Document:

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                                                                    Exhibit 10.9

                             W.P. CAREY & CO., INC.
                              EMPLOYMENT AGREEMENT

          THIS AGREEMENT, made the 7th day of April, 1997 between W.P. Carey &
Co., Inc. (the "Company"), a New York corporation at 50 Rockefeller Plaza, New
York, NY 10020, and Claude Fernandez ("Executive")

                                   WITNESSETH:

          WHEREAS, Executive has been an officer of the Company in which
capacity his services have contributed materially to the successful operation of
the Company's business;

          WHEREAS, the Company wishes to assure itself of the continued
availability of Executive's services, and Executive is willing to give such
assurance in return for the benefits described herein;

          NOW, THEREFORE, intending to be legally bound hereby, the Company
hereby agrees to employ Executive, and Executive hereby agrees to be employed by
the Company upon the following terms and conditions:

          1. Office and Duties. Executive shall service the Company full time in
such positions and have such titles, duties and power with the Company and its
subsidiaries consistent with Executive's experience and abilities as may from
time to time be determined by the board of directors of the Company (the
"Board"), the Chairman of the Board or the Chief Executive Officer of the
Company. Executive will use his reasonable best energies and abilities and will
devote his full business time, except for vacation time and reasonable periods
of absence due to sickness, personal injury or other disability, to the duties
assigned to him and shall use his best efforts, judgment, skill and energy to
perform such services faithfully and diligently to further the business
interests of the Company, to improve and advance the business and interests of
the Company, to increase shareholder value and otherwise promote the best
interests of the Company's shareholders; provided that nothing contained herein
shall preclude Executive from (i) serving on the board of directors of any
business corporation with the consent of the Board, (ii) serving on the board
of, or working for, any charitable or community organization or (iii) pursuing
his personal financial and legal affairs, so long as such

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activities, individually or collectively, do not interfere with the performance
of Executive's duties hereunder.

          2. Term. This Agreement shall be for a term commencing as of the date
hereof (the "Commencement Date") and ending on December 31, 2000 unless sooner
terminated as hereinafter provided. Unless either party elects to terminate this
Agreement at the end of the original or any renewal term by giving the other
party notice of such election at least 90 days before the expiration of the then
current term, this Agreement shall be deemed to have been renewed for an
additional one year period commencing on the day after the expiration of the
then current term. The period during which Executive is employed pursuant to
this Agreement, including any extension thereof in accordance with the preceding
sentence, shall be referred to as the "Employment Period."

          3. Compensation

          (a) Base Salary. During the Employment Period, Executive shall receive
an annual base salary ("Base Salary") at the same rate as in effect on the date
hereof, which shall be payable in accordance with the Company's generally
applicable payroll practices and policies. The Executive Committee shall
periodically review Executive's Base Salary in light of the salaries paid to
other officers of the Company, the performance of Executive, and Executive's
total compensation from the Company and the Company may, in its discretion,
increase such Base Salary by an amount it determines to be appropriate. Any such
increase shall not reduce or limit any other obligation of the Company
hereunder.

          (b) Incentive Compensation. During the term of the Employment Period,
Executive shall be eligible to participate in the Company's incentive
compensation programs (including, without limitation, any program for the
payment of commission income, disposition fees, and bonuses), as the same may be
amended by the Company from time to time, at a level determined by the Company's
Executive Committee. Without limiting the generality of the foregoing, Executive
shall be entitled to draw, in approximately equal monthly installments, against
such incentive compensation in an annual amount determined in accordance with
the practices and policies of the Company.

          4. Stock Option Grant. Effective as of January 1, 1997, Executive will
receive the grant of an option pursuant to the Company's Stock Appreciation
Rights Plan in respect of 2,000 shares of the Common Stock of the notional
corporation described in such Stock Appreciation Rights Plan, subject to the
terms and conditions of such grant. Executive agrees and acknowledges that his
rights and obligations in respect of such option shall be governed by the terms
and conditions of the Stock Appreciation

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Rights Plan, including, without limitation, the provisions thereof relating to
the proportionate dilution of his interest by the grant, after the effective
date of his award, of awards to other employees under the Stock Appreciation
Rights Plan or the Company's Partnership Equity Plan.

          5. Partnership Equity Plan. Effective as of January 1, 1989, Executive
has received an award pursuant to the Company's Partnership Equity Plan of 1,000
shares of the Common Stock of the notional corporation described therein.
Effective as of January 1, 1996, Executive has received an additional award
pursuant to the Partnership Equity Plan of 500 shares of the Common Stock of the
notional corporation described therein. Executive agrees and acknowledges that
his rights and obligations in respect of the Equivalent Shares, as defined in
the Partnership Equity Plan, shall be governed by the terms and conditions of
the Partnership Equity Plan, including, without limitation, the provisions
thereof relating to the proportionate dilution of his interest by the grant,
after the effective date of his award, of awards to other employees under the
Stock Appreciation Rights Plan or the Partnership Equity Plan.

          6. Benefits, Perquisites and Expenses.

          (a) Benefits. During the Employment Period, Executive shall be
eligible to participate in each employee benefit plan sponsored or maintained by
the Company, subject to the generally applicable provisions thereof. Nothing in
this Agreement shall in any way limit the Company's right to amend or terminate
any such plan in its discretion, so long as any such amendment does not impair
the rights of Executive without treating similarly situated executives in a
similar fashion.

          (b) Business Expenses. During the Employment Period, the Company shall
pay or reimburse Executive for all reasonable expenses incurred or paid by
Executive in the performance of Executive's duties hereunder, upon presentation
of expense statements or vouchers and such other information as the Company may
require and in accordance with the generally applicable policies and procedures
of the Company.

          (c) Indemnification. The Company shall indemnify Executive and hold
Executive harmless from and against any claim, loss or cause of action arising
from or out of Executive's performance of services as an officer, director or
Executive of the Company or any of its subsidiaries or in any other capacity in
which Executive serves at the request of the Company on the same basis as it
indemnifies its other officers. If, at any time, the Company has in effect any
policy providing any indemnity to the Company or third parties with respect to
the errors and omissions or other actions of officers or directors, the Company
shall cause Executive's errors, omissions or other actions to be

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covered under such policy on the same terms and conditions as apply generally to
all other officers of the Company.

          7. Termination of Employment.

          (a) Early Termination of the Employment Period. Notwithstanding
Paragraph 2, the Employment Period shall end upon the earliest to occur of (i) a
termination of Executive's employment on account of Executive's death, (ii) a
Termination due to Disability, (iii) a Termination for Cause (iv) a Termination
Without Cause, (v) a Termination for Good Reason or (vi) a Termination due to a
Change of Control.

          (b) Benefits Payable Upon Termination. Following the end of the
Employment Period pursuant to Paragraph 7(a), Executive (or, in the event of his
death, his surviving spouse, if any, or his estate) shall be paid the type or
types of compensation determined to be payable in accordance with the following
table at the times established pursuant to Paragraph 7(c):

<TABLE>
<CAPTION>
                                       Accrued
                       Earned Basic   Employee   Severance
                       Compensation   Benefits    Benefit
                       ------------   --------   ---------
<S>                    <C>            <C>        <C>
Termination due to        Payable      Payable      Not
Death                                             Payable

Termination due to        Payable      Payable      Not
Disability                                        Payable

Termination for           Payable      Payable      Not
Cause                                             Payable

Termination Without       Payable      Payable    Payable
Cause

Termination with          Payable      Payable    Payable
Good Reason

Termination due to a      Payable      Payable    Payable
Change of Control
</TABLE>

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          (c) Timing of Payments. Earned Basic Compensation shall be paid in a
single lump sum as soon as practicable, but in no event more than 30 days
following the end of the Employment Period. Accrued Employee Benefits shall be
payable in accordance with the terms of the plan, policy, practice, program,
contract or agreement under which such benefits have accrued. Severance Benefits
shall be paid at the same time as Executive would have received his base salary
had he continued to be employed and for the period ending on the first to occur
of (i) the first anniversary of Executive's termination of employment and (ii)
the date on which Executive breaches any of the provisions of Paragraph 8.
Notwithstanding the foregoing, the Company may elect, at any time and in its
discretion, to pay Executive the present value of the remaining Severance
Benefits payable hereunder in a single lump sum amount with such present value
to be calculated using a discount rate equal to the one year Treasury bill rate
as quoted in The Wall Street Journal (or in such other reliable publication as
the Independent Committee, in its reasonable discretion, may determine to rely
upon) on the first business day of such year on which such publication is
published.

          (d) Definitions. For purposes of Paragraphs 7 and 8, capitalized terms
have the following meanings:

          "Accrued Employee Benefits" means amounts which are vested or which
Executive is otherwise entitled to receive under the terms of or in accordance
with any plan, policy, practice or program of, or any contract or agreement
with, the Company or any of its subsidiaries, at or subsequent to the date of
his termination without regard to the performance by Executive of further
services or the resolution of a contingency.

          "Carey Affliated Entities" means (i) the Carey Family, (ii) the
employees of the Company and its affiliates, (iii) any Controlled Entity and
(iv) the Carey Foundation.

          "Carey Family" means William P. Carey, his spouse and lineal
descendants and his brothers and brothers-in-law, sisters and sisters-in-law and
each of their lineal descendants.

          "Change of Control" shall mean a transaction as a result of which the
Carey Affiliated Entities (i) cease to be the beneficial owners of at least 50
percent of the combined voting power of all the outstanding voting securities of
the Company and (ii) are not otherwise in Effective Control of the Company.

          "Controlled Entity" means an entity (other than the Company) in which
William P. Carey, the Company or any other Controlled Entity, directly of
indirectly, owns a substantial equity interest and that is

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     (i)  a corporation more than 50 percent of the value of the outstanding
          stock of which is owned directly or indirectly by the Carey Family
          and/or employees of the Company;

     (ii) a partnership more than 50 percent of the capital interest or profits
          interest in which is owned directly or indirectly by the Carey Family
          and/or employees of the Company;

     (iii) a limited liability company more than 50 percent of the ownership
          interests in which are owned directly or indirectly by the Carey
          Family and/or employees of the Company; or

     (iv) a trust in which the Carey Family and/or employees of the Company
          together have 50 percent or more of the voting power or beneficial
          ownership interest.

The Controlled Entities as of September 30, 1996 are listed on Exhibit A
attached hereto. Notwithstanding the foregoing, in no event shall the Carey
Foundation be considered a Controlled Entity.

          "Controlling Shareho1der(s)" means the person(s) who, at the relevant
time, hold of record a majority of the shares of the common stock of the
Company.

          "Earned Basic Compensation" means any salary or other compensation
(including without limitation disposition fees) due and payable, but unpaid, for
services rendered to the Company on or prior to the date on which the Employment
Period ends.

          "Effective Control" means the power to elect a majority of the members
of the Board, whether (i) by reason of the ownership of securties representing
more than 50% of the securities entitled to vote for the election of directors
(the "Voting Shares" or (ii) pursuant to a shareholders agreement, irrevocable
proxy or otherwise controlling the right to vote a majority of the Voting
Shares. Notwithstanding the foregoing, if the Company is merged with, into or
otherwise combined with a Public Corporation or more than 50% of the assets of
the Company are transferred to a Public Corporation, the Carey Affiliated
Entities shall be deemed to be in Effective Control of such Public Corporation
if a majority of the directors on the board of diectors of such Public
Corporation:

     (x)  at the time of the merger, combination, sale or other transaction,
          were either

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          (1)  officers of the Company or members of the Board or the board of
               directors of an affiliate of the Company immediately prior
               thereto or

          (2)  nominated for election to the board of the Public Corporation by
               the members of the Board, the board of directors of a Carey
               Affiliated Entity or the persons who were the Controlling
               Shareho1der(s) immediately prior to such transaction with the
               Public Corporation, or

     (y)  at any time following any such transaction, were nominated for
          election or elected by any of the Board, the board of directors of a
          Carey Affiliated Entity or the persons who were the Controlling
          Shareholder(s) immediately prior to such transaction with the Public
          Corporation.

          "Independent Committee" shall mean the committee initially comprised
of George Stoddard, Charles Townsend and Warren Winturb and as it may thereafter
be constituted from time to time in accordance with this provision. If any
member of the initial Independent Committee (or any successor thereto appointed
in accordance with this provision) ceases to a member of the Independent
Committee for whatever reason, the successor to such person on the Independent
Committee shall be appointed by the Controlling Shareholders from the members of
the Board or the boards of directors of the Company's affiliates, subject to the
approval of such appointment by the then remaining members of the Independent
Committee, provided, however, that no member of the Independent Committee shall
be a member of the Carey Family. The Controlling Shareholders shall have the
right to remove any member of the Independent Committee from office at any time
such person is no longer a member of the Board or of the board of directors of
any of the Carey Affiliated Entities.

          "Public Corporation" means a company with at least one series of
securities registered under Section 12 of the Securities Exchange Act of 1934,
as amended.

          "Severance Benefits" means monthly payments until the earliest of the
following dates:

     (i)  the first anniversary of Executive's termination of employment and

     (ii) the date the Company's obligation to pay Severance Benefits ceases as
          a result of Executive's breach any of the provisions of Paragraph 8;

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in an amount equal to the sum of (x) the Executive's monthly base salary as in
effect immediately prior to his termination of employment and (y) an amount
equal to one-twelfth of any commissions, disposition fees, and other incentive
payments (including bonuses) paid to the Executive during the 12 month period
ended as of the last calendar month ended immediately prior to such termination
of employment;. The amount payable as Severance Benefits, however, shall be
reduced by an amount equal to 75 percent of each dollar paid to the Executive
for services, whether as an employee, consultant or otherwise, during the period
Severance Benefits are payable.

          "Termination for Cause" means a termination of Executive's employment
by the Company as a result of Executive's

     (i)  dishonesty or disloyalty;

     (ii) refusal to perform his duties in good faith or otherwise fail to carry
          out the express and lawful instructions of the Chairman, Chief
          Executive Officer or the Board;

     (iii) gross negligence or wilful and intentional misconduct;

     (iv) engaging in conduct constituting a felony or other crime involving
          moral turpitude;

     (v)  alcohol or drug addiction, provided that, to the extent required
          thereunder, any termination as a result of such addiction may only
          occur after the Company shall have attempted to make reasonable
          accommodations (or shall have determined that no such reasonable
          accommodation is possible under the circumstances) pursuant to the
          Americans with Disabilities Act of 1990, as amended;

     (vi) breach of his fiduciary duties to the Company or its shareholders,
          including, without limitation, the Controlling Shareholder(s); or

     (vii) any other material violation by Executive of the terms and conditions
          of this Agreement or any agreement between the Company and such
          Executive.

Notwithstanding the foregoing, (x) in the case of subclause (i), (ii) or (vi),
any determination as to whether an Executive has been disloyal or dishonest,
refused to perform his duties or breached his fiduciary duties shall be made by
the Independent Committee and (y) in the case of subclauses (iii) and (vii),
the Company shall not have

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the right to terminate an Executive's employment in a Termination for Cause if
the alleged action or omission by the Executive either (A) has not resulted and
is not reasonably expected to result in material harm to the business,
operations or reputation of the Company or (B) was undertaken or omitted by
Executive in good faith after consultation with his supervisor and in a manner
which was understood to be consistent with the course of action determined
following such consultation, which in either case shall be determined by the
Independent Committee prior to a Change of Control and (z) following any Change
of Control, subclauses (i), (ii), and (vi) shall automatically be deleted from
the definition of a Termination for Cause, without any further action by the
Company or the Executive. In making any determination hereunder, the Independent
Committee shall take into consideration the materiality and relevance to the
Company of Executive's action or conduct, and such determination shall be final
and binding on Executive and the Company.

          "Termination due to a Change of Control" means the Executive's
voluntary termination of employment prior to the first anniversary of a Change
of Control of the Company upon written notice delivered not less than ten
business days prior to the effective date of Participant's termination of
employment.

          "Termination due to Disability" means a termination of Executive's
employment by the Company because Executive has been incapable of substantially
fulfilling the positions, duties, responsibilities and obligations set forth in
this Agreement because of physical, mental or emotional incapacity resulting
from injury, sickness or disease for a period of (i) at least four consecutive
months or (ii) more than six months in any twelve month period. Any question as
to the existence, extent or potentiality of Executive's disability upon which
Executive and the Company cannot agree shall be determined by a qualified,
independent physician selected by the Independent Committee. The determination
of any such physician shall be final and conclusive for all purposes of this
Agreement.

          "Termination with Good Reason" means, prior to a Change of Control,
any termination of Executive's employment on account of a material breach by the
Company of any of its material obligations to Executive hereunder. Following a
Change of Control, "Termination with Good Reason" shall mean a termination of
employment by Executive within 90 days following (i) a material adverse change
in Executive's duties and responsibilities as an Executive; (ii) a reduction in
Executive's base salary (other than a proportionate adjustment applicable
generally to similarly situated Company Executives); or (iii) the relocation of
Executive's principal place of business to a location more than thirty-five
miles outside of Manhattan; provided that a termination following a Change of
Control shall not be treated as a Termination with Good Reason if Executive
shall have consented in writing to the occurrence of the event giving rise to
the claim of

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Termination with Good Reason. A Termination for Good Reason must be effected by
a written notice from Executive setting forth in detail the conduct alleged to
be the basis for such termination, provided that, prior to the occurrence of a
Change of Control, Executive shall not have the right to terminate his
employment hereunder pursuant to a Termination with Good Reason (i) if, within
the ten-business day period following receipt of Executive's written notice, the
Company shall have cured the conduct alleged to have caused the material breach
and (ii) unless Executive actually terminates employment within 30 days
following the end of the Company's cure period. Notwithstanding the foregoing,
if the Company disputes whether a breach has occurred, or whether any breach is
material, the Independent Committee shall decide, in good faith, whether the
alleged conduct by the Company entitles Executive to quit pursuant to a
Termination with Good Reason and the time period referred to in subclause (ii)
in the immediately preceding sentence shall not end earlier than 10 days
following the date on which the Independent Committee notifies Executive of its
decision. Prior to the occurrence of a Change of Control, the determination by
the Independent Committee as to Executive's eligibility for a "Termination with
Good Reason" shall be final and binding on Executive and the Company.

          "Termination Without Cause" means any termination by the Company of
Executive's employment with the Company other than (i) a Termination due to
Disability, (ii) a Termination due to death or (iii) a Termination for Cause.

          (e) Full Discharge of Company Obligations. The amounts payable to
Executive pursuant to this Paragraph 7 following termination of his employment
(including amounts payable with respect to Accrued Employee Benefits) shall be
in full and complete satisfaction of Executive's rights under this Agreement and
any other claims he may have in respect of his employment by the Company or any
of its subsidiaries. Such amounts shall constitute liquidated damages with
respect to any and all such rights and claims and, upon Executive's receipt of
such amounts, the Company shall be released and discharged from any and all
liability to Executive in connection with this Agreement or otherwise in
connection with Executive's employment with the Company and its subsidiaries.
Nothing contained in this paragraph shall be construed as limiting Executive's
claims against the Company or any of its subsidiaries with respect to
non-employment related torts.

          8. Non-Competition, Confidential Information, Etc.

          (a) Noncompetition. During the term of this Agreement, as the same may
be renewed and extended, and for a period of

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     (i) 18 months following the termination of Executive's employment for any
     reason other than a Termination with Good Reason, a Termination Without
     Cause or a Termination due to Disability, or

     (ii) 12 months following the termination of Executive's employment due to
     the expiration of the term of this Agreement due to Executive's election
     not to renew the term hereof, a Termination with Good Reason or a
     Termination Without Cause,

Executive shall not, without the written consent of the Company, directly or
indirectly, as a stockholder owing beneficially or of record more than 5% of the
outstanding shares of any class of stock of any issuer, or as an officer,
director, employee, partner, consultant, joint venture, proprietor, or
otherwise, engage in or become interested in any Competing Business in the
United States or in any other jurisdiction in which the Company is actively
engaged in business or with respect to which, at the time of Executive's action
(or, if Executive is not an employee of the Company at such time, the date his
employment with the Company terminated), the Company had taken material steps
toward becoming actively engaged in such business. For purpose of this
Agreement, the term "Competing Business" shall mean any business which is
engaged in (i) the business of structuring, obtaining the financing for, or
otherwise implementing or facilitating long-term financing of corporate property
using leasing arrangements ("Leasing Transactions") or (ii) any other business
activity of a type and kind that, at the relevant time, is conducted by the
Company and which accounts for ten percent (10%) or more of either the Company's
gross revenues or net after tax income ("Other Material Activities"); provided
that nothing in this Agreement shall preclude Executive from providing services
to any Competing Business so long as such services do not relate, directly or
indirectly, to Leasing Transactions or Other Material Activities. Without
limiting the generality of the foregoing, Executive acknowledges and agrees that
the Company is engaged in business in each state of the United States, and each
possession of the United States. Notwithstanding the foregoing, following a
Change of Control, (i) if Executive terminates his employment in a Termination
for Good Reason or is terminated by his employer other than in a Termination for
Cause, all restrictions imposed on Executive pursuant to this paragraph shall
cease to be effective at the date of his termination of employment and (ii) the
only activities that will be treated as Other Material Activities shall be those
business activities, if any, that, immediately prior to the Change of Control
were Other Material Activities, and at the time of the alleged competitive
activity, are Other Material Activities for the Company. The Company and
Executive acknowledge and agree that the provisions of this Paragraph 8(a) are
intended to protect the legitimate business interests of the Company and not to
restrain the ability of Executive to obtain gainful employment. The Company
agrees that this Paragraph 8(a) should not be interpreted to preclude Executive
from raising capital or seeking to

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structure financial transactions in respect of investments of a type or nature
not undertaken by the Company and its affiliates, even if such other investments
compete for investment funds from the same sources of funds as the Company looks
to for its transactions (e.g., this Paragraph 8(a) will not preclude Executive
from participating in the structure, financing or implementation of a venture
capital fund or mezzanine debt fund, even if the potential investors in such
funds include some or all of the same persons or entities as would generally
invest in a transaction sponsored or promoted by the Company).

          (b) Confidential Information. During the term of this Agreement and at
all times thereafter, Executive shall not, without the written consent of the
Company, use for his personal benefit, or disclose, communicate or divulge to,
or use for any company other than the Company or its subsidiaries or affiliates,
any Confidential Information (as defined below) that had been made known to
Executive or learned or acquired by Executive while in the employ of Company or
its subsidiaries or affiliates, unless such information has become public other
than by reason of Executive's breach of this covenant. Confidential Information
shall mean

     (i)  information not in the public domain (or in the public domain as a
          result of a breach by Executive or another executive of the Company
          who is also bound by a similar confidentiality clause) regarding the
          business methods, business policies, procedures, techniques, research
          or developments projects or results, trade secrets, or other processes
          of or developed by the Company;

     (ii) any names and addresses of customers or clients or any data on or
          relating to past, present or prospective customers or clients not in
          the public domain (or in the public domain as a result of a breach by
          Executive or another executive of the Company who is also bound by a
          similar confidentiality clause); and

     (iii) any other material information not in the public domain (or in the
          public domain as a result of a breach by Executive or another
          executive of the Company who is also bound by a similar
          confidentiality clause) relating to or dealing with the business
          operations or activities of the Company which has been designated by
          the Company as confidential or which, if disclosed to any third party,
          would result in a material adverse effect to the Company.

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          (c) Company Property. Promptly following Executive's termination of
employment, Executive shall return to the Company all property of the Company,
and all copies thereof in Executive's possession or under his control.

          (d) Nonsolicitation of Employees. Executive agrees that for a period
of two years after the termination of his employment with the Company, he will
not and will not assist or encourage any other person to (i) employ, hire,
engage or be associated (as a shareholder, partner, employee, consultant or in a
similar capacity) with any employee or other person connected with the Company
who rendered services as a professional, including, without limitation, all
persons who provide direct and substantial services with respect to Leasing
Transactions or Other Material Activities (the "Restricted Employees"), at the
time of such termination or during any part of the six months (three months, in
the case of any employee who was not also an officer of the Company) preceding
such termination of employment, (ii) induce any Restricted Employees to leave
the employ of the Company or any of its affiliates, or (iii) solicit the
employment of any Restricted Employees on his own behalf or on behalf of any
other business enterprise.

          (e) Injunctive Relief. Executive agrees and acknowledges that the
remedies at law for any breach by him of the provisions of this Paragraph 8 will
be inadequate and that the Company shall be entitled to obtain injunctive relief
against him from a court of competent jurisdiction in the event of any such
breach. If any such court of competent jurisdiction shall determine that the
restrictions contained in this Paragraph 8 are unreasonable as to time or
geographical area, such court shall reform said restrictions to the extent
necessary in the opinion of such court to make them reasonable and enforceable.

          9.   Miscellaneous.

          (a) Indulgences, Etc. Neither the failure nor any delay on the part of
either party to exercise any right, remedy, power or privilege under this
Agreement shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, remedy, power or privilege preclude any other or further
exercise of the same or of any other right, remedy, power or privilege, nor
shall any waiver of any right, remedy, power or privilege with respect to any
occurrence be construed as a waiver of such right, remedy, power or privilege
with respect to any other occurrence.

          (b) Controlling Law. This Agreement and all questions relating to its
validity, interpretation, performance and enforcement shall be governed by and
construed in accordance with the laws of the State of New York notwithstanding
any conflicting choice-of-law provisions.

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          (c) Notices. All notices, requests, demands and other communications
required or permitted under this Agreement and the transactions contemplated
herein shall be in writing and shall be deemed to have been given when delivered
in person or when deposited in the United States mail in a postpaid envelope by
registered or certified mail, return receipt requested or by 24-hour courier
service.

          (d) Binding Effect. This Agreement shall be binding on, and shall
inure to the benefit of, the Company and any person or entity that succeeds to
the interest of the Company (regardless of whether such succession does or does
not occur by operation of law) by reason of the sale of all or a portion of the
Company's stock, a merger, consolidation or reorganization involving the Company
or a sale of the assets of the business of the Company in which Executive
performs a majority of his services, unless the Company otherwise elects in
writing to retain responsibility for the duties and obligations of the Company
(and the benefits conveyed to the Company) under this Agreement. This Agreement
shall also inure to the benefit of Executive's heirs executors, administrators
and legal representatives.

          (e) Assignment. Except as provided under Paragraph (d), neither this
Agreement nor any of the rights of obligations hereunder shall be assigned or
delegated by any party hereto without the prior written consent of the other
party.

          (f) Execution in Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original as against the
party whose signature appears thereon, and both of which shall together
constitute one and the same instrument. This Agreement shall become binding when
one or more counterparts hereof, individually or taken together, shall bear the
signatures of all of the parties reflected hereon as the signatories.

          (g) Severability; Reformation. In the event that one or more of the
provisions of this Agreement shall become invalid, illegal or unenforceable in
any respect, the validity, legality and enforceability of the remaining
provisions contained herein shall not be affected thereby. In the event any of
Paragraph 8(a), (b), (c) or (d) is not enforceable in accordance with its terms,
Executive and the Company agree that such Paragraph shall be reformed to make
such Paragraph enforceable in a manner which provides the Company the maximum
rights permitted at law.

          (h) Entire Agreement. This Agreement contains the entire understanding
among the parties hereto with respect to the subject matter hereof, and
supersedes all prior and contemporaneous agreements and understandings,
inducements or conditions, express or implied, oral or written, except as herein
contained. The express terms hereof control and supersede any course of
performance and/or usage of the trade inconsistent

                                       14

<PAGE>

with any of terms hereof. This Agreement may not be modified or amended other
than by an agreement in writing.

          (i) Shareholder Rights. Whenever in this Agreement reference is made
to the interests of the Company's shareholders and there exists or may exist a
conflict in the interests of such shareholders, the Independent Committee shall
determine the action or conduct that is in the interests of shareholders.

          (j) Paragraph Headings. The paragraph headings in this Agreement are
for convenience only; they form no part of this Agreement and shall not affect
its interpretation.

          (k) Gender. Etc. Words used herein, regardless of the number and
gender specifically used, shall be deemed construed to include any other number,
singular or plural, and any other gender, masculine, feminine or neuter, as the
context requires.

          (l) Number of Days. In computing the number of days for purposes of
this Agreement, all days shall be counted, including Saturdays, Sundays and
holidays; provided, however, that if the final day of any time period falls on a
Saturday, Sunday or holiday, then the final day shall be deemed to be the next
day which is not a Saturday, Sunday or holiday.

          (m) Prevailing Parties. Following a Change of Control, any party which
prevails in a lawsuit pertaining to the enforcement or interpretation of any
provision of this Plan shall be entitled to recover all reasonable attorney's
fees incurred by such party with respect to the lawsuit, in addition to any
other remedies to which the party is entitled under the law, from the opposing
party to such lawsuit.

          (n) Independent Committee. The terms of this Agreement shall be
interpreted by the Independent Committee. The Independent Committee shall keep
records of actions taken at its meetings. Two members of the Independent
Committee shall constitute a quorum at any meeting, and the acts of a majority
of the members present at any meeting at which a quorum is present, or acts
approved in writing by a majority of the Independent Committee, shall be the
acts of the Independent Committee. When determining whether an Executive's
employment may be terminated by the Company in a Termination for Cause or by the
Executive in a Termination with Good Reason, the Independent Committee shall
provide the Executive an opportunity to be heard on such issue, and shall render
its decision in writing within 60 days of being presented with the question.
Prior to the occurrence of a Change of Control, any action

                                       15

<PAGE>

taken by the Independent Committee with respect to the interpretation of this
Agreement shall be final, conclusive and binding.

          IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered on the date first above written.

                                        W.P. CAREY & CO., INC.

                                        By /s/ W.P. Carey
                                           -------------------------------------

                                        /s/ Claude Fernandez
                                        ----------------------------------------
                                        Executive

                                       16

<PAGE>

                                    Exhibit A

CONTROLLED ENTITIES

Carey Corporate Property, Inc.

Seventh Carey Corporate Property, Inc.

Eighth Carey Corporate Property, Inc.

Ninth Carey Corporate Property, Inc.

Carey Fiduciary Advisors, Inc.

Carey Property Advisors, L.P.

Carey Financial Corporation

W.P. Carey Advisors, Inc.

Carey Fairview Corporation

W.P. Carey Advisors, L.P.<PAGE>

                                                                  Exhibit 10(aa)

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.

                  MARKETING, DISTRIBUTION AND SUPPLY AGREEMENT

                                     BETWEEN

                           DUSA PHARMACEUTICALS, INC.

                                       AND

                           STIEFEL LABORATORIES, INC.

                                      DATED

                                JANUARY 12, 2006

<PAGE>

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.

     MARKETING, DISTRIBUTION AND SUPPLY AGREEMENT made as of the 12th day of
January 2006 (the "EFFECTIVE DATE") between DUSA PHARMACEUTICALS, INC., a New
Jersey corporation having a principal office and place of business at 25 Upton
Drive, Wilmington, Massachusetts, USA 01887 (hereinafter called "DUSA") and
STIEFEL LABORATORIES, INC., a Delaware corporation having a principal office and
place of business at 255 Alhambra Circle, Suite 1000, Coral Gables, Florida, USA
33134 (hereinafter called "STIEFEL").

     WHEREAS, DUSA is engaged in the development, manufacture and sale of
pharmaceutical products and wishes to market certain of its products in the
Territory (as such term is defined below);

     WHEREAS, STIEFEL is a pharmaceutical company that distributes and sells
pharmaceutical products in the Territory and desires to obtain an exclusive
right to, distribute, promote, and sell in the Territory the Products as such
term is defined manufactured by DUSA;

     WHEREAS, DUSA has agreed, subject to the terms and conditions of the
Agreement, to grant STIEFEL an exclusive right to distribute, promote, and sell
such Product in the Territory and to manufacture and supply to STIEFEL on an
exclusive basis in the Territory all of STIEFEL's reasonable requirements of the
Product;

     WHEREAS, STIEFEL has agreed to undertake the distribution, promotion, and
sale of such Products in the Territory, and will purchase the Product
exclusively from DUSA in accordance with the terms and conditions of this
Agreement; and

     WHEREAS, the Parties also wish to memorialize the understanding between
them with respect to DUSA's grant to STIEFEL of a license to use the DUSA
Trademarks on the DUSA labeled Products in connection with the marketing and
sale of the Product in the Territory under the terms and conditions of the
Agreement.

     NOW, THEREFORE, the Parties agree as follows:

1.   DEFINITIONS.

     For the purposes of this Agreement, capitalized terms used but not
otherwise defined in this Agreement shall have the meanings set forth in this
Section 1:

     1.1 "AFFILIATES" shall mean any Person (defined below) which directly or
indirectly controls, is controlled by, or under common control with a Party to
this Agreement. For purposes of the foregoing definition, the term "control"
(including with correlative meaning, the terms "controlling", "controlled by",
and "under common control with") as used with respect to any Person, shall mean
(i) in the case of corporate entities, direct or indirect ownership of at least
[C.I.] percent ([C.I.]%) of the stock or shares entitled to vote for the
election of directors; and (ii) in the case of non-corporate entities, direct or
indirect ownership of at least [C.I.] percent ([C.I.]%) of the equity interest
or the possession, directly or indirectly, of the power to direct or cause the

<PAGE>

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.

direction of the management and policies of such Person, whether through
ownership of voting securities, by contract, or otherwise.

     1.2 "APPLICABLE LAWS" shall mean all applicable laws, statutes, rules,
regulations and guidelines that may apply to the sale of the Product in the
Territory or the promotion, marketing, packaging, labeling, importation,
exportation, warehousing or distribution of a Product that is to be sold in the
Territory or the performance of either Party's obligations under this Agreement,
and including all good manufacturing practices and all applicable standards or
guidelines promulgated by the appropriate Regulatory Authority.

     1.3 "APPROVED PRICE" shall mean the [C.I.] price per unit to STIEFEL [C.I.]
for the sale of the Product in Brazil excluding up to [C.I.] Percent ([C.I.]%)
in government sales taxes actually paid by STIEFEL on units of the Product sold.

     1.4 "APPROVED PRODUCT" shall mean any Product that shall have been granted
all necessary approvals by the required Regulatory Authorities to allow DUSA
and/or Stiefel, as the case may be, the right to sell and distribute, promote,
and sell the Product in any country in the Territory.

     1.5 "BATCH", with respect to any of the Product, shall mean a separate and
distinct quantity of such Product processed under continuous and identical
conditions and designated by a batch number.

     1.6 "CERTIFICATE OF CONFORMANCE" shall mean a document, which is dated and
signed by a duly authorized representative of the Quality Control or Quality
Assurance Department of DUSA, certifying that a Batch of any Product meets all
Specifications.

     1.7 "COMMERCIALLY REASONABLE EFFORTS" mean the channels, methods and
diligence that a Party employs with respect to other products sold by it
(including its own products) of the same or similar commercial potential.

     1.8 "COMPETING PRODUCTS" means the products identified on Schedule A
attached hereto as Competing Products.

     1.9 "CONFIDENTIAL INFORMATION" means with respect to a Party, all
information of any kind whatsoever (including without limitation, data,
compilations, formulae, models, patent disclosures, procedures, processes,
projections, protocols, results of experimentation and testing, specifications,
strategies, techniques, business and financial information, projections,
customer lists, and all non-public intellectual property rights, and all
tangible and intangible embodiments thereof of any kind whatsoever (including
without limitation, apparatus, compositions, documents, drawings, machinery,
patent applications, records and reports), and all business information,
financial data, projections, customer lists which is disclosed by such Party to
the other Party.

     1.10 "DOMAIN NAMES AND WEBSITES" shall mean those domain names and website
agreed upon by the Parties through which the Products shall be marketed by
STIEFEL hereunder.

<PAGE>

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.

     1.11 "FDA" shall mean the U.S. Food and Drug Administration, or any
successor body.

     1.12 "FD&C ACT" means the Federal Food, Drug and Cosmetic Act of 1938, as
amended and the regulations thereunder, as the same may be amended or revised.

     1.13 "FIELD" shall mean [C.I.] uses of the Products for dermatology
indications.

     1.14 "FIRST APPROVAL DATE" shall mean the date on which DUSA first obtains
approval to market a Product from a Regulatory Authority in the Territory.

     1.15 "FISCAL YEAR" shall mean the twelve-month period commencing on January
1st of each year and ending on December 31st, or any other twelve-month period
designated as the fiscal year of STIEFEL.

     1.16 "GMP" shall mean good manufacturing practices as required by the rules
and regulations of the applicable Regulatory Authority.

     1.17 "GROSS-UP" shall have the meaning set forth in Section 7.2(a).

     1.18 "INDEMNIFIED PARTY" shall have the meaning set forth in Section
14.3(a).

     1.19 "INDEMNIFYING PARTY" shall have the meaning set forth in Section 14.3
(a).

     1.20 "INDEPENDENT LABORATORY" shall have the meaning set forth in Section
9.4.

     1.21 "LAUNCH DATE", as to each Approved Product, shall mean that date on
which marketing and distribution of such Approved Product shall commence in a
given country in the Territory.

     1.22 "LAUNCH NOTICE" shall have the meaning set forth in Section 7.3(a).

     1.23 "MINIMUM PURCHASE OBLIGATIONS" shall have the meaning set forth in
Section 7.2(a).

     1.24 "OBJECTION NOTICE" shall have the meaning set forth in Section 9.4.

     1.25 "PARTY" means STIEFEL and DUSA, individually, and "PARTIES" means
STIEFEL and DUSA, collectively.

     1.26 [C.I.] shall have the meaning set forth on Schedule C attached hereto.

     1.27 "PERSON" shall mean an individual, corporation, partnership, limited
liability company, firm, association, joint venture, estate, trust, governmental
or administrative body or agency, or any other entity.

     1.28 "PRICING APPROVAL" shall mean STIEFEL's receipt from CMED of
Registration of the [C.I.] price allowed to market and sell the Product in
Brazil within the time period stated in Section 2.4 below, at a price of not
less than [C.I.] Brazilian Reals (Brazilian Reals [C.I.]) per unit

<PAGE>

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.

including [C.I.] ([C.I.]%) government taxes (i.e.Net per unit to STIEFEL is
[C.I.] Brazilian Reals (Brazilian Reals [C.I.])).

     1.29 "PRODUCT" shall mean the product set forth on Schedule A.

     1.30 "PRODUCT ALLIANCE MANAGER" shall have the meaning set forth in Section
5.1.

     1.31 "PURCHASE PRICE PER UNIT" shall have the meaning set forth on Schedule
C attached hereto.

     1.32 "REGISTRATION" means the regulatory approvals of any applicable
Regulatory Authorities issued in DUSA's name and necessary to permit the
commencement of the marketing and sale of the Product in any country in the
Territory.

     1.33 "REGULATORY AUTHORITY" means any and all bodies and organizations
regulating the manufacture, importation, distribution, use and sale of the
Product in any country in the Territory.

     1.34 "REPORT" shall have the meaning set forth in Section 9.4.

     1.35 "SPECIFICATIONS" of Product means the specifications for the Product
as approved by the FDA. The Specifications may be amended from time to time by
[C.I.] and as specifically requested by applicable Regulatory Authorities.

     1.36 "DUSA'S TRADEMARKS" shall mean the DUSA Trademarks set forth on
Schedule A hereto, as such Schedule may be amended from time to time by mutual
agreement of the parties.

     1.37 "TECHNICAL INFORMATION" shall mean the manufacturing process and any
and all technical knowledge, trade secrets, analytical methodology, processes,
manufacturing and toxicological information, and any and all other technical
information or experience related to the manufacturing of the Product.

     1.38 "TERM" shall have the meaning set forth in Section 18.1.

     1.39 "TERRITORY" shall mean all countries of the Western Hemisphere from
south of and including Mexico, and all other countries located in the Caribbean
excluding US territories.

     1.40 "THIRD PARTY" means any party other than DUSA, STIEFEL or their
respective Affiliates.

     1.41 "THIRD PARTY LOSS" shall have the meaning set forth in Section 14.1.

     1.42 "TRADEMARK INFRINGEMENT CLAIMS" shall have the meaning set forth in
Section 3.3(a).

<PAGE>

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.

2.   DISTRIBUTION, MARKETING AND PROMOTION.

     2.1 Appointment. During the Term and subject to Sections 2.2(b) and
7.1(a)(i), DUSA hereby appoints STIEFEL as its exclusive distributor for the
Product in the Field in the Territory and STIEFEL hereby accepts such
appointment. Pursuant to this appointment, STIEFEL shall have the exclusive
right to import in finished package form, distribute, promote and sell the
Product in the Field in the Territory subject to the terms and conditions of
this Agreement.

     2.2 Marketing and Promotion Efforts.

          (a) STIEFEL shall use its Commercially Reasonable Efforts to
vigorously distribute, sell and promote the sale of the Product in the Field
within and throughout the Territory [C.I.], so as to maximize sales in each
country in the Territory, beginning [C.I.] after the date of this Agreement,
provided that in the event that STIEFEL is legally prohibited from selling the
Product until Registration for the Product is obtained, then STIEFEL shall begin
distribution and promotion of the Product no later than [C.I.] ([C.I.]) days
after Pricing Approval for the Product is obtained.

          (b) STIEFEL shall be deemed to have commenced the marketing of the
Product in a country within the Territory [C.I.] when it shall have offered such
Product [C.I.]. If STIEFEL does not begin marketing and promotion of the Product
in a country within the Territory within [C.I.] ([C.I.]) days after receipt of
all necessary government approvals to market the Product in such country, in
addition to any other remedies available to DUSA hereunder or under law or in
equity, DUSA may, in its sole discretion [C.I.] of such Product in such country.

          (c) STIEFEL shall provide DUSA as reasonably requested by DUSA on a
[C.I.] basis: (1) [C.I.], as reasonably requested by DUSA for purposes of DUSA's
[C.I.] within the Territory, (2) a summary of the [C.I.] of the Product held by
STIEFEL at the end of such [C.I.] and (3) a report of [C.I.] of the Product sold
by STIEFEL as requested by DUSA, including to comply with applicable laws. The
Parties will mutually agree on the form(s) of reports, information to be
contained therein and the timing of such reports regarding [C.I.] within [C.I.]
([C.I.]) days of the Effective Date, and such agreed upon items shall be
attached to this Agreement as a Schedule D.

          (d) STIEFEL shall, [C.I.], use its Commercially Reasonable Efforts to
distribute, promote, and sell the Product for use [C.I.], as appropriate in the
Territory, in compliance with Applicable Laws and good commercial practice
(including, but not limited to proper shipping and storage).

          (e) STIEFEL will not (and will ensure that its subdistributors, if
any, do not) enter into any [C.I.] for the Product with its customers, including
but not limited to [C.I.], that contain terms that exceed or are otherwise
inconsistent with the terms of this Agreement (including but not limited to
[C.I.] that exceed the term of this Agreement), without receiving DUSA's written
approval, which may be withheld in its sole discretion, before entering into
such agreement.

<PAGE>

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.

          (f) STIEFEL shall purchase all Product needed in pre-marketing efforts
from DUSA at the Purchase Price Per Unit; provided with respect to pre-marketing
in Brazil, during the time that the Pricing Approval has not yet been received,
STIEFEL shall purchase Product needed in pre-marketing efforts in Brazil from
DUSA at [C.I.] U.S. Dollars (U.S. $[C.I.]) per unit.

          (g) Prior to STIEFEL marketing, promoting, distributing or selling a
Product in the Territory, DUSA shall [C.I.] for the Product for STIEFEL's
trainers, at [C.I.]. The [C.I.] shall use [C.I.] provided by DUSA and be limited
only to provide medical information regarding the safety and efficacy of the
Product in question [c.i.] the Products should be marketed, promoted,
distributed or sold in the Territory. [C.I.] STIEFEL and its personnel, sales
force or subdistributors, if any, regarding such medical information regarding
the safety and efficacy and [C.I.], including without limitation marketing and
promotion [C.I.], shall be the responsibility of [C.I.].

     2.3 Restrictions.

          (a) STIEFEL undertakes and agrees that it will not [C.I.] directly or
indirectly [C.I.] the Product [C.I.] nor [C.I.] for the Product knowing that
such [C.I.].

          (b) Except as permitted pursuant to Section 2.5 below, during the term
of this Agreement, STIEFEL shall not, nor shall it aid or facilitate [C.I.] to,
market, promote, sell, offer for sale, distribute or otherwise make the Product
available [C.I.], except as supplied to STIEFEL by DUSA, [C.I.] in the
Territory.

          (c) STIEFEL warrants to DUSA that STIEFEL does not currently represent
or promote [C.I.]. During the term of this Agreement, STIEFEL shall not, nor
shall it aid or facilitate any Third Party to, market, promote, sell, offer for
sale, distribute or otherwise make available [C.I.] to any person in the
Territory.

     2.4 Milestone Payments; Rights of Termination Relating to Pricing Approval.

          (a) Pricing Approval Milestone Payment. Within [C.I.] ([C.I.]) days of
STIEFEL's receipt of the Pricing Approval, STIEFEL shall make a [C.I.], [C.I.]
payment of [C.I.] U.S. Dollars (U.S. $[C.I.]) to DUSA.

          (b) First Units Shipped Milestone Payment. Within [C.I.] ([C.I.]) days
following the total cumulative number of units of Product ordered hereunder by
STIEFEL and shipped by DUSA to STIEFEL exceeding [C.I.] ([c.i.]) units, STIEFEL
shall make a [C.I.], [C.I.] payment of [C.I.] U.S. Dollars (U.S. $[C.I.]) to
DUSA.

          (c) Second Units Shipped Milestone Payment. Within [C.I.] ([C.I.])
days following the total cumulative number of units of Product ordered hereunder
by STIEFEL and shipped by DUSA to STIEFEL exceeding [C.I.] ([c.i.]) units,
STIEFEL shall make a [C.I.], [C.I.] payment of [C.I.] U.S. Dollars (U.S.
$[C.I.]) to DUSA.

          (d) STIEFEL Right of Termination. If STIEFEL does not receive the
Pricing Approval and STIEFEL wishes to terminate the Agreement, STIEFEL must
give DUSA notice

<PAGE>

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.

of such termination within [C.I.] ([C.I.]) days of either (i) receiving a
pricing approval not meeting the conditions of the Pricing Approval (as defined
in Section 1.21), or (ii) failing to receive any approval within [C.I.] ([C.I.])
days of Registration; provided, however that STIEFEL shall not have such right
to terminate if negotiations with CMED are on-going and DUSA and STIEFEL
mutually agree, in writing, to extend such [C.I.] ([C.I.]) day period. In the
event STIEFEL elects to terminate this Agreement, in addition to other effects
of termination set forth herein, STIEFEL shall maintain any Registration for the
Product, [C.I.], until DUSA is able to [C.I.].

          (e) DUSA Right of Termination. If STIEFEL fails receive any approval
from CMED within [C.I.] ([C.I.]) days of Registration, DUSA may elect to
terminate this Agreement provided, however that DUSA shall not have such right
to terminate if negotiations with CMED are on-going and DUSA and STIEFEL
mutually agree, in writing, to extend such [C.I.] ([C.I.]) day period. In such
event, in addition to other effects of termination set forth herein, (i) STIEFEL
shall maintain any Registration for the Product, [C.I.], until DUSA is able to
[C.I.], and (ii) STIEFEL shall be [C.I.] for any Product and [C.I.] ordered from
DUSA on purchase orders submitted to DUSA prior to the date of termination.

     2.5 Sub-Distributor.

          (a) Upon prior written notice to DUSA, STIEFEL shall have the right to
appoint any sub-distributor to distribute, market, promote and/or sell the
Product within the Territory. The appointment of any sub-distributor shall be in
writing and on such terms and conditions as STIEFEL may reasonably require in
writing provided such terms and conditions are not inconsistent with the terms
and conditions of this Agreement. STIEFEL shall provide DUSA with complete,
unredacted copies of each agreement appointing a sub-distributor hereunder.

          (b) STIEFEL acknowledges and agrees that the appointment of a
sub-distributor hereunder shall not relieve STIEFEL of any of STIEFEL's
obligations hereunder. STIEFEL further agrees that it shall, at all times, be
solely responsible:

               (i) for the acts, deeds or omissions of any sub-distributor
appointed pursuant to this Section 2.5; and

               (ii) for the compensation or for the wages, salaries and
remunerations to any such sub-distributors or representatives, without any cost
or liability to DUSA;

          (c) Sales made by such sub-distributors shall be [C.I.] by STIEFEL to
DUSA and such sub-distribution arrangements shall not [C.I.] to DUSA in respect
of such sales (that is, the [C.I.] to DUSA in respect of such Product sales
shall be [C.I.] if STIEFEL had made the sale itself).

          (d) Each sub-distributor shall meet all obligations of STIEFEL
hereunder with respect to the activities undertaken by such sub-distributor in
the distribution, marketing and sale of the Product, including without
limitation adverse event reporting and use of trademarks.

<PAGE>

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.

3.   TRADEMARKS; PRODUCT MARKING.

     3.1 DUSA Trademarks.

          (a) Ownership of DUSA Trademarks. STIEFEL shall use the DUSA
Trademarks set forth on Schedule A for the Product and the Domain Names and
Websites to distribute, market, promote, sell, package and label such Product
during the Term in accordance with the Applicable Laws of the relevant
Regulatory Authority. STIEFEL acknowledges and agrees that DUSA shall own all
right, title and interest in and to each of the DUSA Trademarks and the Domain
Names and Websites. During the Term: (i) STIEFEL and its Affiliates shall not
[c.i.] of the DUSA Trademarks or the Domain Names and Websites, and agree that
no ownership rights are vested or created in any of the DUSA Trademarks or the
Domain Names and Websites by virtue of any licenses and other rights granted to
STIEFEL under this Agreement; and (ii) all use of the DUSA Trademarks or the
Domain Names and Websites in the Territory during the Term, whether in
combination with or apart from any Party's corporate name, including any
goodwill generated in connection therewith, inures to the benefit of DUSA, and
DUSA may call for a confirmatory assignment thereof.

          (b) Use of DUSA Trademarks. Each Party shall use Commercially
Reasonable Efforts during the Term not to do any act which endangers, destroys
or similarly affects, in any material respect, the value of the goodwill
pertaining to the DUSA Trademarks. Further, except when used in accordance with
any usage guidelines agreed to by DUSA or except when a use is otherwise
approved in accordance with other provisions of this Agreement, STIEFEL shall
submit to DUSA any materials bearing the DUSA Trademarks for review and approval
prior to the use thereof.

          (c) Costs. All costs of prosecuting and maintaining the DUSA
Trademarks shall be paid by [C.I.].

     3.2 Other Proprietary Trademarks.

          (a) Ownership of Corporate Names. Each Party shall retain all right,
title and interest in and to its corporate names, and agrees that it shall not
[C.I.] of such other Party's corporate names, or any registrations issued or
issuing with respect thereto. Each Party expressly acknowledges and agrees that
no ownership rights are vested or created by the limited rights of use granted
under this Agreement, and that all use of the corporate names in accordance
therewith, including any goodwill generated in connection therewith, inures to
the benefit of the respective owner of the corporate names and the owner of such
corporate names may call for a confirmatory assignment thereof.

          (b) Use of Corporate Names. With respect to any corporate names
licensed to a Party under or in connection with this Agreement, such Party
agrees to conform to the customary guidelines of the granting Party with respect
to manner of use (as provided in writing by the owner of the corporate name),
and to maintain the quality standards of such granting Party with respect to the
goods sold and services provided in connection with such Party's corporate
names. Each Party shall [C.I.] not to do any act which endangers, destroys or
similarly affects the

<PAGE>

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.

value of the goodwill pertaining to the other Party's corporate names. Further,
except when used in accordance with any usage guidelines provided by the owner
of a corporate name or a use is otherwise approved in accordance with other
provisions of this Agreement, each Party shall submit to the other Party any
materials bearing the other Party's corporate name for review and approval prior
to the use thereof and shall make no use of such corporate name of the other
Party without the other Party's written consent. Neither Party shall use, or
allow any of their Affiliates to use, in connection with the Product any other
trademark that is similar to or substantially similar to or so nearly resembles
the other Party's corporate names as to be likely to cause deception or
confusion.

          (c) Cooperation. Each Party shall execute any documents required in
the reasonable opinion of the other Party to be entered as a "registered user"
or recorded licensee of the other Party's corporate names, or to be removed as
registered user or licensee thereof.

     3.3 DUSA Trademarks Infringement.

          (a) Trademark Infringement Asserted by Third Parties in the Territory.
Each Party shall notify the other Party promptly upon learning of any actual or
alleged infringement of any trademark or of any unfair trade practices, trade
dress imitation, passing off of counterfeit goods, or like offenses, or any such
claims (hereinafter "TRADEMARK INFRINGEMENT CLAIMS") brought by a Third Party
against a Party in connection with the Product in the Territory.

               (i) Upon learning of such Trademark Infringement Claim, DUSA,
[C.I.], shall take reasonable and appropriate steps to resolve the Trademark
Infringement Claim with the reasonable cooperation and assistance of STIEFEL;
provided however DUSA [C.I.] such alleged infringement on behalf of STIEFEL
[C.I.] of STIEFEL, [C.I.].

               (ii) DUSA shall have the right to [C.I.].

          (b) DUSA Trademarks Infringement by Third Parties in the Territory.
Each Party shall notify the other Parties in writing promptly upon learning of
any actual or alleged infringement by a Third Party of any DUSA Trademarks in
the Territory of which they become aware.

               (i) Upon learning of such infringement under this Section 3.3(b),
DUSA shall, [C.I.], take reasonable and appropriate steps to resolve such
infringement with the reasonable cooperation and assistance of STIEFEL; provided
however DUSA [C.I.] such alleged infringement on behalf of STIEFEL [C.I.]
STIEFEL, [C.I.].

               (ii) DUSA shall have the right to [C.I.].

     3.4 Product Marking. Any Product marketed and sold hereunder shall be
marked with appropriate patent numbers and Trademarks, as approved by DUSA.

     3.5 Alternative Trademarks. If one or more the DUSA Trademarks cannot be
used or registered in any country within the Territory for reasons beyond DUSA's
control (e.g., due to objections by Third Parties or local trademark offices) or
cannot otherwise be legally used to
<PAGE>

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.

commercialize the Product in a country within the Territory (e.g., due to
rejection by regulatory authorities), and if the Parties have determined that an
alternative worldwide trademark is not practicable for the Product, then [C.I.]
shall have the right to propose one or more alternative trademarks. [C.I.] shall
then select one of the alternative trademarks for the Product in each country in
the Territory. [C.I.] will undertake the obligation and expense of conducting
appropriate trademark clearance of any such selected alternative trademark for
use in each such country in the Territory, and filing applications for the
cleared trademark. If (a) an alternative trademark is cleared successfully for
use and registration, (b) trademark applications are filed for the additional
alternative trademark, and (c) such additional alternative trademark receives
regulatory approval, then all terms and conditions of this Agreement shall
apply, mutatis mutandis, to the use and registration of such alternative
trademark approved [C.I.] and, thereafter the term "DUSA Trademarks" shall
include such alternative trademark.

4.   REGISTRATIONS.

     4.1 Approval and Maintenance.

          (a) DUSA shall, [C.I.], use Commercially Reasonable Efforts to prepare
the documents necessary for submission to the Regulatory Authorities in Brazil
to seek approval for the treatment of Actinic Keratoses. [C.I.] shall [C.I.] for
[C.I.] incurred on or after the Effective Date, including but not limited to,
[C.I.], and [C.I.] in connection with seeking Registration in Brazil. [C.I.]
shall be responsible for [C.I.] prior to the Effective Date, including but not
limited to, [C.I.], and [C.I.] in connection with seeking Registration in
Brazil.

          (b) STIEFEL shall, [C.I.], provide [C.I.] with reasonable assistance
and cooperation in [C.I.] preparing, filing, seeking and maintaining
Registration in Brazil, which shall include, but not be limited to, the naming
of a [C.I.] and developing and implementing documented standard operating
procedures required to support the Product Registration. If the Pricing Approval
is not obtained and STIEFEL wishes to terminate the Agreement, STIEFEL shall
continue to perform all necessary activities to maintain DUSA's regulatory
approval for the Product, [C.I.], until DUSA is able to [C.I.].

          (c) For other countries in the Territory and/or other indications in
the Field, STIEFEL shall, [C.I.], use [C.I.] to prepare the application for
Registration, on [C.I.] behalf, to seek approval to market. With regard to the
application for Registration for the treatment of Actinic Keratoses, DUSA will
provide STIEFEL with copies of existing clinical and chemistry, manufacturing
and controls data to support of this application. STIEFEL shall [C.I.] for
[C.I.], including but not limited to, [C.I.], and [C.I.] in connection with
seeking these approvals. STIEFEL shall, [C.I.], provide DUSA with reasonable
assistance with the development and implementation of mutual documented standard
operating procedures, such as, but not limited to, adverse event reporting,
storage and handling, etc., required to support the Registration in other
countries in the Territory.

          (d) For clarity, regulatory [C.I.] shall mean all [C.I.] and [C.I.]
(including [C.I.]) incurred by a Party or any of its Affiliates in accordance
with GAAP during the term and pursuant to this Agreement in connection with the
preparation of regulatory submissions for the

<PAGE>

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.

Product, the obtaining and maintenance of Registrations, and compliance with
Registrations and requirements of such Regulatory Authorities, including ICSR
recordation and reporting, regulatory affairs activities, and recalls and
withdrawals of the Product in the Territory. [C.I.] shall report to [C.I.]
within [C.I.] ([C.I.]) days after the end of each calendar [c.i.] with regard to
regulatory costs incurred during such calendar [C.I.]. Such report shall (i)
specify in reasonable detail all expenses incurred during such [C.I.], or (ii)
be accompanied by invoices or other appropriate supporting documentation for any
payments to Third Parties that individually exceed $[C.I.] or such [C.I.] as may
be determined by the Parties. The Parties shall seek to resolve any questions
related to such accounting statements within [C.I.] ([C.I.]) days following
receipt by STIEFEL of DUSA's report hereunder and payment shall be made within
[C.I.] ([C.I.]) days of such report.

     4.2 Adverse Event Reporting. STIEFEL shall notify DUSA, in writing, of any
adverse drug experience within [C.I.] ([C.I.]) hours of such adverse drug
experience becoming known to STIEFEL. As provided in Section 4.5, and except as
required by any Applicable Laws, DUSA shall have the sole discretion and
responsibility to determine whether any adverse drug experience must be reported
to the applicable Regulatory Authority, and following making a determination to
report, to report such events to the applicable Governmental Authority.

     4.3 Ownership of Product Registration. All Registrations and regulatory
filings for the Product in the Territory, including marketing and pricing
filings and authorizations, in connection with the Product, shall be filed,
registered and owned exclusively by DUSA, unless otherwise explicitly agreed in
writing by DUSA.

     4.4 Cooperation.

          (a) STIEFEL shall, [C.I.], provide DUSA with reasonable assistance and
timely cooperation in the preparation, filing, submission and maintenance of
Registrations, which shall include naming of a [C.I.] in Brazil, and in any
country in the Territory which requires it.

          (b) At DUSA's reasonable request, STIEFEL will assist DUSA, in
determining the optimal form of, and the necessary information to be included
in, such filings to meet the applicable requirements of the Regulatory Authority
in the Territory.

          (c) From time to time, each Party shall provide the other Party with a
status of its efforts in attempting to obtain Registration for the Product in
each country in the Territory.

     4.5 Communications; Regulatory Inspections and Notifications. At all times,
[C.I.] shall have [C.I.] with the applicable Regulatory Authorities regarding
the manufacture, marketing and sale of the Product. DUSA and STIEFEL each shall
notify the other within [C.I.] ([C.I.]) hours (or, if such [C.I.] ends on a
non-business day, then prior to noon on the next following business day) of
receipt of any notice of any governmental agency inspection, investigation or
other inquiry, or other material governmental notice or communication, in each
case which relates to the marketing, promotion, distribution and/or detailing of
the Product within the Territory during the term of this Agreement. [C.I.] shall
discuss any response to observations or

<PAGE>

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.

notifications received in connection with any such inspection, investigation or
other inquiry and each shall give the other an opportunity to comment upon any
proposed response before it is made. In the event of disagreement concerning the
form or content of such response, however, DUSA shall be responsible for
deciding the appropriate form and content of any response with respect to any of
its cited activities and STIEFEL shall be responsible for deciding the
appropriate form and content of any response with respect to any of its cited
activities. STIEFEL will provide DUSA with copies of all correspondence received
by it from, or filed by it with, any Regulatory Authority to the extent
pertaining to the Product or its marketing, promotion or detailing in the
Territory.

     4.6 Notwithstanding anything contained herein to the contrary, [C.I.] shall
have no obligation to perform, complete or undertake [C.I.] activities or [C.I.]
activities relating to the Product in furtherance of STIEFEL's rights under this
Agreement.

5.   ALLIANCE MANAGERS AND MEETINGS.

     5.1 Product Alliance Manager. Each Party will appoint an employee with
appropriate authority and experience to act as a liaison ("PRODUCT ALLIANCE
MANAGER") to communicate information concerning the Product and its marketing
and promotion by STIEFEL. The Product Alliance Manager shall be responsible for
calling meetings, preparing, and circulating an agenda in advance of meetings of
the Parties and preparing and issuing minutes of each meeting within [C.I.]
([C.I.]) days thereafter.

     5.2 Meetings. The Parties shall hold meetings at such times as it elects to
do so, but in no event shall such meetings be held less frequently than once
every [C.I.]. The first meeting of the Parties shall be held not more than
[C.I.] ([C.I.]) days after the Effective Date. Thereafter, the Parties shall
meet at such locations as the Parties may agree. Each Party shall be responsible
for [C.I.]. [C.I.] agrees to take into good faith consideration all comments
received [C.I.] in connection with STIEFEL's marketing and promotion of the
Products in the Field in the Territory, and in particular to [C.I.] to undertake
all such marketing and promotion in a manner consistent with and supportive of
DUSA's global marketing, promotion, development and commercialization of the
Product world-wide.

6.   LABELING.

     6.1 Labels.

          (a) Subject to Section 6.1(b), DUSA shall package and label each of
the Approved Products in accordance with the Specifications and in accordance
with the packaging and labeling agreed between the Parties; provided that the
Parties shall follow all legal requirements in effect throughout the Territory,
as applicable, and that the STIEFEL's or its designated Affiliate's name and
logo shall be prominently displayed on all Product packaging.

          (b) STIEFEL shall supply camera ready labeling and package insert
copy, and with the art work for such packaging and labeling, to DUSA
sufficiently in advance of any purchase order delivery timelines requested by
STIEFEL to allow DUSA to manufacture and

<PAGE>

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.

label the Product, including sufficiently in advance of launch. All such
labeling, copy and artwork provided by STIEFEL shall comply with applicable
specifications and regulatory requirements. The labeling for each Product will
indicate that DUSA is the manufacturer of such Product and that STIEFEL is the
distributor and/or agent for the Product.

          (c) DUSA shall be fully responsible for the form and content of all
Product labels and other aspects of Product packaging and labeling, except to
the extent of claims relating to label information and content supplied by
STIEFEL.

7.   MANUFACTURE AND SUPPLY OF THE PRODUCTS.

     7.1 General. DUSA shall manufacture, or cause a Third Party to manufacture
on its behalf [C.I.], the Product in accordance with the Specifications and
supply the Product to STIEFEL pursuant to forecasts and purchase orders placed
by STIEFEL in accordance with this Section 7.

     7.2 Minimum Purchase Obligations; Inventory.

          (a) STIEFEL shall purchase, no less than the Minimum Number of Units
of the Product at the Purchase Price Per Unit during the applicable Time Period
(as such terms are defined on Schedule B) (the "MINIMUM PURCHASE OBLIGATIONS");
provided however if DUSA exercises [C.I.] to Brazil during a [C.I.] with respect
to Brazil pursuant to Section 8.3(a) and such [C.I.] causes STIEFEL not to meet
its Minimum Purchase Obligations for a Time Period, then (i) the Minimum
Purchase Obligations shall be [C.I.] and [C.I.] on which DUSA exercises its
right to [C.I.] to Brazil during a [C.I.] with respect to Brazil pursuant to
Section 8.3(a), and (ii) [C.I.] on (x) appropriate pro-rata adjustments to the
Minimum Purchase Obligations which are to apply to Time Periods during which
supply to Brazil has been [C.I.] (including the present Time Period in
question), and (y) a plan for the Product in Brazil which may include amendments
to this Agreement as necessary and appropriate. Within [C.I.] ([C.I.]) days of
the end of each Time Period, the Parties shall review the purchases made by
STIEFEL for the immediately preceding Time Period. If it is determined from the
review that STIEFEL has not met its Minimum Purchase Obligations for such
preceding Time Period, STIEFEL shall immediately [C.I.] DUSA [C.I.] from STIEFEL
for purchases of the number of units meeting the Minimum Purchase Obligations
and [C.I.] by DUSA for the number of units of Product purchased during such
preceding Time Period [C.I.]. If STIEFEL fails to meet its Minimum Purchase
Requirement for [C.I.] consecutive Time Periods or STIEFEL [C.I.] with respect
to any Time Period, in addition to any other remedies available to DUSA
hereunder or under law or in equity, DUSA may, in its sole discretion either:
(i) [C.I.] of such Product in such country, provided that DUSA does not waive
its right to terminate the Agreement under Section 7.1(a)(ii) even if it [C.I.],
or (ii) [C.I.] the Agreement upon giving written notice thereof to STIEFEL. For
purposes of clarity, DUSA retains its [C.I.] Agreement pursuant to Section
7.1(a)(ii) at any time thereafter even if DUSA initially chooses to [C.I.] in
the Territory. STIEFEL shall [C.I.] within [C.I.] ([C.I.]) days of completion of
the review in United States dollars via wire transfer, check or other instrument
approved by DUSA.

<PAGE>

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.

          (b) Inventory. STIEFEL shall, [C.I.], maintain [C.I.] inventory of the
Product at all times during the term of this Agreement as necessary in order to
meet the marketing demand requirements of any customer or potential customer
within the Territory.

     7.3 Forecast and Purchase Orders. STIEFEL shall provide forecasts and
purchase orders to DUSA for Product as follows:

          (a) Within [C.I.] ([C.I.]) months of the Effective Date with respect
to Brazil, and within [C.I.] ([C.I.]) months prior to any other anticipated
Registration relating to the Product, STIEFEL shall provide DUSA with a forecast
of STIEFEL's quantity requirements for the applicable commercial launch of the
Product and the [C.I.] period following such launch. STIEFEL shall send to DUSA
a notice (the "LAUNCH NOTICE") with respect to such Product that shall contain
the following: (i) a statement of the estimated Launch Date of such Product;
and; (ii) a good faith forecast of the quantities that will in the future be
purchased by STIEFEL prior to the Launch Date.

          (b) At least [C.I.] ([C.I.]) days prior to any anticipated Launch Date
of the Product in the Territory, STIEFEL shall provide DUSA with a firm purchase
order for its requirements for commercial launch of the Product which shall be
for an amount of Product [C.I.] STIEFEL's first [C.I.] of forecasted sales.
Thereafter STIEFEL shall issue purchase orders for its requirements of Product
on the last day of each calendar [C.I.].

          (c) Each purchase order shall be accompanied by a rolling forecast of
STIEFEL's requirements of Product for the [C.I.] following the [C.I.] for which
the purchase order pertains, provided however that STIEFEL shall have no
obligation to make purchase order or forecasts for any time beyond the term of
this Agreement. If a required forecast for a [C.I.] is not timely submitted, the
last submitted [C.I.] forecast shall become the new forecast.

          (d) Each purchase order (including without limitation those provided
to DUSA prior to the commercial launch of the Product) shall be firm and
binding.

          (e) Each purchase order shall specify the delivery date for the
Product and the quantity of Product ordered. The delivery date shall be no
sooner than [C.I.] ([C.I.]) days following the date such purchase order is
issued. The quantity of Product specified shall not be less than [C.I.]% or more
than [C.I.]% of the most recent previous forecast for such quarter, unless
otherwise agreed to by DUSA in writing.

          (f) STIEFEL's forecasts and purchase orders shall reflect its good
faith expectations of customer demand and STIEFEL shall [C.I.] to schedule
orders to avoid creating production capacity problems for DUSA.

          (g) All Product shall be delivered by DUSA to STIEFEL FOB (as defined
in the Incoterms 2000) the manufacturing facility utilized by DUSA to the
destination specified in the applicable purchase order. STIEFEL shall [C.I.] to
the Territory, and [C.I.] in connection therewith. Title and risk of loss for
the Product shall transfer from DUSA to STIEFEL following delivery of the
Product to the common carrier at the manufacturing facility utilized by DUSA.

<PAGE>

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.

          (h) STIEFEL shall have [C.I.] except for [C.I.] as defined in Section
9.1(a).

8.   PRICE AND PAYMENT; SUSPENSION OF SUPPLY AND RENEGOTIATION.

     8.1 Payment for Purchase Orders. Subject to Section 7.3(a), STIEFEL shall
pay for the quantities of Product ordered at the applicable Purchase Price Per
Unit (as set forth on Schedule C hereto) within [C.I.] ([C.I.]) days of the date
of invoice submitted by DUSA, provided that DUSA shall not [C.I.] the Product
has been delivered to STIEFEL pursuant to Section 7.3(g). All payments shall be
made in [C.I.], by wire transfer, preferably [C.I.], of immediately available
funds [C.I.].

     8.2 Late Fee. All payments made after the date it is due and payable shall
accrue interest at the [C.I.] as set forth in the Wall Street Journal, plus
[C.I.] percent ([C.I.]%) per year or the maximum amount allowable by law.

     8.3 Suspension of Supply and Renegotiation. During a [C.I.] with respect to
a country in the Territory (as defined on Schedule C attached hereto):

          (a) DUSA may from time to time or during the [C.I.], in DUSA's sole
discretion and without being liable to STIEFEL in any manner or in breach of any
provision of this Agreement, [C.I.] to supply Product with respect to such
country to STIEFEL under this Agreement and/or any order for Product with
respect to such country placed by STIEFEL in connection with this Agreement;

          (b) DUSA may from time to time or during the [C.I.], in DUSA's sole
discretion, [C.I.] Product with respect to such country to STIEFEL under this
Agreement under any order for Product placed by STIEFEL in connection with this
Agreement, including any such order with respect to which STIEFEL agrees to pay
DUSA; and

          (c) DUSA may (if not already included with the initial notice given by
DUSA pursuant to and as permitted under Schedule C hereto) give further notice
to STIEFEL requesting that the Parties [C.I.] of this Agreement with respect to
such country.

     8.4 Diversion of Product; Currency of Orders. As part of placing each order
for the Product, STIEFEL shall indicate in writing the country in the Territory
where such ordered Product is intended to be sold. Product purchased as being
indicated for sale in a given country shall not be sold in any other country.
Orders shall be placed in U.S. Dollars, adjusted at the then applicable local
currency / U.S. Dollar exchange rate for the currency of the country where
Product is intended to be sold.

9.   QUALITY CONTROL AND PRODUCT ACCEPTANCE.

     9.1 Quality Control.

          (a) DUSA shall ensure that all Products supplied to STIEFEL under the
terms of this Agreement will meet Specifications.

<PAGE>

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.

          (b) DUSA shall conduct all quality control testing of the Product
prior to shipment in accordance with the Specifications and requirements of the
applicable Regulatory Authority.

          (c) DUSA shall retain records and samples of Product relating to such
testings as required by applicable Regulatory Authorities and, from time to
time, upon prior notice from STIEFEL, provide STIEFEL with reasonable access to
such records in accordance with Section 17 below.

     9.2 Delivery Documents. DUSA shall ensure that each Batch of Product is
labeled and each Batch number is applied to each such Batch, as required by the
applicable Regulatory Authority. DUSA will ensure that a copy of the Certificate
of Conformance with respect to each Batch of Product supplied to STIEFEL is (a)
faxed to STIEFEL prior to shipping such Batch to STIEFEL (confirmed by hard copy
mailed to STIEFEL) and (b) accompanies each Batch. DUSA shall not ship any Batch
to STIEFEL if such Batch does not meet Specifications.

     9.3 Storage.

          (a) DUSA shall provide and maintain suitable storage and transport
conditions for each Batch of Product and shall provide STIEFEL with complete
written instructions with respect to proper conditions for the transport and
storage of Product.

          (b) Upon receipt of any Batch of Product, STIEFEL shall provide and
maintain suitable storage conditions therefor and shall comply with any product
labeling and written instructions provided by DUSA in respect of the transport
and storage of Product.

     9.4 Acceptance and Rejection of Product.

          (a) All shipments of Product received by STIEFEL shall be deemed
accepted unless STIEFEL gives DUSA a written notice (the "OBJECTION NOTICE")
within [C.I.] ([C.I.]) days of such receipt specifying the manner in which the
Batch of Product does not conform to Specifications.

          (b) The Objection Notice shall be accompanied by written reports of
any testing performed by or for STIEFEL on such Batch. Upon receipt of the
Objection Notice, DUSA may request STIEFEL to [C.I.] thereof for further
testing. The test results, if any, submitted to DUSA by STIEFEL shall be deemed
conclusive unless DUSA notifies STIEFEL within [C.I.] ([C.I.]) days of its
receipt of the Objection Notice or the samples, whichever is later, that it
disagrees with such test results.

          (c) Should DUSA wish to verify STIEFEL's conclusion in an Objection
Notice, DUSA shall submit the rejected Product or samples to an independent
laboratory (the "INDEPENDENT LABORATORY") for analysis and the Independent
Laboratory shall submit its findings in the form of a written report (the
"REPORT"), the [C.I.] by [C.I.]; provided, however, if the results of the Report
determine that any of the Product rejected by STIEFEL does not meet the
applicable Specifications, [C.I.] for all such [C.I.].

<PAGE>

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.

          (d) DUSA shall [C.I.] to [C.I.] Product that does not meet the
applicable Specifications with conforming goods as soon as reasonably possible,
provided that the departure from Specifications is not the direct result of the
[C.I.] of STIEFEL. In the event that [C.I.] Product is required, it shall be
[C.I.] unless otherwise agreed to in writing by STIEFEL.

     9.5 Limitation of Product Warranty. At no time shall STIEFEL make any
representation or extend the warranty regarding any Product which is not first
approved by DUSA in writing. All representations and warranties made by STIEFEL
regarding the Product must be strictly limited to the representations and
warranties made by the manufacturer of the Product at the time such Product is
made.

10.  RECORDS.

     10.1 Record Retention.

          (a) The Parties shall maintain all necessary and appropriate records
and documents relating to the sale of the Product. The retention period for
records for both Parties shall be: (i) the time period meeting all known
regulations of the applicable Regulatory Authorities with respect to such
Product; and (ii) [C.I.] ([C.I.]) years from the date of sale, whichever is
longer.

          (b) The parties shall use commercially reasonable efforts to ascertain
the retention requirements of the applicable Regulatory Authorities and will
keep the other Party informed of any changes that it becomes aware of that may
reasonably affect such other Party's obligations under this Section 10.1.

11.  INTELLECTUAL PROPERTY RIGHTS.

     11.1 Technical Information. STIEFEL acknowledges and agrees that DUSA is
the owner of the Technical Information, and of all industrial and intellectual
property rights of any kind in relation to the Technical Information, including
the right to patents, registered or other designs, copyrights, trademarks or
trade names and any other Confidential Information. Nothing contained in this
Agreement shall be effective to give STIEFEL any rights of ownership in and to
the Technical Information or to the intellectual property owned by DUSA.

     11.2 Improvements. Any improvements to the Technical Information made or
discovered by DUSA during the term of this Agreement shall remain the property
of DUSA and all industrial and intellectual property rights of any kind in
relation to such improvements, including the right to patents, registered or
other designs, copyrights, trademarks or trade names and any other Confidential
Information, shall remain the property of DUSA.

     11.3 Confidential Information. Within the term of this Agreement and after
its termination or expiration, it is agreed upon between the parties that the
Technical Information

<PAGE>

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.

and all industrial and intellectual property rights of any kind in connection
with or related to the Technical Information shall be considered as Confidential
Information and shall be treated and protected by STIEFEL in accordance with the
terms of Section 16.

12.  RELATIONSHIP OF DUSA AND STIEFEL.

     12.1 Independent Relationship. The relationship between DUSA and STIEFEL
that is created by this Agreement shall be that of vendor and purchaser, and not
that of a partnership, principal and agent, or joint or co-ventures. In the
performance of this Agreement, STIEFEL shall have no authority to assume or
create any obligation or responsibility, either expressed or implied, on behalf
of or in the name of DUSA, or to bind DUSA or its Affiliates in any manner
whatsoever and DUSA shall have no authority to assume or create any obligation
or responsibility, either express or implied, on behalf of or in the name of
STIEFEL or to bind STIEFEL or its Affiliates in any manner whatsoever. Each
Party shall indemnify the other Party for any claim asserted by any Third Party
that the acts of such Party or any of its Affiliates created any obligation or
responsibility of the other Party other than as expressly set forth in this
Section.

     12.2 Use of Names. If this Agreement is terminated for any reason, neither
Party shall thereafter use, or permit anyone else under its control to use, the
other's name in the promotion of its business or the offer for sale of any goods
and neither Party shall package or label any goods in a manner that the other
Party hereto might reasonably consider to be imitative of any goods sold by such
Party.

13.  REPRESENTATIONS AND WARRANTIES.

     13.1 By STIEFEL. STIEFEL hereby represents and warrants to DUSA that:

          (a) it has the corporate authority to enter into this Agreement and to
perform its obligations hereunder;

          (b) it is not aware of any legal, contractual or other restriction,
limitation or condition which might affect adversely its ability to perform
hereunder; and

          (c) it shall at all times sell, market, handle and store the Product
in compliance with all Applicable Laws.

     13.2 By DUSA. DUSA hereby represents and warrants to STIEFEL that:

          (a) it has the corporate authority to enter into this Agreement and to
perform its obligations hereunder;

          (b) it is not aware of any legal contractual or other restriction,
limitation or condition which might affect adversely its ability to perform
hereunder;

          (c) all Product shipped to STIEFEL pursuant to this Agreement (i)
shall be manufactured, packaged and labeled in conformance with the applicable
Specifications for such

<PAGE>

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.

Product at the time of shipment; (ii) shall be manufactured, packaged and
labeled at the manufacturing facilities utilized by DUSA which meets the
requirements of the applicable Regulatory Authority where the Product is
manufactured and sold, including, without limitation, conformance with GMP,
(iii) shall be stored and handled by DUSA at all times in the proper manner and
suitable conditions for such Product.

     13.3 Debarment. Each Party hereby represents, warrants and covenants to the
other that:

          (a) It is not debarred under the Generic Drug Enforcement Act of 1992
and it does not and will not use in any capacity the services of any person
debarred under the Generic Drug Enforcement Act of 1992; and

          (b) To the best of its knowledge, none of its employees, agents or
contractors, has engaged in any activity which could lead to it becoming
debarred under the Generic Drug Enforcement Act of 1992.

     13.4 Disclaimer. EXCEPT AS EXPRESSLY SET FORTH IN THIS SECTION 13, NEITHER
PARTY MAKES ANY REPRESENTATIONS OR EXTENDS ANY WARRANTIES OF ANY KIND, EITHER
EXPRESS OR IMPLIED, AND EACH PARTY EXPRESSLY DISCLAIMS ALL IMPLIED WARRANTIES OF
MERCHANTABILITY AND OF FITNESS FOR A PARTICULAR PURPOSE OR USE.

14.  INDEMNIFICATION.

     14.1 By STIEFEL. STIEFEL agrees to indemnify DUSA against and hold DUSA
harmless from, any and all [C.I.] loss (except [C.I.], such as, for example,
[C.I.]), [C.I.], [C.I.], [C.I.], [C.I.] and [C.I.] (including, without
limitation, [C.I.] and liabilities for [C.I.]) ("THIRD PARTY LOSS") arising from
or in connection with any:

          (a) breach of the warranties by STIEFEL hereunder;

          (b) other misrepresentation or breach of this Agreement by STIEFEL or
the [C.I.] of STIEFEL in connection with its contract obligations hereunder

          (c) claim (expressed or implied) by STIEFEL, its Affiliates or its
sub-distributors, (except to the extent that such claim has been approved by the
Regulatory Authority or authorized by DUSA) as to the efficacy or safety of the
Product or the use to be made by any purchaser of the Product; provided that
DUSA shall indemnify and hold STIEFEL and STIEFEL's Affiliates harmless from any
and all [C.I.] resulting from [C.I.], if STIEFEL and its Affiliates have handled
and stored such Product in accordance with its labelling; or

          (d) any [C.I.] of STIEFEL, its Affiliates or sub-distributors in
connection with the sale and distribution of the Product.

     14.2 By DUSA. DUSA hereby agrees to indemnify and hold STIEFEL and
STIEFEL's Affiliates harmless from any and all [C.I.] arising from or in
connection with any:
<PAGE>

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.

          (a) breach of the warranties by DUSA hereunder;

          (b) other misrepresentation or breach of this Agreement by DUSA or any
[C.I.] of DUSA in connection with its contract obligations hereunder;

          (c) claim (expressed or implied) by DUSA or its Affiliates (except to
the extent that such claim has been approved by the Regulatory Authority or
authorized by STIEFEL) as to the efficacy or safety of the Product or the use to
be made by any purchaser of the Product; provided that STIEFEL shall indemnify
DUSA against and hold DUSA harmless from, any and all [C.I.] arising from
STIEFEL's or its Affiliates' [C.I.] such Product in accordance with its
labeling, if the Product meets all Specifications;

          (d) any [C.I.] of DUSA in connection with the manufacture, packaging,
labeling and sale of Product to STIEFEL or its Affiliates.

     14.3 Procedure for Indemnification.

          (a) If STIEFEL or any of its Affiliates or DUSA or any of its
Affiliates (in each case an "INDEMNIFIED PARTY") receives any written claim
which it believes is the subject of indemnity hereunder by DUSA or STIEFEL, as
the case may be, (in each case as "INDEMNIFYING PARTY"), the Indemnified Party
shall, as soon as reasonably practicable after forming such belief, give notice
thereof to the Indemnifying Party, including full particulars of such claim to
the extent known to the Indemnified Party; provided, that the failure to give
timely notice to the Indemnifying Party as contemplated hereby shall not release
the Indemnifying Party from any liability to the Indemnified Party. The
Indemnifying Party shall have the right, by prompt notice to the Indemnified
Party, to assume the defense of such claim with counsel reasonably satisfactory
to the Indemnified Party, and at the cost of the Indemnifying Party. If the
Indemnifying Party does not so assume the defense of such claim or, having done
so, does not diligently pursue such defense, the Indemnified Party may assume
such defense, with counsel of its choice, but for the account of the
Indemnifying Party. If the Indemnifying Party so assumes such defense, the
Indemnified Party may participate therein through counsel of its choice, but the
cost of such counsel shall be for the account of the Indemnified Party.

          (b) The Party not assuming the defense of any such claim shall render
all reasonable assistance to the Party assuming such defense, and all
out-of-pocket costs of such assistance shall be for the account of the
Indemnifying Party.

          (c) No such claims shall be settled other than by the Party defending
the same, and then only with the consent of the other Party, which shall not be
unreasonably withheld; provided, that the Indemnified Party shall have no
obligation to consent to any settlement of any such claim which imposes on the
Indemnified Party any liability or obligation which cannot be assumed and
performed in full by the Indemnifying Party.

15.  COMPLIANCE WITH LAW.

     15.1 Compliance with Law.

<PAGE>

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.

          (a) It shall be the responsibility of STIEFEL and DUSA, respectively,
to follow all procedures and take all actions which are necessary or required
for agreements of this type by the laws, treaties or regulations applicable in
the country in which it is, respectively, manufacturing, selling or marketing
the Product, in order to effect the intents and purposes of selling Product in
the Territory under this Agreement.

          (b) It is further agreed that neither Party shall be obligated to
carry out or to perform any terms of this Agreement if such term shall
constitute a violation of any treaty, law, code or regulation of any
governmental authority whether local, national or international. To the extent
severable, the other terms of this Agreement that do not violate any treaty,
law, code or regulation of any governmental authority whether local, national or
international shall continue in full force and effect and the Parties shall use
all reasonable efforts to re-negotiate and amend this Agreement so that the
performance of this Agreement as so amended will not involve any such violation.

16.  CONFIDENTIALITY; PUBLIC ANNOUNCEMENTS.

     16.1 Non-Disclosure of Confidential Information. Each of the Parties agrees
that it will not disclose any Confidential Information of the other Party that
it may acquire at any time during the term of this Agreement without the prior
written consent of such Party and that it shall use all reasonable efforts to
prevent unauthorized publication or disclosure by any person of such
Confidential Information including requiring its employees, consultants or
agents to enter into similar confidentiality agreements in relation to such
Confidential Information.

     16.2 Term for Maintaining Confidential Information. The obligations
undertaken by each Party under this Section 16 shall continue in force for a
period of [C.I.] ([C.I.]) years following the termination or expiration of this
Agreement.

     16.3 Exception to Confidential Information. The obligations contained in
this Section 16 do not apply to any information:

          (a) which was at the time of receipt by a Party in the public domain
or generally known in the pharmaceutical manufacturing industry otherwise than
by breach of a Party's duty of confidentiality;

          (b) which a Party can establish to have been known to it at the time
of receipt from the other Party and not to have been acquired directly or
indirectly from the other Party;

          (c) acquired by a Party from a Third Party otherwise than in breach of
an obligation of confidence to the other Party;

          (d) required by law to be provided to governmental agencies but only
for the purpose of providing it to such governmental agencies; and

It is understood and agreed that each Party may disclose Confidential
Information to those of its Affiliates that have a need to know such
Confidential Information in order to perform the

<PAGE>

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.

obligations under this Agreement, and such Affiliates shall keep such
information confidential to the same extent as required of a Party under this
Agreement. Further each Party shall be fully responsible for its Affiliates'
compliance with the confidentiality obligations hereunder.

     16.4 Public Announcements. Except as required by law (including, without
limitation, disclosure requirements of the United States Securities and Exchange
Commission, the NASDAQ Stock Market or any other stock exchange on which
securities issued by a Party or a Party's Affiliates are traded) neither Party
shall make any public announcement concerning this Agreement or the subject
matter hereof without the prior written consent of the other, which shall not be
unreasonably withheld, provided that it shall not be unreasonable for a Party to
withhold consent with respect to any public announcement containing any of such
Party's Confidential Information. In the event a public announcement is required
by law, to the extent practicable under the circumstances, the Party making such
announcement shall provide the other Party with a copy of the proposed text not
less than [C.I.] ([C.I.]) business days prior to such announcement to afford
such other Party a reasonable opportunity to review and comment upon the
proposed text.

17.  AUDITS.

     17.1 Regulatory Audit. Each Party shall have the right to audit the other
Party's, and DUSA shall have the right to audit the STIEFEL's sub-distributors',
facilities and records which directly relate to the Products in order to
determine such other Party's compliance with Applicable Law and the terms of
this Agreement. Such audit right shall include the right to access and review
such records as well as the right to send reasonable numbers of representatives
and agents to examine such facilities, provided all such representatives and
agents execute and deliver to such other Party or sub-distributors, as
applicable, confidentiality non-disclosure non-use agreements acceptable to such
other Party or sub-distributors, as applicable, and all such examination of such
facilities are conducted during normal business hours and with the minimum of
disruption to ongoing operations. Except where any such audit is required to be
undertaken by Applicable Law or in connection with the auditing Party's
compliance therewith, such audits shall not take place more frequently than
[C.I.] and the auditing Party shall give at least [C.I.] ([C.I.]) business days
advance notice of the audit. In any case, any audit shall be conducted at such
facilities and [C.I.], as applicable, shall [C.I.] incur in connection with the
audit. Each Party, the sub-distributors, as applicable, and their respective
affiliates shall permit and cooperate with Regulatory audits required to
maintain Product Registrations in compliance with applicable laws and
regulations within the Territory.

     17.2 In the event of an audit by any Regulatory Authority, DUSA and STIEFEL
each shall supply the other with a copy of any report received from such
Regulatory Authority that pertains to the Product and its sale in the Territory
and shall use its [C.I.] efforts to provide such Regulatory Authority with a
prompt, accurate and complete response to any deficiencies noted during the
audit. Both Parties agree to use their [C.I.] efforts to promptly address, and
if necessary correct, any and all such deficiencies to the satisfaction of such
Regulatory Authority.

<PAGE>

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.

18.  TERM AND TERMINATION.

     18.1 Term. This Agreement shall be for an initial term commencing as of the
date of this Agreement and continuing until the tenth (10th) anniversary of the
Effective Date (the "TERM"). STIEFEL shall have the option to extend the term of
the Agreement for an additional [C.I.] ([C.I.]) year term upon the Parties
reaching agreement in writing on the terms and conditions of such extension;
provided that any such agreement shall incorporate the Minimum (annual) Purchase
Requirements set forth on Schedule B.

     18.2 Early Termination. This Agreement may be terminated in its entirety:

          (a) by notice in writing by either Party if the other Party shall
default in the performance of any of its obligations under this Agreement and
such default shall continue for a period of not less than [C.I.] ([C.I.]) days
after written notice specifying such default shall have been given; provided,
however, that if such default is not capable of being cured within such [C.I.]
([C.I.]) day period but the Party in default initiates and [C.I.] continues
[C.I.] efforts to cure such default, such [C.I.] ([C.I.]) day period shall be
extended to [C.I.] ([C.I.]) days; or

          (b) by either Party if the other Party makes an arrangement with its
creditors or files bankruptcy, receivership or liquidation, or if a receiver or
a receiver and manager is appointed in respect of the whole or a major part of
the property or business of the Party in default; or

          (c) subject to Section 24.1, by either Party in [C.I.] of its voting
securities or if [C.I.] of the other Party are disposed of or acquired by
another person; or

          (d) by DUSA as set forth in Section 7.1(a)(ii) or Section 2.4(c); or

          (e) by STIEFEL as set forth in Section 2.4(b); or

          (f) by STIEFEL if [C.I.] during any calendar year are [C.I.] for that
year; provided DUSA may, [C.I.], during regular business hours, upon giving
reasonable prior written notice to STIEFEL audit or to have an independent
professionally qualified auditor audit STIEFEL's records relative to sales of
the Product in the Territory by STIEFEL and any sub-distributors solely in order
to verify the number of units of Product sold to Third Parties; and provided
further that nothing in this Agreement shall be deemed to obligate STIEFEL to
discount Products below their approved prices; or

          (g) by DUSA if the average of the Purchase Price Per Unit, as
expressed in U.S. Dollars using the then average daily applicable local currency
/ U.S. Dollar exchange rate on the date of each sale, for all sales to the
Territory in any [C.I.] during the Term (the "Average Price") is [C.I.] U.S.
Dollars (U.S.$[C.I.]), unless STIEFEL shall pay DUSA the difference between such
Average Price and [C.I.] U.S. Dollars (U.S.$[C.I.]) for each unit sold during
such [C.I.] within [C.I.] ([C.I.]) business days of DUSA giving STIEFEL notice
under this Section 18.2(g).

     18.3 Effects of Termination.

<PAGE>

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.

          (a) [C.I.] ([C.I.]) days after notice of termination has been given as
herein provided, the right of STIEFEL to place orders for the Product with DUSA
shall cease.

          (b) [C.I.], STIEFEL shall have the obligation to accept any Product in
transit or subject to an accepted purchase order at the time of giving of
written notice of termination.

          (c) DUSA shall not be responsible for [C.I.] Product after the
termination or expiration of this Agreement, provided, that STIEFEL, may [C.I.]
the Product for [C.I.] ([C.I.]) months following the termination of this
Agreement.

          (d) Termination or expiration of this Agreement for any reason shall
be without prejudice to any rights that shall have accrued to the benefit of a
Party prior to such termination or expiration. Such termination or expiration
shall not relieve a Party from obligations that are expressly indicated to
survive the termination or expiration of this Agreement.

          (e) All of the Parties' rights and obligations under Sections 2.3,
2.5(b) through (c) (inclusive), 3, 4.1(b), 4.2, 4.3, 4.5, 4.6, 8, and 10 through
29 (inclusive) shall survive termination, relinquishment or expiration of this
Agreement.

19.  FORCE MAJEURE.

     Neither Party shall be liable or be in breach of any provision of this
Agreement for any failure or delay on its part to perform any obligation where
such failure or delay has been occasioned by any act of God, war, riot, fire,
explosion, flood, sabotage, unavailability of fuel, labor, containers or
transportation facilities, accidents of navigation or breakdown or damage of
vessels or other conveyances for air land or sea, other impediments or
hindrances to transportation, government intervention (other than that of
duly-authorized Regulatory Authority), strikes or other labor disturbances or
any other cause beyond the control of the parties.

20.  INSURANCE.

     DUSA and STIEFEL each shall maintain adequate product liability insurance
[C.I.] to cover product liability claims against it, respectively, as
manufacturer of the Product and distributor of the Product.

21.  NOTICES.

     Notices provided under this Agreement to be given or served by either Party
on the other shall be given in writing and served personally or by prepaid
registered airmail post or by express mail or by means of facsimile to the
following respective addresses or to such other addresses as the Parties may
hereafter advise each other in writing. It being agreed and understood by the
Parties that any such notice shall be deemed given and served the day
transmitted by facsimile or a date three (3) days after the date of express mail
or mail by courier.

<PAGE>

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.

     If to DUSA, to:    DUSA Pharmaceuticals, Inc.
                        25 Upton Drive
                        Wilmington, MA 01887
                        Attn: Bob Doman
                        P: 978-909-2216
                        F: 978-909-1016

     With a copy to:    Nanette Mantell, Esq.
                        Reed Smith LLP
                        Princeton Forrestal Village
                        136 Main Street - Suite 250
                        Princeton, NJ 08543
                        P: 609-514-8542
                        F: 609-951-0824

     If to STIEFEL, to: Stiefel Laboratories, Inc.
                        255 Alhambra Circle, Suite 1000
                        Coral Gables, Florida, USA 33134
                        Attn: Vice President - Area 2
                        P: 305-443-3800
                        F: 305-443-3467

                        And Attn: General Counsel
                        P: 305-443-3800
                        F: 305-443-3467

22.  EXECUTION OF ALL NECESSARY ADDITIONAL DOCUMENTS.

     Each Party agrees that it will forthwith upon the request of the other
Party execute and deliver all such instruments and agreements and will take all
such other actions as the other Party may reasonably request from time to time
in order to effectuate the provision and purposes of this Agreement.

23.  WAIVER.

     The failure of either of the Parties to insist upon a strict performance of
any other terms and provisions therein shall not be deemed a waiver of any
subsequent breach of default in the terms or provisions of this Agreement.

24.  ASSIGNMENT AND AMENDMENT.

     24.1 Non-assignability by STIEFEL and Binding Effect. A mutually agreed
consideration for DUSA's entering into this Agreement is the reputation,
business standing, and

<PAGE>

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.

goodwill already honored and enjoyed by STIEFEL under STIEFEL's present
ownership, and, accordingly, STIEFEL agrees that STIEFEL's rights and
obligations under this Agreement may not be transferred or assigned directly or
indirectly without the prior written consent of DUSA. DUSA may freely assign and
otherwise transfer this Agreement, or any right or obligation of DUSA hereunder,
without obtaining the written consent of STIEFEL. Any attempted assignment not
in accordance with this Section 24.1 shall be void. Subject to the foregoing in
this Section 24.1, this Agreement shall be binding upon and inure to the benefit
of the Parties hereto and their successors and assigns.

     24.2 Amendment. No amendment hereof shall be binding unless made in writing
and signed by the parties hereto.

25.  ENTIRE AGREEMENT.

     This Agreement incorporates the entire understanding of the parties and
revokes and supersedes any and all agreements, contracts, understandings or
arrangements that might have existed heretofore between the parties regarding
the subject matter hereof.

26.  GOVERNING LAW; LANGUAGE.

     26.1 Governing Law and Venue. This Agreement shall be construed in
accordance with and governed by the internal laws of the [C.I.] without regard
to conflict of laws principles. Any litigation arising from disputes regarding
the subject matter of the Agreement shall be brought in United States federal
court in the federal judicial district encompassing [C.I.]. The Parties will
consent to venue and jurisdiction in such federal courts.

     26.2 Language. The parties hereto agree that this Agreement shall be in the
English language.

27.  SEVERABILITY.

     If any term or provision of this Agreement shall be held invalid or
unenforceable, the remaining terms hereof shall not be affected, but shall be
valid and enforced to the fullest extent permitted by law.

28.  HEADINGS.

     The headings used in this Agreement are intended for guidance only and
shall not be considered part of this written understanding between the parties
hereto.

29.  INTERPRETATIVE RULES.

     For the purpose of this Agreement, except as otherwise expressly provided
herein or unless the context otherwise requires: (a) defined terms include the
plural as well as the singular and the use of any gender shall be deemed to
include the other gender; (b) references to Articles, Sections and other
subdivisions and to Schedules and Exhibits without reference to a document,

<PAGE>

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.

are to designated Articles, Sections and other subdivisions of and to Schedules
and Exhibits to this Agreement; (c) the use of the term "including" means
"including but not limited to"; and (d) the words "herein", "hereof",
"hereunder" and other words of similar import refer to this Agreement in whole
and not to any particular provision.

                                      * * *

<PAGE>

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.

     IN WITNESS WHEREOF, this Agreement has been executed by the Parties on the
date first above written.

                                        DUSA PHARMACEUTICALS, INC.

                                        By: /s/ Robert F. Doman
                                            ------------------------------------
                                            Robert F. Doman
                                            President, Chief Operating Officer

                                        STIEFEL LABORATORIES, INC.

                                        By: /s/ Bresly F. Jaramillo
                                            ------------------------------------
                                            Bresly F. Jaramillo
                                            Vice President Latin America

<PAGE>

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.

                                   SCHEDULE A

                                   THE PRODUCT

LEVULAN(R) KERASTICK(R):

DUSA Trademarks: Levulan(R) Kerastick(R)

                 DUSA(R)

                 DUSA Pharmaceuticals, Inc.(R)

Dosage Strength / Administration: 20% topical solution

Competing Products: Any and all products [C.I.] the use of [C.I.] or [C.I.] any
of the foregoing or [C.I.].

<PAGE>

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.

                                   SCHEDULE B

                          MINIMUM PURCHASE OBLIGATIONS

The Minimum Purchase Obligations for Levulan(R) Kerastick(R) shall be as
follows:

<TABLE>
<CAPTION>
                                                                          MINIMUM NUMBER
                              TIME PERIOD                                    OF UNITS
                              -----------                                 --------------
<S>                                                                       <C>
First Time Period    beginning on the earlier of (a) the [C.I.], or (b)   [C.I.] units
                     [C.I.], and in each case continuing for [C.I.]
                     thereafter

Second Time Period   subsequent [C.I.] period following the end of the    [C.I.] units
                     First Time Period

Third Time Period    subsequent [C.I.] period following the end of the    [C.I.] units
                     Second Time Period

Fourth Time Period   subsequent [C.I.] period following the end of the    [C.I.] units
                     Third Time Period

Fifth Time Period    subsequent [C.I.] period following the end of the    [C.I.] units
                     Fourth Time Period

Other subsequent time periods                                             see below
</TABLE>

For the remainder of the Term following the end of the Fifth Time Period, the
Minimum Purchase Obligations for Levulan(R) Kerastick(R) shall be determined by
[C.I.] no later than [C.I.] ([C.I.]) months prior to the end of the Fifth Time
Period.

<PAGE>

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.

                                   SCHEDULE C

                        SUPPLY PRICE AND [C.I.] OF SUPPLY

ALL COUNTRIES IN THE TERRITORY

     "PURCHASE PRICE PER UNIT", with respect to units of the Product that are
purchased for sale in a country in the Territory, shall mean [C.I.] Percent
([C.I.]%) of the final selling price to Third Parties in the applicable local
currency which has been established by STIEFEL [C.I.] by STIEFEL on units of the
Product sold.

     In the event at any time the Purchase Price Per Unit for sales to a country
in the Territory in a given calendar quarter, as expressed in U.S. Dollars using
the then current average daily applicable local currency / U.S. Dollar exchange
rate, is [C.I.] U.S. Dollars (U.S.$[C.I.]) (the "Event"), then STIEFEL shall (a)
[C.I.] in the applicable local currency [C.I.] of such Purchase Price Per Unit
[C.I.] U.S. Dollars (U.S.$[C.I.]) or (b) otherwise pay to DUSA the [C.I.] price;
provided that upon [C.I.] ([C.I.]) days prior written notice from STIEFEL given
after such the Event, STIEFEL [C.I.]; provided further that upon giving such
notice to DUSA, [C.I.] beginning [C.I.] and continuing until the [C.I.] U.S.
Dollars (U.S.$[C.I.]) for a period of not less than [C.I.] ([C.I.]) weeks.

<PAGE>

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.

                                   SCHEDULE D

                    FORM(S) OF REPORTS AND TIMING OF REPORTS

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