EXHIBIT 10(p.1)
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.
AMENDMENT TO PURCHASE AND SUPPLY AGREEMENT
This Amendment to Purchase and Supply Agreement (the "Amendment"), effective as
of February 15, 2001, is made by and between DUSA Pharmaceuticals, Inc., a New
Jersey corporation, having offices at 25 Upton Drive, Wilmington, Massachusetts
01887 ("DUSA") and North Safety Products, Inc., a Delaware corporation and unit
of Norcross Safety Products L.L.C., having offices at 2000 Plainfield Pike,
Cranston, Rhode Island 02921 ("NSP").
Whereas, DUSA and NSP are parties to a Purchase and Supply Agreement effective
as of September 13, 1999 (the "Agreement");
Whereas, DUSA confirms that it will not order at least [c.i.] Kerastick(R) units
for delivery during the period from the first anniversary to the second
anniversary of this Agreement, and that as a result the parties intend to
negotiate a new agreement prior to the second anniversary of the Agreement,
i.e., September 13, 2001; and
Whereas, the parties wish to amend the Agreement upon the terms and conditions
set forth in this Amendment for good and valuable consideration which is hereby
acknowledged;
Now, Therefore, in consideration of the covenants, conditions, and undertakings
hereinafter set forth, the parties mutually agree as follows:
1. The recitals above are incorporated into this Agreement.
2. Amend Article II Supply by adding the following:
2.4.3 Under-Utilization Fee.
(a) The parties recognize that orders for DUSA's Kerastick(R)
have not been at unit levels as originally anticipated by the parties.
DUSA agrees, therefore, to compensate NSP in the form of an
under-utilization fee, for direct labor and overhead costs directly
related to the manufacture of the Kerastick(R). The parties agree that
NSP has substantiated such direct labor and overhead costs to DUSA's
satisfaction supporting the [c.i.] maximum monthly charge described
below. On a quarterly basis commencing September 30, 2001, NSP shall
submit to DUSA documentation in the same form previously submitted
demonstrating the then current direct labor costs related to
manufacture of the Kerastick(R). Any changes in direct labor costs as
compared to those utilized in calculation of the then applicable
current maximum monthly under-utilization charge shall result in a
change for the subsequent quarter to the then applicable maximum
monthly charge, calculated utilizing the same methodology utilized in
calculating the [c.i.] maximum charge. No further information shall be
required and no changes shall be made with regard to overhead related
to the manufacture of the Kerastick(R). For the period November 1, 2000
to December 31, 2000, the parties have agreed and DUSA has paid an
under-utilization fee of Eighty Five Thousand Fifty-Three Dollars
($85,053.00).
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) If, based upon firm orders placed by DUSA under Section
2.4.1 above, during the calendar year 2001, NSP manufactures less than
[c.i.] units of Kerastick(R), or equivalent labor associated with DUSA
activities performed by NSP (e.g., DUSA requested rework of units or
clinical supplies) on a per month basis, (or [c.i.] units for the year)
then DUSA shall pay to NSP an under-utilization fee up to [c.i.] per
month (subject to change as specified in paragraph (a) above), payable
on a monthly basis within thirty (30) days of the date of an invoice
from NSP. Actual monthly under-utilization fees shall be calculated on
a [c.i.] by comparing the number of units manufactured per month to
[c.i.] to determine the percentage of utilization. The percentage of
under-utilization shall equal [c.i.] minus the percentage of
utilization. The percentage of under-utilization shall be multiplied by
[c.i.] (as it may have been adjusted pursuant to paragraph (a) above)
minus any equivalent activities costs to determine if any amount is due
to NSP. For example, if [c.i.] units are manufactured, and billed
equivalent labor charges for other activities are [c.i.] in a month,
the under-utilization fee is [c.i.] (i.e., [c.i.] = [c.i.] utilization,
or [c.i.] under-utilization; [c.i.] x [c.i.] = [c.i.] minus [c.i.] =
[c.i.]. Monthly payments shall be reconciled on a quarterly basis as
provided in subparagraph 2.4.3 (d) below.
(c) If the total number of units of Kerastick(R) manufactured
by NSP during calendar year 2001 equals or exceeds [c.i.] (including
any units rightfully rejected by DUSA), then all under-utilization fee
payments made to NSP by DUSA under this Section 2.4.3 shall be paid to
DUSA within fifteen (15) days of the purchase order from DUSA which
causes manufacturing of units to equal or exceed [c.i.]; provided that
if DUSA's orders during the 2001 exceed North's capacity for production
of Kerastick units during a normal shift, then North shall be entitled
to reduce any payment due to DUSA under this section by the amount of
any applicable overtime labor costs incurred to North to meet DUSA's
supply requirements.
(d) The parties shall reconcile the number of units
manufactured and shall adjust the total of any monthly payments made
under this Section 2.4.3, to reflect the total number of units ordered
during each calendar quarter, or portion thereof, commencing with the
quarter ended March 31, 2001, and continuing for the quarters ending
June 30, September 30 and December 31, 2001, if the parties have not
entered a new agreement as anticipated in Section 10.1 below). By way
of example, if total units manufactured for a calendar quarter is
[c.i.], then the under-utilization fee for the quarter shall be [c.i.],
i.e., [c.i.] = [c.i.] utilization, so [c.i.] x 3 = [c.i.] x [c.i.]
under-utilization and [c.i.] would be due to NSP for the quarter.
Similarly, for the calendar year ending 2001, if total units
manufactured is [c.i.] Kerastick(R), then the total amount due to NSP
is [c.i.], i.e., [c.i.] = [c.i.] utilization, so [c.i.] x 12 = [c.i.] x
[c.i.] under-utilization, or [c.i.] is due to NSP for the year,
entitling DUSA to a payment of [c.i.] from the earlier quarter;
provided that there is no reduction for overtime due to North under
subsection (c) above.
(e) With any invoice from NSP for under-utilization fees, NSP
shall provide a report that indicates the number of units manufactured
and/or the equivalent activities referenced in subsection (b) above,
during the month, together with the lot and/or batch
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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.
information. DUSA shall provide a report to NSP no later than thirty
(30) days following the end of each calendar quarter (assuming that
DUSA has received invoices from NSP) indicating the quarterly and/or
annual reconciliation calculation. The parties shall make any
adjustments due to either party based upon the reconciliation within
fifteen (15) days of the date of the report.
(f) If DUSA orders [c.i.] Kerastick(R) or more in any
particular quarter, NSP agrees to manufacture such amount under the
delivery terms provided in the Agreement, regardless of whether a
lesser amount was ordered or forecast by DUSA in the prior quarter,
subject however, to the proviso that NSP's normal shift capacity is
[c.i.] units per month and that overtime capacity is also limited.
(g) So long as DUSA pays the under-utilization fees according
to the terms provided in this Section 2.4.3, DUSA shall be relieved of
its obligations under Section 2.4.1 to order certain percentages of
forecasted amounts and there shall be no breach of the Agreement for
failure to do so.
3. Further Amend Article II by adding a new sentence to Section 2.3 (Price) to
read as follows:
"North shall, in addition, be entitled to charge DUSA for any
applicable overtime charges resulting from purchase orders in excess of
North normal shift capacity."
4. Further Amend Article II by amending Sections 2.8 and 2.8.1 to read as
follows:
Section 2.8 Invoicing; Payment. NSP shall submit an
invoice to DUSA (and title shall pass to DUSA) upon completion of the
manufacture of the Product including all quality control procedures
and inspections by NSP to verify that the Products conform fully with
the Specifications, but prior to completion of designated third party
inspection, release and acceptance testing that DUSA has requested
pursuant to Section 3.3 in order for DUSA to comply with its own
commitments. All invoices shall be sent to 25 Upton Drive, Wilmington,
Massachusetts 01887, and each such invoice shall state the aggregate
and unit price for Products in a given completed manufacturing batch,
[c.i.] to the purchase or shipment initially [c.i.] hereunder. All
payments hereunder shall be made in U.S. Dollars, by direct bank
transfer to an account designated in NSP's invoice. NSP may ship any
invoiced Product for which DUSA has [c.i.] within [c.i.] after
completion of manufacture. NSP may [c.i.] if any undisputed invoices
at the time of the scheduled shipment are more than [c.i.] beyond the
due date thereof. Risk of loss relating to Products shall be borne by
NSP until [c.i.] of the Products to [c.i.].
2.8.1 Provisional Payment. The Provisional Price due to NSP
under this Section 2.8 shall be due and payable within [c.i.] from the
DUSA's receipt of an invoice. The Provisional Price shall be based on
the forecasted quantities for a particular calendar year.
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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.
5. Amend Article X Term and Termination by amending Section 10.1 and Section
10.2.2 as follows:
Section 10.1 Term. The term of this Agreement shall commence on the
Effective Date and continue in full force and effect until December 31, 2002,
unless terminated earlier upon written agreement of the parties (as a result of
negotiating a new agreement by September 13, 2001 or otherwise) or unless
extended by written agreement of the parties.
Section 10.2.2 [intentionally deleted]
Except as specifically provided in this Amendment, all of the provisions of the
Agreement are and shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have signed this Amendment to Purchase and
Supply Agreement effective as of the date stated above.
DUSA Pharmaceuticals, Inc. North Safety Products, Inc.
By: /s/ D. Geoffrey Shulman By: /s/ R. A. Peterson
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Date: 5/25/01 Date: 5/24/01
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