Exhibit 10.3

 

Execution Version

PURCHASE AGREEMENT

 

This PURCHASE AGREEMENT (this “Agreement”), dated as of June 30, 2016, is
entered into by and between BSN medical, Inc., a Delaware corporation (“BSN”)
and Alliqua BioMedical, Inc., a Delaware corporation (“Alliqua”). Each of BSN
and Alliqua is individually referenced herein as a “Party” and collectively as
“Parties.”

 

RECITALS

 

WHEREAS, BSN and Alliqua are parties to that certain Distributor Agreement
between Sorbion GmbH & Co KG and Alliqua, dated on or around September 20, 2013
and attached hereto as Annex A (as amended pursuant to that certain First
Amendment to Distributor Agreement as of July 31, 2015, attached hereto as Annex
B, collectively, the “Distributor Agreement”, and assigned to BSN pursuant to
that certain Assignment of Distributor Agreement dated June 16, 2015, attached
hereto as Annex C); and

 

WHEREAS, BSN and Alliqua have determined that it is in the best interests of
each of the Parties to enter into this Agreement.

 

NOW, THEREFORE, in consideration of the Recitals and the mutual representations,
warranties, covenants, agreements and conditions contained herein, and for other
good and valid consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties, intending to be legally bound, hereby agree as
follows:

 

1.DEFINITIONS

 

1.1Certain Definitions. Unless separately defined herein, capitalized terms used
in this Agreement have the meanings specified to such terms in this Section 1.1.
Capitalized terms used herein and not otherwise defined shall have the meaning
ascribed to such terms in the Distributor Agreement.

 

(a)“Affiliate” of any specified Person means any Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
such specified Person. For purposes of this definition, “control” (including,
with correlative meanings, the terms “controlling,” “controlled by” and “under
common control with”), as used with respect to any Person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise.

 

(b)“Ancillary Document” means any agreement, certificate, instrument or other
document to be delivered pursuant to or in connection with this Agreement.

 

(c)“Business” means business of Alliqua solely as it relates to the Products.

 

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(d)“Change of Control Transaction” means the occurrence after the date hereof of
any of (a) an acquisition after the date hereof by an individual or legal entity
or “group” (as described in Rule 13d-5(b)(1) promulgated under the Securities
Exchange Act of 1934, as amended) of effective control (whether through legal or
beneficial ownership of capital stock of the Company, by contract or otherwise)
of in excess of 50% of the voting securities of Alliqua, (b) Alliqua merges into
or consolidates with any other Person, or any Person merges into or consolidates
with Alliqua and, after giving effect to such transaction, the stockholders of
Alliqua immediately prior to such transaction own less than 50% of the aggregate
voting power of Alliqua or the successor entity of such transaction, (c) Alliqua
sells or transfers all or substantially all of its assets to another Person and
the stockholders of Alliqua immediately prior to such transaction own less than
50% of the aggregate voting power of the acquiring entity immediately after the
transaction, or (d) Alliqua, directly or indirectly, in one or more related
transactions consummates a stock or share purchase agreement or other business
combination (including, without limitation, a reorganization, recapitalization,
spin-off or scheme of arrangement) with another Person whereby such other Person
acquires more than 50% of the outstanding shares of common stock of Alliqua (not
including any shares of common stock of Alliqua held by the other Person or
other Persons making or party to, or associated or affiliated with the other
Persons making or party to, such stock or share purchase agreement or other
business combination).

 

(e)“Confidentiality Agreements” means, collectively, that certain
Confidentiality Agreement between the Parties dated as of January 3, 2016 and
that certain Confidentiality Agreement between the Parties dated as of January
18, 2016.

 

(f)“Expenses” means all fees, costs and expenses (including all other fees,
costs and expenses of any legal counsel, investment bankers, accountants,
brokers or other representatives, consultants, advisors, appraisal fees, costs
and expenses) in connection with the preparation, negotiation, execution and
delivery of this Agreement and any other document, the performance of the
Parties’ respective obligations hereunder and thereunder, and the consummation
of the transactions contemplated hereby and thereby.

 

(g)“FDA Law and Regulation” means the federal Food, Drug and Cosmetic Act (the
FD&C Act), 21 U.S.C. §§ 301 et seq., as amended, and all applicable regulations
promulgated by the United States Food and Drug Administration (“FDA”), including
but not limited to the recordkeeping provisions of the FDA’s Medical Device
Reporting requirements as set forth in 21 C.F.R. Part 803, as applicable.

 

(h)“Governmental Authority” means any government, agency, governmental
department, commission, board, bureau, court, arbitration panel or
instrumentality of the United States of America or any state or other political
subdivision thereof (whether now or hereafter constituted and/or existing) and
any entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.

 

(i)“Intellectual Property” means all patents, patent applications, trademarks,
trademark applications, service marks, service mark applications, certification
marks, trade dress, trade names, identifying symbols, designs, product names,
company names, slogans, logos or insignia, whether registered or unregistered,
and all common law rights, applications and registrations therefor, and all
goodwill associated therewith, copyright registrations and applications, trade
secrets, domain names and domain name registrations, licenses (software or
otherwise), information, processes and proprietary or intellectual property
rights, the subject matter of any of the foregoing, tangible embodiments of any
of the foregoing, licenses in, to and under any of the foregoing.

 

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(j)“Law” means any federal, state, local, municipal, foreign, international,
multinational law or any constitution, statute, treaty, code, ordinance,
principle of common law or other law (including any rule, regulation, plan,
injunction, judgment, order, decree, ruling or charge thereunder or related
thereto). All references to Law shall be deemed to include any amendments
thereto, and any successor law, unless the context requires otherwise.

 

(k)“Legal Requirement(s)” means all federal, state, foreign and local laws,
statutes, codes, rules, regulations, ordinances, Orders and the like of any
Governmental Authority, including common law.

 

(l)“Liability” means any liability or indebtedness of any kind, character or
description (whether known or unknown, whether asserted or unasserted, whether
absolute or contingent, whether accrued or unaccrued, whether disputed or
undisputed, whether secured or unsecured, whether joint or several, whether
vested or unvested, whether liquidated or unliquidated, whether due or to become
due, or whether executory, determined, determinable, or otherwise).

 

(m)“Lien” means any charge, claim, equitable interest, community or other
material property interest, security interest, conditional sale agreement,
mortgage, indenture, deed of trust, security agreement, pledge, hypothecation,
option, restriction, encroachment, easement, servitude, right of first refusal,
condition or other lien, encumbrance or defect of title of any kind or nature.

 

(n)“Order” means any decision, injunction, judgment, order, decree, ruling, or
verdict of any nature of, entered or issued by any Governmental Authority.

 

(o)“Other Agreements” means each contract or agreement (including, but not
limited to the Distributor Agreement, but specifically excluding this Agreement,
Transition Services Agreement, and the Confidentiality Agreements), written or
oral, including without limitation any implied contract or any other agreement
based on a course of conduct or dealing between the Parties (or in each case,
their predecessors or, in the case of BSN, between Alliqua and Sorbion), as well
as any other contract between the Parties that would purport to limit, in any
way, the ability of BSN to freely solicit, engage, or employ any individual
affiliated with Alliqua, whether as an employee, agent, contractor, or
representative.

 

(p)“Permits” means all permits, licenses, franchises, orders, registrations,
certificates, variances, contractual rights, consents, and other authorizations
or approvals, and any applications for the same, related to the Business.

 

(q)“Person” means an individual, a corporation, a partnership, a limited
liability company, an association, a joint venture, a governmental or other
authority, a trust or any other entity or organization including a corporate or
unincorporated body (whether or not having a separate legal personality).

 

(r)“Relevant Records” means, in respect of the parties to whom Products have
historically been sold by Alliqua, collectively,

 

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(i)(a) Customer data, including a listing of all direct and indirect customers,
including distributors, hospitals, wound-care clinics, and practitioner office
lists, together with (b) historical sales information starting on January 1,
2015 and ending on May 31, 2016, together with a certificate from the chief
financial officer of Alliqua in the form attached hereto as Exhibit B;

(ii)Targeted customer data, including a listing of all targeted customers with
current product evaluations;

(iii)Price lists, including (a) “list price” to direct customers (include price
tiers and basis for such tiers (e.g., volume discounts)); (b) any “special
pricing” to any direct customers and basis thereof; (c) contracted pricing with
group purchasing organizations, independent dealer networks and other similar
organizations;

(iv)Name of Key Opinion Leader historically used by or on behalf of Alliqua in
respect of the Products; and

(v)All marketing literature, case-studies, and/or any clinical data that Alliqua
has produced or caused to be produced;

in each case, in such detail as is reasonably requested by BSN.

 

(s)“Restricted Period” means the period commencing on the date hereof and ending
on the earlier of (i) December 31, 2018, (ii) one hundred fifty (150) days
following the date hereof if a Change of Control Transaction is consummated no
later than sixty (60) days following the date hereof, or (iii) ninety (90) days
following the effective date of any Change of Control Transaction if such Change
of Control Transaction is consummated later than sixty (60) days following the
date hereof.

 

(t)“Rights” means any and all rights Alliqua may have to, under or pursuant to
the Distributor Agreement, including but not limited to distribution rights,
exclusivity rights, Intellectual Property rights, and/or marketing rights.

 

(u)“Tax” or “Taxes” means means all federal, state, local or foreign income,
gross receipts, license, employment, payroll, withholding, Social Security (or
similar), unemployment, severance, premium, disability, excise, value added,
accumulated earnings, windfall profit, net worth, alternative or add-on minimum,
estimated, sales, use, transfer, registration, real property, stamp,
environmental (including taxes under Code §59A), personal property, use and
occupancy, business and occupation, maritime, mercantile, tariff, custom, duty,
capital stock, franchise, gift or estate and all other taxes, fees, assessments,
levies, tariffs, charges or duties of any kind, character, nature or
description, including any interest, penalties or additions thereto.

 

(v)“Unsold Products” means the unsold inventory of Products sold by BSN to
Alliqua in existence as of the Closing; provided, however, that the minimum
outstanding shelf life of all such Products shall be at least 12 (twelve)
months.

 

1.2Other Definitional Provisions and Construction. The terms “hereof,” “herein”
and “hereunder” and terms of similar import shall refer to this Agreement as a
whole and not to any particular provision of this Agreement. Article, Section,
clause, subsection, Exhibit and Schedule references contained in this Agreement
are references to Articles, Sections, clauses, subsections, Exhibits and
Schedules in or attached to this Agreement, unless otherwise specified. Each
defined term used in this Agreement has a comparable meaning when used in its
plural or singular form. Each gender-specific term used in this Agreement has a
comparable meaning whether used in a masculine, feminine or gender-neutral form.
The word “or” is used in the inclusive sense of “and/or”. Whenever the terms
“include” or “including” are used in this Agreement (whether or not such terms
are followed by the phrase “but not limited to” or “without limitation” or words
of similar effect) in connection with a listing of items within a particular
classification, that listing shall be interpreted to be illustrative only and
shall not be interpreted as a limitation on, or an exclusive listing of, the
items within that classification. The recitals set forth in the beginning of
this Agreement (including, the defined terms set forth therein) are hereby
incorporated by reference into this Agreement and made a part hereof as if set
forth in their entirety. Whenever any amount is stated in this Agreement in
“Dollars” or by reference to the “$” symbol, such amount shall be United States
dollars.

 

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2.THE TRANSACTION

 

2.1Sale and Purchase of Rights and Unsold Products. At the Closing Date, and
upon all of the terms and subject to all of the conditions set forth in this
Agreement, Alliqua shall sell, transfer, assign, convey, and deliver to BSN, and
BSN shall purchase and accept from Alliqua, free and clear of all Liens, the
Rights and Unsold Products.

 

2.2Excluded Assets. Other than the Rights, the remaining assets of Alliqua shall
be retained by Alliqua.

 

2.3Retained Liabilities. For avoidance of doubt, BSN shall not assume, and
Alliqua will pay, defend, discharge, and perform, as and when due, and otherwise
retain and remain solely responsible for:

 

(a)any and all Liabilities of Alliqua, including any Taxes in respect of the
amounts received by Alliqua pursuant to the terms hereof;

(b)any Liability of any Person, directly or indirectly related to, accruing or
arising out of, caused by or resulting from the operation or conduct of the
Business on or prior to the Closing Date, whether or not recorded on the books
and records of any Person (including but not limited to any trade or other
accounts payable of Alliqua payable to third parties that remain outstanding as
of the Closing Date);

(c)any and all Liabilities in respect of the Rights and Unsold Products, arising
out of or as a result of the Distributor Agreement, as of the Closing Date; and

(d)any Liability that is the result of a violation of any Legal Requirement by
Alliqua.

 

2.4Purchase Price and Closing Payments.

 

(a)In consideration for the sale of the Rights and Unsold Products to BSN by
Alliqua, BSN shall pay the following amounts in the manner set forth below:

 

(i)$3,500,000 (Three Million Five Hundred Thousand United States Dollars) at the
Closing Date for purchase of all Rights and termination of all Other Agreements
(the “Rights Payment”); and

(ii)Up to an additional $900,000 (Nine Hundred Thousand United States Dollars)
(the “Product Payment”) in accordance with Section 2.9 hereof.

 

(b)The Rights Payment, and if applicable, the Product Payment, shall be paid by
wire transfer of immediately available funds into the following bank account:

 

PNC BankBank Account Holder - Alliqua BioMedical, Inc.

Routing Number - ********* 

Account Number - **********

 

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2.5Closing. The closing of the sale and purchase of the Rights and the Unsold
Products (the “Closing”) shall take place concurrently with the execution and
delivery of this Agreement, scheduled for 9:00 a.m. Eastern U.S. time, or at
such other date as mutually agreed upon by the Parties (such date, the “Closing
Date”). All transactions that are to take place on the Closing Date at Closing
shall be considered to have taken place simultaneously, and no delivery or
payment shall be considered to have been made until all the transactions have
been completed. Title to, ownership of, control over and risk of loss of the
Rights shall pass to BSN effective as of 9:01 a.m. Eastern U.S. time on the
Closing Date unless provided otherwise herein. All monetary amounts payable
pursuant to this Agreement shall be paid by wire transfer or delivery of other
immediately available United States funds, as directed by the Party receiving
payment.

 

2.6Deliveries By Alliqua at Closing. On the Closing Date, Alliqua shall deliver
the following to BSN, executed by Alliqua or other parties as applicable:

 

(a)A bill of sale and assignment in the form of Exhibit A; and

(b)Relevant Records.

 

2.7Deliveries By BSN at Closing. On the Closing Date, upon occurrence of the
Closing, BSN shall execute, pay or deliver to Alliqua (or to other parties as
specified by Alliqua) the Rights Payment.

 

2.8Unsold Products. Provided that the Closing shall have occurred,

 

(a)Alliqua shall deliver all remaining Unsold Products to BSN no later than
fifteen (15) days following the Closing Date; provided, however, that, (i) all
such Unsold Products shall be in substantially similar condition as such Unsold
Products were delivered to Alliqua by BSN; (ii) all such Unsold Products were
stored according to manufacturers’ written specifications and continue to
maintain sterility and human medical use; (iii) none of such Unsold Product
inventory shall be obsolete, damaged or defective; and (iv) none of the
inventory shall be held on consignment for others.

(b)BSN shall inspect such remaining Unsold Products being returned within five
(5) business days of receipt thereof and, if any condition exists that BSN
believes, in good faith, may be a breach of Section 2.8(a) above, BSN shall
notify Alliqua as soon as practicable and the parties shall work, in good faith,
to resolve such matter.

(c)Upon receipt of a notice from BSN in accordance with the preceding paragraph,
Alliqua will invoice BSN for remaining Unsold Product shipments, the price for
such Unsold Products being the cost at which such Unsold Products were sold to
Alliqua, and BSN shall, out of the Product Payment, remit payment to Alliqua in
respect of such invoice within forty-five (45) days following the receipt of
such invoice.

(d)Alliqua shall pay fifty percent (50%) of Shipment Costs for any delivery of
qualifying Unsold Products that are less than $50,000; for delivery of
qualifying Unsold Products greater than or equal to $50,000, Alliqua shall pay
one hundred (100%) of the Shipment Costs. Alliqua shall be required to pay
Shipment Costs only for the delivery of Unsold Products to facilities within the
United States, and Alliqua shall be entitled to choose the method of shipment
for the Unsold Products; provided that, such method of shipment shall ensure
delivery of any such Unsold Products shipped to BSN by no later than seven (7)
days following shipment thereof.

 

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2.9Product Payment. Subject to the terms of this Section 2.9, BSN shall remit
the Product Payment to Alliqua upon Alliqua’s completion of the obligations as
set forth in Section 2.8 above; provided, that to the extent that BSN and
Alliqua are negotiating in good faith to resolve any matter in accordance with
Section 2.8(b) above, then BSN shall not be required to remit payment in respect
of any Unsold Products returned by Alliqua related to such matter until BSN and
Alliqua have reached a mutually satisfactory resolution of such matter. Subject
to the terms of this Section 2.9, BSN shall deliver the Product Payment to
Alliqua within two (2) business days following the satisfaction of the
requirements set forth in the immediately preceding sentence. For the avoidance
of doubt, under no circumstance would the Product Payment exceed $900,000 (Nine
Hundred Thousand United States Dollars).

 

2.10Other Agreements and Obligations. Subject to the occurrence of the Closing,
the Parties hereby cancel, terminate and release, with immediate effect, any and
all Other Agreements between the Parties, and further agree that such Other
Agreements shall be of no further force or effect. All of the obligations,
including without limitation any obligation which expressly survives termination
of the Other Agreements in accordance with the terms of such Other Agreements,
of BSN, together with its successors, assigns or Affiliates, to Alliqua, its
successors, assigns or Affiliates are hereby cancelled, terminated and released;
provided, that this Section 2.10 is not intended to, and shall not, have any
effect on the Parties’ obligations to each other arising out of or related to
that certain Transition Services Agreement being entered into by the Parties
which is being entered into as a separate contract for which separate
consideration is being paid or upon the Confidentiality Agreements, which
contain rights and obligations that are separate from this Agreement.

 

2.11Complete, General, and Mutual Release of Claims.

 

(a)Subject to the occurrence of the Closing, each Party hereto, on behalf of
itself, and its respective parents, subsidiaries, predecessors, successors,
assigns, and transferees, as well as its respective former and present
directors, officers, managers, shareholders, members, partners, and insurers,
hereby fully and forever releases and discharges the other Party hereto, its
respective parents, subsidiaries, predecessors, successors, assigns, and
transferees, as well as its respective former and present directors, officers,
managers, shareholders, members, employees, investors, partners, insurers,
administrators, Affiliates (past and present), divisions, subsidiaries,
attorneys, advisors, representatives, predecessor and successor entities, and
assigns and transferees, from any and all claims, demands, liabilities,
obligations, responsibilities, suits, actions, and causes of actions in law or
in equity, statutory relief, statutory claims, administrative remedies,
injunctions, debts, torts, reports, applications, including but not limited to
the Distributor Agreement or any Other Agreement, but specifically excluding
this Agreement and the Transition Services Agreement and the Confidentiality
Agreements (“Claims”). Each Party hereby represents and warrants that it has not
transferred, encumbered, or assigned any of the Claims to any other Person and
it is not presently aware of any Claims against the other Party that arises out
of or is related to fraud or intentional misconduct. Notwithstanding the
foregoing, this Agreement shall not serve to release any Party from any Claims
related to its respective obligations set forth in Sections 8 or 11 of the
Distributor Agreement, each of which shall survive the Closing.

(b)Except with respect to the obligations arising out of this Agreement and the
Transition Services Agreement, each Party covenants that it shall not institute,
promote, participate in, assist with, submit, file or permit to be filed on
their behalf any lawsuit, charge, Claim, complaint, grievance or other
proceeding, whether judicial, administrative, arbitration or otherwise arising
out of or in any way relating to its business relationship with the other Party,
the Distributor Agreement (or cancellation and termination thereof), or any
Other Agreement, unless compelled to do so by a court of competent jurisdiction.

 

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(c)Each Party covenants that it has carefully read the terms of this Agreement
and all attachments, and it understands their terms and effects, including the
fact that such Party has agreed to RELEASE AND FOREVER DISCHARGE certain
releasees from any legal action or other liability of any type related in any
way to the matters released herein. Each Party has signed this Agreement
voluntarily and knowingly in exchange for the consideration described herein,
which such Party acknowledges is adequate and satisfactory to such Party and
which it acknowledges is in lieu of any other benefits to which it may otherwise
be entitled. Each Party fully understands that if any fact with respect to any
matter covered by the releases herein is found hereafter to be other than or
different from the facts now believed to be true, it accepts and assumes that
the releases shall be and remain effective, notwithstanding such difference in
the facts.

 

3.REPRESENTATIONS AND WARRANTIES OF ALLIQUA

 

Alliqua hereby represents and warrants to BSN as follows:

 

3.1Organization and Good Standing. Alliqua is duly organized, validly existing
and in good standing under the Laws of the state of Delaware. There is no
subsidiary or separate entity that owns any interest in the Distributor
Agreement, Rights, or the Unsold Products.

 

3.2Authority and Enforceability. Alliqua has full power and authority to
execute, deliver and perform this Agreement and each Ancillary Document to which
Alliqua is a party, and the execution, delivery and performance of this
Agreement by Alliqua has been duly authorized by all necessary corporate action
on the part of Alliqua. This Agreement has been duly executed and delivered by
Alliqua and constitutes the valid and legally binding obligation of Alliqua,
enforceable in accordance with its terms. To Alliqua’s knowledge, Alliqua is not
required to give any notice to, make any filing with or obtain any
authorization, consent or approval of any Person or Governmental Authority in
order for Alliqua to consummate the transactions contemplated hereby.

 

3.3Noncontravention. The transactions contemplated hereunder will not: (a)
violate any Law to which Alliqua is subject; or (b) conflict with, result in a
breach of, constitute a default under, result in the acceleration of, give any
Person the right to accelerate, terminate, modify or cancel, or require any
notice under, any agreement, Permit, instrument or other arrangement to which
Alliqua is a party or by which Alliqua is bound or to which any of the assets or
properties of Alliqua are subject.

 

3.4Claims; Legal Compliance.

 

(a)Alliqua has, in all material respects, complied with each applicable Legal
Requirement, has obtained all Permits required to conduct the Business or to
maintain the Products, and has complied with each such Permit.

 

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(b)There are no actions, suits, proceedings, hearings, investigations, charges,
complaints, claims or demands of any kind pending or, to Alliqua’s knowledge,
threatened against or affecting any of the Rights or Unsold Products or any
aspect of the Business that would reasonably be expected to materially and
adversely affect the Rights, Unsold Products or any aspect of the Business ; and
there are no injunctions, judgments, orders or decrees of any kind which are
outstanding against or unsatisfied by Alliqua or relating to any of the Rights
or Unsold Products or any aspect of the Business. To Alliqua’s knowledge,
Alliqua has, in all material respects, complied with each applicable Law, has
obtained all Permits required to conduct the Business or to maintain the Rights,
and has complied with each such Permit. Each such Permit is current and has not
been revoked, suspended, cancelled or terminated, nor has notice been given of
any threatened revocation, suspension, cancellation or termination.

(c)Each of the Products sold by Alliqua, while in the care, custody and control
of Alliqua is and always has been, as applicable, stored and distributed and
distribution records maintained in a manner intended to prevent any product from
becoming adulterated (as defined in FDA Law and Regulation) or misbranded (as
defined in FDA Law and Regulation). Alliqua has not undertaken a recall, field
correction or removal of any U.S. marketed finished medical device that was the
result of mishandling, or any type of adulteration or misbranding that was
caused by Alliqua. With respect to the Products distributed by Alliqua, Alliqua
is in compliance in all material respects with FDA Law and Regulation.

(d)With respect to the Products or the Business, Alliqua has not received any
written notice or communication from the FDA alleging material non-compliance
with applicable provisions of the FDA Law and Regulation. With respect to the
Products or the Business, Alliqua has not entered into any consent decree or
other Order pursuant to any FDA Law and Regulation. To Alliqua’s knowledge,
there has not been any material violation of any FDA Law and Regulation by
Alliqua in its distribution, recordkeeping and reports to the FDA that could
reasonably be expected to require or lead to any investigation, corrective
action or enforcement, or regulatory or administrative action.

(e)With respect to the Products or the Business, no officer, director, employee
or, to Alliqua’s knowledge, representative of Alliqua has: (i) made any untrue
statement of material fact or fraudulent statement to the FDA or any other
Governmental Authority; (ii) failed to disclose a material fact required to be
disclosed to the FDA or any other Governmental Authority; (iii) committed an
act, made a statement, or failed to make a statement that would reasonably be
expected to provide the basis for the FDA or any other Governmental Authority to
invoke its policy respecting “Fraud, Untrue Statements of Material Facts,
Bribery, and Illegal Gratuities,” as set forth in 56 Fed. Reg. 46191 (September
10, 1991); (iv) solicited or received prohibited compensation under the Medicare
and Medicaid Anti-Kickback Statute, 42 U.S.C. § 1320a-7b(b), or any similar
state anti-kickback Law; (v) been convicted of any crime or engaged in any
conduct for which debarment is mandated or permitted by 21 U.S.C. § 335a; or
(vi) been convicted of any crime or engaged in any conduct for which such Person
could be excluded from participating in the federal health care programs under
Section 1128 of the Social Security Act or any similar applicable Laws.

 

3.5Intellectual Property. Other than the Intellectual Property included within
the Rights (all rights in respect of which arise solely from the Distributor
Agreement), there is no other Intellectual Property owned or used by Alliqua in
the Business.

 

3.6Subsequent Transactions. Alliqua disclaims any interest in the subsequent
sale of any Products, and/or Rights; Alliqua acknowledges it has forgone
proceeds of these future sales in return for accepting payment as defined in
this Agreement.

 

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3.7Tax Consequences. Alliqua acknowledges and warrants that it has reviewed the
Tax consequences of this Agreement with its own tax advisors and is relying
solely on that advice and not on any representation or statement of BSN. Alliqua
acknowledges and agrees that it is responsible for its own Tax liability as a
result of the Agreement.

 

3.8Liens. Alliqua represents, warrants, and covenants that all Rights and Unsold
Products, upon transfer to BSN, will be free and clear of any and all Liens.

 

3.9Insolvency. As of the Closing Date, after giving effect to the transactions
contemplated by this Agreement, Alliqua will not: (a) be insolvent (either
because its financial condition is such that the sum of its debts is greater
than the fair market value of its assets or because the fair saleable value of
its assets is less than the amount required to pay its probable liabilities on
its existing debts as they mature); (b) have unreasonably small capital with
which to engage in its business; or (c) have incurred debts beyond its ability
to pay as they become due. The properties of Alliqua (whether real, personal,
common, mixed and whether tangible or intangible) are sufficient for the
continued conduct of Alliqua’s businesses after the Closing Date in
substantially the same manner as conducted immediately prior to the Closing
Date.

 

3.10Brokers. There are no brokers or finders known to Alliqua to be involved
with the transactions contemplated hereunder and Alliqua has not made any
agreement or taken any other action which might cause any Person to become
entitled to a broker’s or finder’s fee or commission as a result of the
transactions contemplated hereby.

 

3.11Anticorruption; International Transactions. Without limiting the generality
of Section 3.4, and with respect to the Rights, the Products, the Business or
the purchased assets:

 

(a)None of Alliqua, its controlling shareholders, directors, officers or
employees have, directly or indirectly, in violation of any applicable Law
(including without limitation the Foreign Corrupt Practices Act of 1977, as
amended): (i) made, offered to make, or authorized any contribution, gift,
bribe, rebate, payoff, influence payment, kickback, or other payment to any
Person, private or public, regardless of form, whether in money, property, or
services, (1) to obtain favorable treatment in securing business or to pay for
favorable treatment for business already secured or (2) to obtain special
concessions or to pay for special concessions already obtained; or (ii)
established or maintained any fund or other asset that has not been properly
recorded in the books and records of Alliqua.

(b)Alliqua is and at all times has been in compliance with all applicable Law
relating to economic sanctions and trade embargoes. Without limiting the
foregoing, Alliqua has not had, directly or indirectly, a business or financial
relationship with or delivered any products or services to any geographic
regions or governments targeted by the sanctions programs administered by the
U.S. Office of Foreign Asset Controls (OFAC) or to any Person, private or
public, appearing on OFAC’s list of Specially Designated Nationals and Blocked
Persons.

(c)Alliqua is, and at all times has been, in compliance with all applicable Law
relating to export controls. All Products shipped by Alliqua have been marked,
labeled, and transported in accordance with all applicable Law.

 

10

 

 

3.12Channel Sales. Since the effective date of the Distributor Agreement,
Alliqua (a) has sold and will sell Products to wholesalers, distributors and
other customers only in the ordinary course of business and in amounts generally
consistent with industry practices past sales by Alliqua to its wholesalers,
distributors and other customers during comparable periods (which, for the
avoidance of doubt, takes into account seasonality, cyclicality and other market
conditions), except for one-time discounts that did not have a material impact
on sales revenue for the Products (b) has donated and will donate Product to
non-profit or charitable organizations only in amounts (if any) that are
generally consistent with past Product donations by Alliqua to non-profit and
charitable organizations during comparable periods, and (c) has not engaged, and
will not engage, in any practice with the intent of increasing the levels of
inventory of the Products in the distributor or wholesaler channels, or with
other customers outside of the ordinary course of business and in anticipation
of entering into this Agreement or any similar transaction with respect to the
Products.

 

3.13Full Disclosure. No representation, warranty, covenant or agreement made by
Alliqua in this Agreement contains or will contain any false or misleading
statement of a material fact, or omits any material fact required to be stated
therein or necessary in order to make the statements therein not false or
misleading.

 

4.REPRESENTATIONS AND WARRANTIES OF BSN

 

BSN hereby represents to Alliqua as follows:

 

4.1Organization and Good Standing. BSN is duly organized, validly existing and
in good standing under the Laws of the state of Delaware.

 

4.2Authority and Enforceability. BSN has full power and authority to execute,
deliver and perform this Agreement and each Ancillary Document to which BSN is a
party, and the execution, delivery and performance of this Agreement by BSN has
been duly authorized by all necessary corporate action on the part of BSN. This
Agreement has been duly executed and delivered by BSN and constitutes the valid
and legally binding obligation of BSN, enforceable in accordance with its terms.
BSN is not required to give any notice to, make any filing with or obtain any
authorization, consent or approval of any Person or Governmental Authority in
order for BSN to consummate the transactions contemplated hereby.

 

4.3Noncontravention. The transactions contemplated hereunder will not: (a)
violate any Law to which BSN is subject; or (b) conflict with, result in a
breach of, constitute a default under, result in the acceleration of, give any
Person the right to accelerate, terminate, modify or cancel, or require any
notice under, any agreement, Permit, instrument or other arrangement to which
BSN is a party or by which BSN is bound or to which any of the assets or
properties of BSN are subject.

 

4.4Insolvency. As of the Closing Date, after giving effect to the transactions
contemplated by this Agreement, BSN will not: (a) be insolvent (either because
its financial condition is such that the sum of its debts is greater than the
fair market value of its assets or because the fair saleable value of its assets
is less than the amount required to pay its probable liabilities on its existing
debts as they mature); (b) have unreasonably small capital with which to engage
in its business; or (c) have incurred debts beyond its ability to pay as they
become due. The properties of BSN (whether real, personal, common, mixed and
whether tangible or intangible) are sufficient for the continued conduct of
BSN’s businesses after the Closing Date in substantially the same manner as
conducted immediately prior to the Closing Date.

 

4.5

Brokers. There are no brokers or finders known to BSN to be involved with the
transactions contemplated hereunder and BSN has not made any agreement or taken
any other action which might cause any Person to become entitled to a broker’s
or finder’s fee or commission as a result of the transactions contemplated
hereby.

 

11

 

 

5.INDEMNIFICATION

 

5.1Indemnification by Alliqua. Alliqua shall indemnify and defend BSN and BSN’s
Affiliates, officers, directors, employees, agents and representatives
(collectively, “BSN Indemnitees”) and hold them harmless from the following and
against any and all losses arising out of, resulting from, relating to, in the
nature of or caused by:

 

(a)any misrepresentation or breach of any representation or warranty made by
Alliqua in this Agreement or in any Ancillary Document, or any claim by a third
party that, if found to have merit, would constitute or give rise to such a
misrepresentation or breach;

(b)any breach of any covenant, agreement or obligation of Alliqua in this
Agreement or in any Ancillary Document, or any claim by a third party that, if
found to have merit, would constitute or give rise to such a breach;

(c)the ownership or operation of the Rights or the distribution, marketing,
promotion and/or sale of Products prior to the Closing;

(d)any breach by Alliqua of its obligations pursuant to Sections 8 and 11 of the
Distributor Agreement; and

(e)retained Liabilities set forth in Section 2.3 hereof.

 

5.2Indemnification by BSN. BSN shall indemnify and defend Alliqua, and Alliqua’s
Affiliates, officers, directors, employees, agents and representatives
(collectively, “Alliqua Indemnitees”) and hold them harmless from and against
any and all losses arising out of, resulting from, relating to, in the nature of
or caused by:

 

(a)any misrepresentation or breach of any representation or warranty made by BSN
in this Agreement or in any Ancillary Document, or any claim by a third party
that, if found to have merit, would constitute or give rise to such a
misrepresentation or breach;

(b)any breach of any covenant, agreement or obligation of BSN in this Agreement
or in any Ancillary Document, or any claim by a third party that, if found to
have merit, would constitute or give rise to such a breach;

(c)the ownership or operation of the Rights or the distribution, marketing,
promotion and/or sale of Products from and after the Closing;

(d)any breach by BSN of its obligations pursuant to Sections 8 and 11 of the
Distributor Agreement.

 

5.3Survival. All representations, warranties, covenants and agreements contained
in this Agreement shall survive Closing (even if the Party seeking indemnity
knew or had reason to know a misrepresentation or breach of warranty at the time
of Closing). The indemnification rights and obligations set forth in this
Article 5 shall also apply to direct claims by the Parties.

 

12

 

 

6.Confidentiality

 

6.1Covenant. Effective as of the Closing Date, Alliqua agrees that it shall not
use or disclose to anyone, except at the request of BSN, as applicable, any
confidential information, knowledge or data directly relating to the Business,
including information relating to accounts, financial dealings, transactions,
trade secrets, intangibles, customer lists, pricing lists, processes, plans and
proposals, whether or not marked or otherwise identified as confidential or
secret, that Alliqua has received from BSN or its predecessor during the term of
the Distributor Agreement (the “Confidential Information”). In the event that
Alliqua is requested or required (by oral question or request for information or
documents in any regulatory or legal proceeding or inspection, interrogatories,
subpoena, civil investigative demand or similar process) to disclose any
Confidential Information, Alliqua shall, if permitted and if practicable, notify
BSN promptly of the request or requirement so that BSN may, at its sole expense,
seek an appropriate protective order or waive compliance with the provisions of
this Section 6.1. If, in the absence of a protective order or the receipt of a
waiver under this Section 6.1, Alliqua is in its reasonable belief, required to
disclose any Confidential Information to any Governmental Authority, Alliqua may
disclose the Confidential Information to the Governmental Authority; provided,
however, that Alliqua shall use commercially reasonable efforts to obtain, at
the reasonable request and sole expense of BSN, an Order or assurance that
confidential treatment shall be accorded to such portion of the Confidential
Information required to be disclosed as BSN shall designate. The foregoing
covenant shall not apply to (a) any information that has been made public (other
than through breach of the provisions of this Agreement); (b) any information
that, prior to disclosure by BSN to Alliqua or its Affiliates, was already in
possession of a receiving party (who is not or was not known to Alliqua to be
under an obligation to maintain its confidentiality) from a source other than
Alliqua or its Affiliates; (c) any disclosure to the extent that it is required
by applicable Law (provided that, if the disclosure is as the result of a legal
proceeding or other similar process described above, the required protective
procedures as contemplated above are followed); (d) any information
independently developed by Alliqua or its Affiliates without any use of
Confidential Information.

 

7.MISCELLANEOUS

 

7.1Amendment and Waiver. This Agreement may only be amended if such amendment is
set forth in a writing executed by both Parties. No waiver of any provision of
this Agreement shall be binding unless such waiver is in writing and signed by
the Party against whom such waiver is to be enforced. No failure by any Party to
insist upon the strict performance of any covenant, duty, agreement or condition
of this Agreement or to exercise any right or remedy consequent upon a breach
thereof shall constitute a waiver of any such breach or any other covenant,
duty, agreement or condition.

 

7.2Notices. All notices, demands and other communications given or delivered
under this Agreement shall be in writing and shall be deemed to have been given
when personally delivered, or sent by electronic means of transmitting written
documents (including without limitation e-mail), or sent to the Parties at the
respective addresses indicated herein by certified U.S. mail, return receipt
requested and postage prepaid, or sent by private overnight mail courier
service. Notices, demands and communications sent by electronic means must also
be sent by regular U.S. mail or by private overnight mail courier service in
order for such notice to be effective. Notices, demands and communications to
Alliqua or BSN must, unless another address is specified in writing, be sent to
the address indicated below:

 

If to BSN:

BSN medical, Inc..

Attention: Joseph P. Carpinelli, Sr. Vice President of Finance – North America

5825 Carnegie Blvd.

Charlotte, NC 28209

Phone: 704.731.1056

Facsimile: 704.910.8994

Email: Joseph.Carpinelli@bsnmedical.com

 

13

 

 

 

with a copy (which copy shall not constitute notice to BSN) to:

 

Koley Jessen P.C., L.L.O.

Attention: Anshu S. K. Pasricha

1125 S. 103rd St., Suite 800

Omaha, NE  68124

Phone: 402.390.9500

Facsimile: 402.390.9005

Email: Anshu.Pasricha@koleyjessen.com

 

 If to Alliqua:

Alliqua Biomedical, Inc.

Attention: David Johnson

1010 Stony Hill Road, Suite 200

Yardley, PA 19067

Phone: 908.240.3521

Facsimile: 215.702.8535

E-mail: djohnson@alliqua.com

 

 

with a copy (which copy shall not constitute notice to Alliqua) to:

 

Haynes and Boone, LLP

Attention: Rick A. Werner

30 Rockefeller Plaza

New York, NY 10112

Phone: 212.659.7300

Facsimile: 212.884.8234

E-mail: Rick.Werner@haynesboone.com

 

7.3Assignment. This Agreement shall be binding upon, and inure to the benefit
of, the Parties and their respective representatives, successors and permitted
assigns. None of the Parties may assign either this Agreement or any of the
rights, interests or obligations hereunder without the prior written approval of
the other Parties, except that either Party shall have the right to assign this
Agreement to an Affiliate or successor-in-interest without the consent of the
other Party.

 

7.4Severability. Whenever possible, each provision of this Agreement shall be
interpreted in such a manner as to be effective and valid under applicable Law,
but if any provision of this Agreement is held to be prohibited by or invalid
under applicable Law, such provision shall be ineffective only to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement. In lieu of such
illegal, invalid or unenforceable provision, there shall be added automatically
as a part of this Agreement a provision as similar in terms to such illegal,
invalid and unenforceable provision as may be legal, valid and enforceable.

 

7.5No Strict Construction. The language used in this Agreement shall be deemed
to be the language chosen by the Parties to express their mutual intent. In the
event an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the Parties, and no
presumption or burden of proof shall arise favoring or disfavoring any Person by
virtue of the authorship of any of the provisions of this Agreement.

 

14

 

 

7.6Captions. The captions used in this Agreement are for convenience of
reference only and do not constitute a part of this Agreement and shall not be
deemed to limit, characterize or in any way affect the meaning or interpretation
of any provision of this Agreement, and all provisions of this Agreement shall
be enforced and construed as if no caption had been used in this Agreement.

 

7.7Entire Agreement. This Agreement (including the Exhibits and the Schedules)
and the documents referred to herein contain the entire agreement between the
Parties relating to the subject matter hereof and supersede any and all prior
understandings, agreements or representations by or between the Parties, written
or oral, which may have related to the subject matter hereof in any way.

 

7.8Governing Law; Venue; Waiver of Jury Trial. ALL QUESTIONS CONCERNING THE
CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS AGREEMENT SHALL
BE GOVERNED BY THE INTERNAL LAW OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT
TO ANY CHOICE OF LAW OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE STATE
OF NEW YORK OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE
LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK. Each Party hereby
irrevocably submits to the exclusive personal jurisdiction of any state or
federal court sitting in the State of NEW YORK in any action or proceeding
arising out of or relating to this Agreement. TO THE EXTENT NOT PROHIBITED BY
APPLICABLE LAW WHICH CANNOT BE WAIVED, EACH PARTY HERETO HEREBY WAIVES AND
COVENANTS THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE)
ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE OR ACTION,
CLAIM, CAUSE OF ACTION OR SUIT (IN CONTRACT, TORT OR OTHERWISE), INQUIRY,
PROCEEDING OR INVESTIGATION ARISING OUT OF OR BASED UPON THIS AGREEMENT OR THE
SUBJECT MATTER HEREOF OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO
THE TRANSACTIONS CONTEMPLATED HEREBY, IN EACH CASE WHETHER NOW EXISTING OR
HEREAFTER ARISING. EACH PARTY HERETO ACKNOWLEDGES THAT IT HAS BEEN INFORMED BY
THE OTHER PARTIES HERETO THAT THIS SECTION 7.8 CONSTITUTES A MATERIAL INDUCEMENT
UPON WHICH THEY ARE RELYING AND WILL RELY IN ENTERING INTO THIS AGREEMENT. ANY
PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION 7.8 WITH
ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF EACH SUCH PARTY TO THE WAIVER OF
ITS RIGHT TO TRIAL BY JURY.

 

7.9Parties in Interest. Nothing in this Agreement, express or implied, is
intended to confer on any Person other than the Parties and their respective
successors and permitted assigns any rights, remedies, obligations or
liabilities under or by virtue of this Agreement, and no Person who is not a
party to this Agreement, other than BSN Indemnitees and Alliqua Indemnitees who
shall be third party beneficiaries of, and entitled to enforce, the
indemnification provisions of Article 5, may rely on the terms hereof. No
provision of this Agreement shall give any third parties any right of
subrogation or action over or against any Party.

 

15

 

 

7.10Specific Performance. Each of the Parties acknowledges and agrees that the
other Party may be damaged irreparably in the event that any of the provisions
of this Agreement are not performed in accordance with their specific terms or
otherwise are breached. Accordingly, each of the Parties agrees that the other
Party shall be entitled to seek an injunction or injunctions to prevent breaches
of any of the provisions of this Agreement and to enforce specifically this
Agreement and the terms and provisions hereof in any action instituted in any
court of the United States or any other state thereof having jurisdiction over
the Parties in the matter, in addition to any other remedy (including monetary
damages) to which it may be entitled, at law or in equity.

 

7.11Other Contracts. It is the intent of the Parties that this Agreement and the
Transition Services Agreement being entered into by the Parties should not be
treated as interrelated documents but treated as separate contracts for which
separate consideration was paid.

 

7.12Waiver of Cal. Civ. Code § 1542. It is a further condition of the
consideration hereof and is the intention of the Parties in executing this
Agreement that the same shall be effective as a bar as to each and every claim,
demand and cause of action hereinabove specified or referred to and, in
furtherance of this intention, the Parties hereby expressly waive any and all
rights or benefits conferred by the provisions of Section 1542 of the California
Civil Code. It is the intention of the Parties that this Agreement shall be
given full force and effect according to each and all of its express terms and
conditions, including those unknown and unsuspected claims, demands and causes
of actions hereinabove specified. Each Party hereto expressly understands and
acknowledges that Section 1542 of the California Civil Code provides as follows:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF
KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR. Each
Party hereby waives the foregoing provisions of California Civil Code §1542. The
Parties acknowledge that they may hereafter discover claims or facts in addition
to or different from those which they now know or believe to exist with respect
to the subject matter of this Agreement and which, if known or suspected at the
time of executing this Agreement, may have materially affected this settlement.
Nevertheless, the Parties hereby waive, after final resolution by the court, any
right, claim or cause of action that might arise as a result of different or
additional claims or facts. The Parties acknowledge that they understand the
significance and consequence of such release and such specific waiver of
California Civil Code §1542.

 

16

 

 

7.13Noncompete; Enforceability; Remedies. Alliqua agrees that during the
Restricted Period Alliqua shall not, directly or indirectly through any entity,
as a principal, employee, partner, owner, member, officer, director, agent,
consultant or otherwise, compete with BSN (whether by manufacturing, designing,
distributing or otherwise selling), or assist in or provide financial resources
to any Person or activity which manufactures, designs, distributes or sells
super absorbent wound dressings competitive with the Products in the Territory.
Alliqua shall provide BSN with at least 30 calendar days prior written notice of
any Change of Control Transaction. For the avoidance of doubt, Alliqua and BSN
hereby acknowledge and agree that the restrictions set forth in this Section
7.13 are not intended to, and shall not, restrict the business activities of any
acquirer of Alliqua pertaining to products other than the Products, provided
that (x) such business activities existed prior to the date of the consummation
of the Change of Control Transaction, (y) that Alliqua is not and was not
directly or indirectly involved or engaged in such business activities in
violation of the first sentence of this Section 7.13, and (z) Alliqua does not
provide any information related to the Business to such acquirer that is used to
the detriment of BSN. Alliqua acknowledges and agrees that the covenants and
agreements set forth in this Section 7.13 were a material inducement to BSN to
enter into this Agreement and to perform its obligations hereunder, and that BSN
would be irreparably damaged and would not obtain the benefit of the bargain set
forth in this Agreement as specifically negotiated by the Parties if Alliqua
breached the provisions of this Section 7.13. Alliqua has consulted with legal
counsel regarding the covenants set forth in this Section 7.13 and, based on
such consultation, has determined and hereby acknowledges that such covenants
are reasonable in terms of duration, scope and area of restrictions and are
necessary to protect the goodwill of Rights and the substantial investment in
the Rights made by BSN hereunder. Alliqua further acknowledges and agrees that:
(i) the benefits to Alliqua of the transactions contemplated by this Agreement
are sufficient consideration to support Alliqua’s agreements set forth in this
Section 7.13; and (ii) the agreements set forth in this Section 7.13 are being
entered into in connection with the purchase of Rights pursuant to this
Agreement and not in connection with any other arrangement between Alliqua and
BSN. In the event of any breach of the covenants set forth in this Section 7.13,
Alliqua agrees that the harm to BSN or the Rights will be irreparable and
without adequate remedy at law and therefore that specific performance by way of
permanent and/or temporary injunctive relief with respect thereto will be
appropriate in addition to any other legal rights or remedies available under
the applicable Legal Requirements or under this Agreement, without the necessity
of proving the inadequacy of legal damages or of posting a bond. Furthermore,
upon the final determination of any breach of the covenants set forth in this
Section 7.13, the relevant restriction period identified above shall be extended
for a length of time equivalent to the period of breach. In the event that a
court of competent jurisdiction determines in a final, non-appealable judgment,
in an action brought by or on behalf of BSN, that any of the foregoing
provisions are unenforceable as stated, the Parties intend that such
restrictions be modified to permit the maximum enforceable restriction,
including on Alliqua’s competition with BSN.

 

7.14Expenses. Except as otherwise expressly provided herein, Alliqua and BSN
shall each pay all of their own Expenses.

 

7.15Public Regulatory Filings. Alliqua will consult with BSN, and provide BSN a
reasonable prior opportunity to review and comment upon any public statements
made or caused to be made by or on behalf of Alliqua or its Affiliates, whether
or not required by applicable Law, that the transactions contemplated hereby
have been consummated. Notwithstanding the foregoing, Alliqua will not be
required to consult with BSN with respect to any public statements as to the
completion of the transaction that are consistent (and not inconsistent) with
any statements that have previously been reviewed by BSN.

 

7.16Mutual Non-Disparagement.

 

(a)Subject to applicable law, the Parties shall each refrain from making, and
shall cause their respective agents, subsidiaries, Affiliates, successors,
assigns, officers, key employees or directors not to, directly or indirectly, in
any capacity or manner, make, express, transmit, speak, write, verbalize or
otherwise communicate in any way (or cause, further, assist, solicit, encourage,
support or participate in any of the foregoing), any remark, comment, message,
information, declaration, communication or other statement of any kind, whether
verbal, in writing, electronically transferred or otherwise, that might
reasonably be construed to be derogatory of (a) in the case of statements or
announcements by Alliqua, BSN or any of its Affiliates or subsidiaries or any of
its or their respective officers or directors or any person who has served as an
officer or director of BSN or any of its Affiliates or subsidiaries, or (b) in
the case of communications by BSN, Alliqua or any of its Affiliates or
subsidiaries or any of its or their respective officers or directors or any
person who has served as an officer or director of Alliqua or any of its
Affiliates or subsidiaries. The foregoing shall not restrict the ability of any
Person to (ii) comply with any subpoena or other legal process or respond to a
request for information from any governmental authority with jurisdiction over
the party from whom information is sought or (ii) to comply with any applicable
Law.

 

17

 

 

(b)The limitations set forth in Section 7.16(a) shall not prevent any Party from
responding to any public statement made by the other Party of the nature
described in Sections 7.16(a) and 7.16(b) if such statement by the other Party
was made in breach of this Agreement.

 

7.17Further Assurances. In case at any time after the Closing any further action
is necessary or desirable to carry out the purposes of this Agreement and any
Ancillary Document, each of the Parties shall take further action (including the
execution and delivery of further instruments and documents) as any other Party
reasonably may request, all at the sole cost and expense of the requesting Party
(unless the requesting Party is entitled to indemnification therefor under
Article 5, in which case the provisions of Article 5 shall apply).

 

7.18Counterparts; Exchange by Electronic Transmission. This Agreement may be
executed in one or more counterparts, each of which shall be deemed an original,
but which together shall constitute one and the same instrument. The Parties may
execute this Agreement, any Ancillary Documents and all other agreements, and
other documents contemplated hereby and thereby and exchange on the Closing Date
counterparts of such documents by means of facsimile transmission or electronic
mail and the Parties agree that the receipt of such executed counterparts shall
be binding on such Parties and shall be construed as originals. After the
Closing the Parties shall promptly exchange original versions of this Agreement,
any Ancillary Documents and all other agreements, and other documents
contemplated hereby and thereby that were executed and exchanged by facsimile
transmission or electronic mail pursuant to this section, but failure to do so
shall not affect the binding nature of the same.

 

[Remainder of This Page Left Blank Intentionally; Signature Page Follows]

 

18

 

 

IN WITNESS WHEREOF, the Parties have executed this Purchase Agreement as of the
date first written above.

 

  BSN MEDICAL, INC.         By: /s/ Joseph Carpinelli   Name: Joseph Carpinelli
  Its: SVP Finance, North America         ALLIQUA BIOMEDICAL, INC.         By:
/s/ Brian M. Posner   Name: Brian M. Posner   Its: CFO

 

[Signature Page to Purchase Agreement]

 

 

 

 

Annex A

Distributor Agreement

 

A-1

 

 

Distributor Agreement

EXECUTION COPY

between

 

Sorbion GmbH & Co KG,

a company based in Senden, Germany, incorporated under the laws of the Federal
Republic of Germany, registered with the commercial register of the local court
of Coesfeld, Germany, under HRA 6688, represented by its general partner SORBION
Verwaltungs GmbH which is represented by its managing director Michael Stonner
and proxy Olaf Ohm, business address: Im Südfeld 11, 48308 Senden, Germany,

 

(hereinafter referred to as "SORBION")

 

and

 

Alliqua Biomedical, Inc.,

a company based in New York, New York, incorporated under the laws of Florida,
business address: 850 Third Avenue, Suite 1801, New York, NY 10022, USA

 

(hereinafter referred to as ,,ALLIQUA")

 

(SORBION and ALLIQUA collectively hereinafter referred to as “PARTIES" and each
as "PARTY")

 

WHEREAS, SORBION is designing, manufacturing and selling wound care-products for
hydro active wound management;

 

WHEREAS, ALLIQUA is a wound management and drug delivery company and is willing
to sell the PRODUCTS of SORBION to third parties within the countries listed in
Exhibit A (hereinafter the "TERRITORY");

 

WHEREAS, SORBION is willing to appoint ALLIQUA with this distributor agreement
(the "AGREEMENT") as its distributor for the sale of some of its products to
third parties residing in the TERRITORY;

 

Now, THEREFORE, IN CONSIDERATION OF THE TERMS AND CONDITIONS SET FORTH
HEREUNDER, THE

PARTIES CONVENE AND AGREE AS FOLLOWS:

 

 1 

 

 

section 1

Appointment as distributor, legal position of the distributor

 

(1)SORBION hereby appoints ALLIQUA as its distributor for the sale of the
products listed in Exhibit B (including Annex 1, Annex 2 and Annex 3 to Exhibit
8) and - subject to para (2) below - all product line extensions of any of the
foregoing (hereinafter referred to as "PRODUCTS") within the TERRITORY. ALLIQUA
accepts such appointments. The specifications of the PRODUCTS are described in
Exhibit B (Annex 1, Annex 2 and Annex 3). SORBION represents and warrants that
the grant of rights to ALLIQUA under this AGREEMENT does not conflict with any
agreement that SORBION has with any third party.

 

(a)ALLIQUA's rights to distribute the PRODUCTS listed in Exhibit B, Annex 1 and
- subject to para (2) below - all product line extensions of any of the
foregoing (collectively, the "ANNEX 1 PRODUCTS") shall be exclusive (even as to
SORBION) in the TERRITORY; provided, however, that notwithstanding such
exclusivity, a certain third party distributor of SORBION, Systagenix Wound
Management ("SYSTAGENIX"), shall have the right to distribute the ANNEX 1
PRODUCTS in the TERRITORY on a private-label basis under SYSTAGENIX's brand
pursuant to an agreement between SYSTAGENIX and SORBION that exists as of the
date of this AGREEMENT. If SYSTAGENIX's right to distribute the ANNEX 1 PRODUCTS
in the TERRITORY expires or is terminated, then ALLIQUA's rights to distribute
the ANNEX 1 PRODUCTS shall automatically become exclusive in all respects.

 

(b)As of the date of this AGREEMENT, ALLIQUA's rights to distribute the PRODUCTS
listed in Exhibit B. Annex 2 and - subject to para (2) below - all product line
extensions of any of the foregoing (collectively, the "ANNEX 2 PRODUCTS") shall
be exclusive (even as to SORBION) in the TERRITORY; provided, however, that
notwithstanding such exclusivity, a certain third party distributor of SORBION,
Carolon Company ("CAROLON"), shall have the right to distribute the ANNEX 2
PRODUCTS in the TERRITORY (in addition to ALLIQUA's right to distribute the
ANNEX 2 PRODUCTS in the TERRITORY) pursuant to an agreement between CAROLON and
SORBION that exists as of the date of this AGREEMENT. If CAROLON's right to
distribute the ANNEX 2 PRODUCTS in the TERRITORY expires or is terminated (or is
assigned to ALLIQUA), then ALLIQUA's rights to distribute the ANNEX 2 PRODUCTS
shall automatically become exclusive in all respects.

 

(c)ALLIQUA's rights to distribute the PRODUCTS listed in Exhibit B, Annex 3 and
– subject to para (2) below - all product line extensions of any of the
foregoing (collectively, the "ANNEX 3 PRODUCTS") shall be exclusive (even as to
SORBION) in the TERRITORY at all times during the term of this AGREEMENT.

 

 2 

 

 

(2)The Parties upon mutual agreement may modify Exhibit B (Annex 1, Annex 2 and
Annex 3). For the avoidance of doubt, SORBION has the sole discretion which
product line extension may be distributed in the TERRITORY. Therefore, if a
product line extension is distributed outside the TERRITORY but Sorbion decides
not to distribute this product line extension in the TERRITORY, ALLIQUA may not
sell the respective product line extension in the TERRITORY.

 

(3)The basis of the legal relationship between the PARTIES, in relation to all
processes connected with this AGREEMENT, is exclusively this AGREEMENT as well
as the General Terms and Conditions of Sale and Transfer of SORBION that are
attached as Exhibit C, which shall be applicable to the individual purchase
contracts still to be concluded (see below section 2). Conflicting, deviating or
additional agreements do not exist, except as attached as exhibits to this
AGREEMENT or except with respect to the design, packaging and labeling agreement
referenced below in section 1(4). SORBION does not acknowledge any general terms
and conditions of ALLIQUA. Even if a purchase contract is performed without
reservation in the knowledge of conflicting or deviating terms and conditions of
ALLIQUA, this shall not constitute a consent of SORBION to their application.

 

(4)ALLIQUA shall buy the PRODUCTS directly from SORBION in its own name and on
its own account, and then shall sell them under the respective trademark (e. g.
"SORBION", "SORBION sachet", "SORBION sachet S" or "SORBION sana") with the
design, packaging and labeling as agreed by the PARTIES (such agreement not to
be unreasonably withheld or delayed), to third parties domiciling within the
TERRITORY in its own name and on its own account. ALLIQUA is free in determining
its selling prices.

 

(5)Nothing in this AGREEMENT shall constitute the right of ALLIQUA to act as an
agent of SORBION to represent SORBION in any way whatsoever. ALLIQUA is not
entitled to conclude legal transaction on behalf of SORBION. For the avoidance
of doubt, ALLIQUA is an independent enterprise and not an employee of SORBION.

 

(6)ALLIQUA is in a position to assess the financial chances and risks of the
activity hereby contractually assumed. SORBION is therefore not responsible for
the profitability of the business of ALLIQUA.

 

(7)ALLIQUA shall not be entitled to engage subcontractors or any third party as
its subagent or the alike with respect to marketing of the PRODUCTS without
having obtained SORBION's prior written approval to do so, such approval not to
be unreasonably withheld; provided, however, that for the avoidance of doubt,
SORBION's approval will not be required for ALLIQUA to: (i) sell PRODUCTS
through wholesalers, Group Purchasing Organizations ("GPOs") and other third
parties as are customarily involved in the distribution and sale of medical
device products in the TERRITORY or (ii) use contract sales organizations or
other independent sales representatives in connection with the marketing of the
PRODUCTS.

 

 3 

 

 

(8)ALLIQUA acknowledges SORBION's policy of working with local partners and
granting them exclusivity for certain countries and regions outside the
TERRITORY: ALLIQUA agrees not to interfere with this policy. ALLIQUA is not
allowed to actively initiate, support and accomplish soliciting any sales of the
PRODUCTS outside the TERRITORY. ALLIQUA shall limit its efforts to advertise and
solicit sales of the PRODUCTS to activities executed within the TERRITORY,
unless customers from outside the TERRITORY have solicited for quotations and/or
deliveries without prior inducement by ALLIQUA (passive distribution). ALLIQUA
will not ship or sell any customer outside the TERRITORY without the expressed
written approval of SORBION. Sale and distribution in the European Union,
Switzerland, Turkey and Australia explicitly is reserved to SORBION and its
other distributors. ALLIQUA will inform its customers that the PRODUCTS are for
sale in the TERRITORY only. Should ALLIQUA determine that PRODUCTS are being
sold outside the TERRITORY by a customer from within the TERRITORY, ALLIQUA will
notify SORBION so that appropriate action may be taken.

 

section 2

Purchase, sale and delivery of PRODUCTS, prices

 

 

(1)ALLIQUA will undertake commercially reasonable efforts to enhance the sale of
the PRODUCTS. ALLIQUA will undertake commercially reasonable efforts to achieve
a regular flow of orders and take-offs of the PRODUCTS during each calendar
year. ALLIQUA is obliged to protect the interests and reputation of SORBION and
not to do anything which would endanger the reputation, market position or
creditworthiness of SORBION or otherwise damage SORBION. ALLIQUA undertakes to
discuss with SORBION at regular intervals the objectives and strategies for the
sale of PRODUCTS in the TERRITORY.

 

(2)SORBION sells the PRODUCTS on the basis of its General Terms and Conditions
of Sale and Transfer attached as Exhibit C and which can be amended from time to
time upon the mutual, written agreement of the PARTIES. The provisions of this
AGREEMENT shall have in case of contradiction priority over the General Terms
and Conditions of Sale and Transfer. For the avoidance of doubt, and without
limiting the foregoing, the PARTIES agree that the following provisions set
forth in the General Terms and Conditions of Sale and Transfer shall have no
effect, as such provisions address matters that are covered in the main body of
this AGREEMENT: Section 11(1), Section Ill, Section IV(1). For the avoidance of
doubt, the sale of PRODUCTS are on basis of Section XIII of the General Terms
and Conditions of Sale and Transfer.

 

 4 

 

  

(3)Except as provided below as well as in Section 2(3) and Section 2(5) below,
SORBION will accept all Product orders that are issued by ALLIQUA and that are
consistent with the valid price list (see para. (6) below). However, the
individual purchase contract shall come into effect only on acceptance of the
order of ALLIQUA by SORBION. SORBION shall send an order confirmation. SORBION
is entitled to stop accepting orders for the PRODUCTS, only to the extent
SORBION decides to do so generally for all markets worldwide, after informing
ALLIQUA in writing with a notice period of six months. Orders of ALLIQUA
accepted by SORBION before the end of such notice period shall remain
unaffected. Further, SORBION may decide to not to accept orders if the
respective Products are - pursuant SORBION's sole discretion - not marketable or
defective or if there is the risk or suspicion that the respective Products do
not comply with the requirements set out in Section 4(1) below.

 

(4)SORBION will deliver PRODUCTS to ALLIQUA by the delivery date set forth on
ALLIQUA's order, provided that such delivery date is no sooner than 30 days
after the date of such order.

 

(5)Events of force majeure hindering the Parties in fulfilling their contractual
obligations in part or in total, shall exempt and free the relevant Party from
its obligation to fulfill this contract until the events of force majeure do not
exist anymore. The following shall be regarded as events of force majeure: fire,
natural disaster, war, revolution, riots, acts of terrorism, shortage of raw
materials, strike, lockouts, disturbances in seller's business or business of
suppliers, acts of government or authority. The other Party may terminate the
contract if the event of force majeure lasts for more than six months or if the
party terminating the contract can reasonably demonstrate that it would be
unreasonable for the party to continuously be bound by the contract.

 

(6)SORBION is free to determine its prices and conditions. At least 30 days
before the beginning of each calendar year starting with 2015, SORBION shall
send ALLIQUA the valid price list which shall remain in effect for the duration
of such calendar year. The currently valid price list which shall remain in
effect for calendar years 2013 and 2014 is attached to this AGREEMENT as Exhibit
D. The prices according to Exhibit D are ex works and have to be paid within 30
days after date of invoice with 3% deduction or 45 days after date of invoice
without deduction. SORBION will invoice ALLIQUA for each PRODUCT order upon
shipment of the PRODUCTS covered by the order to ALLIQUA. For the avoidance of
doubt, prices do not include any import taxes, sales taxes, duty or other
governmental fees which have to be paid by ALLIQUA. Notwithstanding anything to
the contrary: (i) Sorbion will pay for fifty percent (50%) of Shipment Costs (as
defined below) with respect to PRODUCT orders that are for less than 50.000,00 €
and (ii) Sorbion will pay for one hundred percent (100%) of Shipment Costs with
respect to PRODUCT orders that are equal or above 50.000,00 €. "Shipment Costs"
means the following costs associated with an order of PRODUCTS: (i) shipping
costs (via a mutually agreed upon means of shipping), (ii) other logistics
costs, including customs clearance costs and (iii) import taxes, sales taxes,
duties and other governmental fees.

 

 5 

 

  

(7)In cases of late payment for PRODUCTS that conform to the requirements of
this AGREEMENT, SORBION is entitled to claim interest in the amount of 8 % p. a.
Further claims for damages remain unaffected.

 

section 3 Exclusivity

 

(1)ALLIQUA shall act as SORBION's exclusive distributor for the PRODUCTS within
the TERRITORY for the term of this AGREEMENT (subject to the limited exceptions
provided for in Sections 1(1)(a) and {b) and also subject to ppara. (3) and (4)
below). As long as exclusivity is granted to ALLIQUA, SORBION will not itself
sell any PRODUCTS into the TERRITORY or appoint any third party to sell PRODUCTS
into the TERRITORY (other than the existing appointments of SYSTAGENIX and
CAROLON as distributors of ANNEX 1 PRODUCTS and ANNEX 2 PRODUCTS, respectively,
as provided in Sections 1(1)(a) and (b)) without ALLIQUA's approval. In
addition, SORBION agrees that it will use its best efforts to insure that the
PRODUCTS are not sold from another territory into the TERRITORY.

 

(2)The exclusivity granted to ALLIQUA under this AGREEMENT is conditioned on
ALLIQUA purchasing from SORBION, during calendar year 2014 and each calendar
year thereafter during the term of this AGREEMENT, PRODUCTS for an aggregate
purchase price that equals or exceeds the minimum purchase amount that is set
forth for such calendar year on Exhibit E (the "MINIMUM ANNUAL PURCHASE
AMOUNT"). If ALLIQUA fails to make PRODUCT purchases for payments that, in the
aggregate, equal or exceed the MINIMUM ANNUAL PURCHASE AMOUNT for a given
calendar year, then ALLIQUA may, at its sole discretion, cure such failure by
paying SORBION, within 45 days after the end of such calendar year, an amount
equal to such MINIMUM ANNUAL PURCHASE AMOUNT minus the aggregate payments made
by ALLIQUA for PRODUCT purchases for such year. SORBION's sole and exclusive
remedy for any failure by ALLIQUA to pay the MINIMUM ANNUAL PURCHASE AMOUNT for
a given calendar year shall be as set forth below in Section 3(3), Section 3(4)
and Section 3(5).

 

(3)If ALLIQUA fails to pay the applicable MINIMUM ANNUAL PURCHASE AMOUNT for a
given calendar year in accordance with para. (2) above, SORBION is entitled to
terminate the exclusivity right of ALLIQUA immediately and convert ALLIQUA's
rights under this AGREEMENT to non-exclusive rights. In addition, if ALLIQUA
fails to pay the MINIMUM ANNUAL PURCHASE AMOUNT in accordance with para. (2)
above for two subsequent calendar years, SORBION shall have the right to
terminate this AGREEMENT in its entirety upon ninety (90) days prior, written
notice to ALLIQUA.

 

 6 

 

 

(4)Notwithstanding anything to the contrary, ALLIQUA shall not be required to
purchase the MINIMUM ANNUAL PURCHASE AMOUNT in order to retain the exclusivity
granted to ALLIQUA under this AGREEMENT, and SORBION shall have no termination
right under Section 3(3) above, if SORBION fails to supply PRODUCTS to ALLIQUA
that meet the requirements of this AGREEMENT, whether on account of an Event of
Force Majeure, on account of SORBION no longer accepting orders pursuant to
Section 2(3) with regard to any PRODUCT or a cessation of sales pursuant to
Section 4(6) with regard to any PRODUCT, or otherwise. Further, ALLIQUA shall
not be required to purchase the MINIMUM ANNUAL PURCHASE AMOUNT regarding the
calendar year 2014 in order to retain the exclusivity granted to ALLIQUA under
this AGREEMENT, and SORBION shall have no termination right under Section 3(3)
above, if ALLIQUA acquires CAROLON's rights to distribute the ANNEX 2 PRODUCTS
in the TERRITORY.

 

(5)Further, any material breach of this AGREEMENT by ALLIQUA will entitle
SORBION to terminate the exclusivity by providing ALLIQUA with thirty (30) days
prior, written notice of such termination; provided, however, that such
exclusivity will not terminate if ALLIQUA cures such breach by the end of such
thirty (30) day period. This shall not affect any other rights or remedies of
SORBION arising from such failure, especially the right to terminate the whole
AGREEMENT in accordance with section 10.

 

section 4

Agreement of Quality Assurance

 

(1)SORBION declares conformity with the essential requirements as stated in
Annex I of the European medical device directive 93/42/EEC and confirms to
maintain a complete quality management system as required by Annex II of
93/42/EEC. SORBION represents, warrants and covenants that the PRODUCTS at all
times shall be: (i) labeled internationally, including English language and
English language instructions for use, and in compliance with all applicable
laws and regulations in the TERRITORY and (ii) the PRODUCTS at all times shall
meet all applicable laws and regulations pertaining to the sale of the PRODUCTS
in the TERRITORY. If legal provisions or authority directives in the TERRITORY
require a change in the PRODUCTS ALLIQUA is obliged to inform SORBION.

 

(2)ALLIQUA is obliged to ensure that its marketing practices with respect to the
PRODUCTS complies with local or other laws. ALLIQUA is liable for any damages,
financial or of any other kind, which are caused by failure to meet the
foregoing requirement.

 

 7 

 

 

(3)ALLIQUA will comply with all statutory and/or official regulations, laws,
instructions, decisions and/or statutes which affect ALLIQUA and its enterprise
as well as the possibility of the sale of the PRODUCTS in the TERRITORY. ALLIQUA
will pay all taxes, license fees, permit fees or registration fees and other
costs and charges incurred by ALLIQUA connected with the establishment and/or
the operation of ALLIQUA's business as well as the sale of the PRODUCTS, insofar
as such exist.

 

(4)SORBION will be responsible, at its expense, for (i) obtaining and
maintaining any required regulatory approvals and clearances with respect to the
PRODUCTS in the TERRITORY, (ii) responding to requests from regulatory
authorities in the TERRITORY with respect to the PRODUCTS, (iii) reporting any
adverse events with respect to the PRODUCTS to applicable regulatory authorities
in accordance with applicable laws and regulations, (iv) conducting any clinical
studies with respect to the PRODUCTS and (v) obtaining reimbursement approvals
for the PRODUCTS in the TERRITORY.

 

(5)ALLIQUA will promptly report to SORBION any adverse events of which ALLIQUA
becomes aware with regard to the PRODUCTS. ALLIQUA will conduct its distribution
activities (including but not restricted to the keeping of distribution records,
complaint handling, and problem reporting to SORBION and recall procedures) in
accordance with applicable laws and regulations in the TERRITORY. ALLIQUA will
provide for adequate insurance with regard to its distribution activities.
ALLIQUA undertakes reasonable efforts to market the SORBION brand in the
TERRITORY.

 

(6)SORBION has the right to instruct ALLIQUA to immediately cease sales of the
PRODUCTS in the event such sales would violate any applicable law, or would
expose SORBION to product defect liability in the event of non-conformity. Such
right of SORBION is in addition to its rights under section 2(3) of this
AGREEMENT.

 

(7)All marketing materials such as brochures, internet marketing and any kind of
advertising must be in conformity of the PRODUCT's respective instructions for
use and have to be agreed upon with SORBION before launch. SORBION will not
unreasonably withhold its approval of any such marketing materials. Changes in
the PRODUCTS, the packaging and design are only allowed with prior written
consent of SORBION. SORBION may provide for marketing, branding, corporate
identity- and compliance-schemes and materials, which ALLIQUA must use
commercially reasonable efforts to comply with and use. ALLIQUA must inform
SORBION if ALLIQUA becomes aware of that such schemes and materials violate or
interfere with applicable law in the TERRITORY, in which event the PARTIES will
adjust such schemes and/or materials to accomplish the directive of SORBION at
the best.

 

 8 

 

 

(8)ALLIQUA will provide user support for local customers and be responsible for
post-market surveillance in the TERRITORY (provided that SORBION shall be
responsible for any reporting obligations to applicable regulatory authorities).
ALLIQUA will establish procedures for complaint handling and will inform SORBION
without undue delay of any problems relating to the PRODUCTS.

  

(9)ALLIQUA will introduce and maintain a system for keeping distribution
records, which enables ALLIQUA to perform a product recall, if such recall
should become necessary. ALLIQUA will establish procedures to perform such a
recall procedure. The distribution records will be kept for five years after the
PRODUCTS "use-by"-date, even if the exclusivity and/ or the AGREEMENT have
expired. In the event that a recall of the PRODUCTS becomes necessary, SORBION
will provide to ALLIQUA instructions on recall procedures which shall be
followed by ALLIQUA to the extent commercially reasonable. Costs of any recalls
shall be borne by SORBION, unless recall necessity is solely as a result of
ALLIQUA's negligence.

 

(10)ALLIQUA will follow the applicable regulations for marketing medical devices
and the applicable regulations on fair competition and fair dealing. Even if
there are no local restrictions in the TERRITORY, ALLIQUA will not use
fraudulent or misleading advertising or marketing.

 

section 5

Use of trademarks and intellectual property

 

(1)SORBION grants to ALLIQUA the right to use the trademarks SORBION, SORBION
Sachet S, SORBION Sana for the sale and distribution of the PRODUCTS delivered
by SORBION to customers in the TERRITORY and for marketing activities in the
TERRITORY under the terms and for the duration of this AGREEMENT as long as it
is clearly indicated that the Product is manufactured by SORBION and imported
and distributed by ALLIQUA.

 

(2)ALLIQUA will market, sell and deliver the PRODUCTS as provided by SORBION
only under the SORBION SORBION Sachet S, SORBION Sana trademark and Logo with
the original package and directions for use. SORBION will add a reference
identifying ALLIQUA as responsible importer /vendor and/or local contact. The
design requires the prior written consent of both PARTIES.

 

(3)ALLIQUA agrees not to use any name or trademark similar to, confusingly or
deceptively similar with the trademarks of SORBION and to assist SORBION, at
SORBION's request and expense, in taking all reasonable steps to defend or to
protect its trademarks relating to the PRODUCTS in the TERRITORY.

 

 9 

 

 

(4)From the marketing, sale, distribution, or other use of the PRODUCTS, ALLIQUA
generally does not derive any right regarding the trademark, Logo, symbols or
part thereof of SORBION. If local law grants any such rights to ALLIQUA, ALLIQUA
is obliged and guarantees to return the right to SORBION immediately after the
end of exclusivity and/or the AGREEMENT without costs to SORBION.

 

(5)ALLIQUA undertakes to use intellectual property (i.e. trademarks, patents,
know-how, copyright) belonging to SORBION only in the manner and to the extent
expressly permitted by this AGREEMENT or in writing by SORBION. ALLIQUA will
provide all possible co-operation and assistance, at SORBION's request and
expense, in SORBION's efforts to protect its intellectual property in the
TERRITORY.

 

section 6

Sales Forecast / Market Analysis

 

 

(1)ALLI QUA shall provide SORBION with a first market analysis for 2014 on or
before 30.11.2013.

 

(2)In each quarter ALLIQUA shall provide SORBION with a marketing- and
activity-report, relating to its own activities and the general market
development with respect to the PRODUCTS.

 

(3)Not later than thirty (30) days prior to first day of each calendar quarter
during the term of this AGREEMENT, ALLIQUA shall also provide to SORBION: (i)
its non-binding written forecast of ALLIQUA's good faith written estimate of
expected requirements for PRODUCTS during the following 12 months, and (ii) its
binding written forecast of ALLIQUA's requirements for PRODUCTS, during such
calendar quarter {for example, the forecast for the first calendar quarter of
each year shall be provided not later than 30 days prior to the first day of the
first calendar quarter of such year). Each such binding forecast shall be broken
down on a month-by-month basis for the applicable calendar quarter.

 

(4)SORBION shall provide ALLIQUA with any information regarding SORBION's sales
activity outside the TERRITORY, including for new products and special marketing
activities, except regarding confidential information as determined by SORBION.

 

section 7

Warranty and liability

 

(1)ALLIQUA shall examine the PRODUCTS promptly after collection/delivery of the
PRODUCTS for any damage that is obvious from a visual inspection ("Obvious
Defects"). Obvious defects shall be notified to SORBION in writing immediately,
in any event not later than seven days after receipt. Defects that are not
Obvious Defects have to be notified promptly after discovery. If SORBION is not
notified in time, all claims are excluded.

 

 10 

 

 

(2)If the delivered PRODUCTS are not conforming to the specifications agreed
between the PARTIES or the other requirements of this AGREEMENT (hereinafter
referred to as "DEFECTIVE PRODUCTS" or "DEFECT") SORBION at its choice will
either render substitutive delivery or repair, promptly and at no additional
cost to ALLIQUADEFECTIVE PRODUCTS shall, on demand of SORBION and at its costs,
be returned or be demolished. If SORBION fails to fill the order at issue with
PRODUCTS that are not DEFECTIVE PRODUCTS within 30 days after ALLIQUA’s original
requested delivery date, then ALLIQUA has the right to rescind the relevant
portion of the order upon notice to SORBION, in which event SORBION will refund
to ALLIQUA any amounts previously paid by ALLIQUA with respect to such order.

 

(3)THE WARRANTY AND LIABILITY OF SORBION IS EXCLUDED, IF THE DEFECT IS BASED ON
A USE OUTSIDE THE TERRITORY, IMPROPER TRANSPORT OR STORAGE BY ALLIQUA, OR
BECAUSE ALLIQUA HAS DISREGARDED WRITTEN INSTRUCTIONS OF SORBION WITH RESPECT TO
THE STORAGE OR HANDLING OF PRODUCTS.

 

(4)To the best knowledge of SORBION the use of the trademarks and use or sale of
the PRODUCTS does not infringe any rights of third parties. HOWEVER NO WARRANTY
ABOUT THE ABSENCE OF AN INFRINGEMENT OF THIRD PARTIES' INTELLECTUAL PROPERTY
RIGHTS IN THE TERRITORY IS GIVEN AND ABOUT THE FACT OF THE CONTINUANCE OF THE
TRADEMARKS AND THE UNDERLYING INTELLECTUAL PROPERTY CONCERNI NG THE PRODUCTS.

 

(5)SUBJECT TO SECTION 7 (6) BELOW, IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR
ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL, PUNITIVE OR EXEMPLARY DAMAGES
ARISING FROM OR IN CONNECTION WITH THIS AGREEMENT OR THE PRODUCTS (INCLUDING,
BUT NOT LIMITED TO, LOSS OF PROFITS OR REVENUES OR BUSINESS) WHETHER ARISING OUT
OF WARRANTY, INDEMNITY, CONTRACT, NEGLIGENCE OR OTHER TORT, OR OTHERWISE.

 

(6)Notwithstanding anything to the contrary, the liability exclusions set forth
in section 7 (5) will not apply to: (i) any damages arising from a PARTY's gross
negligence, fraud or willful misconduct or (ii) the PARTIES' respective
indemnity obligations under section 8.

 

 11 

 

 

section 8

Product liability

 

(1)SORBION shall indemnify, defend and hold ALLI QUA and its affiliates and its
and their respective officers, directors, employees and agents harmless against
any claims, actions, lawsuits and investigations brought by a third party
("THIRD PARTY CLAIMS") and will pay any settlements, awards, fines and
reasonable attorney's fees and expenses and court costs associated with such
THIRD PARTY CLAIMS (collectively, "LOSSES"), in each case to the extent arising
from or relating to any assertion that any Product contains a defect, such as
faulty design, materials or workmanship, unless caused by ALLIQUA's negligence,
fraud or willful misconduct; provided, however, that ALLIQUA provide proper
notice of the potential THIRD PARTY CLAIM in accordance with section 8(2) below,
and provided that SORBION shall have the exclusive right, subject to its own
indemnity insurance agreements, to select counsel and to accept or reject any
offers of settlement with adverse parties. SORBION'S right to select counsel and
to have exclusive right to accept or reject any offers of settlement shall be a
precondition for any indemnification. This clause shall not apply to any THIRD
PARTY CLAIM related solely to unauthorized sales made in contravention of a
cessation instruction under section 4(6) of this AGREEMENT.

  

(2)ALLIQUA shall immediately notify SORBION in writing of any notice or claim
for which ALLIQUA seeks indemnity pursuant to section 8(1) and of the
commencement of any suit or action with respect to any such claim, but in no
event more than five (5) business days following the first day ALLIQUA becomes
aware of the suit or action; provided, however, that the failure to give timely
notice hereunder will not affect rights to indemnification hereunder if Alliqua
has committed this failure neither deliberately nor carelessly. ALLIQUA shall
permit SORBION to become informed of and to follow any such proceedings.

 

(3)ALLIQUA shall indemnify, defend and hold SORBION and its affiliates and its
and their respective officers, directors, employees and agents harmless against
any THIRD PARTY CLAIMS, and will pay any associated LOSSES, in each case to the
extent arising from or relating to ALLIQUA's negligence, fraud or willful
misconduct.

 

(4)In the event one PARTY is liable to indemnify the other hereunder, the
indemnity shall include any and all liability as against third parties, as well
as reasonable legal and any other costs incurred in defending or settling such
claims.

 

(5)The provisions of this section 8 shall not be affected by the completion,
termination or cancellation of this AGREEMENT or any part thereof, and shall
apply notwithstanding any other provisions of this AGREEMENT.

 

section 9

Purchase of PRODUCTS; Competition

 

(1)ALLIQUA shall purchase the PRODUCTS only from SORBION.

 

 12 

 

 

(2)ALLIQUA shall not during the term of the AGREEMENT without the prior written
consent of SORBION, whether directly or indirectly, itself or through third
parties, distribute, sell, advertise or otherwise market any wound dressing
containing alginate nor any superabsorbent products that compete with any of the
PRODUCTS.

 

section 10

Duration / Termination of the AGREEMENT

 

 

(1)The initial term of this AGREEMENT begins on the date appearing on the
signature page below and ends on December 31, 2018.

 

(2)In September 2014, the PARTIES will agree on Minimum Annual Purchase Amount
to be met in 2018. If these Minimum Annual Purchase Amount is met, the
Distributor AGREEMENT shall be renewed automatically for another year after the
initial term. If the PARTIES cannot agree on the Minimum Annual Purchase Amount
for 2018 until 31 September 2014 or until a mutually agreed extension date, the
AGREEMENT will end automatically on December 31, 2018. Likewise, the PARTIES
will agree within September 2015, September 2016, September 2017 and - as the
case may be - September 2018 on Minimum Annual Purchase Amounts to be met in
2019, 2020, 2021 and 2022, and if the Minimum Annual Purchase Amount for any
such year is met, then the AGREEMENT will be renewed automatically, each time
for another year. Therefore, if the agreed Minimum Annual Purchase Amounts are
met by ALLIQUA each year, the total duration of AGREEMENT will be extended until
December 31, 2023. The PARTIES will negotiate on any further extension mutually.

 

(3)ALLIQUA may terminate this AGREEMENT at any time upon six (6) months prior,
written notice to SORBION.

 

(4)Each PARTY's right to terminate this AGREEMENT for good cause remains
unaffected. Good cause for termination by Sorbion shall be limited to the
following:

 

•a change in the ownership of ALLIQUA unless interference with the legitimate
interests of SORBION is not thereby to be anticipated;

•a material breach of obligations out of sales contracts concluded in the
framework of this AGREEMENT (above all, the failure to settle outstanding
purchase-price receivables), which breach is not cured within sixty (60) days
after receiving written notice of such breach from SORBION;

•ALLIQUA's material breach of any of its obligations under this AGREEMENT, which
breach is not cured within sixty (60) days after receiving written notice of
such breach from SORBION;

•in case ALLIQUA at any time challenges any intellectual property of SORBION;

 

 13 

 

 

•ALLIQUA's application for opening of insolvency proceedings as well as the
refusal to open insolvency proceedings for lack of assets, or any similar
proceeding; or

•full closure of business (other than on account of any PRODUCT or market issues
or for other reasons outside of ALLIQUA's reasonable control), with an actual or
anticipated duration of more than ninety (90) days.

 

(5)The termination requires written form. It may be sent by fax, first-class
mail or email using the notice address in Section 12 below.

 

(6)The termination and ending of this AGREEMENT shall not affect the purchase
contracts concluded in the course of its performance. In the event of any
termination, SORBION will continue to supply ALLIQUA so that the latter can
perform the transactions entered into with third parties in the normal course of
business prior to expiry of the AGREEMENT.

 

(7)Documents provided to ALLIQUA may no longer be used from the ending of the
AGREEMENT and are to be returned, unless consumed as intended.

 

(8)The use of intellectual property rights and designations in the sense of this
AGREEMENT shall be ceased at the ending of the AGREEMENT; provided, however,
that ALLIQUA shall be entitled to market and sell any PRODUCTS that are in
inventory or on order as of the effective date of any expiration or termination
of this AGREEMENT for a period of six (6) months after the effective date of
such expiration or termination.

 

(9)ALLIQUA will, at the ending of the AGREEMENT, cooperate in smoothly
transferring the customer relations.

 

(10)Termination of this AGREEMENT shall not give rise to a right of either PARTY
hereto for compensation of any losses or damages incurred by the termination of
this AGREEMENT only, which shall not affect either PARTY's rights or remedies
for any other reason, including any reason to terminate this AGREEMENT. ALLIQUA
especially shall have no claim against SORBION for compensation for loss of
distribution rights, loss of goodwill or any similar loss.

 

(11)The following provisions will survive any expiration or termination of this
AGREEMENT: section 4 ("Agreement of Quality Assurance"), section 7 ('Warranty
and liability"), section 8 ("Product liability"), section 10 ("Duration and
Termination of the AGREEMENT"}, section 11 ("Confidentiality") and section 12
("Miscellaneous").

 

 14 

 

 

section 11 Confidentiality

 

Each PARTY hereby undertakes:

 

(a)at all times during the continuance of this AGREEMENT and for five (5) years
after its termination not to disclose or divulge the contents of this AGREEMENT
to any third party, whether in whole or in part, without the prior written
consent of the other PARTY, unless (i) the same is required in terms of any
statutory or regulatory obligation or requirement or exchange rules or (ii) on a
confidential basis to any prospective financing source or acquirer and their
advisors;

 

(b)at all times during the continuance of this AGREEMENT and for five (5) years
after its termination to maintain confidentiality of information which is marked
"confidential" or "secret" or which might fairly be considered to be of a
confidential nature, supplied by the other PARTY and including, but not limited
to, trade secrets, know-how, procedures, formulas, statistics, marketing and
sales plans, costs and pricing concepts not publicly released by the other
PARTY;

 

(c)on the expiry or termination of this AGREEMENT, or upon the request of the
other PARTY made at any time, to deliver immediately to such other PARTY all
documents and other materials in the possession, care, custody and/or control of
the first PARTY that bear or incorporate the confidential information of the
other PARTY whether in whole or in part; provided, however, such first PARTY
will not be required to deliver any copies of documents or other materials
necessary for its performance under this AGREEMENT or that are maintained in
such PARTY's backup or archival systems.

 

section 12 Miscellaneous

 

(1)Neither PARTY is entitled to transfer any rights or obligations under this
AGREEMENT to third parties without the other PARTY's prior, written consent.
However, notwithstanding the foregoing (but subject to SORBION's termination
right under clause 10(4) to the extent applicable), either PARTY may, without
any requirement to obtain the other PARTY's consent, transfer and assign its
rights and obligations under this AGREEMENT to (i) an affiliated company of such
PARTY or (ii) in connection with any merger, sale of equity interests, sale of
all or substantially all assets or other change of control transaction relating
to such PARTY or such PARTY's line of business to which this AGREEMENT relates.

 

(2)This AGREEMENT shall not be altered or modified, unless in writing and signed
by both PARTIES hereto. The same applies for any modification of this
requirement of the written form. The Exhibits are an integral part of this
AGREEMENT.

 

(3)NOTICES: All notices, requests, demands and other communications provided for
in this AGREEMENT shall: (a) be in writing; (b) be sent by hand delivery, first
class mail, overnight courier, email or facsimile transmission and {c) be
addressed to the PARTIES hereto as indicated below unless otherwise specified in
writing by any such PARTY.

 

 15 

 

 

If to Sorbion: Olaf Ohm

Im Südfeld 11,

48308 Senden,

Germany o.ohm@sorbion.com

 

If to Alliqua:

 

Brian Posner, Chief Financial Officer

2150 Cabot Blvd West

Langhorne, PA 19047 United States

bposner@alliqua.com

 

(4)This AGREEMENT shall to the greatest extent possible be interpreted in such a
manner as to comply with the applicable laws. However, if any provision hereof
is, notwithstanding such interpretation, determined to be or become invalid or
unenforceable, or if there is an omission, the remaining provisions of this
AGREEMENT shall remain to be binding upon the PARTIES. The PARTIES agree to
replace any such invalid or unenforceable provision by a valid and enforceable
one which comes as close as possible to the original purpose and intention of
the invalid or unenforceable provision. In the event of an omission, a provision
which corresponds with the intention and purpose of what would have been agreed
between the PARTIES if the matter had been considered at the outset shall be
deemed to have been agreed.

 

(5)In the event of any controversy or claim arising out of or relating to any
provision of this AGREEMENT or the breach thereof, the PARTIES shall try to
settle the problem amicably between themselves. Should they fail to agree, any
controversy or claim arising out of or relating to this contract, or the breach
thereof, shall be determined by confidential arbitration administered by the
American Arbitration Association in accordance with its International
Arbitration Rules. The number of arbitrators shall be one. The place of
arbitration shall be New York, New York. The language of the arbitration shall
be English. The Parties agree to keep the substance of the arbitration
confidential except to the extent commercially necessary. The Parties agree not
to make any public statements, written or verbal, or cause or encourage others
to make any public statements, written or verbal, that defame, disparage or in
any way criticize the personal or business reputation, practices, or conduct of
each other, its employees, directors, and officers. The Parties acknowledge and
agree that this prohibition extends to statements, written or verbal, made to
anyone, including but not limited to, the news media, investors, potential
investors, any board of directors or advisory board or directors, industry
analysts, competitors, strategic partners, vendors, employees (past and
present), and clients. The Parties understand and agree that this Paragraph is a
material provision of this Agreement and that any breach of this Paragraph shall
be a material breach of this Agreement, and that each Party would be irreparably
harmed by violation of this provision. For the avoidance of doubt, any sale of
PRODUCTS are on basis of Section XIII of the General Terms and Conditions of
Sale and Transfer and not subject to the sentences stated before.

 

 16 

 

 

(5)This AGREEMENT, and any disputes directly or indirectly arising from or
relating to this AGREEMENT, will be construed and controlled by the laws of the
State of New York, U.S.A. (without reference to the choice of law rules
thereof).

 

(6)This AGREEMENT (including the Exhibits attached hereto) constitutes the
final, complete and exclusive agreement of the PARTIES concerning the subject
matter hereof, and supersedes any other communication related hereto.

 

(7)This AGREEMENT may be executed in multiple counterparts (which may be
exchanged by facsimile or via email by .pdf copies), each of which will be
deemed an original and all of which together will constitute one instrument.

 

(signature page follows)

 

 17 

 

 

1. Exhibit - A Territory

 

·United States of America

 

·Canada

 

·Latin America

 

Exh. A

 

  

Exhibit B, Annex 1 Annex 1 Products

 

Product Name   VE   SAP-Nr.   Artikei-Nr. sorbion sachet S 10 x 10 cm US   10  
10012   22143004-10 sorbion sachet S 20 x 10 cm US   10   10022   22143009-10
sorbion sachet S 20 x 20 cm US   10   20033   22143006-10 sorbion sachet S 30 x
20 cm US   10   20039   22143007-10

 

Exh. B. Annex 1

 

 

Exhibit B, Annex 2 Annex 2 Products

 

Product Name   VE   SAP-Nr.   Artikei-Nr. sorbion sachet S 7,5 x 7,5 cm US   10
  10002   22143002-10 sorbion sachet S 12,5x10 cm US   10   10046   22143018-10
sorbion sachet S Drainaqe 10 x 10 em US   10   10048   22143008-10 sorbion
sachet multi star ø 8 cm US   10   10222   22143019-10 sorbion sachet multi star
ø 14 cm US   10   10223   22143020-10 sorbion sachet border 10 x 10 cm   10  
10107   22663011-10 sorbion sachet border 15 x 15 cm US   10   10189  
22663004-10 sorbion sachet border 25 x 15 cm US   10   10188   22663009-10
sorbion sachet border 25 x 25 cm US   10   10190   22663006-10

 

Exh. B. Annex 2

 

 

Exhibit B, Annex 3 Annex 3 Products

 

Product Name   VE   SAP-Nr.   Artikei-Nr. sorbion sana gentle 8,5 x 8,5cm US  
10   10224   25523002-10 sorbion sana gentle 12 x 12cm US   10   20225  
25523004-10 sorbion sana gentle 22 x 12cm US   10   10226   25523009-10 sorbion
sana gentle 22 x 22cm US   10   10227   25523006-1 0 sorbion sana gentle 32 x
22cm US   10   10228   25523007-10 sorbion sana multi star iii 11em   10   10214
  25143019-10 sorbion sana multi star iii 17 em   10   10217   25143020-10

 

Exh. B. Annex 3

 

 

Exhibit C

 

General Terms and Conditions

 

I.General

1.These General Terms and Conditions for the Sale of Goods shall only apply to
natural persons or entities, or the partnerships with legal personality acting
in their commercial or self- employed capacity (entrepreneurs) at the time the
contract is concluded and shall exclusively apply.

2.Conflicting, deviating or supplementary terms and conditions laid down by the
buyer shall not be recognized unless previously and expressly approved by the
seller in writing. These General Terms and Conditions for the Sale of Goods
shall also apply when the seller supplies the buyer without reservation after
having been informed of conflicting or divergent terms and conditions on the
part of the buyer.

3.These conditions shall govern any and all future contract of sale between the
seller and the buyer.

 

II.Orders and Specifications

1.The seller's quotations are subject to change and are non-binding, unless the
seller has explicitly designated them as binding. Any apparent mistakes due to
error In any sales literature, quotation, price list, acceptance of offer,
invoice or other document of information issued by the seller shall be subject
to correction without any liability on our part.

2.Upon placing an order for the required goods, the buyer shall make a binding
offer to enter into a contract.

3.The seller shall be entitled to accept the offer within five working days
either by dispatching an order confirmation or by dispatching the ordered goods
within the same period.

4.If the goods are to be manufactured or any changes have to be made to the
goods, the packaging or instructions of use by the seller in accordance with a
specification submitted by the buyer, the buyer shall indemnify the seller
against any loss, damages, costs and expenses which results from the seller's
use of the buyer's specification.

5.The seller hereby reserves all proprietary and intellectual property rights as
well as copyrights to any and all illustrations, calculations, drawing and other
documentation. The buyer may only disclose such items to third parties with the
seller's written consent, regardless of whether or not the seller has designated
such items as confidential. The same shall apply to the transmission of
information relating to seller's products which may have been made available to
the buyer.

 

Ill.Price of the Goods

1.The price of the goods shall be the seller's quoted price or, where no price
has been quoted; the price listed in the seller's published price list current
at the date of acceptance of the order. Where the goods are supplied for the
export from Germany, the seller's published export price list shall apply.

2.The seller reserves the right, by giving notice to the buyer at any time
before delivery, to adequately Increase or decrease the price of goods to
reflect an increase or decrease in the costs of the products which is due to any
factor beyond seller's control (such as foreign exchange fluctuation, currency
regulation, alteration of duties, significant increase in the costs of materials
or other costs of the manufacture).

3.Except as otherwise stated in any of the seller's quotations or in any price
list and agreed in writing, all prices are given on an ex works basis. If seller
agrees to deliver the goods otherwise, the buyer shall be liable to pay the
seller's charges for transportation, packing, duties and insurance.

4.The price is exclusive of any applicable value added tax, which the buyer
shall be additionally obliged to pay to the seller.

 

Exh. C -1

 

  

IV.Terms of Payment

1.The buyer shall pay the price of the goods within 30 days of receipt of the
seller's invoice. Agreed discounts shall only be accepted if payment reaches
seller within the agreed period and no overdue invoices remain. The amount of
discount is not deductible from freight costs but only from the value of the
goods.

2.Payment shall be effected by interbank payment transaction only; no cheque or
bill of exchange will be considered as fulfillment of the payment obligation.

3.It may be agreed between the parties that the buyer has to deliver a letter of
credit issued by any bank accepted by the seller. In this individual case it is
assumed that any letter of credit will be issued in accordance with the Uniform
Customs and Practice for Documentary Credits, 1993 Revision, ICC Publication No.
500.

4.If the buyer fails on make any payment on the due date then, without prejudice
to any other right or remedy available to seller, seller shall be entitled to
suspend further deliveries and/or to charge the buyer interest on the amount
unpaid, at the rate of 8 percentage points per annum above European Central Bank
reference rate from then being valid, until payment in full is made. The buyer
shall be entitled to prove that the delay of payment caused no or little damage
only.

5.A complaint lodged by the buyer shall not release him from any duty to effect
payment. With the exception of uncontested or legally enforced claims, the buyer
shall not be entitled to withhold payment or offset such payments against any
counterclaims he/she may be enforcing. Incoming payments shall amortize
outstanding debts in the order in which they have occurred. Place of fulfillment
of payment is the main place of business of seller.

 

V.Delivery

1.Delivery of the goods shall be made by the buyer collecting the goods at the
seller's premises at any time after seller has notified the buyer that the goods
are ready for collection or, If some other place for delivery is agreed by
seller, by delivering the goods to that place.

2.Where delivery of the goods is to be made by seller in bulk, seller reserves
the right to deliver up to 3% more or 3% less than the quantity ordered without
any adjustment in the price, and the quantity so delivered shall be deemed to be
in the quantity ordered.

3.If a binding time for delivery is explicitly provided for in the contract, and
seller fails to deliver and it responsible for failing to deliver within such
time or any extension thereof granted, the buyer shall be entitled, on giving to
seller within a reasonable time notice in writing, to claim a reduction of 0,5%
per week (up to a maximum of 5%) of the price payable under the contract, unless
it can be reasonable concluded from the circumstances of the particular case
that the buyer has suffered no loss. Further damages are excluded. This
exclusion shall not apply if the business had to be settled on a fixed date or
if the delay was caused grossly negligently or intentionally by seller, seller's
agents or representatives or if there is any further breach of any essential
contractual obligation. In this case the provisions of Section XI shall apply.

4.If, except in cases of force majeure, seller fails within such time.of
effecting delivery, the buyer shall be entitled by notice in writing to seller
to fix a deadline after the expiry of which the buyer shall be entitled to
terminate the contract. He may also recover from seller any loss suffered by the
buyer by reason or seller's failure and according to the provisions of§§ 280,
281 German Civil Code.

5.If the buyer fails to accept the delivery on due date, he shall nevertheless
make any payment conditional on delivery as if the goods had been delivered.
Seller shall be entitled to compensation of any loss and/or additional costs
occurred and to arrange for the storage of the goods at the risk and cost of the
buyer. If required by the buyer seller shall insure the goods at the cost of the
buyer.

 

Exh. C -2

 

 

VI.Transfer of Risks

Risk of damage to or loss of the goods shall pass to the buyer as follows:

in the case of goods to be delivered otherwise than the seller's premises,

•at the time of delivery or, if the buyer wrongfully fails to take delivery of
the goods, the time when the seller has tendered delivery of the goods;

•in the case of goods to be delivered at the seller's premises ("ex works,
lncoterms 2000) at the time when the seller notifies the buyer that the goods
are available for collection

 

VII.Retention of Title

1.Notwithstanding delivery and the passing of risk in the goods, or any other
provision of these conditions, the property in the goods shall not pass to the
buyer until the seller has received payment in full of the price of the goods
and all other goods agreed to be sold by the seller to the buyer for which
payment is then due.

2.After termination of the contract the seller shall have absolute authority to
retake, sell or otherwise deal with or dispose of all or any part of the goods
in which title remains vested in the seller.

3.Until such time as the property in the goods passes to the buyer, the buyer
shall hold the goods as the seller's fiduciary agent, and shall keep the goods
properly stored, protected and insured.

4.Until that time the buyer shall be entitled to resell or use the goods In the
ordinary course of its business, but shall account to the seller for the
proceeds of sale or otherwise of the goods including insurance proceeds, and
shall keep all such proceeds separate from any moneys or properties of the buyer
and third parties.

5.If the goods are processed or reshaped by the buyer and if processing is done
with the goods that seller has no property in, seller shall become co-owner of
the goods. The same shall apply if the seller's goods are completely reshaped
and mixed with other goods.

6.If third parties take up steps to pledge to otherwise dispose of the goods,
the buyer shall immediately notify the seller in order to enable the seller to
seek a court injunction in accordance with § 771 of the German Code of Civil
Procedure. If the buyer fails to do so in due time he will be held liable for
any damages caused.

7.The seller shall on demand of the buyer release any part of the collateral if
the value of the collateral held in favour of the seller exceeds the value of
the claims being secured. It is to the seller's decision to release those parts
of the collateral suitable for him.

 

IV.Storage, Resale

After acquisition of the goods the buyer is responsible for the adherence to the
respective legal regulations for the storage and use of the goods. The goods
shall be resold only in the unchanged original packaging.

 

IX.Force Majeure

1.Events of force majeure hindering the Parties in fulfilling their contractual
obligations in part or in total, shall exempt and free the relevant Party from
its obligation to fulfill this contract until the events of force majeure do not
exist anymore.

 

The following shall be regarded as events of force majeure: fire, natural
disaster, war, revolution, riots, acts of terrorism, shortage of raw materials,
strike, lockouts, disturbances in seller's business or business of suppliers,
acts of government or authority.

 

2.The other Party may terminate the contract if the event of force majeure lasts
for more than six months or if the party terminating the contract can reasonably
demonstrate that it would be unreasonable for the party to continuously be bound
by the contract.

 

X.Warranties

1.The buyer shall examine the goods immediately after delivery and in doing so
check every delivery in any respect. Any claim by the buyer which is based on
any defect in the quality or condition of the goods or their failure to
correspond with the specifications shall be notified to the seller within
reasonable time, but not later than 7 working days from the date of delivery.

2.The seller warrants that all items delivered under this agreement will be free
from defects in material and workmanship, conform to applicable specifications,
and, to the extent that detailed designs have not been furnished by the buyer,
will be free from design defects and suitable for the normal use.

 

Exh. C -3

 

 

3.The seller shall not be liable for the goods being fit for a particular
purpose unless otherwise agreed upon, to which the buyer intends to put them.
The seller if not liable for the goods being suitable for the export to and the
use in other countries than agreed by the parties.

4.The above warranty is limited as follows:

•the seller shall not be liable in respect of any defect in the goods arising
from any design or specification supplied by the buyer;

•the above warranty does not extend to parts, materials or equipment
manufactured by or on behalf of the buyer unless such warranty is given by the
manufacturer to the seller.

5.This warranty does not cover defects in the goods or damages which are due to
improper instruction or use (e.g. repeated use of goods; use of the goods in
other countries than the agreed territory), combination with other products or
maintenance misuse, disregard of instruction, neglect or any cause other than
ordinary commercial application.

6.Where any valid claim in respect of any goods which is based on any defect in
the quality or condition of the goods or their failure to meet specifications is
notified to the seller in accordance with this Conditions, the seller shall be
entitled at the seller's sole decision to either replace the goods free of
charge or repair the goods. Expenses incurred in remedying the defects, most
notably transportation, labour costs and costs of materials shall be born by
seller provided that such costs do not increase as a result of the goods being
transported to a destination other than the place of fulfillment. It the seller
is neither ready nor able to either repair or replace the goods after two
attempts the buyer shall be entitled at the buyer's sole decision to claim for a
reduction of price or the cancellation of the contract.

7.Claims relating to defects shall become statute-barred within one year of the
goods being delivered. The statutory limitation periods shall apply in cases
where seller can be charged with malice or intent or damages to life, limb or
health. The limitation period in the cases of delivery regress according to §§
478, 479 German Civil Code remains unaffected.

 

XI.Liability

1.In accordance with the statutory provisions, the seller shall bear unlimited
liability for damage to life, limb and health based on a negligent or
intentional breach of duty on part of the seller, on the part of seller's legal
representatives or seller's vicarious agents, and for damage subject to
liability pursuant to the German Product liability Act ("Produkthaftungsgesetz")
and/ or mandatory foreign product liability laws in countries the goods were
agreed to be used in.

2.Seller shall be liable to the extent provided for by law for damage which is
not covered by Clause 1 and which is based on an Intentional or grossly
negligent breach of duty or malice on seller's part as well as that of our legal
representatives or our vicarious agents. In that event, however, seller's
liability shall be limited to the foreseeable typically arising damage unless
seller, seller's legal representatives or vicarious agents have acted
intentionally.

3.To the extent that seller has issued a guarantee on quality and/or durability
with respect to the goods or parts thereof, seller shall also be liable in the
context of that guarantee. However, seller shall only be liable for damage based
on the absence of the guaranteed quality or durability, but which does not
directly injure the goods themselves, if the risk of such damage is clearly
covered by the quality and durability warranty.

4.Seller shall also be liable for damage caused by ordinary negligence, if such
negligence relates to the breach of contractual obligations the observance of
which is of particular significance to the achievement of the contract purpose
(essential obligations). However, seller shall only be liable if the damage is
typically associated with the contract, and is predictable.

5.All other forms of liability shall be excluded, regardless of the legal nature
of the claim asserted.

 

2.XII. Miscellaneous

 

3.The seller reserves the tight to improve or modify any of the products without
prior notice, provided that such improvement or modification shall not affect
the function of the product.

 

Exh. C -4

 

 

4.This agreement shall not be assigned or transferred by buyer except with the
written consent of the seller.

 

XIII.Choice of law; Place of Jurisdiction

 

1.This Agreement shall be governed by German Law, including the UN-Convention on
the International Sale of Goods (CISG) but excluding the provisions of German
International Private Law that might come to the application of foreign law.

2.Place of jurisdiction shall be seller's principle place of business, Germany.
The seller has the right to bring a claim before a court at the buyer's
principal place of business.

 

Exh. C -5

 

 

Exhibit D Price list

 

Product Name   VE   SAP-Nr.   Article-Nr.   price in € sorbion sachet S 7,5 x
7,5 cm US   10   10002   22143002-10€   13,10                   sorbion sachet S
10 x 10 cm US   10   10012   22143004-10€   15,38                 sorbion sachet
S 12,5x10cm US   10   10046   22143018-10€   20,50                   sorbion
sachet S 20 x 10 cm US   10   10022   22143009-10€   33,20                  
sorbion sachet S 20 x 20 cm US   10   10033   22143006-10€   48,60              
    sorbion sachet S 30 x 20 cm US   10   10039   22143007-10€   71,00          
        sorbion sachet S Drainage 10 x 10 cm US   10   10048   22143008-10€  
15,38                   sorbion sachet multi star 0 8 cm US   10   10222  
22143019-10€   14,50                   sorbion sachet multi star 0 14 cm US   10
  10223   22143020-10€   20,50                   sorbion sachet border 10 x 1o
cm   10   10107   22663011-10€   16,95                   sorbion sachet border
15 x 15 cm US   10   10189   22663004-10€   17,38                   sorbion
sachet border 25 x 15 cm US   10   10188   22663009-10€   36,20                
  sorbion sachet border 25 x 25 cm US   10   10190   22663006-10€   49,60      
            sorbion sana gentle 8,5 x 8,5cm US   10   10224   25523002-10€  
14,50                   sorbion sana gentle 12 x 12cm US   10   20225  
25523004-10€   23,50                   sorbion sana gentle 22 x 12cm US   10  
10226   25523009-10€   36,20                   sorbion sana gentle 22 x 22cm US
  10   10227   25523006-10€   49,60                   sorbion sana gentle 32 x
22cm US   10   10228   25523007-10€   79,00                   sorbion sana multi
star 0 11 cm   10   10214   25143019-10€   24,50                   sorbion sana
multi star 0 17 cm   10   10217   25143020-10€   30,50

 

Order rebate = 10% off, if order = 30.000,00 €, order rebate = 15% off, if order
50,000€

Shipment Costs to be handled in accordance with Clause2(6) of the Agreement.

 

Exh. D-1

 

 

Exhibit E

 

Minimum Annual Purchase Amount 

 

2014   2015   2016   2017   500.000,00    1.000.000,00    2.500.000,00  
 4.000.000,00 

 

Exh. E-1

 

 

Senden, 23 September 2013   New York,  20th September 2013 Sorbion   Alliqua

  

  /s/ Michael Stonner   /s/ David I. Johnson Michael Stonner   David I. Johnson
managing director   C.E.O.

 

/s/ Olaf Ohm   Olaf Ohm   proxy  

 

 

 

 

Annex B

Amendment to Distributor Agreement

 

B-1

 

 

6. FIRST AMENDMENT TO DISTRIBUTOR AGREEMENT

 

 

THIS FIRST AMENDMENT TO DISTRIBUTOR AGREEMENT (the "First Amendment") is made
effective as of the Effective Date as defined herein between ALLIQUA BIOMEDICAL,
INC., a Delaware corporation "Alliqua"), and BSN MEDICAL, INC., a Delaware
corporation ("BSN").

 

BACKGROUND:

 

A.Alliqua and Sorbion GmbH & Co KG ("Sorbion") have entered into that certain
Distributor Agreement in September, 2013 (the "Original Agreement") pursuant to
which Alliqua will sell certain products in the Territory (as defined therein).

 

B.Sorbion assigned its rights and obligations under the Original Agreement to
its affiliate BSN pursuant to an Assignment of Distributor Agreement dated June
16, 2015.

 

C.The parties wish to amend the Original Agreement to provide for pricing,
invoicing and payment in U.S. Dollars ("USD") instead of Euros and to make
related conforming changes in the Original Agreement.

 

D.All capitalized terms which are not defined herein have the meanings given to
such terms in the Original Agreement.

 

NOW, THEREFORE, in consideration of the mutual promises contained herein, the
parties agree as follows:

 

1.Pricing. The prices set forth on Exhibit D of the Original Agreement, as such
prices may have been amended or replaced pursuant to the terms of the Original
Agreement, shall be converted from Euros to USD in accordance with the closing
Exchange Rate (as defined below) on the Effective Date. BSN will deliver a
revised price schedule to Alliqua promptly after the Effective Date. All
subsequent price lists, invoicing, and payments shall be determined and
communicated pursuant to Section 2(6) of the Original Agreement, and the price
list provided for therein shall be in USD.

 

 1

 

 

2.Minimum Annual Purchase Amount. The Minimum Annual Purchase Amount for
calendar year 2015 as set fo1th on Exhibit E of the Original Agreement shall be
conve1ted from Euros to USO in accordance with the Exchange Rate on the
Effective Date, rounded to the nearest $1,000 (one thousand dollars). For
calendar years 2016 and 2017, the Minimum annual Purchase Amount for such year
set forth on Exhibit E of the Original Agreement shall be converted from Euros
to USD in accordance with the Exchange Rate in effect on the last day of the
preceding year (i.e., December 31, 2015 and December 31, 2016, respectively) ,
rounded to the nearest $1,000 (one thousand dollars); provided, however, that
the Exchange Rate on such day shall not be more than five percent (5%) greater
or five percent (5%) less than the Exchange Rate used for the most recent
previous determination date for the Minimum Annual Purchase Amount pursuant to
this First Amendment. If such Exchange Rate is more than five percent (5%)
greater or five percent (5%) less than the Exchange Rate used for the most
recent previous determination date for the Minimum Annual Purchase Amount
pursuant to this First Amendment, it shall be rounded up or rounded down (as
appropriate) so that it is no more than five percent (5%) greater or five
percent (5%) less. All future Minimum Annual Purchase Amounts set in accordance
with Section 10(2) of the Original Agreement shall be in USD. For the avoidance
of doubt, the parties acknowledge and agree that parties are in discussions to
amend and restate the Original Agreement, and accordingly, among other terms,
the Minimum Annual Purchase Amount for the calendar years 2016 and 2017 may also
be revised in connection with such amendment and restatement.

 

3.Shipping Costs. Section 2(6) of the Original Agreement is amended by replacing
the term "50,000 €" (fifty thousand euros) wherever it appears with the amount
dete1mined by converting 50,000 (fifty thousand) Euros to USD at the Exchange
Rate on the Effective Date, rounded to the nearest $1,000 (one thousand
dollars).

 

4.Order Rebate. Exhibit D of the Original Agreement is amended by replacing the
term "50,000 €" (fifty thousand euros)where it appears as to the order rebate
with the amount determined by converting 50,000 (fifty thousand) Euros to USD at
the Exchange Rate on the Effective Date, rounded to the nearest $1,000 (one
thousand dollars), and the term "30,000€" (thirty thousand euros) where it
appears as to the order rebate with the amount determined by converting 30,000
Euros (thirty thousand euros) to USD at the Exchange Rate on the Effective Date,
rounded to the nearest $1 ,000 (one thousand dollars) .

 

5.Definitions: For purposes of this First Amendment:

 

(a)The "Exchange Rate" for any day is the closing spot rate quoted by Reuters
for such day (or the next succeeding business day if no rate is quoted for such
day). If Euro-USD spot rates are no longer quoted by Reuters or become
unavailable for any reason , the patties shall choose a recognized comparable
quoted Euro-USD spot exchange rate.

 

(b)The "Effective Date" is Jul y 31, 2015.

 

6.Original Agreement; Further Assurances. Except as specifically amended by this
Amendment, the Original Agreement remains in full force and effect.

 

 2

 

 

Section 11 (Confidentiality) and Section 12 (Miscellaneous) of the Original
Agreement, as may have been amended in accordance with the Original Agreement,
shall apply mutatis mutandis to this First Amendment. The patties shall execute
such further documents and do any such further things as may be necessary to
implement and carry out the intent of this First Amendment.

 

IN WITNESS WHEREOF, the parties have executed this First Amendment to
Distributor Agreement as of the Effective Date set forth above.

 

ALLIQUA   BIOMEDICAL,    INC.         By: /s/ Brian M. Posner   Name: Brian M.
Posner   Title: CFO  

 

7.BSN MEDICAL, INC.

 

By: /s/ Joseph Carpinelli   Name: Joseph Carpinelli   Title: VP Finance - NA  

 

 3

 

 

8.         Annex C

Assignment of Distributor Agreement

 

C-1

 

  

ASSIGNMENT OF DISTRIBUTOR AGREEMENT

 

THIS ASSIGNMENT OF DISTRIBUTOR AGREEMENT (this "Assignment") is effective as of
June 18th, 2015 (the "Assignment Effective· Date") by and between Sorbion GmbH
(legal successor to Sorbion GmbH & Co. KG) ("Assignor") and BSN medical, Inc.
("Assignee") (each, a "Party" and collectively, the "Parties").

 

WITNESSETH :

 

WHEREAS, Assignor and Alliqua Biomedical, Inc. ("Alliqua") entered into that
certain Distributor Agreement (the "Agreement") dated as of September 23, 2013,
pursuant to which Assignor granted Alliqua the exclusive right to sell ce1tain
products within the United States of America, Canada and Latin America;

 

WHEREAS, Assignor, pursuant to an internal reorganization, conve1ted from a
limited partnership ,to a limited liability company under the laws of the
Federal Republic of Germany in March 2015, and as such all of the rights,
privileges, powers, debts, liabilities and duties, including those incurred
contractually by the converting entity, remain vested in the limited liability
company to which such limited partnership has conve1ted;

 

WHEREAS, pursuant to Section 12(1)(i) of the Agreement, Assignor desires to
·assign to Assignee, an affiliated company of Assignor, all of its rights,
duties and obligations under the Agreement; and

 

WHEREAS, Assignee desires to accept such assignment of rights, duties and
obligations under the Agreement.

 

NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants and agreements of the Parties as set forth below, and intending to be
legally bound, the Parties agree as follows:

 

1.Assignment and Assumption .

 

l.l. Assignor irrevocably (a) assigns to Assignee all of its rights under the
Agreement and (b) delegates to Assignee all of its duties and obligations under
the Agreement as of and following the Assignment Effective Date.

 

1.2. Assignee unconditionally accepts all of Assignor's rights, duties and
obligations in, to and under the Agreement, and assumes and agrees to be bound
by, fulfill, perform and discharge all of the liabilities, obligations, duties
and covenants under or arising out of the Agreement as of and following the
Assignment Effective Date.

 

2.Miscellaneous.

 

2. 1. This Assignment will be construed and interpreted in accordance with the
laws of the State of New York without regard to conflict of law principles.

 

2.2. This Assignment may be executed in any number of counterparts (by fax, pdf
or other electronic signatures), each of which shall be deemed to be an original
but all of which shall constitute one and the same instrument.

 

[Signature page follows]

 

 

 

 

IN WITNESS WHEREOF, the Patties have caused their duly authorized
representatives to execute this Assignment as of the Assignment Effective Date.

 

Sorbion GmbH   BSN medical, Inc.         By: /s/ Erik Korte   By: /s/ Joseph
Carpinelli Name: Erik Korte   Name: Joseph Carpinelli Title:  Authorized
 Representative   Title:  Vice President, Finance -North America

 

By: /s/ Emil Billbaeck   Name:  Emil Billbaeck   Title: Authorized
Representative  

 

 

 

 

Exhibit A

GENERAL BILL OF SALE AND ASSIGNMENT

 

This General Bill of Sale and Assignment (this “Bill of Sale”), dated as of
[June 21, 2016], is executed and delivered by Alliqua Biomedical, Inc., a
Delaware corporation (“Seller”) to BSN medical, Inc., a Delaware corporation
(“Purchaser”).

 

NOW, THEREFORE, Seller, for the consideration described and provided for in that
certain Purchase Agreement, dated as of the date hereof, by and between
Purchaser and Seller (the “Purchase Agreement”), the receipt and sufficiency of
which is hereby acknowledged, does hereby sell, assign, transfer, convey and
deliver unto Purchaser, free and clear of all Liens, subject in all respects to
the terms and provisions of the Purchase Agreement, all of the purchased assets.

 

This Bill of Sale and the covenants and agreements herein contained shall be
binding upon and inure to the benefit of the parties to the Purchase Agreement
and their respective successors and permitted assigns. All representations,
warranties, covenants, agreements and indemnities contained in the Purchase
Agreement shall survive the execution and delivery of this Bill of Sale and
shall continue in full force and effect as provided in the Purchase Agreement.

 

All capitalized terms not otherwise defined in this Bill of Sale, shall have the
meanings ascribed to them in the Purchase Agreement, and the terms of
construction set forth in Section 1.2 of the Purchase Agreement, shall apply to
this Bill of Sale.

Seller may execute and deliver this Bill of Sale by means of facsimile
transmission or electronic mail and the parties agree that the receipt of such
executed Bill of Sale shall be binding on Seller and shall be construed as an
original. After the Closing, Seller shall promptly deliver to Purchaser an
original version of this Bill of Sale that was executed and exchanged by
facsimile transmission or electronic mail, but failure to do so shall not affect
the binding nature of the same.

 

  ALLIQUA BIOMEDICAL, INC.         By: /s/ Brian M. Posner   Name: Brian M.
Posner   Its: CFO

 

A-1