Exhibit 10.3

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (this “Agreement”) is dated as of June 5, 2015 and is
entered into by and between Bradford C. Barton (the “Executive”) and Alliqua
BioMedical, Inc. (the “Company”). The Company and the Executive shall be
referred to herein as the “Parties.”

 

RECITALS

 

Whereas, the Company desires to employ the Executive as its Chief Operating
Officer and the Executive desires to be employed by the Company as its Chief
Operating Officer;

 

Whereas, the Company and the Executive desire to set forth in writing the terms
and conditions of their agreement and understandings with respect to the
employment of the Executive as its Chief Operating Officer; and

 

Whereas, the Company hereby employs the Executive, and the Executive hereby
accepts employment with the Company for the period and upon the terms and
conditions contained in this Agreement.

 

Now, Therefore, in consideration of the mutual promises and agreements contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, and intending to be legally bound, the Parties
hereby agree as follows:

 

ARTICLE I.

Services to be Provided by Executive

 

A.           Position and Responsibilities. The Executive shall serve in the
position of Chief Operating Officer, and shall perform services for the Company
as requested or as needed to perform the Executive’s job. The duties of the
Executive shall be those duties which can reasonably be expected to be performed
by a person in such position.

 

B.           Performance. During the Executive’s employment with the Company,
the Executive shall devote on a full-time basis all of the Executive’s time,
energy, skill and reasonable best efforts to the performance of the Executive’s
duties hereunder in a manner that will faithfully and diligently further the
business and interests of the Company, and shall exercise reasonable best
efforts to perform the Executive’s duties in a diligent, trustworthy, good faith
and business-like manner, all for the purpose of advancing the business of the
Company. The Executive shall at all times act in a manner consistent with
Executive’s position.

 

 

 

 

ARTICLE II.

Compensation for SErvices

 

As compensation for all services the Executive will perform under this
Agreement, the Company will pay the Executive, and the Executive shall accept as
full compensation, the following:

 

A.           Base Salary. The Company shall pay the Executive a monthly salary
of twenty thousand dollars ($20,000.00) ($ 240,000.00 annualized), less
applicable payroll deductions and tax withholdings (the “Base Salary”) for all
services rendered by the Executive under this Agreement. The Company shall pay
the Base Salary in accordance with the normal payroll policies of the Company.

 

B.           Performance Bonus. The Executive shall be entitled to receive
annual bonuses (“Performance Bonuses”) in an amount equal to 60% of the
Executive’s Base Salary for each calendar year during employment based on the
extent to which performance criteria for the year have been met which shall be
paid on or before March 15th of the calendar year after the calendar year to
which the Performance Bonus relates to. Except as otherwise provided in Article
III.B.(ii) of this Agreement, be eligible to receive a Performance Bonus for a
calendar year, the Executive must remain employed through the end of the
applicable calendar year. All performance criteria shall be established
reasonably and in good faith by the Board of Directors (the “Board”). The
evaluation of the Company’s performance, as measured by the applicable
performance criteria and the awarding of bonuses, if any, shall be determined
reasonably and in good faith by the Board.

 

C.           Stock. The Executive has received, and may be eligible to receive,
certain grants of stock options to purchase shares of common stock of the
Company, awards for Restricted Stock Units, and grants of Restricted Stock
Awards, set forth separately in those certain agreements.

 

D.           Expenses. The Company agrees that, during the Executive's
employment, it will reimburse the Executive for out-of-pocket expenses
reasonably incurred in connection with the Executive's performance of the
Executive’s services hereunder, upon the presentation by the Executive of an
itemized accounting of such expenditures, with supporting receipts, provided
that the Executive submits such expenses for reimbursement within thirty (30)
days of the date such expenses were incurred. Reimbursement shall be in
compliance with the Company’s expense reimbursement policies.

 

E.           Vacation. The Executive also shall be eligible for four (4) weeks
paid vacation in accordance with the Company’s policy, as in effect from time to
time.

 

F.           Car Allowance. During the Executive’s employment, the Company shall
provide to the Executive a $700.00 per month car allowance.

 

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G.           Other Benefits. The Executive is entitled to participate in any
group health insurance plan, option or similar incentive compensation plan,
401(k) plan, disability plan, group life plan, and any other benefit or welfare
program or policy that is made generally available, from time to time, to other
employees of the Company, on a basis consistent with such participation and
subject to the terms of the plan documents, as such plans may be modified,
amended, terminated, or replaced from time to time.

 

ARTICLE III.
Term; Termination

 

A.           Term of Employment. The term of the Executive’s employment under
this Agreement shall continue in effect until terminated by either party.

 

B.           Termination. Either party may terminate the Executive’s employment
at any time upon written notice. The date of the Executive’s termination shall
be the date stated in the notice of termination. Upon termination of the
Executive’s employment, the Company shall pay the Executive (i) any unpaid Base
Salary accrued through the date of termination, (ii) any unpaid Performance
Bonus earned and accrued for a previously completed calendar year, (iii) any
accrued and unpaid vacation or similar pay to which the Executive is entitled as
a matter of law or Company policy, and (iv) any unreimbursed expenses properly
incurred prior to the date of termination (the “Accrued Obligations”). The
Executive’s termination under this Agreement shall also constitute the
Executive’s resignation as an officer or director of any affiliate or subsidiary
of the Company, as applicable.

 

(i)          Termination for Cause or Voluntary Resignation. In the event the
Company terminates the Executive’s employment for Cause (defined below) or the
Executive voluntarily resigns without Good Reason (defined below), the Company
shall have no further liability or obligation to the Executive under this
Agreement or in connection with the Executive’s employment hereunder, except for
the Accrued Obligations. The Accrued Obligations shall be payable in a lump sum
within the time period required by applicable law, and in no event later than
thirty (30) days following termination of employment. For purposes of this
Agreement, “Cause” means termination because of: (a) an act or acts of theft,
embezzlement, fraud, or willful or material misrepresentation by the Executive;
(b) the Executive’s indictment or conviction of, or pleading nolo contendere or
guilty to, a felony, or a crime involving moral turpitude; (c) the Executive’s
refusal to perform, or intentional disregard of, in any material respect, the
Executive’s duties and responsibilities hereunder; and (d) a material breach by
the Executive of this Agreement or any other agreement to which the Executive
and the Company are parties. In each such event listed above, if the
circumstances are curable, the Company shall give the Executive written notice
thereof which shall specify in reasonable detail the circumstances constituting
Cause, and there shall be no Cause with respect to any such circumstances if
cured by the Executive within thirty (30) days after such notice.

 

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(ii)         Termination Without Cause or for Good Reason. In the event the
Executive’s employment is terminated by the Company without Cause or by the
Executive for Good Reason, the Executive shall receive the following, subject to
the execution and timely return by the Executive of a release of claims in the
form to be delivered by the Company, which release shall, by its terms, be
irrevocable no later than the sixtieth (60th) day following the termination of
employment: (a) the Accrued Obligations, payable in a lump sum within the time
period required by applicable law, and in no event later than thirty (30) days
following termination of employment; (b) if the Executive was employed by the
Company through at least July 1st of the applicable calendar year, a pro-rata
portion of any Performance Bonus earned during such calendar year, with the
amount prorated based on the number of days employed during such calendar year
and payable in a lump sum within the time period required by applicable law, but
in no event later than March 15th of the calendar year after the calendar year
to which the Performance Bonus relates; (c) severance pay in an amount equal to
the Executive’s Base Salary for twelve (12) months (the “Severance Period”)
payable in equal installments in accordance with the normal payroll policies of
the Company, with the first installment being paid on the Company’s first
regular pay date on or after the sixtieth (60th) day following the termination
of employment, which initial payment shall include all installment amounts that
would have been paid during the first sixty (60) days following the termination
of employment had installments commenced immediately following the termination
date, (d) during the Severance Period or until the Executive becomes eligible
for comparable employer sponsored health plan benefits, whichever is sooner, all
health plan benefits to which the Executive is entitled prior to the termination
date under any such benefit plans or arrangements maintained by the Company in
which the Executive participated, which benefits shall be determined and paid in
accordance with this Agreement and plans or arrangements and shall be provided
pursuant to COBRA with the relative costs therefor being paid by the Company and
the Executive in the same proportion as existed while the Executive was an
active employee of the Company; and (e) the Stock Options and Restricted Stock
granted to the Executive shall be fully and immediately vested, and the Stock
Options shall remain exercisable for two (2) years following the termination
date or, if sooner, until the end of the applicable Stock Option’s term. For
purposes of this Agreement, “Good Reason” means termination because of: (a) a
material diminution without the Executive’s consent in the Executive’s duties
and responsibilities; and (b) a material breach by the Company of this Agreement
or any other agreement to which the Executive and the Company are parties. In
each such event listed above, the Executive shall give the Company written
notice thereof which shall specify in reasonable detail the circumstances
constituting Good Reason, and there shall be no Good Reason with respect to any
such circumstances if cured by the Company within thirty (30) days after such
notice.

 

C.           Survival. The Executive’s post-termination obligations in Article
IV shall continue as provided in this Agreement.

 

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ARTICLE IV.
Restrictive Covenants

 

A.           Confidentiality.

 

(i)          Confidential Information. During the Executive’s employment with
the Company, the Company shall grant the Executive otherwise prohibited access
to its trade secrets and confidential information which is not known to the
Company’s competitors or within the Company’s industry generally, which was
developed by the Company over a long period of time and/or at its substantial
expense, and which is of great competitive value to the Company, and access to
the Company’s customers and clients. For purposes of this Agreement,
“Confidential Information” includes any trade secrets or confidential or
proprietary information of the Company, including, but not limited to, the
following: methods of operation, products, inventions, services, processes,
equipment, know-how, technology, technical data, policies, strategies, designs,
formulas, developmental or experimental work, improvements, discoveries,
research, plans for research or future products and services, database schemas
or tables, software, development tools or techniques, training procedures,
training techniques, training manuals, business information, marketing and sales
methods, plans and strategies, competitors, markets, market surveys, techniques,
production processes, infrastructure, business plans, distribution and
installation plans, processes and strategies, methodologies, budgets, financial
data and information, customer and client information, prices and costs, fees,
customer and client lists and profiles, employee, customer and client nonpublic
personal information, supplier lists, business records, product construction,
product specifications, audit processes, pricing strategies, business
strategies, marketing and promotional practices, management methods and
information, plans, reports, recommendations and conclusions, information
regarding the skills and compensation of employees and contractors of the
Company, and other business information disclosed to the Executive by the
Company, either directly or indirectly, in writing, orally, or by drawings or
observation. “Confidential Information” does not include, and there shall be no
obligation hereunder with respect to, information that (i) is generally
available to the public on the date of this Agreement or (ii) becomes generally
available to the public other than as a result of a disclosure not otherwise
permissible hereunder.

 

(ii)         No Unauthorized Use or Disclosure. The Executive acknowledges and
agrees that Confidential Information is proprietary to and a trade secret of the
Company and, as such, is a special and unique asset of the Company, and that any
disclosure or unauthorized use of any Confidential Information by the Executive
will cause irreparable harm and loss to the Company. The Executive understands
and acknowledges that each and every component of the Confidential Information
(i) has been developed by the Company at significant effort and expense and is
sufficiently secret to derive economic value from not being generally known to
other parties, and (ii) constitutes a protectable business interest of the
Company. The Executive acknowledges and agrees that the Company owns the
Confidential Information. The Executive agrees not to dispute, contest, or deny
any such ownership rights either during or after the Executive’s employment with
the Company. The Executive agrees to preserve and protect the confidentiality of
all Confidential Information. The Executive agrees that the Executive shall not
during the period of the Executive’s employment with the Company and thereafter,
directly or indirectly, disclose to any unauthorized person or use for the
Executive’s own account any Confidential Information without the Company’s
consent. Throughout the Executive’s employment with the Company thereafter: (i)
the Executive shall hold all Confidential Information in the strictest
confidence, take all reasonable precautions to prevent its inadvertent
disclosure to any unauthorized person, and follow all Company policies
protecting the Confidential Information; and (ii) the Executive shall not,
directly or indirectly, utilize, disclose or make available to any other person
or entity, any of the Confidential Information, other than in the proper
performance of the Executive’s duties.

 

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(iii)        Return of Property and Information. Upon the termination of the
Executive’s employment for any reason, the Executive shall immediately return
and deliver to the Company any and all Confidential Information, software,
devices, cell phones, personal data assistants, credit cards, data, reports,
proposals, lists, correspondence, materials, equipment, computers, hard drives,
papers, books, records, documents, memoranda, manuals, e-mail, electronic or
magnetic recordings or data, including all copies thereof, which belong to the
Company or relate to the Company’s business and which are in the Executive’s
possession, custody or control, whether prepared by the Executive or others. If
at any time after termination of the Executive’s employment the Executive
determines that the Executive has any Confidential Information in the
Executive’s possession or control, the Executive shall immediately return to the
Company all such Confidential Information in the Executive’s possession or
control, including all copies and portions thereof.

 

B.           Restrictive Covenants. In consideration for (i) the Company’s
promise to provide Confidential Information to the Executive, (ii) the
substantial economic investment made by the Company in the Confidential
Information and goodwill of the Company, and/or the business opportunities
disclosed or entrusted to the Executive, (iii) access to the Company’s customers
and clients, and (iv) the Company’s employment of the Executive pursuant to this
Agreement and the compensation and other benefits provided by the Company to the
Executive, to protect the Company’s Confidential Information and business
goodwill of the Company, the Executive agrees to the following restrictive
covenants:

 

(i)          Non-Competition. The Executive agrees that during the Restricted
Period (defined below), other than in connection with the Executive’s duties
under this Agreement (including, without limitation, services to affiliates of
the Company), the Executive shall not, and shall not use any Confidential
Information to, without the prior written consent of the Company, directly or
indirectly, either individually or as a principal, partner, stockholder,
manager, agent, consultant, contractor, distributor, employee, lender, investor,
or as a director or officer of any corporation or association, or in any other
manner or capacity whatsoever, become employed by, control, manage, carry on,
join, lend money for, operate, engage in, establish, perform services for,
invest in, solicit investors for, consult for, do business with or otherwise
engage in any Competing Business. Notwithstanding the restrictions contained in
this Article IV.B.(i), the Executive may own an aggregate of not more than two
percent (2%) of the outstanding stock of any class of any corporation engaged in
a Competing Business, if such stock is listed on a national securities exchange
in the United States (or a comparable exchange in a foreign jurisdiction) or
regularly traded in the over-the-counter market by a member of a national
securities exchange in the United States, without violating the provisions of
Article IV.B.(i).

 

For purposes of this Agreement:

 

(a)          “Restricted Period” means during the Executive’s employment with
the Company and for a period of twelve (12) months immediately following the
date of Executive’s termination from employment for any reason.

 

(b)          “Competing Business” means any business, individual, partnership,
firm, corporation or other entity that is competing with any aspect of the
Company’s business of providing wound care products, treatments, technologies or
solutions.

 

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(ii)         Non-Solicitation. The Executive agrees that during the Restricted
Period, other than in connection with Executive’s duties under this Agreement,
the Executive shall not, and shall not use any Confidential Information to,
directly or indirectly, either as a principal, manager, agent, employee,
consultant, officer, director, stockholder, partner, investor or lender or in
any other capacity, and whether personally or through other persons:

 

(a)          Solicit business from, interfere with, induce, attempt to solicit
business with, interfere with, induce or do business with any actual or
prospective customer, client, supplier (including any content providers),
manufacturer, vendor or licensor of the Company with whom the Company did
business, and who or which: (1) the Executive contacted, called on, serviced or
did business with during the Executive’s employment with the Company; (2) the
Executive learned of as a result of the Executive’s employment with the Company;
or (3) about whom the Executive received Confidential Information. This
restriction applies only to business which is in the scope of services or
products provided by the Company or any affiliate thereof; or

 

(b)          Solicit, induce or attempt to solicit or induce, engage or hire, on
behalf of the Executive or any other person or entity, any person who is an
employee or consultant of the Company or who was employed by the Company within
the preceding twelve (12) months.

 

C.           Works.

 

(i)          Assignment of Work Product. For the purposes of this Agreement, the
term “Work Product” shall mean, collectively, all work product, information,
inventions, original works of authorship, ideas, know-how, processes, designs,
computer programs, photographs, illustrations, developments, trade secrets and
discoveries, including improvements thereto, that the Executive conceives,
creates, develops, makes, reduces to practice, or fixes in a tangible medium of
expression, either alone or with others. During the Restricted Period, the
Executive agrees that the Executive shall promptly make full written disclosure
to the Company of all Work Product conceived, created, developed, made, reduced
to practice, or fixed in a tangible medium of expression during the period of
the Executive’s employment with the Company. Executive hereby assigns and shall
be deemed to have assigned to the Company or its designee, all of the
Executive’s right, title, and interest in and to any and all Work Product
conceived, created, developed, made, reduced to practice, or fixed in a tangible
medium of expression during the period of the Executive’s employment the Company
that (a) relates in any manner to the previous, existing or contemplated
business, work, or investigations of the Company; (b) is or was suggested by,
has resulted or will result from, or has arisen or will arise out of any work
that the Executive has done or may do for or on behalf of the Company; (c) has
resulted or will result from or has arisen or will arise out of any materials or
information that may have been disclosed or otherwise made available to the
Executive as a result of duties assigned to the Executive by the Company; or (d)
has been or will be otherwise made through the use of the Company’s time,
information, facilities, or materials, even if conceived, created, developed,
made, reduced to practice, or fixed during other than working hours. The
Executive further acknowledges that all original works of authorship that have
been or will be made or fixed in a tangible medium of expression by the
Executive (solely or jointly with others) within the scope of the Executive’s
employment with the Company that are protectable by copyright are “Works Made
for Hire,” as that term is defined in the United States Copyright Act. The
Executive understands and agrees that the decision whether or not to
commercialize or market any Work Product is within the Company’s sole discretion
and for the Company’s sole benefit, and that no royalty will be due to the
Executive as a result of the Company’s efforts to commercialize or market any
such Work Product.

 

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(ii)         Patent and Copyright Registrations. The Executive agrees to assist
the Company, or its designee, at the Company’s expense, in every proper way to
secure the Company’s rights in Work Product in any and all countries, including
the disclosure to the Company of all pertinent information and data with respect
thereto, the execution of all applications, specifications, oaths, assignments,
affidavits, and all other instruments which the Company shall deem necessary in
order to apply for and obtain such rights and in order to assign and convey to
the Company, its successors, assigns, and nominees the sole and exclusive
rights, title and interest in and to such Work Product. The Executive further
agrees that the Executive’s obligation to execute or cause to be executed, when
it is in the Executive’s power to do so, any such instrument or papers shall
continue after the termination of this Agreement.

 

D.           Tolling. If the Executive violates any of the restrictions
contained in this Article IV, the Restricted Period shall be suspended and shall
not run in favor of the Executive from the time of the commencement of any
violation until the time when the Executive cures the violation to the
satisfaction of the Company.

 

E.           Remedies. The Executive acknowledges that the restrictions
contained in Article IV of this Agreement, in view of the nature of the
Company’s business and the Executive’s position with the Company, are reasonable
and necessary to protect the Company’s legitimate business interests and that
any violation of Article IV of this Agreement would result in irreparable injury
to the Company. In the event of a breach by the Executive of Article IV of this
Agreement, then the Company shall be entitled to a temporary restraining order
and injunctive relief restraining the Executive from the commission of any
breach. Such remedies shall not be deemed the exclusive remedies for a breach or
threatened breach of this Article IV but shall be in addition to all remedies
available at law or in equity, including the recovery of damages from the
Executive, the Executive’s agents, any future employer of the Executive, and any
person that conspires or aids and abets the Executive in a breach or threatened
breach of this Agreement.

 

F.           Reasonableness. The Executive hereby represents to the Company that
the Executive has read and understands, and agrees to be bound by, the terms of
this Article IV. The Executive acknowledges that the geographic scope and
duration of the covenants contained in this Article IV are fair and reasonable
in light of (i) the nature and wide geographic scope of the operations of the
Company’s business; (ii) the Executive’s level of control over and contact with
the business in the Restricted Area; and (iii) the amount of compensation, trade
secrets and Confidential Information that the Executive is receiving in
connection with the Executive’s employment by the Company.

 

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G.           Reformation. If any of the aforesaid restrictions are found by a
court of competent jurisdiction to be unreasonable, or overly broad as to
geographic area or time, or otherwise unenforceable, the Parties intend for the
restrictions herein set forth to be modified by the court making such
determination so as to be reasonable and enforceable and, as so modified, to be
fully enforced. By agreeing to this contractual modification prospectively at
this time, the Company and the Executive intend to make this provision
enforceable under the law or laws of all applicable jurisdictions so that the
entire agreement not to compete and this Agreement as prospectively modified
shall remain in full force and effect and shall not be rendered void or illegal.

 

H.           No Previous Restrictive Agreements. The Executive represents that,
except as disclosed to the Company, the Executive is not bound by the terms of
any agreement with any previous employer or other party to refrain from using or
disclosing any trade secret or confidential or proprietary information in the
course of the Executive’s employment with the Company or to refrain from
competing, directly or indirectly, with the business of such previous employer
or any other party. The Executive further represents that the Executive’s
performance of all the terms of this Agreement and the Executive’s work duties
for the Company do not and will not breach any agreement to keep in confidence
proprietary information, knowledge or data acquired by the Executive in
confidence or in trust prior to the Executive’s employment with the Company. The
Executive shall not disclose to the Company or induce the Company to use any
confidential or proprietary information or material belonging to any previous
employer or others.

 

ARTICLE V.
Miscellaneous Provisions

 

A.           Governing Law. This Agreement shall be governed by and construed
under the laws of the State of Delaware. Venue of any litigation arising from
this Agreement or any disputes relating to the Executive’s employment shall be
in the United States District Court for the District of Delaware, or a state
district court of competent jurisdiction in New Castle County, Delaware. The
Executive consents to personal jurisdiction of the United States District Court
for the District of Delaware, or a state district court of competent
jurisdiction in New Castle County, Delaware for any dispute relating to or
arising out of this Agreement or the Executive’s employment, and the Executive
agrees that the Executive shall not challenge personal or subject matter
jurisdiction in such courts.

 

B.           Headings. The paragraph headings contained in this Agreement are
for convenience only and shall in no way or manner be construed as a part of
this Agreement.

 

C.           Severability. In the event that any court of competent jurisdiction
holds any provision in this Agreement to be invalid, illegal or unenforceable in
any respect, the remaining provisions shall not be affected or invalidated and
shall remain in full force and effect.

 

D.           Reformation. In the event any court of competent jurisdiction holds
any restriction in this Agreement to be unreasonable and/or unenforceable as
written, the court may reform this Agreement to make it enforceable, and this
Agreement shall remain in full force and effect as reformed by the court.

 

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E.           Entire Agreement. This Agreement constitutes the entire agreement
between the Parties, and fully supersedes any and all prior agreements,
understanding or representations between the Parties pertaining to or concerning
the subject matter of this Agreement, including, without limitation, the
Executive’s employment with the Company. No oral statements or prior written
material not specifically incorporated in this Agreement shall be of any force
and effect, and no changes in or additions to this Agreement shall be
recognized, unless incorporated in this Agreement by written amendment, such
amendment to become effective on the date stipulated in it. Any amendment to
this Agreement must be signed by all parties to this Agreement. The Executive
acknowledges and represents that in executing this Agreement, the Executive did
not rely, and has not relied, on any communications, promises, statements,
inducements, or representation(s), oral or written, by the Company, except as
expressly contained in this Agreement. The Parties represent that they relied on
their own judgment in entering into this Agreement.

 

F.           Waiver. No waiver of any breach of this Agreement shall be
construed to be a waiver as to succeeding breaches. The failure of either party
to insist in any one or more instances upon performance of any terms or
conditions of this Agreement shall not be construed as a waiver of future
performance of any such term, covenant or condition but the obligations of
either party with respect thereto shall continue in full force and effect. The
breach by one party to this Agreement shall not preclude equitable relief or the
obligations in Article IV.

 

G.           Modification. The provisions of this Agreement may be amended,
modified or waived only with the prior written consent of the Company and the
Executive, and no course of conduct or failure or delay in enforcing the
provisions of this Agreement shall be construed as a waiver of such provisions
or affect the validity, binding effect or enforceability of this Agreement or
any provision hereof.

 

H.           Assignment. This Agreement shall be binding upon and inure to the
benefit of the Parties hereto and their respective heirs, successors and
permitted assigns. The Executive may not assign this Agreement to a third party.
The Company may assign its rights, together with its obligations hereunder, to
any affiliate and/or subsidiary of the Company or any successor thereto or any
purchaser of substantially all of the assets of the Company.

 

I.           Code Section 409A.

 

(i)          To the extent (A) any payments to which the Executive becomes
entitled under this Agreement, or any agreement or plan referenced herein, in
connection with the Executive’s termination of employment with the Company
constitute deferred compensation subject to Section 409A of the Internal Revenue
Code of 1986, as amended (the “Code”); (B) the Executive is deemed at the time
of his separation from service to be a “specified employee” under Section 409A
of the Code; and (C) at the time of the Executive’s separation from service the
Company is publicly traded (as defined in Section 409A of Code), then such
payments (other than any payments permitted by Section 409A of the Code to be
paid within six (6) months of the Executive’s separation from service) shall not
be made until the earlier of (1) the first day of the seventh month following
the Executive’s separation from service or (2) the date of the Executive’s death
following such separation from service. Upon the expiration of the applicable
deferral period, any payments which would have otherwise been made during that
period (whether in a single sum or in installments) in the absence of this
Article V, Section I shall be paid to the Executive or the Executive’s
beneficiary in one lump sum, plus interest thereon at the Delayed Payment
Interest Rate (as defined below) computed from the date on which each such
delayed payment otherwise would have been made to the Executive until the date
of payment. For purposes of the foregoing, the “Delayed Payment Interest Rate”
shall mean the national average annual rate of interest payable on jumbo
six-month bank certificates of deposit, as quoted in the business section of the
most recently published Sunday edition of The New York Times preceding the
Executive’s separation from service.

 

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(ii)         To the extent any benefits provided under Article III, Section
B(ii) above are otherwise taxable to the Executive, such benefits shall, for
purposes of Section 409A of the Code, be provided as separate in-kind payments
of those benefits, and the provision of in-kind benefits during one calendar
year shall not affect the in-kind benefits to be provided in any other calendar
year.

 

(iii)        In the case of any amounts payable to the Executive under this
Agreement, or under any plan of the Company, that may be treated as payable in
the form of “a series of installment payments,” as defined in Treas. Reg.
§1.409A-2(b)(2)(iii), the Executive’s right to receive such payments shall be
treated as a right to receive a series of separate payments for purposes of
Treas. Reg. §1.409A-2(b)(2)(iii).

 

(iv)        It is intended that this Agreement comply with or be exempt from the
provisions of Section 409A of the Code and the Treasury Regulations and guidance
of general applicability issued thereunder, and in furtherance of this intent,
this Agreement shall be interpreted, operated, and administered in a manner
consistent with such intent.

 

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11

 

 

IN WITNESS WHEREOF, the Company and the Executive have caused this Agreement to
be executed on the date first set forth above, to be effective as of that date.

 

EXECUTIVE:       /s/ Bradford C. Barton   Bradford C. Barton       COMPANY:    
  Alliqua Biomedical, Inc.       By: /s/ David Johnson     David Johnson    
Chief Executive Officer  

 

Signature Page to Employment Agreement