Exhibit 10.13


 


SERVICE CONTRACT


 


between


 


Biofrontera
Aktiengesellschaft, Hemmelrather Weg 201, 51377 Leverkusen, represented by the Supervisory Board, in turn represented by its Chairman,
Dr. Ulrich Granzer,


 


-
hereinafter referred to as the “Company”  -

and


 


Mr.
Christoph Dünwald,


 


-
hereinafter also referred to as the “Management Board member”  –
with the


Company and the Management Board member hereinafter referred to together as


the “Parties”
 -


 


Preliminary
remarks


 


Mr.
Dünwald shall be appointed by resolution of the Supervisory Board to be a member of the company’s Management Board initially
until November 11, 2017. His contract of service to the company was regulated by the service contract dated July 15, 2015, which
equally expired as of November 15, 2017.


 


By
Supervisory Board resolution dated July 19, 2017, the appointment of Mr. Dünwald was extended from November 16, 2017 until
November 30, 2020.


 


Given
this, the parties also wish to hereby newly regulate the service contract.


 


Based
on the foregoing, the Parties shall agree the following:


 




    	 	 	 



     


    

 


Section 1 


Appointment, management, representation


 


		(1)	Mr. Dünwald shall be appointed to be
a member of the Company’s Management Board for the period until November 30, 2020.



 


		(2)	Mr. Dünwald shall manage the Company’s
business as Management Board member together with the other member, or members, of the Management Board.



 


		(3)	If only Mr. Dünwald is appointed as
a Management Board member, he shall represent the company on the sole basis. If several Management Board members are appointed,
Mr. Dünwald shall represent the company together with another Management Board member, or together with a company officer.



 


Section
2 


Tasks,
activities for subsidiaries


 


		(1)	Irrespective of his overall responsibilities,
the Management Board member shall perform the areas of tasks designated in greater detail in the respective valid business allocation
plan according to laws, the Company’s bylaws and the rules of business procedure for the Management Board as approved by the Supervisory
Board.



 


		(2)	The Management Board member shall declare
himself prepared to assume managerial activities in companies in which the Company holds majority interests either directly or
indirectly, or in which it will hold majority interests in the future (affiliates in the meaning of Sections 15 et seq. of the
German Stock Corporation Act [AktG]). These shall also include the readiness to assume corresponding managing director/management
board positions. No additional compensation shall be paid for this, either by the company or by the respective affiliated companies.
Rather, his related activities shall be deemed to be services under this contract, which shall be compensated by remuneration under
this contract. The Management Board member shall immediately step down from such offices at the wish of the Supervisory Board as
far as legally permissible.



 


		(3)	The Management Board member shall be obligated
at the wish of the Supervisory Board to assume Supervisory Board mandates or seats on other controlling bodies at other companies
as well as honorary functions in associations. He must step down from such offices at any time at the wish of the Supervisory Board,
and at the latest as of the ending of the appointment as Management Board member as far as legally permissible.



 






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		(4)	The transactions designated in the Company’s
bylaws or by the Supervisory Board in a set of rules of business procedure or in an individual case shall require prior approval
by the Supervisory Board (Section 111 (4) of the German Stock Corporation Act [AktG]).



 


Section 3


Working hours


 


		(1)	The Management Board member shall not
be bound by fixed working hours. The Management Board member shall nevertheless be required to be available for service if and
to the extent required for the Company’s benefit.



 


		(2)	Irrespective of the regulation in Section
2 (2), the Management Board member must make his entire working hours available to the Company. All paid or unpaid ancillary activities,
including exercising supervisory board mandates as well as publication and lecturing activities, shall require prior written approval
by the supervisory board.



 


		(3)	The management board member shall be permitted
to act as managing director for Biofrontera Bioscience GmbH and for Biofrontera Pharma GmbH, and as officer of Biofrontera Inc.




 


Section 4


Compensation


 


		(1)	The
Management Board member shall receive fixed annual compensation of EUR 225,000.00 gross (in words: two hundred and twenty-five
thousand euros) to be paid in arrears in twelve equal monthly instalments – in compliance with statutory deductions. If
the contact appointment ends during the course of the year, payment shall be made pro rata temporis. Given attainment of consolidated
sales revenue for the year of at least EUR 10 million (in words: ten) in a given fiscal year, the fixed annual compensation from
January 1 of the following fiscal year shall be raised to EUR 250,000.00 (in words: two hundred and fifty thousand euros), and
with the attainment of consolidated sales revenue for the year of at least EUR 15 million (in words: fifteen) in a given fiscal
year the fixed annual compensation shall be increased to EUR 275,000.00 (in words: two hundred seventy-five thousand euros) from
January 1 of the following fiscal year. The consolidated financial statements as approved in each case by the Supervisory Board
shall for the basis for determining the sales revenue targets. Given attainment of consolidated net profit for the year (positive
net result) in a given fiscal year, which shall be derived from the Company’s approved consolidated financial statements, the
fixed salary shall be raised from January 1 of the following fiscal year to EUR 300,000.00 (in words: three hundred thousand euros).
Payment in arrears of the increased salary shall be made for the months between the reporting cut-off date of the corresponding
consolidated financial statements until the month in which the financial statements are approved (inclusive), and a monthly payment
of the increased compensation shall be made from the month following the approval of the corresponding consolidated financial
statements.



 






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		(2)	The Management Board member shall receive
an annual bonus. Given full target attainment (100%), the bonus payment shall amount to EUR 50,000.00 (in words: fifty thousand
euros) gross from the 2017 calendar year. If the target is reached, the annual bonus shall be increased up to a maximum of 200%.
Given target attainment of up to 70%, the bonus payment shall reduce on a linear basis; in the case of target attainment of less
than 70%, no bonus payment shall be made. The measurement factors shall be set at the end of each financial year for the following
financial year in a mutually agreed target agreement. If no mutual agreement is reached between the Management Board member and
the Supervisory Board, the Supervisory Board shall decide at its discretion. The performance targets the 2017 have already been
fixed.



 


Given
attainment of consolidated sales revenue for the year of at least 10 (in words: ten) million euros in a given fiscal year, the
annual bonus shall be increased to EUR 60,000.00 (in words: sixty thousand euros) from January 1 of the following fiscal year,
and with attainment of consolidated sales revenue for the year of at least 15 (in words: fifteen) million euros in a given fiscal
year the annual bonus shall be increased to EUR 70,000.00 (in words: seventy thousand euros) from January 1 of the following fiscal
year. The consolidated financial statements as approved in each case by the Supervisory Board shall form the basis for determining
the sales revenue targets. With the attainment of consolidated net profit for the year (positive consolidated net result) in a
given fiscal year, which shall be derived from the Company’s approved consolidated financial statements, the fixed salary shall
be raised from January 1 of the following fiscal year to EUR 80,000.00 (in words: eighty thousand euros).


 






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The
due date of the bonus payment shall in each case occur one month after the approval of the separate annual financial statements
and the consolidated financial statements by the Company’s Supervisory Board. If the company terminates the service contract on
good grounds in the meaning of Section 626 of the German Civil Code (BGB), the bonus payment for the fiscal year in which the determination
becomes effective shall be cancelled. The bonus shall be reduced proportionally pro rata temporis if the employment relationship
begins or ends during the year.


 


		(3)	Stock options from the 2015 Stock Option
Program are to be granted to the Management Board member as a long-term performance component. The Supervisory Board shall decide
at its discretion on the further specifics and further option grants.



 


		(4)	To further enhance the long-term incentive
effect of variable compensation and consequently its orientation to the Company’s long-term development and growth, the Management
Board member shall be obligated to immediately acquire for every five (5) stock options granted from the 2015 Stock Option Program
one (1) of the company’s ordinary shares (in compliance with insider law, in particular), and to hold them as private assets, for
the period of three years commencing one month after the date on which the options are issued, or on the date when the shares are
purchased if this occurs later (“Blocking Shares”). The total purchasing expense to be borne by the Management
Board member shall nevertheless be limited to an amount of EUR 15,000.00 per calendar year, even if this fails to establish the
ratio of granted options to Blocking Shares of 5 : 1. Shares in the company acquired by the Management Board member before the
stock options were granted can also be utilised as blocking shares. The Management Board member must immediately report an early
sale of such Blocking Shares to the Supervisory Board Chair, and the Company can request a return transfer of an equivalent number
of stock options free of charge within a month of receiving such notification, with the most recently granted options being those
that must be returned first (last in, first out). If the ratio of options to blocking shares of 5 : 1 was not established as part
of the share purchase, a correspondingly higher number of options is to be transferred back.



 


		(5)	These payments shall compensate the entire
activity of the Management Board member for the Company and other affiliates in the meaning of Section 2 (2) as well as for all
overtime, additional work, and work on Sundays and public holidays.



 






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		(6)	Compensation
received by the Management Board member from mandates or activities performed in the Company’s interest pursuant to Section 2
(3) are to be rendered to the Company; tax charges are also to be taken into consideration where relevant. The transfer and assignment
of compensation claims to third parties is not permitted.



 


Section
5


Vehicle
/ company apartment / outlays


 


The
Company shall provide the Management Board member with a car with maximum leasing and insurance costs of up to EUR 15,000.00 net
per year for business and private use. The Company shall also bear all other costs connected with the vehicle. The Management Board
member is required to have the private use of the vehicle be taxed as a benefit in kind. The Management Board member shall hereby
expressly waive all claims and shall indemnify the Company from any claims that might accrue to him, his dependants or third parties
from the Company in connection with the private use of the company car, if they are not covered by the Company’s insurance protection.


 


The
Company shall reimburse the Management Board member for expenses he incurs in performing his tasks as part of this agreement, including
travel and business entertainment expenses according to the respective fiscally permissible maximum rates. If the expenses exceed
these maximum rates, they shall be reimbursed after submitting the corresponding vouchers.


 


Section
6


Continued
payment of compensation in the case of sickness or death


 


If
the Management Board member is prevented from performing his activities through illness or other circumstances not caused by gross
negligence or intentionally, the Company shall pay in full the fixed compensation pursuant to the above Section 4 (1) for a six-month
period, albeit at maximum until the end of this Service Contract. The bonus payment pursuant to the above Section 4 (2) shall be
granted accordingly, although it shall reduce proportionally if the Management Board member fails to perform his tasks, for example
due to illness-related incapacity to work. Sickness benefits paid by the health insurance fund/private health insurance shall be
debited against the compensation.


 






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If
the Management Board member dies during active employment, his widow and children, to the extent that they are under 25 years of
age and are still undergoing professional training, shall be entitled as joint and several creditors to the continued payment of
the fixed salary pursuant to Section 4 (1) for the month of death and the six subsequent months, albeit at maximum until the end
of this contract. They shall also be entitled to any still unpaid bonus for a fiscal year elapsed before the death, and pro rata
temporis until the death, to the bonus for the year of death.


 


		(3)	In relation to the payment to be continued
to be paid pursuant to the above Sections 1 and 2, the Management Board member and/or his remaining dependants shall be required
to deduct the following – if the payments are congruent with the fixed compensation and do not exceed the fixed compensation:



 


		(i)	any private pension if and to the extent
that the premiums were last paid by the Company (“Aktiengesellschaft”/“AG”) or one of its affiliates;



 


		(ii)	if the incapacity to work has occurred as
a consequence of an accident, those payments that the Management Board member obtains from another party due to an accident, especially
also from an accident insurance policy concluded by the Company (“Aktiengesellschaft”/“AG”) or by one of its
affiliates for him, or from the individual that is required to compensate for the consequences of the accident.



 


The
Management Board member and his remaining dependants shall be obligated to provide information about the scope of deductible benefits.


 


		(4)	The Management Board member shall hereby
cede his loss compensation claims to the Company in the instance that such be infringed by third parties, if the Company pays continued
compensation in the meaning of the above paragraph. He shall be obligated to provide the Company with the information required
to assert his claims, and to support it in the prosecution of an action.



 






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Section
7


D & O insurance


 


The
Company shall arrange as part of the permissible statutory options (especially considering the deductible pursuant to Section 93
(2) Clause 3 of the German Stock Corporation Act [AktG]) Directors & Officers Liability insurance cover for the Management
Board member to a level appropriate to the related risk, albeit at least in an amount of EUR 10,000,000.00 (ten million), and shall
bear the related costs. The Management Board member himself shall bear any taxes relating to the monetary benefit that this generates.


 


Section 8


Vacation


 


		(1)	The Management Board member shall be entitled
to annual vacation of 30 working days (Monday to Friday, apart from statutory public holidays). Settlement of vacation entitlement
in cash shall not be permitted.



 


		(2)	The dates and duration of vacation are to
be coordinated and determined in agreement with the Supervisory Board Chair and in collegial coordination with the other Management
Board members, considering the company’s operating matters.



 


Section 9 


Confidentiality, records


 


		(1)	The Management Board member may not exploit
or communicate to other individuals business and operating secrets and any of the Company’ other matters and transactions that
are not intended for third parties, which are entrusted to him or made known to him as part of his activity for the Company, unless
their publication is required in the Company’s interest, or a mandatory statutory obligation to provide information exists.



 


		(2)	If the Management Board member leaves the
Company’s services, or after his being released from the obligation to render services, or at the demand of the Company’s Supervisory
Board at any time, the Management Board member shall be obligated to immediately transfer to the Company, in other words, to an
individual nominated by the Supervisory Board, all work resources (e.g. laptops and similar) and all written documents, correspondence,
records, drafts, papers, copies, photocopies and similar (hereinafter also referred to as documents), which relate to the Company’s
matters and which are still in his possession. The Management Board member shall not be entitled to exercise a right of retention
to such work resources and documents. The Management Board member shall be entitled to make copies at his own cost of any documents
that serve or could serve to discharge the Management Board member. The Management Board member must prepare a list of the copied
documents in the aforementioned meaning, and submit it to the Company, in other words, to an individual nominated by the Supervisory
Board.



 






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Section 10


General
prohibition of competition


 


The
prohibition of competition pursuant to Section 88 the German Stock Corporation Act (AktG) shall apply during the duration of the
Service Contract. Moreover, the Management Board member shall not acquire an interest in a company that competes with the Company
or maintains a significant scope of business relationships with it. Shareholdings amounting to less than 5% of the share capital
or voting rights of the company as specified in the above Clause 1 and which do not enable any influence over the boards of the
respective company shall not be deemed an interest in the meaning of this provision. Shareholdings of more than 5% in the share
capital of voting rights of the company’s specified in above Clause 1 shall require the express prior written approval of
the supervisory board. If the Management Board member indicates to the Supervisory Board that he wishes to enter into an investment
in one of the companies specified in the above Clause 1, the Supervisory Board at its next meeting following the notification
shall decide whether to issue or refuse approval, if the Management Board member informs the Supervisory Board at least 21 days
before the Supervisory Board meeting concerning his wish to enter into an investment. For each case of infringement against the
prohibition of competition, the Management Board member shall pay to the Company a contractual penalty equivalent to 1/12 of his
fixed annual salary. Along with the company’s other claims, the contractual penalty shall derive from the competition agreement.
Given prolonged infringement of the prohibition of competition, the activity during a month shall be deemed as a respective independent
infringement.


 






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Section 11 


Work eligible
for special protection rights


 


		(1)	All
                                         results of the work of the Management Board member shall accrue solely to the Company
                                         both in rem and economically. In particular, copyrights and industrial property rights
                                         as well as rights to technical inventions or improvements that the Management Board member
                                         has made or developed during his activity for the Company or on the basis of work for
                                         the Company shall be solely attributable to the Company. The Management Board member
                                         shall hereby cede all corresponding rights to the Company, which shall expressly accept
                                         such cession. Employee invention law shall not be applicable to the Management Board
                                         Chairman/CEO.



 


		(2)	Irrespective of (1), and furthermore if a
transfer in rem is not possible or has not occurred, the Management Board member shall hereby transfer the global exclusive right
of use, which shall not be limited in terms of time or content, to any copyrights arising in his person to works created in connection
with his activity based on his experience from his activity for the Company or based on the Company’s works, to the Company, which
shall accept such transfer. The rights shall relate to all purposes that the Company pursues or will pursue as part of its respective
– in other words also future – business activities. In particular, the transfer of rights shall not be limited to the
duration of the activity for the Company. The Management Board member shall waive designation as originator.



 


		(3)	The exploitation of technical organisational
improvements proposed by the Management Board member shall accrue exclusively to the Company.



 


		(4)	In relation to the aforementioned cession
or transfer or exploitation of rights that accrue to it, the Company shall not be obligated to render any additional compensation.
Mandatory statutory compensation claims shall be hereby unaffected.



 


		(5)	The provisions of this Section 11 shall apply
in relation to the Company’s direct or indirect affiliates – at the Company’s option for the benefit of the Company or the
benefit of the respective affiliate – correspondingly.



 


Section
12 


Contractual duration


 


This
service contact shall be concluded on a firm basis for the duration from November 16, 2015 until November 30, 2020. In the instance
of a further appointment of the Management Board member to the Company’s Management Board, it shall extend by the period of the
appointment. The Parties shall agree on a further appointment at the latest six months before the expiry of an appointment period.


 






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		(2)	The right to termination on good grounds
pursuant to Section 626 of the German Civil Code (BGB) shall be unaffected.



 


		(3)	If the Management Board member becomes wholly
or partly incapable of working in the meaning of social security legislation during the term of the Service Contract, the Service
Contract shall discontinue at the end of the next quarter in which the partial or complete reduction in earning capacity is determined,
albeit at the latest as of the date on which the Service Contract would have ended without the partial or complete reduction in
earning capacity.



 


		(4)	The Company shall be entitled at any time,
albeit especially after the termination of the Service Contract, to release the Management Board member from his obligation to
work for the Company. In the instance of an irrevocable release from duties, the Management Board member shall be obligated to
immediately and without compensation return to the company the car provided pursuant to Section 5 (1).



 


		(5)	Severance pay in the case of early termination
of Management Board duties without good grounds shall be capped at twice the specified annual salary, and shall amount to no more
than the total remuneration due for the remaining period of the contract. A deduction of income from other sources pursuant to
Section 326 (2), 615 Clause 2 of the German Commercial Code (BGB) shall not occur in this instance. The severance entitlement shall
fall due for payment with the discontinuation of the employment If the service contract is ended for good grounds for which the
Management Board member is responsible, no payment shall be made to the Management Board member.



 


Section
13


 Change-of-control clause


 


		(1)	For the instance of a change of control, the Management
Board member shall have the right to terminate on an extraordinary basis the employment contract with a notice period of three
months as of the month-end (special termination right) and to step down from his office as a member of the Management Board giving
such notice period. The special termination right of the Management Board member shall lapse if he does not exercise it within
three months after being notified of the change of control.



 






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		(2)	A change of control in the meaning of this
agreement shall exist



 


		(i)	given attainment or exceeding the control
threshold in the meaning of Section 29 of the German Securities Takeover Act (WpÜG) (at least 30% of the voting rights),



 


		(ii)	given attainment or exceeding the thresholds
of 50% and/or 75% of the voting rights pursuant to Section 21 et seq. of the German Securities Trading Act (WpHG), 



 


		(iii)	if a shareholder or group of shareholders
acting in coordination in the meaning of Section 30 WpÜG combines to form a simple majority of the voting rights at the Company’s
General Meeting of Shareholders, without reaching or exceeding the control threshold in the meaning of Section 29 WpÜG (a
so-called “constructive majority at the general meeting of shareholders”);



 


if
the Company’s shares are not admitted to stock market listing


 


		(i)	in the case of the acquisition of a majority
interest pursuant to Section 20 (4) of the German Stock Corporation Act (AktG) requiring notification pursuant to Section 20 (4)
AktG,



 


		(ii)	if a shareholder or group of shareholders
acting in coordination and the meaning of Section 30 WpÜG combines to form a simple majority of the voting rights at the Company’s
General Meeting of Shareholders (a so-called “constructive majority at the general meeting of shareholders”);



 


(3)       The
date of notification shall be deemed to be


 


		(i)	the date on which the Company publishes the
voting rights announcement pursuant to the provisions of the WpHG



 


		(ii)	the date on which the bidder or party obligated
to make an offer announces the reaching or exceeding of the control threshold pursuant to the provisions of the WpÜG ;



 






    	 	-12-	 



     


    

 


		(iii)	the date on which the Company announces the
existence of the interest in the company bulletin pursuant to Section 20 (6) AktG,



 


		(iv)	the date on which the Company becomes aware
that a shareholder or a group of shareholders acting in coordination and the meaning of Section 30 WpÜG combines or has combined
at the Company’s General Meeting of Shareholders to form a simple majority of the voting rights;



 


		(4)	If the special termination right is exercised,
the Management Board member shall be entitled to a severance payment. A severance payment shall consist of three years’ salaries
(fixed salary plus variable compensation pursuant to Section 4 (2) (annual bonus) based on an imputed 100% target attainment).
Income derived from other sources shall not be deducted pursuant to Sections 326 (2), 615 Clause 2 of the German Civil Code (BGB).
The severance entitlement shall fall due for payment with the discontinuation of employment.



 


		(5)	In the instance of the aforementioned exercising
of his special termination right, the Management Board member shall relinquish without being asked his office as Management Board
member as of the date when the termination becomes effective through declaration to the Company, as represented by the Supervisory
Board Chair. Stock options and/or other share-based compensation shall be settled based on any related agreed terms.



 


Section
14


Final provisions


 


		(1)	This contract shall replace the service
contract dated July 15, 2015.



 


		(2)	All amendments to this Service Contract
shall require written form to be legally effective, as well as the Supervisory Board’s express and written approval. This shall
also apply for the amendment to the above Clause 1.



 


		(3)	No verbal subsidiary agreements have been
entered into.



 






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		(4)	Should individual provisions of this Service
Contract be or become invalid, this shall not affect the efficacy of the other provisions. In such case, the Parties shall be obligated
to replace the ineffective provision by an effective provision that as far as possible achieves the intended aim of the ineffective
provision. This will also apply if the ineffectiveness of a provision is based on a measure of performance or time; the legally
permissible measure shall then be valid.



 


		(5)	Both Parties shall declare that in each case
they have received an original copy of this service agreement signed by both Parties.



 


Leverkusen,
July 21, 2017


 


Dr.
Ulrich Granzer




 






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