Document:

Filed by Automated Filing Services Inc. (604) 609-0244 - Carbiz Inc. - Exhibit 10.3

 Exhibit 10.3 

PLEDGE AGREEMENT

     THIS PLEDGE AGREEMENT (this
“Agreement”), dated as of March 23, 2007, is by and between CARBIZ INC.,
a corporation organized under the laws of the Province of Ontario, Canada
(“Pledgor”) and SWC SERVICES LLC, a Delaware limited liability company,
acting in its capacity as Administrative Agent (as such term is defined in the
below referenced Loan Agreement, in such capacity, the “Pledgee”) for the
benefit of the “Lenders” (as defined in the Loan Agreement).

W I T N E S S E T H:

     WHEREAS, Pledgor legally and
beneficially owns all of the issued and outstanding capital stock of Carbiz USA
Inc., a Delaware corporation (“Carbiz USA”); and

     WHEREAS, Pledgor, as a Guarantor
(as such term is defined in the Loan Agreement referred to herein below), has
entered into that certain Loan and Security Agreement of even date herewith (as
amended, restated, supplemented or otherwise modified and in effect from time to
time, the “Loan Agreement”) by and among (a) Carbiz USA, Carbiz Auto
Credit, Inc., a Florida corporation and Carbiz Auto Credit JV1, LLC, a Florida
limited liability company as Borrowers (as defined in the Loan Agreement), (b)
Pledgor, as a Guarantor , (c) the Lenders from time to time party thereto and
(d) Pledgee, as Administrative Agent, providing for the Pledgee and the Lenders
to make available to the Borrowers certain loans and other financial
accommodations (collectively, the “Loans”) on the terms and conditions
set forth therein (the Loans, together with all other “Indebtedness” as defined
in the Loan Agreement, are collectively referred to herein as the
“Indebtedness”); and

     WHEREAS, to induce the Pledgee
and the Lenders to enter into the Loan Agreement and make the Loans thereunder,
Pledgor has executed and delivered that certain Guaranty and Security Agreement
dated as of the date hereof in favor of Administrative Agent, for the benefit of
Administrative Agent and the Lenders, pursuant to which the Pledgor has
guarantied the payment and performance of the Indebtedness; 

     WHEREAS, to induce the Pledgee
and the Lenders to enter into the Loan Agreement and make the Loans thereunder,
in order to secure the payment and performance of the Liabilities (as
hereinafter defined), Pledgor has agreed to pledge to Pledgee, for the benefit
of the Pledgee and the Lenders, all of the capital stock, membership interests,
partnership interests and other equity interests of Carbiz USA and each other
corporation, limited liability company, partnership or other entity, all or a
portion of the stock or other equity interests of which is owned or acquired by
Pledgor (each such person, hereafter, an “Issuer”), now or hereafter
owned or acquired by Pledgor, as security for the Liabilities (as hereinafter
defined).

     NOW, THEREFORE, in consideration
of the premises and in order to induce Pledgee and the Lenders enter into the
Loan Agreement and make the Loans and other financial accommodations to Pledgor
and the other Borrowers under the Loan Agreement, Pledgor hereby agrees with
Pledgee, for benefit of Pledgee and the Lenders, as follows:

     Section 1. Defined Terms.
Unless otherwise defined herein, all capitalized terms used

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herein shall have the respective meanings ascribed thereto in
the Loan Agreement. Terms defined in the Uniform Commercial Code, as in effect
in the State of Illinois from time to time (the “UCC”), which are not
otherwise defined in this Agreement or in the Loan Agreement and are used in
this Agreement shall have the meanings ascribed to such terms in the UCC as in
effect on the date hereof. The term “PPSA” shall mean any Personal Property
Security Act, as in effect from time to time in any applicable Canadian
jurisdiction. 

     Section 2. Pledge. Pledgor
hereby pledges, assigns, hypothecates, transfers, delivers and grants to
Pledgee, for the benefit of the Pledgee and the Lenders, a first lien on and
first security interest in (i) all of the capital stock, limited liability
company membership interests or units, partnership interests or other equity
interests of the each Issuer now owned or hereafter acquired by Pledgor
(including, without limitation, the capital stock and membership interests of
Carbiz USA described on Exhibit A hereto) (collectively, the “Pledged
Interests”), (ii) all other property hereafter delivered to, or in
the possession or in the custody of, Pledgee in substitution for or in addition
to the Pledged Interests, (iii) any property of Pledgor described in Section 4
below, now or hereafter delivered to, or in the possession or custody of
Pledgor, and (iv) all proceeds of the collateral described in the preceding
clauses (i), (ii) and (iii) (the collateral described in clauses (i) through
(iv) of this Section 2 being collectively referred to as the “Pledged
Collateral”), as collateral security for:

          (a)
the prompt and complete payment when due (whether at the stated maturity, by
acceleration or otherwise) of all the Indebtedness; and

          (b)
the due and punctual payment, performance by Pledgor of its obligations and
liabilities under, arising out of or in connection with the Guaranty and this
Agreement;

(all of the foregoing being referred to hereinafter
collectively as the “Liabilities”). All of the Pledged Interests now
owned by Pledgor are represented by the certificates described on Exhibit
A hereto, which certificates, together with undated assignments separate
from certificate duly executed in blank by Pledgor and irrevocable proxies, are
being delivered to Pledgee, for the benefit of Pledgee and the Lenders,
simultaneously herewith. Promptly upon Pledgor’s formation or acquisition of a
new Issuer, Pledgor shall (i) execute an Addendum in the form of Exhibit
B with respect to such new Issuer, (ii) deliver to Pledgee any certificates
representing any of the Pledgor’s equity interest in such Issuer, duly executed
and completed, together with undated assignments separate from certificate duly
executed in blank by Pledgor and irrevocable proxies, and (iii) cause such
Issuer to execute an Acknowledgment in the form attached hereto. Pledgee, on
behalf of the Lenders, shall maintain possession and custody of the certificates
representing the Pledged Interests and any additional Pledged Collateral.

     Section 3. Representations and
Warranties of Pledgor. Pledgor represents and warrants to Pledgee, and
covenants with Pledgee, that:

          (a)
Pledgor is the record and beneficial owner of, and has legal title to, the
Pledged Interests listed on Exhibit A, and such interests are and will
remain and all other interests constituting Pledged Collateral will be, free and
clear of all pledges, Liens, security interests and other encumbrances and
restrictions whatsoever, except the liens and security interests created by this
Agreement and second priority Liens in favor of the

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Trafalgar Subordinated Lenders securing the Trafalgar
Subordinated Debt;

          (b)
Pledgor has full power, authority and legal right to execute the pledge provided
for herein and to pledge the Pledged Interests and any additional Pledged
Collateral to Pledgee, for the benefit of the Pledgee and the Lenders;

          (c)
this Agreement has been duly authorized, executed and delivered by Pledgor and
constitutes a legal, valid and binding obligation of Pledgor enforceable in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, moratorium, reorganization and other similar laws
affecting the enforcement of creditors’ rights generally;

          (d)
there are no outstanding options, warrants or other agreements with respect to
the Pledged Interests;

          (e)
the Pledged Interests have been, and all additional Pledged Collateral
constituting capital stock, membership interests, partnership interests or other
similar equity interests will be, duly and validly authorized and issued, and
are or will be fully paid and non-assessable. The Pledged Interests listed on
Exhibit A constitute one hundred percent of the of the capital stock or
other equity interests of Carbiz USA;

          (f)
no consent, approval or authorization of or designation or filing with any
governmental authority on the part of Pledgor is required in connection with the
pledge and security interest granted under this Agreement, or the exercise by
Pledgee of the voting and other rights provided for in this Agreement;

          (g)
the execution, delivery and performance of this Agreement by Pledgor will not
violate any provision of any applicable law or regulation or of any order,
judgment, writ, award or decree of any court, arbitrator or governmental
authority, domestic or foreign, or of the charter or by-laws of Pledgor or any
Issuer or of any securities issued by any Issuer or of any mortgage, indenture,
lease, contract, or other agreement, instrument or undertaking to which Pledgor
or any Issuer is a party or which purports to be binding upon Pledgor or any
Issuer or upon any of their respective assets, and will not result in the
creation or imposition of any lien, charge or encumbrance on or security
interest in any of the assets of Pledgor or any Issuer except as contemplated by
this Agreement;

          (h)
the pledge, assignment and delivery to Pledgee of the Pledged Interests pursuant
to this Agreement creates a valid first lien on and a first perfected security
interest in the Pledged Interests and the proceeds thereof in favor of Pledgee,
for the benefit of Pledgee and the Lenders, subject to no prior pledge, lien,
mortgage, hypothecation, security interest, charge, option or encumbrance or to
any agreement purporting to grant to any third party a security interest in the
property or assets of Pledgor which would include the Pledged Interests. Pledgor
covenants and agrees that it will defend Pledgee’s right, title and security
interest in and to the Pledged Interests and the proceeds thereof against the
claims and demands of all persons whomsoever; 

          (i)
Pledgor hereby irrevocably authorizes Pledgee at any time and from time to

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time (for so long as any of the Liabilities remain outstanding
and any commitment under the Loan Agreement remains effective and to the extent
permitted by applicable law) to file in any filing office in any UCC or PPSA
jurisdiction one or more (i) UCC financing or continuation statements and
amendments thereto and/or (ii) PPSA registration statements, relating to all or
any part of the Pledged Collateral; and

          (j)
  each Pledged Interest consisting of either (i) a membership interest in an Issuer
  that is a limited liability company or (ii) a partnership interest in an Issuer
  that is a partnership (if any) are “securities” governed by Article
  8 of the UCC. Certificates evidencing such membership interests or partnership
  interests (if any) have been issued to Pledgor by the applicable Issuer.

     Section 4. Stock
Dividends, Distributions, etc. If, while this Agreement is in effect,
Pledgor shall become entitled to receive or shall receive any stock certificate,
membership certificate or other certificate evidencing an equity interest in
Pledged Collateral (including, without limitation, any certificate representing
a dividend or a distribution in connection with any reclassification, increase
or reduction of capital, or issued in connection with any reorganization, merger
or consolidation), or any options or rights, whether as an addition to, in
substitution for, or in exchange for any of the Pledged Interests, or otherwise,
Pledgor agrees to accept the same as Pledgee’s agent and to hold the same in
trust for Pledgee, and to deliver the same forthwith to Pledgee in the exact
form received, with the endorsement of Pledgor when necessary and/or appropriate
undated assignments separate from certificate duly executed in blank, to be held
by Pledgee, for the benefit of Pledgee and the Lenders, subject to the terms
hereof, as additional Pledged Collateral. In case any distribution of capital
shall be made on or in respect of the Pledged Interests or any property shall be
distributed upon or with respect to the Pledged Interests pursuant to the
recapitalization or reclassification of the capital of the issuer thereof or
pursuant to the reorganization thereof, the property so distributed shall be
delivered to Pledgee to be held by it as additional Pledged Collateral. Except
as provided in subsection 5(a)(ii) below, all sums of money and property so paid
or distributed in respect of the Pledged Interests which are received by Pledgor
shall, until paid or delivered to Pledgee, be held by Pledgor in trust as
additional Pledged Collateral.

     Section 5. Administration of
Security. The following provisions shall govern the administration of the
Pledged Interests:

           (a)
  So long as no Event of Default has occurred and is continuing, Pledgor shall
  be entitled (subject to the other provisions hereof, including, without limitation,
  Section 8 below):

                    (i)
to vote or consent with respect to the Pledged Interests in any manner not
inconsistent with this Agreement, the Loan Agreement and the other “Loan
Documents” referred to therein; and

                    (ii)
to receive cash dividends or other distributions in the ordinary course made in
respect of the Pledged Interests, to the extent permitted to be paid pursuant to
the Loan Agreement.

               Pledgor
hereby grants to Pledgee or its nominee, on behalf of Pledgee and Lenders,
an

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irrevocable proxy to exercise all voting and corporate and/or
company rights relating to the Pledged Interests in any instance, including,
without limitation, to approve any merger involving any Issuer as a constituent
company, which proxy shall only be exercisable immediately upon the occurrence
and during the continuance of an “Event of Default” as defined in the Loan
Agreement (any such being hereinafter referred to as an “Event of
Default”). After the occurrence and during the continuance of an Event of
Default and upon the request of Pledgee, Pledgor agrees to deliver to Pledgee,
on behalf of Pledgee and Lenders, such further evidence of such irrevocable
proxy or such further irrevocable proxies to vote the Pledged Interests as
Pledgee may request.

          (b)
Upon the occurrence and during the continuance of an Event of Default, in the
event that Pledgor, as record and beneficial owner of the Pledged Interests,
shall have received or shall have become entitled to receive, any cash dividends
or other distributions in the ordinary course, Pledgor shall deliver to Pledgee,
for the benefit of Pledgee and the Lenders, and Pledgee, for its own benefit and
the benefit of the Lenders, shall be entitled to receive and retain, all such
cash or other distributions as additional Pledged Collateral.

          (c)
Subject to any sale or other disposition by Pledgee, on behalf of the Pledgee
and Lenders, of the Pledged Interests or other property pursuant to this
Agreement, the Pledged Interests and any other Pledged Collateral shall be
delivered to Pledgor upon full payment in cash, satisfaction and termination of
all of the Liabilities and the termination of the lien and security interest
hereby granted pursuant to Section 14 hereof.

     Section 6. Rights of
Pledgee. Neither Pledgee nor any of the Lenders shall be liable for failure
to collect or realize upon the Obligations or any collateral security or
guaranty therefor, or any part thereof, or for any delay in so doing, nor shall
Pledgee or any of the Lenders be under any obligation to take any action
whatsoever with regard thereto. Any or all of the Pledged Interests held by
Pledgee hereunder may, if an Event of Default has occurred and is continuing, be
registered in the name of Pledgee or its nominee and Pledgee or its nominee may
thereafter without notice exercise all voting and corporate and/or company
rights at any meeting with respect to each Issuer and exercise any and all
rights of conversion, exchange, subscription or any other rights, privileges or
options pertaining to any of the Pledged Interests as if it were the absolute
owner thereof, including, without limitation, the right to vote in favor of, and
to exchange at its discretion any and all of the Pledged Interests upon, the
merger, consolidation, reorganization, recapitalization or other readjustment
with respect to each Issuer or upon the exercise by Pledgor or Pledgee of any
right, privilege or option pertaining to any of the Pledged Interests, and in
connection therewith, to deposit and deliver any and all of the Pledged
Interests with any committee, depository, transfer agent, registrar or other
designated agency upon such terms and conditions as Pledgee may determine, all
without liability except to account for property actually received by Pledgee,
but Pledgee shall have no duty to exercise any of the aforesaid rights,
privileges or options and shall not be responsible for any failure to do so or
delay in so doing.

     Section 7. Remedies. Upon
the occurrence and during the continuance of an Event of Default, Pledgee,
without demand of performance or other demand, advertisement or notice of any
kind (except the notice specified below of time and place of public or private
sale) to or upon

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Pledgor or any other person (all and each of which demands,
advertisements and/or notices are hereby expressly waived) to the extent
permitted by applicable law, may forthwith collect, receive, appropriate and
realize upon the Pledged Collateral, or any part thereof, and/or may forthwith
sell, assign, give an option or options to purchase, contract to sell or
otherwise dispose of (including the disposition by merger) and deliver said
Pledged Collateral, or any part thereof, in one or more portions at public or
private sale or sales or transactions, at any exchange, broker’s board or at any
of Pledgee’s offices or elsewhere upon such terms and conditions as Pledgee may
deem advisable and at such prices as it may deem best, for any combination of
cash and/or securities or other property or on credit or for future delivery
without assumption of any credit risk, with the right to Pledgee upon any such
sale or sales, public or private, to purchase the whole or any part of said
Pledged Collateral so sold, free of any right or equity of redemption in
Pledgor, which right or equity is hereby expressly waived or released, to the
extent permitted by applicable law. Pledgor acknowledges and agrees that Pledgee
is authorized to date and fill in any blanks on any assignment separate from
certificate delivered by Pledgor to Pledgee pursuant hereto in respect of the
Pledged Interests to effectuate a disposition of Pledged Collateral pursuant
hereto. Pledgee, for its own benefit and the benefit of the Lenders, shall apply
the net proceeds of any such collection, recovery, receipt, appropriation,
realization, sale or disposition, after deducting all reasonable costs and
expenses of every kind incurred therein or incidental to the safekeeping of any
and all of the Pledged Collateral or in any way relating to the rights of
Pledgee or any of the Lenders hereunder, including reasonable attorneys’ fees
and legal expenses, to the payment, in whole or in part, of the Liabilities in
accordance with the Loan Agreement. Only after so paying over such net proceeds
and after the payment by Pledgee of any other amount required by any provision
of law, including, without limitation, Section 9-608 of the UCC, need Pledgee,
on behalf of the Lenders, account for the surplus, if any, to Pledgor. Pledgor
shall remain liable for any deficiency remaining unpaid after such application.
Pledgor agrees with Pledgee that ten (10) days’ notice of the time and place of
any public sale or of the time after which a private sale or other intended
disposition is to take place is reasonable notification of such matters
(provided that the foregoing shall not preclude the effectiveness and
sufficiency of lesser notice to the extent same is sufficient under applicable
law). No notification need be given to Pledgor if Pledgor has signed after the
occurrence and during the continuance of an Event of Default a statement
renouncing or modifying any right to notification of sale or other intended
disposition. In addition to the rights and remedies granted to Pledgee for the
benefit of the Lenders in this Agreement and in any other instrument or
agreement securing, evidencing or relating to any of the Liabilities, Pledgee
and the Lenders shall have all the rights and remedies of a secured party under
the UCC, the PPSA and under any other applicable law.

     Section 8. No Disposition,
etc. Without the prior written consent of Pledgee, Pledgor agrees that
Pledgor will not sell, assign, transfer, exchange, or otherwise dispose of, or
grant any option with respect to, the Pledged Interests or any other Pledged
Collateral, nor will Pledgor create, incur or permit to exist any pledge, lien,
mortgage, hypothecation, security interest, charge, option or any other
encumbrance with respect to any of the Pledged Interests, any other Pledged
Collateral or any interest therein, or any proceeds thereof, except for the lien
and security interest provided for by this Agreement and a second priority Lien
in favor of the Trafalgar Subordinated Creditors securing the Trafalgar
Subordinated Debt. Without the prior written consent of Pledgee (which consent
shall not be unreasonably withheld so long as no Event of Default has occurred
and is continuing or would result therefrom), Pledgor agrees that it will not
vote to enable, and will not otherwise permit, any Issuer to (a) issue any
capital stock,

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membership interests or other securities of any nature in
addition to or in exchange or substitution for the Pledged Interests or (b)
dissolve, liquidate, retire any of its capital, reduce its capital or merge or
consolidate with any other Person.

     Section 9. Sale of Pledged
Interests.

          (a)
Pledgor recognizes that Pledgee, for its own benefit and on behalf of Lenders,
may be unable to effect a public sale or disposition (including, without
limitation, any disposition in connection with a merger of any Issuer) of any or
all the Pledged Collateral by reason of certain prohibitions contained in the
Securities Act of 1933, as amended (the “Act”), and applicable state
securities laws, but may be compelled to resort to one or more private sales or
dispositions thereof to a restricted group of purchasers who will be obliged to
agree, among other things, to acquire such securities for their own account for
investment and not with a view to the distribution or resale thereof. Pledgor
acknowledges and agrees that any such private sale or disposition may result in
prices and other terms (including the terms of any securities or other property
received in connection therewith) less favorable to the seller than if such sale
or disposition were a public sale or disposition and, notwithstanding such
circumstances, agrees that any such private sale or disposition shall be deemed
to be reasonable and affected in a commercially reasonable manner. Pledgee
agrees that, to the extent any such private sale or disposition is subject to
the Act or other applicable state securities law, such private sale or
disposition may only be made in compliance with the requirements of the Act or
applicable state securities laws, as applicable (or pursuant to any applicable
exemption or exclusion therefrom). Pledgee shall be under no obligation to delay
a sale or disposition of any of the Pledged Collateral in order to permit
Pledgor or any Issuer to register such securities for public sale under the Act,
or under applicable state securities laws, even if Pledgor or any Issuer would
agree to do so.

          (b)
Pledgor further agrees to do or cause to be done all such other acts and things
as may be necessary to make such sale or sales or dispositions of any portion or
all of the Pledged Collateral valid and binding and in compliance with any and
all applicable laws, regulations, orders, writs, injunctions, decrees or awards
of any and all courts, arbitrators or governmental instrumentalities, domestic
or foreign, having jurisdiction over any such sale or sales or dispositions, all
at Pledgor’s expense, provided, that Pledgor shall not be required to register
any of the Pledged Collateral under the Act or other applicable state securities
laws. Pledgor further agrees that a breach of any of the covenants contained in
Sections 2, 4, 5(b), 8, 9 or 10 hereof will cause irreparable injury to Pledgee
and the Lenders, that Pledgee and the Lenders have no adequate remedy at law in
respect of such breach and, as a consequence, agrees, without limiting the right
of Pledgee to seek and obtain specific performance of other obligations of
Pledgor contained in this Agreement, that each and every covenant referenced
above shall be specifically enforceable against Pledgor, and Pledgor hereby
waives and agrees not to assert any defenses against an action for specific
performance of such covenants except for a defense that no Event of Default has
occurred and is continuing.

          (c)
Pledgor further agrees to indemnify and hold harmless Pledgee and the Lenders,
each of their respective successors and assigns, officers, directors, employees,
agents and attorneys, and any Person in control of any thereof (each, an
“Indemnified Party”), from and against any loss, liability, claim, damage
and expense, including, without limitation, reasonable counsel fees

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(collectively called the “Indemnified Liabilities”),
under federal and state securities laws or otherwise insofar as such loss,
liability, claim, damage or expense:

               (i)
arises out of or is based upon any untrue statement or alleged untrue statement
of a material fact contained in any registration statement, prospectus or
offering memorandum or in any preliminary prospectus or preliminary offering
memorandum or in any amendment or supplement to any of the foregoing or in any
other writing prepared in connection with the offer, sale or resale of all or
any portion of the Pledged Collateral unless such untrue statement of material
fact was provided by such Indemnified Party specifically for inclusion therein;
or

               (ii)
arises out of or is based upon any omission or alleged omission to state therein
a material fact required to be stated or necessary to make the statements
therein not misleading;

such indemnification to remain operative regardless of any
investigation made by or on behalf of Pledgee or any successor thereof, or any
Person in control of any thereof. In connection with a public sale or other
distribution, Pledgor will provide customary indemnification to any
underwriters, their respective successors and assigns, their respective officers
and directors and each Person who controls any such underwriter (within the
meaning of the Act). If and to the extent that the foregoing undertakings in
this Section 9(c) may be unenforceable for any reason, Pledgor agrees to make
maximum contribution to the payment and satisfaction of each of the Indemnified
Liabilities which is permissible under applicable law. The obligations of
Pledgor under this Section 9(c) shall survive any termination of this
Agreement.

     Section 10. Further
Assurances. Pledgor agrees that at any time and from time to time, upon the
written request of Pledgee, Pledgor will execute and deliver all assignments
separate from certificate, financing statements and such further documents and
do such further acts and things as Pledgee may reasonably request consistent
with the provisions hereof in order to effect the purposes of this
Agreement.

     Section 11. Severability.
Any provision of this Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

     Section 12. No Waiver;
Cumulative Remedies. Neither Pledgee nor any of the Lenders shall not by any
act, delay, omission or otherwise be deemed to have waived any of its remedies
hereunder, and no waiver by Pledgee or any Lender shall be valid unless in
writing and signed by Pledgee or such Lender and then only to the extent therein
set forth. A waiver by Pledgee, or any Lender, of any right or remedy hereunder
on any one occasion shall not be construed as a bar to any right or remedy which
Pledgee, or such Lender, would otherwise have on any further occasion. No course
of dealing between Pledgor and Pledgee or any Lender and no failure to exercise,
nor any delay in exercising on the part of Pledgee or any Lender of any right,
power or privilege hereunder or under the Loan Documents shall impair such right
or remedy or operate as a waiver thereof; nor shall any single or partial
exercise of any right, power or privilege hereunder preclude any other or
further exercise thereof or the exercise of any other right, power

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or privilege. The rights and remedies herein provided are
cumulative and may be exercised singly or concurrently, and are not exclusive of
any rights or remedies provided by law.

     Section 13. Successors.
This Agreement and all obligations of Pledgor hereunder shall be binding upon
the successors and assigns of Pledgor, and shall, together with the rights and
remedies of Pledgee and the Lenders hereunder, inure to the benefit of Pledgee
and the Lenders and their successors and assigns, except that Pledgor shall not
have any right to assign its obligations under this Agreement or any interest
herein without the prior written consent of Pledgee.

     Section 14. Termination.
This Agreement and the Liens and security interests granted hereunder shall
terminate upon indefeasible full and complete performance and satisfaction of
the Liabilities (other than contingent indemnification obligations), and
promptly upon such full and complete performance and satisfaction, Pledgee shall
surrender the certificates evidencing the Pledged Interests to Pledgor.

     Section 15. Possession of
Pledged Collateral. Beyond the exercise of reasonable care to assure the
safe custody of the Pledged Collateral in the physical possession of Pledgee
pursuant hereto, neither Pledgee nor any nominee of Pledgee shall have any duty
or liability to collect any sums due in respect thereof or to protect, preserve
or exercise any rights pertaining thereto, and shall be relieved of all
responsibility for the Pledged Collateral upon surrendering them to Pledgor.

     Section 16. Survival of
Representations. All representations and warranties of Pledgor contained in
this Agreement shall survive the execution and delivery of this Agreement.

     Section 17. Expenses.
Pledgor will upon demand pay to Pledgee all reasonable expenses, including the
reasonable fees and expenses of counsel for Pledgee and of any experts and
agents that Pledgee may incur in connection with:

          (a)
the administration of this Agreement;

          (b)
the custody or preservation of, or the sale of, collection from, or other
realization upon, any of the Pledged Collateral;

          (c)
the exercise or enforcement of any of the rights of Pledgee hereunder; or

          (d)
the failure of Pledgor to perform or observe any of the provisions hereof.

Section 18. Pledgee Appointed Attorney-In-Fact. Pledgor
hereby irrevocably appoints

Pledgee as Pledgor’s attorney-in-fact, effective upon the
occurrence and during the continuance of an Event of Default, with full
authority in the place and stead of Pledgor and in the name of Pledgor or
otherwise, from time to time in Pledgee’s discretion, to take any action and to
execute any instrument that Pledgee deems reasonably necessary or advisable to
accomplish the purposes of this Agreement, including, without limitation, to
receive, endorse and collect all instruments made payable to Pledgor
representing any dividend, interest payment or other distribution in respect of
the Pledged Collateral or any part thereof and to give full discharge for the
same, when and to the extent permitted by this Agreement.

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     Section 19. Notices. All
notices, approvals, requests, demands and other communications hereunder shall
be in writing and delivered in accordance with Section 9.1 of the Loan
Agreement.

     SECTION 20. GOVERNING LAW.
THIS AGREEMENT SHALL BE DEEMED A CONTRACTS MADE UNDER THE LAWS OF THE STATE OF
ILLINOIS AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND GOVERNED BY
THE LAWS OF THE STATE OF ILLINOIS AND THE LAWS OF THE UNITED STATES OF AMERICA,
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.

     SECTION 21. JURISDICTION AND
VENUE. TO INDUCE THE PLEDGEE TO ENTER INTO THIS AGREEMENT, EACH PARTY HERETO
IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY FEDERAL COURT OR
ILLINOIS STATE COURT SITTING IN CHICAGO, ILLINOIS, AND EACH PARTY IRREVOCABLY
WAIVES ANY OBJECTION WHICH IT MAY HAVE AT ANY TIME TO THE LAYING OF VENUE OF ANY
SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING HERETO BROUGHT IN ANY SUCH
COURT. EACH PARTY IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN ANY INCONVENIENT FORUM
AND FURTHER IRREVOCABLY WAIVES THE RIGHT TO OBJECT, WITH RESPECT TO SUCH CLAIM,
SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT, THAT SUCH COURT DOES NOT
HAVE JURISDICTION OVER SUCH PARTY, PROVIDED THAT SERVICE OF PROCESS IS MADE AS
SET FORTH IN THIS SECTION 21, OR BY ANY OTHER LAWFUL MEANS. EACH OF THE PARTIES
HEREBY WAIVE PERSONAL SERVICE OF ANY AND ALL PROCESS AND AGREES THAT ALL SUCH
SERVICE OF PROCESS MAY BE MADE UPON SUCH RELATED PARTY BY CERTIFIED OR
REGISTERED MAIL, RETURN RECEIPT REQUESTED, AND SERVICE SO MADE SHALL BE COMPLETE
TEN (10) DAYS AFTER THE SAME HAS BEEN POSTED.

     SECTION 22. WAIVER OF RIGHT TO
TRIAL BY JURY. EACH PARTY HEREBY COVENANTS AND AGREES THAT IN ANY SUIT,
ACTION OR PROCEEDING IN RESPECT OF ANY MATTER ARISING OUT OF THIS AGREEMENT OR
THE DOCUMENTS EXECUTED IN CONNECTION HEREWITH, WHETHER NOW EXISTING OR HEREAFTER
ARISING OR IN ANY WAY RELATED TO, CONNECTED WITH OR INCIDENTAL TO THE DEALINGS
OF THE PARTIES HERETO OR TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY WHETHER
SOUNDING IN CONTRACT OR TORT OR OTHERWISE, TRIAL SHALL BE TO A COURT OF
COMPETENT JURISDICTION AND NOT TO A JURY; EACH PARTY HEREBY EXPRESSLY WAIVES ANY
RIGHT IT MAY HAVE TO A TRIAL BY JURY. ANY PARTY MAY FILE AN ORIGINAL COUNTERPART
OR A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF
THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

     Section 23. Changes in
Writing. No amendment, modification, termination or waiver of any provision
of this Agreement or consent to any departure by Pledgor thereof from, shall in
any event be effective without the written agreement of Pledgee and Pledgor, and
then only to the extent specifically set forth in such writing.

10

     Section 24. Headings.
Section and subsection headings in this Agreement are included herein for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose or be given any substantive effect.

     Section 25. Counterparts.
This Agreement may be executed in any number of counterparts, all of which taken
together shall constitute one and the same instrument and any of the parties
hereto may execute this Agreement by signing any such counterpart. Any such
counterpart which is delivered to Administrative Agent by email, facsimile or
other similar electronic transmission shall be deemed the equivalent of an
originally executed counterpart and shall be fully admissible in any enforcement
proceedings regarding this Agreement.

     Section 26. Entire
Agreement. This Agreement embodies the entire agreement and understanding
between Pledgor and Pledgee with respect to the subject matter hereof and
supersedes all prior oral and written agreements and understandings between
Pledgor and Pledgee relating to the subject matter hereof.

- Remainder of Page Intentionally Left Blank; Signature
Page Follows -

11

     IN WITNESS WHEREOF, the parties
hereto have caused this Pledge Agreement to be duly executed and delivered as of
the day and year first above written.

PLEDGOR:

CARBIZ INC., a corporation
organized under the laws of the Province of Canada

	 	By: 	/s/ Carl Ritter
	 	Name: 	Carl Ritter
	 	Title: 	CEO

PLEDGEE:

SWC SERVICES LLC, a Delaware
limited liability company, as Administrative Agent

	 	By: 	/s/
      Greg Bell 
	 	Name: 	Greg Bell 
	 	Title: 	Manager 

ACKNOWLEDGMENT

     The undersigned hereby (a)
acknowledges receipt of a copy of the foregoing Pledge Agreement, (b) waives any
rights or requirement at any time hereafter to receive a copy of such Pledge
Agreement in connection with the registration of any Pledged Interests or any
other Pledged Collateral (as such terms are defined therein) in the name of
Pledgee or its nominee or the exercise of voting or other consensual rights by
Pledgee, and (c) agrees promptly to note on its books and records the transfer
of the security interest in the membership interests of the undersigned as
provided in such Pledge Agreement, including the following legend:

PURSUANT TO THAT CERTAIN PLEDGE AGREEMENT DATED AS OF MARCH __,
2007 (AS FROM TIME TO TIME AMENDED, RESTATED, SUPPLEMENTED OR OTHERWISE MODIFIED
AND IN EFFECT FROM TIME TO TIME), CARBIZ USA INC., A DELAWARE CORPORATION, HAS
UNDER THE CIRCUMSTANCES SPECIFIED IN SUCH PLEDGE AGREEMENT EMPOWERED SWC
SERVICES LLC, A DELAWARE LIMITED LIABILITY COMPANY, AS ADMINISTRATIVE AGENT FOR
CERTAIN LENDERS, TO VOTE THE INTERESTS REPRESENTED BY THIS CERTIFICATE PURSUANT
TO SUCH PLEDGE AGREEMENT.

Dated: March __, 2007

	 	CARBIZ USA INC., a Delaware
  
	 	corporation 
	 	 
	 	By:     
    	/s/ Carl Ritter
	 	Name: 	Carl Ritter
	 	Its: 	CEO

     Exhibit A
to
Pledge
Agreement

Pledged Interests 

	

Issuer 

	Class or 
Other
      
Description 
of Pledged 
Interests 	
Certificate 
Number (if
      
applicable) 
	

Date 
Issued 
	
Number of 
Pledged
      
Interests 
	Percentage 
of Total
      
Outstanding 
Securities 
Pledged 
	Carbiz USA 
Inc., a 
Delaware 
corporation 
	

Common 
Stock

	

- 0001 - 

	

3/12/07 

	

10,000 
Common 
Shares 	

100%

Exhibit B

Pledge Supplement

     This Pledge Supplement is dated
as of ______________, 20__ and is provided in accordance with the terms of the
Pledge Agreement referenced below. The undersigned directs that this Pledge
Supplement be attached to the Pledge Agreement, dated as of March 23, 2007,
between the undersigned and SWC SERVICES LLC, a Delaware limited liability
company, in its capacity as Administrative Agent (as amended, restated,
supplemented or otherwise modified from time to time, the “Pledge
Agreement”; capitalized terms used and not defined herein having the
meanings assigned thereto in the Pledge Agreement) and that the equity interests
listed below shall be deemed to be part of the Pledged Collateral.

	

Issuer 

	Class or 
Other
      
Description 
of Pledged 
Interests 	
Certificate 
Number (if
      
applicable) 
	

Date 
Issued 
	
Number of 
Pledged
      
Interests 
	Percentage 
of Total
      
Outstanding 
Securities 
Pledged 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 

	 	CARBIZ INC., a corporation
      organized 
	 	under the laws of the province of
      Ontario, 
	 	Canada 
	 	  
	 	By: 	 
	 	Name: 	 
	 	Title:LICENSE AGREEMENT BETWEEN QUICK-MED TECHNOLOGIES AND DERMA SCIENCES INC.

     

                                                                             
                                                                      
      EXHIBIT 10.1

                                                                                                                                                                                 REDACTED COPY

                                                                         

    PATENT
      AND TECHNOLOGY LICENSE AGREEMENT

    

    This
      Patent and Technology License Agreement (“Agreement”),
      effective this 23rd day of March 2007 (the “Effective
      Date”),
      is by
      and between Quick-Med
      Technologies, Inc.,
      a
      Delaware corporation having offices at 3427 SW 42nd Way, Gainesville, Florida
      32608 (“QMT”)
      and
Derma
      Sciences, Inc.,
      a
      Pennsylvania corporation having offices at 214 Carnegie Center, Suite 100,
      Princeton, New Jersey 08540 (“DERMA”)
      (each
      singularly a “Party”
and
      collectively the “Parties”).

     

    WHEREAS,
      QMT owns or controls certain Patent Rights and Technology (as such terms are
      defined below) relating to its proprietary Nimbus®
      technology and has the right to grant licenses under such Patent Rights and
      Technology; and

     

    WHEREAS,
      QMT agrees to grant, and DERMA desires to obtain, an exclusive license to such
      Patent Rights and Technology in the Field and Exclusive Territory (as such
      terms
      are defined below) and a non-exclusive license to such Patent Rights and
      Technology in the Field in the Non-exclusive Territory (as defined below) on
      the
      terms and conditions of this Agreement.

     

    NOW,
      THEREFORE, in consideration of the premises and the mutual covenants and
      agreements herein contained, and for other good and valuable consideration,
      the
      receipt and sufficiency of which are hereby acknowledged, the Parties do hereby
      agree as follows:

     

    1.  Definitions.

     

    The
      following terms, whether used in the singular or the plural, shall have the
      following meanings for purposes of this Agreement:

     

    1.1  “Affiliate”
means
      any corporation, firm, partnership or other entity, which controls, is
      controlled by or is under common control with a Party. For purposes of this
      Section 1.1, “control” means direct or indirect ownership of more than fifty
      percent (50%) of the outstanding stock or other voting rights entitled to elect
      directors thereof or the ability to otherwise control the management of the
      corporation, firm, partnership or other entity.

     

    1.2  “Commercialization”
      or “Commercialize”
means
      all activities directed towards obtaining pricing and Reimbursement Approvals,
      Regulatory Approval, manufacturing, marketing, promoting, distributing,
      importing, offering for sale or selling a Product. 

     

    1.3  “Commercially
      Reasonable Efforts”
has
      the
      meaning set forth in Section 5.1(b) hereof.

     

    1.4  “Composition
      and Process”
means
      QMT’s confidential and proprietary composition and process for the bonding of
      certain Materials to substrates usable on Products.

     

    1.5  “Confidential
      Information”
has
      the
      meaning set forth in Section 10.1 hereof.
      For
      purposes of clarification, the Technology shall be deemed to be Confidential
      Information of QMT. 

     

    
       

    

    
      
        
        

      

      
        
          -1-    

        

        
          

        

      

      
        
        

      

    

     

    1.6  “Contract
      Year”
means
      the twelve (12) month period beginning on the Contract Year Start Date and
      ending on the first anniversary thereof, and each consecutive 12-month period
      thereafter during the Term.

     

    1.7  “Contract
      Year Start Date”
means
      earlier to occur of (i) date of First Commercial Sale of Conforming Gauze or
      other Product or (ii) the 180th
      day
      following the date on which either DERMA or QMT first obtains Regulatory
      Approval for a primary or secondary wound dressing utilizing the QMT
      Intellectual Property.

     

    1.8  “DERMA
      Invention”
has
      the
      meaning set forth in Section 12.2(b) hereof. 

     

    1.9  “DERMA
      Marks”
has
      the
      meaning set forth in Section 12.6 hereof.

     

    1.10  “Designee”
shall
      mean a corporation or other entity that is employed by, under contract to,
      or in
      partnership with DERMA or an Affiliate thereof, to make, use, sell, promote,
      distribute, market, import, or export Products in the Territory.

     

    1.11  “Disclosing
      Party”
has
      the
      meaning set forth in Section 10.1 hereof.

     

    1.12   “Exclusive
      Territory”
means
      the United States of America and Canada and their respective territories and
      possessions.

     

    1.13  “FDA”
means
      the United States Food and Drug Administration or any successor agency
      thereto.

     

    1.14  “Field”
means
      the field of conforming gauze, oil-emulsion acetate, gauze sponges, gauze
      bandage rolls, gauze packing strips and Unna Boot dressings used solely for
      wound care and sold to the institutional market not for resale as more
      specifically described on Exhibit E.
      The
      Field specifically excludes products provided to, developed for, or sold to
      the
      general, over-the-counter consumer market and, subject to the non-exclusive
      rights granted to DERMA pursuant to Section 2.1(b) hereof, the United States
      government, including, without limitation, the Department of Defense and/or
      agencies and military services thereof.

     

    1.15  “First
      Commercial Sale”
shall
      mean the first sale to an independent third party of a Product.

     

    1.16  “Improvements”
means
      know-how, technical information, inventions, developments, discoveries,
      software, methods, techniques, procedures, formulae, data (including without
      limitation clinical data), processes and other proprietary ideas, whether or
      not
      patentable or copyrightable, that are conceived, discovered, developed, or
      reduced to practice during the Term by or on behalf of DERMA and/or its
      Affiliates, and which are useful for or useable in the practice of the Patent
      Rights and Technology.

     

    1.17  “Indemnitees”
has
      the
      meaning set forth in Section 9.1 hereof.

     

    1.18  “Initial
      Term”
has
      the
      meaning set forth in Section 11.1 hereof.

     

    

      *****
        This material has been omitted pursuant to a request for confidential treatment
        and filed separately with the Securities and Exchange
        Commission.

    

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

     

    1.19  “Know-how”
means
      the tangible and intangible information, including, without limitation, data,
      results, formula, designs, specifications, methods, processes, techniques,
      ideas, discoveries, technical information, process information, clinical
      information and other information which is owned or controlled (with the right
      to sublicense) by QMT as of the Effective Date relating to the Composition
      and
      Process in Field.

     

    1.20  “Materials”
means
      the chemical components, which are listed on Exhibit
      B
      hereto,
      as
      modified by any Improvements
      thereto
      to the extent such modification is part of the Composition and Process as agreed
      by the parties hereto.

     

    1.21  “Minimum
      Royalties”
has
      the
      meaning set forth in Section 3.4 hereof.

     

    1.22  “Net
      Sales”
means
      the gross invoiced sales price of all Products sold, leased, licensed or
      otherwise transferred by DERMA and its Affiliates and its Designees along with
      any other amounts and consideration received in connection therewith, after
      deduction of the following items, to the extent such items are actually
      incurred, taken or borne by the seller thereof and do not exceed reasonable
      and
      customary amounts in the market in which such sale occurred: (a) trade, cash
      or
      quantity discounts or rebates actually taken and documented; (b) credits or
      allowances given or made for rejection, or approved return of, defective goods
      actually taken and documented; (c) taxes or government charges, duties or
      tariffs (other than an income tax) levied on the sale, transportation or
      delivery of a Product and documented. No costs incurred in the manufacturing,
      selling, advertising, and distribution of the Products, including without
      limitation overhead costs, shall be deducted nor shall any deduction be allowed
      for any other uncollectible accounts or allowances.  

     

    1.23  “Non-exclusive
      Territory”
means
      all countries outside the Exclusive Territory in which QMT has not entered
      into
      an exclusive license for the Patent Rights and Technology in the Field with
      a
      Third Party, either as of the date hereof or as of any date in the
      future.

     

    1.24  “Patent
      Rights”
mean
      the patents, patent applications, patent extensions, certificates of invention,
      or applications for certificates of invention, together with any divisions,
      continuations or continuations-in-part thereof, which are owned or controlled
      by, or licensed (with the right to sublicense) to QMT which are listed in
Exhibit
      A
      hereto.

     

    1.25  “Product”
means
      any product in the Field that is covered by, derived from, or manufactured
      using
      or incorporating, or otherwise uses or contains the QMT Intellectual Property,
      and which does not require premarket approval or the performance of clinical
      trials (or their equivalent) from the applicable Regulatory Authority prior
      to
      receiving Regulatory Approval.

     

    1.26   “Promotional
      Materials”
has
      the
      meaning set forth in Section 5.4 hereof.

     

    1.27  “QMT
      Intellectual Property”
means
      collectively the Technology, Patent Rights and Improvements.

     

    1.28  “QMT
      Marks”
has
      the
      meaning set forth in Section 12.6 hereof.

     

    

      *****
        This material has been omitted pursuant to a request for confidential treatment
        and filed separately with the Securities and Exchange
        Commission.

    

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

     

    1.29  “Recipient”
has
      the
      meaning set forth in Section 10.1 hereof.

     

    1.30  “Regulatory
      Approval”
means
      the approval of the applicable Regulatory Authority necessary for the marketing
      and sale of the Product in a country in the Territory, excluding separate
      pricing and/or Reimbursement Approvals that may be required, and including
      the
      expansion or modification of the label in the Field.

     

    1.31  “Regulatory
      Authority”
means
      any federal, national, multinational, state, provincial or local regulatory
      agency, department, bureau or other governmental entity with authority over
      the
      marketing and sale of a pharmaceutical product in a country, including the
      FDA
      in the United States and Health Canada in Canada.

     

    1.32  “Regulatory
      Filings”
has
      the
      meaning set forth in Section 7.3 hereof.

     

    1.33  “Reimbursement
      Approval”
shall
      mean such governmental and other approvals in the Territory for a buyer to
      claim
      reimbursement at any level for the purchase of the Products from private or
      public health organizations, including all pricing approvals.

     

    1.34  “Renewal
      Term”
has
      the
      meaning set forth in Section 11.1 hereof.

     

    1.35  “Royalty”
has
      the
      meaning set forth in Section 3.1 herein.

     

    1.36  “Sell-Off
      Period”
has
      the
      meaning set forth in Section 11.6(a) hereof.

     

    1.37  “Technology”
means
      the Materials and Know-how.

     

    1.38  “Term”
has
      the
      meaning set forth in Section 11.1 hereof.

     

    1.39  “Territory”
means
      collectively the Exclusive Territory and Non-exclusive Territory.

     

    1.40  “Third
      Party”
means
      any entity other than a Party to this Agreement or their respective
      Affiliates.

     

    2.  License.

     

    2.1  Grant.
      Subject
      to the terms and conditions of this Agreement, QMT hereby grants to DERMA during
      the Term: (a) an exclusive, royalty-bearing right and license, without the
      right
      to grant sublicenses (except as set forth in Section 2.2), under the QMT
      Intellectual Property to make, use, sell, and offer for sale and import Products
      (including therein, without limitation, the right to enter into private
      label/OEM agreements relative thereto provided such agreements are not a
      sublicense of the QMT Intellectual Property) within the Field in the Exclusive
      Territory; and (b) a non-exclusive royalty-bearing right and license, without
      the right to grant sublicenses (except as set forth in Section 2.2), under
      the
      QMT Intellectual Property to make, use, sell, and offer for sale and import
      Products to or on behalf of the United States government and all agencies and
      military services thereof.

     

    

      *****
        This material has been omitted pursuant to a request for confidential treatment
        and filed separately with the Securities and Exchange
        Commission.

    

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

     

    2.2  Sublicenses.
      DERMA
      may only grant sublicenses to its Affiliates with a term that is no longer
      than
      the Term of this License but with no further right to grant sublicenses to
      anyone other than an Affiliate; provided that each such sublicensee shall first
      agree in writing to be bound by all of the terms of this Agreement. Upon
      termination of this Agreement, any sublicense granted hereunder shall
      immediately cease and terminate without any additional action by
      QMT.

     

    2.3  Right
      to Negotiate for Exclusivity Relative to Certain Manufacturers.
      The
      parties acknowledge that DERMA will be seeking to sell certain Products to
      a
      European wound care company (the “European Company”) for sale in the European
      Union (which would be outside the Exclusive Territory). QMT agrees that from
      the
      Effective Date until the first anniversary of the Effective Date (the “Defined
      Period”), DERMA may approach such European Company in connection with the sale
      of the Products and enter into discussions with such European Company for an
      exclusive arrangement with respect to the Products. In such an event, DERMA
      and
      QMT will engage in good faith negotiations during the Defined Period with a
      view
      to reaching a mutually agreeable agreement upon the terms of a grant by QMT
      of a
      license to permit DERMA to have the exclusive right to make and sell certain
      Products to the European Company. Any such agreement would be exclusive only
      to
      the European Company and would not affect QMT’s rights with respect to the
      license of its QMT Intellectual Property or the manufacture and/or sale of
      Products outside the Territory except with respect to the license, manufacture
      or sale to the European Company. In any event the terms and conditions of
      Derma’s agreement with the European Company would be consistent with the terms
      and conditions hereunder. If QMT and DERMA are unable to arrive at an agreement
      within the Defined Period, then this Section 2.3 shall expire and be of no
      further force or effect.

     

    2.4  Transfer
      of Know-how.
      Promptly
      after the Effective Date, QMT shall disclose the Know-how to DERMA solely for
      purposes of DERMA’s research, development and manufacture of Products during the
      Term. DERMA agrees that such Know-how is QMT’s Confidential Information and
      shall treat such Confidential Information in accordance with Section 10
      hereof.

     

    2.5  Non-Exclusive
      Territory.
      DERMA
      shall have a non-exclusive, royalty-bearing right and license, without the
      right
      to grant sublicenses, under the QMT Intellectual Property to use, sell, and
      offer for sale Products within the Field (with the exception of products
      provided to, developed for, or sold to the general, over-the-counter consumer
      market) in the Non-exclusive Territory. QMT retains all rights to grant other
      licenses with respect to the QMT Intellectual Property in the Field for any
      purpose whatsoever in the Non-Exclusive Territory, including, without
      limitation, exclusive, semi-exclusive, co-exclusive or non-exclusive licenses.
      In connection therewith, QMT has the right any time to terminate the license
      granted to DERMA under this Section 2.5 in all or in any part of the
      Non-Exclusive Territory upon thirty (30) days prior written notice to
      DERMA.

     

    2.6  Governmental
      Rights; University of Florida.
      All
      rights and licenses granted by QMT under this Agreement are subject to (i)
      any
      limitations imposed by the terms of any government grant, government contract
      or
      government cooperative agreement applicable to the QMT Intellectual Property
      that is the subject of this Agreement, and/or (ii) applicable requirements
      of 35
      U.S.C. Sections 200 et seq.,
      as
      amended, and implementing regulations and policies. Without limitation of the
      foregoing, DERMA agrees that, to the extent required under 35 U.S.C. Section
      204, any Product used, sold, distributed, rented or leased by DERMA or an
      Affiliate in the United States will be manufactured substantially in the United
      States, Canada or Mexico. Furthermore, certain of the rights granted hereunder
      are subject to a reservation of rights by the University of Florida and its
      affiliates to use the Patent Rights for its research and educational purposes
      and the licenses granted hereunder are expressly made subject to such rights
      and
      the license from University of Florida.

     

    

      *****
        This material has been omitted pursuant to a request for confidential treatment
        and filed separately with the Securities and Exchange
        Commission.

    

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

     

    2.7  Manufacturing
      Restrictions.
      Notwithstanding Section 2.3 above, DERMA acknowledges and agrees that it shall
      not manufacture the Products outside of the Exclusive Territory (with the
      exception of Mexico). Under no circumstances shall DERMA manufacture any portion
      of the Products using QMT Intellectual Property at a location outside of the
      Exclusive Territory (with the exception of Mexico) without the prior written
      consent of QMT. 

     

    2.8  No
      Other Rights.
      Except
      for the express license granted pursuant to Section 2.1 hereof, no license,
      express or implied, is granted by either Party to the other Party or its
      Affiliates under any intellectual property rights owned or controlled by such
      Party or its Affiliates.

     

    2.9  Provisional
      Exclusivity Relative to New Products.
      DERMA
      may, from time to time, request that QMT develop for DERMA’s account new wound
      and related skin care products incorporating the QMT Intellectual Property
      (such
      products, “New Products”). Any such request shall be in writing (a “New Product
      Request”) and if QMT agrees to any such request, the parties contemplate that
      the costs of development of any such New Products will be shared between QMT
      and
      DERMA in a manner to be determined. In the event QMT agrees to develop a New
      Product with DERMA pursuant to a New Product Request, then, subject to the
      terms
      of this Agreement: (i) DERMA, for a period of one year from the date of the
      introduction of such New Product(s) (such period, the “Exclusivity Period”),
      upon payment of a Royalty of ***** on Net Sales of such New Products shall
      have
      the exclusive, world-wide right and license, without the right to sublicense,
      under the QMT Intellectual Property to make, use, sell, and offer for sale
      (including therein, without limitation, the right to enter into private
      label/OEM agreements relative thereto) each New Product, (ii) DERMA, following
      the Exclusivity Period and during such period as QMT has not granted exclusive
      licenses relative to such New Product(s) to any other company or companies,
      upon
      payment of a Royalty of ***** on Net Sales of such New Products shall have
      the
      non-exclusive, world-wide right and license, without the right to sublicense,
      under the QMT Intellectual Property to make, use, sell, and offer for sale
      (including therein, without limitation, the right to enter into private
      label/OEM agreements relative thereto) each New Product, and (iii) DERMA, during
      the Exclusivity Period, shall have exclusive negotiating rights relative to
      securing an exclusive license in respect of such New Products; provided that
      if
      no exclusive right is secured for such New Product within such Exclusivity
      Period then there shall be no further obligation on QMT to negotiate with DERMA
      on such exclusive rights on such New Product. In the event QMT grants DERMA
      an
      exclusive license relative to any New Product, the Royalty in respect of such
      New Product shall thereafter be increased from ***** to ***** on Net Sales
      of
      such New Product.

     

    

      *****
        This material has been omitted pursuant to a request for confidential treatment
        and filed separately with the Securities and Exchange
        Commission.

    

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

     

    3.  Consideration;
      Royalties.

     

    3.1  Royalties.
      In
      consideration of the license granted to DERMA pursuant to Section 2.1 hereof,
      commencing with the First Commercial Sale of each Product by DERMA or its
      Affiliates, DERMA shall pay to QMT a royalty (“Royalty”)
      equal
      to: (i) ***** on Net Sales for each Product in the Field in the Exclusive
      Territory, and (ii) ***** on Net Sales for each Product within the Field in
      the
      Non-Exclusive Territory on a nonexclusive basis. In the event DERMA is required
      to pay Royalties to any Third Party in order to make, use or sell Products,
      DERMA’s Royalty obligation to QMT under this Section 3.2 shall not be affected.

     

    3.2  Conforming
      Gauze Incentive.
      In the
      event DERMA obtains ***** approval for use of Conforming Gauze as a “secondary”
dressing during the months of set forth below, DERMA shall make an incentive
      payment to QMT calculated as follows:

     

    Table
      3.2

     

    
      	
              Month
                of *****Approval

            	
              Incentive
                Payment

            
	
              June,
                2007

               

            	
              *****

               

            
	
              July,
                2007

               

            	
              *****

               

            
	
              August,
                2007

               

            	
              *****

               

            

    

    

     

    3.3  Non-Monetary
      Consideration.
      Without
      the prior written consent of QMT, DERMA and its Designees and Affiliates shall
      not solicit any material consideration for the commercial sale of any Product
      other than as will be accurately reflected in Net Sales. In the event DERMA
      and/or its Designees or Affiliates receive any consideration for the sale or
      transfer of any Product other than as will be accurately reflected in Net Sales,
      QMT and the party accepting such non-cash consideration shall act reasonably
      and
      negotiate in good faith an appropriate value for all such non-cash
      consideration

     

    3.4  Minimum
      Royalties.
      Subject
      to Section 11.3 below, during the Initial Term DERMA shall pay to QMT minimum
      Royalties (“Minimum
      Royalties”)
      as
      follows:

     

    Table
      3.4

     

    
      	
              Contract
                Year

            	
              Minimum
                Royalties

            
	
              Contract
                Year 1

               

            	
              US*****

               

            
	
              Contract
                Year 2

               

            	
              US*****

               

            
	
              Contract
                Year 3

               

            	
              US*****

               

            
	
              Contract
                Year 4

               

            	
              US*****

               

            
	
              Contract
                Year 5

               

            	
              US*****

               

            

    

     

     

    

      *****
        This material has been omitted pursuant to a request for confidential treatment
        and filed separately with the Securities and Exchange
        Commission.

    

    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

    

     

    In
      the
      event for a given Contract Year DERMA fails to pay to QMT Royalties equal to
      or
      greater than the Minimum Royalties set forth above in the applicable Contract
      Year, QMT’s exclusive remedy for such failure (other than the collection of
      Royalties earned but not paid to QMT) shall be amendment of this Agreement
      to
      remove DERMA’s exclusive rights relative to the Products or terminate the
      Agreement as more specifically set forth in Section 11.3.

     

    In
      the
      event the launch of Gauze Sponges, Gauze Bandage Rolls, Gauze Packing Strips,
      Oil Emulsion Acetate and/or Unna Boot Dressings is delayed by virtue of the
      failure of the ***** to grant ***** approval for use of any of the foregoing
      Products as a primary dressing (such Products, “Affected Products”), then
      Minimum Royalties payable pursuant to this Section 3.4 shall be adjusted in
      accordance with Section 3.5 hereinbelow to the same extent as if DERMA had
      determined not to proceed with the development or commercialization of the
      Affected Product(s). Provided, however, any adjustment to Minimum Royalties
      relative to a given Affected Product effected pursuant to Section 3.5
      hereinbelow shall be removed, and Minimum Royalties relative to such Affected
      Product shall be reinstated, effective 180 days from ***** approval of such
      Affected Product for use as a primary dressing.

    

    3.5  Adjustments
      to Minimum Royalties.
      In the
      event that DERMA determines not to proceed with the development or
      commercialization of a given Product (such event, “Discontinuance” and such
      Product(s), “Discontinued Product(s)”), then DERMA shall provide QMT with six
      (6) months notice of such Discontinuance following which period the Minimum
      Royalties for all applicable Contract Years shall be reduced by the Minimum
      Royalties associated with the Discontinued Product(s). Minimum Royalties
      associated with a given Discontinued Product shall be determined as follows:
      (i)
      subtract from the Minimum Royalties for the Contract Year in which the
      Discontinuance becomes effective (such Contract Year, the “Effective Contract
      Year”) the Minimum Royalties for the preceding Contract Year; (ii) divide the
      result in (i) by the number of Products attributable to the Effective Contract
      Year; and (iii) multiply the result in (ii) by the number of Discontinued
      Products. In the event that DERMA has not achieved a First Commercial Sale
      of a
      given Product within the end of the Contract Year set forth below in Table
      3.5,
      and DERMA has not paid the Minimum Royalties required under Section 3.4, then
      QMT shall have the right to terminate the license with respect to such Product
      or make the license hereunder nonexclusive.

     

    For
      purposes of the foregoing calculation, the following Products shall be deemed
      attributable to the specified Contract Years and all subsequent Contract
      Years:

     

    Table
      3.5

     

    
      	
              Products

               

            	
              Contract
                Year

               

            
	
              Conforming
                Gauze

               

            	
              *****

               

            
	
              Gauze
                Sponges

               

            	
              *****

               

            
	
              Gauze
                Bandage Rolls

               

            	
              *****

               

            
	
              Gauze
                Packing Strips

               

            	
              *****

               

            
	
              Oil
                Emulsion Acetate

               

            	
              *****

               

            
	
              Unna
                Boot Dressings

               

            	
              *****

               

            

    

    

        Discontinued
      Products shall forthwith be removed from the license granted under Section
      2
      hereof.

     

    

      *****
        This material has been omitted pursuant to a request for confidential treatment
        and filed separately with the Securities and Exchange
        Commission.

    

    
      
        
        

      

      
        -8-

        
          

        

      

      
        
        

      

    

    

    3.6  License
      Fee and Advance Royalties.
      DERMA
      shall pay to QMT a License Fee in the amount of *****on the Effective Date.
      DERMA shall pay to QMT the sums of ***** upon each of three (3) months, six
      (6)
      months and nine (9) months following the Effective Date (such payments,
“*****Royalties”). Subject to Section 3.4, if applicable, Advance Royalties
      shall be ***** Royalties payable hereunder. Provided, however, anything herein
      contained to the contrary notwithstanding, no *****Royalties shall be payable
      on
      or after the date of the First Commercial Sale.

     

    4.  Payments,
      Reports and Records.

     

    4.1  First
      Commercial Sale.
      Within
      thirty (30) days of its occurrence, DERMA shall notify QMT of the date of First
      Commercial Sale of a Product by DERMA or its Designees or Affiliates to a Third
      Party end user in each new country in the Territory.

     

    4.2  Payments.
      Upon
      First Commercial Sale of a Product and thereafter during the Term, DERMA shall
      furnish to QMT, within thirty (30) days from the last business day of each
      quarter during each Contract Year, a written report showing the following:
      (i)
      number of Products sold; (ii) the Net Sales of all Products sold by DERMA and
      its Designees and Affiliates during the reporting period listed by country,
      and
      qualifying deductions, as defined in Section 1.23 hereof, listed by category
      of
      deduction; (iii) the Royalties payable in United States dollars which shall
      have
      accrued hereunder in respect of such sales; (iv) withholding taxes, if any,
      required by law to be deducted in respect of such sales, as applicable; and
      (v)
      the exchange rates used in determining the amount of United States dollars,
      if
      applicable. All Royalty Payments or Minimum Royalties payments shall be due
      and
      payable on the date such report is due. If no payments are due for any reporting
      period hereunder, DERMA shall so report. All reports delivered pursuant to
      this
      Section shall constitute the Confidential Information of DERMA and shall be
      subject to Section 10 hereof. All payments to QMT under this Agreement shall
      be
      made in United States dollars by check payable to “Quick-Med Technologies, Inc.”
or, if requested by QMT, by wire transfer to an account designated by
      QMT.
      All
      payments shall be made from the United States office of DERMA.

     

    4.3  Exchange
      Rates.
      If
      DERMA receives revenues from the sale of Products in currency other than United
      States dollars, revenues shall be converted to United States dollars using
      a
      conversion rate for foreign currency calculated by averaging the conversion
      rates of such foreign currency on the last business day of each month within
      the
      applicable quarter as published in the eastern edition of The
      Wall Street Journal.
      Any and
      all loss of exchange value, taxes, or other expenses incurred in the transfer
      or
      conversion of foreign currency into U.S. dollars, and any income, remittance,
      or
      other taxes on payments based on foreign Net Sales required to be withheld
      at
      the source shall be the exclusive responsibility of DERMA. Royalty Reports
      shall
      show sales both in the local currency and US dollars, with the exchange rate
      used clearly stated. 

     

    4.4  DERMA’s
      Recordkeeping and Inspection.
      DERMA
      shall, and shall cause its Affiliates and Designees to, keep for at least seven
      (7) years records of all sales of Products in sufficient detail to permit QMT
      to
      confirm the accuracy of DERMA’s Royalty payment calculations. At the request of
      QMT, no more frequently than once per year, upon at least five (5) business
      days
      prior written notice to DERMA and at the expense of QMT (except as otherwise
      provided below), DERMA shall permit an independent certified public accountant,
      selected by QMT, to inspect, during regular business hours, any such DERMA,
      Affiliate or Designee records for the then-preceding seven (7) years solely
      to
      the extent necessary to verify such calculations; provided
      that
      such
      accountant has, in advance, entered into a confidentiality agreement with DERMA
      (substantially similar to the confidentiality provisions of this Agreement)
      limiting the disclosure of such information to authorized representatives of
      the
      Parties. Results of any such inspection shall be made available to both Parties.
      If such inspection reveals a deficiency in the calculation of Royalties
      resulting in an underpayment to QMT, DERMA shall promptly paid to QMT such
      deficient amount and if such underpayment is equal to ***** or more, DERMA
      shall
      pay all costs and expenses of such inspection. If such inspection reveals a
      deficiency in the calculation of Royalties resulting in an overpayment to QMT,
      DERMA may credit such overpayment against future Royalty Payments due QMT
      hereunder. If, during any Contract Year during the Term, an inspection reveals
      a
      deficiency in the calculation of Royalties resulting in an underpayment to
      QMT
      ***** or more, then DERMA shall, at its sole cost and expense, thereafter supply
      QMT with annual audits by a mutually agreeable independent auditing firm for
      each remaining Contract Year during the Term.

     

    4.5  Interest
      on Late Payments.
      Amounts
      that are not paid by DERMA when due shall accrue interest, from the due date
      until paid, at a rate equal to one and a half percent (1.5%) per month (or
      the
      maximum allowed by law, if less).

     

    

      *****
        This material has been omitted pursuant to a request for confidential treatment
        and filed separately with the Securities and Exchange
        Commission.

    

    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

    

     

    5.  Diligence
      and Commercialization Requirements.

     

    5.1  Diligence
      and Commercialization Efforts by DERMA.
      

     

    (a)  DERMA
      will have full responsibility for seeking and obtaining Regulatory Approval
      and
      Reimbursement Approval and for the Commercialization of all Products in the
      Field in the Territory. DERMA shall provide to QMT written monthly development
      status reports describing, in reasonable detail, the efforts undertaken for,
      and
      the status of development of, the Products by DERMA. Such status reports shall
      also summarize the clinical trials, Regulatory Filings, applications and
      Regulatory Approvals with respect to any Product that DERMA has made, sought
      or
      obtained. If DERMA elects to stop or abandon, either permanently or temporarily,
      the development, Regulatory Approval or Commercialization of Products, DERMA
      shall promptly notify QMT of such decision.

     

    (b)  DERMA
      will exercise Commercially Reasonable Efforts and diligence in undertaking
      Product development, including investigations, clinical studies, and other
      appropriate actions required to obtain Regulatory Approval and Reimbursement
      Approval and obtain and maintain regulatory filings and to Commercialize
      Products in the Field in the Territory. For purposes of this Agreement,
“Commercially
      Reasonable Efforts”
means,
      with respect to a given Product, efforts consistent with the efforts normally
      used by DERMA in good faith and fair dealing for a product of its own discovery
      of similar market potential at a similar state in its product life.

     

    5.2  Technical
      Support Assistance by QMT.
      Upon
      prior mutual agreement of the Parties, QMT shall provide, and DERMA shall fund,
      certain technical support assistance activities in conjunction with DERMA’s
      Commercially Reasonable Efforts to develop Products in the Field in the
      Territory. QMT
      shall
      provide such technical support assistance activities at the FTE rate of *****
      per day plus expenses (including without limitation travel, lodging and meals)
      for each QMT employee or the equivalent.

     

    5.3  Commercialization
      of Products.
      Promptly after obtaining Regulatory Approval for the Product in the Exclusive
      Territory from the applicable Regulatory Authority, the Parties will mutually
      agree on launch dates for the Commercialization of the Products in the Exclusive
      Territory. 

     

    5.4  Advertising
      and Promotional Materials.
      DERMA
      shall develop relevant written sales, promotion and advertising materials
      relating to the Product (“Promotional
      Materials”)
      consistent with its standard operating procedures, for use in the Exclusive
      Territory and compliant with all applicable laws and the provisions of the
      applicable Regulatory Approvals. Prior to their use by DERMA, DERMA shall
      provide QMT with copies of all Promotional Materials, including, if necessary,
      English translations, for QMT’s review and comment. Subject to any limitations
      imposed by applicable law, all such Promotional Materials and all documentary
      information and oral presentations (where practicable) regarding the marketing
      and promotion of the Product in the Territory shall acknowledge the Parties’
license arrangement and shall, if requested by QMT, display the QMT names and
      logos in accordance with the Trademark Standards set forth in Exhibit
      C.
      

     

    5.5  Product
      Label.
      The
      Parties agree that DERMA and its Affiliates and Designees, if any, shall, if
      requested by QMT, include QMT’s name and/or logo, relevant QMT Marks and patent
      numbers on all Product packaging, promotional materials and other materials
      (in
      written or electronic form) related to the Product in the Territory in
      accordance with the Trademark Standards set forth in Exhibit
      C.

     

    

      *****
        This material has been omitted pursuant to a request for confidential treatment
        and filed separately with the Securities and Exchange
        Commission.

    

    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

      

    

     

    6.  Supply.

     

    6.1  Suppliers.
      It is
      essential to the use of the QMT Intellectual Property as well as to maintaining
      the underlying QMT Marks associated therewith owned by QMT that the quality
      of
      the Materials meet the quality standards of QMT and that the suppliers of the
      necessary Materials agree to maintain the secrecy of the Materials and the
      Composition and Process, and not reverse engineer or determine all or any part
      of the Materials or Composition and Process through the supply of such
      Materials. Therefore, subject to the terms and conditions hereof, DERMA shall
      only purchase Materials from a Supplier approved by QMT. DERMA shall provide
      the
      name of a supplier to QMT, and QMT may disapprove of such Supplier, provided
      that QMT shall not act unreasonably in such disapproval. All Third-Party
      suppliers to be certified must sign a confidentiality and non-competition
      agreement in the form attached hereto as Exhibit
      D
      prior to
      commencing any supply of Materials.  

     

    6.2  No
      Implied License.
      Notwithstanding the foregoing, no express or implied license to any QMT
      Intellectual Property is granted to any such Third Party in connection with
      the
      manufacture, transfer or sale of the Materials; provided
      however
      that the
      DERMA’s use of the Materials shall be covered by the licenses under QMT
      Intellectual Property granted above so long as the DERMA has complied with
      the
      terms of this Agreement. 

     

    6.3  Inspection.
      QMT
      shall upon its request be entitled to review any and all purchase orders and
      shipping documents to confirm the use of the Materials in accordance with the
      QMT Intellectual Property. DERMA shall be solely responsible for all matters
      and
      all obligations between the DERMA and the supplier.

     

    7.  Research
      and Development Data and Regulatory Filings.

     

    7.1  Product
      Data.
      DERMA
      shall be responsible for the development of all data and other information
      relating to the Products and Product sales, including without limitation all
      stability and safety data, (collectively the “Product
      Data”)
      necessary to support sales of Products in the Field in the
      Territory.

     

    7.2  Copies
      of Product Data.
      Upon
      the reasonable written request of QMT, DERMA will provide to QMT copies of
      all
      Product Data that DERMA would reasonably provide publicly to the market or
      to
      customers or potential customers during DERMA’s marketing of Products. For
      purposes of this Section 7.2, any Confidential Information of DERMA or a Third
      Party may be redacted from such Product Data prior to delivery to
      QMT.

     

    7.3  Regulatory
      Approvals.
      Unless
      otherwise agreed by the Parties, any and all Regulatory Approvals obtained
      and
      regulatory filings made and licenses, registrations, certificates and government
      approvals (“Regulatory
      Filings”)
      obtained by DERMA during the Term related to the Product in the Field in the
      Exclusive Territory, will be in the name of and owned by DERMA. 

     

    7.4  Access
      to Regulatory Filings.
      QMT,
      its Affiliates, and its respective sublicensees shall have access in a timely
      manner to all data contained or referenced in such submissions or applications
      for Regulatory Approvals by DERMA, including all reports, correspondence and
      conversation logs, in each case as may be reasonably necessary to enable QMT
      to
      develop, manufacture and Commercialize products outside the Field in the
      Exclusive Territory or Products in the Field and outside the Exclusive
      Territory. DERMA shall provide appropriate notification of such right of QMT
      to
      the Regulatory Authorities. QMT, its Affiliates, and its respective sublicensees
      shall have the right to cross-reference and make any other use of the other
      DERMA’s Regulatory Filings for the Product, including access to all data
      contained or referenced in such Regulatory Filings.

     

    7.5  Adverse
      Events.
      DERMA
      shall comply with all applicable laws with respect to reporting any adverse
      medical event with respect to any Product and shall notify QMT of any such event
      within 24 hours of its occurrence along with the results of any follow up
      investigation.

     

    

      *****
        This material has been omitted pursuant to a request for confidential treatment
        and filed separately with the Securities and Exchange
        Commission.

    

    
      
        
        

      

      
        -11-

        
          

        

      

      
        
        

      

    

     

    8.  Representations
      and Warranties; Disclaimer; Limitation of Liability.

     

    8.1  Representations
      and Warranties of DERMA.
      DERMA
      covenants, represents and warrants to QMT as follows:

     

    (a)  DERMA
      is
      a corporation duly organized, validly existing and in good standing under the
      laws of Pennsylvania. DERMA has all requisite corporate power to own and operate
      its properties and assets and to carry on its business as presently being
      conducted and as proposed to be conducted. DERMA has, and will have on all
      relevant dates, all requisite legal and corporate power to execute and deliver
      this Agreement, and to carry out and perform its obligations under the terms
      of
      this Agreement;

     

    (b)  The
      execution and delivery of this Agreement and the performance of the transactions
      contemplated hereby have been duly authorized by all appropriate DERMA corporate
      action. The performance by DERMA of any of the terms and conditions of this
      Agreement on its part to be performed does not and will not constitute a breach
      or violation of any other agreement or understanding, written or oral, to which
      it is a party;

     

    (c)  Neither
      DERMA nor its Affiliates is prohibited by any law, rule or regulation or by
      any
      order, directive or policy of any Regulatory Authority from developing any
      pharmaceutical products, or assuming the Regulatory Approvals are obtained,
      will
      be prohibited by any law, rule or regulation or by any order, directive or
      policy of any Regulatory Authority from manufacturing or selling any of the
      Products; and

     

    (d)  DERMA
      covenants that neither it nor its Affiliates shall, during the Term, develop
      or
      commercialize any products in the Field that compete, directly or indirectly,
      with the Products other than products which use silver and/or honey as their
      only active anti-microbial ingredients. 

     

    8.2  Representations
      and Warranties of QMT.
      QMT
      represents and warrants to DERMA as follows:

     

    (a)  QMT
      is a
      corporation duly organized, validly existing and in good standing under the
      laws
      of the State of Nevada. QMT has all requisite corporate power to own and operate
      its properties and assets and to carry on its business as presently being
      conducted and as proposed to be conducted. QMT has, and will have on all
      relevant dates, all requisite legal and corporate power to execute and deliver
      this Agreement, and to carry out and perform its obligations under the terms
      of
      this Agreement; 

     

    (b)  QMT
      covenants that neither it nor its Affiliates shall, during the Term, develop
      or
      commercialize any products in the Field that compete, directly or indirectly,
      with the Products; and

     

    (c)  The
      execution and delivery of this Agreement and the performance of the transactions
      contemplated hereby have been duly authorized by all appropriate QMT corporate
      action. The performance by QMT of any of the terms and conditions of this
      Agreement on its part to be performed does not and will not constitute a breach
      or violation of any other agreement or understanding, written or oral, to which
      it is a party.

     

     

    
      *****
        This material has been omitted pursuant to a request for confidential treatment
        and filed separately with the Securities and Exchange
        Commission.

    

     

       

    
      
        
        

      

      
        -12-

        
          

        

      

      
        
        

      

    

     

    8.3  Disclaimer
      of Warranty.
      Except as otherwise expressly provided in this agreement, QMT makes no
      representations and extends no warranty of any kind, either express or implied,
      with respect to the QMT Intellectual Property, including without limitation
      warranties of the validity or enforceability of the patent rights,
      merchantability, fitness for a particular purpose and non-infringement of any
      Third Party patents or proprietary rights. All Uniform Commercial Code
      warranties are expressly disclaimed by QMT. 

     

    8.4  Limitation
      of Liability.
      Except
      with respect to liability arising from breach of Section 10 and liability
      arising under Section 9 herein, it is agreed by the Parties that neither Party
      shall be liable to the other Party for any special, consequential, indirect,
      exemplary or incidental damages (including lost or anticipated revenues or
      profits relating to the same), arising from any claim relating to this
      Agreement, whether such claim is based on contract, tort (including negligence)
      or otherwise, even if an authorized representative of such Party is advised
      of
      the possibility or likelihood of same.

     

    8.5  Modification
      to QMT Intellectual Property.
      DERMA
      shall not modify, change or vary from the QMT Intellectual Property as it is
      applied to the Products. If DERMA seeks to change or modify the QMT Intellectual
      Property used in the Product, it shall notify QMT sixty (60) days prior to
      making such change whereupon, so long as DERMA is in compliance with this
      Agreement, the parties shall reasonably cooperate to adjust the formulation
      of
      the QMT Intellectual Property as necessary to meet the Product requirements
      of
      DERMA. Any such reformulation shall constitute an Improvement and shall be
      owned
      exclusively by QMT and shall be licensed to DERMA under the terms of this
      Agreement. 

     

    9.  Indemnification
      and Insurance.

     

    9.1  Indemnification
      by DERMA.
      DERMA
      shall indemnify, defend and hold harmless QMT and its Affiliates and their
      respective directors, officers, employees and agents, and their respective
      successors, heirs and assigns (the “Indemnitees”)
      against any liability, damage, loss or expense (including reasonable attorneys’
fees and expenses of litigation) incurred by or imposed upon the Indemnitees
      in
      connection with any claim, demand, suit, action or judgment arising out of
      any
      theory of product liability (including without limitation actions in the form
      of
      tort, warranty or strict liability) or based on, or caused by any act or
      omission of DERMA, its Affiliates or Designees with respect to the development,
      manufacture, use sale, offer for sale, importation or exportation of any
      Product, except to the extent that such liability, damage, loss or expense
      is
      directly attributable to the negligence or misconduct of QMT or its Affiliates.
      

     

    9.2  Notice
      and Cooperation.
      Any
      Indemnitee seeking indemnification under Section 9.1 shall provide DERMA with
      prompt written notice of any claim, demand, suit, action or judgment for which
      indemnification is sought under this Agreement. An Indemnitee’s failure to
      deliver written notice to DERMA within a reasonable time after the commencement
      of any such action, to the extent prejudicial to the DERMA’s ability to defend
      such action, shall relieve DERMA of liability to the Indemnitee under this
      Section 9. DERMA agrees, at its own expense, to provide attorneys reasonably
      acceptable to the Indemnitees to defend against any such claim. The Indemnitees
      shall cooperate fully with DERMA in such defense and will permit DERMA to
      conduct and control such defense and the disposition of such claim, suit, or
      action (including all decisions relative to litigation, appeal and settlement);
      provided,
      however,
      that
      any Indemnitee shall have the right to retain its own counsel at the expense
      of
      DERMA, if representation of such Indemnitee by the counsel retained by DERMA
      would be inappropriate because of actual or potential conflicts in the interests
      of such Indemnitee and any other party represented by the counsel retained
      by
      the DERMA. DERMA agrees to keep the Indemnitees informed of the progress in
      the
      defense and disposition of such claim and to consult with the Indemnitees with
      regard to any proposed settlement. The indemnification under this Section 8
      shall not apply to amounts paid in settlement of any liability, claim, lawsuit,
      loss, demand, damage, cost or expense if such settlement is effected without
      the
      consent of DERMA.

     

    9.3  Insurance.
      DERMA
      shall obtain and carry in full force and effect product liability insurance
      in
      amounts that are reasonable and customary in the pharmaceutical industry for
      similar products, but in no event shall such insurance be less than ***** per
      occurrence and ***** in aggregate. Within thirty days of the start of each
      Contract Year, DERMA shall provide QMT with a certificate evidencing the
      insurance coverage required herein and all subsequent renewals thereof. The
      insurance coverage required herein does not constitute a limitation on DERMA’s
      obligation to indemnify QMT under this Agreement. 

     

    

      *****
        This material has been omitted pursuant to a request for confidential treatment
        and filed separately with the Securities and Exchange
        Commission.

    

     

    
      
        
        

      

      
        -13-

        
          

        

      

      
        
        

      

    

     

    10.  Confidentiality.

     

    10.1  Confidential
      Information.
      As used
      in this Agreement, the term “Confidential
      Information”
shall
      mean all scientific, technical, trade or business information of either Party
      (the “Disclosing
      Party”)
      disclosed to the other Party (the “Recipient”),
      whether or not in writing, and regardless of whether it is marked as
      confidential, including any portion of analyses, compilations, forecasts,
      studies or other documents prepared by Recipient which contains such
      information. By way of illustration, but not limitation, Confidential
      Information may include inventions, Know-how, processes, methods, techniques,
      assays, formulas, compositions, compounds, projects, developments, plans,
      research data, clinical data, financial data, personnel data, computer programs,
      customer and supplier lists and contacts at or knowledge of customers or
      prospective customers of the Disclosing Party.

     

    10.2  Disclosure
      of Confidential Information.
      Except
      as expressly permitted in this Section 10, during the Term of this Agreement
      and
      for a period of five (5) years thereafter, the Recipient shall hold in
      confidence and shall not directly or indirectly disclose, communicate or in
      any
      way divulge to any person any Confidential Information, without the prior
      written consent of the Disclosing Party. The Recipient shall use such
      Confidential Information solely for the purposes of this Agreement. The
      Recipient shall not provide or grant access to the Confidential Information
      to
      any Third Party, except
      the
      Recipient may disclose Confidential Information received by it under this
      Agreement only to those of its directors, officers, employees, agents and
      consultants, and the directors, officers, employees, agents and consultants
      of
      its Affiliates, who have a need to know such Confidential Information in the
      course of the performance of their duties and who are bound by a written
      agreement to protect the confidentiality of such Confidential
      Information.

     

    10.3  Limitation
      on Obligations.
      The
      obligations of the Recipient specified in Section 10.2 above shall not apply
      to
      any Confidential Information to the extent the Recipient can demonstrate, by
      clear and convincing evidence, that such Confidential Information:

     

    (a)  was
      in
      the public domain prior to the time of its disclosure under this
      Agreement;

     

    (b)  entered
      the public domain after the time of its disclosure under this Agreement through
      means other than an unauthorized disclosure resulting from an act or omission
      by
      the Recipient;

     

    (c)  is
      or was
      disclosed to the Recipient at any time, whether prior to or after the time
      of
      its disclosure under this Agreement, on a non-confidential basis by a Third
      Party, provided that such Third Party is not, to the Recipient’s knowledge,
      bound by an obligation of confidentiality to the Disclosing Party with respect
      to such Confidential Party;

     

    (d)  is
      independently developed by the Recipient without reference to the Confidential
      Information of the Disclosing Party; or

     

    (e)  is
      required to be disclosed by the Recipient to comply with applicable laws or
      to
      comply with governmental regulations; provided,
      that
      the Recipient provides prior written notice of such disclosure to the Disclosing
      Party and takes reasonable and lawful actions to avoid and/or minimize the
      degree of such disclosure.

     

    10.4  Equitable
      Relief.
      The
      Recipient agrees that any breach of this Section 10 may cause the Disclosing
      Party substantial and irreparable damages and, therefore, in the event of any
      such breach, in addition to other remedies that may be available, the Disclosing
      Party shall have the right to seek specific performance and other injunctive
      and
      equitable relief.

     

    10.5  Ownership
      of Confidential Information.
      The
      Recipient agrees that the Disclosing Party (or any Third Party entrusting its
      own confidential information to the Disclosing Party) is and shall remain the
      exclusive owner of the Confidential Information disclosed to the Recipient
      and
      all patent, copyright, trademark, trade secret, and other intellectual property
      rights in such Confidential Information or arising therefrom. Except as
      expressly set forth in this Agreement, no option, license, or conveyance of
      such
      rights to the Recipient is granted or implied under this Agreement.

     

    

      *****
        This material has been omitted pursuant to a request for confidential treatment
        and filed separately with the Securities and Exchange
        Commission.

    

     

    
      
        
        

      

      
        -14-

        
          

        

      

      
        
        

      

    

     

    11.  Term
      and Termination.

     

    11.1  Term.
      Unless
      terminated sooner as provided in this Section 11, the initial term of this
      Agreement shall extend from the Effective Date for a period equal to the shorter
      of (i) five (5) years from the First Commercial Sale of Conforming Gauze, or
      (ii) seven (7) years from the Effective Date (the “Initial
      Term”),
      and
      may be renewed for additional one-year terms (each a “Renewal
      Term”)
      by
      mutual agreement of the Parties (the Initial Term and each Renewal Term,
      collectively, the “Term”).
      

     

    11.2  Material
      Breach by DERMA.
      Except
      as set forth in Section 11.3 below, the failure by DERMA to comply with any
      of
      its material obligations contained in this Agreement, including without
      limitation, its breach of its obligations under Sections 3.4 herein, shall
      entitle QMT to give to DERMA written notice specifying the nature of the default
      and requiring it to cure such default. If such default is not cured within
      thirty (30) days after the receipt of such notice, then QMT shall be entitled,
      without prejudice to any of its other rights conferred on it by this Agreement
      and in addition to any other remedies available to it by law or in equity,
      to
      terminate this Agreement effective upon written notice to DERMA. The right
      of
      QMT to terminate this Agreement, as hereinabove provided, shall not be affected
      in any way by its waiver or failure to take action with respect to any previous
      default. 

     

    11.3  DERMA’s
      Failure to Meet Minimum Royalties.
      In the
      event for a given Contract Year DERMA fails to make the subject Minimum
      Royalties payments, but nevertheless makes payments aggregating not less than
      fifty percent (50%) of the subject Minimum Royalties, QMT’s exclusive remedy
      shall be amendment of this Agreement to remove DERMA’s exclusive rights relative
      to the Products. Provided, further, in the event (a) for a given Contract Year
      DERMA fails to make Royalty payments aggregating at least fifty percent (50%)
      of
      the subject Minimum Royalties requirement, or (b) for three Contract Years
      DERMA
      fails to make Royalty Payments equal to or greater than meet the Minimum
      Royalties amounts set forth in Section 3.4 hereof, QMT’s exclusive remedies
      (other than collection of earned and unpaid royalties) shall be, at its sole
      option, cancellation of this Agreement or amendment of this Agreement to remove
      DERMA’s exclusive rights relative to the Products.

     

    Anything
      hereinbefore or hereinafter contained to the contrary notwithstanding, the
      remedies set forth in the immediately preceding paragraph shall be the sole
      remedies available to QMT by reason of the failure of DERMA to pay to QMT
      Royalties equal to or greater than the Minimum Royalties set forth in Section
      3.4 hereof. The right of QMT to terminate this Agreement or convert the license
      in the Exclusive Territory to non-exclusive, as hereinabove provided, shall
      not
      be affected in any way by its waiver or failure to take action with respect
      to
      any previous default. 

     

    11.4  Material
      Breach by QMT.
      The
      failure by QMT to comply with any of its material obligations contained in
      this
      Agreement shall entitle DERMA to give to QMT written notice specifying the
      nature of the default and requiring it to cure such default. If such default
      is
      not cured within thirty (30) days after the receipt of such notice, DERMA shall
      be entitled, without prejudice to any of its other rights conferred on it by
      this Agreement and in addition to any other remedies available to it by law
      or
      in equity, to terminate this Agreement effective upon written notice to QMT.
      The
      right of DERMA to terminate this Agreement, as hereinabove provided, shall
      not
      be affected in any way by its waiver or failure to take action with respect
      to
      any previous default. 

     

    11.5  Bankruptcy.
      Either
      Party may terminate this Agreement immediately by providing written notice
      if
      the other Party: (a) applies for or consents to the appointment of a receiver,
      trustee, liquidator or custodian of itself or of all or a substantial part
      of
      its assets, (b) becomes unable, or admits in writing its inability, to pay
      its
      debts generally as they mature, (c) makes a general assignment for the benefit
      of its creditors, (d) is dissolved or liquidated in full or in substantial
      part,
      (e) commences a voluntary case or other proceeding seeking liquidation,
      reorganization or other relief with respect to itself or its debts under any
      bankruptcy, insolvency or other similar law now or hereafter in effect or
      consents to such relief or to the appointment of or taking possession of its
      property by any official in such an involuntary case or such other proceeding
      commenced against it, (f) takes any action for the purpose of effecting any
      of
      the foregoing, and (g) becomes the subject of an involuntary case or other
      proceeding seeking liquidation, reorganization or other relief with respect
      to
      itself or its debts under any bankruptcy, insolvency or other similar law now
      or
      hereafter in effect that is not dismissed within ninety (90) days of
      commencement. 

     

    

      *****
        This material has been omitted pursuant to a request for confidential treatment
        and filed separately with the Securities and Exchange
        Commission.

    

     

    
      
        
        

      

      
        -15-

        
          

        

      

      
        
        

      

    

     

    11.6  Effect
      of Termination.
      

     

    (a)  In
      the
      event of termination of this Agreement pursuant to Sections 11.2, 11.3, 11.4
      or
      11.5 then (a) all licenses and rights granted to DERMA hereunder (except as
      set
      forth in Section 11.6(d) below) shall terminate and DERMA shall immediately
      cease to develop, manufacture, use and sell Products, and (b) DERMA shall be
      obligated to pay QMT any accrued Royalty payments, provided,
      however,
      that
      DERMA shall have no obligation to pay to QMT the difference between actual
      Royalties owed and paid to QMT as of the date of termination and the Minimum
      Royalties of the applicable Contract Year. Notwithstanding the foregoing, in
      the
      event this Agreement is terminated pursuant to Section 11.2, 11.3, 11.4 or
      11.5,
      DERMA shall be permitted to sell-off any and all inventory of Products existing
      at the date termination, provided that such sales occur within six (6) months
      after such termination, and provided further that DERMA remains obligated to
      pay
      actual Royalties and report to QMT on the sale of any such Products (the
“Sell-Off
      Period”).
      Any
      remaining inventory of Products after such Sell-Off Period shall be destroyed
      by
      DERMA at its sole expense.

     

    (b)  Without
      limiting any other legal or equitable remedies that QMT may have, if QMT
      terminates this Agreement in accordance with Section 11.2, 11.3 or 11.5, then,
      at the request of QMT, DERMA shall, as soon as reasonably possible and to the
      extent that it has the right to do so or is permitted by applicable law or
      the
      applicable Regulatory Authority, transfer to QMT or QMT’s designee possession
      and ownership of (i) all governmental or regulatory correspondence, conversation
      logs, filings and approvals (including all Regulatory Approvals) relating
      exclusively to DERMA’s development or Commercialization of the Product in the
      Field in the Territory, and (ii) copies of all data, reports, records and
      materials in DERMA’s possession or control relating exclusively to DERMA’s
      development or Commercialization of Products in the Field in the Territory,
      including all non-clinical and clinical data relating to the Product in the
      Field in the Territory, (iii), all agreements pertaining to contract research
      organizations (CROs), clinical trials and supply of material required to
      continue development of the Product. DERMA shall execute all documents and
      take
      all such further actions as may be reasonably requested by QMT in order to
      give
      effect to the foregoing subsections (i), (ii) and (iii) herein.

     

    (c)  Any
      expiration or termination of this Agreement shall not relieve DERMA from any
      obligation that accrued prior to such expiration or termination. Any obligation
      under any provision of this Agreement which is intended to survive expiration
      or
      termination of this Agreement, including without limitation, Sections 1, 7.3,
      7.4, 8, 9, 10, 11.6, 12 and 13 shall survive.

     

    (d)  Upon
      expiration or termination of this Agreement, QMT shall grant and hereby grants
      to DERMA a non-exclusive, royalty-free, fully paid up, worldwide right and
      license to use any DERMA Inventions relating solely to improvements to DERMA’s
      products to the extent that such improvements relate solely to the manufacture
      and use of DERMA’s products, and which are not covered by, derived from,
      manufactured using or incorporating, or otherwise using or containing the QMT
      Intellectual Property, the Materials or the Composition and Process.

     

    11.7  Challenge
      to Patent Rights.  If
      DERMA,
      directly or indirectly, by itself or through one of its Affiliates, brings
      any
      action or proceeding without
      "Cause" (defined below) challenging
      the validity, enforceability or an interference action of or with respect to
      any
      of the Patent Rights (a “Challenge”), then QMT shall have the right to terminate
      this Agreement at any time following such event upon written notice.
"Cause",
      for purposes of the preceding sentence, shall mean (i) any third party claim,
      action or suit filed or brought in any applicable court or through any
      administrative procedure against DERMA, or (ii) the withholding of payment
      for
      the Products by customers of DERMA, which in each case presented in clause
      (i)
      and/or (ii) above is predicated upon the invalidity of the Patent Rights,
      which has, or if successfully prosecuted could reasonably be expected to
      have, a material adverse effect upon DERMA.

     

    

      *****
        This material has been omitted pursuant to a request for confidential treatment
        and filed separately with the Securities and Exchange
        Commission.

    

     

    
      
        
        

      

      
        -16-

        
          

        

      

      
        
        

      

    

     

    12.  Intellectual
      Property Rights.

     

    12.1  Ownership
      of Intellectual Property.
      QMT
      shall own all right, title and interest in the copyright, patent, trademark,
      trade secret or other intellectual property rights in the Patent Rights and
      Know-how, including without limitation any derivatives, variations, and or
      Improvements thereto. 

     

    12.2  Ownership
      of Inventions.
      Inventorship shall be determined in accordance with United States patent law
      at
      the time the inventor made the invention. Each Party shall ensure that its
      employees, consultants, agents, and representatives are contractually required
      to assign to such Party all rights, title, and interest to any inventions,
      to
      maintain all Confidential Information, and to promptly disclose to such Party
      all such inventions. 

     

    (a)  QMT
      Inventions.
      QMT
      will have and retains sole and exclusive title to all inventions, developments,
      Improvements, discoveries and Know-how relating to the QMT Intellectual Property
      which are made, conceived or reduced to practice solely by QMT, its Affiliates,
      employees, consultants, agents or other Persons acting under its authority
      in
      the course of or as a result of this Agreement or in the course of any
      activities inside and outside the Field and Territory.

     

    (b)  DERMA
      Inventions.
      In the
      event any invention, development, Improvement, discovery, or Know-how relating
      to the QMT Intellectual Property is made, conceived or reduced to practice
      by
      DERMA, its Affiliates, employees, consultants, agents or other persons acting
      under its authority in the course of, in connection with or as a result of
      this
      Agreement, either solely or jointly with QMT, an Affiliate or a Third Party,
      (each a “DERMA
      Invention”)
      such
      DERMA Invention shall be promptly disclosed by DERMA to QMT in writing. All
      DERMA Inventions shall be owned by QMT and any Patent Rights under any DERMA
      Inventions shall be owned by QMT. DERMA hereby assigns and agrees to assign
      all
      right, title, and interest to such DERMA Inventions to QMT, shall execute any
      documents reasonably necessary to fulfill the purposes of this Section 12.2(b),
      and hereby appoints QMT as its attorney to execute and deliver any such
      documents on its behalf in the event the DERMA should fail or refuse to do
      so
      within a reasonable period following QMT’s request. Any
      such
      DERMA Invention shall be subject to the license granted to DERMA under this
      Agreement.

     

    12.3  Prosecution
      of Patent Rights.
      QMT, by
      counsel it selects, shall have the right, but not the obligation, to prepare,
      file, prosecute and maintain the Patent Rights in QMT’s name and in countries
      designated by QMT at the sole discretion of QMT. QMT shall bear all the costs
      and expenses associated with the filing, prosecution and maintenance of such
      Patent Rights. 

     

    12.4  Third
      Party Infringement.
      Each
      Party shall promptly notify the other Party in writing of any alleged
      infringement of the Patent Rights and of any available evidence
      thereof.

     

    (a)  QMT
      shall
      have the first right, but not the obligation, under its own control and at
      its
      own expense, to prosecute any Third Party infringement of the Patent Rights
      and/or to defend the Patent Rights in any declaratory judgment or other action
      brought by a Third Party which alleges invalidity, unenforceability or
      non-infringement of the Patent Rights. QMT may enter into any settlement,
      consent judgment or other voluntary final disposition of any infringement or
      declaratory judgment action hereunder without the prior written consent of
      DERMA. Any recovery or damages derived from any such action shall be retained
      by
      QMT. 

     

    (b)  In
      the
      event QMT institutes a court proceeding relating to the infringement of the
      Patent Rights in the Field under Section 12.4(a), DERMA shall have the right
      to
      intervene in such proceeding and QMT shall not oppose such intervention,
      provided that (i) DERMA notifies the court and QMT of its intention to intervene
      within 180 days of the commencement of such proceeding, and (ii) DERMA shares
      equally with QMT the total costs incurred by QMT (including without limitation
      attorney and expert fees) of conducting such proceeding. QMT shall retain
      control of the conduct and settlement of any such proceeding; provided, however,
      that no settlement, consent judgment or other voluntary final disposition of
      such action may be entered into without the prior written consent of DERMA,
      which consent shall not be unreasonably withheld or delayed. Any recovery of
      damages for any such proceeding (or settlement thereof) shall be applied first
      in satisfaction of any out-of-pocket expenses incurred by the Parties relating
      to the proceeding (including without limitation attorney and expert fees) and
      the balance shall be equally divided between the Parties.

     

    (c)  In
      the
      event that QMT declines to commence legal action to defend against a declaratory
      action alleging invalidity of the Patent Rights or to prosecute infringements
      of
      the Patent Rights in the Field, QMT shall notify DERMA of its decision promptly
      in writing. Thereafter, DERMA shall have the right, but shall not be obligated,
      to commence legal action at its own expense to defend or prosecute such
      infringements relating to the Patent Rights in the Field. No settlement, consent
      judgment or other voluntary final disposition of the suit may be entered into
      without the consent of QMT, which consent shall not be unreasonably withheld
      or
      delayed. The total cost of any action commenced solely by DERMA shall be borne
      by DERMA, and DERMA shall retain any recovery or damages derived
      therefrom.

     

    

      *****
        This material has been omitted pursuant to a request for confidential treatment
        and filed separately with the Securities and Exchange
        Commission.

    

     

    
      
        
        

      

      
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    12.5  Infringement
      Allegations.
      In the
      event that a Third Party asserts or alleges that a Product manufactured or
      sold
      by DERMA or its Affiliates infringes a patent or other proprietary right of
      such
      Third Party, DERMA shall assume the defense of such claim and shall indemnify
      QMT for all reasonable expenses and/or damages incurred by it as a result of
      such claim. QMT may participate in the defense of such claim through counsel
      of
      its own choosing and at its sole expense. In the event that QMT receives notice
      of such assertion or allegation, QMT shall notify DERMA of such allegation
      or
      assertion. DERMA may enter into any settlement, consent judgment, or other
      voluntary final disposition of any infringement action under this Section 10.5
      in the Field; provided,
      however,
      that
      DERMA shall not enter into any settlement, consent judgment or other voluntary
      final disposition that admits or concedes that an aspect of the Patent Rights
      is
      invalid or unenforceable, without the prior written consent of QMT, which
      consent shall not be unreasonably withheld or delayed.

     

    12.6  Trademarks.
      QMT is
      and shall remain the owner of all right, title and interest to the common law
      trademark and goodwill associated with the name “Nimbus®,”
and
      any other marks it develops in association with the QMT Intellectual Property
      (collectively, the “QMT
      Marks”)
      and
      DERMA agrees that it will not at any time assert or claim any interest in,
      nor
      register or attempt to register the QMT Marks or any marks confusingly similar
      thereto. DERMA shall be responsible for the selection, registration and
      maintenance of all other trademarks and trade names that it employs in
      connection with Products (collectively, the “DERMA
      Marks).
      QMT
      agrees that it will not at any time assert or claim any interest in, nor
      register or attempt to register the DERMA Marks or any marks confusingly similar
      thereto. 

     

    13.  Miscellaneous.

     

    13.1  Use
      of
      Name/Public Statements.
      Except
      to the extent required by applicable law or regulation, each Party agrees that
      it will not at any time during or following termination of this Agreement use
      the name of the other Party or any names, insignia, symbols, or logotypes
      associated with the other Party or any variant or variants thereof or the names
      of the other Party’s employees orally or in any literature, advertising, or
      other materials without the prior written consent of Party whose name is to
      be
      used, which consent shall not be unreasonably withheld.

     

    13.2  Assignment.
      This
      Agreement may not be assigned or otherwise transferred by either Party without
      the prior written consent of the other Party, which consent shall not be
      unreasonably withheld or delayed; provided,
      however,
      that
      either Party may, without such consent, assign this Agreement and any of its
      rights or obligations hereunder to its Affiliates or in connection with the
      transfer or sale of all or substantially all of the portion of its business
      to
      which this Agreement relates, or in the event of its merger or consolidation
      or
      change in control or similar transaction; provided,
      further,
      that the
      assigning Party shall deliver written notice of any such permitted assignment
      to
      the other Party. This Agreement shall be binding upon and inure to the benefit
      of the successors and permitted assigns of the Parties and the name of a Party
      appearing herein shall be deemed to include the names of such Party’s successors
      and permitted assigns to the extent necessary to carry out the intent of this
      Agreement. Any attempted assignment not in accordance with this Section 13.2
      shall be void.

     

    

      *****
        This material has been omitted pursuant to a request for confidential treatment
        and filed separately with the Securities and Exchange
        Commission.

    
      
        
        

      

      
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    13.3  Independent
      Contractors.
      QMT and
      DERMA shall at all times act as independent parties and nothing contained in
      this Agreement shall be construed or implied to create an agency or partnership.
      Neither Party shall have the authority to contract or incur expenses on behalf
      of the other.

     

    13.4  Notices.
      Any
      notice or communication required or permitted to be given or made under this
      Agreement by one of the Parties hereto to the other shall be in writing and
      shall be deemed to have been sufficiently given or made for all purposes if
      sent
      by hand, recognized national overnight courier, confirmed facsimile
      transmission, or mailed by certified mail, postage prepaid, return receipt
      requested, addressed to such other Party at its respective address as
      follows:

     

    If
      to
      DERMA:

    

    Derma
      Sciences, Inc.

    214
      Carnegie Center

    Suite
      100

    Princeton,
      New Jersey 08540

    Attn:
      Barry J. Wolfenson

    Fax:
      609.514.8554

    

    If
      to
      QMT:

    

    Quick-Med
      Technologies, Inc.

    3427
      SW
      42nd
      Way

    Gainesville,
      Florida 32608

    Attn:
      David Lerner, President

    Fax:
      561.750.4203

    

    13.5  Severability.
      If any
      one or more of the provisions of this Agreement shall be held to be invalid,
      illegal or unenforceable, that provision shall be stricken and the remainder
      of
      this Agreement shall continue in full force and effect; provided,
      however,
      that
      the Parties shall renegotiate an acceptable replacement provision so as to
      accomplish, as nearly as possible, the original intent of the
      Parties.

     

    13.6  Governing
      Law.
      This
      Agreement shall be governed by and construed in accordance with the laws of
      the
      State of Florida and applicable U.S. Federal law, without regard to any choice
      of law principles that would dictate the application of the laws of another
      jurisdiction. The state and federal courts located in Florida shall have
      exclusive jurisdiction over any dispute arising under this
      Agreement.

     

    13.7  Entirety;
      Amendment.
      This
      Agreement represents the entire agreement of the Parties and expressly
      supersedes all previous written and oral communications between the Parties.
      No
      amendment, alteration, or modification of this Agreement or any exhibits
      attached hereto shall be valid unless executed in writing by authorized
      signatories of both Parties.

     

    13.8  Waiver.
      The
      failure of any Party hereto to insist upon strict performance of any provision
      of this Agreement or to exercise any right hereunder will not constitute a
      waiver of that or any other provision or right.

     

    

       

    

    
      
         

        
          	 	 	 

        

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          This material has been omitted pursuant to a request for confidential treatment
          and filed separately with the Securities and Exchange Commission.

        
        

      

      
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    IN
      WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their
      duly authorized representatives as of the date first written above.

     

    

                                         DERMA
      SCIENCES,
      INC.

    

    

    

    By: /s/
      Barry J. Wolfenson________

    Barry
      J.
      Wolfenson

    Vice
      President of Marketing and

    Business
      Development 

    

    

    QUICK-MED
      TECHNOLOGIES, INC.

    

    

    

    By: /s/
      David S. Lerner_____________

    David
      S.
      Lerner

    President

     

    

       

    
      
         

        
          	 	 	 

        

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          This material has been omitted pursuant to a request for confidential treatment
          and filed separately with the Securities and Exchange Commission.

        
        

      

      
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    EXHIBIT
      A

    

    Patent
      Rights

     

    Issued

     

    Title     Number   Issued

    Intrinsically
      Bactericidal Absorbent Dressing US 7.045,673  5/16/06

    And
      Method of Fabrication    

    “   

    International

    

    Country         Number
      

    Australia         773532 

    Brazil          Pending

    Canada          Pending

    China        
      99814229.9 

    Russia          004160 

    Europe          Pending

    Indonesia         Issued

    India          Allowed

    Japan
                Pending

    Korea          Pending

    Mexico         Pending

    

    

    Published
      Patent Applications

    

    Title       Number 

    Absorbent
      Materials with Covalently Bonded Nonleachable   US
      2002-017

    Polymeric
      Antimicrobial Surfaces & Method of Preparation   7828-A1

    (Continuation
      in Part submitted 1/28/2002)

      

    Publication
      Number

    Same
      as
      above        WO
      03039602A2

    Same
      as
      above        EP
      1450966

     

     

    
 

    
      
         

        
          	 	 	 

        

        *****
          This material has been omitted pursuant to a request for confidential treatment
          and filed separately with the Securities and Exchange Commission.

        
        

      

      
        -21-

        
          

        

      

      
        
        

      

    

    EXHIBIT
      B

     

    Materials

     

    *****
      with
      the
      specified substrate materials in Exhibit E (100% cotton, rayon and PET blend,
      and 100% acetate). 

     

     

     

     

    
      
         

        
          	 	 	 

        

        *****
          This material has been omitted pursuant to a request for confidential treatment
          and filed separately with the Securities and Exchange Commission.

        
        

      

      
        -22-

        
          

        

      

      
        
        

      

    

    EXHIBIT
      C

     

    QMT
      Trademark Standards

     

     

     

     

     

     

     

    
      
         

        
          	 	 	 

        

        *****
          This material has been omitted pursuant to a request for confidential treatment
          and filed separately with the Securities and Exchange Commission.

        
        

      

      
        -23-

        
          

        

      

      
        
        

      

    

    EXHIBIT
      D

     

    Form
      of Confidentiality and Non-competition Agreement

     

     

    
 

     

    
      
         

        
          	 	 	 

        

        *****
          This material has been omitted pursuant to a request for confidential treatment
          and filed separately with the Securities and Exchange Commission.

        
        

      

      
        -24-

        
          

        

      

      
        
        

      

    

    EXHIBIT
      E

     

    Products

     

     

    
 

     

    
      	
              1.

            	
              Conforming
                gauze bandage used as a secondary dressing to hold primary dressing
                in
                place: either 100% cotton or a blend of rayon and PET
                

            

    

    

    2. Gauze
      sponges, gauze bandage rolls, gauze packing strips: 100% cotton

    

    3. Oil
      emulsion acetate: 100% acetate

    

    4. Unna
      boot: 100% cotton 

     

     

    

      *****
        This material has been omitted pursuant to a request for confidential treatment
        and filed separately with the Securities and Exchange
        Commission.

    
      
        
        

      

      
        -25-

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