Document:

Agreement pursuant to RegS-K

    EXHIBIT
      4.4 

    

    AGREEMENT
      PURSUANT TO ITEM 601(B)(4)(III)

    OF

    REGULATION
      S-K

    

    

    Citizens
      First Corporation (the “Registrant”) hereby undertakes and agrees to furnish to
      the Securities and Exchange Commission upon request a copy of any instrument
      relating to, or defining the rights of the holders of, any long-term debt of
      the
      Registrant and/or its subsidiaries, a copy of which has not been filed in
      reliance upon Item 601(b)(4)(iii)(A) of Regulation S-K. This Agreement and
      undertaking is intended to be effective with respect to Registrant's Long-Term
      Debt instruments whether securities have been issued thereunder or are yet
      to be
      issued thereunder.

    

    

    Date:
      March 30, 2007

    

    

    By:
      /s/
      Mary D. Cohron

    

    Mary
      D.
      Cohron

    President
      and Chief Executive OfficerExhibit 10.54 Second Amendment to the MAA France

    MASTER
      ALLIANCE AGREEMENT

    ADDENDUM
      2

     

    Between
      the undersigned

     

    Audible
      Inc.,
      a
      Delaware corporation having offices at 65 Willowbrook Boulevard, Wayne,
      New Jersey 07470, represented by

     

    Hereinafter
      'Audible" And

    France
      Loisirs,
      a
      french stock corporation with a capital of 3.724.000 E. registered under
      number 702 019 902 RCS Paris, having offices at 123 boulevard de Grenelle
—75
      015
      Paris, represented by JOrg HAGEN, Chairman,

     

    Hereinafter
      "France Loisirs" And

    Audio
      Direct,
      french
      stock corporation with a capital of 100.000 E, registered under number
      453 464 927 RCS Paris, having offices at 123 boulevard de Grenelle
      -

    75015
      Paris, represented by Ara CINAR, Chairman,

     

    Hereinafter
      "Audio Direct"

     

    Preamble

     

    According
      to a Master Alliance Agreement between Audible, France Loisirs and Audio
      Direct, Audible grants to France Loisirs the exclusive right and licence to
      conduct
      and operate the Audible Service, to offer and sell licenses to end users to
      download
      digital audio books and audio spoken word content in French.

     

    This
      agreement commences on September 15'h
      2004 and
      continues for a period of 24
      months.

     

    By
      letter
      dated June the 22n(1
      2006,
      and
      as per article 7.1, Audio Direct informed Audible
      about its discussions with a major French publishing house to form a joint
      company
      in order to develop Audible contents and a desire to simplify the financial
      terms
      of
      the renewed Master Alliance Agreement.

     

    According
      to an Addendum n°1 to the Master Alliance Agreement, the parties agree
to
      a
      first renewal period from September the 15th
      to
      December the 31s4
      2006 and
undertake
      to negotiate a second renewal until November the 30th
      2006. If
      not the Master
      Alliance Agreement will terminate on December the 315I
      2006.

     

    The
      parties agree to a second renewal of the Master Alliance
      Agreement.

    
      	
              Therefore
                it has
                been agreed
                and decided as follows:

            	 

    

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Article
      1
—

     

    The
      parties agree to a second renewal period of the Master Alliance Agreement from
      November
      the 30th
      2006 to
      March the 31st
      2007.

     

    During
      this period of time of the second renewal period, all the terms and conditions
      of
      the
      Master Alliance Agreement remain in effect, except the 180 day notice
provision
      in Article 7.2.

     

    If
      the
      Master Alliance Agreement is not renewed, either by the election of France
      Loisirs
      as provided in Article 7 or by the agreement of the parties, by March 31, 2007,
      then
      the
      Term of the Master Alliance Agreement will end in accordance with Article 7
      thereof
      on April 30, 2007.

     

    Article
      2
—

     

    This
      addendum effective date is November the 30`h
      2006.

     

    The
      parties agree that other terms and conditions of the Master Alliance Agreement
      not
      modified hereunder remain in effect.

     

    

     

    Audible
      Inc       France
      Loisirs

     

    By
      /s/Donald R. Katz      By
      /s/
      Mr. JOrg
      HAGEN

     

    Title
      CEO       Title
      President

     

    Date
      Nov.
      21, 2006      Date
      21.11.06

     

    

     

    Audio
      Direct s.a.s.

     

    By
      /s/
      Mr. Ara CINAR

     

    Title
      President

     

    Date
      21.11.2006LICENSE AGREEMENT BETWEEN QUICK-MED TECHNOLOGIES AND DERMA SCIENCES INC.

    PATENT
      AND TECHNOLOGY LICENSE AGREEMENT

    

    This
      Patent and Technology License Agreement (“Agreement”),
      effective this 23 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. 

     

    1.6  “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-

        
          

        

      

      
        
        

      

    

     

    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.

     

    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.  

     

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

     

    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.

     

    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.

     

     

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

     

    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.

     

    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.

     

     

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

     

    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.

     

    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 ten percent (10%) 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 ten percent (10%) 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 ten percent (10%) to twenty
      percent (20%) on Net Sales of such New Product.

     

     

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

     

    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) twenty percent (20%) on Net Sales for each Product in the Field in
      the
      Exclusive Territory, and (ii) ten percent (10%) 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 FDA 510K 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 FDA

              510K
                Approval 

            	
               

              Incentive
                Payment

            
	
              June,
                2007

               

            	
              $15,000

               

            
	
              July,
                2007

               

            	
              $7,500

               

            
	
              August,
                2007

               

            	
              $5,000

               

            

    

    

     

    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

     

     

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

     

    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$300,000

               

            
	
              Contract
                Year 2

               

            	
              US$600,000

               

            
	
              Contract
                Year 3

               

            	
              US$1,000,000

               

            
	
              Contract
                Year 4

               

            	
              US$1,500,000

               

            
	
              Contract
                Year 5

               

            	
              US$2,000,000

               

            

    

     

     

    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 FDA to grant 510K 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 FDA 510K approval of such
      Affected Product for use as a primary dressing.

     

     

    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

    

    
 

    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

               

            	
              1

               

            
	
              Gauze
                Sponges

               

            	
              2

               

            
	
              Gauze
                Bandage Rolls

               

            	
              2

               

            
	
              Gauze
                Packing Strips

               

            	
              2

               

            
	
              Oil
                Emulsion Acetate

               

            	
              3

               

            
	
              Unna
                Boot Dressings

               

            	
              4

               

            

    

    

     

    

     

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

    

    3.6  License
      Fee and Advance Royalties.
      DERMA
      shall pay to QMT a License Fee in the amount of Fifty Thousand Dollars ($50,000)
      on the Effective Date. DERMA shall pay to QMT the sums of Twenty Five Thousand
      Dollars ($25,000) upon each of three (3) months, six (6) months and nine (9)
      months following the Effective Date (such payments, “Advance Royalties”).
      Subject to Section 3.4, if applicable, Advance Royalties shall be fully credited
      against Royalties payable hereunder. Provided, however, anything herein
      contained to the contrary notwithstanding, no Advance Royalties shall be payable
      on or after the date of the First Commercial Sale.

     

     

    
      
        
        

      

      
        -8-

        
          

        

      

      
        
        

      

    

     

    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 five percent (5%) 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 by twenty percent (20%) 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).

     

     

    
      
        
        

      

      
        -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 one
      thousand dollars (US$1,000) 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.

     

     

    
      
        
        

      

      
        -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.

     

     

    
      
        
        

      

      
        -11-

        
          

        

      

      
        
        

      

    

     

    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.

     

     

    
      
        
        

      

      
        -12-

        
          

        

      

      
        
        

      

    

     

    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.

     

    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. 

     

     

    
      
        
        

      

      
        -13-

        
          

        

      

      
        
        

      

    

     

    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 Five Million
      Dollars ($5,000,000) per occurrence and Five Million Dollars ($5,000,000) 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. 

     

     

    
      
        
        

      

      
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    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.

     

     

    
      
        
        

      

      
        -15-

        
          

        

      

      
        
        

      

    

     

    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. 

     

     

    
      
        
        

      

      
        -16-

        
          

        

      

      
        
        

      

    

     

    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.

     

     

    
      
        
        

      

      
        -17-

        
          

        

      

      
        
        

      

    

     

    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. 

     

     

    
      
        
        

      

      
        -18-

        
          

        

      

      
        
        

      

    

     

    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.

     

    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. 

     

     

    
      
        
        

      

      
        -19-

        
          

        

      

      
        
        

      

    

     

    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.

     

    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.

     

    
      
         

        
          	 	 	 

        

        

        
        

      

      
        -20-

        
          

        

      

      
        
        

      

    

     

     

    
 

    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

     

     

    
 

    
      
         

        
          	 	 	 

        

        

        
        

      

      
        -21-

        
          

        

      

      
        
        

      

    

    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

     

     

     

    
 

    
      
         

        
          	 	 	 

        

        

        
        

      

      
        -22-

        
          

        

      

      
        
        

      

    

    EXHIBIT
      B

     

    Materials

     

     

     

    
 

    
      
         

        
          	 	 	 

        

        

        
        

      

      
        -23-

        
          

        

      

      
        
        

      

    

    EXHIBIT
      C

     

    QMT
      Trademark Standards

     

     

    
 

    
      
         

        
          	 	 	 

        

        

        
        

      

      
        -24-

        
          

        

      

      
        
        

      

    

    EXHIBIT
      D

     

    Form
      of Confidentiality and Non-competition Agreement

     

     

     

     

     

    
 

     

    
      
         

        
          	 	 	 

        

        

        
        

      

      
        -25-

        
          

        

      

      
        
        

      

    

     

    
 

    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 

     

     

     

     

     

     

     

     

     

     

    
 

    
      
        
        

      

      
        -26-

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