0001193125-13-455744.txt : 20131127 0001193125-13-455744.hdr.sgml : 20131127 20131127060704 ACCESSION NUMBER: 0001193125-13-455744 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 20131127 DATE AS OF CHANGE: 20131127 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: Alliqua, Inc. CENTRAL INDEX KEY: 0001054274 STANDARD INDUSTRIAL CLASSIFICATION: SURGICAL & MEDICAL INSTRUMENTS & APPARATUS [3841] IRS NUMBER: 582349413 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-85477 FILM NUMBER: 131245594 BUSINESS ADDRESS: STREET 1: 2150 CABOT BOULEVARD WEST CITY: LANGHORNE STATE: PA ZIP: 19047 BUSINESS PHONE: 215-702-8550 MAIL ADDRESS: STREET 1: 2150 CABOT BOULEVARD WEST CITY: LANGHORNE STATE: PA ZIP: 19047 FORMER COMPANY: FORMER CONFORMED NAME: HEPALIFE TECHNOLOGIES INC DATE OF NAME CHANGE: 20030529 FORMER COMPANY: FORMER CONFORMED NAME: ZETA CORP DATE OF NAME CHANGE: 20030219 FORMER COMPANY: FORMER CONFORMED NAME: ZETA CORP /CA DATE OF NAME CHANGE: 20000303 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: CELGENE CORP /DE/ CENTRAL INDEX KEY: 0000816284 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 222711928 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 86 MORRIS AVENUE CITY: SUMMIT STATE: NJ ZIP: 07901 BUSINESS PHONE: (908)673-9000 MAIL ADDRESS: STREET 1: 86 MORRIS AVENUE CITY: SUMMIT STATE: NJ ZIP: 07901 SC 13D 1 d636870dsc13d.htm SC 13D SC 13D

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 13D

Under the Securities Exchange Act of 1934

(Amendment No.     )*

 

 

Alliqua, Inc.

(Name of Issuer)

Common Stock, $0.001 par value

(Title of Class of Securities)

019621 200

(CUSIP Number)

Robert J. Hugin

Chairman of the Board,

President and Chief Executive Officer

Celgene Corporation

86 Morris Avenue

Summit, New Jersey 07901

(908) 673-9000

(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications)

November 18, 2013

(Date of Event Which Requires Filing of This Statement)

 

 

If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g) check the following box:  ¨

 

 

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7 for other parties to whom copies are to be sent.

 

 

 

* The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

 

 

 


SCHEDULE 13D

 

CUSIP No. 019621 200  

 

  1   

Name of reporting person:

I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)

 

CELGENE CORPORATION

22-2711928

  2  

Check the appropriate box if a member of a group*

(a)  ¨        (b)  ¨

 

  3  

SEC use only

 

  4  

Source of funds*

 

    WC

  5  

Check box if disclosure of legal proceedings is required pursuant to Items 2(d) or 2(e)    ¨

 

  6  

Citizenship or place of organization

 

    Delaware, U.S.A.

Number of

shares

beneficially

owned by

each

reporting

person

with

 

     7    

Sole voting power

 

    2,508,711 (1)

     8   

Shared voting power

 

    -0-

     9   

Sole dispositive power

 

    2,508,711 (1)

   10   

Shared dispositive power

 

    -0-

11  

Aggregate amount beneficially owned by each reporting person

 

    2,508,711 (1)

12  

Check box if the aggregate amount in Row (9) excludes certain shares*    ¨

 

13  

Percent of class represented by amount in Row (9)

 

    20.8% (2)

14  

Type of reporting person*

 

    CO

 

(1) Includes 1,672,474 shares of Common Stock and 836,237 shares of Common Stock issuable upon exercise of warrants. Effective November 18, 2013, Alliqua, Inc. consummated a 1 for 43.75 reverse split of its Common Stock (the “Reverse Stock Split”). The number of shares of Common Stock reported in rows (7), (9), and (11) of the cover page have been adjusted to give effect to the Reverse Stock Split.
(2) The percentage ownership interest is determined based on 12,036,128 shares of Common Stock outstanding as of November 25, 2013, which includes (i) 11,199,891 shares of Common Stock outstanding as of November 25,2013, as reported by Alliqua, Inc. to the Reporting Person on such date and (ii) 836,237 shares of Common Stock underlying the Initial Warrant that is exercisable immediately.


SCHEDULE 13D

Alliqua, Inc.

 

Item 1. Security and Issuer.

The class of equity securities to which this Schedule 13D relates is the common stock, par value $0.001 per share (“Common Stock”), of Alliqua, Inc., a Florida corporation (“Alliqua”). The principal business address of Alliqua is 2150 Cabot Boulevard West, Langhorne, Pennsylvania, 19047.

 

Item 2. Identity and Background.

This statement is filed by Celgene Corporation, a Delaware corporation (“Celgene”). The principal business address of Celgene is 86 Morris Avenue, Summit, New Jersey 07093. Celgene is a global biopharmaceutical company primarily engaged in the discovery, development and commercialization of innovative therapies designed to treat cancer and immune-inflammatory related diseases. Set forth on Schedule A hereto, which is incorporated herein by reference, is the name, business address, principal occupation or employment and the name, principal business and address of any corporation or other organization in which such employment is conducted and citizenship of each of Celgene’s directors and executive officers.

During the past five years, neither Celgene, nor, to the knowledge of Celgene, any of the persons listed on Schedule A hereto, has been (i) convicted in a criminal proceeding (excluding traffic violations and similar misdemeanors), or (ii) a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws.

 

Item 3. Source and Amount of Funds or Other Consideration.

The information set forth or incorporated in Items 4 and 6 hereof are incorporated herein by reference.

The shares of Common Stock of Alliqua beneficially owned by Celgene were acquired with working capital of Celgene set aside for the general purpose of investing.

 

Item 4. Purpose of Transaction.

The information set forth or incorporated in Items 3 and 6 hereof are incorporated herein by reference.

On November 14 2013, Celgene entered into a Stock Purchase Agreement with Alliqua (the “Stock Purchase Agreement”), pursuant to which Alliqua sold and issued to Celgene an aggregate of 1,672,474 shares of Common Stock (the “Common Shares”), and a five year warrant (the “Initial Warrant”) to purchase an aggregate of 836,237 shares of Common Stock (the “Initial Warrant Shares”) at an exercise price of $5.69 per share, in exchange for aggregate consideration of $6,000,000. A copy of the Stock Purchase Agreement is Exhibit 1 hereto. The closing under the Stock Purchase Agreement including the issuance to Celgene of the Common Shares and the Initial Warrant, occurred on November 18, 2013. (3)

 

(3)  The number of shares of Common Stock issued to Celgene at the closing under the Stock Purchase Agreement, the number of Initial Warrant Shares, and the exercise price per Initial Warrant Share as set forth herein have been adjusted to give effect to the Reverse Stock Split.


The Stock Purchase Agreement provides that for so long as Celgene or any of its affiliates hold at least 50% of the Common Shares, at the request of Celgene, the board of directors of Alliqua will be required to use its reasonable best efforts to increase Alliqua’s board of directors by one member and elect to such newly created vacancy an individual designated by Celgene. Furthermore, so long as Celgene or any of its affiliates hold at least 25% of the Common Shares, and during any and all periods in which Celgene has not appointed a person to serve on the board of directors pursuant its rights under the Stock Purchase Agreement, upon the request of Celgene at any time, and from time to time, Alliqua shall use its reasonable best efforts to permit one individual designated by Celgene as a non-participating observer to be present at all meetings of Alliqua’s board of directors (subject to certain limited exceptions). As long as Celgene holds at least twenty-five percent (25%) of the Common Shares, Celgene will also share any right of first offer that any other shareholder of Alliqua becomes entitled to for the issuance of any equity securities Alliqua proposes to issue, other than certain customary excluded issuances. Additionally, if prior to June 30, 2015 and on or after the date on which the first commercial sale by Alliqua of certain placental based products pursuant to the License Agreement (as defined below) occurs, Alliqua proposes to issue equity securities in an aggregate amount of at least $4,000,000, then to the extent so requested by Alliqua, Celgene shall purchase $4,000,000 of the same equity securities sold in such equity financing and receive warrants to purchase 50% of the number of equity securities purchased by Celgene in such equity financing with an exercise price equal to 135% of the price per share paid in such equity financing.

Celgene intends to request to Alliqua that Perry A. Karsen, who is currently Executive Vice President and Chief Operations Officer of Celgene and Chief Executive Officer of CCT, be appointed to Alliqua’s board of directors as the Celgene designee in accordance with the Stock Purchase Agreement and, to the extent necessary to accommodate such appointment, that the Alliqua’s board of directors be increased by one member.

Pursuant to the Stock Purchase Agreement, in the event that Alliqua registers any securities for public sale, subject to certain customary exceptions, Celgene shall have the right to include the resale of the Celgene Shares and the Warrant Shares in the registration statement.

The Initial Warrant is exercisable at any time on or after November 18, 2013 and prior to 5:30 p.m., New York City time on November 16, 2018. The Initial Warrant contains provisions that protect its holder against dilution by adjustment of the exercise price upon the occurrence of certain events such as stock dividends, stock splits and other similar events. The Initial Warrant also permits Celgene to participate in any offering to all record holders of Common Stock on the same basis as if it had exercised such warrant prior to such offering.

Concurrently with the execution of the Stock Purchase Agreement, Anthrogenesis Corporation, a New Jersey corporation doing business as Celgene Cellular Therapeutics (“CCT”), a wholly-owned subsidiary of Celgene, entered into a License, Marketing and Development Agreement (the “License Agreement”) with Alliqua, pursuant to which CCT granted Alliqua an exclusive, royalty-bearing license in its intellectual property of certain placental based products, including ECMs, an extracellular matrix derived from the human placenta, and Biovance®, CCT’s proprietary wound coverings produced from decellularized, dehydrated human amniotic membrane, to develop and commercialize ECMs and Biovance® in the United States. A copy of the License Agreement is Exhibit 2 hereto.

The development and application of the intellectual property covered under the License Agreement will be managed by a Joint Steering Committee, composed of members from each of Alliqua and CCT. Following the commencement of commercial sales of the licensed products, Alliqua will pay CCT annual license fees, certain designated amounts when and if certain milestone events occur, as well as royalties on all sales of licensed products, with such amounts being variable and contingent on various factors.


On November 14, 2013, CCT also entered into a Supply Agreement (the “Supply Agreement”) with Alliqua, pursuant to which CCT shall supply Alliqua with Alliqua’s entire requirements of Biovance® for distribution and sale in the United States. A copy of the Supply Agreement is Exhibit 3 hereto. The Supply Agreement also provides that Alliqua and CCT will enter into a supply agreement for ECMs, on substantially the same terms as the Supply Agreement, prior to the anticipated date on which all regulatory approvals or clearances are acquired for the commercial sale of ECMs.

Celgene acquired the shares of the Common Stock reported on this Schedule 13D in furtherance of the purposes of the License Agreement and the Supply Agreement.

Celgene intends to review its investment on a regular basis and, as a result thereof, may at any time or from time to time determine, either alone or as part of a group, (a) to acquire additional securities of Alliqua, through open market purchases, privately negotiated transactions, amendments to its agreements with Alliqua, or otherwise, (b) to dispose of all or a portion of the securities of Alliqua owned by it in the open market, in privately negotiated transactions or otherwise, or (c) to take any other available course of action, which could involve one or more of the types of transactions or have one or more of the results described in the next paragraph of this Item 4. Any such acquisition or disposition or other transaction would be made in compliance with all applicable laws and regulations. Notwithstanding anything contained herein, Celgene specifically reserves the right to change its intention with respect to any or all of such matters, including its relationship with Alliqua. In reaching any decision as to its course of action (as well as to the specific elements thereof), Celgene currently expects that it would take into consideration a variety of factors, including, but not limited to, the following: Alliqua’s business and prospects; other developments concerning Alliqua and its businesses generally; other business opportunities available to Celgene; changes in law and government regulations; general economic conditions; and money and stock market conditions, including the market price of the securities of Alliqua.

Except as set forth above, Celgene does not have any present plans which relate to or would result in:

 

  (a) The acquisition by any person of additional securities of Alliqua, or the disposition of securities of Alliqua;

 

  (b) An extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving Alliqua or any of its subsidiaries;

 

  (c) A sale or transfer of a material amount of assets of Alliqua or any of its subsidiaries;

 

  (d) Any change in the present board of directors or management of Alliqua, including any plans or proposals to change the number or term of directors or to fill any existing vacancies on the board;

 

  (e) Any material change in the present capitalization or dividend policy of Alliqua;

 

  (f) Any other material change in Alliqua’s business or corporate structure;

 

  (g) Changes in Alliqua’s charter, bylaws or instruments corresponding thereto or other actions which may impede the acquisition of control of Alliqua by any person;

 

  (h) Causing a class of securities of Alliqua to be delisted from a national securities exchange or to cease to be authorized to be quoted in an inter-dealer quotation system of a registered national securities association;


  (i) A class of equity securities of Alliqua becoming eligible for termination of registration pursuant to Section 12(g)(4) of the Securities Exchange Act of 1934, as amended; or

 

  (j) Any action similar to any of those enumerated above.

 

Item 5. Interest in Securities of the Issuer.

(a), (b) and (c) — The information contained on the cover pages to this Schedule 13D and the information set forth or incorporated in Items 2, 3, 4 and 6 hereof are incorporated herein by reference.

As of November 18, 2013, following the consummation of the transactions contemplated by the Stock Purchase Agreement and after taking into account additional issuances of Common Stock and warrants to purchase Common Stock on such date to persons other than Celgene, Celgene beneficially owns 2,508,711 shares of Common Stock (comprised of the Common Shares and the Initial Warrant Shares), representing approximately 20.8% of the shares of Common Stock outstanding as of such date. The above percentage interest is determined based on 12,036,128 shares of Common Stock outstanding as of November 18, 2013, which includes (i) 11,199,891 shares of Common Stock outstanding as of November 25,2013, as reported by Alliqua to Celgene on such date and (ii) 836,237 shares of Common Stock underlying the Initial Warrant that is exercisable immediately.

Each of the Common Stock amounts set forth in the immediately preceding paragraph have been adjusted to give effect to the Reverse Stock Split.

(d) Not applicable.

(e) Not applicable.

 

Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer.

The information set forth or incorporated in Items 4 hereof is incorporated herein by reference in response to this Item 6.

Dr. Jerome B. Zeldis, who is Chief Executive Officer of Celgene Global Health and Chief Medical Officer of Celgene, is the chairman of the board of directors of Alliqua. Dr. Zeldis has served on the board of directors of Alliqua since May of 2012, prior to the negotiation of the transactions contemplated by the Stock Purchase Agreement, the License Agreement and the Supply Agreement. Dr. Zeldis is not a member of the Joint Steering Committee. Dr. Zeldis is a party to an indemnification agreement with Alliqua, pursuant to which Alliqua may be required to indemnify Dr. Zeldis for certain expenses, including attorneys’ fees, judgments, fines and settlement amounts, incurred by Dr. Zeldis in any action or proceeding arising out of his service as one of Alliqua’s directors. A form of this agreement (the “Indemnification Agreement”) is Exhibit 4 hereto.

It is expect that Mr. Karsen, if appointed to the board of directors of Alliqua, will upon such appointment enter into an indemnification agreement with Alliqua substantially in the form of the Indemnification Agreement.

Other than as described in Items 3, 4 and 5, this Item 6, and the agreements set forth as exhibits hereto, to Celgene’s knowledge, there are no contracts, arrangements, understandings or relationships (legal or otherwise) among the persons named in Item 2 and between such persons and any person with respect to any securities of Alliqua.


Item 7. Material to Be Filed as Exhibits.

The following documents are filed as exhibits:

 

  Exhibit 1 –    Stock Purchase Agreement, dated as of February 14, 2013, between Celgene and Alliqua

†Exhibit 2 –

   License, Marketing and Development Agreement, dated as of February 14, 2013, between CCT and Alliqua

†Exhibit 3 –

   Supply Agreement, dated as of February 14, 2013, between CCT and Alliqua

  Exhibit 4 –

   Form of Indemnification Agreement between Alliqua and its directors and officers (incorporated by reference to Exhibit 10.2 to the Report on Form 8-K filed by Alliqua on January 5, 2011)

 

Certain portions of this exhibit have been omitted and filed separately with the Securities and Exchange Commission under a confidential treatment request pursuant to Rule 24b-2 of the Securities Exchange Act of 1934.


SIGNATURE

After reasonable inquiry and to the best of its knowledge and belief, the undersigned certifies that the information set forth in this statement is true, complete and correct.

 

    CELGENE CORPORATION
Date: November 27, 2013     By:   /s/ Perry Karsen
      Perry Karsen
     

Executive Vice President and Chief Operations Officer


EXHIBIT INDEX

 

 

Exhibit

  

Description

  1

   Stock Purchase Agreement, dated as of November 14, 2013, between Celgene and Alliqua

†2

   License, Marketing and Development Agreement, dated as of November 14, 2013, between CCT and Alliqua

†3

   Supply Agreement, dated as of November 14, 2013, between CCT and Alliqua

  4

   Form of Indemnification Agreement between Alliqua and its directors and officers (incorporated by reference to Exhibit 10.2 to the Report on Form 8-K filed by Alliqua on January 5, 2011)

 

Certain portions of this exhibit have been omitted and filed separately with the Securities and Exchange Commission under a confidential treatment request pursuant to Rule 24b-2 of the Securities Exchange Act of 1934.


SCHEDULE A

Name, business address, present principal occupation or employment and place of citizenship of the directors and executive officers of Celgene Corporation

The name, business address and present principal occupation or employment of each of the directors and executive officers of Celgene Corporation are set forth below. The business address of each director and executive officer is c/o 86 Morris Avenue, Summit, New Jersey 07093. Unless otherwise indicated, each director and executive officer is a citizen of the United States.

CELGENE CORPORATION — BOARD OF DIRECTORS

 

Name And Position

  

Present Principal Occupation Or Employment

Robert J. Hugin

Chairman of the Board, President and Chief Executive Officer

   Chairman of the Board, President and Chief Executive Officer of Celgene Corporation

Richard W. Barker, D.Phil.

Director (Citizen of the United Kingdom)

   Director of the Centre for Accelerating Medical Innovations; a member of the Board of iCO Therapeutics, Inc.; Chairman of Stem Cells for Safer Medicine; Founder and Chairman of the Athenaeum Group; Senior Advisor of Aegate, Ltd.

Michael D. Casey

Director

   Formerly Chairman, President, Chief Executive Officer and a director of Matrix Pharmaceutical, Inc.

Carrie S. Cox

Director

   Chairman of the Board of Directors and Chief Executive Officer of Humacyte, Inc.

Rodman L. Drake

Director

   Formerly Managing Director of Baringo Capital, LLC

Michael A. Friedman, M.D.

Director

   Chief Executive Officer of City of Hope

Gilla Kaplan, Ph.D.

Director

   Head of the Laboratory of Mycobacterial Immunity and Pathogenesis at The Public Health Research Institute Center at the University of Medicine and Dentistry of New Jersey in Newark, New Jersey

James J. Loughlin

Director

   Formerly National Director of the Pharmaceuticals Practice at KPMG LLP

Ernest Mario, Ph.D.

Director

   Chief Executive Officer of Capnia, Inc.


CELGENE CORPORATION — EXECUTIVE OFFICERS

 

Name

  

Title

Robert J. Hugin    Chairman of the Board, President and Chief Executive Officer
Jacqualyn A. Fouse, Ph.D.    Executive Vice President and Chief Financial Officer
Mark. J. Alles    Executive Vice President and Global Head, Hematology and Oncology
Thomas O. Daniel, M.D.    Executive Vice President and President, Research and Early Development
Perry A. Karsen    Executive Vice President, Chief Operations Officer
Lawrence V. Stein    Executive Vice President, General Counsel and Corporate Secretary
EX-99.1 2 d636870dex991.htm EX-99.1 EX-99.1

Exhibit 1

 

 

 

STOCK PURCHASE AGREEMENT

BY AND BETWEEN

CELGENE CORPORATION

AND

ALLIQUA, INC.

NOVEMBER 14, 2013

 

 

 


TABLE OF CONTENTS

 

         PAGE  

ARTICLE 1 DEFINITIONS

     1   

ARTICLE 2 PURCHASE AND SALE

     6   

2.1

 

Closing

     6   

2.2

 

Adjustments in Share Numbers and Prices

     6   

2.3

 

Reserve Shares

     6   

2.4

 

Concurrent Issuances

     6   

2.5

 

Closing Deliveries

     6   

ARTICLE 3 REPRESENTATIONS AND WARRANTIES

     7   

3.1

 

Representations and Warranties of the Company

     7   

3.2

 

Representations and Warranties of the Investor

     13   

ARTICLE 4 OTHER AGREEMENTS OF THE PARTIES

     16   

4.1

 

Filing of Reports

     16   

4.2

 

Board Representation and Observer Rights

     16   

4.3

 

Right Of First Offer

     17   

4.4

 

Listing of Shares

     17   

4.5

 

Use of Proceeds

     17   

4.6

 

Lock-Up

     17   

4.7

 

Public Statements

     18   

4.8

 

Additional Financing

     18   

ARTICLE 5 CONDITIONS

     19   

5.1

 

Conditions Precedent to the Obligations of the Investor

     19   

5.2

 

Conditions Precedent to the Obligations of the Company

     19   

ARTICLE 6 REGISTRATION RIGHTS

     20   

6.1

 

Piggy-Back Registration Rights

     20   

6.2

 

Registration Expenses

     21   

ARTICLE 7 INDEMNIFICATION

     21   

7.1

 

Indemnification by the Company

     21   

7.2

 

Indemnification by Investor

     22   

7.3

 

Conduct of Indemnification Proceedings

     23   

ARTICLE 8 GENERAL PROVISIONS

     24   

8.1

 

Termination

     24   

8.2

 

Fees and Expenses

     25   

8.3

 

Entire Agreement

     25   

8.4

 

Notices

     25   

 

i


8.5

 

Amendments; Waivers

     25   

8.6

 

Construction

     25   

8.7

 

Successors and Assigns

     25   

8.8

 

No Third-Party Beneficiaries

     26   

8.9

 

Governing Law; Venue; Waiver of Jury Trial

     26   

8.10

 

Survival

     27   

8.11

 

Execution

     27   

8.12

 

Severability

     27   

8.13

 

Replacement of Certificates

     27   

8.14

 

Remedies

     27   

Exhibit A:

 

Form of Warrants

  

Exhibit B:

 

Opinion of Company Counsel

  

 

ii


STOCK PURCHASE AGREEMENT

THIS STOCK PURCHASE AGREEMENT (this “Agreement”), dated as of November 14, 2013, by and between Alliqua, Inc., a Florida corporation (the “Company”), and Celgene Corporation, a Delaware corporation (“Investor”).

PREAMBLE

A. Contemporaneously with the execution and delivery of this Agreement, the Company and Anthrogenesis Corporation, a Delaware corporation doing business as Celgene Cellular Therapeutics (“CCT”), are entering into that certain License, Marketing and Development Agreement, dated as of the date hereof (the “License Agreement”), and that certain Supply Agreement, dated as of the date hereof, relating to, among other things, the development and commercialization by the Company of certain CCT products; and

B. The Investor wishes to purchase, and the Company wishes to sell, upon the terms and conditions stated in this Agreement, (a) that aggregate number of shares of the common stock, par value $0.001 per share, of the Company (the “Common Stock”), which is the nearest number of whole shares of Common Stock determined by dividing (x) $6,000,000 by (y) $0.082; which aggregate amount of shares shall collectively be referred to herein as the “Common Shares”, and (b) five year warrants to purchase 36,585,366 shares of Common Stock at an exercise price of $0.13 per share (the “Initial Warrants”) in the form attached hereto as Exhibit A.

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained in this Agreement, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Company and the Investor agree as follows:

ARTICLE 1

DEFINITIONS

In addition to the terms defined elsewhere in this Agreement, the following terms have the meanings indicated:

Affiliate” means, with respect to a Person, any Person that controls, is controlled by or is under common control with such first Person. For purposes of this definition only, “control” means (a) to possess, directly or indirectly, the power to direct the management or policies of a Person, whether through ownership of voting securities, by contract relating to voting rights or corporate governance or otherwise, or (b) to own, directly or indirectly, fifty percent (50%) or more of the outstanding securities or other ownership interest of such Person. For the purposes of this Agreement, neither Party shall be considered an Affiliate of the other, and the Affiliates of each Party shall not be considered Affiliates of the other Party or of any of such other Party’s Affiliates.

Agreement” has the meaning set forth in the Preamble.

Business Day” means any day (other than a Saturday, Sunday or a legal holiday) on which banks are open for general business in New York, New York.


Board” has the meaning set forth in Section 4.2.

Additional Warrants” has the meaning set forth in Section 4.8.

Agreement” has the meaning set forth in the Preamble.

CCT” has the meaning set forth in the Preamble.

Closing” means the closing of the purchase and sale of the Common Shares pursuant to Section 2.1.

Closing Date” means the date and time of the Closing which, subject to the satisfaction or waiver of the conditions set forth in Article 5, shall take place at 9:00 a.m. EST on the date that is five (5) Business Days following the date hereof, or on such other date and time as is mutually agreed to by the Company and the Investor.

“Company” has the meaning set forth in the Preamble.

Company Counsel” means Lowenstein Sandler LLP, counsel to the Company.

Common Shares” has the meaning set forth in the Preamble.

Common Stock” has the meaning set forth in the Preamble.

Competitor” means any Person that, during the Term of the License Agreement, Commercializes or Develops a Competing Product. For purposes of this definition, the terms “Commercializes”, “Competing Product”, Develops”, and “Term” shall have the meanings ascribed to such terms in the License Agreement.

Convertible Securities” means any stock or securities (other than Options) convertible into or exercisable or exchangeable for Common Stock.

Disclosure Materials” has the meaning set forth in Section 3.1(g).

Equity Securities” means any all shares of Common Stock and any securities of the Company convertible into, or exchangeable or exercisable for, such shares, and options, warrants or other rights to acquire such shares.

Equity Financing” has the meaning set forth in Section 4.8.

Exchange Act” means the Securities Exchange Act of 1934, as amended.

Excluded Securities” means Equity Securities issued in connection with: (a) a grant to any existing or prospective consultants, employees, officers or directors pursuant to any stock option, employee stock purchase or similar equity-based plans or other compensation agreements; (b) the conversion or exchange of any securities of the Company into shares of

 

2


Common Stock, or the exercise of any options, warrants or other rights to acquire such shares; (c) any acquisition by the Company of the stock, assets, properties or business of any Person; (d) any merger, consolidation or other business combination involving the Company; (e) a bona fide firm commitment underwritten public offering; (f) any stock split, stock dividend or any similar recapitalization, or (g) up to an aggregate of $6,000,000 of Common Stock issued to Persons other than the Investor and its Affiliates within 30 days of the date hereof, on terms and conditions no less favorable to the Company than those offered to the Investor hereunder.

First Commercial Sale” means the First Commercial Sale of ECMs. For purposes of this definition, the terms “First Commercial Sale”, and “ECMs”, shall have the meanings ascribed to such terms in the License Agreement.

GAAP” has the meaning set forth in Section 3.1(g).

Indemnified Party” has the meaning set forth in Section 7.3.

Indemnifying Party” has the meaning set forth in Section 7.3.

Initial Warrants” has the meaning set forth in the Preamble.

Intellectual Property Rights” has the meaning set forth in Section 3.1(q).

Investor” has the meaning set forth in the Preamble.

Investor Director” has the meaning set forth in Section 4.2.

Investor Observer” has the meaning set forth in Section 4.2.

knowledge” of the Company means with respect to any statement made to the knowledge of the Company, that the statement is based upon the actual knowledge, after reasonable due inquiry, of any executive officer of the Company as of the date of this Agreement.

License Agreement” has the meaning set forth in the Preamble.

Lien” means any lien, charge, claim, security interest, encumbrance, right of first refusal or other restriction.

Losses” means any and all losses, claims, damages, liabilities, settlement costs and expenses, including, without limitation, reasonable attorneys’ fees.

Material Adverse Effect” means (i) a material adverse effect on the results of operations, assets, business or financial condition of the Company and the Subsidiaries taken as a whole on a consolidated basis or (ii) material and adverse effect on the legality, validity or enforceability of this Agreement, provided, that none of the following alone shall be deemed, in and of itself, to constitute a Material Adverse Effect: (x) a change in the market price or trading

 

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volume of the Common Stock, (y) changes in general economic conditions or changes affecting the industry in which the Company operates generally (as opposed to Company-specific changes) so long as such changes do not have a disproportionate effect on the Company and the Subsidiaries taken as a whole or (z) effects resulting from or relating to the announcement or disclosure of the sale of the Common Shares or other transactions contemplated by, or being taken in connection with, this Agreement.

Material Permits” has the meaning set forth in Section 3.1(r).

New Securities” has the meaning set forth in Section 4.3.

Options” means any outstanding rights, warrants or options to subscribe for or purchase Common Stock or Convertible Securities.

Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, a government or any department or agency thereof and any other legal entity.

Proceeding” means an action, claim, suit, investigation or proceeding (including, without limitation, a partial proceeding, such as a deposition), whether commenced or threatened in writing.

Prospectus” means the prospectus included in the Registration Statement (including, without limitation, a prospectus that includes any information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated under the Securities Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by the Registration Statement, and all other amendments and supplements to the Prospectus including post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference in such Prospectus.

Purchase Price” means the aggregate purchase price to be paid by the Investor for the Common Shares determined by multiplying (i) the number of shares of Common Stock comprising the Common Shares by (ii) $0.082.

Registrable Securities” means the Common Shares and the Warrant Shares (but with respect to the Warrant Shares issuable under the Additional Warrant, from and after the issuance of the Additional Warrant), together with any securities issued or issuable upon any stock split, dividend or other distribution, recapitalization or similar event with respect to the foregoing.

Registration Statement” means any registration statement filed under Article VI, including (in each case) the Prospectus, amendments and supplements to such registration statement or Prospectus, including pre- and post-effective amendments, all exhibits thereto, and all material incorporated by reference or deemed to be incorporated by reference in such registration statement.

 

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Rule 144,” “Rule 415,” and “Rule 424” means Rule 144, Rule 415 and Rule 424, respectively, promulgated by the SEC pursuant to the Securities Act, as such Rules may be amended from time to time, or any similar rule or regulation hereafter adopted by the SEC having substantially the same effect as such Rule.

SEC” means the United States Securities and Exchange Commission.

SEC Reports” has the meaning set forth in Section 3.1(g).

Securities Act” means the Securities Act of 1933, as amended.

Shares” means shares of the Company’s Common Stock.

Short Sales” means all “short sales” as defined in Rule 200 promulgated under Regulation SHO under the Exchange Act and all types of direct and indirect stock pledges, forward sale contracts, options, puts, calls, swaps, derivatives and similar arrangements.

Subsidiary” means any entity in which the Company, directly or indirectly, owns capital stock or holds an equity or similar interest.

Supply Agreement” has the meaning set forth in the Preamble.

Trading Day” means (i) a day on which the Common Stock is traded on a Trading Market (other than the OTC Bulletin Board), or (ii) if the Common Stock is not listed or quoted on a Trading Market (other than the OTC Bulletin Board), a day on which the Common Stock is traded in the over-the-counter market, as reported by the OTC Bulletin Board, or (iii) if the Common Stock is not listed or quoted on any Trading Market, a day on which the Common Stock is quoted in the over-the-counter market as reported by the Pink Sheets LLC (or any similar organization or agency succeeding to its functions of reporting prices); provided, that in the event that the Common Stock is not listed or quoted as set forth in (i), (ii) and (iii) hereof, then Trading Day shall mean a Business Day.

Trading Market” means whichever of the New York Stock Exchange, the NYSE/Amex, the NASDAQ Global Select Market, the NASDAQ Global Market, the NASDAQ Capital Market or OTC Bulletin Board on which the Common Stock is listed or quoted for trading on the date in question.

Transaction” has the meaning set forth in Section 3.2(h).

Transaction Documents” means this Agreement, the License Agreement, the Supply Agreement, the Warrants and the schedules and exhibits referred to herein.

Transfer Agent” means Action Stock Transfer Corporation, or any successor transfer agent for the Company.

Warrant Shares” has the meaning set forth in Section 2.3.

 

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Warrants” has the meaning set forth in Section 4.8.

ARTICLE 2

PURCHASE AND SALE

2.1 Closing. Subject to the terms and conditions set forth in this Agreement, at the Closing the Company shall issue and sell to the Investor, and the Investor shall purchase from the Company, (a) the Common Shares at a purchase price of $0.082 per Common Share, and (b) the Initial Warrants. The date and time of the Closing shall be 11:00 a.m., New York City Time, on the Closing Date. The Closing shall take place at the offices of Company Counsel.

2.2 Adjustments in Share Numbers and Prices. In the event of any stock split, subdivision, dividend or distribution payable in shares of Common Stock (or other securities or rights convertible into, or entitling the holder thereof to receive directly or indirectly shares of Common Stock), combination or other similar recapitalization or event occurring after the date hereof, each reference in this Agreement to the number of Common Shares and the price per Common Share shall be amended to appropriately account for such event.

2.3 Reserve Shares. The Company has authorized and has reserved and covenants to continue to reserve, free of preemptive rights and other similar contractual rights of stockholders, a number of shares of Common Stock equal to the number of shares of Common Stock issuable upon the exercise of the Warrants (the “Warrant Shares”).

2.4 Concurrent Issuances. The Company shall not, within 30 calendar days of the execution of this Agreement, issue any New Securities to any person at a lower per share purchase price than the per share price to be paid by the Investor pursuant to this Agreement, or on other terms and conditions more favorable to such person than the terms and conditions applicable to the Investor pursuant to this Agreement.

2.5 Closing Deliveries.

(a) At the Closing, the Company shall deliver or cause to be delivered to the Investor the following:

(i) a copy of the Company’s irrevocable instructions to the Transfer Agent instructing the Transfer Agent to promptly deliver one or more stock certificates, free and clear of all restrictive and other legends (except for a customary legend to the effect that the Common Shares have not been registered under the Securities Act), evidencing the Common Shares, registered in the name of the Investor;

(ii) a legal opinion of Company Counsel, in the form of Exhibit B, executed by such counsel and delivered to the Investor.

(b) At the Closing, the Investor shall deliver or cause to be delivered to the Company the Purchase Price in United States dollars by wire transfer to an account designated in writing to the Investor by the Company for such purpose.

 

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ARTICLE 3

REPRESENTATIONS AND WARRANTIES

3.1 Representations and Warranties of the Company. The Company hereby represents and warrants to the Investor that, except as set forth in the SEC Reports or in the Schedules delivered concurrently herewith:

(a) Organization and Qualification. The Company is an entity duly organized, validly existing and in good standing under the laws of the State of Florida, with the requisite legal authority to own and use its properties and assets and to carry on its business as currently conducted. Each Subsidiary is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or formation. Neither the Company nor any Subsidiary is in violation of any of the provisions of its respective certificate or articles of incorporation, formation, bylaws or other organizational or charter documents. The Company and each Subsidiary is duly qualified to do business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.

(b) Subsidiaries. The Company owns or controls, directly or indirectly, all of the capital stock or comparable equity interests of each Subsidiary free and clear of any Lien, and all issued and outstanding shares of capital stock or comparable equity interest of each Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive and similar rights; and the Company has no Subsidiaries other than the following corporations, partnerships, limited liability partnerships, limited liability companies, associations or other entities: (i) AquaMed Technologies, Inc., a Delaware corporation, (ii) Alliqua Biomedical, Inc. a Delaware corporation, and (iii) Hepalife Biosystems, Inc. a Nevada corporation.

(c) Authorization; Enforcement. The Company has the requisite corporate authority to enter into and to consummate the transactions contemplated by this Agreement and each of the other Transaction Documents to which it is a party and otherwise to carry out its obligations hereunder and thereunder including the issuance and sale of the Common Shares and Warrants. The execution and delivery by the Company of this Agreement and each of the other Transaction Documents to which it is party and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action on the part of the Company and no further consent or action is required by the Company, its Board of Directors or its stockholders. Each of the Transaction Documents to which to Company is party to has been duly executed by the Company and is the valid and binding obligation of the Company enforceable against the Company in accordance with its

 

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terms, except (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, and (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies.

(d) No Conflicts. The execution, delivery and performance by the Company of this Agreement and the other Transaction Documents it is party to and the consummation by the Company of the transactions contemplated hereby and thereby do not, and will not, (i) conflict with or violate any provision of the Company’s certificate or articles of incorporation, bylaws or other organizational or charter documents, (ii) in any material respect, conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company debt or otherwise) or other understanding to which the Company is a party or by which any property or asset of the Company is bound, or affected, or (iii) in any material respect, result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company is subject (including, assuming the accuracy of the representations and warranties of the Investor set forth in Section 3.2 hereof, federal and state securities laws and regulations and the rules and regulations of any self-regulatory organization to which the Company or its securities are subject, including all applicable Trading Markets), or by which any property or asset of the Company is bound or affected, except in the case of clauses (ii) and (iii) such as would not, individually or in the aggregate, have a Material Adverse Effect. Neither the Company nor any Subsidiary is as of the date hereof, nor after giving effect to the transactions contemplated hereby to occur at the Closing, will be Insolvent (as defined below). For purposes of this Section 3.1(d), “Insolvent” means, with respect to the Company or any Subsidiary (i) the present fair saleable value of such Person’s assets is less than the amount required to pay such Person’s debts and liabilities, (ii) such Person is unable to pay its debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured, (iii) such Person intends to incur or believes that it will incur debts that would be beyond its ability to pay as such debts mature or (iv) such Person has unreasonably small capital with which to conduct the business in which it is engaged, as such business is now conducted and is proposed to be conducted.

(e) The Common Shares. The Common Shares are duly authorized and, when issued and paid for in accordance with this Agreement, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens (other than restrictions on transfer set forth in this Agreement or imposed by applicable securities laws) and will not be subject to preemptive or similar rights of stockholders (other than those imposed by the Investor). When the Warrant Shares are issued in accordance with the terms of the Warrants, such shares will be duly authorized, validly issued, fully paid and nonassessable, free and clear of all Liens (other than restrictions on transfer set forth in this Agreement or imposed by applicable securities laws) and will not be subject to preemptive or similar rights of stockholders (other than those imposed by the Investor).

 

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(f) Capitalization. The aggregate number of shares and type of all authorized, issued and outstanding classes of capital stock, Options and other securities of the Company (whether or not presently convertible into or exercisable or exchangeable for shares of capital stock of the Company) is set forth on Schedule 3.1(f)(i). Schedule 3.1(f)(ii) sets forth the aggregate number of shares and type of all authorized, issued and outstanding classes of capital stock, Options and other securities of the Company (whether or not presently convertible into or exercisable or exchangeable for shares of capital stock of the Company) after taking into account the consummation of the transactions contemplated to occur on the Closing. All outstanding shares of capital stock are duly authorized, validly issued, fully paid and nonassessable and have been issued in compliance in all material respects with all applicable securities laws. Except as set forth on Schedule 3.1(f), the Company does not have outstanding any Options, script rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for, nor has it entered into any agreement giving any Person any right to subscribe for or acquire, any shares of Common Stock, or securities or rights convertible or exchangeable into shares of Common Stock. Except for customary adjustments as a result of stock dividends, stock splits, combinations of shares, reorganizations, recapitalizations, reclassifications or other similar events, there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) and the issuance and sale of the Common Shares will not obligate the Company to issue shares of Common Stock or other securities to any Person (other than the Investor) and will not result in a right of any holder of securities to adjust the exercise, conversion, exchange or reset price under such securities.

(g) SEC Reports; Financial Statements. The Company (i) has filed all reports required to be filed by it under the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the 12 months preceding the date hereof on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension, and (ii) has filed all reports required to be filed by it under the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the two years preceding the date hereof. Such reports required to be filed by the Company under the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, together with the exhibits thereto and the documents incorporated by reference therein, being collectively referred to herein as the “SEC Reports” and, together with this Agreement and the Schedules to this Agreement, the “Disclosure Materials”. As of their respective dates (or, if amended or superseded by a filing prior to the Closing Date, then on the date of such filing), the SEC Reports filed by the Company complied in all material respects with the requirements of the Securities Act and the Exchange Act and the rules and regulations of the SEC promulgated thereunder, and none of the SEC Reports, when filed (or, if amended or superseded by a filing prior to the date hereof, then on the date of such filing) by the Company, contained any untrue statement of a material fact or omitted to state a material fact

 

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required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The financial statements of the Company included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the SEC with respect thereto as in effect at the time of filing (or, if amended or superseded by a filing prior to the Closing Date, then on the date of such filing). Such financial statements have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis during the periods involved (“GAAP”), except as may be otherwise specified in such financial statements, the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP or may be condensed or summary statements, and fairly present in all material respects the consolidated financial position of the Company and the Subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, year-end audit adjustments. All material agreements to which the Company or any Subsidiary is a party or to which the property or assets of the Company or any Subsidiary are subject are included as part of or identified in the SEC Reports, to the extent such agreements are required to be included or identified pursuant to the rules and regulations of the SEC.

(h) Material Changes; Undisclosed Events, Liabilities or Developments; Solvency. Since the date of the latest audited financial statements included within the SEC Reports, except as specifically disclosed in the SEC Reports or as set forth in Schedule 3.1(h), (i) there has been no event, occurrence or development that, individually or in the aggregate, has had or would reasonably be expected to result in a Material Adverse Effect, (ii) neither the Company nor any Subsidiary has incurred any material liabilities other than (A) trade payables and accrued expenses incurred in the ordinary course of business consistent with past practice and (B) liabilities not required to be reflected in the Company’s financial statements pursuant to GAAP or required to be disclosed in filings made with the SEC, (iii) the Company has not altered materially its method of accounting or changed its auditors, (iv) the Company has not declared or made any dividend or distribution of cash or other property to its stockholders, in their capacities as such, or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock (other than in connection with repurchases of unvested stock issued to employees of the Company), and (v) the Company has not issued any equity securities to any officer, director or Affiliate, except pursuant to existing Company stock-based plans. Neither the Company nor any Subsidiary has taken any steps to seek protection pursuant to any bankruptcy law nor does the Company have any knowledge or reason to believe that its creditors intend to initiate involuntary bankruptcy proceedings or any actual knowledge of any fact which would reasonably lead a creditor to do so.

(i) Absence of Litigation. There is no action, suit, claim, or Proceeding, or, to the Company’s knowledge, inquiry or investigation, before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the Company, threatened against or affecting the Company or any Subsidiary that would, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

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(j) Compliance. Except as would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect, (i) neither the Company nor any Subsidiary is in default under or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by the Company or any Subsidiary under), nor has the Company or any Subsidiary received written notice of a claim that it is in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound (whether or not such default or violation has been waived), (ii) neither the Company nor any Subsidiary is in violation of any order of any court, arbitrator or governmental body, and (iii) neither the Company nor any Subsidiary is or has been in violation of any statute, rule or regulation of any governmental authority. The Company has not taken, in violation of applicable Law, any action designed to or that would have reasonably expected to cause or result in stabilization or manipulation of the price of the Common Stock to facilitate the sale of the Common Shares.

(k) Placement Agent’s Fees. The Company shall be responsible for the payment of any placement agent’s fees, financial advisory fees, or brokers’ commission (other than for persons engaged by the Investor or its Affiliates) relating to or arising out of the issuance of the Common Shares to the Investor pursuant to this Agreement. The Company shall pay, and hold the Investor harmless against, any liability, loss or expense (including, without limitation, reasonable attorney’s fees and out-of-pocket expenses) arising in connection with any such claim for fees arising out of the issuance of the Common Shares pursuant to this Agreement.

(l) Private Placement; Investment Company; U.S. Real Property Holding Corporation. Neither the Company nor any of its Affiliates nor, any Person acting on the Company’s behalf has, directly or indirectly, at any time within the past six months, made any offer or sale of any security or solicitation of any offer to buy any security under circumstances that would (i) eliminate the availability of the exemption from registration under Regulation D under the Securities Act in connection with the offer and sale by the Company of the Common Shares as contemplated hereby or (ii) cause the offering of the Common Shares pursuant hereto to be integrated with prior offerings by the Company for purposes of any applicable law, regulation or stockholder approval provisions, including, without limitation, under the rules and regulations of any Trading Market. Assuming the accuracy of the representations and warranties of the Investor set forth in Section 3.2, no registration under the Securities Act is required for the offer and sale of the Common Shares by the Company to the Investor as contemplated hereby. The Company is not required to be registered as, and is not an Affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940, as amended. The Company is not required to be registered as a United States real property holding corporation within the meaning of the Foreign Investment in Real Property Tax Act of 1980.

(m) Registration Rights. The Company has not granted or agreed to grant to any Person any rights (including “piggy-back” registration rights) to have any securities of the Company registered with the SEC or any other governmental authority that have not expired or been satisfied or waived.

 

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(n) Application of Takeover Protections. The Company and its Board of Directors have taken all necessary action, if any, including under the Florida Business Corporation Act, to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the Company’s charter documents or the laws of its state of incorporation that is or could become applicable to the Investor or its Affiliates as a result of the Investor and the Company fulfilling their obligations or exercising their rights under the Transaction Documents, including, without limitation, as a result of the Company’s issuance of the Common Shares to the Investor and the Investor’s ownership thereof.

(o) Disclosure. All written disclosure provided by the Company to the Investor regarding the Company, its business and the transactions contemplated hereby are true and correct in all material respects and do not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. To the Company’s knowledge, no event or circumstance has occurred or information exists with respect to the Company or any Subsidiary or their respective business, properties, operations or financial condition, which, under applicable law, rule or regulation, requires public disclosure or announcement by the Company or their but which has not been so publicly announced or disclosed.

(p) Transactions With Affiliates and Employees. Except as set forth on Schedule 3.1(p), none of the officers, directors or employees of the Company is presently a party to any transaction with the Company that would be required to be reported on Form 10-K by Item 13 thereof pursuant to Regulation S-K Item 404(a) (other than for ordinary course services as employees, officers or directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any such officer, director or employee or, to the Company’s knowledge, any corporation, partnership, trust or other entity in which any such officer, director, or employee has a substantial interest or is an officer, director, trustee or partner.

(q) Patents and Trademarks. The Company and each Subsidiary owns, or possesses adequate rights or licenses to use, all trademarks, trade names, service marks, service mark registrations, service names, patents, patent rights, copyrights, inventions, licenses, approvals, governmental authorizations, trade secrets and other intellectual property rights (“Intellectual Property Rights”) necessary to conduct their respective businesses as now conducted. The Company does not have any knowledge of any infringement by the Company or any Subsidiary of Intellectual Property Rights of others and there is no claim, action or proceeding being made or brought, or to the knowledge of the Company, being threatened, against the Company or any Subsidiary regarding its Intellectual Property Rights.

 

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(r) Regulatory Permits. The Company and each Subsidiary possesses all certificates, authorizations and permits issued by the appropriate federal, state, local or foreign regulatory authorities necessary to conduct their respective businesses as presently conducted and described in the SEC Reports (“Material Permits”), except where the failure to possess such permits would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect, and neither the Company nor any Subsidiary has received any written notice of proceedings relating to the revocation or modification of any Material Permit.

(s) Employee Relations. Neither the Company nor any Subsidiary is a party to any collective bargaining agreement or employs any member of a union. The Company believes that its relations with its employees is as disclosed in the SEC Reports. During the period covered by the SEC Reports, no executive officer or key employee of the Company or any Subsidiary has notified the Company or any Subsidiary that such officer or key employee intends to leave the Company or a Subsidiary, as applicable, or otherwise terminate such officer’s or key employee’s employment with the Company or a Subsidiary, as applicable. To the knowledge of the Company, no executive officer or key employee of the Company or any Subsidiary is in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement, non-competition agreement, or any other contract or agreement or any restrictive covenant, and the continued employment of each such executive officer or key employee does not subject the Company or any Subsidiary to any liability with respect to any of the foregoing matters.

(t) Labor Matters. The Company and each Subsidiary is in compliance in all material respects with all federal, state, local and foreign laws and regulations respecting labor, employment and employment practices and benefits, terms and conditions of employment and wages and hours, except where failure to be in compliance would not, either individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.

(u) Listing and Maintenance Requirements. The Common Stock is registered pursuant to Section 12(b) or 12(g) of the Exchange Act, and the Company has taken no action designed to terminate the registration of the Common Stock under the Exchange Act nor has the Company received any notification that the SEC is contemplating terminating such registration. The Company is in compliance with applicable OTCQB trading qualification requirements. There are no proceedings pending or, to the Company’s knowledge, threatened against the Company relating to the Common Stock’s continued qualification for trading on the OTCQB market.

3.2 Representations and Warranties of the Investor. The Investor hereby represents and warrants to the Company as follows:

(a) Organization; Authority. The Investor is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware with the requisite corporate power and authority to enter into and to consummate the transactions

 

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contemplated by this Agreement and otherwise to carry out its obligations hereunder. The purchase by the Investor of the Common Shares and Warrants hereunder has been duly authorized by all necessary corporate action on the part of the Investor. This Agreement has been duly executed and delivered by the Investor and constitutes the valid and binding obligation of the Investor, enforceable against it in accordance with its terms, except (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, and (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies.

(b) No Public Sale or Distribution. The Investor is acquiring the Common Shares and Warrants for its own account and not with a view towards, or for resale in connection with, the public sale or distribution thereof, except pursuant to sales registered under the Securities Act or under an exemption from such registration and in compliance with applicable federal and state securities laws, and the Investor does not have a present arrangement to effect any distribution of the Common Shares or Warrants to or through any person or entity; provided, however, that by making the representations herein, such Investor does not agree to hold any of the Common Shares or Warrant Shares for any minimum or other specific term and reserves the right to dispose of the Common Shares or Warrant Shares at any time in accordance with or pursuant to a registration statement or an exemption under the Securities Act.

(c) Investor Status. At the time the Investor was offered the Common Shares and Warrants, it was, and at the date hereof it is an “accredited investor” as defined in Rule 501(a) under the Securities Act or a “qualified institutional buyer” as defined in Rule 144A(a) under the Securities Act. Such Investor is not a registered broker dealer registered under Section 15(a) of the Exchange Act, or a member of the Financial Industry Regulatory Authority, Inc. or an entity engaged in the business of being a broker dealer.

(d) Experience of Such Investor. The Investor, either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Common Shares and Warrants, and has so evaluated the merits and risks of such investment. The Investor understands that it must bear the economic risk of this investment in the Common Shares indefinitely, and is able to bear such risk and is able to afford a complete loss of such investment.

(e) Access to Information. The Investor acknowledges that it has reviewed the Disclosure Materials and has been afforded: (i) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, representatives of the Company concerning the terms and conditions of the offering of the Common Shares and Warrants and the merits and risks of investing in the Common Shares and Warrants; (ii) access to information (other than material non-public information) about the Company and its financial condition, results of operations, business, properties, management and prospects sufficient to enable it to evaluate its investment; and (iii) the opportunity to obtain such additional

 

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information that the Company possesses or can acquire without unreasonable effort or expense that is necessary to make an informed investment decision with respect to the investment. Neither such inquiries nor any other investigation conducted by or on behalf of the Investor or its representatives or counsel shall modify, amend or affect the Investor’s right to rely on the truth, accuracy and completeness of the Disclosure Materials and the Company’s representations and warranties contained in the Transaction Documents.

(f) No Conflicts. The execution, delivery and performance by the Investor of this Agreement and the consummation by the Investor of the transactions contemplated hereby will not (i) result in a violation of the organizational documents of the Investor or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Investor is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws) applicable to the Investor, except in the case of clauses (ii) and (iii) above, for such that are not material and do not otherwise affect the ability of the Investor to consummate the transactions contemplated hereby.

(g) Restricted Securities. The Investor understands that the Common Shares are characterized as “restricted securities” under the U.S. federal securities laws inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that under such laws and applicable regulations such securities may be resold without registration under the Securities Act only in certain limited circumstances. The Investor further understands that the certificates evidencing the Common Shares, Warrants and Warrant Shares purchased by it will contain the following legend:

THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY APPLICABLE STATE SECURITIES LAWS AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS OR BLUE SKY LAWS.

(h) Prohibited Transactions. The Investor has not, directly or indirectly, and no Person acting on behalf of or pursuant to any understanding with the Investor has, engaged in any purchases or sales in the securities, including derivatives, of the Company (including, without limitation, any Short Sales (a “Transaction”) involving any of the Company’s securities) since the time that the Investor was first contacted by the Company or any other Person regarding an investment in the Company. The Investor covenants that

 

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neither it nor any Person acting on its behalf or pursuant to any understanding with the Investor will engage, directly or indirectly, in any Transactions in the securities of the Company (including Short Sales) prior to the time the transactions contemplated by this Agreement are publicly disclosed.

ARTICLE 4

OTHER AGREEMENTS OF THE PARTIES

4.1 Filing of Reports. Until the date that the Investor (or any transferee that is an Affiliate of the Investor) ceases to own any Common Shares or Warrant Shares, the Company covenants to use its commercially reasonable efforts to (a) timely file (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Company after the date hereof pursuant to the Securities Act and the Exchange Act, (b) comply with the requirements of Rule 144(c) under the Securities Act with respect to current public information about the Company, and (c) furnish to the Investor promptly upon request therefor (i) a written statement by the Company as to its compliance with the requirements of Rule 144(c) under the Securities Act, and the reporting requirements under the Securities Act and the Exchange Act, and (ii) such reports and documents of the Company as the Investor may reasonably request to avail itself (or its Affiliates) of any similar rule or regulation of the SEC allowing it (or its Affiliates) to sell any such securities without registration.

4.2 Board Representation and Observer Rights.

(a) For so long as the Investor or any of its Affiliates holds at least fifty percent (50%) of the Common Shares purchased under this Agreement, upon the request of the Investor at any time, and from time to time, the Company shall use its reasonable best efforts to cause its board of directors (the “Board”) to (i) increase the current Board by one member and elect to such newly created vacancy an individual designated by the Investor (the “Investor Director”) that is not a Competitor of, or employed or Affiliated with a Competitor of the Company, and (ii) remove, upon direction from the Investor for any reason or no reason, any person who is an Investor Director, and appoint each successor to the Investor Director as the Investor designates; provided, that, such successor is not a Competitor of, or employed or Affiliated with a Competitor of the Company.

(b) For so long as the Investor or any of its Affiliates holds at least twenty-five percent (25%) of the Common Shares purchased under this Agreement, and during any and all periods in which no Investor Director shall be serving on the Board, upon the request of the Investor at any time, and from time to time, the Company shall use its reasonable best efforts to permit one individual designated by the Investor as a non-participating observer (the “Investor Observer”) to be present at all in-person and telephonic meetings of the Board and all committees thereof; provided, that, (y) the Investor Observer executes a confidentiality agreement acceptable to the Company agreeing to hold in confidence and trust all information that the Investor Observer receives or is provided access to; and (z) the Company reserves the right to exclude the Investor Observer from access to any material or meeting or portion thereof if the Board determines in good faith after consulting with legal

 

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counsel that such exclusion is reasonably necessary to preserve the attorney client privilege or the Board determines in good faith that such exclusion is necessary to avoid a conflict of interest between the Company and the Investor Observer. Except as provided in the proviso to the immediately preceding sentence, the Company shall provide the Investor Observer with the same notice with respect to meetings of the Board and all committees thereof as provided to the members of the Board and shall provide the Investor Observer any and all other information that is provided to the members of the Board, whether in connection with any meeting of the Board or committee thereof or otherwise.

(c) The Investor Director and Investor Observer shall have access to the Company’s books and records and to participate in discussions with the Company’s management upon reasonable advance notice and during normal business hours. The Company shall reimburse the Investor Director or Investor Observer, as the case may be, for his or her reasonable out-of-pocket expenses (including travel, lodging and meal expenses) incurred in connection with the attendance of meetings of the Board or any committee thereof. Notwithstanding anything to the contrary contained herein, for purposes of this Section 4.2, any individual who is an employee of the Investor or any direct or indirect subsidiary thereof, shall not be considered a Competitor of the Company or employed or Affiliated with a Competitor of the Company.

4.3 Right Of First Offer. For so long as the Investor or any of its Affiliates holds at least twenty-five percent (25%) of the Common Shares purchased under this Agreement, if the Company proposes to issue any new Equity Securities (other than Excluded Securities) (the “New Securities”) and the Company is required to first offer such New Securities for purchase by any other stockholder of the Company, the Company shall, subject to applicable securities laws, also be required to first offer such New Securities, to the extent applicable, to the Investor on no less favorable terms as such New Securities are required to be offered to such other stockholder of the Company.

4.4 Listing of Shares. Promptly following the date hereof, the Company shall take all necessary action to cause the Common Shares to be qualified for trading on the OTCQB. If the Company applies to have its Common Stock or other securities traded on any other principal stock exchange or market, it shall include in such application the Common Shares and will take such other action as is necessary to cause such Common Shares to be so listed.

4.5 Use of Proceeds. The Company will use the net proceeds from the sale of the Common Shares and Warrants to meet its obligations under the License Agreement and for other working capital and general corporate purposes.

4.6 Lock-Up. During the six (6) month period following the Closing, the Investor shall not, without the consent of the Company, issue, sell, offer or agree to sell, grant any option for the sale of, pledge, enter into any swap, derivative transaction or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of any of the Common Shares or Warrant Shares (whether any such transaction is to be settled by delivery

 

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of Common Shares or Warrant Shares, other securities, cash or other consideration) or otherwise dispose (or publicly announce the undersigned’s intention to do any of the foregoing) of, directly or indirectly, any Common Shares or Warrant Shares. Notwithstanding anything in this Agreement to the contrary, subject to the requirements of Section 8.7 (including the obligation to be bound by this Section 4.6), the Investor shall not be restricted from transferring any of the Warrants, Common Shares or Warrant Shares to any Affiliate of the Investor.

4.7 Public Statements. Except as required by applicable law or regulation, neither party hereto shall issue any press release or other public announcement concerning the existence of or terms of this Agreement or the Transaction Documents without the prior written consent of the other Party, which consent shall not be unreasonably withheld. Each Party agrees to provide to the other Party a copy of any proposed press release or other public announcement as soon as reasonably practicable under the circumstances prior to the proposed date of dissemination thereof. The party proposing such press release or other public announcement shall consider in good faith any changes to such proposed press release or public announcement that are requested by the other party.

4.8 Additional Financing. If at any time, and from time to time, following the date on which the First Commercial Sale occurs and on or prior to June 30, 2015, the Company proposes to issue and sell securities of the Company with the principal purpose of raising capital (“Equity Financing”), to the extent so requested by the Company, the Investor shall purchase up to $4,000,000 of shares of Common Stock, at a price per share equal to the volume weighted average price of the Common Stock for the five trading day period immediately preceding the date such Equity Financing is publicly announced; provided, that (a) purchasers other than the Investor and its Affiliates purchase an aggregate of no less than $4,000,000 of shares of Common Stock in the Equity Financing, at the same per share purchase price paid by, and on other terms and conditions no more favorable to such persons than the terms and conditions applicable to the Investor in such Equity Financing, and (b) concurrently with the consummation of the Equity Financing the Company issues and sells to the Investor five year warrants (the “Additional Warrants” and together with the Initial Warrants, the “Warrants”) to purchase the nearest number of whole shares of Common Stock equal to 50% of the shares of Common Stock purchased by the Investor in the Equity Financing at an exercise price per share equal to 135% of the price per share paid in the Equity Financing. The Additional Warrants shall be in the form attached hereto as Exhibit A. The Investor shall execute and deliver to the Company all transaction documents reasonably requested by the Company and entered into by other purchasers participating in such Equity Financing. The Company shall not grant to any other purchaser in connection with such Equity Financing any right not granted to the Investor.

 

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ARTICLE 5

CONDITIONS

5.1 Conditions Precedent to the Obligations of the Investor. The obligation of the Investor to purchase the Common Shares and Warrants at the Closing is subject to the satisfaction or waiver by the Investor, at or before the Closing, of each of the following conditions:

(a) Representations and Warranties. The representations and warranties of the Company contained herein shall be true and correct in all material respects as of the date when made and as of the Closing as though made on and as of such date (except for representations and warranties that speak as of a specific date, which shall be true and correct as of such specific date);

(b) Performance. The Company shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by the Transaction Documents to be performed, satisfied or complied with by it at or prior to the Closing;

(c) Officer’s Certificate. The Investor shall have received a certificate of the Chief Executive Officer or Chief Financial Officer of the Company, dated as of the Closing Date, certifying to the fulfillment of the conditions specified in Section 5.1(a) and (b);

(d) No Suspensions of Trading in Common Stock. Trading in the Common Stock shall not have been suspended by the SEC or any other applicable authority at any time since the date of execution of this Agreement;

(e) Absence of Litigation. No action, suit or proceeding by or before any court or any governmental body or authority, against the Company or pertaining to the transactions contemplated by this Agreement or their consummation, shall have been instituted on or before the Closing Date, which action, suit or proceeding would, if determined adversely, have a Material Adverse Effect; and

(f) No Injunction. No preliminary or permanent injunction or other order issued by a court of competent jurisdiction which prevents the consummation of the transactions contemplated by any of the Transaction Documents shall have been issued and remain in effect, provided, however, that the parties shall use their respective commercially reasonable efforts to have any such order or injunction lifted.

5.2 Conditions Precedent to the Obligations of the Company. The obligation of the Company to sell the Common Shares and Warrants at the Closing is subject to the satisfaction or waiver by the Company, at or before the Closing, of each of the following conditions:

(a) Representations and Warranties. The representations and warranties of the Investor contained herein shall be true and correct in all material respects as of the date when made and as of the Closing Date as though made on and as of such date (except for representations and warranties that speak as of a specific date, which shall be true and correct as of such specific date);

(b) Performance. The Investor shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by the Transaction Documents to be performed, satisfied or complied with by the Investor at or prior to the Closing;

 

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(c) Officer’s Certificate. The Company shall have received a certificate of an officer of the Investor, dated as of the Closing Date, certifying to the fulfillment of the conditions specified in Section 5.2(a), and (b); and

(d) No Injunction. No preliminary or permanent injunction or other order issued by a court of competent jurisdiction which prevents the consummation of the transactions contemplated hereby shall have been issued and remain in effect, provided, however, that the parties shall use their respective commercially reasonable efforts to have any such order or injunction lifted.

ARTICLE 6

REGISTRATION RIGHTS

6.1 Piggy-Back Registration Rights. If at any time the Company shall determine to prepare and file with the SEC a registration statement relating to an offering for its own account or the account of others under the Securities Act of any of its equity securities, other than on Form S-4 or Form S-8 (each as promulgated under the Securities Act) or their then equivalents relating to equity securities to be issued solely in connection with any acquisition of any entity or business or equity securities issuable in connection with stock option or other employee benefit plans, then the Company shall send to the Investor, provided it owns Registrable Securities and is not then eligible to sell all of its Registrable Securities under Rule 144 in a three-month period, written notice of such determination and if, within ten (10) days after receipt of such notice, the Investor shall so request in writing, the Company shall include in such registration statement all or any part of such Registrable Securities the Investor requests to be registered. The Investor shall comply with any request to furnish the Company a completed selling stockholder questionnaire in customary form and acknowledges that it shall not be entitled to the inclusion of its Registrable Securities unless it has returned such questionnaire to the Company. Notwithstanding the foregoing, in the event that, in connection with any underwritten public offering, the managing underwriter(s) thereof shall impose a limitation on the number of shares of Common Stock which may be included in the Registration Statement because, in such underwriter(s)’ judgment, marketing or other factors dictate such limitation is necessary to facilitate public distribution, then the Company shall be obligated to include in such Registration Statement only such limited portion of the Registrable Securities with respect to which the Investor has requested inclusion hereunder as the underwriter shall permit; provided, however, that (i) the Company shall not exclude any Registrable Securities unless the Company has first excluded all outstanding securities, the holders of which are not contractually entitled to inclusion of such securities in such Registration Statement or are not contractually entitled to pro rata inclusion with the Registrable Securities and (ii) after giving effect to the immediately preceding proviso, any such exclusion of Registrable Securities shall be made pro rata among the Investor and the holders of other securities having the contractual right to inclusion of their securities in such Registration Statement, in proportion to the number of Registrable Securities or other securities, as applicable, sought to be included by the Investor and such other holders. Notwithstanding the foregoing sentence, in the case of an underwritten offering by the Company for its own account, no securities proposed to be included by the Company in such underwritten offering shall be cutback and, after taking into account all of the securities proposed to be included by the Company in such

 

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underwritten offering, the remaining securities shall be allocated among the Registrable Securities and the other securities requested to be included therein in accordance with the proviso of the immediately preceding sentence. If an offering in connection with which the Investor is entitled to registration under this Section 6.1 is an underwritten offering, then the Investor shall, unless otherwise agreed by the Company, offer and sell such Registrable Securities in an underwritten offering using the same underwriter or underwriters and, subject to the provisions of this Agreement, on the same terms and conditions as other shares of Common Stock included in such underwritten offering and shall enter into an underwriting agreement in a form and substance reasonably satisfactory to the Company and the underwriter or underwriters.

6.2 Registration Expenses. The Company shall pay all fees and expenses incurred by the Company incident to the performance of or compliance with Article VI of this Agreement by the Company, including without limitation (a) all registration and filing fees and expenses related to filings with the SEC, any Trading Market and in connection with applicable state securities or Blue Sky laws, (b) printing expenses (including without limitation expenses of printing certificates for Registrable Securities), (c) messenger, telephone and delivery expenses, (d) fees and disbursements of counsel for the Company, (e) fees and expenses of all other Persons retained by the Company in connection with the consummation of the transactions contemplated by this Agreement and (f) all listing fees to be paid by the Company to the Trading Market. The Company shall also pay the reasonable legal fees of the Investor incurred in connection with its legal review of the Registration Statement in an amount not to exceed $10,000 in the aggregate.

ARTICLE 7

INDEMNIFICATION

7.1 Indemnification by the Company. The Company shall, notwithstanding any termination of this Agreement, indemnify and hold harmless the Investor, its officers, directors, partners, members, agents and employees, each Person who controls the Investor (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) and the officers, directors, partners, members, agents and employees of each such controlling Person, to the fullest extent permitted by applicable law, from and against any and all Losses, as incurred, arising out of or relating to (i) any misrepresentation or breach of any representation or warranty made by the Company in this Agreement or any other agreement, certificate, instrument or document delivered in connection with the consummation of the transactions hereby (which, for the avoidance of doubt, shall not include the License Agreement or the Supply Agreement or any agreements, certificates, instruments or documents ancillary thereto), (ii) any breach of any covenant, agreement or obligation of the Company contained in this Agreement or any other agreement, certificate, instrument or document delivered in connection with the consummation of the transactions contemplated hereby (which, for the avoidance of doubt, shall not include the License Agreement or the Supply Agreement or any agreements, certificates, instruments or documents ancillary thereto), (iii) any cause of action, suit or claim brought or made against such Indemnified Party (as defined in Section 7.3(a) below) by a third party (including for these purposes a derivative action brought on behalf of the Company), arising out of or resulting from (x) the execution, delivery, performance or enforcement of this Agreement or any other agreement, certificate, instrument or document delivered in connection with the consummation of

 

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the transactions contemplated hereby (which, for the avoidance of doubt, shall not include the License Agreement or the Supply Agreement or any agreements, certificates, instruments or documents ancillary thereto), or (y) the status of Indemnified Party as a holder of Common Stock (unless, and only to the extent that, such action, suit or claim is based, including in part, upon a breach of the Investor’s representations, warranties or covenants in this Agreement or any other agreement, certificate, instrument or document delivered in connection with the consummation of the transactions contemplated hereby (which, for the avoidance of doubt, shall not include the License Agreement or the Supply Agreement or any agreements, certificates, instruments or documents ancillary thereto), or any conduct by the Investor that constitutes fraud, gross negligence or willful misconduct), or (iv) any untrue or alleged untrue statement of a material fact contained in the Registration Statement, any Prospectus or any form of Company prospectus or in any amendment or supplement thereto or in any Company preliminary prospectus, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus or form of prospectus or supplement thereto, in the light of the circumstances under which they were made) not misleading, except to the extent, but only to the extent, that (A) such untrue statements, alleged untrue statements, omissions or alleged omissions are based solely upon information regarding the Investor furnished in writing to the Company by the Investor for use therein, or to the extent that such information relates to the Investor or the Investor’s proposed method of distribution of Registrable Securities and was reviewed and expressly approved by the Investor in writing expressly for use in the Registration Statement, or (B) with respect to any prospectus, if the untrue statement or omission of material fact contained in such prospectus was corrected on a timely basis in the prospectus, as then amended or supplemented, if such corrected prospectus was timely made available by the Company to the Investor, and the Investor seeking indemnity hereunder was advised in writing not to use the incorrect prospectus prior to the use giving rise to Losses.

7.2 Indemnification by Investor. The Investor shall indemnify and hold harmless the Company and its directors, officers, agents and employees to the fullest extent permitted by applicable law, from and against all Losses (as determined by a court of competent jurisdiction in a final judgment not subject to appeal or review) arising solely out of any untrue statement of a material fact contained in the Registration Statement, any Prospectus, or any form of prospectus, or in any amendment or supplement thereto, or arising out of or relating to any omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus or form of prospectus or supplement thereto, in the light of the circumstances under which they were made) not misleading, but only to the extent that such untrue statements or omissions are based solely upon information regarding the Investor furnished to the Company by the Investor in writing expressly for use therein, or to the extent that such information relates to the Investor or the Investor’s proposed method of distribution of Registrable Securities and was reviewed and expressly approved in writing by the Investor expressly for use in the Registration Statement, such Prospectus or such form of prospectus or in any amendment or supplement thereto. In no event shall the liability of the Investor hereunder be greater in amount than the dollar amount of the net proceeds received by the Investor upon the sale of the Registrable Securities giving rise to such indemnification obligation.

 

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7.3 Conduct of Indemnification Proceedings.

(a) If any Proceeding shall be brought or asserted against any Person entitled to indemnity hereunder (an “Indemnified Party”), such Indemnified Party shall promptly notify the Person from whom indemnity is sought (the “Indemnifying Party”) in writing, and the Indemnifying Party shall assume the defense thereof, including the employment of counsel reasonably satisfactory to the Indemnified Party and the payment of all fees and expenses incurred in connection with defense thereof; provided, that the failure of any Indemnified Party to give such notice shall not relieve the Indemnifying Party of its obligations or liabilities pursuant to this Agreement, except (and only) to the extent that it shall be finally determined by a court of competent jurisdiction (which determination is not subject to appeal or further review) that such failure shall have proximately and materially adversely prejudiced the Indemnifying Party.

(b) An Indemnified Party shall have the right to employ separate counsel in any such Proceeding and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party or Parties unless: (i) the Indemnifying Party has agreed in writing to pay such fees and expenses; or (ii) the Indemnifying Party shall have failed promptly to assume the defense of such Proceeding and to employ counsel reasonably satisfactory to such Indemnified Party in any such Proceeding; or (iii) the named parties to any such Proceeding (including any impleaded parties) include both such Indemnified Party and the Indemnifying Party, and such Indemnified Party shall have been advised by counsel that a conflict of interest is likely to exist if the same counsel were to represent such Indemnified Party and the Indemnifying Party (in which case, if such Indemnified Party notifies the Indemnifying Party in writing that it elects to employ separate counsel at the expense of the Indemnifying Party, the Indemnifying Party shall not have the right to assume the defense thereof and the reasonable fees and expenses of separate counsel shall be at the expense of the Indemnifying Party). It shall be understood, however, that the Indemnifying Party shall not, in connection with any one such Proceeding (including separate Proceedings that have been or will be consolidated before a single judge) be liable for the fees and expenses of more than one separate firm of attorneys at any time for all Indemnified Parties, which firm shall be appointed by a majority of the Indemnified Parties. The Indemnifying Party shall not be liable for any settlement of any such Proceeding effected without its written consent, which consent shall not be unreasonably withheld. No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any settlement of any pending Proceeding in respect of which any Indemnified Party is a party, unless such settlement includes an unconditional release of such Indemnified Party from all liability on claims that are the subject matter of such Proceeding.

(c) All reasonable fees and expenses of the Indemnified Party (including reasonable fees and expenses to the extent incurred in connection with investigating or preparing to defend such Proceeding in a manner not inconsistent with this Section) shall be paid to the Indemnified Party, as incurred, within 20 Trading Days of written notice thereof to the Indemnifying Party (regardless of whether it is ultimately determined that an Indemnified Party is not entitled to indemnification hereunder; provided, that the

 

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Indemnifying Party may require such Indemnified Party to undertake to reimburse all such fees and expenses to the extent it is finally judicially determined that such Indemnified Party is not entitled to indemnification hereunder).

(d) If a claim for indemnification under Section 7.1 or 7.2 is unavailable to an Indemnified Party (by reason of public policy or otherwise), then each Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such Losses, in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party and Indemnified Party in connection with the actions, statements or omissions that resulted in such Losses as well as any other relevant equitable considerations. The relative fault of such Indemnifying Party and Indemnified Party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission of a material fact, has been taken or made by, or relates to information supplied by, such Indemnifying Party or Indemnified Party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such action, statement or omission. The amount paid or payable by a party as a result of any Losses shall be deemed to include, subject to the limitations set forth in Article 7, any reasonable attorneys’ or other reasonable fees or expenses incurred by such party in connection with any Proceeding to the extent such party would have been indemnified for such fees or expenses if the indemnification provided for in this Section was available to such party in accordance with its terms.

The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 7.3(d) were determined by pro rata allocation or by any other method of allocation that does not take into account the equitable considerations referred to in the immediately preceding paragraph. Notwithstanding the provisions of this Section 7.3(d), the Investor shall not be required to contribute, in the aggregate, any amount in excess of the amount by which the net proceeds actually received by such Investor from the sale of the Registrable Securities subject to the Proceeding exceed the amount of any damages that the Investor has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation.

The indemnity and contribution agreements contained in this Article 7 are in addition to any liability that the Indemnifying Parties may have to the Indemnified Parties.

ARTICLE 8

GENERAL PROVISIONS

8.1 Termination. This Agreement may be terminated by the Company or the Investor, by written notice to the other party, if the Closing has not been consummated by November 29, 2013; provided that no such termination will affect the right of any party to sue for any breach by the other party (or parties) occurring prior to such termination.

 

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8.2 Fees and Expenses. Except as expressly set forth in the Transaction Documents to the contrary, each party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement. The Company shall pay all Transfer Agent fees, stamp taxes and other taxes and duties levied in connection with the sale and issuance of the Common Shares.

8.3 Entire Agreement. This Agreement, together with the Exhibits and Schedules hereto, contains the entire understanding of the parties with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral or written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules. At or after the Closing, and without further consideration, the Company will execute and deliver to the Investor such further documents as may be reasonably requested in order to give practical effect to the intention of the parties under this Agreement.

8.4 Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (a) the date of transmission, if such notice or communication is delivered via facsimile or email at the facsimile number or email address specified in this Section prior to 6:30 p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile or email at the facsimile number or email address specified in this Section on a day that is not a Trading Day or later than 6:30 p.m. (New York City time) on any Trading Day, (c) the Trading Day following the date of deposit with a nationally recognized overnight courier service, or (d) upon actual receipt by the party to whom such notice is required to be given. The addresses, facsimile numbers and email addresses for such notices and communications are those set forth on the signature pages hereof, or such other address or facsimile number as may be designated in writing hereafter, in the same manner, by any such Person.

8.5 Amendments; Waivers. No provision of this Agreement may be waived or amended except in a written instrument signed, in the case of an amendment, by the Company and the Investor or, in the case of a waiver, by the party against whom enforcement of any such waiver is sought. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right.

8.6 Construction. The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party.

8.7 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. The Company may not assign

 

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this Agreement or any rights or obligations hereunder without the prior written consent of the Investor, which consent may be withheld by the Investor in its sole discretion. The Investor may assign its rights under this Agreement to any Person to whom the Investor assigns or transfers any Common Shares, provided (i) the Investor agrees in writing with the transferee or assignee to assign such rights, and a copy of such agreement is furnished to the Company after such assignment, (ii) the Company is furnished with written notice of (x) the name and address of such transferee or assignee and (y) the Registrable Securities with respect to which such registration rights are being transferred or assigned, (iii) following such transfer or assignment, the further disposition of such securities by the transferee or assignee is restricted under the Securities Act and applicable state securities laws, (iv) such transferee agrees in writing to be bound, with respect to the transferred Common Shares, by the provisions hereof that apply to the “Investor” and such transferee is not a Competitor of, or Affiliated with a Competitor of, the Company and (v) such transfer shall have been made in accordance with the applicable requirements of this Agreement and with all laws applicable thereto.

8.8 No Third-Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except that each Indemnified Party is an intended third party beneficiary of Section 7.1 or Section 7.2, as applicable, and (in each case) may enforce the provisions of such Section directly against the parties with obligations thereunder.

8.9 Governing Law; Venue; Waiver of Jury Trial. ALL QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. THE COMPANY AND THE INVESTOR HEREBY IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN THE CITY OF NEW YORK, BOROUGH OF MANHATTAN FOR THE ADJUDICATION OF ANY DISPUTE BROUGHT BY THE COMPANY OR THE INVESTOR HEREUNDER, IN CONNECTION HEREWITH OR WITH ANY TRANSACTION CONTEMPLATED HEREBY OR DISCUSSED HEREIN, AND HEREBY IRREVOCABLY WAIVE, AND AGREE NOT TO ASSERT IN ANY SUIT, ACTION OR PROCEEDING BROUGHT BY THE COMPANY OR THE INVESTOR, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF ANY SUCH COURT, OR THAT SUCH SUIT, ACTION OR PROCEEDING IS IMPROPER. EACH PARTY HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS TO PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING BY MAILING A COPY THEREOF VIA REGISTERED OR CERTIFIED MAIL OR OVERNIGHT DELIVERY (WITH EVIDENCE OF DELIVERY) TO SUCH PARTY AT THE ADDRESS IN EFFECT FOR NOTICES TO IT UNDER THIS AGREEMENT AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE GOOD AND SUFFICIENT SERVICE OF PROCESS AND NOTICE THEREOF. NOTHING CONTAINED HEREIN SHALL BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW. THE COMPANY AND THE INVESTOR HEREBY WAIVE ALL RIGHTS TO A TRIAL BY JURY.

 

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8.10 Survival. The representations and warranties, agreements and covenants contained herein shall survive the Closing.

8.11 Execution. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission or email attachment, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or email-attached signature page were an original thereof.

8.12 Severability. If any provision of this Agreement is held to be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Agreement shall not in any way be affected or impaired thereby and the parties will attempt to agree upon a valid and enforceable provision that is a reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Agreement.

8.13 Replacement of Certificates. If any certificate or instrument evidencing any Common Shares is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof, or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction and the execution by the holder thereof of a customary lost certificate affidavit of that fact and an agreement to indemnify and hold harmless the Company for any losses in connection therewith.

8.14 Remedies. In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, each of the Investor and the Company will be entitled to seek specific performance under this Agreement. The parties agree that monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations described in the foregoing sentence and hereby agree to waive in any action for specific performance of any such obligation (other than in connection with any action for a temporary restraining order) the defense that a remedy at law would be adequate.

[SIGNATURE PAGES TO FOLLOW]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.

 

ALLIQUA, INC.
By:  

/s/ David Johnson

  Name:   David Johnson
  Title:   Chief Executive Officer
Address for Notice:
2150 Cabot Boulevard West
Langhorne, PA 19047
Attn: Chief Executive Officer
With a copy (which shall not constitute notice) to:
Lowenstein Sandler LLP
65 Livingston Avenue
Roseland, NJ 07068
Attn: Michael Lerner, Esq.
Facsimile No.: (973) 597-6395

 

Signature page to Stock Purchase Agreement


CELGENE CORPORATION
By:  

/s/ Perry Karsen

Name:   Perry Karsen
Title:   Executive Vice President
Address for Notice:
86 Morris Avenue
Summit, New Jersey 07901
Attention: General Counsel
with copies (which shall not constitute notice) to:
    Proskauer Rose LLP
    Eleven Times Square
    New York, New York 10036
    Attention: Robert A. Cantone, Esq.
    Facsimile: (212) 969-2900

 

Signature Page to Stock Purchase Agreement


Exhibit A

FORM OF WARRANT

NEITHER THESE SECURITIES NOR THE SECURITIES FOR WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.

ALLIQUA, INC.

WARRANT

 

Warrant No. [    ]    Dated: [                    ]

Alliqua, Inc., a Florida corporation (the “Company”), hereby certifies that, for value received, Celgene Corporation, a Delaware corporation or its registered assigns (the “Holder”), is entitled to purchase from the Company up to a total of [                ]1 shares of common stock, $0.001 par value per share (the “Common Stock”) of the Company (each such share, a “Warrant Share” and all such shares, the “Warrant Shares”) at an exercise price equal to $[        ]2 per share (as adjusted from time to time as provided in Section 8, the “Exercise Price”), at any time and on or after [                    ] (the “Initial Exercise Date”) and through and including the date that is five (5) years from the Initial Exercise Date, or if such day is not a Business Day (as defined in the Purchase Agreement, as defined below), on the next preceding Business Day (the “Expiration Date”), and subject to the following terms and conditions. This Warrant (this “Warrant”) is issued pursuant to that certain [                    ], dated as of [                    ], by and among the Company and the Holder (the “Purchase Agreement”).

1. Registration of Warrant. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of record of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.

2. Registration of Transfers. The Company shall register the transfer of any portion of this Warrant in the Warrant Register, upon surrender of this Warrant, with the Form of Assignment attached hereto duly completed and signed, to the Company at its address specified herein. Upon any such registration of transfer, a new warrant to purchase Common Stock, in substantially the Form of this Warrant (any such new warrant, a “New Warrant”), evidencing the portion of this Warrant so transferred shall be issued to the transferee and a New Warrant evidencing the remaining portion of this Warrant not so transferred, if any, shall be issued to the transferring Holder. The acceptance of the New Warrant by the transferee thereof shall be deemed the acceptance by such transferee of all of the rights and obligations of a holder of a Warrant.

 

1  For the Initial Warrants, 50% of the Common Shares issued to the Investor at the Closing. For the Additional Warrants, 50% of the shares issued to Investor and its Affiliates in the Equity Financing.
2  For the Initial Warrants, $0.13 per share. For the Additional Warrants, 135% of the price per share paid by Investor and its Affiliates in the Equity Financing.


3. Exercise and Duration of Warrant.

(a) This Warrant shall be exercisable by the registered Holder at any time and from time to time on or after the Initial Exercise Date and prior to 5:30 p.m., New York City time on the Expiration Date at which time the portion of this Warrant not exercised prior thereto shall be and become void and of no value.

(b) The Holder may exercise this Warrant by delivering to the Company (i) an exercise notice, in the Form attached hereto (the “Exercise Notice”), appropriately completed and duly signed, and (ii) payment of the Exercise Price for the number of Warrant Shares as to which this Warrant is being exercised, and the date such items are delivered to the Company (as determined in accordance with the notice provisions hereof) is an “Exercise Date.” The Holder shall not be required to deliver the original Warrant in order to effect an exercise hereunder; provided, however, that in the event that this Warrant is exercised in full or for the remaining unexercised portion hereof, the Holder shall deliver this Warrant to the Company for cancellation within a reasonable time after such exercise. In the event of a partial exercise of this Warrant, execution and delivery of the Exercise Notice shall have the same effect as cancellation of the original Warrant and issuance of a New Warrant evidencing the right to purchase the remaining number of Warrant Shares.

4. Delivery of Warrant Shares.

(a) Upon exercise of this Warrant, the Company shall promptly following the Exercise Date (but in no event later than three Trading Days after the Exercise Date) credit such aggregate number of Warrant Shares to which the Holder is entitled to receive pursuant to such exercise of this Warrant to the Holder’s or its designee’s balance account with The Depository Trust Company (“DTC”) through its Deposit Withdrawal Agent Commission system, or if the Company’s transfer agent for the Common Stock (the “Transfer Agent”) is not participating in the Fast Automated Securities Transfer Program or if the certificates are required to bear a legend regarding restriction on transferability, issue and dispatch by overnight courier to the address as specified in the Exercise Notice, a certificate, registered in the Company’s share register in the name of the Holder or its designee, for the number of Warrant Shares to which the Holder is entitled to receive pursuant to such exercise of this Warrant. The Holder, or any Person so designated by the Holder to receive Warrant Shares, shall be deemed to have become the holder of record of such Warrant Shares as of the Exercise Date, irrespective of the date such Warrant Shares are credited to the Holder’s DTC account or the date of delivery of the certificates evidencing such Warrant Shares, as the case may be. For purposes of this Warrant, “Person” shall mean an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind and “Trading Day” means a day on which the Common Stock is traded on the principal securities exchange or securities market on which the Common Stock is then traded.

(b) This Warrant is exercisable, either in its entirety or, from time to time, for a portion of the number of Warrant Shares. Upon surrender of this Warrant following one or more partial exercises, the Company shall issue or cause to be issued, at its expense, a New Warrant evidencing the right to purchase the remaining number of Warrant Shares.

5. Charges, Taxes and Expenses. Issuance and delivery of certificates for shares of Common Stock upon exercise of this Warrant shall be made without charge to the Holder for any issue or transfer tax, withholding tax, transfer agent fee or other incidental tax or expense in respect of the issuance of such certificates, all of which taxes and expenses shall be paid by the Company; provided, however, that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the registration of any certificates for Warrant Shares or Warrants in a name other than that of the Holder. The Holder shall be responsible for all other tax liability that may arise as a result of holding or transferring this Warrant or receiving Warrant Shares upon exercise hereof.

 

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6. Replacement of Warrant. If this Warrant is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation hereof, or in lieu of and substitution for this Warrant, a New Warrant, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction and customary and reasonable bond or indemnity, if requested. Applicants for a New Warrant under such circumstances shall also comply with such other reasonable regulations and procedures and pay such other reasonable third-party costs as the Company may prescribe.

7. Reservation of Warrant Shares. The Company covenants that it will at all times reserve and keep available out of the aggregate of its authorized but unissued and otherwise unreserved Common Stock, solely for the purpose of enabling it to issue Warrant Shares upon exercise of this Warrant as herein provided, the number of Warrant Shares which are then issuable and deliverable upon the exercise of this entire Warrant, free from preemptive rights or any other contingent purchase rights of persons other than the Holder (after giving effect to the adjustments of Section 8, if any). The Company covenants that all Warrant Shares so issuable and deliverable shall, upon issuance and the payment of the applicable Exercise Price in accordance with the terms hereof, be duly and validly authorized, issued and fully paid and nonassessable. The Company will take all such action as may be necessary to assure that such shares of Common Stock may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of any securities exchange or automated quotation system upon which the Common Stock may be listed.

8. Certain Adjustments. The Exercise Price and number of Warrant Shares issuable upon exercise of this Warrant are subject to adjustment from time to time as set forth in this Section 8.

(a) Stock Dividends, Subdivisions or Combinations. If the Company, at any time while this Warrant is outstanding, (i) pays a stock dividend on its Common Stock or otherwise makes a distribution on any class of capital stock that is payable in shares of Common Stock, (ii) subdivides outstanding shares of Common Stock into a larger number of shares, or (iii) combines outstanding shares of Common Stock into a smaller number of shares, then in each such case the Exercise Price shall be adjusted by multiplying the Exercise Price by a fraction of which the numerator shall be the number of shares of Common Stock outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event. Simultaneously with any adjustment to the Exercise Price pursuant to this subsection (a), the number of Warrant Shares that may be purchased upon exercise of this Warrant shall be adjusted proportionately, so that after such adjustment the aggregate Exercise Price payable hereunder for the increased or decreased number of Warrant Shares, as the case may be, shall be the same as the aggregate Exercise Price in effect immediately prior to such adjustment to the Exercise Price and the number of Warrant Shares.

(b) Adjustments Upon Reorganization, Reclassification, Consolidation or Merger. In the event of any (i) capital reorganization of the Company, (ii) reclassification of the Common Stock of the Company (other than as a result of a stock dividend or subdivision, split-up or combination of shares), (iii) consolidation or merger of the Company with or into another Person, (iv) sale of all or substantially all of the Company’s assets to another Person or (v) other similar transaction (other than a transaction covered by Section 8(a)), in each case which entitles the holders of Common Stock to receive (either directly or upon subsequent liquidation) stock, securities or assets with respect to or in exchange for Common Stock, this Warrant shall, immediately after such reorganization, reclassification, consolidation, merger, sale or similar transaction, remain outstanding and shall thereafter be exercisable for the kind and number of shares of stock or other securities or assets of the Company or of the successor Person resulting from such transaction to which the Holder would have been entitled upon such reorganization, reclassification, consolidation, merger, sale or similar transaction if the Holder had exercised this Warrant in full immediately prior to the time of such transaction and acquired the applicable number of Warrant Shares then issuable hereunder as a result of such exercise; and, in such case, appropriate adjustments (in form and substance reasonably satisfactory to the Holder) shall be made with respect to the Holder’s rights hereunder to insure that the provisions of this Section 8 shall thereafter be applicable, as nearly as possible, to this Warrant in relation to any shares of stock, securities or assets thereafter acquirable upon exercise of this Warrant. The provisions of this

 

3


Section 8(c) shall similarly apply to all successive reorganizations, reclassifications, consolidations, mergers, sales or similar transactions. The Company shall not effect any such reorganization, reclassification, consolidation, merger, sale or similar transaction unless, prior to the consummation thereof, the successor Person (if other than Company) resulting therefrom, shall assume, by written instrument substantially similar in Form and substance to this Warrant and satisfactory to the Holder, the obligation to deliver to the Holder such shares of stock, securities or assets which, in accordance with the foregoing provisions, the Holder shall be entitled to receive upon exercise of this Warrant. Notwithstanding anything to the contrary contained herein, with respect to any corporate event or transaction contemplated by this Section 8(b), the Holder shall have the right to elect prior to the consummation of such event or transaction, to exercise this Warrant in accordance with Section 3(b) instead of giving effect to the provisions of this Section 8(c) with respect to this Warrant.

(c) [Reserved]

(d) Calculations. All calculations under this Section 8 shall be made to the nearest cent or the nearest 1/100th of a share, as applicable.

(e) Certificate as to Adjustment. As promptly as reasonably practicable following any adjustment of the Exercise Price, but in no event later than five (5) Business Days thereafter, the Company shall furnish to the Holder a certificate of an executive officer of the Company setting forth in reasonable detail such adjustment and the facts upon which it is based and certifying the calculation thereof. No later than five (5) Business Days following the receipt by Company of a written request by the Holder, the Company shall furnish the Holder a certificate of an executive officer certifying the Exercise Price then in effect and the number of Warrant Shares or the amount, if any, of other shares of stock, securities or assets then issuable upon exercise of the Warrant.

(f) Notice of Corporate Events. If (i) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (ii) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock applicable to all holders thereof, (iii) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (iv) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property, or (v) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be mailed to the Holder at its last address as it shall appear upon the Warrant Register of the Company, at least 20 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to mail such notice or any defect therein or in the mailing thereof shall not affect the validity of the corporate action required to be specified in such notice. The Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.

9. Purchase Rights. In addition to any adjustments pursuant to Section 8 above, if at any time prior to the Expiration Date the Company grants, issues or sells (y) any securities directly or indirectly exchangeable for or convertible into Common Stock or (z) any rights to purchase stock, warrants, securities or other property, in the case of clauses (y) and (z), pro rata to all of the record holders of any class of shares of

 

4


Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights.

10. Fractional Shares. The Company shall not be required to issue or cause to be issued fractional Warrant Shares on the exercise of this Warrant. If any fraction of a Warrant Share would, except for the provisions of this Section, be issuable upon exercise of this Warrant, the number of Warrant Shares to be issued will be rounded up to the nearest whole share.

11. Notices. Any and all notices or other communications or deliveries hereunder (including without limitation any Exercise Notice) shall be in writing and shall be deemed given and effective on the earliest of (a) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number specified in the Purchase Agreement prior to 6:30 p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number specified in the Purchase Agreement on a day that is not a Trading Day or later than 6:30 p.m. (New York City time) on any Trading Day, (c) the Trading Day following the date of mailing, if sent by nationally recognized overnight courier service, or (d) upon actual receipt by the party to whom such notice is required to be given. The address for such notices or communications shall be as set forth in the Purchase Agreement.

12. Warrant Agent. The Company shall serve as warrant agent under this Warrant. Upon 30 days’ notice to the Holder, the Company may appoint a new warrant agent. Any corporation into which the Company or any new warrant agent may be merged or any corporation resulting from any consolidation to which the Company or any new warrant agent shall be a party or any corporation to which the Company or any new warrant agent transfers substantially all of its corporate trust or stockholder services business shall be a successor warrant agent under this Warrant without any further act. Any such successor warrant agent shall promptly cause notice of its succession as warrant agent to be mailed (by first class mail, postage prepaid) to the Holder at the Holder’s last address as shown on the Warrant Register.

13. Miscellaneous

(a) Subject to compliance with applicable securities laws and Section 4.6 of the Purchase Agreement, this Warrant may be assigned by the Holder. This Warrant shall be binding on and inure to the benefit of the parties hereto and their respective successors and assigns. Subject to the preceding sentence, nothing in this Warrant shall be construed to give to any Person other than the Company and the Holder any legal or equitable right, remedy or cause of action under this Warrant. This Warrant may be amended only in writing signed by the Company and the Holder and their successors and assigns.

(b) The Company will not, by amendment of its governing documents or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the Holder against impairment. Without limiting the generality of the foregoing, the Company (i) will not increase the par value of any Warrant Shares above the amount payable therefor on such exercise, (ii) will take all such action as may be reasonably necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares on the exercise of this Warrant, and (iii) will not close its stockholder books or records in any manner which interferes with the timely exercise of this Warrant.

 

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(c) ALL QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. EACH OF THE COMPANY AND, BY ACCEPTING THIS WARRANT, THE HOLDER HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN THE CITY OF NEW YORK, BOROUGH OF MANHATTAN, FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR WITH ANY TRANSACTION CONTEMPLATED HEREBY OR DISCUSSED HEREIN (INCLUDING WITH RESPECT TO THE ENFORCEMENT OF THIS WARRANT), AND HEREBY IRREVOCABLY WAIVES, AND AGREES NOT TO ASSERT IN ANY SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF ANY SUCH COURT, THAT SUCH SUIT, ACTION OR PROCEEDING IS IMPROPER. EACH OF THE COMPANY AND, BY ACCEPTING THIS WARRANT, THE HOLDER HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS TO PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING BY MAILING A COPY THEREOF VIA REGISTERED OR CERTIFIED MAIL OR OVERNIGHT DELIVERY (WITH EVIDENCE OF DELIVERY) TO SUCH PARTY AT THE ADDRESS IN EFFECT FOR NOTICES TO IT UNDER THIS AGREEMENT AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE GOOD AND SUFFICIENT SERVICE OF PROCESS AND NOTICE THEREOF. NOTHING CONTAINED HEREIN SHALL BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW. THE COMPANY HEREBY WAIVES ALL RIGHTS TO A TRIAL BY JURY.

(d) The headings herein are for convenience only, do not constitute a part of this Warrant and shall not be deemed to limit or affect any of the provisions hereof.

(e) In case any one or more of the provisions of this Warrant shall be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Warrant shall not in any way be affected or impaired thereby and the parties will attempt in good faith to agree upon a valid and enforceable provision which shall be a commercially reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Warrant.

(f) The remedies provided in this Warrant shall be cumulative and in addition to all other remedies available under this Warrant, at law or in equity (including a decree of specific performance and/or other injunctive relief), and nothing herein shall limit the right of the Holder to pursue actual damages for any failure by the Company to comply with the terms of this Warrant. The Company acknowledges that a breach by it of its obligations hereunder may cause irreparable harm to the Holder and that the remedy at law for any such breach may be inadequate. The Company therefore agrees that, in the event of any such breach or threatened breach, the holder of this Warrant shall be entitled, in addition to all other available remedies, to seek an injunction restraining any breach.

(g) No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase price of any Warrant Shares or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company. Prior to the exercise of this Warrant, the Holder shall not have or exercise any rights as a stockholder of the Company by virtue of its ownership of this Warrant.

SIGNATURE PAGE FOLLOWS

 

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IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by its authorized officer as of the date first indicated above.

 

ALLIQUA, INC.
By:  

 

  Name:
  Title:


FORM OF EXERCISE NOTICE

(To be executed by the Holder to exercise the right to purchase shares of Common Stock under the foregoing Warrant)

To Alliqua, Inc.:

The undersigned is the Holder of Warrant No.      (the “Warrant”) issued by Alliqua, Inc., a Florida corporation (the “Company”). Capitalized terms used herein and not otherwise defined have the respective meanings set forth in the Warrant.

 

1. The Warrant is currently exercisable to purchase a total of                  Warrant Shares.

 

2. The undersigned Holder hereby exercises its right to purchase                  Warrant Shares pursuant to the Warrant.

 

3. The holder shall pay the sum of $         to the Company in accordance with the terms of the Warrant.

 

4. Pursuant to this exercise, the Company shall deliver to the holder                  Warrant Shares in accordance with the terms of the Warrant.

 

5. Following this exercise, the Warrant shall be exercisable to purchase a total of                  Warrant Shares.

 

Dated:  

 

    Name of Holder:
      (Print)  

 

      By:  

 

      Name:  
      Title:  


ACKNOWLEDGED AND AGREED TO this      day of                     , 20    
ALLIQUA, INC.
By:  

 

  Name:
  Title:


FORM OF ASSIGNMENT

[To be completed and signed only upon transfer of Warrant]

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto                                          the right represented by the within Warrant to purchase                  shares of Common Stock of Alliqua, Inc. to which the within Warrant relates and appoints                              attorney to transfer said right on the books of Alliqua, Inc. with full power of substitution in the premises.

 

Dated:   ,

 

 

 

Address of Transferee

 

 

In the presence of:


Exhibit B

OPINION OF COMPANY COUNSEL

1. The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Florida.

2. The authorized capital stock of the Company consists of [                ] shares of Common Stock, $.001 par value, and [                ] shares of Preferred Stock, par value $.[        ] per share.

3. The Company has all necessary corporate power and authority to execute and deliver the Agreement, to perform its obligations thereunder and to consummate the transactions contemplated thereby.

4. The Company has all necessary power and authority to issue and deliver the Common Shares; the Common Shares have been duly authorized, and, when duly issued and delivered to the Investor, will be duly and validly issued, fully paid and nonassessable and will be issued in compliance with federal and state securities laws.

5. Assuming the accuracy of the representations and warranties of the Investor contained in the Agreement and the compliance of such parties with the agreements set forth herein and therein, it is not necessary, in connection with the issuance and sale of the Common Shares, in the manner contemplated by the Agreement, to register the Securities under the Securities Act.

EX-99.2 3 d636870dex992.htm EX-99.2 EX-99.2

Exhibit 2

CONFIDENTIAL PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER A CONFIDENTIAL TREATMENT REQUEST, PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. THE REDACTED TERMS HAVE BEEN MARKED IN THIS EXHIBIT AT THE APPROPRIATE PLACE WITH THREE ASTERISKS [***].

 

 

 

LICENSE, MARKETING AND DEVELOPMENT AGREEMENT

BY AND BETWEEN

ANTHROGENESIS CORPORATION, D/B/A CCT

AND

ALLIQUA, INC.

NOVEMBER 14, 2013

 

 

 


TABLE OF CONTENTS

 

ARTICLE 1 DEFINITIONS

     1   

ARTICLE 2 LICENSES

     9   

2.1

 

License to Alliqua

     9   

2.2

 

Exclusivity

     10   

2.3

 

Alliqua Sublicense Rights

     10   

2.4

 

Third Party Licenses

     11   

2.5

 

CCT Retained Rights

     11   

2.6

 

Right of First Offer

     11   

ARTICLE 3 GOVERNANCE

     12   

3.1

 

Joint Steering Committee

     12   

3.2

 

Alliance Managers

     14   

3.3

 

Commercial Launch Team

     14   

3.4

 

Promotional Materials

     14   

ARTICLE 4 DEVELOPMENT

     14   

4.1

 

Joint Development Plan; Alliqua Activities

     14   

4.2

 

Records and Reports

     15   

4.3

 

Subcontracts

     15   

ARTICLE 5 REGULATORY MATTERS

     17   

5.1

 

Regulatory Activities

     17   

5.2

 

Regulatory Reports; Meetings with Regulatory Authorities

     17   

5.3

 

Regulatory Costs

     17   

5.4

 

Notification of Threatened Action

     17   

5.5

 

Adverse Event Reporting and Safety Data Exchange

     18   

5.6

 

Remedial Actions

     18   

5.7

 

Rebate Processing and Government Price Reporting

     18   

ARTICLE 6 COMMERCIALIZATION

     19   

6.1

 

Commercialization Responsibilities

     19   

6.2

 

Commercialization Plan

     19   

6.3

 

Commercial Diligence

     20   

6.4

 

Records and Reports

     20   

6.5

 

Commercialization Outside the Territory

     20   


ARTICLE 7 COMPENSATION

     20   

7.1

 

Annual License Fee

     20   

7.2

 

Milestone Payments

     21   

7.3

 

Royalties

     21   

7.4

 

Market Condition Change

     22   

7.5

 

Payment Method; Late Payments

     22   

7.6

 

Records

     22   

7.7

 

Audits

     22   

7.8

 

Taxes

     22   

7.9

 

Annual Fee on Medical Device Manufacturers and Importers

     23   

ARTICLE 8 INTELLECTUAL PROPERTY MATTERS

     23   

8.1

 

Prosecution of Patents

     23   

8.2

 

Inventions Generally

     24   

8.3

 

Enforcement of CCT Patents

     24   

8.4

 

Infringement of Third Party Rights in the Territory

     25   

8.5

 

Patent Marking

     25   

8.6

 

Trademarks

     25   

ARTICLE 9 REPRESENTATIONS AND WARRANTIES; COVENANTS

     27   

9.1

 

Mutual Representations and Warranties

     27   

9.2

 

Additional Representations and Warranties of CCT

     27   

9.3

 

Mutual Covenants

     28   

9.4

 

Disclaimer

     29   

ARTICLE 10 INDEMNIFICATION

     29   

10.1

 

Indemnification by CCT

     29   

10.2

 

Indemnification by Alliqua

     29   

10.3

 

Indemnification Procedures

     30   

10.4

 

Limitation of Liability

     30   

10.5

 

Insurance

     30   

ARTICLE 11 CONFIDENTIALITY

     31   

11.1

 

Confidentiality

     31   

11.2

 

Authorized Disclosure

     31   

11.3

 

Return of Confidential Information

     32   

11.4

 

Publicity; Terms of the Agreement; Confidential Treatment

     32   


11.5

 

Technical Publication

     33   

11.6

 

Equitable Relief

     33   

ARTICLE 12 TERM AND TERMINATION

     34   

12.1

 

Term

     34   

12.2

 

Termination by CCT

     34   

12.3

 

Termination for Breach

     35   

12.4

 

Termination for Bankruptcyptcy Code

     35   

12.5

 

Termination for Safety, Legal or Economic Risks

     36   

12.6

 

Effect of Termination

     36   

12.7

 

Survival

     38   

ARTICLE 13 DISPUTE RESOLUTION

     38   

13.1

 

Disputes

     38   

13.2

 

Internal Resolution

     38   

13.3

 

Patent and Trademark Disputes

     38   

13.4

 

Equitable Relief

     38   

ARTICLE 14 MISCELLANEOUS

     39   

14.1

 

Entire Agreement; Amendment

     39   

14.2

 

Force Majeure

     39   

14.3

 

Notices

     39   

14.4

 

No Strict Construction; Headings

     40   

14.5

 

Assignment

     40   

14.6

 

Performance by Affiliates

     41   

14.7

 

Further Actions

     41   

14.8

 

Severability

     41   

14.9

 

No Waiver

     41   

14.10

 

Independent Contractors

     41   

14.11

 

Governing Law

     41   

14.12

 

Counterparts

     42   


Execution Copy

LICENSE, MARKETING AND DEVELOPMENT AGREEMENT

This LICENSE, MARKETING AND DEVELOPMENT AGREEMENT (the “Agreement”) is entered into as of November 14, 2013 (the “Effective Date”) by and between ANTHROGENESIS CORPORATION, D/B/A CELGENE CELLULAR THERAPEUTICS (CCT), a New Jersey corporation having a principal place of business at 33 Technology Drive, 2nd Floor, Warren, NJ 07059 (“CCT”), and ALLIQUA, INC., a Florida corporation having a principal place of business at 2150 Cabot Boulevard West, Langhorne, Pennsylvania (“Alliqua”). Alliqua and CCT may each be referred to as a “Party” or collectively be referred to as the “Parties”.

RECITALS

WHEREAS, CCT owns or has rights to placental based products, including intellectual property relating thereto, and is willing to license such intellectual property to Alliqua, and Alliqua desires to accept such license;

WHEREAS, CCT and Alliqua desire to establish a collaboration for the development and commercialization of Licensed Products in the Field in the Territory (each, as defined below), in accordance with the terms and conditions set forth herein; and

WHEREAS, concurrently with the signing of this Agreement, Celgene Corporation (“Investor”) and Alliqua are entering into a Stock Purchase Agreement (the “Stock Purchase Agreement”) pursuant to which Investor intends to purchase certain securities of Alliqua.

NOW, THEREFORE, in consideration of the foregoing premises and the mutual promises, covenants and conditions contained in this Agreement, the Parties agree as follows:

ARTICLE 1

DEFINITIONS

The terms in this Agreement with initial letters capitalized, whether used in the singular or the plural, shall have the meaning set forth below or, if not listed below, the meaning designated elsewhere in this Agreement (and derivative forms of them shall be interpreted accordingly). The terms “include,” “includes,” “including” and derivative forms of them shall be deemed followed by the phrase “without limitation” regardless of whether such phrase appears there (and with no implication being drawn from its inconsistent inclusion or non-inclusion).

510(k)” means a marketing authorization issued by the FDA pursuant to Section 510(k) of the Act, whereby the FDA clears a medical device for sale in the United States, determining that the medical device is substantially equivalent to legally marketed predicate devices.

Accounting Standards” has the meaning set forth in the definition of Net Sales.

Acquired Entity” has the meaning set forth in Section 2.2(d).


Acquiring Entity” has the meaning set forth in Section 2.2(c).

Act” means the Federal Food, Drug, and Cosmetic Act, as amended, and the rules, regulations, guidelines and requirements of the FDA as may be in effect from time to time.

Additional Territory Transaction” has the meaning set forth in Section 6.5.

Affiliate” means, with respect to a Person, any Person that controls, is controlled by or is under common control with such first Person. For purposes of this definition only, “control” means (a) to possess, directly or indirectly, the power to direct the management or policies of a Person, whether through ownership of voting securities, by contract relating to voting rights or corporate governance or otherwise, or (b) to own, directly or indirectly, fifty percent (50%) or more of the outstanding securities or other ownership interest of such Person. For the purposes of this Agreement, neither Party shall be considered an Affiliate of the other, and the Affiliates of each Party shall not be considered Affiliates of the other Party or of any of such other Party’s Affiliates.

Agreement” has the meaning set forth in the Preamble.

Alliance Manager” has the meaning set forth in Section 3.2.

Alliqua” has the meaning set forth in the Preamble.

Alliqua Indemnitees” has the meaning set forth in Section 10.1.

Alliqua Permitted Subcontractor” has the meaning set forth in Section 4.3(e).

Alliqua Sublicense Agreement” has the meaning set forth in Section 2.3(a).

Annual License Fee(s)” has the meaning set forth in Section 7.1.

Audited Party” has the meaning set forth in Section 7.7.

Auditing Party” has the meaning set forth in Section 7.7.

Bankrupt Party” has the meaning set forth in Section 12.4.

Bankruptcy Code” has the meaning set forth in Section 12.4.

Base Purchase Price” means, with respect to a Licensed Product, (i) the purchase price of such Licensed Product on a per unit basis, as defined in the Supply Agreement, or (ii) if the Licensed Product is manufactured on Alliqua’s behalf by a Third Party in accordance with the Supply Agreement, [***], or (iii) if the Licensed Product is manufactured by Alliqua in accordance with the Supply Agreement, [***].

Biovance” means decellularized, dehydrated human amniotic membrane, as produced according to the CCT Technology as of the Effective Date or thereafter, which are marketed under the Biovance name.

 

-2-


Business Day” means any day (other than a Saturday, Sunday or a legal holiday) on which banks are open for general business in New York, New York.

CCT” has the meaning set forth in the Preamble.

CCT Indemnitees” has the meaning set forth in Section 10.2.

CCT Know-How” means all Know-How Controlled by CCT as of the Effective Date or during the Term that is necessary or useful for the Development or Commercialization of the Licensed Products.

CCT Mark(s)” has the meaning set forth in Section 8.6(b).

CCT Patents” means (i) the Patents listed in Exhibit A and (ii) any other Patents in the Territory that issue from, or that claim the priority of, any of the Patents listed in Exhibit A in the Field in the Territory.

CCT Technology” means the CCT Know-How and the CCT Patents.

Claims” has the meaning set forth in Section 10.1.

Cost of Goods Sold” or “COGS” means, with respect to Licensed Products, the cost of goods sold as determined in accordance with GAAP and as reflected on the published financial statements of Alliqua.

Commercialization Plan” has the meaning set forth in Section 6.2.

Commercialize” or “Commercialization” means to package (from bulk to finished form), label, market, promote, sell, offer for sale and/or distribute (but not to manufacture or have manufactured, except to the extent packaging and labeling hereunder is considered to be manufacturing).

Commercially Reasonable Best Efforts” means, with respect to Alliqua’s activities under this Agreement, the carrying out of such activities with a level of effort and resources consistent with [***] that would be applied [***], provided that Alliqua’s effort with regard to the Development and Commercialization of each Licensed Product shall be [***].

Competing Product” means [***].

Confidential Information” of a Party means any and all information of a confidential or proprietary nature disclosed by such Party to the other Party under this Agreement or under the Prior CDA, whether in oral, written, graphic or electronic form.

Control” means, with respect to any particular Know-How or Patent, that a Party (a) owns or (b) has a license (other than a license granted to such Party under this Agreement) to such Know-How or Patent and, in each case, has the ability to grant to the other Party access, a license, or a sublicense (as applicable) to such Know-How or Patent on the terms and conditions set forth in this Agreement without violating the terms of any then-existing agreement or other arrangement with any Third Party.

 

-3-


Cover” means, with respect to a particular item and a particular Patent, that such Patent claims or covers, in any of the countries of manufacture, use, and/or sale, (a) the composition of such item, any of its ingredients or formulations or any product containing or that is made using such item (by virtue of such product containing or being made using such item); (b) a method of making or using any of the foregoing things referred to in (a); (c) an item used or present in the manufacture of any of the foregoing things referred to in (a); and/or (d) the method by which such item was discovered or identified, or another item present during or used in such method.

Covered Opportunity” has the meaning set forth in Section 2.6.

Develop” or “Development” means activities that relate to developing a Licensed Product or a Competing Product, including clinical trials. Development (with respect to Licensed Products, but not Competing Products) shall exclude manufacturing, Commercialization, and obtaining and supporting Regulatory Clearances and/or Approvals.

Development Costs” means the out-of-pocket and internal costs and expenses associated with particular Development activities for which Alliqua is responsible under each Joint Development Plan.

Development Records” has the meaning set forth in Section 4.2.

Dollar” or “$” means a USA dollar.

ECMs” means extracellular matrix derived from the human placenta, as produced according to the CCT Technology as of the Effective Date or thereafter, [***].

Event of Bankruptcy” has the meaning set forth in Section 12.4.

Executive Officer” means, with respect to CCT, its Chief Executive Officer or such Chief Executive Officer’s designee, or such other person holding a similar position designated by CCT from time to time, and with respect to Alliqua, its Chief Executive Officer or such Chief Executive Officer’s designee, or such other person holding a similar position designated by Alliqua from time to time.

FD&C Act” means the USA Federal Food, Drug and Cosmetic Act, as amended.

FDA” means the USA Food and Drug Administration or any successor entity.

Field” means acute and chronic non-healing wounds [***].

First Commercial Sale” means, with respect to a Licensed Product, the first sale, transfer or disposition for value or for end use to a Third Party of such Licensed Product in a given regulatory jurisdiction after Regulatory Clearance and/or Approval has been obtained in such jurisdiction.

 

-4-


GAAP” means generally accepted accounting principles in the United States, consistently applied.

Governmental Authority” means any multi-national, federal, state, local, municipal, provincial or other governmental authority of any nature (including any governmental division, prefecture, subdivision, department, agency, bureau, branch, office, commission, council, court or other tribunal).

Government Price Reporting” has the meaning set forth in Section 5.7.

Gross Margin” means Net Sales of a Licensed Product minus the Purchase Price, as determined in accordance with GAAP.

Improvements” means an invention, idea, concept, formula, design, technique or improvement (whether or not patentable or subject to any other form of intellectual property right registration) to a Licensed Product developed, conceived or reduced to practice subsequent to the date hereof in the Field.

Indemnified Party” has the meaning set forth in Section 10.3.

Indemnifying Party” has the meaning set forth in Section 10.3.

Infringement” has the meaning set forth in Section 8.3(a).

Infringement Dispute” has the meaning set forth in Section 8.4(b).

Initial Term” has the meaning set forth in Section 12.1.

Investor” has the meaning set forth in the Recitals.

Joint Development Plan” means a plan established by the Parties as described in Section 4.1 setting forth the activities to be conducted by or on behalf of Alliqua to Develop the Licensed Products in accordance with the terms of Article 4.

Joint Steering Committee” or “JSC” means the committee formed by the Parties as described in Section 3.1.

JSC Dispute” has the meaning set forth in Section 3.1(c)(i).

JSC Selected Subcontractor” has the meaning set forth in Section 4.3(b).

JSC Selected Subcontractor Agreement” has the meaning set forth in Section 4.3(b).

Know-How” means all technical information, data and know-how, including inventions, discoveries, trade secrets, specifications, instructions, processes, formulae, expertise, materials, methods, protocols and other technology applicable to formulations, compositions or products or to their manufacture, development, registration, use or marketing or processes for their manufacture, formulations containing them or compositions incorporating or comprising them, and including all biological, chemical, pharmacological, biochemical, toxicological, pharmaceutical, physical and analytical, safety, quality control, manufacturing, preclinical and clinical data, instructions, processes, formula, and expertise.

 

-5-


Launch Year” means, for each of Biovance and ECMs, (i) with respect to the first Launch Year, the 12-month period beginning on the first day of the calendar month immediately preceding the first anniversary of the First Commercial Sale of a Licensed Product and (ii) with respect to any subsequent Launch Year, the 12-month period beginning on the first day of the relevant anniversary of the first Launch Year. Solely by way of example, if the First Commercial Sale occurs on April 15, 2014, the first Launch Year shall commence on April 1, 2014 and each subsequent Launch Year shall commence on April 1 of each subsequent year.

Launch Year Quarter” means the first three (3) calendar month period, second three (3) calendar month period, third three (3) calendar month period and fourth three (3) calendar month period, in each case, commencing with the first day of each Launch Year. Solely by way of example, if the Launch Year commences on April 1, 2014, the first Launch Year Quarter shall mean the period commencing on April 1 and ending on June 30, the second Launch Year Quarter shall mean the period commencing on July 1 and ending on September 30, the third Launch Year Quarter shall mean the period commencing on October 1 and ending on December 31 and the fourth Launch Year Quarter shall mean the period commencing January 1 and ending on March 31.

Laws” means all laws, statutes, rules, regulations, ordinances and other pronouncements having the effect of law of any federal, national, multinational, state, provincial, county, city or other political subdivision, domestic or foreign.

Liabilities” has the meaning set forth in Section 10.1.

Licensed Product” means each of Biovance and ECMs and any and all Improvements thereof; “Licensed Products” shall mean Biovance and ECMs, collectively.

Management Change Transaction” has the meaning set forth in Section 2.2(c).

Market Condition Change” means, for Biovance, at any time during the [***] of this Agreement, and for ECMs, at any time during the [***] after the First Commercial Sale thereof, factors outside the reasonable control of Alliqua, including supply shortages or outages, changes in any Governmental Authority or Regulatory Authority regulation or reimbursement rate, and/or any Regulatory Authority action which would adversely affect the Commercialization of such Licensed Product in any material respect.

Market Condition Financial Terms” has the meaning set forth in Section 7.4.

Milestone Event” has the meaning set forth in Section 7.2.

Milestone Payment” has the meaning set forth in Section 7.2.

Minimum Sales Threshold” has the meaning set forth in Section 12.2(b)(i).

Negotiation Period” has the meaning set forth in Section 2.6.

 

-6-


Net Sales” means, with respect to any Licensed Product, gross amounts invoiced by Alliqua or its Affiliates to Third Parties for the sale or other commercial disposition of such Licensed Product anywhere within the Territory, including sales to wholesale distributors, less deductions from such amounts calculated in accordance with the Accounting Standards so as to arrive at “net sales” under the Accounting Standards, and further reduced by write-offs of accounts receivables or increased for collection of accounts that were previously written off.

(a) Net Sales, and any and all set-offs against gross amounts invoiced, shall be determined from books and records maintained in accordance with the Accounting Standards, consistently applied throughout the organization and across all products of the entity whose sales of any Licensed Product are giving rise to Net Sales. Sales or other commercial dispositions of Licensed Products between Alliqua and its Affiliates, and Licensed Products provided to Third Parties without charge, in connection with research and development, clinical trials, compassionate use, humanitarian and charitable donations, or indigent programs or for use as samples shall be excluded from the computation of Net Sales, and no payments will be payable on such sales or such other commercial dispositions, except where such an Affiliate is an end user of the Licensed Product.

(b) If a Licensed Product is sold or otherwise commercially disposed of for consideration other than cash or in a transaction that is not at arm’s length between the buyer and the seller, then the gross amount to be included in the calculation of Net Sales shall be the amount that would have been invoiced had the transaction been conducted at arm’s length and for cash. Such amount that would have been invoiced shall be determined, wherever possible, by reference to the average selling price of the relevant Licensed Product in arm’s length transactions in the relevant country.

(c) Notwithstanding the foregoing, in the event a Licensed Product is sold as a Combination Product, Net Sales shall be calculated by multiplying the Net Sales of the Combination Product by the fraction A/(A+B), where A is the gross invoice price of the royalty- bearing product if sold separately in a country and B is the gross invoice price of the other product(s) included in the Combination Product if sold separately in such country. If no such separate sales are made by Alliqua or its Affiliates in a country, Net Sales of the Combination Product shall be calculated in a manner to be negotiated and agreed upon by the Parties, reasonably and in good faith, prior to any sale of such Combination Product, which shall be based upon the relative value of the active components of such Combination Product.

As used in this definition: (i) “Accounting Standards” means GAAP (United States Generally Accepted Accounting Principles), and (ii) “Combination Product” means any product that comprises a Licensed Product sold in conjunction with another active component so as to be a combination product (whether packaged together or in the same therapeutic formulation).

Non-Bankrupt Party” has the meaning set forth in Section 12.4.

Notice of Interest” has the meaning set forth in Section 2.6.

Party” or “Parties” has the meaning set forth in the Preamble.

 

-7-


Patents” means, collectively, (a) pending patent applications (and patents issuing therefrom), issued patents, regional patents, utility models and designs; and (b) reissues, divisions, substitutions, confirmations, renewals, extensions, provisionals, registrations, validations, re-examinations, additions, continuations, continued prosecution applications, continuations-in-part, divisionals, or any Supplementary Protection Certificates or restoration of patent terms of or to any patents, patent applications, utility models or designs, in each case being enforceable within the applicable territory.

Person” means an individual, sole proprietorship, partnership, limited partnership, limited liability partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture or other similar entity or organization, including a government or political subdivision, department or agency of a government.

Prior CDA” means that certain Mutual Confidentiality Agreement between the Parties dated March 19, 2013.

Product Marks” has the meaning set forth in Section 8.6(a).

Promotional Materials” has the meaning set forth in Section 3.4.

Purchase Price” means, with respect to a Licensed Product: (a) the Base Purchase Price; plus [***]; in each case, as determined in accordance with GAAP.

Regulatory Clearances and/or Approvals” means all approvals necessary for the commercial sale of a Licensed Product for any indication in a given country or regulatory jurisdiction in the Territory, which shall include satisfaction of all applicable regulatory and notification requirements, and shall be deemed to include any stockpiling by any Governmental Authority for civilian or military use, but which shall exclude any pricing and reimbursement approvals.

Regulatory Authority” means the FDA or any corollary agency or Governmental Authority involved in granting Regulatory Clearances and/or Approvals in any other country or jurisdiction in the Territory.

Regulatory Materials” means regulatory applications, submissions, notifications, communications, correspondence, registrations, Regulatory Clearances and/or Approvals and/or other filings made to, received from or otherwise conducted with a Regulatory Authority in order to Develop, manufacture, market, sell or otherwise Commercialize a Licensed Product in a particular country or jurisdiction.

Remedial Action” has the meaning set forth in Section 5.6.

Renewal Term” has the meaning set forth in Section 12.1.

Revenue” has the meaning set forth in Section 8.3(e).

Royalty Term” has the meaning set forth in Section 7.3(b).

 

-8-


Safety Data and Exchange Agreement” has the meaning set forth in Section 5.5.

Sales Threshold Default” has the meaning set forth in Section 12.2(b)(i).

Sales Threshold Default Notice” has the meaning set forth in Section 12.2(b)(i).

Secretary Designee” has the meaning set forth in Section 3.1(d).

Selected Subcontractor” has the meaning set forth in Section 4.3(a).

Selected Subcontractor Agreement” has the meaning set forth in Section 4.3(a).

Sell-Off Period” has the meaning set forth in Section 12.6(d).

Stock Purchase Agreement” has the meaning set forth in the Recitals.

Subject Transaction” has the meaning set forth in Section 2.2(d).

Supply Agreement” means that certain Supply Agreement entered into by the Parties, dated November 14, 2013.

Term” has the meaning set forth in Section 12.1.

Territory” means USA.

Third Party” means any Person not including the Parties or the Parties’ respective Affiliates.

USA” or “United States” means the United States of America, including all possessions and territories thereof.

ARTICLE 2

LICENSES

2.1 License to Alliqua.

(a) Subject to the terms and conditions of this Agreement, CCT hereby grants to Alliqua during the Term an exclusive, royalty-bearing license, with the right to sublicense solely as provided in Section 2.3, under the CCT Technology, to Develop and Commercialize, including to use, offer for sale and sell Licensed Products in the Field in the Territory. Alliqua shall not, and shall not permit any of its Affiliates to, use or practice any CCT Technology outside the scope of the license granted to it under this Section 2.1(a). CCT hereby expressly retains for itself and others exclusive rights under the CCT Technology to manufacture Licensed Products for Alliqua (it being understood and agreed that the Parties have entered into a Supply Agreement as of the Effective Date to address the supply of Licensed Products). For the avoidance of doubt, as of the Effective Date, the license grant set forth in this Section 2.1(a) is solely in connection with Alliqua’s right to Develop and Commercialize Licensed Products and is subject to CCT’s right to Develop ECMs pursuant to Section 4.1 below.

 

-9-


(b) Alliqua may not enhance, decompile, disassemble, improve, modify, change, reverse assemble or reverse engineer Licensed Products or any part thereof, except as: (i) set forth in the Supply Agreement; (ii) expressly set forth in the applicable Joint Development Plan; or (iii) otherwise agreed to by the JSC.

2.2 Exclusivity.

(a) As partial consideration for the grant of rights set forth in Section 2.1(a), Alliqua agrees that during the Term of this Agreement, it and its Affiliates shall not, directly or indirectly, Develop or Commercialize any Competing Product in the Territory.

(b) Subject to Section 2.2(c) and 2.2(d), as partial consideration for the services to be performed by Alliqua hereunder, CCT agrees that during the Term of this Agreement, it shall not, directly or indirectly, Commercialize any Competing Product in the Territory.

(c) Nothing in this Section 2.2 shall prohibit any Acquiring Entity of CCT or any of its respective Affiliates or sublicensees from continuing, furthering or performing (i) any activities in which it was engaged prior to the effective date of a Management Change Transaction or (ii) any activities relating to products developed by an Acquiring Entity or CCT (or any other Third Party) without accessing or practicing technology or information made available to Alliqua under this Agreement. For purposes of this Section 2.2(c), (x) “Management Change Transaction” shall mean a transfer to a Third Party of all or substantially all of CCT’s assets to which this Agreement relates, or the merger or consolidation with, or acquisition of CCT by a Third Party and (y) “Acquiring Entity” shall mean such Third Party described in clause (x).

(d) Nothing in this Section 2.2 shall prohibit CCT, Alliqua or any of their respective Acquired Entities from continuing, furthering or performing (i) any activities in which an Acquired Entity was engaged prior to the effective date of a Subject Transaction or (ii) any activities relating to products developed by an Acquired Entity, CCT or Alliqua (or any other Third Party) without accessing or practicing technology or information made available to Alliqua under this Agreement. For purposes of this Section 2.2(d), (x) “Subject Transaction” shall mean a transfer to CCT or Alliqua, as the case may be, by a Third Party of all or substantially all of such Third Party’s assets, or the merger or consolidation with, or acquisition of, a Third Party by CCT or Alliqua, as the case may be, and (y) “Acquired Entity” shall mean such Third Party described in clause (x).

2.3 Alliqua Sublicense Rights.

(a) Alliqua shall have the right to grant sublicenses of the licenses granted in Section 2.1(a) to (i) its Affiliates without the consent of CCT and (ii) any Third Party for the sole purpose of providing services directly to Alliqua, so that Alliqua may perform its rights and/or obligations of Alliqua hereunder (but which, for the avoidance of doubt, shall not include a wholesale sublicense of the licenses granted in Section 2.1(a) for purposes of transferring Alliqua’s rights and obligations hereunder in their entirety), upon the prior written consent of CCT as determined by CCT in good faith, in each case, solely as set forth in this Section 2.3 (each such sublicense, a “Alliqua Sublicense Agreement”). Alliqua shall remain primarily responsible for all of its Affiliates’ activities and any and all failures by its Affiliates to comply with the applicable terms of this Agreement.

 

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(b) Alliqua shall, within thirty (30) days after granting any Alliqua Sublicense Agreement, notify CCT of the grant of such sublicense and provide CCT with a true and complete copy of the Alliqua Sublicense Agreement. Each Alliqua Sublicense Agreement shall be consistent with the terms and conditions of this Agreement and the Affiliate shall be bound by and subject to all applicable terms and conditions of this Agreement in the same manner and to the same extent as Alliqua is bound thereby.

2.4 Third Party Licenses.

(a) For the avoidance of doubt, CCT shall be responsible for payment obligations to Third Parties for Patents and Know-How within the CCT Technology that are licensed to CCT by a Third Party prior to the Effective Date, if any. Alliqua hereby acknowledges and agrees that its sublicense under such in-licensed CCT Technology (if any) is subject to the terms and conditions of the applicable license agreement governing CCT’s license of such in-licensed CCT Technology.

(b) The responsibility, necessity and handling of any Third Party license required as a result of Improvements to a Licensed Product after the Effective Date shall be agreed upon by the JSC, provided that Alliqua shall have the right to negotiate any third party license agreement that is required as a result of any Improvement to the CCT Technology, subject to (i) information sharing with CCT, including apprising CCT of any offers made by Third Parties, the substance of such offer, the status of any negotiations with Third Parties and any other information regarding such Third Party license as reasonably requested by CCT and (ii) CCT’s prior written consent of such Third Party license agreement. [***].

2.5 CCT Retained Rights. The licenses granted by CCT under this Agreement are limited to those grants specifically set forth in Section 2.1(a) and Section 8.6(b). Nothing in this Agreement will be construed to grant any rights or licenses to any other intellectual property rights of CCT. All rights, licenses, benefits and privileges not expressly granted to Alliqua hereunder are reserved by CCT. For the avoidance of doubt, CCT shall retain all rights in all CCT intellectual property (including the CCT Technology) (i) outside the Field in the Territory and (ii) in any field (including the Field) outside the Territory. Further, CCT shall have the right to research, Develop, manufacture and Commercialize any products other than Licensed Products in the Field in the Territory.

2.6 Right of First Offer. CCT grants to Alliqua a right of first offer (on the terms and conditions set forth in this Section 2.6) with respect to the Commercialization of any Competing Product in the Field in the Territory Developed by CCT (a “Covered Opportunity”). CCT will promptly notify Alliqua in writing of each Covered Opportunity. If, within fifteen (15) Business Days of receiving such notice from CCT, CCT receives a notice in writing from Alliqua that Alliqua wishes to enter into negotiations regarding the Covered Opportunity (the “Notice of Interest”), then CCT shall negotiate exclusively with Alliqua in good faith for a period of sixty (60) days from the date of CCT’s notice to Alliqua of the Covered Opportunity (or such longer period of time as may be agreed to by the Parties in writing) (the “Negotiation Period”) with respect to a definitive agreement for the Commercialization of the Covered Opportunity by

 

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Alliqua. If (a) Alliqua indicates in writing that it does not wish to enter into negotiations regarding such Covered Opportunity, (b) CCT fails to receive a Notice of Interest within the fifteen (15) Business Day period described above, or (c) the Parties have not entered into such a definitive agreement by the end of the Negotiation Period, then (i) CCT shall be free to Commercialize the Covered Opportunity itself and/or enter into one or more agreements regarding the Covered Opportunity with any Third Party and (ii) the restrictions set forth in Section 2.2(b) shall automatically terminate solely with respect to CCT’s Commercialization of such Covered Opportunity.

ARTICLE 3

GOVERNANCE

3.1 Joint Steering Committee.

(a) Within 30 days after the Effective Date, the Parties shall establish a joint steering committee (the “Joint Steering Committee” or “JSC”). The JSC shall oversee the performance of the Parties’ activities under this Agreement and under each Joint Development Plan, as set forth herein, and provide a forum for sharing advice, progress, and results relating to such activities and shall attempt to facilitate the resolution of any disputes between the Parties. The JSC shall appoint and oversee subcommittees as it deems appropriate for carrying out activities under this Agreement, and shall review the overall progress of the Parties’ collaborative efforts under this Agreement.

(b) Membership; Meetings. The JSC shall be composed of three (3) members from each of CCT and Alliqua or such equal number of members as the Parties may agree, and shall meet, in person, by teleconference, or by video-teleconference, at least one time per calendar quarter, or more or less often as unanimously agreed by both Parties’ JSC members (provided that in any event, the Parties meet at least one time per year in person). Either Party may reasonably call a meeting upon no less than fifteen (15) Business Days’ notice. In-person meetings shall alternate between CCT and Alliqua locations, or as mutually agreed upon by the Parties. Each Party shall be responsible for all of its own personnel and travel costs and expenses relating to participation in JSC meetings. The first such meeting shall be within sixty (60) days after the Effective Date. Any member of the JSC may designate a substitute to attend with prior written notice to the other Party. Ad hoc guests who are subject to written confidentiality obligations commensurate in scope to the provisions in Article 11 may be invited, upon prior joint consent of Alliqua and CCT, to the JSC meetings. Each Party may replace its JSC members with other of its employees, at any time, upon written notice to the other Party.

(c) Decision-Making; Limitations on JSC; JSC Disputes. Decisions of the JSC shall be made by [***], with each Party having collectively one vote in all decisions. The presence of at least one (1) JSC member representing each Party shall constitute a quorum in order for decisions to be made. The JSC shall have only such powers as are specifically delegated to it in this Agreement, and such powers shall be subject to the terms and conditions set forth herein. Amendments or changes to this Agreement shall be valid and binding only upon mutual written agreement of the Parties in accordance with Section 14.1 and the JSC shall have no authority to amend, change or modify the terms and conditions of this Agreement. The JSC shall use reasonable best efforts to resolve the matters within its roles and functions or otherwise referred to it.

 

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(i) If, with respect to a matter that is subject to the JSC’s decision-making authority: (i) the JSC cannot [***] within five (5) Business Days after it has met and attempted to [***] or (ii) the Parties cannot [***] on whether the JSC has decision-making authority regarding a matter within three (3) Business Days after such matter was first raised by either Party (each of the foregoing cases, a “JSC Dispute”); then in each such instance, the JSC Dispute in question shall be referred to the Executive Officer of CCT and the Executive Officer of Alliqua for resolution. The Executive Officers shall use reasonable efforts to resolve the JSC Dispute referred to them.

(ii) If the Executive Officers are unable to resolve the JSC Dispute within five (5) Business Days, the provisions of this Section 3.1(c)(ii) shall control:

(1) if the JSC Dispute solely relates to the [***], and the Executive Officers cannot resolve the matter within five (5) Business Days, then the matter shall be decided by the Executive Officer of Alliqua in good faith, giving appropriate consideration to the reasonable business and scientific concerns of CCT; and

(2) if the JSC Dispute solely relates to [***] and the Executive Officers cannot resolve the matters within five (5) Business Days, then the matter shall be decided by the Executive Officer of CCT in good faith, giving appropriate consideration to the reasonable business and scientific concerns of Alliqua.

(3) Notwithstanding Sections 3.1(c)(ii)(1) and 3.1(c)(ii)(2) above, any dispute relating to Article 7 or any financial term of this Agreement (including, for the avoidance of doubt, any increase or purported increase in the Base Purchase Price for any Licensed Product as contemplated by the Supply Agreement), shall be excluded from the provisions of this Section 3.1(c)(ii) and shall be conclusively settled in accordance with Article 13 below.

(iii) Any JSC Dispute that is not covered by 3.1(c)(ii) or resolved pursuant to Section 3.1(c)(i) or Section 3.1(c)(ii) shall be conclusively settled in accordance with Article 13 below. For all purposes under this Agreement, any decision made pursuant to this Section 3.1(c) shall be deemed to be the decision of the JSC.

(d) Secretary; Agenda; Minutes. The Chairperson shall be designated by CCT. The Chairperson (who shall be a CCT designee) shall designate a secretary of the JSC (the “Secretary Designee”) who also will be a CCT designee and who will be responsible for calling meetings and preparing and circulating an agenda in advance of each meeting. The Secretary Designee shall solicit agenda items from JSC members and provide an agenda along with appropriate information for such agenda reasonably in advance of any meeting. It is understood that such agenda will include all items reasonably requested by any JSC member for inclusion therein. Additionally, the Secretary Designee shall be responsible for preparing and circulating minutes within 15 days after each meeting of the JSC setting forth, among other things, a description, in reasonable detail, of the discussions at the meeting and a list of any actions, decisions, or determinations approved by the JSC. Such minutes shall be effective only after being approved by both Parties. Definitive minutes of all JSC meetings shall be finalized no later than 30 days after the meeting to which the minutes pertain.

 

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3.2 Alliance Managers. Promptly after the Effective Date, each Party shall appoint an individual to act as the alliance manager for such Party (each, an “Alliance Manager”) (who may be a member of the JSC). Each Alliance Manager shall thereafter be permitted to attend meetings of the JSC as a nonvoting observer (if not a member), subject to the confidentiality provisions of Article 11. The Alliance Managers shall be the primary point of contact for the Parties regarding the activities contemplated by this Agreement and shall facilitate communication regarding all activities hereunder. The Alliance Managers shall lead the communications between the Parties and shall be responsible for following-up on decisions made by the JSC. The name and contact information for such Alliance Manager, as well as any replacement(s) chosen by CCT or Alliqua, in their sole discretion, from time to time, shall be promptly provided to the other Party in accordance with Section 14.3.

3.3 Commercial Launch Team. Within thirty (30) days of the Effective Date Alliqua shall establish a commercial launch team with respect to the Commercialization of Licensed Products, and shall invite at least two (2) employees of CCT, or such number as the Parties may agree, to participate in such commercial launch team and Alliqua shall consider in good faith, any advice, comments or recommendations given by the CCT participants. The commercial launch team shall, among other things, provide the Parties with technical and other related support with respect to Commercialization, as well as recommendations in connection therewith.

3.4 Promotional Materials. Alliqua will not use any Promotional Materials in connection with the marketing, sale or distribution of the Licensed Products until after such Promotional Materials have been reviewed by the JSC and by CCT, as needed, and Alliqua has considered in good faith any comments of the JSC and CCT, except that Alliqua may use, without such review, in its introduction announcements to the trade, bill sheets and product catalog Promotional Materials that incorporate only the Licensed Product’s name, launch date, available packaging configurations, and the pricing and delivery terms. For purposes of clarity, CCT shall have final discretion to approve the content of all Promotional Materials and will be solely responsible for all Promotional Materials. For purposes of this Agreement, “Promotional Materials” means all labeling and advertising materials as defined in the Act and the regulations of the FDA thereunder. For the purposes of clarity, Alliqua will be responsible for the filing of Promotional Materials with the FDA as directed by CCT or as otherwise required by applicable Law.

ARTICLE 4

DEVELOPMENT

4.1 Joint Development Plan; Alliqua Activities. A Joint Development Plan for Biovance, consistent with the material terms mutually agreed upon by the Parties, attached hereto as Exhibit B, shall be prepared by Alliqua and presented to the JSC within ninety (90) days of the Effective Date or such other time agreed to by the JSC. In addition, Alliqua shall submit a Joint Development Plan for ECMs (similar in nature to the Joint Development Plan submitted for Biovance) to the JSC no later than ninety (90) days prior to anticipated 510(k) or other Regulatory Clearance and/or Approval in each relevant jurisdiction within the Territory, such Joint Development Plan to be discussed in good faith between the Parties prior to JSC submission, it

 

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being understood and agreed that following the Effective Date, CCT shall have the right to continue to Develop ECMs. The Parties shall, and shall cause their respective members of the JSC to, cooperate with each other in good faith to promptly finalize a mutually acceptable Joint Development Plan for each Licensed Product. The Parties agree to cooperate with each other in carrying out each Joint Development Plan consistent with the activities set forth therein. Alliqua shall use Commercially Reasonable Best Efforts to undertake the Development activities for the Licensed Products (and conduct such related clinical studies and perform all such related activities) set forth in, and in accordance with, each Joint Development Plan, subject to CCT’s right to continue to Develop ECMs. Alliqua shall be responsible for, and shall bear all Development Costs, including any additional activities required by health authorities or following unexpected events.

4.2 Records and Reports. Alliqua shall maintain complete, current and accurate records of (a) all work conducted by it or its Affiliates under each Joint Development Plan; (b) all data, Know-How and Patents resulting from such work; and (c) all Development Costs incurred in connection therewith (collectively, the “Development Records”). At each quarterly JSC meeting, to the extent applicable, (i) CCT shall provide to Alliqua all written updates that CCT has provided to its management team during the previous calendar quarter with respect to any pre-clinical development of ECMs and all other information reasonably requested by Alliqua, including but not limited to, written updates on all work conducted by it or its Affiliates with respect to such development during the previous calendar quarter and (ii) Alliqua shall provide to CCT all written updates that Alliqua has provided to its management team during the previous calendar quarter with respect to Development and all other information reasonably requested by CCT, including but not limited to, written updates on (1) all work conducted by it or its Affiliates under each Joint Development Plan during the previous calendar quarter; (2) all data, Know-How and Patents resulting from such work during the previous calendar quarter; and (3) all Development Costs incurred in connection therewith during the previous calendar quarter. CCT shall have the right to audit the financial records relating to the Development Costs in accordance with Section 7.7, and shall have the right to review Alliqua’s Development Records during regular business hours and not more often than [***].

4.3 Subcontracts. Alliqua may perform any of its Development or Commercialization activities under this Agreement through its Affiliates and through one or more subcontractors or consultants pursuant to a written subcontractor agreement without the prior written consent of CCT, provided that with respect to each subcontractor agreement entered into on or after the Effective Date:

(a) Alliqua obtains CCT’s prior written consent to the selection of each such subcontractor (i) that will perform contract research services or (ii) that will perform contract manufacturing services, in each case, such consent shall not be unreasonably withheld, conditioned or delayed, and, if requested by CCT with respect to such a specific subcontractor (each, a “Selected Subcontractor”), Alliqua shall provide to CCT such subcontractor’s subcontractor agreement for CCT’s review and comment (each, a “Selected Subcontractor Agreement”), solely for the purpose of approving such Selected Subcontractor to perform Development and/or Commercialization activities on behalf of Alliqua pursuant to this Agreement. CCT shall have a period of five (5) Business Days (or such other period of time as mutually agreed to by the Parties in good faith) following receipt of a Selected Subcontractor

 

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Agreement to review and comment upon such Selected Subcontractor Agreement, which comments Alliqua shall consider in good faith; provided, however, that in the event CCT fails to provide or affirmatively deny consent to use such Selected Subcontractor within such five (5) Business Day period, then Alliqua shall be free to enter into such Selected Subcontractor Agreement. For the avoidance of doubt, CCT’s review and comment shall be solely limited to approval of such Selected Subcontractor as a subcontractor who may perform Development and/or Commercialization activities on behalf of Alliqua under this Agreement. Any comments by CCT to a Selected Subcontractor Agreement shall not be construed by Alliqua that CCT consents to any term or condition in such Selected Subcontractor Agreement. Alliqua shall be solely responsible for the terms and substance of each Selected Subcontractor Agreement, including without limitation, that each Selected Subcontractor Agreement conforms to the terms of this Agreement as required by this Section 4.3.

(b) Alliqua obtains the JSC’s prior written consent to the selection of each such subcontractor if the aggregate payments to such subcontractor for services rendered with respect to work performed by such subcontractor in connection with, or related to, any Licensed Product exceed, or are expected to exceed, $[***] (each, a “JSC Selected Subcontractor”). If the JSC approves the selection of a JSC Selected Subcontractor, Alliqua shall provide, at CCT’s request, such subcontractor’s subcontractor agreement to CCT for CCT’s review and comment (each, a “JSC Selected Subcontractor Agreement”). CCT shall have a period of five (5) Business Days (or such other period of time as mutually agreed to by the Parties in good faith) following receipt of a JSC Selected Subcontractor Agreement to review and comment upon such JSC Selected Subcontractor Agreement, which comments Alliqua shall consider in good faith. For the avoidance of doubt, any comments by CCT to a JSC Selected Subcontractor Agreement shall not be construed by Alliqua that CCT consents to any term or condition in such JSC Selected Subcontractor Agreement. Alliqua shall be solely responsible for the terms and substance of each JSC Selected Subcontractor Agreement, including without limitation, that each JSC Selected Subcontractor Agreement conforms to the terms of this Agreement as required by this Section 4.3. If the JSC does not agree on a selection of a subcontractor under Section 4.3(b), the Parties shall resolve the dispute under Section 3.1(c)(ii)(1).

(c) Alliqua remains responsible for the work allocated to such Affiliates, subcontractors and consultants to the same extent it would if it had done such work itself.

(d) The Affiliate or subcontractor (as the case may be) undertakes in writing obligations of confidentiality and non-use regarding Confidential Information, that are substantially the same as those undertaken by the Parties pursuant to Article 11 hereof.

(e) If such Affiliate or subcontractor will develop intellectual property related to any Licensed Product in the course of performing any such work, the Affiliate or subcontractor (as the case may be) agrees in writing to assign to Alliqua all data, inventions, other Know-How, Patents and other intellectual property developed in the course of performing any such work, in each case to the extent related to such Licensed Product. Each subcontractor who performs any Development and/or Commercialization activities on behalf of Alliqua under this Agreement is referred to herein as an “Alliqua Permitted Subcontractor.

 

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Without limiting the foregoing, each Alliqua Permitted Subcontractor shall be subject to the applicable terms and conditions of this Agreement and no agreement with any Alliqua Permitted Subcontractor shall release Alliqua from any of its activities under this Agreement. For purposes of determining Alliqua’s liability under this Agreement, any time the term “Alliqua” is used in this Agreement it includes all subcontractors performing any part of this Agreement on behalf of Alliqua unless otherwise agreed to by CCT in writing. Upon CCT’s reasonable written request, Alliqua shall remove or replace any Alliqua Permitted Subcontractor (subject to compliance with the terms of any applicable agreement entered into by Alliqua with such Alliqua Permitted Subcontractor), if CCT determines, in its reasonable and good faith judgment, that the continued use of such Alliqua Permitted Subcontractor is not in the best interests of CCT.

ARTICLE 5

REGULATORY MATTERS

5.1 Regulatory Activities. CCT shall be responsible for Regulatory Clearances and/or Approvals and shall use commercially reasonable efforts to obtain and support Regulatory Clearances and/or Approvals in at least the United States for Licensed Products. CCT shall file and own all right, title and interest in all Regulatory Materials designed to obtain or support such Regulatory Clearances and/or Approvals. Upon CCT’s reasonable request and expense, Alliqua shall cooperate fully with, and provide assistance to, CCT in connection with the activities set forth in this Article 5.

5.2 Regulatory Reports; Meetings with Regulatory Authorities. Each Party shall keep the other Party informed of material regulatory developments relating to Licensed Products in the Territory through regular reports at the JSC meetings. Each Party shall provide the other Party, for review and comment, significant draft material regulatory filings at least twenty (20) Business Days in advance of their intended date of submission to the extent possible and on a rolling basis as needed to any Regulatory Authority in any country or jurisdiction and shall consider any comments thereto provided by such other Party. Each Party shall notify the other Party as soon as practical of any Regulatory Materials (other than routine correspondence) submitted to or received from any Regulatory Authority in any jurisdiction and shall provide such other Party with copies thereof within twenty (20) Business Days after submission or receipt. Each Party shall provide the other Party with reasonable advance notice of all meetings scheduled with any Regulatory Authority in any country or jurisdiction concerning a Licensed Product to the extent such meeting effects this Agreement and/or such other Party’s obligations hereunder, and shall consider any input from such other Party in preparing for such meetings, and in the Party’s sole discretion and if permitted by the relevant Regulatory Authority, appropriate personnel from such other Party may have the right to attend such meetings at its own expense.

5.3 Regulatory Costs. [***].

5.4 Notification of Threatened Action. Each Party shall immediately notify the other Party of any information it receives regarding any threatened or pending action, inspection or

 

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communication by or from any Third Party, including a Regulatory Authority, which may materially affect the Development, Commercialization or regulatory status of a Licensed Product. Upon receipt of such information, the Parties shall consult with each other in an effort to arrive at a mutually acceptable procedure for taking appropriate action.

5.5 Adverse Event Reporting and Safety Data Exchange. As soon as practical, the Parties shall enter into a commercially reasonable pharmacovigilance agreement (the “Safety Data and Exchange Agreement”). The Safety Data and Exchange Agreement shall include customary guidelines and procedures for the receipt, investigation, recordation, communication, and exchange (as between the Parties) of adverse event reports, pregnancy reports, and any other information concerning the safety of any Licensed Product. Such guidelines and procedures shall be in accordance with, and enable the Parties to fulfill, local and national regulatory reporting activities under applicable Laws. Furthermore, such agreed procedure shall be consistent with relevant guidelines of the International Conference on Harmonisation, except where such guidelines may conflict with existing local regulatory reporting or safety reporting requirements, in which case the local reporting requirements shall prevail. The Safety Data and Exchange Agreement shall provide for an adverse event database for Licensed Products in the Territory to be maintained by CCT [***]. CCT shall be responsible for reporting quality complaints, adverse events and safety data related to Licensed Products to applicable Regulatory Authorities in the Territory, as well as responding to safety issues and to all requests of Regulatory Authorities relating to Licensed Products in the Territory. Each Party hereby agrees to comply with its respective activities under such Safety Data and Exchange Agreement and to cause its Affiliates to comply with such activities.

5.6 Remedial Actions. Each Party shall notify the other Party immediately, and promptly confirm such notice in writing, if it obtains information indicating that any Licensed Product may be subject to any recall, corrective action or other regulatory action with respect to a Licensed Product taken by virtue of applicable Laws (a “Remedial Action”). The Parties shall assist each other in gathering and evaluating such information as is necessary to determine the necessity of conducting a Remedial Action. CCT shall, and shall ensure that its Affiliates will, maintain adequate records to permit the Parties to trace the distribution and use of the Licensed Products. CCT shall have the right to decide whether any Remedial Action with respect to any Licensed Product should be commenced and CCT shall, at its expense, control and coordinate all efforts necessary to conduct such Remedial Action. Upon CCT’s reasonable request, Alliqua shall reasonably cooperate with, and provide reasonable assistance to, CCT in connection with any activities undertaken by CCT pursuant to the immediately preceding sentence, [***].

5.7 Rebate Processing and Government Price Reporting. Alliqua will be solely responsible for all federal, state and local government and private purchasing, pricing or reimbursement programs with respect to the Licensed Products, including taking all necessary and proper steps to execute agreements and file other appropriate reports and other documents with Governmental Authorities and private Persons and CCT shall provide reasonable assistance to Alliqua to effectuate the same. Alliqua shall be solely responsible for payment and processing of all discounts, rebates, and fees, whether required by contract or Laws, for the Licensed Products. For the avoidance of doubt, with respect to Licensed Products, Alliqua shall report all applicable data, including price, rebate and discount data to the Centers for Medicare and Medicaid Services, data to the Department of Veterans Affairs and any other pricing or reimbursement related data

 

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required by Governmental Authorities under applicable Laws (“Government Price Reporting”). Alliqua’s Government Price Reporting shall comply with all applicable Laws and contracts. Alliqua shall pay the rebates, chargebacks, discounts, and fees for the Licensed Products as required by applicable Laws and contracts. If CCT notifies Alliqua that it is required to refer to Licensed Products sales made by Alliqua, or other reimbursement or Commercialization-related data maintained by Alliqua under this Agreement, in CCT’s reports to Governmental Authorities, Alliqua shall provide CCT with required sales figures or other data for Licensed Products sales made by Alliqua, and CCT shall be entitled to use such data or information that Alliqua provides under this Section 5.7 or otherwise for complying with CCT’s required reports to Governmental Authorities.

ARTICLE 6

COMMERCIALIZATION

6.1 Commercialization Responsibilities. During the Term, Alliqua shall use Commercially Reasonable Best Efforts to, and shall be responsible for, all aspects of, the Commercialization of Licensed Products for all indications throughout the Territory. Such Commercialization responsibilities for each Licensed Product shall include: (a) developing and executing a Commercialization Plan for each Licensed Product; (b) negotiating with applicable Governmental Authorities and private Third Party payers regarding the price and reimbursement status of each Licensed Product; (c) marketing and promotion; (d) booking sales and distribution and performance of related services; (e) handling all aspects of order processing, invoicing and collection, inventory and receivables; (f) providing customer support, including handling medical queries, and performing other related functions; and (g) conforming its practices and procedures to applicable Laws relating to the marketing, detailing and promotion of each Licensed Product in the Territory, in each case, unless otherwise expressly provided in this Agreement, as determined by Alliqua in its sole discretion; provided, however, that Alliqua shall promptly inform and provide CCT with any material developments, updates and documentation related to Alliqua’s obligations set forth in this Section 6.1(a)-(g). Alliqua shall bear all of the costs and expenses incurred in connection with such Commercialization activities.

6.2 Commercialization Plan. The strategy for the Commercialization of each Licensed Product shall be described in a comprehensive plan that describes the pre-launch, launch and subsequent Commercialization activities for such Licensed Product in the Territory, which shall include, without limitation, (i) the annual anticipated [***] in each country within the Territory, (ii) the annual anticipated [***] in each of the countries within the Territory, (iii) the annual anticipated [***] in each of the countries within the Territory, and (iv) a report on [***] (the “Commercialization Plan”). An initial Commercialization Plan for Biovance shall be prepared by Alliqua and presented to the JSC as soon as practicable, but in any event, within ninety (90 days) of the Effective Date or such other time agreed to by the JSC. In addition, Alliqua shall submit an initial Commercialization Plan for ECMs to the JSC no later than ninety (90) days prior to anticipated 510(k) or other Regulatory Clearance and/or Approval in each relevant jurisdiction within the Territory. The Parties shall, and shall cause their respective members of the JSC to, cooperate with each other in good faith to promptly finalize a mutually acceptable Commercialization Plan for each Licensed Product. Alliqua shall deliver an updated Commercialization Plan for each Licensed Product, as applicable, at each meeting of the JSC or at such times as agreed to by the JSC.

 

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6.3 Commercial Diligence. During the Term, Alliqua shall use Commercially Reasonable Best Efforts to Commercialize each Licensed Product in the Field throughout the Territory, in each case as contemplated by the applicable Commercialization Plan or as otherwise mutually agreed upon by the Parties in writing.

6.4 Records and Reports. Alliqua shall maintain complete, current and accurate records of all work conducted by it or its Affiliates under each Commercialization Plan. At each quarterly JSC meeting, Alliqua shall provide all written updates that Alliqua has provided to its management team during the previous calendar quarter with respect to the Commercialization of the Licensed Products and all other information reasonably requested by CCT, including but not limited to, an update of all work conducted by it or its Affiliates under each Commercialization Plan during the previous calendar quarter.

6.5 Commercialization Outside the Territory. CCT hereby grants to Alliqua and Alliqua hereby accepts, the right of first negotiation, under mutually acceptable terms between the Parties, to enter into an agreement to market and/or sell the Licensed Products (whether on an exclusive or non-exclusive basis) in the Field in any jurisdictions outside the Territory, in the event that CCT intends to grant rights to a Third Party to market and/or sell the Licensed Products in the Field in any such jurisdictions outside the Territory (an “Additional Territory Transaction”). In the event that CCT desires to enter into an Additional Territory Transaction, CCT shall notify Alliqua in writing of CCT’s desire to enter into discussions regarding such a transaction. Alliqua shall, within fifteen (15) Business Days after receipt of such notice, indicate to CCT in writing whether it wishes to enter into discussions regarding an Additional Territory Transaction and, if Alliqua indicates that it wishes to enter into such discussions, the Parties shall in good faith negotiate a definitive agreement for such Additional Territory Transaction. If either (a) Alliqua indicates it does not wish to enter into such discussions regarding an Additional Territory Transaction, (b) Alliqua fails to indicate its interest within such fifteen (15) Business Day period or (c) Alliqua indicates it wishes to enter into such discussions but the Parties fail to execute a definitive agreement with respect to such Additional Territory Transaction within sixty (60) calendar days after Alliqua’s indication of interest, then CCT shall have no further obligation to Alliqua under this Agreement with respect to an Additional Territory Transaction and CCT may, itself, or through an Affiliate or Third Party, market and/or sell the Licensed Products, as the case may be, in the Field outside the Territory.

ARTICLE 7

COMPENSATION

7.1 Annual License Fee.

(a) As partial consideration for the rights granted to Alliqua herein, subject to Section 7.1(b), Alliqua shall pay to CCT the annual license fees set forth on Schedule 7.1(a) hereto following the First Commercial Sale of each Licensed Product (each, an “Annual License Fee,” and, collectively, the “Annual License Fees”), provided that on a Licensed Product-by-Licensed Product basis, if a Market Condition Change occurs in a Launch Year that an Annual License Fee is due and payable, the Parties shall negotiate and mutually agree upon an alternative Annual License Fee with respect to such Licensed Product in accordance with Section 7.4 below. Alliqua shall pay to CCT each Annual License Fee for each Launch Year in arrears with each such amount due and payable [***] following the end of such Launch Year.

 

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(b) Notwithstanding Section 7.1(a), on a Licensed Product-by-Licensed Product basis, in the event that for any Launch Year: (i) the product of the number of units of the Licensed Product acquired by Alliqua multiplied by the Base Purchase Price of such Licensed Product is less than the Annual License Fee due and payable to CCT for such Launch Year pursuant to Section 7.1(a), then Alliqua shall, in accordance with Section 7.1(a), pay to CCT the Annual License Fee; or (ii) if the product of the number of units of the Licensed Product acquired by Alliqua multiplied by the Base Purchase Price of such Licensed Product is equal to or greater than the Annual License Fee due and payable for such Launch Year pursuant to Section 7.1(a), then Alliqua shall not be obligated to pay any Annual License Fee to CCT for such Launch Year. Schedule 7.1(b) sets forth by way of example the terms of this Section 7.1(b).

7.2 Milestone Payments. Alliqua shall make non-refundable, non-creditable milestone payments (each, a “Milestone Payment”) to CCT upon the achievement of certain milestone events (each a “Milestone Event”) in connection with the sale of a Licensed Product as set forth on Schedule 7.2 hereto, with the caveat that each individual Milestone Payment set forth in rows numbered (1) through (9) of the table set forth on Schedule 7.2 shall be paid only once. Alliqua shall pay to CCT each such amount within [***] following the end of such Launch Year in which achievement of the applicable Milestone Event occurred. If any Milestone Event is achieved and Alliqua has not yet made the prior Milestone Payment(s), all previous unpaid Milestone Payments shall be due and payable together with the payment of the Milestone Payment for the first such subsequent Milestone Event achieved.

7.3 Royalties.

(a) Royalty Rates. Alliqua shall pay to CCT royalties on aggregate annual Net Sales of all Licensed Products during the Royalty Term as set forth on Schedule 7.3(a) hereto, such royalties to be calculated by multiplying the applicable royalty rate in the applicable table for each Licensed Product on Schedule 7.3(a) by the corresponding Gross Margin of such Licensed Product in the Territory in each Launch Year, provided that if a Market Condition Change occurs in a Launch Year that royalties are due and payable, the Parties shall negotiate and mutually agree upon an alternative royalty rate in accordance with Section 7.4 below.

(b) Royalty Term. Royalties shall be due under this Section 7.3 during the period of time beginning, on a country-by-country basis, from the First Commercial Sale of a Licensed Product in such country until the termination or expiration of this Agreement in accordance with Article 12, below, including through any Sell-Off Period in accordance with Section 12.6(d) (the “Royalty Term”).

(c) Royalty Reports and Payments. Within [***] following the end of each Launch Year Quarter, commencing with the Launch Year Quarter in which the First Commercial Sale of any Licensed Product is made anywhere in the Territory, Alliqua shall provide CCT with a report containing the following information for the applicable Launch Year Quarter, on a country-by-country and Licensed Product-by-Licensed Product basis: (i) the amount of gross sales of such Licensed Product in the Territory, (ii) an itemized calculation of Net Sales in the Territory showing deductions provided for in the definition of Net Sales, (iii) a calculation of the royalty

 

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payment due on such sales, and (iv) the exchange rate for such country. Contemporaneously with the delivery of the applicable quarterly report, Alliqua shall pay in Dollars all amounts due to CCT pursuant to Section 7.3(a) with respect to Net Sales by Alliqua and its Affiliates for such Launch Year Quarter.

7.4 Market Condition Change. In the event of a Market Condition Change, the Parties shall negotiate in good faith and mutually agree upon an alternative (i) Annual License Fee for a Launch Year and (ii) Minimum Sales Threshold (as defined below) to account for such Market Condition Change (the “Market Condition Financial Terms”), provided that such Market Condition Financial Terms shall not be reduced by more than [***] of the then-current financial terms set forth in this Article 7 and provided further that, once such Market Condition Change is cured, the Market Condition Financial Terms shall automatically expire as of the end of the calendar year in which the Market Condition Change occurred, and the terms and conditions set forth in this Article 7 shall control.

7.5 Payment Method; Late Payments. All payments due hereunder shall be made in Dollars by wire transfer of immediately available funds into an account in the USA designated by the payee Party. If a Party does not receive payment of any sum due to it on or before the due date, simple interest shall thereafter accrue on the sum due until the date of payment at the per annum rate of [***] over the then-current prime rate reported in The Wall Street Journal or the maximum rate allowable by applicable Laws, whichever is lower.

7.6 Records. Alliqua and its Affiliates shall maintain complete and accurate records in reasonably sufficient detail to permit CCT to confirm the accuracy of the calculation of royalty payments. CCT shall have the right to audit such records in accordance with Section 7.7.

7.7 Audits. For a period of two (2) years from the end of the Launch Year in which a payment was due hereunder, upon [***] prior notice, Alliqua (the “Audited Party”) shall (and shall require that its Affiliates) make such records relating to such payment available, during regular business hours and not more often than once each Launch Year, for examination by an independent certified public accountant selected by CCT (the “Auditing Party”), for the purposes of verifying compliance with this Agreement and the accuracy of the financial reports and/or invoices furnished pursuant to this Agreement. The results of any such audit shall be shared by the auditor with both Parties and shall be considered Confidential Information of both Parties. Any amounts shown to be owed to the other shall be paid within [***] from the auditor’s report, plus interest (as set forth in Section 7.5) from the original due date. The Auditing Party shall bear the full cost of such audit unless such audit discloses a deficiency in the Audited Party’s payments of greater than [***] (i.e., an under-payment by Alliqua pursuant to Section 7.3, or an over-charge by CCT pursuant to Section 5.3), in which case the Audited Party shall bear the full cost of such audit.

7.8 Taxes.

(a) Taxes on Income. Each Party shall be solely responsible for the payment of all taxes imposed on its share of income arising directly or indirectly from the efforts of the Parties under this Agreement.

 

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(b) Tax Cooperation. The Parties agree to cooperate with one another and use reasonable efforts to reduce or eliminate tax withholding or similar obligations in respect of royalties, Milestone Payments, and other payments made by Alliqua to CCT under this Agreement. To the extent Alliqua is required to deduct and withhold taxes on any payment to CCT, Alliqua shall pay the amounts of such taxes to the proper Governmental Authority in a timely manner and promptly transmit to CCT an official tax certificate or other evidence of such withholding sufficient to enable CCT to claim such payment of taxes. CCT shall provide Alliqua any tax forms that may be reasonably necessary in order for Alliqua not to withhold tax or to withhold tax at a reduced rate under an applicable bilateral income tax treaty. Each Party shall provide the other with reasonable assistance to enable the recovery, as permitted by applicable Laws, of withholding taxes, value added taxes, or similar obligations resulting from payments made under this Agreement, such recovery to be for the benefit of the Party bearing such withholding tax or value added tax. Alliqua shall require its Affiliates in the Territory to cooperate with CCT in a manner consistent with this Section 7.8(b).

7.9 Annual Fee on Medical Device Manufacturers and Importers. The Parties acknowledge that the “Annual Fee on Medical Device Manufacturers and Importers” was signed into United States law with the Patient Protection and Affordable Care Act (PPACA) in 2010. For the avoidance of doubt, in the event the Annual Fee on Medical Device Manufacturers and Importers or any similar fee for a drug or biological product is applied to the sale of any Licensed Product by Alliqua, the Parties hereby acknowledge and agree that (a) Alliqua shall be solely responsible for full payment of such fee; and (b) Alliqua shall supply CCT with reasonable documentation supporting the imposition of such fee, including, but not limited to, as applicable, the annual invoice for such fee received from the United States Internal Revenue Service.

ARTICLE 8

INTELLECTUAL PROPERTY MATTERS

8.1 Prosecution of Patents.

(a) CCT Prosecuted Patents.

(i) Subject to Section 8.1(a)(ii) below, as between the Parties, CCT shall have the first right to (and shall use reasonably diligent efforts to) prepare, file, prosecute and maintain the CCT Patents in the Territory. The costs of [***] of CCT Patents shall be borne by [***].

(ii) If CCT decides to cease the prosecution or maintenance of any CCT Patent after the Effective Date, it shall notify Alliqua in writing sufficiently in advance (but in no event less than twenty (20) Business Days prior to the date on which the CCT Patent would become abandoned) so that Alliqua may, at its discretion, assume the responsibility for the prosecution or maintenance of such Patent, [***].

(b) Cooperation. Each Party shall provide the other Party all reasonable assistance and cooperation, at the other Party’s request and expense, in the patent prosecution efforts provide above in this Section 8.1, including providing any necessary powers of attorney and executing any other required documents or instruments for such prosecution.

 

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8.2 Inventions Generally. Inventions conceived or reduced to practice in the course of activities performed under or contemplated by this Agreement (including those which are Improvements to CCT Know-How, CCT Patents or otherwise to CCT’s biomaterials-related intellectual property, or which relate to a Licensed Product), by either CCT or Alliqua (or both, jointly) shall be owned by CCT. Alliqua hereby makes all assignments to CCT in order to effect the foregoing, and agrees, at Alliqua’s cost and expense, to take all further actions requested by CCT in order to perfect the foregoing assignment. All rights assigned to CCT by Alliqua shall be deemed to be CCT Know-How or CCT Patents, as applicable.

8.3 Enforcement of CCT Patents.

(a) Notification. If either Party becomes aware of any existing or threatened infringement of the CCT Patents (an “Infringement”), which infringing activity involves the using, making, importing, offering for sale or selling of any Licensed Product or a competitive product or otherwise adversely affects or is reasonably expected to adversely affect the Commercialization of any Licensed Product, it shall promptly notify the other Party in writing to that effect and the Parties shall consult with each other regarding any actions to be taken with respect to such Infringement.

(b) Actions Controlled by CCT; Alliqua’s Back-Up Enforcement Right. CCT shall have the first right to bring an appropriate suit or take other action against any Third Party engaged in any Infringement, [***]. If, after its receipt or delivery of notice thereof under Section 8.3(a), CCT (i) notifies Alliqua that it will not bring any claim, suit or action to prevent or abate such Infringement or (ii) fails to commence a suit to prevent or abate such Infringement within [***], Alliqua shall have the right, but not the obligation, to commence a suit or take action to prevent or abate such Infringement under the CCT Patents [***]. Expenses of, and recoveries on, suits under this Section 8.3(b) shall be handled as provided in Section 8.3(e).

(c) Collaboration. Each Party shall provide to the enforcing Party reasonable assistance in such enforcement, at such enforcing Party’s request and expense, including joining such action as a party plaintiff if required by applicable Laws to pursue such action. The enforcing Party shall keep the other Party regularly informed of the status and progress of such enforcement efforts and shall reasonably consider the other Party’s comments on any such efforts. The enforcing Party shall consult with the other Party as to any important aspects of such enforcement, including determination of litigation strategy and filing of material papers to the competent court. The non-enforcing Party shall be entitled to separate representation in such matter by counsel of its own choice and at its own expense, but such Party shall at all times cooperate fully with the enforcing Party.

(d) Settlement. Neither Party shall settle any claim, suit or action that it brings under Section 8.3(b) in a manner that would negatively impact the applicable CCT Patents (e.g., shorten the life of such Patents or narrow their scope) without the prior written consent of the other Party.

(e) Expenses and Recoveries. The term “Revenue” includes all fees, minimum royalties, payments, compensation, or consideration of any kind (including without limitation in-kind payments, forbearance in connection with settlement, equity amounts taken in lieu of cash, or discounts below fair market value of equity) received by either Party or its

 

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Affiliates, without regard to which entity pays, transfers or otherwise provides the Revenue, or how the Revenue is structured, denominated, or paid transferred or provided. [***] shall be solely responsible for any expenses incurred by [***] as a result of such claim, suit or action. If [***] receives Revenue in such claim, suit or action, such Revenue shall be allocated first to the reimbursement of any expenses incurred by [***] in such litigation (including, for this purpose, a reasonable allocation of expenses of internal counsel), and any remaining amounts shall be allocated as follows: [***].

8.4 Infringement of Third Party Rights in the Territory.

(a) If any Licensed Product Commercialized by or on behalf of Alliqua becomes the subject of a Third Party claim or assertion of infringement of such Third Party’s intellectual property, including any Patent, issued in the Territory, Alliqua shall promptly notify CCT and the Parties shall negotiate in good faith and agree on and enter into a “common interest agreement” wherein the Parties agree to their shared, mutual interest in the outcome of such potential dispute, and thereafter, the Parties shall promptly meet to consider the claim or assertion and the appropriate course of action. Subject to Sections 2.4 and 12.5, CCT shall have the right, but not the obligation, to defend any such infringement claim, [***]. Alliqua shall provide all reasonable assistance to CCT and reasonably cooperate in the defense of any such action. At each quarterly JSC meeting, CCT shall provide to Alliqua an update on the status and defense of such infringement claim during the previous calendar quarter and any other information with respect thereto as reasonably requested by Alliqua.

(b) CCT shall not settle or consent to judgment of any infringement claim without the prior written consent of Alliqua, such consent not to be unreasonably delayed, conditioned, or withheld; provided, however, that if such settlement or consent to judgment does not impose any liability on, or materially affect the rights or obligations of, Alliqua, CCT shall have the right to settle such claim or consent to judgment (e.g., a monetary liability that is fully satisfied by CCT on behalf of Alliqua). In the event the Parties cannot reach consensus within five (5) Business Days after they have met and attempted to reach consensus regarding settlement of any such infringement claim (an “Infringement Dispute”), the settlement of such Infringement Dispute shall be referred to the JSC for resolution; provided, however, that the provisions of Section 3.1(c)(ii) shall not apply with respect to that particular matter and the Parties’ resolution thereof.

8.5 Patent Marking. Alliqua and its Affiliates shall mark each Licensed Product marketed and sold by Alliqua or its Affiliates hereunder with appropriate patent numbers or indicia.

8.6 Trademarks.

(a) Product Marks. Alliqua shall have the right to brand the Licensed Products and create all Licensed Product labels using Alliqua-related trademarks and any other trademarks and trade names it determines appropriate (including the CCT Marks as set forth in Section 8.6(b) below) for the Licensed Products, which may vary by country or within a country (collectively, the “Product Marks”). The Parties acknowledge and agree that the Licensed Products shall be co-branded as mutually agreed upon in writing by the Parties and that Alliqua

 

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shall give the proper attribution on each Licensed Product to CCT as provider of the CCT Technology or as otherwise mutually agreed upon by the Parties. The Parties shall mutually agree upon the form and substance of such attribution rights. In the event that Alliqua desires to brand a Licensed Product using an alternative name, Alliqua shall first propose such alternative name to CCT, which name may be approved by CCT in its sole discretion. For the avoidance of doubt, in no event may Alliqua brand a Licensed Product under an alternative name without the prior written consent of CCT.

(b) CCT Marks. Subject to the terms and conditions of this Agreement, CCT hereby grants to Alliqua an exclusive license to use and display (with the right to grant sublicenses to any (i) sublicensees permitted under Section 2.3 and (ii) contract research organizations, distributors and other Third Parties who perform activities directly on behalf of Alliqua, provided that such sublicense is incidental to the activities performed by such Third Party), during the Term and in the Field in the Territory, to the Biovance and/or ECM trademark, as applicable, as set forth in Exhibit C, to identify the Licensed Products (each, a “CCT Mark” and collectively, the “CCT Marks”), (i) on the Licensed Product itself, (ii) as part of the Product Marks and (iii) on any other labels, promotional materials or Regulatory Materials used in connection with any Licensed Product, provided that if Alliqua, upon the consent of CCT, brings an enforcement action with respect to any CCT Mark, Alliqua shall reimburse CCT fully for the expenses CCT incurs in connection therewith (including, without limitation, costs associated with hiring consultants, attorneys’ fees and preparation and filing of any applications, renewals or other documentation with the United States Patent and Trademark Office, foreign counterparts, or other relevant agency). Alliqua shall give reasonable prior advance notice to CCT regarding any use or display of the CCT Marks and shall provide CCT with a sample embodying such use or display, for CCT’s prior review and approval to ensure such use or display complies with CCT’s reasonable trademark guidelines, such approval not to be unreasonably withheld, conditioned or delayed. Alliqua shall follow CCT’s reasonable trademark guidelines at all times as to the use of the CCT Marks. If CCT changes such trademark guidelines: (x) CCT shall, if practical, provide Alliqua with at least thirty (30) days prior written notice of such changes, (y) such changes shall not apply to any materials that are in inventory or on order as of the effective date of such notice and (z) Alliqua shall be solely responsible for any expense of implementing such changes, including on packaging, promotional materials and other items if such changes are required by Law, and if such changes are not required by Law, each Party shall bear equal responsibility for any expense of implementing such changes. Other than as expressly set forth herein, use of the CCT Marks shall not confer on Alliqua any right to or interest in such trademark, and Alliqua acknowledges and agrees that all use of the CCT Marks and the goodwill generated thereby shall inure solely to the benefit of CCT. Alliqua shall not use, adopt, file, register, seek to register or take any other action to use or establish rights in any mark anywhere in the world which is comprised of, derivative of, a combination with, or otherwise confusingly similar to, any CCT Mark or file any application to register any trademark or trade name that is confusingly similar to the CCT Marks.

(c) Ownership; No Challenge. Subject to Section 8.6(b), above, Alliqua shall own all right, title and interest in and to the Product Marks (excluding the CCT Marks). All use of the Product Marks (excluding the CCT Marks) and the goodwill generated thereby shall inure solely to the benefit of Alliqua. Other than in connection with the CCT Marks, CCT shall not use, adopt, file, register, seek to register, or take any other action to use or establish rights in any mark anywhere in the world which is comprised of, derivative of, a combination with, or otherwise

 

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confusingly similar to, any Product Mark. For the avoidance of doubt, this Section 8.6(c) does not grant Alliqua any right to or interest in the CCT Marks, and Alliqua acknowledges and agrees that all use of the CCT Marks and the goodwill generated thereby shall inure solely to the benefit of CCT.

ARTICLE 9

REPRESENTATIONS AND WARRANTIES; COVENANTS

9.1 Mutual Representations and Warranties. Each Party hereby represents and warrants to the other Party as follows:

(a) Organization. As of the Effective Date, such Party is an entity duly organized, validly existing and in good standing under the laws of the state of its incorporation or organization, with the requisite legal authority to own and use its properties and assets and to carry on its business as currently conducted. Such Party not in violation of any of the provisions of its respective certificate or articles of incorporation, formation, bylaws or other organizational or charter documents.

(b) Authorization; Enforcement. Such Party has the requisite corporate authority to enter into and to consummate the transactions contemplated by this Agreement and each of and otherwise to carry out its obligations hereunder. The execution and delivery by it of this Agreement and the consummation by it of the transactions contemplated hereby have been duly authorized by all necessary corporate action and no further consent or action is required by it, its Board of Directors or its stockholders. This Agreement has been duly executed by such Party and is the valid and binding obligation of such Party enforceable against such Party in accordance with its terms, except (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, and (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies.

(c) No Conflicts. The execution, delivery and performance by such Party of this Agreement and the consummation by such Party of the transactions contemplated hereby does not, and will not, (i) conflict with or violate any provision of such Party’s certificate or articles of incorporation, bylaws or other organizational or charter documents, (ii) in any material respect, conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument or other understanding to which such Party is a party or by which any property or asset of such Party is bound, or affected, or (iii) in any material respect, result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which such Party is subject, or by which any property or asset of such Party is bound or affected.

9.2 Additional Representations and Warranties of CCT. CCT represents and warrants to Alliqua as follows, as of the Effective Date:

(a) It has sufficient legal and/or beneficial title, ownership or license to the CCT Technology to grant the licenses to Alliqua as purported to be granted pursuant to this Agreement;

 

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(b) CCT has not licensed from any Third Party any intellectual property rights included in the CCT Technology, and, to CCT’s knowledge, no such license is required.

(c) CCT has not received any written claim or notice from any Third Party asserting or alleging that the CCT Technology infringes any intellectual property rights of such Third Party, and, to CCT’s knowledge, the CCT Technology does not infringe any intellectual property rights of any Third Party;

(d) It has not received any written notice from any Third Party asserting or alleging that any research or development of any Licensed Product by CCT prior to the Effective Date infringed or misappropriated the intellectual property rights of such Third Party;

(e) There are no pending, and to CCT’s knowledge, no threatened, adverse actions, suits or proceedings against CCT involving CCT Technology, or any Licensed Product;

(f) The CCT Patents include all Patents that Cover the Licensed Products which are Controlled by CCT and/or its Affiliates on the Effective Date;

(g) Except as set forth on Schedule 9.2(e), to CCT’s knowledge (i) the CCT Marks have been properly filed and registered with the U.S. Patent and Trademark Office and is valid and in full force and effect, and (ii) CCT has the right to use and license the CCT Marks, free and clear of any liens or encumbrances;

(h) To CCT’s knowledge, there are no pending legal suits or proceedings involving the CCT Technology or any Licensed Product; and to there are no threatened legal suits or proceedings in the Territory involving the CCT Technology or any Licensed Product; and

(i) There are no current pending, or to CCT’s knowledge, threatened in writing, product liability, warranty or other similar claims by any Third Party (whether based in contract or tort and whether relating to personal injury, including death, property damage or economic loss) arising from the marketing or sale of any Licensed Product.

9.3 Mutual Covenants.

(a) No Debarment. In the course of, and with respect, the Development and Commercialization of the Licensed Products, each Party shall not use any employee or consultant who has been debarred , excluded or disqualified under applicable Law by any Governmental Authority, or, to such Party’s knowledge, is the subject of debarment, exclusion or disqualification proceedings by any Governmental Authority. Each Party shall notify the other Party promptly upon becoming aware that any of its employees or consultants has been debarred, excluded or disqualified under applicable Law, or is the subject of debarment, exclusion or disqualification proceedings by any Governmental Authority.

(b) Compliance. Each Party and its Affiliates shall comply in all material respects with all applicable Laws in the Development and Commercialization of Licensed

 

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Products and performance of its obligations under this Agreement, including the statutes, regulations and written directives of the FDA and any Regulatory Authority having jurisdiction in the Territory, the FD&C Act, the Prescription Drug Marketing Act, the federal Anti-Kickback Law (42 U.S.C. 1320a-7b(b)), the statutes, regulations and written directives of Medicare, Medicaid and all other federal health care programs (as defined in 42 U.S.C. § 1320a-7b(f)), the civil False Claims Act (31 U.S.C. 3729 et. seq.), the administrative False Claims Act (42 U.S.C. 1320a-7b(a)), the United States Public Health Service Act, the Physician Payment Sunshine Act (42 U.S.C. 1320a-7h), the United States Health Insurance Portability and Accountability Act of 1996 and the Foreign Corrupt Practices Act of 1977, and all regulations promulgated thereunder, each as may be amended from time to time.

9.4 Disclaimer. Alliqua understands that the Licensed Products are the subject of ongoing clinical research and development and that CCT cannot assure the safety or efficacy of any Licensed Product. In addition, CCT makes no warranties except as set forth in this Article 9 concerning the CCT Technology. EXCEPT AS EXPRESSLY STATED IN THIS AGREEMENT, NO REPRESENTATIONS OR WARRANTIES WHATSOEVER, WHETHER EXPRESS OR IMPLIED, INCLUDING WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT, OR NON-MISAPPROPRIATION OF THIRD PARTY INTELLECTUAL PROPERTY RIGHTS ARE MADE OR GIVEN BY OR ON BEHALF OF A PARTY, AND ALL IMPLIED REPRESENTATIONS AND WARRANTIES, WHETHER ARISING BY OPERATION OF LAW OR OTHERWISE, ARE HEREBY EXPRESSLY DISCLAIMED.

ARTICLE 10

INDEMNIFICATION

10.1 Indemnification by CCT. CCT shall indemnify and hold harmless Alliqua, and its directors, officers, employees, agents, Affiliates and contractors (collectively, the “Alliqua Indemnitees”), from and against all losses, liabilities, damages and expenses, including reasonable attorneys’ fees and costs (collectively, “Liabilities”), resulting from any claims, demands, actions or other proceedings by any Third Party (including Claims based upon products liability) (“Claims”) to the extent resulting from or relating to (a) the breach or inaccuracy of any representation or warranty made by CCT in this Agreement; (b) the breach by CCT of any covenant or any of its obligations under this Agreement; (c) CCT’s failure to comply with any applicable federal, state or local Laws in connection with the performance of its obligations hereunder; (d) any design (latent, patent or inherent) defect of the Licensed Products, provided that the Licensed Products are Commercialized in accordance with this Agreement and are used in the Field in the Territory; or (e) any gross negligence or willful misconduct of CCT or any of its Affiliates. The foregoing indemnity obligation shall not apply to the extent that (i) the Alliqua Indemnitees fail to comply with the indemnification procedures set forth in Section 10.3 and CCT’s defense of the relevant Claims is prejudiced by such failure, or (ii) any Claim arises from, is based on, or results from any activity set forth in Sections 10.2(a), 10.2(b), 10.2(c), 10.2(d), 10.2(e) or 10(f) for which Alliqua is obligated to indemnify the CCT Indemnitees under Section 10.2.

10.2 Indemnification by Alliqua. Alliqua shall indemnify and hold harmless CCT, and its directors, officers, employees, agents, Affiliates and contractors (collectively, the “CCT Indemnitees”), from and against all Liabilities resulting from any Claims to the extent resulting

 

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from or relating to (a) the breach or inaccuracy of any representation or warranty made by Alliqua in this Agreement; (b) the breach by Alliqua of any covenant or any of its obligations under this Agreement; (c) Alliqua’s failure to comply with any applicable federal, state or local Laws in connection with the performance of its obligations hereunder; (d) improper Commercialization of the Licensed Products by or on behalf of Alliqua or any representations regarding the Licensed Products made by Alliqua in breach of this Agreement; (e) any gross negligence or willful misconduct of Alliqua or any of its Affiliates; or (f) any manufacturing defects of the Licensed Products manufactured by Alliqua or by a Third Party on behalf of Alliqua. The foregoing indemnity obligation shall not apply to the extent that (i) the CCT Indemnitees fail to comply with the indemnification procedures set forth in Section 10.3 and Alliqua’s defense of the relevant Claims is prejudiced by such failure, or (ii) any Claim arises from, is based on, or results from any activity set forth in Sections 10.1(a), 10.1(b), 10.1(c), 10.1(d) or 10.1(e) for which CCT is obligated to indemnify the Alliqua Indemnitees under Section 10.1.

10.3 Indemnification Procedures. The Party claiming indemnity under this Article 10 (the “Indemnified Party”) shall give written notice to the Party from whom indemnity is being sought (the “Indemnifying Party”) promptly after learning of such Claim. The Indemnifying Party shall have the right to assume and conduct the defense of the Claim with counsel of its choice, and the Indemnified Party may participate in and monitor such defense with counsel of its own choosing at its sole expense. The Indemnified Party shall provide the Indemnifying Party with reasonable assistance, at the Indemnifying Party’s expense, in connection with the defense of the Claim for which indemnity is being sought. Each Party shall not settle or compromise any Claim without the prior written consent of the other Party, which consent shall not be unreasonably withheld, delayed or conditioned. If the Parties cannot agree as to the application of the foregoing Sections 10.1 and 10.2, each may conduct separate defenses of the Claim, and each Party reserves the right to claim indemnity from the other in accordance with this Article 10 upon the resolution of the underlying Claim.

10.4 Limitation of Liability. NEITHER PARTY SHALL BE LIABLE FOR ANY SPECIAL, CONSEQUENTIAL, INCIDENTAL, PUNITIVE, OR INDIRECT DAMAGES, INCLUDING LOST PROFITS, ARISING FROM OR RELATING TO ANY BREACH OF THIS AGREEMENT EXCEPT FOR FRAUD OR WILLFUL MISCONDUCT, BREACH OF EITHER PARTY’S CONFIDENTIALITY OBLIGATIONS, A PARTY’S INDEMNIFICATION OBLIGATIONS, A BREACH OF EACH PARTY’S EXCLUSIVITY OBLIGATIONS OR A BREACH OF THE LICENSE GRANTS, REGARDLESS OF ANY NOTICE OF THE POSSIBILITY OF SUCH DAMAGES; PROVIDED, HOWEVER, THAT ANY DAMAGES CLAIMED BY OR PAID TO A THIRD PARTY IN A THIRD PARTY ACTION SHALL NOT BE CONSIDERED SPECIAL, CONSEQUENTIAL, INCIDENTAL, PUNITIVE, OR INDIRECT DAMAGES FOR PURPOSES OF THIS AGREEMENT.

10.5 Insurance. Each Party shall, at all times during the Term of this Agreement and for five (5) years thereafter, obtain and maintain at its own expense the following types of insurance, with limits of liability not less than those specified below:

(a) Commercial general liability insurance against claims for bodily injury and property damage which shall include contractual coverage and product liability coverage, with limits of not less than [***]. The other Party, its officers, directors, representatives and agents shall be named as additional insureds.

 

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(b) Workers compensation and employers’ liability with limits to comply with the statutory requirements of the state(s) in which the Agreement is to be performed. The policy shall include employers’ liability for not less than [***].

All policies shall be issued by insurance companies with an A.M. Best’s rating of Class A-:V (or its equivalent) or higher status. Each Party shall deliver certificates of insurance evidencing coverage to the other Party promptly after the execution of this Agreement and annually thereafter. All policies provided for herein shall expressly provide that such policies shall not be cancelled, terminated or altered without at least thirty (30) days prior written notice to the insured Party, and each insuring Party shall immediately notify the insured Party in the event that a policy provided for herein is cancelled, terminated or altered.

ARTICLE 11

CONFIDENTIALITY

11.1 Confidentiality. During the Term and for a period of [***] thereafter, each Party shall maintain all Confidential Information of the other Party in trust and confidence and shall not, without the written consent of the other Party, disclose any Confidential Information of the other Party to any Third Party or use any Confidential Information of the other Party for any purpose other than as necessary in connection with the exercise of rights or discharge of obligations under this Agreement. The confidentiality obligations of this Section 11.1 shall not apply to Confidential Information to the extent that the receiving Party can establish by competent evidence that such Confidential Information: (a) is publicly known prior or subsequent to disclosure without breach of confidentiality obligations by such Party or its employees, consultants or agents; (b) was in such Party’s possession at the time of disclosure without any restrictions on further disclosure; (c) is received by such receiving Party, without any restrictions on further disclosure, from a Third Party who has the lawful right to disclose it; or (d) is independently developed by employees or agents of the receiving Party who had no access to the disclosing Party’s Confidential Information.

11.2 Authorized Disclosure. Nothing herein shall preclude a Party from disclosing the Confidential Information of the other Party to the extent:

(a) such disclosure is reasonably necessary (i) for the filing or prosecuting of Patents as contemplated by this Agreement; (ii) to comply with the requirement of Regulatory Authorities with respect to obtaining and maintaining Regulatory Clearance and/or Approval (or any pricing and reimbursement approvals) of any Licensed Product; or (iii) for prosecuting or defending litigations as contemplated by this Agreement;

(b) such disclosure is reasonably necessary to its employees, agents, consultants or contractors on a need-to-know basis for the sole purpose of performing its obligations or exercising its rights under this Agreement; provided that in each case, the disclosees are bound by written obligations of confidentiality and non-use consistent with those contained in this Agreement;

(c) such disclosure is reasonably necessary to any bona fide potential or actual investor, acquiror, merger partner, or other financial or commercial partner for the sole purpose of

 

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evaluating an actual or potential investment, acquisition or other business relationship; provided that in each case, the disclosees are bound by written obligations of confidentiality and non-use consistent with those contained in this Agreement;

(d) such disclosure is reasonably necessary to comply with applicable Laws, including regulations promulgated by applicable security exchanges, a valid order of a court of competent jurisdiction, administrative subpoena or order.

Notwithstanding the foregoing, in the event a Party is required to make a disclosure of the other Party’s Confidential Information pursuant to any of Sections 11.2(a) through 11.2(d), such Party shall promptly notify the other Party of such required disclosure and shall use reasonable efforts to obtain, or to assist the other Party in obtaining, a protective order preventing or limiting the required disclosure.

11.3 Return of Confidential Information. Promptly after the termination or expiration of this Agreement for any reason, each Party shall return to the other Party all tangible manifestations of such other Party’s Confidential Information at that time in the possession of the receiving Party.

11.4 Publicity; Terms of the Agreement; Confidential Treatment.

(a) The Parties agree that the terms of this Agreement (including without limitation any exhibits and schedules hereto) shall be considered Confidential Information of each Party, subject to the special authorized disclosure provisions set forth in Section 11.2 and this Section 11.4.

(b) If either Party desires to make a public announcement concerning the material terms of this Agreement, such Party shall give reasonable prior advance notice of the proposed text of such announcement to the other Party for its prior review and approval (except as otherwise provided herein), such approval not to be unreasonably withheld, conditioned or delayed. A Party commenting on such a proposed press release shall provide its comments, if any, within three (3) Business Days after receiving the press release for review. In addition, to the extent required by applicable Laws, including regulations promulgated by applicable security exchanges, each Party shall have the right to make a press release announcing the achievement of each milestone under this Agreement as it is achieved, and the achievements of Regulatory Clearances and/or Approvals in the Territory as they occur, subject to the other Party’s consent as to form and substance of such announcement, which shall not be unreasonably withheld, conditioned or delayed. In relation to the other Party’s review and approval of such an announcement, such other Party may make specific, reasonable comments on such proposed press release within the prescribed time for commentary, but shall not withhold its consent to disclosure of the information that the relevant milestone has been achieved and triggered a payment hereunder. Neither Party shall be required to seek the permission of the other Party to repeat any information regarding the terms of this Agreement that has already been publicly disclosed by such Party, or by the other Party, in accordance with this Section 11.4, provided such information remains accurate as of such time.

 

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(c) In addition, the Parties acknowledge that either or both Parties may be obligated to file under applicable law and regulation a copy of this Agreement with the USA Securities and Exchange Commission or similar stock exchange authorities or other governmental authorities. Each Party shall be entitled to make such a required filing; provided, however, that it requests confidential treatment of the commercial terms and sensitive technical terms hereof and thereof to the extent such confidential treatment is reasonably available to such Party. In the event of any such filing, each Party shall provide the other Party with a copy of this Agreement marked to show provisions for which such Party intends to seek confidential treatment and shall reasonably consider and incorporate the other Party’s comments thereon to the extent consistent with the legal requirements, with respect to the filing Party, governing disclosure of material agreements and material information that must be publicly filed.

11.5 Technical Publication. Neither Party may publish peer reviewed manuscripts or give other forms of public disclosure such as abstracts and media presentations (such disclosure collectively, for purposes of this Section 11.5, “publication”), of results of studies carried out under this Agreement, without the opportunity for prior review by the other Party, except to the extent required by applicable Laws. A Party seeking publication shall provide the other Party the opportunity to review and comment on any proposed publication that relates to the Licensed Product at least thirty (30) days (or at least ten (10) days in the case of abstracts and media presentations) prior to its intended submission for publication. The other Party shall provide the Party seeking publication with its comments in writing, if any, within twenty (20) days (or within five (5) days in the case of abstracts and media presentations) after receipt of such proposed publication. The Party seeking publication shall consider in good faith any comments thereto provided by the other Party and shall comply with the other Party’s reasonable request to remove any and all of such other Party’s Confidential Information from the proposed publication. In addition, the Party seeking publication shall delay the submission for a period up to sixty (60) days in the event that the other Party can demonstrate reasonable need for such delay in order to accommodate the preparation and filing of a patent application. If the other Party fails to provide its comments to the Party seeking publication within such twenty (20) day period (or five (5) day period, as the case may be), such other Party shall be deemed not to have any comments, and the Party seeking publication shall be free to publish in accordance with this Section 11.5 after the thirty (30) day period (or ten (10) day period, as the case may be) has elapsed. The Party seeking publication shall provide the other Party a copy of the publication at the time of the submission. Each Party agrees to acknowledge the contributions of the other Party and its employees in all publications as scientifically appropriate.

11.6 Equitable Relief. Each Party acknowledges that its breach of Article 11 of this Agreement may cause irreparable injury to the other Party for which monetary damages may not be an adequate remedy. Therefore, each Party shall be entitled to seek injunctive and other appropriate equitable relief to prevent or curtail any actual or threatened breach of the obligations relating to Confidential Information set forth in this Article 11 by the other Party. The rights and remedies provided to each Party in this Article 11 are cumulative and in addition to any other rights and remedies available to such Party at law or in equity.

 

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ARTICLE 12

TERM AND TERMINATION

12.1 Term. This Agreement shall commence on the Effective Date and, unless earlier terminated in accordance with the terms of this Article 12, shall continue for a period of ten (10) years (the “Initial Term”). Upon expiration of the Initial Term, this Agreement will automatically renew for additional two (2) year periods unless either Party gives written notice of termination at least [***] prior to the expiration of the then-current term, which shall cause this Agreement to terminate at the end of the then-current term (each period, a “Renewal Term” and together with the Initial Term, the “Term”).

12.2 Termination by CCT.

(a) For Patent Challenge. CCT may terminate this Agreement in its entirety immediately upon written notice to Alliqua if Alliqua or its Affiliates (directly or indirectly, individually or in association with any other person or entity) challenges the validity, enforceability or scope of any CCT Patent anywhere in the world.

(b) For Failure to Meet Thresholds.

(i) In the event that gross sales of a Licensed Product during the second Launch Year for such Licensed Product are less than (x) [***] or alternatively, (y) the new gross sales volume agreed to by the Parties pursuant to Section 7.4, as the case may be (the “Minimum Sales Threshold”), CCT shall have the right to terminate solely with respect to such Licensed Product, on a Licensed Product-by-Licensed Product basis (but not with respect to the Agreement in its entirety), on sixty (60) days’ written notice to Alliqua (a “Sales Threshold Default”), which notice of such Sales Threshold Default must be delivered to Alliqua [***] following the delivery of the royalty report for the fourth Launch Year Quarter of the second Launch Year (a “Sales Threshold Default Notice”). Upon receipt of a Sales Threshold Default Notice, Alliqua may cure the Sales Threshold Default solely for the second Launch Year by (i) paying to CCT an amount equal to the difference between the Annual License Fee for the second Launch Year and the aggregate royalties which would be due to CCT if gross annual sales of such Licensed Product for the second Launch Year were [***] (or the alternative Minimum Sales Threshold, as the case may be) or (ii) by demonstrating to the reasonable satisfaction of CCT that the gross annual sales of such Licensed Product will reach an annualized run rate of [***] (or the alternative Minimum Sales Threshold) as of the second Launch Year Quarter of the third Launch Year.

(ii) In the event gross annual sales of any Licensed Product for the third Launch Year or any subsequent Launch Year thereafter are less than [***] (or the alternative Minimum Sales Threshold, as the case may be) each of CCT and Alliqua shall have the right to terminate this Agreement solely with respect to such Licensed Product, on a Licensed Product-by-Licensed Product basis (but not with respect to the Agreement in its entirety) upon six months’ prior written notice to the other Party, which notice of such termination must be delivered to the other Party within sixty (60) calendar days following the delivery of the royalty report for the fourth Launch Year Quarter of the applicable Launch Year. Notwithstanding the foregoing, in the event that in the third Launch Year the gross annual sales of a Licensed Product are less than [***] (or the alternative Minimum Sales Threshold, as the case may be), the Parties may discuss alternative options to the termination of this Agreement with respect to such Licensed Product, including, without limitation, the sale of all rights in and to such Licensed Product to Alliqua.

 

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(c) Termination by Either Party. This Agreement may be terminated by either Party in its entirety upon the issuance of a final order or decree issued in a bona fide proceeding by or before a competent judicial authority that a Licensed Product infringed the intellectual property rights of a Third Party, if, after receiving such issuance of a final order or decree of infringement, CCT or Alliqua, as applicable, fails to or is unable to cure such infringement within sixty (60) days from the date of issuance.

12.3 Termination for Breach.

(a) Each Party shall have the right to terminate this Agreement in its entirety immediately upon written notice to the other Party if the other Party materially breaches its obligations under this Agreement (including, but not limited to, failure of Alliqua to exert Commercially Reasonable Best Efforts in accordance with the terms set forth in this Agreement) and, after receiving written notice identifying such material breach in reasonable detail, fails to cure such material breach within sixty (60) days from the date of such notice.

(b) If the alleged breaching Party disputes in good faith the existence or materiality of a breach specified in a notice provided by the other Party in accordance with Section 12.3(a), and such alleged breaching Party provides the other Party notice of such dispute within the applicable cure period, then the non-breaching Party shall not have the right to terminate this Agreement under Section 12.3(a) unless and until an arbitrator, in accordance with Article 13, has determined that the alleged breaching Party has materially breached the Agreement and such breaching Party fails to cure such breach within the applicable cure period (measured as commencing after the arbitrator’s decision). It is understood and agreed that during the pendency of such dispute, all of the terms and conditions of this Agreement shall remain in effect and the Parties shall continue to perform all of their respective obligations hereunder.

12.4 Termination for Bankruptcy. To the extent permitted under applicable Laws, if at any time during the Term of this Agreement, an Event of Bankruptcy (as defined below) relating to either Party (the “Bankrupt Party”) occurs, the other Party (the “Non-Bankrupt Party”) shall have, in addition to all other legal and equitable rights and remedies available hereunder, the option to terminate this Agreement upon sixty (60) days written notice to the Bankrupt Party. It is agreed and understood that if the Non-Bankrupt Party does not elect to terminate this Agreement upon the occurrence of an Event of Bankruptcy, except as may otherwise be agreed with the trustee or receiver appointed to manage the affairs of the Bankrupt Party, the Non-Bankrupt Party shall continue to make all payments required of it under this Agreement as if the Event of Bankruptcy had not occurred, and the Bankrupt Party shall not have the right to terminate any license granted herein. The term “Event of Bankruptcy” means: (a) filing, in any court or agency pursuant to any statute or regulation of any state or country, (i) a petition in bankruptcy or insolvency, (ii) for reorganization or (iii) for the appointment of (or for an arrangement for the appointment of) a receiver or trustee of the Bankrupt Party or of its assets; (b) with respect to the Bankrupt Party, being served with an involuntary petition filed in any insolvency proceeding, which such petition is not dismissed within sixty (60) days after the filing thereof; (c) proposing or being a party to any dissolution or liquidation when insolvent; or (d) making an assignment for the benefit of creditors. Without limitation, the Bankrupt Party’s rights under this Agreement shall include those rights afforded by 11 USAC. § 365(n) of the United States Bankruptcy Code (the “Bankruptcy Code”) and any successor thereto. If the bankruptcy trustee of a Bankrupt Party as a debtor or debtor-in-possession rejects this Agreement under 11 USAC. § 365(o) of the Bankruptcy Code,

 

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the Non-Bankrupt Party may elect to retain its rights licensed from the Bankrupt Party hereunder (and any other supplementary agreements hereto) for the duration of this Agreement and avail itself of all rights and remedies to the full extent contemplated by this Agreement and 11 USAC. § 365(n) of the Bankruptcy Code, and any other relevant Laws.

12.5 Termination for Safety, Legal or Economic Risks. Either Party may terminate this Agreement on a Licensed Product-by-Licensed Product basis, or in the entirety, immediately upon thirty (30) days prior written notice to the other Party if the terminating Party is advised in writing by its outside legal counsel that it is not advisable for Alliqua to continue the Commercialization of such Licensed Product in the Territory as a result of an actual, threatened or perceived significant safety, legal or economic risk regarding such Licensed Product as the result of any Law, decree, resolution, Liabilities resulting from any Claim, or any decision of a Governmental Authority or Regulatory Authority or change in the interpretation of any current Law, decree, resolution or decision by a Governmental Authority or Regulatory Authority, provided that a Party may only terminate this Agreement in the entirety if the actual, threatened or perceived significant safety, legal or economic risk relates to the Licensed Products as a whole. Notwithstanding the foregoing, in the event that CCT purports to terminate this Agreement with respect to a Licensed Product pursuant to this Section 12.5, the Parties may discuss alternative options to the termination of this Agreement with respect to such Licensed Product, including, without limitation, the sale of all rights in and to such Licensed Product to Alliqua.

12.6 Effect of Termination.

(a) General. Upon any termination (but not expiration) of this Agreement in whole or in part, (i) all licenses and rights granted to Alliqua under this Agreement or with respect to each Licensed Product, as applicable, shall terminate, (ii) Alliqua shall immediately transfer and assign to CCT or its designee all materials, Know-How, Regulatory Materials, licenses, Third Party agreements and other items as are reasonably necessary for CCT to continue the Development and Commercialization of the Licensed Product(s) and (iii) Alliqua shall immediately cease all sales, marketing and distribution of the Licensed Product(s), subject to Section 12.6(d), below.

(b) Additional Effects of Termination. Without limiting the generality of Section 12.6(a), the following rights and consequences shall apply upon any termination of this Agreement, it being understood that if this Agreement terminates on a Licensed Product-by-Licensed Product basis, that this Section 12.6(b) shall apply only with respect to the terminated Licensed Product, provided that if this Agreement is terminated with respect to all License Products hereunder, that this Agreement shall automatically terminate without any further action by the Parties:

(i) Regulatory Materials; Data. To the extent permitted by applicable Laws, Alliqua shall transfer and assign to CCT all Regulatory Materials to extent such Regulatory Materials are not owned by CCT, and related data and Know-How relating to the Licensed Product(s) and shall treat the foregoing as Confidential Information of CCT (and not of Alliqua) under Article 11; provided that Alliqua shall be allowed to retain any such materials that a Regulatory Authority requires Alliqua to retain under applicable Laws.

 

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(ii) Alliqua Assignment. Alliqua hereby irrevocably assigns to CCT, effective upon such termination, a non-exclusive, fully paid, worldwide, fully transferrable, irrevocable license (with the right to grant sublicenses through multiple tiers) to all intellectual property, including all Patents and Know-How (i) Controlled by Alliqua (or its Affiliates) as of the effective date of such termination and (ii) related to or useful in connection with the Licensed Product(s).

(iii) Trademarks. Alliqua shall assign to CCT all right, title and interest in and to the Product Marks (excluding any such marks that include, in whole or part, any corporate name or logo of Alliqua) throughout the Territory.

(iv) Transition Assistance. Alliqua shall provide such assistance, at no cost to CCT, as may be reasonably necessary or useful for CCT to continue Developing and/or Commercializing the Licensed Product(s) throughout the Territory, including assigning or amending as appropriate, upon request of CCT, any agreements or arrangements with Third Party vendors and/or distributors to Develop and/or Commercialize the Licensed Product(s). To the extent that any such contract between Alliqua and a Third Party is not assignable to CCT, Alliqua shall reasonably cooperate with CCT to arrange to continue to provide such services for a reasonable time after termination. Alliqua shall not, during such applicable notice period, take any action that could reasonably be expected to have a material adverse impact on the further Development and Commercialization of any Licensed Product.

(c) Inventories. Subject to Section 12.6(d), below, in the event this Agreement terminates other than for CCT’s breach of the Agreement in accordance with Section 12.3(a), then CCT shall have the right to purchase from Alliqua any and all of the inventory of the Licensed Product(s) held by Alliqua as of the effective date of termination at a price equal to Alliqua’s actual cost to acquire or manufacture such inventory. CCT shall notify Alliqua within thirty (30) days after the effective date of termination whether CCT elects to exercise such right. Notwithstanding the foregoing, in the event this Agreement is terminated in accordance with Sections 12.3 and 12.4 due to an Event of Bankruptcy relating to Alliqua, Alliqua shall immediately transfer, at no cost to CCT, any and all inventory of the Licensed Product(s) held by Alliqua as of the effective date of termination.

(d) Alliqua’s Right to Sell Off. In the event this Agreement terminates other than for Alliqua’s breach of the Agreement in accordance with Section 12.3(a), then CCT, at its option, shall (i) have the right to purchase from Alliqua any and all of the inventory of Licensed Products held by Alliqua as of the effective date of termination in accordance with the terms of Section 12.6(c), above, or (ii) permit Alliqua, for a period of [***] from the effective date of termination, to market, distribute, offer to sell and sell off then-existing inventory of Licensed Products then on hand (the period referred to in this Section 12.6(d)(ii), the “Sell-Off Period”). If CCT elects to allow Alliqua to sell off its then-existing inventory of Licensed Products in accordance with Section 12.6(d)(ii), following the expiration of the Sell Off Period, Alliqua shall immediately cease all sales, marketing and distribution of the then-existing inventory Licensed Products on hand as of the end of such Sell-Off Period, and CCT, at its option, shall (x) have the right to purchase from Alliqua any and all of the inventory of Licensed Products held by Alliqua as of the last date of the Sell-Off Period at a price equal to Alliqua’s actual cost to acquire or manufacture such inventory, or (y) instruct Alliqua to destroy or donate (to a recognized not-for-profit charitable organization, provided however, that such inventory is not further re-sold or distributed for profit) such remaining inventory.

 

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For clarity, Alliqua shall continue to perform all of its obligations under this Agreement with respect to the Development and Commercialization of Licensed Products until the effective date of termination and shall not modify in any material respects such activities from past practices during such period.

12.7 Survival. Termination or expiration of this Agreement shall not affect any rights or obligations of the Parties under this Agreement that have accrued prior to the date of termination or expiration. Notwithstanding anything to the contrary, the following provisions shall survive any expiration or termination of this Agreement: 1, 7.3, 8, 9.4, 10, 11, 12.6, 13, 14 and this Section 12.7.

ARTICLE 13

DISPUTE RESOLUTION

13.1 Disputes. The Parties recognize that disputes as to certain matters may from time to time arise that relate to either Party’s rights and/or obligations hereunder. It is the objective of the Parties to establish procedures to facilitate the resolution of disputes arising under this Agreement in an expedient manner by mutual cooperation and without resort to litigation. To accomplish this objective, the Parties agree to follow the procedures set forth in this Article 13 to resolve any controversy or claim arising out of, relating to or in connection with any provision of this Agreement, if and when a dispute arises under this Agreement.

13.2 Internal Resolution. With respect to all disputes arising between the Parties under this Agreement, including any alleged breach under this Agreement or any issue relating to the interpretation or application of this Agreement, if the Parties are unable to resolve such dispute within thirty (30) days after such dispute is first identified by either Party in writing to the other, the Parties shall refer such dispute to the Executive Officers of the Parties for attempted resolution by good faith negotiations within thirty (30) days after such notice is received, including at least one (1) in-person meeting of the Executive Officers within twenty (20) days after such notice is received. If the Executive Officers are not able to resolve such dispute referred to them within such thirty (30) day period, then Section 14.11 shall control.

13.3 Patent and Trademark Disputes. Any dispute, controversy or claim relating to the scope, validity, enforceability or infringement of any Patent Covering the manufacture, use, importation, offer for sale or sale of any Licensed Product or of any trademark rights relating to any Licensed Product shall be submitted to a court of competent jurisdiction in the country in which such Patent or trademark rights were granted or arose.

13.4 Equitable Relief. Nothing in this Article 13 shall prevent either Party from seeking equitable or other relief in a court of competent jurisdiction. All rights and remedies provided to each Party in this Agreement are cumulative and in addition to any other rights and remedies available to such Party at law or in equity.

 

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ARTICLE 14

MISCELLANEOUS

14.1 Entire Agreement; Amendment. This Agreement, together with the exhibits and schedules attached hereto, which are hereby incorporated herein, represents the entire agreement and understanding between the Parties with respect to its subject matter and supersedes and terminates any prior and/or contemporaneous discussions, representations or agreements, whether written or oral, of the Parties regarding the subject matter hereto, and supersedes, as of the Effective Date, all prior and contemporaneous agreements and understandings between the Parties with respect to the subject matter hereof (including for the Prior CDA). There are no covenants, promises, agreements, warranties, representations, conditions or understandings, either oral or written, between the Parties other than as are set forth in this Agreement. Amendments or changes to this Agreement shall be valid and binding only if in writing and signed by duly authorized representatives of the Parties.

14.2 Force Majeure. Both Parties shall be excused from the performance of their obligations under this Agreement to the extent that such performance is prevented by force majeure and the nonperforming Party promptly provides notice of the prevention to the other Party. Such excuse shall be continued so long as the condition constituting force majeure continues and the nonperforming Party takes reasonable efforts to remove the condition. For purposes of this Agreement, force majeure shall mean conditions beyond the control of the Parties, including an act of God, war, civil commotion, terrorist act, labor strike or lock-out, epidemic, failure or default of public utilities or common carriers, destruction of production facilities or materials by fire, earthquake, storm or like catastrophe, and failure of plant or machinery (provided that such failure could not have been prevented by the exercise of skill, diligence, and prudence that would be reasonably and ordinarily expected from a skilled and experienced person engaged in the same type of undertaking under the same or similar circumstances). If a force majeure persists for more than ninety (90) days, then the Parties shall discuss in good faith the modification of the Parties’ obligations under this Agreement in order to mitigate the delays caused by such force majeure, and if the force majeure prevents CCT from performing its obligations under either Joint Development Plan for a period of more than one hundred and eighty (180) days, Alliqua shall have the right to terminate this Agreement pursuant to Section 12.3.

14.3 Notices. Any notice required or permitted to be given under this Agreement shall be in writing, shall specifically refer to this Agreement, and shall be addressed to the appropriate Party at the address specified below or such other address as may be specified by such Party in writing in accordance with this Section 14.3, and shall be deemed to have been given for all purposes (a) when received, if hand-delivered or sent by confirmed facsimile or a reputable courier service, or (b) five (5) Business Days after mailing, if mailed by first class certified or registered airmail, postage prepaid, return receipt requested.

 

If to CCT:

   Anthrogenesis Corporation, d/b/a Celgene Cellular Therapeutics
   Attn.: Chief Executive Officer
   33 Technology Drive
   Warren, NJ 07059-5148
   Fax: [***]

 

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With a copy to (which shall not constitute notice):
   Proskauer Rose LLP
   Eleven Times Square
   New York, NY 10036
   Attn: Robert A. Cantone, Esq.
   Fax No.: (212) 969-2900
   and
   Celgene Corporation
   86 Morris Avenue
   Summit, NJ 07901
   Attention: General Counsel
   Fax: [***]
If to Alliqua:    Alliqua, Inc.
   2150 Cabot Boulevard West
   Langhorne, Pennsylvania 19047
   Attention: Chief Executive Officer
   Fax No.: [***]
With a copy to (which shall not constitute notice):
   Lowenstein Sandler LLP
   65 Livingston Avenue
   Roseland, New Jersey 07068
   Attention: Michael Lerner, Esq.
   Fax No.: (973) 597-6395

14.4 No Strict Construction; Headings. This Agreement has been prepared jointly by the Parties and shall not be strictly construed against either Party. Ambiguities, if any, in this Agreement shall not be construed against any Party, irrespective of which Party may be deemed to have authored the ambiguous provision. The headings of each Article and Section in this Agreement have been inserted for convenience of reference only and are not intended to limit or expand on the meaning of the language contained in the particular Article or Section. Except where the context otherwise requires, the use of any gender shall be applicable to all genders, and the word “or” is used in the inclusive sense (and/or). The term “including” as used herein means including, without limiting the generality of any description preceding such term.

14.5 Assignment. Neither Party may assign this Agreement without the prior written consent of the other Party, such consent not to be unreasonably withheld, conditioned or delayed; provided, however, that [***] may assign this Agreement without the consent of [***], effective upon written notice to [***], to (i) an [***], provided that [***] agrees in writing to continue to be bound by and subject to the terms and conditions of this Agreement and (ii) any [***] and who

 

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agrees in writing to be bound by and subject to the terms and conditions of this Agreement. Further, [***] may assign without [***] consent [***]. Any permitted assignment shall be binding on the successors of the assigning Party. Any attempted or purported assignment in violation of this Section 14.5 shall be null and void.

14.6 Performance by Affiliates. Each Party may discharge any obligations and exercise any right hereunder through any of its Affiliates. Each Party hereby guarantees the performance by its Affiliates of such Party’s obligations under this Agreement, and shall cause its Affiliates to comply with the provisions of this Agreement in connection with such performance. Any breach by a Party’s Affiliate of any of such Party’s obligations under this Agreement shall be deemed a breach by such Party, and the other Party may proceed directly against such Party without any obligation to first proceed against such Party’s Affiliate.

14.7 Further Actions. Each Party agrees to execute, acknowledge and deliver such further instruments, and to do all such other acts, as may be necessary or appropriate in order to carry out the purposes and intent of this Agreement.

14.8 Severability. If any provision of this Agreement is found by a court of competent jurisdiction to be unenforceable, then such provision shall be construed, to the extent feasible, so as to render the provision enforceable, and if no feasible interpretation would save such provision, it shall be severed from the remainder of this Agreement. The remainder of this Agreement shall remain in full force and effect, unless the severed provision is essential and material to the rights or benefits received by either Party. In such event, the Parties shall negotiate, in good faith, and substitute a valid and enforceable provision or agreement that most nearly implements the Parties’ intent in entering into this Agreement.

14.9 No Waiver. No provision of this Agreement can be waived except by the express written consent of the Party waiving compliance. Except as specifically provided for herein, the waiver from time to time by either Party of any of its rights or its failure to exercise any remedy shall not operate or be construed as a continuing waiver of same or of any other of such Party’s rights or remedies provided in this Agreement.

14.10 Independent Contractors. For all purposes under this Agreement, Alliqua and CCT and their respective Affiliates are independent contractors with respect to each other, and shall not be deemed to be an employee, agent, partner or legal representative of the other Party. This Agreement does not grant any Party or its employees, consultants or agents any authority (express or implied) to do any of the following without the prior express written consent of the other Party: create or assume any obligation; enter into any agreement; make any representation or warranty; serve or accept legal process on behalf of the other Party; settle any claim by or against the other Party; or bind or otherwise render the other liable in any way.

14.11 Governing Law. This Agreement shall be governed by the laws of the state of New York, without regard to its choice of law provisions that would require the application of the laws of a different jurisdiction. The Parties hereby irrevocably submit to the jurisdiction of the state and federal courts sitting in the County and State of New York for the adjudication of disputes arising out of or relating to this Agreement.

 

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14.12 Counterparts. This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original but all of which together shall constitute the same legal instrument. Facsimile or PDF execution and delivery of this Agreement by any Party shall constitute a legal, valid and binding execution and delivery of this Agreement by such Party. The Parties to this document agree that a copy of the original signature (including an electronic copy) may be used for any and all purposes for which the original signature may have been used. The Parties agree they will have no rights to challenge the use or authenticity of this document based solely on the absence of an original signature.

[Signature page follows]

 

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Execution Copy

IN WITNESS WHEREOF, the Parties have executed this Agreement by their duly authorized officers as of the Effective Date.

 

ALLIQUA, INC.    

ANTHROGENESIS CORPORATION

(D/B/A CCT)

By:  

/s/ David Johnson

    By:  

/s/ Perry Karsen

Name:   David Johnson     Name:   Perry Karsen
Title:   Chief Executive Officer     Title:   Chief Executive Officer
EX-99.3 4 d636870dex993.htm EX-99.3 EX-99.3

EXHIBIT 3

CONFIDENTIAL PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER A CONFIDENTIAL TREATMENT REQUEST, PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. THE REDACTED TERMS HAVE BEEN MARKED IN THIS EXHIBIT AT THE APPROPRIATE PLACE WITH THREE ASTERISKS [***].

 

 

 

SUPPLY AGREEMENT

BY AND BETWEEN

ANTHROGENESIS CORPORATION

AND

ALLIQUA, INC.

NOVEMBER 14, 2013

 

 

 


TABLE OF CONTENTS

 

     PAGE  

ARTICLE 1 DEFINITIONS

     1   

ARTICLE 2 SUPPLY OF MANUFACTURED PRODUCTS

     2   

2.1

 

Sale and Purchase of Manufactured Products

     2   

2.2

 

Forecasts; Firm Orders

     3   

2.3

 

Shipment and Delivery

     3   

2.4

 

Alliqua Right to Manufacture

     4   

2.5

 

Manufacture and Supply of ECMs

     4   

ARTICLE 3 REGULATORY AND QUALITY MATTERS

     4   

3.1

 

Regulatory Responsibility

     4   

3.2

 

Change Control

     5   

3.3

 

Records

     5   

3.4

 

Testing

     5   

3.5

 

Regulatory Inquiries

     5   

3.6

 

Notice of Regulatory Inspections

     5   

3.7

 

Quality Agreement

     6   

3.8

 

Quality Audits

     6   

3.9

 

Intentionally Omitted

     7   

3.10

 

Cooperation

     7   

3.11

 

Recalls

     7   

3.12

 

Complaints

     8   

3.13

 

Warning Letters

     8   

3.14

 

Inquiries from Health Care Professionals

     8   

3.15

 

Debarment

     8   

3.16

 

Additional Covenants of Alliqua

     8   

ARTICLE 4 PRICE AND PAYMENT TERMS

     9   

4.1

 

Purchase Price

     9   

4.2

 

Taxes

     9   

4.3

 

Freight and Insurance

     9   

4.4

 

Payments

     9   

4.5

 

Interest Charges

     9   

4.6

 

Pricing

     9   

ARTICLE 5 INSPECTION OF MANUFACTURED PRODUCTS

     10   

5.1

 

Inspection by Alliqua

     10   

5.2

 

Disputes Over Manufactured Products

     10   

5.3

 

Replacement of Manufactured Products That Are Not Acceptable Manufactured Products

     10   

5.4

 

Exclusive Remedy

     10   

 

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ARTICLE 6 REPRESENTATIONS AND WARRANTIES; CERTAIN COVENANTS

     11   

6.1

 

Mutual Representations and Warranties

     11   

6.2

 

Additional CCT Representations and Warranties

     11   

6.3

 

Alliqua Compliance with Applicable Law

     11   

ARTICLE 7 INDEMNIFICATION AND INSURANCE

     12   

7.1

 

CCT Indemnification

     12   

7.2

 

Alliqua Indemnification

     12   

7.3

 

Indemnification Procedures

     12   

7.4

 

Limitation of Liability

     12   

7.5

 

Insurance

     13   

ARTICLE 8 CONFIDENTIAL INFORMATION

     13   

8.1

 

Confidentiality

     13   

8.2

 

Authorized Disclosure

     14   

8.3

 

Return of Confidential Information

     14   

8.4

 

Publicity; Terms of the Agreement; Confidential Treatment

     14   

8.5

 

Technical Publication

     15   

8.6

 

Equitable Relief

     16   

ARTICLE 9 TERM AND TERMINATION

     16   

9.1

 

Term

     16   

9.2

 

Termination

     16   

9.3

 

Effects of Termination

     17   

ARTICLE 10 GENERAL PROVISIONS

     18   

10.1

 

Entire Agreement; Amendment

     18   

10.2

 

Force Majeure

     18   

10.3

 

Notices

     18   

10.4

 

No Strict Construction; Headings

     19   

10.5

 

Assignment

     19   

10.6

 

Performance by Affiliates

     20   

10.7

 

Further Actions

     20   

10.8

 

Severability

     20   

10.9

 

No Waiver

     20   

10.10

 

Independent Contractors

     20   

10.11

 

Governing Law

     20   

10.12

 

Counterparts

     21   

 

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SUPPLY AGREEMENT

THIS SUPPLY AGREEMENT (this “Agreement”) dated as of November 14, 2013 (the “Effective Date”), by and between Anthrogenesis Corporation, a Delaware corporation doing business as Celgene Cellular Therapeutics (“CCT”), and Alliqua, Inc., a Florida corporation (“Alliqua”). Alliqua and CCT may each be referred to as a “Party” or collectively be referred to as the “Parties”.

PREAMBLE

A. CCT and Alliqua are entering into a License, Marketing and Development Agreement (the “License Agreement”) concurrently herewith, under which CCT will grant certain rights to Alliqua to market and sell the Licensed Products; and

B. In connection with the License Agreement, CCT wishes to supply to Alliqua, and Alliqua wishes to purchase from CCT, Alliqua’s entire requirements of Manufactured Product for distribution and sale in the Territory;

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained in this Agreement, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, CCT and Alliqua agree as follows:

ARTICLE 1

DEFINITIONS

All capitalized terms used but not defined herein shall have the meaning ascribed to such term in the License Agreement. In addition to the terms defined in the License Agreement and elsewhere in this Agreement, the following terms have the meanings indicated:

Acceptable Manufactured Products” has the meaning set forth in Section 5.1.

Act” means the Federal Food, Drug, and Cosmetic Act, as amended, and the rules, regulations, guidelines and requirements of the FDA as may be in effect from time to time.

Alliqua Indemnified Parties” has the meaning set forth in Section 7.1.

Calendar Year” means each successive period of twelve (12) calendar months commencing on January 1.

CCT Indemnified Parties” has the meaning set forth in Section 7.2.

CCT Recall Event” has the meaning set forth in Section 3.11.

CFR” has the meaning set forth in Section 3.1.


cGTPs” means current Good Tissue Practices as described in Part 1271 of Title 21 of the U.S. Code of Federal Regulations.

FDA” means the United States Food and Drug Administration or any successor agency performing a similar function.

Firm Order” means a written irrevocable firm purchase order for Manufactured Products, which order shall include a delivery schedule specifying the required delivery date and quantity for each Manufactured Product stock keeping unit ordered and the location to which shipment of Manufactured Products is to be delivered.

Forecast” has the meaning set forth in Schedule 2.2, subsection (a)(ii).

Long Range Forecast” has the meaning set forth in Schedule 2.2, subsection (a)(i).

Losses” has the meaning set forth in Section 7.1.

Manufactured Product” means Biovance.

Permitted Subcontractor” has the meaning set forth in Section 2.1(d).

Product Samples” has the meaning set forth in Section 3.4.

Purchase Price” has the meaning set forth in Section 4.1.

Quality Agreement” has the meaning set forth in Section 3.7.

Required Manufacturing Changes” has the meaning set forth in Section 3.2.

Specifications” means the applicable specifications for manufacturing, storage, testing, and bulk packaging of a Manufactured Product as set forth on Schedule A hereto, as it may be amended from time to time.

Term” has the meaning set forth in Section 9.1.

Third Party Claims” has the meaning set forth in Section 7.1.

ARTICLE 2

SUPPLY OF MANUFACTURED PRODUCTS

2.1 Sale and Purchase of Manufactured Products.

(a) Subject to the terms and on the conditions set forth in this Agreement, commencing no earlier than [***], CCT shall supply and sell to Alliqua, and Alliqua shall purchase from CCT, Alliqua’s entire requirements of bulk Manufactured Products for exploitation in the Territory under the License Agreement. The bulk form and bulk packaging of Manufactured Products shall be in accordance with the Specifications.

 

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(b) CCT shall manufacture, store at its facility, and test all bulk Manufactured Products or cause the same to be manufactured, stored at the manufacturing facility, and tested, in conformity with the applicable Specifications for such Manufactured Product and in compliance with all applicable Law, including cGTPs, and the terms and conditions of this Agreement and the Quality Agreement.

(c) Alliqua shall be solely responsible for all labels, labeling, tracking letters, and packaging of finished Manufactured Products, including package inserts and outserts for each Manufactured Product in the Territory.

(d) Subject to any legal requirements under applicable Law, CCT may, at its sole option, engage or use subcontractors and suppliers that it reasonably believes are qualified to perform some or all of CCT’s obligations under this Agreement (each, a “Permitted Subcontractor”).

(e) Without limiting the foregoing, all Permitted Subcontractors shall be subject to the applicable terms and conditions of this Agreement and the Quality Agreement and no agreement with any Permitted Subcontractor shall release CCT from any of its obligations under this Agreement or the Quality Agreement. CCT shall remain responsible for any services performed by such Permitted Subcontractor to the same extent as if it had performed the obligations itself.

(f) For the purposes of clarity, nothing in this Agreement shall provide a right of reference to support any filing by Alliqua or an Alliqua Affiliate with the FDA for any product other than the Manufactured Products or to support any similar filing with another Governmental Authority in or out of the Territory.

2.2 Forecasts; Firm Orders. The Parties shall comply with the provisions of Schedule 2.2 to this Agreement with respect to the matters set forth therein.

2.3 Shipment and Delivery.

(a) CCT shall deliver to Alliqua the Manufactured Products ordered pursuant to a Firm Order by the required delivery dates therefor EXW (Incoterms 2010) CCT’s designated facility in the United States. For purposes of clarity, Alliqua bears all risk and costs from the time Alliqua or its carrier picks up the Manufactured Products at CCT’s designated facility in the United States and CCT has no obligation to load the Manufactured Products or clear them for export.

(b) CCT shall package Manufactured Products in bulk for shipment in accordance with practices that are customary and reasonable in the industry with respect to similar products and comply with applicable Law, unless otherwise specified in writing by Alliqua at least ten (10) Business Days prior to such shipment, in which event CCT shall package Manufactured Products in bulk for shipment in accordance with such instructions and any commercially reasonable, documented actual external costs incurred by CCT (without markup) on account of the bulk packaging changes requested by Alliqua shall be promptly reimbursed by Alliqua.

(c) Prior to shipment, CCT shall perform release testing for the Manufactured Product pursuant to the Specifications, cGTPs and the Quality Agreement.

 

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2.4 Alliqua Right to Manufacture.

(a) If CCT terminates this Agreement pursuant to Section 9.2(a), or Alliqua terminates this Agreement pursuant to Section 9.2(b), (c) or (d), then, for so long as Alliqua has the right to Commercialize the Manufactured Products in the Territory under the License Agreement, Alliqua or any person or entity designated by Alliqua (including an Affiliate of Alliqua) may, following notice to CCT, manufacture, store at is facility, and test Alliqua’s requirements of the Manufactured Products for Commercialization in the Field in the Territory in accordance with the License Agreement.

(b) If Alliqua elects to manufacture, store, and test Alliqua’s requirements of the Manufactured Products in accordance with Section 2.4(a), CCT shall cooperate with and assist Alliqua or any person or entity designated by Alliqua (including an Affiliate of Alliqua) in transferring the processes for manufacturing, storing and testing the Manufactured Product to Alliqua or any person or entity designated by Alliqua (including an Affiliate of Alliqua).

2.5 Manufacture and Supply of ECMs. Prior to the anticipated date of Regulatory Clearance and/or Approval of the first of CCT’s extracellular matrix derived from the human placenta (“ECM”) products, the Parties shall enter into a supply agreement with respect to such ECM product that is on substantially the same terms as this Agreement, except that the purchase price shall be as set forth in Schedule 2.5 to this Agreement.

ARTICLE 3

REGULATORY AND QUALITY MATTERS

3.1 Regulatory Responsibility. Subject to the terms of this Agreement and the License Agreement, all matters in the Territory regarding obtaining and supporting Regulatory Clearance and/or Approval of the Manufactured Products, and manufacturing and testing of the Manufactured Products in compliance with the applicable Specifications for the Manufactured Product and applicable Law (including cGTPs), shall be the responsibility of, and shall remain under the control of CCT. Except as set forth in Section 3.2 below, any costs or expenses required to comply with CCT’s obligations under this Section 3.1 shall be borne by [***]. Each Party shall be registered with the FDA’s Center for Biologics Evaluation and Research pursuant to 21 Code of Federal Regulations (“CFR”) Part 1271, as and when their activities with respect to Manufactured Products require such registration. Each Party shall promptly (within three (3) Business Days) provide the other Party with copies of all communications received from any Regulatory Authority concerning the Manufactured Products which directly or indirectly affect or relate to the manufacturing, storage, testing, packaging or labeling thereof, and any filings that directly or indirectly affect or relate to the manufacturing, storage, testing, packaging or labeling of the Manufactured Products to be made to any such agency for prior review and comment at least five (5) Business Days prior to such submission. Each Party shall provide notice to the other Party of meetings with any Regulatory Authority, whether via electronic means, in person, or otherwise, which affect or relate to the manufacturing, storing, testing, packaging or labeling

 

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of the Manufactured Products. CCT will require each Permitted Subcontractor to keep CCT and Alliqua fully and promptly advised of any inspections, inspectional observations and other communications and interactions between such Permitted Subcontractor and any Regulatory Authority which may directly or indirectly affect or relate to the manufacturing, storage, testing, packaging or labeling of any Manufactured Products. In the event of any inconsistency between the provisions of this Section 3.1 and the provisions of the License Agreement, the provisions of the License Agreement shall control.

3.2 Change Control. CCT and Alliqua shall cooperate in timely making any and all changes to the Specifications or manufacturing processes that are required by applicable Law (collectively, “Required Manufacturing Changes”). The commercially reasonable, documented costs attributable to the Required Manufacturing Change, including the cost of a reasonable quantity (in light of the Forecasts submitted by Alliqua) of raw materials, work-in-process, Manufactured Products and bulk packaging materials rendered obsolete as a result of any such Required Manufacturing Changes, shall be borne by [***].

3.3 Records. CCT shall, and shall cause its Affiliates and each Permitted Subcontractor to, keep appropriate accounts, notes, data and records of the work performed under this Agreement in accordance with applicable Law, including cGTPs, and the terms and conditions of this Agreement and the Quality Agreement. CCT shall provide Alliqua with a copy of a certificate of analysis with each batch of Manufactured Products delivered to Alliqua, as set forth in the Quality Agreement.

3.4 Testing. CCT shall be solely responsible for (a) taking and maintaining quality control samples of all Manufactured Products delivered to Alliqua (collectively, the “Product Samples”), and (b) testing Product Samples, in each case, in accordance with the Quality Agreement. CCT shall promptly provide Alliqua data resulting from testing related to the Product Samples for distribution in the Territory as such information becomes available, including any discovery of any negative or adverse trending in testing data.

3.5 Regulatory Inquiries. Without limiting any provision of the License Agreement, upon being contacted (and, in the case of CCT, upon any Permitted Subcontractor being contacted) by any Regulatory Authority for any regulatory purpose pertaining to this Agreement or to the Manufactured Products, including notice of the initiation of any inquiries, notices or inspection activity by any such agency, a Party shall immediately notify the other Party and provide the other Party with (a) a reasonable description of any such inquiries and related documentation, (b) an opportunity to advise and comment with respect thereto and (c) if appropriate, an opportunity to participate with respect thereto to the extent such matters relate to the Manufactured Products in the Territory.

3.6 Notice of Regulatory Inspections. Each Party shall (a) advise the other Party of any requests by any Regulatory Authority (including, in the case of CCT, any such requests made to a Permitted Subcontractor) for any inspections with respect to the manufacturing, storing, testing, packaging and/or labeling of Manufactured Products, (b) provide the other Party with copies of any correspondence related thereto, and, to the extent it (or, in the case of CCT, by a Permitted Subcontractor) becomes aware of the results, observations or outcome of any inspections or audits of the facilities or operations involved in the manufacture, storage, testing,

 

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packaging and/or labeling of the Manufactured Products conducted by any Regulatory Authority, including providing the other Party an opportunity to advise and comment with respect to any correspondence to be provided by such Party (or, in the case of CCT, by a Permitted Subcontractor) to the applicable agency, and (c) notify the other Party of any such information as it relates to the Manufactured Products in the Territory within three (3) Business Days of obtaining the information.

3.7 Quality Agreement. Within sixty (60) Business Days after the Effective Date, CCT and Alliqua shall negotiate in good faith the terms of, and enter into, a reasonable and customary quality agreement (the “Quality Agreement”). The Quality Agreement shall include provisions with respect to, among other things, release testing, change control procedures with respect to the Specifications and the manufacturing processes for the Manufactured Products, stability testing, recalls of any Manufactured Products, and record retention requirements with respect to recalls. In the event of any conflict between the terms of the Quality Agreement and the terms of this Agreement, the terms of the Quality Agreement shall govern.

3.8 Quality Audits.

(a) Upon reasonable advance notice and during reasonable business hours, Alliqua shall have the right to inspect and audit those portions of CCT’s and its Affiliates’ and its Permitted Subcontractors’ facilities in which the Manufactured Products are manufactured, stored or tested, to ascertain compliance with cGTPs, applicable Law, and the terms and conditions of this Agreement and the Quality Agreement; provided, however, that (i) Alliqua’s representatives shall follow all security and facility access procedures as reasonably required by CCT or its Affiliate or Permitted Subcontractor, as applicable, and (ii) Alliqua may not exercise its right under this Section 3.8(a) more than once in any twelve (12)-month period (unless such inspection and audit reveals a material compliance issue, in which event Alliqua shall have the right to conduct a follow-up inspection and audit to verify that such issue has been remedied). CCT shall use commercially reasonable efforts to promptly resolve, and to cause its Affiliates and its Permitted Subcontractors to promptly resolve, any quality issues raised by any inspections and audits of their respective facilities.

(b) Upon reasonable advance notice and during reasonable business hours, CCT shall have the right to inspect and audit (i) those portions of Alliqua’s facilities in which the Manufactured Products are stored, handled or labeled and (ii) if Alliqua elects to manufacture, store, and test Alliqua’s requirements of the Manufactured Products or designate another person or entity to manufacture, store, and test Alliqua’s requirements of the Manufactured Products, in accordance with Section 2.4(a), those portions of Alliqua’s facilities or those of its designated Person, as the case may be, in which the Manufactured Products are manufactured, stored, handled or labeled, in each case, to ascertain compliance with cGTPs, applicable Law, and the terms and conditions of this Agreement and the Quality Agreement; provided, however, that (i) CCT’s representatives shall follow all security and facility access procedures as reasonably required by Alliqua, as applicable, and (ii) CCT may not exercise its right under this Section 3.8(a) more than once in any twelve (12)-month period (unless such inspection and audit reveals a material compliance issue, in which event CCT shall have the right to conduct a follow-up inspection and audit to verify that such issue has been remedied). Alliqua shall use commercially reasonable efforts to promptly resolve any quality issues raised by any inspections and audits of its facilities.

 

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(c) Except as otherwise set forth in this Agreement, each Party shall, at its sole cost and expense, maintain in full force and effect all necessary licenses, approvals, permits and other authorizations required by applicable Law to carry out its duties and obligations under this Agreement and the Quality Agreement.

3.9 Intentionally Omitted.

3.10 Cooperation. The Parties will cooperate in good faith in responding to any Regulatory Authority inquiry or in making any report to the Regulatory Authority with respect to Manufactured Products. Notwithstanding anything to the contrary in this Agreement (and without limiting CCT’s obligation under the License Agreement to obtain, support and maintain Regulatory Clearances and/or Approvals), CCT will have final authority for regulatory decisions and responsibility for all communications with any Regulatory Authority with respect to obtaining or maintaining Regulatory Approval of the Manufactured Products.

3.11 Recalls. CCT and Alliqua will each notify the other Party promptly if it becomes aware that a Manufactured Product is the subject of a recall or market withdrawal that is mandated by a Regulatory Authority, and the Parties will reasonably cooperate in the handling and disposition of such recall or market withdrawal; provided, however, in the event of a disagreement as to any matters related to any such recall or market withdrawal, other than the determination of who will bear the costs as set forth in the immediately following sentences, CCT will have the final authority with respect to any product recall or withdrawal relating to Manufactured Products, including any recall or market withdrawal that is not mandated by a Regulatory Authority. [***] will bear the cost of all recalls or market withdrawals of Manufactured Products [***] pursuant to this Agreement where such recall or market withdrawal is [***]. [***] will bear the cost of all recalls or market withdrawals of Manufactured Products [***] pursuant to this Agreement where such recall or market withdrawal is [***]. If a recall or market withdrawal is due [***], then the costs of such recall or market withdrawal will be [***]. [***] will bear the cost of all recalls or market withdrawals of Manufactured Products [***] pursuant to this Agreement where the recall or market withdrawal is [***]. Alliqua will maintain records of all sales of Manufactured Product and all customers sufficient to adequately administer a recall or market withdrawal for the longer of one (1) year after termination or expiration of this Agreement or the period required by applicable Law. Alliqua will, in all events and regardless of who bears the cost, be responsible for administering the physical aspects of any recalls or market withdrawals with respect to the Manufactured Products, provided, however, that any reasonable external costs and expenses incurred by Alliqua relating to the recall or market withdrawal (including, but not limited to reasonable recall destruction costs) will be allocated between the Parties as set forth above in this Section. Any revenue attributable to Manufactured Products held or sold by Alliqua (or its designee) that is subject to a recall will be deducted from Net Sales for purposes of the License. In the event of any recall, if requested by Alliqua, CCT will provide Manufactured Products to Alliqua to replace the recalled Manufactured Products and, to the extent the recalled Manufactured Products were previously paid for by Alliqua, the cost of such replacement Manufactured Products shall be allocated between the Parties as set forth above in this Section.

 

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3.12 Complaints. Alliqua will collect complaint files for the Manufactured Products in accordance with the provisions of the Quality Agreement. Manufactured Products complaint reports received by Alliqua will be sent to CCT at [***] within twenty-four (24) hours after receipt of the complaint by Alliqua. Alliqua and CCT will notify each other of any Manufactured Product complaints made by customers that will or could require a report of an “adverse reaction” to the FDA pursuant to 21 CFR 1271.350, and will thereafter reasonably cooperate with each other relative to any investigation or inquiry that may be initiated by FDA with respect thereto. The complaint handling obligations of the Parties will be detailed further within the Quality Agreement and/or the Safety Data and Exchange Agreement.

3.13 Warning Letters. In the event that either Party (or, in the case of CCT, any Permitted Subcontractor) receives a warning letter from the FDA or the equivalent from any other Governmental Authority in connection with the Manufactured Product, such Party will notify the other Party promptly, and in any event within twenty four (24) hours (to the extent legally permitted) after receiving such warning letter.

3.14 Inquiries from Health Care Professionals. CCT shall provide reasonable assistance to Alliqua in its preparation and filing with appropriate Regulatory Authorities related to reimbursement and health care insurance filings required for the marketing and distribution of Manufactured Products in the Territory by Alliqua.

3.15 Debarment. Neither Party shall use any employee or consultant (or, in the case of CCT, any Permitted Subcontractor or employees or consultants thereof) who has been debarred by any Regulatory Authority, or, to such Party’s knowledge, is the subject of debarment proceedings by a Regulatory Authority. Each Party shall notify the other Party promptly upon becoming aware that any of its employees or consultants (or, in the case of CCT, any Permitted Subcontractor or employees or consultants thereof) has been debarred or is the subject of debarment proceedings by any Regulatory Authority.

3.16 Additional Covenants of Alliqua. Alliqua shall:

(a) discharge its obligations pursuant to this Agreement in accordance with all applicable Laws, including those enforced by the FDA (including compliance with cGTP);

(b) maintain the Manufactured Products pending sale to its customers in a facility that is properly equipped to store such Manufactured Products in accordance with the applicable Manufactured Product labeling; and

(c) comply in all respects with Article 3 hereof and the Quality Agreement and the Safety Data and Exchange Agreement.

 

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ARTICLE 4

PRICE AND PAYMENT TERMS

4.1 Purchase Price.

(a) For all Manufactured Products ordered pursuant to Firm Orders by Alliqua at any time, Alliqua shall pay CCT a purchase price (“Purchase Price”) for each conforming quantity of Manufactured Product delivered hereunder in accordance with the terms set forth in Schedule 4.1 to this Agreement.

(b) If at any time during the Term, CCT notifies Alliqua in writing that CCT has incurred an increase in the costs associated with manufacturing the Manufactured Products, the Parties shall promptly negotiate in good faith an increase in the Purchase Price to account for such increase in costs [***].

4.2 Taxes. The Purchase Price and other amounts payable by Alliqua to CCT pursuant to this Agreement shall not be reduced on account of any taxes unless required by applicable Law. CCT alone shall be responsible for paying any and all taxes (other than any withholding taxes required by applicable Law to be paid by Alliqua) levied on account of, or measured in whole or in part by reference to, any payments it receives from Alliqua.

4.3 Freight and Insurance. In addition to the Purchase Price, for the purposes of clarity, Alliqua shall pay all actual freight and insurance expenses incurred by Alliqua in connection with the sale and shipment of the Manufactured Products.

4.4 Payments.

(a) Upon each delivery of Manufactured Products, CCT shall promptly submit an invoice to Alliqua. All invoices and payments for Manufactured Products shall be in United States dollars. Alliqua shall pay each invoice (except for any amounts disputed by Alliqua in good faith) within thirty (30) days after receipt thereof.

(b) If an inconsistency between any invoice, purchase order, purchase order release, confirmation, acceptance or similar document and this Agreement exists, the terms of this Agreement shall control.

(c) Payment due to CCT shall be paid in United States dollars by wire transfer to an account designated in writing by CCT.

4.5 Interest Charges. If CCT does not receive payment of any sum due to it on or before the due date, simple interest shall thereafter accrue on the sum due until the date of payment at the rate of [***] or, if less, the maximum rate allowable by applicable Law.

4.6 Pricing. All resale prices of Manufactured Products shall be reviewed by the JSC and Alliqua shall consider in good faith any comments of the JSC. For purposes of clarity, Alliqua shall have final discretion with respect to resale prices of the Manufactured Products during the Term, including resale price increases and decreases and the timing thereof.

 

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ARTICLE 5

INSPECTION OF MANUFACTURED PRODUCTS

5.1 Inspection by Alliqua. Alliqua may inspect and analyze the Manufactured Products delivered to Alliqua for purposes of determining whether the Manufactured Products meet the applicable Specifications at the time of delivery thereof (such Manufactured Product, “Acceptable Manufactured Products”). Alliqua shall notify CCT in writing within thirty (30) days after the date of delivery to Alliqua (or within thirty (30) days after discovery that any Manufactured Product is not Acceptable Manufactured Products for reasons that could not reasonably have been detected by Alliqua’s customary inspection on delivery) of any Manufactured Product or portion thereof which Alliqua is returning because it is not an Acceptable Manufactured Product, including documentation of the reasons therefor. If CCT does not receive such notice within such thirty (30)-day period, the shipped Manufactured Products will be deemed accepted as Acceptable Manufactured Products.

5.2 Disputes Over Manufactured Products. CCT shall have a reasonable opportunity not to exceed thirty (30) days from the date of receipt of the notice described in Section 5.1 to inspect and/or test such Manufactured Product that Alliqua claims is not an Acceptable Manufactured Product. If CCT, after good faith consultation with Alliqua, disputes any determination by Alliqua that a Manufactured Product is not an Acceptable Manufactured Product, then representative samples of such Manufactured Product shall be forwarded to an independent Third Party laboratory jointly selected by CCT and Alliqua, in their reasonable discretion, for analysis, which analysis shall be performed in compliance with industry standards and applicable Law. The findings of such Third Party laboratory regarding whether the Manufactured Product was an Acceptable Manufactured Product shall be binding upon the Parties. The cost of such analysis by such Third Party laboratory shall be borne by the Party whose analysis was not substantiated by the findings of such Third Party laboratory.

5.3 Replacement of Manufactured Products That Are Not Acceptable Manufactured Products. CCT shall, at Alliqua’s option, either replace any Manufactured Product order or portion thereof which is not an Acceptable Manufactured Product as soon as reasonably practicable at CCT’s cost and expense, including shipping costs, or promptly refund to Alliqua the payments made for such returned Manufactured Products (including Alliqua’s shipping costs). At the sole option of CCT, said Manufactured Products may be returned to CCT, at CCT’s expense including shipping costs, or destroyed in an environmentally acceptable manner, in accordance with applicable Law, at CCT’s expense. CCT will not, however, replace any Manufactured Product which fails or ceases to conform to the Specifications or which is unsalable, in each case, as a result of improper storage, transport or other mishandling or other event after the Manufactured Product has been delivered to Alliqua, Alliqua’s designated courier or other Alliqua designee.

5.4 Exclusive Remedy. The sole and exclusive remedy available to Alliqua in connection with Manufactured Products that are not Acceptable Manufactured Products shall be replacement of such Manufactured Product by CCT in accordance with Section 5.3 above. Notwithstanding the immediately preceding sentence, Manufactured Products that are not Acceptable Manufactured Products shall be deemed not to have been delivered for purposes of Section 9.2(b).

 

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ARTICLE 6

REPRESENTATIONS AND WARRANTIES; CERTAIN COVENANTS

6.1 Mutual Representations and Warranties. Each Party represents and warrants to the other Party as of the Effective Date as follows:

(a) It is a corporation duly organized, validly existing and in good standing under the laws of the State of its incorporation, with the requisite legal authority to own and use its properties and assets and to carry on its business as currently conducted.

(b) It has the requisite corporate authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder. The execution and delivery of this Agreement by it and the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action on its part and no further consent or action is required by it, by its Board of Directors or by its stockholders.

(c) This Agreement has been duly executed by it and is the valid and binding obligation of the Company enforceable against it in accordance with its terms, except (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, and (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies.

6.2 Additional CCT Representations and Warranties. CCT represents and warrants to Alliqua that at the time each Manufactured Product is delivered to Alliqua such Manufactured Product: (a) will meet the Specifications therefor; (b) will have been manufactured, stored and handled at CCT’s facility, and tested in accordance with the applicable Law, Regulatory Clearances and/or Approvals, Specifications and cGTPs; (c) will have a remaining shelf life no less than [***] of the shelf life set forth in the Regulatory Clearances and/or Approvals therefor in the Territory; (d) will not be (i) adulterated, or (ii) manufactured, stored or handled at CCT’s facility, or tested in a manner that violates the Act, or any other applicable Law; and (e) will pass to Alliqua free and clear of any security interest, lien or other encumbrances.

6.3 Alliqua Compliance with Applicable Law. Alliqua shall at all times: (a) handle, warehouse, store, label, package, market, sell, distribute and otherwise dispose of the Manufactured Products in the Territory in compliance with all applicable Law, Regulatory Clearances and/or Approvals, Specifications and cGTPs; and (b) except for any Regulatory Clearances and/or Approvals that CCT is responsible for maintaining, maintain all applicable licenses, registrations and permits necessary to take control of, market, sell and distribute such Manufactured Products in the Territory. Alliqua will not market the Manufactured Product in any manner which is inconsistent with its labeling or with applicable Law, or otherwise make any false or misleading representations to customers or others regarding the Manufactured Product.

 

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ARTICLE 7

INDEMNIFICATION AND INSURANCE

7.1 CCT Indemnification. Subject to the procedures set forth in Section 7.3, CCT shall indemnify Alliqua, its Affiliates and its and their respective directors, officers, employees and agents (the “Alliqua Indemnified Parties”), and defend and save each of them harmless, from and against any and all claims, lawsuits, losses, damages, liabilities, penalties, costs and expenses (including reasonable attorneys’ fees and disbursements) (collectively, “Losses”) incurred by any of them in connection with any and all suits, investigations, claims or demands of Third Parties (collectively, “Third Party Claims”) in connection with, arising from or occurring as a result of: (a) the breach or inaccuracy of any representation or warranty made by CCT in this Agreement or the Quality Agreement; (b) the breach by CCT of any of its obligations under this Agreement or the Quality Agreement; or (c) any manufacturing defect of the Manufactured Products manufactured by CCT or on its behalf; in each case except for those Losses for which Alliqua has an obligation to indemnify any CCT Indemnified Parties pursuant to Section 7.2 of the License Agreement.

7.2 Alliqua Indemnification. Subject to the procedures set forth in Section 7.3, Alliqua shall indemnify CCT, its Affiliates and its and their respective directors, officers, employees and agents (the “CCT Indemnified Parties”), and defend and save each of them harmless, from and against any and all Losses incurred by any of them in connection with any Third Party Claims in connection with, arising from or occurring as a result of: (a) the breach or inaccuracy of any representation or warranty made by Alliqua in this Agreement or the Quality Agreement; (b) the use of any and all Promotional Materials; (c) the breach by Alliqua of any of its obligations under this Agreement or the Quality Agreement; or (d) any Manufactured Products manufactured by Alliqua or on its behalf by any Person other than CCT, in each case except for those Losses for which CCT has an obligation to indemnify any Alliqua Indemnified Parties pursuant to Section 7.1 or the License Agreement.

7.3 Indemnification Procedures. The Party claiming indemnity under this Article 7 (the “Indemnified Party”) shall give written notice to the Party from whom indemnity is being sought (the “Indemnifying Party”) promptly after learning of such Claim. The Indemnifying Party shall have the right to assume and conduct the defense of the Claim with counsel of its choice, and the Indemnified Party may participate in and monitor such defense with counsel of its own choosing at its sole expense. The Indemnified Party shall provide the Indemnifying Party with reasonable assistance, at the Indemnifying Party’s expense, in connection with the defense of the Claim for which indemnity is being sought. Each Party shall not settle or compromise any Claim without the prior written consent of the other Party, which consent shall not be unreasonably withheld, delayed or conditioned. If the Parties cannot agree as to the application of the foregoing Sections 7.1 and 7.2, each may conduct separate defenses of the Claim, and each Party reserves the right to claim indemnity from the other in accordance with this Article 7 upon the resolution of the underlying Claim.

7.4 Limitation of Liability. NEITHER PARTY SHALL BE LIABLE FOR ANY SPECIAL, CONSEQUENTIAL, INCIDENTAL, PUNITIVE, OR INDIRECT DAMAGES, INCLUDING LOST PROFITS, ARISING FROM OR RELATING TO ANY BREACH OF

 

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THIS AGREEMENT EXCEPT FOR FRAUD OR WILLFUL MISCONDUCT, BREACH OF EITHER PARTY’S CONFIDENTIALITY OBLIGATIONS, A PARTY’S INDEMNIFICATION OBLIGATIONS, A BREACH OF EACH PARTY’S EXCLUSIVITY OBLIGATIONS OR A BREACH OF THE LICENSE GRANTS, REGARDLESS OF ANY NOTICE OF THE POSSIBILITY OF SUCH DAMAGES; PROVIDED, HOWEVER, THAT ANY DAMAGES CLAIMED BY OR PAID TO A THIRD PARTY IN A THIRD PARTY ACTION SHALL NOT BE CONSIDERED SPECIAL, CONSEQUENTIAL, INCIDENTAL, PUNITIVE, OR INDIRECT DAMAGES FOR PURPOSES OF THIS AGREEMENT.

7.5 Insurance. Each Party shall, at all times during the Term of this Agreement and for five (5) years thereafter, obtain and maintain at its own expense the following types of insurance, with limits of liability not less than those specified below:

(a) Commercial general liability insurance against claims for bodily injury and property damage which shall include contractual coverage and product liability coverage, with limits of not less than [***]. The other Party, its officers, directors, representatives and agents shall be named as additional insureds.

(b) Workers compensation and employers’ liability with limits to comply with the statutory requirements of the state(s) in which the Agreement is to be performed. The policy shall include employers’ liability for not less than [***].

All policies shall be issued by insurance companies with an A.M. Best’s rating of Class A-:V (or its equivalent) or higher status. Each Party shall deliver certificates of insurance evidencing coverage to the other Party promptly after the execution of this Agreement and annually thereafter. All policies provided for herein shall expressly provide that such policies shall not be cancelled, terminated or altered without at least thirty (30) days prior written notice to the insured Party, and each insuring Party shall immediately notify the insured Party in the event that a policy provided for herein is cancelled, terminated or altered.

ARTICLE 8

CONFIDENTIAL INFORMATION

8.1 Confidentiality. During the Term and for a period of [***] thereafter, each Party shall maintain all Confidential Information of the other Party in trust and confidence and shall not, without the written consent of the other Party, disclose any Confidential Information of the other Party to any Third Party or use any Confidential Information of the other Party for any purpose other than as necessary in connection with the exercise of rights or discharge of obligations under this Agreement. The confidentiality obligations of this Section 8.1 shall not apply to Confidential Information to the extent that the receiving Party can establish by competent evidence that such Confidential Information: (a) is publicly known prior or subsequent to disclosure without breach of confidentiality obligations by such Party or its employees, consultants or agents; (b) was in such Party’s possession at the time of disclosure without any restrictions on further disclosure; (c) is received by such receiving Party, without any restrictions on further disclosure, from a Third Party who has the lawful right to disclose it; or (d) is independently developed by employees or agents of the receiving Party who had no access to the disclosing Party’s Confidential Information.

 

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8.2 Authorized Disclosure. Nothing herein shall preclude a Party from disclosing the Confidential Information of the other Party to the extent:

(a) such disclosure is reasonably necessary (i) for the filing or prosecuting of Patents as contemplated by the License Agreement; (ii) to comply with the requirement of Regulatory Authorities with respect to obtaining and maintaining Regulatory Clearance and/or Approval (or any pricing and reimbursement approvals) of any Manufactured Product; or (iii) for prosecuting or defending litigations as contemplated by the License Agreement;

(b) such disclosure is reasonably necessary to its employees, agents, consultants or contractors on a need-to-know basis for the sole purpose of performing its obligations or exercising its rights under this Agreement; provided that in each case, the disclosees are bound by written obligations of confidentiality and non-use consistent with those contained in this Agreement;

(c) such disclosure is reasonably necessary to any bona fide potential or actual investor, acquiror, merger partner, or other financial or commercial partner for the sole purpose of evaluating an actual or potential investment, acquisition or other business relationship; provided that in each case, the disclosees are bound by written obligations of confidentiality and non-use consistent with those contained in this Agreement;

(d) such disclosure is reasonably necessary to comply with applicable Laws, including regulations promulgated by applicable security exchanges, a valid order of a court of competent jurisdiction, administrative subpoena or order.

Notwithstanding the foregoing, in the event a Party is required to make a disclosure of the other Party’s Confidential Information pursuant to any of Sections 8.2(a) through 8.2(d), such Party shall promptly notify the other Party of such required disclosure and shall use reasonable efforts to obtain, or to assist the other Party in obtaining, a protective order preventing or limiting the required disclosure.

8.3 Return of Confidential Information. Promptly after the termination or expiration of this Agreement for any reason, each Party shall return to the other Party all tangible manifestations of such other Party’s Confidential Information at that time in the possession of the receiving Party.

8.4 Publicity; Terms of the Agreement; Confidential Treatment.

(a) The Parties agree that the terms of this Agreement (including without limitation any exhibits and schedules hereto) shall be considered Confidential Information of each Party, subject to the special authorized disclosure provisions set forth in Section 8.2 and this Section 8.4.

 

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(b) If either Party desires to make a public announcement concerning the material terms of this Agreement, such Party shall give reasonable prior advance notice of the proposed text of such announcement to the other Party for its prior review and approval (except as otherwise provided herein), such approval not to be unreasonably withheld, conditioned or delayed. A Party commenting on such a proposed press release shall provide its comments, if any, within three (3) Business Days after receiving the press release for review. In addition, to the extent required by applicable Laws, including regulations promulgated by applicable security exchanges, each Party shall have the right to make a press release announcing the achievement of each milestone under this Agreement as it is achieved, and the achievements of Regulatory Clearances and/or Approvals in the Territory as they occur, subject to the other Party’s consent as to form and substance of such announcement, which shall not be unreasonably withheld, conditioned or delayed. In relation to the other Party’s review and approval of such an announcement, such other Party may make specific, reasonable comments on such proposed press release within the prescribed time for commentary, but shall not withhold its consent to disclosure of the information that the relevant milestone has been achieved and triggered a payment hereunder. Neither Party shall be required to seek the permission of the other Party to repeat any information regarding the terms of this Agreement that has already been publicly disclosed by such Party, or by the other Party, in accordance with this Section 8.4, provided such information remains accurate as of such time.

(c) In addition, the Parties acknowledge that either or both Parties may be obligated to file under applicable law and regulation a copy of this Agreement with the USA Securities and Exchange Commission or similar stock exchange authorities or other governmental authorities. Each Party shall be entitled to make such a required filing; provided, however, that it requests confidential treatment of the commercial terms and sensitive technical terms hereof and thereof to the extent such confidential treatment is reasonably available to such Party. In the event of any such filing, each Party shall provide the other Party with a copy of this Agreement marked to show provisions for which such Party intends to seek confidential treatment and shall reasonably consider and incorporate the other Party’s comments thereon to the extent consistent with the legal requirements, with respect to the filing Party, governing disclosure of material agreements and material information that must be publicly filed.

8.5 Technical Publication. Neither Party may publish peer reviewed manuscripts or give other forms of public disclosure such as abstracts and media presentations (such disclosure collectively, for purposes of this Section 8.5, “publication”), of results of studies carried out under this Agreement, without the opportunity for prior review by the other Party, except to the extent required by applicable Laws. A Party seeking publication shall provide the other Party the opportunity to review and comment on any proposed publication that relates to the Manufactured Product at least thirty (30) days (or at least ten (10) days in the case of abstracts and media presentations) prior to its intended submission for publication. The other Party shall provide the Party seeking publication with its comments in writing, if any, within twenty (20) days (or within five (5) days in the case of abstracts and media presentations) after receipt of such proposed publication. The Party seeking publication shall consider in good faith any comments thereto provided by the other Party and shall comply with the other Party’s reasonable request to remove any and all of such other Party’s Confidential Information from the proposed publication. In addition, the Party seeking publication shall delay the submission for a period up to sixty (60) days in the event that the other Party can demonstrate reasonable need for such delay in order to

 

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accommodate the preparation and filing of a patent application. If the other Party fails to provide its comments to the Party seeking publication within such twenty (20) day period (or five (5) day period, as the case may be), such other Party shall be deemed not to have any comments, and the Party seeking publication shall be free to publish in accordance with this Section 8.5 after the thirty (30) day period (or ten (10) day period, as the case may be) has elapsed. The Party seeking publication shall provide the other Party a copy of the publication at the time of the submission. Each Party agrees to acknowledge the contributions of the other Party and its employees in all publications as scientifically appropriate.

8.6 Equitable Relief. Each Party acknowledges that its breach of Article 8 of this Agreement may cause irreparable injury to the other Party for which monetary damages may not be an adequate remedy. Therefore, each Party shall be entitled to seek injunctive and other appropriate equitable relief to prevent or curtail any actual or threatened breach of the obligations relating to Confidential Information set forth in this Article 8 by the other Party. The rights and remedies provided to each Party in this Article 8 are cumulative and in addition to any other rights and remedies available to such Party at law or in equity.

ARTICLE 9

TERM AND TERMINATION

9.1 Term. The term of this Agreement shall commence on the Effective Date and shall continue until this Agreement is terminated pursuant to this ARTICLE 9 (the “Term”).

9.2 Termination. This Agreement may be terminated as follows:

(a) By CCT upon [***] prior written notice to Alliqua.

(b) By Alliqua upon [***] prior written notice to CCT if, on at least [***] occasions within any [***] period, CCT fails to deliver at least [***] of any Manufactured Products specified in a Firm Order conforming to the provisions of Schedule 2.2, subsection (c) by the required delivery date specified therein and in conformity with the applicable Specifications.

(c) By either Party immediately upon written notice to the other Party if the other Party materially breaches its obligations under this Agreement and, after receiving written notice identifying such material breach in reasonable detail, fails to cure such material breach within sixty (60) days from the date of such notice. If the alleged breaching Party disputes in good faith the existence or materiality of a breach specified in a notice provided by the other Party in accordance with this Section 9.2(c), and such alleged breaching Party provides the other Party notice of such dispute within the applicable cure period, then the non-breaching Party shall not have the right to terminate this Agreement under this Section 9.2(c) unless and until an arbitrator, in accordance with Article 13 of the License Agreement, has determined that the alleged breaching Party has materially breached the Agreement and such breaching Party fails to cure such breach within the applicable cure period (measured as commencing after the arbitrator’s decision). It is understood and agreed that during the pendency of such dispute, all of the terms and conditions of this Agreement shall remain in effect and the Parties shall continue to perform all of their respective obligations hereunder.

 

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(d) To the extent permitted under applicable Laws, if at any time during the Term of this Agreement, an Event of Bankruptcy (as defined below) relating to either Party (the “Bankrupt Party”) occurs, the other Party (the “Non-Bankrupt Party”) shall have, in addition to all other legal and equitable rights and remedies available hereunder, the option to terminate this Agreement upon sixty (60) days written notice to the Bankrupt Party. It is agreed and understood that if the Non-Bankrupt Party does not elect to terminate this Agreement upon the occurrence of an Event of Bankruptcy, except as may otherwise be agreed with the trustee or receiver appointed to manage the affairs of the Bankrupt Party, the Non-Bankrupt Party shall continue to make all payments required of it under this Agreement as if the Event of Bankruptcy had not occurred, and the Bankrupt Party shall not have the right to terminate any license granted herein. The term “Event of Bankruptcy” means: (a) filing, in any court or agency pursuant to any statute or regulation of any state or country, (i) a petition in bankruptcy or insolvency, (ii) for reorganization or (iii) for the appointment of (or for an arrangement for the appointment of) a receiver or trustee of the Bankrupt Party or of its assets; (b) with respect to the Bankrupt Party, being served with an involuntary petition filed in any insolvency proceeding, which such petition is not dismissed within sixty (60) days after the filing thereof; (c) proposing or being a party to any dissolution or liquidation when insolvent; or (d) making an assignment for the benefit of creditors. Without limitation, the Bankrupt Party’s rights under this Agreement shall include those rights afforded by 11 USAC. § 365(n) of the United States Bankruptcy Code (the “Bankruptcy Code”) and any successor thereto. If the bankruptcy trustee of a Bankrupt Party as a debtor or debtor-in-possession rejects this Agreement under 11 USAC. § 365(o) of the Bankruptcy Code, the Non-Bankrupt Party may elect to retain its rights licensed from the Bankrupt Party hereunder (and any other supplementary agreements hereto) for the duration of this Agreement and avail itself of all rights and remedies to the full extent contemplated by this Agreement and 11 USAC. § 365(n) of the Bankruptcy Code, and any other relevant Laws.

(e) This Agreement shall automatically terminate upon expiration or termination of the License Agreement.

9.3 Effects of Termination.

(a) Upon termination of this Agreement for any reason, all submitted Firm Orders for Manufactured Products shall be delivered and paid for in accordance with Article 2.

(b) Termination or expiration of this Agreement for any reason shall be without prejudice to any rights that shall have accrued to the benefit of a Party prior to such termination or expiration.

(c) Section 3.11, this Section 9.3 and Articles 1, 4, 5, 6, 7, 8 and 10 shall survive expiration or termination of this Agreement for any reason; Schedule 2.2, subsection (h) and Section 2.4 shall survive a termination of this Agreement pursuant to Section 9.2(a) or (b); and, with respect to Firm Orders submitted and/or filled after termination of this Agreement pursuant to Schedule 2.2, subsection (h), the provisions of this Agreement otherwise applicable to the Manufactured Products that are the subject of such Firm Orders shall survive termination of this Agreement.

 

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ARTICLE 10

GENERAL PROVISIONS

10.1 Entire Agreement; Amendment. This Agreement, together with the exhibits and schedules hereto, which are hereby incorporated herein, represents the entire agreement and understanding between the Parties with respect to its subject matter and supersedes and terminates any prior and/or contemporaneous discussions, representations or agreements, whether written or oral, of the Parties regarding the subject matter hereto, and supersedes, as of the Effective Date, all prior and contemporaneous agreements and understandings between the Parties with respect to the subject matter hereof (including for the Prior CDA). There are no covenants, promises, agreements, warranties, representations, conditions or understandings, either oral or written, between the Parties other than as are set forth in this Agreement. Amendments or changes to this Agreement shall be valid and binding only if in writing and signed by duly authorized representatives of the Parties.

10.2 Force Majeure. Both Parties shall be excused from the performance of their obligations under this Agreement to the extent that such performance is prevented by force majeure and the nonperforming Party promptly provides notice of the prevention to the other Party. Such excuse shall be continued so long as the condition constituting force majeure continues and the nonperforming Party takes reasonable efforts to remove the condition. For purposes of this Agreement, force majeure shall mean conditions beyond the control of the Parties, including an act of God, war, civil commotion, terrorist act, labor strike or lock-out, epidemic, failure or default of public utilities or common carriers, destruction of production facilities or materials by fire, earthquake, storm or like catastrophe, and failure of plant or machinery (provided that such failure could not have been prevented by the exercise of skill, diligence, and prudence that would be reasonably and ordinarily expected from a skilled and experienced person engaged in the same type of undertaking under the same or similar circumstances). If a force majeure persists for more than ninety (90) days, then the Parties shall discuss in good faith the modification of the Parties’ obligations under this Agreement in order to mitigate the delays caused by such force majeure.

10.3 Notices. Any notice required or permitted to be given under this Agreement shall be in writing, shall specifically refer to this Agreement, and shall be addressed to the appropriate Party at the address specified below or such other address as may be specified by such Party in writing in accordance with this Section 10.3, and shall be deemed to have been given for all purposes (a) when received, if hand-delivered or sent by confirmed facsimile or a reputable courier service, or (b) five (5) Business Days after mailing, if mailed by first class certified or registered airmail, postage prepaid, return receipt requested.

 

If to CCT:    Anthrogenesis Corporation, d/b/a Celgene Cellular Therapeutics
   Attn.: Chief Executive Officer
   33 Technology Drive Warren, NJ 07059-5148
   Fax: [***]

 

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With a copy to (which shall not constitute notice):
   Proskauer Rose LLP
   Eleven Times Square
   New York, NY 10036
   Attn: Robert A. Cantone, Esq.
   Fax No.: (212) 969-2900
and   
   Celgene Corporation
   86 Morris Avenue
   Summit, NJ 07901
   Attention: General Counsel
   Fax: [***]
If to Alliqua:    Alliqua, Inc.
   2150 Cabot Boulevard West
   Langhorne, Pennsylvania 19047
   Attention: Chief Executive Officer
   Fax No.: [***]
With a copy to (which shall not constitute notice):
   Lowenstein Sandler LLP
   65 Livingston Avenue
   Roseland, New Jersey 07068
   Attention: Michael Lerner, Esq.
   Fax No.: (973) 597-6395

10.4 No Strict Construction; Headings. This Agreement has been prepared jointly by the Parties and shall not be strictly construed against either Party. Ambiguities, if any, in this Agreement shall not be construed against any Party, irrespective of which Party may be deemed to have authored the ambiguous provision. The headings of each Article and Section in this Agreement have been inserted for convenience of reference only and are not intended to limit or expand on the meaning of the language contained in the particular Article or Section. Except where the context otherwise requires, the use of any gender shall be applicable to all genders, and the word “or” is used in the inclusive sense (and/or). The term “including” as used herein means including, without limiting the generality of any description preceding such term.

10.5 Assignment. Neither Party may assign this Agreement without the prior written consent of the other Party, such consent not to be unreasonably withheld, conditioned or delayed; provided, however, that [***] may assign this Agreement without the consent of [***], effective upon written notice to [***], to (i) [***], provided that [***] agrees in writing to continue to be bound by and subject to the terms and conditions of this Agreement and (ii) [***] and who agrees in writing to be bound by and subject to the terms and conditions of this Agreement. Further,

 

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[***] may assign without [***] consent [***]. Any permitted assignment shall be binding on the successors of the assigning Party. Any attempted or purported assignment in violation of this Section 10.5 shall be null and void.

10.6 Performance by Affiliates. Each Party may discharge any obligations and exercise any right hereunder through any of its Affiliates. Each Party hereby guarantees the performance by its Affiliates of such Party’s obligations under this Agreement, and shall cause its Affiliates to comply with the provisions of this Agreement in connection with such performance. Any breach by a Party’s Affiliate of any of such Party’s obligations under this Agreement shall be deemed a breach by such Party, and the other Party may proceed directly against such Party without any obligation to first proceed against such Party’s Affiliate.

10.7 Further Actions. Each Party shall execute, acknowledge and deliver such further instruments, and to do all such other acts, as may be necessary or appropriate in order to carry out the purposes and intent of this Agreement.

10.8 Severability. If any provision of this Agreement is found by a court of competent jurisdiction to be unenforceable, then such provision shall be construed, to the extent feasible, so as to render the provision enforceable, and if no feasible interpretation would save such provision, it shall be severed from the remainder of this Agreement. The remainder of this Agreement shall remain in full force and effect, unless the severed provision is essential and material to the rights or benefits received by either Party. In such event, the Parties shall negotiate, in good faith, and substitute a valid and enforceable provision or agreement that most nearly implements the Parties’ intent in entering into this Agreement.

10.9 No Waiver. No provision of this Agreement can be waived except by the express written consent of the Party waiving compliance. Except as specifically provided for herein, the waiver from time to time by either Party of any of its rights or its failure to exercise any remedy shall not operate or be construed as a continuing waiver of same or of any other of such Party’s rights or remedies provided in this Agreement.

10.10 Independent Contractors. For all purposes under this Agreement, Alliqua and CCT and their respective Affiliates are independent contractors with respect to each other, and shall not be deemed to be an employee, agent, partner or legal representative of the other Party. This Agreement does not grant any Party or its employees, consultants or agents any authority (express or implied) to do any of the following without the prior express written consent of the other Party: create or assume any obligation; enter into any agreement; make any representation or warranty; serve or accept legal process on behalf of the other Party; settle any claim by or against the other Party; or bind or otherwise render the other liable in any way.

10.11 Governing Law. This Agreement shall be governed by the laws of the state of New York, without regard to its choice of law provisions that would require the application of the laws of a different jurisdiction. The Parties hereby irrevocably submit to the jurisdiction of the state and federal courts sitting in the County and State of New York for the adjudication of disputes arising out of or relating to this Agreement.

 

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10.12 Counterparts. This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original but all of which together shall constitute the same legal instrument. Facsimile or PDF execution and delivery of this Agreement by any Party shall constitute a legal, valid and binding execution and delivery of this Agreement by such Party. The Parties to this document agree that a copy of the original signature (including an electronic copy) may be used for any and all purposes for which the original signature may have been used. The Parties agree they will have no rights to challenge the use or authenticity of this document based solely on the absence of an original signature.

[Signature page follows.]

 

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IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be executed in duplicate, as of the Effective Date, by its duly authorized officer or representative.

 

ANTHROGENESIS CORPORATION     ALLIQUA, INC.
By:  

/s/ Perry Karsen

    By:  

/s/ David Johnson

Name:   Perry Karsen     Name:   David Johnson
Title:   Chief Executive Officer     Title:   Chief Executive Officer

 

[Signature Page to Supply Agreement]