Item 1.01 Entry into a Material Definitive Agreement.
On November 27, 2018, AquaMed Technologies, Inc. (“
AquaMed
”),
a wholly-owned subsidiary of Alliqua BioMedical, Inc. (“
Alliqua
” or the “
Company
”), AQ TOP,
LLC, a Delaware limited liability company and a wholly-owned subsidiary of AquaMed (“
Merger Sub
”), and TO Pharmaceuticals,
LLC, a Delaware limited liability company (“
TOP
”), entered into an Agreement and Plan of Merger (the “
Merger
Agreement
”), pursuant to which, among other things, subject to the satisfaction or waiver of the conditions set forth
in the Merger Agreement, Merger Sub will merge with and into TOP, with TOP becoming a wholly-owned subsidiary of the AquaMed and
the surviving company of the merger (the “
Merger
”). The Merger is intended to qualify for federal income tax
purposes as a tax-free contribution under the provisions of Section 351(a) of the Internal Revenue Code of 1986, as amended.
The following description of the Merger Agreement, and the transactions
contemplated thereby, are included to provide you with information regarding their terms. They do not purport to be a complete
description and are qualified in their entirety by reference to the full text of such agreement, which it attached hereto as Exhibit
2.1 and incorporated herein by reference.
The Merger will occur after the consummation by Alliqua of the
following steps:
(1) Pursuant to an Asset Contribution and Separation Agreement
to be entered into by and between Alliqua and AquaMed (the “
Separation Agreement
”) prior to consummation of
the Merger, Alliqua will transfer certain assets and liabilities utilized primarily in connection with its custom hydrogels contract
manufacturing business to AquaMed (the “
Separation
”),
(2) AquaMed will issue a to be determined number of shares of
common stock to Alliqua in consideration of the contribution of assets pursuant to the Separation Agreement (the “
Distribution
Consideration
”),
(3) Alliqua will distribute to its stockholders all of the issued
and outstanding shares of common stock, par value $0.001 per share, of AquaMed by way of a pro rata dividend (the “
Distribution
”),
and
(4) Alliqua will consummate the previously announced reverse
merger transaction with Adynxx, Inc. (“
Adynxx
”), pursuant to that certain Agreement and Plan of Merger and Reorganization,
dated as of October 11, 2018, by and among Alliqua, Embark Merger Sub, Inc. and Adynxx.
At the effective time of the Merger, all of the outstanding
membership units of TOP will be converted into the right to receive, in the aggregate, merger consideration consisting of shares
of AquaMed common stock. Immediately after the effective time of the Merger and consummation of the Private Placement (as defined
below), before giving effect to any fees payable in equity to financial advisors or other intermediaries, the current members of
TOP and the third-party investors that participate in the Private Placement are expected to hold approximately 90% of the total
number of shares of AquaMed common stock outstanding (on a fully diluted basis).
The consummation of the Merger is subject to certain
customary and other conditions, including (i) the completion of the Separation and the Distribution, (ii) the
effectiveness of the registration statement on Form 10 to be filed with the SEC with respect to, and the approval for listing
on the NASDAQ Capital Market of, the shares of AquaMed common stock to be issued in the Distribution and the Merger, (iii)
receipt of binding commitments from third-party investors to consummate a private placement of AquaMed’s common stock
in a minimum aggregate amount of $10 million immediately prior to the effective time of the Merger (the “
Private
Placement
”) (iv) the accuracy of the parties’ representations and warranties and the performance of
their respective covenants contained in the Merger Agreement, and (v) receipt of an independent third-party valuation of
the AquaMed common stock to be issued in the Distribution.
The Merger Agreement contains customary and other representations,
warranties and covenants, including a covenant for AquaMed to use (i) commercially reasonable efforts to consummate and make effective
the Separation and payment of the Distribution Consideration contemplated by the Distribution Agreement in accordance with its
terms and (ii) reasonable best efforts to consummate the Private Placement.
The Merger Agreement contains certain termination rights for
AquaMed and TOP, including a termination right of either AquaMed or TOP if the Merger is not consummated by February 15, 2019.
The agreements that will govern the terms of the Separation
will be entered into prior to the completion of the Separation and Merger, including the Separation Agreement and a Tax Matters
Agreement. Neither the Separation, Distribution nor the Merger will require the approval of the stockholders of Alliqua.