EXHIBIT 10.1
 
EXECUTIVE EMPLOYMENT AGREEMENT
 
This Executive Employment Agreement (“Agreement”) is entered into effective
September 28, 2012 by and between Alliqua, Inc., with its principal place of
business at 850 Third Avenue, Suite 1801, New York, NY 10022 (the “Company”),
and James Sapirstein (“Executive”).  In consideration of the mutual promises and
covenants contained in this Agreement, the parties agree as follows:
 
1.           Agreement to Employ.  The Company desires to secure the services of
Executive as its Chief Executive Officer (“CEO”).  The Company and Executive
desire to enter into this Agreement to, among other things, set forth the terms
of Executive’s employment with the Company.  The Company and Executive
acknowledge that this Agreement supersedes any other offer, agreement or
promises made by anyone, specifically concerning the offer of employment by the
Company, and this Agreement comprises the complete agreement between Executive
and the Company concerning Executive’s employment by the Company.
 
2.           Term of Agreement.  This Agreement shall be binding upon and
enforceable against the Company and Executive immediately when both parties
execute the Agreement.  The Agreement’s stated term and the employment
relationship created hereunder will begin on October 1, 2012 and will remain in
effect for three (3) years, unless earlier terminated in accordance with Section
8 (the “Initial Employment Term”).  This Agreement shall be automatically
renewed for a successive one (1) year term after the Initial Employment Term
(the “Renewal Term”), unless terminated by either party upon written notice
(“Non-Renewal Notice”) provided not less than four (4) months before the end of
the Initial Employment Term, or unless earlier terminated in accordance with
Section 8.  The period during which Executive is employed under this Agreement
(including the Renewal Term) will be referred to as the “Employment Period.”
 
3.           Surviving Agreement Provisions.  Notwithstanding any provision of
this Agreement to the contrary, the parties’ respective rights and obligations
under Sections 6 through 10 shall survive any termination or expiration of this
Agreement or the termination of Executive’s employment for any reason
whatsoever.
 
4.           Services to be Provided by Executive.
 
(a)           Position and Responsibilities. Subject to the Agreement’s terms,
Executive agrees to serve the Company as CEO.  Executive shall have the duties
and privileges customarily associated with an executive occupying such role at a
publicly-traded company, and shall perform all reasonable acts customarily
associated with such role, or necessary and/or desirable to protect and advance
the best interests of the Company.  Executive shall also serve as a Member of
the Board of Directors of the Company (the “Board”).  For purposes of this
Agreement only, all references to the Board shall not include Executive.
 
(b)           Executive’s Office Location.  Through December 31, 2012,
Executive’s primary office location shall be the Company’s business office
located at 850 Third Avenue, Suite 1801, New York, NY 10022.  At any time after
January 1, 2013, Executive may move the Company’s office to a location in New
Jersey, convenient to other Company personnel.
 
(c)           Executive’s Employment Representations.  Executive agrees that he
(i) shall not serve as a member of any board of directors, or as a trustee of,
or in any manner be affiliated with, any present or future agency or
organization (except for civic, religious, and not for profit organizations)
without the consent of the Board, which consent will not be unreasonably
withheld, other than those board of directors or trustees on which Executive
serves as of date of this Agreement; and (ii) is required to devote sufficient
working time to the Company (other than sick time and civic responsibilities,
charitable or religious activities that do not interfere with the performance of
Executive’s duties) in order to properly carry out Executive’s
duties.  Executive further represents to the Company that Executive (x) is not,
to Executive’s knowledge, violating and will not violate any contractual, legal,
or fiduciary obligations or burdens to which Executive is subject as of the date
of this Agreement by entering into this Agreement or providing services under
the Agreement’s terms; (y) is, to Executive’s knowledge, under no contractual,
legal, or fiduciary obligation or burden that will interfere with his ability to
perform services under the Agreement’s terms; and (z) has no bankruptcies,
convictions, disputes with regulatory agencies, or other discloseable or
disqualifying events that would have any material impact on the Company or its
ability to conduct securities offerings.
 
 
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5.           Compensation for Services.  As compensation for the services
Executive will perform under this Agreement during the Employment Period, the
Company will pay Executive, and Executive shall accept as full compensation, the
following:

(a)           Base Salary.  Executive shall receive a bi-weekly salary of
thirteen thousand four hundred sixty-one dollars and fifty-four cents (U.S.
$13,461.54) (annualized, three hundred fifty thousand dollars (U.S.
$350,000.00)), less required withholdings (the “Base Salary”), payable in equal
installments bi-weekly pursuant to the Company’s normal payroll practices.  The
Base Salary may be increased in the discretion of the Board, but not decreased
without the consent of Executive.  If increased, the increased amount shall
constitute Base Salary for purposes of this Agreement.  During the Renewal Term,
Executive shall receive the same rate of Base Salary as in effect immediately
prior to the commencement of such Renewal Term.  Executive’s compensation shall
be subject to all appropriate federal and state withholding taxes.

(b)           Bonus Plans.  For 2012, Executive shall be eligible to receive up
to sixty percent (60%) of his Base Salary as a bonus (prorated based on actual
days employed by the Company in 2012), payable on or before March 15, 2013,
provided that Executive remains employed through December 31, 2012 and the
performance criteria for 2012 (as set forth on Exhibit A) has been
achieved.  Subject to approval of the Board in its sole discretion, Executive
may revise the targets set forth in Exhibit A after the Executive has been
employed with the Company for a period of ninety (90) days.  For fiscal years
during the Employment Period after 2012, Executive shall be eligible to receive
periodic bonuses of up to sixty percent (60%) of his Base Salary upon
achievement of target objectives and performance criteria, payable on or before
March 15th of the fiscal year following the fiscal year to which the bonus
relates.  Except to the extent provided by Section 9(c), Executive shall be
entitled to a bonus for a year, subject to achievement of the performance
criteria, if he is employed by the Company as of December 31 for the year to
which services to which the bonus applies were performed. Targets and
performance criteria shall be established by the Board after consultation with
Executive. The evaluation of Executive’s performance, as measured by the
applicable targets and the awarding of bonuses, if any, shall be at the Board’s
sole discretion.

(c)           Equity Award.  Within thirty (30) days after the date this
Agreement is executed by the Company and Executive, the Company shall submit to
the Board, and request the Board’s approval of, the issuance to Executive of the
following equity awards pursuant to the Alliqua, Inc. 2011 Long-Term Incentive
Plan (the “2011 Plan”) or, if there are not sufficient shares available under
the 2011 Plan, pursuant to a stand-alone award agreement:
 
 
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(i)           A stock option with respect to the number of shares of the
Company’s common stock equal to 3% of the Company’s total outstanding shares of
common stock (determined on a fully-diluted basis as of the date of this
Agreement), subject to the terms and conditions of a nonqualified stock option
award agreement consistent with this Agreement and, if granted pursuant to the
2011 Plan, the 2011 Plan, which terms shall include: (A) an exercise price equal
to the greater of $0.10 per share or the fair market value of a share of common
stock on the date of grant, (B) equal vesting (one-third (1/3) each year) on the
first, second, and third anniversary of the date of grant, (C) immediate vesting
of 100% of the then unvested optioned shares upon the effective date of a
“Change in Control” (as defined in the 2011 Plan) with respect to such grant),
and (D) a term of ten (10) years (subject to early termination of forfeiture in
accordance with the terms of the nonqualified stock option award
agreement).  The options shall also be subject to the terms set forth in Section
9(c).

(ii)           An award of restricted stock units relating to the number of
shares of  common stock equal to 1.0% of the Company’s outstanding shares of
common stock as of the date hereof (determined on a fully-diluted basis),
subject to the terms and conditions of a restricted stock unit award agreement
consistent with this Agreement and, if granted pursuant to the 2011 Plan, the
2011 Plan, which terms shall include: (A) vesting as follows if and to the
extent that the following goals are achieved on or before the third anniversary
of the date of grant: (1) 50% of the restricted stock units shall vest upon the
achievement of a market cap in excess of $50MM; (2) an additional number of the
restricted stock units shall vest upon the achievement of a market cap in excess
of $100MM such that a total of 75% of the initial number of restricted stock
units granted will be vested; and (3) the remainder of the restricted stock
units shall vest upon the achievement of a market cap in excess of $200MM; and
(B) except as provided by Section 9(c), immediate forfeiture of any unvested
restricted stock units on the earlier of (1) the date of Executive’s termination
of employment or (2) on the third anniversary of the date of grant to the extent
not vested on such date.  Shares with respect to vested restricted stock units
shall be issued to Executive within five (5) business days following the date(s)
on which such units become vested.  Notwithstanding the foregoing, all of the
restricted stock units shall become immediately vested upon the effective date
of a “Change in Control” (as defined in the 2011 Plan) if a Change in Control
occurs on or before the third anniversary of the date of grant.

(iii)           Subject to the discretion of the Board, in 2013 and 2014,
Executive will be eligible to receive additional equity compensation in the form
of stock options awarded pursuant to the 2011 Plan (or pursuant to stand-alone
award agreements), provided that the number of shares subject to any such stock
options and the terms of such stock options shall be determined by the Board in
its sole discretion.

(d)           Vacation.  During the Employment Period, Executive shall be
entitled to vacation in accordance with the Company’s vacation policy.  Vacation
shall be taken at such times and intervals as shall be determined by Executive,
subject to the reasonable business needs of the Company.

(e)           Reimbursement of Ordinary Business Expenses.  The Company shall
reimburse Executive for all reasonable business expenses upon the presentation
of itemized statements of such expenses in accordance with Company policies and
procedures as may be in effect from time to time.

(f)           Automobile Allowance.  During the Employment Period, Executive
shall be entitled to an automobile allowance in an amount equal to $750.00 per
month.
 
 
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(g)           Life Insurance.  During the Employment Period, the Company will
reimburse Executive, up to the maximum amount of $200.00 per month, for the cost
of a term life insurance policy having a face amount of $1,000,000.  Executive
shall be the owner of such policy and shall be entitled to name the
beneficiary(ies) thereof.

(h)           Other Benefits and Perquisites.  Executive shall be entitled to
participate in the benefit plans provided by the Company for all employees
generally, and for the Company’s executive employees, including the availability
of health and dental insurance benefits. The Company shall be entitled to
modify, amend or terminate these benefit plans in its sole discretion at any
time.  Any reimbursement of expenses made under this Agreement shall only be
made for eligible expenses incurred during the Employment Period, and no
reimbursement of any expense shall be made by the Company after December 31st of
the year following the calendar year in which the expense was incurred.  The
amount eligible for reimbursement under this Agreement during a taxable year may
not affect expenses eligible for reimbursement in any other taxable year, and
the right to reimbursement under this Agreement is not subject to liquidation or
exchange for another benefit.  Executive will comply with the Company’s policies
regarding these benefits, including all Internal Revenue Service rules and
requirements.

6.           Confidential Information.

(a)           Confidential Information.  The Company shall provide Executive
with confidential information and trade secrets of the Company (hereinafter
referred to as “Confidential Information”), shall place Executive in a position
to develop and have ongoing access to Confidential Information of the Company,
shall entrust Executive with business opportunities of the Company, and shall
place Executive in a position to develop business goodwill on behalf of the
Company.  For purposes of this Agreement, Confidential Information includes, but
is not limited to:

(i)            Technologies developed by the Company and any research data or
other documentation related to the development of such technologies, including,
without limitation, all designs, ideas, concepts, improvements, product
developments, discoveries and inventions, whether patentable or not, that are
conceived, developed or acquired by Executive, individually or in conjunction
with others, during the period of Executive’s employment by the Company;

(ii)           All documents, drawings, memoranda, notes, records, files,
correspondence, manuals, models, specifications, computer programs, E-mail,
voice mail, electronic databases, maps, logs, drawings, models and all other
writings or materials of any type embodying any of such information, ideas,
concepts, improvements, discoveries, inventions and other similar forms of
expression that are conceived, developed or acquired by Executive individually
or in conjunction with others during the Employment Period (whether during
business hours or otherwise and whether on any Company premises or otherwise)
that relate to the Company’s Business (defined below), trade secrets, products
or services;

(iii)          Customer lists and prospect lists developed by the Company;

(iv)          Information regarding the Company’s customers which Executive
acquired as a result of his employment with the Company, including but not
limited to, customer contracts, work performed for customers, customer contacts,
customer requirements and needs, data used by the Company to formulate customer
bids, customer financial information, and other information regarding the
customer’s business;
 
 
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(v)           Information related to the Company’s Business (defined below),
including but not limited to marketing strategies and plans, sales procedures,
operating policies and procedures, pricing and pricing strategies, business
plans, sales, profits, and other business and financial information of the
Company;

(vi)          Training materials developed by and utilized by the Company; and

(vii)         Any other information that Executive acquired as a result of his
employment with the Company and which the Company would not want disclosed to a
business competitor or to the general public.

Executive understands and acknowledges that such Confidential Information gives
the Company a competitive advantage over others who do not have the information,
and that the Company would be irreparably harmed if the Confidential Information
were disclosed.

For purposes of this Agreement, Confidential Information shall not include
information that: (i) prior to disclosure, is or was known or generally
available to the public; (ii) after disclosure, become known to the public
through no act or omission of Executive or any other person or entity with an
obligation of confidentiality to the Company; (iii) is or was independently
developed by or Executive, without the use of or reference to Confidential
Information of the Company, and can be demonstrated by Executive through
adequate documentation was developed by Executive in this manner; or (iv) is
required to be disclosed pursuant to an applicable law, rule, regulation,
government requirement or court order, or the rules of any stock exchange
(provided however, Executive shall advise the Company of such required
disclosure promptly upon learning thereof in order to afford the Company a
reasonable opportunity to contest, limit and/or assist Executive in crafting
such disclosure and shall cooperate with the Company concerning any such attempt
to contest, limit or craft the disclosure).

(b)           Disclosure of Confidential Information.  Executive agrees that he
shall hold all Confidential Information of the Company in trust for the Company
and shall not during or after his employment terminates for any reason:  (i) use
the information for any purpose other than the benefit of the Company; or (ii)
disclose to any person or entity any Confidential Information of the Company
except as necessary during Executive’s employment with the Company to perform
services on behalf of the Company.  Executive shall also take reasonable steps
to safeguard such Confidential Information in Executive’s possession or control
to prevent its disclosure to unauthorized persons.

(c)           Return of Information.  Upon termination of employment, or at any
earlier time as directed by the Company, Executive shall immediately deliver to
the Company any and all Confidential Information in Executive’s possession, any
other documents or information that Executive acquired as a result of his
employment with the Company and any copies of any such
documents/information.  Executive shall not retain any originals or copies of
any documents or materials related to the Company’s Business – whether in hard
copy or digital form – which Executive came into possession of or created as a
result of his employment with the Company.  Executive acknowledges that such
information, documents and materials are the exclusive property of the
Company.  After Executive delivers to the Company all Confidential Information
in Executive’s possession and all other documents and/or information relating to
the Company’s Business, Executive shall immediately delete all Company
Confidential Information and other documents and/or information relating to the
Company’s Business from any computer, cellular phone or other digital or
electronic device owned by Executive.  In addition, upon termination of
employment, or at any time earlier as directed by the Company, Executive shall
immediately deliver to the Company any property of the Company in Executive’s
possession.
 
 
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7.           Restrictive Covenants.  In consideration for (i) the Company’s
promise to provide Confidential Information to Executive and Executive’s return
promise to hold the Company’s Confidential Information in trust, (ii) the
substantial economic investment made by the Company in the Confidential
Information and goodwill of the Company, and the business opportunities
disclosed or entrusted to Executive, (iii) the compensation and other benefits
provided by the Company to Executive, and (iv) the Company’s employment of
Executive pursuant to this Agreement, and to protect the Company’s Confidential
Information, customer relationships, and goodwill, Executive agrees to enter
into the following restrictive covenants.

(a)           Non-Solicitation.  Executive agrees that, during the Employment
Period and thereafter during the Restricted Period (defined below), other than
in connection with his authorized duties under this Agreement, Executive shall
not, directly or indirectly, either as a principal, manager, agent, employee,
consultant, officer, director, stockholder, partner, investor, owner, or lender
or in any other capacity, and whether personally or through other persons or
entities:

(i)           Solicit business from, interfere with, attempt to solicit business
with, or do business with any customer or client of the Company with whom the
Company did business or who the Company solicited within the preceding eighteen
(18) months and who or which:  (1) Executive contacted, called on, serviced or
did business with during Executive’s employment at the Company; (2) Executive
learned of solely as a result of Executive’s employment with the Company; or (3)
about whom Executive received Confidential Information.  This restriction in
this Section 7(a)(i) only prohibits soliciting, attempting to solicit or
transacting business for any person or entity, other than the Company, engaged
in the Business (as defined below) of the Company or any affiliate thereof; or

(ii)           Solicit, induce or attempt to solicit or induce, engage or hire,
on behalf of himself or any other person or entity, any person who is an
employee or consultant of the Company or who was employed by the Company within
the preceding twelve (12) months (general advertisements and similar
solicitations not directed at any specific individuals shall not be considered
solicitation for this purpose).

Notwithstanding the foregoing, the restrictions contained in this Section shall
not apply to any individual who is a family member of Executive.

(b)           Non-Disparagement.  Executive agrees that the Company’s goodwill
and reputation are assets of great value to the Company and its affiliates which
were obtained through great costs, time and effort.  Therefore, Executive agrees
that during his employment and after the termination of his employment,
Executive shall not in any way, directly or indirectly, disparage, libel or
defame the Company, its beneficial owners or its affiliates, their respective
business or business practices, products or services, or employees.
 
 
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For purposes of this Agreement:

“Restricted Period” means a period of fifteen (15) months immediately following
the date of Executive’s termination from employment for any reason.

“Business” means a person or entity whose business is the  development,
manufacture and/or marketing of biomedical products, utilizing a transdermal
delivery system for the delivery of active pharmaceutical ingredients or
biomedical products for the treatment of advanced wound care and/or similar
products; any other business the Company engages in during Executive’s
employment and in which Executive participated or of which Executive had
knowledge of Confidential Information; or any business contemplated by the
Company during Executive’s employment and in which contemplations or business
assessment Executive participated or about which contemplated business Executive
had knowledge of Confidential Information.

“Restricted Area” means, because the Company’s business is nationwide,
Executive’s responsibilities are nationwide in scope, and Executive has access
to the Company’s Confidential Information on a nationwide basis, all States
comprising the United States, and any other geographic area in which the Company
conducts business and for which Executive has responsibilities during
Executive’s employment.

 (c)           Tolling.  If Executive violates any of the restrictions contained
in this Section 7 (other than subsection (b) of this Section 7), the Restricted
Period shall be suspended and will not run in favor of Executive from the time
of the commencement of any violation until the time when Executive cures the
violation to the satisfaction of the Company.

(d)           Remedies.  Executive acknowledges that the restrictions contained
in Sections 6 and 7 of this Agreement, in view of the nature of the Company’s
business and his position with the Company, are reasonable and necessary to
protect the Company’s legitimate business interests, Confidential Information
and goodwill and that any violation of Sections 6 and 7 of this Agreement may
result in irreparable injury to the Company.  In the event of a breach or
threatened breach by Executive of Sections 6 or 7 of this Agreement, the Company
may (i) seek a temporary restraining order and injunctive relief restraining
Executive from the commission of any breach, and (ii) if the Company is the
prevailing party, recover reasonable attorneys’ fees, expenses and costs the
Company incurs in such action.  Further, if the Company prevails in any action
brought by Executive (or anyone acting on his behalf) seeking to declare any
term in this Section 7 void or unenforceable or subject to reduction or
modification, then the Company shall be entitled to recover attorneys’ fees,
expenses and costs the Company incurs in such action.  Similarly, if Executive
prevails in any action brought by the Company (or anyone acting on its behalf)
seeking to enforce any term in Section 6 or 7, then  Executive shall be entitled
to recover reasonable attorneys’ fees, expenses and costs he incurs in such
action. Nothing contained in this Agreement shall be construed as prohibiting
the Company from pursuing any other remedies available to it for any breach or
threatened breach, including, without limitation, the recovery of money
damages.  The existence of any claim or cause of action by Executive against the
Company, whether predicated on this Agreement or otherwise, shall not constitute
a defense to the enforcement by the Company of Section 6 or 7 of this
Agreement.  If Executive, in the future, seeks or is offered employment, or any
other position or capacity with another person or entity, Executive agrees to
inform each such person or entity of the restrictions in Sections 6 and 7 of
this Agreement.  Further, before accepting any employment or other position with
any person or entity during the Restricted Period, Executive agrees to give
prior written notice to the Company of the name and address of such person or
entity.  The Company shall be entitled to advise such person or entity of the
provisions of Sections 6 and 7 and to otherwise deal with such person or entity
to ensure that the provisions of Sections 6 and 7 are enforced.
 
 
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(e)           Reformation.  The courts shall be entitled to modify the duration
and scope of any restriction contained herein to the extent such restriction
would otherwise be unenforceable, and such restriction as modified shall be
enforceable.  Executive acknowledges that the restrictions imposed by this
Agreement are legitimate, reasonable and necessary to protect the Company’s
investment in its Confidential Information, businesses, customer relationships
and the goodwill thereof.  Executive acknowledges that the scope and duration of
the restrictions contained herein are necessary and reasonable in light of the
time that Executive has been engaged in the business of the Company, Executive’s
reputation in the markets for the Company’s business and Executive’s
relationship with the suppliers, customers and clients of the Company obtained
through Executive’s employment with the Company.
 
8.           Termination of Agreement.  The employment relationship between
Executive and the Company created under this Agreement shall terminate before
the expiration of the stated term of this Agreement upon the occurrence of any
one of the following events:
 
(a)           Death or Permanent Disability.  This Agreement, and Executive’s
employment, shall be terminated effective on the death or permanent disability
of Executive.  For this purpose, “permanent disability” shall mean that
Executive has, by reason of any medically determinable physical or mental
impairment, been determined to be disabled under a long-term disability benefits
plan covering employees of the Company or is determined to be totally disabled
by the U.S. Social Security Administration.
 
(b)           Termination by the Company for Cause.  The Company may terminate
Executive’s employment hereunder for Cause at any time after providing written
notice to Executive.  For purposes of this Agreement, the term “Cause” shall
mean any of the following:
 
(i)           an act or acts of theft, embezzlement, fraud, or willful or
material misrepresentation by Executive;
 
(ii)           an act or acts of intentional dishonesty or willful
misrepresentation of a material nature;
 
(iii)          any willful misconduct by Executive with regard to the Companies;
 
(iv)          a material breach by Executive of any fiduciary duties owed by him
to the Companies;
 
(v)           Executive’s conviction of, or pleading nolo contendere or guilty
to, a felony or misdemeanor (other than a traffic infraction) that is reasonably
likely to cause damage to the Companies or the Companies’ reputation;
 
(vi)          a material violation of the Companies’ written policies, standards
or guidelines, which Executive failed to cure within thirty (30) days;
 
(vii)         Executive’s refusal to perform the material duties and
responsibilities required to be performed by Executive under the terms of this
Agreement, which Executive failed to cure within thirty (30) days after
receiving written notice from the Board; and
 
 
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(viii)        a material breach by Executive of this Agreement or any other
agreement to which Executive and the Companies are parties that is not cured by
Executive within thirty (30) days after receipt by Executive of a written notice
from the Companies of such breach specifying the details thereof.
 
(c)           Termination by the Company Without Cause.  The Company may
terminate this Agreement and Executive’s employment at any time upon thirty (30)
days written notice to Executive without Cause, during which period Executive
shall not be required to perform any services for Employer other than to assist
the Company in training his successor and generally preparing for an orderly
transition.
 
(d)           Termination by Executive.  Executive may terminate this Agreement
and his employment for without Good Reason at any time upon thirty (30) days
written notice to the Company.  Executive may also terminate his employment for
Good Reason.  For purposes of this Agreement, the term “Good Reason” shall mean
the occurrence of any of the following without Executive’s prior written
consent:
 
(i)            a material reduction in Executive’s Base Salary;
 
(ii)           a material diminution in Executive’s title, duties,
responsibility or authority; or
 
(iii)          relocation without Executive’s consent for three consecutive
months or more to an office located fifty (50) miles outside of (y) the current
business at 850 Third Avenue, Suite 1801, New York, NY 10022 or (z) the business
office in New Jersey contemplated in Section 4(b) of this Agreement.
 
Any event described in (i) through (iii) shall not constitute Good Reason unless
Executive delivers to the Companies a written notice of termination for Good
Reason within ninety (90) days after Executive first learns of the existence of
the circumstances giving rise to Good Reason, and within thirty (30) days
following delivery of such notice, the Company or Companies, as applicable, have
failed to cure the circumstances giving rise to Good Reason.
 
 (e)          Separation from Service.  For purposes of this Agreement,
including, without limitation, Sections 8 and 9, any references to a termination
of Executive’s employment shall mean a “separation from service” as defined by
Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) and
the Treasury Regulations and other guidance issued thereunder.
 
(f)           Notice of Termination.  Any termination of Executive’s employment
hereunder (other than as a result of the death of Executive or as a result of
the expiration of the Employment Term or any Renewal Term if either party has
given a Non-Renewal Notice to the other), whether by the Company or by
Executive, shall be communicated by written Notice of Termination to the other
party hereto.  For purposes of this Agreement, a “Notice of Termination” shall
mean a written notice that shall indicate (i) the specific termination provision
in this Agreement relied upon; (ii) the basis for the termination; and (iii) the
date of termination.
 
           9.           Compensation Upon Termination for Any Reason.  Upon the
termination of Executive’s employment under this Agreement before the expiration
of the stated term in this Agreement, Executive shall be entitled to the
following:
 
 
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(a)           Termination by the Company for Cause or as a Result of the
Resignation of Executive.  In the event that Executive’s employment is
terminated by the Company for Cause, or as a result of Executive’s resignation,
the Company shall, in addition to any benefits provided under any employee
benefit plan or program of the Company, pay the following amounts to Executive
(or his estate or other legal representative, as the case may be) within the
time period required by applicable law (and in all events within thirty (30)
days of such termination):

(i)           any accrued but unpaid Base Salary (as determined pursuant to
Section 5(a) hereof, including any shares of common stock) for services rendered
to the date of termination; and

(ii)           any accrued but unpaid expenses required to be reimbursed
pursuant to Section 5(e) hereof.

The amounts described in Sections 9(a)(i) and 9(a)(ii) above, together with
benefits provided under any employee benefit plan or program of the Company,
shall be referred to herein as the “Accrued Obligations.”
 
(b)           Termination by Reason of Death or Disability of Executive.  In the
event that Executive’s employment is terminated by reason of Executive’s death
or Disability, the Company shall pay the Accrued Obligations to Executive (or
his estate or other legal representative, as the case may be) within the time
period required by applicable law (and in all events within thirty (30) days of
such termination).  In addition, the Company shall pay Executive any earned, but
unpaid, bonus under Section 5(b) for services rendered during the year preceding
the date of termination within the time period provided by Section 5(b) for
payment of bonuses (the “Accrued Bonus”).
 
(c)           Termination by the Company Without Cause, or by Executive for Good
Reason.  In the event that Executive’s employment is terminated by the Company
without Cause or by Executive for Good Reason, the Company shall pay and/or
provide the following amounts to Executive:
 
(i)           the Accrued Obligations within the time period required by
applicable law (and in all events within thirty (30) days of such termination),
except for employee benefits that shall be provided in accordance with the terms
applicable to such benefits, and the Accrued Bonus within the time period
provided by Section 5(b) hereof for payment of bonuses; and
 
(ii)           subject to compliance with the restrictive covenants in Section 7
and the execution and timely return by Executive of a release of claims in
substantially the form of Exhibit B hereto (the “Release”) which the Company
shall deliver to Executive within five (5) business days following the
termination of Executive’s employment, and subject to the provisions of Section
11 below:
 
(1)           The Company shall pay Executive an amount equal to the greater of
the sum of twelve (12) months Base Salary or (B) the Base Salary payable for the
remaining number of months in the Initial Employment Term (but not to exceed to
thirty-six (36) months), payable in equal monthly installments over a period of
time equal to the number of months severance is payable (the “Severance
Period”). The first installment shall commence on the sixtieth (60th) day
following the termination of Executive’s employment but shall include all
installment amounts that would have been paid during the first sixty (60) days
following the termination of Executive’s employment had installments commenced
immediately following the date of termination.  Notwithstanding the foregoing,
if the Executive’s employment terminates under this Section 9(c) in connection
with, or within twenty-four (24) months following, a “Change in Control” (as
defined in the 2011 Plan), then the amount of severance set forth above shall be
doubled, but shall remain payable over the Severance Period determined without
regard to such doubling of the amount of severance.
 
 
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(2)           The Company shall pay Executive an amount equal to the greater of
(x) the most recent annual bonus earned by Executive, (y) the average of the
immediately preceding two year’s annual bonuses earned by Executive, or (z) if
Executive’s termination of employment occurs during the first calendar year of
the Initial Employment Term before any annual bonus for a full twelve (12)-month
period of service has been paid, then the target bonus Executive is eligible for
under Section 5(b) hereof (the greater of clauses (x), (y) or (z), the “Bonus
Amount”), provided that no Bonus Amount shall be payable if the bonuses for the
year of termination are subject to achievement of performance goals and such
performance goals are not achieved by the Company for such year.  The Bonus
Amount shall be paid at the same time bonuses would be payable under Section
5(b) hereof if Executive was actively employed. Notwithstanding the foregoing,
if Executive’s employment terminates under this Section 9(c) in connection with,
or within twenty-four (24) months following, a “Change in Control” (as defined
in the 2011 Plan), then the amount of Bonus Amount set forth above shall be
doubled.
 
(3)           All outstanding stock options and restricted stock unit awards
granted to Executive pursuant to Section 5(c) hereof shall be fully and
immediately vested, to the extent not previously vested, and the stock options
shall remain exercisable for two (2) years following Executive’s termination of
employment.  Shares with respect to the restricted stock unit awards that become
vested hereunder shall be delivered to Executive within ten (10) days following
the date that the Release is effective.
 
(4)           The Company shall provide Executive with continued healthcare
coverage under the Company’s group health plan at the same cost, if any, imposed
on active employees of the Company, until the earlier of (x) the expiration of
the Severance Period, (y) the date that Executive’s “COBRA” coverage terminates
or expires.  Such healthcare coverage shall be provided pursuant to COBRA.  To
the extent any such benefits are otherwise taxable to Executive, such benefits
shall, for purposes of Section 409A of the Code, be provided as separate in-kind
payments of those benefits, and the provision of in-kind benefits during one
calendar year shall not affect the in-kind benefits to be provided in any other
calendar year.
 
In the event Executive fails to comply with the restrictive covenants in Section
7 or does not timely execute and return (or otherwise revokes) a release of
claims in the form and substance reasonably requested by the Company, no amount
shall be payable to Executive pursuant to this Section 9(c)(ii).
 
 
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(d)           Termination Upon Non-Renewal.  In the event that Executive’s
employment is terminated by reason of non-renewal of the Agreement as provided
by Section 2 hereof, the Company shall pay
 
(i)           the Accrued Obligations and the Accrued Bonus to Executive within
the time period required by applicable law (and, with respect to the Accrued
Bonus, in all events within thirty (30) days of such termination); and
 
(ii)         subject to compliance with the restrictive covenants in Section 7
and the execution and timely return by Executive of the Release (defined above),
which the Company shall deliver to Executive within five (5) business days
following the termination of Executive’s employment, and subject to the
provisions of Section 11 below, an amount equal to the sum of six (6) months
Base Salary, payable in six (6) equal monthly installments.  The first
installment shall commence on the sixtieth (60th) day following the termination
of Executive’s employment but shall include all installment amounts that would
have been paid during the first sixty (60) days following the termination of
Executive’s employment had installments commenced immediately following the date
of termination.
 
In the event Executive fails to comply with the restrictive covenants in Section
7 or does not timely execute and return (or otherwise revokes) a release of
claims in the form and substance reasonably requested by the Company, no amount
shall be payable to Executive pursuant to this Section 9(d)(ii).
 
10.           Other Provisions.
 
(a)           Remedies; Legal Fees.  Each of the parties to this Agreement shall
be entitled to enforce its rights under this Agreement, specifically, to recover
damages by reason of any breach of any provision of this Agreement and to
exercise all other rights existing in its favor.  The prevailing party shall be
entitled to attorney’s fees.
 
(b)           Limitations on Assignment.  In entering into this Agreement, the
Company is relying on the unique personal services of Executive; services from
another person will not be an acceptable substitute.  Except as provided in this
Agreement, Executive may not assign this Agreement or any of the rights or
obligations set forth in this Agreement without the explicit written consent of
the Company.  Any attempted assignment by Executive in violation of this Section
10(b) shall be void.  Except as provided in this Agreement, nothing in this
Agreement entitles any person other than the parties to the Agreement to any
claim, cause of action, remedy, or right of any kind, including, without
limitation, the right of continued employment. No rights or obligations of the
Company under this Agreement may be assigned or transferred by the Company
without Executive’s prior written consent, except that such rights or
obligations may be assigned or transferred pursuant to a merger or consolidation
in which the Company is not the continuing entity, or a sale, liquidation or
other disposition of all or substantially all of the assets of the Company,
provided that the assignee or transferee is the successor to all or
substantially all of the assets of the Company and assumes the liabilities,
obligations and duties of the Company under this Agreement, either contractually
or as a matter of law.  The Company further agrees that, in the event of any
disposition of its business and assets described in the preceding sentence, it
shall cause such assignee or transferee expressly to assume the liabilities,
obligations and duties of the Company hereunder.
 
 
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(c)           No Mitigation or Offset.  In the event of termination of
Executive’s employment for any reason, Executive shall be under no obligation to
seek other employment and there shall be no offset against amounts due to him on
account of any remuneration or benefits from any subsequent employment that he
may obtain.
 
(d)           Severability and Reformation.  The parties intend all provisions
of this Agreement to be enforced to the fullest extent permitted by law.  If,
however, any provision of this Agreement is held to be illegal, invalid, or
unenforceable under present or future law, such provision shall be fully
severable, and this Agreement shall be construed and enforced as if such
illegal, invalid, or unenforceable provision were never a part hereof, and the
remaining provisions shall remain in full force and effect and shall not be
affected by the illegal, invalid, or unenforceable provision or by its
severance.  In lieu of such illegal, invalid or unenforceable provision, there
shall be added automatically as a part of this Agreement a legal, valid and
enforceable provision as similar in terms to such illegal, invalid or
unenforceable provision as may be possible, and the Company and Executive hereby
request the court to whom disputes relating to this Agreement are submitted to
reform the otherwise unenforceable covenant in accordance with this Section
10(d).
 
(e)           Notices.  Any notice or other communication required, permitted or
desired to be given under this Agreement shall be deemed delivered when
personally delivered; the business day, if delivered by overnight courier; the
same day, if transmitted by facsimile on a business day before noon, Eastern
Standard Time; the next business day, if otherwise transmitted by facsimile; and
the third business day after mailing, if mailed by prepaid certified mail,
return receipt requested, as addressed or transmitted as follows (as
applicable):
 
If to Executive:

The address of Executive’s principal residence kept in the Company’s records,
with a copy to him (during the Employment Period) at his office.
 
If to the Company:

Alliqua, Inc.
850 Third Avenue, Suite 1801
New York, NY 10022
Facsimile:  (646) 218-1401
 
(f)           Further Acts.  Whether or not specifically required under the
terms of this Agreement, each party shall execute and deliver such documents and
take such further actions as shall be necessary in order for such party to
perform all of his or its obligations specified in the Agreement or reasonably
implied from the Agreement’s terms.
 
(g)           Publicity and Advertising. Executive agrees that the Company may
use his name, picture, or likeness for any advertising, publicity or other
business purpose at any time, during the term of this Agreement and may continue
to use materials generated during the term of this Agreement for a period of six
(6) months thereafter.  The use of Executive’s name, picture, or likeness shall
not be deemed to result in any invasion of Executive’s privacy or in violation
of any property right Executive may have; and Executive shall receive no
additional consideration if his name, picture or likeness is so used.  Executive
further agrees that any negatives, prints or other material for printing or
reproduction purposes prepared in connection with the use of his name, picture
or likeness by the Company shall be and are the sole property of the Company.
 
 
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(h)           GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO
THE CONFLICT OF LAWS (RULES) OR CHOICE OF LAWS (RULES) THEREOF.
 
(i)           Venue.  The exclusive venue for all suits or proceedings arising
from or related to this Agreement shall be in a court of competent jurisdiction
in New York, New York.
 
(j)           Waiver.  A party’s waiver of any breach or violation of any
Agreement provisions shall not operate as, or be construed to be, a waiver of
any later breach of the same or other Agreement provision.
 
(k)           Entire Agreement, Amendment, Binding Effect. This Agreement
constitutes the entire agreement between the parties concerning the subject
matter in this Agreement.  No oral statements or prior written material not
specifically incorporated in this Agreement shall be of any force and effect,
and no changes in or additions to this Agreement shall be recognized, unless
incorporated in this Agreement by written amendment, such amendment to become
effective on the date stipulated in it.  Executive acknowledges and represents
that in executing this Agreement, he did not rely, and has not relied, on any
communications, promises, statements, inducements, or representation(s), oral or
written, by the Company, except as expressly contained in this Agreement.  Any
amendment to this Agreement must be signed by all parties to this
Agreement.  This Agreement will be binding on and inure to the benefit of the
parties hereto and their respective successors, heirs, legal representatives,
and permitted assigns (if any).  This Agreement supersedes any prior agreements
between Executive and the Company concerning the subject matter of this
Agreement.
 
(l)           Counterparts.  This Agreement may be executed in counterparts,
with the same effect as if both parties had signed the same document.  All such
counterparts shall be deemed an original, shall be construed together and shall
constitute one and the same instrument.
 
(m)          Indemnification.  The Company agrees to maintain a directors’ and
officers’ liability insurance policy covering Executive in an amount, and on
terms and conditions (including without limitation, with respect to scope,
exclusions, sub-amounts and deductibles), no less favorable to him than the
coverage the Company provides other senior executives and directors from time to
time.  Executive’s indemnification rights shall be outlined by such policy and
to the extent applicable, the Company by-laws and other governing documents.
 
(n)          Attorney’s Fees.  The Company agrees to pay or reimburse Executive
for reasonable attorney’s fees incurred by Executive in connection with the
review of this Agreement, up to a maximum of $10,000.   Such payment will be
made promptly following execution of this Agreement.
 
 
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11.           Section 409A of the Code.
 
(a)           To the extent (i) any payments to which Executive becomes entitled
under this Agreement, or any agreement or plan referenced herein, in connection
with Executive’s termination of employment with the Company constitute deferred
compensation subject to Section 409A of the Code; (ii) Executive is deemed at
the time of his separation from service to be a “specified employee” under
Section 409A of the Code; and (iii) at the time of Executive’s separation from
service the Company is publicly traded (as defined in Section 409A of Code),
then such payments (other than any payments permitted by Section 409A of the
Code to be paid within six (6) months of Executive’s separation from service)
shall not be made until the earlier of (x) the first day of the seventh month
following Executive’s separation from service or (y) the date of Executive’s
death following such separation from service.  Upon the expiration of the
applicable deferral period, any payments which would have otherwise been made
during that period (whether in a single sum or in installments) in the absence
of this Section 11 shall be paid to Executive or Executive’s beneficiary in one
lump sum, plus interest thereon at the Delayed Payment Interest Rate (as defined
below) computed from the date on which each such delayed payment otherwise would
have been made to Executive until the date of payment.  For purposes of the
foregoing, the “Delayed Payment Interest Rate” shall mean the national average
annual rate of interest payable on jumbo six-month bank certificates of deposit,
as quoted in the business section of the most recently published Sunday edition
of The New York Times preceding Executive’s separation from service.
 
(b)           In the case of any amounts  payable to Executive under this
Agreement, or under any plan of the Company, that may be treated as payable in
the form of “a series of installment payments”, as defined in Treas. Reg.
§1.409A-2(b)(2)(iii), Executive’s right to receive such payments shall be
treated as a right to receive a series of separate payments for purposes of
Treas. Reg. §1.409A-2(b)(2)(iii).
 
(c)           It is intended that this Agreement comply with or be exempt from
the provisions of Section 409A of the Code and the Treasury Regulations and
guidance of general applicability issued thereunder so as to not subject
Executive to the payment of additional interest and taxes under Section 409A of
the Code, and in furtherance of this intent, this Agreement shall be
interpreted, operated and administered in a manner consistent with these
intentions.
 
[Signature Page Follows]
 
 
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first indicated above.
 

  THE COMPANY:           ALLIQUA, INC.          
 
By:
      Name:       Title:               EXECUTIVE:           James Sapirstein  

 
 
 
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EXHIBIT A

1.  
SilverSeal gross revenues of $5.0MM or greater – 15% bonus

 
2.  
Operating Margin greater than 20% - 10% bonus

 
3.  
Successful Funding of Company in excess of $5MM – 15% bonus

 
Note 1: In the event any two (2) of these targets are achieved, the bonus will
be multiplied by 120%.

Note 2: In the event all three (3) of these targets are achieved, the bonus will
be multiplied by 150%.

 
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EXHIBIT B
 
SEPARATION AGREEMENT AND RELEASE

This Separation Agreement and Release (“Agreement”) is entered into by James
Sapirstein (“Executive”) and Alliqua, Inc. (the “Company”), as of _______  ,
20__.  The Company and Executive are referred to as the “Parties.”

WHEREAS, Executive has been employed as the Company’s Chief Executive Officer;

WHEREAS, Executive entered into an Executive Employment Agreement with the
Company as of September , 2012, which, except for the Surviving Provisions
defined in Paragraph 8 below, expired on  , 20  (the “Employment Agreement”);

WHEREAS, the Parties agree that Executive’s employment shall terminate effective
as of  _____, 20__. and all of Executive’s positions with the Company, including
all officer positions, shall terminate as of  _____, 20__ (the “Separation
Date”); and

WHEREAS, the Parties desire to finally, fully and completely resolve all
disputes that now or may exist between them concerning Executive’s hiring,
employment and separation from the Company and all disputes arising from or
during Executive’s employment, Employment Agreement, any benefits, stock
options, bonuses and compensation connected with such employment, and all other
disputes that the Parties may have for any reason.

NOW, THEREFORE, in consideration of the premises and mutual covenants and
agreements hereinafter set forth, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Parties hereto
agree as follows:

1. End of Executive’s Employment and the Employment Agreement.  Executive’s
employment with the Company shall terminate on the Separation Date.  Effective
as of the Separation Date, all of Executive’s officer positions with the Company
and its affiliates and subsidiaries, including his position as Chief Executive
Officer of the Company, shall terminate.  Executive shall execute all documents
and take such further steps as may be required to effectuate such
termination(s).  Executive agrees that Executive shall not make any
representations or execute any documents, or take any other actions, on behalf
of the Company after the Separation Date.  Executive agrees that this Agreement
fully supersedes any and all prior agreements, except for the Surviving
Provisions defined below, relating to Executive’s employment, compensation and
equity with the Company, all of which shall terminate upon the Separation Date.
 
2. Certain Payments and Benefits.
 
(a) Payment.  The Company shall pay Executive [insert Severance terms in
accordance with Section 9(c) or (d) of Employment Agreement] (“Severance
Payments”), payable [insert payment terms in accordance with Section 9(c) or (d)
of Employment Agreement].  Except as stated in this Agreement or as required by
law, all other compensation, payments and benefits which relate to Executive’s
employment with the Company or positions with the Company, including any
payments, vacation pay, bonus or any benefits set forth in any employee benefit
plan, policy or program shall cease as of the Separation Date.  The Company
however, shall have no obligation to make the Severance Payments until Executive
has had the opportunity to consider this Agreement as described in Paragraph 14
of this Agreement, and has not revoked the Agreement in accordance with
Paragraph 14 of this Agreement.
 

Separation Agreement and Release PAGE 1

 
 

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(b) Benefits.  After the Separation Date, Executive will have the right to
choose the continuation of any applicable medical and/or dental benefit coverage
pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended (“COBRA”).  The Company will provide Executive under separate cover at
Executive’s home address, information necessary and as required by law regarding
the election of COBRA.
 
(c) Waiver of Additional Compensation or Benefits.  Other than the compensation
and payments provided for in this Agreement, Executive shall not be entitled to
any additional compensation, bonuses, benefits, payments or grants under the
Employment Agreement, stock options, or any benefit plan, long term incentive
plan, option plan, severance plan or bonus or incentive program established by
the Company or any of the Company’s affiliates.  Executive agrees that the
release in Paragraph 3 covers any claims Executive might have regarding
Executive’s compensation, bonuses, incentive compensation, stock options or
grants and any other benefits Executive may or may not have received during
Executive’s employment with the Company.
 
3. General Release and Waiver.  In consideration of the Severance Payments and
other consideration provided for in this Agreement, that being good and valuable
consideration, the receipt, adequacy and sufficiency of which are acknowledged
by Executive, Executive, on Executive’s own behalf and on behalf of Executive’s
agents, administrators, representatives, executors, successors, heirs, devisees
and assigns (collectively, the “Releasing Parties”) hereby fully releases,
remises, acquits and forever discharges the Company, its parent and all of its
affiliates, subsidiaries and each of their respective past, present and future
officers, directors, shareholders, equity holders, members, partners, agents,
employees, consultants, independent contractors, attorneys, advisers, successors
and assigns (collectively, the “Released Parties”), jointly and severally, from
any and all claims, rights, demands, debts, obligations, losses, causes of
action, suits, controversies, setoffs, affirmative defenses, counterclaims,
third party actions, damages, penalties, costs, expenses, attorneys’ fees,
liabilities and indemnities of any kind or nature whatsoever (collectively, the
“Claims”), whether known or unknown, suspected or unsuspected, accrued or
unaccrued, whether at law, equity, administrative, statutory or otherwise, and
whether for injunctive relief, back pay, fringe benefits, reinstatement,
reemployment, or compensatory, punitive or any other kind of damages, which any
of the Releasing Parties ever have had in the past or presently have against the
Released Parties, and each of them, arising from or relating to Executive’s
employment with the Company or its affiliates or the termination of that
employment relationship or any circumstances related thereto, or any other
matter, cause or thing whatsoever, including without limitation all claims
arising under or relating to Executive’s employment, the Employment Agreement
(or any prior employment agreement or other agreement), bonuses, any bonus plan,
options, any long term incentive plan, Executive’s termination from employment,
any claimed payments, contracts, benefits or bonuses or purported employment
discrimination, retaliation, wrongdoing or violations of civil rights of
whatever kind or nature, including without limitation all claims arising under
the Employment Agreement, the Age Discrimination in Employment Act, the
Americans with Disabilities Act of 1990 as amended, the Family and Medical Leave
Act of 1993, the Equal Pay Act of 1963, the Rehabilitation Act of 1973, Title
VII of the Civil Rights Act of 1964, 42 U.S.C. § 1981, the Civil Rights Act of
1991, the Civil Rights Acts of 1866 and/or 1871, the Employee Retirement Income
Security Act of 1974, the Immigration Reform and Control Act, the Older Workers
Benefit Protection Act, the Uniformed Services Employment and Re-Employment
Rights Act, the Worker Adjustment and Retraining Notification Act, the
Sarbanes-Oxley Act of 2002, the Lilly Ledbetter Fair Pay Act of 2009, the
Genetic Information Nondiscrimination Act, the Employment Non-Discrimination
Act, the National Labor Relations Act, the Labor Management Relations Act, the
Fair Labor Standards Act, the Occupational Safety and Health Act, the Employee
Polygraph Protection Act, any statute or laws of the State of New York, or any
other federal, state or local whistleblower, discrimination or anti-retaliation
statute, law or ordinance, including, without limitation, any workers’
compensation or disability claims under any such laws, claims for wrongful
discharge, breach of express or implied contract or implied covenant of good
faith and fair dealing, breach of the Employment Agreement (or any prior
employment agreement or other agreement), and any other claims arising under
state or federal law, as well as any expenses, costs or attorneys’ fees.  Except
as required by law, Executive agrees that he will not commence, maintain,
initiate, or prosecute, or cause, encourage, assist, volunteer, advise or
cooperate with any other person to commence, maintain, initiate or prosecute,
any action, lawsuit, proceeding, charge, petition, complaint or claim before any
court, agency or tribunal against the Company arising from, concerned with, or
otherwise relating to, in whole or in part, Executive’s employment or separation
from employment with the Company, the Employment Agreement, or any of the
matters discharged and released in this Agreement.  Notwithstanding the
preceding sentence or any other provision of this Agreement, this release is not
intended to interfere with Executive’s right to file a charge with the Equal
Employment Opportunity Commission (the “EEOC”) in connection with any claim
Executive believes he may have against the Company or its affiliates.  However,
by executing this Agreement, Executive hereby waives the right to recover in any
proceeding he may bring before the EEOC or any state human rights commission or
in any proceeding brought by the EEOC or any state human rights commission (or
any other agency) on Executive’s behalf.  This release shall not apply to any of
the Company’s obligations under this Agreement, COBRA continuation coverage
benefits or any employee benefit plan subject to the Employment Retirement
Income Security Act of 1974, as amended, in which Executive has
vested.  Anything to the contrary notwithstanding, nothing herein shall release
the Company or any other of the Released Parties from any claims or damages
based on (i) any right the Executive may have to enforce this Release or the
provisions of the Employment Agreement which survive a termination of
employment, (ii) any right or claim that arises after the date this Release is
executed, (iii) any right the Executive may have to vested or accrued benefits
or entitlements under any applicable plan, agreement, program, award, policy or
arrangement of the Company, (iv) the Executive’s right to indemnification and
advancement of expenses in accordance with applicable laws and/or the
certificate of incorporation and by-laws of the Company, or any applicable
insurance policy or (v) any right the Executive may have to obtain contribution
as permitted by law in the event of entry of judgment against the Executive as a
result of any act or failure to act for which the Executive, on the one hand,
and the Company or any other Released Party, on the other hand, are jointly
liable.
 

Separation Agreement and Release PAGE 2

 
 

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4. Return of the Company Property.  Within 3 days of the Separation Date,
Executive shall, to the extent not previously returned or delivered: (a) return
all equipment, records, files, documents, data, programs or other materials and
property in Executive’s possession which belongs to the Company or any one or
more of its affiliates, including, without limitation, all, confidential
information (as defined in the Employment Agreement), computer equipment, access
codes, messaging devices, credit cards, cell phones, keys and access cards; and
(b) deliver all original and copies of confidential information, notes,
materials, records, plans, technical data or other documents, files or programs
(whether stored in paper form, computer form, digital form, electronically or
otherwise) that relate or refer to (1) the Company or any one or more of its
affiliates, or (2) the Company or any one or more of the Company’s affiliates’
financial statements, business contacts, business information, strategies, sales
or similar information.  By signing this Agreement, Executive represents and
warrants that Executive has not retained and has or will timely return and
deliver all the items described or referenced in subsections (a) or (b) above;
and, that should Executive later discover additional items described or
referenced in subsections (a) or (b) above, Executive will promptly notify the
Company and return/deliver such items to the Company.
 
5. No Admission of Liability.  This Agreement shall not in any way be construed
as an admission by the Company or Executive of any acts of wrongdoing or
violation of any statute, law, or legal right.  Rather, the parties specifically
deny and disclaim that either has any liability to the other, but are willing to
enter this Agreement at this time to definitely resolve once and forever this
matter and to avoid the costs, expense, and delay of litigation.
 
6. Mutual Non-Disclosure and Confidentiality.  The Parties agree to keep
confidential the specific terms of this Agreement and shall not disclose same to
any person except that Executive may inform Executive’s financial, tax,
professional, pastoral and legal advisors of the contents or terms of this
Agreement, and the Company may disclose the terms of this Agreement to those
persons as needed (including to implement the terms of this Agreement).  Before
sharing the Agreement or its terms with Executive’s financial, tax and legal
advisors, Executive agrees to notify them of this confidentiality
requirement.  If Executive or the Company is required to disclose the Agreement
to others by legal process, the Party so ordered shall to the extent practical
under the circumstances first give notice to the other Party in order that such
other Party may have an opportunity to seek a protective order.  The Parties
shall cooperate with each other, should either decide to seek a protective order
with all costs and expenses being borne by the party seeking such order.
 
7. Non-Disparagement.  Executive agrees that the Company’s goodwill and
reputation are assets of great value to the Company and its affiliates which
were obtained through great costs, time and effort.  Therefore, Executive agrees
that Executive shall not in any way, directly or indirectly, disparage, libel or
defame the Company, its beneficial owners or its affiliates, their respective
business or business practices, products or services, or employees.
 

Separation Agreement and Release PAGE 3

 
 

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8. Surviving Provisions.  Executive acknowledges and agrees that Sections 6
through 10 of the Employment Agreement (the “Surviving Provisions”) shall remain
in full force and effect, and shall survive this Agreement.  Executive reaffirms
and agrees to honor and abide by the terms of the Surviving Provisions.  If
Executive breaches any of the Surviving Provisions, Executives forfeits all
Severance Payments from the date of such breach.
 
9. No Assignment of Claims.  Executive represents that he has not transferred or
assigned, to any person or entity, any claim involving the Company, or any
portion thereof or interest therein.
 
10. Binding Effect of Agreement.  This Agreement shall be binding upon the
Company and upon Executive and Executive’s heirs, spouse, representatives,
successors and assigns.
 
11. Severability.  Should any provision of this Agreement be declared or
determined to be illegal or invalid by any government agency or court of
competent jurisdiction, the validity of the remaining parts, terms or provisions
of this Agreement shall not be affected and such provisions shall remain in full
force and effect.
 
12. No Waiver.  This Agreement may not be waived, modified, amended,
supplemented, canceled or discharged, except by written agreement of the
Parties.  Failure to exercise and/or delay in exercising any right, power or
privilege in this Agreement shall not operate as a waiver.  No waiver of any
breach of any provision shall be deemed to be a waiver of any preceding or
succeeding breach of the same or any other provision, nor shall any waiver be
implied from any course of dealing between or among the Parties.
 
13. Entire Agreement.  Except for the Surviving Provisions, this Agreement sets
forth the entire agreement between the Parties, and fully supersedes any and all
prior agreements, understandings, or representations between the Parties,
whether oral or written, pertaining to the subject matter of this Agreement and
Executive’s employment with the Company.  No oral statements or other prior
written material not specifically incorporated into this Agreement shall be of
any force and effect, and no changes in or additions to this Agreement shall be
recognized, unless incorporated into this Agreement by written amendment, such
amendment to become effective on the date stipulated in it.  Any amendment to
this Agreement must be signed by all parties to this Agreement.  Executive
represents and acknowledges that in executing this Agreement, Executive does not
rely, and has not relied, upon any representation(s) by the Company or its
agents except as expressly contained in this Agreement.  Executive further
represents that Executive is relying on Executive’s own judgment in entering
into this Agreement.
 
14. Knowing and Voluntary Waiver.  Executive, by Executive’s free and voluntary
act of signing below, (i) acknowledges that Executive has been given a period of
21 days to consider whether to agree to the terms contained herein, (ii)
acknowledges that Executive has been advised in writing to consult with an
attorney prior to executing this Agreement, (iii) acknowledges that Executive
understands that this Agreement specifically releases and waives all rights and
claims Executive may have under the Age Discrimination in Employment Act, as
amended (“ADEA”) prior to the date on which Executive signs this Agreement, and
(iv) agrees to all of the terms of this Agreement and intends to be legally
bound thereby.  Furthermore, Executive acknowledges that the promises and
benefits, including, without limitation, the Severance Payments, provided for in
Paragraph 2 of this Agreement will be delayed until this Agreement becomes
effective, enforceable and irrevocable.
 

Separation Agreement and Release PAGE 4

 
 

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This Agreement will become effective, enforceable and irrevocable on the eighth
day after the date on which it is executed by Executive (the “Effective
Date”).  During the seven-day period prior to the Effective Date, Executive may
revoke Executive’s agreement to release claims under the ADEA by indicating in
writing to the Company Executive’s intention to revoke.  If Executive exercises
Executive’s right to revoke hereunder, Executive shall forfeit Executive’s right
to receive a portion of the Severance Payments equal to one (1) month of the
Executive’s monthly Base Salary.
 
 
15. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE
CONFLICT OF LAWS (RULES) OR CHOICE OF LAWS (RULES) THEREOF.
 
 
16. Venue.  The exclusive venue for all suits or proceedings arising from or
related to this Agreement shall be in a court of competent jurisdiction in New
York, New York.
 
[Remainder of Page Intentionally Left Blank]
 

Separation Agreement and Release PAGE 5

 
 

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I ACKNOWLEDGE THAT I HAVE CAREFULLY READ THE FOREGOING AGREEMENT, THAT I
UNDERSTAND ALL OF ITS TERMS AND THAT I AM RELEASING CLAIMS AND THAT I AM
ENTERING INTO IT VOLUNTARILY.
 
 
AGREED TO BY:
              James Sapirstein   Date           ALLIQUA, INC.           By:    
      Title:                    Date:            

 
 

Separation Agreement and Release PAGE 6

 

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