Document:

OPTION CANCELLATION AND RELEASE AGREEMENT

 

This OPTION CANCELLATION
AND RELEASE AGREEMENT (this “Agreement”) is entered into by and between Alliqua, Inc., a Florida
corporation (the “Company”) and David Stefansky (the “Optionholder”), effective
as of January 6, 2014.

 

WHEREAS, the
Company previously granted the Optionholder certain nonqualified stock options (the “Options”), in the
amounts and with the exercise prices as set forth in Exhibit A, and subject to the terms set forth in the applicable stock
option agreement (the “Option Agreements”); and

 

 WHEREAS,
the Company and the Optionholder desire to cancel the Options as of the date hereof (the “Cancellation Date”),
so that on and after the Cancellation Date, the Options and the Option Agreements shall be cancelled and of no further effect;
and

 

WHEREAS, the
Company desires to grant the Optionholder shares of common stock of the Company in connection with the cancellation of the Options
and the Option Agreements.

 

NOW, THEREFORE,
in consideration of the mutual covenants contained herein and other good and valuable consideration, the sufficiency of which are
hereby acknowledged, the parties to this Agreement agree as follows:

 

CANCELLATION OF OPTIONS

 

1.1Cancellation
of Options. In exchange for the consideration described in Section 1.2 below, the Optionholder hereby agrees that the
Option Agreements and the Options granted thereunder, shall be cancelled, terminated, and of no further force or effect, effective
on the Cancellation Date, and neither the Company nor the Optionholder shall have any further rights or obligations with respect
to the Options, the Option Agreements, or with respect to any common stock of the Company that could have been purchased upon exercise
of the Options under the Option Agreements.

 

1.2 Payment.
In exchange for the Optionholder’s agreement to cancel the Options, the Option Agreements and any other rights, obligations
and liabilities of the Company granting the Optionholder the right to purchase shares of the Company’s common stock or other
ownership interests of the Company and the release of claims set forth in Section 1.3, the Company hereby agrees to grant
the Optionholder, pursuant to the Alliqua, Inc. 2011 Long-Term Incentive Plan, one hundred ninety-four thousand six hundred sixty-seven
(194,667) full shares of common stock of the Company as of the Cancellation Date.

 

1.3 Release.

 

(a)Effective
as of the Cancellation Date, the Optionholder, for the Optionholder and the Optionholder’s successors and assigns forever,
does hereby unconditionally and irrevocably compromise, settle, remise, acquit and fully and forever release and discharge the
Company and its respective successors, assigns, parents, divisions, subsidiaries, and affiliates, and its present and former officers,
directors, employees and agents (collectively, the “Released Parties”) from any and all claims, counterclaims,
set-offs, debts, demands, choses in action, obligations, remedies, suits, damages and liabilities in connection with any rights
to acquire securities of the Company pursuant to the Options, the Option Agreements and the common stock of the Company issuable
thereunder (collectively, the “Releaser’s Claims”), whether now known or unknown or suspected or
claimed, whether arising under common law, in equity or under statute, which the Optionholder or the Optionholder’s successors
or assigns ever had, now have, or in the future may claim to have against the Released Parties and which may have arisen at any
time on or prior to the date hereof; provided that this Section 1.3(a) shall not apply to any of the obligations or liabilities
of the Released Parties arising under or in connection with this Agreement.

 

 

    	 

    	 

    

 

(b)The Optionholder
covenants and agrees never to commence, voluntarily aid in any way, prosecute or cause to be commenced or prosecuted against the
Released Parties any action or other proceeding based on any of the released Releaser’s Claims which may have arisen at any
time on or prior to the date hereof.

 

1.4Further Assurances. Each
party to this Agreement agrees that it will perform all such further acts and execute and deliver all such further documents as
may be reasonably required in connection with the consummation of the transactions contemplated hereby in accordance with the terms
of this Agreement.

 

1.5Representations and Warranties.
The Optionholder hereby represents and warrants to the Company that the Optionholder has full power and authority to enter into
and perform this Agreement and to carry out the transactions contemplated hereby. This Agreement constitutes the legal, valid,
and binding obligation of the Optionholder, enforceable against the Optionholder in accordance with its terms. The Optionholder
has read and understood this Agreement and is entering into this Agreement voluntarily. The Optionholder agrees that this Agreement
provides good and valuable consideration for the Optionholder’s agreements herein.

 

MISCELLANEOUS

 

2.1Captions.
The captions used in this Agreement are for reference purposes only, and shall not in any way affect the meaning or interpretation
of this Agreement.

 

2.2Parties in
Interest. This Agreement shall be binding upon and shall inure to the benefit of the parties to this Agreement and their respective
heirs, executors, administrators, successors, and assigns.

 

2.3Execution.
This Agreement may be executed in two or more counterparts, all of which taken together shall constitute one instrument. The exchange
of copies of this Agreement and of signature pages by facsimile transmission shall constitute effective execution and delivery
of this Agreement as to the parties and may be used in lieu of the original Agreement for all purposes. Signatures of the parties
transmitted by facsimile shall be deemed to be their original signatures for any purpose whatsoever.

 

2.4Entire Agreement.
This Agreement contains the entire understanding of the parties to this Agreement with respect to the subject matter contained
in this Agreement, and supersedes all prior agreements and understandings among the parties with respect to such subject matter.

 

2.5Governing
Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE SUBSTANTIVE LAWS OF THE STATE OF FLORIDA, WITHOUT
REGARD TO ITS PRINCIPLES OF CONFLICT OF LAWS.

 

2.6Notice.
Any notice required by the terms of this Agreement shall be given in writing and shall be deemed effective upon personal delivery
or upon deposit with the United States Postal Service, by registered or certified mail, with postage and fees prepaid. Notice shall
be addressed to the Company at its principal executive office and to the Optionholder at the address that he most recently provided
to the Company.

 

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IN WITNESS WHEREOF,
the Company has caused this Agreement to be executed by its duly authorized officer, and the Optionholder, to evidence his consent
and approval of all the terms hereof, has duly executed this Agreement as of the date above.

 

	 	ALLIQUA, INC.
	 	 	 
	 	 	 
	 	By:	/s/ Brian Posner
	 	Name:	Brian Posner
	 	Title:	Chief Financial Officer

 

	 	OPTIONHOLDER
	 	 	 
	 	 	 
	 	/s/ David Stefansky
	 	David Stefansky
	 	 	 
	 	Address:	 
	 	 	 
	 	 	 

 

 

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EXHIBIT A

 

	Date of Grant	Options	Adjusted for 43.75:1 Stock Split	Exercise Price	Adjusted for 43.75:1 Stock Split
	December 9, 2010	5,000,000	114,286	$0.145	$6.34
	March 1, 2011	1,666,667	38,095	$0.21	$9.19
	May 2012	5,000,000	114,286	$0.20	$8.75
	May 31, 2012	500,000	11,429	$0.20	$8.75

 

    	4RESTRICTED STOCK AWARD AGREEMENT

 

ALLIQUA, INC.

2011 LONG-TERM INCENTIVE PLAN

 

1.Grant of Award.
Pursuant to the Alliqua, Inc. 2011 Long-Term Incentive Plan (the “Plan”) for key Employees, key Contractors,
and Outside Directors of Alliqua, Inc., a Florida corporation (the “Company”),

 

 

_____David Johnson_____

(the “Participant”)

 

has been granted a Restricted Stock Award
in accordance with Section 6.4 of the Plan. The number of shares of Common Stock awarded under this Restricted Stock Award Agreement
(this “Agreement”) is three hundred sixty-nine thousand three hundred ninety-five (369,395) shares (the
“Awarded Shares”). The “Date of Grant” of this Award is January 6, 2014.

 

2.Subject to
Plan. This Agreement is subject to the terms and conditions of the Plan, and the terms of the Plan shall control to the extent
not otherwise inconsistent with the provisions of this Agreement. To the extent the terms of the Plan are inconsistent with the
provisions of this Agreement, this Agreement shall control. The capitalized terms used herein that are defined in the Plan shall
have the same meanings assigned to them in the Plan unless such terms are otherwise defined herein. This Agreement is subject to
any rules promulgated pursuant to the Plan by the Board or the Committee and communicated to the Participant in writing.

 

3.Vesting.
Except as specifically provided in this Agreement, one-eighth (1/8th) of the Awarded Shares shall vest on the Date of
Grant and the first day of each calendar quarter thereafter during the period commencing on January 6, 2014, and ending on December
31, 2015 (rounded down to the nearest whole share for the first seven (7) vesting dates and the remaining unvested Awarded Shares
vesting on the last vesting date), provided the Participant is providing services (as an Employee, Contractor, or Outside Director)
to the Company or a Subsidiary on the applicable vesting date.

 

Notwithstanding the
foregoing, upon (i) the occurrence of a Change in Control or (ii) the Participant’s Termination of Service by the Company
without Cause or by the Participant for Good Reason, any unvested Awarded Shares immediately shall vest on the effective date of
such Change in Control or Termination of Service, as applicable. For purposes of this Agreement, the terms “Cause”
and “Good Reason” each shall have the meanings set forth for such terms in the Executive Employment Agreement,
by and between the Participant and the Company, dated February 4, 2013.

 

4.Forfeiture
of Awarded Shares. Awarded Shares that are not vested in accordance with Section 3 shall be forfeited on the date
of the Participant’s Termination of Service. Upon forfeiture, all of the Participant’s rights with respect to the forfeited
Awarded Shares shall cease and terminate, without any further obligations on the part of the Company.

 

5.Restrictions
on Awarded Shares. Subject to the provisions of the Plan and the terms of this Agreement, from the Date of Grant until the
date the Awarded Shares are vested in accordance with Section 3 and are no longer subject to forfeiture in accordance
with Section 4 (the “Restriction Period”), the Participant shall not be permitted to sell,
transfer, pledge, or assign any of the Awarded Shares. Except for these limitations, the Committee may in its sole discretion,
remove any or all of the restrictions on such Awarded Shares whenever it may determine that, by reason of changes in Applicable
Laws or other changes in circumstances arising after the date of this Agreement, such action is appropriate.

 

    	 

    	 

    

 

6.Legend.
Awarded Shares electronically registered in the Participant’s name shall note that such shares are Restricted Stock. If certificates
for Awarded Shares are issued, the following legend shall be placed on all such certificates:

 

On the face of the certificate:

 

“Transfer of this stock
is restricted in accordance with conditions printed on the reverse of this certificate.”

 

On the reverse:

 

“The shares of stock
evidenced by this certificate are subject to and transferable only in accordance with that certain Alliqua, Inc. 2011 Long-Term
Incentive Plan, a copy of which is on file at the principal office of the Company in Langhorne, PA. No transfer or pledge of the
shares evidenced hereby may be made except in accordance with and subject to the provisions of said Plan. By acceptance of this
certificate, any holder, transferee or pledgee hereof agrees to be bound by all of the provisions of said Plan.”

 

The following legend
shall be inserted on a certificate, if issued, evidencing Common Stock issued under the Plan if the shares were not issued in a
transaction registered under the applicable federal and state securities laws:

 

“Shares of stock represented
by this certificate have been acquired by the holder for investment and not for resale, transfer or distribution, have been issued
pursuant to exemptions from the registration requirements of applicable state and federal securities laws, and may not be offered
for sale, sold or transferred other than pursuant to effective registration under such laws, or in transactions otherwise in compliance
with such laws, and upon evidence satisfactory to the Company of compliance with such laws, as to which the Company may rely upon
an opinion of counsel satisfactory to the Company.”

 

All Awarded Shares
owned by the Participant shall be subject to the terms of this Agreement and shall be represented by a certificate or certificates
bearing the foregoing legend.

 

7.Delivery of
Certificates. If requested by the Participant in accordance with Section 6.4(a) of the Plan, the Company shall deliver
certificates for the Awarded Shares free of restriction under this Agreement promptly after, and only after, the Restriction Period
has expired without forfeiture pursuant to Section 4. In connection with the issuance of a certificate for Restricted
Stock, the Participant shall endorse such certificate in blank or execute a stock power in a form satisfactory to the Company in
blank and deliver such certificate and executed stock power to the Company.

 

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8.Rights of
a Shareholder. Except as provided in Section 4 and Section 5 above, the Participant shall have, with respect
to his Awarded Shares, all of the rights of a shareholder of the Company, including the right to vote the shares, and the
right to receive any dividends thereon.

 

9.Voting.
The Participant, as record holder of the Awarded Shares, has the exclusive right to vote, or consent with respect to, such Awarded
Shares until such time as the Awarded Shares are transferred in accordance with this Agreement; provided, however,
that this Section 9 shall not create any voting right where the holders of such Awarded Shares otherwise have no such
right.

 

10.Adjustment
to Number of Awarded Shares. The number of Awarded Shares shall be subject to adjustment in accordance with Articles 11-13
of the Plan.

 

11.Specific
Performance. The parties acknowledge that remedies at law will be inadequate remedies for breach of this Agreement and consequently
agree that this Agreement shall be enforceable by specific performance. The remedy of specific performance shall be cumulative
of all of the rights and remedies at law or in equity of the parties under this Agreement.

 

12.Participant’s
Representations. Notwithstanding any of the provisions hereof, the Participant hereby agrees that he will not acquire any Awarded
Shares, and that the Company will not be obligated to issue any Awarded Shares to the Participant hereunder, if the issuance of
such shares shall constitute a violation by the Participant or the Company of any provision of any law or regulation of any governmental
authority. Any determination in this connection by the Company shall be final, binding, and conclusive. The rights and obligations
of the Company and the rights and obligations of the Participant are subject to all Applicable Laws, rules, and regulations.

 

13.Participant’s
Acknowledgments. The Participant acknowledges that a copy of the Plan has been made available for his review by the Company,
and represents that he is familiar with the terms and provisions thereof, and hereby accepts this Award subject to all the terms
and provisions thereof. The Participant hereby agrees to accept as binding, conclusive, and final all decisions or interpretations
of the Committee or the Board, as appropriate, upon any questions arising under the Plan or this Agreement.

 

14.Law Governing.
This Agreement shall be governed by, construed, and enforced in accordance with the laws of the State of Florida (excluding
any conflict of laws rule or principle of Delaware law that might refer the governance, construction, or interpretation of this
Agreement to the laws of another state).

 

15.No Right
to Continue Service or Employment. Nothing herein shall be construed to confer upon the Participant the right to continue in
the employ or to provide services to the Company or any Subsidiary, whether as an Employee, Contractor, or Outside Director, or
interfere with or restrict in any way the right of the Company or any Subsidiary to discharge the Participant as an Employee, Contractor,
or Outside Director at any time.

 

16.Legal Construction.
In the event that any one or more of the terms, provisions, or agreements that are contained in this Agreement shall be held by
a court of competent jurisdiction to be invalid, illegal, or unenforceable in any respect for any reason, the invalid, illegal,
or unenforceable term, provision, or agreement shall not affect any other term, provision, or agreement that is contained in this
Agreement and this Agreement shall be construed in all respects as if the invalid, illegal, or unenforceable term, provision, or
agreement had never been contained herein.

 

17.Covenants
and Agreements as Independent Agreements. Each of the covenants and agreements that is set forth in this Agreement shall be
construed as a covenant and agreement independent of any other provision of this Agreement. The existence of any claim or cause
of action of the Participant against the Company, whether predicated on this Agreement or otherwise, shall not constitute a defense
to the enforcement by the Company of the covenants and agreements that are set forth in this Agreement.

 

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18.Entire Agreement.
This Agreement together with the Plan supersede any and all other prior understandings and agreements, either oral or in writing,
between the parties with respect to the subject matter hereof and constitute the sole and only agreements between the parties with
respect to the said subject matter. All prior negotiations and agreements between the parties with respect to the subject matter
hereof are merged into this Agreement. Each party to this Agreement acknowledges that no representations, inducements, promises,
or agreements, orally or otherwise, have been made by any party or by anyone acting on behalf of any party, which are not embodied
in this Agreement or the Plan and that any agreement, statement or promise that is not contained in this Agreement or the Plan
shall not be valid or binding or of any force or effect.

 

19.Parties Bound.
The terms, provisions, and agreements that are contained in this Agreement shall apply to, be binding upon, and inure to the benefit
of the parties and their respective heirs, executors, administrators, legal representatives, and permitted successors and assigns,
subject to the limitation on assignment expressly set forth herein. No person shall be permitted to acquire any Awarded Shares
without first executing and delivering an agreement in the form satisfactory to the Company making such person or entity subject
to the restrictions on transfer contained herein.

 

20.Modification.
No change or modification of this Agreement shall be valid or binding upon the parties unless the change or modification is in
writing and signed by the parties. Notwithstanding the preceding sentence, the Company may amend the Plan to the extent permitted
by the Plan.

 

21.Headings.
The headings that are used in this Agreement are used for reference and convenience purposes only and do not constitute substantive
matters to be considered in construing the terms and provisions of this Agreement.

 

22.Gender and
Number. Words of any gender used in this Agreement shall be held and construed to include any other gender, and words in the
singular number shall be held to include the plural, and vice versa, unless the context requires otherwise.

 

23.Notice.
Any notice required or permitted to be delivered hereunder shall be deemed to be delivered only when actually received by the Company
or by the Participant, as the case may be, at the addresses set forth below, or at such other addresses as they have theretofore
specified by written notice delivered in accordance herewith:

 

a.Notice
to the Company shall be addressed and delivered as follows:

 

Alliqua, Inc.

2150 Cabot Boulevard
West

Langhorne, PA 19047

Attn: Chairman of the
Board of Directors

Facsimile: (646) 218-1401

 

b.Notice
to the Participant shall be addressed and delivered as set forth on the signature page.

 

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24.Tax Requirements.
The Participant is hereby advised to consult immediately with his own tax advisor regarding the tax consequences of this Agreement,
the method and timing for filing an election to include this Agreement in income under Section 83(b) of the Code, and the
tax consequences of such election. By execution of this Agreement, the Participant agrees that if the Participant makes such an
election, the Participant shall provide the Company with written notice of such election in accordance with the regulations promulgated
under Section 83(b) of the Code. The Company or, if applicable, any Subsidiary (for purposes of this Section 24, the
term “Company” shall be deemed to include any applicable Subsidiary), shall have the right to deduct
from all amounts paid in cash or other form in connection with the Plan, any federal, state, local, or other taxes required by
law to be withheld in connection with this Award. The Company may, in its sole discretion, also require the Participant receiving
shares of Common Stock issued under the Plan to pay the Company the amount of any taxes that the Company is required to withhold
in connection with the Participant’s income arising with respect to this Award. Such payments shall be required to be made
when requested by Company and may be required to be made prior to the delivery of any certificate representing shares of Common
Stock, if such certificate is requested by the Participant in accordance with Section 6.4(a) of the Plan. Such payment may
be made by (i) the delivery of cash to the Company in an amount that equals or exceeds (to avoid the issuance of fractional shares
under (iii) below) the required tax withholding obligations of the Company; (ii) if the Company, in its sole discretion, so consents
in writing, the actual delivery by the Participant to the Company of shares of Common Stock that the Participant has not acquired
from the Company within six (6) months prior thereto, which shares so delivered have an aggregate Fair Market Value that equals
or exceeds (to avoid the issuance of fractional shares under (iii) below) the required tax withholding payment; (iii) if the Company,
in its sole discretion, so consents in writing, the Company’s withholding of a number of shares to be delivered upon the
vesting of this Award, which shares so withheld have an aggregate Fair Market Value that equals (but does not exceed) the required
tax withholding payment; or (iv) any combination of (i), (ii), or (iii). The Company may, in its sole discretion, withhold any
such taxes from any other cash remuneration otherwise paid by the Company to the Participant.

 

 

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[Remainder of Page Intentionally Left
Blank.

Signature Page Follows]

 

 

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IN WITNESS WHEREOF,
the Company has caused this Agreement to be executed by its duly authorized officer, and the Participant, to evidence his consent
and approval of all the terms hereof, has duly executed this Agreement, as of the date specified in Section 1 hereof.

 

	 	
        COMPANY:

        

	 	 
	 	ALLIQUA, INC.
	 	 	 
	 	 	 
	 	By:	/s/ Brian Posner
	 	Name:	Brian Posner
	 	Title:	Chief Financial Officer

 

	 	PARTICIPANT:
	 	 
	 	 
	 	/s/ David Johnson
	 	Signature
	 	 	 
	 	Name: David Johnson
	 	Address:

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