EXHIBIT 10.4
 
ALLIQUA, INC.

NONQUALIFIED STOCK OPTION AGREEMENT

1. Grant of Option. Pursuant to this nonqualified stock option agreement (this
“Agreement”), Alliqua, Inc., a Florida corporation (the “Company”), hereby
grants to
 

  Steven Berger     (the “Optionee”)  

                                      
an option (the “Stock Option”) to purchase a total of five million (5,000,000)
full shares (the “Optioned Shares”) of common stock of the Company, par value
$0.001 per share (the “Common Stock”), at an exercise price equal to $0.10 (the
“Option Price”). The “Date of Grant” of this Stock Option is September 3, 2013.
The “Option Period” shall commence on the Date of Grant and shall expire on
December 31, 2016, unless terminated earlier in accordance with Section 4 below.
The Stock Option is a nonqualified stock option. This Stock Option is intended
to comply with the provisions governing nonqualified stock options under the
final Treasury Regulations issued on April 17, 2007, in order to exempt this
Stock Option from application of Section 409A of the Internal Revenue Code of
1986, as amended (the “Code”).

2. Vesting; Time of Exercise. Except as specifically provided in this Agreement,
the Optioned Shares shall be one hundred percent (100%) vested on the Date of
Grant and shall be exercisable in accordance with the following schedule:

a.  
On the Separation Date (as such term is defined in that certain Transition
Agreement and Release dated September 3, 2013 by and between the Company and the
Participant (the “Transition Agreement”)), the portion of the Optioned Shares
shall become exercisable equal to (i) the total Optioned Shares less (ii) the
number of Optioned Shares with an aggregate Option Price equal to one (1) month
of the Participant’s base salary immediately prior to the Separation Date.

b.  
On the date that the Release (as such term is defined in the Transition
Agreement) becomes effective, the remaining portion of the Optioned Shares shall
become exercisable.

3. Term; Forfeiture. Except as otherwise provided herein, the unexercised
portion of the Stock Option that relates to Optioned Shares will terminate at
the first of the following to occur:

a. 5 p.m. on the date the Option Period terminates;

b. immediately upon the Optionee’s violation of any non-compete or
non-solicitation agreement entered into between the Company and the Optionee;
and

c. 5 p.m. on the date the Company causes any portion of the Stock Option to be
forfeited pursuant to Section 6 hereof.

Notwithstanding anything to the contrary contained herein, the portion of the
Optioned Shares that would have become exercisable pursuant to Section 2.b.
above shall be immediately forfeited upon the date the Participant exercises his
right to revoke under Section 8 of the Release.
 
 
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4. Who May Exercise. Subject to the terms and conditions set forth in Sections 2
and 3 above, during the lifetime of the Optionee, the Stock Option may be
exercised only by the Optionee, or by the Optionee’s guardian or personal or
legal representative. If the Optionee dies prior to the dates specified in
Section 3 hereof, and the Optionee has not exercised the Stock Option as to the
maximum number of vested Optioned Shares as set forth in Section 2 hereof as of
the date of death, the following persons may exercise the exercisable portion of
the Stock Option on behalf of the Optionee at any time prior to the earliest of
the dates specified in Section 3 hereof: the personal representative of his
estate, or the person who acquired the right to exercise the Stock Option by
bequest or inheritance or by reason of the death of the Optionee; provided that
the Stock Option shall remain subject to the other terms of this Agreement, and
applicable laws, rules, and regulations.

5. No Fractional Shares. The Stock Option may be exercised only with respect to
full shares, and no fractional share of stock shall be issued.

6. Manner of Exercise. Subject to such administrative regulations as the Company
may from time to time adopt, the Stock Option may be exercised by the delivery
of written notice to the Company setting forth the number of shares of Common
Stock with respect to which the Stock Option is to be exercised, the date of
exercise thereof (the “Exercise Date”) which shall be at least three (3) days
after giving such notice unless an earlier time shall have been mutually agreed
upon. On the Exercise Date, the Optionee shall deliver to the Company
consideration with a value equal to the total Option Price of the shares to be
purchased, payable as follows: (a) cash, check, bank draft, or money order
payable to the order of the Company, (b) if the Company, in its sole discretion,
so consents in writing, Common Stock (including restricted stock) owned by the
Optionee on the Exercise Date, valued at its fair market value on the Exercise
Date, and which the Optionee has not acquired from the Company within six (6)
months prior to the Exercise Date, (c) if the Company, in its sole discretion,
so consents in writing, by delivery (including by FAX) to the Company or its
designated agent of an executed irrevocable option exercise form together with
irrevocable instructions from the Optionee to a broker or dealer, reasonably
acceptable to the Company, to sell certain of the shares of Common Stock
purchased upon exercise of the Stock Option or to pledge such shares as
collateral for a loan and promptly deliver to the Company the amount of sale or
loan proceeds necessary to pay such purchase price, and/or (d) in any other form
of valid consideration that is acceptable to the Company in its sole discretion.
In the event that shares of restricted stock are tendered as consideration for
the exercise of a Stock Option, a number of shares of Common Stock issued upon
the exercise of the Stock Option equal to the number of shares of restricted
stock used as consideration therefor shall be subject to the same restrictions
and provisions as the restricted stock so tendered.

Upon payment of all amounts due from the Optionee, the Company shall either
cause certificates for the Common Stock then being purchased to be delivered to
the Optionee (or the person exercising the Optionee’s Stock Option in the event
of his death) or cause the Common Stock then being purchased to be
electronically registered in the Optionee’s name (or the name of the person
exercising the Optionee’s Stock Option in the event of his death), promptly
after the Exercise Date. The obligation of the Company to deliver or register
such shares of Common Stock shall, however, be subject to the condition that, if
at any time the Company shall determine in its discretion that the listing,
registration, or qualification of the Stock Option or the Common Stock upon any
securities exchange or inter-dealer quotation system or under any state or
federal law, or the consent or approval of any governmental regulatory body, is
necessary as a condition of, or in connection with, the Stock Option or the
issuance or purchase of shares of Common Stock thereunder, then the Stock Option
may not be exercised in whole or in part unless such listing, registration,
qualification, consent, or approval shall have been effected or obtained free of
any conditions not reasonably acceptable to the Company.
 
 
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If the Optionee fails to pay for any of the Optioned Shares specified in such
notice or fails to accept delivery thereof, then that portion of the Optionee’s
Stock Option and right to purchase such Optioned Shares may be forfeited by the
Optionee.

7. Nonassignability. The Stock Option is not assignable or transferable by the
Optionee except by will or by the laws of descent and distribution.

8. Rights as Shareholder. The Optionee will have no rights as a shareholder with
respect to any of the Optioned Shares until the issuance of a certificate or
certificates to the Optionee or the registration of such shares in the
Optionee’s name for the shares of Common Stock. The Optioned Shares shall be
subject to the terms and conditions of this Agreement. Except as otherwise
provided in Section 9 hereof, no adjustment shall be made for dividends or other
rights for which the record date is prior to the issuance of such certificate or
certificates. The Optionee, by his execution of this Agreement, agrees to
execute any documents requested by the Company in connection with the issuance
of the shares of Common Stock.

9. Adjustments and Related Matters. In the event that any dividend or other
distribution (whether in the form of cash, Common Stock, other securities, or
other property), recapitalization, stock split, reverse stock split, rights
offering, reorganization, merger, consolidation, split-up, spin-off, split-off,
combination, subdivision, repurchase, or exchange of Common Stock or other
securities of the Company, issuance of warrants or other rights to purchase
Common Stock or other securities of the Company, or other similar corporate
transaction or event affects the fair value of the Stock Option, then the
Company shall adjust any or all of the following so that the fair value of the
Stock Option immediately after the transaction or event is equal to the fair
value of the Stock Option immediately prior to the transaction or event (i) the
number of shares and type of Common Stock (or other securities or property)
subject to the Stock Option, (ii) the exercise price of the Stock Option;
provided, however, that the number of shares of Common Stock (or other
securities or property) subject to the Stock Option shall always be a whole
number. The Company shall determine the specific adjustments to be made under
this Section 9, and its determination shall be conclusive. Notwithstanding
anything herein to the contrary, no such adjustment shall be made or authorized
to the extent that such adjustment would cause the Stock Option or this
Agreement to violate Section 409A of the Code. Such adjustments shall be made in
accordance with the rules of any securities exchange, stock market, or stock
quotation system to which the Company is subject. Upon the occurrence of any
such adjustment, the Company shall provide notice to the Optionee of its
computation of such adjustment which shall be conclusive and shall be binding
upon the Optionee.

10. Nonqualified Stock Option. The Stock Option shall not be treated as an
“incentive stock option” under Section 422 of the Code.

11. Voting. The Optionee, as record holder of some or all of the Optioned Shares
following exercise of this Stock Option, has the exclusive right to vote, or
consent with respect to, such Optioned Shares until such time as the Optioned
Shares are transferred in accordance with this Agreement; provided, however,
that this Section shall not create any voting right where the holders of such
Optioned Shares otherwise have no such right.

12. 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.

13. Optionee’s Representations. Notwithstanding any of the provisions hereof,
the Optionee hereby agrees that he will not exercise the Stock Option granted
hereby, and that the Company will not be obligated to issue any shares to the
Optionee hereunder, if the exercise thereof or the issuance of such shares shall
constitute a violation by the Optionee 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
obligations of the Company and the rights of the Optionee are subject to all
applicable laws, rules, and regulations.
 
 
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14. Investment Representation. Notwithstanding anything herein to the contrary,
the Optionee hereby represents and warrants to the Company, that:

a. The Common Stock that will be received upon exercise of the Stock Option are
acquired for investment purposes only for the Optionee’s own account and not
with a view to or in connection with any distribution, re-offer, resale or other
disposition not in compliance with the Securities Act of 1933 (the “Securities
Act”) and applicable state securities laws;

b. The Optionee, alone or together with the Optionee’s representatives,
possesses such expertise, knowledge and sophistication in financial and business
matters generally, and in the type of transactions in which the Company proposes
to engage in particular, that the Optionee is capable of evaluating the merits
and economic risks of acquiring Common Stock upon the exercise of the Stock
Option and holding such Common Stock;

c. The Optionee has had access to all of the information with respect to the
Common Stock underlying the Stock Option that the Optionee deems necessary to
make a complete evaluation thereof, and has had the opportunity to question the
Company concerning the Stock Option;

d. The decision of the Optionee to acquire the Common Stock upon exercise of the
Stock Option for investment has been based solely upon the evaluation made by
the Optionee;

e. The Optionee understand that the Common Stock underlying the Stock Option
constitutes “restricted securities” under the Securities Act and has not been
registered under the Securities Act in reliance upon a specific exemption
therefrom, which exemption depends upon, among other things, the bona fide
nature of the Optionee’s investment intent as expressed herein. The Optionee
further understands that the Common Stock underlying the Stock Option must be
held indefinitely unless it is subsequently registered under the Securities Act
or an exemption from such registration is available;

f. The Optionee acknowledges and understands that the Company is under no
obligation to register the Common Stock underlying the Stock Option and that the
certificates evidencing such Common Stock will be imprinted with a legend which
prohibits the transfer of such Common Stock unless it is registered or such
registration is not required in the opinion of counsel satisfactory to the
Company and any other legend required under applicable state securities laws;
and

g. The Optionee is an “accredited investor,” as such term is defined in Section
501 of Regulation D promulgated under the Securities Act.

15. Optionee’s Acknowledgments. The Optionee hereby agrees to accept as binding,
conclusive, and final all decisions or interpretations of the Company, upon any
questions arising under this Agreement.
 
 
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16. 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 Florida law that might refer the governance,
construction, or interpretation of this Agreement to the laws of another state).

17. No Right to Continue Service or Employment. Nothing herein shall be
construed to confer upon the Optionee the right to continue in the employ or to
provide services to the Company or any subsidiary, whether as an employee or as
a contractor or as an outside director, or interfere with or restrict in any way
the right of the Company or any subsidiary to discharge the Optionee at any
time.

18. 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.

19. 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 Optionee 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.

20. Entire Agreement. This Agreement supersedes any and all other prior
understandings and agreements, either oral or in writing, between the parties
with respect to the subject matter hereof and constitutes 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 and that any
agreement, statement or promise that is not contained in this Agreement shall
not be valid or binding or of any force or effect.

21. 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.

22. 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; provided, however, that the Company may change or modify
this Agreement without the Optionee’s consent or signature if the Company
determines, in its sole discretion, that such change or modification is
necessary for purposes of compliance with or exemption from the requirements of
Section 409A of the Code or any regulations or other guidance issued thereunder.

23. 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.

 
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24. 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.

25. 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
Optionee, 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.
850 Third Avenue, Suite 1801
New York, NY 10022
Attn: President
Facsimile: (646) 218-1401
 
b. Notice to the Optionee shall be addressed and delivered as set forth on the
signature page.

26. Tax Requirements. The Optionee is hereby advised to consult immediately with
his own tax advisor regarding the tax consequences of this Agreement. The
Company or, if applicable, any subsidiary (for purposes of this Section 26, 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, any Federal,
state, local, or other taxes required by law to be withheld in connection with
this Agreement. The Company may, in its sole discretion, also require the
Optionee receiving shares of Common Stock to pay the Company the amount of any
taxes that the Company is required to withhold in connection with the Optionee’s
income arising with respect to the Stock Option. Such payments shall be required
to be made when requested by the Company and may be required to be made prior to
the delivery of any certificate representing shares of Common Stock. Such
payment may be made (i) by 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
exercising Optionee to the Company of shares of Common Stock that the Optionee
has not acquired from the Company within six (6) months prior to the date of
exercise, 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 exercise of the Stock Option, 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 Optionee.

* * * * * * * *

[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 Optionee, 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/ David I. Johnson      Name: David I. Johnson      Title: Chief Executive
Officer  

 

 
OPTIONEE:
         
 
/s/ Steven Berger     Signature             Name:  Steven Berger     Address:   
         

 
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