Exhibit 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the “
Agreement ”), is made on this 29th day of May 2009, by
and between IGI Laboratories, Inc., having an address at 105
Lincoln Avenue, Buena, New Jersey 08310 (the “ Company
”) and Hemanshu Pandya, having an address at 7 Nottinghill
Court, Manalapan, NJ 07726 (the “ Executive
”). The Company and the Executive are collectively
referred to hereinafter as the “ Parties
”.
R E C I T A L S
:
WHEREAS, the Company desires to employ
the Executive on the terms and subject to the conditions set forth
herein, and Executive is willing to accept such employment on such
terms and conditions; and
WHEREAS, by virtue of such employment,
Executive will have access to Proprietary Information of the
Company and its subsidiaries (the “IGI Companies”);
and
WHEREAS, Executive acknowledges and
agrees that the Company (on behalf of itself and the IGI Companies)
has a reasonable, necessary and legitimate business interest in
protecting its own and the IGI Companies’ Proprietary
Information, client accounts, relationships with prospective
clients, Goodwill and ongoing business, and that the terms and
conditions set forth below are reasonable and, necessary in order
to protect these legitimate business interests.
NOW THEREFORE, in consideration of the
representations, warranties, covenants, and agreements contained
herein, and for other good and valuable consideration, the receipt
and adequacy of which are conclusively acknowledged, the Parties,
intending to become legally bound, agree as follows:
A G R E E M E N T
:
1.
DEFINITIONS
1.1.
Specific Definitions
. Capitalized terms not defined
elsewhere herein shall have the following meanings ascribed to
them:
“Change in Control” shall
mean the occurrence of any of the following events:
(a)
any “person,” as such term is
used in Sections 13(d) and 14(d) of the Securities Exchange Act of
1934, as amended (the “Exchange Act”) (other (i) than
an individual or entity holding securities of the Company as of the
date hereof which represent 3% or more of the outstanding voting
power of the all securities on matters to be generally voted upon
by the Company’s stockholders, (ii) Jane Hager, Edward Hager,
Steve Morris, Frank Gerardi or any of their respective affiliates,
any entity of which any of the foregoing are trustees, or trusts
established for their benefit, (iii) the Company, any trustee or
other fiduciary holding securities under an employee benefit plan
of the Company, (iv) Signet Healthcare Partners, its affiliates or
any of its affiliated funds, or (v) any corporation owned directly
or indirectly by the
stockholders of the Company in
substantially the same proportion as their ownership of stock of
the Company) is or becomes the owner, directly or indirectly, of
outstanding securities of the Company representing 60% or more of
the combined voting power of the Company’s then outstanding
securities;
(b)
the consummation of a merger or
consolidation of the Company with any other corporation, other than
(i) a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity)
more than 40% of the combined voting power of the voting securities
of the Company or such surviving entity outstanding immediately
after such merger or consolidation or (ii) a merger or
consolidation effected to implement a re-capitalization of the
Company (or similar transaction) or a reincorporation of the
Company into another jurisdiction; or
(c)
a sale of all or substantially all of the
assets of the Company;
“Goodwill” means the
expectation of continued patronage from client accounts and new
patronage from prospective clients.
“Person” means an individual,
a partnership, a corporation, an association, a joint stock
company, a trust, a joint venture, an unincorporated organization,
a limited liability company, or a governmental entity (or any
department, agency, or political subdivision thereof).
“IGI Business” means the
businesses provided by any of the IGI Companies.
“IGI Companies” or “IGI
Company” means the Company, its subsidiaries (including the
Company), and any entity under the control (as defined in Rule
12b-2 of the regulations promulgated under the Securities Exchange
Act of 1934, as amended, without regard to whether any party is a
“registrant” under such Act) of IGI, and any of their
successors or assigns.
2.
POSITION,
RESPONSIBILITIES AND TERM
2.1.
Executive’s Position
. On the terms and subject to the
conditions set forth in this Agreement, the Company shall employ
Executive to serve as an officer of the Company and as the
President and Chief Executive Officer of the Company. The
Executive shall report directly to the Board of Directors of the
Company (the “ Board ”), through the Chairwoman
of the Board. Executive shall perform such services in the
Company’s offices in Buena, New Jersey or such other location
or locations as the Executive and the Chairwoman shall agree;
provided, however , that Executive will be required to
travel from time to time for business purposes.
2.2.
Executive’s
Responsibilities . The
Executive shall perform all duties customarily attendant to the
position and shall perform such services and duties commensurate
with such position as may from time to time be reasonably
prescribed by the Board.
2.3.
No Conflicts of Interest
. Executive further agrees that
throughout the period of his employment hereunder, he will not
perform any activities or services, or accept such other employment
which would be inconsistent with this Agreement, the employment
relationship
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between the Parties, or would interfere
with or present a conflict of interest concerning Executive’s
employment with the Company; provided , that Executive shall
be permitted to serve on the boards of directors of such other
companies as the Board shall approve, and that Executive may make
personal investments and may act as a director and engage in other
activities for any charitable, educational, or other nonprofit
institution, as long as such investments and activities do not
materially interfere with the performance of Executive’s
duties hereunder. Executive agrees to adhere to and comply
with any and all business practices and requirements of ethical
conduct set forth in writing from time to time by the Company in
its employee manual or similar publication.
2.4.
Term . This Agreement shall become effective on June
29, 2009 (the “ Effective Date ”) and will
govern Executive’s employment by the Company until that
employment ceases (such period of Executive’s employment is
herein referred to as the “ Term ”).
3.
ACCEPTANCE
Executive hereby accepts such employment
and agrees that throughout the Term, Executive will devote his full
business time, attention, knowledge and skills faithfully,
diligently and to the best of his ability, in the furtherance of
the business of the IGI Companies.
4.
COMPENSATION
4.1.
Base Salary . The Executive shall receive an initial annual
salary of Two Hundred Sixty Thousand Dollars ($260,000) (the
“ Base Salary ”), which shall increase on
January 1, 2010 to Two Hundred Seventy Five Thousand Dollars
($275,000), paid in accordance with the Company’s payroll
practices, as in effect from time to time. The Base Salary
shall be reviewed on an annual basis by the Company and may be
adjusted from time to time by the Company.
4.2.
Benefits . In addition to such compensation, Executive
shall be entitled to the benefits which are afforded generally,
from time to time to similarly situated executive employees of the
IGI Companies. Notwithstanding the foregoing, nothing
contained in this Agreement shall require the IGI Companies to
establish, maintain or continue any of the group benefits plans
already in existence or hereafter adopted for the employees of the
IGI Companies, or restrict the right of the IGI Companies to amend,
modify or terminate such group benefit plans in a manner which does
not discriminate against Executive as compared to other executive
employees of IGI Companies.
4.3.
Paid Time Off . Executive shall be entitled to 20 business
days of paid time off (consisting of vacation and personal days)
and sick days and holidays as are provided in general to similarly
situated employees of the IGI Companies, in accordance with usual
practices and procedures. Without limiting the foregoing,
unless otherwise required by law, Executive shall not be entitled
to any additional compensation for any unused paid time off.
Paid time off shall stop accruing once Executive has
accumulated and not used the number of days to which he is entitled
to in a year.
4.4.
Annual Performance Bonus
. The Executive shall be eligible
to receive an annual performance bonus (the “ Annual
Bonus ”) for each calendar year during the Term (each a
“ Fiscal Year ”), which may be payable, in the
discretion of the Board or the Compensation
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Committee of the Board (the “
Committee ”), in the form of cash, stock options
and/or restricted equity not later than 75 days after the end of
such Fiscal Year; provided, however , that the Executive
must be employed by the Company on December 31 of a Fiscal Year in
order to be eligible for an Annual Bonus under this Section 4.4 for
such Fiscal Year.
The Executive’s target Annual Bonus
will be $65,000 with respect to the remainder of the 2009 calendar
year and will be 60% of Executive’s Base Salary then in
effect for each subsequent Fiscal Year. The actual amount of
the Annual Bonus with respect to the 2009 calendar year, and any
subsequent Fiscal Years, will be determined by the Board or the
Committee, in their discretion, with reference to the
Executive’s and the Employer’s fulfillment of
performance goals established by the Committee with respect to the applicable Fiscal Year . The Committee shall establish such
performance goals within one (1) month of the Effective Date of
this Agreement with respect to the remainder of the 2009 calendar
year (the “ 2009 Performance Goals ”). The
2009 Performance Goals shall be mutually agreed upon by the
Executive and the Chairwoman of the Board.
4.5.
Grant of Equity Awards
.
(a)
Equity Awards . As soon as practicable following the
Effective Date of this agreement and subject to the approval of the
Board, Executive will receive a grant of: (i) 975,000 shares of
restricted stock, as memorialized in (and subject to the terms of)
a restricted stock award agreement, attached hereto as Exhibit
A (the “ Restricted Stock Agreement ”) and
(ii) an option to purchase, at the closing price of the
Company’s Common Stock on the date of grant, that number of
shares of the Company’s Common Stock such that the value of
the option on the date of grant is equivalent to the value of
325,000 shares of the Company’s Common Stock on the date of
grant, as memorialized in (and subject to the terms of) an option
award agreement, attached hereto as Exhibit B (the “
Option Agreement ”) (collectively the “
Equity Award Agreements ”).
(b)
Vesting . Except as otherwise set forth in Section 8
hereof, the shares subject to the Equity Award Agreements shall
become fully vested over a period of three years as follows: (i)
one-twelfth of the shares subject to the Equity Award Agreements
shall vest as of the Effective Date; (ii) one-twelfth of the shares
subject to the Equity Award Agreements shall vest on each of the
following dates: (A) September 30, 2009, (B) December 31, 2009 and
(C) March 31, 2010; (iii) one-third of the shares subject to the
Equity Award Agreements shall vest on the second anniversary of the
Effective Date and (iv) one-third of the shares subject to the
Equity Award Agreements shall vest on the third anniversary of the
Effective Date.
(c)
Accelerated Vesting
. Immediately prior to a Change in
Control (as defined in Section 1.1 above), any shares that then
remain unvested will become vested, provided the Executive remains
in continuous service with the Company through the consummation of
that Change in Control.
5.
EXPENSES
The Company shall reimburse Executive, in
accordance with Company policy, for all expenses reasonably and
properly incurred by Executive in connection with the
performance
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of Executive’s duties hereunder and
the conduct of the business of the Company, upon the submission to
the Company (or its designee) of appropriate vouchers
therefor.
6.
CONFIDENTIAL
INFORMATION AND PROPERTY
6.1.
Confidentiality
. The Executive recognizes and
acknowledges that the Proprietary Information (as defined below) is
a valuable, special and unique asset of the business of the Company
and its affiliates. As a result, both during the Term and
thereafter, the Executive will not, without the prior written
consent of the Company, for any reason divulge to any third-party
or use for his own benefit, or for any purpose other than the
exclusive benefit of the Company and its affiliates, any
Proprietary Information. Notwithstanding the foregoing, if
the Executive is compelled to disclose Proprietary Information by
court order or other legal or regulatory process, to the extent
permitted by applicable law, he shall promptly so notify the
Company so that it may seek a protective order or other assurance
that confidential treatment of such Proprietary Information shall
be afforded, and the Executive shall reasonably cooperate with the
Company and its affiliates in connection therewith. If the
Executive is so obligated by court order or other legal process to
disclose Proprietary Information it will disclose only the minimum
amount of such Proprietary Information as is necessary for the
Executive to comply with such court order or other legal
process.
6.2.
Property of the Company
.
(a)
Proprietary Information
. All right, title and interest in and to
Proprietary Information will be and remain the sole and exclusive
property of the Company and its affiliates. The Executive
will not remove from the Company’s or its affiliates’
offices or premises any documents, records, notebooks, files,
correspondence, reports, memoranda or similar materials of or
containing Proprietary Information, or other materials or property
of any kind belonging to the Company or its affiliates unless
necessary or appropriate in the performance of his duties to the
Company and its affiliates. If the Executive removes such
materials or property in the performance of his duties, he will
return such materials or property promptly after the removal has
served its purpose. The Executive will not make, retain,
remove and/or distribute any copies of any such materials or
property, or divulge to any third person the nature of and/or
contents of such materials or property, except to the extent
necessary to satisfy contractual obligations of the Company or its
affiliates or to perform his duties on behalf of the Company and
its affiliates. Upon termination of the Executive’s
employment with the Company, he will leave with the Company and its
affiliates or promptly return to the Company and its affiliates all
originals and copies of such materials or property then in his
possession.
(b)
Intellectual Property
. The Executive agrees that all the
Intellectual Property (as defined below) will be considered
“works made for hire” as that term is defined in
Section 101 of the Copyright Act (17 U.S.C. § 101) and that
all right, title and interest in such Intellectual Property will be
the sole and exclusive property of the Company and its affiliates.
To the extent that any of the Intellectual Property may not
by law be considered a work made for hire, or to the extent that,
notwithstanding the foregoing, the Executive retains any interest
in the Intellectual Property, the Executive hereby irrevocably
assigns and transfers to the Company and its affiliates any and all
right, title, or interest that the Executive may now or in the
future have in the Intellectual Property under patent, copyright,
trade secret, trademark or other law, in
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perpetuity or for the longest period
otherwise permitted by law, without the necessity of further
consideration. The Company and its affiliates will be
entitled to obtain and hold in its own name all copyrights,
patents, trade secrets, trademarks and other similar registrations
with respect to such Intellectual Property. The Executive
further agrees to execute any and all documents and provide any
further cooperation or assistance reasonably required by the
Company, at the Company’s expense, to perfect, maintain
or otherwise protect its rights in the Intellectual Property.
If the Company or its affiliates, as applicable, are unable
after reasonable efforts to secure the Executive’s signature,
cooperation or assistance in accordance with the preceding
sentence, whether because of the Executive’s incapacity or
any other reason whatsoever, the Executive hereby designates and
appoints the Company, the appropriate affiliate, or their
respective designee as the Executive’s agent and
attorney-in-fact, to act on his behalf, to execute and file
documents and to do all other lawfully permitted acts necessary or
desirable to perfect, maintain or otherwise protect the
Company’s or its affiliates’ rights in the Intellectual
Property. The Executive acknowledges and agrees that such
appointment is coupled with an interest and is therefore
irrevocable.
For purposes of this Agreement,
“Intellectual Property” means (a) all inventions
(whether patentable or unpatentable and whether or not reduced to
practice), all improvements thereto, and all patents and patent
applications claiming such inventions, (b) all trademarks, service
marks, trade dress, logos, trade names, fictitious names, brand
names, brand marks and corporate names, together with all
translations, adaptations, derivations, and combinations thereof
and including all goodwill associated therewith, and all
applications, registrations, and renewals in connection therewith,
(c) all copyrightable works, all copyrights, and all applications,
registrations, and renewals in connection therewith, (d) all mask
works and all applications, registrations, and renewals in
connection therewith, (e) all trade secrets (including research and
development, know-how, formulas, compositions, manufacturing and
production processes and techniques, methodologies, technical data,
designs, drawings and specifications), (f) all computer software
(including data, source and object codes and related
documentation), (g) all other proprietary rights, (h) all copies
and tangible embodiments thereof (in whatever form or medium), or
(i) similar intangible personal property which have been or are
developed or created in whole or in part by the Executive (1) at
any time and at any place while the Executive is employed by
Company and which, in the case of any or
