Exhibit 10.3
IGI
LABORATORIES, INC.
NON-QUALIFIED STOCK OPTION AWARD
AGREEMENT
THIS NON-QUALIFIED STOCK OPTION AWARD
AGREEMENT (this “ Agreement ”) is made as of May
29, 2009 (the “ Effective Date ”), between IGI
Laboratories, Inc. (the “ Company ”) and Phillip
S. Forte (the “ Optionee ”).
WHEREAS, to compensate the Optionee for
his future service to the Company and to further align the
Optionee’s personal financial interests with those of the
Company’s stockholders, the Company wishes to award the
Optionee a stock option to purchase shares of the Company’s
Common Stock, par value $.01 per share (the “ Common
Stock ”), subject to the restrictions and on the terms
and conditions contained in this Agreement; and
WHEREAS, in consideration of the granting
of that stock option the Optionee intends to remain in the employ
of the Company.
NOW, THEREFORE, in consideration of these
premises and the agreements set forth herein, the parties,
intending to be legally bound hereby, agree as follows:
1.
Nature of the Option
. This Option is intended to be a non-statutory
stock option and is not intended to be an Incentive Stock
Option within the meaning of Section 422 of the Code, or to
otherwise qualify for any special tax benefits to the
Optionee.
2.
Date of Grant; Term of
Option .
This Option was granted on May 29, 2009
and it may not be exercised later than May 29, 2019.
3.
Award of Option
. This Agreement evidences the grant to the
Optionee of an option (the “ Option ”) to
purchase 110,000 shares of the Company’s common stock, par
value of $.01 per share (the “ Shares ”).
The Option is subject to the terms set forth
herein.
4.
Option Exercise Price
. The Option exercise price is $1.01 per Share,
the Fair Market Value (as defined below) on the Effective
Date.
5.
Exercise of Option
.
(a)
Right to Exercise
. The Option will become vested and
exercisable if the Optionee remains in continuous service to the
Company (whether as an employee, consultant, independent contractor
or any other capacity in which he provides services to the Company)
through the applicable vesting date according to the following
schedule:
|
|
|
Percentage of Shares
|
Vesting Date:
|
|
8.33%
|
June 1, 2009
|
|
8.33%
|
September 30, 2009
|
|
8.33%
|
December 31, 2009
|
|
8.34%
|
March 31, 2010
|
|
33.33%
|
June 1, 2011
|
|
33.34%
|
June 1, 2012
|
Notwithstanding the foregoing,
immediately prior to but contingent upon the occurrence of a Change
in Control (as defined below), the entire Option will become vested
and exercisable, provided that the Optionee remains in continuous
service to the Company through the date of that Change in
Control.
(b)
All Unvested Option Shares Forfeited
Upon Cessation of Service .
Except for as provided in Section 5(c) below, upon cessation
of Optionee’s service with the Company for any reason or for
no reason (and whether such cessation is initiated by the Company,
the Optionee or otherwise), any portion of the Option that has not,
on or prior to the effective date of such cessation, become vested
will immediately and automatically, without any action on the part
of the Company, be forfeited and the Optionee will have no further
rights with respect to those Shares.
(c)
Termination by the Company Without
Cause . Notwithstanding
anything contained in this Section 5, if the Optionee’s
service with the Company ceases due to a termination by the Company
without Cause (as defined below), a pro-rata portion of the Option
shall become vested, with such pro-rata portion being equal to the
quotient of (i) the number of full months that have transpired
between the Effective Date and the date of such termination,
divided by (ii) 36. For avoidance of doubt, any portion of
the Option that has previously become vested in accordance with
Section 5(a) above shall be included in the number of Options that
become vested in accordance with this Section 5(c).
(d)
Method of Exercise
. This Option shall be
exercisable by written notice which shall state the election to
exercise this Option, the number of Shares in respect to which the
Option is being exercised and such other representations of
agreements as to the Optionee’s investment intent with
respect to such Shares as may be required by the Company hereunder.
Such written notice shall be signed by the Optionee and shall
be delivered in person or by certified mail to the Secretary of the
Company or such other person as may be designated by the Company.
The written notice shall be accompanied by payment of the
purchase price and the amount of any tax withholding arising in
connection with the exercise of the Option. Payment of the
purchase price and tax withholding shall be by check, by means of a
“broker-assisted cashless exercise” conducted in
accordance with procedures permitted by rules or regulations of the
Federal Reserve Board or by such other method of payment authorized
by the Company. The certificate or certificates for the
Shares as to which the Option shall be exercised shall be
registered in the name of the Optionee and shall be legended as
required under applicable law.
(e)
Partial Exercise
. The Option may be exercised in
whole or in part; provided, however, that any exercise may
apply only with respect to a whole number of Shares.
(f)
Restrictions on Exercise
. The obligation of the Company to
deliver Shares upon exercise of the Option shall be subject to all
applicable laws, rules, and regulations and such approvals by
governmental agencies as may be deemed appropriate by the Company,
including such actions as Company counsel shall deem necessary or
appropriate to comply with relevant securities laws and
regulations. The Company may require that the Optionee (or
other person exercising the Option after the Optionee’s
death) represent that the Optionee is purchasing Shares for the
Optionee's own account and not with a view to or for sale
in
-2-
connection with any distribution of the
Shares, or such other representation
