EXHIBIT 10.8

HI-TECH PHARMACAL CO., INC.
369 BAYVIEW AVENUE
AMITYVILLE, NY 11701

January 1, 2009

Mr. Gary April
17 Alley Pond Court
Dix Hills, NY  11746

Dear Mr. April:

We are pleased to continue to secure your employment upon the terms and
conditions set forth in this letter.

Effective as of January 1, 2009 (the “Effective Date”), you will continue to be
employed by Hi-Tech Pharmacal Co., Inc. (the “Company”) as President of the
Health Care Products Division (“HCP Division”) for a term of twenty-four (24)
months from the Effective Date, or until terminated or extended as herein
provided.  The Company will pay to you as compensation for your services an
annual salary in the amount of (i) Two Hundred Twenty -Five Thousand ($225,000)
Dollars for calendar year January 1, 2009 to December 31, 2009 (“Calendar
2009”); and (ii) Two Hundred Thirty-Five Thousand ($235,000) Dollars for
calendar year January 1, 2010 to December 31, 2010 (“Calendar 2010”).  Your
salary shall be payable in weekly installments less such deductions as shall be
required to be withheld by applicable law and regulations.  Prior to the end of
each of Calendar 2009 and Calendar 2010, the Company’s Chief Executive Officer
or Chief Financial Officer will recommend to the Compensation Committee and
Stock Option Committee that you receive options to purchase seven thousand five
hundred (7,500) shares of the Company’s Common Stock; provided however, that the
Compensation Committee and Stock Option Committee shall make the final
determination, in its discretion, as to the number of options or other stock or
equity based compensation, if any, to be granted to you.

In addition to your annual salary, you will receive a bonus during each year of
your employment equal to 2% of the increase in Net Sales of the HCP Division
over the immediately preceding year’s Net Sales of the HCP Division (the
“Bonus”).  For purposes of this letter, the parties agree that (i) Domestic
Sales for the period May 1, 2007 to April 30, 2008 (“Fiscal 2008”) shall be
deemed to be $10,846,000.  For purposes of this letter, “Net Sales” shall mean
gross sales net of any deductions, returns, discounts, allowances, chargebacks
and rebates, as conclusively determined by the Company’s Chief Executive Officer
or Chief Financial Officer, which determination shall be final and binding upon
you and the Company.

 

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While you are employed you may also receive a profit bonus based on the Net
Profits of the HCP Division.  In the event the Net Profits of the HCP Division
are greater than the prior year’s Net Profits, then you will receive a profit
bonus (“Profit Bonus”) equal to 3% of the increase in Net Profits of the HCP
Division over the immediately preceding year’s Net Profits of the HCP
Division.  For purposes of this letter, the parties agree that Net Profits for
Fiscal 2008 shall be deemed to be $0.  The term “Net Profits” as used herein
shall mean the net profits of the HCP Division as conclusively determined by the
Company’s Chief Executive Officer or Chief Financial Officer in accordance with
the mutually agreed upon formula which is attached hereto as Exhibit A.  Such
determination by the Company’s Chief Executive Officer or Chief Financial
Officer shall be final and binding upon you and the Company.

While you are employed, you will be entitled to a car allowance of $500 per
month and you will be entitled to participate in the Company’s pension, profit
sharing, group insurance, hospitalization and group health benefit plans and all
other benefits and plans as the Company provides to its senior executives.

You will be entitled to a vacation of four (4) weeks per year, during which time
your salary will be paid in full.  You will take your vacation at such times as
you and the Company shall determine is mutually convenient.

In the event that during your employment, all or substantially all of the assets
or stock of the Company or of the HCP Division of the Company are sold to a
third party unrelated to any of the current principal shareholders of the
Company or its affiliates, you shall be entitled to receive a “Sale Bonus”,
payable, at the Company’s discretion, in cash, stock options of the Company or
other equity based compensation.  The Sale Bonus shall be calculated in
accordance with the formula detailed on Exhibit B attached hereto.  Such Sale
Bonus shall be payable only in the event you are employed with the Company at
the time of the consummation of the sale.

Your employment shall terminate in the event you die, are totally disabled,
wrongfully leave your employment, or your employment is terminated pursuant to
this letter agreement.

In the event your employment is terminated as a result of your death or total
disability, if you are entitled to a Bonus or a Profit Bonus, then you, your
designee or your estate will be paid, within thirty (30) days after the
Company’s Chief Executive Officer or Chief Financial Officer has determined the
Net Sales and Net Profits of the Company’s HCP Division, an amount equal to the
product of (i) the sum of the Bonus and Profit Bonus for such year in which
death or total disability occurred and (ii) a fraction, the numerator of which
is the number of months during the year of such death or total disability during
which you were employed by the Company through and including the month of your
death or total disability, and the denominator of which is twelve (12).

For purposes of this letter, total disability means that you are mentally or
physically incapable or unable to perform your regular and customary duties of
employment with the Company for a period of 90 consecutive or non-consecutive
days in any 360 day period.

 
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The Company may terminate your employment at any time “For Cause”.  For purposes
of this letter, “For Cause” shall include (i) your repeated failure to perform
your duties, provided that the Company shall have given you notice of your
failure to perform your duties and for a period of five (5) days thereafter,
such failure shall not have been remedied to the reasonable satisfaction of the
Chief Executive Officer of the Company; (ii) your inability to perform your
duties at the level reasonably expected of you by the Chief Executive Officer of
the Company; (iii) your willful refusal to follow, or reckless disregard of, the
policies and directives of the Chief Executive Officer of the Company; (iv) a
material breach of your responsibility to the Company; (v) misappropriation of
the Company’s assets or perpetration of fraud against, or dishonesty in dealings
with the Company; or (vi) your indictment for a crime which constitutes a
felony.

You may voluntarily terminate your employment hereunder only upon the giving of
six (6) months’ prior written notice thereof to the Company (“Permissible
Voluntary Termination”).  In addition to your salary, in the event you are
entitled to a Bonus or a Profit Bonus, then you will be paid, within thirty (30)
days after the Company’s Chief Executive Officer or Chief Financial Officer has
determined the Net Profits of the Company’s HCP Division, an amount equal to the
product of (i) the sum of the Bonus and Profit Bonus for such year in which the
Permissible Voluntary Termination occurs and (ii) a fraction, the numerator of
which is the number of months during the year which you were employed by the
Company through and including the month of your Permissible Voluntary
Termination, and the denominator of which is twelve (12).  The date of the
Permissible Voluntary Termination shall be not less than six months after your
notice to the Company.

In the event you leave your employment without such prior notice or are
discharged For Cause or you wrongfully leave your employment, then, upon such
occurrence, your employment shall be deemed terminated and the Company shall be
released from all obligations to you with respect to this letter agreement
except for your salary up to the date of such termination.  You will not be
entitled to any Bonus or Profit Bonus for the year in which such termination
occurs.

By executing this letter, you acknowledge receipt of, and agree to abide by, the
Company’s Insider Trading Policy.  Considering that the Company is a
publicly-traded corporation, you agree that you shall comply with any and all
federal and state securities laws, including but not limited to those that
relate to non-disclosure of information, insider trading and individual
reporting requirements and shall specifically abstain from discussing the
non-public aspects of the Company’s business affairs with any individual or
group of individuals (e.g., analysts, customers, Internet chat rooms) who does
not have a business need to know such information for the benefit of the
Company.  You further agree to immediately notify the Company’s Compliance
Officer in accordance with the Company’s Insider Trading Policy prior to your
acquisition or disposition of the Company’s securities.

You recognize that the services to be performed by you hereunder are special,
unique and extraordinary.  The parties confirm that it is reasonably necessary
for the protection of the Company that you agree, and, accordingly, you hereby
agree, that during your employment and for a period of twenty-four (24) months
from and after the termination of your employment (for any reason whatsoever)
with the Company, you shall not, directly or indirectly, within the United
States:

 
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·
engage in a business which is competitive with the HCP Division (a “Competitive
Business”) for your account or render any services that constitute engaging in a
Competitive Business, in any capacity to any entity; or become interested or
have an interest in any Competitive Business either on your own behalf or as an
officer, director, stockholder, partner, principal, consultant, associate,
employee, owner, agent, creditor, independent contractor, or co-venturer of any
third party or in any other relationship or capacity; or

 
·
employ or engage, or cause to authorize, directly or indirectly, to be employed
or engaged, for or on behalf of yourself or any third party, any employee,
representative or agent of the Company; or

 
·
solicit, directly or indirectly, on behalf of yourself or any third party, any
customer, client or vendor of the Company and its affiliates.

You acknowledge that as an employee of the Company you will be exposed to the
Company’s proprietary and confidential information.  You agree that during or
after your employment with the Company (i) you shall not use such proprietary or
confidential information for any purposes whatsoever except in furtherance of
the Company’s business and (ii) you shall not disclose such proprietary or
confidential information to any third party, except at the direction of the
Company.  You further agree that upon the earlier of (i) the termination of your
employment relationship with the Company, or (ii) the Company’s request, you
will deliver to the Company, or destroy, all such confidential information in
your possession or under your control.

If any of the restrictions contained in this letter agreement shall be deemed to
be unenforceable by reason of the extent, duration or geographical scope
thereof, or otherwise, then after such restrictions have been reduced so as to
be enforceable, in its reduced form this letter agreement shall then be
enforceable in the manner contemplated hereby.

The non-compete and confidentiality provisions of this letter agreement shall
survive the termination of your employment hereunder.  You agree that any breach
or threatened breach by you of the non-compete and/or the confidentiality
provisions of this letter shall entitle the Company, in addition to all other
legal remedies available to it, to apply to any court of competent jurisdiction
to enjoin such breach or threatened breach.

This letter sets forth the entire agreement of the parties hereto and supersedes
any prior agreements, promises, covenants, arrangements, communications,
representations or warranties, whether oral or written with respect to the
subject matter contained herein.

This letter, and the rights and obligations herein, shall inure to the benefit
of, be binding upon and enforceable against, the parties hereto and their
respective successors and assigns.  This letter shall be governed by and
construed in accordance with the laws of the State of New York.
 
 
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If the foregoing is acceptable to you, please execute the enclosed copy of this
letter in the space provided below and return it to me at your earliest
convenience.

 
Very truly yours,
     
Hi-Tech Pharmacal Co., Inc.
     
By:
/s/David S. Seltzer
   
David S. Seltzer, President

Accepted and Agreed to this
18th day of February, 2009

/s/Gary M. April
 
Gary M. April

 
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EXHIBIT A
NET PROFITS

The term “Net Profits” as used herein shall mean the “Net Sales” of the HCP
Division less the following expenses:
 
(a)
Cost of Goods Sold;

 
(b)
Direct costs of HCP (salaries, advertising, travel, regulatory, legal, etc.;

 
(c)
Indirect costs allocated based on sales dollars (general, administrative,
overhead and freight expenses);

 
(d)
R&D expenses allocated on a project basis; and

 
(e)
Taxes, based on the corporate tax rate.

For purposes of this letter agreement:
 
·
“Net Sales” shall mean the gross sales of the HCP Division less all deductions,
returns, discounts, allowances, chargebacks and rebates;

 
·
Indirect costs in accordance with subsection (c) above shall be deemed to equal
10% of Net Sales; and

 
·
The calculation of Net Profits shall be determined by the Company’s Chief
Executive Officer or Chief Financial Officer, and such determination shall be
final and binding upon the parties to this agreement.

 
 
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EXHIBIT B
SALE BONUS CALCULATION

In the event of a sale of the Company, then the Sale Bonus shall be equal to 2%
of the Division Proceeds (as hereinafter defined).

In the event of a sale of the HCP Division: (a) if the Net Sale Price (as
hereinafter defined) is up to 1.5 times the Sales of the HCP Division, then the
Sale Bonus shall be equal to 2% of the Division Proceeds; (b) if the Net Sale
Price of the HCP Division is more than 1.5 times the Sales, but not more than 2
times the Sales of the HCP Division, then the Sale Bonus shall be equal to 3% of
the Division Proceeds; or (c) if the Net Sale Price of the HCP Division is in
excess of 2 times the Sales of the HCP Division, then the Sale Bonus shall be
equal to 4% of the Division Proceeds.  For purposes of this paragraph only,
Sales shall include export sales.

The term “Sales” shall mean the gross sales of the HCP Division, net of any
deductions, returns, discounts, allowances, chargebacks and rebates.

The term “Net Sale Price” shall mean the actual net proceeds, less all direct
and indirect expenses received by the Company.  For purposes of this Exhibit,
Sales shall be measured by the fiscal year immediately preceding the sale of the
HCP Division.

The term “Division Proceeds” shall mean (i) in the event of a sale of the HCP
Division, the actual net proceeds, less all direct and indirect expenses
incurred by the Company for the HCP Division or (ii) in the event of a sale of
the Company, 1.5 times the Sales of the HCP Division for the fiscal year
immediately preceding the sale of the Company (irrespective of the actual
proceeds received by the Company).

For illustration purposes, if for Fiscal 2008 the Sales of the HCP Division were
$8 million and the Sales of the Company were $40 million and in 2008 the Company
was sold for a Net Sale Price of $80 million, then you would be entitled to 2%
of the Division Proceeds for a Sale Bonus of $240,000 (2% x ($8 million x
1.5)).  On the other hand, if in 2008 the HCP Division was sold for a Net Sale
Price of $16 million (2 x Sales of the HCP Division), then you would be entitled
to 3% of the Division Proceeds for a Sale Bonus of $480,000 (3% x $16 million).
 
In no event shall you be entitled to more than one Sale Bonus.  The calculation
of the Sale Bonus shall be determined by the Company’s Chief Executive Officer
or Chief Financial Officer, and such determination shall be final and binding
upon the parties to this agreement.

 
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