Exhibit 10.1

 

September 16, 2008

 

Carlene Lloyd

 

Subject: Separation Agreement and Release

 

The purpose of this letter agreement ("Agreement") is to confirm the agreement
between IGI Laboratories, Inc. and all of its parents, subsidiaries and
affiliated companies (collectively referred to as "IGI") and Carlene Lloyd
(referred to as "You") concerning your termination of employment with IGI.

 

Termination Date

You agree that your last day of employment with IGI will be October 03, 2008
(the "Termination Date") and following such date you will cease to be an officer
or employee of IGI.

 

Severance Pay

Following the Termination Date, subject to receipt of this fully-executed
Agreement, the receipt and non-revocation of the release of claims attached
hereto as Exhibit A (the "Release"), you will be paid $26,153.85 (twenty six
thousand one hundred fifty three USD and eighty five cents) in severance (the
"Severance Benefit") in the form of salary continuation for a 16 week period
(the "Initial Severance Period"). The first installment payment of the Severance
Benefit will be made on the first regular payroll date that occurs after the
Termination Date. In addition to the Severance Benefit payable during the
Initial Severance Period, if you satisfactorily perform the duties reasonably
requested of you by IGI during the 16 weeks period following the Termination
Date (the "Additional Services"), as determined by the Chief Executive Officer
of IGI in his sole discretion, you will be paid an additional $13,076.92
(thirteen thousand seventy six USD and ninety two cents) in severance in the
form of salary continuation for an additional 8 weeks period following the end
of the Initial Severance Period (such additional period, to the extent
applicable, together with the Initial Severance Period, the "Severance
Period")). You acknowledge and agree that the Additional Services will not
create any new employment relationship between you and IGI.

 

Continuation of Health/Group Life Insurance Benefits

Following the Termination Date, in addition to the severance pay described
above, subject to the receipt and non-revocation of the Release, you are
entitled to receive the group health benefits coverage in effect on the
Termination Date (or generally comparable coverage) for yourself and, where
applicable, your spouse and eligible dependents (to the extent they were
receiving such coverage as of the Termination Date), at the same premium rates
as may be charged from time to time for employees of IGI generally, which
coverage will be provided until the earlier of (i) the expiration of the Initial
Severance Period or, if later, to the extent applicable, the Severance Period
and (ii) the date you are or become eligible for coverage under group health
plan(s) of any other employer. Such continued coverage will run concurrently
with COBRA.

 

401(k) Plan

You may be entitled to receive benefits under the IGI Laboratories, Inc. 401(k)
Plan in accordance with the terms and conditions of the plan.

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IGI Stock Option Plan

With respect to the options to purchase shares of common stock of IGI (the
"Options") subject to your nonqualified stock option agreements, you will have
180 days from the Termination Date to exercise such options.

 

Transition Procedure

You agree to (i) continue to conduct your activities in a professional manner
and to cooperate with IGI in all reasonable ways to achieve a smooth transition
and resolution to any open items on which you were working, (ii) not
intentionally injure IGI in any way relating to company property or personnel,
(iii) turn over any company property including proprietary information in your
possession including, but not limited to, all credit cards, prescription cards,
office or warehouse keys, supplies or equipment, all company documents and all
copies thereof, (iv) refrain from any conduct, activity, or conversation which
is intended to or does interfere with or disparage the relationships between IGI
and its employees, customers, suppliers or others.

 

Restrictive Covenants

In consideration of the compensation and other benefits to be paid to you
pursuant to this Agreement, you agree that you will not, without the prior
written consent of the board of directors of IGI, for a period of eighteen (18)
months following the Termination Date, directly or indirectly engage in the
United States or any other country in which IGI conducts business, in any
activity which, or any activity for any enterprise or entity a material part of
the business of which, is competitive with the business conducted by IGI. You
further agree that for a period of twenty four (24) months following the
Termination Date, you will not, directly or indirectly, on your own behalf or on
behalf of any third party, (i) target, recruit, solicit or induce, or attempt to
induce, any employees of IGI to terminate their employment with, or otherwise
cease their relationship with, IGI or (ii) solicit, divert, reduce, take away,
or attempt to divert, reduce or take away, the business or patronage (with
respect to products or services of the kind or type developed, produced,
marketed, furnished or sold by IGI) of any of IGI's customers or prospective
customers. You further agree that all information, whether or not in writing,
relating to the business, technical or financial affairs of IGI or any of its
affiliates or their respective customers and that is generally understood in the
industry as being confidential and/or proprietary ("Confidential Information"),
is the exclusive property of IGI and that you will not disclose to anyone any
Confidential Information, or utilize such Confidential Information for your own
benefit, or for the benefit of third parties. You also agree that you shall not
disparage, deprecate or make any comments or take any other actions, directly or
indirectly, that could reflect adversely on IGI or any of its officers,
directors, employees or agents or adversely affect its business reputation or
goodwill. You acknowledge and agree that the restrictive covenants contained in
this paragraph are reasonable and necessary to protect the legitimate business
interests of IGI, that you received adequate consideration for agreeing to them
and that you will abide by them, and that, in the event of a breach or
threatened breach of this provision by you, IGI may suffer irreparable harm and
will therefore be entitled to injunctive relief to enforce this provision, which
shall be in addition to any other remedies available to it, as well as an award
of attorneys' fees and costs to cover the expenses it incurs in seeking to
enforce this provision.

 

No Additional Payments

The severance payments, rights and benefits described in this Agreement will be
the only such payments, rights and benefits you are to receive as a result of
your termination of employment and you agree you are not entitled to any
additional payments, rights or benefits not otherwise described in this
Agreement. You hereby acknowledge and agree that you are not eligible to be

<PAGE>

a participant in any severance or retention plan of IGI. Any payments, rights or
benefits received under this Agreement will not be taken into account for
purposes of determining benefits under any employee benefit plan of IGI, except
to the extent required by law, or as otherwise expressly provided by the terms
of such plan.

 

Litigation and Regulatory Cooperation

You agree to cooperate fully with IGI in the defense or prosecution of any
claims or actions now in existence or which may be brought in the future against
or on behalf of IGI that relate to events or occurrences that transpired during
your employment with IGI. Your full cooperation in connection with such claims
or actions shall include, but not be limited to, being available to meet with
counsel to prepare for discovery or trial and to act as a witness on behalf of
IGI at mutually convenient times. In scheduling your time to prepare for
discovery or trial, IGI shall attempt to minimize interference with any other
employment obligations that you may have. You also shall cooperate with IGI in
connection with any investigation or review of any foreign, federal, state or
local regulatory authority as any such investigation or review relates to events
or occurrences that transpired while you were employed by IGI. IGI shall
reimburse you for any reasonable out-of-pocket expenses incurred in connection
with any litigation and regulatory cooperation provided after the Termination
Date. In the event that you are named personally in any legal proceeding
relating to your activities on behalf of IGI, you will be eligible for
indemnification to the extent permitted by IGI's by-laws and other governance
documents, as well as any applicable liability insurance policies, as in effect
at the time you make a claim for indemnification.

 

Deduction; Withholding; Set-Off

Notwithstanding any other provision of this Agreement, any payments or benefits
hereunder will be subject to the withholding of such amounts, if any, relating
to tax and other payroll deductions as IGI reasonably determines it should
withhold pursuant to any applicable law or regulation. The amounts due and
payable under this Agreement will at all times be subject to the right of
set-off of IGI for any amounts or debts incurred and owed by you to IGI whether
during your employment or after the Termination Date.

 

Compliance with IRC Section 409A

Notwithstanding anything herein to the contrary, if at the time of your
separation from service with IGI you are a "specified employee" as defined in
Section 409A of the Internal Revenue Code of 1986, as amended (the "Code"), and
the deferral of the commencement of any payments or benefits otherwise payable
hereunder as a result of such separation from service is necessary in order to
prevent any accelerated or additional tax under Section 409A of the Code, then
IGI will defer the commencement of the payment of any such payments or benefits
hereunder (without any reduction in such payments or benefits ultimately paid or
provided to you) until the date that is six months and one day following your
separation from service with IGI (or the earliest date as is permitted under
Section 409A of the Code). IGI will consult with you in good faith regarding the
implementation of the provisions of this section; provided that neither IGI nor
any of its employees or representatives will have any liability to you with
respect thereto.

 

Review of Agreement and Release

You agree and represent that you have been advised of and fully understand your
right to discuss all aspects of this Agreement and the Release with counsel of
your choice. Your execution of this Agreement and Release establishes that, if
you wish the advice of counsel, you have done so by the date you signed the
Agreement and the Release, and that you were given at least 21 days to consider
whether or not to sign. You may sign this Agreement and the

<PAGE>

Release before the end of the 21-day period and you agree that if you decide to
shorten this time period for signing, your decision knew and voluntary. The
parties agree that a change, whether material or immaterial, does not restart
the running of the 21-day period. You will have 7 days from the date that you
sign this Agreement and the Release to revoke the Release and to change your
mind, in which case this Agreement and the Release will be ineffective and of no
legal force. If you so revoke the Agreement and the Release, then there will be
no obligation on the part of IGI to pay you any severance or provide you with
any other benefits and you agree to repay to IGI any such severance or other
benefits previously paid or provided to you.

 

Modifications/Severability

This Agreement constitutes the entire understanding of the parties on the
subjects covered, and supersedes any and all previous agreement on these
subjects. The parties agree that this Agreement will not be terminated or
modified except in writing signed by you and IGI. If any provision or portion of
this Agreement is held to be unenforceable for any reason, all other provisions
of this Agreement will remain in full force and effect and will be enforced
according to their terms.

 

Full Compliance

You acknowledge and agree that your receipt of severance and other benefits
under this Agreement is expressly contingent upon your full compliance with the
provisions of this Agreement to the extent applicable.

 

Successors

You and anyone who succeeds to your rights and responsibilities are bound by
this Agreement and the Release and this Agreement and the Release will accrue to
the benefit of and may be enforced by IGI and its successors and assigns.

 

References

As is our policy, IGI will only provide dates of employment and position title
to inquiring employers.

 

Governing Law

You agree that all questions concerning the intention, validity or meaning of
this Agreement and the Release will be construed and resolved according to the
laws of the State of Delaware.

 

Counterparts

This Agreement may be executed in one or more counterparts, each of which will
be deemed to be an original but all of which together will constitute one in the
same instrument. I believe the foregoing accurately reflects the terms of your
severance from IGI, and ask that you sign an extra copy of this letter to
confirm your agreement. You must return the signed Agreement to me by September
22, 2008 and the Release within three business days following your last day of
employment; provided, however, that the Release is not signed and returned prior
to your last day of employment, otherwise, I will assume that you reject this
offer and it will no longer be available to you.

 

[Signature Page Follows]

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Sincerely,

 

/s/ Rajiv Mathur

 

Rajiv Mathur

President and CEO

 

Agreed to:

 

/s/ Carlene Lloyd

Carlene Lloyd

<PAGE>

EXHIBIT A

 

This Release and Waiver of Claims ("Release") is entered into as of this day of
__________ __, 2008, by Carlene Lloyd (the "Executive"). The Executive agrees as
follows:

 

1. In consideration of the payments and benefits provided for in the Separation
Agreement, dated, September 16, 2008 (the "Separation Agreement"), the
sufficiency of which the Executive hereby acknowledges, the Executive, on behalf
of the Executive and the Executive's heirs, executors and assigns, hereby
releases and forever discharges IGI Laboratories, Inc. ("IGI") and its members,
parents, affiliates, subsidiaries, divisions, any and all current and former
directors, officers, employees, agents, and contractors and their heirs and
assigns, and any and all employee pension benefit or welfare benefit plans of
IGI, including current and former trustees and administrators of such employee
pension benefit and welfare benefit plans (the "Released Parties"), from all
claims, charges, or demands, in law or in equity, whether known or unknown,
which may have existed or which may now exist from the beginning of time to the
date of this Release, relating to any claims the Executive may have arising from
or relating to (i) Executive's employment or termination from employment with
IGI and (ii) Executive's investment in IGI, including a release of any rights or
claims the Executive may have under Title VII of the Civil Rights Act of 1964,
as amended, and the Civil Rights Act of 1991 (which prohibits discrimination in
employment based upon race, color, sex, religion, and national origin); the
Americans with Disabilities Act of 1990, as amended, and the Rehabilitation Act
of 1973 (which prohibits discrimination based upon disability); the Family and
Medical Leave Act of 1993 (which prohibits discrimination based on requesting or
taking a family or medical leave); Section 1981 of the Civil Rights Act of 1866
(which prohibits discrimination based upon race); Section 1985(3) of the Civil
Rights Act of 1871 (which prohibits conspiracies to discriminate); the Employee
Retirement Income Security Act of 1974, as amended (which prohibits
discrimination with regard to benefits); the Fair Labor Standards Act, as
amended, 29 U.S.C. Section 201 et. seq.; any other federal, state or local laws
against discrimination; or any other federal, state, or local statute, or common
law relating to employment, wages, hours, or any other terms and conditions of
employment. This includes a release by the Executive of any and all claims or
rights arising under contract, covenant, public policy, tort or otherwise.

 

2. The Executive acknowledges that the Executive is waiving and releasing any
rights that the Executive may have under the Age Discrimination in Employment
Act of 1967, as amended ("ADEA") and that this Release is knowing and voluntary.
The Executive and IGI agree that this Release does not apply to any rights or
claims that may arise under the ADEA after the effective date of this Release.
The Executive acknowledges that the consideration given for this Release is in
addition to anything of value to which the Executive is already entitled. The
Executive further acknowledges that the Executive has been advised by this
writing that: (i) the Executive should consult with an attorney prior to
executing this Release; (ii) the Executive has up to twenty-one (21) days within
which to consider this Release, although the Executive may, at the Executive's
discretion, sign and return this Release at an earlier time, provided, that the
Release is not signed and returned prior to the Executives last day of
employment; (iii) for a period of 7 days following the execution of this Release
in duplicate originals, the Executive may revoke this Release by providing a
written revocation to IGI, addressed to IGI's Chief Executive Officer, at IGI's
corporate headquarters located at 105 Lincoln Avenue, Buena, New Jersey, 08310,
and this Release shall not become effective or enforceable, and neither IGI nor
any other person is obligated to provide any benefits to the Executive until the
revocation period has expired; (iv) nothing in this Release prevents or
precludes the Executive from challenging or seeking a determination in good
faith of the validity of this Release under the ADEA, nor does it

<PAGE>

impose any condition precedent, penalties or costs for doing so, unless
specifically authorized by federal law and (v) nothing in this Release will
prevent the Executive from filing a claim with the Equal Employment Opportunity
Commission or participating in an investigation brought by the Equal Employment
Opportunity Commission; provided, however, that the Executive will not be
entitled to equitable, monetary or other relief from IGI as a result of such
claim. If Executive has not returned the signed Release within the time
permitted, then the offer of payments and benefits set forth in the Separation
Agreement will expire by its own terms at such time.

 

3. Except as otherwise set forth herein or in the Separation Agreement, this
Release does not release the Released Parties from (i) any obligations due to
the Executive under the Separation Agreement or under this Release or (ii) any
vested rights Executive has under IGI's employee pension benefit and welfare
benefit plans.

 

4. This Release is not an admission by the Released Parties of any wrongdoing,
liability or violation of law.

 

5. Each of the sections contained in this Release shall be enforceable
independently of every other section in this Release, and the invalidity or
unenforceability of any section shall not invalidate or render unenforceable any
other section contained in this Release.

 

6. The Executive acknowledges that the Executive has carefully read and
understands this Release, that the Executive has the right to consult an
attorney with respect to its provisions and that this Release has been entered
into voluntarily. The Executive acknowledges that no representation, statement,
promise, inducement, threat or suggestion has been made by any of the Released
Parties to influence the Executive to sign this Release except such statements
as are expressly set forth herein or in the Severance Agreement.

 

[Signature Page Follows]

<PAGE>

The Executive has executed this Release as of the day and year first written
above.

 

 

By:

         

Date:

___________________________