Exhibit 10.W
A.P. PHARMA, INC.
AMENDMENT NO. 1 TO MANAGEMENT
RETENTION AGREEMENT
This Amendment No. 1 (this
“ Amendment ”) to the Management Retention
Agreement dated as of November 8, 2007 (the “
Agreement ”) between A.P. Pharma, Inc., a Delaware
corporation (the “ Company ”), and Dr. John
Barr (the “ Employee ”) is entered into as of
December 23, 2008.
WHEREAS, the Company and the
Employee have agreed to amend the Agreement to clarify certain
existing provisions in light of final regulations issued under
Section 409A of the Internal Revenue Code of 1986, as
amended.
NOW, THEREFORE, the parties agree as
follows:
1. Section 4 of the Agreement
is hereby amended and restated as follows:
“(a) Parachute
Payments . In the event that the severance and other
benefits provided for in this Agreement to the
Employee: (i) constitute “parachute payments”
within the meaning of Section 280G of the Internal Revenue
Code of 1986, as amended (the “ Code ”); and
(ii) but for this Section, would be subject to the excise tax
imposed by Section 4999 of the Code, then the Employee’s
severance benefits under Sections 2(a) and 2(b) shall be payable
either:
(i) in full; or
(ii) as to such lesser amount
which would result in no portion of such severance benefits being
subject to excise tax under Section 4999 of the Code,
whichever of the foregoing amounts, taking into account the
applicable federal, state and local income taxes and the excise tax
imposed by Section 4999, results in the receipt by the
Employee on an after-tax basis, of the greatest amount of severance
benefits under Section 2(a) and 2(b), notwithstanding that all
or some portion of such severance benefits may be taxable under
Section 4999 of the Code. Any determination required
under this Section 4 shall be made in writing by independent
public accountants selected by the Company (the “
Accountants ”), whose determination shall be
conclusive and binding upon the Employee and the Company for all
purposes. For purposes of making the calculations required by
this Section 4, the Accountants may make reasonable
assumptions and approximations concerning applicable taxes and may
rely on reasonable, good faith interpretations concerning the
application of Section 280G and 4999 of the Code. The
Company and the Employee shall furnish to the Accountants such
information and documents as the Accountants may reasonably request
in order to make a determination under this Section. The
Company shall bear all costs the Accountants may reasonably incur
in connection with any calculations contemplated by this
Section 4. Any reduction in severance benefits required by
this Section 4 shall occur in a manner necessary to provide
the service provider
with the greatest economic benefit.
If more than one manner of reduction of severance benefits
necessary to arrive at the Reduced Amount yields the greatest
economic benefit to the service provider, the payments and benefits
shall be reduced pro rata.”
(b) Release Prior to
Receipt of Benefits . Prior to the receipt of any
benefits under this Agreement, Employee shall execute, and allow to
become effective, a release of claims agreement (the “
Release ”) not later than fifty (50) days
following Employee’s employment termination in the form
provided by the Company. Such Release shall specifically
relate to all of Employee’s rights and claims in existence at
the time of such execution and shall confirm Employee’s
obligations under the Company’s standard form of proprietary
information agr
