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Exhibit
10.15
A.P. PHARMA, INC.
MANAGEMENT RETENTION AGREEMENT
This
Management Retention Agreement (the “ Agreement
”) is dated as of November 8, 2007, by and between Dr.
John Barr (“ Employee ”) and A.P. Pharma,
Inc., a Delaware corporation (the “ Company
”). This Agreement is intended to provide
Employee with certain benefits described herein upon the
occurrence of specific events and supercedes an earlier Change
of Control Agreement dated March 23, 2005 between the Company
and Employee.
RECITALS
A. The
Company’s Board of Directors believes it is in the best
interests of the Company and its shareholders to retain
Employee and provide incentives to Employee to continue in
the service of the Company.
B. The
Board of Directors further believes that it is imperative to
provide Employee with certain benefits upon certain
termination of Employee’s employment in connection with
an Involuntary Termination or with a Change of Control, which
benefits are intended to provide Employee with financial
security and provide sufficient income and encouragement to
Employee to remain with the Company, notwithstanding the
possibility of a Change of Control.
D. To
accomplish the foregoing objectives, the Board of Directors
has directed the Company, upon execution of this Agreement by
Employee, to agree to the terms provided in this
Agreement.
It is therefore agreed as
follows
1.
At-Will Employment . The
Company and Employee acknowledge that Employee’s
employment is and shall continue to be at-will, as defined
under applicable law, and that Employee’s employment
with the Company may be terminated by either party at any time
for any or no reason. If Employee’s
employment terminates for any reason, Employee shall not be
entitled to any payments, benefits, damages, award or
compensation other than as provided in this Agreement or
otherwise agreed to by the Company. The terms of
this Agreement shall terminate upon the earliest
of: (i) the date on which Employee ceases to be
employed as a corporate officer of the Company, other than as
a result of an Involuntary Termination; (ii) the date
that all obligations of the parties hereunder have been
satisfied. A termination of the terms of this
Agreement pursuant to the preceding sentence shall be
effective for all purposes, except that such termination shall
not affect the payment or provision of compensation or
benefits on account of a termination of employment occurring
prior to the termination of the terms of this
Agreement. The rights and duties created by this
Section 1 are contingent upon the Employee’s release of
claims against the Company (at the time of termination in a
form reasonably satisfactory to the Company) and may not be
modified in any way except by a written agreement executed by
an officer of the Company upon direction from the Board of
Directors.
2.
Benefits
Upon Termination of
Employment.
(a)
Severance. In the event
that Employee suffers an Involuntary Termination at any
time Employee will be entitled to receive severance
benefits as follows: (i) severance payments during
the period from the date of Employee’s termination until
the date twelve months after the effective date of the
termination (the “ Severance Period ”)
equal to the base salary which Employee was receiving
immediately prior to the Involuntary Termination together with
(ii) the average bonus paid by the Company to the Employee for
services during each of the three 12- month periods prior to
Involuntary Termination date, which payments shall be paid
during the Severance Period in accordance with the
Company’s standard payroll practices; and (iii)
continuation of payment by the Company of its portion of the
health insurance benefits provided to Employee immediately
prior to the Involuntary Termination pursuant to the terms of
the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended (“ COBRA ”) or other applicable law
through the earlier of the end of the Severance Period or the
date upon which Employee is no longer eligible for such COBRA
or other benefits under applicable law.
(b)
Treatment of Stock Options Upon Involuntary
Termination . In the event that
Employee suffers an Involuntary Termination under
circumstances other than as covered in paragraph 2(c) below,
the Employee’s unvested Company stock options shall
continue to vest for the 12 month Severance Period following
the Involuntary Termination date in accordance with the
provisions of the option agreement and plan pursuant to which
such option was granted.
(c)
Treatment of Stock Options Upon a Change of
Control . In the event that Employee
suffers an Involuntary Termination in connection with or
within twelve months following the effective date of a Change
of Control, 100% of Employee’s unvested Company stock
options shall become immediately vested on such termination
date. Except for the accelerated vesting provided
by this paragraph 2(c), each such option shall be exercisable
in accordance with the provisions of the option agreement and
plan pursuant to which such option was granted.
(d)
Lapse of
Restrictions on Restricted Stock Upon Involuntary
Termination . In the event that
Employee suffers an Involuntary Termination under
circumstances other than in connection with or within twelve
months following the effective date of a Change of Control,
relinquishment of all forfeiture and transfer restrictions on
stock previously awarded to the Employee will continue, solely
for the duration of the twelve month Severance Period, in
accordance with the provisions of the restricted stock
agreement relating to such restricted stock.
(e)
Lapse of Restrictions on Restricted
Stock Upon a Change of
Control . Upon a Change of Control all
forfeiture and transfer restrictions on shares of restricted
stock previously awarded to Employee shall lapse in
their entirety.
(f)
Termination for Cause
. Notwithstanding any other provision of this
Agreement, if Employee’s employment is terminated for
Cause at any time, then Employee shall not be entitled to
receive payment of any severance benefits or any continuation
or acceleration of stock option vesting or relinquishment of
forfeiture and transfer restrictions on restricted stock
awards. Employee will receive payment(s) for all
salary, bonuses and unpaid vacation accrued as of the date of
Employee’s termination of employment.
(g)
Voluntary Resignation . If
Employee voluntarily resigns from the Company under
circumstances which do not constitute an Involuntary
Termination, then Employee shall not be entitled to receive
payment of any severance benefits, or option acceleration, or
relinquishment of forfeiture and transfer
restrictions. Employee will receive payment(s) for
all salary, bonuses and unpaid vacation accrued as of the date
of Employee’s termination of employment.
3.
Definition of Terms . The
following terms referred to in this Agreement shall have the
following meanings:
(a)
“Cause” means any of the
following: (i) Employee’s theft,
dishonesty, willful misconduct, breach of fiduciary duty for
personal profit, or falsification of any Company or Affiliate
documents or records; (ii) Employee’s
material failure to abide by a Company’s or
Affiliate’s code of conduct or other policies (including
without limitation, policies relating to confidentiality and
reasonable workplace conduct); (iii) Employee’s
unauthorized use, misappropriation, destruction or diversion
of any tangible or intangible asset or corporate opportunity
of the Company or an Affiliate (including, without
limitation, Employee’s improper use or
disclosure of confidential or proprietary information);
(iv) any intentional act by Employee which has
a material detrimental effect on the Company or an
Affiliate’s reputation or business; (v)
Employee’s repeated failure or inability to perform any
reasonable assigned duties after written notice from the
Company or an Affiliate (including, without
limitation, habitual absence from work for reasons other than
illness), and a reasonable opportunity to cure, such failure
or inability; (vi) any material breach
by Employee of any employment or service agreement
between Employee and the Company or an Affiliate,
which breach is not cured pursuant to the terms of such
agreement; or (vii) Employee’s conviction
(including any plea of guilty or nolo contendere) of any
criminal act involving fraud, dishonesty, misappropriation or
moral turpitude, or which impairs Employee’s
ability to perform his or her duties with the Company or an
Affiliate.
(b)
“Change in Control” means the
occurrence of any of the following:
(i) an
Ownership Change Event or a series of related Ownership Change
Events (collectively, a “ Transaction
”) in which the stockholders of the Company immediately
before the Transaction do not retain immediately after the
Transaction, in substantially the same proportions as their
ownership of shares of the Company’s voting stock
immediately before the Transaction, direct or indirect
beneficial ownership of more than fifty percent (50%) of the
total combined voting power of the outstanding voting
securities of the Company or such surviving entity immediately
outstanding after the Transaction, or, in the case of an
Ownership Change Event the entity to which the assets of the
Company were transferred (the “
Transferee ”), as the case may be;
or
(ii) the
liquidation or dissolution of the Company.
For
purposes of the preceding sentence, indirect beneficial
owner
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