EXHIBIT 10.11
AMENDED AND
RESTATED
RETENTION AND NON-COMPETITION
AGREEMENT
THIS RETENTION AND
NON-COMPETITION AGREEMENT (this “Agreement”), is entered into
by and between A.P. Pharma, Inc. (the “Company”), and
Michael P.J. O’Connell (“Executive”), effective
the 23rd day of March, 2005 (the “Effective Date”) in
full substitution for the Retention and Non-Competition Agreement
originally entered into between the parties effective May 12,
1999 and amended in its entirety effective August 1,
2000.
WHEREAS , the Company desires to retain the services of
Executive as set forth in this Agreement and Executive desires to
provide services to the Company, upon the terms and conditions set
forth herein; and
WHEREAS , the Company desires to ensure that Executive
does not compete with and is available to provide services to the
Company for the period of time set forth herein;
NOW, THEREFORE
, in consideration of the covenants
and agreements hereinafter set forth, the parties hereto agree as
follows:
1. Term of Agreement . This
Agreement shall commence on the Effective Date and shall end on
(i) December 31, 2006, and shall be automatically renewed
for additional one-year periods without any action required of
either party unless not later than four months prior to the end of
any calendar year either party gives to the other party notice in
writing that it intends to terminate the Agreement at the end of
the calendar year. The Company and Executive agree that this
Agreement shall govern the terms and conditions of
Executive’s provision of services to the Company during the
term of this Agreement.
2. Title and Responsibilities
. From and after the Effective Date until the commencement of any
Part-Time Employment Term (as defined in Section 6 of this
Agreement) (the “Full-Time Employment Period”), the
Company shall employ Executive as the President and Chief Executive
Officer of the Company reporting to the Board of Directors. As
President and Chief Executive Officer of the Company, Executive
shall have the duties and responsibilities customarily associated
with such position and as determined from time to time by the Board
of Directors of the Company. It is understood and agreed that
Executive will be considered an employee of the Company for tax
withholding purposes for the duration of both the Full-Time
Employment Period and the Part-Time Employment Term. Executive
acknowledges that as a Part-Time Employee he shall not have the
power to bind the Company.
3. Obligations . Executive
agrees, during the Full-Time Employment Period, not to actively
engage in any other employment, occupation or consulting activity
for any direct or indirect remuneration without the prior approval
of the Board; provided , however , that Executive may
serve in any capacity with any civic, educational, or charitable
organization.
4. Employee Benefits . During
the Full-Time Employment Period and Part-Time Employment Period,
Executive shall be eligible to participate in (i) all employee
benefit plans
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currently and hereafter maintained by the
Company for senior management according to their terms, and
(ii) such other employee benefits as are set forth in this
Agreement.
5. Full-Time Employment Period
Compensation .
(a) Base Salary . During the
Full-Time Employment Period, and during certain Part-Time
Employment Terms, as specified in Section 6 hereof, the
Company shall pay Executive as compensation for his services a base
salary at an initial annualized rate recommended by the
Compensation Committee of the Board and approved by the Board
(which rate shall in no event be less than Executive’s base
salary on the Effective Date as adjusted from time to time by the
Board or its Compensation Committee (the “Base
Salary”). The Base Salary shall be paid periodically in
accordance with normal Company payroll practices and subject to the
usual required withholding. Notwithstanding the foregoing, during
the Full-Time Employment Period, Executive’s Base Salary
shall be reviewed annually for possible adjustments in light of
Executive’s performance of his duties, as determined by the
Board or its Compensation Committee.
(b) Bonus . During the
Full-Time Employment Period and during Part-Time Employment Terms
as specified in Section 6 hereof, Executive shall be eligible
to receive bonuses as determined by the Board or its Compensation
Committee.
6. Termination of Employment;
Transition to Part-Time Employment .
(a) Part-Time Employment Term
Definition; Obligations . The periods of part-time employment
specified in this Section 6 shall be defined as the
“Part-Time Employment Term” for the purposes of this
Agreement. During any Part-Time Employment Term, Executive shall be
required to devote such time in rendering services to the Company
as shall be reasonably agreed upon and acceptable to the Executive
and the Company, but in any event, not less than ten hours per
month. During the Part-Time Employment Term, Executive shall be
free to serve as a director, employee, consultant or advisor to any
other corporation or other business enterprise without the prior
written consent of the Company so long as such activities do not
interfere with his duties and obligations under this Agreement,
including without limitation, Executive’s obligations under
Section 9 hereof. In consideration of Executive’s not
working for a “Drug Delivery Company” (as such term is
defined in Section 9) and being available to provide the
mutually agreed upon services required hereunder during the
Part-Time Employment Term, the Executive shall receive the
compensation specified in this Section 6.
(b) Termination of Full-Time
Employment for Cause . The Company may at any time terminate
Executive’s full-time employment hereunder for
“Cause.” For the purposes of this Agreement,
“Cause” shall mean (i) Executive’s gross
negligence or willful misconduct in connection with the performance
of his duties, (ii) Executive’s conviction of, or plea
of nolo contendere to, any felony in a court of competent
jurisdiction, or (iii) Executive’s embezzlement or
misappropriation of Company property.
(c) Termination of Full-Time
Employment by Company Other than for Cause . If the Company
desires to terminate Executive’s full-time employment with
the Company other
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than for Cause, then the Company shall provide
Executive with written notice of such termination. If the
Executive’s full-time employment is terminated by the Company
other than for Cause, then, subject to Executive entering into a
Release, the Executive shall remain employed by the Company as a
part-time employee for a period of 24 months from the date upon
which the Executive is given such written notice from the Company,
after which period Executive’s employment with the Company
shall terminate.
In connection with the Part-Time
Employment Term arising in connection with termination of
Executive’s full-time employment by Company other than for
Cause, Executive shall be paid (i) Base Salary, payable 50% at
time of commencement of Part-Time Employment and the balance in
accordance with the Company’s normal payroll practices and
(ii) an annual bonus for the 24-month period (prorated for any
partial year) equal to the bonus paid to Executive during the
immediately preceding 12-month period.
(d) Voluntary Termination of
Full-Time Employment by Executive for Good Reason . If
Executive desires to voluntarily terminate his full-time employment
with the Company for Good Reason, then Executive shall provide the
Company with written notice of his such termination. Subject to
Executive ente
