EXHIBIT 10.3
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is entered into as of the 1st day of July 1998 (the
"Effective Date") by and between Bentley Pharmaceuticals. Inc., a Florida
corporation, (the "Employer") and Michael D. Price (the "Employee"), as the same
may be modified, supplemented, amended or restated from time to time in the
manner provided herein.
RECITALS
The Employer desires to employ the Employee, and the Employee desires to be
employed by the Employer, all upon the terms and provisions and subject to the
conditions set forth in this Agreement.
WITNESSETH
NOW THEREFORE, in consideration of the foregoing premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree to be legally bound as follows:
1. Employment. The Employer hereby employs the Employee, and the Employee hereby
accepts such employment as the Vice President, Chief Financial Officer,
Secretary and Treasurer of the Employer upon the terms and subject to the
conditions set forth in this Agreement. The Employee shall, without any
compensation in addition to that which is specifically provided in this
Agreement, serve in such further offices or positions with Employer or any
subsidiary of Employer or (collectively, the "Employer Group") as shall from
time to time be reasonably requested by the Board of Directors of Employer. Each
office and position within the Employer Group in which Employee may serve or to
which he may be appointed shall be consistent in title and duties with
Employee's positions.
2. Term. Subject to the termination provisions hereinafter contained, the term
of employment under this Agreement shall be for an initial term of two and one
half years, commencing on the Effective Date and terminating on December 31,
2000. This Agreement and the Employee's employment hereunder shall thereafter be
automatically renewed for successive one (1) year terms, unless terminated as
hereinafter provided. The term of employment hereunder, and any extension
thereof pursuant to this paragraph, are referred to as the ("Term").
3. Compensation, Reimbursement, etc
(a) Base Salary. Effective July 1, 1998, the Employer shall pay to the Employee
as compensation for all services rendered by the Employee an annual base salary
of $160,000 plus annual bonuses as determined by the Compensation Committee of
the Board of Directors, subject to Sections 3(d) and 3(e). Beginning Jan. 1,
1999 the base salary will be adjusted to $168,000. Annual reviews of the
Employee will be on a calendar year basis thereafter.
(b) Expense Reimbursement. The Employer shall reimburse the Employee on a
semi-monthly basis for all reasonable expenses incurred by the Employee in the
performance of his duties under this Agreement; provided however, that the
Employee shall have previously furnished to the Employer an itemized account,
satisfactory to the Employer, in substantiation of such expenditures.
(c) Benefits. The Employee shall be entitled to health and other benefits on the
same terms and conditions as the Employer has made available to the Employee
during his initial employment contract dated 12 June 1995, i.e. participation in
the Employer's Health Plan. The Employer shall obtain a term life insurance and
disability policy for the Employee with a value equal to at least one year's
base salary payable to the estate of the Employee upon the Employee's death or
to the Employee in the event of disability as provided in Section 7(a) hereof.
(d) Bonuses. The Employee shall be eligible for a bonus on or prior to December
31, 1998, payable in common stock of the Employer in an amount to be determined
by the Compensation Committee. Thereafter, during the Term starting Jan. 1,
1999, the Employee shall be eligible for bonuses of up to 50% of annual salary
each year, payable in cash and/or common stock as determined by the Board of
Director's Compensation Committee. Such compensation will be awarded as soon as
practicable after March 15th. It is hereby understood between the Employer and
the Employee that upon (i). the attainment of the Employer's posting of its
second consecutive posting of quarterly net profit, or closing a year with a net
profit, or announcement of a merger into another company, or the sale or
transfer of all or substainially all of the pharmaceutical assets of the
Company, the Employee will be eligible for a cash bonus award, OR (ii). Upon a
Change in Control (as defined below), the Employee will be entitled to the
maximum cash bonus award. OTHERWISE, (iii). bonuses (payable in cash and/or
common stock of the Company) will be determined based upon, but not limited to,
his contribution to improvement in financial position of the Company, without
regard to budgeted research and development expenditures. Other consideration
will be given to raising of capital, as well as specific personal and corporate
goals established by the CEO and Board of Directors.
(e) Annual Review. The Employee shall be reviewed by the CEO who will give
recommendations to the compensation committee of the Board of Directors of the
Employer on an annual (calendar year) basis. The Employee will be eligible to
receive a minimum of 5% increase in base salary and issuance of stock options as
determined by the Board's Compensation Committee.
(f) Stock Option Plan. Beginning in April 1999, the Employee will be eligible
for periodic stock option grants under the 1991 Stock Option Plan (the "Plan")
as determined by the Board of Director's Compensation Committee.
4. Duties. The Employee is engaged as the Vice President, Chief Financial
Officer, Secretary and Treasurer of the Employer. In addition, the Employee
shall have such other
2
duties and hold such offices as may from time to time be reasonably assigned to
him by the Board of Directors of the Employer.
5. Extent of Services. During the Term of employment under this Agreement, the
Employee shall devote his full time, energy and attention to the benefit and
business of the Employer and its affiliates and shall not be employed by another
entity, except as a consultant to or as a director of a non-competitive company
or a company that could be of strategic interest to the Employer approved, by
the Employer's Board of Directors.
6. Vacation and Days Off. The Employee may take a maximum of four weeks of
vacation each calendar year, at times to be determined in a manner most
convenient to the business of the Employer. A maximum of one week unused
vacation may be carried over from one calendar year to the next or will be paid
to the Employee.
7. Termination Following Death or Incapacity.
(a) Death. All rights of the Employee under this Agreement shall terminate upon
death (other than rights accrued prior thereto). All Plan Options (as
defined below) shall vest in accordance with the Plan and be exercisable
for a period of time as set forth in the Plan. All Non-Plan Options (as
defined below) shall immediately vest and transfer to the Employee's estate
and be exercisable for a period of 5 years from the date of his death or
the period of time as set forth in the Non-Plan Option Contract, whichever
is greater. The Employer shall pay to the estate of the Employee any unpaid
salary and other benefits due as well as reimbursable expenses accrued and
owing to the Employee at the time of his death. The Employer agrees to
maintain life insurance on the Employee equivalent to one year's salary and
will be payable to the Employee's estate upon his death. The Employer shall
have no additional financial obligation under this Agreement to the
Employee or his estate beyond the term-life insurance benefit as discussed
above.
(b) Disability.
(i) During any period of disability, illness or incapacity during the term
of this Agreement which renders the Employee at least temporarily unable to
perform the services required under this Agreement, the Employee shall
receive throughout which time, his salary payable under Section 3 of this
Agreement, less any benefits received by him under any insurance carried by
or provided by the Employer; provided however, all rights of the Employee
under this Agreement (other than rights already accrued) shall terminate as
provided below upon the Employee's permanent disability (as defined below).
(ii) The term "permanent disability" as used in this Agreement shall mean
the inability of the Employee, as determined by the Board of Directors of
the Employer, by reason of physical or mental disability to perform the
duties required of him under this Agreement after a period of: (a) 120
consecutive days of such disability; or (b) disability for at least six
months during any twelve month period. Upon such determination, the Board
of Directors may terminate the Employee's employment under this Agreement
upon ten (10) days prior written notice. In the event of permanent
disability all Plan Options (as defined below) shall vest in accordance
with
3
the terms of the Plan and will be exercisable for a period of time as set
forth in the Plan. All Non-Plan Options (as defined below) shall
immediately vest and will be exercisable for a period of five years or the
period of time indicated in the option contract, whichever is greater.
(iii) If any determination of the Board of Directors with respect to
permanent disability is disputed by the Employee, the parties hereto agree
to abide by the decision of a panel of three physicians. The Employee and
Employer shall each appoint one member, and the third member of the panel
shall be appointed by the other two physicians. The Employee agrees to make
himself available for and to submit to reasonable examinations by such
physicians as may be directed by the Employer. Failure to submit to any
such exam shall constitute a material breach of this Agreement. In the
event such a panel is convened, the party whose position is not sustained
will bear all the associated costs.
8. Other Terminations.
(a) Without Cause.
(i) Either the Employee or the Employer may terminate this Agreement upon
written notice, sixty (60) days prior to the end of the initial term or any
one-year extension of this Agreement. (ii) If the Employee gives notice
pursuant to paragraph (i) above, the Employer shall have the right to
either (a) relieve the Employee, in whole or in part, of his duties under
this Agreement (without reduction in compensation) or (b) to accelerate the
date of termination to coincide with the date on which the written notice
is received (without reduction in compensation for the notice period).
(iii) Not withstanding any provisions hereof to the contrary, the Employer
may terminate this Agreement without cause at any time. If the Employer
terminates this Agreement pursuant to the provisions of this paragraph 8(a)
(iii), it shall pay to the Employee as a severance benefit, in cash, an
amount equal to the Employee's Annual Base Salary plus bonus, all Plan
Options (defined below) shall vest in accordance with the terms of the Plan
and shall be exercisable for a period of time as set forth in the Plan and
all Non-Plan Options (defined below) shall immediately vest and be
exercisable by the Employee for a period of five years or the period of
time indicated in the Non-Plan Option contract whichever is greater.
(b) For Cause.
(i) The Employer may terminate this Agreement without notice (a) upon the
Employee's breach of any material provision of this Agreement, or (b) for
other "good cause" (as defined below). (ii) The term "good cause" as used
in this Agreement shall include, but shall not be limited to: (a) conduct
disloyal to the employer; (b) conviction of any crime involving moral
turpitude; and (c) substantial dependence, as determined by the Board of
Directors of the employee, on any addictive substance, including but not
limited to
4
alcohol, amphetamines, barbiturates, methadone, cannabis, cocaine, PCP,
THC, LSD, or narcotic drug. Should the Employee dispute such a
determination, the parties hereto agree to abide by the decision of a panel
of three physicians as described in section 7 (b) (iii).
(c) Payment on Termination. If this Agreement is terminated pursuant to Section
8(b), the Employer shall pay to the Employee any unpaid salary and other
benefits and reimbursable expenses accrued and owing to the Employee. Such
payment shall be in full and complete discharge of any and all liabilities
or obligations of the Employer to the employee hereunder except as provided
in Section 9 hereof. The employee shall be entitled to no further benefits
under this Agreement other than extension of health benefits at the
Employee's expense and Plan Options (defined below) shall vest in
accordance with the terms of the Plan and shall be exercisable for a period
of time as set forth in the Plan and all Non-Plan Options (defined below)
awarded to the Employee shall immediately vest and be exercisable for a
period of 5 years or the period of time indicated in the option contract,
whichever is greater.
8. Termination of Employment Upon Change in Control.
(a) For purposes hereof, a "Change in Control" shall be deemed to have occurred
if: (i) there has occurred a "change in control" as such term is used in
Item 6(e) of Schedule 14A of Regulation 14A promulgated under the
Securities Exchange Act of 1934, as in effect as the date hereof
(hereinafter referred to as the "Act"); (ii) if there has occurred a Change
in Control as the term "Control" is defined in Rule 12b-2 promulgated under
the Act; (iii) when any "person" (such term is defined in Section3 (a) (9)
and 13 (d) (3) of the Act), during the term of this Agreement, becomes a
beneficial owner, directly or indirectly, of securities of the Employer
representing 20% or more of the Employer's then outstanding securities
having the right to vote on the election of directors; (iv) if the
stockholders of the Employer approve a plan of complete liquidation or
dissolution of the Employer or a merger or consolidation in which the
Employer is not the surviving corporation; (v) if there has occurred a
change in ownership of effective control of the Employer (within the
meaning of Section 280G (b) (2) (A) of the Internal Revenue Code of 1986,
as amended (the "Code"); or (vi) when the individuals who are members of
the Board of Directors of the Employer on the date hereof shall cease to
constitute at least a majority of the Board of Directors of the Employer,
provided, however, that any new director whose election to the Board of
Directors or nomination for election to the Board of Directors then still
in office, shall not be deemed to have replaced his or her predecessor.
(b) The Employee may terminate his employment at any time within 12 months
after a Change in Control and any of the following events has occurred: (i)
an assignment to the Employee of any duties inconsistent with the status of
the Employee's office and/or position with the Employer as constituted
immediately prior
5
to the Change in Control or a significant adverse change in the nature or
scope of the Employee's compensation or duties as constituted immediately
prior to the Change in Control, (ii) a failure by the Employer, after
having received written notice from the Employee specifying a material
breach of its obligations pursuant to this Agreement, to cure such breach
within 30 days after receipt of such notice.
An election by the Employee to terminate his employment following a Change in
Control shall not be deemed a voluntary termination of employment by the
Employee for the purpose of interpreting the provisions of this Agreement or any
of the Employer's Employee benefit plans and arrangements. The Employee's
continued employment with the Employer for any period of time during the Term of
this Agreement after a Change of Control shall not be considered a waiver of any
right he may have to terminate his employment to the extent permitted under this
Section 9 (b).
If the Employer terminates the Employee without cause pursuant to Section 8 (a)
hereof within 12 months after a Change in Control has occurred, such termination
shall be deemed an election by the Employee to terminate his employment pursuant
to this Section 9. In addition, in the event of such termination, the Employee
shall continue to have the obligation provided for in Sections 11 and 12 hereof.
(c). If the Employee's employment with the Employer is terminated under Section
9 (b) hereof,
(i) the Employee shall be paid in a lump sum, within 30 days after
termination of employment, in cash, severance pay in an amount equal to 2.9
times his Base Salary plus bonuses, or that amount of salary and bonuses
that would have been due to the Employee through the expiration of the Term
of this Agreement, whichever is the greater; Notwithstanding the foregoing,
if the majority of the Board of Directors approves a transaction which
results in a Change of Control, the amount paid to the Employee shall be
calculated using a multiplier of 2.0 rather than 2.9. (ii) the Employee
shall be issued a number of stock options to purchase shares of common
stock (the "Common Stock") of the Employer equal to the number of stock
options (vested or non-vested) held by the Employee immediately prior to
the effective date of any Change in Control; to the extent that a
sufficient number of shares of Common Stock are available under the Plan,
options to purchase such shares shall be issued under the Plan ("the Plan
Options"), and to the extent that there are an insufficient number of
shares available under the Plan, such number of options to purchase shares
shall be issued outside of the Plan (the "Non-Plan Options"); the exercise
price of the shares underlying the Plan Options shall equal the fair market
value of the Employer's Common Stock on the date of the Employee's
termination and the exercise price of the shares underlying the Non-Plan
Options shall equal the closing bid price of the Employer's Common Stock on
the Effective Date of this Agreement; and (iii) all stock options held by
the Employee immediately prior to the effective date of the Change in
Control and those Plan Options granted pursuant to Section 9 (c) (ii)
6
shall immediately vest and become fully exercisable for a period of time
indicated in the option contract, and all Non-Plan Options granted pursuant
to Section 9 (c)(ii) shall immediately vest and become fully exercisable
for a period of 5 years or the period of time indicated in the option
contract, whichever is greater; however, at the option of the Employee, if
the Employee is to receive options pursuant to this section, all Plan
Options may be terminated and may be replaced with Non-Plan Options and
(iv) benefits, as provided in Section 3 (c), shall continue until the end
of the Term as if the Employee continued to remain in employment through
the end of the Term of this Agreement.
The lump sum severance payment described in this Section 9 (c) (i)-(iv) is
hereinafter referred to as the "Termination Compensation". The amount of the
Termination Compensation shall be determined, at the expense of the Employer, by
its regular outside certified public accountant organization. Upon payment of
the Termination Compensation and any other accrued compensation, this Agreement
shall terminate (except for the Employee's obligations pursuant to Sections 10,
11, 12, 13 and 14 hereof) and be of no further force or effect.
(d) After a Change in Control has occurred, the Employer shall honor the
Employee's exercise of the Employee's outstanding stock options and any other
stock related rights, in accordance with this Employment Agreement. After a
Change in Control has occurred and the Employee's employment is terminated as a
result thereof, the Employee (or his designated beneficiary or personal
representative(s) shall also receive, except to the extent already paid pursuant
to Section 9 (c) (i) hereof or otherwise, the sums the Employee would otherwise
have received (whether under this Agreement, by law or otherwise) by reason of
termination of employment as if a Change of Control had not occurred.
(e) Notwithstanding anything in this Agreement to the contrary, the Employee
shall have the right, prior to the receipt by him of any amounts due hereunder,
to treat some or all of such amounts as a loan from the Employer which the
Employee shall repay to the Employer, within 90 days from the date of receipt,
with interest at the rate provided in Section 7872 of the Code. The repayment of
the loan balance will be with the deferred severance which will then be supplied
by the Employer. Notice of any such waiver or treatment of amounts received as a
loan shall be given by the Employee to the Employer in writing and shall be
binding upon the Employer.
(f) The Employee shall not be required to mitigate the payment of the
Termination Compensation or other benefits or payments by seeking other
employment. To the extent that the Employee shall, after the Term of this
Agreement, receive compensation from any other employment, the payment of
Termination Compensation or other benefits or payments shall not be adjusted.
8. Disclosure, Proprietary Rights.
The Employee agrees that during the Term of his employment by the Employer, he
will disclose only to the Employer all ideas, methods, plans, formulas,
processes, trade
7
secrets, developments, or improvements known by him which relate directly or
indirectly to the business of the Employer, including any lines of business,
acquired by the Employee during his employment by the Employer; provided, that
nothing in this Section 10 shall be construed as requiring any such
communication where the idea, plan, method or development is lawfully protected
from disclosure, including but not limited to trade secrets of third parties.
For purposes of the Agreement, the term "the business of the Employer" shall
include, without limitation, the following: the design, development, obtaining
regulatory approval, production, manufacturing, marketing, and licensing of
prescription and non-prescription drugs, medical devices, and methods for the
diagnosis, evaluation, treatment or correction of any disease, injury, illness
or other medical or health condition and such other lines of business as the
Employer shall engage in during the Term hereof. The parties further agree that
any inventions, formulas, trade secrets, ideas, or secret processes which shall
arise form any disclosure made by the Employee pursuant to this paragraph,
whether or not patentable, shall be and remain the sole property of the
Employer.
11. Confidentiality.
The Employee agrees to keep in strict secrecy and confidence any and all
information the Employee assimilates or to which he has access during his
employment by the Employer and which has not been publicly disclosed and is not
a matter of common knowledge in the fields of work of the Employer. The Employee
agrees that both during and after the Term of his employment by the Employer, he
will not, without prior written consent of the employer, disclose any such
confidential information to any third person, partnership, joint venture,
company, corporation, or other organization.
12. Non-Competition
Through the Term of this Agreement and for a period of one year thereafter, if
the Employee is terminated for good cause the Employee covenants that he will
not engage, directly or indirectly, alone or in conjunction with others, as an
agent, employee, investor, director, shareholder or partner in any business
which provides products, information and/or services to the public which are
competitive with those provided by the Employer Group; provided, however, that
the ownership by the Employee of 5% or less of the issued and outstanding shares
of any class of securities which is traded on a national securities exchange or,
in the over the counter market shall not constitute a breach of the provisions
of this section. Through the Term of this Agreement and for a period of one year
thereafter, the Employee will not on his own behalf or on behalf of any other
business enterprise, directly or indirectly, solicit or induce any creditor,
customer, client, supplier, officer, employee or agent of the Employer Group to
sever his/her or its relationship with or leave the employ of the Employer
Group.
13. Conflict of Interest
8
(a) Conflict of Interest. The employee shall devote his full time, energy and
attention to the benefit and business of the employer and its affiliates and
shall not be employed by another entity, except as permitted in Section 5. (b)
Essential Element. It is understood by and between the parties hereto that the
foregoing restrictive covenants set forth in Sections 10, 11, 12, and 13(a) and
14 are essential elements of this Agreement, and that but for the Agreement of
the Employee to comply with such covenants, the Employer would not have entered
into this Agreement. Notwithstanding anything to the contrary in this Agreement,
the terms and provisions of Sections 11, and 12, 13(a) and 14 of this Agreement,
together with any definitions used in such terms and provisions, shall survive
the termination or expiration of this Agreement. The existence of any claim or
cause of action of the Employee against the Employer, whether predicated on this
Agreement or otherwise, shall not constitute a defense to the enforcement by the
Employer of such covenants.
14. Specific Performance.
The Employee agrees that damages at law will be insufficient remedy to the
Employer if the employee violates the terms of Sections 10, 11, or 12 or 13 of
this Agreement and that the Employer shall be entitled, upon application to a
court of competent jurisdiction, to obtain injunctive relief to enforce the
provisions of such Sections, which injunctive or other equitable relief shall be
in addition to any other rights or remedies available to the Employer, and the
Employee agrees that he will not raise and hereby waives any objection or
defense that there is an adequate remedy at law.
15. Compliance with Other Agreements.
The Employee represents and warrants that the execution of this Agreement by him
and his performance of his obligation hereunder will not conflict with, result
in the breach of any provision of, terminate, or constitute a default under any
agreement to which the Employee is or may be bound.
16. Waiver of Breach.
The waiver by the Employer of a breach of any of the provisions of this
Agreement by the Employee shall not be construed as a waiver of any subsequent
breach by the Employee.
17. D&O Insurance; Indemnification.
The Employer hereby agrees to maintain in full force and effect for the duration
of this Agreement, Director's and Officer's Liability Insurance of at least
$2,000,000 and to indemnify and hold harmless to the full extent permitted by
law, the Employee for acts performed by him in carrying out his duties and
responsibilities in accordance with this Agreement.
9
18. Binding Effect, Assignment.
The rights and obligations of the Employer under this Agreement shall inure to
the benefit of and shall be binding upon the successors and assigns of the
Employer. This Agreement is a personal employment contract and the rights,
obligations and interests of the Employee hereunder may not be sold or assigned
or hypothecated.
19. Successors and Assigns; Assignment.
Whenever in this Agreement reference is made to any party, such reference shall
be deemed to include the successors, assigns, heirs, and legal representatives
of such party, and without limiting the generality of the foregoing, all
representations, warranties, covenants and other agreements made by or on behalf
of the Employee in this Agreement shall inure to the benefit of the successors
and assigns of the Employer; provided, however, that nothing herein shall be
deemed to authorize or permit the Employee to assign any of his rights or
obligations under this Agreement to any other person (whether or not a family
member or other affiliate or the Employee other than stated in section 7 of this
Agreement), and the Employee covenants and agrees that he shall not make any
such assignments.
20. Modification, Amendment, Etc.
Each and every modification and amendment of this Agreement shall be in writing
and signed by all of the parties hereto, and each and every waiver of, or
consent to any departure from, any representation, warranty, covenant or other
term or provision of this Agreement shall be in writing and signed by each
affected party hereto.
21. Notice.
Any notice required or permitted to be given under this Agreement shall be
sufficient if in writing and if sent by certified or registered mail, first
class, return receipt requested, to the parties at the following addresses:
Employer: Bentley Pharmaceuticals, Inc Employee: Michael D. Price
Two Urban Centre, Suite 400 11114 Carrollwood Dr.
4890 W, Kennedy Blvd. Tampa, FL 33618
Tampa, FL 33609
22. Severability.
It is agreed by the Employer and Employee that if any portion of the covenants
set forth in this Agreement are held to be unreasonable, arbitrary or against
public policy, then that portion of such covenants shall be considered divisible
both as to time and geographical area. The Employer and Employee agree that if
any court of competent jurisdiction determines the specific time period or the
specified geographical area applicable to this
10
Agreement to be unreasonable , arbitrary or against public policy, then a lesser
time period or geographical are which is determined to be reasonable,
non-arbitrary and not against public policy may be enforced against the
Employee. The Employer and Employee agree that the foregoing covenants are
appropriate and reasonable when considered in light of the nature and extent of
the business conducted by the Employer.
23. Entire Agreement. This Agreement contains the entire agreement between the
Employer and the Employee and superseded all prior agreement and understandings,
oral or written, with respect to the subject matter hereof. It is expressly
agreed that the terms of this Employment Agreement govern any prior stock option
grants to the Employee.
24. Headings. The headings contained in this agreement are for reference
purposes only and shall not affect the meaning or interpretation of the
Agreement.
25. Governing Law. This Agreement shall be construed and enforced in accordance
with the laws of the State of Florida.
26. Counterparts. This Agreement may be executed in two counterparts copies of
the entire document or of signature pages to the document, each of which may be
executed by one or more of the parties hereto, but all of which when taken
together, shall constitute a single agreement binding upon all of the parties
hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first written.
Employer: Employee:
Bentley Pharmaceuticals, Inc. Michael D. Price
---------------------------------
By: ________________________ By: /s/ Michael D. Price
Compensation Committee Chairman, President and CEO
Bentley Pharmaceuticals, Inc.
Board of Directors By: ________________________
11