SCHEDULE 14A
(Rule 14a-101)
Information Required in Proxy Statement
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
[X] Definitive Proxy Statement Commission Only (as permitted
[ ] Definitive Additional Materials by Rule 14a-6(e)(2))
[ ] Soliciting Material Pursuant
to Rule 14a-11(c) or Rule 14a-12
Bentley Pharmaceuticals, Inc.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement,
if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
BENTLEY PHARMACEUTICALS, INC.
TWO URBAN CENTRE
SUITE 400
4890 WEST KENNEDY BLVD.
TAMPA, FLORIDA 33609
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JUNE 30, 1999
Tampa, Florida
May 12, 1999
To the Stockholders of
Bentley Pharmaceuticals, Inc.
NOTICE IS HEREBY GIVEN that the 1999 Annual Meeting (the "Meeting") of
Stockholders of BENTLEY PHARMACEUTICALS, INC., a Florida corporation (the
"Company"), will be held on Wednesday, June 30, 1999 at 11:00 a.m., local time
at the Company's New Hampshire offices located at 65 Lafayette Road, North
Hampton, New Hampshire 03862 for the purpose of considering and acting upon the
following matters:
(1) The election of one Class I Director to serve until the 2000
Annual Meeting of Stockholders, one Class II Director to serve
until the 2001 Annual Meeting of Stockholders and three Class
III Directors to serve until the 2002 Annual Meeting of
Stockholders, or until the election and qualification of their
respective successors;
(2) A proposal to change the Company's state of incorporation from
Florida to Delaware and adopt a Certificate of Incorporation
and Bylaws which conform to Delaware law and adopt various
"anti-takeover" provisions;
(3) A proposal to amend the Company's 1991 Stock Option Plan (the
"1991 Plan") to increase the number of shares of Common Stock
for which options may be granted under the 1991 Plan from
500,000 to 1,000,000; and
(4) The transaction of such other business as may properly be
brought before the meeting or any adjournment or postponement
thereof.
The Board of Directors has fixed the close of business on May
5, 1999 as the record date for the determination of stockholders entitled to
notice of, and to vote at, the Meeting.
You are cordially invited to attend the Meeting. Whether or
not you intend to attend the Meeting, you are urged to complete, sign and date
the enclosed form of proxy, and return it promptly in the enclosed reply
envelope. No postage is required if mailed in the United States. Returning your
proxy does not deprive you of your right to attend the Meeting and to vote your
shares in person. THIS SOLICITATION IS BEING MADE ON BEHALF OF THE COMPANY'S
BOARD OF DIRECTORS.
By Order of the Board of Directors
MICHAEL D. PRICE
SECRETARY
BENTLEY PHARMACEUTICALS, INC.
TWO URBAN CENTRE
SUITE 400
4890 WEST KENNEDY BLVD.
TAMPA, FLORIDA 33609
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
JUNE 30, 1999
This Proxy Statement, to be mailed to stockholders on or about May 19,
1999, is furnished in connection with the solicitation by the Board of Directors
of Bentley Pharmaceuticals, Inc., a Florida corporation (the "Company"), of
proxies in the accompanying form ("Proxy" or "Proxies") for use at the 1999
Annual Meeting of Stockholders of the Company to be held on June 30, 1999 at
11:00 a.m., local time at the Company's New Hampshire offices located at 65
Lafayette Road, North Hampton, New Hampshire 03862 and at any adjournments or
postponements thereof (the "Meeting").
All Proxies received will be voted in accordance with the
specifications made thereon or, in the absence of any specification, for the
election of all of the nominees named herein to serve as Directors, for the
proposal to change the Company's state of incorporation from Florida to Delaware
and adopt a Certificate of Incorporation and Bylaws which conform to Delaware
law and adopt various "anti-takeover" provisions and for the proposal to amend
the Company's 1991 Plan to increase the number of shares for which options may
be granted. Any Proxy given pursuant to this solicitation may be revoked by the
person giving it any time prior to the exercise of the powers conferred thereby
by notice in writing to Michael D. Price, Secretary of the Company, 65 Lafayette
Road, North Hampton, New Hampshire 03862, by execution and delivery of a
subsequent Proxy or by attendance and voting in person at the Meeting, except as
to any matter or matters upon which, prior to such revocation, a vote shall have
been cast pursuant to the authority conferred by such Proxy.
Only holders of record of the Company's issued and outstanding Common
Stock, $.02 par value (the "Common Stock"), as of the close of business on May
5, 1999 (the "Record Date") will be entitled to notice of, and to vote at, the
Meeting. As of the Record Date, there were issued and outstanding 8,443,192
shares of the Company's Common Stock, each of which is entitled to one vote upon
each matter at the Meeting. The holders of a majority of the shares entitled to
vote at the Meeting will constitute a quorum for the transaction of business.
Proxies submitted which contain abstentions or broker non-votes will be deemed
present at the Meeting in determining the presence of a quorum. A plurality of
the votes cast at the Meeting at which a quorum is present will be required for
the election of Directors and the affirmative vote of the holders of a majority
of the votes cast at the Meeting at which a quorum is present will be required
to approve the amendment to the Company's 1991 Plan. The affirmative vote of the
holders of a majority of the issued and outstanding shares of the Company's
Common Stock will be required to approve the proposed change of the Company's
state of incorporation from Florida to Delaware and the adoption of a
Certificate of Incorporation and Bylaws which conform to Delaware law and adopt
various "anti-takeover" provisions. For purposes of the proposals to elect
Directors and approve the amendment to the Company's 1991 Plan, shares of Common
Stock that are voted to abstain and shares which are subject to broker non-votes
will not be considered cast with respect to such proposals. For purposes of the
proposal to change the Company's state of incorporation from Florida to Delaware
and adopt a Certificate of Incorporation and Bylaws which conform to Delaware
law and adopt various "anti-takeover" provisions, shares of Common Stock that
are voted to abstain and shares which are subject to broker non-votes will be
treated as votes against such proposals.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information as of May 5, 1999 as to (i)
each person (including any "group" as that term is used in Section 13(d)(3) of
the Securities Exchange Act of 1934, as amended) who is known to the Company to
be the beneficial owner of more than five percent of the Company's Common Stock,
its only class of voting securities, and (ii) the shares of the Company's Common
Stock beneficially owned by all executive officers and directors of the Company
as a group.
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP (1) OF CLASS
------------------------------------ ------------- --------
Michael McGovern, J.D., C.P.A. 2,560,900(2) 26.21%
5910 Long Island Drive
Atlanta, GA 30328
Renaissance U.S. Growth and Income Trust PLC 984,000(3) 11.28%
8080 North Central Expressway
Suite 210, LB59
Dallas, TX 75206-1857
Renaissance Capital Growth and Income Fund III, Inc. 800,000(4) 9.13%
8080 North Central Expressway
Suite 210, LB59
Dallas, TX 75206-1857
Light Associates, Inc. 550,594(5) 6.26%
1031 Rosewood Way
Alameda, CA 94501
All executive officers and 3,465,659(6) 32.63%
directors as a group (6 persons)
(1) Except as otherwise indicated, all shares of Common Stock are
beneficially owned, and sole investment and voting power is held, by
the persons named.
(2) Based solely upon information contained in Amendment No. 5 to Schedule
13D dated April 13, 1999 and Form 4 for April 1999. Includes 1,313,500
shares of Common Stock which Mr. McGovern has the right to acquire
pursuant to presently exercisable warrants and 15,000 shares of Common
Stock which Mr. McGovern has the right to acquire pursuant to
presently exercisable stock purchase options.
(3) Based solely upon information contained in Amendment No. 1 to Schedule
13G, dated April 20, 1999. Includes 284,000 shares of Common Stock
which Renaissance U.S. Growth and Income Trust PLC has the right to
acquire upon the conversion of the Company's 12% Convertible Senior
Subordinated Debentures.
(4) Based solely upon information contained in Amendment No. 2 to Schedule
13G, dated April 20, 1999. Includes 320,000 shares of Common Stock
which Renaissance Capital Growth and Income Fund III, Inc. has the
right to acquire upon the conversion of the Company's 12% Convertible
Senior Subordinated Debentures.
(Footnote explanations continue on following page)
-2-
(5) Based solely upon information contained in Amendment No. 8 to Schedule
13D, dated December 26, 1997. Includes 350,000 shares which Light
Associates, Inc. has the right to acquire pursuant to presently
exercisable warrants.
(6) Includes 692,999 shares of Common Stock which certain of the current
Executive Officers and Directors have a right to acquire pursuant to
presently exercisable stock options, 1,328,000 shares of Common Stock
which certain of the executive officers and directors have a right to
acquire pursuant to presently exercisable warrants, 8,000 shares of
Common Stock which certain of the executive officers and directors
have a right to acquire upon the conversion of the Company's 12%
Convertible Senior Subordinated Debentures (which warrants and
debentures were purchased in the Company's 1996 public offering of
such securities) and 150,000 shares of Common Stock which are issuable
to certain of the executive officers and directors upon approval of
listing of such shares with the American Stock Exchange.
-3-
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth information regarding beneficial
ownership of the Company's Common Stock as of May 5, 1999 as to (i) each
Director and nominee for Director of the Company, (ii) each Executive Officer of
the Company named in the Summary Compensation Table set forth below, and (iii)
all current executive officers and directors as a group.
AMOUNT AND NATURE OF PERCENT
NAME BENEFICIAL OWNERSHIP (1) OF CLASS
- ---- -------------------- --------
James R. Murphy 356,487(2) 4.06%
Chairman of the Board, President,
Chief Executive Officer and Director
Robert M. Stote, M.D. 282,866(3) 3.25%
Senior Vice President, Chief
Science Officer and Director
Michael D. Price 187,636(4) 2.18%
Vice President, Chief
Financial Officer, Secretary,
Treasurer and Director
Charles L. Bolling 24,800(5) *
Director
Robert J. Gyurik 52,970(6) *
Vice President of Pharmaceutical
Development and Director
Michael McGovern, J.D., C.P.A. 2,560,900(7) 26.21%
Director
Russell Cleveland 1,784,000(8) 19.72%
Nominee for Director
Miguel Fernandez 0 *
Nominee for Director
William A. Packer 0 *
Nominee for Director
All executive officers
and directors as a group (6 persons) 3,465,659(9) 32.63%
- ---------------------------------
* Less than one percent
(1) Except as otherwise indicated, all shares are beneficially owned, and
sole investment and voting power is held, by the persons named.
(Footnote explanations continue on following page)
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(2) Includes 1,000 shares of Common Stock owned by Mr. Murphy's son as to
which Mr. Murphy disclaims beneficial ownership. Also, includes 253,000
shares of Common Stock which Mr. Murphy has the right to acquire
pursuant to presently exercisable stock options, 1,500 shares of Common
Stock which Mr. Murphy has the right to acquire pursuant to presently
exercisable stock purchase Class B warrants (the "Class B Warrants"),
1,200 shares of Common Stock which Mr. Murphy has a right to acquire
upon the conversion of 12% Convertible Senior Subordinated Debentures
(the "Debentures") (which Class B Warrants and Debentures were
purchased in the Company's 1996 public offering of such securities),
and 80,000 shares of Common Stock which are issuable to Mr. Murphy upon
approval of listing of such shares with the American Stock Exchange.
(3) Includes 239,166 shares of Common Stock which Dr. Stote has the right
to acquire pursuant to presently exercisable stock options, 10,000
shares of Common Stock which Dr. Stote has the right to acquire
pursuant to presently exercisable stock purchase Class A warrants (the
"Class A Warrants"), 4,000 shares of Common Stock which Dr. Stote has a
right to acquire upon conversion of the Debentures (which Class A
Warrants and Debentures were purchased in the Company's 1996 public
offering of such securities), and 15,000 shares of Common Stock which
are issuable to Dr. Stote upon approval of listing of such shares with
the American Stock Exchange.
(4) Includes 101 shares of Common Stock owned by Mr. Price's son as to
which Mr. Price disclaims beneficial ownership. Also includes 165,833
shares of Common Stock which Mr. Price has the right to acquire
pursuant to presently exercisable stock options, 1,000 shares of Common
Stock which Mr. Price has the right to acquire pursuant to exercise of
the Class A Warrants, 400 shares of Common Stock which Mr. Price has a
right to acquire upon conversion of the Debentures (which Class A
Warrants and Debentures were purchased in the Company's 1996 public
offering of such securities), and 15,000 shares of Common Stock which
are issuable to Mr. Price upon approval of listing of such shares with
the American Stock Exchange.
(5) Includes 18,000 shares of Common Stock which Mr. Bolling has the right
to acquire pursuant to presently exercisable stock options.
(6) Includes 2,250 shares of Common Stock and 800 shares of Common Stock
which are issuable upon conversion of the Debentures owned by Mr.
Gyurik's IRA as to which Mr. Gyurik disclaims beneficial ownership.
Also includes 2,000 shares of Common Stock which Mr. Gyurik has the
right to acquire pursuant to presently exercisable stock options, 2,000
shares of Common Stock which Mr. Gyurik has the right to acquire
pursuant to exercise of the Class A Warrants, 1,600 shares of Common
Stock which Mr. Gyurik has the right to acquire upon conversion of the
Debentures, and 40,000 shares of Common Stock which are issuable to Mr.
Gyurik upon approval of listing of such shares with the American Stock
Exchange.
(7) Includes 1,313,500 shares of Common Stock which Mr. McGovern has the
right to acquire pursuant to exercise of the Class B Warrants and
15,000 shares of Common Stock which Mr. McGovern has the right to
acquire pursuant to presently exercisable stock options.
(8) Includes 700,000 shares of Common Stock and 284,000 shares of Common
Stock issuable upon conversion of the Debentures held by or issuable to
Renaissance U.S. Growth and Income Trust PLC, of which Mr. Cleveland
serves as President and Director, and 480,000 shares of Common Stock
and 320,000 shares of Common Stock issuable upon conversion of the
Debentures held by or issuable to Renaissance Capital Growth and Income
Fund III, Inc., of which Mr. Cleveland serves as President and CEO, as
to all of which shares Mr. Cleveland disclaims beneficial ownership.
(9) Includes 692,999 shares of Common Stock which certain of the executive
officers and directors have a right to acquire pursuant to presently
exercisable stock options, 13,000 shares of Common Stock which certain
of the executive officers and directors have a right to acquire
pursuant to exercise of the Class A Warrants, 1,315,000 shares of
Common Stock which certain of the executive officers and directors have
a right to acquire pursuant to exercise of the Class B Warrants, 8,000
shares of Common Stock which certain of the executive officers and
directors have a right to acquire upon the conversion of the
Debentures, and 150,000 shares of Common Stock which are issuable to
certain executive officers upon approval of listing of such shares with
the American Stock Exchange.
-5-
PROPOSAL 1
ELECTION OF DIRECTORS
The Company's Articles of Incorporation and By-Laws provide for a
classified Board of Directors. The Board is divided into three classes
designated Class I, Class II and Class III. The nominee included in Class I
below is being presented for election as a director to hold office until the
2000 Annual Meeting of Stockholders. The nominee included in Class II below is
being presented for election as a director to hold office until the 2001 Annual
Meeting of Stockholders. The nominees included in Class III below are being
presented for election as Class III Directors to hold office until the 2002
Annual Meeting of Stockholders. Unless instructed to the contrary, the persons
named in the enclosed Proxy intend to cast all votes pursuant to Proxies
received in favor of the person listed under the heading "Nominees" below as
Directors. The nominees have indicated to the Company their availability for
election; Messrs. Murphy and Stote are presently directors. In the event that
the nominees should not continue to be available for election, the holders of
the Proxies may exercise their discretion to vote for a substitute. Officers
hold office until the meeting of the Board of Directors following each Annual
Meeting of Stockholders and until their successors have been chosen and
qualified.
The following information is furnished with respect to the nominees
and each other continuing member of the Company's Board of Directors.
CLASS OF YEAR
POSITIONS WITH DIRECTOR FIRST
THE COMPANY (UPON BECAME
NAME AGE PRESENTLY HELD ELECTION) DIRECTOR
- ---- --- -------------- ----------- --------
NOMINEES:
Russell Cleveland 60 None I N/A
William A. Packer 64 None II N/A
Miguel Fernandez 68 None III N/A
James R. Murphy 49 Chairman of the Board, President, III 1993
Chief Executive Officer and Director
Robert M. Stote, M.D. 59 Senior Vice President, Chief III 1993
Science Officer and Director
DIRECTORS WHOSE TERMS OF OFFICE
CONTINUE AFTER THE MEETING:
Charles L. Bolling 75 Director II 1991
Robert J. Gyurik 52 Vice President of Pharmaceutical II 1998
Development and Director
Michael McGovern 55 Director I 1997
Michael D. Price 41 Vice President, Chief Financial I 1995
Officer, Secretary, Treasurer
and Director
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BACKGROUND OF NOMINEES
RUSSELL CLEVELAND is the principal founder and the majority stockholder
of Renaissance Capital Group, Inc. ("Renaissance"). Renaissance provides capital
to emerging publicly-owned companies. For more than the past five years, Mr.
Cleveland has served as President and Managing General Partner of Renaissance
Capital Partners, Ltd., President and Director of Renaissance Capital Growth &
Income Fund III, Inc., and a Director of Renaissance U.S. Growth and Income
Trust PLC. Mr. Cleveland's background includes executive positions with various
major southwest regional brokerage firms. Mr. Cleveland also currently serves as
a director of Danzer Corp. (formerly Global Environmental Corp.),
Biopharmaceutics, Inc., Turogen Medical, Inc. and Technology Research, Inc. Mr.
Cleveland is a Chartered Financial Analyst and a graduate of the University of
Pennsylvania, Wharton School of Finance and Commerce.
WILLIAM A. PACKER has been a business and industry consultant to a
number of biopharmaceutical companies since 1998. From 1992 until 1998, Mr.
Packer was President and Chief Financial Officer of Virus Research Institute,
Inc., a publicly-owned biotechnology company. Prior to this, Mr. Parker was
employed by SmithKline Beecham Plc ("SmithKline"), a major pharmaceutical
company, where he held various senior management positions, the most recent as
Senior Vice President, Biologicals, in which position he was responsible for the
direction of SmithKline's global vaccine business. Mr. Packer is a Chartered
Accountant.
MIGUEL FERNANDEZ has been retired since 1996. Mr. Fernandez served from
1980 to 1996 as President of the International Division and Corporate Vice
President at Carter-Wallace, Inc., where he was responsible for all product
lines outside of the United States. Prior thereto, Mr. Fernandez was employed
for approximately eight years by SmithKline Beecham, where his last position was
Vice President for Europe, where he was based. He also served in the capacity of
Vice President for Latin America. Before SmithKline Beecham, Mr. Fernandez
served as Managing Director of Warner Lambert in Argentina for two years. From
1962 to 1970, Mr. Fernandez was employed by Merck/Frost in Canada. Mr. Fernandez
received a Bachelors of Commerce degree from the University of British Columbia
and an MBA from the Ivey School of Business at the University of Western in
Ontario, Canada.
JAMES R. MURPHY became President and Chief Operating Officer of the
Company on September 7, 1994, was named Chief Executive Officer effective
January 1, 1995 and became Chairman of the Board on June 9, 1995. Prior to
rejoining the Company, Mr. Murphy served as Vice President of Business
Development at MacroChem Corporation, a publicly-owned pharmaceutical company,
from March 1993 through September 1994. From September 1992 until March 1993,
Mr. Murphy served as a consultant to the pharmaceutical industry with his
primary efforts directed toward product licensing. Prior thereto, Mr. Murphy
served as Director - Worldwide Business Development and Strategic Planning of
the Company from December 1991 to September 1992. Mr. Murphy previously spent 14
years in basic pharmaceutical research and product development with SmithKline
Beecham Corporation and in business development with contract research
laboratories. Mr. Murphy also serves on the Board of Directors of
Biopharmaceutics, Inc. Mr. Murphy received a B.A. in Biology from Millersville
University and attended the Massachusetts School of Law in 1993 and 1994.
ROBERT M. STOTE, M.D. became Senior Vice President and Chief Science
Officer of the Company in March 1992. Prior to joining the Company, Dr. Stote
was employed for 20 years by SmithKline Beecham Corporation serving as Senior
Vice President and Medical Director, Worldwide Medical Affairs from 1989 to
1992, and Vice President-Clinical Pharmacology-Worldwide from 1987 to 1989. From
1984 to 1987 Dr. Stote was Vice President-Phase I Clinical Research, North
America. Dr. Stote was Chief of Nephrology at Presbyterian Medical Center of
Philadelphia from 1972 to 1989 and was Clinical Professor of Medicine at the
University of Pennsylvania. Dr. Stote received a B.S. in Pharmacy from the
Albany College of Pharmacy, an M.D. from Albany Medical College and is Board
Certified in Internal Medicine and Nephrology. He was a Fellow in Nephrology and
Internal Medicine at the Mayo Clinic and is currently a Fellow of the American
College of Physicians.
-7-
BACKGROUND OF CONTINUING DIRECTORS
CHARLES L. BOLLING served from 1968 to 1973 as Vice President of
Product Management and Promotion (U.S.), from 1973 to 1977 as Vice President of
Commercial Development and from 1977 to 1986 as Director of Business Development
(International) at Smith Kline & French Laboratories. Mr. Bolling has been
retired since 1986.
ROBERT J. GYURIK became Vice President of Pharmaceutical Development of
the Company in March 1999 and became a member of the Board of Directors in 1998.
Prior to joining the Company, Mr. Gyurik served as Manager of Development and
Quality Control at Macrochem Corporation, a position he held from 1993 to
February 1999. From 1971 to 1993, Mr. Gyurik worked in various positions at
SmithKline Beecham ranging from Associate Senior Investigator in the
Nutrition/Production Enhancer Research Group and Pharmaceutical Development
Group to Senior Medical Chemist in the Parasitology Research Group. Prior
thereto, Mr. Gyurik worked at Schering as a Medicinal Chemist. Mr. Gyurik
attended Rutgers University and received a B.A. in Biology and Chemistry from
Immaculata College. Mr. Gyurik is a member of the American Chemical Society,
International Society for Chronobiology and the New York Academy of Sciences.
MICHAEL MCGOVERN, J.D., C.P.A. serves as President of McGovern
Enterprises, a provider of corporate and financial consulting services, which he
founded in 1975. Mr. McGovern is Chairman of the Board of Directors of Specialty
Surgicenters, Inc., a developer and operator of outpatient surgical clinics, and
is the Chairman of the Board of Directors of North Fulton Bancshares, a company
that owns and operates banks. Mr. McGovern is also a member of the board of
directors of Suburban Lodges of America Inc., a public company that owns and
operates extended stay hotels, Career Publishing Network, L.L.C., a publishing
company that specializes in career and job fairs for college students, Training
Solutions Interactive Inc., a developer and producer of interactive training
programs and the Reynolds Development Company, a real-estate company. Mr.
McGovern received a B.S. and M.S. in accounting and his Juris Doctor from the
University of Illinois. Mr. McGovern is a Certified Public Accountant and a
member of the state bar of Georgia and the American Bar Association.
MICHAEL D. PRICE became Chief Financial Officer, Vice
President/Treasurer and Secretary of the Company in October 1993, April 1993 and
November 1992, respectively. He has served the Company in other capacities since
March 1992. Prior to joining the Company, Mr. Price was employed as a financial
and management consultant with Carr Financial Group in Tampa, Florida from March
1990 to March 1992. Prior thereto, he was employed as Vice President of Finance
with Premiere Group, Inc., a real estate developer in Tampa, Florida from June
1988 to February 1990. Prior thereto, Mr. Price was employed by Price Waterhouse
in Tampa, Florida from January 1982 to June 1988 where his last position with
that firm was as an Audit Manager. Mr. Price received a B.S. in Business
Administration with a concentration in Accounting from Auburn University and an
M.B.A. from Florida State University. Mr. Price is a Certified Public Accountant
in the State of Florida.
COMMITTEES OF THE BOARD OF DIRECTORS; BOARD OF DIRECTORS MEETINGS
The Board of Directors has an Audit Committee and a Compensation
Committee. The Audit Committee recommends to the Board of Directors the
appointment of independent auditors to audit the Company's consolidated
financial statements, reviews the Company's internal control procedures and
advises the Company on tax and other matters connected with the growth of the
Company. The Audit Committee also reviews with management the annual audit and
other work performed by the independent auditors. The Compensation Committee
administers the Company's 1991 Stock Option Plan and reviews and recommends to
the Board of Directors the nature and amount of compensation to be paid to the
Company's executive officers. The Audit
-8-
Committee and the Compensation Committee both currently consist of Messrs.
Charles L. Bolling and Michael McGovern.
During the Company's last fiscal year ended December 31, 1998, the
Board of Directors held three meetings and the Compensation Committee held three
meetings. The Audit Committee did not hold any formal meetings in fiscal year
ended December 31, 1998 but has held one meeting to date in fiscal year ending
December 31, 1999. In addition, various informal consultations of members of the
Audit Committee and the Company's auditors were held during fiscal year ended
December 31, 1998. Each Director attended at least 75% of the total number of
meetings of the Board of Directors which were held during the period he served
as a Director in the fiscal year ended December 31, 1998 and meetings of each
Committee on which such Director served.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee during the fiscal year ended
December 31, 1998 were Messrs. Randolph W. Arnegger, Charles L. Bolling, Robert
J. Gyurik and Michael McGovern, all of whom are or were at the time of service
non-employee Directors. No member of the Compensation Committee has a
relationship that would constitute an interlocking relationship with Executive
Officers or Directors of the Company or another entity.
REMUNERATION OF NON-EMPLOYEE DIRECTORS
The Company presently pays non-employee Director fees of $3,000 for
each face to face meeting of the Board of Directors, $500 for each telephonic
meeting, $500 for each committee meeting of the Board of Directors and
reimburses expenses incurred in attending meetings. Total non-employee Director
fee payments during the year ended December 31, 1998 were $25,500 and expenses
incurred by non-employee Directors in attending meetings which were reimbursed
by the Company totaled $1,325. Each non-employee director is automatically
granted options to purchase a number of shares of Common Stock equal to 2/10 of
1% of the number of outstanding shares of Common Stock upon his or her election
to the Board. Thereafter, each continuing non-employee director is entitled to
receive, annually, options to purchase the number of shares of Common Stock
equal to 2/10 of 1% of the number of outstanding shares of Common Stock. During
the year ended December 31, 1998, options to purchase 31,856 shares of Common
Stock were granted at $2.00 per share, representing the fair market value of the
Common Stock on the date of the grants. These options expire on July 29, 2008.
-9-
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the total compensation paid to or
accrued by the Company for the account of the current Chief Executive Officer
and the executive officers at December 31, 1998 whose total cash compensation
for the year ended December 31, 1998 exceeded $100,000.
SUMMARY COMPENSATION TABLE
Long-Term Compensation
Annual Compensation Awards Payouts
Securities
Other Restricted Underlying LTIP All
Annual Stock Options/ Payouts Other
Name and Principal Position Year Salary ($) Bonus ($) Comp. ($)(1) Awards($) SARs (#) ($) Comp.
- --------------------------- ---- ---------- --------- ------------ --------- -------- ----- -----
James R. Murphy (2) Y/E 12/31/98 $260,000 $37,381 --- --- --- --- $5,000
Chairman of the Board, Y/E 12/31/97 $245,000 $50,000 --- --- --- --- $4,750
President, Chief Executive Y/E 12/31/96 $235,833 $20,000 --- --- 600,000 --- $4,750
Officer and Director
Robert M. Stote(3) Y/E 12/31/98 $200,178 $33,694 - - - - $5,000
Senior Vice President, Y/E 12/31/97 $225,000 -- - - --- - $4,750
Chief Science Officer and Y/E 12/31/96 $220,417 - - - 500,000 - $4,750
Director
Michael D. Price(4) Y/E 12/31/98 $155,958 $11,985 - - - - $5,000
Vice President, Chief Y/E 12/31/97 $136,378 --- - - --- - $4,750
Financial Officer, Y/E 12/31/96 $122,500 $10,000 - - 400,000 - $4,750
Treasurer, Secretary and
Director
- ---------------
(1) The value of perquisites provided to the named executive officers did
not exceed 10% of total compensation in any case.
(2) Mr. Murphy, Chairman of the Board, President and Chief Executive
Officer, has been employed by the Company since September 1994. Mr.
Murphy's annual salary is currently $290,000. During the year ended
December 31, 1996, Mr. Murphy was awarded ten-year stock options to
purchase 600,000 shares of Common Stock, of which one-third of such
options vested when the closing price of the Company's Common Stock on
the American Stock Exchange equaled or exceeded the exercise price of
$2.89 for twenty consecutive trading days; one-third will vest and
become exercisable when the closing price equals or exceeds the
exercise price of $3.68 for twenty consecutive trading days; and
one-third will vest and become exercisable when the closing price
equals or exceeds the exercise price of $4.73 for twenty consecutive
trading days. During the years ended December 31, 1998, 1997 and 1996,
the Company provided to Mr. Murphy matching funds totaling $5,000,
$4,750 and $4,750, respectively, pursuant to the terms of a Company
sponsored 401(k) retirement plan (see "401(k) Retirement Plan").
(3) Dr. Stote, Senior Vice President and Chief Science Officer, has been
employed by the Company since March 1992. As of August 31, 1998, Dr.
Stote began working part time and receives an annual base salary of
$75,000 plus compensation at the rate of $130 per hour for all hours
worked on behalf of the Company in excess of twelve per week. During
the year ended December 31, 1996, Dr. Stote was awarded ten-year stock
options to purchase 500,000 shares of Common Stock,
(Footnote explanations continue on following page)
-10-
of which one-third of such options vested when the closing price of the
Company's Common Stock on the American Stock Exchange equaled or
exceeded the exercise price of $2.89 for twenty consecutive trading
days; one-third will vest and become exercisable when the closing price
equals or exceeds the exercise price of $3.68 for twenty consecutive
trading days; and one-third will vest and become exercisable when the
closing price equals or exceeds the exercise price of $4.73 for twenty
consecutive trading days. During the years ended December 31, 1998,
1997 and 1996, the Company provided to Dr. Stote matching funds
totaling $5,000, $4,750 and $4,750, respectively, pursuant to the terms
of a Company sponsored 401(k) retirement plan (see "401(k) Retirement
Plan").
(4) Mr. Price, Vice President, Chief Financial Officer, Secretary and
Treasurer, has been employed by the Company since March 1992. Mr.
Price's annual salary is currently $168,000. During the year ended
December 31, 1996, Mr. Price was awarded ten-year stock options to
purchase 400,000 shares of Common Stock, of which one-third of such
options vested when the closing price of the Company's Common Stock on
the American Stock Exchange equaled or exceeded the exercise price of
$2.89 for twenty consecutive trading days; one-third will vest and
become exercisable when the closing price equals or exceeds the
exercise price of $3.68 for twenty consecutive trading days; and
one-third will vest and become exercisable when the closing price
equals or exceeds the exercise price of $4.73 for twenty consecutive
trading days. During the years ended December 31, 1998, 1997 and 1996,
the Company provided to Mr. Price matching funds totaling $5,000,
$4,750 and $4,750, respectively, pursuant to the terms of a Company
sponsored 401(k) retirement plan (see "401(k) Retirement Plan").
-11-
OPTION/SAR GRANTS IN LAST FISCAL YEAR
No options were granted to the individuals listed in the Summary
Compensation table during the year ended December 31, 1998. No stock
appreciation rights have been granted to date.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth certain information concerning the
number of shares of Common Stock acquired upon the exercise of stock options
during the year ended December 31, 1998 by, and the number and value at December
31, 1998 of shares of Common Stock subject to unexercised options held by, the
individuals listed in the Summary Compensation Table.
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-money
Options/SARs at Options/SARs at
Shares FY-End (# Shares) FY-End ($)
Acquired Value Exercisable/ Exercisable/
On Exercise (#) Realized ($) Unexercisable Unexercisable (1)
--------------- ------------ --------------- -----------------
NAME
James R. Murphy - - 253,000 / 400,000 -0- / -0-
Robert M. Stote, M.D. - - 239,166 / 333,333 -0- / -0-
Michael D. Price - - 165,833 / 266,667 -0- / -0-
- -------------------------
(1) Represents the closing price of the Company's Common Stock on the
American Stock Exchange on December 31, 1998 minus the respective
exercise prices.
LONG-TERM INCENTIVE PLAN AWARDS IN LAST FISCAL YEAR
No long-term incentive plan awards were granted to the individuals
listed in the Summary Compensation table during the year ended December 31,
1998.
EMPLOYMENT AGREEMENTS
Mr. James R. Murphy, Chairman of the Board, President and Chief
Executive Officer, entered into an employment agreement with the Company dated
as of July 1, 1998 providing for an initial term which expires on December 31,
2001. Under the terms of this agreement, Mr. Murphy's current annual base salary
is $290,000. The agreement with Mr. Murphy also provides for bonuses at the
recommendation and discretion of the Compensation Committee of the Company's
Board of Directors. Mr. Murphy is entitled to a bonus award of 50% of his annual
base salary upon (i) the attainment by the Company of two consecutive quarters
of net profit, (ii) the closing of a year with a net profit, (iii) the
announcement of a merger of the Company into another company or a sale or
transfer of all or substantially all of the pharmaceutical assets of the Company
or (iv) a change in control of the Company. The agreement with Mr. Murphy also
provides that, upon termination following a change in control of the Company,
Mr. Murphy shall be entitled to receive (i) a severance payment equal to 2.99
times his annual salary plus bonuses, or that amount of salary and bonuses that
would have been due to Mr. Murphy through the expiration of the term of the
agreement, whichever is greater, (ii) a number of stock options equal to the
number of stock options held by Mr. Murphy prior to the effective date of such
change in control (the "Termination Options"), (iii) immediate vesting of all
outstanding stock options (including the Termination Options), and (iv) health
and other benefits through the end of the term of the agreement or for a period
of five years, whichever is greater. Pursuant to the agreement, if terminated
without cause, Mr. Murphy will be entitled
-12-
to a severance payment equal to two years salary plus bonus and immediate
vesting of all outstanding non-plan stock options.
Dr. Robert M. Stote, Senior Vice President and Chief Science Officer,
entered into an employment agreement with the Company dated as of August 31,
1998 providing for an initial term which expires on August 31, 2001. Under the
terms of this agreement, Dr. Stote's annual base salary is $75,000 plus
compensation at the rate of $130 per hour for hours worked in excess of twelve
per week. The agreement with Dr. Stote also provides for bonuses at the
recommendation and discretion of the Compensation Committee of the Company's
Board of Directors. Dr. Stote is eligible for a bonus upon (i) the attainment by
the Company of two consecutive quarters of pre-tax net profit or (ii) the
announcement of a merger of the Company with another company. The agreement with
Dr. Stote also provides that, upon termination following a change in control of
the Company, Dr. Stote shall be entitled to receive (i) a severance payment
equal to 2.99 times his average annual salary plus bonuses for the five year
period preceding the year in which the change in control occurs, or that amount
of salary that would have been due to Dr. Stote through the expiration of the
term of this Agreement, whichever is greater, (ii) a number of stock options
equal to the number of stock options held by Dr. Stote prior to the effective
date of such change in control (the "Termination Options"), (iii) immediate
vesting of all outstanding stock options (including the Termination Options),
and (iv) health and other benefits through the end of the term of the agreement.
Pursuant to the agreement, if terminated without cause, Dr. Stote will be
entitled to a severance payment equal to 2.99 times the average of Dr. Stote's
salary plus bonus for the five year period preceding the year in which the date
of termination occurs and immediate vesting of all outstanding non-plan stock
options.
Mr. Michael D. Price, Vice President, Chief Financial Officer,
Secretary and Treasurer, entered into an employment agreement with the Company
dated as of July 1, 1998 and under the terms of its amendment provides for a
term which expires on June 30, 2001. Under the terms of this agreement, Mr.
Price's current annual base salary is $168,000. The agreement with Mr. Price
also provides for bonuses at the recommendation and discretion of the
Compensation Committee of the Company's Board of Directors. Mr. Price is
eligible for a bonus upon (i) the attainment by the Company of two consecutive
quarters of net profit, (ii) the closing of a year with a net profit, or (iii)
the announcement of a merger of the Company into another Company or a sale or
transfer of all of substantially all of the pharmaceutical assets of the
Company. Mr. Price is entitled to a bonus of 50% of his annual salary upon a
change in control of the Company. The agreement with Mr. Price also provides
that, upon termination following a change in control of the Company, Mr. Price
shall be entitled to receive (i) a severance payment equal to 2.9 times his
annual salary plus bonuses, or that amount of salary and bonuses that would have
been due to Mr. Price through the expiration of the term of the agreement,
whichever is greater, (ii) a number of stock options equal to the number of
stock options held by Mr. Price prior to the effective date of such change in
control (the "Termination Options"), (iii) immediate vesting of all outstanding
stock options (including the Termination Options), and (iv) health and other
benefits through the end of the term of the agreement. Pursuant to the
agreement, if terminated without cause, Mr. Price will be entitled to a
severance payment equal to one year salary plus bonus and immediate vesting of
all outstanding non-plan stock options.
Mr. Robert J. Gyurik, Vice President of Pharmaceutical Development,
entered into an employment agreement with the Company dated as of March 9, 1999
providing for an initial term which expires on December 31, 2000. Under the
terms of this agreement, Mr. Gyurik's current annual base salary is $120,000.
The agreement provides that Mr. Gyurik is entitled to a sign-on bonus of 40,000
shares of Common Stock. The agreement with Mr. Gyurik also provides for bonuses
at the recommendation and discretion of the Compensation Committee of the
Company's Board of Directors. Mr. Gyurik is eligible for a bonus upon the
announcement of a merger of the Company into another Company or a sale or
transfer of all or substantially all of the assets of the Company. Mr. Gyurik is
entitled to a bonus of 50% of his annual salary upon a change in control of the
Company. The agreement with Mr. Gyurik also provides that, upon termination
following a change in control of the Company, Mr. Gyurik shall be entitled to
receive (i) a severance payment equal to 2.9 times his annual salary plus
bonuses, or that amount of salary and bonuses that would have been due to Mr.
Gyurik through the
-13-
expiration of the term of the agreement, whichever is greater, (ii) a number of
stock options equal to the number of stock options held by Mr. Gyurik prior to
the effective date of such change in control (the "Termination Options"), (iii)
immediate vesting of all outstanding stock options (including the Termination
Options), and (iv) health and other benefits through the end of the term of the
agreement. Pursuant to the agreement, if terminated without cause, Mr. Gyurik
will be entitled to a severance payment equal to one year salary plus bonus and
immediate vesting of all outstanding non-plan stock options.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's executive officers and directors, and any persons who own
more than 10% of any class of the Company's equity securities, to file certain
reports relating to their ownership of such securities and changes in such
ownership with the Securities and Exchange Commission, the American Stock
Exchange and the Pacific Stock Exchange and to furnish the Company with copies
of such reports. To the Company's knowledge, during the year ended December 31,
1998, all Section 16(a) filing requirements have been satisfied.
1991 STOCK OPTION PLAN
The Company's 1991 Stock Option Plan (the "1991 Plan") was unanimously
adopted by the Board of Directors on September 30, 1991, approved by the
stockholders at the December 1991 Annual Meeting of Stockholders and amended to
increase the number of shares available under the plan to an aggregate of
500,000 by the stockholders at the February 1993, June 1994 and June 1997 Annual
Meetings of Stockholders. The purpose of the 1991 Plan is to promote the
interests of the Company in attracting and retaining employees (including
officers) and experienced and knowledgeable non-employee directors for the
Company and its subsidiaries, by enabling them to acquire or increase a
proprietary interest in the Company, to benefit from appreciation in the value
of the Company's Common Stock and, thus, participate in the long-term growth of
the Company. For a proposal to increase the number of shares available under the
1991 Plan, see "Proposal 3 Proposal to Adopt an Amendment to the Company's 1991
Stock Option Plan."
During the fiscal year ended December 31, 1998, options to purchase
66,000 shares of Common Stock were granted to employees of the Company who are
not executive officers. Such options were granted at $2.37 per share,
representing the fair market value of the Common Stock on the date of grants.
These options expire on June 15, 2008.
-14-
401(K) RETIREMENT PLAN
The Company sponsors a 401(k) retirement plan (the "401(k) Plan") under
which eligible employees may contribute, on a pre-tax basis, between 1% to 15%
of their respective total annual income from the Company, subject to maximum
aggregate annual contribution imposed by the Internal Revenue Code of 1986, as
amended. All full-time employees who have worked for the Company for at least
six months are eligible to participate in the 401(k) Plan. All employee
contributions are allocated to the employee's individual account and are
invested in various investment options as directed by the employee. Cash
contributions are fully vested and nonforfeitable. The Company made matching
contributions to the 401(k) Plan for the 1998 fiscal year in the amount of
$25,943, and is continuing to match 50% of each eligible employee's contribution
in 1999.
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors, which is
currently comprised of two non-employee Directors of the Company, determines, to
the extent not fixed pursuant to the terms of applicable employment agreements,
the compensation of the Chief Executive Officer, other employee members of the
Board of Directors, and all other executive employees whose annual compensation
exceeds $50,000. The compensation levels of such officers, Directors and
employees are subject to the approval of the Board of Directors.
The Compensation Committee, being responsible for overseeing and
approving executive compensation and grants of stock options, is in a position
to appropriately balance the current cash compensation considerations with the
longer-range incentive-oriented growth outlook associated with stock options.
The main objectives of the Company's compensation structure include
rewarding individuals for their respective contributions to the Company's
performance, providing executive officers with a stake in the long-term success
of the Company and providing compensation programs and policies that will
attract and retain qualified executive personnel. The Board of Directors and the
Compensation Committee place a great deal of importance on job security and
recognize that by offering executives protection against job loss, it can be
more successful in recruiting experienced executives from large, established
pharmaceutical companies. Historically, the members of the Board of Directors
and the Compensation Committee have chosen to achieve these objectives through
salary increases, bonuses and periodic stock option grants. The Committee
considered each of these factors in approving the compensation for Mr. Murphy,
who serves as President and Chief Executive Officer.
In determining compensation, the Compensation Committee considers,
among other things, the performance of the Company, improvement in financial
position, strategic alliances, acquisition of products, product registration,
raising of capital, compensation levels in competing companies, individual
contributions to the Company and the length of service with the Company. The
Compensation Committee also considered independent surveys of executive
compensation of similarly situated companies.
Compensation through the periodic grant of Common Stock and stock
options under the Company's stock option plans is intended to coordinate
executives' and stockholders' long-term interests by creating a direct link
between a portion of executive compensation and increases in the price of Common
Stock and the long-term success of the Company. This method of compensation also
permits the Company to preserve its cash resources.
Although the extraordinary individual contributions of each executive
officer must be recognized when appropriate, it can be expected that any future
substantial increases in executive compensation will be based upon the
satisfaction of pre-established individual objectives, corporate milestones and
financial performance of the Company.
COMPENSATION COMMITTEE
Charles L. Bolling
Michael McGovern
-15-
COMMON STOCK PERFORMANCE
The graph presented below compares the cumulative total stockholder
return on the Company's Common Stock for the five years ended December 31, 1998
with the cumulative total stockholder return for such period reflected in the
Standard and Poor's (S&P) 500 Stock Index and in a peer group index of four
competing pharmaceutical companies (Andrx Corp., Biovail Corp. International,
Noven Pharmaceuticals Inc. and Theratech Inc. Utah). The graph (and the
information relating to it) was obtained by the Company from S&P. The
comparative returns shown in the graph assume (i) the investment of $100 in the
Company's Common Stock, the common stock of the companies included in the S&P
500 Stock Index and the common stock of the four peer group companies at the
market close on December 31, 1993 and (ii) the reinvestment of all dividends.
[GRAPH APPEARS HERE]
-16-
TOTAL SHAREHOLDER RETURNS
-------------------------
(Dividends Reinvested)
ANNUAL RETURN PERCENTAGE
Years Ending
Company Name/Index DEC 94 DEC 95 DEC 96 DEC 97 DEC 98
- --------------------------------------------------------------------------------
BENTLEY PHARMACEUTICALS -80.00 -55.00 16.67 -9.52 -36.84
S&P 500 INDEX 1.32 37.58 22.96 33.36 28.58
PEER GROUP -23.16 157.26 6.82 23.84 19.39
INDEXED RETURNS
BASE YEARS ENDING
PERIOD
COMPANY NAME/INDEX DEC 93 DEC 94 DEC 95 DEC 96 DEC 97 DEC 98
- --------------------------------------------------------------------------------
BENTLEY PHARMACEUTICALS 100 20.00 9.00 10.50 9.50 6.00
S&P 500 INDEX 100 101.32 139.40 171.40 228.59 293.91
PEER GROUP 100 76.84 197.67 211.15 261.49 312.19
PEER GROUP COMPANIES
- --------------------
ANDRX CORP
BIOVAIL CORP INTERNATIONAL
NOVEN PHARMACEUTICALS INC.
THERATECH INC UTAH
-17-
PROPOSAL 2
PROPOSAL TO CHANGE THE COMPANY'S STATE OF INCORPORATION FROM FLORIDA TO
DELAWARE AND TO ADOPT A CERTIFICATE OF INCORPORATION AND BYLAWS WHICH
CONFORM TO DELAWARE LAW AND ADOPT VARIOUS ANTI-TAKEOVER PROVISIONS
GENERAL
The Board of Directors of the Company has proposed that the state of
incorporation of the Company, which is currently Florida, be changed to
Delaware. Such change is proposed to be effected by an Agreement and Plan of
Merger a copy of which is attached to this Proxy Statement as "Appendix A" (the
"Agreement of Merger"). The Board of Directors has unanimously approved the
Agreement of Merger for submission to the Company's stockholders. The Agreement
of Merger provides for the merger (the "Reincorporation Merger") of the Company
with and into Bentley Pharma, Inc., a Delaware corporation, which is a
wholly-owned subsidiary of the Company ("Bentley-Delaware"), with
Bentley-Delaware being the surviving corporation. This Reincorporation Merger
will, in effect, cause the Company to be reincorporated in Delaware. On the
effective date of the Reincorporation Merger, each issued and outstanding share
of Common Stock will be converted into one (1) share of common stock, $.02 par
value per share of Bentley-Delaware ("Bentley-Delaware Stock"). The following
discussion summarizes certain aspects of the Reincorporation Merger, but is
qualified in its entirety by reference to the Agreement of Merger which is
attached hereto as "Appendix A."
On the effective date of the Reincorporation Merger, Bentley-Delaware
will succeed to all of the assets, liabilities and business of the Company and
will possess all of the rights and powers of the Company. The business of the
Company will continue to operate under the name, "Bentley Pharmaceuticals, Inc."
The officers and directors of Bentley-Delaware will be the same as the officers
and directors of the Company.
Except as described below, stockholders of Bentley-Delaware, as
stockholders of a Delaware corporation, will, in general, have the same rights
that they possess as stockholders of the Company, a Florida corporation,
although certain changes are inherent in being incorporated in Delaware rather
than in Florida. A summary of these changes, as they might affect the
stockholders, are discussed below in the section entitled "Summary of
Significant Differences Between Delaware and Florida Corporate Laws."
In addition, in connection with the Reincorporation Merger,
Bentley-Delaware will adopt the Restated Certificate of Incorporation (the
"Certificate of Incorporation") and Amended and Restated Bylaws (the "Bylaws"),
attached as "Appendix B" and "Appendix C," respectively, to this Proxy
Statement. Approval by the stockholders of the reincorporation in Delaware will
also constitute approval of the Certificate of Incorporation and Bylaws of
Bentley-Delaware. The Certificate of Incorporation and Bylaws of
Bentley-Delaware incorporate various "anti-takeover" provisions which are
intended to protect the Company's stockholders by rendering it more difficult
for a person or persons to obtain control of the Company without cooperation of
the Company's Board of Directors. See "Changes in the Company's Charter and
Bylaws to be Effected by the Reincorporation Merger."
The Agreement of Merger will be terminated if this Proposal is not
approved by the Company's stockholders or if certain other conditions are not
met.
On the effective date of the Reincorporation Merger, each issued and
outstanding share of Common Stock will automatically be converted into one (1)
share of Bentley-Delaware Stock. Stockholders may, but are not required to,
surrender their present Common Stock certificates so that replacement
certificates representing shares of Bentley-Delaware Stock may be issued in
exchange therefor. Certificates representing Common Stock should not be
destroyed or returned to the Company. After the Reincorporation Merger,
certificates representing Common Stock will constitute "good delivery" in
connection with sales through a broker, or otherwise, of shares
-18-
of Bentley-Delaware Stock. American Stock Transfer and Trust Company, the
Company's transfer agent, will act as transfer agent for Bentley-Delaware after
the Reincorporation Merger.
The Agreement of Merger provides that it may be amended at any time,
whether before or after its approval by the stockholders, by agreement of the
Boards of Directors of the Company and Bentley-Delaware, subject to any
restrictions imposed by the laws of Florida and Delaware. Delaware law will not
permit an amendment to the Agreement of Merger, absent stockholder approval, if
such amendment would adversely affect the holders of any class of stock of
either the Company or Bentley-Delaware.
REASONS FOR AND ADVANTAGES OF REINCORPORATION IN DELAWARE
The proposal to reincorporate in Delaware is made for several reasons.
First, the Company was originally incorporated in Florida in 1974. The Company
chose to incorporate in Florida because, at that time, its business operations
were conducted predominantly in Florida. In addition, at that time, all of the
Company's offices and equipment were located in Florida. As the Company grew and
its business operations were expanded outside of Florida, its roots remained in
Florida and its corporate headquarters continued to be located in Florida
despite the establishment of manufacturing and other operations in Spain. In
February 1999, the Company completed the acquisition of certain patents and
related permeation enhancement technology. The Company plans to develop such
technology into product applications and then to seek to enter into
collaborative arrangements with various companies with greater financial
resources than the Company. In order to accomplish the foregoing, the Company
determined it was necessary to secure sufficient laboratory space. Therefore, in
March 1999, the Company entered into a five year lease agreement for office and
laboratory space in North Hampton, New Hampshire. The Company plans to
consolidate its U.S. operations and relocate its corporate headquarters there in
the summer of 1999. In addition, the Company's lease on its corporate
headquarters in Florida expires in October 1999 and will not be renewed. At such
time as the Company relocates corporate headquarters to New Hampshire and its
lease for its corporate headquarters in Florida expires, the Company will no
longer have any assets or properties in Florida. As a result of the move, the
Company's stockholders will no longer enjoy the benefits of Florida's
"anti-takeover" statute. See "Summary of Significant Differences between
Delaware and Florida Corporate Laws - Business Combinations with Substantial
Stockholders." The Board of Directors therefore has concluded that this is an
appropriate time to reincorporate the Company from Florida to Delaware.
For many years, Delaware has followed a policy of encouraging
incorporation in that state and, in furtherance of that policy, has adopted
comprehensive, modern and flexible corporate laws which are periodically updated
and revised to meet changing business needs. As a result, many major
corporations whose headquarters are located throughout the United States have
chosen Delaware for their domicile or have subsequently reincorporated in
Delaware. The Delaware courts have developed considerable expertise in dealing
with corporate issues, and a substantial body of case law has developed
construing Delaware law and establishing public policies with respect to
Delaware corporations, thereby providing greater predictability with respect to
legal affairs.
The differences between the corporate law of Delaware and Florida allow
Delaware corporations greater latitude of corporate action. In the opinion of
management, such latitude affords Delaware corporations more opportunities to
raise capital. For example, a Delaware corporation has greater flexibility in
declaring dividends, which can aid a corporation in marketing various classes or
series of dividend paying securities. Under Delaware law, dividends may be paid
out of surplus, or if there is no surplus, out of net profits from the
corporation's previous fiscal year or the fiscal year in which the dividend is
declared, or both, so long as there remains in the stated capital account an
amount equal to the par value represented by all shares of the corporation's
stock, if any, having a preference upon the distribution of assets. Under
Florida law, dividends may be paid by the corporation unless after giving effect
to the distribution, the corporation would not be able to pay its debts as they
come due in the usual course of business, or the corporation's total assets
would be less than the sum of its total liabilities,
-19-
plus (unless the corporation's articles of incorporation permit otherwise)
amounts payable in dissolution to holders of shares carrying a liquidation
preference over the class of shares to which a dividend is declared. These and
other differences between Florida's and Delaware's corporate laws are more fully
explained below in the section entitled "Summary of Significant Differences
between Delaware and Florida Corporate Laws."
In management's opinion, underwriters and other members of the
financial services industry may be more willing and better able to assist in
capital raising programs for corporations having the greater flexibility
reflected in the examples mentioned.
Finally, Delaware law permits a corporation to adopt a number of
measures, through amendment of the corporate certificate of incorporation or
bylaws or otherwise, designed to reduce a corporation's vulnerability to
unsolicited takeover attempts. There is substantial judicial precedent in the
Delaware courts as to the legal principles applicable to such defensive measures
with respect to the conduct of the Board of Directors under the business
judgment rule with respect to unsolicited takeover attempts. The Board of
Directors has no present intention following the reincorporation in Delaware to
amend the Certificate of Incorporation of Bentley-Delaware or the Bylaws of
Bentley-Delaware to include any additional provisions which might deter an
unsolicited takeover attempt, other than those set forth in this Proxy
Statement. However, the Board of Directors is currently contemplating the
implementation of a stockholder rights plan or "poison pill." See "Changes in
the Company's Charter and Bylaws to be Effected by the Reincorporation Merger -
Certain Anti-Takeover Procedural Requirements." In addition, in the discharge of
its fiduciary obligations to the stockholders, the Board of Directors may
consider in the future certain additional "anti-takeover" strategies which may
enhance the Board of Directors' ability to negotiate with an unsolicited bidder.
Further, Section 203 of the Delaware General Corporation Law provides certain
protections not available under Florida laws. See "Summary of Significant
Differences Between Delaware and Florida Corporate Laws - Business Combinations
with Substantial Stockholders."
DISADVANTAGES OF REINCORPORATION IN DELAWARE
Despite the belief of the Board of Directors of the Company as to the
benefits or advantages of reincorporation in Delaware, some stockholders may
find the Reincorporation Merger disadvantageous for several reasons. As
discussed below, Delaware law contains a statutory provision intended to
discourage certain takeover attempts of Delaware corporations which are not
approved by the Board of Directors. This "anti-takeover" provision along with
other "anti-takeover" provisions being included in the Certificate of
Incorporation and Bylaws of Bentley-Delaware (see "Changes in the Company's
Charter and Bylaws to be Effected by the Reincorporation Merger - Certain
Anti-Takeover Procedural Requirements") could have the effect of lessening the
possibility that stockholders of Bentley-Delaware would be able to receive a
premium above market value for their shares in the event of a takeover. These
provisions could also have an adverse effect on the market value of the shares
of Bentley-Delaware Stock. To the extent that these provisions may restrict or
discourage takeover attempts, they may render less likely a takeover opposed by
the Company's Board of Directors and may make removal of the Board of Directors
or management less likely as well. Florida law, however, has its own
"anti-takeover" statutory protections which may have had a similar effect in the
past. See "Summary of Significant Differences Between Delaware and Florida
Corporate Laws - Business Combinations with Substantial Stockholders."
As discussed below, the Certificate of Incorporation of
Bentley-Delaware will contain a provision limiting director liability under
certain circumstances and the Certificate of Incorporation of Bentley-Delaware
and the Bylaws of Bentley-Delaware will contain provisions relating to
indemnification of directors and officers. The inclusion of these provisions
could operate to the potential disadvantage of the stockholders of Bentley-
Delaware. For example, their inclusion may have the effect of reducing the
likelihood of Bentley-Delaware's recovering monetary damages from directors as a
result of derivative litigation against directors for breach of their
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duty of care, even though such an action, if successful, might otherwise have
benefitted Bentley-Delaware and its stockholders. In addition, if the
Reincorporation Merger is effected and the limitation on liability provision is
part of the Certificate of Incorporation of Bentley-Delaware, the stockholders
of Bentley-Delaware will forego potential causes of action for breach of duty of
care against the directors involving grossly negligent business decisions,
including those relating to attempts to change control of Bentley-Delaware.
CHANGES IN THE COMPANY'S CHARTER AND BYLAWS TO BE EFFECTED BY THE
REINCORPORATION MERGER
Approval of the reincorporation in Delaware by the Company's
stockholders will also constitute approval of the provisions of the Certificate
of Incorporation of Bentley-Delaware (See "Appendix B" to this Proxy Statement)
and Bylaws of Bentley-Delaware (See "Appendix C" to this Proxy Statement). The
Certificate of Incorporation and Bylaws of Bentley-Delaware differ from the
Company's Articles of Incorporation and Bylaws in certain respects, the most
important of which are described below. The following discussion summarizes the
most important aspects of such differences, but is qualified in its entirety by
reference to the Certificate of Incorporation and Bylaws of Bentley-Delaware.
CERTAIN ANTI-TAKEOVER PROCEDURAL REQUIREMENTS. The Certificate of Incorporation
of Bentley-Delaware adopts certain measures (the "Measures") which are intended
to protect the Company's stockholders by rendering it more difficult for a
person or persons to obtain control of the Company without cooperation of the
Company's Board of Directors. The Measures are set forth below and include the
potential implementation of certain supermajority requirements for the amendment
of the Certificate of Incorporation and Bylaws. Such Measures are often referred
to as "anti-takeover" provisions. As explained below, the Company's current
Articles of Incorporation include some but not all of such "anti-takeover"
provisions.
The inclusion of such "anti-takeover" provisions in the Certificate of
Incorporation may delay, deter or prevent a takeover of the Company which the
stockholders may consider to be in their best interests, thereby possibly
depriving holders of the Company's securities of certain opportunities to sell
or otherwise dispose of their securities at above-market prices, or limit the
ability of stockholders to remove incumbent directors as readily as the
stockholders may consider to be in their best interests.
The Measures are not being proposed in response to any present attempt
known by the Board of Directors of the Company to acquire control of the
Company, to obtain representation on the Company's Board of Directors or to take
significant corporate action. Rather, management believes that in connection
with the approval of the Company's reincorporation in Delaware, the Measures are
prudent and in the best interests of the Company and its stockholders and should
be adopted for their protection. The Board of Directors further believes that
now is an appropriate time to adopt the proposed Measures, since they would
lessen the likelihood that the Company would be required to incur significant
expense and might be subject to substantial disruption in connection with a
takeover attempt.
In addition to the Measures, the Board of Directors is currently
contemplating the implementation of a stockholder rights plan or "poison pill"
(the "Plan") as an additional "anti-takeover" tactic. The implementation of the
Plan would not require approval of the Company's stockholders and could be
adopted by the Company whether or not the Agreement of Merger is adopted by the
stockholders. The Plan currently being considered by the Board of Directors
would expire three (3) years after it is adopted. In addition, the Plan would
not place any impediments on a tender offer to all of the Company's
stockholders, which offer has been approved by a majority of the Company's
disinterested directors. There can be no assurance that the Board of Directors
will ultimately implement the Plan or that, if implemented, the Plan will
include the foregoing provisions.
Except as described in this Proxy Statement or as set forth in the
Certificate of Incorporation and Bylaws of Bentley-Delaware, the Board of
Directors does not have any current plans to seek stockholder approval of any
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amendments to, or make changes in, the Company's charter documents that may be
deemed to have "anti-takeover" implications. However, the Board of Directors may
consider other "anti-takeover" measures in the future, including measures which
do not require stockholder approval.
AMENDMENTS TO THE BYLAWS. Under Florida law and the Company's current Articles
of Incorporation, both the Company's stockholders and the Board of Directors
have the power to adopt, amend or repeal the Company's Bylaws. Under Delaware
law and the Certificate of Incorporation of Bentley-Delaware, both the
stockholders of Bentley-Delaware and the Board of Directors have the power to
adopt, amend or repeal any or all of the Bylaws. However, the Certificate of
Incorporation of Bentley-Delaware adds a provision which is not in the Company's
current Articles of Incorporation which requires that any stockholder adoption,
amendment or repeal of the Bylaws be approved by the holders of at least 66-2/3%
of the voting power of all outstanding shares of voting stock, including in any
instance in which the alteration is proposed by an Interested Stockholder (as
defined below), or by affiliates or associates of any Interested Stockholder,
the affirmative vote of the holders of at least a majority of voting power of
all outstanding shares of voting stock held by persons other than the Interested
Stockholder or its affiliates or associates. However, the only stockholder vote
required if the Bylaw modification is approved by a majority of the Continuing
Directors (as defined below) of the Company is the affirmative vote of a
majority of the voting power of all outstanding shares of voting stock. The
Board of Directors believes that the foregoing gives the Board of Directors
needed flexibility in managing the Company and protects against an unsolicited
takeover attempt of the Company.
The term Interested Stockholder is used throughout the proposed
Certificate of Incorporation of Bentley- Delaware and is defined therein to have
the meaning assigned to it at Section 203 of the Delaware General Corporation
Law. Section 203 of the Delaware General Corporation Law defines an Interested
Stockholder as any person who is: (i) the owner of fifteen percent (15%) or more
of the outstanding voting stock of the corporation or (ii) an affiliate or
associate of the corporation and who was the owner of fifteen percent (15%) or
more of the outstanding voting stock of the corporation at any time within the
three (3) year period immediately prior to the date on which it is sought to be
determined whether such person is an Interested Stockholder.
The term Continuing Director is also used throughout the proposed
Certificate of Incorporation of Bentley-Delaware and is defined therein to mean
(i) any member of the Board of Directors who (A) is not an Interested
Stockholder or an affiliate or associate of an Interested Stockholder and (B)
was a member of the Board or Directors prior to the time that an Interested
Stockholder became an Interested Stockholder; and (ii) any person who is elected
or nominated to succeed a Continuing Director, or to join the Board of
Directors, by a majority of the Continuing Directors.
DETERMINATION BY THE BOARD OF THE NUMBER OF DIRECTORS. The Company's current
charter documents permit the size of the Board of Directors to be set between
one (1) and thirteen (13), by action of either the Board of Directors or the
stockholders. Under the proposed charter documents of Bentley-Delaware, the
Board of Directors of Bentley-Delaware will have the sole power, without the
necessity of a stockholder vote, to adjust the number of members on the Board of
Directors between one (1) and thirteen (13). The Board of Directors believes
that reserving to the Board of Directors the power to set its size combined with
the other powers set forth herein regarding appointing newly created
directorships and vacancies on the board of directors protects against an
unsolicited takeover attempt of the Company.
FILLING NEWLY CREATED DIRECTORSHIPS AND BOARD VACANCIES. Florida law permits the
directors to fill vacancies on the board and newly created directorships. In
addition, the current Articles of Incorporation of the Company provide that the
holders of at least 66-2/3% of the voting power of the Company may fill
vacancies on the Board of Directors created by death or resignation. The
proposed Certificate of Incorporation of Bentley-Delaware provides that
vacancies on the Board of Directors and newly created directorships may be
filled solely by a majority of the remaining directors. The Certificate of
Incorporation also provides that any directors appointed
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by the remaining directors will hold office only until the next annual meeting
of stockholders, at which time the stockholders will vote on the election of
such director.
REMOVAL OF DIRECTORS FOR CAUSE. Both the Company's current Articles of
Incorporation and the proposed Certificate of Incorporation of Bentley-Delaware
(combined with certain aspects of Delaware law) provide that a director may only
be removed for cause by the holders of at least 66-2/3% of the voting power of
the Company. However, in order for such removal to be effective, the proposed
Certificate of Incorporation of Bentley-Delaware adds a provision which is not
in the Company's current Articles of Incorporation which requires that where
such removal is proposed by an Interested Stockholder or by its affiliates or
associates, the removal be approved by a majority of the voting power of all
outstanding shares of voting stock, other than shares held by such Interested
Stockholder or by its affiliates or associates. However, if such removal has
previously been approved by a majority of Continuing Directors, only a majority
of the voting power of all outstanding shares of voting stock is necessary to
remove such director. The Board of Directors believes that the provision for
removal of directors by the stockholders as set forth in the Company's current
Articles of Incorporation and as enhanced as discussed above, will continue to
be an effective "anti-takeover" tactic for the Company.
SUPERMAJORITY AND FAIR PRICE REQUIREMENT FOR MERGERS, SALES AND OTHER BUSINESS
COMBINATIONS. The Company's current charter documents have no provision
requiring a supermajority vote to approve certain business combinations or the
dissolution or liquidation of the Company. The proposed Certificate of
Incorporation of Bentley-Delaware includes a provision which requires the
affirmative vote of at least 66-2/3% of the voting power of the Company to
approve a merger, a sale or lease of all or substantially all of the assets of
the Company, certain other business combinations or the dissolution or
liquidation of the Company. The Certificate of Incorporation of Bentley-Delaware
also imposes a "fair price" requirement in each of the foregoing transactions.
The "fair price" provision requires that the amount of consideration received by
the holders of the Company's Common Stock in such transactions be at least equal
to the highest of the following amounts: (i) the fair market value per share of
the Company's Common Stock on the announcement date of the transaction, (ii) the
fair market value per share of the Company's Common Stock on the date the
acquiring person became an Interested Stockholder, or (iii) the per share price
paid by the acquiring person in the transaction in which such person became an
Interested Stockholder. However, the Certificate does away with both the
supermajority and the "fair price" requirement if a majority of the Continuing
Directors approves the transaction. The Board of Directors believes that the
foregoing provision gives stockholders a measure of assurance that any
multi-step attempt to take over the Company will offer similar terms to all of
the Company's stockholders.
SUPERMAJORITY REQUIRED FOR AMENDMENT. The Company's current Articles of
Incorporation require the affirmative vote of 66-2/3% of the voting power of the
Company to amend any provision in the Articles relating to directors and/or
officers of the Company or to amend any provision in the Articles which requires
the affirmative vote of 66-2/3% of the voting power of the Company.
In order to insure that the substantive provisions set forth in the
Certificate of Incorporation are not circumvented by the amendment of the
Certificate of Incorporation pursuant to a vote of a majority of the voting
power of the Company's outstanding shares, the Certificate of Incorporation also
provides that any amendment, change or repeal of the provisions contained in the
Certificate of Incorporation with respect to: (i) the Company's capitalization,
(ii) amendment of the Bylaws, (iii) determination by the Board of the number of
directors, (iv) filling newly created directorships and Board vacancies, (v) the
removal of directors for cause, (vi) classification of the Board of Directors,
(vii) supermajority and fair price requirement for mergers, sales and other
business combinations, or a dissolution or liquidation of the Company, or (viii)
the amendment of the provision imposing such supermajority requirement for
amendment of the Certificate of Incorporation, shall require the affirmative
vote of the holders of at least 66-2/3% of the voting power of all outstanding
shares of voting stock, including, in any instance where the amendment is
proposed by an Interested Stockholder or its affiliate or associate, the
affirmative vote of at least a majority of the voting power of all outstanding
shares of voting stock held by
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persons other than such Interested Stockholder or its affiliates or associates.
However, only the affirmative vote of a majority of the voting power of all
outstanding shares of voting stock is required if the amendment of any of the
foregoing provisions is previously approved by a majority of the Continuing
Directors of the Company.
SPECIAL MEETING OF STOCKHOLDERS. The current Bylaws of the Company provide that
a special meeting of stockholders may be called by the President, the Board of
Directors or 10% of the stockholders of record of all shares entitled to vote.
The proposed Bylaws of Bentley-Delaware provide that a special meeting of
stockholders may be called by the President, a majority of the Board of
Directors or by the holders of not less than 33-1/3% of the voting power of the
Company. The Board of Directors believes that such a higher threshold is
appropriate in light of the fact that a quorum of at least a majority of the
voting power is required for the transaction of business at a stockholder
meeting. The Board of Directors therefore believes it is appropriate that the
Company not have to incur the significant expense associated with a special
stockholder meeting unless at least 33-1/3% of the voting power of the Company
requests convening such a meeting.
AUTHORIZED CAPITAL. Both the Company's current Articles of Incorporation and the
proposed Certificate of Incorporation of Bentley-Delaware authorize the issuance
of up to 37,000,000 shares, consisting of 35,000,000 of Common Stock, par value
$0.02 per share, and 2,000,000 shares of preferred stock, par value $1.00 per
share. Furthermore, both the Company's current Articles of Incorporation and the
proposed Certificate of Incorporation of Bentley-Delaware authorize a class of
preferred stock commonly known as "blank check" preferred stock. The preferred
stock may be issued from time to time in one or more series, and the Board of
Directors of Bentley- Delaware, without further approval of its stockholders, is
authorized to fix the relative rights, preferences, privileges and restrictions
applicable to each series of preferred stock. Such shares of preferred stock, if
and when issued, may have rights, powers and preferences superior to those of
the Common Stock. In the event of any issuances of preferred stock, the holders
of Bentley-Delaware Stock will not have any preemptive or similar rights to
acquire any preferred stock or any other capital stock of the Company. A series
of preferred stock may also be utilized in connection with the Board of
Directors' implementation of a stockholder rights plan or "poison pill." See
"Changes in the Company's Charter and Bylaws to Be Effected by the
Reincorporation Merger - Certain Anti-Takeover Procedural Requirements."
LIMITATION OF LIABILITY OF DIRECTORS. Florida law limits a director's liability
for monetary damages, except for breach of a director's duties under certain
circumstances. Under Delaware law, a corporation may provide in its certificate
of incorporation that directors shall not be liable to the corporation or its
stockholders for monetary damages for breach of their fiduciary duty. See
"Summary of Significant Differences between Delaware and Florida Corporate Laws
- - Liability of Directors." The proposed Certificate of Incorporation of
Bentley-Delaware contains a provisions limiting a director's liability for
monetary damages to the fullest extent permitted by Delaware law.
INDEMNIFICATION OF DIRECTORS AND OFFICERS. The charter documents of each of
Bentley-Delaware and the Company provide that Bentley-Delaware and the Company
shall indemnify its directors and officers to the fullest extent permitted under
Delaware law and Florida law, respectively. As described below, with certain
exceptions, Delaware law is similar to Florida law with respect to
indemnification of directors and officers. See "Summary of Significant
Differences between Delaware and Florida Corporate Laws - Indemnification of
Directors and Officers."
SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN DELAWARE AND FLORIDA CORPORATE LAWS
The following is a brief summary of certain material ways in which Florida and
Delaware corporate laws differ and does not purport to be a complete statement
of such laws.
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BUSINESS COMBINATIONS WITH SUBSTANTIAL STOCKHOLDERS. Delaware law contains a
statutory provision which is intended to curb abusive takeovers of Delaware
corporations. Section 203 of the Delaware General Corporation Law addresses the
problem by preventing certain business combinations of the corporation with
Interested Stockholders within three (3) years after such stockholders become
interested. Section 203 provides, with certain exceptions, that a Delaware
corporation may not engage in any of a broad range of business combinations with
a person or an affiliate or associate of such person, who is an Interested
Stockholder for a period of three (3) years from the date that such person
became an Interested Stockholder unless: (i) the transaction resulting in a
person becoming an Interested Stockholder, or the business combination, is
approved by the Board of Directors of the corporation before the person becomes
an Interested Stockholder, (ii) the Interested Stockholder acquired 85% or more
of the outstanding voting stock of the corporation in the same transaction that
makes such person an Interested Stockholder (excluding shares owned by persons
who are both officers and directors of the corporation, and shares held by
certain employee stock ownership plans) or (iii) on or after the date the person
becomes an Interested Stockholder, the business combination is approved by the
corporation's board of directors and by the holders of at least 66-2/3% of the
corporation's outstanding voting stock at an annual or special meeting,
excluding shares owned by the Interested Stockholder.
A corporation may, at its option, exclude itself from the coverage of
Section 203 by amending its certificate of incorporation or bylaws by action of
its stockholders to exempt itself from coverage, provided that such bylaw or
certificate of incorporation amendment shall not become effective until twelve
(12) months after the date it is adopted. The Board of Directors of
Bentley-Delaware is not now, and it is not currently anticipated that the Board
of Directors of Bentley-Delaware will in the future, seek stockholder approval
to "opt out" of the operation of this provision.
Florida law contains an affiliated transactions statute which provides
that certain transactions involving a corporation and a stockholder owning 10%
or more of the corporation's outstanding voting shares (an "affiliated
stockholder") must generally be approved by the affirmative vote of the holders
of at least 66-2/3% of the voting shares other than those owned by the
affiliated stockholder. The transactions covered by the statute include, with
certain exceptions: (i) mergers and consolidations to which the corporation and
the affiliated stockholder are parties, (ii) sales or other dispositions of
substantial amounts of the corporation's assets to the affiliated stockholder,
(iii) issuances by the corporation of substantial amounts of its securities to
the affiliated stockholder, (iv) the adoption of any plan for the liquidation or
dissolution of the corporation proposed by or pursuant to an arrangement with
the affiliated stockholder, (v) any reclassification of the corporation's
securities which has the effect of increasing by more than five percent (5%) the
percentage of the outstanding voting shares of the corporation beneficially
owned by the affiliated stockholder and (vi) the receipt by the affiliated
stockholder of certain loans or other financial assistance from the corporation.
These special voting requirements do not apply in any of the following
circumstances: (i) if the transaction was approved by a majority of the
corporation's disinterested directors, (ii) if the corporation did not have more
than 300 stockholders of record at any time during the preceding three years,
(iii) if the affiliated stockholder has been the beneficial owner of at least
80% of the corporation's outstanding voting shares for the past five years, (iv)
if the affiliated stockholder is the beneficial owner of at least 90% of the
corporation's outstanding voting shares, exclusive of those acquired in a
transaction not approved by a majority of disinterested directors or (v) if the
consideration received by each stockholder in connection with the transaction
satisfies the "fair price" provisions of the statute. This statute applies to
any Florida corporation unless the original articles of incorporation or an
amendment to the articles of incorporation or bylaws contain a provision
expressly electing not to be governed by this statute. Such an amendment to the
articles of incorporation or bylaws must be approved by the affirmative vote of
a majority of disinterested stockholders and is not effective until 18 months
after approval. The Company has not, through its Articles of Incorporation or
its Bylaws, elected not to be governed by this statute.
Florida law also provides for certain "anti-takeover" protections
against persons who acquire or intend to acquire 20% or more of the voting power
of certain Florida corporations, defined by statute as "issuing public
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corporations." However, in order to fall within the definition of an "issuing
public corporation," the Florida corporation must have: (i) its principal place
of business, principal office or substantial assets within Florida and (ii)
either more than 10% of its stockholders resident in Florida, more than 10% of
its shares owned by Florida residents or at least 1,000 Florida resident
stockholders (with shares held by banks, brokers or nominees disregarded for the
purpose of calculating such percentage). The Company is in the process of moving
its corporate headquarters from Florida to New Hampshire which move is expected
to be completed in the summer of 1999. See "Reasons for and Advantages of
Reincorporation in Delaware." At such time as the move if completed, the
Company's principal place of business and principal office will be located
outside of Florida and the Company will not have any significant assets in
Florida. Therefore, at such time, the Company will not fall within the
definition of an "issuing public corporation" for purposes of the foregoing
Florida "anti-takeover" statute, and therefore, such "anti-takeover" provisions
will not apply to the Company, regardless of whether the Company remains a
Florida corporation or is reincorporated in Delaware.
LIABILITY OF DIRECTORS. Delaware law permits a Delaware corporation to include
in its certificate of incorporation a provision which eliminates or limits the
personal liability of a director to the corporation or its stockholders for
monetary damages for breach of fiduciary duties as a director. However, no such
provision may eliminate or limit the liability of a director: (i) for any breach
of the director's duty of loyalty to the corporation or its stockholders, (ii)
for acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law, (iii) for declaration of unlawful dividends or
illegal redemptions or stock repurchases or (iv) for any transaction from which
the director derived an improper personal benefit. The proposed Certificate of
Incorporation of Bentley-Delaware includes such a provision.
Under Florida law, a director is not personally liable for monetary
damages to any person for his actions as a director unless the director breached
his duties as a director by way of: (i) a criminal violation, unless the
director has reasonable cause to believe his conduct was lawful or had no
reasonable cause to believe his conduct was unlawful, (ii) a transaction from
which the director derived an improper personal benefit, (iii) declaration of
unlawful distributions, (iv) in a derivative action, conscious disregard by the
director for the best interests of the corporation or willful misconduct by the
director or (v) in a third party action, recklessness or actions or omissions
committed in bad faith or with malicious purpose or in a manner exhibiting
wanton and willful disregard of human rights, safety or property.
INDEMNIFICATION OF DIRECTORS AND OFFICERS. Under both Florida law and Delaware
law, a corporation may generally indemnify its officers, directors, employees
and agents against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement of any proceedings (other than derivative actions),
if they acted in good faith and in a manner they reasonably believed to be in or
not opposed to the best interests of the corporation and, with respect to any
criminal action or proceeding, had no reasonable cause to believe their conduct
was unlawful. A similar standard is applicable in derivative actions, except
that indemnification may be made only for expenses (including attorneys' fees),
provided that in the event the person seeking indemnification has been
adjudicated liable, such indemnification shall only be for amounts deemed
proper, fair and reasonable by the appropriate court upon application thereto.
In addition, Delaware law and Florida law provide that to the extent that
present or former directors or officers under Delaware law and present or former
directors, officers, employees or agents under Florida law, have been successful
in defense of any proceeding, they must be indemnified by the corporation
against expenses actually and reasonably incurred in connection therewith.
Florida law further provides that, unless a corporation's articles of
incorporation provide otherwise, if a corporation does not so indemnify such
persons, they may seek, and a court may order, indemnification under certain
circumstances even if the board of directors or stockholders of the corporation
have determined that the persons are not entitled to indemnification. The
Company's current Bylaws provide that directors, officers, employees and other
agents will be indemnified to the fullest extent permitted by law. The proposed
Certificate of Incorporation and Bylaws of Bentley-Delaware provides that
directors, officers, employees and other agents will be indemnified to the
fullest extent permitted by law.
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SPECIAL MEETINGS OF STOCKHOLDERS. Under Delaware law, a special meeting of
stockholders may be called by the corporation's board of directors or by such
persons as may be authorized by the corporation's certificate of incorporation
or bylaws. The proposed Bylaws of Bentley-Delaware provide that a special
meeting may be called by the President or a majority of the Board of Directors
or when requested in writing by the holder or holders of at least 33-1/3% of all
the shares entitled to vote at the meeting. Florida law provides that a special
meeting of stockholders may be called by: (i) a corporation's board of
directors, (ii) the persons authorized by the articles of incorporation or
bylaws or (iii) the holders of not less than 10% of all votes entitled to be
cast on any issue to be considered at the proposed special meeting. A Florida
corporation's articles of incorporation may require a higher percentage of
votes, up to a maximum of 50% to call a special meeting of stockholders. The
Company's current Articles of Incorporation do not require a higher percentage
of votes. The current Bylaws of the Company provide that a special meeting of
stockholders may be called by the President or the Board of Directors or when
requested in writing by the holder or holders of not less than 10% of all the
shares entitled to vote at the meeting.
MERGER WITH SUBSIDIARY. Under Delaware law, a parent corporation may merge into
a subsidiary and a subsidiary may merge into its parent, without stockholder
approval, where such parent corporation owns at least 90% of the outstanding
shares of each class of capital stock of its subsidiary. Florida law permits
such a merger of a subsidiary without stockholder approval if 80% of each class
of capital stock of the subsidiary is owned by the parent corporation.
REMOVAL OF DIRECTORS. Both the Company's current Articles of Incorporation and
the proposed Certificate of Incorporation of Bentley-Delaware provides for three
separate classes of directors, each class serving for a term of three (3) years,
with the term of each class expiring in subsequent years, commonly known as a
"classified" board of directors. Under Delaware law, unless the certificate of
incorporation otherwise permits, if a Delaware corporation has a classified
board of directors, stockholders may remove directors only for cause. Under
Florida law, stockholders may remove one or more directors, with or without
cause, unless the articles of incorporation provide that directors may be
removed only with cause, at a meeting of stockholders called expressly at least
in part for that purpose. The Company's current Articles of Incorporation only
permit the removal of directors for cause at a meeting of stockholders held for
such purpose by the affirmative vote of the holders of shares entitling them to
exercise at least 66-2/3% of the voting power of the Company. The proposed
Certificate of Incorporation of Bentley-Delaware has a similar provision, but
also requires, in the event the removal is proposed by an Interested Stockholder
or an affiliate or associate thereof, the approval of a majority of the voting
power of all outstanding shares of voting stock, other than shares held by such
Interested Stockholder or an affiliate or associate thereof. However, if a
majority of Continuing Directors approves the proposal, only a majority of the
voting power of all outstanding voting stock is necessary to approve such
removal.
BOARD VACANCIES. Delaware law provides that, unless otherwise provided in the
certificate of incorporation or bylaws, a vacancy or newly-created directorship
on the board of directors may be filled by a majority of the remaining
directors, even though less than a quorum. Under Florida law, a vacancy on the
board of directors generally may be filled by an affirmative vote of a majority
of the remaining directors or by the stockholders, unless the articles of
incorporation provide otherwise. The Company's current Articles of Incorporation
provide that stockholders may by affirmative vote of the holders of shares
entitling them to exercise at least 66-2/3% of the voting power of the
Corporation fill any vacancy in the Board of Directors created by death or
resignation. Bentley-Delaware's proposed Certificate of Incorporation, on the
other hand, does not permit the stockholders to fill vacancies or newly created
directorships, but instead reserves such power solely to the Board of Directors.
However, under Bentley-Delaware's proposed Certificate of Incorporation, any
director appointed by the Board of Directors will serve only until the next
stockholders meeting, at which time the Company's stockholders will vote on a
director for such position.
COMMITTEES OF THE BOARD OF DIRECTORS. Florida and Delaware law both provide that
the board of directors may delegate certain of their duties to one or more
committees elected by a majority of the board. A Delaware
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corporation can delegate to a committee of the board of directors, among other
things, the responsibility of nominating candidates for election to the office
of director, to fill vacancies on the board of directors, and to reduce earned
or capital surplus and authorize the acquisition of the corporation's own stock.
Moreover, if either the corporation's certificate of incorporation or bylaws, or
the resolution of the board of directors creating the committee so permits, a
committee of the board of directors may declare dividends and authorize the
issuance of stock. A Delaware corporation may not, however, delegate to a
committee of the board of directors the duty of approving, adopting or
recommending to the stockholders any action or matter required to be submitted
to stockholders or the duty of adopting, amending or repealing any bylaws of the
corporation. Florida law places additional limitations on the types of
activities that can be delegated to committees of the board. Under Florida law,
a committee of the board of directors may not approve or recommend to
stockholders actions or proposals required to be approved by the stockholders,
fill a vacancy on the board, adopt, amend or repeal the bylaws, authorize the
issuance of stock, or authorize the reacquisition of the corporation's own
stock.
AMENDMENT OR REPEAL OF THE CERTIFICATE OF INCORPORATION. Under Delaware law,
unless the certificate of incorporation otherwise provides, amendments to the
certificate of incorporation generally require the approval of the holders of a
majority of the outstanding stock entitled to vote thereon, and if the amendment
would increase or decrease the number of authorized shares of any class or
series or the par value of such shares or would adversely affect the rights,
powers or preferences of such class or series, a majority of the outstanding
stock of such class or series also would have to approve the amendment. The
proposed Certificate of Incorporation of Bentley-Delaware provides that the
affirmative vote of at least 66-2/3% of the voting power of all outstanding
shares of voting stock is needed to amend, change or repeal the provisions in
the Certificate of Incorporation relating to (i) the Company's capitalization,
(ii) amendment of the Bylaws, (iii) determination by the Board of the number of
directors, (iv) filling newly created directorships and board vacancies, (v) the
removal of directors for cause, (vi) classification of the Board of Directors,
(vii) supermajority and fair price requirement for mergers, sales and other
business combinations or a dissolution or liquidation of the Company, or (viii)
the amendment of the provision imposing such supermajority requirement for
amendment to the Certificate of Incorporation. The proposed Certificate of
Incorporation of Bentley-Delaware also requires, in the event the amendment is
proposed by an Interested Stockholder or an affiliate or associate thereof, the
approval of a majority of the voting power of all outstanding shares of voting
stock, other than shares held by such Interested Stockholder or an affiliate or
associate thereof. However, if a majority of Continuing Directors approves the
amendment, only a majority of the voting power of all outstanding voting stock
is necessary to approve such amendment.
Except with regard to minor amendments specified in the Florida statute
which may be made by the Board of Directors, all amendments to the articles of
incorporation of a Florida corporation must be approved by a majority of all the
votes entitled to be cast by each voting group, unless the articles of
incorporation require a greater vote. Article VIII of the Company's current
Articles of Incorporation requires the affirmative vote of at least 66-2/3% of
the voting power of the Company to amend any provision which relates to
directors and/or officers of the Company, and/or any provision which requires an
affirmative vote of the holders of shares entitling them to exercise at least
66-2/3% of the voting power of the Company.
AMENDMENTS TO BYLAWS. Under Florida law, a corporation's board of directors may
amend or repeal the corporation's bylaws unless such power is expressly reserved
to the stockholders in the articles of incorporation or the stockholders
expressly provide in amending or repealing all or any part of the bylaws, that
the board of directors may not amend or repeal the effected bylaws. Neither the
Company's current Articles of Incorporation nor its Bylaws impose any such
limits on the Board of Directors' power to amend the Company's Bylaws. Under
Delaware law, directors may amend the bylaws of a corporation only if such right
is expressly conferred upon the directors in the corporation's certificate of
incorporation. The proposed Certificate of Incorporation of Bentley-Delaware
permits the Board of Directors to adopt, alter or amend the proposed Bylaws of
Bentley- Delaware. It also permits the stockholders of Bentley-Delaware to
adopt, amend or repeal the proposed Bylaws of Bentley-Delaware but requires a
vote of at least 66-2/3% of the voting power of the Company to do so, including,
in the event the amendment is proposed by an Interested Stockholder or an
affiliate or associate thereof, the approval of a majority of the voting power
of all outstanding shares of voting stock other than shares held by such
Interested Stockholder or an affiliate or associate thereof. However, if a
majority of Continuing Directors approves such Bylaw amendment, only a majority
of the voting power of all outstanding voting stock is necessary for approval.
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STOCKHOLDER VOTING REQUIREMENTS. Under both Delaware law and Florida law,
directors are generally elected by a plurality of the votes cast by the
stockholders entitled to vote at a stockholders' meeting at which a quorum is
present, unless a greater number of affirmative votes is required by the
certificate of incorporation or bylaws (in the case of a Delaware corporation)
or the articles of incorporation (in the case of Florida corporation). With
respect to matters other than the election of directors, unless otherwise
provided by Delaware law or a Delaware corporation's certificate of
incorporation or bylaws, if a quorum exists, action on a matter generally is
approved by the affirmative vote of a majority in voting power of the shares
represented at a meeting and entitled to vote on the matter. Accordingly, under
Delaware law, abstentions have the same effect as votes against a matter. Under
Florida law, unless otherwise provided by Florida law or a Florida corporation's
articles of incorporation (but not its bylaws), if a quorum exists, action on
any matter generally is approved by the stockholders if the votes cast by the
holders of the shares represented at the meeting and entitled to vote on the
matter favoring the action exceed the votes cast opposing the action.
Accordingly, under Florida law, abstentions have no impact on the outcome of a
vote.
VOTE REQUIRED FOR MERGERS. Florida law provides that the sale, lease, exchange
or disposal of all, or substantially all, of the assets of a Florida
corporation, not in the ordinary course of business, as well as any merger,
consolidation or share exchange generally must be recommended by the Board of
Directors and approved by a vote of a majority of the shares of each class of
the stock of the corporation entitled to vote on such matters. Under Florida
law, the vote of the stockholders of a corporation surviving a merger is not
required if: (i) the articles of incorporation of the surviving corporation will
not differ from its articles of incorporation before the merger and (ii) each
stockholder of the surviving corporation before the effective date will hold the
same number of shares, with identical designations, preferences, limitations and
relative rights immediately after the merger. Delaware law has a similar
provision requiring stockholder approval in the case of the disposition of
assets or a merger or a share exchange. However, with respect to mergers which
do not require the vote of the corporation's stockholders, Delaware law, unlike
Florida law, also requires that either no shares of common stock of the
surviving corporation and no shares, securities or obligations convertible into
such stock are to be issued or delivered under the plan of merger or the
authorized unissued shares or the treasury shares of common stock of the
surviving corporation to be issued or delivered under the plan of merger, plus
those initially issuable upon conversion of any other shares, securities or
obligations to be issued or delivered under such plan, do not exceed 20% of the
shares of common stock of such constituent corporation outstanding immediately
prior to the effective date of the merger. The proposed Certificate of
Incorporation of Bentley-Delaware provides that a vote of at least 66-2/3% of
the voting stock of the Company is required to approve certain business
combinations, including a merger. In addition, the Certificate of Incorporation
of Bentley-Delaware imposes a "fair price" requirement in the event of such a
transaction. The Company's current Articles of Incorporation has neither a
supermajority merger provision nor a "fair price" provision governing such
transactions. See "Changes in the Company's Charter and Bylaws to Effected by
the Reincorporation Merger - Supermajority and Fair Price Requirement for
Mergers, Sales and Other Business Combinations."
STOCK REDEMPTIONS AND REPURCHASES. Both Delaware and Florida corporations may
generally purchase or redeem their own shares of capital stock. Under Delaware
law, a Delaware corporation may purchase or redeem its own shares of capital
stock, except when the capital of the corporation is impaired or when such
purchase or redemption would cause any impairment of the capital of the
corporation. Subject to any restrictions imposed
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by its articles of incorporation, a Florida corporation may make distributions
to stockholders, so long as, after giving effect to such distribution: (i) the
corporation would be able to pay its debts as they become due in the usual
course of business or (ii) the corporation's total assets would not be less than
the sum of its total liabilities plus (unless the articles of incorporation
permit otherwise) the amount that would be needed if the corporation were to be
dissolved at the time of the distribution to satisfy the preferential rights
upon dissolution of stockholders whose preferential rights are superior to those
receiving the distribution.
PROXIES. Under Delaware law, a proxy executed by a stockholder will remain valid
for a period of three years unless the proxy provides for a longer period. Under
Florida law, a proxy is effective only for a period of 11 months unless
otherwise provided in the proxy.
CONSIDERATION FOR STOCK. Under Florida law, a corporation may issue its capital
stock only in return for certain tangible or intangible property or benefit to
the corporation, including cash, promissory notes, services performed, promises
to perform services evidenced by a written contract, and other securities of the
corporation. Under Delaware law, a corporation may accept as consideration for
its stock a combination of cash, property or past services in an amount not less
than the par value of the shares being issued, and a secured promissory note or
other binding obligation executed by the subscriber for any balance, the total
of which must equal at least the par value of the issued stock, as determined by
the board of directors.
STOCKHOLDERS' RIGHTS TO EXAMINE BOOKS AND RECORDS. Delaware law provides that
any stockholder of record may demand to examine the corporation's books and
records for any proper purpose. If management of the corporation refuses to
permit such examination, the stockholder can compel release of the books by
court order. Under Florida law, any stockholder may inspect and copy certain of
the corporation's records upon written demand, including the corporation's
articles of incorporation, bylaws, certain resolutions of the Board of Directors
relating to the creation of classes or series of stock, minutes of stockholder
meetings during the prior three (3) years, written communications to
stockholders, a list of names and business addresses of the corporation's
officers and directors, the corporation's most recent corporate report delivered
to the Florida Secretary of State and the corporation's financial statements
during the prior three (3) year period. However, only a stockholder whose demand
is in good faith and with a proper purpose and describes in particularity the
purpose and the desired records which are related to such purpose, may examine
certain of the corporation's books, including minutes of meetings of the Board
of Directors, minutes of other meetings or actions taken by stockholders not
otherwise expressly available for inspection to all stockholders, accounting
records of the corporation, a list of names and address of the corporation's
stockholders and any other books and records of the corporation. Under Florida
law, if the corporation refuses to allow a stockholder of a corporation to
examine the corporation's books, the corporation may be liable to the
stockholder for costs (including reasonable attorney's fees) incurred by the
stockholder. There is no such corresponding provision in Delaware law.
DIVIDENDS. Delaware law provides that the corporation may pay dividends out of
surplus, out of the corporation's net profits for the preceding fiscal year, or
both, provided that there remains in the stated capital account an amount equal
to the par value represented by all shares of the corporation's stock having a
distribution preference. Florida law provides that dividends may be paid, unless
after giving effect to such distribution, the corporation would not be able to
pay its debts as they come due in the usual course of business, or the
corporation's total assets would be less than the sum of its total liabilities,
plus (unless the corporation's articles of incorporation permit otherwise) the
amount needed to satisfy preferential distributions.
CORPORATE ACTION WITHOUT A STOCKHOLDER MEETING. Delaware and Florida law both
permit corporate action without a meeting of stockholders upon the written
consent of the holders of that number of shares necessary to authorize the
proposed corporate action being taken, unless the certificate of incorporation
or articles of incorporation, respectively, expressly provide otherwise. Neither
the Company's current Articles of Incorporation nor the proposed Certificate of
Incorporation of Bentley-Delaware include any such contrary provision. In the
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event such proposed corporate action is taken without a meeting by less than the
unanimous written consent of stockholders, Delaware law requires that prompt
notice of the taking of such action be sent to those stockholders who have not
consented in writing. Florida law provides that such notice must be given within
ten (10) days of the date such stockholder authorization is granted.
DISSENTERS' RIGHTS OF APPRAISAL
Florida law generally provides that stockholders may have dissenters'
rights in connection with a plan of merger in connection with which the approval
of the corporation's stockholders is required. However, Florida law provides
that there is no right of dissent with respect to a plan of merger, such as the
Reincorporation Merger, in favor of holders of any class or series which, at the
record date for the stockholders' meeting to approve the plan, were either: (i)
registered on a national securities exchange or designated as a national market
system security on an interdealer quotation system by the National Association
of Securities Dealers, Inc. ("NASD"), such as the over-the-counter market, or
(ii) held by at least 2,000 stockholders of record. The Company's Common Stock
is registered on the American Stock Exchange. As of the Record Date, the Company
had approximately 1,970 beneficial stockholders of record. Therefore, the
Company believes there are no dissenters' or appraisal rights available to the
Company's stockholders with respect to the Reincorporation Merger.
A stockholder of a Delaware corporation generally is entitled to
dissenters' rights in the event that the corporation is a party to certain
mergers or consolidations to which the stockholder did not consent. A Delaware
corporation's certificate of incorporation may also provide that dissenters'
rights are available with respect to any amendment to the certificate of
incorporation or any sale of all or substantially all of the corporation's
assets. The proposed Bentley-Delaware's certificate of incorporation does not
contain such a provision. Dissenters' rights are not available to a stockholder
of a Delaware corporation if such stockholder's shares, at the relevant record
date, were (i) listed on a national securities exchange or designated as a
national market system security on an interdealer quotation system by the NASD
or (ii) held of record by more than 2,000 stockholders. Notwithstanding the
foregoing, however, under the Delaware Act, a stockholder does have dissenters'
rights with respect to such shares if the stockholder is required by the terms
of the agreement of merger or consolidation to accept anything for his shares
other than: (i) shares of stock of the corporation surviving or resulting from
the merger or consolidation, (ii) shares of stock of any other corporation which
is listed on a national securities exchange or designated as a national market
system security on an interdealer quotation system by NASD or held of record by
more than 2,000 stockholders, (iii) cash in lieu of fractional shares or (iv)
any combination of the foregoing.
FEDERAL INCOME TAX CONSEQUENCES
The following discussion addresses certain material federal income tax
consequences of the Reincorporation Merger to stockholders of the Company
holding their shares of Common Stock as capital assets within the meaning of the
Internal Revenue Code of 1986, as amended (the "Code"). The discussion is based
on the current provisions of the Code, applicable regulations, judicial
authority and administrative rulings and practice. It does not address all
aspects of federal income taxation that may be relevant to particular
stockholders in light of their specific circumstances or to certain types of
stockholders subject to special treatment under the federal income tax laws,
including, without limitation, insurance companies, tax-exempt organizations,
foreign persons, financial institutions or broker-dealers, and stockholders who
acquired their Common Stock pursuant to the exercise of employee stock options
or in other compensatory transactions. This discussion also does not address the
state, local, foreign or other federal tax consequences of the Reincorporation
Merger (other than the state franchise tax consequences set forth below under
"Delaware Franchise Tax Consequences"). There can be no assurance that the
Internal Revenue Service will not take a contrary view to any expressed herein.
No rulings have been or will be requested from the Internal Revenue Service with
respect to the tax consequences of the Reincorporation Merger. Moreover,
legislative, judicial or administrative changes or interpretations may be
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forthcoming that could alter or modify the statements and conclusions set forth
herein, possibly with retroactive effect.
A stockholder owning Common Stock will not recognize gain or loss with
respect to the stockholder's exchange of the Common Stock for Bentley-Delaware
Stock as a result of the Reincorporation Merger. A stockholder's basis in a
share of Bentley-Delaware Stock will be the same as the stockholder's basis in
the corresponding share of Common Stock held immediately prior to the
Reincorporation Merger. The stockholder's holding period with respect to a share
of Bentley-Delaware Stock will include the period during which the stockholder
held the corresponding share of Common Stock.
Neither the Company nor Bentley-Delaware will recognize gain or loss as
a result of the Reincorporation Merger, and Bentley-Delaware will generally
succeed, without adjustment, to the tax attributes of the Company.
ALL STOCKHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO THE SPECIFIC
TAX CONSEQUENCES TO THEM OF THE REINCORPORATION MERGER, INCLUDING THE
APPLICABILITY AND EFFECT OF ANY FEDERAL, STATE, LOCAL AND FOREIGN TAX LAWS, AND
OF ANY CHANGES IN APPLICABLE TAX LAWS.
DELAWARE FRANCHISE TAX CONSEQUENCES
Upon the consummation of the Reincorporation Merger, Bentley-Delaware
will be subject to Delaware franchise tax. The Company anticipates that Bentley
Delaware will be required to pay the State of Delaware an annual franchise tax
of approximately $17,000. Apart from the preceding sentence, no other view is
expressed regarding any other state or local tax consequences of the
Reincorporation Merger to the Company, Bentley- Delaware or the stockholders of
either the Company or Bentley-Delaware.
SECURITIES ACT CONSEQUENCES
The shares of Bentley-Delaware Stock to be issued in exchange for
shares of Common Stock are not being registered under the Securities Act of
1933, as amended (the "1933 Act"). In that regard, Bentley-Delaware is relying
on Rule 145(a)(2) under the 1933 Act, which provides that a merger which has "as
its sole purpose" a change in the domicile of a corporation does not involve the
sale of securities for purposes of the 1933 Act, and on interpretations of the
Rule by the Securities and Exchange Commission (the "Commission") which indicate
that the making of certain changes in the surviving corporation's charter
documents which could otherwise be made only with the approval of the
stockholders of either corporation does not render Rule 145(a)(2) inapplicable.
After the Reincorporation Merger, Bentley-Delaware will be a
publicly-held company, Bentley-Delaware Stock will be listed for trading on the
American Stock Exchange, and Bentley-Delaware will file periodic reports and
other documents with the Commission and provide to its stockholders the same
types of information that the Company has previously filed and provided.
Stockholders whose Common Stock is freely tradeable before the Reincorporation
Merger will continue to have freely tradeable shares of Bentley-Delaware Stock
after the Reincorporation Merger. Stockholders holding restricted shares of
Common Stock will have shares of Bentley- Delaware Stock which are subject to
the same restrictions on transfer as those to which their present shares of
Common Stock are subject, and their stock certificates, if surrendered for
replacement certificates representing shares of Bentley-Delaware Stock, will
bear the same restrictive legend as appears on their present stock certificates.
For purposes of computing compliance with the holding period requirement of Rule
144 under the 1933 Act, stockholders will be deemed to have acquired their
shares of Bentley-Delaware Stock on the date they acquired their shares of
Common Stock. In summary, Bentley-Delaware and its stockholders will be in the
same respective positions under the federal securities laws after the
Reincorporation Merger as were the Company and the stockholders prior to the
Reincorporation Merger.
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APPROVAL BY THE STOCKHOLDERS OF THE COMPANY'S REINCORPORATION IN DELAWARE WILL
CONSTITUTE APPROVAL OF THE AGREEMENT OF MERGER, THE CERTIFICATE OF INCORPORATION
OF BENTLEY-DELAWARE AND THE BYLAWS OF BENTLEY-DELAWARE.
The Company's Board of Directors recommends a vote FOR this proposal.
VOTE REQUIRED
Under the Company's Articles of Incorporation and Florida law, the
Company's reincorporation in Delaware must be approved by the affirmative vote
of the holders of a majority of the issued and outstanding shares of the
Company's Common Stock.
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PROPOSAL 3
PROPOSAL TO ADOPT AN AMENDMENT TO THE COMPANY'S 1991 STOCK OPTION PLAN
The Company's 1991 Stock Option Plan (the "1991 Plan") was adopted by
the Board of Directors on September 30, 1991 and was approved by the
stockholders on December 16, 1991. The 1991 Plan was amended to increase the
number of shares available under the Plan to an aggregate of 1,200,000 and
2,400,000 shares by the stockholders at the February 1993 and June 1994 Annual
Meetings of Stockholders, respectively. As a result of the reverse stock split
on July 25, 1995, the number of shares available under the Plan was reduced to
240,000. The 1991 Plan was amended to increase the number of shares available
under the Plan to an aggregate of 500,000 by the stockholders at the June 1997
Annual Meeting of Stockholders. As of May 5, 1999, 6,500 options had been
exercised and options to purchase 320,856 shares held by 25 optionees were
outstanding at a weighted average per share exercise price of $14.40 and 172,644
shares are available for future grants under the 1991 Plan.
PROPOSED AMENDMENT
On March 25, 1999, the Board of Directors unanimously adopted and
recommended for submission to the stockholders for their approval at the
Meeting, an amendment to the 1991 Plan (the "Amendment") to increase the number
of shares of Common Stock for which options may be granted under the 1991 Plan
from 500,000 to 1,000,000 shares. A copy of the 1991 Plan (as proposed to be
amended by this Proposal 3) is attached as Appendix D to this Proxy Statement
and the following description of the 1991 Plan is qualified in its entirety by
reference to Appendix D. The Board of Directors believes that, although the
Company has not experienced difficulty in attracting and retaining personnel,
the 1991 Plan has been instrumental in attracting and retaining employees,
officers and consultants of outstanding ability and that this objective will be
furthered by providing additional shares for future option grants.
The following is a description of the 1991 Plan:
TYPES OF GRANTS AND AWARDS
The 1991 Plan permits the grant of options which may either be
"incentive stock options" ("ISOs"), within the meaning of Section 422 of the
Code, or "non-qualified stock options" ("NQSOs"), which do not meet the
requirements of Section 422 of the Code.
ELIGIBILITY
All employees (including officers), and directors of the Company and
its subsidiaries, are eligible to be granted options under the 1991 Plan. The
Company currently has approximately 137 employees.
STOCK SUBJECT TO THE 1991 PLAN
The total number of shares of Common Stock for which options may be
granted under the 1991 Plan may not exceed 500,000, subject to possible
adjustment in the future. The Amendment to the 1991 Plan would increase the
number of shares for which options may be granted under the 1991 Plan to
1,000,000. Any shares of Common Stock subject to any option which for any reason
expires, is canceled or is terminated unexercised or which ceases for any reason
to be exercised will again be available for grant under the 1991 Plan. The
number of shares of Common Stock underlying that portion of options which are
exercised will not again become available for grant under the Plan.
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ADMINISTRATION
The 1991 Plan is administered by a committee of the Board of Directors
of not less than two Directors, each of whom must be a "Non-Employee Director"
within the meaning of regulations promulgated by the Securities and Exchange
Commission. The Board of Directors has designated the Compensation Committee of
the Board, currently consisting of Messrs. Bolling and McGovern, to administer
the 1991 Plan. The Compensation Committee has the authority under the 1991 Plan
to determine the terms of options granted under the 1991 Plan, including, among
other things, the individuals who shall receive options, the times when they
shall receive them, whether an incentive stock option and/or non-qualified
option shall be granted, the number of shares to be subject to each option, and
the date or dates each option shall become exercisable.
EXERCISE PRICE
The exercise price of an option granted under the 1991 Plan is
determined by the Compensation Committee, but may not be less than 100% of the
fair market value of the Common Stock on the date an option is granted (110% of
such fair market value in the case of ISOs granted to an optionee (a "Ten
Percent Stockholder") who owns or is deemed to own stock possessing more than
10% of the total combined voting power of all classes of stock of the Company.)
The exercise price is payable at the time of exercise of the option in cash,
previously acquired shares of Common Stock (valued at their fair market value on
the date of exercise of the option) or a combination thereof, in the discretion
of the Compensation Committee. The Compensation Committee may, in its
discretion, permit payment of the exercise price of options by delivery of
properly executed exercise notices, together with a copy of irrevocable
instructions from the optionee to a broker to deliver promptly to the Company
the amount of sale or loan proceeds to pay such exercise. To facilitate the
foregoing, the Company may enter into agreements for coordinated procedures with
one or more brokerage firms.
TERMS AND CONDITIONS
As to options granted to employees:
i. Options granted to employees may be granted for terms of up
to but not exceeding ten years as determined by the Compensation Committee,
provided that ISOs granted to a Ten Percent Stockholder may not be for a term of
more than five years.
ii. Shares covered by options may not be purchased within the
one-year period after the date of grant, except as described in subparagraphs
(iii), (iv) and (v) below. Thereafter, options will become exercisable on such
terms and at such times as the Compensation Committee shall determine. Options
may not be exercised in an amount of less than 100 shares (except the remaining
shares then covered by and purchasable under the option if less than 100
shares).
iii. If an employee optionee's employment is terminated for
any reason other than "retirement," "disability" or death, the option may be
exercised at any time within three months thereafter to the extent shares were
purchasable at the date of termination. However, in the event employment is
terminated by the Company within three years after a "change in control of the
Company," the optionee at any time within three months after termination may
exercise all or any part of the remaining unexercised potion of the option
notwithstanding that the option had not yet become exercisable with respect to
all or any part of such shares at the date of termination. The term "change in
control of the Company" means the acquisition of the beneficial ownership,
directly or indirectly, of voting stock of the Company by any corporation,
person or entity resulting in such corporation, person or entity owning 50% or
more of such stock.
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iv. If an employee's employment is terminated by "disability"
or "retirement," the remaining unexercised portion of the option may be
exercised at any time within a twelve month period after such termination
notwithstanding that the option had not yet become exercisable with respect to
all or any part of such shares at the date of termination.
v. In the event of the death of an optionee while employed,
the remaining unexercised potion of the option may be exercised notwithstanding
that it had not yet become exercisable with respect to all or any part of such
shares at the date of death. If death occurs during the three month period after
termination of employment, or the twelve month period after termination by
reason of retirement (three months in the case of termination by reason of
retirement for employee optionees holding ISOs) or disability, the option may be
exercised to the extent the optionee was entitled to do so at the date of death,
giving effect to the provisions described in subparagraph (iii) and (iv) above.
In each case, the option may be exercised by the optionee's legal representative
or beneficiary during the period prescribed in the option agreement not
exceeding twelve months after the date of death.
vi. An option may not be transferred other than by will or the
laws of descent and distribution and may be exercised during a holder's lifetime
only by the holder or by the holder's guardian or legal representative.
vii. The foregoing notwithstanding, in no case may options be
exercised later than the expiration date specified in the grant.
As to options granted to Non-Employee Directors:
i. Options granted to Non-Employee Directors are for a term of
ten years; provided that shares may not be purchased within the one-year period
after the date of grant, except as described in subparagraphs (ii), (iii) and
(iv) below. Shares not purchased in any one exercise period may be purchased in
any subsequent exercise period prior to the termination of the option. Options
may not be exercised in an amount less than 100 shares (except the remaining
shares then covered by and purchasable under the option if less than 100
shares).
ii. If a Non-Employee Director optionee ceases to serve on the
Board for any reason, other than "disability" or death without being designated
as a "Director Emeritus," or a "Director Emeritus" ceases to retain such status
otherwise than by reason of "disability" or death, the option may be exercised
at any time within three months thereafter to the extent shares were purchasable
at the date of termination. However, in the event service on the Board or
"Director Emeritus" status is terminated by the Company within three years after
a "change in control" of the Company, the non-employee director optionee at any
time within three months after termination may exercise all or any part of the
remaining unexercised portion of the option notwithstanding that the option had
not yet become exercisable with respect to all or any part of such shares at the
date of termination. If a Non-Employee Director ceases to serve on the Board but
is designated as a "Director Emeritus," the option will continue to be
exercisable under the terms thereof while the Non-Employee Director retains such
status.
iii. If a Non-Employee Director optionee ceases to serve on
the Board by reason of "disability" or becomes "disabled" while retaining the
status of "Director Emeritus," the remaining unexercised portion of the option
may be exercised at any time within a twelve month period after such termination
notwithstanding that the option had not yet become exercisable with respect to
all or any part of such shares at the date of termination.
iv. In the event of the death of a Non-Employee Director
optionee either while serving on the Board or retaining the status of "Director
Emeritus," the remaining unexercised portion of the option may be
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exercised notwithstanding that it had not yet become exercisable with respect to
all or any part of such shares at the date of death. If death occurs during the
three month period after termination of service on the Board without "Director
Emeritus" status, or within the twelve month period after termination of service
on the Board or of "Director Emeritus" status by reason of "disability," the
option may be exercised to the extent the optionee was entitled to do so at the
date of death, giving effect to the provisions described in subparagraphs (ii)
and (iii) above. In each case, the option may be exercised by the optionee's
legal representative or beneficiary during the twelve month period after the
date of death.
v. An option may not be transferred other than by will or the
laws of descent and distribution and may be exercised during a holder's lifetime
only by the holder or by his guardian or legal representative.
vi. The foregoing notwithstanding, in no case may options be
exercised later than the expiration date specified in the grant.
ADJUSTMENT IN THE EVENT OF CAPITAL CHANGES
The Board of Directors shall make appropriate adjustments in the number
and kind of shares subject to the 1991 Plan, and in the number and kind of
shares subject to, and the exercise price of, outstanding options in the event
of any change in the Common Stock by reason of any stock dividend, stock split,
stock combination, recapitalization, merger or reorganization in which the
Company is the surviving corporation, or the like.
PLAN TERM AND AMENDMENTS
No options may be granted under the 1991 Plan after September 30, 2001.
The Board may amend, suspend or terminate the 1991 Plan or any portion thereof
at any time and from time to time in such respects as it deems necessary or
advisable (including without limitation to conform with applicable law or the
regulations or rulings thereunder), but may not without the approval of the
Company's stockholders make any alteration or amendment thereof which would (i)
change the class of those eligible to receive options, (ii) increase the maximum
number of shares for which options may be granted (except for anti-dilution
adjustments) or (iii) materially increase the benefits to participants under the
1991 Plan.
FEDERAL INCOME TAX TREATMENT
The following is a general summary of the federal income tax
consequences under current tax law of NQSOs and ISOs. It does not purport to
cover all of the special rules, including special rules relating to optionees
subject to Section 16(b) of the Exchange Act and the exercise of an option with
previously-acquired shares, or the state or local income or other tax
consequences inherent in the ownership and exercise of stock options and the
ownership and disposition of the underlying shares.
An optionee will not recognize taxable income for federal income tax
purposes upon the grant of a NQSO or an ISO.
Upon the exercise of a NQSO, the optionee will recognize ordinary
income in an amount equal to the excess, if any, of the fair market value of the
shares acquired on the date of exercise over the exercise price thereof, and the
Company will generally be entitled to a deduction for such amount at that time.
If the optionee later sells shares acquired pursuant to the exercise of a NQSO,
he or she will recognize long-term or short-term capital gain or loss, depending
on the period for which the shares were held. Long-term capital gain is
generally subject to more favorable tax treatment than ordinary income or
short-term capital gain.
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Upon the exercise of an ISO, the optionee will not recognize taxable
income. If the optionee disposes of the shares acquired pursuant to the exercise
of an ISO more than two years after the date of grant and more than one year
after the transfer of the shares to him or her, the optionee will recognize
long-term capital gain or loss and the Company will not be entitled to a
deduction. However, if the optionee disposes of such shares within the required
holding period, all or a portion of the gain will be treated as ordinary income
and the Company will generally be entitled to deduct such amount.
In addition to the federal income tax consequences described above, an
optionee may be subject to the alternative minimum tax, which is payable to the
extent it exceeds the optionee's regular tax. For this purpose, upon the
exercise of an ISO, the excess of the fair market value of the shares over the
exercise price therefor is an adjustment which increases alternative minimum
taxable income. In addition, the optionee's basis in such shares is increased by
such excess for purposes of computing the gain or loss on the disposition of the
shares for alternative minimum tax purposes. If an optionee is required to pay
an alternative minimum tax, the amount of such tax which is attributable to
deferral preferences (including the ISO adjustment) is allowed as a credit
against the optionee's regular tax liability in subsequent years. To the extent
the credit is not used, it is carried forward.
The Company's Board of Directors recommends a vote FOR this proposal.
VOTE REQUIRED
The affirmative vote of the holders of a majority of the shares of the
Company's Common Stock present or represented and entitled to vote at the
Meeting will be required to approve the amendments to the 1991 Plan.
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MISCELLANEOUS
VOTING REQUIREMENTS
Directors are elected by a plurality of the votes cast at the Meeting
at which a quorum is present (Proposal 1). The affirmative vote of the holders
of a majority of the issued and outstanding shares of the Company's Common Stock
will be required to approve the proposed change of the Company's state of
incorporation from Florida to Delaware and the adoption of a Certificate of
Incorporation and Bylaws which conform to Delaware law and adopt various
"anti-takeover" provisions (Proposal 2). The affirmative vote of the holders of
a majority of the votes cast at the Meeting at which a quorum is present will be
required to approve the amendment to the Company's 1991 Plan (Proposal 3). For
purposes of Proposals 1 and 3, abstentions and broker non-votes are not
considered cast with respect to such proposals. For purposes of Proposal 2,
abstentions and broker non-votes are treated as votes against such proposal.
INDEPENDENT AUDITORS
The Audit Committee of the Board of Directors of the Company selected
Deloitte & Touche LLP to serve as the Company's independent auditors for the
year ended December 31, 1998 and for the year ending December 31, 1999.
Representatives of Deloitte & Touche LLP will not be present at the Meeting.
STOCKHOLDER PROPOSALS
From time to time stockholders may present proposals for consideration
at a meeting which may be proper subjects for inclusion in the proxy statement
and form of proxy related to that meeting. Stockholder proposals intended to be
included in the Company's proxy statement and form of proxy relating to the
Company's 2000 Annual Meeting of Stockholders must be received by the Company at
its office at 65 Lafayette Road, North Hampton, New Hampshire 03862 by January
19, 2000. Any such proposals, as well as any questions relating thereto, should
be directed to the Secretary of the Company at such address.
ADDITIONAL INFORMATION
The cost of solicitation of Proxies, including the cost of reimbursing
banks, brokers and other nominees for forwarding Proxy solicitation material to
the beneficial owners of shares held of record by them and seeking instructions
from such beneficial owners, will be borne by the Company. The Company has
engaged Morrow & Co., Inc. to solicit Proxies and has agreed to pay Morrow &
Co., Inc. a fee of $7,000 plus their accountable expenses in connection with the
solicitation. Proxies may also be solicited without extra compensation by
certain officers and regular employees of the Company. Proxies may be solicited
by mail and, if determined to be necessary, by telephone, telegraph or personal
interview.
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OTHER MATTERS
Management does not intend to bring before the Meeting any matters
other than those specifically described above and knows of no matters other than
the foregoing to come before the Meeting. If any other matters or motions
properly come before the Meeting, it is the intention of the persons named in
the accompanying Proxy to vote such Proxy in accordance with their judgment on
such matters or motions, including any matters dealing with the conduct of the
Meeting.
By Order of the Board of Directors
MICHAEL D. PRICE
SECRETARY
Tampa, Florida
May 12, 1999
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APPENDIX A
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT OF MERGER (the "Agreement"), dated as of ___________,
1999 is entered into by and between Bentley Pharmaceuticals, Inc., a Florida
corporation ("Bentley Florida") and Bentley Pharma, Inc., a Delaware corporation
("Bentley Delaware").
WITNESSETH:
WHEREAS, Bentley Florida is a corporation duly organized and existing
under the laws of the State of Florida;
WHEREAS, the respective Boards of Directors of Bentley Florida and
Bentley Delaware have determined that it is advisable and in the best interests
of each of such corporations that Bentley Florida merge with and into Bentley
Delaware (the "Merger") upon the terms and subject to the conditions set forth
in this Agreement for the purpose of effecting the change of the state of
incorporation of Bentley Florida from Florida to Delaware;
WHEREAS, the respective Boards of Directors of Bentley Florida and
Bentley Delaware have, by resolutions duty adopted, approved this Agreement,
subject to the approval of the shareholders of each of Bentley Delaware and
Bentley Florida; and
WHEREAS, this Agreement is intended as a tax free plan of
reorganization within the meaning of Section 368 of the Internal Revenue Code;
NOW, THEREFORE, in consideration of the mutual agreements and covenants
set forth herein, Bentley Florida and Bentley Delaware hereby agree as follows:
1. Merger. Bentley Florida shall be merged with and into Bentley
Delaware and Bentley Delaware shall be the surviving corporation (hereinafter
sometimes referred to as the "Surviving Corporation"). The Merger shall become
effective upon the date and time when this Agreement is made effective in
accordance with applicable law (the "Effective Time").
2. Governing Documents; Executive Officers and Directors. The
Certificate of Incorporation of Bentley Delaware, from and after the Effective
Time, shall be the Certificate of Incorporation of the Surviving Corporation
without change or amendment until thereafter amended in accordance with the
provisions thereof and applicable laws. The Bylaws of Bentley Delaware from and
after the Effective Time, shall be the Bylaws of the Surviving Corporation
without change or amendment until thereafter amended in accordance with the
provisions thereof, or the Certificate of Incorporation of the Surviving
Corporation and applicable laws. The members of the Board of Directors and
committees of the Board of Directors and the officers of Bentley-Florida
immediately prior to the Effective Time shall be the members of the Board of
Directors and committees of the Board of Directors and the officers of the
Surviving Corporation from and after the Effective Time,
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until their respective successors have been duty elected and qualify, unless
they earlier die, resign or are removed.
3. Succession. At the Effective Time, the separate corporate existence
of Bentley Florida shall cease, and the Surviving Corporation shall possess all
the rights, privileges, powers and franchises of a public and private nature of
Bentley Florida; and all property, real, personal and mixed, and all debts due
to Bentley Florida on whatever account, as well as for share subscriptions as
all other things in action belonging to Bentley Florida, shall be vested in the
Surviving Corporation; and all property, rights, privileges, powers and
franchises, and all and every interest shall be thereafter as effectually the
property of the Surviving Corporation as they were of Bentley Florida, and the
title to any real estate vested by deed or otherwise in Bentley Florida shall
not revert or be in any way impaired by reason of the Merger; but all rights of
creditors and all liens upon any property of Bentley Florida shall be preserved
unimpaired, and all debts, liabilities and duties of Bentley Florida shall
thenceforth attach to the Surviving Corporation and may be enforced against it
to the same extent as if such debts, liabilities and duties had been incurred or
contracted by it. All corporate acts, plans, policies, agreements, arrangements,
approvals and authorizations of Bentley Florida, its shareholders, Board of
Directors and committees thereof, officers and agents which were valid and
effective immediately prior to the Effective Time, shall be taken for all
purposes as the acts, plans, policies, agreements, approvals and authorizations
of the Surviving Corporation and shall be as effective and binding thereon as
the same were with respect to Bentley Florida. The employees and agents of
Bentley Florida shall become the employees and agents of the Surviving
Corporation and continue to be entitled to the same rights and benefits which
they enjoyed as employees and agents of Bentley Florida. The requirements of any
plans or agreements of Bentley Florida involving the issuance or purchase by
Bentley Florida of certain shares of its capital stock shall be satisfied by the
issuance or purchase of a like number of shares of the Surviving Corporation.
4. Further Assurances. From time to time, as and when required by the
Surviving Corporation or by its successors or assigns, there shall be executed
and delivered on behalf of Bentley Florida such deeds and other instruments, and
there shall be taken or caused to be taken by it all such further and other
action, as shall be appropriate, advisable or necessary in order to vest,
perfect or confirm, of record or otherwise, in the Surviving Corporation the
title to and possession of all property, interests, assets, rights, privileges,
immunities, powers, franchises and authority of Bentley Florida, and otherwise
to carry out the purposes of this Agreement, and the officers and directors of
the Surviving Corporation are fully authorized in the name and on behalf of
Bentley Florida or otherwise, to take any and all such action and to execute and
deliver any and all such deeds and other instruments.
5. Conversion of Shares. At the Effective Time, by virtue of the Merger
and without any action on the part of the holder thereof:
(a) each share of the common stock, par value $.02 per share
(the "Bentley Florida Common Stock") of Bentley Florida outstanding immediately
prior to the Effective Time shall be changed and converted into and shall be one
fully paid and nonassessable share of common stock, par value $.02 per share
(the "Surviving Corporation Common Stock") of the Surviving Corporation and no
fractional shares shall be issued and fractions of half or more shall be rounded
to a whole share and fractions of less than half shall be disregarded, such that
the issued and outstanding capital stock
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of the Surviving Corporation resulting from the conversion of the Bentley
Florida Common Stock upon the Effective Time shall be equal to the number of
shares of Bentley Florida Common Stock at that time; and
(b) as of the Effective Time, the Surviving Corporation hereby
assumes all obligations under any and all employee benefit plans of Bentley
Florida in effect as of the Effective Time or with respect to which employee
rights or accrued benefits are outstanding as of the Effective Time and shall
continue the stock option plans, warrants or other rights to purchase, or
securities convertible into Bentley Florida Common Stock. Each outstanding and
unexercised option, warrant or other right to purchase, or security convertible
into Bentley Florida Common Stock shall become an option, warrant or right to
purchase, or a security convertible into the Surviving Corporation Common Stock
on the basis of one share of the Surviving Corporation Common Stock for each
share of Bentley Florida Common Stock issuable pursuant to any such option,
warrant or stock purchase right or convertible security, on the same terms and
conditions and at an exercise or conversion price per share equal to the
exercise or conversion price per share applicable to any such Bentley Florida
option, warrant, stock purchase right or other convertible security at the
Effective Time.
A number of shares of the Surviving Corporation Common Stock
shall be reserved for issuance upon the exercise of options, warrants, stock
purchase rights and convertible securities equal to the number of shares of
Bentley Florida Common Stock so reserved immediately prior to the Effective
Time.
(c) the shares of Surviving Corporation Common Stock presently
issued and outstanding in the name of Bentley Florida shall be canceled and
retired and resume the status of authorized and unissued shares of Surviving
Corporation Common Stock, and no shares of Surviving Corporation Common Stock or
other securities of Bentley Florida shall be issued in respect thereof.
6. Stock Certificates. As of and after the Effective Time, all of the
outstanding certificates which, immediately prior to the Effective Time,
represented shares of Bentley Florida Common Stock shall be deemed for all
purposes to evidence ownership of, and to represent, shares of Surviving
Corporation Common Stock into which the shares of Bentley Florida Common Stock
formerly represented by such certificates, have been converted as herein
provided. The registered owner on the books and records of the Surviving
Corporation or its transfer agents of any such outstanding stock certificate
shall, until such certificate shall have been surrendered for transfer or
otherwise accounted for to the Surviving Corporation or its transfer agents,
have and be entitled to exercise any voting and other rights with respect to,
and to receive any dividends and other distributions upon, the shares of
Surviving Corporation Common Stock evidenced by such outstanding certificate as
above provided.
7. Shareholder Approval. This Agreement has been approved by Bentley
Florida under Section 607.1103 of the Florida Business Corporation Act by the
shareholders representing in excess of 50% of the issued and outstanding voting
securities of Bentley Florida. This Agreement has been approved by Bentley
Delaware under Section 253 of the General Corporation Law of the State of
Delaware. The signature of Bentley Florida on this Agreement shall constitute
its written consent as sole shareholder of Bentley Delaware, to this Agreement
and the Merger.
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8. Amendment. To the full extent permitted by applicable law, this
Agreement may be amended, modified or supplemented by written agreement of the
parties hereto, either before or after approval of the shareholders of the
constituent corporations and at any time prior to the Effective Time with
respect to any of the terms contained herein.
9. Termination. At any time prior to the Effective Time, this Agreement
may be terminated and the Merger may be abandoned by the Boards of Directors of
Bentley Florida or Bentley Delaware, notwithstanding approval of this Agreement
by the shareholders of Bentley Delaware or by the shareholders of Bentley
Florida, or both, if, in the opinion of either of the Boards of Directors of
Bentley Florida or Bentley Delaware, circumstances arise which in the opinion of
such Boards of Directors, make the Merger for any reason inadvisable.
10. Counterparts. In order to facilitate the filing and recording of
this Agreement, the same may be executed in two or more counterparts, each of
which shall be deemed to be an original and the same agreement.
11. Florida Appointment. Bentley Delaware hereby agrees that it may be
served with process in the State of Florida in any action or special proceeding
for enforcement of any liability or obligation of Bentley Florida or Bentley
Delaware arising from the Merger. Bentley Delaware appoints the Secretary of
State of the State of Florida as its agent to accept service of process in any
such suit or other proceeding and a copy of such process shall be mailed by the
Secretary of State of Florida to Bentley Delaware at 65 Lafayette Road, North
Hampton, New Hampshire 03862.
12. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware.
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IN WITNESS WHEREOF, Bentley Florida and Bentley Delaware have caused
this Agreement to be executed and delivered by their respective duly authorized
officers as of the date first above written.
BENTLEY PHARMACEUTICALS, INC.
a Florida corporation
By:_________________________________
Name:
Title:
BENTLEY PHARMA, INC.
a Delaware corporation
By:_________________________________
Name:
Title:
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APPENDIX B
RESTATED CERTIFICATE OF INCORPORATION
OF
BENTLEY PHARMA, INC.
This Restated Certificate of Incorporation of BENTLEY PHARMA, INC. (the
"Corporation"), was duly adopted by the Board of Directors of the Corporation on
_______________, 1999 and the stockholders of the Corporation on
_______________, 1999, as set forth below, in accordance with Sections 228, 242
and 245 of the General Corporation Law of the State of Delaware (the "GCL"). The
original Certificate of Incorporation was filed on May 1, 1998.
The text of the Certificate of Incorporation as amended or supplemented
heretofore is hereby restated and further amended to read in its entirety as
follows:
ARTICLE I
The name of this Corporation shall be BENTLEY PHARMACEUTICALS, INC.
ARTICLE II
The address of the registered office of the Corporation in the State of Delaware
shall be at Corporation Trust Center, 1209 Orange Street, City of Wilmington,
County of New Castle, Delaware 19801. The name and address of the Corporation's
registered agent in the State of Delaware is The Corporation Trust Company, 1209
Orange Street, City of Wilmington, County of New Castle, Delaware 19801.
ARTICLE III
The nature of the business and the purposes to be conducted and promoted by the
Corporation shall be to conduct any lawful business, to promote any lawful
purpose, and to engage in any lawful act or activity for which corporations may
be organized under the GCL.
ARTICLE IV
The total number of shares of stock which the Corporation shall have authority
to issue is 37,000,000 shares, consisting of: (a) 35,000,000 shares of a single
class of common stock, par value $.02 per share ("Common Stock"); and (b)
2,000,000 shares of preferred stock, par value $1.00 per share ("Preferred
Stock"). The number of shares of Preferred Stock may be issued from time to time
in one or more series as may be established from time to time by resolution of
the Board of Directors of the Corporation (the "Board of Directors"), each of
which series shall consist of such number of shares and have such distinctive
designation or title as shall be fixed by resolution of the Board of Directors
prior to the issuance of any shares of such series. The Board of Directors is
expressly authorized to provide for the issuance of all or any shares of the
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Preferred Stock in one or more classes or series, and, subject to the provisions
hereof, to fix by resolution or resolutions the designations, powers,
preferences and relative, participating, optional or other special rights, and
the qualifications, limitations and restrictions, of each such class or series.
ARTICLE V
In furtherance and not in limitation of the powers conferred by statute and
subject to Article Sixth hereof, the Board of Directors is expressly authorized
to adopt, repeal, rescind, alter or amend in any respect the Bylaws of the
Corporation (the "Bylaws").
ARTICLE VI
Notwithstanding Article Fifth hereof, the Bylaws may be adopted, rescinded,
altered or amended in any respect by the stockholders of the Corporation, but
only by the affirmative vote of the holders of not less than 66 2/3% of the
voting power of all outstanding shares of voting stock, regardless of class and
voting together as a single voting class, and where such action is proposed by
an interested stockholder or by any associate or affiliate of an interested
stockholder, the affirmative vote of the holders of at least a majority of the
voting power of all outstanding shares of voting stock, regardless of class and
voting together as a single voting class, other than shares held by the
interested stockholder which proposed (or the affiliate or associate of which
proposed) such action, or any affiliate or associate of such interested
stockholder; provided, however, that where such action is approved by a majority
of the continuing directors the affirmative vote of a majority of the voting
power of all outstanding shares of voting stock, regardless of class and voting
together as a single voting class, shall be required for approval of such
action.
ARTICLE VII
The business and affairs of the Corporation shall be managed by and under the
direction of the Board of Directors. Except as may otherwise be provided
pursuant to Article Fourth hereof in connection with rights to elect additional
directors under specified circumstances which may be granted to the holders of
any series of Preferred Stock, the number of directors of the Corporation shall
be set in accordance with the Bylaws.
ARTICLE VIII
Each director shall serve until his successor is elected and qualified or until
his death, resignation or removal; no decrease in the authorized number of
directors shall shorten the term of any incumbent director; and additional
directors, elected pursuant to Article Fourth hereof in connection with rights
to elect such additional directors under specified circumstances which may be
granted to the holders of any series of Preferred Stock, shall not be included
in any class, but shall serve for such term or terms and pursuant to such other
provisions as are specified in the resolution of the Board of Directors
establishing such series.
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ARTICLE IX
(a) Except as may otherwise be provided pursuant to Article Fourth
hereof in connection with rights to elect additional directors
under specified circumstances which may be granted to the
holders of any series of Preferred Stock, newly created
directorships resulting from any increase in the number of
directors, or any vacancies on the Board of Directors
resulting from death, resignation, removal or other causes,
shall be filled solely by the affirmative vote of a majority
of the remaining directors then in office, even though less
than a quorum of the Board of Directors.
(b) Any director elected in accordance with the preceding
paragraph (a) shall hold office until the next annual meeting
of stockholders or until such director's death, resignation or
removal, whichever first occurs.
ARTICLE X
Except for such additional directors as may be elected by the holders of any
series of Preferred Stock pursuant to the terms thereof established by a
resolution of the Board of Directors pursuant to Article Fourth hereof, any
director may only be removed from office for cause at a meeting of the
stockholders held for such purposes, and only by the affirmative vote of the
holders of not less than 66 2/3% of the voting power of all outstanding shares
of voting stock entitled to vote in connection with the election of such
director, regardless of class and voting together as a single voting class, and,
where such action is proposed by an interested stockholder, the affirmative vote
of the holders of a majority of the voting power of all outstanding shares of
voting stock, regardless of class and voting together as a single class, other
than shares held by the interested stockholder which proposed (or an affiliate
or associate which proposed) such action, or any affiliate or associate of such
interested stockholder; provided, however, that where such removal is approved
by at least a majority of the continuing directors, the affirmative vote of at
least a majority of the voting power of all outstanding shares of voting stock
entitled to vote in connection with the election of such director, regardless of
class and voting together as a single voting class, shall be required for
approval of such removal.
ARTICLE XI
(a) The Board of Directors shall be divided into three (3)
classes: Class I, Class II and Class III. The number of
directors in each Class shall be the whole number contained in
such quotient obtained by dividing the authorized number of
directors by three (3). If a fraction is also contained in
such quotient, then additional directors shall be apportioned
amongst the Classes as determined by the Board of Directors.
Each Class of directors shall be elected for a term of three
(3) years each and the term of each Class of directors shall
expire in subsequent years so that approximately one Class
shall be elected annually.
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(b) Except as provided in Article IX, paragraph (b) for directors
appointed to newly created directorships or vacancies, each
director shall serve for a term ending on the date of the
expiration of the term of the Class to which the director is
elected.
ARTICLE XII
Meetings of stockholders of the Corporation may be held within or without the
State of Delaware, as the Bylaws may provide. The books of the Corporation may
be kept (subject to any provision of applicable law) outside the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the Bylaws.
ARTICLE XIII
(a) In addition to any vote required by law and in addition to
the requirements of paragraph (b) of this Article XIII and except as otherwise
expressly provided in paragraph (c) of this Article XIII, the affirmative vote
of the holders of at least 66 2/3% of the outstanding shares of capital stock of
the Corporation entitled to vote thereon shall be required to authorize: (i) any
merger, combination, amalgamation or consolidation of the Corporation or any of
its subsidiaries with or into any other corporation or entity; or (ii) any sale,
lease or exchange by the Corporation of property or assets constituting all or
substantially all of the property and assets of the Corporation and its
subsidiaries taken as a whole to or with any other corporation, person or other
entity; or (iii) the dissolution or liquidation of the Corporation. Such
affirmative vote shall be required notwithstanding the fact that some lesser
percentage may be specified by law, in any contract or agreement (including any
agreement with any national securities exchange or otherwise) to which the
Corporation is a party and shall be in addition to any class or series vote to
which any class or series of stock of the Corporation may be entitled.
(b) In addition to the requirements of paragraph (a) of this
Article XIII and except as otherwise provided in paragraph (c) of this Article
XIII, in any transaction set forth in subparagraphs (i), (ii) or (iii) of
paragraph (a) of this Article XIII, the aggregate amount of cash and fair market
value of the consideration other than cash to be received per share by the
holders of the Corporation's Common Stock shall be at least equal to the highest
of the following amounts: (i) the fair market value per share of the
Corporation's Common Stock on the announcement date of such transaction, (ii)
the fair market value per share of the Corporation's Common Stock on the date on
which the other corporation, person or entity became an interested stockholder,
or (iii) the per share price paid by the other corporation, person or entity in
the transaction in which such other corporation, person or entity became an
interested stockholder.
(c) The provisions of Article XIII, paragraphs (a) and (b)
shall not apply to any transaction set forth in subparagraphs (i), (ii) or (iii)
of paragraph (a) of this Article XIII if a majority of the continuing directors
shall by resolution have approved such transaction.
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ARTICLE XIV
For the purposes of this Restated Certificate of Incorporation, the following
definitions shall apply:
(a) "continuing director" means: (i) any member of the Board of
Directors who (A) is not an interested stockholder or an
affiliate or associate of an interested stockholder and (B)
was a member of the Board of Directors prior to the time that
an interested stockholder became an interested stockholder;
and (ii) any person who is elected or nominated to succeed a
continuing director, or to join the Board of Directors, by a
majority of the continuing directors.
(b) The terms "affiliate," "associate," "control," "interested
stockholder," "owner," "person" and "voting stock" shall have
the meanings set forth in Section 203(c) of the GCL.
ARTICLE XV
The provisions set forth in this Article Fifteenth and in Articles Fourth,
Fifth, Sixth, Seventh, Ninth (paragraph (a) only), Tenth, Eleventh (paragraph
(a) only), Thirteenth and Fourteenth hereof may not be repealed, rescinded,
altered or amended in any respect, and no other provision or provisions may be
adopted which impair(s) in any respect the operation or effect of any such
provision, except by the affirmative vote of the holders of not less than 66
2/3% of the voting power of all outstanding shares of voting stock, regardless
of class and voting together as a single voting class, and, where such action is
proposed by an interested stockholder or by any associate or affiliate of an
interested stockholder, the affirmative vote of the holders of a majority of the
voting power of all outstanding shares of voting stock, regardless of class and
voting together as a single class, other than shares held by the interested
stockholder which proposed (or the affiliate or associate of which proposed)
such action, or any affiliate or associate of such interested stockholder;
provided, however, that where such action is approved by at least a majority of
the continuing directors, the affirmative vote of at least a majority of the
voting power of all outstanding shares of voting stock, regardless of class and
voting together as a single voting class, shall be required for approval of such
action.
ARTICLE XVI
The Corporation reserves the right to adopt, repeal, rescind, alter or amend in
any respect any provision contained in this Certificate in the manner now or
hereafter prescribed by applicable law, and all rights conferred on stockholders
herein are granted subject to this reservation. Notwithstanding the preceding
sentence, the provisions set forth in Articles Fourth, Fifth, Sixth, Seventh,
Ninth (paragraph (a) only), Tenth, Eleventh (paragraph (a) only), Thirteenth,
Fourteenth and Fifteenth may not be repealed, rescinded, altered or amended in
any respect, and no other provision or provisions may be adopted which impair(s)
in any respect the operation or effect of any such provisions, unless such
action is approved as specified in Article Fifteenth hereof.
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ARTICLE XVII
No director of the Corporation shall be liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (a) for any breach of the director's duty of loyalty to the
Corporation or its stockholders, (b) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (c) under
Section 174 of the GCL, or (d) for any transaction from which the director
derived an improper personal benefit. If the GCL hereafter is amended to
authorize the further elimination or limitation of the liability of directors,
then the liability of a director of the Corporation, in addition to the
limitation on personal liability provided herein, shall be limited to the
fullest extent permitted by the amended GCL. Any repeal or modification of this
Section by the stockholders of the Corporation shall be prospective only and
shall not adversely affect any limitation on the personal liability of a
director of the Corporation existing at the time of or prior to such repeal or
modification.
ARTICLE XVIII
No contract or other transaction of the Corporation with any other person, firm
or corporation, or in which this corporation is interested, shall be affected or
invalidated by: (a) the fact that any one or more of the directors or officers
of the Corporation is interested in or is a director or officer of such other
firm or corporation; or, (b) the fact that any director or officer of the
Corporation, individually or jointly with others, may be a party to or may be
interested in any such contract or transaction, so long as the contract or
transaction is authorized, approved or ratified at a meeting of the Board of
Directors by sufficient vote thereon by directors not interested therein, to
which such fact of relationship or interest has been disclosed, or the contract
or transaction has been approved or ratified by vote or written consent of the
stockholders entitled to vote, to whom such fact of relationship or interest has
been disclosed, or so long as the contract or transaction is fair and reasonable
to the Corporation. Each person who may become a director or officer of the
Corporation is hereby relieved from any liability that might otherwise arise by
reason of his contracting with the Corporation for the benefit of himself or any
firm or corporation in which he may in any way be interested.
ARTICLE XIX
The Corporation shall, to the fullest extent permitted by the GCL, as the same
may be amended and supplemented, indemnify any and all persons whom it shall
have power to indemnify from and against any and all liabilities, including,
without limitation, expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement of any suit, action or proceeding to which such
person is made, or is threatened to be made, a party. The indemnification
provided for herein shall not be deemed exclusive of any other rights to which
any person may be entitled under any By-law, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in his official capacity
and as to action in another capacity while holding such office; shall continue
as to a person who has ceased to be a director, officer, employee or agent; and
shall inure to the benefit of the heirs, executors and administrators of such a
person.
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IN WITNESS WHEREOF, Bentley Pharma, Inc. has caused this Restated
Certificate of Incorporation to be executed by its President and to be attested
to by its Secretary as of the ______ day of __________, 1999.
BENTLEY PHARMA, INC.
By:____________________________
Name:
Title: President
By:____________________________
Name:
Title: Secretary
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APPENDIX C
AMENDED AND RESTATED BYLAWS
OF
BENTLEY PHARMACEUTICALS, INC.
(FORMERLY KNOWN AS BENTLEY PHARMA, INC.)
The following are the Bylaws of BENTLEY PHARMACEUTICALS, INC., a
Delaware corporation formerly known as Bentley Pharma, Inc. (the "Corporation"),
effective as of ____________, 1999 upon approval by the Corporation's Board of
Directors and stockholders:
ARTICLE I. MEETINGS OF STOCKHOLDERS
SECTION 1. ANNUAL MEETING. The annual meeting of the stockholders of the
Corporation for the election of Directors and the transaction of such other
business as may be properly come before the meeting shall be held on the second
Friday in June of each year or at another date and at such time as determined by
the President or a majority of the Board of Directors. If the annual meeting is
not held, by oversight or otherwise, a special meeting shall be held as soon as
practical, and any business transacted or election held at that meeting shall be
as valid as if transacted or held at the annual meeting.
SECTION 2. SPECIAL MEETINGS. Special meetings of the stockholders for any
purpose shall be held when called by the President or a majority of the Board of
Directors or when requested in writing by the holder or holders of not less than
one-third (33 1/3%) of all the shares entitled to vote at the
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meeting. A meeting requested by stockholders shall be called for a date not less
than ten nor more than sixty days after the request is made, unless the
stockholders requesting the meeting designate a later date. The Secretary shall
issue the call for the meeting, unless the President, the Board of Directors, or
the stockholders requesting the meeting designate another person to do so. The
stockholders at a special meeting may transact only business that is related to
the purposes stated in the notice of the meeting.
SECTION 3. PLACE. Meetings of stockholders may be held within or without the
State of Delaware and any stockholder may waive notice thereof either before or
after the meeting.
SECTION 4. NOTICE. A written notice of each meeting of stockholders, stating the
place, day, and time of the meeting and, in the case of a special meeting, the
purpose or purposes for which the meeting is called, shall be delivered to each
stockholder of record entitled to vote at the meeting, not less than ten (10)
nor more than sixty (60) days before the date set for the meeting, either
personally or by first class mail, by or at the direction of the President, the
Secretary, or the officer or other persons calling the meeting. If mailed, the
notice is effective when it is deposited in the United States mail, postage
prepaid, addressed to the stockholder at his address as it appears on the
records of the Corporation. This notice shall be sufficient for that meeting and
any adjournment of the meeting if the time and place to which the meeting is
adjourned are announced at the meeting at which the adjournment is taken and, if
after the adjournment, the Board does not fix a new record date for the
adjourned meeting. If any stockholder transfers any of his stock after notice is
given, it shall not be necessary to notify the transferee. All items to be
placed on the agenda for vote at an annual stockholders meeting including any
director or slate of directors, must be submitted to the Corporation in writing
75 days prior to the day of the meeting to allow the Corporation time to have
the item included in the proxy statement mailed to all the stockholders with the
notice of said meeting and further, in the case
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of a nomination of a director or a slate of directors, the submission shall also
include the required qualifications and background information and an acceptance
of the nomination in writing of each nominee.
SECTION 5. WAIVERS OF NOTICE. Whenever any notice is required to be given to any
stockholder under these Bylaws, the Company's Certificate of Incorporation, or
the Delaware General Corporation Law, a written waiver of notice signed at any
time by the person entitled to that notice shall be equivalent to giving that
notice. Attendance by a stockholder entitled to vote at a meeting, in person or
by proxy, constitutes a waiver of notice of the meeting, except when a
stockholder attends a meeting for the purpose, expressed at the beginning of the
meeting, of objecting to the transaction of any business because the meeting is
not lawfully called or convened.
SECTION 6. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE. For the purpose
of determining stockholders entitled to payment of any dividend or to receive
notice of or to vote at any meeting of stockholders or any adjournment of any
meeting or in order to make a determination of stockholders for any other
purpose, the Board of Directors may provide that the stock transfer books shall
be closed for a period not to exceed sixty days. If the stock transfer books are
closed for the purpose of determining stockholders entitled to notice of or to
vote at a meeting of stockholders, they shall be closed at least ten days
immediately preceding that meeting. Instead of closing the stock transfer books,
the Board of Directors may fix in advance a date as the record date for the
determination of stockholders but that date shall never be more than sixty days
nor, in case of a meeting of stockholders, less than ten days prior to the date
on which the action requiring the determination of stockholders is to be taken.
If the stock transfer books are not closed and no record date is fixed for the
determination of stockholders, the date on which either notice of the meeting is
mailed or the resolution of the Board of Directors declaring a dividend or
authorizing the action that requires a
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determination of stockholders is adopted shall be the record date for the
determination of stockholders. When a determination of stockholders entitled to
vote at any meeting of stockholders has been made as provided in this section,
the determination shall apply to any adjournment of the meeting, unless the
Board of Directors fixes a new record date for the adjourned meeting.
SECTION 7. VOTING RECORD. At least ten (10) days before each meeting of
stockholders, the officer or agent having charge of the stock transfer books for
shares of the Corporation shall make a complete list of the stockholders
entitled to vote at that meeting or at any adjournment of such meeting, stating
each stockholder's address and the number, class, and series of the shares that
he holds. This list shall be kept on file for a period of at least ten (10) days
before the meeting at the Corporation's registered office or principal place of
business or at the office of its transfer agent or registrar, and any
stockholder may inspect the list anytime during usual business hours. The list
also shall be produced and kept open at the time and place of the meeting, and
any stockholder may inspect it anytime during the meeting. Failure to comply
with the requirements of this section does not affect the validity of .any
action taken at the meeting.
SECTION 8. STOCKHOLDER QUORUM AND VOTING. A majority of the shares entitled to
vote, represented in person or by proxy, constitutes a quorum at any meeting of
stockholders. When an item of business must be voted on by a class or series of
stock, a majority of the shares of that class or series constitutes a quorum for
the transaction of that business by that class or series. If a quorum is
present, the affirmative vote of the majority of the shares represented at the
meeting and entitled to vote on the matter is the act of the stockholders unless
otherwise provided by law or by the Corporation's Certificate of Incorporation.
After a quorum has been established at a stockholders' meeting, a withdrawal of
stockholders that reduces the number of stockholders entitled to vote at the
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meeting below the number required for a quorum does not affect the validity of
any action taken at the meeting.
SECTION 9. VOTING OF SHARES. Every stockholder entitled to vote at a meeting of
stockholders is entitled, upon each proposal presented to the meeting, to one
vote for each share of voting stock recorded in his name on the books of the
Corporation on the record date fixed as provided in Article I, Section 6 of
these Bylaws. A stockholder may vote either in person or by proxy executed in
writing by the stockholder or his duly authorized attorney-in-fact. Treasury
shares, shares of stock of this Corporation owned by another corporation the
majority of the voting stock of which is owned or controlled by this
Corporation, and shares of stock of this Corporation that it holds in a
fiduciary capacity shall not be voted, directly or indirectly, at any meeting
and shall not be counted in determining the total number of outstanding shares.
The Chairman of the Board, the President, any Vice President, the Secretary, and
the Treasurer of a corporate stockholder, in that order, are presumed to possess
authority to vote shares standing in the name of the corporate stockholder in
the absence of a bylaw or other instrument of the corporate stockholder
designating some other officer, agent, or proxy to vote the shares. Proof of
that designation shall be made by presentation of a certified copy of the bylaws
or other instrument of the corporate stockholder. Shares held by a personal
representative, guardian, or conservator may be voted by him, either in person
or by proxy, without a transfer of those shares into his name. A trustee may
vote, either in person or by proxy, shares standing in his name, but no trustee
may vote any shares that are not transferred into his name. If he is authorized
to do so by an appropriate order of the court by which he was appointed, a
receiver may vote shares standing in his name or held by or under his control
without a transfer of those shares into his name. A stockholder whose shares are
pledged may vote those shares until the shares have been transferred into the
name of the pledgee, and thereafter the pledgee or his nominee
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shall be entitled to vote the .shares transferred, unless the instrument
creating the pledge provides otherwise.
SECTION 10. PROXIES. A stockholder entitled to vote at a meeting of the
stockholders or to express consent or dissent without a meeting or a
stockholder's duly authorized attorney-in-fact may authorize one or more persons
to act for him by proxy. To be effective, a proxy must be signed by the
stockholder or his attorney-in-fact. A proxy granting authority to vote shares
that are registered in the names of multiple owners is effective only if each
record owner signs it. A proxy is not valid after three (3) years from its date
unless it provides otherwise. A proxy is revocable at the pleasure of the
stockholder executing it, except as otherwise provided by law. A proxy holder's
authority to act is not revoked by the incompetence or death of the stockholder
who executed the proxy unless, before the authority is exercised, the officer or
agent responsible for maintaining the list of stockholders receives written
notice of an adjudication of incompetence or death. If a proxy for the same
shares confers authority on two or more persons and does not otherwise indicate
how the shares should be voted, a majority of those proxies who are present at
the meeting (or a single proxy holder if only one is present) may exercise all
the powers conferred by the proxy, but if the proxy holders present at the
meeting are equally divided as to the manner of voting in any case, the voting
of the shares subject to the proxy shall be prorated. If a proxy expressly
provides, the proxy holder may appoint in writing a substitute to act in his
place.
SECTION 11. ACTION BY STOCKHOLDERS WITHOUT A MEETING. Any action required by
law, these Bylaws, or the Certificate of Incorporation of this Corporation to be
taken at an annual or special meeting of stockholders of the Corporation or any
action that may be taken at any annual or special meeting of the stockholders
may be taken without a meeting, without prior notice, and without a vote, if a
written consent, setting forth the action taken, is signed by the holders of
outstanding stock
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having not less than the minimum number of votes that would be necessary to
authorize or take that action at a meeting at which all shares entitled to vote
on the matter were present and voted. All stockholders need not sign the same
document. If any class of shares is entitled to vote as a class, written consent
is required of both (a) the holders of each class of shares entitled to vote as
a class, and (b) the total shares entitled to vote on the matter. In the case of
each vote required by paragraphs (a) and (b) of the immediately preceding
sentence, each such vote shall have not less than the minimum number of votes
that would be necessary to authorize or take action at a meeting at which all
shares entitled to vote on the matter were present and voted. Promptly after the
stockholders authorize an action by written consent, written notice shall be
given to the stockholders who did not consent.
SECTION 12. VOTING TRUSTS. Any number of stockholders of this Corporation may
create a voting trust in the manner provided by law for the purpose of
conferring upon the trustee or trustees the right to vote or otherwise represent
their shares. When the counterpart of a voting trust agreement and a copy of the
record of the holders of voting trust certificates are deposited with the
Corporation as provided by law, those documents shall be subject to the same
right of examination by a stockholder of the Corporation, in person or by agent
or attorney, as are the books and records of the Corporation, and the
counterpart and the copy of the records shall be subject to examination by any
holder of record of voting trust certificates, either in person or by agent or
attorney at any reasonable time for any proper purpose.
SECTION 13. STOCKHOLDERS AGREEMENT. Two or more stockholders of this Corporation
may enter into an agreement providing for the exercise of voting rights in the
manner provided in the agreement or relating to any phase of the affairs of the
Corporation, in the manner and to the extent provided
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by law. The agreement shall not impair the right of this Corporation to treat a
stockholder of record as entitled to vote the shares as standing in his name.
ARTICLE II. DIRECTORS
SECTION 1. FUNCTION. The business of this Corporation shall be managed and its
corporate powers exercised by the Board of Directors.
SECTION 2. NUMBER. The number of members of the Corporation's Board of Directors
shall not be less than one nor more than thirteen, as fixed from time to time by
resolution of the Board of Directors. All the Directors shall be of full age and
at least one shall be a citizen of the United States. The presence of a majority
of all Directors shall be necessary at any meeting to constitute a quorum for
the transaction of business. Meetings of the Directors may be held within or
without the state of Delaware.
SECTION 3. QUALIFICATION. Each Director need not be a resident of Delaware.
SECTION 4. COMPENSATION. The Board of Directors has authority to fix the
compensation of the Directors as Directors and as officers.
SECTION 5. DUTIES OF DIRECTORS. A Director shall perform his duties as a
Director, including his duties as a member of any committee of the Board upon
which he serves, in good faith, in a manner he reasonably believes to be in the
best interests of the Corporation, and with such care as an ordinarily prudent
person in a similar position would use under similar circumstances. In
performing his duties, a Director may rely on information, opinions, reports, or
statements, including financial statements and other financial data, prepared or
presented by the following:
(a) one or more officers or employees of the Corporation whom the
Director reasonably believes to be reliable and competent in the matters
presented;
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(b) counsel, public accountants, or other persons as to matters that
the Director reasonably believes to be within that person's professional or
expert competence; or
(c) a committee of the Board upon which he does not serve and which he
reasonably believes to merit confidence, as to matters within the authority
designated to it by the Certificate of Incorporation or the Bylaws. A Director
shall not be considered as acting in good faith if he has knowledge concerning
the matter in question that would cause the reliance described above to be
unwarranted. A person who performs his duties in compliance with this section
shall have no liability because of his being or having been a Director of the
Corporation.
SECTION 6. PRESUMPTION OF ASSENT. A Director of the Corporation who is present
at a meeting of the Board of Directors at which action on any corporate matter
is taken is presumed to have assented to the action unless he votes against it
or expressly abstains from voting on it. The Secretary of the meeting shall
record each abstention or negative vote in the minutes of the meeting.
SECTION 7. NEWLY CREATED DIRECTORSHIPS AND VACANCIES. Newly created
directorships and vacancies on the Board of Directors shall be filled in
accordance with Article IX of the Certificate of Incorporation.
SECTION 8. QUORUM AND VOTING. A majority of the full Board of Directors
constitutes a quorum for the transaction of business. The act of the majority of
the Directors present at a meeting at which a quorum is present is the act of
the Board of Directors.
SECTION 9. EXECUTIVE AND OTHER COMMITTEES. The Board of Directors by resolution
adopted by a majority of the full Board of Directors, may designate from among
its members an executive committee and one or more other committees each of
which, to the extent provided in the resolution
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shall have and may exercise all the authority of the Board of Directors, except
that no committee shall have the authority to:
(a) approve, adopt or recommend to stockholders actions or proposals
required by law to be submitted to the stockholders, or
(b) amend or repeal the Bylaws. The Board of Directors, by resolution
adopted according to this section, may designate one or more Directors as
alternate members of any committee, who may act in the place of any absent
member at any meeting of that committee.
SECTION 10. PLACE OF MEETINGS. Regular and special meetings by the Board of
Directors may be held within or outside the State of Delaware.
SECTION 11. REGULAR MEETINGS. A regular meeting of the Board of Directors shall
be held without notice other than this Bylaw immediately after, and at the same
place as, the annual meeting of stockholders. The Board of Directors may
provide, by resolution, the time and place for the holding of additional regular
meetings without notice other than this Bylaw.
SECTION 12. SPECIAL MEETINGS. Special meetings of the Board of Directors may be
called by or at the request of the President or any two Directors.
SECTION 13. NOTICE OF MEETINGS. Written notice of the time and place of special
meetings of the Board of Directors shall be given to each Director by either
personal delivery or first-class United States mail, telegram, or cablegram at
least two days before the day on which the meeting held or shall be sent to him
by facsimile transmission or telephoned or personally delivered to him not later
than the day before the day on which the meeting is held. Notice of a meeting of
the Board of Directors need not be given to any Director who signs a waiver of
notice before, during, or after the meeting. Attendance of a Director at a
meeting constitutes a waiver of notice of that meeting and
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waiver of all objections to the time and place of the meeting, and the manner in
which it was called or convened, except when the Director attends the meeting
solely to object, at the beginning of the meeting, to the transaction of
business because the meeting is not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the Board of Directors need be specified in the notice or waiver of notice of
that meeting. A majority of the Directors present, whether or not a quorum
exists, may adjourn any meeting of the Board of Directors to another time and
place. Notice of any adjourned meeting shall be given to the Directors who were
not present at the time of the adjournment and, unless the time and place of the
adjourned meeting are announced at the time of the adjournment, to the other
Directors.
SECTION 14. METHOD OF MEETING. Members of the Board of Directors may participate
in the meeting of the Board by means of a conference telephone or similar
communications equipment by which all persons participating in the meeting can
hear each other at the same time. Participation by such means constitutes
presence in person at a meeting.
SECTION 15. ACTION WITHOUT A MEETING. Any action required to be taken at a
meeting of the Directors, or any action that may be taken at a meeting of the
Directors or a committee of the Directors, may be taken without a meeting if a
written consent, setting forth the action to be taken and signed by all the
Directors or committee members, is filed in the minutes of the proceedings of
the Board or the committee. All Directors need not sign the same document. A
unanimous, written consent has the same effect as a unanimous vote.
SECTION 16. DIRECTOR CONFLICTS OF INTEREST. No contract or other transaction
between this Corporation and one or more of its Directors or any other
corporation, firm, association or entity in which one or more of the Directors
are directors or officers or are financially interested, shall be either void or
voidable because of that relationship or interest or because the Director or
Directors
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are present at the meeting of the Board of Directors or a committee that
authorizes, approves or ratifies the contract or transaction or because such
person or persons votes are counted for that purpose, if:
(a) the existence of the relationship or interest is disclosed or known
to the Board of Directors or committee that authorizes, approves, or ratifies
the contract or transaction by a vote or consent sufficient for the purpose,
without counting the votes and consents of the interested Directors, or
(b) the existence of the relationship or interest is disclosed, or
known to the stockholders entitled to vote and they authorize, approve, or
ratify the contract or transaction by vote or written consent, or
(c) the contract or transaction is fair and reasonable to the
Corporation at the time it is authorized by the Board, a committee, or the
stockholders. Interested Directors may be counted in determining the presence of
a quorum at a meeting of the Board of Directors or a committee that authorizes,
approves, or ratifies the contract or transaction.
ARTICLE III. OFFICERS
SECTION 1. OFFICERS. The Executive Officers of the Corporation shall consist of
a Chief Executive Officer, President, a Secretary, and a Treasurer, and may
include one or more Executive and Senior Vice Presidents. The Executive Officers
shall be elected by the Board of Directors, at the first meeting of the Board
following the annual meeting of the stockholders each year. The Board from time
to time may elect or appoint other officers (including Vice Presidents),
assistant officers, and agents, who shall have the authority and perform such
duties as the Board prescribes. Each Executive Officer shall hold office until
his successor is appointed and has qualified or until his earlier death,
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resignation, or removal from office. One person may hold any two or more
Executive Offices. The failure to elect any Executive Officer shall not affect
the existence of the Corporation.
SECTION 2. PRESIDENT. The President may also be the Chief Executive Officer
("CEO") of the Corporation. Subject to the directions of the Board of Directors,
the CEO has general and active management of the business and affairs of the
Corporation, and shall preside at all meetings of the stockholders and Board of
Directors. The duties, powers and functions of the CEO and other officers shall
be such as is and has been customary for such CEO and officers of the
Corporation.
SECTION 3. VICE PRESIDENTS. The Executive Vice Presidents and Senior Vice
Presidents have the powers and shall perform the duties that the Board of
Directors or the President prescribes. Unless the Board otherwise provides, if
the President is absent or unable to act, the Executive Vice President shall
perform all the duties and may exercise all the powers of the President. If the
Executive Vice President is absent or unable to act, the Vice President who has
served in the capacity for the longest time and who is present and able to act
shall perform all the duties and may exercise all the powers of the Executive
Vice President. Unless the Board otherwise provides, any Executive or Senior
Vice President may sign bonds, deeds, and contracts for the Corporation and,
with the Secretary or Assistant Secretary, may sign certificates for shares of
stock of the Corporation.
SECTION 4. SECRETARY. The Secretary shall (a) keep the minutes of the meetings
of the stockholders and the Board of Directors in one or more books provided for
that purpose, (b) see that all notices are duly given according to the relevant
provisions of these Bylaws or as required by law, (c) maintain custody of the
corporate records and seal, attest the signatures of officers who execute
documents on behalf of the Corporation, and affix the seal to all documents that
are executed on behalf of the Corporation under its seal, (d) keep a register of
each stockholder's mailing address that the stockholder furnishes to the
Secretary, (e) sign with the President or a Vice President certificates for
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shares of stock of the Corporation, the issuance of which has been authorized by
resolution of the Board of Directors, (f) have general charge of the stock
transfer books of the Corporation, and (g) in general, perform all duties
incident to the office of Secretary and such other duties as the President or
the Board of Directors from time to time prescribes.
SECTION 5. TREASURER. The Treasurer shall (a) have charge and custody of and be
responsible for all funds and securities of the Corporation, (b) receive and
give receipts for all monies due and payable to the Corporation and deposit all
monies in the name of the Corporation in the banks, trust companies, or other
depositories selected by the Board of Directors, and (c) in general perform all
the duties incident to the office of Treasurer and such other duties as the
President or the Board of Directors from time to time assigns to him. If
required by the Board of Directors, the Treasurer shall give a bond for the
faithful discharge of his duties in such sum and with such sureties as the Board
of Directors determines.
SECTION 6. REMOVAL OF OFFICERS. An officer or agent elected or appointed by the
Board of Directors may be removed by the Board or the CEO whenever in the
judgment of either, his removal would serve the best interests of the
Corporation. Removal shall be without prejudice to any contract rights of the
person removed. The mere appointment of any person as an officer, agent, or
employee of the Corporation does not create any contract rights. The Board of
Directors may fill a vacancy in any office.
SECTION 7. SALARIES. The Board of Directors from time to time shall fix the
salaries of the officers, and no officer shall be prevented from receiving a
salary merely because he is also a Director of the Corporation.
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ARTICLE IV. INDEMNIFICATION
Any person, or his heirs or personal representative who is made or threatened to
be made a party to any threatened, pending, or completed action or proceeding,
whether civil, criminal, administrative, or investigative, because he or his
testator or intestate is or was a Director, officer, employee, or agent of this
Corporation or serves or served any other Corporation or enterprise in any
capacity at the request of this Corporation, shall be indemnified by this
Corporation, and this Corporation may advance his related expenses to the full
extent permitted by law. The foregoing right of indemnification or reimbursement
shall not be exclusive of any other rights to which the person or his heirs, or
personal representative may be entitled. The Corporation may, upon the
affirmative vote of a majority of its Board of Directors, purchase insurance for
the purpose of indemnifying these persons. The insurance may be for the benefit
of all Directors, officers, or employees.
ARTICLE V. STOCK CERTIFICATES
SECTION 1. ISSUANCE. Every stockholder of this Corporation is entitled to have a
certificate, evidencing all shares to which he is entitled. No certificate shall
be issued for any share until the share is fully paid.
SECTION 2. FORM. Certificates evidencing shares in this Corporation shall be
signed by the President or a Vice President and the Secretary or an Assistant
Secretary and may be sealed with the seal of this Corporation or a facsimile of
the seal. The signatures of the foregoing officers may be facsimiles if the
certificate is manually signed on behalf of a transfer agent or a registrar,
other than the Corporation or an employee of the Corporation. If, before the
certificate is issued, any officer who signed or whose facsimile signature has
been placed on the certificate ceases to hold that office, the certificate may
be issued and will be as effective as if that person were an officer at the date
of issuance. Every certificate evidencing shares that are restricted as to the
sale, disposition, or other
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transfer shall (a) bear a legend stating that those shares are restricted as to
transfer and (b) the circumstances under which the shares may be transferred.
Every certificate evidencing shares shall state on its face (a) the name of the
Corporation, (b) that the Corporation is organized under the laws of Delaware,
(c) the name of the person or persons to whom the shares are issued, (d) the
number and class of shares, (e) the designation of the series, if any, that the
certificate evidences, and (f) the par value of each share evidenced by the
certificate or a statement that the shares have no par value.
SECTION 3. LOST, STOLEN, OR DESTROYED CERTIFICATES. The Corporation may issue a
new certificate in the place of any certificate previously issued if the holder
of record of the Corporation (a) makes proof in affidavit form that it has been
lost, destroyed, or wrongfully taken, (b) requests the issuance of a new
certificate before the Corporation has notice the certificate has been acquired
by a purchaser for value in good faith and without notice of any adverse claim,
(c) if requested by the Corporation, gives bond in such form as the Corporation
directs, to indemnify the Corporation, the transfer agent, and the registrar
against any claim that may be made because of the alleged loss, destruction, or
theft of a certificate, and (d) satisfies any other reasonable requirements
imposed by the Corporation.
ARTICLE VI. BOOKS AND RECORDS
SECTION 1. RECORDS REQUIRED. This Corporation shall keep correct and complete
books and records of account and minutes of the proceedings of its stockholders,
Board of Directors, and committees of Directors, and shall keep at its
registered office or principal place of business, or at the office of its
transfer agent or registrar, a record of its stockholders, giving the names and
addresses of all stockholders, and the number, class and series, if any, of the
shares held by each.
SECTION 2. FORM. The Corporation's books, records, and minutes may be written or
kept in any other form capable of being converted into writing within a
reasonable time.
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SECTION 3. INSPECTION. Upon written demand stating a proper purpose, any
stockholder may examine, in person or by agent or attorney, during the usual
hours for business, the Corporation's stock ledger, a list of its stockholders,
and any other books and records permitted by law, and may make copies or
extracts from any of the foregoing.
SECTION 4. FINANCIAL REPORTS. Unless modified by resolution of the stockholders,
not later than four months after the close of each fiscal year, this Corporation
shall prepare a balance sheet showing in reasonable detail the financial
condition of the Corporation as of the close of its fiscal year and a profit and
loss statement showing the results of its operation during its fiscal year.
These balance sheets and profit and loss statements shall be (a) filed at the
office of the Corporation, (b) kept for at least three (3) years, and (c)
subject to inspection during business hours by any stockholder or holder of
voting trust certificates, in person or by agent. The Corporation shall mail a
copy of the most recent balance sheet and profit and loss statement to any
stockholder or holder of voting trust certificates for shares of the
Corporation, upon his written request.
SECTION 5. FISCAL YEAR. The fiscal year of the Corporation shall be determined
by resolution of the Board of Directors. ARTICLE VII. DIVIDENDS The Board of
Directors from time to time may declare, and the Corporation may pay, dividends
on the Corporation's outstanding shares in the manner and upon the terms and
conditions provided by law. ARTICLE VIII. SEAL The Corporate seal shall have the
name of the Corporation and the word "seal" inscribed on it, and may be a
facsimile, engraved, printed, or impression seal.
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ARTICLE IX. AMENDMENT
These Bylaws may be repealed or amended, and additional Bylaws may be adopted,
by a majority vote of the Board of Directors, all in accordance and conformity
with the Certificate of Incorporation, and if any Bylaw is found to be in
conflict with the Certificate of Incorporation then the Certificate of
Incorporation shall prevail.
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APPENDIX D
BENTLEY PHARMACEUTICALS, INC.
AMENDED AND RESTATED
1991 STOCK OPTION PLAN
1. PURPOSES OF THE PLAN AND TYPES OF OPTIONS
(a) The purposes of this Stock Option Plan (the "Plan") of Bentley
Pharmaceuticals, Inc., a Florida corporation (the "Corporation"), are (i) to
make available shares of the Common Stock, par value $.02 per share (the "Common
Stock"), of the Corporation for purchase on favorable terms by such employees
(including officers) of the Corporation or its subsidiaries as the Board of
Directors of the Corporation (the "Board"), or a committee thereof constituted
for the purpose, may from time to time determine, and thus to promote the
interests of the Corporation by attracting and retaining executive, management
and other personnel of outstanding ability by enabling such personnel to
participate in the long-term growth and financial success of the Corporation,
and (ii) to attract and retain the services of experienced and knowledgeable
non-employee directors ("Outside Directors") of the Corporation for the benefit
of the Corporation and its stockholders and to provide additional incentive for
such Outside Directors to continue to work for the best interests of the
Corporation and its stockholders through continuing ownership of its Common
Stock.
(b) Stock options granted under the Plan may be of two types, incentive
stock options ("Incentive Stock Options") and non-qualified stock options. It is
intended that Incentive Stock Options granted under the Plan shall constitute
"incentive stock options" within the meaning of Section 422(b) of the Internal
Revenue Code of 1986 as now in effect or as later amended (the "Code") and shall
be subject to the tax treatment described in Section 421 of the Code.
2. STOCK SUBJECT TO THE PLAN
Subject to the provisions of Article 10, the total number of shares of
Common Stock which may be subject to options under the Plan shall not exceed
1,000,000. Such shares may, in the discretion of the Board, consist of either in
whole or in part of authorized but unissued shares, or shares which shall have
been purchased or acquired by the Corporation for this or any other purpose. In
the event any option granted under the Plan shall expire, be cancelled or
terminate for any reason without having been exercised in full or shall cease
for any reason to be exercisable in whole or in part, the unpurchased shares
subject thereto shall be available for the purpose of the Plan.
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3. ADMINISTRATION OF THE PLAN
(a) The Plan shall be administered by the Board which, to the extent it
shall determine, may delegate its powers with respect to the administration of
the Plan to a committee (the "Committee") appointed by the Board and composed of
not less than two directors (or such greater number as required by law), each of
whom shall be a "Non-Employee Director", under Rule 16b-3 or any successor rule
or regulation promulgated under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). References hereinafter to determinations or actions by the
Committee shall be deemed to include determinations and actions by the Board. A
majority of the members of the Committee shall constitute a quorum, and the acts
of a majority of the members present at any meeting at which a quorum is
present, and any acts approved in writing by all members without a meeting,
shall be the acts of the Committee.
(b) The Committee shall determine, within the limits of the express
provisions of the Plan, the individuals to whom, and the time or times at which,
options shall be granted, the number of shares to be subject to each option, the
duration of each option, the option price under each option, and the time or
times within which (during the term of the option) all or portions of each
option may be exercised. In making such determinations, the Committee may take
into account the nature of the services rendered by such individuals, their
present and potential contributions to the Corporation's success and such other
factors as the Committee in its discretion shall deem relevant.
(c) The Committee, in its sole discretion shall determine whether and
to what extent options under the Plan shall be designated as Incentive Stock
Options.
(d) Each individual to whom an option is granted shall enter into a
written Agreement with the Corporation, dated the date the option is granted,
setting forth the terms and conditions of the option granted to him, which
agreement shall contain such terms and conditions, consistent with the Plan, as
the Committee shall approve.
(e) Subject to the express provisions of the Plan, the Committee may
interpret the Plan; correct any defect, supply any omission or reconcile any
inconsistency in the Plan; prescribe, amend and rescind rules and regulations
relating to the Plan; determine the terms and provisions of the respective
option agreements (which need not be identical); and make all other
determinations necessary or advisable for the administration of the Plan.
(f) The determination of the Committee on the matters referred to in
this Article 3 shall be conclusive.
4. ELIGIBILITY
(a) Subject to the provisions of paragraph (b) of this Article 4,
options may be granted only to persons who are employees (which term shall be
deemed to include officers) of the Corporation or of any subsidiary corporation
of the Corporation (such subsidiary corporation being hereinafter called a
"Subsidiary"). An employee who has been granted an option or options at any time
may be granted an additional option or options at a later time or times if the
Committee shall so determine.
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(b) Options may be granted to Outside Directors, subject to the same
terms and conditions as options granted to employees, except that clauses (a)
through (c) of Article 9 and Article 11 shall not apply in any event.
(c) No Incentive Stock Option may be granted under the Plan if such
grant, together with any other applicable grant of Incentive Stock Options under
the Plan or any other plan of the Corporation (and any parent or subsidiary
corporation within the meaning of Section 424(e) and (f) of the Code) would
exceed any applicable maximum established under Section 422 of the Code for
incentive stock options. The aggregate fair market value (determined at the time
the option is granted) of the shares as to which Incentive Stock Options may be
granted under the Plan or any other plan of the Corporation, (and any parent
corporation or subsidiary corporation within the meaning of Section 424(e) and
(f) of the Code) which are exercisable for the first time by such employee
during any calendar year shall not exceed $100.000. If an option granted under
the Plan exceeds such limitations, such option, to the extent of such excess,
shall be a separate non-qualified option.
5. OPTION PRICE
The price at which shares of the Common Stock may be purchased pursuant
to options granted under the Plan shall be not less than 100% of the fair market
value of the Common Stock on the date an option is granted. If an optionee owns
(or is deemed to own under applicable provisions of the Code and rules and
regulations promulgated thereunder) more than 10% of the combined voting power
of all classes of the stock of the Corporation (or any parent or subsidiary
corporation within the meaning of Section 424(e) or (f) of the Code) and an
option granted to such optionee is intended to qualify as an Incentive Stock
Option, the option price shall be no less than 110% of the fair market value of
the Common Stock on the date the option is granted. The fair market value of the
Common Stock on any day shall be the mean between the highest and the lowest
quoted selling prices of the Common Stock on such day as reported by any
national securities exchange that the Common Stock is listed on or the mean
between the highest bid and lowest ask prices of the Common Stock on such day as
reported by the National Association of Securities Dealers Automated Quotation
System ("NASDAQ"). If fair market value cannot be calculated on such date on
either of the foregoing bases, fair market value will be determined by the
Committee. However, with respect to Incentive Stock Options, fair market value
may be computed in any manner required or permitted by the Code and the
regulations promulgated thereunder. The date on which the Committee approves the
granting of an option shall be considered the date on which such option is
granted. Notwithstanding the foregoing, no option may be granted at an option
price that is less than the book value per share of the Common Stock as
determined from the balance sheet of the Corporation as of the end of the
quarter immediately preceding the date of grant (unaudited for the first three
quarters of the fiscal year and audited for the last quarter).
6. TERM OF EACH OPTION
The term of each option shall be for such period as the Committee shall
determine, but not more than ten years from the date of the granting thereof, or
such shorter period as is prescribed in Articles 9 and 11 hereof, provided that
an option intended to qualify as an Incentive Stock Option
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shall have a term of not more than ten years, and further provided that if an
optionee owns (or is deemed to own under applicable provisions of the Code and
rules and regulations promulgated thereunder) more than 10% of the combined
voting power of all classes of the stock of the Corporation (or any parent or
subsidiary corporation within the meaning of Section 424(e) and (f) of the Code)
and an option granted to such optionee is intended to qualify as an Incentive
Stock Option, the term of such option shall be no more than five years. The term
of each option granted to an Outside Director shall be ten years, or such
shorter period as is prescribed in Article 9 hereof.
7. EXERCISE OF OPTIONS
(a) Subject to the provisions of Article 9, no option granted under the
Plan shall be exercisable for one year after the date it is granted. Thereafter,
an option shall become exercisable on such terms and at such times as the
Committee shall determine. An option holder purchasing less than the number of
shares available to him in any year under the option may purchase any such
unpurchased shares in any subsequent year of the option term. The option shall
not be exercisable at any time in an amount less than 100 shares (or the
remaining shares then covered by and purchasable under the option if less than
100 shares). The option may not be exercised in respect of a fraction of a
share.
(b) The purchase price of the shares as to which an option shall be
exercised plus any required Federal income tax or other withholding amount shall
be paid in full at the time of exercise by one or more of the following methods,
as determined by the Committee: (i) in cash or by certified check, (ii) by
transferring to the Corporation previously acquired shares of the Common Stock
having an aggregate fair market value equal to the aggregate option exercise
price of all options being exercised and/or (iii) by transferring to the
Corporation previously acquired shares of the Common Stock having an aggregate
fair market value less than the aggregate option exercise price of all options
being exercised and cash or certified check for the balance of the aggregate
option exercise price of all options being exercised. The fair market value of
the shares so transferred to the Corporation shall be determined in accordance
with the methods described in Article 5, but as of the date of exercise of the
option. The Corporation shall not be required to deliver certificates for such
shares until such payment has been made.
8. NON-TRANSFERABILITY OF OPTIONS
Except as provided in Article 9, no option may be exercised at any time
unless the holder thereof is then an employee of the Corporation or of a
Subsidiary, an Outside Director or a Director Emeritus (as that term is defined
in paragraph (g) of Article 9), as the case may be. No option granted under the
Plan shall be transferable otherwise than by will or by the laws of descent and
distribution, and an option may be exercised, during the lifetime of the holder
thereof, only by him or by his guardian or legal representative.
9. TERMINATION OF EMPLOYMENT OR SERVICE ON THE BOARD
(a) In the event that the employment of an employee to whom an option
has been granted under the Plan shall be terminated (otherwise than by reason of
death, disability or retirement), such option may, subject to the provisions of
Article 11 hereof, be exercised (to the extent that the
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employee was entitled to do so at the termination of his employment) at any time
within three months after such termination but not thereafter, and in no event
after the date on which, except for such termination of employment, the option
would otherwise expire; provided, however, that if the Corporation terminates
the employee's employment within a three-year period after a change in control
of the Corporation (as defined in paragraph (g) of this Article 9), the employee
during such three-month period after termination (but not after the date on
which the option would otherwise expire) may exercise all or any part of the
remaining unexercised portion of the option notwithstanding that the option had
not yet become exercisable with respect to all or part of such shares at the
date of termination.
(b) In the event that the employment of an employee to whom an option
has been granted under the Plan shall be terminated by disability or retirement
(as those terms are defined in paragraph (g) of this Article 9), the remaining
unexercised portion of the option may be exercised by the employee
(notwithstanding that the option had not yet become exercisable with respect to
all or part of such shares at the date of termination) at any time within twelve
months after such termination but not thereafter (except that an optionee
holding Incentive Stock Option cannot exercise such option more than three
months after termination of his employment unless he was disabled within the
meaning of Section 22(e)(3) of the Code), and in no event after the date on
which, except for such termination of employment, the option would otherwise
expire.
(c) If an employee to whom an option has been granted under the Plan
shall die while he is employed by the Corporation or a Subsidiary or during the
period following termination of employment in which the employee had a right to
exercise the option under paragraph (a) or (b) of this Article 9, such option
may be exercised (i) in the case of death while employed, as to all or any part
of the remaining unexercised portion of the option, notwithstanding that the
option had not yet become exercisable with respect to all or a part of such
shares at the date of death, or (ii) in the case of death after termination of
employment, to the extent that the employee was entitled to do so at the date of
his death giving effect to the provisions of paragraphs (a) and (b) of this
Article 9, in either case by a legatee or legatees of such option under the
employee's last will, or by his personal representatives or distributees, at any
time within such period, not exceeding twelve months after his death, as shall
be prescribed in the option agreement, but in no event after the date on which,
except for such death, the option would otherwise expire.
(d) In the event that an Outside Director to whom an option has been
granted under the Plan shall cease to serve on the Board, otherwise than by
reason of death or disability (as that term is defined in paragraph (g) of this
Article 9), without being designated as a Director Emeritus (as that term is
defined in paragraph (g) of this Article 9), or if a Director Emeritus shall
cease to retain such status (otherwise than by reason of death or disability),
such option may be exercised (to the extent that the Outside Director or the
Director Emeritus was entitled to do so at the time of cessation of service or
termination of status), at any time within three months after such cessation of
service or termination of status but not thereafter, and in no event after the
date on which, except for such cessation of service or termination of status,
the option would otherwise expire; provided, however, that if the Outside
Director's cessation of service is the result of his removal or failure to be
nominated for re-election to the Board, or if the termination of the Director
Emeritus status occurs, within three years after a change in control of the
Corporation (as defined in paragraph (g) of this Article 9), the Outside
Director or Director Emeritus during such three month period after cessation of
service or
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termination of status may exercise all or any part of the remaining unexercised
portion of the option notwithstanding that the option had not yet become
exercisable with respect to all or part of such shares at the date of cessation
of service or termination of status. Except hereinabove provided, in the event
an Outside Director to whom an option has been granted under the Plan shall
cease to serve on the Board but shall have been designated as a Director
Emeritus, his option shall continue to be exercisable as though such Director
Emeritus continued to serve as an Outside Director.
(e) In the event that an Outside Director to whom an option has been
granted under the Plan shall cease on the Board by reason of disability or he
shall become disabled (as such terms are defined in paragraph (g) of this
Article 9) while holding the status of Director Emeritus, the remaining
unexercised portion of the option may be exercised by the Outside Director or
Director Emeritus (notwithstanding that the option had not yet become
exercisable with respect to all or part of such shares at the date of
disability) at any time within twelve months after such disability but not
thereafter, and in no event after the date on which, except for such disability,
the option would otherwise expire.
(f) If an Outside Director to whom an option has been granted under the
Plan shall die (i) when he is serving on the Board or while holding the status
of Director Emeritus, or (ii) within three months after cessation of service on
the Board without the status of Director Emeritus or after termination of
Director Emeritus status, or (iii) within twelve months after cessation of
service on the Board or after termination of Director Emeritus status by reason
of disability, such option may be exercise (x) in the case of death while
serving on the Board or while holding the status of Director Emeritus, as to all
or any part of the remaining unexercised portion of the option, notwithstanding
that the option had not yet become exercisable with respect to all or part of
such shares at the date of death, or (y) in the case of death after cessation of
service on the Board without the status of Director Emeritus or after
termination of Director Emeritus status or death after termination of such
service or status by reason of disability, to the extent that the Outside
Director or Director Emeritus was entitled to do so at the date of his death
giving effect to the provisions of paragraphs (d) and (e) of this Article 9, in
each case by a legatee or legatees of such option under the Outside Director's
or Director Emeritus' last will, or by his personal representatives or
distributees, at any time within twelve months after this death, but in no event
after the date on which, except for such death, the option would otherwise
expire.
(g) For the purpose of this Article 9, "retirement" shall mean
retirement no earlier than the normal retirement age pursuant to any pension or
retirement plan of the Corporation or a Subsidiary; "disability" or "disabled"
shall mean permanent mental or physical disability as determined by the
Committee subject, in the case of Incentive Stock Options, to the requirements
of Section 22(e)(3) of the Code; "Director Emeritus" shall mean an honorary
title granted by majority vote of the members of the Board then serving; and
"change in control of the Corporation" shall mean any acquisition by any
corporation, person or entity, of the beneficial ownership, directly or
indirectly, of voting stock of the Corporation resulting in such corporation,
person or entity owning, directly or indirectly, 50% or more of such voting
stock. For the purpose of the foregoing definition of change in control of the
Corporation, any corporation, person or other entity shall be deemed to be the
beneficial owner of any shares of voting stock of the Corporation (i) which it
has the right to acquire, hold or vote pursuant to any agreement, or upon
exercise of conversion rights, warrants or options, or otherwise, or (ii) which
are beneficially owned, directly or indirectly (including shares
D-6
deemed owned through application of clause (i) above), by any other corporation,
person or entity (A) with which it or its "affiliate" or "associate" (as those
terms are defined in Rule 12b-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934 as in effect on August 24, 1978) has any
agreement, arrangement or understanding for the purpose of acquiring, holding,
voting or disposing of voting stock of the Corporation, or (B) which is its
"affiliate" or "associate". In computing the aforesaid percentage, the
outstanding shares of voting stock of the Corporation shall include shares
deemed owned through application of clauses (i) and (ii) but shall not include
any other shares which may be issuable pursuant to any agreement, or upon
exercise of conversion rights, warrants or options or otherwise.
(h) Options granted under the Plan to employees shall not be affected
by any change of employment so long as the holder continues to be an employee of
the Corporation or a Subsidiary. Nothing in the Plan or in any option granted
under the Plan shall confer on any individual any right to continue in the
employ of the Corporation or a Subsidiary or limit or restrict in any way the
right of the Corporation or any Subsidiary to terminate his employment at any
time for any reason whatsoever.
10. ADJUSTMENT OF AND CHANGES IN COMMON STOCK
Notwithstanding any other provisions of the Plan, the option agreements
may contain such provisions as the Board or the Committee shall determine to be
appropriate for the adjustment of the number of shares of Common Stock subject
to each outstanding option, the option prices and the number of shares which may
be exercised in any one year in the event of changes in the Common Stock by
reason of any stock dividend, stock split-up, stock combination, exchange of
shares, recapitalization, merger, consolidation, acquisition of property or
stock, separation, reorganization or liquidation and the like; and, in the event
of any such change in the Common Stock, the aggregate number of shares available
under the Plan shall be appropriately adjusted by the Board or the Committee,
whose determination shall be conclusive.
11. EMPLOYEE'S AGREEMENT TO SERVE
Each employee receiving an option, shall as one of the conditions of
receiving such option, and as an inducement to the Corporation to grant such
option to him, agree that he will remain in the employ of the Corporation, or a
Subsidiary, for a period of at least one year from the date the option is
granted to him, and that he will, during such employment, serve the Corporation
or such Subsidiary in good faith and use his best efforts at all times to
promote its interests. Except as otherwise provided in a written agreement
between the Corporation or such Subsidiary and such employee, such employment
shall be at the pleasure of the Corporation or such Subsidiary and shall be at
such rate of base compensation as the Corporation or such Subsidiary shall
determine from time to time. If, during such one-year period, the employee's
employment shall be terminated by the Corporation (otherwise than a termination
within a three-year period after a change in control of the Corporation as
defined in Article 9) or he shall terminate his employment, otherwise than by
death, disability, retirement (as these terms are defined in Article 9) or with
the consent or approval of the Corporation or such Subsidiary, or shall
otherwise violate the provisions of the agreement referred to in this Article
11, the option or options then held by him shall forthwith terminate. The
provisions of this
D-7
Article 11 shall be incorporated in the option agreement to be executed and
delivered by the Corporation and the individual to whom an option is to be
granted.
12. COMPLIANCE WITH SECURITIES LAWS
The Committee may, in their discretion, require as a condition to the
exercise of any option that the shares reserved for issue upon the exercise of
the option shall have been duly listed, upon official notice of issuance, by the
American Stock Exchange or by such other securities exchange upon which such
shares are then listed, and either that (a) a Registration Statement under the
Securities Act of 1933, as amended, or any succeeding act, with respect to such
shares is effective at the time of such exercise or (b) there is an exemption
from registration under such Act for the issuance of shares of Common Stock upon
such exercise.
13. AMENDMENT AND TERMINATION OF THE PLAN
The Board, without further approval of the Company's stockholders, may
at any time suspend or terminate the Plan, in whole or in part, or amend it from
time to time in such respects as it may deem advisable, including, without
limitation, to comply with the provisions of Rule 16b-3 promulgated under the
Exchange Act and to conform to any change in applicable law or to regulations or
rulings of administrative agencies; provided, however, that no amendment shall
be effective without the requisite prior or subsequent stockholder approval
which would (a) change the class of eligible participants as described in
Article 4 hereof; (b) increase the total number of shares of Common Stock for
which options may be granted under the Plan except as provided in Article 10
hereof; (c) extend the term of the Plan or the maximum option period provided
under the Plan; (d) decrease the minimum option price provided in Article 5
hereof or (e) materially increase the benefits accruing to participants under
the Plan. No options may be granted under the Plan after September 30, 2001,
though options outstanding on such date shall not be affected by such
termination.
Notwithstanding the foregoing, the Board is expressly authorized to
further amend the Plan or any portion thereof and/or to amend or direct the
Committee to amend the terms of any option granted under the Plan in order to
quality any previously granted option and/or any subsequently granted option as
an Incentive Stock Option under Section 422 of the Code.
14. DUTIES OF THE CORPORATION
The Corporation shall at all times during the term of each option
reserve and keep available for issuance or delivery such number of shares of
Common Stock as will be sufficient to satisfy the requirements of all options at
the time outstanding, shall pay all original issue taxes or transfer taxes with
respect to the issuance or delivery of shares pursuant to the exercise of such
options and all other fees and expenses necessarily incurred by the Corporation
in connection therewith, except for required Federal income tax or other
withholding amount.
15. EFFECTIVE DATE OF PLAN
The Plan is subject to approval at the 1991 Annual Meeting of
Stockholders of the Corporation by the vote of the holders of a majority of the
votes present in person or by proxy at such
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meeting. If approved, the Plan shall be effective as of September 30, 1991, the
date of its adoption by the Board. If the Plan is not so approved, any options
granted under the Plan will be void and of no further effect, and the Plan shall
terminate. Any other provision of the Plan to the contrary notwithstanding, no
options granted under the Plan may be exercised until after such stockholder
approval, and if such approval is not obtained, such options shall be null and
void.
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BENTLEY PHARMACEUTICALS, INC.
ANNUAL MEETING OF STOCKHOLDERS - JUNE 30, 1999
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints, as proxies for the undersigned, James
R. Murphy, Dr. Robert M. Stote and Michael D. Price and each of them, with full
power of substitution, to vote all shares of Common Stock of the undersigned in
Bentley Pharmaceuticals, Inc. (the "Company") at the Annual Meeting of
Stockholders of the Company to be held at the Company's New Hampshire offices
located at 65 Lafayette Road, North Hampton, New Hampshire 03862 on June 30,
1999, at 11:00 a.m., local time (the receipt of Notice of which meeting and the
Proxy Statement accompanying the same being hereby acknowledged by the
undersigned), or at any adjournments thereof, upon the matters described in the
Notice of Annual Meeting and Proxy Statement and upon such other business as may
properly come before such meeting or any adjournments thereof, hereby revoking
any proxies heretofore given.
EACH PROPERLY EXECUTED PROXY WILL BE VOTED IN ACCORDANCE WITH THE
SPECIFICATIONS MADE ON THE REVERSE SIDE HEREOF. IF NO SPECIFICATIONS ARE MADE,
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED "FOR" THE LISTED NOMINEES,
"FOR" APPROVAL OF THE CHANGE OF THE COMPANY'S STATE OF INCORPORATION FROM
FLORIDA TO DELAWARE AND THE ADOPTION OF A CERTIFICATE OF INCORPORATION AND
BYLAWS WHICH CONFORM TO DELAWARE LAW AND ADOPT VARIOUS "ANTI-TAKEOVER"
PROVISIONS AND "FOR" APPROVAL OF THE AMENDMENT TO THE COMPANY'S 1991 PLAN.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
BENTLEY PHARMACEUTICALS, INC.
A VOTE FOR EACH NOMINEE AND FOR
PROPOSALS 2 AND 3 IS RECOMMENDED BY THE BOARD OF DIRECTORS
1. Election of Directors:
FOR ALL NOMINEES [ ] WITHHOLD AUTHORITY [ ]
to vote for all nominees
Nominees: Russell Cleveland, William A. Packer, Miguel Fernandez, James R.
Murphy and Robert M. Stote, M.D.
(INSTRUCTION: To withhold authority for any individual nominee, strike a line
through the nominee's name on the list above.)
2. Approval of the change in the Company's state of incorporation from
Florida to Delaware and the adoption of a Certificate of Incorporation
and Bylaws which conform to Delaware law and adopt various
"anti-takeover" provisions.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. Approval of the amendment to the Company's 1991 Stock Option Plan (the
"1991 Plan") increasing the number of shares of Common Stock for which
options may be granted under the 1991 Plan from 500,000 to 1,000,000.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
Dated: __________________, 1999
--------------------------------
--------------------------------
Signature of Stockholder(s)
--------------------------------
Print Name(s)
NOTE: Please date and sign your
name or names exactly as set
forth hereon. If signing as
attorney, executor,
administrator, trustee or
guardian, please indicate the
capacity in which you are
acting. Proxies by corporations
should be signed by a duly
authorized officer and should
bear the corporate seal.
PLEASE SIGN AND RETURN THE PROXY PROMPTLY IN THE ENCLOSED ENVELOPE.