Item 5.02.
Departure of Directors or Certain Officers; Election of Directors; Appointment of
Certain Officers; Compensatory Arrangements of Certain Officers.
The Compensation Committee of the Board of Directors of Bentley Pharmaceuticals, Inc. has
taken actions to provide retention incentives and additional compensation for two of its
executives, including actions that have resulted in a new retention agreement for Adolfo Herrera,
the Managing Director of Bentley’s European subsidiaries, and payment of additional compensation to
Richard Lindsay, Bentley’s Chief Financial Officer, in light of Bentley’s corporate performance and
his individual efforts preparing for the previously proposed spin-off transaction for Bentley’s
drug delivery business.
On December 17, 2007, Laboratorios Belmac S.A. (“Belmac”), a wholly owned subsidiary of
Bentley, entered into a letter agreement with Mr. Herrera pursuant to which Mr. Herrera is entitled
to a retention bonus, severance protection and equity vesting acceleration in the event that Belmac
experiences a change in control (as defined in the letter agreement) prior to December 31, 2008.
Pursuant to the terms of the letter agreement, provided he remains continuously employed by Belmac
or its affiliate or successor through December 31, 2008, Mr. Herrera will be entitled to receive a
payment equal to 150% of the sum of (i) his base annual salary then in effect, (ii) his actual
bonus for the prior year, and (iii) the value of his then-leased car (the “Base Amount”), with such
payment to be made as soon as practicable following December 31, 2008, but in no event later than
January 31, 2009. If, following a change of control occurring prior to December 31, 2008, Mr.
Herrera’s employment with Belmac, its affiliate or successor is terminated by Belmac without cause
or by means of a disciplinary or objective dismissal that is declared unjustified or void by the
Spanish Labor Courts, or by Mr. Herrera for good reason (as each is defined in the letter
agreement) or based on any negligent and material breach by Belmac, in each case after notification
of the final decision of the Spanish Labor Courts, Mr. Herrera will be entitled to receive a
payment equal to 150% of the Base Amount as soon as practicable, but in no event later than one
month following such notification.
Following a change in control, in the event that Mr. Herrera’s employment with Belmac or its
affiliate or successor is terminated by Belmac without cause, by means of a disciplinary or
objective dismissal that is declared unjustified by the Spanish Labor Courts, or by Mr. Herrera for
good reason or based on any negligent and material breach by Belmac, Mr. Herrera will be entitled
to a severance payment in an amount equal to 45 days of his annual salary (as defined under Spanish
Labor Law) for each of his years of service with Belmac, up to a maximum of 42 months’ salary, net
of any related taxes (the “Termination Severance”). If such termination occurs prior to the second
anniversary of a change in control, Mr. Herrera will also be entitled to receive an amount equal to
the product of two times the Base Amount multiplied by a fraction, the numerator of which is the
number of whole months remaining between the date of termination and the second anniversary of the
change in control, and the denominator of which is 24. In addition, upon a change of control,
subject to the approval of Bentley’s Board of Directors, all outstanding stock options, restricted
stock and other equity awards held by Mr. Herrera relating to the stock of Bentley shall become
immediately vested and exercisable and/or all forfeiture restrictions on such awards shall
immediately lapse, as applicable.
The letter agreement will remain in effect until the second anniversary of a change in control
of Belmac; provided that if no change in control occurs prior to January 1, 2009, the letter
agreement will terminate on that date except for provisions relating to the Termination Severance,
which survive the termination of the letter agreement.
On December 14, 2007, the Bentley Compensation Committee approved a $10,000 increase in the
monthly base salary of Mr. Lindsay from $21,250 to $31,250, retroactive to September 1, 2007. The
Compensation Committee also approved payment of $118,000 to Mr. Lindsay for his annual cash
incentive bonus for the 2007 year based on the achievement of his personal objectives for the year
and the projected achievement of corporate goals for total shareholder return, free cash flow and
total earnings per share.
