Exhibit 10.2

SEPARATION AGREEMENT

This Separation Agreement (“Agreement”) dated as of September 15, 2006 is made
by and between Bentley Pharmaceuticals, Inc., on behalf of itself, its
predecessors, successors, parents, subsidiaries, related and affiliated
companies (hereinafter referred to collectively as the “Company”), and Michael
D. Price, on behalf of himself, his executors, heirs, administrators, agents,
attorneys, administrators, beneficiaries and assigns (hereinafter referred to
collectively as “Employee”).  In consideration of the mutual covenants contained
herein, the receipt and sufficiency of which is hereby acknowledged, the Company
and Employee agree as follows:

1.                                       Termination.   Employee’s employment
with the Company shall terminate at the close of business on September 30, 2006
(the “Termination Date”), which shall also be deemed to be the end of the “Term”
of Employee’s Employment Agreement with the Company dated as of January 1, 2002
(the “Employment Agreement”).   Employee hereby confirms his resignation from
all offices he holds in the Company and from all other offices he holds in any
of the Company’s direct and indirect subsidiaries and any affiliates thereof,
including without limitation any employee benefit plans, and agrees to deliver
such further instruments confirming such resignations as the Company may
reasonably request from time to time.

2.                                       Severance Pay and Period.   Pursuant to
Section 8A of the Employment Agreement, on the Termination Date Employee shall
be paid an amount equal to (i) twelve months of his current annual base salary,
plus (ii) $150,000, which is equal to the amount of his bonus paid for 2005.  In
accordance with Employee’s request previously communicated to the Company, which
is hereby confirmed, the maximum amount that Employee can contribute to his
401(k) plan account with the Company for 2006 will be deducted from the payment
due under this Section 2.  In addition, as of the Termination Date, Employee
will be paid in full for any and all wages through that date.   Employee will be
paid in full for any accrued but unused vacation time as of the Termination
Date.

3.                                       Stock and Stock Options.

(a)                                  Employee holds restricted stock units with
respect to 7,700 shares of the Company’s Common Stock, none of which will be
issuable as of the Termination Date according to the original terms of the
units.    Of these shares, 1,604 shares will be issued to Employee promptly
after the Termination Date and his rights with respect to the remaining units
shall terminate on the Termination Date.

(b)                                 Pursuant to Section 8.A of the Employment
Agreement, the pro rated portion of the annual increment of additional shares
under each of his outstanding unvested stock options that would otherwise become
exercisable on the next anniversary of the respective grant date of each such
option shall accelerate and become exercisable on the Termination Date in
accordance with the “Pro Rated Vesting of Shares on Termination Date” column set
forth on Schedule 1 attached to this Agreement.  In addition, the Company agrees
to accelerate and make exercisable certain additional option shares in
accordance with the “Additional Accelerated Shares” column set forth on Schedule
1 attached to this Agreement, so long as the

--------------------------------------------------------------------------------

                                                Company has received a
fully-executed copy of this Agreement and the General Release and the seven-day
period referenced in the General Release has expired without revocation thereof
by Employee.

(c)                                  The Company will extend the period during
which Employee may exercise and purchase the vested shares under his outstanding
options listed on Schedule 2 attached to this Agreement, including without
limitation shares that are vested after giving effect to the acceleration
provided in Section 3(b) above, until September 30, 2007, and shall allow
Employee to exercise such options by surrendering shares of Company Common Stock
he already owns, which shall be valued based on the fair market value of the
Common Stock, so long as the Company has received a fully-executed copy of this
Agreement and the General Release and the seven-day period referenced in the
General Release has expired without revocation thereof by Employee.   “Fair
market value” of the Common Stock shall be determined for this purpose in the
same manner as the Company then uses to determine the fair market value exercise
price for its option awards or as otherwise suggested as best practice by the
Securities and Exchange Commission.

(d)                                 The Company confirms to Employee that he may
exercise his outstanding options to purchase shares that are vested or will be
vested, whether pursuant to the terms of the options or the provisions of
Section 8.A of the Employment Agreement, before giving effect to subsections 3
(b) or (c) of this Agreement, and that Employee may exercise such options by
surrendering shares of Company Common Stock he already owns, which shall be
valued based on the fair market value of the Common Stock.

4.                                       Insurance and Other Benefits.

(a)                                  The Company will continue Employee’s
current health and dental insurance through September 30, 2006, and thereafter
will pay Employee, directly or on his account (at the Company’s option), the
cost of continuing equivalent medical and dental coverage pursuant to COBRA
until June 30, 2007 or such earlier date as Employee is eligible to receive such
benefits through another employer.  Employee may continue his health insurance
coverage at his own expense through COBRA after June 30, 2007.  Employee will
receive a separate notice about his right to elect COBRA continuation.

(b)                                 The Company will renew Employee’s life
insurance coverage under the Metropolitan Life Insurance policy for an amount
equal to two times Employee’s base salary on September 20, 2006 (i) for a
twelve-month term at the Company’s expense and (ii) at Employee’s expense, for
such additional coverage and additional period as is available under the policy
and as Employee may designate to the Company before such date.   The Company
will provide Employee such opportunity as is available under the Principal Life
Insurance policy to transfer such policy to Employee’s account and at Employee’s
expense before the Termination Date, when it will otherwise expire by its terms.

2

--------------------------------------------------------------------------------

 

5.                                       Moving Expenses.   The Company will
reimburse Employee for up to $4,000 of his out-of-pocket costs incurred in
moving his personal belongings from his apartment in New Hampshire to his home
in Tampa, Florida.

6.                                       Return of Property.   On or before the
Termination Date, Employee shall return all property belonging to the Company,
including but not limited to papers, files, documents, reference guides,
equipment, keys, access key tag/card, identification, credit cards, software,
Blackberry, computer access codes, disks, supplies, institutional manuals,
Employee Handbook, and Employee shall not retain any copies, duplicates,
reproductions or excerpts of any of the foregoing; provided, however, that if
Employee allows the Company to remove licensed Company software, including
current Operating System (OS) software (to be reimaged with alternate OS
software), from the Dell laptop computer Employee has used for Company business,
Company shall transfer the computer to Employee and Employee shall be allowed to
retain such computer as his own property, as well as the computer printer
located in his home office and the framed print depicting the University of
Tampa, which  is currently located in Employee’s office at the Company.

7.                                       General Release.   Within twenty-one
(21) days following the Termination Date, Employee will sign a general release
of the Company in the form attached hereto as Exhibit A (the “General
Release”).  Employee understands and agrees that his right to any of the
benefits afforded Employee under the terms of this Agreement, as distinguished
from those provided in the Employment Agreement and referenced herein, is
expressly contingent upon his execution and delivery of the General Release to
the Company and expiration of the seven-day revocation period set forth therein.

8.                                       Covenant Not to Sue.   Employee
represents and warrants that he has not filed any complaints, charges, or claims
for relief against the Company and its officers, directors, partners,
stockholders, trustees, attorneys, insurers, representatives, agents and
employees (collectively, the “Releasees”), or any one of them, with any local,
state or federal court or administrative agency, any professional or regulatory
board, or any other agency or entity.  Employee further warrants that he has not
previously assigned or transferred any of the claims that are the subject of the
General Release.  Employee agrees and covenants not to sue or bring any claims
or charges against the Releasees, or any one of them, with respect to matters
subject to the General Release.  Employee further agrees not to institute any
claim, charge, complaint or lawsuit to challenge the validity of the General
Release or the circumstances surrounding its execution.  In the event that
Employee institutes any action covered by this Section 8, that action shall be
dismissed upon presentation of this Agreement and Employee shall reimburse the
affected Releasees for all legal fees and expenses incurred in defending such
claim and obtaining its dismissal.   The Company represents to Employee that it
is not currently aware of any basis for the Company instituting any action
against Employee.

9.                                       Non-admissions.   It is understood and
agreed that this Agreement does not constitute any admission by the Company that
any action taken with respect to Employee was unlawful or wrongful, or that any
action by it constituted a breach of contract or violated any

3

--------------------------------------------------------------------------------

                                                federal or state law, policy,
rule or regulation or professional or industry regulation or standard.

10.                                 Nondisclosure of Confidential Information.  
During the course of Employee’s employment with the Company, Employee has become
acquainted with and/or developed Confidential Information belonging to the
Company or its customers.  Employee acknowledges and agrees that he continues to
be bound by the terms of the Employee Confidentiality Agreement.

11.                                 Adequacy of this Agreement.   Employee
acknowledges that the option acceleration and certain other benefits afforded
Employee under the terms of this agreement exceed any legal obligation of the
Company, under the Employment Agreement or otherwise, and provide valid
consideration for the general release, attached hereto as Exhibit A to this
Agreement, and covenant not to sue contained in Section 8 of this Agreement.

12.                                 Nondisparagement; References.   Employee
agrees not to disparage or make negative statements about the Company or any of
the Company’s officers, directors, employees, programs or products.  The Company
agrees that the officers and directors of the Company shall not disparage or
make negative statements about Employee.  Employee agrees to direct all
reference inquiries to the CEO of the Company.  The Company agrees that the CEO
will respond to such requests by verifying the dates of employment of Employee
and the positions held by Employee only, except as may otherwise be agreed by
the Company and Employee.

13.                                 Breach.   Employee agrees that the
compensation and benefits contained in this Agreement that are not otherwise
payable to Employee pursuant to the terms of the Employment Agreement are
subject to termination, reduction, cancellation or repayment in the event that
the Company determines in good faith that Employee has taken any action or
engaged in any conduct that is a material violation of this Agreement.  Employee
further acknowledges that any material breach of this Agreement by Employee will
cause irreparable damage to the Company and that in the event of such breach,
the Company shall be entitled, in addition to monetary damages and to any other
remedies available to the Company under this Agreement and at law, to equitable
relief, including injunctive relief, and to payment by Employee of all costs and
attorneys’ fees incurred by the Company in enforcing the provisions of this
Agreement, including attorneys’ fees.  In the event that Employee institutes
legal proceedings to enforce this Agreement, Employee agrees that the sole
remedy available to Employee shall be enforcement of the terms of this Agreement
and/or a claim for damages resulting from the breach of this Agreement, but that
under no circumstances shall Employee be entitled to receive or collect any
damages for claims that Employee has released under this Agreement.

14.                                 Successors and Assigns.   This Agreement
shall be binding upon and inure to the benefit of the Company and Employee and
their respective successors and assigns.

15.                                 Severability.   Should any part, term or
provision of this Agreement be determined by any tribunal, administrative agency
or court of competent jurisdiction to be illegal, invalid or unenforceable, the
validity of the remaining parts, terms or provisions shall not be

4

--------------------------------------------------------------------------------

                                                affected thereby, and the
illegal, invalid or unenforceable part, term or provision shall be deemed not to
be part of this Agreement. However, should the General Release or covenant not
to sue provisions of this Agreement be declared or determined by any tribunal,
administrative agency or court of competent jurisdiction to be illegal or
invalid, and should Employee thereupon seek to institute any claims that would
have been within the scope of the General Release or the covenant not to sue,
the Company shall be entitled to immediate repayment, and Employee shall
immediately return amounts paid hereunder and reimburse the Company for
additional amounts paid for the benefit of Employee hereunder to the extent any
such amounts were not paid to Employee pursuant to the terms of the Employment
Agreement. If a party other than Employee seeks to institute any claims that
would have been within the scope of the general release or covenant not to sue,
Employee shall not be required to return the consideration, but Employee agrees
that he shall not accept any monetary award resulting from such a proceeding.

16.                                 Entire Agreement.   This Agreement
constitutes the entire agreement between the parties about or relating to
Employee’s termination of employment from the Company, or the Company’s
obligations to him with respect to his termination, and fully supersedes any and
all prior and contemporaneous agreements or understanding between the parties
including, but not limited to, the Employment Agreement other than Sections 11,
12, 13 and 14 thereof, which shall survive, together with any definitions used
in such sections.  The terms of this Agreement are contractual in nature and not
a mere recital, and they shall take effect as a sealed document.  This Agreement
shall be governed by the laws of the State of New Hampshire, without regard to
conflict of law rules, and may not be changed orally.  This Agreement may be
changed or amended only by agreement in writing signed by both parties.  The
parties attest that no other representations were made regarding this Agreement
other than those contained herein.

17.                                 Counterparts.   This Agreement may be
executed in two or more of counterparts, each of which when executed and
delivered constitutes an original of this Agreement, but all the Counterparts
shall together constitute one and the same agreement.  No counterpart shall be
effective until each party has executed at least one counterpart.

18.                                 Choice of Law.   This Agreement shall be
construed in accordance with the laws of the State of New Hampshire.  The
parties hereby expressly consent to the personal jurisdiction of the state and
federal courts located in New Hampshire for any lawsuit filed arising from or
relating to this Agreement and expressly waive any and all objections to venue,
including, without limitation, the inconvenience of such forum.

[This space left blank intentionally]

5

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the Company and Employee have duly executed this Agreement.

Bentley Pharmaceuticals, Inc.

 

Michael D. Price

 

 

 

 

 

By:

 

/s/ James R. Murphy

 

/s/ Michael D. Price

 

 

Name:

James R. Murphy

 

Michael D. Price, individually

 

 

Title:

Chairman of the Board and Chief Executive Officer

 

 

 

 

 

 

 

Date:

 

September 15, 2006

 

Date: September 15, 2006

6

--------------------------------------------------------------------------------

 

Schedule 1

Acceleration of Option Vesting

Grant Date

 

No. of

 

 

 

 

 

 

 

 

 

(MM/DD/YY)

 

Shares Vesting
on next
anniversary of
Grant Date

 

Exercise
Price

 

Vesting Date
(MM/DD/YY)

 

Pro rated Vesting
of Shares on
Termination Date

 

Additional
Accelerated
Shares

 

3/30/2005

 

16,667

 

$

7.500

 

3/30/2007

 

8,333

 

16,667

 

5/23/2006

 

4,433

 

$

11.775

 

5/23/2007

 

1,478

 

0

 

      Total

 

21,100

 

 

 

 

 

9,811

 

16,667

 

 

7

--------------------------------------------------------------------------------

 

Schedule 2

Vested Option Shares for Which Exercise Date is Extended to September 30, 2007

 

Grant Date

 

No. of
Vested

 

Exercise

(MM/DD/YY)

 

Shares

 

Price

1/1/2003

 

25,000

 

$

8.050

5/21/2003

 

25,000

 

$

10.040

1/1/2004

 

50,000

 

$

13.300

3/30/2005

 

41,667

 

$

7.500

5/23/2006

 

1,478

 

$

11.775

Total

 

143,145

 

 

 

8

--------------------------------------------------------------------------------

 

GENERAL RELEASE

Except with respect to any rights, obligations or duties arising out of the
Separation Agreement dated September 15, 2006 and in consideration of certain
payments and other provisions for Michael D. Price’s benefit set forth herein,
and other valuable consideration, Michael D. Price, on behalf of himself, his
executors, heirs, administrators, agents, attorneys, beneficiaries and assigns
(hereinafter referred to collectively as “Employee”) hereby releases and
discharges Bentley Pharmaceuticals, Inc., on behalf of itself, its predecessors,
successors, parents, subsidiaries, related and affiliated companies (hereinafter
referred to collectively as the “Company”) and its officers, directors,
partners, stockholders, trustees, attorneys, insurers, representatives, agents
and employees (hereinafter referred to collectively, the “Releasees”), of and
from any and all complaints, charges, lawsuits or claims for relief of any kind
by Employee that he now has or ever had against the Releasees, or any one of
them, whether known or unknown, arising out of any matter or thing that has
happened before the signing of this General Release, including but not limited
to claims arising under common law, claims for breach of contract and in tort,
and claims arising under federal and state labor law and employment laws and
laws prohibiting discrimination on the basis of age, sex, race, national origin,
disability or other protected characteristic, and specifically including any
claims under the Age Discrimination in Employment Act of 1967, as amended.  The
laws referred to in the preceding sentence include but are not limited to Title
VII of the Civil Rights Act of 1964, the Equal Pay Act of 1963, the Age
Discrimination in Employment Act of 1967 (“ADEA”), the Fair Labor Standards Act
of 1938, the Americans with Disabilities Act of 1990, the Rehabilitation Act of
1973, the Family and Medical Leave Act of 1993, and the New Hampshire Law
Against Discrimination, and the Florida Civil Rights Act, all as amended.  It is
further expressly agreed and understood by Employee that the release contained
herein is a GENERAL RELEASE.  Nothing in this General Release shall be construed
to preclude Employee from participating or cooperating in any investigation or
proceeding conducted by a state or federal Fair Employment Practices Agency. 
However, in the event that a charge or complaint is filed against the Releasees,
or any one of them, with any administrative agency or in the event of an
authorized investigation, charge or lawsuit filed against the Releasees by any
administrative agency, Employee expressly waives and shall not accept any award
or damages therefrom.

Time to Consider Agreement.   Employee acknowledges that he has been advised to
consult with an attorney and has had ample time to consult with an attorney of
his choice, and has been given a period of at least twenty-one days within which
to consider whether to sign this General Release.  Employee may sign this
General Release prior to the end of this twenty-one day period, provided that
Employee does this knowingly and voluntarily.

Revocation.   It is agreed that for a period of seven days following the
execution of this General Release, which period shall end at 5:00 p.m. on the
seventh day following the date of execution by Employee, Employee may revoke
this General Release.  This General Release will not become effective until this
revocation period has expired.  This seven-day revocation period cannot be
shortened by agreement of the parties or by any other means.

9

--------------------------------------------------------------------------------

 

Employee acknowledges and recites that:

(a)                                  Employee has executed this General Release
knowingly and voluntarily;

(b)                                 Employee has read and understands this
General Release in its entirety;

(c)                                  Employee has been advised and directed
orally and in writing (and this subsection (c) constitutes such written
direction) to seek legal counsel and any other advice the Employee wishes with
respect to the terms of this General Release before executing it; and

(d)                                 Employee’s execution of this General Release
has not been forced by any employee or agent of the Company, and the Employee
has had an opportunity to negotiate about the terms of this General Release.

PLEASE READ THIS GENERAL RELEASE CAREFULLY.  IT CONTAINS A RELEASE OF ALL KNOWN
AND UNKNOWN CLAIMS. 

 

 

 

 

 

 

 

 

Date:

 

 

 

 

 

 

Michael D. Price

 

10

--------------------------------------------------------------------------------