Exhibit 10.1


 


EMPLOYMENT
AGREEMENT


 


THIS EMPLOYMENT AGREEMENT is
entered into as of the 27th day of August 2005 (the “Effective Date”) by
and between Bentley Pharmaceuticals, Inc., a Delaware corporation (the “Employer”),
and John A. Sedor, (the “Employee”).


 


RECITALS


 


The Employer desires to employ the Employee, and the
Employee desires to be employed by the Employer, all upon the terms and
provisions and subject to the conditions set forth in this Agreement.


 


WITNESSETH


 


NOW THEREFORE, in consideration
of the foregoing premises and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree to be legally bound as follows:


 


1.                                      Employment.  The Employer hereby employs the Employee, and
the Employee hereby accepts such employment, as President of the Employer upon the terms and subject to the
conditions set forth in this Agreement. 
The Employee shall perform such functions as are consistent with these
positions under the supervision of the Chief Executive Officer or the Board of
Directors of the Employer.  The Employee
shall, without any compensation in addition to that which is specifically
provided in this Agreement, serve in such further offices or positions with
Employer or any subsidiary or affiliate of Employer (collectively, the “Employer
Group”) as shall from time to time be reasonably requested by the Chief
Executive Officer or the Board of Directors of Employer.


 


2.                                      Term.  Subject to the termination provisions
hereinafter contained, the term of employment under this Agreement shall be for
an initial term commencing on the Effective Date and terminating on December 31,
2006.  This Agreement shall thereafter be
automatically renewed for successive one (1) year terms, unless the
Employee’s employment with the Employer has been terminated, as hereinafter
provided, or unless either party shall have given the other party prior notice
of termination of this Agreement effective as of the date of expiration of its
then applicable Term.  The initial term
of employment hereunder, and any extension thereof pursuant to this paragraph,
are referred to as the “Term”.


 


3.                                      Compensation,
Reimbursement, Etc.


 


a.                                       Base Salary.  Commencing
on the Effective Date, the Employer shall pay to the Employee as compensation
for all services rendered by the Employee a base salary of $37,500.00 per month (“Base Salary”), payable in
accordance with the Employer’s regular payroll practices, plus annual
bonuses on a calendar year basis as determined by the Compensation Committee of
the Board of Directors (the “Compensation Committee”), subject to Sections 3(d) and
3(e).  If an increase in


 


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Base Salary is determined for a calendar year after January 1
and before April 30 of that year, the increase shall be retroactive to the
beginning of that year.  Any bonus for 2005 will be
prorated based on the portion of 2005 that the Employee is employed by the
Employer.  Annual reviews of the Employee
will be on a calendar year basis.


 


b.                                       Expense Reimbursement.  The
Employer shall reimburse the Employee on a semi-monthly basis for all
reasonable expenses incurred by the Employee in the performance of his duties
under this Agreement; provided however, that the Employee shall have previously
furnished to the Employer an itemized account, satisfactory to the Employer, in
substantiation of such expenditures.


 


c.                                       Benefits.  The
Employee shall be entitled to health and other benefits on the same terms and
conditions as the Employer has made available to other senior executives of
Employer, including participation in the Employer’s health plans.  If the Employee elects not to participate in
the Employer’s health plans, Employee shall be entitled to reimbursement for
the premiums paid for an alternate plan in amounts not to exceed the premiums
that would have been paid on behalf of the Employee for Employer’s health
plan.  The Employer shall obtain a term
life insurance and disability policy for the Employee with a value equal to at
least two year’s Base Salary payable to the estate or beneficiaries of the
Employee upon the Employee’s death or to the Employee in the event of
disability as provided in Section 7(b) hereof.


 


d.                                       Bonuses.  The Employee
shall be eligible for a bonus each year of the Term of up to 50% of his annual
Base Salary, based upon achievement of the bonus targets for the year, payable
in cash and/or common stock, as determined by the Compensation Committee,
subject to the terms of the applicable year’s bonus incentive plan approved by
the Board of Directors and/or Compensation Committee of the Employer.  The bonus target for 2005 is 50% of annual
Base Salary and shall be subject to the terms of the “Bonus Targets under the
2005 Annual Bonus Incentive Plan”, which has been approved by the Board of
Directors and/or Compensation Committee of the Employer and previously provided
to Employee.   Such annual bonus will be
prorated as provided in Section 3(a) for 2005, and the annual bonus
will be awarded for each year as soon as practicable after the Company’s annual
results of operations are publicly reported in the following year.


 


e.                                       Automobile Allowance. The employee will receive a monthly
allowance of $1,000 for an automobile of his own use.


 


f.                                         Annual Review.  The
Employee shall be reviewed by the CEO who will give recommendations to the
Compensation Committee on an annual (calendar year) basis.


 


g.                                      Equity Incentives.  Upon
commencement of employment, the Employee will be granted an award of
nonstatutory stock option (the “Initial Option”) under the


 


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Employer’s
2005 Equity and Incentive Plan (the “Plan”) to purchase 150,000 shares of
common stock of the Employer, which option shall be immediately exercisable and
not subject to vesting as to 100,000 of the shares and shall become exercisable
and vested as to the remaining 50,000 shares on December 31, 2005, and
otherwise shall contain the customary terms and conditions for options granted
under the Plan to executive employees. 
Thereafter, so long as the Employee continues to be employed as an
executive officer of the Employer, the Employee will be entitled to receive:


 


(i)                                     subject
to stockholder approval of one or more increases after the date hereof totaling
at least 600,000 shares in the number of shares reserved under the Plan (which
is planned for the 2006 annual meeting of stockholders of the Employer), a
nonstatutory stock option (the “Follow-On Option Award”) under the Plan to
purchase 150,000 shares of common stock of the Employer, which option shall be
on substantially the same terms as the Initial Option except that it (A) will
be granted as of the date such increase in the reserved shares is approved by
stockholders, (B) have an exercise price determined based on the fair
market value of the common stock as of the date of grant, (C) will vest in
equal quarterly installments over five years from the date of grant, and (D) in
addition to any acceleration provided for in Section 8 hereof, will
contain a provision that if the Employee is terminated by the Company for any
reason other than “good cause” (as defined herein) after December 31, 2006
(the end of the initial term of this Agreement), on the date of such
termination such number of unvested options that would have vested under the terms
of the applicable option agreement had the Employee continued to be employed by
the Company for the six (6) month-period following the date of termination
shall immediately become vested; and


 


(ii)                                  subject
to stockholder approval from time to time of an increase of a sufficient number
of additional shares of common stock reserved under the Plan for annual grants
to all eligible employees of the Employer, annual equity awards in each of the
four years after 2005 with respect to no fewer than 50,000 shares (200,000
shares in the aggregate) (the “Annual Equity Awards”) under the Plan, and
further subject to substantially same terms and conditions (and, if more than
one type of award is granted, in the same proportions) as the annual equity
awards made generally to the other executive officers of the Employer, as
determined in good faith by the Compensation Committee, which awards shall be
made on the same date as when annual equity awards are made generally to the
other executive officers of the Employer; and


 


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(iii)                               all of the foregoing
options and common stock shall be subject to equitable adjustment in light of
any stock split or stock dividend with respect to the Employer’s common stock
and to reduction in the case of substitution of full value awards under
the  Plan, such as Restricted Stock, in
place of stock option awards, in each case as determined in good faith by the
Compensation Committee.


 


4.                                      Duties.  The Employee will be engaged initially as President of the Employer.  In addition, the Employee shall have such
other duties and hold such offices as may from time to time be reasonably
assigned to him by the Chief Executive Officer or the Board of Directors of the
Employer.


 


5.                                      Extent
of Services.  During the Term, the
Employee shall devote his full time, energy and attention to the benefit and
business of the Employer and its affiliates and shall not be employed by
another entity, either directly or as a consultant to or in any other capacity,
except as approved in advance by the Employer’s Board of Directors; provided,
however, that no such approval shall be required to serve as a director,
officer or trustee of any trade association or of any civic or charitable
organization so long as such service does not significantly interfere with the
Employee’s performance of his duties at the Employer.


 


6.                                      Vacation.  The Employee may take a maximum of four weeks
of vacation each calendar year, at times to be determined in a manner most
convenient to the business of the Employer, as approved by the Chief Executive
Officer.  A maximum of one week of unused
vacation may be carried over from one calendar year to the next.


 


7.                                      Termination
Following Death or Incapacity.


 


a.                                       Death.  All rights of
the Employee under this Agreement shall terminate upon death (other than rights
accrued prior thereto).  All Plan Awards
shall vest in accordance with the Plan and shall be exercisable for a period of
time as set forth in the Plan.  The
Employer shall pay to the estate of the Employee any unpaid salary and other
benefits due as well as reimbursable expenses accrued and owing to the Employee
at the time of his death.  The Employer
agrees to maintain life insurance coverage on the Employee in an amount
equivalent to two year’s salary, which insurance will be payable to the
Employee’s estate or beneficiaries upon his death as the Employee may
designate.  The Employer shall have no
additional financial obligation under this Agreement to the Employee or his
estate beyond the term-life insurance benefit describe above.


 


b.                                       Disability.


 


i.                                          During
any period of disability, illness or incapacity during the Term which renders
the Employee at least temporarily unable to perform the services required under
this Agreement, the Employee shall receive his salary payable under Section 3
of this Agreement, less any benefits received by him under any insurance
carried by or provided by the Employer; provided however, all rights of the
Employee under this


 


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Agreement (other than rights already accrued) shall
terminate as provided below upon the Employee’s permanent disability (as
defined below).


 


ii.                                       The
term “permanent disability” as used in this Agreement shall mean the inability
of the Employee, as determined by the Board of Directors of the Employer, by
reason of physical or mental disability to perform the duties required of him
under this Agreement after a period of:  (a) 120
consecutive days of such disability; or (b) disability for at least six months
during any twelve month period.  Upon
such determination, the Board of Directors may terminate the Employee’s
employment under this Agreement upon ten (10) days prior written
notice.  In the event of permanent
disability all Plan Awards shall vest in accordance with the terms of the Plan
and shall be exercisable for a period of time as set forth in the Plan.


 


iii.                                    If
any determination of the Board of Directors with respect to permanent
disability is disputed by the Employee, the parties hereto agree to abide by
the decision of a panel of three physicians. 
The Employee and Employer shall each appoint one member, and the third
member of the panel shall be appointed by the other two physicians.  If the physicians appointed by the parties
have not agreed upon the third physician within fifteen (15) days, either party
may  petition the New Hampshire Medical
Society to appoint a third physician. 
The Employee agrees to make himself available for and to submit to
reasonable examinations by such physicians as may be directed by the
Employer.  Failure to submit to any such
exam shall constitute a material breach of this Agreement.  In the event such a panel is convened, the
party whose position is not sustained will bear all the associated costs.


 


8.                                      Other
Terminations.


 


a.                                       Without Cause.


 


i.                                          Either
the Employee or the Employer may terminate the Employee’s employment hereunder
at any time upon written notice.


 


ii.                                       If
the Employee gives notice pursuant to paragraph (i) above, the Employer
shall have the right to either (a) relieve the Employee, in whole or in
part, of his duties under this Agreement or (b) to accelerate the date of
termination of employment to coincide with the date on which the written notice
is received.


 


iii.                                    Notwithstanding
any provisions hereof to the contrary, the Employer may terminate Employee’s
employment hereunder without cause at any time. 
If the Employer terminates the Employee’s Employment pursuant to the
provisions of this section 8(a), it shall pay to the Employee as a
severance benefit, in cash, an amount equal to the Employee’s annual Base
Salary


 


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plus bonus (the higher of the bonus target for the current year or the bonus paid in the prior year).  Additionally, the vesting of Plan Awards
shall be accelerated on a pro rata basis determined by the number of completed
months of service during the then current annual vesting period, and all other
vesting of Plan Awards shall cease.


 


b.                                       For Cause.


 


i.                                          The
Employer may terminate the Employee’s employment hereunder without notice (a) upon
the Employee’s breach of any material provision of this Agreement, or (b) for
other “good cause” (as defined below).


 


ii.                                       The
term “good cause” as used in this Agreement shall include, but shall not be limited
to:  (a) conduct which breaches the
Employee’s fiduciary duties to the Employer; (b) a significant performance
shortcoming, which has been brought to the Employee’s attention in writing by
his supervisor, where the supervisor has provided the Employee with written
performance improvement objectives and a timeline of at least three months to
achieve these objectives and the Employee fails to remedy the shortcoming
within such period (or such extended period as the supervisor may determine
based on the employee’s progress towards achievement of the improvement plan); (c) conviction
of any crime involving moral turpitude; and (d) substantial dependence, as
determined by the Board of Directors of the Employer, on any addictive
substance, including but not limited to alcohol, amphetamines, barbiturates,
methadone, cannabis, cocaine, PCP, THC, LSD, or any other narcotic drug;
provided, however, that after a Change in Control (as defined below) “good
cause” termination shall not include termination for the cause set forth
in the preceding clause (b).  Should the
Employee dispute such a determination, the parties hereto agree to abide by the
decision of a panel of three physicians as described in Section 7(b)(iii).


 


iii.                                    If
the Employee’s employment is terminated pursuant to Section 8(b), the
Employer shall pay to the Employee any unpaid salary and other benefits and
reimbursable expenses accrued and owing to the Employee.  Such payment shall be in full and complete
discharge of any and all liabilities or obligations of the Employer to the
employee hereunder.  The Employee shall
be entitled to no further benefits under this Agreement other than extension of
health benefits as required by law, at the Employee’s expense. All Plan Awards
shall cease vesting in accordance with the terms thereof and the Plan.


 


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9.                                      Termination
of Employment Upon Change in Control.


 


a.                                       For
purposes hereof, a “Change in Control” shall be deemed to have occurred if:


 


i.                                          there
has occurred a “change in control” as such term is used in Item 6(e) of Schedule 14A
of Regulation 14A promulgated under the Securities Exchange Act of 1934, as in
effect as of the date hereof (hereinafter referred to as the “1934 Act”);


 


ii.                                       if
there has occurred a change in “control” as the term “control” is defined in Rule 12b-2
promulgated under the 1934 Act;


 


iii.                                    when
any person (as such term is defined in Section 3(a)(9) and 13(d)(3) of
the 1934 Act, a “Person”), during the Term, becomes a beneficial owner, directly
or indirectly, of securities of the Employer representing 20% or more of the
Employer’s then outstanding securities having the right to vote on the election
of directors if such person did not have 20% or more of the Employer’s then
outstanding securities at the commencement of the Term; or if a Person having
more than 20% of the Employer’s then outstanding securities increases his or
its holdings by more than 15% of the Employer’s then outstanding securities
during the Term;


 


iv.                                   if
the stockholders of the Employer approve a plan of complete liquidation or
dissolution of the Employer, or a merger or consolidation (a) in which the
voting securities of the Employer outstanding immediately prior thereto do not
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) at least 50.1% of the combined voting
securities of the Employer or such surviving entity outstanding immediately
after such merger or consolidation or (b) in which no Person acquires 30%
or more of the combined voting power of the Employer’s then outstanding
securities; or


 


v.                                      if
during any period of twenty-four (24) consecutive months (not including any
period prior to the date of this Agreement), individuals who at the beginning
of such period constitute the Board and any new director (other than a director
designated by a person who has entered into an agreement with the Employer to
effect a transaction described in paragraphs i, ii or iii of this section 9(a))
whose election by the Board or nomination for election by the stockholders of
the Employer was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors at the beginning of
such period or whose election or nomination for election was previously so
approved by the stockholders, cease for any reason to constitute a majority
thereof; provided, however, in no event shall any mere action (other than sales
or purchases of the Employer’s outstanding securities) by Michael McGovern and
the Employer be deemed to be a Change in Control.


 


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b.                                       The
Employee may terminate his employment at any time within 12 months after a
Change in Control and any of the following events has occurred:


 


i.                                          an
assignment to the Employee of any duties inconsistent with the status of the
Employee’s office and/or position with the Employer as constituted immediately
prior to the Change in Control or a significant adverse change in the nature or
scope of the Employee’s authority, power, compensation, functions or duties as
constituted immediately prior to the Change in Control,


 


ii.                                       a
failure by the Employer, after having received written notice from the Employee
specifying a material breach of its obligations pursuant to this Agreement, to
cure such breach within 30 days after receipt of such notice; or


 


iii.                                    the
Employer requires Employee to move Employee’s primary place of employment to a
location more than 30 miles from Employer’s primary place of business before
the Change in Control (other than temporary relocation or business travel in
the ordinary course).


 


An election by the Employee to terminate his
employment following a Change in Control shall not be deemed a voluntary
termination of employment by the Employee for the purpose of interpreting the
provisions of this Agreement or any of the Employer’s employee benefit plans
and arrangements.  The Employee’s
continued employment with the Employer for any period of time during the Term
of this Agreement after a Change in Control shall not be considered a waiver of
any right he may have to terminate his employment to the extent permitted under
this Section 9(b).


 


If the Employer terminates the Employee without cause pursuant to Section 8(a) hereof
within 12 months after a Change in Control has occurred, such termination shall
be deemed an election by the Employee to terminate his employment pursuant to
this Section 9(b) and Employee shall have the right to the
compensation set forth in Section 9(c) instead of the compensation
set forth in Section 8(a).  In
addition, in the event of such termination, the Employee shall continue to have
the obligations provided for in Sections 11 and 12 hereof.


 


c.                                       If
the Employee’s employment with the Employer is terminated under Section 9(b) hereof,


 


i.                                          the
Employee shall be paid in a lump sum, within 30 days after termination of
employment, in cash, severance pay in an amount equal to two times (2x) the
average of his aggregate cash compensation paid during the two prior calendar
years (consisting of annual Base Salary and bonuses, if any).


 


ii.                                       If
any of the Annual Equity Awards contemplated by Section 3(g) have not
yet been granted because the Change in Control occurred before the


 


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grant of the Annual Equity Award would have otherwise
occurred, the Employee shall also be paid in connection with payment of the
lump sum an amount equal to:


 


(1)                                  the
dollar amount, if any, that remains after subtracting the exercise price of the
most recent Annual Equity Award made to the Employee (or if none has occurred,
the Initial Option) from the fair market value of the Employer’s common stock
as of the date of the Change in Control (or, if the Change in Control occurs in
connection with an acquisition or other transaction in which all outstanding
Awards granted to Employer’s employees under the Plan are terminated if not
exercised pursuant to their terms, the consideration per share of the Employer’s
common stock delivered for each share of common stock underlying such
outstanding Awards, multiplied by


 


(2)                                  the
remainder of (A) 200,000 (or, if the Follow-On Option Award has not been
granted before the Change in Control, 350,000), less (C) the number of
shares of Employer’s common stock that are subject to Annual Equity Awards
granted to the Employee before the Change in Control (which amount shall be
subject to equitable adjustment for any equitable adjustments in the number of
shares subject to Annual Equity Awards previously made in accordance with Section 3(g));


 


iii.                                    all
stock options and other equity Awards under the Plan held by the Employee
immediately prior to the effective date of the Change in Control shall
immediately vest and become fully exercisable for the period of time indicated
in the option contract;


 


iv.                                   health
benefits as provided in Section 3(c) shall continue for up to two
years from the date of termination, including reimbursement of COBRA payments
to the extent no longer covered under the Employer’s plans; provided, however,
that benefits will be subject to mitigation to the extent of comparable
benefits at a new job; and


 


v.                                      life
insurance benefits may be continued for up to two years from the date of
termination at the option of the Employee and at the Employee’s expense.


 


The lump sum severance payment described in clause (i), and any
additional amount described in clause (ii) of this Section 9(c) are
hereinafter referred to collectively as the “Termination Compensation.”  The amount of the Termination Compensation
shall be determined, at the expense of the Employer, by its regular outside
certified public accountants.  If a
Change in Control has occurred before the Follow-On Option Award and all of the
Annual Equity Awards provided in Section 3(g) have been granted to
the Employee, the Employer’s obligation to make any such award or awards shall
be satisfied in full by payment of the amount to be paid in lieu thereof
pursuant to Section 9(c)(ii).  Upon
payment of


 


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the Termination Compensation and any other accrued compensation, this
Agreement shall terminate (except for the Employee’s obligations pursuant to
Sections 10, 11, 12, 13 and 14 hereof and the continuing obligations to provide
the benefits set forth in clauses (ii) – (v) of this Section 9(c) in
accordance with the terms thereof) and be of no further force or effect.


 


d.                                       After
a Change in Control has occurred, the Employer shall honor the Employee’s
exercise of the Employee’s outstanding stock options and any other equity related
rights, in accordance with this Employment Agreement.  After a Change in Control has occurred and
the Employee’s employment is terminated as a result thereof, the Employee (or
his designated beneficiary or personal representative(s) shall also receive, except
to the extent already paid pursuant to Section 9(c)(i) hereof or
otherwise, the sums the Employee would otherwise have received (whether under
this Agreement, by law or otherwise) by reason of termination of employment as
if a Change in Control had not occurred.


 


e.                                       The
Employee shall not be required to mitigate the payment of the Termination
Compensation or other benefits or payments by seeking other employment.  To the extent that the Employee shall, after
the Term of this Agreement, receive compensation from any other employment, the
payment of Termination Compensation or other benefits or payments shall not be
adjusted (except as set forth in Section 9(c)(iii)).


 


10.                               Disclosure,
Proprietary Rights.  The Employee
agrees that during the Term of his employment by the Employer, he will disclose
only to the Employer all ideas, methods, plans, formulas, processes, trade
secrets, developments, or improvements known by him which relate directly or
indirectly to the business of the Employer, including any lines of business,
acquired by the Employee during his employment by the Employer; provided, that
nothing in this Section 10 shall be construed as requiring any such
communication where the idea, plan, method or development is lawfully protected
from disclosure, including but not limited to trade secrets of third
parties.  For purposes of the Agreement,
the term “the business of the Employer” shall include, without limitation, the
following:  the design, development,
obtaining regulatory approval, production, manufacturing, marketing, and
licensing of prescription and non-prescription drugs, medical devices, and
methods for the diagnosis, evaluation, treatment or correction of any disease,
injury, illness or other medical or health condition and such other lines of
business as the Employer shall engage in during the Term hereof.  The parties further agree that any
inventions, formulas, trade secrets, ideas, or secret processes which shall
arise from any disclosure made by the Employee pursuant to this paragraph,
whether or not patentable, shall be and remain the sole property of the
Employer.


 


11.                               Confidentiality.  The Employee agrees to keep in strict secrecy
and confidence any and all information the Employee assimilates or to which he
has access during his employment by the Employer and which has not been
publicly disclosed and is not a matter of common knowledge in the fields of
work of the Employer.  The Employee
agrees that both during and after the Term of his employment by the Employer,
he will not, without prior written consent of the Employer, disclose any such
confidential information to any third person, partnership, joint venture,
company, corporation, or other organization.


 


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12.                               Non-Competition.  If the Employee is terminated for good cause
the Employee covenants that he will not engage, directly or indirectly, alone
or in conjunction with others, as an agent, employee, investor, director,
shareholder or partner in any business which provides products, information
and/or services to the public which are competitive with those provided by the
Employer Group; provided, however, that the ownership by the Employee of 5% or less of the issued and outstanding shares of any class
of securities which is traded on a national securities exchange or, in the over
the counter market shall not constitute a breach of the provisions of this
section.  The Employee will not on his
own behalf or on behalf of any other business enterprise, directly or
indirectly, solicit or induce any creditor, customer, client, supplier,
officer, employee or agent of the Employer Group to sever his/her or its
relationship with or leave the employ of the Employer Group.  The covenants in this Section 12 shall
continue in full force and effect throughout the Term hereof and for a one year
period subsequent to the termination hereof.


 


13.                               Conflict
of Interest.  The employee shall
devote his full time, energy and attention to the benefit and business of the
employer and its affiliates and shall not be employed by another entity, except
as permitted in Section 5.  It is
understood by and between the parties hereto that the foregoing restrictive
covenants set forth in Sections 10, 11, 12, 13 and 14 are essential elements of
this Agreement, and that but for the agreement of the Employee to comply with
such covenants, the Employer would not have entered into this Agreement.  Notwithstanding anything to the contrary in
this Agreement, the terms and provisions of Sections 11, 12, 13 and 14 of this
Agreement, together with any definitions used in such terms and provisions,
shall survive the termination or expiration of this Agreement.  The existence of any claim or cause of action
of the Employee against the Employer, whether predicated on this Agreement or
otherwise, shall not constitute a defense to the enforcement by the Employer of
such covenants.


 


14.                               Specific
Performance.  The Employee agrees
that damages at law will be insufficient remedy to the Employer if the employee
violates the terms of Sections 10, 11, 12 or 13 of this Agreement and that the
Employer shall be entitled, upon application to a court of competent
jurisdiction, to obtain injunctive relief to enforce the provisions of such
Sections, which injunctive or other equitable relief shall be in addition to
any other rights or remedies available to the Employer, and the Employee agrees
that he will not raise and hereby waives any objection or defense that there is
an adequate remedy at law.


 


15.                               Compliance
with Other Agreements.  The Employee
represents and warrants that the execution of this Agreement by him and his
performance of his obligation hereunder will not conflict with, result in the
breach of any provision of, terminate, or constitute a default under any
agreement to which the Employee is or may be bound.


 


16.                               Waiver
of Breach.  The waiver by the
Employer of a breach of any of the provisions of this Agreement by the Employee
shall not be construed as a waiver of any subsequent breach by the
Employee.  The waiver by the Employee of a
breach of any of the provisions of this Agreement by the Employer shall not be
construed as a waiver of any subsequent breach by the Employer.


 


17.                               D&O
Insurance; Indemnification.  The
Employer hereby agrees to maintain in full force and effect for the duration of
this Agreement, Director’s and Officer’s Liability Insurance


 


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of at least
$5,000,000 and to indemnify and hold harmless to the full extent permitted by
law, the Employee for acts performed by him in carrying out his duties and
responsibilities in accordance with this Agreement.


 


18.                               Binding
Effect, Assignment.  The rights and
obligations of the Employer under this Agreement shall inure to the benefit of
and shall be binding upon the successors and assigns of the Employer.  This Agreement is a personal employment
contract and the rights, obligations and interests of the Employee hereunder
may not be sold or assigned or hypothecated. 
Whenever in this Agreement reference is made to any party, such reference
shall be deemed to include the successors, assigns, heirs, and legal
representatives of such party, and without limiting the generality of the
foregoing, all representations, warranties, covenants and other agreements made
by or on behalf of the Employee in this Agreement shall inure to the benefit of
the successors and assigns of the Employer; provided, however, that
nothing herein shall be deemed to authorize or permit the Employee to assign
any of his rights or obligations under this Agreement to any other person
(whether or not a family member or other affiliate of the Employee, other than
as specifically provided in this Agreement), and the Employee covenants and
agrees that he shall not make any such assignments.


 


19.                               Modification,
Amendment, Etc.  Each and every
modification and amendment of this Agreement shall be in writing and signed by
all of the parties hereto, and each and every waiver of, or consent to any
departure from, any representation, warranty, covenant or other term or
provision of this Agreement shall be in writing and signed by each affected
party hereto.


 


20.                               Notice.  Any notice required or permitted to be given
under this Agreement shall be sufficient if in writing and if sent by certified
or registered mail, first class, return receipt requested, to the Employer, at
its executive offices as set forth in its filings with the Securities and
Exchange Commission and, to the Employee, at his address as set forth on the
current employment records of the Employer.


 


21.                               Severability.  It is agreed by the Employer and Employee
that if any portion of the provisions set forth in this Agreement are held to
be unreasonable, arbitrary or against public policy, then that portion of such
covenants shall be considered divisible both as to time and geographical
area.  The Employer and Employee agree
that if any court of competent jurisdiction determines the specific time period
or the specified geographical area applicable to this Agreement to be unreasonable,
arbitrary or against public policy, then a lesser time period or geographical
area which is determined to be reasonable, non-arbitrary and not against public
policy may be enforced against the Employee. 
The Employer and Employee agree that the foregoing covenants are
appropriate and reasonable when considered in light of the nature and extent of
the business conducted by the Employer.


 


22.                               Entire
Agreement.  This Agreement contains
the entire agreement between the Employer and the Employee and supersedes all
prior agreements and understandings, oral or written, with respect to the
subject matter hereof.


 


23.                               Headings.  The headings contained in this agreement are
for reference purposes only and shall not affect the meaning or interpretation
of the Agreement.


 


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24.                               Governing
Law; Forum.  This Agreement shall be
construed and enforced in accordance with the laws of the State of New
Hampshire.  Any action brought pursuant
to this Agreement or in relation to its breach may be heard by any court of
competent jurisdiction having jurisdiction thereof.


 


25.                               Counterparts.  This Agreement may be executed in two
counterpart copies of the entire document or of signature pages to the
document, each of which may be executed by one or more of the parties hereto,
but all of which when taken together, shall constitute a single agreement
binding upon all of the parties hereto.


 


IN WITNESS WHEREOF, the parties hereto have executed
this Agreement effective as of the day and year first written above.


 


	
  Employer:

  	
  Employee:

  
	
  BENTLEY PHARMACEUTICALS, INC.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By: 

  	
  /s/ James R.
  Murphy

  	
   

  	
  By: 

  	
  /s/ John A.
  Sedor

  	
   

  
	
   

  	
  James R. Murphy

  Chairman and CEO

  	
   

  	
   John A. Sedor

  
						



 


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