UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Amendment No. 1 on FORM 10-K/A
FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTIONS 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 for the fiscal year ended December 31, 1997
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 for the transition period from __________ to
__________
Commission File Number 1-10581
BENTLEY PHARMACEUTICALS, INC.
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(Exact name of registrant as specified in its charter)
Florida No. 59-1513162
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. employer identification no.)
incorporation or organization)
4830 W. Kennedy Blvd., Suite 548, Tampa, FL 33609
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (813) 286-4401
Securities registered pursuant to section 12(b) of the Act:
Title of each class Name of each exchange on which registered
- ------------------- -----------------------------------------
Common Stock, $.02 par value American Stock Exchange and Pacific
Exchange, Inc.
12% Convertible Senior American Stock Exchange and Pacific
Subordinated Debentures Exchange, Inc.
Class A Redeemable Warrants American Stock Exchange and Pacific
Exchange, Inc.
Class B Redeemable Warrants Applications Pending
Securities registered pursuant to section 12(g) of the Act: None
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES [X] NO [_]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
State the aggregate market value of the voting and non-voting common equity held
by non-affiliates of the registrant. The aggregate market value shall be
computed by reference to the price at which the common equity was sold, or the
average bid and asked prices of such common equity, as of a specified date
within 60 days prior to the date of filing.
Title of Class Shares Outstanding As of Close of Business on
-------------- ------------------ --------------------------
Common Stock, $.02 par value $24,900,000 March 26, 1998
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date.
Title of Class Shares Outstanding As of Close of Business on
-------------- ------------------ --------------------------
Common Stock, $.02 par value 8,427,699 March 26, 1998
<PAGE>
PART III
ITEM 11. EXECUTIVE COMPENSATION
----------------------
The following table sets forth the total compensation paid to or
accrued by the Registrant for the account of the current Chief Executive Officer
and the executive officers at December 31, 1997 whose total cash compensation
for the year ended December 31, 1997 exceeded $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-term Compensation
-----------------------------------------------
Annual Compensation Awards Payouts
-------------------------------- ----------------------- --------------------
Securities
Name and Principal Position Other Restricted Underlying LTIP All
Annual Stock Options/ Payouts Other
Year Salary($) Bonus($) Comp.($) Awards($) Sars(#) ($) Comp.(1)
--------- --------- -------- --------- --------- ---------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
James R. Murphy (2) Y/E 12/31/97 $245,000 $50,000 -- -- -- -- $4,750
Chairman of the Board, Y/E 12/31/96 $235,833 $20,000 -- -- 600,000 -- $4,750
President, Chief Executive Y/E 12/31/95 $187,500 -- -- -- 50,000 -- $4,620
Officer and Director
Robert M. Stote (3) Y/E 12/31/97 $225,000 -- -- -- -- -- $4,750
Senior Vice President, Y/E 12/31/96 $220,417 -- -- -- 500,000 -- $4,750
Chief Science Officer Y/E 12/31/95 $203,750 -- -- -- 37,500 -- $4,620
And Director
Michael D. Price (4) Y/E 12/31/97 $136,378 -- -- -- -- -- $4,750
Vice President, Chief Y/E 12/31/96 $122,500 $10,000 -- -- 400,000 -- $4,750
Financial Officer, Y/E 12/31/95 $114,808 -- -- -- 22,500 -- $4,620
Treasurer, Secretary And
Director
</TABLE>
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(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, President and Chief Executive Officer, has been
employed by the Registrant since September 1994. Mr. Murphy's annual base
salary is currently $245,000. 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 Registrant'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 year ended December 31, 1995, Mr.
Murphy was awarded stock options to purchase 50,000 shares of Common Stock
at $3.75 per share, 50% of which vested on June 12, 1996 and the balance
of which vested on June 12, 1997. During the years ended December 31,
1997, 1996 and 1995, the Registrant provided to Mr. Murphy matching funds
totaling $4,750, $4,750 and $4,620, respectively, pursuant to the terms of
a Registrant sponsored 401(k) retirement plan (see "401(k) Retirement
Plan").
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<PAGE>
(3) Dr. Stote, Senior Vice President and Chief Science Officer, has been
employed by the Registrant since March 1992. Dr. Stote's annual base
salary is currently $225,000. During the year ended December 31, 1996, Dr.
Stote was awarded ten-year stock options to purchase 500,000 shares of
Common Stock, of which one-third of such options vested when the closing
price of the Registrant'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 year ended December 31, 1995, Dr.
Stote was awarded stock options to purchase 37,500 shares of Common Stock
at $3.75 per share, 50% of which vested on June 12, 1996 and the balance
of which vested on June 12, 1997. During the years ended December 31,
1997, 1996 and 1995, the Registrant provided to Dr. Stote matching funds
totaling $4,750, $4,750 and $4,620, respectively, pursuant to the terms of
a Registrant 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 Registrant since March 1992. Mr.
Price's annual base salary is currently $150,000. 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 Registrant'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 year ended
December 31, 1995, Mr. Price was awarded stock options to purchase 22,500
shares of Common Stock at $3.75 per share, 50% of which vested on June 12,
1996 and the balance of which vested on June 12, 1997. During the years
ended December 31, 1997, 1996 and 1995, the Registrant provided to Mr.
Price matching funds totaling $4,750, $4,750 and $4,620, respectively,
pursuant to the terms of a Registrant sponsored 401(k) retirement plan
(see "401(k) Retirement Plan").
OPTION/SAR GRANTS IN LAST FISCAL YEAR
No options were granted to the individuals listed in the Summary
Compensation table during the year ended December 31, 1997. No stock
appreciation rights have been granted to date.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth certain information concerning the
number of shares of Common Stock acquired upon the exercise of stock options
during the year ended December 31, 1997 by, and the number and value at December
31, 1997 of shares of Common Stock subject to unexercised options held by, the
individuals listed in the Summary Compensation Table.
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<PAGE>
<TABLE>
<CAPTION>
Number of
Securities Value of
Underlying Unexcersised
Unexercised In-the-money
Options/SARs at Options/SARd st
FY-End (# Shares) FY-End ($)
Shares ----------------- ----------------
Acquired Value Exercisable/ Exercisable/
Name On Exercise(#) Realized($) Unexercisable Unexercisable(1)
- ---- -------------- ----------- ------------- ----------------
<S> <C> <C> <C> <C>
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-
</TABLE>
- ---------
(1) Represents the closing price of the Registrant's Common Stock on the
American Stock Exchange on December 31, 1997 minus the respective exercise
prices.
REMUNERATION OF NON-EMPLOYEE DIRECTORS
The Registrant 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. Prior to August 1997,
the Registrant's policy consisted of payment of fees equal to $12,000 per year
to non-employee Directors and an award of 200 shares of Common Stock per year to
non-employee Directors who serve on committees of the Board of Directors. Total
non-employee Director fee payments during the year ended December 31, 1997 were
$45,500 and expenses incurred by non-employee Directors in attending meetings
which were reimbursed by the Registrant totaled $3,256. During the year ended
December 31, 1997, 600 shares of Common Stock were granted to non-employee
Directors. Until June 1997, options to purchase 10,000 shares of Common Stock
were automatically granted to each non-employee Director upon his or her
election to the Board. As of August 1997, pursuant to a Compensation Policy for
non-employee Directors, each non-employee Director shall be automatically
granted options to purchase 15,000 shares of Common Stock upon his or her
election to the Board. Thereafter, each continuing non-employee Director shall
be entitled to receive, annually, options to purchase the number of shares of
Common Stock equal to 1/10 of 1% of the number of outstanding shares of Common
Stock. During the year ended December 31, 1997, options to purchase 54,000
shares of Common Stock were granted to non-employee Directors of the Registrant.
Such options were granted at prices ranging from $2.69 to $2.88 per share,
representing the fair market value of the Common Stock on the dates of grant.
These options expire on various dates through November 13, 2007.
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 Registrant's consolidated
financial statements, reviews the Registrant's internal control procedures and
advises the Registrant on tax and other matters connected with the growth of the
Registrant. The Audit Committee also reviews with management the annual audit
and other work performed by the independent auditors. The Registrant's
Compensation Committee administers the Registrant'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 Registrant's executive officers. The Audit
Committee and the Compensation Committee both consist of Randolph W. Arnegger,
Charles L. Bolling and Michael McGovern.
During the Registrant's last fiscal year ended December 31, 1997, the
Board of Directors held seven meetings, the Audit Committee held two meetings
and the Compensation Committee held three meetings. Each Director attended at
least 75% of the total number of meetings of the Board of Directors which were
held during the period
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<PAGE>
he or she served as a Director in the fiscal year ended December 31, 1997 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, 1997 were Randolph W. Arnegger, Charles L. Bolling, Ehud D.
Laska, Michael McGovern and Dorris E. Wardell, all of whom are, or were at the
time, non-employee Directors. No member of the Compensation Committee has a
relationship that would constitute an interlocking relationship with Executive
Officers or Directors of another entity.
EMPLOYMENT AGREEMENTS
Mr. James R. Murphy, Chairman of the Board, President and Chief
Executive Officer, entered into an employment agreement with the Registrant
dated as of June 12, 1995 providing for an initial term which was scheduled to
expire on June 12, 1998. Under the terms of this agreement, as amended, Mr.
Murphy's annual base salary is $245,000. The agreement with Mr. Murphy also
provides for bonuses at the recommendation and discretion of the Compensation
Committee of the Registrant's Board of Directors and a severance payment equal
to two years salary and immediate vesting of all outstanding stock options upon
termination following a change in control of the Registrant. Pursuant to the
agreement, if terminated without cause, Mr. Murphy will be entitled to a
severance payment equal to one year salary and immediate vesting of all
outstanding stock options.
Dr. Robert M. Stote, Senior Vice President and Chief Science Officer,
entered into an employment agreement with the Registrant dated as of June 12,
1995 providing for an initial term which was scheduled to expire on June 12,
1998. Under the terms of this agreement, as amended, Dr. Stote's annual base
salary is $225,000. The agreement with Dr. Stote also provides for bonuses at
the recommendation and discretion of the Compensation Committee of the
Registrant's Board of Directors and a severance payment equal to two years
salary and immediate vesting of all outstanding stock options upon termination
following a change in control of the Registrant. Pursuant to the agreement, if
terminated without cause, Dr. Stote will be entitled to a severance payment
equal to one year salary and immediate vesting of all outstanding stock options.
Mr. Michael D. Price, Vice President, Chief Financial Officer,
Secretary and Treasurer, entered into an employment agreement with the
Registrant dated as of June 12, 1995 providing for an initial term which was
scheduled to expire on June 12, 1998. Under the terms of this agreement, as
amended, Mr. Price's annual base salary is $150,000. The agreement with Mr.
Price also provides for bonuses at the recommendation and discretion of the
Compensation Committee of the Registrant's Board of Directors and a severance
payment equal to two years salary and immediate vesting of all outstanding stock
options upon termination following a change in control of the Registrant.
Pursuant to the agreement, if terminated without cause, Mr. Price will be
entitled to a severance payment equal to one year salary and immediate vesting
of all outstanding stock options.
1991 STOCK OPTION PLAN
The Registrant'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 Registrant in attracting and
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<PAGE>
retaining employees (including Officers) and experienced and knowledgeable
non-employee Directors for the Registrant and its subsidiaries, by enabling them
to acquire or increase a proprietary interest in the Registrant, to benefit from
appreciation in the value of the Registrant's Common Stock and, thus,
participate in the long-term growth of the Registrant.
During the fiscal year ended December 31, 1997, options to purchase
10,000 shares of Common Stock were granted to an employee of the Registrant who
is not an executive officer. Such options were granted at a price of $2.88 per
share, representing the fair market value of the Common Stock on the date of
grant. These options expire on July 18, 2007
401(k) RETIREMENT PLAN
The Registrant 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 Registrant, 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 Registrant 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 Registrant made matching
contributions to the 401(k) Plan for the 1997 fiscal year in the amount of
$27,208 and is continuing to match 50% of each eligible employee's contribution
in fiscal 1998.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
--------------------------------------------------------------
The following table sets forth information as of April 28, 1998 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
Registrant to be the beneficial owner of more than five percent of the
Registrant's Common Stock, its only class of voting securities, and (ii) the
shares of the Registrant's Common Stock beneficially owned by all Executive
Officers and Directors of the Registrant as a group.
Amount and
Nature of
Beneficial Percent
Name and Address of Beneficial Owner: Ownership (1) of Class
- ------------------------------------- ------------- --------
Estate of Richard C. Perry 3,665,000(2) 37.10%
2635 Century Parkway, N.E.
Suite 1000
Atlanta, GA 30345
Michael McGovern 865,900(3) 9.96%
65 Maryeanna Drive N.E.
Atlanta, GA 30342
The Dreyfus Corporation 590,958(4) 7.01%
c/o Mellon Bank Corp.
One Mellon Bank Center
Pittsburgh, PA 15258
-6-
<PAGE>
Light Associates 550,594(5) 6.27%
1031 Rosewood Way
Alameda, CA 94501
All current Executive Officers and 1,582,302(6) 16.87%
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) Includes 1,000,000 shares of Common Stock which the estate of Mr. Perry
has the right to acquire pursuant to presently exercisable stock purchase
warrants and 450,000 shares which the estate of Mr. Perry has the right to
receive upon the conversion of 12% Convertible Senior Subordinated
Debentures.
(3) Includes 263,500 shares of Common Stock which Mr. McGovern has the right
to acquire pursuant to presently exercisable stock purchase warrants (the
"Warrants").
(4) As reported in The Dreyfus Corporation Schedule 13-G (Amendment No. 1)
dated January 15, 1998.
(5) As reported in the Light Associates Schedule 13-D (Amendment No. 8) dated
December 26, 1997. Includes 350,000 shares which Mr. Light has the right
to acquire pursuant to presently exercisable stock purchase warrants.
(6) Includes 668,599 shares of Common Stock which certain of the current
Executive Officers and Directors have a right to acquire pursuant to
presently exercisable stock options and 276,000 shares of Common Stock
which certain of the current Executive Officers and Directors have a right
to acquire pursuant to presently exercisable stock purchase warrants (the
"Warrants") and 5,600 shares of Common Stock which certain of the current
Executive Officers and Directors have a right to acquire upon the
conversion of 12% Convertible Senior Subordinated Debentures (the
"Debentures"), which Warrants and Debentures were purchased in the 1996
public offering.
The following table sets forth information regarding beneficial
ownership of the Registrant's Common Stock as of April 28, 1998 as to (i) each
Director of the Registrant, (ii) each Executive Officer of the Registrant named
in the Summary Compensation Table set forth above, and (iii) all current
Executive Officers and Directors as a group.
Amount and Nature of Percent
Name of Beneficial Owner Beneficial Ownership (1) of Class
- ------------------------ ------------------------ --------
James R. Murphy 271,987(2) 3.13%
Chairman of the Board, President,
Chief Executive Officer and Director
Robert M. Stote, M.D. 260,366(3) 3.00%
Senior Vice President, Chief
Science Officer and Director
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<PAGE>
Michael D. Price 170,636(4) 1.99%
Vice President, Chief
Financial Officer, Secretary,
Treasurer and Director
Randolph W. Arnegger 4,413(5) *
Director
Charles L. Bolling 9,000(6) *
Director
Michael McGovern 865,900(7) 9.96%
Director
All current Executive Officers
and Directors as a group (6 persons) 1,582,302(8) 16.87%
- ----------------------
* 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.
(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 and 1,500 shares of Common Stock
which Mr. Murphy has the right to acquire pursuant to presently
exercisable stock purchase warrants (the "Warrants") and 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 Warrants and Debentures were purchased in the 1996 public offering.
(3) Includes 239,166 shares of Common Stock which Dr. Stote has the right to
acquire pursuant to presently exercisable stock options and 10,000 shares
of Common Stock which Dr. Stote has the right to acquire pursuant to
presently exercisable stock purchase warrants (the "Warrants") and 4,000
shares of Common Stock which Dr. Stote has a right to acquire upon the
conversion of 12% Convertible Senior Subordinated Debentures (the
"Debentures"), which Warrants and Debentures were purchased in the 1996
public offering.
(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 and 1,000 shares of Common Stock which
Mr. Price has the right to acquire pursuant to presently exercisable stock
purchase warrants (the "Warrants") and 400 shares of Common Stock which
Mr. Price has a right to acquire upon the conversion of 12% Convertible
Senior Subordinated Debentures (the "Debentures"), which Warrants and
Debentures were purchased in the 1996 public offering.
(5) Includes 3,600 shares of Common Stock which Mr. Arnegger has the right to
acquire pursuant to presently exercisable stock options.
(6) Includes 7,000 shares of Common Stock which Mr. Bolling has the right to
acquire pursuant to presently exercisable stock options.
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<PAGE>
(7) Includes 263,500 shares of Common Stock which Mr. McGovern has the right
to acquire pursuant to presently exercisable stock purchase warrants (the
"Warrants").
(8) Includes 668,599 shares of Common Stock which certain of the current
Executive Officers and Directors have a right to acquire pursuant to
presently exercisable stock options and 276,000 shares of Common Stock
which certain of the current Executive Officers and Directors have a right
to acquire pursuant to presently exercisable stock purchase warrants (the
"Warrants") and 5,600 shares of Common Stock which certain of the current
Executive Officers and Directors have a right to acquire upon the
conversion of 12% Convertible Senior Subordinated Debentures (the
"Debentures"), which Warrants and Debentures were purchased in the 1996
public offering.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
----------------------------------------------
Not applicable.
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<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BENTLEY PHARMACEUTICALS, INC.
Dated: April 30, 1998 By: /s/ Michael D. Price
----------------------------
Michael D. Price
Vice President, Chief Financial
Officer, Treasurer and Secretary
(principal financial and accounting
officer)
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