EXHIBIT 10.3
EMPLOYEE MATTERS AGREEMENT
by
and between
BENTLEY PHARMACEUTICALS, INC.
and
CPEX PHARMACEUTICALS, INC.
Dated
as of June 13, 2008
INDEX OF DEFINED TERMS
| |
|
|
|
TERM |
|
SECTION IN WHICH DEFINED |
|
Agreement
|
|
Preamble |
|
Bentley
|
|
Preamble |
|
Bentley Welfare
Plans
|
|
4.1(a) |
|
CPEX
|
|
Preamble |
|
CPEX 401(k)
Plan
|
|
3.1(a) |
|
CPEX Ratio
|
|
5.1(a)(ii) |
|
CPEX Stock
Plan
|
|
2.4 |
|
CPEX Welfare
Plans
|
|
4.1(a) |
|
Delaware
Courts
|
|
9.11 |
|
Parties
|
|
Preamble |
|
Post-Distribution
Bentley Option
|
|
5.1(a)(i) |
|
Post-Distribution
Spanish Employee Option
|
|
5.1(b)(i) |
|
Post-Distribution
Spanish Employee Restricted
Stock Unit
|
|
5.2(b)(i) |
|
Pre-Distribution
Bentley Option Price
|
|
5.1(a)(ii) |
|
Separation
Agreement
|
|
Recitals |
|
Service Crediting
Date
|
|
2.3(b)(i) |
|
Spanish Employee
Option
|
|
5.1(a) |
|
Spanish Employee
Restricted Stock Unit
|
|
5.2(a) |
EMPLOYEE MATTERS AGREEMENT
EMPLOYEE MATTERS AGREEMENT (this
“ Agreement ”), dated as of June 13, 2008, by
and between Bentley Pharmaceuticals, Inc., a Delaware corporation
(“ Bentley ”), and CPEX Pharmaceuticals, Inc., a
Delaware corporation (“ CPEX ”). Each of Bentley
and CPEX is herein referred to as a “ Party ”
and collectively, as the “ Parties ”.
RECITALS:
WHEREAS, Bentley, acting through its
direct and indirect Subsidiaries, currently conducts a number of
businesses, including (i) the Bentley Business and
(ii) the CPEX Business;
WHEREAS, the Board of Directors of
Bentley has determined that it is appropriate, desirable and in the
best interests of Bentley and its stockholders to separate Bentley
into two independent companies (the “ Separation
”), one for each of: (i) the Bentley Business, which
shall continue to be owned and conducted, directly or indirectly,
by Bentley, and (ii) the CPEX Business, which shall be owned
and conducted, directly or indirectly, by CPEX;
WHEREAS, to effect the Separation the
Parties entered into that certain Separation and Distribution
Agreement dated as of even date hereof (as amended or otherwise
modified from time to time, the “ Separation Agreement
”); and
WHEREAS, pursuant to the Separation
Agreement, Bentley and CPEX have agreed to enter into this
Agreement for the purpose of allocating Assets, Liabilities and
responsibilities with respect to certain employee compensation and
benefit plans and programs between them.
NOW, THEREFORE, in consideration of
the foregoing premises, the mutual promises and covenants
hereinafter set forth, and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the
Parties, intending to be legally bound, agree as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
Section 1.1
Definitions . Capitalized terms used but not defined herein
shall have the meanings assigned to such terms in the Separation
Agreement and the following terms shall have the following
meanings:
“ Benefit Plan ”
shall mean, with respect to an entity, each plan, program,
arrangement, agreement or commitment that is an employment, change
in control/severance, consulting, non-competition or deferred
compensation agreement, or an executive compensation, incentive
bonus or other bonus, employee pension, profit-sharing, savings,
retirement, supplemental retirement, stock option, stock purchase,
stock appreciation rights, restricted stock, other equity-based
compensation, severance pay, salary continuation, life, health,
hospitalization, sick leave, vacation pay, disability or accident
insurance plan, corporate-owned or key-man life insurance or other
employee benefit plan, program, arrangement, agreement or
commitment, including any “employee benefit plan” (as
defined in Section 3(3) of ERISA), sponsored or maintained by
such entity (or to which such entity contributes or is required to
contribute).
“ Bentley Benefit Plan
” shall mean any Benefit Plan sponsored, maintained or
contributed to by any member of the Bentley Group or any ERISA
Affiliate thereof immediately following the Distribution
Date.
“ Bentley Employee
” shall mean an active employee or an employee on vacation or
on approved leave of absence (including maternity, paternity,
family, sick leave, salary continuation, qualified military service
under the Uniformed Services Employment and Reemployment Rights Act
of 1994, and leave under the Family Medical Leave Act and other
approved leaves) who, on the Distribution Date, is employed by or
will be employed by Bentley or any member of the Bentley
Group.
“ Bentley 401(k) Plan
” shall mean the Bentley 401(k) Plan.
“ Bentley Liabilities
” shall mean all liabilities of Bentley other than the CPEX
Liabilities.
“ Bentley Option ”
shall mean an option to purchase shares of Bentley Common Stock
granted pursuant to one of the Bentley Stock Plans.
2
“ Bentley Participant
” shall mean any individual who, immediately following the
Distribution Date, is a Bentley Employee, a Former Bentley Employee
or a beneficiary, dependent or alternate payee of any of the
foregoing.
“ Bentley Restricted Stock
Unit ” shall mean a unit granted by Bentley or one of its
Affiliates pursuant to one of the Bentley Stock Plans representing
a general unsecured promise by Bentley or one of its Affiliates to
deliver a share of Bentley Common Stock or dividend equivalents, if
applicable (or the cash equivalent of either), upon the
satisfaction of a vesting requirement (other than performance based
vesting requirements).
“ Bentley Service Plans
” shall mean, collectively, the Bentley 401(k) Plan and the
severance and health and welfare benefit plans maintained by a
member of the Bentley Group to the extent eligibility for or level
of benefits thereunder is dependent upon length of service,
including the Bentley vacation, health and welfare, sick leave,
salary continuation and retiree medical, dental and life programs,
if any.
“ Bentley Stock Plan
” shall mean, collectively, the Bentley Pharmaceuticals, Inc.
1991 Stock Option Plan, Bentley Pharmaceuticals, Inc. 2001 Employee
Stock Option Plan, Bentley Pharmaceuticals, Inc. 2001
Directors’ Stock Option Plan, and Bentley Pharmaceuticals,
Inc. 2005 Equity and Incentive Plan.
“ COBRA ” shall
mean the continuation coverage requirements for “group health
plans” under Title X of the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended, and as codified in Code
Section 4980B and Sections 601 through 608 of ERISA,
together with all regulations and proposed regulations promulgated
thereunder.
“ CPEX Benefit Plan
” shall mean any Benefit Plan sponsored, maintained or
contributed to by any member of the CPEX Group or any ERISA
Affiliate thereof immediately following the Distribution Date,
including the CPEX 401(k) Plan and the CPEX Welfare Plans.
“ CPEX Employee ”
shall mean a person listed on Exhibit A to the Separation
Agreement.
“ CPEX Option ”
shall mean an option to purchase shares of CPEX Common Stock as of
the Distribution Date, which shall be issued pursuant to the CPEX
Stock Plan as part of the adjustment to Bentley Options in
connection with the Distribution.
“ CPEX Participant
” shall mean any individual who, immediately following the
Distribution Date, is a CPEX Employee, a Former CPEX Employee or a
beneficiary, dependent or alternate payee of any of the
foregoing.
“ CPEX Restricted Stock
Unit ” shall mean a unit issued by CPEX or one of its
Affiliates representing a general unsecured promise by CPEX or one
of its Affiliates to deliver a share of CPEX Common Stock or
dividend equivalents, if applicable (or the cash equivalent of
either), upon the satisfaction of a service based vesting
requirement, which unit is issued pursuant to the CPEX Stock Plan
as part of the adjustment to Bentley Restricted Stock Units in
connection with the Distribution.
3
“ CPEX Service Plans
” shall mean, collectively, the CPEX 401(k) Plan and the
severance and health and welfare plans maintained by a member of
the CPEX Group to the extent eligibility for or level of benefits
thereunder is dependent upon length of service, including the CPEX
vacation, health and welfare, sick leave, salary continuation and
retiree medical, dental and life programs, if any.
“ CPEX Stock Plan
” shall mean the CPEX 2008 Equity and Incentive Plan.
“ ERISA Affiliate
” shall mean with respect to any Person, each business or
entity which is a member of a “controlled group of
corporations,” under “common control” or a member
of an “affiliated service group” with such Person
within the meaning of Sections 414(b), (c) or (m) of
the Code, or required to be aggregated with such Person under
Section 414(o) of the Code, or under “common control”
with such Person within the meaning of Section 4001(a)(14) of
ERISA.
“ ERISA ” shall
mean the Employee Retirement Income Security Act of 1974, as
amended.
“ Former Bentley
Employee ” shall mean, as of the Distribution Date, any
individual who, before the Distribution Date, terminated employment
with Bentley or its predecessors or any member of the Bentley Group
and is not listed on Exhibit A to the Separation Agreement,
other than any Former CPEX Employee.
“ Former CPEX Employee
” shall mean, as of the Distribution Date, any individual
who, before the Distribution Date, terminated employment with
Bentley or its predecessors or any member of the Bentley Group and
whose principal services to the Bentley Group related to the CPEX
Business.
“ HIPAA ” shall
mean the Health Insurance Portability and Accountability Act of
1996, as amended.
“ Initial CPEX Stock
Price ” shall mean, unless otherwise determined by the
Compensation Committee of the Bentley Board of Directors in its
sole discretion in order to effect an equitable adjustment of a
Bentley Option in connection with the Distribution, the closing per
share trading price of CPEX Common Stock on a when issued basis on
the Distribution Date or, if none, the opening per share trading
price of CPEX Common Stock on the first date following the
Distribution Date on which there is trading.
“ Participating Company
” shall mean Bentley or any Person (other than an individual)
participating in a Bentley Benefit Plan.
“ Pre-Distribution Bentley
Stock Price ” shall mean the closing per share trading
price of Bentley Common Stock on the day immediately preceding the
Distribution Date.
“ Post-Distribution Bentley
Stock Price ” shall mean, unless otherwise determined by
the Compensation Committee of the Bentley Board of Directors in its
sole discretion in order to effect an equitable adjustment of a
Bentley Option in connection with the Distribution, the closing per
share trading price of Bentley Common Stock on an ex-distribution
basis on the Distribution Date or, if none, the closing per share
trading price of Bentley Common Stock on the Distribution
Date
4
(or, if
there is no trading on the Distribution Date, on the first
following date on which there is trading).
“ Spanish Employee
” shall mean an active employee or an employee on vacation or
on approved leave of absence (including maternity, paternity,
family, sick leave, salary continuation, qualified military service
under the Uniformed Services Employment and Reemployment Rights Act
of 1994, and leave under the Family Medical Leave Act and other
approved leaves) who, on the Distribution Date, is employed by or
will be employed by Laboratorios Belmac, S.A., Laboratorios
Rimafor, S.L., Laboratorios Davur, S.L. or Bentley A.P.I., S.L. or
any former employee who immediately prior to his or her termination
of employment was employed by such entities.
Section 1.2
References; Interpretation . References in this Agreement to
any gender include references to all genders, and references to the
singular include references to the plural and vice versa. Unless
the context otherwise requires, the words “include”,
“includes” and “including” when used in
this Agreement shall be deemed to be followed by the phrase
“without limitation”. Unless the context otherwise
requires, references in this Agreement to Articles, Sections,
Exhibits and Schedules shall be deemed references to Articles and
Sections of, and Exhibits and Schedules to, this Agreement. Unless
the context otherwise requires, the words “hereof”,
“hereby” and “herein” and words of similar
meaning when used in this Agreement refer to this Agreement in its
entirety and not to any particular Article, Section or provision of
this Agreement.
ARTICLE II
GENERAL PRINCIPLES
Section 2.1
Assumption and Retention of Liabilities; Related Assets
.
(a) As
of the Distribution Date, except as otherwise expressly provided in
this Agreement, Bentley shall, or shall cause one or more members
of the Bentley Group to, assume or retain, as applicable, and pay,
perform, fulfill and discharge, in due course in full (i) all
Liabilities under all Bentley Benefit Plans, (ii) all
Liabilities (excluding Liabilities incurred under a Benefit Plan
except as otherwise provided in this Agreement) with respect to the
employment, service, termination of employment or termination of
service of all Bentley Employees, Former Bentley Employees and
their dependents and beneficiaries (and any alternate payees in
respect thereof) and other service providers (including any
individual who is, or was, an independent contractor, temporary
employee, temporary service worker, consultant, freelancer, agency
employee, leased employee, on-call worker, incidental worker, or
non-payroll worker or in any other employment, non-employment, or
retainer arrangement, or relationship with any member of the
Bentley Group), in each case to the extent arising in connection
with or as a result of employment with or the performance of
services for any member of the Bentley Group, and (iii) any
other Liabilities or obligations expressly assigned to Bentley or
any of its Affiliates (other than any member of the CPEX Group)
under this Agreement. For purposes of clarification, the
Liabilities assumed or retained by the Bentley Group as provided
for in this Section 2.1(a) or elsewhere in this Agreement are
intended to be Bentley Liabilities.
5
(b) As
of the Distribution Date, except as otherwise expressly provided in
this Agreement, CPEX shall, or shall cause one or more members of
the CPEX Group to, assume or retain, as applicable, and pay,
perform, fulfill and discharge, in due course in full (i) all
Liabilities under all CPEX Benefit Plans, (ii) all Liabilities
(excluding Liabilities incurred under a Benefit Plan except as
otherwise provided in this Agreement) with respect to the
employment, service, termination of employment or termination of
service of all CPEX Employees, Former CPEX Employees and their
dependents and beneficiaries (and any alternate payees in respect
thereof) and other service providers (including any individual who
is, or was, an independent contractor, temporary employee,
temporary service worker, consultant, freelancer, agency employee,
leased employee, on-call worker, incidental worker, or non-payroll
worker or in any other employment, non-employment, or retainer
arrangement, or relationship with any member of the Bentley Group
or CPEX Group), in each case to the extent arising in connection
with or as a result of employment with or the performance of
services for any member of the CPEX Group, or in the case of Former
CPEX Employees, the Bentley Group and (iii) any other
Liabilities or obligations expressly assigned to CPEX or any of its
Affiliates (other than any member of the Bentley Group) under this
Agreement. For purposes of clarification, the Liabilities assumed
or retained by the CPEX Group as provided for in this
Section 2.1(b) or elsewhere in this Agreement are intended to
be CPEX Liabilities as such term is defined in the Separation
Agreement.
(c) From
time to time after the Distribution Date, the Parties shall
promptly reimburse one another, upon reasonable request of the
Party requesting reimbursement and the presentation by such Party
of such substantiating documentation as the other Party shall
reasonably request, for the cost of any obligations or Liabilities
satisfied or assumed by the Party requesting reimbursement or its
Affiliates that are, or that have been made pursuant to this
Agreement, the responsibility of the other Party or any of its
Affiliates. Any such request for reimbursement must be made not
later than the first anniversary of the Distribution Date.
(d) Bentley
shall retain responsibility for all employee-related regulatory
filings for reporting periods ending at or prior to the
Distribution Date except for Equal Employment Opportunity
Commission EEO-1 reports and affirmative action program
(AAP) reports and responses to Office of Federal Contract
Compliance Programs (OFCCP) submissions, for which Bentley
will provide data and information (to the extent permitted by
applicable Laws and consistent with Section 8.1) to CPEX, who
will be responsible for making such filings in respect of CPEX
Employees.
Section 2.2
Participation in Bentley Benefit Plans . Except as otherwise
expressly provided for in this Agreement or as otherwise expressly
agreed to in writing between or among the affected Parties,
(i) effective as of the Distribution Date, CPEX and each
member of the CPEX Group shall cease to be a Participating Company
in any Bentley Benefit Plan, and (ii) each CPEX Participant
and any other service providers (including any individual who is,
or was, an independent contractor, temporary employee, temporary
service worker, consultant, freelancer, agency employee, leased
employee, on-call worker, incidental worker, or nonpayroll worker
of any member of the CPEX Group or in any other employment,
non-employment, or retainer arrangement, or relationship with any
member of the CPEX Group), effective as of the Distribution Date,
shall cease to participate in, be covered by, accrue benefits
under, be eligible to contribute to or have any rights under any
Bentley Benefit Plan (except to the extent of obligations
6
that
accrued before the Distribution Date, including benefits that are
not otherwise addressed herein), and CPEX and Bentley shall take
all necessary action to effectuate each such cessation.
Section 2.3
Service Recognition . CPEX shall give each CPEX Participant
full credit for purposes of eligibility, vesting, determination of
level of benefits, and, to the extent applicable, benefit accruals
under any CPEX Benefit Plan, respectively, for such CPEX
Participant’s service with any member of the Bentley Group
prior to the Distribution Date to the same extent such service was
recognized by the applicable Bentley Benefit Plans immediately
prior to the Distribution Date; provided , that ,
such service shall not be recognized to the extent that such
recognition would result in the duplication of benefits.
Section 2.4
Approval by Bentley As Sole Stockholder . Effective as of
the Distribution Date, CPEX shall have adopted the CPEX
Pharmaceuticals, Inc. 2008 Equity and Incentive Plan (the “
CPEX Stock Plan ”), which shall permit the issuance of
long-term incentive awards that have material terms and conditions
substantially similar to those long-term incentive awards issued
under the relevant Bentley Stock Plans in respect of which CPEX
long-term incentive awards will be issued in connection with the
Distribution. The CPEX Stock Plan shall be approved prior to the
Distribution Date by Bentley as the sole stockholder of CPEX.
ARTICLE III
QUALIFIED DEFINED CONTRIBUTION PLAN
Section 3.1
CPEX 401(k) Plan .
(a)
Establishment of the CPEX 401(k) Plan . Effective as of the
Distribution Date, CPEX shall, or shall have caused one of its
Affiliates to, establish a defined contribution plan and trust for
the benefit of CPEX Participants (the “ CPEX 401(k)
Plan ”). CPEX shall be responsible for taking all
necessary, reasonable and appropriate action to establish, maintain
and administer the CPEX 401(k) Plan so that it is qualified under
Section 401(a) of the Code and that the related trust thereunder is
exempt from Federal income tax under Section 501(a) of the Code.
CPEX (acting directly or through its Affiliates) shall be
responsible for any and all Liabilities and other obligations with
respect to the CPEX 401(k) Plan.
(b)
Transfer of Savings Plan Assets . Not later than ninety
(90) days following the Distribution Date (or such later time
as mutually agreed by Bentley and CPEX), Bentley shall cause the
accounts (including any outstanding loan balances) in the Bentley
401(k) Plan attributable to CPEX Participants and all of the Assets
in the Bentley 401(k) Plan related thereto, to be transferred to
the CPEX 401(k) Plan and CPEX shall cause the CPEX 401(k) Plan to
accept such transfer of accounts and underlying Assets and,
effective as of the date of such transfer, to assume and to fully
perform, pay and discharge, all obligations of the Bentley 401(k)
Plan relating to the accounts of CPEX Participants (to the extent
the Assets related to those accounts are actually transferred from
the Bentley 401(k) Plan to the CPEX 401(k) Plan). Any transfer of
Assets pursuant to this Section 3.1(b) shall be conducted in
accordance with Section 414(l) of the Code, Treasury
Regulation Section 1.414(1)-1 , and
Section 208 of ERISA.
7
(c)
Continuation of Elections . As of the Distribution Date,
CPEX (acting directly or through its Affiliates) shall cause the
CPEX 401(k) Plan to recognize and maintain all Bentley 401(k) Plan
and CPEX 401(k) Plan elections, including, but not limited to,
deferral, investment, and payment form elections, dividend
elections, beneficiary designations, and the rights of alternate
payees under qualified domestic relations orders with respect to
CPEX Participants, to the extent such election or designation is
available under the CPEX 401(k) Plan.
(d)
Form 5310-A . No later than thirty (30) days prior
to the date of any transfer of Assets and Liabilities pursuant to
Section 3.1(b), Bentley and CPEX (each acting directly or
through their respective Affiliates) shall, to the extent
necessary, file Internal Revenue Service Form 5310-A regarding the
transfer of Assets and Liabilities from the Bentley 401(k) Plan to
the CPEX 401(k) Plan as described in this Section 3.1.
(e)
Contributions as of the Distribution Date . All
contributions payable to the Bentley 401(k) Plan with respect to
employee deferrals and contributions, matching contributions and
other contributions for CPEX Participants through the Distribution
Date, determined in accordance with the terms and provisions of the
Bentley 401(k) Plan, ERISA and the Code, shall be paid by Bentley
to the Bentley 401(k) Plan prior to the date of the Asset transfer
described in subsection (b), above.
ARTICLE IV
HEALTH AND WELFARE PLANS
Section 4.1
Health And Welfare Plans Maintained By Bentley Prior To The
Distribution Date .
(a)
Establishment of Welfare Plans . Bentley or one or more of
its Affiliates maintain health and welfare plans (the “
Bentley Welfare Plans ”) for the benefit of eligible
Bentley Participants and CPEX Participants. Effective as of the
Distribution Date, CPEX shall, or shall cause a CPEX Affiliate to,
adopt, for the benefit of eligible CPEX Participants, health and
welfare plans (collectively, the “ CPEX Welfare Plans
”).
(b)
Terms of Participation in CPEX Welfare Plans . CPEX (acting
directly or through its Affiliates) shall use reasonable best
efforts to cause all CPEX Welfare Plans, respectively, to
(i) waive all limitations as to preexisting conditions,
exclusions, and service conditions with respect to participation
and coverage requirements applicable to CPEX Participants,
respectively, other than limitations that were in effect with
respect to CPEX Participants as of the Distribution Date under the
Bentley Welfare Plans, and (ii) waive any waiting period
limitation or evidence of insurability requirement that would
otherwise be applicable to a CPEX Participant, respectively,
following the Distribution Date to the extent such CPEX Participant
had satisfied any similar limitation under the analogous Bentley
Welfare Plan.
(c)
Employees on Leave . Notwithstanding any other provision of
this Agreement to the contrary, CPEX shall assume Liability for
payment of any salary continuation, short term disability or health
and welfare coverage with respect to CPEX Employees and
Bentley
8
shall
have no further responsibility for such disabled employees or
employees on approved leave after the Distribution Date.
(d)
COBRA and HIPAA . Effective as of the Distribution Date,
Bentley shall retain responsibility for compliance with the health
care continuation coverage requirements of COBRA with respect to
CPEX Participants who, as of the day prior to the Distribution
Date, were covered under a Bentley Welfare Plan pursuant to COBRA.
Bentley (acting directly or through its Affiliates) shall be
responsible for administering compliance with any certificate of
creditable coverage requirements of HIPAA or Medicare applicable to
the Bentley Welfare Plans with respect to CPEX Participants. The
Parties hereto agree that neither the Distribution nor any
transfers of employment that occur as of the Distribution Date
shall constitute a COBRA qualifying event for purposes of COBRA;
provided , that , in all events, CPEX (acting
directly or through its Affiliates) shall assume, or shall have
caused the CPEX Welfare Plans to assume, responsibility for
compliance with the health care continuation coverage requirements
of COBRA with respect to those
|
