ALPHARMA INC. CHANGE IN CONTROL PLAN

 

Purpose of the Plan

The purpose of the Alpharma Inc. Change in Control Plan, effective March 11,
2002 (the "Plan"), is to provide certain executive Employees with benefits that
will assist them with their transition following a Change in Control.

This Plan represents an amendment and restatement of all prior change in control
plans, practices or policies in effect at Alpharma or any of its Subsidiaries as
of the effective date hereof, and supersedes any and all such prior change in
control plans, practices and policies. Except as otherwise specified in the Plan
all such prior change in control plans, practices and policies are hereby
discontinued and terminated, to the extent permitted by law.

Wherever any words are used herein in the masculine gender they shall be
construed as though they were also used in the feminine gender in all cases
where they would so apply, and wherever any words are used herein in the
singular form they shall be construed as though they were also used in the
plural form in all cases where they would so apply.

 

SECTION I - DEFINITIONS

The following definitions shall apply for purposes of this Plan:

1.1    "Acquiring Company" - Has the meaning provided in the definition of
Change in Control.

1.2    "Alpharma" - Alpharma Inc., a Delaware Company.

1.3    "Automobile and Financial Planning Allowance" - The automobile and
financial planning allowance an Executive Participant is receiving immediately
preceding his Termination Date.

1.4    "Benefit Continuation Period" -In the case of a an Executive who receives
a Change in Control Benefit, his Benefit Continuation Period will be determined
based on the number of months used in Section 4.2 to compute the Executive's
Change in Control Benefit.

1.5    "Board" - The Board of Directors of Alpharma.

1.6    "Change in Control" - (i) The acquisition by any person, entity or
"group" (Acquiring Company") within the meaning of Section 13(d) (3) or 14(d)
(2) of the Exchange Act (excluding, for this purpose, Alpharma or its
Subsidiaries, or any employee benefit plan of Alpharma or its Subsidiaries which
acquires beneficial ownership of voting securities of Alpharma) of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act)
of shares of Common Stock of Alpharma sufficient to elect a majority of
directors; (ii) persons who, as of the date of this Plan, constitute the Board
(the "Incumbent Board") cease for any reason to constitute at least a majority
of the Board , provided that any person becoming a director subsequent to the
date hereof whose election, or nomination for election by Alpharma's
stockholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as though such person
were a member of the Incumbent Board; (iii) approval by the stockholders of
Alpharma or a reorganization, merger or consolidation, in each case, with
respect to which persons who were the stockholders of Alpharma immediately prior
to such reorganization, merger or consolidation do not, immediately thereafter,
beneficially own shares sufficient to elect a majority of directors in the
election of directors of the reorganized, merged or consolidated company; or
(iv) a liquidation or dissolution of Alpharma (other than pursuant to the United
States Bankruptcy Code) or the conveyance, transfer or leasing of all or
substantially all of the assets of Alpharma to any person; provided, however,
that for the purposes of clauses (i) - (iv) above, the terms "person", "entity"
and "group" shall not include (x) A.L. Industrier ASA ("Industrier"), (y) the
stockholders of Industrier in the case of a distribution of shares of capital
stock of Alpharma beneficially owned by Industrier to the shareholders of
Industrier, unless a Change in Control of Industrier has occurred or occurs
concurrently with such a distribution, or in series of related transaction of
which such distribution is part, (determined without regard to this clause (y)
of this proviso) or (z) E.W. Sissener, his spouse, any heir or descendant of Mr.
Sissener or the spouse of any such heir or descendant of the estate of Mr.
Sissener (each, an "EWS Party"), or any trust or other similar arrangement for
the benefit of any EWS Party or any corporation or other person or entity
controlled by one or more EWS Party or any group of which any EWS Party is a
member. For purposes of the preceding sentence, a "liquidation" or "dissolution"
shall not be deemed to include any transfer of Alpharma property solely to any
persons identified in clauses (x), (y) and (z) of the proviso of such sentence.

 

1.7    "Change in Control Benefits" - Has the meaning provided in Section 4.2.

1.8     "Chief Executive Officer" - Chief Executive Office of Alpharma

1.9    "Committee" - The committee appointed by the Chief Executive Officer to
administer the Plan which shall consist of three (3) employees: the Executive
Vice President, Human Resources, who shall act as chairman, and two other
Executives.

1.10     "Company" - Alpharma Inc. and its US Subsidiaries and any non-US
Subsidiary whose Board of Directors (or similar governing body) has adopted this
plan, or any successor by merger, consolidation or sale of assets.

1.11    "Constructive Termination" - A voluntary resignation following a Change
in Control and following an action initiated by Alpharma, a Subsidiary or an
Acquiring Company which results in (i) a reduction in the Executive's
compensation or a reduction in the basis upon which such Executive's bonus or
commission is determined, (ii) the Executive's relocation to a base office or
site which is more than 50 miles from the location of the Executive's office or
site prior to the Change in Control, (iii) the assignment of duties
substantially inconsistent with, or a substantial diminution of, the duties,
responsibilities or status of the position that the Executive held prior to the
Change in Control, (iv) a reduction in benefits, or (v) a change in reporting
relationship which is detrimental to the Executive (including, without
limitation, a detrimental change in the position to which the Executive reports
and not including, without limitation, the termination or change in the person
who held the position to whom the Executive reported prior to the Change in
Control).

1.12    "Employee" - A full-time permanent salaried or hourly employee of the
Company, as determined by the Committee. An Employee shall not include any
individual classified by the Company as either a temporary employee, a leased
employee or an independent contractor (regardless of whether such individual is
classified or retroactively reclassified as an employee of the Company by any
person, entity or agency).

1.13    "Executive" - An Employee who is providing services to the Company in
one of the following capacities: the Chief Executive Officer, a member of the
Leadership Team, an Employee holding the title of Vice President or Director of
the Company or its Operating Divisions, or any other individual deemed by the
Committee to be an Executive.

1.14    "Executive Bonus Plan" - The Alpharma Inc. Executive Bonus Plan
(effective January 1, 2002), as amended from time to time, or such other bonus
plan setting forth the Executives' annual awards of cash bonuses.

1.15    "Incentive Award" - An Executive's annual target bonus award immediately
preceding the date of the Change in Control event as set forth in the Executive
Bonus Plan (as such agreement may be revised from time to time), assuming 100%
funding of the bonus pool thereunder, provided however, that upon the occurrence
of a Change in Control, the target annual bonus award may not be reduced.

1.16    "Involuntary Termination of Employment" - A Termination of Employment
which was initiated by the Company other than a Termination for Cause. The
Committee shall have complete discretion to determine whether an Involuntary
Termination of Employment has occurred.

1.17    "Leadership Team" - Those officers of the Company that report directly
to the Chief Executive Officer and such other employees who the Chief Executive
Officer, in his sole discretion, determines is eligible to be classified as a
member of the Leadership Team for purposes of this Plan.

1.18    "Non Qualifying Sale" - A sale of (i) the stock or assets of a
Subsidiary or the assets of an Operating Division or (ii) assets (other than
substantially all the assets of the Company).

1.19.1    Operating Division" - The Company's operating divisions, which for
management or financial purposes are reported as individual business segments.

1.20    "Plan" - The Alpharma Inc. Change in Control Plan.

1.21    "Salary" - An Executive's annual base salary immediately preceding his
Termination Date. In the United States, Salary shall include amounts contributed
on behalf of the Executive to a cafeteria plan or a cash or deferred arrangement
and not includable in compensation under Section 125 or 402(e)(3) of the
Internal Revenue Code. Salary shall exclude the following: commissions;
incentive compensation; bonuses; overtime; extended workweek premiums;
cost-of-living allowances; shift premiums; other premiums; deferred
compensation; payments under consulting agreements; payments under advisory
agreements; any other special payments, fees, or allowances.

1.22    "Subsidiary" - Any corporation in which Alpharma owns either directly or
indirectly, more than 50% of the voting stock.

1.23    "Termination Date" - The date an Executive's active employment with the
Company terminates as a result of an Involuntary Termination of Employment or a
Constructive Termination.

1.24    "Termination for Cause" - A Termination of Employment for reasons such
as a conviction of a felony, habitual excessive use of drugs or alcohol,
unsatisfactory attendance, substantial and willful neglect of job duties,
failure or inability to adequately perform job duties, disclosure of
confidential information regarding the Company or its operations, or the aiding
or assisting of any person or entity which is competitive with the Company or
its successors. The determination of whether an Executive is terminated for
cause or not for cause shall be made by the Committee in its sole discretion and
shall be final and conclusive.

1.25    "Termination of Employment" - A termination of employment with the
Company for any reason other than by reason of retirement, death or disability
provided that a transfer of employment to the Acquired Company or any of its
affiliates shall not be a Termination of Employment unless it constitutes a
Constructive Termination.

1.26    "US Employee" - An Employee whose primary place of employment is in the
United States.

1.27    "US Subsidiary" - Any Subsidiary incorporated in the United States.

1.28    "Waiver and Release" - A form of waiver and release provided by the
Company which has the effect of releasing the Company, its affiliates, officers,
directors and employees from any and all claims, demands, causes of action,
damages, expenses and liabilities, whether known or unknown, which the Executive
has or may later have against the Company which relate in any way to his
employment by the Company, or his separation from employment with the Company,
or any other matter at the time of Termination of Employment.

ARTICLE II - ELIGIBILITY

2.1    Eligibility for Change in Control Benefits.

 a. Subject to Section 3.1, an Executive shall be eligible to receive Change in
    Control Benefits specified under Article IV if concurrently with or within
    the 24-month period following the Change in Control he has either (i) an
    Involuntary Termination of Employment or (ii) a Constructive Termination.
 b. An Executive shall not be eligible for Change in Control Benefits if he is
    subject to a collective bargaining agreement or comparable labor agreement
    or is otherwise not permitted to participate pursuant to the laws of the
    jurisdiction where he is employed.
 c. A Non Qualifying Sale shall not be deemed a Change in Control and an
    Executive shall not be eligible to receive Change in Control Benefits upon a
    Non Qualifying Sale.

2.2 Committee Discretion. The Committee shall have full discretion to determine
eligibility to receive benefits under this Plan. Such discretion shall be
exercised in accordance with the provisions set forth herein and in a uniform
and non-discriminatory fashion.

 

ARTICLE III - CONDITIONS

3.1    Change in Control Benefits Conditions. The following are conditions to an
Executive receiving Change in Control Benefits:

 a. Termination Date on or after March 11, 2002;
 b. Termination Date does not immediately follow a period during which the
    Executive has not been actively at work due to leave of absence, layoff or
    salary continuance, unless the Committee specifically designates the
    condition as not applicable to the Executive;
 c. To the extent, an Executive claims that Constructive Termination has
    occurred, such claim shall be made in writing to the Committee within 90
    days following the Constructive Termination event;
 d. If requested by the Company or Acquiring Company, the Executive shall remain
    employed with the Company or the Acquiring Company for up to six months
    following the Change in Control; and
 e. Executive executes a Waiver and Release and does not revoke it within seven
    (7) days after the execution thereof.

To the extent the duration of the Change in Control Benefits is longer than any
notice period required under the laws of the jurisdiction in which an Executive
is employed, then such Change in Control Benefits shall be in lieu of such
notice period.

 

ARTICLE IV - CHANGE IN CONTROL BENEFITS

4.1    General.

Subject to Section 6.1, an Executive who is eligible under Section 2.1 to
receive Change in Control Benefits and who satisfies the conditions in Section
3.1 shall receive the amount of Change in Control Benefits specified under
Section 4.2 payable in accordance with Article VII and those other benefits as
specified in Article V.

4.2    Amount of Change in Control Benefits.

An Executive who satisfies the eligibility requirements under Section 2.1 shall
be entitled to receive Change in Control benefits ("Change in Control Benefits")
equal to the following:

 i.   In the case of the Chief Executive Officer, Salary and Automobile and
      Financial Planning Allowance during each of the 36 months following the
      Termination Date. Additionally, he shall receive an Incentive Award for
      such 36 month period;
 ii.  In the case of a member of the Leadership Team , Salary and Automobile and
      Financial Planning Allowance during each of the 30 months following the
      Termination Date. Additionally, he shall receive an Incentive Award for
      such 30 month period;
 iii. In the case of a Vice President, Salary during each of the 18 months
      following the Termination Date; and

(iv) In the case of a Director, Salary during each of the 12 months following
the Termination Date.

4.3    Incentive Awards.

Any Incentive Award payable under the terms of this Plan shall be in addition to
any Incentive Award otherwise payable under the Executive Bonus Plan during the
year in which the Change in Control event occurs.

 

ARTICLE V - OTHER BENEFIT PROVISIONS

5.1   Medical, Dental and/or Life Insurance Coverage

An Executive shall be entitled to continued coverage under the medical, dental,
accidental death and dismemberment and/or life insurance benefits plan sponsored
by the Company under which the Executive is covered and as in effect on the
Executive's Termination Date (including medical and dental coverage for the
Executive's covered dependents, if any) for the duration of the applicable
Benefit Continuation Period whether or not the Executive receives the benefit
payments in a lump sum or in monthly payments.Such coverage shall be equal to
the coverage offered to the Employees of the Company or Acquiring Company, as
the case may be, during such Benefit Continuation Period and shall be at the
same cost to the Executive as is applicable to such Employees during the Benefit
Continuation Period. In no event shall an Executive be entitled to add
dependents to his medical or dental coverage after his Termination Date except
for US Employees as would otherwise be allowed by the Consolidated Omnibus
Budget Reconciliation Act of 1985 ("COBRA").

At the end of the Benefit Continuation Period, an Executive which is a US
Employee may elect to continue medical and dental benefits according to the
continuation coverage requirements of group health plans in COBRA, and all of
the health insurance continuation provisions under COBRA shall regulate an
Executive's election to continue medical and dental benefits at the end of the
period during which he is covered under the terms of this Plan. The period for
which such Executive is eligible for COBRA shall be reduced by the number of
weeks during which he received medical and/or dental coverage as a result of his
participation in the Plan. At the end of the Benefit Continuation Period,
accidental death and dismemberment and life insurance benefits shall cease.

5.2    Retiree Medical Benefits.

(1)    An Executive who is eligible to retire and who is eligible for retiree
medical insurance as of his Termination Date shall be provided retiree welfare
benefits in accordance with the provisions of the applicable plans rather than
the benefits described in this Article V.

(2) An Executive who is eligible to retire and who is not eligible for retiree
medical insurance as of his Termination Date shall be eligible for
Medical/Dental benefits for the Benefit Period, in accordance with the
provisions of this Article V.

5.3    Retirement Plans.

In the event an Executive becomes eligible to receive Change in Control
Benefits, the benefit payments under this Plan shall not be considered for
purposes of computing benefits under the Alpharma Inc. Pension Plan and the
Alpharma Inc. Supplemental Pension Plan or any similar pension or retirement
plan. An Executive shall not be eligible to actively participate under any such
Plans after his Termination Date.

5.4 Savings Plan and Stock Purchase Plan

In the event an Executive becomes eligible to receive Change in Control
Benefits, the benefit payments under this Plan shall not be considered for
purposes of computing benefits under any defined contribution plan or stock
purchase plan sponsored by the Company including the Employee Stock Purchase
Plan, the Alpharma Inc. Savings Plan and the Alpharma Inc. Supplemental Savings
Plan. An Executive shall not be eligible to actively participate under any of
these Plans after his Termination Date.

5.5 Stock Options.

As permitted under Section 8 of the Alpharma Inc. 1997 Incentive Stock Option
and Appreciation Rights Plan, as amended ("Stock Option Plan"), upon the
occurrence of a Change in Control, all Options and Units (as defined under the
Stock Option Plan) held by an Executive shall become immediately exercisable by
the optionee and grantee, respectively, and shall remain exercisable for the
lesser of (i) the length of time during which the Option or Unit, as the case
may be, may be exercised or (ii) the maximum period permitted under the Stock
Option Plan.

5.6 Other Plans.

An Executive's participation in all other employee benefit plans sponsored by
the Company shall cease being effective as of the Executive's Termination Date.

5.7 Terms of Other Plans.

Continued participation in any of the plans noted above shall be subject to the
terms of said plans; as in the past, the Company continues to retain the right
to amend or terminate such plans at any time.

 

ARTICLE VI - OTHER AGREEMENTS AND LAWS

6.1   General.

Notwithstanding, anything to the contrary herein, to the extent that an
Executive is party to an employment agreement with the Company, the Executive
shall be entitled to receive benefits (taken individually) equal to the greater
of (i) the benefits available under the Plan or (ii) the benefits available
under such employment agreement.

6.2 Local Laws

Notwithstanding anything to the contrary herein, to the extent that an Employee
satisfies the conditions in Sections 2.1 and 3.1, and any such Employee is
entitled to benefits at the time of a Termination of Employment under applicable
local law, which are more favorable than the Severance Benefits available under
the Plan, the Employee shall receive only those benefits available under local
law.

 

 

ARTICLE VII - PAYMENT

7.1 Method of Payment.

 a. Change in Control Benefits under Section 4.2 shall be paid to an Executive
    in installments in accordance with the Company's standard payroll cycles
    beginning with the first payroll period immediately after his Termination
    Date and continuing for the applicable Benefit Continuation Period.

(b) If an Executive dies after his Involuntary Termination of Employment or
Constructive Termination but before receiving the total amount of his Change in
Control Benefit, such benefit will instead be paid in a lump sum to the
Executive's surviving spouse, if any, and otherwise to the Executive's estate
commencing as soon as administratively feasible after the date of death.

 

SECTION VIII - ADMINISTRATION

8.1 The Committee.

The Committee shall have the complete authority to: (a) determine eligibility
for benefits in accordance with the provisions of the Plan; (b) construe the
terms of the Plan; and (c) control and manage the operation of the Plan.

8.2 Administrative Rules.

Subject to the limitations of the Plan, the Committee from time to time shall
establish rules for the administration and interpretation of the Plan and the
transaction of its business. The determination of the Committee as to any
disputed question shall be conclusive. All actions, decisions and
interpretations of the Committee in administering the Plan shall be conclusive.
All actions, decisions and interpretations of the Committee in administering the
Plan shall be performed in a uniform and non-discriminatory manner.

8.3 Delegation.

The Committee may, in its sole discretion, delegate some or all of its functions
to third parties and employ counsel and other agents and may procure such
clerical, actuarial accounting and other services as the Committee may require
in carrying out the provisions of the Plan.

8.4. Indemnification.

The Company shall indemnify and hold harmless each member of the Committee
against all expenses and liabilities arising out of the Committee member's
service as such, excepting only expenses and liabilities arising from the
member's own gross negligence or willful misconduct.

8.5 Arbitration.

All disputes regarding the application of the definition of Constructive
Termination shall be submitted to an Arbitration Panel whose findings shall be
binding on the Company and the Executive. For purposes of this Plan, the term
"Arbitration Panel" shall mean three (3) independent arbitrators, one of whom
shall be selected by the Company, one by the Executive and the third shall be
selected by the two other arbitrators. In the event that agreement cannot be
reached on the selection of the third arbitrator, such arbitrator shall be
selected by the American Arbitration Association. All arbitrators shall be
selected from a list provided by the American Arbitration Association. All
matters presented to the Arbitration Panel shall be decided by majority vote.
All costs of the arbitration, including the Executive's attorneys' fees, if any,
shall be paid by the Company.

8.6 Claim Procedure.

(a) The Company will notify an Executive at the time of Termination of
Employment what benefits, if any, he will receive under the Plan. If an
Executive believes that he is entitled to receive additional benefits under the
Plan he must submit a claim for benefits in writing to the Committee. Any claim
for benefits must be received by the Committee within 60 days after the date of
the Executive's Terminated Employment. If a claim for benefits under the Plan is
denied in whole or in part, the claimant will receive written notice of the
denial within 90 days after the filing of the claim. The notice will state the
specific reason for the denial of benefits.

(b) Any claimant whose claim for benefits is denied may request a review of the
decision denying his claim. The claimant or his duly authorized representative
must submit a written request for review to the Committee within 60 days after
receiving the notice of denial. When making a request for review, a claimant
should state the reasons why he believes the claim was improperly denied and
should submit any documents or information relevant to the claim.

(c) The decision on review will be completed and furnished to the claimant in
writing within 60 days after receipt of the request for review. All decisions of
the Committee are final and binding. In unusual circumstances the Committee may
require an extension of time for deciding on a claim for benefits or a request
for review. Whenever there is a need for an extension of time, the Committee
will notify the claimant of the extension. In no event will such an extension
exceed a period of 90 days in the case of the initial claim or 60 days in the
case of the decision on review.

(d) If the Committee fails to take any action required by it within the time
limits specified above, the claim shall be deemed denied as of the latest date
by which such action should have been completed.

 

ARTICLE IX - MISCELLANEOUS

9.1 Amendment and Termination.

The Company reserves the right to amend or modify the Plan, to terminate the
Plan in its entirety, or to terminate the participation in the Plan of any
Subsidiary, provided that (i) any such amendment, modification or termination
shall be approved by the Compensation Committee of the Board , (ii) any such
amendment, modification or termination shall not be applicable to an Executive
who has already been notified of a Termination of Employment, and (iii) the Plan
shall not be amended, modified or terminated after the earlier of (a) the
Board's initial consideration of a transaction which would be a Change in
Control or (ii ) the execution of a contract which results in a Change in
Control.

9.2 Parachute Payments.

Notwithstanding anything in this Agreement to the contrary, to the extent that
any payment or benefit received or to be received by an Executive in connection
with a Change in Control (whether pursuant to the terms of this Agreement
("Contract Payments") or any other plan, arrangement or agreement with the
Company, any person whose actions result in a Change in Control or any person
affiliated with the Company or such person (collectively with the Contract
Payments, "Total Payments")) would, as determined by tax counsel selected by the
Company, result in "Excess Parachute Payments" (as defined below) equal to or
greater than three times the "base amount" (the "Maximum Amount") as defined in
Section 280G of the Code , an Executive shall not be entitled to receive such
portion of the payment or benefit under this Agreement which is greater than the
Maximum Amount. "Excess Parachute Payments" shall mean "parachute payments" as
defined in Section 280G of the Code other than (A) health and life insurance
benefits and (B) payments attributable to any award, benefit or other
compensation plan or program based upon the number of full or fractional months
of any restricted period (relating thereto) which has elapsed prior to the date
of the Change in Control. Furthermore, such payments or benefits provided to the
Executive under this Agreement shall be reduced to the extent necessary so that
no portion thereof shall be subject to the excise taxes imposed by Section 4999
of the Code, but only if, by reason of such reduction, Executive's net after-tax
benefit shall exceed the net after-tax benefit if such reduction were not made.
"Net after-tax benefit" shall mean the sum of (1) all payments and benefits
which Executive receives or is then entitled to receive from the Company and any
of its subsidiaries that would constitute a "parachute payment" within the
meaning of Section 280G of the Code, less (2) the amount of federal income taxes
payable with respect to the payments and benefits described in (1) above
calculated at the maximum marginal income tax rate for each year in which such
payments and benefits shall be paid to Executive (based upon the rate in effect
for such year as set forth in the Code at the time of the first payment of the
foregoing), less (3) the amount of excise taxes imposed with respect to the
payments and benefits described in (1) above by Section 4999 of the Code.

The terms of any new or revised tax regulations relating to Excess Parachute
Payments shall be incorporated by reference herein.

 

9.3 Withholding.

The Company shall withhold all required local, state and federal income taxes
from any benefits payable under this Plan.

9.4 Binding on Successors.

The obligations of the Company under the Plan shall be binding upon any
organization which shall succeed to all or substantially all of the assets of
the Company, and the term "Company," whenever used in the Plan, shall mean and
include any such organization after the succession.

9.5 Applicable Law.
The Plan shall be governed by and construed in accordance with the laws of the
State of New Jersey (regardless of the laws that might otherwise govern under
applicable New Jersey principles of conflicts of law.

9.6 Contract Right of Executives .
The Board intends this Plan to constitute an enforceable contract between the
Company and each Executive and intends this Plan to vest rights in such
Executives as third party beneficiaries.

9.7 Compensation.
For all purposes hereof, with respect to the determination of an Executive's
incentive award amount, compensation, rate of base earnings, job grade or band,
target award or similar amounts or status shall be the higher of such amount,
grade, band or status (as the case may be) at the time of the occurrence of a
Change in Control.