November 9, 2007

Mr. Carl-Aake Carlsson

Batstojordet 93

N-1363 Hovik, Norway

Dear Carl-Aake:

Alpharma AS (the "Company") recognizes you as a valuable member of the team
charged with responsibility for completing the sale of all or substantially all
of the Active Pharmaceutical Ingredient Business (which consists of the Active
Pharmaceutical Ingredient business segment reported by Alpharma Inc.
("Alpharma") under the Securities Act of 1934, and hereafter called the "API
Business "). In order to incentivize you to remain with the Company, and to
protect you in the event your employment is terminated, the Company is providing
you with the retention and severance benefits set forth in this letter agreement
(this "Agreement").

This Agreement will remain in effect until December 12, 2008; provided that, if
a Qualifying Transaction (as defined below) occurs prior to such date, it shall
remain in effect for two years after such Qualifying Transaction.

Retention Award

Without regard to the occurrence of a Qualifying Transaction (as defined below),
on the 15th day of the month following the full execution this letter agreement,
you will receive a long-term incentive award in the form of Restricted Stock
under the Company's 2003 Omnibus Incentive Compensation Plan (the "Omnibus
Plan") consisting of 10,000 shares of the Alpharma's Class A Common Stock. As
you may know, restricted stock is stock that Alpharma holds for you, pending the
satisfaction of the restrictions set forth in the Restricted Stock Award
Agreement,. At the time that the restrictions set forth in the award agreement
lapse, the shares of stock will be "released" to you. You may retain, sell or
otherwise dispose of the shares of stock subject to restrictions on the sale of
the stock that are imposed by law and Alpharma's normal stock sale "black-out"
provisions applicable generally to senior executives. You will be responsible
for any taxes or sales costs associated with this award or the sale of the
related Alpharma stock.

The Restricted Stock Award Agreement will include a provision providing for 100%
vesting of such restricted stock on the third anniversary date of the Grant Date
(as defined therein) provided that you are an active employee of the Company on
such date. The Award Agreement will also include certain other provisions under
which vesting could occur earlier in the event of a Qualifying Transaction. You
will have no right to the Restricted Stock unless and until it vests in the
manner set forth in the Restricted Stock Award Agreement. All terms of this
award are subject to the terms of the Restricted Stock Award Agreement which
shall prevail should there be any inconsistencies between this Agreement and the
Award Agreement.

Additional Benefits Upon a Qualifying Transaction

If prior to December 12, 2008, either a (x) a Sale of the API Business (as
defined below) or (y) a "Change in Control" of Alpharma under Alpharma's Change
in Control Plan occurs while both you are an active employee of the Company and
the companies constituting the API Business are direct or indirect subsidiaries
of Alpharma (each a "Qualifying Transaction"), you will be entitled to the
benefits described below. The benefits provided herein will be in lieu of the
benefits set forth in Alpharma's Severance or Change in Control Plans or any
employment letter or agreement, including the letter agreement dated December
12, 2005 between the Company and you (the "2005 Letter"), or any other plan or
arrangement in existence prior to the date of this Agreement.

Transaction Bonus.

In recognition of your past and expected efforts in this regard, and in
recognition of the fact that a Sale of the API Business could materially change
the nature of your continuing responsibilities with the Company, the Company is
granting you a Transaction Bonus (as defined below) provided that both of the
following conditions are satisfied:

1.The consummation on or before December 12, 2008 of the sale or other transfer
of all or substantially all of the assets and business of the API Business to
any person, entity or group unaffiliated with Alpharma in a transaction that
does not result in a "Change in Control" of Alpharma Inc. under the Alpharma
Change in Control Plan (a "Sale of the API Business"). For avoidance of doubt,
any transaction which results in a "Change in Control" of Alpharma shall not
entitle you to a Transaction Bonus but the Sale of the API Business does not, by
itself, constitute a "Change in Control" of Alpharma under the Alpharma Change
in Control Plan, and

2. You continue to be an employee of the Company or the entity that acquires the
Company or the API Business (the "Acquiring Company") until the first to occur
of (a) six months after the date of the Sale of the API Business, or (b) the
date after the Sale of the API Business upon which (i) the Company or the
Acquiring Company terminates your employment for any reason other than "Cause,"
or (ii) you terminate your employment due to a "Constructive Termination," as
further described in this letter and you accept such termination without making
any claim for damages, payments or entitlements ("Damages") not provided in this
letter (including any Damages under Norwegian law) and provide the Company with
an executed release of any right to receive such Damages in form and substance
which the Company's Norwegian counsel advises is sufficient to release the
Company from any obligation to pay Damages. For the purposes of this letter, a
termination for Cause shall mean your termination by the Company or the
Acquiring Company due to (a) conviction of a felony, or (b) substantial and
willful neglect of job duties or willful misconduct, in either case having a
material and demonstrable effect on the Company or the Acquiring Company or (c)
termination for any other reason justifiable under Norwegian law.

The Transaction Bonus ("Transaction Bonus") shall be equal to an amount as
provided on Appendix A hereto.

Any Transaction Bonus due hereunder shall be payable in cash within ten (10)
business days after the satisfaction of the employment criteria set forth in (2)
above.

Treatment of Annual Bonuses and Equity Awards.

A. Annual Bonus.

If a Qualifying Transaction occurs while you are an active employee of the
Company and prior to December 12, 2008, your annual cash bonus for the calendar
year of such Qualifying Transaction will be treated as follows:

(1) if the Qualifying Transaction is either (x) a Sale of the API Business that
occurs on or prior to June 30 of any calendar year, or (y) a "Change in Control"
of Alpharma under Alpharma's Change in Control Plan, which occurs at anytime
during the calendar year, the Company will pay you a pro-rata bonus based on
your target annual bonus opportunity, as in existence immediately prior to the
Qualifying Transaction, under the Executive Bonus Plan based on the portion of
such calendar year that occurred prior to the Qualifying Transaction, payable
ten (10) business days after the applicable Qualifying Transaction; or

(2) if the Qualifying Transaction is a Sale of the API Business that occurs
after June 30 of any calendar year, the Company will pay you a pro-rata bonus
for that year based on actual performance under the criteria established in
accordance with the terms of the Executive Bonus Plan based on the portion of
such calendar year that occurred prior to the Qualifying Transaction, payable
between January 1 and March 15 of the following calendar year.

B. Equity Awards.

If a Qualifying Transaction occurs while you are an active employee of the
Company, then any Stock Options, Restricted Stock or Restricted Stock Units of
Alpharma issued to you prior to the date of such Qualifying Transaction under
either the 1997 Incentive Stock Option and Appreciation Rights Plan or the 2003
Omnibus Incentive Compensation Plan (or any successor plans) shall immediately
vest (but otherwise be governed by the terms of such applicable grant document
and Incentive Plan); provided that, if such Qualifying Transaction is a "Change
in Control" of Alpharma under Alpharma's Change in Control Plan, then any such
vesting with respect to Restricted Stock or Restricted Stock Units shall instead
occur upon the earliest of (i) the vesting date set forth in the applicable
grant document, or (ii) the termination of your employment with the Company or
the entity that acquires the Company (the "Acquiring Company") prior to the
second anniversary of the Qualifying Transaction either by your employer without
Cause or by you pursuant to a Constructive Termination of employment, as further
described below.

Special Severance Arrangement

.

Should a Qualifying Transaction occur while you are an active employee of the
Company and your employment with the Company or the Acquiring Company is
terminated on or after the Qualifying Transaction, but on or prior to the second
anniversary of the Qualifying Transaction (either by your employer without Cause
or pursuant to a Constructive Termination of employment, as further described
below), you shall receive from the Company the severance benefits and payments
set forth in Appendix B of this Agreement.

For purposes of this Agreement, a Constructive Termination means your voluntary
termination following (i) any material reduction in your base salary or in your
target annual bonus opportunity, as in existence immediately prior to the
Qualifying Transaction, (ii) your relocation to a base office or site that is
more than 50 miles from the location of your present base office or site, (iii)
any material reduction in your health, welfare and pension benefits in the
aggregate or (iv) the assignment of duties substantially inconsistent with, or a
substantial diminution of, the duties, responsibilities or status of your
position with the Company immediately prior to the Qualifying Transaction;
provided that, if you are eligible to voluntarily terminate employment pursuant
to a Constructive Termination of employment within the first six months after
the date of the Qualifying Transaction, the Company or the Acquiring Company may
request that you continue as a full time employee to assist with transition and
other activities reasonably appropriate to your position, your background and
history with the Company with no reduction in base salary, target annual bonus
opportunity or benefits, and no relocation, as described above in the definition
of "Constructive Termination" until six months after the Qualifying Transaction
and any benefits and payments required under this paragraph shall be payable
only upon your completion of such service, or your death or termination due to
Disability. In any of the foregoing events, in order to qualify as a
Constructive Termination of employment, you must have provided written notice to
your employer of the circumstances that entitle you to terminate due to a
Constructive Termination, and the employer must be afforded 30 days in which to
cure such circumstances before you can resign due to a Constructive Termination.

Non-Competition and Non-Solicitation Obligations

.

The payments and benefits provided for hereunder are conditional on your
agreement not to engage in competition with, or to solicit employees of, the
Company and its affiliates, as further provided in Appendix C of this Agreement.

No Mitigation

.

Unless expressly provided in this Agreement, the Company agrees that any income
or other employment benefits received by you from any and all sources other than
the Company, the Acquiring Company and their respective affiliates for any
reason whatsoever shall in no way reduce or otherwise affect the Company's
obligations to make payments and afford benefits under this Agreement.

Miscellaneous

.

You confirm that you have previously received copies of all Plans, employment
letters and other agreements referred to in this Letter Agreement.

This Agreement shall be governed by and construed in accordance with the laws
Norway.

 

 

Except as specifically set forth in this Agreement, no other benefits shall be
provided to you upon or after the occurrence of a Qualifying Transaction,
including benefits set forth in Alpharma's Severance or Change in Control Plans
or any employment letter or agreement, or other plan or arrangement, in
existence prior to the date of this Agreement and no amounts payable pursuant to
this Agreement shall be taken into account for purposes of any benefit plan
maintained by the Company or any affiliate of the Company. Notwithstanding
anything to the contrary, to the extent that the Company or an Acquiring Company
makes a payment or payments to you under Norwegian or other applicable law as a
result of a Qualifying Transaction or any termination of employment within two
years after a Qualifying Transaction, the amount of such payment shall reduce,
by an equal amount, (i) first, any payments due to you under the Special
Severance Arrangement set forth above and; (ii) if said payments made under
applicable law exceed the amount of the Special Severance Arrangement, then,
payments due under the Transaction Bonus.

Upon execution of this Agreement, the 2005 Letter, shall automatically terminate
and be of no further force and effect without regard to the occurrence or a
Qualifying Transaction.

Payments to you by the Company and its affiliates shall be subject to all
applicable legal requirements with respect to withholding of taxes and you shall
be responsible for all applicable Norwegian taxes which, under applicable laws
and regulations, are payable by you or otherwise your responsibility.

This Agreement shall be binding upon, and inure to the benefit of, the parties
hereto, any successors to or assigns of the Company and your heirs and the
personal representatives of your estate. If the Company or the Acquiring Company
consolidates with or merges into or sells all or substantially all of its assets
to, another corporation, partnership or other entity or person, the Company (or
the Acquiring Company, as the case may be) shall require such corporation,
partnership or other entity or person to assume this Agreement, and upon such
assumption, the successor corporation, partnership or other entity or person
shall become obligated to perform all of the terms and conditions set forth
herein.

This Agreement may not be modified, amended or waived in any manner except by an
instrument in writing signed by the parties hereto. The waiver by either party
of compliance with any provision in this Agreement by the other party shall not
operate or be construed to operate as a waiver of any provision of this
Agreement, or any subsequent breach by such party of any provision of this
Agreement.

This Agreement is not an offer or promise of continuing employment by the
Company. In addition, the Company shall have no responsibility or liability for
your employment by an Acquiring Company other than with respect to payments due
pursuant to the terms of this Agreement.

We ask that you acknowledge that, by countersigning this Agreement, you are
agreeing to maintain a strict level of confidence regarding all information
disclosed, developed or learned by you in the performance of your duties with
the Company, including any facts, circumstances or discussions that could lead
to a Qualifying Transaction ("Confidential Information"). By countersigning this
Agreement, you agree that, unless you first secure the written consent of the
Chief Executive Officer of Alpharma, you shall not disclose or use at any time,
either during or after employment by the Company, any Confidential Information
except to the extent that you are required to disclose or use such Confidential
Information by law or in the performance of your assigned duties for the
Company. This obligation is in addition to the confidentiality agreement that
you have previously executed as an employee of the Company, the general
obligation of confidentiality existing under the law and the Non-Competition and
Non-Solicitation obligations included herewith as Appendix C.

Notwithstanding anything in this Agreement to the contrary, any payments
hereunder that (i) are subject to United States Income Tax and (ii) would be
subject to the additional income or excise tax imposed (x) by Section 409A of
the United States Internal Revenue Code of 1986, as amended (the "Code"), shall
be deferred until the earliest date that such payments may be made without the
imposition of such tax, and any payments that would have been made to you but
for this sentence shall be accumulated (without interest) and paid to you on
such date or (y) by Section 4999 of the Code, shall be subject to the "Gross Up"
provisions as set forth in Attachment B of this Letter Agreement.

We believe that the Retention Award, Transaction Bonus and other potential
payments and benefits set forth above clearly reflect your value to this
organization and provide you with enhanced financial benefits in connection with
the potential Qualifying Transaction.

Please indicate your acknowledgement of this Agreement, and our acceptance of
its terms, by countersigning this Agreement where indicated below and returning
one copy to the Company.

Sincerely,

 

ALPHARMA AS

 

 

By:

/s/ Frode Johansen

/s/ Arnt-Tore Valsvik

/s/ Mikkel Lyager-Olsen

 

Frode Johansen

Arnt-Tore Valsvik

Mikkel Lyager-Olsen

 

Chairman

Director

Director

 

 

I acknowledge and agree to the terms and conditions of this Agreement, and I
intend to be legally bound hereby

 

 

/s/ Carl-Aake Carlsson

Dated: November 12, 2007

Signature

 

 

 

Appendix A

Transaction Bonus

Upon the Sale of the API Business in which the Acquiring Company pays to the
Company an amount equal to the Consideration (as defined below) listed on the
chart below, subject to you satisfying the conditions for receipt of a
Transaction Bonus as set forth in the attached letter

agreement, the Company shall pay you a lump-sum equal to the Transaction Bonus
listed below. For purposes of calculating the Transaction Bonus, all
Consideration values shall be rounded to the nearest ($USM). For avoidance of
doubt, in the event Consideration values are equal to or in excess of $US 400M,
the Transaction Bonus will be capped at $US 1,040,000.

Consideration
($USM)

Transaction Bonus as % of Deal Consideration

Transaction Bonus ($US)

Less than $280

0

$280-289

0.040%

$112,000

$290-299

0.050%

$145,000

$300-304

0.060%

$180,000

$305-309

0.070%

$213,500

$310-314

0.080%

$248,000

$315-319

0.090%

$283,500

$320-324

0.100%

$320,000

$325-329

0.110%

$357,500

$330-334

0.120%

$396,000

$335-339

0.130%

$435,500

$340-344

0.140%

$476,000

$345-349

0.150%

$517,500

$350-354

0.160%

$560,000

$355-359

0.170%

$603,500

$360-364

0.180%

$648,000

$365-369

0.190%

$693,500

$370-374

0.200%

$740,000

$375-379

0.210%

$787,500

$380-384

0.220%

$836,000

$385-389

0.230%

$885,500

$390-394

0.240%

$936,000

$395-399

0.250%

$987,500

$400 and above

0.260%

$1,040,000

 

For purposes of this Agreement, the term "Consideration" shall mean the gross
value of all cash, securities and other properties paid or payable, directly or
indirectly, by the Acquiring Company in one transaction or in a series or
combination of transactions, in connection with the Qualifying Transaction
(including, without limitation, amounts paid pursuant to covenants not to
compete or similar arrangements, but not consideration paid to employees of the
API Business as a result of a "change in control", an incentive to complete the
Qualifying Transaction, or severance). Consideration shall not include the
amount of value of any liabilities of the API Business assumed by the Acquiring
Company except any indebtedness for borrowed money and any pension liabilities
and guarantees related to the API Business indirectly or directly assumed or
acquired, or otherwise repaid or retired, by the Acquiring Company.
Consideration shall include all amounts paid into escrow payable to the Company
in connection with the Qualifying Transaction. If the Consideration to be paid
is computed in any foreign currency, the value of such foreign currency shall,
for purposes hereof, be converted into U.S. dollars at the prevailing exchange
rate on the date or dates on which such Consideration is paid (including into
escrow). Furthermore, the value of any securities (whether debt or equity) or
other property paid or payable as part of the Consideration shall be determined
as follows: (a) the value of securities that are freely tradable in an
established public market will be determined on the basis of the last market
closing price prior to the public announcement of the Qualifying Transaction;
and (b) the value of securities that are not freely tradable or have no
established public market, (or if the Consideration utilized consists of
property other than securities, the value of such property), shall be the value
thereof as mutually agreed by the Company and the Acquiring Company.

 

Appendix B

Special Severance Arrangement

The benefits and payments set forth in this Appendix B are as follows:

1. Cash Severance - Two and one-half (2.5) times the sum of (a) your base
salary, plus (b) your target annual bonus opportunity, in both cases as in
effect immediately prior to a Qualifying Transaction. Severance shall be payable
in equal monthly installments over 30 months commencing on the first day of the
calendar month after your termination of employment, except as otherwise
provided herein.

2. Medical, Dental and/or Life Insurance Coverage - Continued coverage for
medical, dental, accidental death and dismemberment and life insurance
(including medical and dental coverage for your covered dependents, if any)
under the Company's group benefits plan, as if you had remained an active
employee of the Company, for a period of 30 months after termination of
employment at the active employee rate. In the event you are ineligible under
the terms of one or more of such plans to continue to be so covered, the Company
shall provide you with substantially equivalent coverage through other sources
to the extent permitted by applicable law.

3. Outplacement - Outplacement support in accordance with the Company's
outplacement policies in effect on the date of this Agreement.

4. Employee Benefits - Without duplication of the above, any benefits to which
you are entitled under the terms of any Company pension or welfare benefit plan
or program, other than any severance plan.

 

 

Appendix C

1. Non-Competition; Non-Solicitation; Non-Interference

For the benefit of Alpharma and the Company and their respective subsidiaries
and affiliates (the "Protected Parties"), you hereby agree as follows:

(i) Non-Competition. During the 12-month period after the Qualifying
Transaction, you will not, directly or indirectly:

(A) engage in any business that competes with any business that Alpharma or its
affiliates or subsidiaries was conducting immediately prior to the date of the
Qualifying Transaction (the "Relevant Date"), including, without limitation,
Active Pharmaceutical Ingredients Business and any businesses that Alpharma or
its affiliates or subsidiaries is actively considering conducting on the
Relevant Date, so long as you know or reasonably should have known about such
plan(s) in any geographical area that is within 100 miles of any geographical
area where Alpharma or its affiliates or subsidiaries provides its products or
services as of the Relevant Date (a "competitive Business")

(B) enter the employ of, or render any services to, any person or legal entity
(or any division or controlled or controlling affiliate of any person or legal
entity) who or which is a Competitive Business as of the date you enter such
employment or render such services; or

(C) acquire a financial interest in, or otherwise become actively involved with,
any Competitive Business which is a Competitive Business as of the date of such
acquisition or involvement, directly or indirectly, as an individual, partner,
shareholder, officer, director, principal, agent, trustee or consultant.

The foregoing shall not prohibit you from (1) investing, as a passive investor,
in any publicly held company provided that your beneficial ownership of any
class of such publicly held company's securities does not exceed two percent
(2%) of the outstanding securities of such class or (2) providing services to a
subsidiary or affiliate of an entity that controls a separate subsidiary or
affiliate that is a Competitive Business, so long as the subsidiary or affiliate
for which you may be providing services is not itself a Competitive Business and
you are not, as an employee of such subsidiary or affiliate, engaging in
activities that would otherwise cause such subsidiary or affiliate to be deemed
a Competitive Business.

(ii) Non-Interference with Business Relationships. During the 30-month period
after the Qualifying Transaction (such period, the "Restricted Period"), you
will not interfere with, or attempt to interfere with, business relationships
(whether formed before, on or after the date of this Agreement) between any
Protected Party and its customers, suppliers or partners, in any such ease
determined as of the Relevant Date.

The provisions of subsections (i) and (ii) may be waived in writing in whole or
in part by the Chief Executive Officer of Alpharma (after consulting with the
Compensation Committee of Alpharma's Board of Directors).

(iii) Non-Solicitation of Employees; Non-Solicitation of Consultants. During the
Restricted Period, you will not, whether on your own behalf or on behalf of or
in conjunction with any person or entity, directly or indirectly:

(A) solicit or encourage any employee of Alpharma or its affiliates or
subsidiaries to leave the employment of Alpharma or its affiliates or
subsidiaries; or

(B) hire any such employee who was employed by Alpharma or its affiliates or
subsidiaries as of the Relevant Date or who left the employment of Alpharma or
its affiliates or subsidiaries coincident with, or within one year prior to or
after, the Relevant Date; or

(C) solicit or encourage to cease to work with Alpharma or its affiliates or
subsidiaries any consultant that you know, or reasonably should have known, is
then under contract with Alpharma or its affiliates or subsidiaries.

(iv) Enforcement. It is expressly understood and agreed that although the
Company, Alpharma and you consider the restrictions contained in this Appendix C
to be reasonable, if a final judicial determination is made by a court of
competent jurisdiction that the time or territory or any other restriction
contained in this Appendix C is an unenforceable restriction against you, the
provisions of this Appendix C shall not be rendered void but shall be deemed
amended to apply as to such maximum time and territory and to such maximum
extent as such court may judicially determine or indicate to be enforceable
(provided that in no event shall any such amendment broaden the time period or
scope of any restriction herein). Alternatively, if any court of competent
jurisdiction finds that any restriction contained in this Appendix C is
unenforceable, and such restriction cannot be amended so as to make it
enforceable, such finding shall not affect the enforceability of any of the
other restrictions contained herein.

2. Parachute Tax Gross-Up

(i) If (a) it shall be determined that any payment, benefit or distribution (or
combination thereof) by the Company, the Acquiring Company or any of their
respective affiliates, or one or more trusts established by the Company for the
benefit of its employees, to or for your benefit (whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement, or
otherwise) (a "Payment") is subject to the excise tax imposed by Section 4999 of
the Code or any interest or penalties are incurred by you with respect to such
excise tax (such excise tax, together with any such interest and penalties,
hereinafter collectively referred to as the "Excise Tax"), and (b) such Excise
Tax would be equal to $50,000 or less, then such Payments shall be reduced to
the extent necessary so that the Payment is equal to 2.99 times your "base
amount" (as defined in Section 280G(b)(3) of the Code). If (x) it shall be
determined that any Payment is subject to Excise Tax and (y) such Excise Tax
would be greater than $50,000, then you shall be entitled to receive from the
Company an additional payment (a "Gross-Up Payment") in an amount such that
after payment by you of all taxes (including any interest or penalties imposed
with respect to such taxes), including, without limitation, any income taxes
(and any interest and penalties imposed with respect thereto) and the Excise Tax
imposed upon the Gross-Up Payment, you retain an amount of the Gross-Up Payment
equal to the Excise Tax imposed upon the Payments.

(ii) All determinations required to be made under this Paragraph 2, including
whether and when a Gross-Up Payment is required and the amount of such Gross-Up
Payment and the assumptions to be utilized in arriving at such determination,
shall be made by BDO Seidman, LLP or such other nationally recognized certified
public accounting firm as may be designated by the Company (the "Accounting
Firm") which shall provide detailed supporting calculations both to the Company
and you within ten business days of the receipt of notice from you that there
has been a Payment, or such earlier time as is requested by the Company;
provided that for purposes of determining the amount of any Gross-Up Payment,
you shall be deemed to pay federal income tax at the highest marginal rates
applicable to individuals in the calendar year in which any such Gross-Up
Payment is to be made and deemed to pay state and local income taxes at the
highest effective rates applicable to individuals in the state or locality of
your residence or place of employment in the calendar year in which any such
Gross-Up Payment is to be made, net of the maximum reduction in federal income
taxes that can be obtained from deduction of such state and local taxes, taking
into account limitations applicable to individuals subject to federal income tax
at the highest marginal rates. All fees and expenses of the Accounting Firm
shall be borne solely by the Company. Any Gross-Up Payment, as determined
pursuant to this Paragraph 2, shall be paid by the Company to you (or to the
appropriate taxing authority on your behalf) when due, but in no event later
than the end of the taxable year next following the taxable year in which the
related taxes are remitted to the IRS or other taxing authority. If the
Accounting Firm determines that no Excise Tax is payable by you, it shall so
indicate to you in writing. Any determination by the Accounting Firm shall be
binding upon the Company and you. As a result of the uncertainty in the
application of Section 4999 of the Code, it is possible that the amount of the
Gross-Up Payment determined by the Accounting Firm to be due to (or on behalf
of) you was lower than the amount actually due ("Underpayment"). In the event
that the Company exhausts its remedies pursuant to Paragraph 2(iii) and you
thereafter are required to make a payment of any Excise Tax, the Accounting Firm
shall determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for the benefit of you.

(iii) You shall notify the Company in writing of any claim by the Internal
Revenue Service that, if successful, would require the payment by the Company of
any Gross-Up Payment. Such notification shall be given as soon as practicable
but no later than ten business days after you are is informed in writing of such
claim and shall apprise the Company of the nature of such claim and the date on
which such claim is requested to be paid. You shall not pay such claim prior to
the expiration of the thirty day period following the date on which you give
such notice to the Company (or such shorter period ending on the date that any
payment of taxes with respect to such claim is due). If the Company notifies you
in writing prior to the expiration of' such period that it desires to contest
such claim, you shall (i) give the Company any information reasonably requested
by the Company relating to such claim, (ii) take such action in connection with
contesting such claim as the Company shall reasonably request in writing from
dine to time, including, without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by the Company, (iii)
cooperate with the Company in good faith in order to effectively contest such
claim and (iv) permit the Company to participate in any proceedings relating to
such claim; provided, however, that the Company shall bear and pay directly all
costs and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold you harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions of
this Paragraph 2(iii), the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forego any
and all administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option, either
direct you to pay the tax claimed and sue for a refund or contest the claim in
any permissible manner, and you agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, further, that if the Company directs you to pay such claim
and sue for a refund, the Company shall advance the amount of such payment to
you, on an interest-free basis, and shall indemnify and hold you harmless, on an
after-tax basis, from any Excise Tax or income tax (including interest or
penalties with respect thereto) imposed with respect to such advance or with
respect to any imputed income with respect to such advance; provided, further,
that if you are required to extend the statute of limitations to enable the
Company to contest such claim, you may limit this extension solely to such
contested amount. The Company's control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be payable hereunder and
you shall be entitled to settle or contest, as the ease may be, any other issue
raised by the Internal Revenue Service or any other taxing authority.

(iv) If, after the receipt by you of an amount paid or advanced by the Company
pursuant to this Paragraph 2, you become entitled to receive any refund with
respect to a Gross-Up Payment, you shall (subject to the Company's complying
with the requirements of Paragraph 2(iii)) promptly pay to the Company the
amount of such refund received (together with any interest paid or credited
thereon after taxes applicable thereto). If, after the receipt by you of an
amount advanced by the Company pursuant to Paragraph 2(iii), a determination is
made that you shall not be entitled to any refund with respect to such claim and
the Company does not notify you in writing of its intent to contest such denial
of refund prior to the expiration of thirty days after such determination, then
such advance shall be forgiven and shall not be required to be repaid and the
amount of such advance shall offset, to the extent thereof, the amount of the
Gross-Up Payment required to be paid.