ALPHARMA INC. SEVERANCE PLAN 

 

Purpose of the Plan

The purpose of the Alpharma Inc. Severance Plan, effective March 11, 2002, as amended and restated effective February 19, 2004 (the "Plan"), is to provide permanent Employees (as defined below) with uniform severance benefits that will financially assist them with their transition following an involuntary termination of employment, other than for cause.

This Plan represents an amendment and restatement of all prior severance 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 severance plans, practices and policies to the extent permitted by law.  Except as otherwise specified in the Plan all such prior severance plans, practices and policies are hereby discontinued and terminated.

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    "Alpharma" - Alpharma Inc., a Delaware company.

 

1.2    "Benefit Continuation Period" - In the case of a Participant who receives a Severance Benefit, his Benefit Continuation Period will be determined based on the number of weeks or months, as the case may be, used in Section 4.2 to compute the Participant's Severance Benefit.  

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

1.4    "Change in Control Plans" - The Change in Control Plan, as may be approved by the Board or the Board's Compensation Committee.

1.5    "Chief Executive Officer" - Chief Executive Officer of Alpharma Inc.

1.6    "Committee" - The Benefits Committee appointed by the Chief Executive Officer to administer the Plan which shall consist of three (3) employees: the Executive Vice President, Human Resources, the Chief Financial Officer, and the Chief Legal Officer.

1.7    "Company" - Alpharma Inc., 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.

1.8    "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).

1.9    "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, or an Employee holding the title of Vice President or Director (not to be confused with a member of the Board) of the Company or its Operating Divisions or any other individual deemed by the Committee to be an Executive.

1.10    "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. 

1.11    Leadership Team" - The Chief Executive Officer and 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. 

1.12    "Non Qualifying Sale" - A sale of (i) the stock or assets of a Subsidiary or the assets of an Operating Division of the Company or (ii) assets of the Company.

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

1.14    "Participant" - An Employee or an Executive who the Committee determines is eligible to receive Severance Benefits pursuant to Article II.

1.15    "Plan" - The Alpharma Inc. Severance Plan.

1.16    "Salary" - (a) A Participant's annual base salary immediately preceding his Termination Date.  In the United States, Salary shall include amounts contributed on behalf of the Employee 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 also include cash amounts paid to an Executive in lieu of fringe benefits.  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. 

 (b) For purposes of this Plan, weekly Salary shall be equal to a Participant's annual Salary divided by 52.

1.17    "Severance Benefits" - Has the meaning provided in Section 4.2.

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

1.19    "Termination Date" - The date a Participant's active employment with the Company terminates as a result of an Involuntary Termination of Employment.

1.20    "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 Employee is terminated for cause or not for cause (as it relates to eligibility to receive benefits under the Plan) shall be made by the Committee in its sole discretion and shall be final and conclusive.

1.21    "Termination of Employment" - A termination of employment with the Company for any reason other than by reason of retirement, death or disability.

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

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

1.24    "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 on the Board and employees from any and all claims, demands, causes of action, damages, expenses and liabilities, whether known or unknown, which the Participant 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.  

1.25    "Years of Service" - Each complete twelve (12) months of uninterrupted employment with the Company as an Employee. Only the last period of continuous employment as an Employee with the Company shall be considered in the determination of a Participant's number of Years of Service with the Company.

 

ARTICLE II - ELIGIBILITY

2.1    Eligibility for Severance Benefits.
(a)   Subject to Section 3.1, an Employee shall be eligible to receive Severance Benefits specified under Article IV in the event that he has an Involuntary Termination of Employment. 

(b)    An Employee shall not be eligible for Severance Benefits if (i) he is eligible to receive Change in Control Benefits as defined under any Change in Control Plan or (ii) 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 or (iii) to the extent he is an Employee other than an Executive, he is eligible to receive different severance benefits pursuant to the laws of the jurisdiction in which he is employed. 

(c)    An Employee shall not be entitled to Severance Benefits upon a Non-Qualifying Sale unless the Committee, in its discretion, adopts rules extending Severance Benefits to such 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    Severance Benefits Conditions.  The following are conditions to a Participant receiving Severance Benefits: 

(a)   Termination Date on or after March 11, 2002;

(b)   Termination Date does not immediately follow a period during which the Participant 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 Participant; and

(c)   Participant executes a Waiver and Release and does not revoke it within seven (7) days after the execution thereof.  

(d)   To the extent the duration of the Severance Benefits is longer than any notice period required under the laws of the jurisdiction in which participant is employed, then such severance benefits shall be in lieu of such notice period.
**ARTICLE IV - SEVERANCE BENEFITS

4.1    General.  

Subject to Section 6.1, a Participant who is eligible under Section 2.1 to receive Severance Benefits and who satisfies the conditions in Section 3.1 shall receive the amount of Severance 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 Severance Benefits.  The amount of severance benefits ("Severance Benefits") shall be as follows:

(a)    The Severance Benefit payable to a Participant who is not an Executive shall be an amount equal to two (2) weeks' Salary for each Year of Service.  In no event shall the Severance Benefit determined under the prior sentence be less than four (4) weeks' Salary or greater than fifty-two (52) weeks' salary.  

(b)    The Severance Benefit payable to an Executive shall be an amount determined as follows:

(i)   In the case of Chief Executive Officer, Salary during each of the 24 months following the Termination Date.  Additionally, he shall receive his bonus or other cash incentive award (as in effect immediately preceding the date of the Change in Control event), at 100% of his annual target rate, with an assumed 100% funding of any applicable bonus pool, for such 24 month period;

(ii)   In the case of a member of the Leadership Team, Salary during each of the 18 months following the Termination Date.  Additionally, he shall receive his bonus or other cash incentive award (as in effect immediately preceding the date of the Change in Control event), at 100% of his annual target rate, with an assumed 100% funding of any applicable bonus pool, for such 18 month period;

(iii)   In the case of a Vice President, Salary during each of the 12 months following the Termination Date; and

(iv)   In the case of a Director (employee title, not member of the Board), the greater of (i) Salary during each of the 6 months following the Termination date or (ii) Salary during the period determined under paragraph (a).

4.3    Bonus and Incentive Awards.

Notwithstanding anything herein to the contrary, an Executive's target bonus or incentive award may not reduced upon his or her becoming eligible to receive Severance Benefits.

 
**ARTICLE V - OTHER BENEFIT PROVISIONS******