Document:

ALPHARMA SEVERANCE AND CHANGE OF CONTROL PLAN

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.

	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.
	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.
	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.  

2.2Committee 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: 

	Termination Date on or after March 11, 2002;
	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; 
	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;
	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 
	 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:

	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;
	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;
	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. 
5.4Savings 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.

5.5Stock 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.

5.6Other 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.

5.7Terms 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.
6.2Local 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

7.1Method of Payment.

	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

8.1The 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.

8.2Administrative 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.

8.3Delegation.

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.

8.5Arbitration.  

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.
8.6Claim 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

9.1Amendment 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.  

9.2Parachute 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.  

 
9.3Withholding.

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

9.4Binding 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.

9.5Applicable 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.

9.6Contract 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. 

9.7Compensation.  

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.ALPHARMA INC

AMENDED

ALPHARMA INC.

EXECUTIVE BONUS PLAN

(EFFECTIVE JANUARY 1, 2002)

1.     Purpose.  

The purpose of this Executive Bonus Plan is to foster continuing long-term growth in earnings of Alpharma Inc. by rewarding key executives for outstanding performance in the accomplishment of assigned goals through annual awards of cash bonuses.

 

2.     Definitions.  

Actual Bonus Pool:  The aggregate sum available to pay Bonus Awards computed separately for each SBU and the Company Executives, as a group.

Base Salary:  The Participant''s annual base salary rate of earnings in effect as of 

December 31, of any Incentive Year.

Board of Directors:  The Board of Directors of the Company.

Bonus Award:  An amount awarded to a Participant pursuant to Section 4.

CEO:  The Chief Executive Officer of the Company.

CFO:   The Chief Financial Officer of the Company.

Change in Control:  The definition provided in the Alpharma Inc. Change in Control Plan effective March 11, 2002, as may be amended from time to time.

Committee:The Benefit Plans Administration Committee of the Company.

Compensation Committee:  The Compensation Committee of the Board of Directors.

Company:   Alpharma Inc., a Delaware corporation.

Company Bonus Component:  The percentage based determined by the application of the formula set forth in Section 3 (a) to actual Company Net Income.

Company Executive:   A Participant who is not an officer or employee of an SBU.

Company Maximum Bonus Component:  The amount of the Company Bonus Component expressed as a percentage of the Target Bonus Component which would be earned assuming the Company Net Income Goal for the applicable Incentive Year was exceeded by more than 20%.

Company Threshold Bonus Component:   The amount of the Company Bonus Component expressed as a percentage of the Target Bonus Component which would be earned assuming the Company Net Income Goal for the applicable Incentive Year was less than the Company Net Income Goal but at least 80% thereof.

Company Net Income Goal:  The net income shall be the target level of consolidated net income of the Company (as determined by the Company''s audited financial statements for the relevant Incentive Year) as established prior to the beginning of the Incentive Year by the CEO (which may be adjusted for that Incentive Year, in the discretion of the CEO, if necessary for equitable purposes; including adjustments with respect to factors not directly related to the normal operations of the Company) which if achieved would result in the awarding of a Company Bonus Component under Section 4.

Company Target Bonus Component:  100% when  the Company Net Income Goal for the applicable Incentive Year is achieved at 100% of the level established by the CEO.

Eligible Employee:  For each Incentive Year, a person who (a) is regularly employed by the Company or an SBU on a full-time basis, or who, under conditions approved by the Committee, is regularly employed by the Company or an SBU on a part-time basis and  (b) has been employed by the Company or an SBU for the entire Incentive Year and in an Eligible Participant Level at the end of such Incentive Year or, if not an active employee at the end of the Incentive Year, his or her employment was terminated during the Incentive year (i) on account of  death, Retirement or disability or (ii) after a Change in Control transaction and (c) has been assigned Individual Goals to be accomplished during the Incentive Year and (d) has not engaged in any conduct that the Committee determines to be against the best interests of the Company.

Eligible Participant Levels:   For each Incentive Year,  all Vice Presidents of the Company, the President of each SBU, all Vice Presidents of each SBU  and such other employees designated by the Committee.

HRO:  The Executive Vice President of Human Relations of the Company.

Incentive Year:  A fiscal year of the Company in which the Plan is in effect.

Individual Goals:   Performance Goals assigned to a Participant by his or her relevant SBU President (or, in the case of a Company Executive or an SBU President, the CEO) and approved by the CEO.

Participant:  Each Eligible Employee for an Incentive Year.

Plan:  The Executive Bonus Plan as set forth herein, as from time to time amended.

Retirement:  The termination of a Participant''s employment with the Company, at an age and meeting all other terms and conditions of ""retirement"", as that term is used by the Participant''s local employing unit.

SBU:Each individually managed business unit of the Company as designated from time to time by the CEO.

SBU Goals:Certain financial targets, which may include one or more of the target operating income, revenues and cash flow for an SBU (as determined utilizing the normal course accounting practices and procedures of the Company) as established by the CEO prior to the beginning of the relevant Incentive Year (as may be adjusted during that Incentive Year, in the discretion of the CEO if necessary for equitable purposes; including adjustments with respect to factors not directly related to the normal operations of the SBU) or such other or additional goals as determined by the CEO prior to the beginning of the relevant Incentive Year. 

SBU Maximum Bonus Component:  The amount of the SBU Bonus Component which would be earned assuming the SBU Goals for the Incentive Year were exceeded by more than 20%.

SBU Threshold Bonus Component:  The amount of the SBU Bonus Component which would be earned assuming the SBU Goals for the Incentive Year were less than the SBU Goals but at least 80% thereof.

SBU Target Bonus Component:  100% when  SBU Goals for the applicable Incentive Year are achieved at the 100% level established by the CEO (with multiple SBU Goals and each individual SBU treated separately)..

Target Bonus:  The targeted amount of Bonus Award established for each Eligible Employee, expressed as a percentage of the Eligible Employee''s Base Salary corresponding to the Eligible Employee''s position at the end of the applicable Incentive Year, assuming the Company Net Income Goals, Individual Goals and, if relevant, the SBU Goals for such Incentive Year are achieved at the 100% level established by the CEO.

Target Bonus Pool:  An amount equal to the sum of the Target Bonus for all eligible employees computed separately for each SBU and the Company Executives, as a group. 

 

3.     Establishment of Goals, Bonus Pool Range and Participant Bonus Award Formulae:  

The CEO (with the concurrence of the Compensation Committee  as to (a), (b)  and (c) below) shall establish in writing and deliver to the Committee: 

	The Company Net Income Goal for such Incentive Year at Threshold, Target and Maximum Bonus Component levels, and by means of one or more formulae the percentage of the Company Target Bonus Component which may be earned at each level of achievement. 

	The SBU Goals for each SBU (considered individually) for such Incentive Year at Threshold, Target and Maximum Bonus Component levels, and by means of one or more formulae the percentage of the SBU Target Bonus Component which may be earned at each level of achievement of such SBU Goals and, in the event there are more than one component within the SBU Goal, the relative weighting of each such component..
	The relative weighting of the Company Bonus Component and the SBU Bonus Component in computing the Target and Actual Bonus Pool for all Eligible Employees, computed separately for each SBU and the Company Executives, as a group. 
	The Target Bonus percentage for each Eligible Participant Level (or group of Eligible Participant Levels).

	By means of one or more formulae, the relative percentage of each Participant''s Target Bonus which will be based upon achievement of one or more of Company Net Income Goal, SBU Goals  and Individual Goals and, to the extent utilized in the computation of Target Bonuses, the percentage by which a Participant''s Target Bonus will be adjusted, upward or downward based upon actual performance being less or more than the Company Net Income Goal and the SBU Goals.

 

4.     Determination of Bonus Pool and Awards:  

As soon as practicable after the end of each Incentive Year:

	The CFO shall determine whether the Company Net Income Goal and each of the SBU Goals for the Incentive Year were achieved and, if so, at what level of achievement under the formulae established for such Incentive Year pursuant to Section 3 hereof.  

	If  the Company Net Income Goal for an Incentive Year has been achieved at the Threshold level or better, then a Company Bonus Component shall be earned for that Incentive Year and the CFO shall, by applying the formula adopted pursuant to Section 3 (a)  determine the appropriate percentage of the Company Target Bonus Component actually achieved.  
	If  the SBU Goals for an Incentive Year have been achieved at the Threshold level or better(provided that, in the event of two or more SBU Goals, each Goal shall be treated separately), then an SBU Bonus Pool (with each SBU being considered individually) shall be earned for that Incentive Year and the CFO shall determine, by applying the formula adopted pursuant to Section 3 (b) , the appropriate percentage of each SBU''s Target Bonus Component actually achieved.  
	The relevant SBU Presidents (or the CEO as to Company Executives and SBU Presidents ) shall determine whether (or the extent to which) each Participant has met his or her Individual Goals.
	Utilizing the computation required by Sections 4 (b) and (c) and the weighting established pursuant to Section 3 (c) as applied to the Target Bonus Pool, the HRO shall calculate an Actual Bonus Pool for each SBU and the Company Executives, as a group.
	The Actual Bonus Pool for each SBU and the Company Executives as a group shall then be divided among Eligible Employees employed within each of said entities pursuant to the formula adopted under Section 3 (e)
	In no event shall the aggregate Bonus Awards computed for payment pursuant to this Section 4 exceed the relevant Company or SBU Bonus Pool computed separately for each of the SBU''s and the Company Executives as a group.   In the event the computations required by this Section 4 would cause the requirements of the previous sentence to be violated, the amount of each relevant Participant''s Bonus Award shall be reduced pro rata in an amount that will allow the aggregate of all Bonus Awards to comply with the provisions of the previous sentence.

      

5.     Vesting and Payment of Awards; Deferral Election.     

Bonus Awards shall be immediately and fully vested upon the HRO''s authorization of the Company Bonus Pool for the applicable Incentive Year.  In general, Bonus Awards shall be paid to Participants within a reasonable time after the HRO''s authorization of such awards.

(a)The Committee in its sole and exclusive discretion may allow Participants at certain Grade Levels and/or located in certain countries the opportunity to defer payment of all or a portion of any Bonus Award earned for any Incentive Year pursuant to the terms of the Company''s Deferred Compensation Plan, as in effect from time to time.

(b)All payments made under this Plan shall be subject to any required withholdings.

(c)Bonus Awards shall be payable soley from the general assets of the Company and its subsidiaries.  No Participant shall have any right to, or interest in, any specific assets of the Company or any subsidiary in respect of Bonus Awards.  The foregoing shall not preclude the Company from establishing one or more funds from which payments under the Plan shall be made.

 

6.     Amendment and Termination.  

The Board of Directors of the Company, in absolute discretion of the body so acting and without notice, may at any time amend or terminate the Plan, provided that no such amendment or termination shall adversely affect the rights of any Participant under any Bonus Award previously granted.  Further, once an Incentive Year has commenced, neither the Board of Directors nor Company shall have the discretion not to make Bonus Awards if Bonus Awards are earned pursuant to the terms hereof for that Incentive Year. 

 

7.     No Assignment.  

Bonus Awards authorized under this Plan shall be paid only to Participants (or, in the event of a Participant''s death, to the person or persons identified pursuant to Section 8 hereof).  No Bonus Award, nor any part thereof, and no right or claim to any of the moneys payable pursuant to the provisions of this Plan shall be anticipated, assigned, or otherwise encumbered, nor be subject to attachment, garnishment, execution or levy of any kind, prior to the actual assignment or other encumbrance or attachment, garnishment, execution or levy and shall be of no force or effect, except as other provided by law.  Notwithstanding the above, if a Participant is adjudged incompetent, the Committee may direct that any amounts payable be paid to the Participant''s guardian or legal representative.  

 

8.     Employment and Plan Rights.  

The Plan shall not be deemed to give any Eligible Employee or Participant the right to be retained in the employ of the Company or any Subsidiary, nor shall the Plan interfere with the right of the Company or any Subsidiary to discharge any employee at any time, nor shall the Plan be deemed to give any employee any right to any Bonus Award until such award is authorized in accordance with Section 4 and, in the event of a Participant''s death, payment shall be made to his or her estate or as otherwise authorized by a Court of competent jurisdiction.

 

9.      Administration and Authority.  

The Plan shall be administered by the Committee except with respect to the power reserved herein to the CEO, CFO and HRO.  The CEO, CFO and HRO may delegate any or all their responsibilities hereunder to the Committee.

All decisions, determinations and interpretations of the Committee, the CEO, CFO or the HRO with respect to the exercise of their respective responsibilities, shall be binding on all parties concerned.

10.Bonus Awards in the event of Change in Control.

Notwithstanding any other provision of this Plan to the contrary, in the event of a Change in Control, a Bonus Award for the Incentive Year in which the Change in Control occurs shall be paid to each employee in an Eligible Participant Level at the time of the Change in Control, whether or not the employee remains employed by the Company or a Subsidiary at the end of the Incentive Year (other than any such employees whose termination of employment is by the Company for cause).  The amount of Bonus Award payable to each such employee shall equal the Target Bonus for the Incentive Year in which the Change in Control occurs on a pro rata basis through the date on which the Change in Control occurs.

11. Partial Year Employees.

If any employee of the Company or an SBU meets all of the conditions set forth within the definition of ""Eligible Employee"" (i) as of the last day of an Incentive Year except the requirement that he or she have been employed by the Company or an SBU for the entire Incentive Year or (ii) his or her employment was terminated, or interrupted, during the Incentive Year by death, disability, a leave of absence of 3 months or more, or Retirement  subject to the adoption of other rules or procedures deemed equitable in the circumstances by the Committee, such employee shall be eligible of a Bonus Award computed as if he or she had been an Eligible Employee for the entire Incentive Year but then reduced pro rata for the portion of the Incentive Year during which he or she was not an employee of the Company or an SBU.   If an employee transfers from one SBU to another (or between the Company and an SBU) during the Incentive Year his or her Bonus Award shall be prorated based upon the portion of the Incentive Year in each unit.  The Company Target Bonus Pool, and the relevant SBU Target Bonus Pool, shall be increased by an amount equal to the sum of any Bonus Awards payable under this Section 10.

 

12.       Effect of Local Laws

To the extent that any applicable statute, law or regulation (""Local Law"") contains provisions requiring treatment more favorable to a Participant than is provided for in this Plan, the provisions of such Local Law shall prevail over the provisions of this Plan with respect to any Participant whose primary place of employment is within the jurisdiction of such Local Law.    

 

13.       Applicability of Plan Document.  

          The Plan, as amended herein, shall be applicable for Incentive Years beginning on and after January 1, 2003 .

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