Exhibit 10.3
Ms. Carol Wrenn
Dear Carol:
Alpharma, Inc. (the "Company") recognizes you as a valuable
member of the team charged with responsibility for managing the AHD
Business (which consists of the Animal Health business segment
reported by Alpharma Inc. ("Alpharma") under the Securities Act of
1934, hereafter called "Animal Health Business"). As you know,
Alpharma anticipates significant changes in the Company as a result
of the impending sale of the Generics business to Actavis. 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 the third anniversary
of the date hereof, and thereafter will remain in effect for a
series of one-year periods unless either party shall give to the
other written notice of expiration of this Agreement at least one
year in advance of a subsequent renewal date. In any event this
Agreement, if it has not expired when a "Qualifying Transaction,"
as defined below, occurs, shall remain in effect for two years
after a Qualifying Transaction.
Retention Benefits
Retention Payment .
The Company hereby grants you a series of "Retention Payments",
payable in the following amounts and on the following dates:
1/3 of your Base Salary (as defined below) and target annual bonus
opportunity as of the date of this Agreement (your "Annual
Compensation"), payable on June 30, 2006
1/3 of your Annual Compensation on December 29, 2006
1/3 of your Annual Compensation on June 29, 2007;
provided that you are an active employee of the Company on the
applicable payment date.
However, all unpaid amounts under this paragraph will be
accelerated and paid within ten (10) business days upon the first
to occur of (x) your termination of employment as a result of
death or termination by the Company for other than Cause (as
defined below) or due to a disability that would qualify you for
coverage under the applicable long-term disability plan that covers
employees of the Company ("Disability"), (y) six months after
a sale or other transfer of all or substantially all of the assets
and business of Animal Health Business (a "Sale of Animal Health
Business") that occurs while you are an active employee of the
Company or (z) a "Change in Control" of Alpharma under
Alpharma's Change in Control Plan that occurs while you are an
active employee of the Company. "Base Salary" shall mean your base
salary at the applicable time (which shall include your executive
allowance as indicated on the Company's payroll records).
Performance Units .
In the event of the sale or other transfer of all or
substantially all of the assets and business of Global Generics to
any person, entity or group unaffiliated with Alpharma on or before
March 31, 2006 in a transaction that does not result in a "Change
in Control" of Alpharma under Alpharma's Change in Control Plan (a
"Sale of Global Generics"), the Performance Units that you have
previously been granted under Alpharma's 2003 Omnibus Incentive
Compensation Plan will be treated as follows: each Performance Unit
will be converted into the right to receive cash incentive payments
from the Company if you are an active employee of the Company on
both (x) the date of the Sale of Global Generics and
(y) the scheduled vesting date for such cash incentive
payments, as described below.
Payment of this cash incentive payment will be made at the
"target" level of $100.00 per Unit, but will be pro-rated based on
the number of days you were employed by Alpharma and its affiliates
prior to the applicable vesting date, but during the "Performance
Period" applicable to such Unit compared to the total number of
days in the Performance Period. The vesting date will be the first
to occur of (w) your employment being terminated as a result
of death or Disability or by the Company for other than Cause,
(x) a Sale of Animal Health Business while you are an active
employee of the Company, (y) the end of the applicable Performance
Period, provided you are then an active employee of the Company or
(z) a "Change in Control" of Alpharma under Alpharma's Change
in Control Plan while you are an active employee of the Company;
provided that only a pro rata share of the full value of the
Performance Units will be payable based on the number of days that
have elapsed during the applicable Performance Periods as of the
vesting date. Payment of the cash incentive payment shall occur ten
(10) business days after the vesting date.
Additional Benefits Upon a Sale of Animal Health Business or
Change in Control
If either (x) a Sale of Animal Health Business 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 Company is a subsidiary of Alpharma (a "Qualifying
Transaction"), you will be entitled to the benefits described below
in lieu of the benefits set forth in Alpharma's Severance or Change
in Control Plans or any employment letter or agreement, or any
other plan or arrangement, in existence prior to the date of this
Agreement.
Treatment of Cash Bonuses and Equity Awards .
-
-
Annual Bonus .
If a Qualifying Transaction occurs
while you are an active employee of the Company, your annual cash
bonus for the calendar year of such Qualifying Transaction will be
treated as follows:
-
-
-
-
-
if the Qualifying Transaction is either (x) a Sale of Animal
Health 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, 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
-
if the Qualifying Transaction is a Sale of Animal Health 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
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.
-
Equity Awards .
In addition, 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, (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, and
(iii) the purchase or other acquisition by the Acquiring
Company of all or substantially all of the issued and outstanding
Class A and Class B common stock of Alpharma.
Notwithstanding the foregoing, no delivery with respect to
Restricted Stock Units shall occur until the first day on which
such delivery can occur without your incurring tax under Section
409A of the Internal Revenue Code of 1986, as amended (the
"Code").
-
-
Transaction Bonus .
Upon the occurrence of a Qualifying Transaction that is a Sale
of Animal Health Business in which the Acquiring Company pays to
Alpharma an amount equal to or in excess of $250 million in
Consideration (as defined below), the Company shall pay to you a
lump-sum amount of $100,000.00, payable as soon as practicable, but
in no event later than six (6) months after the Qualifying
Transaction. "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 Animal Health Business as a
result of a "change in control", an incentive to complete the
Qualifying Transaction, or severance). Consideration shall also
include the principal amount of any indebtedness for borrowed
money, any pension liabilities and guarantees related to Animal
Health Business indirectly or directly assumed or acquired, or
otherwise repaid or retired, by the Acquiring Company.
Consideration shall include all amounts paid into escrow and all
contingent payments payable to Alpharma in connection with the
Qualifying Transaction, with fees on amounts paid into escrow to be
payable upon the establishment of such escrow and fees on
contingent payments to be payable when such contingent payments are
made. 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.
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 other
property), shall be the value thereof as mutually agreed by
Alpharma and the Acquiring Company.
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 be 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 A of this
Agreement.
For purposes of this Agreement, a Constructive Termination means
your voluntary termination following (i) any 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 (and, in the case of a Qualifying Transaction
that is a Sale of Animal Health Business, any unpaid Retention
Payments) 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.
For purposes of this Agreement, 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 o
