Exhibit 10.1
Dear :
Alpharma Inc., (the "Company") recognizes you as a valuable
member of its senior leadership team. As you know, the Company
anticipates significant changes 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") or (y) a "Change in
Control" of the Company under the Company'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 the Company on or
before March 31, 2006 in a transaction that does not result in a
"Change in Control" of the Company under the Company's Change in
Control Plan (a "Sale of Global Generics"), the Performance Units
that you have previously been granted under the Company'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 the Company 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 (x) your employment being terminated as
a result of death or Disability or by the Company for other than
Cause, (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 the Company under the Company'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 Change in Control
If a "Change in Control" of the Company under the Company's
Change in Control Plan occurs while you are an active employee of
the Company (a "Qualifying Transaction"), you will be entitled to
the benefits described below in lieu of the benefits set forth in
the Company'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 .
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Annual Bonus .
If a Qualifying Transaction occurs
while you are an active employee of the Company, the Company will
pay you a pro-rata bonus based on your target annual bonus
opportunity (in lieu of your regular annual cash bonus for such
calendar year), 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.
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Equity Awards .
In addition, if a Qualifying Transaction occurs while you are an
active employee of the Company, then:
(1)
any Stock Options of the Company granted 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) (the
"Incentive Plans") shall immediately vest (but otherwise be
governed by the terms of such applicable grant document and
Incentive Plan); and
(2)
any Restricted Stock or Restricted Stock Units of the Company
granted to you prior to the date of such Qualifying Transaction
under any Incentive Plan shall vest (but otherwise be governed by
the terms of such applicable grant document and Incentive Plan)
upon the earliest of (w) six months after such Qualifying
Transaction, (x) the vesting date set forth in the applicable
grant document, (y) termination of your employment with the
Company or the entity that acquires the Company (the "Acquiring
Company") either by your employer without Cause or by you pursuant
to a Constructive Termination of employment, as further described
below, and (z) 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
delivery can occur without your incurring tax under Section 409A of
the Internal Revenue Code of 1986, as amended (the "Code").
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 (x) by your employer without
Cause or pursuant to a Constructive Termination of employment, as
further described below, on or after the Qualifying Transaction,
but on or prior to the second anniversary of the Qualifying
Transaction or (y) by you for any reason on or after the
six-month anniversary of the Qualifying Transaction, but on or
prior to the first anniversary of the Qualifying Transaction, 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 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 or the Acquiring
Company.
Gross-Up .
You will be entitled to, and subject to, the "gross-up"
provisions set forth in Appendix B of this Agreement.
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 B 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 .
This Agreement 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).
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 the
Company'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.
Payments to you by the Company and its affiliates shall be
subject to all applicable legal requirements with respect to
withholding of taxes.
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 assum
