ATTENTION:
THIS PERFORMANCE UNIT AWARD SHALL NOT BECOME EFFECTIVE
UNLESS AND UNTIL IT IS "ACCEPTED" BY THE EMPLOYEE
IN THE MANNER DESCRIBED IN SECTION 1(b) BELOW.
PERFORMANCE UNIT AWARD AGREEMENT
This PERFORMANCE UNIT AWARD Agreement (this "
Agreement " ) is made as of the Grant Date (defined
below), by and between Alpharma Inc., a Delaware (USA) corporation
with an address at One Executive Drive, Fort Lee, New Jersey 07024
(the " Company " ), and the Employee (defined below),
pursuant and subject to the Company's 2003 Omnibus Incentive
Compensation Plan (the " Plan " ), on the following
terms and conditions:
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DEFINITIONS : The following terms shall have the
following meanings when used in this Agreement.
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" Employee
":
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" Grant Date
":
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" Number of
Performance Units ":
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" Performance
Period Commencement Date ":
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" Performance
Period End Date ":
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1.
Grant and Acceptance of Performance Unit Award .
(a)
The Company hereby grants to the Employee, subject to the
forfeiture risks and other terms and conditions set forth herein
and in the Plan, the "Performance Unit Award", which shall consist
of performance units in the amount of that Number of Performance
Units (defined above) (the " Performance Units "
).
(b)
The Performance Unit Award shall not be considered granted unless
and until the Employee accepts the terms of this Agreement through
the E*Trade system by clicking the button marked "ACCEPT" and
completing each action required by the subsequent electronic
prompts. By so accepting the Performance Unit Award, the Employee
is memorializing that he or she has accepted the Performance Unit
Award as of the Grant Date. If the Company has no record of the
Employee's acceptance of the terms of this Agreement, or any other
document required by the Company in connection with the Performance
Unit Award, the Performance Unit Award shall be ineffective and the
Employee shall have no rights in the Performance Unit Award.
2.
Performance Period . The Performance
Period commences as of the start of business on the Performance
Period Commencement Date (defined above) and ends as of the close
of business on the Performance Period End Date (defined above).
3.
Value of Performance Units . Each Performance Unit shall
have a potential value between zero and $200 (in United States
currency), as determined at the close of business on the
Performance Period End Date pursuant to Section 4 of this
Agreement.
4.
Achievement of Performance Measure .
(a)
Performance Measure . The value of the Performance Units
granted under this Agreement shall be based on the Company's total
shareholder return as set forth below (" Total Shareholder
Return " or " TSR " ) during the Performance
Period as compared to the TSR during the Performance Period of
those companies (i) which are included in the Dow Jones U.S.
Pharmaceuticals Index as of the close of business on the
Performance Period End Date, (ii) which are characterized as
either "small cap" or "mid cap" by Dow Jones, and (iii) the stocks
of which have been listed and traded on a nationally-recognized,
public exchange (e.g., NYSE, NASDAQ, AMEX, etc.) without material
interruption throughout the Performance Period (the " Peer
Group " ). The value of each Performance Unit will be based
on the percentile rank of the Company's TSR during the Performance
Period as compared to the TSR of the companies that comprise the
Peer Group during the Performance Period, as set forth below:
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TSR Performance Relative to Companies in peer Group
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Unit Value
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90th percentile or above
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US$200
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75th percentile
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US$150
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60th percentile
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US$100
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50th percentile
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US$50
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Below 50th percentile
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US$0
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Note: If the Company's TSR is
between two of the percentiles set forth above, the value of the
Performance Units shall also be between the two corresponding
Performance Unit values, as determined in the sole discretion of
the Committee (defined in the Plan).
(b)
Total Shareholder Return . For purposes of this Agreement,
TSR shall be determined as follows:
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TSR =
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Change in Stock
Price + Dividends
Beginning Stock
Price
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The Company's determination of the TSR and those of the Peer Group
shall be final and binding on the Employee and any other
person.
(c)
Definitions .
(i)
" Change in Stock Price " shall mean the Ending Stock
Price minus the Beginning Stock Price.
(ii)
" Ending Stock Price " shall mean the average closing
price on the applicable stock exchange of one share of the
Company's Class A Common Stock or Peer Group company's comparable
stock (the " Common Stock " ) for the thirty (30)
trading days immediately prior to (and including) the Performance
Period End Date.
(iii) "
Beginning Stock Price " shall mean the average closing
price on the applicable stock exchange of one share of Common Stock
for the thirty (30) trading days immediately prior to (and
including) the Performance Period Commencement Date.
(iv) "
Dividends " shall mean the total of all cash dividends
paid on one share of Common Stock during the Performance Period,
provided that dividends shall be treated as though they are
reinvested at the end of each calendar quarter of the Performance
Period.
(d)
Percentile Rank . Following the determination of the TSR for
the Company and each of the companies in the Peer Group, the
Company's percentile rank shall be determined by listing the
Company and the companies in the Peer Group in order from the
company with the highest TSR to the company with the lowest TSR
during the Performance Period and counting up from the company with
the lowest TSR. The Company's determination of the percentile rank
and those of the Peer Group shall be final and binding on the
Employee and any other person.
(e)
Other Considerations . Payment of the Performance Unit Award
shall be subject to the Company's achievement of the free cash flow
minimum set forth in Section 7(b) below, as described in
such Section. Furthermore, the Committee may make adjustments in
the payment of the Performance Unit Award and/or the calculation of
TSR and/or percentile rank in the event of any unusual or
nonrecurring event affecting the Company and/or one or more Peer
Group companies, including changes in applicable laws, regulations,
or accounting principles and/or a corporate event or transaction
(including, but not limited to, a change in capitalization) such as
a merger, consolidation, reorganization, recapitalization,
separation, stock split, reverse stock split, split up, spin-off,
or other distribution of stock or property of such company,
combination of securities, exchange of securities, stock dividend,
dividend in kind, or other like change in capital structure or
distribution to stockholders of such company (other than
Dividends), or any similar corporate event or transaction, whenever
the Committee determines that such adjustments are appropriate in
order to prevent unintended dilution or enlargement of the benefits
or potential benefits intended by the Company to be made available
to the Employee under this Agreement. The determination of the
Committee as to the foregoing adjustments, if any, shall be
conclusive and binding on the Employee under the Plan.
5.
Restrictions / Rights of Company and Employee .
(a)
Vesting of Performance Unit Award . The Employee shall
become 100% vested in the Performance Unit Award at the close of
business on the Performance Period End Date, subject to the other
terms and conditions of this Agreement, including this Section
5 .
(b)
Forfeiture Rights of the Company Upon Termination . Except
as set forth below in this Section 5(b) , the Employee shall
be eligible for payment of the Performance Units granted under this
Agreement only if the Employee's employment with the Company
continues through the close of business on the Performance Period
End Date. Subject to the further provisions of this Agreement, and
except as otherwise provided in Section 5(c) below, if,
prior to the Performance Period End Date, the Employee ceases to be
a continuing employee of the Company for any cause or reason
(including, without limitation, a termination of his or her
Employment by the Company with or without cause) other than as a
result of the death, Disability or Retirement of the Employee, all
of the Performance Units shall automatically be forfeited by the
Employee, with no payment to the Employee (the " Forfeiture
Event " ). (The terms " Employment " , "
Retirement " and " Disability " are
defined in Section 6 below.)
(c)
The Death, Disability or Retirement of the Employee . In the
event that the Employee dies, an event of Disability takes
