September 24, 1999
Xx. Xxxx X. Xxxxxx
Alpharma Inc.
Xxx Xxxxxxxxx Xxxxx
Xxxx Xxx, XX 00000
Dear Xx. Xxxxxx:
Since you have informed Alpharma Inc. (the "Company") that
you desire to resign from the Company but are willing to remain
with the Company until the end of 1999, it is appropriate to set
forth the arrangements that will exist between the Company and
you following your resignation. This letter agreement will
supersede, except to the extent expressly set forth herein, the
terms of the letter agreement dated February 26, 1998 between the
Company and you (the "1998 Employment Agreement") and set forth
such arrangements. You will have the opportunity to review and
approve any press release or other public statement which
announces your decision to resign prior to the time such release
or statement is made public by the Company. You will also have
the opportunity to review and approve any statement regarding
your resignation the Company proposes to include in any proxy
statement or other document required to be filed with the
Securities and Exchange Commission before such proxy statement or
other document is mailed to shareholders, filed or otherwise
communicated outside of the Company.
1. You resign all positions as officer, director and
employee of the Company and each subsidiary of the
Company effective on (a) December 31, 1999 or, if
earlier and only as to positions as officer and
director, (b) a date prior to December 31, 1999
determined by the Compensation Committee of the
Company's Board of Directors (such date of effective
resignation being called the "effective date"). Prior
to the effective date you will continue to hold the
title of President and CEO of the Company and will
perform such duties to the best of your ability as are
assigned to you by the Chairman of the Office of the
Chief Executive.
2. From the date hereof through December 31, 1999 (whether
your resignation as officer and director is earlier or
not), you will receive as compensation the salary and
other benefits set forth pursuant to the 1998
Employment Agreement. For your agreements herein you
will receive the following:
a. the amount of U.S.$10,000 per month commencing
January, 2000, through December, 2001, in
consideration of your agreements in paragraph 3;
and
b. the amount of an additional U.S.$40,000 per month
beginning January, 2000 through June, 2001 in
consideration of your agreements in paragraph 4;
and
c. a payment of U.S. $200,000 on or before February
1, 2000 in lieu of any bonus under the 1998
Employment Agreement; and
d. continued participation through December 31, 2001
on the same basis as senior executives of the
Company in the Company's life insurance program,
disability insurance program, health and medical
insurance program and tax and financial services
planning (provided the Company may determine to
reimburse you for your costs in obtaining
comparable coverage in lieu of participation in
any such insurance program); and
e. an automobile allowance of up to U.S. $15,000 per
year for 2000 and 2001 plus insurance and
maintenance;
provided that if you become employed by or a partner in
another entity prior to December 31, 2001, the
compensation provided in clauses (d) (except for the
tax and financial planning services contemplated by
clause (d)) and (e) shall terminate at the end of the
month in which such employment or partnership
commences. For this purpose employment in another
entity shall be deemed to include becoming entitled to
receive income for services rendered as an independent
contractor in excess of U.S.$10,000 in any month.
Unless otherwise legally required, all payments made
under clauses (a), (b), (c), (d) or (e) of this
paragraph 2 shall be in gross amounts and no
withholding shall be taken from such payments. You
will receive a Form 1099 from the Company for all such
payments.
3. You agree that following the effective date through
December 31, 2001 you will provide such consultation to
the senior officers of the Company as is requested from
time to time by the Chairman or the CEO of the Company.
The Company agrees that your services following the
effective date shall not require you to provide
services in a manner which conflicts with your personal
schedule (including subsequent employment or consulting
obligations) and you agree to use reasonable effort to
respond to such request in a manner which does not
disadvantage the Company. The Company shall promptly
reimburse you for any expenses you incur in performing
any duties under this paragraph 3.
4. You agree that you shall not, during the period from
now until June 30, 2001, (the "Restricted Period"),
directly or indirectly engage in the business of
producing, marketing or distributing generic
pharmaceutical products or products for the animal
health industry of the type currently produced or sold
by the Company or its subsidiaries, and provided such
business was engaged in by the Company or its
subsidiaries prior to October 1, 1999, in any
geographical area where such products are produced or
sold by the Company or its subsidiaries. Without
limitation you agree not to provide services during the
Restricted Period to Xxxxxxx Pharmaceuticals, KV
Pharmaceuticals, Xxxxxx Grove Laboratories, Xxxx
Laboratories, Mylan Laboratories, Ivax, Teva
Pharmaceuticals, Xxxxxx Pharmaceuticals, Pharmaceutical
Resources or the Novartis generic subsidiary or Merck
Darmstadt generic subsidiary or the animal health
division of Pfizer, Xxxxxxx-XxXxxxx or Xxxxx Xxxxx
Xxxxxxx; provided that it shall not be a violation of
this paragraph 4 for you to directly or indirectly
engage in (i) the business of sale through e-commerce
of pharmaceuticals and related products or the business
of development and commercialization of non-generic
pharmaceutical products or (ii) any other businesses
not described in this paragraph 4.
For purposes of this agreement, each of the following
activities, without limitation, shall be deemed to
constitute engaging in a business: to work with, be
employed by, consult for, either individually, in
partnership or in conjunction whether as principal,
agent, employee, partner, director, officer or
consultant, or in any other manner whatsoever, without
or without compensation therefor. Nothing contained in
this agreement shall prohibit you from acquiring or
holding as a passive investor less than five percent
(5%) of the outstanding securities of any publicly
traded company.
The Company agrees not to make any statement at any
time which disparages you or the services you have
performed for the Company and you agree not to make any
statement at any time which disparages the Company or
its officers or employees. Without limiting or
affecting your Key Employee Agreement attached hereto,
you agree to not disclose or use in any manner any
information regarding the Company or its products,
operations, technology or plans unless and until such
information shall have become generally known to the
public other than as a result of any disclosure or
other action by you.
You acknowledge and agree that the covenants set forth
in this paragraph 4 are reasonable in scope, duration,
geographic area and in all other respects. You and the
Company further agree that such covenants replace and
supersede paragraph 10 of your Key Employee Agreement
provided that all other provisions of such Key Employee
Agreement shall continue.
If any provision of this paragraph 4 shall be
determined by any court of competent jurisdiction to be
invalid, illegal or unenforceable in whole or in part,
and such determination shall become final, such
provision shall be deemed to be severed or limited, but
only to the extent required to render the remaining
provisions of this paragraph 4 enforceable. This
paragraph 4 as thus amended shall be enforced to give
effect to the intention of the parties insofar as that
is possible.
You and the Company acknowledge and you agree that if
you are found by a court of competent jurisdiction to
have breached any covenant in this paragraph 4 all
obligations of the Company to pay compensation to you
under paragraph 2 of this Agreement of which this
paragraph 4 is part shall terminate and the option
which vests on July 8, 2001 shall not vest as provided
in paragraph 6 below. You and the Company further
agree that in the event of any breach by either, the
non-breaching party shall be entitled, in addition to
its other rights and remedies, to enforce its rights
under this Agreement by an action or actions for
specific performance, injunction and/or other equitable
relief in order to enforce or prevent any violations
(whether anticipatory, continuing or future) of the
provisions of this paragraph 4 (including, without
limitation, the extension of the term of this paragraph
4 by a period equal to (i) the length of the violation
of this term plus (ii) the length of any court
proceedings necessary to stop such violation.
5. The Company agrees that clause (iii) (to the extent it
relates to relocation to Norway) and clause (iv) of
paragraph 6 of the 1998 Employment Agreement shall
continue provided that the Company's obligations under
such clause (iv) shall terminate upon the earlier of
(a) the sale of your current residence in New Jersey or
(b) December 31, 2001. You agree to use reasonable
efforts to mitigate any cost to the Company under such
clause (iv) and to make mutually satisfactory
arrangements to release the Company from any
obligations under such clause (iv) on December 31, 2001
or such earlier date on which such residence is sold.
The Company's obligations under clause (iii) shall
terminate on December 31, 2001 (except for
reimbursement of expenses incurred in relocating to
Norway prior to such date).
6. All stock options granted to you shall continue in
accordance with their terms (with vesting until the
effective date), and such options which are exercisable
on the effective date shall remain exercisable for two
years following the effective date. All options not
vested and exercisable on the effective date shall not
become vested and shall be forfeited on the effective
date, except that options for 25,000 shares included in
the option to acquire 100,000 shares granted to you on
July 8, 1998, shall vest and become exercisable (until
December 31, 2001) on July 8, 2001 provided you have
not been found by a court of competent jurisdiction to
have violated any provision of paragraph 4 of the
agreement (it being understood that 50,000 shares of
such option shall not vest and shall be forfeited).
7. If at any time after January 1, 2000 you intend to
invest in an enterprise that is not engaged in a
business which, in the good faith opinion of Xxxxxxxx &
Xxxxx, would violate paragraph 4 hereunder and of which
you intend to become an officer and employee, the
Company will pay to you in a lump sum the sum of
amounts payable to you under clause (b) of paragraph 2
which then remain unpaid, discounted by the prime rate
at Citibank then in effect. Such lump sum payment will
be made within 30 days after the Company receives a
written notice from you confirming your intention as
set forth in the prior sentence and nature of such
investment. You agree that a portion of such lump sum
(consisting of amounts that would be payable following
such violation if paid monthly as provided in paragraph
2) shall be repaid by you as provided in paragraph 4 if
you are found by a court of competent jurisdiction to
have violated the provisions thereof.
8. The Company agrees to confirm the importance of your
services hereunder and take other commercially
reasonable efforts (not involving material cost to the
Company) to enable your current visa (or other
satisfactory visa or other arrangement to permit you to
remain legally in the United States) to remain in
effect through December 31, 2001 or your earlier
relocation to Norway.
If the foregoing accurately reflects our agreement, please
sign a counterpart of this agreement in the space provided below.
Sincerely,
Xxxxx X. Xxxxxxx
Chairman of the Compensation
Committee
Chairman of the Stock Option
Committee
The foregoing is hereby agreed to:
Date:
Xxxx X. Xxxxxx
