February 26, 1998
Xx. Xxxx Xxxxxx
Alpharma A.S.
Xxxxxxxxxxxxx 0
Xxxxxxxx 000 Xxxxxx
X-0000 Xxxx 0 Xxxxxx
Dear Gert:
This letter agreement will delineate the material terms
of your employment by ALPHARMA Inc. ("AL") and its subsidiaries
(together, the "Worldwide Group") which will become effective on
May1, 1998 or such earlier date as you shall determine upon 30
days prior written notice to AL (the "Commencement Date"). Your
employment hereunder shall continue in effect through the date of
termination of your employment in accordance with this agreement
(the "Termination Date"), subject only to such changes as may
heretofore be approved by you and the Board of Directors of AL.
As recommended by the Compensation Committee, the terms
of your employment are as follows:
1. Beginning on the Commencement Date, you will serve as
President and Chief Operating Officer ("COO") of AL and have
operational oversight responsibility with respect to each of
the divisions and companies in the Worldwide Group, subject
to review and direction by the Chief Executive Officer and
the general oversight of the Board of Directors of AL.
2. It is contemplated that you will be elected as President and
Chief Executive Officer ("CEO") of AL on or about the time
of the Annual Meeting of AL Stockholders expected to be held
in the second quarter of 1999. Following such election you
shall have all the powers and responsibilities of CEO of AL
with general managerial or oversight responsibility with
respect to each of the companies in the Worldwide Group,
subject to review and direction by the Board of Directors of
AL.
3. You agree, if elected, to serve as COO and/or CEO of
Alpharma AS and Alpharma U.S., Inc. ("AL-US") and as a
director of AL and AL Oslo and as a director or in such
other positions to which you are or may be elected by the
boards of directors of the various other companies of
Worldwide Group.
4. Your base annual salary shall be $400,000 while serving as
COO and $600,000 while serving as CEO, in each case subject
to upward adjustments as provided below. The base salary
shall be paid in $U.S. by AL in approximately equal semi-
monthly installments (or as otherwise paid to senior
executives). Your base salary includes compensation for
your services as an officer and/or director of any of the
companies in the Worldwide Group, and you will not receive
additional compensation for such services. Your base salary
will be reviewed annually by the Compensation Committee for
upward adjustment, subject to Board approval, as of January
1, 2000 and each subsequent year.
5. You will be considered for an annual cash bonus each year.
You are eligible for a bonus of up to 75% of your base
salary payable with respect to such year based on the
overall performance of the Worldwide Group and your
individual performance and contribution; provided that such
bonus shall be not less than $100,000 (subject to proration
if you are employed for less than the full calendar year)
with respect to 1998. The annual bonus recommendation will
be made by the Compensation Committee and will be subject to
approval by the Board of Directors. The annual bonus with
respect to each year shall be payable in cash prior to April
1 of the following year.
6. You will establish your residence in the Metropolitan New
York area within approximately three months of the
Commencement Date, it being understood that you may at your
election thereafter reestablish your residency in Norway at
any time following twelve months after your election as CEO.
Irrespective of the location of your residency, you will be
expected to be present for significant amounts of time as
required to perform your responsibilities at the company's
corporate offices in the United States and in Norway. In
order to facilitate your relocation of your residency to the
United States, the Company will (i) reimburse you for your
reasonable expenses incurred in making two trips to the
Metropolitan New York area with your spouse for the purpose
of locating an appropriate residence while in the United
States; (ii) pay the fees and reasonable expenses of a real
estate consultant to assist you and your spouse in learning
about communities, including schools and other facilities,
to which you may choose to relocate in the United States;
(iii) pay your reasonable moving expenses in relocating to
the United States and subsequent relocation to Norway and
(iv) provide an appropriate guarantee (or other mutually
satisfactory credit support) of your obligations under a
mortgage loan (or other borrowing) made to finance your
purchase of a residence in the United States and reasonable
financial assurances that provide you with protection
against loss incurred upon sale of such residence. In
addition, at the beginning of each calendar year in which
you intend (as reflected in a notice to the Company to such
effect) to be resident in the Metropolitan New York area for
the major portion of the year, you will receive a general
expense allowance payable during the first month of such
year of $50,000 (it being understood that such allowance may
be used for such expenses of living in the United States as
you deem appropriate and you shall not be required to
account for any such expenses). You will be entitled to the
expense allowance of $50,000 for 1998 even if you will be
resident in the Metropolitan New York area for less than six
moths in 1998. the allowance for 1998 shall be payable on
May 1, 1998.
7. You will be granted options to purchase Class A Common Stock
of AL at not less than the fair market value of such shares
on the date of grant ("Options") as follows: (i) 100,000
Options shall be granted after the Commencement Date but not
earlier than the date on which you have become resident in
the United States in 1998, and (ii) 50,000 options shall be
granted as of the first trading day of January in the
calendar year following the year in which you receive the
100,000 shares grant. These two Options are granted as a
long term compensation element for the years 1998 and 1999.
You will be entitled to other long term compensations, as
the Compensation committee may decide, for the year 2000 and
thereafter. The Options shall have the terms, vesting
provisions and other conditions as set forth in our Appendix
A to this Letter Agreement or as otherwise provided in the
Company's stock option plan. Without limiting the
foregoing, the Options shall provide that, to the extent
exercisable on the date of termination of your employment,
they shall remain exercisable for a two years period after
any such termination which is without good cause of your
employment.
8. During the term of your employment, you will be entitled to
an annual automobile allowance of $15,000, plus
reimbursement for insurance and maintenance and will be
entitled to participate in all employee benefit programs
that are from time to time available to senior executives of
AL on the same basis as other senior executives of AL
including:
a. Life insurance;
b. Disability insurance program;
c. 401K Plan;
d. Health and medical insurance;
e. Retirement Plan.
f. Stock Purchase Plan
g. Deferred Compensation Plan
h. Paid Vacation and Holidays, and
i. Tax and Financial Services Planning.
With respect to retirement benefits, you will be entitled to
the normal amount of benefits available to an employee of AL
with the compensation and years of service which are
applicable to you provided that (i) you shall be entitled to
a supplemental retirement benefit calculated in a mutually
acceptable manner which provides you with an amount equal to
the amount that would be payable to you under AL's qualified
plan if no limitations were imposed by the Internal Revenue
Code compared with the amount actually payable to you under
the plan giving effect to such limitations; and (ii) you
shall have the option to retire at age 55, (irrespective of
the provisions of the plan) with an annual benefit that has
been actuarially reduced (using the actuarial tables and
methods utilized in administering the Company's pension plan
for Unites States employees) to reflect such early
retirement.
9. If you in accordance with Section 6 above choose to re-
establish your residency in Norway after being elected as
CEO, it will be essential that you divide your work between
the United States and Oslo and most probably with a major
part of your work in the United States. Your salary and
benefits as described in Section 8 a-i should be split
accordingly and shall be agreed with the Compensation
Committee.
10. Your employment under this Agreement shall continue until
terminated by AL or you as hereinafter provided. Your
employment hereunder may be terminated by you on ninety days
written notice to AL or by AL on thirty days written notice
to you; provided that if your employment is terminated by AL
without good cause, then you shall be entitled to continue
to receive your then current base salary payable during each
of the twenty-four months following such termination. If
you are not elected to the offices as provided in paragraphs
1 and 2, or following your initial election as CEO you do
not continue to be elected as CEO, in any such instance for
other than good cause, then such failure to be so elected
shall be deemed to be a termination of employment by AL and
you shall be entitled to the salary continuation as provided
in the second sentence of this paragraph. Similarly, if at
any time while you are serving as COO or CEO, the
responsibilities and authority of such office is materially
changed in a manner which you in good faith reasonably
consider materially adverse, you may terminate your
employment hereunder within 60 days of such change and be
entitled to receive the salary continuation as provided in
the second section of this paragraph. "Good cause" shall
mean the willful failure (or inability as a result of
disability) to carry out your responsibilities continuing
for thirty days after notice from the Board of Directors of
AL or committing any unlawful or improper act which
materially and adversely affects AL.
11. You agree that during the term of your employment by AL and
for a period of one year thereafter you will not engage in
any activity as an officer, director, employee, consultant,
investor or otherwise on behalf of any business or other
entity which is engaged in competition with any business in
which AL is engaged during the term of your employment
anywhere in the geographical area in which AL conducts such
business. You further agree to execute the non-competition
and confidentiality agreements customarily executed by other
senior executives in AL.
If the foregoing accurately reflects the terms of your
employment by AL and the Worldwide Group, please sign both copies
of this letter where indicated and return one original signed
document to my attention.
Sincerely,
Xxxxx X. Xxxxxxx
Chairman of the Compensation
Committee
Chairman of the Stock Option
Committee
I agree to employment with AL
on the terms described above.
/s/ Xxxx Xxxxxx Date: March 13, 1998
Xxxx Xxxxxx
