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EXHIBIT 10.1
APPENDIX
ALPHARMA INC.
NON-EMPLOYEE DIRECTOR OPTION PLAN
1. PURPOSE OF THE PLAN
The purpose of this Plan is to promote the interests of the Company (i) by
tying more directly the compensation of directors to the performance of the
Company as measured by the market price of its stock and (ii) through aligning
more closely the interests of directors with the interests of the Company's
stockholders.
2. ADMINISTRATION
Except for the discretion reserved to the Board of Directors, the Plan
shall be administered by a committee of the Board of Directors of the Company
consisting of one or more directors (the "Director Options Committee") appointed
for such purpose by the Compensation Committee of the Board of Directors. All
questions of interpretation and application of this Plan to options granted
hereunder (the "Director Options") and of this Plan and any related agreements
and instruments shall be subject to the good faith determination of the Director
Options Committee, which shall be final and binding on all persons. No member of
the Committee shall be liable for anything done or omitted to be done by him or
her or by any other member of the Committee in connection with the Plan, except
for his or her own willful misconduct or as expressly provided by statute.
3. DIRECTOR OPTION SHARES
The stock subject to the Director Options and other provisions of this Plan
shall be shares of the Company's Class A Common Stock, with $.20 par value
(hereinafter referred to as the "Class A Stock"). The aggregate number of shares
of Class A Stock authorized to be issued upon exercise of Director Options and
reserved for issuance under the Plan is 150,000. In the event that application
of any provision of this Plan would result in the issuance of, or the right to
purchase, any fractioned share of Class A Stock, the fraction shall be rounded
to a full share.
4. GRANTING OF DIRECTOR OPTIONS
Subject to the discretion and approval of the Board of Directors, each
director shall receive an option to purchase up to 5,000 shares of Class A Stock
immediately following each annual meeting of stockholders of the Company at
which such director is elected to serve on the Board of Directors of the
Company. If a director is elected or appointed to the Board of Directors other
than at the annual meeting of stockholders, such director shall receive as of
the date of such election or appointment an option to purchase a number of share
of Class A Stock equal to (i) the amount of the then most recent grant
multiplied by (ii) a fraction, the numerator of which is the number of days
remaining from the date of such election or appointment until the anniversary of
the preceding annual meeting of the stockholders and the denominator of which is
365. The price at which shares may be purchased pursuant to any Director Option
shall be the fair market value of the shares on the date that the Director
Option is granted.
5. ELIGIBILITY
The individuals who will be eligible to receive Director Options will be
each person elected or appointed as a director of the Company who is not also an
employee of the Company or any of its subsidiaries at the time such person is so
elected or appointed. A Director Option granted to a director under this Plan
shall continue to be
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effective in accordance with its terms notwithstanding that prior to or
subsequent to the grant of such option such director was or becomes an employee
of the Company or its subsidiaries.
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6. TERMS OF DIRECTOR OPTIONS; VESTING
Each Director Option shall have a term of ten years from the date of grant
or such lesser term as is approved by the Board of Directors (the "Option
Term"); provided that if a director ceases to be a director for any reason, all
Director Options held by such Director shall terminate on the fifth anniversary,
of the date on which such individual ceases to be a director, if such director
has served for five years or more, or otherwise on the first anniversary of the
date on which such individual ceases to serve as a Director (the "Early
Termination Date"). Each Director Option which has become vested (as described
below) may be exercised from time to time until the earlier of (i) the end of
the Option Term or (ii) the Early Termination Date, in part or in whole. The
exercise price of each Director Option may be paid in cash or by delivery of
shares of Class A Stock previously acquired by the optionee having a fair market
value equal to the exercise price of the Director Option being exercised. Each
Director Option shall vest in full on the date of the first annual meeting of
stockholders following the date of grant of such option; provided that if a
person ceases to be a director for reason of disability or death prior to such
vesting date, a portion of any unvested Director Options held by such director
shall vest as of the day preceding the date such person ceases to be a director
for such reason, which portion shall be equal to (i) the number of unvested
Director Options held by such director multiplied by (ii) a fraction, the
numerator of which is the number of days such Director has held such unvested
option and the denominator of which is 365. If a Director is removed from the
Board or resigns other than for reasons of disability or death, the unvested
Director Options held by such director shall not vest following such removal or
resignation.
7. EXERCISE OF DIRECTOR OPTIONS
Director Options shall be exercised by the delivery of written notice to
the Company (Attention: Treasurer) setting forth the number of shares with
respect to which the Director Option is to be exercised and the address to which
the certificates for such shares are to be mailed, together with (i) cash
(including checks, bank drafts or postal or express money orders payable to the
order of the Company) or (ii), shares of Class A Stock, previously acquired,
having an aggregate value equal to the option price of such shares. As promptly
as practicable after receipt of such written notification and payment, the
Company shall deliver to the optionee certificates for the number of shares with
respect to which such Director Option has been so exercised ("Option Shares"),
issued in the optionee's name; provided, that such delivery shall be deemed
effected for all purposes when such certificates shall have been deposited in
the United States mail, addressed to the optionee, at the address specified
pursuant to this paragraph. For all purposes, an optionee shall be deemed to
have exercised a Director Option and to have purchased and become the holder of
the Option Shares as of the date the Company receives written notification of
exercise and payment as provided herein.
8. TRANSFERABILITY OF DIRECTOR OPTIONS
Director Options shall not be transferable otherwise than by will or the
laws of descent and distribution and shall be exercisable during the optionee's
lifetime only by him or by his guardian or legal representative.
9. REQUIREMENTS IMPOSED BY LAW AND DIRECTOR OPTIONS COMMITTEE
The Company shall not be required to sell or issue any shares under any
Director Option if the issuance of such shares shall constitute a violation by
the optionee or by the Company of any provisions of any law or regulation of any
governmental authority. Any determination in this connection by the Director
Options Committee shall be final, binding and conclusive.
The Company shall not be required to issue any shares upon exercise of any
option unless the Company has received the optionee's representation or other
evidence satisfactory to it to the effect that the holder of such Director
Option will not transfer such Option Shares in any manner which could constitute
a violation of any securities or other law, or which would not be in compliance
with such other conditions as the Director Options Committee may deem
appropriate.
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The Director Options Committee may impose such other limitations on the
exercise of Director Options as it concludes are necessary to comply with
applicable law and carry out the intent and purpose of the Plan.
10. NO RIGHTS AS STOCKHOLDER
No optionee shall have rights as a stockholder with respect to shares
covered by a Director Option until the date of exercise of such Director Option;
and, except as otherwise provided in paragraph 12 hereof, no adjustment for
dividends, or otherwise, shall be made if the record date therefore is prior to
the date of exercise of such option.
11. NO OBLIGATION TO RETAIN DIRECTOR
The granting of any option shall not impose upon Company, its stockholders
or the Board of Directors any obligation to elect, appoint or retain any person
as a member of the Board of Directors; and the right to remove any director as
provided by applicable law shall not be diminished or affected by reason of the
fact that a Director Option has been granted to such Director.
12. CHANGES IN THE COMPANY'S CAPITAL STRUCTURE
The existence of outstanding Director Options shall not affect in any way
the right of power of the Company or its stockholders to make or authorize any
or all adjustment, recapitalizations, reorganization, or other changes in the
Company's capital structure or its business, or any merger or consolidation of
the Company, or any issue of bonds, debentures or preferred or prior preference
stock senior to or otherwise affecting the Class A Stock or the rights thereof,
or the dissolution or liquidation of the Company, or any sale or transfer of all
or any part of its assets or business, or any other corporate act or proceeding,
whether of a similar character or otherwise.
If the Company shall effect a subdivision or consolidation of shares or
other capital readjustment, or pay a dividend in shares of its Class A or Class
B Common Stock, then (a) the number, type, and per share price of shares of
stock subject to outstanding Director Options hereunder shall be appropriately
adjusted in such a manner as to entitle each optionee to receive upon exercise
of his Director Option, for the same aggregate consideration, the same total
number and type of shares as he would have received as a result of the event
requiring the adjustment had he exercise his Director Option in full immediately
prior to such event; provided, however, that if any such adjustment would result
in the right to purchase a fractional share, the number of shares subject to the
Director Option will be decreased to the next lower whole number; and (b) the
number and type of shares then reserved for issuance under the Plan shall be
adjusted by substituting for the total number of shares of Class A Stock then
reserved that number and type of shares of stock that would have been received
by the owner of an equal number of outstanding shares of Class A Stock as the
result of the event requiring the adjustment.
If the Company shall be a party to any merger or consolidation or effect
any recapitalization which causes a change in the Class A Stock which does not
effect an adjustment under the prior paragraph, the Director Options Committee,
in its discretion, may, if it considers it to be appropriate to carry out the
intent and purpose of the Plan, make such adjustments in the nature or amount of
securities subject to the Director Options or the Director Option price as it
considers appropriate, and such adjustments shall be binding and conclusive of
all holders of Options.
Except as expressly provided herein, the issue by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
for cash or property, or for labor or services either upon sale, or upon the
exercise or rights or warrants to subscribe therefore, or upon conversion of
other securities, shall not affect, and no adjustment by reason thereof shall be
made with respect to, the number or price of shares of Class A Stock then
subject to outstanding Director Options.
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13. AMENDMENT OR TERMINATION OF PLAN
The Board of Directors of the Company may modify, revise or terminate this
Plan at any time and from time to time, except that none of the term of the
Plan, the eligibility of grantees, the aggregate number of shares reserved for
issuance pursuant to this Plan, the amount of Directors Options to be granted to
any director or the minimum option price shall, other than by operation of
paragraph 12 hereof, be modified or revised without the consent of the holders
of Class A and Class B Common Stock having a majority of the voting power. The
termination of the Plan by the Board of Directors shall not affect any Director
Options granted prior to such termination. The terms upon which Directors
Options are granted may not be amended more frequently than once every six
months (except to comply with applicable tax or other laws).
14. WRITTEN OPTION AGREEMENTS
Each Director Option granted hereunder may be embodied in a written option
agreement which shall contain such other provisions as the Director Options
Committee in its discretion shall deem advisable. The failure to provide a
written option agreement shall not affect the validity of Director Options
provided for herein or the rights of directors to receive and exercise such
options as herein provided.
15. DIRECTOR AND STOCKHOLDER APPROVAL; DURATION OF PLAN
This Plan has been duly adopted by the Board of Directors on March 14, 1996
and approved by the stockholders of the Company on May 30, 1996. This Plan shall
terminate on December 31, 2005 or by earlier action of the Board of Directors
pursuant to paragraph 13 hereof provided such termination shall not affect any
Director Options granted prior to such termination.
16. ELECTION TO RECEIVE SHARES IF SUBJECT TO DETRIMENTAL NON-U.S. INCOME TAX
CONSEQUENCES
If a person would be subject to significantly detrimental income tax
consequences as a result of receiving Director Options under any non-United
States income tax provisions, such person may elect (by written notice to the
Director Options Committee prior to the date of grant) to receive in lieu
thereof one share of Class A stock for every ten shares purchasable under the
Director Options such person would otherwise have received.
17. REFERENCE TO EMPLOYEE STOCK OPTION PLAN ("EMPLOYEE PLAN")
To the extent not inconsistent with the terms of this Plan, the terms and
provisions of the Employee Plan shall apply to any options granted hereunder.
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