Edgar Filing: ALPHARMA INC

SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )

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[ ] Preliminary Proxy Statement
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(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-12

ALPHARMA INC.
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(Name of Registrant as Specified In Its Charter)

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(Name of Person(s) Filing Proxy Statement, if other than Registrant)

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[ALPHARMA LOGO]

ALPHARMA INC.
ONE EXECUTIVE DRIVE
FORT LEE, NEW JERSEY 07024

------------------------

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 23, 2002
------------------------

To the Stockholders of ALPHARMA INC.:

NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Alpharma
Inc., a Delaware corporation (the "Company"), will be held at The Regency Hotel,
540 Park Avenue, New York, New York, on Thursday, May 23, 2002, at 9:00 a.m.,
local time, to consider and act upon the following matters:

1. The election of ten directors to the Company's Board of Directors, each
to hold office until the 2003 Annual Meeting of Stockholders and until
their successors shall be elected and shall qualify.

2. A proposal to amend the Company's 1997 Incentive Stock Option and
Appreciation Right Plan, as amended, (i) to increase the number of
shares available for awards thereunder by 1,500,000 shares and (ii) to
extend the term of the Plan to December 31, 2010.

3. A proposal to amend the Company's Non-Employee Stock Option Plan, as
amended, (i) to increase the number of shares available for awards
thereunder by 200,000 shares, (ii) to extend the term of the Plan to
December 31, 2010, (iii) to increase the maximum amount of shares of
Class A Common Stock as to which a director is eligible to receive
options, to 10,000 and (iv) to permit directors to transfer options to
purchase Class A Common Stock upon terms and conditions and to
transferees as approved by the Director Options Committee.

4. Ratifying appointment of PricewaterhouseCoopers LLP as the Company's
independent accountants.

5. Transaction of such other business as may properly come before the
meeting or any adjournments or postponements thereof.

The Board of Directors has fixed the close of business on March 28, 2002 as
the record date for determining the stockholders entitled to notice of and to
vote at the meeting or any adjournment thereof.

YOUR REPRESENTATION AT THIS MEETING IS IMPORTANT. Whether or not you
expect to attend the Annual Meeting in person, please complete, date, sign and
return the enclosed proxy. An envelope is enclosed for your convenience which,
if mailed in the United States, requires no additional postage. If you attend
the Annual Meeting, you may then withdraw your proxy and vote in person.

A copy of the Company's Annual Report to stockholders for the year ended
December 31, 2001 and a Proxy Statement accompany this notice.

By order of the Board of Directors,

Robert F. Wrobel
Secretary

April 17, 2002

[ALPHARMA LOGO]

ALPHARMA INC.
ONE EXECUTIVE DRIVE
FORT LEE, NEW JERSEY 07024

MAILING DATE
APRIL 17, 2002
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PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
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To Be Held on May 23, 2002

This proxy statement (the "Proxy Statement") is furnished in connection
with the solicitation of proxies by the Board of Directors of Alpharma Inc., a
Delaware corporation (the "Company"), for use at the Annual Meeting of
Stockholders (the "Annual Meeting") to be held on Thursday, May 23, 2002 at The
Regency Hotel, 540 Park Avenue, New York, New York at 9:00 a.m., local time, and
at any adjournment or postponement thereof. The cost of solicitation of the
Company's stockholders will be paid by the Company. Such cost will include the
reimbursement of banks, brokerage firms, nominees, fiduciaries and other
custodians for expenses of forwarding solicitation materials to beneficial
owners of shares. In addition to the solicitation of proxies by use of mail, the
directors, officers and employees of the Company may solicit proxies personally
or by telephone, telegraph or facsimile transmission. Such directors, officers
and employees will not be additionally compensated for such solicitation but may
be reimbursed for out-of-pocket expenses incurred in connection therewith.

It is anticipated that this Proxy Statement and form of proxy will first be
sent to the Company's stockholders on or about April 17, 2002.

THE ANNUAL MEETING

PURPOSE OF MEETING

At the Annual Meeting, the Company's stockholders will consider and act
upon the following matters:

1. The election of ten directors to the Company's Board of Directors,
each to hold office until the 2003 Annual Meeting of Stockholders and until
their successors shall be elected and shall qualify.

2. A proposal to amend the Company's 1997 Incentive Stock Option and
Appreciation Right Plan, as amended, (the "Stock Option Plan"), (i) to
increase the number of shares available for awards thereunder by 1,500,000
shares and (ii) to extend the term of the Plan to December 31, 2010.

3. A proposal to amend the Company's Non-Employee Stock Option Plan,
as amended, (the "Director Stock Option Plan"), (i) to increase the number
of shares available for awards thereunder by 200,000 shares, (ii) to extend
the term of the Plan to December 31, 2010, (iii) to increase the maximum
amount of shares of Class A Common Stock as to which a director is eligible
to receive options, to 10,000 and (iv) to permit directors to transfer
options to purchase Class A Common Stock upon terms and conditions and to
transferees, as approved by the Director Options Committee.

4. Ratifying the appointment of PricewaterhouseCoopers LLP as the
Company's independent accountants.

5. Transaction of such other business as may properly come before the
meeting or any adjournments or postponements thereof.

RECORD DATE

The close of business on March 28, 2002 (the "Record Date") has been fixed
as the record date for determining holders of outstanding shares of the
Company's Class A Common Stock, par value $.20 per share (the "Class A Stock"),
and Class B Common Stock, par value $.20 per share (the "Class B Stock"),
entitled to notice of, and entitled to vote at, the Annual Meeting. As of the
Record Date, 39,293,180 shares of Class A Stock and 11,872,897 shares of Class B
Stock were outstanding and entitled to vote.

QUORUM

For each matter to be voted upon at the Annual Meeting, the presence in
person or by proxy, of holders of stock entitled to be voted with respect to
such matter representing a majority of the aggregate voting power of all shares
of stock entitled to be voted with respect to such matter is necessary to
constitute a quorum with respect to such matter and to transact business with
respect to such matter at the Annual Meeting. For purposes of determining
whether a quorum exists with respect to the election of directors, shares as to
which authority to vote in the election of directors has been withheld and
broker non-votes (where a broker submits a proxy but does not have authority to
vote a customer's shares on one or more matters) with respect thereto will be
considered present at the Annual Meeting. For the purpose of determining whether
a quorum exists with respect to amending the Stock Option Plan and the Director
Stock Option Plan, ratifying the appointment of the Company's independent
accountants and any other matter which may properly come before the Annual
Meeting, shares abstaining on such matter and all broker non-votes with respect
to such matter will be considered present at the Annual Meeting.

REQUIRED VOTE

Votes Entitled to be Cast by Each Class of Stock. Except for the election
of directors (described below) and certain matters that require a class vote,
the holders of the Class A Stock and the holders of the Class B Stock vote
together, with each share of Class A Stock entitling the holder thereof to one
vote and each share of Class B Stock entitling the holder thereof to four votes.

Election of Directors. Ten directors will be elected at the Annual
Meeting. As permitted under the Company's by-laws, the number of directors was
increased from nine to ten pursuant to the action of the Board of Directors
taken on March 22, 2002. Under the Company's Certificate of Incorporation, the
holders of the Class A Stock are entitled, voting as a separate class, to elect
at least 33 1/3% of the Company's Board of Directors (rounded to the nearest
whole number, but in no event less than two members of the Company's Board of
Directors), and the holders of the Class B Stock are entitled, voting separately
as a class, to elect the remaining directors. Therefore, the holders of the
Class A Stock will elect three directors (directors to be elected by the holders
of Class A Stock being referred to as the "Class A Directors") and the holders
of the Class B Stock will elect seven directors (directors elected by the
holders of Class B Stock being referred to as the "Class B Directors"). The
affirmative vote of a plurality of the votes cast at the Annual Meeting by the
holders of the Class A Stock, voting as a single class, is necessary to elect
the three Class A Directors, and the affirmative vote of a plurality of the
votes cast at the Annual Meeting by the holders of the Class B Stock,

voting as a single class, is necessary to elect the seven Class B Directors. (A
plurality of the votes cast means the greatest number of votes cast for a
director.)

Amending the 1997 Incentive Stock Option and Appreciation Right Plan and
Director Stock Option Plan and Ratifying Appointment of the Independent
Accountants. Approval of the proposals to amend, the Stock Option Plan and the
Director Stock Option Plan, and the proposal to ratify the appointment of the
Company's independent accountants requires the affirmative vote of a majority of
the votes cast by the holders of the Class A Stock and Class B Stock, voting
together, present and entitled to vote at the meeting.

PROXIES

The enclosed proxy provides space for holders of Class A Stock to vote for,
or withhold authority to vote for, all or any one of the Company's three
nominees for Class A Directors.

Shares of Class A Stock represented by properly executed proxies received
at or prior to the Annual Meeting and which have not been revoked will be voted
in accordance with the instructions indicated therein. If no instructions are
indicated, such proxies will be voted FOR (i) the election as directors of the
three nominees for Class A Directors nominated by the Company's Board of
Directors (see "Election of Directors; Nominees for Directors; Nominees for
Class A Directors" below), (ii) the proposal to amend the Stock Option Plan,
(iii) the proposal to amend the Director Stock Option Plan, (iv) the proposal to
ratify the appointment of the Company's independent accountants and (v) in the
discretion of the proxy holder, as to any other matter which may properly come
before the Annual Meeting. With respect to the election of directors, neither
shares as to which authority to vote has been withheld (to the extent withheld)
nor broker non-votes will be considered affirmative votes. With respect to any
other matter which may properly come before the meeting, abstentions, and broken
non-votes will be considered present and entitled to vote but will not have been
cast and therefore will not be counted in determining whether any matter
received the requisite votes. With respect to amendment of the Company's Stock
Option Plan and Director Stock Option Plan and the ratification of the
appointment of the Company's independent accountants, (i) abstentions, pursuant
to Delaware law, will be considered present and entitled to vote but will not
have been cast and therefore will not be counted in determining whether such
proposal received the requisite votes and (ii) broker non-votes will be
considered not entitled to vote on such proposal and thus will not be counted in
determining whether such proposal has received the requisite votes.

YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL
MEETING, PLEASE COMPLETE, DATE AND SIGN YOUR PROXY IN ORDER TO ENSURE THAT YOUR
SHARES WILL BE REPRESENTED AT THE ANNUAL MEETING. THE GIVING OF SUCH PROXY DOES
NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IN THE EVENT YOU ATTEND THE ANNUAL
MEETING.

A holder of Class A Stock who has given a proxy may revoke such proxy at
any time prior to its exercise at the Annual Meeting by (i) giving written
notice of revocation to the Secretary of the Company, (ii) properly submitting
to the Company a duly executed proxy bearing a later date or (iii) attending the
Annual Meeting and voting in person. Attendance at the Annual Meeting will not
in and of itself revoke a proxy. All written notices of revocation and other
communications with respect to revocation of proxies should be sent to the
attention of the Secretary of the Company at the Company's United States
executive offices, located at One Executive Drive, Fort Lee, New Jersey 07024.

If a quorum is not obtained, the Annual Meeting may be adjourned for the
purpose of obtaining additional proxies or for any other purpose, and, at any
subsequent reconvening of the Annual Meeting, all
3

proxies will be voted in the same manner as such proxies would have been voted
at the original convening of the meeting (except for any proxies which have
therefore effectively been revoked or withdrawn), notwithstanding that they may
have been effectively voted on the same or any other matter at a previous
meeting.

ELECTRONIC AND TELEPHONIC VOTING

You can vote your proxies by touch-tone telephone from the U.S., using the
toll-free telephone number on the proxy card, or by the Internet using the
procedures and instructions described on the proxy card. Stockholders who own
their common stock through a broker, also known as "street name" holders, may
vote by telephone or the Internet if their bank or broker makes those methods
available, in which case the bank or broker will enclose the instructions with
the proxy statement. The telephone and Internet voting procedures including the
use of control numbers found on the proxy card are designed to authenticate
stockholder identities, to allow stockholders to vote their shares of common
stock and to confirm that their instructions have been properly recorded.
Stockholders voting via the Internet should understand that there may be costs
associated with electronic access, such as usage charges from Internet access
providers and telephone companies, which must be paid by the stockholder.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

OWNERSHIP OF COMMON STOCK

The following table sets forth as of February 19, 2002 (unless otherwise
noted) certain information regarding the beneficial ownership of the Class A
Stock and the Class B Stock by (a) each person who is known to the Company to be
the beneficial owner of more than 5% of the outstanding shares of either of such
classes, (b) each director and each nominee for director of the Company, (c) the
Chief Executive Officer and the four other most highly compensated executive
officers, (d) two former executive officers who would have been included in the
four most highly compensated executive officer list if not for the fact that
they were not executive officers at the end of the fiscal year ending December
31, 2001 and (e) all directors and executive officers of the Company as a group.
Unless otherwise indicated, each beneficial owner possesses sole voting and
dispositive power with respect to the shares listed in this table.

AMOUNT AND PERCENT OF
NATURE OF PERCENT OF COMMON STOCK
BENEFICIAL CLASS (BOTH CLASSES)
TITLE OF CLASS OF STOCK NAME OF BENEFICIAL OWNER OWNERSHIP OUTSTANDING OUTSTANDING
----------------------- ------------------------ ---------- ----------- --------------

Class B Common Stock A.L. Industrier AS(1)(2)(3) 11,872,897 100.00% 26.7%
Class A Common Stock A.L. Industrier AS(1)(2)(3) 0 -- --
Class A Common Stock Berger Small Cap Value Fund(4) 1,700,000 5.22 3.83
Class A Common Stock FMR Corp.(5) 4,571,803 14.05 10.29
Class A Common Stock Franklin Resources(6) 2,065,010 6.35 4.65
Class A Common Stock Mellon Bank(7) 2,775,466 8.53 6.25
Class A Common Stock Morgan Stanley Dean Witter & Co.(8) 2,116,484 6.50 4.77
Class A Common Stock Perkins, Wolf, McDonnell(9) 2,464,775 7.57 5.55
Class A Common Stock Thomas L. Anderson(10) 1,978 * *
Class A Common Stock Bruce I. Andrews(10) 3,268 * *
Class A Common Stock Oyvin A. Broymer(10) 16,000 * *
Class A Common Stock Richard J. Cella(10) 10,544 * *
Class A Common Stock I. Roy Cohen(10) 15,000 * *
Class A Common Stock Thomas G. Gibian(10) 17,509 * *
Class A Common Stock Glen E. Hess(10) 19,842 * *
Class A Common Stock Erik Hornnaess(10) 16,667 * *
Class A Common Stock William I. Jacobs 0 -- --
Class A Common Stock Michael J. Nestor(10) 1,000 * *
Class A Common Stock Einar W.Sissener(10)(11)(12) 333,667 1.03 *
Class A Common Stock Jeffrey E. Smith(10)(13) 151,405 * *
Class A Common Stock Erik G. Tandberg(10)(14) 15,234 * *
Class A Common Stock Tore Tonne 0 -- --
Class A Common Stock Peter G. Tombros(10) 15,818 * *
Class A Common Stock Ingrid Wiik(10)(14) 105,556 * *
Class A Common Stock Robert F. Wrobel(10) 45,305 * *
Class A Common Stock All directors and executive officers
as a group (17 persons)(10) 867,956 2.63 1.93

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* Indicates ownership of less than 1%.

(1) The address of A.L. Industrier AS (formerly known as Apothekernes
Laboratorium AS), a corporation organized and existing under the laws of
the Kingdom of Norway ("A.L. Industrier"), is Harbitzalleen 3, 0275 Oslo,
Norway.

(2) The source of this information is Amendment No. 6 to the Schedule 13D,
dated October 5, 2001, filed with the Securities and Exchange Commission
(the "Commission") by A.L. Industrier AS. The shares reflected in the table
are held of record by A/S Wangs Fabrik ("Wangs") and A.L. Chemy A.S. ("AL
Chemy") wholly owned subsidiaries of A.L. Industrier, although A.L.
Industrier retains full beneficial ownership of these shares. Pursuant to a
letter agreement between A.L. Industrier, Wangs and a Norwegian bank and a
loan agreement between AL Chemy and the same bank, A.L. Industrier, Wangs
and AL Chemy have agreed not to pledge or sell any of these shares.

(3) Shares of Class B Stock are convertible into an equal number of shares of
Class A Stock. If all shares of Class B Stock beneficially owned by A.L.
Industrier were converted as of February 19, 2002, A.L. Industrier would
own approximately 26.7% of the then outstanding shares of Class A Stock.

(4) The source of this information is Schedule 13G dated February 12, 2002,
filed with the Commission by Berger Small Cap Value Fund ("Berger"). Such
Schedule 13G reports that Berger holds shared voting power and shared
dispositive power as to all shares. The address of Berger is 210 University
Boulevard, Suite 900, Denver, Colorado 80206.

(5) The source of this information is Amendment No. 3 to the Schedule 13G dated
February 14, 2002, filed with the Commission by FMR Corp. ("FMR"). Such
Schedule 13G reports that FMR holds sole voting power as to 88,088 shares
and sole dispositive power as to all shares. FMR declared in its filing
that various persons have the right to receive or the power to direct the
receipt of dividends from, or the proceeds from the sale of, the shares.
The interest of one person, Fidelity Low Priced Stock Fund, an investment
company registered under the Investment Company Act of 1940, in the shares
amounted to 2,066,200 shares of the Company's Class A Stock. The address of
FMR is 82 Devonshire Street, Boston, Massachusetts 02109.

(6) The source of this information is Schedule 13G dated February 1, 2002,
filed with the Commission by Franklin Resources, Inc. ("Franklin
Resources"). Such Schedule 13G reports that the securities are beneficially
owned by one or more open or closed-end investment companies or other
managed accounts which are advised by direct and indirect investment
advisory subsidiaries of Franklin Resources. Such subsidiaries hold all
investment and/or voting power over the securities owned by such
subsidiaries. Franklin Advisers, Inc. holds sole voting power and sole
dispositive power as to 2,050,629 shares. Templeton Investment Counsel, LLC
holds sole voting power and sole dispositive power as to 5,600 shares.
Franklin Private Client Group, Inc. holds sole dispositive power as to
8,781. The address of Franklin Resources is One Franklin Parkway, San
Mateo, CA 94403.

(7) The source of this information is Amendment No. 2 to Schedule 13G dated
January 11, 2002, filed with the Commission by Mellon Financial Corporation
("Mellon"). Such Schedule 13G reports that Mellon holds sole voting power
as to 2,368,666 shares, shared voting power as to 317,100 shares, sole
dispositive power as to 2,615,066 shares and shared dispositive power as to
154,500 shares. Mellon declared in its filing that the shares are
beneficially owned by Mellon and its direct or indirect subsidiaries in
their various fiduciary capacities and that no account holds more than 5%
of the Company's Class A Stock. The address of Mellon is One Mellon Center,
Pittsburgh, Pennsylvania 15258.

(8) The source of this information is Amendment No. 3 to Schedule 13G dated
February 1, 2002, filed with the Commission by Morgan Stanley Dean Witter &
Co. ("Morgan Stanley"). Such Schedule 13G reported that Morgan Stanley
holds shared voting power as to 1,549,554 shares, and shared dispositive
power with respect to all shares. Morgan Stanley declared in its filing
that the shares are held in various accounts managed by Morgan Stanley and
that no account holds more than 5% of the Company's Class A Stock. The
address of Morgan Stanley is 1585 Broadway, New York, NY 10036.

(9) The source of this information is Schedule 13G dated February 6, 2002,
filed with the Commission by Perkins, Wolf, McDonnell & Company
("Perkins"). Such Schedule 13G reports that Perkins holds sole voting power
and sole dispositive power as to 3,300 shares and, shared voting power and
shared dispositive power as to 2,461,475 shares. The address of Perkins is
310 S. Michigan Avenue, Suite 2600, Chicago, Illinois 60604.

(10) The shares reflected in the table include shares that the executive officer
or director has the right to acquire upon the exercise of stock options
granted under the Stock Option Plan or the Director Stock Option Plan which
are exercisable as of February 19, 2002 or within 60 days thereafter as
follows: Ms. Wiik -- 100,500 shares, Mr. Smith -- 125,500 shares, Mr.
Wrobel -- 44,500 shares, Mr. Cella -- 10,000 shares, each of

Messrs. Cohen, Gibian, Hess, Tandberg and Tombros -- 15,000 shares, each of
Messrs. Broymer and Hornnaess -- 11,000 shares, Mr. Sissener -- 5,000
shares. All executive officers and directors as a group -- 483,325 shares.

(11) Beneficial ownership of the Company shares by A. L. Industrier is not
included. Mr. Sissener is Chairman of the Board of A.L. Industrier and
together with A/S Swekk (Mr. Sissener's family-controlled private holding
company) ("Swekk") and certain of his relatives, beneficially owns
approximately 51% of A.L. Industrier's outstanding ordinary shares entitled
to vote and, accordingly, may be deemed a controlling person of A.L.
Industrier.

(12) Includes shares held by, Mr. Sissener, the estate of his wife, Swekk, and
EWS Stiftelse, a trust established for the benefit of members of the family
of Mr. Sissener.

(13) The Company has been advised by Mr. Smith that his children own 5,150 of
the shares of Class A Stock listed for Mr. Smith but that he has voting
power over such shares.

(14) Mr. Tandberg and Ms. Wiik also own 39 and 580 shares, respectively, of A.L.
Industrier.

ELECTION OF DIRECTORS

In March of 2002, the Company's Board of Directors passed a resolution
which will increase the number of Class B Directors to seven effective as of the
date of the 2002 Annual Meeting. The current term of all of the Company's
directors expires at the 2002 Annual Meeting. Mr. Gibian, a Class A Director,
has informed the Board of Directors that he will not stand re-election as he
intends to retire from the Company's Board of Directors at the end of his term.

The Company's Board of Directors intends to cause the nomination of the
nominees listed below under "Nominees for Directors; Nominees for Class A
Directors" and all proxies received from holders of the Class A Stock will be
voted FOR the election of such nominees as Class A Directors, except to the
extent that persons giving such proxies withhold authority to vote for such
nominees.

Each director is to be elected to hold office until the next Annual Meeting
of Stockholders and until his successor is chosen and qualified.

A.L. Industrier, which beneficially owns 100% of the shares of Class B
Stock, has advised the Company that it intends to vote its shares in favor of
the nominees listed below under "Nominees for Directors; Nominees for Class B
Directors," which would assure their election as Class B Directors.

NOMINEES FOR DIRECTORS

The Company believes that each of the nominees for director will be able to
serve. If any of the nominees for Class A Directors would be unable to serve,
the enclosed proxy confers authority to vote in favor of such other person or
persons as the Company's Class A Directors at the time recommends to serve in
place of the person or persons unable to serve. Similarly, if any of the
nominees for Class B Directors would be unable to serve, the proxy provided to
Class B shareholders confers authority to vote in favor of such other person or
persons as the Company's Class B Directors at the time recommends to serve in
place of the person or persons unable to serve.

Nominees for Class A Directors. The name, age, principal business
experience during the last five years, and certain other information regarding
each of the persons proposed to be nominated for election as a Class A Director
are listed below. Mr. Jacobs is not presently a director of the Company.

NAME AGE PRINCIPAL BUSINESS EXPERIENCE
---- --- -----------------------------

Erik Hornnaess................. 65 Director of the Company since 1998. Area Vice President
(Europe, Middle East and Africa) of the Diagnostic Division
of Abbott Laboratories, the pharmaceutical company, from
1982 to 1997. Director of Qiagen, The Netherlands. Member
of the Company's Audit Committee.
William I. Jacobs.............. 60 Managing Director and Chief Financial Officer of NewPower
Holding, a retail energy company, from 2000 to 2002. Senior
Executive Vice President of MasterCard International, the
credit card company, from 1995 to 2000. Director of
Investment Technology Group, Global Payments, Exide
Technologies and NewPower Holding.

NAME AGE PRINCIPAL BUSINESS EXPERIENCE
---- --- -----------------------------

Peter G. Tombros............... 59 Director of the Company since 1994. Former Director,
President and Chief Executive Officer of Enzon, Inc., a
developer and marketer of bio-pharmaceutical products, from
April 1994 to 2001; and presently, performing certain
transition services for Enzon. A Vice President of Pfizer,
Inc., the pharmaceutical company, from 1986 to 1994 with
responsibility for corporate strategic planning and
investor relations from 1990 to 1994; an Executive Vice
President of Pfizer Pharmaceuticals Division, from 1986 to
1990; a Senior Vice President and General Manager of Roerig
Division of Pfizer and various other positions with Pfizer
Inc., from 1968 to 1986. Recently named, Chief Executive
Officer and director of VivoQuest, a private
biopharmaceutical company. Director of NPS Pharmaceuticals,
Inc., a biotechnology company, and Cambrex, a supplier of
human health and bioscience products to the life sciences
industry. Chairman of the Company's Compensation Committee,
member of the Executive and Finance and Audit Committees.

Nominees for Class B Directors. The name, age, principal business
experience during the last five years, and certain other information regarding
each of the persons proposed to be nominated for election as a Class B Director
are listed below. Mr. Tonne is not presently a director of the Company.

NAME AGE PRINCIPAL BUSINESS EXPERIENCE
---- --- -----------------------------

Oyvin A. Broymer............... 53 Director of the Company since 1998. Private consultant
since 2000 Executive Vice President, Leif Hoegh & Co., a
shipping company, from 1996 to 2000. Executive Vice
President, Hafslund Nycomed, a pharmaceutical company, from
1989 to 1996; Chief Financial Officer, Hafslund Nycomed,
from 1980 to 1989. Member of the Company's Audit Committee.
I. Roy Cohen................... 79 Director of the Company since 1975. Consultant to the
Company from January 1991 to December 2001; Chairman of the
Office of the Chief Executive of the Company July 1991 to
June 1994; Vice Chairman of the Board of Directors of the
Company January 1991 to December 31, 1992; President and
Chief Executive Officer of the Company 1976 to January
1991. Chairman of the Company's Executive and Finance
Committee, member of the Company's Compensation Committee.
Glen E. Hess................... 60 Director of the Company since 1983. Partner in the law firm
of Kirkland & Ellis since 1973. Member of the Company's
Compensation and Executive and Finance Committees.

NAME AGE PRINCIPAL BUSINESS EXPERIENCE
---- --- -----------------------------

Einar W. Sissener.............. 73 Chairman of the Board since 1975. Consultant to the Company
since July 1999. Chief Executive Officer from June 1994 to
June 1999. Member of the Office of the Chief Executive of
the Company from July 1991 to June 1994. Chairman of the
Office of the Chief Executive from June 1999 to December
1999. President, Alpharma AS from October 1994 to March
2000. President, Apothekernes AS (now A.L. Industrier AS)
from 1972 to 1994. Chairman of A.L. Industrier AS since
November 1994. Member of the Company's Compensation and
Executive and Finance Committees.
Erik G. Tandberg............... 72 Director of the Company since 1994. Partner in Corporate
Development International, a consulting partnership
specializing in international searches for companies, since
1986. President of Arco Chemical Europe Inc., a chemical
company, 1982 to 1986. Member of the Company's Audit
Committee.
Tore Tonne..................... 53 Minister of Health, Norway March 2000 to October 2001.
President and Chief Executive Officer of Norway Seafoods
ASA, a seafood products company, from 1998 to 2000.
Chairman and Partner of Saga Securities ASA 1997 to 1998.
President and Chief Executive Officer of The Norwegian
Industrial and Regional Development Fund (SND) 1993 to
1997.
Ingrid Wiik.................... 57 President and Chief Executive Officer and director of the
Company since January 2000. President of Alpharma's
International Pharmaceuticals Division 1994 to January
2000; President, Pharmaceutical Division of Apothekernes
Laboratorium A.S. 1986 to 1994.

BOARD OF DIRECTORS AND COMMITTEES

BOARD MEETINGS AND ATTENDANCE OF DIRECTORS

The Company's Board of Directors held twelve (12) meetings in 2001. Each
person who served as a director in 2001 attended at least 75% of the aggregate
of (i) the total number of meetings of the Company's Board of Directors held
while such person was a member and (ii) the total number of meetings held by all
committees of the Company's Board of Directors on which such person served while
such person was a member of such committee.

COMMITTEES OF THE BOARD

Pursuant to its bylaws, the Company has established standing Audit,
Executive and Finance and Compensation Committees.

The Audit Committee reviews and makes recommendations to the Company's
Board of Directors regarding internal accounting and financial controls and
accounting principles, auditing practices, the engagement of independent public
accountants and the scope of the audit to be undertaken by such accountants. In
addition, the Company's Board of Directors has adopted a resolution requiring
the Audit Committee to review transactions between the Company and A.L.
Industrier (the beneficial owner of all the outstanding Class B Stock) (or their
respective subsidiaries) involving more than $50,000 and to report to the
Company's Board of Directors regarding whether such transactions are fair to the
Company. Such resolution also requires prior approval of the Audit Committee for
any transaction with A.L. Industrier which involves $500,000 or more, except
that prior approval of the Audit Committee is required for any sale or transfer
of assets other than inventory sold or transferred in the ordinary course of
business. The Audit Committee also monitors the Company's Business Conduct
Guidelines. The bylaws of the Company require that a majority of the members of
the Audit Committee not be employees of the Company or A.L. Industrier or
otherwise have a material relationship with either of them. The current members
of the Audit Committee are Messrs. Thomas G. Gibian (Chairman), Erik G.
Tandberg, Peter G. Tombros, Erik Hornnaess and Oyvin A. Broymer. The Audit
Committee held 16 meetings in 2001.

The Executive and Finance Committee is generally empowered, to the fullest
extent permitted by Delaware law, to exercise all power and authority vested in
the Company's Board of Directors. By resolution, the Company's Board of
Directors has specifically authorized and requested the Executive and Finance
Committee to act on behalf of the Board in emergency situations where the full
Board is unable to meet, to discuss and consult with the Chief Executive Officer
of the Company as requested by such officer and to act with respect to such
matters as the Board may from time to time designate. Additionally, the
Executive and Finances Committee reviews and has the authority to make
recommendations to the Board of Directors with respect to raising funds required
in the operation of the Company. Until May 30, 2001 the Executive and Finance
Committee existed as two separate committees (the Executive Committee and the
Finance Committee). The current members of the Executive and Finance Committee
are Messrs. I. Roy Cohen (Chairman), Glen E. Hess, Einar W. Sissener and Peter
G. Tombros. As separate committees, the Executive Committee members were Messrs.
I. Roy Cohen (Chairman), Erik Hornnaess and Einar W. Sissener and the Finance
Committee members were Messrs. I. Roy Cohen (Chairman), Glen E. Hess and Einar
W. Sissener. As separate committees, in 2001 the Executive Committee held 1
meeting and also communicated informally and the Finance Committee held 20
meetings. After the two committees were combined the Executive and Finance
Committee held 11 meetings and communicated informally throughout the remainder
of the year.

The Compensation Committee has the authority of the Company's Board of
Directors with respect to the compensation, benefit and employment policies and
arrangements for executive officers and other highly paid personnel of the
Company, except the Chief Executive Officer as to whom the Committee makes
compensation recommendations to the Company's Board of Directors. The Committee
also has authority with respect to the compensation and benefit plans generally
applicable to the Company's employees, and two members of the committee (Messrs.
Tombros and Gibian) serve as the committee administering the 1997 Stock Option
and Appreciation Right Plan, as amended, with authority to grant options to
eligible employees of the Company and its subsidiaries. The Compensation
Committee held 11 meetings in 2001.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The members of the Compensation Committee are Messrs. Peter G. Tombros
(Chairman), I. Roy Cohen, Thomas G. Gibian, Glen E. Hess and Einar W. Sissener.
Mr. Cohen is a former executive officer of the Company, having served as
President and Chief Executive Officer from 1976 to January, 1991 and as a member
of the Office of the Chief Executive from July, 1991 through June, 1994. He
currently serves as Chairman of the Executive and Finance Committee. (See
"Certain Relationships and Related Transactions" for a description of Mr.
Cohen's prior consulting agreements). Mr. Sissener currently serves as Chairman
of the Board of the Company and as a consultant to the Company and, in recent
years has been the Company's Chief Executive Officer (see "Nominee for Class B
Directors" and "Certain Relationships and Related Transactions" for further
information). Mr. Hess' professional corporation is a partner of Kirkland &
Ellis, a law firm which since 1978 has performed and continues to perform
significant legal services for the Company.

DIRECTORS' COMPENSATION

Pursuant to an agreement between the Company and Mr. Sissener, in 2001 Mr.
Sissener received $150,000 for serving as Chairman of the Company's Board of
Directors (and as a director of certain of the Company's subsidiaries). See
("Certain Relationships and Related Transactions" for a description of Mr.
Sissener's agreement.) During 2001, each director (except Mr. Sissener and Ms.
Wiik) received directors' fees of $22,500 and each director received a grant of
an option to acquire 5,000 shares of Class A Stock pursuant to the Director
Stock Option Plan. In addition, each director (other than Mr. Sissener and Ms.
Wiik) received $1,200 for each Board meeting attended in person, $600 for each
Committee meeting attended in person and one-half of the applicable fee for each
meeting attended by telephone (with certain exceptions). The Chairman of each of
the Audit, Executive and Finance and Compensation Committees received an
additional $7,500. The Chairman of the Finance Committee received $7,500 prior
to such committee's combination with the Executive Committee. The same
compensation arrangements will continue in 2002.

PROPOSAL TO AMEND THE STOCK OPTION PLAN

GENERAL

The Stock Option Plan of the Company originally was adopted by the
Company's Board of Directors on September 26, 1983 and approved by the Company's
stockholders on January 25, 1984. The Plan has been amended in various respects
(including changing the name of the Plan to "1997 Incentive Stock Option and
Appreciation Right Plan"), with certain amendments having been approved by
stockholders. As of April 3, 2002, the Plan provided that no more than 6,500,000
shares were available for grant under the Plan of which 2,200,404 had been
issued in the exercise of options since 1983. At such date a total of 3,679,798
shares were reserved for issuance pursuant to outstanding options under the Plan
and 620,548 shares were available for
12

the issuance of future options to be granted under the Plan. The Company's Board
of Directors or the Executive and Finance Committee of the Board of Directors
(under its powers granted by the Board of Directors) has approved an amendment
of the Plan which if adopted by the stockholders will (i) increase the maximum
number of shares available for grant under the plan to 8,000,000 shares and
(ii) will extend the term of the Plan to December 31, 2010. At the Annual
Meeting a resolution will be submitted seeking approval of the stockholders for
these amendments.

The purpose of the Plan is to enhance the Company's ability to attract,
retain and provide incentive to present and future executive, managerial,
marketing, technical and other key employees of the Company and its subsidiaries
by affording such employees an opportunity to acquire or increase their
proprietary interest in the Company through acquisition of shares of its Class A
Stock or units based on the value of the Class A Stock.

The Company's Board of Directors believes that the Proposal will further
the long term purpose of the Plan. Information regarding options granted during
the last fiscal year to each named executive officer is set forth below under
"Information Regarding Executive Compensation -- Summary Compensation Table" and
"Grants of Options."

The number of shares underlying options granted during 2001 to all current
executive officers as a group and all employees (including executive officers)
as a group were 210,000 shares and 803,775 shares, respectively. The Plan does
not permit options to be granted to directors who are not employees although
such directors may receive options under the Non-Employee Director Option Plan.
See "Board of Directors and Committees -- Directors Compensation."

The grant of options or units under the Plan is determined by the Stock
Option Committee and thus future grants to any individual under the Plan cannot
be determined. As of April 3, 2002 approximately 240 people held options under
the Plan. In January of 2002, 288,690 options were granted under the Plan to 53
key personnel in lieu of the cash bonus opportunity under the Company's cash
bonus plan for the first six months of 2002. In April of 2002, 857,800 options
were granted under the Plan to 223 key personnel as part of a regularly
scheduled option grant.

Approval of the proposal to amend the Plan requires that a majority of the
votes cast by the holders of shares of the Class A Stock and Class B Stock,
voting together, present and entitled to vote at the meeting be votes for
approval. A.L. Industrier has advised the Company that it intends to vote its
shares in favor of the proposal, which will assure its approval. The material
features of the Plan, as amended (including the amendment being proposed), are
described below.

THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR AMENDMENT
TO THE STOCK OPTION PLAN.

SUMMARY DESCRIPTION OF THE COMPANY'S 1997 INCENTIVE STOCK OPTION AND
APPRECIATION RIGHT PLAN

Attached as an appendix to this Proxy Statement is a copy of the 1997
Incentive Stock Option and Appreciation Right Plan (hereinafter referred to as
the "Plan") and the following summary description of the Plan (including the
proposed amendments) is qualified in its entirety by reference to such appendix.

General. The Plan provides for the issuance by a committee of the
Company's Board of Directors appointed for such purpose (the "Committee") of
options to acquire a maximum of 8,000,000 shares of the Company's Class A Stock
and stock appreciation units which entitle the grantee to receive a payment
equal to the difference between (i) the base value and (ii) the fair market
value of a share of Class A Stock on the
13

maturity date (as defined in the Plan) of the unit. The Plan is administered by
a committee of the Company's Board of Directors appointed for such purpose (the
"Committee"). The individuals who are eligible to participate in the Plan are
such executive, managerial, marketing, technical and other key employees of the
Company and its subsidiaries as the Stock Option Committee determines from time
to time. In the discretion of the Committee, options granted under the Plan may
be either "incentive stock options" as such term is defined in Section 422 of
the United States Internal Revenue Code of 1986, as amended ("Incentive Stock
Options"), or options which do not meet such definition. The number of shares
which may be subject to options granted or on which units may be issued under
the Plan shall be determined by the Committee in its discretion and shall be
subject to adjustment for any stock splits, recapitalization or other changes in
the Company's capital structure. Options or units for more than 100,000 shares
(subject to adjustment for any stock splits, recapitalization and other changes
in the Company's capital structure) may not be granted to any participant in any
taxable year.

Options. At the time the option is granted, the Committee specifies the
price at which shares may be purchased pursuant to any option, and such price
may not be less than the fair market value of the shares on the date that the
option is granted. The exercise price may be paid in cash or by delivery of
shares of Class A Stock previously owned by the optionee having a fair market
value equal to the exercise price of the options being exercised. The Committee
also determines the term of each option, which in no event may exceed ten years
(in the case of an Incentive Stock Option) or ten years and one month (in the
case of any other option) from the date of grant. If for any reason the full
number of shares covered by any option are not issued before the option expires
or terminates, shares not issued under such option are again available for the
grant of options under the Plan.

Each option may be exercised from time to time during its term, in part or
in whole, subject to such vesting requirements and any other limitations that
the Committee, in its discretion, may specify at the time of grant. Unless the
Committee otherwise determines at the time of grant, options become exercisable
(or vest) at the rate of 25% per year that the employee holds such options so
that options do not become fully exercisable until four years from the date of
grant. Subject to certain limitations, the Committee may, in its discretion: (i)
accelerate the time at which any outstanding option or part thereof shall become
exercisable and (ii) extend the time during which any outstanding option may be
exercised, provided that no option may be exercised more than ten years (in the
case of an Incentive Stock Option) or ten years and one month (in the case of
any other option) after the date of grant.

Stock Appreciation Units. Under the Plan the Committee is given discretion
to grant units having such maturity date as the Committee may specify (including
units which are "exercisable" by the grantee through his or her selection of the
maturity date). The number of units granted and the terms and conditions of all
units shall be determined by the Committee. The base value of a unit shall not
be less than the fair market value of a share of Class A Stock on the date of
grant and no unit shall have a maturity date later than ten years and one month
after the date of grant. Unless the Committee shall otherwise determine, each
unit shall have a base value equal to the fair market value of the Class A Stock
on the date of grant, shall have a maturity date which is the fifth anniversary
of the date of grant and shall provide that the grantee is not entitled to
payment unless such employee has remained an employee of the Company from the
date of grant to the maturity date (except in the event of death or retirement).

Transferability of Options. Options and units are not transferable
otherwise than by will or the law of descent and distribution, except to such
transferees and on such terms as the Committee may approve.

Termination of Employment or Death of Optionee. Except as expressly
provided in the Plan, options terminate of the earlier of: (i) the date of
expiration thereof, (ii) immediately upon termination of the employment
relationship between the Company and the optionee for cause, or (iii) 30 days
(or up to two years if the Committee so provides) after termination of the
employment relationship between the Company and the optionee without cause for
any reason other than death, retirement in good standing or disability.

If an optionee dies while in the employ of the Company and before the date
of expiration of an option, such option terminates on the earlier of such date
of expiration or two years following the date of such death. After the death of
an optionee, his or her executors or administrators have the right, at any time
prior to the termination of such option, to exercise such option to the extent
that such option was vested immediately prior to his or her death.

If the optionee is retired in good standing from the employment of the
Company for reason of age or disability before the date of expiration of an
option, such option terminates on the earlier of such date of such expiration or
a date from 90 days to two years (as the Committee determines) after the date of
such retirement. In the event of such retirement the optionee has the right
prior to the termination of such option to exercise the option to the extent to
which he or she was entitled to exercise such option immediately prior to such
retirement.

Tax Consequences. The following discussion is intended only as a brief
summary of the United States Federal income tax consequences of the grant and
exercise of options and units. The discussion addresses only the United States
Federal income tax consequences to employees who are citizens or residents of
the United States and who perform services within the United States. Some
employees who are employees of the Company's foreign subsidiaries may be subject
to tax under the law of the country where they are citizens or residents, which
may differ significantly from the United States income tax law. The laws
governing the tax aspects of stock options and stock appreciation rights are
highly technical, and such laws are subject to change at any time, which could
be retroactive in nature.

The Committee has the discretion to grant either (i) Incentive Stock
Options with the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended, or (ii) options which do not qualify as Incentive Stock Options and
which shall be referred to herein as "nonstatutory options." The United States
income tax consequences will vary depending on which type of option is granted.

Tax Consequences of Incentive Stock Options to United States Citizens or
Residents. An optionee generally will not recognize taxable income or loss on
the grant or exercise of an Incentive Stock Option, but he may incur alternative
minimum tax liability on exercise of the Incentive Stock Option. Neither the
Company nor any subsidiary will be entitled to any deduction on the grant or
exercise of an Incentive Stock Option.

An optionee's tax consequences from the sale or other disposition of shares
acquired on the exercise of an Incentive Stock Option will depend on when such
sale or disposition occurs. If the optionee holds the option shares for more
than two years after the Incentive Stock Option was granted and for more than
one year after the Incentive Stock Option was exercised (the "Required Holding
Periods"), he will recognize long-term capital gain or loss when he sells or
disposes of his shares equal to the difference between the proceeds he receives
and his tax basis in the option shares (generally the exercise price paid for
the shares, except as otherwise discussed below). In such case, neither the
Company nor any subsidiary will be entitled to a deduction on the optionee's
sale or disposition of his shares.

If an optionee sells the shares acquired upon exercise of an option without
satisfying the Required Holding Periods (a "Disqualifying Disposition"), he
generally will recognize ordinary taxable income, and the Company, or a United
States subsidiary, if the subsidiary is the optionee's employer, will be
entitled to a deduction for the amount of ordinary income taxed to the optionee.
The amount of ordinary income taxable to the optionee (and the corresponding
deduction) is calculated by deducting the option price from the lesser of (i)
the fair market value of the shares on the exercise date and (ii) the price at
which the optionee sells or otherwise disposes the shares (unless such sale or
disposition is to a related party, in which case the fair market value must be
used even if the sales price is lower). If the price at which the optionee sells
the shares exceeds the shares' fair market value on the exercise date, the
excess will be taxed as capital gain. This capital gain will be either long or
short-term depending on whether the optionee held the shares for more than one
year. Neither the Company nor any subsidiary will be entitled to a deduction for
the capital gain.

If an optionee delivers previously-acquired Class A Stock (other than stock
acquired upon exercise of an Incentive Stock Option and not held for the
Required Holding Periods) in payment of all or part of the option price of an
Incentive Stock Option, the optionee generally will not be required to recognize
as taxable income or loss any appreciation or depreciation in the value of the
previously acquired stock after its acquisition date. The optionee's tax basis
in, and holding period (for capital gain, but not Disqualifying Disposition,
purposes) for, the previously acquired stock surrendered carries over to an
equal number of the option shares received on a share-for-share basis. Shares
received in excess of the number of shares surrendered have a tax basis equal to
the amount paid (if any) in excess of the previously-acquired shares used to pay
the exercise price, and the holding period of those excess shares will begin on
the date of exercise. Proposed regulations provide that where an Incentive Stock
Option is exercised using previously-acquired stock, a later Disqualifying
Disposition of the shares received will be deemed to have been a disposition of
the shares having the lowest basis first.

If an optionee pays the exercise price of an Incentive Stock Option in
whole or in part with Class A Stock that was previously acquired upon the
exercise of an Incentive Stock Option and that has not been held for the
Required Holding Periods, the optionee will recognize ordinary taxable income
with respect to the shares surrendered under the rules applicable to
Disqualifying Dispositions. The Company will be entitled to a corresponding
deduction. The optionee's basis in the shares received in exchange for the
shares surrendered will be increased by the amount of ordinary income recognized
by the optionee.

Tax Consequences of Nonstatutory Options and Stock Appreciation Units to
United States Citizens or Residents. In general, upon the grant of a
nonstatutory option or unit, the grantee will not recognize taxable income or
loss, and neither the Company nor any subsidiary will be entitled to a
deduction.

Upon the exercise of a nonstatutory option, the amount by which the fair
market value of the shares at the time of exercise exceeds the option price will
constitute ordinary taxable income to the optionee. Payment of amounts due to an
employee pursuant to a stock appreciation unit will constitute ordinary taxable
income to the employee at the time of payment. The Company, or if the optionee
is employed by a subsidiary of the Company, the subsidiary, will be entitled to
a corresponding deduction. In the event the Company makes payment pursuant to a
unit in the form of shares of Class A Stock, the employee's basis in such stock
will equal the fair market value thereof on the date of payment.

share-for-share basis. The excess of the fair market value of the shares
received over the option exercise price constitutes compensation taxable to the
optionee as ordinary income. Such fair market value is determined on the date of
exercise. Shares received in excess of the number of shares surrendered have a
tax basis equal to their fair market value on the exercise date, and their
holding period begins on the exercise date. The Company generally is entitled to
a tax deduction equal to the compensation income recognized by the optionee.

DURATION

Options may not be granted under the plan after December 31, 2010.

PROPOSAL TO AMEND THE DIRECTOR STOCK OPTION PLAN

GENERAL

The Director Stock Option Plan of the Company originally was adopted by the
Company's Board of Directors on March 14, 1996 and approved by the Company's
stockholders on May 30, 1996. The Plan has been amended in various respects,
with the amendments having been approved by stockholders. As of April 3, 2002,
the Plan provided that no more than 150,000 shares were available for grant
under the Plan. At such date a total of 142,000 shares were reserved for
issuance pursuant to outstanding options under the Plan, and no shares had been
issued pursuant to options under the Plan. The Company's Board of Directors or
the Executive and Finance Committee of the Board of Directors (under its powers
granted by the Board of Directors) has approved an amendment of the Plan which,
if adopted by the stockholders, will (i) increase the number of shares available
for awards thereunder by 200,000 shares, (ii) extend the term of the Plan until
December 31, 2010, (iii) increase the maximum amount of shares of Class A Common
Stock as to which a director is eligible to receive options, to 10,000 and (iv)
permit directors to transfer options to purchase Class A Common Stock upon terms
and conditions and to transferees as approved by the Director Option Committee.
At the Annual Meeting a resolution will be submitted seeking approval of the
stockholders for these amendments.

The purpose of this Plan is to promote the interests of the Company (i) by
tying the compensation of directors more directly 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.

For information regarding options granted during the last fiscal year to
each director who was not an employee of the Company see "Board of Directors and
Committees -- Directors Compensation". Directors who are also employees of the
Company are not eligible for the grant of options under the Director Stock
Option Plan but may receive options under the Stock Option Plan.

Approval of the proposal to amend the Director Stock Option Plan requires
that a majority of the votes cast by the holders of the shares of the Class A
Stock and Class B Stock, voting together, present and entitled to vote at the
meeting be votes for approval. A.L. Industrier has advised the Company that it
intends to vote its shares in favor of the proposal, which would assure its
approval. The material features of the Director Stock Option Plan, as amended
(including the amendment being proposed), are described below.

THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR AMENDMENT
TO THE DIRECTOR STOCK OPTION PLAN.

SUMMARY DESCRIPTION OF THE COMPANY'S DIRECTOR STOCK OPTION PLAN

Attached as an appendix to this Proxy Statement is a copy of the Director
Stock Option Plan and the following summary description of the Plan (including
the proposed amendments) is qualified in its entirety by reference to such
appendix.

General. The Director Stock Option Plan provides for the issuance of
options to acquire a maximum of 350,000 shares of the Company's Class A Stock at
fair market value of the shares on the date of grant.

Options. At the time the option is granted, the Board of Directors
specifies the price at which shares may be purchased pursuant to any option, and
such price may not be less than the fair market value of the shares on the date
that the option is granted. The exercise price may be paid in cash or by
delivery of shares of Class A Stock previously owned by the optionee having a
fair market value equal to the exercise price of the options being granted.

GRANTING OF DIRECTOR OPTIONS

Each Director who is not an employee of the Company, may at the discretion
of the Board of Directors, be awarded an option to purchase up to 10,000 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 may, at the
discretion of the Board of Directors receive as of the date of such election or
appointment an option to purchase a maximum of a pro rata number of shares.

TERMS OF DIRECTOR OPTIONS: VESTING

Each Option under the Director Stock Option Plan shall have a term
determined by the Board of Directors, which may not be longer than ten years
from the date of grant (the "Option Term"); provided that if a director ceases
to be a director for any reason, all of the Options held by such Director shall
terminate on the earlier to occur of (i) the end of the Option Term or (ii) the
first anniversary of the date on which such individual ceases to serve as a
director or, if such individual has been a director for five or more years or
ceases to be a director on account of death or disability on the fifth such
anniversary (the "Early Termination Date"). Each 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 a person ceases to be director for reason of
disability or death prior to such vesting date, a pro rata portion of any
unvested Options held by such director shall vest as of the day preceding the
date such person ceases to be a director for such reason.

TRANSFERABILITY OF DIRECTOR OPTIONS

Options shall not be transferable other than upon such terms and conditions
and to such transferee as the Director Options Committee may approve (pursuant
to provisions of an option agreement approved by the Director Options Committee,
or upon request in individual cases).

TAX CONSEQUENCES

The following discussion is intended only as a brief summary of the United
States Federal income tax consequences of the grant and exercise of options. The
discussion addresses only the United States Federal income tax consequences to
directors who are citizens or residents of the United States and who perform
services within the United States. Some directors may be subject to tax under
the law of the country where they are citizens or residents, which may differ
significantly from the United States income tax law. The laws

governing the tax aspects of stock options are highly technical, and such laws
are subject to change at any time, which could be retroactive in nature.

Options granted to non-employee directors will be treated as "nonstatutory"
options. In general, upon the grant of a nonstatutory option, the grantee will
not recognize taxable income or loss, and the Company will not be entitled to a
tax deduction. Upon the exercise of a nonstatutory option, the amount by which
the fair market value of the shares at the time of exercise exceeds the option
price will constitute ordinary taxable income to the optionee, and the Company
will be entitled to a corresponding tax deduction.

If an optionee delivers previously-acquired Class A Stock, however
acquired, in payment of all or part of the option exercise price of a
nonstatutory option, the optionee generally will not, as a result of such
delivery, be required to recognize as taxable income or loss any appreciation or
depreciation in the value of the previously-acquired stock after its acquisition
date. The optionee's tax basis in and, the holding period for, the
previously-acquired stock surrendered carries over to an equal number of the
option shares received on a share-for-share basis. The excess of the fair market
value of the shares received over the option exercise price constitutes
compensation taxable to the optionee as ordinary income. Such fair market value
is determined on the date of exercise. Shares received in excess of the number
of shares surrendered have a tax basis equal to their fair market value on the
exercise date, and their holding period begins on the exercise date. The Company
generally is entitled to a tax deduction equal to the compensation income
recognized by the optionee.

DURATION

The Plan shall terminate on December 31, 2010 or by earlier action of the
Board of Directors.

PROPOSAL TO RATIFY APPOINTMENT OF
PRICEWATERHOUSECOOPERS LLP AS THE COMPANY'S ACCOUNTANTS

The Audit Committee of the Board of Directors and the full Board of
Directors has approved PricewaterhouseCoopers LLP as the Company's independent
accountants to audit its consolidated financial statements for the 2002 fiscal
year. During the 2001 fiscal year, PricewaterhouseCoopers LLP served as the
Company's independent accountants and also provided certain tax consulting and
other accounting services. The Company is not required to seek stockholder
approval for the appointment of its independent accountants, however, the Board
believes it to be sound corporate practice to seek such approval. If the
appointment is not ratified, the Audit Committee will investigate the reasons
for stockholder rejection and the Board will re-consider the appointment.

A representative of PricewaterhouseCoopers LLP will be present at the
Annual Meeting to respond to any questions. He will be given the opportunity to
make a statement if he desires to do so.

THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS THE COMPANY'S
INDEPENDENT ACCOUNTANT.

EXECUTIVE COMPENSATION

SUMMARY OF EXECUTIVE COMPENSATION

The following table (the "Summary Compensation Table") sets forth annual
and long-term compensation paid, or accrued for, the executive officers named
below (the "named executive officers") by the Company or its subsidiaries during
2001, 2000 and 1999:

SUMMARY COMPENSATION TABLE

LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------------ OTHER ANNUAL ------------ ALL OTHER
NAME AND PRINCIPAL POSITION SALARY BONUS COMPENSATION OPTION/SARS COMPENSATION
DURING 2001(1) YEAR ($) ($)(2) ($) (#)(3) ($)(4)
--------------------------- ---- ------- ------- ------------ ------------ ----------------

Ingrid Wiik..................... 2001 690,000 -- * 40,000 36,522
President and Chief 2000 659,247 400,000 * 85,000 19,762
Executive Officer 1999 252,836 53,134 * 25,000 1,412

Michael J. Nestor............... 2001 106,875 467,862 * 20,000 14,314
Executive Vice President and
President, 2000 -- -- -- -- --
U.S. Human Pharmaceuticals 1999 -- -- -- -- --

Jeffrey E. Smith................ 2001 425,000 -- * 20,000 37,319
Executive Vice President,
Finance 2000 400,009 162,800 * 25,000 35,164
and Chief Financial Officer 1999 364,834 173,500 * 20,000 32,066

Robert F. Wrobel................ 2001 400,000 -- * 20,000 23,403
Executive Vice President,
Chief 2000 350,011 155,400 * 25,000 28,676
Legal Officer and Secretary 1999 252,923 118,800 * 20,000 19,207

Richard J. Cella................ 2001 255,000 -- * 20,000 13,107
Executive Vice President and 2000 67,308 26,980 * 20,000 1,955
Chief Information Officer 1999 -- -- -- -- --

Bruce I. Andrews................ 2001 505,000 -- * 20,000 819,952
Former Vice President and 2000 479,034 -- * 45,000 24,689
President, Animal Health
Division 1999 394,761 197,500 * 22,500 32,712

Thomas L. Anderson.............. 2001 484,374 -- * 20,000 1,473,775
Former Vice President and 2000 430,000 313,900 * 45,000 20,690
President, U.S. 1999 404,270 202,000 * 22,500 24,174
Pharmaceuticals Division

---------------
(1) Includes those who in fiscal 2001 were the Chief Executive Officer or one of
the four most highly compensated officers as measured by salary and bonus.
Also includes two former executive officers who would have been one of the
four most highly compensated executive officers if not for the fact that
they were not executive officers at the fiscal year ending December 31,
2001. Mr. Nestor joined the Company on October 8, 2001 and replaced Mr.
Anderson as Vice President and President, U.S.Pharmaceuticals Division. Mr.
Andrews resigned as Vice President and President, Animal Health Division
effective November 5, 2001. Mr. Cella joined the Company on September 18,
2000.

(2) The bonus amount shown for Mr. Nestor for 2001 includes an employment bonus
and a bonus earned in 2001.

(3) Reflects options granted under the Stock Option Plan. The Company has not
granted any stock appreciation rights ("SARs") to any of the named executive
officers in 1999, 2000 or 2001.

(4) Includes contributions by the Company to various employee profit-sharing,
stock purchase and savings plans. The amounts shown for 2001 include (a)
matching contributions under the Employee Stock Purchase Plan (Ms. Wiik
$13,200, Mr. Smith $8,490, Mr. Wrobel $7,981, Mr. Cella $5,098, Mr. Andrews
$10,100, and Mr. Anderson $9,100); (b) contributions to the savings plan
(Ms. Wiik $15,840, Mr. Smith $25,471, Mr. Wrobel $9,577, Mr. Cella $6,118,
Mr. Andrews $12,120, and Mr. Anderson $11,051); (c) taxable life insurance
premiums (Ms. Wiik $7,482, Mr. Nestor $314, Mr. Smith $3,357, Mr. Wrobel
$5,845, Mr. Cella $1,891, Mr. Andrews $7,482, and Mr. Anderson $1,794); (d)
transportation costs associated with Mr. Nestor's travel between North
Carolina, New Jersey and Baltimore in the amount of $5,000 and hotel costs
until Mr. Nestor relocates in the amount of $9,000 (both amounts since the
date of employment with the Company); (e) payments related to Mr. Andrews'
separation agreement in the amount of $790,250 to be paid through April 19,
2002; and (f) payments related to Mr. Anderson's separation agreement in the
amount of $1,451,831 to be paid through January 15, 2004.

* The incremental cost of the perquisites for each named executive in each of
2001, 2000 and 1999 was not in excess of the lesser of (a) $50,000 or (b)
10% of the amounts reported as Salary and Bonus for such year in the Summary
Compensation Table. The Company provides automobile allowance, car insurance
reimbursement and financial planning reimbursement for its named executive
officers. Additionally, the Company made a payment to Ms. Wiik for vacation
earned in 2000 under a Norwegian compensation plan, and reimbursed Mr.
Anderson for personal taxes paid by him in connection with outside director
fees he paid over to the Company during 2001.

EMPLOYMENT AGREEMENTS

Ms. Wiik is a party to an employment agreement with the Company dated
October 26, 2000 which provides that in the event she is terminated for any
reason other than good cause or disability or she terminates due to a materially
adverse change in her responsibilities, she is entitled to receive base salary
and certain benefits for two years. (See "Compensation Report on Executive
Compensation" for further information.) Ms. Wiik participates in all the
employee benefits available to executives of the Company except the Company's
Pension Plan (defined below). Upon retirement Ms. Wiik is entitled to receive a
defined retirement benefit that is determined primarily based on a percentage of
her base salary for twelve months prior to her retirement (see "Retirement
Plans" for further information).

Mr. Nestor is a party to an employment agreement with the Company dated
September 17, 2001 which provided Mr. Nestor with the option to purchase 20,000
shares of Class A Common Stock under the Company's Stock Option Plan and a
hiring bonus of $366,800, with an equal bonus amount to be paid on his second
anniversary with the Company. The arrangement further provides that in the event
Mr. Nestor is terminated other than for cause or if he elects to terminate his
employment as a result of experiencing a dimunition of responsibilities or
change in job title reflecting less responsibility or if he is terminated within
six months after a change in control of the Company or in the Company's Chief
Executive Officer, he is entitled to receive eighteen months of severance pay.
Mr. Nestor is entitled to certain relocation benefits including the cost of
travel between North Carolina, New Jersey and Baltimore until he relocates to
New Jersey and he participates in all of the employee benefits available to
executives of the Company.

Mr. Smith is a party to an employment agreement with the Company dated July
30, 1991 which provides that, if his employment is terminated by the Company for
any reason other than for cause, he is entitled to receive base salary and
certain benefits for one year. Mr. Smith participates in all of the employee

benefits available to executives of the Company. Upon retirement, the Company
will pay to Mr. Smith supplemental retirement benefits equal to the amount, if
any, by which the pension due under the Company's Non-Contributory Retirement
Plan without any limitation imposed by the Internal Revenue Service exceeds any
ceiling imposed by the Internal Revenue Service.

Mr. Wrobel is party to an employment agreement with the Company dated
October 8, 1997 which provides that, if his employment is terminated by the
Company for any reason other than for cause, he is entitled to receive base
salary and certain benefits for one year. Mr. Wrobel participates in all of the
employee benefits available to executives of the Company.

Mr. Cella is a party to an employment agreement with the Company dated
August 29, 2000 which provides that in the event Mr. Cella is terminated by the
Company for any reason other than for cause or within six months after a change
in control of the Company or a change in the Company's Chief Executive Officer,
he is entitled to receive base salary and certain benefits until the earlier of
twelve months following such termination or the date upon which he begins a new
job.

Mr. Andrews terminated his employment with the Company on December 31,
2001. A Separation Agreement with Mr. Andrews was executed on April 1, 2002. The
Separation Agreement provides Mr. Andrews with (i) a lump sum payment of
$757,500 equal to eighteen months of his full salary (at an annual rate of
$505,000 per annum) through June 30, 2003 ("Separation Period") which amount is
to be paid no later than April 15, 2002, (ii) continuation of certain insurance
benefits through the Separation Period, (iii) a lump sum payment of $27,750 for
executive car allowance and tax and financial planning reimbursement during the
Separation Period, which amount is to be paid no later than April 15, 2002 and
(iv) $5,000 in attorneys fees incurred in connection with legal advice relating
to the Separation Agreement. All of Mr. Andrews' vested options remained
exercisable until January 30, 2002. In exchange for these severance benefits,
Mr. Andrews has agreed to certain non-competition restrictions.

Mr. Anderson terminated his employment with the Company on January 15,
2002. A Separation Agreement with Mr. Anderson was executed on November 19,
2001. The Separation Agreement provides Mr. Anderson with (i) a payment of
$505,000 per year for the period through January 15, 2004, (ii) a payment of
$202,000 to be paid on April 1, 2003 in lieu of all payments under the Executive
Incentive Compensation Plan and (iii) a payment of $239,831 which was paid on
February 28, 2002 in recognition of stock options that would have become
exercisable had Mr. Anderson continued as an employee of the Company through
December 31, 2002. All of Mr. Anderson's vested options remained exercisable
until February 15, 2002. Mr. Anderson is entitled to outplacement services
through the earlier of accepting full time employment or January 15, 2003. In
exchange for these severance benefits, Mr. Anderson agreed to certain
non-competition restrictions.

SEVERANCE AND CHANGE IN CONTROL PLAN

Ms. Wiik, Mr. Nestor, Mr. Smith, Mr. Wrobel and Mr. Cella will receive
additional benefits pursuant to a severance and change in control plan, the
terms of which have been approved in principle by the Compensation Committee of
the Board of Directors subject to the adoption of a final plan anticipated to be
completed in 2002 (the "Severance Plan"). To the extent more favorable to the
executive officer, these benefits will be paid in lieu of the severance benefits
set forth in the employment agreements referred to above.

Pursuant to the terms of the Severance Plan, in the event Ms. Wiik is
terminated for any reason other than for cause, she is entitled to receive base
salary, bonus and certain benefits for twenty-four months and if she is
terminated as a result of a change in control of the Company, she is entitled to
receive salary and certain benefits for thirty-six months, subject to certain
tax limitations.

Additionally, the Severance Plan provides that in the event that an
Executive Officer, including Messrs. Nestor, Smith, Wrobel and Cella, (i) is
terminated for any reason other than for cause, such Executive Officer is
entitled to receive base salary, bonus and certain benefits for eighteen months
and (ii) is terminated as a result of a change in control of the Company, such
executive officer is entitled to receive base salary and certain benefits for
thirty months, subject to certain tax limitations.

The Severance Plan also provides for payments to be made to certain other
key employees of the Company in the event of termination for any reason other
than for cause or as a result of a change in control of the Company.

ANNUAL PERFORMANCE INCENTIVE PLAN

The Company has approved a Bonus Plan which applies to the second six
months of the 2002 fiscal year which provides that all executive officers and
key employees performing services for the Company will be entitled to receive a
cash bonus within a target range. Payment of the cash bonus is dependent on
achieving certain operating division or Company financial levels relative to
budget. In addition, all bonuses take into consideration certain individual
performance factors. Higher cash bonuses than the target level may be paid if
budgeted financial levels are exceeded but no cash bonuses will be paid if
minimum financial levels are not met. Ms. Wiik has a target bonus of 37.5% of
base salary. Messrs. Nestor, Smith, Wrobel and Cella have target bonuses of 25%
of base salary. These amounts are approximately 50% of the targets which would
have been provided if the Bonus Plan was applicable to the full year. In
addition, in lieu of the cash bonus opportunity for the first six months of
2002, all executive officers and other key employees received options to
purchase 288,690 shares of the Company's Class A Common Stock at an exercise
price of $25.40 under the Company's Stock Option Plan. See "Compensation
Committee Report on Executive Compensation".

GRANTS OF OPTIONS

The following table discloses, for the named executive officers certain
information with respect to options granted during 2001. All grants are options
under the Company's Stock Option Plan.

NUMBER OF
SHARES OF
CLASS A % OF TOTAL
COMMON SHARES
STOCK GRANTED TO POTENTIAL REALIZABLE VALUE
UNDERLYING EMPLOYEES AT ASSUMED ANNUAL RATES
OPTIONS IN FISCAL EXERCISE OF STOCK PRICE APPRECIATION
NAME GRANTED YEAR PRICE EXPIRATION DATE(1) FOR OPTION TERM
---- ---------- ---------- --------- ------------------ ---------------------------
5% 10%

Ingrid Wiik............ 40,000 4.98% $30.11 February 23, 2011 $757,401.60 $1,919,441.17
Michael Nestor......... 20,000 2.49% $29.53 October 8, 2011 $371,447.52 $ 941,311.73
Jeffrey E. Smith....... 20,000 2.49% $30.11 February 23, 2011 $378,700.80 $ 959,720.58
Robert F. Wrobel....... 20,000 2.49% $30.11 February 23, 2011 $378,700.80 $ 959,720.58
Richard Cella.......... 20,000 2.49% $30.11 February 23, 2011 $378,700.80 $ 959,720.58
Bruce I. Andrews(2).... 20,000 2.49% $30.11 February 23, 2011 $378,700.80 $ 959,720.58
Thomas L.
Anderson(3).......... 20,000 2.49% $30.11 February 23, 2011 $378,700.80 $ 959,720.58

---------------
(1) Options vest at the rate of 25% on each of the first four anniversaries of
the date of grant.

(2) Pursuant to the terms of Mr. Andrews' Separation Agreement, options which
had not exercised on or before January 30, 2002 were extinguished and are
not subject to further exercise.

(3) Pursuant to the terms of Mr. Anderson's Separation Agreement, options which
had not exercised on or before February 15, 2002 were extinguished and are
not subject to further exercise.

OPTION EXERCISES AND VALUES

The following table discloses, for the named executive officers, (a) the
number of shares acquired upon exercise of options or with respect to which such
options were exercised and the aggregate dollar value realized

upon such exercise and (b) the number and value of unexercised options, in each
case as of December 31, 2001.

NUMBER OF SHARES VALUE OF UNEXERCISED
NUMBER OF UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT 12/31/01 OPTIONS AT 12/31/01(1)
ACQUIRED ON --------------------------- ---------------------------------
NAME EXERCISE VALUE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE(2) UNEXERCISABLE(2)
---- ----------- -------------- ----------- ------------- -------------- ----------------

Ingrid Wiik........... 0 $ 0.00 69,250 103,750 $ 76,554.00 $ 0.00
Michael Nestor........ 0 $ 0.00 0 20,000 $ 0.00 $ 0.00
Jeffrey E. Smith...... 2,539 $ 28,208.29 99,250 58,750 $661,099.00 $43,280.00
Robert F. Wrobel...... 0 $ 0.00 26,500 50,500 $ 37,799.50 $ 7,574.00
Richard Cella......... 0 $ 0.00 5,000 35,000 $ 0.00 $ 0.00
Bruce I. Andrews(3)... 0 $ 0.00 39,676 78,750 $ 74,337.73 $59,510.00
Thomas L.
Anderson(4)......... 28,750 $296,459.00 26,250 71,250 $ 27,050.00 $27,050.00

---------------
(1) All grants are options under the Company's Stock Option Plan.

(2) Value is based on the closing price of a share of Class A Stock on December
31, 2001 ($26.45) minus the exercise price.

(3) Pursuant to the terms of Mr. Andrews' Separation Agreement, options which
had not exercised on or before January 30, 2002 were extinguished and are
not subject to further exercise.

(4) Pursuant to the terms of Mr. Anderson's Separation Agreement, options which
had not exercised on or before February 15, 2002 were extinguished and are
not subject to further exercise.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than ten percent of registered
class of the Company's equity securities, to file reports of ownership and
changes in ownership of the Company's stock on Forms 3, 4 and 5 with the
Securities and Exchange Commission ("SEC") and the New York Stock Exchange.
Officers, directors and greater than ten percent shareowners are required by SEC
regulation to furnish the Company with copies of all Forms 3, 4 and 5 they file.
Based on the review of such forms, the Company believes that during the 2001
fiscal year its officers, directors and greater than ten percent beneficial
owners complied with all Section 16(a) filing requirements with the exception of
three late reports for Mr. Nestor, Mr. Sissener and A.L. Industrier ("ALI"). Mr.
Nestor inadvertently did not report the purchase of 1,000 shares of Class A
Stock purchased on November 20, 2001 until a Form 4 filing on February 15, 2002.
ALI and Mr. Sissener inadvertently did not report the purchase of 2,372,897
shares of Class B Stock by ALI on October 5, 2001 until a Form 4 filing on March
11, 2002.

RETIREMENT PLANS

Ms. Wiik is not a participant in the Company's Pension Plan (as defined
below) pursuant to the terms of her employment agreement (see "Employment
Agreements".) She is entitled to receive from the Company upon retirement at age
60 an annual retirement benefit for each calendar year following retirement
equal to (i) 30% of her Base Compensation (defined below) plus (ii) inflationary
adjustments (which shall be the same as the adjustment for inflation provided in
the retirement plan for Alpharma AS for Norwegian employees) minus (iii) "Other
Retirement Benefits" (defined below). "Base Compensation" means annual

base salary during the twelve month period ending on the last day of the month
preceding retirement or disability (provided that if base salary shall have
changed during such twelve month period, Base Compensation shall mean the
average annual base salary weighted to reflect the number of days during which
each varying base salary was in effect). "Other Retirement Benefits" means
amounts Ms. Wiik is entitled to receive as retirement benefits under Norwegian
pension plans but does not include payments received under the 401(k) savings
plan or the deferred compensation plan maintained by the Company but does
include retirement benefits received under any governmental program or under any
insurance program funded by the Company or any of its subsidiaries or their
predecessors.

Messrs. Smith, Wrobel and Cella are participants in the Alpharma Inc.
Pension Plan (a qualified defined benefit plan) (the "Pension Plan"). Under the
Pension Plan, both salaried and hourly employees are eligible for benefits.
Participants are entitled to receive their specified annual benefit, in the form
of a life annuity or, at the election of participants, its actuarial equivalent
in certain other forms, commencing within one month of their 65th birthday. The
specified annual benefit is equal to (x) the sum of (i) 0.8% of the
participant's highest five-year Final Average Compensation (as defined below) up
to "covered compensation" ($37,212 for 2001) plus (ii) 1.45% of the
participant's highest five-year Final Average Compensation in excess of "covered
compensation", multiplied by (y) the number of years of benefit service (up to a
maximum of 30 years)). The Pension Plan also provides for an early retirement
benefit which is equal to the specified annual benefit described above, reduced
actuarially for each year by which the early retirement date precedes the normal
retirement date. Mr. Nestor will be eligible to participate in the Pension Plan
commencing July of 2002.

The following table sets forth the approximate annual retirement benefit
under the Pension Plan based on years of service and Final Average Compensation.

PENSION PLAN TABLE

YEARS OF SERVICE
-----------------------------------------
REMUNERATION(1) 15 20 25 30(2)
--------------- -------- -------- -------- --------

$250,000 50,747 67,662 84,578 101,494
$275,000 56,184 74,912 93,641 112,369
$300,000 61,622 82,162 102,703 123,244
$325,000 67,059 89,412 111,766 134,119
$350,000 72,497 96,662 120,828 144,994
$375,000 77,934 103,912 129,891 155,869
$400,000 83,372 111,162 138,953 166,744
$425,000 88,809 118,412 148,016 177,619
$450,000 94,247 125,662 157,078 188,494
$475,000 99,684 132,912 166,141 199,369
$500,000 105,122 140,162 175,203 210,244
$525,000 110,559 147,412 184,266 221,119
$550,000 115,997 154,662 193,328 231,994
$575,000 121,434 161,912 202,391 242,869
$600,000 126,872 169,162 211,453 253,744
$625,000 132,309 176,412 220,516 264,619
$650,000 137,747 183,662 229,578 275,494
$675,000 143,184 190,912 238,641 286,369
$700,000 148,622 198,162 247,703 297,244

---------------

(1) Final average compensation. Current Federal pension law limits average
annual compensation considered for benefit purposes to $170,000 for 2000 and
2001.

(2) The Plan provides that there is a maximum of 30 years of service for
computation of benefits.

For purposes of the Pension Plan, an employee's "Final Average
Compensation" generally is his regular cash salary (excluding bonuses) for the
five consecutive years of service in which his compensation was highest during
the ten years of service immediately preceding his retirement. In 2001, the
respective amounts of the compensation of Messrs. Smith, Wrobel, Cella, Andrews
and Anderson would have been $379,874, $251,156, $161,106, $390,380 and $411,136
respectively, under the Pension Plan if there were no limitations under Federal
pension law. However, due to the Federal pension law, the respective amounts of
compensation of Messrs. Smith, Wrobel, Cella, Andrews and Anderson under the
Pension Plan in 2001 were limited to $170,000. Mr. Smith, however, is entitled
to supplemental retirement benefits from the Company equal to the amount, if
any, by which the pension due under the Pension Plan without any limitation
imposed by the Internal Revenue Service exceeds any ceiling imposed by the
Internal Revenue Service (the "Supplemental Benefit") and Messrs. Andrews and
Anderson are entitled to receive a Supplemental Benefit based upon a maximum
base compensation of $235,840 per annum. The years of service credited under the
Pension Plan as of December 31, 2001 to such officers were as follows: Mr. Smith
17 years, Mr. Wrobel 4 years, Mr. Cella 1 year, Mr. Andrews 4 years and Mr.
Anderson 4 years.

Under the Pension Plan, in the event of the termination of employment prior
to retirement, part of the employee's benefit may be forfeited. A retirement
benefit, payable in the form of a life annuity following the employee's 55th
birthday, is equal to an accrued percentage of the normal retirement benefit,
actuarially reduced to reflect commencement of payments prior to the normal
retirement date. As to employees hired on or after January 1, 1989, pension
benefits under the Pension Plan vest after five years of employment with the
Company. Pension benefits under the Pension Plan of employees hired prior to
January 1, 1989 are currently 100% vested.

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

The Compensation Committee of the Company's Board of Directors is
responsible for reviewing the performance of the Chief Executive Officer ("CEO")
and recommending to the Board the amount of compensation and other benefits
payable to the CEO, reviewing and approving the compensation and benefits of
other executive officers and highly paid personnel, reviewing the general
compensation and employment benefit policies for management personnel, reviewing
management development and succession matters and approving any material new
benefit plan or material amendment to such plan. During 2001, two members of the
Compensation Committee (Messrs. Gibian and Tombros) also served as the Stock
Option Committee that is established under the Company's Stock Option Plan with
authority to fix the terms of, and grant options under, such plan. The
Compensation Committee is comprised of non-employee directors.

In general, the Compensation Committee strives to meet the following
objectives in making compensation decisions and recommendations for executive
officers and other key personnel: (1) provide overall compensation that is
competitive in its ability to attract and retain highly qualified personnel; (2)
relate compensation to the degree to which the Company (and/or specific business
unit in which an executive has responsibility) attains its annual financial
performance targets; (3) reward excellent individual performance, with special
consideration for specific projects completed or adverse conditions overcome;
and (4) provide incentive to contribute to the long-term growth of the Company's
businesses and stockholder value. In making compensation recommendations, the
Committee consults with tax advisors as necessary to avoid or minimize any
nondeductible compensation under Section 162 of the Internal Revenue Code of
1986, as amended.

During 2001, the Committee approved compensation policies for key personnel
which (i) rationalized compensation on a worldwide basis so that key personnel
in different divisions and locations and with the same performance level
received generally comparable economic value, (ii) provided for the same
compensation adjustment date, (iii) provided for a severance plan which, subject
to local law, rationalized severance pay arrangements, (iv) created a change of
control plan for senior personnel which provided for increased severance in the
event of certain events affecting control of the Company (so long as deductible
under Section 280(g) of the Internal Revenue Code), and (v) amended in various
respects the Company's employee benefit plans. The Committee also approved
compensation for ten senior personnel of the Faulding business (including Mr.
Nestor) acquired in 2001.

In February 2001, the Committee reviewed and approved an executive
incentive plan which covered the highest paid executive officers (other than the
CEO) in 2001. This plan provided for the payment of annual cash bonuses only
upon the attainment of target annual operating income criteria for the Company
and (except for corporate level personnel) the relevant operating division. The
plan provides for target bonuses of up to 50% of a participant's salary. The
amount awarded if the criteria are met is also affected by the executive's
individual performance (as determined by the CEO). As a result of the Company's
financial performance during 2001, none of the executive officers was entitled
to any bonus award under this plan.

In February 2001, the Compensation Committee recommended granting (and the
Stock Option Committee approved and granted) options to 168 key employees
(including all executive officers) to purchase

624,775 shares. The Committee followed the pattern of annual option grants to
officers and key employees as a means of providing incentive to enhance
long-term shareholder return and share value. All stock options grants during
2001 had an exercise price equal to the market price on the date of grant,
vested in equal installments over four years and had a seven-year term.

In January 2002, the Compensation Committee recommended (and the Stock
Option Committee approved and granted) special stock options to the senior
executives and managers in lieu of participation in the Company's cash bonus
incentive plan during the first six months of 2002. A special grant was also
made to the CEO who received options for 35,500 shares. A total of 288,690 stock
options were granted to 53 persons. All such special options have an exercise
price equal to the market price of the shares on the date of grant, become fully
vested (without regard to any Company performance criteria) on the first
anniversary of the date of grant and have a four year term.

In March 2002, the Compensation Committee approved certain amendments to
the executive incentive plan and approved various company-wide and divisional
financial goals. Because of the incentive provided by the special options grant
described above, the cash bonus target for 2002 has been reduced by 50% and the
financial criteria approved by the Committee are generally based on second half
performance. These criteria include total revenues, operating income and cash
flow, with each criterion being weighted.

In April 2002, the Compensation Committee recommended (and the Stock Option
Committee approved and granted) annual options to 223 key employees (including
all executive officers) to purchase 857,800 shares. Each option provided for an
exercise price equal to the market price on the date of grant, vesting in equal
installments over four years and a ten-year term.

In 2002, the Committee reviewed the CEO's performance during 2001 and
recommended several compensation matters with respect to Ms. Wiik. The
Committee's review of Ms. Wiik's performance in 2001 focused on: the
difficulties that the Company encountered (particularly in its Animal Health and
International Pharmaceutical divisions); the changes in certain senior
management positions; the Company's budgeting and reporting procedures and its
financial and accounting personnel; and the Company's overall cash flow and
return on capital. The Committee also discussed the CEO's strategic initiatives,
her excellent work ethic and high level of energy and dedication and the
Faulding acquisition which, together with its financing, was an important
development for the Company and a major element of the CEO's strategy. In
recommending compensation for the CEO the Committee was guided by her employment
contract and the performance matters discussed by the Committee. Because of the
poor earnings and financial results of the Company (as well as absence of
bonuses paid to continuing key personnel under the 2001 executive incentive
plan), no bonus for 2001 was recommended by the Committee for Ms. Wiik. The
increase in the CEO's salary was set at 3% which approximates the rate of
inflation and the average increase for key personnel. The CEO received 40,000
and 65,000 options, respectively, as part of the 2001 and 2002 annual grants.
The higher percentage of the CEO's compensation which is in the form of stock
options (relative to other senior personnel) reflects the Committee's view that
the CEO's compensation should, in large part, reflect shareholder value and is
appropriate given the CEO's level of responsibility.

By the Compensation Committee:

Peter G. Tombros (Chairman)
Thomas G. Gibian
I. Roy Cohen
Glen E. Hess
Einar W. Sissener

AUDIT COMMITTEE REPORT

The Audit Committee reviews and makes recommendations to the Board of
Directors regarding internal accounting and financial controls and accounting
principles, auditing practices, the engagement of independent public
accountants, the scope of the audit to be undertaken by such accountants, all
transactions with the Company's affiliates and the internal process for
monitoring compliance with the Company's Business Conduct Guidelines. Each of
the Audit Committee members satisfies the definition of independent director as
established in the New York Stock Exchange Listing Standards. The Board adopted
a written charter for the Audit Committee on May 25, 2000. The Company operates
with a January 1 to December 31 fiscal year. The Audit Committee met sixteen
times during the 2001 fiscal year.

The Audit Committee has reviewed the Company's audited consolidated
financial statements and discussed such statements with management. The Audit
Committee has discussed with PricewaterhouseCoopers LLP, the Company's
independent accountants, during the 2001 fiscal year, the matters required to be
discussed by Statement of Auditing Standards No. 61 (Codification of Statements
on Auditing Standards AU 380), as amended.

PricewaterhouseCoopers LLP also provided the Audit Committee the written
disclosures and a letter required by Independence Standards Board Standard No. 1
(Independence Standards Board Standard No. 1, Independence Discussions with
Audit Committees), and the Audit Committee discussed with the independent
accountants that firm's independence. The Committee considered various non-audit
services provided by the independent accountants and the fees and costs billed
and expected to be billed by the independent accountants for those services (as
shown on page 30 of this Proxy Statement). The Committee has fully considered
whether those services provided by the independent accountants are compatible
with maintaining auditor independence.

Based upon the review and discussions noted above, the Audit Committee
recommended to the Board that the Company's audited consolidated financial
statements be included in the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 2001, and be filed with the U.S. Securities and
Exchange Commission.

This report of the Audit Committee shall not be deemed incorporated by
reference into any filing under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, except to the extent that the
Company specifically incorporates this information by reference.

Submitted by:

Thomas G. Gibian (Chairman)
Oyvin A. Broymer
Erik Hornnaess
Erik G. Tandberg
Peter G. Tombros

The following table sets forth the aggregate fees billed or expected to be
billed by PricewaterhouseCoppers LLP for audit services rendered in connection
with the financial statements and reports for fiscal year 2001 and for other
services rendered during fiscal year 2001 on behalf of the Company and its
subsidiaries, as well as all "out-of-pocket" costs incurred in connection with
these services, which have been or will be billed to the Company:

Audit fees.................................................. $1,652,000
Financial Information Systems Design and Implementation..... $ --
All Other Fees(a)........................................... $1,683,000

(a) All Other Fees includes fees for professional services rendered for all
services other than those covered under "Audit Fees" for fiscal year
2001. These other services include (i) $1,061,000 of advisory services
related to revision of the Company's financial statements, (ii)
$358,000 of accounting due diligence, valuation and tax services
related to acquisitions during 2001, (iii) $142,000 of services
rendered in connection with employee benefit plan audits, review of SEC
filings, and other matters and (iv) $123,000 of international tax
planning and assistance.

PERFORMANCE GRAPH

The following graph compares the Company's cumulative total stockholder
return during the last five calendar years with the composite of the Media
General Financial Services Index for Drug Manufacturers -- Other, Drug-Generic
and Drug Delivery Industry Groups (which indexes include 151 corporations that
describe themselves as drug manufacturers and are publicly traded) and The New
York Stock Exchange Index. The graph assumes $100 invested on December 31, 1996
in the Company's Class A Stock and $100 invested at that time in each of the
selected indices. The comparison assumes that all dividends are reinvested.

ALPHARMA INC.
5-YEAR CUMULATIVE RETURNS
VERSUS PEER GROUP AND NYSE INDEX

ALPHARMA'S CUMULATIVE RETURN LINE GRAPH
[ALPHARMA'S CUMULATIVE RETURN LINE GRAPH]

FISCAL YEAR ENDING
---------------------------------------------------------------------------------------
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
COMPANY, INDEX, MARKET 1996 1997 1998 1999 2000 2001
---------------------- ------------ ------------ ------------ ------------ ------------ ------------

Alpharma Inc. .......... 100.00 150.41 246.21 215.50 308.73 187.29
Media General Group
Index................. 100.00 123.47 146.82 179.15 295.13 275.64
NYSE Market Index....... 100.00 131.56 156.55 171.42 175.51 159.87

CERTAIN RELATIONSHIPS AND RELATED TRANSACTION

Mr. Sissener is Chairman of the Board of A.L. Industrier AS, commonly known
as A.L. Together with certain family-controlled private holding companies and
certain of his relatives, Mr. Sissener beneficially owns approximately 51% of
A.L.'s outstanding ordinary shares entitled to vote and, accordingly, may be
deemed a controlling person of A.L.

A.L. and Alpharma AS, one of the Company's Norwegian subsidiaries, are
parties to two leases pursuant to which A.L. leases to Alpharma AS the land and
facility in Oslo, Norway where Alpharma AS' principal administrative offices and
fermentation plant for its bulk antibiotics are located (the "Office Lease") and
adjoining land for a parking facility for employees (the "Parking Lease"). Both
leases have terms ending in 2014. The terms are renewable, at the option of
Alpharma AS, for up to four additional consecutive five year terms. Basic rent
during the initial terms are $1.00 per year and, during any renewal term
thereafter, basic rent will be the then prevailing fair rental value of the
premises. In addition to basic rent, Alpharma AS pays documented expenses of
ownership and operation of such facilities, such as taxes and maintenance
expenses. Alpharma AS has the right to terminate the Office Lease at any time
during its term upon twelve months' written notice to A.L. and the Parking Lease
at any time during its term upon twenty-four months' written notice to A.L.

Alpharma AS is a party to an administrative services agreement with A.L.,
pursuant to which Alpharma AS provides certain administrative services to A.L.
Such services are provided on a full cost basis, except that A.L. paid Alpharma
AS a minimum fee for services rendered during calendar year 2001 equal to NOK
3,000,000 or approximately $333,000. This agreement expired in January 1997 and
has been automatically extended for successive one year terms. Such one year
extensions will continue unless the agreement is terminated by either of the
parties, upon six months' notice.

During 2001, through Alpharma AS and other subsidiaries, the Company sold
$1,881,000 of products (primarily multivitamins and adhesive products), at then
prevailing market rates to a subsidiary of A.L. for distribution of these
products to retail food stores. In addition, during 2001, Alpharma AS purchased
$8,000 of products from a subsidiary of A.L. These transactions were made on an
arm's length basis.

Until October 5, 2001, A.L. held convertible subordinated notes the Company
issued, commonly known as the A.L. Notes, in the principal amount of
$67,850,000. These notes were issued concurrently with, and with similar terms
to, the 5.75% convertible subordinated notes sold to unaffiliated third parties,
except that the A.L. Notes were convertible into shares of Class B Stock. The
Company paid interest to A.L. on these notes in the amount of $3,901,000 in
1999, $3,901,587 in 2000 and $2,969,000 in 2001.

On October 5, 2001, in connection with entering into the issuer's senior
credit facilities, the Company exchanged the A.L. Notes for 2,372,897 shares of
Class B Stock pursuant to an agreement the Company entered into with A.L. on
July 11, 2001. This is the number of shares that A.L. was entitled to receive
upon conversion of the notes pursuant to the terms of the notes. As a part of
this exchange, the Company also paid A.L. an amount equal to the unpaid interest
accrued through the date of the exchange.

All transactions with A.L. are subject to review by, and in some
circumstances prior approval of, the Company's Audit Committee. See "Board of
Directors and Committees -- Committees of the Board" above.

CERTAIN OTHER TRANSACTIONS AND RELATIONSHIPS

Mr. Einar W. Sissener, who as of June 30, 1999 ceased acting as president
and Chief Executive Officer, is party to an Agreement with the Company,
effective July 1, 1999, pursuant to which Mr. Sissener receives an
33

annual fee of $150,000 for serving as Chairman of the Board of Directors of the
Company (and director of certain of the Company's subsidiaries). In addition to
the annual fee, Mr. Sissener is eligible for a bonus in an amount recommended by
the Compensation Committee of the Board of Directors. Mr. Sissener is reimbursed
for expenses while in the New York metropolitan area and receives other fringe
benefits substantially equal to those received by executive officers of the
Company. In addition, Mr. Sissener has agreed to provide consulting services to
the Company's management for a ten year term for $12,000 per month plus payment
of reasonable expenses incurred in connection with performance of such
consulting services. The consulting fee is adjusted annually for inflation. In
addition to the amounts described above, Mr. Sissener is entitled to all
benefits available under applicable plans and policies in Norway arising from
retirement from employment by Alpharma AS and is entitled to receive from
Alpharma AS an amount which, when added to amounts he is entitled to receive
under Norwegian Social Security, Alpharma AS's pension plan and his individual
retirement benefits equals 900,000 NOK (approximately $102,800). Such latter
amount is estimated at 344,000 NOK (approximately $39,292).

Mr. I. Roy Cohen, who as of January 15, 1991 retired as President and Chief
Executive Officer, had a contract to act as a special consultant to the Company
for a ten-year period following such retirement (the "Consultant Term"). Such
contract expired on January 15, 2001. From January 15, 2001 through December 31,
2001, Mr. Cohen had a contract ("New Contract") to act as a special consultant
to the Company. The New Contract required Mr. Cohen to provide at least 10 days
of service and the Company was required to pay him consideration of $37,750. The
Company was also required to pay Mr. Cohen $3,775 for each day in excess of 10
days of service during the term and to provide him with an automobile allowance
and certain other benefits. Mr. Cohen provided 6 days of services in 2001, and
according to the terms of the New Contract, received an aggregate payment of
$60,400.

Mr. Glen E. Hess' professional corporation is a partner of Kirkland &
Ellis, a law firm which since 1978 has performed and continues to perform
significant legal services for the Company.

STOCKHOLDERS' PROPOSALS FOR THE 2003 ANNUAL MEETING

In order to be considered for inclusion in the proxy statement for the 2003
Annual Meeting of Stockholders, stockholder proposals must be submitted to the
Company on or before December 6, 2002. Such proposals also will need to comply
with Securities and Exchange regulations regarding the inclusion of stockholder
proposals in Company-sponsored proxy materials. Similarly, in order for a
stockholder proposal to be raised from the floor during next year's annual
meeting, written notice must be received by the Company no later than December
6, 2002.

OTHER BUSINESS

As of the date hereof, the foregoing is the only business which management
intends to present, or is aware that others will present, at the Annual Meeting.
If any other proper business should be presented at the Annual Meeting, the
proxies will be voted in respect thereof in accordance with the discretion and
judgment of the person or persons voting the proxies.

By order of the Board of Directors

ROBERT F. WROBEL
Secretary
ALPHARMA INC.

YOUR VOTE IS IMPORTANT
PLEASE PROMPTLY COMPLETE AND SIGN THE ENCLOSED
FORM OF PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE

APPENDIX A

ALPHARMA INC.

1997 INCENTIVE STOCK OPTION AND APPRECIATION RIGHT PLAN

A-1

TABLE OF CONTENTS

1. Purpose of the Plan......................................... A-3
2. Administration.............................................. A-3
3. Shares Relating to Options and Units........................ A-3
4. Authority to Grant Options and Units........................ A-4
5. Limitation on Value of Shares Covered by Incentive Stock
Options granted to any Employee........................... A-4
6. Eligibility................................................. A-4
7. Option Price and Base Value................................. A-4
8. Terms of Options; Vesting................................... A-4
9. Terms and Conditions of Units; Vesting...................... A-5
10. Exercisability of Options and Exercisable Units............. A-6
10A. Procedure for Exercise of Options........................... A-6
10B. Withholding Tax Requirements on Exercise of Options......... A-6
10C. Option Exercise with Previously Acquired Stock.............. A-7
11. Transferability of Benefits................................. A-7
12. Termination of Employment or Death Options.................. A-7
13. Requirements Imposed by Law................................. A-8
14. No Rights as Stockholder.................................... A-8
15. No Employment Obligation.................................... A-9
16. Changes in the Firm's Capital Structure..................... A-9
17. Amendment or Termination of Plan............................ A-10
18. Written Agreement........................................... A-10
19. Director and Stockholder Approval; Duration of Plan......... A-10

A-2

ALPHARMA INC.

1997 INCENTIVE STOCK OPTION AND APPRECIATION RIGHT PLAN(1)

1. Purpose of the Plan.

This 1997 Incentive Stock Option and Appreciation Right Plan (the "Plan")
of Alpharma Inc. (the "Company") is designed to provide incentive to present and
future executive, managerial, marketing, technical and other key employees of
the Company and of its subsidiaries (hereinafter referred to as "Employees") by
affording such Employees an opportunity to acquire or increase their proprietary
interest in the Company through the acquisition of shares of its Class A Common
Stock, with $.20 par value (hereinafter referred to as the "Common Stock") or
benefits based on the value of such shares. By encouraging stock ownership by,
or providing benefits based on the value of the Company's shares to, such
Employees, the Company seeks to attract and retain in its and its subsidiaries'
employ persons of exceptional competence and seeks to furnish and added
incentive for them to increase their efforts on behalf of the Company.

2. Administration.

This Plan shall be administered by a committee of the Board of Directors of
the Company consisting of two or more directors (the "Committee") appointed for
such purpose. All questions of interpretation and application of this Plan, of
any options ("Options") or stock appreciation units ("Units") granted hereunder
(collectively referred to as "Benefits"), of any related agreements and
instruments, and of the value of shares of Common Stock subject to Benefits
shall be subject to the good faith determination of the Committee which shall be
final and binding. If for any reason a Committee shall not have been appointed,
all authority and duties of the Committee under this Plan shall be vested in and
exercised by the Board of Directors of the Company.

3. Shares Relating to Options and Units.

The stock subject to the Options and other provisions of this Plan and
which is the basis for the Units shall be shares of Common Stock. The total
amount of the Common Stock with respect to which Benefits may be granted shall
not exceed in the aggregate 8,000,000 shares; provided, however, that the type
and aggregate number of shares which may be subject to Benefits granted
hereunder shall be subject to adjustment in accordance with the provisions of
section 16 hereof, and further provided that if Incentive Stock Options (as
hereinafter defined) are granted, the aggregate fair market value (determined as
of the time the option is granted) of the Common Stock with respect to which
Options are exercisable for the first time by any single employee during any
calendar year shall not exceed $100,000. Shares deliverable on exercise of any
Option or as payment pursuant to any Unit may be treasury shares or authorized
but unissued shares.

If for any reason the full number of shares covered by any Option are not
issued before the Option expires or terminates, shares not issued under such
Option shall again be available for the grant of Benefits under this Plan. If
any Units cease to be outstanding before the maturity date thereof because the
grantee has ceased to be an Employee or for any other reason, the number of
shares as to which such unmatured Units relate shall again be available for the
grant of Benefits under this Plan.

---------------
1Includes amendments being proposed.
A-3

4. Authority to Grant Options and Units.

The Committee may grant Options and Units from time to time to such
eligible Employees as it shall determine; provided, however, that no Options or
Units may be granted to any person who is a member of the Committee at the time
of such grant. Subject only to any applicable limitations set forth in this
Plan, the number of shares of Common Stock which may be purchased pursuant to
any Option or as to which any Units are based shall be as determined by the
Committee, but in no event may the number of Options and Units granted to any
person under the Plan exceed 100,000 in any annual taxable period.

In the discretion of the Committee, Options granted under this Plan may be
"incentive stock options" as such term is defined in Section 422A of the
Internal Revenue Code of 1986 ("Incentive Stock Options"), or Options which do
not meet such definition. The option agreement with respect to any Option
intended to qualify as an Incentive Stock Option shall so identify such Option.

The Committee may grant Options and Units to the same Employee and, without
limiting the Committee's authority to set conditions for any Benefits, may
condition the maturity of the Units upon exercise of the Options or vice versa.

5.Limitation on Value of Shares Covered by Incentive Stock Options granted to
any Employee.

The aggregate fair market value (determined as of the time the Option is
granted) of the Common Stock with respect to which any employee may be granted
Incentive Stock Options under this Plan and any other plans of the Company or
any parent or subsidiary of the Company shall not exceed the amount permitted by
Section 422A of the Internal Revenue Code of 1986.

6. Eligibility.

The individuals who shall be eligible to receive Benefits under the Plan
shall be such Employees from the class of executive, managerial, marketing,
technical and other key employees as the Committee shall determine from time to
time.

7. Option Price and Base Value.

The price at which shares may be purchased pursuant to any Option and the
base value with respect to any Unit shall be specified by the Committee at the
time the Benefit is granted, and shall be equal to or greater than the fair
market value, as determined by the Options Committee, of the shares of Common
Stock on the date the Benefit is granted.

For all purposes of this Plan the fair market value of the Common Stock
shall be the closing price on the principal exchange on which the Common Stock
is traded on the day such value is measured (or most recent trading day), or if
no such price is available, the value shall be determined in such manner as the
Committee shall determine to be appropriate; provided that for purposes of
determining the fair market value of the Common Stock on the maturity date of an
exercisable Unit (as defined below), the Committee may provide that the fair
market value of the Common Stock shall be the average of the closing prices on
such principal exchange for the ten trading days prior to the maturity date.

8. Terms of Options; Vesting.

The Committee shall determine the term of each Option and any vesting or
other conditions to the exercise of any Options, provided that in no event shall
the term of an Option exceed ten years and one month
A-4

from the date of grant. Unless the Committee shall otherwise determine at the
time of grant, Options shall vest at the rate of 25% per year that the Employee
holds such Option so that Options shall not become fully exercisable until four
years from the date of grant. Accordingly, unless the Committee shall otherwise
determine at the time of grant, Options cannot be exercised until one year after
the Option has been granted and then 25% of the Option Shares may be purchased
during the second year, an additional 25% during the third year, an additional
25% during the fourth year, and the final 25% after four years. Subject to the
limitations contained in paragraph 12 hereof, the Committee may, in its
discretion: (a) accelerate the time at which any outstanding Option or part
thereof shall become exercisable, (b) extend the time during which any
outstanding Option may be exercised (provided that no Option may be exercised
more than ten years and one month after the date of grant) and (c) waive, in
whole or in part, any condition to exercisability of an Option. There shall be
deemed to be part of the conditions and terms of every Option granted hereunder
as an Incentive Stock Option each condition, term, limitation or restriction
which is required under Section 422A of the Internal Revenue Code and the
applicable regulations for such Option to qualify as an Incentive Stock Option.

9. Terms and Conditions of Units; Vesting.

Each Unit shall entitle the Employee to whom such Unit is granted to
receive a payment equal to any positive difference between (i) the fair market
value of one share of Common Stock on the maturity date of the Unit and (ii) the
base value of the Unit. The Committee may grant Units from time to time to
Employees and at the time of grant shall determine: (i) the maturity date (which
may be a specific date or a date based on an occurrence, such as operating
results of the Company or a division thereof, or an indeterminate date to be
specified by the grantee upon "exercise" of the Unit); provided the maturity
shall in no event be later than two years following termination of Employee's
employment relationship; (ii) the base value of each Unit granted; (iii) any
vesting or other conditions to maturity of the Units and the Employee's right to
payment; (iv) any events which may accelerate or defer maturity of the Units;
and (v) any other terms relating to such Units. In no event shall the maturity
date of a Unit be earlier than six months after the date of grant or be (or be
deferred to) later than ten years and one month after the date of grant. A Unit
as to which the grantee may select the maturity date shall be referred to in
this Plan as an "Exercisable Unit". Unless the Committee shall otherwise
determine, each Unit shall have a base price equal to the fair market value of
the Common Stock on the date of grant, shall have a maturity date which is the
fifth anniversary of the date of grant and shall not entitle the grantee to any
payment unless such Employee shall remain an Employee of the Company from the
date of grant to the maturity date (except that in the event the Employee dies
or retires in accordance with established Company rules as a result of
disability or age before the maturity date, the maturity date of such Units
shall be accelerated to the date such Employee ceases to be an Employee due to
death or retirement). In no event shall a maturity date or any Unit be
accelerated in the event that the employment relationship of any Employee is
terminated for cause prior to the maturity date of such Unit.

Payments with respect to Units shall be made to the persons entitled
thereto in cash or, if the Committee so determines, shares of Common Stock
having a fair market value on the maturity date equal to the amount of payment
to which the recipient is entitled, or any combination of cash or such shares.
Unless deferred as hereafter provided, such payment shall be made by the Company
within ninety days after the maturity date.

An account shall be established for each Employee to whom Units are granted
in which shall be recorded the number of Units granted to such Employee, the
base price and maturity date of such Units and other appropriate data. If the
Committee so determines, an Employee who becomes entitled to receive a payment
with respect to any Units may have the right to defer such payment under such
deferred payment arrangement

A-5

as the Company (or the subsidiary employing such Employee) may from time to time
provide. It shall be a condition of payment by the Company with respect to any
Unit that the person entitled to receive such payment shall make appropriate
payment or other arrangement acceptable to the Company with respect to any
withholding or similar tax requirement, and the Company may withhold any amount
so required from any payment it makes with respect to any Units.

10. Exercisability of Options and Exercisable Units.

Each Option and Exercisable Units may be exercised, so long as it has
vested and is valid and outstanding, from time to time, in part or in whole,
subject to any limitations with respect to the number of shares for which the
Option or Unit may be exercised at a particular time and to such other
conditions as the Committee in its discretion, may specify.

Each Exercisable Unit may be exercised by written notice to the Company,
(Attention; Treasurer) setting forth the maturity date of such Unit which in no
event shall be a date earlier than the day following the date on which each such
notice is received by the Company.

10A. Procedure for Exercise of Options.

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 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)
unless prohibited by the Committee in accordance with section 10C, shares of
Common Stock previously acquired with an aggregate fair market value equal to
the option price of such shares. As promptly as practicable after receipt of
such written notification and payment and subject to section 10B hereof, the
Company shall deliver to the optionee certificates for the number of shares with
respect to which such Option has been so exercised, 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 an 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.

10B. Withholding Tax Requirements on Exercise of Options.

It shall be a condition of exercise of any Option (including any Option
which has been transferred as permitted by section 11 of the Plan) that the
person exercising the Option make appropriate payment or other provision
acceptable to the Company with respect to any withholding tax requirement
arising from such exercise. The amount of withholding tax required, if any, with
respect to any Option exercise (the "Withholding Amount") shall be determined by
the Treasurer or other appropriate officer of the Company, and each Employee
shall furnish such information and make such representations as such officer
requires to make such determination with respect to all Options granted to such
Employee. If the Company determines that withholding tax is required with
respect to any Option exercise, the Company shall notify the Employee of the
Withholding Amount, and the Employee shall pay to the Company, by check or other
means acceptable to the Company, an amount not less than the Withholding Amount.
In lieu of making such payment, the Employee may elect to pay the Withholding
Amount by either (i) delivering to the Company a number of shares of Common
Stock having an aggregate fair market value as of the "measurement date" (as
hereinafter defined) not less than the Withholding Amount of (ii) directing the
Company to withhold (and not to deliver
A-6

or issue to such Employee) a number of shares of Common Stock otherwise issuable
upon the Option exercise having an aggregate fair market value as of the
measurement date not less than the Withholding Amount. If the Company approves,
an Employee may elect pursuant to the prior sentence to deliver or direct the
withholding of shares of Common Stock having an aggregate value in excess of the
minimum Withholding Amount but not in excess of the Employee's applicable
highest marginal combined federal income tax rate, as estimated in good faith by
the Employee. Any fractional share interest resulting from the delivery or
withholding of shares of Common Stock to meet withholding tax requirements shall
be settled in cash. All amounts paid to or withheld by the Company and the value
of all shares of Common Stock delivered to or withheld by the Company pursuant
to this section 10B shall be deposited in accordance with applicable law by the
Company as withholding tax for the Employee's account. If the Treasurer or other
appropriate officer of the Company determines that no withholding tax is
required with respect to the exercise of any Option (because such Option is an
Incentive Stock Option or otherwise), but subsequently it is determined that the
exercise resulted in taxable income as to which withholding is required (as a
result of a disposition of shares or otherwise), the Employee shall promptly,
upon being notified of the withholding requirement, pay to the Company by means
acceptable to the Company the amount required to be withheld; and at its
election the Company may condition any transfer of shares issued upon exercise
of an Incentive Stock Option upon receipt of such payment. The term "measurement
date" as used in this section 10B shall mean the date on which any taxable
income resulting from the exercise of an Option is determined under applicable
federal income tax provisions.

10C. Option Exercise with Previously Acquired Stock.

Unless the Committee, in its discretion, shall by rule applicable to all or
any specified class of Options prohibit the use of shares of Common Stock to pay
the option price, any Employee may pay the option price for the shares being
acquired upon the exercise of an Option to be paid, in full or in part, by the
delivery to the Company of a number of shares of Common Stock having an
aggregate fair market value as of the "exercise measurement date" (as
hereinafter defined) equal to the exercise price for the shares being acquired.
The term "exercise measurement date" as used in this section 10C shall mean the
date on which the Option is exercised in accordance with section 10.

11. Transferability of Benefits.

Benefits shall not be transferable other than by will or by the laws of
descent and distribution, or in the case of Benefits which are not Incentive
Stock Options upon such terms and conditions and to such transferee as the
Option Committee may approve (through a rule applicable to all or specific
classes of Employees, pursuant to provisions of an option agreement approved by
the Committee, or upon request in individual cases).

12. Termination of Employment or Death Options.

Except as expressly provided herein, Options shall terminate on the earlier
of:

a. the date of expiration of the term thereof, specified pursuant to
section 8 of this Plan,

b. immediately upon termination of the employment relationship between the
Company and the optionee for cause, or

c. thirty (30) days or, if the written option agreement (as specified
pursuant to section 18 hereof) specifically provides or the Committee
specifically approves, for a longer period not to exceed two
A-7

years after termination of the employment relationship between the
Company and the optionee without cause, other than death or retirement
in good standing from the employ of the Company for reasons of age or
disability under then established rules of the Company or the subsidiary
employing the optionee.

The Committee shall determine in its sole discretion whether authorized
leave of absence, or absence on military or government service shall constitute
termination of the employment relationship. In the event of the death of the
holder of an Option while in the employ of the Company and before the date of
expiration of such Option, such Option shall terminate on the earlier of such
date of expiration or two years following the date of such death of the optionee
and subject to any condition relating to such Option, his or her executors,
administrators, or any person or persons to whom his or her Option may be
transferred by will or by the laws of descent and distribution or as permitted
by section 11 of the Plan, shall have the right, at any time to such termination
to exercise such portions of such Option which shall have been vested
immediately prior to his or her death. If before the date of expiration of an
Option, the optionee shall be retired in good standing from the employ of the
Company for reasons of age or disability under the then established rules of the
Company, such Option shall terminate on the earlier of such date of expiration
of 90 days after the date of such retirement unless the written option agreement
specifically provides for a longer period not to exceed two years after the date
of such retirement. In the event of such retirement, the optionee or a
transferee permitted by section 11 of the Plan shall have the right prior to the
termination of such Option and subject to any condition relating to such Option,
to exercise such portion of such Option which shall have been vested immediately
prior to the date of retirement.

For all purposes of this Plan, an employment relationship between the
Company and any holder of any Benefit shall be deemed to exist during any period
in which such holder is employed by the Company or by any subsidiary of the
Company.

13. Requirement Imposed by Law.

No Employee who is subject to Section 16(b) of the Securities and Exchange
Act of 1934 shall sell any shares of Common Stock acquired on exercise of an
Option or transfer any Option for consideration until the lapse of at least six
months from the date of grant of such Option.

The Company shall not be required to sell or issue any shares under any
Option or make any payment with respect to a Unit if the issuance of such shares
or making of such payments shall constitute a violation by the optionee or
holder of Units or by the Company of any provisions of any law or regulation of
any governmental authority. Any determination in this connection by the
Committee shall be final, binding and conclusive.

The Company shall not be required to issue any shares upon exercise of any
Option or payment with respect to any Unit unless the Company has received the
optionee's or holder's representation or other evidence satisfactory to it to
the effect that such optionee or holder of such Unit will not transfer such
Shares in any manner which would constitute a violation of any securities or
other law, or which would not be in compliance with such other conditions as the
Committee may deem appropriate.

14. No Rights as Stockholder.

No holder of any Benefit under this Plan shall have rights as stockholder
with respect to shares covered relating to such holder's Benefit (except upon
exercise of an Option); and, except as otherwise provided in

A-8

section 16 hereof, no adjustment for dividends, or otherwise, shall be made if
the record date therefor is prior to the date of exercise of such Option or
maturity of a Unit.

15. No Employment Obligation.

The granting of any Benefit shall not impose upon the Company any
obligation to employ or continue to employ any holder of a Benefit under the
Plan, and the right of the Company to terminate the employment of any officer or
other employee shall not be diminished or affected by reason of the fact that a
Benefit has been granted to him or her.

16. Changes in the Firm's Capital Structure.

The existence of outstanding Benefits hereunder shall not affect in any way
the right or power of the Company or its stockholders to make or authorize any
or all adjustments, recapitalizations, reorganizations, 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 Common 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 Options hereunder or on which a Unit is based shall
be appropriately adjusted in such a manner as to entitle the holder of such
Benefit to receive upon exercise of his Option or maturity of his Unit, for the
same aggregate consideration (in the case of Options), the same total number and
type of shares (in the case of Options) or the same value (in the case of Units)
as he would have received as a result of the event requiring the adjustment had
he exercised his Option or the Unit had matured in full immediately prior to
such event provided, however, that, if any such adjustment would result in the
right to purchase a fractional share under an Option, the number of shares
subject to the Option will be decreased to the next lower whole number, and (b)
the number and type of shares with respect to which Benefits may be granted
under the Plan shall be adjusted by substituting for the total number of shares
of Common 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
Common 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 Common Stock which does not
effect an adjustment under the prior paragraph, the 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, amount of price of
securities subject to the Benefits as it considers appropriate, and such
adjustments shall be binding and conclusive on all holders of Benefits.

Except as expressly provided herein, the issuance 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 direct sale,
or upon the exercise of rights or warrants to subscribe therefor, 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 Common
Stock then covered by or relating to outstanding Benefits.

A-9

17. Amendment or Termination of Plan.

The Board of the Directors of the company may modify, revise or terminate
this Plan at any time and from time to time, except that the aggregate number of
shares as to which Benefits may be granted under this Plan, the maximum number
of Benefits which may be granted to any Employee in a particular fiscal year,
the minimum option price specified in paragraph 7 of this Plan and the minimum
base value for Units specified in Section 9 shall not, other than by operation
of paragraph 16 hereof, be adjusted without the consent of the holders of Class
A and Class B Common Stock having a majority of the voting power. Any amendment
of this Plan shall apply to all Benefits outstanding at the time of such
amendment (i) unless otherwise specified in the amendment or (ii) to the extent
such amendment is materially adverse to the outstanding Benefits.

18. Written Agreement.

Each Benefit granted hereunder shall be embodied in a written agreement or
other document which shall be subject to the terms and conditions prescribed
above and shall be signed by the Employee holding the Benefit and by the
President or a Vice President of the Company for and in the name and on behalf
of the Company. Such an option agreement or other document shall contain such
other provisions as the Committee in its discretion shall deem advisable.

19. Director and Stockholder Approval; Duration of Plan.

This Plan has been duly adopted by the Board of Directors originally on
September 26, 1983 and approved by the Stockholders of the Company on January
25, 1984, and restated by the Board on March 21, 1997. Options may not be
granted under this Plan after December 31, 2010. This Plan shall terminate (a)
when the total amount of Common Stock with respect to which Benefits may be
granted shall have been issued upon the exercise of Options, or (b) by action of
the Board of Directors pursuant to paragraph 17 hereof, whichever shall first
occur.

A-10

APPENDIX B

ALPHARMA INC.

NON-EMPLOYEE DIRECTOR OPTION PLAN(1)

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 350,000. 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 10,000 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
shares 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.

---------------
1Includes amendments being proposed.
B-1

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 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.

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 other than upon such terms and
conditions and to such transferee as the Director Options Committee may approve
(pursuant to provisions of an option agreement approved by the Director Options
Committee, or upon request in individual cases).

B-2

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.

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 adjustments, recapitalizations, reorganizations, 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 exercised 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.

B-3

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.

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 Director 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, 2010 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.

B-4

3480-PS-02

ALP38B DETACH HERE

[ALPHARMA LOGO]

PROXY
ALPHARMA INC.
ONE EXECUTIVE DRIVE, FORT LEE, NEW JERSEY 07024
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS ON MAY 30, 2001

Jeffrey E. Smith, Vice President and Chief Financial Officer and Robert F.
Wrobel, Vice President, Chief Legal Officer and Secretary, or either one of
them, with full power of substitution, are hereby authorized to vote the shares
of Class A Common Stock of Alpharma Inc. (the "Company"), which the undersigned
is entitled to vote at the 2001 Annual Meeting of Stockholders to be held at The
New York Palace Hotel, 455 Madison Avenue, New York, New York on Wednesday, May
30, 2001 at 9:00 a.m., local time, and at all adjournments thereof, as follows
on the reverse side.

THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR (i) THE
NOMINEES SET FORTH IN ITEM 1 AND (ii) ITEMS 2 AND 3. SHARES REPRESENTED BY THIS
PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED BY THE
UNDERSIGNED STOCKHOLDER AND IN THE DISCRETION OF THE PROXY HOLDERS AS TO ANY
OTHER MATTER THAT MAY PROPERLY COME BEFORE THE ANNUAL MEETING OF STOCKHOLDERS
OR, IF NO DIRECTION IS INDICATED, WILL BE VOTED FOR (i) THE NOMINEES SET FORTH
IN ITEM 1 AND (ii) ITEMS 2 AND 3, AND IN THE DISCRETION OF THE PROXY HOLDERS AS
TO ANY OTHER MATTER THAT MAY PROPERLY COME BEFORE THE ANNUAL MEETING OF
STOCKHOLDERS.

----------- -----------
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
----------- -----------

[ALPHARAM LOGO]

Dear Stockholder: April 10, 2001

You are cordially invited to attend the Annual Meeting of Stockholders to be
held at 9:00 a.m. on Wednesday, May 30, 2001 at The New York Palace Hotel, 455
Madison Avenue, New York, New York. Detailed information is contained in the
accompanying Notice of Annual Meeting and Proxy Statement.

Regardless of whether you plan to attend the meeting, it is important that your
shares be voted. Accordingly, we ask that you sign and return your proxy as soon
as possible in the envelope provided. If you do plan to attend the meeting,
please mark the appropriate box on the proxy.

Best regards,

/s/ Robert F. Wrobel

Robert F. Wrobel
Secretary

ZALP4A DETACH HERE

PLEASE MARK
/X/ VOTES AS IN
THIS EXAMPLE.

1. ELECTION OF CLASS A DIRECTORS

NOMINEES: (01) Thomas G. Gibian, (02) Peter G. Tombros,
(03) Eric Hornnaess

FOR WITHHELD
ALL FROM ALL
NOMINEES NOMINEES
/ / / /

/ / ________________________________________
For all nominees except as noted above

Signature: Date:

2. Ratify appointment of PricewaterhouseCoopers LLP as the Company's
independent accountants.

FOR AGAINST ABSTAIN
/ / / / / /

3. As such persons may in their discretion determine upon such matters as may
come before the meeting.

MARK HERE IF YOU PLAN TO ATTEND THE MEETING / /

MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT / /

PLEASE MARK, SIGN AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED ENVELOPE, WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.

NOTE: The signature should correspond exactly with the name of the stockholder
as it appears hereon. Where stock is registered in Joint Tenancy, all tenants
should sign. Persons signing as Executors, Administrators, Trustees, etc. should
so indicate.

Signature: Date: