SCHERING-PLOUGH RETIREMENT
BENEFITS EQUALIZATION PLAN
(As Amended and Restated to
January 1, 2008)
The purpose of
this Plan is to provide a means of equalizing the benefits of those
employees participating in the Schering-Plough Corporation
Retirement Plan (the “Retirement Plan”) whose benefits
under the Retirement Plan are or will be limited by application of
the Employee Retirement Income Security Act of 1974
(“ERISA”) and the Internal Revenue Code of 1986 or as
subsequently amended (the “Code”).
II.
Administration of the Plan
The Plan shall
be administered by the Secretary of Schering-Plough Corporation
(the “Company”) or its delegate (the
“Secretary”), and all questions arising in connection
with the Plan shall be determined by the Compensation Committee of
Schering-Plough Corporation or its delegate (the
“Committee”). The Secretary and the Committee may
employ and rely upon such legal counsel, such actuaries, such
accountants, and such agents as they may deem advisable. Decisions
of the Committee shall be conclusive and binding upon all persons.
The Committee may delegate in writing part or all of its authority
under this Plan to such party or parties as it may deem necessary
or appropriate.
III.
Participation in the Plan
All members of
the Retirement Plan shall become Participants in this Plan whenever
their compensation or benefits under the Retirement Plan as from
time to time in effect exceed the limitations on eligible
compensation and/or benefits imposed by Sections 401 and 415
of the Code, respectively.
IV.
Compensation and Benefit Limitations
For purposes of
this Plan and the Retirement Plan, the limitations on eligible
compensation under Section 401(a)(17) of the Code shall be
deemed to be reached when a Participant’s eligible
compensation under the Retirement Plan, commencing January 1,
2008, exceeds $230,000 or such other amount as the Secretary of the
Treasury shall pronounce. The limitations imposed by
Section 415 of the Code shall be deemed to be reached when the
benefits otherwise payable to the Participant in the Retirement
Plan for a given plan year would exceed the maximum allowable under
the Code. The limitations imposed by Section 401(a)(4) shall
be deemed to be reached to the extent that any Participant’s
benefit in the Retirement Plan is reduced by virtue of the
application of applicable nondiscrimination testing to the
Participant’s benefits under the Retirement Plan or to a
voluntary early retirement program (or any similar program) under
the Retirement Plan.
V. Amount of
Supplemental Benefits
Each eligible
member of the Retirement Plan and his or her beneficiaries shall
receive a supplemental pension benefit (a “Supplemental
Benefit”) equal to the benefit which would have been payable
to them under the Retirement Plan, without regard for any provision
therein incorporating limitations imposed by Section 401 or
415 of the Code, to the extent that such benefit otherwise payable
under the Retirement Plan exceeds the benefit limitations as
described in Section IV of this Plan. For purposes of the
preceding sentence, and solely with respect to a
Participant who
also participates in the Schering-Plough Supplemental Executive
Retirement Plan (the “SERP”), the benefit which would
have been payable to such eligible member under the Retirement Plan
without regard to the aforesaid limitations shall be calculated by
substituting the eligible member’s “Earnings”
under the SERP for his or her “Compensation” under the
Retirement Plan for periods prior to the eligible member’s
“Separation from Executive Service” under the SERP.
Notwithstanding the foregoing, the benefit of any Participant in
the Pilots’ and Chauffeurs’ Supplemental Retirement
Plan (the “Pilots’ Plan”) under this Plan shall
be reduced, but not below zero, by the benefit payable to such
Participant under the Pilots’ Plan.
VI. Form and
Timing of Payment of Supplemental Benefit
1.
Definitions . For purposes of this Article VI, the
following words shall mean as follows:
"
Applicable Actuarial Assumptions ” shall mean the
applicable interest rate and mortality table under the Retirement
Plan except:
(i) with
respect to the conversion of a SERP Eligible Participant’s
Supplemental Benefit to a lump sum (or, with respect to amounts
that must be paid in a form that is equivalent to a form available
under the Retirement Plan, the pre-conversion lump sum equivalent),
that the interest rate and mortality table to be used shall be the
interest rate and mortality table used to calculate the lump sum
benefit in the SERP, and that the value of the early retirement
subsidy provided under the Retirement Plan shall only be included
in the value of the Supplemental Benefit provided under this Plan
if the value of the early retirement subsidy is included in the
lump sum supplemental benefit provided to the Participant or
surviving spouse under the SERP;
(ii) with
respect to the reconversion of that portion of a SERP Eligible
Participant’s Supplemental Benefit that is payable in a form
available under the Retirement Plan, the interest rate and
mortality table to be applied to convert the lump sum equivalent
amount to the form of payment available under the Retirement Plan
shall be the applicable interest rate and mortality table under the
Retirement Plan;
(iii) with
respect to any Participant who is not a SERP Eligible Participant,
the interest rate and mortality table used to calculate the small
benefit cash out pursuant to Section 5 below shall be the
interest rate and mortality table used to calculate the automatic
lump sum cash out under the Retirement Plan, and the value of the
early retirement subsidy provided under the Retirement Plan shall
only be included in the lump sum if the value of the early
retirement subsidy would have been included in an automatic lump
sum provided to the Participant or surviving spouse under the
Retirement Plan at such time.
"
Change of Control ” shall mean a Change of Control as
defined in the 2002 Stock Incentive Plan of Schering-Plough
Corporation or its successor plan.
"
Change of Control Termination Date ” shall mean the
date, following a Change of Control, as of which a Participant
ceases to be an employee of the Company or any of its
affiliates.
"
Deferral Rate ” shall mean, for each calendar quarter,
a rate equal to the actual yield on three-month U.S. Treasury bills
as reported in the Wall Street Journal on the first business day of
such calendar quarter.
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"
PTP Participant ” shall mean any Participant who is
involuntarily terminated in connection with OBS Integration or the
Productivity Transformation Program during the period commencing on
January 1, 2008 and ending on December 31,
2009.
"
SERP Eligible Participant ” shall mean any Participant
who is eligible to participate in the SERP at any time prior to the
commencement of his or her Supplemental Benefit.
"
Separation from Service ” shall mean “separation
from service” as defined in regulations under
Section 409A(a)(2)(A)(i) of the Code.
2.
Pre-1/1/09 Rules . Supplemental Benefits of a Participant
who commences Retirement Plan benefits prior to January 1,
2009 shall be payable as follows (except as otherwise provided in
this Article VI):
(a)
Linked Benefit . Such Supplemental Benefit shall be payable
at the same time and in the same form as applicable to such
Participant’s benefits under the Retirement Plan, including
whatever optional benefits he or she may have elected, determined
using the Applicable Actuarial Assumptions.
(b)
BEP Only Accruals for SERP Eligible Participants .
Notwithstanding Section 2(a), the portion of a SERP Eligible
Participant’s Supplemental Benefit that accrued during any
period (after December 31, 2007) when such SERP Eligible
Participant was not eligible to participate in the SERP shall be
payable at the same time and in the same form as applicable to such
Participant’s benefits under the Retirement Plan, including
whatever optional benefits he or she may have elected, determined
using the Applicable Actuarial Assumptions. The amount of these
benefits shall be determined by converting the Supplemental Benefit
to a lump sum using the Applicable Actuarial Assumptions and
reconverting such lump sum amount to the applicable form of benefit
elected under the Retirement Plan using the Applicable Actuarial
Assumptions.
3.
Post-12/31/08 Rules . Supplemental Benefits of a Participant
who does not commence Retirement Plan benefits before
January 1, 2009 shall be payable as follows (except as
otherwise specifically provided in this
Article VI):
(a)
General Rule . Except as otherwise provided herein,
Supplemental Benefits of a Participant who does not commence
Retirement Plan benefits before January 1, 2009 shall be
payable in any such form that is available under the Retirement
Plan as the Participant shall elect in the manner established by
the Company (determined using the Applicable Actuarial Assumptions)
and shall commence on the latest of (i) the
Participant’s Separation from Service; (ii) the first
day of the month coincident with or next following the date on
which the Participant reaches age 55; or (iii) January 1,
2009. If the Participant fails to elect the form of his or her
Supplemental Benefit under this Section 3(a), he or she shall
be deemed to have elected a life annuity (if the Participant is
unmarried on the date on which his or her Supplemental Benefit
commences) or a joint and 50% survivor annuity with the
Participant’s spouse as beneficiary (if the Participant is
married on the date on which his or her Supplemental Benefit
commences).
(b)
BEP Only Accruals for SERP Eligible Participants . Except as
otherwise provided herein, the portion of a SERP Eligible
Participant’s Supplemental Benefit that accrued during any
period (after December 31, 2007) during which such SERP
Eligible Participant was not eligible to participate in the SERP
shall be payable in any such form that is available under the
Retirement Plan as the Participant shall elect in the manner
established by the Company (determined using the Applicable
Actuarial Assumptions) and shall commence on the later of
(i)
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the
Participant’s Separation from Service; (ii) the first
day of the month coincident with or next following the date on
which the Participant reaches age 55; or (iii) January 1,
2009. The amount of these benefits shall be determined by
converting the Supplemental Benefit to a lump sum using the
Applicable Actuarial Assumptions and reconverting such lump sum
amount to the applicable form of benefit elected at the
time
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