SCHERING-PLOUGH
CORPORATION
2006 STOCK INCENTIVE
PLAN
(As Amended and Restated Effective
as of January 1, 2009)
SCHERING-PLOUGH CORPORATION
2006 STOCK INCENTIVE PLAN
(As Amended and Restated Effective
as of January 1, 2009)
I.
ESTABLISHMENT AND PURPOSE
1.1
Purpose . The purpose of this Schering-Plough Corporation
2006 Stock Incentive Plan (the “Plan”) is to enable
Schering-Plough Corporation to achieve superior financial
performance, as reflected in the performance of its Shares and
other key financial or operating indicators by (i) providing
incentives and rewards to certain Employees who are in a position
to contribute materially to the success and long-term objectives of
Schering-Plough, (ii) aiding in the recruitment and retention
of Employees of outstanding ability and (iii) providing
Employees an opportunity to acquire or expand equity interests in
Schering-Plough, thus aligning the interests of such Employees with
those of Schering-Plough’s shareholders. Schering-Plough
expects that it will benefit from the added interest that such
Employees will have in the welfare of Schering-Plough as a result
of their ownership or increased ownership of
Schering-Plough’s Shares.
1.2
Effective Date; Shareholder Approval . The Plan was
originally effective as of May 19, 2006, subject to the
approval of the Plan by the affirmative vote of the holders of a
majority of the Shares present in person or by proxy and entitled
to vote at the 2006 Annual Meeting of Shareholders of
Schering-Plough, or any adjournment of such meeting. Any Awards
granted under the Plan prior to the approval of the Plan by
Schering-Plough’s shareholders, as provided herein, were
contingent on such approval; if such approval is not obtained, the
Plan would have had no effect, and any Awards granted under the
Plan would have been rescinded. Schering-Plough’s shareholder
approved the Plan at the 2006 Annual Meeting and the Plan became
effective on May 19, 2006.
Capitalized terms
used in the Plan have the following meanings, unless another
definition is indicated clearly by particular usage and
context.
“
Acquired Company ” means any business, corporation or
other entity acquired by Schering-Plough or its Affiliates or
Subsidiaries.
“
Acquired Grantee ” means the grantee of a stock-based
award of an Acquired Company.
“
Affiliate ” means a corporation or other entity
controlled by, controlling or under common control with
Schering-Plough.
“
Award ” means any form of incentive or performance
award granted under the Plan, whether singly or in combination, to
a Participant by the Committee pursuant to such terms, conditions,
restrictions and/or limitations (if any) as the Committee may
establish and set forth in the applicable Award Certificate. Awards
granted under the Plan may consist of:
(a)
“Stock Options” awarded pursuant to
Section 4.4;
(b)
“Restricted Stock” awarded pursuant to
Section 4.5;
(c)
“Deferred Stock Units” awarded pursuant to
Section 4.6;
(d)
“Other Stock-Based Awards” awarded pursuant to
Section 4.7;
(e)
“Performance Awards”, including “Qualified
Performance Awards,” awarded pursuant to Section 4.8;
and
(f)
“Substitute Awards” awarded pursuant to
Section 4.9.
“ Award
Certificate ” means the document issued, either in
writing or by electronic means, by Schering-Plough to a Participant
evidencing the grant of an Award and setting forth the specific
terms, conditions, restrictions and limitations applicable to the
Award.
“
Beneficiary ” means the person or persons designated
by the Participant in accordance with Section 7.6 to acquire
the Participant’s right in the Plan in the event of the
Participant’s death.
“
Board ” means the Board of Directors of
Schering-Plough.
“ Change
in Control ” means the happening of any of the following
events:
(a) the
acquisition by any individual, entity or group (within the meaning
of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a
“Person”) of beneficial ownership (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) of
securities of Schering-Plough where such acquisition causes such
Person to own more than 50% of either ( x ) the then
outstanding Shares of Schering-Plough (the “Outstanding
Shares”) or ( y ) the combined voting power of the
then outstanding voting securities of Schering-Plough entitled to
vote generally in the election of directors (the “Outstanding
Voting Securities”); provided, however, that for purposes of
this subsection (a) the following acquisitions will not
constitute a Change in Control: (i) any acquisition directly
from Schering-Plough, (ii) any acquisition by Schering-Plough,
(iii) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by Schering-Plough or any
corporation controlled by Schering-Plough or (iv) any
acquisition by any corporation pursuant to a transaction which
complies with clauses (i), (ii) and (iii) of subsection
(c) below; and provided, further, that if any Person’s
beneficial ownership of the Outstanding Shares or
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Outstanding
Voting Securities reaches or exceeds 50% as a result of a prior
transaction, and such Person subsequently acquires beneficial
ownership of additional Shares or additional voting securities of
Schering-Plough, such subsequent acquisition will not be treated as
an acquisition that causes such Person to own more than 50% of the
Outstanding Shares or Outstanding Voting Securities;
(b) during any
12-month period, individuals who, as of the first day of such
period, constitute the Board (the “Incumbent Board”)
cease for any reason to constitute at least a majority of the
Board; provided, however, that any individual becoming a director
subsequent to the beginning of such 12-month period whose election,
or nomination for election by the Schering-Plough’s
shareholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board will be considered as
though such individual were a member of the Incumbent
Board;
(c) consummation
of a reorganization, merger, statutory share exchange or
consolidation or similar corporate transaction involving
Schering-Plough, or the acquisition of assets or stock of another
entity by Schering-Plough (each a “Business
Combination”), in each case, unless, following such Business
Combination, (i) all or substantially all of the individuals
and entities who were beneficial owners, respectively, of the
Outstanding Shares or Outstanding Voting Securities immediately
prior to such Business Combination beneficially own, directly or
indirectly, more than 50% of, respectfully, the then outstanding
shares of the common stock and the combined voting power of the
then outstanding voting securities entitled to vote generally in
the election of directors, as the case may be, of the corporation
resulting from such Business Combination (including, without
limitation, a corporation which as a result of such transaction
owns Schering-Plough or substantially all of
Schering-Plough’s assets either directly or through one or
more subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Business Combination, of the
Outstanding Shares and Outstanding Voting Securities, as the case
may be, (ii) no Person (excluding any corporation resulting
from such Business Combination or any employee benefit plan (or
related trust) of Schering-Plough or such corporation resulting
from such Business Combination) beneficially owns, directly or
indirectly, more than 50% of, respectfully, the then outstanding
shares of common stock of the corporation resulting from such
Business Combination or the combined voting power of the then
outstanding voting securities of such corporation, except to the
extent that such ownership existed prior to the Business
Combination and (iii) at least a majority of the members of
the board of directors of the corporation resulting from such
Business Combination were members of the Incumbent Board on the
later of (A) the time of the execution of the initial
agreement, (B) the action of the Board providing for such
Business Combination or (C) the beginning of the 12-month
period ending on the effective date of the Business
Combination;
(d) any one Person
acquires (or has acquired during any 12-month period ending on the
date of the most recent acquisition by such Person) assets of
Schering-Plough having a fair market value equal to or more than
40% of the total gross fair market
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value of all of
the assets of Schering-Plough immediately prior to such sale, other
than an acquisition by (i) a Person who was a shareholder of
Schering-Plough immediately before the asset acquisition in
exchange for or with respect to such Person’s Shares,
(ii) an entity whose total or voting power immediately after
the transfer is at least 50% owned, directly or indirectly, by
Schering-Plough, (iii) a person or group that, immediately
after the transfer, directly or indirectly owns at least 50% of the
total value or voting power of the outstanding stock of
Schering-Plough or (iv) an entity whose total value or voting
power immediately after the transfer is at least 50% owned,
directly or indirectly, by a person described in clause
(iii) above; or
(e) the complete
liquidation of Schering-Plough.
The definition of
Change in Control for purposes of the Plan is intended to conform
to the description of “Change in Control Events” in
Treasury Regulation section 1.409A-3(i)(5), or in subsequent IRS
guidance describing what constitutes a change in control event for
purposes of Code section 409A. Accordingly, no Change in Control
will be deemed to occur with respect to a transaction or event
described in paragraphs (a) through (e) above unless the
transaction or event would constitute a “Change in Control
Event” as described in Treasury Regulation section
1.409A-3(i)(5), or in subsequent IRS guidance under Code section
409A.
“ Change
in Control Price ” means the higher of (a) the
highest reported sales price of a Share in any transaction reported
on the New York Stock Exchange Composite Tape or other national
exchange on which Shares may then be listed during the 60-day
period prior to and including the effective date of a Change in
Control or (b) if the Change in Control is the result of a
tender or exchange offer or a business combination, the highest
price per Share paid in such tender or exchange offer or business
combination; provided, however, that in the case of Stock Options,
the Change in Control Price shall be in all cases the Fair Market
Value of a Share on the date such Stock Option is exercised or
cancelled. To the extent that the consideration paid in any
transaction described in clause (b) above consists all or in
part of securities or other non-cash consideration, the value of
such securities or other non-cash consideration shall be determined
in the sole discretion of the Committee.
“
Code ” means the Internal Revenue Code of 1986, as
amended.
“
Committee ” means the Compensation Committee of the
Board of Directors, or such other successor committee or
subcommittee of the Board formed to act on performance-based
compensation for Covered Employees, which is comprised solely of
two or more persons who are outside directors within the meaning of
Section 162(m)(4)(C)(i) of the Code and the applicable
regulations and non-employee directors within the meaning of
Rule 16b-3(b)(3) under the Exchange Act.
“
Controlled Group Member ” means Schering-Plough and
each other company that is required to be aggregated with
Schering-Plough under Code Sections 414(b), (c) and
(m).
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“
Corporation ” means Schering-Plough
Corporation.
“ Covered
Employee ” means an Employee who is, or who the Committee
determines may be, a “covered employee” within the
meaning of Section 162(m)(3) of the Code in the fiscal year in
which Schering-Plough would expect to be able to claim a tax
deduction with respect to a Performance Award.
“
Deferred Stock Account ” means a hypothetical
bookkeeping account established and maintained by Schering-Plough
on behalf of a Participant pursuant to Section 4.6(a) to track
Deferred Stock Units awarded to the Participant pending the
distribution of Shares in settlement of such units.
“
Deferred Stock Unit ” means the Award of an unfunded
contractual right granted under Section 4.6 to receive one Share in
the future, subject to any restrictions, as the Committee, in its
discretion, may determine.
“
Disabled ” or “ Disability ” means
an inability to engage in any substantial gainful activity by
reason of any medically determinable physical or mental impairment
that can be expected to result in death or can be expected to last
for a continuous period of not less than 12 months.
“
Dividend Equivalent ” means an amount equal to the
cash dividend or the Fair Market Value of the stock dividend that
would be paid on each Share underlying an Award if the Share were
duly issued and outstanding on the dividend record date.
“
Effective Date ” means May 19, 2006.
“
Employee ” means any individual who performs services
as a common law employee for Schering-Plough or an Affiliate or
Subsidiary.
“
Exchange Act ” means the United States Securities
Exchange Act of 1934, as amended.
“
Exercise Price ” means the price per Share, as fixed
by the Committee, at which Shares may be purchased under a Stock
Option.
“ Fair
Market Value ” of a Share means either:
(a) The closing
sales price of a Share as reported on the New York Stock Exchange
on the applicable date,
(b) If no sales of
Shares are reported for such date, the mean between the bid and
asked price of a Share on such Exchange at the close of the market
on such date, or
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(c) In the event
that the method for determining fair market value described in
clauses (a) or (b) is not practicable, the fair market value
of a Share determined in accordance with any other reasonable
method approved by the Committee in its discretion.
“
GAAP ” means United States generally accepted
accounting principles.
“
Incentive Stock Option ” means a Stock Option granted
under Section 4.4 of the Plan that meets the requirements of
Section 422 of the Code and any regulations or rules
promulgated thereunder and is designated in the Award Certificate
to be an Incentive Stock Option.
“
Involuntary Termination ” means a Termination of
Employment initiated by Schering-Plough or an Affiliate or
Subsidiary other than a Termination for Cause or a Termination Due
to Business Divestiture.
“
Nonqualified Stock Option ” means any Stock Option
granted under Section 4.4 of the Plan that is not an Incentive
Stock Option.
“ Other
Stock-Based Award ” means an Award (other than a Stock
Option, Restricted Stock or Deferred Stock Unit) granted under
Section 4.7 of the Plan that consists of, or is denominated
in, payable in, valued in whole or in part by reference to, or
otherwise based on or related to, Shares.
“
Participant ” means an Employee or Acquired Grantee
who has been granted an Award under the Plan.
“
Performance Award ” means an Award granted under
Section 4.8 of the Plan that is granted, vested or paid solely
on account of the attainment of a specified performance target in
relation to one or more Performance Measures.
“
Performance Cycle ” means a period typically measured
by Schering-Plough’s fiscal year or years over which the
level of attainment of one or more Performance Measures shall be
assessed; provided, however, that the Committee, in its discretion,
may determine to designate a Performance Cycle that is less than a
full fiscal year.
“
Performance Measure ” means, with respect to any
Performance Award, the business criteria selected by the Committee
to measure the level of performance of Schering-Plough during a
Performance Cycle. The Committee may select as the Performance
Measure for a Performance Cycle any one or combination of the
following corporate measures, as interpreted by the
Committee:
(a) Net
operating profit after taxes;
(b) Operating
profit before taxes;
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(d) Return
on assets or net assets;
(e) Total
shareholder return;
(f) Total
shareholder return (as compared with a peer group of
Schering-Plough);
(g) Earnings
before income taxes;
(k) Free
cash flow per Share;
(l) Revenue
(or any component thereof);
(o) Relative
Share performance;
(p) Economic
value added; and/or
“
Plan ” means the Schering-Plough Corporation 2006
Stock Incentive Plan, as set forth in this document and as may be
amended from time to time.
“ Prior
Plan ” means the Schering-Plough Corporation 2002 Stock
Incentive Plan.
“
Qualified Performance Award ” means a Performance
Award that is intended by the Committee to meet the requirements
for “qualified performance-based compensation” within
the meaning of Code Section 162(m) and Treasury
Regulation Section 1.162-27(e).
“
Qualified Performance Award Determination Period ”
means the period within which Committee determinations regarding
Performance Measures, targets and payout formulas in connection
with a Qualified Performance Award must be made. The Qualified
Performance Award Determination Period is the period beginning on
the first day of a Performance Cycle and ending no later than
90 days after commencement of the Performance Cycle; provided,
however, that in the case of a Performance Cycle that is
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less than
12 months in duration, the Qualified Performance Award
Determination Period shall end no later than the date on which 25%
of the Performance Cycle has elapsed.
“
Reporting Person ” means an Employee who is subject to
the reporting requirements of Section 16(a) of the Exchange
Act.
“
Restricted Stock ” means Shares issued pursuant to
Section 4.5, which are subject to such restrictions as the
Committee, in its discretion, shall impose.
“
Restriction Period ” means the period of time during
which the Restricted Stock Awards will remain subject to
restrictions imposed by the Committee and set forth in the Award
Certificate.
“
Retirement ” means, for purposes of a particular
Award, an Employee’s “retirement” as defined in
the Committee’s grant guidelines in effect as of the date the
Award is granted to the Employee or, if no such grant guidelines
are in effect as of the date of grant (or if such guidelines are in
effect, but do not define “retirement”), an
Employee’s Termination of Employment on or after the earliest
date the Employee is eligible to retire under
Schering-Plough’s tax-qualified retirement plans, or in the
case of a non-U.S. Employee, under the Worldwide Retirement
Plan.
“
Section 409A Specified Employee ” means a
“specified employee” within the meaning of Section
409A(2)(B)(i) of the Code, as amended, as determined by the
Committee.
“
Shares ” means shares of common stock, $.50 par value
per share, of Schering-Plough.
“ Stock
Option ” means a right granted under Section 4.4 of
the Plan to purchase from Schering-Plough a stated number of Shares
at the Exercise Price. Stock Options awarded under the Plan shall
be in the form of either Incentive Stock Options or Nonqualified
Stock Options.
“
Subsidiary ” means any corporation, partnership, joint
venture or other entity during any period in which at least a 50%
voting or profit interest is owned, directly or indirectly, by
Schering-Plough or any successor to Schering-Plough.
“
Termination Due to Business Divestiture ” means a
Termination of Employment due to a transaction or series of related
transactions (other than a transaction or series of transactions
that are a part of a Change in Control) that result in a
divestiture, sale, transfer, assignment or other disposition of any
division, subsidiary, business unit, product line or group, or any
other asset of Schering-Plough or any of its affiliates.
“
Termination for Cause ” shall have the definition
prescribed in the current employment agreement, if any, between
Schering-Plough and the relevant Employee or, in the absence of
such definition, shall mean a Termination of Employment initiated
by Schering-Plough or an Affiliate or Subsidiary incident to or
connected with a
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determination
that the Employee has engaged in misappropriation, theft,
embezzlement, kick-backs, bribery or similar deliberate, gross or
willful misconduct or dishonest acts or omissions. Termination for
Cause shall also include such a Termination of Employment incident
to or in connection with acts or omissions of the Employee that the
Committee reasonably determines to be willfully or wantonly harmful
to, or detrimental to the interests of, Schering-Plough or any of
its Affiliates or Subsidiaries, monetarily or otherwise.
“
Termination of Employment ” means the date of
cessation of an Employee’s employment relationship with
Schering-Plough and any Affiliate or Subsidiary for any reason,
with or without cause, as determined by Schering-Plough. A transfer
of an Employee between and among Schering-Plough, an Affiliate or a
Subsidiary shall not be deemed a Termination of Employment for
purposes of the Plan. Notwithstanding the foregoing, the date of an
Employee’s Termination of Employment for purposes of
determining the date that any payment or benefit that is treated as
nonqualified deferred compensation under Section 409A of the
Code is to be paid or provided (or in determining whether an
exemption to such treatment applies), and for purposes of
determining whether the Employee is a Section 409A Specified
Employee on the termination date, shall be the date on which the
Employee has incurred a “separation from service”
within the meaning of Treasury Regulation section 1.409A-1(h), or
in subsequent IRS guidance under Code section 409A.
3.1 The
Committee . The Plan shall be administered by the
Committee.
3.2
Authority of the Committee . The Committee shall have
authority, in its sole and absolute discretion and consistent with
applicable law and regulation, and subject to the terms of the
Plan, to:
(a) Interpret and
administer the Plan and any instrument or agreement relating to the
Plan;
(b) Prescribe the
rules and regulations that it deems necessary for the proper
operation and administration of the Plan, and amend or rescind any
existing rules or regulations relating the Plan;
(c) Select
Employees to receive Awards under the Plan;
(d) Determine the
form of an Award, the number of Shares subject to each Award, all
the terms and conditions of an Award, including, without
limitation, the conditions on exercise or vesting, the designation
of Stock Options as Incentive Stock Options or Nonqualified Stock
Options, and the circumstances in which an Award may be settled in
cash or Shares or may be cancelled, forfeited or suspended, and the
terms of the Award Certificate;
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(e) Determine
whether Awards will be granted singly, in combination or in
tandem;
(f) Establish and
interpret Performance Measures in connection with Performance
Awards, evaluate the level of performance over a Performance Cycle
and, in the case of Qualified Performance Awards, certify the level
of performance attained with respect to Performance
Measures;
(g) Waive or amend
any terms, conditions, restrictions or limitations on an Award,
except that the prohibition on the repricing of Stock Options, as
described in Section 4.4(h), and the limitations on elections
to defer payment of Deferred Stock Units, as described in Section
4.6(e), may not be waived;
(h) Except to the
extent that any such action would result in the imposition on a
Participant of an “additional tax” under
Section 409A of the Code, accelerate the vesting, exercise or
lapse of restrictions on an Award when such action or actions would
be in the best interest of Schering-Plough;
(i) Make any
adjustments permitted by the Plan (including but not limited to
adjustment of the number of Shares available under the Plan or any
Award) and any Award granted under the Plan as may be appropriate
pursuant to Article V;
(j) Subject to the
requirements of Section 409A of the Code, determine under
which circumstances Awards may be deferred and the extent to which
a deferral will be credited with Dividend Equivalents and interest
thereon;
(k) Determine
whether a Nonqualified Stock Option or Restricted Stock Award may
be transferable to family members, a family trust or a family
partnership;
(l) Establish any
sub-plans and make any modifications to the Plan that the Committee
may determine to be necessary to implement and administer the Plan
in countries outside the United States;
(m) Appoint such
agents as it shall deem appropriate for proper administration of
the Plan; and
(n) Take any and
all other actions it deems necessary or advisable for the proper
operation or administration of the Plan.
3.3
Committee Determinations . All determinations of the
Committee shall be made in its sole discretion, in the best
interest of Schering-Plough, not as a fiduciary, and in keeping
with the objectives of the Plan and need not be uniform as to
similarly situated individuals. Committee determinations shall be
made by a majority of its members present at a meeting at which a
quorum is present and shall be final, conclusive and binding on all
persons having an interest in the Plan and any Awards granted under
the
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Plan. Any
determination of the Committee that is reduced to writing and
signed by all of the members of the Committee shall be as fully
effective as if it had been made at a meeting duly held.
3.4
Delegation of Authority . The Committee, in its discretion
and consistent with applicable law and regulations, may delegate
some or all of its authority and duties under the Plan to such
other individual, individuals or committee as it may deem
advisable, under such conditions and subject to such limitations as
the Committee may establish. Notwithstanding the foregoing, only
the Committee shall have authority to grant and administer Awards
to Covered Employees and other Reporting Persons, to establish and
certify Performance Measures for Qualified Performance Awards and
to grant Awards to any Employee who is acting as a delegate of the
Committee in respect of the Plan.
3.5
Employment of Advisors . The Committee may employ attorneys,
consultants, accountants and other advisors, and the Committee,
Schering-Plough and the officers and directors of Schering-Plough
may rely upon the advice, opinions or valuations of the advisors
employed.
3.6 No
Liability . No member of the Committee, nor any person acting
as a delegate of the Committee in respect of the Plan, shall be
liable for any losses incurred by any person resulting from any
action, interpretation or construction made in good faith with
respect to the Plan or any Award granted under the Plan.
4.1
Eligibility . All Employees shall be eligible to receive
Awards under the Plan.
4.2
Participation . The Committee, at its sole discretion, shall
select from time to time Participants from those persons eligible
under Section 4.1 to receive Awards under the Plan.
4.3 Forms of
Award . Awards shall be in the form determined by the
Committee, in its discretion, and shall be evidenced by an Award
Certificate. Awards may be granted singly or in combination or
tandem with other Awards.
4.4 Stock
Options . The Committee may grant Stock Options under the Plan
to those Employees whom the Committee may from time to time select,
in the amounts and pursuant to such other terms and conditions that
the Committee, in its discretion, may determine and set forth in
the Award Certificate, subject to the following
provisions.
(a) Form .
Stock Options granted under the Plan may, at the discretion of the
Committee, be in the form of Nonqualified Stock Options, Incentive
Stock Options or a combination of the two, subject to the
restrictions set forth in paragraph (g) below with respect to
grants of Incentive Stock Options. The Committee shall designate
the form of the Stock Option at the time of grant and such form
shall be specified in the Award Certificate. Where both a
Nonqualified Stock Option and an
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Incentive Stock
Option are granted to an Employee at the same time, such Awards
shall be deemed to have been granted in separate grants, shall be
clearly identified, and in no event will the exercise of one such
Award affect the right to exercise the other Award.
(b) Amount of
Shares . The Committee may grant Stock Options to an Employee
in such amounts as the Committee may determine, subject to the
limitations set forth in Section 5.1 of the Plan. The number of
Shares subject to a Stock Option shall be set forth in the Award
Certificate.
(c) Exercise
Price . The Exercise Price of Stock Options granted under the
Plan shall be determined by the Committee at the time of grant and
set forth in the Award Certificate. In no event shall the Exercise
Price with respect to any Share subject to a Stock Option be set at
a price that is less than the grant date Fair Market Value of a
Share.
(d) Option
Term . Except as otherwise provided in paragraph (e)(iv) of
this Section 4.4, all Stock Options granted under the Plan
shall lapse no later than the tenth anniversary of the date of
grant.
(e) Timing of
Exercise . Except as the Committee may otherwise determine at
the time of grant, and subject to (1) the Committee’s
authority under Section 3.2(g) to waive or amend any terms,
conditions, limitations or restrictions of an Award,
(2) Section 5.4 relating to Changes in Control and
(3) the special forfeiture provisions of Section 7.2,
each Stock Option granted under the Plan shall be exercisable in
whole or in part, subject to the following conditions, limitations
and restrictions.
(i)
Vesting . The Committee will determine and set forth
in the Award Certificate the date on which the Stock Options
subject to the Award may first be exercised. Unless the Award
Certificate provides otherwise, and except as otherwise provided in
this Section 4.4(e) and in Section 5.4 relating to Changes in
Control, no Stock Option shall be exercisable prior to the one-year
anniversary of the date of grant.
(ii)
Retirement . Upon a Participant’s
Retirement,
(A) All Stock
Options granted to the Participant during the one-year period
immediately preceding the Participant’s Retirement date that
have not become exercisable as of the such Retirement date shall be
forfeited;
(B) All Stock
Options granted to the Participant more than one year prior to the
Participant’s Retirement date that have not become
exercisable as of such Retirement date shall continue to become
exercisable in accordance with the vesting schedule set out in the
applicable Award Certificate; and
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(C) To the extent
that Stock Options have become exercisable as of the
Participant’s Retirement date, or become exercisable after
such date in accordance with paragraph (B) above, such Stock
Options must be exercised, if at all, within five years after the
Participant’s Retirement date, or, if earlier, no later than
the original expiration date of the Stock Option.
(D) In the event
the Participant’s death occurs after Retirement, the
Participant’s Stock Options that have not become exercisable
in accordance with paragraph (B) as of the date of the
Participant’s death shall become immediately exercisable and
all of the Participant’s Stock Options must be exercised, if
at all, within the later of (x) five years from the
Participant’s Retirement date or, if earlier, the original
expiration date of Stock Option and (y) one year from the
Participant’s date of death.
(iii)
Termination Due to Business Divestiture . Upon a
Participant’s Termination Due to Business Divestiture, all
Stock Options granted to the Participant that have not become
exercisable as of the date of such Termination Due to Business
Divestiture shall become immediately exercisable and must be
exercised, if at all, within five years after such termination
date, but in no event later than the original expiration date of
the Stock Option.
(iv)
Disability . Upon the Disability of a Participant,
all Stock Options granted to the Participant that have not become
exercisable as of the date of Disability shall become immediately
exercisable and shall remain exercisable for the full duration of
the Stock Option’s original term.
(v)
Death . Upon a Participant’s Termination of
Employment due to his or her death during the term of a Stock
Option, all Stock Options held by the Participant at the time of
his or her death that are not already exercisable shall become
immediately exercisable and all Stock Options shall remain
exercisable for the longer of (A) the full duration of the
Stock Option’s original term and (B) one year from the
Participant’s date of death. Stock Options of a deceased
Participant may be exercised only by the Participant’s
Beneficiary or, if none, by the legal representative of the
Participant’s estate or by the person given authority to
exercise such Stock Options by the Participant’s will or by
operation of law. In the event a Stock Option is exercised by the
executor or administrator of a deceased Participant, or by the
person or persons to whom the Stock Option has been transferred
under the Participant’s will or the applicable laws of
descent and distribution, Schering-Plough shall be under no
obligation to deliver Shares unless and until Schering-Plough is
satisfied that the person or persons exercising the Stock Option is
or are the duly appointed executor(s) or administrator(s) of the
deceased Participant or the person to whom the Stock Option has
been transferred under the Participant’s will or by the
applicable laws of descent and distribution.
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(vi) Other
Terminations . Upon an Employee’s Termination of
Employment for any reason other than death, Disability, Retirement,
Termination Due to Business Divestiture or Termination for Cause,
all Stock Options that have not become exercisable as of the date
of termination shall be forfeited and to the extent that Stock
Options have become exercisable as of such date, such Stock Options
must be exercised, if at all, within three months after such
Termination of Employment (one year in the case of an Involuntary
Termination), but in no event later than the original expiration
date of the Stock Option.
(f) Method of
Exercise; Payment of Exercise Price . A Stock Option may be
exercised by giving written notice to Schering-Plough specifying
the number of Shares to be purchased, which shall be accompanied by
full payment of the Exercise Price plus applicable taxes, if any.
No Stock Option shall be exercised for less than the lesser of 100
Shares or the full number of Shares for which the Stock Option is
then exercisable. No stock certificates shall be registered and
delivered, and no Participant shall have any rights to dividends or
other rights of a shareholder with respect to Shares subject to the
Stock Option until the Participant has given written notice of
exercise, made full payment of the Exercise Price for such Shares
(including taxes) and, if requested by Schering-Plough, has given
the representation described in Section 7.4. Payment of the
Exercise Price may be made in cash or by certified check, bank
draft, wire transfer, or postal or express money order. In
addition, at the discretion of the Committee, payment of all or a
portion of the Exercise Price may be made by —
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