UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
Commission file number 1-6571
SCHERING-PLOUGH CORPORATION
Incorporated in New Jersey 22-1918501
One Giralda Farms (I.R.S. Employer Identification No.)
Madison, N.J. 07940-1000 (973) 822-7000
(telephone number)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months, and (2) has been subject to
such filing requirements for the past 90 days.
YES X NO
Common Shares Outstanding as of March 31, 1998: 733,667,804
PART I. - FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
SCHERING-PLOUGH CORPORATION AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED INCOME
(UNAUDITED)
(Amounts in millions, except per share figures)
<CAPTION>
Three Months
Ended
March 31
1998 1997
<S> <C> <C>
Sales . . . . . . . . . . . . . $1,908 $1,568
Costs and expenses:
Cost of sales. . . . . . . . . 380 289
Selling, general
and administrative. . . . . . 712 594
Research and development . . . 224 179
Other, net . . . . . . . . . . (4) 9
1,312 1,071
Income before income taxes. . . 596 497
Income taxes. . . . . . . . . . 146 122
Net Income. . . . . . . . . . . $ 450 $ 375
Basic earnings per common share $ .61 $ .51
Diluted earnings per common share $ .61 $ .51
Dividends per common share. . . $ .19 $ .165
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
SCHERING-PLOUGH CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(Amounts in millions, except per share figures)
<CAPTION>
March 31, December 31,
1998 1997
<S> <C> <C>
Assets
Cash and cash equivalents . . . . . . . . $ 622 $ 714
Accounts receivable, net. . . . . . . . . 794 645
Inventories . . . . . . . . . . . . . . . 721 713
Prepaid expenses, deferred income
taxes and other current assets . . . . . 898 848
Total current assets. . . . . . . . . 3,035 2,920
Property, plant and equipment . . . . . . 3,765 3,750
Less accumulated depreciation . . . . . . 1,260 1,224
Property, net . . . . . . . . . . . . 2,505 2,526
Intangible assets, net. . . . . . . . . . 481 481
Other assets. . . . . . . . . . . . . . . 630 580
$6,651 $6,507
Liabilities and Shareholders' Equity
Accounts payable. . . . . . . . . . . . . $ 786 $ 803
Short-term borrowings and current
portion of long-term debt. . . . . . . . 449 581
Other accrued liabilities . . . . . . . . 1,449 1,507
Total current liabilities . . . . . . 2,684 2,891
Long-term debt. . . . . . . . . . . . . . 46 46
Other long-term liabilities . . . . . . . 773 749
Shareholders' Equity:
Preferred shares - $1 par value
each; issued - none. . . . . . . . . . . - -
Common shares - $1 par value;
issued - 1998, 1,015; 1997, 1,015 . . . 1,015 1,015
Paid-in capital . . . . . . . . . . . . . 161 96
Retained earnings . . . . . . . . . . . . 5,984 5,673
Accumulated other comprehensive income. . (250) (244)
Total . . . . . . . . . . . . . . . . 6,910 6,540
Less treasury shares, at cost -
1998, 281 shares; 1997, 282 shares . . . 3,762 3,719
Total shareholders' equity. . . . . . 3,148 2,821
$6,651 $6,507
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
SCHERING-PLOUGH CORPORATION AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31
(UNAUDITED)
(Amounts in millions)
<CAPTION>
1998 1997
<S> <C> <C>
Operating Activities:
Net Income. . . . . . . . . . . . . . . . $450 $375
Depreciation and amortization . . . . . . 56 47
Accounts receivable . . . . . . . . . . . (166) (238)
Inventories . . . . . . . . . . . . . . . (14) (5)
Prepaid expenses and other assets . . . . (66) (64)
Accounts payable and other liabilities . 62 74
Net cash provided by operating activities 322 189
Investing Activities:
Capital expenditures and purchased
software . . . . . . . . . . . . . . . . (41) (62)
Reduction of investments. . . . . . . . . - 28
Purchases of investments. . . . . . . . . (26) (31)
Other, net. . . . . . . . . . . . . . . . (4) (1)
Net cash used for investing
activities . . . . . . . . . . . . . . . (71) (66)
Financing Activities:
Short-term borrowings, net. . . . . . . . (128) 206
Common shares repurchased . . . . . . . . (34) (3)
Dividends paid to common shareholders . . (140) (121)
Other, net. . . . . . . . . . . . . . . . (40) 18
Net cash provided by (used for) financing
activities . . . . . . . . . . . . . . . (342) 100
Effect of exchange rates on cash and
cash equivalents. . . . . . . . . . . . . (1) (1)
Net increase (decrease) in cash and
cash equivalents . . . . . . . . . . . . (92) 222
Cash and cash equivalents, beginning
of period . . . . . . . . . . . . . . . . 714 535
Cash and cash equivalents, end of period . $622 $757
See notes to consolidated financial statements.
</TABLE>
SCHERING-PLOUGH CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(Amounts in millions, except per share figures)
Basis of Presentation
The unaudited financial statements included herein have been
prepared pursuant to the rules and regulations of the Securities
and Exchange Commission for reporting on Form 10-Q. Certain
information and footnote disclosures normally included in
financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations. The statements should be
read in conjunction with the accounting policies and notes to
consolidated financial statements included in the Company's 1997
Annual Report on Form 10-K.
In the opinion of management, the financial statements reflect
all adjustments necessary for a fair statement of the operations
for the interim periods presented.
Earnings Per Common Share
The shares used for basic earnings per common share and diluted
earnings per common share are reconciled as follows (number of
shares in millions):
Three Months
Ended March 31,
1998 1997
Average shares outstanding for
basic earnings per share . . . . . 733 731
Dilutive effect of options and
deferred stock units . . . . . . . 10 7
Average shares outstanding for
diluted earnings per share . . . . 743 738
As of March 31, 1998 and 1997, there were 5.1 million and 4.2
million options outstanding, respectively, with exercise prices
higher than the average price of the Company's common stock
during the first quarter of 1998 and 1997, respectively.
Accordingly, these options are not included in the dilutive
effects indicated above.
Comprehensive Income and Segments
In 1997, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 130,
"Reporting Comprehensive Income." Comprehensive income is
defined as the total change in shareholders' equity during the
period other than from transactions with shareholders. For the
Company, comprehensive income is comprised of net income, the net
change in the accumulated foreign currency translation adjustment
account and the net change in unrealized gains and losses on
securities classified for SFAS No. 115 purposes as held available
for sale. Total comprehensive income for the three months ended
March 31, 1998 and 1997 was $444 and $338, respectively.
In 1997, the FASB issued SFAS No. 131, "Disclosure About Segments
of an Enterprise and Related Information." As required by the
standard, the Company will begin reporting under SFAS No. 131 in
its 1998 Annual Report.
Inventories
Inventories consisted of: March 31, December 31,
1998 1997
Finished products . . . . . . . $331 $334
Goods in process. . . . . . . . 214 191
Raw materials and supplies. . . 176 188
Total inventories . . . . . . $721 $713
Legal and Environmental Matters
The Company is involved in various claims and legal proceedings
of a nature considered normal to its business, including
environmental matters and product liability cases. The recorded
liabilities for these matters at March 31, 1998 were not
material. Management believes that, except for the matters
discussed in the following paragraph, it is remote that any
material liability in excess of the amounts accrued will be
incurred.
The Company is a defendant in more than 160 antitrust actions
commenced (starting in 1993) in state and federal courts by
independent retail pharmacies, chain retail pharmacies and
consumers. The plaintiffs allege price discrimination and/or
conspiracy between the Company and other defendants to restrain
trade by jointly refusing to sell prescription drugs at
discounted prices to the plaintiffs.
One of the federal cases is a class action on behalf of
approximately two-thirds of all retail pharmacies in the United
States and alleges a price-fixing conspiracy. The Company has
agreed to settle the federal class action for a total of $22
payable over three years. The settlement provides, among other
things, that the Company shall not refuse to grant discounts on
brand-name prescription drugs to a retailer based solely on its
status as a retailer and that, to the extent a retailer can
demonstrate its ability to affect market share of a Company brand-
name prescription drug in the same manner as a managed care
organization with which the retailer competes, it will be
entitled to negotiate similar incentives subject to the rights,
obligations, exemptions and defenses of the Robinson-Patman Act
and other laws and regulations. The United States District Court
in Illinois approved the settlement of the federal class action
on June 21, 1996. In June 1997, the Seventh Circuit Court of
Appeals dismissed all appeals from that settlement, and it is not
subject to further review. In addition, in August 1997, the
Seventh Circuit ruled that there was sufficient evidence of
participation in the alleged conspiracy by certain wholesalers to
require them to proceed to trial.
Four of the state antitrust cases have been certified as class
actions. Two are class actions on behalf of certain retail
pharmacies in California and Wisconsin, and the other two are
class actions in California and the District of Columbia, on
behalf of consumers of prescription medicine. In addition, an
action has been brought in Alabama purportedly on behalf of
consumers in Alabama and several other states. Plaintiffs are
seeking to maintain the action as a class action. The Company
has settled the retailer class action in Wisconsin and the
alleged class action in Minnesota, subject to Court approval; the
settlement amounts were not significant. Plaintiffs generally
seek treble damages in an unspecified amount and an injunction
against the allegedly unlawful conduct. The Company believes
that all of the antitrust actions are without merit and is
defending itself vigorously.
In April 1997, certain of the plaintiffs in the federal class
action commenced another purported class action in United States
District Court in Illinois against the Company and the other
defendants who settled the previous federal class action. The
complaint alleges that the defendants conspired not to implement
the settlement commitments following the settlement discussed
above. The District Court has denied the plaintiffs' motion for
a preliminary injunction hearing. The Company believes the
action is without merit and is defending itself vigorously.
On March 13, 1996, the Company was notified that the United
States Federal Trade Commission (FTC) is investigating whether
the Company, along with other pharmaceutical companies, conspired
to fix prescription drug prices. The investigation is ongoing.
The Company vigorously denies that it has engaged in any price-
fixing conspiracy.
The Company is a defendant in a state court action in Texas
brought by Foxmeyer Health Corporation, the parent of a
pharmaceutical wholesaler that filed for bankruptcy in August
1996, which has now been removed to Federal Bankruptcy Court in
Dallas. The case is against another pharmaceutical wholesaler
and 11 pharmaceutical companies, and alleges that the defendants
conspired to drive the plaintiff's wholesaler subsidiary out of
business. The plaintiff is seeking damages in the amount of
$400. Motions for summary judgment are pending in the Delaware
bankruptcy of the bankrupt wholesaler.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations - three months ended March 31, 1998
compared with the corresponding period in 1997.
Sales
Consolidated sales for the first quarter increased $340 million
or 22 percent compared with the same period in 1997. Excluding
the effect of foreign exchange rate fluctuations, consolidated
sales grew 25 percent. Excluding the June 1997 acquisition of the
worldwide animal health business of Mallinckrodt Inc., which
contributed sales of $91 million, sales would have increased 16
percent. This performance reflects worldwide CLARITIN brand sales
of $436 million in the first quarter, compared with $353 million
in 1997.
Domestic prescription pharmaceutical sales advanced 27 percent
for the first three months of 1998. Sales of allergy/respiratory
products increased 26 percent, due to continued strong growth of
the CLARITIN brand of nonsedating antihistamines. Sales of
VANCERIL asthma products increased in the quarter reflecting
market share growth. NASONEX, a once-daily corticosteroid for
allergic rhinitis, launched in the first quarter, also
contributed to sales growth.
U.S. sales of cardiovascular products rose 35 percent in the
quarter, reflecting market share gains for IMDUR, a once-daily
oral nitrate for angina and K-DUR, a sustained-release potassium
supplement.
Domestic sales of anti-infective and anticancer products rose 48
percent compared with 1997, primarily due to increased
utilization of INTRON A, the Company's alpha interferon
anticancer and antiviral agent, for malignant melanoma and
hepatitis C.
U.S. sales of dermatological products increased 35 percent for
the quarter, primarily due to higher sales of LOTRISONE, a
topical antifungal/anti-inflammatory cream, ELOCON a medium-
potency topical steroid and DIPROLENE, a high potency topical
steroid.
International ethical pharmaceutical product sales increased 4
percent for the first three months of 1998. Excluding the impact
of foreign currency exchange rate fluctuations, sales would have
risen 13 percent. Sales of allergy/respiratory products advanced
13 percent for the quarter, led by CLARITIN in most world
markets.
International dermatological product sales grew 16 percent, led
by ELOCON and DIPROSONE, a high potency topical steroid.
Cardiovascular product sales grew 34 percent driven by higher
sales of NITRO-DUR, a transdermal nitroglycerin patch for angina.
International sales of anti-infective and anticancer products
declined 1 percent in the quarter, due to lower sales for INTRON
reflecting a decline in the alpha-interferon market in Japan and
a decrease in sales for EULEXIN, a prostate cancer therapy, due
to generic and branded competition. International sales
benefited from higher sales of LOSEC, an anti-ulcer treatment
licensed from AB Astra.
Worldwide sales of animal health products rose 182 percent in the
first quarter, excluding foreign exchange rate fluctuations. On
June 30, 1997, the Company completed the acquisition of the
worldwide animal health business of Mallinckrodt Inc. which
contributed sales of $91 million in the quarter. Excluding
Mallinckrodt, sales would have increased 7 percent versus prior
year.
Sales of health care products increased 10 percent in the first
quarter of 1998. The higher sales were recorded in all three
business units - footcare, suncare and over-the-counter (OTC)
products.
Income before income taxes increased 20 percent for the quarter
as compared with 1997, and represented 31.3 percent of sales
versus 31.7 percent last year.
Cost of sales as a percentage of sales increased to 19.9 percent
in the quarter from 18.4 percent in 1997, principally driven by
the inclusion of Mallinckrodt products which have lower margins.
Selling, general and administrative expenses represented 37.3
percent of sales in the first quarter compared with 37.8 percent
last year. The decrease in the ratio was the result of timing
related spending for promotional and selling activities.
Research and development spending rose 25 percent in the quarter,
representing 11.7 percent of sales compared with 11.4 percent a
year ago. The higher spending reflects the Company's funding of
both internal research efforts and research collaborations with
various partners to develop a steady flow of innovative products
and line extensions.
The effective tax rate was 24.5 percent in the first three months
of both 1998 and 1997.
Basic and diluted earnings per common share advanced 20 percent
in the first quarter to $.61 from $.51 in 1997. Excluding the
impact of fluctuations in foreign currency exchange rates, basic
and diluted earnings per common share would have increased
approximately 24 percent in the quarter.
Additional Factors Influencing Operations
In the United States, many of the Company's pharmaceutical
products are subject to increasingly competitive pricing as
managed care groups, institutions, government agencies and other
buying groups seek price discounts. In most international
markets, the Company operates in an environment of government-
mandated cost containment programs. In an effort to contain
medical costs, several governments have placed restrictions on
physician prescribing levels and patient reimbursements,
emphasized greater use of generic drugs and enacted across-the-
board price cuts.
Since the Company is unable to predict the final form and timing
of any future health care initiatives, their effect on operations
and cash flows cannot be reasonably estimated.
The market for pharmaceutical products is competitive. The
Company's operations may be affected by technological advances of
competitors, patents granted to competitors, new products of
competitors and generic competition as the Company's products
mature. In addition, patent positions can be highly uncertain
and an adverse result in a patent dispute can preclude
commercialization of products or negatively affect sales of
existing products. The effect on operations of competitive
factors and patent disputes cannot be predicted.
Uncertainties inherent in government regulatory approval
processes, including among other things delays in approval of new
products, may also affect the Company's operations. The effect
on operations of regulatory approval processes cannot be
predicted.
Liquidity and financial resources - three months ended March 31,
1998
Cash generated from operations continues to be the Company's
major source of funds to finance working capital, capital
expenditures, acquisitions, shareholder dividends and common
share repurchases. Cash provided by operating activities was
$322 million. Cash was used to reduce short-term borrowings by
$128 million, pay shareholder dividends of $140 million, fund
capital expenditures of $39 million, repurchase shares for $34
million and purchase investments for $26 million.
In October 1997, the Board of Directors authorized the repurchase
of $1 billion of common shares. This program commenced in
January 1998 and as of March 31, 1998, this program was
approximately three percent complete.
In April 1998, the Board of Directors increased the quarterly
dividend by 16 percent to $.22 from $.19 per commmon share.
The Company's liquidity and financial resources continue to be
sufficient to meet its operating needs.
Market Risk Disclosures
As discussed in the 1997 Annual Report to Shareholders, the
Company's exposure to market risk from changes in foreign
currency exchange rates and interest rates, in general, is not
material.
Cautionary Statements for Forward Looking Information
Management's discussion and analysis set forth above contains
certain forward looking statements, including statements
regarding the Company's financial position and results of
operations. These forward looking statements are based on
current expectations. Certain factors have been identified by
the Company in Exhibit 99 of the Company's December 31, 1997,
Form 10-K filed with the Securities and Exchange Commission,
which could cause the Company's actual results to differ
materially from expected and historical results. Exhibit 99 from
the Form 10-K is incorporated by reference herein.
PART II OTHER INFORMATION
Item 1. Legal Proceedings
The first paragraph of Item 3, Legal Proceedings, of Part I of
the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1997, relating to certain lawsuits arising out
of the use of synthetic estrogens, is incorporated herein by
reference. The alleged class action has been dismissed.
The ninth paragraph of Item 3, Legal Proceedings, of Part I of
the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1997, relating to a state court action in
Texas brought by Foxmeyer Health Corporation, is incorporated
herein by reference. The case has been removed to Federal
Bankruptcy Court in Dallas, and motions for summary judgment by
the defendants are pending in the Delaware bankruptcy of the
bankrupt wholesaler.
Item 4. Submission of Matters to a Vote of Security Holders
(a) The Annual Meeting of Shareholders was held on April 28,
1998.
(b) Not applicable.
(c) The designation by the Board of Directors of Deloitte &
Touche LLP to audit the books and accounts of the
Corporation for the year ended December 31, 1998 was
ratified by a vote of shares as follows:
FOR AGAINST ABSTAIN
645,358,223 1,303,705 1,629,186
All of the nominees for director were elected for a three year
term by a vote of shares, as follows:
FOR WITHHELD
Hugh A. D'Andrade 642,341,485 5,949,629
Richard Jay Kogan 642,300,926 5,990,188
Donald L. Miller 641,855,251 6,435,863
Richard de J. Osborne 642,309,561 5,981,553
William A. Schreyer 642,068,772 6,222,342
(d) None
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits - The following Exhibits are filed with this
document:
Exhibit
Number Description
10(a) - Third Amendment to the Employment Agreement
between the Company and Robert P. Luciano
10(b) - Fourth Amendment to the Employment Agreement
between the Company and Richard J. Kogan
10(c) - Third Amendment to the Employment Agreement
between the Company and Hugh A. D'Andrade
10(d) - Agreement between the Company and Robert P.
Luciano dated February 25, 1998
10(e) - Amended and Restated Supplemental Executive
Retirement Plan
10(f) - Amended and Restated Retirement Benefits
Equalization Plan
10(g) - Forms of Amendment to Split Dollar Agreement
between the Company and its executive
officers, Trust related thereto and related
Collateral Assignment Agreement
10(h) - Amendment to Directors Stock Award Plan
27 - Financial Data Schedule
99 - Company Statements Relating to Forward
Looking Information
b) Reports on Form 8-K:
No report was filed during the three months ended March 31,
1998.
SIGNATURE(S)
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
Schering-Plough Corporation
(Registrant)
Date May 7, 1998 /s/Thomas H. Kelly
Thomas H. Kelly
Vice President and Controller
Exhibit 10(a)
THIRD AMENDMENT TO EMPLOYMENT AGREEMENT
THIS THIRD AMENDMENT to the Employment Agreement by
and between SCHERING-PLOUGH CORPORATION, a New Jersey corporation
(the "Company"), and ROBERT P. LUCIANO (the "Employee") dated as
of September 26, 1989, as amended as of June 28, 1994, and as
further amended as of March 1, 1995 (as so amended, the
"Employment Agreement"), is made and entered into as of this 25th
day of February, 1998.
WHEREAS, the Company and the Employee wish to amend
the Employment Agreement as set forth below;
NOW, THEREFORE, IN CONSIDERATION of the mutual
promises, covenants and agreements set forth below, it is hereby
agreed as follows:
1. Subparagraph (k)(i) of Section 3 of the
Employment Agreement is hereby amended by deleting the fifth and
sixth full paragraphs thereof and inserting the following:
The Employee may elect (the "Employee's Lump Sum
Election") to receive payment of the actuarial equivalent of the
aggregate of his Normal Supplement or Early Retirement
Supplement, as the case may be (the "Employee's Benefit") and the
benefit payable to his wife after his death pursuant to this
subparagraph (k)(i) (the "Survivor's Benefit") in a lump sum (x)
in cash on the date of his retirement or on the first day of any
month thereafter not later than the first day of the month
coincident with or next following the second anniversary of the
date of his retirement or on the fifth, tenth, fifteenth or
twentieth anniversary of the date of his retirement or (y) in
two, three, four, five, ten, fifteen or twenty equal annual cash
installments commencing on the date of his retirement or the
first day of any month thereafter not later than the first day of
the month coincident with or next following the second
anniversary of the date of his retirement. If the Employee dies
after retirement with an Employee's Lump Sum Election in effect
but prior to the payment of the full amount of the lump sum or
annual installments due thereunder, payment of the unpaid amount
thereof shall be made to his surviving spouse, designated
beneficiary or estate in accordance with his election. Payment
made in accordance with this paragraph to the Employee, his
surviving spouse, designated beneficiary or estate shall
constitute full and complete satisfaction of the Company's
obligation in respect of the Employee's Benefit and the
Survivor's Benefit.
If the Employee does not make the Employee's
Lump Sum Election, the Employee's surviving spouse may elect (the
"Survivor's Lump Sum Election") to receive the actuarial
equivalent of the Survivor's Benefit, if any, in a lump sum (x)
in cash on the date of the Employee's death or the first day of
any month thereafter not
later than the first day of the month coincident with or next
following the second anniversary of the Employee's death or on
the fifth, tenth, fifteenth or twentieth anniversary of his death
or (y) in two, three, four, five, ten, fifteen or twenty equal
annual cash installments commencing on the date of the Employee's
death or the first day of any month thereafter not later than the
first day of the month coincident with or next following the
second anniversary of the Employee's death.
2. Except as provided above, the Employment
Agreement shall continue in effect without alteration as in
effect on the date hereof. The Employment Agreement, as amended
by this Third Amendment, constitutes the entire agreement of the
parties and supersedes all prior agreements and understandings
with respect to the subject matter hereof and thereof.
IN WITNESS WHEREOF, the Employee and, pursuant to
due authorization from its Board of Directors, the Company have
caused this Agreement to be executed as of the day and year first
above written.
_______________________
Robert P. Luciano
SCHERING-PLOUGH CORPORATION
_______________________
Richard Jay Kogan
President and Chief Executive Officer
Exhibit 10(b)
FOURTH AMENDMENT TO EMPLOYMENT AGREEMENT
THIS FOURTH AMENDMENT to the Employment Agreement by
and between SCHERING-PLOUGH CORPORATION, a New Jersey
corporation (the "Company"), and RICHARD JAY KOGAN (the
"Employee") dated as of September 26, 1989, as amended as of
June 28, 1994, as further amended as of March 1, 1995, and as
further amended as of October 24, 1995 (as so amended, the
"Employment Agreement"), is made and entered into as of this
25th day of February, 1998.
WHEREAS, the Company and the Employee wish to amend
the Employment Agreement as set forth below;
NOW, THEREFORE, IN CONSIDERATION of the mutual
promises, covenants and agreements set forth below, it is hereby
agreed as follows:
1. Subparagraph (j)(i)(III) of Section 3 of the
Employment Agreement is hereby amended by deleting subparagraphs
(CCC) and (DDD) and inserting the following:
(CCC) The Employee may elect (the "Employee's
Lump Sum Election") to receive payment of the actuarial
equivalent of the aggregate of his Normal Supplement or Early
Retirement Supplement, as the case may be (the "Employee's
Benefit") and the Survivor's Benefit in a lump sum (x) in cash
on the date of his retirement or on the first day of any month
thereafter not later than the first day of the month coincident
with or next following the second anniversary of the date of his
retirement or on the fifth, tenth, fifteenth or twentieth
anniversary of the date of his retirement or (y) in two, three,
four, five, ten, fifteen or twenty equal annual cash
installments commencing on the date of his retirement or the
first day of any month thereafter not later than the first day
of the month coincident with or next following the second
anniversary of the date of his retirement. If the Employee dies
after retirement with an Employee's Lump Sum Election in effect
but prior to the payment of the full amount of the lump sum or
annual installments due thereunder, payment of the unpaid amount
thereof shall be made to his surviving spouse, designated
beneficiary or estate in accordance with his election. Payment
made in accordance with this subsection (CCC) to the Employee,
his surviving spouse, designated beneficiary or estate shall
constitute full and complete satisfaction of the Company's
obligation in respect of the Employee's Benefit and the
Survivor's Benefit.
(DDD) If the Employee does not make the
Employee's Lump Sum Election, the Employee's surviving spouse
may elect (the "Survivor's Lump Sum Election") to receive the
actuarial equivalent of the Survivor's Benefit, if any, in a
lump sum (x) in cash on the date of the Employee's death or the
first day of any month thereafter not
10(b)
later than the first day of the month coincident with or next
following the second anniversary of the Employee's death or on
the fifth, tenth, fifteenth or twentieth anniversary of his
death or (y) in two, three, four, five, ten, fifteen or twenty
equal annual cash installments commencing on the date of the
Employee's death or the first day of any month thereafter not
later than the first day of the month coincident with or next
following the second anniversary of the Employee's death.
2. Except as provided above, the Employment
Agreement shall continue in effect without alteration as in
effect on the date hereof. The Employment Agreement, as amended
by this Fourth Amendment, constitutes the entire agreement of
the parties and supersedes all prior agreements and
understandings with respect to the subject matter hereof and
thereof.
IN WITNESS WHEREOF, the Employee and, pursuant to
due authorization from its Board of Directors, the Company have
caused this Agreement to be executed as of the day and year
first above written.
_______________________
Richard Jay Kogan
SCHERING-PLOUGH CORPORATION
_______________________
Robert P. Luciano
Chairman of the Board
Exhibit 10(c)
THIRD AMENDMENT TO EMPLOYMENT AGREEMENT
THIS THIRD AMENDMENT to the Employment Agreement by and
between SCHERING-PLOUGH CORPORATION, a New Jersey corporation
(the "Company"), and HUGH A. D'ANDRADE (the "Employee") dated as
of June 28, 1994, as amended as of March 1, 1995, and as further
amended as of December 11, 1995 (as so amended, the "Employment
Agreement"), is made and entered into as of this 25th day of
February, 1998.
WHEREAS, the Company and the Employee wish to amend the
Employment Agreement as set forth below;
NOW, THEREFORE, IN CONSIDERATION of the mutual promises,
covenants and agreements set forth below, it is hereby agreed as
follows:
1. Subparagraph (j)(i)(III) of Section 3 of the
Employment Agreement is hereby amended by deleting subparagraphs
(CCC) and (DDD) and inserting the following:
(CCC) The Employee may elect (the
"Employee's Lump Sum Election") to receive payment of the
actuarial equivalent of the aggregate of his Normal Supplement or
Early Retirement Supplement, as the case may be (the "Employee's
Benefit") and the Survivor's Benefit in a lump sum (x) in cash on
the date of his retirement or on the first day of any month
thereafter not later than the first day of the month coincident
with or next following the second anniversary of the date of his
retirement or on the fifth, tenth, fifteenth or twentieth
anniversary of the date of his retirement or (y) in two, three,
four, five, ten, fifteen or twenty equal annual cash installments
commencing on the date of his retirement or the first day of any
month thereafter not later than the first day of the month
coincident with or next following the second anniversary of the
date of his retirement. If the Employee dies after retirement
with an Employee's Lump Sum Election in effect but prior to the
payment of the full amount of the lump sum or annual installments
due thereunder, payment of the unpaid amount thereof shall be
made to his surviving spouse, designated beneficiary or estate in
accordance with his election. Payment made in accordance with
this subsection (CCC) to the Employee, his surviving spouse,
designated beneficiary or estate shall constitute full and
complete satisfaction of the Company's obligation in respect of
the Employee's Benefit and the Survivor's Benefit.
(DDD) If the Employee does not make the
Employee's Lump Sum Election, the Employee's surviving spouse may
elect (the "Survivor's Lump Sum Election") to receive the
actuarial equivalent of the Survivor's Benefit, if any, in a lump
sum (x) in cash on the date of the Employee's death or the first
day of any month thereafter not later than the first day of the
month coincident with or next following the second anniversary of
the Employee's death or on the fifth, tenth, fifteenth or
twentieth anniversary of his death or (y) in two, three, four,
five, ten, fifteen or twenty equal annual cash installments
commencing on the date of the Employee's death or the first day
of any month thereafter not later than the first day of the month
coincident with or next following the second anniversary of the
Employee's death.
2. Except as provided above, the Employment
Agreement shall continue in effect without alteration as in
effect on the date hereof. The Employment Agreement, as amended
by this Third Amendment, constitutes the entire agreement of the
parties and supersedes all prior agreements and understandings
with respect to the subject matter hereof and thereof.
IN WITNESS WHEREOF, the Employee and, pursuant to due
authorization from its Board of Directors, the Company have
caused this Agreement to be executed as of the day and year first
above written.
_______________________
Hugh A. D'Andrade
SCHERING-PLOUGH CORPORATION
_______________________
Robert P. Luciano
Chairman of the Board
Exhibit 10(d)
AGREEMENT
This Agreement is made and entered into as of this
25th day of February, 1998 by and between Schering-Plough
Corporation, a New Jersey corporation (the "Company") and Robert
P. Luciano (the "Employee").
WHEREAS, the Company desires to recognize the Employee
for his extraordinary performance on behalf of the Company and
its shareholders and to make certain arrangements for the period
following his retirement as an employee of the Company; and
WHEREAS, following retirement as an employee, the
Employee will be available to act as an advisor to or
representative of the Company as may be mutually agreed by the
Employee and his successor.
NOW, THEREFORE, for good and valuable consideration the
receipt and sufficiency of which are hereby acknowledged, it is
agreed as follows:
1. From and after the date of the Employee's retirement as an
employee of the Company, he shall be entitled to limited security
services (including, from and after April 25, 2006, limited
transportation) and, through April 2006, financial planning
services on terms and conditions reasonably comparable to those
provided to senior executives. In addition, to the extent that
the Employee may act as an advisor to or representative of the
Company as mutually agreed by the Employee and his successor, the
Employee shall be entitled to reimbursement by the Company for
properly documented expenses.
2. This Agreement shall not diminish any rights which the
Employee may have under the Employment Agreement by and between
the Company and the Employee dated September 26, 1989, as amended
as of June 28, 1994 and as further amended as of March 1, 1995.
Such Employment Agreement shall continue in full force and
effect.
3. This Agreement is personal to the Employee and without the
prior written consent of the Company shall not be assignable by
the Employee. This Agreement shall inure to the benefit of and
be binding upon the Company and its successors and assigns.
Schering-Plough Corporation
By: _____________________
Chief Executive Officer
________________________
Robert P. Luciano
Exhibit 10(e)
SCHERING-PLOUGH CORPORATION
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
(AMENDED AND RESTATED TO FEBRUARY 24, 1998)
PREAMBLE
The principal purpose of this Supplemental Executive Retirement
Plan is to ensure the payment of a competitive level of
retirement income in order to attract, retain and motivate
selected executives of the Corporation and its affiliated
companies.
SECTION 1
Definitions
1.1 "Affiliate" means any corporation, partnership or other
organization controlled by or under common control with the
Corporation.
1.2 "Basic Plan" means as to any Participant or Former
Participant the qualified retirement or pension plan of the
Corporation or an Affiliate pursuant to which retirement benefits
are payable to such Participant or Former Participant or to the
Surviving Spouse or designated Beneficiary of a deceased
Participant or Former Participant.
1.3 "Basic Plan Benefit" means the amount of benefit payable
from the Basic Plan to a Participant or Former Participant.
1.4 "Board" means the Board of Directors of Schering-Plough
Corporation.
1.5 "Change of Control" means Change of Control as defined in
the Corporation's 1992 Stock Incentive Plan.
1.6 "Committee" means the Committee provided for in Section 6 of
the Plan.
1.7 "Corporation" means Schering-Plough Corporation, a New
Jersey Corporation, and any successor or assigns thereto.
1.8 "Deferral Rate" means a rate, at the option of the
Participant or the Former Participant, as the case may be, either
(a) 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 each calendar quarter, or (b) as reported in the Wall Street
Journal (or, if not reported in the Wall Street Journal, as
reported in a similar widely recognized business publication) on
the first business day following the retirement or death, as the
case may be, of the Participant or Former Participant, equal to
the actual yield on U.S. Treasury securities with a maturity
equal to the period for which a lump sum or annual installment
payment is deferred pursuant to a Participant's Lump Sum Election
or a Survivor's Lump Sum Election or action by the Committee
under Section 4.6 hereof (or, if there are no U.S. Treasury
securities of such maturity, then the functional equivalent
thereof). The Deferral Rate shall be selected by the Participant
or Former Participant, as the case may be, at or before the time
that a Participant's Lump Sum Election or Survivor's Lump Sum
Election, as applicable, is made.
1.9 "Earnings" means the base pay received as an employee as
salary or wages, including any amounts deferred under Section
401(k) of the Internal Revenue Code, and bonuses awarded under
any executive or management incentive plan of the Corporation or
an Affiliate, excluding without limitation any stock awards,
stock options and rights under any Stock Option, Employee Stock
Ownership, or Stock Incentive Plan of the Corporation, any
pensions, profit-sharing, pay in lieu of vacation, or other
special remuneration.
"Average Final Earnings" means a Participant's or Former
Participant's average annual Earnings during the sixty
consecutive months for which his Earnings were highest during the
last one hundred twenty consecutive months of his service.
1.10 "Effective Date" means January 1, 1983.
1.11 "Former Participant" means an executive employee who has
been removed from further participation in the Plan.
1.12 "Optional Survivor's Benefit Payment Date" means (a), in
the case of a Participant or Former Participant having at least
ten years of employment with the Corporation or an Affiliate, the
first day of the month coincident with or next following the date
of his death and (b), in the case of a Participant of Former
Participant having less than ten years of employment with the
Corporation or an Affiliate, the first day of the month
coincident with or next following (i) the date on which the
Participant or Former Participant would have attained age 55 or,
(ii) if later, the date on which the Participant or Former
Participant dies.
1.13 "Other Retirement Income" means retirement income payable
to a Participant or Former Participant from the following
sources:
(a) any Retirement Benefits Equalization Plan of the
Corporation or an Affiliate; and
(b) any other contract, agreement or other arrangement with
the Corporation or an Affiliate (excluding any Basic Plan) to the
extent it provides retirement or pension benefits.
1.14 "Participant" means an executive employee of the
Corporation or an Affiliate who becomes a participant in the plan
pursuant to Section 2.
1.15 "Plan" means this Supplemental Executive Retirement Plan,
as amended from time to time.
1.16 "Retirement" means the termination of a Participant's or
Former Participant's employment with the Corporation or an
Affiliate on one of the retirement dates specified in Section 3
or the deemed retirement of a Participant or a Former Participant
pursuant to an employment agreement between him and the
Corporation.
1.17 "Service" means a Participant's period of employment with
the Corporation or an Affiliate for which benefits are accrued
under the relevant Basic Plan.
1.18 "Surviving Spouse" means the spouse of a deceased
Participant or Former Participant to whom such Participant or
Former Participant has been validly married for a continuous
period of at least one year immediately preceding such
Participant or Former Participant's death.
1.19 The masculine gender, where appearing in the Plan, will be
deemed to include the feminine gender, and the singular may
include the plural, unless the context clearly indicates the
contrary.
SECTION 2
Eligibility, Participation and Vesting
2.1 An executive of the Corporation or an Affiliate in an E-
grade pay status, participating in a Basic Plan and actively
employed on the Effective Date, shall be a Participant on the
Effective Date.
Any other executive of the Corporation or an Affiliate shall
become a Participant on the date he achieves E-grade pay status
and is a participant in a Basic Plan.
2.2 An executive of the Corporation or an Affiliate who is on a
leave of absence on the date he would otherwise become a
Participant shall become a Participant on the date his leave of
absence terminates and he resumes active employment.
2.3 A Participant who is removed from an E-grade pay status
shall as of such date cease to be a Participant in the Plan and
shall accrue no further benefits under the Plan.
SECTION 3
Eligibility For Benefits
3.1 Each Participant or Former Participant is eligible to
commence receiving benefits under this Plan on one of the
following dates, as such dates are defined in the relevant Basic
Plan.
(a) "Normal Retirement Date."
(b) "Early Retirement Date."
(c) "Deferred or Postponed Retirement Date."
SECTION 4
Amount and Form of Retirement Benefit
4.1 The annual retirement benefits provided by the Plan are
designed to provide each Participant and Former Participant with
an annual pension from the Plan and certain other sources equal
to his Benefit as hereinafter specified. The annual retirement
benefits provided by Section 5 of the Plan to a Surviving Spouse
of a Participant or Former Participant are designed to provide
each such Surviving Spouse with a percentage of the Participant's
or Former Participant's Benefit at date of death and also include
benefits provided from sources other than the Plan as hereinafter
specified. Thus, the retirement benefits described hereunder as
payable to Participants, Former Participants, and Surviving
Spouses, will be offset by retirement benefits payable from
sources specified herein outside the Plan.
4.2 The Benefit of a Participant or Former Participant retiring
on his Normal Retirement Date or a Deferred or Postponed
Retirement Date shall be an annual benefit payable monthly
commencing on the first day of the calendar month coincident with
or next following his Retirement equal to:
a) 2% of his Average Final Earnings multiplied by his years
of Service in E-grade pay status or, after ten years of Service
in any pay status all Service except Service subsequent to
removal from E-grade pay status, up to twenty years plus 1% of
his Average Final Earnings for each such year of such Service in
excess of twenty years, inclusive of his Other Retirement Income
and his Basic Plan Benefit; or
b) if greater, and if he has completed 10 years of Service
in E-grade pay status on his Normal Retirement Date, 35% of his
Average Final Earnings, inclusive of his Other Retirement Income
and his Basic Plan Benefit.
4.3 The Benefit of a Participant or Former Participant retiring
on an Early Retirement Date shall be an annual benefit payable
monthly commencing on the first day of the calendar month
coincident with or next following his Early Retirement Date equal
to 2% of his Average Final Earnings multiplied by his years of
Service in E-grade pay status, or after ten years of Service in
any pay status all Service except Service subsequent to removal
from E-grade pay status, up to twenty years plus 1% of his
Average Final Earnings for each such year of such Service in
excess of twenty years, inclusive of his Other Retirement Income
and his Basic Plan Benefit, and reduced by the following factors
depending upon his age on such Early Retirement Date:
Age at Early
Retirement Date Reduction Factor
64 0
63 0
62 0
61 4%
60 8%
59 12%
58 16%
57 20%
56 24%
55 28%
provided however, that the Benefit payable to a Participant or
Former Participant who retires while an active employee on an
Early Retirement Date on or after he has attained age 60 and has
at least 10 years of Service in E-grade pay status shall not be
less than an annual benefit payable monthly commencing on the
first day of the calendar month coincident with or next following
his Retirement equal to 35% of his Average Final Earnings,
inclusive of his Other Retirement Income and his Basic Plan
Benefit.
The Benefit of a Participant or Former Participant, whose
employment is terminated other than by Retirement, disability, or
death, shall be an annual benefit payable monthly commencing on
the first day of the calendar month coincident with or next
following his Normal Retirement Date, as determined under the
preceding sentence but without taking into account the reduction
factors, and if such Benefit is payable in a lump sum or annual
installments pursuant to an election made in accordance with
Section 4.6, payment thereof shall be made or commence on such
Normal Retirement Date or on the first day of any month
thereafter not later than the second anniversary of such Normal
Retirement Date.
4.4 In the event that a Participant or Former Participant has
become totally and permanently disabled for the purposes of the
relevant Basic Plan, disability retirement benefits shall be
payable under this Plan, and shall be determined pursuant to
Section 4 hereof, with Earnings (as defined herein) and Service
deemed to have continued for such period, if any, as shall be
applicable under the disability retirement benefit provisions of
the relevant Basic Plan.
4.5 For the purpose of determining Benefits under the foregoing
paragraphs of this Section 4:
a) Service prior to March 1, 1987 for all executives who
were Participants in the Plan on the Effective Date shall be
deemed to be in an E-grade pay status; and
b) in no event shall the Benefit of an actively employed
executive participating in the Plan on March 1, 1987 be less than
the Benefit which would be payable if such Benefit were
determined under the provisions of the Plan as in effect
immediately prior to such date.
4.6 The benefits under this Plan shall be payable to a
Participant or Former Participant in the normal form such
Participant's or Former Participant's retirement benefits would
be payable under the Basic Plan determined solely on the basis of
his marital status on his retirement benefit commencement date
and without regard for any optional form of benefits elected
under the Basic Plan. Notwithstanding the preceding sentence, a
Participant or Former Participant may elect that payment of any
benefits under this Plan shall be made in accordance with any
optional form of benefit available under the Basic Plan or as
hereinafter provided in this Section 4.6 A Participant or Former
Participant may elect (the "Participant's Lump Sum Election") to
receive payment of the actuarial equivalent of the aggregate of
his benefits under this Plan and any Survivor's Benefit payable
to his Surviving Spouse under this Plan in a lump sum (x) in cash
on his Early Retirement Date, Normal Retirement Date, or Deferred
or Postponed Retirement Date or the first day of any month
thereafter not later than the first day of the month coincident
with or next following the second anniversary of such Early
Retirement Date, Normal Retirement Date, or Deferred or Postponed
Retirement Date, as the case may be, or on the fifth, tenth,
fifteenth or twentieth anniversary of his Early Retirement Date,
Normal Retirement Date, or Deferred or Postponed Retirement Date,
as the case may be, or (y) in two, three, four, five, ten,
fifteen, or twenty equal annual cash installments commencing on
his Early Retirement Date, Normal Retirement Date, or Deferred or
Postponed Retirement Date or the first day of any month
thereafter not later than the first day of the month coincident
with or next following the second anniversary of such Early
Retirement Date, Normal Retirement Date, or Deferred or Postponed
Retirement Date, as the case may be. If a Participant or a
Former Participant terminates his employment by Retirement and
dies with a Participant's Lump Sum Election in effect but prior
to the payment of the full amount of such lump sum or annual
installments, payment of the unpaid amount thereof shall be made
to his Surviving Spouse, designated Beneficiary or estate in
accordance with such Election. Payment made in accordance with
either of the two preceding sentences to the Participant or
Former Participant, his Surviving Spouse, designated Beneficiary
or estate shall constitute full and complete satisfaction of the
Company's obligation in respect of the benefits of such
Participant or Former Participant and any Survivor's benefit of
his Surviving Spouse. If a Participant or Former Participant
dies before Retirement, the Company shall have no obligation in
respect of his benefits under this Plan and shall be obligated to
pay any Survivor's Benefit, if, but only if, his spouse shall
survive him. If the Participant or Former Participant does not
make the Participant's Lump Sum Election, he may nevertheless
elect (the "Survivor's Lump Sum Election") that if he should die
prior to termination of employment, his Surviving Spouse shall
receive the actuarial equivalent of her Survivor's Benefit, if
any, in a lump sum (x) in cash on the Optional Survivor's Benefit
Payment Date or the first day of any month thereafter not later
than the first day of the month coincident with or next following
the second anniversary of the Optional Survivor's Benefit Payment
Date or on the fifth, tenth, fifteenth, or twentieth anniversary
of the Optional Survivor's Benefit Payment Date, or (y) in two,
three, four, five, ten, fifteen, or twenty equal annual cash
installments commencing on the Optional Survivor's Benefit
Payment Date or the first day of any month thereafter not later
than the first day of the month coincident with or next following
the second anniversary of the Optional Survivor's Benefit Payment
Date. A Participant or a Former Participant may make any
election pursuant to this Section 4.6. or may modify or rescind
such an election previously made: (a), in the case of an
election of a form of benefit other than a lump sum or annual
installments pursuant to a Participant's Lump Sum Election or a
Survivor's Lump Sum Election, at any time prior to the
Participant's or Former Participant's Retirement, except that in
the case of a Participant or Former Participant whose employment
is terminated other than by Retirement, such election,
modification or rescission must be made at least 90 days prior to
his Normal Retirement Date; (b), in the case of a Participant's
Lump Sum Election by a Participant or a Former Participant whose
Retirement occurs on or after October 1, 1994, and on or before
July 1, 1995, at least 30 days prior to the date of his
Retirement; (c), in the case of a Participant's Lump Sum
Election by a Participant or a Former Participant who is not
covered by clause (b) of this sentence, not later than the end of
the calendar year preceding the calendar year in which the
termination of his employment occurs and at least six months
prior to such termination of employment; and (d), in the case of
a Survivor's Lump Sum Election by a Participant of Former
Participant, at least six months prior to his death; provided,
however, that in the event of a Change of Control, a Participant
or Former Participant may make a Participant's Lump Sum Election
or a Survivor's Lump Sum Election, or modify or rescind such an
Election previously made, within a period of 60 days following
such Change of Control but in no event later than 30 days prior
to the date of the termination of his employment. Any election
pursuant to this Section 4.6, or any modification or rescission
of a previous election, shall be made in writing and filed with
the Committee before the applicable limitation of time specified
in this Section 4.6, and any election purported to be filed after
the applicable limitation of time shall be void. Unless
otherwise specified in the written form of election, the
actuarial equivalent of the benefits payable to a Participant or
a Former Participant who has made a Participant's Lump Sum
Election, and the actuarial equivalent of any Survivor's Benefit
payable to his Surviving Spouse pursuant to a Survivor's Lump Sum
Election, shall be paid in five equal annual installments
commencing on his Early Retirement Date, Normal Retirement Date,
Deferred or Postponed Retirement Date, or the first day of the
month coincident with or next following his death, as the case
may be, with interest payable at the three-month U.S. Treasury
bill rate as reported in The Wall Street Journal on the first
business day of each calendar quarter. If benefits under this
Plan are payable to a Participant or Former Participant in a
different form than his retirement benefits under the Basic Plan,
the amount of the offset provided in this Plan for such
Participant's or Former Participant's Basic Plan Benefit shall be
actuarially converted into the form of benefit payable under this
Plan but solely for purposes of calculating the amount of such
offset. The amount of any lump sum payment shall be equal to the
actuarial present value of the benefits payable under this Plan
to a Participant, Former Participant or Surviving Spouse
calculated as of the Early Retirement Date, Normal Retirement
Date, Deferred or Postponed Retirement Date, or date of death of
the Participant or Former Participant, as the case may be, by
utilizing (a) the interest rate determined as of such Retirement
Date or date of death under the regulations of the Pension
Benefit Guaranty Corporation for determining the present value of
a lump sum distribution on plan termination that were in effect
on September 1, 1993, and (b) the other applicable actuarial
assumptions in use as of such Retirement Date or date of death
under the Basic Plan. The amount of any annual installment shall
be calculated by converting the benefits payable under this Plan
to a Participant, Former Participant or Surviving Spouse, as the
case may be, into a lump sum amount in accordance with the
preceding sentence and by dividing such amount by the number of
installments elected or deemed to have been elected by the
Participant or Former Participant. The amount of any lump sum or
annual installment of the benefit of any Participant or Former
Participant that is not paid within fifteen days after the date
of his Retirement, and the amount of any lump sum or annual
installment of any Survivor's Benefit of his Surviving Spouse
that is not paid within fifteen days after the Optional
Survivor's Benefit Payment Date, shall bear interest from such
fifteenth day after the date of Retirement or the Optional
Survivor's Benefit Payment Date, as the case may be, to but
excluding the date of payment of such amount, at the Deferral
Rate, compounded quarterly. Interest on any such amount shall be
paid on the date such amount is paid or, at the election of the
Participant or Former Participant, as the case may be, such
interest shall be paid currently on a semiannual basis (with such
election to be made on or before the last date on which a
Participant's Lump Sum Election or Survivor's Lump Sum Election,
as applicable, may be made). If the benefits under this Plan are
to continue after a Participant's or Former Participant's death
for the benefit of his spouse or a designated beneficiary, then
such Participant or Former Participant shall have the right at
any time to change the recipient of the survivorship benefit
payable under this Plan; provided, however, that any such change,
if made after the applicable deadline set forth in the Basic
Plan, shall not affect the amount of the benefit payable under
this Plan as originally calculated or the term for which such
benefit is payable, also as originally calculated. The Committee
may, in its sole discretion, defer the payment of any lump sum or
initial annual installment to a Participant or a Former
Participant who is a "covered employee" as defined in Section
162(m) of the Internal Revenue Code of 1986, as amended, if such
payment would be subject to such Section's limitation on
deductibility; provided, however, that such payment shall not be
deferred to a date later than the earliest date in the year in
which such payment would not be subject to such limitation; and
further provided that the Company shall, at the time of payment
of any amount so deferred, pay interest thereon from the due date
thereof at the Deferral Rate, compounded quarterly.
4.7 Benefits payable under the Plan shall be regularly
redetermined to reflect any changes in a Participant's, a Former
Participant's, Surviving Spouse's or beneficiary's Basic Plan
Benefit or Other Retirement Income including any payments from
any trust established by the Corporation to meets its obligations
under this Plan. If any Other Retirement Income is payable after
the Participant's or Former Participant's death to a beneficiary
other than the recipient of a survivorship benefit under this
Plan, the calculation of the survivorship benefits payable under
this Plan shall include the Other Retirement Income payable to
such beneficiary. The Committee shall be empowered to make such
additional equitable adjustments to accomplish the purposes of
the foregoing as the Committee in its sole discretion shall
determine.
4.8 Subject to the foregoing limitations, the Benefit of each
Participant and Former Participant under the Plan shall at all
times be 100% vested and nonforfeitable.
SECTION 5
Surviving Spouse Benefit
5.1 Upon the death of a Participant or Former Participant while
employed by the Corporation or an Affiliate who has at least ten
years of employment with the Corporation or an Affiliate, his
Surviving Spouse will be entitled to an immediate Survivors
Benefit under this Plan based upon his Benefit immediately prior
to his death, but without any reduction factor, in accordance
with the following schedule:
Age and service at Time of Death Survivor's Benefit
a. Age 55 or more with 10 or more 50% of the Participant's
years of employment or Former Participant's
Benefit.
b. Ages 50 through 54 with 10 or 50% of the Participant's or
more years of employment, and Former Participant's
age plus years of employment Benefit.
equal 65 multiplied by 80.0%.
c. Below age 50 with 10 or more 50% of the Participant's
years of employment, and age or Former Participant's
plus years of employment Benefit.
equal 65 multiplied by 53.1%.
less any Basic Plan Benefit payable to the Surviving Spouse
whether or not the Participant or Former Participant has elected
or has been deemed to have elected to have such benefit paid to
his Surviving Spouse under the Basic Plan, and less any Other
Retirement Income.
5.2 Upon the death of any other Participant or Former
Participant his Surviving Spouse will be entitled to a survivors
benefit under this Plan based upon his Benefit immediately prior
to his death and computed as if he had retired on the day before
his death and had elected a 50% Qualified Joint and Survivors
Annuity (as defined in the relevant Basic Plan) for the benefit
of his Surviving Spouse. Such survivors benefit under this Plan
shall be reduced by any Basic Plan Benefit payable to the
Surviving Spouse whether or not the Participant or Former
Participant has elected or has been deemed to have elected to
have such benefit paid to his Surviving Spouse under the Basic
Plan, and any other Retirement Income.
5.3 A Surviving Spouse's benefits provided under Section 5.1
will be payable monthly, and will commence on the first day of
the month coincident with or next following the month in which
the Participant or Former Participant dies, and will continue to
the first day of the month in which the Surviving Spouse dies.
5.4 A Surviving Spouse's benefits provided under Section 5.2
will be payable monthly, and will commence on the first day of
the month coincident with or next following (a) the month in
which the Participant or Former Participant would have attained
age 55 or, (b) if later, the month in which the Participant or
Former Participant dies, and will continue to the first day of
the month in which the Surviving Spouse dies.
SECTION 6
Committee
6.1 The Committee shall consist of such persons as may be
appointed by the Chief Executive Officer of the Corporation and
shall be responsible for the administration of the Plan. The
Committee shall have the authority to interpret the Plan, to
adopt, amend, and rescind rules and regulations for the
administration of the Plan, and generally to conduct and
administer the Plan and to make all determinations in connection
with the Plan as may be necessary or advisable and all such
actions of the Committee shall be conclusive and binding upon all
Participants, Former Participants, Beneficiaries, and Surviving
Spouses.
SECTION 7
Miscellaneous
7.1 The Board may, in its sole discretion, terminate, suspend or
amend this Plan at any time or from time to time, in whole or in
part. However, no amendment or suspension of the Plan may
adversely affect a Participant's or Former Participant's vested
Benefit under the Plan, or a retired Participant's or Former
Participant's right or the right of a Beneficiary or a Surviving
Spouse to receive or to continue to receive a benefit in
accordance with the Plan as in effect on the date immediately
preceding the date of such termination, suspension or amendment.
7.2 Nothing contained herein will confer upon any Participant or
Former Participant the right to be retained in the service of the
Corporation or any Affiliate, nor will it interfere with the
right of the Corporation or any Affiliate to discharge or
otherwise deal with Participants or Former Participants without
regard to the existence of the Plan.
7.3 The Plan is unfunded, and the Corporation will make Plan
benefit payments solely on a current disbursement basis,
provided, however, the Corporation reserves the right to
establish one or more trusts to provide alternative sources of
benefit payments under this Plan. The existence of any such
trust or trusts shall not relieve the Corporation of any
liability to make benefit payments under this Plan, but to the
extent any benefit payments are made from any such trust, such
payment shall be in satisfaction of and shall reduce the
Corporation's liabilities under this Plan. Further, in the event
of the Corporation's bankruptcy or insolvency, all benefits
accrued under this Plan shall immediately become due and payable
in a lump sum and all Participants, Former Participants,
Surviving Spouses and Beneficiaries shall be entitled to share in
the Corporation's assets in the same manner and to the same
extent as general unsecured creditors of the Corporation.
7.4 If any dispute arises under the Plan between the Corporation
and a Participant, Former Participant, Surviving Spouse or
Beneficiary (collectively or individually referred to as
"Participant" in this Section 7.4) as to the amount or timing of
any benefit payable under the Plan or as to the persons entitled
thereto, such dispute shall be resolved by binding arbitration
proceedings initiated by either party to the dispute in
accordance with the rules of the American Arbitration Association
and the results of such proceedings shall be conclusive on both
parties and shall not be subject to judicial review. If the
disputed benefits involve the benefits of a Participant or Former
Participant who is no longer employed by the Corporation, the
Corporation shall pay or continue to pay the benefits claimed by
the Participant until the results of the arbitration proceedings
are determined unless such claim is patently without merit;
provided, however, if the results of the arbitration proceedings
are adverse to the Participant, then in such event the recipient
of the benefits shall be obligated to repay the excess benefits
to the Corporation. The Corporation expressly acknowledges that
the amounts payable under the Plan are necessary to the
livelihood of Participants, Former Participants and their family
members and that any refusal or neglect to pay benefits under the
preceding sentence prior to the resolution of any dispute shall
be prima facie evidence of bad faith on its part and will be
conclusive grounds for an arbitration award resulting in an
immediate lump sum payment of the Participant's or Former
Participant's total benefits under the Plan to the person
entitled thereto, unless the arbitrator determines that the claim
for the disputed benefits was patently without merit. The amount
of such lump sum payment shall be equal to the then actuarial
value of such benefits (a) calculated by utilizing the assumed
earnings rate and the other actuarial assumptions then in use
under the Basic Plan for the calculation of lump sum
distributions from such Basic Plan but (b) adjusted for the fact
that a lump sum distribution under this Plan will be immediately
depleted by application of income tax and that the earnings on
the depleted amount will also be subject to income tax, as
earned, whereas a lump sum distribution from the Basic Plan would
be eligible for tax-free rollover to a tax exempt individual
retirement account. Such adjustment for income tax, including
Federal, state and local tax, if applicable, shall be computed on
the basis of an assumed 50% combined tax rate and shall also take
into consideration the income tax payable in respect of the
adjustment amount. In order to assure uniformity of treatment
and clarity in the operation of this provision, the Corporation
agrees that the adjustment amount shall be 100% of the actuarial
value of the benefits payable in a lump sum as calculated on the
assumptions described above. In addition, in the event of any
dispute covered by this Section 7.4 the Corporation agrees to pay
the entire costs of any arbitration proceeding or legal
proceeding brought hereunder, including the fees and expenses of
counsel and pension experts engaged by a Participant and that
such expenses shall be reimbursed promptly upon evidence that
such expenses have been incurred without awaiting the outcome of
the arbitration proceedings; provided, however, such costs and
expenses shall be repaid to the Corporation by the recipient of
same if it is finally determined by the arbitrators that the
position taken by such person was without merit.
7.5 To the maximum extent permitted by law, no benefit under the
Plan shall be assignable or subject in any manner to alienation,
sale, transfer, claims of creditors, pledge, attachment or
encumbrances of any kind.
7.6 The Plan is established under and will be construed
according to the laws of the State of New Jersey.
Exhibit 10(f)
SCHERING-PLOUGH
RETIREMENT BENEFITS EQUALIZATION PLAN
(As Amended and Restated to February 24, 1998)
I. Purpose of Plan
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 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, and all questions arising in connection with
the Plan shall be determined by the Executive Compensation and
Organization Committee of Schering-Plough Corporation (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.
III. Participation in the Plan
All members of the Retirement Plan shall be eligible to
participate in this Plan whenever their compensation or benefits
under the Retirement Plan as from time to time in effect would
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, commencing January 1, 1989,
shall be deemed to be reached when a participant's eligible
compensation under the Retirement Plan exceeds $200,000 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 (i) the sum of the participant's
defined benefit plan fraction under the Retirement Plan and his
defined contribution plan fraction under all applicable defined
contribution plans equals 1.0 as such fractions are computed for
purposes of said Section, or (ii) 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.
V. Equalized Benefits
1. Each eligible member of the Retirement Plan and his
beneficiaries shall receive a supplemental pension 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 Sections 401 and 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. Such supplemental pension benefits
shall be payable in accordance with all the terms and conditions
applicable to the member's benefits under the Retirement Plan,
including whatever optional benefits he may have elected.
2. Notwithstanding Section V.1 of this Plan, a participant
or former participant may elect (the "Participant's Lump Sum
Election") to receive payment of the actuarial equivalent of the
aggregate of his benefits under this Plan and any survivor's
benefit payable to his surviving spouse under this Plan in a lump
sum (X) in cash on his Early Retirement Date, Normal Retirement
Date or Deferred or Postponed Retirement Date or the first day of
any month thereafter not later than the first day of the month
coincident with or next following the second anniversary of such
Early Retirement Date, Normal Retirement Date, or Deferred or
Postponed Retirement Date, as the case may be, or on the fifth,
tenth, fifteenth or twentieth anniversary of his Early Retirement
Date, Normal Retirement Date, or Deferred or Postponed Retirement
Date, as the case may be, or (Y) in two, three, four, five, ten,
fifteen, or twenty equal annual cash installments commencing on
his Early Retirement Date, Normal Retirement Date, or Deferred or
Postponed Retirement Date or the first day of any month
thereafter not later than the first day of the month coincident
with or next following the second anniversary of such Early
Retirement Date, Normal Retirement Date, or Deferred or Postponed
Retirement Date, as the case may be. If a participant or a
former participant terminates his employment by retirement and
dies with a Participant's Lump Sum Election in effect but prior
to the payment of the full amount of such lump sum or annual
installments, payment of the unpaid amount thereof shall be made
to his surviving spouse, designated beneficiary or estate in
accordance with such Election. Payment made in accordance with
either of the two preceding sentences to the participant or
former participant, his surviving spouse, designated beneficiary
or estate shall constitute full and complete satisfaction of the
obligation of Schering Corporation (the "Company") or any
affiliate in respect of the benefits of such participant or
former participant and any survivor's benefit of his surviving
spouse. If a participant or former participant dies before
retirement, the Company shall have no obligation in respect of
his benefits under this Plan and shall be obligated to pay any
survivor's benefit, if, but only if, his spouse shall survive
him. If the participant or former participant does not make the
Participant's Lump Sum Election, he may nevertheless elect (the
"Survivor's Lump Sum Election") that if he should die prior to
termination of employment, his surviving spouse shall receive the
actuarial equivalent of her survivor's benefit, if any, in a lump
sum (X) in cash on the Optional Survivor's Benefit Payment Date
(as defined in Section V.3) or the first day of any month
thereafter not later than the first day of the month coincident
with or next following the second anniversary of the Optional
Survivor's Benefit Payment Date or on the fifth, tenth,
fifteenth, or twentieth anniversary of the Optional Survivor's
Benefit Payment Date, or (Y) in two, three, four, five, ten,
fifteen or twenty equal annual cash installments commencing on
the Optional Survivor's Benefit Payment Date or the first day of
any month thereafter not later than the first day of the month
coincident with or next following the second anniversary of the
Optional Survivor's Benefit Payment Date. A participant or a
former participant may make any election pursuant to this Section
V.2, or may modify or rescind such an election previously made:
(a), in the case of an election of a form of benefit other than a
lump sum or annual installments pursuant to a Participant's Lump
Sum Election or a Survivor's Lump Sum Election, at any time prior
to the participant's or former participant's retirement, except
that in the case of a participant or former participant whose
employment is terminated other than by retirement, such election,
modification or rescission must be made at least 90 days prior to
his Normal Retirement Date; (b), in the case of a Participant's
Lump Sum Election by a participant or a former participant whose
retirement occurs on or after October 1, 1994, and on or before
July 1, 1995, at least 30 days prior to the date of his
retirement; (c), in the case of a Participant's Lump Sum Election
by a participant or a former participant who is not covered by
clause (b) of this sentence, not later than the end of the
calendar year preceding the calendar year in which the
termination of his employment occurs and at least six months
prior to such termination of employment; and (d), in the case of
a Survivor's Lump Sum Election by a participant or former
participant, at least six months prior to his death; provided,
however, that in the event of a Change of Control (as defined in
Section V.3), a participant or former participant may make a
Participant's Lump Sum Election or a Survivor's Lump Sum
Election, or modify or rescind such an Election previously made,
within a period of 60 days following such Change of Control but
in no event later than 30 days prior to the date of the
termination of his employment. Any election pursuant to this
Section V.2, or any modification or rescission of a previous
election, shall be made in writing and filed with the Committee
before the applicable limitation of time specified in this
Section V.2, and any election purported to be filed after the
applicable limitation of time shall be void. Unless otherwise
specified in the written form of election, the actuarial
equivalent of the benefits payable to a participant or a former
participant who has made a Participant's Lump Sum Election, and
the actuarial equivalent of any survivor's benefit payable to his
surviving spouse pursuant to a Survivor's Lump Sum Election,
shall be paid in five equal annual installments commencing on his
Early Retirement Date, Normal Retirement Date, Deferred or
Postponed Retirement Date, or the first day of the month
coincident with or next following his death, as the case may be,
with interest payable at the three-month U.S. Treasury bill rate
as reported in The Wall Street Journal on the first business day
of the calendar quarter. If benefits under this Plan are payable
to a participant or former participant in a different form than
his retirement benefits under the Retirement Plan, the amount of
the offset provided in this Plan for such participant's or former
participant's benefit under the Retirement Plan shall be
actuarially converted into the form of benefit payable under this
Plan but solely for purposes of calculating the amount of such
offset. The amount of any lump sum payment shall be equal to the
actuarial present value of the benefits payable under this Plan
to a participant, former participant or surviving spouse
calculated as of the Early Retirement Date, Normal Retirement
Date, Deferred or Postponed Retirement Date, or date of death of
the participant or former participant, as the case may be, by
utilizing (a) the interest rate determined as of such Retirement
Date or date of death under the regulations of the Pension
Benefit Guaranty Corporation for determining the present value of
a lump sum distribution on plan termination that were in effect
on September 1, 1993, and (b) the other applicable actuarial
assumptions in use as of such Retirement Date or date of death
under the Retirement Plan. The amount of any annual installment
shall be calculated by converting the benefits payable under this
Plan to a participant, former participant or surviving spouse, as
the case may be, into a lump sum amount in accordance with the
preceding sentence and by dividing such amount by the number of
installments elected or deemed to have been elected by the
participant or former participant. The amount of any lump sum or
annual installment of the benefit of any participant or former
participant that is not paid within fifteen days after the date
of his retirement, and the amount of any lump sum or annual
installment of any survivor's benefit of his surviving spouse
that is not paid within fifteen days after the Optional
Survivor's Benefit Payment Date, shall bear interest from such
fifteenth day after the date of retirement or the Optional
Survivor's Benefit Payment Date, as the case may be, to but
excluding the date of payment of such amount, at the Deferral
Rate (as defined in Section V.3), compounded quarterly. Interest
on any such amount shall be paid on the date such amount is paid
or, at the election of the participant or former participant, as
the case may be, such interest shall be paid currently on a
semiannual basis (with such election to be made on or before the
last date on which a Participant's Lump Sum Election or
Survivor's Lump Sum Election, as applicable, may be made). If the
benefits under this Plan are to continue after a participant's or
former participant's death for the benefit of his spouse or a
designated beneficiary, then such participant or former
participant shall have the right at any time to change the
recipient of the survivorship benefit payable under this Plan;
provided, however, that any such change, if made after the
applicable deadline set forth in the Retirement Plan, shall not
affect the amount of the benefit payable under this Plan as
originally calculated or the term for which such benefit is
payable, also as originally calculated. The Committee may, in
its sole discretion, defer the payment of any lump sum or initial
annual installment to a participant or a former participant who
is a "covered employee" as defined in Section 162(m) of the
Internal Revenue Code of 1986, as amended, if such payment would
be subject to such Section's limitation on deductibility;
provided, however, that such payment shall not be deferred to a
date later than the earliest date in the year in which such
payment would not be subject to such limitation; and further
provided that the Company shall, at the time of payment of any
amount so deferred, pay interest thereon from the due date
thereof at the Deferral Rate, compounded quarterly.
3. The following terms, when used in this Plan, shall
have the meanings given below:
(a) "Change of Control" means Change of Control as
defined in the 1992 Stock Incentive Plan of Schering-Plough
Corporation.
(b) "Deferral Rate" means a rate, at the option of the
participant or former participant, as the case may be, either (a)
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
each calendar quarter or (b) as reported in the Wall Street
Journal (or, if not reported in the Wall Street Journal, as
reported in a similar widely recognized business publication) on
the first business day following the retirement or death, as the
case may be, of the Participant or Former Participant, equal to
the actual yield on U.S. Treasury securities with a maturity
equal to the period for which a lump sum or annual installment
payment is deferred pursuant to a Participant's Lump Sum Election
or a Survivor's Lump Sum Election or action by the Committee
under Section V.2 hereof (or if there are no U.S. Treasury
securities of such maturity, then the functional equivalent
thereof). The Deferral Rate shall be selected by the participant
or former participant, as the case may be, at or before the time
that a Participant's Lump Sum Election or Survivor's Lump Sum
Election, as applicable, is made.
(c) "Optional Survivor's Benefit Payment Date" means
(a), in the case of a participant or former participant having at
least ten years of employment with the Company or an affiliate,
the first day of the month coincident with or next following the
date of his death and (b), in the case of a participant or former
participant having less than ten years of employment with the
Company or an affiliate, the first day of the month coincident
with or next following (i) the date on which the participant or
former participant would have attained age 55 or, (ii) if later,
the date on which the participant or former participant dies.
VI. Miscellaneous
1. Neither the establishment of this Plan nor the
participation therein shall confer upon any person any right to
be continued as an employee of the Company or any affiliated
company, and the Company reserves the right to discharge any
employee whenever in its sole judgment the interest of the
Company or any affiliated company so requires.
2. All expenses of administering this Plan shall be borne
by the Company.
3. No benefit under this Plan shall be subject in any
manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance, or charge, or subject to attachment,
garnishment, or other legal process.
4. This Plan may be amended or terminated at any time by
action of the Company's Board of Directors. In the event of
termination, no contributions shall be made thereafter, except
for a year preceding the year in which termination occurs and
provided that no such amendment or termination shall affect any
right or obligation with respect to any contribution theretofore
made, or the rights of a participant, terminated participant,
former participant or beneficiary to receive amounts credited to
his account.
5. Benefits payable under this Plan shall not be funded
and shall be paid out of the general funds of the Company and/or
its affiliates.
6. This Plan shall be construed, administered, and
enforced according to the laws of the State of New Jersey.
Exhibit 10(g)
AMENDMENT TO SCHERING-PLOUGH CORPORATION
EXECUTIVE LIFE INSURANCE PLAN SPLIT DOLLAR AGREEMENT
This Amendment is made, effective __________, 1998, between
Schering-Plough Corporation (the "Corporation") and
_______________, an employee of a directly or indirectly
wholly-owned subsidiary of the Corporation ("Employee").
WHEREAS, the Corporation and Employee are parties to a
Schering-Plough Corporation Executive Life Insurance Plan
Split Dollar Agreement (the "Agreement");
WHEREAS, the Corporation has established a rabbi trust and
has agreed to contribute to the trust assets that shall be
used to pay premiums under Policy Number _____________
issued by Metropolitan Life Insurance Company at the time
Employee retires;
WHEREAS, at the time Employee retires, the Corporation has
agreed to release the collateral assignment of the Policy
and Employee has agreed to reassign the Policy to the
trustee of the rabbi trust;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements described in the Agreement and Employee's
continued service with the Corporation's subsidiary, the
Corporation and the Employee hereby agree to amend the
Agreement as follows:
1. The second paragraph of Section 2 of the Agreement is
hereby deleted in its entirety and replaced with the
following:
"By the Corporation: The Corporation shall pay
the balance of premiums on the Policy until the termination
of this Agreement under Section 6. The Corporation may
increase or decrease the scheduled premium for any year
after the first year. Except as set forth below, each annual
premium for the Policy following execution of this Agreement
will be transferred by the Corporation to the appropriate
Metropolitan account within 31 days following the
corresponding anniversary date of the Policy; provided that,
as soon as administratively practicable (but in no event
more than 90 days) after the Employee's termination of
service due to early or normal retirement, as defined under
any applicable qualified pension plan maintained by the
Corporation or its subsidiaries, the Corporation shall
transfer an amount equal to the present value of the balance
of the premiums on the Policy due under this Agreement (the
"Contribution") to a rabbi trust ("Rabbi Trust"). Each
annual premium for the Policy following deposit of the
Contribution to the Rabbi Trust will be transferred by the
trustee of the Rabbi Trust to the appropriate Metropolitan
account within 31 days following the corresponding
anniversary date of the Policy."
2. Section 5 shall be amended by adding the following new
paragraph:
"Concurrently with the making of the
Contribution, the Corporation shall release the Collateral
Assignment Agreement and Employee shall reassign the Policy,
pursuant to a collateral assignment agreement in
substantially the same form, to the trustee of the Rabbi
Trust. Thereafter, all references in this Agreement to the
Corporation as Assignee under the Collateral Assignment
Agreement shall be deemed to refer to the trustee of the
Rabbi Trust, as the successor assignee of the Policy."
3. The following proviso shall be added to the end of
Section 6 (e):
"provided that the failure of the Corporation to
make the Contribution under Section 2 of this Agreement
shall not cause this Agreement to terminate;"
4. The last paragraph in Section 6 shall be deleted in its
entirety and replaced with the following:
"In the event of the termination of this
Agreement, the aggregate of the advances made by the
Corporation pursuant to this Agreement (including, without
limitation, the Contribution) less any outstanding Policy
loans received by the Corporation prior to such termination
(or, if less, the net cash value in the Policy), shall
become due and payable to the Corporation. Upon payment of
such amount, whether from the Policy, the trustee of the
Rabbi Trust, the Employee or whatever other source, the
Corporation or the trustee of the Rabbi Trust, as the case
may be, shall execute a release of the collateral assignment
agreement and deliver such release and the Policy, if
applicable, to the Owner. If the trustee is the assignee of
the collateral assignment agreement, the Corporation shall
give written notice to the trustee that all such amounts
have been paid and instructing the trustee to execute a
release and deliver such release to the Owner."
5. The following proviso shall be added to the end of
Section 8(c), to be inserted before the period:
"; provided that upon the Employee's termination
of service due to early or normal retirement, as defined
under any applicable qualified pension plan maintained by
the Corporation or its subsidiaries, the Corporation shall
no longer have the right to terminate this Agreement under
this Section 8 (c)."
6. Except as expressly provided herein, no other
amendments, modifications, or waivers are made to the
Agreement. This Amendment shall be subject to and construed
in accordance with the laws of the State of New Jersey.
IN WITNESS WHEREOF, the parties hereto have executed this
Amendment as of the day and year first above written.
SCHERING-PLOUGH CORPORATION Employee
By: _________________________
__________________
Witness:
__________________
Exhibit 10(g)
AMENDMENT TO SCHERING-PLOUGH CORPORATION
EXECUTIVE LIFE INSURANCE PLAN SPLIT DOLLAR AGREEMENT
This Amendment is made, effective __________, 1998, between
Schering-Plough Corporation (the "Corporation") and
_______________, a retired employee of a directly or
indirectly wholly-owned subsidiary of the Corporation
("Employee").
WHEREAS, the Corporation and Employee are parties to a
Schering-Plough Corporation Executive Life Insurance Plan
Split Dollar Agreement (the "Agreement");
WHEREAS, Employee has retired from active service with the
Corporation's subsidiary;
WHEREAS, the Corporation has established rabbi trust and has
agreed to contribute to the trust assets that shall be used
to pay remaining premiums under Policy Number _____________
issued by Metropolitan Life Insurance;
WHEREAS, the Corporation has agreed to release the
collateral assignment of the Policy and Employee has agreed
to reassign the Policy to the trustee of the rabbi trust;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements described in the Agreement and Employee's prior
service with the Corporation's subsidiary, the Corporation
and the Employee hereby agree to amend the Agreement as
follows:
1. The second paragraph of Section 2 of the Agreement is
hereby deleted in its entirety and replaced with the
following:
"By the Corporation: The Corporation shall pay
the balance of premiums on the Policy until the termination
of this Agreement under Section 6. The Corporation may
increase or decrease the scheduled premium for any year
after the first year. The Corporation shall transfer an
amount equal to the present value of the balance of the
premiums on the Policy due under this Agreement (the
"Contribution") to a rabbi trust ("Rabbi Trust") as soon as
administratively practicable (but in no event more than 90
days) after the date hereof. Each annual premium for the
Policy following deposit of the Contribution to the Rabbi
Trust will be transferred by the trustee of the Rabbi Trust
to the appropriate Metropolitan account within 31 days
following each corresponding anniversary date of the
Policy."
2. The following provision shall be added to the end of
Section 6 (e):
"provided that the failure of the Corporation to
make the Contribution under Section 2 of this Agreement
shall not cause this Agreement to terminate;"
3. The last paragraph in Section 6 shall be deleted in its
entirety and replaced with the following:
"In the event of the termination of this
Agreement, the aggregate of the advances made by the
Corporation pursuant to this Agreement (including, without
limitation, the Contribution) less any outstanding Policy
loans received by the Corporation prior to such termination
(or, if less, the net cash value in the Policy), shall
become due and payable to the Corporation. Upon payment of
such amount, whether from the Policy, the trustee of the
Rabbi Trust, the Employee or whatever other source, the
trustee of the Rabbi Trust shall execute a release of the
collateral assignment agreement and deliver such release and
the Policy, if applicable, to the Owner."
4. Sections 6(a), 6(c), 6(g) and 8(c) shall be deleted.
Sections 6(b), 6(d), 6(e), 6(f), and 6(h) shall be
renumbered as new Sections 6(a), 6(b), 6(c), 6(d), and 6(e),
respectively, and all references to those sections in the
Agreement shall be changed accordingly.
5. All references in the Agreement to the Corporation as
Assignee under the Collateral Assignment Agreement shall be
deemed to refer to the trustee of the Rabbi Trust, as the
successor assignee of the Policy.
6. Except as expressly provided herein, no other
amendments, modifications, or waivers are made to the
Agreement. This Amendment shall be subject to and construed
in accordance with the laws of the State of New Jersey.
IN WITNESS WHEREOF, the parties hereto have executed this
Amendment as of the day and year first above written.
SCHERING-PLOUGH CORPORATION Employee
By: _________________________
__________________
Witness:
__________________
Exhibit 10(g)
SCHERING-PLOUGH EXECUTIVE LIFE INSURANCE TRUST
This Agreement made as of the 1st day of April, 1998,
by and between Schering-Plough Corporation ("Company") and
The Northern Trust Company ("Trustee");
WHEREAS, Company has adopted the Executive Life
Insurance Program ("Program") as described on Appendix A.
WHEREAS, Company intends to continue to pay life
insurance premiums under the terms of such Program with
respect to the individuals participating in such Program who
have retired from active service with the Company and its
subsidiaries ("Participants");
WHEREAS, Company wishes to establish a trust
(hereinafter called the "Trust") and to contribute to the
Trust assets that shall be held therein, subject to the
claims of Company's creditors in the event of Company's
Insolvency, as herein defined, until applied to pay the
insurance premiums in such manner and at such times as
specified in the Program;
WHEREAS, Company wishes to establish separate accounts
("Accounts") with respect to all of the Participants in the
Program;
WHEREAS, amounts transferred to each separate Account,
as determined by the Company from time to time in its sole
discretion and any earnings thereon shall be used by the
Trustee to satisfy the liabilities of the Company under the
Program with respect to the Participants for whom such
separate accounts have been established and such utilization
shall be in accordance with the procedures set forth herein;
WHEREAS, upon satisfaction of all liabilities of the
Company under the Program with respect to a Participant in
respect of whom a separate Account has been established, the
balance, if any, remaining in such Account shall be paid to
the Company in accordance with the procedures set forth
herein;
WHEREAS, it is the intention of the parties that this
Trust shall constitute an unfunded arrangement and shall not
affect the status of the Program as an unfunded plan
maintained for the purpose of providing life insurance for a
select group of management or highly compensated employees
for purposes of Title I of the Employee Retirement Income
Security Act of 1974;
WHEREAS, it is the intention of Company to make
contributions to the Trust to provide itself with a source
of funds to assist it in paying premiums under the Program;
NOW, THEREFORE, the parties do hereby establish the
Trust and agree that the Trust shall be comprised, held and
disposed of as follows:
Section 1. Establishment Of Trust
(a) The principal of the Trust shall be the money
deposited with the Trustee from time to time by the Company,
and any income thereon, and the collateral assignment
agreements with respect to the Participants' insurance
policies (each a "Policy") as listed from time to time in
Appendix B, which shall be held, administered and disposed
of by Trustee as provided in this Trust Agreement.
(b) The Trust hereby established shall be irrevocable
except as otherwise provided herein.
(c) The Trust is intended to be a grantor trust, of
which Company is the grantor, within the meaning of subpart
E, part I, subchapter J, chapter 1, subtitle A of the
Internal Revenue Code of 1986, as amended, and shall be
construed accordingly.
(d) The principal of the Trust and any earnings thereon
shall be held separate and apart from other funds of the
Company and shall be used exclusively for the uses and
purposes of Participants and general creditors as herein set
forth. Participants and their beneficiaries shall have no
preferred claim on, or any beneficial ownership interest in,
any assets of the Trust. Any rights created under the
Program and this Trust Agreement shall be mere unsecured
contractual rights of Participants and their beneficiaries
against Company. Any assets held by the Trust will be
subject to the claims of Company's general creditors under
federal and state law in the event of Insolvency, as defined
in Section 3(a) herein.
(e) Company, in its sole discretion, may at any time, or
from time to time, add additional Participant Accounts,
update Appendix B to add collateral assignment agreements
for new Participants and to delete collateral assignment
agreements that have been released in accordance with
Section 2(d), and make additional deposits of cash or other
property (including without limitation collateral assignment
agreements) in trust with Trustee to augment the principal
to be held, administered and disposed of by Trustee as
provided in this Trust Agreement. Neither Trustee nor any
Participant or beneficiary shall have any right to compel
such additional deposits, except as expressly agreed in
writing between the Company and the Participant. Trustee
shall have no duty to enforce any funding obligations of
Company and the duties of Trustee shall be governed solely
by the terms of this Agreement and applicable law.
(f) The Company shall be responsible for maintaining
records for individual Participant Accounts within the
Trust. The Company may appoint as its agent a third-party
recordkeeper (the Company, in such capacity, or such third
party being hereinafter referred to as the "Recordkeeper")
to carry out various recordkeeping responsibilities as
indicated in this Agreement. The Company initially appoints
Buck Consultants as Recordkeeper.
(g) Except for the records dealing solely with the
aggregate Trust assets, which shall be maintained by the
Trustee, the Recordkeeper shall maintain all Participant
records contemplated herein, including the Participants'
Accounts.
(h) The Recordkeeper shall maintain a separate Account
record for each Participant under the Program. The Company
shall certify to the Recordkeeper at the time of each
deposit to the Trust the amount of such deposit being made
in respect of each Participant under the Program and each
such deposit shall be credited to the Participant's Account
as of the last business day of the calendar quarter in which
such deposit is made. The Trust assets shall be revalued by
the Trustee as of the last business day of each calendar
quarter ("Valuation Date") at current market values, as
determined by the Trustee, and the Trustee shall certify the
values thereof to the Company with a copy to the
Recordkeeper; provided, that no value shall be attributed to
the collateral assignment agreements or the underlying
Policies until such time as the Trustee has the right to
collect the Policy Proceeds (as defined below) of the Policy
from the insurer. At such time the Company will instruct
the Trustee as to the proper valuation of the collateral
assignment agreements and the Policies. The Trustee may
conclusively rely on determinations of the Company of
valuations for the collateral assignment agreements, the
Policies, and other assets of the Trust for which the
Trustee deems there to be no readily determinable market
value. The Recordkeeper may conclusively rely on
determinations of, and information provided by, the Company
and the Trustee.
(i) Upon a Termination Event, as defined in Section
2(d), with respect to a Participant for whom the Termination
Event has occurred, the balance, if any, remaining in such
Participant's Account shall be paid to the Company promptly
pursuant to direction of the Company or of the Recordkeeper
(who shall be directed by the Company to provide such
direction to the Trustee) upon certification by the Company
to the Recordkeeper and Trustee that the Company's legal
liabilities under the Program have been satisfied.
Section 2. Premium Payments and Collateral Assignments
(a) Company shall deliver to Trustee a schedule (as
updated from time to time, the "Premium Schedule") that
provides directions to Trustee regarding the amounts payable
by the Company in respect of each Participant, the form of
payment, and the time of payment of such amounts. The
Premium Schedule may be changed from time to time by the
Company in accordance with the Program and the premiums
required by the insurance company. Except as otherwise
provided herein, Trustee shall make the Company's premium
payments in accordance with the then effective Premium
Schedule. Company shall have sole responsibility for all
tax withholding filings and reports. Trustee shall withhold
such amounts from distributions as Company directs and shall
follow the instructions of Company with respect to remission
of such withheld amounts to appropriate governmental
authorities.
(b) The entitlement of a Participant or his or her
beneficiaries to benefits under the Program shall be
determined by Company or such party as it shall designate
under the Program, and any claim for such benefits shall be
considered and reviewed under the procedures set out in the
Program.
(c) Company may make premium payments directly to the
insurance company as they become due under the terms of the
Program. Company shall notify Trustee of its decision to
make payment of premiums directly prior to the time amounts
are payable and shall adjust the Premium Schedule
accordingly. In addition, if the principal of the Trust,
and any earnings thereon, are not sufficient to make premium
payments in accordance with the terms of the Premium
Schedule, the Company shall make the balance of each such
payment as it falls due or deposit the deficit amount with
the Trustee prior to the time premiums are due. Trustee
shall notify the Company in advance when principal and
earnings are not sufficient to make a payment in accordance
with the Premium Schedule.
(d) Trustee shall not take any Policy loans as assignee
of the collateral assignment agreements. Trustee shall hold
each collateral assignment agreement deposited in trust
until (1) all amounts payable in respect of the relevant
Participant have been paid in accordance with the Premium
Schedule or (2) if earlier, any other termination of the
Schering-Plough Corporation Executive Life Insurance Plan
Split Dollar Agreement (each, a "Split Dollar Agreement")
between the Company and such Participant, in accordance with
its terms (in either case, a "Termination Event"). In the
case of a termination under clause (2) above, Trustee shall
be entitled to rely on a written notice from the Company
that such a Termination Event has occurred. Upon a
Termination Event and subject to Section 7(d) hereof, the
Trustee promptly shall forward to the Company any amounts
received, whether from the Policy, the Participant, or
whatever other source, which represent the advances made by
or on behalf of the Company with respect to such
Participant's Policy or any other amounts owed to the
Company in accordance with the applicable Split Dollar
Agreement (the "Policy Proceeds"). Upon written notice from
the Company that it has received, from whatever source, the
aggregate of the Policy Proceeds less any outstanding Policy
loans received by the Company prior to such Termination
Event (or, if less, the net cash value in the Policy), the
Trustee shall release the collateral assignment agreement
for such Participant's Policy and deliver such release to
the owner of the Policy, as set forth in such notice.
Section 3. Trustee Responsibility Regarding Premium Payments
When Company Is Insolvent.
(a) Subject to the provisions of Section 3(b) below,
the Trustee shall cease premium payments if the Company is
Insolvent. Company shall be considered "Insolvent" for
purposes of this Trust Agreement if (i) Company is unable to
pay its debts as they become due, or (ii) Company is subject
to a pending proceeding as a debtor under the United States
Bankruptcy Code.
(b) At all times during the continuance of this
Trust, as provided in Section 1(d) hereof, the principal and
income of the Trust shall be subject to claims of general
creditors of Company under federal and state law as set
forth below.
(1) The Board of Directors and the President and Chief
Executive Officer of the Company shall have the duty to
inform the Trustee in writing of the Company's Insolvency.
If a person claiming to be a creditor of the Company alleges
in writing to the Trustee that the Company has become
Insolvent, the Trustee shall determine whether the Company
is Insolvent and, pending such determination, the Trustee
shall discontinue premium payments.
(2) Unless the Trustee has actual knowledge of the
Company's Insolvency, or has received notice from the
Company or a person claiming to be a creditor alleging that
the Company is Insolvent, the Trustee shall have no duty to
inquire whether the Company is Insolvent. In no event shall
actual knowledge be deemed to include knowledge of the
Company's credit status held by banking officers or banking
employees of The Northern Trust Company which has not been
communicated to the trust department of the Trustee. If the
Trustee has the duty to inquire whether the Company is
insolvent, the Trustee may appoint an independent
accounting, consulting or law firm to make such
determination of solvency required by the Trustee under this
Section 3. In such event, the Trustee may conclusively rely
upon the determination by such firm and shall be responsible
only for the prudent selection of such firm. Trustee may in
all events rely on such evidence concerning the Company's
solvency as may be furnished to the Trustee and that
provides the Trustee with a reasonable basis for making a
determination concerning the Company's solvency.
(3) If at any time the Trustee has determined that the
Company is Insolvent, the Trustee shall discontinue premium
payments and shall hold the assets of the Trust for the
benefit of the Company's general creditors. Nothing in this
Trust Agreement shall in any way diminish any rights of
Participants or their beneficiaries to pursue their rights
with respect to benefits due under the Program or otherwise.
(4) Trustee shall resume premium payments in accordance
with Section 2 of this Trust Agreement only after the
Trustee has determined that the Company is not Insolvent (or
is no longer Insolvent).
(c) Provided that there are sufficient assets, if
Trustee discontinues premium payments from the Trust
pursuant to Section 3(b) hereof and subsequently resumes
such payments, the first payment following such
discontinuance shall include the aggregate amount of all
payments due under the terms of the Program for the period
of such discontinuance, less the aggregate amount of any
premium payments made by Company in lieu of the payments
provided for hereunder during any such period of
discontinuance, all in accordance with the Premium Schedule,
which shall be modified by Company as necessary to comply
with the provisions of this subsection (c).
Section 4. Investment Authority.
The Company, or one or more investment managers
designated by written notice to the Trustee, shall have
investment responsibility for the Trust assets (including
the Collateral Assignment Agreements and underlying
Policies), and Trustee shall act with respect to such assets
only as directed by the Company or such designated
investment managers and shall have no investment review
responsibility therefor; provided that subject to
investment guidelines issued by the Company, the Trustee
shall have responsibility for the short-term investment of
any cash balances held in the Trust. The Trustee may invest
cash for short-term purposes in mutual funds, including
those for which it or any of its affiliates serves as
investment manager or advisor. In no event may Trustee, in
the exercise of any investment responsibility delegated to
it hereunder, invest in securities (including stock or
rights to acquire stock) or obligations issued by Company,
other than a de minimis amount held in common investment
vehicles in which the Trustee invests. All rights
associated with assets of the Trust shall be exercised by
Trustee or the person designated by the Trustee, and shall
in no event be exercisable by or rest with the Participants.
The assets of the Trust shall be used by the Trustee to make
insurance premium payments and the payments to the Company
of Policy Proceeds payable to the Trustee prior to the
release of the collateral assignment agreements, at such
times as required pursuant to the Program, as described in
Section 2 and the Premium Schedule, and as otherwise set
forth in this Trust Agreement.
Section 5. Disposition of Income.
During the term of this Trust, all income received by
the Trust, net of expenses and taxes, shall be accumulated
and reinvested.
Section 6. Accounting by Trustee.
Trustee shall keep accurate and detailed records of all
investments, receipts, disbursements, and all other
transactions required to be made, including such specific
records as shall be agreed upon in writing between Company
and Trustee. Within thirty (30) days following the close of
each calendar year and within thirty (30) days after the
removal or resignation of Trustee, Trustee shall deliver to
Company a written account of its administration of the Trust
during such year or during the period from the close of the
last preceding year to the date of such removal or
resignation, setting forth all investments, receipts,
disbursements and other transactions effected by it,
including a description of all securities and investments
purchased and sold with the cost or net proceeds of such
purchases or sales (accrued interest paid or receivable
being shown separately), and showing all cash, securities
and other property held in the Trust at the end of such year
or as of the date of such removal or resignation, as the
case may be. In the absence of the filing in writing with
Trustee by Company of exceptions or objections to any such
written account within sixty (60) days, Company shall be
deemed to have approved such account; in such case, or upon
the written approval by the Company of any such account,
Trustee shall be released, relieved and discharged with
respect to all matters and things written in such account as
though such account had been settled by the decree of a
court of competent jurisdiction.
Section 7. Responsibility of Trustee.
(a) Trustee shall act with the care, skill, prudence
and diligence under the circumstances then prevailing that a
prudent person acting in like capacity and familiar with
such matters would use in the conduct of an enterprise of a
like character and with like aims; provided, however, that
Trustee shall incur no liability to any person for any
action taken pursuant to a direction, request or approval
given in writing by an authorized representative of the
Company, except any liability due to Trustee's gross
negligence or willful misconduct. In the event of a dispute
between Company and a party, Trustee may apply to a court of
competent jurisdiction to resolve the dispute.
(b) Trustee shall have, without exclusion, all powers
conferred on trustees by applicable law, unless expressly
provided otherwise herein; provided, however, that if an
interest in an insurance policy, as evidenced by a
collateral assignment agreement, is held as an asset of the
Trust, Trustee shall have no power to name a beneficiary
other than the Trust for its interest in the policy, or to
assign its interest (as distinct from conversion of the
policy to a different form) other than to a successor
Trustee. Trustee shall act with respect to any such policy
only as directed by Company, except as expressly set forth
in Section 2(d).
(c) Notwithstanding any powers granted to Trustee
pursuant to this Trust Agreement or to applicable law,
Trustee shall not have any power that could give this Trust
the objective of carrying on a business and dividing the
gains therefrom, within the meaning of Section 301.7701-2 of
the Procedure and Administrative Regulations promulgated
pursuant to the Internal Revenue Code.
(d) Company shall pay all administrative and Trustee's
fees and expenses. If not so paid, the fees and expenses
shall be paid from the Policy Proceeds before such Policy
Proceeds are forwarded to the Company.
(e) Company shall indemnify and hold harmless The
Northern Trust Company for any liabilities, losses, claims,
suits or expenses (including reasonable attorneys' fees)
incurred by Trustee with respect to holding, managing,
investing, or otherwise administering the Trust or its
assets or carrying out its duties hereunder, except to the
extent that such liability, loss, claim, suit or expense
arises from actions constituting negligence or willful
misconduct by the Trustee under this Agreement. This
section shall survive the termination of this Trust
Agreement.
(f) Company shall indemnify and hold harmless the
Recordkeeper for any liabilities, losses, claims, suits or
expenses (including reasonable attorneys' fees) incurred by
the Recordkeeper with respect to its duties and obligations
hereunder, except to the extent that such liability, loss,
claim, suit or expense arises from actions constituting
negligence or willful misconduct by the Trustee under this
Agreement. This section shall survive the termination of
this Trust Agreement.
Section 8. Resignation and Removal of Trustee.
(a) The Trustee may resign at any time by delivering
written notice thereof to the Company; provided, however,
that no such resignation shall take effect until the earlier
of (i) sixty (60) days from the date of delivery of such
notice to the Company or (ii) the appointment of a successor
trustee.
(b) The Trustee may be removed at any time by the
Company, pursuant to a resolution of the Board of Directors
of the Company, upon delivery to the Trustee of a certified
copy of such resolution and sixty (60) days' written notice,
unless such notice period is waived in whole or in part by
the Trustee, of (i) such removal and (ii) the appointment of
a successor trustee.
(c) Upon the resignation or removal of the Trustee, a
successor trustee shall be appointed by the Company. Such
successor trustee shall be a bank or trust company which is
established under the laws of the United States or a State
within the United States and which is not related, directly
or indirectly, to the Company. Such appointment shall take
effect upon the delivery to the Trustee of (a) a written
appointment of such successor trustee, duly executed by the
Company, and (b) a written acceptance by such a successor
trustee, duly executed thereby. Any successor trustee shall
have all the rights, powers and duties granted the Trustee
hereunder.
(d) If, within sixty (60) days of the delivery of the
Trustee's written notice of resignation, a successor trustee
shall not have been appointed, the Trustee may apply to any
court of competent jurisdiction for the appointment of a
successor trustee.
(e) Upon the resignation or removal of the Trustee and
the appointment of a successor trustee, and after the
acceptance and approval of the Trustee's accounting of the
Trust property, the Trustee shall transfer and deliver the
Trust's property to such successor. Under no circumstances
shall the Trustee transfer or deliver the Trust's property
to any successor which is not a bank or trust company as
herein above defined.
(f) Upon a Change of Control, as defined herein,
neither the Trustee nor the Recordkeeper may be removed by
Company for three (3) years. If Trustee or Recordkeeper
resigns within such three year period, Company shall apply
to a court of competent jurisdiction for the appointment of
a successor Trustee or Recordkeeper or for other
instructions.
(g) Upon resignation or removal of Trustee and
appointment of a successor Trustee, all assets shall
subsequently be transferred to the successor Trustee. The
transfer shall be completed within sixty (60) days after
receipt of notice of resignation, removal or transfer,
unless Company extends the time limit.
(h) If Trustee resigns or is removed, a successor shall
be appointed, in accordance with Section 9 hereof, by the
effective date of resignation or removal under paragraph(s)
(a) or (b) of this section. If no such appointment has been
made, Trustee may apply to a court of competent jurisdiction
for appointment of a successor or for instructions. All
reasonable expenses of Trustee in connection with the
proceeding shall be allowed as administrative expenses of
the Trust.
Section 9. Appointment of Successor.
(a) If Trustee resigns or is removed in accordance with
Section 8(a) or 8(b) hereof, Company may appoint any third
party bank or trust company that is granted corporate
trustee powers under state law, as a successor to replace
Trustee upon resignation or removal. The appointment shall
be effective when accepted in writing by the new Trustee,
who shall have all of the rights and powers of the former
Trustee. The former Trustee shall execute any instrument
necessary or reasonably requested by Company or the
successor Trustee to evidence the transfer.
(b) If Trustee resigns or is removed pursuant to the
provisions of Section 8(e) hereof and selects a successor
Trustee, Trustee may appoint any third party bank or trust
company that is granted corporate trustee powers under state
law. The appointment of a successor Trustee shall be
effective when accepted in writing by the new Trustee. The
new Trustee shall have all the rights and powers of the
former Trustee. The former Trustee shall execute any
instrument necessary or reasonably requested by the
successor Trustee to evidence the transfer.
Section 10. Amendment or Termination.
(a) This Trust Agreement may be amended by a written
instrument executed by Trustee and Company; provided,
however, upon a Change of Control (as defined herein) no
amendment may be made to this Trust Agreement without the
express written consent of eighty percent (80%) in interest
of the affected Participants, which consent shall be
determined by the Company on the basis of the records
maintained by the Recordkeeper. Notwithstanding the
foregoing, no such amendment shall conflict with the terms
of the Program or shall make the Trust revocable after it
has become irrevocable in accordance with Section 1(b)
hereof.
(b) The Trust shall not terminate until the date on
which the Trust holds no collateral assignment agreements or
any other interest in any Policy pursuant to the terms of
the Program. Upon termination of the Trust, any assets
remaining in the Trust shall be returned to Company.
Section 11. Miscellaneous.
(a) Any provision of this Trust Agreement prohibited by
law shall be ineffective to the extent of any such
prohibition, without invalidating the remaining provisions
hereof.
(b) Premium payments under this Trust Agreement may
not be anticipated, assigned (either at law or in equity),
alienated, pledged, encumbered or subjected to attachment,
garnishment, levy, execution or other legal or equitable
process.
(c) This Trust Agreement shall be governed by and
construed in accordance with the laws of the State of New
Jersey.
(d) The following defined terms used in this Trust
Agreement shall have the meanings indicated:
(1) "Change of Control" shall mean:
(i) The acquisition by any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of
the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) (a "Person") of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of securities of the Company where such
acquisition causes such Person to own 20% or more of either
(A) the then outstanding shares of common stock of the
Company (the "Outstanding Company Common Stock") or (B) the
combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the
election of directors (the "Outstanding Company Voting
Securities"); provided, however, that for purposes of this
subsection (i) the following acquisitions shall not
constitute a Change of Control: (A) any acquisition directly
from the Company, (B) any acquisition by the Company, (C)
any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any
corporation controlled by the Company or (D) any acquisition
by any corporation pursuant to a transaction which
complies with clauses (A), (B) and (C) of subparagraph (iii)
of this paragraph (1); and provided, further, that if any
Person's beneficial ownership of the Outstanding Company
Voting Securities reaches or exceeds 20% as a result of a
transaction described in clause (A) or (B) above, and such
Person subsequently acquires beneficial ownership of
additional voting securities of the Company, such subsequent
acquisition shall be treated as an acquisition that causes
such Person to own 20% or more of the Outstanding Company
Voting Securities; or
(ii) Individuals who, as of the date hereof,
constitute the Board of Directors of the Company (the
"Incumbent Board") cease for any reason to constitute at
least a majority of the Board of Directors of the Company;
provided, however, that any individual becoming a director
subsequent to the date hereof whose election, or nomination
for election by the Company's shareholders, was approved by
a vote of at least a majority of the directors then
comprising the Incumbent Board shall be considered as though
such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose
initial assumption of office occurs as a result of either an
actual or threatened election contest with respect to the
election or removal of directors or other actual or
threatened solicitation of proxies or consents by or on
behalf of a Person other than the Incumbent Board, or
(iii) Approval by the shareholders of the Company of
a reorganization, merger or consolidation or sale or other
disposition of all or substantially all of the assets of the
Company (a "Business Combination"), in each case, unless,
following such Business Combination, (A) all or
substantially all of the individuals and entities who were
the beneficial owners, respectively, of the Outstanding
Company Common Stock and Outstanding Company Voting
Securities immediately prior to such Business Combination
beneficially own, directly or more than 50% of,
respectively, the then outstanding shares of 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 the Company or all or substantially all of
the Company'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 Company Common Stock and Outstanding Company
Voting Securities, as the case may be, (B) no Person
(excluding any employee benefit plan (or related trust) of
the Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 20%
or more of, respectively, 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 (C) 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 at the time of the execution of the initial
agreement, or of the action of the Board of Directors of the
Company, providing for such Business Combination; or
(iv) Approval by the shareholders of the Company of
a complete liquidation or dissolution of the Company.
(2) The term "affiliated company" shall mean
any company controlled by, controlling or under common
control with the Company.
(e) Company shall immediately notify Trustee and
Recordkeeper of any Change of Control. Trustee and
Recordkeeper may conclusively rely upon such notice and
shall have no duty to determine whether a Change of Control
has occurred.
Section 12. Effective Date
The effective date of this Trust Agreement shall be
April 1, 1998.
Section 13. Counterparts
This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, and
all of which together shall constitute one Agreement.
IN WITNESS WHEREOF, the Schering-Plough Executive Life
Insurance Trust is executed on behalf of the Company and the
Trustee as of the 1st day of April, 1998.
Schering-Plough Corporation
_______________________________
Authorized Officer
ATTEST:
________________________________
Secretary
The Northern Trust Company
_______________________________
Authorized Officer
ATTEST:
________________________________
Secretary
Accepted and agreed to solely in its capacity as
Recordkeeper hereunder.
Buck Consultants
_______________________________
Authorized Officer
APPENDIX A
EXECUTIVE LIFE INSURANCE PROGRAM
Plan Design - Pre- and post-retirement life insurance
coverage with equity build-up that participant controls
following plan maturity.
Plan Maturity - All policies mature (i.e., company
premium payments cease) at the later of participant reaching
age 65 or 15 years after participant's policy is issued.
Plan Carrier - All policies are issued by Metropolitan
Life Insurance Company.
Before Plan Maturity
Death Benefit
- - Participants have a choice of selecting an individual policy
on themselves or a second-to-die policy that insures
both participant and participant's spouse. The death benefit
on an individual policy is paid to participant's named
beneficiary upon participant's death. This type of contract is
designed for those individuals who have a need for cash
liquidity for their
survivors.
- - A second-to-die policy pays a death benefit upon
the second death of the individuals insured. This type of
contract is used mostly in an estate planning situation
where cash liquidity is needed to offset final estate taxes.
- - Participants also have the option of purchasing
additional coverage equal to 50% of their Schering-
Plough sponsored coverage at their own expense.
Premiums
- - The company pays the majority of the annual premium.
- - Participants pay a small annual term premium to
plan maturity. Payments are handled as follows:
- If participant owns the policy, participant's
term contribution is paid by payroll withholding.
- If a trust or other third party owns the policy,
the policy owner pays the term contribution by check at the
beginning of each policy year.
Policy Cash Values
- - Cash values accumulate based on premium payments,
interest credited, and mortality charged.
- - The credited interest rate is reviewed and
adjusted annually by the insurance company.
At or After Plan Maturity
Death Benefit
- - The design of the program is to provide an endowed
death benefit at age 95. The amount of the death benefit will
equal the amount participant had before plan maturity.
- - Cash withdrawals or policy loans will reduce the
death benefit and could cause participant to outlive his or
her coverage.
- - Coverage after plan maturity is not guaranteed.
Policy Cash Values
- - The company recovers its premium payments at
plan maturity.
- - The design of the program is that the cash value at
plan maturity will be sufficient to absorb future mortality
charges and provide a fixed death benefit through age 95.
Premiums
- - The company makes no further premium payments after
plan maturity.
General Information
- - Terminations, other than for retirement or
disability, before maturity - The company recovers its premium payments
and discontinues any future payments. Participant or
participant's trust still owns the policy and can either
cancel it or arrange with the carrier for the particular
continuation of coverage options he or she desires.
APPENDIX B
COLLATERAL ASSIGNMENT AGREEMENTS
Exhibit 10(g)
COLLATERAL ASSIGNMENT AGREEMENT
A. For value received, the undersigned (the
"Policyowner"), as owner of Policy Number _________ (the
"Policy") issued by Metropolitan Life Insurance Company (the
"Insurer"), hereby assigns, sets over and transfers the Policy
from Schering-Plough Corporation ("SPC") to The Northern Trust
Company, as trustee under the Schering-Plough Executive Life
Insurance Trust established April 1, 1998 (the "Trust"), as
collateral security for those liabilities as may arise under
the terms of the Split Dollar Agreement between the Policyowner
(or its assignor) and SPC dated as of
, 199_ (as amended from time to time, the "Split Dollar
Agreement"), subject to the terms and conditions in the Policy
and the Trust and to all superior liens, if any, which the
Insurer has or may have against the Policy.
B. The collateral assignment being made pursuant to this
Agreement is solely for the purpose of assuring the Assignee,
on behalf of SPC, of payment of the liabilities under the terms
of the Split Dollar Agreement.
C. The Policyowner and the Assignee expressly agree,
without detracting from the generality of the foregoing, that
the following rights are included in this assignment and pass
to the Assignee by virtue hereof:
1. The sole right to collect the net proceeds
of
the Policy from the Insurer when the Policy becomes a claim by
death or maturity.
2. The sole right to surrender the Policy and
receive the cash surrender value thereof pursuant to the policy
provisions.
3. The sole right to obtain one or more loans
or advances on the Policy, and to pledge or assign the Policy as
security for such loans or advance.
4. The right to assign, sell or convey the
Policy, subject to the interest of the Policyowner.
D. The Policyowner and the Assignee expressly agree that
as long as the Policy has not been surrendered, the following
rights are reserved by the Policyowner and excluded from this
assignment, and do not pass by virtue hereof:
1. The sole right to designate and change the
beneficiary.
2. The sole right to elect any Optional Mode
of Settlement permitted by the Policy or permitted by the Insurer.
3. The right to assign, sell or convey the
Policy, subject to the interest of the assignee.
E. The Assignee covenants and agrees with the
Policyowner:
1. That amounts which are paid to the
Assignee by the Insurer pursuant to the terms of the Policy
and this Agreement and which are remaining after payment
of the then existing liabilities of the Policyowner under
the Split Dollar Agreement shall be paid by the Assignee
to the persons entitled thereto under the Policy had this
Agreement not been executed.
2. That the Assignee will not exercise
either the right to surrender or withdraw from the Policy
or the right to obtain Policy loans from the Insurer
unless and until there has been a default in any of the
liabilities under the Split Dollar Agreement, failure by
the Policyowner to pay a premium when due, or the
occurrence of any event under the Split Dollar Agreement
which calls for the Assignee to recover amounts to which
the Assignee is entitled under the Policy. In any event,
the Assignee shall not exercise any of its rights under
the Policy until 20 days after the Assignee shall have
mailed, by first class mail, to the Policyowner at the
address last supplied to the Assignee specifically
referring to this assignment, notice of intention to
exercise such right.
Upon the full payment of all liabilities under the Split
Dollar Agreement by the Policyowner, the Assignee shall
execute an appropriate instrument of release of this
assignment.
The Insurer shall be fully protected and discharged from
further obligation by paying in reliance upon the terms of
the Policy and/or the terms of this assignment. The
Insurer shall not be bound by the terms of the Split
Dollar Agreement and may rely on any written assurance
concerning such Agreement provided to the Insurer by the
Policyowner or the Assignee. Any conflicts between this
assignment and any other agreement, with respect to the
rights of the Assignee under the Policy, shall be solved
in accordance with the terms of this assignment.
Date:__________
_________________________
Policyowner
_________________________
Name (typed or printed)
_________________________
Address
_________________________
Exhibit 10(h)
SCHERING-PLOUGH CORPORATION
Amendment to Directors Stock Award Plan
The Schering-Plough Corporation Directors Stock Award
Plan is hereby amended effective as of April 1, 1998, by
deleting Section 4 thereof and substituting therefore the
following:
4. From and after April 1, 1998, each non-employee
Director shall receive 1100 shares of Common Stock of the
Corporation on the day following each Annual Meeting of
Shareholders of the Corporation; provided that this provision
shall not take effect until (a) the 1999 Annual Meeting of
Shareholders for non-employee Directors elected on April 23, 1996
and (b) the 2000 Annual Meeting of Shareholders for non-employee
Directors elected on April 22, 1997. Newly eligible non-employee
Directors shall receive a pro rata portion of such award for the
applicable term pending the next succeeding Annual Meeting of
Shareholders.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
Schering-Plough Corporation and subsidiaries consolidated Financial
Statements, and related Exhibits for the three months ended March
31, 1998, and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1000000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 622
<SECURITIES> 0
<RECEIVABLES> 794
<ALLOWANCES> 0
<INVENTORY> 721
<CURRENT-ASSETS> 3035
<PP&E> 3765
<DEPRECIATION> 1260
<TOTAL-ASSETS> 6651
<CURRENT-LIABILITIES> 2684
<BONDS> 46
0
0
<COMMON> 1015
<OTHER-SE> 2133
<TOTAL-LIABILITY-AND-EQUITY> 6651
<SALES> 1908
<TOTAL-REVENUES> 1908
<CGS> 380
<TOTAL-COSTS> 380
<OTHER-EXPENSES> 224
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 596
<INCOME-TAX> 146
<INCOME-CONTINUING> 450
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 450
<EPS-PRIMARY> .61
<EPS-DILUTED> .61
</TABLE>
Exhibit 99
Company Statement Relating to Forward Looking Information
(Filed Pursuant to Rule 175)
Statement from press release issued by the Company on April 21, 1998:
Mr. Richard Jay Kogan, President and Chief Executive
Officer, commenting on the Company's business results,
stated that the Company "expects to achieve solid earnings
growth in 1998."
