Exhibit 10 (e)(iii)
FIRST AMENDMENT TO EMPLOYMENT AGREEMENT
THIS FIRST AMENDMENT to the Employment Agreement by and
between SCHERING-PLOUGH CORPORATION, a New Jersey corpora-
tion (the "Company"), and HUGH A. D'ANDRADE (the "Employee")
dated as of June 28, 1994 (the "Employment Agreement"), made
and entered into as of this 1st day of March, 1995;
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) of Section 3 of the Employment
Agreement is hereby amended to read in its entirety as
follows:
(i) Supplemental Retirement Plan ("SRP"). (I) An unfunded,
non-tax-qualified annual pension supplement (the "Normal
Supplement"), subject to the terms and conditions set forth
below, in the amount by which the greatest of (A) or (B) or
(C), exceeds (D), where:
(A) is two percent (2%) of the Employee's "final average
earnings" (the average of his Annual Base Salary over the
highest sixty (60) consecutive months in his last one
hundred twenty (120) months of employment with the Company
plus the average of his last five (5) annual awards from the
Cash Bonus Plans) times his years of service with the
Company up to twenty (20) years
plus
one percent (1%) of the same "final average earnings" times
his years of service with the Company in excess of twenty
(20) years;
(B) is thirty-five percent (35%) of the Employee's "final
average earnings", as defined hereinabove; provided,
however, that this subparagraph (B) shall apply only if the
Employee is in the employ of the Company when he reaches age
sixty (60) with at least ten (10) years of service with the
Company;
(C) is fifty-five percent (55%) of the Employee's "final
average earnings", as defined hereinabove; provided,
however, that this subparagraph (C) shall apply only if the
Employee is in the employ of the Company on or after he
reaches age sixty-two (62); and
(D) is the sum of (I) the Employee's pension from the
Company's qualified retirement plan and retirement benefits
equalization plan applicable to him and (II) the amount of
any benefits paid under the Company's Supplemental Executive
Retirement Plan or any successor or replacement plan
(collectively with the SRP, the "SERP").
(II) In the event the Employee elects to retire prior to
age sixty-five (65) ("Early Retirement"), the Employee shall
be entitled, in lieu of the Normal Supplement, to an un-
funded, non-tax-qualified annual pension supplement (the
"Early Retirement Supplement"), subject to the terms and
conditions set forth below, equal to the amount by which
(AA) exceeds (BB) below, where:
(AA) is the amount computed in accordance with (A) of
subsection (I) of this Section 3(j)(i) or, if applicable and
greater, (B) or (C) of such subsection (I), reduced four
percent (4%) for each year that the Employee's retirement
precedes age sixty-two (62); provided, however, that such
amount shall not be less than thirty-five percent (35%) of
the Employee's "final average earnings" if the Employee's
early retirement occurs on or after he reaches age sixty
(60) with at least ten (10) years of service; and
(BB) is the sum of (I) the Employee's pension payable at
early retirement from the Company's qualified retirement
plan and retirement benefits equalization plan applicable to
him and (II) the amount of any benefits paid under the
Company's Supplemental Executive Retirement Plan or any
successor or replacement plan.
(III) Any SRP that becomes payable pursuant to subsection
(I) or (II) of this Section 3(j)(i) shall be payable as
follows.
(AAA) If payable, the Normal Supplement or the Early
Retirement Supplement, as the case may be, shall commence
to be paid upon the date of the Employee's retirement. The
Normal Supplement or the Early Retirement Supplement, as the
case may be, shall be computed on a straight life annuity
basis, with an option to the Employee to receive the
actuarial equivalent of such supplement under a joint and
survivor's annuity; provided, however, that in the event the
Employee retires from the employ of the Company on or after
he reaches age sixty-two (62), the Employee shall be
entitled to receive the Normal Supplement (without any
reduction) on a straight life annuity basis and after the
Employee's death, his surviving spouse shall be entitled to
receive annually for the duration of her life a survivor's
benefit (the "Survivor's Benefit") equal to the amount by
which (i) 45% of "final average earnings" (as defined in (A)
of subsection (I) of this Section 3(j)(i)) (without any
reduction) exceeds (ii) the amount payable to her set forth
in clause (D) of subsection (I) of this Section 3(j)(i). If
the Employee's benefits under the Company's qualified
retirement plan are to continue after his death for the
benefit of his surviving spouse or a designated beneficiary,
then he shall have the right at any time to change the
recipient of any survivorship benefit payable under the SRP;
provided, however, that any such change, if made after the
applicable deadline set forth in the qualified retirement
plan, shall not affect the amount of the benefit payable
under the SRP as originally calculated or the term for which
such benefit is payable, also as originally calculated.
(BBB) Notwithstanding the foregoing, the Employee shall be
entitled to elect that the SRP shall be paid in accordance
with any optional form of benefit available under the
Company's qualified retirement plan or as provided in
subsection (CCC) below.
(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 in cash or in up to
five equal annual cash installments on or commencing on the
date of his retirement or the first day of any month
thereafter not later than the second anniversary of the date
of his retirement. If the Employee dies after retirement or
deemed 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
in cash or in up to five equal annual cash installments. A
lump sum or installments so elected by a surviving spouse
shall be paid on or commencing on the first day of the month
next following the month 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 his death.
(EEE) The Employee's Lump Sum Election and the Survivor's
Lump Sum Election shall be made, and may be rescinded, in
the same manner and at the same times as are prescribed for
the analogous elections under the Company's Supplemental
Executive Retirement Plan or any successor or replacement
plan (the "Basic SERP") or, at any time when there is no
Basic SERP in effect, in accordance with procedures
specified by the Executive Compensation and Organization
Committee of the Board of Directors of the Company (the
"Committee"). The amount of any lump sum or installment
payments of the Employee's Benefit or Survivor's Benefit
shall be computed in the same manner as is prescribed for
the analogous computations under the Basic SERP or, at any
time when there is no Basic SERP in effect or there are no
analogous computations provided under the Basic SERP, as
specified by the Committee.
(FFF) Notwithstanding any timely Employee's Lump Sum
Election or Survivor's Lump Sum Election, neither the
Employee nor the Employee's surviving spouse shall have the
right to receive the SRP in a form provided for in
subsection (CCC) or subsection (DDD), as the case may be, if
the Employee's employment is terminated for Cause (as
defined below). In the event the Employee dies before
retirement or deemed retirement, the Company shall have no
obligation in respect of the Employee's Benefit, and shall
be obligated to pay the Survivor's Benefit to his spouse,
if, but only if, the Employee's spouse shall survive him.
(GGG) The Committee may, in its sole discretion, defer the
payment of any lump sum or annual installment of the
Employee's Benefit to the Employee, if the Employee is, at
the time such amount would otherwise be paid, 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 a rate equal to the actual yield on
three-month U.S. Treasury bills as reported in the Wall
Street Journal on the first business day of each calendar
quarter, compounded quarterly.
(IV) In determining the SRP, the following rules shall
apply:
(AAAA)If, during the Employment Period, the Employee's
employment terminates by reason of death, or the Company
terminates the Employee's employment for Disability or
otherwise than for Cause, or the Employee terminates his
employment either for Good Reason or without any reason
during the Window Period (as the terms Disability, Cause,
Good Reason and Window Period are hereinafter defined),
then, in any such event, the references to final average
earnings, age and retirement in this subparagraph (j)(i) of
Section 3 shall be read in a manner that takes into account
the provisions in paragraphs (a)(iv), (b) and (c) of Section
5 of this Agreement regarding deemed compensation, deemed
age and deemed retirement, and the time of payment of the
SRP shall be determined in accordance with such provisions.
(BBBB) Except as otherwise specifically provided for in this
Agreement, the provisions of the Company's qualified
retirement plan and of the Basic SERP applicable to the
Employee shall apply to the SRP provided hereunder.
2. Subparagraph (a)(iv) of Section 5 is hereby amended to
read in its entirety as follows:
(iv) for all purposes of subparagraph (j)(i) of Section 3
above (including without limitation both the computation and
time of payment of the SRP), the Employee shall be deemed to
have retired at age 62 on the Date of Termination with final
average earnings computed as if the compensation for his
final three years consisted of the compensation paid
pursuant to subparagraph (a)(i)(B) of this Section 5 and the
compensation for the two years preceding his final three
years consisted of the compensation actually paid to him
with respect to the year in which the Date of Termination
occurs (including without limitation the compensation
payable pursuant to subparagraph (a)(i)(A) of this Section
5) and the compensation actually paid to him with respect to
the year preceding the year in which the Date of Termination
occurs.
3. Subparagraph (b) of Section 5 is hereby amended by adding
the following sentences at the end thereof:
For all purposes of determining the Survivor's Benefit, if
any, pursuant to subparagraph (j)(i) of Section 3 above
(including without limitation both the computation and time
of payment of the Survivor's Benefit), the Employee shall be
deemed to have attained age 62 and retired immediately
before his death. For purposes of determining the
Supplemental Retirement Amount payable pursuant to this
subparagraph (b), references in the definition of
"Supplemental Retirement Amount" set forth in subparagraph
(a)(i)(C) of this Section 5 to the Employee's retirement
benefits shall be deemed to refer to the Survivor's Benefit
and the other retirement benefits payable to the Employee's
surviving spouse and/or beneficiaries and estate.
4. Subparagraph (c) of Section 5 is hereby amended by adding
the following sentence at the end thereof:
For all purposes of determining the SRP pursuant to
subparagraph (j)(i) of Section 3 above (including without
limitation both the computation and the time of payment of
the SRP), the Employee shall be deemed to have retired at
age 62 on the Date of Termination.
5. Section and other headings contained in the Employment
Agreement, as hereby amended, are for reference purposes
only and are not intended to interpret, define or limit any
provision of such Agreement.
6. This First Amendment and the Employment Agreement
constitute the entire agreement between the parties with
respect to the subject matter hereof and supersede all prior
agreements and understandings between the parties with
respect to the subject matter hereof. The Employment
Agreement, as amended by this First Amendment, is and shall
continue to be in full force and effect and is hereby in all
respects ratified and confirmed.
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
_____________________________
Hugh A. D'Andrade
SCHERING-PLOUGH CORPORATION
Robert P. Luciano
______________________________
Robert P. Luciano
Chairman of the Board and Chief
Executive Officer
18152-1