EMPLOYMENT AGREEMENT
Exhibit 10(e)(iv)
AGREEMENT by and between Schering-Plough Corporation, a New
Jersey corporation (the "Company") and _________ _________
(the "Executive"), dated as of the ___ day of _______, 1994.
The Board of Directors of the Company (the "Board"), has
determined that it is in the best interests of the Company
and its shareholders to assure that the Company will have
the continued dedication of the Executive, notwithstanding
the possibility, threat or occurrence of a Change of Control
(as defined below) of the Company. The Board believes it is
imperative to diminish the inevitable distraction of the
Executive by virtue of the personal uncertainties and risks
created by a pending or threatened Change of Control and to
encourage the Executive's full attention and dedication to
the Company currently and in the event of any threatened or
pending Change of Control, and to provide the Executive with
compensation and benefits arrangements upon a Change of
Control which ensure that the compensation and benefits
expectations of the Executive will be satisfied and which
are competitive with those of other corporations.
Therefore, in order to accomplish these objectives, the
Board has caused the Company to enter into this Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Certain Definitions. (a) The "Effective Date" shall
mean the first date during the Change of Control Period (as
defined in Section 1(b)) on which a Change of Control (as
defined in Section 2) occurs. Anything in this Agreement to
the contrary notwithstanding, if a Change of Control occurs
and if the Executive's employment with the Company is termi-
nated prior to the date on which the Change of Control oc-
curs, and if it is reasonably demonstrated by the Executive
that such termination of employment (i) was at the request
of a third party who has taken steps reasonably calculated
to effect a Change of Control or (ii) otherwise arose in
connection with or anticipation of a Change of Control, then
for all purposes of this Agreement the "Effective Date"
shall mean the date immediately prior to the date of such
termination of employment.
(b) The "Change of Control Period" shall mean the period
commencing on the date hereof and ending on the third an-
niversary of the date hereof; provided, however, that com-
mencing on the date one year after the date hereof, and on
each annual anniversary of such date (such date and each an-
nual anniversary thereof shall be hereinafter referred to as
the "Renewal Date"), unless previously terminated, the
Change of Control Period shall be automatically extended so
as to terminate three years from such Renewal Date, unless
at least 60 days prior to the Renewal Date the Company shall
give notice to the Executive that the Change of Control
Period shall not be so extended.
2. Change of Control. For the purpose of this Agreement,
a "Change of Control" shall mean:
(a) 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 (i) the then outstanding
shares of common stock of the Company (the "Outstanding
Company Common Stock") or (ii) 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 (a), the following
acquisitions shall not be deemed to result in a Change of
Control: (i) any acquisition directly from the Company,
(ii) any acquisition by the Company, (iii) any acquisition
by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by
the Company or (iv) any acquisition by any corporation
pursuant to a transaction which complies with clauses (i),
(ii) and (iii) of subsection (c) of this Section 2; 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
(i) or (ii) 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
(b) Individuals who, as of the date hereof, constitute the
Board (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board; provided,
however, that any individual becoming a director subsequent
to the 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 exclud-
ing, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or
threatened election contest with respect to the election or
removal of directors or other actual or threatened solicita-
tion of proxies or consents by or on behalf of a Person
other than the Board; or
(c) Consummation 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, (i) 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 indirectly, 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 sub-
stantially 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, (ii) no Person (excluding any corporation resulting from
such Business Combination or 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 out-
standing shares of common stock of the corporation resulting
from such Business Combination or the combined voting power
of the then outstanding voting securities of such
corporation except to the extent that such ownership existed
prior to the Business Combination and (iii) at least a
majority of the members of the board of directors of the
corporation resulting from such Business Combination were
members of the Incumbent Board at the time of the execution
of the initial agreement, or of the action of the Board,
providing for such Business Combination; or
(d) Approval by the shareholders of the Company of a
complete liquidation or dissolution of the Company.
3. Employment Period. The Company hereby agrees to
continue the Executive in its employ, and the Executive
hereby agrees to remain in the employ of the Company subject
to the terms and conditions of this Agreement, for the
period commencing on the Effective Date and ending on the
earlier of (x) the third anniversary of such date and (y)
the Executive's 65th birthday (the "Employment Period").
4. Terms of Employment. (a) Position and Duties. (i)
During the Employment Period, (A) the Executive's position
(including status, offices, titles and reporting re-
quirements), authority, duties and responsibilities shall be
at least commensurate in all material respects with the most
significant of those held, exercised and assigned at any
time during the 120-day period immediately preceding the Ef-
fective Date and (B) the Executive's services shall be
performed at the location where the Executive was employed
immediately preceding the Effective Date or any office or
location less than 35 miles from such location.
(ii) During the Employment Period, and excluding any
periods of vacation and sick leave to which the Executive is
entitled, the Executive agrees to devote reasonable
attention and time during normal business hours to the
business and affairs of the Company and, to the extent
necessary to discharge the responsibilities assigned to the
Executive hereunder, to use the Executive's reasonable best
efforts to perform faithfully and efficiently such responsi-
bilities. During the Employment Period it shall not be a
violation of this Agreement for the Executive to (A) serve
on corporate, civic or charitable boards or committees, (B)
deliver lectures, fulfill speaking engagements or teach at
educational institutions and (C) manage personal invest-
ments, so long as such activities do not significantly
interfere with the performance of the Executive's
responsibilities as an employee of the Company in accordance
with this Agreement. It is expressly understood and agreed
that to the extent that any such activities have been
conducted by the Executive prior to the Effective Date, the
continued conduct of such activities (or the conduct of
activities similar in nature and scope thereto) subsequent
to the Effective Date shall not thereafter be deemed to
interfere with the performance of the Executive's
responsibilities to the Company.
(b) Compensation. (i) Base Salary. During the Employment
Period, the Executive shall receive an annual base salary
("Annual Base Salary"), which shall be paid at a
semi-monthly rate, at least equal to twenty-four times the
highest semi-monthly base salary paid or payable, including
any base salary which has been earned but deferred, to the
Executive by the Company and its affiliated companies in
respect of the twelve-month period immediately preceding the
month in which the Effective Date occurs. During the
Employment Period, the Annual Base Salary shall be reviewed
no more than 12 months after the last salary increase
awarded to the Executive prior to the Effective Date and
thereafter at least annually. Any increase in Annual Base
Salary shall not serve to limit or reduce any other
obligation to the Executive under this Agreement. Annual
Base Salary shall not be reduced after any such increase and
the term Annual Base Salary as utilized in this Agreement
shall refer to Annual Base Salary as so increased. As used
in this Agreement, the term "affiliated companies" shall
include any company controlled by, controlling or under com-
mon control with the Company.
(ii) Annual Bonus. In addition to Annual Base Salary, the
Executive shall be awarded, for each fiscal year ending
during the Employment Period, an annual bonus (the "Annual
Bonus") in cash at least equal to the Executive's highest
bonus under the Company's Executive Incentive Plan, or any
comparable bonus under any predecessor or successor plan,
for the last three full fiscal years prior to the Effective
Date (annualized in the event that the Executive was not
employed by the Company for the whole of such fiscal year)
(the "Recent Annual Bonus"). Each such Annual Bonus shall
be paid no later than the end of the third month of the
fiscal year next following the fiscal year for which the An-
nual Bonus is awarded, unless the Executive shall elect to
defer the receipt of such Annual Bonus.
(iii) Incentive, Savings and Retirement Plans. During the
Employment Period, the Executive shall be entitled to
participate in all incentive, profit-sharing, stock option,
stock award, savings and retirement plans, practices,
policies and programs applicable generally to other peer
executives of the Company and its affiliated companies, but
in no event shall such plans, practices, policies and
programs provide the Executive with incentive opportunities
(measured with respect to both regular and special incentive
opportunities, to the extent, if any, that such distinction
is applicable), savings opportunities and retirement benefit
opportunities, in each case, less favorable, in the
aggregate, than the most favorable of those provided by the
Company and its affiliated companies for the Executive under
such plans, practices, policies and programs as in effect at
any time during the 120-day period immediately preceding the
Effective Date or if more favorable to the Executive, those
provided generally at any time after the Effective Date to
other peer executives of the Company and its affiliated
companies.
(iv) Welfare Benefit Plans. During the Employment Period,
the Executive and/or the Executive's family, as the case may
be, shall be eligible for participation in and shall receive
all benefits under welfare benefit plans, practices,
policies and programs provided by the Company and its
affiliated companies (including, without limitation,
medical, prescription, dental, disability, employee life,
group life, accidental death and travel accident insurance
plans and programs) to the extent applicable generally to
other peer executives of the Company and its affiliated
companies, but in no event shall such plans, practices,
policies and programs provide the Executive with benefits
which are less favorable, in the aggregate, than the most
favorable of such plans, practices, policies and programs in
effect for the Executive at any time during the 120-day
period immediately preceding the Effective Date or, if more
favorable to the Executive, those provided generally at any
time after the Effective Date to other peer executives of
the Company and its affiliated companies.
(v) Expenses. During the Employment Period, the Executive
shall be entitled to receive prompt reimbursement for all
reasonable expenses incurred by the Executive in accordance
with the most favorable policies, practices and procedures
of the Company and its affiliated companies in effect for
the Executive at any time during the 120-day period
immediately preceding the Effective Date or, if more favor-
able to the Executive, as in effect generally at any time
thereafter with respect to other peer executives of the
Company and its affiliated companies.
(vi) Fringe Benefits. During the Employment Period, the
Executive shall be entitled to fringe benefits, including,
without limitation, tax and financial planning services,
payment of club dues, and, if applicable, use of an
automobile and payment of related expenses and use of
Company aircraft, in accordance with the most favorable
plans, practices, programs and policies of the Company and
its affiliated companies in effect for the Executive at any
time during the 120-day period immediately preceding the Ef-
fective Date or, if more favorable to the Executive, as in
effect generally at any time thereafter with respect to
other peer executives of the Company and its affiliated
companies.
(vii) Office and Support Staff. During the Employment
Period, the Executive shall be entitled to an office or
offices of a size and with furnishings and other ap-
pointments, and to personal secretarial and other
assistance, at least equal to the most favorable of the
foregoing provided to the Executive by the Company and its
affiliated companies at any time during the 120-day period
immediately preceding the Effective Date or, if more favor-
able to the Executive, as provided generally at any time
thereafter with respect to other peer executives of the
Company and its affiliated companies.
(viii) Vacation. During the Employment Period, the
Executive shall be entitled to paid vacation in accordance
with the most favorable plans, policies, programs and
practices of the Company and its affiliated companies as in
effect for the Executive at any time during the 120-day
period immediately preceding the Effective Date or, if more
favorable to the Executive, as in effect generally at any
time thereafter with respect to other peer executives of the
Company and its affiliated companies.
5. Termination of Employment. (a) Death or Disability.
The Executive's employment shall terminate automatically
upon the Executive's death during the Employment Period. If
the Company determines in good faith that the Disability of
the Executive has occurred during the Employment Period
(pursuant to the definition of Disability set forth below),
it may give to the Executive written notice in accordance
with Section 12(b) of this Agreement of its intention to
terminate the Executive's employment. In such event, the
Executive's employment with the Company shall terminate
effective on the 30th day after receipt of such notice by
the Executive (the "Disability Effective Date"), provided
that, within the 30 days after such receipt, the Executive
shall not have returned to full-time performance of the
Executive's duties. For purposes of this Agreement,
"Disability" shall mean the absence of the Executive from
the Executive's duties with the Company on a full-time basis
for 180 consecutive business days as a result of incapacity
due to mental or physical illness which is determined to be
total and permanent by a physician selected by the Company
or its insurers and acceptable to the Executive or the
Executive's legal representative.
(b) Cause. The Company may terminate the Executive's
employment during the Employment Period for Cause. For
purposes of this Agreement, "Cause" shall mean:
(i) the willful and continued failure of the Executive to
perform substantially the Executive's duties with the
Company or one of its affiliates (other than any such
failure resulting from incapacity due to physical or mental
illness), after a written demand for substantial performance
is delivered to the Executive by the Board or the Chief
Executive Officer of the Company which specifically
identifies the manner in which the Board or Chief Executive
Officer believes that the Executive has not substantially
performed the Executive's duties, or
(ii) the willful engaging by the Executive in illegal
conduct or gross misconduct which is materially and
demonstrably injurious to the Company.
For purposes of this provision, no act or failure to act, on
the part of the Executive, shall be considered "willful" un-
less it is done, or omitted to be done, by the Executive in
bad faith or without reasonable belief that the Executive's
action or omission was in the best interests of the Company.
Any act, or failure to act, based upon authority given pur-
suant to a resolution duly adopted by the Board or upon the
instructions of the Chief Executive Officer or a senior of-
ficer of the Company or based upon the advice of counsel for
the Company shall be conclusively presumed to be done, or
omitted to be done, by the Executive in good faith and in
the best interests of the Company. The cessation of
employment of the Executive shall not be deemed to be for
Cause unless and until there shall have been delivered to
the Executive a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters of the
entire membership of the Board at a meeting of the Board
called and held for such purpose (after reasonable notice is
provided to the Executive and the Executive is given an
opportunity, together with counsel, to be heard before the
Board), finding that, in the good faith opinion of the
Board, the Executive is guilty of the conduct described in
subparagraph (i) or (ii) above, and specifying the
particulars thereof in detail.
(c) Good Reason. The Executive's employment may be
terminated by the Executive for Good Reason. For purposes
of this Agreement, "Good Reason" shall mean:
(i) the assignment to the Executive of any duties
inconsistent in any respect with the Executive's position
(including status, offices, titles and reporting require-
ments), authority, duties or responsibilities as contem-
plated by Section 4(a) of this Agreement, or any other
action by the Company which results in a diminution in such
position, authority, duties or responsibilities, excluding
for this purpose an isolated, insubstantial and inadvertent
action not taken in bad faith and which is remedied by the
Company promptly after receipt of notice thereof given by
the Executive;
(ii) any failure by the Company to comply with any of the
provisions of Section 4(b) of this Agreement, other than an
isolated, insubstantial and inadvertent failure not
occurring in bad faith and which is remedied by the Company
promptly after receipt of notice thereof given by the
Executive;
(iii) the Company's requiring the Executive to be based at
any office or location other than as provided in Section
4(a)(i)(B) hereof or the Company's requiring the Executive
to travel on Company business to a substantially greater
extent than required immediately prior to the Effective
Date;
(iv) any purported termination by the Company of the
Executive's employment otherwise than as expressly
permitted by this Agreement; or
(v) any failure by the Company to comply with and satisfy
Section 11(c) of this Agreement.
For purposes of this Section 5(c), any good faith determina-
tion of "Good Reason" made by the Executive shall be conclu-
sive. Anything in this Agreement to the contrary notwith-
standing, a termination by the Executive for any reason dur-
ing the 30-day period immediately following the first
an-
niversary of the Effective Date shall
be deemed to be a ter-
mination for Good Reason for all purposes of this Agreement.
(d) Notice of Termination. Any termination by the Company
for Cause, or by the Executive for Good Reason, shall be
communicated by Notice of Termination to the other party
hereto given in accordance with Section 12(b) of this Agree-
ment. For purposes of this Agreement, a "Notice of Termina-
tion" means a written notice which (i) indicates the
specific termination provision in this Agreement relied
upon, (ii) to the extent applicable, sets forth in
reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive's
employment under the provision so indicated and (iii) if the
Date of Termination (as defined below) is other than the
date of receipt of such notice, specifies the termination
date (which date shall be not more than thirty days after
the giving of such notice). The failure by the Executive or
the Company to set forth in the Notice of Termination any
fact or circumstance which contributes to a showing of Good
Reason or Cause shall not waive any right of the Executive
or the Company, respectively, hereunder or preclude the
Executive or the Company, respectively, from asserting such
fact or circumstance in enforcing the Executive's or the
Company's rights hereunder.
(e) Date of Termination. "Date of Termination" means (i)
if the Executive's employment is terminated by the Company
for Cause, or by the Executive for Good Reason, the date of
receipt of the Notice of Termination or any later date
specified therein, as the case may be, (ii) if the
Executive's employment is terminated by the Company other
than for Cause or Disability, the Date of Termination shall
be the date on which the Company notifies the Executive of
such termination and (iii) if the Executive's employment is
terminated by reason of death or Disability, the Date of
Termination shall be the date of death of the Executive or
the Disability Effective Date, as the case may be.
6. Obligations of the Company upon Termination. (a) Good
Reason; Other Than for Cause, Death or Disability. If,
during the Employment Period, the Company shall terminate
the Executive's employment other than for Cause or
Disability or the Executive shall terminate employment for
Good Reason:
(i)the Company shall pay to the Executive in a lump sum
in cash within 30 days after the Date of Termination the
aggregate of the following amounts:
A. the sum of (1) the Executive's Annual Base Salary
through the Date of Termination to the extent not
theretofore paid, (2) the product of (x) the higher of (I)
the Recent Annual Bonus and (II)
the Annual Bonus paid or payable, including any bonus or
portion thereof which has been earned but deferred (and
annualized for any fiscal year consisting of less than
twelve full months or during which the Executive was
employed for less than twelve full months), for the most
recently completed fiscal year during the Employment Period,
if any (such higher amount being referred to as the "Highest
Annual Bonus") and (y) a fraction, the numerator of which is
the number of days in the current fiscal year through the
Date of Termination, and the denominator of which is 365 and
(3) any compensation previously deferred by the Executive
(together with any accrued interest or earnings thereon) and
any accrued vacation pay, in each case to the extent not
theretofore paid (the sum of the amounts described in
clauses (1), (2), and (3) shall be hereinafter referred to
as the "Accrued Obligations"); and
B. the amount equal to the product of (1) the lesser of (x)
three and (y) the number of days after the Date of
Termination and on or before the Executive's 65th birthday,
divided by 365, times (2) the sum of (A) the Executive's
Annual Base Salary, (B) the Highest Annual Bonus and (C) the
highest contributions made under the Company's Employees'
Profit Sharing Incentive Plan and the Company's Profit
Sharing Benefits Equalization Plan or any successor or
replacement plans thereto, for any of the three calendar
years preceding the Date of Termination; and
C. an amount equal to the excess of (a) the actuarial
equivalent of the benefit under the Company's qualified
defined benefit retirement plan (the "Retirement Plan")
(utilizing actuarial assumptions no less favorable to the
Executive than those in effect under the Company's Re-
tirement Plan immediately prior to the Effective Date), and
any excess or supplemental retirement plans in which the
Executive participates (together, the "SERP") which the
Executive would have received if the Executive's employment
had continued for three years after the Date of Termination
or through age 65, if sooner, assuming for this purpose that
all accrued benefits were fully vested, and, assuming that
the Executive's compensation in each of the three years (or
the shorter period to age 65, if applicable) would have been
that required by Section 4(b)(i) and Section 4(b)(ii), over
(b) the actuarial equivalent of the Executive's actual
benefit (paid or payable), if any, under the Retirement Plan
and the SERP as of the Date of Termination;
(ii) for the lesser of
(x) three years after the
Executive's Date of Termination and (y) the period through
the Executive's 65th birthday, or such longer period as may
be provided by the terms of the appropriate plan, program,
practice or policy, the Company shall continue benefits to
the Executive and/or the Executive's family at least equal
to those which would have been provided to them in accor-
dance with the plans, programs, practices and policies
described in Section 4(b)(iv) of this Agreement if the
Executive's employment had not been terminated or, if more
favorable to the Executive, as in effect generally at any
time thereafter with respect to other peer executives of the
Company and its affiliated companies and their families,
provided, however, that if the Executive becomes reemployed
with another employer and is eligible to receive medical or
other welfare benefits under another employer provided plan,
the medical and other welfare benefits described herein
shall be secondary to those provided under such other plan
during such applicable period of eligibility. For purposes
of determining eligibility (but not the time of commencement
of benefits) of the Executive for retiree benefits pursuant
to such plans, practices, programs and policies, the Ex-
ecutive shall be considered to have remained employed until
three years after the Date of Termination and to have
retired on the last day of such period; and
(iii) to the extent not theretofore paid or provided, the
Company shall timely pay or provide to the Executive any
other amounts or benefits required to be paid or provided or
which the Executive is eligible to receive under any plan,
program, policy or practice or contract or agreement of the
Company and its affiliated companies (such other amounts and
benefits shall be hereinafter referred to as the "Other
Benefits").
(b) Death. If the Executive's employment is terminated by
reason of the Executive's death during the Employment
Period, this Agreement shall terminate without further
obligations to the Executive's legal representatives under
this Agreement, other than for payment of Accrued
Obligations and the timely payment or provision of Other
Benefits. Accrued Obligations shall be paid to the
Executive's estate or beneficiary, as applicable, in a lump
sum in cash within 30 days of the Date of Termination. With
respect to the provision of Other Benefits, the term Other
Benefits as utilized in this Section 6(b) shall include,
without limitation, and the Executive's estate and/or
beneficiaries shall be entitled to receive, benefits at
least equal to the most favorable benefits provided by the
Company and affiliated companies to the estates and
beneficiaries of peer executives of the Company and such af-
filiated companies under such plans, programs, practices and
policies relating to death benefits and survivor benefits,
if any, as in effect with respect to other peer executives
and their beneficiaries at any time during the 120-day
period immediately preceding the Effective Date or, if more
favorable to the Executive's estate and/or the Executive's
beneficiaries, as in effect on the date of the Executive's
death with respect to other peer executives of the Company
and its affiliated companies and their beneficiaries.
(c) Disability. If the Executive's employment is terminated
by reason of the Executive's Disability during the
Employment Period, this Agreement shall terminate without
further obligations to the Executive, other than for payment
of Accrued Obligations and the timely payment or provision
of Other Benefits. Accrued Obligations shall be paid to the
Executive in a lump sum in cash within 30 days of the Date
of Termination. With respect to the provision of Other
Benefits, the term Other Benefits as utilized in this
Section 6(c) shall include, without limitation, and the
Executive shall be entitled after the Disability Effective
Date to receive, disability and other benefits at least
equal to the most favorable of those generally provided by
the Company and its affiliated companies to disabled
executives and/or their families in accordance with such
plans, programs, practices and policies relating to dis-
ability, if any, as in effect generally with respect to
other peer executives and their families at any time during
the 120-day period immediately preceding the Effective Date
or, if more favorable to the Executive and/or the
Executive's family, as in effect at any time thereafter
generally with respect to other peer executives of the Com-
pany and its affiliated companies and their families.
(d) Cause; Other than for Good Reason. If the Executive's
employment shall be terminated for Cause during the
Employment Period, this Agreement shall terminate without
further obligations to the Executive other than the obliga-
tion to pay to the Executive (x) his Annual Base Salary
through the Date of Termination, (y) the amount of any com-
pensation previously deferred by the Executive, and (z)
Other Benefits, in each case to the extent theretofore
unpaid. If the Executive voluntarily terminates employment
during the Employment Period, excluding a termination for
Good Reason, this Agreement shall terminate without further
obligations to the Executive, other than for Accrued Obliga-
tions and the timely payment or provision of Other Benefits.
In such case, all Accrued Obligations shall be paid to the
Executive in a lump sum in cash within 30 days of the Date
of Termination.
7. Non-exclusivity of Rights. Nothing in this Agreement
shall prevent or limit the Executive's continuing or future
participation in any plan, program, policy or practice
provided by the Company or any of its affiliated companies
and for which the Executive may qualify, nor, subject to
Section 12(f), shall anything herein limit or otherwise af-
fect such rights as the Executive may have under any
contract or agreement with the Company or any of its af-
filiated companies. Amounts which are vested benefits or
which the Executive is otherwise entitled to receive under
any plan, policy, practice or program of or any contract or
agreement with the Company or any of its affiliated
companies at or subsequent to the Date of Termination shall
be payable in accordance with such plan, policy, practice or
program or contract or agreement except as explicitly
modified by this Agreement.
8. Full Settlement. The Company's obligation to make the
payments provided for in this Agreement and otherwise to
perform its obligations hereunder shall not be affected by
any set-off, counterclaim, recoupment, defense or other
claim, right or action which the Company may have against
the Executive or others. In no event shall the Executive be
obligated to seek other employment or take any other action
by way of mitigation of the amounts payable to the Executive
under any of the provisions of this Agreement and such
amounts shall not be reduced whether or not the Executive
obtains other employment. The Company agrees to pay as
incurred, to the full extent permitted by law, all legal
fees and expenses which the Executive may reasonably incur
as a result of any contest (regardless of the outcome
thereof) by the Company, the Executive or others of the
validity or enforceability of, or liability under, any
provision of this Agreement or any guarantee of performance
thereof (including as a result of any contest by the Execu-
tive about the amount of any payment pursuant to this Agree-
ment), plus in each case interest on any delayed payment at
the applicable Federal rate provided for in Section
7872(f)(2)(A) of the Internal Revenue Code of 1986, as
amended (the "Code").
9. Certain Additional Payments by the Company.
(a) Anything in this Agreement to the contrary not-
withstanding and except as set forth below, in the event it
shall be determined that any payment or distribution by the
Company to or for the benefit of the Executive (whether paid
or payable or distributed or distributable pursuant to the
terms of this Agreement or otherwise, but determined without
regard to any additional payments required under this Sec-
tion 9) (a "Payment") would be subject to the excise tax im-
posed by Section 4999 of the Code or any interest or penal-
ties are incurred by the Executive with respect to such ex-
cise tax (such excise tax, together with any such interest
and penalties, are hereinafter collectively referred to as
the "Excise Tax"), then the Executive shall be entitled to
receive an additional payment (a "Gross-Up Payment") in an
amount such that after payment by the Executive of all taxes
(including any interest or penalties imposed with respect to
such taxes), including, without limitation, any income taxes
(and any interest and penalties imposed with respect
thereto) and Excise Tax imposed upon the Gross-Up Payment,
the Executive retains an amount of the Gross-Up Payment
equal to the Excise Tax imposed upon the Payments.
(b) Subject to the provisions of Section 9(c), all
determinations required to be made under this Section 9, in-
cluding whether and when a Gross-Up Payment is required and
the amount of such Gross-Up Payment and the assumptions to
be utilized in arriving at such determination, shall be made
by Deloitte & Touche or such other certified public ac-
counting firm as may be designated by the Executive (the
"Accounting Firm") which shall provide detailed supporting
calculations both to the Company and the Executive within 15
business days of the receipt of notice from the Executive
that there has been a Payment, or such earlier time as is
requested by the Company. In the event that the Accounting
Firm is serving as accountant or auditor for the individual,
entity or group effecting the Change of Control, the
Executive shall appoint another nationally recognized ac-
counting firm to make the determinations required hereunder
(which accounting firm shall then be referred to as the Ac-
counting Firm hereunder). All fees and expenses of the Ac-
counting Firm shall be borne solely by the Company. Any
Gross-Up Payment, as determined pursuant to this Section 9,
shall be paid by the Company to the Executive within five
days of the receipt of the Accounting Firm's determination.
Any determination by the Accounting Firm shall be binding
upon the Company and the Executive. As a result of the
uncertainty in the application of Section 4999 of the Code
at the time of the initial determination by the Accounting
Firm hereunder, it is possible that Gross-Up Payments which
will not have been made by the Company should have been made
("Underpayment"), consistent with the calculations required
to be made hereunder. In the event that the Company
exhausts its remedies pursuant to Section 9(c) and the
Executive thereafter is required to make a payment of any
Excise Tax, the Accounting Firm shall determine the amount
of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for
the benefit of the Executive.
(c) The Executive shall notify the Company in writing of any
claim by the Internal Revenue Service that, if successful,
would require the payment by the Company of the Gross-Up
Payment. Such notification shall be given as soon as
practicable but no later than ten business days after the
Executive is informed in writing of such claim and shall ap-
prise the Company of the nature of such claim and the date
on which such claim is requested to be paid. The Executive
shall not pay such claim prior to the expiration of the 30-
day period following the date on which it gives such notice
to the Company (or such shorter period ending on the date
that any payment of taxes with respect to such claim is
due). If the Company notifies the Executive in writing
prior to the expiration of such period that it desires to
contest such claim, the Executive shall:
(i) give the Company any information reasonably
requested by the Company relating to such claim,
(ii)take such action in connection with contesting such
claim as the Company shall reasonably request in writing
from time to time, including, without limitation, accepting
legal representation with respect to such claim by an
attorney reasonably selected by the Company,
(iii)cooperate with the Company in good faith in order
effectively to contest such claim, and
(iv) permit the Company to participate in any pro-
ceedings relating to such claim;
provided, however, that the Company shall bear and pay di-
rectly all costs and expenses (including additional interest
and penalties) incurred in connection with such contest and
shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including
interest and penalties with respect thereto) imposed as a
result of such representation and payment of costs and ex-
penses. Without limitation on the foregoing provisions of
this Section 9(c), the Company shall control all proceedings
taken in connection with such contest and, at its sole op-
tion, may pursue or forgo any and all administrative
appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its
sole option, either direct the Executive to pay the tax
claimed and sue for a refund or contest the claim in any
permissible manner, and the Executive agrees to prosecute
such contest to a determination before any administrative
tribunal, in a court of initial jurisdiction and in one or
more appellate courts, as the Company shall determine;
provided, however, that if the Company directs the Executive
to pay such claim and sue for a refund, the Company shall
advance the amount of such payment to the Executive, on an
interest-free basis and shall indemnify and hold the Execu-
tive harmless, on an after-tax basis, from any Excise Tax or
income tax (including interest or penalties with respect
thereto) imposed with respect to such advance or with
respect to any imputed income with respect to such advance;
and further provided that any extension of the statute of
limitations relating to payment of taxes for the taxable
year of the Executive with respect to which such contested
amount is claimed to be due is limited solely to such
contested amount. Furthermore, the Company's control of the
contest shall be limited to issues with respect to which a
Gross-Up Payment would be payable hereunder and the
Executive shall be entitled to settle or contest, as the
case may be, any other issue raised by the Internal Revenue
Service or any other taxing authority.
(d) If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 9(c), the
Executive becomes entitled to receive any refund with
respect to such claim, the Executive shall (subject to the
Company's complying with the requirements of Section 9(c))
promptly pay to the Company the amount of such refund
(together with any interest paid or credited thereon after
taxes applicable thereto). If, after the receipt by the
Executive of an amount advanced by the Company pursuant to
Section 9(c), a determination is made that the Executive
shall not be entitled to any refund with respect to such
claim and the Company does not notify the Executive in
writing of its intent to contest such denial of refund prior
to the expiration of 30 days after such determination, then
such advance shall be forgiven and shall not be required to
be repaid and the amount of such advance shall offset, to
the extent thereof, the amount of Gross-Up Payment required
to be paid.
10. Confidential Information. The Executive shall hold in
a fiduciary capacity for the benefit of the Company all
secret or confidential information, knowledge or data
relating to the Company or any of its affiliated companies,
and their respective businesses, which shall have been ob-
tained by the Executive during the Executive's employment by
the Company or any of its affiliated companies and which
shall not be or become public knowledge (other than by acts
by the Executive or representatives of the Executive in vio-
lation of this Agreement). After termination of the
Executive's employment with the Company, the Executive shall
not, without the prior written consent of the Company or as
may otherwise be required by law or legal process, communi-
cate or divulge any such information, knowledge or data to
anyone other than the Company and those designated by it.
In no event shall an asserted violation of the provisions of
this Section 10 constitute a basis for deferring or
withholding any amounts otherwise payable to the Executive
under this Agreement.
11. Successors. (a) This Agreement is personal to the
Executive and without the prior written consent of the
Company shall not be assignable by the Executive otherwise
than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable
by the Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns.
(c) The Company shall require any successor (whether direct
or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business
and/or assets of the Company to assume expressly and agree
to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if
no such succession had taken place. As used in this
Agreement, "Company" shall mean the Company as hereinbefore
defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement
by operation of law, or otherwise.
12. Miscellaneous. (a) This Agreement shall be governed
by and construed in accordance with the laws of the State of
New Jersey, without reference to principles of conflict of
laws. The captions of this Agreement are not part of the
provisions hereof and shall have no force or effect. This
Agreement may not be amended or modified otherwise than by a
written agreement executed by the parties hereto or their
respective successors and legal representatives.
(b) All notices and other communications hereunder shall be
in writing and shall be given by hand delivery to the other
party or by registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:
If to the Executive:
If to the Company:
Schering-Plough Corporation
One Giralda Farms
Madison, New Jersey 07940
Attention: General Counsel
or to such other address as either party shall have
furnished to the other in writing in accordance herewith.
Notice and communications shall be effective when actually
received by the addressee.
(c) The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement.
(d) The Company may withhold from any amounts payable under
this Agreement such Federal, state, local or foreign taxes
as shall be required to be withheld pursuant to any ap-
plicable law or regulation.
(e) The Executive's or the Company's failure to insist upon
strict compliance with any provision of this Agreement or
the failure to assert any right the Executive or the Company
may have hereunder, including, without limitation, the right
of the Executive to terminate employment for Good Reason
pursuant to Section 5(c)(i)-(v) of this Agreement, shall not
be deemed to be a waiver of such provision or right or any
other provision or right of this Agreement.
(f) The Executive and the Company acknowledge that, except
as may otherwise be provided under any other written
agreement between the Executive and the Company, the employ-
ment of the Executive by the Company is "at will" and, sub-
ject to Section 1(a) hereof, prior to the Effective Date,
the Executive's employment and/or this Agreement may be ter-
minated by either the Executive or the Company at any time
prior to the Effective Date, in which case the Executive
shall have no further rights under this Agreement. From and
after the Effective Date this Agreement shall supersede any
prior agreement between the parties with respect to the sub-
ject matter hereof.
IN WITNESS WHEREOF, the Executive has hereunto set the
Executive's hand and, pursuant to the authorization from its
Board of Directors, the Company has caused these presents to
be executed in its name on its behalf, all as of the day and
year first above written.
__________________________
[Executive]
SCHERING-PLOUGH CORPORATION
By________________________
Robert P. Luciano
Chairman of the Board and
Chief Executive Officer
18721-1