Merck Sharp & Dohme Corp. 2007 Incentive Stock Plan



 Exhibit 10.7 
 MERCK SHARP & DOHME CORP. 
 2007 INCENTIVE STOCK PLAN 
 (Effective as Amended and Restated on Closing Date of the Transactions) 
 1. Purpose 
 The 2007 Incentive Stock Plan (the “Plan”), effective May 1,
2006, was established to encourage employees of Merck & Co., Inc., its subsidiaries, its affiliates and its joint ventures to acquire common stock in Merck & Co, Inc. 
 As of the Closing Date (“Closing Date”) of the Agreement and Plan of Merger dated as of March 8, 2009, as amended, by and among Merck & Co., Inc. Schering Plough Corporation, SP
Merger Subsidiary One, Inc., and SP Merger Subsidiary Two, Inc. (the “Transactions”), the Plan is amended and restated (1) to reflect the new corporate structure resulting from the Transactions, including clarification that the
sponsoring entity of the Plan shall be Merck & Co, Inc., (formerly known as Schering-Plough Corporation) (“Parent”) and Merck Sharp & Dohme Corp. (formerly known as Merck & Co., Inc.) (“MSD” or the
“Company”), a subsidiary of Parent; (2) to provide that all awards that have been granted pursuant to the Plan to acquire common stock of MSD shall be automatically converted into awards to acquire common stock of the Parent
(“Parent Common Stock”); and (3) to further provide that any award to acquire stock granted on or after the Transactions, will be granted with respect to Parent Common Stock. 
 It is believed that the Plan will continue to serve the interests of the Company, its Parent and its Parent’s stockholders because it allows employees
to have a greater personal financial interest in the Company and its Parent through ownership of, or the right to acquire Parent Common Stock, which in turn will stimulate employees’ efforts on the Company’s and Parent’s behalf, and
maintain and strengthen their desire to remain with the Company or Parent. It is believed that the Plan also will assist in the recruitment of MSD employees. 
 2. Administration 
 The Plan shall be administered by the Compensation and Benefits
Committee of the Board of Directors of the Parent (the “Committee”). A Director of the Parent may serve on the Committee only if he or she (i) is a “Non-Employee Director” of the Parent for purposes of Rule 16b-3 under the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), and (ii) satisfies the requirements of an “outside director” of the Parent for purposes of Section 162(m) of the Internal Revenue Code (the
“Code”). The Committee shall be responsible for the administration of the Plan including, without limitation, determining which Eligible Employees receive Incentives, the types of Incentives they receive under the Plan, the number of
shares covered by Incentives granted under the Plan, and the other terms and conditions of such Incentives. Determinations by the Committee under the Plan including, without limitation, determinations of the Eligible Employees, the form, amount and
timing of Incentives, the terms and provisions of Incentives and the writings evidencing Incentives, need not be uniform and may be made selectively among Eligible Employees who receive, or are eligible to receive, Incentives hereunder, whether or
not such Eligible Employees are similarly situated. 
  

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 The Committee shall have the responsibility of construing and interpreting the Plan, including the right to
construe disputed or doubtful Plan provisions, and of establishing, amending and construing such rules and regulations as it may deem necessary or desirable for the proper administration of the Plan. Any decision or action taken or to be taken by
the Committee, arising out of or in connection with the construction, administration, interpretation and effect of the Plan and of its rules and regulations, shall, to the maximum extent permitted by applicable law, be within its absolute discretion
(except as otherwise specifically provided herein) and shall be final, binding and conclusive upon the Company, all Eligible Employees and any person claiming under or through any Eligible Employee. 
 The Committee, as permitted by applicable state law, may delegate any or all of its power and authority hereunder to the Chief Executive Officer of the
Parent or such other senior member of management of the Parent or Company as the Committee deems appropriate; provided, however, that the Committee may not delegate its authority with regard to any matter or action affecting an “officer”
as such term is defined in Rule 16(a)-1(f) of the Exchange Act (a “Section 16 Officer”) and that no such delegation shall be made in the case of Incentives intended to be qualified under Section 162(m) of the Code. 
 For the purpose of this section and all subsequent sections, the Plan shall be deemed to include this Plan and any comparable sub-plans established by
subsidiaries which, in the aggregate, shall constitute one Plan governed by the terms set forth herein. 
 3. Eligibility 
 (a) Employees. Regular full-time and part-time employees employed by the Company, or, except as noted below, its Parent, or its subsidiaries, its
affiliates and its joint ventures, including officers, whether or not directors of the Company or Parent, and employees of a joint venture partner or affiliate of the Company who provide services to the joint venture with such partner or affiliate
(each such person, an “Employee”), shall be eligible to participate in the Plan if designated by the Committee (“Eligible Employees”). 
 (b) Non-employees and other Excluded Persons. The term “Employee” shall not include any of the following (collectively, “Excluded Persons”): a director who is not an employee or
an officer of the Company or Parent; a person who is an independent contractor, or agrees or has agreed that he/she is an independent contractor of the Company; a person who has any agreement or understanding with the Company or Parent, or any of
its affiliates or joint venture partners that he/she is not an employee or an Eligible Employee, even if he/she previously had been an employee or Eligible Employee; a person who is employed by a temporary or other employment agency, regardless of
the amount of control, supervision or training provided by the Company or its affiliates; a “leased employee” as defined under Section 414 (n) of the Code; or a person who was an employee, director, or independent contractor of
Schering-Plough Corporation, its subsidiaries, or joint venture partners on the Closing Date. An Excluded Person is not an Eligible Employee and cannot receive Incentives even if a court, agency or other authority rules that he/she is a common-law
employee of the Company or its affiliates. 
  

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 (c) No Right To Continued Employment. Nothing in the Plan shall interfere with or limit in any way
the right of the Company, its Parent, its subsidiaries, its affiliates or its joint ventures to terminate the employment of any person at any time, nor confer upon any person the right to continue in the employ of the Company, its Parent, its
subsidiaries, its affiliates or its joint ventures. No Eligible Employee shall have a right to receive an Incentive or any other benefit under this Plan or having been granted an Incentive or other benefit, to receive any additional Incentive or
other benefit. Neither the award of an Incentive nor any benefits arising under such Incentives shall constitute an employment contract with the Company, its Parent, its subsidiaries, its affiliates or its joint ventures, and accordingly, this Plan
and the benefits hereunder may be terminated at any time in the sole and exclusive discretion of the Parent without giving rise to liability on the part of the Company, its Parent, its subsidiaries, its affiliates or its joint ventures for
severance. Except as may be otherwise specifically stated in any other employee benefit plan, policy or program, neither any Incentive under this Plan nor any amount realized from any such Incentive shall be treated as compensation for any purposes
of calculating an employee’s benefit under any such plan, policy or program. 
 4. Term of the Plan 
 This Plan became effective on May 1, 2006, based on the approval of the Plan by a majority of the votes cast at the Annual Meeting of stockholders of
the Company on April 25, 2006, and was amended and restated based on approval of the Board of Directors of the Parent, effective on the Closing Date. No Incentive shall be granted under the Plan after the annual meeting of Shareholders of the
Parent in or around May 2010, if the Shareholders of the Parent approve a stock incentive plan of the Parent at such annual meeting, (or such earlier date that the Plan may be terminated by the Board), but the term and exercise of Incentives granted
theretofore may extend beyond that date. 
 5. Incentives 
 Incentives under the Plan may be granted in any one or a combination of (a) Incentive Stock Options (“ISOs”), (b) Nonqualified Options (together with ISOs, “Stock Options”),
(c) Stock Appreciation Rights, (d) Restricted Stock Grants, (e) Performance Awards, (f) Share Awards and (g) Phantom Stock Awards (collectively, “Incentives”). All Incentives shall be subject to the terms and
conditions set forth herein and to such other terms and conditions as may be established by the Committee. In general, Incentives may not vest, and Stock Options and Stock Appreciation Rights may not be exercisable, earlier than one year from their
grant date except in case of an intervening event, such as for example, a change in control of the Company (for Incentives granted prior to the Transactions), a change in control of the Parent, or the grantee’s death, retirement, termination of
employment caused by the Company, Parent, or other event as established by the Committee, or as required by applicable law. Notwithstanding anything to the contrary, any Incentives granted to an individual who is not an Eligible Employee or
otherwise in error shall be void ab initio. 
  

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 6. Shares Available for Incentives 
 (a) Shares Available. Subject to the provisions of Section 6(c), the maximum number of shares of Parent Common Stock of the Parent that may be issued under the Plan is 155 million. 

(i) A Stock Option or Stock Appreciation Right shall be counted as one share for purposes of the limit set forth in Section 6(a) at the time of
grant. A combination of Tandem SAR and Stock Option, where the exercise of the Tandem SAR or Stock Option results in the cancellation of the other, shall be counted as one share for purposes of the limit set forth in Section 6(a) at the time of
grant. 
 (ii) A Restricted Stock Grant, Performance Share, Share Award or Phantom Stock Award shall be counted as four shares for purposes of
the limit set forth in Section 6(a) at the time of grant. 
 (iii) Any shares under this Plan or under the 1991, 1996, 2001 or 2004
Incentive Stock Plans that are not purchased or awarded under an Incentive because such Incentive has lapsed, expired, terminated or been canceled may be used for the further grant of Incentives under the Plan. 
 (iv) Notwithstanding anything to the contrary: (a) shares tendered in payment of the exercise price of a Stock Option shall not be added to the maximum
share limitations described above; (b) shares withheld by the Company to satisfy the tax withholding obligation shall not be added to the maximum share limitations described above; and (c) all shares covered by a Stock Appreciation Right,
to the extent that it is exercised and whether or not shares of Parent Common Stock are actually issued upon exercise of the right, shall be considered issued or transferred pursuant to the Plan. 
 (v) Incentives and similar awards issued by an entity that is merged into or with the Company or Parent, acquired by the Company or Parent or otherwise
involved in a similar corporate transaction with the Company or Parent are not considered issued under this Plan. Shares under this Plan may be delivered by the Parent from its authorized but unissued shares of Parent Common Stock or from issued and
reacquired Parent Common Stock held as treasury stock, or both. In no event shall fractional shares of Parent Common Stock be issued under the Plan. 
 (b) Limit on an Individual’s Incentives. In any calendar year, no Eligible Employee may receive (i) with respect to Incentives denominated with respect to shares of Parent Common Stock, Incentives covering more than
3 million shares of Parent Common Stock (such number of shares shall be counted as provided in Section 6(a) and shall be adjusted in accordance with Section 6(c)), or (ii) with respect to Incentives denominated in cash,
Incentives with a fair market value exceeding that of 3 million shares of Parent Common Stock determined as of the date such Incentive is granted. 
 (c) Adjustment of Shares. In the event of a reorganization, recapitalization, stock split, stock dividend, extraordinary cash dividend, combination of shares, merger, consolidation, rights
offering, spin off, split off, split up or other event identified by the Committee, the Committee shall make such adjustments in (i) the number and kind of shares authorized for issuance under the Plan, (ii) the number and kind of shares
subject to outstanding Incentives, (iii) the option price of Stock Options and (iv) the grant value of Stock Appreciation Rights, in a manner it may deem appropriate. Any such determination shall be final, binding and conclusive on all
parties. 
  

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 7. Stock Options 
 The Committee may grant options qualifying as ISOs as defined in Section 422 of the Code, and options other than ISOs (“Nonqualified Options”). Such Stock Options shall be subject to the
following terms and conditions and such other terms and conditions as the Committee may prescribe: 
 (a) Stock Option Price. The option
price per share with respect to each Stock Option shall be determined by the Committee, but shall not be less than 100 percent of the fair market value of the Parent Common Stock on the date the Stock Option is granted, as determined by the
Committee. 
 (b) Period of Stock Option. The period of each Stock Option shall be fixed by the Committee, provided that the period for
all Stock Options shall not exceed ten years from the grant, provided further, however, that, in the event of the death of an Optionee prior to the expiration of a Nonqualified Option, such Nonqualified Option may, if the Committee so determines, be
exercisable for up to eleven years from the date of the grant. The Committee may, subsequent to the granting of any Stock Option, extend the term thereof, but in no event shall the extended term exceed ten years from the original grant date.

 (c) Exercise of Stock Option and Payment Therefore. No shares shall be issued until full payment of the option price has been made.
The option price may be paid in cash or, if the Committee determines, in shares of Parent Common Stock, a combination of cash and shares of Parent Common Stock, or through a cashless exercise procedure that allows grantees to sell immediately some
or all of the shares underlying the exercised portion of the Option in order to generate sufficient cash to pay the option price. If the Committee approves the use of shares of Parent Common Stock as a payment method, the Committee shall establish
such conditions as it deems appropriate for the use of Parent Common Stock to exercise a Stock Option. Stock Options awarded under the Plan shall be exercised through such procedure or program as the Committee may establish or define from time to
time, which may include a designated broker that must be used in exercising such Stock Options. The Committee may establish rules and procedures to permit an option holder to defer recognition of gain upon the exercise of a Stock Option. 

(d) First Exercisable Date. The Committee shall determine how and when shares covered by a Stock Option may be purchased. The Committee may
establish waiting periods, the dates on which Stock Options become exercisable or “vested” and, subject to paragraph (b) of this section, exercise periods. The Committee may accelerate the exercisability of any Stock Option or portion
thereof. 
 (e) Termination of Employment. Unless determined otherwise by the Committee, upon the termination of a Stock Option
grantee’s employment (for any reason other than gross misconduct), Stock Option privileges shall be limited to the shares that were immediately

  

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exercisable at the date of such termination. The Committee, however, in its discretion, may provide that any Stock Options outstanding but not yet exercisable upon the termination of a Stock
Option grantee’s employment may become exercisable in accordance with a schedule determined by the Committee. Such Stock Option privileges shall expire unless exercised within such period of time after the date of termination of employment as
may be established by the Committee, but in no event later than the expiration date of the Stock Option. 
 (f) Termination Due to
Misconduct. If a Stock Option grantee’s employment is terminated for gross misconduct, as determined by the Company, all rights under the Stock Option shall expire upon the date of such termination. 
 (g) Limits on ISOs. Except as may otherwise be permitted by the Code, an Eligible Employee may not receive a grant of ISOs for stock that would have
an aggregate fair market value in excess of $100,000 (or such other amount as the Internal Revenue Service may decide from time to time), determined as of the time that the ISO is granted, that would be exercisable for the first time by such person
during any calendar year. If any grant is made in excess of the limits provided in the Code, such grant shall automatically become a Nonqualified Option. 
 (h) No dividend equivalents. Anything in the Plan to the contrary notwithstanding, no dividends or dividend equivalents may be paid on Stock Options. 
 8. Stock Appreciation Rights 
 The Committee
may, in its discretion, grant a right to receive the appreciation in the fair market value of shares of Parent Common Stock (“Stock Appreciation Right”) either singly or in combination with an underlying Stock Option granted hereunder.
Such Stock Appreciation Right shall be subject to the following terms and conditions and such other terms and conditions as the Committee may prescribe: 
 (a) Time and Period of Grant. If a Stock Appreciation Right is granted with respect to an underlying Stock Option (a “Tandem SAR”), it may be granted at the time of the Stock Option grant
or at any time thereafter but prior to the expiration of the Stock Option grant. At the time the Tandem SAR is granted the Committee may limit the exercise period for such Stock Appreciation Right, before and after which period no Stock Appreciation
Right shall attach to the underlying Stock Option. In no event shall the exercise period for a Tandem SAR exceed the exercise period for such Stock Option. If a Stock Appreciation Right is granted without an underlying Stock Option (a “Stand
Alone SAR”), the period for exercise of the Stock Appreciation Right shall be set by the Committee. 
 (b) Value of Stock Appreciation
Right. The grantee of a Tandem SAR will be entitled to surrender the Stock Option which is then exercisable and receive in exchange therefor an amount equal to the excess of the fair market value of the Parent Common Stock on the date the
election to surrender is received by the Company in accordance with exercise procedures established by the Company over the Stock Option price (the “Spread”) multiplied by the number of shares covered by the Stock Option which is
surrendered. The grantee of a Stand Alone SAR will receive upon exercise of the Stock Appreciation Right an amount equal to the excess of the fair

  

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market value of the Parent Common Stock on the date the election to surrender such Stand Alone SAR is received by the Company in accordance with exercise procedures established by the Company
over the fair market value of the Parent Common Stock on the date of grant multiplied by the number of shares covered by the grant of the Stand Alone SAR. Notwithstanding the foregoing, in its sole discretion the Committee at the time it grants a
Stock Appreciation Right may provide that the Spread covered by such Stock Appreciation Right may not exceed a specified amount. 
 (c)
Payment of Stock Appreciation Right. Payment of a Stock Appreciation Right shall be in the form of shares of Parent Common Stock, cash or any combination of shares and cash. The form of payment upon exercise of such a right shall be
determined by the Committee either at the time of grant of the Stock Appreciation Right or at the time of exercise of the Stock Appreciation Right. 
 (d) No dividend equivalents. Anything in the Plan to the contrary notwithstanding, no dividends or dividend equivalents may be paid on Stock Appreciation Rights. 
 9. Performance Awards 
 The Committee may grant awards denominated in shares of Parent
Common Stock (“Performance Shares”), or denominated in dollars (“Performance Units”) if the performance of the Company or its Parent or any subsidiary, division, affiliate or joint venture of the Company selected by the Committee
during the Award Period meets certain goals established by the Committee (“Performance Awards”). Performance Awards shall be subject to the following terms and conditions and such other terms and conditions as the Committee may prescribe:

 (a) Award Period and Performance Goals. The Committee shall determine and include in a Performance Share Award grant the period of
time for which a Performance Share Award is made (“Award Period”). The Committee also shall establish performance objectives (“Performance Goals”) to be met by the Company, its Parent, subsidiary, division, affiliate or joint
venture of the Company or its Parent during the Award Period as a condition to payment of the Performance Award. The Performance Goals may include share price, pre-tax profits, earnings per share, return on stockholders’ equity, return on
assets, sales, net income, total shareholder return or any combination of the foregoing or, solely for an Award not intended to constitute “performance-based compensation” under Section 162(m) of the Code, any other financial or other
measurement established by the Committee. The Performance Goals may include minimum and optimum objectives or a single set of objectives. 
 (b)
Payment of Performance Awards. The Committee shall establish the method of calculating the amount of payment to be made under a Performance Award if the Performance Goals are met, including the fixing of a maximum payment. After the
completion of an Award Period, the performance of the Company, its Parent, subsidiary, division, affiliate or joint venture of the Company shall be measured against the Performance Goals, and the Committee shall determine, in accordance with the
terms of such Performance Award, whether all, none or any portion of a Performance Award shall be paid. The Committee, in its discretion, may elect to make payment in shares of Parent Common Stock, cash or a combination of shares and cash.

  

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Any cash payment shall be based on the fair market value of shares of Parent Common Stock on, or as soon as practicable prior to, the date of payment. The Committee may establish rules and
procedures to permit a grantee to defer recognition of income upon the attainment of a Performance Award. 
 (c) Revision of Performance
Goals. As to any Award not intended to constitute “performance-based compensation” under Section 162(m) of the Code, at any time prior to the end of an Award Period, the Committee may revise the Performance Goals and the
computation of payment if unforeseen events occur which have a substantial effect on the performance of the Company, its Parent, subsidiary, division, affiliate or joint venture of the Company or its Parent and which, in the judgment of the
Committee, make the application of the Performance Goals unfair unless a revision is made. 
 (d) Requirement of Employment. A grantee of
a Performance Award must remain in the employ of the Company, its Parent, subsidiary, affiliate or joint venture until the completion of the Award Period in order to be entitled to payment under the Performance Award; provided that the Committee
may, in its discretion, provide for a full or partial payment where such an exception is deemed equitable. 
 (e) Dividends. The
Committee may, in its discretion, at the time of the granting of a Performance Award, provide that any dividends declared on the Parent Common Stock during the Award Period, and which would have been paid with respect to Performance Shares had they
been owned by a grantee, be (i) paid to the grantee, or (ii) accumulated for the benefit of the grantee and used to increase the number of Performance Shares of the grantee or (iii) not paid or accumulated. 
 10. Restricted Stock Grants 
 The Committee
may award actual shares of Parent Common Stock (“Restricted Stock”) or phantom shares of Parent Common Stock (“Restricted Stock Units”) to an Eligible Employee, which shares shall be subject to the following terms and conditions
and such other terms and conditions as the Committee may prescribe (“Restricted Stock Grants”). 
 (a) Requirement of
Employment. A grantee of a Restricted Stock Grant must remain in the employment of the Company or Parent during a period designated by the Committee (“Restricted Period”) in order to receive the shares, cash or combination thereof
under the Restricted Stock Grant. If the grantee leaves the employment of the Company or Parent prior to the end of the Restricted Period, the Restricted Stock Grant shall terminate and any shares of Parent Common Stock shall be returned immediately
to the Parent, provided that the Committee may, at the time of the grant, provide for the employment restriction to lapse with respect to a portion or portions of the Restricted Stock Grant at different times during the Restricted Period. The
Committee may, in its discretion, also provide for such complete or partial exceptions to the employment restriction as it deems equitable. 
 (b) Restrictions on Transfer and Legend on Stock Certificates. During the Restricted Period, the grantee may not sell, assign, transfer, pledge or otherwise dispose of the Restricted Stock Grant, including but not limited to any
shares of Parent Common Stock. Any certificate for shares of Parent Common Stock issued hereunder shall contain a legend giving appropriate notice of the restrictions in the grant. 
  

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 (c) Escrow Agreement. The Committee may require the grantee to enter into an escrow agreement
providing that any certificates representing the Restricted Stock Grant will remain in the physical custody of an escrow holder until all restrictions are removed or expire. 
 (d) Lapse of Restrictions. All restrictions imposed under the Restricted Stock Grant shall lapse upon the expiration of the Restricted Period if the conditions as to employment set forth above have
been met. The grantee shall then be entitled to have the legend removed from any certificates for Restricted Stock. Restricted Stock Units may be paid in the form of shares of Parent Common Stock, cash or any combination of shares and cash as
determined by the Committee. The Committee may establish rules and procedures to permit a grantee to defer recognition of income upon the expiration of the Restricted Period. 
 (e) Dividends. The Committee may, in its discretion, at the time of the Restricted Stock Grant, provide that any dividends declared on Parent Common Stock during the Restricted Period or dividend
equivalents be (i) paid to the grantee, or (ii) accumulated for the benefit of the grantee and paid to the grantee only after the expiration of the Restricted Period or (iii) not paid or accumulated. 
 (f) Performance Goals. The Committee may designate whether any Restricted Stock Grant is intended to be “performance-based compensation” as
that term is used in Section 162(m) of the Code. Any such Restricted Stock Grant designated to be “performance-based compensation” shall be conditioned on the achievement of one or more Performance Goals (as defined in
Section 9(a)), to the extent required by Section 162(m). 
 11. Other Share-Based Awards 
 The Committee may grant an award of actual shares of Parent Common Stock (a “Share Award”) or phantom shares of Parent Common Stock (a
“Phantom Stock Award”) to any Eligible Employee on such terms and conditions as the Committee may determine in its sole discretion. Share Awards may be made as additional compensation for services rendered by the Eligible Employee or may
be in lieu of cash or other compensation to which the Eligible Employee is entitled from the Company or its Parent. 
 12. Transferability

 Each ISO granted under the Plan shall not be transferable other than by will or the laws of descent and distribution; each other Incentive
granted under the Plan will not be transferable or assignable by the recipient, and may not be made subject to execution, attachment or similar procedures, other than by will or the laws of descent and distribution or as determined by the Committee
in accordance with the Exchange Act or any other applicable law or regulation. Notwithstanding the foregoing, the Committee, in its discretion, may adopt rules permitting the transfer, solely as gifts during the grantee’s lifetime, of Stock
Options (other than ISOs) to

  

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members of a grantee’s immediate family or to trusts, family partnerships or similar entities for the benefit of such immediate family members. For this purpose, immediate family member
means the grantee’s spouse, parent, child, stepchild, grandchild and the spouses of such family members. The terms of a Stock Option shall be final, binding and conclusive upon the beneficiaries, executors, administrators, heirs and successors
of the grantee. 
 13. Discontinuance or Amendment of the Plan 
 The Board of Directors of the Parent may discontinue the Plan at any time and may from time to time amend or revise the terms of the Plan as permitted by applicable statutes, except that it may not,
without the consent of the grantees affected, revoke or alter, in a manner unfavorable to the grantees of any Incentives hereunder, any Incentives then outstanding, nor may the Board of Directors of the Parent amend the Plan without stockholder
approval where the absence of such approval would cause the Plan to fail to comply with Rule 16b-3 under the Exchange Act, or any other requirement of applicable law or regulation. Notwithstanding the foregoing, without consent of affected grantees,
Incentives may be amended, revised or revoked when necessary to avoid penalties under Section 409A of the Internal Revenue Code of 1986, as amended. Unless approved by the Parent’s stockholders or as otherwise specifically provided under
this Plan, no adjustments or reduction of the exercise price of any outstanding Incentives shall be made in the event of a decline in stock price, either by reducing the exercise price of outstanding Incentives or through cancellation of outstanding
Incentives in connection with regranting of Incentives at a lower price to the same individual. 
 14. No Limitation on Compensation 

 Nothing in the Plan shall be construed to limit the right of the Parent or Company to establish other plans or to pay compensation to its
employees, in cash or property, in a manner which is not expressly authorized under the Plan. 
 15. No Constraint on Corporate Action 

 Nothing in the Plan shall be construed (i) to limit, impair or otherwise affect the Parent’s right or power to make adjustments,
reclassifications, reorganizations or changes of its capital or business structure, or to merge or consolidate, or dissolve, liquidate, sell or transfer all or any part of its business or assets, or (ii) except as provided in Section 13,
to limit the right or power of the Company, its Parent, or any subsidiary, affiliate or joint venture to take any action which such entity deems to be necessary or appropriate. 
 16. Withholding Taxes 
 The Company shall be entitled to deduct from any payment under the
Plan, regardless of the form of such payment, the amount of all applicable income and employment taxes required by law to be withheld with respect to such payment or may require the Eligible Employee to pay to it such tax prior to and as a condition
of the making of such payment. In accordance with any applicable administrative guidelines it establishes, the Committee may allow an Eligible Employee to pay the amount of taxes required by law to be withheld from an Incentive by

  

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withholding from any payment of Parent Common Stock due as a result of such Incentive, or by permitting the Eligible Employee to deliver to the Company, shares of Parent Common Stock having a
fair market value, as determined by the Committee, equal to the amount of such required withholding taxes. 
 17. Compliance with
Section 16 
 With respect to Eligible Employees who are Section 16 Officers, transactions under the Plan are intended to comply
with all applicable conditions of Rule 16b-3 or its successor under the Exchange Act. To the extent that compliance with any Plan provision applicable solely to the Section 16 Officers is not required in order to bring a transaction by such
Section 16 Officer into compliance with Rule 16b-3, it shall be deemed null and void as to such transaction, to the extent permitted by law and deemed advisable by the Committee and its delegees. To the extent any provision of the Plan or
action by the Plan administrators involving such Section 16 Officers is deemed not to comply with an applicable condition of Rule 16b-3, it shall be deemed null and void as to such Section 16 Officers, to the extent permitted by law and
deemed advisable by the Plan administrators. 
 18. Use of Proceeds 
 Any proceeds received by the Company under the Plan shall be added to the general funds of the Company and shall be used for such corporate purposes as the Board of Directors shall direct. 
 19. Governing Law 
 The Plan, and all
agreements hereunder, shall be construed in accordance with and governed by the laws of the State of New Jersey without giving effect to the principles of conflicts of laws. 
 20. Offset and Suspension of Exercise 
 Anything to the contrary in the Plan
notwithstanding, the Plan administrators may (i) offset any Incentive by amounts reasonably believed to be owed to the Company or Parent by the grantee and (ii) disallow an Incentive to be exercised or otherwise payable during a time when
the Company is investigating reasonably reliable allegations of gross misconduct by the grantee. 
 21. Effect of a Change in Control. 

 (a) Options. 
 1. Vesting of
Options Other Than Key R&D Options. Upon the occurrence of a Change in Control, each Stock Option which is outstanding immediately prior to the Change in Control, other than the Key R&D Options, shall immediately become fully vested and
exercisable. 
  

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 2. Vesting of Key R&D Options. 
 (i) Subject to Section 21(a)(2)(ii), upon the occurrence of a Change in Control, each Key R&D Option shall continue to be subject to the performance-based vesting schedule applicable thereto
immediately prior to the Change in Control. 
 (ii) Notwithstanding Section 21(a)(2)(i), if the Stock Options do not continue to be
outstanding following the Change in Control or are not exchanged for or converted into options to purchase securities of a successor entity (“Successor Options”), then, upon the occurrence of a Change in Control, all or a portion of each
Key R&D Option shall immediately vest and become exercisable in the following percentages: (A) if such Key R&D Option’s first milestone has not been reached before the date of the Change in Control, 14% of the then-unvested portion
of the Key R&D Option shall vest and become exercisable and the remainder shall be forfeited; (B) if only such Key R&D Option’s first milestone has been reached before the date of the Change in Control, 42% of the then-unvested
portion of the Key R&D Option shall vest and become exercisable and the remainder shall be forfeited; and (C) if such Key R&D Option’s first and second milestones have been reached before the date of the Change in Control, 100% of
the then-unvested portion of the Key R&D Option shall vest and become exercisable. 
 3. Post-Termination Exercise Period. If Stock Options
continue to be outstanding following the Change in Control or are exchanged for or converted into Successor Options, then the portion of such Stock Options or such Successor Options, as applicable, that is vested and exercisable immediately
following the termination of employment of the holder thereof after the Change in Control shall remain exercisable following such termination for five years from the date of such termination (but not beyond the remainder of the term thereof)
(provided, however, that, if such termination is by reason of gross misconduct, death or retirement (as these terms are applied to awards granted under the Plan), then those provisions of the Plan that are applicable to a termination by reason of
gross misconduct, death or retirement shall apply to such termination). 
 4. Cashout of Stock Options. If the Stock Options do not continue to
be outstanding following the Change in Control and are not exchanged for or converted into Successor Options, each holder of a vested and exercisable option shall be entitled to receive, as soon as practicable following the Change in Control, for
each share of Parent Common Stock subject to a vested and exercisable option, an amount of cash determined by the Committee prior to the Change in Control but in no event less than the excess of the Change in Control Price over the exercise price
thereof (subject to any existing deferral elections then in effect). If the consideration to be paid in a Change in Control is not entirely shares of common stock of an acquiring or resulting corporation, then the Committee may, prior to the Change
in Control, provide for the cancellation of outstanding Stock Options at the time of the Change in Control in whole or in part for cash pursuant to this Section 21(a)(4) or may provide for the exchange or conversion of outstanding Stock Options
at the time of the Change in Control in whole or in part, and, in connection with any such provision, may (but shall not be obligated to) permit holders of Stock Options to make such elections related thereto as it determines are appropriate.

  

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 (b) Restricted Stock Grants and Performance Share Awards. 
 1. Vesting of Restricted Stock Grants. Upon the occurrence of a Change in Control, each unvested Restricted Stock Grant which is outstanding immediately
prior to the Change in Control under the Plan shall immediately become fully vested. 
 2. Vesting of Performance Award. Upon the occurrence of
a Change in Control, each unvested Performance Award which is outstanding immediately prior to the Change in Control under the Plan shall immediately become vested in an amount equal to the PSU Pro Rata Amount. 
 3. Settlement of Restricted Stock Grants and Performance Awards. 
 (i) If the Parent Common Stock continues to be widely held and freely tradeable following the Change in Control or is exchanged for or converted into securities of a successor entity that are widely held
and freely tradeable, then the vested Restricted Stock Grants and Performance Awards shall be paid in shares of Parent Common Stock or such other securities as soon as practicable after the date of the Change in Control, or in the form of cash with
respect to Performance Units (subject to any existing deferral elections then in effect). 
 (ii) If the Parent Common Stock does not continue
to be widely held and freely tradeable following the Change in Control and is not exchanged for or converted into securities of a successor entity that are widely held and freely tradeable, then the vested Restricted Stock Grants and Performance
Awards shall be paid in cash as soon as practicable after the date of the Change in Control (subject to any existing deferral elections then in effect). 
 (c) Other Provisions. 
 1. Except to the extent required by applicable law, for the entirety
of the Protection Period, the material terms of the Plan shall not be modified in any manner that is materially adverse to the Qualifying Participants (it being understood that this Section 21(c) shall not require that any specific type or
levels of equity awards be granted to Qualifying Participants following the Change in Control). 
 2. During the Protection Period, the Plan may
not be amended or modified to reduce or eliminate the protections set forth in Section 21(c)(1) and may not be terminated. 
 3. The
Company shall pay all legal fees and related expenses (including the costs of experts, evidence and counsel) reasonably and in good faith incurred by a Qualifying Participant if the Qualifying Participant prevails on his or her claim for relief in
an action (x) by the Qualifying Participant claiming that the provisions of Section 21(c)(1) or 21(c)(2) of the Plan have been violated (but, for avoidance of doubt, excluding claims for plan benefits in the ordinary course) and
(y) if applicable, by the Company or the Qualifying Participant’s employer to enforce post-termination covenants against the Qualifying Participant. 
  

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 (d) Definitions. For purposes of this Section 21, the following terms shall have the following
meanings: 
 1. “Change in Control” shall have the meaning as set forth in the Parent’s Change in Control Separation Benefits
Plan; provided, however, that in any event, as to any award under the Plan that consists of deferred compensation subject to Section 409A of the Code, the definition of “Change in Control” shall be deemed modified to the extent
necessary to comply with Section 409A of the Code. 
 2. “Change in Control Price” shall mean, with respect to a share of Parent
Common Stock, the higher of (A) the highest reported sales price, regular way, of such share in any transaction reported on the New York Stock Exchange Composite Tape or other national exchange on which such shares are listed or on the NASDAQ
National Market during the ten-day period prior to and including the date of a Change in Control and (B) if the Change in Control is the result of a tender or exchange offer, merger, or other, similar corporate transaction, the highest price
per such share paid in such tender or exchange offer, merger or other, similar corporate transaction; provided that, to the extent all or part of the consideration paid in any such transaction consists of securities or other noncash
consideration, the value of such securities or other noncash consideration shall be determined by the Committee. 
 3. “Key R&D
Options” shall mean those performance-based options granted to employees under the Key Research and Development Program described in the applicable Schedule to the Rules and Regulations for the Plan. 
 4. “Protection Period” shall mean the period beginning on the date of the Change in Control and ending on the second anniversary of the date of
the Change in Control. 
 5. “PSU Pro Rata Amount” shall mean for each Performance Award, the amount determined by the Committee when
it grants Performance Awards. 
 6. “Qualifying Participants” shall mean those individuals who participate in the Plan (whether as
current or former employees) as of immediately prior to the Change in Control. 
  

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