EX-4.1



 






Exhibit 4.1




SCHERING-PLOUGH CORPORATION

SAVINGS ADVANTAGE PLAN




(Effective January 1, 2004)




 









 








SCHERING-PLOUGH CORPORATION

SAVINGS ADVANTAGE PLAN




Table of Contents




	 	 	 	 	 	 	 
	 	 	 	 	Page

	ARTICLE I
	 	DEFINITIONS	 	 	1	 
	ARTICLE II
	 	ELIGIBILITY AND PARTICIPATION	 	 	5	 
	ARTICLE III
	 	DEFERRAL OF COMPENSATION	 	 	6	 
	ARTICLE IV
	 	BENEFIT ACCOUNTS	 	 	9	 
	ARTICLE V
	 	PAYMENT OF BENEFITS	 	 	11	 
	ARTICLE VI
	 	BENEFICIARY DESIGNATION	 	 	13	 
	ARTICLE VII
	 	ADMINISTRATION	 	 	13	 
	ARTICLE VIII
	 	AMENDMENT AND TERMINATION OF PLAN	 	 	14	 
	ARTICLE IX
	 	MISCELLANEOUS	 	 	14	 







 









 






PURPOSE




     The Schering-Plough Savings Advantage Plan (the “Plan”) is intended to attract
and retain qualified individuals to serve as officers and managers of
Schering-Plough Corporation and its affiliates by providing a select group of
the Company’s management and highly compensated employees with the ability to
defer the receipt of a portion of their compensation. The Plan is effective as
of January 1, 2004.



ARTICLE I

DEFINITIONS



     When used in this Plan and initially capitalized, the following words and
phrases shall have the meanings indicated below:




     1.01 Account. “Account” means the sum of a Participant’s Employer Contribution
Account, Non-Qualified Defined Benefit Plan Rollover Account, Non-Qualified
Defined Contribution Plan Rollover Account, Prior Plan Stock Rollover Account,
Cash LTIP Rollover Account, Performance Plan Rollover Account, and, effective
January 1, 2005, Elective Deferral Account.



     1.02 Base Compensation Elective Deferral Credit. “Base Compensation Elective
Deferral Credit” means the amount of Compensation (other than Bonus) that a
Participant elects to defer under the Plan pursuant to Section 3.02, and which
the Employer credits to the Participant’s Elective Deferral Account.



     1.03 Base Salary. “Base Salary” means that portion of an Eligible Employee’s
Compensation that represents his or her annual rate of pay (not including
Bonus) prior to any reduction for amounts deferred by the Eligible Employee
pursuant to the Savings Plan or Section 125 or 132(f)(4) of the Code, or
pursuant to this Plan or any other non-qualified plan that permits the
voluntary deferral of compensation.



     1.04 Beneficiary. “Beneficiary” means the person, persons, or entity
designated by the Participant pursuant to Article VI to receive any benefits
payable under the Plan after the Participant’s death.



     1.05 Board. “Board” means the Board of Directors of the Company.



     1.06 Bonus. “Bonus” means any regular, recurring bonus payable to an Eligible
Employee from one of the Company’s annual incentive plans prior to any
reduction for any amounts deferred by the Participant under the Savings Plan or
Section 125 or 132(f)(4) of the Code, or pursuant to this Plan or any other
non-qualified plan that permits the voluntary deferral of compensation.



     1.07 Bonus Elective Deferral Credits. “Bonus Elective Deferral Credits” means
the amount of Bonus that a Participant elects to defer under the Plan pursuant
to Section 3.03, and which the Employer credits to the Participant’s Elective
Deferral Account.



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     1.08 Bonus Eligible Employee. “Bonus Eligible Employee” means any highly
compensated or management employee of an Employer who is paid on the Company’s
U.S. payroll, who normally works within the U.S., and whose Base Salary from
his or her Employer equals or exceeds $205,000 (or such other limit as set
forth pursuant to Section 401(a)(17) of the Code) as of April 15 of the
calendar year in which the Bonus is earned (or, for Bonuses payable in 2005, as
of April 30, 2004 and in the case of a newly hired employee, as of his or her
employment commencement date).



     1.09 Cash LTIP. “Cash LTIP” means the Company’s Cash Long-Term Incentive Plan,
as amended from time to time.



     1.10 Cash LTIP Rollover Account. “Cash LTIP Rollover Account” means the
account maintained for the purpose of recording Cash LTIP Rollover Credits and
the amount of deemed investment earnings credited thereto pursuant to Article
IV.



     1.11 Cash LTIP Rollover Credits. “Cash LTIP Rollover Credits” means the amount
that becomes distributable to a Participant under the Cash LTIP that is
automatically deferred under the Plan pursuant to Section 3.04(d).



     1.12 Change in Control. “Change in Control” means a Change of Control as
defined in the Company’s 2002 Stock Incentive Plan and any successor to such
plan, or if such definition does not comply with Section 409A of the Code and
the regulations promulgated thereunder, such other definition as shall be
approved by the Committee in advance of the transaction and permitted by
Section 409A of the Code without resulting in current adverse tax treatment to
the Participants.



     1.13 Code. “Code” means the Internal Revenue Code of 1986, as amended from
time to time.



     1.14 Committee. “Committee” means the Global Benefits and Compensation
Oversight Committee of Schering-Plough Corporation or its delegate.



     1.15 Company. “Company” means the Schering-Plough Corporation, a New Jersey
corporation, and any successor thereto.



     1.16 Compensation. “Compensation” has the same meaning as set forth in the
Savings Plan without regard to any limitation thereon imposed by Section
401(a)(17) of the Code.



     1.17 Covered Employee. “Covered Employee” means with respect to a particular
calendar year, a covered employee as defined in Treasury regulation Section
1.162-27(c)(2) or any replacement regulation thereof. At the time of the
adoption of this Plan, this includes any individual who, as of the last day of
the Company’s taxable year, is the Chief Executive Officer or one of the four
highest compensated officers (other than the Chief Executive Officer) as
determined under the Securities Exchange Act of 1934, as amended.



     1.18 Deferral Election. “Deferral Election” means the written election made by
a Participant to defer Compensation pursuant to Article III.



     1.19 Disability. “Disability” means a Participant’s Disability as defined
under the



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Company’s long term disability plan, or any successor thereto.



     1.20 Elective Deferral Account. “Elective Deferral Account” means the account
maintained on the books of the Employer for the purpose of accounting for the
Base Compensation Elective Deferral Credits and Bonus Elective Deferral Credits
that a Participant elects to defer under the Plan, and for the amount of deemed
investment return credited thereto pursuant to Article IV.



     1.21 Eligible Employee. “Eligible Employee” means any employee who is a Salary
Eligible Employee, a Bonus Eligible Employee, or an Expatriate Employee.



     1.22 Employer. “Employer” means, with respect to a Participant, the Company or
the Selected Affiliate that pays such Participant’s Compensation.



     1.23 Employer Contribution Account. “Employer Contribution Account” means the
account maintained on the books of the Employer for the purpose of accounting
for the Employer Contribution Credits that are credited to a Participant
pursuant to Section 3.01 of the Plan, and for the amount of deemed investment
return credited thereto pursuant to Article IV.



     1.24 Employer Contribution Credit. “Employer Contribution Credit” means the
amount credited to a Participant’s Employer Contribution Account pursuant to
Section 3.01.



     1.25 ERISA. “ERISA” means the Employee Retirement Income Security Act of 1974,
as amended.



     1.26 Expatriated Employee. “Expatriated Employee” means an employee who
receives Compensation from an Employer, but does not meet the definition of a
Salary Eligible Employee or a Bonus Eligible Employee only because he or she
either is not paid on the Company’s U.S. payroll or normally works outside the
U.S.



     1.27 Hardship Withdrawal. “Hardship Withdrawal” has the meaning set forth in
Section 5.06.



     1.28 Investment Committee. “Investment Committee” means the Investment
Committee of Schering-Plough Corporation.



     1.29 Investment Return Rate. “Investment Return Rate” means:



     (a) In the case of an investment named in Exhibit A of a fixed income nature,
the interest deemed to be credited as determined in accordance with the
procedures applicable to the same investment option provided under the Savings
Plan;



     (b) In the case of an investment named in Exhibit A of an equity investment
nature, the increase or decrease in deemed value and dividends deemed to be
credited as determined in accordance with the procedures applicable to the same
investment option provided under the Savings Plan; or



     (c) In the case of the Common Stock Investment Option, the increase or
decrease in the deemed value, and the reinvestment in the Schering-Plough
Corporation Common Stock of



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any dividends deemed to be credited, as determined in accordance with the
procedures established by the Investment Committee.



     1.30 Non-Qualified Defined Benefit Plan Rollover Account. “Non-Qualified
Defined Benefit Plan Rollover Account” means the account maintained on the
books of the Employer for the purpose of accounting for the Non-Qualified
Defined Benefit Plan Rollover Credits that are credited to a Participant
pursuant to Section 3.04(a) of the Plan, and for the amount of deemed
investment return credited thereto pursuant to Article IV.



     1.31 Non-Qualified Defined Benefit Plan Rollover Credit. “Non-Qualified
Defined Benefit Plan Rollover Credit” means the amount that becomes
distributable to a Participant under the Company’s non-qualified defined
benefit plan that the is automatically deferred pursuant to Section 3.04(a) of
the Plan.



     1.32 Non-Qualified Defined Contribution Plan Rollover Account. “Non-Qualified
Defined Contribution Plan Rollover Account” means the account maintained on the
books of the Employer for the purpose of accounting for the Non-Qualified
Defined Contribution Credits that are credited to a Participant pursuant to
Section 3.04(b) of the Plan, and for the amount of deemed investment return
credited thereto pursuant to Article IV.



     1.33 Open Enrollment Period. “Open Enrollment Period” means the period or
periods established by the Company in any calendar year for making various
elections described in the Plan that affect the rights of Participants and
Beneficiaries with respect to subsequent periods.



     1.34 Participant. “Participant” means an Eligible Employee who elects to
participate by executing and delivering any agreements required by the
Committee in order to participate in the Plan.



     1.35 Performance Plan. “Performance Plan” means the Company’s Long-Term
Performance Share Unit Incentive Plan, as amended from time to time.



     1.36 Performance Plan Rollover Account. “Performance Plan Rollover Account”
means the account maintained for the purpose of recording Performance Plan
Rollover Credits and the amount of deemed investment return credited thereto

pursuant to Article IV.



     1.37 Performance Plan Rollover Credits. “Performance Plan Rollover Credits”
means the amount that becomes distributable to a Participant under the
Performance Plan that is automatically deferred under the Plan pursuant to
Section 3.04(e).



     1.38 Plan. “Plan” means the Schering-Plough Savings Advantage Plan, as amended
from time to time.



     1.39 Plan Sponsor. “Plan Sponsor” means Schering Corporation.



     1.40 Plan Year. “Plan Year” means a twelve-month period commencing January 1
and ending the following December 31.



     1.41 Prior Plan Stock Rollover Account. “Prior Plan Stock Rollover Account”
means the account maintained on the books of the Employer for the purpose of
accounting for the



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amounts under the Company’s Transformational Program that is automatically
deferred pursuant to Section 3.04(c) of the Plan, and for the amount of deemed
investment return credited thereto pursuant to Article IV.



     1.42 Prior Plan Stock Rollover Credit. “Prior Plan Stock Rollover Credit”
means the amount that becomes distributable to a Participant under the
Company’s Transformational Program that is automatically deferred under the
Plan pursuant to Section 3.04(c) of the Plan.



     1.43 Salary Eligible Employee. “Salary Eligible Employee” means any highly
compensated or management employee of an Employer who is paid on the Company’s
U.S. payroll, who normally works within the U.S., and whose Base Salary and
target incentive bonus from his or her Employer equals or exceeds $205,000 (or
such other limit as set forth pursuant to Section 401(a)(17) of the Code) as of
October 15 of the prior year (or, in the case of a newly hired employee, as of
his or her employment commencement date).



     1.44 Savings Plan. “Savings Plan” means the Schering-Plough Employees’ Savings
Plan, as amended from time to time, or any successor thereto.



     1.45 Transformational Program. “Transformational Program” means the Company’s
Transformational Performance Contingent Shares Program, as amended from time to
time.



     1.46 Value. “Value” means, with respect to any applicable date, the fair
market value determined by the Investment Committee as of the previous
Valuation Date.



     1.47 Valuation Date. “Valuation Date” means a date on which the amount of a
Participant’s Account is valued as provided in Article IV. The Valuation Date
shall be each trading day under the applicable market or exchange or on any
date on which a net asset value is calculated by the Plan’s third party
administrator with respect to the applicable investment.



ARTICLE 2

ELIGIBILITY AND PARTICIPATION




     2.01 Eligibility.



     (a) 2004 Employer Contribution Credits. Any Eligible Employee whose
Compensation exceeds $205,000 during 2004 shall be eligible to receive Employer
Contribution Credits to his or her Employer Contribution Account in accordance
with Section 3.01 below for the 2004 Plan Year.



     (b) 2005 and Later Employer Contribution Credits. Any person who is an
Eligible Employee with respect to the 2005 Plan Year or a later Plan Year shall
be eligible to receive Employer Contribution Credits to his or her Employer
Contribution Account for that Plan Year in accordance with Section 3.01 below
after his or her Compensation exceeds the applicable Section 401(a)(17) limit
for that year.



     (c) 2005 and Later Base Compensation Deferrals. Any person who is a Salary
Eligible Employee with respect to the 2005 Plan Year or a later Plan Year shall
be eligible to



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elect to defer a portion of his or her Compensation (not including Bonus)
payable in such year in accordance with Section 3.02 below. Any such election
must be made during the Company’s applicable Open Enrollment Period that
precedes the year in which the deferrals are to be made, provided, however that
Eligible Employees hired during a 2005 or later Plan Year may make such an
election at any time within 30 days after their date of hire.



     (d) 2005 Bonus Deferrals. Any person who is a Bonus Eligible Employee with
respect to the 2005 Plan Year shall be eligible to elect to defer a portion of
his or her Bonus that is payable in 2005 in accordance with Section 3.03 below.
Any such election must be made during the period from April 23, 2004 until May
28, 2004, provided, however that Bonus Eligible Employees hired during 2004 may
make such an election at any time within 30 days after their date of
eligibility to participate in the Plan.



     (e) 2006 and Later Bonus Deferrals. Any person who is a Bonus Eligible
Employee with respect to the 2006 Plan Year or a later Plan Year shall be
eligible to elect to defer a portion of his or her Bonus that is payable in
2006 or such later Plan Year, as applicable. Any such election must be made
during the applicable Open Enrollment Period to be completed not later than six
months into the Plan Year in which such Bonus is earned, provided, however that
Bonus Eligible Employees hired during any such Plan Year may make an election
to defer their Bonus that is payable in the following year at any time within
30 days after their date of hire.



     2.02 Participation. Notwithstanding anything herein to the contrary,
Participation in the Plan shall be limited to Eligible Employees who elect to
participate in the Plan by executing and filing the appropriate documentation
required by the Committee, if any.



     2.03 Change in Participation Status.



     (a) Except as provided in (b) below, a Participant may elect to terminate his
or her participation in the Plan at any time by filing a written notice thereof
with the Committee. A termination of participation with respect to Elective
Deferral Credits shall become effective as of the beginning of the next payroll
period in the month following receipt of the termination election by the
Committee and in accordance with the Committee’s prevailing administrative
practices and procedures.



     (b) Amounts credited to such Participant’s Account with respect to periods
prior to the effective date of a termination described in (a) above shall
continue to be payable pursuant to, receive investment credit on, and otherwise
be governed by, the terms of the Plan.



     (c) Any Participant who elects to terminate his or her participation in the
Plan shall not be permitted to again participate in the Plan during the
remainder of the Plan Year in which he or she terminated participation or the
following Plan Year.



ARTICLE 3

DEFERRAL OF COMPENSATION




     3.01 Employer Contribution Credits. With respect to each Plan Year, the
Employer shall credit Employer Contribution Credits to the Employer
Contribution Account of each



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Eligible Employee who satisfies the requirements of Section 2.01(a) or
(b), as applicable. The amount of the Employer Contribution Credits shall be
equal to five percent of such Eligible Employee’s Compensation for the Plan
Year that exceeds $205,000 or such other limit as set forth in 401(a)(17) of
the Code for that year. Employer Contribution Credits shall be credited to the
Participant’s Account on the same date on which the related employer
contributions are made to the Savings Plan or such other date as the Committee
shall determine.



     3.02 Base Compensation Elective Deferral Credits. With respect to each Plan
Year beginning on or after January 1, 2005, an Eligible Employee who satisfies
the requirements of Section 2.01(c) may elect to defer a up to 80% of his or
her Compensation (excluding Bonus) in 1% increments by filing a complete and
timely Deferral Election with the Committee. Any such election must be made
during the Company’s Open Enrollment Period that precedes the year in which the
Compensation being deferred is otherwise payable, provided, however that
Eligible Employees hired during a 2005 or later Plan Year may make such an
election at any time within 30 days after their date of hire. A Participant
may change the percentage of his or her Compensation to be deferred by filing a
new Deferral Election with the Committee during the Company’s Open Enrollment
Period or at such other time as the Committee shall permit. Any such change
shall be effective as of the first day of the Plan Year immediately following
the Plan Year in which such Deferral Election is filed with the Committee.
Base Compensation Elective Deferral Credits shall be credited to the
Participant’s Account on the same date for each pay period on which elective
deferrals for the same pay period are generally contributed to the Savings Plan
or such other date as the Committee shall determine. Notwithstanding anything
herein to the contrary, the Committee may reduce the percentage of Compensation
that the Participant elects to defer if the Committee believes that the
percentage elected by the Participant is likely to result in a negative balance
in the Participant’s pay in any pay period after considering all applicable
deductions (including garnishments).



     3.03 Bonus Elective Deferral Credits. With respect to each Plan Year beginning
on or after January 1, 2005, a Bonus Eligible Employee who satisfies the
requirements of Section 2.01(d) or (e), as applicable, may elect to defer up to
100% of his or her Bonus (in 1% increments) by filing a complete and timely
Deferral Election with the Committee. Any such election with respect to a
Bonus payable in 2005 must be made during the period from April 23, 2004 until
May 28, 2004, provided, however that Bonus Eligible Employees hired during 2004
may make such an election at any time within 30 days after their date of first
becoming eligible to participate in the Plan. Any such election with respect
to a Bonus payable in 2006 or any year thereafter must be made during the Open
Enrollment Period to be completed not later than six months into the calendar
year in which the Bonus is earned, provided, however that Bonus Eligible
Employees hired during any year may make an election at any time within 30 days
after their date of hire to defer the Bonus. Unless modified in accordance
with the terms of the Plan, such an election shall apply to the first regular,
recurring bonus to which the employee is entitled after his or her date of hire
and any subsequent bonus thereafter. Bonus Elective Deferral Credits shall be
credited to the Participant’s Account as soon as administratively practicable
following the date that such Bonuses are otherwise payable from the applicable
incentive plan. Notwithstanding anything herein to the contrary, the Committee
may reduce the percentage of Bonus deferrals elected by the Participant if the
Committee believes that the percentage elected by the Participant is likely to
result in a negative balance in the Participant’s pay in any pay period after
considering all applicable deductions (including garnishments).



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     3.04 Deferrals of Distributions from Other Plans. Any deferral made pursuant
to this Section 3.04 must be made at least twelve months prior to the first
scheduled payment under the transferor plan. In addition, no payment
previously scheduled under a transferor plan may be accelerated. Also, a
Participant cannot receive any payments of the transferred amounts for a period
of at least five years from the date of the transfer.



     (a) Non-Qualified Defined Benefit Plan Rollover Credits. To the extent
permitted by the Committee, Eligible Employees who participate in the Company’s
Supplemental Executive Retirement Plan (the “SERP”) may elect to defer under
this Plan the actuarial single sum present value of benefits (determined in the
manner established by the Committee) that become payable under the SERP. Any
Participant who makes such an election shall automatically be deemed to make
such and election with respect to any benefits to which he or she is entitled
under the Company’s Retirement Benefits Equalization Plan (“RBEP”). Once the
deferral referenced in this paragraph becomes effective, (i) any amounts
deferred pursuant to this paragraph shall be deemed to be invested in this Plan
in accordance with the Participant’s latest effective elections applicable to
new contributions; and (ii) any such deferrals shall be subject to the terms
and conditions of this Plan (including those terms governing distribution,
withdrawal, and deemed investment) and shall not be subject to the terms and
conditions of, or payable from, the plan pursuant to which such amounts were
originally maintained. To the extent that any payroll taxes become due as a
result of this election, such taxes, together with federal and state income
taxes thereon, shall be paid by the Company and shall reduce the Participant’s
Nonqualified Defined Benefit Rollover Account accordingly, to the extent
permissible by law without resulting in adverse current income tax consequences
to the Participants.



     (b) Non-Qualified Defined Contribution Plan Rollover Credits. Eligible
Employees who participate in any 162(m) Deferred Compensation plans of the
Company shall automatically have any amounts deferred under such plan governed
by the terms of this Plan with regard to administration, deemed investment and
timing and form of benefit distributions. Once the deferral referenced in this
paragraph becomes effective, (i) any amounts deferred pursuant to this
paragraph shall be deemed to be invested in this Plan in accordance with the
Participant’s latest effective elections applicable to new contributions; and
(ii) any such deferrals shall be subject to the terms and conditions of this
Plan (including those terms governing distribution, withdrawal, and deemed
investment) and shall not be subject to the terms and conditions of, or payable
from, the plan pursuant to which such amounts were originally maintained.



     (c) Transformational Program Rollover Credits. With respect to any Eligible
Employee who participates in the Transformational Program, on or around March
15, 2009, the Company shall credit the Fair Market Value (as defined in the
Transformational Program) of each Eligible Employee’s vested Share Units (as
defined in the Transformational Program) to the Participant’s stock rollover
account under the Plan. Once the deferral referenced in this paragraph becomes
effective, (i) each stock unit deferred pursuant to this paragraph shall be
deemed to be invested in this Plan in a phantom share, which shall be the
equivalent of one share of the Company’s Common Stock; and (ii) any such stock
units shall be subject to the terms and conditions of this Plan (including
those terms governing distribution, withdrawal, and deemed investment) and
shall not be subject to the terms and conditions of, or payable from, the
Transformational Program. To the extent that any payroll taxes become due as a
result of this election, such taxes, together with federal and state income
taxes thereon, shall be paid by the



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Company and shall reduce the Participant’s Prior Plan Stock Rollover
Account accordingly.



     (d) Cash LTIP Rollover Credits. With respect to any Eligible Employee who
participates in the Cash LTIP, on or around March 15, 2007, the Company shall
credit each such Participant’s incentive award under the Cash LTIP to the
Participant’s Account under the Plan. Once the deferral referenced in this
paragraph becomes effective, (i) any amounts deferred pursuant to this
paragraph shall be deemed to be invested in this Plan in accordance with the
Participant’s latest effective elections applicable to new contributions; and
(ii) any such deferrals shall be subject to the terms and conditions of this
Plan (including those terms governing distribution, withdrawal, and deemed
investment) and shall not be subject to the terms and conditions of, or payable
from, the plan pursuant to which such amounts were originally maintained. To
the extent that any payroll taxes become due as a result of this election, such
taxes, together with federal and state income taxes thereon, shall be paid by
the Company and shall reduce the Participant’s Cash LTIP Rollover Account
accordingly.



     (e) Performance Plan Rollover Credits. With respect to any Eligible Employee
who participates in the Performance Plan, on or around each vesting date under
that plan, the Company shall credit the Fair Market Value (as defined in the
Performance Plan) of each Eligible Employee’s vested Share Units (as defined in
the Performance Plan) to the Participant’s Account under the Plan. Once the
deferral referenced in this paragraph becomes effective, (i) any amounts
deferred pursuant to this paragraph shall be deemed to be invested in this Plan
in accordance with the Participant’s latest effective elections applicable to
new contributions; and (ii) any such deferrals shall be subject to the terms
and conditions of this Plan (including those terms governing distribution,
withdrawal, and deemed investment) and shall not be subject to the terms and
conditions of, or payable from, the plan pursuant to which such amounts were
originally maintained. To the extent that any payroll taxes become due as a
result of this election, such taxes, together with federal and state income
taxes thereon, shall be paid by the Company and shall reduce the Participant’s
Performance Plan Account accordingly.



     3.05 Tax Withholding. Except as otherwise provided in Section 3.04, to the
extent that the Employer is required to withhold any taxes or other amounts
from a Participant’s Compensation subject to a Deferral Election pursuant to
any state, federal, or local law, such amounts shall be withheld only from his
or her Compensation before any Elective Deferral Credits are credited to his or
her Account.



ARTICLE 4

BENEFIT ACCOUNTS




     4.01 Valuation of Account. As of each Valuation Date, a Participant’s Account
shall consist of the balance of the Participant’s Account as of the immediately
preceding Valuation Date, plus the Participant’s Elective Deferral Credits,
Bonus Elective Deferral Credits, Employer Contribution Credits, Non-Qualified
Defined Benefit Plan Rollover Credits, Non-Qualified Defined Contribution Plan
Rollover Credits, Prior Plan Stock Rollover Credits, Performance Plan Rollover
Credits and Cash LTIP Rollover Credits that are credited pursuant to Article
III since the immediately preceding Valuation Date, plus or minus deemed
investment gain or loss credited as of such Valuation Date pursuant to Section
4.02, minus the aggregate amount of distributions, if any, made from such
Account since the immediately preceding Valuation Date.



     4.02 Crediting of Deemed Investment Return. As of each Valuation Date, each



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Participant’s Account shall be increased or decreased by the amount of
deemed investment gain or loss earned since the immediately preceding Valuation
Date. Deemed investment return shall be credited at the Investment Return Rate
as of such Valuation Date based upon the average balance of the Participant’s
Account since the immediately preceding Valuation Date, but after such Accounts
have been adjusted for any contributions or distributions to be credited or
deducted for such period or with such other method as the Investment Committee
shall deem appropriate. Deemed investment return for the period prior to the
first Valuation Date applicable to an Account shall be deemed earned ratably
over such period. Until a Participant or his or her Beneficiary receives his
or her entire Account, the unpaid balance thereof shall earn a deemed
investment return as provided in this Section 4.02.



     4.03 Statement of Accounts. The Committee shall provide to each Participant,
within 30 days after the close of each calendar quarter, a statement setting
forth the balance of such Participant’s Account as of the last day of the
preceding calendar quarter and showing all adjustments made thereto during such
calendar quarter.



     4.04 Vesting of Amounts. A Participant shall be 100 percent vested in the
amounts credited to his or her Account.



     4.05 Deemed Investments.



     (a) New Money and Reallocation Elections. A Participant may direct that
the amounts credited to his or her Account under Article III be deemed invested
in one or more of the investment options listed in Exhibit A, in increments of
whole percentages or whole dollars (a “New Money Election”). In the event that
a Participant fails to designate a New Money Election, new deferrals credited
to the Participant’s Account shall be deemed to be invested in the Treasury
Money Market Fund or such other fund as the Committee shall designate. Unless
determined otherwise by the Committee, a Participant may not make more than one
New Money Election per calendar quarter. A Participant also may direct that
amounts previously credited to his or her Account and deemed invested in one or
more of the investment options listed in Exhibit A, be transferred, in
increments of whole percentages or whole dollars between and among the then
available investment options listed in Exhibit A (a “Reallocation Election”).
Unless determined otherwise by the Committee, a Participant may not make more
than one Reallocation Election per calendar quarter. A New Money Election or a
Reallocation Election must be filed with the Committee in accordance with
uniform rules established by the Committee. A Reallocation Election shall not
change a Participant’s existing New Money election. The effective date of any
New Money Election or Reallocation Election shall be the Valuation Date on
which such election is received by the Committee in accordance with uniform
rules established by the Committee.



     (b) Insider Trading Restrictions. The Company reserves the right to refuse to
honor any Participant direction related to deemed investments, including deemed
contributions to, distributions from, and transfers among investment options,
and any other circumstances where the Committee deems it necessary or desirable
to refuse to honor such a direction in order to ensure or facilitate compliance
with applicable law including U.S. or other securities laws, or the Company’s
insider trading policies and practices. The Company, however, does not assume
any responsibility for compliance by officers or others with any such laws, and
any failure by the Company to delay or dishonor any such direction shall not be
deemed to increase the Company’s



-10-









 







legal exposure to the Participant or third parties.

     (e) Prior Plan Stock Rollover Account. Notwithstanding the foregoing, a
Participant’s Prior Plan Stock Rollover Account shall always be deemed invested
in the Schering-Plough Common Stock Investment Option.



ARTICLE 5

PAYMENT OF BENEFITS




     5.01 Distributions.



     (a) Reasons other than Death, Disability, or Change of Control. Each
Participant may elect to commence receiving distributions of the balance of his
or her Account on (i) the first day of any month elected by the Participant,
provided that such day is no less than 3 years from the day on which the
election is made; (ii) the first day of the month that is at least 60 days
following the termination of his or her employment; or (iii) the earlier of (i)
or (ii). Elections may be made during Open Enrollment or at such other time as
is permitted by the Committee, however, except as otherwise required above, no
such election shall become effective until twelve months following the date the
election is made unless such election is made either during the 2004 Open
Enrollment Period or, in the case of a newly eligible Participant, within 30
days of such Participant’s eligibility date, in both of which cases such
election shall be immediately effective. Distributions under this Section
5.01(a) may be made in any form permissible under Section 5.02.



     (b) Death. Notwithstanding Section 5.01(a), in the event of a Participant’s
death before he or she commences receiving his or her benefit under the Plan,
his or her Beneficiary shall receive the Value of his or her entire account
balance in cash in a single sum within 60 days following the date of the
Participant’s death. Also notwithstanding Section 5.01(a), in the event of a
Participant’s death after he or she has commenced receiving installment
payments under this Plan, the Participant’s Beneficiary shall receive a single
sum cash distribution of the Value of the Participant’s Account as soon as
administratively practicable following the Participant’s death, provided,
however, that if the Participant so elected prior to his or her death, the
Participant’s Beneficiary shall continue to receive installment payments under
the Plan on the same schedule as the Participant was receiving.



     (c) Disability. Notwithstanding Section 5.01(a), in the event that a
Participant incurs a Disability, the Company shall commence paying benefits to
the Participant as soon as administratively feasible after the Participant
becomes disabled, provided, however, that if the Participant so elects at least
twelve months prior to the date of his or her Disability, he or she may
commence receiving his or her benefit under the Plan as of the later of the
first day of the month following his or her 65th birthday or the first day of
the month following the day on which his or her long-term disability payments
under the Company’s long-term disability plan cease. Distributions under this
Section 5.01(c) may be made in any form permissible under Section 5.02 as
elected by the participant at least twelve months prior to the date of his or
her Disability.



     (d) Change of Control. Each Participant may make a separate election
regarding when his or her distributions will be paid following a change of
control in the same manner provided under Section 5.01(a). Any such election
shall supercede all other elections if a change of control occurs prior to the
time when the Participant is in pay status under the Plan. In order



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to be
effective, any such election must be made at least elect to commence receiving
a distribution as soon as administratively feasible following a Change of
Control, provided that such election is made in the calendar year prior to, and
at least six months prior to, the Change of Control.



     5.02 Form of Payment. Except as otherwise provided in Section 5.01, the
benefits payable pursuant to Section 5.01 shall be paid in cash in one of the
following forms, as elected by the Participant in connection with his or her
latest effective applicable distribution election:



     (a) Installments. Annual payments of a fixed amount that shall amortize the
Account balance as of the payment commencement date over a period not to exceed
20 years (together, in the case of each annual payment, with deemed earnings
thereon credited after the payment commencement date pursuant to Section 5.01).



     (b) Single Sum Distribution. A single sum payment to the Participant or
Beneficiary, as applicable.



     In the event a Participant fails to make a distribution election, his or her
Account balance shall be distributed in a single sum distribution.



     5.03 Commencement of Benefits to 162(m) Covered Employees and 409A Key
Employees. The Committee shall have discretion to delay the commencement of
benefits to any Covered Employee (or any Participant that the Committee
believes could be a Covered Employee) until April 1 of the first calendar year
in which the Participant was no longer a Covered Employee. The Committee shall
delay distribution of any benefits to be distributed to a Key Employee (as
defined in Section 409A of the Code) for a period of six months following such
employee’s termination of employment.



     5.04 Small Benefit. In the event the Committee determines that the Value of a
Participant’s Account is $5,000 or less at the time of such Participant’s
termination of employment, or the Value of the balance of the Participant’s
Account payable to any Beneficiary is $5,000 or less at the time of the
Participant’s death, the Committee may inform the Employer and the Employer, in
its discretion, may choose to pay the benefit in the form of a lump sum
payment, notwithstanding any provision of the Plan or a Participant’s election
to the contrary. Such lump sum payment shall be equal to the Value of the
balance of the Participant’s Account or the portion thereof payable to a
Beneficiary.



     5.05 90% Distribution. To the extent permissible by applicable law without
causing current adverse tax treatment to any Participant, a Participant or
Beneficiary may elect to receive a distribution of all or a portion of his or
her Account, beginning at any time not less than one year after the end of the
Plan Year in which such portion was credited to his or her Account. At the
time of such a distribution, a penalty of 10% of the amount elected shall be
retained by the Employer and forever forfeited by the Participant. A
Participant’s or Beneficiary’s election for a 90% distribution shall be filed
in writing with the Committee. Such a distribution shall be payable in cash in
a single sum only. Any benefits paid to the Participant as an in-service
distribution and the 10% penalty shall reduce the amount of the Participant’s
or Beneficiary’s Account under the Plan.



     5.06 Hardship Withdrawal. In the event that the Committee, upon the written
request



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of a Participant or Beneficiary, determines, in its sole discretion,
that the Participant or Beneficiary has suffered an unforeseeable financial
emergency, the Employer shall pay to the Participant or Beneficiary, as soon as practicable following such
determination, an amount necessary to meet the emergency (the “Hardship
Withdrawal”), but not exceeding the aggregate balance of the Participant’s or
Beneficiary’s Account as of the date of such payment. For purposes of this
Section 5.06, an “unforeseeable financial emergency” shall mean an event that
the Committee determines to give rise to an unexpected need for cash arising
from an illness, casualty loss, sudden financial reversal, or other such
unforeseeable occurrence as prescribed by Section 409A of the Code and the
regulations promulgated thereunder. The amount of a Hardship Withdrawal may
not exceed the amount that the Committee reasonably determines to be necessary
to meet such emergency needs (including taxes incurred by reason of a taxable
distribution). The amount of the benefit otherwise payable under the Plan to
such Participant or Beneficiary shall be adjusted to reflect the early payment
of the Hardship Withdrawal.



ARTICLE 6

BENEFICIARY DESIGNATION




     6.01 Beneficiary Designation. Each Participant shall have the sole right, at
any time, to designate any person(s) or entity as his or her Beneficiary to
whom payment under the Plan shall be made in the event of the Participant’s
death prior to complete distribution of his or her Account. Any Beneficiary
designation shall be made in a written instrument provided by the Committee.
All Beneficiary designations must be filed in the manner required by the
Committee and shall be effective only when received by the Committee.



     6.02 Change of Beneficiary Designation. Any Beneficiary designation may be
changed by a Participant by the filing of a new Beneficiary designation, which
shall cancel all Beneficiary designations previously filed. The designation of
a Beneficiary may not be made or changed at any time without the consent of the
applicable Participant except as required by a court of competent jurisdiction.



     6.03 No Designation. If all designated Beneficiaries predecease the
Participant or if no designated Beneficiary is on file for the Participant at
the time of the Participant’s death, the Participant’s Account shall be paid to
the Participant’s beneficiaries designated under the Savings Plan, or, if no
such beneficiaries are alive, the Participant’s estate.



     6.04 Effect of Payment. Payment to a Participant’s Beneficiary (or, upon the
death of a primary Beneficiary, to the contingent Beneficiary or, if none, to
the Participant’s beneficiary under the Savings Plan or, if none, to the
Participant’s estate) shall completely discharge the Employer’s obligations
under the Plan.



ARTICLE 7

ADMINISTRATION




     7.01 Committee. The Plan shall be administered by the Committee. The
Committee shall have (a) complete discretion to supervise the administration
and operation of the Plan, (b) complete discretion to adopt rules and
procedures governing the Plan from time to time, and (c) sole authority to
interpret the terms of the Plan.



     7.02 Investments. The Investment Committee shall have the sole discretion to
choose



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the investment options available under the Plan and to change or
eliminate such investment options, from time to time, as it deems appropriate.



     7.03 Binding Effect of Decisions. Any decision or action of the Committee with
respect to any question arising out of or in connection with the
administration, interpretation, or application of the Plan shall be final and
binding upon all persons having any interest in the Plan.



     7.04 Indemnification of Committee. The Company shall indemnify and hold
harmless the members of the Committee and Investment Committee and their
designees against any and all claims, loss, damage, expense, or liability
arising from any action or failure to act with respect to the Plan, except in
the case of gross negligence or willful misconduct by any such member or
designee of the Committee or Investment Committee.



ARTICLE 8

AMENDMENT AND TERMINATION OF PLAN




     8.01 Amendment. The Board of Directors of the Company or its delegate, on
behalf of itself and of each Selected Affiliate may at any time amend, suspend,
or reinstate any or all of the provisions of the Plan, except that no such
amendment, suspension, or reinstatement may adversely affect any Participant’s
Account, as it existed as of the day before the effective date of such
amendment, suspension, or reinstatement, without such Participant’s prior
written consent. Written notice of any amendment or other action with respect
to the Plan shall be given to each Participant.



     8.02 Termination. The Board of Directors of the Company or its delegate, on
behalf of itself and of each Selected Affiliate, in its sole discretion, may
terminate this Plan at any time and for any reason whatsoever. On and after
Plan termination, the Committee shall take those actions necessary to
administer any Accounts existing prior to the effective date of such
termination; provided, however, that a termination of the Plan shall not
adversely affect the value of a Participant’s Account, the crediting of
investment return under Section 4.02, or the timing or method of distribution

of a Participant’s Account, without the Participant’s prior written consent.



ARTICLE 9

MISCELLANEOUS




     9.01 Funding. Participants, their Beneficiaries, and their heirs, successors,
and assigns shall have no secured interest or claim in any property or assets
of the Employer. The Employer’s obligation under the Plan shall be merely that
of an unfunded and unsecured promise of the Employer to pay money in the
future. Notwithstanding the foregoing, in the event of a Change in Control,
the Company shall create an irrevocable trust, or before such time the Company
may create an irrevocable or revocable trust, to hold funds to be used in
payment of the obligations of Employers under the Plan. In the event of a
Change in Control or prior thereto, the Employers shall fund such trust in an
amount equal to not less than the total value of the Participants’ Accounts
under the Plan as of the Valuation Date immediately preceding the Change in
Control, provided that any funds contained therein shall remain available for
the claims of the respective Employer’s general creditors.



     9.02 Nonassignability. No right or interest under the Plan of a Participant or
his or her Beneficiary (or any person claiming through or under any of them)
shall be assignable or



-14-









 







transferable in any manner or be subject to alienation,
anticipation, sale, pledge, encumbrance, or other legal process or in any manner be liable for or subject to the debts
or liabilities of any such Participant or Beneficiary. If any Participant or
Beneficiary shall attempt to or shall transfer, assign, alienate, anticipate,
sell, pledge, or otherwise encumber his or her benefits hereunder or any part
thereof, or if by reason of his or her bankruptcy or other event happening at
any time such benefits would devolve upon anyone else or would not be enjoyed
by him or her, the Committee, in its discretion, may terminate his or her
interest in any such benefit to the extent the Committee considers necessary or
advisable to prevent or limit the effects of such occurrence. Termination
shall be effected by filing a written “termination declaration” with the
Company’s highest ranking human resources official and making reasonable
efforts to deliver a copy to the Participant or Beneficiary whose interest is
adversely affected (the “Terminated Participant”).



          As long as the Terminated Participant is alive, any benefits affected by
the termination shall be retained by the Employer and, in the Committee’s sole
and absolute judgment, may be paid to or expended for the benefit of the
Terminated Participant, his or her spouse, his or her children, or any other
person or persons in fact dependent upon him or her in such a manner as the
Committee shall deem proper. Upon the death of the Terminated Participant, all
benefits withheld from him or her and not paid to others in accordance with the
preceding sentence shall be disposed of according to the provisions of the Plan
that would apply if he or she died prior to the time that all benefits to which
he or she was entitled were paid to him or her.



     9.03 Claims Procedure



     (a) Claim. A person who believes that he or she is being denied a
Supplemental Benefit to which he or she is entitled under the Plan (hereinafter
referred to as a “Claimant”) may file a written request for such benefit with
the Committee, setting forth the claim.



     (b) Claim Decision. Upon receipt of a claim, the Committee shall advise the
Claimant that a reply will be forthcoming within 90 days and shall, in fact,
deliver such reply within such period. The Committee may, however, extend the
reply period for an additional 90 days for reasonable cause.



     (c) Information. If the claim is denied in whole or in part, the Claimant
shall be provided an opinion, drafted in a manner calculated to be understood
by the Claimant, setting forth:




	 	(i)	 	The specific reason or reasons for such denial;
	 
	 	(ii)	 	The specific reference to pertinent provisions of
this Plan upon which such denial is based;
	 
	 	(iii)	 	A description of any additional material or
information necessary for the Claimant to perfect his or her
claim and an explanation why such material or such information
is necessary;
	 
	 	(iv)	 	Appropriate information as to the steps to be
taken if the Claimant wishes





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	 	 	 	to submit the claim for review;
	 
	 	(v)	 	The time limits for requesting a review under
subsection (d) hereof; and
	 
	 	(vi)	 	A statement of the Claimant’s right to bring an
action under Section 502 of ERISA upon a claim denial on
review.





     (d) Request for Review. Within 60 days after the receipt by the Claimant of
the opinion described above, the Claimant may request in writing that the
Committee review its determination. The Claimant or his or her duly authorized
representative may, but need not, review the pertinent documents and submit
issues and comment in writing for consideration by the Committee. If the
Claimant does not request a review of the initial determination within such
60-day period, the Claimant shall be barred and estopped from challenging the
determination.



     (e) Review of Decision. Within 60 days after the Committee’s receipt of a
request for review, it shall review the initial determination. After
considering all materials presented by the Claimant, the Committee shall render
an opinion, drafted in a manner calculated to be understood by the Claimant,
setting forth the specific reasons for the decision and containing specific
references to the pertinent provisions of this Plan upon which the decision is
based and a statement of the Claimant’s right to bring an action under Section
502 of ERISA. If special circumstances require that the 60-day time period be
extended, the Committee shall so notify the Claimant and shall render the
decision as soon as possible, but no later than 120 days after receipt of the
request for review.



     9.04 Governing Law. The Plan is intended to constitute an unfunded plan
providing retirement or deferred compensation benefits for officers and highly
compensated employees exempt from the requirements of parts 2, 3, and 4 of
ERISA. Except to the extent otherwise provided in ERISA and the Code, this
Plan shall be construed, regulated and administered under the laws of the State
of New Jersey.



     9.05 Successors. The provisions of the Plan shall bind and inure to the
benefit of the Company, its Selected Affiliates, and their respective
successors and assigns. The term successors as used herein shall include any
corporate or other business entity that, whether by merger, consolidation,
purchase, or otherwise, acquires all or substantially all of the business and
assets of the Company or a Selected Affiliate and successors of any such
Company or other business entity.



     9.06 Right to Continued Service. Nothing contained herein shall be construed
to confer upon any Eligible Employee the right to continue to serve as an
Eligible Employee of the Employer or in any other capacity.



     9.07 Illegal or Invalid Provision. In case any provision of the Plan shall be
held illegal or invalid for any reason, such illegal or invalid provision shall
not affect the remaining parts of the Plan, and the Plan shall be construed and
enforced without regard to such illegal or invalid provision.



-16-









 





Exhibit A


     The following are the investment options that are used in determining the
Investment Return Rate under the Plan.



Account Name (Fund Code)





	 	 	 	Vanguard 500 Index Fund Investor Shares (000040)
	 
	 	 	 	Vanguard Treasury Money Market Fund (000050) — Default Investment Election
	 
	 	 	 	Vanguard Life Strategy Growth Fund (000122)
	 
	 	 	 	Vanguard Wellington Fund Investor Shares (000021)
	 
	 	 	 	Vanguard Windsor Fund Investor Shares (000022)
	 
	 	 	 	Vanguard Explorer Fund Investor Shares (000024)
	 
	 	 	 	Vanguard ST Investment Grade Fund Investor Shares (000039)
	 
	 	 	 	Vanguard Life Strategy Income Fund (00007L)
	 
	 	 	 	Vanguard Life Strategy Conservative Growth Fund (00007M)
	 
	 	 	 	Vanguard Life Strategy Moderate Growth Fund (000914)
	 
	 	 	 	Vanguard IT Investment Grade Fund Investor Shares (000071)
	 
	 	 	 	Vanguard US Growth Fund Investor Shares (000023)
	 
	 	 	 	Vanguard International Growth Fund Investor Shares (000081)
	 
	 	 	 	Schering-Plough Company Stock Investment Option (000117)