Exhibit 10.5  **MERCK & CO., INC.****2001 INCENTIVE STOCK PLAN**(*Amended and Restated as of December 19, 2006*)  
 

 
**2001 INCENTIVE STOCK PLAN**     The 2001 Incentive Stock Plan (“ISP”), effective January 1, 2001, is established toencourage employees of Merck & Co., Inc. (the “Company”), its subsidiaries, its affiliates andits joint ventures to acquire Common Stock in the Company (“Common Stock”). It is believedthat the ISP will stimulate employees’ efforts on the Company’s behalf, will tend to maintainand strengthen their desire to remain with the Company, will be in the interest of the Companyand its Stockholders and will encourage such employees to have a greater personal financialinvestment in the Company through ownership of its Common Stock.**1. Incentives**     Incentives under the ISP may be granted in any one or a combination of (a) Incentive StockOptions (or other statutory stock options); (b) Nonqualified Stock Options; (c) StockAppreciation Rights; (d) Restricted Stock Grants and (e) Performance Shares (collectively“Incentives”). All Incentives shall be subject to the terms and conditions set forth hereinand to such other terms and conditions as may be established by the Compensation and BenefitsCommittee of the Board of Directors (the “Committee”).**2. Eligibility**     Regular full-time and part-time employees of the Company, its subsidiaries, its affiliatesand its joint ventures, including officers, whether or not directors of the Company, andemployees of a joint venture partner or affiliate of the Company who provide services to thejoint venture with such partner or affiliate, shall be eligible to participate in the ISP(“Eligible Employees”) if designated by the Committee. Directors of the Company who are notregular employees are not eligible to participate in the ISP.**3. Administration**     The ISP shall be administered by the Committee. The Committee shall be responsible for theadministration of the ISP including, without limitation, determining which Eligible Employeesreceive Incentives, what kind of Incentives are made under the ISP and for what number ofshares, and the other terms and conditions of such Incentives. Determinations by the Committeeunder the ISP including, without limitation, determinations of the Eligible Employees, the form,amount and timing of Incentives, the terms and provisions of Incentives and the agreementsevidencing Incentives, need not be uniform and may be made selectively among Eligible Employeeswho receive, or are eligible to receive, Incentives hereunder, whether or not such EligibleEmployees are similarly situated.     The Committee shall have the responsibility of construing and interpreting the ISP and ofestablishing and amending such rules and regulations as it may deem necessary or desirable forthe proper administration of the ISP. Any decision or action taken or to be taken by theCommittee, arising out of or in connection with the construction, administration, interpretationand effect of the ISP and of its rules and regulations, shall, to the maximum extent permittedby applicable law, be within its absolute discretion (except as otherwise specifically providedherein) and shall be conclusive and binding upon the Company, all Eligible Employees and anyperson claiming under or through any Eligible Employee.     The Committee may delegate some or all of its power and authority hereunder to the ChiefExecutive Officer or other senior member of management as the Committee deems appropriate;provided, however, that the Committee may not delegate its authority with regard to any matteror action affecting an officer subject to Section 16 of the Securities Exchange Act of 1934.     For the purpose of this section and all subsequent sections, the ISP shall be deemed toinclude this plan and any comparable sub-plans established by subsidiaries which, in theaggregate, shall constitute one plan governed by the terms set forth herein.
 

 
**4. Shares Available for Incentives**     (a) **Shares Subject to Issuance or Transfer.**Subject to adjustment as provided in Section4(c) hereof, there is hereby reserved for issuance under the ISP 95 million shares of CommonStock. The shares available for granting awards shall be increased by the number of shares as towhich options or other benefits granted under the ISP have lapsed, expired, terminated or beencanceled. In addition, any shares reserved for issuance under the Company’s 1996 Incentive StockPlan and 1991 Incentive Stock Plan (“Prior Plans”) in excess of the number of shares as towhich options or other benefits have been awarded thereunder, plus any such shares as to whichoptions or other benefits granted under the Prior Plans may lapse, expire, terminate or becanceled, shall also be reserved and available for issuance or reissuance under the ISP. Sharesunder this ISP may be delivered by the Company from its authorized but unissued shares of CommonStock or from Common Stock held in the Treasury.     (b) **Limit on an Individual’s Incentives.**In any given year, no Eligible Employee mayreceive Incentives covering more than three (3) million shares of the Company’s Common Stock(such number of shares shall be adjusted in accordance with Section 4(c)).     (c) **Adjustment of Shares.**In the event of a reorganization, recapitalization, stocksplit, stock dividend, extraordinary cash dividend, combination of shares, merger,consolidation, rights offering, spin off, split off, split up or other similar change in thecapital structure of the Company, the Committee shall make equitable adjustments to (i) thenumber and kind of shares authorized for issuance under the ISP, (ii) the number and kind ofshares subject to outstanding Incentives, (iii) the option price of Stock Options and (iv) thegrant value of Stock Appreciation Rights. Any such determination shall be final, binding andconclusive on all parties.**5. Stock Options**     The Committee may grant options qualifying as Incentive Stock Options under the InternalRevenue Code of 1986, as amended, or any successor code thereto (the “Code”), other statutoryoptions under the Code and Nonqualified Options (collectively “Stock Options”). Such StockOptions shall be subject to the following terms and conditions and such other terms andconditions as the Committee may prescribe:     (a) **Option Price.**The option price per share with respect to each Stock Option shallbe determined by the Committee, but shall not be less than 100% of the fair market value ofthe Common Stock on the date the Stock Option is granted, as determined by the Committee.     (b) **Period of Option.**The period of each Stock Option shall be fixed by theCommittee, but shall not exceed ten (10) years.     (c) **Payment.**No shares shall be issued until full payment of the option price hasbeen made. The option prices may be paid in cash or, if the Committee determines, in sharesof Common Stock or a combination of cash and shares. If the Committee approves the use ofshares of Common Stock as a payment method, the Committee shall establish such conditions asit deems appropriate for the use of Common Stock to exercise a stock option. Stock optionsawarded under the ISP shall be exercised through the Company’s broker-assisted stock optionexercise program, provided such program is available at the time of the option exercise, orby such other means as the Committee may determine from time to time. The Committee mayestablish rules and procedures to permit an optionholder to defer recognition of gain uponthe exercise of a stock option.     (d) **Exercise of Option.**The Committee shall determine how and when shares covered bya Stock Option may be purchased. The Committee may establish waiting periods, the dates onwhich options become exercisable or “vested” and exercise periods, provided that in noevent (including those specified
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in paragraphs (e), (f) and (g) of this section) shall any Stock Option be exercisable afterits specified expiration period.     (e) **Termination of Employment.**Upon the termination of a Stock Option grantee’semployment (for any reason other than retirement, death or termination for deliberate,willful or gross misconduct), Stock Option privileges shall be limited to the shares whichwere immediately exercisable at the date of such termination. The Committee, however, in itsdiscretion, may provide that any Stock Options outstanding but not yet exercisable upon thetermination of a Stock Option grantee’s employment may become exercisable in accordance witha schedule as may be determined by the Committee. Such Stock Option privileges shall expireunless exercised or surrendered under a Stock Appreciation Right within such period of timeafter the date of termination of employment as may be established by the Committee, but inno event later than the expiration date of the Stock Option.     (f) **Retirement.**Upon retirement of a Stock Option grantee, Stock Option privilegesshall apply to those shares immediately exercisable at the date of retirement. TheCommittee, however, in its discretion, may provide that any Stock Options outstanding butnot yet exercisable upon the retirement of a Stock Option grantee may become exercisable inaccordance with a schedule as may be determined by the Committee. Stock Option privilegesshall expire unless exercised within such period of time as may be established by theCommittee, but in no event later than the expiration date of the Stock Option.     (g) **Death.**Upon the death of a Stock Option grantee, Stock Option privileges shallapply to those shares which were immediately exercisable at the time of death. TheCommittee, however, in its discretion, may provide that any Stock Options outstanding butnot yet exercisable upon the death of a Stock Option grantee may become exercisable inaccordance with a schedule as may be determined by the Committee. Such privileges shallexpire unless exercised by legal representative(s) within a period of time as determined bythe Committee, but in no event later than the expiration date of the Stock Option.     (h) **Termination Due to Misconduct**. If a Stock Option grantee’s employment isterminated for deliberate, willful or gross misconduct, as determined by the Company, allrights under the Stock Option shall expire upon receipt of the notice of such termination.     (i) **Limits on Incentive Stock Options.**Except as may otherwise be permitted by theCode, the Committee shall not grant to an Eligible Employee Incentive Stock Options that, inthe aggregate, are first exercisable during any one calendar year to the extent that theaggregate fair market value of the Common Stock, at the time the Incentive Stock Options aregranted, exceeds $100,000, or such other amount as the Internal Revenue Service may decidefrom time to time.**6. Stock Appreciation Rights**     The Committee may, in its discretion, grant a right to receive the appreciation in the fairmarket value of shares of Common Stock (“Stock Appreciation Right”) either singly or incombination with an underlying Stock Option granted hereunder or under the Prior Plans. SuchStock Appreciation Rights shall be subject to the following terms and conditions and such otherterms and conditions as the Committee may prescribe:     (a) **Time and Period of Grant.**If a Stock Appreciation Right is granted with respectto an underlying Stock Option, it may be granted at the time of the Stock Option grant or atany time thereafter but prior to the expiration of the Stock Option grant. If a StockAppreciation Right is granted with respect to an underlying Stock Option, at the time theStock Appreciation Right is granted the Committee may limit the exercise period for suchStock Appreciation Right, before and after which period no Stock Appreciation Right shallattach to the underlying Stock Option. In no event shall the exercise period for a StockAppreciation Right granted with respect to an underlying Stock Option exceed the exerciseperiod
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for such Stock Option. If a Stock Appreciation Right is granted without an underlying StockOption, the period for exercise of the Stock Appreciation Right shall be set by theCommittee.     (b) **Value of Stock Appreciation Right.**If a Stock Appreciation Right is granted withrespect to an underlying Stock Option, the grantee will be entitled to surrender the StockOption which is then exercisable and receive in exchange therefor an amount equal to theexcess of the fair market value of the Common Stock on the date the election to surrender isreceived by the Company over the Stock Option price multiplied by the number of sharescovered by the Stock Option which is surrendered. If a Stock Appreciation Right is grantedwithout an underlying Stock Option, the grantee will receive upon exercise of the StockAppreciation Right an amount equal to the excess of the fair market value of the CommonStock on the date the election to surrender such Stock Appreciation Right is received by theCompany over the fair market value of the Common Stock on the date of grant multiplied bythe number of shares covered by the grant of the Stock Appreciation Right.     (c) **Payment of Stock Appreciation Right.**Payment of a Stock Appreciation Right shallbe in the form of shares of Common Stock, cash or any combination of shares and cash. Theform of payment upon exercise of such a right shall be determined by the Committee either atthe time of grant of the Stock Appreciation Right or at the time of exercise of the StockAppreciation Right.**7. Performance Share Awards**     The Committee may grant awards under which payment may be made in shares of Common Stock,cash or any combination of shares and cash if the performance of the Company or any subsidiary,division, affiliate or joint venture of the Company selected by the Committee during the AwardPeriod meets certain goals established by the Committee (“Performance Share Awards”). SuchPerformance Share Awards shall be subject to the following terms and conditions and such otherterms and conditions as the Committee may prescribe:     (a) **Award Period and Performance Goals.**The Committee shall determine and include ina Performance Share Award grant the period of time for which a Performance Share Award ismade (“Award Period”). The Committee shall also establish performance objectives(“Performance Goals”) to be met by the Company, subsidiary, division or joint ventureduring the Award Period as a condition to payment of the Performance Share Award. ThePerformance Goals may include earnings per share, return on stockholders’ equity, return onassets, net income or any other financial or other measurement established by the Committee.The Performance Goals may include minimum and optimum objectives or a single set ofobjectives.     (b) **Payment of Performance Share Awards.**The Committee shall establish the method ofcalculating the amount of payment to be made under a Performance Share Award if thePerformance Goals are met, including the fixing of a maximum payment. The Performance ShareAward shall be expressed in terms of shares of Common Stock and referred to as “PerformanceShares.” After the completion of an Award Period, the performance of the Company,subsidiary, division or joint venture shall be measured against the Performance Goals, andthe Committee shall determine whether all, none or any portion of a Performance Share Awardshall be paid. The Committee, in its discretion, may elect to make payment in shares ofCommon Stock, cash or a combination of shares and cash. Any cash payment shall be based onthe fair market value of Performance Shares on, or as soon as practicable prior to, the dateof payment.     (c) **Revision of Performance Goals.**At any time prior to the end of an Award Period,the Committee may revise the Performance Goals and the computation of payment if unforeseenevents occur which have a substantial effect on the performance of the Company, subsidiary,division or joint
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venture and which, in the judgment of the Committee, make the application of the PerformanceGoals unfair unless a revision is made.     (d) **Requirement of Employment.**A grantee of a Performance Share Award must remain inthe employ of the Company until the completion of the Award Period in order to be entitledto payment under the Performance Share Award; provided that the Committee may, in itsdiscretion, provide for a full or partial payment where such an exception is deemedequitable.     (e) **Dividends.**The Committee may, in its discretion, at the time of the granting of aPerformance Share Award, provide that any dividends declared on the Common Stock during theAward Period, and which would have been paid with respect to Performance Shares had theybeen owned by a grantee, be (i) paid to the grantee, or (ii) accumulated for the benefit ofthe grantee and used to increase the number of Performance Shares of the grantee.     (f) **Limit on Performance Share Awards.**Incentives granted as Performance Share Awardsunder this section and Restricted Stock Grants under Section 8 shall not exceed, in theaggregate, six (6) million shares of Common Stock (such number of shares shall be adjustedin accordance with Section 4(c)).**8. Restricted Stock Grants**     The Committee may award shares of Common Stock to a grantee, which shares shall be subjectto the following terms and conditions and such other terms and conditions as the Committee mayprescribe (“Restricted Stock Grant”):     (a) **Requirement of Employment.**A grantee of a Restricted Stock Grant must remain inthe employment of the Company during a period designated by the Committee (“RestrictionPeriod”) in order to retain the shares under the Restricted Stock Grant. If the granteeleaves the employment of the Company prior to the end of the Restriction Period, theRestricted Stock Grant shall terminate and the shares of Common Stock shall be returnedimmediately to the Company 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 theRestricted Stock Grant at different times during the Restriction Period. The Committee may,in its discretion, also provide for such complete or partial exceptions to the employmentrestriction as it deems equitable.     (b) **Restrictions on Transfer and Legend on Stock Certificates.**During the RestrictionPeriod, the grantee may not sell, assign, transfer, pledge or otherwise dispose of theshares of Common Stock. Each certificate for shares of Common Stock issued hereunder shallcontain a legend giving appropriate notice of the restrictions in the grant.     (c) **Escrow Agreement.**The Committee may require the grantee to enter into an escrowagreement providing that the certificates representing the Restricted Stock Grant willremain in the physical custody of an escrow holder until all restrictions are removed orexpire.     (d) **Lapse of Restrictions.**All restrictions imposed under the Restricted Stock Grantshall lapse upon the expiration of the Restriction Period if the conditions as to employmentset forth above have been met. The grantee shall then be entitled to have the legend removedfrom the certificates.     (e) **Dividends.**The Committee shall, in its discretion, at the time of the RestrictedStock Grant, provide that any dividends declared on the Common Stock during the RestrictionPeriod shall either be (i) paid to the grantee, or (ii) accumulated for the benefit of thegrantee and paid to the grantee only after the expiration of the Restriction Period.
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     (f) **Limit on Restricted Stock Grant.**Incentives granted as Restricted Stock Grantsunder this section and Performance Share Awards under Section 7 shall not exceed, in theaggregate, six (6) million shares of Common Stock (such number of shares shall be adjustedin accordance with Section 4(c)).**9. Transferability**     Each Incentive Stock Option granted under the ISP shall not be transferable other than bywill or the laws of descent and distribution; each other Incentive granted under the ISP willnot 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 oras determined by the Committee in accordance with regulations promulgated under the SecuritiesExchange Act of 1934, or any other applicable law or regulation.**10. Discontinuance or Amendment of the Plan**     The Board of Directors may discontinue the ISP at any time and may from time to time amendor revise the terms of the ISP as permitted by applicable statutes, except that it may notrevoke or alter, in a manner unfavorable to the grantees of any Incentives hereunder, anyIncentives then outstanding, nor may the Board amend the ISP without stockholder approval wherethe absence of such approval would cause the Plan to fail to comply with Rule 16b-3 under theSecurities Exchange Act of 1934, or any other requirement of applicable law or regulation.Unless approved by the Company’s stockholders, no adjustments or reduction of the exercise priceof any outstanding Incentives shall be made by cancellation of outstanding Incentives and thesubsequent regranting of Incentives at a lower price to the same individual. No Incentive shallbe granted under the ISP after December 31, 2003, but Incentives granted theretofore may extendbeyond that date.**11. No Right of Employment or Participation**     The ISP and the Incentives granted hereunder shall not confer upon any Eligible Employeethe right to continued employment with the Company, its subsidiaries, its affiliates or itsjoint ventures or affect in any way the right of such entities to terminate the employment of anEligible Employee at any time and for any reason. No individual shall have a right to be grantedan Incentive, or having been granted an Incentive, to receive any future Incentives.**12. No Limitation on Compensation**     Nothing in the ISP shall be construed to limit the right of the Company to establish otherplans or to pay compensation to its employees, in cash or property, in a manner which is notexpressly authorized under the ISP.**13. No Impact on Benefits**     Except as may otherwise be specifically stated under any employee benefit plan, policy orprogram, no amount payable in respect of any Incentive shall be treated as compensation forpurposes of calculating an employee’s right under any such plan, policy or program.**14. No Constraint on Corporate Action**     Nothing in the ISP shall be construed (i) to limit, impair or otherwise affect theCompany’s right or power to make adjustments, reclassifications, reorganizations or changes ofits capital or business structure, or to merge or consolidate, or dissolve, liquidate, sell ortransfer all or any part of its business or assets, or (ii) except as provided in Section 10, tolimit the right or power of the Company or any subsidiary to take any action which such entitydeems to be necessary or appropriate.
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**15. Withholding Taxes**     The Company shall be entitled to deduct from any payment under the ISP, regardless of theform of such payment, the amount of all applicable income and employment taxes required by lawto be withheld with respect to such payment or may require the Eligible Employee to pay to itsuch tax prior to and as a condition of the making of such payment. In accordance with anyapplicable administrative guidelines it establishes, the Committee may allow an EligibleEmployee to pay the amount of taxes required by law to be withheld from an Incentive bywithholding from any payment of Common Stock due as a result of such Incentive, or by permittingthe Eligible Employee to deliver to the Company, shares of Common Stock having a fair marketvalue, as determined by the Committee, equal to the amount of such required withholding taxes.**16. Governing Law**     The ISP, and all agreements hereunder, shall be construed in accordance with and governedby the laws of the State of New Jersey.**Merck Change in Control**     (a) **Options.**     1. Vesting of Options Other Than Key R&D Options. Upon the occurrence of a Change inControl, 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.     2. Vesting of Key R&D Options.     (i) Subject to (a)(2)(ii) of this Schedule, upon the occurrence of a Change in Control,each Key R&D Option shall continue to be subject to the performance-based vesting scheduleapplicable thereto immediately prior to the Change in Control.     (ii) Notwithstanding (a)(2)(i) of this Schedule, if the Stock Options do not continue to beoutstanding following the Change in Control or are not exchanged for or converted into optionsto purchase securities of a successor entity (“Successor Options”), then, upon the occurrence ofa Change in Control, all or a portion of each Key R&D Option shall immediately vest and becomeexercisable in the following percentages: (A) if such Key R&D Option’s first milestone has notbeen reached before the date of the Change in Control, 14% of the then-unvested portion of theKey R&D Option shall vest and become exercisable and the remainder shall be forfeited; (B) ifonly such Key R&D Option’s first milestone has been reached before the date of the Change inControl, 42% of the then-unvested portion of the Key R&D Option shall vest and becomeexercisable and the remainder shall be forfeited; and (C) if such Key R&D Option’s first andsecond milestones have been reached before the date of the Change in Control, 100% of thethen-unvested portion of the Key R&D Option shall vest and become exercisable.     3. Post-Termination Exercise Period. If Stock Options continue to be outstandingfollowing the Change in Control or are exchanged for or converted into Successor Options, thenthe portion of such Stock Options or such Successor Options, as applicable, that is vested andexercisable immediately following the termination of employment of the holder thereof after theChange in Control shall remain exercisable following such termination for five years from thedate 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 termsare applied to awards granted under the Plans), then those provisions of the Plan that areapplicable to a termination by reason of gross misconduct, death or retirement, if any, shallapply to such termination. If the effect of vesting pursuant to this Section (a) would cause aStock Option or
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Successor Stock Option to terminate earlier than if such accelerated vesting had not occurred,then the term of such Stock Option shall not expire earlier than if such accelerated vesting hadnot occurred.     4. Cashout of Stock Options. If the Stock Options do not continue to be outstandingfollowing 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 aspracticable following the Change in Control, for each share of Common Stock subject to a vestedand exercisable option, an amount of cash determined by the Committee prior to the Change inControl but in no event less than the excess of the Change in Control Price over the exerciseprice thereof (subject to any existing deferral elections then in effect). If the considerationto be paid in a Change in Control is not entirely shares of common stock of an acquiring orresulting corporation, then the Committee may, prior to the Change in Control, provide for thecancellation of outstanding Stock Options at the time of the Change in Control, in whole or inpart, for cash pursuant to this provision or may provide for the exchange or conversion ofoutstanding Stock Options at the time of the Change in Control, in whole or in part, and, inconnection with any such provision, may (but shall not be obligated to) permit holders of StockOptions to make such elections related thereto as it determines are appropriate.     5. Incentive Stock Options Not Amended. This Section does not apply to any incentivestock option within the meaning of Section 422 of the Internal Revenue Code.     (b) **Restricted Stock Units and Performance Share Units.**     1. Vesting of Restricted Stock Units. Upon the occurrence of a Change in Control, eachunvested restricted stock unit award which is outstanding immediately prior to the Change inControl under the Plan shall immediately become fully vested.     2. Vesting of Performance Share Units. Upon the occurrence of a Change in Control, eachunvested performance share unit award which is outstanding immediately prior to the Change inControl under the Plan shall immediately become vested in an amount equal to the PSU Pro RataAmount.     3. Settlement of Restricted Stock Units and Performance Share Units.     (i) If the Common Stock continues to be widely held and freely tradable following theChange in Control or is exchanged for or converted into securities of a successor entity thatare widely held and freely tradable, then the restricted stock units and the vested performanceshare units shall be paid in shares of Common Stock or such other securities as soon aspracticable after the date of the Change in Control (subject to any existing deferral electionsthen in effect).     (ii) If the Common Stock does not continue to be widely held and freely tradable followingthe Change in Control and is not exchanged for or converted into securities of a successorentity that are widely held and freely tradable, then the restricted stock units and the vestedperformance share units shall be paid in cash as soon as practicable after the date of theChange 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 ProtectionPeriod, the material terms of the Plan shall not be modified in any manner that is materiallyadverse to the Qualifying Participants (it being understood that this Section (c) of thisSchedule shall not require that any specific type or levels of equity awards be granted toQualifying Participants following the Change in Control).     2. During the Protection Period, the Plan may not be amended or modified to reduce oreliminate the protections set forth in Section (c)(1) of this Schedule and may not beterminated.
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     3. The Company shall pay all legal fees and related expenses (including the costs ofexperts, evidence and counsel) reasonably and in good faith incurred by a Qualifying Participantif the Qualifying Participant prevails on his or her claim for relief in an action (x) by theQualifying Participant claiming that the provisions of Section (c)(1) or (c)(2) of this Schedulehave been violated (but, for avoidance of doubt, excluding claims for Plan benefits in theordinary course) and (y) if applicable, by the Company or the Qualifying Participant’s employerto enforce post-termination covenants against the Qualifying Participant.     4. This section does not apply to any incentive stock option within the meaning of Section422 of the Internal Revenue Code.     5. Anything in the Plan as amended by this Schedule notwithstanding, the Company reservesthe right to make such further changes as may be required if and to the extent required to avoidadverse consequences under the American Jobs Creation Act of 2004, as amended.     (d) **Definitions.**     For purposes of this Schedule, the following terms shall have the following meanings:     1. “Change in Control” shall have the meaning set forth in the Company’s Change in ControlSeparation Benefits Plan; provided, however, that, as to any award under the Plan that consistsof deferred compensation subject to Section 409A of the Code, the definition of “Change inControl” shall be deemed modified to the extent necessary to comply with Section 409A of theCode.     2. “Change in Control Price” shall mean, with respect to a share of Common Stock, thehigher of (A) the highest reported sales price, regular way, of such share in any transactionreported on the New York Stock Exchange Composite Tape or other national exchange on which suchshares are listed or on the NASDAQ National Market during the 10-day period prior to andincluding the date of a Change in Control and (B) if the Change in Control is the result of atender or exchange offer, merger, or other, similar corporate transaction, the highest price persuch share paid in such tender or exchange offer, merger or other, similar corporatetransaction; provided that, to the extent all or part of the consideration paid in any suchtransaction consists of securities or other non-cash consideration, the value of such securitiesor other non-cash consideration shall be determined by the Committee.     3. “Key R&D Options” shall mean those performance-based options granted to employees underthe Key Research and Development Program described in the applicable Schedule to the Rules andRegulations for the Plan, if any.     4. “Protection Period” shall mean the period beginning on the date of the Change inControl and ending on the second anniversary of the date of the Change in Control.     5. “PSU Pro Rata Amount” shall mean for each Performance Share Unit award, the amountdetermined by multiplying (x) and (y), where (x) is the number of Target Shares subject to thePerformance Share Unit award times the Assumed Performance Percentage and (y) is a fraction, thenumerator of which is the number of whole and partial calendar months elapsed during theapplicable performance period (counting any partial month as a whole month for this purpose) andthe denominator of which is the total number of months in the applicable performance period.The Assumed Performance Percentage shall be determined by (1) averaging the ranks during theAward Period as follows: (A) as to any completed performance year as of the Change in Control,the actual rank (except that, if fewer than 90 days have elapsed since the completion of suchperformance year, the Target Rank shall be used), and (B) as to any performance year that isincomplete or has not yet begun as of the Change in Control, the Target Rank, (2) rounding theaverage rank calculated pursuant to the foregoing clause (1) to the nearest whole number usingordinary
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numerical rounding, and (3) using the Final Award Percentage associated with the numberdetermined in the foregoing clause (2). The Target Rank is the rank associated with 100% on thechart of Final Award Percentages.     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.     (e) **Application.**          This Schedule shall apply to Stock Options, restricted stock unit awards and performance shareunit awards under the Plans granted prior to November 24, 2004.
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