Document:

EX-10.D.III

 

Exhibit 10(d)(iii)

2006 STOCK INCENTIVE PLAN

(Amended and Restated as of May 19, 2006)

			
	I.	 	ESTABLISHMENT AND PURPOSE

1.1 Purpose. The purpose of this Schering-Plough Corporation 2006 Stock Incentive Plan (the
“Plan”) is to enable Schering-Plough Corporation to achieve superior financial performance, as
reflected in the performance of its Shares and other key financial or operating indicators by (i)
providing incentives and rewards to certain Employees who are in a position to contribute
materially to the success and long-term objectives of Schering-Plough, (ii) aiding in the
recruitment and retention of Employees of outstanding ability and (iii) providing Employees an
opportunity to acquire or expand equity interests in Schering-Plough, thus aligning the interests
of such Employees with those of Schering-Plough’s shareholders. Schering-Plough expects that it
will benefit from the added interest that such Employees will have in the welfare of
Schering-Plough as a result of their ownership or increased ownership of Schering-Plough’s Shares.

1.2 Effective Date; Shareholder Approval. The Plan is effective as of May 19, 2006, subject
to the approval of the Plan by the affirmative vote of the holders of a majority of the Shares
present in person or by proxy and entitled to vote at the 2006 Annual Meeting of Shareholders of
Schering-Plough, or any adjournment of such meeting. Any Awards granted under the Plan prior to the
approval of the Plan by Schering-Plough’s shareholders, as provided herein, shall be contingent on
such approval; if such approval is not obtained, the Plan shall have no effect, and any Awards
granted under the Plan shall be rescinded.

			
	II.	 	DEFINITIONS

     Capitalized terms used in the Plan have the following meanings, unless another definition is
indicated clearly by particular usage and context.

     “Acquired Company” means any business, corporation or other entity acquired by Schering-Plough
or its Affiliates or Subsidiaries.

     “Acquired Grantee” means the grantee of a stock-based award of an Acquired Company.

     “Affiliate” means a corporation or other entity controlled by, controlling or under common
control with Schering-Plough.

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     “Award” means any form of incentive or performance award granted under the Plan, whether
singly or in combination, to a Participant by the Committee pursuant to such terms, conditions,
restrictions and/or limitations (if any) as the Committee may establish
and set forth in the applicable Award Certificate. Awards granted under the Plan may consist of:

          (a) “Stock Options” awarded pursuant to Section 4.4;

          (b) “Restricted Stock” awarded pursuant to Section 4.5;

          (c) “Deferred Stock Units” awarded pursuant to Section 4.6;

          (d) “Other Stock-Based Awards” awarded pursuant to Section 4.7;

          (e) “Performance Awards”, including “Qualified Performance Awards,” awarded
pursuant to Section 4.8; and

          (f) “Substitute Awards” awarded pursuant to Section 4.9.

     “Award Certificate” means the document issued, either in writing or by electronic means, by
Schering-Plough to a Participant evidencing the grant of an Award and setting forth the specific
terms, conditions, restrictions and limitations applicable to the Award.

     “Beneficiary” means the person or persons designated by the Participant in accordance with
Section 7.6 to acquire the Participant’s right in the Plan in the event of the Participant’s death.

     “Board” means the Board of Directors of Schering-Plough.

     “Change in Control” means the happening of any of the following events:

     (a) the acquisition by any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Exchange Act) (a “Person”) of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of securities of Schering-Plough where
such acquisition causes such Person to own more than 50% of either (x) the then outstanding
Shares of Schering-Plough (the “Outstanding Shares”) or (y) the combined voting power of the
then outstanding voting securities of Schering-Plough entitled to vote generally in the election
of directors (the “Outstanding Voting Securities”); provided, however, that for purposes of this
subsection (a) the following acquisitions will not constitute a Change in Control: (i) any
acquisition directly from Schering-Plough, (ii) any acquisition by Schering-Plough, (iii) any
acquisition by any employee benefit plan (or related trust) sponsored or maintained by
Schering-Plough or any corporation controlled by Schering-Plough or (iv) any acquisition by any
corporation pursuant to a transaction which complies with clauses (i), (ii) and (iii) of
subsection (c) below; and provided, further, that if any Person’s beneficial ownership of the
Outstanding Shares or

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Outstanding Voting Securities reaches or exceeds 50% as a result of a prior transaction,
and such Person subsequently acquires beneficial ownership of additional Shares or additional
voting securities of Schering-Plough, such subsequent acquisition will not be treated as an
acquisition that causes such Person to own more than 50% of the Outstanding Shares or
Outstanding Voting Securities;

     (b) during any 12-month period, individuals who, as of the first day of such period,
constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual becoming a director subsequent to
the beginning of such 12-month period whose election, or nomination for election by the
Schering-Plough’s shareholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board will be considered as though such individual were a member
of the Incumbent Board;

     (c) consummation of a reorganization, merger, statutory share exchange or consolidation
or similar corporate transaction involving Schering-Plough, or the acquisition of assets or
stock of another entity by Schering-Plough (each a “Business Combination”), in each case,
unless, following such Business Combination, (i) all or substantially all of the individuals and
entities who were beneficial owners, respectively, of the Outstanding Shares or Outstanding
Voting Securities immediately prior to such Business Combination beneficially own, directly or
indirectly, more than 50% of, respectfully, the then outstanding shares of the common stock and
the combined voting power of the then outstanding voting securities entitled to vote generally
in the election of directors, as the case may be, of the corporation resulting from such
Business Combination (including, without limitation, a corporation which as a result of such
transaction owns Schering-Plough or substantially all of Schering-Plough’s assets either
directly or through one or more subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Business Combination, of the Outstanding Shares and
Outstanding Voting Securities, as the case may be, (ii) no Person (excluding any corporation
resulting from such Business Combination or any employee benefit plan (or related trust) of
Schering-Plough or such corporation resulting from such Business Combination) beneficially owns,
directly or indirectly, more than 50% of, respectfully, the then outstanding shares of common
stock of the corporation resulting from such Business Combination or the combined voting power
of the then outstanding voting securities of such corporation, except to the extent that such
ownership existed prior to the Business Combination and (iii) at least a majority of the members
of the board of directors of the corporation resulting from such Business Combination were
members of the Incumbent Board on the later of (A) the time of the execution of the initial
agreement, (B) the action of the Board providing for such Business Combination or (C) the
beginning of the 12-month period ending on the effective date of the Business Combination;

     (d) any one Person acquires (or has acquired during any 12-month period ending on the
date of the most recent acquisition by such Person) assets of Schering-Plough having a fair
market value equal to or more than 40% of the total gross fair market

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value of all of the assets of Schering-Plough immediately prior to such sale, other than an
acquisition by (i) a Person who was a shareholder of Schering-Plough immediately before the
asset acquisition in exchange for or with respect to such Person’s Shares, (ii) an entity whose
total or voting power immediately after the transfer is at least 50% owned, directly or
indirectly, by Schering-Plough, (iii) a person or group that, immediately after the transfer,
directly or indirectly owns at least 50% of the total value or voting power of the outstanding
stock of Schering-Plough or (iv) an entity whose total value or voting power immediately after
the transfer is at least 50% owned, directly or indirectly, by a person described in clause
(iii) above; or

     (e) the complete liquidation of Schering-Plough.

     The definition of Change in Control for purposes of the Plan is intended to conform to the
description of “Change in Control Events” in Treas. Prop. Reg. 1.409A-3(g)(5), or in subsequent IRS
guidance describing what constitutes a change in control event for purposes of Code section 409A.
Accordingly, no Change in Control will be deemed to occur with respect to a transaction or event
described in paragraphs (a) through (e) above unless the transaction or event would constitute a
“Change in Control Event” as described in Treas. Prop. Reg. 1.409A-3(g)(5), or in subsequent IRS
guidance under Code section 409A.

     “Change in Control Price” means the higher of (a) the highest reported sales price of a Share
in any transaction reported on the New York Stock Exchange Composite Tape or other national
exchange on which Shares may then be listed during the 60-day period prior to and including the
effective date of a Change in Control or (b) if the Change in Control is the result of a tender or
exchange offer or a business combination, the highest price per Share paid in such tender or
exchange offer or business combination; provided, however, that in the case of Stock Options, the
Change in Control Price shall be in all cases the Fair Market Value of a Share on the date such
Stock Option is exercised or cancelled. To the extent that the consideration paid in any
transaction described in clause (b) above consists all or in part of securities or other non-cash
consideration, the value of such securities or other non-cash consideration shall be determined in
the sole discretion of the Committee.

     “Code” means the Internal Revenue Code of 1986, as amended.

     “Committee” means the Compensation Committee of the Board of Directors, or such other
successor committee or subcommittee of the Board formed to act on performance-based compensation
for Covered Employees, which is comprised solely of two or more persons who are outside directors
within the meaning of Section 162(m)(4)(C)(i) of the Code and the applicable regulations and
non-employee directors within the meaning of Rule 16b-3(b)(3) under the Exchange Act.

     “Controlled Group Member” means Schering-Plough and each other company that is required to be
aggregated with Schering-Plough under Code Sections 414(b), (c) and (m).

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     “Corporation” means Schering-Plough Corporation.

     “Covered Employee” means an Employee who is, or who the Committee determines may be, a
“covered employee” within the meaning of Section 162(m)(3) of the Code in the fiscal year in which
Schering-Plough would expect to be able to claim a tax deduction with respect to a Performance
Award.

     “Deferred Stock Account” means a hypothetical bookkeeping account established and maintained
by Schering-Plough on behalf of a Participant pursuant to Section 4.6(a) to track Deferred Stock
Units awarded to the Participant pending the distribution of Shares in settlement of such units.

     “Deferred Stock Unit” means the Award of an unfunded contractual right granted under Section
4.6 to receive one Share in the future, subject to any restrictions, as the Committee, in its
discretion, may determine.

     “Disabled” or “Disability” means an inability to engage in any substantial gainful activity by
reason of any medically determinable physical or mental impairment that can be expected to result
in death or can be expected to last for a continuous period of not less than 12 months.

     “Dividend Equivalent” means an amount equal to the cash dividend or the Fair Market Value of
the stock dividend that would be paid on each Share underlying an Award if the Share were duly
issued and outstanding on the dividend record date.

     “Effective Date” means May 19, 2006.

     “Employee” means any individual who performs services as a common law employee for
Schering-Plough or an Affiliate or Subsidiary.

     “Exchange Act” means the United States Securities Exchange Act of 1934, as amended.

     “Exercise Price” means the price per Share, as fixed by the Committee, at which Shares may be
purchased under a Stock Option.

     “Fair Market Value” of a Share means either:

     (a) The closing sales price of a Share as reported on the New York Stock Exchange on the
applicable date,

     (b) If no sales of Shares are reported for such date, the mean between the bid and asked
price of a Share on such Exchange at the close of the market on such date, or

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     (c) In the event that the method for determining fair market value described in clauses (a)
or (b) is not practicable, the fair market value of a Share determined in accordance with any
other reasonable method approved by the Committee in its discretion.

     “GAAP” means United States generally accepted accounting principles.

     “Incentive Stock Option” means a Stock Option granted under Section 4.4 of the Plan that meets
the requirements of Section 422 of the Code and any regulations or rules promulgated thereunder and
is designated in the Award Certificate to be an Incentive Stock Option.

     “Involuntary Termination” means a Termination of Employment initiated by Schering-Plough or an
Affiliate or Subsidiary other than a Termination for Cause or a Termination Due to Business
Divestiture.

     “Nonqualified Stock Option” means any Stock Option granted under Section 4.4 of the Plan that
is not an Incentive Stock Option.

     “Other Stock-Based Award” means an Award (other than a Stock Option, Restricted Stock or
Deferred Stock Unit) granted under Section 4.7 of the Plan that consists of, or is denominated in,
payable in, valued in whole or in part by reference to, or otherwise based on or related to,
Shares.

     “Participant” means an Employee or Acquired Grantee who has been granted an Award under the
Plan.

     “Performance Award” means an Award granted under Section 4.8 of the Plan that is granted,
vested or paid solely on account of the attainment of a specified performance target in relation to
one or more Performance Measures.

     “Performance Cycle” means a period typically measured by Schering-Plough’s fiscal year or
years over which the level of attainment of one or more Performance Measures shall be assessed;
provided, however, that the Committee, in its discretion, may determine to designate a Performance
Cycle that is less than a full fiscal year.

     “Performance Measure” means, with respect to any Performance Award, the business criteria
selected by the Committee to measure the level of performance of Schering-Plough during a
Performance Cycle. The Committee may select as the Performance Measure for a Performance Cycle any
one or combination of the following corporate measures, as interpreted by the Committee:

          (a) Net operating profit after taxes;

          (b) Operating profit before taxes;

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          (c) Return on equity;

          (d) Return on assets or net assets;

          (e) Total shareholder return;

          (f) Total shareholder return (as compared with a peer group of Schering-Plough);

          (g) Earnings before income taxes;

          (h) Earnings per Share;

          (i) Net income;

          (j) Free cash flow;

          (k) Free cash flow per Share;

          (l) Revenue (or any component thereof);

          (m) Revenue growth;

          (n) Share performance;

          (o) Relative Share performance;

          (p) Economic value added; and/or

          (q) Return on capital.

     “Plan” means the Schering-Plough Corporation 2006 Stock Incentive Plan, as set forth in this
document and as may be amended from time to time.

     “Prior Plan” means the Schering-Plough Corporation 2002 Stock Incentive Plan.

     “Qualified Performance Award” means a Performance Award that is intended by the Committee to
meet the requirements for “qualified performance-based compensation” within the meaning of Code
Section 162(m) and Treasury Regulation Section 1.162-27(e).

     “Qualified Performance Award Determination Period” means the period within which Committee
determinations regarding Performance Measures, targets and payout formulas in connection with a
Qualified Performance Award must be made. The Qualified Performance Award Determination Period is
the period beginning on the first day of a Performance Cycle and ending no later than 90 days after
commencement of the Performance Cycle; provided, however, that in the case of a Performance Cycle
that is

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less than 12 months in duration, the Qualified Performance Award Determination Period shall
end no later than the date on which 25% of the Performance Cycle has elapsed.

     “Reporting Person” means an Employee who is subject to the reporting requirements of Section
16(a) of the Exchange Act.

     “Restricted Stock” means Shares issued pursuant to Section 4.5, which are subject to such
restrictions as the Committee, in its discretion, shall impose.

     “Restriction Period” means the period of time during which the Restricted Stock Awards will
remain subject to restrictions imposed by the Committee and set forth in the Award Certificate.

     “Retirement” means, for purposes of a particular Award, an Employee’s “retirement” as defined
in the Committee’s grant guidelines in effect as of the date the Award is granted to the Employee
or, if no such grant guidelines are in effect as of the date of grant (or if such guidelines are in
effect, but do not define “retirement”), an Employee’s Termination of Employment on or after the
earliest date the Employee is eligible to retire under Schering-Plough’s tax-qualified retirement
plans, or in the case of a non-U.S. Employee, under the Worldwide Retirement Plan.

     “Section 409A Specified Employee” means, with respect to Terminations of Employment that occur
between April 1st of a calendar year (beginning with the 2006 calendar year) and the following
March 31st, any Employee who meets the requirements of paragraphs (a), (b) or (c) below at any time
during the 12-month period ending on December 31st of the calendar year immediately preceding such
April 1st.

     (a) An officer of Schering-Plough or any other Controlled Group Member having annual
compensation greater than $135,000 in 2005 or $140,000 in 2006 (and as adjusted under Section
416(i)(1) of the Code for years after 2006). Notwithstanding the foregoing, an Employee will be
treated as an officer for purposes of the Plan only if such Employee is one of the top 50
highest paid employees of Schering-Plough and all other Controlled Group Members who exceed the
applicable annual compensation threshold described herein at any time during a calendar year.

     (b) A “5% owner” of Schering-Plough. A “5% owner” means any person who owns (or is
considered as owning within the meaning of Code Section 318) more than 5% of the outstanding
stock of Schering-Plough or stock possessing more than 5% of the total combined voting power of
all stock of Schering-Plough. In determining percentage ownership hereunder, Controlled Group
Members shall be treated as separate employers.

     (c) A “1% owner” of Schering-Plough having an annual compensation from Schering-Plough of
more than $150,000. “1% owner” means any person who owns (or is considered as owning within the
meaning of Code Section 318) more than 1% of the outstanding stock of Schering-Plough or stock
possessing more than 1% of the total

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combined voting power of all stock of Schering-Plough. In determining percentage ownership,
Controlled Group Members shall be treated as separate employers. However, in determining whether
an individual has annual compensation of more than $150,000, compensation from each Controlled
Group Member shall be taken into account.

     (d) For purposes of paragraphs (a), (b) and (c) above, “annual compensation” shall mean
the Form W-2 compensation of a Participant for the applicable calendar year.

     “Shares” means shares of common stock, $.50 par value per share, of Schering-Plough.

     “Stock Option” means a right granted under Section 4.4 of the Plan to purchase from
Schering-Plough a stated number of Shares at the Exercise Price. Stock Options awarded under the
Plan shall be in the form of either Incentive Stock Options or Nonqualified Stock Options.

     “Subsidiary” means any corporation, partnership, joint venture or other entity during any
period in which at least a 50% voting or profit interest is owned, directly or indirectly, by
Schering-Plough or any successor to Schering-Plough.

     “Termination Due to Business Divestiture” means a Termination of Employment due to a
transaction or series of related transactions (other than a transaction or series of transactions
that are a part of a Change in Control) that result in a divestiture, sale, transfer, assignment or
other disposition of any division, subsidiary, business unit, product line or group, or any other
asset of Schering-Plough or any of its affiliates.

     “Termination for Cause” shall have the definition prescribed in the current employment
agreement, if any, between Schering-Plough and the relevant Employee or, in the absence of such
definition, shall mean a Termination of Employment initiated by Schering-Plough or an Affiliate or
Subsidiary incident to or connected with a determination that the Employee has engaged in
misappropriation, theft, embezzlement, kick-backs, bribery or similar deliberate, gross or willful
misconduct or dishonest acts or omissions. Termination for Cause shall also include such a
Termination of Employment incident to or in connection with acts or omissions of the Employee that
the Committee reasonably determines to be willfully or wantonly harmful to, or detrimental to the
interests of, Schering-Plough or any of its Affiliates or Subsidiaries, monetarily or otherwise.

     “Termination of Employment” means the date of cessation of an Employee’s employment
relationship with Schering-Plough and any Affiliate or Subsidiary for any reason, with or without
cause, as determined by Schering-Plough. A transfer of an Employee between and among
Schering-Plough, an Affiliate or a Subsidiary shall not be deemed a Termination of Employment for
purposes of the Plan.

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	III.	 	ADMINISTRATION

3.1 The Committee. The Plan shall be administered by the Committee.

3.2 Authority of the Committee. The Committee shall have authority, in its sole and
absolute discretion and consistent with applicable law and regulation, and subject to the terms of
the Plan, to:

     (a) Interpret and administer the Plan and any instrument or agreement relating to the Plan;

     (b) Prescribe the rules and regulations that it deems necessary for the proper operation
and administration of the Plan, and amend or rescind any existing rules or regulations relating
the Plan;

     (c) Select Employees to receive Awards under the Plan;

     (d) Determine the form of an Award, the number of Shares subject to each Award, all the
terms and conditions of an Award, including, without limitation, the conditions on exercise or
vesting, the designation of Stock Options as Incentive Stock Options or Nonqualified Stock
Options, and the circumstances in which an Award may be settled in cash or Shares or may be
cancelled, forfeited or suspended, and the terms of the Award Certificate;

     (e) Determine whether Awards will be granted singly, in combination or in tandem;

     (f) Establish and interpret Performance Measures in connection with Performance Awards,
evaluate the level of performance over a Performance Cycle and, in the case of Qualified
Performance Awards, certify the level of performance attained with respect to Performance
Measures;

     (g) Waive or amend any terms, conditions, restrictions or limitations on an Award, except
that the prohibition on the repricing of Stock Options, as described in Section 4.4(h), and the
limitations on elections to defer payment of Deferred Stock Units, as described in Section
4.6(e), may not be waived;

     (h) Except to the extent that any such action would result in the imposition on a
Participant of an “additional tax” under Section 409A of the Code, accelerate the vesting,
exercise or lapse of restrictions on an Award when such action or actions would be in the best
interest of Schering-Plough;

     (i) Make any adjustments permitted by the Plan (including but not limited to adjustment of
the number of Shares available under the Plan or any Award) and any Award granted under the Plan
as may be appropriate pursuant to Article V;

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     (j) Subject to the requirements of Section 409A of the Code, determine under which
circumstances Awards may be deferred and the extent to which a deferral will be credited with
Dividend Equivalents and interest thereon;

     (k) Determine whether a Nonqualified Stock Option or Restricted Stock Award may be
transferable to family members, a family trust or a family partnership;

     (l) Establish any sub-plans and make any modifications to the Plan that the Committee may
determine to be necessary to implement and administer the Plan in countries outside the United
States;

     (m) Appoint such agents as it shall deem appropriate for proper administration of the Plan;
and

     (n) Take any and all other actions it deems necessary or advisable for the proper operation
or administration of the Plan.

3.3 Committee Determinations. All determinations of the Committee shall be made in its sole
discretion, in the best interest of Schering-Plough, not as a fiduciary, and in keeping with the
objectives of the Plan and need not be uniform as to similarly situated individuals. Committee
determinations shall be made by a majority of its members present at a meeting at which a quorum is
present and shall be final, conclusive and binding on all persons having an interest in the Plan
and any Awards granted under the Plan. Any determination of the Committee that is reduced to
writing and signed by all of the members of the Committee shall be as fully effective as if it had
been made at a meeting duly held.

3.4 Delegation of Authority. The Committee, in its discretion and consistent with
applicable law and regulations, may delegate some or all of its authority and duties under the Plan
to such other individual, individuals or committee as it may deem advisable, under such conditions
and subject to such limitations as the Committee may establish. Notwithstanding the foregoing, only
the Committee shall have authority to grant and administer Awards to Covered Employees and other
Reporting Persons, to establish and certify Performance Measures for Qualified Performance Awards
and to grant Awards to any Employee who is acting as a delegate of the Committee in respect of the
Plan.

3.5 Employment of Advisors. The Committee may employ attorneys, consultants, accountants
and other advisors, and the Committee, Schering-Plough and the officers and directors of
Schering-Plough may rely upon the advice, opinions or valuations of the advisors employed.

3.6 No Liability. No member of the Committee, nor any person acting as a delegate of the
Committee in respect of the Plan, shall be liable for any losses incurred by any person resulting
from any action, interpretation or construction made in good faith with respect to the Plan or any
Award granted under the Plan.

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	IV.	 	AWARDS

4.1 Eligibility. All Employees shall be eligible to receive Awards under the Plan.

4.2 Participation. The Committee, at its sole discretion, shall select from time to time
Participants from those persons eligible under Section 4.1 to receive Awards under the Plan.

4.3 Forms of Award. Awards shall be in the form determined by the Committee, in its
discretion, and shall be evidenced by an Award Certificate. Awards may be granted singly or in
combination or tandem with other Awards.

4.4 Stock Options. The Committee may grant Stock Options under the Plan to those Employees
whom the Committee may from time to time select, in the amounts and pursuant to such other terms
and conditions that the Committee, in its discretion, may determine and set forth in the Award
Certificate, subject to the following provisions.

     (a) Form. Stock Options granted under the Plan may, at the discretion of the
Committee, be in the form of Nonqualified Stock Options, Incentive Stock Options or a
combination of the two, subject to the restrictions set forth in paragraph (g) below with
respect to grants of Incentive Stock Options. The Committee shall designate the form of the
Stock Option at the time of grant and such form shall be specified in the Award Certificate.
Where both a Nonqualified Stock Option and an Incentive Stock Option are granted to an
Employee at the same time, such Awards shall be deemed to have been granted in separate
grants, shall be clearly identified, and in no event will the exercise of one such Award
affect the right to exercise the other Award.

     (b) Amount of Shares. The Committee may grant Stock Options to an Employee in
such amounts as the Committee may determine, subject to the limitations set forth in Section
5.1 of the Plan. The number of Shares subject to a Stock Option shall be set forth in the
Award Certificate.

     (c) Exercise Price. The Exercise Price of Stock Options granted under the Plan
shall be determined by the Committee at the time of grant and set forth in the Award
Certificate. In no event shall the Exercise Price with respect to any Share subject to a Stock
Option be set at a price that is less than the grant date Fair Market Value of a Share.

     (d) Option Term. Except as otherwise provided in paragraph (e)(iv) of this
Section 4.4, all Stock Options granted under the Plan shall lapse no later than the tenth
anniversary of the date of grant.

     (e) Timing of Exercise. Except as the Committee may otherwise determine at the
time of grant, and subject to (1) the Committee’s authority under Section 3.2(g) to waive or
amend any terms, conditions, limitations or restrictions of an Award, (2)

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Section 5.4 relating to Changes in Control and (3) the special forfeiture provisions of
Section 7.2, each Stock Option granted under the Plan shall be exercisable in whole or in
part, subject to the following conditions, limitations and restrictions.

     (i) Vesting. The Committee will determine and set forth in the Award Certificate the
date on which the Stock Options subject to the Award may first be exercised. Unless the
Award Certificate provides otherwise, and except as otherwise provided in this Section
4.4(e) and in Section 5.4 relating to Changes in Control, no Stock Option shall be
exercisable prior to the one-year anniversary of the date of grant.

     (ii) Retirement. Upon a Participant’s Retirement,

     (A) All Stock Options granted to the Participant during the one-year period
immediately preceding the Participant’s Retirement date that have not become
exercisable as of the such Retirement date shall be forfeited;

     (B) All Stock Options granted to the Participant more than one year prior to the
Participant’s Retirement date that have not become exercisable as of such Retirement
date shall continue to become exercisable in accordance with the vesting schedule set
out in the applicable Award Certificate; and

     (C) To the extent that Stock Options have become exercisable as of the
Participant’s Retirement date, or become exercisable after such date in accordance with
paragraph (B) above, such Stock Options must be exercised, if at all, within five years
after the Participant’s Retirement date, or, if earlier, no later than the original
expiration date of the Stock Option.

     (D) In the event the Participant’s death occurs after Retirement, the
Participant’s Stock Options that have not become exercisable in accordance with
paragraph (B) as of the date of the Participant’s death shall become immediately
exercisable and all of the Participant’s Stock Options must be exercised, if at all,
within the later of (x) five years from the Participant’s Retirement date or, if
earlier, the original expiration date of Stock Option and (y) one year from the
Participant’s date of death.

     (iii) Termination Due to Business Divestiture. Upon a Participant’s Termination Due
to Business Divestiture, all Stock Options granted to the Participant that have not become
exercisable as of the date of such Termination Due to Business Divestiture shall become
immediately exercisable and must be exercised, if at all, within five years after such
termination date, but in no event later than the original expiration date of the Stock
Option.

     (iv) Disability. Upon the Disability of a Participant, all Stock Options granted to
the Participant that have not become exercisable as of the date of

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Disability shall become immediately exercisable and shall remain exercisable for the
full duration of the Stock Option’s original term.

     (v) Death. Upon a Participant’s Termination of Employment due to his or her death
during the term of a Stock Option, all Stock Options held by the Participant at the time
of his or her death that are not already exercisable shall become immediately exercisable
and all Stock Options shall remain exercisable for the longer of (A) the full duration of
the Stock Option’s original term and (B) one year from the Participant’s date of death.
Stock Options of a deceased Participant may be exercised only by the Participant’s
Beneficiary or, if none, by the legal representative of the Participant’s estate or by the
person given authority to exercise such Stock Options by the Participant’s will or by
operation of law. In the event a Stock Option is exercised by the executor or
administrator of a deceased Participant, or by the person or persons to whom the Stock
Option has been transferred under the Participant’s will or the applicable laws of descent
and distribution, Schering-Plough shall be under no obligation to deliver Shares unless
and until Schering-Plough is satisfied that the person or persons exercising the Stock
Option is or are the duly appointed executor(s) or administrator(s) of the deceased
Participant or the person to whom the Stock Option has been transferred under the
Participant’s will or by the applicable laws of descent and distribution.

     (vi) Other Terminations. Upon an Employee’s Termination of Employment for any
reason other than death, Disability, Retirement, Termination Due to Business Divestiture
or Termination for Cause, all Stock Options that have not become exercisable as of the
date of termination shall be forfeited and to the extent that Stock Options have become
exercisable as of such date, such Stock Options must be exercised, if at all, within three
months after such Termination of Employment (one year in the case of an Involuntary
Termination), but in no event later than the original expiration date of the Stock Option.

     (f) Method of Exercise; Payment of Exercise Price. A Stock Option may be
exercised by giving written notice to Schering-Plough specifying the number of Shares to be
purchased, which shall be accompanied by full payment of the Exercise Price plus applicable
taxes, if any. No Stock Option shall be exercised for less than the lesser of 100 Shares or
the full number of Shares for which the Stock Option is then exercisable. No stock
certificates shall be registered and delivered, and no Participant shall have any rights to
dividends or other rights of a shareholder with respect to Shares subject to the Stock Option
until the Participant has given written notice of exercise, made full payment of the Exercise
Price for such Shares (including taxes) and, if requested by Schering-Plough, has given the
representation described in Section 7.4. Payment of the Exercise Price may be made in cash or
by certified check, bank draft, wire transfer, or postal or express money order. In addition,
at the discretion of the Committee, payment of all or a portion of the Exercise Price may be
made by —

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     (i) Delivering a properly executed exercise notice to Schering-Plough or its
agent, together with irrevocable instructions to a broker to deliver promptly to
Schering-Plough the amount of sale proceeds with respect to the portion of the Shares to be
acquired having a Fair Market Value on the date of exercise equal to the sum of the
applicable portion of the Exercise Price being so paid;

     (ii) Tendering (actually or by attestation) to Schering-Plough previously
acquired Shares that have been held by the Participant for at least six months, subject to
paragraph (iv), and that have a Fair Market Value on the day prior to the date of exercise
equal to the applicable portion of the Exercise Price being so paid, provided that the
Board has specifically approved the repurchase of such Shares (unless such approval is not
required by the terms of the By-Laws of Schering-Plough) and the Committee has determined
that, as of the date of repurchase, Schering-Plough is, and after the repurchase will
continue to be, able to pay its liabilities as they become due; or

     (iii) Provided such payment method has been expressly authorized by the Board or
the Committee in advance and subject to any requirements of applicable law and regulations,
instructing Schering-Plough to reduce the number of Shares that would otherwise be issued
by such number of Shares as have in the aggregate a Fair Market Value on the date of
exercise equal to the applicable portion of the Exercise Price being so paid.

     (iv) The Committee, in consideration of applicable accounting standards, may waive
any holding period on Shares required to tender pursuant to clause (ii).

     (g) Incentive Stock Options. Incentive Stock Options granted under the Plan
shall be subject to the following additional conditions, limitations and restrictions:

     (i) Eligibility. Incentive Stock Options may be granted only to Employees of
Schering-Plough or an Affiliate or Subsidiary that is a “subsidiary” or “parent
corporation”, within the meaning of Code Section 424, of Schering-Plough. In no event may
an Incentive Stock Option be granted to an Employee who owns stock possessing more than 10%
of the total combined voting power of all classes of stock of Schering-Plough or such
Affiliate or Subsidiary.

     (ii) Timing of Grant. No Incentive Stock Option shall be granted under the Plan
after the 10-year anniversary of earlier of (A) the date the Plan is adopted by the Board
and (B) the date the Plan is approved by Schering-Plough’s shareholders.

     (iii) Amount of Award. The aggregate Fair Market Value on the date of grant of the
Shares with respect to which such Incentive Stock Options first become exercisable during
any calendar year under the terms of the Plan for any Participant may not exceed $100,000.
For purposes of this $100,000 limit, the Participant’s Incentive Stock Options under this
Plan and all Plans maintained by

-15-

 

Schering-Plough and its Affiliates and Subsidiaries shall be aggregated. To the extent
any Incentive Stock Option first becomes exercisable in a calendar year and such limit
would be exceeded, such Incentive Stock Option shall thereafter be treated as a
Nonqualified Stock Option for all purposes.

     (iv) Timing of Exercise. In the event that an Incentive Stock Option is exercised by
a Participant more than three months after a Participant’s Termination of Employment (or
more than 12 months after the Participant is Disabled), such Incentive Stock Option shall
thereafter be treated as a Nonqualified Stock Option for all purposes. For this purpose, an
Employee’s employment relationship shall be treated as continuing intact while the Employee
is on military leave, sick leave or other bona fide leave of absence (such as temporary
employment with the Government) duly authorized in writing by Schering-Plough if the period
of such leave does not exceed three months or, if longer, so long as the Employee’s right
to reemployment with Schering-Plough or an Affiliate or Subsidiary is guaranteed either by
statute or by contract. If the period of leave exceeds three months and the Employee’s
right to reemployment is not guaranteed either by statute or by contract, the employment
relationship will be deemed to terminate on the first date immediately following such
three-month period.

     (v) Transfer Restrictions. In no event shall the Committee permit an Incentive Stock
Option to be transferred by a Participant other than by will or the laws of descent and
distribution, and any Incentive Stock Option granted hereunder shall be exercisable, during
his or her lifetime, only by the Participant.

     (h) No Repricing. Except as otherwise provided in Section 5.3, in no event
shall the Committee decrease the Exercise Price of a Stock Option after the date of grant or
cancel outstanding Stock Options and grant replacement Stock Options with a lower Exercise
Price without first obtaining the approval of the holders of a majority of the Shares present
in person or by proxy at a meeting of Schering-Plough’s shareholders and entitled to vote at
such meeting.

4.5 Restricted Stock. The Committee may grant Restricted Stock under the Plan to such
Employees as the Committee may from time to time select, in such amounts and subject to such terms,
conditions and restrictions (including, without limitation, transfer restrictions) and Restriction
Periods as the Committee, in its discretion, may determine and set forth in the Award Certificate.
The Committee, in its discretion, may condition an Award of Restricted Stock on the Participant
giving the representation described in Section 7.4.

     (a) Payment of Restricted Stock. As soon as practicable after Restricted
Stock is awarded, a certificate or certificates for all such Shares of Restricted Stock shall
be registered in the name of the Participant and, at the discretion of Schering-Plough, be
either (i) delivered to the Participant or (ii) held by Schering-Plough on behalf of the
Participant until all restrictions have lapsed. The Participant shall

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thereupon have all the rights of a shareholder with respect to such Shares, including
the right to vote and receive dividends or other distributions made or paid with respect to
such Shares, except that such Shares shall be subject to the forfeiture provisions of clause
(i) below. The Committee may, in its discretion, impose and set forth in the Award
Certificate such other restrictions on Restricted Stock for such Restriction Period or
Periods as it deems appropriate. Except as the Committee may otherwise determine, and subject
to (1) the Committee’s authority under Section 3.2 to waive or amend any terms, conditions,
limitations or restrictions of an Award, (2) Section 5.4 relating to Changes in Control and
(3) the special forfeiture provisions of Section 7.2, such Shares shall be subject to the
following provisions.

     (i) Forfeiture and Lapse of Restriction. Shares of Restricted Stock shall be
forfeited by a Participant upon the Participant’s Termination of Employment during the
Restriction Period for any reason other than the Participant’s death, Disability or
Termination Due to Business Divestiture. Subject to clause (ii) below and Section 5.4
relating to Changes in Control, restrictions on Shares of Restricted Stock shall lapse at
the end of the Restriction Period set forth in the Award Certificate.

     (ii) Accelerated Lapse. Notwithstanding the foregoing, all restrictions on Shares
of Restricted Stock shall immediately lapse upon the death or Disability of the
Participant. The Committee may, in its discretion, provide in the applicable Award
Certificate that restrictions on Shares of Restricted Stock shall also lapse upon the
Participant’s Retirement or Involuntary Termination.

     (b) Legend. In order to enforce any restrictions that the Committee may
impose on Restricted Stock, the Committee shall cause a legend or legends setting forth a
specific reference to such restrictions to be placed on all certificates for Shares of
Restricted Stock. As restrictions are released, a new certificate, without the legend, for
the number of Shares with respect to which restrictions have been released shall be issued
and delivered to the Participant as soon as possible thereafter.

4.6 Deferred Stock Units. The Committee may grant Deferred Stock Units under the Plan
to those Employees whom the Committee may from time to time select, in such amounts and pursuant to
such other terms and conditions that the Committee, in its discretion, may determine and set forth
in the Award Certificate, subject to the following provisions.

     (a) Deferred Stock Account. Deferred Stock Units awarded to a Participant
shall be credited to a Deferred Stock Account established and maintained by Schering-Plough on
behalf of the Participant. No Participant shall be a shareholder with respect to any Shares
underlying Deferred Stock Units credited to his Deferred Stock Account, nor shall the
Participant (or the Participant’s Beneficiary) have any right to or interest in any specific
assets of Schering-Plough or its Affiliates or

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Subsidiaries, including any Shares reserved for issuance under the Plan, until such
Shares are actually distributed to the Participant.

     (b) Dividend Equivalents. Unless the Committee determines otherwise at the time
of grant and sets forth in the applicable Award Certificate, in the event of Schering-Plough’s
payment of dividends on Shares, Dividend Equivalents shall be applied as follows.

     (i) Stock Dividends. Dividend Equivalents relating to stock dividends shall be
credited to a Participant’s Deferred Stock Account as of the dividend payment date in the
form of additional Deferred Stock Units, based on the Fair Market Value of a Share on the
dividend payment date.

     (ii) Non-Stock Dividends. Dividend Equivalents relating to dividends other than
stock dividends shall be distributed immediately to the Participant as additional
compensation on the dividend payment date.

     (c) Payment of Shares. Subject to paragraph (d) below and Section 5.4 relating to
Changes in Control, Deferred Stock Units shall be paid in Shares, at the rate of one Share per
each Deferred Stock Unit, at such time or times and in such manner as the Committee shall
determine at the time of grant and set forth in the applicable Award Certificate, which can be
either:

     (i) Lump Sum. A single lump sum payable on a specified date not earlier than the
six-month anniversary of the date the Deferred Stock Units were awarded to the
Participant, or

     (ii) Installments. In a set number of equal or unequal periodic installments
commencing on a specified date not earlier than the six-month anniversary of the date the
Deferred Stock Units were awarded to the Participant.

The timing and form of payment of Shares in settlement of Deferred Stock Units shall be set
forth in the Award Certificate at the time of grant and, to the extent such Deferred Stock Units
are subject to the requirements of Section 409A of the Code, shall not be subject to
modification or acceleration by the Committee, except as provided in paragraph (d) below and in
Section 5.4. The Committee, in its discretion, may condition the issuance of Shares in
connection with Deferred Stock Units on the Participant giving the representation described in
Section 7.4.

     (d) Termination and Forfeiture. Unless the Award Certificate provides otherwise,
and subject to (1) the Committee’s authority under Section 3.2 to waive or amend any terms,
conditions, limitations or restrictions of an Award, (2) Section 5.4 relating to Changes in
Control and (3) the special forfeiture provisions of Section 7.2, any undistributed Deferred
Stock Units remaining in a Participant’s Deferred Stock Account shall be forfeited by the
Participant upon the Participant’s Termination of Employment for any reason other than other
than the death,

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Disability, Retirement, Termination Due to Business Divestiture or Involuntary
Termination of the Participant.

     (i) Death. Upon the death of a Participant prior to full payment of the
Participant’s Deferred Stock Account, the remaining balance of the Participant’s Deferred
Stock Account shall be paid in Shares to the Participant’s Beneficiary or, if none, to the
legal representative of the Participant’s estate or to the person to whom the
Participant’s Deferred Stock Unit payment rights are transferred under Participant’s will
or by operation of law, in a single lump sum payment as soon as administratively feasible
after the Participant’s death. Schering-Plough shall be under no obligation to deliver
Shares in satisfaction of a Deferred Stock Unit unless and until Schering-Plough is
satisfied that the person or persons to whom the Shares are being transferred are the duly
appointed executor(s) or administrator(s) of the deceased Participant or the person to
whom the Deferred Stock Units have been transferred under the Participant’s will or by the
applicable laws of descent and distribution.

     (ii) Disability. In the event a Participant becomes Disabled prior to full payment
of the Participant’s Deferred Stock Account, the remaining balance of the Participant’s
Deferred Stock Account shall be paid in Shares at the scheduled time and in the scheduled
manner set out in the applicable Award Certificate at the time of grant; provided, however
that the Committee may determine at the time of grant and set forth in an Award
Certificate that if the Participant becomes Disabled prior to the scheduled payment date
or dates of the Deferred Stock Units, the remaining balance the Participant’s Deferred
Stock Account shall be paid to the Participant in a single lump sum distribution as soon
as administratively feasible after the date the Participant becomes Disabled.

     (iii) Retirement. Upon the Retirement of a Participant prior to full payment of the
Participant’s Deferred Stock Account, the Participant shall forfeit all unpaid Deferred
Stock Units that were awarded to the Participant during the one-year period immediately
preceding the Participant’s Retirement date and all other Deferred Stock Units remaining
in the Participant’s Deferred Stock Account shall be paid at the scheduled time and in the
scheduled manner set out in the applicable Award Certificate at the time of grant;
provided, however that the Committee may determine at the time of grant and set forth in
an Award Certificate that the entire unpaid balance of the a Participant’s Deferred Stock
Account shall be forfeited upon the Participant’s Retirement. Alternatively, to the extent
permitted under Section 409A of the Code, the Committee may determine at the time of grant
and set forth in an Award Certificate that, in the event of the Participant’s Retirement
prior to the scheduled payment date or dates of the Deferred Stock Units, the remaining
balance the Participant’s Deferred Stock Account shall be paid to the Participant in a
single lump sum distribution as soon as administratively feasible after the Participant’s
Retirement date, but not earlier than the six-month anniversary of the Participant’s
Retirement date if the Participant is a Section 409A Specified Employee.

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     (iv) Termination Due to Business Divestiture. Upon a Participant’s Termination Due
to Business Divestiture prior to full payment of the Participant’s Deferred Stock Account,
the remaining balance of the Participant’s Deferred Stock Account shall be paid in Shares
at the scheduled time and in the scheduled manner set out in the applicable Award
Certificate at the time of grant. Alternatively, to the extent permitted under Section
409A of the Code, the Committee may determine at the time of grant and set forth in an
Award Certificate that, in the event of the Participant’s Termination Due to Business
Divestiture prior to the scheduled payment date or dates of the Deferred Stock Units, the
remaining balance the Participant’s Deferred Stock Account shall be paid to the
Participant in a single lump sum distribution as soon as administratively feasible after
the Participant’s termination date, but not earlier than the six-month anniversary of the
Participant’s termination date if the Participant is a Section 409A Specified Employee.

     (v) Involuntary Termination. Upon the Involuntary Termination of a Participant
prior to full payment of the Participant’s Deferred Stock Account, the Participant shall
forfeit —

     (A) All unpaid Deferred Stock Units that were awarded to the Participant during
the one-year period immediately preceding the Participant’s Involuntary Termination
date; and

     (B) A prorated portion of the remaining Deferred Stock Units under each
Deferred Stock Unit Award determined by subtracting from the number of unpaid Deferred
Stock Units remaining under such Award the product of (I) the number of unpaid Deferred
Stock Units remaining under such Award, multiplied by (II) a fraction, the numerator of
which is the number of full months worked by the Participant between the date of grant
and the Involuntary Termination date, and the denominator of which is the total number
of full months between the date of grant and the originally scheduled payment date.

     All other Deferred Stock Units remaining in the Participant’s Deferred Stock
Account shall be paid at the scheduled time and in the scheduled manner set out in the
applicable Award Certificate at the time of grant.

     (e) Payment Deferrals. Subject to the requirements of Section 409A of the
Code, the Committee may from time to time and on a case by case basis permit a Participant to
elect to defer payment of his Deferred Stock Units, or change the form of payment of Shares
issued in connection with Deferred Stock Units. Elections to defer the payment date or change
the form of payment shall be subject to the following limitations, which may not be waived by
the Committee:

-20-

 

     (i) Such election must be made, if at all, no less than 12 months prior to
the originally scheduled payment date set out in the Award Certificate for the Deferred
Stock Units with respect to which the election is made;

     (ii) Such election may not take effect until at least 12 months after the date on
which the election is made; and

     (iii) Except with respect to an election to receive payment upon Disability, the
first scheduled payment must be deferred pursuant to the election for a period of at least
five years from the original payment date set out in the Award Certificate for the
Deferred Stock Units with respect to which the election is made.

For purposes of this paragraph (e), each scheduled installment payment under a Deferred Stock
Unit Award shall be deemed to be a separate payment.

     (f) Committee Discretion. Notwithstanding anything in the Plan to the contrary
(including anything in Section 3.2 relating to the authority of the Committee or Section 5.4
relating to Changes in Control) in no event shall the Committee have discretion under the Plan
to accelerate the payment date or deferred payment date of Deferred Stock Units, except to the
extent permitted under Section 409A of the Code and applicable U.S. Treasury Department or
Internal Revenue Service guidance issued in connection with Section 409A of the Code.

4.7 Other Stock-Based Awards. Subject to compliance with the requirements of Section
409A of the Code, the Committee may, from time to time, grant to an Employee Other Stock-Based
Awards under the Plan. These Awards may include, among other things Shares, restricted stock
options, stock appreciation rights that are settled in Shares, and phantom or hypothetical Shares.
The Committee shall determine, in its discretion, the terms, conditions, restrictions and
limitations, if any, that shall apply to Other Stock-Based Awards granted pursuant to this Section
4.7 (including whether Dividend Equivalents shall be credited or paid with respect to any such
Award), which terms, conditions, restrictions and/or limitations shall be set forth in the Award
Certificate. The Committee, in its discretion, may condition the delivery of Shares in connection
with an Award under this Section 4.7 on the Participant giving the representation described in
Section 7.4.

4.8 Performance Awards. The Committee may grant Performance Awards under the Plan only to
such Employees as the Committee may from time to time select, in such amounts and subject to such
terms and conditions as the Committee, in its discretion, may determine. Performance Awards granted
under the Plan shall be subject to the following provisions.

     (a) General. Performance Awards that are not Qualified Performance Awards
shall be based on such Performance Cycles, Performance Measures and vesting or payout formulas
(which may be the same as or different than those applicable to

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Performance Awards that are designated as Qualified Performance Awards) as the Committee,
in its discretion, may establish for such purposes.

     (b) Form of Payment. Performance Awards may be paid in cash, Shares, Stock
Options, Restricted Stock, Deferred Stock Units, Other Stock-Based Awards or any combination
of the foregoing in such proportions as the Committee may determine, in its discretion, and
set forth in the Award Certificate. To the extent that a Performance Award is paid in Shares,
Stock Options, Restricted Stock, Deferred Stock Units and/or Other Stock-Based Awards, the
amount of each such form of Award that is payable shall be based on the Fair Market Value of a
Share on the date of grant, subject to such reasonable Restricted Stock and Deferred Stock
Unit discount factors and/or Stock Option valuation methodologies as the Committee may, in its
discretion, apply. Stock Options, Restricted Stock, Deferred Stock Units and Other Stock-Based
Awards granted in connection with a Performance Award shall be subject to the provisions of
Sections 4.4, 4.5, 4.6 and 4.7, respectively.

     (c) Qualified Performance Awards. A Performance Award granted to a Covered
Employee under the Plan may, at the discretion of the Committee, be designated as a Qualified
Performance Award. Qualified Performance Awards under the Plan may be granted either
separately or at the same time as Awards that are not designated as Qualified Performance
Awards; provided, however, that in no event may the payment of an Award that is not a
Qualified Performance Award be contingent upon the failure to attain a specific level of
performance on the Performance Measure(s) applicable to a Qualified Performance Award for the
same Performance Cycle. In the event the Committee designates an Award as a Qualified
Performance Award, any determinations of the Committee pertaining to Performance Measures and
other terms and conditions of such Qualified Performance Award (other than a determination
under paragraph (iii)(D) below to reduce the amount of the Award) shall be in writing and made
within the Qualified Performance Award Determination Period. A Performance Award that the
Committee designates as a Qualified Performance Award shall be subject to the following
additional requirements.

     (i) Performance Cycles. Performance Awards that are designated as Qualified
Performance Awards shall be awarded in connection with a Performance Cycle. The Committee
shall determine the length of a Performance Cycle within the Qualified Performance Award
Determination Period. In the event that the Committee determines that a Performance Cycle
shall be a period greater than one fiscal year, a new Qualified Performance Award may be
granted and a new Performance Cycle may commence prior to the completion of the
Performance Cycle associated with the prior Qualified Performance Award.

     (ii) Participants. Within the Qualified Performance Award Determination Period,
the Committee shall determine the Covered Employees who shall be eligible to receive a
Qualified Performance Award for such Performance Cycle.

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     (iii) Performance Measures; Targets; Vesting and Payout Formulas.

     (A) Within the Qualified Performance Award Determination Period, the Committee
shall fix and establish, in writing, (1) the Performance Measure(s) that shall apply to
the Qualified Performance Award for the Performance Cycle; (2) the target amount of
such Qualified Performance Award that shall be payable to each such Covered Employee;
and (3) the vesting and/or payout formula for computing the actual amount of such
Qualified Performance Award that shall become vested and/or payable with respect to
each level of attained performance. Towards this end, such vesting and/or payout
formula shall, based on objective criteria, set forth for the applicable Performance
Measure(s) the minimum level of performance that must be attained during the
Performance Cycle before any such Qualified Performance Award shall become vested
and/or payable and the percentage of the target amount of such Award that shall be
vested and/or payable to each Covered Employee upon attainment of various levels of
performance that equal or exceed the minimum required level.

     (B) The Committee may, in its discretion, select Performance Measures that
measure the performance of Schering-Plough or one or more business units, divisions,
Affiliates or Subsidiaries of Schering-Plough. The Committee may select Performance
Measures that are absolute or relative to the performance of one or more comparable
companies or an index of comparable companies.

     (C) In applying Performance Measures, the Committee may, in its discretion,
exclude unanticipated, unusual or infrequently occurring items (including any event
described in Section 5.3 and the cumulative effect of changes in the law, regulations
or accounting rules), and may determine within the Qualified Performance Award
Determination Period to exclude other items.

     (D) Notwithstanding anything in this paragraph (c)(iii) to the contrary, the
Committee may, on a case by case basis and in its sole discretion, reduce, but not
increase, the amount of any Qualified Performance Award that is payable to a Covered
Employee with respect to a Performance Cycle, provided, however, that no such reduction
shall result in an increase in the dollar amount of any such Qualified Performance
Award payable to any other Covered Employee.

     (iv) Committee Certification. No Qualified Performance Award shall vest or be
paid to a Covered Employee under the Plan unless and until the Committee certifies in
writing the level of attainment of the applicable Performance Measure(s) for the
applicable Performance Cycle.

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     (v) Limitation on Awards. Subject to Sections 5.1 and 5.3, the dollar value of
any Qualified Performance Award payable in cash to any Covered Employee shall not exceed
$3 million (or, in the case of the Chief Executive Officer, $6,000,000) for any 12-month
Performance Cycle; provided that for any Performance Cycle that is the same as a
performance period under the Operations Management Team Incentive Plan, such amounts shall
serve as combined limits under both this Plan and the Operations Management Team Incentive
Plan. For any Performance Cycle greater than 12 months in duration, this maximum will be
adjusted proportionately.

     (vi) Code Section 162(m). It is the intent of Schering-Plough that Qualified
Performance Awards granted to Covered Employees under the Plan shall satisfy the
applicable requirements of Code Section 162(m) and the regulations thereunder so that
Schering-Plough’s tax deduction for Qualified Performance Awards is not disallowed in
whole or in part by operation of Code Section 162(m). If any provision of this Plan
pertaining to Qualified Performance Awards, or any Award to a Covered Employee under the
Plan that the Committee designates as a Qualified Performance Award, would otherwise
frustrate or conflict with such intent, that provision or Award shall be interpreted and
deemed amended so as to avoid such conflict.

4.9 Substitute Awards. The Committee may make Awards under the Plan to Acquired
Grantees through the assumption of, or in substitution for, outstanding stock-based awards
previously granted to such Acquired Grantees. Such assumed or substituted Awards will be subject to
the terms and conditions of the original awards made by the Acquired Company, with such adjustments
therein as the Committee considers appropriate to give effect to the relevant provisions of any
agreement for the acquisition of the Acquired Company. Any grant of Stock Options pursuant to this
Section 4.9 will be subject to the rules set out in Section 424 of the Code and any final
regulations published thereunder, regardless of whether the Stock Option is intended to be an
Incentive Stock Option or a Nonqualified Stock Option.

4.10 Termination for Cause. Notwithstanding anything to the contrary herein, if a
Participant incurs a Termination for Cause, then all of the Participant’s outstanding Awards under
the Plan (whether or not vested or exercisable) will immediately be cancelled and forfeited and the
special forfeiture provisions of Section 7.2 shall apply. The exercise of any Stock Option or the
payment of any Award may be delayed, in the Committee’s discretion, in the event that a potential
Termination for Cause is pending.

			
	V.	 	SHARES SUBJECT TO THE PLAN; ADJUSTMENTS

5.1 Shares Available. The Shares issuable under the Plan are authorized but unissued
Shares or Shares held in Schering-Plough’s treasury. Subject to adjustment in accordance with
Section 5.3, the total number of Shares with respect to which Awards may be issued under the Plan
may not exceed 92,000,000 Shares, which includes the number of Shares that have been approved by
Schering-Plough shareholders for issuance under the Prior

-24-

 

Plan, but which have not been awarded under the Prior Plan as of the Effective Date and which are
no longer available for issuance under Prior Plan for any reason (including without limitation, the
discontinuance or termination of the Prior Plan). Subject to adjustment in accordance with Section
5.3, from such aggregate limit:

     (a) No more than an aggregate of 46,000,000 Shares may be issued under Incentive Stock
Options during the term of the Plan;

     (b) No more than an aggregate of 46,000,000 Shares may be issued in the form of
Restricted Stock, Deferred Stock Units or Other Stock-Based Awards payable in Shares during
the term of the Plan; and

     (c) The maximum aggregate number of Shares with respect to which Stock Options may be
granted to any one Participant during any fiscal year of Schering-Plough may not exceed
3,000,000 Shares.

5.2 Counting Rules.

     (a) Shares Counted. For purposes of determining the number of Shares remaining
available for issuance under the Plan (including Shares originally approved under the Prior
Plan, but made available for issuance under this Plan in accordance with Section 5.1), only
Awards payable in Shares shall be counted. In addition, Shares that are tendered or withheld
in payment of all or part of the Exercise Price of a Stock Option, or in satisfaction of the
withholding obligations of an Award shall be counted against the remaining Shares and shall no
longer be available for issuance under the Plan.

     (b) Shares Not Counted. The following Shares relating to Awards under this Plan
(or Awards under the Prior Plan that are outstanding as of the Effective Date) are not counted
as issued Shares for purposes of determining the number of Shares remaining available for
issuance under the Plan, and shall remain available for issuance under the Plan.

     (i) Shares underlying awards that are settled in cash in lieu of Shares;

     (ii) Shares underlying Awards that expire, are forfeited, cancelled or terminate for
any other reason without the issuance of Shares;

     (iii) Shares issued in connection with Awards that are assumed, converted or
substituted as the result of Schering-Plough’s acquisition of an Acquired Company or the
combination of Schering-Plough with another company; and

     (iv) Shares of Restricted Stock that are forfeited and returned to Schering-Plough
upon a Participant’s Termination of Employment.

-25-

 

5.3 Adjustments. If there is a change in the outstanding Shares by reason of any stock
split, reverse stock split, dividend or other distribution (whether in the form of cash, Shares,
other securities or other property), extraordinary cash dividend, recapitalization, split-up,
spin-off, reorganization, combination, repurchase or exchange of Shares or other securities, the
issuance of warrants or other rights to purchase Shares or other securities, or other similar
corporate transaction or event, then in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan, an adjustment in the number or
kind of Shares that may be issued under the Plan, the number of Shares underlying an outstanding
Award, the Exercise price of a Stock Option or the number of Deferred Stock Units credited to a
Deferred Stock Account will be made by the Committee and such adjustment will be conclusive and
binding for all purposes under the Plan. Notwithstanding the foregoing, no adjustments shall be
made with respect to Qualified Performance Awards granted to a Covered Employee to the extent such
adjustment would cause the Award to fail to qualify as performance-based compensation under Section
162(m) of the Code.

5.4 Consequences of a Change in Control. Notwithstanding any other provision of the
Plan, Awards that are outstanding as of the effective date of a Change in Control shall be subject
to the following provisions.

     (a) Replacement Awards. Any Award granted hereunder shall be deemed to apply
to the securities, cash or other property (subject to adjustment by cash payment in lieu of
fractional interests) to which a holder of the number of Shares equal to the number of Shares
underlying the Participant’s Awards would have been entitled pursuant to the Change in
Control, and proper provisions shall be made to ensure that this clause is a condition to any
transaction that would result in a Change in Control; provided, however, that during the
60-day period beginning on the date of Change in Control, the Committee (or, if applicable,
the board of directors of the entity assuming Schering-Plough’s obligations under the Plan)
may, in its discretion, take any of the following actions with respect to each Award that is
outstanding as of the effective date of Change in Control:

     (i) Modify or adjust the Award to reflect the Change in Control; or

     (ii) Cancel the Award and cause the acquiring or surviving corporation to replace
it with an equivalent right after the Change in Control.

     (b) Stock Options. All outstanding Stock Options shall become immediately
vested and exercisable as of the effective date of a Change in Control. In addition, during
the 60-day period beginning on the date of Change in Control, the Committee may, in its
discretion, cancel all or a portion of a Participant’s remaining Stock Options and, in
consideration of such cancellation, pay the Participant with respect to each Share issuable
under the cancelled Stock Option an amount in cash equal to the amount by which the Change in
Control Price exceeds the Exercise Price of the cancelled Stock Option. Finally in the event
an Employee

-26-

 

incurs an Involuntary Termination after a Change in Control, all of the Participant’s
outstanding Stock Options as of the date of such Involuntary Termination (which became
exercisable as of the effective date of the Change in Control, if not already exercisable
before such time), shall remain exercisable for the full duration of the Stock Option’s
original term, notwithstanding the Participant’s Termination of Employment.

     (c) Deferred Stock Units. All Deferred Stock Units credited to a
Participant’s Deferred Stock Account but not yet distributed as of the date of the Change in
Control shall become immediately vested and non-forfeitable as of the effective date of a
Change in Control and shall be distributed in a single lump sum cash payment, in lieu of
Shares, as soon practicable thereafter (but in no event more than 30 days after the effective
date of the Change in Control) at a dollar value per Deferred Stock Unit equal to the Change
in Control Price.

     (d) Restricted Stock and Other Stock-Based Awards. All restrictions and
conditions on any Shares of Restricted Stock or Other Stock-Based Awards shall immediately
lapse or be deemed satisfied, as the case may be, as of the effective date of a Change in
Control and all such Awards shall become vested and non-forfeitable as of such date.

     (e) Performance Awards. Each Employee who has been granted a Performance
Award that is outstanding as of the effective date of a Change in Control shall be deemed to
have achieved a level of performance, as of the Change in Control, that would cause all
(100%) of the Participant’s target amounts to become payable and all restrictions and vesting
conditions, if any, on the form of Award or Awards payable to the Employee in connection with
the Performance Award shall be waived.

5.5 Fractional Shares. No fractional Shares shall be issued under the Plan. In the
event that a Participant acquires the right to receive a fractional Share under the Plan, such
Participant shall receive, in lieu of such fractional Share, cash equal to the Fair Market Value of
the fractional Share as of the date of settlement.

			
	VI.	 	AMENDMENT AND TERMINATION

6.1 Amendment. The Plan may be amended at any time and from time to time by the Board
without the approval of shareholders of Schering-Plough, except that no material revision to the
terms of the Plan will be effective without first obtaining the approval of the amendment by the
holders of a majority of the Shares present in person or by proxy at a meeting of Schering-Plough’s
shareholders and entitled to vote at such meeting. A revision is “material” for this purpose if,
among other changes, it (a) materially increases the number of Shares that may be issued under the
Plan (other than an increase pursuant to Section 5.3 of the Plan), (b) changes the types of Awards
available under the Plan, (c) expands the class of persons eligible to receive Awards under the
Plan, (d) extends the term of the Plan, (e) decreases the Exercise Price at which Stock Options may
be granted,

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(f) reduces the Exercise Price of outstanding Stock Options, or (g) results in the replacement of
outstanding Stock Options with new Awards that have an Exercise Price that is lower than the
Exercise Price of the replaced Stock Options. No amendment of the Plan made without the
Participant’s written consent may adversely affect any right of a Participant with respect to an
outstanding Award. Notwithstanding the foregoing, this Plan is intended to incorporate all
applicable requirements of Section 409A of the Code and guidance issued thereunder by the U.S.
Treasury Department and the Internal Revenue Service, and the Plan will be deemed to be amended as
necessary to comply with those requirements.

6.2 Termination. The Plan shall terminate upon the earlier of the following dates or
events to occur:

     (a) The adoption of a resolution of the Board terminating the Plan; or

     (b) December 31, 2011.

     No Awards shall be granted under this Plan after it has been terminated. However, the
termination of the Plan shall not alter or impair any of the rights or obligations of any person,
without such person’s consent, under any Award theretofore granted under the Plan. After the
termination of the Plan, any previously granted Awards shall remain in effect and shall continue to
be governed by the terms of the Plan and the applicable Award Certificate.

			
	VII.	 	GENERAL PROVISIONS

7.1 Nontransferability of Awards. No Award under the Plan shall be subject in any manner
to alienation, anticipation, sale, assignment, pledge, encumbrance or transfer, and no other
persons will otherwise acquire any rights therein, except as provided below.

     (a) Any Award may be transferred by will or by the laws of descent or distribution.

     (b) The Committee may provide in the Award Certificate that all or any part of the
vested portion of a Nonqualified Stock Option may, subject to the prior written consent of
the Committee, be transferred to one or more of the following classes of donees:

     (i) a family member;

     (ii) a trust for the benefit of a family member; or

     (iii) a limited partnership whose partners are solely family members, or any other legal
entity set up for the benefit of family members.

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          For purposes of this paragraph (b), a family member means a Participant’s spouse, children,
grandchildren, parents, grandparents, siblings, nieces, nephews, grandnieces and grandnephews,
including adopted, in-laws and step family members.

     (c) Any transferred Award will be subject to all of the same terms and conditions as
provided in the Plan and the applicable Award Certificate. The Participant or the
Participant’s estate will remain liable for any withholding tax that may be imposed by any
federal, state or local tax authority. The Committee may, in its discretion, disallow all or
a part of any transfer of an Award pursuant to paragraph (b) above unless and until the
Participant makes arrangements satisfactory to the Committee for the payment of any
withholding tax. The Participant must immediately notify the Committee, in the form and
manner required by the Committee, of any proposed transfer of an Award pursuant to paragraph
(b). No transfer will be effective until the Committee consents to the transfer in writing.

     (d) Except as otherwise provided in the Award Certificate, any Nonqualified Stock
Option transferred by a Participant pursuant to this paragraph (d) may be exercised by the
transferee only to the extent that the Award would have been exercisable by the Participant
had no transfer occurred. The transfer of Shares upon exercise of the Award will be
conditioned on the payment of any withholding tax.

     (e) Restricted Stock may be freely transferred after the restrictions lapse or are
satisfied and the Shares are delivered; provided, however, that Restricted Stock awarded to
an affiliate of Schering-Plough may be transferred only pursuant to Rule 144 under the
Securities Act, or pursuant to an effective registration for resale under the Securities Act.
For purposes of this paragraph (e), “affiliate” will have the meaning assigned to that term
under Rule 144.

     (f) In no event may a Participant transfer an Incentive Stock Option other than by
will or the laws of descent and distribution.

7.2 Special Forfeiture Provision. Except as otherwise provided in the current employment
agreement between Schering-Plough and the relevant Employee (which agreement shall take precedent
over this Section 7.2), and if the Committee, in its discretion, provides otherwise in the
applicable Award Certificate, if a Participant either —

     (a) incurs a Termination for Cause or

     (b) incurs a Termination of Employment for any reason other than other than death,
Disability, Retirement, Termination Due to Business Divestiture or Involuntary Termination
and, within one year after such Termination of Employment, without prior written approval of
the Committee, enters into an employment or consulting arrangement (including service as an
agent, partner, stockholder, consultant, officer or director) with any entity or person
engaged in

-29-

 

any business in which Schering-Plough or its Affiliates or Subsidiaries is engaged that,
in the sole judgment of the Committee, is competitive with Schering-Plough or any Affiliate
or Subsidiary, then the Participant shall forfeit and return to Schering-Plough —

     (i) the amount of any profit realized upon the exercise of any Stock Options at any
time on or after the date that is ninety (90) days immediately prior to the date of the
Participant’s Termination of Employment;

     (ii) all shares of Restricted Stock that are not then vested or which vested during
the three-month period immediately preceding such Termination of Employment; and

     (iii) all Shares issued to the Participant in payment of the Participant’s Deferred
Stock Units during the three-month period immediately preceding such Termination of
Employment.

7.3 Withholding of Taxes. The Committee, in its discretion, may satisfy a Participant’s
tax withholding obligations by any of the following methods or any method as it determines to be in
accordance with the laws of the jurisdiction in which the Participant resides, has domicile or
performs services.

     (a) Stock Options. As a condition to the delivery of Shares pursuant to the
exercise of a Stock Option, the Committee may require that the Participant, at the time of
exercise, pay to Schering-Plough by cash, certified check, bank draft, wire transfer or
postal or express money order an amount sufficient to satisfy any applicable tax withholding
obligations. The Committee may, however, in its discretion, accept payment of tax withholding
obligations through any of the Exercise Price payment methods described in Section 4.4(f).

     (b) Other Awards Payable in Shares. The Participant shall satisfy the
Participant’s tax withholding obligations arising in connection with the release of
restrictions on Restricted Stock or the payment of Deferred Stock Units or Other Stock-Based
Awards by payment to Schering-Plough by cash, certified check, bank draft, wire transfer or
postal or express money order an amount sufficient to satisfy any applicable tax withholding
obligations, provided that the format is approved by Schering-Plough or a designated
third-party administrator. Notwithstanding the foregoing, subject to the requirements of
applicable law, Schering-Plough may also satisfy the Participant’s tax withholding
obligations by other methods, including selling or withholding Shares that would otherwise be
available for delivery, provided that the Committee has specifically approved such payment
method in advance.

     (c) Cash Awards. Schering-Plough may satisfy a Participant’s tax withholding
obligations arising in connection with the payment of any Award in cash by withholding cash
from such payment.

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7.4 Investment Representation. As a condition to any distribution of Shares pursuant to
Awards under the Plan, Schering-Plough may require a Participant to represent in writing that such
Shares are being acquired for the Participant’s own account for investment and not with a view to,
or for sale in connection with, the distribution of any part thereof.

7.5 Code Section 83(b) Elections. Neither Schering-Plough, any Affiliate or Subsidiary, nor
the Committee shall have any responsibility in connection with a Participant’s election, or attempt
to elect, under Code Section 83(b) to include the value of a Restricted Stock Award in the
Participant’s gross income for the year of payment. Any Participant who makes a Code Section 83(b)
election with respect to any such Award shall promptly notify the Committee of such election and
provide the Committee with a copy thereof.

7.6 Beneficiary Designations. Designations of Beneficiaries by a Participant shall be
made in writing and filed with Schering-Plough in such form and in such manner as the Committee may
from time to time prescribe. A Participant may change his or her Beneficiaries in the same manner
at any time prior to the death of the Participant. If a Participant dies without having designated
any surviving Beneficiaries, the Participant’s remaining interests in Awards under the Plan shall
be distributed to the legal representative of his estate or in accordance with the Participant’s
will.

7.7 No Implied Rights. The establishment and operation of the Plan, including eligibility
as a Participant, shall not be construed as conferring any legal or other right upon any Employee
for the continuation of his or her employment for any Performance Cycle or any other period.
Schering-Plough expressly reserves the right, which may be exercised at any time and in
Schering-Plough’s sole discretion, to discharge any individual and/or treat him or her without
regard to the effect which such treatment might have upon him or her as a Participant in the Plan.

7.8 No Obligation to Exercise Options. The granting of a Stock Option shall impose no
obligation upon the Participant to exercise such Stock Option.

7.9 No Rights as Shareholders. A Participant granted an Award under the Plan shall have no
rights as a shareholder of Schering-Plough with respect to the Award unless and until such time as
certificates for the Shares underlying the Award are registered in such Participant’s name. The
right of any Participant to receive an Award by virtue of participation in the Plan shall be no
greater than the right of any unsecured general creditor of Schering-Plough.

7.10 Indemnification of Committee. Schering-Plough shall indemnify, to the full extent
permitted by law, each person made or threatened to be made a party to any civil or criminal action
or proceeding by reason of the fact that he, or his testator or intestate, is or was a member of
the Committee or a delegate of the Committee so acting.

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7.11 No Required Segregation of Assets. Neither Schering-Plough nor any Affiliate or
Subsidiary shall be required to segregate any assets that may at any time be represented by Awards
granted pursuant to the Plan. In no event shall any interest be paid or accrued on any Award,
including unpaid installments of an Award.

7.12 Nature of Payments. All Awards made pursuant to the Plan are in consideration of
services for Schering-Plough or its Affiliates or Subsidiaries. Any gain realized pursuant to
Awards under the Plan constitutes a special incentive payment to the Participant and shall not be
taken into account as compensation for purposes of any of the employee benefit plans of Schering-
Plough or any Affiliate or Subsidiary except as may otherwise be specifically provided in the
applicable employee benefit plan.

7.13 Compliance with Applicable Law. The obligations of Schering-Plough to issue or
transfer Shares pursuant to Awards shall be subject to (a) the effectiveness of a registration
statement under the Securities Act of 1933, as amended, with respect to the Shares, (b) the
condition that the Shares be listed (or authorized for listing upon official notice of issuance)
upon each stock exchange upon which Shares are listed and (c) compliance with all applicable laws
and approvals by all governmental or regulatory agency as may be required. With respect to
Reporting Persons, it is the intent of Schering-Plough that the Plan and all transactions under the
Plan comply with all applicable provisions of Rule 16b-3 or its successors under the Exchange Act.
If any provision or this Plan or of any grant of an Award would otherwise frustrate or conflict
with such intent, that provision shall be interpreted and deemed amended so as to avoid such
conflict. No Participant will be entitled to a grant, exercise, transfer or payment of any Award if
the grant, exercise, transfer or payment would violate the provisions of the Sarbanes-Oxley Act of
2002 or any other applicable law. In addition, it is the intent of Schering-Plough that the Plan
and applicable Awards under the Plan comply with the applicable provisions of Sections 162(m) and
422 of the Code, and to the extent an Award is subject to the requirements of Section 409A of the
Code, it is the intent of Schering-Plough that the Award be administered in a manner that satisfies
such requirements. To the extent that any legal requirement of Section 16 of the Exchange Act or
Section 162(m), 409A or 422 of the Code as set forth in the Plan ceases to be required under such
Section, that Plan provision shall cease to apply. The Committee may revoke any Award if it is
contrary to law or modify a Award (to the extent permitted by applicable law) to bring it into
compliance with any valid and mandatory government regulation.

7.14 Headings. Section and paragraph headings are for reference only. In the event of a
conflict between the title and content of a section or paragraph, the content shall control.

7.15 Governing Law; Severability. The Plan and all determinations made and actions taken
thereunder shall be governed by the internal substantive laws, and not the choice of law rules, of
the State of New Jersey and construed accordingly, to the extent not superseded by applicable federal
law. If any provision of the Plan shall be held unlawful or otherwise invalid or unenforceable in
whole or in part, the unlawfulness, invalidity or

-32-

 

unenforceability shall not affect any other provision of the Plan or part thereof, each of which
shall remain in full force and effect.

-33-EX-10.E.XIII

 

Exhibit 10(e)(xiii)

SCHERING-PLOUGH CORPORATION

SAVINGS ADVANTAGE PLAN

(Amended and Restated as of January 1, 2006)

Table of Contents 

	 	 	 	 	 
	 	 	 	 	Page
	ARTICLE 1	 	DEFINITIONS
	 	1
	ARTICLE 2	 	ELIGIBILITY AND PARTICIPATION
	 	5
	ARTICLE 3	 	DEFERRAL OF COMPENSATION
	 	6
	ARTICLE 4	 	BENEFIT ACCOUNTS
	 	10
	ARTICLE 5	 	PAYMENT OF BENEFITS
	 	12
	ARTICLE 6	 	BENEFICIARY DESIGNATION
	 	15
	ARTICLE 7	 	ADMINISTRATION
	 	15
	ARTICLE 8	 	AMENDMENT AND TERMINATION OF PLAN
	 	16
	ARTICLE 9	 	MISCELLANEOUS
	 	16
	EXHIBIT A	 	 
	 	A-1

-i-

 

PURPOSE

     The Schering-Plough Corporation 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. The Plan has been subsequently amended and restated, effective
January 1, 2006.

ARTICLE 1

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 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. The term Bonus only applies to amounts that are deemed performance-based in
accordance with Section 409A of the Code.

     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.

-1-

 

     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 $210,000 (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 2006 Stock Incentive Plan or any successor to such plan.

     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 and without
deducting any amounts deferred under this Plan.

     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 any condition in which the Participant is
considered Disabled as defined in Section 409A of the Code.

-2-

 

     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
5.05.

     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

-3-

 

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 Credit. “Performance Plan Rollover Credit” 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 Corporation 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.

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     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 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 $220,000 (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 Specified Employee. “Specified Employee” means a specified employee as defined
in Section 409A of the Code and Treasury regulations thereunder and as determined in accordance
with rules established and uniformly applied by the Committee in accordance with Section 409A of
the Code.

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

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

     1.48 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.

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     (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 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 2005 or a later Plan Year may make such an election at any
time within 30 days after their date of hire. An election made by a Participant within the 30 days
after his or her date of hire shall apply only to Compensation that has been earned after such
election has been made.

     (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. An election made by a Participant within the 30 days after
his or her date of hire shall apply only to a Bonus (or portion of a Bonus) that has been earned
after such election has been made.

     (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. An election made by a
Participant within the 30 days after his or her date of hire shall apply only to a Bonus (or
portion of a Bonus) that has been earned after such election has been made.

     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.

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 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 the lower of (a) $220,000 or such other

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limit as set forth in Section 401(a)(17) of the Code for that year and (b) the Participant’s
compensation applicable under the Savings Plan. 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. An election made by a Participant within the 30 days after his or her date of hire
shall apply only to Compensation that has been earned after such election has been made. 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. An
election made by a Participant within the 30 days after his or her date of hire shall apply only to
a Bonus that has been earned after such election has been made. 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. An election made by a Participant within the
30 days after his or her date of hire shall apply only to a Bonus that has been earned after such
election has been made. 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

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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).

     3.04 Deferrals of Distributions from Non-Qualified Defined Benefit and Defined
Contribution 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 that the distribution was originally scheduled to be made under the terms of the transferor
plan. Notwithstanding the preceding sentence, if a Participant has made or makes an election
pursuant to this Section 3.04 prior to January 1, 2008, he or she will be permitted to make a
special one-time only election regarding the form and timing of his or her Non-Qualified Defined
Benefit Plan Rollover Credits. Such special one-time election shall be effective regardless of
whether it complies with the five-year delay requirement. To the extent that any payroll taxes
become due as a result of any election under this Section 3.04, such taxes, together with federal
and state income taxes thereon, shall be paid by the Company and shall reduce the applicable
Account accordingly, to the extent permissible by law without resulting in adverse current income
tax consequences to the Participants.

     (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”) or the Company’s Retirement Benefits Equalization Plan (“RBEP”) 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 or the RBEP.
Notwithstanding the forgoing, any Participant who makes such an election with respect to the SERP
shall automatically be deemed to make such an election with respect to any benefits to which he or
she is entitled under the 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.

     (b) Non-Qualified Defined Contribution Plan Rollover Credits. Eligible Employees who
participate in any 162(m) Deferred Compensation plans of the Company automatically shall 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.

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     (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. Any
dividends paid on the Company’s Common Stock shall be deemed to be reinvested in phantom shares of
the Company’s Common Stock at the then fair market value of the Company’s Common Stock. A
Participant’s vested Prior Plan Stock Rollover Credit shall be subject to his or her distribution
election applicable to the year in which the Prior Plan Stock Rollover Credit is made to the Plan.

     (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. Notwithstanding
the preceding sentence, a Participant’s Cash LTIP Rollover Account shall be subject to a vesting
schedule as follows:

          (i) 25% of the Cash LTIP Rollover Credit shall vest immediately;

          (ii) The next 50% of the Cash LTIP Rollover Credit shall vest on December 31, 2007; and

          (iii) The remaining 25% of the Cash LTIP Rollover Credit shall vest on December 31, 2008.

          A Participant’s Cash LTIP Rollover Credit shall vest fully if the Participant retires, incurs
a Disability, dies or in the event of a change of control of the Company (as defined in the Cash
LTIP). If the Participant leaves the Company for any other reason, he or she shall forfeit any
unvested portion of the Cash LTIP Rollover Account. Any deemed earnings on a Cash LTIP Rollover
Credit shall vest in the same proportion as the rest of the Cash LTIP Rollover Credit. A
Participant’s vested Cash LTIP Rollover Credit shall be subject to his or her distribution election
applicable to the year in which the Cash LTIP Rollover Credit is made to the Plan.

     (e) Performance Plan Rollover Credits. With respect to any Eligible Employee who
participates in the Performance Plan, on or around March 15, 2007, the Company shall credit the

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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. Notwithstanding
the preceding sentence, a Participant’s Performance Plan Rollover Account shall be subject to a
vesting schedule as follows:

          (i) 25% of the Performance Plan Rollover Credit shall vest immediately;

          (ii) The next 50% of the Performance Plan Rollover Credit shall vest on December 31, 2007; and

          (iii) The remaining 25% of the Performance Plan Rollover Credit shall vest on December 31,
2008.

     A Participant’s Performance Plan Rollover Account shall vest fully if the Participant retires,
incurs a Disability, dies or in the event of a change of control of the Company (as defined in the
Performance Plan). If the Participant leaves the Company for any other reason, he or she shall
forfeit any unvested portion of the Performance Plan Rollover Account. Any deemed earnings on a
Performance Plan Rollover Credit shall vest in the same proportion as the rest of the Performance
Plan Rollover Credit. A Participant’s vested Performance Plan Rollover Credit shall be subject to
his or her distribution election applicable to the year in which the Performance Plan Rollover
Credit is made to the Plan.

     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.

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     4.02 Crediting of Deemed Investment Return. As of each Valuation Date, each
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. Except with respect to Cash LTIP Rollover Credits and
Performance Plan Rollover Credits, 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

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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 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 in Control. At the time at which
his or her initial deferral election is made, each Participant may elect to commence receiving
distributions of the balance of his or her Account (i) on any
April 1, provided that such day is no less than three years from the day on
which the election is made; (ii) with respect to a Participant who elects a single sum payment,
within 60 days following the termination of his or her employment or, with respect to distributions
in any form other than a single sum, 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); subject to any
delays under Section 5.03. Elections made during Open Enrollment or, in the case of a newly
eligible Participant, within 30 days of such Participant’s eligibility date, shall be immediately
effective. Distributions under this Section 5.01(a) may be made in any form permissible under
Section 5.02. Except as otherwise provided in Sections 5.01(b) and (c), in the event that a
Participant fails to elect when to commence distribution of his or her Account or such an election
is not yet effective, the balance of his or her Account shall be distributed within 60 days after
the Participant’s termination of employment, subject to any delays under Section 5.03.

     Notwithstanding the foregoing, effective for deferrals made in the 2006 Plan Year and
thereafter, a Participant must make a distribution election (relating to the timing and form of the
distribution ) during each Open Enrollment applicable to any deferrals made in such Plan Year only
(a “Class Year”). In the event, a Participant does not make a distribution election during an Open
Enrollment for a Class Year, the distribution election that applied to the deferrals in the prior
Class Year shall apply to the deferrals in the current Class Year, to the extent permitted by law.

     With respect to Participants who participated in the Plan during the 2004 Plan Year and/or
2005 Plan Year, the distribution election that he or she elected during the applicable Open
Enrollment shall apply to deferrals made during these Plan Years and shall continue to apply to
future Class Years until he or she makes a new distribution election. If a Participant has not
participated in the Plan previously and does not make a distribution election, he or she shall be
deemed to have elected a lump sum payment within 60 days following the termination of his or her
employment.

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     (b) Death. Notwithstanding Section 5.01(a), in the event of a Participant’s death
before the distribution of all of his or her Class Years have commenced, his or her Beneficiary
shall receive the Value of his or her entire Account balance in cash in a lump 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 relating to a
Class Year, the Participant’s Beneficiary shall receive a lump sum cash distribution of the
remaining Value of the installment payments 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 relating to
such Class Year 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 before the distribution of a Class Year has commenced, the Company shall
commence paying benefits relating to such Class Year 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 amounts relating to a Class Year 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 or
within 30 days of the Participant becoming eligible to participate in the Plan.

     (d) Change of Control. Each Participant may make a separate election regarding when
the distribution of a Class Year(s) shall be paid following a Change of Control in the same manner
provided under Section 5.01(a). Any such election shall supersede all other elections if a Change
of Control occurs prior to the time when the Participant is in pay status under the Plan. Any such
election must be made at least twelve months prior to the Change of Control to be effective (or
within 30 days of the Participant becoming eligible to participate in the Plan). If a Participant
makes such an election, he or she may change it only by electing a later date on which to receive a
distribution. If the new date that the Participant elects turns out to be five or more years after
the date on which the distribution of such Class Year(s) otherwise would have commenced as a result
of the Change of Control under the Participant’s prior distribution election, the new election
shall be valid and the prior election shall be disregarded. If not, the distribution of the Class
Year(s) shall begin as soon as administratively feasible following the Change of Control pursuant
to the Participant’s old distribution election.

     (e) Changing Distribution Timing Elections. Except as otherwise provided in Section
5.01(d), a Participant may change any of his or her distribution elections at any time; provided,
however, any such change shall not become effective until twelve months after the date that such
election change is made. Once a Participant selects a specific date for a distribution to begin,
he or she may not change the timing of the distribution to an earlier date, and any later date that
the Participant selects must be at least five years after the date on which the distribution would
otherwise commence under the existing distribution election. If a Participant previously elected
to commence the distribution of his or her benefits upon the termination of his or her employment
or upon the earlier of his or her termination of employment or a specified date, any new
distribution election shall be valid only if the new election is made at least twelve months in

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advance of the date on which the benefits would otherwise commence under the existing
distribution election and the date on which benefits will commence under the new election is at
least five years after the date on which the benefits would have otherwise commenced under the
existing distribution election.

     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 his or her distribution election in connection with each Class Year:

     (a) Installments. Annual payments of a fixed amount that shall amortize the amount
relating to the Class Year 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 has never made a distribution election, his or her entire Account
balance shall be distributed in a single sum distribution.

     (c) Changing Distribution Form Elections. A Participant may change a previous
distribution election from installments to a lump sum provided that the subsequent election is made
at least twelve months in advance of the date that the installments would have commenced otherwise
and the lump sum is payable no earlier than five years after the installments were to commence
otherwise.

     5.03 Commencement of Benefits to 162(m) Covered Employees and 409A Specified
Employees. The distribution of a Covered Employee’s benefit applicable to a Class Year shall
be made upon the later of (a) the date elected by the Covered Employee for the distribution of his
or her Class Year to commence and (b) April 1 following the Covered Employee’s termination of
employment. In the event a Class Year is payable on account of the separation of service of a
Specified Employee, the Committee shall delay the distribution of the lump sum payment or the
commencement of installment payments, as applicable, for a period of six months following the
separation from service, during which time earnings shall still accrue in accordance with the
applicable deemed investments.

     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 shall pay the benefit in the
form of a lump sum, 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 Hardship Withdrawal. In the event that the Committee, upon the written request
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

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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. The amount
of the Hardship Withdrawal shall be deducted from the earliest Class Year(s). For purposes of this
Section 5.05, 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.

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

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     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
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;

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	 	(iv)	 	Appropriate information as to the steps to be taken if the
Claimant wishes 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.

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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)

A-1

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