Document:

SUPPLEMENT TO EMPLOYMENT AGREEMENT

 

Exhibit 10(e)(x)

SUPPLEMENT TO EMPLOYMENT AGREEMENT

     This SUPPLEMENT to the Employment Agreement by and between Schering-Plough
Corporation, a New Jersey corporation (the “Company”), and Raul Kohan (the
“Executive”), dated as of September 27, 1994 and amended as of September 28,
1999 and January 1, 2002 (as amended, the “Employment Agreement”), is dated as
of the 1st day of January, 2002. Capitalized terms used but not defined in
this Supplement have the meanings given to them in the Employment Agreement.

     The Board of Directors of the Company has determined that it would be
detrimental to the interests of the Company and its shareholders if the
Executive were to terminate his employment during the term of this Supplement,
particularly if the Executive were to engage in activities competitive with the
Company. Therefore, the Board has determined to offer to the Executive, and
the Executive has agreed, to enter into this Supplement in order to enhance the
incentives for the Executive to remain in the employ of the Company and to
refrain from such competition.

     NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

     1. Term. The term of this Supplement (the “Term of this Supplement”)
shall begin on January 1, 2002 and expire on December 31, 2005; provided, that
the Term of this Supplement shall in any event expire immediately before the
Effective Date of the Employment Agreement (as defined therein). From and
after the expiration of the Term of this Supplement, the Employment Agreement
shall remain in effect, without regard to the amendments thereto made by this
Supplement except as specifically provided below, unless the Employment
Agreement has been sooner terminated in accordance with its terms.

     2. Procedures for Termination of Employment. The following provisions
shall apply in the event of a termination of the Executive’s employment during
the Term of this Supplement.

     (a) Death or Disability. The Executive’s employment shall terminate
automatically upon the Executive’s death during the Term of this Supplement.
If the Company determines in good faith that the Disability of the Executive
has occurred during the Term of this Supplement (pursuant to the definition of
Disability set forth below), it may give to the Executive written notice in
accordance with Section 9(b) below of its intention to terminate the
Executive’s employment. In such event, the Executive’s employment with the
Company shall terminate effective on the 30th day after receipt of such notice
by the Executive (the “Disability Effective Date”), provided that, within the
30 days after such receipt, the Executive shall not have returned to full-time
performance of the Executive’s duties. For purposes of this Supplement,
“Disability” shall mean the absence of the Executive from the Executive’s
duties

 

 

with the Company on a full-time basis for 180 consecutive business days as
a result of incapacity due to mental or physical illness which is determined to
be total and permanent by a physician selected by the Company or its insurers
and acceptable to the Executive or the Executive’s legal representative.

     (b) Cause. The Company may terminate the Executive’s employment during
the Term of this Supplement for Cause or without Cause. For purposes of this
Supplement, “Cause shall mean:

(i) the willful and continued failure of the Executive to perform
substantially the Executive’s duties with the Company or one of its
affiliated companies (other than any such failure resulting from
incapacity due to physical or mental illness), after a written
demand for substantial performance is delivered to the Executive by
the Board or the Chief Executive Officer of the Company which
specifically identifies the manner in which the Board or Chief
Executive Officer believes that the Executive has not substantially
performed the Executive’s duties, or

(ii) the willful engaging by the Executive in illegal conduct or
gross misconduct which is materially and demonstrably injurious to
the Company, or

(iii) the conviction of the Executive of a felony involving moral
turpitude.

     For purposes of this provision, no act or failure to act, on the part of
the Executive, shall be considered “willful” unless it is done, or omitted to
be done, by the Executive in bad faith or without reasonable belief that the
Executive’s action or omission was in the best interests of the Company. Any
act, or failure to act, based upon authority given pursuant to a resolution
duly adopted by the Board or upon the instructions of the Chief Executive
Officer or a senior officer of the Company or based upon the advice of counsel
for the Company shall be conclusively presumed to be done, or omitted to be
done, by the Executive in good faith and in the best interests of the Company.

     (c) Good Reason. The Executive’s employment may be terminated by the
Executive for Good Reason or without Good Reason. For purposes of this
Supplement, “Good Reason” shall mean:

     (i) the assignment to the Executive of any duties that are materially
inconsistent with the Executive’s education, training and experience, or that
result in a significant diminution in the Executive’s status or title, it being
understood that a change in the person to whom the Executive reports does not
constitute “Good Reason”; or

     (ii) any significant reduction by the Company of the Executive’s
compensation, unless such reduction was part of a reduction approved by the
Company’s Board of Directors (or a Committee thereof) for one or more employees
in addition to the Executive;

in either case which the Company fails to cure within 20 business days after
receiving notice thereof from the Executive.

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     (d) Notice of Termination. Any termination by the Company for Cause, or
by the Executive for Good Reason, shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section 9(b)
below. For purposes of this Supplement, a “Notice of Termination” means a
written notice which (i) indicates the specific termination provision in this
Supplement relied upon, (ii) to the extent applicable, sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination
of the Executive’s employment under the provision so indicated and (iii) if the
Date of Termination (as defined below) is other than the date of receipt of
such notice, specifies the termination date (which date shall be not more than
thirty days after the giving of such notice). The failure by the Executive or
the Company to set forth in the Notice of Termination any fact or circumstance
which contributes to a showing of Good Reason or Cause shall not waive any
right of the Executive or the Company, respectively, hereunder or preclude the
Executive or the Company, respectively, from asserting such fact or
circumstance in enforcing the Executive’s or the Company’s rights hereunder.

     (e) Date of Termination. “Date of Termination” means (i) if the
Executive’s employment is terminated by the Company for Cause, or by the
Executive for Good Reason, the date of receipt of the Notice of Termination or
any later date specified therein, as the case may be, (ii) if the Executive’s
employment is terminated by the Company other than for Cause or Disability, the
Date of Termination shall be the date on which the Company notifies the
Executive of such termination and (iii) if the Executive’s employment is
terminated by reason of death or Disability, the Date of Termination shall be
the date of death of the Executive or the Disability Effective Date, as the
case may be.

     3. Obligations of the Company upon Termination of Employment. (a) Good
Reason; Other Than for Cause, Death or Disability. If, during the Term of this
Supplement, the Company shall terminate the Executive’s employment other than
for Cause or Disability or the Executive shall terminate employment for Good
Reason:

     (i) The Company shall pay to the Executive in a lump sum in cash within 30
days after the Date of Termination the aggregate of the following amounts:

     A. the sum of (1) the Executive’s Annual Base Salary through
the Date of Termination to the extent not theretofore paid, (2) the
product of (x) the Highest Annual Bonus and (y) a fraction, the
numerator of which is the number of days in the current fiscal year
through the Date of Termination, and the denominator of which is
365 and (3) any compensation previously deferred by the Executive
(together with any accrued interest or earnings thereon) and any
accrued vacation pay, in each case to the extent not theretofore
paid (the sum of the amounts described in clauses (1), (2), and (3)
shall be hereinafter referred to as the “Accrued Obligations”); and

     B. the amount equal to the product of (1) the lesser of (x)
three and (y) the number of days after the Date of Termination and
on or before the Executive’s 65th birthday, divided by 365, times
(2) the sum of (A) the Executive’s Annual Base Salary, (B) the
Highest Annual Bonus and (C) the highest contributions made under
the Company’s Employees’ Profit Sharing Incentive Plan and the
Company’s Profit Sharing Benefits Equalization Plan or any
successor or

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replacement plans thereto, for any of the three calendar years
preceding the Date of Termination.

     (ii) Notwithstanding anything to the contrary in any employee pension
benefit plan or any supplemental or excess employee pension benefit plan of the
Company (including without limitation the Retirement Plan, the SERP, the
Company’s Retirement Benefits Equalization Plan (the “BEP”) or any successor or
replacement plan thereto), all benefits payable to the Executive under any
supplemental or excess employee pension benefit plan of the Company (including
without limitation the SERP, the BEP or any successor or replacement plan
thereto) shall not be reduced by any “reduction factors” or similar formulae or
otherwise because such benefits are payable prior to a specified age or because
the Executive has not yet reached a specified age (including, without
limitation, the Executive’s earliest or normal retirement age under the terms
of the relevant plan). This Section 3(a)(ii) shall survive until December 31,
2005 notwithstanding any earlier termination of the Term of this Supplement
pursuant to the proviso of the first sentence of Section 1 hereof.

     (b) Other Terminations. If, during the Term of this Supplement, the
Executive’s employment is terminated by reason of the Executive’s death or
Disability, by the Company for Cause or by the Executive without Good Reason,
the Company shall have no further obligations to the Executive or his legal
representatives under this Supplement.

     (c) Consequences of Expiration of the Term of this Supplement. If the
Executive’s employment terminates for any reason during the Term of this
Supplement, the provisions of this Section 3 shall survive the expiration of
the Term of this Supplement to the extent they remain applicable in accordance
with their terms.

     4. Confidential Information and Competitive Conduct. (a) Confidential
Information. The Employee shall hold in a fiduciary capacity for the benefit
of the Company all secret or confidential information, knowledge or data
relating to the Company or any of its affiliated companies, and their
respective businesses, which shall have been obtained by the Employee during
the Employee’s employment by the Company or any of its affiliated companies and
which shall not be or become public knowledge (other than by acts by the
Employee or representatives of the Employee in violation of this Agreement).
After termination of the Employee’s employment with the Company, the Employee
shall not, without the prior written consent of the Company, or as may
otherwise be required by law or legal process, communicate or divulge any such
information, knowledge or data to anyone other than the Company and those
designated by it.

     (b) Competitive Conduct. During the Noncompetition Period (as defined
below), the Executive shall not, without the prior written consent of the
Board, engage in or become associated with a Competitive Activity. For
purposes of this Section 4(b): (i) the “Noncompetition Period” means (A) the
period during which the Executive is employed by the Company, plus (B) two
years following any termination of employment during the Term of this
Supplement by the Company for Cause or by the Executive without Good Reason;
(ii) a “Competitive Activity” means any business or other endeavor that is
engaged in research, development and/or sale of human and/or animal
pharmaceutical products, in any county of any state of the United States or any
other country; and (iii) the Executive shall be considered to have become
“associated with a Competitive Activity” if the Executive becomes directly or
indirectly

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involved as an owner, principal, employee, officer, director, independent
contractor, representative, stockholder, financial backer, agent, partner,
advisor, lender, or in any other individual or representative capacity with any
individual, partnership, corporation or other organization that is engaged in a
Competitive Activity. Notwithstanding the foregoing, the Executive may make
and retain investments during the Noncompetition Period which do not constitute
a controlling interest of any entity engaged in a Competitive Activity, if such
investment is made on a passive basis and the Executive does not act as an
employee, officer, director, independent contractor, representative, agent or
advisor with respect to such entity and so long as the making or retaining of
such investment is not contrary to the best interests of the Company.

     (c) Enforcement. The Executive acknowledges and agrees that: (i) the
purpose of the foregoing covenants is to protect the goodwill, trade secrets
and other confidential information of the Company; (ii) because of the nature
of the business in which the Company and its affiliated companies are engaged
and because of the nature of the confidential information to which the
Executive has access, it would be impractical and excessively difficult to
determine the actual damages of the Company and its affiliated companies in the
event the Executive breached any of the covenants of this Section 4; and (iii)
remedies at law (such as monetary damages) for any breach of the Executive’s
obligations under this Section 4 would be inadequate. The Executive therefore
agrees and consents that if he commits any breach of a covenant under this
Section 4 or threatens to commit any such breach, the Company shall have the
right (in addition to, and not in lieu of, any other right or remedy that may
be available to it) to temporary and permanent injunctive relief from a court
of competent jurisdiction, without posting any bond or other security and
without the necessity of proof of actual damage. With respect to any provision
of this Section 4 finally determined by a court of competent jurisdiction to be
unenforceable, the Executive and the Company hereby agree that such court shall
have jurisdiction to reform this Agreement or any provision hereof so that it
is enforceable to the maximum extent permitted by law, and the parties agree to
abide by such court’s determination. If any of the covenants of this Section 4
are determined to be wholly or partially unenforceable in any jurisdiction,
such determination shall not be a bar to or in any way diminish the Company’s
right to enforce any such covenant in any other jurisdiction.

     (d) No Offset. In no event shall an asserted violation of the provisions
of this Section 4 constitute a basis for deferring or withholding any amounts
otherwise payable to the Employee under this Supplement.

     (e) Consequences of Expiration of the Term of this Supplement. The
provisions of this Section 4 shall survive the expiration of the Term of this
Supplement to the extent they remain applicable in accordance with their terms,
provided that Section 4(b) shall terminate and be of no further force or effect
as of the Effective Date.

     5. Non-exclusivity of Rights. Nothing in this Supplement shall prevent or
limit the Executive’s continuing or future participation in any plan, program,
policy or practice provided by the Company or any of its affiliated companies
and for which the Executive may qualify, nor, subject to Section 9(f), shall
anything herein limit or otherwise affect such rights as the Executive may have
under any contract or agreement with the Company or any of its affiliated
companies. Amounts which are vested benefits or which the Executive is
otherwise entitled to receive under any plan, policy, practice or program of or
any contract or agreement

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with the Company or any of its affiliated companies at or subsequent to
the Date of Termination shall be payable in accordance with such plan, policy,
practice or program or contract or agreement except as explicitly modified by
this Supplement. Notwithstanding the foregoing, if the Executive receives
payments and benefits pursuant to Section 3(a) of this Supplement, the
Executive shall not be entitled to any severance pay or benefits under any
severance plan, program or policy of the Company or any of its affiliated
companies, unless otherwise specifically provided therein in a specific
reference to this Supplement.

     6. No Mitigation; Legal Fees. In no event shall the Executive be
obligated to seek other employment or take any other action by way of
mitigation of the amounts payable to the Executive under any of the provisions
of this Supplement and such amounts shall not be reduced whether or not the
Executive obtains other employment. The Company agrees to reimburse the
Executive, to the full extent permitted by law, for all legal fees and expenses
which the Executive may reasonably incur as a result of any contest (regardless
of the outcome thereof) by the Company, the Executive or others of the validity
or enforceability of, or liability under, any provision of this Supplement or
any guarantee of performance thereof (including as a result of any contest by
the Executive about the amount of any payment pursuant to this Supplement);
provided, that no such reimbursement shall be required if the trier of fact in
such contest determines that the Executive’s position was frivolous or
maintained in bad faith. The provisions of this Section 6 shall survive the
expiration of this Supplement to the extent they remain applicable in
accordance with their terms.

     7. Definitions. For purposes of this Supplement, the following terms
shall have the meanings provided below:

     (a) Annual Base Salary: the annual rate of the Executive’s base salary,
as in effect immediately before the Date of Termination, but disregarding any
reduction in such base salary resulting from any action constituting “Good
Reason” as defined in Section 2(c) above.

     (b) Annual Bonus: a bonus paid or payable under the Company’s Executive
Incentive Plan, or any comparable bonus under any predecessor or successor
plan, including any bonus or portion thereof which has been earned but
deferred.

     (c) Highest Annual Bonus: the Executive’s highest Annual Bonus for the
last three full fiscal years prior to the Date of Termination (annualized in
the event that the Executive was not employed by the Company for the whole of
any such fiscal year).

     (d) Retirement Plan: the Company’s qualified defined benefit retirement
plan.

     (e) SERP: all excess or supplemental retirement plans in which the
Executive participates, collectively.

     (f) Welfare Benefits: all benefits under the welfare benefit plans,
practices, policies and programs provided by the Company and its affiliated
companies (including, without limitation, medical, prescription, dental,
disability, employee life, group life, accidental death and travel accident
insurance plans and programs) to the Executive or other peer executives of the
Company and its affiliated companies.

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     8. Successors.

     (a) This Supplement is personal to the Executive and without the prior
written consent of the Company, shall not be assignable by the Executive
otherwise than by will or the laws of descent and distribution. This
Supplement shall inure to the benefit of, and be enforceable by, the
Executive’s legal representatives.

     (b) This Supplement shall inure to the benefit of, and be binding upon the
Company and its successors and assigns.

     (c) The Company shall require any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially all of
the business and/or assets of the Company to assume expressly and agree to
perform this Supplement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place.
As used in this Supplement, “Company” shall mean the Company as hereinbefore
defined and any successor to its business and/or assets as aforesaid which
assumes and agrees to perform this Supplement by operation of law, or
otherwise.

     9. Miscellaneous.

     (a) This Supplement shall be governed by and construed in accordance with
the laws of the State of New Jersey, without reference to principles of
conflict of laws. The captions of this Supplement are not part of the
provisions hereof and shall have no force or effect. This Supplement may not
be amended or modified otherwise than by a written agreement executed by the
parties hereto or their respective successors and legal representatives.

     (b) All notices and other communications hereunder shall be in writing and
shall be given by hand delivery to the other party or by registered or
certified mail, return receipt requested, postage prepaid, addressed as
follows:

If to the Executive:

Mr. Raul Kohan

Morgan Drive

P.O. Box 139

New Vernon, New Jersey 07976

If to the Company:

Schering-Plough Corporation

2000 Galloping Hill Road

Kenilworth, New Jersey 07033

Attention: General Counsel

or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.

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     (c) The invalidity or unenforceability of any provision of this Supplement
shall not affect the validity or enforceability of any other provision of this
Supplement.

     (d) The Company may withhold from any amounts payable under this
Supplement such Federal, state, local or foreign taxes as shall be required to
be withheld pursuant to any applicable law or regulation.

     (e) The Executive’s or the Company’s failure to insist upon strict
compliance with any provision of this Supplement or the failure to assert any
right the Executive or the Company may have hereunder, including, without
limitation, the right of the Executive to terminate employment for Good Reason
pursuant to Section 2(c) of this Supplement, shall not be deemed to be a waiver
of such provision or right or any other provision or right of this Supplement.

     (f) The Executive and the Company acknowledge that this Supplement
supersedes any prior agreement between the parties with respect to the subject
matter hereof, other than the Employment Agreement.

     IN WITNESS WHEREOF, the Executive and, pursuant to the authorization from
its Board of Directors, the Company, have caused this Supplement to be executed
as of the day and year first above written.

	 	 	 	 	 
	 

	 	 	 	/s/ Raul Kohan
	

	 	 	 	
 
	

	 	 	 	Raul Kohan
	

	 	 	 	 
	 	 	SCHERING-PLOUGH CORPORATION
	

	 	 	 	 
	

	 	By:
	 	/s/ Richard Jay Kogan
	

	 	 	 	
 
	

	 	 	 	Richard Jay Kogan

Chairman of the Board and

Chief Executive Officer

8OPERATIONS MANAGEMENT TEAM INCENTIVE PLAN

 

Exhibit 10(m)

Schering-Plough Corporation Operations Management Team Incentive Plan

1. Plan Objective

The Schering-Plough Corporation Operations Management Team Incentive
Plan (alternatively referred to as the “OMTIP” or the “Plan”) is designed to
encourage results-oriented actions on the part of members of the Operations
Management Team (“OMT”) of Schering-Plough Corporation (the “Company”). The
Plan is intended to align closely financial rewards with the achievement of
specific performance objectives.

2. Eligibility

All management employees of the Company and its subsidiaries who are members of
the OMT are eligible to participate in the Plan. The Administrator (as defined
in Section 3 below) may select any other management employees who shall
participate in the Plan (the “Participants”).

3. Administration

     (a) The Plan shall be administered by the Compensation Committee of the Board
of Directors (the “Committee”) with respect to employees who are executives of
the Company who are subject to the reporting requirements of Section 16 of the
Securities Exchange Act of 1934 (“Section 16 Executives”), and the Plan shall
be administered by the Chief Executive Officer of the Company (“CEO”) with
respect to all other employees. The CEO may delegate his authority to
administer the Plan to an individual or other committee. The term
“Administrator” shall mean the Committee, as applied to Section 16 Executives,
and the CEO or an individual or committee to which authority has been
delegated, as applied to all other employees.

     (b) The Administrator shall have full power and authority to establish the
rules and regulations relating to the Plan, to interpret the Plan and those
rules and regulations, to select Participants for the Plan, to determine each
Participant’s target award, performance goals and final award, to make all
factual and other determinations in connection with the Plan, and to take all
other actions necessary or appropriate for the proper administration of the
Plan, including the delegation of such authority or power, where appropriate.
Only the Committee shall take the foregoing actions with respect to Section 16
Executives.

     (c) All powers of the Administrator shall be executed in its sole discretion,
in the best interest of the Company, not as a fiduciary, and in keeping with
the objectives of the Plan and need not be uniform as to similarly situated
individuals. The Administrator’s administration of the Plan, including all such
rules and regulations, interpretations, selections, determinations, approvals,
decisions, delegations, amendments, terminations and other actions, shall be
final and binding on the Company and all employees of the Company, including
the Participants and their respective beneficiaries.

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4. Target Awards and Performance Goals

     (a) At the beginning of each plan year designated by the Administrator (a
“Plan Year”), the Administrator shall establish for each Participant a target
incentive award, which shall be expressed as a dollar amount, a percentage of
salary or otherwise. The Administrator shall establish for each Section 16
Executive a maximum award that may be paid for the Plan Year. The maximum
award amount for Section 16 Executives will remain fixed for the entire Plan
Year and may not be increased based on an increase in salary during the Plan
Year or otherwise. The target awards will be based on a number of factors,
including but not limited to:

	•	 	Market competitiveness of the position

	•	 	Job level

	•	 	Base salary level

	•	 	Past individual performance

	•	 	Expected contribution to future Company performance and business impact

     (b) At the beginning of each Plan Year, the Administrator shall establish for
each Participant performance goals that must be met in order for an award to be
payable for the Plan Year. The Administrator shall establish in writing (i)
the performance goals that must be met, (ii) the threshold, target and maximum
amounts that may be paid if the performance goals are met, and (iii) any other
conditions that the Administrator deems appropriate and consistent with the
Plan and, in the case of Section 16 Executives, the exception for “qualified
performance-based compensation” (the “Section 162(m) Exception”) under Section
162(m) of the Internal Revenue Code of 1986, as amended (the “Code”). The
Administrator shall establish objective performance goals for each Participant
related to the Participant’s business unit or the performance of the Company
and its parents, subsidiaries and affiliates as a whole, or any combination of
the foregoing. The Administrator may also establish subjective performance
goals for Participants; provided that, for Section 16 Executives, the
subjective performance goals may only be used to reduce, and not increase, the
award otherwise payable under the Plan. The Company shall notify each
Participant of his or her target award and the performance goals for the Plan
Year.

     (c) The objectively determinable performance goals shall be based on one or
more of the following criteria related to the Participant’s business unit or
the performance of the Company and its parents, subsidiaries and affiliates as
a whole, or any combination of the foregoing: stock price, earnings per share,
net earnings, operating or other earnings, profits, revenues, net cash flow,
financial return ratios, return on assets, stockholder return, return on
equity, growth in assets, unit volume, sales, market share, drug discovery or
other scientific goals, pre-clinical or clinical goals, regulatory approvals,
or strategic business criteria consisting of one or more objectives based on
meeting specified revenue goals, market penetration goals, geographic business
expansion goals, cost targets, goals relating to acquisitions or divestitures,
or strategic partnerships.

     (d) For Section 16 Executives, the Administrator must establish the target
awards and performance goals no later than the earlier of (i) 90 days after the
beginning of the Plan Year or (ii) the date on which 25% of the Plan Year has
been completed, or such other date as may be required or permitted under
applicable regulations under section 162(m) of the Code. The performance goals
for each Section 16 Executive for each Plan Year are intended to satisfy the
requirements for the Section 162(m) Exception, including the requirement that
the achievement of the performance goals be substantially uncertain at the time
they are established and that the performance goals be established in such a
way that a third party with knowledge of the relevant facts could determine
whether and to what extent the performance goals have been met.

     (e) Each Participant will earn an award for a Plan Year based on the
achievement of the performance goals established by the Administrator. The
Administrator may adjust, upward or downward, the award for

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each Participant
who is not a Section 16 Executive, based on the Administrator’s determination
of the Participant’s achievement of personal and other performance goals
established by the Administrator and other factors as the Administrator
determines. The Administrator may reduce (but not increase) the award for each
Section 16 Executive based on the Administrator’s determination of the
Participant’s achievement of personal and other performance goals established
by the Administrator and other factors as the Administrator determines. The
Administrator shall not be authorized to increase the amount of any award of a
Section 16 Executive that would otherwise be payable pursuant to the terms of
the Plan.

     (f) The maximum award that a Participant may receive for any Plan Year is
$9,000,000.

5. Payment of Incentive Awards

     (a) The Administrator shall certify and announce to the Participants the
awards that will be paid by the Company as soon as practicable following the
final determination of the Company’s financial results for the Plan Year.
Payment of the awards certified by the Administrator shall be made in a single
lump sum cash payment as soon as practicable following the close of the Plan
Year, but in any event within 120 days after the close of the Plan Year.

     (b) Participants must be employed on the last day of the Plan Year to be
eligible for an award from the Plan, except as described in subsections (c) and
(d) below. Notwithstanding any other provision of this Plan, in no event may
the Administrator waive the achievement of performance goals for any Section 16
Executive except in the event of such Section 16 Executive’s death or
disability.

     (c) Participants who terminate employment prior to the last day of the Plan
Year will not be eligible for any award payment for that Plan Year, except as
the Administrator may otherwise determine. Unless the Administrator determines
otherwise:

          (i) Participants who die or who retire under a Company-sponsored retirement
program during the Plan Year will be eligible for a prorated award based on the
achievement of the performance goals for the Plan Year and appropriate
adjustment as described in Section 4. The prorated award will be calculated
from the date when they became eligible for the Plan to the date of death or
retirement rounded to the nearest whole month. Payment will be made in a
single payment at the same time as all other incentive awards for the Plan Year
are distributed. In the case of the death of a Participant, any award payable
to the Participant shall be paid to his or her beneficiary. For this purpose,
the Company will use the beneficiary named under the Company-sponsored life
insurance plan. If no life insurance beneficiary is designated, the
beneficiary will be the decedent’s estate.

          (ii) Participants who leave the Company under a Company-sponsored disability
program, separation program (other than in the case of termination for cause)
or other program approved by the Management Committee will be eligible for a
prorated award based on achievement of the performance goals for the year and
appropriate adjustment as described in Section 4. The awards will be
calculated from the date when they became eligible for the Plan to the
effective date of separation rounded to the nearest whole month. Payment will
be made in a single payment at the same time as all other incentive awards for
the Plan Year are distributed.

     (d) The Administrator may establish appropriate terms and conditions to
accommodate newly hired and transferred employees, consistent, in the case of
Section 16 Executives, with the requirements of the Section 162(m) Exception.

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6. Changes to Performance Goals and Target Awards

     At any time prior to the final determination of awards, for Participants other
than Section 16 Executives, the Administrator may adjust the performance goals
and target awards to reflect a change in corporate capitalization (such as a
stock split or stock dividend), or a corporate transaction (such as a merger,
consolidation, separation, reorganization or partial or complete liquidation),
or to reflect equitably the occurrence of any extraordinary event, any change
in applicable accounting rules or principles, any change in the Company’s
method of accounting, any change in applicable law, any change due to any
merger, consolidation, acquisition, reorganization, stock split, stock
dividend, combination of shares or other changes in the Company’s corporate
structure or shares, or any other change of a similar nature. The
Administrator may make the foregoing adjustments with respect to Section 16
Executives’ awards to the extent the Administrator deems appropriate, but only
to the extent consistent with the requirements of the Section 162(m) Exception.

7. Amendments and Termination

     (a) The Company may at any time amend or terminate the Plan by action of
the Committee; provided, however, that the Committee shall not amend the Plan
without stockholder approval if such approval is required in order for awards
under the Plan to qualify for the Section 162(m) Exception. Without limiting
the foregoing, the Company, by action of the Administrator, shall have the
right to modify the terms of the Plan as may be necessary or desirable to
comply with the laws or local customs of countries in which the Company
operates or has employees.

     (b) The Plan must be reapproved by the stockholders no later than the
first stockholders meeting that occurs in the fifth year following the year in
which the stockholders previously approved the Plan, if required in order for
awards under the Plan to qualify for the Section 162(m) Exception under the
Code or the regulations thereunder.

8. Miscellaneous Provisions

     (a) This Plan is not a contract between the Company and the Participants.
Neither the establishment of this Plan, nor any action taken hereunder, shall
be construed as giving any
Participant any right to be retained in the employ of the Company or any
of its subsidiaries. Nothing in the Plan, and no action taken pursuant to the
Plan, shall affect the right of the Company to terminate a Participant’s
employment at any time and for any or no reason. The Company is under no
obligation to continue the Plan.

     (b) A Participant’s right and interest under the Plan may not be assigned or
transferred, except as provided in Section 5(c) of the Plan upon death, and any
attempted assignment or transfer shall be null and void and shall extinguish,
in the Company’s sole discretion, the Company’s obligation under the Plan to
pay awards with respect to the Participant. The Company’s obligations under
the Plan may be assigned to any corporation which acquires all or substantially
all of the Company’s assets or any corporation into which the Company may be
merged or consolidated.

     (c) The Plan shall be unfunded. The Company shall not be required to
establish any special or separate fund, or to make any other segregation of
assets, to assure payment of awards. The Company’s obligations hereunder shall
constitute a general, unsecured obligation, awards shall be paid solely out of
the Company’s general assets, and no Participant shall have any right to any
specific assets of the Company.

     (d) The Company shall have the right to deduct from awards any and all
federal, state and local taxes or other amounts required by law to be withheld.

     (e) It is the intent of the Company that the Plan and awards under the Plan
for Section 16 Executives comply with the requirements for the Section 162(m)
Exception. To the extent that any requirement of the Section 162(m) Exception
as set forth in the Plan ceases to be required under Section 162(m) of the
Code, that Plan provision shall cease to apply.

     (f) The Company’s obligation to pay compensation as herein provided is subject
to any applicable orders, rules or regulations of any government agency or
office having authority to regulate the payment of wages, salaries, and other
forms of compensation.

     (g) The validity, construction, interpretation and effect of the Plan shall
exclusively be governed by and determined in accordance with the laws of the
State of New Jersey.

4

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