FIRST AMENDMENT TO EMPLOYMENT AGREEMENT
Exhibit 99.4
FIRST AMENDMENT TO EMPLOYMENT AGREEMENT
This FIRST AMENDMENT (the “Amendment”) to the Employment Agreement by and between
Schering-Plough Corporation, a New Jersey Corporation (the “Company”), and Xxxxxx Xxxxxxxx (the
“Executive”), dated as of the 19th day of December, 2006 (the “Employment Agreement”),
is made and entered into as of the 9th day of December, 2008.
WHEREAS, the Compensation Committee of the Company’s Board of Directors has determined that it
is appropriate to amend the Employment Agreement as provided below in order to comply with the
applicable requirements of section 409A of the Internal Revenue Code of 1986, as amended, and the
Executive has agreed to enter into this Amendment.
NOW, THEREFORE, it is hereby agreed as follows:
1. Section 4(f), Expenses, of the Employment Agreement is hereby amended by inserting
the following sentence at the end of the Section:
Such reimbursement shall be made no later than March 15 of the year following the
calendar year in which such expense was incurred.
2. Clauses (i) and (iii) of Section 5(b), Involuntary and Good Reason Terminations, of
the Employment Agreement are hereby amended by replacing the words “within 30 days following the
effective date of the Satisfactory Release” where they appear in such clauses with the words
“within 90 days following the Termination Date, but not later than March 15 of the calendar year
following the Termination Date.”
3. Section 7(p), “Section 409A Change in Control Event,” of the Employment Agreement
is hereby amended by:
(A) Deleting clause (5) of the Section in its entirety, and
(B) Replacing the reference to “Treas. Prop. Reg. 1.409A-3(g)(5)” wherever it appears in the
last paragraph of the Section to a reference to “Treasury Regulation section 1.409A-3(i)(5).”
4. Section 7(r), “Termination Date” of the Employment Agreement is hereby amended in
its entirety to read as follows:
“Termination Date” shall mean (i) if the Executive’s employment is terminated by
the Company for Cause, the date of the receipt of the Notice of Termination or any
later date specified therein, (ii) if the Executive’s employment is terminated by
the Company other than for Cause or Disability, the Termination Date shall be the
date on which the Notice of Termination is delivered or any later date as may be
mutually agreed
upon; (iii) if the Executive’s employment is terminated by the Executive for Good
Reason, the Termination Date shall be the close of the 30th calendar
day after the Company receives notice from the Executive of the basis for Good
Reason if the Company has failed to cure such basis for Good Reason, (iv) if the
Executive’s employment is terminated by reason of death, the Termination Date
shall be the date of the death; and (v) if the Executive’s employment is
terminated by reason of Disability of the Executive, the Termination Date shall be
the 30th day after Executive’s receipt of the Notice of Termination
from the Company. Notwithstanding the foregoing, the Termination Date for
purposes of determining the date that any payment or benefit that is treated as
nonqualified deferred compensation under Section 409A of the Code is to be paid or
provided (or in determining whether an exemption to such treatment applies), and
for purposes of determining whether the Executive is a Specified Employee on the
Termination Date, shall be the date on which the Executive has incurred a
“separation from service” within the meaning of Treasury Regulation section
1.409A-1(h), or in subsequent IRS guidance under Code section 409A.
5. Section 7, Definitions, of the Employment Agreement is hereby amended by adding the
following new defined term to the Section:
“Specified Employee” shall mean a “specified employee” within the meaning of
Section 409A(a)(2)(B)(i) of the Code, as determined by the Company’s Compensation
Committee.
6. Section 9, Code Section 409A Provision, is hereby amended in its entirety to read
as follows:
9. Code Section 409A Provisions.
(a) To the fullest extent applicable, amounts and other benefits payable
under this Agreement are intended to be exempt from the definition of
“nonqualified deferred compensation” under section 409A of the Code (“Section
409A”) in accordance with one or more of the exemptions available under the final
Treasury regulations promulgated under Section 409A and, to the extent that any
such amount or benefit is or becomes subject to Section 409A due to a failure to
qualify for an exemption from the definition of nonqualified deferred compensation
in accordance with such final Treasury regulations, this Agreement is intended to
comply with the applicable requirements of Section 409A with respect to such
amounts or benefits. This Agreement shall be interpreted and administered to the
extent possible in a manner consistent with the foregoing statement of intent. In
this regard, notwithstanding anything in this Agreement to the contrary, the
following provisions shall apply.
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(b) In each case where this Agreement provides for the payment of an amount
that constitutes nonqualified deferred compensation under Section 409A to be made
to the Executive within a designated period (e.g., within 30 days after the
Termination Date) and such period begins and ends in different calendar years, the
exact payment date within such range shall, subject to Section 9(c) below, be
determined by the Company, in its sole discretion, and the Executive shall have no
right to designate the year in which the payment shall be made.
(c) Notwithstanding anything in this Agreement or elsewhere to the contrary,
if the Executive is a Specified Employee on the Date of Termination and, due to
the failure of an amount or other benefit that is payable under this Agreement on
account of the Executive’s “separation from service,” within the meaning of
Section 409A(a)(2)(A)(i) of the Code (other than a separation from service as a
result of the Executive’s death), to qualify for any of the exemptions from the
definition of nonqualified deferred compensation available under section
1.409A-1(b) of the Treasury Regulations, the Company reasonably determines that
such amount or other benefit, constitutes nonqualified deferred compensation that
will subject the Executive to “additional tax” under section 409A(a)(1)(B) of the
Code (together with any interest or penalties imposed with respect to, or in
connection with, such tax, a “409A Tax”) with respect to the payment of such
amount or the provision of such benefit if paid or provided at the time specified
in the Agreement, then the payment or provision thereof shall be postponed to the
first business day of the seventh month following the Termination Date or, if
earlier, the date of the Executive’s death (the “Delayed Payment Date”). In the
event that this subparagraph (v) requires a delay of any payment, such payment
shall be accumulated and paid in a single lump sum on the Delayed Payment Date
together with interest for the period of delay, compounded monthly, equal to the
prime lending rate then used by CitiBank, N.A., in New York City and in effect as
of the date the payment would otherwise have been provided.
(d) In the event the Executive becomes entitled to a Gross-Up Payment under
Section 8, such Gross-Up Payment shall in no event be made later than December 31
of the year following the year during which the related Code section 4999 excise
tax is remitted to the Internal Revenue Service, and all payments to the
Accounting Firm pursuant to Section 8 shall be made no later than the end of the
calendar year following the calendar year in which the related work is performed
by the Accounting Firm.
(e) The Company and the Executive may agree to take other actions to avoid
the imposition of a 409A Tax at such time and in such manner as permitted under
Section 409A.
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7. Except as otherwise provided above, the Employment Agreement shall continue in full force
and effect without alteration as in effect on the date hereof. The Employment Agreement, as
amended by this Amendment, constitutes the entire agreement of the parties and supersedes all prior
agreements and understandings with respect to the subject matter hereof and thereof.
IN WITNESS WHEREOF, the Executive and, pursuant to the authorization from its Board of
Directors, the Company, have caused this Amendment to be executed as of the day and year first
written above.
| /s/ Xxxxxx Xxxxxxxx | ||||
| Xxxxxx Xxxxxxxx | ||||
| SCHERING-PLOUGH CORPORATION |
||||
| By: | /s/ C. Xxx Xxxxxxx | |||
| C. Xxx Xxxxxxx | ||||
| Senior Vice President, Global Human Resources | ||||
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