RETIREMENT AGREEMENT
This Retirement Agreement (this "Agreement") by and between
Schering-Plough Corporation, a New Jersey corporation (the "Company") and
Xxxxxxx Xxx Xxxxx (the "Executive"), is dated as of November 13, 2002.
WHEREAS, the Executive has been employed by the Company as its
Chief Executive Officer pursuant to an Employment Agreement between the Company
and the Executive dated as of September 26, 1989, as amended as of June 28,
1994, further amended as of March 1, 1995, further amended as of October 24,
1995, further amended as of February 25, 1998, further amended as of November 1,
1998, and further amended as of May 15, 2002 (as so amended, the "Employment
Agreement");
WHEREAS, the Company and the Executive have mutually agreed
that the Executive will cease to serve as Chairman of the Company's Board of
Directors (the "Board") as of the date hereof, which constitutes "Good Reason"
under the Employment Agreement; and
WHEREAS, the Company and the Executive have mutually agreed
that the Executive will hereafter retire from his employment, and they wish to
set forth their mutual agreement as to the terms and conditions of such
retirement;
NOW, THEREFORE, the Company and the Executive hereby agree as
follows:
1. Retirement. Effective as of the date hereof, the Executive
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hereby resigns from his position as the Chairman of the Board. In addition,
effective as of the first to occur of (a) the Company's next annual meeting of
shareholders and (b) the Company's appointment of a successor to the Executive
(the date on which such earlier event occurs, the "Retirement Date"), the
Executive shall retire from his employment with the Company, from his position
as a member of the Board, and from all other positions the Executive may then
hold as an officer or member of the board of directors of any of the Company's
subsidiaries or affiliates.
2. Severance Payments and Benefits. (a) On or as soon as
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practicable after the Retirement Date, and in any event not later than 30 days
thereafter, if the Executive has executed a release in the form of Section 9
hereof with respect to claims arising out of acts or omissions occurring on or
before the Retirement Date (the "Retirement Release"), the Company shall pay to
the Executive the following amounts provided for under Section 5(a)(i) of the
Employment Agreement: (i) the pro-rata amount based on the Highest Annual Bonus
described in clause (A)(2) of said Section 5(a)(i), calculated as if the Date of
Termination were the date hereof; (ii) the other Accrued Obligations provided
for under clause (A) of said Section 5(a)(i), calculated as set forth therein;
(iii) the Severance Amount, calculated as set forth in clause (B) of said
Section 5(a)(i); and (iv) the lump-sum supplemental retirement benefit described
in clause (C) of said Section 5(a)(i), but with the amount described in
subclause (1) thereof calculated as if the Date of Termination were the date
hereof. In addition, the Company shall pay to the Executive, in accordance with
Section 3(f) of the Employment Agreement, the amount of any expenses that he has
incurred before the Retirement Date for which he is entitled to be reimbursed
pursuant to said Section 3(f).
(b) The Company shall pay the Executive the SRP benefit
provided for in Section 3(j) of the Employment Agreement, with the amount and
time of payment of such benefit being determined in accordance with said Section
3(j), except that (i) the amount of such benefit (before reduction by the
Executive's actual benefits under the Company's qualified retirement plan and
benefits equalization plan applicable to him and the Company's Supplemental
Executive Retirement Plan) shall be computed as if the Executive had retired at
age 62 on the date hereof, and (ii) except to the extent provided in clause (i)
of this sentence, the Executive shall be treated as having retired at age 62 on
the Retirement Date if he has not yet attained age 62 as of the Retirement Date.
(c) If the Executive has executed the Retirement Release, the
Company shall also (i) provide to the Executive and/or the Executive's family
the medical and other welfare benefits described in Section 5(a)(ii) of the
Employment Agreement for the period from the Retirement Date through the third
anniversary thereof; PROVIDED, that if the Executive becomes re-employed with
another employer and is eligible to receive medical or other welfare benefits
under another employer provided plan, the foregoing medical and other welfare
benefits shall be secondary to those provided under such other plan during such
applicable period of eligibility; and (ii) for purposes of determining
eligibility of the Executive for benefits pursuant to the Company's retiree
medical and other retiree welfare plans, programs, practices and policies, treat
the Executive as having remained employed until the third anniversary of the
Retirement Date and to have retired on the date of such third anniversary. In
addition, the Executive shall receive any other benefits to which he is entitled
under the Company's employee benefit plans in which he participates, in
accordance with the terms and conditions of the applicable plans. It is
acknowledged and agreed that all of the Executive's deferred compensation under
the Company's Deferred Compensation Plan will be paid to him as part of the
Accrued Obligations, as provided for in Section 2(a) above, and that as a
result, he will not be entitled to any other payments or benefits pursuant to
that plan from and after the Retirement Date.
(d) The Company shall provide the following to the Executive
from and after the Retirement Date for the remainder of his lifetime: (i)
subject to the next two sentences, an office at a location not on the premises
of the Company but within 35 miles of Kenilworth, New Jersey, and secretarial
assistance, in each case reasonably comparable to those received by senior
executives of the Company; (ii) an automobile and driver for security purposes
and continued provision of security alarm systems in his residences; (iii)
financial planning services on terms and conditions reasonably comparable to
those provided to senior executives of the Company; and (iv) limited use of
Company-owned aircraft, subject to reasonable availability of such aircraft. The
specific office to be provided to the Executive pursuant to the preceding
sentence shall be as mutually agreed by the Executive and the Chairman of the
Board. If such agreement has not been reached before the Retirement Date, then
until such time as the Chairman of the Board and the Executive have so agreed,
the Executive shall be provided with an appropriate office in the Company's
headquarters building; PROVIDED, that the Executive shall make all reasonable
efforts to locate an off-premises office as promptly after the date hereof as is
reasonably practicable. In addition, for one year following the Retirement Date,
the Company shall continue to provide the Executive with a security person
consistent with the security person provided to him as of the date hereof.
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(e) The Company shall pay all legal fees and expenses which
the Executive reasonably incurs in connection with entering into this Agreement.
3. Stock Options and Other Equity Awards. As provided in
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Section 5(a)(v) of the Employment Agreement, all options and other equity awards
granted to the Executive within one year before the Retirement Date shall vest
as of the Retirement Date to the extent provided in said Section 5(a)(v). All of
the Executive's outstanding options and other equity awards that are vested as
of the Retirement Date (after taking account of the preceding sentence) shall be
treated in accordance with their terms, taking into account the Executive's
retirement on the Retirement Date.
4. Mutual Nondisparagement. (a) The Executive shall not make,
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participate in the making of, or encourage any other person to make, any
statements, written or oral, which criticize, disparage, or defame the goodwill
or reputation of, or which are intended to embarrass or adversely affect the
morale of, the Company, any of its subsidiaries or affiliates, or any of, their
respective present, former or future directors, officers, executives, employees
and/or shareholders. The Executive further agrees not to make any negative
statements, written or oral, relating to his employment, his retirement, or any
aspect of the business of the Company or any of its subsidiaries or affiliates.
(b) The Company shall not make, participate in the making of,
or encourage any employees or any other person to make, any statements, written
or oral, which criticize, disparage, or defame the reputation of, or which are
intended to embarrass, the Executive. The Company further agrees not to make any
negative statements, written or oral, relating to the Executive's employment or
his retirement.
(c) Notwithstanding the foregoing, nothing in this Section 4
shall prohibit any person from making truthful statements when required by order
of a court or other body having jurisdiction, or as otherwise may be required by
law or legal process.
5. Surviving Provisions of the Employment Agreement. From the
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date hereof through the Retirement Date, the following provisions of the
Employment Agreement shall continue to apply: Section 3 (dealing with the
Executive's compensation and benefits during his continued employment);
PROVIDED, that notwithstanding the foregoing, after the date hereof, the
Executive shall not be paid any bonuses (whether annual bonuses for 2002 or 2003
or otherwise) nor granted any additional stock options or other equity or
long-term cash awards, nor shall he accrue any additional benefits under the SRP
provided for in Section 3(j); Sections 4(a) and (b) and Sections 5(b) and (c)
(dealing with termination of the Executive's employment as a result of death or
Disability or for Cause); and Sections 4(d) and (e) and 5(d), to the extent
applicable in connection with a termination of the Executive's employment as a
result of death or Disability or for Cause. From and after the date hereof, the
Executive shall remain bound by, and he hereby agrees to comply with, the
provision of Section 9 of the Employment Agreement, it being understood and
agreed that the noncompetition provisions of Section 9(b) of the Employment
Agreement will not be applicable after the Executive's retirement. From and
after the date hereof, the Company shall remain bound by, and it hereby agrees
to comply with, the special liability protection provisions of Section 13 of the
Employment Agreement.
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6. Indemnification. This Agreement does not supersede
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the indemnification provisions contained in the Company's Certificate of
Incorporation, and the Executive shall remain entitled to the protections of
such provisions to the fullest extent permitted by applicable law.
7. Cooperation. The Executive agrees to cooperate with and
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make himself reasonably available to the Company in any pending or future
governmental or regulatory investigation or proceeding, subject to any
privileges that the Executive may have. The Company will reimburse the Executive
for all reasonable costs and expenses that he incurs in connection with any such
investigation or proceeding.
8. Consulting. The Executive agrees to cooperate with the
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Company in transitioning his responsibilities and in connection therewith shall
provide such consulting services as may be reasonably requested by the Company
over the ten weeks immediately following the Retirement Date, it being
understood that such services shall not exceed fifteen hours per week.
Thereafter, the Executive shall make himself available at mutually convenient
times for such consulting services as may be reasonably requested by the
Company.
9. General Release. (a) The Executive, on behalf of himself
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and his successors, assigns, heirs and any and all other persons claiming
through the Executive, if any, and each of them, shall and does hereby forever
relieve, release, and discharge the Company and its respective predecessors,
successors, assigns, owners, attorneys, representatives, affiliates, parent
corporations, subsidiaries (whether or not wholly-owned), divisions, partners
and their officers, directors, agents, employees, servants, executors,
administrators, accountants, investigators, insurers, and any and all other
related individuals and entities, if any, and each of them, in any and all
capacities, from any and all claims, debts, liabilities, demands, obligations,
liens, promises, acts, agreements, costs and expenses (including, but not
limited to, attorneys' fees), damages, actions and causes of action, of whatever
kind or nature, including, without limitation, any statutory, civil or
administrative claim, or any claim, arising out of acts or omissions occurring
before the execution of this Agreement, whether known or unknown, suspected or
unsuspected, fixed or contingent, apparent or concealed (collectively referred
to as "claims"), including, but not limited to, any claims based on, arising out
of, related to or connected with the subject matter of the Employment Agreement,
this Agreement, the Executive's employment or the termination thereof, and any
and all facts in any manner arising out of, related to or connected with the
Executive's employment with, or termination of employment from, the Company and
its subsidiaries and affiliates, including, but not limited to, any claims
arising from rights under federal, state, and local laws prohibiting
discrimination on the basis of race, national origin, sex, religion, age,
marital status, pregnancy, handicap, ancestry, sexual orientation, or any other
form of discrimination, and any common law claims of any kind, including, but
not limited to, contract, tort, and property rights including, but not limited
to, breach of contract, breach of the implied covenant of good faith and fair
dealing, tortious interference with contract or current or prospective economic
advantage, fraud, deceit, misrepresentation, defamation, wrongful termination,
infliction of emotional distress, breach of fiduciary duty, and any other common
law claim of any kind whatever; PROVIDED, that the foregoing shall not apply to
claims for payments and benefits expressly provided for under this Agreement,
nor to any rights the Executive may have with respect to vested benefits under
employee benefit plans sponsored by the Company and its subsidiaries and
affiliates that are qualified under Section 401(a) of the Internal Revenue Code
of 1986, as amended.
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10. Entire Agreement. This Agreement sets forth the entire
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agreement of the Company and the Executive with respect to the subject matter
hereof, and supersedes the Employment Agreement in its entirety except as
specifically provided herein.
11. Successors. (a) This Agreement is personal to the
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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 Agreement shall inure to the benefit of and be enforceable
by the Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and be
binding upon the Company and its successors.
12. Miscellaneous. (a) This Agreement shall be governed by and
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construed in accordance with the laws of the State of New Jersey, without
reference to principles of conflict of laws. The captions of this Agreement are
not part of the provisions hereof and shall have no force or effect. This
Agreement may not be amended, modified, repealed, waived, extended or discharged
except by an agreement in writing signed by the party against whom enforcement
of such amendment, modification, repeal, waiver, extension or discharge is
sought. No person, other than pursuant to a resolution of the Board or a
committee thereof, shall have authority on behalf of the Company to agree to
amend, modify, repeal, waive, extend or discharge any provision of this
Agreement or anything in reference thereto.
(b) All notices and other communications hereunder shall be in
writing; shall be delivered by hand delivery to the other party or mailed by
registered or certified mail, return receipt requested, postage prepaid; shall
be deemed delivered upon actual receipt; and shall be addressed as follows:
if to the Executive:
Xxxxxxx Xxx Xxxxx
00 Xxxxxxx Xxxx
Xxxxx Xxxxx, Xxx Xxxxxx 00000
If to the Company:
Schering-Plough Corporation
0000 Xxxxxxxxx Xxxx Xxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000-0000
Attention: General Counsel
or to such other address as either party shall have furnished to the other in
writing in accordance herewith.
(c) The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
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(d) The Company may withhold from any amounts payable under
this Agreement such Federal, state or local taxes as shall be required to be
withheld pursuant to any applicable law or regulation.
IN WITNESS WHEREOF, each of the parties hereto has duly
executed this Agreement as of the date first set forth above.
THE EXECUTIVE:
/s/ Xxxxxxx Xxx Xxxxx
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Xxxxxxx Xxx Xxxxx
THE COMPANY:
Schering-Plough Corporation,
a New Jersey corporation
By: /s/ Xxxxxxx de X. Xxxxxxx
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Xxxxxxx de X. Xxxxxxx
