EXHIBIT 10.11
MSD
SPECIAL SEPARATION PROGRAM
FOR
“SEPARATED” EMPLOYEES
Eligible Employees: Employees of Merck Sharp & Dohme Corp. (and certain of its
subsidiaries) who are not subject to a collective bargaining agreement and:
(1) who experience a Separation From Service (as defined in the Separation
Benefits Plan) on or between January 1, 2009 through December 31, 2011; and
(2) who, as of their Separation Date are

  •   Less than age 49; or     •   At least age 49 but not yet age 64 with less
than 9 years of Credited Service

Effective Date: As of October 1, 2010
Separated Employees
Effective as of October 1, 2010
Revised as of October 1, 2010

 

--------------------------------------------------------------------------------

 

This document summarizes the benefits for which a “Separated Employee” may be
eligible under the Special Separation Program and other employee benefit plans
and programs of Merck Sharp & Dohme,Corp. (“MSD”). Unless otherwise noted below,
the terms and conditions of MSD’s employee benefit plans and programs applicable
on an employee’s termination of employment from the Employer are as described in
the applicable sections of the current MSD Benefits Book (and applicable
summaries of material modification) previously provided to you or provided to
you with this Brochure, as such plans and programs (and the applicable sections
of the MSD Benefits Book) may be amended from time to time. (A copy of the
applicable sections of the MSD Benefits Book (and applicable summaries of
material modification) can be obtained on line at http://hr.merck.com or
www.merck.com/benefits or by calling the Merck Benefits Service Center at
1-800-666-3725). However, to the extent that the terms below differ from those
described in the applicable sections of the current MSD Benefits Book (and
applicable summaries of material modification), this communication constitutes a
summary of material modifications and should be kept with that book.
“Separated Employees” are certain nonunionized employees of the Employer
(1) who experience a Separation From Service (as that term is defined in the
Separation Benefits Plan) on or between January 1, 2009 through December 31,
2011; and
(2) who, as of their Separation Date, is:

  •   Less than age 49 or     •   At least age 49 but not yet age 64 with less
than nine years of Credited Service

Separated Employees are only those employees who are designated by MSD as
“Separated Employees.” “Separated Employees” do not include employees who
terminate employment in any way that does not constitute a Separation From
Service as determined by MSD, including employees who resign for any reason.
Benefits described in this Brochure only apply to Separated Employees and do not
apply to any other employees of Merck or its subsidiaries or affiliates,
including the Employer.
If you have been designated as a Separated Employee, MSD will provide you with a
separation letter (the “Separation Letter”) that will describe the Special
Separation Program benefits for which you are eligible and include a release of
legal claims against Merck and its subsidiaries and affiliates, including the
Employer, and may also include other terms, such as non-solicitation and
non-competition provisions, as MSD in its sole discretion decides to include. In
order to receive the benefits under the Special Separation Program, you must
sign and return the Separation Letter by the date stated in the letter (the
“Separation Letter Return Date”) and, if a revocation period is applicable to
you, not revoke the letter within the revocation period.
Separated Employees
Effective as of October 1, 2010
Revised as of October 1, 2010

2

--------------------------------------------------------------------------------

 

Special Separation Program
All benefits under this Special Separation Program are contingent upon the
Separated Employee signing (and, if a revocation period is applicable, not
revoking) the Separation Letter. They consist of:

  •   Separation Pay     •   Outplacement Services     •   Eligibility for
continued medical, dental and life insurance benefits     •   Eligibility for a
special payment in lieu of an AIP/EIP bonus for the performance year in which
his or her Separation Date occurs if his or her Separation Date occurs after
June 30 and on or before December 31 of that performance year

Separation Pay, Outplacement Benefits and continued medical, dental and life
insurance benefits are described in the Separation Plan SPD distributed with
this Brochure.
This Brochure describes the following:

  •   the benefits for those Separated Employees who do not sign, or who sign
and, if a revocation period is applicable to them, later revoke, the Separation
Letter; and

  •   the terms and conditions of certain MSD benefit plans and programs as they
apply to any separated employee without regard to whether they sign the
Separation Letter.

Medical (including Prescription Drug) and Dental
Medical (including Prescription Drug) and Dental — If You Do Not Sign the
Separation Letter
If you do not sign the Separation Letter (or if a revocation period is
applicable to you, you revoke the Separation Letter), your medical and dental
coverage options in effect on your Separation Date will continue under MSD’s
medical and dental plans (as they may be amended from time to time) until the
end of the month in which your Separation Date occurs. At the end of that
period, you will be eligible to elect to continue your coverage in accordance
with COBRA for up to 18 months from your Separation Date. If you have no medical
and/or dental coverage under MSD’s medical and dental plans on your Separation
Date, you will not have medical and/or dental coverage, as applicable, after
your Separation Date nor will you be eligible to elect such coverage under
COBRA.
Separated Employees
Effective as of October 1, 2010
Revised as of October 1, 2010

3

--------------------------------------------------------------------------------

 

Special Separation Program — Medical (including Prescription Drug) and Dental —
If You Sign the Separation Letter
Under the Special Separation Program, if you sign the Separation Letter (and if
a revocation period is applicable to you, do not revoke the Separation Letter),
you will be eligible to continue medical and dental coverage under MSD’s plans
(as they may be amended from time to time) for the Separation Pay Period as more
fully described in the Separation Plan SPD. If the Separation Pay Period is less
than six months, you may continue medical and dental coverage for six months.
Your contributions to continue such coverage will be the same as the
contributions for active employees, as they may change from time to time and
will be payable to MSD (or its designee) in the time and manner specified by MSD
from time to time. If you do not pay the required contributions to MSD (or its
designee) in the time and manner specified by MSD from time to time, your
coverage will be terminated and it will not be reinstated. Provided you have
paid the required contributions to continue coverage, at the end of the
Separation Pay Period or, if the Separation Pay Period is less than 6 months, at
the end of the 6-month period during which medical and dental coverages are
provided, you may elect to continue your coverage in accordance with COBRA for
up to an additional 18 months.
Continuation of medical and dental coverages under the Special Separation
Program is subject to the early forfeiture provisions described in the
Separation Plan SPD.
Life Insurance
Whether or not you sign the Separation Letter, your accidental death and
dismemberment coverage ends on your Separation Date. In addition, a full month’s
premium for your life insurance coverage in effect on your Separation Date may
be deducted from your paycheck for the month in which your Separation Date
occurs.
Life Insurance — If You Do Not Sign the Separation Letter
If your Separation Date Occurs before December 31, 2010. If your Separation Date
occurs before December 31, 2010 and you do not sign the Separation Letter (or if
a revocation period is applicable to you, you revoke the Separation Letter),
your basic and optional employee group term life, dependent life, and survivor
income protection will continue for 31 days after your Separation Date. After
this 31-day period you may elect to continue these coverages at the level in
effect on your Separation Date under MSD’s Life Insurance Plan (as it may be
amended from time to time). You may continue these coverages at your cost for up
to the earlier of 30 months from your Separation Date or age 65. If you wish to
continue your survivor income protection and/or your dependent life coverage,
you must continue your
Separated Employees
Effective as of October 1, 2010
Revised as of October 1, 2010

4

--------------------------------------------------------------------------------

 

employee group term life (basic and optional). Please note that if you have “old
format” basic life insurance and/or survivor income coverage in effect on
December 31, 2010, that coverage will terminate at midnight on that date and an
amount of coverage will map to an amount of optional life insurance effective
January 1, 2011, which amount will be added to your then current optional life
insurance. See your annual enrollment communications for 2011 for more
information on coverage mapping. To continue your life insurance coverage(s) you
must contact the Merck Benefits Service Center (1-800-666-3725) within 31 days
after your Separation Letter Return Date and you must pay the applicable premium
in the time and manner specified by MSD. If you fail to pay the premium in the
time and manner specified by MSD, your coverage(s) will be terminated and will
not be reinstated. If you are interested in continuing your coverage(s), contact
the Merck Benefits Service Center (1-800-666-3725) for more information.
If your Separation Date Occurs on or after December 31, 2010. If your Separation
Date occurs on or after December 31, 2010 and you do not sign the Separation
Letter (or if a revocation period is applicable to you, you revoke the
Separation Letter), your basic group term life insurance equal to 1x base pay
will continue for 31 days after your Separation Date. During this 31-day period
you may elect to convert this coverage to an individual policy with Prudential,
subject to certain limitations. Contact the Merck Benefits Service Center
(1-800-666-3725) or Prudential for more information.
If your Separation Date occurs on or after December 31, 2010 whether or not you
sign the Separation Letter, your optional group term life insurance (including
any amount of “old format” basic life and/or survivor income protection coverage
that is mapped to your optional life insurance coverage effective January 1,
2011 as described in the annual enrollment communications for 2011) and
dependent life insurance will continue for 31 days after your Separation Date.
During this 31-day period you may elect to convert or port this coverage to an
individual policy with Prudential, subject to certain limitations. Contact the
Merck Benefits Service Center (1-800-666-3725) or Prudential for more
information.
Special Separation Program — Life Insurance — If You Sign the Separation Letter
If your Separation Date Occurs before December 31, 2010. Under the Special
Separation Program, if your Separation Date occurs before December 31, 2010 and
you sign the Separation Letter (and if a revocation period is applicable to you,
do not revoke the Separation Letter), your basic employee group term life
insurance coverage will continue under MSD’s Life Insurance Plan (as it may be
amended from time to time) until the earlier of (i) last day of the month in
which the Separation Pay Period ends, or, if the Separation Pay Period is less
than 6 months, then for 6 months beginning on the first of the
Separated Employees
Effective as of October 1, 2010
Revised as of October 1, 2010

5

--------------------------------------------------------------------------------

 

month coincident with or following your Separation Date as more fully described
in the Separation Plan SPD, or (ii) age 65. If your basic employee group term
life coverage is under the “Old Format” (that is, equal to 2x base pay with the
1st $20,000 company-paid and the remainder up to 2x base pay employee-paid at
.25/1,000), prior to January 1, 2011 your contributions to continue such
coverage will be the same as the contributions for active employees, as they may
change from time to time and will be payable to MSD (or its designee) in the
time and manner specified by MSD from time to time. Prior to January 1, 2011, if
you do not pay the required contributions to MSD (or its designee) in the time
and manner specified by MSD from time to time, your coverage will default to
“New Format” (that is 1x base pay). No contributions are required if your basic
employee group term life coverage is under the “New Format” (that is 1x base
pay). If you continue to be covered under “Old Format” coverage as of
December 31, 2010, then you will be mapped effective January 1, 2011 to
company-paid basic life insurance equal to 1x base pay and employee-paid
optional coverage of 1x base pay which will be added to your then current
optional life insurance, if any (see the annual enrollment communications for
2011 for more information on coverage mapping). Continuation of basic life
insurance under the Special Separation Program is subject to the early
forfeiture provisions described in the Separation Plan SPD.
If you sign the Separation Letter (and if a revocation period is applicable to
you, do not revoke the Separation Letter) and your basic life insurance
continues, you may also continue optional term life, dependent life and survivor
income protection at your cost for up to the earlier of 30 months from your
Separation Date or age 65. If you wish to continue your survivor income
protection and/or your dependent life coverage, you must continue your optional
employee group term life. Please note that if you have “old format” basic life
insurance and/or survivor income coverage in effect on December 31, 2010, that
coverage will terminate at midnight on that date and an amount of coverage will
map to an amount of optional life insurance effective January 1, 2011, which
amount will be added to your then current optional life insurance. See your
annual enrollment communications for 2011 for more information on coverage
mapping. To continue your optional life insurance coverage(s) you must contact
the Merck Benefits Service Center (1-800-666-3725) within 31 days after your
Separation Letter Return Date and you must pay the applicable premium in the
time and manner specified by MSD. If you fail to pay the premium in the time and
manner specified by MSD, your optional coverage(s) will be terminated and they
will not be reinstated. If you are interested in continuing your optional
coverage(s), contact the Merck Benefits Service Center (1-800-666-3725) for more
information. After the Separation Pay Period, you may continue your basic
employee group term life coverage at your cost for the remainder of the period
ending at the earlier of the expiration of the 30-month period from your
Separation Date or age 65. At that time, if you are interested in continuing
your basic life coverage, you must contact the Merck Benefits Service Center
(1-800-666-3725).
Separated Employees
Effective as of October 1, 2010
Revised as of October 1, 2010

6

--------------------------------------------------------------------------------

 

If your basic life insurance ends as a result of the early forfeiture provisions
of the Separation Benefits Plan, you will not be allowed to continue your
optional coverages under the 30-month continuation provisions. See the life
insurance section of the MSD Benefits Book (and applicable summaries of material
modification) for description of conversion rights.
If your Separation Date Occurs on or after December 31, 2010. Under the Special
Separation Program, if your Separation Date occurs on or after December 31, 2010
and you sign the Separation Letter (and if a revocation period is applicable to
you, do not revoke the Separation Letter), your basic employee group term life
insurance coverage equal to 1x base pay will continue at no cost to you under
MSD’s Life Insurance Plan (as it may be amended from time to time) until the
earlier of (i) last day of the month in which the Separation Pay Period ends,
or, if the Separation Pay Period is less than 6 months, then for 6 months
beginning on the first of the month coincident with or following your Separation
Date as more fully described in the Separation Plan SPD, or (ii) age 65.
Continuation of basic life insurance under the Special Separation Program is
subject to the early forfeiture provisions described in the Separation Plan SPD.
If your Separation Date occurs on or after December 31, 2010 whether or not you
sign the Separation Letter, your optional group term life insurance (including
any amount of “old format” and/or survivor income protection coverage that is
mapped to your optional life insurance coverage effective January 1, 2011 as
described in the annual enrollment communications for 2011) and dependent life
insurance will continue for 31 days after your Separation Date. During this
31-day period you may elect to convert or port this coverage to an individual
policy with Prudential, subject to certain limitations. Contact the Merck
Benefits Service Center (1-800-666-3725) or Prudential for more information.
Separated Employees
Effective as of October 1, 2010
Revised as of October 1, 2010

7

--------------------------------------------------------------------------------

 

The chart below is provided for your convenience to compare the medical, dental
and life insurance benefits offered under the Special Separation Program to the
normal plan provisions.

                  Special Separation         Program (if sign     Regular Plan
Provisions   letter)
Medical, Dental, Prescription
Drug
  Benefits continue to the end of the month in which your Separation Date
occurs; eligible for COBRA afterward   Benefits continue to the end of the month
in which the Separation Pay Period ends (or a minimum of 6 months), provided you
pay the applicable employee contributions in the time and manner specified by
MSD (or its designee); eligible for COBRA afterward
 
       
Basic Employee Term Life Insurance (New Format-maximum 1x base pay; Prior to
January 1, 2011, Old Format -2x base pay)
  If your Separation Date occurs before December 31, 2010

•     coverage at level in effect on Separation Date continues for 31 days,
provided “old format” coverage is reduced to 1x base pay due to mapping of “old
format” coverage effective January 1, 2011 as described in annual enrollment
materials for 2011; and

•     you may elect to continue coverage for up to 30 months (but not beyond age
65) from your Separation Date at your cost under the Merck Life Insurance Plan.

If your Separation Date occurs on or after December 31, 2010, coverage equal to
1x base pay continues for 31 days.

In either event, you may be eligible to convert to an individual policy with
Prudential after coverage under the Merck Life Insurance Plan ends.

  Coverage under the Merck Life Insurance Plan continues to the end of the month
in which the Separation Pay Period ends (or a minimum of 6 months) (but not
beyond age 65), provided you pay the applicable employee contributions in the
time and manner specified by MSD (or its designee) for “old format” coverage
prior to January 1, 2011 and subject to mapping of “old format” coverage
effective January 1, 2011 as described in annual enrollment materials for 2011.

If your Separation Date occurs before December 31, 2010, you may elect
to continue coverage under the Merck Life Insurance Plan for the balance of up
to 30 months (but not beyond age 65) from your Separation Date at your cost.

You may be eligible to convert to an individual policy with Prudential after
coverage under the Merck Life Insurance Plan ends.
 
       
Optional Employee Group Term Life, Dependent Life and prior to January 1, 2011,
Survivor Income
  Coverage at level in effect on your Separation Date continues for 31 days,
subject to mapping of “old format” and survivor income coverage effective
January 1, 2011 as described in annual enrollment materials for 2011.

If your Separation Date occurs before December 31, 2010, you may elect to
continue coverage for up to 30 months (but not beyond age 65) from your
Separation Date at your cost under the Merck Life Insurance Plan

You may be eligible to convert or port to an individual policy with Prudential
after coverage under the Merck Life Insurance Plan ends.   Coverage at level in
effect on your Separation Date continues for 31 days, subject to mapping of “old
format” and survivor income coverage effective January 1, 2011 as described in
annual enrollment materials for 2011

If your Separation Date occurs before December 31, 2010, you may elect to
continue coverage for up to 30 months (but not beyond age 65) from your
Separation Date at your cost under the Merck Life Insurance Plan

You may be eligible to convert or port to an individual policy with Prudential
after coverage under the Merck Life Insurance Plan ends.
 
       
AD&D
  No coverage   No coverage

Separated Employees
Effective as of October 1, 2010
Revised as of October 1, 2010

8

--------------------------------------------------------------------------------

 

Annual Incentive Program/Executive Incentive Program (“AIP/EIP”)—
As described in more detail below, payment of bonuses, or a special payment in
lieu of a bonus, depends on when a Separated Employee’s Separation Date occurs
during a performance year. Actual AIP/EIP bonuses with respect to the
performance year immediately preceding the Separated Employee’s Separation Date
may be paid to employees whose employment terminates between January 1 and the
time AIP/EIP bonuses are paid for that year to other employees. No AIP/EIP or
special payment in lieu of a bonus with respect to the performance year in which
the Separation Date occurs is payable for any employee separated January 1
through June 30, inclusive. A special payment in lieu of a bonus is payable
under this program with respect to the performance year in which the Separation
Date occurs only for employees whose Separation Dates occur on or after July 1
and on or before December 31 of that performance year. For executives who are
listed in the Summary Compensation Table for the most recent proxy materials
issued by Merck in connection with the annual meeting of shareholders, the
amount of payment in lieu of EIP award, if any, will be guided by the following
principles, but Merck retains complete discretion to pay more, or less, than
those amounts. The Employer reserves the right to treat the payment of AIP/EIP
bonuses and/or the special payments in lieu of AIP/EIP bonuses as supplemental
wages subject to flat-rate withholding (that is, not taking into account any
exemptions).
If Your Separation Date occurs between January 1 and prior to the time AIP/EIP
bonuses are paid for the prior performance year
If your Separation Date occurs on or after January 1 and prior to the day
AIP/EIP bonuses for the prior performance year are paid to other MSD employees,
you will be eligible for consideration for an AIP/EIP bonus with respect to the
prior complete performance year on the same terms and conditions as other MSD
employees. Provided you are in a class of employees eligible for an AIP/EIP,
your AIP/EIP bonus, if any, will be paid to you at the same time AIP/EIP bonuses
are paid to other MSD employees or will be deferred in accordance with your
applicable deferral election for that AIP/EIP performance year, as applicable.
Eligibility for consideration for AIP/EIP bonus is not contingent upon your
signing the Separation Letter. You will not be eligible for any AIP/EIP or
payment in lieu of an AIP/EIP for the performance year in which your Separation
Date occurs.
If Your Separation Date occurs between the time AIP/EIP bonuses for the prior
performance year are paid and June 30
If your Separation Date occurs after AIP/EIP bonuses for the prior performance
year are paid to other MSD employees and on or before June 30, you will not be
eligible for consideration for an AIP/EIP bonus or the special in lieu of bonus
payment described below whether or not you sign the Separation Letter.
Separated Employees
Effective as of October 1, 2010
Revised as of October 1, 2010

9

--------------------------------------------------------------------------------

 

If Your Separation Date occurs after June 30 and on or before December 31
If your Separation Date occurs after June 30 and on or before December 31, a
special payment in lieu of an AIP/EIP with respect to the performance year in
which your Separation Date occurs may be paid only if you sign (and, if a
revocation period is applicable to you, do not revoke) the Separation Letter.
The special payment, if any, will be calculated based on the target bonus
applicable to you under the Annual Incentive Program/Executive Incentive Program
with respect to the current performance year and the number of full and partial
months you worked in the current performance year and is subject to adjustment
by Merck in its sole discretion based on a variety of factors, including but not
limited to your documented poor or extraordinary performance in the current
performance year. If you receive a special payment in lieu of an AIP/EIP bonus,
it will be paid to you (less applicable withholding) as soon as administratively
feasible following your Separation Date. However, if you elected to defer your
AIP/EIP bonus, that election will apply to payments made in lieu of AIP/EIP
bonus.
OTHER BENEFITS AND PROGRAMS
Stock Options, Restricted Stock Units and Performance Stock Units
Only employees may receive incentives under Merck’s incentive stock plans,
including stock options, restricted stock units (“RSUs”) or performance stock
units (“PSUs”); therefore, you will not be eligible to receive any grants after
your Separation Date.
Outstanding Stock Options, RSUs and PSUs
Whether you sign the Separation Letter or not, the separation provisions
applicable to stock options, RSUs and PSUs will apply to any outstanding
incentives you hold on your Separation Date that were granted to you before
2010; the sale/involuntary termination provisions applicable to stock options,
RSUs and PSUs will apply to any outstanding incentives you hold on your
Separation Date that were granted to you after 2009. Provisions may differ based
on the grants. IT IS YOUR REPSONSIBILITY TO FAMILIARIZE YOURSELF WITH THE TERMS
OF INDIVIDUAL GRANTS.
Separated Employees
Effective as of October 1, 2010
Revised as of October 1, 2010

10

--------------------------------------------------------------------------------

 

Stock Options (separation/sale/involuntary termination terms) Generally, for
outstanding annual and quarterly stock option grants made prior to 2001, the
terms are:
Vested options will expire upon the earlier of (i) the day before the one-year
anniversary of your Separation Date or (ii) the original 10-year expiration
date.
Generally, for outstanding annual and quarterly stock option grants made in 2001
through 2009:

      Unvested options will vest on the Separation Date. You will then have two
years to exercise them and previously vested grants. All outstanding vested
options—including those previously vested—will expire on the day before the
second anniversary of your Separation Date (or their original expiration date,
if earlier).

Generally, for outstanding annual and quarterly stock option grants made during
2010 and thereafter, terms differ depending on whether your employment
terminated due to the sale of your division or otherwise in an involuntary
termination:

  •   If your employment is terminated due to the sale of your subsidiary,
division or joint venture, options that would have become exercisable within one
year of your Separation Date will be exercisable on your Separation Date and all
others immediately expire. All unexercised options will expire on the day before
the first anniversary of your Separation Date (or their original expiration
date, if earlier).     •   If your employment terminates due to an other
involuntary termination, options that are unvested on your Separation date will
expire on your Separation Date. Options that are exercisable on your Separation
Date will expire on the day before the first anniversary of your Separation Date
(or their original expiration date, if earlier).

Key R&D, MRL and MMD new hire stock option grants and other stock option grants
may have different terms. See the term sheets applicable to such stock option
grants.
If on your Separation Date your then outstanding equity is treated as described
above and you are rehired,

  •   stock options granted before 2010 that are unexercised and outstanding on
your rehire date will be reinstated to active status as if your employment had
not been interrupted, and     •   stock options granted during 2010 and
thereafter that are unexercised and outstanding on your rehire date will
continue to be treated as described above.

Separated Employees
Effective as of October 1, 2010
Revised as of October 1, 2010

11

--------------------------------------------------------------------------------

 

RSUs (separation/sale/involuntary termination terms)
For RSUs granted before 1/1/2011, under the separation provisions of the RSUs, a
pro rata portion of your annual grants of restricted stock units, if any,
generally will vest and become distributable at the same time as if your
employment had continued; the remainder of the grant will expire on your
Separation Date. Different terms may apply to RSUs that were not granted as part
of the annual RSU grants. See the term sheets applicable to RSUs granted to you,
if any.
For each annual and quarterly RSU grant made on or after 1/1/2010, terms differ
depending on whether your employment terminated due to the sale of your division
or otherwise in an involuntary termination.
If your employment is terminated due to the sale of your subsidiary, division or
joint venture, the following portion of your RSU awards and accrued dividends,
if any, will be distributed at the time distributed to active employees:
one-third if your Separation Date is on or after the grant date but before the
first anniversary of the grant date; two-thirds if your Separation Date is on or
after the first anniversary of the grant date but before the second anniversary
of the grant date; and all if your Separation Date is on or after the second
anniversary of the grant date.
If your employment terminates in an other involuntary termination and your
Separation Date occurs

  •   On or after the first anniversary of the RSU grant date, a pro rata
portion of your RSU grant generally will vest and become distributable to you
(together with any applicable accrued dividend equivalents) at the same time as
if your employment had continued; the remainder of the grant will expire on your
Separation Date; or

  •   before the first anniversary of the RSU grant date, the entire grant
(together with any applicable accrued dividend equivalents) will expire on your
Separation Date.

See the term sheets applicable to RSUs granted to you, if any.
PSUs (separation/sale/involuntary termination terms)
For PSUs granted before 1/1/2010, under the separation provisions of the PSUs, a
pro rata portion of your annual grant of performance share units will be
payable, if at all, when the distribution with respect to the applicable
performance year is made to active employees. See the term sheets applicable to
PSUs granted to you, if any.
For each PSU granted on or after 1/1/2010, terms differ depending on whether
your employment terminated due to the sale of your division or otherwise in an
involuntary termination.
Separated Employees
Effective as of October 1, 2010
Revised as of October 1, 2010

12

--------------------------------------------------------------------------------

 

If your employment is terminated due to the sale of your subsidiary, division or
joint venture, the following portion of your PSU awards will be distributed at
the time distributed to active employees, based on actual performance: one-third
if your Separation Date is on or after the grant date but before the first
anniversary of the grant date; two-thirds if your Separation Date is on or after
the first anniversary of the grant date but before the second anniversary of the
grant date; and all if your Separation Date is on or after the second
anniversary of the grant date.
If your employment terminates in an other involuntary termination and your
Separation Date occurs

  •   on or after the first anniversary of the PSU grant date, a pro rata
portion of your PSU grant generally will vest and become distributable to you at
the same time as if your employment had continued and based on actual
performance; the remainder of the grant will expire on your Separation Date; or
    •   before the first anniversary of the PSU grant date, the entire grant
will expire on your Separation Date.

See the term sheets applicable to PSUs granted to you, if any.

If you have any question about your stock options, RSUs or PSUs, you can call
the Support Center at 1-866-MERCK-HD (1-866-637-2543).
* * *
The following describes the terms and conditions of certain MSD benefit plans
and programs as they apply to employees whose employment with the Employer
terminates for any reason. For additional information, see the applicable
sections of the current MSD Benefits Book (and applicable summaries of material
modification).
Separated Employees
Effective as of October 1, 2010
Revised as of October 1, 2010

13

--------------------------------------------------------------------------------

 

Dependent Care Reimbursement Account
Your participation in the Dependent Care Reimbursement Account (“DCRA”) ends on
your Separation Date. Eligible expenses incurred throughout the calendar year in
which your Separation Date occurs (even after employment with the Employer ends)
can be reimbursed but only up to the amount actually contributed to the account.
Claims for those expenses must be submitted to Horizon Blue Cross Blue Shield by
April 15th of the year following the year in which your Separation Date occurs.
Amounts remaining in the account after all eligible expenses have been paid will
be forfeited.
Financial Planning
Your company-paid financial planning benefit will continue through the end of
the calendar year in which your Separation Date occurs.
Flexible Benefits Program
The Flexible Benefits Program consists of the following MSD plans and programs:
medical, dental, vision, health care and dependent care reimbursement accounts,
life insurance (including basic and optional term life, dependent term life,
accidental death and dismemberment and prior to January 1, 2011, survivor income
protection), long term care and long term disability. Your participation in
these plans ends as described elsewhere in this communication. However, a full
month of contribution/premium for your coverage under these plans in effect on
your Separation Date may be deducted from your paycheck for the month in which
your Separation Date occurs.
Health Care Reimbursement Account
Your participation in the Health Care Reimbursement Account (“HCRA”) ends on
your Separation Date, unless you elect to continue to participate in accordance
with COBRA for the remainder of the calendar year in which your Separation Date
occurs. If you elect to continue participation in HCRA under COBRA, you must
make your required contributions on an after-tax basis. Eligible expenses
incurred while you participate in HCRA during the calendar year in which your
Separation Date occurs can be reimbursed up to your entire elected amount.
Claims incurred after your participation in HCRA ends cannot be reimbursed, no
matter how much money is left in the account. Claims for expenses incurred
during the calendar year in which your Separation Date occurs and while you are
a participant in HCRA must be submitted to Horizon Blue Cross Blue Shield by
April 15 of the year following the year in which your Separation Date occurs.
Amounts remaining in the account after all eligible expenses have been paid will
be forfeited.
Separated Employees
Effective as of October 1, 2010
Revised as of October 1, 2010

14

--------------------------------------------------------------------------------

 

Long Term Care
If you elected coverage under MSD’s Long Term Care Plan for you (or your spouse
or same-sex domestic partner), that coverage will end on your Separation Date.
However, if you want to continue coverage without interruption, you must contact
CNA (the insurer) and pay your first quarterly premium to CNA within 31 days
after the last day of the month in which your Separation Date occurs. For more
information (and to request the necessary forms) contact CNA directly at
1-800-528-4582.
Long Term Disability
Your participation in the Long Term Disability Plan will end on the last day of
the month in which your Separation Date occurs. In other words, you must have
satisfied the 26-week eligibility period by the end of the month that includes
your Separation Date to be eligible for LTD benefits. If you are disabled and
receiving income replacement benefits under the Long Term Disability Plan on
your Separation Date, those benefits will continue in accordance with the terms
of the Long Term Disability Plan. However, Separation Pay paid by the Employer
under the Special Separation Program will act as an offset from benefits payable
under the Long Term Disability Plan (meaning the LTD benefits will be reduced by
Separation Pay).
Pension
If you have at least 5 years of Vesting Service (as that term is defined in the
Retirement Plan) as of your Separation Date, you will be a “terminated vested”
participant in the Retirement Plan. This means that your employment will have
terminated before you were eligible to “retire” from active service with the
Employer (generally, age 55 with at least 10 years of Credited Service (as that
term is defined in the Retirement Plan)) and that you have a “vested” pension
under the Retirement Plan.
If you are a “terminated vested” participant, your benefits under the Retirement
Plan must begin no later than the first day of the month following age 65 after
your employment terminates. However, you can start receiving a reduced benefit
on the first day of any month after you reach age 55. The early payment
reduction for a “terminated vested” participant is an “actuarial” reduction.
That is, your life expectancy and certain other actuarial assumptions are used
in calculating the reduction amount. You should expect this to reduce your
benefits substantially because by commencing your benefit early, you receive
benefits earlier and for a longer period. A table illustrating examples of
actuarial reductions from the age 65 benefit and a more detailed explanation of
the benefits for “terminated vested” participants can be found in the Salaried
Retirement Plan section of the current MSD Benefits Book (and applicable
summaries of material modification). If you do not have at least 5 years of
Separated Employees
Effective as of October 1, 2010
Revised as of October 1, 2010

15

--------------------------------------------------------------------------------

 

Vesting Service as of your Separation Date, you will not be eligible for a
benefit under the Retirement Plan.
After you leave the Employer, if you are entitled to a vested benefit from the
Retirement Plan, you’ll receive a statement that will tell you what your life
income will be at age 65. This will be sent to you within approximately one year
from your Separation Date. If any portion of your benefit is from a different
plan, such as the Retirement Plan for Hourly Employees of MSD, there is an
offset which reduces the benefit from the Retirement Plan. The aggregate lump
sum benefit payable from two different plans generally differs slightly from a
lump sum payable from only one plan (especially if different interest rate
methodologies apply).
Payments not Compensation for Retirement Plan. Separation Pay is not
compensation for Retirement Plan purposes. A bonus or the special payment, if
any, in lieu of an AIP/EIP bonus paid after your Separation Date is also not
compensation for Retirement Plan purposes.
Sales Incentive Plan
If you are a participant in a sales incentive plan of Merck or its subsidiaries,
including the Employer, on your Separation Date, your eligibility to be paid a
bonus, if any, will be determined under the terms and conditions of the plan in
which you are a participant.
Savings Plan
Any Separation Pay you receive under the Special Separation Program is not Base
Pay and may not be contributed to the Savings Plan. A pro-rata deduction will be
made to the Savings Plan based on the percentage of your monthly base pay you
receive for the month in which your Separation Date occurs. If you have a plan
loan and do not repay it within 45 days of your Separation Date, the loan will
be declared in default and reported as a taxable distribution to the Internal
Revenue Service.
You generally may receive a final distribution from the Savings Plan at any time
after your Separation Date. However, if your account balance is $5,000 or less,
your account balance automatically will be distributed to you soon after your
Separation Date. If, upon reaching age 65, you have not previously elected to
receive your benefits, your account balance will be distributed to you without
regard to its amount. Review the information in the Salaried Savings Plan
section of the current MSD Benefits Book (and applicable summaries of material
modification) for additional information on Receiving a Final Distribution.
Separated Employees
Effective as of October 1, 2010
Revised as of October 1, 2010

16

--------------------------------------------------------------------------------

 

Short Term Disability
Subject to applicable state law, your participation in the Short Term Disability
Plan ends on your Separation Date. If you are disabled and are receiving income
replacement benefits under the Short Term Disability Plan on your Separation
Date, those benefits will continue in accordance with the terms of the plan.
However, subject to state law, Separation Pay paid by the Employer under the
Special Separation Program will act as an offset from benefits payable under the
Short Term Disability Plan (meaning the STD benefits will be reduced by
Separation Pay). Where state law does not permit such offsets to be made to STD
benefits (or where MSD in its sole and absolute discretion determines it is
easier for the Employer to administer), STD benefits will instead act as an
offset from Separation Pay paid (or payable) by the Employer under the Special
Separation Program (meaning Separation Pay will be reduced by the STD benefits).
Travel Accident
Your coverage under the Travel Accident Insurance Plan ends on your Separation
Date.
Vacation Pay
You will be paid for any amount of vacation that you have accrued but not used
as of your Separation Date. Conversely, you must reimburse MSD for any vacation
you used prior to your Separation Date that you had not earned as of your
Separation Date. Any such amounts to be reimbursed may be deducted from
Separation Pay paid pursuant to the Separation Benefits Plan.
Vision
Coverage under the Vision Plan ends on the last day of the month in which your
Separation Date occurs. You will be given the opportunity to continue this
benefit in accordance with COBRA for up to 18 months from your Separation Date
by paying the required premiums.
* * *
The Special Separation Program described here currently is scheduled to be in
effect for Separations From Service that occur from January 1, 2009 through
December 31, 2011. MSD retains the right (to the extent permitted by law) to
amend or terminate the Special Separation Program and any benefit or plan
described in this brochure (or otherwise) at any time. However, following a
“change in control” of Merck (as defined in the Merck & Co., Inc. Change in
Control Separation Benefits Plan, as it may be
Separated Employees
Effective as of October 1, 2010
Revised as of October 1, 2010

17

--------------------------------------------------------------------------------

 

amended from time to time), certain limitations apply to MSD’s ability to amend
or terminate this and other benefit plans.
While it has no current intention to do so, MSD also may extend, decrease or
enhance, the Special Separation Program in the future. If you sign and return
the Separation Letter by the Separation Letter Return Date, any later amendment
or termination will not decrease or increase the amount of Separation Pay you
are eligible to receive under the Special Separation Program.
Notwithstanding anything in the Special Separation Program to the contrary,
benefits under the Program that are subject to Section 409A of the Internal
Revenue Code of 1986, as amended, will be adjusted to avoid the excise tax under
Section 409A. MSD will take any and all steps it determines are necessary, in
its sole and absolute discretion, to adjust benefits under the Special
Separation Program to avoid the excise tax under Section 409A, including but not
limited to, reducing or eliminating benefits, changing the time or form of
payment of benefits, etc.
Payments made on account of separation from service are limited during the six
months following the termination of employment of a “Specified Employee” as
defined in Treas. Reg. Sec. 1.409A-1(i) or any successor thereto, which in
general includes the top 50 employees of a company ranked by compensation.
Notwithstanding anything contained in the Special Separation Program to the
contrary, if a Covered Employee is a “Specified Employee” on his or her
Separation Date, to the extent required by Section 409A of the Internal Revenue
Code of 1986, as amended, no payments will be made during the six-month period
following termination of employment. Instead, amounts that would otherwise have
been paid during that six-month period will be accumulated and paid, without
interest, as soon as administratively feasible following the end of such
six-month period after termination of employment.
Separated Employees
Effective as of October 1, 2010
Revised as of October 1, 2010

18

--------------------------------------------------------------------------------

 

Glossary of Definitions
As used in this document, the following terms have the following meanings.
“Basic Employee Group Term Life Coverage” is (i) prior to January 1, 2011, 1x
base pay for those who are considered New Format and 2x base pay (with the 1st
$20,000 company-paid and the remainder up to 2x base pay employee paid at
.25/1,000) for those who are considered Old Format and (ii) on and after
January 1, 2011, 1x base pay.
“Credited Service” is as defined in the Retirement Plan.
“Employer” means individually and collectively, Merck Sharp & Dohme Corp., Merck
Holdings, Inc., Merck and Company Incorporated, KBI Enterprises, Inc., Rosetta
Inpharmatics LLC, Merck HDAC Research, LLC, Abmaxis, Inc., Glycofi, Inc. and
Sirna Therapeutics, Inc.
“Merck” means Merck & Co., Inc., ultimate parent of Merck Sharp & Dohme Corp.
“MSD” means Merck Sharp & Dohme Corp.
“MSD Benefits Book” means summary plan descriptions of various employee benefit
plans sponsored by MSD (formerly known as the Merck Benefits Book).
“Retirement Plan” means the Retirement Plan for Salaried Employees of MSD.
“Separation Benefits Plan” means the MSD Separation Benefits Plan for Nonunion
Employees
“Separation Date” means a Separated Employee’s last day of employment with the
Employer.
“Separated Employees” are certain nonunionized employees of the Employer
(1) who experience a Separation From Service (as that term is defined in the
Separation Benefits Plan) on or between January 1, 2009 through December 31,
2011; and
(2) who, as of their Separation Date, is:

  •   Less than age 49 or     •   At least age 49 but not yet age 64 with less
than nine years of Credited Service

Separated Employees are only those employees who are designated by MSD as
“Separated Employees.” “Separated Employees” do not include employees who
terminate employment in any way that does not constitute a Separation From
Service as determined by MSD, including employees who resign for any reason.
Separated Employees
Effective as of October 1, 2010
Revised as of October 1, 2010

19

--------------------------------------------------------------------------------

 

“Separation Letter” means the MSD-provided letter that will describe the Special
Separation Program benefits and include a release of claims against Merck and
its subsidiaries and affiliates, including the Employer and may include such
other terms such as non-solicitation and non-competition provisions, as MSD
determines.
“Separation Letter Return Date” is the date stated in the Separation Letter by
which Separated Employees must sign and return it to MSD.
“Separation Pay Period” is the number of full or partial workweeks for which a
Separated Employee is being paid Separation Pay.
“Special Separation Program” means the separation benefits that Separated
Employees receive if they sign (and, if a revocation period is applicable to
them, do not revoke) the Separation Letter.
Separated Employees
Effective as of October 1, 2010
Revised as of October 1, 2010

20