EX-10.12






Exhibit 10.12




MERCK & CO., INC.




SPECIAL SEPARATION PROGRAM




FOR




“SEPARATED RETIREMENT ELIGIBLE” EMPLOYEES



Eligible Employees: Employees of Merck & Co., Inc. 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 and December 31, 2011; and



(2) who on the Separation Date are





	•	 	at least age 55 with at least 10 years of Credited Service; or
	 
	•	 	at least age 65





Effective Date: As of January 1, 2009




 









 





This document summarizes the benefits for which a “Separated Retirement Eligible Employee” may be
eligible under the Special Separation Program and other Merck employee benefit plans and programs.
Unless otherwise noted below, the terms and conditions of Merck’s employee benefit plans and
programs applicable on an employee’s termination of employment from Merck are as described in the
applicable sections of the current Merck 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 Merck Benefits Book) may be amended from time to time.
(A copy of the applicable sections of the Merck Benefits Book (and applicable summaries of
material modification) can be obtained on line at
http://humres.merck.com/benefit/about_benefits_book.html 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 Merck Benefits Book (and
applicable summaries of material modification), this communication constitutes a summary of
material modifications and should be kept with that book.



“Separated Retirement Eligible Employees” are certain nonunionized Merck & Co., Inc. employees




(1) who experience a Separation From Service (as defined in the Separation Benefits Plan) on or
between January 1, 2009 and December 31, 2011; and




(2) who as of their last day of employment with Merck (the “Separation Date”), are







	 	•	 	at least age 55 and have at least 10 years of Credited Service (as defined in the
Retirement Plan); or
	 
	 	•	 	at least age 65.





Separated Retirement Eligible Employees are only those employees who are designated by Merck as
“Separated Retirement Eligible Employees.” “Separated Retirement Eligible Employees” do not
include employees who terminate employment in any way that does not constitute a Separation From
Service (as defined in the Separation Benefits Plan) as determined by Merck, including employees
who resign for any reason. Benefits described in this Brochure only apply to Separated Retirement
Eligible Employees and do not apply to any other Merck employees.



If you have been designated as a Separated Retirement Eligible Employee, the Company will provide
you with a separation letter (the “Separation Letter”) that will describe the Special Separation
Program benefits for which you are eligible and will include a release of legal claims against the
Company, and may also include other terms, such as non-solicitation and non-competition provisions,
as the Company 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



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Date”) and, if a revocation period is applicable to you, not revoke the letter within the
revocation period.



Special Separation Program




All benefits under this Special Separation Program are contingent upon the Separated Retirement
Eligible 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 and dental benefits (for employees not otherwise
eligible for retiree medical and dental benefits)
	 
	 	•	 	Rule of 85 Transition Benefit under the Retirement Plan (for those who would have
attained it within two years of their Separation Dates)
	 
	 	•	 	Eligibility for a special payment in lieu of an AIP/EIP bonus for the performance
year in which his or her Separation Date occurs
	 
	 	•	 	Eligibility for extended use of the day care center





Separation Pay and Outplacement Benefits are described in the Separation Plan SPD distributed with
this Brochure.



This Brochure describes:




	•	 	additional benefits offered under the Special Separation Program that are not described in the
Separation Plan SPD:






	 	o	 	eligibility for the Rule of 85 Transition Benefit under the Retirement Plan
	 
	 	o	 	eligibility for continued medical and dental benefits for employees who are
not otherwise eligible for retiree medical and dental benefits; and
	 
	 	o	 	eligibility for extended use of the day care center, if applicable.






	•	 	benefits for those Separated Retirement Eligible Employees who do not sign, or, if a revocation period is applicable to
them, who sign and later revoke, the Separation Letter; and
	 
	•	 	terms and conditions of certain Merck benefit plans and programs as they apply to any separated employee without regard
to whether they sign the Separation Letter.










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Retirement Plan – Rule of 85 Transition Benefit




If You Do Not Sign the Separation Letter




You are eligible to retire under the terms of the Retirement Plan. As a Separated Retirement
Eligible Employee, you will be considered to have retired from active service for Retirement Plan
purposes on your Separation Date (even if the Separation Date is not the first day of a month).
Your benefit from the Retirement Plan will be based on the Credited Service accrued as of your
Separation Date and will be payable on the first day of the month following age 65 (or, if you are
at least 65 on your Separation Date, on the first day of the month following your Separation Date).
However, you can begin to receive your benefits on the first day of any month after you reach age
55. If you commence your benefit at or after age 55 but before age 62, the benefit will be
reduced. This reduction reflects that payments are made earlier and for a longer period of time.
The reduction for “retirees” is 0.25% for each month (i.e., 3% for each year that benefit payments
begin before age 62). The reduction is much less than the actuarial reduction that applies to
“terminated vested” participants. You will not receive the “Rule of 85 Transition Benefit” unless
you are eligible for the Rule of 85 Transition Benefit as described below.



Death. If you die after your Separation Date but before you begin to receive your benefits from
the Retirement Plan, your spouse (or estate in the case of any unmarried participant) will receive
an annuity or a lump sum. The lump sum, according to the plan factors in effect as they change
from time to time, is based on your age 65 accrued benefit, reduced .25% per month before age 62
that your death occurs. Then the benefit is calculated as though you had elected a joint and 100%
survivor annuity with your spouse (if you’re unmarried, as though you had a spouse the same age as
you) on the day before you died. The lump sum is the actuarial equivalent of just the 100%
survivor portion of the benefit—that is, taking into account your death. The annuity or lump sum
is payable only after your spouse (or administrator of your estate) applies for the benefit.



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.



If any portion of your benefit is from a different plan, such as the Retirement Plan for Hourly
Employees of Merck & Co., Inc., 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).



Special Separation Program – Rule of 85 Transition Benefit – If You Sign the Separation Letter



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As described above in the paragraph “If You Do Not Sign the Separation Letter,” you are eligible to
retire under the terms of the Retirement Plan. Under the Special Separation Program, if you would
have qualified for the Rule of 85 Transition Benefit within two years of your Separation Date, the
Rule of 85 Transition Benefit will be paid to you under special provisions under the Retirement
Plan. The Rule of 85 Transition Benefit will be payable upon commencement of your pension
benefits, even if the date of commencement of pension benefits is earlier than the date you would
otherwise have qualified for the Rule of 85 Transition Benefit.



The Rule of 85 Transition Benefit is fully described in the Salaried Retirement Plan section of the
current Merck Benefits Book (and applicable summaries of material modification). In general, the
Rule of 85 was phased out in July of 1995. It had provided that an employee whose employment
terminated after age 55, and whose age and service equaled at least 85, would be eligible for an
unreduced age 65 benefit instead of the normal early retirement subsidy (i.e., a 3% per year
reduction for every year the benefit begins prior to age 62). The Rule of 85 Transition Benefit
preserved 100% of the Rule of 85 for any employee who was 50 or older in July of 1995, with 90%
preserved for then 49 year old employees, etc. No benefit was preserved for employees then 40 or
younger.



You are eligible for the Rule of 85 Transition Benefit under the Special Separation Program, if you
would have reached the Rule of 85 Transition Benefit within two years of your Separation Date. In
other words, this enhancement applies if on your Separation Date the sum of your age and Credited
Service is at least 81.



For example, assume a Separated Retirement Eligible Employee was born June 30, 1951. On July 1,
1995, this employee was 44, so 40% of her Rule of 85 Transition benefit was preserved. Assume
further that her Separation Date is January 1, 2009 and that she then has exactly 26 years of
Credited Service. If her employment had continued, she would have been entitled to the Rule of 85
Transition Benefit as of October 1, 2009 (her age and service as of that date would have equaled
85). Therefore, this employee would receive the Rule of 85 Transition Benefit (i.e., 40% of the
Rule of 85 Transition Benefit) when her benefits from the Retirement Plan begin, because October 1,
2009, is less than two years from her Separation Date of January 1, 2009.



On the other hand, assume instead that a Separated Retirement Eligible Employee’s age and Credited
Service as of his Separation Date add up to less than 81. He is not eligible for the Rule of 85
Transition Benefit under the Special Separation Program because he would not have been entitled to
the Rule of 85 Transition Benefit within two years of his Separation Date.



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The special provisions in the Retirement Plan are subject to certain discrimination tests under tax
laws. Our actuaries have reviewed data on a preliminary basis and concluded that these special
provisions satisfy those tests, under most scenarios. However, if the provisions in practice
happen to fail the tests, the benefits described here will be made, to the extent necessary, from
Company assets outside the Retirement Plan. Benefits from the Retirement Plan have tax advantages
that payments outside it do not. You will be notified as soon as possible if this provision
affects you.



Split Election. Separated Retirement Eligible Employees whose pension benefits are payable in part
from the Supplemental Retirement Plan who wish to make an election with respect to the retirement
benefits under that plan may do so in accordance with that plan by contacting the HR Service Center
at 1-866-MRK-HR4U (1-866-675-4748) to request the appropriate paperwork if eligible.



Medical (including Prescription Drug) and Dental




If You Are Eligible For Retiree Healthcare Benefits under the Current Terms of the Merck Medical
and Dental Plans



If, as of your Separation Date, you are eligible for retiree healthcare (medical and dental)
benefits under the terms of Merck’s medical and dental plans, whether you sign the Separation
Letter or not, you will be eligible to select retiree healthcare coverage under Merck’s plans (as
they may be amended from time to time) as of the first day of the month after your Separation Date
(even if your Separation Date is not the first day of a month). Your active employee coverage will
continue to the end of the month in which your Separation Date occurs. Your retiree healthcare
benefits will commence as of the first of the month following your Separation Date (“Retiree
Healthcare Commencement Date”).



You will be automatically enrolled in retiree dental under the comprehensive coverage option and in
retiree medical coverage under the same coverage option in which you were enrolled as an active
employee on the day before your Retiree Healthcare Commencement Date, provided that coverage option
is available to you as a retiree; if that medical coverage option is not available, you will be
automatically enrolled in the plan’s default option (currently the Merck PPO option if your address
is within the network coverage area, otherwise the Merck 80/20 Out of Area option). Coverage under
your retiree medical and dental coverage will also automatically continue for your eligible
dependents who were your covered dependents under the applicable plans on the day before your
Retiree Healthcare Commencement Date.



You are permitted to add eligible dependents or drop covered dependents and/or change medical
coverage options retroactive to the date your Retiree Healthcare Commencement Date only if you
notify the Merck Benefits Service Center of



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such change(s) within 30 days after your Retiree Healthcare Commencement Date. Thereafter, any
permitted changes will only be made prospectively.



Note that only those eligible dependents who are your “Dependents of Record” as of your Retiree
Healthcare Commencement Date can be eligible for dependent coverage under your retiree healthcare
coverage. Be sure to register your eligible dependents as “Dependents of Record” with the Merck
Benefit Service Center within 30 days after your Retiree Healthcare Commencement Date. If an
eligible dependent is not timely registered as your “Dependent of Record”, he/she will never be
eligible for dependent coverage under your Merck retiree healthcare coverage. Eligible dependents
who are your covered dependents on your Retiree Healthcare Commencement Date, are automatically
registered as Dependents of Record.



You can “opt-out” of retiree coverage, but note that your ability to re-enroll for coverage is
generally limited to annual open enrollment (with the following January 1 as the re-enrollment
effective date); mid-year enrollment is available only if you are covered under and lose other
coverage and you contact the Merck Benefit Service Center to re-enroll in Merck retiree coverage
within 30 days of the loss of your other coverage.



You must pay the applicable premiums for retiree healthcare coverage beginning on your Retiree
Healthcare Commencement Date. You will receive an invoice from Fidelity that indicates the premium
due for your retiree coverage. If you fail to pay the premium required for retiree healthcare
coverage in the time and manner specified on the invoice, you will be deemed to have opted out of
coverage and your ability to re-enroll is limited as described above.



For purposes of determining the retiree medical and dental premiums, a Separated Retirement
Eligible Employee




	 	•	 	will have the number of points that is the sum of his/her age and years of adjusted
service as recorded on the Company’s records (from age 40 for those subject to the
“Rule of 88”; all adjusted service for those subject to the “Rule of 92”) as of
his/her Separation Date; and
	 
	 	•	 	will pay premiums for medical coverage in accordance with the premium schedule for
the “Rule of 92” or the “Rule of 88”, as applicable, in effect on his/her Retiree
Healthcare Commencement Date, as the premium schedule may be amended from time to
time.






	 	 	To determine whether the “Rule of 92” or the “Rule of 88” applies to you and to see the
premiums applicable to those schedules, see the Reference Library on Fidelity’s netbenefits
website.





You are eligible for retiree healthcare benefits if, as of your Separation Date, you are at least
age 55 and:



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	 	•	 	have at least 10 years of service with the Company after age 40; or
	 
	 	•	 	(i) were an employee of the Company on January 1, 2003, (ii) have not had a break in
service since January 1, 2003, and (iii) have at least 10 years of Credited Service (as
defined in the Retirement Plan); or
	 
	 	•	 	(i) had a break in service with the Company after age 45 and before April 1, 2002, (ii)
had returned to work before April 1, 2002 and were employed on that date, (iii) have not
had a break in service since April 1, 2002, and (iv) have 10 years of Credited Service (as
defined in the Retirement Plan).





If You Are Not Eligible For Retiree Healthcare Benefits



If You Are Not Eligible For Retiree Healthcare Benefits — If You Do Not Sign the Separation Letter




If you are not eligible for retiree healthcare benefits and 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 the normal provisions
of Merck’s medical and dental plans (as they may be amended from time to time) until the end of the
month following the calendar month in which your Separation Date occurred. 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 Merck’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.



Special Separation Program – If You Are Not Eligible For Retiree Healthcare Benefits and Have at
Least 9 Years of Credited Service — If You Sign the Separation Letter



If, on your Separation Date, you (i) are at least age 55 and, (ii) have at least 9 years of
Credited Service (as defined in the Retirement Plan), (iii) are not eligible for retiree healthcare
benefits (see the section “If You Are Eligible for Retiree Healthcare Benefits under the Current
Terms of Merck’s Medical and Dental Plans,“ above), and (iv) sign the Separation Letter (and if a
revocation period is applicable to you, do not revoke the Separation Letter), then, under the
Special Separation Program, you will be eligible to select retiree healthcare coverage under
Merck’s plans (as they may be amended from time to time) as of the first day of the month after
your Separation Date (even if your Separation Date is not the first day of a month). Your active
employee coverage will continue to the end of the month in which your Separation Date occurs. Your
retiree healthcare benefits will commence as of the first of the month following your Separation
Date (“Retiree Healthcare Commencement Date”).



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You will be automatically enrolled in retiree dental under the comprehensive coverage option and in
retiree medical coverage under the same coverage option in which you were enrolled as an active
employee on the day before your Retiree Healthcare Commencement Date, provided that coverage option
is available to you as a retiree; if that medical coverage option is not available, you will be
automatically enrolled in the plan’s default option (currently the Merck PPO option if your address
is within the network coverage area, otherwise the Merck 80/20 Out of Area option). Coverage under
your retiree medical and dental coverage will also automatically continue for your eligible
dependents who were your covered dependents under the applicable plans on the day before your
Retiree Healthcare Commencement Date.



You are permitted to add eligible dependents or drop covered dependents and/or change medical
coverage options retroactive to the date your Retiree Healthcare Commencement Date only if you
notify the Merck Benefits Service Center of such change(s) within 30 days after your Retiree
Healthcare Commencement Date. Thereafter, any permitted changes will only be made prospectively.



Note that only those eligible dependents who are your “Dependents of Record” as of your Retiree
Healthcare Commencement Date can be eligible for dependent coverage under your retiree healthcare
coverage. Be sure to register your eligible dependents as “Dependents of Record” with the Merck
Benefit Service Center within 30 days after your Retiree Healthcare Commencement Date. If an
eligible dependent is not timely registered as your “Dependent of Record”, he/she will never be
eligible for dependent coverage under your Merck retiree healthcare coverage. Eligible dependents
who are your covered dependents on your Retiree Healthcare Commencement Date, are automatically
registered as Dependents of Record.



You can “opt-out” of retiree coverage, but note that your ability to re-enroll for coverage is
generally limited to annual open enrollment (with the following January 1 as the re-enrollment
effective date); mid-year enrollment is available only if you are covered under and lose other
coverage and you contact the Merck Benefit Service Center to re-enroll in Merck retiree coverage
within 30 days of the loss of your other coverage.



You must pay the applicable premiums for retiree healthcare coverage beginning on your Retiree
Healthcare Commencement Date. You will receive an invoice from Fidelity that indicates the premium
due for your retiree coverage. If you fail to pay the premium required for retiree healthcare
coverage in the time and manner specified by on the invoice, you will be deemed to have opted out
of coverage and your ability to re-enroll is limited as described above.



For purposes of determining the retiree medical and dental premiums, a Separated Retirement
Eligible Employee



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	 	•	 	will have the number of points that is the sum of his/her age and years of adjusted
service as recorded on the Company’s records (from age 40 for those subject to the
“Rule of 88”; all adjusted service for those subject to the “Rule of 92”) as of
his/her Separation Date; provided, however, that if such sum is less than 65, then the
Separated Retirement Eligible Employee is deemed to have 65 points; and
	 
	 	•	 	will pay premiums for medical coverage in accordance with the premium schedule for
the “Rule of 92” or the “Rule of 88”, as applicable, in effect on his/her Retiree
Healthcare Commencement Date, as the premium schedule may be amended from time to
time.






	 	 	To determine whether the “Rule of 92” or the “Rule of 88” applies to you and to see the
premiums applicable to those schedules, see the Reference Library on Fidelity’s netbenefits
website.





Continuation of retiree medical and dental coverages under the Special Separation Program for
Separated Retirement Eligible Employees who are not otherwise eligible for retiree healthcare
benefits is subject to the same early forfeiture provisions applicable to separated employees as
described in the Separation Plan SPD. The forfeiture provisions will apply for the Separation Pay
Period only.



Special Separation Program – If You Are Not Eligible For Retiree Healthcare Benefits and Have Less
than 9 Years of Credited Service and You Sign the Separation Letter



If, on your Separation Date, you are (i) a Separated Retirement Eligible Employee who is not
otherwise eligible for retiree healthcare benefits under the terms of Merck’s medical and dental
plans, (ii) have less than nine years of Credited Service, and (iii) you sign the Separation Letter
(and if a revocation period is applicable to you, do not revoke the Separation Letter), then, under
the Special Separation Program, you will be eligible for continued medical and dental coverage (not
retiree coverage) under Merck’s medical and dental 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 Merck (or its
designee) in the time and manner specified by Merck from time to time. If you do not pay the
required contributions to Merck (or its designee) in the time and manner specified by Merck 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, then at the end of the 6-month period during
which medical and dental coverages are provided, you may elect to



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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 for Separated
Retirement Eligible Employees who are not otherwise eligible for retiree healthcare benefits is
subject to the same early forfeiture provisions applicable to separated employees as described in
the Separation Plan SPD.



Life Insurance




Whether you sign the Separation Letter or not, you will be considered a retiree for life insurance
purposes under Merck’s Life Insurance Plan (as it may be amended from time to time) as of your
Separation Date, with retiree coverage to begin on the first day of the month after your Separation
Date. As a retiree, your employee group term life insurance coverage equal to 1x base pay (or 2x
base pay if you have “Old Format”) will continue at no cost to you. This amount will reduce by 25%
of the amount of your coverage starting on the first day of the month after your Separation Date,
and by an equal dollar amount on the anniversary of that date, until the third anniversary of that
date, when no balance remains. You have the right to convert the amount by which your insurance is
reduced to an individual policy. See the Life Insurance Plan section of the current Merck Benefits
Book (and applicable summaries of material modification) for information on conversion. If you are
a retiree who is not yet age 65 on your Separation Date, you may continue your employee group term
life insurance in excess of 1x base pay (2x if you are “Old Format”), dependent life and/or
survivor income protection (collectively “Optional Coverages”) in effect on your Separation Date
until age 65 by paying the applicable premiums in the time and manner required by Merck. If you
fail to pay the premium required to continue your coverage in the time and manner specified by
Merck, your coverage(s) will be terminated and they will not be reinstated. If you are age 65 or
older on your Separation Date, your Optional Coverages will continue for 31 days from your
Separation Date. During this period you may convert these coverages to an individual policy. See
the Life Insurance Plan section of the current Merck Benefits Book (and applicable summaries of
material modification) for information on conversion.



In any event, your accidental death and dismemberment coverage ends on your Separation Date.



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



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	 	 	Regular Plan	 	Special Separation
	 	 	Provisions	 	Program
	Medical, Dental, 

Prescription Drug

	 	If eligible for
retiree healthcare
benefits — you will
be treated as a
retiree w/ applicable
contributions 


If not eligible for
retiree healthcare
benefits — benefits
continue until the
end of the month
following the month
in which your
Separation Date
occurred; eligible
for COBRA afterward
	 	If eligible for
retiree healthcare
benefits – treated as
a retiree w/applicable
contributions paid by
retiree

If not eligible for
retiree healthcare
benefits – medical
and or dental
benefits continue for
the Separation Pay
Period (minimum 6
months), provided you
pay the applicable
employee
contributions in the
time and manner
specified by Merck
(or its designee);
eligible for COBRA
afterward
	 
	 	 	 	 
	Basic Employee Term
Life Insurance (New
Format-maximum 1x
base pay; Old Format
—2x base pay)

	 	Treated as a retiree
	 	Treated as a retiree
— Coverage level in
effect on Separation
Date reduced by 25%
on the first day of
the month following
Separation Date, then
reduced on each
anniversary of that
date until coverage
amount reaches zero
	 
	 	 	 	 
	Optional Employee 

Group Term Life, 

Dependent Life, 

Survivor Income

	 	Treated as a retiree
— You can continue
coverage at your cost
up to age 65
	 	Treated as a retiree
— You can continue
coverage at your cost
up to age 65
	 
	 	 	 	 
	AD&D

	 	No coverage
	 	No coverage






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 Retirement Eligible Employee’s Separation Date occurs during a
performance year and whether or not the employee signs the Separation Letter.




	 	•	 	For the performance year prior to Separation Date: Actual AIP/EIP bonuses with respect
to the performance year immediately preceding the Separated Retirement Eligible Employee’s
Separation Date may be paid to employees whose employment terminates between January 1 and
prior to the time AIP/EIP bonuses for the prior performance year are paid for that year to
other employees.
	 
	 	•	 	For the performance year in which the Separation Date occurs: For employees who do not
sign the Separation Letter, a pro-rated actual AIP/EIP bonuses with respect to the
performance year in which the Separated Retirement Eligible Employee’s Separation Date
occurs may be paid to employees at the time AIP/EIP bonuses are paid for that performance
year to other employees. For employees who sign the Separation Letter, a special payment
in lieu of an actual AIP/EIP bonus for the performance year in which the Separated
Retirement Eligible Employee’s Separation Date occurs is payable under this program. For
executives who are listed in the Summary Compensation Table for the










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	 	 	 	most recent proxy
materials issued by the Company 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 the Company retains complete discretion to pay
more, or less, than those amounts.






	 	•	 	The Company 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).





AIP/EIP For Performance Year Prior to Separation Date




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 Merck 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 Merck 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 Merck 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
for the prior performance year is not contingent upon your signing the Separation Letter.



AIP/EIP For Performance Year in which Separation Date occurs—If you do not sign the Separation
Letter



If you do not sign the Separation Letter, you will be eligible for consideration for an AIP/EIP
bonus with respect to the performance year in which your Separation Date occurs on the same terms
and conditions as other Merck employees who retired during the performance year. 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 Merck employees or will be deferred in accordance
with your applicable deferral election for that AIP/EIP performance year, as applicable.



AIP/EIP For Performance Year in which Separation Date occurs—If you sign the Separation Letter




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 the Company in its sole
discretion based on a variety of factors, including but not limited to your documented poor or
extraordinary performance in the current



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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.



Merck On-Site Day Care Centers




If your child is enrolled in a Merck on-site day care center, the child can remain enrolled at the
center until the Separation Letter Return Date. If you sign the Separation Letter and your child
is in an infant, toddler or preschool room as of your Separation Date, he/she may continue at the
day care center until the third month anniversary of your Separation Date; a child in kindergarten
as of your Separation Date may continue until the end of the calendar week in which kindergarten
graduation occurs; provided that continued enrollment is subject to your continuing to abide by the
rules and regulations of the day care center and the terms of the Separation Letter. Continuation
for the first three months shall be at the regular tuition rate. For kindergarten children
continuing after the first three months, there may be an additional charge.



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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




Under Merck’s incentive stock plans, stock options, RSUs and PSUs held by a U.S. employee whose
employment ends are treated under the provisions of the grants applicable to retirement only if the
employee is considered a retiree under the Retirement Plan.



Whether you sign the Separation Letter or not, because you are considered a retiree under the
Retirement Plan the retirement provisions applicable to stock options, restricted stock units and
performance stock units will apply to any outstanding incentive you hold on your Separation Date.
The retirement provisions may differ based on the grants. IT IS YOUR RESPONSIBILTY TO FAMILIARIZE
YOURSELF WITH THE TERMS OF INDIVIDUAL GRANTS.



Retirement Provisions




Stock Options



Generally, for outstanding annual and quarterly stock option grants made prior to 2001, the
retirement provisions are:





Vested options: May be exercised until the earlier of (i) the day before the 5th
anniversary of your Separation Date (considered your “retirement date”) or (ii) the
original expiration date.



Generally, for outstanding annual and quarterly stock option grants made during 2001 and
thereafter, the retirement provisions are:




Unvested options will vest on the original vesting date and then be exercisable for the
full term of the option, expiring on the original expiration date. Vested options will be
exercisable for then remaining term of the option, expiring on the original expiration
date.



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.



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If you are treated as retired, and later rehired, stock options that are unexercised and
outstanding on your rehire date will continue under the retirement terms.



RSUs




Under the retirement provisions of the RSUs, your annual grants of restricted stock units that were
granted at least 6 months prior to your Separation Date, if any, generally will vest and become
distributable as if your employment with Merck had continued. RSUs granted within 6 months of your
Separation Date will be forfeited. See the term sheets applicable to RSUs granted to you, if any.



PSUs




Under the retirement provisions of the PSUs, a pro rata portion of your annual grant of performance
share units that were granted to you at least 6 months prior to your Separation Date, if any, will
be payable when the distribution, if any, with respect to the applicable performance year is made
to active employees. Performance share units, if any, granted to you within 6 months of your
Separation Date will lapse 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, restricted stock units or performance stock
units, you can call the HR Service Center at 1-866-MRK-HR4U (1-866-675-4748).



* * *




The following describes the terms and conditions of certain Merck benefit plans and programs as
they apply to employees whose employment with Merck terminates for any reason. For additional
information, see the applicable sections of the current Merck Benefits Book (and applicable
summaries of material modification).



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 Merck employment 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.



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Financial Engines




Your eligibility to use the Financial Engines financial planning tool will end on your Separation
Date.



Financial Planning




If you elected Financial Planning, you will continue in this benefit through the remainder of the
calendar year in which your Separation Date occurs. Your remaining cost for this benefit will be
deducted from your final pay check, or, if necessary, from any Separation Pay paid pursuant to the
Separation Benefits Plan. Your Financial Planning election is irrevocable and cannot be changed.



Flexible Benefits Program




The Flexible Benefits Program consists of the following Merck plans and programs: medical, dental,
vision, health care and dependent care reimbursement accounts, financial planning, life insurance
(including basic and optional term life, dependent term life, survivor income and accidental death
and dismemberment), 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.



Long Term Care




If you elected coverage under Merck’s Long Term Care Plan for you (or your spouse or same-sex
domestic partner), that coverage will end on your



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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 Company 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).



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 Merck Benefits Book (and applicable summaries of material modification)
for additional information on Receiving a Final Distribution.



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 Company under the
Special Separation Program will act as an offset from benefits payable under



18









 







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 the Company in its sole
and absolute discretion determines it is easier for the Company to administer), STD benefits will
instead act as an offset from Separation Pay paid (or payable) by the Company 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 Merck 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 any 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.



* * *




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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. Merck 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 Change in Control Separation Benefits Plan), certain
limitations apply to Merck’s ability to amend or terminate this and other benefit plans. In
addition, an employee whose employment is terminated without cause within two years following a
change in control will also be entitled to receive the retirement bridge as provided in the Change
in Control Separation Benefits Plan.



While it has no current intention to do so, Merck 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. Merck 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.



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Glossary of Definitions




As used in this document, the following terms have the following meanings.



“Company” or “Merck” means Merck & Co., Inc.



“Credited Service” is as defined in the Retirement Plan.



“Retirement Plan” means the Retirement Plan for Salaried Employees of Merck & Co., Inc.



“Separation Benefits Plan” means the Merck & Co., Inc. Separation Benefits Plan for Nonunion
Employees



“Separated Retirement Eligible Employees” are certain nonunionized Merck & Co., Inc. employees





(1)  who experience a Separation From Service ( as defined in the Separation Benefits Plan)
on or between January 1, 2009 and December 31, 2011; and





	 	(2)	who as of their last day of employment with Merck (the “Separation Date”) are




	 
	 	•	 	at least age 55 and have at least 10 years of Credited Service (as defined in
the Retirement Plan) or
	 
	 	•	 	at least age 65.





Separated Retirement Eligible Employees are only those employees who are designated by Merck as
“Separated Retirement Eligible Employees.” “Separated Retirement Eligible Employees” do not
include employees who terminate employment in any way that does not constitute a Separation From
Service (as defined in Separation Benefits Plan) as determined by Merck, including employees who
resign for any reason.



“Separation Date” means a Separated Retirement Eligible Employee’s last day of employment with
Merck.



“Separation Letter” means the Company-provided letter that will describe the Special Separation
Program benefits and include a release of claims against the Company and may include such other
terms such as non-solicitation and non-competition provisions, as the Company determines.



“Separation Letter Return Date” is the date stated in the Separation Letter by which Separated
Retirement Eligible Employees must sign and return it to the Company.



“Separation Pay Period” is the number of full or partial workweeks for which a Separated Retirement
Eligible Employee is being paid Separation Pay.



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“Special Separation Program” means the separation benefits that Separated Retirement Eligible
Employees receive if they sign (and, if a revocation period is applicable, do not revoke) the
Separation Letter.




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