Document:

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

2

 

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.

3

 

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

4

 

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.

5

 

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

6

 

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:

7

 

	 	•	 	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”).

8

 

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

9

 

	 	•	 	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

10

 

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.

11

 

	 	 	 	 	 
	 	 	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

12

 

	 	 	 	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

13

 

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.

14

 

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.

15

 

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.

16

 

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

17

 

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.

* * *

19

 

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.

20

 

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.

21

 

“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.

22EX-10.16

Exhibit 10.16

 

MERCK & CO., INC.

SUPPLEMENTAL RETIREMENT PLAN

As Amended and Restated effective January 1, 2009

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	 	 	Page
	Article I
	 	Purpose	 	1
	 
	Article II
	 	Definitions	 	1
	 
	Article III
	 	Benefits Payable Under This Plan	 	2
	 
	Article IV
	 	Payments of Benefits	 	4
	 
	Article V
	 	Plan Administration	 	8
	 
	Article VI
	 	Claims and Appeal Procedure	 	8
	 
	Article VII
	 	Amendment and Termination	 	9
	 
	Article VIII
	 	Miscellaneous	 	10
	 
	Article IX
	 	Change in Control	 	11

 

 

MERCK & CO., INC.

SUPPLEMENTAL RETIREMENT PLAN

I. PURPOSE

1.1 The Merck & Co., Inc. Supplemental Retirement Plan (the “Plan”) is intended to provide
additional benefits to executive participants in the Merck & Co., Inc. Retirement Plan for Salaried
Employees (the “Qualified Plan”) as follows: (i) benefits not payable by the Qualified Plan because
of the limitations on benefits payable from the Qualified Plan set forth in Sections 415 and/or
401(a)(17) of the Internal Revenue Code of 1986, as amended, (ii) benefits not payable by such
Qualified Plan because of the exclusion of deferred compensation from the Qualified Plan, (iii) a
minimum aggregate benefit for the incumbents at time of actual retirement in positions designated
as bona fide executive or high policymaking under the Company’s Corporate Policy on Executive
Retirement, and (iv) an enhanced benefit for certain of such individuals who have held such
positions prior to January 1, 1995.

II. DEFINITIONS

2.1 “ADEA-Exempt Employee” means an Employee who occupies a position designated as “bona fide
executive” or “high policy making” under the Company’s Corporate Policy on Executive Retirement.

2.2 “Basic Supplemental Benefit” means the benefit described in Section 3.1 and 3.2 hereof.

2.3 “Beneficiary” means the individual, individuals or entity entitled to receive a death or
survivor benefit under the Qualified Plan or pursuant to Section 4.2.

2.4 “Code” means the Internal Revenue Code of 1986, as amended.

2.5 “Committee” means the U.S. Compensation and Benefits Committee of the Company, a management
committee appointed by the Compensation and Benefits Committee of the Board of Directors of the
Company.

2.6 “Company” means Merck & Co., Inc. or any successor thereto.

2.7 “Compensation” means compensation as defined in the Qualified Plan; provided, however, that if
an Employee defers, or if there is a mandatory deferral of, all or any portion of an award under an
Incentive Plan in any year, such deferred amount will be included in Compensation for such year,
notwithstanding any subsequent forfeiture.

2.8 “Credited Service” means credited service as defined in the Qualified Plan.

2.9 “Director” means the Global Benefits Leader or the successor thereto.

 

 

2.10 “Employee” means an employee of the Company or its subsidiaries who is a participant in the
Qualified Plan. The following are not “Employees”: any person who (1) is an independent contractor
for the Company or its Affiliates; (2) agrees or has agreed that he or she is an independent
contractor for the Company; (3) has an agreement or understanding with the Company or its
Affiliates that such person is not an Employee, even if that person previously has been an
Employee; (4) is employed by a temporary or other employment agency, regardless of the amount of
control, supervision or training provided by the Company or its Affiliates or (5) is a leased
employee (as defined in Section 414(n) of the Code). The foregoing exclusion applies even if a
court, agency or other authority rules that the person happens to be a common law employee of the
Company or its Affiliates. “Employee” also excludes individuals who are included in a unit of
employees covered by a collective bargaining agreement between employee representatives and one or
more employers; provided, however, that such an employee may be an eligible employee during the
period he or she is not covered by covered by a collective bargaining agreement and during which he
or she participates in the Qualified Plan.

2.11 “Enhanced Credited Service” means credited service as defined in Section 3.3.

2.12 “Enhanced Supplemental Benefit” means the benefit described in Section 3.3.

2.13 “Incentive Plan” means the Merck & Co., Inc. Annual Incentive Plan, Executive Incentive Plan,
Subsidiary Incentive Plan, Calgon Vestal Annual Incentive Plan or Kelco Annual Incentive Plan.

2.14 “Participant” means an Employee who has a benefit under this Plan.

2.15 “Plan” means the Merck & Co., Inc. Supplemental Retirement Plan as amended from time to time.

2.16 “Post-2004 Accruals” means benefits that accrued or will accrue (within the meaning of Section
409A of the Code) under the Plan on or after January 1, 2005

2.17 “Pre-2005 Accruals” means benefits that accrued (within the meaning of Section 409A of the
Code) under the Plan on or before December 31, 2004

2.18 “Prior Benefit” means the benefit described in Section 3.3.

2.19 “Qualified Plan” means the Retirement Plan for the Salaried Employees of Merck & Co., Inc. as
in effect from time to time.

2.20 “Supplemental Benefits” means the benefits provided for pursuant to Article III.

III. BENEFITS PAYABLE UNDER THIS PLAN

3.1. An Employee will be entitled to a Basic Supplemental Benefit in an amount equal to the excess
of (a) over (b) where:

2

 

     (a) is the benefit which would have been paid to such Employee (or his/her Beneficiary) under
the Qualified Plan if the provisions were administered (1) without regard to the limitations set
forth in Section 415 and/or Section 401(a)(17) of the Code, and (2) as if the definition of
Compensation set forth herein was substituted for the definition of compensation in the Qualified
Plan; and

     (b) is the benefit which is payable to such Employee (or his/her Beneficiary) under the
Qualified Plan.

3.2 An Employee who, at time of termination of employment or death,

     (a) is an ADEA-Exempt Employee and

     (b) in the case of termination of employment prior to normal retirement date, has had,
immediately prior to such retirement, at least ten years of Credited Service,

will be entitled at normal retirement date to a Basic Supplemental Benefit in an amount equal to
the excess, if any, of $50,000 per year, on a life income basis, over the benefit which is payable
to such Employee (or his/her Beneficiary) under the Qualified Plan and any other provision of this
Plan. In the case of early or disability retirement or death prior to normal retirement date, such
benefit will be reduced, prior to any reduction set forth in Section 4.1 below, by multiplying
$50,000 by a fraction the numerator of which is such Employee’s years of Credited Service as of the
date of such early or disability retirement or death and the denominator of which will be such
Employee’s years of Credited Service assuming he/she terminated employment with the Company or an
affiliate on his/her normal retirement date.

3.3 ADEA-Exempt Employees who are such Employees on or after March 1, 1988 and who are mandatorily
retired at normal retirement date will be entitled to an Enhanced Supplemental Benefit determined
as follows:

     (a) for each month of Credited Service earned under the Qualified Plan by an ADEA-Exempt
Employee prior to or during the period in which such Employee is an ADEA-Exempt Employee, such
Employee will be granted an additional month of Credited Service, up to an aggregate maximum of 35
years, such additional Credited Service constituting the Enhanced Credited Service for such
Employee;

     (b) such Employee’s Basic Supplemental Benefit will be determined using the formula set forth
in Section 3.1 above and as if the definition of Enhanced Credited Service set forth above were
substituted for the definition of Credited Service in the Qualified Plan; the resulting increased
benefit, less such Employee’s Basic Supplemental Benefit, and the benefit payable to such Employee
under the Qualified Plan, will then be reduced by any other benefit paid or payable to such
Employee under any other retirement plan, except for any retirement plan sponsored in whole or in
part by the Company or any of its affiliates, in which he or she has ever participated regardless
of the nature of the sponsor (including, without limitation, government-sponsored plans) (the
“Prior Benefit”). The resulting amount will be such Employee’s Enhanced Supplemental Benefit. All
benefit amounts used in determining the Enhanced Supplemental Benefit will be determined by the
Company on a

3

 

lump-sum basis utilizing the actuarial and interest rate assumptions employed as of the date
of retirement by the Qualified Plan, or, in the case of a Prior Benefit previously distributed to
an Employee, using such other interest rates as the Company deems appropriate under the
circumstances;

     (c) subject to Section 3.3(d), such Employee will have a non-forfeitable right to the Enhanced
Supplemental Benefit at such time as he or she has a non-forfeitable right to a benefit under the
Qualified Plan;

     (d) at such time as any Employee becomes an ADEA-Exempt Employee, he or she will promptly
provide the Company with confirmation, in such detail as may from time to time be required by the
Company, of the nature and amount of any Prior Benefit. The Company may establish such rules and
regulations as it deems appropriate in confirming the existence, nature and terms of payments of
any such Prior Benefit. Failure of an Employee to comply with such rules and regulations or any
other Company requests in this regard will result in forfeiture of the Enhanced Supplemental
Benefit. The Company will determine whether any plan in which an Employee has participated is a
plan providing a Prior Benefit and will determine the amount thereof and its decisions will be
final and binding in all respects.

     (e) Enhanced Credited Service will be used only to calculate an Employee’s Enhanced
Supplemental Benefit as described above and not for any other purpose under this Plan or the
Qualified Plan.

     (f) In the case of the early or disability retirement or death prior to normal retirement date
of an ADEA-Exempt Employee who would have been eligible for an Enhanced Supplemental Benefit upon
retirement on his or her normal retirement date, an Enhanced Supplemental Benefit will only be
payable with the consent of the Compensation and Benefits Committee of the Board of Directors of
the Company.

     (g) Effective January 1, 1995, there will be no further accruals under the Enhanced
Supplemental Benefit provisions of this Plan, except that those individuals listed on Exhibit One
hereto will continue such accruals under the terms and conditions set forth in this Section.

IV. PAYMENT OF BENEFITS

4.1 With respect to Pre-2005 Accruals, the payment of Supplemental Benefits hereunder will be
governed by the terms of the Qualified Plan, including but not limited to actuarial or other
reductions relative to termination of employment or early retirement, and any applicable elections
thereunder, with respect to date of commencement, form of benefit, payments in the event of death,
vesting, and any other term, condition or election applicable to such benefits.

4.2 Section 4.1 notwithstanding, with respect to Pre-2005 Accruals,

     (a) An Employee who elects a lump-sum payment under the Qualified Plan may elect to receive
his/her Supplemental Benefits in any other form allowed under the Qualified

4

 

Plan. Any such election must be made no later than the end of the calendar year preceding the
year in which the Employee “Retires” (that is, the year of his or her Annuity Starting Date for the
Qualified Plan); provided, however, that for elections made after 2008, such election shall not
become effective before the first anniversary of the date it is received by the Company. In the
event a Participant makes such an election, he/she will designate a Beneficiary to receive any
death or survivor benefit which may become payable hereunder.

     (b) An Employee who is prohibited from electing a form of benefit under the Qualified Plan
because spousal consent has not been obtained, as required under Section 417(a)(2)(A) of the Code,
may elect to receive his/her Supplemental Benefit in any other form allowed under the Qualified
Plan. Any such election must be made no later than the end of the calendar year preceding the year
in which the Employee Retires; provided, however, that for elections made after 2008, such election
shall not become effective before the first anniversary of the date it is received by the Company.
In the event a Participant makes such an election, he/she will designate a Beneficiary to receive
any death or survivor benefit which may become payable hereunder.

     (c) Any Employee eligible to make an election under paragraphs (a) or (b) of this Section may
elect a lump sum under this Plan to be paid on the first of January following the Employee’s Normal
Retirement Date regardless of whether the employee dies before that date, and the amount of the
lump sum will be the exact amount that would have been paid if the Employee had elected a lump sum
payable on his/her actual retirement date. Any such election must be made no later than the end of
the calendar year preceding the year in which the Employee receives his benefit from the Qualified
Plan; provided, however, that for elections made after 2008, such election shall not become
effective before the first anniversary of the date it is received by the Company. In the event an
Employee makes such an election, he/she will designate a Beneficiary to receive any death benefit
which may become payable hereunder.

     (d) An employee who qualifies for a Disability Retirement (as defined in the Qualified Plan)
will receive his or her Pre-2005 Accruals under this Plan at the same time and in the same manner
as benefits are paid under the Qualified Plan without regard to any previous election under this
Section.

4.3 With respect to Post-2004 Accruals, effective January 1, 2009,

     (a) Benefits will commence on the Post-2004 Start Date, which shall be the later of the first
day of the first month following (i) the Participant’s post-2008 Separation from Service (within
the meaning of Section 409A of the Code) or (ii) the Participant’s attainment of age 55. Benefits
will be payable as a lump sum, calculated in the same manner as lump sums are calculated under the
Qualified Plan for annuity starting dates on the Post-2004 Start Date unless the Participant has
elected to defer receipt in accordance with 4.3(b) or (c).

     (b) During 2008, a Participant may make an election (an “Initial Election”) to receive
benefits in the form of five or 10 Annual Installments, which shall commence as of the Post-2004
Start Date. The amount of such installments shall equal the present value of the amount described
in 4.3(a) payable over five or 10 equal annual installments, subject to rounding, using the same
interest rate, compounded monthly, as provided in 4.3(a).

5

 

Notwithstanding the foregoing, if on the Post-2004 Start Date the amount calculated under
Section 4.3(a) does not exceed 25% of the annual compensation limit in effect under Section 417 of
the Internal Revenue Code (or any successor thereto) for that year, a lump-sum payment calculated
under Section 4.3(a) will instead be made.

     (c) After December 31, 2008, a Participant may elect to defer receipt of the Post-2004
Accruals by making an election (a “Deferral Election”) not less than 12 months before the Post-2004
Start Date. A Participant may only make one Deferral Election. The Deferral Election is
irrevocable and is not effective until the first anniversary of the date it is received by the
Company. A Deferral Election shall become payable either (i) in the case of a Participant who is
younger than 54, on the first day of the month following the later of attainment of age 60 or
Separation from Service or (ii) in the case of a Participant who is 54 or older, the first day of
the month following the 5th anniversary of his or her Separation from Service. Payment
of benefits of such Participant’s benefit shall be in the form of (x) a lump sum, (y) five annual
payments or (z) 10 annual payments.

          (1) If in the form of a lump sum, the amount shall equal the future value of the lump sum
calculated pursuant to Section 4.3(a) using the same interest rate used in Section 4.3(a),
expressed as a monthly rate and compounded monthly.

          (2) If in the form of annual payments, the amounts shall be equal to the present value of the
amount described in 4.3(c)(1) payable over five or 10 equal annual installments, subject to
rounding, using the same interest rate, compounded monthly, as provided in 4.3(c)(1).
Notwithstanding the foregoing, if at the time the first payment is to be paid the lump sum amount
calculated under Section 4.3(c)(1) does not exceed 25% of the annual compensation limit in effect
under Section 417 of the Internal Revenue Code (or any successor thereto) for that year, a lump-sum
payment calculated under Section 4.3(c)(1) will instead be made.

     (d) Notwithstanding the foregoing, where a Participant dies and has not begun to receive
Post-2004 Accruals, they shall be paid in a lump sum to the (1) Beneficiary, (2) current spouse
(within the meaning of the Qualified Plan) if no Beneficiary has been designated or (3) estate, if
there is no such spouse and no Beneficiary has been designated, of the Participant as soon as
administratively feasible after such death using the assumptions applicable under the Qualified
Plan. If a Participant has begun to receive installments of his or her Post-2004 Accruals but dies
before receiving the last installment, such Beneficiary, spouse, or estate shall be paid the
present value of the remaining, unpaid payments as soon as administratively feasible following such
death using the lump-sum interest rate under the Qualified Retirement Plan that was used pursuant
to Section 4.3(a).

     (e) Anything in the Plan to the contrary notwithstanding, for a Participant who prior to
separation from service becomes “disabled” within the meaning of Treas. Reg. Sec. 1.409A-1(h)(1)(i)
or any successor thereto, Post-2004 Start Date shall mean the first day of the 30th
month after the onset of the disability (within the meaning of Section 409A of the Code) unless
prior thereto the Participant recovers and returns to service with the Company. Such benefit shall
be distributed in a lump sum, which shall not be reduced for early commencement, actuarially or
otherwise. No further accruals shall apply to such

6

 

participant under this Plan. In the event such a Participant dies prior to such 30th
month, such benefit shall be paid in accordance with Section 4.3(d).

4.4 The creation, assignment or recognition of a right to any benefit payable with respect to a
Participant pursuant to a “domestic relations order” (as hereinafter defined) must be in accordance
with this Section. In the event a right to a benefit hereunder is established pursuant to a
domestic relations order, any benefit otherwise payable to the Participant or his/her beneficiary
hereunder shall be appropriately reduced to reflect the effect of the domestic relations order.
For purposes of the Plan, “Alternate Payee” means a person who would be an alternate payee under
Section 414(p)(8) of the Code if the Plan were subject to Section 401(a) of the Code. A domestic
relations order that is or purports to be applicable to the Qualified Plan does not apply to this
Plan unless it satisfies the requirements of this Section. A domestic relations order shall mean
any judgment, decree or order, including the approval of a property settlement agreement, provided
that:

     (a) the order relates to the provision of child support, alimony or marital property rights
and is made pursuant to state domestic relations or community property laws;

     (b) the order creates or recognizes the existence of an Alternate Payee’s right to receive
all or a portion of the Participant’s benefit under this Plan;

     (c) the order specifies the name and last known mailing address of the Participant and each
Alternate Payee covered by the order;

     (d) the order precisely and unambiguously specifies the amount or percentage of the
Participant’s benefit to be paid to each Alternate Payee or the manner in which the amount or
percentage is to be determined;

     (e) the order clearly specifies that it applies to this Plan;

     (f) the order does not require this Plan to provide any type of benefits or form of benefits
not otherwise provided under this Plan;

     (g) With respect to post 2004 accruals, the order provides that the Alternate Payee shall
receive his or her interest in the Plan in the same form and at the same time as the Participant
receives his or her benefit; and

     (h) The Company’s legal department (or its delegate) determines that the order satisfies the
requirements of this Article.

4.5. Benefit payments will be paid in cash from the general funds of the Company, and no special or
separate fund will be established and no segregation of assets will be made to assure payment of
distributions. Nothing contained in this Plan and no action taken pursuant to its provisions will
create or be construed to create a trust of any kind. To the extent that any person acquires a
right to receive benefits from the Company or its subsidiaries under this Plan, such right will be
no greater than the right of an unsecured creditor of the Company or its subsidiaries.

7

 

V. PLAN ADMINISTRATION

5.1 The Plan is operated under the direction of the Board of Directors of the Company and
administered by the Director and Employee Benefits Committee. Rules of general application to the
Qualified Plan may be adopted for the administration of this Plan to the extent consistent with the
purposes of this Plan.

5.2 The Director and Employee Benefits Committee have the full discretionary power and authority to
make factual determinations, to interpret the Plan, to make benefit eligibility determinations, and
to resolve all questions arising in the administration, interpretation and application of the Plan.
They will correct any defect, reconcile any inconsistency, or supply any omission with respect to
the Plan. All such corrections, reconciliations, interpretations and completions of Plan
provisions are final, binding and conclusive upon the parties, including the Company, Employees,
Participants, alternate payees, and their affiliates, families, dependents, beneficiaries, heirs,
successors and assigns.

VI. CLAIMS AND APPEALS PROCEDURE

6.1. Determination of Claim

An Employee or his/her authorized representative may present a claim for benefits to the Director.
The Director will make all determinations as to the Employee’s claim for benefits under the Plan.
If the Director grants a claim, benefits payable under the Plan will be paid to the Employee as
soon as feasible thereafter. If the Director denies in whole or part any claim for a benefit under
the Plan, he/she will furnish the claimant with notice of the decision not later than 90 days after
receipt of the claim. If special circumstances require an extension of time for processing the
claim, the Director will provide a written notice of the extension during the initial 90-day
period, in which case a decision will be rendered not more than 180 days after receipt of the
claim. The written notice which the Director will provide to every claimant who is denied a claim
for benefits will set forth in a manner calculated to be understood by the claimant:

     (a) the
specific reason or reasons for the
denial;

     (b) specific reference to pertinent Plan provisions on which the denial is based;

     (c) a description of any additional material or information necessary for the claimant to
perfect the claim and an explanation of why such material or information is necessary; and

     (d) appropriate information as to the steps to be taken if the claimant wishes to submit
his/her claim for review.

6.2. Appeal of Denied Claim

A claimant or his/her authorized representative may request a review of the denied claim by the
Employee Benefits Committee. Such request will be made in writing and will be presented to the
Employee Benefits Committee not more than 60 days after receipt by the claimant of written
notification of the denial of the claim. The Employee Benefits Committee will render its decision
on review not later than 60 days after receipt of the claimant’s request for review, unless special
circumstances require an extension of time, in

8

 

which case a decision will be rendered as soon as possible but not later than 120 days after
receipt of the request for review. The decision on review will be in writing and will include
specific reasons for the decision.

6.3 ERISA Section 503

It is intended that the claims procedure of the Plan be administered in accordance with regulations
of the Department of Labor issued under ERISA Section 503.

6.4 Limitation of Action

No action at law or in equity (an “Action”) shall be maintained by a Participant, Beneficiary or
other individual, entity or party (including but not limited to a person determined to be other
than a Participant or Beneficiary) (a “Claimant”) against the Plan, the Company, their affiliates,
agents, fiduciaries, officers, directors, employees, successors, assigns or plans (collectively,
the “Plan Group”) unless (a) the Claimant has presented every basis or argument in support of the
Action (a “Claim”) in strict accordance with both Sections 6.1 and 6.2 which Claim is denied in
whole or in part and (b) unless the Action is commenced no later than one year after the date the
Company provides notice of the adverse decision pursuant to Section 6.2. Where the Company puts
the Claimant on notice of the Company’s or Plan’s intention with respect to the basis or argument
in support of the Action, the Claimant must commence the process described in Section 6.1 within
one year of such notice. A “Claim” includes but is not limited to a claim for benefits and a
purported or actual fiduciary breach by any member of the Plan Group. The limitation of Action may
only be tolled by a writing executed by the Director.

VII. AMENDMENT AND TERMINATION

7.1 The Committee, with the concurrence of the Chief Executive Officer of the Company, will have
the right to alter or amend this Plan including the right to merge the Plan with any other
retirement plan of the Company which is not qualified under Section 401(a) of the Code; provided
that amendments which (i) result in a significant cost increase, or (ii) would have a significant
adverse effect on rights of Employees including the termination of this Plan, or (iii) would have a
significant effect on the long-term rights or liabilities of the Company, must be approved by the
Board of Directors of the Company.

7.2 If this Plan is amended, the rights of an Employee to his/her accrued benefits under the Plan,
determined as of the date of such amendment, will be nonforfeitable to the extent that any such
amendment would reduce such Employee’s accrued benefits hereunder. If the Company terminates this
Plan, the rights of an Employee to his/her accrued benefits will be nonforfeitable. If the Company
terminates the Qualified Plan with respect to participants therein, Pre-2005 Accruals will be
payable to affected Employees in accordance with all of the terms and conditions applicable to such
Employees’ benefits under the Qualified Plan in the event of its termination; with respect to
Post-2004 Accruals, benefits shall be payable in a lump sum at the earliest time permitted and as
otherwise provided by Treas. Reg. Sec. 1.409A-3(j)(4)(ix) or any successor thereto.

9

 

VIII. MISCELLANEOUS

8.1 Except as otherwise provided in Section 4.4, no right to payment or any other interest of an
Employee or his/her Beneficiary will be assignable or subject to attachment, execution or levy of
any kind.

8.2 Nothing in this Plan will be construed as giving any Employee or Participant the right to
continued employment with the Company.

8.3 No Supplemental Benefit will be deemed salary or other compensation to the Employee for the
purpose of computing benefits to which he/she may be entitled under the Qualified Plan. This Plan
will be binding upon and inure to the benefit of the Company and its successors and assigns and the
Employee and his/her Beneficiary.

8.4 The Company may withhold from any benefits payable under the Plan any taxes required to be
withheld pursuant to any law or governmental regulation or ruling and any amounts deemed to be
owing to the Company for any reason within the Company’s reasonable discretion.

8.5 This Plan is not intended to be qualified under Section 401(a) of the Code.

8.6 This Plan is established and maintained pursuant to this written plan document and may not be
amended, altered, terminated or administered except as provided herein. This plan document
constitutes the complete Plan and benefits provided hereunder and supersedes any and all other
agreements and understandings, both oral and written, as they relate to the subject matter of this
Plan.

8.7 (a) The Plan is a “nonqualified deferred compensation plan” within the meaning of Section 409A
of the Code. Anything in the Plan to the contrary notwithstanding, with respect to Post-2004
Accruals, the Plan shall be interpreted and operated in compliance with the requirements, if any,
of Section 409A (or any successor thereto) as in effect from time to time, including but not
limited to applicable regulations of the U.S. Department of the Treasury or Internal Revenue
Service including but not limited to Treas. Reg. Secs. 1.409A-1 through 1.409A-6 or any successor
thereto. Any payment called for under the Plan that is subject to Section 409A as of a designated
date shall be made no later than a date within the same tax year of a participant, or by March 15
of the following year, if later (or such other date as specified in Treas. Reg. Sec. 1.409A 3(d) or
any successor thereto); provided further, that the participant is not permitted to designate the
taxable year of payment.

       (b) Anything in the Plan to the contrary notwithstanding, to the extent required by Section
409A with respect to Post-2004 Accruals, distributions on account of a Separation from Service to a
“Specified Employee,” as such term is defined in Section 409A, may not be made before the date
which is six months after the date of Separation from Service (or, if earlier, the date of death of
the employee). Where such a payment would have been made to a Specified Employee within such
six-month period and such payment is one of a series of annual payments, the first payment shall be
delayed as necessary and the remaining payments shall be made according to their elected schedule
notwithstanding such delay, such that two otherwise annual payments may be made in a single year.

10

 

IX. Change in Control

9.1 This Article describes benefits under the Plan provided to a Participant who also is a
participant (a “CIC Participant”) in and as defined in the Merck & Co., Inc. Change in Control
Separation Benefits Plan (the “CIC Plan”) if such CIC Participant signs and returns the release of
claims in use under the CIC Plan. Generally, CIC Participants are limited to certain Employees in
Bands 1 and 2.

9.2 If a CIC Participant’s employment is terminated in circumstances entitling him or her to the
Severance Benefits (as such term is defined in the CIC Plan) provided in Section 4.3(b) of the CIC
Plan,

     (a) For a CIC Participant who participates in this Plan and on his or her Termination Date (as
such term is defined in the CIC Plan) is not at least age 55 with at least ten years of Credited
Service under the Qualified Plan but would attain at least age 50 and have at least ten years of
Credited Service under the Qualified Plan within two years following the date of the Change in
Control (as such term is defined in the CIC Plan and assuming continued employment during the
entirety of such two-year period), then the CIC Participant shall be deemed to be eligible for a
subsidized early retirement benefit under this Plan commencing no earlier than age 55 based on his
or her Credited Service under this Plan accrued as of his or her Termination Date.

     (b) For a CIC Participant who participates in this Plan and on his or her Termination Date is
not at least age 65 but would attain at least age 65 within two years following the date of the
Change in Control without regard to years of Credited Service (assuming continued employment during
the entirety of such two-year period), then the CIC Participant shall be deemed to be eligible for
a benefit unreduced for early commencement under this Plan upon commencement of his or her benefit
under this Plan.

     (c) For a CIC Participant who participates in this Plan and on his or her Termination Date is
not eligible for the “Rule of 85 Transition Benefit” (as such term is defined in the Qualified
Plan) but would have been eligible for the Rule of 85 Transition Benefit within two years following
the date of the Change in Control (assuming continued employment during the entirety of such
two-year period), then the CIC Participant shall be deemed to be eligible for the Rule of 85
Transition Benefit upon commencement of his or her benefit under this Plan.

9.3. If a CIC Participant’s employment is terminated in circumstances entitling him or her to the
Severance Benefits provided in Section 4.3(a) of the CIC Plan,

     (a) If the CIC Participant participates in this Plan at any time prior to the Termination
Date, the Company shall adjust the benefit payable thereunder

          (1) by adding a number of years of additional Credited Service to the CIC Participant’s
existing Credited Service as of the Termination Date equal to the Multiple(as such term is defined
in the CIC Plan),

          (2) by assuming for each of the years of Credited Service added pursuant to Section 9.3(a)(1)
that the CIC Participant’s Compensation (as such term is

11

 

defined in the Qualified Plan) was equal to the sum of the CIC Participant’s Base Salary and Bonus
Amount,

          (3) by adding a number of years of age to the CIC Participant thereunder equal to the Multiple
and

          (4) then by calculating the CIC Participant’s pension in accordance with the formula provided
therein as of immediately prior to the Change in Control or, if greater, as of the Termination
Date.

     (b) Anything in this Section 9.3 to the contrary notwithstanding, the application of the
Multiple and any additional years of age shall not cause the CIC Participant’s total years of
Credited Service or age to exceed the amount that would have applied to the CIC Participant if his
or her employment had continued to age 65.

9.4 Benefits payable under this Article shall be at such times and in such forms as provided in
Article IV.

12

 

EXHIBIT ONE

(NONE, effective January 1, 2009)

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00153-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00153-of-00352.parquet"}]]