Document:

EX-10.33

 

Exhibit 10.33

NRG Energy, Inc

Named Executive Officer Compensation

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	2007 Annual Incentive	 	 
	Name	 	Title	 	Plan Payout	 	2008 Base Salary
	David Crane
	 	President, Chief Executive Officer and Director
	 	 	1,801,500	 	 	 	1,100,000	 
	 
	 		 	 	 	 	 	 	 	 
	Robert C. Flexon
	 	Executive Vice President and Chief Operating Officer (1)
	 	 	736,668	 	 	 	660,000	(1)
	 
	 		 	 	 	 	 	 	 	 
	Kevin T. Howell
	 	Executive Vice President and Chief Administrative Officer (1)
	 	 	425,733	 	 	 	480,000	(1)
	 
	 		 	 	 	 	 	 	 	 
	J. Andrew Murphy
	 	Executive Vice President and General Counsel
	 	 	384,225	 	 	 	420,000	 
	 
	 	 	 	 	 	 	 	 	 	 
	John W. Ragan
	 	Executive Vice President and Regional President, Northeast
	 	 	345,384	 	 	 	365,000	 
	 
	 		 	 	 	 	 	 	 	 

 

			
	(1)	 	Effective March 1, 2008

     The Compensation Committee approved, effective March 1, 2008, a cash-based phantom-equity
program (the “Phantom Plan”) for Mr. Howell that vests in full for all grants on August 1, 2010.
This arrangement is designed to retain Mr. Howell through August 1, 2010, at a minimum, while
continuing to align Mr. Howell’s compensation with shareholder value and improvements in corporate
performance.

The Phantom Plan contains two elements:

	 	•	 	Phantom Non-Qualified Units (PNQU’s) that track the performance of the NRG
stock listed on the New York Stock Exchange and reward Mr. Howell in a similar
manner as would a Non-Qualified Stock Option granted under the Company’s LTIP.
The first grant of PNQU’s will be valued at the time of award, March 3, 2008.
This price will be compared to the average closing price of the NRG stock for the
20 trading days prior to August 1, 2010. The gain in the stock price (if any) will
be multiplied by the number of PNQU’s and paid in the form of cash as soon as
practicable after August 1, 2010.
	 
	 	•	 	Phantom Restricted Stock Units (PRSU’s) will also track the performance of the
NRG stock listed on the New York Stock Exchange. A cash award will be made as
soon as practicable after August 1, 2010 that reflects the number of PRSU’s
multiplied by the average closing price for the 20 trading days prior to August 1,
2010.

     Mr. Howell’s participation in the Phantom Plan precludes him from receiving additional equity
awards under the LTIP that is otherwise in effect for the Company’s other executive officers. The
Company anticipates awarding Mr. Howell with additional

 

 

grants under the Phantom Program on March 3, 2009 and March 3, 2010 at a level of 2x base
salary multiple. This multiple equals what would otherwise be his participation level in the LTIP.
The value of all awards will be divided equally between PNQU’s and PRSU’s.

     In addition, Clint Freeland, Senior Vice President and Chief Financial Officer effective March
1, 2008, will have a base salary of $350,000. Mr. Freeland and Mr. Flexon will also receive an
equity grant consisting of restricted stock units, non-qualified stock options and performance
units under the Company’s Amended and Restated Long-Term Incentive Plan, with terms consistent with
the annual equity awards granted to each of the Company’s executive officers in early January of
each year.EX-10.10

 

Exhibit 10.10

MERCK & CO., INC.

SPECIAL SEPARATION PROGRAM

FOR

“SEPARATED” 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 November 1, 2005 through December 31, 2008; and

(2) who, as of their Separation Date are

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

Effective Date: As of January 2, 2008

 

 

This document summarizes the benefits for which a “Separated 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 Employees” are certain nonunionized Merck & Co., Inc. employees

(1) who experience a Separation From Service (as that term is defined in the Separation
Benefits Plan) on or between November 1, 2005 through December 31, 2008; and

(2) who, as of their Separation Date, is:

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

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

If you have been designated as a Separated 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 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 Date”) and not revoke the letter within the revocation period.

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Advance Notice or Pay in Lieu of Notice

You will either receive advance notice of your Separation From Service, or, Pay in Lieu of Notice.
Pay in Lieu of Notice, which is not contingent upon your signing the Separation Letter, will be
paid to you if you are not provided advance notice as described in the Summary Plan Description for
the Separation Benefits Plan (the “Separation Plan SPD”) distributed with this Brochure. If the
Company is required under the Worker Adjustment Retraining and Notification Act or any other
similar federal, state or local law to provide a notice period or pay in lieu of notice, such
required notice or pay shall be in lieu of, and not in addition to, any notice or Pay in Lieu of
Notice provided under the Separation Benefits Plan.

Special Separation Program

All other benefits under this Special Separation Program are contingent upon the Separated Employee
signing and not revoking the Separation Letter. They consist of:

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

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

This Brochure describes the following:

	 	•	 	the eligibility for extended use of the day care center, if applicable, under the
Special Separation Program in exchange for signing and not revoking the Separation Letter;
	 
	 	•	 	the benefits for those Separated Employees who do not sign, or who sign and later
revoke, the Separation Letter; and
	 
	 	•	 	the 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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Medical (including Prescription Drug) and Dental

Medical (including Prescription Drug) and Dental — If You Do Not Sign the Separation Letter

If you do not sign the Separation Letter, your medical and dental coverage options in effect on
your Separation Date will continue under 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 — Medical (including Prescription Drug) and Dental — If You Sign the
Separation Letter

Under the Special Separation Program, if you sign the Separation Letter, you will be eligible to
continue medical and dental coverage under Merck’s plans (as they may be amended from time to time)
for the Separation Pay Period as more fully described in the Separation Plan SPD. If the
Separation Pay Period is less than six months, you may continue medical and dental coverage for six
months. Contributions for medical and dental coverage will be deducted from your Separation Pay.
The contributions will be the same as the contributions for active employees, as they may change
from time to time. At the end of the Separation Pay Period or, if the Separation Pay Period is
less than 6 months, at the end of the 6-month period during which medical and dental coverages are
provided, you may elect to continue your coverage in accordance with COBRA for up to an additional
18 months.

Continuation of medical and dental coverages under the Special Separation Program is subject to the
early forfeiture provisions described in the Separation Plan SPD.

Life Insurance

Life Insurance — If You Do Not Sign the Separation Letter

If you do not sign the Separation Letter, your employee group term life, dependent life, and
survivor income protection will continue for 31 days after your Separation Date. After this 31-day
period you may elect to continue these coverages at the level in effect on your Separation Date
under Merck’s Life

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Insurance Plan (as it may be amended from time to time). You may continue these coverages at your
cost for up to the earlier of 30 months from your Separation Date or age 65. If you wish to
continue your survivor income protection and/or your dependent life coverage, you must continue
your employee group term life (basic and optional). To continue your life insurance coverage(s)
you must submit the applicable form to the Merck Benefits Service Center (1-800-666-3725) within 31
days after your Separation Letter Return Date and you must pay the applicable premium in the time
and manner specified by Merck. If you fail to pay the premium in the time and manner specified by
Merck, your coverage(s) will be terminated and they will not be reinstated. If you are interested
in continuing your coverage(s), contact the Merck Benefits Service Center (1-800-666-3725) for more
information and the applicable form.

Your accidental death and dismemberment coverage ends on your Separation Date.

A full month’s premium may be deducted from your paycheck for the month in which your Separation
Date occurs.

Special Separation Program — Life Insurance — If You Sign the Separation Letter

Under the Special Separation Program, if you sign the Separation Letter, your basic employee group
term life insurance coverage will continue under Merck’s Life Insurance Plan (as it may be amended
from time to time) until the earlier of (i) last day of the month in which the Separation Pay
Period ends, or, if the Separation Pay Period is less than 6 months, then for 6 months beginning on
the first of the month coincident with or following your Separation Date as more fully described in
the Separation Plan SPD, or (ii) age 65. Contributions, if any, will be deducted from your
Separation Pay. Continuation of basic life insurance under the Special Separation Program is
subject to the early forfeiture provisions described in the Separation Plan SPD.

If you sign the Separation Letter and your basic life insurance continues, you may also continue
optional term life, dependent life and survivor income protection at your cost for up to the
earlier of 30 months from your Separation Date or age 65. If you wish to continue your survivor
income protection and/or your dependent life coverage, you must continue your optional employee
group term life. To continue your optional life insurance coverage(s) you must submit the
applicable form to The Merck Benefits Service Center (1-800-666-3725) within 31 days after your
Separation Letter Return Date and you must pay the applicable premium in the time and manner
specified by Merck. If you fail to pay the premium in the time and manner specified by Merck, your
optional coverage(s) will be terminated and they will not be reinstated. If you are interested in
continuing your optional coverage(s), contact The Merck Benefits Service Center (1-800-666-3725)
for more information and the applicable form.

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After the Separation Pay Period, you may continue your basic employee group term life coverage at
your cost for the remainder of the period ending at the earlier of the expiration of the 30-month
period from your Separation Date or age 65. At that time, if you are interested in continuing your
basic life coverage, you must contact The Merck Benefits Service Center (1-800-666-3725).

If your basic life insurance ends as a result of the early forfeiture provisions of the Separation
Benefits Plan, you will not be allowed to continue your optional coverages under the 30-month
continuation provisions. See the life insurance section of the Merck Benefits Book (and applicable
summaries of material modification) for description of conversion rights.

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

	 	 	 	 	 
	 	 	Regular Plan	 	Special Separation
	 	 	Provisions	 	Program (if sign letter)
	 
	Medical, Dental, 

Prescription Drug

	 	Benefits continue to
the end of the month
following the month in
which your Separation
Date occurs; eligible
for COBRA afterward
	 	Benefits continue to
the end of the month
in which the
Separation Pay
Period ends (or a
minimum of 6
months);
contributions are
deducted from
Separation Pay;
eligible for COBRA
afterward
	 
	 	 	 	 
	Basic Employee Term
Life Insurance (new
format-maximum 1x
base pay; Old Format
-2x base pay)

	 	Coverage at level in
effect on Separation
Date continues for 31
days; you may elect to
continue coverage for
up to 30 months (but
not beyond age 65) from
your Separation Date at
your cost
	 	Coverage continues
to the end of the
month in which the
Separation Pay
Period ends (or a
minimum of 6 months)
(but not beyond age
65); contributions
are deducted from
Separation Pay; you
may elect to
continue coverage
for the balance of
up to 30 months (but
not beyond age 65)
from your Separation
Date at your cost
	 
	 	 	 	 
	Optional Employee 

Group Term Life, 

Dependent Life, 

Survivor Income

	 	Coverage at level in
effect on your
Separation Date
continues for 31 days;
you may elect to
continue coverage for
up to 30 months (but
not beyond age 65) from
your Separation Date at
your cost
	 	Coverage at level in
effect on your
Separation Date
continues for 31
days; you may elect
to continue coverage
for up to 30 months
(but not beyond age
65) from your
Separation Date at
your cost
	 
	 	 	 	 
	AD&D

	 	No coverage
	 	No coverage

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

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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.

Annual Incentive Program/Executive Incentive Program (“AIP/EIP”)—

As described in more detail below, payment of bonuses, or a special payment in lieu of a bonus,
depends on when a Separated Employee’s Separation Date occurs during a performance year. Actual
AIP/EIP bonuses with respect to the performance year immediately preceding the Separated Employee’s
Separation Date may be paid to employees whose employment terminates between January 1 and the time
AIP/EIP bonuses are paid for that year to other employees . No AIP/EIP or special payment in lieu
of a bonus with respect to the performance year in which the Separation Date occurs is payable for
any employee separated after AIP/EIP bonuses are paid for a year and on or before June 30. A
special payment in lieu of a bonus is payable under this program with respect to the performance
year in which the Separation Date occurs only for employees whose Separation Dates occur on or
after July 1 and on or before December 31 of that performance year.

If Your Separation Date occurs between January 1 and the time AIP/EIP bonuses are paid for a year

If your Separation Date occurs on or after January 1 and the day AIP/EIP bonuses 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.
Eligibility for consideration for AIP/EIP bonus is not contingent upon your signing the Separation
Letter. You will not be eligible for any AIP/EIP or payment in lieu of an AIP/EIP for the
performance year in which your Separation Date occurs.

If Your Separation Date occurs between the time AIP/EIP bonuses are paid for a year and June 30

If your Separation Date occurs after AIP/EIP bonuses are paid to other Merck employees and on or
before June 30, you will not be eligible for consideration for an AIP/EIP bonus or the special in
lieu of bonus payment described below whether or not you sign the Separation Letter.

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If Your Separation Date occurs after June 30 and on or before December 31

A special payment in lieu of an AIP/EIP with respect to the performance year in which your
Separation Date occurs may be paid only if you sign and do not revoke the Separation Letter. The
special payment, if any, will be calculated based on the bonus paid to you under the Annual
Incentive Program/Executive Incentive Program with respect to the prior complete performance year
and the number of 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 performance year. If you received no
AIP/EIP in the prior performance year and you do not have documented poor performance for the prior
or current performance year, the Company may base your special payment in lieu of an AIP/EIP bonus,
if any, on the minimum of the Company’s bonus range for your position. If your AIP/EIP for the
prior performance year was prorated (e.g., due to a leave of absence, new hire status,
promotion/demotion, change in full-time/part-time status, etc.), the Company may, in its
discretion, calculate your special payment in lieu of an AIP/EIP bonus, if any, by annualizing the
actual AIP/EIP paid for the prior 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. Your deferral election applicable to the AIP/EIP for the
current performance year if any, will not apply to any special payment in lieu of an AIP/EIP bonus.

OTHER BENEFITS AND PROGRAMS

Stock Options, Restricted Stock Units and Performance Stock Units

Only employees may receive incentives under Merck’s incentive stock plans, including stock options,
restricted stock units (“RSUs”) or performance stock units (“PSUs”); therefore, you will not be
eligible to receive any grants after your Separation Date.

Outstanding Stock Options, RSUs and PSUs

Whether you sign the Separation Letter or not, the separation provisions applicable to stock
options, RSUs and PSUs will apply to any outstanding incentives you hold on your Separation Date.
The separation provisions may differ based on the grants. IT IS
YOUR RESPONSIBILITY TO FAMILIARIZE
YOURSELF WITH THE TERMS OF INDIVIDUAL GRANTS.

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Stock Options (separation terms)

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

Vested options will expire upon the earlier of (i) the day before the one-year anniversary
of your Separation Date or (ii) the original 10-year expiration date.

Generally, for annual and quarterly stock option grants made in 2001 and thereafter:

All outstanding annual and quarterly grants will vest on the Separation Date. You will
then have two years to exercise them; they will expire on the day before the second
anniversary of your Separation 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.

If you are later rehired, stock options that are unexercised and outstanding on your rehire date
will be reinstated to active status as if your employment had not been interrupted.

RSUs (separation terms)

Under the separation provisions of the RSUs, a pro rata portion of your annual grants of restricted
stock units, if any, generally will vest and become distributable soon after your Separation Date.
See the term sheets applicable to RSUs granted to you, if any.

PSUs (separation terms)

Under the separation provisions of the PSUs, a pro rata portion of your annual grant of performance
share units, if any, will be payable when the distribution, if any, with respect to the applicable
performance year is made to active employees. See the term sheets applicable to PSUs granted to
you, if any.

If you have any question about your stock options, RSUs or PSUs, you can call the 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

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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 Aetna by April 15th of
the year following the year in which your Separation Date occurs. Amounts remaining in the account
after all eligible expenses have been paid will be forfeited.

Financial 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 Pay in Lieu of Notice or 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

10

 

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 Aetna 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 domestic
partner), that coverage will end on your Separation Date. However, if you want to continue
coverage without interruption, you must contact CNA (the insurer) and pay your first quarterly
premium to CNA within 31 days after the last day of the month in which your Separation Date occurs.
For more information (and to request the necessary forms) contact CNA directly at 1-800-528-4582.

Long Term Disability

Your participation in the Long Term Disability Plan will end on the last day of the month in which
your Separation Date occurs. In other words, you must have satisfied the 26-week eligibility
period and filed an application for benefits 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, Pay in Lieu of Notice and
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
the Pay in Lieu of Notice and Separation Pay.)

Pension

If you have at least 5 years of Vesting Service (as that term is defined in the Retirement Plan) as
of your Separation Date, you will be a “terminated vested” participant in the Retirement Plan.
This means that your employment will have terminated before you were eligible to “retire” from
active service with the Company (generally, age 55 with at least 10 years of Credited Service (as
that term is defined in the Retirement Plan)) and that you have a “vested” pension under the
Retirement Plan.

If you are a “terminated vested” participant, your benefits under the Retirement Plan must
begin no later than the first day of the month following age 65 after

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your employment terminates. However, you can start receiving a reduced benefit on the first day of
any month after you reach age 55. The early payment reduction for a “terminated vested”
participant is an “actuarial” reduction. That is, your life expectancy and certain other actuarial
assumptions are used in calculating the reduction amount. You should expect this to reduce your
benefits substantially because by commencing your benefit early, you receive benefits earlier and
for a longer period. A table illustrating examples of actuarial reductions from the age 65
benefit and a more detailed explanation of the benefits for “terminated vested” participants can be
found in the Salaried Retirement Plan section of the current Merck Benefits Book (and applicable
summaries of material modification). If you do not have at least 5 years of Vesting Service as of
your Separation Date, you will not be eligible for a benefit under the Retirement Plan.

After you leave the Company, if you are entitled to a vested benefit from the Retirement Plan,
you’ll receive a statement that will tell you what your life income will be at age 65. This will
be sent to you within approximately one year from your Separation Date. If any portion of your
benefit is from a different plan, such as the Retirement Plan for Hourly Employees of 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).

Payments not Compensation for Retirement Plan. Any Pay in Lieu of Notice or 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.

Savings Plan

Any Pay in Lieu of Notice or 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

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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, Pay in Lieu of Notice and Separation Pay paid by
the Company under the Special Separation Program will act as an offset from benefits payable under
the Short Term Disability Plan (meaning the STD benefits will be reduced by the Pay in Lieu of
Notice and Separation Pay). Where state law does not permit such offsets to be made to STD
benefits, STD benefits will instead act as an offset from Pay in Lieu of Notice and/or Separation
Pay paid (or payable) by the Company under the Special Separation Program (meaning Pay in Lieu of
Notice and/or 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 Pay in Lieu of Notice or 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 November 1, 2005 through December 31, 2008. 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.

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 generally may not be made on account of separation from service for six months following
the termination of employment of a “Specified Employee” as defined in Prop. 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 to him or her prior to the first day of the sixth month following termination of
employment. Instead, amounts that would otherwise have been payable will be accumulated and paid,
without interest, as soon as administratively feasible following such six-month period.

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Glossary of Definitions

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

“Basic Employee Group Term Life Coverage” is the lesser of the amount of the Separated Employee’s
group term life coverage in effect on the Separation Date or 1x base pay for those who are
considered New Format (2x base pay for those who are considered Old Format).

“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

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

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

(1) who experience a Separation From Service (as that term is defined in the Separation
Benefits Plan) on or between November 1, 2005 through December 31, 2008; and

(2) who, as of their Separation Date, is:

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

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

“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
Employees must sign and return it to the Company.

15

 

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

“Special Separation Program” means the separation benefits that Separated Employees receive if they
sign and do not revoke the Separation Letter.

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