Document:

EX-4.1

Exhibit
4.1

UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN CERTIFICATED FORM, THIS
SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITORY TRUST COMPANY (“DTC”) TO A
NOMINEE OF DTC, OR BY A NOMINEE OF DTC TO DTC OR ANOTHER NOMINEE OF DTC, OR BY DTC OR ANY SUCH
NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.

 

 

	 	 	 
	No. R-1

	 	$                        
	 

	 	CUSIP No. 713448 BK3

PEPSICO, INC.

3.75% SENIOR NOTE DUE 2014

     PEPSICO, INC., a corporation in existence under the laws of the State of North Carolina
(herein called the “Company”, which term includes any successor corporation under the Indenture
referred to on the reverse hereof), for value received, hereby promises to pay to Cede & Co. or
registered assigns, the principal sum of $                        on March 1, 2014, and to pay interest on said
principal sum semi-annually on March 1 and September 1 of each year, commencing September 1, 2009,
at the rate of 3.75% per annum from March 2, 2009, or from the most recent date in respect of which
interest has been paid or duly provided for, until payment of the principal sum has been made or
duly provided for. The interest so payable and punctually paid or duly provided for on any Interest
Payment Date will, as provided in the Indenture, be paid to the Person in whose name this Note (or
one or more Predecessor Securities) is registered at the close of business on the Record Date for
such Interest Payment Date, which shall be the February 15 or August 15 (whether or not a New York
Business Day) next preceding such Interest Payment Date. Any such interest that is payable but is
not so punctually paid or duly provided for shall forthwith cease to be payable to the registered
Holder on such Record Date and may either be paid to the Person in whose name this Note (or one or
more Predecessor Securities) is registered at the close of business on a Special Record Date for
the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to
Holders of Notes not earlier than 10 days prior to such Special Record Date, or may be paid at any
time in any other lawful manner not inconsistent with the requirements of any securities exchange
on which the Notes may be listed and upon such notice as may be required by such exchange, if such
manner of payment shall be deemed practical by the Trustee, all as more fully provided in the
Indenture.

     Payment of the principal of and interest on this Note will be made at the Place of Payment in
such coin or currency of the United States as at the time of payment is legal tender for payment of
public and private debts; provided, however, that payments of interest may be made at the option of
the Company by checks mailed to the addresses of the Persons entitled thereto as such addresses
shall appear in the Security Register.

     Reference is made to the further provisions of this Note set forth on the reverse hereof,
which shall have the same effect as though fully set forth at this place. Unless the certificate
of authentication hereon has been executed by or on behalf of the Trustee by manual signature, this
Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any
purpose.

 

 

     IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed by manual or
facsimile signature under its corporate seal or a facsimile thereof.

	 	 	 	 	 
	Dated:                          , 2009 	PEPSICO, INC.

 	 
	 	By:  	 	 
	 	 	Authorized Officer 	 
	 	 	 	 
	 
	 	 	 
	 	By:  	 	 
	 	 	Authorized Officer 	 
	 	 	 	 
	 

[seal]

Attest:

 

 

 

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

     This is one of the Securities of the series designated therein referred to in the
within-mentioned Indenture.

	 	 	 	 	 
	 	The Bank of New York Mellon, as Trustee

 	 
	 	By:  	 	 
	 	 	Authorized Signatory 	 
	 	 	 	 
	 

 

 

REVERSE OF NOTE

PEPSICO, INC.

3.75% SENIOR NOTE DUE 2014

     This Note is one of a duly authorized issue of debentures, notes or other evidences of
indebtedness of the Company (herein called the “Securities”), issued and to be issued in one or
more series under an Indenture, dated as of May 21, 2007 (herein called the “Indenture”), between
the Company and The Bank of New York Mellon, as Trustee (herein called the “Trustee”, which term
includes any successor trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the respective rights thereunder
of the Company, the Trustee, and the Holders of the Securities, the terms upon which the Securities
are, and are to be, authenticated and delivered, and the definition of capitalized terms used
herein and not otherwise defined herein. The Securities may be issued in one or more series, which
different series may be issued in various aggregate principal amounts, may be denominated in
different currencies, may mature at different times, may bear interest (if any) at different rates
(which rates may be fixed or variable), may be subject to different redemption provisions (if any),
may be subject to different sinking, purchase, or analogous funds (if any), may be subject to
different covenants and Events of Default, and may otherwise vary as provided in the Indenture.
This Note is one of a series of Securities of the Company designated as set forth on the face
hereof (herein called the “Notes”), initially limited in aggregate principal amount to
$1,000,000,000.

     The Notes shall be redeemable as a whole or in part, at the Company’s option at any time and
from time to time, at a redemption price equal to the greater of (i) 100% of the principal amount
of such Notes and (ii) the sum of the present values of the remaining scheduled payments of
principal and interest thereon (exclusive of interest accrued to the date of redemption) discounted
to the redemption date on a semiannual basis (assuming a 360-day year consisting of twelve 30-day
months) at the Treasury Rate plus 30 basis points, plus in each case accrued and unpaid interest to
the date of redemption.

     Except as otherwise provided herein, redemption of the Notes shall be made in accordance with
the terms of Article 11 of the Indenture.

     “Comparable Treasury Issue” means the United States Treasury security or securities selected
by an Independent Investment Banker as having an actual or interpolated maturity comparable to the
remaining term of the Notes to be redeemed that would be utilized, at the time of selection and in
accordance with customary financial practice, in pricing new issues of corporate debt securities of
a comparable maturity to the remaining term of such Notes.

     “Comparable Treasury Price” means, with respect to any redemption date, (A) the average of the
Reference Treasury Dealer Quotations for such redemption date, after excluding the highest and
lowest such Reference Treasury Dealer Quotations, or (B) if the Trustee obtains fewer than four
such Reference Treasury Dealer Quotations, the average of all such quotations.

 

 

     “Independent Investment Banker” means one of the Reference Treasury Dealers appointed by the
Company and reasonably acceptable to the Trustee.

     “Reference Treasury Dealer” means each of any four primary U.S. Government securities dealers
in the United States of America selected by the Company.

     “Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer
and any redemption date, the average, as determined by the Trustee, of the bid and asked prices for
the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount)
quoted in writing to the Trustee by such Reference Treasury Dealer at 3:30 p.m. New York time on
the third business day preceding such redemption date.

     “Treasury Rate” means, with respect to any redemption date, the rate per annum equal to the
semiannual equivalent yield to maturity or interpolated (on a day count basis) of the Comparable
Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of
its principal amount) equal to the Comparable Treasury Price for such redemption date.

     The Indenture permits, with certain exceptions as therein provided, the amendment thereof and
the modification of the rights and obligations of the Company and the rights of the Holders of the
Securities of each series under the Indenture at any time by the Company and the Trustee with the
consent of the Holders of a majority in aggregate principal amount of the Securities at the time
Outstanding of each series to be affected by such amendment or modification. The Indenture also
contains provisions permitting the Holders of a majority in aggregate principal amount of the
Securities of each series at the time Outstanding, on behalf of the Holders of Securities of such
series, to waive compliance by the Company with certain provisions of the Indenture and certain
past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder
of this Note shall be conclusive and binding upon such Holder and upon all future Holders of this
Note and of any Note issued upon registration of transfer hereof or in exchange herefor or in lieu
hereof, whether or not notation of such consent or waiver is made upon this Note.

     The Indenture contains provisions setting forth certain conditions to the institution of
proceedings by Holders of Securities with respect to the Indenture or for any remedy under the
Indenture.

     If an Event of Default with respect to the Notes shall occur and be continuing, the principal
amount hereof may be declared due and payable or may be otherwise accelerated in the manner and
with the effect provided in the Indenture.

     No reference herein to the Indenture and no provision of this Note or of the Indenture shall
alter or impair the obligation of the Company, which is absolute and unconditional, to pay the
principal of and interest on this Note at the times, place and rate, and in the coin or currency,
herein prescribed.

     As provided in the Indenture and subject to certain limitations therein set forth, the
transfer of this Note is registerable in the Security Register, upon surrender of this Note for
registration of transfer at the office or agency of the Company in any Place of Payment duly

 

 

endorsed, or accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed, by the Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Notes, of authorized denominations and for the
same aggregate principal amount, will be issued to the designated transferee or transferees.

     The Notes are issuable only in registered form without coupons in denominations of $2,000 and
integral multiples of $1,000 in excess thereof. As provided in the Indenture and subject to certain
limitations therein set forth, this Note is exchangeable for a like aggregate principal amount of
Notes of different authorized denominations as requested by the Holder surrendering the same.

     No service charge shall be made for any such registration or transfer or exchange, but the
Company may require payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith.

     Prior to the presentment of this Note for registration of transfer, the Company, the Trustee,
and any agent of the Company or the Trustee may treat the Person in whose name this Note is
registered as the owner hereof for the purpose of receiving payment as herein provided and for all
other purposes, whether or not this Note is overdue, and neither the Company, the Trustee, nor any
such agent shall be affected by notice to the contrary.

     All terms used in this Note which are defined in the Indenture and are not otherwise defined
herein shall have the meanings assigned to them in the Indenture.

     FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto

 

[PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE]

 

 

 

[PLEASE PRINT OR TYPE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE]

the within Note and all rights thereunder, hereby irrevocably constituting and appointing
                                         attorney to transfer such Note on the books of the Issuer, with full
power of substitution in the premises.

Dated:                                        

 

 

NOTICE: The signature to this assignment must correspond with the name as written upon the face of
the within Note in every particular without alteration or enlargement or any change whatsoever.EX-10.3

Exhibit 10.3

 

MERCK & CO., INC.

DEFERRAL PROGRAM

(Amended and Restated as of January 1, 2009)

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page
	Article I	Administration
	 	1	 
	 	 
	 	 	 
	Article II	Eligibility
	 	1	 
	 	 
	 	 	 
	Article III	Deferral Into a Deferred Compensation Account
	 	2	 
	 	 
	 	 	 
	Article IV	Valuation of Deferred Compensation Accounts
	 	4	 
	 	 
	 	 	 
	Article V	Redesignation Within a Deferred Compensation Account
	 	6	 
	 	 
	 	 	 
	Article VI	Distribution of Deferred Compensation Accounts
	 	7	 
	 	 
	 	 	 
	Article VII	Deductions from Distributions
	 	9	 
	 	 
	 	 	 
	Article VIII	Beneficiary Designations
	 	9	 
	 	 
	 	 	 
	Article IX	Amendments
	 	9	 
	 	 
	 	 	 
	Article X	Claims and Appeal Procedures
	 	10	 
	 	 
	 	 	 
	Article XI	Domestic Relations Orders
	 	11	 
	 	 
	 	 	 
	Schedule I	Deferral Program Investment Alternatives
	 	12	 
	 	 
	 	 	 
	Schedule II	Special Provisions Applicable to Medco Health Employees
	 	13	 

(i)

 

 

MERCK & CO., INC. DEFERRAL PROGRAM

     The Deferral Program (the “Program”) is an unfunded arrangement intended to permit a select
group of management to defer income that would otherwise be immediately payable to them as annual
base salary or under various incentive plans of Merck & Co., Inc. (the “Merck” or the “Company”).
The Program is a “nonqualified deferred compensation plan” within the meaning of Section 409A of
the Code (“Section 409A”).

     Anything in the Program to the contrary notwithstanding, the Program 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 and Treas. Reg. Secs. 1.409A-1 through
1.409A-6 or any successor thereto. Any payment called for under the Program 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 dates 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. Where the Program’s obligation to pay is unclear to the Company,
including a dispute about who is the proper beneficiary of a participant who dies, payment shall be
made as soon as adminstratively feasible after the Program’s obligation becomes clear and at a time
permitted by Treas. Reg. Sec. 1.409A-3(g)(4) or any successor thereto.

I. ADMINISTRATION

     The Program is administered by the Compensation and Benefits Committee (“Committee”) of the
Company’s Board of Directors. The Committee is composed of non-employee directors only. The
Committee shall have responsibility for determining which investments will be available under the
Program, and those investments shall be listed on Schedule I hereto. The Committee shall make all
decisions affecting the timing, price or amount of any and all of the Deferred Compensation of
“officers” as defined in Rule 16a-1(f) of the Securities Exchange Act of 1934, as amended (“Section
16 Officers”) other than rules of general application to all Participants, but may otherwise
delegate any of its authority under this Program.

II. ELIGIBILITY

A. Salaried employees of Merck & Co., Inc. who are based in and subject to U.S. income taxes are
eligible to make an election to defer into the Program if they are in Bands 1 through 3 (or
successor level according to Merck’s assignment as in effect from time to time) according to
Merck’s payroll system on the date by which initial elections must be made for a year. Otherwise,
eligibility to defer under this Program will be determined in accordance with the terms of the
Company’s Base Salary Deferral Plan and various incentive plans and the Committee may refuse to
permit any employee or class of employees to participate in this Program.

B. Anything in the Program to the contrary notwithstanding, the following are not eligible to make
an election: 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; or (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. 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. Also excluded are 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
otherwise is eligible to participate according to Article II, Section A.

C. A person who has made an election into the Program pursuant to Section A above shall be a
Participant for so long as he or she has an account balance, but cannot make another election to
defer unless he or she is then eligible pursuant to Article II, Section A. If a person has made an
election to defer but thereafter becomes ineligible to defer (for example, a Band 3 employee
becomes a Band 4 employee), the election nonetheless will be given effect.

III. DEFERRAL INTO A DEFERRED COMPENSATION ACCOUNT

A. Initial Election to Defer

     To defer, a participant must irrevocably elect to defer under the Program by the earlier of
the time specified in Treas. Reg. Sec. 1.409A-2 or any successor thereto or:

1. Base Salary Deferral Plan, prior to the end of the year preceding the year during which
such base salary will be earned. The amount that may be deferred is

     (a) Not less than 5 percent of Annual Base Salary (as defined in the Base Salary
Deferral Plan) and

     (b) Not more than the lesser of

     (1) 50 percent of Annual Base Salary or

     (2) The portion of the Participant’s Annual Base Salary that exceeds the amount
determined under Section 401(a)(17) of the Internal Revenue Code (the “Code”)

provided, however, that amounts may be expressed in relation to amounts that may be deducted
by the Company under Section 162(m) of the Code.

2. Annual incentive plans (such as the Annual Incentive Plan and the Executive Incentive
Plan), prior to the commencement of the performance year during which the bonus monies to be
deferred will be earned, provided:

     (a) A participant who is hired by the Company during a performance year may make an
election, no later than the 30th day from the participant’s date of hire, to defer bonus
monies to be earned during such performance year, and

     (b) The minimum that may be deferred in any year under this Section IV.A.2. is $3,000.

3. Annual grants of Restricted Stock Units (RSUs) and Performance Share Units (PSUs) may be
deferred prior to the commencement of the last year of the award period during which they
will be earned. Other RSUs and PSUs may not be deferred. After 2008, RSUs

2

 

and PSUs for which the deferral election is made after grant must be deferred in compliance
with the rules applicable to re-deferral (as opposed to initial elections) under Section 409A
as described in Article VI, Section F. Deferrals of RSUs and PSUs must be made initially
into the Merck Common Stock fund and may not thereafter be reallocated into any other
investment alternative provided pursuant to Schedule I (a “Mutual Fund”).

Amounts so deferred are known as “Deferred Compensation” and will be credited to the participant’s
“Deferred Compensation Account.” Deferred Compensation shall be accounted for in one account
regardless of the plan (e.g., Base Salary Deferral or incentive plan) under which it was deferred,
but a separate election to defer applies for each year for base salary, annual incentive, or grant
of RSUs or PSUs, and records shall show each separate election. Further, for purposes of
modifications to a distribution schedule, each such separate election shall be eligible for such a
modification. Only amounts described above may be deferred; stock option gains may not be
deferred.

Notwithstanding the foregoing, a participant’s Deferral Election will be cancelled if he or she
receives a hardship distribution from the Merck & Co., Inc. Employee Savings & Security Plan or
other qualified savings plan with a 401(k) feature maintained by the Company or its affiliates if
and only if such cancellation is required by applicable regulation of the Internal Revenue Service.
If a participant terminates employment or transfers to a class of employees that is ineligible to
make a deferral election after having made a deferral election, the election will nevertheless be
effected. If the Company pays an amount that it reasonably believes is or may be held to be a
“substitute payment,” within the meaning of Treas. Reg. Sec. 1.409A-1(b)(9), for an amount that
would have been deferred pursuant to the foregoing, that substitute payment also will be deferred
according to the participant’s election.

B. Initial Election of Distribution Schedule

1. Timing of Election

     The participant must elect an initial distribution schedule when making the initial election
pursuant to III.A. above.

2. Distribution Schedule

     A participant may elect to have payments begin (a) in a particular year (whether or not
employment has then ended) or (b) in the year following the participant’s “Separation from Service”
as defined below, or (c) up to 15 years subsequent to the participant’s Separation from Service.
Separation from Service means Separation from Service as defined in Treas. Reg. Sec. 1.409A-1(h) or
any successor thereto and includes but is not limited to: retirement; separation due to lack of
work; voluntary resignation; or involuntary termination of employment. It does not include
termination of service due to death or commencement of employment with a joint venture (as
described below). A participant may elect a lump sum or a schedule of annual installments, up to a
maximum of 15 annual installments.

3. Manner of Elections

     All elections under the Program shall be made with the Program’s designated recordkeeper (the
“Recordkeeper”) in the manner and in accordance with the process approved by the Company’s head of
Human Resources Department from time to time.

3

 

4. Default Designation

     Where a Participant’s initial election of a distribution schedule is for any reason unclear to
the Company (including but not limited to where a Participant failed to elect when amounts will be
distributed), the Participant shall be deemed to have elected to receive distributions in the year
following the year in which occurs his Separation from Service.

C. Election of Investment Alternatives

     The participant shall designate, in accordance with procedures established by the Company for
such designation, the portion (in multiples of 1 percent) of the Deferred Compensation to be
allocated to any investment alternative available under this Program.

IV. VALUATION OF DEFERRED COMPENSATION ACCOUNTS

     The Deferral Program shall offer as investment alternatives (a) a fund of Merck Common Stock and
(b) Mutual Funds.

A. Merck Common Stock 

1. Initial Crediting

     The amount allocated to Merck Common Stock shall be used to determine the number of full and
partial shares of Merck Common Stock which such amount would purchase at the closing price of Merck
Common Stock on the New York Stock Exchange (“NYSE”) on the date cash payments of base salary, for
amounts deferred under the Base Salary Deferral Plan, or incentive awards, for amounts deferred
under the various incentive plans, would otherwise be paid to the participant (the “Deferral
Date”). The Company shall credit the participant’s Deferred Compensation Account with the number
of full and partial shares of Merck Common Stock so determined. However, at no time prior to the
delivery of such shares shall any actual shares be purchased or earmarked for such Account and the
participant shall not have any of the rights of a shareholder with respect to shares credited to
his/her Deferred Compensation Account.

2. Dividends

     The Company shall credit the Participant’s Deferred Compensation Account with the number of
full and partial shares of Merck Common Stock purchasable at the closing price of Merck Common
Stock on the NYSE as of the date each dividend is paid on the Common Stock, with the dividends that
would have been paid on the number of shares credited to such Account (including pro rata dividends
on any partial share) had the shares so credited then been issued and outstanding.

3. Redesignations

     The value of Merck Common Stock for purposes of redesignation shall be the closing price of
Merck Common Stock on the NYSE on the first day the NYSE is open after the request is received by
the Recordkeeper.

4

 

4. Distributions

     Distributions of Merck Common Stock will be valued at the closing price of Merck Common Stock
on the NYSE on the Distribution Date.

5. Limitations

     Shares of Merck Common Stock to be delivered under the provisions of this Program may be
delivered by the Company from its authorized but unissued shares of Common Stock or from Common
Stock held in the treasury. The Company also may, in its sole and nonreviewable discretion,
purchase shares on public markets in order to make distributions under the Program.

6. Adjustments

     In the event of a reorganization, recapitalization, stock split, stock dividend, combination
of shares, merger, consolidation, rights offering or any other change in the corporate structure or
shares of the Company, the number and kind of shares of Merck Common Stock available under this
Program or credited to participants’ Deferred Compensation Accounts shall be adjusted accordingly.

7. Fair Market Value of Merck Common Stock

     For purposes of valuation of Merck Common Stock, if Merck Common Stock is no longer traded on
the NYSE, but is publicly traded on any other exchange, references to NYSE shall mean such other
exchange. If Merck Common Stock is not publicly traded and if the Committee determines that a
measurement of Merck Common Stock on any applicable date would not constitute fair market value,
then the Committee shall decide on the date and method to determine fair market value, which shall
be in accord with any requirements set forth under Section 409A or any successor thereto.

B. Mutual Funds

1. Initial Crediting

     The amount allocated to each Mutual Fund shall be used to determine the number of full and
partial Mutual Fund shares that such amount would purchase at the closing net asset value of the
Mutual Fund shares on the Deferral Date. The Company shall credit the participant’s Deferred
Compensation Account with the number of full and partial Mutual Fund shares so determined.
However, no actual Mutual Fund shares shall be purchased or earmarked for such Account, nor shall
the participant have the rights of a shareholder with respect to such Mutual Fund shares.

2. Dividends

     The Company shall credit the participant’s Deferred Compensation Account with the number of
full and partial Mutual Fund shares purchasable, at the closing net asset value of the Mutual Fund
shares as of the date each dividend is paid on the Mutual Fund shares, with the dividends that
would have been paid on the number of shares credited to such Account (including pro rata dividends
on any partial share) had the shares then been owned by the participant for purposes of the above
computation.

5

 

3. Redesignations

     The value of Mutual Fund shares for purposes of redesignation shall be the net asset value of
such Mutual Fund at the close of business on the first day the NYSE is open after the request is
received by the Recordkeeper.

4. Distributions

     Mutual Fund distributions will be valued based on the closing net asset value of the Mutual
Fund shares on the Distribution Date (as defined below).

5. Adjustments

     In the event of a reorganization, recapitalization, stock split, stock dividend, combination
of shares, merger, consolidation, rights offering or any other change in the corporate structure or
shares of a Mutual Fund, the number and kind of shares of that Mutual Fund credited to
participants’ Deferred Compensation Accounts shall be adjusted accordingly.

6. Default Designation

     Where a Participant’s designation of investment alternatives is for any reason not clear
(including but not limited to where a Participant failed to make such an election), the Participant
shall be deemed to have designated deferrals into the life cycle, target or similar Mutual Fund
with a target date closest to the Participant’s attainment of age 65.

V. REDESIGNATION WITHIN A DEFERRED COMPENSATION ACCOUNT

A. Basic Redesignation Rules

     A participant, or the beneficiary or legal representative of a deceased participant, may
redesignate amounts credited to a Deferred Compensation Account among the investments available
under this Program in accordance with the following rules:

	 	(1)	 	Eligible Participants —All Participants and beneficiaries may redesignate.
	 
	 	(2)	 	Frequency and Timing —Redesignation shall be effective as of 4:00 p.m. E.T. on the
first day the NYSE is open after the request is received by the Recordkeeper.
	 
	 	(3)	 	Amount and Extent of Redesignation — Redesignation must be in 1% multiples of the
investment from which redesignation is being made.
	 
	 	(4)	 	Beneficiaries or Legal Representatives — The beneficiary or legal representative of
a deceased participant may redesignate subject to the same rules as participants.

B. Special Rules for Redesignation Into or Out of Merck Common Stock 

1. Frequency and Timing

     For Section 16 Officers, redesignations may only be made into or out of Merck Common Stock
during any window period established by the Company from time-to-time. Redesignation out of Merck
Common Stock is restricted to amounts held in Merck Common Stock for longer

6

 

than six months. Redesignation shall not be permitted to the extent the Company is aware of a
transaction that the Company reasonably believes may cause a violation under Section 16 of the
Securities Exchange Act of 1934, as amended.

2. Material, Nonpublic Information

     The Committee, in its sole discretion and with advice of counsel, at any time may rescind a
redesignation into or out of Merck Common Stock if such redesignation was made by a participant
who, (a) at the time of the redesignation was in the possession of material, nonpublic information
with respect to the Company; and (b) in the Committee’s estimation benefited from such information
in the timing of his/her redesignation. The Committee’s determination shall be final and binding.
In the event of such rescission, the participant’s Deferred Compensation Account shall be returned
to a status as though such redesignation had not occurred. Notwithstanding the above, the
Committee shall not rescind a redesignation if the facts were reviewed by the participant with the
General Counsel of the Company or a designee prior to the redesignation and if the General Counsel
or designee had concluded that such participant was not in possession of adverse material,
nonpublic information.

C. Conversion of Common Stock Accounts

     The Committee may, in its sole discretion, convert all of the shares of Merck Common Stock
allocated to a participant’s Deferred Compensation Account in the manner provided below where a
position which a participant has taken or wishes to take is, in the opinion of the Committee, such
as would make uncertain the propriety of the participant’s having a continued interest in Merck
Common Stock. The date of conversion shall be the date of commencement of such other employment or
the date of the Committee’s action, whichever is later.

     Conversion shall be from an expression of value in shares of Merck Common Stock in the
participant’s Deferred Compensation Account to an expression of value in United States dollars in
another available investment. The value of the Merck Common Stock shall be based upon its closing
price on the NYSE on the date of conversion or if no trading took place on such day, the next
business day on which trading took place. Any conversion under this paragraph shall be irrevocable
and absolute.

VI. DISTRIBUTION OF DEFERRED COMPENSATION ACCOUNTS

     Distribution of Deferred Compensation Accounts shall be made in accordance with the
participant’s distribution schedule pro rata by investment. Distributions from Merck Common Stock
will be made in shares, with cash payable for any partial share, subject to the limitations set
forth in Article IV, Section A.5. For Section 16 Officers, distribution of amounts in Merck Common
Stock is also restricted to amounts held in Merck Common Stock for longer than six months.
Distributions from Mutual Funds will be in cash. Distributions will be valued on the Distribution
Date, i.e, the 15th day of the distribution month (or, if such day is not a business
day, the next business day) and paid as soon thereafter as practicable. Distribution months shall
mean only January, April, July, and October.

7

 

A. Separation from Service 

     1. Distribution Commences.

     Upon a participant’s Separation from Service, Deferred Compensation Accounts will commence in
accordance with the participant’s previously elected schedule. If a participant incurs a
Separation from Service and thereafter is rehired by the Company, such rehire shall be ignored and
distributions shall commence notwithstanding such rehire; provided, however, that if the
participant is eligible and elects to make additional deferrals, those additional deferrals may be
payable in relation to the subsequent Separation from Service.

     2. Specified Employee.

     Anything in the Program to the contrary notwithstanding, to the extent required by Section
409A, 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 6 months after the date of
Separation from Service (or, if earlier, the date of death of the employee). Where a payment would
have been made to a Specified Employee within such 6-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.

B. Death

     In the event of a participant’s death, whether or not distributions have commenced pursuant to
a Participant’s election, Deferred Compensation Accounts under this Program will be distributed to
the participant’s beneficiary or estate in a lump sum as soon as administratively feasible and in
any event by March 15 of the year following death (except as otherwise permitted by Treas. Reg.
Sec. 1.409A-3(g)(4) or any successor thereto).

C. Automatic Distribution

     Except as provided in Schedule II, if a participant incurs a Separation from Service and has a
Deferred Compensation Account valued at less than $125,000 on the first Distribution Date
thereafter, the Deferred Compensation Account shall be distributed in a lump sum as soon as
administratively feasible following such termination and in any event by March 15 of the year
following death (except as otherwise permitted by Treas. Reg. Sec. 1.409A-3(g)(4) or any successor
thereto).

D. Joint Venture Service

     A participant’s termination of employment in order to take a position with a joint venture or
other business entity in which the Company shall directly or indirectly own 50 percent or more of
the outstanding voting or other ownership interest shall not be considered a Separation from
Service.

E. Hardship Distributions

     The Committee shall distribute a participant’s Deferred Compensation Account, if and to the
extent a participant applies to receive a distribution due to an Unforeseeable Emergency as

8

 

defined in Treas. Reg. Sec. 1.409A-3(i). A participant wishing a hardship distribution must
provide the Committee or its delegate with sufficient evidence to prove compliance with Treas. Reg.
Sec. 1.409A-3(i).

F. Modifications to Distribution Schedule

     After making an initial election, a participant may elect to change his or her distribution
schedule from time to time, provided, however, such changes shall not be permitted if it might
reasonably be expected to cause a “plan failure” as such term is used in Section 409A of the Code.
For example, except as otherwise permitted by Section 409A, no election may permit an acceleration
of a distribution, or may become effective earlier than one year from the date it is made, or may
permit an additional deferral after the initial election unless it results in a deferral of at
least five additional years from the previously schedule distribution date. For purposes of this
provision, where a participant has elected to receive a distribution as a series of payments, such
series shall be considered a single distribution for purposes of Section 409A. Any such elections
shall be made with the Recordkeeper in the manner and in accordance with the process approved by
the Company’s’ head of Human Resources Department from time to time.

VII. DEDUCTIONS FROM DISTRIBUTIONS

     The Company will deduct from each distribution amounts required to be withheld for income,
Social Security and other tax purposes. Such withholding will be done on a pro rata basis per
investment. The Company may also deduct any amounts the participant owes the Company for any
reason.

VIII. BENEFICIARY DESIGNATIONS

     A participant may designate a beneficiary to receive his/her Deferred Compensation Account
upon the participant’s death. If the beneficiary predeceases the participant or if the participant
does not name a beneficiary, the participant’s Deferred Compensation Account will be distributed to
the participant’s estate. Such designation shall be on in the format designated by the Company’s’
head of Human Resources Department from time to time, and it must be received by the Company’s
Human Resources Department prior to such participant’s death to be valid.

IX. AMENDMENTS

     The Committee may amend or terminate this Program at any time. However, such amendment may
not retroactively reduce a participant’s Deferred Compensation Account.

     For two years following a change in control of the Company (as such term is defined in the
Change in Control Separation Benefits Plan) the material terms of the Program (including terms
relating to eligibility, benefit calculation, benefit accrual, cost to participants, subsidies and
rates of employee contributions) may not be modified in a manner that is materially adverse to
individuals who participated immediately before the change in control. The Company will pay the
legal fees and expenses of any participant that prevails on his or her claim for relief in an
action regarding an impermissible amendment to the Program (other than ordinary claims for
benefits) or, if applicable, in an action regarding restrictive covenants applicable to the
participant.

9

 

X. CLAIMS AND APPEALS PROCEDURE

10.1. Determination of Claim

An Employee or his/her authorized representative may present a claim for benefits to the Global
Benefits Leader or the successor thereto (the “Director”) or such other person as the Committee may
determine to handle claims and appeals from the Program. The Director will make all determinations
as to the Employee’s claim for benefits under the Program. If the Director grants a claim,
benefits payable under the Program 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 Program, 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 Program 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.

10.2. Appeal of Denied Claim

A claimant or his/her authorized representative may request a review of the denied claim by the
Committee. Such request will be made in writing and will be presented to the Committee not more
than 60 days after receipt by the claimant of written notification of the denial of the claim. The
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 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.

10.3 ERISA Section 503

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

10.4 Limitation on 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 Program, the Company, their
affiliates, agents, fiduciaries, officers, directors, employees, successors, assigns or plans
(collectively, the “Program 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

10

 

Company puts the Claimant on notice of the Company’s or Program’s intention with respect to the
basis or argument in support of the Action, the Claimant must commence the process described in
Section 10.1 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 Program Group. The
limitation of Action may only be tolled by a writing executed by the Director.

XI. DOMESTIC RELATIONS ORDERS

     Notwithstanding any other provision of this Program to the contrary, 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) is not prohibited. 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 qualified domestic relations order. For purposes of the Program,
“Alternate Payee” means a person who would be an alternate payee under Section 414(p)(8) of the
Code if the Program were subject to Section 401(a) of the Code. 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 Account Balance;

          (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 Account Balance 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 Program;

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

          (g) the order provides that the Alternate Payee shall receive his or her interest in the
Program in a lump sum as soon as administratively feasible following determination by the Company’s
legal department (or its delegate) that the order satisfies the requirements of this Article.

11

 

SCHEDULE I

DEFERRAL PROGRAM INVESTMENT ALTERNATIVES

“Mutual Funds” shall mean all of the same investment alternatives offered under the Merck & Co.,
Inc. Employee Savings and Security Plan as in effect from time to time, excluding participant loans
and Merck Common Stock.

The Merck Common Stock fund offered under the Deferral Program shall be measured as if it were
invested 100% in Merck Common Stock with dividends reinvested in additional shares of Merck Common
Stock.

12

 

SCHEDULE II

SPECIAL PROVISIONS APPLICABLE TO

MEDCO HEALTH EMPLOYEES

(Approved July 23, 2002)

DEFINITIONS

Medco
Health — Medco Health Solutions, Inc.

Medco
Health Employee — A participant who is (i) employed by Medco Health prior to the
Spin-Off or (ii) employed by Merck prior to the Spin-Off and expected to be employed by Medco
Health prior to or as of the Spin-Off.

Separated
Medco Health Employee — A participant in the Deferral Program who is employed by
Medco Health as of the date of the Spin-Off and is considered to have terminated employment with
the Company as a result of the Spin-Off.

Spin-Off — The distribution by Merck to its shareholders of the equity securities of Medco
Health. The Spin-Off will be a divestiture for purposes of the Deferral Program.

SPECIAL PROVISIONS

Notwithstanding anything to the contrary in Article VI, Section C of the Deferral Program, the
Deferred Compensation Account of each Separated Medco Health Employee shall be paid out in
accordance with Article VI, Section D, without regard to the $125,000 threshold set forth in
Section C.

13

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"}]]