EX-10.2 3 y83714exv10w2.htm EX-10.2 exv10w2
Exhibit 10.2
MSD
SPECIAL SEPARATION PROGRAM
FOR
“SEPARATED RETIREMENT ELIGIBLE” EMPLOYEES
Eligible Employees: Employees of Merck Sharp & Dohme Corp. (and certain of its subsidiaries) who are not subject to a collective bargaining agreement and:
(1) who experience a Separation From Service (as defined in the Separation Benefits Plan) on or between January 1, 2009 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 November 3, 2009
Separated Retirement Eligible Employees
Effective as of November 3, 2009
Revised March 15, 2010

 


 

This document summarizes the benefits for which a “Separated Retirement Eligible Employee” may be eligible under the Special Separation Program and other employee benefit plans and programs of Merck Sharp & Dohme Corp. (“MSD”). Unless otherwise noted below, the terms and conditions of MSD’s employee benefit plans and programs applicable on an employee’s termination of employment from the Employer are as described in the applicable sections of the current MSD Benefits Book (and applicable summaries of material modification) previously provided to you or provided to you with this Brochure, as such plans and programs (and the applicable sections of the MSD Benefits Book) may be amended from time to time. (A copy of the applicable sections of the MSD Benefits Book (and applicable summaries of material modification) can be obtained on line at http://hr.merck.com or www.merck.com/benefits or by calling the Merck Benefits Service Center at 1-800-666-3725). However, to the extent that the terms below differ from those described in the applicable sections of the current MSD Benefits Book (and applicable summaries of material modification), this communication constitutes a summary of material modifications and should be kept with that book.
“Separated Retirement Eligible Employees” are certain nonunionized employees of the Employer
(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 the Employer (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 MSD 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 MSD, 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 employees of Merck or its subsidiaries or affiliates, including the Employer.
If you have been designated as a Separated Retirement Eligible Employee, MSD will provide you with a separation letter (the “Separation Letter”) that will describe the Special Separation Program benefits for which you are eligible and will include a release of legal claims against Merck and its subsidiaries and affiliates, including the Employer, and may also include other terms, such as non-solicitation and non-competition provisions, as MSD in its sole discretion decides to include. In order to receive the benefits under the Special Separation Program, you must sign and return the Separation Letter by the date stated in the
Separated Retirement Eligible Employees
Effective as of November 3, 2009
Revised March 15, 2010

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letter (the “Separation Letter Return 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 or MSD benefit plans and programs as they apply to any separated employee without regard to whether they sign the Separation Letter.
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
Separated Retirement Eligible Employees
Effective as of November 3, 2009
Revised March 15, 2010

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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 MSD, there is an offset which reduces the benefit from the Retirement Plan. The aggregate lump sum benefit payable from two different plans generally differs slightly from a lump sum payable from only one plan (especially if different interest rate methodologies apply).
Special Separation Program — Rule of 85 Transition Benefit — If You Sign the Separation Letter
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
Separated Retirement Eligible Employees
Effective as of November 3, 2009
Revised March 15, 2010

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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 MSD 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.
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
Separated Retirement Eligible Employees
Effective as of November 3, 2009
Revised March 15, 2010

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MSD 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 Support Center at 1-866-MERCK-HD (1-866-637-2543) 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 MSD’s medical and dental plans, whether you sign the Separation Letter or not, you will be eligible to select retiree healthcare coverage under MSD’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 such change(s) within 30 days after your Retiree Healthcare Commencement Date. Thereafter, any permitted changes will only be made prospectively.
Separated Retirement Eligible Employees
Effective as of November 3, 2009
Revised March 15, 2010

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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 MSD 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 MSD 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 MSD’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.
Separated Retirement Eligible Employees
Effective as of November 3, 2009
Revised March 15, 2010

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You are eligible for retiree healthcare benefits if, as of your Separation Date, you are at least age 55 and:
    have at least 10 years of service with the Employer after age 40; or
 
    (i) were an employee of the Employer on January 1, 2003 (and the Employer was a subsidiary of MSD (formerly Merck & Co., Inc.) on that date), (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 Employer after age 45 and before April 1, 2002 (and the Employer was a subsidiary of MSD (formerly Merck & Co., Inc.) on that date), (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 MSD’s medical and dental plans (as they may be amended from time to time) until the end of the month in which your Separation Date occurs; provided, however, if your Separation Date occurs on or before December 31, 2009, such coverage will continue until the end of the month following the month in which your Separation Date occurs. At the end of that period, you will be eligible to elect to continue your coverage in accordance with COBRA for up to 18 months from your Separation Date. If you have no medical and/or dental coverage under MSD’s medical and dental plans on your Separation Date, you will not have medical and/or dental coverage, as applicable, after your Separation Date nor will you be eligible to elect such coverage under COBRA.
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 MSD’s Medical and Dental
Separated Retirement Eligible Employees
Effective as of November 3, 2009
Revised March 15, 2010

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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 MSD’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 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 MSD 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 MSD retiree coverage within 30 days of the loss of your other coverage.
Separated Retirement Eligible Employees
Effective as of November 3, 2009
Revised March 15, 2010

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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
    will have the number of points that is the sum of his/her age and years of adjusted service as recorded on the MSD’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 MSD’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 MSD’s medical and dental plans (as they may be amended from time to time) for the Separation Pay Period as more fully
Separated Retirement Eligible Employees
Effective as of November 3, 2009
Revised March 15, 2010

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described in the Separation Plan SPD. If the Separation Pay Period is less than six months, you may continue medical and dental coverage for six months. Your contributions to continue such coverage will be the same as the contributions for active employees, as they may change from time to time and will be payable to MSD (or its designee) in the time and manner specified by MSD from time to time. If you do not pay the required contributions to MSD (or its designee) in the time and manner specified by MSD from time to time, your coverage will be terminated and it will not be reinstated. Provided you have paid the required contributions to continue coverage, at the end of the Separation Pay Period or, if the Separation Pay Period is less than 6 months, then 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 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 MSD‘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 MSD 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 MSD. If you fail to pay the premium required to continue your coverage in the time and manner specified by MSD, 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
Separated Retirement Eligible Employees
Effective as of November 3, 2009
Revised March 15, 2010

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individual policy. See the Life Insurance Plan section of the current MSD 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.
         
     
    Regular Plan Provisions   Special Separation 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 —


    and Separation Date is on or after 1/1/2010, benefits continue until the end of the month in which your Separation Date occurred; eligible for COBRA afterward

    and Separation Date is on or before 12/31/2009, benefits continue to the end of the month following the month in which your Separation Date occurs; 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
MSD (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
Separated Retirement Eligible Employees
Effective as of November 3, 2009
Revised March 15, 2010

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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 most recent proxy materials issued by Merck in connection with the annual meeting of shareholders, the amount of payment in lieu of EIP award, if any, will be guided by the following principles, but Merck retains complete discretion to pay more, or less, than those amounts.
 
    The Employer reserves the right to treat the payment of AIP/EIP bonuses and/or the special payments in lieu of AIP/EIP bonuses as supplemental wages subject to flat-rate withholding (that is, not taking into account any exemptions).
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 MSD employees, you will be eligible for consideration for an AIP/EIP bonus with respect to the prior complete performance year on the same terms and conditions as other MSD employees. Provided you are in a class of employees eligible for an AIP/EIP, your AIP/EIP bonus, if any, will be paid to you at the same time AIP/EIP bonuses are paid to other MSD employees or will be deferred in accordance with your applicable deferral election for that AIP/EIP performance year, as applicable. Eligibility for consideration for AIP/EIP bonus 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
Separated Retirement Eligible Employees
Effective as of November 3, 2009
Revised March 15, 2010

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Date occurs on the same terms and conditions as other MSD 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 MSD 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 Merck in its sole discretion based on a variety of factors, including but not limited to your documented poor or extraordinary performance in the current performance year. If you receive a special payment in lieu of an AIP/EIP bonus, it will be paid to you (less applicable withholding) as soon as administratively feasible following your Separation Date. However, if you elected to defer your AIP/EIP bonus, that election will apply to payments made in lieu of AIP/EIP bonus.
OTHER BENEFITS AND PROGRAMS
Stock Options, Restricted Stock Units and Performance Stock Units
Only employees may receive incentives under Merck’s incentive stock plans, including stock options, restricted stock units (“RSUs”) or performance stock units (“PSUs”); therefore, you will not be eligible to receive any grants after your Separation Date.
Outstanding Stock Options, RSUs and PSUs
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
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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 through 2009, 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.
Generally, for outstanding annual and quarterly stock option grants made during 2010 and thereafter, the retirement provisions are:
    Unvested Options:
  o   If your Separation Date occurs before the 6-month anniversary of the option grant date, the options expire on your Separation Date; or
 
  o   If your Separation Date occurs on or after the 6-month anniversary of the option grant date, unvested options will vest on their original vesting date and then be exercisable until they expire on the day before the fifth anniversary of the grant date (or their original expiration date, if earlier).
    Vested Options: Options that are vested on your Separation Date will be exercisable until they expire on the day before the fifth anniversary of the grant date (or their original expiration date, if earlier).
Key R&D, MRL and MMD new hire stock option grants, and other stock option grants may have different terms. See the term sheets applicable to such stock option grants.
If 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.
Separated Retirement Eligible Employees
Effective as of November 3, 2009
Revised March 15, 2010

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RSUs
Under the retirement provisions of the RSUs, any annual grants of restricted stock units that were granted at least 6 months prior to your Separation Date generally will vest and become distributable (together with any applicable accrued dividend equivalents for grants made in 2010 and thereafter) as if your employment with the Employer had continued. RSUs granted within 6 months of your Separation Date will be forfeited (together with any applicable accrued dividend equivalents for grants made in 2010 and thereafter). 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 any annual grant of performance share units that were granted to you at least 6 months prior to your Separation Date will be payable if at all when the distribution with respect to the applicable performance year is made to active employees; the remainder of the grant will expire on your Separation Date. 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 Support Center at 1-866-MERCK-HD (1-866-637-2543).
* * *
The following describes the terms and conditions of certain MSD benefit plans and programs as they apply to employees whose employment with the Employer terminates for any reason. For additional information, see the applicable sections of the current MSD Benefits Book (and applicable summaries of material modification).
Dependent Care Reimbursement Account
Your participation in the Dependent Care Reimbursement Account (“DCRA”) ends on your Separation Date. Eligible expenses incurred throughout the calendar year in which your Separation Date occurs (even after employment with the Employer ends) can be reimbursed but only up to the amount actually contributed to the account. Claims for those expenses must be submitted to Horizon Blue Cross Blue Shield by April 15th of the year following the year in
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Revised March 15, 2010

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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 your Separation Date occurs on or before 12/31/2009: If you elected Financial Planning for the 2009 plan year, 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. The Financial Planning benefit has been eliminated from the Flexible Benefits Program as of 1/1/2010.
If your Separation Date occurs on or after 1/1/2010: Your company-paid financial planning benefit will continue through the end of the calendar year in which your Separation Date occurs.
Flexible Benefits Program
The Flexible Benefits Program consists of the following MSD plans and programs: medical, dental, vision, health care and dependent care reimbursement accounts, life insurance (including basic and optional term life, dependent term life, survivor income and accidental death and dismemberment), long term care, long term disability and ending 12/31/09, financial planning. 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
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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 MSD’s Long Term Care Plan for you (or your spouse or same-sex domestic partner), that coverage will end on your Separation Date. However, if you want to continue coverage without interruption, you must contact CNA (the insurer) and pay your first quarterly premium to CNA within 31 days after the last day of the month in which your Separation Date occurs. For more information (and to request the necessary forms) contact CNA directly at 1-800-528-4582.
Long Term Disability
Your participation in the Long Term Disability Plan will end on the last day of the month in which your Separation Date occurs. In other words, you must have satisfied the 26-week eligibility period by the end of the month that includes your Separation Date to be eligible for LTD benefits. If you are disabled and receiving income replacement benefits under the Long Term Disability Plan on your Separation Date, those benefits will continue in accordance with the terms of the Long Term Disability Plan. However, Separation Pay paid by the Employer under the Special Separation Program will act as an offset from benefits payable under the Long Term Disability Plan (meaning the LTD benefits will be reduced by Separation Pay).
Sales Incentive Plan
If you are a participant in a sales incentive plan of Merck or its subsidiaries, including the Employer, on your Separation Date, your eligibility to be paid a bonus, if any, will be determined under the terms and conditions of the plan in which you are a participant.
Savings Plan
Any Separation Pay you receive under the Special Separation Program is not Base Pay and may not be contributed to the Savings Plan. A pro-rata deduction will be made to the Savings Plan based on the percentage of your monthly base pay you receive for the month in which your Separation Date occurs. If you have a plan loan and do not repay it within 45 days of your Separation Date, the loan
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will be declared in default and reported as a taxable distribution to the Internal Revenue Service.
You generally may receive a final distribution from the Savings Plan at any time after your Separation Date. However, if your account balance is $5,000 or less, your account balance automatically will be distributed to you soon after your Separation Date. If, upon reaching age 65, you have not previously elected to receive your benefits, your account balance will be distributed to you without regard to its amount. Review the information in the Salaried Savings Plan section of the current MSD Benefits Book (and applicable summaries of material modification) for additional information on Receiving a Final Distribution.
Short Term Disability
Subject to applicable state law, your participation in the Short Term Disability Plan ends on your Separation Date. If you are disabled and are receiving income replacement benefits under the Short Term Disability Plan on your Separation Date, those benefits will continue in accordance with the terms of the plan. However, subject to state law, Separation Pay paid by the Employer under the Special Separation Program will act as an offset from benefits payable under the Short Term Disability Plan (meaning the STD benefits will be reduced by Separation Pay). Where state law does not permit such offsets to be made to STD benefits (or where the Employer in its sole and absolute discretion determines it is easier for the Employer to administer), STD benefits will instead act as an offset from Separation Pay paid (or payable) by the Employer under the Special Separation Program (meaning Separation Pay will be reduced by the STD benefits).
Travel Accident
Your coverage under the Travel Accident Insurance Plan ends on your Separation Date.
Vacation Pay
You will be paid for any amount of vacation that you have accrued but not used as of your Separation Date. Conversely, you must reimburse MSD for any vacation you used prior to your Separation Date that you had not earned as of your Separation Date. Any such amounts to be reimbursed may be deducted from 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
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in accordance with COBRA for up to 18 months from your Separation Date by paying the required premiums.
* * *
The Special Separation Program described here currently is scheduled to be in effect for Separations From Service that occur from January 1, 2009 through December 31, 2011. MSD retains the right (to the extent permitted by law) to amend or terminate the Special Separation Program and any benefit or plan described in this brochure (or otherwise) at any time. However, following a “change in control” of Merck (as defined in the Merck & Co., Inc. Change in Control Separation Benefits Plan, as it may be amended from time to time), certain limitations apply to MSD’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 Merck & Co., Inc. Change in Control Separation Benefits Plan. Notwithstanding the foregoing, through November 3, 2010 a “change in control” shall include both a “Change in Control” with respect to Merck and an “MSD Change in Control” with respect to MSD, as both terms are defined in the Merck & Co., Inc. Separation Benefits Plan, as amended and restated as of November 3, 2009.
While it has no current intention to do so, MSD also may extend, decrease or enhance, the Special Separation Program in the future. If you sign and return the Separation Letter by the Separation Letter Return Date, any later amendment or termination will not decrease or increase the amount of Separation Pay you are eligible to receive under the Special Separation Program.
Notwithstanding anything in the Special Separation Program to the contrary, benefits under the Program that are subject to Section 409A of the Internal Revenue Code of 1986, as amended, will be adjusted to avoid the excise tax under Section 409A. MSD will take any and all steps it determines are necessary, in its sole and absolute discretion, to adjust benefits under the Special Separation Program to avoid the excise tax under Section 409A, including but not limited to, reducing or eliminating benefits, changing the time or form of payment of benefits, etc.
Payments made on account of separation from service are limited during the six months following the termination of employment of a “Specified Employee” as defined in Treas. Reg. Sec. 1.409A-1(i) or any successor thereto, which in general includes the top 50 employees of a company ranked by compensation. Notwithstanding anything contained in the
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Special Separation Program to the contrary, if a Covered Employee is a “Specified Employee” on his or her Separation Date, to the extent required by Section 409A of the Internal Revenue Code of 1986, as amended, no payments will be made during the six-month period following termination of employment. Instead, amounts that would otherwise have been paid during that six-month period will be accumulated and paid, without interest, as soon as administratively feasible following the end of such six-month period after termination of employment.
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Revised March 15, 2010

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Glossary of Definitions
As used in this document, the following terms have the following meanings.
“Credited Service” is as defined in the Retirement Plan.
“Employer” means individually and collectively, Merck Sharp & Dohme Corp., Merck Holdings, Inc., Merck and Company Incorporated, KBI Enterprises, Inc., Rosetta Inpharmatics LLC, Merck HDAC Research, LLC, Abmaxis, Inc., Glycofi, Inc. and Sirna Therapeutics, Inc.
“Merck” means Merck & Co., Inc., ultimate parent of Merck Sharp & Dohme Corp.
“MSD” means Merck Sharp & Dohme Corp.
“MSD Benefits Book” means summary plan descriptions of various employee benefit plans sponsored by MSD (formerly known as the Merck Benefits Book).
“Retirement Plan” means the Retirement Plan for Salaried Employees of MSD.
“Separation Benefits Plan” means the MSD Separation Benefits Plan for Nonunion Employees.
“Separated Retirement Eligible Employees” are certain nonunionized employees of the Employer.
(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 the Employer (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 MSD 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 MSD, including employees who resign for any reason.
“Separation Date” means a Separated Retirement Eligible Employee’s last day of employment with the Employer.
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“Separation Letter” means the MSD-provided letter that will describe the Special Separation Program benefits and include a release of claims against Merck and its subsidiaries and affiliates, including the Employer and may include such other terms such as non-solicitation and non-competition provisions, as the MSD 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 MSD.
“Separation Pay Period” is the number of full or partial workweeks for which a Separated Retirement Eligible Employee is being paid Separation Pay.
“Special Separation Program” means the separation benefits that Separated Retirement Eligible Employees receive if they sign (and, if a revocation period is applicable, do not revoke) the Separation Letter.
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Effective as of November 3, 2009
Revised March 15, 2010

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