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II.	ELECTION OF DEFERRAL, INVESTMENT ALTERNATIVES AND DISTRIBUTION SCHEDULE

A.	Election of Voluntary Deferral Amount

1.	Prior to December 31 of each year, each director may irrevocably elect (an “Initial Election”) to defer, until termination of service as a director or later, 50% or 100% of each of the following (together, the “Voluntary Deferral Amount”) with respect to the 12 months beginning April 1 of the next calendar year after such Initial Election:

2.	Prior to commencement of duties as a director or within the first 30 days following commencement of services, a director newly elected or appointed to the Board during a calendar year may make an Initial Election for the portion of the Voluntary Deferral Amount applicable to such director's first year of service (or part thereof).

3.

The Voluntary Deferral Amount shall be credited as follows: (1) Board and committee meeting fees, if any, that are deferred are credited as of the last business day of each calendar quarter; (2) if the Board retainer, Lead Director retainer, Committee Chairperson retainer and/or Audit Committee member retainer are deferred, a pro-rata share of the deferred retainer is credited as of the last business day of each calendar quarter. The dates as of which the Voluntary Deferral Amount, or parts thereof, are credited to the director's deferred account are hereinafter referred to as the Voluntary Deferral Dates.

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4.	Once an Initial Election is made, including, effective December’s 2008, elections made by directors of MSD prior to the Transactions, it shall continue to apply in successive years on the same terms and conditions until the director makes a new Initial Election.

5.

Certain directors (the “Schering Directors”) who were directors of Schering‑Plough Corporation on the Closing Date of the Transactions continued service following the Closing Date. Anything in the Plan to the contrary notwithstanding, the Schering Directors were first eligible to elect Voluntary Deferrals by December 31 of the year that includes the Closing Date. That initial election may not apply earlier than January 1 of the following year and shall continue through April 1 of the second year following the Closing Date.

B.	Mandatory Deferral Amount

1.

As of the Friday following the Company’s Annual Meeting of Shareholders (the “Mandatory Deferral Date”), each director will be credited with an amount equivalent to the annual cash retainer for the 12 month period beginning on the April 1 preceding the Annual Meeting; provided, however, that effective for the 12-month period beginning April 1, 2020 and thereafter, such credit shall instead equal $200,000 (the “Mandatory Deferral Amount”). The Mandatory Deferral Amount will be measured by the Merck Common Stock account.

2.	A director newly elected or appointed to the Board after the Mandatory Deferral Date will be credited with a pro rata portion of the Mandatory Deferral Amount applicable to such director's first year of service (or part thereof). Such pro rata portion shall be credited to the director's account as of the first day of such director's service.

3.	For purposes of the Mandatory Deferral Amount, the Schering Directors shall be treated as if newly elected or appointed to the Board as of the Closing Date.

C.	Automatic Deferral of Executive Committee Fees

D.	Election of Investment Alternatives

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F.	Changes to Distribution Schedule

G.	Unforeseeable Emergency

A.	Merck Common Stock

1.	Initial Crediting. The annual Mandatory Deferral Amount shall be used to determine the number of full and partial shares of Merck Common Stock that such amount would purchase at the closing price of the Common Stock on the New York Stock Exchange (“NYSE”) on the Mandatory Deferral Date.

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2.	Dividends. Each director's account will be credited with the additional number of full and partial shares of Merck Common Stock that would have been purchasable with the dividends on shares previously credited to the account at the closing price of the Common Stock on the NYSE on the date each dividend was paid.

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

4.

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 Governance Committee of the Board of Directors (formerly known as the Committee on Corporate Governance) determines that a measurement of Merck Common Stock on any Mandatory or Voluntary Deferral Date or Distribution 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.	Other Investment Alternatives

2.

Dividends. Each director’s account will be credited with the additional number of full and partial Other Investment Alternative shares that would have been purchasable, at the closing net asset value of the Other Investment Alternative shares as of the date each dividend is paid on the Other Investment Alternative shares, with the dividends that would have been paid on the number of shares previously credited to such account (including pro rata dividends on any partial shares).

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3.	Distributions. Other Investment Alternative distributions will be valued based on the closing net asset value of the Other Investment Alternative shares as of the Distribution Date.

C.	Adjustments

IV.	REDESIGNATION WITHIN A DEFERRAL ACCOUNT

1.	During Active Service. There is no limit on the number of times a director may Redesignate the portion of his/her deferred account permitted to be Redesignated. Each such request shall be irrevocable and can be Redesignated in whole percentages or as a dollar amount.

2.	After Death. Following the death of a director, the legal representative or beneficiary of such director may Redesignate subject to the same rules as for active directors set forth in Article IV, Section B.1.

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V.	PAYMENT OF DEFERRED AMOUNTS

A.	Payment

B.	Forfeitures

(i)

joined the Board of, managed, operated, participated in a material way in, entered employment with, performed consulting (or any other) services for, or otherwise been connected in any material manner with a company, corporation, enterprise, firm, limited partnership, partnership, person, sole proprietorship or any other business entity determined by the Governance Committee in its sole discretion to be competitive with the business of the Company, its subsidiaries or its affiliates (a "Competitor");

(ii)	directly or indirectly acquired an equity interest of 5 percent or greater in a Competitor; or

(iii)	disclosed any material trade secrets or other material confidential information, including customer lists, relating to the Company or to the business of the Company to others, including a Competitor.

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