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Exhibit 10.1

PERFORMANCE SHARE UNIT TERMS UNDER THE
MERCK & CO., INC. 2004 INCENTIVE STOCK PLAN

Except as otherwise indicated in this schedule, the terms of Performance Shares
granted under this Schedule are the same as those described in the Rules and
Regulations. Except as defined below, defined terms under this Schedule are the
same as under the Rules and Regulations.

I. Definitions For the purpose of this Schedule:

“Award Period” shall mean three years, with the first Award Period commencing on
January 1, 2004 and ending December 31, 2006. The next Award Period also shall
be three years, commencing January 1, 2005.

“Final Award Percentage” for each Award Period shall mean the percentage of
Target described in Article IV.

“Grant Date” shall mean the date a Performance Share Award is granted, and shall
not be later than 90 days after the beginning of an Award Period with respect to
that Award Period.

“Leading Healthcare Peers” shall mean the group of healthcare companies used by
the Board of Directors in evaluating the Company’s annual performance for that
year.

“Leading Healthcare Peers Earnings Per Share” for a Year shall mean the change
in Earnings Per Share for each Leading Healthcare Peer from the prior year using
the same method applicable to the Board’s evaluation of the Company’s annual
performance; provided, however, that the calculation shall be as of the most
reasonably practicable date prior to the date on which the Earnings Per Share is
calculated.

“Performance Award Grantee” shall mean an Eligible Employee who receives a
Performance Share Award as described in Article II.

“Performance Share Award” shall mean an award of Performance Shares as described
in this Schedule.

“Performance Measure” shall mean the change in the Company’s Earnings Per Share
for a Year and each Leading Healthcare Peers Earnings Per Share for the same
Year to the extent data for the same Year is available.

“Performance Share” shall mean a phantom share of Merck Common Stock. Until
distributed pursuant to Article VII, Performance Shares shall not entitle the
holder to any of the rights of a holder of Merck Common Stock; provided,
however, that the Committee retains the right to make adjustments in the case of
a corporate restructuring as described in Section 6 of the ISP.

“Target Shares” shall mean the number of Performance Shares that will be
distributable if the Performance Measures are achieved at the 6th of 12 Final
Ranks as described in Article IV.

“Year” means calendar year.

II. Eligibility

Each Eligible Employee who also is a Grade 1 or Grade 2 employee on the Grant
Date is eligible to receive Performance Shares if the Committee, in its sole and
non-reviewable discretion, designates him or her to receive a Performance Share
Award (“Performance Award Grantee”).

III. Establishment of Targets

The Committee, in its sole and non-reviewable discretion, shall determine the
Target Shares for each Performance Share Award for each Performance Award
Grantee.

IV. Determination of Performance Share Awards

The Committee expects that there will be 11 Leading Healthcare Peers for each
Award Period.

For each Year, the Performance Measure shall be calculated for the Company and
each Leading Healthcare Peer. Each Leading Healthcare Peer and the Company shall
then be assigned a rank (“Rank”) from one to 12, highest to lowest Performance
Measure, as appropriate.

After the end of the Award Period, the Ranks of each Leading Healthcare Peer and
the Company for all Years within the Award Period shall be averaged, and the
averages shall then be ranked (the “Final Rank”) from one (the highest rank) to
12 (the lowest rank), as appropriate.

The Final Award Percentage shall be the following percentage of Target Shares
based on the Company’s Final Rank for an Award Period.

                                                                               
         
1
    2       3       4       5       6       7       8       9       10       11
      12  
 
                                                                               
       
 
                                                                               
       
200%
    180 %     160 %     140 %     120 %     100 %     80 %     60 %     40 %    
0 %     0 %     0 %
 
                                                                               
       

If at any time the number of Leading Healthcare Peers is not 11, the Committee
intends to adjust the above schedule appropriately to retain a similar range of
Performance Share Award opportunities with a maximum Final Award Percentage of
200% and a minimum of 0%. The Committee also intends that, in case of multiple
changes in the Leading Healthcare Peer group during an Award Period, replacement
companies shall be substituted based on the substitutes’ market capitalization
relative to the other Leading Healthcare Peer group.

Notwithstanding the above, for the Award Period commencing January 1, 2005 and
ending December 31, 2007 (the “Special Award Period”), the Rank of the Company
with respect to the first Year only shall not be based on a comparison to the
Leading Healthcare Peers Earnings Per Share but instead be based on the
Company’s earnings per share against business plan. [Pre-determined targets
established by Company omitted.]

The Rank of each Leading Healthcare Peer for the first Year of the Special Award
Period shall be determined using the Performance Measure except that each
Leading Healthcare Peer with a Rank that is equal to or lower than the Company’s
Rank for the first Year will instead assume a Rank that is one Rank lower than
its Rank using the Performance Measure. [Reference to pre-determined targets
established by Company omitted.] All Leading Healthcare Peers with Ranks from
one to five for the first Year using the Performance Measure will retain their
Ranks; the Leading Healthcare Peers with Ranks from six to 11 will instead
assume Ranks from seven to 12, respectively. The Company intends that grants be
deductible by the Company under Section 162(m) of the Internal Revenue Code and
reserves the right to make such adjustments as may be required to comply with
Section 162(m).

V. Dividends

Dividends shall not be paid, accrued or accumulated on Performance Shares during
the Award Period.

VI. Termination of Employment

A. General Rule. Upon the termination of the employment of a Performance Award
Grantee for any reason other than those specified in paragraphs B through F of
this Article (including but not limited to voluntary or involuntary resignation,
or failure or refusal to accept relocation or reassignment within the Company or
employment with a Joint Venture), any Final Award shall be distributed to the
Performance Award Grantee with respect to any Award Period that was completed
prior to the employment termination. All other Performance Share Awards shall
expire and be forfeited in their entirety at the end of the last day of
employment. Failure to satisfy each and every condition described in paragraphs
B through F (in the Committee’s determination) shall render a Performance Share
Award subject to this paragraph A upon termination of employment.

B. Separation. If a Performance Award Grantee’s employment is terminated at an
employer’s initiative (as determined by the Company or Joint Venture in its sole
discretion) due to lack of work because, for example, the Company eliminates the
Performance Award Grantee’s job or divests itself of a business resulting in
his/her loss of employment with the Company, then the Performance Award Grantee
shall be considered “Separated.” In case of Separated Performance Award
Grantees, with respect to any Award Period completed prior to the employment
termination, the Final Award shall be distributed at the time active Performance
Award Grantees receive such distributions. With respect to any other Performance
Share Award, the Final Award shall be multiplied by a fraction, the numerator of
which is the number of completed months in the Award Period during which the
Performance Award Grantee was employed by the Company or Joint Venture, and the
denominator of which is 36. Such pro rata amount shall be distributed at the
time active Performance Award Grantees receive such distributions with respect
to that Award Period.

C. Retirement. Upon a Performance Award Grantee’s retirement (including early
and disability retirement):

Performance Share Awards granted in 2004 shall continue and be distributable in
accordance with their terms as if employment had continued; such Performance
Share Awards shall be distributed at the time active Performance Award Grantees
receive such distributions with respect to that Award Period.

Performance Share Awards granted in 2005 and later: Performance Share Awards
granted less than six months prior to such retirement date shall expire and be
forfeited in their entirety at the end of the last day of employment.
Performance Share Awards granted at least six months prior to such retirement
date shall be distributable on a pro rata basis at the time active Performance
Award Grantees receive such distributions with respect to that Award Period; the
pro rata portion shall be determined by multiplying the Final Award by a
fraction, the numerator of which is the number of completed months in the Award
Period during which the Performance Award Grantee was employed by the Company or
Joint Venture, and the denominator of which is 36.

D. Death. Upon a Performance Award Grantee’s death, any Final Award shall be
distributed to the Performance Award Grantee with respect to any Award Period
that was completed prior to the Performance Award Grantee’s death. All other
Performance Share Awards shall assume a Target Shares payout and be multiplied
by a fraction, the numerator of which is the number of completed months in the
Award Period during which the Performance Award Grantee was alive, and the
denominator of which is 36. Such amount shall be distributed as soon as
administratively practicable following the date of death.

E. Gross Misconduct. If the employment of a Performance Award Grantee is
terminated for deliberate, willful or gross misconduct, all Performance Share
Awards, including but not limited to those for which the Award Period has ended,
shall immediately be forfeited.

F. Joint Venture Service. For the purposes of this Article, notwithstanding a
Performance Award Grantee’s termination of employment with the Company, if he or
she assumes and retains a position in a Joint Venture in accordance with this
paragraph, employment with the Joint Venture will be treated as if it were
employment with the Company. To qualify for this paragraph, (i) a Performance
Award Grantee must transfer employment directly from the Company to the Joint
Venture without an intervening break in employment, (ii) the Performance Award
Grantee’s transfer to the Joint Venture must be made with the input and approval
of his/her senior management and a representative of the Company’s Corporate
Human Resources department and (iii) the Company’s Corporate Human Resources
representative and a similar representative from the Joint Venture must agree
that the transfer meets the business needs of the Company and the Joint Venture.

Where a Performance Award Grantee transfers employment from a Joint Venture to
the Company, employment will be treated as if it continued with the Company if
(i) the Performance Award Grantee transfers employment directly from the Joint
Venture to the Company without an intervening break in employment, and (ii) the
Company’s Corporate Human Resources representative and a similar representative
from the Joint Venture agree that the transfer meets the business needs of the
Company and the Joint Venture.

This paragraph does not apply to a transfer of employment to the Joint Venture’s
parent or other affiliate unless that entity is within the Company’s controlled
group of entities.

VII. Distribution of Performance Shares

A. General Rule. Following the end of an Award Period, each Performance Award
Grantee shall be entitled to receive a number of shares of Merck Common stock
equal to the Target Shares times the Final Award Percentage, rounded down to the
nearest whole number (no fractional  shares shall be issued). Prior to
distribution, the Performance Award Grantee shall deliver to the Company an
amount the Company determines sufficient to satisfy any amount required to
withheld, include applicable taxes. The Committee, in its discretion, may permit
Performance Award Grantee to elect to direct the Company to withhold any
applicable taxes directly from a Performance Share Award before it is
denominated in actual shares of Merck Common Stock. Moreover, the Committee may
permit the Performance Award Grantee to defer the value of a Performance Share
Award into the Merck & Co., Inc. Deferral Program (the “Deferral Program”) or
such other Company-sponsored deferral program; provided, however, the Committee
intends that any such deferral shall for so long as it remains within the
Deferral Program be limited to investment denominated as Merck Common Stock and
ultimately distributed as such. An election to defer a Performance Share Award
into the Deferral Program shall be made in accordance with rules applicable to
the Deferral Program.

B. Death. In the case of distribution on account of a Performance Award
Grantee’s death, the portion of the Performance Share Award distributable shall
be distributed to the Performance Award Grantee’s estate. Prior to distribution,
the Company shall receive from the Performance Award Grantee’s representative or
estate an amount, if any, the Company determines sufficient to satisfy any
amount required to be withheld, include applicable taxes. The Committee in its
discretion may provide that the Company will withhold any applicable taxes
directly from a Performance Award before it is denominated in actual shares of
Merck Common Stock.

VIII. Transferability

Prior to distribution pursuant to Article VII, Performance Share Awards shall
not be transferable, assignable or alienable except according to the laws of
descent or distribution following a Performance Award Grantee’s death.

IX. Administrative Powers

In addition to the Committee’s powers set forth in the Incentive Stock Plan,
anything in this Schedule to the contrary notwithstanding, with respect to any
Performance Share Award not intended to constitute “performance-based
compensation” under Section 162(m) of the Code, the Committee may revise the
terms of any Performance Share Award not yet granted or granted but prior to the
end of an Award Period if unforeseen events occur and which, in the judgment of
the Committee, make the application of original terms of this Schedule or the
Performance Share Award unfair and contrary to the intentions of this Schedule
unless a revision is made.

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