Document:

<PAGE>

                                                                Exhibit 4.2
                                                                -----------

                                     FORM OF

                          REGISTRATION RIGHTS AGREEMENT

                                     BETWEEN

                                MERCK & CO., INC.

                                       AND

                           MEDCOHEALTH SOLUTIONS, INC.

<PAGE>

                                Table of Contents
                                -----------------

                                                                        Page
                                                                        ----

ARTICLE 1  DEFINITIONS......................................................1

    Section 1.1.  Holders...................................................1
    Section 1.2.  Indemnification Agreement.................................1
    Section 1.3.  SEC.......................................................1
    Section 1.4.  Selling Holders...........................................1
    Section 1.5.  Shares....................................................2

ARTICLE 2  DEMAND REGISTRATION..............................................2

    Section 2.1.  Notice....................................................2
    Section 2.2.  Registration Expenses.....................................2
    Section 2.3.  Selection of Professionals................................2
    Section 2.4.  Other Shares..............................................3
    Section 2.5.  Permitted Transferees.....................................3
    Section 2.6.  Shelf Registration; Convertible Registration;
                  Exchange Registration.....................................3
    Section 2.7.  SEC Form..................................................3
    Section 2.8.  Other Registration Rights.................................3

ARTICLE 3  PIGGYBACK REGISTRATIONS..........................................4

    Section 3.1.  Notice and Registration...................................4
    Section 3.2.  Selection of Professionals................................5
    Section 3.3.  Registration Expenses.....................................5

ARTICLE 4  REGISTRATION PROCEDURES..........................................5

    Section 4.1.  Registration and Qualification............................5
    Section 4.2.  Underwriting..............................................7
    Section 4.3.  Listing...................................................8

<PAGE>

    Section 4.4.  Holdback Agreements.......................................8

ARTICLE 5  PREPARATION......................................................9

    Section 5.1.  Reasonable Investigation..................................9

ARTICLE 6  INDEMNIFICATION..................................................9

ARTICLE 7  BENEFITS AND TERMINATION OF REGISTRATION RIGHTS.................10

   Section 7.1.  Benefits and Termination of Registration Rights...........10

ARTICLE 8  REGISTRATION EXPENSES...........................................11

    Section 8.1.  Registration Expenses....................................11

ARTICLE 9  DISPUTE RESOLUTION..............................................11

ARTICLE 10  MISCELLANEOUS..................................................12

    Section 10.1.  No Inconsistent Agreements..............................12
    Section 10.2.  Entire Agreement........................................12
    Section 10.3.  Governing Law; Forum....................................12
    Section 10.4.  Termination.............................................12
    Section 10.5.  Notices.................................................12
    Section 10.6.  Counterparts............................................13
    Section 10.7.  Binding Effect; Assignment; Third-Party Beneficiaries...13
    Section 10.8.  Offset..................................................13
    Section 10.9.  Severability............................................14
    Section 10.10. Failure or Indulgence Not Waiver........................14
    Section 10.11. Amendment...............................................14
    Section 10.12. Authority...............................................14
    Section 10.13. Interpretation..........................................14

<PAGE>

                          REGISTRATION RIGHTS AGREEMENT

     THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement"), is made and entered
into as of [ ] __, 2002, between Merck & Co., Inc., a New Jersey corporation
("Merck"), and MedcoHealth Solutions, Inc., a Delaware corporation (the
"Company" or "Medco"). Capitalized terms used herein and not otherwise defined
shall have the meanings ascribed to such terms set forth in the Master
Separation Agreement, dated as of the date hereof, between Merck and Medco (the
"Master Separation Agreement").

     WHEREAS, the Board of Directors of Merck has determined that it is
appropriate and desirable for Merck to separate the Medco Group from the Merck
Group (the "Separation"); and

     WHEREAS, in connection with the foregoing, Merck and Medco are entering
into a Master Separation Agreement, which provides, among other things, for the
Separation, the IPO of Medco Common Stock, the declaration of the Merck Dividend
immediately prior to the IPO Closing Date, the subsequent Distribution of all
the Medco Common Stock then owned by Merck to the holders of Merck common stock,
and the execution and delivery of certain other agreements in order to
facilitate and provide for the foregoing; and

     WHEREAS, upon consummation of the IPO, Merck will own no less than 80.1% of
the outstanding shares of Medco Common Stock; and

     WHEREAS, in connection with the Separation, the parties desire to enter
into this Agreement to provide Merck with certain registration rights with
respect to the Medco Common Stock following the IPO.

     NOW THEREFORE, in consideration of the mutual covenants and agreements set
forth herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged and intending to be legally bound
hereby, the parties hereby agree as follows:

<PAGE>

                                    ARTICLE 1

                                   DEFINITIONS

          Section 1.1. Holders. "Holders" means, collectively Merck and any
Permitted Transferees (as defined in Section 2.5).

          Section 1.2. Indemnification Agreement. "Indemnification
Agreement" means the Indemnification and Insurance Matters Agreement
between the parties.

          Section 1.3. SEC. "SEC" means the Securities and Exchange
Commission.

          Section 1.4. Selling Holders. "Selling Holders" means,
collectively the Holders of Shares proposed to be included in any
registration under this Agreement.

          Section 1.5. Shares. "Shares" shall mean, subject to Section 7.1,
those shares of Medco Common Stock that are held by Merck immediately following
the IPO. The "Shares" shall include any securities issued or issuable with
respect to the Shares by way of a stock or other dividend or a stock split, in
connection with a combination of shares, recapitalization, merger, consolidation
or other reorganization or otherwise.

                                    ARTICLE 2

                               DEMAND REGISTRATION

          Section 2.1. Notice. Upon the terms and subject to the conditions set
forth herein, upon written notice of any Holder requesting that the Company
effect the registration under the Securities Act, of any or all of the Shares
held by it, which notice shall specify the intended method or methods of
disposition of such Shares (which methods may include, without limitation, a
Shelf Registration, a Convertible Registration or an Exchange Registration (as
such terms are defined in Section 2.6)), the Company will promptly give written
notice of the proposed registration to all other Holders and will use its best
efforts to effect (at the earliest reasonable date) the registration under the
Securities Act of such Shares (and the Shares of any other Holders joining in
such request as are specified in a written notice received by the Company within
[5] days after receipt of the Company's written notice of the proposed
registration) for disposition in accordance with the intended method or methods
of disposition stated in such request (each registration request pursuant to
this Section 2.1 is sometimes referred to herein as a "Demand Registration");
provided, however, that:

               (a) any Demand Registration requested hereunder shall request the
registration of Shares representing at least [5]% of the then-outstanding shares
of Medco Common Stock, based on the number of such shares outstanding as
reported by the Company in its most recent annual or quarterly report filed with
the SEC under the Exchange Act; and

<PAGE>

               (b) if a Demand Registration is an underwritten offering and the
managing underwriters advise the Company in writing that in their opinion the
number of Shares requested to be included in such offering exceeds the number of
Shares which can be sold in an orderly manner in such offering within a price
range acceptable to the Holders of a majority of the Shares initially requesting
such registration or without materially adversely affecting the market for the
Medco Common Stock, the Company shall include in such registration the number of
Shares requested to be included therein which in the opinion of such
underwriters can be sold in an orderly manner within the price range of such
offering and without materially adversely affecting the market for the Medco
Common Stock, pro rata among the respective Holders thereof on the basis of the
amount of Shares owned by each Holder requesting inclusion of Shares in such
registration or as otherwise agreed by the Holders requesting inclusion of
Shares in such registration.

          Section 2.2. Registration Expenses. The Company shall pay all
Registration Expenses (as defined in Article 8) for any registration requested
pursuant to this Article 2 (including any registration that is delayed or
withdrawn).

          Section 2.3. Selection of Professionals. The Holders of a majority of
the Shares included in any Demand Registration shall have the right to select
the investment banker(s) and manager(s) to administer the offering. The Holders
of a majority of the Shares included in any Demand Registration shall have the
right to select the financial printer, the solicitation and/or exchange agent
(if any) and one counsel for the Selling Holders. The Holders of a majority of
the Shares included in any Demand Registration also shall be entitled to
designate any broker or other agent through whom the Holders shall sell into the
public market any Shares pursuant to a Shelf Registration that is not an
underwritten offering. The Company shall select its own outside counsel and
independent auditors.

          Section 2.4. Other Shares. Without the approval of the Holders of a
majority of the Shares included in any Demand Registration, the Company shall
not have the right to cause the registration in any Demand Registration of any
securities of any other Person.

          Section 2.5. Permitted Transferees. As used in this Agreement,
"Permitted Transferees" shall mean any transferee, whether direct or indirect,
of Shares so designated by Merck (or a subsequent Holder) in a written notice to
the Company as provided for in Section 9.7. Any Permitted Transferees of the
Shares shall be subject to and bound by all of the terms and conditions herein
applicable to Holders. The notice required by this Section 2.5 shall be signed
by both the transferring Holder and the Permitted Transferees so designated and
shall include an undertaking by the Permitted Transferees to comply with the
terms and conditions of this Agreement applicable to Holders. In the event of a
transfer of any of the Shares to a transferee that is not a Permitted
Transferee, the Shares so transferred shall no longer be subject to this
Agreement.

          Section 2.6. Shelf Registration; Convertible Registration; Exchange
Registration. With respect to any Demand Registration, the requesting Holders
may request the Company to effect a registration of the Shares (a) under a
registration statement pursuant to Rule 415 under the Securities Act (or any
successor rule) (a "Shelf Registration"); (b) in connection with such Holders'
registration under the Securities Act of securities (the "Convertible
Securities") convertible into, exercisable for or otherwise related to the
Shares (a "Convertible Registration"); or (c) in connection with any offer by
any such Holder to exchange the Shares for any debt or equity securities of such
Holder, a subsidiary or affiliate thereof or any other Person, or any
distribution by such Holder of Shares

<PAGE>

to holders of debt or equity securities of such Holder, a subsidiary or
affiliate thereof or any other Person (an "Exchange Registration").

          Section 2.7. SEC Form. The Holders of a majority of the Shares
included in any Demand Registration shall have the right to select the form of
registration statement under the Securities Act (from among the forms the
Company is then entitled to use) on which such Demand Registration shall be
registered. The Company shall use its best efforts to become eligible under the
Securities Act to use Form S-3 (or any successor form) and, after becoming
eligible to use Form S-3 (or any successor form), shall use its best efforts to
remain so eligible.

          Section 2.8. Other Registration Rights. The Company shall not grant to
any Persons the right to request the Company to register any equity securities
of the Company, or any securities convertible or exchangeable into or
exercisable for such securities unless such rights are consistent with the
rights granted under this Agreement.

                                    ARTICLE 3

                             PIGGYBACK REGISTRATIONS

          Section 3.1. Notice and Registration. If the Company proposes to
register any of its securities for public sale under the Securities Act (whether
proposed to be offered for sale by the Company or any other Person), on a form
and in a manner which would permit registration of the Shares for sale to the
public under the Securities Act (a "Piggyback Registration"), it will give
prompt written notice to the Holders of its intention to do so, and upon the
written request of any or all of the Holders delivered to the Company within [5]
days after the giving of any such notice (which request shall specify the Shares
intended to be disposed of by such Holders), the Company will use its best
efforts to effect, in connection with the registration of such other securities,
the registration under the Securities Act of all of the Shares which the Company
has been so requested to register by such Holders (which shall then become
Selling Holders), to the extent required to permit the disposition (in
accordance with the same method of disposition as the Company proposes to use to
dispose of the other securities) of the Shares to be so registered; provided,
however, that:

               (a) if, at any time after giving such written notice of its
intention to register any of its other securities and prior to the effective
date of the registration statement filed in connection with such registration,
the Company shall determine for any reason not to register such other
securities, the Company may, at its election, give written notice of such
determination to the Selling Holders (or, if prior to delivery of the Holders'
written request described above in this Section 3.1, the Holders) and thereupon
the Company shall be relieved of its obligation to register such Shares in
connection with the registration of such other securities (but not from its
obligation to pay Registration Expenses to the extent incurred in connection
therewith as provided in Section 3.3), without prejudice, however, to the rights
(if any) of any Selling Holders immediately to request (subject to the terms and
conditions of Article 2) that such registration be effected as a registration
under Article 2;

               (b) the Company shall not be required to effect any registration
of the Shares under this Article 3 incidental to the registration of any of its
securities in connection with mergers, acquisitions, exchange offers,
subscription offers, dividend reinvestment plans or stock option or other
employee benefit plans of the Company; and

               (c) if a Piggyback Registration is an underwritten offering

<PAGE>

and the managing underwriters advise the Company in writing that in their
opinion the number of securities requested to be included in such registration
exceeds the number which can be sold in such offering without materially
adversely affecting the marketability of the offering or the market for the
Medco Common Stock, the Company shall include in such registration (i) first,
the securities the Company proposes to sell, (ii) second, the Shares requested
to be included in such registration, pro rata among the Holders of such Shares
on the basis of the number of Shares owned by each such Holder or as otherwise
agreed by the Holders requesting inclusion of Shares in such registration, and
(iii) third, any other securities requested to be included in such registration.

          Section 3.2. Selection of Professionals. If any Piggyback Registration
is an underwritten offering, the Company shall select the investment banker(s)
or manager(s) to administer the offering and the financial printer; provided,
that, no investment banker or manager shall administer such offering if the
Holders of a majority of the Shares included in such Piggyback Registration
reasonably object thereto. The Holders of a majority of the Shares included in
any Piggyback Registration shall have the right to select one counsel for the
Selling Holders. The Company shall select its own outside counsel and
independent auditors.

          Section 3.3. Registration Expenses. The Company will pay all of
the Registration Expenses in connection with any registration pursuant to
this Article 3.

                                    ARTICLE 4

                             REGISTRATION PROCEDURES

          Section 4.1. Registration and Qualification. If and whenever the
Company is required to use its best efforts to effect the registration of any of
the Shares under the Securities Act as provided in Articles 2 and 3, the Company
will as promptly as is practicable:

               (a) prepare and file with the SEC a registration statement with
respect to such Shares and use its best efforts to cause such registration
statement to become effective (provided that before filing a registration
statement or prospectus or any amendments or supplement thereto, the Company
shall furnish to the counsel selected by the Holders of a majority of the Shares
covered by such registration statement copies of all such documents proposed to
be filed (which documents shall be subject to the review and comment of such
counsel, subject to paragraph (i) below));

               (b) except in the case of a Shelf Registration, Convertible
Registration or Exchange Registration, prepare and file with the SEC such
amendments and supplements to such registration statement and the prospectus
used in connection therewith as may be necessary to keep such registration
statement effective and to comply with the provisions of the Securities Act with
respect to the disposition of all of the Shares until the earlier of (i) such
time as all of such Shares have been disposed of in accordance with the intended
methods of disposition set forth in such registration statement or (ii) the
expiration of nine months after such registration statement becomes effective;

               (c) in the case of a Shelf Registration (but not including any
Convertible Registration or Exchange Registration), prepare and file with the
SEC such amendments and supplements to such registration statement and the
prospectus used in connection therewith as may be necessary to keep such
registration statement effective and to comply with the provisions of the
Securities Act with respect to the disposition of all Shares subject thereto for
a period ending on the earlier of (i) 18 months after the

<PAGE>

effective date of such registration statement and (ii) the date on which all the
Shares subject thereto have been sold pursuant to such registration statement
(the "Shelf Effective Period");

               (d) in the case of a Convertible Registration or an Exchange
Registration, prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection therewith as
may be necessary to keep such registration statement effective and to comply
with the provisions of the Securities Act with respect to the disposition of all
of the Shares subject thereto until such time as the rules, regulations and
requirements of the Securities Act and the terms of the Convertible Securities,
if any, no longer require such Shares to be registered under the Securities Act
(the "Convertible Effective Period");

               (e) furnish to the Selling Holders and to any underwriter of such
Shares such number of conformed copies of such registration statement and of
each such amendment and supplement thereto (in each case including all
exhibits), such number of copies of the prospectus included in such registration
statement (including each preliminary prospectus and any summary prospectus), in
conformity with the requirements of the Securities Act, such documents
incorporated by reference in such registration statement or prospectus, and
such other documents as the Selling Holders or such underwriter may reasonably
request;

               (f) use its best efforts to register or qualify all of the Shares
covered by such registration statement under such other securities or blue sky
laws of such jurisdictions as the Selling Holders or any underwriter of such
Shares shall reasonably request, and do any and all other acts and things which
may be necessary or advisable to enable the Selling Holders or any underwriter
to consummate the disposition in such jurisdictions of the Shares covered by
such registration statement, except that the Company shall not for any such
purpose be required to qualify generally to do business as a foreign corporation
in any jurisdiction where it is not so qualified, or to subject itself to
taxation in any such jurisdiction, or to consent to general service of process
in any such jurisdiction;

               (g) (i) furnish to the Selling Holders, addressed to them, an
opinion of counsel for the Company and (ii) use its best efforts to furnish to
the Selling Holders, addressed to them, a "cold comfort" letter signed by the
independent public accountants who have certified the Company's financial
statements included in such registration statement, covering substantially the
same matters with respect to such registration statement (and the prospectus
included therein) and, in the case of such accountants' letter, with respect to
events subsequent to the date of such financial statements, as are customarily
covered in opinions of issuer's counsel and in accountants' letters delivered to
underwriters in underwritten public offerings of securities and such other
matters as the Selling Holders may reasonably request, in each case, in form and
substance and as of the dates reasonably satisfactory to the Selling Holders;

               (h) immediately notify the Selling Holders, at any time when a
prospectus relating to a registration pursuant to Article 2 or 3 is required to
be delivered under the Securities Act, of the happening of any event as a result
of which the prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, and at the request of the Selling Holders prepare and furnish to the
Selling Holders a reasonable number of copies of a supplement to or an amendment
of such prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such Shares, such prospectus shall not include an untrue statement
of a material

<PAGE>

fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
are made, not misleading;

               (i) permit any Selling Holder which Selling Holder, in its sole
and exclusive judgment, might be deemed to be an underwriter or a controlling
person of the Company, to participate in the preparation of such registration or
comparable statement and to require the insertion therein of material, furnished
to the Company in writing, which in the reasonable judgment of such Holder and
its counsel should be included;

               (j) to make available members of management of the Company, as
selected by the Holders of a majority of the Shares included in such
registration, for assistance in the selling effort relating to the Shares
covered by such registration, including, but not limited to, the participation
of such members of the Company's management in road show presentations;

               (k) in the event of the issuance of any stop order suspending the
effectiveness of a registration statement, or of any order suspending or
preventing the use of any related prospectus or suspending the qualification of
any securities included in such registration statement for sale in any
jurisdiction, the Company shall use it best efforts promptly to obtain the
withdrawal of such order;

               (l) use its best efforts to cause Shares covered by such
registration statement to be registered with or approved by such other
government agencies or authorities as may be necessary to enable the sellers
thereof to consummate the disposition of such Shares; and

               (m) otherwise use its best efforts to comply with all applicable
rules and regulations of the SEC, and make available to its security holders, as
soon as reasonably practicable, an earnings statement covering a period of
twelve months, beginning within three months after the effective date of the
registration statement, which earnings statement shall satisfy the provisions of
Section 11(a) of the Securities Act and Rule 158 thereunder.

     The Company may require the Selling Holders to furnish the Company with
such information regarding the Selling Holders and the distribution of such
Shares as the Company may from time to time reasonably request in writing and as
shall be required by law, the SEC or any securities exchange on which any shares
of Medco Common Stock are then listed for trading in connection with any
registration.

          Section 4.2. Underwriting. If requested by the underwriters for any
underwritten offering in connection with a registration requested hereunder
(including any registration under Article 3 which involves, in whole or in part,
an underwritten offering), the Company will enter into an underwriting agreement
with such underwriters for such offering, such agreement to contain such
representations and warranties by the Company and such other terms and
provisions as are customarily contained in underwriting agreements with respect
to secondary distributions, including, without limitation, indemnities to the
effect and to the extent provided in Article 6 and the provision of opinions of
counsel and accountants' letters to the effect and to the extent provided in
Section 4.1(g). The Company may require that the Shares requested to be
registered pursuant to Article 3 be included in such underwriting on the same
terms and conditions as shall be applicable to the other securities being sold
through underwriters under such registration; provided, however, that no Selling
Holder shall be required to make any representations or warranties to the
Company or the underwriters (other than representations and warranties regarding
such Holder and such Holder's intended method of distribution) or to undertake

<PAGE>

any indemnification obligations to the Company or the underwriters with respect
thereto, except as otherwise provided in Article 6 hereof. The Selling Holders
shall be parties to any such underwriting agreement, and the representations and
warranties by, and the other agreements on the part of, the Company to and for
the benefit of such underwriters shall also be made to and for the benefit of
such Selling Holders.

          Section 4.3. Listing. In connection with the registration of any
offering of the Shares pursuant to this Agreement, the Company agrees to use its
best efforts to effect the listing of such Shares on any securities exchange on
which any shares of the Medco Common Stock are then listed or otherwise
facilitate the public trading of such Shares.

          Section 4.4. Holdback Agreements.

               (a) The Company shall not effect, and shall not permit any of its
directors, officers or affiliates or [any other Person to whom the Company has
granted registration rights] to effect any sale or distribution of its equity
securities, or any securities convertible into or exchangeable or exercisable
for such securities, during the seven days prior to and during the [90] day
period beginning on the effective date of any registration statement in
connection with a Demand Registration (other than a Shelf Registration) or a
Piggyback Registration, except pursuant to registrations on Form S-8 or any
successor form or unless the Holders of a majority of the Shares included in
such Demand Registration or the underwriters managing any such public offering
otherwise agree.

               (b) If the Holders of Shares notify the Company in writing that
they intend to effect an underwritten sale of Shares registered pursuant to a
Shelf Registration pursuant to Article 2 hereof, the Company shall not effect,
and shall not permit any of its directors, officers or affiliates or [any other
Person to whom the Company has granted registration rights] to effect any sale
or distribution of its equity securities, or any securities convertible into or
exchangeable or exercisable for its equity securities, during the seven days
prior to and during the [90]-day period beginning on the date such notice is
received, except pursuant to registrations on Form S-8 or any successor form or
unless the Holders of a majority of the Shares sought to be sold in such
underwritten sale or the underwriters managing any such public offering
otherwise agree.

               (c) If the Company completes an underwritten registration with
respect to any of its securities (whether offered for sale by the Company or any
other Person) on a form and in a manner that would have permitted registration
of the Shares and no Holder requested the inclusion of any Shares in such
registration, the Holders shall not effect any public sales or distributions of
equity securities of the Company, or any securities convertible into or
exchangeable or exercisable for such securities, until the termination of the
holdback period required from the Company by any underwriters in connection with
such previous registration, but in no event more than 90 days from the effective
date of such registration.

               (d) Notwithstanding anything in this Section 4.4 to the contrary,
no Holder of Shares shall be precluded from distributing to any or all of its
stockholders any or all of its Shares.

                                    ARTICLE 5

                                   PREPARATION

          Section 5.1. Reasonable Investigation. In connection with the
preparation and filing of each registration statement registering the

<PAGE>

Shares under the Securities Act and each sale of the Shares thereunder, the
Company will give the Selling Holders and the underwriters, if any, and their
respective counsel and accountants, access to its financial and other records,
pertinent corporate documents and properties of the Company and such
opportunities to discuss the business of the Company with its officers and the
independent public accountants who have certified its financial statements as
shall be necessary, in the opinion of the Selling Holders and such underwriters
or their respective counsel, to conduct a reasonable investigation within the
meaning of the Securities Act.

                                    ARTICLE 6

                                 INDEMNIFICATION

               (a) In the event of any registration of any of the Shares
hereunder, the Company shall, and shall enter into additional customary
indemnification arrangements to, indemnify and hold harmless each of the Selling
Holders, each of their respective directors and officers, each Person who
participates as an underwriter in the offering or sale of such securities, each
officer and director of each underwriter, and each Person, if any, who controls
each such Selling Holder or any such underwriter within the meaning of the
Securities Act (collectively, the "Covered Persons") against any losses, claims,
damages, liabilities, fees and expenses (including attorneys' fees and
expenses), joint or several, to which such Person may be subject under the
Securities Act or otherwise insofar as such losses, claims, damages, liabilities
or expenses (or actions or proceedings in respect thereof) arise out of are
based upon (i) any untrue statement or alleged untrue statement of any material
fact contained in any related registration statement filed under the Securities
Act, any preliminary prospectus or final prospectus included therein, or any
amendment or supplement thereto, or any document incorporated by reference
therein, or (ii) any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, and the Company will reimburse each such Covered Person, as
incurred, for any legal or any other expenses reasonably incurred by such
Covered Person in connection with investigating or defending any such loss,
claim, liability, action or proceeding; provided, however, that the Company
shall not be liable in any such case to the extent that any such loss, claim,
damage, liability (or action or proceeding in respect thereof) or expense arises
out of or is based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in such registration statement, any such
preliminary prospectus or final prospectus, amendment or supplement in reliance
upon and in conformity with written information furnished to the Company by such
Selling Holder or such underwriter specifically for use in the preparation
thereof. Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of any such Covered Person and shall survive
the transfer of such securities by the Selling Holders.

               (b) Each of the Selling Holders, by virtue of exercising its
respective registration rights hereunder, agree and undertake to enter into
customary indemnification arrangements to indemnify and hold harmless (in the
same manner and to the same extent as set forth in clause (a) of this Article 6)
the Company, its directors and officers, each Person who participates as an
underwriter in the offering or sale of such securities, each officer and
director of each underwriter, and each Person, if any, who controls the Company
or any such underwriter within the meaning of the Securities Act, with respect
to any statement in or omission from such registration statement, any
preliminary prospectus or final prospectus included therein, or any amendment or
supplement thereto, if such statement or omission is contained in written
information furnished by such Selling Holder to the Company specifically for
inclusion in such registration statement or prospectus; provided, however, that
the obligation to

<PAGE>

indemnify shall be individual, not joint and several, for each Selling Holder
and shall be limited to the net amount of proceeds received by such Selling
Holder from the sale of Shares pursuant to such registration statement. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of the Company or any such director, officer or Person and
shall survive the transfer of the registered securities by the Selling Holders.

               (c) Any Person entitled to indemnification hereunder shall (i)
give prompt written notice to the indemnifying party of any claim with respect
to which it seeks indemnification (provided, however, that the failure to give
prompt notice shall not impair any Person's rights to indemnification hereunder
to the extent such failure has not prejudiced the indemnifying party) and (ii)
permit such indemnifying party to assume or participate in the defense of such
claim with counsel satisfactory to the indemnified party. Notwithstanding the
foregoing, the Selling Holders shall have the right to assume the defense of any
claim with respect to which indemnification is sought by the Selling Holders
with one or more counsel selected by a majority of the Selling Holders for which
such indemnification is sought.

               (d) Indemnification similar to that specified in the preceding
subdivisions of this Article 6 (with appropriate modifications) shall be given
by the Company and the Selling Holders with respect to any required registration
or other qualification of such Shares under any federal or state law or
regulation of governmental authority other than the Securities Act.

               (e) The rights of Merck and its directors and officers to
indemnification hereunder shall be in addition to, and not in limitation of, the
indemnification they are entitled to under the Indemnification and Insurance
Agreement.

                                    ARTICLE 7

              BENEFITS AND TERMINATION OF REGISTRATION RIGHTS

          Section 7.1. Benefits and Termination of Registration Rights.
Notwithstanding anything contained herein to the contrary, the Holders may
exercise the registration rights granted hereunder in such manner and
proportions as they shall agree among themselves. The registration rights
hereunder shall cease to apply to any particular Shares, and such securities
shall cease to be Shares, when: (a) a registration statement with respect to the
sale of such Shares shall have become effective under the Securities Act and
such Shares shall have been disposed of in accordance with such registration
statement; (b) such Shares shall have been sold to the public pursuant to Rule
144 under the Securities Act (or any successor provision); (c) such Shares shall
have been otherwise transferred, new certificates for them not bearing a legend
restricting further transfer shall have been delivered by the Company and
subsequent public distribution of them shall not, in the judgment of the Holders
hereof, require registration or qualification of them under the Securities Act
or any similar state law then in force; and (d) such Shares shall have ceased to
be outstanding.

                                    ARTICLE 8

                              REGISTRATION EXPENSES

          Section 8.1. Registration Expenses. As used in this Agreement, the
term "Registration Expenses" means all expenses incident to the Company's
performance of or compliance with the registration requirements set forth in
this Agreement including, without limitation, the following:

<PAGE>

(a) all registration and filing fees; (b) the fees, disbursements and expenses
of the Company's and the Holders' counsel and accountants in connection with the
registration of the Shares to be disposed of under the Securities Act; (c) all
expenses in connection with the preparation, printing and filing of the
registration statement, any preliminary prospectus or final prospectus, any
other offering document and amendments and supplements thereto and the mailing
and delivering of copies thereof to the underwriters and dealers and directly to
security holders in the case of an Exchange Registration; (d) the cost of
printing and producing any agreements among underwriters, underwriting
agreements, and blue sky or legal investment memoranda, any selling agreements
and any amendments thereto or other documents in connection with the offering,
sale or delivery of the Shares to be disposed of; (e) all expenses in connection
with the qualification of the Shares to be disposed of for offering and sale
under state securities laws, including the fees and disbursements of counsel for
the underwriters in connection with such qualification and in connection with
any blue sky and legal investment surveys; (f) the filing fees incident to
securing any required review by the New York Stock Exchange and any other
securities exchange on which the Medco Common Stock is then traded or listed of
the terms of the sale of the Shares to be disposed of and the trading or listing
of all such Shares on each such exchange; (g) the costs of preparing stock
certificates; (h) the costs and charges of the Company's transfer agent and
registrar; (i) all road show expenses; and (j) the fees and disbursements of any
custodians, solicitation agents, information agents and/or exchange agents.
Registration Expenses shall not include underwriting discounts and underwriters'
commissions attributable to the Shares being registered for sale on behalf of
the Selling Holders, which shall be paid by the Selling Holders.

                                    ARTICLE 9

                               DISPUTE RESOLUTION

ANY DISPUTE, CONTROVERSY OR CLAIM BETWEEN THE PARTIES HERETO ARISING OUT OF OR
RELATING TO THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION, DISPUTES CONCERNING
THE VALIDITY, INTERPRETATION OR PERFORMANCE OF OR UNDER THIS AGREEMENT OR ANY
TERM OR PROVISION HEREOF, SHALL BE EXCLUSIVELY GOVERNED BY AND SETTLED IN
ACCORDANCE WITH THE PROVISIONS OF ARTICLE III OF THE INDEMNIFICATION AGREEMENT.

                                   ARTICLE 10

                                  MISCELLANEOUS

          Section 10.1. No Inconsistent Agreements. The Company shall not on or
after the date of this Agreement enter into any agreement with respect to its
securities that violates or subordinates the rights expressly granted to the
Holders in this Agreement. The Company shall not take any action, or permit any
change to occur, with respect to its securities which would adversely affect the
ability of the Holders of Shares to include such Shares in a registration
undertaken pursuant to this Agreement.

          Section 10.2. Entire Agreement. This Agreement, the Master Separation
Agreement, the other Ancillary Agreements and any Annexes, Exhibits and
Schedules attached hereto and thereto, constitutes the entire agreement among
the parties with respect to the subject matter hereof and thereof and shall
supersede all prior written and oral and all contemporaneous oral agreements and
understandings with respect to the subject matter hereof and thereof.

          Section 10.3. Governing Law; Forum. This Agreement shall be

<PAGE>

construed in accordance with, and all Disputes (as defined in the
Indemnification Agreement) hereunder shall be governed by, the procedural
(except to the extent inconsistent with the procedures set forth in Article III
of the Indemnification Agreement) and substantive laws of the State of New York
as to all matters regardless of the laws that might otherwise govern under
principles of conflicts of laws applicable thereto. Under no circumstances may
any party seek or be awarded punitive damages under this Agreement. Any state
court sitting in New York county, New York and/or the United States District
Court for the Southern District of New York shall have exclusive jurisdiction
and venue, and each party hereto hereby submits to such jurisdiction and venue
and irrevocably waives, to the fullest extent permitted by applicable law, any
objection it may now or hereafter have to such jurisdiction or the laying of
such venue over any Disputes between the parties that are permitted to be
brought in a court, or the enforcement of any decision of an arbitrator,
pursuant to Article III of the Indemnification Agreement. Each of the parties
hereby irrevocably waives any right to a jury trial with respect to a Dispute.

          Section 10.4. Termination. This Agreement may be terminated at any
time prior to the consummation of the IPO by and in the sole discretion of Merck
without the approval of Medco. This Agreement may be terminated at any time
after the IPO Closing Date by the written consent of Merck and the Holders of a
majority of the Shares. In the event of termination pursuant to this Section, no
party shall have any liability of any kind to the other party, except to the
extent otherwise agreed by the parties.

          Section 10.5. Notices. All notices and other communications required
or permitted to be given by any party pursuant to the terms of this Agreement
shall be in writing to and shall be deemed to have been duly given when
delivered in person, by express or overnight mail delivery by a nationally
recognized courier (delivery charges prepaid), or by registered or certified
mail (postage prepaid, return receipt requested), as follows:

          if to Merck:

               Merck & Co., Inc.
               One Merck Drive
               P.O. Box 100
               Whitehouse Station, New Jersey 08889
               Attention: General Counsel

          if to Medco:

               MedcoHealth Solutions, Inc.
               100 Parsons Pond Drive
               Franklin Lakes, New Jersey  07417
               Attention: General Counsel

furnished to the other in writing in the manner set forth above. All notices and
other communication shall be deemed to have been given and received on the date
of actual delivery.

          Section 10.6. Counterparts. This Agreement, including any Annexes,
Schedules and Exhibits hereto, and the other documents referred to herein, may
be executed in counterparts, each of which shall be deemed to be an original but
all of which shall constitute one and the same agreement.

          Section 10.7. Binding Effect; Assignment; Third-Party Beneficiaries.
Medco may not, directly or indirectly, in whole or in part, whether by operation
of law or otherwise, assign or transfer this Agreement or its rights or
obligations hereunder, without Merck's prior written consent and, except as
otherwise permitted hereby, any attempted

<PAGE>

assignment, transfer or delegation without such prior written consent shall be
voidable at the sole option of Merck. Nothing in this Agreement shall restrict
any transfer of this Agreement by Merck, whether by operation of law or
otherwise. Without limiting the foregoing, this Agreement shall be binding upon
Merck and the other members of the Merck Group and Medco and the other members
of the Medco Group and their respective legal representatives, successors and
permitted assigns, and nothing in this Agreement, express or implied, is
intended to confer upon any other Person any rights or remedies of any nature
whatsoever under or by reason of this Agreement.

          Section 10.8. Offset. In addition to, and not in limitation of, any
other remedies any member of the Merck Group or any Merck Indemnitee (as defined
in the Indemnification Agreement) may be entitled to under the Master Separation
Agreement, any Ancillary Agreement (including this Agreement) or any
Intercompany Agreement (as defined in the Indemnification Agreement) , any
member of the Merck Group or any Merck Indemnitee may satisfy any amounts owed
to such member of the Merck Group or Merck Indemnitee by any member of the Medco
Group by means of an offset against any amounts any member of the Merck Group
may from time to time owe to any member of the Medco Group or an Medco
Indemnitee, whether under the Master Separation Agreement, any Ancillary
Agreement (including this Agreement), any Intercompany Agreement, any other
agreement or arrangement existing between any member of the Merck Group and any
member of the Medco Group, or otherwise.

          Section 10.9. Severability. If any term or other provision of this
Agreement or any Annexes, Schedules or Exhibits attached hereto is determined by
a court, administrative agency or arbitrator to be invalid, illegal or incapable
of being enforced by any rule of law or public policy, all other conditions and
provisions of this Agreement will nevertheless remain in full force and effect
so long as the economic or legal substance of the transactions contemplated
hereby is not affected in any manner materially adverse to any party hereto.
Upon such determination that any term or other provision is invalid, illegal or
incapable of being enforced, the parties hereto shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the parties hereto
as closely as possible in an acceptable manner to the end that transactions
contemplated hereby are fulfilled to the fullest extent possible. If the parties
are unable to reach an agreement on any such modification, the arbitrator
selected in accordance with Article III of the Indemnification Agreement shall
have the authority to determine such modification.

          Section 10.10. Failure or Indulgence Not Waiver. No failure or delay
on the part of any party hereto in the exercise of any right hereunder shall
impair such right or be construed to be a waiver of, or acquiescence in, any
breach of any representation, warranty or agreement herein, nor shall any single
or partial exercise of any such right preclude other or further exercise thereof
or of any other right.

          Section 10.11. Amendment. No change or amendment will be made to
this Agreement except by an instrument in writing signed on behalf of each
of the parties hereto.

          Section 10.12. Authority. Each of the parties hereto represents to the
other that (a) it has the corporate or other requisite power and authority to
execute, deliver and perform this Agreement, (b) the execution, delivery and
performance by it of this Agreement has been duly authorized by all necessary
corporate or other actions, (c) it has duly and validly executed and delivered
this Agreement, and (d) this Agreement is a legal, valid and binding obligation,
enforceable against it in accordance with its terms subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors'

<PAGE>

rights generally and general equity principles.

          Section 10.13. Interpretation. The headings contained in this
Agreement, in any Annex, Exhibit or Schedule hereto and in the table or contents
to this Agreement are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement. Any capitalized term used
in any Annex, Schedule or Exhibit but not otherwise defined therein, shall have
the meaning assigned to such term in this Agreement. When a reference is made in
this Agreement to an Article or Section, or an Annex, Exhibit or Schedule, such
reference shall be to an Article or Section of, or an Annex, Exhibit or Schedule
to, this Agreement unless otherwise indicated.

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the date and year first written above.

                                    MERCK & CO., INC.

                                    By:

                                    ----------------------------
                                    Name:
                                    Title:

                                    MEDCOHEALTH SOLUTIONS, INC.

                                    By:

                                    ----------------------------
                                    Name:
                                    Title:<PAGE>

                                                                    Exhibit 10.1
                                                                    ------------
================================================================================

                                    FORM OF

                           MEDCOHEALTH SOLUTIONS, INC.

                            2002 STOCK INCENTIVE PLAN

                           (Adopted __________, 2002)

================================================================================

<PAGE>

                            2002 STOCK INCENTIVE PLAN

1.   Purpose

     The 2002 Stock Incentive Plan (the "Plan"), effective _________, 2002 is
established to encourage employees of MedcoHealth Solutions, Inc. (the
"Company"), its parent, if any, its subsidiaries, its affiliates and its joint
ventures to acquire Common Stock in the Company ("Common Stock"). It is believed
that the Plan will serve the interests of the Company and its stockholders
because it allows employees to have a greater personal financial interest in the
Company through ownership of, or the right to acquire its Common Stock, which in
turn will stimulate employees' efforts on the Company's behalf, and maintain and
strengthen their desire to remain with the Company. It is believed that the Plan
will also assist in the recruitment of employees.

2.   Administration

     The Plan shall be administered by the Compensation Committee of the Board
of Directors of the Company (the "Committee"). A Director of the Company may
serve on the Committee only if he or she (i) is a "Non-Employee Director" for
purposes of Rule 16b-3 under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and (ii) satisfies the requirements of an "outside
director" for purposes of Section 162(m) of the Internal Revenue Code (the
"Code"). The Committee shall be responsible for the administration of the Plan
including, without limitation, determining which Eligible Persons receive
Incentives, the types of Incentives they receive under the Plan, the number of
shares covered by Incentives granted under the Plan, and the other terms and
conditions of such Incentives. Determinations by the Committee under the Plan
including, without limitation, determinations of the Eligible Persons, the form,
amount and timing of Incentives, the terms and provisions of Incentives and the
writings evidencing Incentives, need not be uniform and may be made selectively
among Eligible Persons who receive, or are eligible to receive, Incentives
hereunder, whether or not such Eligible Persons are similarly situated.

     The Committee shall have the responsibility of construing and interpreting
the Plan, including the right to construe disputed or doubtful Plan provisions,
and of establishing, amending and construing such rules and regulations as it
may deem necessary or desirable for the proper administration of the Plan. Any
decision or action taken or to be taken by the Committee, arising out of or in
connection with the construction, administration, interpretation and effect of
the Plan and of its rules and regulations, shall, to the maximum extent
permitted by applicable law, be within its absolute discretion (except as
otherwise specifically provided herein) and shall be final, binding and
conclusive upon the Company, all Eligible Persons and any person claiming under
or through any Eligible Person.

     The Committee may delegate any or all of its power and authority hereunder
to the Chief Executive Officer or President and such other officers as the
Committee deems appropriate; provided, however, that the Committee may not
delegate its authority with regard to any matter or action affecting an officer
subject to Section 16 of the Exchange Act and that no such delegation shall be
made in the case of Incentives intended to be qualified under Section 162(m) of
the Code.

     For the purpose of this section and all subsequent sections, the Plan shall
be deemed to include this Plan and any comparable sub-plans established by
subsidiaries which, in the aggregate, shall constitute one Plan governed by the
terms set forth herein.

     Until such time as the Compensation Committee of the Board consists of
"Non-Employee Directors" and "outside directors" as provided herein, the Plan
shall be administered by the full Board of Directors of the Company. Any
Incentives granted prior to (but including those that are effective as of) the
initial public

<PAGE>

offering of the Company's stock shall be subject to approval of the full Board
and the further approval of the Compensation and Benefits Committee of the Board
of Directors of Merck & Co., Inc.

3.   Eligibility

     (a) Employees. Any person employed by the Company, its parent, if any, or
its subsidiaries, its affiliates and its joint ventures, including officers,
whether or not directors of the Company, and employees of a joint venture
partner or affiliate of the Company who provide services to the joint venture
with such partner or affiliate (each such person, an "Employee"), shall be
eligible to participate in the Plan if designated by the Committee ("Eligible
Persons").

     (b) Non-employees. The term "Employee" shall not include a non-employee
director or a person hired as an independent contractor, leased employee or
consultant, provided, however, that the Committee may determine that any such
person is eligible to receive Incentives under the Plan (and, if such a
determination is made as to any such person, such person shall be an Eligible
Person under the Plan). Such person shall not participate in this Plan except to
the extent that the Committee so determines, even if such person is subsequently
determined to be an "employee" by any governmental or judicial authority.

     (c) No Right To Continued Employment. Nothing in the Plan shall interfere
with or limit in any way the right of the Company, its parent, its subsidiaries,
its affiliates or its joint ventures to terminate the employment of any
participant at any time, nor confer upon any participant the right to continue
in the employ of the Company, its parent, its subsidiaries, its affiliates or
its joint ventures. No Eligible Person shall have a right to receive an
Incentive or any other benefit under this Plan or having been granted an
Incentive or other benefit, to receive any additional Incentive or other
benefit. Neither the award of an Incentive nor any benefits arising under such
Incentives shall constitute an employment contract with the Company, its parent,
its subsidiaries, its affiliates or its joint ventures, and accordingly, this
Plan and the benefits hereunder may be terminated at any time in the sole and
exclusive discretion of the Company without giving rise to liability on the part
of the Company, its parent, its subsidiaries, its affiliates or its joint
ventures for severance. Except as may be otherwise specifically stated in any
other employee benefit plan, policy or program, neither any Incentive under this
Plan nor any amount realized from any such Incentive shall be treated as
compensation for any purposes of calculating an employee's benefit under any
such plan, policy or program.

4.   Term of the Plan

     This Plan shall be effective as of the date of its adoption by the Board of
Directors of the Company, subject to the approval of the Plan by the affirmative
vote of the stockholders of the Company entitled to vote thereon at the time of
such approval. Such approval by the stockholders shall occur within 12 months of
the adoption of the Plan by the Board of Directors. No Incentive shall be
granted under the Plan after December 31, 2007, but the term and exercise of
Incentives granted theretofore may extend beyond that date.

5.   Incentives

     Incentives under the Plan may be granted in any one or a combination of (a)
Incentive Stock Options; (b) Nonqualified Stock Options; (c) Stock Appreciation
Rights; (d) Restricted Stock Grants, (e) Performance Shares, (f) Share Awards
and (g) Phantom Stock Awards (collectively "Incentives"). All Incentives shall
be subject to the terms and conditions set forth herein and to such other terms
and conditions as may be established by the Committee.

                                       2

<PAGE>

6.   Shares Available for Incentives

     (a) Shares Available. Subject to the provisions of Section 6(c), the
maximum number of shares of Common Stock of the Company that may be issued under
the Plan is ______. This number includes the shares to be issued under the stock
option grants made under the Merck & Co., Inc. 2001 Incentive Stock Plan that
will be converted to options for shares of Common Stock of the Company (the
"Converted Options") as of the completion of the "Distribution" as defined in
the Master Separation and Distribution Agreement between the Company and Merck &
Co., Inc. dated ________, 2002. Any shares which are not purchased or awarded
under an Incentive or Converted Option that has lapsed, expired, terminated or
been canceled, may be used for the further grant of Incentives under the Plan.
Shares under this Plan may be delivered by the Company from its authorized but
unissued shares of Common Stock or from issued and reacquired Common Stock held
as treasury stock, or both. In no event shall fractional shares of Common Stock
be issued under the Plan.

     (b) Limit on an Individual's Incentives. In any calendar year, no Eligible
Person may receive (i) Incentives covering more than ____ shares of the
Company's Common Stock (such number of shares shall be adjusted in accordance
with Section 6(c)), or (ii) any Incentive if such person owns more than ten
percent of the stock of the Company within the meaning of Section 422 of the
Code, or (iii) any Incentive Stock Option, as defined in Section 422 of the
Code, which would result in such person receiving a grant of Incentive Stock
Options for stock that would have an aggregate fair market value in excess of
$100,000, determined as of the time that the Incentive Stock Option is granted,
that would be exercisable for the first time by such person during any calendar
year.

     (c) Adjustment of Shares. In the event of a reorganization,
recapitalization, stock split, stock dividend, combination of shares, merger,
consolidation, rights offering, spin off, split off, split up or other event
identified by the Committee, the Committee shall make such adjustments, if any,
as it may deem appropriate in (i) the number and kind of shares authorized for
issuance under the Plan, (ii) the number and kind of shares subject to
outstanding Incentives, (iii) the option price of Stock Options and (iv) the
fair market value of Stock Appreciation Rights, provided that fractions of a
share will be rounded down to the nearest whole share (other than for Incentive
Stock Options). Any such determination shall be final, binding and conclusive on
all parties.

7.   Stock Options

     The Committee may grant options qualifying as Incentive Stock Options as
defined in Section 422 of the Code, and options other than Incentive Stock
Options ("Nonqualified Options") (collectively "Stock Options"). Such Stock
Options shall be subject to the following terms and conditions and such other
terms and conditions as the Committee may prescribe:

          (a) Stock Option Price. The option price per share with respect to
     each Stock Option shall be determined by the Committee, but shall not be
     less than 100% of the fair market value of the Common Stock on the date the
     Stock Option is granted, as determined by the Committee.

          (b) Period of Stock Option. The period of each Stock Option shall be
     fixed by the Committee, provided that the period for all Stock Options
     shall not exceed ten (10) years from the grant, provided further, however,
     that, in the event of the death of an Optionee prior to the expiration of a
     Non-Qualified Stock Option, such Non-Qualified Stock Option may, if the
     Committee so determines, be exercisable for up to eleven years from the
     date of the grant. The Committee may, subsequent to the granting of any
     Stock Option, extend the term thereof, but in no event shall the extended
     term exceed ten years from the original grant date.

                                       3

<PAGE>

          (c) Exercise of Stock Option and Payment Therefore. No shares shall be
     issued until full payment of the option price has been made. The option
     price may be paid in cash or, if the Committee determines, in shares of
     Common Stock or a combination of cash and shares of Common Stock. If the
     Committee approves the use of shares of Common Stock as a payment method,
     the Committee shall establish such conditions as it deems appropriate for
     the use of Common Stock to exercise a Stock Option. Stock Options awarded
     under the Plan shall be exercised through such procedure or program as the
     Committee may establish or define from time to time, which may include a
     designated broker that must be used in exercising such Stock Options. The
     Committee may establish rules and procedures to permit an optionholder to
     defer recognition of gain upon the exercise of a Stock Option.

          (d) First Exercisable Date. The Committee shall determine how and when
     shares covered by a Stock Option may be purchased. The Committee may
     establish waiting periods, the dates on which Stock Options become
     exercisable or "vested" and, subject to paragraph (b) of this section,
     exercise periods. The Committee may accelerate the exercisability of any
     Stock Option or portion thereof.

          (e) Termination of Employment. Unless determined otherwise by the
     Committee, upon the termination of a Stock Option grantee's employment (for
     any reason other than deliberate, willful or gross misconduct), Stock
     Option privileges shall be limited to the shares which were immediately
     exercisable at the date of such termination. The Committee, however, in its
     discretion, may provide that any Stock Options outstanding but not yet
     exercisable upon the termination of a Stock Option grantee's employment may
     become exercisable in accordance with a schedule determined by the
     Committee. Such Stock Option privileges shall expire unless exercised
     within such period of time after the date of termination of employment as
     may be established by the Committee, but in no event later than the
     expiration date of the Stock Option. If the Committee decides to grant
     Incentives to a non-employee director or to an independent contractor,
     leased employee or consultant, the Committee shall determine at the time of
     grant the terms applicable in the event such person's relationship with the
     Company is terminated.

          (f) Termination Due to Misconduct. If a Stock Option grantee's
     employment is terminated for deliberate, willful or gross misconduct, as
     determined by the Company, all rights under the Stock Option shall expire
     upon the date of such termination.

          (g) Limits on Incentive Stock Options. Except as may otherwise be
     permitted by the Code, an Eligible Person may not receive a grant of
     Incentive Stock Options for stock that would have an aggregate fair market
     value in excess of $100,000 (or such other amount as the Internal Revenue
     Service may decide from time to time), determined as of the time that the
     Incentive Stock Option is granted, that would be exercisable for the first
     time by such person during any calendar year.

8.   Stock Appreciation Rights

     The Committee may, in its discretion, grant a right to receive the
appreciation in the fair market value of shares of Common Stock ("Stock
Appreciation Right") either singly or in combination with an underlying Stock
Option granted hereunder. Such Stock Appreciation Right shall be subject to the
following terms and conditions and such other terms and conditions as the
Committee may prescribe:

          (a) Time and Period of Grant. If a Stock Appreciation Right is granted
     with respect to an underlying Stock Option, it may be granted at the time
     of the Stock Option grant or at any time thereafter but prior to the
     expiration of the Stock Option grant. If a Stock Appreciation Right is
     granted with respect to an underlying Stock Option, at the time the Stock
     Appreciation Right is granted the Committee may limit the exercise period
     for such Stock Appreciation Right, before and after which period no Stock
     Appreciation Right shall attach to the underlying Stock Option. In no event
     shall the exercise period for a Stock Appreciation Right granted with
     respect to an underlying Stock Option exceed the exercise

                                       4

<PAGE>

     period for such Stock Option. If a Stock Appreciation Right is granted
     without an underlying Stock Option, the period for exercise of the Stock
     Appreciation Right shall be set by the Committee.

          (b) Value of Stock Appreciation Right. If a Stock Appreciation Right
     is granted with respect to an underlying Stock Option, the grantee will be
     entitled to surrender the Stock Option which is then exercisable and
     receive in exchange therefor an amount equal to the excess of the fair
     market value of the Common Stock on the date the election to surrender is
     received by the Company in accordance with exercise procedures established
     by the Company over the Stock Option price multiplied by the number of
     shares covered by the Stock Option which is surrendered. If a Stock
     Appreciation Right is granted without an underlying Stock Option, the
     grantee will receive upon exercise of the Stock Appreciation Right an
     amount equal to the excess of the fair market value of the Common Stock on
     the date the election to surrender such Stock Appreciation Right is
     received by the Company in accordance with exercise procedures established
     by the Company over the fair market value of the Common Stock on the date
     of grant multiplied by the number of shares covered by the grant of the
     Stock Appreciation Right.

          (c) Payment of Stock Appreciation Right. Payment of a Stock
     Appreciation Right shall be in the form of shares of Common Stock, cash or
     any combination of shares and cash. The form of payment upon exercise of
     such a right shall be determined by the Committee either at the time of
     grant of the Stock Appreciation Right or at the time of exercise of the
     Stock Appreciation Right.

9.   Performance Share Awards

     The Committee may grant awards under which payment may be made in shares of
Common Stock, cash or any combination of shares and cash if the performance of
the Company or its parent or any subsidiary, division, affiliate or joint
venture of the Company selected by the Committee during the Award Period meets
certain goals established by the Committee ("Performance Share Awards"). Such
Performance Share Awards shall be subject to the following terms and conditions
and such other terms and conditions as the Committee may prescribe:

          (a) Award Period and Performance Goals. The Committee shall determine
     and include in a Performance Share Award grant the period of time for which
     a Performance Share Award is made ("Award Period"). The Committee shall
     also establish performance objectives ("Performance Goals") to be met by
     the Company, its parent, subsidiary, division, affiliate or joint venture
     of the Company during the Award Period as a condition to payment of the
     Performance Share Award. The Performance Goals may include share price,
     pre-tax profits, earnings per share, return on stockholders' equity, return
     on assets, sales, net income or any combination of the foregoing. The
     Performance Goals may include minimum and optimum objectives or a single
     set of objectives.

          (b) Payment of Performance Share Awards. The Committee shall establish
     the method of calculating the amount of payment to be made under a
     Performance Share Award if the Performance Goals are met, including the
     fixing of a maximum payment. The Performance Share Award shall be expressed
     in terms of shares of Common Stock and referred to as "Performance Shares."
     After the completion of an Award Period, the performance of the Company,
     its parent, subsidiary, division, affiliate or joint venture of the Company
     shall be measured against the Performance Goals, and the Committee shall
     determine, in accordance with the terms of such Performance Share Award,
     whether all, none or any portion of a Performance Share Award shall be
     paid. The Committee, in its discretion, may elect to make payment in shares
     of Common Stock, cash or a combination of shares and cash. Any cash payment
     shall be based on the fair market value of Performance Shares on, or as
     soon as practicable prior to, the date of payment.

                                       5

<PAGE>

          (c) Revision of Performance Goals. As to any Award not intended to
     constitute "performance-based compensation" under Section 162(m) of the
     Code, at any time prior to the end of an Award Period, the Committee may
     revise the Performance Goals and the computation of payment if unforeseen
     events occur which have a substantial effect on the performance of the
     Company, its parent, subsidiary, division, affiliate or joint venture of
     the Company and which, in the judgment of the Committee, make the
     application of the Performance Goals unfair unless a revision is made.

          (d) Requirement of Employment. A grantee of a Performance Share Award
     must remain in the employ of the Company, its parent, subsidiary, affiliate
     or joint venture until the completion of the Award Period in order to be
     entitled to payment under the Performance Share Award; provided that the
     Committee may, in its discretion, provide for a full or partial payment
     where such an exception is deemed equitable. If the Committee decides to
     grant Incentives to a non-employee director or to an independent
     contractor, leased employee or consultant, the Committee shall determine at
     the time of grant the terms applicable in the event such person's
     relationship with the Company is terminated.

          (e) Dividends. The Committee may, in its discretion, at the time of
     the granting of a Performance Share Award, provide that any dividends
     declared on the Common Stock during the Award Period, and which would have
     been paid with respect to Performance Shares had they been owned by a
     grantee, be (i) paid to the grantee, or (ii) accumulated for the benefit of
     the grantee and used to increase the number of Performance Shares of the
     grantee.

          (f) Limit on Performance Share Awards. Incentives granted as
     Performance Share Awards under this section and Restricted Stock Grants
     under Section 10 shall not exceed, in the aggregate, ____ shares of Common
     Stock (such number of shares shall be adjusted in accordance with Section
     6(c)).

10.   Restricted Stock Grants

     The Committee may award shares of Common Stock to an Eligible Person, which
shares shall be subject to the following terms and conditions and such other
terms and conditions as the Committee may prescribe ("Restricted Stock Grant"):

          (a) Requirement of Employment. A grantee of a Restricted Stock Grant
     must remain in the employment of the Company during a period designated by
     the Committee ("Restriction Period") in order to retain the shares under
     the Restricted Stock Grant. If the grantee leaves the employment of the
     Company prior to the end of the Restriction Period, the Restricted Stock
     Grant shall terminate and the shares of Common Stock shall be returned
     immediately to the Company provided that the Committee may, at the time of
     the grant, provide for the employment restriction to lapse with respect to
     a portion or portions of the Restricted Stock Grant at different times
     during the Restriction Period. The Committee may, in its discretion, also
     provide for such complete or partial exceptions to the employment
     restriction as it deems equitable. If the Committee decides to grant
     Incentives to a non-employee director or to an independent contractor,
     leased employee or consultant, the Committee shall determine at the time of
     grant the terms applicable in the event such person's relationship with the
     Company is terminated.

          (b) Restrictions on Transfer and Legend on Stock Certificates. During
     the Restriction Period, the grantee may not sell, assign, transfer, pledge
     or otherwise dispose of the shares of Common Stock. Each certificate for
     shares of Common Stock issued hereunder shall contain a legend giving
     appropriate notice of the restrictions in the grant.

          (c) Escrow Agreement. The Committee may require the grantee to enter
     into an escrow agreement providing that the certificates representing the
     Restricted Stock Grant will remain in the physical custody of an escrow
     holder until all restrictions are removed or expire.

                                       6

<PAGE>

          (d) Lapse of Restrictions. All restrictions imposed under the
     Restricted Stock Grant shall lapse upon the expiration of the Restriction
     Period if the conditions as to employment set forth above have been met.
     The grantee shall then be entitled to have the legend removed from the
     certificates.

          (e) Dividends. The Committee shall, in its discretion, at the time of
     the Restricted Stock Grant, provide that any dividends declared on the
     Common Stock during the Restriction Period shall either be (i) paid to the
     grantee, or (ii) accumulated for the benefit of the grantee and paid to the
     grantee only after the expiration of the Restriction Period.

          (f) Performance Goals. The Committee may designate whether any
     Restricted Stock Grant is intended to be "performance-based compensation"
     as that term is used in Section 162(m) of the Code. Any such Restricted
     Stock Grant designated to be "performance-based compensation" shall be
     conditioned on the achievement of one or more Performance Goals (as defined
     in Section 9(a)), to the extent required by Section 162(m).

          (g) Limit on Restricted Stock Grant. Incentives granted as Restricted
     Stock Grants under this section and Performance Share Awards under Section
     9 shall not exceed, in the aggregate, ____ shares of Common Stock (such
     number of shares shall be adjusted in accordance with Section 6(c)).

11.  Other Share-Based Awards

     (a) Share Awards. The Committee may grant an award of shares of common
stock (a "Share Award") to any Eligible Person on such terms and conditions as
the Committee may determine in its sole discretion. Share Awards may be made as
additional compensation for services rendered by the Eligible Person or may be
in lieu of cash or other compensation to which the Eligible Person is entitled
from the Company.

     (b) Phantom Stock Awards. The Committee may, in its discretion, grant a
right representing a number of hypothetical shares, including hypothetical
restricted shares or restricted stock units (a "Phantom Stock Award"), to any
Eligible Person on such terms and conditions, including whether payment of such
Phantom Stock Award will be in cash or shares, as the Committee may determine in
its sole discretion.

12.  Transferability

     Each Incentive, other than Nonqualified Options, granted under the Plan
shall not be transferable or assignable other than by will or the laws of
descent and distribution and shall be exercisable during the grantee's lifetime
only by the grantee. Nonqualified Options shall not be transferable or
assignable by the recipient, and may not be made subject to execution,
attachment or similar procedures, other than by will or the laws of descent and
distribution or pursuant to a domestic relations order within the meaning of
Rule 16a-12 under the Exchange Act. Notwithstanding the foregoing, the
Committee, in its discretion, may adopt rules permitting the transfer, solely as
gifts during the grantee's lifetime, of Stock Options (other than Incentive
Stock Options) to members of a grantee's immediate family or to trusts or family
partnerships for the benefit of such immediate family members. For this purpose,
immediate family member means the grantee's spouse, parent, child, stepchild,
grandchild and the spouses of such family members. The terms of a Stock Option
shall be final, binding and conclusive upon the beneficiaries, executors,
administrators, heirs and successors of the grantee.

                                       7

<PAGE>

13.  Discontinuance or Amendment of the Plan

     The Board of Directors may discontinue the Plan at any time and may from
time to time amend or revise the terms of the Plan as permitted by applicable
statutes, except that it may not, without the consent of the grantees affected,
revoke or alter, in a manner unfavorable to the grantees of any Incentives
hereunder, any Incentives then outstanding, nor may the Board amend the Plan
without stockholder approval where the absence of such approval would cause the
Plan to fail to comply with Rule 16b-3 under the Exchange Act, or any other
requirement of applicable law or regulation. Unless approved by the Company's
stockholders or otherwise provided under this Plan, no adjustments or reduction
of the exercise price of any outstanding Incentives shall be made.

14.  No Limitation on Compensation

     Nothing in the Plan shall be construed to limit the right of the Company to
establish other plans or to pay compensation to its employees, in cash or
property, in a manner which is not expressly authorized under the Plan.

15.  No Constraint on Corporate Action

     Nothing in the Plan shall be construed (i) to limit, impair or otherwise
affect the Company's right or power to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure, or to merge or
consolidate, or dissolve, liquidate, sell or transfer all or any part of its
business or assets, or (ii) except as provided in Section 13, to limit the right
or power of the Company, its parent, or any subsidiary, affiliate or joint
venture to take any action which such entity deems to be necessary or
appropriate.

16.  Withholding Taxes

     The Company shall be entitled to deduct from any payment under the Plan,
regardless of the form of such payment, the amount of all applicable income and
employment taxes required by law to be withheld with respect to such payment or
may require the Eligible Person to pay to it such tax prior to and as a
condition of the making of such payment. In accordance with any applicable
administrative guidelines it establishes, the Committee may allow an Eligible
Person to pay the amount of taxes required by law to be withheld from an
Incentive by withholding from any payment of Common Stock due as a result of
such Incentive, or by permitting the Eligible Person to deliver to the Company,
shares of Common Stock having a fair market value, as determined by the
Committee, equal to the amount of such required withholding taxes.

17.  Compliance with Section 16

     With respect to Eligible Persons subject to Section 16 of the Exchange Act
("Section 16 Officers"), transactions under the Plan are intended to comply with
all applicable conditions of Rule 16b-3 or its successor under the Exchange Act.
To the extent that compliance with any Plan provision applicable solely to the
Section 16 Officers is not required in order to bring a transaction by such
Section 16 Officer into compliance with Rule 16b-3, it shall be deemed null and
void as to such transaction, to the extent permitted by law and deemed advisable
by the Committee and its delegees. To the extent any provision of the Plan or
action by the Plan administrators involving such Section 16 Officers is deemed
not to comply with an applicable condition of Rule 16b-3, it shall be deemed
null and void as to such Section 16 Officers, to the extent permitted by law and
deemed advisable by the Plan administrators.

                                       8

<PAGE>

18.  Use of Proceeds

     The proceeds received by the Company from the sale of stock under the Plan
shall be added to the general funds of the Company and shall be used for such
corporate purposes as the Board of Directors shall direct.

19.  Change in Control

     The Committee shall have the authority to determine the effect of a Change
in Control (as hereinafter defined) on outstanding Incentives.

     A "Change in Control" shall mean the occurrence during the term of the
Plan, but following the completion of the "Distribution" (as defined in the
Master Separation and Distribution Agreement between the Company and Merck &
Co., Inc. dated ________, 2002), of any one of the following events:

     (a)  An acquisition (other than directly from the Company) of any shares of
          Common Stock or other voting securities of the Company by any "Person"
          (for purposes of this Section only, as the term "person" is used for
          purposes of Section 13(d) or 14(d) of the Exchange Act), immediately
          after which such Person has "Beneficial Ownership" (within the meaning
          of Rule 13d-3 promulgated under the Exchange Act) of twenty percent
          (20%) or more of either (i) the then outstanding shares of Common
          Stock or (ii) the combined voting power of the Company's then
          outstanding voting securities entitled to vote for the election of
          directors (the "Voting Securities"); provided, however, in determining
          whether a Change in Control has occurred, shares of Common Stock or
          Voting Securities which are acquired in a "Non-Control Acquisition"
          (as hereinafter defined) shall not constitute an acquisition which
          would cause a Change in Control. A "Non-Control Acquisition" shall
          mean an acquisition by (i) an employee benefit plan (or a trust
          forming a part thereof) maintained by (A) the Company or (B) any
          corporation or other Person of which a majority of its voting power or
          its voting equity securities or equity interest is owned, directly or
          indirectly, by the Company (for purposes of this definition, a
          "Related Entity"), (ii) the Company or any Related Entity, or (iii)
          any Person in connection with a "Non-Control Transaction" (as
          hereinafter defined); or

     (b)  The individuals who, immediately following the Distribution, are
          members of the Board of Directors of the Company (the "Incumbent
          Board"), (i) cease for any reason to constitute at least a majority of
          the members of the Board of Directors of the Company, or (ii)
          following a Merger (as hereinafter defined), do not constitute at
          least a majority of the board of directors of (x) the Surviving
          Corporation (as hereinafter defined), if fifty percent (50%) or more
          of the combined voting power of the then outstanding voting securities
          of the Surviving Corporation is not Beneficially Owned, directly or
          indirectly by a Parent Corporation, or (y) if there is one or more
          Parent Corporations, the ultimate Parent Corporation (as hereinafter
          defined); provided, however, that if the election, or nomination for
          election by the Company's common stockholders, of any new director was
          approved by a vote of at least a majority of the Incumbent Board, such
          new director shall, for purposes of this Plan, be considered as a
          member of the Incumbent Board; provided, further, however, that no
          individual shall be considered a member of the Incumbent Board if such
          individual initially assumed office as a result of an actual or
          threatened solicitation of proxies or consents by or on behalf of a
          Person other than the Board of Directors of the Company (a "Proxy
          Contest"), including by reason of any agreement intended to avoid or
          settle any Proxy Contest; or

                                       9

<PAGE>

     (c) The consummation of:
                  (i) A merger, consolidation or reorganization with or into the
         Company or a direct or indirect subsidiary of the Company or in which
         securities of the Company are issued (a "Merger"), unless the Merger is
         a "Non-Control Transaction." A "Non-Control Transaction" shall mean:

                  (A) the stockholders of the Company immediately before such
         Merger own directly or indirectly immediately following the Merger at
         least fifty percent (50%) of the outstanding common stock and the
         combined voting power of the outstanding voting securities of (x) the
         corporation resulting from such Merger (the "Surviving Corporation"),
         if fifty percent (50%) or more of the combined voting power of the then
         outstanding voting securities of the Surviving Corporation is not
         Beneficially Owned, directly or indirectly by another corporation (a
         "Parent Corporation"), or (y) if there is one or more Parent
         Corporations, the ultimate Parent Corporation;

                  (B) the individuals who were members of the Incumbent Board
         immediately prior to the execution of the agreement providing for the
         Merger, constitute at least a majority of the members of the board of
         directors of, (x) the Surviving Corporation, if fifty percent (50%) or
         more of the combined voting power of the then outstanding voting
         securities of the Surviving Corporation is not Beneficially Owned,
         directly or indirectly by a Parent Corporation, or (y) if there is one
         or more Parent Corporations, the ultimate Parent Corporation; and

                  (C) no Person other than (1) the Company or another
         corporation that is a party to the agreement of Merger, (2) any Related
         Entity, or (3) any employee benefit plan (or any trust forming a part
         thereof) that, immediately prior to the Merger, was maintained by the
         Company or any Related Entity, or (4) any Person who, immediately prior
         to the Merger had Beneficial Ownership of twenty percent (20%) or more
         of the then outstanding shares of Common Stock or Voting Securities,
         has Beneficial Ownership, directly or indirectly, of twenty percent
         (20%) or more of the combined voting power of the outstanding voting
         securities or common stock of (x) the Surviving Corporation, if fifty
         percent (50%) or more of the combined voting power of the then
         outstanding voting securities of the Surviving Corporation is not
         Beneficially Owned, directly or indirectly by a Parent Corporation, or
         (y) if there is one or more Parent Corporations, the ultimate Parent
         Corporation.

         (ii) A complete liquidation or dissolution of the Company; or

         (iii) The sale or other disposition of all or substantially all of the
         assets of the Company and its subsidiaries taken as a whole to any
         Person (other than a transfer to a Related Entity or under conditions
         that would constitute a Non-Control Transaction with the disposition of
         assets being regarded as a Merger for this purpose or the distribution
         to the Company's stockholders of the stock of a Related Entity or any
         other assets).

     Notwithstanding the foregoing, a Change in Control shall not be deemed to
occur solely because any Person (the "Subject Person") acquired Beneficial
Ownership of more than the permitted amount of the then outstanding shares of
Common Stock or Voting Securities as a result of the acquisition of shares of
Common Stock or Voting Securities by the Company which, by reducing the number
of shares of Common Stock or Voting Securities then outstanding, increases the
proportional number of shares Beneficially Owned by the Subject Persons;
provided, that if a Change in Control would occur (but for the operation of this
sentence) as a result of the acquisition of shares of Common Stock or Voting
Securities by the Company, and after such share acquisition by the Company, the
Subject Person becomes the Beneficial Owner of any additional shares of Common
Stock or Voting Securities which increases the percentage of the then
outstanding shares of Common Stock or Voting Securities Beneficially Owned by
the Subject Person, then a Change in Control shall occur.

                                       10

<PAGE>

20.  Governing Law

     The Plan, and all agreements hereunder, shall be construed in accordance
with and governed by the laws of the State of Delaware without giving effect to
the principles of conflicts of laws.

                                       11

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00038-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00038-of-00352.parquet"}]]