Document:

EX-10.1

	 	 	 
	 
	 
	 	 

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Exhibit 10.1

PERFORMANCE SHARE UNIT TERMS UNDER THE

MERCK & CO., INC. 2004 INCENTIVE STOCK PLAN

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

I. Definitions For the purpose of this Schedule:

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

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

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

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

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

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

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

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

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

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

“Year” means calendar year.

II. Eligibility

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

III. Establishment of Targets

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

IV. Determination of Performance Share Awards

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

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

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

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

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
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	200%

	 	 	180	%	 	 	160	%	 	 	140	%	 	 	120	%	 	 	100	%	 	 	80	%	 	 	60	%	 	 	40	%	 	 	0	%	 	 	0	%	 	 	0	%
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

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

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

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

V. Dividends

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

VI. Termination of Employment

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

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

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

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

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

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

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

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

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

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

VII. Distribution of Performance Shares

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

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

VIII. Transferability

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

IX. Administrative Powers

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

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5EX-10.2

Exhibit 10.2

AMENDMENT OF MERCK & CO., INC. EQUITY STOCK PLANS

WHEREAS, Merck & Co., Inc. (the “Company”) maintains the plans listed on Attachment A
(collectively, the “Plans”);

WHEREAS, some or all of the Plans provide for the grant of Stock Options and other equity
awards, including restricted stock unit awards and performance share unit awards;

WHEREAS, pursuant to resolutions of the Board of Directors of the Company (the “Board”) dated
February 22, 2005, the Board has amended the Plans as set forth herein to provide for the treatment
of these awards previously granted under the Plans in the event of a Change in Control of the
Company; and

NOW, THEREFORE, pursuant to resolutions of the Board dated February 22, 2005, each of the
Plans shall be, and hereby is, amended to add a new Schedule entitled “Merck Change in Control” at
the end thereof, as follows:

Merck Change in Control

(a) Options.

1. Vesting of Options Other Than Key R&D Options. Upon the occurrence of a Change in
Control, each Stock Option which is outstanding immediately prior to the Change in Control, other
than the Key R&D Options, shall immediately become fully vested and exercisable.

2. Vesting of Key R&D Options.

(i) Subject to (a)(2)(ii) of this Schedule, upon the occurrence of a Change in Control, each
Key R&D Option shall continue to be subject to the performance-based vesting schedule applicable
thereto immediately prior to the Change in Control.

(ii) Notwithstanding (a)(2)(i) of this Schedule, if the Stock Options do not continue to be
outstanding following the Change in Control or are not exchanged for or converted into options to
purchase securities of a successor entity (“Successor Options”), then, upon the occurrence of a
Change in Control, all or a portion of each Key R&D Option shall immediately vest and become
exercisable in the following percentages: (A) if such Key R&D Option’s first milestone has not been
reached before the date of the Change in Control, 14% of the then-unvested portion of the Key R&D
Option shall vest and become exercisable and the remainder shall be forfeited; (B) if only such Key
R&D Option’s first milestone has been reached before the date of the Change in Control, 42% of the
then-unvested portion of the Key R&D Option shall vest and become exercisable and the remainder
shall be forfeited; and (C) if such Key R&D Option’s first and second milestones have been reached
before the date of the Change in Control, 100% of the then-unvested portion of the Key R&D Option
shall vest and become exercisable.

3. Post-Termination Exercise Period. If Stock Options continue to be outstanding
following the Change in Control or are exchanged for or converted into Successor Options, then the
portion of such Stock Options or such Successor Options, as applicable, that is vested and
exercisable immediately following the termination of employment of the holder thereof after the
Change in Control shall remain exercisable following such termination for five years from the date
of such termination (but not beyond the remainder of the term thereof) provided, however, that, if
such termination is by reason of gross misconduct, death or retirement (as these terms are applied
to awards granted under the Plans), then those provisions of the Plan that are applicable to a
termination by reason of gross misconduct, death or retirement, if any, shall apply to such
termination. If the effect of vesting pursuant to this Section (a) would cause a Stock Option or
Successor Stock Option to terminate earlier than if such accelerated vesting had not occurred, then
the term of such Stock Option shall not expire earlier than if such accelerated vesting had not
occurred.

4. Cashout of Stock Options. If the Stock Options do not continue to be outstanding
following the Change in Control and are not exchanged for or converted into Successor Options, each
holder of a vested and exercisable option shall be entitled to receive, as soon as practicable
following the Change in Control, for each share of Common Stock subject to a vested and exercisable
option, an amount of cash determined by the Committee prior to the Change in Control but in no
event less than the excess of the Change in Control Price over the exercise price thereof (subject
to any existing deferral elections then in effect). If the consideration to be paid in a Change in
Control is not entirely shares of common stock of an acquiring or resulting corporation, then the
Committee may, prior to the Change in Control, provide for the cancellation of outstanding Stock
Options at the time of the Change in Control, in whole or in part, for cash pursuant to this
provision or may provide for the exchange or conversion of outstanding Stock Options at the time of
the Change in Control, in whole or in part, and, in connection with any such provision, may (but
shall not be obligated to) permit holders of Stock Options to make such elections related thereto
as it determines are appropriate.

5. Incentive Stock Options Not Amended. This Section does not apply to any incentive
stock option within the meaning of Section 422 of the Internal Revenue Code.

(b) Restricted Stock Units and Performance Share Units.

1. Vesting of Restricted Stock Units. Upon the occurrence of a Change in Control,
each unvested restricted stock unit award which is outstanding immediately prior to the Change in
Control under the Plan shall immediately become fully vested.

2. Vesting of Performance Share Units. Upon the occurrence of a Change in Control,
each unvested performance share unit award which is outstanding immediately prior to the Change in
Control under the Plan shall immediately become vested in an amount equal to the PSU Pro Rata
Amount.

3. Settlement of Restricted Stock Units and Performance Share Units.

(i) If the Common Stock continues to be widely held and freely tradable following the Change
in Control or is exchanged for or converted into securities of a successor entity that are widely
held and freely tradable, then the restricted stock units and the vested performance share units
shall be paid in shares of Common Stock or such other securities as soon as practicable after the
date of the Change in Control (subject to any existing deferral elections then in effect).

(ii) If the Common Stock does not continue to be widely held and freely tradable following the
Change in Control and is not exchanged for or converted into securities of a successor entity that
are widely held and freely tradable, then the restricted stock units and the vested performance
share units shall be paid in cash as soon as practicable after the date of the Change in Control
(subject to any existing deferral elections then in effect).

(c) Other Provisions.

1. Except to the extent required by applicable law, for the entirety of the Protection
Period, the material terms of the Plan shall not be modified in any manner that is materially
adverse to the Qualifying Participants (it being understood that this Section (c) of this Schedule
shall not require that any specific type or levels of equity awards be granted to Qualifying
Participants following the Change in Control).

2. During the Protection Period, the Plan may not be amended or modified to reduce or
eliminate the protections set forth in Section (c)(1) of this Schedule and may not be terminated.

3. The Company shall pay all legal fees and related expenses (including the costs of experts,
evidence and counsel) reasonably and in good faith incurred by a Qualifying Participant if the
Qualifying Participant prevails on his or her claim for relief in an action (x) by the Qualifying
Participant claiming that the provisions of Section (c)(1) or (c)(2) of this Schedule have been
violated (but, for avoidance of doubt, excluding claims for Plan benefits in the ordinary course)
and (y) if applicable, by the Company or the Qualifying Participant’s employer to enforce
post-termination covenants against the Qualifying Participant.

4. This section does not apply to any incentive stock option within the meaning of Section
422 of the Internal Revenue Code.

5. Anything in the Plan as amended by this Schedule notwithstanding, the Company reserves the
right to make such further changes as may be required if and to the extent required to avoid
adverse consequences under the American Jobs Creation Act of 2004, as amended.

(d) Definitions.

For purposes of this Schedule, the following terms shall have the following meanings:

1. “Change in Control” shall have the meaning set forth in the Company’s Change in Control
Separation Benefits Plan; provided, however, that, as to any award under the Plan that consists of
deferred compensation subject to Section 409A of the Code, the definition of “Change in Control”
shall be deemed modified to the extent necessary to comply with Section 409A of the Code.

2. “Change in Control Price” shall mean, with respect to a share of Common Stock, the higher
of (A) the highest reported sales price, regular way, of such share in any transaction reported on
the New York Stock Exchange Composite Tape or other national exchange on which such shares are
listed or on the NASDAQ National Market during the 10-day period prior to and including the date of
a Change in Control and (B) if the Change in Control is the result of a tender or exchange offer,
merger, or other, similar corporate transaction, the highest price per such share paid in such
tender or exchange offer, merger or other, similar corporate transaction; provided that, to the
extent all or part of the consideration paid in any such transaction consists of securities or
other non-cash consideration, the value of such securities or other non-cash consideration shall be
determined by the Committee.

3. “Key R&D Options” shall mean those performance-based options granted to employees under
the Key Research and Development Program described in the applicable Schedule to the Rules and
Regulations for the Plan, if any.

4. “Protection Period” shall mean the period beginning on the date of the Change in Control
and ending on the second anniversary of the date of the Change in Control.

5. “PSU Pro Rata Amount” shall mean for each Performance Share Unit award, the amount
determined by multiplying (x) and (y), where (x) is the number of Target Shares subject to the
Performance Share Unit award times the Assumed Performance Percentage and (y) is a fraction, the
numerator of which is the number of whole and partial calendar months elapsed during the applicable
performance period (counting any partial month as a whole month for this purpose) and the
denominator of which is the total number of months in the applicable performance period. The
Assumed Performance Percentage shall be determined by (1) averaging the ranks during the Award
Period as follows: (A) as to any completed performance year as of the Change in Control, the actual
rank (except that, if fewer than 90 days have elapsed since the completion of such performance
year, the Target Rank shall be used), and (B) as to any performance year that is incomplete or has
not yet begun as of the Change in Control, the Target Rank, (2) rounding the average rank
calculated pursuant to the foregoing clause (1) to the nearest whole number using ordinary
numerical rounding, and (3) using the Final Award Percentage associated with the number determined
in the foregoing clause (2). The Target Rank is the rank associated with 100% on the chart of Final
Award Percentages.

6. “Qualifying Participants” shall mean those individuals who participate in the Plan
(whether as current or former employees) as of immediately prior to the Change in Control.

(e) Application.

This Schedule shall apply to Stock Options, restricted stock unit awards and performance share unit
awards under the Plans granted prior to November 24, 2004.

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Attachment A

PLANS

	 	•	 	2004 Merck & Co., Inc. Incentive Stock Plan

	 	•	 	2001 Merck & Co., Inc. Incentive Stock Plan

	 	•	 	1996 Merck & Co., Inc. Incentive Stock Plan

	 	•	 	Medco 1991 Class C NQ Plan

	 	•	 	Systemed 1993 Employee Stock Option Plan

	 	•	 	MMG 1991 Special NQ Plan

	 	•	 	SIBIA 1996 Equity and Incentive Plan

	 	•	 	Provantage 1999 Stock Incentive Plan

	 	•	 	Rosetta 1997 Employee Stock Plan

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