10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

           For the quarterly period ended September 30, 2003

OR

[   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

           For the transition period from _______ to _______

Commission File No. 1-3305

MERCK & CO., INC.

P. O. Box 100
One Merck Drive
Whitehouse Station, N.J. 08889-0100
(908) 423-1000

Incorporated in New Jersey I.R.S. Employer Identification
No. 22-1109110

The number of shares of common stock outstanding as of the close of business on October 31, 2003:

Class	Number of Shares Outstanding
Common Stock	2,224,997,335

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

Yes [X] No [  ]

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes [X] No [  ]

TABLE OF CONTENTS

Part I - Financial Information
	Item 1. Financial Statements
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
	Item 4. Controls and Procedure
Part II - Other Information
	Item 1. Legal Proceedings
	Item 6. Exhibits and Reports on Form 8-K
Signatures
EXHIBIT INDEX
MERCK & CO. DEFERRAL PROGRAM
2001 INCENTIVE STOCK PLAN
PLAN FOR DEFERRED PAYMENT OF DIRECTORS
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
CERTIFICATION OF CEO
CERTIFICATION OF CFO
SECTION 1350 CERTIFICATION OF CEO
SECTION 1350 CERTIFICATION OF CFO

Part I - Financial Information

Item 1. Financial Statements

MERCK & CO., INC. AND SUBSIDIARIES
INTERIM CONSOLIDATED STATEMENT OF INCOME
THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002
(Unaudited, $ in millions except per share amounts)

		Three Months						Nine Months
		Ended September 30						Ended September 30
		2003			2002			2003			2002
Sales		$	5,762.0		$	5,426.1		$	16,858.8		$	15,388.1
Costs, Expenses and Other
	Materials and production		1,051.7			973.2			3,087.0			2,779.5
	Marketing and administrative		1,463.6			1,407.6			4,600.8			4,113.8
	Research and development		776.5			676.9			2,283.2			1,838.4
	Acquired research		—			—			90.4			—
	Equity income from affiliates		(183.4	)		(188.7	)		(468.2	)		(550.7	)
	Other (income) expense, net		48.8			46.8			(25.1	)		132.0
			3,157.2			2,915.8			9,568.1			8,313.0
Income from Continuing Operations Before Taxes			2,604.8			2,510.3			7,290.7			7,075.1
Taxes on Income			739.8			743.0			2,096.3			2,094.2
Income from Continuing Operations			1,865.0			1,767.3			5,194.4			4,980.9
Income (Loss) from Discontinued Operations, net of taxes			(6.7	)		116.7			241.3			278.8
Net Income		$	1,858.3		$	1,884.0		$	5,435.7		$	5,259.7
Basic Earnings per Common Share
	Continuing Operations	$	.83		$	.79		$	2.32		$	2.20
	Discontinued Operations		(0.0	)		.05			.11			.12
	Net Income	$	.83		$	.84		$	2.43		$	2.33	*
Earnings per Common Share Assuming Dilution
	Continuing Operations	$	.83		$	.78		$	2.30		$	2.18
	Discontinued Operations		(0.0	)		.05			.11			.12
	Net Income	$	.82	*	$	.83		$	2.41		$	2.31	*
Dividends Declared per Common Share		$	.37		$	.36		$	1.09		$	1.06

*Amount does not add as a result of rounding.

The accompanying notes are an integral part of this consolidated financial statement.

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MERCK & CO., INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 2003 AND DECEMBER 31, 2002
(Unaudited, $ in millions)

					September 30			December 31
					2003			2002
ASSETS
	Current Assets
		Cash and cash equivalents			$	2,173.8		$	2,243.0
		Short-term investments				4,118.9			2,728.2
		Accounts receivable				4,561.8			5,423.4
		Inventories				2,441.4			2,964.3
		Prepaid expenses and taxes				725.3			1,027.5
			Total current assets			14,021.2			14,386.4
	Investments					7,919.4			7,255.1
	Property, Plant and Equipment, at cost, net of allowance for depreciation of $6,981.0 in 2003 and $6,788.0 in 2002					13,924.9			14,195.6
	Goodwill					1,034.7			4,127.0
	Other Intangibles, net					869.7			3,114.0
	Other Assets					4,819.1			4,483.1
					$	42,589.0		$	47,561.2
LIABILITIES AND STOCKHOLDERS’ EQUITY
	Current Liabilities
		Loans payable and current portion of long-term debt			$	4,273.6		$	3,669.8
		Trade accounts payable				728.8			2,413.3
		Accrued and other current liabilities				3,139.9			3,365.6
		Income taxes payable				2,745.6			2,118.1
		Dividends payable				827.7			808.4
			Total current liabilities			11,715.6			12,375.2
	Long-Term Debt					5,398.8			4,879.0
	Deferred Income Taxes and Noncurrent Liabilities					6,092.4			7,178.2
	Minority Interests					4,069.5			4,928.3
	Stockholders’ Equity
		Common stock
			Authorized - 5,400,000,000 shares
			Issued         - 2,976,230,393 shares - September 30, 2003
				- 2,976,198,757 shares - December 31, 2002		29.8			29.8
		Other paid-in capital				6,943.6			6,943.7
		Retained earnings				33,583.7			35,434.9
		Accumulated other comprehensive loss				(145.4	)		(98.8	)
						40,411.7			42,309.6
		Less treasury stock, at cost
			744,336,493 shares - September 30, 2003
			731,215,507 shares - December 31, 2002			25,099.0			24,109.1
			Total stockholders’ equity			15,312.7			18,200.5
					$	42,589.0		$	47,561.2

The accompanying notes are an integral part of this consolidated financial statement.

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MERCK & CO., INC. AND SUBSIDIARIES
INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002
(Unaudited, $ in millions)

			Nine Months
			Ended September 30
			2003			2002
CASH FLOWS FROM OPERATING ACTIVITIES OF CONTINUING OPERATIONS
Net Income			$	5,435.7		$	5,259.7
	Less: Income from discontinued operations, net of tax			(241.3	)		(278.8	)
Income from continuing operations				5,194.4			4,980.9
	Adjustments to reconcile income from continuing operations to net cash provided by operating activities from continuing operations:
		Acquired research		90.4			—
		Depreciation and amortization		993.6			923.6
		Deferred income taxes		319.4			248.2
		Other		(300.7	)		(187.4	)
		Net changes in assets and liabilities		(698.7	)		216.0
NET CASH PROVIDED BY OPERATING ACTIVITIES OF CONTINUING OPERATIONS				5,598.4			6,181.3
CASH FLOWS FROM INVESTING ACTIVITIES OF CONTINUING OPERATIONS
Capital expenditures				(1,374.1	)		(1,472.7	)
Purchase of securities, subsidiaries and other investments				(41,789.7	)		(24,832.0	)
Proceeds from sale of securities, subsidiaries and other investments				39,839.9			22,395.8
Banyu acquisition				(1,389.5	)		—
Other				(3.4	)		(3.1	)
NET CASH USED BY INVESTING ACTIVITIES OF CONTINUING OPERATIONS				(4,716.8	)		(3,912.0	)
CASH FLOWS FROM FINANCING ACTIVITIES OF CONTINUING OPERATIONS
Net change in short-term borrowings				516.1			(1,802.5	)
Proceeds from issuance of debt				1,295.9			2,583.5
Payments on debt				(721.6	)		(4.3	)
Purchase of treasury stock				(1,389.0	)		(1,834.2	)
Dividends paid to stockholders				(2,423.4	)		(2,382.1	)
Other				222.9			113.9
NET CASH USED BY FINANCING ACTIVITIES OF CONTINUING OPERATIONS				(2,499.1	)		(3,325.7	)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS				112.4			49.0
DISCONTINUED OPERATIONS
Net cash provided by discontinued operations				248.0			360.0
Dividend received from Medco Health, net of intercompany settlements and cash transferred				1,187.9			—
NET CASH PROVIDED BY DISCONTINUED OPERATIONS				1,435.9			360.0
NET DECREASE IN CASH AND CASH EQUIVALENTS				(69.2	)		(647.4	)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR				2,243.0			2,144.0
CASH AND CASH EQUIVALENTS AT END OF PERIOD			$	2,173.8		$	1,496.6

The accompanying notes are an integral part of this consolidated financial statement.

Notes to Consolidated Financial Statements

1.	The accompanying unaudited interim consolidated financial statements have been prepared pursuant to the rules and regulations for reporting on Form 10-Q. Accordingly, certain information and disclosures required by accounting principles generally accepted in the United States for complete consolidated financial statements are not included herein. The interim statements should be read in conjunction with the financial statements and notes thereto included in the Company’s latest Annual Report on Form 10-K.
	The results of operations of any interim period are not necessarily indicative of the results of operations for the full year. In the Company’s opinion, all adjustments necessary for a fair presentation of these interim statements have been included and are of a normal and recurring nature.
	Certain reclassifications have been made to prior year amounts to conform with current year presentation.

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Notes to Consolidated Financial Statements (continued)

2.

Employee stock-based compensation is recognized using the intrinsic value method. Generally, employee stock options are granted to purchase shares of Company stock at the fair market value at the time of grant. Accordingly, no compensation expense is recognized for the Company’s stock-based compensation plans other than for its employee performance-based awards and options granted to employees of certain equity method investees, the total of which is not significant.

The effect on net income and earnings per common share if the Company had applied the fair value method for recognizing employee stock-based compensation is as follows:

					($ in millions)
		Three Months						Nine Months
		Ended September 30						Ended September 30
		2003			2002			2003			2002
Net income, as reported		$	1,858.3		$	1,884.0		$	5,435.7		$	5,259.7
Compensation expense, net of tax:
	Reported		(1.4	)		.8			1.2			(.9	)
	Fair value method		(199.3	)		(129.2	)		(442.5	)		(357.4	)
Pro forma net income		$	1,657.6		$	1,755.6		$	4,994.4		$	4,901.4
Earnings per common share:
	Basic – as reported	$	.83		$	.84		$	2.43		$	2.33
	Basic – pro forma	$	.74		$	.78		$	2.23		$	2.17
	Assuming dilution – as reported	$	.82		$	.83		$	2.41		$	2.31
	Assuming dilution – pro forma	$	.74		$	.77		$	2.21		$	2.15
Earnings per common share from continuing operations:
	Assuming dilution – as reported	$	.83		$	.78		$	2.30		$	2.18
	Assuming dilution – pro forma	$	.78		$	.73		$	2.15		$	2.05

	In connection with the Medco Health Solutions, Inc. (“Medco Health”) spin-off, options granted to Medco Health employees prior to February 2002 and some options granted after February 2002 became fully vested in accordance with the original terms of the grants. As a result, pro forma compensation expense for the three and nine months ended September 30, 2003 reflects the accelerated vesting of these options. In addition, certain stock options granted to Medco Health employees in 2002 and 2003 were converted to Medco Health options with terms and amounts that maintained the option holders’ positions. Therefore, pro forma compensation expense for these options is only reflected through the date of the spin-off.
3.	During the second quarter 2003, Merck announced that its Board of Directors had approved the 100 percent spin-off of Medco Health, Merck’s wholly owned subsidiary. On August 5, 2003, Merck declared a special dividend of all the outstanding shares of common stock of Medco Health. The declaration and payment of the dividend was contingent upon Medco Health’s registration statements on Form 10 and Form S-1 being declared effective by the Securities and Exchange Commission and Medco Health’s payment to Merck of cash dividends in an aggregate amount of $2.0 billion.
	On August 19, 2003, Merck completed the spin-off of Medco Health. The spin-off was effected by way of the pro rata dividend to Merck stockholders described above. Holders of Merck common stock at the close of business on August 12, 2003, received a dividend of .1206 shares of Medco Health common stock for every one share of Merck common stock held on that date. No fractional shares of Medco Health common stock were issued. Shareholders entitled to a fractional share of Medco Health common stock in the distribution received the cash value instead. Based on a letter ruling Merck received from the U.S. Internal Revenue Service, receipt of Medco Health shares in the distribution was tax-free for U.S. federal income tax purposes, but any cash received in lieu of fractional shares was taxable.

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Notes to Consolidated Financial Statements (continued)

Prior to the spin-off, Merck received the $2.0 billion dividend from Medco Health and Merck paid $564.7 million in settlement of the net intercompany payable to Medco Health. In addition, at the date of the spin-off, $247.4 million of cash and cash equivalents were included in the net assets of Medco Health which were spun off.

Following the August 19 distribution, the Company’s prior period Consolidated Statements of Income and Cash Flows have been restated to present the results of Medco Health separately as discontinued operations. The December 31, 2002 Consolidated Balance Sheet has not been restated.

Summarized financial information for discontinued operations is as follows (dollars in millions):

	Three Months Ended					Nine Months Ended
	2003*			2002		2003*		2002
Total net revenues	$	4,755.9		$	7,466.8	$	20,328.7	$	22,483.8
Income (loss) before taxes		(5.2	)		181.0		369.6		438.7
Taxes on income		1.5			64.3		128.3		159.9

*includes operations up through August 19, 2003 (date of spin-off)

The following is a summary of the assets and liabilities of discontinued operations which were spun off (dollars in millions):

		August 19
		2003
Cash & cash equivalents		$	247.4
Other current assets			2,727.6
Net fixed assets			819.9
Goodwill			3,310.2
Other intangibles, net			2,351.9
Other assets			138.4
	Total Assets	$	9,595.4
Current liabilities		$	2,193.9
Long-term debt			1,362.3
Deferred income taxes			1,195.0
	Total Liabilities	$	4,751.2
	Net Assets Transferred	$	4,844.2

4.

In January 2003, the Company, through its wholly owned subsidiary, MSD (Japan) Co., Ltd., launched a tender offer to acquire the remaining 49% of the common shares of Banyu Pharmaceutical Co., Ltd. (“Banyu”) that it did not already own. In March 2003, the Company received tenders for 116.5 million shares, bringing its ownership to 95% of outstanding Banyu common stock, for an aggregate purchase price approximating $1.4 billion. The acquisition allows the Company to further enhance its position in the Japanese market, which is the world’s second largest pharmaceutical market.

The Company’s acquisition of the Banyu shares was accounted for under the purchase method and, accordingly, 95% of Banyu’s results of operations have been included in the Company’s consolidated results of operations since March 12, 2003. Pro forma information is not provided as the impact of the transaction does not have a material effect on the Company’s results of operations. The purchase price was allocated based upon the fair values of the portion of assets and liabilities acquired. The allocation of the purchase price resulted in the reversal of $908.5 million of minority interest liability and recognition of $303.3 million in other intangibles, $213.3 million in goodwill, $139.7 million in deferred income tax liabilities and $30.7 million in other net assets, principally property, plant and equipment. Other intangibles included $275.4 million of in-line product rights having a 10-year weighted average useful life and $27.9 million representing a 20-year life tradename. In connection with the transaction, the Company also recorded a $90.4 million charge for acquired research associated with products in development for which, at the acquisition date, technological feasibility had not been established and no alternative future use existed. Approximately $57.9 million of the total acquired research charge related to Merck products that Banyu is developing for sale in the Japanese market, the most significant of which is ‘Vioxx’. For any of these products, Merck can choose not to exclusively license the rights to Banyu and, in that event, generally would reimburse Banyu for its associated research and development expenditures. Accordingly, these

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Notes to Consolidated Financial Statements (continued)

	products were valued using a cost approach, adjusted to reflect the probability of regulatory approval. The remaining portion of the acquired research charge represents Banyu-developed product candidates. The fair value of each product was determined based upon the present value of projected future cash flows utilizing an income approach reflecting the appropriate risk-adjusted discount rate based on the applicable product’s stage of completion and its probability of technical and marketing success.
	In October 2003, the Company completed its tender offer for all remaining shares in Banyu, which brings Merck’s ownership to 99% of outstanding Banyu common stock. This offer was made for an aggregate purchase price approximating $143.0 million. The Company is currently considering the further steps necessary to achieve full ownership in the near future.
5.	Inventories consisted of:

		($ in millions)
		September 30		December 31
		2003		2002
Finished goods		$	526.4	$	1,262.3
Raw materials and work in process			1,813.4		1,626.3
Supplies			101.6		75.7
	Total (approximates current cost)		2,441.4		2,964.3
Reduction to LIFO cost			—		—
		$	2,441.4	$	2,964.3

The reduction in finished goods is primarily attributable to the absence of the inventory held by Medco Health, which was spun off in August 2003.

6.

Aggregate amortization expense from continuing operations for the three months ended September 30, 2003 and 2002 totaled $47.1 million and $40.8 million, respectively. Aggregate amortization expense from continuing operations for the nine months ended September 30, 2003 and 2002 totaled $137.1 million and $122.7 million, respectively. Amortization expense is recorded in Materials and production expense and Other (income) expense, net. The estimated aggregate amortization expense for each of the next five years is as follows: 2003, $183.5 million; 2004, $184.3 million; 2005, $155.1 million; 2006, $134.4 million; and 2007, $131.4 million. Other intangibles consisted of:

	($ in millions)
	September 30		December 31
	2003		2002
Customer relationships – Medco Health	$	—	$	3,172.2
Patents and product rights		1,630.7		1,355.2
Other		153.7		121.5
Total acquired cost	$	1,784.4	$	4,648.9
Customer relationships – Medco Health	$	—	$	757.3
Patents and product rights		821.0		694.4
Other		93.7		83.2
Total accumulated amortization	$	914.7	$	1,534.9

7.

In August 2003, the Company entered into a ten-year $500.0 million notional amount pay-floating, receive-fixed interest rate swap contract designated as a hedge of the fair value changes in $500.0 million of ten-year fixed rate notes attributable to changes in the benchmark London Interbank Offered Rate (LIBOR) swap rate. The swap effectively converts fixed rate obligations to floating rate instruments. The fair value changes in the notes are fully offset in Interest expense by the fair value changes in the swap contract.

8.

The Company is involved in various claims and legal proceedings of a nature considered normal to its business, including product liability, intellectual property and commercial litigation, as well as additional matters such as antitrust actions.

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Notes to Consolidated Financial Statements (continued)

As previously reported, the Company is party to a number of antitrust suits, certain of which have been certified as class actions, instituted by most of the nation’s retail pharmacies and consumers in several states, alleging conspiracies in restraint of trade and challenging the pricing and/or purchasing practices of the Company. A significant number of other pharmaceutical companies and wholesalers have also been sued in the same or similar litigation. In 1996, the Company and several other defendants finalized an agreement to settle the federal class action alleging conspiracy, which represents the single largest group of retail pharmacy claims. Since that time, the Company has entered into other settlements on satisfactory terms. The Company has not engaged in any conspiracy and no admission of wrongdoing was made nor was included in any settlement agreements. While it is not feasible to predict the final outcome of the remaining proceedings, in the opinion of the Company, such proceedings should not ultimately result in any liability which would have a material adverse effect on the Company’s financial position, results of operations or liquidity.

As previously reported, a number of lawsuits, involving individual claims as well as putative class actions, have been filed against the Company with respect to ‘Vioxx’. Certain of the lawsuits include allegations regarding gastrointestinal bleeding, cardiovascular events, and kidney damage. The lawsuits have been filed in federal courts as well as in a number of state courts. While cases in other jurisdictions are proceeding separately, the actions filed in the state courts of California and New Jersey have been transferred to a single judge in each state for coordinated proceedings. The Company anticipates that one or more of the lawsuits in various jurisdictions may go to trial in the first half of 2004. Litigation is inherently subject to uncertainties and no assurance can be given on the outcome of any given trial. However, the Company believes that these lawsuits are without merit, and will vigorously defend against them.

As previously disclosed, the Company is a party in claims brought under the Consumer Protection Act of 1987 in the United Kingdom which allege that certain children suffer from a variety of conditions as a result of being vaccinated with various bivalent vaccines for measles and rubella and/or trivalent vaccines for measles, mumps and rubella, including the Company’s M-M-R II. In connection with those claims, eight lead cases had been selected for a trial scheduled to commence in April 2004: two against the Company, and six against other pharmaceutical companies. The trial of the eight cases was initially to be limited to issues of causation and defect on the conditions of autistic spectrum disorders, with or without inflammatory bowel disease. In early September 2003, the Legal Services Commission announced its decision to withdraw public funding of the litigation brought by the claimants. This decision was confirmed on appeal by the Funding Review Committee on September 30, 2003. The April 2004 trial date has been vacated and the claims stayed pending the outcome of any application for judicial review of the funding withdrawal decision. The Company believes that the lawsuits are without merit and will vigorously defend against them.

As previously reported, the Company is a party to a number of proceedings brought under the Comprehensive Environmental Response, Compensation and Liability Act, commonly known as Superfund. The Company is also remediating environmental contamination resulting from past industrial activity at certain of its sites and takes an active role in identifying and providing for these costs. In management’s opinion, the liabilities for all environmental matters which are probable and reasonably estimable have been accrued and totaled $166.2 million at September 30, 2003. These liabilities are undiscounted, do not consider potential recoveries from insurers or other parties and will be paid out over the periods of remediation for the applicable sites, which are expected to occur primarily over the next 15 years. Although it is not possible to predict with certainty the outcome of these matters, or the ultimate costs of remediation, management does not believe that any reasonably possible expenditures that may be incurred in excess of the liabilities accrued should exceed $100.0 million in the aggregate. Management also does not believe that these expenditures should result in a material adverse effect on the Company’s financial position, results of operations, liquidity or capital resources for any year.

As previously disclosed, on July 31, 2003, a shareholder derivative complaint in federal court in the District of New Jersey, which was originally filed in May 2003, was amended to add Arthur Andersen LLP as a defendant and to add certain new allegations. The lawsuit is based on previously-disclosed allegations relating to the Company’s revenue recognition practices for retail co-payments and further alleges that certain individual defendants breached their fiduciary duty by failing to prevent the conduct at issue in the previously-disclosed Gruer cases, the antitrust claims pending in the Northern District of Illinois, and the qui tam actions in which the U.S. Attorney’s office for the Eastern District of Pennsylvania has intervened against Medco Health. The complaint seeks monetary damages from those Merck directors who are defendants in the lawsuit in an unspecified amount as well as injunctive and other relief.

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Notes to Consolidated Financial Statements (continued)

9. Net sales consisted of:

	($ in millions)
	Three Months				Nine Months
	Ended September 30				Ended September 30
	2003		2002		2003		2002
Atherosclerosis	$	1,421.1	$	1,472.3	$	3,852.0	$	3,814.4
Hypertension/heart failure		848.2		819.7		2,488.9		2,565.7
Osteoporosis		686.7		451.7		2,026.3		1,552.4
Respiratory		615.6		342.3		1,502.2		982.5
Anti-inflammatory/analgesics		543.1		770.5		1,906.7		2,186.9
Vaccines/biologicals		311.3		287.5		789.2		764.7
Anti-bacterial/anti-fungal		280.9		211.9		754.3		571.2
Ophthalmologicals		166.2		154.3		485.7		452.6
Urology		126.3		154.0		437.7		383.5
Human immunodeficiency virus (HIV)		64.3		65.3		228.7		216.5
Other		698.3		696.6		2,387.1		1,897.7
	$	5,762.0	$	5,426.1	$	16,858.8	$	15,388.1

	Sales by individual therapeutic class are presented net of rebates and discounts. Other primarily includes sales of other human pharmaceuticals, also net of rebates and discounts, and pharmaceutical and animal health supply sales to the Company’s joint ventures and AstraZeneca LP.
10.	Other (income) expense, net, consisted of:

	($ in millions)
	Three Months						Nine Months
	Ended September 30						Ended September 30
	2003			2002			2003			2002
Interest income	$	(66.9	)	$	(106.5	)	$	(236.5	)	$	(307.8	)
Interest expense		81.1			99.9			270.9			292.5
Exchange (gains)/losses		(1.7	)		8.3			(25.1	)		10.9
Minority interests		39.1			59.1			131.5			169.7
Amortization of other intangibles		36.1			29.9			104.3			89.8
Other, net		(38.9	)		(43.9	)		(270.2	)		(123.1	)
	$	48.8		$	46.8		$	(25.1	)	$	132.0

	Minority interests include third parties’ share of exchange gains and losses arising from translation of the financial statements into U.S. dollars.
	The change in Other, net for the nine months ended September 30, 2003 reflects second quarter realized gains on the Company’s investment portfolios reflecting the favorable interest rate environment.
	Interest paid from continuing operations for the nine-month periods ended September 30, 2003 and 2002 was $302.2 million and $332.0 million, respectively.
11.	The weighted average common shares used in the computations of basic earnings per common share and earnings per common share assuming dilution (shares in millions) are as follows:

	Three Months				Nine Months
	Ended September 30				Ended September 30
	2003		2002		2003		2002
Average common shares outstanding		2,237.0		2,249.9		2,240.7		2,261.1
Common shares issuable(1)		16.9		16.0		18.2		19.9
Average common shares outstanding assuming dilution		2,253.9		2,265.9		2,258.9		2,281.0

⁽¹⁾ Issuable primarily under stock option plans.

12. Comprehensive income for the three months ended September 30, 2003 and 2002, representing all changes in stockholders’ equity during the period other than changes resulting from the Company’s stock, was $1,884.3 million and $2,022.4 million, respectively. Comprehensive income for the nine months ended September 30, 2003 and 2002 was $5,389.1 million and $5,434.7 million, respectively.

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Notes to Consolidated Financial Statements (continued)

13.	The Company’s operations are principally managed on a product basis. The Merck Pharmaceutical segment includes products marketed either directly or through joint ventures. These products consist of therapeutic and preventative agents, sold by prescription, for the treatment of human disorders. All Other includes non-reportable human and animal health segments.
	As a result of the 100% spin-off of Medco Health, Merck’s financial results from continuing operations exclude the results of Medco Health, which are reported separately as income (loss) from discontinued operations net of taxes. Accordingly, the segment information included in this note reflects Merck’s financial results from continuing operations. In addition, product sales now reflect sales to Medco Health as third-party sales based upon the net selling price from Merck to Medco Health. Prior year amounts have been restated to conform to the current year presentation.
	Revenues and profits for these segments are as follows:

		($ in millions)
		Three Months				Nine Months
		Ended September 30				Ended September 30
		2003		2002		2003		2002
Segment revenues:
	Merck Pharmaceutical	$	5,348.1	$	5,027.4	$	15,780.1	$	14,278.2
	All Other		369.2		344.0		943.7		933.5
		$	5,717.3	$	5,371.4	$	16,723.8	$	15,211.7
Segment profits:
	Merck Pharmaceutical	$	3,448.4	$	3,221.3	$	10,001.4	$	9,144.1
	All Other		379.9		337.5		910.4		866.4
		$	3,828.3	$	3,558.8	$	10,911.8	$	10,010.5

Segment profits are comprised of segment revenues less certain elements of materials and production costs and operating expenses, including components of equity income (loss) from affiliates and depreciation and amortization expenses. For internal management reporting presented to the chief operating decision maker, the Company does not allocate the vast majority of indirect production costs, research and development expenses and general and administrative expenses, all predominantly related to the Merck pharmaceutical segment, as well as the cost of financing these activities. Separate divisions maintain responsibility for monitoring and managing these costs, including depreciation related to fixed assets utilized by these divisions and, therefore, they are not included in segment profits.

A reconciliation of segment profits to total income from continuing operations before taxes is as follows:

		($ in millions)
		Three Months						Nine Months
		Ended September 30						Ended September 30
		2003			2002			2003			2002
Segment profits		$	3,828.3		$	3,558.8		$	10,911.8		$	10,010.5
Other profits			66.9			64.5			90.3			158.1
Adjustments			162.0			161.5			464.8			441.8
Unallocated:
	Interest income		66.9			106.5			236.5			307.8
	Interest expense		(81.1	)		(99.9	)		(270.9	)		(292.5	)
	Equity income (loss) from affiliates		11.2			46.3			40.2			189.4
	Depreciation and amortization		(277.8	)		(290.4	)		(854.8	)		(859.2	)
	Acquired research		—			—			(90.4	)		—
	Research and development		(776.5	)		(676.9	)		(2,283.2	)		(1,838.4	)
	Other expenses, net		(395.1	)		(360.1	)		(953.6	)		(1,042.4	)
		$	2,604.8		$	2,510.3		$	7,290.7		$	7,075.1

Other profits are primarily comprised of miscellaneous corporate profits as well as operating profits related to divested products or businesses and other supply sales. Adjustments represent the elimination of the effect of double counting certain items of income and expense. Equity income (loss) from affiliates includes taxes paid at the joint venture level and a portion of equity income that is not reported in segment profits. Other expenses, net, include expenses from corporate and manufacturing cost centers and other miscellaneous income (expense), net.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Operating Results

Earnings per share from continuing operations for the third quarter of 2003 were $0.83, a 6% increase over the same period in 2002. Continuing operations exclude the results from Medco Health Solutions, Inc. (“Medco Health”), which was spun off on August 19 as discussed below. Net income from continuing operations was $1,865.0 million, compared to $1,767.3 million in the third quarter of last year. Worldwide sales from continuing operations grew 6% for the quarter to $5.8 billion.

For the first nine months of 2003, earnings per share from continuing operations were $2.30, compared to $2.18 in the first nine months of 2002. Net income from continuing operations was $5,194.4 million, compared to $4,980.9 million for the first nine months of 2002. Sales from continuing operations grew 10% for the period to $16.9 billion.

Earnings per share including discontinued operations were $0.82 for the third quarter and $2.41 for the first nine months of 2003.

Sales of ‘Zocor’, ‘Fosamax’, ‘Cozaar’ and ‘Hyzaar’*, ‘Singulair’ and ‘Vioxx’ collectively increased 9% for the third quarter of 2003, compared to the third quarter of 2002, and drove Merck’s sales performance, with 67% of total sales. Total sales from continuing operations increased 6% and 10% for the third quarter and first nine months, respectively. Sales performance includes a two-point and a four-point favorable effect from foreign exchange for the third quarter and first nine months, respectively. Sales outside the United States accounted for 39% and 40% of the Company’s third quarter and first nine months of 2003 sales, respectively, compared to 39% and 38% of sales during the same periods in 2002.

The Company’s gross margin from continuing operations was 81.7% in the 2003 third quarter compared to 82.1% in the 2002 third quarter and 81.7% compared to 81.9% for the respective nine-month periods. For 2003, Merck continues to expect that manufacturing productivity will offset inflation on product cost.

Marketing and Administrative expenses increased 4% and 12% compared to the third quarter and first nine months of 2002, respectively. Marketing and administrative expense for 2003 is estimated to grow at a high single-digit percentage rate over the full-year 2002 expense.

Research and development expenses increased 15% and 24% during the third quarter and first nine months, respectively, reflecting the Company’s ongoing commitment to both basic and clinical research, as well as new research collaborations begun since mid-2002. Research and development expense is anticipated to increase at a mid- to high-teens percentage growth rate over the full-year 2002 level.

Results for the third quarter and nine months of 2003 reflect a 28.4% and 28.8% effective tax rate, respectively, the latter of which includes the impact of the nondeductibility of the charge for acquired research in connection with the Banyu acquisition in the first quarter. The 2003 tax rate is estimated to be 28.5% to 29.5%.

In anticipation of possible price increases, certain U.S. wholesalers place some noncancellable orders at prices that remain in effect until Merck ships the product. In the aggregate, these types of wholesaler purchases resulted in a favorable impact on pharmaceutical sales of an estimated $60 million for the third quarter. Merck expects these types of purchases to moderate significantly in the future with the implementation of the Company’s new distribution program for U.S. wholesalers. This program is discussed in further detail below. Estimated wholesaler inventory levels are within a range customary for Merck products, in the aggregate.

‘Zocor’, Merck’s statin for modifying cholesterol, achieved worldwide sales of $1.4 billion in the third quarter and $3.8 billion for the first nine months, a decrease of 2% and an increase of 2% from the comparable prior-year periods. Sales were affected by patent expirations in several markets outside the United States in 2003. U.S. mail-order-adjusted prescription levels for ‘Zocor’ increased by approximately 3% for the quarter. In the aggregate, estimated wholesaler buy-in for ‘Zocor’ for the quarter had a favorable impact of $110 million. Worldwide sales of ‘Zocor’ in 2003 were expected to have approximated $5.4 to $5.7 billion prior to the implementation of the new wholesaler distribution program. The wholesaler distribution program is expected to reduce ‘Zocor’ sales by approximately $500 million for the fourth quarter and the year.

*‘Cozaar’ and ‘Hyzaar’ are registered trademarks of E.I. du Pont de Nemours and Company, Wilmington, DE, USA.

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Merck continues to communicate the results of the landmark Heart Protection Study (HPS) to physicians and consumers. HPS demonstrated that, along with diet, ‘Zocor’ 40 mg is the first and only cholesterol-lowering medication proven to reduce the risk of heart attacks and stroke in people with heart disease or diabetes, regardless of cholesterol level.

Global sales of ‘Fosamax’, the most-prescribed medicine worldwide for the treatment of postmenopausal, male and glucocorticoid-induced osteoporosis, were strong in the third quarter and first nine months, reaching $687 million and $2.0 billion, respectively, growing 52% and 31% from the comparable prior-year periods. U.S. mail-order-adjusted prescription levels for ‘Fosamax’ increased by approximately 7% for the quarter. In the aggregate, estimated wholesaler buy-in for ‘Fosamax’ for the quarter had a favorable impact of $10 million. This is expected to have an unfavorable impact on wholesaler purchases for ‘Fosamax’ in the fourth quarter of 2003. Worldwide sales of ‘Fosamax’ in 2003 are expected to approximate $2.6 to $2.8 billion.

In a recently published study versus Actonel (administered in an approved once-daily dosing regimen in Europe, where the study was conducted), ‘Fosamax’ 70 mg Once Weekly provided significantly greater increases in bone mineral density at the spine and hip and similar tolerability.

Sales of Merck’s antihypertensive medicines, ‘Cozaar’ and ‘Hyzaar’, were strong during the third quarter and first nine months, with global sales reaching $622 million and $1.8 billion, respectively, with growth over the same periods in 2002 of 13% and 20%. U.S. mail-order-adjusted prescription levels for ‘Cozaar’ and ‘Hyzaar’ increased by approximately 7% for the quarter. In the aggregate, estimated wholesaler buy-out for ‘Cozaar’ and ‘Hyzaar’ had an unfavorable impact for the quarter of $15 million. Worldwide sales of ‘Cozaar’ and ‘Hyzaar’ in 2003 are expected to approximate $2.5 to $2.7 billion.

Contributing to the sales performance of ‘Cozaar’ is the recognition by physicians and regulatory agencies of the stroke risk reduction benefits of ‘Cozaar’ in patients with hypertension, nephropathy and type 2 diabetes, as demonstrated in the landmark Losartan Intervention for Endpoint Reduction in Hypertension (LIFE) and Reduction of Endpoints in Non-Insulin Dependent Diabetes Mellitus with the Angiotensin II Antagonist Losartan (RENAAL) studies, respectively. Twenty-seven countries have granted new regulatory licenses to ‘Cozaar’ based on the LIFE study, and 41 countries have done so based on RENAAL.

Worldwide sales of ‘Singulair’, a once-a-day oral medication indicated for the treatment of chronic asthma and the relief of symptoms of seasonal allergic rhinitis, were strong, reaching $616 million in the third quarter and $1.5 billion for the first nine months, representing growth of 80% and 53% over the respective 2002 periods. Year-to-date sales have been driven by strong performance in both the asthma and allergic rhinitis markets. U.S. mail-order-adjusted prescription levels for ‘Singulair’ increased by 37% during the quarter. In the aggregate, estimated wholesaler buy-in for ‘Singulair’ for the quarter had a favorable impact of $120 million. This is expected to have an unfavorable impact on wholesaler purchases for ‘Singulair’ in the fourth quarter of 2003. Worldwide sales of ‘Singulair’ in 2003 are expected to approximate $2.0 to $2.2 billion.

On September 15, Merck announced that it had made ‘Singulair’ available in the United States for the prevention and treatment of chronic asthma in children aged 12 months to 5 years with a new, convenient once-a-day oral granules formulation. The new formulation represents the first non-steroidal once-daily oral asthma controller medication approved for children as young as 12 months. The oral granules formulation of ‘Singulair’ can also be used for relief of symptoms of seasonal allergies in children aged 2 to 5. Asthma is the most common chronic childhood illness, affecting more than six million children in the United States alone, with an increasing prevalence in children under 5.

In September, Merck presented the results of a new study, PREvention of Virally Induced Asthma (PREVIA), at the 13th Annual Congress of the European Respiratory Society. PREVIA showed that young children whose asthma was triggered by colds experienced significantly fewer asthma attacks when treated with ‘Singulair’, compared to placebo. Viruses that cause the common cold and respiratory infections account for up to 85% of childhood asthma attacks.

Global sales of Merck’s first once-a-day coxib, ‘Vioxx’, were $510 million during the third quarter and $1.8 billion for the first nine months, decreases of 32% and 14% from the comparable prior-year periods. In the United States, ‘Vioxx’ remains the most-widely prescribed and frequently preferred coxib on managed care formularies. More than 85 million prescriptions have been written in the United States since ‘Vioxx’ was first introduced in 1999. U.S. mail-order-adjusted prescription levels for ‘Vioxx’ decreased by approximately 3% for the quarter. In the aggregate, estimated wholesaler buy-out for ‘Vioxx’ had an unfavorable impact of $145 million for the quarter. In 2003, worldwide sales of coxibs, ‘Vioxx’ and ‘Arcoxia’, which is discussed below, are expected to approximate $2.5 to $2.7 billion.

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‘Arcoxia’, Merck’s newest coxib, continues to be launched in countries outside the United States. Thus far, ‘Arcoxia’ has been launched in 37 countries in Europe, Latin America and the Asia-Pacific region, most recently in Malaysia. Merck plans to resubmit an expanded New Drug Application (NDA) for ‘Arcoxia’ to the Food and Drug Administration (FDA) by the end of 2003.

Results from an investigational study of ‘Arcoxia’ in patients with chronic low-back pain were published in the August issue of The Journal of Pain. The study showed that ‘Arcoxia’ 60 mg and 90 mg once daily provided significant improvement in the relief of symptoms and disability associated with chronic low-back pain compared to placebo. Improvement was observed one week after initiating therapy. Maximum relief was observed at four weeks, and relief was maintained throughout the three-month study.

Third quarter sales also included supply sales to AstraZeneca LP (AZLP), most notably for ‘Nexium’ and ‘Prilosec’. In 2003, Merck anticipates a growth rate in excess of 20% in total supply sales to AZLP.

Sales of other Merck-promoted medicines and vaccines during the third quarter were $1.3 billion and $3.7 billion for the first nine months. These products treat or prevent a broad range of conditions.

Global sales of ‘Zetia’, the cholesterol absorption inhibitor developed and marketed by Merck/Schering-Plough Pharmaceuticals, reached $136 million in the third quarter and $305 million for the first nine months. More than 3.5 million prescriptions have been written in the United States since ‘Zetia’s’ U.S. launch in mid-November 2002, according to IMS Health. ‘Zetia’ currently accounts for approximately 5% of new prescriptions in the cholesterol-modifying market. ‘Zetia’ is reimbursed for nearly 90% of all patients in managed care plans in the United States.

Following the successful completion of the European Union Mutual Recognition Procedure, ‘Ezetrol’ (the brand name for ‘Zetia’ outside of the United States) has now been launched in four European countries — Germany, the United Kingdom, Switzerland and Sweden.

Merck/Schering-Plough Pharmaceuticals intends to file an NDA with the FDA for a combination product containing the active ingredients of both ‘Zetia’ (ezetimibe) and ‘Zocor’ (simvastatin) in late 2003. If approved, the product would be the first single medication to target the body’s two sources of cholesterol through dual inhibition - inhibiting both cholesterol production and absorption.

On November 12, 2003, the Company announced that it was discontinuing its Phase III clinical development program for its substance P antagonist investigational product, MK-0869, for the treatment of depression. The Phase III clinical program was halted because the compound failed to demonstrate efficacy for the treatment of depression.

Effective December 1, the company will implement a new distribution program for U.S. wholesalers which is intended to moderate the fluctuations in sales currently caused by wholesaler investment buying and improve efficiencies in the distribution of Merck pharmaceutical products. The new program will lower existing limits on average monthly purchases of Merck pharmaceutical products by U.S. customers. Implementation of the new program, which is expected to moderate investment purchasing in the fourth quarter, is expected to negatively impact revenues by approximately $650 to $750 million, including the ‘Zocor’ impact described above, and reduce earnings per share from continuing operations by approximately $0.18 to $0.21 for the fourth quarter and the year.

Merck is taking additional actions to fundamentally lower its cost structure that are expected to generate approximately $250 to $300 million of annual savings of payroll and benefits costs, and result in a reduction of approximately 3,200 positions and 1,200 contract or temporary employees. Restructuring costs related to these actions are estimated to be approximately $140 to $200 million in the fourth quarter and are expected to reduce earnings per share from continuing operations by $0.04 to $0.06. The balance of the restructuring costs, approximately $75 to $125 million, will occur in 2004. Savings and restructuring costs may increase as the Company continues to identify opportunities to improve its business processes and reduce its cost structure.

Other major initiatives designed to reduce the Company’s cost structure include enhanced leverage of the Company’s buying power for goods, services and technology through global procurement activities, improved efficiency of capital expenditures, and consolidation of transaction processing and services.

Merck anticipates reported earnings per share from continuing operations for 2003 of $2.90 to $2.95 as a result of workforce reductions, implementation of the new distribution program for U.S. wholesalers, and product sales trends for its major in-line products. In the aggregate, the major in-line products have not met the Company’s challenging revenue targets that it believed were achievable. Overall, they are growing and competing well in their respective categories.

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On August 19, Merck completed the 100% spin-off of Medco Health, Merck’s wholly owned subsidiary, through a pro rata distribution of 100% of Medco Health common stock to Merck stockholders. Merck’s financial results from continuing operations exclude all sales made by Medco Health and expenses incurred by Medco Health in the ongoing operation of its business. Medco Health results prior to the spin-off, together with any one-time costs incurred by Merck to effect the transaction, are reported separately as income (loss) from discontinued operations net of taxes.

As a result of the 100% spin-off of Medco Health, product sales now reflect sales to Medco Health as third-party sales based upon the net selling price from Merck to Medco Health.

In October 2003, the Company completed its tender offer for all remaining shares in Banyu, which brings Merck’s ownership to 99% of outstanding Banyu common stock. This offer was made for an aggregate purchase price approximating $143.0 million. The Company is currently considering the further steps necessary to achieve full ownership in the near future.

Liquidity and Capital Resources

($ in millions)	September 30, 2003			December 31, 2002
Cash, cash equivalents and short-term investments	$	6,292.7		$	4,971.2
Working capital	$	2,305.6		$	2,011.2
Total debt to total liabilities and equity		22.7	%		18.0	%

Cash provided by continuing operations continues to be the Company’s primary source of funds to finance operating needs and capital expenditures. Net cash provided by operating activities of continuing operations totaled $5.6 billion and $6.2 billion for the nine months ended September 30, 2003 and 2002, respectively.

Capital expenditures of continuing operations for the nine months totaled $1.4 billion and $1.5 billion in 2003 and 2002, respectively. Capital expenditures of continuing operations for the full year 2003 are expected to approximate $1.9 billion.

In March 2003, the Company funded the acquisition of 116.5 million common shares of Banyu at an aggregate purchase price of approximately $1.4 billion with cash on hand.

During the first nine months of 2003, total debt increased by approximately $1.1 billion. The proceeds from these borrowings were used to fund capital expenditures, treasury stock repurchases and other corporate initiatives.

Treasury stock purchases totaled $1.4 billion during the first nine months of 2003 compared with $1.8 billion for the same period in 2002. The Company has $10.2 billion remaining under current buyback authorizations approved by the Board of Directors.

Dividends paid to stockholders totaled $2.4 billion for the first nine months of 2003 and 2002. In July 2003, the Board of Directors declared a quarterly dividend of 37 cents per share on the Company’s common stock for the fourth quarter of 2003. The Company’s total dividends paid during 2003 will be $1.45 per share, a three percent increase over the amount paid during the same period in 2002.

In August 2003, the Company received a $2.0 billion cash dividend from Medco Health prior to the spin-off and paid $564.7 million in settlement of the net intercompany payable to Medco Health. In addition, at the date of the spin-off, $247.4 million of cash and cash equivalents were included in the net assets of Medco Health which were spun off.

Legal Proceedings

As previously disclosed, a number of lawsuits, involving individual claims as well as putative class actions, have been filed against the Company with respect to ‘Vioxx’. Certain of the lawsuits include allegations regarding gastrointestinal bleeding, cardiovascular events, and kidney damage. The lawsuits have been filed in federal courts as well as in a number of state courts. While cases in other jurisdictions are proceeding separately, the actions filed in the state courts of California and New Jersey have been transferred to a single judge in each state for coordinated proceedings. The Company anticipates that one or more of the lawsuits in various jurisdictions may go to trial in the first half of 2004. Litigation is inherently subject to uncertainties and no assurance can be given on the outcome of any given trial. However, the Company believes that these lawsuits are without merit, and will vigorously defend against them.

The Company announced on August 28, 2003 that the U.S. District Court in Wilmington, Delaware, upheld Merck’s U.S. patent covering the weekly administration of alendronate. As a result of the court’s decision, the patent is valid and infringed by Teva Pharmaceuticals USA, Inc.’s Abbreviated New Drug Application (ANDA) filing. Merck filed a patent

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infringement lawsuit against Teva in January 2001. The ‘Fosamax’ Once-Weekly patent expires in July 2018. The court’s decision is subject to appeal.

As previously disclosed, on October 30, 2003 the United States Court of Appeals for the Federal Circuit upheld a lower court’s ruling that Merck’s U.S. patent covering the use of alendronate is not invalid and is infringed by the submission of ANDAs by Teva Pharmaceutical USA and Zenith Goldline Laboratories. As a result of this decision, this patent is set to expire in August 2007. An additional six-month period of market exclusivity will prevent approval of a generic alendronate in the U.S. until February 2008.

On November 6, 2003 the Court of Appeals of England and Wales affirmed the previously disclosed ruling by the High Court of Justice for England and Wales which held invalid Merck’s U.K. patents covering alendronate compositions and the once-weekly administration of alendronate.

From time to time, generic manufacturers of pharmaceutical products file ANDAs with the FDA seeking to market generic forms of Company products prior to the expiration of relevant patents owned by the Company. As previously disclosed, in the case of ‘Vioxx’, an ANDA has been filed including allegations of non-infringement, invalidity and unenforceability of the Company’s rofecoxib patents. The Company filed a patent infringement lawsuit in the District Court of Delaware in August 2003.

As previously disclosed, the Company is a party in claims brought under the Consumer Protection Act of 1987 in the United Kingdom which allege that certain children suffer from a variety of conditions as a result of being vaccinated with various bivalent vaccines for measles and rubella and/or trivalent vaccines for measles, mumps and rubella, including the Company’s M-M-R II. In connection with those claims, eight lead cases had been selected for a trial scheduled to commence in April 2004: two against the Company, and six against other pharmaceutical companies. The trial of the eight cases was initially to be limited to issues of causation and defect on the conditions of autistic spectrum disorders, with or without inflammatory bowel disease. In early September 2003, the Legal Services Commission announced its decision to withdraw public funding of the litigation brought by the claimants. This decision was confirmed on appeal by the Funding Review Committee on September 30, 2003. The April 2004 trial date has been vacated and the claims stayed pending the outcome of any application for judicial review of the funding withdrawal decision. The Company believes that the lawsuits are without merit and will vigorously defend against them.

Item 4. Controls and Procedure

Management of the Company, with the participation of its Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the Company’s disclosure controls and procedures. Based on their evaluation, as of the end of the period covered by this Form 10-Q, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) are effective. There have been no significant changes in internal control over financial reporting, for the period covered by this report, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

CAUTIONARY FACTORS THAT MAY AFFECT FUTURE RESULTS

This report and other written reports and oral statements made from time to time by the Company may contain so-called “forward-looking statements,” all of which are subject to risks and uncertainties. One can identify these forward-looking statements by their use of words such as “expects,” “plans,” “will,” “estimates,” “forecasts,” “projects” and other words of similar meaning. One can identify them by the fact that they do not relate strictly to historical or current facts. These statements are likely to address the Company’s growth strategy, financial results, product approvals and development programs. One must carefully consider any such statement and should understand that many factors could cause actual results to differ from the Company’s forward-looking statements. These factors include inaccurate assumptions and a broad variety of other risks and uncertainties, including some that are known and some that are not. No forward-looking statement can be guaranteed and actual future results may vary materially.

The Company does not assume the obligation to update any forward-looking statement. One should carefully evaluate such statements in light of factors described in the Company’s filings with the Securities and Exchange Commission, especially on Forms 10-K, 10-Q and 8-K (if any). In Item 1 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2002, as filed on March 21, 2003, the Company discusses in more detail various important factors that could cause actual results to differ from expected or historic results. The Company notes these factors for investors as permitted by the Private Securities Litigation Reform Act of 1995. One should understand that it is not possible to predict or identify all such factors. Consequently, the reader should not consider any such list to be a complete statement of all potential risks or uncertainties.

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Part II - Other Information

Item 1. Legal Proceedings

Information with respect to certain legal proceedings is incorporated by reference from Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in Part 1 of this report.

Item 6. Exhibits and Reports on Form 8-K

(a)  Exhibits

Number	Description
3.1	Restated Certificate of Incorporation of Merck & Co., Inc. (September 1, 2000) – Incorporated by reference to Form 10-Q Quarterly Report for the period ended September 30, 2000
3.2	By-Laws of Merck & Co., Inc. (as amended effective February 25, 1997) – Incorporated by reference to Form 10-Q Quarterly Report for the period ended March 31, 1997
10.1	Merck & Co., Inc. Deferral Program (amended and restated July 22, 2003)
10.2	2001 Incentive Stock Plan (as amended and restated July 22, 2003)
10.3	Plan for Deferred Payment of Directors’ Compensation (amended and restated July 24, 2003)
12	Computation of Ratios of Earnings to Fixed Charges
31.1	Rule 13a – 14(a)/15d – 14(a) Certification of Chief Executive Officer
31.2	Rule 13a – 14(a)/15d – 14(a) Certification of Chief Financial Officer
32.1	Section 1350 Certification of Chief Executive Officer
32.2	Section 1350 Certification of Chief Financial Officer

(b)  Reports on Form 8-K

       During the three-month period ending September 30, 2003, the Company:

(1)	furnished one Current Report on Form 8-K pursuant to Item 12 – Results of Operations and Financial Condition, and presented under Item 9 – Regulation FD Disclosure: Report dated and furnished July 21, 2003, regarding earnings for second quarter and certain supplemental information; and
(2)	filed two Current Reports on Form 8-K under:

(i)	Item 11 – Temporary Suspension of Trading Under Registrant’s Employee Benefit Plans: Report dated and filed August 6, 2003, regarding black-out period notices; and
(ii)	Item 2 – Acquisition or Disposition of Assets: Report dated August 19, 2003 and filed September 3, 2003, regarding pro forma financial statements from the spin-off of the Registrant’s subsidiary, Medco Health Solutions, Inc.

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Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	MERCK & CO., INC.
Date: November 13, 2003	/s/ Kenneth C. Frazier
	KENNETH C. FRAZIER
	Senior Vice President and General Counsel
Date: November 13, 2003	/s/ Richard C. Henriques
	RICHARD C. HENRIQUES
	Vice President, Controller

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EXHIBIT INDEX

Number	Description
3.1	Restated Certificate of Incorporation of Merck & Co., Inc. (September 1, 2000) – Incorporated by reference to Form 10-Q Quarterly Report for the period ended September 30, 2000
3.2	By-Laws of Merck & Co., Inc. (as amended effective February 25, 1997) – Incorporated by reference to Form 10-Q Quarterly Report for the period ended March 31, 1997
10.1	Merck & Co., Inc. Deferral Program (amended and restated July 22, 2003)
10.2	2001 Incentive Stock Plan (as amended and restated July 22, 2003)
10.3	Plan for Deferred Payment of Directors’ Compensation (amended and restated July 24, 2003)
12	Computation of Ratios of Earnings to Fixed Charges
31.1	Rule 13a – 14(a)/15d – 14(a) Certification of Chief Executive Officer
31.2	Rule 13a – 14(a)/15d – 14(a) Certification of Chief Financial Officer
32.1	Section 1350 Certification of Chief Executive Officer
32.2	Section 1350 Certification of Chief Financial Officer

EX-10.1 3 y91380exv10w1.txt MERCK & CO. DEFERRAL PROGRAM ================================================================================ Exhibit 10.1 MERCK & CO., INC. DEFERRAL PROGRAM (AMENDED AND RESTATED JULY 22, 2003) ================================================================================ TABLE OF CONTENTS

Page Article I Administration 1 Article II Eligibility 1 Article III Deferral Into a Deferred Compensation Account 1 Article IV Valuation of Deferred Compensation Accounts 2 Article V Redesignation Within a Deferred Compensation Account 4 Article VI Distribution of Deferred Compensation Accounts 6 Article VII Deductions from Distributions 8 Article VIII Beneficiary Designations 8 Article IX Amendments 8 Schedule I Deferral Program Investment Alternatives 9 Schedule II Special Provisions Applicable to Medco Health Employees 13

(i) MERCK & CO., INC. DEFERRAL PROGRAM The Deferral Program ("the Program") is intended to permit a select group of management to defer income which would otherwise be immediately payable to them as annual base salary or under various incentive plans of Merck & Co., Inc. ("the Company"). I. ADMINISTRATION This Program is administered by the Compensation and Benefits Committee of the Company's Board of Directors. This Committee is composed of non-employee directors only. The Committee shall have responsibility for determining which investments will be available under the Program, and those investments shall be listed on Schedule I hereto. The Committee shall review the investment selections at least once every five years. The Committee shall make all decisions affecting the timing, price or amount of any and all of the Deferred Compensation of participants subject to Section 16 of the Securities Exchange Act of 1934, as amended ("Section 16 Officers"), but may otherwise delegate any of its authority under this Program. II. ELIGIBILITY Eligibility to defer under this Program will be determined in accordance with the terms of the Company's Base Salary Deferral Plan and various incentive plans. However, the Committee has the authority to refuse to permit an employee to participate in this Program, if the Committee determines that such participation would jeopardize the Program's compliance with applicable law or the Program's status as a top hat plan under the Employee Retirement Income Security Act. III. DEFERRAL INTO A DEFERRED COMPENSATION ACCOUNT A. ELECTION TO DEFER A participant's decision to defer under the Program must be made, (i) for the Base Salary Deferral Plan, prior to the commencement of the pay period during which the base salary to be deferred will be earned, (ii) for annual incentive plans, prior to the commencement of the performance year during which the bonus monies to be deferred will be earned, and (iii) for long-term incentive plans, prior to the commencement of the last year of the award period during which the bonus monies to be deferred will be earned. For purposes of annual incentive plans only, a participant who is hired by the Company during a performance year may make an election, no later than the thirtieth (30th) day from the participant's date of hire, to defer bonus monies to be earned during such performance year. For the Base Salary Deferral Plan, only amounts equal to or in excess of five percent (5%) of Annual Base Salary (as defined in the Base Salary Deferral Plan) and less than or equal to the lesser of (1) fifty percent (50%) of Annual Base Salary or (2) the Participant's Annual Base Salary in excess of the amount determined under Section 401(a)(17) of the Internal Revenue Code may be deferred. For the annual and long-term incentive plans, only amounts in excess of $3,000 may be deferred. Amounts so deferred are known as "Deferred Compensation" and will be credited to the participant's "Deferred Compensation Account." Deferred Compensation shall be held in one account regardless of the plan (Base Salary Deferral or incentive plan) under which it was deferred. 1 B. ELECTION OF DISTRIBUTION SCHEDULE 1. Timing of Election The participant shall also elect a distribution schedule for his/her Deferred Compensation. A participant's election of a distribution schedule in connection with a deferral election under annual and/or long-term incentive plans shall be made at the same time that the participant makes the election to defer. A participant's initial election of a distribution schedule in connection with deferrals under the Base Salary Deferral Plan shall be made at the same time as the initial deferral election, shall be irrevocable during the calendar year for which it was made and shall apply to all deferrals of Annual Base Salary until a new distribution election becomes effective. Thereafter, an election of a different distribution schedule in connection with deferrals under the Base Salary Deferral Plan may be made at any time, provided, however, that such new distribution schedule shall only apply prospectively to deferrals of Annual Base Salary in the following calendar year. 2. Distribution Schedule A participant may elect to have payments begin at the participant's actual retirement date, subsequent to that date or prior thereto. A participant may elect a lump sum or a schedule of annual installments, up to a maximum of 15 annual installments. No installment, however, may be payable more than fifteen years after the participant's termination of employment. C. ELECTION OF INVESTMENT ALTERNATIVES The participant shall designate, in accordance with procedures established by the Company for such designation, the portion (in multiples of 1%) of the Deferred Compensation to be allocated to any investment alternative available under this Program. IV. VALUATION OF DEFERRED COMPENSATION ACCOUNTS A. COMMON STOCK 1. Initial Crediting The amount allocated to Merck Common Stock shall be used to determine the number of full and partial shares of Merck Common Stock which such amount would purchase at the closing price of Merck Common Stock on the New York Stock Exchange on the date cash payments of base salary, for amounts deferred under the Base Salary Deferral Plan, or incentive awards, for amounts deferred under the various incentive plans, would otherwise be paid to the participant ("the Deferral Date"). Should the Committee determine that valuation on any Deferral Date would not constitute fair market value, then the Committee shall decide on which date fair market value shall be determined using the valuation method set forth in this paragraph. The Company shall credit the participant's Deferred Compensation Account with the number of full and partial shares of Merck Common Stock so determined. However, at no time prior to the delivery of such shares shall any shares be purchased or earmarked for such Account and the participant shall not have any of the rights of a shareholder with respect to shares credited to his/her Deferred Compensation Account. 2 2. Dividends The Company shall credit the Participant's Deferred Compensation Account with the number of full and partial shares of Merck Common Stock purchasable at the closing price of Merck Common Stock on the New York Stock Exchange as of the date each dividend is paid on the Common Stock, with the dividends which would have been paid on the number of shares credited to such Account (including pro rata dividends on any partial share) had the shares so credited then been issued and outstanding. 3. Redesignations The value of Merck Common Stock for purposes of redesignation shall be the closing price of Merck Common Stock on the New York Stock Exchange on (i) the day when the redesignation request is received pursuant to administrative guidelines established by the Human Resources Financial Services area of the Treasury department, provided the request is received prior to the close of the New York Stock Exchange on such day or (ii) the next following business day if the request is received when the New York Stock Exchange is closed. 4. Distributions Distributions of Merck Common Stock will be valued at the closing price of Merck Common Stock on the New York Stock Exchange on the distribution date. 5. Limitations Shares of Merck Common Stock to be delivered under the provisions of this Program may be delivered by the Company from its authorized but unissued shares of Common Stock or from Common Stock held in the treasury. The amount of shares available each year under this Program shall be one-tenth of one-percent of outstanding shares of Merck Common Stock on the last business day of the preceding calendar year plus any shares authorized under this Program in previous years but not used, minus any shares distributed under the Executive Incentive Plan after April 26, 1994. 6. Adjustments In the event of a reorganization, recapitalization, stock split, stock dividend, combination of shares, merger, consolidation, rights offering or any other change in the corporate structure or shares of the Company, the number and kind of shares of Merck Common Stock available under this Program or credited to participants' Deferred Compensation Accounts shall be adjusted accordingly. B. MUTUAL FUNDS 1. Initial Crediting The amount allocated to each Mutual Fund shall be used to determine the number of full and partial Mutual Fund shares that such amount would purchase at the closing net asset value of the Mutual Fund shares on the Deferral Date. The Company shall credit the participant's Deferred Compensation Account with the number of full and partial Mutual Fund shares so 3 determined. However, no Mutual Fund shares shall be purchased or earmarked for such Account, nor shall the participant have the rights of a shareholder with respect to such Mutual Fund shares. 2. Dividends The Company shall credit the participant's Deferred Compensation Account with the number of full and partial Mutual Fund shares purchasable, at the closing net asset value of the Mutual Fund shares as of the date each dividend is paid on the Mutual Fund shares, with the dividends which would have been paid on the number of shares credited to such Account (including pro rata dividends on any partial share) had the shares then been owned by the participant for purposes of the above computation. 3. Redesignations The value of Mutual Fund shares for purposes of redesignation shall be the net asset value of such Mutual Fund at the close of business on (i) the day when the redesignation request is received pursuant to administrative guidelines established by the Human Resources Financial Services area of the Treasury department, provided the request is received prior to the close of the New York Stock Exchange on such day or (ii) the next following business day if the request is received when the New York Stock Exchange is closed. 4. Distributions Mutual Fund distributions will be valued based on the closing net asset value of the Mutual Fund shares on the distribution date. 5. Adjustments In the event of a reorganization, recapitalization, stock split, stock dividend, combination of shares, merger, consolidation, rights offering or any other change in the corporate structure or shares of a Mutual Fund, the number and kind of shares of that Mutual Fund credited to participants' Deferred Compensation Accounts shall be adjusted accordingly. V. REDESIGNATION WITHIN A DEFERRED COMPENSATION ACCOUNT A. BASIC REDESIGNATION RULES A participant, or the beneficiary or legal representative of a deceased participant, may redesignate amounts credited to a Deferred Compensation Account among the investments available under this Program in accordance with the following rules: (1) Eligible Participants - Active employees, separated employees and retired participants are eligible to redesignate; provided, however, that no such redesignation shall be made into Merck Common Stock. 4 (2) Frequency and Timing - Effective June 1, 1999, there is no limit on the number of times a participant may redesignate amounts measured by Mutual Funds, or, subject to Section B, below, Merck Common Stock. Redesignation shall take place on (i) the day when the redesignation request is received pursuant to administrative guidelines established by the Human Resources Financial Services area of the Treasury department, provided the request is received prior to the close of the New York Stock Exchange on such day or (ii) the next following business day if the request is received when the New York Stock Exchange is closed. (3) Amount and Extent of Redesignation - Redesignation must be in 1% multiples of the investment from which redesignation is being made. (4) Beneficiaries or Legal Representatives - The beneficiary or legal representative of a deceased participant may redesignate subject to the same rules as participants. However, the beneficiary or legal representative shall have one opportunity to redesignate any amount out of Merck Common Stock without regard to the rule set forth in Section B, below; thereafter, the beneficiary or legal representative shall be subject to the same redesignation rules as participants (including the limitation on redesignation out of Merck Common Stock). B. SPECIAL RULES FOR REDESIGNATION OUT OF COMMON STOCK 1. Eligible Participants No redesignation may be made out of Merck Common Stock unless the participant's balance in Merck Common Stock exceeds three times such participant's Annual Base Salary. For the purposes of this Section B, Annual Base Salary for an active participant shall be such participant's monthly base salary at the date the redesignation is requested, and, for a retired participant, monthly base salary at the date of retirement, annualized. 2. Frequency and Timing For Section 16 Officers, redesignations may only be made out of Merck Common Stock during any window period established by the Company from time-to-time. 3. Amount. Redesignation of amounts in Merck Common Stock is restricted to amounts in excess of three times Annual Base Salary. For Section 16 Officers, redesignation of amounts in Merck Common Stock is also restricted to amounts held in Merck Common Stock for longer than six (6) months. 4. Material, Nonpublic Information The Committee, in its sole discretion and with advice of counsel, at any time may rescind a redesignation out of Merck Common Stock if such redesignation was made by a participant who, a) at the time of the redesignation was in the possession of material, nonpublic information with respect to the Company; and b) in the Committee's estimation benefited from such information in the timing of his/her redesignation. The Committee's determination shall be final and binding. In the event of such rescission, the participant's Deferred Compensation Account shall be returned to a status as though such redesignation had not occurred. Notwithstanding the above, the Committee shall not rescind a redesignation if the facts were reviewed by the participant with the 5 General Counsel of the Company or a designee prior to the redesignation and if the General Counsel or designee had concluded that such participant was not in possession of adverse material, nonpublic information. C. CONVERSION OF COMMON STOCK ACCOUNTS The Committee may, in its sole discretion, convert all of the shares of Merck Common Stock allocated to a participant's Deferred Compensation Account in the manner provided below where a position which a terminated or retired participant has taken or wishes to take is, in the opinion of the Committee, such as would make uncertain the propriety of the participant's having a continued interest in Merck Common Stock. The date of conversion shall be the date of commencement of such other employment or the date of the Committee's action, whichever is later. Conversion shall be from an expression of value in shares of Merck Common Stock in the participant's Deferred Compensation Account to an expression of value in United States dollars in another available investment. The value of the Merck Common Stock shall be based upon its closing price on the New York Stock Exchange on the date of conversion or if no trading took place on such day, the next business day on which trading took place. Any conversion under this paragraph shall be irrevocable and absolute. VI. DISTRIBUTION OF DEFERRED COMPENSATION ACCOUNTS Distribution of Deferred Compensation Accounts shall be made in accordance with the participant's distribution schedule pro rata by investment. Distributions from Merck Common Stock will be made in shares, with cash payable for any partial share, subject to the limitations set forth in Article IV, Section A.5. For Section 16 Officers, distribution of amounts in Merck Common Stock is also restricted to amounts held in Merck Common Stock for longer than six months. Distributions from Mutual Funds will be in cash. Distributions will be valued on the fifteenth day of the distribution month (or, if such day is not a business day, the next business day) and paid as soon thereafter as practicable. A. Retirement A participant's retirement from active service will cause distributions of his/her Deferred Compensation Account to commence as soon as administratively feasible in accordance with the participant's previously elected schedule. If a participant retires from active service prior to age 65, the Committee may establish a different distribution schedule. The schedule chosen by the Committee, however, shall not be shorter than the participant's previously elected schedule unless there has been or would be a significant change in the participant's economic circumstances attributable to the participant's early retirement. If the Committee decides to change the participant's distribution schedule, the participant's Deferred Compensation Account must be distributed ratably over no less than five years. However, if a participant has retired at the Company's request, the limitation in the preceding sentence does not apply. 6 B. Death In the event of a participant's death, distributions under this Program will commence as soon as administratively feasible in accordance with his/her previously elected schedule. The participant's beneficiary or legal representative, however, may request that the Committee change such distribution schedule. C. Automatic Distribution If a participant terminates employment for reasons other than death, divestiture or a separation due to reorganization, reduction in force, elimination of the participant's job, or to take a position with a joint venture or other business entity defined in Section E, below, and is not eligible to retire from active service under one of the Company's pension plans, then his/her Deferred Compensation Account will be automatically paid in a lump sum as soon as administratively feasible following his/her termination of employment. Furthermore, except as provided in Schedule II, any participant who dies, retires from active service, or whose employment terminates as a result of a divestiture, or a separation due to reorganization, reduction in force, or elimination of the participant's job, but whose Deferred Compensation Account is valued at less than $125,000 on the date of his/her death, retirement, termination due to divestiture or separation will have his/her Deferred Compensation Account distributed in a lump sum as soon as administratively feasible following his/her death, retirement, or termination due to divestiture or separation. D. Termination Due to Divestiture or Separation If a participant is employed by a subsidiary of the Company that is sold, so that the subsidiary is no longer considered within the controlled group of the Company, that participant shall be considered to have terminated employment with the Company for purposes of this Program. If a participant's employment terminates as a result of a divestiture of a division or subsidiary of the Company, or as a result of a separation due to a reorganization, reduction in force, or elimination of the participant's job, distributions under this Program will commence as soon as administratively feasible after such termination of employment in accordance with his/her previously elected schedule or such schedule as the Committee, in its discretion, may approve in accordance with Section G, below. E. Joint Venture Service A participant's termination of employment in order to take a position with a joint venture or other business entity in which the Company shall directly or indirectly own fifty percent or more of the outstanding voting or other ownership interest shall not be considered a termination of employment with the Company for purposes of distribution under this Program. 7 F. Hardship Distributions The Committee, in its sole discretion, may accelerate the time of distribution of a participant's Deferred Compensation Account, if the participant experiences severe financial hardship due to illness, accident or death in the immediate family, loss of or damage to property due to casualty, or other extraordinary and unforeseeable circumstances. Such participant should provide the Committee with a statement in reasonable detail as to the nature of such financial hardship together with a statement that such acceleration is necessary to alleviate such hardship. G. Post-Retirement, Post-Divestiture and Post-Separation Modifications A participant who has retired from active service or whose employment has terminated as a result of a divestiture or separation as described in Section D, above, may submit one petition to the Committee requesting an extension of the period of distribution of his/her Deferred Compensation Account. Such petition must be received by the Committee prior to the first distribution to the participant of his/her previously elected distribution schedule. Any revised distribution schedule may not exceed fifteen years from the date of actual retirement, or the divestiture or separation date and will be effective the beginning of the next calendar year. The Committee shall in no event grant a new schedule under which the participant would cumulatively receive a greater portion of his/her Deferred Compensation Account as measured at the end of each calendar year. Except as provided in Schedule II, a participant who is an active employee may not make a request under this paragraph. VII. DEDUCTIONS FROM DISTRIBUTIONS The Company will deduct from each distribution amounts required to be withheld for income, Social Security and other tax purposes. Such withholding will be done on a pro rata basis per investment. The Company may also deduct any amounts the participant owes the Company for any reason. VIII. BENEFICIARY DESIGNATIONS A participant under this program may designate a beneficiary to receive his/her Deferred Compensation Account upon the participant's death. Should the beneficiary predecease the participant or should the participant not name a beneficiary, the participant's Deferred Compensation Account will be distributed to the participant's estate. IX. AMENDMENTS The Committee may amend this Program at any time. However, such amendment shall not materially adversely affect any right or obligation with respect to any Deferred Compensation made theretofore. 8 SCHEDULE I DEFERRAL PROGRAM INVESTMENT ALTERNATIVES (JANUARY 1, 2002 - JANUARY 10, 2003) MERCK COMMON STOCK MUTUAL FUNDS American Century Emerging Markets Fund American Funds EuroPacific Growth Fund Fidelity Destiny I Fidelity Dividend Growth Fidelity Equity-Income Fund Fidelity Low-Priced Stock Fund Fidelity Retirement Money Market Fidelity Spartan (R) Government Income Fidelity Spartan (R) U.S. Equity Index Franklin Small-Mid Cap Growth A Janus Enterprise Janus Growth & Income Liberty Acorn Fund-Class Z PIMCO Foreign Bond Institutional PIMCO Long Term US Government Institutional PIMCO Total Return Institutional Putnam Global Equity Fund A* Putnam International Voyager A Putnam Vista A T. Rowe Price Blue Chip Growth Fund Vanguard Asset Allocation *From September 20, 2002 - September 30, 2002, this investment was briefly named the Putnam Global Growth Fund A as a result of the merger, in September 2002, of Putnam Global Equity Fund A with Putnam Global Growth Fund A. The merged fund briefly retained the name "Putnam Global Growth Fund A." Effective October 1, 2002, the merged fund changed its name to "Putnam Global Equity Fund A." 9 SCHEDULE I DEFERRAL PROGRAM INVESTMENT ALTERNATIVES (EFFECTIVE JANUARY 11, 2003 TO JULY 31, 2003) MERCK COMMON STOCK MUTUAL FUNDS American Century Emerging Markets Institutional American Funds EuroPacific Growth Fund Fidelity Destiny I Fidelity Dividend Growth Fidelity Equity-Income Fidelity Low-Priced Stock Fidelity Retirement Money Market Fidelity Spartan Government Income Fidelity Spartan U.S. Equity Index Franklin Small-Mid Cap Growth A Janus Enterprise Janus Growth & Income Liberty Acorn Class Z PIMCO Foreign Bond Institutional PIMCO Long Term US Government Institutional PIMCO Total Return Institutional Putnam Global Equity A Putnam International Capital Opportunities Fund A* Putnam Vista A T. Rowe Price Blue Chip Growth Vanguard Asset Allocation *Prior to April 30, 2003, known as Putnam International Voyager Fund A. REDESIGNATION OF DEFERRED AMOUNTS MEASURED BY PUTNAM VISTA A ON JULY 31, 2003 Prior to 4 p.m. ET on July 31, 2003, each participant who has any part of his/her Deferred Compensation Account measured by the Putnam Vista A investment alternative may redesignate the amount in such investment alternative in accordance with Article V, Section A. If a participant does not redesignate the amount measured by the Putnam Vista A investment alternative to any other remaining investment alternatives before 4 p.m. ET on July 31, 2003, then the amount in the Putnam Vista A account shall be redesignated as of 4 p.m. ET on July 31, 2003, to the Fidelity Mid-Cap Stock Fund. 10 SCHEDULE I DEFERRAL PROGRAM INVESTMENT ALTERNATIVES (EFFECTIVE JULY 31, 2003) MERCK COMMON STOCK MUTUAL FUNDS American Century Emerging Markets Institutional American Funds EuroPacific Growth Fund Fidelity Destiny I Fidelity Dividend Growth Fidelity Equity-Income Fidelity Low-Priced Stock Fidelity Mid-Cap Stock Fund Fidelity Retirement Money Market Fidelity Spartan Government Income Fidelity Spartan U.S. Equity Index Franklin Small-Mid Cap Growth A Janus Enterprise Janus Growth & Income Liberty Acorn Class Z PIMCO Foreign Bond Institutional PIMCO Long Term US Government Institutional PIMCO Total Return Institutional Putnam Global Equity A Putnam International Capital Opportunities Fund A* T. Rowe Price Blue Chip Growth Vanguard Asset Allocation *Prior to April 30, 2003, known as Putnam International Voyager Fund A. 11 SCHEDULE I DEFERRAL PROGRAM INVESTMENT ALTERNATIVES (REVISED OCTOBER 17, 2003) MERCK COMMON STOCK MUTUAL FUNDS American Century Emerging Markets Institutional American Funds EuroPacific Growth Fund Columbia Acorn Fund * Fidelity Destiny I Fidelity Dividend Growth Fidelity Equity-Income Fidelity Low-Priced Stock Fidelity Mid-Cap Stock Fund Fidelity Retirement Money Market Fidelity Spartan Government Income Fidelity Spartan U.S. Equity Index Franklin Small-Mid Cap Growth A Janus Enterprise Janus Growth & Income PIMCO Foreign Bond Institutional PIMCO Long Term US Government Institutional PIMCO Total Return Institutional Putnam Global Equity A Putnam International Capital Opportunities Fund A** T. Rowe Price Blue Chip Growth Vanguard Asset Allocation *Prior to October 2003, known as Liberty Acorn Class Z **Prior to April 30, 2003, known as Putnam International Voyager Fund A. 12 SCHEDULE II SPECIAL PROVISIONS APPLICABLE TO MEDCO HEALTH EMPLOYEES (APPROVED JULY 23, 2002) DEFINITIONS Medco Health - Medco Health Solutions, Inc. Medco Health Employee - A participant who is (i) employed by Medco Health prior to the Spin-Off or (ii) employed by Merck prior to the Spin-Off and expected to be employed by Medco Health prior to or as of the Spin-Off. Separated Medco Health Employee - A participant in the Deferral Program who is employed by Medco Health as of the date of the Spin-Off and is considered to have terminated employment with the Company as a result of the Spin-Off. Spin-Off -- The distribution by Merck to its shareholders of the equity securities of Medco Health. The Spin-Off will be a divestiture for purposes of the Deferral Program. SPECIAL PROVISIONS Notwithstanding anything to the contrary in Article VI, Section C of the Deferral Program, the Deferred Compensation Account of each Separated Medco Health Employee shall be paid out in accordance with Article VI, Section D, without regard to the $125,000 threshold set forth in Section C. Notwithstanding anything to the contrary in Article VI, Section G of the Deferral Program, each Medco Health Employee may submit the petition for an extension of the distribution schedule permitted under Section G either prior to the Spin-Off or once the Medco Health Employee has become a Separated Medco Health Employee; provided, however, that if a Medco Health Employee makes a request for a new distribution schedule prior to the Spin-Off and thereafter does not become a Separated Medco Health Employee, then such request shall not be effective. 13 EX-10.2 4 y91380exv10w2.txt 2001 INCENTIVE STOCK PLAN ________________________________________________________________________________ Exhibit 10.2 MERCK & CO., INC. 2001 INCENTIVE STOCK PLAN (amended and restated July 22, 2003) ________________________________________________________________________________ 2001 INCENTIVE STOCK PLAN The 2001 Incentive Stock Plan ("ISP"), effective January 1, 2001, is established to encourage employees of Merck & Co., Inc. (the "Company"), its subsidiaries, its affiliates and its joint ventures to acquire Common Stock in the Company ("Common Stock"). It is believed that the ISP will stimulate employees' efforts on the Company's behalf, will tend to maintain and strengthen their desire to remain with the Company, will be in the interest of the Company and its Stockholders and will encourage such employees to have a greater personal financial investment in the Company through ownership of its Common Stock. 1. INCENTIVES Incentives under the ISP may be granted in any one or a combination of (a) Incentive Stock Options (or other statutory stock options); (b) Nonqualified Stock Options; (c) Stock Appreciation Rights; (d) Restricted Stock Grants and (e) Performance Shares (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 Compensation and Benefits Committee of the Board of Directors (the "Committee"). 2. ELIGIBILITY Regular full-time and part-time employees of the Company, 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, shall be eligible to participate in the ISP ("Eligible Employees") if designated by the Committee. Directors of the Company who are not regular employees are not eligible to participate in the ISP. 3. ADMINISTRATION The ISP shall be administered by the Committee. The Committee shall be responsible for the administration of the ISP including, without limitation, determining which Eligible Employees receive Incentives, what kind of Incentives are made under the ISP and for what number of shares, and the other terms and conditions of such Incentives. Determinations by the Committee under the ISP including, without limitation, determinations of the Eligible Employees, the form, amount and timing of Incentives, the terms and provisions of Incentives and the agreements evidencing Incentives, need not be uniform and may be made selectively among Eligible Employees who receive, or are eligible to receive, Incentives hereunder, whether or not such Eligible Employees are similarly situated. The Committee shall have the responsibility of construing and interpreting the ISP and of establishing and amending such rules and regulations as it may deem necessary or desirable for the proper administration of the ISP. 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 ISP 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 conclusive and binding upon the Company, all Eligible Employees and any person claiming under or through any Eligible Employee. The Committee may delegate some or all of its power and authority hereunder to the Chief Executive Officer or other senior member of management 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 Securities Exchange Act of 1934. For the purpose of this section and all subsequent sections, the ISP 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. 4. SHARES AVAILABLE FOR INCENTIVES (a) SHARES SUBJECT TO ISSUANCE OR TRANSFER. Subject to adjustment as provided in Section 4(c) hereof, there is hereby reserved for issuance under the ISP 95 million shares of Common Stock. The shares available for granting awards shall be increased by the number of shares as to which options or other benefits granted under the ISP have lapsed, expired, terminated or been canceled. In addition, any shares reserved for issuance under the Company's 1996 Incentive Stock Plan and 1991 Incentive Stock Plan ("Prior Plans") in excess of the number of shares as to which options or other benefits have been awarded thereunder, plus any such shares as to which options or other benefits granted under the Prior Plans may lapse, expire, terminate or be canceled, shall also be reserved and available for issuance or reissuance under the ISP. Shares under this ISP may be delivered by the Company from its authorized but unissued shares of Common Stock or from Common Stock held in the Treasury. (b) LIMIT ON AN INDIVIDUAL'S INCENTIVES. In any given year, no Eligible Employee may receive Incentives covering more than three (3) million shares of the Company's Common Stock (such number of shares shall be adjusted in accordance with Section 4(c)). (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 ISP, (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. 5. STOCK OPTIONS The Committee may grant options qualifying as Incentive Stock Options under the Internal Revenue Code of 1986, as amended, or any successor code thereto (the "Code"), other statutory options under the Code and 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) 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 OPTION. The period of each Stock Option shall be fixed by the Committee, but shall not exceed ten (10) years. 2 (c) PAYMENT. No shares shall be issued until full payment of the option price has been made. The option prices may be paid in cash or, if the Committee determines, in shares of Common Stock or a combination of cash and shares. 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 ISP shall be exercised through the Company's broker-assisted stock option exercise program, provided such program is available at the time of the option exercise, or by such other means as the Committee may determine from time to time. The Committee may establish rules and procedures to permit an optionholder to defer recognition of gain upon the exercise of a stock option. (d) EXERCISE OF OPTION. 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 options become exercisable or "vested" and exercise periods, provided that in no event (including those specified in paragraphs (e), (f) and (g) of this section) shall any Stock Option be exercisable after its specified expiration period. (e) TERMINATION OF EMPLOYMENT. Upon the termination of a Stock Option grantee's employment (for any reason other than retirement, death or termination for 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 as may be determined by the Committee. Such Stock Option privileges shall expire unless exercised or surrendered under a Stock Appreciation Right 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. (f) RETIREMENT. Upon retirement of a Stock Option grantee, Stock Option privileges shall apply to those shares immediately exercisable at the date of retirement. The Committee, however, in its discretion, may provide that any Stock Options outstanding but not yet exercisable upon the retirement of a Stock Option grantee may become exercisable in accordance with a schedule as may be determined by the Committee. Stock Option privileges shall expire unless exercised within such period of time as may be established by the Committee, but in no event later than the expiration date of the Stock Option. (g) DEATH. Upon the death of a Stock Option grantee, Stock Option privileges shall apply to those shares which were immediately exercisable at the time of death. The Committee, however, in its discretion, may provide that any Stock Options outstanding but not yet exercisable upon the death of a Stock Option grantee may become exercisable in accordance with a schedule as may be determined by the Committee. Such privileges shall expire unless exercised by legal representative(s) within a period of time as determined by the Committee, but in no event later than the expiration date of the Stock Option. (h) 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 receipt of the notice of such termination. (i) LIMITS ON INCENTIVE STOCK OPTIONS. Except as may otherwise be permitted by the Code, the Committee shall not grant to an Eligible Employee Incentive Stock Options that, in the aggregate, are first exercisable during any one calendar year to the extent that the aggregate fair market value of the Common Stock, at the time the Incentive Stock Options are granted, exceeds $100,000, or such other amount as the Internal Revenue Service may decide from time to time. 3 6. 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 or under the Prior Plans. Such Stock Appreciation Rights 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 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 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 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. 7. 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 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, subsidiary, division or joint venture during the Award Period as a condition to payment of the Performance Share Award. The Performance Goals may include earnings per share, return on stockholders' equity, return on assets, net income or any other financial or other measurement established by the Committee. The Performance Goals may include minimum and optimum objectives or a single set of objectives. 4 (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, subsidiary, division or joint venture shall be measured against the Performance Goals, and the Committee shall determine 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. (c) REVISION OF PERFORMANCE GOALS. 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, subsidiary, division or joint venture 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 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. (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 8 shall not exceed, in the aggregate, six (6) million shares of Common Stock (such number of shares shall be adjusted in accordance with Section 4(c)). 8. RESTRICTED STOCK GRANTS The Committee may award shares of Common Stock to a grantee, 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. 5 (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. (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) LIMIT ON RESTRICTED STOCK GRANT. Incentives granted as Restricted Stock Grants under this section and Performance Share Awards under Section 7 shall not exceed, in the aggregate, six (6) million shares of Common Stock (such number of shares shall be adjusted in accordance with Section 4(c)). 9. TRANSFERABILITY Each Incentive Stock Option granted under the ISP shall not be transferable other than by will or the laws of descent and distribution; each other Incentive granted under the ISP will 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 as determined by the Committee in accordance with regulations promulgated under the Securities Exchange Act of 1934, or any other applicable law or regulation. 10. DISCONTINUANCE OR AMENDMENT OF THE PLAN The Board of Directors may discontinue the ISP at any time and may from time to time amend or revise the terms of the ISP as permitted by applicable statutes, except that it may not revoke or alter, in a manner unfavorable to the grantees of any Incentives hereunder, any Incentives then outstanding, nor may the Board amend the ISP without stockholder approval where the absence of such approval would cause the Plan to fail to comply with Rule 16b-3 under the Securities Exchange Act of 1934, or any other requirement of applicable law or regulation. Unless approved by the Company's stockholders, no adjustments or reduction of the exercise price of any outstanding Incentives shall be made by cancellation of outstanding Incentives and the subsequent regranting of Incentives at a lower price to the same individual. No Incentive shall be granted under the ISP after December 31, 2003, but Incentives granted theretofore may extend beyond that date. 11. NO RIGHT OF EMPLOYMENT OR PARTICIPATION The ISP and the Incentives granted hereunder shall not confer upon any Eligible Employee the right to continued employment with the Company, its subsidiaries, its affiliates or its joint ventures or affect in any way the right of such entities to terminate the employment of an Eligible Employee at any time and for any reason. No individual shall have a right to be granted an Incentive, or having been granted an Incentive, to receive any future Incentives. 6 12. NO LIMITATION ON COMPENSATION Nothing in the ISP 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 ISP. 13. NO IMPACT ON BENEFITS Except as may otherwise be specifically stated under any employee benefit plan, policy or program, no amount payable in respect of any Incentive shall be treated as compensation for purposes of calculating an employee's right under any such plan, policy or program. 14. NO CONSTRAINT ON CORPORATE ACTION Nothing in the ISP 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 10, to limit the right or power of the Company or any subsidiary to take any action which such entity deems to be necessary or appropriate. 15. WITHHOLDING TAXES The Company shall be entitled to deduct from any payment under the ISP, 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 Employee 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 Employee 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 Employee 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. 16. GOVERNING LAW The ISP, and all agreements hereunder, shall be construed in accordance with and governed by the laws of the State of New Jersey. 7 EX-10.3 5 y91380exv10w3.txt PLAN FOR DEFERRED PAYMENT OF DIRECTORS ________________________________________________________________________________ Exhibit 10.3 MERCK & CO., INC. PLAN FOR DEFERRED PAYMENT OF DIRECTORS' COMPENSATION (Amended and Restated July 24, 2003) ________________________________________________________________________________ TABLE OF CONTENTS

Page ---- Article I Purpose ...................................................... 1 Article II Election of Deferral, Measurement Methods and Distribution Schedule ...................................... 1 Article III Valuation of Deferred Amounts ................................ 2 Article IV Redesignation Within a Deferral Account ...................... 3 Article V Payment of Deferred Amounts .................................. 4 Article VI Designation of Beneficiary ................................... 5 Article VII Plan Amendment or Termination ................................ 5 Schedule A Measurement Methods .......................................... 6

(i) MERCK & CO., INC. PLAN FOR DEFERRED PAYMENT OF DIRECTORS' COMPENSATION I. PURPOSE To provide an arrangement under which directors of Merck & Co., Inc. other than current employees may (i) elect to voluntarily defer payment of the annual retainer and meeting and committee fees until after termination of their service as a director, and (ii) value compensation mandatorily deferred on their behalf. II. ELECTION OF DEFERRAL, MEASUREMENT METHODS AND DISTRIBUTION SCHEDULE A. Election of Voluntary Deferral Amount 1. Prior to December 28 of each year, each director is entitled to make an irrevocable election to defer until termination of service as a director receipt of payment of (a) 50% or 100% of the retainer for the 12 months beginning April 1 of the next calendar year, (b) 50% or 100% of the Committee Chairperson retainer beginning April 1 of the next calendar year, and (c) 50% or 100% of the meeting and committee fees for the 12 months beginning April 1 of the next calendar year. 2. Prior to commencement of duties as a director, a director newly elected or appointed to the Board during a calendar year must make the election under this paragraph for the portion of the Voluntary Deferral Amount applicable to such director's first year of service (or part thereof). 3. The Voluntary Deferral Amount shall be credited as follows: (1) Meeting and committee fees that are deferred are credited as of the day the director's services are rendered; (2) if the Board retainer and/or Committee Chairperson retainer is deferred, a pro-rata share of the deferred retainer is credited on the last business day of each calendar quarter. The dates the Voluntary Deferral Amount, or parts thereof, are credited to the director's deferred account are hereinafter referred to as the Voluntary Deferral Dates. B. Mandatory Deferral Amount 1. On the Friday following the Company's Annual Meeting of Stockholders (such Friday hereinafter referred to as the "Mandatory Deferral Date"), each director will be credited with an amount equivalent to one-third of the annual cash retainer for the 12 month period beginning on the April 1 preceding the Annual Meeting (the "Mandatory Deferral Amount"). The Mandatory Deferral Amount will be measured by the Merck Common Stock account. 2. A director newly elected or appointed to the Board after the Mandatory Deferral Date will be credited with a pro rata portion of the Mandatory Deferral Amount applicable to such director's first year of service (or part thereof). Such pro rata portion shall be credited to the director's account on the first day of such director's service. 1 C. Election of Measurement Method Each such annual election referred to in Section A shall include an election as to the measurement method or methods by which the value of amounts deferred will be measured in accordance with Article III, below. The available measurement methods are set forth on Schedule A hereto. D. Election of Distribution Schedule Each annual election referred to in Section A above shall also include an election to receive payment following termination of service as a director of all Voluntary Deferral Amounts and Mandatory Deferral Amounts in a lump sum either immediately or one year after such termination, or in quarterly or annual installments over five, ten or fifteen years. III. VALUATION OF DEFERRED AMOUNTS A. Common Stock 1. Initial Crediting. The annual Mandatory Deferral Amount shall be used to determine the number of full and partial shares of Merck Common Stock which such amount would purchase at the closing price of the Common Stock on the New York Stock Exchange on the Mandatory Deferral Date. That portion of the Voluntary Deferral Amount allocated to Merck Common Stock shall be used to determine the number of full and partial shares of Merck Common Stock which such amount would purchase at the closing price of the Common Stock on the New York Stock Exchange on the applicable Voluntary Deferral Date. However, should it be determined by the Committee on Corporate Governance of the Board of Directors that a measurement of Merck Common Stock on any Mandatory or Voluntary Deferral Date would not constitute fair market value, then the Committee shall decide on which date fair market value shall be determined using the valuation method set forth in this Article III, Section A.1. At no time during the deferral period will any shares of Merck Common Stock be purchased or earmarked for such deferred amounts nor will any rights of a shareholder exist with respect to such amounts. 2. Dividends. Each director's account will be credited with the additional number of full and partial shares of Merck Common Stock which would have been purchasable with the dividends on shares previously credited to the account at the closing price of the Common Stock on the New York Stock Exchange on the date each dividend was paid. 3. Distributions. Distribution from the Merck Common Stock account will be valued at the closing price of Merck Common Stock on the New York Stock Exchange on the distribution date. 2 B. Mutual Funds 1. Initial Crediting. The amount allocated to each Mutual Fund shall be used to determine the full and partial Mutual Fund shares which such amount would purchase at the closing net asset value of the Mutual Fund shares on the Mandatory or Voluntary Deferral Date, whichever is applicable. The director's account will be credited with the number of full and partial Mutual Fund shares so determined. At no time during the deferral period will any Mutual Fund shares be purchased or earmarked for such deferred amounts nor will any rights of a shareholder exist with respect to such amounts. 2. Dividends. Each director's account will be credited with the additional number of full and partial Mutual Fund shares which would have been purchasable, at the closing net asset value of the Mutual Fund shares as of the date each dividend is paid on the Mutual Fund shares, with the dividends which would have been paid on the number of shares previously credited to such account (including pro rata dividends on any partial shares). 3. Distributions. Mutual Fund distributions will be valued based on the closing net asset value of the Mutual Fund shares on the distribution date. C. Adjustments In the event of a reorganization, recapitalization, stock split, stock dividend, combination of shares, merger, consolidation, rights offering or any other change in the corporate structure or shares of the Company or a Mutual Fund, the number and kind of shares or units of such investment measurement method available under this Plan and credited to each director's account shall be adjusted accordingly. IV. REDESIGNATION WITHIN A DEFERRAL ACCOUNT A. General A director may request a change in the measurement methods used to value all or a portion of his/her account other than Merck Common Stock. AMOUNTS DEFERRED USING THE MERCK COMMON STOCK METHOD AND ANY EARNINGS ATTRIBUTABLE TO SUCH DEFERRALS MAY NOT BE REDESIGNATED. The change will be effective on (i) the day when the redesignation request is received pursuant to administrative guidelines established by the Human Resources Financial Services area of the Treasury department, provided the request is received prior to the close of the New York Stock Exchange on such day or (ii) the next following business day if the request is received when the New York Stock Exchange is closed. B. When Redesignation May Occur 1. During Active Service. There is no limit on the number of times a director may redesignate the portion of his/her deferred account permitted to be redesignated. Each such request shall be irrevocable and can be designated in whole percentages or as a dollar amount. 3 2. After Death. Following the death of a director, the legal representative or beneficiary of such director may redesignate subject to the same rules as for active directors set forth in Article IV, Section B.1. C. Valuation of Amounts to be Redesignated The portion of the director's account to be redesignated will be valued at its cash equivalent and such cash equivalent will be converted into shares or units of the other measurement method(s). For purposes of such redesignations, the cash equivalent of the value of the Mutual Fund shares shall be the closing net asset value of such Mutual Fund on (i) the day when the redesignation request is received pursuant to administrative guidelines established by the Human Resources Financial Services area of the Treasury department, provided the request is received prior to the close of the New York Stock Exchange on such day or (ii) the next following business day if the request is received when the New York Stock Exchange is closed. V. PAYMENT OF DEFERRED AMOUNTS A. Payment All payments to directors of amounts deferred will be in cash in accordance with the distribution schedule elected by the director pursuant to Article II, Section D. Distributions shall be pro rata by measurement method. Distributions shall be valued on the fifteenth day of the distribution month (or, if such day is not a business day, the next business day) and paid as soon thereafter as possible. B. Changes to Distribution Schedule Prior to Termination Upon the request of a director made at any time during the calendar year immediately preceding the calendar year in which service as a director is expected to terminate, the Committee on Corporate Governance of the Board of Directors, in its sole discretion, may authorize: (a) an extension of a payment period beyond that originally elected by the director not to exceed that otherwise allowable under Article II, Section D, and/or (b) a payment frequency different from that originally elected by the director. Such request may not be made with regard to amounts deferred after December 31, 1990 using the Merck Common Stock method and to any earnings attributable to such deferrals. Deferrals into Merck Common Stock made after December 31, 1990 and any earnings thereon may only be distributed in accordance with the schedule elected by the director under Article II, Section D or determined by the Committee on Corporate Governance under Article VI. C. Post-Termination Changes to Distribution Schedule Following termination of service as a director, each director may make one request for a further extension of the period for distribution of his/her deferred compensation. Such request must be received by the Committee on Corporate Governance prior to the first distribution to the participant under his/her previously elected distribution schedule. Any revised distribution schedule may not exceed the deferral period otherwise allowable under Article II, Section C. This request may be granted and a new payment schedule determined in the sole discretion of the Committee on Corporate Governance. 4 Such request may not be made with regard to amounts deferred after December 31, 1990 using the Merck Common Stock Method and to any earnings attributable to such deferrals. Any retired director who is not subject to U.S. income tax may petition the Committee on Corporate Governance to change payment frequency, including a lump sum distribution, and the Committee on Corporate Governance may grant such petition if, in its discretion, it considers there to be reasonable justification therefor. Deferrals into Merck Common Stock made after December 30, 1990 and any earnings thereon may only be distributed in accordance with the schedule elected by the director under Article II, Section D or determined by the Committee on Corporate Governance under Article VI. D. Forfeitures A director's deferred amount attributable to the Mandatory Deferral Amount and earnings thereon shall be forfeited upon his or her removal as a director or upon a determination by the Committee on Corporate Governance in its sole discretion, that a director has: (i) joined the Board of, managed, operated, participated in a material way in, entered employment with, performed consulting (or any other) services for, or otherwise been connected in any material manner with a company, corporation, enterprise, firm, limited partnership, partnership, person, sole proprietorship or any other business entity determined by the Committee on Corporate Governance in its sole discretion to be competitive with the business of the Company, its subsidiaries or its affiliates (a "Competitor"); (ii) directly or indirectly acquired an equity interest of five (5) percent or greater in a Competitor; or (iii) disclosed any material trade secrets or other material confidential information, including customer lists, relating to the Company or to the business of the Company to others, including a Competitor. VI. DESIGNATION OF BENEFICIARY In the event of the death of a director, the deferred amount at the date of death shall be paid to the last named beneficiary or beneficiaries designated by the director, or, if no beneficiary has been designated, to the director's legal representative, in one or more installments as the Committee on Corporate Governance in its sole discretion may determine. VII. PLAN AMENDMENT OR TERMINATION The Committee on Corporate Governance shall have the right to amend or terminate this Plan at any time for any reason. 5 SCHEDULE A MEASUREMENT METHODS (JANUARY 1, 2002 - JANUARY 10, 2003) MERCK COMMON STOCK MUTUAL FUNDS American Century Emerging Markets Fund American Century Europacific Growth Fund Fidelity Destiny I Fidelity Dividend Growth Fidelity Equity Income Fund Fidelity Low-Priced Stock Fund Fidelity Retirement Money Market Fidelity Spartan Government Income Fidelity Spartan U.S. Equity Index Franklin Small-Mid Cap Growth A Janus Enterprise Janus Growth & Income Liberty Acorn Z PIMCO Foreign Bond Institutional PIMCO Long Term US Government Institutional PIMCO Total Return Institutional Putnam Global Equity Fund A* Putnam International Voyager A Putnam Vista A T. Rowe Price Blue Chip Growth Fund Vanguard Asset Allocation *From September 20, 2002 -- September 30, 2002, this investment was briefly named the Putnam Global Growth Fund A as a result of the merger, in September 2002, of Putnam Global Equity Fund A with Putnam Global Growth Fund A. The merged fund briefly retained the name "Putnam Global Growth Fund A." Effective October 1, 2002, the merged fund changed its name to "Putnam Global Equity Fund A." 6 SCHEDULE A MEASUREMENT METHODS (EFFECTIVE JANUARY 11, 2003 TO JULY 31, 2003) MERCK COMMON STOCK MUTUAL FUNDS American Century Emerging Markets Institutional American Funds EuroPacific Growth Fund Fidelity Destiny I Fidelity Dividend Growth Fidelity Equity-Income Fidelity Low-Priced Stock Fidelity Retirement Money Market Fidelity Spartan Government Income Fidelity Spartan U.S. Equity Index Franklin Small-Mid Cap Growth A Janus Enterprise Janus Growth & Income Liberty Acorn Class Z PIMCO Foreign Bond Institutional PIMCO Long Term US Government Institutional PIMCO Total Return Institutional Putnam Global Equity A Putnam International Capital Opportunities Fund A* Putnam Vista A T. Rowe Price Blue Chip Growth Vanguard Asset Allocation * Prior to April 30, 2003, known as Putnam International Voyager Fund A. REDESIGNATION OF DEFERRED AMOUNTS MEASURED BY PUTNAM VISTA A ON JULY 31, 2003 Prior to 4 p.m. ET on July 31, 2003, each participant who has any part of his/her account measured by the Putnam Vista A measurement method may redesignate the amount in such measurement method in accordance with Article IV. If a participant does not redesignate the amount measured by the Putnam Vista A measurement method to any other remaining measurement method before 4 p.m. ET on July 31, 2003, then the amount in the Putnam Vista A account shall be redesignated as of 4 p.m. ET on July 31, 2003, to the Fidelity Mid-Cap Stock Fund. 7 SCHEDULE A MEASUREMENT METHODS (EFFECTIVE JULY 31, 2003) MERCK COMMON STOCK MUTUAL FUNDS American Century Emerging Markets Institutional American Funds EuroPacific Growth Fund Columbia Acorn Class Z* Fidelity Destiny I Fidelity Dividend Growth Fidelity Equity-Income Fidelity Low-Priced Stock Fidelity Mid-Cap Stock Fund Fidelity Retirement Money Market Fidelity Spartan Government Income Fidelity Spartan U.S. Equity Index Franklin Small-Mid Cap Growth A Janus Enterprise Janus Growth & Income PIMCO Foreign Bond Institutional PIMCO Long Term US Government Institutional PIMCO Total Return Institutional Putnam Global Equity A Putnam International Capital Opportunities Fund A** T. Rowe Price Blue Chip Growth Vanguard Asset Allocation * Prior to October 2003, known as Liberty Acorn Class Z ** Prior to April 30, 2003, known as Putnam International Voyager Fund A 8 EX-12 6 y91380exv12.htm COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES

Exhibit 12

MERCK & CO., INC. AND SUBSIDIARIES

Computation Of Ratios Of Earnings To Fixed Charges

(In millions except ratio data)

	Nine Months
	Ended			Years Ended December 31
	September 30
	2003			2002			2001			2000			1999			1998
Income from Continuing Operations Before Taxes	$	7,290.7		$	9,651.7		$	9,948.1		$	9,362.3		$	8,370.1		$	7,976.9
Add (Subtract):
One-third of rents		55.6			67.2			64.2			55.9			55.0			52.3
Interest expense, gross		270.9			390.6			463.7			484.0			315.5			205.1
Interest capitalized, net of amortization		(21.1	)		(36.9	)		(66.1	)		(99.0	)		(61.4	)		(36.9	)
Equity (income) loss from affiliates,      net of distributions		(50.8	)		(161.2	)		(119.0	)		(288.3	)		(352.7	)		36.2
Preferred stock dividends, net of tax		113.7			164.3			199.6			205.0			120.2			61.4
Earnings from Continuing Operations	$	7,659.0		$	10,075.7		$	10,490.5		$	9,719.9		$	8,446.7		$	8,295.0
One-third of rents	$	55.6		$	67.2		$	64.2		$	55.9		$	55.0		$	52.3
Interest expense, gross		270.9			390.6			463.7			484.0			315.5			205.1
Preferred stock dividends		162.4			234.7			285.1			292.9			171.7			87.7
Fixed Charges from Continuing Operations	$	488.9		$	692.5		$	813.0		$	832.8		$	542.2		$	345.1
Ratio of Earnings to Fixed Charges from Continuing Operations		16			15			13			12			16			24

For purposes of computing these ratios, “earnings” consist of income from continuing operations before taxes, one-third of rents (deemed by the Company to be representative of the interest factor inherent in rents), interest expense, net of amounts capitalized, equity (income) loss from affiliates, net of distributions, and dividends on preferred stock of subsidiary companies. “Fixed charges” consist of one-third of rents, interest expense as reported in the Company’s consolidated financial statements and dividends on preferred stock of subsidiary companies.

EX-31.1 7 y91380exv31w1.txt CERTIFICATION OF CEO Exhibit 31.1 CERTIFICATION I, Raymond V. Gilmartin, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Merck & Co., Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: November 13, 2003 By: /s/ Raymond V. Gilmartin ----------------------------------------------- RAYMOND V. GILMARTIN Chairman, President and Chief Executive Officer EX-31.2 8 y91380exv31w2.txt CERTIFICATION OF CFO Exhibit 31.2 CERTIFICATION I, Judy C. Lewent, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Merck & Co., Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: November 13, 2003 By: /s/ Judy C. Lewent --------------------------------------------------- JUDY C. LEWENT Executive Vice President & Chief Financial Officer President, Human Health Asia EX-32.1 9 y91380exv32w1.txt SECTION 1350 CERTIFICATION OF CEO Exhibit 32.1 CERTIFICATION BY THE CHIEF EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 CERTIFICATION Pursuant to 18 U.S.C. Section 1350, the undersigned officer of Merck & Co., Inc. (the "Company"), hereby certifies that the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2003 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Dated: November 13, 2003 /s/ Raymond V. Gilmartin ------------------------------------- Name: Raymond V. Gilmartin Title: Chairman, President and Chief Executive Officer EX-32.2 10 y91380exv32w2.txt SECTION 1350 CERTIFICATION OF CFO Exhibit 32.2 CERTIFICATION BY THE CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 CERTIFICATION Pursuant to 18 U.S.C. Section 1350, the undersigned officer of Merck & Co., Inc. (the "Company"), hereby certifies that the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2003 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Dated: November 13, 2003 /s/ Judy C. Lewent -------------------------------- Name: Judy C. Lewent Title: Executive Vice President & Chief Financial Officer President, Human Health Asia -----END PRIVACY-ENHANCED MESSAGE-----

EX-10.1

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

                                                                    Exhibit 10.1


                                MERCK & CO., INC.

                                DEFERRAL PROGRAM


                      (AMENDED AND RESTATED JULY 22, 2003)


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

                                TABLE OF CONTENTS



                                                                         Page
                                                                      
Article I    Administration                                                1

Article II   Eligibility                                                   1

Article III  Deferral Into a Deferred Compensation Account                 1

Article IV   Valuation of Deferred Compensation Accounts                   2

Article V    Redesignation Within a Deferred Compensation Account          4

Article VI   Distribution of Deferred Compensation Accounts                6

Article VII  Deductions from Distributions                                 8

Article VIII Beneficiary Designations                                      8

Article IX   Amendments                                                    8

Schedule I   Deferral Program Investment Alternatives                      9

Schedule II  Special Provisions Applicable to Medco Health Employees      13



                                       (i)

                       MERCK & CO., INC. DEFERRAL PROGRAM

      The Deferral Program ("the Program") is intended to permit a select group
of management to defer income which would otherwise be immediately payable to
them as annual base salary or under various incentive plans of Merck & Co., Inc.
("the Company").

                                I. ADMINISTRATION

      This Program is administered by the Compensation and Benefits Committee of
the Company's Board of Directors. This Committee is composed of non-employee
directors only. The Committee shall have responsibility for determining which
investments will be available under the Program, and those investments shall be
listed on Schedule I hereto. The Committee shall review the investment
selections at least once every five years. The Committee shall make all
decisions affecting the timing, price or amount of any and all of the Deferred
Compensation of participants subject to Section 16 of the Securities Exchange
Act of 1934, as amended ("Section 16 Officers"), but may otherwise delegate any
of its authority under this Program.

                                 II. ELIGIBILITY

      Eligibility to defer under this Program will be determined in accordance
with the terms of the Company's Base Salary Deferral Plan and various incentive
plans. However, the Committee has the authority to refuse to permit an employee
to participate in this Program, if the Committee determines that such
participation would jeopardize the Program's compliance with applicable law or
the Program's status as a top hat plan under the Employee Retirement Income
Security Act.

               III. DEFERRAL INTO A DEFERRED COMPENSATION ACCOUNT

A.    ELECTION TO DEFER

      A participant's decision to defer under the Program must be made, (i) for
the Base Salary Deferral Plan, prior to the commencement of the pay period
during which the base salary to be deferred will be earned, (ii) for annual
incentive plans, prior to the commencement of the performance year during which
the bonus monies to be deferred will be earned, and (iii) for long-term
incentive plans, prior to the commencement of the last year of the award period
during which the bonus monies to be deferred will be earned. For purposes of
annual incentive plans only, a participant who is hired by the Company during a
performance year may make an election, no later than the thirtieth (30th) day
from the participant's date of hire, to defer bonus monies to be earned during
such performance year. For the Base Salary Deferral Plan, only amounts equal to
or in excess of five percent (5%) of Annual Base Salary (as defined in the Base
Salary Deferral Plan) and less than or equal to the lesser of (1) fifty percent
(50%) of Annual Base Salary or (2) the Participant's Annual Base Salary in
excess of the amount determined under Section 401(a)(17) of the Internal Revenue
Code may be deferred. For the annual and long-term incentive plans, only amounts
in excess of $3,000 may be deferred. Amounts so deferred are known as "Deferred
Compensation" and will be credited to the participant's "Deferred Compensation
Account." Deferred Compensation shall be held in one account regardless of the
plan (Base Salary Deferral or incentive plan) under which it was deferred.


                                       1

B.    ELECTION OF DISTRIBUTION SCHEDULE

1. Timing of Election

      The participant shall also elect a distribution schedule for his/her
Deferred Compensation. A participant's election of a distribution schedule in
connection with a deferral election under annual and/or long-term incentive
plans shall be made at the same time that the participant makes the election to
defer. A participant's initial election of a distribution schedule in connection
with deferrals under the Base Salary Deferral Plan shall be made at the same
time as the initial deferral election, shall be irrevocable during the calendar
year for which it was made and shall apply to all deferrals of Annual Base
Salary until a new distribution election becomes effective. Thereafter, an
election of a different distribution schedule in connection with deferrals under
the Base Salary Deferral Plan may be made at any time, provided, however, that
such new distribution schedule shall only apply prospectively to deferrals of
Annual Base Salary in the following calendar year.

2. Distribution Schedule

      A participant may elect to have payments begin at the participant's actual
retirement date, subsequent to that date or prior thereto. A participant may
elect a lump sum or a schedule of annual installments, up to a maximum of 15
annual installments. No installment, however, may be payable more than fifteen
years after the participant's termination of employment.

C.    ELECTION OF INVESTMENT ALTERNATIVES

      The participant shall designate, in accordance with procedures established
by the Company for such designation, the portion (in multiples of 1%) of the
Deferred Compensation to be allocated to any investment alternative available
under this Program.

                 IV. VALUATION OF DEFERRED COMPENSATION ACCOUNTS

A.    COMMON STOCK

1. Initial Crediting

      The amount allocated to Merck Common Stock shall be used to determine the
number of full and partial shares of Merck Common Stock which such amount would
purchase at the closing price of Merck Common Stock on the New York Stock
Exchange on the date cash payments of base salary, for amounts deferred under
the Base Salary Deferral Plan, or incentive awards, for amounts deferred under
the various incentive plans, would otherwise be paid to the participant ("the
Deferral Date"). Should the Committee determine that valuation on any Deferral
Date would not constitute fair market value, then the Committee shall decide on
which date fair market value shall be determined using the valuation method set
forth in this paragraph. The Company shall credit the participant's Deferred
Compensation Account with the number of full and partial shares of Merck Common
Stock so determined. However, at no time prior to the delivery of such shares
shall any shares be purchased or earmarked for such Account and the participant
shall not have any of the rights of a shareholder with respect to shares
credited to his/her Deferred Compensation Account.


                                       2

2. Dividends

      The Company shall credit the Participant's Deferred Compensation Account
with the number of full and partial shares of Merck Common Stock purchasable at
the closing price of Merck Common Stock on the New York Stock Exchange as of the
date each dividend is paid on the Common Stock, with the dividends which would
have been paid on the number of shares credited to such Account (including pro
rata dividends on any partial share) had the shares so credited then been issued
and outstanding.

3. Redesignations

      The value of Merck Common Stock for purposes of redesignation shall be the
closing price of Merck Common Stock on the New York Stock Exchange on (i) the
day when the redesignation request is received pursuant to administrative
guidelines established by the Human Resources Financial Services area of the
Treasury department, provided the request is received prior to the close of the
New York Stock Exchange on such day or (ii) the next following business day if
the request is received when the New York Stock Exchange is closed.

4. Distributions

      Distributions of Merck Common Stock will be valued at the closing price of
Merck Common Stock on the New York Stock Exchange on the distribution date.

5. Limitations

      Shares of Merck Common Stock to be delivered under the provisions of this
Program may be delivered by the Company from its authorized but unissued shares
of Common Stock or from Common Stock held in the treasury. The amount of shares
available each year under this Program shall be one-tenth of one-percent of
outstanding shares of Merck Common Stock on the last business day of the
preceding calendar year plus any shares authorized under this Program in
previous years but not used, minus any shares distributed under the Executive
Incentive Plan after April 26, 1994.

6. Adjustments

      In the event of a reorganization, recapitalization, stock split, stock
dividend, combination of shares, merger, consolidation, rights offering or any
other change in the corporate structure or shares of the Company, the number and
kind of shares of Merck Common Stock available under this Program or credited to
participants' Deferred Compensation Accounts shall be adjusted accordingly.

B.    MUTUAL FUNDS

1. Initial Crediting

      The amount allocated to each Mutual Fund shall be used to determine the
number of full and partial Mutual Fund shares that such amount would purchase at
the closing net asset value of the Mutual Fund shares on the Deferral Date. The
Company shall credit the participant's Deferred Compensation Account with the
number of full and partial Mutual Fund shares so


                                       3

determined. However, no Mutual Fund shares shall be purchased or earmarked for
such Account, nor shall the participant have the rights of a shareholder with
respect to such Mutual Fund shares.

2. Dividends

      The Company shall credit the participant's Deferred Compensation Account
with the number of full and partial Mutual Fund shares purchasable, at the
closing net asset value of the Mutual Fund shares as of the date each dividend
is paid on the Mutual Fund shares, with the dividends which would have been paid
on the number of shares credited to such Account (including pro rata dividends
on any partial share) had the shares then been owned by the participant for
purposes of the above computation.

3. Redesignations

      The value of Mutual Fund shares for purposes of redesignation shall be the
net asset value of such Mutual Fund at the close of business on (i) the day when
the redesignation request is received pursuant to administrative guidelines
established by the Human Resources Financial Services area of the Treasury
department, provided the request is received prior to the close of the New York
Stock Exchange on such day or (ii) the next following business day if the
request is received when the New York Stock Exchange is closed.

4. Distributions

      Mutual Fund distributions will be valued based on the closing net asset
value of the Mutual Fund shares on the distribution date.

5. Adjustments

      In the event of a reorganization, recapitalization, stock split, stock
dividend, combination of shares, merger, consolidation, rights offering or any
other change in the corporate structure or shares of a Mutual Fund, the number
and kind of shares of that Mutual Fund credited to participants' Deferred
Compensation Accounts shall be adjusted accordingly.

             V. REDESIGNATION WITHIN A DEFERRED COMPENSATION ACCOUNT

A.    BASIC REDESIGNATION RULES

      A participant, or the beneficiary or legal representative of a deceased
participant, may redesignate amounts credited to a Deferred Compensation Account
among the investments available under this Program in accordance with the
following rules:

      (1)   Eligible Participants - Active employees, separated employees and
            retired participants are eligible to redesignate; provided, however,
            that no such redesignation shall be made into Merck Common Stock.


                                       4

      (2)   Frequency and Timing - Effective June 1, 1999, there is no limit on
            the number of times a participant may redesignate amounts measured
            by Mutual Funds, or, subject to Section B, below, Merck Common
            Stock. Redesignation shall take place on (i) the day when the
            redesignation request is received pursuant to administrative
            guidelines established by the Human Resources Financial Services
            area of the Treasury department, provided the request is received
            prior to the close of the New York Stock Exchange on such day or
            (ii) the next following business day if the request is received when
            the New York Stock Exchange is closed.

      (3)   Amount and Extent of Redesignation - Redesignation must be in 1%
            multiples of the investment from which redesignation is being made.

      (4)   Beneficiaries or Legal Representatives - The beneficiary or legal
            representative of a deceased participant may redesignate subject to
            the same rules as participants. However, the beneficiary or legal
            representative shall have one opportunity to redesignate any amount
            out of Merck Common Stock without regard to the rule set forth in
            Section B, below; thereafter, the beneficiary or legal
            representative shall be subject to the same redesignation rules as
            participants (including the limitation on redesignation out of Merck
            Common Stock).

B.   SPECIAL RULES FOR REDESIGNATION OUT OF COMMON STOCK

1.  Eligible Participants

No redesignation may be made out of Merck Common Stock unless the participant's
balance in Merck Common Stock exceeds three times such participant's Annual Base
Salary. For the purposes of this Section B, Annual Base Salary for an active
participant shall be such participant's monthly base salary at the date the
redesignation is requested, and, for a retired participant, monthly base salary
at the date of retirement, annualized.

2.  Frequency and Timing

For Section 16 Officers, redesignations may only be made out of Merck Common
Stock during any window period established by the Company from time-to-time.

3.  Amount.

Redesignation of amounts in Merck Common Stock is restricted to amounts in
excess of three times Annual Base Salary. For Section 16 Officers, redesignation
of amounts in Merck Common Stock is also restricted to amounts held in Merck
Common Stock for longer than six (6) months.

4.  Material, Nonpublic Information

The Committee, in its sole discretion and with advice of counsel, at any time
may rescind a redesignation out of Merck Common Stock if such redesignation was
made by a participant who, a) at the time of the redesignation was in the
possession of material, nonpublic information with respect to the Company; and
b) in the Committee's estimation benefited from such information in the timing
of his/her redesignation. The Committee's determination shall be final and
binding. In the event of such rescission, the participant's Deferred
Compensation Account shall be returned to a status as though such redesignation
had not occurred. Notwithstanding the above, the Committee shall not rescind a
redesignation if the facts were reviewed by the participant with the



                                       5

General Counsel of the Company or a designee prior to the redesignation and if
the General Counsel or designee had concluded that such participant was not in
possession of adverse material, nonpublic information.

C.    CONVERSION OF COMMON STOCK ACCOUNTS

      The Committee may, in its sole discretion, convert all of the shares of
Merck Common Stock allocated to a participant's Deferred Compensation Account in
the manner provided below where a position which a terminated or retired
participant has taken or wishes to take is, in the opinion of the Committee,
such as would make uncertain the propriety of the participant's having a
continued interest in Merck Common Stock. The date of conversion shall be the
date of commencement of such other employment or the date of the Committee's
action, whichever is later.

      Conversion shall be from an expression of value in shares of Merck Common
Stock in the participant's Deferred Compensation Account to an expression of
value in United States dollars in another available investment. The value of the
Merck Common Stock shall be based upon its closing price on the New York Stock
Exchange on the date of conversion or if no trading took place on such day, the
next business day on which trading took place. Any conversion under this
paragraph shall be irrevocable and absolute.

               VI. DISTRIBUTION OF DEFERRED COMPENSATION ACCOUNTS

      Distribution of Deferred Compensation Accounts shall be made in accordance
with the participant's distribution schedule pro rata by investment.
Distributions from Merck Common Stock will be made in shares, with cash payable
for any partial share, subject to the limitations set forth in Article IV,
Section A.5. For Section 16 Officers, distribution of amounts in Merck Common
Stock is also restricted to amounts held in Merck Common Stock for longer than
six months. Distributions from Mutual Funds will be in cash. Distributions will
be valued on the fifteenth day of the distribution month (or, if such day is not
a business day, the next business day) and paid as soon thereafter as
practicable.

A. Retirement

      A participant's retirement from active service will cause distributions of
his/her Deferred Compensation Account to commence as soon as administratively
feasible in accordance with the participant's previously elected schedule.

      If a participant retires from active service prior to age 65, the
Committee may establish a different distribution schedule. The schedule chosen
by the Committee, however, shall not be shorter than the participant's
previously elected schedule unless there has been or would be a significant
change in the participant's economic circumstances attributable to the
participant's early retirement. If the Committee decides to change the
participant's distribution schedule, the participant's Deferred Compensation
Account must be distributed ratably over no less than five years. However, if a
participant has retired at the Company's request, the limitation in the
preceding sentence does not apply.


                                       6

B. Death

      In the event of a participant's death, distributions under this Program
will commence as soon as administratively feasible in accordance with his/her
previously elected schedule. The participant's beneficiary or legal
representative, however, may request that the Committee change such distribution
schedule.

C. Automatic Distribution

      If a participant terminates employment for reasons other than death,
divestiture or a separation due to reorganization, reduction in force,
elimination of the participant's job, or to take a position with a joint venture
or other business entity defined in Section E, below, and is not eligible to
retire from active service under one of the Company's pension plans, then
his/her Deferred Compensation Account will be automatically paid in a lump sum
as soon as administratively feasible following his/her termination of
employment. Furthermore, except as provided in Schedule II, any participant who
dies, retires from active service, or whose employment terminates as a result of
a divestiture, or a separation due to reorganization, reduction in force, or
elimination of the participant's job, but whose Deferred Compensation Account is
valued at less than $125,000 on the date of his/her death, retirement,
termination due to divestiture or separation will have his/her Deferred
Compensation Account distributed in a lump sum as soon as administratively
feasible following his/her death, retirement, or termination due to divestiture
or separation.

D. Termination Due to Divestiture or Separation

      If a participant is employed by a subsidiary of the Company that is sold,
so that the subsidiary is no longer considered within the controlled group of
the Company, that participant shall be considered to have terminated employment
with the Company for purposes of this Program. If a participant's employment
terminates as a result of a divestiture of a division or subsidiary of the
Company, or as a result of a separation due to a reorganization, reduction in
force, or elimination of the participant's job, distributions under this Program
will commence as soon as administratively feasible after such termination of
employment in accordance with his/her previously elected schedule or such
schedule as the Committee, in its discretion, may approve in accordance with
Section G, below.

E. Joint Venture Service

      A participant's termination of employment in order to take a position with
a joint venture or other business entity in which the Company shall directly or
indirectly own fifty percent or more of the outstanding voting or other
ownership interest shall not be considered a termination of employment with the
Company for purposes of distribution under this Program.


                                       7

F. Hardship Distributions

The Committee, in its sole discretion, may accelerate the time of distribution
of a participant's Deferred Compensation Account, if the participant experiences
severe financial hardship due to illness, accident or death in the immediate
family, loss of or damage to property due to casualty, or other extraordinary
and unforeseeable circumstances. Such participant should provide the Committee
with a statement in reasonable detail as to the nature of such financial
hardship together with a statement that such acceleration is necessary to
alleviate such hardship.

G. Post-Retirement, Post-Divestiture and Post-Separation Modifications

      A participant who has retired from active service or whose employment has
terminated as a result of a divestiture or separation as described in Section D,
above, may submit one petition to the Committee requesting an extension of the
period of distribution of his/her Deferred Compensation Account. Such petition
must be received by the Committee prior to the first distribution to the
participant of his/her previously elected distribution schedule. Any revised
distribution schedule may not exceed fifteen years from the date of actual
retirement, or the divestiture or separation date and will be effective the
beginning of the next calendar year. The Committee shall in no event grant a new
schedule under which the participant would cumulatively receive a greater
portion of his/her Deferred Compensation Account as measured at the end of each
calendar year. Except as provided in Schedule II, a participant who is an active
employee may not make a request under this paragraph.

                       VII. DEDUCTIONS FROM DISTRIBUTIONS

      The Company will deduct from each distribution amounts required to be
withheld for income, Social Security and other tax purposes. Such withholding
will be done on a pro rata basis per investment. The Company may also deduct any
amounts the participant owes the Company for any reason.

                         VIII. BENEFICIARY DESIGNATIONS

      A participant under this program may designate a beneficiary to receive
his/her Deferred Compensation Account upon the participant's death. Should the
beneficiary predecease the participant or should the participant not name a
beneficiary, the participant's Deferred Compensation Account will be distributed
to the participant's estate.

                                 IX. AMENDMENTS

      The Committee may amend this Program at any time. However, such amendment
shall not materially adversely affect any right or obligation with respect to
any Deferred Compensation made theretofore.


                                       8


SCHEDULE I

                    DEFERRAL PROGRAM INVESTMENT ALTERNATIVES
                      (JANUARY 1, 2002 - JANUARY 10, 2003)



MERCK COMMON STOCK

MUTUAL FUNDS

         American Century Emerging Markets Fund
         American Funds EuroPacific Growth Fund
         Fidelity Destiny I
         Fidelity Dividend Growth
         Fidelity Equity-Income Fund
         Fidelity Low-Priced Stock Fund
         Fidelity Retirement Money Market
         Fidelity Spartan (R) Government Income
         Fidelity Spartan (R) U.S. Equity Index
         Franklin Small-Mid Cap Growth A
         Janus Enterprise
         Janus Growth & Income
         Liberty Acorn Fund-Class Z
         PIMCO Foreign Bond Institutional
         PIMCO Long Term US Government Institutional
         PIMCO Total Return Institutional
         Putnam Global Equity Fund A*
         Putnam International Voyager A
         Putnam Vista A
         T. Rowe Price Blue Chip Growth Fund
         Vanguard Asset Allocation




         *From September 20, 2002 - September 30, 2002, this investment was
         briefly named the Putnam Global Growth Fund A as a result of the
         merger, in September 2002, of Putnam Global Equity Fund A with Putnam
         Global Growth Fund A. The merged fund briefly retained the name "Putnam
         Global Growth Fund A." Effective October 1, 2002, the merged fund
         changed its name to "Putnam Global Equity Fund A."




                                       9

SCHEDULE I

                    DEFERRAL PROGRAM INVESTMENT ALTERNATIVES
                  (EFFECTIVE JANUARY 11, 2003 TO JULY 31, 2003)

         MERCK COMMON STOCK

         MUTUAL FUNDS

                  American Century Emerging Markets Institutional
                  American Funds EuroPacific Growth Fund
                  Fidelity Destiny I
                  Fidelity Dividend Growth
                  Fidelity Equity-Income
                  Fidelity Low-Priced Stock
                  Fidelity Retirement Money Market
                  Fidelity Spartan Government Income
                  Fidelity Spartan U.S. Equity Index
                  Franklin Small-Mid Cap Growth A
                  Janus Enterprise
                  Janus Growth & Income
                  Liberty Acorn Class Z
                  PIMCO Foreign Bond Institutional
                  PIMCO Long Term US Government Institutional
                  PIMCO Total Return Institutional
                  Putnam Global Equity A
                  Putnam International Capital Opportunities Fund A*
                  Putnam Vista A
                  T. Rowe Price Blue Chip Growth
                  Vanguard Asset Allocation

*Prior to April 30, 2003, known as Putnam International Voyager Fund A.

REDESIGNATION OF DEFERRED AMOUNTS MEASURED BY PUTNAM VISTA A ON JULY 31, 2003

Prior to 4 p.m. ET on July 31, 2003, each participant who has any part of
his/her Deferred Compensation Account measured by the Putnam Vista A investment
alternative may redesignate the amount in such investment alternative in
accordance with Article V, Section A. If a participant does not redesignate the
amount measured by the Putnam Vista A investment alternative to any other
remaining investment alternatives before 4 p.m. ET on July 31, 2003, then the
amount in the Putnam Vista A account shall be redesignated as of 4 p.m. ET on
July 31, 2003, to the Fidelity Mid-Cap Stock Fund.




                                       10

SCHEDULE I

                    DEFERRAL PROGRAM INVESTMENT ALTERNATIVES
                            (EFFECTIVE JULY 31, 2003)

         MERCK COMMON STOCK

         MUTUAL FUNDS

                  American Century Emerging Markets Institutional
                  American Funds EuroPacific Growth Fund
                  Fidelity Destiny I
                  Fidelity Dividend Growth
                  Fidelity Equity-Income
                  Fidelity Low-Priced Stock
                  Fidelity Mid-Cap Stock Fund
                  Fidelity Retirement Money Market
                  Fidelity Spartan Government Income
                  Fidelity Spartan U.S. Equity Index
                  Franklin Small-Mid Cap Growth A
                  Janus Enterprise
                  Janus Growth & Income
                  Liberty Acorn Class Z
                  PIMCO Foreign Bond Institutional
                  PIMCO Long Term US Government Institutional
                  PIMCO Total Return Institutional
                  Putnam Global Equity A
                  Putnam International Capital Opportunities Fund A*
                  T. Rowe Price Blue Chip Growth
                  Vanguard Asset Allocation

*Prior to April 30, 2003, known as Putnam International Voyager Fund A.




                                       11

SCHEDULE I

                    DEFERRAL PROGRAM INVESTMENT ALTERNATIVES
                           (REVISED OCTOBER 17, 2003)

         MERCK COMMON STOCK

         MUTUAL FUNDS

                  American Century Emerging Markets Institutional
                  American Funds EuroPacific Growth Fund
                  Columbia Acorn Fund *
                  Fidelity Destiny I
                  Fidelity Dividend Growth
                  Fidelity Equity-Income
                  Fidelity Low-Priced Stock
                  Fidelity Mid-Cap Stock Fund
                  Fidelity Retirement Money Market
                  Fidelity Spartan Government Income
                  Fidelity Spartan U.S. Equity Index
                  Franklin Small-Mid Cap Growth A
                  Janus Enterprise
                  Janus Growth & Income
                  PIMCO Foreign Bond Institutional
                  PIMCO Long Term US Government Institutional
                  PIMCO Total Return Institutional
                  Putnam Global Equity A
                  Putnam International Capital Opportunities Fund A**
                  T. Rowe Price Blue Chip Growth
                  Vanguard Asset Allocation

*Prior to October 2003, known as Liberty Acorn Class Z

**Prior to April 30, 2003, known as Putnam International Voyager Fund A.




                                       12

SCHEDULE II

                        SPECIAL PROVISIONS APPLICABLE TO
                             MEDCO HEALTH EMPLOYEES
                            (APPROVED JULY 23, 2002)

DEFINITIONS

Medco Health - Medco Health Solutions, Inc.

Medco Health Employee - A participant who is (i) employed by Medco Health prior
to the Spin-Off or (ii) employed by Merck prior to the Spin-Off and expected to
be employed by Medco Health prior to or as of the Spin-Off.

Separated Medco Health Employee - A participant in the Deferral Program who is
employed by Medco Health as of the date of the Spin-Off and is considered to
have terminated employment with the Company as a result of the Spin-Off.

Spin-Off -- The distribution by Merck to its shareholders of the equity
securities of Medco Health. The Spin-Off will be a divestiture for purposes of
the Deferral Program.



SPECIAL PROVISIONS

Notwithstanding anything to the contrary in Article VI, Section C of the
Deferral Program, the Deferred Compensation Account of each Separated Medco
Health Employee shall be paid out in accordance with Article VI, Section D,
without regard to the $125,000 threshold set forth in Section C.

Notwithstanding anything to the contrary in Article VI, Section G of the
Deferral Program, each Medco Health Employee may submit the petition for an
extension of the distribution schedule permitted under Section G either prior to
the Spin-Off or once the Medco Health Employee has become a Separated Medco
Health Employee; provided, however, that if a Medco Health Employee makes a
request for a new distribution schedule prior to the Spin-Off and thereafter
does not become a Separated Medco Health Employee, then such request shall not
be effective.



                                       13

EX-10.2

________________________________________________________________________________

                                                                    Exhibit 10.2












                                MERCK & CO., INC.

                            2001 INCENTIVE STOCK PLAN

                              (amended and restated
                                 July 22, 2003)











________________________________________________________________________________

                            2001 INCENTIVE STOCK PLAN

      The 2001 Incentive Stock Plan ("ISP"), effective January 1, 2001, is
established to encourage employees of Merck & Co., Inc. (the "Company"), its
subsidiaries, its affiliates and its joint ventures to acquire Common Stock in
the Company ("Common Stock"). It is believed that the ISP will stimulate
employees' efforts on the Company's behalf, will tend to maintain and strengthen
their desire to remain with the Company, will be in the interest of the Company
and its Stockholders and will encourage such employees to have a greater
personal financial investment in the Company through ownership of its Common
Stock.

1.    INCENTIVES

      Incentives under the ISP may be granted in any one or a combination of (a)
Incentive Stock Options (or other statutory stock options); (b) Nonqualified
Stock Options; (c) Stock Appreciation Rights; (d) Restricted Stock Grants and
(e) Performance Shares (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 Compensation and Benefits Committee of
the Board of Directors (the "Committee").

2.    ELIGIBILITY

      Regular full-time and part-time employees of the Company, 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, shall be eligible to participate in the ISP ("Eligible
Employees") if designated by the Committee. Directors of the Company who are not
regular employees are not eligible to participate in the ISP.

3.    ADMINISTRATION

      The ISP shall be administered by the Committee. The Committee shall be
responsible for the administration of the ISP including, without limitation,
determining which Eligible Employees receive Incentives, what kind of Incentives
are made under the ISP and for what number of shares, and the other terms and
conditions of such Incentives. Determinations by the Committee under the ISP
including, without limitation, determinations of the Eligible Employees, the
form, amount and timing of Incentives, the terms and provisions of Incentives
and the agreements evidencing Incentives, need not be uniform and may be made
selectively among Eligible Employees who receive, or are eligible to receive,
Incentives hereunder, whether or not such Eligible Employees are similarly
situated.

      The Committee shall have the responsibility of construing and interpreting
the ISP and of establishing and amending such rules and regulations as it may
deem necessary or desirable for the proper administration of the ISP. 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 ISP 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 conclusive and binding upon the
Company, all Eligible Employees and any person claiming under or through any
Eligible Employee.

      The Committee may delegate some or all of its power and authority
hereunder to the Chief Executive Officer or other senior member of management 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 Securities Exchange Act of 1934.

      For the purpose of this section and all subsequent sections, the ISP 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.

4.    SHARES AVAILABLE FOR INCENTIVES

      (a) SHARES SUBJECT TO ISSUANCE OR TRANSFER. Subject to adjustment as
provided in Section 4(c) hereof, there is hereby reserved for issuance under the
ISP 95 million shares of Common Stock. The shares available for granting awards
shall be increased by the number of shares as to which options or other benefits
granted under the ISP have lapsed, expired, terminated or been canceled. In
addition, any shares reserved for issuance under the Company's 1996 Incentive
Stock Plan and 1991 Incentive Stock Plan ("Prior Plans") in excess of the number
of shares as to which options or other benefits have been awarded thereunder,
plus any such shares as to which options or other benefits granted under the
Prior Plans may lapse, expire, terminate or be canceled, shall also be reserved
and available for issuance or reissuance under the ISP. Shares under this ISP
may be delivered by the Company from its authorized but unissued shares of
Common Stock or from Common Stock held in the Treasury.

      (b) LIMIT ON AN INDIVIDUAL'S INCENTIVES. In any given year, no Eligible
Employee may receive Incentives covering more than three (3) million shares of
the Company's Common Stock (such number of shares shall be adjusted in
accordance with Section 4(c)).

      (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 ISP, (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.

5.    STOCK OPTIONS

      The Committee may grant options qualifying as Incentive Stock Options
under the Internal Revenue Code of 1986, as amended, or any successor code
thereto (the "Code"), other statutory options under the Code and 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) 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 OPTION. The period of each Stock Option shall be fixed
      by the Committee, but shall not exceed ten (10) years.


                                       2

            (c) PAYMENT. No shares shall be issued until full payment of the
      option price has been made. The option prices may be paid in cash or, if
      the Committee determines, in shares of Common Stock or a combination of
      cash and shares. 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 ISP shall be exercised through the
      Company's broker-assisted stock option exercise program, provided such
      program is available at the time of the option exercise, or by such other
      means as the Committee may determine from time to time. The Committee may
      establish rules and procedures to permit an optionholder to defer
      recognition of gain upon the exercise of a stock option.

            (d) EXERCISE OF OPTION. 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 options become exercisable
      or "vested" and exercise periods, provided that in no event (including
      those specified in paragraphs (e), (f) and (g) of this section) shall any
      Stock Option be exercisable after its specified expiration period.

            (e) TERMINATION OF EMPLOYMENT. Upon the termination of a Stock
      Option grantee's employment (for any reason other than retirement, death
      or termination for 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 as may be determined
      by the Committee. Such Stock Option privileges shall expire unless
      exercised or surrendered under a Stock Appreciation Right 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.

            (f) RETIREMENT. Upon retirement of a Stock Option grantee, Stock
      Option privileges shall apply to those shares immediately exercisable at
      the date of retirement. The Committee, however, in its discretion, may
      provide that any Stock Options outstanding but not yet exercisable upon
      the retirement of a Stock Option grantee may become exercisable in
      accordance with a schedule as may be determined by the Committee. Stock
      Option privileges shall expire unless exercised within such period of time
      as may be established by the Committee, but in no event later than the
      expiration date of the Stock Option.

            (g) DEATH. Upon the death of a Stock Option grantee, Stock Option
      privileges shall apply to those shares which were immediately exercisable
      at the time of death. The Committee, however, in its discretion, may
      provide that any Stock Options outstanding but not yet exercisable upon
      the death of a Stock Option grantee may become exercisable in accordance
      with a schedule as may be determined by the Committee. Such privileges
      shall expire unless exercised by legal representative(s) within a period
      of time as determined by the Committee, but in no event later than the
      expiration date of the Stock Option.

            (h) 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 receipt of the notice of such termination.

            (i) LIMITS ON INCENTIVE STOCK OPTIONS. Except as may otherwise be
      permitted by the Code, the Committee shall not grant to an Eligible
      Employee Incentive Stock Options that, in the aggregate, are first
      exercisable during any one calendar year to the extent that the aggregate
      fair market value of the Common Stock, at the time the Incentive Stock
      Options are granted, exceeds $100,000, or such other amount as the
      Internal Revenue Service may decide from time to time.


                                       3

6.    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 or under the Prior Plans. Such Stock Appreciation
Rights 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 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 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 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.

7.    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 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, subsidiary, division or joint venture
      during the Award Period as a condition to payment of the Performance Share
      Award. The Performance Goals may include earnings per share, return on
      stockholders' equity, return on assets, net income or any other financial
      or other measurement established by the Committee. The Performance Goals
      may include minimum and optimum objectives or a single set of objectives.


                                       4

            (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, subsidiary, division or joint venture shall be
      measured against the Performance Goals, and the Committee shall determine
      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.

            (c) REVISION OF PERFORMANCE GOALS. 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, subsidiary, division or joint
      venture 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 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.

            (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 8 shall not exceed, in the aggregate, six (6) million shares
      of Common Stock (such number of shares shall be adjusted in accordance
      with Section 4(c)).

8.    RESTRICTED STOCK GRANTS

      The Committee may award shares of Common Stock to a grantee, 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.


                                       5

            (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.

            (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) LIMIT ON RESTRICTED STOCK GRANT. Incentives granted as
      Restricted Stock Grants under this section and Performance Share Awards
      under Section 7 shall not exceed, in the aggregate, six (6) million shares
      of Common Stock (such number of shares shall be adjusted in accordance
      with Section 4(c)).

9.    TRANSFERABILITY

      Each Incentive Stock Option granted under the ISP shall not be
transferable other than by will or the laws of descent and distribution; each
other Incentive granted under the ISP will 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 as
determined by the Committee in accordance with regulations promulgated under the
Securities Exchange Act of 1934, or any other applicable law or regulation.

10.   DISCONTINUANCE OR AMENDMENT OF THE PLAN

      The Board of Directors may discontinue the ISP at any time and may from
time to time amend or revise the terms of the ISP as permitted by applicable
statutes, except that it may not revoke or alter, in a manner unfavorable to the
grantees of any Incentives hereunder, any Incentives then outstanding, nor may
the Board amend the ISP without stockholder approval where the absence of such
approval would cause the Plan to fail to comply with Rule 16b-3 under the
Securities Exchange Act of 1934, or any other requirement of applicable law or
regulation. Unless approved by the Company's stockholders, no adjustments or
reduction of the exercise price of any outstanding Incentives shall be made by
cancellation of outstanding Incentives and the subsequent regranting of
Incentives at a lower price to the same individual. No Incentive shall be
granted under the ISP after December 31, 2003, but Incentives granted
theretofore may extend beyond that date.

11.   NO RIGHT OF EMPLOYMENT OR PARTICIPATION

      The ISP and the Incentives granted hereunder shall not confer upon any
Eligible Employee the right to continued employment with the Company, its
subsidiaries, its affiliates or its joint ventures or affect in any way the
right of such entities to terminate the employment of an Eligible Employee at
any time and for any reason. No individual shall have a right to be granted an
Incentive, or having been granted an Incentive, to receive any future
Incentives.


                                       6

12.   NO LIMITATION ON COMPENSATION

      Nothing in the ISP 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 ISP.

13.   NO IMPACT ON BENEFITS

      Except as may otherwise be specifically stated under any employee benefit
plan, policy or program, no amount payable in respect of any Incentive shall be
treated as compensation for purposes of calculating an employee's right under
any such plan, policy or program.

14.   NO CONSTRAINT ON CORPORATE ACTION

      Nothing in the ISP 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 10, to limit the right
or power of the Company or any subsidiary to take any action which such entity
deems to be necessary or appropriate.

15.   WITHHOLDING TAXES

      The Company shall be entitled to deduct from any payment under the ISP,
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 Employee 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
Employee 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 Employee 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.

16.   GOVERNING LAW

      The ISP, and all agreements hereunder, shall be construed in accordance
with and governed by the laws of the State of New Jersey.


                                       7

EX-10.3

________________________________________________________________________________

                                                                    Exhibit 10.3

                                MERCK & CO., INC.

                          PLAN FOR DEFERRED PAYMENT OF

                             DIRECTORS' COMPENSATION

                      (Amended and Restated July 24, 2003)




________________________________________________________________________________

                                TABLE OF CONTENTS



                                                                            Page
                                                                            ----
                                                                         
Article I   Purpose ......................................................     1

Article II  Election of Deferral, Measurement Methods and
              Distribution Schedule ......................................     1

Article III Valuation of Deferred Amounts ................................     2

Article IV  Redesignation Within a Deferral Account ......................     3

Article V   Payment of Deferred Amounts ..................................     4

Article VI  Designation of Beneficiary ...................................     5

Article VII Plan Amendment or Termination ................................     5

Schedule A  Measurement Methods ..........................................     6



                                       (i)

                                MERCK & CO., INC.
                          PLAN FOR DEFERRED PAYMENT OF
                             DIRECTORS' COMPENSATION

I.    PURPOSE

      To provide an arrangement under which directors of Merck & Co., Inc. other
      than current employees may (i) elect to voluntarily defer payment of the
      annual retainer and meeting and committee fees until after termination of
      their service as a director, and (ii) value compensation mandatorily
      deferred on their behalf.

II.   ELECTION OF DEFERRAL, MEASUREMENT METHODS AND
      DISTRIBUTION SCHEDULE

      A.    Election of Voluntary Deferral Amount

      1.    Prior to December 28 of each year, each director is entitled to make
            an irrevocable election to defer until termination of service as a
            director receipt of payment of (a) 50% or 100% of the retainer for
            the 12 months beginning April 1 of the next calendar year, (b) 50%
            or 100% of the Committee Chairperson retainer beginning April 1 of
            the next calendar year, and (c) 50% or 100% of the meeting and
            committee fees for the 12 months beginning April 1 of the next
            calendar year.

      2.    Prior to commencement of duties as a director, a director newly
            elected or appointed to the Board during a calendar year must make
            the election under this paragraph for the portion of the Voluntary
            Deferral Amount applicable to such director's first year of service
            (or part thereof).

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

      B.    Mandatory Deferral Amount

      1.    On the Friday following the Company's Annual Meeting of Stockholders
            (such Friday hereinafter referred to as the "Mandatory Deferral
            Date"), each director will be credited with an amount equivalent to
            one-third of the annual cash retainer for the 12 month period
            beginning on the April 1 preceding the Annual Meeting (the
            "Mandatory Deferral Amount"). The Mandatory Deferral Amount will be
            measured by the Merck Common Stock account.

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


                                       1

      C.    Election of Measurement Method

            Each such annual election referred to in Section A shall include an
            election as to the measurement method or methods by which the value
            of amounts deferred will be measured in accordance with Article III,
            below. The available measurement methods are set forth on Schedule A
            hereto.

      D.    Election of Distribution Schedule

            Each annual election referred to in Section A above shall also
            include an election to receive payment following termination of
            service as a director of all Voluntary Deferral Amounts and
            Mandatory Deferral Amounts in a lump sum either immediately or one
            year after such termination, or in quarterly or annual installments
            over five, ten or fifteen years.

III.  VALUATION OF DEFERRED AMOUNTS

      A.    Common Stock

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

            That portion of the Voluntary Deferral Amount allocated to Merck
            Common Stock shall be used to determine the number of full and
            partial shares of Merck Common Stock which such amount would
            purchase at the closing price of the Common Stock on the New York
            Stock Exchange on the applicable Voluntary Deferral Date.

            However, should it be determined by the Committee on Corporate
            Governance of the Board of Directors that a measurement of Merck
            Common Stock on any Mandatory or Voluntary Deferral Date would not
            constitute fair market value, then the Committee shall decide on
            which date fair market value shall be determined using the valuation
            method set forth in this Article III, Section A.1.

            At no time during the deferral period will any shares of Merck
            Common Stock be purchased or earmarked for such deferred amounts nor
            will any rights of a shareholder exist with respect to such amounts.

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

      3.    Distributions. Distribution from the Merck Common Stock account will
            be valued at the closing price of Merck Common Stock on the New York
            Stock Exchange on the distribution date.


                                       2

      B.    Mutual Funds

      1.    Initial Crediting. The amount allocated to each Mutual Fund shall be
            used to determine the full and partial Mutual Fund shares which such
            amount would purchase at the closing net asset value of the Mutual
            Fund shares on the Mandatory or Voluntary Deferral Date, whichever
            is applicable. The director's account will be credited with the
            number of full and partial Mutual Fund shares so determined.

            At no time during the deferral period will any Mutual Fund shares be
            purchased or earmarked for such deferred amounts nor will any rights
            of a shareholder exist with respect to such amounts.

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

      3.    Distributions. Mutual Fund distributions will be valued based on the
            closing net asset value of the Mutual Fund shares on the
            distribution date.

      C.    Adjustments

            In the event of a reorganization, recapitalization, stock split,
            stock dividend, combination of shares, merger, consolidation, rights
            offering or any other change in the corporate structure or shares of
            the Company or a Mutual Fund, the number and kind of shares or units
            of such investment measurement method available under this Plan and
            credited to each director's account shall be adjusted accordingly.

IV.   REDESIGNATION WITHIN A DEFERRAL ACCOUNT

      A.    General

            A director may request a change in the measurement methods used to
            value all or a portion of his/her account other than Merck Common
            Stock. AMOUNTS DEFERRED USING THE MERCK COMMON STOCK METHOD AND ANY
            EARNINGS ATTRIBUTABLE TO SUCH DEFERRALS MAY NOT BE REDESIGNATED. The
            change will be effective on (i) the day when the redesignation
            request is received pursuant to administrative guidelines
            established by the Human Resources Financial Services area of the
            Treasury department, provided the request is received prior to the
            close of the New York Stock Exchange on such day or (ii) the next
            following business day if the request is received when the New York
            Stock Exchange is closed.

      B.    When Redesignation May Occur

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


                                       3

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

      C.    Valuation of Amounts to be Redesignated

            The portion of the director's account to be redesignated will be
            valued at its cash equivalent and such cash equivalent will be
            converted into shares or units of the other measurement method(s).
            For purposes of such redesignations, the cash equivalent of the
            value of the Mutual Fund shares shall be the closing net asset value
            of such Mutual Fund on (i) the day when the redesignation request is
            received pursuant to administrative guidelines established by the
            Human Resources Financial Services area of the Treasury department,
            provided the request is received prior to the close of the New York
            Stock Exchange on such day or (ii) the next following business day
            if the request is received when the New York Stock Exchange is
            closed.

V.    PAYMENT OF DEFERRED AMOUNTS

      A.    Payment

            All payments to directors of amounts deferred will be in cash in
            accordance with the distribution schedule elected by the director
            pursuant to Article II, Section D. Distributions shall be pro rata
            by measurement method. Distributions shall be valued on the
            fifteenth day of the distribution month (or, if such day is not a
            business day, the next business day) and paid as soon thereafter as
            possible.

      B.    Changes to Distribution Schedule Prior to Termination

            Upon the request of a director made at any time during the calendar
            year immediately preceding the calendar year in which service as a
            director is expected to terminate, the Committee on Corporate
            Governance of the Board of Directors, in its sole discretion, may
            authorize: (a) an extension of a payment period beyond that
            originally elected by the director not to exceed that otherwise
            allowable under Article II, Section D, and/or (b) a payment
            frequency different from that originally elected by the director.
            Such request may not be made with regard to amounts deferred after
            December 31, 1990 using the Merck Common Stock method and to any
            earnings attributable to such deferrals. Deferrals into Merck Common
            Stock made after December 31, 1990 and any earnings thereon may only
            be distributed in accordance with the schedule elected by the
            director under Article II, Section D or determined by the Committee
            on Corporate Governance under Article VI.

      C.    Post-Termination Changes to Distribution Schedule

            Following termination of service as a director, each director may
            make one request for a further extension of the period for
            distribution of his/her deferred compensation. Such request must be
            received by the Committee on Corporate Governance prior to the first
            distribution to the participant under his/her previously elected
            distribution schedule. Any revised distribution schedule may not
            exceed the deferral period otherwise allowable under Article II,
            Section C. This request may be granted and a new payment schedule
            determined in the sole discretion of the Committee on Corporate
            Governance.


                                       4

            Such request may not be made with regard to amounts deferred after
            December 31, 1990 using the Merck Common Stock Method and to any
            earnings attributable to such deferrals. Any retired director who is
            not subject to U.S. income tax may petition the Committee on
            Corporate Governance to change payment frequency, including a lump
            sum distribution, and the Committee on Corporate Governance may
            grant such petition if, in its discretion, it considers there to be
            reasonable justification therefor. Deferrals into Merck Common Stock
            made after December 30, 1990 and any earnings thereon may only be
            distributed in accordance with the schedule elected by the director
            under Article II, Section D or determined by the Committee on
            Corporate Governance under Article VI.

      D.    Forfeitures

            A director's deferred amount attributable to the Mandatory Deferral
            Amount and earnings thereon shall be forfeited upon his or her
            removal as a director or upon a determination by the Committee on
            Corporate Governance in its sole discretion, that a director has:

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

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

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

VI.   DESIGNATION OF BENEFICIARY

      In the event of the death of a director, the deferred amount at the date
      of death shall be paid to the last named beneficiary or beneficiaries
      designated by the director, or, if no beneficiary has been designated, to
      the director's legal representative, in one or more installments as the
      Committee on Corporate Governance in its sole discretion may determine.

VII.  PLAN AMENDMENT OR TERMINATION

      The Committee on Corporate Governance shall have the right to amend or
      terminate this Plan at any time for any reason.


                                       5

                                   SCHEDULE A

                               MEASUREMENT METHODS
                      (JANUARY 1, 2002 - JANUARY 10, 2003)


      MERCK COMMON STOCK

      MUTUAL FUNDS

            American Century Emerging Markets Fund
            American Century Europacific Growth Fund
            Fidelity Destiny I
            Fidelity Dividend Growth
            Fidelity Equity Income Fund
            Fidelity Low-Priced Stock Fund
            Fidelity Retirement Money Market
            Fidelity Spartan Government Income
            Fidelity Spartan U.S. Equity Index
            Franklin Small-Mid Cap Growth A
            Janus Enterprise
            Janus Growth & Income
            Liberty Acorn Z
            PIMCO Foreign Bond Institutional
            PIMCO Long Term US Government Institutional
            PIMCO Total Return Institutional
            Putnam Global Equity Fund A*
            Putnam International Voyager A
            Putnam Vista A
            T. Rowe Price Blue Chip Growth Fund
            Vanguard Asset Allocation

            *From September 20, 2002 -- September 30, 2002, this investment was
      briefly named the Putnam Global Growth Fund A as a result of the merger,
      in September 2002, of Putnam Global Equity Fund A with Putnam Global
      Growth Fund A. The merged fund briefly retained the name "Putnam Global
      Growth Fund A." Effective October 1, 2002, the merged fund changed its
      name to "Putnam Global Equity Fund A."


                                       6

                                   SCHEDULE A

                               MEASUREMENT METHODS
                  (EFFECTIVE JANUARY 11, 2003 TO JULY 31, 2003)

      MERCK COMMON STOCK

      MUTUAL FUNDS

            American Century Emerging Markets Institutional
            American Funds EuroPacific Growth Fund
            Fidelity Destiny I
            Fidelity Dividend Growth
            Fidelity Equity-Income
            Fidelity Low-Priced Stock
            Fidelity Retirement Money Market
            Fidelity Spartan Government Income
            Fidelity Spartan U.S. Equity Index
            Franklin Small-Mid Cap Growth A
            Janus Enterprise
            Janus Growth & Income
            Liberty Acorn Class Z
            PIMCO Foreign Bond Institutional
            PIMCO Long Term US Government Institutional
            PIMCO Total Return Institutional
            Putnam Global Equity A
            Putnam International Capital Opportunities Fund A*
            Putnam Vista A
            T. Rowe Price Blue Chip Growth
            Vanguard Asset Allocation

* Prior to April 30, 2003, known as Putnam International Voyager Fund A.

REDESIGNATION OF DEFERRED AMOUNTS MEASURED BY PUTNAM VISTA A ON JULY 31, 2003

Prior to 4 p.m. ET on July 31, 2003, each participant who has any part of
his/her account measured by the Putnam Vista A measurement method may
redesignate the amount in such measurement method in accordance with Article IV.
If a participant does not redesignate the amount measured by the Putnam Vista A
measurement method to any other remaining measurement method before 4 p.m. ET on
July 31, 2003, then the amount in the Putnam Vista A account shall be
redesignated as of 4 p.m. ET on July 31, 2003, to the Fidelity Mid-Cap Stock
Fund.


                                       7

                                   SCHEDULE A

                               MEASUREMENT METHODS
                            (EFFECTIVE JULY 31, 2003)

      MERCK COMMON STOCK

      MUTUAL FUNDS

            American Century Emerging Markets Institutional
            American Funds EuroPacific Growth Fund
            Columbia Acorn Class Z*
            Fidelity Destiny I
            Fidelity Dividend Growth
            Fidelity Equity-Income
            Fidelity Low-Priced Stock
            Fidelity Mid-Cap Stock Fund
            Fidelity Retirement Money Market
            Fidelity Spartan Government Income
            Fidelity Spartan U.S. Equity Index
            Franklin Small-Mid Cap Growth A
            Janus Enterprise
            Janus Growth & Income
            PIMCO Foreign Bond Institutional
            PIMCO Long Term US Government Institutional
            PIMCO Total Return Institutional
            Putnam Global Equity A
            Putnam International Capital Opportunities Fund A**
            T. Rowe Price Blue Chip Growth
            Vanguard Asset Allocation

* Prior to October 2003, known as Liberty Acorn Class Z
** Prior to April 30, 2003, known as Putnam International Voyager Fund A


                                       8

EX-12

COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES

EX-31.1

                                                                    Exhibit 31.1


                                  CERTIFICATION

      I, Raymond V. Gilmartin, certify that:

      1. I have reviewed this quarterly report on Form 10-Q of Merck & Co.,
Inc.;

      2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;

      3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;

      4. The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:


            a) Designed such disclosure controls and procedures, or caused such
      disclosure controls and procedures to be designed under our supervision,
      to ensure that material information relating to the registrant, including
      its consolidated subsidiaries, is made known to us by others within those
      entities, particularly during the period in which this report is being
      prepared;

            b) Evaluated the effectiveness of the registrant's disclosure
      controls and procedures and presented in this report our conclusions about
      the effectiveness of the disclosure controls and procedures, as of the end
      of the period covered by this report based on such evaluation; and

            c) Disclosed in this report any change in the registrant's internal
      control over financial reporting that occurred during the registrant's
      most recent fiscal quarter (the registrant's fourth fiscal quarter in the
      case of an annual report) that has materially affected, or is reasonably
      likely to materially affect, the registrant's internal control over
      financial reporting; and

      5. The registrant's other certifying officer(s) and I have disclosed,
based on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing the equivalent
functions):

            a) All significant deficiencies and material weaknesses in the
      design or operation of internal control over financial reporting which are
      reasonably likely to adversely affect the registrant's ability to record,
      process, summarize and report financial information; and

            b) Any fraud, whether or not material, that involves management or
      other employees who have a significant role in the registrant's internal
      control over financial reporting.



Date:       November 13, 2003


By:         /s/ Raymond V. Gilmartin
            -----------------------------------------------
            RAYMOND V. GILMARTIN
            Chairman, President and Chief Executive Officer

EX-31.2

                                                                    Exhibit 31.2

                                  CERTIFICATION

      I, Judy C. Lewent, certify that:

      1. I have reviewed this quarterly report on Form 10-Q of Merck & Co.,
Inc.;

      2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;

      3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;

      4. The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

            a) Designed such disclosure controls and procedures, or caused such
      disclosure controls and procedures to be designed under our supervision,
      to ensure that material information relating to the registrant, including
      its consolidated subsidiaries, is made known to us by others within those
      entities, particularly during the period in which this report is being
      prepared;

            b) Evaluated the effectiveness of the registrant's disclosure
      controls and procedures and presented in this report our conclusions about
      the effectiveness of the disclosure controls and procedures, as of the end
      of the period covered by this report based on such evaluation; and

            c) Disclosed in this report any change in the registrant's internal
      control over financial reporting that occurred during the registrant's
      most recent fiscal quarter (the registrant's fourth fiscal quarter in the
      case of an annual report) that has materially affected, or is reasonably
      likely to materially affect, the registrant's internal control over
      financial reporting; and

      5. The registrant's other certifying officer(s) and I have disclosed,
based on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing the equivalent
functions):

            a) All significant deficiencies and material weaknesses in the
      design or operation of internal control over financial reporting which are
      reasonably likely to adversely affect the registrant's ability to record,
      process, summarize and report financial information; and

            b) Any fraud, whether or not material, that involves management or
      other employees who have a significant role in the registrant's internal
      control over financial reporting.



Date:       November 13, 2003


By:         /s/ Judy C. Lewent
            ---------------------------------------------------
            JUDY C. LEWENT
            Executive Vice President & Chief Financial Officer
              President, Human Health Asia

EX-32.1

                                                                    Exhibit 32.1


                  CERTIFICATION BY THE CHIEF EXECUTIVE OFFICER
                 PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED
            PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002






                                  CERTIFICATION

      Pursuant to 18 U.S.C. Section 1350, the undersigned officer of Merck &
Co., Inc. (the "Company"), hereby certifies that the Company's Quarterly Report
on Form 10-Q for the quarter ended September 30, 2003 (the "Report") fully
complies with the requirements of Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 and that the information contained in the Report fairly
presents, in all material respects, the financial condition and results of
operations of the Company.

Dated:  November 13, 2003                 /s/ Raymond V. Gilmartin
                                          -------------------------------------
                                   Name:  Raymond V. Gilmartin
                                   Title: Chairman, President and Chief
                                          Executive Officer

EX-32.2

                                                                    Exhibit 32.2


                  CERTIFICATION BY THE CHIEF FINANCIAL OFFICER
                 PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED
            PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


                                  CERTIFICATION

      Pursuant to 18 U.S.C. Section 1350, the undersigned officer of Merck &
Co., Inc. (the "Company"), hereby certifies that the Company's Quarterly Report
on Form 10-Q for the quarter ended September 30, 2003 (the "Report") fully
complies with the requirements of Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 and that the information contained in the Report fairly
presents, in all material respects, the financial condition and results of
operations of the Company.

Dated:  November 13, 2003            /s/ Judy C. Lewent
                                     --------------------------------
                              Name:  Judy C. Lewent
                              Title: Executive Vice President & Chief
                                     Financial Officer
                                     President, Human Health Asia