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EXHIBIT 10(e)
MERCK & CO., INC.
1991 INCENTIVE STOCK PLAN
(As Amended Effective February 23, 1994)
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1991 INCENTIVE STOCK PLAN
The 1991 Incentive Stock Plan ("ISP") is established to encourage employees
of the Company, its subsidiaries and the Merck Institute for Therapeutic
Research to acquire Common Stock in Merck & Co., Inc. (the "Company"). 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. Administration
The ISP shall be administered by the Compensation and Benefits Committee of
the Board of Directors of the Company (the "Committee"). The Committee is
authorized, subject to the provisions of the ISP, to establish such rules and
regulations as it deems necessary for the proper administration of the ISP, and
to make such determinations and to take such action in connection therewith or
in relation to the ISP as it deems necessary or advisable, consistent with the
ISP. 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.
2. Eligibility
Regular full-time and part-time employees of the Company, its subsidiaries,
and the Merck Institute for Therapeutic Research, including officers, whether or
not directors of the Company, shall be eligible to participate in the ISP
("Eligible Employees") if designated by the Committee or its delegate. Those
directors who are not regular employees are not eligible.
3. Incentives
Incentives under the ISP may be granted in any one or a combination of (a)
Incentive Stock Options (or other statutory stock option); (b) Nonqualified
Stock Options; (c) Stock Appreciation Rights; (d) Performance Share Awards; and
(e) Restricted Stock Grants (together "Incentives"). All Incentives shall be
subject to the terms and conditions set forth herein and to such other terms and
conditions as may be established by the Committee. 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.
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4. Shares Available for Incentives
(a) Shares Subject to Issuance or Transfer. Subject to adjustment as
provided in Section (b) hereof, there is hereby reserved for issuance under the
ISP in each calendar year one percent (1%) of the outstanding shares of the
Company's Common Stock as of the first business day of each calendar year
("Common Stock"). The shares available for granting awards in any year shall be
increased by the number of shares available under the Plan in previous years but
not covered by Awards granted under the Plan in those years plus any shares as
to which options or other benefits granted under the Plan have lapsed, expired,
terminated or been canceled. In addition, any shares reserved for issuance under
the Company's 1987 Incentive Stock Plan, 1981 Incentive Stock Option Plan and
1981 Nonqualified Stock Option 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 cancelled, shall also be reserved and
available for issuance or reissuance under the ISP in any calendar year. No
further options or other benefits are to be granted under the Prior Plans;
provided that any outstanding options or other benefits may be exercised in
accordance with the terms thereof.
In the event of a lapse, expiration, termination or cancellation of any
Incentive granted under the ISP without the issuance of shares or payment of
cash, or if shares are issued under a Restricted Stock Grant hereunder and are
reacquired by the Company pursuant to rights reserved upon the issuance thereof,
the shares subject to or reserved for such Incentive may again be used for new
Incentives hereunder; provided that in no event may the number of shares issued
hereunder exceed the total number of shares reserved for issuance.
(b) In any given year, no eligible employee may receive Incentives covering
more than one-quarter of one-percent of the outstanding shares of the Company's
Common Stock as of the first business day of the calendar year.
(c) Recapitalization Adjustment. 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 Committee shall make such adjustment, if any, as
it may deem appropriate in the number and kind of shares authorized by the ISP,
in the number and kind of shares covered by Incentives granted, in the case of
Stock Options, in the option price, and in the case of stock appreciation
rights, in the fair market value.
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"), and 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.
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(c) Payment. The option price shall be payable at the time the Stock Option
is exercised in cash or, at the discretion of the Committee, in whole or in part
in the form of shares of Common Stock already owned by the grantee (based on the
fair market value of the Common Stock on the date the option is exercised as
determined by the Committee). No shares shall be issued until full payment
therefor has been made. A grantee of a Stock Option shall have none of the
rights of a stockholder until the shares are issued.
(d) Exercise of Option. The shares covered by a Stock Option may be
purchased in such installments and on such exercise dates as the Committee may
determine. Any shares not purchased on the applicable exercise date may be
purchased thereafter at any time prior to the final expiration of the Stock
Option. In no event (including those specified in paragraphs (e), (f) and (g) of
this section below) 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 may become exercisable in accordance with a schedule to 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 such termination as may be established by the Committee.
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.
(f) Retirement. Upon retirement of the 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 the
Stock Option grantee may become exercisable in accordance with a schedule to be
determined by the Committee. Stock Option privileges shall expire unless
exercised within such period of time as may be established by the Committee.
(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 to be
determined by the Committee. Such privileges shall expire unless exercised by
legal representatives within a period of time as determined by the Committee but
in no event later than the date of the expiration of the Stock Option.
(h) Limits on Incentive Stock Options. Except as may otherwise be permitted
by the Code, the Committee shall not, in the aggregate, grant an Eligible
Employee Incentive Stock Options that 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.
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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 are 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 or division 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:
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(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 or division 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.
(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 or division 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 or division 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 employment 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 sole discretion, provide for a 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.
8. Restricted Stock Grants
The Committee may issue 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"). 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
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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.
(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 except to a successor under
Section 10 hereof. 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.
9. 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. No Incentive shall be granted under the ISP after December 31, 1995
but Incentives granted theretofore may extend beyond that date.
10. Nontransferability
Each Incentive granted under the ISP shall not be transferable other than
by will or the laws of descent and distribution, and with respect to Stock
Options, shall be exercisable, during the grantee's lifetime, only by the
grantee or the grantee's guardian or legal representative.
11. No Right of Employment
The ISP and the Incentives granted hereunder shall not confer upon any
Eligible Employee the right to continued employment with the Company or affect
in any way the right of the Company to terminate the employment of an Eligible
Employee at any time and for any reason.
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12. Taxes
The Company shall be entitled to withhold the amount of any tax
attributable to any amount payable or shares deliverable under the ISP after
giving the person entitled to receive such amount or shares notice as far in
advance as practicable.
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