<PAGE> 1
As filed with the Securities and Exchange Commission on February 16, 2000
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
under
THE SECURITIES ACT OF 1933
MERCK & CO., INC.
(Exact Name of issuer As Specified in Its Charter)
P.O. BOX 100
WHITEHOUSE STATION, NEW JERSEY 08889-0100
(Address of Principal Executive Offices)
NEW JERSEY 22-1109110
(State of Incorporation) (I.R.S. Employer Identification No.)
MERCK PUERTO RICO EMPLOYEE SAVINGS AND SECURITY PLAN
(Full Title of the Plan)
CELIA A. COLBERT
Vice President, Secretary & Assistant General Counsel
MERCK & CO., INC.
P.O. Box 100
Whitehouse Station, New Jersey 08889-0100
(908) 423-1000
(Name, Address and Telephone Number of Agent for Service)
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under
the Securities Act of 1933, other than securities
offered only in connection with dividend or interest
reinvestment plans, check the following box. |X|
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Amount to be Proposed maximum Proposed maximum Amount of
Title of Securities to be Registered Registered offering price per share aggregate offering price registration fee
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock (Par Value $.01 500,000(1) $66.22(2) $33,110,000(2) $8,741.04
per share)
Plan interests related to Merck An indeterminate N/A N/A N/A
Puerto Rico Employee Savings amount of plan
and Security Plan interests (3)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Based on an estimate of the number of shares that will be purchased
pursuant to the Merck Puerto Rico Employee Savings and Security Plan.
Pursuant to Rule 416(c) of the Securities Act of 1933, as amended (the
"Securities Act"), there is also being registered such number of
additional shares that may become available for purchase pursuant to
such plan in the event of certain changes in the outstanding shares,
including reorganizations, mergers, recapitalizations, restructuring,
stock dividends, stock splits, reverse stock splits and
reclassifications.
(2) Estimated pursuant to paragraphs (c) and (h) of Rule 457 of the
Securities Act, solely for the purpose of calculating the registration
fee, based upon the average of the high and low sales prices of shares
of Common Stock on February 11, 2000, as reported on the New York
Stock Exchange.
(3) Pursuant to Rule 416(c) of the Securities Act, this Registration
Statement covers an indeterminate amount of plan interests to be
offered or sold pursuant to the Merck Puerto Rico Employee Savings
and Security Plan, attached as an exhibit hereto.
<PAGE> 2
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents filed by the registrant (Exchange Act File No.
1-3305) with the Securities and Exchange Commission are incorporated herein by
reference and made a part hereof:
(a) Annual Report on Form 10-K, filed March 24, 1999 for the fiscal year
ended December 31, 1998;
(b) Quarterly Report on Form 10-Q filed on May 12, 1999 for the quarter
ended March 31, 1999;
(c) Form 10-K/A filed on June 11, 1999, amending the registrant's Annual
Report on Form 10-K for the fiscal year ended December 31, 1998;
(d) Quarterly Report on Form 10-Q filed on August 12, 1999 for the quarter
ended June 30, 1999;
(e) Quarterly Report on Form 10-Q filed on November 12, 1999 for the
quarter ended September 30, 1999;
(f) Current Report on Form 8-K dated December 9, 1999, filed on December
16, 1999;
(g) Proxy Statement for the Annual Meeting of Stockholders held on April
27, 1999; and
(h) The descriptions of the Common Stock of the registrant set forth in the
registrant's Registration Statements pursuant to Section 12 of the
Exchange Act, and any amendment or report filed for the purpose of
updating such description.
All documents filed by the registrant pursuant to Section 13, 14 or
15(d) of the Exchange Act from the date hereof and prior to the termination of
the offering of the securities offered hereby shall be deemed to be incorporated
by reference herein and to be part hereof from
2
<PAGE> 3
the date of filing of such documents. An Exhibit Index can be found on page 12
of this Registration Statement.
ITEM 4. DESCRIPTION OF SECURITIES
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
The validity of the Common Stock will be passed upon for the Company
by Celia A. Colbert, Vice President, Secretary & Assistant General Counsel of
the Company.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The New Jersey Business Corporation Act provides that a New Jersey
corporation has the power to indemnify a director or officer against his or her
expenses and liabilities in connection with any proceeding involving the
director or officer by reason of his or her being or having been such a director
or officer, other than a proceeding by or in the right of the corporation, if
such a director or officer acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best interests of the
corporation; and with respect to any criminal proceeding, such director or
officer had no reasonable cause to believe his or her conduct was unlawful.
The indemnification and advancement of expenses shall not exclude any
other rights, including the right to be indemnified against liabilities and
expenses incurred in proceedings by or in the right of the corporation, to which
a director or officer may be entitled under a certificate of incorporation,
bylaw, agreement, vote of shareholders, or otherwise; provided that no
indemnification shall be made to or on behalf of a director or officer if a
judgment or other final adjudication adverse to the director or officer
establishes that his or her acts or omissions (a) were in breach of his or her
duty of loyalty to the corporation or its shareholders, (b) were not in good
faith or involved in a knowing violation of law or (c) resulted in receipt by
the director or officer of an improper personal benefit.
3
<PAGE> 4
The Company's Restated Certificate of Incorporation provides that, to
the fullest extent permitted by the laws of the State of New Jersey, directors
and officers of the Company shall not be personally liable to the Company or its
stockholders for damages for breach of any duty owed to the Company or its
stockholders, except that a director or officer shall not be relieved from
liability for any breach of duty based upon an act or omission (a) in breach of
such person's duty of loyalty to the Company or its stockholders, (b) not in
good faith or involving a knowing violation of law or (c) resulting in receipt
by such person of an improper personal benefit.
The By-Laws of the Company provide that a former, present or future
director, officer or employee of the Company or the legal representative of any
such director, officer or employee shall be indemnified by the Company:
(a) against reasonable costs, disbursements and counsel fees paid or
incurred where such person has been successful in the defense on the merits or
otherwise of any pending, threatened or completed civil, criminal,
administrative or arbitrative action, suit or proceeding, and any appeal therein
and any inquiry or investigation which could lead to such action, suit, or
proceeding or in defense of any claim, issue or matter therein, brought by
reason of such person's being or having been such director, officer or employee,
and
(b) with respect to the defense of any such action, suit, proceeding,
inquiry or investigation for which indemnification is not made under (a) above,
against reasonable costs, disbursements (which shall include amounts paid in
satisfaction of settlements, judgments, fines and penalties, exclusive, however,
of any amount paid or payable to the Company) and counsel fees if such person
acted in good faith and in a manner such person reasonably believed to be in or
not opposed to the best interests of the Company, and in connection with any
criminal proceedings such person also had no reasonable cause to believe the
conduct was unlawful, with the determination as to whether the applicable
standard of conduct was met to be made by a majority of the members of the Board
of Directors (sitting as a Committee of the Board) who were not parties to such
inquiry, investigation, action, suit or proceeding or by any one or more
disinterested counsel to whom the question may be referred by the Board of
Directors; provided, however, in connection with any proceeding by or in the
right of the Company, no
4
<PAGE> 5
indemnification shall be provided as to any person adjudged by any court to be
liable to the Company except as and to the extent determined by such court.
The Company enters into indemnification agreements with its directors
and officers and enters into insurance agreements on its own behalf. The
indemnification agreements provide that the Company agrees to hold harmless and
indemnify its directors and officers to the fullest extent authorized or
permitted by the Business Corporation Act of the State of New Jersey, or any
other applicable law, or by any amendment thereof or other statutory provisions
authorizing or permitting such indemnification that is adopted after the date
hereof. Without limiting the generality of the foregoing, the Company agrees to
hold harmless and indemnify its directors and officers to the fullest extent
permitted by applicable law against any and all expenses, judgments, fines, and
amounts paid in settlement actually and reasonably incurred by its directors and
officers in connection with the defense of any present or future threatened,
pending, or completed claim, action, suit, or proceeding by reason of the fact
that they were, are, shall be, or shall have been a director or officer of the
Company, or are or were serving, shall serve, or shall have served, at the
request of the Company, as director or officer of another corporation,
partnership, joint venture, trust, employee benefit plan, or other enterprise.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not applicable.
5
<PAGE> 6
ITEM 8. EXHIBITS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
EXHIBIT
NUMBER DESCRIPTION METHOD OF FILING
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
3(a) -- Restated Certificate of Incorporated by reference to Form
Incorporation of the registrant (May 10-K Annual Report for the fiscal year ended
6, 1992) December 31, 1992
3(b) -- Certificate of Amendment to the Incorporated by reference to Form 10-K Annual
Certificate of Incorporation of Report for the fiscal year ended December 31,
Merck & Co., Inc. (as amended 1998
January 14, 1999, effective February
16, 1999)
3(c) -- By-Laws of the registrant (as Incorporated by reference to Form
amended effective February 25, 1997) 10-Q Quarterly Report for the period ended
March 31, 1997
5 -- Opinion of Consent of Celia A. Filed with this Registration Statement
Colbert, Vice President, Secretary
and Assistant General Counsel of
registrant
23 -- Consent of Arthur Andersen LLP Filed with this Registration Statement
24 -- Certified Resolution of Board of Filed with this Registration Statement
Directors and Power of Attorney
99 -- Merck Puerto Rico Employee Filed with this Registration Statement
Savings and Security Plan
</TABLE>
6
<PAGE> 7
ITEM 9. UNDERTAKINGS
The undersigned registrant hereby undertakes:
1(a) To file, during any period in which offers or sales are being
made, a post-effective amendment to the registration statement to include any
material information with respect to the plan of distribution not previously
disclosed in the registration statement or any material change to such
information in the registration statement.
(b) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
2. That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the registrant's annual report pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and,
where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
3. Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy
7
<PAGE> 8
as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion
of its counsel, the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
8
<PAGE> 9
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
the requirements for filing on Form S-8, and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunder duly
authorized, in the City of Whitehouse Station and the State of New Jersey on the
16th day of February 2000.
MERCK & CO., INC.
By: *
-----------------------------------
Raymond V. Gilmartin
Chairman of the Board, President
& Chief Executive Officer
By: /s/ Celia A. Colbert
-----------------------------------
Celia A. Colbert
Vice President, Secretary &
Assistant General Counsel
9
<PAGE> 10
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
<S> <C> <C>
*
- ------------------------------------------
Raymond V. Gilmartin Chairman of the Board, President & February 16, 2000
Chief Executive Officer; Principal
Executive Officer; Director
*
- ------------------------------------------
Judy C. Lewent Senior Vice President & Chief February 16, 2000
Financial Officer; Principal
Financial Officer
*
- ------------------------------------------
Richard C. Henriques, Jr. Vice President, Controller; February 16, 2000
Principal Accounting Officer
*
- ------------------------------------------
H. Brewster Atwater, Jr. Director February 16, 2000
*
- ------------------------------------------
Derek Birkin Director February 16, 2000
*
- ------------------------------------------
Lawrence A. Bossidy Director February 16, 2000
*
- ------------------------------------------
William G. Bowen Director February 16, 2000
*
- ------------------------------------------
Johnnetta B. Cole Director February 16, 2000
*
- ------------------------------------------
Carolyne K. Davis Director February 16, 2000
</TABLE>
* Celia A. Colbert, by signing her name hereto, does hereby sign this
document pursuant to powers of attorney duly executed by the persons
named, filed with the Securities and Exchange Commission as an exhibit to
this document, on behalf of such persons, all in the capacities and on
the date stated, such persons including a majority of the directors of
the Company.
10
<PAGE> 11
<TABLE>
<S> <C> <C>
*
- ------------------------------------------
Lloyd C. Elam Director February 16, 2000
*
- ------------------------------------------
Charles E. Exley, Jr. Director February 16, 2000
*
- ------------------------------------------
Carleton S. Fiorina Director February 16, 2000
*
- ------------------------------------------
William B. Harrison, Jr. Director February 16, 2000
*
- ------------------------------------------
William N. Kelley Director February 16, 2000
*
- ------------------------------------------
Edward M. Scolnick Director February 16, 2000
*
- ------------------------------------------
Samuel O. Thier Director February 16, 2000
*
- ------------------------------------------
Dennis Weatherstone Director February 16, 2000
</TABLE>
* Celia A. Colbert, by signing her name hereto, does hereby sign this
document pursuant to powers of attorney duly executed by the persons
named, filed with the Securities and Exchange Commission as an exhibit to
this document, on behalf of such persons, all in the capacities and on
the date stated, such persons including a majority of the directors of
the Company.
By: /s/ Celia A. Colbert
------------------------------
Celia A. Colbert
Vice President, Secretary &
Assistant General Counsel
Attorney-in-Fact
The Plan. Pursuant to the requirements of the Securities Act of 1933,
the Plan has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly
authorized in Barceloneta, Puerto Rico on February 16,
2000.
MERCK PUERTO RICO EMPLOYEE
SAVINGS AND SECURITY PLAN
By: /s/ Ernesto L. Vega
----------------------------------
Name: Ernesto L. Vega
Title: Designated Individual
Puerto Rico Administrative
Committee
11
<PAGE> 12
EXHIBIT INDEX
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
EXHIBIT
NUMBER DESCRIPTION METHOD OF FILING
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
3(a) -- Restated Certificate of Incorporated by reference to Form
Incorporation of the registrant (May 10-K Annual Report for the fiscal year ended
6, 1992) December 31, 1992
3(b) -- Certificate of Amendment to the Incorporated by reference to Form 10-K Annual
Certificate of Incorporation of Report for the fiscal year ended December 31,
Merck & Co., Inc. (as amended 1998
January 14, 1999, effective February
16, 1999)
3(c) -- By-Laws of the registrant (as Incorporated by reference to Form
amended effective February 25, 1997) 10-Q Quarterly Report for the period ended
March 31, 1997
5 -- Opinion of Consent of Celia A. Filed with this Registration Statement
Colbert, Vice President, Secretary
and Assistant General Counsel of
registrant
23 -- Consent of Arthur Andersen LLP Filed with this Registration Statement
24 -- Certified Resolution of Board of Filed with this Registration Statement
Directors and Power of Attorney
99 -- Merck Puerto Rico Employee Filed with this Registration Statement
Savings and Security Plan
</TABLE>
12
<PAGE> 1
EXHIBIT 5
February 16, 2000
Board of Directors
Merck & Co., Inc.
One Merck Drive
Whitehouse Station, NJ 08889-0100
Re: Merck & Co., Inc. - Common Stock
Ladies and Gentlemen:
I am the Vice President, Secretary & Assistant General Counsel of Merck & Co.,
Inc., a New Jersey corporation (the "Corporation"), and in such capacity have
acted as counsel for the Corporation in connection with the proposed
registration under the Securities Act of 1933, as amended, of up to 500,000
shares of the Common Stock, par value $0.01 per share (the "Shares"), of the
Corporation, which may be issued by the Corporation pursuant to the Merck Puerto
Rico Employee Savings and Security Plan, or any successor plans thereto, as such
plans or successor plans may be amended from time to time. I have examined such
corporate records and other documents, including the Registration Statement on
Form S-8 relating to the Shares, and have reviewed such matter of law as I have
deemed necessary for this opinion.
I am admitted to the Bar of the state of New York. The opinions expressed herein
are limited in all respects to the federal laws of the United States of America,
the laws of the State of New York, and the Business Corporation Act of the State
of New Jersey.
On the basis of the foregoing examination and review, I advise you that, in my
opinion:
1. The Corporation is a corporation duly organized and existing under the
laws of the State of New Jersey.
2. All necessary corporate action on the part of the Corporation has been
taken to authorize the issuance of the Shares and, when issued as
described in the Registration Statement, the Shares will be legally and
validly issued, fully paid and non-assessable.
The opinions expressed herein are rendered only to you and are solely for your
benefit and may not be relied upon by any person, firm, or corporation for any
reason without my prior written consent.
13
<PAGE> 2
I consent to the filing of this opinion as an exhibit to the Registration
Statement. In giving this consent I do not admit that I am in the category of
persons whose consent is required under Section 7 of the Securities Act of 1933
or the rules and regulations of the Securities and Exchange Commission
thereunder.
By: /s/ Celia A. Colbert
-------------------------------------
Celia A. Colbert
14
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this Form S-8 Registration Statement of our report
dated January 26, 1999 included in and incorporated by reference in Merck & Co.,
Inc.'s Annual Report on Form 10-K, for the fiscal year ended December 31, 1998,
as amended by Form 10-K/A dated June 11, 1999 and to all references to our firm
included in or made a part of this Registration Statement.
ARTHUR ANDERSEN LLP
New York, New York
February 16, 2000
15
<PAGE> 1
EXHIBIT 24
CERTIFIED RESOLUTION OF
BOARD OF DIRECTORS
I, Nancy V. Van Allen, Senior Assistant Secretary of Merck & Co., Inc.,
a Corporation duly organized and existing under the laws of the State of New
Jersey, do hereby certify that the following is a true copy of a resolution
adopted on December 21, 1999, at a meeting of the Directors of said Corporation
held in the City of New York, State of New York, duly called in accordance with
the provisions of the By-Laws of said Corporation, and at which a quorum of
Directors was present:
RESOLVED, that the Merck Puerto Rico Employee Savings and
Security Plan (the "Merck Puerto Rico Plan") is hereby ratified in the
form presented to this meeting;
RESOLVED, that the proper officers of the Company are hereby
authorized and directed on behalf of the Company to prepare, execute
and file with the Securities and Exchange Commission (the "SEC")
Registration Statements and any and all amendments thereto, and any and
all exhibits and other documents relating thereto or required by law or
regulation in connection therewith, for the registration under the
Securities Act of 1933 of the shares of Common Stock of the Company
which may be purchased under the Merck Puerto Rico Plan and the Merial
401(k) Savings Plan (hereinafter collectively referred to as the
"Plans");
RESOLVED, that Celia A. Colbert is hereby appointed and
designated the person duly authorized to receive communication and
notices from the SEC with respect to such Registration Statements or
any amendments thereto and as agent for service of process;
RESOLVED, that each officer, director or employee of the
Company who may be required to execute such Registration Statements or
any amendments thereto (whether on behalf of the Company, or as an
officer or director thereof, or by attesting the seal of the Company,
or on behalf of the Plan, or otherwise), is hereby authorized to
execute a power of attorney appointing Celia A. Colbert and Kenneth C.
Frazier, and each of them severally, his or her true and lawful
attorney
16
<PAGE> 2
or attorneys to execute in his or her name, place and stead (in any
such capacity) such Registration Statements and any and all amendments
thereto and any and all exhibits and other documents necessary or
incidental in connection therewith, and to file the same with the SEC,
each of said attorneys to have power to act with or without the other,
and to have full power and authority to do and perform in the name and
on behalf of each of said officers, directors and employees, or any of
them, as the case may be, every act whatsoever necessary or advisable
to be done in the premises as fully and to all intents and purposes as
any such officer, director or employee might or could do in person;
RESOLVED, that the proper officers of the Company are hereby
authorized and directed to arrange with the New York Stock Exchange and
the Philadelphia Stock Exchange for the listing of the additional
shares of the Common Stock of the Company to be issued in connection
with the Plans; and
RESOLVED, that the proper officers of the Company, with the
advice of counsel, are hereby authorized to take any action and to
execute and deliver any letters, documents, agreements or other
instruments as they deem necessary, appropriate or desirable to carry
out the purposes and intents of this Special Resolution.
IN WITNESS WHEREOF, I have hereunto subscribed my signature and affixed
the seal of the Corporation this 31st day of January, 2000.
By: /s/ Nancy V. Van Allen
-----------------------------------
Nancy V. Van Allen
Senior Assistant Secretary
[Corporate Seal]
17
<PAGE> 3
EXHIBIT 24
POWER OF ATTORNEY
KNOW TO ALL MEN BY THESE PRESENTS that each of the undersigned hereby
severally constitutes and appoints Kenneth C. Frazier and Celia A. Colbert, and
each of them, their true and lawful attorney-in-fact and agent for the
undersigned, in any and all capacities, with full power and authority of
substitution, to execute for and on behalf of the undersigned a REGISTRATION
STATEMENT ON FORM S-8 by Merck & Co., Inc. for the Merck Puerto Rico Employee
Savings and Security Plan, all amendments or supplements to this Registration
Statement and all related documents and instruments, and to file the same with
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto each attorney-in-fact and
agent full power and authority to take such action as he/she deems advisable or
necessary to carry out the intent of this Power of Attorney.
IN WITNESS WHEREOF, this instrument has been duly executed as of the
21st day of December, 1999.
MERCK & CO., INC.
By: /s/ Raymond V. Gilmartin
-------------------------------------
Raymond V. Gilmartin
Chairman of the Board, President
& Chief Executive Officer
/s/ Judy C. Lewent
-------------------------------------
Judy C. Lewent
Senior Vice President & Chief
Financial Officer
(Principal Financial Officer)
/s/ Richard C. Henriques, Jr.
-------------------------------------
Richard C. Henriques, Jr.
Vice President, Controller
(Principal Accounting Officer)
18
<PAGE> 4
DIRECTORS
/s/ H. Brewster Atwater, Jr. /s/ Charles E. Exley, Jr.
- ---------------------------- ----------------------------
H. Brewster Atwater, Jr. Charles E. Exley, Jr.
/s/ Derek Birkin /s/ Carleton S. Fiorina
- ---------------------------- ----------------------------
Derek Birkin Carleton S. Fiorina
/s/ Lawrence A. Bossidy /s/ William B. Harrison, Jr.
- ---------------------------- ----------------------------
Lawrence A. Bossidy William B. Harrison, Jr.
/s/ William G. Bowen /s/ William N. Kelley
- ---------------------------- ----------------------------
William G. Bowen William N. Kelley
/s/ Johnnetta B. Cole /s/ Edward M. Scolnick
- ---------------------------- ----------------------------
Johnnetta B. Cole Edward M. Scolnick
/s/ Carolyne K. Davis /s/ Samuel O. Thier
- ---------------------------- ----------------------------
Carolyne K. Davis Samuel O. Thier
/s/ Lloyd C. Elam /s/ Dennis Weatherstone
- ---------------------------- ----------------------------
Lloyd C. Elam Dennis Weatherstone
19
<PAGE> 1
Exhibit 99
MERCK PUERTO RICO
EMPLOYEE SAVINGS AND SECURITY PLAN
Effective as of July 1, 1997
<PAGE> 2
PREFACE
The Merck Puerto Rico Employee Savings and Security Plan is maintained
at the discretion of Merck Sharp & Dohme Quimica de Puerto Rico, Inc. and does
not create a contract of employment. Merck Sharp & Dohme Quimica de Puerto Rico,
Inc. reserves the right to change, modify, discontinue or terminate the Plan at
any time.
This Plan was originally a part of the Merck & Co, Inc. Employee
Savings and Security Plan (the "Merck ES&SP"), which was originally adopted
effective July 1, 1959. This Plan was spun off from the Merck ES&SP effective as
of July 1, 1997.
ARTICLE I: PURPOSE
1.1 The Merck Puerto Rico Employee Savings and Security Plan (the
"Plan") is a profit-sharing plan designed to provide an opportunity for
employees to become stockholders of Merck & Co., Inc. and to encourage them to
save on a regular basis by setting aside part of their earnings.
ARTICLE II: DEFINITIONS
The following words and phrases shall have the following meanings for
purposes of the Plan:
2.1 Account Balance: The term "Account Balance" shall mean the total at
any given time of a Participant's Pre-Tax Contributions, After-Tax
Contributions, Catch-Up Contributions, Company Matching Contributions, Rollover
Contributions, Trust-To-Trust Transfer Contributions, and earnings and losses
thereon.
2.2 Actual Deferral Percentage: The term "Actual Deferral Percentage"
shall mean the ratio (expressed as a percentage) of a Participant's Pre-Tax
Contributions for the Plan Year to the Participant's compensation (as defined in
Section 414(s) of the U.S. Code and regulations promulgated thereunder) for the
Plan Year. For purposes of this definition, Pre-Tax Contributions shall include
(i) for a Participant who is a Highly Compensated Employee, any Excess Deferrals
or Pre-Tax Contributions in excess of the limit described in Section
10.10(a)(1), and (ii) for a Participant who is a non-Highly Compensated
Employee, Excess Deferrals. The Actual Deferral Percentage for an Eligible
Employee or Participant who does not make a Pre-Tax Contribution is zero.
2.3 Affiliate: The term "Affiliate" shall mean any corporation or other
entity which is a member of a controlled group of corporations under common
control, a member of an affiliated service group, and any other entity required
to be aggregated with the Company under U.S. Code Section 414(b), (c), (m) or
(o).
<PAGE> 3
2.4 After-Tax Contribution: The term "After-Tax Contribution" shall
mean that money which an employee contributes to the Plan and which does not
reduce his/her compensation subject to Federal or Puerto Rico income tax for the
taxable year in which the After-Tax contributions are made.
2.5 Average Actual Deferral Percentage: The term "Average Actual
Deferral Percentage" shall mean, for a specified group of Eligible Employees for
a Plan Year, the average of the Actual Deferral Percentages (calculated
separately for each Participant in such group). The Average Actual Deferral
Percentage of the Eligible Employees shall be rounded to the nearest 100th of
1%.
2.6 Average Contribution Percentage: The term "Average Contribution
Percentage" shall mean, for a specified group of Eligible Employees for a Plan
Year, the average of the Contribution Percentages (calculated separately for
each Participant in such group). The Average Contribution Percentage of the
Eligible Employees shall be rounded to the nearest 100th of 1%.
2.7 Base Compensation: The term "Base Compensation" shall mean the
employee's annual base wage or salary prior to any adjustment for Pre-Tax
Contributions divided by 12, and excludes all other amounts including overtime,
shift work differential, incentive payments, bonuses, separation payments, and
long term disability payments.
For purposes of the Plan, the Base Compensation of a Participant for
any Plan Year shall not exceed $160,000 (or such other amount as in effect under
Section 401(a)(17) of the U.S. Code for such year).
2.8 Board of Directors: The term "Board of Directors" shall mean the
Merck Sharp & Dohme Quimica de Puerto Rico, Inc. Board of Directors.
2.9 Business Day: The term "Business Day" shall mean any day on which
the New York Stock Exchange is open for trading.
2.10 Catch-Up Contributions: The term "Catch-Up Contributions" shall
mean any employee contribution made pursuant to Section 5.8.
2.11 Company: The term "Company" shall mean Merck Sharp & Dohme Quimica
de Puerto Rico, Inc. and each other Affiliate doing business in Puerto Rico that
has adopted the Plan, as listed in Schedule A.
2.12 Company Matching Contribution: The term "Company Matching
Contributions" shall mean the Company contribution calculated and invested in
accordance with the terms of Article VI hereof.
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2.13 Contribution Percentage: The term "Contribution Percentage" shall
mean the ratio (expressed as a percentage) of After-Tax Contributions and
Company Matching Contributions on behalf of an Eligible Employee or Participant
for the Plan Year to the Eligible Employee or Participant's 415 Compensation.
However, Company Matching contributions shall not be taken into account to the
extent they are forfeited either to correct Excess Aggregate Contributions or
because the contributions to which they relate are Excess Deferral Amounts,
Excess Contributions, or Excess Aggregate Contributions. The contribution
Percentage of each Eligible Employee or Participant shall be rounded to the
nearest 100th of 1% of such Employee or Participant's 415 Compensation.
2.14 Disability: The term "Disability" shall occur when a Participant
becomes entitled to benefits under his or her Employer's long-term disability
plan.
2.15 (ET): The term "(ET)" shall mean Eastern Time, either Daylight or
Standard, whichever is applicable at the time.
2.16 Eligible Employee: The term "Eligible Employee" shall mean any
Employee of an Employer who is eligible for participation in the Plan as
described in Article III. Notwithstanding the foregoing, the term excludes any
person who is, agrees or has agreed that he or she is an independent contractor,
or who has any agreement or understanding with the Company or any Affiliate that
the person is not an Employee or Eligible Employee, even if the individual
previously may have been an Employee or Eligible Employee. The term also
excludes any person who is employed by a temporary or other employment agency,
regardless of the amount of control, supervision or training provided by the
Company and its affiliates, whether or not such person is a Leased Employee.
These exclusions are unaffected by any ruling of a court, agency or other
authority holding that any person is in fact an employee of the Company or
Affiliate under any standard whatsoever.
2.17 Employee: The term "Employee" means an individual who is employed
by the Company or an Affiliate on a part-time or full-time basis and who is paid
by the Company or Affiliate.
2.18 Employer: The term "Employer" means the Company that employs an
Employee.
2.19 Enrollment Date: The term "Enrollment Date" shall mean the 1st day
of each January and July. The Board of Directors may designate another
enrollment date for any employee who has become eligible to participate in this
Plan by the express authorization of the Board of Directors.
2.20 ERISA: The term "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended.
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2.21 Excess Aggregate Contributions: The term "Excess Aggregate
Contributions" shall mean the amount described in U.S. Code Section
401(m)(6)(B).
2.22 Excess Contributions: The term "Excess Contributions" shall mean,
with respect to any Plan Year, the aggregate amount of Pre-Tax Contributions
actually paid to the Trustee for a Plan Year on behalf of Highly Compensated
Employees over the maximum amount of such contributions permitted under Section
10.10.
2.23 Excess Deferral: The term "Excess Deferral" shall mean the amount
of Pre-Tax Contributions for a calendar year that a Participant allocates to the
Plan pursuant to the claim procedure set forth in Section 10.10.
2.24 Five-Percent Owner: The term "Five-Percent Owner" shall mean any
person who owns (or is considered as owning within the meaning of U.S. Code
Section 318) more than five percent of the outstanding stock of the Company or
stock possessing more than five percent of the total combined voting power of
all stock of the Company.
2.25 415 Compensation: The term "Compensation" shall mean an employee's
wages which are actually paid by the Company or its Affiliates for the Plan Year
within the meaning of Section 3401(a) of the U.S. Code and all other payments of
compensation to the employee by the Company or its Affiliates under Sections
6041(d), 6051(a)(3) and 6052 of the U.S. Code without regard to any rules that
limit such remuneration based on the nature or location of the services
performed; provided, however, that Pre-Tax Contributions and any amounts not
includible in gross income of an employee under Section 125 of the U.S. Code
shall be included in 415 Compensation.
2.26 Highly Compensated Employee: The term "Highly Compensated
Employee" shall mean an employee described in U.S. Code Section 414(q) and the
regulations thereunder, and generally means an Employee of the Company who
either:
(a) was a Five-Percent Owner at any time during the Plan Year
or the preceding Plan Year; or
(b) for the preceding Plan Year had 415 Compensation in excess
of $80,000 (or such other amount as in effect under Code Section 414(q)(1) and
was in the group of employees consisting of the top 20 percent of the employees
of Merck and its Affiliates when ranked on the basis of 415 Compensation for
that Plan Year (the "Top-Paid Group")).
For purposes of the P.R. Code, the term "highly compensated employee"
shall mean a member of the top one third group of Eligible Employees.
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2.27 Investment Medium: The term "Investment Medium" shall mean Merck
Common Stock Fund, Participant loans or any of the Mutual Funds described in
Article IX in which Plan assets may be invested.
2.28 Leased Employee: The term "Leased Employee" shall mean any person
who provides services to the Company and who is a "leased employee" within the
meaning of Section 414(n) of the U.S. Code.
2.29 Merck: The term "Merck" shall mean Merck & Co., Inc.
2.30 Merck Common Stock Fund: The term "Merck Common Stock Fund" shall
mean the portfolio comprised primarily of Merck Common Stock described in
Article IX.
2.31 Mutual Fund: The term "Mutual Fund" shall mean each of the
Investment Media other than Merck Common Stock Fund and Participant loans.
2.32 Normal Retirement Age: The term "Normal Retirement Age" shall mean
the attainment of age 65.
2.33 Participant: The term "Participant" shall mean an individual who
either (1) is currently contributing to the Plan and/or (2) has an Account
Balance and/or (3) is currently suspended from the Plan pursuant to Section
5.6(b), (c), (d) and (e). If an individual does not meet at least one of these
three criteria, then he/she is not a Participant in the Plan.
2.34 PIN: The term "PIN" shall mean a Participant's Social Security
number or another identifying number assigned to the Participant.
2.35 Plan Committee: The term "Plan Committee" shall mean the Employee
Benefits Committee appointed by the President of the Company.
2.36 Plan Year: The term "Plan Year" shall mean the calendar year.
2.37 Pre-Tax Contribution: The term "Pre-Tax Contribution" shall mean
that amount contributed to the Plan in accordance with Section 401(k) of the
U.S. Code or Section 1165(e) of the Puerto Rico Code, and is not includible in
the Participant's compensation subject to income tax for the taxable year such
pre-tax contribution is made. Pre-tax contributions shall be allowed only to the
extent the Company has earned surplus or current earnings.
2.38 Puerto Rico Code: The term "Puerto Rico Code" or "P.R. Code" shall
mean the Internal Revenue Code of 1994, as amended.
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2.39 Recharacterized Contribution: The term "Recharacterized
Contribution" shall mean a Pre-Tax Contribution made by a Participant which is
treated as an After-Tax Contribution for nondiscrimination testing purposes, but
remain subject to the distribution restrictions on Pre-Tax Contributions.
2.40 Retirement: The term "Retirement" shall mean a Termination of
Employment effected by the Employee and the Company in accordance with the
provisions of the Company defined benefit pension plan in which the Employee
participates.
2.41 Rollover Contributions: The term "Rollover Contributions" shall
mean any amounts contributed to the Plan pursuant to Section 5.9.
2.42 Sources: The term "Sources" shall mean After-Tax Contributions,
Pre-Tax Contributions, Company Matching Contributions subject to pre-tax
distribution restrictions, Company Matching Contributions subject to after-tax
distribution rules, Rollover Contributions, and Recharacterized Contributions.
2.43 Termination of Employment: The term "Termination of Employment"
shall mean the termination of the Participant's employment relationship with the
Company and its Affiliates, whether voluntary or involuntary, by death or
Retirement.
2.44 Trustee: The term "Trustee" shall mean the entity designated by
the Board of Directors to hold Plan assets and which entity has entered into the
trust agreement described in Article XIV.
2.45 Trust-To-Trust Transfer Contributions: The term "Trust-to-Trust
Transfer Contributions" shall mean any contribution to the Plan made pursuant to
Section 5.10.
2.46 U.S. Code: The term "U.S. Code" shall mean the Internal Revenue
Code of 1986, as amended.
2.47 Year of Employment: The term "Year of Employment" shall mean the
12-month period of employment commencing on the date the employee enters service
with the Company or any of its Affiliates. Continuous employment during such
period shall not be required for completion of a Year of Employment, and service
shall include periods of absence to the extent required by the service spanning
rules of ERISA, the U.S. Code and the P.R. Code. Unless authorized by the Board
of Directors, employment with an entity prior to its acquisition, merger or
consolidation with the Company or any of its Affiliates shall not be counted
toward a Year of Employment, except to the extent required by law.
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2.48 Year of Participation: The term "Year of Participation" shall mean
any Plan Year in which an employee is a Participant for at least one day, and
Years of Participation do not need to be consecutive.
ARTICLE III: ELIGIBILITY
3.1 Except as otherwise provided in this Article III, every regular
full-time or part-time Employee of the Company and who is resident in Puerto
Rico or who is not a resident of Puerto Rico for reason of being in a short term
assignment for the employer in other country, is eligible to participate in the
Plan, provided such employee has completed at least one Year of Employment.
3.2 Employees covered by a collective bargaining agreement negotiated
with the Company are not eligible to participate in this Plan unless such
agreement specifically provides that such employees will participate in this
Plan.
3.3 Leased Employees are not eligible to participate in this Plan.
3.4 Members of the Board of Directors who are not also employees of the
Company are not eligible to participate in this Plan.
3.5 An employee who would be eligible to participate in the Plan but
for the one Year of Employment requirement may make a Rollover Contribution or a
Trust To Trust Transfer Contribution only. To be eligible to make any other
contribution to the Plan, however, an employee must satisfy all the requirements
of Section 3.1.
3.6 An employee who incurs a Termination of Employment and who later is
rehired by the Company or who transfers from an ineligible to an eligible
employment category as described in this Article III is eligible to participate
in the Plan on the later of (a) the date the employee is so rehired or
transferred or (b) the date the employee completes a Year of Employment.
ARTICLE IV: PARTICIPATION
4.1 Enrollment:
(a) An Eligible Employee may elect to participate in the Plan effective
on any Enrollment Date after the Participant's election is conveyed to the
Trustee authorizing a Pre-Tax and/or After-Tax Contribution in accordance with
Article V and selecting the Investment Medium(a) in which his/her Pre-Tax and/or
After-Tax Contributions are to be invested in accordance with Article VIII. An
Eligible Employee may also elect to participate by making a Rollover
Contribution or an approved Trust To Trust Transfer Contribution to the Plan,
and by selecting the Investment Medium(a) in which such contributions are to be
invested in accordance with Article VIII. Rollover
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Contributions and Trust To Trust Transfer Contributions may be made at any time
and need not be made on an Enrollment Date.
(b) An Employee described in Section 3.6 may enroll pursuant to the
foregoing on the later of the date (a) the employee is rehired or transferred
(as applicable) or (b) the Employee completes a Year of Employment.
4.2 Certain Participants Subject To Special Plan Terms:
With respect to transactions involving Merck Common Stock, Participants
who are officers subject to Section 16 of the Securities Exchange Act of 1934
are subject to the provisions of this Plan as modified by the terms and
conditions of Schedule B.
4.3 Payment in the Event of Death:
(a) In the event a married Participant who has an Account Balance dies,
the Participant's spouse shall be the beneficiary to receive the Participant's
Account Balance unless the Participant designates a beneficiary on the
appropriate form. If such beneficiary is not the Participant's spouse, such
designation shall not be effective unless accompanied by a signed, notarized
spousal consent which acknowledges the effect of the designation of the
non-spouse beneficiary. Spousal consent may be waived by the Plan Committee only
if it is established to the satisfaction of the Plan Committee that such consent
cannot be obtained because the spouse cannot be located or because of such other
circumstances as are prescribed in regulations issued by the Secretary of the
Treasury. Consent obtained under this paragraph shall be effective only with
respect to the spouse from whom such consent is obtained. A Participant may from
time to time change his/her designated beneficiary hereunder, but must in all
cases comply with the spousal consent and waiver rules of this Subsection.
(b) In the event an unmarried Participant who has an Account Balance
dies, the Participant's Account Balance shall be paid to his/her estate, unless
the Participant designates a beneficiary on the appropriate form. If an
unmarried Participant designates a beneficiary and such designated beneficiary
predeceases the Participant, the Participant's Account Balance shall be paid to
his/her estate.
(c) Where a Participant has properly designated a beneficiary in
accordance with (a) or (b) above, such beneficiary may be changed only by a
subsequent proper beneficiary designation form filed with the Plan Administrator
prior to such Participant's death. For example, a divorce decree may not change
a beneficiary designation unless it is a qualified domestic relations order as
provided in Section 22.2 that clearly and unambiguously provides that any
beneficiary designation form then in existence will be deemed to be revoked and
unless the order is filed prior to the Participant's death.
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ARTICLE V: EMPLOYEE CONTRIBUTIONS
5.1 Method of Contribution: Each Participant may authorize
contributions to the Plan by means of payroll deduction, and, if applicable, by
lump sum as described in Sections 5.8, 5.9 and 5.10.
5.2 Amount of Payroll Deductions: Each Participant may authorize
payroll deductions in increments of whole percentages of Base Compensation with
a minimum contribution of 2% up to a maximum contribution of 15%, provided that
Pre-Tax Contribution may not exceed 10% of Base Compensation. If a Participant's
Base Compensation changes, the percentage of Base Compensation being contributed
at that time shall be applied against the new amount of Base Compensation as
soon as practicable after the change.
5.3 Changes to the Amount of Payroll Deductions: A Participant may
change the percentage of his/her payroll deduction to be effective as soon as is
administratively feasible after the Participant's election is conveyed to the
Trustee; provided, that any election will apply in full to any payroll period
during which it is in effect, rather than be pro-rated for any period.
5.4 Designation of Payroll Deductions As Pre-Tax and/or After-Tax
Contributions: Each Participant must designate his/her contributions in
increments of whole percentages of the amount contributed to the Plan as
After-Tax and/or Pre-Tax Contributions. If no such designation is made, all
contributions shall be considered After-Tax Contributions. If a Participant
designates all or part of his/her contributions as Pre-Tax Contributions, then
such Participant must indicate whether, upon reaching the maximum amount which
can be contributed to the Plan on a pre-tax basis, the amount designated as a
Pre-Tax Contribution is to be contributed to the Plan on an after-tax basis or
not contributed to the Plan.
5.5 Changes in the Designation of Payroll Deductions as Pre-Tax and/or
After-Tax Contributions: A Participant may change the percentage of his/her
contributions designated as Pre-Tax and After-Tax Contributions as soon as is
administratively feasible after the Participant's election is conveyed to the
Trustee. A change in such designations shall apply with respect to an entire
payroll period, rather than be pro-rated for any period.
5.6 Suspension of Contributions: Suspension of Plan contributions shall
be in accordance with the following provisions:
(a) A Participant who is an active employee may voluntarily
suspend Pre- and After-Tax Contributions to the Plan, effective as soon after
the Participant's election is conveyed to the Trustee as is administratively
feasible. A participant who has voluntarily suspended Pre- and After-Tax
Contributions may resume such contributions at any time, which resumption shall
be effective as soon after the Participant's election to make such contributions
is conveyed to the Trustee as is administratively feasible.
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(b) A Participant's payroll deductions shall be automatically
suspended at the time he/she goes on an authorized leave of absence at less than
full pay or becomes entitled to benefits under his or her's Employer's
disability plan and such suspension will continue for the duration of the
authorized leave.
(c) A Participant to whom Section 10.7(c) is applicable shall
have his/her payroll deductions suspended for 12 months in accordance with the
terms of that Section. A Participant whose contributions have been suspended
pursuant to paragraph (b) shall automatically resume contributions at the
expiration of the suspension period; provided, however, such a Participant may
further suspend such contributions pursuant to paragraph (a). Pre- and After-Tax
Contributions for a Participant whose contributions have been suspended pursuant
to any other paragraph of this Section may be resumed by the Participant making
a new election and such election shall be effective as soon as after such
election is conveyed to the Trustee as is administratively feasible.
5.7 Final Payroll Period: A Participant who is incurring a Termination
of Employment can only make a contribution via payroll deduction for his/her
final payroll period if the Participant is being compensated for the entire
final payroll period.
5.8 Catch-Up Contributions: Effective January 1, 1995, no Catch-Up
Contribution may be made by any Participant.
5.9 Rollover Contributions: An Eligible Employee or Participant who is
an active Employee and who receives a total distribution from a tax qualified
employee benefit plan may, subject to the terms of Section 402 of the U.S. Code
and Section 1165 of the Puerto Rico Code, contribute, in cash, all or part but
not less than $500, of the taxable monies received in such distribution. An
Eligible Employee or Participant who is an active participant and who receives a
total distribution from an Individual Retirement Account (an "IRA") which monies
originally constituted a total distribution from a tax-qualified employee
benefit plan may contribute, subject to the terms of Section 408 of the U.S.
Code and Section 1165 and 1169 of the Puerto Rico Code, in cash, all or part but
not less than $500 of the taxable monies received in such distribution from the
IRA. Any Rollover Contributions shall be subject to the terms and conditions of
this Plan applicable to After-Tax Contributions. See Section 8.2 for provisions
regarding the investment of these contributions.
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5.10 Trust-To-Trust Transfer Contributions: The Plan Committee may
approve for Eligible Employees (a) a direct transfer of assets to the trust
under the Plan from a trust forming part of another plan qualified under Section
401(a) of the U.S. Code or Section 1165 of the Puerto Rico Code, or (b) a direct
transfer of assets out of the trust under the Plan to a trust forming part of
another plan qualified under Section 401(a) of the U.S. Code or Section 1165 of
the Puerto Rico Code. However, assets may be transferred between the Merck &
Co., Inc. Employee Stock Purchase and Savings Plan and this Plan, the Merck &
Co., Inc. Employee Savings and Security Plan and this Plan, the Medco 401(k)
Savings Plan and this Plan, and the Telerx Marketing Inc. 401(k) Plan and this
Plan (collectively, the "Transfer Plans") on account of employees becoming
eligible to participate in one plan after having participated in the other, and
such trust to trust transfers shall not require Plan Committee approval.
Transfers to a trust under this Plan from a Transfer Plan shall be subject to
the terms and conditions of this Plan applicable to After-Tax Contributions.
Upon transfer, all Trust To Trust Transfer Contributions shall retain their
characteristics as either pre-tax, after-tax, or rollover monies, and shall be
subject to the terms and conditions of this Plan regarding each of those types
of contributions as applicable. The Plan may not accept a transfer from a plan
which is subject to the requirements of Section 401(a)(11) or 417 of the U.S.
Code.
5.11 Vesting Of Employee Contributions: A Participant's After-Tax
Contributions, Pre-Tax Contributions, Rollover Contributions, and Trust To Trust
Transfer Contributions vest upon contribution and are nonforfeitable.
ARTICLE VI: COMPANY MATCHING CONTRIBUTIONS
6.1 At the time a Participant makes a Pre-Tax Contribution and/or
After-Tax Contribution to the Plan via payroll deduction, the Company shall
contribute to the Plan out of current earnings and earned surplus only, an
amount equal to 50% of each such After-Tax Contribution and Pre-Tax
Contribution, but in no event shall the Company Matching Contribution exceed
2-1/2% of each Participant's Base Compensation applicable to the pay period in
which the Participant is making the Pre-Tax Contribution and/or After-Tax
Contribution.
For salaried Participants, Base Compensation applicable to any pay
period in which the Participant makes a contribution shall be determined by
dividing the Participant's Base Compensation by the number of times the
Participant is paid in a month. For hourly Participants who are paid weekly,
Base Compensation applicable to any pay period in which the Participant makes a
contribution shall be determined by converting the Participant's hourly wage to
a monthly rate and dividing by four the resulting amount being applied to each
of the first four pay periods in the month. For hourly Participants who are paid
bi-weekly, Base Compensation applicable to any pay period in which the
Participant makes a contribution shall be determined by converting the
Participant's hourly wage to a monthly rate and dividing by two the resulting
amount being applied to each of the first two pay periods in the month.
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6.2 There shall be no Company Matching Contribution with respect to
Catch-Up Contributions, Rollover Contributions, or Trust To Trust Transfer
Contributions.
6.3 To the extent that prior to January 1, 1990, any Company Matching
Contribution was characterized as a pre-tax contribution, such prior Company
Matching Contribution shall continue to have such pre-tax characteristics, and
shall remain subject to any distribution restrictions which accompany a
designation as a pre-tax contribution.
6.4 The Company Matching Contribution shall be nonforfeitable.
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ARTICLE VII: VALUATION AND MAINTENANCE
OF PARTICIPANTS' ACCOUNTS
7.1 Maintenance Of An Account: An account shall be established for each
Participant which shall reflect the amount and investment of his/her Account
Balance.
7.2 Reports to Participants: Each Participant shall be furnished at
least annually a statement setting forth his/her Account Balance and any
transactions regarding such Account Balance in which the Participant has engaged
during that period.
7.3 Valuation Of Account Balances: The value on any given day of a
Participant's interest in any Mutual Fund or the Merck Common Stock Fund shall
be determined by multiplying the number of shares or units and fractions thereof
reflected in the Participant's Account Balance as of the given day by the
applicable fund's closing price per share on such given date. For purpose of
initial purchase, reallocation of Account Balance and distributions, the value
of the Mutual Funds and Merck Common Stock Fund shall be determined by reference
to the closing price per share of the applicable fund(s) on the given Business
Day the Trustee conducts the applicable sale or purchase.
ARTICLE VIII: INVESTMENT OF CONTRIBUTIONS
8.1 Investment of Company Matching Contributions: Company Matching
Contributions shall be invested in the Merck Common Stock Fund.
8.2 Investment of Contributions By Or On Behalf of Employees: At the
time a Participant elects to participate in the Plan, he/she shall choose the
Investment Media (exclusive of Participant Loans) in which his/her contributions
are to be invested. This choice must be expressed in whole percentages of the
payroll deduction amount (or in whole percentages of the Rollover Contribution
or Trust to Trust Transfer Contribution amount if they are the Participant's
initial contribution to the Plan), with a minimum investment of 1% in any
Investment Medium. This choice of Investment Media shall be applied pro rata to
the different types of contributions which a Participant makes to the Plan at
any one time. A Catch-Up Contribution shall be invested in accordance with the
Participant's selection of Investment Media in effect at the time such
contribution is made.
8.3 Changes in Investment Media for Future Contributions: A Participant
may change the Investment Medium(a) in which his/her future contributions are
invested by calling the Trustee prior to 4 p.m. (ET) on any Business Day, giving
his/her PIN, and authorizing the specific investment change in whole percentages
of the payroll deduction amount. The change will become effective with the next
contribution received by the Trustee. Instructions given to the Trustee on the
day that any payroll deduction amounts are credited to a Participant's Account
Balance will be
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effective with the next contribution received by the Trustee. Changes in
Investment Media for future contributions may only be done via telephone to the
Trustee.
8.4 Changes In Investment Media For Account Balances:
(a) General Rule: With the exception of the Company Matching
Contribution, a Participant may change the Investment Medium(a) in which his/her
Account Balance is invested by calling the Trustee, giving his/her PIN, and
authorizing the specific investment change(s). Changes in Investment Media for
Account Balances may only be done via telephone to the Trustee. No change may be
made which results in the simultaneous reallocation into and out of any given
Investment Medium.
(b) Transfers Between and Among Mutual Funds and Merck Common
Stock Fund: If the Participant wishes to reallocate his/her Account Balance from
one or more Mutual Funds or the Merck Common Stock Fund to other Mutual Funds or
the Merck Common Stock Fund, and if the Participant completes his/her
instructions to the Trustee prior to 4 p.m. (ET) on any Business Day, then the
transaction implementing the reallocation will be valued as of that Business
Day. If the Participant's instructions regarding a reallocation are received
after 4 p.m. (ET) on a Business Day, then the transaction implementing the
change will be valued the next Business Day.
(c) Limitations: The maximum aggregate number of reallocations
permitted under the Plan each Plan Year is based on the aggregate number of
reallocations permitted per Participant per year pursuant to the terms of all
the Investment Media prospectuses multiplied by the number of Participants. If
activity under the Plan should approach this maximum, then the Plan Committee
shall determine a reasonable manner of ensuring that the Plan does not exceed
such limit.
ARTICLE IX - INVESTMENT MEDIA
A Participant may invest in the following Investment Media in
accordance with the provisions of Article VIII.
9.1 Mutual Funds: MPIC shall determine from time to time which
investments, funds and mutual funds offered by the Trustee or another party may
be permitted investments under the Plan.
9.2 Merck Common Stock: In addition to any investment funds offered
pursuant to Section 9.1, a fund or investment which includes shares of Merck
Common Stock and such other investments (such as short term, liquid investments)
as determined by MPIC, shall be permitted under the Plan.
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9.3 Participant Loans: A Participant may borrow money from his/her
Account Balance in accordance with the terms of Section 10.8. If a Participant
does so, that loan will be considered an investment medium for that
Participant's Account Balance.
ARTICLE X: DISTRIBUTIONS AND LOANS
10.1 Valuation and Timing of Distributions: Except as otherwise
provided herein, distributions will be valued based on the Business Day the
distribution is processed by the Trustee. Transactions processed by the Trustee
before 4:00 p.m. E.T. (or such other time as is established by the Trustee in
accordance with generally applicable procedures) shall be valued based on the
closing price of the Investment Media for the Business Day; transactions
processed by the Trustee after such time shall be valued based on the closing
price for the following Business Day. Except as otherwise provided herein,
distributions will be made as soon as administratively feasible following proper
fulfillment of all requirements applicable to any distribution.
10.2 Automatic Distributions upon or Subsequent to Termination of
Employment:
(a) Account Balances of $3,500 or Less. A Participant who has
incurred a Termination of Employment shall have his/her Account Balance valued
for the purpose of determining whether such Account Balance is $3,500 or less
not less frequently than annually following such Termination of Employment. For
any Participant who has not received an In-Service Distribution pursuant to
Section 10.4, if such Participant's Account Balance is $3,500 or less as of such
valuation date, the Account Balance shall be distributed to such Participant in
a lump sum as soon as administratively feasible after such valuation date
(provided the actual amount of such distribution is not in excess of $3,500).
(b) Attainment of Normal Retirement Age (65). The Account
Balance of a Participant who has incurred a Termination of Employment and who
has attained Normal Retirement Age shall be valued within 13 months of the date
the Participant attains Normal Retirement Age and shall be distributed in a lump
sum as soon as administratively feasible after such valuation; provided,
however, that a Participant who previously has elected a series of distributions
from the Plan shall not be subject to this paragraph.
(c) Death. The Account Balance of a Participant who has died
shall be valued and distributed as soon as administratively feasible after the
Company learns of the Participant's death. Such distribution shall be made in a
lump sum in accordance with Section 4.3.
For purposes for paragraphs (a) through (c) hereof, a distribution
shall consist of cash representing the Participant's interest in Mutual Fund(s)
and Merck Common Stock; provided, however, that the Participant or beneficiary
may elect to receive shares of Merck Common Stock in respect of his/her interest
in Merck Common Stock.
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10.3 Voluntary Distributions.
(a) Except as otherwise required by Section 10.2, a
Participant who has incurred a Termination of Employment (other than by death)
may irrevocably elect with the Trustee to receive his/her Account Balance:
(i) in a lump sum, or
(ii) in substantially equal annual installments not
to exceed ten. Each such installment shall be disbursed proportionally from all
Sources and from all Investment Media.
(b) An Alternate Payee shall receive, in a lump sum, that
portion of the Participant's benefit specified in the applicable qualified
domestic relations order (as defined in Section 22.2) as soon as
administratively feasible following qualification of such order and lapse of any
time required by the Qualified Domestic Relations Orders Procedures (as defined
in Section 22.2).
10.4 In-Service Distributions:
(a) General Rule. While employed with the Company, a
Participant may request a distribution of all or part of his/her (i) After-Tax
Contributions, (ii) subject to Section 10.4(d), Company Matching Contributions
subject to after-tax distribution rules, (iii) if the Participant has attained
age 59 1/2 or incurred a Disability, Pre-Tax Contributions and Company Matching
Contributions subject to pre-tax distribution rules, (iv) Rollover
Contributions, and (v) Trust To Trust Transfer Contributions, and any earnings
thereon.
(b) Minimum Amount of Distribution. The amount of an
in-service distribution may be no less than the lesser of (1) $500 or (2) the
Participant's entire Account Balance.
(c) Specifying Amount of Distribution. In requesting an
in-service distribution, the Participant must specify the dollar amount of the
distribution he/she wishes to receive.
(d) 5-Year Participation or 2-Year Contribution Requirement.
Effective July 1, 1988, a Participant who has fewer than five Years of
Participation in the Plan from the date of his/her enrollment pursuant to
Section 4.1 may not receive Company Matching Contributions (without earnings
thereon) which were contributed to the Plan less than two years prior to the
time such distribution is requested unless such distribution would qualify as a
hardship distribution pursuant to Section 10.7.
10.5 Provisions Applicable to Distributions other than Automatic
Distributions:
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(a) Distribution of Cash and/or Stock: Mutual fund shares
(other than the Merck Common Stock Fund) shall always be distributed in cash,
and Merck Common Stock may be distributed in cash or shares as the Participant
directs. If the Participant fails to indicate whether he/she wants Merck Common
Stock in cash or shares, cash will be distributed. If a Participant's
distribution consists entirely of shares of Merck Common Stock, the Participant
will receive the number of shares which brings him/her closest to but not over
the dollar amount he/she requested. No fractional shares of Merck Common Stock
will be distributed.
(b) Order of Distributions: The amount of any distribution
shall be disbursed from the Sources in a Participant's account in the following
order: (1) After-Tax Contributions made before 1987, (2) After-Tax Contributions
made after 1986 with a pro rata portion of earnings on these contributions
determined by the ratio of the Participant's post-1986 After-Tax Contributions
to the sum of the Participant's post-1986 After-Tax Contributions plus earnings
thereon, (3) that portion of the Company Matching Contribution which may be
invested in the same Investment Media as the Participant's Pre- and After-Tax
Contributions, and (4) all other amounts in the Plan. To the extent possible, in
order to make such distributions, Investment Media (other than Participant
loans) shall be liquidated proportionately based on their current market value.
(c) Waiver of 30-Day Notice: If a distribution is one to which
Sections 401(a)(11) and 417 of the U.S. Code do not apply, such distribution may
commence less than 30 days after the notice required under Treas. Reg. Section
1.411(a)-ll(c) is given, provided that (a) the plan administrator informs the
Participant that he or she has a right to a period of at least 30 days after
receiving the notice to consider the decision of whether or not to elect a
distribution (and, if applicable, a particular distribution option), and (b) the
Participant, after receiving the notice, affirmatively elects a distribution.
10.6 Mandatory Distributions: A Participant must commence to receive
distributions under the Plan no later than the April 1st of the calendar year
following the year in which the Participant attains age 70-1/2. The
Participant's entire interest shall be distributed to him/her over a period no
greater than the Participant's life expectancy. Distributions pursuant to this
paragraph shall comply with Section 401(a)(9) of the U.S. Code and Section
1165(e) of the P.R. Code and with any regulations promulgated thereunder,
including the minimum distribution incidental benefit requirements of proposed
Treasury Regulation Section 1.40(a)(9)-2 (or any successor regulation). This
initial mandatory payment shall be calculated by dividing the Participant's
Account Balance as of December 31 of the second year preceding the initial
mandatory payment date by the Participant's life expectancy in the year
immediately preceding the initial mandatory payment date as determined under
appropriate IRS mortality tables. Each succeeding mandatory distribution shall
be made annually by December 31 of each year. Each succeeding mandatory payment
shall be calculated by dividing the Participant's life expectancy in the year of
distribution as determined under appropriate IRS mortality tables. If a
Participant has a distribution valued in a Plan Year, that distribution will
offset any amount required to be mandatorily distributed for that Plan Year.
This provision shall not apply to Participants who attained age 70-1/2 prior to
1988 except that
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distributions to Participants who are Five-Percent Owners attached age 70-1/2
prior to 1989 must commence not later than April 1 of the calendar year
following the calendar year in which the Five-Percent Owner attained age 70-1/2
prior to 1988 must begin no later than April 1 of the calendar year after the
calendar year in which the non-Five Percent Owners must begin no later than
April 1, 1990. In a mandatory distribution, a Participant shall receive cash for
his/her interest in Mutual funds, and stock certificates for his/her interest in
Merck Common Stock. Sources and Investment Media (other than Participant loans)
shall be debited proportionally for this distribution.
10.7 Hardship Distributions:
(a) A Participant may submit a written request for a
distribution on account of hardship to the Plan Committee. The Plan Committee
may approve distributions of Pre-Tax Contributions to a Participant on account
of hardship, if the Participant can demonstrate that he/she has an immediate and
heavy financial need, and the distribution is needed to relieve such financial
need. The determination of the existence of an immediate and heavy financial
need and of the amount necessary to meet the need will be made in accordance
with the nondiscriminatory and objective standards set forth herein. The Plan
Committee shall adopt regulations for the administration of such distributions.
If a Participant's request is approved, the Participant's distribution will be
valued and distributed as soon as practicable after the date the Plan Committee
makes its determination.
The maximum amount that may be distributed on a hardship basis
to a Participant is the sum of Pre-Tax Contributions made prior to January 1,
1989, under the Merck & Co., Inc. Employee Savings and Security Plan, including
earnings attributable to those contributions as of such date (the "frozen
amount"), plus Pre-Tax Contributions made after January 1, 1989, minus any
amount previously taken on account of hardship. However, in the event that
losses attributable to Pre-Tax Contributions reduce the Participant's pre-tax
monies to an amount below the frozen amount, Company Matching Contributions
subject to pre-tax distribution rules may be used to increase the pre-tax monies
available for a hardship distribution up to the frozen level.
(b) The Plan Committee shall consider a Participant to have an
immediate and heavy financial need if the Participant's request for a hardship
distribution is on account of one of the following events:
(i) Purchase (excluding mortgage payments) of a
principal residence of the Participant;
(ii) Payment of tuition, related educational and room
and board expenses fees for the next 12 months of post-secondary education for
the Participant, his/her spouse, or dependents;
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(iii) To obtain services for or on account of
unreimbursed medical expenses described in Section 213(d) of the U.S. Code
incurred by the Participant, the Participant's spouse, or dependents or
necessary for these persons to obtain medical care; or
(iv) The need to prevent the eviction of the
Participant from his/her principal residence or the foreclosure on the
Participant's principal residence.
(c) The distribution of funds, on account of an immediate and
heavy financial need, will be deemed necessary to satisfy the financial need of
a Participant if all of the following requirements are satisfied:
(i) The distribution is not in excess of the amount
of the immediate and heavy financial need of the Participant including amounts
necessary to pay income taxes and penalties which may be owed as a result of the
hardship distribution; and
(ii) The Participant has obtained all distributions,
other than hardship distributions, and all other nontaxable loans currently
available under all plans maintained by the Company; and
(iii) The Participant's contributions, including
Pre-Tax Contributions, are suspended for 12 months commencing with the pay
period following the date the Participant's hardship distribution was valued;
and
(iv) The Participant may not make Pre-Tax
Contributions to the Plan and all other plans maintained by the Company, for the
Participant's taxable year immediately following the taxable year of the
hardship distribution, in excess of the $7,500 limit (or the lesser of such
other amount as in effect under Section 402(g) of the U.S. Code or Section
1165(e)(7) of the P.R. Code) applicable in the next taxable year less the amount
of such Participant's Pre-Tax Contributions for the taxable year of the hardship
distribution.
(d) A Participant may apply for a hardship distribution on the
grounds of severe financial hardship which, if not alleviated, would cause the
Participant to face imminent financial collapse or personal bankruptcy. A
distribution of funds on account of such an immediate and heavy financial need
will be deemed necessary to satisfy such need if such need cannot be satisfied
from other reasonably available sources as outlined in regulations issued by the
Internal Revenue Service.
10.8 Loans:
(a) Application for a Loan: A Participant may apply to the
Trustee or its designate for a loan from his/her vested Account Balance in
accordance with this section. A loan may not be obtained if a Participant
intends to use the proceeds to purchase or carry any security in
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<PAGE> 21
a manner that would violate the "margin rules" promulgated under the Securities
Exchange Act of 1934 or any successor statute.
(b) Minimum/Maximum Loan Amounts: The minimum amount a
Participant can borrow is $500, which amount must constitute 50% or less of
his/her Account Balance as of the valuation date. The maximum amount a
Participant can borrow is the lesser of: (1) $50,000 reduced by the highest
outstanding loan during the one year period immediately preceding the making of
the new loan, or (2) 50% of the Participant's Account Balance reduced by any
outstanding loan the Participant currently has from the Plan. A Participant may
not refinance a loan.
(c) Interest: Loan interest rates shall be set monthly. The
interest rate shall be the prime rate set by the Morgan Guaranty Trust Company
of New York at the opening of business on the 27th day of each month or if the
27th is a non-working day for Morgan Guaranty, the next working day, plus one
percentage point. The interest rate set on the 27th of any month shall be
effective for loans valued on the 10th of the second month next following.
(d) Collateral: All plan loans must be secured. Up to 50% of
the Participant's Account Balance may be used as collateral for a Plan loan. No
other security is permissible.
(e) Repayment Period: A loan (a "Short-Term Loan") must be
repaid within five years of the date the loan is valued, except that a loan used
to acquire the Participant's primary residence (a "Residential Loan") may be
repaid within 30 years. All loans shall be levelly amortized within the meaning
of Section 72(p) of the U.S. Code. Loans shall be repaid on a monthly or more
frequent basis. For those Participants who repay a loan via payroll deduction,
loan repayments are due from each paycheck. For those Participants who repay by
means other than payroll deduction, the loan repayments are due to Treasury
Operations by the 20th of each month.
(f) Order of Distributions for Loans: The amount of any loan
shall be disbursed from the Sources in the Participant's account in an order
inverse to that set forth in Section 10.5(b). To the extent possible, in order
to distribute the loan proceeds, Investment Media (other than Participant loans)
shall be liquidated proportionately based on their current market value.
(g) Required Agreements: In order to receive a loan, a
Participant must give a Plan a note (a "Promissory Note") irrevocably agreeing
to repay the loan and an authorization (a "Payroll Deduction Authorization")
irrevocably authorizing repayment of the loan through payroll deduction.
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(h) Default: For a Participant who is an employee, a loan
shall be in default at the end of the 60-day period (or such other period as
established under procedures adopted by the Plan Committee) following the
Participant's failure to pay the monthly amount, if payment has not been
rendered by the end of such period. Additionally, upon Termination of
Employment, a Participant (who is not a party in interest as that term is
defined in ERISA) must repay any outstanding loans in full unless his/her
Account Balance is $3,500 or less. If the Participant does not repay within the
45-day period (or such other period as established under procedures adopted by
the Plan Committee) following the later of his/her Termination of Employment or
the date site personnel learns of the Participant's Termination of Employment,
then the Participant's loan will be in default. At a Participant's request, the
Plan Committee may declare the Participant's plan loan in default on account of
the Participant's having filed for personal bankruptcy.
(i) Consequences of Default: If the Participant defaults after
having incurred a Disability or Termination of Employment, the amount of his/her
outstanding loan balance will be reported as a taxable event and deleted from
his/her Account Balance. If the Participant defaults without having incurred a
Termination of Employment or a Disability, then the amount of the Participant's
outstanding loan balance(s) will be reported to the IRS as a taxable event. That
portion of the loan which consists of money subject to after-tax distribution
rules will be discharged from the Participant's Account Balance. That portion of
the loan which consists of money subject to pre-tax distribution rules shall be
discharged from the Participant's Account Balance when permissible under Section
401(k) of the U.S. Code. Once a Participant defaults on a Plan loan, he/she may
not apply for another Plan loan for three years from the date of the default.
Any Participant who defaults on two Plan loans is precluded from taking another
Plan loan.
(j) Loan Guidelines The Plan Committee shall issue guidelines
with which a Participant must comply. Such loan guidelines shall be consistent
with the applicable terms of the U.S. Code, the P.R. Code, with ERISA,
regulations issued by governmental agencies, and the terms of this Plan.
(k) Number of Loans: No more than one Residential Loan and two
Short-Term Loans may be in effect with respect to any Participant at any time.
10.9 Limitations: Section 10.7 shall not be applicable to Participants
who have incurred a Disability, and Sections 10.7 and 10.8 shall not be
applicable to any Participant who has incurred a Termination of Employment;
however, Section 10.8 shall apply if such Participant is a party in interest as
that term is defined in Section 3(14) of ERISA. Only one distribution under this
Article X may be valued on any given Business Day.
10.10 Distribution of Excess Deferrals and Excess Contributions:
(a) For each Plan Year, Pre-Tax Contributions shall be subject
to the following:
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(1) Dollar Limit on Pre-Tax Contributions: For any Plan Year, no
Participant may make Pre-Tax Contributions to the Plan together with all other
plans of the Company and its Affiliates in excess of $7,500 (or such other
amount as in effect under Section 402(g) of the U.S. Code or Section 1165(e)(7)
of the P.R. Code). Any Pre-Tax Contribution designated in excess of such limit,
together with earnings thereon, but reduced by any Excess Contributions which
were previously distributed with respect to the same Plan Year, shall be
distributed to such Participant no later than April 15 following the Plan Year
in which such excess Pre-Tax Contributions were designated. Any Matching
Contributions allocable to Pre-Tax Contributions distributed under this Section
shall be forfeited.
(2) Average Actual Deferral Percentage Limit: The Average Actual
Deferral Percentage for Eligible Employees who are Highly Compensated Employees
for the Plan Year and the Average Actual Deferral Percentage for Eligible
Employees who are non-Highly Compensated Employees for the Plan Year must
satisfy one of the following tests:
(i) For Plan Years prior to 1997, the average Actual Deferral
Percentage for Eligible Employees who are Highly Compensated Employees for the
Plan Year shall not exceed the Average Actual Deferral Percentage for Eligible
Employees who are non-Highly Compensated Employees for the Plan Year multiplied
by 1.25 and for Plan Years after 1996, the Average Actual Deferral Percentage
for Eligible Employees who are Highly Compensated Employees for the Plan Year
shall not exceed the Average Actual Deferral Percentage for Eligible Employees
who are non-Highly Compensated Employees for the Plan Year shall not exceed the
Average Actual Deferral Percentage for Eligible employees who are non-Highly
Compensated Employees for the prior Plan Year, multiplied by 1.25; or
(ii) The Average Actual Deferral Percentage for Eligible
Employees who are Highly Compensated Employees for the Plan Year shall not
exceed the Average Actual Deferral Percentage for Eligible Employees for the
prior Plan Year who were non-Highly Compensated Employees for the prior Plan
Year (for Plan Years before 1997, the Average Deferral Percentage for Eligible
Employee who were non-Highly Compensated Employees for the same Plan Year)
multiplied by 2.0, provided that the Average Actual Deferral Percentage for
Eligible Employees who are Highly Compensated Employees does not exceed the
Average Actual Deferral Percentage for Eligible Employees who are non-Highly
Compensated Employees by more than two percentage points.
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(3) Aggregation of Pre-Tax Contributions
(i) For purposes of this Section 10.10(a), the Actual
Deferral Percentage for any Eligible Employee who is a Highly Compensated
Employee for the Plan Year and who is eligible to have Pre-Tax Contributions
allocated to his/her Account Balance under two or more plans or arrangements
described in U.S. Code Section 401(k) that are maintained by the Company and its
Affiliates shall be determined as if all such Pre-Tax Contributions were made
under a single arrangement.
(ii) For purposes of determining the Actual Deferral
Percentage of an Eligible Employee who is a Highly Compensated Employee for Plan
Years prior to 1997,, the Pre-Tax Contributions and Base Compensation of such
Eligible Employee shall include the Pre-Tax Contributions and Base Compensation
of Family Members, and such Family Members shall be disregarded in determining
the Actual Deferral Percentage for Participants who are non-Highly Compensated
Employees.
(b) Notwithstanding any other provision of the Plan, Excess Deferrals
and income allocable thereto with respect to a Plan Year, reduced by any Excess
Contributions which were previously distributed with respect to the same Plan
Year, shall be distributed no later than April 15 following such Plan Year to
Participants who claim such allocable Excess Deferrals for the preceding
calendar year in accordance with the following:
(1) The Participant's claim shall be in writing; shall be
submitted to the Plan Committee not later than such date prior to April 15 as
specified by the Plan Committee; shall specify the amount of the Participant's
Excess Deferral for the preceding calendar year; and shall be accompanied by the
Participant's written statement that if such amounts are not distributed, such
Excess Deferrals, when added to amounts deferred under other plans or
arrangements described in U.S. Code Sections 401(k), 408(k), or 403(b), will
exceed the limit imposed on the Participant by U.S. Code Section 402(g) for the
year in which the deferral occurred.
(2) Maximum Distribution Amount. The Excess Deferral
distributed to a Participant with respect to a calendar year shall be adjusted
for income or loss. The income or loss allocable to Excess Deferrals shall be
the sum of the allocable gain or loss for the Plan Year. Any Matching
Contributions allocable to amounts distributed under this Subsection 10.10(b)
shall be forfeited.
(c) Distribution of Excess Contributions
(1) Notwithstanding any other provision of the Plan, Excess
Contributions and income allocable thereto, reduced by any amount which was
previously distributed to the Participant for the same Plan Year pursuant to
Section 10.10(a)(1) or Section
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10.10(b), shall be distributed from Participants' Account Balances no later than
the last day of each Plan Year to Participants on whose behalf such Excess
Contributions were made for the preceding Plan Year. The Excess Contributions
with respect to Highly Compensated Employees shall be determined by reducing
Pre-Tax Contributions made on behalf of such Highly Compensated Employees in
order of the Actual Deferral Percentage beginning with the highest of such
percentage.
(i) For Plan Years prior to 1997, the determination
and correction of Excess Contributions of a Highly Compensated Employee whose
Actual Deferral Percentage is determined under the family aggregation rules of
Section 10.10(a)(3)(ii) shall be accomplished by treating the Family Members as
a single Highly Compensated Employee for purposes of the reductions made under
this Section and allocating the Excess Contributions to each Family Member based
on a fraction, the numerator of which is such member's Pre-Tax Contribution and
the denominator of which is the family unit's aggregated Pre-Tax Contributions
under Section 10.10(a)(3)(ii).
(ii) For Plan Years after 1996, the Excess
Contributions with respect to Highly Compensated Employees shall be determined
by reducing the Pre-Tax Contributions made on behalf of such Highly Compensated
Employees on the basis of the amount of such Excess Contributions by, or on
behalf of such Highly Compensated Employees, beginning with the greatest dollar
amount of such contributions.
Excess Contributions shall be treated as annual additions under the
Plan.
(2) The income allocable to Excess Contributions shall be the
sum of the allocable gain or loss for the Plan Year.
(3) Any Matching Contributions allocable to the amounts
distributed under this Subsection 10.10(c) shall be forfeited.
10.11 Limit on Company Matching Contributions and Distribution of
Excess Aggregate Contributions
(a) For each Plan Year, Company Matching Contributions and After-Tax
Contributions shall be subject to the following provisions:
(1) Company Matching Contributions and After-Tax Contributions
for each Plan Year must satisfy one of the following tests:
(i) For Plan Years prior to 1997, the Average
Contribution Percentage for Eligible Employees who are Highly Compensated
Employees for the Plan Year shall not exceed the Average Contribution Percentage
for Eligible Employees who are non-Highly Compensated Employees for the Plan
Year multiplied by 1.25 and for Plan Years after 1996, the Average Contribution
Percentage for Eligible Employees who are Highly Compensated Employees
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for the Plan Year shall not exceed the Average Contribution Percentage for
Eligible Employees who are non-Highly Compensated Employees for the prior Plan
Year, multiplied by 1.25; or
(ii) The Average Contribution Percentage for Eligible
Employees who are Highly Compensated Employees for the Plan Year shall not
exceed the Average Contribution Percentage for Eligible Employees for the prior
Plan Year who were non-Highly Compensated Employees for the prior Plan Year
multiplied (for Plan Years before 1997, the Average Contribution Percentage for
Eligible Employee who were non-Highly Compensated Employees for the same Plan
Year) by two provided that the Average Contribution Percentage for Participants
who are Highly Compensated Employees does not exceed the Average Contribution
Percentage for Participants who are non-Highly Compensated Employees by more
than two percentage points.
However, in order to prevent the multiple use of the
alternative method described in (ii) above and in Section 10.10(a)(2)(ii), any
Highly Compensated Employee eligible to make Pre-Tax Contributions and to make
After-Tax Contributions or to receive Company Matching Contributions under the
Plan or any other plan of the Company shall have his Contribution Percentage
reduced if required pursuant to Regulation Section 1.401(m)-2.
(2) For purposes of this Subsection 10.11(a), the Contribution
Percentage for any Eligible Employee who is a Highly Compensated Employee for
the Plan Year and who is eligible to receive Company Matching Contributions or
to make employee contributions under one or more other plans described in U.S.
Code Section 401(a) that are maintained by the Company and its Affiliates shall
be determined as if all such contributions were made under a single plan
aggregated with this Plan.
(3) For Plan Years ending before January 1, 1997, for purposes
of determining the Contribution Percentage of an Eligible Employee who is a
Highly Compensated Employee, the Company Matching Contributions, After-Tax
Contributions, and compensation (as defined in Section 414(s) of the U.S. Code
and regulations promulgated thereunder) of such Eligible Employee shall include
the Company Matching Contributions, After-Tax Contributions, and compensation of
Family Members, and such Family Members shall be disregarded in determining the
Contribution Percentage for Eligible Employees who are non-Highly Compensated
Employees.
(b) Distribution of Excess Aggregate Contributions
(1) Excess Aggregate Contributions and income allocable
thereto shall be distributed no later than the last day of each Plan Year to
Participants to whose Account Balances, Company Matching Contributions or
After-Tax Contributions were allocated for the preceding Plan Year. For Plan
Years after 1996, the Excess Aggregate Contributions with respect to Highly
Compensated Employees shall be determined by reducing After-Tax Contributions
and Company Matching Contributions on the basis of such Excess Aggregate
Contributions on behalf of, or made
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by, each such Highly Compensated Employee beginning with the greatest dollar
amount of such contributions.
(2) The income allocable to Excess Aggregate Contributions
shall be the sum of the allocable gain or loss for the Plan Year.
(3) Excess Aggregate Contributions with respect to a
Participant for a Plan Year shall be determined after determining the Excess
Contributions, if any, which is to be treated as employee contributions (within
the meaning of U.S. Treas. Reg. Sec. 1.40(m)-1(e)(2)(ii)).
10.12 Rollover Distribution: This Section applies to distributions made
on or after January 1, 1993. A Participant, Participant's spouse, surviving
spouse, or former spouse who is an alternate payee under a qualified domestic
relations order (a "Spouse-Alternate Payee") may elect, at the time and in the
manner prescribed by the plan administrator, to have any portion of an eligible
rollover distribution paid directly to an eligible retirement plan specified by
the Participant, Participant's surviving spouse, or Spouse-Alternate Payee in a
direct rollover. An eligible rollover distribution is any distribution of all or
any portion of the balance to the credit of the Participant, Participant's
surviving spouse or Spouse-Alternate Payee, except that a Participant's,
Participant's surviving spouse or Spouse-Alternate Payee's eligible rollover
distribution does not include: any distribution elected pursuant to Section
10.3(a)(iii), 10.4(b) (if ten annual installments are elected), 10.6, 10.8(i),
10.10(c) and 10.11(b), or any distribution to the extent such portion of any
distribution is not includible in gross income (determined without regard to the
exclusion for net unrealized appreciation with respect to employer securities).
An eligible retirement plan is an individual retirement account described in
Section 408(a) of the U.S. Code, an individual retirement annuity described in
Section 408(b) of the U.S. Code, an annuity plan described in Section 403(a) of
the U.S. Code, or a qualified trust described in Section 401(a) of the U.S.
Code, that accepts the Participant's eligible rollover distribution. However, in
the case of an eligible rollover distribution to the surviving spouse, an
eligible retirement plan is an individual retirement account or individual
retirement annuity. A direct rollover is a payment by the Plan to the eligible
retirement plan specified by the Participant, Participant's surviving spouse or
alternate payee.
ARTICLE XI - FORFEITURES
11.1 Amounts which are forfeited by Participants under this Plan shall
be used to reduce future Company Matching Contributions.
ARTICLE XII: CUSTODY AND INVESTMENT OF PARTICIPANTS'
AND COMPANY CONTRIBUTIONS
12.1 Transfer to Trustee: Participant contributions and any applicable
Company Matching Contribution will be transferred to the Trustee for investment
as soon as administratively feasible
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following the payroll deduction or receipt of such contributions. No income will
accrue to a Participant's account on uninvested funds.
12.2 Purchase of Merck Common Stock: Unless the Merck Common Stock
portfolio contains investments other than Merck Common Stock the Trustee shall,
as soon as administratively feasible following receipt of contributions, make
purchases of Merck Common Stock on the New York Stock Exchange, and then
allocate such Merck Common Stock to Participants' accounts. Certificates
representing Merck Common Stock will be held in the name of the Trustee or its
nominees for the accounts of the Participants until distributed, and the Trustee
shall in its discretion exercise or sell any rights for the purchase of any
additional shares of Merck Common Stock or other securities which the Company
may offer to stockholders.
12.3 Purchase of Other Investment Media: As soon as practical after
receipt of contributions applicable to Investment Media (including Merck Common
Stock, if such portfolio includes investments other than Merck Common Stock),
the Trustee shall invest the contributions in such Investment Media.
12.4 Investment of Income Received: Dividends, interest and other
distributions received by the Trustee in respect of any Investment Medium except
loans shall be reinvested in that medium.
12.5 Voting of Common Stock: Before each annual or special meeting of
the stockholders of the Company, the Trustee will arrange to furnish each
Participant with a copy of the proxy solicitation material for such meeting,
together with a form requesting the Participant's confidential instruction on
how the shares of Merck Common Stock credited to the Participant's Account
Balance should be voted. Upon receipt of such instructions, the Trustee shall
vote such Merck Common Stock as instructed.
ARTICLE XIII: ADMINISTRATIVE COSTS
13.1 All direct expenses of administration of the Plan, including
Trustee and record keeping fees, brokerage commissions for Merck Common Stock
only, transfer taxes and other expenses charged or incurred by the Trustee,
shall be borne by the Company and the Company shall reimburse the Trustee for
such expenses incurred. The Company will not cover any expenses of a Mutual Fund
which expenses are reflected in the Mutual Fund's price per share, nor will the
Company cover any taxes assessed against monies in the Trust.
ARTICLE XIV - TRUST AGREEMENT
14.1 The Company shall enter into a trust agreement with a Trustee to
be designated by the Board of Directors. The trust agreement shall provide,
among other things, that all funds received by the Trustee thereunder will be
held, managed, invested and distributed by the Trustee in accordance with the
Plan. Funds paid to the Trustee shall not revert to the Company except as
27
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follows: (1) Because all contributions to the Plan are premised on their being
deductible under U.S. Code Section 404 and Section 1022(n) of the P.R. Code, any
contribution which is determined not to be deductible under U.S. Code Section
404 or Section 1022(n) of the P.R. Code, must be returned to the Company within
one year of the disallowance of the deduction; and (2) any contributions made by
reason of a mistake of fact must be returned to the Company within one year
following the mistaken contribution. The Board of Directors may change the
Trustee in its sole discretion.
ARTICLE XV - ADMINISTRATION
15.1 The Plan shall be administered by the Plan Committee. The Plan
Committee is authorized, subject to the provisions of the Plan, to establish
such rules and regulations as it deems necessary for the proper administration
of the Plan. The Plan Committee shall have full discretionary power and
authority to make factual determinations, to interpret the Plan, to make benefit
eligibility determinations, and to resolve all questions arising in the
administration, interpretation and application of the Plan. The Plan Committee
shall correct any defect, reconcile any inconsistency, or supply any omission
with respect to the Plan. All such corrections, reconciliations, interpretations
and completions of Plan provisions shall be final, binding and conclusive upon
the parties, including the Company, the employees, their families, dependents,
beneficiaries, and any alternate payees.
The Company, the Trustee, the Plan Committee, and all fiduciaries with
respect to the Plan, and all other persons or entities associated with the
operation of the Plan, the management of its assets, and the provision of
benefits thereunder, may reasonably rely on the truth, accuracy and completeness
of any data provided by any Participant, any beneficiary or any alternate payee,
including, without limitation, representations as to age, health and marital
status. None of the aforementioned persons or entities associated with the
operation of the Plan, its assets and the benefits provided under the Plan shall
have any duty to inquire into any such data, and all may rely on such data being
current to the date of reference, it being the duty of the Participants, spouses
of Participants, beneficiaries, and alternate payees to advise the appropriate
parties of any change in such data. Furthermore, the Company, the Trustee, the
Plan Committee and all fiduciaries with respect to the Plan may reasonably rely
on all consents, elections and designations filed with the Plan or those
associated with the operation of the Plan and the trust by any Participant, the
spouse of any Participant, any beneficiary of any Participant, any alternate
payee, or the representatives of such persons without duty to inquire into the
genuineness of any such consent, election or designation.
The Plan Committee shall take such steps as are considered necessary
and appropriate to remedy any inequity that results from incorrect information
received or communicated in good faith or as the consequence of an
administrative error.
The Management Pension Investment Committee of Merck ("MPIC") shall
have the authority to select investment alternatives and vehicles for the Plan.
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The Company shall be the administrator of the Plan only to the extent
that such term is used in ERISA, and in any regulations issued thereunder.
ARTICLE XVI: FIDUCIARY RESPONSIBILITY
16.1 The named fiduciaries under the Plan and their areas of primary
authority in the administration of the Plan are as follows:
(a) The Plan Committee having those duties and
responsibilities outlined in Articles IV, V, X, XV, XIX and XXII. The Plan
Committee also shall establish confidentiality procedures to ensure the
confidentiality of the Plan administration of Merck Common Stock. The Plan
Committee shall be responsible for monitoring compliance with such procedures.
(b) MPIC having those duties and responsibilities outlined in
Article XV.
(c) The Director of Human Resources of the Company or any
other person duly designated by the Plan Committee having the responsibility
outlined in Article XIX.
16.2 The fiduciaries named in Section 16.1 hereof may allocate their
authority to control and manage the operation and administration of the Plan to
other persons, as may from time to time be deemed appropriate for the proper
operation and administration of the Plan. Further, a named fiduciary, or a
fiduciary designated by a named fiduciary as described above, may employ one or
more persons to render advice with regard to any responsibility such fiduciary
may have under the Plan.
16.3 A fiduciary, as that term is defined in ERISA, and any regulations
issued thereunder, shall discharge his/her fiduciary duties with respect to the
Plan prudently and solely in the interests of the Plan Participants and
beneficiaries. A fiduciary shall discharge his/her fiduciary duties in
accordance with the documents and instruments governing the Plan and in
accordance with any and all applicable laws or regulations.
16.4 No fiduciary shall be liable to the Company or to any Participant
or to any beneficiary on account of any act done or omitted or determination
made by the fiduciary acting in good faith in the performance of his/her
fiduciary duties under the Plan, nor for any act done or omitted by any agent or
representative of the fiduciary selected by the fiduciary with reasonable care,
nor shall the fiduciary be liable to any person for any act done or omitted by
any fiduciary in which he/she did not concur. The Company shall, to the extent
permitted by law and the by-laws of the Company, indemnify and hold a fiduciary
harmless from and against any liability he/she may incur in the administration
of the Plan, unless arising from his/her own willful misconduct or willful
breach of his/her fiduciary duties or the duties imposed on him/her by the
by-laws of the Company.
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Further, the Company may, in its discretion, purchase liability insurance
covering the fiduciaries of the Plan, including those not specifically named
herein.
16.5 The Plan is intended to be Section 404(c) Plan within the meaning
of Section 404(c) of ERISA and the regulations thereunder. Pursuant to Section
404(c), Plan fiduciaries may be relieved of liability for any losses that are
the direct and necessary result of instructions from Plan Participants regarding
the investment of the Plan Participant's accounts.
ARTICLE XVII: AMENDMENT, SUSPENSION OR TERMINATION
OF THE PLAN
17.1 The Board of Directors may discontinue the Plan at any time and
may, from time to time, amend or revise the terms of the Plan as permitted by
applicable statutes; provided, however, that the U.S. Compensation and Benefits
Committee (as appointed by the Chief Executive Officer of Merck), with the
concurrence of the Chief Executive Officer of Merck, shall have the right to
amend or revise the terms of the Plan to the extent that such amendment or
revision does not (i) result in a cost increase to the Company in excess of 5%,
(ii) have a significant adverse impact on the prospective rights of
Participants, or (iii) have a significant effect on the long-term rights or
liabilities of the Company. Notwithstanding the foregoing sentence, no such
discontinuance, amendment or revision shall affect adversely any right or
obligation of any Participant with respect to contributions theretofore made. No
amendment may be made which would permit any funds paid to the Trustee to revert
to the Company.
ARTICLE XVIII: SUCCESSOR EMPLOYER AND MERGER OR
CONSOLIDATION OF PLANS
18.1 Successor Employer: In the event of the dissolution, merger,
consolidation or reorganization of the Company, provision may be made by which
the Plan and Trust will be continued by the successor; and, in that event, such
successor shall be substituted for the Company under the Plan. The substitution
of the successor shall constitute an assumption of Plan liabilities by the
successor and the successor shall have all of the powers, duties and
responsibilities of the Company under the Plan.
18.2 Plan Assets: In the event of any merger or consolidation of the
Plan with, or transfer in whole or in part of the assets and liabilities of the
Trust Fund to, another trust fund held under any other plan of deferred
compensation maintained or to be established for the benefit of all or some of
the Participants of this Plan, the assets of the Trust Fund applicable to such
Participants shall be transferred to the other trust fund only if:
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(a) each Participant would (if either this Plan or the other
plan then terminated) receive a benefit immediately after the merger,
consolidation or transfer which is equal to or greater than the benefit the
Participant would have been entitled to receive immediately before the merger,
consolidation or transfer (if this Plan had then terminated);
(b) except as provided in Article V, resolutions of the Board
of Directors of the Company under this Plan, or of any new or successor employer
of the affected Participants, shall authorize such transfer of assets; and, in
the case of the new or successor employer of the affected Participants, its
resolutions shall include an assumption of liabilities with respect to such
Participant's inclusion in the new employer's plan; and
(c) such other plan and trust will be qualified under Sections
401(a) and 501(a) of the U.S. Code; and Section 1165 and 1101 of the P.R. Code.
ARTICLE XIX: CLAIMS AND APPEAL PROCEDURE
19.1 Determination of Claim: A Participant or his/her authorized
representative may present a claim for benefits to the Director of Human
Resources of the Company or any other person duly designated by the Plan
Committee. The Director of Human Resources of the Company or any other person
duly designated by the Plan Committee shall make all determinations as to the
Participant's claim for benefits under the Plan. If the Director of Human
Resources of the Company or any other person duly designated by the Plan
Committee grants a claim, benefits payable under the Plan will be paid to the
Participant as soon as feasible thereafter. If the Director of Human Resources
of the Company or any other person duly designated by the Plan Committee denies
in whole or part any claim for a benefit under the Plan by a Participant, the
Director of Human Resources of the Company or any other person duly designated
by the Plan Committee shall furnish the claimant with notice of the decision not
later than 90 days after receipt of the claim. If special circumstances require
an extension of time for processing the claim, the Director of Human Resources
of the Company or any other person duly designated by the Plan Committee shall
provide a written notice of the extension during the initial 90-day period, in
which case a decision shall be rendered not more than 180 days after receipt of
the claim. The written notice which the Director of Human Resources of the
Company or any other person duly designated by the Plan Committee shall provide
to every claimant who is denied a claim for benefits shall set forth in a manner
calculated to be understood by the claimant:
(a) the specific reason or reasons for the denial;
(b) specific reference to pertinent Plan provisions on which
the denial is based;
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(c) a description of any additional material or information
necessary for the claimant to perfect the claim and an explanation of why such
material or information is necessary; and
(d) appropriate information as to the steps to be taken if the
claimant wishes to submit his/her claim for review.
19.2 Appeal of Denied Claim: A claimant or his/her authorized
representative may request a review of the denied claim by the Plan Committee.
Such request shall be made in writing and shall be presented to the Plan
Committee not more than 60 days after receipt by the claimant of written
notification of the denial of the claim. The Plan Committee shall render its
decision on review not later than 60 days after receipt of the claimant's
request for review, unless special circumstances require an extension of time,
in which case a decision shall be rendered as soon as possible but not later
than 120 days after receipt of the request for review. The decision on review
shall be in writing and shall include specific reasons for the decision. The
decision so rendered shall be binding upon all parties.
19.3 The Director of Human Resources of the Company or any other person
duly designated by the Plan Committee and the Plan Committee, in determining
claims for benefits, shall have the maximum discretion permitted by law to
review and determine questions regarding eligibility, to construe and interpret
the terms of the Plan and to make all other factual and other determinations
necessary or desirable to accomplish the purposes of the plan.
It is intended that the claims procedure of the Plan be administered in
accordance with regulations of the Department of Labor issued under ERISA
Section 503.
ARTICLE XX - SECTION 415 LIMITATIONS
20.1 No amount may be contributed to this Plan or paid therefrom in
excess of that allowable under Section 415 of the U.S. Code. If any
contributions are found to be in excess of the U.S. Code Section 415 limits,
such contributions, adjusted for gains and/or losses, shall be distributed as
soon as administratively feasible after the close of the Plan Year. This Plan
shall operate in full compliance with the terms of U.S. Code Section 415 as it
may be amended from time to time and with regulations promulgated thereunder.
If a Participant herein is also a participant in a defined benefit plan
required to be aggregated with this Plan under U.S. Code Section 415, then the
benefit payable under that defined benefit plan shall be reduced to the extent
necessary so that the overall limitations of U.S. Code Section 415 will not be
exceeded.
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Any Company Matching Contributions allocable to Pre-Tax Contributions
or After-Tax contributions distributed under this Section shall be forfeited.
Distributions will be considered as coming first from After-Tax Contributions
and then to the extent a sufficient amount of After-Tax Contributions is not
available, from Pre-Tax Contributions.
ARTICLE XXI TOP-HEAVY PROVISIONS
21.1 The following provisions shall become effective in any Plan Year
beginning January 1, 1984 or thereafter in which the Plan is determined to be a
Top-Heavy Plan:
(a) Determination of Whether Plan is Top-Heavy: The Plan will
be considered a top-heavy Plan for the Plan Year if as of the last day of the
preceding Plan Year (the "Determination Date"), (1) the value of the accounts of
Participants who are key employees (but not including any allocations to be made
as of such last day of the Plan Year except contributions actually made on or
before that date and allocated to Participants who are key employees, as defined
in Section 416(i) of the U.S. Code) exceeds 60% of the value of all Participant
accounts (but not including any allocations to be made as of such last day of
the Plan Year except contributions actually made on or before that date and
allocated) (the "60% Test") or (2) the Plan is part of a Required Aggregation
Group (as hereinafter defined) and the Required Aggregation Group is top-heavy.
However, and notwithstanding the results of the 60% Test, the Plan shall not be
considered a Top-Heavy Plan for any Plan Year in which the Plan is a part of a
Required or Permissive Aggregation Group (as hereinafter defined) which is not
top-heavy. For purposes of the foregoing, a group is top-heavy if (i) the sum of
the present value of the accumulated accrued benefits for key employees under
all defined benefits plans included in such group, and the aggregate of the
accounts of key employees under all defined contribution plans included in such
group, (ii) exceeds 60% of a similar sum determined for all employees. The value
of a Participant's account shall include any Plan distributions made within the
Plan Year that includes the Determination Date or within any of the four
preceding Plan Years. If a Participant has not performed any services for the
Company and its Affiliates at any time during the 5-year period ending on the
Determination Date or if a Participant is a former key employee, the value of
the Participant's account shall not be taken into account hereunder.
For purposes of this Article XXI, the term "Required
Aggregation Group" shall mean (i) each plan of the Company and its Affiliates in
which a key employee is a Participant in the Plan Year containing the
Determination Date or within any of the four preceding Plan Years, and (ii) each
other plan of the Company and its Affiliates which enables any plan described in
(i) to meet the requirements of Section 401(a)(4) or Section 410 of the U.S.
Code. The Company may treat any plan not included in the Required Aggregation
Group as being part of such group if such group would continue to meet the
requirements of Sections 401(a)(4) and 410 of the U.S. Code with such plan being
taken into account (together the "Permissive Aggregation Group").
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(b) Minimum Benefits: For any Plan Year during which the Plan
is a top-heavy Plan:
(i) Participants who are not key employees and who
participate in the Retirement Plan for the Salaried Employees of Merck & Co.,
Inc. or any other defined benefit plan maintained by the Company and its
Affiliates shall receive the minimum benefit provided by the top-heavy
provisions of said defined benefit plan.
(ii) For each Eligible Employee who is not a key
employee and who does not participate in the Retirement Plan for the Salaried
Employees of Merck & Co., Inc. or any other defined benefit plan maintained by
the Company and its Affiliates, Company Matching Contributions made pursuant to
Article VI shall be not less than 3% of such Eligible Employee's compensation as
defined in Section 414(q)(4) of the U.S. Code, taking into account the limits of
Section 401(a)(17) of the U.S. Code for the Plan Year, where applicable.
Notwithstanding the provisions of Article VI, the Company Matching Contribution
shall be increased to the extent necessary to attain the 3% level and such
Company Matching Contributions shall be nonforfeitable.
(c) Impact on Maximum Benefits: For any Plan Year in which the
Plan is a top-heavy Plan, the provisions relating to limitations on annual
benefits pursuant to Section 415 of the U.S. Code in the Retirement Plan for the
Salaried Employees of Merck & Co., Inc. and any other defined benefit plan
maintained by the Company and its Affiliates in which a Participant participates
shall be read by substituting the number "1.00" for the number "1.25" wherever
it appears therein; except that such substitution shall not have the effect of
reducing any benefit accrued under a defined benefit plan prior to the 1st day
of the Plan Year in which this provision becomes applicable.
ARTICLE XXII: ASSIGNMENT OR ATTACHMENT
22.1 Except as otherwise provided by law, no assignment of any right or
interest under this Plan of any Participant will be permitted or recognized, nor
will any such right or interest be subject to attachment or other legal process
for debts of any Participant.
22.2 Notwithstanding Section 22.1 above or any other provision of this
Plan to the contrary, the creation, assignment or recognition of a right to any
benefit payable with respect to a Participant pursuant to a "qualified domestic
relations order" (as hereinafter defined) is not prohibited. In the event a
right to a benefit hereunder is established pursuant to a qualified domestic
relations order, any benefit otherwise payable to the Participant or his/her
beneficiary hereunder shall be appropriately reduced to reflect the effect of
the qualified domestic relations order. For purposes of the Plan, a "qualified
domestic relations order" shall mean any judgment, decree or order, including
the approval of a property settlement agreement, provided that:
(a) the order relates to the provision of child support,
alimony or marital property rights to an alternate payee (as such term is
defined in U.S. Code Section 414(p)(8)) and is made pursuant to state domestic
relations or community property laws;
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(b) the order creates or recognizes the existence of an
alternate payee's right to receive all or a portion of the Participant's Account
Balance;
(c) the order specifies the name and last known mailing
address of the Participant and each alternate payee covered by the order;
(d) the order precisely specifies the amount or percentage of
the Participant's Account Balance to be paid to each alternate payee or the
manner in which the amount or percentage is to be determined;
(e) the order specifies the number of payments or the period
to which the order applies;
(f) the order clearly specifies that it applies to this Plan;
and
(g) the order does not require this Plan to provide any type
of benefits or form of benefits not otherwise provided under this Plan.
A qualified domestic relations order may provide that a former spouse
of the Participant is to be treated as a surviving spouse for purposes of the
beneficiary designation requirements set forth in Article IV.
This Article will be implemented in accordance with the Qualified
Domestic Relations Orders Procedures adopted by the Plan Committee, as amended
from time to time and with Section 414(p) of the U.S. Code and Section 206(d) of
ERISA.
IN WITNESS WHEREOF, the U.S. Compensation and Benefits Committee of the
Company has caused this instrument to be executed by the Director, Employee
Benefits of the Company as of the ______ day of June, 1997.
Merck Sharp & Dohme Quimica de Puerto Rico, Inc.
By _________________________
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SCHEDULE A
PARTICIPATING COMPANIES
Merck Sharp & Dohme (I.A.) Corp.
36
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SCHEDULE B
PROVISIONS APPLICABLE TO OFFICERS
COVERED BY SECTION 16
OF THE SECURITIES EXCHANGE ACT OF 1934
Participants covered by Section 16 of the Securities Exchange Act of
1934 are subject to the following provisions with respect to transactions
involving Merck Common Stock. All other provisions of the Plan continue to be
applicable to these officers unless inconsistent with the provisions of this
Schedule B.
1. Changes in Investment Media for Future Contributions
Changes in Investment Media for future contributions which involve an
investment in or out of Merck Common Stock shall be effective beginning with
contributions deducted during the first payroll period in the second month
following the month in which the Director - Benefits Financing receives the
notice of change.
2. Changes in Investment Media for Account Balances - Reallocations
Between Merck Common Stock and Mutual Funds
Changes in Investment Media for Account Balances which involve an
investment in or out of Merck Common Stock reallocations shall be valued on the
1st day of the second month following the month in which the notice of
reallocation is received by the Director - Benefits Financing.
3. In-Service Distributions
All in-service distribution which includes Merck Common Stock shall be
valued on the 10th day of the second month following the month in which the
Director - Benefits Financing receives the distribution request. A Participant
may only receive Merck Common Stock in shares.
4. Limitations
If a Participant elects a change in Investment Media for future
contributions which involves Merck Common Stock and/or a reallocation of his/her
Account Balance which involves Merck Common Stock, then such Participant may not
again elect either a change in Investment Media for future contributions or a
reallocation of his/her Account Balance which involves Merck Common Stock for a
three-month period following the valuation date of the most recent change and/or
reallocation.
A Participant may not elect to have a reallocation and a distribution
valued in the same month.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
PREFACE ....................................................................................................... -1-
ARTICLE I: PURPOSE ........................................................................................... -1-
ARTICLE II: DEFINITIONS ..................................................................................... -1-
2.1 Account Balance ............................................................................. -1-
2.2 Actual Deferral Percentage .................................................................. -1-
2.3 Affiliate ................................................................................... -1-
2.4 After-Tax Contribution ...................................................................... -2-
2.5 Average Actual Deferral Percentage .......................................................... -2-
2.6 Average Contribution Percentage ............................................................. -2-
2.7 Base Compensation ........................................................................... -2-
2.8 Board of Directors .......................................................................... -2-
2.9 Business Day ................................................................................ -2-
2.10 Catch-Up Contributions ...................................................................... -2-
2.11 Company ..................................................................................... -2-
2.12 Company Matching Contribution ............................................................... -2-
2.13 Contribution Percentage ..................................................................... -3-
2.14 Disability .................................................................................. -3-
2.15 (ET) ........................................................................................ -3-
2.16 Eligible Employee ........................................................................... -3-
2.17 Employee .................................................................................... -3-
2.18 Employer .................................................................................... -3-
2.19 Enrollment Date ............................................................................. -3-
2.20 ERISA ....................................................................................... -3-
2.21 Excess Aggregate Contributions .............................................................. -4-
2.22 Excess Contributions ........................................................................ -4-
2.23 Excess Deferral ............................................................................. -4-
2.24 Five-Percent Owner .......................................................................... -4-
2.25 415 Compensation ............................................................................ -4-
2.26 Highly Compensated Employee ................................................................. -4-
2.27 Investment Medium ........................................................................... -5-
2.28 Leased Employee ............................................................................. -5-
2.29 Merck ....................................................................................... -5-
2.30 Merck Common Stock Fund ..................................................................... -5-
2.31 Mutual Fund ................................................................................. -5-
2.32 Normal Retirement Age ....................................................................... -5-
2.33 Participant ................................................................................. -5-
2.34 PIN ......................................................................................... -5-
2.35 Plan Committee .............................................................................. -5-
</TABLE>
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<TABLE>
<S> <C>
2.36 Plan Year ................................................................................... -5-
2.37 Pre-Tax Contribution ........................................................................ -5-
2.38 Puerto Rico Code ............................................................................ -5-
2.39 Recharacterized Contribution ................................................................ -6-
2.40 Retirement .................................................................................. -6-
2.41 Rollover Contributions ...................................................................... -6-
2.42 Sources ..................................................................................... -6-
2.43 Termination of Employment ................................................................... -6-
2.44 Trustee ..................................................................................... -6-
2.45 Trust-To-Trust Transfer Contributions ....................................................... -6-
2.46 U.S. Code ................................................................................... -6-
2.47 Year of Employment .......................................................................... -6-
2.48 Year of Participation ....................................................................... -7-
ARTICLE III: ELIGIBILITY ..................................................................................... -7-
ARTICLE IV: PARTICIPATION ................................................................................... -7-
4.1 Enrollment .................................................................................. -7-
4.2 Certain Participants Subject To Special Plan Terms .......................................... -8-
4.3 Payment in the Event of Death ............................................................... -8-
ARTICLE V: EMPLOYEE CONTRIBUTIONS ........................................................................... -9-
5.1 Method of Contribution ...................................................................... -9-
5.2 Amount of Payroll Deductions ................................................................ -9-
5.3 Changes to the Amount of Payroll Deductions ................................................. -9-
5.4 Designation of Payroll Deductions As Pre-Tax and/or After-Tax Contributions ................. -9-
5.5 Changes in the Designation of Payroll Deductions as Pre-Tax and/or After-Tax Contributions .. -9-
5.6 Suspension of Contributions ................................................................. -9-
5.7 Final Payroll Period ........................................................................ -10-
5.8 Catch-Up Contributions ...................................................................... -10-
5.9 Rollover Contributions ...................................................................... -10-
5.10 Trust-To-Trust Transfer Contributions ....................................................... -11-
5.11 Vesting Of Employee Contributions ........................................................... -11-
ARTICLE VI: COMPANY MATCHING CONTRIBUTIONS ................................................................... -11-
ARTICLE VII: VALUATION AND MAINTENANCE OF PARTICIPANTS' ACCOUNTS ............................................ -13-
7.1 Maintenance Of An Account ................................................................... -13-
7.2 Reports to Participants ..................................................................... -13-
7.3 Valuation Of Account Balances ............................................................... -13-
ARTICLE VIII: INVESTMENT OF CONTRIBUTIONS .................................................................. -13-
</TABLE>
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<TABLE>
<S> <C>
8.1 Investment of Company Matching Contributions ................................................ -13-
8.2 Investment of Contributions By Or On Behalf of Employees .................................... -13-
8.3 Changes in Investment Media for Future Contributions ........................................ -13-
8.4 Changes In Investment Media For Account Balances ............................................ -14-
(a) General Rule ....................................................................... -14-
(b) Transfers Between and Among Mutual Funds and Merck Common Stock Fund ............... -14-
(c) Limitations ........................................................................ -14-
ARTICLE IX - INVESTMENT MEDIA ................................................................................. -14-
9.1 Mutual Funds ................................................................................ -14-
9.2 Merck Common Stock .......................................................................... -14-
9.3 Participant Loans ........................................................................... -15-
ARTICLE X: DISTRIBUTIONS AND LOANS ........................................................................... -15-
10.1 Valuation and Timing of Distributions ....................................................... -15-
10.2 Automatic Distributions upon or Subsequent to Termination of Employment ..................... -15-
(a) Account Balances of $3,500 or Less ................................................. -15-
(b) Attainment of Normal Retirement Age (65) ........................................... -15-
(c) Death .............................................................................. -15-
10.3 Voluntary Distributions ..................................................................... -16-
10.4 In-Service Distributions .................................................................... -16-
(a) General Rule ....................................................................... -16-
(b) Minimum Amount of Distribution ..................................................... -16-
(c) Specifying Amount of Distribution .................................................. -16-
(d) 5-Year Participation or 2-Year Contribution Requirement ............................ -16-
10.5 Provisions Applicable to Distributions other than Automatic Distributions ................... -16-
(a) Distribution of Cash and/or Stock .................................................. -17-
(b) Order of Distributions ............................................................. -17-
(c) Waiver of 30-Day Notice ............................................................ -17-
10.6 Mandatory Distributions ..................................................................... -17-
10.7 Hardship Distributions ...................................................................... -18-
10.8 Loans ....................................................................................... -19-
(a) Application for a Loan ............................................................. -19-
(b) Minimum/Maximum Loan Amounts ....................................................... -20-
(c) Interest ........................................................................... -20-
(d) Collateral ......................................................................... -20-
(e) Repayment Period ................................................................... -20-
(f) Order of Distributions for Loans ................................................... -20-
(g) Required Agreements ................................................................ -20-
(h) Default ............................................................................ -21-
(i) Consequences of Default ............................................................ -21-
(j) Loan Guidelines .................................................................... -21-
(k) Number of Loans .................................................................... -21-
</TABLE>
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<TABLE>
<S> <C>
10.9 Limitations ................................................................................. -21-
10.10 Distribution of Excess Deferrals and Excess Contributions ................................... -22-
10.11 Limit on Company Matching Contributions and Distribution of Excess Aggregate Contributions .. -24-
10.12 Rollover Distribution ....................................................................... -26-
ARTICLE XI - FORFEITURES ...................................................................................... -26-
ARTICLE XII: CUSTODY AND INVESTMENT OF PARTICIPANTS' AND COMPANY CONTRIBUTIONS .............................. -26-
12.1 Transfer to Trustee ......................................................................... -26-
12.2 Purchase of Merck Common Stock .............................................................. -27-
12.3 Purchase of Other Investment Media .......................................................... -27-
12.4 Investment of Income Received ............................................................... -27-
12.5 Voting of Common Stock ...................................................................... -27-
ARTICLE XIII: ADMINISTRATIVE COSTS .......................................................................... -27-
ARTICLE XIV - TRUST AGREEMENT ................................................................................. -27-
ARTICLE XV - ADMINISTRATION ................................................................................... -28-
ARTICLE XVI: FIDUCIARY RESPONSIBILITY ....................................................................... -29-
ARTICLE XVII: AMENDMENT, SUSPENSION OR TERMINATION OF THE PLAN ............................................... -30-
ARTICLE XVIII: SUCCESSOR EMPLOYER AND MERGER OR CONSOLIDATION OF PLANS ...................................... -30-
18.1 Successor Employer .......................................................................... -30-
18.2 Plan Assets ................................................................................. -30-
ARTICLE XIX: CLAIMS AND APPEAL PROCEDURE .................................................................... -31-
19.1 Determination of Claim ...................................................................... -31-
19.2 Appeal of Denied Claim ...................................................................... -32-
ARTICLE XX - SECTION 415 LIMITATIONS .......................................................................... -32-
ARTICLE XXI TOP-HEAVY PROVISIONS ............................................................................. -33-
ARTICLE XXII: ASSIGNMENT OR ATTACHMENT ...................................................................... -34-
SCHEDULE A .................................................................................................... -36-
SCHEDULE B .................................................................................................... -37-
</TABLE>
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