EX-10.1






Exhibit 10.1




EMPLOYMENT AGREEMENT




          This EMPLOYMENT AGREEMENT (“Agreement”), dated as of February 10, 2009, is entered into by and
between Medco Health Solutions, Inc. (“Medco”), a Delaware corporation with offices at 100 Parsons
Pond Drive, Franklin Lakes, New Jersey 07417 and David B. Snow, Jr. (“the Executive”). This
Agreement shall be effective as of the date it has been signed by both Medco and the Executive and
at that time the Employment Agreement between Medco and the Executive dated as of March 17, 2003 as
amended by Letter Agreement dated January 24, 2007 shall terminate and have no further force or
effect.




          1. Employment. Medco hereby agrees to continue to employ the Executive during the
Employment Period subject to the terms of this Agreement, and, provided that this Agreement has not
terminated prior to March 31, 2012, thereafter as an employee-at-will. Unless prevented by
sickness or disability, the Executive shall use his best and most diligent efforts to promote the
interests of Medco and its affiliates and shall devote his full business time and attention to his
employment under this Agreement. The Executive will not, without the prior written approval of
Medco’s Board of Directors, engage in any other business activity that would interfere with the
performance of his duties, services and responsibilities hereunder or that is in violation of
policies established by Medco; provided, however, that this Agreement shall not be interpreted as
prohibiting the Executive from managing his personal affairs or engaging in reasonable charitable
or civic activities. For purposes of this Agreement, “Employment Period” shall mean a period
commencing on February 10, 2009 and ending on the sooner of March 31, 2012 or the date on which
this Agreement is terminated under paragraph 9 below.




          2. Title. The Executive’s title shall be Chairman and Chief Executive Officer.




          3. Compensation. As compensation for the Executive’s services under this Agreement,
Medco shall pay the Executive a base salary at the rate of $1,300,000 per year, payable in equal
installments in accordance with Medco’s practice. During the first quarter of each year, the
Executive’s base salary then in effect and other components of compensation shall be reviewed and,
if appropriate, revised by the Board of Directors no less frequently than annually. The Executive
shall not participate in such compensation review or revision.




          4. Annual Incentive. The Executive shall be eligible to participate in Medco’s
annual incentive bonus plan in accordance with its terms and conditions. During the Employment
Period, the target amount of such bonus shall be 130 percent of the Executive’s base salary at the
end of the prior calendar year. The actual amount of the annual bonus shall be determined by the
Board of Directors considering Medco’s and the Executive’s performance. The Executive shall not
participate in deliberations or determinations of the Board of Directors concerning his bonus.




          5. Long-Term Incentives. The Executive shall be eligible to receive annual
long-term incentives. The date such long-term incentives are granted shall generally be the same
as the date long-term incentives are granted to other senior executives of Medco. The form and
amount of any long-term incentives shall be determined by the Board of Directors taking into
account the



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Executive’s position, current competitive data, the historical value of long term incentive
awards, the price of the Company’s stock at the time of grant, Company performance, individual
performance and internal equity. The Executive shall not participate in such determination.




          6. Participation in Other Benefit Plans. As an employee of Medco, the Executive
shall be eligible to participate in Medco’s employee benefit plans for its salaried employees on a
basis comparable to Medco’s other most senior executives, including but not limited to its medical,
dental, disability, life insurance, pension and savings plans, subject to any contribution
requirements applicable to participants of such plans and programs. The Executive shall be
entitled to take five weeks of paid vacation during each calendar year.




          7. Other Benefits.





	 	(a)	 	Medco shall pay for the cost of personal financial planning to the
Executive by a financial counselor of the Executive’s choice, provided that the
cost to be borne by Medco shall not exceed $10,000 in each year of the Employment
Period.
	 
	 	(b)	 	During the Employment Period, Medco shall pay the Executive a monthly
automobile allowance of $1,885.
	 
	 	(c)	 	During the Employment Period, the Executive is authorized to incur
reasonable business expenses in carrying out his duties and responsibilities under
this Agreement. Medco shall reimburse him for all such reasonable business
expenses subject to and in accordance with the terms and conditions of Medco’s
policies applicable to its other senior executives.
	 
	 	(d)	 	Medco shall indemnify and hold harmless the Executive in the same
amount and to the same extent as its other senior officers and directors for any
action or inaction of the Executive while serving as an officer or director of
Medco or any of its affiliates or, at Medco’s request, as an officer or director of
any other entity or as a fiduciary of any benefit plan. Medco shall cover the
Executive under directors and officers liability insurance both during and, while
potential liability exists, after termination of employment in the same amount and
to the same extent as Medco covers its other senior officers and directors.





          8. Full Settlement. Medco’s obligation to make the payments or grant the benefits
provided for in this Agreement and otherwise to perform its obligations hereunder shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which
Medco may have against the Executive or others, except as otherwise provided in this Agreement. In
no event shall the Executive be obligated to seek other employment or take any other action by way
of mitigation of the amounts payable or benefits granted to the Executive under any of the
provisions of this Agreement and such amounts or benefits shall not be reduced because the
Executive obtains other employment, except as otherwise provided in this Agreement, except that any
continued healthcare benefits provided for in subparagraphs 9(b) and




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9(c) shall be secondary to any coverage provided to the Executive and his spouse and eligible
dependents by any such other employment.




          9. Termination.





	 	(a)	 	By Medco for Cause. Upon written notice to the Executive
specifying the basis for such action, Medco may discharge the Executive and
terminate this Agreement for Cause. As used in this paragraph, “Cause” shall exist
only if, after reasonable investigation, a majority of the Board of Directors
(excluding the Executive), after providing the Executive (and his counsel, if he so
chooses) a reasonable opportunity to be heard, finds that one or more of the
following conditions exists: (i) an act or acts of personal dishonesty or
misrepresentation made by the Executive and intended to or resulting in personal
enrichment of the Executive at the expense of Medco that is not immaterial; (ii)
demonstrably willful and deliberate violations by the Executive of the Executive’s
obligations under this Agreement; (iii) the Executive’s gross neglect (other than
any such failure resulting from incapacity due to physical or mental illness) or
gross misconduct in carrying out his duties resulting, in either case, in material
economic harm to Medco; (iv) the conviction of, or plea of nolo contendere by, the
Executive of a felony. Upon Medco’s termination of this Agreement for Cause: the
Executive shall forfeit any remaining equity awards granted under paragraph 5
hereof (whether or not vested) that have not yet been paid, been exercised or
become unrestricted (as applicable) as of the date of such termination; Medco shall
have no obligation to provide severance or separation pay to the Executive; and
Medco shall be relieved, as of the effective date of the termination, from any
further salary or compensation payments to the Executive other than the payment of
accrued or vested benefits. For purposes of the foregoing sentence, the annual
bonus described in paragraph 4, and equity and incentive awards described in
paragraph 5, shall not be deemed accrued or vested benefits.
	 
	 	(b)	 	By Medco without Cause or by Reason of Disability or by the
Executive for Good Reason. Medco on written notice to the Executive may
discharge the Executive and terminate this Agreement without Cause at any time
during the Employment Period. Medco on written notice to the Executive may
discharge the Executive and terminate this Agreement at any time during the
Employment Period by reason of Disability which, for purposes of this Agreement,
means the failure of the Executive to carry out substantially and effectively
Executive’s duties and responsibilities hereunder for a period in excess of eight
consecutive weeks or twelve weeks in any six-month consecutive period. The
Executive may terminate this Agreement during the Employment Period upon written
notice to Medco, for Good Reason which, for purposes of this paragraph, will arise
only if (i) there is any material breach by Medco of the Agreement which is not
remedied after notice from the Executive; (ii) Medco takes any action that results
in a material reduction




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	 	 	 	in the Executive’s base salary or target bonus opportunity, provided that prior
to a Change in Control, Good Reason will not arise as a result of a reduction of
Executive’s base salary that is either required by law or implemented as part of
an across the board reduction in pay affecting all senior executives of Medco;
(iii) Medco relocates its principal executive offices to a location more than
fifty (50) miles from its location immediately prior to such relocation and such
relocation increases the distance from Executive’s residence at the time of
relocation to the executive office by a material amount; (iv) Medco takes any
action that results in a substantial and material diminution in the Executive’s
position, authority, duties or responsibilities, excluding for this purpose an
isolated, insubstantial and inadvertent action not taken in bad faith and which
is remedied by Medco promptly after receipt of written notice thereof given by
the Executive, or if the Executive is required to report to anyone other than
the full Board of Directors, provided that written notice must be received by
the Board of Directors within 30 days of such diminution or change in reporting,
whichever is applicable, or (v) Medco fails to comply with and satisfy paragraph
14 of this Agreement, provided that such written notice must be received by the
Board of Directors within 60 days of such initial failure or noncompliance.
Upon termination of this Agreement during the Employment Period either by Medco
without Cause or by reason of Disability or by the Executive for Good Reason (as
described above), Medco shall be relieved of any further salary or compensation
payments to the Executive other than the payment of accrued or vested benefits.
Notwithstanding the preceding sentence, the Executive shall also be entitled to
receive, in return for a general release and waiver of claims, a severance
payment (subject to appropriate payroll and tax withholding and deductions)
equal in amount to twice the sum (one times the sum in the case of termination
by reason of Disability) of the Executive’s current (i.e., at the time of
termination) annual base pay plus the last annual bonus he received from Medco
prior to such termination, and payment for 12 months by Medco of the premium
cost of COBRA continuation coverage for him and his spouse and dependents who
are eligible for COBRA continuation coverage. The foregoing severance payment
shall be in lieu of any other severance payment or arrangement under any Medco
plan, policy or practice, and shall be paid in 24 equal monthly installments (12
equal monthly installments in the case of termination by reason of Disability)
beginning on the last day of the month following the month in which the
Executive’s employment with Medco terminated; provided, however, that upon the
Executive’s post-employment substantial or material breach of any of his
obligations set forth in paragraph 10 below, or upon Medco’s learning after the
termination of the Executive’s employment that the Executive either breached any
such obligation during the Employment Period, or engaged in conduct during the
Employment Period that would have warranted the termination of this Agreement
for Cause under paragraph 9(a) hereof, Medco shall be relieved of the obligation
to make any, or any further, severance or COBRA payment or payments under this
subparagraph 9(b) and Medco shall have the right to recover amounts




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	 	 	 	previously paid or benefits provided pursuant to subparagraph 9(b). The general
release and waiver of claims provided as a condition of the receipt of payments
and benefits pursuant to this subparagraph 9(b) shall not be affected and shall
remain in full force and effect in the event Medco is relieved of its obligation
to provide severance pay or benefits under this subparagraph 9(b) or Medco
exercises its right under this subparagraph 9(b) to recover amounts paid or
benefits previously provided pursuant to this subparagraph 9(b). Stock-based
incentives shall be governed by their terms, provided that, any termination of
the Executive by the Company without Cause or by the Executive with Good Reason
shall be treated as a “Separation” if the Executive signs the general release
and waiver of claims described herein.
	 
	 	(c)	 	By Medco Following a Change in Control. If within one year of a
“Change in Control” as defined in Attachment “A” annexed hereto, the Executive’s
employment with Medco is terminated by the Company without Cause or by Executive
with Good Reason, Medco shall be relieved of any further salary or compensation
payments hereunder, except that the Executive shall be entitled to receive, in
return for a general release and waiver of claims, a lump sum severance payment
(subject to appropriate payroll and tax withholding and deductions) equal in amount
to three times the sum of the Executive’s current annual base pay plus the last
annual bonus he received from Medco prior to such termination, and payment for 12
months by Medco of the premium cost of COBRA continuation coverage for him and his
spouse and dependents who are eligible for COBRA continuation coverage. The
foregoing severance payment shall be in lieu of any other severance payment or
arrangement under any Medco plan, policy or practice. Stock-based incentives shall
be governed by their terms. In the event that the payments and benefits provided
to Executive herein or otherwise by the Company constitute “parachute payments”
within the meaning of Code Section 280G and would, but for this provision, be
subject to the excise tax imposed by Section 4999 of the Code (the “Excise
Tax”), then the payments and benefits to the Executive shall be either
(i) delivered in full or (ii) delivered as to such lesser extent, as Executive may
elect, as would result in no portion of such amounts being subject to the Excise
Tax, whichever of the foregoing results in the receipt by Executive on an after-tax
basis of the greatest amount, notwithstanding that all of some of the amounts may
be taxable under Section 4999 of the Code. If a reduction is to occur pursuant to
the prior sentence, unless an alternative election is permitted by, and does not
result in taxation under, Section 409A and timely elected by Executive, the
payments and benefits shall be cutback in the following order: any cash severance
to which the Executive is entitled (starting with the last payment due), then other
cash amounts that are parachute payments (starting with the last payment due), then
any stock options that have exercise prices higher than the then fair market value
price of the stock (based on the latest vesting tranches), then restricted stock
and restricted stock units based on the last ones scheduled to be distributed and
then other stock options based on the latest vesting




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	 	 	 	tranches. For purposes of clarification, Executive shall be responsible for the
payment of all taxes associated with any “parachute payment.”
	 
	 	(d)	 	Resignation from the Board of Directors. If the Executive’s
employment with Medco ends for any reason, and the Board of Directors requests that
the Executive resign from the Board of Directors, the Executive agrees to resign
from the Board of Directors immediately upon receipt of such request.
	 
	 	(e)	 	Continuing Obligations. The termination of this Agreement
shall not affect any of the Executive’s post-employment obligations that may arise
under paragraph 10 below.
	 
	 	(f)	 	Section 409A Compliance. Executive agrees that he is solely
responsible for the payment of any tax liability (including any taxes and penalties
arising under Section 409A of the Internal Revenue Code of 1986, as amended) that
may result from any payments or benefits that he receives pursuant to the
Employment Agreement. The Company shall not have any obligation to pay, mitigate,
or protect Executive from any such tax liability. Nevertheless, Executive agrees
that if the Company reasonably determines that Executive’s receipt of payments or
benefits pursuant to the Employment Agreement would cause Executive to incur
liability for additional tax under Section 409A of the Code, then the Company may
in its discretion suspend such payments or benefits until the end of the six-month
period following termination of Executive’s employment (the “409A Suspension
Period”). As soon as reasonably practical after the end of the 409A Suspension
Period, the Company will make a lump sum payment to Executive, in cash by check, in
an amount equal to any payments and benefits that the Company does not make during
the 409A Suspension Period. Thereafter, Executive will receive any remaining
payments and benefits due pursuant to the Employment Agreement in accordance with
the terms thereof (as if there had not been any suspension beforehand). 





          10. Noncompete, Nonsolicitation, Developments, Nondisparagement and Confidentiality.
In consideration for the compensation and benefits provided pursuant to this Agreement, the
Executive agrees:





	 	(a)	 	While the Executive is an employee of Medco and for a period of two
years after his employment by Medco terminates, the Executive will not (as an
individual, principal, agent, employee, consultant or otherwise) for any reason
without Medco’s prior written consent, directly or indirectly in any territory in
which Medco and/or any of its affiliates does business and/or markets its products
and services, engage in activities competitive with, nor render services to any
firm or business engaged or about to become engaged in competition with, the
business of Medco, which includes, but is not limited to, the following businesses:
(i) the third party prescription drug claims






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	 	 	 	processing business; (ii) the design, development or marketing of or consulting
as to, prescription drug benefit plans; (iii) the provision of mail service
pharmacy (including all those products and services that are presently or
hereafter marketed by Medco, or that are in the development stage at the time of
termination of the Executive’s employment at Medco and are actually marketed by
Medco and/or its any of its affiliates thereafter); (iv) the collection,
analysis and/or sale of data relating to prescription drug utilization; (v) the
pharmacy benefit management and disease management business whether such
business is conducted through mail service, retail pharmacy networks or other
means, including but not limited to the internet and other types of electronic
transmission; (vi) the organization and administration of retail pharmacy
networks; and (vii) any other business in which Medco and/or its any of its
affiliates is then engaged (hereinafter collectively, the “Business of Medco”).
In addition, the Executive agrees not to have an equity interest in any such
firm or business other than a 1% or less shareholder of a public corporation.
Notwithstanding the foregoing, after the Executive’s employment by Medco
terminates, nothing herein shall be construed to prevent or restrict the ability
of the Executive to perform services (as an individual, principal, agent,
employee, officer, director, consultant or otherwise) for any business or entity
primarily engaged in the operation, management, financing or marketing of health
insurance or health maintenance organizations, provided that such business or
entity is not engaged in the third party prescription drug claims processing
business or the pharmacy benefit management business.
	 
	 	(b)	 	During the Executive’s employment with Medco and for a period of
two years following the termination of his employment with Medco, he will not,
directly or indirectly, (i) solicit or contact any customer or targeted potential
customer of Medco and/or any of its affiliates for the purpose of offering
products or services that, directly or indirectly, compete or interfere with the
Business of Medco and/or its any of its affiliates, (ii) induce or attempt to
induce, any employees, agents or other consultants of Medco and/or its any of its
affiliates to do anything from which the Executive is restricted by reason of
this Agreement, (iii) offer or aid others to offer employment to any employees,
agents, or other consultants of Medco and/or its any of its affiliates, or (iv)
provide services to any customer or otherwise interfere with or disrupt any
contractual or potential contractual relationship between any customer and Medco
and/or any of its affiliates.
	 
	 	(c)	 	The Executive agrees that, during his employment and following the
termination of his employment with Medco, he will not disparage Medco, any of its
affiliates, products, officers, employees, former employees, representatives or
agents in any way whatsoever.
	 
	 	(d)	 	All data, concepts, ideas, designs, findings, discoveries,
inventions, improvements, advances, methods, formulas, plans, programs (computer
or




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	 	 	 	otherwise), practices, techniques, developments and relationships with customers
and prospective customers relating in any way to the present and/or contemplated
products, services, or business of Medco (collectively “Developments”) that the
Executive may conceive, make, invent or suggest during or as a result of his
employment by Medco, whether acting alone or in conjunction with others, shall
be the sole and absolute property of Medco free of any rights of any kind on the
part of the Executive. The Executive shall promptly make full disclosure of all
Developments to Medco. He agrees to do all acts and things (including, among
others, the execution and delivery of patent and copyright applications and
instruments of assignment) deemed by Medco to be necessary or desirable at any
time in order to effect the full assignment to Medco of his rights, if any, to
such Developments.
	 
	 	(e)	 	The Executive recognizes that, in connection with his employment by
Medco, he may learn of, and/or it may be desirable or necessary for Medco to
disclose to him confidential information (“Confidential Information”). He
understands that Confidential Information is valuable and propriety to Medco (or
to third parties that have entrusted the Confidential Information to Medco). The
Executive agrees that, except as required by his employment with Medco, he will
not at any time, directly or indirectly, use, publish, communicate, describe,
disseminate, or otherwise disclose Confidential Information to any person or
entity without the express prior written consent of Medco. The term Confidential
Information shall include, but shall not be limited to: (i) customer lists,
lists of potential customers and details of agreements with customers; (ii)
acquisition, expansion, marketing, financial and other business information and
plans of Medco; (iii) research and development; (iv) data concerning usage of
prescription drugs and any other data compiled by Medco; (v) computer programs;
(vi) sources of supply; (vii) identity of specialized consultants and contractors
and Confidential Information developed by them for Medco; (viii) purchasing,
operating and other cost data; (ix) special customer needs, cost and pricing
data; (x) employee information (including, but not limited to, personnel,
payroll, compensation and benefit data and plans); and (xi) patient records and
data, including all such information recorded in manuals, memoranda, projections,
minutes, plans, drawings, designs, formula books, specifications, computer
programs and records, whether or not legended or otherwise identified by Medco as
Confidential Information, as well as such information that is the subject of
meetings and discussions and not recorded. Confidential Information shall not
include such information that is generally available to the public (other than as
a result of a disclosure by the Executive) or that is disclosed to the Executive
by a third party under no obligation to keep such information confidential.
	 
	 	(f)	 	Upon the termination of the Executive’s employment with Medco or
upon Medco’s request, whichever is sooner, the Executive shall immediately
deliver to Medco all plans, designs, listings, manuals, records, notebooks, and





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	 	 	 	similar repositories of or containing Confidential Information or other
documents and data relating to Medco’s products, services, or business then in
the Executive’s possession or control or available from other persons receiving
such documents from the Executive, whether prepared by the Executive or others.
The Executive shall not retain any copies or abstracts of any such documents.
Upon the termination of the Executive’s employment with Medco, the Executive
shall immediately deliver to Medco all Medco property in his possession or
control including, but not limited to, computer(s) and office equipment.
	 
	 	(g)	 	Any substantial or material breach by the Executive of any of the
post-employment obligations set forth in this paragraph 10, shall terminate any
further post-employment obligations that Medco may have relative to providing
post-employment compensation or benefits to the Executive and shall result in the
immediate expiration of any outstanding options, vested or unvested.





          11. Applicable Law. Any question as to the scope, interpretation and effect of this
Agreement will be resolved under the substantive and procedural laws of the State of New Jersey and
the United States.




          12. Enforceability. All provisions and portions of this Agreement are severable.
If any provision or portion of this Agreement or the application of any provision or portion of the
Agreement shall be determined to be invalid or unenforceable to any extent or for any reason, all
other provisions and portions of this Agreement shall remain in full force and effect and shall
continue to be enforceable to the fullest and greatest extent permitted by law.




          13. No Representations. The Executive agrees that no promises, other than the
promises in this Agreement, have been made to him by or on behalf of Medco. He agrees that in
executing this Agreement he is not relying upon any statement or representation, other than those
set forth herein, made by or on behalf of Medco concerning his employment by Medco.




          14. Successors.





	 	(a)	 	This Agreement is personal to the Executive and without the prior
written consent of Medco shall not be assignable by the Executive. This Agreement
shall inure to the benefit of and be enforceable by the Executive’s legal
representatives.
	 
	 	(b)	 	This Agreement shall inure to the benefit of and be binding upon
Medco and its successors and assigns.
	 
	 	(c)	 	Medco shall require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of Medco to assume expressly and agree to perform this
Agreement





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	 	 	 	in the same manner and to the same extent that Medco would be required to perform
it if no such succession had taken place.





     IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first
above written.



	 	 	 	 	 	 	 
	 	 	MEDCO HEALTH SOLUTIONS, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ John L. Cassis
 

     John L. Cassis,

     Chairman, Compensation Committee
	 	 






	 	 	 	 	 
	 

	 	EXECUTIVE	 	 
	 
	 	 	 	 
	 

	 	/s/ David B. Snow, Jr.
 

David B. Snow, Jr.
	 	 







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ATTACHMENT “A”




          A “Change in Control” shall mean the occurrence during the term of the Employment Period of
any one of the following events:





	 	(a)	 	An acquisition (other than directly from Medco) of any shares of Common Stock or
other voting securities of Medco by any “Person” (for purposes of this Section only, as
the term “person” is used for purposes of Section 13(d) or 14(d) of the Exchange Act),
immediately after which such Person has “Beneficial Ownership” (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) of forty percent (40%) or more of either
(i) the then outstanding shares of Common Stock or (ii) the combined voting power of
Medco’s then outstanding voting securities entitled to vote for the election of
directors (the “Voting Securities”); provided, however, in determining whether a Change
in Control has occurred, shares of Common Stock or Voting Securities which are acquired
in a “Non-Control Acquisition” (as hereinafter defined) shall not constitute an
acquisition which would cause a Change in Control. A “Non-Control Acquisition” shall
mean an acquisition by (i) an employee benefit plan (or a trust forming a part thereof)
maintained by (A) Medco or (B) any corporation or other Person of which a majority of
its voting power or its voting equity securities or equity interest is owned, directly
or indirectly, by Medco (for purposes of this definition, a “Related Entity”), (ii)
Medco or any Related Entity, or (iii) any Person in connection with a “Non-Control
Transaction” (as hereinafter defined); or
	 
	 	(b)	 	The individuals who are members of the Board of Directors of Medco on February 10,
2009 (the “Incumbent Board”), (i) cease for any reason to constitute at least a
majority of the members of the Board of Directors of Medco, or (ii) following a Merger
(as hereinafter defined), do not constitute at least a majority of the board of
directors of (x) the Surviving Corporation (as hereinafter defined), if fifty percent
(50%) or more of the combined voting power of the then outstanding voting securities of
the Surviving Corporation is not Beneficially Owned, directly or indirectly by a Parent
Corporation, or (y) if there is one or more Parent Corporations, the ultimate Parent
Corporation (as hereinafter defined); provided, however, that if the election, or
nomination for election by the Company’s common stockholders, of any new director was
approved by a vote of at least a majority of the Incumbent Board, such new director
shall, for purposes of this Agreement, be considered as a member of the Incumbent
Board; provided, further, however, that no individual shall be considered a member of
the Incumbent Board if such individual initially assumed office as a result of an
actual or threatened solicitation of proxies or consents by or on behalf of a Person
other than the Board of Directors of Medco (a “Proxy Contest”), including by reason of
any agreement intended to avoid or settle any Proxy Contest; or
	 
	 	(c)	 	The consummation of:






          (i) A merger, consolidation or reorganization with or into Medco or a direct or
indirect subsidiary of Medco or in which securities of Medco are issued (a



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“Merger”), unless the Merger is a “Non-Control Transaction.” A “Non-Control Transaction”
shall mean:




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




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




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




(ii) A complete liquidation or dissolution of Medco; or




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



     Notwithstanding the foregoing, a Change in Control shall not be deemed to occur solely
because any Person (the “Subject Person”) acquired Beneficial Ownership of more than the
permitted amount of the then outstanding shares of Common Stock or Voting Securities as a result
of the acquisition of shares of Common Stock or Voting Securities by Medco which, by reducing
the number of shares of Common Stock or Voting Securities then outstanding,



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increases the proportional number of shares Beneficially Owned by the Subject Persons;
provided, that if a Change in Control would occur (but for the operation of this sentence) as a
result of the acquisition of shares of Common Stock or Voting Securities by Medco, and after
such share acquisition by Medco, the Subject Person becomes the Beneficial Owner of any
additional shares of Common Stock or Voting Securities which increases the percentage of the
then outstanding shares of Common Stock or Voting Securities Beneficially Owned by the Subject
Person, then a Change in Control shall occur.




          Notwithstanding the foregoing, there shall not be a Change in Control if, in advance of such
event, the Executive agrees in writing that such event shall not constitute a Change in Control.





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