Exhibit 10.20August 24, 2006Dear Brad:          This letter agreement (“Agreement”) supersedes Peter Loescher’s letter to you dated July 12,2006 concerning your employment status with Merck & Co., Inc. (“Merck” or the “Company”) andincorporates revisions to the earlier letter discussed by your attorneys and Merck’s attorneys. Asyou and Peter discussed, as part of a general restructuring of Merck’s worldwide human healthbusiness, your current position as President, U.S. Human Health will be eliminated at the close ofbusiness on September 30, 2006 and you will be separated from employment. Merck is offering youseverance arrangements set forth below, contingent on your timely acceptance and nonrevocation ofthe terms set forth in this Agreement:1. **Employment Status**. (a) Transition Assignment. Effective July 12, 2006 you were relieved ofoperational responsibilities and your sole assignment is to effectuate the full transitionof your responsibilities as President, U.S. Human Health, under my direction. Your statusas an “officer” as defined in Rule 16a-1(f) as defined under the Securities Exchange Act of1934 ended at the close of business on July 12, 2006. You agree to use your best effortsto perform this assignment and such other duties as I may assign to you and to otherwiseconduct yourself in the best interests of the Company. Your grade and base salary willremain at their current level and you will continue to be eligible to participate in theCompany’s employee benefit plans and programs, as they may be amended from time to time, onthe same terms and conditions applicable to Company employees at your grade level. At mysole discretion, your employment status may be converted at any time to paid inactivestatus prior to September 30, 2006. While on paid inactive status, your grade and basesalary will be unchanged; you will continue to receive monthly salary payments; you willcontinue to accrue pension credit and be eligible to participate in the plans that youelected under the flexible benefits program; provided, however, that you will not beeligible to participate in the short term and long term disability benefit plans whichbenefits you agree to waive.  (b) Termination of Employment. Your employment will terminate on September 30,2006 (“Separation Date”), provided that you have not terminated your employment byresignation prior to the Separation Date. Your resignation will be deemed to occur in theevent that you engage in conduct inconsistent with your responsibilities and obligations asa Merck employee or if you voluntarily terminate your employment by quitting or commencingemployment elsewhere. The termination of your employment on the Separation Date will be a“Separation from Service” (“Separation”) under the Merck & Co., Inc. Separation BenefitsPlan for Nonunion Employees (“Separation Plan”) and you will be eligible for the benefitsapplicable to a “Bridged Employee” described in the brochure entitled “Special SeparationProgram for Bridged Employees” (the “Bridged Employee Brochure”) under the Separation Plan.The summary plan description (“SPD”) that describes the benefits available to you underthe Separation Plan and the Bridged Employee Brochure that describes the effect of aseparation on other benefits for a “Bridged

 

Page 2 of 8   Employee” have been provided to you and are incorporated herein by reference. If there isany conflict between the SPD and this Agreement or between the Bridged Employee Brochure andthis Agreement, the SPD or Bridged Employee Brochure, as the case may be, shall govern.2. **Separation Benefits**. Upon your Separation, you will receive the following separationbenefits all in accordance with the SPD and Bridged Employee Brochure: (a) Separation Pay. Subject to paragraph 3(b) below, you will receiveseventy-eight (78) weeks’ pay as described in the SPD, payable in periodic installments inaccordance with the Company’s normal payroll periods, minus applicable deductions andwithholdings.  (b) Retirement Plan. You will receive the Bridged Pension Benefit described in theBridged Employee Brochure, subject to paragraph 3(b) below.  (c) Medical and Dental Benefits. You will be eligible to select retiree medicaland dental benefits as described in the Bridged Employee Brochure.  (d) Life Insurance. You will be eligible to be considered a retiree for lifeinsurance plan purposes as described in the Bridged Employee Brochure.  (e) Outplacement. You will eligible to receive Senior Executive Serviceoutplacement services over a period of twelve (12) months.  (f) Equity Grants. You will be considered “retired” for purposes of youroutstanding unexercised stock options, restricted stock units, leader shares andperformance share units, in each case, if any. It is your responsibility to familiarizeyourself with the terms of your individual equity grants.  (g) Special Payment in Lieu of EIP Bonus. Subject to paragraph 3(b) below, youwill receive a special payment of $412,500, minus applicable deductions and withholdings,in lieu of an EIP bonus for your performance in 2006. Your deferral election, if any, withrespect to such EIP bonus will not apply to this special payment. In the event that youdie before this special payment is made, the payment will be made to your estate.3. **Payments**. (a) Generally. All payments made pursuant this Agreement will be based on yourcurrent base salary and are subject to applicable deductions and withholding. Upon yourSeparation, except for the payments described in this Agreement and the attached BridgedEmployee Brochure, no other compensation will be paid to you or on your behalf.  (b) Section 409A. Payments generally may not be made on account of separation fromservice for six months following the termination of employment of a “Specified Employee” asdefined in Prop. Treas. Reg. Sec. 1.409A-1(i) or any successor thereto, which in generalincludes the top 50 employees of a company ranked by compensation. You are a “SpecifiedEmployee.” Thus, where payments are characterized in this Agreement as subject to thisparagraph, no such payments will be made to you prior to the first day of the seventh monthfollowing termination of your employment. Instead, amounts that would otherwise have beenpayable during the six months immediately following your Separation will be accumulated andpaid in a lump sum, without interest, as soon as administratively practicable followingsuch six month period (i.e., on or after April 1, 2007).

 

Page 3 of 84. **Deferral Program Account**. Your Deferred Program Account, if applicable, will be paidout to you in accordance with the terms and conditions of the Merck deferral program applicable toseparated employees, subject to paragraph 3(b) of this Agreement.5. **Lump Sum Payment**. As soon as practicable after your Separation, Merck will pay to you,subject to appropriate tax withholding, a gross lump sum in the amount of $137,500. This lump sumpayment is not subject to the delay described in paragraph 3(b) of this Agreement. As a conditionof receiving this lump sum payment, you agree to execute and return to me the release of claimsattached hereto as Attachment “A” on or soon after September 30, 2006. Merck’s obligation to paythis lump sum will not arise until the revocation period for such executed release has passedwithout your revocation thereof.6. **Financial Counseling**. You may continue to participate in the Company’s ExecutiveFinancial Services Program through the end of 2007 at the level established for ManagementCommittee members from time to time (currently, reimbursement up to $10,000 per calendar year).7. **Nondisparagement**. You agree not to disparage Merck, its affiliates, subsidiaries, orjoint ventures, and their products, officers, directors, employees, former employees,representatives and agents, in any way whatsoever; provided, however, that nothing set forth hereinwill prohibit you from making any statement or engaging in conduct to the extent such statement orconduct is required by law, court order or legal process. The Company agrees that neither itsemployees who were executive officers of the Company on July 12, 2006 nor members of the Company’sBoard of Directors will disparage you or your performance as a Merck employee.8. **Noncompete**. For a period of eighteen months following your Separation Date, you agreenot to conduct business in competition with Merck. “Conduct business in competition with Merck”means, for purposes of this Agreement,(a) to be, or become being connected in any manner with, a Competitor as defined below,directly or indirectly, as an individual or as a director, trustee, officer or employeeof, or debt or equity investor in, or consultant or other independent contractor to, aCompetitor, or through ownership, management, operation or control of a person or entitythat is a Competitor; *provided*that in no event shall ownership of 1% or less of theoutstanding equity securities of any issuer whose securities are registered under theSecurities Exchange Act of 1934, as amended, standing alone, be prohibited by thissubparagraph so long as you do not have, or exercise, any rights to manage, operate orcontrol the business of such issuer; or(b) individually or in partnership or conjunction with any other person or entity toengage in, work in, work for or with as an employee or consultant, advise, manage, lead,be employed by or affiliated with, or own or operate any enterprise or endeavor, notdefined below as a Competitor, that discovers, develops, markets or sells pharmaceuticalor biological products or vaccines, unless you have first obtained the consent ofMerck’s General Counsel. Your request for consent must include the name of the companyfor which you would like to work (or otherwise become associated), the nature of yourproposed employment, association or relationship with such company, and any otherinformation requested by the General Counsel. The consent of the General Counselrequired hereunder will not be unreasonably withheld, *provided, however,*that youunderstand and agree that the decision whether to grant any such requested consent willbe determined by the General Counsel in the exercise of his or her sole discretion. Nosuch consent will be effective unless it is set forth in a signed, written communicationfrom the General Counsel to you.

 

Page 4 of 8(c) “Competitor” means any of the following companies as well as their parents,subsidiaries, affiliates and successors: Abbott Laboratories, Amgen, AstraZeneca,Bristol Myers Squibb, Glaxo Smith Kline, Genentech, Johnson & Johnson, Eli Lilly,Novartis/Chiron, Pfizer, Roche/Hoffmann-La Roche, Sanofi/Adventis, Schering Plough andWyeth.9. **Nonsolicitation**. For a period of eighteen months following your Separation Date, youagree not to solicit, entice, persuade, induce or otherwise attempt to influence any person, who isemployed by Merck, its subsidiaries or joint ventures on the date of this Agreement, to leave theemploy of Merck, its subsidiaries or joint ventures, by (1) making initial contact with a Merckemployee for such purpose or engaging in discussion with a Merck employee about such purpose orresult, (2) causing any third party to make initial contact with a Merck employee for the purposeof soliciting, enticing, persuading or inducing them to leave the employ of Merck, or (3) providinga third party information about any Merck employee for the purpose of recruitment of that employee.10. **Confidential Information**. You acknowledge and agree that, in the course of youremployment with the Company, you had access to trade secrets, and confidential and proprietarybusiness information (“Confidential Information”) owned by, or pertinent to, the Company and itssubsidiaries or joint ventures. You agree not to disclose Confidential Information except as youdetermine in good faith, with the advice of counsel, to be required of you by law or legal process,subpoena or court order, provided that, prior to any such required disclosure, you will use yourreasonable best efforts to provide sufficient notice to the Company so as to enable the Company tointerpose an effective objection to such disclosure.11. **Litigation**. In connection with litigation, investigation, inquiry or proceedingsbefore a court, arbitrator, government or administrative agency or other tribunal, you may be askedby Merck to testify as a witness or to provide information concerning matters you were or mighthave been involved in during the course of your employment with Merck. You agree to cooperatefully with Merck’s counsel by making yourself available to such counsel, upon reasonable advancenotice, to discuss your information or to review your testimony reasonably in advance of suchlitigation or proceedings, by making yourself available to testify at depositions or trial asrequired or requested by Merck, and by notifying Merck immediately upon becoming aware of anylitigation, investigation, inquiry or proceedings involving Merck. Other than travel expenses andapplicable, or statutorily mandated, witness fees, you agree that you will not be paid inconnection with your testimony, appearance or participation pursuant to this paragraph in suchlitigation or proceedings. You further agree that you will not participate in any lawsuit or otherlegal action or administrative proceeding initiated by a third party against or involving Merck,except as such participation is solicited by Merck or authorized by Merck, unless commanded to doso by a valid and lawfully issued subpoena. You agree that if you are subjected to a subpoenarequiring you to bear witness on matters concerning your employment with or your knowledge aboutMerck, you will contact the Company as soon as reasonably practicable and cooperate fully with theCompany in its chosen manner of proceeding. Nothing in this provision shall be construed asprecluding you from cooperating with law enforcement or regulatory agencies in connection with anylawful government inquiries.12. **Breach of Agreement and Forfeiture of Benefits**. (a) The forfeiture of benefits provision set forth in the SPD is incorporated by referenceinto this Agreement with respect to all amounts and benefits payable hereunder.  (b) Separate and apart from any other remedy that Merck may have, in the event that Merckreasonably determines that you have breached or violated paragraph 7, 8, 9, 10 or 11 ofthis Agreement, Merck’s obligation to pay amounts described in paragraphs 2(a), 2(g) and 5of this Agreement will immediately cease as of the date of such breach or violation andMerck (i) will be

 

Page 5 of 8   relieved of any further obligation to make such payments and (ii) will be entitled todemand, and you agree to immediately tender, all benefits and payments previously made toyou hereunder. (c) You agree that your breach of paragraph 8, 9 or 10 of this Agreement will causeimmediate and irreparable injury to Merck and it is and will be impossible to estimate anddetermine the damage that will be suffered by Merck in the event of your breach. You agreethat your breach of any of these paragraphs will cause immediate and irreparable injury toMerck and that it is and will be impossible to estimate and determine the damage that willbe suffered in the event of a breach. Separate and apart from any other remedy that Merckmay have, you further agree that, in the event of such a breach, Merck will be entitled, inaddition to any other available remedies, to (i) temporary and permanent injunctive relieffrom any such breach by you and by your employers, employees, partners, agents andassociates, of the terms set forth in this paragraph, without the necessity of provingactual damages, or immediate or irreparable harm, or of posting a bond, ii) an award ofliquidated damages equal to all monies paid to you or received by you in accordance withparagraphs 2(a), 2(g) and 5 of this Agreement, and (iii) all associated attorney’s fees andcosts.13. **Reformation**. You agree that if any portion(s) of paragraph(s) 8, 9, 10, 11 or 12 isdetermined to be invalid, such determination will not affect the enforceability of the remainingportions of such paragraph(s) and such paragraph(s) will be interpreted as if the invalid portionshad not been inserted. You agree that if such invalidity is caused by the length of any period oftime or the size of any area, then the period of time or the area, or both, will, without need offurther action by any party, be deemed to be reduced to a period or area that will cure theinvalidity.14. **Confidentiality**. You agree to hold the existence of this Agreement and the terms andconditions of this Agreement in strict confidence and you agree not to disclose, except as may berequired by law or legal process, any such information to any third party other than members ofyour immediate family, your former spouse, financial advisors, outplacement firm, tax authorities,tax consultants or anyone preparing your tax returns, or legal advisors. Notwithstanding theforegoing, you may disclose to executive search firms and prospective employers the provisions ofthis Agreement related to your agreement not to conduct business in competition with Merck.15. **Release**. In consideration of the promises of the Company as set forth in thisAgreement, and with the intent to be bound legally, you agree to irrevocably RELEASE AND FOREVERDISCHARGE Merck & Co., Inc., together with its benefit plans, subsidiaries and affiliates and theirofficers, directors, employees, agents, predecessors, partners, successors, fiduciaries and assigns(“Releasees”) from and with respect to any manner of actions, suits, debts, claims, demandswhatsoever in law or equity arising out of or in any way relating to your employment with theCompany or the termination of your employment, or arising out of or in any way relating to anytransaction, occurrence, act or omission or any loss, damage or injury occurring at any time up toand including the date and time on which you sign this Agreement (“Claims”), including, but notlimited to (a) any and all Claims based upon any law, statute, ordinance, regulation, constitutionor executive order or based in contract, tort or common law or any other legal or equitable theoryof relief; (b) any and all Claims based on the Employee Retirement Income Security Act of 1974; (c)any and all Claims arising under the civil rights laws of any federal, state or local jurisdiction,including, but not limited to, Title VII of the Civil Rights Act of 1964; the Americans withDisabilities Act; Sections 503 and 504 of the Rehabilitation Act; the Family and Medical Leave Act;the Age Discrimination in Employment Act; the Pennsylvania Human Relations Act; and the New JerseyLaw Against Discrimination; (d) any and all Claims under any whistleblower laws or whistleblowerprovisions of other laws including, but not limited to, the New Jersey Conscientious EmployeeProtection Act; and (e) any and all Claims for counsel fees or costs.

 

Page 6 of 8          You understand that by signing this Agreement, you are waiving any and all Claims against anyand all Releasees released by this Agreement to the greatest extent allowable under law. Nothingin this paragraph shall be read as a waiver of any vested rights in any savings or pension plan.The foregoing release does not release or waive claims or rights that cannot be waived by law anddoes not release or waive any claims or rights to indemnification under Merck’s by-laws, or byapplicable law, or under Merck’s directors and officers insurance, that you may have now or in thefuture.16. **No Representation**. You acknowledge that no promise, other than the promises in thisAgreement, have been made to you and that in signing this Agreement you are not relying upon anystatement or representation made by or on behalf of the Releasees and each or any of themconcerning the merits of any Claims or the nature, amount, extent or duration of any damagesrelating to any Claims or the amount of any money, benefits, or compensation due you or claimed byyou, or concerning the Agreement or concerning any other thing or matter.17. **Voluntariness**. You agree that you are relying solely upon your own judgment; that youare legally competent to sign this Agreement; that you are signing this Agreement of your freewill; that you have read and understood the Agreement before signing it; and that you are signingthis Agreement in exchange for consideration that you believe is satisfactory and adequate.18. **No Admissions**. You agree and acknowledge that neither the offer of these arrangementsnor this Agreement will be construed as an admission or as evidence that Merck or its agents havefailed in any way to act properly in connection with your employment or the termination thereof.To the contrary, the Company specifically denies any wrongful or unlawful treatment towards you.This Agreement has been proposed by the Company solely for the purpose of reaching a mutuallyacceptable resolution of issues you have raised arising out of the termination of your employment.19. **Applicable Law**. You acknowledge and agree that your employment relationship withMerck is governed solely and exclusively under the laws of the State of New Jersey and the UnitedStates and that any question as to the scope, interpretation and effect of this Agreement will beresolved under the substantive and procedural laws of the State of New Jersey without giving effectto any conflict of laws provisions.20. **Severability**. All provisions and portions of this Agreement are severable. If anyprovision or portion of this Agreement or the application of any provision or portion of theAgreement will be determined to be invalid or unenforceable to any extent or for any reason, allother provisions and portions of this Agreement will remain in full force and effect and willcontinue to be enforceable to the fullest and greatest extent permitted by law.21. **Amendment, Termination of Plans**. Merck retains the right (to the extent permitted bylaw) to amend or terminate the Separation Plan and any benefit or plan described in the SPD and/orthe Bridged Employee Brochure (or otherwise) at any time, and nothing in this Agreement affects oralters that right. While it has no current intention to do so, Merck also may extend, or enhance,the Separation Plan in the future. If you sign and return the Agreement, any later amendment ortermination will not decrease the amount of Separation Pay or the other Separation Benefits you areeligible to receive as described in this Agreement.22. **Complete Agreement**. This Agreement constitutes the complete and final agreementbetween the parties and supersedes and replaces all prior or contemporaneous agreements,negotiations, or discussions relating to the subject matter of this Agreement.

 

Page 7 of 8          **In accordance with the federal Older Workers’ Benefit Protection Act of 1990, you haveforty-five (45) days from your initial receipt of this Agreement within which to consider whetherto sign the Agreement. Should you choose to sign this Agreement, you are entitled to revoke youracceptance at any time within seven (7) calendar days after signing it. If revoked by you withinthat time period, the Agreement will be null and void for all purposes. The Agreement will notbecome effective or enforceable until the revocation period has expired. Lastly, you have theright to consult with an attorney before signing this Agreement.**          Please indicate your acceptance of this Agreement by signing and dating this letter andreturning it to me. A duplicate of this letter, signed by me, is enclosed for your records.      Very truly yours,