Document:

EX-10.20

 

Exhibit 10.20

August 24, 2006

Dear 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”) and
incorporates revisions to the earlier letter discussed by your attorneys and Merck’s attorneys. As
you and Peter discussed, as part of a general restructuring of Merck’s worldwide human health
business, your current position as President, U.S. Human Health will be eliminated at the close of
business on September 30, 2006 and you will be separated from employment. Merck is offering you
severance arrangements set forth below, contingent on your timely acceptance and nonrevocation of
the terms set forth in this Agreement:

1. Employment Status.

	 	(a)	 	Transition Assignment. Effective July 12, 2006 you were relieved of
operational responsibilities and your sole assignment is to effectuate the full transition
of your responsibilities as President, U.S. Human Health, under my direction. Your status
as an “officer” as defined in Rule 16a-1(f) as defined under the Securities Exchange Act of
1934 ended at the close of business on July 12, 2006. You agree to use your best efforts
to perform this assignment and such other duties as I may assign to you and to otherwise
conduct yourself in the best interests of the Company. Your grade and base salary will
remain at their current level and you will continue to be eligible to participate in the
Company’s employee benefit plans and programs, as they may be amended from time to time, on
the same terms and conditions applicable to Company employees at your grade level. At my
sole discretion, your employment status may be converted at any time to paid inactive
status prior to September 30, 2006. While on paid inactive status, your grade and base
salary will be unchanged; you will continue to receive monthly salary payments; you will
continue to accrue pension credit and be eligible to participate in the plans that you
elected under the flexible benefits program; provided, however, that you will not be
eligible to participate in the short term and long term disability benefit plans which
benefits 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 by
resignation prior to the Separation Date. Your resignation will be deemed to occur in the
event that you engage in conduct inconsistent with your responsibilities and obligations as
a Merck employee or if you voluntarily terminate your employment by quitting or commencing
employment elsewhere. The termination of your employment on the Separation Date will be a
“Separation from Service” (“Separation”) under the Merck & Co., Inc. Separation Benefits
Plan for Nonunion Employees (“Separation Plan”) and you will be eligible for the benefits
applicable to a “Bridged Employee” described in the brochure entitled “Special Separation
Program for Bridged Employees” (the “Bridged Employee Brochure”) under the Separation Plan.
The summary plan description (“SPD”) that describes the benefits available to you under
the Separation Plan and the Bridged Employee Brochure that describes the effect of a
separation on other benefits for a “Bridged

 

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	 	 	 	Employee” have been provided to you and are incorporated herein by reference. If there is
any conflict between the SPD and this Agreement or between the Bridged Employee Brochure and
this 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 separation
benefits all in accordance with the SPD and Bridged Employee Brochure:

	 	(a)	 	Separation Pay. Subject to paragraph 3(b) below, you will receive
seventy-eight (78) weeks’ pay as described in the SPD, payable in periodic installments in
accordance with the Company’s normal payroll periods, minus applicable deductions and
withholdings.
	 
	 	(b)	 	Retirement Plan. You will receive the Bridged Pension Benefit described in the
Bridged Employee Brochure, subject to paragraph 3(b) below.
	 
	 	(c)	 	Medical and Dental Benefits. You will be eligible to select retiree medical
and dental benefits as described in the Bridged Employee Brochure.
	 
	 	(d)	 	Life Insurance. You will be eligible to be considered a retiree for life
insurance plan purposes as described in the Bridged Employee Brochure.
	 
	 	(e)	 	Outplacement. You will eligible to receive Senior Executive Service
outplacement services over a period of twelve (12) months.
	 
	 	(f)	 	Equity Grants. You will be considered “retired” for purposes of your
outstanding unexercised stock options, restricted stock units, leader shares and
performance share units, in each case, if any. It is your responsibility to familiarize
yourself with the terms of your individual equity grants.
	 
	 	(g)	 	Special Payment in Lieu of EIP Bonus. Subject to paragraph 3(b) below, you
will 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, with
respect to such EIP bonus will not apply to this special payment. In the event that you
die 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 your
current base salary and are subject to applicable deductions and withholding. Upon your
Separation, except for the payments described in this Agreement and the attached Bridged
Employee 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 from
service for six months following the termination of employment of a “Specified Employee” as
defined in Prop. Treas. Reg. Sec. 1.409A-1(i) or any successor thereto, which in general
includes the top 50 employees of a company ranked by compensation. You are a “Specified
Employee.” Thus, where payments are characterized in this Agreement as subject to this
paragraph, no such payments will be made to you prior to the first day of the seventh month
following termination of your employment. Instead, amounts that would otherwise have been
payable during the six months immediately following your Separation will be accumulated and
paid in a lump sum, without interest, as soon as administratively practicable following
such six month period (i.e., on or after April 1, 2007).

 

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4. Deferral Program Account. Your Deferred Program Account, if applicable, will be paid
out to you in accordance with the terms and conditions of the Merck deferral program applicable to
separated 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 sum
payment is not subject to the delay described in paragraph 3(b) of this Agreement. As a condition
of receiving this lump sum payment, you agree to execute and return to me the release of claims
attached hereto as Attachment “A” on or soon after September 30, 2006. Merck’s obligation to pay
this lump sum will not arise until the revocation period for such executed release has passed
without your revocation thereof.

6. Financial Counseling. You may continue to participate in the Company’s Executive
Financial Services Program through the end of 2007 at the level established for Management
Committee 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, or
joint ventures, and their products, officers, directors, employees, former employees,
representatives and agents, in any way whatsoever; provided, however, that nothing set forth herein
will prohibit you from making any statement or engaging in conduct to the extent such statement or
conduct is required by law, court order or legal process. The Company agrees that neither its
employees who were executive officers of the Company on July 12, 2006 nor members of the Company’s
Board 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 agree
not 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 employee
of, or debt or equity investor in, or consultant or other independent contractor to, a
Competitor, or through ownership, management, operation or control of a person or entity
that is a Competitor; provided that in no event shall ownership of 1% or less of the
outstanding equity securities of any issuer whose securities are registered under the
Securities Exchange Act of 1934, as amended, standing alone, be prohibited by this
subparagraph so long as you do not have, or exercise, any rights to manage, operate or
control the business of such issuer; or

(b) individually or in partnership or conjunction with any other person or entity to
engage 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, not
defined below as a Competitor, that discovers, develops, markets or sells pharmaceutical
or biological products or vaccines, unless you have first obtained the consent of
Merck’s General Counsel. Your request for consent must include the name of the company
for which you would like to work (or otherwise become associated), the nature of your
proposed employment, association or relationship with such company, and any other
information requested by the General Counsel. The consent of the General Counsel
required hereunder will not be unreasonably withheld, provided, however, that you
understand and agree that the decision whether to grant any such requested consent will
be determined by the General Counsel in the exercise of his or her sole discretion. No
such consent will be effective unless it is set forth in a signed, written communication
from the General Counsel to you.

 

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(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 and
Wyeth.

9. Nonsolicitation. For a period of eighteen months following your Separation Date, you
agree not to solicit, entice, persuade, induce or otherwise attempt to influence any person, who is
employed by Merck, its subsidiaries or joint ventures on the date of this Agreement, to leave the
employ of Merck, its subsidiaries or joint ventures, by (1) making initial contact with a Merck
employee for such purpose or engaging in discussion with a Merck employee about such purpose or
result, (2) causing any third party to make initial contact with a Merck employee for the purpose
of soliciting, enticing, persuading or inducing them to leave the employ of Merck, or (3) providing
a 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 your
employment with the Company, you had access to trade secrets, and confidential and proprietary
business information (“Confidential Information”) owned by, or pertinent to, the Company and its
subsidiaries or joint ventures. You agree not to disclose Confidential Information except as you
determine 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 your
reasonable best efforts to provide sufficient notice to the Company so as to enable the Company to
interpose an effective objection to such disclosure.

11. Litigation. In connection with litigation, investigation, inquiry or proceedings
before a court, arbitrator, government or administrative agency or other tribunal, you may be asked
by Merck to testify as a witness or to provide information concerning matters you were or might
have been involved in during the course of your employment with Merck. You agree to cooperate
fully with Merck’s counsel by making yourself available to such counsel, upon reasonable advance
notice, to discuss your information or to review your testimony reasonably in advance of such
litigation or proceedings, by making yourself available to testify at depositions or trial as
required or requested by Merck, and by notifying Merck immediately upon becoming aware of any
litigation, investigation, inquiry or proceedings involving Merck. Other than travel expenses and
applicable, or statutorily mandated, witness fees, you agree that you will not be paid in
connection with your testimony, appearance or participation pursuant to this paragraph in such
litigation or proceedings. You further agree that you will not participate in any lawsuit or other
legal 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 do
so by a valid and lawfully issued subpoena. You agree that if you are subjected to a subpoena
requiring you to bear witness on matters concerning your employment with or your knowledge about
Merck, you will contact the Company as soon as reasonably practicable and cooperate fully with the
Company in its chosen manner of proceeding. Nothing in this provision shall be construed as
precluding you from cooperating with law enforcement or regulatory agencies in connection with any
lawful government inquiries.

12. Breach of Agreement and Forfeiture of Benefits.

	 	(a)	 	The forfeiture of benefits provision set forth in the SPD is incorporated by reference
into 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 Merck
reasonably determines that you have breached or violated paragraph 7, 8, 9, 10 or 11 of
this Agreement, Merck’s obligation to pay amounts described in paragraphs 2(a), 2(g) and 5
of this Agreement will immediately cease as of the date of such breach or violation and
Merck (i) will be

 

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	 	 	 	relieved of any further obligation to make such payments and (ii) will be entitled to
demand, and you agree to immediately tender, all benefits and payments previously made to
you hereunder.

	 	(c)	 	You agree that your breach of paragraph 8, 9 or 10 of this Agreement will cause
immediate and irreparable injury to Merck and it is and will be impossible to estimate and
determine the damage that will be suffered by Merck in the event of your breach. You agree
that your breach of any of these paragraphs will cause immediate and irreparable injury to
Merck and that it is and will be impossible to estimate and determine the damage that will
be suffered in the event of a breach. Separate and apart from any other remedy that Merck
may have, you further agree that, in the event of such a breach, Merck will be entitled, in
addition to any other available remedies, to (i) temporary and permanent injunctive relief
from any such breach by you and by your employers, employees, partners, agents and
associates, of the terms set forth in this paragraph, without the necessity of proving
actual damages, or immediate or irreparable harm, or of posting a bond, ii) an award of
liquidated damages equal to all monies paid to you or received by you in accordance with
paragraphs 2(a), 2(g) and 5 of this Agreement, and (iii) all associated attorney’s fees and
costs.

13. Reformation. You agree that if any portion(s) of paragraph(s) 8, 9, 10, 11 or 12 is
determined to be invalid, such determination will not affect the enforceability of the remaining
portions of such paragraph(s) and such paragraph(s) will be interpreted as if the invalid portions
had not been inserted. You agree that if such invalidity is caused by the length of any period of
time or the size of any area, then the period of time or the area, or both, will, without need of
further action by any party, be deemed to be reduced to a period or area that will cure the
invalidity.

14. Confidentiality. You agree to hold the existence of this Agreement and the terms and
conditions of this Agreement in strict confidence and you agree not to disclose, except as may be
required by law or legal process, any such information to any third party other than members of
your immediate family, your former spouse, financial advisors, outplacement firm, tax authorities,
tax consultants or anyone preparing your tax returns, or legal advisors. Notwithstanding the
foregoing, you may disclose to executive search firms and prospective employers the provisions of
this 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 this
Agreement, and with the intent to be bound legally, you agree to irrevocably RELEASE AND FOREVER
DISCHARGE Merck & Co., Inc., together with its benefit plans, subsidiaries and affiliates and their
officers, directors, employees, agents, predecessors, partners, successors, fiduciaries and assigns
(“Releasees”) from and with respect to any manner of actions, suits, debts, claims, demands
whatsoever in law or equity arising out of or in any way relating to your employment with the
Company or the termination of your employment, or arising out of or in any way relating to any
transaction, occurrence, act or omission or any loss, damage or injury occurring at any time up to
and including the date and time on which you sign this Agreement (“Claims”), including, but not
limited to (a) any and all Claims based upon any law, statute, ordinance, regulation, constitution
or executive order or based in contract, tort or common law or any other legal or equitable theory
of 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 with
Disabilities 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 Jersey
Law Against Discrimination; (d) any and all Claims under any whistleblower laws or whistleblower
provisions of other laws including, but not limited to, the New Jersey Conscientious Employee
Protection Act; and (e) any and all Claims for counsel fees or costs.

 

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          You understand that by signing this Agreement, you are waiving any and all Claims against any
and all Releasees released by this Agreement to the greatest extent allowable under law. Nothing
in 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 and
does not release or waive any claims or rights to indemnification under Merck’s by-laws, or by
applicable law, or under Merck’s directors and officers insurance, that you may have now or in the
future.

16. No Representation. You acknowledge that no promise, other than the promises in this
Agreement, have been made to you and that in signing this Agreement you are not relying upon any
statement or representation made by or on behalf of the Releasees and each or any of them
concerning the merits of any Claims or the nature, amount, extent or duration of any damages
relating to any Claims or the amount of any money, benefits, or compensation due you or claimed by
you, 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 you
are legally competent to sign this Agreement; that you are signing this Agreement of your free
will; that you have read and understood the Agreement before signing it; and that you are signing
this 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 arrangements
nor this Agreement will be construed as an admission or as evidence that Merck or its agents have
failed 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 mutually
acceptable 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 with
Merck is governed solely and exclusively under the laws of the State of New Jersey and the United
States and that 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 without giving effect
to any conflict of laws provisions.

20. Severability. 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 will be determined to be invalid or unenforceable to any extent or for any reason, all
other provisions and portions of this Agreement will remain in full force and effect and will
continue 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 by
law) to amend or terminate the Separation Plan and any benefit or plan described in the SPD and/or
the Bridged Employee Brochure (or otherwise) at any time, and nothing in this Agreement affects or
alters 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 or
termination will not decrease the amount of Separation Pay or the other Separation Benefits you are
eligible to receive as described in this Agreement.

22. Complete Agreement. This Agreement constitutes the complete and final agreement
between the parties and supersedes and replaces all prior or contemporaneous agreements,
negotiations, or discussions relating to the subject matter of this Agreement.

 

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          In accordance with the federal Older Workers’ Benefit Protection Act of 1990, you have
forty-five (45) days from your initial receipt of this Agreement within which to consider whether
to sign the Agreement. Should you choose to sign this Agreement, you are entitled to revoke your
acceptance at any time within seven (7) calendar days after signing it. If revoked by you within
that time period, the Agreement will be null and void for all purposes. The Agreement will not
become effective or enforceable until the revocation period has expired. Lastly, you have the
right to consult with an attorney before signing this Agreement.

          Please indicate your acceptance of this Agreement by signing and dating this letter and
returning it to me. A duplicate of this letter, signed by me, is enclosed for your records.

	 	 	 	 	 
	 	Very truly yours,

 	 
	 	/s/ Richard T. Clark
 	 
	 	Richard T. Clark 	 
	 	Chief Executive Officer and President 	 
	 

	 	 	 	 	 	 	 	 	 
	ACCEPTED:
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	Dated:	 	 	 	 
	 

Bradley Sheares

	 	 	 	 
	 	 

	 	 

 

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Attachment “A”

RELEASE AND WAIVER OF CLAIMS

          In consideration of the lump sum to be paid to me by Merck & Co., Inc. (“Merck” or “the
Company”), as set forth in paragraph 5 of the agreement between me and Merck dated August 24, 2006
(“the Agreement”), and with the intent to be bound legally, I agree to irrevocably RELEASE AND
FOREVER DISCHARGE Merck & Co., Inc., together with its benefit plans, subsidiaries and affiliates
and their officers, directors, employees, agents, predecessors, partners, successors, fiduciaries
and assigns (“Releasees”) from and with respect to any manner of actions, suits, debts, claims,
demands whatsoever in law or equity arising out of or in any way relating to my employment with the
Company or the termination of my employment, or arising out of or in any way relating to any
transaction, occurrence, act or omission or any loss, damage or injury occurring at any time up to
and including the date and time on which I sign this Release (“Claims”), including, but not limited
to (a) any and all Claims based upon any law, statute, ordinance, regulation, constitution or
executive order or based in contract, tort or common law or any other legal or equitable theory of
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 with
Disabilities 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 Jersey
Law Against Discrimination; (d) any and all Claims under any whistleblower laws or whistleblower
provisions of other laws including, but not limited to, the New Jersey Conscientious Employee
Protection Act; and (e) any and all Claims for counsel fees or costs.

          I understand that by signing this Release, I am waiving any and all Claims against any and all
Releasees released by this Release to the greatest extent allowable under law. Nothing in this
Release shall be read as a waiver of any vested rights in any savings or pension plan. This
Release does not release or waive claims or rights that cannot be waived by law and does not
release or waive any claims or rights (i) to indemnification under Merck’s by-laws, or by
applicable law, or under Merck’s directors and officers insurance, or (ii) arising under the
Agreement, that I may have now or in the future. I have had 45 days to consider the terms of this
Release and I have been advised of my right to have my counsel review this Release before I sign
it. I have the right to revoke my agreement to the terms of this Release by notifying Merck in
writing within 7 calendar days after executing the Release.

	 	 	 	 	 	 	 
	Accepted:	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	Dated:EX-10.21

 

Exhibit 10.21

December 15, 2006

David W. Anstice

Dear David:

     This letter agreement (“Agreement”) will confirm our discussions and sets forth the
arrangements that have been made concerning your employment status with Merck & Co., Inc. (“Merck”
or the “Company”). We have agreed as follows:

1. Employment Status.

     (a) Job Assignment. Effective September 15, 2006, you were appointed to the newly
created position of Executive Vice President, Strategic Initiatives, reporting to me (“New
Assignment”). In the New Assignment, you will serve on Executive Committee and will continue as an
“officer” as defined in Rule 16a-1(f) under the Securities Exchange Act of 1934.

     (b) Job Duties. Your duties in your New Assignment will include: (i) functioning as
the primary sustaining sponsor to the Company’s End-to-End and Global Support Function initiatives,
with full accountability for the successful realization of these two elements of the Company’s Plan
to Win; (ii) helping to refine the Company’s strategic direction in key pharmaceutical emerging
markets (in particular, China and India); (iii) serving as a member of the Human Health Operating
Committee and the Research Strategic Review Committee; (iv) assisting your successors in their
transitions to your former roles of President, Asia Pacific Human Health and leader of the
Merck/Schering Plough Joint Venture, as necessary; and (v) performing such other duties as may be
assigned me. You agree to devote your full business time, attention and best efforts and abilities
in the performance of your duties and will not, without the consent of the Company, serve as an
employee, director or consultant or other independent contractor to or in respect to any business
other than the Company and its affiliates.

     (c) Compensation and Benefits. While employed in the New Assignment, you will remain
eligible for salary increases, bonus (subject to Section 1(d)) and long-term incentives. You will
continue to be eligible to participate in the Company’s employee benefit plans and programs, as
they may be amended from time to time, on the same terms and conditions applicable to Company
employees at your grade level.

     (d) Bonus. You will be eligible for an award under the Company’s Executive Incentive
Plan (“EIP”), or, in certain cases an amount in lieu of such an award, as follows: (i) for
performance year 2006, unless your employment is terminated for Cause (as defined in Section 2(a)),
the Company agrees to grant to you an EIP award (or an amount in lieu of such award should your
employment ends prior to the payout of such award) in an amount no less than the amount of the EIP
award paid to you for performance year 2005, which amount will be payable in 2007 at such time when
EIP awards are generally paid to other employees; (ii) for any calendar year subsequent to 2006
during which you are employed for the entire calendar year (i.e., through the close of
business on December 31), you will be eligible for an EIP award determined in accordance with the
manner in which the Company makes such determinations for employees at your level, including,
without limitation, the Company’s performance, your division’s performance and the scope, impact
and complexity of your individual contributions, which award (if any)

 

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and will be payable in the calendar year following the performance year in question at such
time as EIP awards are generally paid to other employees; and (iii) for the Severance Year (as
defined in Section 2(c)), if any, you will be entitled to an amount in lieu of an EIP award in
accordance with Section 4(b).

     (e) No Separation. You agree that your appointment to the New Assignment is not a
“Separation from Service” within the meaning of the Company’s Separation Benefits Plan for
Non-Union Employees.

     (f) Length of Assignment. Your employment will continue to be on an “at will” basis, which
means that either you or the Company may terminate the employment relationship at any time, with or
without notice, for any lawful reason.

2. Definitions.

     (a) Big Pharmaceutical Competitor. The term “Big Pharmaceutical Competitor” means any
of the following companies as well as their parents, subsidiaries, affiliates, joint ventures 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/Aventis, Schering Plough and Wyeth.

     (b) Cause. The term “Cause” means your (i) intentional or repeated failure or refusal
to perform reasonably assigned duties, (ii) dishonesty, willful misconduct, gross insubordination
or gross negligence in the performance of your duties, (iii) involvement in a transaction in
connection with the performance of the your duties to the Company or any of its affiliates which
transaction is adverse to the interests of the Company or any of its affiliates and which is
engaged in for personal profit, (iv) willful violation of any law, rule or regulation in connection
with the performance of your duties (other than traffic violations or similar minor offenses), (v)
indictment, conviction or plea of no contest with respect to (x) any felony or (y) other crime
involving moral turpitude (whether or not a felony), (vi) action or inaction materially adversely
affecting the reputation of the Company or any of its affiliates or (vii) breach of the covenants
contained in Section 8 of this Agreement or breach of any other agreement to which you and the
Company are parties.

     (c) Competitor. The term “Competitor” means any person, company or other entity that
(i) discovers, develops, markets or sells pharmaceutical or biological products or vaccines
anywhere in the world; and (ii) is not a Big Pharmaceutical Competitor.

     (d) Severance Event. The term “Severance Event” means any cessation of your
employment at the Company, whether as a result of a decision by you or a decision by the Company,
except that a “Severance Event” does not occur if the cessation of your employment occurs as the
result of (i) a decision by the Company to terminate your employment for Cause; (ii) a decision by
you to leave employment with the Company in the presence of circumstances that would have supported
a decision by the Company to terminate your employment for Cause; or (iii) an employment
termination that entitles you to receive severance benefits under the Merck & Co., Inc. Change in
Control Separation Benefits Plan as in effect from time to time.

     (e) Severance Year. The term “Severance Year” means that calendar year (if any)
during which a Severance Event occurs.

3. Consideration. You acknowledge that in exchange for your agreement to accept and abide
by the terms of this Agreement you are receiving benefits which are being provided to you solely
pursuant to this Agreement and to which you otherwise would not be entitled. Specifically, (a) in
consideration of

 

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your initial execution, the Company has agreed to offer to you the New Assignment, a guaranteed EIP
award (or amount in lieu of such award) as set forth in Section 1(d) and other terms of this
Agreement; and (b) in consideration of your re-execution of this Agreement, the Company is
providing you with the Severance Benefits as set forth in Section 4 and other terms of this
Agreement.

4. Severance Benefits. In consideration of your Agreement to accept and abide by the terms
of this Agreement, the Company will provide you with the following benefits (“Severance Benefits”)
on the condition that your employment ends as the result of a Severance Event (as defined in
Section 2(b)) and on the further condition that, upon presentation by the Company after a Severance
Event, you re-affirm your acceptance of this Agreement by re-executing this Agreement within the
time period set forth in Section 20 and by not subsequently revoking that acceptance:

     (a) Severance Pay. Subject to Section 5(b), you will receive severance pay in the
form of continued monthly salary payments, minus applicable deductions and withholdings, for a
period beginning on the day after a Severance Event and ending on the earlier of: (i) that date
which is eighteen months after a Severance Event; (ii) July 31, 2013; or (iii) your breach of any
of the conditions set forth in Section 8.

     (b) Severance Year Bonus. Subject to Section 5(b), you will be entitled to payment of
an amount in lieu of an EIP award should your employment end in a Severance Year, which amount will
be equal to the product obtained by multiplying the amount of your EIP award for the performance
year immediately preceding the Severance Year times a fraction the numerator of which is the number
of complete months of service provided by you in the Severance Year (i.e., the number of
complete months worked by you in the Severance Year immediately preceding the Severance Event) and
the denominator of which is 12. The amount (if any) payable in accordance with this Section 4(b)
will be payable in the calendar year following the Severance Year at such time as EIP awards are
generally paid to other employees. Notwithstanding anything to the contrary above, this Section
4(b) will not apply should a Severance Year occur in calendar year 2006. In such case, the amount
(if any) payable in lieu of an EIP award will be as set forth in Section 1(d)(i).

     (c) Financial Counseling. You will be eligible to continue to participate in the
Company’s Executive Financial Services Program for the balance of a Severance Year at the then
current level established for Executive Committee members from time to time (currently,
reimbursement up to $10,000 per calendar year). In addition, the Company will provide you with
reimbursement for tax counseling, if required, relative to your tax obligations, if any, under the
laws of any country for a period commencing on January 1st of the calendar year immediately
following the Severance Year and ending on December 31st of the third calendar year
following the Severance Year. The total cost of such tax/financial counseling payable by Merck
under this Section 4(c) will not exceed $75,000.

     (d) Relocation Benefits. If you decide to relocate your primary residence outside the
United States, then Merck, in accordance with Company policy, will provide one-way return trip
airfare and temporary living for a maximum of sixty days for you and your accompanying dependents;
will ship your household goods to the point of some other mutually agreed upon area; and will
consider you eligible for home sale assistance, with buyout, under the Company’s then current
Relocation Policy, provided that your relocation is completed prior to the two-year anniversary of
a Severance Event, and provided further that Merck’s payment(s) for these benefits will be reduced
by any relocation reimbursement/expenses (for the same move) you may be entitled to by arrangement
with another employer. You understand and agree that your eligibility for the benefits of this
Section 4(d) is contingent on your compliance with the procedures of the then current Company
Relocation Policy and other related Company policies.

 

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5. Payments.

     (a) Generally. All severance payments made pursuant to Section 4(a) of this Agreement
will be based on your then current base salary as of the time of a Severance Event and are subject
to applicable deductions and withholding. Subject to Section 5(b), the severance payments pursuant
to Section 4(a) will be made by electronic transfer or by mail, in accordance with your normal
manner of payment, on or about the regularly scheduled paydays for Merck salaried employees or
within thirty (30) days after you have re-executed this Agreement and the revocation period of
Section 20 has elapsed, whichever is later.

     (b) Section 409 (A). Payments generally may not be made on account of separation from
service for six months following the termination of employment of a “Specified Employee” as defined
in Prop. Reg. Sec. 1.409A-1(i) or any successor thereto, which in general includes the top 50
employees of a company ranked by compensation. You are a “Specified Employee,” thus to the extent
required by Section 409A of the Internal Revenue Code of 1986, as amended, no payments will be made
to you prior to the first day of the sixth month following termination of your employment.
Instead, amounts that would otherwise have been payable will be accumulated and paid, without
interest, as soon as administratively practicable following such six month period.

6. Other Benefits. Your entitlement to benefits under the Company’s pension, health and
welfare and other plans will be governed by the relevant plan documents and/or Company policies.
For avoidance of doubt, you acknowledge that you are not and will not be eligible for severance
benefits under the Company’s current or any successor Separation Benefits Plan.

7. Release. In consideration of the promises of the Company as set forth in this Agreement,
and with the intent to be bound legally, you agree to irrevocably RELEASE AND FOREVER DISCHARGE
Merck & Co., Inc., together with its benefit plans, subsidiaries, affiliates and joint ventures and
their officers, directors, employees, agents, predecessors, partners, successors, fiduciaries and
assigns (“Released Parties”) from and with respect to any manner of actions, suits, debts, claims,
demands whatsoever in law or equity arising out of or in any way relating to your employment with
the Company, your transfer to the New Assignment or the cessation of your employment, or arising
out of or in any way relating to any transaction, occurrence, act or omission or any loss, damage
or injury occurring at any time up to and including the date and time on which you sign this
Agreement (“Claims”), including, but not limited to (a) any and all Claims based upon any law,
statute, ordinance, regulation, constitution or executive order or based in contract, tort or
common law or any other legal or equitable theory of 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 with Disabilities 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 Jersey Law Against Discrimination; (d) any and all
Claims under any whistleblower laws or whistleblower provisions of other laws including, but not
limited to, the New Jersey Conscientious Employee Protection Act; and (e) any and all Claims for
counsel fees or costs.

     You understand that by signing this Agreement, you are waiving any and all Claims against any
and all Released Parties released by this Agreement to the greatest extent allowable under law.
Nothing in this paragraph shall be read as a waiver of any vested rights in any savings or pension
plan.

 

Page 5 of 9

8. Conditions of Agreement.

     (a) Terms and Conditions. This Agreement is conditioned on your abiding by all the
terms and conditions of this Agreement and the terms and conditions set forth in the Company’s
Conditions of Employment Agreement, incorporated herein by reference.

     (b) Confidentiality. You agree to hold the existence of this Agreement, the terms and
conditions of this Agreement, the circumstances surrounding your employment with Merck (including,
without limitation, your transfer to the New Assignment) and the cessation thereof, in strict
confidence and you agree not to disclose, except as may be required by law or legal process, any
such information to any third party other than members of your immediate family, tax authorities,
tax consultants or legal advisors. You agree that, if you are subjected to a subpoena or other
court process or order requiring you to bear witness on matters concerning your employment with or
your knowledge about Merck you shall contact the Company immediately unless notification is
prohibited by law or order of a court. Nothing in this provision shall be construed as precluding
you from cooperating with federal or state law enforcement or regulatory agencies in connection
with any lawful government inquiries.

     (c) Non Disparagement. You agree not to communicate negatively about or to otherwise
disparage Merck or its products or each and any of the Released Parties in any way whatsoever.

     (d) Agreement Not to Compete. You agree that during your continued employment at the
Company and for a period of eighteen months after the cessation of your employment at the Company,
you will not conduct business in competition with Merck. “Conduct business in competition with
Merck,” means, for purposes of this Agreement,

(i) to be, or become connected in any manner with, a Big Pharmaceutical Competitor, directly
or indirectly, as an individual or as a director, trustee, officer or employee of, or debt
or equity investor in, or consultant or other independent contractor to, a Big
Pharmaceutical Competitor, or through ownership, management, operation or control of a
person or entity that is a Big Pharmaceutical Competitor; provided that in no event shall
ownership of 1% or less of the outstanding equity securities of any issuer whose securities
are registered under the Securities Exchange Act of 1934, as amended, standing alone, be
prohibited by this subparagraph so long as you do not have, or exercise, any rights to
manage, operate or control the business of such issuer; or

(ii) to be or become an employee, consultant or other independent contractor, director,
trustee, or officer of a Competitor, without the prior consent of Merck’s General Counsel.
Your request for consent must include the name of the company for which you would like to
work (or otherwise become associated), the nature of your proposed employment, association
or relationship with such company, and any other information requested by the General
Counsel. While the decision whether to consent to a request made in accordance with this
subparagraph will be within the sole discretion of Merck’s General Counsel, such consent
will not be unreasonably withheld. No such consent will be effective unless it is set forth
in a signed, written communication from the General Counsel to you.

     (e) Non Solicitation. You agree that during your continued employment at the Company
and for a period of eighteen months after the cessation of your employment at the Company, you will
not solicit, entice, persuade, induce or otherwise attempt to influence any Merck Employee (as
defined below) to leave the employ of Merck, its subsidiaries, affiliates or joint ventures, by (i)
making initial contact with a Merck Employee for such purpose or engaging in discussion with a
Merck Employee about such purpose or result, (ii) causing any other person to make initial contact
with a Merck Employee for

 

Page 6 of 9

the purpose of soliciting, enticing, persuading or inducing them to leave the employ of Merck,
its subsidiaries, affiliates or joint ventures or (iii) providing any other person information
about any Merck Employee for the purpose of recruitment of that employee. For the purposes of this
Section 8(e), a Merck Employee means any person who, at the time of the action, is, or at anytime
in the preceding six (6) months was, employed by Merck, or any of its subsidiaries, affiliates or
joint ventures.

     (f) Non Disclosure. You acknowledge that, in the course of your employment with the
Company, you had access to trade secrets and to confidential and/or proprietary information owned
by the Company. You agree not to disclose such information to third parties.

     (g) Extension of Time. The period of time during which you are prohibited from
engaging in the activities described in subsections (d) and (e) of this Section 8 will be extended
by the length of time, if any, during which you are in breach of those subsections.

     (h) Reformation. You agree that if any portion of this Section 8 is determined to be
invalid, such determination will not affect the enforceability of the remaining portions of Section
8 and this Section 8 will be interpreted as if the invalid portions had not been inserted. You
agree that if such invalidity is caused by the length of any period of time or the size of any area
in this paragraph, then the period of time or the area, or both, will, without need of further
action by any party, be deemed to be reduced to a period or area that will cure the invalidity.

9. Remedy. You agree that a violation of any of your agreements contained in Section 8
will cause immediate and irreparable injury to Merck and it is and will be impossible to estimate
and determine the damage that will be suffered by Merck in the event of your breach. Separate and
apart from any other remedy that Merck may have, you agree that, in the event that you violate any
of your agreements in Section 8, Merck will be entitled to (a) temporary and permanent injunctive
relief from any such breach by you, your employers, employees, partners, agents, or other
associates or any of them, without the necessity of proving actual damages, or immediate and
irreparable harm, or of posting a bond; (b) cease and desist from providing you with any further
benefits under this Agreement; and (c) an award of liquidated damages equal to all monies paid to
you or received by you in accordance with Sections 4(a) and 4(b) of this Agreement; and (d) all
associated attorney’s fees and costs.

10. Merck Covenant. Merck agrees to instruct its Executive Officers and the members of its
Board of Directors not to disparage you to third parties.

11. Litigation. In connection with litigation, investigation, inquiry or proceedings
before a court, arbitrator, government or administrative agency or other tribunal, you may be asked
by Merck to testify as a witness or to provide information concerning matters you were involved in
during the course of your employment with Merck. You agree to cooperate fully with Merck’s counsel
by making yourself reasonably available to such counsel to discuss your information or to review
your testimony reasonably in advance of such litigation or proceedings, by making yourself
available to testify at depositions or trial as required or requested by Merck. Other than travel
expenses and applicable, or statutorily mandated, witness fees, you agree that you will not be paid
in connection with your testimony, appearance or participation pursuant to this paragraph in such
litigation or proceedings. This paragraph does not affect any right you may have to
indemnification under Merck’s corporate bylaws or policies, or your eligibility to have Merck
advance to you reasonable costs, disbursements and counsel fees under certain circumstances, in
connection with proceedings related to or arising out of your activities as a Merck employee.
Merck will continue to pay for legal counsel bills incurred by you during the course of litigation,
subject to the terms of our existing arrangement on this subject.

 

Page 7 of 9

12. No Representation. You acknowledge that no promise, other than the promises in this
Agreement, have been made to you and that in signing this Agreement you are not relying upon any
statement or representation made by or on behalf of the Released Parties and each or any of them
concerning the merits of any Claims or the nature, amount, extent or duration of any damages
relating to any Claims or the amount of any money, benefits, or compensation due you or claimed by
you, or concerning the Agreement or concerning any other thing or matter.

13. Voluntariness. You agree that you are relying solely upon your own judgment; that you
are over eighteen years of age and are legally competent to sign this Agreement; that you are
signing this Agreement of your free will; that you have read and understood the Agreement before
signing it; and that you are signing this Agreement in exchange for consideration that you believe
is satisfactory and adequate.

14. Legal Counsel. You acknowledge that you have been informed of your right to consult
with legal counsel, have been encouraged to do so, that you have in fact engaged legal counsel to
represent you with respect to this Agreement and that counsel has negotiated the terms of this
Agreement on your behalf.

15. Complete Agreement. This Agreement constitutes the complete and final agreement
between the parties and supersedes and replaces all prior or contemporaneous agreements,
negotiations, or discussions relating to the subject matter of this Agreement.

16. Applicable Law. You acknowledge and agree that your employment relationship with Merck
is governed solely and exclusively under the laws of the State of New Jersey and the United States
and that 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 without giving effect to any
conflict of laws provisions.

17. Other Severance Pay. You agree that neither Merck nor any of the Released Parties owes
you severance pay, termination indemnity or other amounts payable upon a termination of employment
in the nature of severance or unemployment compensation (“Other Severance Pay”) under the laws or
regulations of any state or country. In the event that a court, administrative agency or other
such authority rules that you are owed Other Severance Pay, amounts payable under Section 3 of this
Agreement will be reduced by the amount of such Other Severance Pay and you agree to be a
constructive trustee of such amounts to carry out the purposes of this Section 17.

18. Severability. 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 will be determined to be invalid or unenforceable to any extent or for any reason, all
other provisions and portions of this Agreement will remain in full force and effect and will
continue to be enforceable to the fullest and greatest extent permitted by law

19. Initial Execution.  Your initial execution of this Agreement will acknowledge your
acceptance of the terms and conditions of this Agreement. By your initial execution, you
acknowledge that

	 	(a)	 	Acceptance. You have been given a period of twenty-one (21) days
within which to consider your initial execution of this Agreement. You may accept this
Agreement at any time within this period of time by signing the Agreement and returning
it me.
	 
	 	(b)	 	Revocability. You have been informed that, upon your initial
execution, this Agreement will not become effective or enforceable until seven (7)
calendar days after such execution.

 

Page 8 of 9

You may revoke your acceptance of this Agreement at any time within that seven (7)
calendar day period by sending written notice to me. Such notice must be received by
me within the seven (7) calendar day period in order to be effective and, if so
received, would void this Agreement for all purposes.

20. Re-execution. Upon the Company’s determination that a Severance Event has occurred, it
will present this Agreement to you for re-execution. You agree that you must re-execute this
Agreement as a condition precedent to your entitlement to the Severance Benefits set forth in
Section 4. By your re-execution of this Agreement, you acknowledge that:

	 	(a)	 	Acceptance. You have been given a period of twenty-one (21) days
within which to consider whether to re-execute this Agreement. You may accept this
Agreement at any time within this period of time by signing the Agreement and returning
it me.
	 
	 	(b)	 	Revocability. You have been informed that, upon re-execution, this
Agreement as re-executed will not become effective or enforceable until seven (7)
calendar days after such re-execution. You may revoke your acceptance of this
Agreement as re-executed at any time within that seven (7) calendar day period by
sending written notice to me. Such notice must be received by me within the seven (7)
calendar day period in order to be effective and, if so received, would void this
Agreement as re-executed, but will not affect this Agreement as initially executed.
	 
	 	(c)	 	Release. Upon re-execution, the date of such re-execution will be the
date on which you sign this Agreement for the purposes of this Agreement, including
without limitation, for the purposes of the Release set forth in Section 7.

21. Intent to be Bound. You and the Company have entered into this Agreement with the
intent to be legally bound.

[signature page follows]

 

Page 9 of 9

Please indicate your initial acceptance of this Agreement by signing and dating this letter and
returning it to me. A duplicate of this letter, signed by me, is enclosed for your records.

	 	 	 	 	 
	 	Very truly yours,

 	 
	 	/s/ Richard T. Clark
 	 
	 	Richard T. Clark 	 
	 	President, CEO

Merck & Co., Inc. 	 
	 

	 	 	 	 	 	 	 	 	 
	ACCEPTED:
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	/s/ David W. Anstice
 

David W. Anstice

	 	 	 	Dated: 
	 	December 15, 2006
	 	 
	 
	 	 	 	 	 	 	 	 
	RE-EXECUTED:
	 	 	 	 	 	 	 	 
	 

	 	 	 	Dated:	 	 	 	 
	 

David W. Anstice

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