Document:

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                                                                    EXHIBIT 10.2

                          MEDCO HEALTH SOLUTIONS, INC.
                          2002 EXECUTIVE SEVERANCE PLAN

                                    SECTION 1
                                     PURPOSE

                  The purpose of the Plan is to alleviate concerns that
top-level executives of the Company may have that their employment may be
terminated without Cause so that these executives will be able to focus fully on
the success of the business of the Company. The Plan is an amendment and
restatement of the Executive Severance Plan adopted by the Board of Directors of
the Company on June 17, 2002 and amended on June 25, 2002 and June 28, 2002.

                                    SECTION 2
                                   DEFINITIONS

                  For purposes of the Plan, the following terms shall have the
following meanings:

                  2.1 "Affiliate" shall mean, with respect to any person or
entity, any entity directly or indirectly controlled by, controlling or under
common control with such person or entity.

                  2.2 "Annual Cash Bonus" shall mean, the annual cash bonus paid
or deferred in respect of the Fiscal Year Preceding Termination, or if bonuses
for such fiscal year have not been paid generally to employees as of an Eligible
Individual's Termination Date, Annual Cash Bonus shall mean an amount equal to
the Eligible Individual's Earned But Unpaid Bonus Amount.

                  2.3 "Annual Salary Amount" shall mean an Eligible Individual's
annual base salary as in effect immediately prior to his or her Termination
Date.

                  2.4 "Cause" shall mean conduct of an Eligible Individual
evidencing any of the following, as determined by the Plan Administrator: (i)
dishonesty related to the Eligible Individual's employment; (ii) improper
disclosure by the Eligible Individual of any information of the Company or any
of its Affiliates considered by the Company to be confidential or in the nature
of a trade secret; (iii) any material violation of law by the Eligible
Individual related to the Eligible Individual's employment; (iv) commission of
any crime or disorderly persons offense by the Eligible Individual that
materially injures the business or reputation of the Company or any of its
Affiliates; (v) gross or willful insubordination by the Eligible Individual; or
(vi) dereliction in the performance of the Eligible Individual's employment
duties that continues after the Eligible Individual has been notified of such
dereliction and has been given a reasonable opportunity to correct such
dereliction.

                  2.5 "Company" shall mean Medco Health Solutions, Inc., a
Delaware corporation, and any successor thereto.

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                  2.6 "Company's Bonus Plan" shall mean the Company's annual
cash bonus plan.

                  2.7 "Earned But Unpaid Bonus Amount" shall mean, as to any
Eligible Individual whose Termination Date occurs prior to the date on which
annual cash bonuses are paid under the Company's Bonus Plan in respect of the
Fiscal Year Preceding Termination, an amount equal to the bonus awarded to the
Eligible Individual under the Company's Bonus Plan in respect of the Fiscal Year
Preceding Termination (which may be zero); provided, however, if bonuses have
not yet been awarded by the Termination Date, the Earned But Unpaid Bonus Amount
shall be equal to the annual cash bonus, if any, paid to or deferred by such
Eligible Individual in respect of the fiscal year ended immediately prior to the
Fiscal Year Preceding Termination. The Earned But Unpaid Bonus Amount shall not
duplicate any bonus paid or deferred in respect of the Fiscal Year Preceding
Termination. By way of example, if an Eligible Individual's Termination Date is
February 1, 2004 (and assuming bonuses have not yet been awarded under the
Company's Bonus Plan in respect of fiscal year 2003 by such date), the Earned
But Unpaid Bonus Amount for such Eligible Individual shall be equal to the
Eligible Individual's annual bonus in respect of 2002, if any.

                  2.8 "Effective Date" shall mean December 1, 2002.

                  2.9 "Eligible Individual" shall mean Initial Participants and
New Participants. For purposes of this Plan, the terms "employ," "employee" and
"employment" shall be construed to refer to the provision of services by the
Eligible Individual to the Company, irrespective of whether the Eligible
Individual is classified as an employee of the Company under the Internal
Revenue Code of 1986, as amended, and the regulations promulgated thereunder.

                  2.10 "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended, and the regulations promulgated thereunder.

                  2.11 "Expiration Date" shall mean the first day immediately
following the third anniversary of the Effective Date.

                  2.12 "Fiscal Year Preceding Termination" shall mean the most
recent fiscal year of the Company ended prior to an Eligible Individual's
Termination Date.

                  2.13 "Initial Participants" shall mean the initial group of
executives selected for participation as of the Effective Date who are notified
that they are Initial Participants.

                  2.14 "New Participants" shall mean executives selected for
participation after the Effective Date. The Plan Administrator, in his or her
discretion, may add or remove New Participants from the Plan from time to time.

                  2.15 "Plan" shall mean the Medco Health Solutions, Inc. 2002
Executive Severance Plan. The Plan, as originally adopted, was entitled the
Medco Health Solutions, Inc. Executive Severance Plan. This is an amendment and
restatement of that plan as it was amended.

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                  2.16 "Plan Administrator" shall mean the Chief Executive
Officer of the Company or his or her designee.

                  2.17 "Plan Year" shall mean the calendar year.

                  2.18 "Pro Rata Bonus Amount" shall mean, as to any Eligible
Individual, an amount equal to his or her Annual Cash Bonus multiplied by a
fraction, the numerator of which is the number of full calendar months that have
elapsed since the end of the Fiscal Year Preceding Termination through the
Termination Date and the denominator of which is 12. The Pro Rata Bonus shall
not duplicate any bonus paid or deferred in respect of the fiscal year in which
the Termination Date occurs.

                  2.19 "Qualifying Termination" shall mean a termination of
employment of an Eligible Individual that entitles him or her to Severance
Benefits, as provided in Section 3.1.

                  2.20 "Release of Claims" shall mean the agreement that an
Eligible Individual must execute in order to receive Severance Benefits under
the Plan, which shall be prepared by the Plan Administrator and shall contain,
among such other terms and conditions determined by the Plan Administrator, a
general release of all claims that the Eligible Individual may have against
Merck & Co., Inc., the Company and any of their Affiliates relating to the
employment and termination of employment of the Eligible Individual and
specifically including any claims for bonus payments pursuant to the Company's
Bonus Plan or otherwise.

                  2.21 "Severance Benefits" shall mean the Severance Pay and the
benefits provided pursuant to Section 4.3.

                  2.22 "Severance Pay" shall mean the cash benefit payable under
the Plan pursuant to Section 4.1.

                  2.23 "Termination Date" shall mean the date designated by the
Company as an Eligible Individual's date of termination of employment.

                                    SECTION 3
                       ELIGIBILITY FOR SEVERANCE BENEFITS

                  3.1 Eligibility for Severance Benefits

                  (a) Except as provided in Sections 3.1(b) and 3.4, an Eligible
Individual will become entitled to Severance Benefits under the Plan if his or
her employment is involuntarily terminated by the Company other than for Cause
prior to the Expiration Date (any such termination of employment is herein
referred to as a "Qualifying Termination").

                  (b) An Eligible Individual shall not be entitled to Severance
Benefits if his or her employment is terminated by the Company in connection
with a sale, divestiture or other disposition of the stock or assets of the
Company or any of its Affiliates (a "Transaction") if (i) the Eligible
Individual is offered a position with the counterparty to the Transaction (or an
Affiliate of such counterparty) (such counterparty or Affiliate, the
"Post-Transaction Employer"),

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(ii) the Plan Administrator determines that the cash compensation to be provided
to the Eligible Individual in such position is comparable to the Eligible
Individual's then-current cash compensation and (iii) the Company obtains an
agreement from the Post-Transaction Employer such that the Post-Transaction
Employer will provide severance pay and benefits, if the Eligible Individual
accepts the offered employment and continues in employment with the
Post-Transaction Employer following the Transaction, (A) substantially equal to
the Severance Benefits and (B) to be provided upon a termination of the Eligible
Individual's employment with the Post-Transaction Employer by the
Post-Transaction Employer without Cause prior to the Expiration Date. For
purposes of this Section 3.1(b), the term Cause shall have the meaning ascribed
to it in Section 2.3, but the term Employer as it is used in Section 2.3 shall
be deemed to refer to the Post-Transaction Employer, and the term Plan
Administrator as it is used in Section 2.3 shall be deemed to refer to the Chief
Executive Officer of the Post-Transaction Employer or, if applicable, of the
ultimate parent corporation of the Post-Transaction Employer.

                  (c) An Eligible Individual shall not be entitled to Severance
Benefits if his or her employment is transferred by the Company to an Affiliate
or by an Affiliate to the Company (including for this purpose Merck & Co. Inc.).

                  3.2 Death of an Eligible Individual

                  If an Eligible Individual whose employment terminates in a
Qualifying Termination dies after his or her Termination Date but before the
Eligible Individual receives the Severance Pay to which he or she is entitled,
the payment will be made to the Eligible Individual's surviving spouse or, if
the Eligible Individual does not have a surviving spouse, to the Eligible
Individual's estate; provided, however, that, if permitted by the Plan
Administrator, such payment will be made to a beneficiary designated by the
Eligible Individual; provided, further however, that no Severance Pay will be
paid pursuant to this Section 3.2 unless the surviving spouse or such
beneficiary, or the executor of the Eligible Individual's estate, or any or all
of the foregoing, upon the request of the Plan Administrator, properly execute
and deliver to the Company a Release of Claims that has become irrevocable as
provided therein.

                  3.3 Requirement for Release of Claims

                  No Severance Benefits will be provided to an Eligible
Individual unless the Eligible Individual has properly executed and delivered to
the Company a Release of Claims and that Release of Claims has become
irrevocable as provided therein. Such Release of Claims shall not be accepted by
the Company unless it is executed on or after the Eligible Individual's
Termination Date.

                  3.4 Duration of Participation

                  An Eligible Individual shall cease to be an Eligible
Individual if his or her employment is terminated under circumstances under
which he or she is not entitled to Severance Benefits under the Plan. An
Eligible Individual who is a New Participant shall cease to be an Eligible
Individual on the date the Plan Administrator terminates such Eligible
Individual's participation in the Plan. To avoid any doubt, the Plan
Administrator has full discretion to add

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New Participants to, or remove New Participants from, the Plan at any time, but
New Participants shall not have the authority to add or remove Initial
Participants. Not withstanding the foregoing, an Eligible Individual who has
become entitled to receive Severance Benefits under the Plan shall remain an
Eligible Individual until he or she has received the full amount of the
Severance Benefits; provided, such Eligible Individual shall remain subject to
the Restrictions as provided in Section 4.4.

                                    SECTION 4
                           SEVERANCE PAY AND BENEFITS

                  4.1 Amount of Severance Pay

                  (a) In the event of a Qualifying Termination, the amount of
Severance Pay that shall be payable to an Eligible Individual who the Plan
Administrator determines is entitled to Severance Pay shall be an amount of cash
equal to the sum of (1) the Annual Salary Amount, plus (2) the Pro Rata Bonus
Amount, plus (3) the Earned But Unpaid Bonus Amount.

                  4.2 Form and Time of Payment

                  Severance Pay shall be paid in a lump sum, less any applicable
state and federal taxes required to be withheld. Severance Pay shall be paid as
soon as practicable after the expiration of any period during which the Eligible
Individual may revoke the Release of Claims pursuant to the terms of the Release
of Claims.

                  4.3 Other Benefits

                  Upon the Qualifying Termination of an Eligible Individual, the
Company shall, for up to twelve months following his or her Termination Date,
pay the premium cost of COBRA continuation coverage for him or her and his or
her spouse and dependents who are eligible for COBRA continuation coverage;
provided, such Eligible Individual is eligible for and timely and properly
elects COBRA continuation coverage; provided, however, that any such payment
shall be made directly to the applicable plan, and in no event will an Eligible
Individual or his or her spouse or any dependent be entitled to receive any cash
payment pursuant to this Section 4.3. If an Eligible Individual whose employment
terminates in a Qualifying Termination dies after his or her Termination Date
but before he or she receives the full amount of the benefits set forth in this
Section 4.3, such benefits shall, if they are then being provided to the spouse
and dependents of the Eligible Individual, continue to be provided to his or her
spouse and dependents for the period set forth herein.

                  4.4 Payments, Benefits Conditional

                  (a) Anything in this Plan to the contrary notwithstanding, all
payments and benefits for each Eligible Individual are conditional upon such
Eligible Individual's compliance with the Restrictions on Competitive Employment
and Restrictions Against Solicitation and Inducement described below
(collectively the "Restrictions"). Until such Restrictions are completely
satisfied, the Eligible Individual shall be a constructive trustee of such
payments and

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benefits and shall return them to the Company promptly if he/she violates any
aspect of such Restrictions.

                  (b) During employment, and for a period 12 months following
the Qualifying Termination, the Eligible Individual will not (as an individual,
principal, agent, employee, consultant, or otherwise), directly or indirectly in
any territory in which the Company 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 the Business of the Company (collectively, "Restrictions on Competitive
Employment"). The Business of the Company includes, but is not limited to, the
following businesses: (i) the third party prescription drug claims 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 the Company, or that are in the development stage at the time of the
Qualifying Termination and are actually marketed by the Company and/or 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 or other types of electronic transmission; (vi) the organization
and administration of retail pharmacy networks; and (vii) any other business in
which the Company and/or any of its Affiliates is then engaged as to which the
Eligible Individual has involvement in the course of his or her employment
hereunder and/or acquired or received Confidential Information, (hereinafter
collectively, the "Business of the Company"). In addition, the Eligible
Individual will not have an equity interest in any such firm or business other
than as a 1% or less shareholder of a public corporation.

                  (c) During employment and for a period of 12 months following
a Qualifying Termination, the Eligible Individual will not, directly or
indirectly do any of the following (collectively, "Restrictions Against
Solicitation and Inducement"): (i) solicit or contact any customer or targeted
potential customer of the Company and/or its Affiliates upon whom he/she called
or solicited or with whom he/she became acquainted after commencement of
employment; (ii) induce or attempt to induce, any employees, agents or
consultants of the Company and/or its Affiliates to do anything from which he or
she is restricted by reason of this Plan or any agreement between the Eligible
Individual and the Company that restricts the Eligible Individual against
solicitation or inducement; (iii) offer or aid others to offer employment to any
employees, agents, or consultants of the Company and/or 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 the
Company and/or its Affiliates.

                  (d) The Restrictions on Competitive Employment and the
Restrictions Against Solicitation applicable to Eligible Individuals are
effective for the time stated in this Plan and do not affect and are not
affected by any other similar restrictions that may apply or may in the future
apply to such Eligible Individual pursuant to any other plan, agreement or other
arrangement.

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                                    SECTION 5
                    ADMINISTRATION, AMENDMENT AND TERMINATION

                  5.1 Administration

                  (a) The Plan will be interpreted by the Plan Administrator in
accordance with the terms of the Plan and their intended meanings. The Plan
Administrator shall be the "Named Fiduciary" (within the meaning of Section
402(a) of ERISA) of the Plan and will have the discretion, in his or her sole
judgment, to (i) make any findings of fact needed in the administration of the
Plan, (ii) interpret or construe ambiguous, unclear or implied (but omitted)
terms, (iii) establish rules and regulations for administering the Plan and (iv)
take such other action as he or she deems necessary or appropriate. The validity
of any such action or determination by the Plan Administrator will not be given
de novo review if challenged in court, by arbitration or any other forum and
will be upheld unless clearly arbitrary or capricious. All actions and all
determinations made in good faith by the Plan Administrator shall be final,
binding and conclusive upon all persons claiming any interest in or under the
Plan. Benefits under the Plan will be paid only if the Plan Administrator
decides in his or her discretion that a claimant is entitled to them.

                  (b) The Plan Administrator shall establish a claims procedure
in accordance with ERISA and shall set forth such claims procedure in the
summary plan description of the Plan.

                  5.2 Amendment and Termination

                  The Plan shall automatically terminate without further action
on the Expiration Date, provided, however, that the termination of the Plan
shall not affect the rights or responsibilities under Section 4 of any such
person who incurred a Qualifying Termination prior to the Expiration Date. Prior
to the Expiration Date, the Company reserves the right to amend, terminate or
otherwise modify all or any part of the Plan at any time, and from time to time,
without the consent of or notice to any person; provided, however, that no such
action of the Company may adversely affect the rights of any person who incurred
a Qualifying Termination prior to such action.

                                    SECTION 6
                               GENERAL PROVISIONS

                  6.1 Unfunded Obligation

                  The Severance Benefits to be provided to an Eligible
Individual under the Plan shall be an unfunded obligation of the Company and
shall be provided only from the Company's general assets.

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                  6.2 Applicable Law

                  It is intended that the Plan shall constitute an "employee
welfare benefit plan" within the meaning of Section 3(1) of ERISA, and the Plan
shall be administered in a manner consistent with such intent. The Plan and all
rights thereunder shall be governed and construed in accordance with ERISA and,
to the extent not preempted by federal law, with the laws of the State of New
Jersey, wherein venue shall lie for any dispute arising hereunder.

                  6.3 Severability

                  If a court of competent jurisdiction holds any provision of
the Plan invalid or unenforceable, the Plan shall be construed and enforced as
if such provision had not been included herein, and the remaining provisions of
the Plan shall continue to be fully effective.

                  6.4 Employment at Will

                  No provision of the Plan shall be construed to constitute a
contract of employment or impose upon the Company any obligation to (a) retain
the employment of any Eligible Individual, (b) make any payments or provide any
benefits upon termination of employment to the Eligible Individual (except as
otherwise provided herein), (c) change the status of any Eligible Individual's
employment, (d) change any employment policies of the Company or (e) restrict
the scope of services to be provided to the Company by any Eligible Individual.

                  6.5 Limitation on Benefits

                  Severance Benefits under this Plan are not intended to
duplicate benefits such as (i) workers' compensation wage replacement benefits,
disability benefits, and pay-in-lieu-of-notice, (ii) severance pay, or similar
benefits under other benefit plans, severance programs or agreements, or
employment contracts, in each case of this clause (ii) which are entered into or
adopted by the Company after the Effective Date (however, this clause (ii) shall
not apply to agreements assumed by the Company from Merck & Co., Inc, in
connection with the separation of the Company from Merck & Co., Inc.), or (iii)
applicable laws, such as the WARN Act. Should such other benefits be payable, an
Eligible Individual's benefits under this Plan will be reduced accordingly or,
alternatively, benefits previously paid under this Plan will be treated as
having been paid to satisfy such other benefit obligations. In either case, the
Plan Administrator, in his or her sole discretion, will determine how to apply
this provision and may override other provisions in this Plan in doing so.

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                  IN WITNESS WHEREOF, the Company has caused the Plan to be
executed effective as of the Effective Date.

                                    MEDCO HEALTH SOLUTIONS, INC.

                                               /s/ Karin Princivalle
                                    --------------------------------------------

                                    By:   Karin Princivalle
                                        ----------------------------------------

                                    Its:  Senior Vice President, Human Resources
                                        ----------------------------------------

ATTEST:

      /s/ David S. Machlowitz
-------------------------------------

Name:  David S. Machlowitz
      -------------------------------

Title: Senior Vice President,
       General Counsel & Secretary
      -------------------------------

                                       9<PAGE>

                                                                    EXHIBIT 10.5

          AMENDED AND RESTATED MANAGED CARE AGREEMENT, dated and executed on
May 28, 2003, between Merck & Co., Inc., a New Jersey corporation ("Merck"), and
Medco Health Solutions, Inc., a Delaware corporation ("Medco").

          WHEREAS, Medco, an independently managed wholly-owned subsidiary of
Merck, is in the business of providing PBM Services to corporations, health
maintenance organizations, unions, insurance carriers, government employee plans
and others;

          WHEREAS, Merck is a pharmaceutical company engaged in the discovery,
development, manufacturing and marketing of pharmaceutical products;

          WHEREAS, on June 28, 2002, Merck and Medco entered into a Managed Care
Agreement (the "Original Agreement") setting forth (a) terms upon which Medco
would be entitled to receive rebates from Merck for the utilization, from and
after the Effective Date, of Merck Products by Medco Plans and (b) other terms
and provisions governing the relations of Merck and Medco from and after the
Effective Date;

          WHEREAS, the parties desire to amend and restate the Original
Agreement to reflect the terms as set forth in this Restated Agreement; and

          WHEREAS, except as expressly provided herein, this Restated Agreement
shall be deemed to be effective as of the Effective Date.

          NOW, THEREFORE, in consideration of the covenants and agreements
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:

1.   Definitions.

     "Acceptable Formulary Product" shall have the meaning set forth in Section
2.5.

     "Access Disqualified Plan" means, with respect to a Merck Product, for a
given Calendar Quarter, any Medco Plan under which, at any time during such
Calendar Quarter such Merck Product is (i) not On Formulary under such Medco
Plan, (ii) subject to Non-Rebate-Eligible Utilization Controls under such Medco
Plan, or (iii) not available to Members under such Medco Plan on a Basis at
least as favorable as the Basis upon which any Basis Competitive Product is
available to Members under such Medco Plan; provided, however, that the
requirement set forth in clause (ii) above shall apply only with respect to
Calendar Quarters beginning after June 30, 2003; provided, further, that Merck
shall have the right to designate a Medco Plan as an Access Disqualified Plan
with respect to one or more Merck Products for any one or more Calendar Quarters
beginning

<PAGE>

on or after the Effective Date and prior to June 30, 2003, if it determines in
its sole discretion that during such Calendar Quarter(s) Utilization Controls
(other than Rebate-Eligible Utilization Controls) restricting the use of such
Merck Product(s), encouraging the use of any Basis Competitive Product(s) or
restricting generally the use of all Pharmaceutical Products in the Basis
Therapeutic Category that includes such Merck Product were implemented under
such Plan.

     "Acquiror(s)" means any Person or Persons (other than a Medco Party) party
to a transaction that, if consummated, would constitute a Medco Acquisition
Transaction.

     "Affiliate" means, with respect to any specified Person, any other Person
that, directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such specified Person; provided,
however, that for purposes of this Restated Agreement, neither Merck nor any of
its Subsidiaries (other than Medco and its Subsidiaries) shall be deemed to be
Affiliates of any Medco Party, and no Medco Party shall be deemed to be an
Affiliate of Merck or any of its Subsidiaries (other than Medco and its
Subsidiaries).

     "Aggregate Medco Cost" has the meaning reflected in Annex B.

     "Applicable Percentage" has the meaning referenced in Annex B.

     "Average Units Per Prescription Dispensed By A Medco Mail Service Pharmacy"
for any Calendar Quarter shall be the total Units for a Merck Product or
Competitive Product dispensed by all Medco Mail Service Pharmacies divided by
the total prescriptions of such Merck Product or Competitive Product dispensed
by all Medco Mail Service Pharmacies.

     "Average Units Per Prescription Dispensed By A Pharmacy Participating In
The Medco Retail Network Of Pharmacies" for any Calendar Quarter shall be the
total Units for a Merck Product or Competitive Product dispensed by all
pharmacies participating in the Medco Retail Network of Pharmacies divided by
the total prescriptions of such Merck Product or Competitive Product dispensed
by all pharmacies participating in the Medco Retail Network of Pharmacies.

     "Basis" shall have the meaning set forth in Section 2.4.

     "Basis Competitive Products" means, in relation to any Merck Product, for
any Calendar Quarter, all other Pharmaceutical Products included in the same
Basis Therapeutic Category as such Merck Product.

     "Basis Therapeutic Category" means initially the categories set forth on
Schedule 10.8(a)(ii), subject to adjustment in accordance with Section 10.8.
Each Basis Therapeutic Category shall include initially the Merck Products and
the Basis

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Competitive Products set forth with respect thereto on Schedule 10.8(a)(ii)
subject to adjustment in accordance with Section 10.8.

     "Best Price" with respect to any Merck Product shall have the meaning set
forth in Section 1927 of the Social Security Act.

     "Calendar Quarter" means the three-month period ending on each of March 31,
June 30, September 30 and December 31 of any Calendar Year; provided, however,
that if this Restated Agreement is terminated in accordance with Article 8 as of
a date other than March 31, June 30, September 30 and December 31, for purposes
of this Restated Agreement, the final Calendar Quarter shall begin on the day
after the conclusion of the preceding Calendar Quarter and end as of the date of
such termination.

     "Calendar Year" means each twelve-month period ending on December 31;
provided, however, that if this Restated Agreement is terminated in accordance
with Article 8 as of a date other than December 31, for purposes of this
Restated Agreement, the final Calendar Year shall begin on the day after the
conclusion of the preceding Calendar Year and end as of the date of such
termination.

     "Catalog Price" means the per Unit price of any Merck Product as calculated
based upon the catalog price published by Merck provided that, except as
expressly otherwise provided herein, if the catalog price of any Merck Product
as so published by Merck changes during any Calendar Quarter, the "Catalog
Price" shall be the per Unit price as calculated based upon the catalog price so
published for the largest number of days during such Calendar Quarter.

     "Claims-Level Data" means, for all utilization of any Merck Product, all
Competitive Products and all other Pharmaceutical Products, individual
claims-level data in the NCPDP standard file format, as set forth in Schedule
1.1. The "Encrypted Patient ID Code" field is specifically excluded from the
definition of Claims-Level Data and has been replaced in Schedule 1.1 with a
designation of "Filler" indicating that no data shall be inserted into that
field. Medco shall not include such information in the data it delivers to
Merck.

     "Competitive Products" means, in relation to any Merck Product, for any
Calendar Quarter, all other Pharmaceutical Products included in the same
Therapeutic Category as such Merck Product.

     "Conversion Factor" for any Calendar Quarter shall be the number derived by
dividing the Average Units Per Prescription Dispensed By A Medco Mail Service
Pharmacy into the Average Units Per Prescription Dispensed By A Pharmacy
Participating In The Medco Network Of Retail Pharmacies for each Merck Product
or Competitive Product.

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     "CPR Rules" shall have the meaning set forth in Section 9.2.

     "Customized Medco Formulary" means, with respect to any Plan, for any Merck
Product, each Formulary created, maintained or offered to such Plan by Medco, in
whole or in part, other than a Standard Medco Formulary in compliance with
Section 2.1(a).

     "Dispute" shall have the meaning set forth in Article 9.

     "Distribution Channel" means the Medco Mail Services Pharmacies or the
Medco Retail Network of Pharmacies, as applicable.

     "Effective Date" means July 1, 2002.

     "Eligible Medco Plan" means each Medco Plan that is not a Non-Eligible
Medco Plan.

     "Eligible Prescription" means any prescription for a Pharmaceutical Product
dispensed by (a) a pharmacy participating in the Medco Retail Network of
Pharmacies for which an Eligible Medco Plan or a Member thereof is entitled to
reimbursement or (b) a Medco Mail Service Pharmacy for which an Eligible Medco
Plan or a Member thereof is entitled to reimbursement; but shall expressly not
include, unless otherwise determined by Merck in its sole discretion, (1) any
prescription for which an Eligible Medco Plan or a Member thereof is entitled to
any reimbursement from Medicaid, Medicare or any other federal or state program,
(2) any prescription dispensed under a Non-Eligible Medco Plan or any
prescription dispensed using quantities of a Merck Product purchased by Medco or
any of its immediate or intermediate suppliers outside the U.S. and (3) any
prescription of a Pharmaceutical Product dispensed under a Medco Plan under
which such Pharmaceutical Product is classified as an Unacceptable Formulary
Product. If any prescription for a Merck Product or Competitive Product that is
not in a Unit Measured Therapeutic Category and which in accordance with the
foregoing constitutes an Eligible Prescription is dispensed by a Medco Mail
Service Pharmacy, for purposes of calculating Medco Market Share and otherwise
under this Restated Agreement, such prescription shall be multiplied by the
Conversion Factor for such Merck Product or Competitive Product, in order to
equate the prescriptions dispensed by any Medco Mail Service Pharmacy to
prescriptions dispensed by a pharmacy participating in the Medco Retail Network
of Pharmacies. If any prescription for a Merck Product or Competitive Product
that is in a Unit Measured Therapeutic Category and which in accordance with the
foregoing constitutes an Eligible Prescription contains a number of Units of
such Merck Product or Competitive Product that is more or less than the Merck
Unit Number for such Unit Measured Therapeutic Category, for purposes of
calculating Medco Market Share and otherwise under this Restated Agreement, such
prescription shall be counted as that number of (or fraction of an) Eligible
Prescription(s) of such Merck Product or Competitive Product, as applicable,

                                        4

<PAGE>

that is equal to the number of Units contained in such prescription divided by
the Merck Unit Number for such Unit Therapeutic Category.

     "Existing Medco Plan" means any Medco Plan for which any Medco Party, or
directly or through an intermediary, provided PBM Services as of March 31, 2002
(or any successor plan). Each Existing Medco Plan shall at all times during the
term of this Restated Agreement be treated as such, regardless of any renewal,
replacement, amendment or modification of the agreement between Medco and such
Medco Plan or the sponsor thereof, except as provided in Section 10.6 of this
Restated Agreement.

     "Existing Merck Product" means, with respect to each Existing Medco Plan,
any Merck Product available to Members under such Existing Medco Plan as of
April 1, 2002.

     "FDA" means the United States Food and Drug Administration.

     "Formulary" means, with respect to any Plan, the list or lists of
prescription products that Members may request and/or physicians may prescribe
under such Plan. It is understood that, under certain Plans, Members may request
and/or physicians may prescribe prescription products not included on such
lists.

     "Formulary Managed Medco Plan " means any New Medco Plan in respect of
which a Medco Party designs and/or implements, directly or indirectly, the
applicable Medco Plan's Formulary and in respect of which a Medco Party
communicates with physicians and pharmacists on a routine basis to encourage
appropriate utilization consistent with the Medco Plan's Formulary, and either

     (1)  the benefit design of the Plan includes significant financial
          incentives (e.g., three-tier co-payments with significant
          differentials) for Members that are reasonably calculated to promote
          compliance with the Medco Plan's Formulary; or
     (2)  the Medco Party implements programs for the significant movement of
          market share to Merck Products, such as, but not limited to, Medco's
          Prescriber Choice Program, Medco's physician-calling program or other
          at least equally effective programs for the movement of market share,
          in at least three of the Select Therapeutic Categories.

Any other New Medco Plan that Merck elects to treat as a Formulary Managed Medco
Plan, whether or not it meets the foregoing definition, shall be deemed to be a
Formulary Managed Medco Plan for the purposes of this Restated Agreement.

     "General Control Eligible Medco Plan" means, with respect to any Calendar
Quarter, for each Merck Product, each Eligible Medco Plan that (a) is an
Existing Medco

                                        5

<PAGE>

Plan or a New Medco Plan that constitutes a Formulary Managed Medco Plan, and
(b) is not a High Control Eligible Medco Plan for such Merck Product.

     "General Control MAS Rebate Percentage" has the meaning reflected in Annex
B.

     "group of Members" means any group of Members under a Plan, all the Members
of which are entitled to receive substantially similar benefits under that Plan.

     "Group A Merck Products" has the meaning reflected in Annex B.

     "Group B Merck Products" has the meaning reflected in Annex B.

     "Group C Merck Products" has the meaning reflected in Annex B.

     "Group D Merck Products" has the meaning reflected in Annex B.

     "Group E Merck Products" has the meaning reflected in Annex B.

     "Group of Merck Products" has the meaning reflected in Annex B.

     "High Control Eligible Medco Plan" means, with respect to any Calendar
Quarter, for each Merck Product, each Eligible Medco Plan which Merck determines
in its sole discretion has features which enable the Plan or its sponsor to
exercise a high level of control over influencing the market share of
Pharmaceutical Products in the Therapeutic Category that includes such Merck
Product. Examples of such features would include (a) such Merck Product being
the only Pharmaceutical Product available to Members of a Plan for which any
reimbursement is provided by the Plan to a pharmacy or Member during such
Calendar Quarter in the Therapeutic Category that includes such Merck Product,
(b) the co-payment payable by Members during such Calendar Quarter for an
Eligible Prescription of such Merck Product being at least $15 less than the
lowest co-payment payable by Members for any Eligible Prescription of any
Competitive Product, or (c) active management of utilization within the
Therapeutic Category that includes such Merck Product for the benefit of the
utilization of such Merck Product by Members of such Plan. In no event shall a
Medco Plan constitute a High Control Eligible Medco Plan with respect to a Merck
Product unless such Plan is an Existing Medco Plan that constitutes an Eligible
Medco Plan or a New Medco Plan that constitutes a Formulary Managed Medco Plan.

     "High Control MAS Rebate Percentage" has the meaning reflected in Annex B.

     "IMS" means IMS Health Incorporated or any successor entity thereto (or any
other Person selected by Merck that provides data and data services
substantially identical to the data and data services provided by IMS Health
Incorporated as of the Effective Date).

                                        6

<PAGE>

         "Incoming Medco Plan" has the meaning reflected in Annex B.

         "Incoming Medco Plans MAS Premium Percentage" has the meaning reflected
in Annex B.

         "Incoming Medco Plans Sales Percentage" has the meaning reflected in
Annex B.

         "Individual Formulary Access Rebate Amount" shall have the meaning
reflected in Annex B.

         "Mandatory Formulary Product" has the meaning set forth in Section 2.5

         "MAS Premium Percentage" has the meaning reflected in Annex B.

         "Medco" shall have the meaning set forth in the preamble to this
Restated Agreement.

         "Medco Acquisition Transaction" means any direct or indirect
acquisition, by any Person or group of Persons acting together, in one or a
series of transactions (including by means of a merger, consolidation or other
business combination of or with Medco or any of its Affiliates), (i) of one or
more businesses or assets of Medco and/or its Subsidiaries that generated five
percent (5%) or more of the net revenue or net income of Medco and its
Subsidiaries on a consolidated basis during the four Calendar Quarters prior to
the consummation of such acquisition, or that constituted five percent (5%) or
more of the total assets of Medco and its Subsidiaries on a consolidated basis
as of the last day of the Calendar Quarter last ended prior to the consummation
of such acquisition, measured either on a book value basis or a fair market
value basis, or (ii) of beneficial ownership (as defined for purposes of
Regulations 13D-13G under the Securities Exchange Act of 1934) of fifteen
percent (15%) or more of any class of equity securities of Medco or of any
Subsidiary of Medco that generated five percent (5%) or more of the net revenue
or net income of Medco and its Subsidiaries on a consolidated basis during the
four Calendar Quarters prior to the consummation of such acquisition or that
held five percent (5%) or more of the total assets of Medco and its Subsidiaries
on a consolidated basis as of the last day of the Calendar Quarter last ended
prior to the consummation of such acquisition, measured either on a book value
basis or a fair market value basis.

         "Medco Mail Service Pharmacies" means the pharmaceutical dispensing
functions located in the U.S. of the Medco Parties which utilize the United
States Postal Service, common carriers or other means of distribution to deliver
Pharmaceutical Products to Members under Medco Plans.

         "Medco Market Share" of a Pharmaceutical Product in any Therapeutic
Category under one or more Medco Plans, for any Calendar Quarter (or other
period), shall be the percentage determined by dividing (a) the aggregate number
of Eligible Prescriptions actually dispensed of the applicable Pharmaceutical
Product under such Medco Plan or

                                        7

<PAGE>

Medco Plans, as applicable during such Calendar Quarter (or other period), by
(b) the aggregate number of Eligible Prescriptions actually dispensed of the
applicable Pharmaceutical Product and all other Pharmaceutical Products in such
Therapeutic Category, under such Medco Plan or Medco Plans, as applicable during
such Calendar Quarter (or other period).

         "Medco Parties" means Medco and all Persons that at any time are
Affiliates of Medco.

         "Medco Plan" means, for any Calendar Quarter, any Plan for which any
Medco Party, directly or through an intermediary, provides any PBM Services
during such Calendar Quarter; provided, however, that any Plan for which a Medco
Party provides PBM Services pursuant to an agreement with Merck in its capacity
as an employer shall not be deemed a "Medco Plan" for purposes of this Restated
Agreement.

         "Medco P&T Committee" means any pharmacy and therapeutics committee,
medical advisory board, clinical oversight group, other professional advisory
body or individual having similar authority utilized or created by a Medco Party
or over which or whom a Medco Party has substantial influence with respect to
the general framework of decision-making of such committee, board, group, body
or individual.

         "Medco Retail Network of Pharmacies" shall mean the retail pharmacies
or any other entity or function located in the U.S. under contract with Medco
Parties to participate in providing prescription services to Members under Medco
Plans.

         "Member" means, with respect to any Plan, any person entitled to
benefits under that Plan.

         "Merck Products" means initially the Pharmaceutical Products identified
on Schedule 10.8 as "Merck Products." The Pharmaceutical Products constituting
Merck Products shall be adjusted from time to time after the date of execution
of this Restated Agreement in accordance with Section 10.8.

         "Merck Quarterly Revenue Amount" for any Calendar Quarter means the sum
of the Aggregate Medco Cost of all Eligible Prescriptions of all Merck Products
dispensed in that Calendar Quarter under Eligible Medco Plans.

         "Merck Unit Number" means, with respect to any Unit Measured
Therapeutic Category, the number of Units of the Merck Product in such Unit
Measured Therapeutic Category generally included in one prescription of such
Merck Product.

         "Minimum MAS Premium Percentage" has the meaning reflected in Annex B.

         "National Market Share" of any Merck Product, for any Calendar Quarter
(or other period), means the percentage represented by (a) the number of
prescriptions of such

                                        8

<PAGE>

Merck Product dispensed in the U.S. during such Calendar Quarter (or other
period) (excluding quantities of such Merck Product dispensed under Medco
Plans), divided by (b) the aggregate number of prescriptions of such Merck
Product and all Competitive Products dispensed in the U.S. during such Calendar
Quarter (or other period) (not including quantities of such Merck Product and
Competitive Products dispensed under Medco Plans as reported by IMS). The
numbers referred to in clauses (a) and (b) of this definition, including,
without limitation, the calculation of the amounts of Merck Products and
Competitive Products dispensed under Medco Plans to be excluded from the
computation of National Market Share, shall be determined by Merck based on
national third-party prescription data and national mail prescription data
furnished by IMS; provided, however, in the event that (x) the prescription data
furnished by IMS at any time reflects a methodology for determining the number
of prescriptions for Merck Products and/or any Competitive Products that is
different than the methodology reflected by the data furnished as of the
Effective Date by IMS to Merck and (y) in the judgment of Merck such change in
methodology is reasonably likely to result in a determination of National Market
Share for any Merck Product that is inconsistent with the determination that
would result from the methodology reflected by the data furnished as of the
Effective Date by IMS to Merck, the manner in which such National Market Share
shall be determined, or the data utilized to make such determination, shall be
adjusted to avoid such inconsistency. It is understood that Merck intends
initially to obtain the data to make the calculations contemplated by this
definition from the Xponent(R) PlanTrak product of IMS. Merck shall have the
right at any time to utilize a different product of IMS to obtain such data,
provided that Merck notifies Medco before it begins to utilize such other
product.

         "NCPDP" shall mean the National Council for Prescription Drug Programs.

         "New Basis Competitive Product" means any Pharmaceutical Product that
becomes a Basis Competitive Product after the Effective Date.

         "New Medco Plan" means any Medco Plan that is not an Existing Medco
Plan.

         "New Merck Product" means each Merck Product that became or becomes a
Merck Product after the Effective Date.

         "Non-Eligible Medco Plan" means, for any Calendar Quarter, Medco's
YOURxPlan; any cash card plan, including any cash card plan sponsored or
administered by a state, federal or local governmental agency or
instrumentality, for the purpose of providing discounts on Pharmaceutical
Products and any similar program; any Plan with respect to which the Medco
Parties' primary role is to provide claims processing services, including
Merck's patient assistance programs; any Plan with respect to which the Medco
Parties' primary role is to dispense Pharmaceutical Products utilizing Medco
Mail Service Pharmacies; any Plan pursuant to which Members pay all or a
substantial part of the cost of Pharmaceutical Products dispensed thereunder
without the right of Members to obtain

                                        9

<PAGE>

subsequent reimbursement for a substantial portion of such cost; and any New
Medco Plan that is not a Formulary Managed Medco Plan.

         "Non-MAS Group of Merck Products" has the meaning reflected in Annex B.

         "Non-Rebate Eligible Utilization Controls" means, with respect to any
Merck Product, Utilization Controls that are not Rebate-Eligible Utilization
Controls.

         "Notification" shall have the meaning set forth Section 10.6.

         "Offer Disqualified Plan" means any Plan in respect of which Medco has
at any time breached its obligations under Section 2.2. Notwithstanding a breach
by Medco of its obligations under Section 2.2, a Plan which constitutes an Offer
Disqualified Plan will no longer constitute an Offer Disqualified Plan, when and
so long as such Plan (i) adheres to a (x) Standard Medco Formulary that is in
compliance with Section 2.1(a) or (y) a Formulary that constitutes a
Rebate-Eligible Customized Medco Formulary with respect to all Merck Products
available under such Plan, and (ii) to the extent any Merck Product is subject
to any Utilization Controls under such Plan, adopts Rebate-Eligible Utilization
Controls with respect to that Merck Product.

         "Offer-Permitted Customized Medco Formulary" means, with respect to any
Plan, any Customized Medco Formulary that is a Rebate-Eligible Customized Medco
Formulary or that is approved by Merck, in its sole discretion, with respect to
a specific offer or presentation made to an existing, new or potential Medco
Plan, its sponsor and/or the Plan P&T Committee responsible for such Plan with
respect to that Merck Product. It is understood that any Customized Medco
Formulary approved by Merck as constituting an Offer-Permitted Customized Medco
Formulary in accordance with the prior sentence shall be deemed to be an
Offer-Permitted Customized Medco Formulary solely with respect to the specific
offer or presentation in connection with which such approval is granted and
shall not by virtue of such approval constitute a Rebate-Eligible Customized
Medco Formulary.

         "Offer-Permitted Utilization Control" means, with respect to any Merck
Product, all Rebate-Eligible Utilization Controls in respect of that Merck
Product and any other Utilization Controls approved by Merck, in its sole
discretion, with respect to a specific offer or presentation made to an
existing, new or potential Medco Plan, its sponsor, and/or the Plan P&T
Committee responsible for such Plan with respect to that Merck Product. It is
understood that any Utilization Controls approved by Merck as constituting
Offer-Permitted Utilization Controls in accordance with the prior sentence shall
be deemed to be Offer-Permitted Utilization Controls solely with respect to the
specific offer or presentation in connection with which such approval is granted
and shall not by virtue of such approval constitute Rebate-Eligible Utilization
Controls.

                                       10

<PAGE>

         "On Formulary" means, with respect to a Merck Product, for any Calendar
Quarter, under any Plan (or Standard Medco Formulary), that, during the entire
Calendar Quarter:

         (1)(x) such Plan's Formulary (or the applicable Standard Medco
Formulary) has only one branded tier and such Merck Product is included on such
Formulary (or Standard Medco Formulary), (y) such Plan's Formulary (or the
applicable Standard Medco Formulary) is comprised of more than one branded tier
and such Merck Product is included in the most preferred branded tier of such
Formulary (or Standard Medco Formulary) (i.e., the branded tier from which
Members are encouraged to request Pharmaceutical Products and/or physicians are
encouraged to prescribe Pharmaceutical Products consistent with their
professional medical judgment and applicable medical and pharmacy laws and
procedures; generally, with respect to a Formulary or a Standard Medco Formulary
that has a three-tier benefit design, the most preferred branded tier will be
the second tier) or (z) Merck has approved in writing the Formulary status of
such Merck Product under such Plan's Formulary (or Standard Medco Formulary);
and

         (2) the co-payment or co-insurance amount or percentage, as applicable,
payable by Members under such Plan for a prescription for such Merck Product is
the lowest co-payment or co-insurance amount or percentage available for a
prescription (providing the same number of days of therapy) for any other
Pharmaceutical Product included in the Basis Therapeutic Category including such
Merck Product.

         "Outgoing Medco Plan" has the meaning reflected in Annex B.

         "Outgoing Medco Plans MAS Premium Percentage" has the meaning reflected
in Annex B.

         "Outgoing Medco Plans Sales Percentage" has the meaning reflected in
Annex B.

         "PBM Services" means any substantial prescription drug benefit
management services, including but not limited to management of retail pharmacy
networks, payment of claims to pharmacies for prescription drugs, drug
utilization review, Formulary management services and drug benefit management
services.

         "Person" means any individual, corporation, association, partnership
(general or limited), joint venture, trust, estate, limited liability company or
other legal entity or organization.

         "Pharmaceutical Product" means any pharmaceutical product (a) approved
by the FDA for a particular use; (b) which may be dispensed only pursuant to a
prescription under the rules and regulations of the FDA; and (c) for which the
manufacturer (or its licensees or assignees) has marketing exclusivity under the
Food, Drug and Cosmetic Act, the Orphan Drug Act of 1984, or any law, statute,
regulation or order having a

                                       11

<PAGE>

similar effect, or by virtue of one or more patents granted by the United States
Patent and Trademark Office, such that no other product can be marketed by
another Person for the same purpose without violating such marketing exclusivity
or infringing such patent.

         "Plan" means any third-party payor plan, agreement or arrangement
through which Members are entitled to receive Pharmaceutical Products. To the
extent that any such plan, agreement or arrangement provides for different
benefits (including, without limitation, different Formularies or Utilization
Controls for any Merck Product) for different groups of Members, for purposes of
this Restated Agreement, such plan, agreement or arrangement shall be deemed to
be a separate "Plan" with respect to each such group of Members.

         "Plan P&T Committee" shall mean, with respect to any Medco Plan, any
pharmacy and therapeutics committee, medical advisory board, clinical oversight
group or other professional advisory body with the authority, or individual
having similar authority, to evaluate Pharmaceutical Products for safety and
efficacy for such Plan and shall not include a Medco P&T Committee.

         "Prescription" means a legal and valid order to dispense a
Pharmaceutical Product.

         "Quarterly Incoming Sales Amount" has the meaning reflected in Annex B.

         "Rebate-Eligible Customized Medco Formulary" means for any Plan (x) any
Customized Medco Formulary in which all Merck Products are On Formulary and are
treated at least as favorably as under a Standard Medco Formulary in compliance
with Section 2.1(a), or (y) with respect to any Merck Product that, under such
Customized Medco Formulary, is not On Formulary or not treated at least as
favorably as under a Standard Medco Formulary in compliance with Section 2.1(a),
the Formulary status of such Merck Product on such Customized Medco Formulary
shall have been approved in advance in writing by Merck in its sole discretion.
It is understood that any Customized Medco Formulary in respect of which any
approval is granted by Merck pursuant to clause (y) above shall be deemed to
constitute a Rebate-Eligible Customized Medco Formulary solely with respect to
the Medco Plan in connection with which such approval is granted (but only so
long as no further change is made to such Customized Medco Formulary that would
apply to the Merck Product (or any Basis Competitive Product) in connection with
which such approval was granted) and such Customized Medco Formulary shall not
by virtue of such approval constitute a Rebate-Eligible Customized Medco
Formulary with respect to any other Medco Plan.

         "Rebate-Eligible Utilization Controls" means, with respect to each
Merck Product, the Utilization Controls Merck has at any time designated, in its
sole discretion, in a written notice delivered to Medco as "Rebate-Eligible
Utilization Controls" with respect to such Merck Product. Once specific
Utilization Controls are designated, in a written notice delivered by Merck to
Medco, as "Rebate-Eligible Utilization Controls" with

                                       12

<PAGE>

respect to a Merck Product, such Utilization Controls shall constitute
"Rebate-Eligible Utilization Controls" with respect to such Merck Product for
the remainder of the term of this Restated Agreement.

     "Representatives" means, with respect to any Person, such Person's
officers, employees, including account executives, agents and other
representatives.

     "Restated Agreement" means this Amended and Restated Managed Care
Agreement, dated and executed on May 28, 2003, between Merck and Medco and
effective as of the Effective Date.

     "Select Therapeutic Categories" means initially the following Therapeutic
Categories: ARBs, Arthritis & Analgesia, Asthma Controllers, HMGs, Migraine,
Osteoporosis. The Therapeutic Categories constituting Select Therapeutic
Categories shall be subject to adjustment in accordance with Section 10.8.

     "Standard Medco Formulary" means any standardized Formulary created,
maintained, or offered to such Plan by Medco, in whole or in part, including but
not limited to Medco's Preferred Prescriptions Formulary or Rx Selections
Formulary (and/or, in each case, any successor or similar Formulary of any Medco
Party).

     "Subsidiary" of any Person means any corporation or other organization
whether incorporated or unincorporated, of which at least a majority of the
securities or interests having by the terms thereof ordinary voting power to
elect at least a majority of the board of directors or others performing similar
functions with respect to such corporation or other organization is directly or
indirectly owned or controlled by such Person or by any one or more of its
Subsidiaries, or by such Person and one or more of its Subsidiaries. For
purposes of this Restated Agreement, neither Medco nor any of its Subsidiaries
shall be deemed to be a Subsidiary of Merck.

     "Target MAS Premium Percentage" has the meaning reflected in Annex B.

     "Therapeutic Category" means initially the categories set forth on Schedule
10.8(a)(i), subject to adjustment in accordance with Section 10.8. Each
Therapeutic Category shall include initially the Merck Products and the
Competitive Products set forth with respect thereto on Schedule 10.8(a)(i),
subject to adjustment in accordance with Section 10.8.

     "Unacceptable Formulary Product" shall have the meaning set forth in
Section 2.5.

     "Unit" means the smallest quantity available for use as one administration
of a Pharmaceutical Product.

     "Unit Measured Therapeutic Category" means any Therapeutic Category for
which the Medco Market Share of a Merck Product contained therein shall be
measured

                                       13

<PAGE>

based on the number of Units dispensed, rather than the number of prescriptions
dispensed. Merck may from time to time designate or withdraw any Therapeutic
Category as a "Unit Measured Therapeutic Category" with respect to any one or
more Calendar Quarters by written notice to Medco. As of the Effective Date, the
Therapeutic Category that includes Maxalt(R) shall be deemed to be a "Unit
Measured Therapeutic Category."

       "U.S." means the 50 states of the United States of America and the
District of Columbia (and, if determined by Merck in its sole discretion with
respect to any Medco Plan, for purposes of such Medco Plan, Puerto Rico).

       "Utilization Controls" means, with respect to any Merck Product,
controls, including prior authorization requirements, edits or other
interventions or communications (but excluding Formulary status and co-payment
and co-insurance requirements), that have the purpose or effect of restricting
the use of such Merck Product, encouraging the use of any Basis Competitive
Product or restricting generally the use of all Pharmaceutical Products in the
Basis Therapeutic Category that includes such Merck Product. In this Restated
Agreement, Utilization Controls are considered to be "with respect to" a Merck
Product, and a Merck Product is considered to be "subject to" Utilization
Controls under circumstances in which controls, including prior authorization
requirements, edits or other interventions or communications (but excluding
Formulary status and co-payment and co-insurance requirements), are applicable
to, or are likely to have an effect on the utilization of, such Merck Product,
one or more Basis Competitive Products, or all Pharmaceutical Products in the
Basis Therapeutic Category that includes such Merck Product.

2. Access.

          2.1. Standard Medco Formulary Requirements. (a) Subject to Section
2.1(c), Medco shall ensure that, at all times prior to the expiration of the
term of this Restated Agreement (or, if earlier, until the time at which the
applicable product is no longer a Merck Product), each Merck Product shall be On
Formulary on each Standard Medco Formulary with a Formulary status on such
Standard Medco Formulary that is no less favorable than the Formulary status of
any Basis Competitive Product.

          (b)  Without limiting the foregoing in Section 2.1(a) but subject to
Section 2.5, in the event that at any time during the term of this Restated
Agreement Medco makes any modification or change to any Standard Medco Formulary
or adopts a new Standard Medco Formulary, Medco shall ensure that, after giving
effect to such modification or change, all Merck Products are On Formulary on
such modified or changed Standard Medco Formulary and all Merck Products are On
Formulary on such new Standard Medco Formulary, in each case with a Formulary
status on such modified, changed or new Standard Medco Formulary that is no less
favorable than the Formulary status of any Basis Competitive Product.

                                       14

<PAGE>

       (c) With respect to each New Merck Product, the obligation under Section
2.1(a) shall not apply, unless and until such New Merck Product is determined by
a Medco P&T Committee to be a Mandatory Formulary Product or an Acceptable
Formulary Product in accordance with the provisions of Section 2.5 of this
Restated Agreement. Medco shall comply with the requirements of Section 2.5(b)
with respect to the submission and recommendation of Merck Products to a Medco
P&T Committee and with respect to ensuring that such Medco P&T Committee review
each New Merck Product within the period set forth therein. The obligation under
Section 2.1(a) shall not apply with respect to a Merck Product under a Standard
Medco Formulary if the Medco P&T Committee responsible for that Standard Medco
Formulary determines that such Merck Product is an Unacceptable Formulary
Product in accordance with the provisions of Section 2.5 of this Restated
Agreement.

       (d) Nothing contained in this Section 2.1 shall be interpreted to
prohibit any Medco Party from including in any Standard Medco Formulary any New
Basis Competitive Product, provided that, after including such New Basis
Competitive Product in such Standard Medco Formulary, all Merck Products are On
Formulary on such Standard Medco Formulary, with a Formulary status on such
Standard Medco Formulary that is no less favorable than the Formulary status of
any Basis Competitive Product.

       2.2. Requirements in Connection with Offers to New and Existing Medco
Plans.

       (a) With respect to each new or potential Medco Plan, Medco shall present
and offer to the Plan, its sponsor and/or Plan P&T Committee one or more of its
Standard Medco Formularies that is in compliance with Section 2.1(a) to be the
Formulary of such Plan; provided, that, Medco may present or offer to such new
or potential Medco Plan, sponsor and/or committee any Offer-Permitted Customized
Medco Formulary to be the Formulary of such Plan. Medco may also present or
offer to a new or potential Medco Plan, sponsor or committee Utilization
Controls that constitute Offer-Permitted Utilization Controls with respect to
such offer or presentation.

       (b) In the event that any Medco Plan or the sponsor thereof indicates to
a Medco Party that it is reviewing a therapeutic category or considering any
change or modification to the Formulary of such Medco Plan or the Utilization
Controls with respect to Merck Products under such Medco Plan or the adoption of
Utilization Controls with respect to Merck Products under such Medco Plan, Medco
shall present and offer to the Plan, its sponsor and/or Plan P&T Committee one
or more of its Standard Medco Formularies that is in compliance with Section
2.1(a) to be the Formulary of such Plan; provided, that, Medco may present and
offer to such Medco Plan, sponsor and/or committee any Offer-Permitted
Customized Medco Formulary to be the Formulary of such Plan. Medco may also
present or offer to such Plan, sponsor or committee Utilization Controls that
constitute Offer-Permitted Utilization Controls with respect to such offer or
presentation.

                                       15

<PAGE>

            (c) After the date of the execution of this Restated Agreement,
Medco shall not offer, encourage or propose to any potential, new or existing
Medco Plan or its sponsor or Plan P&T Committee that such Plan (i) deviate from
a Standard Medco Formulary (other than to utilize an Offer-Permitted Customized
Medco Formulary), (ii) deviate from a Rebate-Eligible Customized Medco Formulary
(other than to utilize an Offer-Permitted Customized Medco Formulary or a
Standard Medco Formulary), (iii) change the Formulary status of a Merck Product
under such Plan to be less favorable to such Merck Product, (iv) adopt
Utilization Controls with respect to a Merck Product that are not
Offer-Permitted Utilization Controls, (v) modify or deviate from Rebate-Eligible
Utilization Controls with respect to any Merck Product other than to remove the
Utilization Controls, make the Utilization Controls less restrictive with
respect to such Merck Product or to offer or present Offer-Permitted Utilization
Controls); provided that the foregoing shall not prevent Medco from offering
Utilization Controls that do not constitute Offer-Permitted Utilization Controls
with respect to a Merck Product if and solely to the extent expressly requested
by such Plan or its sponsor without any suggestion, encouragement, or
instigation on the part of any Medco Party.

       2.3. Best Efforts. (a) Medco shall use its best efforts to ensure that,
at all times after the execution of this Restated Agreement and prior to the
expiration of the term of this Restated Agreement (or, if earlier, until the
time at which the applicable product is no longer a Merck Product), each Merck
Product is made available under each Medco Plan on a Basis that is no less
favorable than the Basis upon which any Basis Competitive Product is then made
available under such Medco Plan and made available for all indications for which
such Merck Product may be legally prescribed. At a minimum and without
limitation, Medco must use best efforts to ensure that, at all times after the
execution of this Restated Agreement and prior to the expiration of the term of
this Restated Agreement (or, if earlier, until the time at which the applicable
product is no longer a Merck Product), with respect to each Merck Product (x)
each Eligible Medco Plan adheres to a (i) Standard Medco Formulary that is in
compliance with Section 2.1(a) or (ii) Rebate-Eligible Customized Medco
Formulary), and (y) to the extent any Merck Product is subject to any
Utilization Controls under a Medco Plan, such Utilization Controls treat such
Merck Product no less favorably than the Rebate-Eligible Utilization Control
that is most favorable to such Merck Product. With respect to each New Merck
Product, the best efforts obligations of this Section 2.3 shall not apply with
respect to a New Merck Product under a Medco Plan with a Plan P&T Committee
until 30 days after the New Merck Product is determined by the Plan P&T
Committee to be a Mandatory Formulary Product or an Acceptable Formulary Product
(or to have a similar classification) in accordance with the provisions of
Section 2.5 of this Restated Agreement. The best efforts obligations of this
Section 2.3 shall not apply with respect to a Merck Product under a Medco Plan
if the Plan P&T Committee determines that such Merck Product is an Unacceptable
Formulary Product in accordance with the provisions of Section 2.5 of this
Restated Agreement.

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<PAGE>

       2.4.  Definition of "Basis." A Merck Product shall be deemed to be made
available to Members under a Medco Plan on a "Basis" less favorable than the
Basis upon which a Basis Competitive Product is made available, if:

       (i)   the level of access of Members to, or the Formulary status of, such
Merck Product under such Medco Plan is less favorable to such Merck Product than
the level of access of Members to, or the Formulary status of, any Basis
Competitive Product under such Medco Plan;

       (ii)  with respect to each Calendar Quarter beginning after June 30,
2003, the Utilization Controls to which such Merck Product is subject under the
Medco Plan results in such Merck Product being made available to Members under
such Medco Plan with a status less favorable to such Merck Product than to any
Basis Competitive Product;

       (iii) such Merck Product's status under the Medco Plan as the therapy for
a particular condition is less favorable than the status as therapy for such
condition of any Basis Competitive Product, except as a result of the
classification of such Merck Product as an Unacceptable Formulary Product under
the applicable Medco Plan in accordance with Section 2.5(c). Although the
parties acknowledge that the definition of status as therapy for a condition
will be different from Medco Plan to Medco Plan, examples of levels of status of
Pharmaceutical Products under Medco Plans as therapy for a condition are (from
highest status downward): exclusive first-line therapy; first-line therapy on
equal status with a limited number of other specific Basis Competitive Products;
second-line therapy on equal status with specific Basis Competitive Products as
the second-line therapy, etc.; and

       (iv)  other forms of inducement, intervention or encouragement are
offered or communicated, directly or indirectly, by any Medco Party to any Medco
Plan or Members of such Medco Plan or any of their physicians or pharmacists,
that have the purpose or effect of encouraging such Medco Plan, Members or
physician or pharmacist to favor a Basis Competitive Product over any Merck
Product.

       In the event that Merck unilaterally makes a change to a Basis
Therapeutic Category pursuant to Section 10.8(d) and solely as a result of such
change a Merck Product is available to Members under a Medco Plan on a Basis
less favorable than the Basis upon which a Basis Competitive Product is
available, for purposes hereof, for the first Calendar Quarter during which such
change is in effect, such Merck Product shall nonetheless be deemed to be made
available to Members under such Medco Plan on a Basis at least as favorable as
the Basis upon which each Basis Competitive Product is made available under such
Medco Plan.

       2.5.  Plan P&T Committees; Medco P&T Committee.

                                       17

<PAGE>

       (a)  The parties acknowledge that the determination of the Formulary
status of, or the Utilization Controls, if any, with respect to, any Merck
Product (including without limitation a New Merck Product) for a Medco Plan may
be subject to review or prior action with respect to the classification of such
Merck Product by the Plan P&T Committee for such Medco Plan. The parties further
acknowledge that a Plan P&T Committee may classify a Pharmaceutical Product as
(x) mandatory for Formulary inclusion (i.e., a "must add") (a "Mandatory
Formulary Product"), (y) acceptable for Formulary inclusion (i.e., a "may add")
(an "Acceptable Formulary Product"), or (z) unacceptable for Formulary inclusion
(an "Unacceptable Formulary Product") or under any similar classification. In
the event that any Medco Party makes any direct or indirect recommendation to a
Plan P&T Committee on Formulary or product utilization choices in a therapeutic
category which includes a Merck Product, such Medco Party shall recommend to
such Plan P&T Committee that such Merck Product be classified as an Acceptable
Formulary Product or Mandatory Formulary Product or under similar
classifications utilized by such Plan P&T Committee.

       (b)  Medco represents and warrants that each Medco P&T Committee is
structured and managed so that (a) its decisions with respect to Merck Products
are based solely on objective clinical factors and other factors unrelated to
(i) the price or cost of such Merck Product, (ii) other financial criteria or
(iii) financial objectives of Medco, (b) its evaluations of the safety of Merck
Products are based solely on clear and objective safety reasons based on valid
scientific data or authorized FDA directives specifically concerning the safety
of such products, and (c) it will take action with respect to a Merck Product to
classify such product as a Mandatory Formulary Product, an Acceptable Formulary
Product or an Unacceptable Formulary Product, with respect to any or all of the
FDA-approved indications for such Merck Product; provided, that, any
classification of a Merck Product by a Medco P&T Committee as an Unacceptable
Formulary Product shall be based solely on clear and objective safety reasons
based on valid scientific data or authorized FDA directives specifically
concerning the safety of the relevant Merck Product. Medco further represents
and warrants that, as of the date of this Restated Agreement, each Merck Product
is classified by each Medco P&T Committee as a Mandatory Formulary Product or as
an Acceptable Formulary Product. Medco shall (i) promptly and timely submit each
New Merck Product to each Medco P&T Committee, and (ii) ensure that each Medco
P&T Committee reviews the New Merck Product in accordance with the requirements
of this Section 2.5(b) within 4 months from the date such New Merck Product
becomes a Merck Product. In the event that any Medco Party makes any direct or
indirect recommendation to a Medco P&T Committee on Formulary or product
utilization choices in a therapeutic category that includes a Merck Product,
such Medco Party shall recommend that such Merck Product be classified by the
Medco P&T Committee as an Acceptable Formulary Product or Mandatory Formulary
Product.

                                       18

<PAGE>

           (c)  Notwithstanding anything contained herein to the contrary, a
Medco P&T Committee may at any time determine to classify or reclassify a
Pharmaceutical Product to be an Unacceptable Formulary Product as a result of
clear and demonstrated objective safety reasons based on valid scientific data
or authorized FDA directives specifically concerning the safety of such product.

           2.6. Adverse Impact on a Plan Sponsor/Access Disqualified Plan.

           (a)  In the event that, in any Calendar Quarter, Medco fails, with
respect to any Merck Product under any Medco Plan, to comply fully with its best
efforts obligations under Section 2.3, such failure shall not constitute a
breach of Section 2.3 if and to the extent that (x) Medco's compliance with such
obligations would have a clear and objective material adverse economic impact on
a Plan sponsor (provided that nothing in Section 2.6 shall excuse Medco from
taking any action that it would otherwise be required to take to comply with
Section 2.3 if and to the extent that such action would not have a clear and
objective material adverse economic impact on a Plan sponsor) and (y) Medco
complies with Section 2.7(iii).

           (b)  In the event that, with respect to any given Calendar Quarter,
(1) a Medco Plan constitutes an Access Disqualified Plan with respect to one or
more Merck Products for which the Medco Plan did not constitute an Access
Disqualified Plan with respect to the preceding Calendar Quarter and (2) for the
immediately preceding Calendar Quarter, the sum of the Aggregate Medco Cost for
all Eligible Prescriptions of such Merck Product or Merck Products under such
Medco Plan constituted 20% or more of the sum of the Aggregate Medco Cost for
all Eligible Prescriptions of all Merck Products for which such Medco Plan did
not constitute an Access Disqualified Plan with respect to the preceding
Calendar Quarter, Merck shall have the right to elect, with respect to such
given Calendar Quarter, that no Individual Formulary Access Rebate Amount shall
be paid in respect of any Eligible Prescription under such Medco Plan. Merck
shall not be entitled to make the foregoing election with respect to a Medco
Plan for a given Calendar Quarter if such Plan was not a Medco Plan during the
immediately preceding Calendar Quarter.

           (c)  Nothing contained in Sections 2.1 or 2.3 shall be interpreted to
prohibit any Medco Party from representing to Medco Plans and sponsors thereof
on any Standard Medco Formulary or on any other Formulary, for any Merck
Product, the daily cost of therapy for a Merck Product relative to Basis
Competitive Products; provided, that, any such representation of relative daily
cost of therapy shall be based upon relative net effective cost to the relevant
Plan.

           2.7. Affirmative Obligations. Medco shall be subject to the following
additional affirmative obligations from and after the date of the execution of
this Restated Agreement:

                                       19

<PAGE>

           (i)   To provide fair clinical and economic comparisons of each Merck
Product, Competitive Product and Basis Competitive Product to existing,
potential or new Medco Plans, their sponsors and, to the extent such comparisons
are provided, to Plan P&T Committees;

           (ii)  To base modeling and presentations, with respect to Merck
Products, Competitive Products and Basis Competitive Products on complete and
accurate data and reasonable methodologies and assumptions;

           (iii) To conduct appropriate monitoring and to notify Merck on a
monthly basis, on the last business day of each month during which Medco learns
or obtains information that a Medco Plan or its sponsor or Plan P&T Committee is
considering (1) not adopting or not adhering to a Standard Medco Formulary or a
Rebate-Eligible Customized Medco Formulary by, among other things, removing a
Merck Product from its Formulary or assigning a Formulary status to a Merck
Product that is less favorable than such Merck Product's Formulary status under
a Standard Medco Formulary, (2) implementing any Utilization Controls with
respect to Merck Product(s) under which such Merck Products will be treated less
favorably than under the Rebate-Eligible Utilization Controls, (3) making Merck
Products available on a Basis that is less favorable than Basis Competitive
Products or otherwise disadvantaging a Merck Product relative to Basis
Competitive Products, (4) disadvantaging the entire Basis Therapeutic Category
or Therapeutic Category in which a Merck Product is included, (5) implementing
clinical program(s) which negatively impact a Merck Product or the Basis
Therapeutic Category or Therapeutic Category in which a Merck Product is
included, (6) conducting a routine review or evaluation of a Therapeutic
Category or Basis Therapeutic Category, or (7) restricting the availability of a
Merck Product for any indication for which such Merck Product may be legally
prescribed. In addition to such monthly reporting obligation, Medco shall
provide notification to Merck by e-mail on the last business day of any week
during which Medco learns or obtains information that a Medco Plan, or its
sponsor or Plan P&T Committee is considering any action described in clauses (1)
through (7) above that could result in a change with a potential to impact a
Merck Product. In connection with any notice referred to above in this clause
(iii), Medco shall provide to Merck any information in Medco's possession
relating to the applicable circumstances in clauses (1) through (7) above
(including, without limitation, such economic and other information that forms
the bases for Medco's view that any circumstance in clauses (1) through (7)
above may become applicable). In the event that Medco learns or obtains
information that an existing, potential or new Medco Plan, sponsor or Plan P&T
Committee is considering any of the actions described in clauses (1) through (7)
above, Medco shall use its best efforts to ensure that Merck will have adequate
opportunity to provide complete and accurate information and communications in a
timely fashion (and in any event prior to the time action is taken by Medco, any
Plan sponsor and/or Plan P&T Committee that would adversely affect Merck) to
such Medco Plan, its sponsor or Plan P&T Committee and to discuss with Medco and
the relevant

                                       20

<PAGE>

Plan sponsor(s) and/or Plan P&T Committee to seek to resolve such circumstance.
Medco shall cooperate with Merck in connection with the foregoing, including
participating in any meetings requested by Merck and assisting Merck in seeking
to resolve such circumstance. Medco shall keep Merck informed on a current basis
of any developments of which Medco learns or obtains information relating to any
circumstance referred to in this paragraph. Medco's providing of notice or
information to Merck as contemplated by this Section 2.7(iii) and Merck's taking
of any action in response to, or in connection with, such notice or information
from Medco shall not excuse any failure by Medco to comply with any of its
obligations under this Restated Agreement, including Sections 2.1, 2.2, 2.3,
2.4, 2.5, 2.7 and 6.1. Medco represents and warrants to Merck that, as of the
Effective Date of this Restated Agreement, Medco has no reason to expect that
any such circumstances in clauses (1) through (7) above may become applicable
with respect to any Merck Product or Merck Products at one or more Medco Plans
or any Plan sponsor;

           (iv) In connection with any notice provided by Medco to Merck as set
forth in the foregoing clause (iii) of this Section 2.7, to provide to Merck,
upon Merck's request, Medco's assumptions, methodologies, market share and Merck
Product cost information used to evaluate any Merck Product, Merck program or
Utilization Controls with respect to any Merck Product or its therapeutic
category. Medco shall use its best efforts to provide Merck with the opportunity
to review such information at least 5 business days before Medco uses any such
information in any presentations to, or incorporates such items in presentations
to any existing, potential or new Medco Plan or the sponsor thereof; provided,
however, in the event that notwithstanding Medco's best efforts, Medco is unable
to provide Merck with the opportunity to review such information at least 5
business days before Medco uses such information in any presentations to, or
incorporates such items in presentations to, any existing, potential or new
Medco Plan or the sponsor thereof, Medco shall provide Merck with an opportunity
to review such information as much time prior to Medco's use of such information
as is possible. In any event, Medco shall provide Merck with the opportunity to
review such information prior to or at the same time that Medco uses such
information in any presentations to, or incorporates such items in presentations
to, any existing, potential or new Medco Plan or the sponsor thereof;

           (v)  To offer Merck the opportunity to review and comment on the
accuracy and labeling consistency of clinical information to be utilized by
Medco or utilized by or made available to existing, potential or new Medco
Plans, their sponsors and Plan P&T Committees, in connection with any clinical
review of any Merck Product, Merck program or Utilization Controls with respect
to any Merck Product, in advance of Medco's utilizing or making available such
information;

           (vi) To provide Merck, during two times each Calendar Year as such
times are determined by Merck in its sole discretion, upon reasonable notice to
Medco,

                                       21

<PAGE>

with the opportunity to discuss in-depth with Medco's clinical and economic
influencers and decision makers the clinical and economic benefits of Merck
Products, including a review of the information described in clause (v) above;

           (vii)  To ensure that any recommendation or suggestion that Medco
makes to an existing, potential or new Medco Plan or sponsor concerning choices
relating to Formularies or utilization of Pharmaceutical Products in the
therapeutic categories in which Merck Products are included follow the
requirements of Section 2.5; and

           (viii) To present accurate and complete clinical and economic
information about relevant Merck Products to a Medco Plan and its sponsor at the
time Medco negotiates or renegotiates its contract with, or discusses pricing
with, such Plan or its sponsor, if, with respect to the then most recently
completed Calendar Quarter, such Plan was ineligible to receive an Individual
Formulary Access Rebate Amount with respect to any Merck Product due to (i) the
failure of such Medco Plan or its sponsor to adhere to either a Standard Medco
Formulary in compliance with Section 2.1(a) or a Rebate-Eligible Customized
Medco Formulary, or (ii) the implementation by such Medco Plan or sponsor of
Non-Rebate Eligible Utilization Controls.

3. Performance Parameters.

           3.1.   Performance Requirements. For each Calendar Quarter beginning
on or after July 1, 2002, the MAS Premium Percentage of all Merck Products under
all Eligible Medco Plans in the aggregate shall be no less than the Minimum MAS
Premium Percentage of all Merck Products for such Calendar Quarter.

           3.2.   Liquidated Damages.

           (i)    In the event that, for any Calendar Quarter, the Merck
Products fail to achieve the Minimum MAS Premium Percentage for such Calendar
Quarter required by Section 3.1, Medco shall pay to Merck, as liquidated
damages, an amount equal to the product obtained by multiplying (x) the excess
of (i) the amount determined by multiplying (A) the Merck Quarterly Revenue
Amount for such Calendar Quarter by (B) a fraction, (I) the numerator of which
shall be equal to the sum of the Minimum MAS Premium Percentage for such
Calendar Quarter plus 100% and (II) the denominator of which shall be equal to
the sum of the MAS Premium Percentage for such Calendar Quarter plus 100%, over
(ii) the Merck Quarterly Revenue Amount for such Calendar Quarter by (y) the
Applicable Percentage.

           (ii)   Any payment required to be made by Medco pursuant to 3.2(a)
shall be paid to Merck within ten business days after Medco's receipt of a
written request for such payment from Merck setting forth the calculations used
by Merck in determining the amount of such payment.

                                       22

<PAGE>

           (iii) The parties agree that Merck's rights under this Section 3.2
shall not in any way impair Merck's rights to pursue any equitable remedy it may
be entitled to pursue against Medco. The parties further agree that the
agreement contained in Section 3.1 is an integral part of this Restated
Agreement, that the damages that would be suffered by Merck as a result of
Medco's failure to meet its obligations with respect to the required Minimum MAS
Premium Percentage are inherently incapable of precise calculation and that the
amounts that Merck is entitled to receive under this Section 3.2 as a result of
any such failure are reasonable. The parties agree that the amounts payable to
Merck under this Section 3.2 constitute liquidated damages and not a penalty.

4. Rebates.

           4.1.  Rebate Eligibility. With respect to each Calendar Quarter
beginning July 1, 2002, Medco shall be eligible to receive rebates, if any, with
respect to Merck Products determined in accordance with Annexes A and B.

           4.2.  Commercially Reasonable Efforts.

           (a)   Definitions:

           "Comparator Group" means those pharmacy benefit managers in the U.S.
(other than Medco Parties) selected by Merck, to which Merck granted Price
Reductions on a significant selection of Merck Products during the relevant
Calendar Year and whose business, in Merck's judgment, resembles Medco's books
of business among companies competing as pharmacy benefit managers in the U.S.;
provided, that, the Comparator Group shall not include Affiliates of any health
maintenance organization or other similar managed care organization or of any
pharmaceutical manufacturer.

           "Comparator PBM" means the pharmacy benefit manager of the Comparator
Group which, during the relevant Calendar Year, received actual Price Reductions
from Merck on its utilization of Merck Products, measured in the aggregate
across all Merck Products that in the aggregate were the greatest Price
Reductions received by any member of the Comparator Group.

           "Price Reductions" means discounts, rebates or other price reductions
on Merck Products calculated as a percentage of product utilization with
reference to the Catalog Price thereof. Price Reductions shall not include
payments pursuant to service agreements or any other arrangement other than one
under which the customer receives rebates, discounts or other price reductions
calculated as a percentage of product utilization by a group of Members. Price
Reductions shall be deemed to occur in the Calendar Quarter of utilization,
notwithstanding that the payment of such Price Reductions by Merck may not occur
until later as a result of the submission and reconciliation of data.

                                       23

<PAGE>

                 (b) Determining Rebate Levels. In determining rebate levels
available to Medco in each Calendar Year commencing with Calendar Year 2003,
Merck shall use commercially reasonable efforts (including by adjusting the
parameters for determining the amount of the rebates Medco is entitled to
receive in accordance with Annexes A and B) to ensure that, provided that
throughout such Calendar Year Medco is in full compliance with all of its
obligations under Articles 2 and 7, and Sections 10.1, 10.3, 10.5, 10.6, 12.4,
12.8 and 12.9 of this Restated Agreement, Medco will have the opportunity to
earn Price Reductions for Merck Products dispensed during such year pursuant to
Eligible Prescriptions, which, when measured in the aggregate across all Merck
Products are as favorable to Medco as the Price Reductions actually earned by
the Comparator PBM for Merck Products dispensed during the relevant Calendar
Year, measured in the aggregate across all Merck Products, taking into account
and adjusting for the following factors at the Comparator PBM (but only to the
extent that such factors can be identified and measured based on publicly
available information, e.g., formularies available to physicians, benefit design
information available to Members, IMS market share data, etc.) and at Medco:

(i)   Formulary design and Formulary status of Merck Products;

(ii)  Access to Merck Products by Members;

(iii) Applicable controls and interventions;

(iv)  Plan benefit design (e.g., co-payment structure and amount of differential
co-payments, number of Competitive Products in Therapeutic Categories, etc.);

(v)   Market share for Merck Products; and

(vi)  Equalization of data parameters (collectively, the "Factors").

The determination of rebate levels as set forth above shall be made by Merck
based on (a) information about Medco in Merck's possession, (b) information
about Price Reductions actually earned by members of the Comparator Group for
Merck Products dispensed during the relevant Calendar Year, and (c) publicly
available information about the Factors as relating to the members of the
Comparator Group. All of the Factors shall be taken into account and shall be
weighted as appropriate to reasonably compare the Comparator PBM with Medco. In
determining rebate levels available to Medco and whether Medco will have the
opportunity to earn rebates as specified above, the provisions of this Restated
Agreement relating to Merck's remedies, including without limitation those
provisions which may under specified circumstances reduce or eliminate rebates
or require the payment of liquidated damages to Merck, shall be disregarded.

Medco acknowledges and agrees that Merck's contracts with Medco's competitors,
including those constituting the Comparator Group ("Competitor Agreements"),
contain

                                       24

<PAGE>

provisions which require Merck to treat and maintain certain information as
confidential and which, in some cases, restrict Merck's use of certain
information. In fulfilling its obligations under this Section 4.2 and Section
4.3, Merck will not be required to violate any of its obligations under any
Competitor Agreement. In no event will Merck be required to provide information
with respect to any member of the Comparator Group on an individual basis in
connection with any review or other proceeding relating to the subject matter of
this Article 4. Carve-Ins will not be taken into account in measuring the level
of Price Reductions in the Comparator PBM or Medco. A "Carve-In" is an
arrangement in which a specific Plan under a pharmacy benefit manager agrees,
either separately or through the pharmacy benefit manager, to treat one or more
Merck Products in a more advantageous fashion than such Merck Products are
treated by Plans under the pharmacy benefit manager generally in exchange for
higher discounts on such Merck Products.

     4.3. Independent Verifying Party.

     (i)  In the event that with respect to any Calendar Year after 2002 (other
than the Calendar Year 2006, which shall not be subject to review) Medco shall
notify Merck in writing not later than January 31 of the succeeding Calendar
Year that in its view Merck has failed to comply with Section 4.2 hereof with
respect to the previous Calendar Year, Merck shall appoint a nationally-
recognized accounting firm that has not had a material relationship with Merck
during the prior twelve month period to review Merck's determination pursuant to
Section 4.2 (the "Independent Verifying Party"). The fees and expenses of the
Independent Verifying Party shall be equally shared by Merck and Medco. Review
by an Independent Verifying Party under Sections 4.3 and 4.4 shall occur not
more than once per Calendar Year and only at the specific request of Medco.

     (ii) Merck shall provide to the Independent Verifying Party the results of
Merck's analysis pursuant to Section 4.2 on a blinded, aggregate basis, such
that the identity of any member of the Comparator Group shall not be disclosed
and the only Price Reductions disclosed shall be the Price Reductions, measured
in the aggregate across all Merck Products, which were actually earned by each
member of the Comparator Group during the relevant Calendar Year. Merck shall
also provide to the Independent Verifying Party the publicly available
information concerning the Factors that Merck employed in its analysis under
Section 4.2. Medco shall provide to the Independent Verifying Party access to
such information requested by the Independent Verifying Party and reasonably
available to Medco regarding Medco Plans, including the Formulary status of
Merck Products, the level of access of Members to Merck Products and quantities
of Merck Products dispensed to different groups of Members under such Medco
Plans, and the Factors as applied to Medco with respect to Merck Products. For
purposes of the verification process conducted by the Independent Verifying
Party, Merck shall provide information with respect to the Comparator PBM and
the Comparator Group and Medco shall provide information with respect to Medco,
in each

                                       25

<PAGE>

case for the first three Calendar Quarters of the relevant Calendar Year. The
Independent Verifying Party shall be instructed not to, and shall not, disclose
to a party or its Affiliates or Representatives or to any other Person any
information provided to the Independent Verifying Party by or on behalf of the
other party. The sole purpose of the Independent Verifying Party is to determine
and report to Merck and Medco whether Merck reasonably applied the standard set
forth in Section 4.2 in determining the rebates available to Medco.

     (iii) The Independent Verifying Party shall be instructed to prepare and
deliver to the parties, as promptly as practicable (but in any event within 45
days after the Independent Verifying Party's retention) a report setting forth
its conclusion as to whether Merck reasonably applied the standard set forth in
Section 4.2 in determining the rebates available to Medco. If the Independent
Verifying Party concludes that Merck failed to satisfy such obligation, the
Independent Verifying Party shall set forth in its report delivered to the
parties its conclusion as to the additional aggregate rebate amount, if any (the
"Additional Rebate Amount"), which Medco would have been entitled to receive in
respect of all Merck Products, in the aggregate, had Merck satisfied such
obligation. The conclusions of the Independent Verifying Party shall be final
and binding on the parties. The Independent Verifying Party shall not disclose
to Medco or Merck, as the case may be, in such report or otherwise, any
Confidential Information disclosed by the other to the Independent Verifying
Party.

     4.4.  Rebate Adjustment.

     (i)   In the event that the Independent Verifying Party shall determine
that Medco is entitled to an Additional Rebate Amount with respect to any
Calendar Year, Merck shall adjust the rebates for the four consecutive Calendar
Quarters commencing with the Calendar Quarter beginning July 1 of the Calendar
Year in which the Independent Verifying Party determines that Medco is entitled
to an Additional Rebate Amount in such a way that Medco will have an opportunity
to earn the Additional Rebate Amount during that period of four consecutive
Calendar Quarters in addition to the rebates it would otherwise have an
opportunity to earn during those Calendar Quarters. Notwithstanding anything
herein to the contrary, Medco shall be entitled to no Additional Rebate Amount
and no such adjustment will be required or made to the extent that, in the
judgment of Merck, any such Additional Rebate Amount or any such adjustment
would, alone or together with any other price reduction or other payment
pursuant to this Restated Agreement (including any rebate or prompt payment
discount) at any time available to any Medco Party, establish a new Best Price
for Merck during any period with respect to any Merck Product, and the amount of
any Additional Rebate Amount to which Medco would otherwise be entitled under
this Section 4.4 shall be allocated and reduced to the extent necessary in the
judgment of Merck so that such Additional Rebate Amount shall not establish a
new Best Price with respect to any Merck Product.

                                       26

<PAGE>

      (ii) Medco's sole remedy for Merck's failure to comply with Sections 4.2
and 4.3 shall be its right to have its rebates prospectively adjusted in
accordance with the terms of this Section 4.4.

5. Purchase Requirements.

      5.1. Requirements. From and after January 1, 2003, Medco shall purchase
directly from Merck all Merck Products to be dispensed by or on behalf of the
Medco Mail Service Pharmacies subject to Merck's distribution policies and in
accordance with Merck's standard terms and conditions as they may change from
time to time during the remainder of the term of this Restated Agreement. During
the term of this Restated Agreement, no Medco Party shall purchase any Merck
Products to be dispensed by or on behalf of any Medco Mail Service Pharmacy from
any Person other than Merck and all Merck Products dispensed by or on behalf of
any Medco Mail Service Pharmacy during the term of this Restated Agreement shall
have been purchased by a Medco Party directly from Merck.

      5.2. Terms. All purchases of Merck Products by Medco parties pursuant to
Section 5.1 shall be at the Catalog Price for such Merck Products as in effect
at the time of shipment thereof and otherwise on Merck's standard terms and
conditions (including with respect to prompt payment discounts) as may from time
to time be in effect.

6. Best Efforts for Merck Products.

      6.1. Best Efforts. Without limiting any of the obligations of Medco under
this Restated Agreement, including, without limitation, Article 2, Medco shall,
shall cause all other Medco Parties to, and shall use its best efforts to cause
each Medco Plan to, (i) avoid any practice which directly or indirectly
restricts, discourages or discriminates against use of Merck Products and not
take action to prefer, or encourage the use or exchange of any Competitive
Product over or for any Merck Product, in each case, except for clear and
objective safety reasons based on valid scientific data or authorized FDA
directives specifically concerning the safety of such products or where such
actions would have a clear and objective material adverse economic impact on a
Plan sponsor, and (ii) encourage utilization of Merck Products by Members of
Medco Plans where medically appropriate. Notwithstanding the foregoing, Medco
Parties may prefer generic drug products as a Formulary choice; provided,
however, that no Medco Party may actively attempt to switch prescriptions
written for a Merck Product for a generic drug product, other than in accordance
with Medco's Generics First program or any successor program with respect to
products which no longer constitute Pharmaceutical Products, unless Medco
Parties are making an identical attempt to switch prescriptions written for
Competitive Products to that generic drug product. Best efforts under this
Section 6 shall include ensuring that any management, administrative or other
fees payable to Medco Parties by any Eligible Medco Plan shall be calculated on
the

                                       27

<PAGE>

same basis, and shall be payable at a rate that shall not exceed, the
management, administrative or other fees payable to Medco Parties by such
Eligible Medco Plan with respect to the products of other manufacturers.

      6.2. Notification of Exceptions. If at any time Medco learns, or has
reason to expect, that the exceptions set forth in clause (i) of Section 6.1 may
become applicable with respect to any Merck Product or Merck Products at one or
more Medco Plans, Medco shall provide written notice to Merck within 5 business
days after Medco learns of or expects such circumstance, together with any
information in Medco's possession relating thereto (including, without
limitation, such economic and other information that forms the bases for Medco's
view that the exceptions set forth in clause (i) of Section 6.1 may become
applicable), in order to permit Merck to engage in discussions with Medco and
with the relevant Medco Plan sponsor(s) to seek to resolve such circumstance.
Medco shall cooperate with Merck in connection with the foregoing, including
participating in any meetings requested by Merck and assisting Merck in seeking
to resolve such circumstance. Medco shall keep Merck informed on a current basis
of any developments relating to any circumstance referred to in this paragraph
and shall provide Merck with adequate opportunity to take actions to resolve
that circumstance in a timely manner and in any event prior to the time action
is taken by Medco or any Medco Plan sponsor that would adversely affect Merck.

      6.3. No Excuse of Failure to Perform. For the avoidance of doubt, Medco's
providing of notice or information to Merck as contemplated by Section 6.2 and
Merck's taking of any action in response to, or in connection with, such notice
or information from Medco shall not excuse any failure by Medco to comply with
any of its obligations under this Restated Agreement, including Sections 2.1,
2.2, 2.3, 2.4, 2.5, 2.7 and 6.1 (without regard for the exceptions set forth in
clause (i) of Section 6.1). Medco represents and warrants to Merck that, as of
the Effective Date, Medco has no reason to expect that that the exceptions set
forth in clause (i) of Section 6.1 may become applicable with respect to any
Merck Product or Merck Products at one or more Medco Plans of any Plan sponsor.

7. Information and Data Requirements.

      7.1. Periodic Information Delivery. At Medco's expense, Medco shall
provide to Merck promptly (x) (but in any event within 30 days) after each month
Medco Market Share data for such month for each Merck Product and each
Competitive Product by Eligible Medco Plan, for all Eligible Medco Plans, in the
aggregate, and by Distribution Channel, (y) within 90 days following each
Calendar Quarter, the information specified in Section 7.2(a) and (z) (but in
any event within 30 business days) after a written request therefor, all other
data and information requested by Merck for purposes of administering this
Restated Agreement.

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<PAGE>

      7.2.  Quarterly Data. (a) Within 90 days following the close of each
Calendar Quarter, Medco shall deliver to Merck, in a mutually acceptable
electronic format, the information specifically described in Schedule 7.2(a) and
such other information available to and retrievable by Medco (with the cost and
expenses of obtaining and retrieving such information to be paid by Medco) as
Merck shall deem reasonably necessary for purposes of determining the rebate, if
any, Medco shall be entitled to under this Restated Agreement (collectively, the
"Quarterly Data"); provided, that, Medco may provide to Merck in hard copy
format (rather than in electronic format) that portion of such information that
in the ordinary course of business Medco does not maintain in electronic
databases (e.g., lists of Utilization Controls) so long as such information
provided in hard copy format is orderly, accessible, complete and accurate. The
Quarterly Data submitted by Medco shall identify, with respect to each Merck
Product dispensed under each Medco Plan during the applicable Calendar Quarter,
whether prescriptions for such Merck Product dispensed under such Medco Plan are
eligible for any Formulary Access Rebate Amount, specifying whether for such
Calendar Quarter such Merck Product was (i) On Formulary under such Medco Plan,
(ii) subject to Non-Rebate-Eligible Utilization Controls under such Medco Plan,
or (iii) not available to Members under such Medco Plan on a Basis at least as
favorable as the Basis upon which any Basis Competitive Product is available to
Members under such Medco Plan. The Quarterly Data shall include a "Quarterly
Utilization Controls Report" disclosing all Utilization Controls that are in
place for each Medco Plan during the Quarter. For each Plan, this report shall
include the following group-level data: (1) electronic data showing all "point
of adjudication" Utilization Controls - e.g., electronic coverage management
rules, CDUR, RDUR, RationalMed, and prior authorizations -- that are in place at
such Plan on the 45th day of the applicable Calendar Quarter (the "snapshot");
(2) electronic or hard copy data showing all switch programs, teleconsulting,
facsimile intervention, counterdetailing, and similar controls that are
implemented at any time during the applicable Calendar Quarter; and (3)
electronic or hard copy data showing all other interventions or communications
that are implemented at any time during the applicable Calendar Quarter that
would constitute Utilization Controls, provided that interventions and
communications implemented solely by Plans (without the participation of Medco)
must be reported only when and to the extent that Medco is aware of such
interventions and communications.

            (b)  In connection with Merck's making a rebate payment to Medco in
accordance with Annex A to this Restated Agreement with respect to a Calendar
Quarter, Merck shall deliver to Medco, in a mutually acceptable electronic
format, the information specified in Schedule 7.2(b).

      7.3.  General Information Delivery. At Medco's expense, Medco shall
promptly (but in any event within 30 business days of any request) provide to
Merck any information that is at any time requested by Merck that is relevant to
the performance by the parties of this Restated Agreement or relates to the
Merck Products, including, but not

                                       29

<PAGE>

limited to, information regarding drug management techniques that affect the
utilization of Merck Products.

      7.4. Maintenance of Records. Medco shall accurately collect and retain in
records and databases that are available, accessible and retrievable (including,
subject to the last sentence of this Section 7.4, electronically in a format
accessible by using standard forms of querying) all information required to be
provided to Merck in accordance with this Restated Agreement, including any
information requested by Merck in accordance herewith and information necessary
to determine if any representation or warranty made by Medco was true at the
time made or deemed made hereunder. Medco shall ensure that such records and
databases are available and accessible to, and the information contained therein
is readily retrievable (including, subject to the last sentence of this Section
7.4, electronically in a format accessible by using standard forms of querying)
by, Merck or any independent third-party auditor, upon their request, in
connection with any review or audit conducted pursuant to Section 10.1. Medco
may satisfy its obligations set forth above in this Section 7.4 with respect to
records that in the ordinary course of business are normally maintained by Medco
in hard copy format (and not electronically) by collecting, retaining and making
available such records and databases in hard copy format in a manner that is
orderly, accessible, complete and accurate.

      7.5. Accuracy of Data. All data and information, including Quarterly Data
and information relating to Formulary status, benefit design, Utilization
Controls, and whether a Medco Plan constitutes a High Control Eligible Medco
Plan or General Control Eligible Medco Plan provided by Medco to Merck pursuant
to this Restated Agreement (including, without limitation, Section 10.6) shall
be accurate and complete.

8. Term. The term of this Restated Agreement shall commence as of the Effective
Date and shall remain in effect until July 1, 2007, unless earlier terminated in
accordance with the next sentence. The term of this Restated Agreement may be
terminated at any time either by mutual agreement of the parties or at the
option of Merck, upon 120 days' written notice from Merck to Medco; provided,
that, any such termination at the option of Merck shall not be effective prior
to July 1, 2003. The termination or expiration of this Restated Agreement shall
not relieve any party of any obligation or liability it may have to the other in
respect of any period prior to such expiration or termination nor shall it
relieve any party from its obligations under Sections of this Restated Agreement
that by their terms survive after the expiration or termination of this Restated
Agreement.

                                       30

<PAGE>

9. DISPUTE RESOLUTION. ANY DISPUTE, CONTROVERSY OR CLAIM (A "DISPUTE") BETWEEN
THE PARTIES HERETO ARISING OUT OF OR RELATING TO THIS RESTATED AGREEMENT,
INCLUDING, WITHOUT LIMITATION, DISPUTES CONCERNING THE VALIDITY, INTERPRETATION
OR PERFORMANCE OF OR UNDER THIS RESTATED AGREEMENT OR ANY TERM OR PROVISION
HEREOF, SHALL BE EXCLUSIVELY GOVERNED BY AND SETTLED IN ACCORDANCE WITH THE
PROVISIONS OF THIS ARTICLE 9. THE TERMS OF THIS ARTICLE 9 SHALL SURVIVE THE
EXPIRATION OR TERMINATION OF THIS RESTATED AGREEMENT.

         9.1. Negotiation. The parties shall make a good faith attempt to
resolve any Dispute through negotiation. Within ten (10) days after notice of a
Dispute is given by any party, each party shall select one or more
Representatives who are vice presidents, senior vice presidents or executive
vice presidents of such party and shall notify the other party in writing of the
names and contact details of its Representatives, which Representatives shall
meet and make a good faith attempt to resolve such Dispute and shall continue to
negotiate in good faith in an effort to resolve the Dispute without the
necessity of any formal proceedings. The specific format for such negotiations
will be left to the discretion of the designated Representatives but may include
the preparation of agreed upon statements of fact or written statements of
position furnished to the other party.

         9.2. Binding Arbitration.

         (i)  If such Representatives fail to resolve a Dispute within ten (10)
days after the date of delivery of the letter of the notices of selection of the
Representatives, unless otherwise mutually agreed, either party shall have the
right to submit such Dispute to final and binding arbitration. It is the intent
of the parties that any such arbitration be structured in such a way as to
result in a resolution of such Dispute as promptly as practicable in accordance
herewith. Except as otherwise provided in this Article 9, any arbitration shall
be conducted pursuant to the then current Rules for Non-Administered Arbitration
of the Center for Public Resources ("CPR Rules"), and the site of the
arbitration shall be New York County, New York.

         (ii) A party (a "Disputing Party") shall institute any arbitration
proceeding hereunder by providing written notice thereof to the other party (the
"Arbitration Demand") which shall describe in reasonable detail the nature of
the Dispute, the claims of the Disputing Party and the requested relief and, if
the Disputing Party is Merck, setting forth a list of at least five potential
independent and impartial arbitrators selected by Merck, each of whom shall not
have a personal or financial interest in the result of the arbitration or the
parties to the arbitration (provided that ownership of shares in a mutual fund
that owns securities of either of the parties shall not be considered a personal
or financial interest for this purpose) and shall be experienced in

                                       31

<PAGE>

representing clients in commercial arbitrations. Within thirty (30) days after
the other party's receipt of the Arbitration Demand, such other party shall
furnish the Disputing Party with a written statement (a "Response Statement")
(1) answering the claims set forth in the Arbitration Demand, (2) asserting any
counterclaim, describing in reasonable detail the nature of the Dispute relating
to such counterclaim and the requested relief for such counterclaims, and (3) if
such other party is Medco, selecting as the sole arbitrator for the proceeding
one of the potential arbitrators listed in the Arbitration Demand or if such
other party is Merck, setting forth a list of at least five potential impartial
arbitrators selected by Merck, each of whom shall not have a personal or
financial interest in the result of the arbitration and shall be experienced in
representing clients in the subject matter of the Dispute. If the Disputing
Party is Medco, Medco shall notify Merck within ten (10) business days of
Medco's receipt of the Response Statement of Medco's selection as the sole
arbitrator for the proceeding from the potential arbitrators listed in the
Arbitration Demand. If Medco fails within the applicable time period to select
an arbitrator from the list of potential arbitrators included in Merck's
Arbitration Demand or Response Statement, as applicable, an arbitrator shall be
selected in accordance with the CPR Rules from such list of potential
arbitrators.

         (iii) With respect to discovery in an arbitration proceeding, the
arbitrator must allow either party to make discovery requests for documents of
the other party where the information sought is reasonably calculated to lead to
the discovery of admissible evidence, and each party agrees to respond to such
discovery request within a reasonable time. The arbitrator is obligated to
construe the term "document" liberally to encompass data compilations in any
form.

         (iv)  The arbitrator shall be instructed to use best efforts to
complete all arbitration hearings no later than three (3) months from the date
of the arbitrator's appointment and use best efforts to render a decision within
four (4) months from the date of the arbitrator's appointment.

         (v)   In the case of a Dispute between the parties, the arbitrator
shall allocate responsibility between the parties for the expenses, including
costs and reasonable attorneys' and other professional fees, incurred by the
parties in connection with the arbitration (including the fees and expenses of
the arbitrator), in a manner that the arbitrator deems appropriate in light of
the claims, and responses thereto, made by the parties and the ultimate success
of the parties with respect to such claims and responses.

         (vi)  In connection with any Dispute, the arbitrator shall apply solely
principles of law.

         (vii) The decision of the arbitrator shall be final and non-appealable
and may be enforced in any court of competent jurisdiction.

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<PAGE>

         (viii) The use of any alternative dispute resolution procedures will
not be construed under the doctrine of laches, waiver or estoppel to adversely
affect the rights of either party.

         9.3.   Sensitive Information. During the course of negotiations and
arbitration under this Article 9, all reasonable requests made by one party to
the other for information, including requests for copies of relevant documents,
will be honored; provided, however, that Merck shall be under no obligation to
furnish to Medco or to the arbitrator any information or documents if in the
judgment of Merck such information or documents include or contain competitively
sensitive data or information subject to a confidentiality agreement with any
other Person; provided, however, that this provision shall not be interpreted to
apply to any information or document other than the portion of such information
or document that in the judgment of Merck is competitively sensitive or subject
to a confidentiality agreement.

         9.4.   Equitable Relief. Medco agrees and acknowledges that Merck would
suffer irreparable harm in the event that Medco fails to perform any of its
obligations hereunder in accordance with its specific terms or otherwise
breaches any of such obligations. Medco further agrees and acknowledges that
money damages may be an inadequate remedy for such failure to perform or breach
by Medco. Accordingly, notwithstanding anything herein to the contrary, and
without waiving any remedy hereunder, Merck shall be entitled to seek specific
performance by Medco of its obligations under Articles 2, 3, 5, 6, 7, this
Article 9, and Sections 10.1, 10.2, 10.3, 10.6, 10.9, 12.1, 12.4, 12.8 and 12.9
of this Restated Agreement and/or injunctive or other equitable relief to
prevent or cure breaches of Articles 2, 3, 5, 6, 7, this Article 9, and Sections
10.1, 10.2, 10.3, 10.6, 10.9, 12.1, 12.4, 12.8 and 12.9 of this Restated
Agreement in an arbitration proceeding (without first complying with the
negotiation provision of Section 9.1) or in court (subject to Section 12.1).

         9.5.   Continuity of Performance. Unless otherwise agreed in writing,
the parties will continue to honor all other commitments under this Restated
Agreement during the course of dispute resolution pursuant to the provisions of
this Article 9.

10. Certain Covenants.

         10.1.  Audit Rights. Merck, shall have the right, upon at least ten
business days' prior written notice, at Merck's expense, to review and audit (or
to perform other verification procedures with respect to) data and other
documentation of the Medco Parties and Medco Plans as Merck deems reasonably
necessary to verify Medco's performance and compliance with its obligations
under this Restated Agreement. Such review and audit or verification may be
conducted by Merck at least on a quarterly basis and more frequently on no less
than five days prior written notice to Medco. An independent third-party auditor
may, at Merck's expense and in Merck's sole discretion, conduct any such review
and audit or verification; provided, that, such independent third-

                                       33

<PAGE>

party auditor enters into an agreement pursuant to which such auditor agrees to
comply with Section 10.3 with respect to all Confidential Information (as
defined in Section 10.3) provided to it by Medco, not to provide any such
information to any person other than Merck, its Representatives and persons
working on the review, audit or verification process, and not to use any such
information other than in connection with such review, audit or verification. In
connection with any such review, audit or verification, Medco shall cause the
work papers of Medco's internal and external auditors and such other
documentation and information requested by Merck to be made available to Merck
(or any independent third-party auditor) promptly (but in any event within five
(5) business days after request therefor by Merck). Medco agrees that all work
papers, documentation and other information that it may provide to Merck (or the
independent third-party auditors) in connection with any review, audit or
verification shall be accurate and complete. Medco shall also be responsible for
any indemnification required by Medco's external auditors in connection with any
review, audit or verification. Medco acknowledges that Merck's audit and
verification rights hereunder are an integral part of this Restated Agreement
and agrees to cooperate fully and unconditionally with Merck (or any independent
third-party auditor), in connection with such review, audit or verification and
treat any such review, audit or verification procedures with the highest
priority. The terms of this Section 10.1 shall survive the expiration or
termination of this Restated Agreement for a period of five years.

         10.2. Access to Medco Clients. Notwithstanding anything contained in
this Restated Agreement to the contrary, Merck shall have the right to engage in
discussions with any Medco customer, Medco Plan or any sponsor of any Medco Plan
or any Representative thereof that indicates that it may be interested in
working directly with Merck or that it is contemplating or in the process of
terminating its relationship with Medco as it relates to Merck or any Merck
Products. Medco expressly, for itself and all Medco Parties, waives any
provisions in any third party agreements that conflict with this Section 10.2.

         10.3. Confidentiality. (i) Each of Medco and Merck shall, and shall
cause its Affiliates and Representatives to, maintain as confidential, and not
disclose to any Person other than such Party's Representatives (who agree to
comply with the provisions of this Section 10.3) the terms and conditions of
this Restated Agreement, including but not limited to the rebate levels (and the
criteria for Medco's obtaining rebates) for the utilization of Merck Products
provided for hereunder (all such terms and conditions, "Agreement Confidential
Information") or any other proprietary or confidential information disclosed by
the other party (such other information, "Other Confidential Information," and
together with the Agreement Confidential Information, "Confidential
Information"), except when such disclosure is required by law (including,
without limitation, 42 C.F.R. (S) 1001.952(h)(l)), regulation or any judicial or
governmental order or, in the case of Merck only, to its joint venture partners,
co-promotion partners and co-marketing partners on a need-to-know basis;
provided, that (i) Medco may

                                       34

<PAGE>

disclose to any Eligible Medco Plan and the sponsor thereof the net price of
Merck Products to such Plan if such Plan and sponsor are bound by a
confidentiality obligation not to disclose such information to any other Person
and (ii) Medco may disclose the conditions under which Medco is entitled to
rebates under this Restated Agreement to any Eligible Medco Plan or the sponsor
thereof, or any independent third-party auditor of such Eligible Medco Plan or
sponsor, so long as (i) Medco simultaneously discloses to such Eligible Medco
Plan, sponsor or auditor similar information regarding the conditions under
which Medco is entitled to rebates under its agreements with all other
pharmaceutical manufacturers, (ii) Medco does not disclose to such Eligible
Medco Plan, sponsor or auditor more information regarding the conditions under
which Medco is entitled to rebates under this Restated Agreement than Medco
discloses to such Eligible Medco Plan, sponsor or auditor regarding the
conditions under which Medco is entitled to rebates under any of its agreements
with any other pharmaceutical manufacturer, and (iii) such Eligible Medco Plan,
sponsor or independent third-party auditor enters into an agreement pursuant to
which such Eligible Medco Plan, sponsor or auditor, as applicable, agrees to
comply with this Section 10.3 with respect to all Confidential Information
provided to such Eligible Medco Plan, sponsor or auditor. Notwithstanding the
foregoing, Confidential Information shall exclude information that: (i) was in
the possession of a party to this Restated Agreement or such party's
Representatives before receipt from the other party; (ii) is or becomes a matter
of public knowledge other than as a result of a breach of this Restated
Agreement by a party to this Restated Agreement or such party's Representatives;
(iii) is rightfully received by a party to this Restated Agreement or such
party's Representatives from a third-party without a duty of confidentiality; or
(iv) is independently developed by a party to this Restated Agreement or such
party's Representatives.

         (ii)  If either party hereto or any of its Affiliates or
Representatives is required by law, regulation or other applicable judicial or
governmental order to disclose any Confidential Information, then that party
shall notify the other party sufficiently in advance of releasing any
Confidential Information to enable the other party to seek an appropriate
protective order. If, failing the entry of a protective order after such
notification, that party is, in the opinion of its counsel, compelled to
disclose Confidential Information, that party may disclose that portion of the
Confidential Information that its counsel advised in writing that the party is
compelled to disclose and will exercise reasonable efforts to obtain assurance
that confidential treatment will be accorded to that portion of the Confidential
Information that is being disclosed. In any event, the disclosing party will not
oppose action by the other party to obtain an appropriate protective order or
other reliable assurance that confidential treatment will be accorded the
Confidential Information.

         (iii) This Section 10.3 shall survive the expiration or termination of
this Restated Agreement for a period of five years.

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<PAGE>

         10.4. Patient Information. Medco will not provide any patient
identifiable information to Merck. Medco will also not provide any other
information the disclosure of which is prohibited by laws or regulations
governing confidentiality of any subject matter, including but not limited to
medical records.

         10.5. Indemnification; Set-Off Rights. (a) Without limiting the right
of Merck and its Affiliates and its other respective Representatives to
indemnification under any agreement between Merck and Medco (and subject to the
provisions and procedures of any such agreement), Medco shall indemnify Merck
and its Affiliates and its and their respective Representatives against any and
all losses, claims, damages or liabilities to any third party, including Plan
sponsors, Plans, Members of Plans, in connection with or as result of the
Original Agreement, this Restated Agreement or the activities carried out
pursuant thereto or hereto. Such indemnification shall be subject to the
indemnification procedures and rules set forth in the Indemnification and
Insurance Matters Agreement to be entered into by and among Merck and Medco;
provided, that, any Dispute with respect to any indemnification obligations
shall be governed by the provisions of this Restated Agreement.

         (ii)  In addition to, and not in limitation of, any other remedies in
which Merck, any of its Affiliates or any of its or their respective
Representatives may be entitled to under other agreements between Merck or its
Affiliates, on the one hand, and Medco and its Affiliates, on the other hand,
Merck shall have the right to satisfy any amounts owed to it, any of its
Affiliates or any of its or their respective Representatives by Medco or any of
its Affiliates under the Original Agreement, the Restated Agreement or any other
agreement or arrangement existing between Medco or its Affiliates, on the one
hand, and Merck or its Affiliates, on the other hand, or otherwise, by means of
an offset against any amounts Merck may from time to time owe to Medco under
this Restated Agreement.

         (iii) The terms of this Section 10.5 shall survive the expiration or
termination of this Restated Agreement.

         10.6. Determination of High Control Eligible Medco Plan Status;
Formulary Managed Medco Plan Status; Rebate-Eligible Utilization Control.

               (a)  Medco has provided to Merck a list (the "High Control
Eligible Medco Plan List") identifying the Eligible Medco Plans which initially
constitute High Control Eligible Medco Plans with respect to Zocor(R), with
respect to all Merck Products other than Zocor(R) or with respect to all Merck
Products (including Zocor(R)), as applicable, as of the date of execution of
this Restated Agreement (subject to any adjustment made in accordance with the
remaining provisions of this Section 10.6(a)). Medco has provided information
regarding the terms and provisions of those Eligible Medco Plans, including
details of benefit design, Formulary status and intervention techniques or other
devices or factors that have the purpose or effect of encouraging or

                                       36

<PAGE>

discouraging utilization of the applicable Merck Products and all Competitive
Products. Merck has determined , with respect to each Medco Plan that the High
Control Eligible Medco Plan List identifies as a High Control Eligible Medco
Plan with respect to a Merck Product, that such Medco Plan shall constitute a
High Control Eligible Medco Plan with respect to such Merck Product, and Merck's
determination shall be binding on the parties, subject to any revisions Merck is
entitled to make pursuant to Section 10.6(b) through (g).

     (b) Within 30 days of a Merck Product first becoming available under any
Eligible Medco Plan, Medco shall provide to Merck with respect to such
applicable Eligible Medco Plan (the "Applicable Eligible Plan"), a written
notice (a "Notification") setting forth (i) the name of the Applicable Eligible
Plan; (ii) the identity of the group of Members and the number of Members in the
Applicable Eligible Plan; (iii) the name of the sponsor of the Applicable
Eligible Plan; and (iv) whether, in Medco's view, the Applicable Eligible Plan
should be deemed to be a High Control Eligible Medco Plan with respect to such
Merck Product. Such Notification shall be accompanied by all information
regarding the terms and provisions of the Applicable Eligible Plan, including
details of benefit design, Formulary status and intervention techniques or other
devices or factors that have the purpose or effect of encouraging or
discouraging utilization of the applicable Merck Product and all Competitive
Products and Basis Competitive Products as shall be necessary to support Medco's
view. Merck shall have the right to request from Medco, and Medco shall promptly
provide to Merck, at Medco's expense, any additional information that Merck
shall deem necessary for purposes of the determination required by this
paragraph. Within 30 days after the receipt by Merck of all such information,
Merck shall determine in its sole discretion whether the Applicable Eligible
Plan shall constitute a High Control Eligible Medco Plan with respect to such
Merck Product and shall notify Medco in writing of its determination. Merck's
determination in accordance with the foregoing shall be binding on the parties,
subject to any revisions Merck is entitled to make pursuant to Section 10.6(b)
through (g).

     (c) Within 30 days of any Medco Party's entering into any agreement or
arrangement for the provision of PBM Services with respect to any Plan that
constitutes a New Medco Plan, Medco shall provide to Merck with respect to the
applicable Medco Plan (the "Applicable Plan"), a written notice (a
"Notification") setting forth (i) the name of the Applicable Plan; (ii) the
identity and the number of Members in the Applicable Plan; (iii) the name of the
sponsor of the Applicable Plan; (iv) whether, in Medco's view, the Applicable
Plan should be deemed to be (A) an Eligible Medco Plan, (B) a Formulary Managed
Medco Plan, and/or (C) with respect to each Merck Product available under the
Applicable Plan, a High Control Eligible Medco Plan. Such Notification shall be
accompanied by all information regarding the terms and provisions of the
Applicable Plan, including details of benefit design, Formulary status and
intervention techniques or other devices or factors that have the purpose or
effect of encouraging or discouraging utilization of Pharmaceutical Products,
including the

                                       37

<PAGE>

utilization of each Merck Product, Competitive Product and Basis Competitive
Product, as shall be necessary to support Medco's view. Merck shall have the
right to request from Medco, and Medco shall promptly provide to Merck, at
Medco's expense, any additional information that Merck shall deem necessary for
purposes of the determination required by this paragraph. Within 30 days after
the receipt by Merck of all such information, Merck shall determine in its sole
discretion whether the Applicable Plan shall constitute (x) an Eligible Medco
Plan, (y) a Formulary Managed Medco Plan, and/or (z) with respect to each Merck
Product available under the Applicable Plan, a High Control Eligible Medco Plan,
and shall notify Medco in writing of its determination. Merck's determination in
accordance with the foregoing shall be binding on the parties, subject to any
revisions Merck is entitled to make pursuant to Section 10.6(b) through (g).

          (d) (i)Within 30 days of (1) any material change in benefit design
with respect to any Merck Product or Competitive Product under any Eligible
Medco Plan, (2) any change under any Eligible Medco Plan to the Formulary status
of (or the co-payment payable by Members for a prescription of) any Merck
Product or any Competitive Product, including the addition of any Competitive
Product to any Formulary under such Plan or (3) any material change to the
intervention techniques or other devices or factors used by or under any
Eligible Medco Plan, with respect to any Merck Product or Competitive Products,
that have the purpose or effect of encouraging or discouraging utilization of
any Merck Product or Competitive Product, Medco shall provide to Merck with
respect to the applicable Eligible Medco Plan (the "Applicable Medco Plan"), a
Notification setting forth (i) the Merck Product(s), Competitive Products in
respect of which the change was made, (ii) the name of the Applicable Medco
Plan; (iii) the identity of the group of Members and the number of Members in
the Applicable Medco Plan; (iv) the name of the sponsor of the Applicable Medco
Plan; (v) a description in reasonable detail regarding the change(s) to the
Applicable Medco Plan; and (vi) whether, in Medco's view, the Applicable Medco
Plan continues to constitute (or now constitutes) a High Control Eligible Medco
Plan with respect to the applicable Merck Product(s). Merck shall have the right
to request from Medco, and Medco shall promptly provide to Merck, at Medco's
expense, any additional information that Merck shall deem necessary for purposes
of the determination required by this paragraph. Within 30 days after the
receipt by Merck of all such information, Merck shall determine in its sole
discretion whether the Applicable Medco Plan continues to constitute (or now
constitutes) a High Control Eligible Medco Plan with respect to the applicable
Merck Product(s), and shall notify Medco in writing of its determination.
Merck's determination in accordance with the foregoing shall be binding on the
parties, subject to any revisions Merck is entitled to make pursuant to Section
10.6(b) through (g).

     (ii) At least 90 days prior to the date that any Eligible Medco Plan that
the High Control Medco Plan List identifies as constituting a High Control
Eligible Medco Plan with respect to Merck Product(s) will become subject to
renewal or extension, Medco shall provide to Merck with respect to the
applicable Medco Plan, a

                                       38

<PAGE>

Notification setting forth (i) the name of the Plan; (ii) information regarding
the terms and provisions of such Plan, including details of benefit design,
Formulary status and intervention techniques or other devices or factors that
have the purpose or effect of encouraging or discouraging utilization of such
Merck Product(s); and (iii) whether, in Medco's view, such Medco Plan as renewed
or extended shall continue to constitute a High Control Eligible Medco Plan with
respect to the applicable Merck Product(s). Such Notification shall be
accompanied by all additional information as shall be necessary to support
Medco's view. Merck shall have the right to request from Medco, and Medco shall
promptly provide to Merck, at Medco's expense, any additional information that
Merck shall deem necessary for purposes of the determination required by this
paragraph. Within 30 days after the receipt by Merck of all such information,
Merck shall determine in its sole discretion whether the applicable Medco Plan
as renewed or extended shall continue to constitute a High Control Eligible
Medco Plan with respect to the applicable Merck Product(s). Merck's
determination in accordance with the foregoing shall be binding on the parties,
subject to any revisions Merck is entitled to make pursuant to Section 10.6(b)
through (g).

          (e) Within 30 days of any Medco Party's entering into any agreement or
arrangement providing for any material change in general benefit design under a
Medco Plan, Medco shall provide to Merck with respect to the applicable Medco
Plan (the "Amended Plan"), a Notification setting forth (i) the name of the
Amended Plan; (ii) the identity of the group of Members and the number of
Members in the Amended Plan affected by the material change in benefit design or
the identity of any new group of Members (and the number of Members in such
group), as applicable; (iii) the name of the sponsor of the Amended Plan; and
(iv) whether, in Medco's view, the Amended Plan should be deemed to be, with
respect to the group or groups of Members affected by the change in benefit
design or the additional group of Members, as applicable, (A) an Eligible Medco
Plan, and/or (B) a Formulary Managed Medco Plan. Such Notification shall be
accompanied by all information regarding the terms and provisions of the Amended
Plan, including details of benefit design, Formulary status and intervention
techniques or other devices or factors that have the purpose or effect of
encouraging or discouraging utilization of Pharmaceutical Products, for each
group of Members affected by the material change in benefit design under such
Plan for any new group of Members, as applicable, as shall be necessary to
support Medco's view. Merck shall have the right to request from Medco, and
Medco shall promptly provide to Merck, at Medco's expense, any additional
information that Merck shall deem necessary for purposes of the determination
required by this paragraph. Within 30 days after the receipt by Merck of all
such information, Merck shall determine in its sole discretion whether the
Amended Plan shall constitute, with respect to the relevant group or groups of
Members, (x) an Eligible Medco Plan, (y) a Formulary Managed Medco Plan and/or
(z) a Managed Eligible Medco Plan, and shall notify Medco in writing of its
determination. Merck's determination in accordance with the foregoing shall be
binding on the parties, subject to any revisions Merck is entitled to make
pursuant to Section 10.6(b) through (g).

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<PAGE>

          (f) In the event that a Medco Party expects to make an offer or
presentation to any Plan having an annualized drug-spend of $50 million or more
or to the sponsor of any such Plan with respect to (a) a proposed agreement or
arrangement for the provision of PBM Services with respect to any such Plan, (b)
a proposed material change in benefit design under such Medco Plan, (c) any
material change in benefit design under any such Medco Plan, (d) any change
under any such Medco Plan to the Formulary status of (or the co-payment or
coinsurance payable by Members for a prescription of) any Merck Product or any
Competitive Product, including the addition of any Basis Competitive Product to
any Formulary under such Plan or (e) any change to, or adoption of, Utilization
Controls with respect to any Merck Product or a Customized Medco Formulary with
respect to such specific Plan, Medco may request in writing that Merck provide
Medco, for purposes of this Restated Agreement, with a preliminary view as to
whether, in Merck's judgment, (x) such Plan should be deemed to constitute (A)
an Eligible Medco Plan, (B) a Formulary Managed Medco Plan, and/or (C) with
respect to any Merck Product, a High Control Eligible Medco Plan, (y) the
Utilization Controls with respect to a Merck Product would constitute
Rebate-Eligible Utilization Controls and/or Offer-Permitted Utilization Controls
with respect to such specific offer or presentation, and/or (z) the Customized
Medco Formulary with respect to such specific Plan would constitute a
Rebate-Eligible Customized Medco Formulary (with respect to any Merck
Product(s)) or an Offer-Permitted Customized Medco Formulary. In connection with
any such request, Medco shall provide to Merck, a written notice setting forth
(I) (i) the name of the applicable Plan; (ii) the identity and the number of
Members in the applicable Plan; and (iii) the name of the sponsor of the
applicable Plan; (II) to the extent Medco is seeking Merck's determination with
respect thereto, (1) whether, in Medco's view, the applicable Plan should be
deemed to be (A) an Eligible Medco Plan, (B) a Formulary Managed Medco Plan,
and/or (C) with respect to any Merck Product, a High Control Eligible Medco
Plan, (2) with respect to any Merck Product, whether, in Medco's view, the
Utilization Controls should be deemed to be Rebate-Eligible Utilization Controls
or Offer-Permitted Utilization Controls with respect to such offer or
presentation, and/or (3) in Medco's view, the Customized Medco Formulary should
be deemed to constitute a Rebate-Eligible Customized Formulary (as it relates to
any Merck Product(s)) with respect to such Plan or an Offer-Permitted Customized
Medco Formulary with respect to such offer or presentation. Such written notice
shall be accompanied by all information regarding the terms and provisions of
the applicable Plan, including details of benefit design, Formulary status and
Utilization Controls with respect to each Merck Product, Competitive Product and
Basis Competitive Product, as shall be necessary to support Medco's view. Within
5 business days of its receipt of such information from Medco, Merck shall
provide to Medco Merck's view, to the extent requested by Medco, as to whether,
in Merck's judgment, based on the information provided by Medco, (I) such Plan
would constitute (w) an Eligible Medco Plan, (x) a Formulary Managed Medco Plan,
(y) with respect to each Merck Product, a High Control Eligible Medco Plan, (II)
the Utilization Controls anticipated with respect to a Merck Product would be
deemed to be Rebate-Eligible Utilization Controls or Offer-Permitted

                                       40

<PAGE>

Utilization Controls with respect to such offer or proposal, and/or (iii) the
Customized Medco Formulary would be deemed to constitute a Rebate-Eligible
Customized Medco Formulary (as it relates to any Merck Product(s)) with respect
to such Plan or an Offer-Permitted Customized Medco Formulary with respect to
such offer or presentation; provided, however, that, so long as Merck notifies
Medco within such 5 business day period of any matter for which Medco requested
Merck's view and for which Merck has determined that it lacks sufficient
information to express a view, Merck shall not be required to provide Medco with
Merck's view with respect to such matter. In the event that Medco enters into a
binding agreement with a Plan or a Plan sponsor based on a view provided in
writing by Merck on a matter in accordance with the foregoing, such view with
respect to such matter shall be binding on the parties (and procedures set forth
above in Sections 10.6 (b)-(e) and Section 10.6 (j) shall not be applicable with
respect thereto); provided, that, the information furnished by Medco upon which
Merck sets forth its view on the applicable matter was true and correct.

          (g) Medco agrees that all information provided by it to Merck pursuant
to this Section 10.6 (including the information referred to Section 10.6(a))
shall be accurate and complete. Notwithstanding anything herein to the contrary,
in the event that information provided by Medco to Merck in connection with any
determination made by Merck pursuant to this Section 10.6 is determined by Merck
to be inaccurate or incomplete, Merck shall be entitled retroactively to revise
such determination.

          (h) Each Medco Plan in respect of which a Notification is delivered
shall be deemed, with respect to the period beginning upon the commencement of
the Calendar Quarter in which an event occurring for which a Notification is
delivered until such time as Merck makes the determination required by the
applicable provisions of this Section 10.6, to have, as the case may be, the
status as (1) an Eligible Medco Plan or Non-Eligible Medco Plan, (2) a Formulary
Managed Medco Plan or otherwise, and/or (3) with respect to each Merck Product
available under such Medco Plan, a High Control Eligible Medco Plan or General
Control Eligible Medco Plan, as such determination is ultimately made by Merck
in accordance with Section 10.6.

          (i) In the event of any material change in benefit design for a group
of Members under an Existing Medco Plan or the addition of any group of Members
under an Existing Medco Plan, with respect to those groups of Members, that
Medco Plan will be treated as a New Medco Plan for purposes of this Restated
Agreement. Notwithstanding the foregoing, (1) each Existing Medco Plan shall be
deemed to continue to be an Existing Medco Plan (notwithstanding the addition of
a new group of Members thereto) for so long as such Medco Plan is subject to the
terms and benefit design applicable to such Medco Plan as in effect as of March
31, 2002.

          (j) (i) Within 60 days of the execution of this Restated Agreement,
Medco shall deliver to Merck a list (the "Utilization Control List")
identifying, with respect to each Merck Product at each Medco Plan, each of the
Utilization Controls,

                                       41

<PAGE>

including all prior authorization requirements, edits or other interventions or
communications, then used by or made available to each Medco Plan with respect
to any Merck Product. The Utilization Control List shall include sufficient
detail with respect to each Utilization Control to which each Merck Product is
subject at each Medco Plan that would enable Merck to determine, in its sole
discretion, whether utilization of such Merck Product subject to such
Utilization Controls is eligible for any Individual Formulary Access Rebate
Amount for any Calendar Quarter. Medco represents and warrants that, as of the
date of delivery of the Utilization Control List, such list shall be true and
accurate in all respects and identify in sufficient detail each of the
Utilization Controls, including all prior authorization requirements, edits or
other interventions or communications, then used by or made available to each
Medco Plan with respect to each Merck Product. Merck will notify Medco in
writing of any Utilization Controls appearing on the Utilization Control List
which Merck shall, in its sole discretion, designate as Rebate-Eligible
Utilization Controls with respect to a Merck Product. Such notification setting
forth such designations shall be delivered by Merck to Medco within 60 days
after the receipt by Merck of the Utilization Control List, including sufficient
detail with respect to each Utilization Control as provided above. Merck's
designation of Utilization Controls as constituting Rebate-Eligible Utilization
Controls with respect to a Merck Product pursuant to such notice shall be deemed
to be effective for Calendar Quarters beginning on or after the Effective Date,
subject to revisions Merck is entitled to make pursuant to Section 10.6(g) and
this Section 10.6(j).

     (ii) Within 30 days of any Medco Party's implementation under any Medco
Plan of any new Utilization Control with respect to any Merck Product(s),
including as a result of a Merck Product first being made available under such
Plan, or any altered Utilization Control with respect to any Merck Product(s),
Medco shall provide to Merck with respect to the new or altered Utilization
Control, a notification setting forth (i) the Merck Product(s) in respect of
which the new or altered Utilization Controls will apply; and (ii) a description
in reasonable detail of the new or altered Utilization Controls. Merck shall
have the right to request from Medco, and Medco shall promptly provide to Merck,
at Medco's expense, any additional information that Merck shall deem necessary
for purposes of determining whether such new or altered Utilization Controls
constitute Rebate-Eligible Utilization Controls with respect to the applicable
Merck Product(s). Within 15 days after the receipt by Merck of all such
information, Merck shall determine in its sole discretion whether the new or
altered Utilization Controls continue to constitute (or now constitute)
Rebate-Eligible Utilization Controls with respect to all or a portion of the
applicable Merck Product(s), and shall notify Medco in writing of its
determination. Merck's determination in accordance with the foregoing shall be
binding on the parties.

     (iii) At the end of each Calendar Quarter, Medco shall update the
Utilization Control List to reflect the addition or removal of any Utilization
Controls from such List during such Calendar Quarter. Within 15 days after the
end of each

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<PAGE>

Calendar Quarter, Medco shall provide Merck with a copy of such updated
Utilization Control List with respect to each Merck Product at each Medco Plan.

          10.7. Notification of Acquisition or Loss of Plan, Plan Sponsor or
Group of Members.

                (a) Upon Medco's becoming aware of a potential loss of a Medco
Plan, any Plan sponsor or any group of Members under any Medco Plan and upon the
occurrence of any such loss, Medco shall promptly provide Merck with
Notification thereof. At the end of any Calendar Quarter, Medco shall promptly
(but in no event later than 30 days after the end of such Calendar Quarter)
provide to Merck a written notice setting forth (i) the name of each Eligible
Medco Plan that constitutes an Outgoing Medco Plan with respect to such Calendar
Quarter, if any; and (ii) the name of the sponsor of each such Outgoing Medco
Plan.

                (b) For each Eligible Medco Plan that constituted an Outgoing
Medco Plan with respect to the Calendar Quarters ended March 31, 2002, June 30,
2002 or September 30, 2002, Medco shall promptly (but in no event later than 30
days after the date of execution of this Restated Agreement) provide to Merck a
written notice setting forth (i) the name of each such Outgoing Medco Plan with
respect to each such Calendar Quarter, if any; (ii) the name of the sponsor of
each such Outgoing Medco Plan with respect to each such Calendar Quarter; (iii)
the Outgoing Medco Plans Sales Percentage with respect to each such Calendar
Quarter; and (iv) the Outgoing Medco Plans MAS Premium Percentage with respect
to each such Calendar Quarter.

                (c) For each Eligible Medco Plan that constituted an Incoming
Medco Plan with respect to the Calendar Quarters ended March 31, 2002, June 30,
2002 or September 30, 2002, Medco shall promptly (but in no event later than 30
days after the date of execution of this Restated Agreement) provide to Merck a
written notice setting forth (i) the name of each such Incoming Medco Plan with
respect to each such Calendar Quarter, if any; (ii) the name of the sponsor of
each such Incoming Medco Plan with respect to each such Calendar Quarter; and
with respect to each Eligible Medco Plan that constituted an Incoming Medco Plan
with respect to the Calendar Quarters ended March 31, 2002 or June 30, 2002,
(iii) the Quarterly Incoming Sales Amount with respect to each such Calendar
Quarter; (iv) the Incoming Medco Plans Sales Percentage with respect to each
such Calendar Quarter; and (v) the Incoming Medco Plans MAS Premium Percentage
for each such Calendar Quarter. In the event that Merck unilaterally
redesignates a Merck Product from one Therapeutic Category to another
Therapeutic Category in accordance with the foregoing, Merck shall adjust the
calculation of Target MAS Premium Percentage and Minimum MAS Premium Percentage
in light of such redesignation in a manner Merck determines to be equitable,
based on an adjustment methodology similar to the adjustment methodology
applicable in connection with Zocor(R) ceasing to be a Pharmaceutical Product.

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<PAGE>

          10.8. Merck Products; Competitive Products; Therapeutic Categories;
Basis Therapeutic Categories .

                (a)  The parties agree that, for purposes of this Restated
Agreement, (x) the Pharmaceutical Products identified on Schedule 10.8(a)(i) as
Merck Products shall initially be the "Merck Products" for purposes hereof, and
(y) each such Merck Product shall be included in the Therapeutic Category set
forth with respect thereto on Schedule 10.8(a)(i) along with the Pharmaceutical
Products identified on such Schedule as "Competitive Products" with respect to
such Therapeutic Category and (z) each such Merck Product shall be included in
the Basis Therapeutic Category set forth with respect thereto on a Schedule
10.8(a)(ii) along with the Pharmaceutical Products identified on such Schedule
as "Basis Competitive Products" with respect to such Basis Therapeutic Category.
For purposes of this Restated Agreement, the parties agree that (1) a
Competitive Product is not required to satisfy the criterion set forth in clause
(c) under the definition of "Pharmaceutical Product," (2) each Basis Competitive
Product is required to satisfy the criterion set forth in clause (c) of such
definition of "Pharmaceutical Product," and (3) no pharmaceutical product that
fails to satisfy the criterion set forth in clause (c) of such definition of
"Pharmaceutical Product" may be included in a Basis Therapeutic Category.

                (b)  (i) Merck may, at any time (x) designate as a Merck
Product, for purposes of this Restated Agreement, any Pharmaceutical Product (1)
discovered, developed, manufactured, marketed or sold by Merck or any of its
existing or future Affiliates, (2) in respect of which Merck or any of its
Affiliates is entitled to receive royalties or similar payments or (3) subject
to any joint venture, co-marketing or co-promotion arrangement involving Merck
or any of its Affiliates, or (y) (subject to the last sentence of Section
10.8(b)(v)) withdraw the designation of a Pharmaceutical Product as a Merck
Product for purposes of this Restated Agreement, in each case by written notice
to Medco.

                (ii) Any written notice designating a Pharmaceutical Product as
a Merck Product (a "Merck Product Designation Notice") shall set forth the
General Control Individual Formulary Access Percentage and High Control
Individual Formulary Access Percentage for such newly designated Merck Product,
as such percentages are determined by Merck's sole discretion. Such percentages
shall be deemed to be included thereafter in the respective definitions of
"General Control Individual Formulary Access Percentage" and "High Control
Individual Formulary Access Percentage." Each Merck Product Designation Notice
shall also set forth whether such newly designated Merck Product will constitute
a Group A Merck Product, Group B Merck Product, Group C Merck Product, Group D
Merck Product , Group E Merck Product or be part of a another Group of Merck
Products, as determined by Merck in its sole discretion. Such newly designated
Merck Product shall be deemed to be included thereafter in the Group of

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<PAGE>

Merck Products set forth in the Merck Product Designation Notice. Annex B and
Schedules 2 and 3 thereto shall be amended, if necessary, to reflect such new
designation.

          (iii) Merck shall have the right at any time to redesignate, with the
consent of Medco not to be unreasonably withheld, any Merck Product that is part
of an existing Group of Merck Products to be part of another or new Group of
Merck Products by giving written notice to Medco (such notice, a "Redesignation
Notice"). Any such redesignation shall be effective beginning in the Calendar
Quarter after delivery of the Redesignation Notice from Merck to Medco with
respect thereto. In connection with any such redesignation, Annex B and the
Schedule 3 thereto shall be amended to reflect such redesignation. Such
redesignated Merck Product shall be deemed to be included thereafter in the
other or new Group of Merck Products set forth in the Redesignation Notice.

          (iv)  In connection with the delivery of a Merck Product Designation
Notice or a Redesignation Notice, Merck may establish a new Group of Merck
Products by indicating so on the applicable Merck Product Designation Notice or
Redesignation Notice and either (x) setting forth with respect to such new Group
of Merck Products the applicable High Control MAS Rebate Percentages and General
Control MAS Rebate Percentages for such Merck Product, or (y) indicating that
such new Group of Merck Products is included in a Non-MAS Group of Merck
Products (and setting forth any additional rebate terms determined by Merck in
its sole discretion to be applicable to such new Group of Merck Products). Annex
B and/or Schedule 3 thereto shall be amended to reflect such new Group of Merck
Products and, if necessary, the High Control MAS Rebate Percentages and General
Control MAS Rebate Percentages for such new Group of Merck Products set forth on
the applicable Merck Product Designation Notice or Redesignation Notice.

          (v)   In connection with any withdrawal of a Pharmaceutical Product as
a Merck Product, the General Control Individual Formulary Access Percentage and
the High Control Individual Formulary Access Percentage for such Merck Product
shall be deleted from the respective definitions of "General Control Individual
Formulary Access Percentage" and "High Control Individual Formulary Access
Percentage." Any designation or withdrawal of a Pharmaceutical Product as a
Merck Product pursuant hereto shall be effective beginning in the Calendar
Quarter after delivery of the notice from Merck to Medco with respect thereto,
except that if a Merck Product loses its patent or market exclusivity such that
it ceases to be a Pharmaceutical Product or is otherwise withdrawn from the U.S.
market, no rebates will be payable with respect to such Merck Product effective
on the day after such Merck Product ceases to be a Pharmaceutical Product. Merck
shall not withdraw Zocor(R) as a Merck Product under this Restated Agreement
unless and until the MAS Premium Percentage of all Merck Products under all
Eligible Medco Plans in the aggregate shall be less than the Target MAS Premium
Percentage of all Merck Products for any two consecutive Calendar Quarters
(any such two consecutive Calendar Quarters, the "Below Target Calendar
Quarters"), in which case Merck may withdraw Zocor(R) as a Merck Product for any
Calendar Quarters thereafter; provided, however, (a) in the event the Below
Target Calendar Quarters giving rise to a withdrawal of Zocor(R) are the first
and second, or second and third, Calendar Quarters of the Calendar Year 2005 and
prior to and throughout the Below Target Calendar Quarters and the subsequent
Calendar Quarter(s) of the Calendar Year 2005 Medco complies in all material
respects with the terms of this Restated Agreement, Zocor(R) shall again
constitute a Merck Product beginning in the first Calendar Quarter of the
Calendar Year 2006, subject to the terms of this Restated Agreement, and (b) in
the event the Below Target Calendar Quarters giving rise to such withdrawal are
the third and fourth Calendar Quarters of the Calendar Year 2005 and prior to
and throughout the Below Target Calendar Quarters and the first Calendar Quarter
of the Calendar Year 2006 Medco complies in all material respects with the terms
of this Restated Agreement, Zocor(R) shall again constitute a Merck Product for
the second Calendar Quarter of the Calendar Year 2006, subject to the terms of
this Restated Agreement.

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<PAGE>

          (c) Merck may, at any time, designate new Therapeutic Categories and
Select Therapeutic Categories, designate an undesignated Merck Product and/or
Competitive Product to be included in a Therapeutic Category and/or Select
Therapeutic Category or redesignate one or more Merck Products or Competitive
Products from one Therapeutic Category or Select Therapeutic Category to another
Therapeutic Category or Select Therapeutic Category, and may, on not less than
180 days' prior notice, remove one or more of the existing Therapeutic
Categories and/or Select Therapeutic Categories or remove one or more Merck
Products or Competitive Products from any Therapeutic Category or Select
Therapeutic Category, in each case by written notice to Medco; provided, that,
any Pharmaceutical Product that is withdrawn as a Merck Product in accordance
with Section 10.8(c) shall be deemed removed from the Therapeutic Categories and
Select Therapeutic Categories in which it is included immediately (without 180
days' prior notice) upon the withdrawal thereof as a Merck Product. Any
designation or removal of a Therapeutic Category and/or Select Therapeutic
Category pursuant hereto, or the designation or removal of Merck Products or
Competitive Products to or from a Therapeutic Category pursuant hereto, shall be
effective beginning in the Calendar Quarter after delivery of the notice from
Merck to Medco with respect thereto, subject to the advance notice obligations
set forth in the prior sentence, if applicable.

          (d) Merck may, at any time, designate a new Basis Therapeutic
Category, designate any Merck Product or New Basis Competitive Product to be
included in such Basis Therapeutic Category, redesignate one or more Merck
Products or Basis Competitive Products from one Basis Therapeutic Category to
another Basis Therapeutic Category, remove one or more of the existing Basis
Therapeutic Categories or remove one or more Merck Products or Basis Competitive
Products from any Basis Therapeutic Category in each case by written notice to
Medco; provided, that, any Pharmaceutical Product that is withdrawn as a Merck
Product in accordance with this Section 10.8(d) shall be deemed removed from the
Basis Therapeutic Category in which it was included immediately upon the
withdrawal thereof as a Merck Product. Any designation or removal of a Basis
Therapeutic Category pursuant hereto, or the designation, removal or
redesignation of Merck Products or Basis Competitive Products to or from a Basis
Therapeutic Category pursuant hereto, shall be effective beginning in the
Calendar Quarter after delivery of the notice from Merck to Medco with respect
thereto, subject to the advance notice obligations set forth in the prior
sentence, if applicable.

          (e) Promptly after any new drug application of Merck to the FDA for
any new product is approved by the FDA, Merck shall commence discussions with
Medco with respect to Merck's proposed pricing and rebates for such product.

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<PAGE>

11.  Representations and Warranties. Medco represents and warrants to Merck as
     follows:

          11.1. Authorization and Binding Effect. Medco has full power and
authority, organizational and otherwise, to execute and deliver this Restated
Agreement and to perform its obligations hereunder. The execution and delivery
of this Restated Agreement by Medco, and the performance by Medco of its
obligations hereunder, have been duly and validly authorized by all necessary
organizational and other action. This Restated Agreement, including the
Exhibits, Annexes and Schedules hereto, constitutes the valid and binding
obligation of Medco, enforceable against Medco in accordance with the terms and
conditions hereof and thereof.

          11.2. No Conflict. The execution and delivery by Medco of this
Restated Agreement does not and will not, and the performance by Medco of its
obligations hereunder does not and will not, (i) violate or conflict with the
constitutional documents of Medco, (ii) conflict with or violate any law,
regulation, ethical or professional code, order, judgment or decree applicable
to Medco or any of its Affiliates or by which any of their respective property
is bound or affected, (iii) result in any breach of or constitute a default (or
an event which with notice or lapse of time or both would become a default)
under, impair Medco's or any of its Affiliates' rights under or alter the rights
or obligations of any other party to, give to others any rights of termination,
cancellation, vesting, modification, alteration or acceleration of any
obligation under, result in the creation of a lien, claim or encumbrance on any
of the properties or assets of Medco or any of its Affiliates pursuant to,
require the consent of any other party to, or result in any obligation on the
part of Medco or any of its Subsidiaries to repurchase (with respect to a
debenture, bond or note) pursuant to, any Plan, agreement, contract, permit,
license or franchise to which Medco or any of its Subsidiaries is a party or by
which Medco, any of its Affiliates or any of their respective property is bound
or affected.

          11.3. Continuing Representations. All representations and warranties
made by Medco herein or in any Annex or Schedule hereto or thereto shall be
deemed to be continuing representations during the term of this Restated
Agreement, including, without limitation, as of the Effective Date, as of the
date of execution of this Restated Agreement and as of the date of each delivery
of information pursuant to Section 7.1.

12.  Miscellaneous.

          12.1. Governing Law; Forum. This Restated Agreement shall be construed
in accordance with, and all Disputes hereunder shall be governed by, the
procedural laws (except to the extent inconsistent with Article 9 of this
Restated Agreement) and the substantive laws of the State of New York as to all
matters regardless of the laws that might otherwise govern under principles of
conflicts of laws applicable thereto. Under no circumstances may either party
seek or be awarded punitive damages. Any state court sitting in New York County,
New York and/or the United States District

                                       47

<PAGE>

Court for the Southern District of New York shall have exclusive jurisdiction
and venue, and each party hereto hereby submits to such jurisdiction and venue
and irrevocably waives, to the fullest extent permitted by applicable law, any
objection it may now or hereafter have to such jurisdiction or the laying of
such venue over any Disputes between the parties that are permitted to be
brought in a court, or the enforcement of any decision of the arbitrator,
pursuant to Article 9 above. Each of the parties hereby irrevocably waives any
right to a jury trial with respect to a Dispute.

          12.2. Descriptive Headings; Entire Agreement. The headings contained
in this Restated Agreement or in any Annex, Exhibit or Schedule hereto are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Restated Agreement. Any capitalized term used in any
Annex, Exhibit or Schedule but not otherwise defined therein, shall have the
meaning assigned to such term in this Restated Agreement. When a reference is
made in this Restated Agreement to a Section, Article, Annex, Exhibit or
Schedule, such reference shall be to a Section or Article of, or an Annex,
Exhibit or Schedule to, this Restated Agreement unless otherwise indicated. This
Restated Agreement and the Annexes, Exhibits and Schedules referenced or
attached hereto and thereto and the agreements to be entered into by the parties
in connection with a distribution of Medco's common stock to Merck's
shareholders will constitute the entire agreement between the parties with
respect to the subject matter hereof and thereof and shall supersede all prior
written and oral and all contemporaneous oral agreements and understandings with
respect to the subject matter hereof and thereof.

          12.3. Notices. Notices, offers, requests, or other communications
required or permitted to be given by either party pursuant to the terms of this
Restated Agreement shall be given in writing to the respective party at the
following addresses:

                if to Merck:        Merck & Co., Inc.
                                    Sumneytown Pike
                                    P.O. Box 4
                                    West Point, PA 19486
                                    Attention: Jerry Wisler
                                    Vice President, Managed Care

                with a copy to:     Merck & Co., Inc.
                                    One Merck Drive
                                    Whitehouse Station, NJ 08889-0100
                                    Attention: General Counsel
                                    Telecopy: (908) 735-1244

                if to Medco:        Medco Health Solutions, Inc.
                                    100 Parsons Pond Drive
                                    Franklin Lakes, NJ 07417

                                       48

<PAGE>

                                        Attention: General Counsel
                                        Telecopy:(201) 269-1225

or at such other address as the party to whom notice is given may have
previously furnished to the other in writing as provided herein. Any notice
involving non-performance, termination, or renewal shall be sent by hand
delivery, recognized overnight courier or, within the United States, may also be
sent via certified mail, return receipt requested. All other notices may also be
sent by fax, confirmed by first class mail. All notices shall be deemed to have
been given and received on the earlier of actual delivery or three days from the
date of postmark.

          12.4. Assignability; Medco Acquisition Transactions; Third-Party
Beneficiaries. Medco may not, directly or indirectly, in whole or in part,
whether by operation of law or otherwise, assign or transfer this Restated
Agreement, without Merck's prior written consent, and any attempted assignment,
transfer or delegation by Medco without such prior written consent shall be
voidable at the sole option of Merck. Medco shall not consummate or permit the
consummation of any Medco Acquisition Transaction by or with any Acquiror
unless, at the election of Merck, the Ultimate Parent Entity (as defined under
the Hart-Scott-Rodino Act of 1976, as amended) or Ultimate Parent Entities of
such Acquiror shall enter into an agreement reasonably satisfactory to Merck
containing terms and provisions applicable to such third party and all Plans of
such third-party and its Affiliates that are substantially similar to terms and
provisions hereof applicable to the Medco Parties and the Medco Plans; provided,
however, that under such agreement, Plans of such third party and its Affiliates
in effect immediately prior to the consummation of such transaction may be
excluded from the definition of "Medco Plan" (or any comparable definition)
under such agreement, but only with respect to groups of Members covered by such
Plans immediately prior to the consummation of such transaction (provided that
Medco shall use its best efforts to convert such groups to a Formulary providing
Members thereof with full and complete access to Merck Products in accordance
with the access standards set forth in Article 2 hereof); provided further, that
with respect to any new group of Members added to any such Plan after the
consummation of such transaction, such Plan shall be included under the
definition of "Medco Plan" (or any comparable definition) under such agreement.
Nothing in this Restated Agreement shall restrict any assignment or transfer of
this Restated Agreement by Merck, whether by operation of law or otherwise.
Without limiting the foregoing, this Restated Agreement will be binding upon and
inure to the benefit of the parties and their permitted successors and assigns.
This Restated Agreement, including the Annexes, Exhibits and Schedules and the
other documents referred to herein, shall be binding upon and inure solely to
the benefit of each party hereto and their legal representatives and permitted
successors and assigns, and nothing in this Restated Agreement, express or
implied, is intended to confer upon any other Person any rights or remedies of
any nature whatsoever under or by reason of this Restated Agreement.

                                       49

<PAGE>

          12.5. Severability. If any term or other provision of this Restated
Agreement is determined by a court, administrative agency or arbitrator to be
invalid, illegal or incapable of being enforced by any rule of law or public
policy or for any other reason, all other conditions and provisions of this
Restated Agreement will nevertheless remain in full force and effect so long as
the economic or legal substance of the transactions contemplated hereby is not
affected in any manner materially adverse to any party. Upon such determination
that any term or other provision is invalid, illegal or incapable of being
enforced, the parties shall negotiate in good faith to modify this Restated
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner to the end that transactions contemplated
hereby are fulfilled to the fullest extent possible. If the parties are unable
to reach an agreement with respect to any such modification, arbitrators shall
have the authority to do so in accordance with Article 9.

          12.6. Failure or Indulgence not Waiver; Remedies Cumulative. No
failure or delay on the part of either party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty or agreement herein,
nor shall any single or partial exercise of any such right preclude other or
further exercise thereof or of any other right. All rights and remedies existing
under this Restated Agreement are cumulative to, and not exclusive of, any
rights or remedies otherwise available, except with respect to Article 3 of this
Restated Agreement in respect of which the remedies set forth or referred to
therein shall apply.

          12.7. Amendment; Waiver. Except as expressly provided herein, no
change or amendment may be made to this Restated Agreement except by an
instrument in writing signed on behalf of each of the parties hereto. No term or
provision hereof may be waived by a party except by an instrument in writing
signed on behalf of the party waiving compliance thereto.

          12.8. No Circumvention of this Agreement. Without the prior written
consent of Merck, Medco shall not take any action intended to or which is
reasonably likely to circumvent, avoid or nullify any of Medco's obligations
under this Restated Agreement or to materially and adversely affect the rights
of, and the benefits intended to be realized by, Merck pursuant to this Restated
Agreement, or the financial capability of Medco to perform its obligations
hereunder, including, without limitation, any corporate reorganization,
restructuring or other corporate transaction, including transactions with
Subsidiaries or Affiliates of Medco.

          12.9. Acknowledgement. The parties acknowledge that the type, nature
and scope of the services provided by the Medco Parties to Medco Plans will be
subject to change and revision from time to time during the term of this
Restated Agreement in a manner which the parties hereto are unable to anticipate
as of the date of execution of this Restated Agreement. The parties agree that,
to the extent that, during the term of this

                                       50

<PAGE>

Restated Agreement, changes or revisions occur to the type, nature and scope of
the services provided by the Medco Parties to Medco Plans or in the manner in
which Medco Parties deliver Pharmaceutical Products or effect the delivery of
Pharmaceutical Products, to Members under Medco Plans and in the judgment of
Merck such changes could adversely affect the benefits contemplated by Merck to
be realized by it pursuant to this Restated Agreement, the parties shall amend
the terms of this Restated Agreement as necessary to ensure that,
notwithstanding such changes or revisions, Merck obtains the benefits
contemplated to be realized by it pursuant to this Restated Agreement.

                                       51

<PAGE>

          IN WITNESS WHEREOF, each of the Parties has caused this Restated
Agreement to be executed in duplicate originals by its duly authorized
representatives.

MERCK & CO., INC.                          MEDCO HEALTH SOLUTIONS, INC.

By:    /s/  Margaret G. McGlynn            By:    /s/  David B. Snow, Jr.
       ------------------------------             -----------------------------
Name:  Margaret G. McGlynn                 Name:  David B. Snow, Jr.
Title: President, U.S. Human Health        Title: President and Chief Executive
       Division                                   Officer

                                       52

<PAGE>

                                     ANNEX A

1.   For each Calendar Quarter after the Calendar Quarter ended June 30, 2002,
     Merck shall pay to Medco the Total Rebate Amount, if any, in accordance
     with, and subject to, the provisions of Sections 2, 3, 4 and 5 of this
     Annex A. All capitalized terms used but not defined in this Annex A shall
     have the meanings set forth with respect thereto in the Amended and
     Restated Managed Care Agreement to which this Annex A is attached or in
     Annex B to the Restated Agreement.

2.   Notwithstanding anything herein to the contrary, to the extent that, in the
     judgment of Merck, any rebate otherwise payable to Medco pursuant to the
     Restated Agreement in respect of a Calendar Quarter would, alone or
     together with any other price reduction, including any prompt payment
     discount, at any time available to any Medco Party, establish a new Best
     Price for Merck during any period with respect to any Merck Product, the
     amount of such rebate shall be reduced to the extent necessary in the
     judgment of Merck so that such rebate shall not establish a new Best Price
     with respect to such Merck Product and Medco shall have no right to receive
     any other form of payment or compensation from Merck with respect to the
     rebate so reduced.

3.   Within 90 days following the close of each Calendar Quarter, Medco shall
     deliver to Merck, in a mutually acceptable electronic format, the Quarterly
     Data required by Section 7.2 of the Restated Agreement. Within 90 days
     after Merck receives with respect to a Calendar Quarter Quarterly Data that
     Merck determines in its sole discretion is substantially complete and
     accurate, Merck shall make a payment to Medco of an estimated rebate amount
     determined by Merck in its sole judgment based on its view of the rebate
     amount that will ultimately be payable with respect to such Calendar
     Quarter pursuant to the Restated Agreement (as adjusted in accordance with
     Section 2 of this Annex A). Within 90 days after Merck's receipt of
     complete and accurate Quarterly Data, Merck shall pay to Medco any rebate
     amount not previously paid by Merck with respect to such Calendar Quarter
     due pursuant to the Restated Agreement (as adjusted in accordance with
     Section 2 of this Annex A). In the event that Merck determines that
     Quarterly Data submitted by Medco is not complete or accurate, Merck shall
     notify Medco of such determination, and to the extent known to Merck, the
     additional information required to be submitted by Medco in order for the
     Quarterly Data to be complete and accurate; provided that Merck's failure
     to provide such notice shall not adversely affect Merck's rights or
     obligations hereunder. Merck's payment of any rebate amount or estimated
     rebate amount or Merck's notification of any determination shall not
     constitute an acknowledgement on the part of Merck that the data submitted
     by Medco is complete and accurate or a waiver of any of Merck's right under
     the Restated Agreement to obtain complete and accurate Quarterly Data from
     Medco or that the amount paid is correct, all payments being subject to
     final reconciliation and audit as provided herein Notwithstanding the
     foregoing, Merck shall not be required to pay any rebates with respect to
     utilization
                                       -1-

<PAGE>

     that occurred during a Calendar Quarter for which complete and accurate
     Quarterly Data is received by Merck more than 180 days following the close
     of that Calendar Quarter.

4.   If any error is discovered in the data submitted or rebates paid under the
     Original Agreement and/or the Restated Agreement, including the submission
     of information regarding utilization not subject to rebates under the
     Original Agreement and/or the Restated Agreement, the rebates due
     thereunder or hereunder shall be appropriately adjusted to reflect the
     error and Merck or Medco shall make payment to the other as required to
     reflect such adjustment, within 10 business days from the date such
     adjustment is determined. If Merck has overpaid Medco as a result of an
     error in data submitted by Medco or otherwise or makes a payment or
     estimated payment to which Medco is not entitled, Merck may, at its sole
     discretion, deduct the amount of the overpayment from future rebate
     payments due pursuant to this Restated Agreement or require Medco to repay
     to Merck the amount of the overpayment.

5.   The parties agree that, notwithstanding anything to the contrary contained
     in the Restated Agreement or any other arrangement in effect between Merck
     and Medco prior to the Effective Date, Medco shall be entitled to receive
     rebates in an aggregate amount of not less than $443.9 million for the four
     Calendar Quarters of 2002 and in an aggregate amount of not less than
     $100.6 million for the first Calendar Quarter of 2003. The parties agree
     and acknowledge that the rebate amounts reflected in the foregoing sentence
     are not intended to reflect the manner in which rebate amounts, if any,
     which Medco may be entitled to receive under the Restated Agreement for the
     Calendar Quarters beginning with and after the second Calendar Quarter of
     2003 will be determined. Neither such rebate amounts nor the payment
     thereof shall adversely affect, or constitute a waiver of, Merck's rights
     to determine the rebate amounts, if any, which Medco may be entitled to
     receive under the Restated Agreement for the Calendar Quarters beginning
     with and after the second Calendar Quarter of 2003 in accordance with the
     terms of the Restated Agreement.

6.   At the time of each rebate payment, Merck shall provide Medco with
     reconciliation statements. Medco acknowledges that it is aware of the
     provisions with respect to the reporting of discounts pursuant to 42 C.F.R.
     (S) 1001.952(h)(1) and agrees to use the reconciliation statements to
     accurately report to private and governmental third-party payors, Plan
     sponsors, patients, and other individuals or entities the net effective
     discount price for each Merck Product for which a rebate has been paid
     under this Restated Agreement, to the extent required under applicable
     federal or state law.

7.   Medco represents and warrants to Merck that all Individual Formulary Access
     Rebate Amounts received by Medco from Merck pursuant to the Original
     Agreement or the Restated Agreement will be passed on to Medco Plans, less
     any applicable management, administrative or other fees, all of which shall
     comply with Section 6 of the Restated Agreement.

                                        2

<PAGE>

                                     ANNEX B

         "Aggregate Medco Cost" of any Merck Product for any Calendar Quarter
(or other period) means the product of (x) the Catalog Price of such Merck
Product for such Calendar Quarter (or other period) and (y) the sum of the Units
of such Merck Product from all Eligible Prescriptions of that Merck Product
dispensed in such Calendar Quarter (or other period).

         "Applicable Percentage" shall have the meaning set forth on Schedule 4
to this Annex B.

         "Cumulative Incoming Sales Adjustment Amount" shall initially be equal
to (x) the Quarterly Incoming Sales Amount for the Calendar Quarter ended March
31, 2002, plus (y) the Quarterly Incoming Sales Amount for the Calendar Quarter
ended June 30, 2002. As of the end of each given Calendar Quarter ending after
the Effective Date, the Cumulative Incoming Sales Adjustment Amount shall be
adjusted, to the extent necessary, to be equal to the sum of the Cumulative
Incoming Sales Adjustment Amount as of the end of the immediately preceding
Calendar Quarter and the Quarterly Incoming Sales Amount for such given Calendar
Quarter.

         "Exclusion Period" means, for any New Merck Product under any Medco
Plan, a period ending as of the expiration of the fourth Calendar Quarter from
and including the first Calendar Quarter in which any of the following events
occurs: (i) the Plan P&T Committee of such Medco Plan reviews such New Merck
Product for Formulary acceptance; (ii) such New Merck Product is listed on the
Formulary of such Medco Plan; or (iii) a period of four calendar months shall
have elapsed from the first date of sale of such New Merck Product by Merck.

         "Ex-Zocor(R) Minimum Reduction Percentage" means the percentage equal
to seven percent (7%) multiplied by the Ex-Zocor(R) Reduction Factor.

         "Ex-Zocor(R) Reduction Factor" means (x) the Target (Ex-Zocor(R)) MAS
Premium Percentage with respect to the Calendar Quarter ended December 31, 2001,
divided by (y) the Target MAS Premium Percentage with respect to the Calendar
Quarter ended December 31, 2001.

         "Final Zocor(R) Calendar Quarter" means the Calendar Quarter during
which Zocor(R) ceases to be a Pharmaceutical Product.

         "Formulary Access Rebate Amount" for any Calendar Quarter shall be: (x)
if, during such Calendar Quarter, (i) Medco shall have failed to comply with any
of its obligations under Article 7 or Sections 2.1, 2.7, 10.1, 10.3, 10.5, 10.6,
12.4, 12.8 or 12.9 of the Restated Agreement, or (ii) the MAS Premium

                                        1

<PAGE>

Percentage is less than the Minimum MAS Premium Percentage, zero; and (y) in any
other case, the sum of the Individual Formulary Access Rebate Amounts for all
Merck Products.

         "Formulary Access Rebate Deduction" shall equal, for any Calendar
Quarter in which the MAS Premium Percentage is lower than the Target MAS Premium
Percentage, (x) the applicable percentage set forth on Schedule 1 to this Annex
B multiplied by (y) (1) the Formulary Access Rebate Amount for such Calendar
Quarter less (2) the Non-MAS Group Formulary Access Rebate Amount, if any, for
such Calendar Quarter.

         "Formulary Access Rebate Deduction Recovery" shall equal, for any given
Calendar Quarter, the Formulary Access Rebate Deduction, if any, for the
immediately preceding Calendar Quarter (the "Moratorium Quarter"), if and only
if there is no Formulary Access Rebate Deduction for the given Calendar Quarter
and there is no Formulary Access Rebate Deduction for the Calendar Quarter
immediately preceding the Moratorium Quarter.

         "General Control Individual Formulary Access Percentage" shall be, for
each Merck Product, the percentage set forth for such Merck Product under the
column "General" on Schedule 2 to this Annex B.

         "General Control MAS Rebate Amount," for any Calendar Quarter, for any
Group of Merck Products (other than a Group of Merck Products that is a Non-MAS
Group of Merck Products), shall be the General Control MAS Rebate Percentage
with respect to such Group of Merck Products multiplied by the sum of the
Aggregate Medco Cost of all Eligible Prescriptions of all Merck Products
included in such Group of Merck Products dispensed during such Calendar Quarter
under Eligible Medco Plans that constitute General Control Eligible Medco Plans
with respect to the applicable dispensed Merck Products. For each Group of Merck
Products that is a Non-MAS Group of Merck Products, the "General Control MAS
Rebate Amount" shall be zero for each Calendar Quarter.

         "General Control MAS Rebate Percentage" for any Calendar Quarter, shall
be, with respect to any Group of Merck Products (other than a Group of Merck
Products that is a Non-MAS Group of Merck Products), the percentage set forth
under "General" for such Group of Merck Products on Schedule 3 to this Annex B
that relates to the Rebate Tier on Schedule 3 to this Annex B that corresponds
to the MAS Premium Percentage for such Calendar Quarter.

         "Group of Merck Products" shall mean, as applicable, the Group A Merck
Products, Group B Merck Products, Group C Merck Products, Group D Merck
Products, Group E Merck Products or any new Group of Merck Products established
pursuant to Section 10.8(b) of the Restated Agreement.

                                        2

<PAGE>

         "Group A Merck Products" means initially the Merck Products identified
on Schedule 3 to this Annex B as "Group A," subject to adjustment in accordance
with Section 10.8(b) of the Restated Agreement.

         "Group B Merck Products" means initially the Merck Products identified
on Schedule 3 to this Annex B as "Group B," subject to adjustment in accordance
with Section 10.8(b) of the Restated Agreement.

         "Group C Merck Products" means initially the Merck Products identified
on Schedule 3 to this Annex B as "Group C," subject to adjustment in accordance
with Section 10.8(b) of the Restated Agreement.

         "Group D Merck Products" means initially the Merck Products identified
on Schedule 3 to this Annex B as "Group D," subject to adjustment in accordance
with Section 10.8(b) of the Restated Agreement.

         "Group E Merck Products" means initially the Merck Products identified
on Schedule 3 to this Annex B as "Group E," subject to adjustment in accordance
with Section 10.8(b) of the Restated Agreement.

         "High Control Individual Formulary Access Percentage" shall be, for
each Merck Product, the percentage set forth for such Merck Product under the
column "High" on Schedule 2 to this Annex B.

         "High Control MAS Rebate Amount," for any Calendar Quarter, for any
Group of Merck Products (other than a Group of Merck Products that is a Non-MAS
Group of Merck Products), shall be the High Control MAS Rebate Percentage with
respect to such Group of Merck Products multiplied by the sum of the Aggregate
Medco Cost of all Eligible Prescriptions of all Merck Products included in such
Group of Merck Products dispensed during such Calendar Quarter under Eligible
Medco Plans that constitute High Control Eligible Medco Plans with respect to
the applicable dispensed Merck Products. For each Group of Merck Products that
is a Non-MAS Group of Merck Products, the "High Control MAS Rebate Amount" shall
be zero for each Calendar Quarter.

         "High Control MAS Rebate Percentage" for any Calendar Quarter, shall
be, with respect to any Group of Merck Products (other than a Group of Merck
Products that is a Non-MAS Group of Merck Products), the percentage set forth
under "High" for such Group of Products on Schedule 3 to this Annex B that
relates to the Rebate Tier on Schedule 3 to this Annex B that corresponds to the
MAS Premium Percentage for such Calendar Quarter.

                                       3

<PAGE>

         "Incoming Medco Plan" means with respect to any Calendar Quarter, each
Medco Plan for which such Calendar Quarter is the first Calendar Quarter in
which such Medco Plan is an Eligible Medco Plan for an entire Calendar Quarter.

         "Incoming Medco Plans Adjustment Percentage" for any Calendar Quarter
shall be determined as follows:

         (A) If the Incoming Medco Plans MAS Premium Percentage with respect to
such Calendar Quarter is less than the Outgoing Adjusted Minimum MAS Premium
Percentage for such Calendar Quarter, the "Incoming Medco Plans Adjustment
Percentage" shall be the percentage (which will be negative) obtained by
multiplying (x)(i) the Incoming Medco Plans MAS Premium Percentage with respect
to such Calendar Quarter less (ii) the Outgoing Adjusted Minimum MAS Premium
Percentage with respect to such Calendar Quarter, by (y) the Incoming Medco
Plans Sales Percentage with respect to such Calendar Quarter.

         (B) If there are no Incoming Medco Plans with respect to such Calendar
Quarter or if the Incoming Medco Plans MAS Premium Percentage with respect to
such Calendar Quarter is greater than or equal to the Outgoing Adjusted Minimum
MAS Premium Percentage with respect to such Calendar Quarter but less than or
equal to the Outgoing Adjusted MAS Premium Percentage with respect to such
Calendar Quarter, the "Incoming Medco Plans Adjustment Percentage" shall be
zero.

         (C) If the Incoming Medco Plans MAS Premium Percentage with respect to
such Calendar Quarter is greater than the Outgoing Adjusted MAS Premium
Percentage with respect to such Calendar Quarter, the "Incoming Medco Plans
Adjustment Percentage" shall be the percentage (which will be positive) obtained
by multiplying (x) the result of (i) the Incoming Medco Plans MAS Premium
Percentage for such Calendar Quarter less (ii) the Outgoing Adjusted MAS Premium
Percentage with respect to such Calendar Quarter, by (y) the Incoming Medco
Plans Sales Percentage with respect to such Calendar Quarter.

         Attached hereto is Schedule 5 to this Annex B, which sets forth, solely
for illustrative purposes, examples of the calculations reflected in clauses
(A), (B) and (C) under this definition of "Incoming Medco Plans Adjustment
Percentage."

         "Incoming Medco Plans MAS Premium Percentage" shall be, with respect to
any Calendar Quarter, equal to the MAS Premium Percentage for such Calendar
Quarter calculated solely with respect to Eligible Medco Plans that constitute
Incoming Medco Plans with respect to such Calendar Quarter.

         "Incoming Medco Plans Sales Percentage" shall be, with respect to any
Calendar Quarter, (I) the sum of the Aggregate Medco Cost of all Eligible

                                        4

<PAGE>

Prescriptions of all Merck Products dispensed during such Calendar Quarter under
Eligible Medco Plans that constitute Incoming Medco Plans with respect to such
Calendar Quarter, divided by (II) the sum of the Aggregate Medco Cost of all
Eligible Prescriptions of all Merck Products dispensed during such Calendar
Quarter under all Eligible Medco Plans (including Incoming Medco Plans with
respect to such Calendar Quarter).

         "Individual Formulary Access Rebate Amount" shall be, in respect of any
Calendar Quarter for any Merck Product, equal to the sum of (1)(x) the High
Control Individual Formulary Access Percentage for such Merck Product,
multiplied by (y) the Aggregate Medco Cost of all Eligible Prescriptions of such
Merck Product dispensed during such Calendar Quarter under Eligible Medco Plans
that constitute High Control Eligible Medco Plans with respect to such Merck
Product and (2)(a) the General Control Individual Formulary Access Percentage
for such Merck Product, multiplied by (b) the Aggregate Medco Cost of all
Eligible Prescriptions of such Merck Product dispensed during such Calendar
Quarter under Eligible Medco Plans that constitute General Control Eligible
Plans with respect to such Merck Product; provided, however, that for any
Calendar Quarter ending on or prior to December 31, 2003, the Individual
Formulary Access Rebate Amount for Zocor(R) shall not exceed the Zocor(R)
Maximum Individual Formulary Access Rebate Amount for such Calendar Quarter.
Notwithstanding the foregoing, (a) no Individual Formulary Access Rebate Amount
shall be paid for any Merck Product dispensed in any Calendar Quarter under any
Offer Disqualified Plan, and (b) no Individual Formulary Access Rebate Amount
shall be paid for a Calendar Quarter for any Merck Product dispensed under a
Medco Plan (i) that constituted an Access Disqualified Plan for such Merck
Product for such Calendar Quarter or (ii) in respect of which Medco Plan Medco
breached any of its obligations under Section 2.3 of this Restated Agreement
with respect to such Merck Product during such Calendar Quarter or (iii) in
respect of which Merck elects, with respect to the applicable Calendar Quarter,
in accordance with Section 2.6(b) of this Restated Agreement, that no Individual
Formulary Access Rebate Amount be paid with respect to any Eligible
Prescription.

         "MAS Premium Percentage" for any Calendar Quarter means the sum of all
the Weighted Medco Market Share Premium Percentages for such Calendar Quarter;
provided, that, for purposes of the calculation of MAS Premium Percentage, (i)
any New Merck Product shall not be treated as a Merck Product during the
Exclusion Period, and (ii) all Merck Products included in a Non-MAS Group of
Merck Products shall not be treated as a Merck Product for any Calendar Quarter.

                                        5

<PAGE>

         "MAS Rebate" shall equal, for any Calendar Quarter in which the MAS
Premium Percentage is equal to or exceeds the Minimum MAS Premium Percentage,
the sum of (a) the General Control MAS Rebate Amounts with respect to all Groups
of Merck Products, and (b) the High Control MAS Rebate Amounts with respect to
all Groups of Merck Products. Notwithstanding the foregoing, if during any
Calendar Quarter, Medco shall have failed to comply with any of its obligations
under Article 7 or Sections 10.1, 10.3, 10.5, 10.6, 12.4, 12.8 or 12.9 of the
Restated Agreement, the MAS Rebate for that Calendar Quarter shall be zero.

         "Medco Share Weight" for any Merck Product for any Calendar Quarter
means the result (expressed as a percentage) obtained by dividing (x) the
Aggregate Medco Cost of that Merck Product in that Calendar Quarter by (y) the
sum of the Aggregate Medco Cost of all Merck Products in that Calendar Quarter.

         "Minimum (Ex-Zocor(R)) MAS Premium Percentage" means, for any Calendar
Quarter, the Target (Ex-Zocor(R)) MAS Premium Percentage for such Calendar
Quarter less the Ex-Zocor(R) Minimum Reduction Percentage. (It is understood
that in accordance with the foregoing, the Minimum (Ex-Zocor(R)) MAS Premium
Percentage will adjust simultaneously with any adjustments to the Target
(Ex-Zocor(R)) MAS Premium Percentage.)

         "Minimum MAS Premium Percentage" means, for any Calendar Quarter, the
Target MAS Premium Percentage for such Calendar Quarter less seven (7)
percentage points. (It is understood that, in accordance with the foregoing, the
Minimum MAS Premium Percentage will adjust simultaneously with any adjustments
to the Target MAS Premium Percentage.) Notwithstanding the foregoing, with
respect to any Calendar Quarter after the Final Zocor(R) Calendar Quarter, the
Minimum MAS Premium Percentage shall be equal to the Minimum (Ex Zocor(R)) MAS
Premium Percentage (determined and calculated in accordance with the definition
thereof).

         "Non-MAS Group of Merck Products" means any Group of Merck Products
determined to be a Non-MAS Group of Merck Products by Merck in accordance with
Section 10.8(b) of the Restated Agreement. Each such Group of Merck Products
shall not be included for purposes of calculating the MAS Rebate or in any
calculation of MAS Premium Percentage.

         "Non-MAS Group Formulary Access Rebate Amount" means, with respect to
any Calendar Quarter, the sum of the Individual Formulary Access Rebate Amounts,
if any, for all Merck Products that are included in a Non-MAS Group of Merck
Products.

         "Outgoing Adjusted MAS Premium Percentage" means, with respect to any
given Calendar Quarter, the sum of (x) the MAS Premium Percentage for the

                                        6

<PAGE>

immediately preceding Calendar Quarter, and (y) the Outgoing Medco Plans
Adjustment Percentage for such given Calendar Quarter.

         "Outgoing Adjusted Minimum MAS Premium Percentage" means, for any given
Calendar Quarter, the sum of (x) the Minimum MAS Premium Percentage for the
immediately preceding Calendar Quarter and (y) the Outgoing Medco Plans
Adjustment Percentage for such given Calendar Quarter.

         "Outgoing Medco Plan" means, with respect to any given Calendar
Quarter, any Medco Plan that is not an Eligible Medco Plan during the entire
given Calendar Quarter, but was an Eligible Medco Plan for the entire
immediately preceding Calendar Quarter.

         "Outgoing Medco Plans Adjustment Percentage" for any given Calendar
Quarter means the percentage (which may be zero, negative or positive ) obtained
by multiplying (x)(i) the MAS Premium Percentage for the immediately preceding
Calendar Quarter less (ii) the Outgoing Medco Plans MAS Premium Percentage with
respect to the given Calendar Quarter, by (y) the Outgoing Medco Plans Sales
Percentage with respect to the given Calendar Quarter. Attached hereto is
Schedule 5 to this Annex B, which sets forth, solely for illustrative purposes,
examples of the calculation reflected under this definition of "Outgoing Medco
Plans Adjustment Percentage."

         "Outgoing Medco Plans MAS Premium Percentage" shall be, with respect to
any given Calendar Quarter, equal to the MAS Premium Percentage for the
immediately preceding Calendar Quarter calculated solely with respect to
Eligible Medco Plans that constitute Outgoing Medco Plans with respect to the
given Calendar Quarter.

         "Outgoing Medco Plans Sales Percentage" shall be, with respect to any
given Calendar Quarter, (I) the sum of the Aggregate Medco Cost of all Eligible
Prescriptions of all Merck Products dispensed during the immediately preceding
Calendar Quarter under Eligible Medco Plans that constitute Outgoing Medco Plans
with respect to the given Calendar Quarter, divided by (II) the result of (a)
the sum of the Aggregate Medco Cost of all Eligible Prescriptions of all Merck
Products dispensed during the immediately preceding Calendar Quarter under all
Eligible Medco Plans (but excluding Outgoing Medco Plans with respect to the
immediately preceding Calendar Quarter), less (b) the amount reflected in clause
(I) of this paragraph.

         "Quarterly Incoming Sales Amount", with respect to any Calendar
Quarter, shall equal the sum of the Aggregate Medco Cost of all Eligible
Prescriptions of all Merck Products dispensed during such Calendar Quarter under
all Eligible Medco Plans that constitute Incoming Medco Plans with respect to
such Calendar

                                        7

<PAGE>

Quarter. For any Calendar Quarter with respect to which there are no Incoming
Medco Plans, the "Quarterly Incoming Sales Amount" shall be zero.

         "Target (Ex-Zocor(R)) MAS Premium Percentage" shall be, with respect to
the Calendar Quarter ended December 31, 2001, the sum of all of the Weighted
Medco Market Share Premium Percentages for the Calendar Quarter ended December
31, 2001, excluding from such calculation (x) Prinivil(R)/Prinzide(R) and the
Therapeutic Category that includes Prinivil(R)/Prinzide(R), and (y) Zocor(R) and
the Therapeutic Category that includes Zocor(R). With respect to each given
Calendar Quarter beginning with the Calendar Quarter ended March 31, 2002, the
"Target (Ex-Zocor(R)) MAS Premium Percentage" shall be adjusted, if necessary,
to be equal to the sum of (x) the Target MAS (Ex-Zocor(R)) Premium Percentage
for the immediately preceding Calendar Quarter, (y) the Outgoing Medco Plans
Adjustment Percentage for such given Calendar Quarter (calculated as if Zocor(R)
did not constitute a Merck Product and with all references to "Minimum MAS
Premium Percentage" being deemed to refer to "Minimum (Ex-Zocor(R)) MAS Premium
Percentage") and (z) the Incoming Medco Plans Adjustment Percentage for such
given Calendar Quarter (calculated as if Zocor(R) did not constitute a Merck
Product and with all references to "Minimum MAS Premium Percentage" being deemed
to refer to "Minimum (Ex-Zocor(R)) MAS Premium Percentage"). If, at the end of
any Calendar Quarter ending after the Effective Date, the Cumulative Incoming
Sales Adjustment Amount (calculated as if Zocor(R) did not constitute a Merck
Product) exceeds 20% of the sum of the Aggregate Medco Cost of all Eligible
Prescriptions of all Merck Products dispensed during the Calendar Quarter ended
December 31, 2001 under all Eligible Medco Plans (calculated as if Zocor(R) did
not constitute a Merck Product), Merck shall have the right, at any time
thereafter, to renegotiate with Medco the adjustment methodology reflected in
this paragraph.

         "Target MAS Premium Percentage" shall be, with respect to the Calendar
Quarter ended December 31, 2001, the sum of all of the Weighted Medco Market
Share Premium Percentages for the Calendar Quarter ended December 31, 2001,
excluding from such calculation Prinivil(R)/Prinzide(R) and the Therapeutic
Category that includes Prinivil(R)/Prinzide(R), and utilizing a Weighted Medco
Market Share Premium Percentage for Zocor(R) that is equal to the actual Medco
Market Share for Zocor(R) for the Calendar Quarter ended December 31, 2001 less
the Zocor(R) Permitted Percentage Point Reduction set forth on Schedule 4 to
this Annex B. Medco shall deliver to Merck within 30 days from the Effective
Date the Quarterly Data with respect to the Calendar Quarter ended December 31,
2001. Within 30 days after receipt of complete and accurate Quarterly Data for
the Calendar Quarter ended December 31, 2001, Merck shall calculate the initial
Target MAS Premium Percentage referred to in the first sentence of this
definition. With respect to each given Calendar Quarter beginning with the

                                        8

<PAGE>

Calendar Quarter ended March 31, 2002, the "Target MAS Premium Percentage" shall
be adjusted, if necessary, to be equal to the sum of (x) the Target MAS Premium
Percentage for the immediately preceding Calendar Quarter, (y) the Outgoing
Medco Plans Adjustment Percentage for such given Calendar Quarter and (z) the
Incoming Medco Plans Adjustment Percentage for such given Calendar Quarter. (It
is understood that Schedules 1 and 3 to this Annex B operate to adjust each of
the percentages set forth under "Rebate Tiers" in Schedule 3 to this Annex B and
under "MAS Premium Percentage" in Schedule 1 to this Annex B simultaneously with
any adjustments to the Target MAS Premium Percentage in accordance with the
foregoing.) If, at the end of any Calendar Quarter ending after the Effective
Date, the Cumulative Incoming Sales Adjustment Amount exceeds 20% of the sum of
the Aggregate Medco Cost of all Eligible Prescriptions of all Merck Products
dispensed during the Calendar Quarter ended December 31, 2001 under all Eligible
Medco Plans, Merck shall have the right, at any time thereafter, to renegotiate
with Medco the adjustment methodology reflected above in this paragraph.
Notwithstanding the foregoing, with respect to Calendar Quarters after the Final
Zocor(R) Calendar Quarter, (a) the Target MAS Premium Percentage for such
Calendar Quarter shall be equal to the "Target (Ex-Zocor(R)) MAS Premium
Percentage (as calculated in accordance with the definition thereof) and (b) the
percentages under "Rebate Tiers" in Schedule 3 to this Annex B and under "MAS
Premium Percentage" in Schedule 1 to this Annex B shall be adjusted so that the
increment (expressed as a percentage) between each consecutive tier shall be
equal to the increment between such tiers as of the execution date of this
Restated Agreement (one percent) multiplied by the Ex-Zocor(R) Reduction Factor
(rounded to the nearest hundredth decimal place). (It is understood that, after
such adjustment to those increments, Schedules 1 and 3 to this Annex B will
operate to adjust each of the percentages set forth under "Rebate Tiers" in
Schedule 3 to this Annex B and under "MAS Premium Percentage" in Schedule 1 to
this Annex B simultaneously with any adjustments to the Target (Ex-Zocor(R)) MAS
Premium Percentage in accordance with the foregoing.)

         "Total Rebate Amount" for any Calendar Quarter after the Calendar
Quarter ended June 30, 2002 shall be equal to (1) the Formulary Access Rebate
Amount for such Calendar Quarter, if any, plus (2) the MAS Rebate for such
Calendar Quarter, if any, less (3) the Formulary Access Rebate Deduction for
such Calendar Quarter, if any, plus (4) the Formulary Access Rebate Deduction
Recovery for such Calendar Quarter, if any, and, solely in the case of the last
Calendar Quarter of any True-up Period, plus (5) the Zocor(R) Annual Market
Share Rebate Amount, if any. Notwithstanding any other provision of the Restated
Agreement, Annex A, Annex B or any of the Schedules thereto or hereto, if any
Medco Plan is not an Eligible Medco Plan for an entire Calendar Quarter,
Eligible Prescriptions dispensed during such Calendar Quarter under such Medco
Plan during the period when it was an Eligible Medco Plan shall be taken into
account

                                        9

<PAGE>

for purposes of calculating the Formulary Access Rebate Amount but not for
purposes of calculating any MAS Rebate, and such Medco Plan shall not be taken
into account for purposes of any calculation of MAS Premium Percentage. In the
event that (a) with respect to any Calendar Quarter, the Total Rebate Amount is
reduced as a result of Medco's failure, for such Calendar Quarter (or the
True-up Period ending at the end of such Calendar Quarter), to comply with any
of its obligations to furnish, make available or provide information or data to
Merck under the Restated Agreement and (b) within 30 days of receipt of notice
from Merck of the applicable failure to furnish, make available or provide
information or data, Medco cures such failure by furnishing the required
information and data to Merck, Medco shall thereupon become entitled to receive,
with respect to such Calendar Quarter, the amount by which the Total Rebate
Amount was reduced as a result of Medco's failure and shall not be deemed to
have breached the Restated Agreement as a result of such failure.

         "True-up Period" means each of the four Calendar Quarter periods ending
on June 30 during the term of the Restated Agreement; provided, however, that if
the Restated Agreement is terminated in accordance with Article 8 as of a date
other than June 30, for purposes hereof, the final True-up Period shall begin on
the day after the conclusion of the immediately preceding True-up Period and end
as of the date of such termination. Notwithstanding the foregoing, the True-up
Period during which Zocor(R) ceases to be a Merck Product or a Pharmaceutical
Product shall be deemed to begin on the day after the conclusion of the
immediately preceding True-up Period and end as of the last date of the Calendar
Quarter during which Zocor ceases to be a Pharmaceutical Product or a Merck
Product, and no True-up Period shall occur thereafter.

         "Weighted Medco Market Share Premium Percentage" for any Merck Product
for any Calendar Quarter means the result (which may be zero, negative or
positive ) obtained by multiplying (x) the Medco Share Weight for that Merck
Product for that Calendar Quarter by (y) the result (expressed as a percentage)
obtained by (1) dividing (A) the Medco Market Share for that Merck Product for
that Calendar Quarter by (B) the National Market Share for that Merck Product
for that Calendar Quarter and (2) subtracting 100% from such quotient; provided,
that, if the result obtained pursuant to the calculation in this clause (y)
exceeds 100% with respect to any Merck Product, the result shall be deemed equal
to 100% for purposes of this clause (y).

         "Zocor(R) Annual Market Share Rebate Amount" shall mean, for any
True-up Period in which the result obtained by subtracting (x) 100% from (y) the
quotient of the Medco Market Share for Zocor(R) for such True-up Period, divided
by the National Market Share for Zocor(R) for such True-up Period is equal to or
greater than the Zocor(R) 2001 Premium Percentage, an amount determined at the
end of

                                       10

<PAGE>

the last Calendar Quarter of such True-up Period that is equal to the excess, if
any, of (a)(i) the Zocor(R) Maximum Individual Formulary Access Percentage set
forth on Schedule 4 to this Annex B, multiplied by (ii) the Aggregate Medco Cost
of all Eligible Prescriptions of Zocor(R) dispensed during all Calendar Quarters
of the True-up Period under Zocor(R) High Control Eligible Medco Plans and
Zocor(R) General Control Eligible Medco Plans (other than Medco Plans (1) which
constituted Access Disqualified Plans with respect to Zocor(R) for the
applicable Calendar Quarter or constitute Offer Disqualified Plans, or (2) in
respect of which (x) Medco breached any of its obligations under Section 2.3 of
this Restated Agreement with respect to Zocor(R) during the applicable Calendar
Quarter or (y) Merck elects, with respect to the applicable Calendar Quarter, in
accordance with Section 2.6(b) of this Restated Agreement, that no Individual
Formulary Access Rebate Amount be paid with respect to any Eligible
Prescription), over (b) the sum of the Individual Formulary Access Rebate
Amounts with respect to Zocor(R) for all Calendar Quarters of such True-up
Period (excluding Eligible Prescriptions dispensed under Medco Plans (1) which
constituted Access Disqualified Plans with respect to Zocor(R) for the
applicable Calendar Quarter or constitute Offer Disqualified Plans, or (2) in
respect of which (x) Medco breached any of its obligations under Section 2.3 of
this Restated Agreement with respect to Zocor(R) during the applicable Calendar
Quarter, (y)Merck elects, with respect to the applicable Calendar Quarter, in
accordance with Section 2.6(b) of this Restated Agreement, that no Individual
Formulary Access Rebate Amount be paid with respect to any Eligible
Prescription); provided, that, the Zocor(R) Annual Market Share Rebate Amount
for any True-up Period shall be reduced by a percentage thereof equal to the
percentage calculated by dividing (a) (x) the aggregate amount of the Formulary
Access Rebate Deductions for all Calendar Quarters during such True-up Period
(after giving effect to Formulary Access Rebate Deduction Recoveries relating to
any such Calendar Quarters), plus (y) the aggregate amount of the Formulary
Access Rebate Amounts that would have applied for Calendar Quarters, if any,
during the True-up Period with respect to which the Formulary Access Rebate
Amount was zero by reason of the fact that the MAS Premium Percentage was less
than the Minimum MAS Premium Percentage by (b) (x) the aggregate amount of the
Formulary Access Rebate Amounts for all Calendar Quarters of such True-up
Period, plus (y) the aggregate amount of the Formulary Access Rebate Amounts
that would have applied for Calendar Quarters, if any, during the True-up Period
with respect to which the Formulary Access Rebate Amount was zero by reason of
the fact that the MAS Premium Percentage was less than the Minimum MAS Premium
Percentage. Notwithstanding the foregoing, if during any Calendar Quarter in
such True-up Period, Medco shall have failed to comply with any of its
obligations under Article 7 or Sections 2.1, 2.7, 10.1, 10.3, 10.5, 10.6, 12.4,
12.8 or 12.9 of the Restated Agreement, the Zocor(R) Annual Market Share Rebate
Amount for such True-up Period shall be zero.

                                       11

<PAGE>

         "Zocor(R) General Control Eligible Medco Plan" means, in respect of any
Calendar Quarter, any Eligible Medco Plan that constitutes a General Control
Eligible Medco Plan with respect to Zocor(R) for such Calendar Quarter.

         "Zocor(R) High Control Eligible Medco Plan" means, in respect of any
Calendar Quarter, any Eligible Medco Plan that constitutes a High Control
Eligible Medco Plan with respect to Zocor(R) for such Calendar Quarter.

         "Zocor(R) Maximum Individual Formulary Access Rebate Amount" shall
mean, for any Calendar Quarter ending on or prior to December 31, 2003, (x) the
Zocor(R) Maximum Individual Formulary Access Percentage set forth on Schedule 4
to this Annex B, multiplied by (y) the Aggregate Medco Cost of all Eligible
Prescriptions of Zocor(R) dispensed during such Calendar Quarter under all
Zocor(R)High Control Eligible Medco Plans and Zocor(R) General Control Eligible
Plans.

         "Zocor(R) 2001 Premium Percentage" shall be equal to the percentage
obtained by subtracting (x) 100% from (y) the quotient of (i) the Medco Market
Share for Zocor(R) for the Calendar Quarter ended December 31, 2001 less the
Zocor(R) Permitted Percentage Point Reduction set forth on Schedule 4 to this
Annex B, divided by (ii) the National Market Share for Zocor(R) for that
Calendar Quarter. Medco shall deliver to Merck within 30 days from the Effective
Date the Quarterly Data with respect to Zocor(R) for the Calendar Quarter ended
December 31, 2001. Within 30 days after receipt of complete and accurate
Quarterly Data with respect to Zocor(R) for the Calendar Quarter ended December
31, 2001, Merck shall calculate the Zocor(R) 2001 Premium Percentage.

                                       12

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