Document:

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                                                                    EXHIBIT 10.4

                                                                  EXECUTION COPY

                 INDEMNIFICATION AND INSURANCE MATTERS AGREEMENT

                                 BY AND BETWEEN

                               MERCK & CO., INC.,

                                       AND

                          MEDCO HEALTH SOLUTIONS, INC.

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                                Table of Contents
                                -----------------

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                                                                            ----

ARTICLE I      INDEMNIFICATION.................................................1
   Section 1.1   Indemnification by Medco......................................1
   Section 1.2   Indemnification by Merck......................................2
   Section 1.3   Procedures for Defense, Settlement and
                 Indemnification of Third Party Claims.........................3
   Section 1.4   Additional Matters............................................5
   Section 1.5   Survival of Indemnities.......................................6
ARTICLE II     INSURANCE MATTERS...............................................6
   Section 2.1   Medco Insurance Coverage......................................6
   Section 2.2   Cooperation and Agreement Not to Release Carriers.............6
   Section 2.3   No Liability..................................................6
   Section 2.4   No Restrictions...............................................7
   Section 2.5   Further Agreements............................................7
ARTICLE III    DISPUTE RESOLUTION..............................................7
   Section 3.1   Negotiation...................................................7
   Section 3.2   Binding Arbitration...........................................7
   Section 3.3   Specific Performance..........................................9
ARTICLE IV     PRIVILEGED INFORMATION..........................................9
   Section 4.1   Privileged Information........................................9
ARTICLE V      MISCELLANEOUS..................................................10
   Section 5.1   Entire Agreement.............................................10
   Section 5.2   Governing Law; Forum.........................................10
   Section 5.3   Notices......................................................11
   Section 5.4   Binding Effect; Assignment; Third-Party Beneficiaries........11
   Section 5.5   Offset.......................................................12
   Section 5.6   Other Agreements Evidencing Indemnification Obligations......12
   Section 5.7   Counterparts.................................................12
   Section 5.8   Severability.................................................12
   Section 5.9   Failure or Indulgence Not Waiver.............................12
   Section 5.10  Amendment....................................................13
   Section 5.11  Interpretation...............................................13
ARTICLE VI     DEFINITIONS....................................................13
   Section 6.1   Action.......................................................13
   Section 6.2   Dispute......................................................13
   Section 6.3   Indemnitee...................................................13
   Section 6.4   Indemnifying Party...........................................13
   Section 6.5   Insurance Policies...........................................13
   Section 6.6   Intercompany Agreements......................................13

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                                Table of Contents
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   Section 6.7   Liabilities..................................................13
   Section 6.8   Material Adverse Effect......................................14
   Section 6.9   Medco Assets.................................................14
   Section 6.10  Medco Balance Sheets.........................................14
   Section 6.11  Medco Business...............................................14
   Section 6.12  Medco Indemnitees............................................14
   Section 6.13  Medco Liabilities............................................14
   Section 6.14  Merck Indemnitees............................................17
   Section 6.15  Merck Insurance Policy.......................................17
   Section 6.16  Merck Liabilities............................................17
   Section 6.17  Merck Share of the Shared Liability Actions..................17
   Section 6.18  Privileged Information.......................................17
   Section 6.19  Securities Liabilities.......................................17
   Section 6.20  Distribution Agreement.......................................18
   Section 6.21  Shared Liability Actions.....................................18
   Section 6.22  Subsidiary...................................................18
   Section 6.23  Taxes........................................................18
   Section 6.24  Third Party Claim............................................18
   Section 6.25  Other Definitions............................................18

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                 INDEMNIFICATION AND INSURANCE MATTERS AGREEMENT

     THIS INDEMNIFICATION AND INSURANCE MATTERS AGREEMENT (this "Agreement") is
entered into as of August __, 2003, by and between Merck & Co., Inc., a New
Jersey corporation ("Merck"), and Medco Health Solutions, Inc., a Delaware
corporation ("Medco"). Certain capitalized terms used herein are defined in
Article VI. Capitalized terms used herein and not otherwise defined herein shall
have the meanings ascribed to such terms in the Distribution Agreement (defined
below).

                                    RECITALS

     WHEREAS, the Merck Board has determined that it is appropriate and
desirable for Merck to separate the Medco Group from the Merck Group; and

     WHEREAS, as part of the foregoing, Merck and Medco have entered into the
Master Separation and Distribution Agreement, dated as of August __, 2003 (the
"Distribution Agreement"), which provides, among other things, for the
declaration of the Merck Dividend prior to the Distribution Date, the pro-rata
distribution by Merck of all of its shares of Medco Common Stock to the holders
of Merck Common Stock, and the execution and delivery of certain other
agreements in order to facilitate and provide for the foregoing; and

     WHEREAS, in connection therewith, the parties desire to set forth certain
agreements regarding indemnification and insurance.

     NOW, THEREFORE, in consideration of the foregoing and the covenants and
agreements set forth below, the parties hereto agree as follows:

                                    ARTICLE I

                                 INDEMNIFICATION

     Section 1.1  Indemnification by Medco.

     (a)  Indemnification. Except as otherwise provided in this Agreement, Medco
shall, for itself and as agent for each member of the Medco Group, indemnify,
defend and hold harmless the Merck Indemnitees from and against any and all
Liabilities that any third party seeks to impose upon any of the Merck
Indemnitees, or which are imposed upon any of the Merck Indemnitees, if and to
the extent such Liabilities relate to, arise out of or result from any of the
following items (without duplication):

                  (i)  any breach by Medco or any member of the Medco Group of
          the Distribution Agreement or any of the Ancillary Agreements
          (including this Agreement), other than breaches of the Amended and
          Restated Managed Care Agreement between Merck and Medco, dated as of
          May 28, 2003 (the "Restated Agreement"), as further amended from time
          to time, or the original Managed Care Agreement between Merck and
          Medco, dated as of June 28, 2002 (the "Original Agreement" together
          with the Restated Agreement, the "Managed Care Agreement"), which
          shall be covered by the provisions thereof; or

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                  (ii) any Medco Liability.

     (b)  Reduction of Liability. In the event that any member of the Medco
Group makes a payment to any Merck Indemnitee hereunder, and the Liabilities on
account of which such payment was made are subsequently diminished or reduced,
either directly or through a third-party recovery (other than as a result of a
recovery under a Merck Insurance Policy, unless such recovery is pursuant to the
Credit Support Insurance Coverage, if any), Merck will promptly repay (or will
procure the relevant Merck Indemnitee promptly to repay) such member of the
Medco Group the amount by which the payment made by such member of the Medco
Group exceeds the actual cost of the associated indemnified Liabilities.

     (c)  Joint and Several Liability; No Modification to Other Agreements. The
liability of the members of the Medco Group under this Section 1.1 shall be
joint and several. Nothing in this Section 1.1 shall modify or limit the rights
and remedies of Merck under the Distribution Agreement or any of the Ancillary
Agreements (other than this Agreement) relating to, arising out of or resulting
from any breach by Medco or any member of the Medco Group of the Distribution
Agreement or any of the Ancillary Agreements (other than this Agreement),
including without limitation, any provisions relating to the measure of damages,
consequential damages, liquidated damages, limitation of damages and/or specific
performance.

     Section 1.2  Indemnification by Merck.

     (a)  Indemnification. Except as otherwise provided in this Agreement, Merck
shall, for itself and as agent for each member of the Merck Group, indemnify,
defend and hold harmless the Medco Indemnitees from and against any and all
Liabilities that any third party seeks to impose upon any of the Medco
Indemnitees, or which are imposed upon any of the Medco Indemnitees, if and to
the extent such Liabilities relate to, arise out of or result from (without
duplication):

                  (i)  any breach by Merck or any member of the Merck Group of
          the Distribution Agreement or any of the Ancillary Agreements
          (including this Agreement), other than breaches of the Managed Care
          Agreement, which shall be covered by the provisions thereof; or

                  (ii) any Merck Liability;

provided, however, that notwithstanding anything to the contrary herein, in no
event shall Merck or any member of the Merck Group be obligated to indemnify,
defend or hold harmless the Medco Indemnitees from, against or in respect of any
Medco Liability.

     (b)  Reduction of Liability. In the event that any member of the Merck
Group makes a payment to any Medco Indemnitee hereunder, and the Liabilities on
account of which such payment was made are subsequently diminished or reduced,
either directly or through a third-party recovery, Medco will promptly repay (or
will procure a Medco Indemnitee to promptly repay) such member of the Merck
Group the amount by which the payment made by such member of the Merck Group
exceeds the actual cost of the associated indemnified Liabilities.

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     (c)  Joint and Several Liability; No Modification to Other Agreements. The
liability of the members of the Merck Group under this Section 1.2 shall be
joint and several. Nothing in this Section 1.2 shall modify or limit the rights
and remedies of Medco under the Distribution Agreement or any of the Ancillary
Agreements (other than this Agreement) relating to, arising out of or resulting
from any breach by Merck or any member of the Merck Group of the Distribution
Agreement or any of the Ancillary Agreements (other than this Agreement),
including without limitation, any provisions relating to the measure of damages,
consequential damages, liquidated damages, limitation of damages and/or specific
performance.

     Section 1.3  Procedures for Defense, Settlement and Indemnification of
Third Party Claims.

          (a)     Notice of Claims. If an Indemnitee shall receive notice or
otherwise learn of the assertion of any Third Party Claim with respect to which
a party may be obligated to provide indemnification to such Indemnitee pursuant
to Section 1.1 or 1.2, Merck or Medco (as applicable) shall ensure that such
Indemnitee shall give the potential Indemnifying Party written notice thereof
(including any pleadings relating thereto) within twenty (20) days after
becoming aware of such Third Party Claim. Any such notice shall describe the
Third Party Claim in reasonable detail. Notwithstanding the foregoing, any delay
or failure of any Indemnitee to give notice as provided in this Section 1.3(a)
shall not relieve the Indemnifying Party of its obligations under this Article
I, except to the extent that the Indemnifying Party is actually and
substantially prejudiced by such delay or failure to give notice.

          (b)     Defense by Indemnifying Party. For any Third Party Claim
concerning which notice is required to be given under Section 1.3(a), the
Indemnifying Party may elect to defend and, subject to Section 1.3(f), may
settle or compromise the Third Party Claim using counsel appointed by the
Indemnifying Party, which counsel shall be reasonably satisfactory to the
Indemnitee. An Indemnifying Party electing to defend a Third Party Claim must
(i) notify the Indemnitee of its election to defend within twenty (20) days of
receipt of notice of such claim pursuant to Section 1.3(a) or sooner if the
nature of the Third Party Claim so requires and (ii) subject to Section 1.3(c),
acknowledge and agree in writing that if such Third Party Claim is adversely
determined, such Indemnifying Party will have an obligation to indemnify the
Indemnitee in respect of all Liabilities relating to, arising out of or
resulting from such Third Party Claim and that such Indemnifying Party
irrevocably waives in full all defenses it may have to contest such obligation.

          (c)     Defense by Merck. Notwithstanding Section 1.3(b), Merck, in
its sole discretion, upon written notice to Medco, may elect to defend (or may
at any time assume the defense of) and, subject to Section 1.3(f), may settle or
compromise, any Third Party Claim or series of related Third Party Claims,
regardless of whether Merck is obligated to indemnify any member of the Medco
Group in respect of such Third Party Claim or series of related Third Party
Claims or whether Merck acknowledges any obligation to indemnify any Medco
Indemnitee if:

                  (i)  any member of the Merck Group is named as a party to any
          of such Third Party Claims; or

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                  (ii) both Merck and Medco may be Indemnifying Parties with
          respect to such Third Party Claim(s).

     Except as otherwise provided in the definition of "Merck Share of the
Shared Liability Actions," if Merck elects to defend against a Third Party Claim
pursuant to this Section 1.3(c) all costs and expenses incurred by members of
the Merck Group in connection with such defense shall be paid by Merck and Medco
pro rata based on their respective proportionate liability for any Liabilities
relating to, arising out of or resulting from such Third Party Claim (after
taking into account the parties' respective indemnification obligations under
this Agreement, other than with respect to payment of defense costs).

          (d)     Defense By Non-Electing Party. If the party having the right
to elect to defend a Third Party Claim pursuant to Section 1.3(b) or 1.3(c)
elects not to defend, or does not within any time frame required thereunder
elect to defend, a particular claim, the other party shall defend such Third
Party Claim. In such case, (i) the other party shall have the right, subject to
Sections 1.3(c) and 1.3(f) and the provisions contained in the definition of
"Merck Share of the Shared Liability Actions," to compromise, settle or consent
to the entry of any judgment with respect to such Third Party Claim (but such
compromise, settlement or judgment shall not necessarily be determinative of
which party hereunder is entitled to indemnification) and (ii) the Indemnifying
Party shall bear all costs and expenses of defending such Third Party Claim;
provided, however, that if both parties may be Indemnifying Parties with respect
to such Third Party Claim, except as otherwise provided in the definition of
"Merck Share of the Shared Liability Actions," the Non-Defending Party (defined
below) shall reimburse the Defending Party for the Non-Defending Party's pro
rata share of all costs and expenses incurred by the Defending Party in
connection with its defense of such Third Party Claim, based on the
Non-Defending Party's proportionate liability for any Liabilities relating to,
arising out of or resulting from such Third Party Claim (after taking into
account the parties' indemnification obligations under this Agreement, other
than with respect to payment of defense costs).

          (e)     Participation by Non-Defending Party. In the event that a
party (a "Defending Party") elects or is required to defend a particular Third
Party Claim pursuant to Section 1.3(b), 1.3(c) or 1.3(d), the other party (the
"Non-Defending Party") shall have the right to participate in the defense of
such Third Party Claim; provided, however, that (i) the Defending Party shall
control, manage and direct the defense of such Third Party Claim; and (ii) the
costs and expenses of participating in such defense by the Non-Defending Party
shall be the sole responsibility of the Non-Defending Party. Nothing in this
Section 1.3(e) shall affect the rights of Merck under Section 1.3(c) at any time
to assume the defense of any Third Party Claim and to be indemnified for costs
and expenses of such defense in accordance with Section 1.3(c).

          (f)     No Settlement, Compromise or Consent to Judgments.

                  (i)  No Non-Defending Party may compromise or settle or
          consent to the entry of judgment or determination of liability with
          respect to any Third Party Claim without the consent of the Defending
          Party.

                  (ii) Notwithstanding anything to the contrary herein (but
          subject to the provisions contained in the definition of "Merck Share
          of the Shared Liability

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          Actions"), no Defending Party shall compromise, settle or consent to
          the entry of judgment or determination of liability concerning any
          Third Party Claim without providing at least 10 days' prior written
          notice of such compromise, settlement or consent to the Indemnitor (if
          the Indemnitor is other than the Defending Party) and without the
          consent of the Non-Defending Party (such approval not to be
          unreasonably withheld) if the terms or conditions of such compromise,
          settlement or consent would have a Material Adverse Effect on the
          Non-Defending Party's Group.

     Section 1.4  Additional Matters.

          (a)     Other Claims for Indemnification. Any claim in respect of a
Liability which does not relate to, arise out of or result from a Third Party
Claim shall be asserted by written notice from the Indemnitee to the
Indemnifying Party stating the specific provisions of this Agreement or any
Ancillary Agreement upon which such claim is based. Such Indemnifying Party
shall have a period of twenty (20) days from actual receipt of the notice within
which to respond thereto. If such Indemnifying Party does not respond within
such 20-day period, then such Indemnifying Party shall be deemed to have denied
responsibility for such claim.

          (b)     Contribution. If with respect to any Securities Liabilities an
Indemnitee's right to indemnification therefor contained in this Article I is
for any reason held by a court or other tribunal to be unavailable on policy
grounds or otherwise, the Indemnifying Party shall contribute to any amount
payable by the Indemnitee as a result of such Securities Liabilities in such
proportion as to reflect the relative benefit received by the members of the
Indemnifying Party's Group and such Indemnitee from the transaction or
disclosure giving rise to such Securities Liability. If the contribution
provided above is not permitted by applicable law, the Indemnifying Party shall
contribute to any amount payable by the Indemnitee as a result of such
Securities Liabilities in such proportion as to reflect the relative benefit
received by the members of the Indemnifying Party's Group and such Indemnitee
from the transaction and the statements and omissions giving rise to such
Securities Liability, and the relative fault of such members and the Indemnitee
in connection with such statements or omissions. The relative fault of the
members of the Indemnifying Party's Group and such Indemnitee shall be
determined by reference to, among other things, their relative intent,
knowledge, access to information and opportunity to prevent or correct the
statements or omissions giving rise to such Securities Liability.

          (c)     Subrogation. In the event of payment by or on behalf of any
Indemnifying Party to or on behalf of any Indemnitee in connection with any
Third Party Claim, such Indemnifying Party shall be subrogated to and shall
stand in the place of such Indemnitee, in whole or in part based upon whether
the Indemnifying Party has paid all or only part of the Indemnitee's Liability,
as to any events or circumstances in respect of which such Indemnitee may have
any right, defense or claim relating to such Third Party Claim against any
claimant or plaintiff asserting such Third Party Claim or against any other
Person. Such Indemnitee shall cooperate with such Indemnifying Party in a
reasonable manner, and at the cost and expense of such Indemnifying Party, in
prosecuting any subrogated right, defense or claim.

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          (d)     Effect of Insurance on Indemnification/Contribution
Obligations. No Indemnitee shall be required to pursue any claim under any
Insurance Policies of which it is a beneficiary in connection with any Liability
for which such Indemnitee is entitled to indemnification hereunder. The amount
of indemnification or contribution to which such Indemnitee may be entitled
hereunder shall not be reduced as a result of any claim such Indemnitee may
pursue, or have the right to pursue, under any Insurance Policy in respect of
the Liability to which such right to indemnification or contribution relates,
unless the Indemnitee shall have actually recovered any portion of such
Liability from its insurance carrier(s), in which case, whether or not the
amount of indemnification or contribution to such Indemnitee shall be reduced
shall be determined in accordance with Sections 1.1(b) and 1.2(b), as
applicable.

          (e)     Not Applicable to Taxes. Notwithstanding anything to the
contrary contained herein, this Agreement shall not apply to Taxes (which are
covered by the Tax Agreement).

     Section 1.5  Survival of Indemnities. Subject to Section 5.4, the rights
and obligations of the members of the Merck Group and the Medco Group under this
Article I shall survive the sale or other transfer by any party of any assets or
businesses or the assignment by it of any Liabilities or the sale by any member
of the Merck Group or the Medco Group of the capital stock or other equity
interests of any Subsidiary to any Person.

                                   ARTICLE II

                                INSURANCE MATTERS

     Section 2.1  Medco Insurance Coverage. Medco, and Medco alone, shall be
responsible for obtaining and maintaining insurance programs for its risk of
loss and such insurance arrangements shall be separate and apart from Merck's
insurance programs. Merck shall not be required to maintain any insurance
coverage for the benefit of the members of the Medco Group or the directors,
officers or employees of any member of the Medco Group for any period prior to
or after the Distribution.

     Section 2.2  Cooperation and Agreement Not to Release Carriers. Each of
Merck and Medco will share such information as is reasonably necessary in order
to permit the other to manage and conduct its insurance matters in an orderly
fashion. Medco, at the request of Merck, shall cooperate with and use
commercially reasonable efforts to assist Merck in recoveries for claims made
under any Merck Insurance Policy for the benefit of members of the Merck Group.
Neither Medco nor any of its Subsidiaries shall take any action which would
intentionally jeopardize or otherwise interfere with the ability of any member
of the Merck Group to collect any proceeds payable pursuant to any insurance
policy. Nothing in this Agreement shall be interpreted to require Merck to
maintain any insurance coverage for any Member of the Medco Group or any of
their officers, directors or employees.

     Section 2.3  No Liability. Medco does hereby, for itself and as agent for
each other member of the Medco Group, agree that no member of the Merck Group or
any Merck Indemnitee shall have any Liability whatsoever as a result of the
insurance policies and practices

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of Merck and its Subsidiaries as in effect at any time prior to the Distribution
Date, including as a result of the level or scope of any such insurance, the
creditworthiness of any insurance carrier, the terms and conditions of any
policy, the adequacy or timeliness of any notice to any insurance carrier with
respect to any claim or potential claim or otherwise.

     Section 2.4  No Restrictions. Nothing in this Agreement shall be deemed to
restrict any member of the Medco Group from acquiring at its own expense any
other insurance policy in respect of any Liabilities or covering any period.

     Section 2.5  Further Agreements. Medco, the members of the Medco Group, and
the directors, officers and employees of any member of the Medco Group, shall
not make any claims under Merck Insurance Policies, including in respect of
events that occurred when Medco and the members of the Medco Group were
subsidiaries of Merck.

                                   ARTICLE III

                               DISPUTE RESOLUTION

     EXCEPT AS OTHERWISE SET FORTH IN THE DISTRIBUTION AGREEMENT OR ANY
ANCILLARY AGREEMENT, ANY DISPUTES ARISING OUT OF OR RELATING TO THE DISTRIBUTION
AGREEMENT OR ANY ANCILLARY AGREEMENT (INCLUDING THIS AGREEMENT BUT EXPRESSLY
EXCLUDING THE MANAGED CARE AGREEMENT), INCLUDING, WITHOUT LIMITATION, DISPUTES
CONCERNING THE VALIDITY, INTERPRETATION AND PERFORMANCE OF OR UNDER ANY SUCH
AGREEMENT, SHALL BE EXCLUSIVELY GOVERNED BY AND SETTLED IN ACCORDANCE WITH THE
PROVISIONS OF THIS ARTICLE III.

     Section 3.1  Negotiation. The parties shall make a good faith attempt to
resolve any Dispute through negotiation. Within fifteen (15) days after notice
of a Dispute is given by either party to the other 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.

     Section 3.2  Binding Arbitration.

          (a)     If such representatives fail to resolve a Dispute within ten
(10) days after the date of delivery of the later 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 III, any
arbitration shall be conducted pursuant to

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the then current Rules for Non-Administered Arbitration of the Center for Public
Resources ("CPR Rules") and the site of the arbitration shall be in New York
County, New York.

          (b)     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 the 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
representing clients in commercial arbitration. 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 or the parties to the
arbitration (provided that the 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 representing
clients in commercial arbitration. If the Disputing Party is Medco, Medco shall
notify Merck within ten (10) 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.

          (c)     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 such date.

          (d)     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" literally to encompass data compilations in any
form.

          (e)     The prevailing party in any arbitration as determined by the
arbitrator shall be entitled to expenses, including costs and reasonable
attorneys' and other professional fees, incurred in connection with the
arbitration.

          (f)     In connection with any Dispute, the arbitrator shall be
obligated to apply solely principles of law.

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

          (h)  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.

     Section 3.3  Specific Performance. The parties agree and acknowledge that
each would suffer irreparable harm in the event that the other fails to perform
any of its obligations under Article IV hereunder in accordance with its
specific terms or otherwise breaches any of such obligations. Each of the
parties further agrees and acknowledges that money damages may be an inadequate
remedy for such failure to perform or breach of Article IV by it. Accordingly,
notwithstanding anything herein to the contrary, and without waiving any remedy
hereunder, each of the parties shall be entitled to seek specific performance by
the other of its obligations under Article IV hereunder and/or injunctive or
other equitable relief to prevent or cure breaches of Article IV hereunder in an
arbitration proceeding (without first complying with the negotiation provision
of Section 3.1) or in court (subject to Section 5.2).

                                   ARTICLE IV

                             PRIVILEGED INFORMATION

     Section 4.1  Privileged Information. In furtherance of the rights and
obligations of the parties set forth in the Distribution Agreement and the
Ancillary Agreements:

          (a)  Each party hereto acknowledges that (i) each of the Merck Group
on the one hand, and the Medco Group on the other hand, has or may obtain
Information regarding a member of the other Group, or any of its operations,
employees, assets or liabilities (whether in documents or stored in any other
form or known to its employees or agents), as applicable, that is or may be
protected from disclosure pursuant to the attorney-client privilege, the work
product doctrine or other applicable privileges ("Privileged Information"); (ii)
there are a number of actual, threatened or future litigations, investigations,
proceedings (including arbitration proceedings), claims or other legal matters
that have been or may be asserted by or against, or otherwise affect, each or
both of Merck and Medco (or members of either Group) ("Litigation Matters");
(iii) Merck and Medco have a common legal interest in Litigation Matters, in the
Privileged Information, and in the preservation of the confidential status of
the Privileged Information, in each case relating to the Merck Business or the
Medco Business or any former businesses or the assets or liabilities of each
party as it or they existed prior to the Distribution Date or relating to or
arising in connection with the relationship between the constituent elements of
the Groups on or prior to the Distribution Date; and (iv) Merck and Medco intend
that the transactions contemplated by the Related Agreements and any transfer of
Privileged Information in connection herewith or therewith shall not operate as
a waiver of any potentially applicable privilege.

          (b)  Each of Merck and Medco agrees, on behalf of itself and each
member of the Group of which it is a member, not to disclose or otherwise waive
any privilege attaching to any Privileged Information relating to the Merck
Business or the Medco Business or any former

                                        9

<PAGE>

businesses or the assets or liabilities of either party as it or they existed
prior to the Distribution Date or relating to or arising in connection with the
relationship between the Groups on or prior to the Distribution Date, without
providing prompt written notice to and obtaining the prior written consent of
the other, which consent shall not be unreasonably withheld and shall not be
withheld if the other party certifies that such disclosure is to be made in
response to a likely threat of suspension, debarment, criminal indictment or
similar action; provided, however, that Merck may make such disclosure or waiver
with respect to Privileged Information if such Privileged Information relates
solely to the Merck Business, its former businesses (other than the Medco
Business), its assets or liabilities (other than assets or liabilities of the
Medco Business), and Medco may make such disclosure or waiver with respect to
Privileged Information if such Privileged Information relates solely to the
Medco Business, or assets or liabilities exclusively of the Medco Business. The
parties will use commercially reasonable efforts to limit any such disclosure or
waiver to the maximum extent possible and shall seek the execution of a
confidentiality agreement by the party or parties to which such disclosure or
waiver is made.

          (c)  Upon any member of the Merck Group or any member of the Medco
Group receiving any subpoena or other compulsory disclosure notice from any
Governmental Authority or otherwise which requests disclosure of Privileged
Information, in the case of the Medco Group, relating to the Merck Business, its
former businesses (other than the Medco Business), its assets or liabilities
(other than assets or liabilities of the Medco Business), or, in the case of the
Merck Group, relating to the Medco Business, or assets or liabilities
exclusively of the Medco Business, as it or they existed prior to the
Distribution Date or, in either case, relating to or arising in connection with
the relationship between the constituent elements of the Groups on or prior to
the Distribution Date, the recipient of the notice shall promptly provide to
Merck, in the case of receipt by a member of the Medco Group, or to Medco, in
the case of receipt by a member of the Merck Group, a copy of such notice, the
intended response, and all materials or information relating to the other Group
that might be disclosed. In the event of a disagreement as to the intended
response or disclosure, unless and until the disagreement is resolved as
provided in Article III, Merck and Medco shall cooperate to assert all defenses
to disclosure claimed by either Group, at the cost and expense of the Group
claiming such defense to disclosure, and shall not disclose any disputed
documents or information until all legal defenses and claims of privilege have
been finally determined.

                                    ARTICLE V

                                  MISCELLANEOUS

     Section 5.1  Entire Agreement. This Agreement, the Distribution Agreement,
the other Ancillary Agreements and any Annexes, Exhibits and Schedules attached
hereto and thereto, constitutes the entire agreement among 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.

     Section 5.2  Governing Law; Forum. This Agreement, the Distribution
Agreement and all other Ancillary Agreements shall be construed in accordance
with, and all Disputes hereunder shall be governed by, the procedural (except to
the extent inconsistent with the procedures set

                                       10

<PAGE>

forth in Article III of this Agreement) and 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
any party seek or be awarded punitive damages under this Agreement, the
Distribution Agreement or any other Ancillary Agreement. Any state court sitting
in New York county, New York and/or the United States District 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 arbitrators, pursuant to Article III above. Each
of the parties hereby irrevocably waives any right to a jury trial with respect
to a Dispute.

     Section 5.3  Notices. All notices and other communications required or
permitted to be given by any party pursuant to the terms of this Agreement shall
be in writing to and shall be deemed to have been duly given when delivered in
person, by express or overnight mail delivery by a nationally recognized courier
(delivery charges prepaid), or by registered or certified mail (postage prepaid,
return receipt requested), as follows:

          if to Merck:

               Merck & Co., Inc.
               One Merck Drive
               P.O. Box 100
               Whitehouse Station, New Jersey 08889
               Attention: General Counsel

          if to Medco:

               Medco Health Solutions, Inc.
               100 Parsons Pond Drive
               Franklin Lakes, New Jersey 07417
               Attention: General Counsel

or to such other address as the party to whom notice is given may have
previously furnished to the other in writing in the manner set forth above. All
notices and other communication shall be deemed to have been given and received
on the date of actual delivery.

     Section 5.4  Binding Effect; Assignment; 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 Agreement or its rights or obligations
hereunder, without Merck's prior written consent and, except as otherwise
permitted hereby, any attempted assignment, transfer or delegation without such
prior written consent shall be voidable at the sole option of Merck. Nothing in
this Agreement shall restrict any transfer of this Agreement by Merck, whether
by operation of law or otherwise. Without limiting the foregoing, this Agreement
shall be binding upon Merck and the other members of the Merck Group and Medco
and the other members of the Medco Group and inure solely to the benefit of the
Medco Indemnitees and the Merck

                                       11

<PAGE>

Indemnitees and their respective legal representatives, successors and permitted
assigns, and nothing in this 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 Agreement.

     Section 5.5  Offset. In addition to, and not in limitation of, any other
remedies any member of the Merck Group or any Merck Indemnitee may be entitled
to under the Distribution Agreement, any Ancillary Agreement (including this
Agreement) or any Intercompany Agreement, any member of the Merck Group or any
Merck Indemnitee may satisfy any amounts owed to such member of the Merck Group
or Merck Indemnitee by any member of the Medco Group by means of an offset
against any amounts any member of the Merck Group may from time to time owe to
any member of the Medco Group or an Medco Indemnitee, whether under the
Distribution Agreement, any Ancillary Agreement (including this Agreement), any
Intercompany Agreement, any other agreement or arrangement existing between any
member of the Merck Group and any member of the Medco Group, or otherwise.

     Section 5.6  Other Agreements Evidencing Indemnification Obligations. Merck
hereby agrees to execute, for the benefit of any Medco Indemnitee, such
documents as may be reasonably requested by such Medco Indemnitee, evidencing
Merck's agreement that the indemnification obligations of Merck set forth in
this Agreement inure to the benefit of and are enforceable by such Medco
Indemnitee. Medco hereby agrees to execute, for the benefit of any Merck
Indemnitee, such documents as may be reasonably requested by such Merck
Indemnitee, evidencing Medco's agreement that the indemnification obligations of
Medco set forth in this Agreement inure to the benefit of and are enforceable by
such Merck Indemnitee.

     Section 5.7  Counterparts. This Agreement, including any Annexes, Schedules
and Exhibits hereto, and the other documents referred to herein, may be executed
in counterparts, each of which shall be deemed to be an original but all of
which shall constitute one and the same agreement.

     Section 5.8  Severability. If any term or other provision of this Agreement
or any Annexes, Schedules or Exhibits attached hereto 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, all other conditions and
provisions of this 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 hereto.
Upon such determination that any term or other provision is invalid, illegal or
incapable of being enforced, the parties hereto shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the parties hereto
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 on any such modification, the arbitrator
selected in accordance with Article III of this Agreement shall have the
authority to determine such modification.

     Section 5.9  Failure or Indulgence Not Waiver. No failure or delay on the
part of any 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.

                                       12

<PAGE>

     Section 5.10 Amendment. No change or amendment will be made to this
Agreement except by an instrument in writing signed on behalf of each of the
parties to this Agreement.

     Section 5.11 Interpretation. The headings contained in this Agreement, in
any Annex, Exhibit or Schedule hereto and in the table or contents to this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Any capitalized term used in any
Annex, Schedule or Exhibit but not otherwise defined therein, shall have the
meaning assigned to such term in this Agreement. When a reference is made in
this Agreement to an Article or Section, or an Annex, Exhibit or Schedule, such
reference shall be to an Article or Section of, or an Annex, Exhibit or Schedule
to, this Agreement unless otherwise indicated.

                                   ARTICLE VI

                                   DEFINITIONS

     Section 6.1  Action. "Action" means any claim, demand, action, suit,
countersuit, arbitration, inquiry, proceeding or investigation by or before any
federal, state, local, foreign or international governmental authority or any
arbitration or mediation tribunal.

     Section 6.2  Dispute. "Dispute" means a dispute arising from or in
connection with the Distribution Agreement, this Agreement or any other
Ancillary Agreement, whether based on contract, tort, or otherwise.

     Section 6.3  Indemnitee. "Indemnitee" means a Merck Indemnitee or a Medco
Indemnitee.

     Section 6.4  Indemnifying Party. "Indemnifying Party" means any party who
is required to indemnify any other Person pursuant to this Agreement.

     Section 6.5  Insurance Policies. "Insurance Policies" means insurance
policies pursuant to which a Person makes a true risk transfer to an insurer.

     Section 6.6  Intercompany Agreements. "Intercompany Agreements" means any
written agreement, arrangement or understanding between any member of the Merck
Group and any member of the Medco Group which is in effect prior to, as of or
after the Distribution Date.

     Section 6.7  Liabilities. "Liabilities" means all debts, liabilities,
guarantees, assurances, commitments and obligations, whether fixed, contingent
or absolute, asserted or unasserted, matured or unmatured, liquidated or
unliquidated, accrued or not accrued, known or unknown, due or to become due,
whenever or however arising (including, without limitation, whether arising out
of any contract or tort based on negligence or strict liability) and whether or
not the same would be required by generally accepted principles and accounting
policies to be reflected in financial statements or disclosed in the notes
thereto. For purposes of any indemnification hereunder, "Liabilities" shall be
deemed also to include any and all damages, claims, suits, judgments, fines,
penalties, costs and expenses of any kind or character, including attorney's
fees and expenses, costs of investigation and preparation, expert witness costs
and any

                                       13

<PAGE>

other fees and expenses associated with the defense of any Action
whether relating to Third Party Claims or Actions against the other party
hereto.

     Section 6.8  Material Adverse Effect. "Material Adverse Effect" means, with
respect to either Group, a material adverse effect on the business, results of
operations or financial conditions of the members of such Group, taken as a
whole, provided that, without limiting the events, circumstances or conditions
which may constitute or result in a Material Adverse Effect on the Merck Group,
any compromise, settlement or consent affecting the Merck Group that, if applied
to Medco or any member of the Medco Group, would result in a Material Adverse
Effect on the Medco Group, shall be deemed to result in a Material Adverse
Effect on the Merck Group.

     Section 6.9  Medco Assets. "Medco Assets" means all assets of the Medco
Group following the consummation of the Distribution.

     Section 6.10 Medco Balance Sheets. "Medco Balance Sheets" means the
consolidated balance sheets of Medco and its Subsidiaries included in the Form
10.

     Section 6.11 Medco Business. "Medco Business" means (a) the business and
operations of Medco, Merck-Medco LLC and its Subsidiaries and Affiliates (other
than members of the Merck Group), and (b) except as otherwise expressly provided
herein, any terminated, divested or discontinued businesses or operations that
at the time of termination, divestiture or discontinuation primarily related to
the Medco Business as then conducted; provided, that the Medco Business shall
not include the business or operations of Merck Capital Ventures LLC, Merck
Liability Management Company or Merck Medco Holdings II Corp.

     Section 6.12 Medco Indemnitees. "Medco Indemnitees" means Medco, each
member of the Medco Group and each of their respective directors, officers,
employees, agents or representatives.

     Section 6.13 Medco Liabilities. "Medco Liabilities" means, collectively,
all of the Liabilities of Medco and each of the other members of the Medco
Group, including without limitation:

                  (i)    all of the Liabilities reflected on the Medco Balance
             Sheet;

                  (ii)   all Liabilities relating to, arising out of or
             resulting from any of the Credit Support Arrangements, including,
             without limitation, any payment required to be made by a member of
             the Merck Group under any of the Credit Support Arrangements;

                  (iii)  all Liabilities which are incurred or arise, or which
             accrue or exist or are accrued at any time on, prior to or after
             the date of the Medco Balance Sheets and which arise or arose out
             of, or in connection with, or otherwise relate to or result from,
             the Medco Assets or the Medco Business;

                                       14

<PAGE>

                  (iv)   all Liabilities of each member of the Medco Group
             under, allocated to or to be retained or assumed by Medco or any of
             the other members of the Medco Group pursuant to the Distribution
             Agreement, this Agreement or any Ancillary Agreements, or
             Intercompany Agreements; provided that nothing in this Agreement
             shall adversely affect the rights and remedies of Merck or Medco
             under the Managed Care Agreement relating to, arising out of or
             resulting from a breach of the Managed Care Agreement, or any
             Liability of either party to the other relating to, arising out of
             or resulting from such breach;

                  (v)    all of the Liabilities of any member of the Merck Group
             or Medco Group (whenever arising whether prior to, on or following
             the Distribution Date) arising out of or in connection with or
             otherwise relating to the management or conduct prior to, on or
             following the Distribution Date of the Medco Business or the Medco
             Assets; provided that nothing in this Agreement shall adversely
             affect the rights and remedies of Merck or Medco under the Managed
             Care Agreement relating to, arising out of or resulting from a
             breach of the Managed Care Agreement, or any Liability of either
             party to the other relating to, arising out of or resulting from
             such breach;

                  (vi)   Subject to the proviso set forth after clause (x) of
             this Section 6.13, all Liabilities relating to, arising out of or
             resulting from (a) the Shared Liability Actions, any Actions in
             respect of which as of the date of this Agreement any member of the
             Medco Group has been named as a defendant (including, without
             limitation, the Actions captioned U.S.A. ex rel. Hunt and Gauger v.
             Medco and U.S.A. ex rel. v. Piacentile v. Medco) or any amendments
             to such Actions (the "Existing Actions"), (b) any of the facts,
             circumstances and events giving rise to Shared Liability Actions or
             any of the Existing Actions, and (c) any Actions involving similar
             claims or which are based upon similar facts, circumstances or
             events, whether involving the same parties or other parties, in
             each case whether relating to, arising out of or resulting from
             facts, circumstances or events prior to, on or after the
             Distribution Date;

                  (vii)  all Liabilities relating to, arising out of or
             resulting from, any Third Party Claim relating to, arising out of
             or resulting from (1) the Managed Care Agreement or (2) any
             infringement or alleged infringement by the Patents or the Patent
             License (or the use thereof) on any intellectual property or other
             rights of any Person;

                  (viii) all Liabilities relating to, arising out of or
             resulting from the Actions, Third Party Claims, the examinations,
             notices, letters, reviews and investigations by Governmental
             Authorities, referred to in the Form 10 under "Business - Legal
             Proceedings and Government Investigations", and "Management -
             Retirement Benefits - Cash Balance Plan" and Liabilities relating
             to, arising out of, or resulting from the facts, circumstances or
             events giving rise to any of such Actions, Third Party Claims,
             examinations, notices, letters, reviews

                                       15

<PAGE>

             or investigations (subject to the proviso set forth after clause
             (x) of this Section 6.13);

                  (ix)   all Securities Liabilities relating to, arising out of
             or resulting from (A) the Notes Offering, the Distribution and any
             documents, information or data (financial or otherwise) furnished
             or provided, orally or in writing, to purchasers or transferees or
             potential purchasers and transferees (or any of their respective
             representatives), in connection therewith or filed or furnished in
             connection therewith with or to any Governmental Authority or any
             securities exchange or securities market, including, without
             limitation, the Registration Statements, (B) any other offer,
             issuance, sale, exchange or other transfer of securities of or by
             Medco or any member of the Medco Group prior to, on or after the
             Distribution Date, or any documents, information or data (financial
             or otherwise) furnished or provided, orally or in writing, to
             transferees or purchasers or potential transferees or purchasers
             (or any of their respective representatives) of such securities or
             filed or furnished in connection therewith with or to any
             Governmental Authority or securities exchange or securities market,
             including, without limitation, any registration statement, (C) any
             oral or written disclosure made, whether or not included in
             documents filed with or furnished to any Governmental Authority or
             securities exchange or securities market, by Medco or any member of
             the Medco Group, or on behalf of Medco or any Member of the Medco
             Group, prior to, on or after the Distribution Date or any
             disclosure made (other than by a member of the Merck Group), orally
             or in writing, of information or data (financial or otherwise)
             relating to or concerning Medco or any other member of the Medco
             Group, the business, operations and management of the Medco
             Business and/or Medco or any other member of the Medco Group, and
             (D) any oral or written disclosure made, whether or not included in
             documents filed with or furnished to any Governmental Authority or
             securities exchange or securities market, by Merck or any member of
             the Merck Group prior to, on or after the Distribution Date based
             on any information or data (financial or otherwise) provided by or
             on behalf of Medco or any member of the Medco Group; and

                  (x)    all other Liabilities arising out of, relating to or
             resulting from any Action or Third Party Claim by any Governmental
             Authority or any other Person that is based on (A) any violations
             or alleged violations by Medco, its Subsidiaries and/or any of
             their respective directors, officers, employees, agents or
             representatives of any of the provisions of the Securities Act,
             Exchange Act, or the rules and regulations of the Commission
             promulgated thereunder, any other securities or similar law or any
             other law, rule or regulation, including, without limitation, the
             federal False Claims Act and state False Claims Acts, or (B) any
             breach or alleged breach of fiduciary duty by the Medco Board or
             any Committee of the Medco Board (or any member of the Medco Board
             or any Committee thereof) or the board of directors or similar body
             or any Committee of the board of directors or similar body (or any
             member of any such board or similar body or any Committee thereof)
             of any other member of the Medco Group, or by any officer or
             employee of any member of the Medco Group.

                                       16

<PAGE>

provided, however, that (i) Medco Liabilities shall not include the Merck
Defendant Robinson-Patman Act Liabilities and the Specified Litigation
Liabilities (both as defined in Section 6.16), and (ii) Merck shall be
responsible for the Merck Share of the Shared Liability Actions.

     Section 6.14 Merck Indemnitees. "Merck Indemnitees" means Merck, each
member of the Merck Group and each of their respective directors, officers,
employees, agents and representatives.

     Section 6.15 Merck Insurance Policy. "Merck Insurance Policy" shall mean
each Insurance Policy owned or maintained by a member of the Merck Group.

     Section 6.16 Merck Liabilities. "Merck Liabilities" means

                  (i)    all Liabilities of any member of the Merck Group under,
             allocated to or to be retained or assumed by Merck or any of the
             other members of the Merck Group pursuant to the Distribution
             Agreement, this Agreement or any other Ancillary Agreement (other
             than Liabilities resulting from a breach of the Managed Care
             Agreement, which shall be subject to the terms thereof);

                  (ii)   all Liabilities incurred by members of the Merck Group
             in connection with the management or conduct prior to, on or
             following the Distribution Date of the Merck Business (other than
             Liabilities resulting from a breach of the Managed Care Agreement,
             which shall be subject to the terms thereof);

                  (iii)  all monetary Liabilities arising out of those Actions
             set forth on Schedule 6.16(a) (but not including any lost sales or
             profits resulting from any of such Actions) (the "Merck Defendant
             Robinson-Patman Act Liabilities"); and

                  (iv)   all monetary Liabilities arising out of claims made
             prior to the date of this Agreement in the Action set forth on
             Schedule 6.16(b) (but not including any lost sales or profits
             resulting from such Action ) ("Specified Litigation Liabilities");

provided, however, that Merck Liabilities shall not include any Liability that
constitutes a Medco Liability.

     Section 6.17 Merck Share of the Shared Liability Actions. "Merck Share of
the Shared Liability Actions" shall have the meaning set forth on Schedule 6.17.

     Section 6.18 Privileged Information. "Privileged Information" has the
meaning set forth in Section 4.1(a).

     Section 6.19 Securities Liabilities. "Securities Liabilities" means any and
all losses, liabilities, penalties, claims, damages, demands, costs or expenses
or other Liabilities whatsoever that are assessed, imposed, awarded against,
incurred or accrued by a Person arising out of or relating in whole or in part
to any Action, any potential or threatened Action, any Third Party

                                       17

<PAGE>

Claim or any potential or threatened Third Party Claim by any Governmental
Authority or any other Person that is based on any violations or alleged
violations of the Securities Act, the Exchange Act, and any of the rules or
regulations of the Commission promulgated under the Securities Act or Exchange
Act, or any other securities or other similar laws, rules or regulations,
including, without limitation, state securities or "blue sky" laws, rules or
regulations, foreign securities laws, rules or regulations and rules or
regulations of any securities exchange or market.

     Section 6.20 Distribution Agreement. "Distribution Agreement" has the
meaning set forth in the Recitals hereof.

     Section 6.21 Shared Liability Actions. "Shared Liability Actions" has the
meaning set forth on Schedule 6.21.

     Section 6.22 Subsidiary. "Subsidiary" has the meaning set forth in the
Distribution Agreement.

     Section 6.23 Taxes. "Taxes" has the meaning set forth in the Tax Agreement.

     Section 6.24 Third Party Claim. "Third Party Claim" means an Action
brought, asserted, commenced or pursued by a Person (including any Governmental
Authority) other than a member of the Merck Group or the Medco Group.

     Section 6.25 Other Definitions. Any capitalized terms used but not defined
herein shall have the meanings assigned to them in the Distribution Agreement.

                         [SIGNATURES ON FOLLOWING PAGE]

                                       18

<PAGE>

     IN WITNESS WHEREOF, each of the parties has caused this Indemnification and
Insurance Matters Agreement to be executed on its behalf by its officers
thereunto duly authorized on the day and year first above written.

                                        MERCK & CO., INC.

                                        By:
                                           -------------------------------------
                                        Name:
                                        Title:

                                        MEDCO HEALTH SOLUTIONS, INC.

                                        By:
                                           -------------------------------------
                                        Name:
                                        Title:

                                       19

<PAGE>

                                Schedule 6.16(a)

                           Robinson-Patman Act Actions
                           ---------------------------

The Actions in which Merck was named as defendant that were consolidated for
pre-trial proceedings in the United States District Court for the Northern
District of Illinois into the Action captioned In Re Brand Name Prescription
Drug Antitrust Litigation.

<PAGE>

                                Schedule 6.16(b)

                           Specified Litigation Action
                           ---------------------------

The Action filed in the United States District Court For the District of New
Jersey (No. 03 CV 2631 (SRC)) captioned Ellen Fagin and Judith Fagin,
derivatively and on behalf of Merck & Co., Inc. and Medco Health Solutions,
Inc., v. Raymond V. Gilmartin, Judy C. Lewent, William B. Harrison, Jr., Heidi
G. Miller, Thomas E. Shenk, Samuel O. Their, Richard T. Clark, Joan A. Reed,
Richard J. Rubino, Lawrence A. Bossidy, Jeanetta B. Cole, William N. Kelly,
William G. Bowen, Niall Fitzgerald, Anne M. Tatlock, Edward M. Skolnick and
Arthur Andersen, LLP and Merck & Co., Inc.

                                        2

<PAGE>

                                  Schedule 6.17

     "Merck Share of the Shared Liability Actions" means (x) 10% of amounts
payable in settlement of, and/or pursuant to judgments rendered in, the ERISA
Shared Liability Actions (as defined on Schedule 6.21) ("Merck's Share of the
ERISA Shared Liability Actions"); provided that Merck's Share of the ERISA
Shared Liability Actions shall not exceed $25 million, in the aggregate, and
notwithstanding anything to the contrary contained in this Agreement, Merck
shall not be responsible for any, and Medco shall be responsible for all,
amounts incurred defending against the ERISA Shared Liability Actions and (y)
80% of amounts payable in settlement of, and/or pursuant to judgments rendered
in, the Revenue Recognition Actions (as defined on Schedule 6.21), and
notwithstanding anything to the contrary contained in this Agreement, Medco
shall not be responsible for any, and Merck shall be responsible for all,
amounts incurred defending against the Revenue Recognition Actions, it being
understood that Medco shall be responsible for 20% (but not more than 20%) of
amounts payable in settlement of, and/or pursuant to judgments rendered in, the
Revenue Recognition Actions. Under no circumstances shall Merck be responsible
for any lost sales and profits of members of the Medco Group resulting from, or
relating to, the Shared Liability Actions. Merck shall have the sole right to
compromise, settle, or consent to the entry of a judgment or determination of
liability concerning any Revenue Recognition Actions, it being understood that
Merck shall be under no obligation to provide prior notice to, or obtain consent
from, Medco in connection with any such compromise, settlement or consent. Medco
shall have the sole right to compromise, settle, or consent to the entry of a
judgment or determination of liability concerning any ERISA Shared Liability
Actions, it being understood that Medco shall be under no obligation to obtain
consent from Merck in connection with any such compromise, settlement or
consent.

                                       3

<PAGE>

                                  Schedule 6.21

     "ERISA Shared Liability Actions" means the Action captioned Gruer v.
Merck-Medco Managed Care, L.L.C. filed in the United States District Court for
the Southern District of New York (the "Gruer Action") and all other Actions
that prior to the date of this Agreement were transferred and consolidated with
the Gruer Action in the District Court for the Southern District of New York
into the Action captioned In re Medco Health Solutions, Inc. Pharmacy Benefit
Management Litigation and other Actions naming Merck as a defendant that are
commenced prior to the first anniversary of the Distribution Date, in each case
to the extent such Actions include, or are amended to include, (a) claims that a
member of the Medco Group should be treated as a fiduciary under the Employment
Retirement Income Security Act of 1974, as amended ("ERISA"), and that a member
of the Medco Group breached its fiduciary obligations under such Act in
connection with the development and implementation prior to the Distribution
Date of formularies, preferred drug listings and intervention programs by
members of the Medco Group and (b) state or federal claims alleging antitrust
violations based on or arising from conduct occurring prior to the Distribution
Date alleged to be violative of ERISA in the Actions captioned above or in
similar Actions. ERISA Shared Liability Actions shall not include: (a) any
Action or Third Party Claim of, brought by or on behalf of, or in which there is
intervention by, any Governmental Authority, including without limitation the
office of the U.S. Attorney for the Eastern District of Pennsylvania, (b) any
Action or Third Party Claim of, or brought by or on behalf of, any other Person
as a result of, or alleging, facts, circumstances or events discovered as a
result of, any review or investigation made by any Governmental Authority,
including without limitation the office of the U.S. Attorney for the Eastern
District of Pennsylvania, or (c) any Action or Third Party Claim alleging
violations of the federal False Claims Act or state False Claims Acts,
including, without limitation, the Actions captioned U.S.A. ex rel. Hunt and
Gauger v. Medco and U.S.A. ex rel. v. Piacentile v. Medco. Without limiting
Medco's responsibilities and obligations under this Agreement, it is understood
that any Action or Third Party Claim that would constitute an ERISA Shared
Liability Action but for the immediately preceding sentence and all Liabilities
resulting therefrom shall be the sole responsibility of Medco.

     "Revenue Recognition Actions" means the Actions in which Merck and Medco
and their officers and directors were named as defendants (relating to Merck and
Medco's revenue recognition practices, for retail co-payments and rebates
received by Medco and Medco's independent status) that were consolidated in the
United States District Court for the District of New Jersey into the Action
captioned In re Merck & Co. Securities Litigation.

     "Shared Liability Actions" means the Revenue Recognition Actions and the
ERISA Shared Liability Actions.

                                        4

<PAGE>

                                        5<PAGE>

                                                                    EXHIBIT 10.5

     TAX RESPONSIBILITY ALLOCATION AGREEMENT (the "Agreement"), dated as of
August 12, 2003, between Merck & Co., Inc., a New Jersey Corporation
("Distributing"), and Medco Health Solutions, Inc., a Delaware corporation
("Controlled" and together with Distributing, the "Companies").

     WHEREAS, Distributing owned 100% of the membership interests in Merck Medco
Care LLC, a Delaware limited liability company ("Medco") and, as part of a plan
intended to culminate in the Distribution (as defined below), has caused Medco
to convert under Delaware law to a corporation which has adopted the name of
Controlled;

     WHEREAS, pursuant to such plan, the board of directors of Distributing has
determined it would be in the best interests of Distributing and its
shareholders to distribute (the "Distribution") all of Distributing's shares in
Controlled to the Distributing shareholders on the terms and conditions set
forth in the Master Separation and Distribution Agreement dated the date hereof
between Distributing and Controlled (the "Distribution Agreement") (the date of
such Distribution, the "Distribution Date");

     WHEREAS, the Companies intend that the Distribution qualify as a tax-free
spin-off pursuant to Section 355 and as a reorganization pursuant to Section
368(a)(1)(D) of the Internal Revenue Code of 1986, as amended (the "Code");

     WHEREAS, as of the date hereof, Distributing is the common parent of an
affiliated group of domestic corporations, including Controlled, which has
elected to file consolidated U.S. federal income tax returns and, as a result of
the Distribution, Controlled will not be a member of such group for the portion
of the taxable year following the Distribution or in future taxable years;

                                        1

<PAGE>

     WHEREAS, the Companies desire (i) to allocate the responsibilities for
Income Tax (as hereinafter defined) of Controlled, (ii) to allocate the
responsibilities for Other Controlled Tax (as hereinafter defined) and (iii) to
provide for certain additional Tax (as hereinafter defined) matters;

     NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, the Companies (each on behalf of itself, each of its
subsidiaries as of the Distribution Date, and its future subsidiaries) hereby
agree as follows:

                                        2

<PAGE>

                                    ARTICLE I

                                   DEFINITIONS

     The following terms shall have the following meanings (such meanings to
apply equally to both the singular and the plural forms of the terms defined).
All section references are to this Agreement unless otherwise stated.

     "Affiliate" means any entity that is directly or indirectly under the
Control of the person or entity in question.

     "Control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a person,
whether through ownership of voting securities, by contract or otherwise.

     "Controlled Business" means any businesses formerly carried out by
Distributing (directly or indirectly), that are now carried out by the
Controlled Group and any assets owned directly or indirectly by Distributing
that are now owned by the Controlled Group.

     "Controlled Combined Income Tax" shall mean, with respect to any period for
which the Controlled Group is included in any of Distributing's combined or
unitary groups, the liability for state or local Income Tax of the Controlled
Group computed as though the Controlled Group filed a Tax Return separate from
Distributing for such taxable period, which amount shall not be less than zero.

     "Controlled Federal Income Tax" shall mean, with respect to any period for
which the Controlled Group is included in Distributing's consolidated group, the
liability for U.S. federal Income Tax (including "alternative minimum tax", if
any) of the Controlled Group computed as though the Controlled Group filed a
U.S. federal Income Tax Return separate from Distributing for such taxable
period, which amount shall not be less than zero.

                                        3

<PAGE>

     "Controlled Group" shall mean, collectively or separately, Controlled and
any Affiliate of Controlled for which Controlled has any direct or indirect Tax
liability.

     "Controlled Incorporation Date" means May 21, 2002, the date Controlled was
incorporated.

     "Controlled Separate Income Tax" shall mean any state or local Income Tax
imposed on any member of the Controlled Group (which is not a Controlled
Combined Income Tax).

     "Distributing Group" shall mean, collectively or separately, Distributing
and any Affiliate of Distributing for which Distributing has any direct or
indirect Tax liability, other than any member of the Controlled Group.

     "Distributing Subsidiary" shall mean an Affiliate of Distributing other
than Controlled or any Affiliate of Controlled.

     "Income Tax" shall mean any tax imposed on net income, including the
Michigan Single Business Tax, but not including Washington State's "business and
occupation tax" or any municipal gross receipts tax ("patente") imposed in
Puerto Rico.

     "IRS Private Letter Ruling" means the supplemental private letter ruling
from the United States Internal Revenue Service issued in connection with the
Distribution on July 14, 2003, and, to the extent not superceded by such private
letter ruling, the private letter ruling from the United States Internal Revenue
Service issued in connection with the Distribution on September 30, 2002

     "Other Controlled Tax" means any Tax of the Controlled Group or with
respect to the Controlled Business that is not an Income Tax (whether payable
directly by Controlled

                                        4

<PAGE>

Group or payable by a combined or unitary group that includes the Controlled
Group to the extent of Controlled Group's portion of such Tax).

     "Post-Distribution Period" means all taxable periods or portions of periods
beginning on or after the Distribution Date.

     "Post-Incorporation Period" means all taxable periods or portions of
periods beginning on or after the Controlled Incorporation Date.

     "Pre-Distribution Period" means all taxable periods or portions of periods
ending before the Distribution Date.

     "Pre-Incorporation Period" means all taxable periods or portions of periods
ending before the Controlled Incorporation Date.

     "Tax" means any income, gross income, gross receipts, profits, capital
stock, franchise, withholding, payroll, social security, workers compensation,
unemployment, disability, property, ad valorem, stamp, excise, severance,
occupation, service, sales, use, license, lease, transfer, import, export, value
added, alternative minimum, estimated or other similar tax (including any fee,
assessment, or other charge in the nature of or in lieu of any tax) imposed by
any governmental entity or political subdivision thereof, and any interest,
penalties, additions to tax, or additional amounts in respect of the foregoing
imposed on any taxpayer or consolidated, combined or unitary group of taxpayers.

     "Tax Authority" means, with respect to any Tax, the governmental entity or
political subdivision thereof that imposes such Tax, and the agency (if any)
charged with the collection of such Tax for such entity or subdivision.

     "Tax Benefit" means the amount that any item of loss, deduction or credit
(or any other item) decreases Taxes paid or payable including any interest with
respect thereto or

                                        5

<PAGE>

interest that would have been payable but for such item, net of any Tax imposed
on such interest.

     "Tax Contest" means an audit, review, examination, or any other
administrative or judicial proceeding with the purpose or effect of
redetermining any Tax (including any administrative or judicial review of any
claim for refund).

     "Tax Detriment" means the amount that any item of income or gain (or any
other item) increases Taxes paid or payable including any interest with respect
thereto.

     "Tax Return" means any report of Tax due, any claims for refund of Tax
paid, any information return with respect to Tax, any election made with respect
to Tax, or any other similar report, statement, declaration, or document
required to be filed under the Code or other law in respect of Tax, including
any attachments, exhibits, or other materials submitted with any of the
foregoing, and including any amendments or supplements to any of the foregoing
for any taxpayer or consolidated, combined or unitary group of taxpayers.

                                        6

<PAGE>

                                   ARTICLE II

                             RESPONSIBILITY FOR TAX

     2.01 Responsibility for Tax.
          ----------------------

          (a)  Distributing shall be responsible for and indemnify and hold
harmless the Controlled Group from (i) any liability for Controlled Federal
Income Tax and Controlled Combined Income Tax with respect to the Pre-
Distribution Period (other than Income Taxes described in Section 2.01(g)); (ii)
any Controlled Separate Income Tax with respect to the Pre-Incorporation Period;
(iii) any Income Tax of the Distributing Group by reason of Controlled Group
being severally liable for such Income Tax pursuant to Treasury Regulations
Section 1.1502-6 or any analogous provision of state or local law; and (iv) any
item described in Section 3.01(a) to the extent not covered by Section 3.01(b).

          (b)  Notwithstanding the provisions of clause (i) of Section 2.01(a),
for all periods in which Controlled is a member of Distributing's consolidated
group, Controlled shall be responsible for and shall pay to Distributing, on or
prior to the Distribution Date, an amount equal to the estimate of the
Controlled Federal Income Tax for such periods, as determined by Distributing in
good faith and in the ordinary course of business.

          (c)  Notwithstanding the provisions of clause (i) of Section 2.01(a),
for all periods in which Controlled or any other member of the Controlled Group
is a member of a state or local consolidated, combined or unitary group of which
any member of the Distributing Group is the parent, Controlled shall be
responsible for and shall pay to Distributing, on or prior to the Distribution
Date, an amount equal to the estimate of the

                                        7

<PAGE>

Controlled Combined Income Tax for such periods, as determined by Distributing
in good faith and in the ordinary course of business.

          (d)  Controlled shall be responsible for, and indemnify and hold
harmless the Distributing Group from (i) all Income Tax of the Controlled Group
with respect to a Post-Distribution Period; (ii) any Controlled Separate Income
Tax with respect to the Post-Incorporation Period; (iii) Income Taxes described
in Section 2.01(g); (iv) all Other Controlled Tax (regardless of which period it
relates to); and (v) any act for which Controlled is liable under Section
3.01(b).

          (e)  For purposes of this Agreement, in the case of any taxable period
that begins before and ends after the Distribution Date, the amount of
Controlled Federal Income Tax and/or Controlled Combined Income Tax payable for
a portion of a period shall be the amount which would have been payable if that
portion of a period constituted a separate taxable period beginning on the date
such portion of a period began and ending on the date such portion of a period
ended, or in such other manner as the parties may agree.

          (f)  For purposes of this Agreement, in the case of any taxable period
that begins before and ends after the Controlled Incorporation Date, the amount
of Controlled Separate Income Tax payable for a portion of a period shall be the
amount which would have been payable if that portion of a period constituted a
separate taxable period beginning on the date such portion of a period began and
ending on the date such portion of a period ended, or in such other manner as
the parties may agree.

          (g)  In the event that any jurisdiction determines that the income of
any member of the Controlled Group is included or includible with the income of
any member

                                        8

<PAGE>

of the Distributing Group for purposes of calculating the combined,
consolidated, or unitary Tax liability of the Distributing Group and, as of the
date hereof, the income of such member of the Controlled Group was not so
included by any member of the Distributing Group in a combined, consolidated, or
unitary group of which such member of the Distributing Group was the common
parent, Controlled shall be responsible for and shall pay to Distributing any
Income Tax liability incurred by any member of the Distributing Group as a
result of such determination.

     2.02 Refunds and Tax Benefits.
          ------------------------

          (a)  Refunds and Carrybacks. (i) Except as provided in (v) or (vi)
below, Distributing shall be entitled to any refunds of Controlled Federal
Income Tax and Controlled Combined Income Tax (including refunds paid by means
of a credit against other or future Tax liabilities) arising with respect to
taxable periods ending on or before the Distribution Date and Controlled shall
be entitled to any refunds of Income Tax of the Controlled Group (including
refunds paid by means of a credit against other or future Tax liabilities)
arising with respect to taxable periods beginning on or after the Distribution
Date. Distributing and Controlled agree to allocate such refunds (including
refunds paid by means of a credit against other or future Tax liabilities)
arising with respect to taxable periods that begin before and end after the
Distribution Date to whichever of Distributing, Controlled, or both initially
bore the items to which such refund is attributable.

               (ii)  Except as provided in (v) below, Distributing shall be
entitled to any refunds of Controlled Separate Income Tax (including refunds
paid by means of a credit against other or future Tax liabilities) arising with
respect to taxable periods ending

                                        9

<PAGE>

on or before the Controlled Incorporation Date. Controlled shall be entitled to
any refunds of Controlled Separate Income Tax paid by or on behalf of the
Controlled Group (including refunds paid by means of a credit against other or
future Tax liabilities) arising with respect to taxable periods beginning on or
after the Controlled Incorporation Date. Distributing and Controlled agree to
allocate such refunds (including refunds paid by means of a credit against other
or future Tax liabilities) arising with respect to taxable periods that begin
before and end after the Controlled Incorporation Date to whichever of
Distributing, Controlled, or both initially bore the items to which such refund
is attributable.

               (iii) Controlled shall be entitled to any refunds or credits of
Other Controlled Tax (including refunds paid by means of a credit against other
or future Tax liabilities).

               (iv)  Controlled shall promptly forward to Distributing or
reimburse Distributing for any refunds due Distributing (pursuant to the terms
of this Section 2.02(a)) after receipt thereof (less any net Tax Detriment
imposed with respect to such refunds or any interest paid with respect to such
refunds), and Distributing shall promptly forward to Controlled or reimburse
Controlled for any refunds due Controlled (pursuant to the terms of this Section
2.02(a)) after receipt thereof (less any net Tax Detriment imposed with respect
to such refunds or any interest paid with respect to such refunds). In the case
of a refund received in the form of a credit against other or future Tax
liabilities, reimbursement in respect of such refund shall be due in each case
on the due date for payment of the Tax against which such refund has been
credited. If Distributing reasonably so requests, Controlled, at Distributing's
expense, shall file for and

                                       10

<PAGE>

pursue any refund to which Distributing is entitled under this Section 2.02(a).
If Controlled reasonably so requests, Distributing, at Controlled's expense,
shall file for and pursue any refund to which Controlled is entitled to under
this Section 2.02(a).

               (v)   Distributing agrees that if the Controlled Group carries
back any item of loss, deduction or credit which arises in any taxable period
the Income Tax for which Controlled is responsible, into any taxable period the
Income Tax for which Distributing was responsible, then Controlled shall be
entitled to any Tax Benefit or refund of Tax realized as a result of the
carryback.

               (vi)  Notwithstanding anything to the contrary in this Section
2.02, Distributing shall not be entitled to, and Controlled shall be entitled
to, any refunds or credits with respect to Income Tax for which Controlled was
liable under Section 2.01(g).

          (b)  Allocation of Benefits. If as a result of or in settlement of any
Tax Contest, any adjustments shall be made to any Tax Returns relating to Income
Tax of the Controlled Group or the Distributing Group for any period in which
Distributing was responsible for all or a portion of such Income Tax, and if
such adjustment results in both (x) any Tax Detriment to Distributing or any
Affiliate of Distributing and (y) any Tax Benefit to which the Controlled Group
is entitled, then Controlled shall pay to Distributing the amount of such Tax
Benefit at such time or times as and to the extent that the Controlled Group
realizes such benefit through a refund of Tax or reduction in the amount of Tax
which the Controlled Group would otherwise have had to pay if such adjustment
had not been made. For purposes of clause (x), an Affiliate of Distributing
shall include (but not be limited to) members of the Controlled Group with
respect to (a) Controlled

                                       11

<PAGE>

Federal Income Tax and/or Controlled Combined Income Tax and (b) for the
Pre-Incorporation Period, Controlled Separate Income Tax.

          If as a result of or in settlement of any Tax Contest, any adjustments
shall be made to any Tax Returns relating to Income Tax of the Controlled Group
for any period in which Controlled is liable hereunder for all or a portion of
such Income Tax, and if such adjustment results in both (x) any Tax Detriment to
the Controlled Group with respect to such period and (y) any Tax Benefit to
which Distributing or any Affiliate of Distributing is entitled hereunder, then
Distributing shall pay to Controlled the amount of such Tax Benefit at such time
or times as and to the extent that Distributing or any Affiliate of Distributing
realizes such benefit through a refund of Tax or reduction in the amount of Tax
which Distributing or such Affiliate of Distributing would otherwise have had to
pay if such adjustment had not been made. For purposes of clause (y), an
Affiliate of Distributing shall include (but not be limited to) members of the
Controlled Group with respect to (a) Controlled Federal Income Tax and/or
Controlled Combined Income Tax and (b) for the Pre-Incorporation Period,
Controlled Separate Income Tax.

     2.03 Option Deductions.
          -----------------

          (a)  Acquired Company Options.

               (i)   Upon the exercise of any Acquired Company Option (as
defined in (d) below) following the Distribution, (1) Controlled shall claim any
Tax deduction attributable to such exercise on its Tax Return and Distributing
shall not claim such deduction on its Tax Return as originally filed, (2)
Controlled shall pay to Distributing an amount equal to the Option Tax Value (as
defined in (d) below), and (3) to

                                       12

<PAGE>

the extent that such deduction is disallowed to Controlled, and a Tax Authority
determines (a "Determination") that Distributing is entitled to such deduction
to any extent, Distributing shall, to such extent, repay to Controlled the
portion of the Option Tax Value attributable to such Acquired Company Option.

               (ii)  Controlled shall pay to Distributing the Option Tax Value
under this Section 2.03(a) within 30 days of the date that Distributing notifies
Controlled of the amount thereof. Distributing shall pay to Controlled the
Option Tax Value under this Section 2.03(a) within 30 days of the date that
Controlled notifies Distributing of the receipt of a Determination (which
notification shall be made promptly after receipt thereof).

          (b)  Merck Options. Upon the exercise of any Merck Option (as defined
in (d) below) following the Distribution, (i) Distributing shall claim any Tax
deduction attributable to such exercise on its Tax Return and Controlled shall
not claim such deduction on its Tax Return as originally filed, and (ii) to the
extent such deduction is disallowed to Distributing, and a Tax Authority makes a
Determination that Controlled is entitled to such deduction, Controlled shall,
to such extent, pay to Distributing, within 30 days of the date that
Distributing notifies Controlled of the receipt of such Determination (which
notification shall be made promptly after receipt thereof), the Option Tax Value
attributable to such Merck Option.

          (c)  All Other Stock Options. (i) Except as set forth in Section
2.03(a) and 2.03(b), upon the exercise of any option to purchase Distributing
stock (whether before or following the Distribution), Distributing shall claim
any tax deduction

                                       13

<PAGE>

attributable to such exercise on its Tax Return and Controlled shall not claim
such deduction on its Tax Return, and (ii) upon the exercise of any option to
purchase Controlled stock following the Distribution, Controlled shall claim any
tax deduction attributable to such exercise on its Tax Return and Distributing
shall not claim such deduction on its Tax Return.

          (d)  Definitions. For purposes of this Section 2.03, the following
terms shall have the following meanings:

               (i)   An "Acquired Company Option" shall mean any option to
purchase Distributing stock held by a Controlled Employee (as defined below)
granted under (1) the Medco Containment Services, Inc. 1991 Class C
Non-Qualified Stock Option Plan (as amended effective November 18, 1993), (2)
the Systemed, Inc. 1993 Employee Stock Option Plan, (3) the ProVantage Health
Services, Inc. 1999 Stock Incentive Plan, (4) the Medical Marketing Group, Inc.
1991 Class B Stock Option Plan and (5) the Medical Marketing Group, Inc. 1991
Special Non-Qualified Stock Option Plan.

               (ii)  The "Controlled Employees" shall mean any and all employees
of the "Medco Group" (as defined in the Distribution Agreement) immediately
following the Distribution.

               (iii) A "Merck Option" shall mean any option to purchase
Distributing stock held by a Controlled Employee granted prior to February 26,
2002, other than the Acquired Company Options.

                                       14

<PAGE>

               (iv)   The "Option Tax Value" as to the exercise of any option
shall be an amount equal to the sum of (1) the amount of the deduction which
would have been realized by Distributing thereon if Distributing had claimed
such deduction multiplied by the highest statutory federal Income Tax rate to
which Distributing is subject in the year of exercise (regardless of actual
liability), plus (2) the amount of the deduction which would have been realized
by Distributing thereon if Distributing had claimed such deduction multiplied by
Distributing's weighted average state statutory income tax rate in the year of
option exercise (regardless of actual liability, but less federal benefit), plus
(3) employment taxes, if any, payable by Distributing by reason of the exercise
of such option, plus (4) an additional payment such that, after payment by
Distributing of Tax, if any, upon the receipt of the Option Tax Value (including
upon the payment provided by this clause (4)), Distributing retains an amount
equal to the sum of the amounts set forth in clauses (1), (2) and (3) of this
sentence.

     2.04 Preparation of Tax Returns.

     (a)  Distributing shall cause the Controlled Group to join, for any
Pre-Distribution Period for which the Controlled Group is required to do so (and
may cause the Controlled Group (or any member thereof) to join for any such
period or Tax Return for which the Controlled Group is eligible but not required
to do so), in all federal, state or local consolidated, combined or unitary
Income Tax Returns of Distributing's filing group. Distributing shall prepare
and timely file all such federal, state or local consolidated, combined or
unitary Tax Returns and shall timely pay all Tax with respect to such Tax
Returns. Distributing shall provide to Controlled a copy of the portion of each
such Tax

                                       15

<PAGE>

Return and any supporting schedules that relate to the Controlled Group within 5
days after the filing thereof. No later than December 31 (or as close as
reasonably practicable thereto) of the year in which Distributing's federal
Income Tax Return with respect to such Tax is filed, Distributing shall provide
to Controlled a statement of the Controlled Federal Income Tax and Controlled
Combined Income Tax for such period, as determined by Distributing in good faith
and in the ordinary course of business based upon such Tax Returns. If (x) the
sum of the estimates of such Controlled Federal Income Tax and Controlled
Combined Income Tax as paid by Controlled pursuant to Section 2.01(b) and (c)
above is less than (y) the sum of the Controlled Federal Income Tax and
Controlled Combined Income Tax as determined under this Section 2.04(a),
Controlled shall pay to Distributing the difference between (x) and (y). If (x)
the sum of the estimates of such Controlled Federal Income Tax and Controlled
Combined Income Tax as paid by Controlled pursuant to Section 2.01(b) and (c)
above is more than (y) the sum of the Controlled Federal Income Tax and
Controlled Combined Income Tax as determined under this Section 2.04(a),
Distributing shall pay to Controlled the difference between (x) and (y).

     (b)  Distributing shall prepare (or cause to be prepared), at Controlled's
expense (or where appropriate through the utilization of Controlled's staff),
and Controlled shall timely file (or cause to be timely filed) any Tax Return
relating to Controlled Separate Income Tax for any period that begins before the
Distribution Date (or any portion of such a Tax Return which relates to the
Pre-Distribution Period) whether it is required to be filed before or after the
Distribution Date. Distributing shall provide a copy of each such Tax Return (or
portion thereof) and any supporting schedules to

                                       16

<PAGE>

Controlled at least 30 days before the date such Return is to be filed by
Controlled for Controlled's review and approval, which approval shall not be
unreasonably withheld. Controlled shall pay all Tax with respect to such Tax
Return for which it is responsible pursuant to Section 2.01. Distributing shall
pay to Controlled at least 5 days prior to the filing of such Tax Return any
amount due on such Tax Return that is the responsibility of Distributing
pursuant to Section 2.01.

     (c)  Controlled shall be responsible for the preparation and filing of Tax
Returns relating to Other Controlled Tax. Controlled shall pay all Tax with
respect to any such Tax Returns.

     (d)  Controlled shall not file (or allow the Controlled Group to file) any
amended Tax Returns with respect to the Controlled Group for any
Pre-Distribution Period without Distributing's consent.

          2.05 Cooperation and Exchange of Information. Distributing on the one
hand, and Controlled, on the other, will timely and competently provide each
other with such cooperation and information as either of them reasonably may
request of the other in (i) filing any Tax Return, amended return or claim for
refund, (ii) determining a liability for Tax or a right to a refund of Tax or
(iii) participating in or conducting any audit or other proceeding in respect of
Tax. Such cooperation and information shall include providing copies of relevant
Tax Returns or portions thereof, together with accompanying schedules and
related work papers and documents relating to rulings or other determinations by
any Tax Authorities. Each party shall devote the personnel and resources
necessary in order to carry out this Section 2.05 and shall make its employees
available on a mutually

                                       17

<PAGE>

convenient basis to provide explanations of any documents or information
provided hereunder. Except as provided below, each party shall carry out their
responsibilities under this Section 2.05 without charge to the other. Any
information obtained under this Section 2.05 shall be kept confidential, except
as may be otherwise necessary in connection with the filing of Tax Returns or
claims for refund or in conducting an audit or other proceeding. Notwithstanding
the foregoing, Controlled shall reimburse Distributing for any internal and
external costs and expenses (including the use of Distributing's staff) incurred
with respect to matters concerning Controlled Separate Income Tax for the
Pre-Distribution Period. It is further understood that in order to reduce the
cost to Controlled in connection with Controlled Separate Income Tax matters, to
the extent appropriate, Distributing shall utilize and Controlled shall provide,
members of Controlled's staff.

     2.06 Tax Contests.

          (a)  Notice. Each of the parties shall provide prompt notice to the
other party of any pending or threatened Tax audit, assessment or proceeding or
other Tax Contest of which it becomes aware related to Tax for which it is
indemnified by the other party hereunder. Such notice shall contain factual
information (to the extent known) describing any asserted Tax liability in
reasonable detail and shall be accompanied by copies of any notice and other
documents received from any Tax Authority in respect of any such matters. If an
indemnified party has knowledge of an asserted Tax liability with respect to a
matter for which it is to be indemnified hereunder and such party fails to give
the indemnifying party prompt notice of such asserted Tax liability, then (i) if
the indemnifying party is precluded from contesting the asserted Tax liability
in any forum as a

                                       18

<PAGE>

result of the failure to give prompt notice, the indemnifying party shall have
no obligation to indemnify the indemnified party for any Tax arising out of such
asserted Tax liability, and (ii) if the indemnifying party is not precluded from
contesting the asserted Tax liability in any forum, but such failure to give
prompt notice results in a monetary detriment to the indemnifying party, then
any amount which the indemnifying party is otherwise required to pay the
indemnified party pursuant to this Agreement shall be reduced by the amount of
such detriment.

          (b)  Control of Tax Contests. Each Company shall have full
responsibility and discretion in handling, settling or contesting any Tax
Contest involving a Tax for which it is liable pursuant to Section 2 of this
Agreement; provided, however, Distributing shall have full responsibility and
discretion in handling, settling or contesting any Tax Contest with respect to a
consolidated, combined or unitary federal or state Income Tax of which
Distributing or a Distributing Subsidiary is the common parent and with respect
to Controlled Separate Income Tax for the Pre-Incorporation Period. In the event
that Distributing controls (pursuant to the proviso in the previous sentence)
any Tax Contest which gives rise to a Controlled indemnification obligation
hereunder, Distributing shall consult with Controlled with respect to such Tax
Contest (to the extent such Tax Contest relates to issues for which Controlled
is liable) and shall consider in good faith Controlled's advice with respect
thereto. Furthermore Distributing may participate in any Tax Contest with
respect to any Covered Transaction Tax (as hereinafter defined), and Controlled
shall consider in good faith Distributing's advice with respect thereto,
regardless of whether Distributing has liability or indemnification obligations
with respect to such Tax under this Agreement.

                                       19

<PAGE>

                                   ARTICLE III

                                TRANSACTIONS TAX

     3.01 Transactions Tax.

          (a)  General. Except as otherwise provided in this Section 3.01,
Distributing shall be responsible for and pay any and all Tax resulting from
income or gain recognized by Distributing as a result of the Distribution
failing to qualify for or maintain tax-free treatment pursuant to Section 355 of
the Code or other provisions of the Code or corresponding provisions of other
applicable Tax laws and any Tax resulting from any income or gain recognized by
Distributing or its Affiliates (including the Controlled Group) under Treasury
Regulations Sections 1.1502-13 or 1.1502-19 (or any corresponding provisions of
other applicable Tax laws) as a result of the Distribution (collectively
"Covered Transaction Tax").

          (b)  Inconsistent Acts and Events. Controlled shall be liable for, and
shall indemnify and hold harmless the Distributing Group from and against any
liability for, any Covered Transactions Tax (including without limitation
reasonable attorney fees and other costs incurred in connection therewith) to
the extent arising from (i) any breach by the Controlled Group of the
representations or covenants under Section 4, (ii) any Tainting Act (as
hereinafter defined) performed by the Controlled Group (whether or not Section
4.02(d) is complied with) and (iii) any Section 355(e) Event with respect to
Controlled (whether or not such event is caused by a Tainting Act). A Section
355(e) Event with respect to Controlled means any event, involving the stock of
Controlled or assets of the Controlled Group, which causes the Distribution to
be a taxable event to Distributing as the result of the application of Section
355(e) of the Code (i.e., the

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Distribution becomes taxable to Distributing under Section 355(e) and but for
the event the Distribution would not have been a taxable event to Distributing
under Section 355(e)).

                                   ARTICLE IV

                          REPRESENTATIONS AND COVENANTS

     4.01 Representations.

          (a)  Each of Controlled and Distributing represent that, as of the
date of this Agreement, it and its Affiliates know of no fact that would
jeopardize the expected Tax treatment of the Distribution.

          (b)  Each of Controlled and Distributing represent and warrant that
neither it nor any of its Affiliates has any plan or intent to take any action
which is inconsistent with the expected Tax treatment of the Distribution.

     4.02 Covenants.

          (a)  Controlled covenants and agrees that it will not take any action,
and it will cause its Affiliates to refrain from taking any action, which is
inconsistent with the expected Tax treatment of the Distribution (any such
action, including any action referred to in clause (i) through (iii), is
referred to in this Agreement as a "Tainting Act"). Without limiting the
foregoing:

               (i)   Specified Actions. During the two year period following the
Distribution Date, Controlled will not (and it will cause its Affiliates not to)
(A) liquidate, merge or consolidate with or into any other corporation; (B)
issue any of its capital stock in one or more transactions, other than (i)
issuances to employees or directors in connection with the performance of
services for Controlled (that are not

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excessive by reference to the services performed) which issuances either are (x)
with respect to the exercise of options that were granted by Controlled before
the Closing Date or (y) with respect to the exercise of options that were
granted by Controlled on or after the Closing Date which satisfy the
requirements of Treasury Regulations Section 1.355-7T(d)(6) to not be treated
for purposes of Section 355(e) of the Code to be part of a plan or series of
related transactions that includes the Distribution or (ii) issuances of stock
to a retirement plan qualified under Section 401(a) or 403(a) of the Code in a
transaction which satisfies the requirements of Treasury Regulations Section
1.355-7T(d)(7); (C) redeem, purchase or otherwise reacquire its capital stock in
one or more transactions; (D) change the voting rights of any of its stock; (E)
sell, exchange, distribute or otherwise dispose of, other than in the ordinary
course of business, all or a substantial part of the assets of any of the trades
or businesses relied upon to satisfy Section 355(b) of the Code; (F) issue any
options to acquire Controlled Shares other than options which satisfy the
requirements of Treasury Regulations Section 1.355-7T(e)(3)(ii); or (G)
discontinue or cause to be discontinued the active conduct of any of the trades
or businesses relied upon to satisfy Section 355(b) of the Code.

               (ii)  No Inconsistent Actions. Regardless of any change in
circumstances, Controlled covenants and agrees that it will not take any action
(and it will cause its Affiliates to refrain from taking any action) which is
inconsistent with any factual statements or representations in the IRS Private
Letter Ruling on or before the second anniversary of the Distribution Date other
than as permitted in this Section 4. For this purpose an action is considered
inconsistent with a representation if the representation states that there is no
plan or intention to take such action.

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               (iii) 355(e) Covenant. Without in any manner limiting paragraphs
(i) or (ii) immediately above, Controlled covenants and agrees that, through the
second anniversary of the Distribution Date, it will not enter into (and it will
cause its Affiliates to refrain from entering into) any agreements,
understandings, arrangements or substantial negotiations with respect to
transactions or events (including stock issuances, option grants, capital
contributions, acquisitions, or changes in the voting power of any of its
stock), which may cause the Distribution to be treated as part of a plan
pursuant to which one or more persons acquire directly or indirectly Controlled
stock representing a "50 percent or greater interest" within the meaning of
Section 355(e)(4) of the Code.

          (b)  Amended or Supplemental Rulings. Each of Distributing and
Controlled covenants and agrees that it will not file, and it will cause its
Affiliates to refrain from filing, any amendment or supplement to the IRS
Private Letter Ruling with respect to the Distribution subsequent to the
Distribution Date without the consent of the other, which consent shall not be
unreasonably withheld.

          (c)  Each of Distributing and Controlled covenants and agrees that it
will not take, and it will cause its Affiliates to refrain from taking, any
position on a Tax Return that is inconsistent with the treatment of the
Distribution as tax-free pursuant to Code Section 355 and the treatment of the
Distribution in a manner inconsistent with the IRS Private Letter Ruling.

          (d)  Exceptions. Notwithstanding the foregoing, Controlled shall be
permitted to take an action inconsistent with Section 4.02(a), if, prior to
taking such action, Controlled provides notification to Distributing of its
plans with respect to such

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action, and promptly responds to any inquiries by Distributing following such
notification, and (unless Distributing agrees otherwise in writing) either:

               (i)   Controlled obtains a ruling with respect to the action from
the Internal Revenue Service or other applicable Tax Authority that is
reasonably satisfactory to Distributing (except that Controlled shall not submit
any such ruling request if Distributing determines in good faith that filing
such request might have a materially adverse effect upon Distributing), on the
basis of facts and representations consistent with the facts at the time of such
action, that such action will not affect the expected Tax treatment of the
Distribution or the IRS Private Letter Ruling; or

               (ii)  Controlled obtains an unqualified opinion reasonably
acceptable to Distributing of an independent nationally recognized tax counsel
acceptable to Distributing, on the basis of facts and representations consistent
with the facts at the time of such action, that such action will not affect the
Tax treatment of the Distribution or the IRS Private Letter Ruling.

     Notwithstanding anything to the contrary in this Agreement, Controlled
shall be liable for, and shall indemnify and hold harmless Distributing from any
Covered Transaction Tax resulting from a Tainting Act by Controlled or its
Affiliates, regardless of whether the exception of this Section 4.02(d) is
satisfied with respect to such act.

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                                    ARTICLE V

                            MISCELLANEOUS PROVISIONS

     5.01 Notice. Any payment, notice or communication required or permitted to
be given under this Agreement shall be in writing (including facsimile) and
mailed, faxed or delivered to the parties at the following addresses (or at such
other address as one party may specify by notice to the other party):

          if to Distributing:

               Merck & Co., Inc.
               One Merck Drive
               P.O. Box 100
               Whitehouse Station, New Jersey 08889
               Attention: Vice President - Corporate Taxes

          if to Controlled:

               Medco Health Solutions, Inc.
               100 Parsons Pond Drive
               Franklin Lakes, New Jersey 07417
               Attention: Tax Director

          Notification of a change of address shall be given by either
party to the other as provided in this Section 5.01. All such notices and
communications shall be

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effective (i) when received, if mailed or delivered, or (ii) when confirmed by
fax answerback, if faxed.

     5.02 Governing Law. This Agreement shall be governed by the laws applicable
to contracts entered into and to be performed within the State of New Jersey.

     5.03 Dispute Resolution. Any and all disputes between Distributing and
Controlled arising out of any provision of this Agreement shall be submitted to
and resolved by an independent nationally recognized accounting firm selected by
Distributing and Controlled.

     5.04 Jurisdiction. Each party agrees to submit itself exclusively to the
personal jurisdiction of any New Jersey court in the event any dispute arises
out of this Agreement or any of the transactions contemplated by this Agreement
and agrees that it will not attempt to deny or defeat such personal jurisdiction
or venue by motion or other request for leave from any such New Jersey court.
Each party further agrees that service of any process, summons, notice or
document by U.S. registered mail to such party's respective address set forth
above shall be effective service of process for any action, suit or proceeding
in New Jersey with respect to any matters to which it has submitted to
jurisdiction in this Section 5.04.

     5.05 Waiver Of Jury Trial. Each party waives, to the fullest extent
permitted by applicable law, any right it may have to a trial by jury in respect
of any dispute arising out of this Agreement.

     5.06 Entire Agreement. This Agreement embodies the entire understanding
between the parties relating to its subject matter and supersedes and terminates
all prior agreements and understandings among the parties with respect to such
matters. No

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<PAGE>

promises, covenants or representations of any kind, other than those expressly
stated herein, have been made to induce any party to enter into this Agreement.
This Agreement shall not be modified or terminated except by a writing duly
signed by each of the parties hereto, and no waiver of any provisions of this
Agreement shall be effective unless in a writing duly signed by the party sought
to be bound. If, and to the extent, the provisions of this Agreement conflict
with the Distribution Agreement, or any other agreement entered into in
connection with the Distribution the provisions of this Agreement shall control.

     5.07 Assignment; Binding Effect. Neither this Agreement nor any of the
rights, interests or obligations under this Agreement shall be assigned, in
whole or in part, by operation of law or otherwise by any of the parties without
the prior written consent of the other party; provided, however, that no such
consent shall be required in the event of a merger, consolidation or sale of
either Distributing or Controlled. Subject to the preceding sentence, this
Agreement shall be binding on, and shall inure to the benefit of, and be
enforceable by, the parties hereto and their respective successors and assigns.

     5.08 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same.

     5.09 Severability. If any provision of this Agreement or the application of
any such provision to any person or circumstances shall be held invalid,
illegal, or unenforceable in any respect by a court of competent jurisdiction,
such invalidity, illegality, or unenforceability shall not affect any other
provision hereof.

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     5.10 Headings. Headings of sections in this Agreement are inserted for
convenience of reference only and are not intended to be a part of or to affect
the meaning or interpretation of this Agreement.

     5.11 Survival. Notwithstanding anything in this Agreement to the contrary,
the provisions of this Agreement shall survive for thirty days after the full
period of all applicable statutes of limitations (giving effect to any waiver,
mitigation or extension thereof).

     5.12 Payments. Unless a provision in this Agreement specifically provides a
time period for payment, Distributing shall pay to Controlled any payment it
owes to Controlled under this Agreement within 30 days after the date on which
such payment becomes due. Unless a provision in this Agreement specifically
provides a time period for payment, Controlled shall pay to Distributing any
payment it owes to Distributing under this Agreement within 30 days after the
date on which such payment becomes due.

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     IN WITNESS WHEREOF, each of the parties has caused this Tax Responsibility
Allocation Agreement to be executed by its respective duly authorized officer as
of the date first set forth above.

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

By:                                       By:
   -----------------------------------       -----------------------------------
Name:                                     Name:
Title:                                    Title:

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