Employment Agreement - Merck-Medco Managed Care LLC and Jeffrey A. Jones


                             EMPLOYMENT AGREEMENT
                             --------------------

         This EMPLOYMENT AGREEMENT ('Agreement'), dated as of May 4, 2000, is
entered into by and between Merck-Medco Managed Care, L.L.C. ('Merck-Medco' or
'Company'), a Delaware corporation with offices at 100 Parsons Pond Drive,
Franklin Lakes, New Jersey 07417 and Jeffrey A. Jones ('Executive').

                                   RECITALS

         WHEREAS, Executive has been and is presently employed by ProVantage
Health Services, Inc. ('PV'); and

         WHEREAS, PV, Merck-Medco and a subsidiary of Merck-Medco ('Merger Sub')
have entered into an Agreement and Plan of Merger, dated as of May 4, 2000 (the
'Merger Agreement'), pursuant to which, at the 'Effective Time' (as defined in
the Merger Agreement) (the 'Effective Time'), Merger Sub will be merged with and
into PV (the 'Merger') and PV will thereby become a wholly owned subsidiary of
Merck-Medco; and

         WHEREAS, pursuant to the Merger Agreement, it is intended that the
acquisition of PV by Merck-Medco be accomplished by means of a cash tender offer
by Merger Sub for all of the issued and outstanding common stock of PV (the
consummation of such tender offer, the 'Consummation Date'), followed by the
Merger; and

         WHEREAS, Executive is currently a party to a Change of Control
Agreement with PV, dated as of December 22, 1998 (the 'Change of Control
Agreement'); and

         WHEREAS, Merck-Medco desires to secure the continued services and
employment of the Executive on its behalf following the Consummation Date, and
the Executive is willing to render such services on the terms and conditions set
forth herein; and

         WHEREAS, the Executive and Merck-Medco have agreed that this Agreement
shall supersede the Change of Control Agreement in its entirety and that, upon
and following the Consummation Date, the Change of Control Agreement shall cease
to be of any force or effect;

         NOW THEREFORE, in consideration of the mutual covenants contained
herein, the parties hereto agree as follows, effective as of the Consummation
Date:

                                 TERMS OF AGREEMENT

         In consideration of the Recitals (which are incorporated herein) and
the mutual covenants in this Agreement, the parties agree as follows:

         1.   Definitions.  For the purpose of this Agreement, the 
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                                       1

 
terms used as headings in this Section 1, and parenthetically defined elsewhere
in this Agreement, shall have the indicated meanings and may be used in the
singular or plural.

              'Affiliate.' Any business entity controlled by, controlling, or
               ---------
under common control or in joint venture with, the Company.

              'Business of the Company.'  The Company and/or its Affiliates are
               -----------------------                                         
engaged in :  (i) the third party prescription drug claims processing business;
(ii) the design, development or marketing of or consulting as to, prescription
drug benefit plans; (iii) the provision of mail service pharmacy, including,
without limitation, internet-based services (including all those products and
services that are presently or hereafter marketed by the Company or any of its
Affiliates, or that are in the development stage at the time of termination of
Executive's employment and are actually marketed by the Company or any of its
Affiliates thereafter); (iv) the collection, analysis and/or sale of data
relating to prescription drug utilization; (v) the pharmacy benefit management
and disease management businesses; (vi) the organization and administration of
retail pharmacy networks; and (vii) any other business in which the Company or
any of its Affiliates is then engaged as to which Executive has involvement in
the course of his employment hereunder and/or acquired or received Confidential
Information.

              'Confidential Information.'  All confidential and proprietary
               ------------------------                                    
information of the Company and its Affiliates, in whatever form, tangible or
intangible, not otherwise publicly disclosed or generally available (other than
as a result of a wrongful disclosure by the Executive), whether or not
discovered or developed by the Executive, including information entrusted to the
Company and/or its Affiliates by others.  Without limiting the generality of the
foregoing, Confidential Information shall include but shall not be limited to:
(a) customer lists, lists of potential customers and details of agreements with
customers; (b) acquisition, expansion, marketing, financial and other business
information and plans of the Company or any of its Affiliates; (c) research and
development; (d) data concerning usage of prescription drugs and any other data
compiled by the Company or any of its Affiliates; (e) computer programs; (f)
sources of supply; (g) identity of specialized consultants and contractors and
Confidential Information developed by them for the Company or any of its
Affiliates; (h) purchasing, operating and other cost data; (i) special customer
needs, cost and pricing data; (j) employee information (including, but not
limited to, personnel, payroll, compensation and benefit data and plans); and
(k) patient records and data, including all such information recorded in
manuals, memoranda, projections, minutes, plans, drawings, designs, formula
books, specifications, computer programs and records, whether or not legended or
otherwise identified by the Company or any of its 

                                       2

 
Affiliates as Confidential Information, as well as such information that is the
subject of meetings and discussions and not recorded.

              'Developments.' All data, discoveries, findings, reports, designs,
               ------------                                             
inventions, improvements, methods, practices, techniques, developments, programs
(computer or otherwise), formulas, plans, concepts, and ideas, whether or not
patentable, relating to the present and planned future activities and the
Products and Services of the Company or any of its Affiliates.

              'Employment Period.'  The period from the Consummation Date (the
               -----------------                                              
'Commencement Date') through the second anniversary of the Commencement Date
(or, if later, through the second anniversary of the Effective Time), unless
terminated prior thereto as set forth in Section 6.

              'Products and Services.'  All products or services sold, rented,
               ---------------------                                          
leased, rendered or otherwise made available to customers by the Company or any
of its Affiliates, as well as products and services in any stage of development
by the Company or any of its Affiliates, although not yet commercialized or not
generally available.

              'Territory.'  The United States of America, its territories and
               ---------                                                     
possessions.

         2.   Employment.  The Company hereby employs the Executive during the
              ----------                                                      
Employment Period subject to the terms of this Agreement, and thereafter as an
employee-at-will, and to perform those duties and services as may be designated
from time-to-time by its President or his designee. Executive hereby accepts
said employment. The Executive shall use his best and most diligent efforts to
promote the interests of the Company and its Affiliates and shall devote his
full business time and attention to his employment under this Agreement.  The
Executive will not, without the prior written approval of the President of
Merck-Medco, engage in any other business activity which would interfere with
the performance of his duties, services and responsibilities hereunder or which
is in violation of policies established from time to time by Merck-Medco.  It is
understood that the Executive is Chair-Elect of PCMA and will serve as Chair of
that association.

         3.   Title.  The Executive presently has been assigned the title of
              -----                                                         
President and Chief Executive Officer - ProVantage .  In the future, the Company
may assign the Executive to other positions and titles, as required by the
Company's business.

         4.   Compensation and Benefits; Disability.
              ------------------------------------- 

              4.1  Base Compensation.  During the Employment Period, the Company
                   -----------------                                            
shall pay the Executive base compensation commencing at an annual rate of
$449,350.00; the Executive shall be eligible for annual merit increases at the
discretion of the 

                                       3

 
Company. Such base compensation shall be payable in equal installments
pursuant to the Company's customary payroll policies in force at the time of
payment (but not less frequently than monthly). Such base compensation and any
other payments made hereunder shall be less all required and/or authorized
payroll deductions.

              4.2  Retention Arrangement. Not later than the close of business
                   --------------------- 
on May 15, 2000, the Executive shall notify the Company substantially in the
form of the notice attached hereto as Exhibit A that he has irrevocably elected
one of the Retention Arrangements set forth therein. If the Executive fails to
provide timely notice to the Company substantially in form of the notice
attached hereto as Exhibit A, the Executive will be deemed to have elected
Retention Arrangement No. 1 described in the form of notice attached as Exhibit
A. Lump sum payments payable to the Executive hereunder shall be payable
(subject to applicable withholding) as soon as practicable after the second
anniversary of the Consummation Date (or, if later, after the second anniversary
of the Effective Time), so long as the Executive has remained an employee of
Merck-Medco through the entire Employment Period and is an employee of Merck-
Medco on the second anniversary of the Consummation Date (or, if later, after
the second anniversary of the Effective Time).

              4.3  Incentive Bonus and Stock Options. In addition to the
                   --------------------------------- 
Retention Arrangement set forth in Paragraph 4.2, the Executive shall be
eligible to receive the following during the Employment Period:

              (a)  Bonus.   During the Employment Period, the Executive shall be
                   -----                                                       
                   eligible to receive performance-based bonuses on the same
                   terms and conditions generally afforded other similarly
                   situated employees of Merck-Medco under the Merck & Co., Inc.
                   Annual Incentive Plan.

              (b)  Stock Options.   Any options granted in connection with the
                   -------------                                             
                   applicable Retention Arrangement set forth on Exhibit A
                   attached hereto shall be subject to the terms and conditions
                   set forth in Exhibit B attached hereto and made a part
                   hereof.  During the Employment Period, the Executive will be
                   eligible to receive other grants of options to purchase
                   shares of Merck & Co., Inc. common stock under the Merck & Co., Inc. Incentive Stock Plan (the 'Merck Stock Plan') at an
                   exercise price equal to the fair market value of such common
                   stock on the date of grant.  The number of shares covered by
                   any such option shall be determined by the Company in its
                   sole and absolute discretion.  All the terms and conditions
                   of such options shall be governed by 

                                       4

 
                   the terms and conditions of the Merck Stock Plan in effect at
                   the time of the applicable grant, as summarized in the option
                   grant letter provided to the Executive at the time of each
                   such option grant, which terms and conditions shall be the
                   same as those that apply to similarly situated employees of
                   Merck-Medco at the time of such grant.

              4.4  Other Benefits. During the Employment Period, the Executive
                   --------------
shall be eligible to participate in the employee benefit plans and programs of
the Company, including, but not limited to, its medical, dental, disability,
life insurance and retirement benefit plans and programs of the Company on the
same terms and conditions as are generally afforded similarly situated employees
of the Company, subject to any contribution requirements applicable to
participants of such plans and programs.

              4.5  Vacation.  The Executive may take such vacation period or
                   --------                                                 
periods during each year in accordance with the Company's vacation policies or
practices for similarly situated employees of the Company.  Prior employment
with PV shall be considered as employment with the Company for this purpose.

         5.   Expenses. Pursuant to the Company's customary policies in
              -------- 
force at the time of payment, the Executive shall be promptly reimbursed,
against presentation of vouchers or receipts therefor, for all expenses properly
and reasonably incurred by him on behalf of the Company and its Affiliates in
the performance of his duties hereunder.

         6.   Termination of Employment Period.  This Agreement shall continue
              --------------------------------                                
through the Employment Period, unless terminated prior to such date by the
earlier of (a) the Executive's termination pursuant to Sections 7.1, 7.2 7.3 or
7.5; or (b) the Executive's death.  In all events, the provisions of Section 9
shall survive termination of this Agreement, and shall remain in effect during
and after any continued employment by the Company subsequent to the termination
of the Employment Period.

         7.   Termination.
              ----------- 

              7.1      By the Company for Cause. Upon written notice, the
                       ------------------------   
Company may discharge the Executive and terminate this Agreement for Cause. As
used in this Section 7, Cause shall mean any one or more than one of the
following: (i) an act or acts of personal dishonesty or misrepresentation taken
by the Executive and intended to result in substantial personal enrichment of
the Executive at the expense of the Company; (ii) repeated violations by the
Executive of the Executive's obligations under this Agreement which are
demonstrably willful and deliberate on the Executive's part and which are not
remedied within thirty (30) days after receipt of notice from the Company, or
(iii) the conviction of the Executive of a felony.

                                       5

 
              7.2  By the Company Without Cause or By the Executive for Good
                   ---------------------------------------------------------
Reason.  The Company on written notice to the Executive may discharge the
------                                                                   
Executive and terminate this Agreement without Cause at any time during the
Employment Period.  The Executive may terminate this Agreement during the
Employment Period for 'Good Reason,' which shall mean any one of the following:
(i) the Executive's transfer to a place of employment more than fifty (50) miles
from the Executive's current place of employment; or (ii) a reduction in the
Executive's job title from the title currently specified in paragraph 2 of this
Agreement; however, Executive may terminate the Employment Period for Good
Reason only after the passage of sixty (60) days following written notice from
the Executive to the Company of the event giving rise to the Termination and a
failure by the Company to cure such event.

              7.3  Disability.  If during the Employment Period, (i) the
                   ----------                                           
Executive shall become ill, mentally or physically disabled, or otherwise
incapacitated so as to be unable to perform regularly the duties of his position
for a period in excess of 90 consecutive days or more than 120 days in any
consecutive 12 month period, or (ii) a duly licensed physician (who does not
have any business or other previous relationship with the Company and is
associated with a teaching hospital in the New York City metropolitan area)
selected by the Company determines that the Executive is mentally or physically
disabled so as to be unable to perform regularly the duties of his position and
such condition is expected to be of a permanent duration (each a 'Permanent
Disability'), then the Company shall have the right to discharge the Executive
and terminate this Agreement upon 30 days' written notice to the Executive.  In
the absence of termination, the Executive shall receive full compensation and
benefits while disabled; provided, however, that any payments to the Executive
pursuant to the Company's disability plans shall be offset from amounts payable
to the Executive under this Paragraph 7.3.  Upon a request by the Company, the
Executive will submit to a medical examination to determine whether the
Executive is subject to a Permanent Disability.

              7.4  Death.  The Employment Period and this Agreement shall
                   -----                                                 
terminate forthwith upon the death of the Executive.

              7.5  By the Executive.  The Executive may terminate the Employment
                   ----------------                                             
Period and this Agreement at any time upon 30 days' written notice to the
Company for any reason other than Good Reason.  Section 7.2 shall be the sole
basis for termination for Good Reason.

         8.   Effect of Termination.
              --------------------- 

              8.1  Effect of Termination under Section 7.1.  In the event of
                   ---------------------------------------                  
termination of this Agreement by the Company pursuant to Section 7.1, the
Executive shall be entitled to receive only 

                                       6

 
his earned and unpaid compensation to the effective date of such termination.

              8.2  Effect of Termination under Section 7.2.  In the event of
                   ---------------------------------------                  
termination of this Agreement during the Employment Period pursuant to Section
7.2, the Executive shall be entitled to:

              (a)  receive his earned and unpaid compensation to the effective
                   date of such termination;

              (b)  a lump sum payment in the amount of $675,000 (less applicable
                   withholding) in consideration of the covenants of the
                   Employee set forth in Section 9 below (and subject in any
                   event to the last sentence of Section 9.6 hereof);

              (c)  an additional lump sum payment in the amount of $834,837.00
                   (less applicable withholding);

              (d)  1/24th of the amount equal to the remainder, if any, of (x)
                   the lump sum amount, if any, that would have been payable
                   under the Retention Arrangement the Executive elects pursuant
                   to Section 4.2 and (y) $1,698,567 for each full calendar
                   month during which the Executive actually performs services
                   for the Company (less applicable withholding); and

              (e)  Continued coverage (in an inactive, unpaid employee status)
                   under the Company's medical, dental and prescription plans
                   for twelve (12) months or until the Executive obtains other
                   employment with comparable coverages, whichever is earlier.

              8.3  Effect of Termination under Sections 7.3 or 7.4. In the event
                   -----------------------------------------------
of termination of this Agreement during the Employment Period pursuant to
Sections 7.3 or 7.4, the Executive (or the personal representative of his estate
or his heirs at law, as appropriate, in the case of a termination pursuant to
Section 7.4) shall be entitled to the amounts referred to in Sections 8.2(a)
through 8.2(c) of this Agreement. In addition, in the event of a termination of
this Agreement during the Employment Period pursuant to Section 7.4, and so long
as the Executive has elected Retention Arrangement No. 1 or Retention
Arrangement No. 3 described on Exhibit A attached hereto, the Executive's estate
or heirs at law, as appropriate, shall be entitled to an amount equal to the
excess of the lump sum payment payable under the applicable Retention
Arrangement over the lump sum payments payable under Sections 8.2(b) and 8.2(c)
(less applicable withholding).

              8.4  Effect of Termination Under Section 7.5.
                   --------------------------------------- 

              (a)  In the event of Termination of this Agreement 

                                       7

 
under Section 7.5 within the first six months of the Employment Period, the
Executive shall be entitled to receive only his earned and unpaid compensation
to the effective date of such termination.

              (b)  In the event of Termination of this Agreement under Section
7.5 after the first six months of the Employment Period have elapsed, but before
the expiration of the Employment Period, the Executive shall be entitled to
receive:

                   (i)    his earned and unpaid compensation to the effective
                   date of such termination; and

                   (ii)   a lump sum payment in the amount of $675,000 (less
                   applicable withholding) in consideration of the covenants of
                   the Employee set forth in Section 9 below (and subject in any
                   event to the last sentence of Section 9.6 hereof);

                   (iii)  an additional lump sum payment in the amount of
                   $834,837.00 (less applicable withholding).

              8.5  Conditions Applicable to Sections 8.2, 8.3 and 8.4. Any 
                   --------------------------------------------------      
payments required under Section 8.2, 8.3 or 8.4 will be conditioned upon the
Executive (or the personal representative of his estate or his heirs at law, as
appropriate) executing and delivering a general release of the Company and its
Affiliates, and their Managers, officers, employees and agents, from any claims
or obligations other than (i) the expressed obligation of the Company under
Section 8.2, 8.3 or 8.4 of this Agreement, as appropriate, (ii) to pay the
Executive his earned and unpaid compensation to the effective date of
termination, (iii) the obligations of the Company and its Affiliates with
respect to all Stock Options, (iv) the obligations of the Company and its
Affiliates to continue to provide director and officer indemnification (if
applicable) and (v) the obligations of the Company and its Affiliates to comply
with the requirements of COBRA and any other law or regulation applicable to
employee benefit plans in connection with the termination of employment
generally. Such general release shall be in a form acceptable to the Company.
The Executive acknowledges that the payments under Section 8.2, 8.3 or 8.4, as
appropriate, are in lieu of all such released claims that the Executive may have
against the Company and are liquidated damages (and not a penalty).
Notwithstanding any termination hereunder, the Company shall have no obligation
under Section 8.2, 8.3 or 8.4 in the event of a material breach by the Executive
of his covenants in Section 9. For purposes of this Section 8, the term Stock
Options shall mean all options to purchase common stock of Merck & Co., Inc.
previously or hereafter granted to the Executive by the Company and/or any of
its Affiliates.

              8.6  Consulting Period.  In the event of (i) termination of this
                   -----------------                                        
Agreement

                                       8

 
at any time before the expiration of the Employment Period in connection with
the termination of the Executive's employment by the Company without Cause or by
the Executive with Good Reason under Section 7.2, or (ii) termination of the
Agreement after the first six months of the Employment Period have elapsed but
before the expiration of the Employment Period in connection with termination of
the Executive's employment by the Executive for any reason other than Good
Reason under Section 7.5, the Executive will be retained as a Consultant by the
Company for a period of four (4) months commencing on the date of Termination of
his employment (the 'Consulting Period'). During the Consulting Period, the
Executive will make himself available to provide services to the Company at the
Company's reasonable request, and at mutually agreeable times and places, for
not less than 40 hours per month. As compensation for these consulting services,
the Executive will receive payments in the amount of $47,182.42 per month during
the Consulting Period (less any applicable withholding).

         9.   Developments, Confidential Information and Related Matters.
              ---------------------------------------------------------- 

              9.1  Assignment of Developments.  All Developments that are at any
                   --------------------------                                   
time made, conceived or suggested by the Executive, whether acting alone or in
conjunction with others, during or as a result of the Executive's employment
under this Agreement or thereafter, shall be the sole and absolute property of
the Company, free of any reserved or other rights of any kind on the Executive's
part.  During the Executive's employment by the Company and thereafter, the
Executive shall promptly make full disclosure of any such Developments to the
Company and, at its cost and expense, do all acts and things (including, among
others, the execution and delivery under oath of patent and copyright
applications and instruments of assignment) deemed by the Company to be
necessary or desirable at any time in order to effect the full assignment to the
Company of the Executive's right and title, if any, to such Developments.

              9.2  Restrictions on Use and Disclosure. The Executive
                   ----------------------------------
acknowledges that the Confidential Information is valuable and proprietary to
the Company (or to third parties that have entrusted Confidential Information to
the Company), and, except as required by the Executive's duties hereunder, the
Executive shall not at any time, directly or indirectly, use, copy, publish,
summarize, disseminate, describe or otherwise disclose any Confidential
Information or Developments without the prior written consent of the Company.

              9.3  Return of Documents.  Upon termination of the Executive's
                   -------------------                                      
employment with the Company, or at the Company's request, whichever is sooner,
the Executive shall forthwith deliver to the Company all manuals, memoranda,
projections, minutes, plans, drawings, designs, formula books, specifications,
listings, records, notebooks, computer programs and similar repositories of, or
containing Confidential Information and Developments, including all copies, then
in the Executive's possession or control, whether prepared by the Executive or
others.  Upon such termination, the Executive shall not retain any copies or
abstracts of any such documents or materials.

              9.4  Restrictions on Competitive Employment. During 
                   --------------------------------------

                                       9

 
the term of the Executive's employment and for a period of twelve (12) months
after the termination of the Executive's employment for any reason, pursuant to
this Agreement or thereafter, absent the Company's prior written approval, the
Executive shall not (as an individual, principal, agent, employee, consultant or
otherwise) within the Territory, directly or indirectly, engage in activities
competitive with, nor render services to any firm or business engaged or about
to become engaged in the Business of the Company. In addition, the Executive
shall not have an equity interest in any such firm or business other than as a
1% or less shareholder of a public corporation.

              9.5  Inducement; Enticement. During the term of the Executive's
                   ----------------------                                    
employment and for a period of twelve (12) months after the termination of the
Executive's employment for any reason, pursuant to this Agreement or thereafter,
the Executive shall not, directly or indirectly: (a) solicit or contact any
customer or prospective customer of the Company or any of its Affiliates as to
matters that relate to the Business of the Company or which is in any way
inconsistent or interferes therewith; (b) induce, or attempt to induce, any
employees or agents or consultants of the Company or any of its Affiliates to do
anything from which the Executive is restricted by reason of Sections 9.1
through 9.5; or (c) offer or aid others to offer employment to any employees of
the Company or any of its Affiliates.

              9.6  Survival and Other Matters.  The provisions of Sections 9.1
                   --------------------------                                 
through 9.5 shall survive the termination of this Agreement and shall continue
in effect during and after any employment of the Executive after the end of the
Employment Period and the termination of this Agreement.  This provision shall
not be construed to limit the survival of any other provisions that also survive
the termination of this Agreement by the express or implied terms of such
provisions.  In addition, it is understood that the value to the Company of the
Executive agreeing to and abiding by the restrictions set forth in this Section
9 is equal to at least $675,000, but it is further understood that (i) the
Executive has agreed to abide by such restrictions in consideration of the
Company's entering into this Agreement, and (ii) such restrictions shall remain
in effect irrespective of whether the Executive becomes entitled to any payments
or benefits hereunder.

         10.  Notices.  All notices and other communications provided for or
              -------                                                       
permitted hereunder shall be in writing and shall be deemed to have been duly
given on the date that they are delivered personally or sent by registered or
certified mail (return receipt requested) postage prepaid to the parties at the
following addresses (or at such other address for any party as shall be
specified by like notice, provided that notices of a change of address shall be
effective only upon receipt thereof):

         (a)  If to the Company:

                                       10

 
              Merck-Medco Managed Care, L.L.C.
              100 Parsons Pond Drive
              Franklin Lakes, New Jersey  07417
              Attention:  Senior Vice President -
                          Chief Financial Officer

              With a copy at the same address to:

              President.


         (b)  If to the Executive, at the last address included on the Company's
              payroll records.

         11.  [intentionally omitted.]

         12.  Miscellaneous.
              ------------- 

              12.1  Representations and Covenants.  In order to induce the
                    -----------------------------                         
Company to enter into this Agreement, the Executive makes the following
representations and covenants to the Company and acknowledges that the Company
is relying upon said representations and covenants:

              (a)  No agreements or obligations exist to which the Executive is
                   a party or otherwise bound, in writing or otherwise, which in
                   any way interfere with, impede or preclude him from
                   fulfilling all of the terms and conditions of this Agreement.

              (b)  The Executive, during his employment by the Company, shall
                   use his best efforts to disclose to the President in writing
                   or by other effective method any bona fide information known
                   by him that would have any material negative impact on the
                   Company or an Affiliate.

              12.2  Entire Agreement.  This Agreement contains the entire
                    ----------------                                     
understanding of the parties as to the subject matter hereof and fully
supersedes all prior oral and written agreements and understandings between the
parties with respect to such subject matter.  This Agreement also supersedes and
nullifies any and all change-of-control, severance or other employment-related
agreements entered into by Executive with PV or any of its predecessor or
affiliated corporations (including, without limitation, the Change of Control
Agreement), it being agreed between Executive and Merck-Medco that, following
the Consummation Date, (i) the consideration provided to the Executive as set
forth in this Agreement is in lieu of any consideration provided by such other
agreements and (ii) all such agreements shall cease to be of any force and
effect.

              12.3  Amendment; Waiver.  This Agreement may not be 
                   -----------------                                     

                                       11

 
amended, supplemented, cancelled or discharged, except by written instrument
executed by the party as to whom enforcement is sought. No failure to exercise,
and no delay in exercising, any right, power or privilege hereunder shall
operate as a waiver thereof. No waiver of any breach of this Agreement shall be
deemed to be a waiver of any preceding or succeeding breach of this Agreement.

              12.4  Binding Effect; Assignment.  The rights and obligations of
                    --------------------------                                
this Agreement shall bind and inure to the benefit of the surviving corporation
in any merger or consolidation in which the Company is a party, or any assignee
of all or substantially all of the Company's business and properties.  The
Executive's rights and obligations under this Agreement may not be assigned by
him, except that his right to receive accrued but unpaid compensation,
unreimbursed expenses and other rights, if any, provided under this Agreement
which survive termination of this Agreement shall pass after death to the
personal representatives of his estate.

              12.5  Headings.  The headings contained in this Agreement (except
                    --------                                                   
those in Section 1) are for reference purposes only and shall not affect the
meaning or interpretation of this Agreement.

              12.6  Counterparts.  This Agreement may be executed in one or more
                    ------------                                                
copies, each of which shall be deemed an original.

              12.7  Governing Law; Interpretation.  This Agreement shall be
                    -----------------------------                          
construed in accordance with and governed for all purposes by the laws and
public policy of the State of New Jersey, without regard to any principles of
conflict of laws.  Service of process in any dispute shall be effective (a) upon
the Company, if served upon the Chairman of the Board, the President or any
Executive Vice President of the Company (other than the Executive); and (b) upon
the Executive, if delivered to the Executive's residence last known to the
Company.  The Executive acknowledges that a breach of Sections 9.1 through 9.5
would cause grave and irreparable injury to the Company that would not be
compensable in money damages, and therefore, in addition to the Company's other
express and implied remedies, the Company shall be entitled to injunctive and
other equitable relief to prevent any actual, intended or likely injuries that
may result from such breach.  However, nothing in this Section shall limit any
other right or remedy to which the Company may be entitled.

              12.8  Further Assurances.  Each party agrees at any time, and from
                    ------------------                                          
time-to-time, to execute, acknowledge, deliver and perform, and/or cause to be
executed, acknowledged, delivered and performed, all such further acts, deeds,
assignments, transfers, conveyances, powers of attorney and/or assurances as may
be necessary, and/or proper to carry out the provisions and/or intent of this
Agreement.

              12.9  Gender; Singular; Plural.  In this Agreement, the use of one
                    ------------------------                                    
gender (e.g., 'he', 'she' and 'it') shall mean each 
        -----                                                            

                                       12

 
other gender; and the singular shall mean the plural, and vice versa, all as the
context may require.

              12.10  Severability.  The parties acknowledge that the terms of
                     ------------ 
this Agreement are fair and reasonable at the date signed by them. However, in
light of the possibility of a change of conditions or differing interpretations
by a court of what is fair and reasonable, the parties stipulate as follows: if
any one or more of the terms, provisions, covenants or restrictions of this
Agreement shall be determined by a court of competent jurisdiction to be
invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated; further, if any
one or more of the terms, provisions, covenants or restrictions contained in
this Agreement shall for any reason be determined by a court of competent
jurisdiction to be excessively broad as to duration, geographical scope,
activity or subject, it shall be construed, by limiting or reducing it, so as to
be enforceable to the maximum extent compatible with then applicable law.

              12.11  Consents.  Any consent, approval or authorizations required
                     --------                                                   
hereunder shall mean the written consent, approval or authorization of the
Chairman of the Board of the Company or such other officer as may be designated
in writing by the Board of Managers.

                                   EXECUTION

         The parties, intending to be legally bound in accordance with its terms
as of the date first above written, executed this Agreement, to be effective as
of the Consummation Date.


                                             MERCK-MEDCO MANAGED CARE, L.L.C.
 
 
 
DATE:  May 4, 2000                           /s/  Richard T. Clark
                                             ---------------------------------
                                             By:  Richard T. Clark
                                             Its: President



 
DATE:  May 4, 2000                           /s/  Jeffrey A. Jones
                                             ---------------------------------
                                                  Jeffrey A. Jones

                                       13

 
                       Exhibit A to Employment Agreement
                                        
                    NOTICE OF RETENTION ARRANGEMENT ELECTION
                    ----------------------------------------
                                        
Date: _______________, 2000

Certified Mail/Return Receipt Requested
Mr. Thomas DiDonato
Senior Vice President - Human Resources
Merck-Medco Managed Care, L.L.C.
100 Parsons Pond Drive
Franklin Lakes, New Jersey  07417

Dear Mr. DiDonato:

          Pursuant to Section 4.2 of that certain employment agreement (the
'Employment Agreement') dated __________, 2000 between me and Merck-Medco
Managed Care, L.L.C. (the 'Company'), I hereby irrevocably elect the Retention
Arrangement indicated by a check mark below:

[ ]   Retention Arrangement No. 1

          A lump sum payment of $ 2,264,756.00

[ ]   Retention Arrangement No. 2

         (A)  A lump sum payment of $1,698,567.00; and

         (B)  an option to purchase 40,442/1/ shares of Merck & Co., Inc. common
              stock under the Merck Stock Plan, on the terms set forth on
              Exhibit B attached to the Employment Agreement, which option shall
              be granted at the Consummation Date, provided I am an employee of
              Merck-Medco on that date.

[ ]   Retention Arrangement No. 3

         (A)  A lump sum payment of $1,981,662.00; and

         (B)  an option to purchase 20,221 shares of Merck & Co., Inc. common
              stock under the Merck Stock Plan, on the terms set forth on
              Exhibit B attached to the Employment Agreement, which option shall
              be granted at the Consummation Date, provided I am an employee of
              Merck-Medco on that date.


___________________
/1/ The number of shares subject to the option referenced in subparagraph (B) of
Retention Arrangement Nos. 2 and 3 is an estimate based upon a closing price of
$70.00 per share. The actual number of shares subject to the option may vary.

                                       14

 
I understand, acknowledge and agree that:

          (1)  The Retention Arrangement I have irrevocably elected above is
               subject to the terms and conditions set forth in the Employment
               Agreement and that nothing in this letter agreement in any way
               affects the terms and conditions of the Employment Agreement;

          (2)  Upon execution of this letter agreement by me and the Company,
               this letter agreement shall be incorporated into and deemed a
               part of the Employment Agreement;

          (3)  This letter agreement may be executed in one or more copies, each
               of which shall be deemed an original; and

          (4)  Capitalized terms not specifically defined herein shall have the
               meaning ascribed to them in the Employment Agreement.


          Please indicate your election, and your agreement with and acceptance
of the foregoing, by executing a copy of this letter agreement below as
indicated.

Sincerely,
 
 
 
______________________
Jeffrey A. Jones
 
Agreed to and accepted this ___ 
day of _________, 2000
 
Merck-Medco Managed Care, L.L.C.
 
 
 
By:________________________
Name:______________________
Title:_______________________

                                       15

 
                       Exhibit B to Employment Agreement
                                        
                                  Option Terms
                                  ------------
                                        

--------------------------------------------------------------------------------------------------
                                              
Option Type:                                      Non-qualified stock option
--------------------------------------------------------------------------------------------------
Term:                                             10 years from date of grant (the 'Expiration
                                                  Date')
--------------------------------------------------------------------------------------------------
Vesting Date:                                     Earlier of date of death and 2nd anniversary of
                                                  grant date, provided the Executive is an
                                                  employee of Merck-Medco on the applicable date
--------------------------------------------------------------------------------------------------
Exercise Price:                                   Fair market value on date of grant
--------------------------------------------------------------------------------------------------
Effect of termination of Employment:              see chart below
--------------------------------------------------------------------------------------------------


                      Effect of Termination of Employment:
                      -----------------------------------


------------------------------------------------------------------------------------------------------------------
                                                        
Due to death                                               options are exercisable by the estate for 3 years from
                                                           date of death (but not later than the Expiration Date)
-------------------------------------------------------------------------------------------------------------------
By the Company for 'Cause' (as defined in the              options lapse on the termination of employment date
Employment Agreement).
-------------------------------------------------------------------------------------------------------------------
By the Company without Cause (other than death) or by     Options to purchase a number of shares equal to the
 the Executive for 'Good Reason' (as defined in the       product (rounded to the nearest whole number) of (a) the
 Employment Agreement) during the 2-year period           total number of shares subject to the option multiplied
 beginning on the date of grant.                          by (b) a fraction, the numerator of which is the number
                                                          of full calendar months the Executive has been employed
                                                          by the Company (excluding any period the Executive is on
                                                          unpaid inactive status due to the application of
                                                          Paragraph 8.2(e) of the Employment Agreement) since the
                                                          option grant date and the denominator of which is 24,
                                                          are exercisable by the Executive for a period beginning
                                                          on the date the Executive's active employment with the
                                                          Company is terminated and ending on the 5th anniversary
                                                          of the grant date.  The remaining options lapse on the
                                                          date the Executive's active employment with the Company
                                                          terminates.  For purposes
-------------------------------------------------------------------------------------------------------------------


                                       16

 

-------------------------------------------------------------------------------------------------------------------
                                                       
                                                          of this section, the Executive's active employment
                                                          ends on the earlier of (x) the date his employment
                                                          terminates or (y) the day his period of unpaid inactive
                                                          employment with the Company begins in accordance with
                                                          Paragraph 8.2(e) of the Employment Agreement.
-------------------------------------------------------------------------------------------------------------------
By the Executive for any reason (other than death or      options lapse on termination of employment date
 Good Reason) during the 2-year period beginning on
 date of grant
-------------------------------------------------------------------------------------------------------------------
By the Company without cause (other than death or         options are exercisable for the following period,
 disability) during the period beginning on the 2nd       whichever is longer: (a) 3 months from the termination
 anniversary of grant date and ending on the 5th          of employment date or (b) 5th anniversary of grant date
 anniversary of grant date
-------------------------------------------------------------------------------------------------------------------
By the Executive for any reason (other than death) or     options are exercisable for 3 months from termination of
 by the Company for disability, in each case during       employment date
 the period beginning on the 2nd anniversary of grant
 date and ending on the 5th anniversary of grant date
-------------------------------------------------------------------------------------------------------------------
By the Company due to 'separation' (as defined by the     options are exercisable for 1 year from termination of
 Merck Stock Plan) during the period beginning on the     employment date (but not later than the Expiration Date)
 5th Anniversary and ending on the Expiration Date
-------------------------------------------------------------------------------------------------------------------
By the Executive due to retirement at or after age 55     options are exercisable until the Expiration Date
 with at least 7 years of employment with Merck-Medco
 during the period beginning on the 5th Anniversary
 and ending on the Expiration Date
-------------------------------------------------------------------------------------------------------------------
By the Company or Executive for any reason (other than    options are exercisable for 3 months from termination of
 death, separation or retirement) during the period       employment date (but not later than the Expiration Date)
 beginning on the 5th Anniversary and ending on the
 Expiration Date
-------------------------------------------------------------------------------------------------------------------


                                       17