EXHIBIT 10.14
FORM OF
EMPLOYEE LEASING AGREEMENT
THIS AGREEMENT made as of the ____ day of __________, 2002 (the
"Effective Date") by and between Merck & Co., Inc., a New Jersey corporation
("Merck"), and MedcoHealth Solutions, Inc., a Delaware corporation ("Medco").
W I T N E S S E T H:
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WHEREAS, the Board of Directors of Merck has determined that it
is appropriate and desirable for Merck to separate the Medco Group from the
Merck Group; and
WHEREAS, certain employees of Merck (the "Sourced Employees")
have been and are presently employed by Merck but have been sourced to Medco;
WHEREAS, the Sourced Employees possess an intimate knowledge of
the business and affairs of the Medco Group and its policies, procedures,
methods and personnel;
WHEREAS, the Sourced Employees possess skills, experience and
knowledge that are of value to the Medco Group;
WHEREAS, Medco desires to secure the continued services and
employment of the Sourced Employees, and Merck is willing to lease the Sourced
Employees to Medco during the Lease Period on the terms and conditions set forth
herein.
NOW, THEREFORE, the parties, intending to be legally bound,
hereby agree as follows:
SECTION I - Definitions
For purposes of this Agreement, (i) unless otherwise defined
herein, capitalized terms shall have the same meaning as set forth in the Master
Separation and Distribution Agreement, dated as of _______________, 2002, and
the Employee Matters Agreement, dated as of _______________, 2002 (the "Employee
Matters Agreement"), to which Merck and Medco are parties, and (ii) the
following terms shall have the following meanings:
1.1 "Expiration Date" shall mean (i) as to all Sourced
Employees other than Xxxxxxx X. Xxxxx, December 31, 2002 or such other date as
the parties shall mutually agree, and (ii) as to Xxxxxxx X. Xxxxx, or such date
as the Parties shall mutually agree.
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1.2 "Lease Period" shall mean, as to any Sourced Employee, the
period commencing on the Effective Date and ending at midnight (New York, New
York Time) on the Expiration Date applicable to such Sourced Employee.
1.3 "Payroll Costs" means the aggregate monthly base salary
and overtime pay paid to each of the Sourced Employees (the "Base Salaries").
1.4 "Sourced Employees" shall have the meaning set forth in
the recitals to this Agreement. The Sourced Employees as of the Effective Date
are listed on Exhibit 1 of this Agreement. Individuals shall be removed from
such list from time to time on and after the Effective Date (i) to take into
account (a) terminations of employment with Merck (for any reason) during the
Lease Period and (b) that individuals have ceased to perform services for and
serve in the workforce of the Medco Business but have remained employees of
Merck during the Lease Period and (ii) as provided in Section V of this
Agreement. Any individual so removed shall cease to be a Sourced Employee as of
the date of such removal.
SECTION II - Employment of Sourced Employees
2.1 Merck agrees to furnish the Sourced Employees to Medco to
perform services for, and serve in the workforce of, the Medco Business during
the Lease Period. The Sourced Employees shall remain employees of Merck during
the Lease Period and shall be deployed by Medco at locations Medco shall
designate from time to time for the efficient operation of the Medco Business;
provided, however, that nothing in this Agreement shall be construed to prohibit
(i) either any member of the Merck Group from offering any Sourced Employee a
position that does not provide services to the Medco Business or the Medco Group
from offering employment to any Sourced Employee, or (ii) any Sourced Employee
from accepting a position that does not provide services to the Medco Business
with any member of the Merck Group or an offer of employment with any member of
the Medco Group (whether by reason of the offer contemplated by clause (i)
hereof or by reason of a Sourced Employee bidding on a position pursuant to the
bidding policies of Merck and Medco as in effect from time to time).
Notwithstanding anything herein to the contrary, Medco shall have sole
responsibility and liability for determining the overall direction of the
Sourced Employees in accordance with its business plans and objectives and shall
at all times be responsible for directing the daily work of the Sourced
Employees.
2.2 Each of the Sourced Employees shall be involved solely in
the Medco Business and shall render no services to the Merck Group other than
services rendered to the Merck Group immediately prior to the Effective Date;
provided, however, that any of the Sourced Employees shall provide such
assistance to the Merck Group as may be required to either assert claims or to
defend against claims brought against any member of the Merck Group, whether
asserted or threatened, to the extent that (a) a Sourced Employee has knowledge
of the facts or issues, or (b) a Sourced Employee's
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assistance is reasonably necessary to the defense or assertion of those claims.
Medco shall provide to Merck, upon its request, performance reports regarding
any Sourced Employee for use by Merck in conducting performance reviews of any
Sourced Employee.
2.3 In the event that the Sourced Employees are deployed at
locations which are not Merck locations, Medco shall (i) be responsible for all
necessary record keeping regarding times and overtime worked by Sourced
Employees classified as "non-exempt" under the United States Fair Labor
Standards Act, (ii) provide proper documentation to Merck on a timely basis
sufficient to enable Merck to meet any federal, state or local laws pertaining
to payment of wages with respect to the Sourced Employees, (iii) be responsible
for all necessary record keeping regarding vacation, sick leave or any other
form of leave with respect to the Sourced Employees, whether taken under Merck
policies and practices or as a matter of law and (iv) shall provide proper
documentation with respect to such leaves to Merck on a timely basis sufficient
to enable Merck to manage its policies and procedures and, where applicable,
comply with any federal, state or local laws with respect to the Sourced
Employees.
2.4 During the Lease Period, Medco shall comply with all labor
and employment laws applicable to the Sourced Employees, including, without
limitation, federal, state and local laws (and any regulations promulgated
thereunder) relating to (i) civil rights and employment discrimination, (ii)
wages and hours of employment and (iii) workplace safety and health.
2.5 Prior to the applicable Expiration Date, Medco shall offer
to employ each Sourced Employee other than Xxxxxxx X. Xxxxx effective as of
immediately following the Expiration Date. Each such offer of employment shall
consist of (i) the same base salary applicable to the Sourced Employee as of the
Expiration Date, (ii) a bonus opportunity substantially the same as the bonus
opportunities in effect for similarly situated employees of the Medco Group,
(iii) employee benefits that are the same as the employee benefits that Medco
provides to similarly situated employees of the Medco Group and (iv) such other
terms as Medco shall determine and Merck shall approve (such approval not to be
unreasonably withheld). Any Sourced Employee who accepts such offer shall cease
to be a Sourced Employee and shall become a Medco employee immediately following
the Expiration Date (each such event, a "Transfer"). Merck shall deem any
Sourced Employee who receives but does not accept such offer to have resigned
immediately following the Expiration Date. The parties intend that no such
Transfer, nor any such resignation, nor the Distribution shall constitute a
termination of employment that entitles any Sourced Employee to separation pay,
benefit continuation or eligibility for enhanced retirement benefits under any
plan, program, policy or arrangement of Merck (including, without limitation,
under any of the agreements listed on Exhibit 2 to this Agreement (the
"Severance Agreements")); provided, however, that, if a Sourced Employee other
than Xxxxxxx X. Xxxxx does become
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entitled to separation pay, benefit continuation or eligibility for enhanced
retirement benefits under any plan, program, policy or arrangement of Merck
(including, without limitation, under any Severance Agreement) by reason of any
such Transfer, any such resignation or the Distribution, Medco shall reimburse
Merck in cash for such separation pay, benefit continuation and enhanced
retirement benefits within fifteen (15) business days after receipt of a
statement therefor or in accordance with such other procedures agreed to by
Merck and Medco. Effective as of immediately following the Expiration Date
applicable to him, Xxxxxxx X. Xxxxx shall cease to be a Sourced Employee.
SECTION III - Salary, Bonuses and Benefits
3.1 The base salary paid to each Sourced Employee as of the
Effective Date shall be the same base salary as in effect immediately prior to
the Effective Date for such Sourced Employee and shall thereafter include any
increases on and after the Effective Date. During the Lease Period, Merck shall
pay such base salaries and applicable overtime compensation earned by the
Sourced Employees through the Expiration Date in accordance with its normal
payroll practices. Medco will reimburse Merck for the payment of such base
salaries and overtime compensation in accordance with Section 3.4 below.
3.2 During the Lease Period, the Sourced Employees shall
continue to be eligible to participate in each of the Merck Benefit Arrangements
in which they were eligible to participate immediately prior to the Effective
Date on the terms and conditions of such plans as in effect from time to time.
For each month that ends during the Lease Period and for the portion of a month
which ends on the Expiration Date if the Expiration Date is not the last day of
such month, Medco will pay to Merck on a monthly basis in accordance with
Section 3.4 below an amount equal to a percentage of the Base Salaries (as
defined in Section 1.3 of this Agreement) to cover the costs of such Merck
Benefit Arrangements (the "Benefits Amount"), such percentage to be the same
percentage that Merck charges to its divisions for such plan benefits. The
parties agree that the costs of the bonus payments made pursuant to Section 3.5
of this Agreement and any severance benefits made pursuant to Section 2.5 or
Section IV of this Agreement shall not be included in the Benefits Amount.
3.3 If, during the Lease Period, Merck shall pay any business
expenses incurred by the Sourced Employee (the "Business Expenses"), Medco shall
reimburse Merck for the payment of such expenses in accordance with Section 3.4
below.
3.4 Merck shall send a written statement of the Payroll Costs,
the Benefits Amount and the Business Expenses to Medco on a monthly basis for
each month that ends during the Lease Period and for the portion of a month
which ends on the Expiration Date if the Expiration Date is not the last day of
such month (a "Payroll Statement"). Medco agrees to remit to Merck in cash the
amount shown on each Payroll
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Statement within fifteen (15) business days after receipt thereof or in
accordance with such other procedures as agreed to by Merck and Medco.
3.5 Individuals who are or were Sourced Employees (other than
Xxxxxxx X. Xxxxx) shall be eligible to receive bonuses under the applicable
Merck annual incentive plans (including, without limitation, the Annual
Incentive Plan) (each such applicable plan, a "Bonus Plan") for the 2002
calendar year (and, if applicable, for the portion of any later calendar year
into which the Expiration Date has been extended). Merck will pay such bonuses
in such amounts as mutually agreed by Merck and Medco and at such times in
accordance with the terms and conditions of each Bonus Plan (the "Bonus
Amount"). Medco shall reimburse Merck in cash for the Bonus Amount allocable to
any such individual within fifteen (15) business days after receipt of a
statement therefor or in accordance with such other procedures as agreed to by
Merck and Medco. In addition, (i) Medco shall reimburse Merck in cash within
fifteen (15) business days after receipt of a statement therefor or in
accordance with such other procedures as agreed to by Merck and Medco for the
bonus payable to Xxxxxxx X. Xxxxx under the applicable Merck annual incentive
plans (including, without limitation, the Executive Incentive Plan) (a)
allocable to 2002, and (b) allocable to each full calendar year on or after
January 1, 2003 during which the Expiration Date applicable to him has not
occurred, and (ii) if the Expiration Date applicable to Xxxxxxx X. Xxxxx occurs
after July 1 of any calendar year, Medco shall reimburse Merck in cash within
fifteen (15) business days after receipt of a statement therefor or in
accordance with such other procedures as agreed to by Merck and Medco, for the
portion of any bonus payable to him allocable to the period commencing on
January 1 of such calendar year and ending on the Expiration Date.
SECTION IV - Termination of Sourced Employees
4.1 If Medco desires to terminate the services of a Sourced
Employee, it shall request that Merck terminate such Sourced Employee. Merck
shall accept or reject any such request in its sole discretion; provided,
however, that, in the event that Medco presents sufficient evidence to Merck
that such Sourced Employee has engaged in acts constituting cause or other
material violation of Medco or Merck policies, Merck shall not unreasonably
withhold its acceptance of such request. If Merck rejects any such request, such
Sourced Employee shall not be terminated.
4.2 Sourced Employees who are terminated pursuant to clause
(i) of Section 4.1 of this Agreement may, if eligible, receive separation pay,
benefit continuation and eligibility for enhanced retirement benefits under any
plan, program, policy or arrangement of Merck, if any, in accordance with the
terms and conditions thereof in effect as of the date of such termination. Medco
shall reimburse Merck in cash for such cost within fifteen (15) business days
after receipt of a statement therefor or in accordance with such other
procedures as agreed to by Merck and Medco.
SECTION V - Long Term Disability
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Each Sourced Employee who meets the requirements to receive
benefits due to total disability under the Merck & Co., Inc. Long Term
Disability Plan for Non-Union Employees at any time during the Lease Period
shall be removed from Exhibit 1 during such period of total disability.
SECTION VI - Indemnification
6.1 The Merck Group hereby agrees to indemnify the Medco
Group, the Medco Benefit Arrangements and the directors, officers, employees and
agents of the Medco Group (collectively, the "Medco Releasees") against and
agrees to hold them harmless from, any liability, loss, damage, cost or expense
(including, without limitation, reasonable attorneys' fees and disbursements),
suffered by the Medco Releasees with respect to, or arising out of, any claims
or suits brought by any (a) Sourced Employee against the Medco Releasees with
respect to, or arising out of, Merck's failure to pay salary or benefits in
accordance with the terms of this Agreement, or (b) Sourced Employee who was
employed in Merck's Finance, Legal, Public Affairs, Information Services or
Human Resources department under any state or federal civil rights law based on
the actions of a Merck Employee, other than a Sourced Employee; provided,
however, that, if the Employee Matters Agreement explicitly provides that the
Medco Group shall not be indemnified as to any matter for which indemnification
is available pursuant to this Section 6.1 (determined without reference to this
proviso), then, as to such matter, indemnification shall not be available
pursuant to this Section 6.1.
6.2 The Medco Group hereby agrees to indemnify the Merck
Group, the Merck Benefit Arrangements and the directors, officers, employees and
agents of the Medco Group (collectively, the "Merck Releasees") against, and
agrees to hold them harmless from, any liability, loss, damage, cost or expense
(including, without limitation, reasonable attorneys' fees and disbursements),
suffered by the Merck Releasees with respect to any claims or suits brought by
any Sourced Employee against the Merck Releasees with respect to, or arising out
of, any events relating to the Sourced Employee's employment or termination of
employment, other than (a) a failure by Merck to pay salary and benefits to any
Sourced Employee in accordance with the terms of this Agreement, and (b) claims
or suits brought by any Sourced Employee who was employed in Merck's Finance,
Legal, Public Affairs, Information Services or Human Resources department under
any state or federal civil rights law based on the actions of a Merck Employee,
other than a Sourced Employee. Indemnification under this Section 6.2 shall
include, without limitation, claims and suits relating to any Severance
Agreement, other than Xxxxxxx X. Xxxxx'x Separation Agreement, and claims and
suits relating to separation pay, benefit continuation or eligibility for
enhanced retirement benefits under any plan, program, policy or arrangement of
Merck; provided, however, that, if the Employee Matters Agreement explicitly
provides that the Merck Group shall not be indemnified as to any matter for
which indemnification is available pursuant to this Section 6.2
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(determined without reference to this proviso), then, as to such matter,
indemnification shall not be available pursuant to this Section 6.2.
SECTION VII - Miscellaneous Provisions
7.1 Independent Contractor. The relationship between Medco and
Merck under this Agreement shall be solely that Merck is an independent
contractor for Medco, and nothing in this Agreement shall be deemed to create
any relationship of agency, employment, partnership, or joint venture between
the parties.
7.2 Amendment of Plans. Nothing in this Agreement shall be
construed to restrict the right of Merck to amend, modify or terminate any of
its plans, programs, policies or arrangements relating to compensation or
employee benefits in accordance with their terms.
7.3 Force Majeure.
(a) Merck shall not be liable to Medco for a failure to comply
with the terms hereof where such failure is due to causes beyond its reasonable
control. The suspension of Merck's obligations pursuant to this Section 7.3
shall not relieve it from performing any other obligation not affected by such
cause or excuse it from performing its obligations under this Agreement without
delay.
(b) Medco shall not be liable to Merck for a failure to comply
with the terms hereof where such failure is due to causes beyond its reasonable
control. The suspension of Medco's obligations pursuant to this Section 7.3
shall not relieve it from performing any other obligation not affected by such
cause or excuse it from performing its obligations under this Agreement without
delay.
7.4 Cooperation. Medco shall cooperate with Merck in the
prosecution and defense of any claims, allegations, causes of action, litigation
or other proceedings relating to any Sourced Employee.
7.5 Effect of Expiration Date. The occurrence of the
Expiration Date as to any Sourced Employees hereunder shall not affect any
obligations of the parties hereunder, which shall survive until fully performed.
7.6 Incorporation of Indemnification and Insurance Matters
Agreement. Article V of the Indemnification and Insurance Matters Agreement,
dated as of ___________, 2002 to which Merck and Medco are parties (the
"Indemnification Agreement") is hereby incorporated into this Agreement by
reference as if set forth fully herein.
7.7 DISPUTE RESOLUTION. ANY DISPUTE, CONTROVERSY OR CLAIM
BETWEEN THE PARTIES HERETO ARISING OUT OF OR RELATING TO
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THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION, DISPUTES CONCERNING THE VALIDITY,
INTERPRETATION OR PERFORMANCE OF OR UNDER THIS AGREEMENT OR ANY TERM OR
PROVISION HEREOF, SHALL BE EXCLUSIVELY GOVERNED BY AND SETTLED IN ACCORDANCE
WITH THE PROVISIONS OF ARTICLE III OF THE INDEMNIFICATION AGREEMENT.
IN WITNESS WHEREOF the parties hereto have caused this
Agreement to be executed by their duly authorized representatives as of the day
and year first above written.
MERCK & CO., INC. MEDCOHEALTH SOLUTIONS, INC.
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By: By:
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Its: Its:
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