Exhibit 10.38

 

[g287991jci001.gif]

 

CVS CAREMARK CORPORATION

NONQUALIFIED STOCK OPTION AGREEMENT

GRANT DATE:  APRIL 2, 2012

 

1.                                      GRANT OF AWARD.  Pursuant to the
provisions of the 2010 Incentive Compensation Plan (the “ICP”) of CVS Caremark
Corporation (the “Company”), on the date set forth above (the “Grant Date”), the
Company has granted and hereby evidences the Grant to the person named below
(the “Optionee”), subject to the terms and conditions set forth or incorporated
in this Nonqualified Stock Option Agreement (“Agreement”), the right, and
option, to purchase from the Company the aggregate number of shares of Common
Stock ($.01 par value) of the Company (“Shares”) set forth below, at the
purchase price indicated below (the “Option”), such Option to be exercised as
hereinafter provided.  The ICP is hereby made a part hereof and Optionee agrees
to be bound by all the provisions of the ICP.  Capitalized terms not otherwise
defined herein shall have the meaning assigned to such term(s) in the ICP. The
Option is a nonqualified option as defined in the ICP.

 

Optionee:

 

 

Employee ID:

 

 

Shares:

 

 

Option Price:

 

$xx.xx

 

2.                                      TERM OF OPTION.  The term of this Option
shall be for a period of seven (7) years from the Grant Date, subject to the
earlier termination of the Option, as set forth in the ICP and in this
Agreement. No portion of the Option shall be exercisable after the term of the
Option.

 

3.                                      EXERCISE OF OPTION.  (a)  The Option,
subject to the provisions of the ICP, shall be exercised by submitting a request
to exercise to the Company’s stock option administrator, in accordance with the
Company’s current exercise policies and procedures, specifying the number of
Shares to be purchased, which number may not be less than one hundred (100)
Shares (unless the number of Shares purchased is the total balance which is then
exercisable).  Unless the Company, in its discretion, establishes “cashless
exercise” procedures and permits Optionee entitled to exercise the Option to
utilize such “cashless exercise” procedures, Optionee so exercising all or part
of this Option shall, at the time of exercise, tender to the Company cash or
cash equivalent for the aggregate option price of the Shares Optionee has
elected to purchase or certificates for Shares of Common Stock of the Company
owned by Optionee for at least six (6) months with a fair market value at least
equal to the aggregate option price of the Shares Optionee has elected to
purchase, or a combination of the foregoing.

 

(b)                                 Prior to its expiration or termination and
except as otherwise provided herein, the Option will become vested in accordance
with the vesting schedule set forth below and any vested Option will be
exercisable by the Optionee so long as Optionee has maintained continuous
employment with the Company or a subsidiary of the Company from the Grant Date
through the exercise date:

 

(i)                                     25% of the Option shall vest on the 1st
anniversary of the Grant Date.

 

(ii)                                  25% of the Option shall vest on the 2nd
anniversary of the Grant Date.

 

(iii)                               25% of the Option shall vest on the 3rd
anniversary of the Grant Date.

 

(iv)                              25% of the Option shall vest on the 4th
anniversary of the Grant Date.

 

4.                                      TAXES.  If, upon the exercise of an
Option, there shall be payable by the Company any amount for tax withholding,
the Company shall have the right to require Optionee to pay the amount of such
taxes immediately, upon notification from the Company, before a certificate for
the Shares purchased is delivered to Optionee pursuant to such Option. 
Furthermore, the Company may elect to deduct such taxes from any other amounts
then payable to Optionee in cash or in Shares or from any other amounts payable
any time thereafter to Optionee.

 

1

--------------------------------------------------------------------------------

 

5.                                      NON-TRANSFERABILITY.  The Option shall
not be transferable by Optionee other than by will or by the laws of descent and
distribution, and during Optionee’s lifetime the Option shall be exercised only
by Optionee and only during the continuance of Optionee’s employment, except as
may otherwise be provided under the ICP.

 

6.                                      FORFEITURE OF OPTION UPON TERMINATION OF
EMPLOYMENT.  Unless otherwise provided for in the ICP or in this Agreement, the
Option (whether vested or unvested), to the extent not yet exercised, shall be
forfeited immediately upon Optionee’s termination of employment with the Company
or any of its subsidiaries.

 

7.                                      TERMINATION OF OPTIONEE’S EMPLOYMENT
WITHOUT CAUSE.  In the event that Optionee’s employment is terminated without
cause by the Company or one of its subsidiaries and Optionee receives severance
pay following Optionee’s employment pursuant to a written agreement, vesting of
the Option shall continue through the end of the severance period set forth in
the agreement providing for such severance pay.  Any vested Options shall be
exercisable at any time during the severance period and on or before the
ninetieth (90th) day following the last day of the severance period, as long as
no government regulations or rules are violated by such continued vesting or
exercise period; provided, however, that no Option will be exercisable beyond
its original option term.

 

8.                                      RETIREMENT OF OPTIONEE.  A “Qualified
Retiree” (defined below) may exercise a vested Option, to the extent that
Optionee shall be entitled to do so as of Optionee’s Retirement Date, at any
time within two (2) years after Optionee’s Retirement Date, but not beyond the
original term of the Option.  Subject to the provisions below regarding vesting
during a severance period, Options unvested at the Retirement Date are
forfeited.  A “Qualified Retiree” shall be an Optionee who (a) voluntarily
terminates his or her employment with, or is terminated without cause by the
Company or one of its subsidiaries, and (b) has attained the age of fifty-five
(55) and has at least ten (10) years of continuous service, or attained the age
of sixty (60) with at least five (5) years of continuous service on his or her
last date of employment (the “Retirement Date”).  If the Qualified Retiree is
receiving severance pay following such Retirement Date pursuant to a written
agreement, the vesting provisions of Section 7 shall apply to any Options that
are not vested as of the Retirement Date.  Any Options that vest during such
severance period shall be exercisable until the later of the ninetieth (90th)
day following the last day of the severance period and the two-year anniversary
of Optionee’s Retirement Date, but not beyond the original term of the Option,
as long as no government regulations or rules are violated by such continued
vesting or exercise period. The Committee shall have the authority in its sole
discretion to make any interpretations, determinations, and/or take any
administrative actions with respect to whether Optionee shall be deemed a
Qualified Retiree.

 

9.                                      DISABILITY OF OPTIONEE.  In the event
Optionee ceases to be employed by the Company, or any subsidiary of the Company,
by reason of total and permanent disability (as defined in the Company’s
Long-Term Disability Plan, or, if not defined in such Plan, as defined by the
Social Security Administration), the Options shall vest as follows: the total
number of Options vesting as of the separation date (which is the last day that
Optionee is employed by the Company or any subsidiary of the Company), shall be
equal to (i) the number of Options granted on the Grant Date multiplied by the
following fraction:  (A) the numerator shall be the whole number of months
elapsed since the Grant Date and (B) the denominator shall be forty-eight (48), 
minus (ii) the number of Options vested prior to the separation date (whether or
not such previously vested Options were exercised).  For purposes of this
calculation, the number of months in the numerator in sub-section (A) above
shall include any partial month in which Participant has worked.  For example,
if the time elapsed between the Grant Date and the separation date is eight
months and five days, the numerator in sub-section (A) above shall be nine.  The
vested Option may be exercised at any time within one (1) year of Optionee’s
separation date but not beyond the original term of the Option.

 

10.                               DEATH OF OPTIONEE.  In the event of Optionee’s
death while Optionee is employed by the Company or a subsidiary of the Company,
all unvested Options shall immediately vest and the Option shall remain
exercisable for a period of one (1) year after Optionee’s death, or prior to the
Option expiration date, whichever occurs first, by Optionee’s executor,
administrator, personal representative or any person or persons who acquired the
Option directly from Optionee by bequest or inheritance.  At the end of said
one-year time period, all rights with respect to any Option that is unexercised
shall terminate and the unexercised Option shall be cancelled.

 

11.                               TRANSFER OF EMPLOYMENT.  Transfer of
employment of Optionee from the Company to a subsidiary of the Company, transfer
among or between subsidiaries, or transfer from a subsidiary to the Company
shall not be treated as cessation of employment.

 

2

--------------------------------------------------------------------------------

 

12.                               ACCEPTANCE OF AWARD.  The Option may not be
exercised unless and until the Company has received acceptance by Optionee of
the terms and conditions set forth herein.  Acceptance may be submitted either
electronically, if available, or in writing.

 

13.                               NOTICE.  Any notice required to be given
hereunder to the Company shall be addressed to the Company, attention Senior
Vice President, Chief Human Resources Officer, One CVS Drive, Woonsocket, RI 
02895, and any notice required to be given hereunder to Optionee shall be
addressed to Optionee at his or her address as shown on the records of the
Company, subject to the right of either party hereafter to designate in writing
to the other some other address.

 

14.                               RECOUPMENT OF OPTION AWARDS DUE TO FRAUD OR
FINANCIAL MISCONDUCT.  Any portion of this Stock Option that has not been
exercised shall be forfeited and cancelled, and Optionee shall immediately repay
to the Company the value of any pre-tax economic benefit that Optionee derived
from any portion of this Stock Option that has been exercised if the Board
determines that Optionee is subject to recoupment under the Company’s recoupment
policy as it exists from time to time.  The portion of this Stock Option to be
cancelled and the amount to be repaid by Optionee shall be the portion and
amount necessary to disgorge the value enjoyed or realized by Optionee from this
Stock Option and the underlying Shares, as determined by the Board, or a portion
of such value as may be determined by the Board in its sole discretion.  In
making its determinations under this paragraph, the Board may, by way of example
only, (i) with respect to any portion of this Stock Option which has been
exercised and as to which beneficial ownership of the Shares obtained on
exercise has not been transferred by Optionee as of the date the repayment
obligation arises, require Optionee to repay to the Company an amount equal to
the Fair Market Value of such Shares as of the date of such repayment, less the
exercise price paid by Optionee to acquire such Shares; and (ii) with respect to
any portion of this Stock Option which has been exercised and as to which
beneficial ownership of the Shares obtained on exercise has been transferred by
Optionee as of the date the repayment obligation arises, require Optionee to
repay to the Company an amount equal to the Fair Market Value of such Shares as
of the date such Shares were transferred by Optionee, less the exercise price
paid by Optionee to acquire such Shares.  In each case the amount to be repaid
by Optionee shall also include any dividends (including any economic benefit
thereof) or distributions received by Optionee with respect to any Stock Option
Shares and, in calculating the value to be repaid, adjustments may be made for
stock splits or other capital changes or corporate transactions, as determined
by the Board.  If Optionee fails to repay the required value immediately upon
request by the Board, the Company may seek reimbursement of such value from
Optionee by reducing salary or any other payments that may be due to Optionee,
to the extent legally permissible, and/or through initiating a legal action to
recover the such amount, which recovery shall include any reasonable attorneys
fees incurred by the Company in bringing such action.

 

15.                               COMMITTEE AUTHORITY.  The Committee shall have
the authority, in its sole discretion, to make any interpretations,
determinations, and/or take any administrative actions with respect to the ICP
and this Agreement, including whether any post-termination payments to Optionee
shall be deemed severance pay, the duration of any severance period, and/or
whether a termination was without cause.

 

16.                               GOVERNING LAW.  This Nonqualified Stock Option
Agreement and the Option evidenced hereby shall be governed by the laws of the
State of Rhode Island, without giving effect to principles of conflict of laws.

 

BY:

s/ Lisa G. Bisaccia

 

 

Senior Vice President

 

 

Chief Human Resources Officer

 

 

CVS Caremark Corporation

 

 

 

3

--------------------------------------------------------------------------------