Exhibit 10.6

 

SURVIVOR BENEFIT AGREEMENT

 

This Survivor Benefit Agreement (“Agreement”) is made and entered into on
February 25, 2004, by and between Caremark Rx, Inc. (hereinafter referred to as
“the Company”) and E. Mac Crawford (hereinafter referred to as “Executive”).

 

WHEREAS, the Company and the Executive desire to enter into this Agreement to
provide to the beneficiaries of the Executive a certain survivor benefit upon
the death of the Executive under the terms and conditions set forth herein.

 

NOW THEREFORE, the parties hereto agree as follows:

 

1. Definitions.

 

(a) “Beneficiary” shall mean the person(s) designated pursuant to Section 6 to
receive the Death Benefit under this Agreement.

 

(b) “Death Benefit” shall mean the benefit payable under the Agreement to the
Beneficiary pursuant to Section 2.

 

(c) “Employment Agreement” shall mean the employment agreement executed by and
between the Company and the Executive, including any amendments thereto, in
effect as of the date of this Agreement.

 

2. Death Benefit.

 

(a) The Death Benefit shall be paid to the Beneficiary in a lump sum cash
payment by the Company no later than 10 days following the death of the
Executive.

 

(b) The Death Benefit shall be equal to the sum of (i) the Executive’s
then-current Base Salary at the time of Executive’s death for the then-remaining
term of the Employment Agreement, but in no event less than three (3) years, and
(ii) the Executive’s then-current amount of Bonus for the then-remaining term of
the Employment Agreement (pro-rated for any partial calendar year during such
remaining term), but in no event less than three (3) years. To the extent the
Death Benefit becomes payable at any time prior to the insurance policy transfer
contemplated in Section 4 hereof, the Company also shall be obligated to pay to
the Beneficiary a tax gross up amount equal to the amount of federal income
taxes recognized on the payment of the Death Benefit and such gross up amount.

 

(c) The parties to this Agreement hereby acknowledge and agree that the payment
of benefits under this Agreement shall offset any obligations of the Company to
pay a death benefit upon the death of the Executive in accordance with the
provisions of Section 10(d) of the Employment Agreement or any successor
thereto.

 

(d) The terms “Base Salary” and “Bonus” shall have the same meanings ascribed
thereto in the Employment Agreement.

 

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3. Offset of Other Insurance Payments. Notwithstanding any provisions of this
Agreement to the contrary, in the event the Beneficiary receives any death
benefits under an insurance policy (regardless of the owner of such policy) for
which the insurance premiums have been paid directly by the Company, then the
amount of the Death Benefit payable hereunder shall be reduced by the amount of
the death benefit payable under such insurance policy. Notwithstanding any
provisions hereof to the contrary, the Death Benefit shall not be reduced by any
death benefits payable on behalf of the Executive under any group term insurance
program sponsored by the Company.

 

4. Termination of Employment by the Executive. Upon the termination of the
Executive’s employment with the Company for any reason other than Executive’s
death, the Company shall be obligated to transfer to the Executive ownership of
an insurance policy with a specified minimum death benefit at the time of such
transfer equal to $ 17 million and a minimum cash value at the time of such
transfer determined in accordance with this Section 4. The required amount of
the minimum cash value under such insurance policy shall be determined by
reference to the date on which the Executive terminates employment with the
Company in accordance with the terms of Attachment A to the Agreement. Upon the
completion of such transfer, the obligations of the Company to pay the Death
Benefit under this Agreement shall cease. To the extent the Executive recognizes
taxable income for federal tax purposes at the time of the transfer to the
Executive of ownership of an insurance policy as provided hereunder, the Company
also shall be obligated to pay to the Executive at the time of such transfer a
tax gross up amount equal to the amount of federal income taxes so recognized at
the time of the transfer, including such taxes attributable to the payment of
the gross up amount.

 

5. General Obligation of Company. The Death Benefit payable under this Agreement
shall be paid solely from the general assets of the Company and shall be
considered an unfunded promise to pay. Neither the Executive nor the Beneficiary
shall have any right in or claim to any asset of the Company under this
Agreement other than as a general unsecured creditor of the Company. The Company
may purchase and maintain insurance contracts on the life of the Executive to
pay the Death Benefit. Except to the extent set forth in Section 4, the
Executive and his Beneficiary shall have no interest in any such insurance
contract.

 

6. Designation of Beneficiary. The Executive shall designate a Beneficiary to
receive the Death Benefit under the Agreement by executing a beneficiary
designation form in writing, as provided by or acceptable to the Company. The
Executive may change such Beneficiary designation or add a secondary or
contingent Beneficiary, provided such change or designation is in writing (on a
form provided by or acceptable to the Company) and is received by the Company
before the death of the Executive. An Executive may irrevocably assign his or
her rights to designate and change the Beneficiary. In the absence of any
Beneficiary designation, or the failure of any designated Beneficiary to survive
the Executive, the Beneficiary shall be the Executive’s estate.

 

7. Amendment or Termination of Agreement. This Agreement may be amended or
terminated by the parties only by mutual action taken in a writing executed by
both parties hereto.

 

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8. Successors. This Agreement shall be binding upon and shall inure to the
benefit of the Company, its participating subsidiaries and their respective
successors, assigns, and legal representatives.

 

9. State Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of Alabama to the extent not preempted by federal
law.

 

10. Withholding. The Company shall be authorized to withhold any federal or
state employment and income taxes payable with respect to any compensation paid
to the Executive or the Beneficiary under the terms of this Agreement.

 

11. Claims. Any claim by the Executive or the Beneficiary for benefits under
this Agreement should be submitted to the Company. To the extent permitted by
applicable law, any dispute in connection with any claim under this Agreement
shall be handled in accordance with the dispute resolution provisions contained
in Section 15 of the Employment Agreement (or any successor provision thereto).

 

12. Entire Agreement. This Agreement supersedes all prior negotiations and
agreements, proposed or otherwise, whether written or oral, between the parties
concerning the matters covered herein, and this Agreement constitutes the entire
agreement between the parties with respect thereto. No person has any authority
to make any representation or promise on behalf of any of the parties not set
forth herein and this Agreement has not been executed in reliance upon any
representations or promises except those contained herein.

 

13. Headings Not Controlling. Headings in this Agreement are used for ease of
reference and are not controlling of the interpretation of this Agreement. IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date first
above written.

 

03/02/2004

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Date

 

/s/ E. Mac Crawford

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E. Mac Crawford

ON BEHALF OF CAREMARK RX, INC.

02/25/2004

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Date

 

/s/ Harris Diamond

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Harris Diamond, Director and

    Compensation Committee Chairman

03/03/2004

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Date

 

/s/ Kirk McConnell

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Kirk McConnell, EVP/CAO

 

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ATTACHMENT A

 

The required amount of the minimum cash value under the insurance policy
transferred to the Executive, measured at the time of such transfer, under
Section 4 of the Agreement upon Executive’s termination of employment shall be
determined by reference to the date on which the Executive terminates
employment, for whatever reason, with the Company in accordance with the
following chart:

 

Date of Termination

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Required Minimum Cash Value

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On or Before November 1, 2004

  $1,226,592

On or Before November 1, 2005

  $2,015,860

On or Before November 1, 2006

  $2,829,078

On or Before November 1, 2007

  $3,666,256

After November 1, 2007

  $4,527,827

 

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