Exhibit 10.24

 

CAREMARK RX, INC.

1994 STOCK INCENTIVE PLAN

 

The Caremark Rx, Inc. 1994 Stock Incentive Plan is the result of the assumption
and adoption by Caremark Rx, Inc., a Delaware corporation, of the 1994 Stock
Incentive Plan of InPhyNet Medical Management Inc., pursuant to the provisions
of that certain Plan and Agreement of Merger, dated as of June 26, 1997, by and
among Caremark Rx Inc. and InPhyNet Medical Management Inc.

 

1. PURPOSE.

 

The purpose of the Caremark Rx, Inc. 1994 Stock Incentive Plan (the “Plan”) is
to provide a means through which the Company and its Subsidiaries and Affiliates
may attract able persons to enter and remain in the employ of the Company and
its Subsidiaries and Affiliates, and to provide a means whereby those key
persons upon whom the responsibilities of the successful administration and
management of the Company rest, and whose present and potential contributions to
the welfare of the Company are of importance, can acquire and maintain stock
ownership, thereby strengthening their commitment to the welfare of the Company
and promoting an identity of interest between stockholders and these key
persons.

 

A further purpose of the Plan is to provide such key persons with additional
incentive and reward opportunities designed to enhance the profitable growth of
the Company. So that the appropriate incentive can be provided, the Plan
provides for granting Incentive Stock Options, Nonqualified Stock Options,
Restricted Stock Awards, or any combination of the foregoing.

 

2. DEFINITIONS.

 

The following definitions shall be applicable throughout the Plan.

 

“Affiliate” means any affiliate of the Company within the meaning of 17 CFR ss.
230.405.

 

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“Award” means, individually or collectively, any Incentive Stock Option,
Nonqualified Stock Option or Restricted Stock Award.

 

“Beneficial Owner” or “Beneficial Ownership” shall have the meaning ascribed to
such term in Rule 13d-3 of the General Rules and Regulations under the Exchange
Act.

 

“Board” means the Board of Directors of the Company.

 

“Cause” means the Company, a Subsidiary or an Affiliate having cause to
terminate a Participant’s employment under any existing employment agreement
between the Participant and the Company, a Subsidiary or an Affiliate or, in the
absence of such an employment agreement, upon (i) the determination by the
Committee that the Participant has ceased to perform his duties to the Company,
or a Subsidiary or an Affiliate (other than as a result of his incapacity due to
physical or mental illness or injury), which failure amounts to an intentional
and extended neglect of his duties to such party, (ii) the Committee’s
determination that the Participant has engaged or is about to engage in conduct
materially injurious to the Company, or a Subsidiary or an Affiliate, or
(iii) the Participant having been convicted of a felony.

 

“Change in Control” a Change in Control of the Company shall be deemed to have
occurred as of the first day that any one or more of the following conditions
shall have been satisfied:

 

(a) The acquisition by any Person of Beneficial Ownership of 20% or more of
either (i) the then outstanding shares of Common Stock of the Company, or
(ii) the combined voting power of the outstanding voting securities of the
Company entitled to vote generally in the selection of Directors; provided,
however, that for purposes of this subsection, the following transactions shall
not constitute a Change of Control: (A) any acquisition directly from the
Company through a public offering of shares of Common Stock of the Company,
(B) any acquisition by the Company, (C) any acquisition by any employee benefit
plan (or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company, or (D) any acquisition by any corporation
pursuant to a transaction which complies with clauses (i), (ii) and (iii) of
subsection (c) below;

 

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(b) The cessation, for any reason, of the individuals who constitute the
Company’s Board of Directors as of the date hereof (“Incumbent Board”) to
constitute at least a majority of the Company’s Board of Directors; provided,
however, that any individual becoming a Director following the date hereof whose
election, or nomination for election by the Company’s stockholders, was approved
by a vote of at least a majority of the Directors then comprising the Incumbent
Board shall be considered as though such individual was a member of the
Incumbent Board, but excluding, for this purpose, any such individual whose
initial assumption of office occurs because of an actual or threatened election
contest with respect to the election or removal of Directors or other actual or
threatened solicitation of proxies or consents by or on behalf of a Person other
than the Company’s Board of Directors;

 

(c) The consummation of a reorganization, merger or consolidation or sale or
other disposition of all or substantially all of the assets of the Company
(“Business Combination”) unless, following such Business Combination, (i) all or
substantially all of the individuals and entities who were the Beneficial
Owners, respectively, of the outstanding shares of Common Stock of the Company
and the outstanding voting securities of the Company immediately before such
Business Combination beneficially own, directly or indirectly, more than 50% of,
respectively, the then outstanding shares of Common Stock and the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of Directors, as the case may be, of the Company
resulting from such Business Combination (including, without limitation, a
corporation which as a result of such transaction owns the Company or all or
substantially all of the Company’s assets either directly or through one or more
subsidiaries) in substantially the same proportions as their ownership
immediately before such Business Combination of the outstanding shares of Common
Stock and the outstanding voting

 

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securities of the Company, as the case may be; (ii) no party (excluding any
corporation resulting from such Business Combination or any employee benefit
plan (or related trust) of the Company or such corporation resulting from such
Business Combination) beneficially owns, directly or indirectly, 20% or more of,
respectively, the then outstanding shares of common stock of the corporation
resulting from such Business Combination or the combined voting power of the
then outstanding voting securities of such corporation except to the extent that
such ownership existed before the Business Combination; and (iii) at least a
majority of the members of the board of directors of the corporation resulting
from such Business Combination were members of the Company’s Board of Directors
at the time of the execution of the initial agreement, or of the action of the
Company’s Board of Directors, providing for such Business Combination;

 

(d) The approval by the stockholders of the Company of a complete liquidation or
dissolution of the Company; or

 

(e) Any other condition or event (i) that the Committee determines to be a
“Change in Control” within the meaning of this Section 2 and (ii) that is set
forth as a supplement to this Section 2 in the Stock Option Agreement.

 

“Code” means the Internal Revenue Code of 1986, as amended. Reference in the
Plan to any section of the Code shall be deemed to include any amendments or
successor provisions to such section and any regulations under such section.

 

“Committee” means the Compensation Committee of the Board or such other
committee as the Board may appoint to administer the Plan.

 

“Common Stock” means the common stock, par value $.001 per share, of the
Company.

 

“Company” means Caremark Rx, Inc.

 

“Date of Grant” means the date on which the granting of an Award is authorized
or such other date as may be specified in such authorization.

 

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“Disability” means the complete and permanent inability by reason of illness or
accident to perform the duties of the occupation at which a Participant was
employed when such disability commenced or, if the Participant was retired when
such disability commenced, the inability to engage in any substantial gainful
activity, as determined by the Committee based upon medical evidence acceptable
to it.

 

“Eligible Employee” means any person regularly employed by the Company or a
Subsidiary or Affiliate on a full-time salaried basis, and any independent
contractor of the Company or a Subsidiary or Affiliate, who satisfies all of the
requirements of Section 6.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

“Fair Market Value” means, except as otherwise determined by the Committee, an
amount equal to the closing sale price of a share of Common Stock as reported on
The National Association of Securities Dealers’ New York Stock Exchange
Composite Reporting Tape (or if the Common Stock is not traded on The New York
Stock Exchange, the closing sale price on the exchange on which it is traded or
as reported by an applicable automated quotation system) (the “Composite Tape”),
on the applicable date or, if no sales of Common Stock are reported on such
date, the closing sale price of a share of Common Stock on the date the Common
Stock was last reported on the Composite Tape (or such other exchange or
automated quotation system, if applicable).

 

“Holder” means a Participant who has been granted an Option or a Restricted
Stock Award.

 

“Incentive Stock Option” means an Option granted by the Committee to a
Participant under the Plan which is designated by the Committee as an Incentive
Stock Option pursuant to Section 422 of the Code.

 

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“Non-Employee Director” means a Director of the Company who (i) is not currently
an officer or employee of the Company or any Subsidiary of the Company;
(ii) does not directly or indirectly receive any compensation from the Company
or any Subsidiary for services rendered as a consultant or in any other
non-director capacity that would exceed the $60,000 threshold for which
disclosure would be required under Item 404(a) of Regulation S-K; (iii) does not
possess an interest in any other transaction for which disclosure would be
required under Item 404(a) of Regulation S-K; and (iv) is not engaged in a
business relationship with the Company which would be disclosable under
Item 404(b) of Regulation S-K.

 

“Nonqualified Stock Option” means an Option granted by the Committee to a
Participant under the Plan which is not designated by the Committee as an
Incentive Stock Option.

 

“Normal Termination” means termination:

 

(i) with respect to the Company or a Subsidiary, at retirement (excluding early
retirement) pursuant to the Company retirement plan then in effect;

 

(ii) with respect to an Affiliate, at retirement (excluding early retirement)
pursuant to the retirement plan of such Affiliate then in effect or, if the
Affiliate has no such plan, at retirement upon or after the attainment of age
65;

 

(iii) on account of Disability;

 

(iv) with the written approval of the Committee; or

 

(v) by the Company, a Subsidiary or Affiliate without Cause

 

(vi) voluntarily by the Holder for any reason other than Cause or death.

 

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“Option” means an Award granted under Section 7 of the Plan.

 

“Option Period” means the period described in Section 7(c).

 

“Participant” means an Eligible Employee who has been selected to participate in
the Plan and to receive an Award pursuant to Section 6.

 

“Person” shall have the meaning ascribed to such term in Section 3(a)(9) of the
Exchange Act and used in Sections 13(d) and 14(d) thereof, including a “group”
as defined in Section 13(d) thereof.

 

“Plan” means the Caremark Rx, Inc. 1994 Stock Incentive Plan.

 

“Reporting Company” means the Company.

 

“Restricted Period” means, with respect to any share of Restricted Stock, the
period of time determined by the Committee during which such share of Restricted
Stock is subject to the restrictions set forth in Section 8.

 

“Restricted Stock” means shares of Common Stock issued or transferred to a
Participant subject to the restrictions set forth in Section 8 and any new,
additional or different securities a Participant may become entitled to receive
as a result of adjustments made pursuant to Section 10.

 

“Restricted Stock Award” means an Award granted under Section 8 of the Plan.

 

“Securities Act” means the Securities Act of 1933, as amended.

 

“Stock” means the Common Stock or such other authorized shares of stock of the
Company as the Committee may from time to time authorize for use under the Plan.

 

“Subsidiary” means any subsidiary of the Company as defined in Section 424(f) of
the Code.

 

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3. EFFECTIVE DATE, DURATION AND STOCKHOLDER APPROVAL.

 

The Plan became effective on May 7, 1994, and no further Awards may be made
after May 7, 2004.

 

The Plan shall continue in effect until all matters relating to the payment of
Awards and administration of the Plan have been settled.

 

4. ADMINISTRATION.

 

The Committee shall administer the Plan. Each member of the Committee shall, at
the time he takes any action with respect to an Award under the Plan, be a
Non-Employee Director. The acts of a majority of the members present at any
meeting at which a quorum is present or acts approved in writing by a majority
of the Committee shall be deemed the acts of the Committee.

 

Subject to the provisions of the Plan, the Committee shall have exclusive power
to:

 

(a) Select the Eligible Employees to participate in the Plan;

 

(b) Determine the nature and extent of the Awards to be made to each
Participant;

 

(c) Determine the time or times when Awards will be made;

 

(d) Determine the conditions to which the payment of Awards may be subject;

 

(e) Prescribe the form or forms evidencing Awards;

 

(f) Interpret and construe the terms and provisions of the Plan and any form or
forms evidencing Awards granted under the Plan; and

 

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(g) Cause records to be established in which there shall be entered, from time
to time, as Awards are made to Participants, the date of each Award, the number
of Incentive Stock Options, Nonqualified Stock Options, and shares of Restricted
Stock awarded by the Committee to each Participant, the expiration date, and the
duration of any applicable Restricted Period.

 

The Committee shall have the authority, subject to the provisions of the Plan,
to establish, adopt, or revise such rules and regulations and to make all such
determinations relating to the Plan as it may deem necessary or advisable for
the administration of the Plan. The Committee’s interpretation of the Plan or
any form or forms evidencing Awards granted pursuant thereto and all decisions
and determinations by the Committee with respect to the Plan shall be final,
binding, and conclusive on all parties unless otherwise determined by the Board.

 

5. GRANT OF OPTIONS AND RESTRICTED STOCK AWARDS; SHARES SUBJECT TO THE PLAN.

 

The Committee may, from time to time, grant Awards of Options and/or Restricted
Stock to one or more Participants; provided, however, that:

 

(a) Subject to Section 10, the aggregate number of shares of Stock made subject
to Awards may not exceed 2,950,000;

 

(b) Such shares shall be deemed to have been used in payment of Awards whether
they are actually delivered or the Fair Market Value equivalent of such shares
is paid in cash. In the event any Option or Restricted Stock shall be
surrendered, terminate, expire, or be forfeited, the number of shares of Stock
no longer subject thereto shall thereupon be released and shall thereafter be
available for new Awards under the Plan to the fullest extent permitted by Rule
16b-3 under the Exchange Act (if applicable at the time); and

 

(c) Stock delivered by the Company in settlement

 

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of Awards under the Plan may be authorized and unissued Stock or Stock held in
the treasury of the Company or may be purchased on the open market or by private
purchase at prices no higher than the Fair Market Value at the time of purchase.

 

6. ELIGIBILITY.

 

Participants shall be limited to officers, key employees and independent
contractors of the Company and its Subsidiaries and Affiliates who have received
written notification from the Committee or from a person designated by the
Committee, that they have been selected to participate in the Plan.

 

7. STOCK OPTIONS.

 

One or more Incentive Stock Options or Nonqualified Stock Options may be granted
to any Participant; provided, however, that Incentive Stock Options may be
granted only to employees of the Company or a Subsidiary. Each Option so granted
shall be subject to the following conditions:

 

(a) Option Price. The Option Price (“Option Price”) per share of Common Stock
shall be set by the Committee at the time of grant but shall not be less than
(i) in the case of an Incentive Stock Option, the Fair Market Value of a share
of Stock at the Date of Grant, and (ii) in the case of a Nonqualified Stock
Option, the par value per share of Stock.

 

(b) Manner of Exercise and Form of Payment. Options which have become
exercisable may be exercised by delivery of proper notification of exercise to
the Committee. No shares of Common Stock shall be issued on the exercise of an
Option unless the Option Price is paid in full at the time of the exercise.
Payment shall be made in cash, which may be paid by check or other instrument
acceptable to the Company. In addition, subject to compliance with applicable
laws and regulations and such conditions as the Committee may impose, the
Committee may elect to accept payment of the Option Price in shares of Common
Stock of the Company which are already owned

 

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by the Holder, valued at the Fair Market Value thereof on the date of exercise.
The Committee may also allow a Holder to exercise an Option by the use of
proceeds to be received from the sale of Common Stock issuable pursuant to the
Option being exercised.

 

(c) Other Terms and Conditions. If the Holder has not died or terminated, the
Option shall become exercisable in such manner and within such period or periods
(“Option Period”), not to exceed 10 years from its Date of Grant, as set forth
in the vesting schedule set forth in Section 7(i) hereof, or as otherwise set
forth in the Stock Option Agreement to be entered into in connection therewith.

 

(d) Termination.

 

(i) Except as otherwise provided in a Stock Option Agreement or as provided in
paragraphs (ii) and (iii) below, each Option to the extent it has not been
previously exercised, shall terminate upon the earliest to occur of: (a) the
expiration of the term of the Option set forth in the Stock Option Agreement;
(b) the expiration of 12 months following the Holder’s death (if the Holder dies
within the Option Period or within 3 months after a Normal Termination (or such
other period as may have been established by the Committee)); (c) immediately
upon the Holder ceasing to be an employee, officer or consultant or otherwise
affiliated with the Company for Cause; or (d) 90 days following a Normal
Termination.

 

(ii) Except as otherwise provided in a Stock Option Agreement, any Option
granted after September 21, 1998 (a “Secondary Option”), to the extent it has
not been previously exercised, shall terminate upon the earliest to occur of:
(a) the expiration of the Secondary Option period set forth in the Stock Option
Agreement (as defined in paragraph (e) heretofore); (b) the expiration of 12
months following the Holder’s death or Disability; (c) immediately upon
termination for Cause; or (d) the expiration of 90 days

 

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following the Holder’s termination of employment for any reason other than
Cause, Change in Control, death or Disability.

 

(iii) Notwithstanding the foregoing, any Secondary Option, to the extent it has
not been previously exercised prior to a Change in Control shall remain
exercisable for its full original term upon and following such Change in
Control.

 

(e) Stock Option Agreement. Each Option granted under the Plan shall be
evidenced by a “Stock Option Agreement” between the Company and the Holder of
the Option. Each Stock Option Agreement shall incorporate by reference the terms
and provisions of the Plan as in effect at the time of its execution and may
contain such other provisions not contrary to the Plan as may be determined by
the Committee, subject to the following terms and conditions:

 

(i) Each Option or portion thereof that is exercisable shall be exercisable for
the full amount or for any part thereof, except as otherwise determined by the
terms of the Stock Option Agreement.

 

(ii) Each share of Stock purchased through the exercise of an Option shall be
paid for in full at the time of the exercise. Each Option shall cease to be
exercisable, as to any share of Stock, when the Holder purchases the share or
when the Option lapses.

 

(iii) Options shall not be transferable by the Holder except by will or the laws
of descent and distribution and shall be exercisable during the Holder’s
lifetime only by him.

 

(iv) Each Option shall become exercisable by the Holder in accordance with the
vesting schedule set forth in Section 7(i) hereof, or as otherwise established
by the Committee for the Award.

 

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(v) Each Stock Option Agreement may contain an agreement that, upon demand by
the Committee for such a representation, the Holder shall deliver to the
Committee at the time of any exercise of an Option a written representation that
the shares to be acquired upon such exercise are to be acquired for investment
and not for resale or with a view to the distribution thereof.

 

Upon such demand, delivery of such representation prior to the delivery of any
shares issued upon exercise of an Option shall be a condition precedent to the
right of the Holder or such other person to purchase any shares. In the event
certificates for Stock are delivered under the Plan with respect to which such
investment representation has been obtained, the Committee may cause a legend or
legends to be placed on such certificates to make appropriate reference to such
representation and to restrict transfers in the absence of compliance with
applicable federal or state securities laws.

 

(f) Grants to 10% Holders of Company Voting Stock. Notwithstanding Section 7(a),
if an Incentive Stock Option is granted to a Holder who owns stock representing
more than 10% of the voting power of all classes of stock of the Company or of
the Company and its Subsidiaries, the period specified in the Stock Option
Agreement for which the Option thereunder is granted and at the end of which
such Option shall expire shall not exceed five years from the Date of Grant of
such Option and the Option Price shall be at least 110% of the Fair Market Value
(on the Date of Grant) of the Stock subject to the Option.

 

(g) Limitation. To the extent the aggregate Fair Market Value (as determined as
of the Date of Grant) of Stock for which Incentive Stock Options are exercisable
for the first time by any Participant during any calendar year (under all plans
of the Company and its Subsidiaries) exceeds $100,000, such excess Incentive
Stock Options shall be treated as Nonqualified Stock Options.

 

(h) Order of Exercise. Options granted under the Plan may be exercised in any
order, regardless of the Date of Grant or the existence of any other outstanding
Option.

 

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(i) Vesting of Options. Except as otherwise provided by the Committee in the
applicable Stock Option Agreement, Options granted under the Plan shall vest and
become exercisable as follows:

 

(i) 34% of the Options granted shall vest on the Date of Grant;

 

(ii) 33% of the Options granted shall vest on each of the first anniversary and
second anniversary of the Date of Grant; provided, however, that if during the
first year after the Date of Grant, the stock price of the Common Stock closes
at or above $12.00 (or such other price as determined by the Committee and set
forth in the applicable Stock Option agreement) for any twenty (20) out of
thirty (30) consecutive trading days, the 33% of the Options due to vest on the
first anniversary of the Date of Grant shall vest immediately at the end of such
20th day, and provided, however, that if during the second year after the Date
of Grant, the stock price of the Common Stock closes at or above $18.00 (or such
other price as determined by the Committee and set forth in the applicable Stock
Option agreement) for any twenty (20) out of thirty (30) consecutive trading
days, the 33% of the Options due to vest on the second anniversary of the Date
of Grant shall vest immediately at the end of such 20th day.

 

8. RESTRICTED STOCK AWARDS.

 

(a) Award of Restricted Stock.

 

(i) The Committee shall have the authority (1) to grant Restricted Stock, (2) to
issue or transfer Restricted Stock to Participants, and (3) to establish terms,
conditions

 

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and restrictions applicable to such Restricted Stock, including the Restricted
Period, which may differ with respect to each grantee, the time or times at
which Restricted Stock shall be granted or become vested and the number of
shares or units to be covered by each grant.

 

(ii) The Holder of a Restricted Stock Award shall execute and deliver to the
Corporate Secretary of the Company an agreement with respect to Restricted Stock
and escrow agreement satisfactory to the Committee and the appropriate blank
stock powers with respect to the Restricted Stock covered by such agreements. If
a Participant shall fail to execute the agreement, escrow agreement and stock
powers within such period, the Award shall be null and void. Subject to the
restrictions set forth in Section 8(b), the Holder shall generally have the
rights and privileges of a stockholder as to such Restricted Stock, including
the right to vote such Restricted Stock. At the discretion of the Committee,
cash and stock dividends with respect to the Restricted Stock may be either
currently paid or withheld by the Company for the Holder’s account, and interest
may be paid on the amount of cash dividends withheld at a rate and subject to
such terms as determined by the Committee. Cash or stock dividends so withheld
by the Committee shall not be subject to forfeiture.

 

(iii) In the case of a Restricted Stock Award, the Committee shall then cause
stock certificates registered in the name of the Holder to be issued and
deposited together with the stock powers with an escrow agent to be designated
by the Committee. The Committee shall cause the escrow agent to issue to the
Holder a receipt evidencing any stock certificate held by it registered in the
name of the Holder.

 

(b) Restrictions.

 

(i) Restricted Stock awarded to a Participant

 

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shall be subject to the following restrictions until the expiration of the
Restricted Period: (1) the Holder shall not be entitled to delivery of the stock
certificate; (2) the shares shall be subject to the restrictions on
transferability set forth in the grant; (3) the shares shall be subject to
forfeiture to the extent provided in subparagraph (d) and, to the extent such
shares are forfeited, the stock certificates shall be returned to the Company,
and all rights of the Holder to such shares and as a stockholder shall terminate
without further obligation on the part of the Company.

 

(ii) The Committee shall have the authority to remove any or all of the
restrictions on the Restricted Stock whenever it may determine that, by reasons
of changes in applicable law or other changes in circumstances arising after the
date of the Restricted Stock Award such action is appropriate.

 

(c) Restricted Period. The Restricted Period of Restricted Stock shall commence
on the Date of Grant and shall expire from time to time as to that part of the
Restricted Stock indicated in a schedule established by the Committee in the
Award agreement.

 

(d) Forfeiture Provisions. In the event a Holder terminates employment during a
Restricted Period, that portion of the Award with respect to which restrictions
have not expired (“Non-Vested Portion”) shall be treated as follows:

 

(i) Resignation or discharge: The Non-Vested Portion of the Award shall be
completely forfeited.

 

(ii) Normal Termination: The Non-Vested Portion of the Award shall be prorated
for service during the Restricted Period and shall be received as soon as
practicable following termination.

 

(iii) Death: The Non-Vested Portion of the Award

 

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shall be prorated for service during the Restricted Period and paid to the
Participant’s beneficiary as soon as practicable following death.

 

(e) Delivery of Restricted Stock. Upon the expiration of the Restricted Period
with respect to any shares of Stock covered by a Restricted Stock Award, a stock
certificate evidencing the shares of Restricted Stock which have not then been
forfeited and with respect to which the Restricted Period has expired (to the
nearest full share) shall be delivered without charge to the Holder, or his
beneficiary, free of all restrictions under the Plan.

 

(f) SEC Restrictions. Each certificate representing Restricted Stock awarded
under the Plan shall bear the following legend:

 

“Transfer of this certificate and the shares represented hereby is restricted
pursuant to the terms of a Restricted Stock Agreement, dated as of             ,
between Caremark Rx, Inc. and             . A copy of such Agreement is on file
at the offices of the Company in Birmingham, Alabama.”

 

Stop transfer orders shall be entered with the Company’s transfer agent and
registrar against the transfer of legend securities except in compliance with
the Securities Act.

 

9. GENERAL.

 

(a) Additional Provisions of an Award. The award of any benefit under the Plan
may also be subject to such other provisions (whether or not applicable to the
benefit awarded to any other Participant) as the Committee determines
appropriate.

 

(b) Privileges of Stock Ownership. Except as otherwise specifically provided in
the Plan, no person shall be entitled to the privileges of stock ownership in
respect of shares of

 

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Stock which are subject to Options or Restricted Stock Awards, hereunder until
such shares have been issued to that person upon exercise of an Option according
to its terms or upon sale or grant of those shares in accordance with a
Restricted Stock Award.

 

(c) Government and Other Regulations. The obligation of the Company to make
payment of Awards or otherwise shall be subject to all applicable laws, rules,
and regulations, and to such approvals by governmental agencies as may be
required. The Company shall be under no obligation to register under the
Securities Act any of the shares of Stock paid under the Plan. If the shares
paid under the Plan may in certain circumstances be exempt from registration
under the Securities Act, the Company may restrict the transfer of such shares
in such manner as it deems advisable to ensure the availability of any such
exemption.

 

(d) Withholding and Employment Taxes. At the time of exercise of an Option, the
optionee shall remit to the Company in cash all applicable federal and state
withholding and employment taxes. If and to the extent authorized and approved
by the Committee in its sole discretion, an optionee may elect, by means of a
form of election to be prescribed by the Committee, to have shares which are
acquired upon exercise of an Option withheld by the Company or tender other
shares of Common Stock or other securities of the Company owned by the optionee
to the Company at the time the amount of such taxes is determined in order to
pay the amount of such tax obligations, subject to the following limitations:

 

(1) each election shall be irrevocable; and

 

(2) such election shall be subject to the disapproval of the Committee at any
time;

 

Any Common Stock or other securities so withheld or tendered will be valued by
the Company as of the date they are withheld or tendered. Unless the Committee
otherwise determines, the optionee shall pay to the Company in cash, promptly
when the amount of such obligations become determinable, all

 

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applicable federal and state withholding taxes resulting from the lapse of
restrictions imposed on exercise of an Option, from a transfer or other
disposition of shares acquired upon exercise of an Option or otherwise related
to the Option or the shares acquired upon exercise of the Option.

 

(e) Claim to Awards and Employment Rights. No employee or other person shall
have any claim or right to be granted an Award under the Plan nor, having been
selected for the grant of an Award, to be selected for a grant of any other
Award. Neither this Plan nor any action taken hereunder shall be construed as
giving any Participant any right to be retained in the employ of the Company or
a Subsidiary or Affiliate.

 

(f) Designation and Change of Beneficiary. Each Participant shall file with the
Committee a written designation of one or more persons as the beneficiary who
shall be entitled to receive the amounts payable with respect to an Award of
Restricted Stock, if any, due under the Plan upon his death. A Participant may,
from time to time, revoke or change his beneficiary designation without the
consent of any prior beneficiary by filing a new designation with the Committee.
The last such designation received by the Committee shall be controlling;
provided, however, that no designation, or change or revocation thereof, shall
be effective unless received by the Committee prior to the Participant’s death,
and in no event shall it be effective as of a date prior to such receipt.

 

(g) Payments to Persons Other Than Participants. If the Committee shall find
that any person to whom any amount is payable under the Plan is unable to care
for his affairs because of illness or accident, or is a minor, or has died, then
any payment due to such person or his estate (unless a prior claim therefor has
been made by a duly appointed legal representative), may, if the Committee so
directs the Company, be paid to his spouse, child, relative, an institution
maintaining or having custody of such person, or any other person deemed by the
Committee to be a proper recipient on behalf of such person otherwise entitled
to payment. Any such payment shall be a complete discharge of the liability of
the Committee and the Company therefor.

 

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(h) No Liability of Committee Members. No member of the Committee shall be
personally liable by reason of any contract or other instrument executed by such
member or on his behalf in his capacity as a member of the Committee nor for any
mistake of judgment made in good faith, and the Company shall indemnify and hold
harmless each member of the Committee and each other employee, officer or
director of the Company to whom any duty or power relating to the administration
or interpretation of the Plan may be allocated or delegated, against any cost or
expense (including counsel fees) or liability (including any sum paid in
settlement of a claim) arising out of any act or omission to act in connection
with the Plan unless arising out of such person’s own fraud or bad faith;
provided, however, that approval of the Board shall be required for the payment
of any amount in settlement of a claim against any such person. The foregoing
right of indemnification shall not be exclusive of any other rights of
indemnification to which such persons may be entitled under the Company’s
Certificate of Incorporation or ByLaws, as amended, as a matter of law, or
otherwise, or any power that the Company may have to indemnify them or hold them
harmless.

 

(i) Governing Law. The Plan shall be governed by and construed in accordance
with the internal laws of the State of Delaware without reference to the
principles of conflicts of law thereof.

 

(j) Funding. Except as provided under Section 8, no provision of the Plan shall
require the Company, for the purpose of satisfying any obligations under the
Plan, to purchase assets or place any assets in a trust or other entity to which
contributions are made or otherwise to segregate any assets, nor shall the
Company maintain separate bank accounts, books, records or other evidence of the
existence of a segregated or separately maintained or administered fund for such
purposes. Holders shall have no rights under the Plan other than as unsecured
general creditors of the Company, except that insofar as they may become
entitled to payment of additional compensation by performance of services, they
shall have the same rights as other employees under general law.

 

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(k) Transferability.

 

(1) Incentive Stock Options. No Incentive Stock Option granted under the Plan
may be sold, transferred, pledged, assigned or otherwise alienated or
hypothecated, other than by will or by the laws of descent and distribution.
Further, all Incentive Stock Options granted to an Eligible Employee under the
Plan shall be exercisable during his or her lifetime only by such Eligible
Employee.

 

(2) Nonqualified Stock Options. No Nonqualified Stock Option granted under the
Plan may be sold, transferred, pledged, assigned or otherwise alienated or
hypothecated, other than by will or by the laws of descent and distribution.
Notwithstanding the foregoing, to the extent not prohibited by any statute, rule
or regulation applicable to the Plan, the Nonqualified Stock Options or the
registration with the Securities and Exchange Commission of the Common Stock to
be issued upon exercise of the Nonqualified Stock Options, the Committee may, in
its discretion, authorize all or a portion of Nonqualified Stock Options granted
to an Eligible Employee to be on terms which permit transfer by such Eligible
Employee to (i) the spouse, children or grandchildren of the Eligible Employee
(“Immediate Family Members”), (ii) a trust or trusts for the exclusive benefit
of such Immediate Family Members, or (iii) a partnership in which such Immediate
Family Members are the only partners, provided that (x) there may be no
consideration for any such transfer, (y) the Stock Option Agreement pursuant to
which such Nonqualified Stock Options are granted must be approved by the
Committee, and must expressly provide for transferability in a manner consistent
with this Section, and (z) subsequent transfers of transferred Nonqualified
Stock Options shall be prohibited except those by will or the laws of descent
and distribution. Following transfer, any such Nonqualified Stock Options shall
continue to be subject to the same terms and conditions as were applicable
immediately prior to transfer, provided that for purposes of this Plan, the term
“Eligible Employee” shall be deemed to refer to the transferee. The events of
termination of employment shall continue to be applied with respect to the
original Eligible Employee following which the Nonqualified Stock Options shall
be exercisable by the transferee only to the extent, and for the periods

 

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specified in Section 7(c). Notwithstanding the foregoing, should the Committee
provide that Options granted be transferable, the Company by such action incurs
no obligation to notify or otherwise provide notice to a transferee of early
termination of the Option. In the event of a transfer, as set forth above, the
original Eligible Employee is and will remain subject to and responsible for any
applicable withholding taxes upon the exercise of such Options.

 

(l) Reliance on Reports. Each member of the Committee and each member of the
Board shall be fully justified in relying, acting or failing to act, and shall
not be liable for having so relied, acted or failed to act in good faith, upon
any report made by the independent public accountant of the Company and its
Subsidiaries or Affiliates and upon any other information furnished in
connection with the Plan by any person or persons other than himself.

 

(m) Relationship to Other Benefits. No payment under the Plan shall be taken
into account in determining any benefits under any pension, retirement, profit
sharing, group insurance or other benefit plan of the Company or any Subsidiary
or Affiliate except as otherwise specifically provided.

 

(n) Expenses. The expenses of administering the Plan shall be borne by the
Company and its Subsidiaries and Affiliates.

 

(o) Pronouns. Masculine pronouns and other words of masculine gender shall refer
to both men and women.

 

(p) Titles and Headings. The titles and headings of the sections in the Plan are
for convenience of reference only, and in the event of any conflict, the text of
the Plan, rather than such titles or headings shall control.

 

10. CHANGES IN CAPITAL STRUCTURE.

 

Options and Restricted Stock Awards and any agreements evidencing such Awards
shall be subject to adjustment or substitution, as determined by the Committee
in its sole discretion, as to the number, price or

 

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kind of a share of Stock or other consideration subject to such Awards or as
otherwise determined by the Committee to be equitable (i) in the event of
changes in the outstanding Stock or in the capital structure of the Company by
reason of stock dividends, stock splits, recapitalizations, reorganizations,
mergers, consolidations, combinations, exchanges, or other relevant changes in
capitalization occurring after the Date of Grant of any such Award or (ii) in
the event of any change in applicable laws or any change in circumstances which
results in or would result in any substantial dilution or enlargement of the
rights granted to, or available for, Participants in the Plan, or which
otherwise warrants equitable adjustment because it interferes with the intended
operation of the Plan. In addition, in the event of any such adjustments or
substitution, the aggregate number of shares of Stock available under the Plan
shall be appropriately adjusted by the Committee, whose determination shall be
conclusive. Any adjustment in Incentive Stock Options under this Section 10
shall be made only to the extent not constituting a “modification” within the
meaning of Section 424(h)(3) of the Code, and any adjustments under this
Section 10 shall be made in a manner which does not adversely affect the
exemption provided pursuant to Rule 16b-3 under the Exchange Act. The Company
shall give each Participant notice of an adjustment hereunder and, upon notice,
such adjustment shall be conclusive and binding for all purposes.

 

11. EFFECT OF CHANGE IN CONTROL.

 

(a) In the event of a Change in Control, notwithstanding any vesting schedule
provided for hereunder or by the Committee with respect to an Award of Options
or Restricted Stock, such Option shall become immediately exercisable with
respect to 100% of the shares subject to such Option and the Restricted Period
shall expire immediately with respect to 100% of the Restricted Stock subject to
Restrictions; provided, however, to the extent that so accelerating the time an
Incentive Stock Option may first be exercised would cause the limitation
provided in Section 7(g) to be exceeded, such Options shall instead first become
exercisable in so many of the next following years as is necessary to comply
with such limitation.

 

(b) The obligations of the Company under the Plan shall

 

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be binding upon any successor corporation or organization resulting from the
merger, consolidation or other reorganization of the Company, or upon any
successor corporation or organization succeeding to substantially all of the
assets and business of the Company. The Company agrees that it will make
appropriate provisions for the preservation of Participant’s rights under the
Plan in any agreement or plan which it may enter into or adopt to effect any
such merger, consolidation, reorganization or transfer of assets.

 

12. SALE OF BUSINESS UNIT OF COMPANY

 

The Committee, in connection with the sale of any Subsidiary, Affiliate,
division or other business unit of the Company, may within the Committee’s sole
and absolute discretion (1) cause any or all Options granted hereunder to
Participants whose Options or rights under Options will be adversely affected by
such transaction (a) to become immediately exercisable, or (b) to remain
exercisable after such transaction for such period as the Committee deems
appropriate under the circumstances, or both (a) and (b), or (2) cause the
restrictions on any or all shares of Restricted Stock awarded hereunder to
Participants whose Restricted Stock will be adversely affected by such
transaction to lapse immediately. The provisions of this Section 12 and the
actions of the Committee taken pursuant to this Section 12 shall be effective
upon action of the Committee alone without amendment to any Award agreement or
the consent of any Participant.

 

13. NONEXCLUSIVITY OF THE PLAN.

 

Neither the adoption of this Plan by the Board nor the submission of this Plan
to the stockholders of the Company for approval shall be construed as creating
any limitations on the power of the Board to adopt such other incentive
arrangements as it may deem desirable, including, without limitation, the
granting of stock options otherwise than under this Plan, and such arrangements
may be either applicable generally or only in specific cases.

 

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14. AMENDMENTS AND TERMINATION.

 

The Committee may at any time terminate the Plan. With the express written
consent of an individual Participant, the Board may cancel or reduce or
otherwise alter the outstanding Awards thereunder if, in its judgment, the tax,
accounting, or other effects of the Plan or potential payouts thereunder would
not be in the best interest of the Company. The Committee may, at any time, or
from time to time, amend or suspend and, if suspended, reinstate, the Plan in
whole or in part; provided, however, that without further stockholder approval,
the Committee shall not:

 

(a) Increase the maximum number of shares of Stock which may be issued on
exercise of Options or pursuant to Restricted Stock Awards, except as provided
in Section 10;

 

(b) Change the maximum Option Price;

 

(c) Extend the maximum Option term;

 

(d) Extend the termination date of the Plan;

 

(e) Cancel and regrant or reprice any outstanding Option, except as provided in
Section 10; or

 

(f) Change the class of persons eligible to receive Awards under the Plan.

 

* * *

 

As originally adopted, as amended, by the Committee as of June 27, 1997 and as
amended and restated as of August 17, 2000.

 

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