EXHIBIT 10.18


 


CVS CORPORATION


1996 DIRECTORS STOCK PLAN


(as amended and restated November 5,
2002)


 


1.                                       PURPOSE


 


The purpose of this Plan
is to afford present and future Directors of CVS Corporation (the “Company”) an
opportunity to secure a stock ownership in the Company, thereby encouraging
them to acquire a direct and long term interest in the growth and prosperity of
the Company and to have the outlook and consideration of an owner of the
Company.  This Plan also permits the
Company to compete with other organizations offering similar plans in
attracting and retaining the services of Directors of exceptional talent who
are able to make important contributions to the Company’s success.


 


2.                                       ADMINISTRATION
OF THE PLAN


 


This Plan shall be
administered by the Company’s Board of Directors (the “Board”). Subject to the
provisions of the Plan, the Board shall be authorized to interpret the Plan, to
establish, amend, and rescind any rules and regulations relating to the Plan
and to make all other determinations necessary or advisable for the
administration of the Plan; provided, however, that the Board shall have no
discretion with regard to the selection of individual Directors to receive
stock grants under the Plan.  The Board’s
interpretation of the terms and provisions of this Plan shall be final and
conclusive.  The Board may authorize an
appropriate officer or officers of the Company to execute, on behalf of the
Company, such agreements and other instruments as may be necessary to implement
this Plan.


 


3.                                       ELIGIBILITY


 


Participation will be
limited to individuals who are Eligible Directors as defined herein.  Eligible Director shall mean a Director of
the Company who at the relevant time is not, and, solely for purposes of
Section 5, has not been within the one year period immediately preceding such
time, an employee of the Company or its subsidiaries or otherwise eligible for
selection to participate (on a discretionary basis) in any plan of the Company
or its subsidiaries that entitles the participant therein to acquire stock,
stock options or stock appreciation rights of the Company or its subsidiaries.


 


4.                                       SHARES
SUBJECT TO THE PLAN


 


(a)                                Subject
to the adjustments made pursuant to paragraph (c) of this Section 4, the
aggregate number of shares of Common Stock, $.01 par value, of the Company
(“Stock”) which may be issued under the Plan shall be 346,460 (after giving
effect to the Company’s June 1998 stock split).


 


(b)                               Any
shares of Stock to be delivered under the Plan shall be made available from
newly issued shares of Stock or from shares of Stock reacquired by the Company,
including such shares purchased in the open market.


 


(c)                                  In
the event of any merger, reorganization, consolidation, recapitalization, stock
split, stock dividend or other special, large, and non-recurring non-cash
dividend, or other change in corporate structure affecting the Stock, the
aggregate number of shares of Stock which may be issued under the Plan, the
number of shares automatically granted under the first and second sentences of Section
5, and the number of shares of Stock subject to the later issuance by reason of
previous deferral of payment shall be increased or decreased proportionately,
as the case may be; provided, said number of shares already has been adjusted
to reflect the Company’s June 1998 stock split.


 


5.                                       ANNUAL
STOCK GRANTS


 


Effective as of the end
of each annual meeting of shareholders of the Company, each person who is an
Eligible Director shall be granted an award of 1500 shares of Stock in respect
of the preceding Award Year except that if the Eligible Director was not a
Director of the Company for all of such Award Year, the size of the award shall
be pro rated based on the number of months in such Award Year during which such
Eligible Director was a Director of the Company.  If an


 

















 


Eligible Director
retires, resigns, dies or otherwise ceases to be a Director of the Company
prior to the end of the annual meeting of shareholders of the Company, there
shall be granted, effective as of the first day of the month after such
person’s termination of service as an Eligible Director of the Company, an
award of 125 shares of Stock for each month during the Award Year such person
was an Eligible Director.  For purposes
of this Section 5, a part of a month shall be treated as a month and an Award
Year shall mean the period from the first day of the month after an annual
meeting of shareholders of the Company to the beginning of the next annual
meeting of shareholders of the Company.


 


6.                                       DIRECTOR
STOCK COMPENSATION


 


(a)                                  Unless
otherwise elected under paragraph 6(b) by an Eligible Director, the
compensation of each Eligible Director shall be paid one-half in Stock and,
unless otherwise elected under paragraph 6(b) by an Eligible Director, one-half
in cash.  Compensation for this purpose
means annual retainer fees, but shall not include supplemental retainer fees
for committee chair positions and Board and committee meeting fees unless
otherwise elected by the Eligible Director.


 


(b)                                 (i)                                     Each
Eligible Director may elect in accordance with rules established by the Board
and uniformly applied, to receive in Stock any part of such Eligible Director’s
compensation otherwise payable in cash. 
The number of shares of Stock to be issued in lieu of such cash shall be
determined by dividing the average of the high and low sales price of the
Company’s Common Stock on the date the cash is otherwise payable as reported on
the Composite Tape for such day into the cash amount elected to be received in
Stock.  Except to the extent deferred in
accordance with paragraph 6(c), such number of shares shall be rounded down to
the next whole number of shares.


 


(ii)                                  Each
Eligible Director may elect, in accordance with rules established by the Board
and uniformly applied, to receive all or part of such Eligible Director’s
compensation in the form of stock options. 
Each option shall be for a number of shares of Stock determined under a
methodology adopted by the Board, shall have a term of 10 years, shall have an
option price of at least 100% of the fair market value of a share of Stock
(determined by dividing the average of the high and low sales price of the
Company’s Common Stock on the trading date prior to the date of the option
grant), and shall have such other terms and conditions that are established by
the Board.


 


(c)                                  (i)                                     Each
Eligible Director may elect to defer the receipt of shares otherwise currently
payable to such Eligible Director under Sections 5 or 7 or paragraph 6(b)(i) of
this Plan until such Eligible Director terminates service as a Director or such
other date or event as permitted under rules established by the Board and
uniformly applied.  In that event, such
Eligible Director shall be granted an immediate award of share credits equal to
the number of shares of Stock elected to be deferred, including fractional
share credits to not less than three decimal places.


 


(ii)                                  As
soon as practicable after an Eligible Director has ceased being a Director of
the Company or such other date or event elected by an Eligible Director under
paragraph 6(c)(i), all awards shall be paid to the Eligible Director or, in the
case of the death of the Eligible Director, the Eligible Director’s designated
beneficiary or beneficiaries or in the absence of a designated beneficiary, to
the estate of the Eligible Director, in a single payment or installments as
elected by the Eligible Director.


 


(iii)                               (A)                              In
addition to the payment provided for in paragraph (c)(ii) of this Section 6,
each Eligible Director (or beneficiary) entitled to payment under this
paragraph 6(c) shall receive at the same time the dividend equivalent amounts
calculated under subparagraph (B) below.


 


(B)                                The
dividend equivalent amount is the number of additional share credits
attributable to the number of share credits originally granted plus additional
share credits previously calculated hereunder. 
Such additional share credits shall be


 


1

















 


determined and credited
as of each dividend payment date by dividing the aggregate cash dividends which
would have been paid had share credits awarded or credited (but not yet paid)
under this paragraph 6(c), as the case may be, been actual shares of Stock on
the record date for such dividend by the market price per share of Stock on the
dividend payment date.  For this
purpose, the market price on any day shall be the average of the highest and
lowest sales price of Stock as reported on the Composite Tape for such day,
unless the Board determines that another procedure for determining market price
would be more appropriate.  Fractional
share credits shall be calculated to not less than three decimal places.


 


(iv)                              Payments
pursuant to paragraphs (ii) and (iii) above shall be made in shares of Stock
except that there shall be paid in cash the value of any fractional share.


 


7.                                       RETIREMENT
BENEFITS CONVERSION


 


Each person who is an
Eligible Director as of the end of the annual meeting of shareholders of the
Company at which the Plan is approved shall have the right to elect within 30
days after such meeting on a form prescribed by the Company for such purpose to
waive any and all rights under the Directors Retirement Plan and to receive in
lieu of such rights a grant of shares of Stock.  Unless otherwise elected under paragraph 6(c) by an Eligible
Director, such shares shall be delivered to such Eligible Director as soon as
possible after the end of the 30 day election period.  The number of shares of Stock to be granted in lieu of an
Eligible Director’s benefit rights under the Directors Retirement Plan shall be
calculated by the Company’s actuarial consultants using assumptions that are
reasonable and uniformly applied.


 


8.                                       DELIVERY
OF SHARES; TRANSFER OF SHARES


 


No shares of Stock shall
be delivered under the Plan until the requirements of such laws and regulations
as may be deemed by the Board to be applicable thereto are satisfied.


 


9.                                       GENERAL
PROVISIONS


 


(a)                                  Designation
of Beneficiary.  Each
Eligible Director may designate a beneficiary or beneficiaries and may change
such designation from time to time by filing a written instrument of
beneficiaries with the Board on a form to be prescribed by it, provided that no
such designation shall be effective unless so filed prior to the death of such
Eligible Director.


 


(b)                                 Nontransferability.


 


(i)                                     Except
as may be permitted by paragraph 9(a) or paragraph 9(b)(ii), no right to
receive Stock hereunder shall be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance or charge and any
such alleged action shall be void and of no effect.


 


(ii)                                  The
right to receive Stock pursuant to a deferral election made in accordance with
paragraph 6(c) or an option granted pursuant to paragraph 6(b)(ii) may be
transferred, without receipt of consideration by the transferor, during the
lifetime of the Eligible Director to one or more transferees who are members of
the Eligible Director’s immediate family or to a trust or other entity
maintained for the benefit of such persons. 
For this purpose “immediate family” means the Eligible Director’s
spouse, parents, children, grandchildren and the spouses of such parents,
children and grandchildren.


 


(c)                                No
Segregation of Cash or Shares. 
The Company shall not be required to segregate any cash or any shares of
Stock which may at any time be represented by Stock grants, share credits or
dividend equivalents.  No Eligible
Director shall have voting or other rights with respect to shares of Stock
prior to the delivery of such shares. 
The Company shall not, by any provisions of this Plan, be deemed to be a
trustee of any Stock or any other property, and the liabilities of the Company
to any Eligible Director pursuant to the Plan shall be those of a debtor
pursuant to such contract obligations as are created by the Plan, and no such
obligation of the Company shall be deemed to be secured by any pledge or other
encumbrance on any property of the Company.


 


2

















 


(d)                               Delaware Law
to Govern.  All questions
pertaining to the construction, regulation, validity and effect of the provisions
of the Plan shall be determined in accordance with the laws of the State of
Delaware.


 


(e)                                  Withholding
of Taxes.  The Company shall
be authorized to withhold from any payment due under this Plan the amount of
withholding taxes, if any, due in respect of an award or payment hereunder,
unless other provisions satisfactory to the Company shall have been made for
the payment of such taxes.


 


10.                                 AMENDMENTS,
SUSPENSION OR DISCONTINUANCE


 


The Board of Directors
may amend, suspend, or discontinue the Plan, but except as permitted by Rule
16b-3 promulgated under the Securities Exchange Act of 1934 may not make any
amendment which operates (a) to modify the class of persons who constitute
Eligible Directors as defined in the Plan, (b) to increase the total number of
shares of Stock available under the Plan, or (c) to extend the period during
which awards may be granted under the Plan.


 


11.                                 TERMINATION


 


The Plan shall be
effective as of the annual meeting of shareholders of the Company at which the
shareholders approve the Plan.  No grant
shall be made under the Plan after expiration of ten years from the date upon
which the Plan is approved by vote of the shareholders.


 


3