Document:

Exhibit 10.35

 

 

 

 

Partnership Equity Program

 

 

Revised December 2012

 

 

Partnership Equity Program

 

Table of Contents

 

	
 
    	
 
    	
 
    	
Page
    
	
I.
    	
 
    	
Purpose   and Status of the PEP
    	
1
    
	
II.
    	
 
    	
Eligibility
    	
1
    
	
III.
    	
 
    	
Definitions
    	
1
    
	
IV.
    	
 
    	
Administration
    	
2
    
	
V.
    	
 
    	
Award
    	
3
    
	
VI.
    	
 
    	
Participation
    	
3
    
	
VII.
    	
 
    	
Form of   Participation
    	
3
    
	
VIII.
    	
 
    	
Company   Matching Investments
    	
4
    
	
IX.
    	
 
    	
Restrictions   on Disposition of Participant Purchased Shares
    	
4
    
	
X.
    	
 
    	
Dividends   
    	
4
    
	
XI.
    	
 
    	
Vesting   and Settlement
    	
5
    
	
XII.
    	
 
    	
Option   to Purchase Common Stock
    	
5
    
	
XIII.
    	
 
    	
Termination   of Employment
    	
6
    
	
XIV.
    	
 
    	
General   Provisions
    	
8
    
	
XV.
    	
 
    	
Recoupment   Policy
    	
10
    

 

i

 

I.             Purpose and  Status of the PEP.  The Partnership Equity Program (the “PEP”) has been adopted by the Management Planning & Development Committee (“Committee”) of the Board of Directors of CVS Caremark Corporation (the “Company”), as a subplan implemented under the Company’s 2010 Incentive Compensation Plan (the “2010 ICP”). The purpose of the PEP is to promote a partnership between the participating executive and the Company through a mutual commitment based on ownership of a proprietary interest in the Company.  This is accomplished through an investment by the participating executive in the Company’s common stock and an award by the Company of restricted stock units and stock options.  All shares of Stock (as hereinafter defined) issued or delivered in settlement of Participant Purchased RSUs (as hereinafter defined) and Company Matching RSUs (as hereinafter defined) under the PEP or issued upon exercise of Company Matching Options (as hereinafter defined) granted under the PEP shall be shares of Stock reserved and available under the 2010 ICP.  All of the terms and conditions of the 2010 ICP are hereby incorporated by reference.  Capitalized terms used in the PEP but not defined herein shall have the same meanings as defined in the 2010 ICP Plan.  If any provision of the PEP is inconsistent with a provision of the 2010 ICP, the provision of the 2010 ICP shall govern.

 

II.            Eligibility.  The Committee shall determine and approve, in its sole discretion, the executives eligible to participate in the PEP.

 

III.          Definitions.

 

A.            “Award” means any Participant’s investment, Company Matching RSUs, and Company Matching Options granted to a Participant under the PEP.

 

B.            “Beneficiary” has the same meaning as the definition in the 2010 ICP.

 

C.            “Board” means the Company’s Board of Directors.

 

D.            “Change in Control” means Change in Control as defined in the 2010 ICP.

 

E.            “Code” means the Internal Revenue Code of 1986, as amended from time to time, including regulations thereunder and successor provisions and regulations thereto.

 

F.            “Company Matching Option” means a right granted to a Participant under Section VIII of the PEP and 6(b) of the 2010 ICP to purchase Stock at a specified price during a specified time period.

 

G.            “Company Matching RSU” refers to a RSU granted by the Company pursuant to which the Participant has  a right to receive, at the time of settlement specified in the PEP, the value of one share of Stock.

 

H.            “Eligible Participant” means an employee of the Company or of any subsidiary who is selected to have an opportunity to participate in the PEP.

 

I.             “Fair Market Value” or “FMV”  means the fair market value of the Stock as determined by the Committee or under procedures established by the Committee.  Unless otherwise determined by the Committee, the Fair Market Value shall be the closing price of a share of Stock, as quoted on the composite transactions table on the New York Stock Exchange, on the date on which the determination of Fair Market Value is being made.

 

J.             “Grant Date” means the date an Award is granted, as approved by the Committee.

 

K.            “Grant Price” means the Fair Market Value of a share of Stock of the Company on the Grant Date, as approved by the Committee.

 

1

 

L.            “Participant” means an Eligible Participant who has been granted an Award that remains outstanding under the PEP.

 

M            “Participant Purchased RSUs” means the number of RSUs credited to a designated account representing a Participant’s pre-tax investment in the PEP.

 

N             “Participant Purchased Shares” means number of shares of Stock credited to a designated account representing a Participant’s post-tax investment in the PEP.

 

O.            “Post-Tax Investment Date” means the date on which the Participant purchases Stock in the PEP on a post-tax basis.

 

P.            “RSU” means a restricted stock unit granted under Sections VII and VIII of the PEP and Section 6(d) of the 2010 ICP in each case that represents a right to receive the value of a share of Stock upon the terms and conditions set forth in the PEP, the 2010 ICP and the applicable Award agreement.

 

Q.            “Stock” means the Company’s common stock, $0.01 par value, and such other securities as may be substituted for Stock pursuant to Section 11 (c) of the 2010 ICP.

 

IV.          Administration.

 

(A)          Authority of the Committee.  The PEP shall be administered by the Committee.  The Committee shall have full and final authority, in each case subject to and consistent with the provisions of the PEP, to select Eligible Participants, grant Awards, determine the type, number and other terms and conditions of, and all other matters relating to, Awards, prescribe Award agreements (which need not be identical for each Participant) and rules and regulations for the administration of the PEP, construe and interpret the PEP and Award agreements and correct defects, supply omissions or reconcile inconsistencies therein, and to make all other decisions and determinations as the Committee may deem necessary or advisable for the administration of the PEP.  The Committee, in its sole discretion, may waive the forfeiture provisions applicable to any Participant Purchased RSUs or Company Matching RSUs, provided that those RSUs shall be settled at the same time that they would otherwise have been settled if they had vested in due course under the terms of the PEP and the applicable Award.

 

(B)          Manner of Exercise of Committee Authority.  The express grant of any specific power to the Committee, and the taking of any action by the Committee, shall not be construed as limiting any power or authority of the Committee.  To the extent permitted by applicable law, the Committee may delegate to officers or managers of the Company or any subsidiary, or committees thereof, the authority, subject to such terms as the Committee shall determine, to perform such functions, including administrative functions, as the Committee may determine.  The Committee may appoint agents to assist it in administering the PEP.

 

(C)          Limitation of Liability.  The Committee and each member thereof shall be entitled to, in good faith, rely or act upon any report or other information furnished to him or her by any Participant officer, other officer or employee of the Corporation or a subsidiary, the Company’s independent auditors, consultants or any other agents assisting in the administration of the PEP. Members of the Committee and any officer or employee of the Company or a subsidiary acting at the direction or on behalf of the Committee shall not be personally liable for any action or determination taken or made in good faith with respect to the PEP, and shall, to the extent permitted by law, be fully indemnified and protected by the Company with respect to any such action or determination.

 

2

 

V.            Award.  Upon approval by the Committee, an Eligible Participant shall be notified that he or she has been selected to receive an Award, contingent upon the Eligible Participant’s decision to invest in the PEP by completion of a PEP participant election form (an “Election Form”).  The Award will stipulate the Grant Date and the amount the Eligible Participant may invest in the PEP.

 

VI.          Participation.  On or before the Grant Date, the Eligible Participant shall be provided an Election Form to indicate (A) the dollar amount to be invested; and (B) the form of participation by the Eligible Participant.  In order to become a Participant in the PEP, the Eligible Participant must return the executed Election Form to the Company within the time period designated on such form.

 

VII.         Form of Participation.  At the determination of the Committee, an Eligible Participant may invest in the PEP in one or in a combination of the following:

 

(A)          Participant Purchased RSUs.  On a pre-tax basis by electing to use cash payable to the Participant by the Company to invest in Participant Purchased RSUs, with such investment to occur on the Grant Date (Participant shall pay all applicable FICA taxes on the total dollar value of such pre-tax investment).  The Company shall establish and maintain for each Participant an account on its stock administration system for purposes of tracking and administering the Participant Purchased RSUs.

 

Upon receipt by the Company from the Participant of a commitment to invest an amount in the PEP on a pre-tax basis as set forth on an Election Form, as of the Grant Date the Company will credit to the Participant’s account an amount of Participant Purchased RSUs, as follows:

 

(i) The initial number of Participant Purchased RSUs shall be equal to the Participant’s elected investment amount divided by the Fair Market Value of the Stock as of the Grant Date, rounded up to the next whole number of shares.

 

(ii) Each Participant Purchased RSU represents a right to receive, at the time of settlement specified in the PEP, the value of one share of Stock.

 

(iii) Participant Purchased RSUs are non-transferable.

 

(B)          Participant Purchased Shares. On an after-tax basis by designating Stock as follows:

 

(i)    Designation by the Participant of Stock that the Participant owns as Participant Purchased Shares, with such designation as provided on the completed Election Form. The number of shares of Stock designated by the Participant as Participant Purchased Shares shall have a total Fair Market Value as of the Grant Date at least equal to the amount of the approved investment amount set forth in the Award.

 

(ii)   Purchase of Stock by the Participant to be designated as Participant Purchased Shares, with such purchase and investment in the PEP to occur within thirty (30) days of the Grant Date.

 

a.    The number of shares of Stock purchased by the Participant shall have a total Fair Market Value as of the purchase date at least equal to the investment amount set forth in the applicable Election Form (or, if applicable, at least equal to the difference between the Fair Market Value of the shares of Stock designated by the Participant under Section VII (B) (i) and the investment amount).

 

3

 

b.    The Participant is responsible for the payment of any brokerage fees associated with the purchase of Stock for this purpose.

 

Under no circumstance may a Participant designate as Participant Purchased Shares any shares not actually owned by the Participant, including shares that are held in any other deferred compensation program sponsored by the Company or any prior employer of the Participant or any shares of Stock that are held in a qualified defined contribution plan as defined by the Code.

 

In all cases, the Participant shall maintain an account administered by a brokerage firm to hold the Participant Purchased Shares.  The Participant is required to demonstrate, on a semi-annual basis and in the form required by the Company, that he or she has maintained ownership of such designated Participant Purchased Shares throughout the required ownership period.

 

VIII.       Company Matching Investments.  The Company shall establish and maintain for each Participant an account on its stock administration system for purposes of tracking and administering the Company Matching RSUs and Company Matching Options.  As of the Grant Date, the Company shall make a matching Award to the Participant as described below.

 

(A) Company Matching RSUs.  The Company Matching RSUs are non-transferable, shall be equal in number to the total Participant Purchased RSUs or to the Participant’s investment amount divided by the Fair Market Value as of the Grant Date, and shall be credited to the Participant’s account as of the Grant Date.

 

(B)  Company Matching Option.  The Company Matching Option is non-transferable and shall comprise an option to purchase a number of shares of Stock equal to ten (10) times the number of Company Matching RSUs and shall be credited to the Participant’s account as of the Grant Date.

 

IX.          Restrictions on Disposition of Participant Purchased Shares.  Participant Purchased Shares are not subject to restriction on transfer, withdrawal, or other dispositions, except that if the Participant transfers, withdraws, sells or otherwise disposes of Participant Purchased Shares prior to the earlier of the fifth (5th) anniversary of the Grant Date or the date of the settlement of the Company Matching RSUs relating to Participant Purchased Shares, the Participant will immediately forfeit the number of Company Matching RSUs (including additional Company Matching RSUs acquired as a result of dividend reinvestment, as described below) and all or a portion of the Company Matching Options, in each case granted in respect of the Purchased Shares disposed of, determined as follows: such Participant shall forfeit the Company Matching Option to purchase ten (10) shares for each Participant Purchased Share so disposed of, except that only the portion of the Company Matching Option that is not yet exercisable shall be forfeited.

 

X.            Dividends.  To the extent that dividends are declared on Stock as of a record date on which Participant Purchased RSUs or Company Matching RSUs remain outstanding and prior to the Settlement Date (as defined below), the Company shall credit as of the dividend payment date, a number of additional Participant Purchased RSUs or Company Matching RSUs to the Participant’s account, which shall be determined by multiplying (i) the amount of cash actually paid by the Company as a dividend per share of Stock by (ii) the number of Participant Purchased RSUs and Company Matching RSUs credited to the Participant’s account as of the record date and dividing the product by (iii) the FMV per share of Stock on the dividend or dividend equivalent payment date; provided, however, that such additional Participant Purchased RSUs and Company Matching RSUs shall be subject to the same terms and conditions (including vesting) as the underlying award.  As necessary to reflect dividend equivalents, a Participant’s RSUs account will include fractional Stock units calculated to not

 

4

 

less than three decimal places.

 

XI.          Vesting and Settlement of Participant Purchased RSUs and Company Matching RSUs.  Except as provided under Section XIII, Participant Purchased RSUs and Company Matching RSUs not previously forfeited shall vest on the fifth anniversary of the Grant Date (the “Vesting Date”).

 

(A)          Pursuant to the rules promulgated by the Committee, the Participant may make a prior election to defer settlement of Participant Purchased RSUs and Company Matching RSUs.

 

(B)          Absent a valid prior election by the Participant to defer settlement of the Stock subject to the Participant Purchased RSUs and Company Matching RSUs, the settlement and delivery of the Stock shall occur as promptly as practicable, but in any case within fifteen (15) days, following the Vesting Date (the “Settlement Date”).  On the Settlement Date, the Company shall deliver to the Participant one share of Stock for each Participant Purchased RSU and Company Matching RSU; provided, however, that at the Settlement Date the number of shares of Stock to be delivered by the Company to the Participant shall be reduced by the smallest number of shares of Stock having a FMV at least equal to the dollar amount of Federal, state or local tax withholding required to be withheld by the Company with respect to such Participant Purchased RSUs and Company Matching RSUs on such date.  In lieu of having the number of shares of Stock underlying the Participant Purchased RSUs and Company Matching RSU reduced, the Participant may elect to pay the Company for any amounts required to be withheld by the Company in connection with the settlement of the Participant Purchased RSUs and Company Matching RSUs pursuant to the Agreement.  Such election may be made electronically at any time prior to the Settlement Date.

 

If the settlement includes any fractional share of Stock the Company may instead pay cash in lieu of delivery of a fractional share, on such basis as the Committee may determine.  Upon settlement, all obligations of the Company in respect of Participant Purchased RSUs and Company Matching RSUs will be terminated, and the shares of Stock so distributed will no longer be subject to any risk of forfeiture or restriction under the PEP.

 

The settlement of Participant Purchased RSUs and Company Matching RSUs shall be subject to the settlement timing provisions of Section XIV(C)(ix) of the PEP.

 

XII.        Options to Purchase Common Stock.

 

(A)          Grant of Option. A Participant shall be granted a Company Matching Option in accordance with VIII (B) of the PEP.

 

(B)          Exercise Price.    The exercise price per share of Stock under a Company Matching Option shall be the FMV on the Grant Date, unless otherwise determined by the Committee, provided that in no event will the exercise price be less than the FMV of a share of Stock on the Grant Date.

 

(C)          Vesting and Method of Exercise.   Unless otherwise determined by the Committee, Company Matching Options will vest as to one-third of the underlying shares of Stock on each of the third, fourth and fifth anniversaries of the Grant Date; provided, however, that the exercisability of said Company Matching Option may be accelerated in accordance with the provisions of the PEP.  To the extent vested, a Company Matching Option may be exercised in whole or in part, from time to time, all subject to the limitations on exercise set forth in this Section XII.  An exercise shall be accomplished in accordance with Section 6(b) of the 2010 ICP.  At the time of exercise, the exercise price of the number of shares as to which the Company Matching Option is being exercised shall be tendered to the Company.  The exercise price of such Company Matching Option shall be paid in cash or

 

5

 

by check or by surrender to the Company of shares of Stock (valued at their FMV as of the date of exercise) already owned by the Participant, other than shares acquired from the Company by exercise of an option during the preceding six months, or by a combination of cash, check, and surrender of such shares.

 

(D)          Expiration.  The Company Matching Option, to the extent it has not been exercised or previously terminated due to forfeiture, shall expire on the tenth (10th) anniversary of the Grant Date.

 

XIII.       Termination of Employment.  Except as provided below in this Section XIII, if, for any reason, a Participant’s employment with the Company, or a subsidiary of the Company, terminates prior to the fifth anniversary of the Grant Date, all Company Matching RSUs and all Company Matching Options not yet exercised shall be immediately forfeited as of the date of termination. For purposes of this section, “Cause” shall have the same meaning as defined in the Company’s standard change in control agreement.  Participant’s transfer of employment from the Company to a subsidiary, from a subsidiary to the Company or from one subsidiary to another subsidiary shall not be considered a termination of employment.

 

(A)                               Termination of Participant’s Employment without Cause.

 

(i) In the event that a Participant’s employment is terminated without Cause by the Company or one of its subsidiaries and the Participant receives severance pay following the Participant’s termination of employment, any Participant Purchased Shares or Participant Purchased RSUs shall be vested and no longer subject to any transfer or sale restrictions.  In addition, vesting of the Company Matching RSUs and Company Matching Options shall continue through the end of the severance period set forth in the Participant’s severance agreement providing for such severance pay if and to the extent those awards would otherwise vest during such period, and any vested Company Matching 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 Company Matching Option will be exercisable beyond its original term.

 

(ii)  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 any post-termination payments to the Participant shall be deemed severance pay, the duration of any severance period, and/or whether a termination was without Cause.

 

(B)                               Retirement of Participant.  A “Qualified Retiree” is a Participant who is at least age fifty-five (55) with at least ten (10) years of service, or at least age sixty (60) with at least five (5) years of service, at the time of the Participant’s voluntary termination of employment or termination by the Company without Cause (“Retirement Date”).  As of the Qualified Retiree’s Retirement Date any Participant Purchased Shares or Participant Purchased RSUs shall be vested and no longer subject to any transfer or sale restrictions. The Qualified Retiree may exercise his or her vested Company Matching Option during the two-year period following the Retirement Date; any portion of the Company Matching Option which is not vested as of the Retirement Date shall be forfeited by the Participant as of the Retirement Date.  Any Company Matching RSU that is not vested as of the Retirement Date shall be forfeited by the Participant, except to the extent that the Participant is

 

6

 

granted severance pay and the vesting of the Participant’s Company Matching RSU is extended pursuant to Section XIII (A) above.

 

(C)                               Disability of Participant.  In the event a Participant 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), any Participant Purchased Shares or Participant Purchased RSUs shall be vested and no longer subject to any transfer or sale restrictions. In addition, any Company Matching RSUs shall be vested and be settled and any Company Matching Option shall vest and be exercisable, in each case on a pro rata basis in accordance with the Award in effect for the Participant. Notwithstanding the foregoing, a Participant shall be deemed to have ceased employment due to a qualifying disability under this Section XIII (C) only if at the time of such cessation of employment the Participant is disabled within the meaning of Section 409A of the Code pursuant to the regulations thereunder.

 

(D)                               Death of Participant.  In the event of a Participant’s death while employed by the Company or one of its subsidiaries, any Participant Purchased Shares or Participant Purchased RSUs shall be vested and no longer subject to any transfer or sale restrictions.  In addition, all Company Matching RSUs shall vest and be settled and Company Matching Options shall become immediately vested in full.  The Company Matching Option may be exercised up to one (1) year following the Participant’s death, or prior to the Company Matching Option expiration date, whichever occurs first, by the Participant’s executor, administrator, personal representative or any person or persons who acquired the Company Matching Option directly from the Participant by bequest or inheritance.  At the end of said one-year time period, all rights with respect to any Company Matching Option that is unexercised shall terminate and the unexercised Company Matching Option shall be cancelled.

 

(E)                               Change In Control.  In the event of a Termination Without Cause or a Constructive Termination Without Cause, in each case within the two-year period following a Change in Control, any Participant Purchased Shares or Participant Purchased RSUs shall be vested and no longer subject to any transfer or sale restrictions.  In addition, all of the Participant’s outstanding Company Matching RSUs shall vest and be settled and Company Matching  Options that are not then vested will become immediately vested and exercisable.  All other terms and conditions governing such Company Matching RSUs, Participant Purchased RSUs and Company Matching Options will be subject to the provisions of the Company’s 2010 ICP.

 

(F)                                Coordination of Provisions.  Notwithstanding anything to the contrary above, to the extent that the circumstances of the termination of a Participant’s employment are within the description of more than one of the subparagraphs above in this Section XIII, each portion of a Participant’s Company Matching RSU or Company Matching Option under any Award shall be entitled to the more favorable treatment explicitly applicable to such portion of the Participant’s Company Matching RSU or Company Matching Option under the provisions of this Section XIII.  For example, if a Participant qualifies as Qualified Retiree at the time of the Participant’s termination of

 

7

 

employment but the Participant receives severance in connection with the Participant’s termination as described in Section XIII (A), the Participant’s unvested Matching Company Option shall continue to vest during the applicable severance period and any portion of the Company Matching Option that vests during the severance period shall be exercisable on or before the ninetieth (90th) day following the last day of the severance period, while any portion of the Participant’s Matching Company Option that vests as of the Retirement Date may be exercised during the two-year period following the Retirement Date.  Similarly, by way of example, if a Participant experiences a termination of employment due to disability following a Change in Control, the treatment described in Section XIII (E) shall apply to the Participant’s Awards to the extent that such treatment is more favorable to the Participant than the treatment applicable under Section XIII (C).

 

(G)                              In any case, the settlement of Participant Purchased RSUs and Company Matching RSUs shall be subject to the settlement timing provisions of Section XIV(C)(ix) of the PEP.

 

XIV.       General Provisions.

 

(A)          Stock Dividends and Stock Splits.  If the Company declares and pays a dividend or distribution in the form of Stock payable on Stock, or if there is a stock split of the Stock, and the record date is prior to the Vesting Date of Participant Purchased and/or Company Matching RSUs, the Company shall credit, as of the dividend payment date, distribution, or split, a number of additional Participant Purchased RSUs and Company Matching RSUs, as the case may be, to the Participant’s account equal to the number of shares of Stock paid as a dividend or distribution per share of Stock or distributed as a result of the split per share of Stock multiplied by the number of Participant Purchased RSUs and Company Matching RSUs, as the case may be, credited to the Participant’s account at the record date.

 

(B)          Treatment of Additional Participant Purchased RSUs and Company Matching RSUs Resulting from Dividends or Splits.  Additional Participant Purchased RSUs or Company Matching RSUs will be subject to the same terms, including the risk of forfeiture in the case of Company Matching RSUs, as the Participant Purchased RSUs or Company Matching RSUs in respect of which they were credited.  No such additional Company Matching RSUs will be credited to the Participant’s account in respect of Company Matching RSUs forfeited on or before the record date for the dividend, distribution, or split.

 

(C)          Other Terms.  The following terms and provisions will be applicable to Participant Purchased Shares or RSUs, Company Matching RSUs and Company Matching Options, as applicable.

 

(i)                                     Adjustments.  Participant Purchased Shares or RSUs, Company Matching RSUs, and Company Matching Options, and the terms and conditions relating thereto, shall be subject to adjustment in accordance with applicable sections of the 2010 ICP.

 

(ii)                                  Nontransferability.  Participant Purchased Shares or RSUs, Company Matching RSUs, Company Matching Options, and all rights relating thereto, shall not be transferable or assignable by a Participant, other than by will or the laws of descent and distribution (or pursuant to a beneficiary designation if and to the extent authorized by the Committee), and shall not be pledged, hypothecated, or otherwise encumbered in any way or subject to execution,

 

8

 

attachment, or similar process, and any such attempt to transfer such rights shall be considered null and void by the Company.

 

(iii)                               Certain Other Terms.  Additional terms applicable to Awards under the PEP are set forth in the 2010 ICP.

 

(iv)                              No Partnership Rights or Rights to Participate.  A Participant’s participation in the PEP, investment in Participant Purchased Shares or RSUs, and grant of an Award under the PEP confers no rights as a partner of a partnership.  No Participant has or will have any claim to participate in the PEP, except as selected by the Committee, and the Company will have no obligation to continue the PEP.

 

(v)                                 Changes to the PEP.  The Committee may amend, alter, suspend, discontinue or terminate the PEP without the consent of any Participant; provided, however, that, without the consent of an affected Participant, no such action shall materially and adversely affect the rights of such Participant with respect to an outstanding Award.

 

(vi)                              Limitation on Repurchase Obligation.  All repurchases of Stock permitted to occur in the ordinary course pursuant to the terms established under the PEP are intended to qualify for the exemption from Section 16(b) of the Exchange Act pursuant to Rule 16b-3(e) promulgated under the Exchange Act and, accordingly, such repurchases are authorized to occur with respect to all Awards under the PEP unless and until the repurchase rights and obligations relating to an Award are explicitly revoked by the Committee.

 

(vii)                           Agreements and Other Documents.  The Committee shall specify agreements or other documents to evidence rights and obligations under the PEP. A form of agreement that may be used to evidence rights and obligations relating to Participant Purchased Shares and/or RSUs, Company Matching RSUs and Company Matching Options shall be provided to each Participant.

 

(viii)                        Governing Law.  The validity, construction, and effect of the PEP, any rules and regulations and any award agreements or related documents hereunder shall be determined in accordance with the Delaware General Corporation Law, without giving effect to principles of conflicts of laws and applicable federal law.

 

(ix)                              Section 409A Compliance.  The Participant Purchased RSUs and Company Matching RSUs under the PEP are intended to qualify as nonqualified deferred compensation awards which comply with the provisions of Section 409A and the regulations thereunder. The vesting dates shall be the dates fixed under the terms of the PEP as of the Grant Date, subject to acceleration only upon the following permissible events under Section 409A of the Code as specified under the PEP or as otherwise provided by the Committee in its sole discretion: the Participant’s death, the Participant’s qualifying disability (under Section XIII (C)) or a Change in Control (within the meaning of the 2010 ICP, which includes a definition of change in control that complies with Section 409A of the Code). Any portion of a Participant Purchased RSU and Company Matching RSU that has become vested in accordance with the terms of the PEP shall be settled as provided under the PEP on a date selected by the Company occurring prior to the 15th day of the third calendar month following the applicable vesting date. In the event that a Participant

 

9

 

experiences a termination of employment and is granted severance and is therefore permitted to continue to vest in one or more installments of a Participant Purchased RSU or Company Matching RSU Award pursuant to Section XIII (A), such installments shall continue to be subject to settlement only after the vesting date originally applicable to such installments and during the settlement period set forth above in this Section XIV (C). In the event that the Committee exercises its sole discretion to waive the forfeiture provisions applicable to any Participant Purchased RSUs or Company Matching RSUs, those RSUs shall be settled at the same time that they would otherwise have been settled if they had vested in due course under the terms of the PEP and the applicable Award.  Notwithstanding the foregoing or any other provision of the PEP or any Award to the contrary, to the extent necessary to comply with the requirements of Section 409A of the Code, any settlement amounts to which a Participant may become entitled under the PEP, which are subject to Section 409A of the Code (and not otherwise exempt from its application), that are payable within six months following the date of termination will be withheld until the first business day of the seventh (7th) month following the date of termination. To the extent any provisions of the PEP or any RSU does not comply with Section 409A of the Code, the Company and any affected Participant will make such changes with respect to such RSU as are mutually acceptable in order to comply with Section 409A of the Code.

 

XV.         Recoupment Policy.           Except as may be specifically provided in the Award agreement, each Award under the PEP shall be subject to the terms of the Company’s Recoupment Policy as it exists from time to time.

 

10Exhibit 10.36

 

Pre-Tax

 

 

PARTNERSHIP EQUITY PROGRAM

 Participant Purchased RSUs, Company Matching RSUs 
 and Company Matching Options Agreement

 

AGREEMENT, by and between CVS Caremark Corporation, a Delaware corporation (the “Company”), and                          (“Participant”), effective on                       , herein after known as the “Grant Date” (this “Agreement”).

 

WHEREAS, Participant has been selected as an employee eligible to invest under the Company’s Partnership Equity Program (the “PEP”) and has elected in the Participant’s Election Form to invest $                  in the PEP, subject to the terms and conditions set forth in the PEP and in this Agreement;

 

WHEREAS, the Company desires to provide Participant with written evidence acknowledging Participant’s investment under the PEP, his or her acquisition of Participant Purchased RSUs) and the corresponding grant of Company Matching RSUs and Company Matching Options under the PEP.

 

WHEREAS, the provisions of the PEP and the Company’s 2010 Incentive Compensation Plan (the “ICP”) are hereby incorporated by reference and shall have the same force and effect as though fully set forth herein; participant hereby acknowledges receipt of a copy of the PEP  and the ICP at the time of receipt of this Agreement and agrees to be bound by such provisions (as presently in effect or hereafter amended); if any provision of this Agreement is inconsistent with a provision of the PEP  or the ICP, the terms of the PEP  and/or the ICP, or any successor thereto, shall control; capitalized terms used in this Agreement but not defined herein shall have the same meanings as in the PEP  or the ICP, as the case may be; and on the Grant Date specified above, the Fair Market Value (the “FMV”) of a share of CVS Caremark Common Stock equals $        , which is the closing price on such date.

 

NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the parties hereto agree as follows:

 

I.  PARTICIPANT PURCHASED RSUs AND COMPANY MATCHING RSUs

 

(A)          Participant Purchased RSUs.  The Company has received from Participant an Election Form authorizing the Company to apply designated future compensation of $           to the purchase of Participant Purchased RSUs on the Grant Date under the PEP, and the Company has accordingly credited Participant’s Account under the PEP with the Participant Purchased RSUs.  The Participant Purchased RSUs (including any Participant Purchased RSUs credited to Participant pursuant to Section I(C)(ii)) shall be fully vested at all times.

 

(B)          Crediting of Company Matching RSUs.  As of the Grant Date the Company hereby awards the Participant, subject to the terms and conditions set forth and incorporated in this Agreement and the PEP,             Company Matching RSUs.

 

(C)                               Additional Transactions in Participant Accounts.

 

(i)                                     Each Participant Purchased RSU and Company Matching RSU represents a right to a future payment of one share of Stock, subject to applicable tax withholding.

 

(ii)                                  To the extent that dividends are declared and paid on shares of Stock while the Participant Purchased RSUs and Company Matching RSUs remain outstanding and prior to a Settlement Date (as defined below), the Company shall credit to

 

1

 

Participant’s Purchased RSU account and Company Matching RSU account (as applicable) an additional number of Participant Purchased RSUs and Company Matching RSUs calculated by multiplying (a) the amount of dividend per share of Stock paid  by the Company by (b) the number of Participant Purchased RSUs and Company Matching RSUs held by Participant on the record date of such dividend, and dividing the product by (c) the FMV of a share of Stock on such dividend payment date:

 

(iii)                               provided, however, that if such dividend is paid prior to the Vesting Date of Participant Purchased RSUs and/or Company Matching RSUs, as set forth in Section I (D) below, Participant shall not be entitled to any payment in respect of such dividend unless Participant is still employed by the Company on such dividend payment date.

 

(iv)                              Participant hereby agrees that, prior to the Settlement Date, the Company may withhold from the dividend equivalent amounts referred to in Section I(C)(ii) amounts sufficient to satisfy the applicable tax withholding in respect of such dividend equivalent payments, as applicable.

 

(D)          Vesting of Company Matching RSUs.  Subject to the terms and conditions of the PEP and this Agreement, and to Participant’s continued employment through such date, the Company Matching RSUs, and the dividend equivalent amounts attributed to same, shall vest on the fifth anniversary of the Grant Date.

 

(E)          Settlement.

 

(i)                                     A “Settlement Date” shall mean the date shares of Stock are delivered to Participant pursuant to this Agreement.

 

(ii)                                  Within fifteen (15) days following the earliest of the fifth anniversary of the Grant Date, Participant’s termination of employment (to the extent not forfeited under the PEP) or a Change in Control (as defined in Section 10 of the ICP), Participant shall be entitled to receive and the Company shall deliver to Participant the total number of shares of Stock (giving effect to Sections I(C)(ii) and I(C)(iv)) underlying the Participant Purchased RSUs.  Notwithstanding the foregoing, no shares of Stock shall be delivered upon termination of employment unless such termination of employment is considered a “separation from service” (within the meaning given of Treasury Regulation §1.409A-1(h) or successor guidance thereto).

 

(iii)                               Within fifteen  (15) days following the earliest of the fifth anniversary of the Grant Date, Participant’s death, termination of employment due to Participant’s 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), or a Change in Control, Participant shall be entitled to receive and the Company shall deliver to Participant the total number of shares of Stock(giving effect to Sections I(C)(ii) and I(C)(iv)) underlying the Company Matching RSUs vested as of such date.  Notwithstanding the foregoing, no shares of Stock shall be delivered upon termination of employment unless such termination of employment is considered a “separation from service” (within the meaning given of Treasury Regulation §1.409A-1(h) or successor guidance thereto).

 

(iv)                              Subject to the rules promulgated by the Committee, the terms of the CVS Caremark Deferred Stock Compensation Plan and Section 409A, Participant may elect to defer  settlement of Participant Purchased or Company Matching RSUs covered by this Agreement.

 

II.            COMPANY MATCHING OPTION

 

(A)          Grant of Option.  The Company hereby awards and evidences the grant to Participant, subject to the terms and conditions incorporated in this Agreement, the right, and option, to purchase from the Company              shares of Stock, with an Exercise Price per share of

 

2

 

Stock equal to the FMV of a share of Stock on the Grant Date , such Company Matching Option to be exercised as hereinafter provided.  The Company Matching Option is a nonqualified option as defined in the ICP.

 

(B)          Term of Company Matching Option.  The term of this Company Matching Option shall be for a period of ten (10) years from the Grant Date, subject to the earlier termination of the Company Matching Option, as set forth in the ICP and in this Agreement.

 

(C)          Exercise of Company Matching Option.

 

(i)                                     The Company Matching 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 of Stock to be purchased, which number may not be less than one hundred (100) shares of Stock (unless the number of shares of Stock purchased is the total balance which is then exercisable).  Unless the Company, in its discretion, establishes “cashless exercise” procedures and permits Participant entitled to exercise the Company Matching Option to utilize such “cashless exercise” procedures, Participant so exercising all or part of this Company Matching Option shall, at the time of exercise, tender to the Company cash or cash equivalent for the aggregate option price of the shares of Stock Participant has elected to purchase or certificates for shares  of  Stock of the Company owned by Participant for at least six (6) months with a FMV at least equal to the aggregate option price of the shares of Stock Participant has elected to purchase, or a combination of the foregoing.

 

(ii)                                  Prior to its expiration or termination, and except as otherwise provided herein, the Company Matching Option may be exercised by Participant, provided Participant has maintained continuous employment with the Company or a subsidiary of the Company immediately following the Grant Date, within the following time limitations:

 

a.                                      On or after three (3) years from the Grant Date, the Company Matching Option may be exercised as to not more than one-third (1/3) of the shares of Stock originally subject to the Company Matching Option;

 

b.                                      On or after four (4) years from the Grant Date, the Company Matching Option may be exercised as to not more than an aggregate of two-thirds (2/3) of the shares of Stock originally subject to the Company Matching Option; and

 

c.                                       On or after five (5) years from the Purchase Date, the Company Matching Option may be exercised as to any part or all of the shares of Stock originally subject to the Company Matching Option.

 

(D)          Company Matching  Option Expiration.  The Company Matching Option shall be and become exercisable only as provided above and shall expire at the earlier of the close of business on the day before the tenth anniversary of its Grant Date or such earlier termination as described in Section III below.

 

III.          TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL

 

(A)          Except as provided in Sections III(B) - (E) below, if, for any reason, Participant’s employment is terminated by the Company, or a subsidiary of the Company, all Company Matching RSUs and Company matching Options not then vested in accordance with Sections I(D) and II(C)(ii) above, shall be immediately forfeited.

 

(B)          In the event Participant’s employment with  the Company, or any subsidiary of the Company, terminates by reason of death, Company Matching RSUs and Company Matching Options not then vested in accordance with Section I(D) and II(C)(ii) will become immediately vested, and the vested portion of the Company Matching Option shall be exercisable during the twelve (12) month period following the date on which Participant’s employment terminates, as long as no government regulations or rules are violated by such

 

3

 

accelerated vesting or exercise period; provided, however, that no Company Matching Option will be exercisable beyond its original term.

 

(C)          In the event Participant’s employment is terminated 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 Company Matching RSUs and the Company Matching Options shall vest on a pro rata basis as follows:

 

(i)                                     the total number of Company Matching RSUs vested as of the Separation Date (which is the last day that the Participant is employed by the Company or any subsidiary of the Company), shall be equal to the number of Company Matching RSUs 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 sixty (60).  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.

 

(ii)                                  the total number of Company Matching Options vested as of the Separation Date (which is the last day that the Participant is employed by the Company or any subsidiary of the Company), including Company Matching Options previously vested, shall be equal to the number of Company Matching 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 sixty (60).  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.

 

(iii)                               The vested portion of the Company matching Option shall be exercisable during the twelve (12) month period following the date on which Participant’s employment terminates, as long as no government regulations or rules are violated by such accelerated vesting or exercise period; provided, however, that no Company Matching Option will be exercisable beyond its original term.

 

(D)          Termination of Employment without Cause. In the event that Participant’s employment is terminated without cause, as that term is defined in Participant’s Change in Control agreement (“Cause”), by the Company or any subsidiary thereof, and Participant receives severance pay following Participant’s employment, vesting of Participant’s Company Matching RSU and the Company Matching Option shall continue through the last day of the severance period (to the extent that a relevant vesting date occurs within the severance period) and the vested portion of the Company Matching Option shall be exercisable 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 Company Matching Option will be exercisable beyond its original term.

 

(E)          Retirement.  An Participant shall be a “Qualified Retiree” if he or she (i) is at least age fifty-five (55) and has at least ten (10) years of continuous service, or (ii) is at least age sixty (60) and has at least five (5) years of continuous service at the time of his or her Retirement Date; provided, however, that an Participant who (a) voluntarily terminates his or her employment, or (b) whose employment is terminated without Cause by the Company or one of its subsidiaries, each at a time when Participant has satisfied the age and service requirements set forth above, shall be deemed a Qualified Retiree and such termination date shall be deemed a Retirement Date.

 

(i)                                     A Qualified Retiree may exercise a vested Company Matching Option, to the extent that Participant shall be entitled to do so as of Participant’s Retirement

 

4

 

Date, at any time within two (2) years after Participant’s Retirement Date, but not beyond the original term of the Company Matching Option.  Company Matching Options unvested at the Retirement Date are forfeited.  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 Participant shall be deemed a Qualified Retiree.

 

(ii)                                  Company Matching RSUs that are unvested as of the Retirement Date are forfeited.

 

(F)           The provisions of Section 10 of the ICP, or any successor thereto, shall apply in the event of a Change in Control.

 

(G)          For purposes of this Section III, transfer of employment by Participant from the Company to a subsidiary of the Company, transfer among or between subsidiaries, transfer from a subsidiary to the Company or any other continuation of employment with the Company or a subsidiary after termination by a related entity shall not be treated as termination of employment.

 

IV.          NON-COMPETITION.  As a condition of receiving the benefits of this Agreement, Participant acknowledges that he has previously executed the CVS Caremark Corporation Employee Non-Competition, Non-Disclosure and Developments Agreement and reaffirms his intent to be bound by and to comply with his obligations in that agreement.

 

V.            MISCELLANEOUS.

 

(A)          Withholding Tax.  Participant may be subject to withholding taxes as a result of the exercise of the Company Matching Option or settlement of Participant Purchased RSUs or Company Matching RSUs.  Except as may otherwise be elected by Participant, the number of shares of Stock to be delivered by the Company to Participant shall be reduced by the smallest number of shares of Stock having a FMV at least equal to the dollar amount of Federal, state or local tax withholding required to be withheld by the Company with respect to such exercise or settlement.  Any shares of Stock so withheld or tendered will be valued as of the date they are withheld or tendered.  In lieu of having the number of shares of Stock underlying the applicable award reduced, Participant may elect to pay to the Company in cash, promptly when the amount of such obligations become determinable, all applicable federal, state, local and foreign withholding taxes that result from each such exercise or settlement.  Such election may be made electronically or in writing at any time prior to the exercise date or Settlement Date, as applicable.

 

(B)          Recoupment.  The award(s) covered by this Agreement shall be subject to the terms of the Company’s Recoupment Policy as it exists from time to time.

 

(C)          Certain Terms and Conditions of the PEP.  Participant acknowledges and agrees that terms and conditions of the PEP  preclude all transfers of Participant Purchased RSUs, all Company Matching RSUs, and all Company Matching Options, except in limited circumstances in the event of Participant’s death, impose a risk of forfeiture on Company Matching RSUs and Company Matching Options, relieve the Company of certain obligations unless and until laws and regulations have been complied with, provide for adjustments to Participant Purchased RSUs, Company Matching RSUs, and Company Matching Options upon the occurrence of certain events, and specify the state law which shall govern this Agreement, without giving effect to principles of conflict of laws.

 

(D)          Binding Agreement.  This Agreement shall be binding upon the heirs, executors, administrators, and successors of the parties.  In particular, Participant’s heirs, executors, administrators, and successors shall be subject to the terms and conditions of the PEP, ICP and this Agreement, and the Company may require any such person to execute an agreement or other documents acknowledging and agreeing to such terms and conditions as a condition precedent to any transfer of rights hereunder or shares of Stock issuable under the PEP, including upon exercise of a Company Matching Option, into the name of any such person.

 

(E)          Integration Clause; Amendments to Agreement.  This Agreement, together with

 

5

 

the PEP and the ICP, constitutes the entire Agreement between the parties with respect to the PEP, and supersedes any prior agreements or documents with respect thereto.  This Agreement may be amended, but no amendment or other change which may impose any additional obligation upon the Company or materially impair the rights of Participant with respect to the PEP shall be valid unless contained in a writing signed by the party to be bound thereby.

 

(F)           Employment.  Neither the execution and delivery hereof nor the granting of the Company Matching RSUs nor Company Matching Options evidenced hereby shall constitute or be evidenced of any agreement or understanding, expressed or implied, on the part of the Company or its subsidiaries to employ the Participant for any specific period.

 

(G)          Acceptance of Award.  Acceptance may be submitted either electronically, if available, or in writing. The Company Matching Option may not be exercised unless and until the Company has received acceptance by the Participant of the terms and conditions set forth.

 

(H)          Company Matching RSUs.  Neither a Company Matching RSU nor a Participant Purchased RSU represents an equity interest in the Company and neither carries any voting rights.  Except as otherwise specifically provided herein, Participant shall have no rights of a shareholder with respect to the RSUs until the shares of Stock have been delivered to Participant.

 

(I)            Section 409A.  The Company intends that the award granted under this Agreement comply with the provisions of Section 409A of the Internal Revenue Code of 1986, as amended, and all regulations and guidance promulgated thereunder (“Section 409A.  Notwithstanding the foregoing, the Company makes no guarantees as to the tax consequences of the payments made hereunder, including under Section 409A, and the Participant shall be solely responsible and liable there for.

 

(J)           Notices.  Any notice hereunder to the Company shall be addressed to One CVS Drive, Woonsocket, RI 02895, Attention: Senior Vice President, Chief Human Resources Officer, and any notice required to be given hereunder to the Participant shall be addressed to such Participant at the address as shown on the records of the Company, subject to the right of either party to designate in writing some other address for notices, and shall be deemed given as of [five (5)] days following the date of mailing.

 

	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
s/Lisa G. Bisaccia
    
	
 
    	
 
    	
Senior Vice President
    
	
 
    	
 
    	
Chief Human Resources Officer
    
	
 
    	
 
    	
CVS CAREMARK CORPORATION
    
	
 
    	
 
    	
 
    
	
Accepted by:
    	
 
    	
 
    
	
 
    	
 
    	
[Name]
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
[Employee   ID #]
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
[Date]
    

 

6

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00212-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00212-of-00352.parquet"}]]