Document:

Exhibit
10.5

1999 CHARLES RIVER CORPORATE
OFFICER SEPARATION PLAN

(Last Revised on
July 27, 2001)

1.0                                 Background

1.1                                 Purpose:

The purpose of the Charles River Corporate Officer Separation Plan is
to establish an equitable measure of compensation for a corporate officer of
Charles River Laboratories, Inc. (the “Company”) who has been terminated.

1.2                                 Eligibility:

Eligible employees under this Plan are corporate officers at the vice
president level and above of the Company whose employment as a corporate officer
is terminated for reasons other than cause, voluntary resignation, disability,
early or normal retirement, or death and who have not been offered a comparable
position within the Company.

2.0                                 Definitions

2.1                                 Termination
for Cause:

A termination of employment status for fraud, violence, theft, gross
misconduct, discrimination, harassment or actions which create legal
liabilities for the Company or actions of malicious intent which directly
compromise the individual’s role/accountabilities.

2.2                                 Comparable
Position:

A comparable position is defined as a position having the same salary
grade as the corporate officer’s current position in the same geographical area
with comparable salary, employee benefits perquisites, and status.

2.3                                 Separation
Date:

The last day of full time active employment.

2.4                                 Termination
Date:

The termination date will be the later of the separation date or the
last day as a severed employee receiving benefits, in the event the officer
elects to receive cycle payments; provided that the foregoing shall be subject
to Section 5.1 hereof as it relates to the rights under any of the Company’s
stock option plans then in effect.

3.0                                 Severance Pay

3.1                                 Maximum
Severance Pay Allowance:

A corporate officer shall be entitled to a severance pay allowance
equal to

twenty-four (24) months of the corporate officer’s base pay plus an amount
equal to the accrued vacation pay payable to the corporate officer as of the
separation date.

3.2                                 Method
of Payment:

The Company shall make payments to the corporate officer monthly, based
upon normal payroll procedures, or in one lump sum payment at the officer’s
election.

4.0                                 Incentive Compensation

4.1                                 Executive
Incentive Compensation Plan:

Participants whose separation date is after June 30 in any plan year,
will receive a pro rata bonus based on the period of active employment on the
date that such bonuses are paid to all other active eligible employees.

5.0                                 Stock Incentive Plan

5.1                                 Pursuant
to Stock Incentive Plans:

a)              A corporate officer
who is terminated will have 90 days from the termination date in which to
exercise vested stock options which were granted to the corporate officer.  Only options which have vested on or before
the separation date may be exercised.

b)             On or after the
separation date an eligible corporate officer will not be eligible for any
loans in connection with the exercise of vested options.

c)              A
corporate officer who is terminated has ownership rights to restricted stock to
the extent it was vested at the separation date.

6.0                                 Outplacement Services

6.1                                 The
Company will assist the corporate officer in the search for new employment by
paying professional fees for the services incurred in the normal course of a
job search of an outplacement organization in a total amount not to exceed 15%
of the officer’s annualized pay (base pay and prior year bonus actually paid)
at the time of termination.  All such
fees and expenses must be incurred within one year from the Separation Date to
be reimbursed.

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7.0                                 Financial Perquisites

7.1                                 The
following perquisites will be continued as set forth below for those officers
who elect cycled severance:

7.2                                 Company
Car:

The officer’s car may be purchased by the executive on or before the
termination date, at the officer’s election, at a price to be determined by
reference to the Company’s Automobile Policy, as then in effect.  If not purchased, the car must be returned to
the Company on the termination date.  The
purchase price will be deducted from the severance payments if the executive
has failed to make arrangements to return or purchase the vehicle on or before
the termination date.

7.3                                 Healthcare
Reimbursement:

Eligibility for Company reimbursement or payment made on behalf of
officers for healthcare benefits shall continue until the termination date.

7.3                                 Other
Perquisites:

The Company shall
reimburse the Officer for other standard perquisites through the termination
date, based on those that were made available to the officer as of the
Separation Date, consistent with past practices.

8.0                                 Benefits/Perquisites

Health, Life
Insurance, Retirement Income, and Savings Plus Plan:

Health, Life Insurance, Retirement Income, and Savings Plus Plan
Benefits shall continue during the period of severance with benefits, and cease
on the termination date, subject to the officer’s election under COBRA.

Benefits under the Long-Term and Short-Term Disability Plans shall
cease on the separation date.  There are
no conversion privileges.

9.0                                 Non-Compete Agreement

9.1                                 In
addition, in order to be eligible for benefits under the Plan, the corporate
officer must execute an agreement not to compete with or solicit employees from
the Company for a period of two (2) years in the following form:

In consideration of the benefits to be provided to you and as part of
your fiduciary obligations to the Company, you agree that for a period of two
(2) years from the Separation Date you will not, directly or indirectly:

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(a) Compete with any business of the Company engaged in or under active
development by the Company or any of its subsidiaries.  For the purpose of this Agreement, the phrase
“compete” shall include serving as an employee, an officer, a director, an
owner, a partner or a 5% or more shareholder of any business or otherwise
engaging in or assisting another to engage in any business.  Without limiting the foregoing, the Company
shall consider, on an as requested basis, modifications to your restrictions on
competition where management of the Company believes the competitive impact on
the Company to be minimal or otherwise manageable; or

(b) Directly or indirectly solicit or hire any employee of the Company
or any of its subsidiaries to work for or on behalf of you or any business in
which you serve as an employee, an officer, a director, an owner, a partner or
a 5% or more shareholder.

10.0                           Administration of the Plan

10.1                           Preparation
of Severance Package:

The Company’s corporate Human Resources Department is responsible for
the preparation of the executive severance package in accordance with this
Plan.

10.2                           Other
Policies and Plans:

This Plan supersedes the
Officer Separation Plan of May 16, 1991.

	
  

  	
  CHARLES RIVER
  LABORATORIES, INC.

  
	
   

  
	
   

  
	
   

  	
  By:

  	
  /s/  James C. Foster

  
	
   

  	
       James
  C. Foster

  
	
   

  	
       Chairman,
  President & CEO

  
	
   

  
	
   

  	
  Effective Date: 
  

  	
  July 27, 2001

  	
   

  
					

 

 4Exhibit 10.39

 

CVS CORPORATION

Employment Agreement for Christopher Bodine

 

 

CVS
CORPORATION

Employment
Agreement for Christopher Bodine

	
  

  	
   

  	
   

  	
   

  	
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  1.

  	
   

  	
  Definitions

  	
   

  	
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  2.

  	
   

  	
  Term of Employment

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  Position, Duties and Responsibilities

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  Base Salary

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
   

  	
  Annual Incentive Awards

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
   

  	
  Long-Term Stock Incentive Programs

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
   

  	
  Employee Benefit Programs

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
   

  	
  Disability

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
   

  	
  Reimbursement of Business and Other Expenses

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
   

  	
  Termination of Employment

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11

  	
   

  	
  Confidentiality; Cooperation with Regard to
  Litigation; Non-disparagement

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12.

  	
   

  	
  Non-competition

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  13.

  	
   

  	
  Non-solicitation

  	
   

  	
  17

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  14.

  	
   

  	
  Remedies

  	
   

  	
  17

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  15.

  	
   

  	
  Resolution of Disputes

  	
   

  	
  17

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  16.

  	
   

  	
  Indemnification

  	
   

  	
  18

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  17.

  	
   

  	
  Excise Tax Gross-Up

  	
   

  	
  18

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  18.

  	
   

  	
  Effect of Agreement on Other Benefits

  	
   

  	
  20

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  19.

  	
   

  	
  Assignability; Binding Nature

  	
   

  	
  20

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  20.

  	
   

  	
  Representation

  	
   

  	
  21

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  21.

  	
   

  	
  Entire Agreement

  	
   

  	
  21

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  22.

  	
   

  	
  Amendment or Waiver

  	
   

  	
  21

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  23.

  	
   

  	
  Severability

  	
   

  	
  21

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  24.

  	
   

  	
  Survivorship

  	
   

  	
  21

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  25.

  	
   

  	
  Beneficiaries/References

  	
   

  	
  21

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  26.

  	
   

  	
  Governing Law/Jurisdiction

  	
   

  	
  21

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  27.

  	
   

  	
  Notices

  	
   

  	
  22

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  28.

  	
   

  	
  Headings

  	
   

  	
  22

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  29.

  	
   

  	
  Counterparts

  	
   

  	
  22

  

 

 

EMPLOYMENT
AGREEMENT

AGREEMENT,
made and entered into as of the 20th day of December, 2001 by and between CVS
Corporation, a Delaware corporation (together with its successors and assigns,
the “Company”), and Christopher Bodine 
(the “Executive”).

W I
T N E S S E T H:

WHEREAS,
the Company desires to employ the Executive pursuant to an agreement embodying
the terms of such employment (this “Agreement”) and the Executive desires to
enter into this Agreement and to accept such employment, subject to the terms
and provisions of this Agreement;

NOW, THEREFORE, in
consideration of the promises and mutual covenants contained herein and for
other good and valuable consideration, the receipt of which is mutually
acknowledged, the Company and the Executive (individually a “Party” and
together the “Parties”) agree as follows:

1 .                                    Definitions.

(a)                                  “Approved
Early Retirement” shall have the meaning set forth in Section 10(f) below.

(b)                                 “Base
Salary” shall have the meaning set forth in Section 4 below.

(c)                                  “Board”
shall have the meaning set forth in Section 3(a) below.

(d)                                 “Cause”
shall have the meaning set forth in Section 10(b) below.

(e)                                  “Change
in Control” shall have the meaning set forth in Section 10(c) below.

(f)                                    “Committee”
shall have the meaning set forth in Section 4 below.

(g)                                 “Confidential
Information” shall have the meaning set forth in Section 11(c) below.

(h)                                 “Constructive
Termination Without Cause” shall have the meaning set forth in Section 10(c)
below.

(i)                                     “Effective
Date” shall have the meaning set forth in Section 2(a) below.

(j)                                     “Normal
Retirement” shall have the meaning set forth in Section 10(f) below.

(k)                                  “Original
Term of Employment” shall have the meaning set forth in Section  2(a) below.

(l)                                     “Renewal
Term” shall have the meaning set forth in Section 2(a) below.

(m)                               “Restriction
Period” shall have the meaning set forth in Section 12(b) below.

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(n)                                 “Severance
Period” shall have the meaning set forth in Section 10(c)(ii) below, except as
provided otherwise in Section 10(e) below.

(o)                                 “Subsidiary”
shall have the meaning set forth in Section 11(d) below.

(p)                                 “Term
of Employment” shall have the meaning set forth in Section 2(a) below.

(q)                                 “Termination
Without Cause” shall have the meaning set forth in Section 10(c) below.

2.             Term of Employment.

(a)           The term of the Executive’s
employment under this Agreement shall commence on the date of this Agreement
(the “Effective Date”) and end on the third anniversary of such date (the “Original
Term of Employment”), unless terminated earlier in accordance herewith.  The Original Term of Employment shall be
automatically renewed for successive one-year terms (the “Renewal Terms”)
unless at least 180 days prior to the expiration of the Original Term of
Employment or any Renewal Term, either Party notifies the other Party in
writing that he or it is electing to terminate this Agreement at the expiration
of the then current Term of Employment.  “Term
of Employment” shall mean the Original Term of Employment and all Renewal
Terms.  If a Change in Control shall have
occurred during the Term of Employment, notwithstanding any other provision of
this Section 2(a), the Term of Employment shall not expire earlier than two
years after such Change in Control.

(b)           Notwithstanding anything in this
Agreement to the contrary, at least one year prior to the expiration of the
Original Term of Employment, upon the written request of the Company or the
Executive, the Parties shall meet to discuss this Agreement and may agree in
writing to modify any of the terms of this Agreement.

3.             Position, Duties and
Responsibilities.

(a)           Generally.  Executive shall serve as a senior officer of
the Company.  Executive shall have and
perform such duties, responsibilities, and authorities as shall be specified by
the Company from time to time and as are customary for a senior officer of a
publicly held corporation of the size, type, and nature of the Company as they
may exist from time to time and as are consistent with such position and
status.  Executive shall devote
substantially all of his business time and attention (except for periods of
vacation or absence due to illness), and his best efforts, abilities,
experience, and talent to his position and the businesses of the Company.

(b)           Other Activities.  Anything herein to the contrary
notwithstanding, nothing in this Agreement shall preclude the Executive from
(i) serving on the boards of directors of a reasonable number of other
corporations or the boards of a reasonable number of trade associations and/or
charitable organizations, (ii) engaging in charitable activities and community
affairs, and (iii) managing his personal investments and affairs, provided that
such activities do not materially interfere with the proper performance of his
duties and responsibilities under this Agreement.

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(c)           Place of Employment.  Executive’s principal place of employment
shall be  the corporate offices of the
Company.

4.             Base Salary.

The Executive
shall be paid an annualized salary (“Base Salary”), payable in accordance with
the regular payroll practices of the Company, of not less than $350,000,
subject to review for increase at the discretion of the Compensation Committee
(the “Committee”) of the Company’s Board of Directors (the “Board”).

5.             Annual Incentive Awards.

The Executive
shall participate in the Company’s annual incentive compensation plan with a
target annual incentive award opportunity of no less than 75% of Base
Salary.  Payment of annual incentive
awards shall be made at the same time that other senior-level executives
receive their incentive awards.

6.             Long-Term Incentive Programs.

The Executive
shall be eligible to participate in the Company’s long-term incentive
compensation programs (including stock options and stock grants).

7.             Employee Benefit Programs.

(a)           General Benefits.  During the Term of Employment, the Executive
shall be entitled to participate in such employee pension and welfare benefit
plans and programs of the Company as are made available to the Company’s
senior-level executives or to its employees generally, as such plans or
programs may be in effect from time to time, including, without limitation,
health, medical, dental, long-term disability, travel accident and life
insurance plans.

(b)           Deferral of Compensation.  The Company shall implement deferral
arrangements, reasonably acceptable to Executive and the Company, permitting
Executive to elect to defer receipt, pursuant to written deferral election
terms and forms (the “Deferral Election Forms”), of all or a specified portion
of (i) his annual Base Salary and annual incentive compensation under Sections
4 and 5, (ii) long term incentive compensation under Section 6 and (iii) shares
acquired upon exercise of options to purchase Company common stock that are
acquired in an exercise in which Executive pays the exercise price by the
surrender of previously acquired shares, to the extent of the net additional
shares otherwise issuable to Executive in such exercise; provided, however
that such deferrals shall not reduce Executive’s total cash compensation in any
calendar year below the sum of (i) the FICA maximum taxable wage base plus (ii)
the amount needed, on an after-tax basis, to enable Executive to pay the 1.45%
Medicare tax imposed on his wages in excess of such FICA maximum taxable wage
base.

In
accordance with such duly executed Deferral Election Forms, the Company shall
credit to a bookkeeping account (the “Deferred Compensation Account”)
maintained for Executive on the respective payment date or dates, amounts equal
to the compensation subject to deferral, such credits to be denominated in cash
if the compensation would have been paid in cash but for the deferral or in
shares if the compensation would have been paid in shares but for the
deferral.  An amount of cash equal in
value to all cash-denominated amounts credited to Executive’s account and a
number of shares of Company common stock equal to the number of shares credited
to Executive’s account pursuant to this Section 7(b) shall be transferred as
soon as practicable following such crediting by the Company to, and shall be
held and invested by, an independent trustee selected by the Company and
reasonably acceptable to Executive (a “Trustee”) pursuant to a “rabbi trust”
established by the Company in connection with such 

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deferral
arrangement and as to which the Trustee shall make investments based on
Executive’s investment objectives (including possible investment in publicly
traded stocks and bonds, mutual funds, and insurance vehicles).  Thereafter, Executive’s deferral accounts
will be valued by reference to the value of the assets of the “rabbi trust”.  The Company shall pay all costs of
administration or maintenance of the deferral arrangement, without deduction or
reimbursement from the assets of the “rabbi trust.”

Except as
otherwise provided under Section 10, in the event of Executive’s termination of
employment with the Company or as otherwise determined by the Committee in the
event of hardship on the part of Executive, upon such date(s) or event(s) set
forth in the Deferral Election Forms (including forms filed after deferral but
before settlement in which Executive may elect to further defer settlement),
the Company shall promptly pay to Executive cash equal to the value of the
assets then credited to Executive’s deferral accounts, less applicable
withholding taxes, and such distribution shall be deemed to fully settle such
accounts; provided, however, that the Company may instead settle such
accounts by directing the Trustee to distribute Company common stock and/or
other assets of the “rabbi trust.” The Company and Executive agree that
compensation deferred pursuant to this Section 7(b) shall be fully vested and
nonforfeitable; however, Executive acknowledges that his rights to the
deferred compensation provided for in this Section 7(b) shall be no greater
than those of a general unsecured creditor of the Company, and that such rights
may not be pledged, collateralized, encumbered, hypothecated, or liable for or
subject to any lien, obligation, or liability of Executive, or be assignable or
transferable by Executive, otherwise than by will or the laws of descent and
distribution, provided that Executive may designate one or more beneficiaries
to receive any payment of such amounts in the event of his death.

8.             Disability.

(a)           During the Term of Employment, as
well as during the Severance Period, the Executive shall be entitled to
disability coverage as described in this Section 8(a).  In the event the Executive becomes disabled,
as that term is defined under the Company’s Long-Term Disability Plan, the
Executive shall be entitled to receive pursuant to the Company’s Long-Term
Disability Plan or otherwise, and in place of his Base Salary, an amount equal
to 60% of his Base Salary, at the annual rate in effect on the commencement
date of his eligibility for the Company’s long-term disability benefits (“Commencement
Date”) for a period beginning on the Commencement Date and ending with the
earlier to occur of (A) the Executive’s attainment of age 65 or (B) the
Executive’s commencement of retirement benefits from the Company in accordance
with Section 10(f) below.  If (i) the
Executive ceases to be disabled during the Term of Employment (as determined in
accordance with the terms of the Long-Term Disability Plan), (ii) his position
or another senior executive position is then vacant and (iii) the Company
requests in writing that he resume such position, he may elect to resume such
position by written notice to the Company within 15 days after the Company
delivers its request.  If he resumes such
position, he shall thereafter be entitled to his Base Salary at the annual rate
in effect on the Commencement Date and, for the year he resumes his position, a
pro rata annual incentive award.  If he
ceases to be disabled during the Term of Employment and does not resume his
position in accordance with the preceding sentence, he shall be treated as if
he voluntarily terminated his employment pursuant to Section 10(d) as of the
date the Executive ceases to be disabled. 
If the Executive is not offered his position or another senior executive
position after he ceases to be disabled during the Term of Employment, he shall
be treated as if his employment was terminated Without Cause pursuant to
Section 10(c) as of the date the Executive ceases to be disabled ; provided,
however, that if a Change in Control shall have occurred during the
period of the Executive’s disability, he shall be treated as if his employment
was terminated Without Cause following a Change in Control pursuant to Section
10(e) as of the date the Executive ceases to be disabled.

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(b)           The Executive shall be entitled to a
pro rata annual incentive award for the year in which the Commencement Date
occurs based on 75% of Base Salary paid to him during such year prior to the
Commencement Date, payable in a lump sum not later than 15 days after the
Commencement Date.  The Executive shall
not be entitled to any annual incentive award with respect to the period
following the Commencement Date.  If the
Executive recommences his position in accordance with Section 8(a), he shall be
entitled to a pro rata annual incentive award for the year he resumes such
position and shall thereafter be entitled to annual incentive awards in
accordance with Section 5 hereof.

(c)           During the period the Executive is
receiving disability benefits pursuant to Section 8(a) above, he shall continue
to be treated as an employee for purposes of all employee benefits and
entitlements in which he was participating on the Commencement Date, including
without limitation, the benefits and entitlements referred to in Sections 6 and
7 above, except that the Executive shall not be entitled to receive any annual
salary increases or any new long-term incentive plan grants following the
Commencement Date.

9.             Reimbursement of Business and
Other Expenses.

The Executive is
authorized to incur reasonable expenses in carrying out his duties and
responsibilities under this Agreement, and the Company shall promptly reimburse
him for all business expenses incurred in connection therewith, subject to
documentation in accordance with the Company’s policy.  During the Term of Employment, the Company
shall reimburse the Executive, upon demand, for out-of-pocket expenses incurred
in connection with personal financial and tax planning up to a maximum of
$15,000 per annum.  The Company shall pay
or reimburse the Executive for the expenses (including, without limitation,
reasonable attorneys’ fees and expenses) incurred by him in conjunction with
preparation and negotiation of this Agreement and any related documents up to a
maximum of $10,000.

10.           Termination of Employment.

(a)           Termination Due to Death.  In the event the Executive’s employment with
the Company is terminated due to his death, his estate or his beneficiaries, as
the case may be, shall be entitled to and their sole remedies under this Agreement
shall be:

(i)                                     Base
Salary through the date of death, which shall be paid in a cash lump sum not
later than 15 days following the Executive’s death;

(ii)                                  pro
rata annual incentive award for the year in which the Executive’s death occurs
assuming that the Executive would have received an award equal to 75% of Base
Salary for such year, which shall be payable in a cash lump sum promptly (but
in no event later than 15 days) after his death;

(iii)                               elimination
of all restrictions on any restricted or deferred stock awards outstanding at
the time of his death (other than awards under the Company’s Partnership Equity
Program, which shall be governed by the terms of such awards);

(iv)                              immediate
vesting of all outstanding stock options and the right to exercise such stock
options for a period of one year following death  or for the remainder of the exercise period,
if less (other 

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                                                than
awards under the Company’s Partnership Equity Program, which shall be governed
by the terms of such awards);

(v)                                 the
balance of any incentive awards earned as of December 31 of the prior year (but
not yet paid), which shall be paid in a cash lump sum not later than 15 days
following the Executive’s death;

(vi)                              settlement
of all deferred compensation arrangements in accordance with any then
applicable deferred compensation plan or election form; and

(vii)                           other
or additional benefits then due or earned in accordance with applicable plans
and programs of the Company.

(b)           Termination by the Company for
Cause.

(i)                                     “Cause”
shall mean:

(A)                              the
Executive’s willful and material breach of Sections 11, 12 or 13 of this
Agreement;

(B)                                the
Executive is convicted of a felony involving moral turpitude; or

(C)                                the
Executive engages in conduct that constitutes willful gross neglect or willful
gross misconduct in carrying out his duties under this Agreement, resulting, in
either case, in material harm to the financial condition or reputation of the
Company.

For purposes of
this Agreement, an act or failure to act on Executive’s part shall be considered
“willful” if it was done or omitted to be done by him not in good faith, and
shall not include any act or failure to act resulting from any incapacity of
Executive.

(ii)                                  A
termination for Cause shall not take effect unless the provisions of this paragraph
(ii) are complied with.  The Executive
shall be given written notice by the Company of its intention to terminate him
for Cause, such notice (A) to state in detail the particular act or acts or
failure or failures to act that constitute the grounds on which the proposed
termination for Cause is based and (B) to be given within 90 days of the
Company’s learning of such act or acts or failure or failures to act.  The Executive shall have 20 days after the
date that such written notice has been given to him in which to cure such
conduct, to the extent such cure is possible. 
If he fails to cure such conduct, the Executive shall then be entitled
to a hearing before the Committee of the Board at which the Executive is
entitled to appear.  Such hearing shall
be held within 25 days of such notice to the Executive, provided he requests
such hearing within 10 days of the written notice from the Company of the
intention to terminate him for Cause. 
If, within five days following such hearing, the Executive is furnished
written notice by the Board confirming that, in its judgment, grounds for Cause
on the basis of the original notice exist, he shall thereupon be
terminated  for Cause.

 6
 

 

(iii)                               In
the event the Company terminates the Executive’s employment for Cause, he shall
be entitled to and his sole remedies under this Agreement shall be:

(A)                              Base
Salary through the date of the termination of his employment for Cause, which
shall be paid in a cash lump sum not later than 15 days following the Executive’s
termination of employment;

(B)                                any
incentive awards earned as of December 31 of the prior year (but not yet paid),
which shall be paid in a cash lump sum not later than 15 days following the
Executive’s termination of employment;

(C)                                settlement
of all deferred compensation arrangements in accordance with  any then applicable deferred compensation
plan or election form; and

(D)                               other
or additional benefits then due or earned in accordance with applicable plans
or programs of the Company.

(c)           Termination Without Cause or
Constructive Termination Without Cause Prior to Change in Control.  In the event the Executive’s employment with
the Company is terminated without Cause (which termination shall be effective
as of the date specified by the Company in a written notice to the Executive),
other than due to death, or in the event there is a Constructive Termination
Without Cause (as defined below), in either case prior to a Change in Control
(as defined below) the Executive shall be entitled to and his sole remedies
under this Agreement shall be:

(i)                                     Base
Salary through the date of termination of the Executive’s employment, which
shall be paid in a cash lump sum not later than 15 days following the Executive’s
termination of employment;

(ii)                                  Base
Salary, at the annualized rate in effect on the date of termination of the
Executive’s employment (or in the event a reduction in Base Salary is a basis
for a Constructive Termination Without Cause, then the Base Salary in effect
immediately prior to such reduction), for a period of 24 months (the “Severance
Period”);

(iii)                               pro
rata annual incentive award for the year in which termination occurs equal to
75% of Base Salary (determined in accordance with Section 10(c)(ii) above) for
such year, payable in a cash lump sum promptly (but in no event later than 15
days) following termination;

(iv)                              an
amount equal to 75% of Base Salary (determined in accordance with Section
10(c)(ii) above) multiplied by two, payable in equal monthly payments over the
Severance Period;

 7
 

 

(v)                                 elimination
of all restrictions on any restricted or deferred stock awards outstanding at
the time of termination of employment (other than awards under the Company’s
Partnership Equity Program, which shall be governed by the terms of such
awards);

(vi)                              any
outstanding stock options which are unvested shall vest and the Executive shall
have the right to exercise any vested stock options during the Severance Period
or for the remainder of the exercise period, if less (other than awards under
the Company’s Partnership Equity Program, which shall be governed by the terms
of such awards);

(vii)                           the
balance of any incentive awards earned as of December 31 of the prior year (but
not yet paid), which shall be paid in a cash lump sum not later than 15 days
following the Executive’s termination of employment;

(viii)                        settlement
of all deferred compensation arrangements in accordance with any then
applicable deferred compensation plan or election form;

(ix)                                continued
participation in all medical, health and life insurance plans at the same
benefit level at which he was participating on the date of the termination of
his employment until the earlier of:

(A)                              the
end of the Severance Period; or

(B)                                the
date, or dates, he receives equivalent coverage and benefits under the plans
and programs of a subsequent employer (such coverage and benefits to be
determined on a coverage-by-coverage, or benefit-by-benefit, basis); provided
that (1) if the Executive is precluded from continuing his participation in any
employee benefit plan or program as provided in this clause (ix) of this
Section 10(c), he shall receive cash payments equal on an after-tax basis to
the cost to him of obtaining the benefits provided under the plan or program in
which he is unable to participate for the period specified in this clause (ix)
of this Section 10(c), (2) such cost shall be deemed to be the lowest
reasonable cost that would be incurred by the Executive in obtaining such
benefit himself on an individual basis, and (3) payment of such amounts shall
be made quarterly in advance; and

(x)                                   other
or additional benefits then due or earned in accordance with applicable plans
and programs of the Company.

“Termination
Without Cause” shall mean the Executive’s employment is terminated by the
Company for any reason other than Cause (as defined in Section 10(b)) or due to
death.

“Constructive
Termination Without Cause” shall mean a termination of the Executive’s
employment at his initiative as provided in this Section 10(c) following the 

 8
 

occurrence,
without the Executive’s written consent, of one or more of the following events
(except as a result of a prior termination):

(A)                              an
assignment of any duties to Executive that are inconsistent with his status as
a senior officer of the Company;

(B)                                a
decrease in Executive’s annual Base Salary or target annual incentive award
opportunity below 75% of Base Salary;

(C)                                any
other failure by the Company to perform any material obligation under, or
breach by the Company of any material provision of, this Agreement that is not
cured within 30 days; or

(D)                               any
failure to secure the agreement of any successor corporation or other entity to
the Company to fully assume the Company’s obligations under this Agreement.

In addition,
following a Change in Control, “Constructive Termination Without Cause” shall
also mean a termination of the Executive’s employment at his initiative as
provided in this Section 10(c) following the occurrence, without the Executive’s
written consent, of (i) a relocation of his principal place of employment
outside a 35-mile radius of his principal place of employment as in effect
immediately prior to such Change in Control or (ii) a material diminution or
change, adverse to Executive, in Executive’s positions, titles, offices,
status, rank, nature of responsibility, or authority within the Company, as in
effect immediately prior to such Change in Control, or a removal of Executive
from or any failure to elect or re-elect, or as the case may be, nominate
Executive to any such positions or offices.

A “Change in
Control” shall be deemed to have occurred if:

(i)                                     any
Person (other than the Company, any trustee or other fiduciary holding
securities under any employee benefit plan of the Company, or any company
owned, directly or indirectly, by the stockholders of the Company immediately
prior to the occurrence with respect to which the evaluation is being made in
substantially the same proportions as their ownership of the common stock of
the Company) becomes the Beneficial Owner (except that a Person shall be deemed
to be the Beneficial Owner of all shares that any such Person has the right to
acquire pursuant to any agreement or arrangement or upon exercise of conversion
rights, warrants or options or otherwise, without regard to the sixty day
period referred to in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company or any Significant Subsidiary (as
defined below), representing 25% or more of the combined voting power of the
Company’s or such subsidiary’s then outstanding securities;

(ii)                                  during any period of two consecutive years,
individuals who at the beginning of such period constitute the Board, and any
new director (other than a director designated by a person who has entered into
an agreement with the Company to effect a 

 9
 

                                                transaction described in clause (i), (iii),
or (iv) of this paragraph) whose election by the Board or nomination for
election by the Company’s stockholders was approved by a vote of at least
two-thirds of the directors then still in office who either were directors at
the beginning of the two-year period or whose election or nomination for
election was previously so approved but excluding for this purpose any such new
director whose initial assumption of office occurs as a result of either an
actual or threatened election contest (as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act) or other actual or
threatened solicitation of proxies or consents by or on behalf of an
individual, corporation, partnership, group, associate or other entity or
Person other than the Board, cease for any reason to constitute at least a
majority of the Board;

(iii)                               the
consummation of a merger or consolidation of the Company or any subsidiary
owning directly or indirectly all or substantially all of the consolidated
assets of the Company (a “Significant Subsidiary”) with any other entity, other
than a merger or consolidation which would result in the voting securities of
the Company or a Significant Subsidiary outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving or resulting entity) more than 50% of
the combined voting power of the surviving or resulting entity outstanding
immediately after such merger or consolidation;

(iv)                              the
stockholders of the Company approve a plan or agreement for the sale or
disposition of all or substantially all of the consolidated assets of the
Company (other than such a sale or disposition immediately after which such
assets will be owned directly or indirectly by the stockholders of the Company
in substantially the same proportions as their ownership of the common stock of
the Company immediately prior to such sale or disposition) in which case the
Board shall determine the effective date of the Change in Control resulting
therefrom; or

(v)                                 any
other event occurs which the Board determines, in its discretion, would
materially alter the structure of the Company or its ownership.

For purposes of
this definition:

(A)                              The
term “Beneficial Owner” shall have the meaning ascribed to such term in Rule
13d-3 under the Exchange Act (including any successor to such Rule).

(B)                                The
term “Exchange Act” means the Securities Exchange Act of 1934, as amended from
time to time, or any successor act thereto.

(C)                                The
term “Person” shall have the meaning ascribed to such term in Section 3(a)(9)
of the Exchange Act and  

 10
 

                                                used
in Sections 13(d) and 14(d) thereof, including “group” as defined in Section
13(d) thereof.

(d)           Voluntary Termination.  In the event of a termination of employment
by the Executive on his own initiative after delivery of 10 business days
advance written notice, other than a termination due to death, a Constructive
Termination Without Cause, or Approved Early Retirement or Normal Retirement
pursuant to Section 10(f) below, the Executive shall have the same entitlements
as provided in Section 10(b)(iii) above for a termination for Cause, provided
that at the Company’s election, furnished in writing to the Executive within 15
days following such notice of termination, the Company shall in addition pay
the Executive 50% of his Base Salary for a period of 18 months following such
termination in exchange for the Executive not engaging in competition with the
Company or any Subsidiary as set forth in Section 12(a) below.  Notwithstanding any implication to the
contrary, the Executive shall not have the right to terminate his employment
with the Company during the Term of Employment except in the event of a
Constructive Termination Without Cause, Approved Early Retirement, or Normal
Retirement, and any voluntary termination of employment during the Term of
Employment in violation of this Agreement shall be considered a material
breach.

(e)           Termination Without Cause;
Constructive Termination Without Cause or Voluntary Termination  Following Change in Control.  In the event the Executive’s employment with
the Company is terminated by the Company without Cause (which termination shall
be effective as of the date specified by the Company in a written notice to the
Executive), other than due to death, or in the event there is a Constructive
Termination Without Cause (as defined above), in either case within two years
following a Change in Control (as defined above), the Executive shall be
entitled to and his sole remedies under this Agreement shall be:

(i)                                     Base
Salary through the date of termination of the Executive’s employment, which
shall be paid in a cash lump sum not later than 15 days following the Executive’s
termination of employment;

(ii)                                  an
amount equal to three times the Executive’s Base Salary, at the annualized rate
in effect on the date of termination of the Executive’s employment (or in the
event a reduction in Base Salary is a basis for a Constructive Termination
Without Cause, then the Base Salary in effect immediately prior to such
reduction), payable in a cash lump sum promptly (but in no event later than 15
days) following the Executive’s termination of employment;

(iii)                               pro
rata annual incentive award for the year in which termination occurs assuming
that the Executive would have received an award equal to 75% of Base Salary
(determined in accordance with Section 10(e)(ii) above) for such year, payable
in a cash lump sum promptly (but in no event later than 15 days) following the
Executive’s termination of employment;

(iv)                              an
amount equal to 75% of such Base Salary (determined in accordance with Section
10(e)(ii) above) multiplied by three, payable in a cash lump sum promptly (but
in no event later than 15 days) following the Executive’s termination of
employment;

 11
 

 

(v)                                 elimination
of all restrictions on any restricted or deferred stock awards outstanding at
the time of termination of employment (other than awards under the Company’s
Partnership Equity Program, which shall be governed by the terms of such
awards);

(vi)                              immediate
vesting of all outstanding stock options and the right to exercise such stock
options during the Severance Period or for the remainder of the exercise
period, if less (other than awards under the Company’s Partnership Equity
Program, which shall be governed by the terms of such awards);

(vii)                           the
balance of any incentive awards earned as of December 31 of the prior year (but
not yet paid), which shall be paid in a single lump sum not later than 15 days
following the Executive’s termination of employment;

(viii)                        immediate
vesting of the Executive’s accrued benefits under any supplemental retirement
benefit plan (“SERP”) maintained by the Company, with payment of such benefit
to be made in accordance with the terms and conditions of the SERP;

(ix)                                settlement
of all deferred compensation arrangements in accordance with  any then applicable deferred compensation
plan or election form;

(x)                                   continued
participation in all medical, health and life insurance plans at the same
benefit level at which he was participating on the date of termination of his
employment until the earlier of:

(A)                              the
end of the Severance Period; or

(B)                                the
date, or dates, he receives equivalent coverage and benefits under the plans
and programs of a subsequent employer (such coverage and benefits to be
determined on a coverage-by-coverage, or benefit-by-benefit, basis); provided
that (1) if the Executive is precluded from continuing his participation in any
employee benefit plan or program as provided in this clause (ix) of this
Section 10(e), he shall receive cash payments equal on an after-tax basis to
the cost to him of obtaining the benefits provided under the plan or program in
which he is unable to participate for the period specified in this clause (ix)
of this Section 10(e),  (2) such cost
shall be deemed to be the lowest reasonable cost that would be incurred by the
Executive in obtaining such benefit himself on an individual basis, and (3)
payment of such amounts shall be made quarterly in advance; and

(xi)                                other
or additional benefits then due or earned in accordance with applicable plans
and programs of the Company.

For purposes of
any termination pursuant to this Section 10(e), the term “Severance Period”
shall mean the period of 36 months following the termination of the Executive’s
employment.

 

 12

 

(f)            Approved
Early Retirement or Normal Retirement. 
Upon the Executive’s
Approved Early Retirement or Normal Retirement (each as defined below), the
Executive shall be entitled to and his sole remedies under this Agreement shall
be:

(i)                                     Base
Salary through the date of termination of the Executive’s employment, which
shall be paid in a cash lump sum not later than 15 days following the Executive’s
termination of employment;

(ii)                                  pro
rata cash portion of annual incentive award for the year in which termination
occurs, based on performance valuation at the end of such year and payable in a
cash lump sum promptly (but in no event later than 15 days) thereafter;

(iii)                               elimination
of all restrictions on any restricted stock awards outstanding at the time of
the Executive’s termination of employment;

(iv)                              continued
vesting (as if the Executive remained employed by the Company) of any deferred
stock awards outstanding at the time of his termination of employment (other
than awards under the Company’s Partnership Equity Program, which shall be
governed by the terms of such awards);

(v)                                 continued
vesting of all outstanding stock options and the right to exercise such stock
options for a period of one year following the later of the date the options
are fully vested or the Executive’s termination of employment or for the
remainder of the exercise period, if less (other than awards under the Company’s
Partnership Equity Program, which shall be governed by the terms of such
awards);  provided, however, that options
granted pursuant to the Company’s 1987 Stock Option Plan shall in no event be
exercisable after three years following termination of employment;

(vi)                              the
balance of any incentive awards earned as of December 31 of the prior year (but
not yet paid), which shall be paid in a single lump sum not later than 15 days
following the Executive’s termination of employment;

(vii)                           settlement
of all deferred compensation arrangements in accordance with any then
applicable deferred compensation plan or election form; and

(viii)                        other or
additional benefits then due or earned in accordance with applicable plans and
programs of the Company.

“Approved Early
Retirement” shall mean the Executive’s voluntary termination of employment with
the Company at or after attaining age 55 but prior to attaining age 60, if such
termination is approved in advance by the Committee.

 13
 

 

“Normal Retirement” shall mean the Executive’s voluntary termination
of  employment with the Company at or
after attaining age 60.

(g)           No Mitigation; No Offset.  In the event of any termination of
employment, the Executive shall be under no obligation to seek other
employment; amounts due the Executive under this Agreement shall not be offset
by any remuneration attributable to any subsequent employment that he may obtain.

(h)           Nature of Payments.  Any amounts due under this Section 10 are in
the nature of severance payments considered to be reasonable by the Company and
are not in the nature of a penalty.

(i)            Exclusivity of Severance
Payments.  Upon termination of the Executive’s
employment during the Term of Employment, he shall not be entitled to any
severance payments or severance benefits from the Company or any payments by
the Company on account of any claim by him of wrongful termination, including
claims under any federal, state or local human and civil rights or labor laws,
other than the payments and benefits provided in this Section 10.

(j)            Release of Employment Claims.  The Executive agrees, as a condition to
receipt of the termination payments and benefits provided for in this Section
10, that he will execute a release agreement, in a form reasonably satisfactory
to the Company, releasing any and all claims arising out of the Executive’s
employment (other than enforcement of this Agreement, the Executive’s rights
under any of the Company’s incentive compensation and employee benefit plans
and programs to which he is entitled under this Agreement, and any claim for
any tort for personal injury not arising out of or related to his termination
of employment).

11.           Confidentiality; Cooperation with
Regard to Litigation; Non-disparagement.

(a)           During the Term of Employment and
thereafter, the Executive shall not, without the prior written consent of the
Company, disclose to anyone (except in good faith in the ordinary course of
business to a person who will be advised by the Executive to keep such
information confidential) or make use of any Confidential Information except in
the performance of his duties hereunder or when required to do so by legal
process, by any governmental agency having supervisory authority over the
business of the Company or by any administrative or legislative body (including
a committee thereof) that requires him to divulge, disclose or make accessible
such information.  In the event that the
Executive is so ordered, he shall give prompt written notice to the Company in
order to allow the Company the opportunity to object to or otherwise resist
such order.

(b)           During the Term of Employment and
thereafter, Executive shall not disclose the existence or contents of this
Agreement beyond what is disclosed in the proxy statement or documents filed
with the government unless and to the extent such disclosure is required by
law, by a governmental agency, or in a document required by law to be filed with
a governmental agency or in connection with enforcement of his rights under
this Agreement.  In the event that
disclosure is so required, the Executive shall give prompt written notice to
the Company in order to allow the Company the opportunity to object to or
otherwise resist such requirement.  This
restriction shall not apply to such disclosure by him to members of his
immediate family, his tax, legal or financial advisors, any lender, or tax
authorities, or to potential future employers to the extent necessary, each of
whom shall be advised not to disclose such information.

 14
 

 

(c)   “Confidential Information” shall mean all
information concerning the business of the Company or any Subsidiary relating
to any of their products, product development, trade secrets, customers,
suppliers, finances, and business plans and strategies. Excluded from the
definition of Confidential Information is information (i) that is or becomes
part of the public domain, other than through the breach of this Agreement by
the Executive or (ii) regarding the Company’s business or industry properly
acquired by the Executive in the course of his career as an executive in the
Company’s industry and independent of the Executive’s employment by the
Company.  For this purpose, information
known or available generally within the trade or industry of the Company or any
Subsidiary shall be deemed to be known or available to the public.

(d)           “Subsidiary” shall mean any
corporation controlled directly or indirectly by the Company.

(e)           The Executive agrees to cooperate
with the Company, during the Term of Employment and thereafter (including
following the Executive’s termination of employment for any reason), by making
himself reasonably available to testify on behalf of the Company or any
Subsidiary in any action, suit, or proceeding, whether civil, criminal,
administrative, or investigative, and to assist the Company, or any Subsidiary,
in any such action, suit, or proceeding, by providing information and meeting
and consulting with the Board or its representatives or counsel, or
representatives or counsel to the Company, or any Subsidiary as reasonably
requested; provided, however, that the same does not materially
interfere with his then current professional activities.  The Company agrees to reimburse the
Executive, on an after-tax basis, for all expenses actually incurred in
connection with his provision of testimony or assistance.

(f)            The Executive agrees that, during
the Term of Employment and thereafter (including following the Executive’s termination
of employment for any reason) he will not make statements or representations,
or otherwise communicate, directly or indirectly, in writing, orally, or
otherwise, or take any action which may, directly or indirectly, disparage the
Company or any Subsidiary or their respective officers, directors, employees,
advisors, businesses or reputations.  The
Company agrees that, during the Term of Employment and thereafter (including
following the Executive’s termination of employment for any reason), the Company
will not make statements or representations, or otherwise communicate, directly
or indirectly, in writing, orally, or otherwise, or take any action which may,
directly or indirectly, disparage the Executive or his business or reputation.  Notwithstanding the foregoing, nothing in
this Agreement shall preclude either the Executive or the Company from making
truthful statements or disclosures that are required by applicable law,
regulation or legal process.

12.           Non-competition.

(a)           During the Restriction Period (as
defined in Section 12(b) below), the Executive shall not engage in Competition
with the Company or any Subsidiary.  “Competition”
shall mean engaging in any activity, except as provided below, for a Competitor
of the Company or any Subsidiary, whether as an employee, consultant,
principal, agent, officer, director, partner, shareholder (except as a less
than one percent shareholder of a publicly traded company) or otherwise.  A “Competitor” shall mean any corporation or
other entity (and its subsidiaries, successors and assigns) engaged in the
operation of a retail business which includes or has plans to include a
pharmacy offering or component including, without limitation, chain drug store
companies, mass merchants and food/drug combinations and any corporation or
other entity whose principal business is mail order pharmacy benefits
management, or any corporation or other entity which, during the Term of
Employment, was or is in a joint venture relationship (directly or indirectly)
with the Company. If the Executive commences employment or becomes a
consultant, principal, agent, officer, director, partner, or shareholder of any
entity  

 15
 

that is not a
Competitor at the time the Executive initially becomes employed or becomes a
consultant, principal, agent, officer, director, partner, or shareholder of the
entity, future activities of such entity shall not result in a violation of
this provision unless (x) such activities were contemplated by the Executive at
the time the Executive initially became employed or becomes a consultant,
principal, agent, officer, director, partner, or shareholder of the entity or
(y) the Executive commences directly or indirectly overseeing or managing the
activities of  an entity which becomes a
Competitor during the Restriction Period, which activities are competitive with
the activities of the Company or Subsidiary. 
The Executive shall not be deemed indirectly overseeing or managing the
activities of such Competitor which are competitive with the activities of the
Company or Subsidiary so long as he does not regularly participate in
discussions with regard to the conduct of the competing business.

(b)           For the purposes of this Section 12, “Restriction
Period” shall mean the period beginning with the Effective Date and ending
with:

(i)                                     in
the case of a termination of the Executive’s employment without Cause or a
Constructive Termination Without Cause, in either case prior to a Change in
Control, the earlier of (1) 24 months after such termination and (2) the
occurrence of a Change in Control;

(ii)                                  in
the case of a termination of the Executive’s employment for Cause, the earlier
of (1) 24 months after such termination and (2) the occurrence of a Change in
Control;

(iii)                               in
the case of a voluntary termination of the Executive’s employment pursuant to
Section 10(d) above followed by the Company’s election to pay the Executive
(and subject to the payment of) 50% of his Base Salary, as provided in Section
10(d) above, the earlier of (1) 18 months after such termination and (2) the
occurrence of a Change in Control;

(iv)                              in
the case of a voluntary termination of the Executive’s employment pursuant to
Section 10(d) above which is not followed by the Company’s election to pay the
Executive such 50% of Base Salary, the date of such termination;

(v)                               in
the case of Approved Early Retirement or Normal Retirement pursuant to Section
10(f) above, the remainder of the Term of Employment; or

(vi)                              in
the case of a termination of the Executive’s employment without Cause or a
Constructive Termination Without Cause, in either case following a Change in
Control, immediately upon such termination of employment.

(c)           The parties agree that it is their
respective intent that the terms of this paragraph 12 be enforceable as written
and to the broadest extent permissible under the law.  Therefore, in the event of any dispute
regarding the scope and/or enforceability or this paragraph 12 wherein any
provision of the foregoing is legally determined to be over broad or otherwise
unenforceable as written, the parties agree that such provision may be modified
in the manner that most closely satisfies their intent. In the event that any
provision is declared legally void or unenforceable and cannot be modified so
as to be valid and enforceable, the parties agree that 

 16
 

such provision may
be stricken and the remaining provisions shall remain valid and enforceable to
the broadest extent permissible under the law.

13.           Non-solicitation.

During the period
beginning with the Effective Date and ending 18 months following the
termination of the Executive’s employment, the Executive shall not induce
employees of the Company or any Subsidiary to terminate their employment, nor
shall the Executive solicit or encourage any of the Company’s or any Subsidiary’s
non-retail customers, or any corporation or other entity in a joint venture
relationship (directly or indirectly) with the Company or any Subsidiary, to
terminate or diminish their relationship with the Company or any Subsidiary or
to violate any agreement with any of them. 
During such period, the Executive shall not hire, either directly or
through any employee, agent or representative, any employee of the Company or
any Subsidiary or any person who was employed by the Company or any Subsidiary
within 180 days of such hiring.

14.           Remedies.

If the Executive
breaches any of the provisions contained in Sections 11, 12 or 13 above, the
Company (a) subject to Section 15, shall have the right to immediately
terminate all payments and benefits due under this Agreement and (b) shall have
the right to seek injunctive relief.  The
Executive acknowledges that such a breach of Sections 11,12 or 13 would cause
irreparable injury and that money damages would not provide an adequate remedy
for the Company; provided, however, the foregoing shall not prevent the
Executive from contesting the issuance of any such injunction on the ground
that no violation or threatened violation of Section 11, 12 or 13 has occurred.

15.           Resolution of Disputes.

Any controversy or
claim arising out of or relating to this Agreement or any breach or asserted
breach hereof or questioning the validity and binding effect hereof arising
under or in connection with this Agreement, other than seeking injunctive
relief under Section 14, shall be resolved by binding arbitration, to be held
at an office closest to the Company’s principal offices in accordance with the
rules and procedures of the American Arbitration Association.  Judgment upon the award rendered by the
arbitrator(s) may be entered in any court having jurisdiction thereof.  Pending the resolution of any arbitration or
court proceeding, the Company shall continue payment of all amounts and
benefits due the Executive under this Agreement.  All costs and expenses of any arbitration or
court proceeding (including fees and disbursements of counsel) shall be borne
by the respective party incurring such costs and expenses, but the Company
shall reimburse the Executive for such reasonable costs and expenses in the
event he substantially prevails in such arbitration or court proceeding.  Notwithstanding the foregoing, following a
Change in Control all reasonable costs and expenses (including fees and
disbursements of counsel) incurred by the Executive pursuant to this Section 15
shall be paid on behalf of or reimbursed to the Executive promptly by the
Company; provided, however, that no reimbursement shall be made of such
expenses if and to the extent the arbitrator(s) determine(s) that any of the
Executive’s litigation assertions or defenses were in bad faith or frivolous.

 17
 

 

16.           Indemnification.

(a)           Company Indemnity.  The Company agrees that if the Executive is
made a party, or is threatened to be made a party, to any action, suit or
proceeding, whether civil, criminal, administrative or investigative (a “Proceeding”),
by reason of the fact that he is or was a director, officer or employee of the
Company or any Subsidiary or is or was serving at the request of the Company or
any Subsidiary as a director, officer, member, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, including
service with respect to employee benefit plans, whether or not the basis of
such Proceeding is the Executive’s alleged action in an official capacity while
serving as a director, officer, member, employee or agent, the Executive shall
be indemnified and held harmless by the Company to the fullest extent legally
permitted or authorized by the Company’s certificate of incorporation or bylaws
or resolutions of the Company’s Board or, if greater, by the laws of the State
of Delaware against all cost, expense, liability and loss (including, without
limitation, attorney’s fees, judgments, fines, ERISA excise taxes or penalties
and amounts paid or to be paid in settlement) reasonably incurred or suffered
by the Executive in connection therewith, and such indemnification shall
continue as to the Executive even if he has ceased to be a director, member,
officer, employee or agent of the Company or other entity and shall inure to
the benefit of the Executive’s heirs, executors and administrators.  The Company shall advance to the Executive
all reasonable costs and expenses  to be
incurred by him in connection with a Proceeding within 20 days after receipt by
the Company of a written request for such advance.  Such request shall include an undertaking by
the Executive to repay the amount of such advance if it shall ultimately be
determined that he is not entitled to be indemnified against such costs and
expenses.  The provisions of this Section
16(a) shall not be deemed exclusive of any other rights of indemnification to
which the Executive may be entitled or which may be granted to him, and it
shall be in addition to any rights of indemnification to which he may be
entitled under any policy of insurance.

(b)           No Presumption Regarding Standard
of Conduct.  Neither the failure of
the Company (including its Board, independent legal counsel or stockholders) to
have made a determination prior to the commencement of any proceeding
concerning payment of amounts claimed by the Executive under Section 16(a)
above that indemnification of the Executive is proper because he has met the
applicable standard of conduct, nor a determination by the Company (including
its Board, independent legal counsel or stockholders) that the Executive has
not met such applicable standard of conduct, shall create a presumption that
the Executive has not met the applicable standard of conduct.

(c)           Liability Insurance.  The Company agrees to continue and maintain a
directors and officers’ liability insurance policy covering the Executive to
the extent the Company provides such coverage for its other executive officers.

17.           Excise Tax Gross-Up.

If the Executive
becomes entitled to one or more payments (with a “payment” including, without
limitation, the vesting of an option or other non-cash benefit or property),
whether pursuant to the terms of this Agreement or any other plan, arrangement,
or agreement with the Company or any affiliated company (the “Total Payments”),
which are or become subject to the tax imposed by Section 4999 of the Internal
Revenue Code of 1986, as amended (the “Code”) (or any similar tax that may
hereafter be imposed) (the “Excise Tax”), the Company shall pay to the
Executive at the time specified below an additional amount (the “Gross-up
Payment”) (which shall include, without limitation, reimbursement for any
penalties and interest that may accrue in respect of such Excise Tax) such that
the net amount retained by the Executive, after reduction for any Excise Tax
(including any penalties or interest thereon) on the Total Payments and any
federal, state and local income or employment tax and Excise 

 18
 

Tax on the
Gross-up Payment provided for by this Section 17, but before reduction for any
federal, state, or local income or employment tax on the Total Payments, shall
be equal to the sum of (a) the Total Payments, and (b) an amount equal to the
product of any deductions disallowed for federal, state, or local income tax
purposes because of the inclusion of the Gross-up Payment in the Executive’s
adjusted gross income multiplied by the highest applicable marginal rate of
federal, state, or local income taxation, respectively, for the calendar year
in which the Gross-up Payment is to be made. 
For purposes of determining whether any of the Total Payments will be
subject to the Excise Tax and the amount of such Excise Tax:

(i)                                     The
Total Payments shall be treated as “parachute payments” within the meaning of
Section 280G(b)(2) of the Code, and all “excess parachute payments” within the
meaning of Section 280G(b)(1) of the Code shall be treated as subject to the
Excise Tax, unless, and except to the extent that, in the written opinion of
independent compensation consultants, counsel or auditors of nationally
recognized standing (“Independent Advisors”) selected by the Company and
reasonably acceptable to the Executive, the Total Payments (in whole or in
part) do not constitute parachute payments, or such excess parachute payments
(in whole or in part) represent reasonable compensation for services actually
rendered within the meaning of Section 280G(b)(4) of the Code in excess of the
base amount within the meaning of Section 280G(b)(3) of the Code or are
otherwise not subject to the Excise Tax;

(ii)                                  The
amount of the Total Payments which shall be treated as subject to the Excise
Tax shall be equal to the lesser of (A) the total amount of the Total Payments
or (B) the total amount of excess parachute payments within the meaning of
Section 280G(b)(1) of the Code (after applying clause (i) above); and

(iii)                               The
value of any non-cash benefits or any deferred payment or benefit shall be
determined by the Independent Advisors in accordance with the principles of
Sections 280G(d)(3) and (4) of the Code.

For purposes of
determining the amount of the Gross-up Payment, the Executive shall be deemed
(A) to pay federal income taxes at the highest marginal rate of federal income
taxation for the calendar year in which the Gross-up Payment is to be made; (B)
to pay any applicable state and local income taxes at the highest marginal rate
of taxation for the calendar year in which the Gross-up Payment is to be made,
net of the maximum reduction in federal income taxes which could be obtained
from deduction of such state and local taxes if paid in such year (determined
without regard to limitations on deductions based upon the amount of the
Executive’s adjusted gross income); and (C) to have otherwise allowable
deductions for federal, state, and local income tax purposes at least equal to
those disallowed because of the inclusion of the Gross-up Payment in the
Executive’s adjusted gross income.  In
the event that the Excise Tax is subsequently determined to be less than the
amount taken into account hereunder at the time the Gross-up Payment is made,
the Executive shall repay to the Company at the time that the amount of such
reduction in Excise Tax is finally determined (but, if previously paid to the
taxing authorities, not prior to the time the amount of such reduction is
refunded to the Executive or otherwise realized as a benefit by the Executive)
the portion of the Gross-up Payment that would not have been paid if such
Excise Tax had been applied in initially calculating the Gross-up Payment, plus
interest on the amount of such repayment at the rate provided in Section
1274(b)(2)(B) of the Code.  In the event
that the Excise Tax is determined to exceed the amount taken into account
hereunder at the time the Gross-up Payment is made (including by reason of any
payment the existence or amount of which 

 19
 

cannot be determined
at the time of the Gross-up Payment), the Company shall make an additional
Gross-up Payment in respect of such excess (plus any interest and penalties
payable with respect to such excess) at the time that the amount of such excess
is finally determined.

The Gross-up
Payment provided for above shall be paid on the 30th day (or such earlier date
as the Excise Tax becomes due and payable to the taxing authorities) after it
has been determined that the Total Payments (or any portion thereof) are subject
to the Excise Tax; provided, however, that if the amount of such
Gross-up Payment or portion thereof cannot be finally determined on or before
such day, the Company shall pay to the Executive on such day an estimate, as
determined by the Independent Advisors, of the minimum amount of such payments
and shall pay the remainder of such payments (together with interest at the
rate provided in Section 1274(b)(2)(B) of the Code), as soon as the amount
thereof can be determined.  In the event
that the amount of the estimated payments exceeds the amount subsequently
determined to have been due, such excess shall constitute a loan by the Company
to the Executive, payable on the fifth day after demand by the Company
(together with interest at the rate provided in Section 1274(b)(2)(B) of the
Code).  If more than one Gross-up Payment
is made, the amount of each Gross-up Payment shall be computed so as not to
duplicate any prior Gross-up Payment. 
The Company shall have the right to control all proceedings with the Internal
Revenue Service that may arise in connection with the determination and
assessment of any Excise Tax and, at its sole option, the Company may pursue or
forego any and all administrative appeals, proceedings, hearings, and
conferences with any taxing authority in respect of such Excise Tax (including
any interest or penalties thereon); provided, however, that the Company’s
control over any such proceedings shall be limited to issues with respect to
which a Gross-up Payment would be payable hereunder, and the Executive shall be
entitled to settle or contest any other issue raised by the Internal Revenue
Service or any other taxing authority. 
The Executive shall cooperate with the Company in any proceedings relating
to the determination and assessment of any Excise Tax and shall not take any
position or action that would materially increase the amount of any Gross-Up
Payment hereunder.

18.           Effect of Agreement on Other
Benefits.

Except as
specifically provided in this Agreement, the existence of this Agreement shall
not be interpreted to preclude, prohibit or restrict the Executive’s
participation in any other employee benefit or other plans or programs in which
he currently participates.

19.           Assignability; Binding Nature.

This Agreement
shall be binding upon and inure to the benefit of the Parties and their
respective successors, heirs (in the case of the Executive) and permitted
assigns.  No rights or obligations of the
Company under this Agreement may be assigned or transferred by the Company
except that such rights or obligations may be assigned or transferred in
connection with the sale or transfer of all or substantially all of the assets
of the Company, provided that the assignee or transferee is the successor to
all or substantially all of the assets of the Company and such assignee or
transferee assumes the liabilities, obligations and duties of the Company, as
contained in this Agreement, either contractually or as a matter of law.  The Company further agrees that, in the event
of a sale or transfer of assets as described in the preceding sentence, it
shall take whatever action it legally can in order to cause such assignee or
transferee to expressly assume the liabilities, obligations and duties of the
Company hereunder.  No rights or
obligations of the Executive under this Agreement may be assigned or
transferred by the Executive other than his rights to compensation and
benefits, which may be transferred only by will or operation of law, except as
provided in Section 25 below.

 20
 

 

20.           Representation.

The Company
represents and warrants that it is fully authorized and empowered to enter into
this Agreement and that the performance of its obligations under this Agreement
will not violate any agreement between it and any other person, firm or
organization.

21.           Entire Agreement.

This Agreement
contains the entire understanding and agreement between the Parties concerning
the subject matter hereof and, as of the Effective Date, supersedes all prior
agreements, understandings, discussions, negotiations and undertakings, whether
written or oral, between the Parties with respect thereto, including, without
limitation, the Income Continuation Policy for Select Senior Executives of CVS
Corporation.

22.           Amendment or Waiver.

No provision in
this Agreement may be amended unless such amendment is agreed to in writing and
signed by the Executive and an authorized officer of the Company.  Except as set forth herein, no delay or
omission to exercise any right, power or remedy accruing to any Party shall
impair any such right, power or remedy or shall be construed to be a waiver of
or an acquiescence to any breach hereof. 
No waiver by either Party of any breach by the other Party of any
condition or provision contained in this Agreement to be performed by such
other Party shall be deemed a waiver of a similar or dissimilar condition or
provision at the same or any prior or subsequent time.  Any waiver must be in writing and signed by
the Executive or an authorized officer of the Company, as the case may be.

23.           Severability.

In the event that
any provision or portion of this Agreement shall be determined to be invalid or
unenforceable for any reason, in whole or in part, the remaining provisions of
this Agreement shall be unaffected thereby and shall remain in full force and
effect to the fullest extent permitted by law.

24.           Survivorship.

The respective
rights and obligations of the Parties hereunder shall survive any termination
of the Executive’s employment to the extent necessary to the intended
preservation of such rights and obligations.

25.           Beneficiaries/References.

The Executive
shall be entitled, to the extent permitted under any applicable law, to select
and change a beneficiary or beneficiaries to receive any compensation or
benefit payable hereunder following the Executive’s death by giving the Company
written notice thereof.  In the event of
the Executive’s death or a judicial determination of his incompetence,
reference in this Agreement to the Executive shall be deemed, where
appropriate, to refer to his beneficiary, estate or other legal representative.

26.           Governing Law/Jurisdiction.

This Agreement
shall be governed by and construed and interpreted in accordance with the laws
of Rhode Island without reference to principles of conflict of laws.

 21
 

 

Subject to Section
15, the Company and the Executive hereby consent to the jurisdiction of any or
all of the following courts for purposes of resolving any dispute under this
Agreement: (i) the United States District Court for Rhode Island or (ii) any of
the courts of the State of Rhode Island. 
The Company and the Executive further agree that any service of process
or notice requirements in any such proceeding shall be satisfied if the rules
of such court relating thereto have been substantially satisfied.  The Company and the Executive hereby waive,
to the fullest extent permitted by applicable law, any objection which it or he
may now or hereafter have to such jurisdiction and any defense of inconvenient
forum.

27.           Notices.

Any notice given to a Party shall be in writing and shall be deemed to
have been given when delivered personally or sent by certified or registered
mail, postage prepaid, return receipt requested, duly addressed to the Party
concerned at the address indicated below or to such changed address as such Party
may subsequently give such notice of:

	
  

  	
  If to the
  Company:

  	
   

  	
  CVS Corporation

  
	
   

  	
   

  	
  One CVS Drive

  
	
   

  	
   

  	
  Woonsocket,
  Rhode Island 02895

  
	
   

  	
   

  	
  Attention:
  Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
  If to the
  Executive:

  	
   

  	
  Christopher Bodine

  
	
   

  	
   

  	
  45 Horizon Drive

  
	
   

  	
   

  	
  Cranston, RI
  02921

  

 

28.           Headings.

The headings of
the sections contained in this Agreement are for convenience only and shall not
be deemed to control or affect the meaning or construction of any provision of
this Agreement.

29.           Counterparts.

This Agreement may
be executed in two or more counterparts.

IN WITNESS
WHEREOF, the undersigned have executed this Agreement as of the date first
written above.

	
  

  	
  CVS CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
  Rosemary Mede

  
	
   

  	
  Title:

  	
  Sr. VP Human Resources

  
	
   

  	
   

  	
  and Corporate Communications

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Christopher Bodine

  

 

 22

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