Document:

Exhibit

Exhibit 10.37

CVS HEALTH CORPORATION
BUSINESS PLANNING COMMITTEE
NONQUALIFIED STOCK OPTION AGREEMENT
ANNUAL GRANT
GRANT DATE:  APRIL __, ____

1.      GRANT OF OPTION.   Pursuant to the provisions of the 2010 Incentive Compensation Plan, as amended (the “ICP”) of CVS Health Corporation (the ”Company”), on the date set forth above (the “Grant Date”), the Company has granted and hereby evidences the Grant to the person named below (the “Participant”), subject to the terms and conditions set forth or incorporated in this Nonqualified Stock Option Agreement (“Agreement”), the right, and option, to purchase from the Company the aggregate number of shares of Common Stock ($.01 par value) of the Company (“Shares”) set forth below, at the purchase price indicated below (the “Option”), the Option to be exercised as hereinafter provided.  The ICP is hereby made a part hereof and Participant agrees to be bound by all the provisions of the ICP.  Capitalized terms not otherwise defined herein shall have the meaning assigned to such term(s) in the ICP.  The provisions in this Agreement shall be read in concert with the Amended and Restated Employment Agreement dated as of December 22, 2008, as amended as of December 21, 2012 (the “Employment Agreement”) and the ICP.  In the event of any ambiguity concerning the coordination of the provisions of this Agreement and the Employment Agreement, the terms of the document which provide Participant with the most favorable treatment with respect to the Option shall govern.  The Option is a nonqualified option as defined in the ICP.  The Option purchase price per Share as stated below is equal to the Fair Market Value per Share as of the Grant Date.

	
		
	Participant:
	Larry Merlo

	Employee ID:
	XXXXXX

	Shares:
	XXXXXX

	Option Price:
	$XXX.XX

2.    TERM OF OPTION.  The term of the Option shall be for a period of seven (7) years from the Grant Date, subject to the earlier termination of the Option, as set forth in the ICP and in this Agreement.  No portion of the Option shall be exercisable after the term of the Option.

3.     EXERCISE OF OPTION.    (a)    The 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 to be purchased, which number may not be less than one hundred (100) Shares (unless the number of Shares purchased is the total balance which is then exercisable).  An exercise by Participant of all or part of this Option shall effected through the Company’s “cashless exercise” procedures. Otherwise,  at the time of exercise, Participant shall tender to the Company cash or cash equivalent for the aggregate option price of the Shares Participant has elected to purchase or certificates for Shares of Common Stock of the Company owned by Participant for at least six (6) months with a fair market value at least equal to the aggregate option price of the Shares Participant has elected to purchase, or a combination of the foregoing. 

(b)      Prior to its expiration or termination and except as otherwise provided herein, the Option will become vested in accordance with the vesting schedule set forth below, each date on which vesting occurs a “Vesting Date”, and any vested Option will be exercisable by Participant prior to the expiration of its term so long as Participant has maintained continuous employment with the Company or a subsidiary of the Company from the Grant Date through the exercise date: 

		
	(i) 
	25% of the Option shall vest on the 1st anniversary of the Grant Date;

		
	(ii)
	25% of the Option shall vest on the 2nd anniversary of the Grant Date;

		
	(iii)
	25% of the Option shall vest on the 3rd anniversary of the Grant Date;

		
	(iv)
	25% of the Option shall vest on the 4th anniversary of the Grant Date.

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4.    TAXES.  Upon a cashless exercise of the Option the Company shall withhold from the proceeds of the exercise of the Option any required taxes. If the Options is exercised other than through a cashless exercise Company shall have the right to require Participant to pay the amount of any withholding taxes immediately, upon notification from the Company, before the proceeds from the exercise are delivered to Participant.  Furthermore, the Company may elect to deduct such taxes from any other amounts then payable to Participant in cash or in Shares or from any other amounts payable any time thereafter to Participant to the extent allowed under applicable law. 

5.    TRANSFERABILITY.  The Option may be transferred to and may thereafter be exercised by one or more members of Participant’s immediate family, by a trust established by Participant for the benefit of one or more members of Participant’s immediate family, or by a partnership of Company of which the only owners are members of Participant’s immediate family (the “Transferee(s)”); provided, that no portion of the Option may be transferred until such time as it becomes vested and exercisable pursuant to Section 3(b) hereof, and further provided that no more than fifty percent (50%) of the exercisable Option may be transferred by Participant.  An “immediate family member” shall mean Participant’s spouse, parents, children, grandchildren and the spouses of such parents, children and grandchildren.  Transferee will be subject to all terms and conditions applicable to the Option prior to its transfer.  Transferee may not again transfer the Option.  In order to transfer the Option, Participant must notify the Company in the form of a “Notice of Transfer of Nonqualified Stock Option” (which form may be obtained from the Company’s Legal Department) of such transfer and include the name, address and social security number of Transferee, as well as the relationship of Transferee to Participant. With respect to any transfer of an Option, Participant will be subject to any tax liability due upon exercise of the transferred Option by Transferee.

6.    TERMINATION OF EMPLOYMENT.  Unless otherwise provided for in the ICP, this Agreement or the Employment Agreement as amended from time to time, the Option (whether vested or unvested), to the extent not yet exercised, shall be forfeited immediately upon Participant’s termination of employment with the Company or any of its subsidiaries.  With respect to terminations addressed in the Employment Agreement, the provisions of the Employment Agreement as amended from time to time shall apply and continue to apply, except as set forth in this Section 6, notwithstanding any termination of the Employment Agreement.  Otherwise, the following shall apply:

(a)Retirement.  In the event of an “Approved Early Retirement” or “Normal Retirement” as such terms are defined below, the Option shall continue to vest and be exercisable in accordance with Section 10(f) of the Employment Agreement as amended from time to time; provided that the Option, to the extent it becomes vested in connection with an Approved Early Retirement or Normal Retirement, shall remain exercisable for the later of (1) the three (3) year period immediately following the Approved Early Retirement or Normal Retirement, or (2) the one (1) year period following the date the Option is fully vested but, in each case, not beyond the original term of the Option.  Solely for purposes of the Option, the term “Approved Early Retirement” shall mean the Participant’s voluntary termination of employment with the Company at or after attaining age sixty (60) but prior to attaining age sixty-five (65), and the term “Normal Retirement” shall mean Participant’s voluntary termination of employment with the Company at or after attaining age sixty-five (65), in each case so long as (i) Participant provides at least twelve (12) months’ advance notice to the Committee of his intent to take Approved Early Retirement or Normal Retirement, (ii) Participant fully cooperates with the Company in transitioning his duties during the period between the disclosure to the Committee of his intent to take Approved Early Retirement or Normal Retirement and his retirement date, (iii) Participant continues to be employed by the Company through the Approved Early Retirement or Normal Retirement date, and (iv)  in the case of an Approved Early Retirement, the Committee approves such retirement. 

(b)Disability.  Notwithstanding any contrary provisions of any agreement (including the Employment Agreement), in the event Participant’s employment with the Company and any subsidiary of the Company terminates 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 Option shall vest as of the employment termination date on a pro-rata basis as follows: the Option shall vest with respect to a total number of Shares as of the employment termination date (which is the last day that Participant is employed by the Company and any subsidiary of the Company), equal to (i) the number of Shares subject to the Option on the Grant Date multiplied by the following fraction:  (A) the numerator shall be the whole number of months elapsed as of the employment termination date since the Grant Date and (B) the denominator shall be forty-eight (48), minus (ii) the number of Shares with respect to which the Option vested prior to the employment termination date (whether or not the Option was previously exercised).  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 employment termination date is eight months and five days, the numerator 

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in sub-section (A) above shall be nine.  The Option may be exercised to the extent vested at any time within one (1) year of Participant’s employment termination date but not beyond the original term of the Option. 
7.     REQUIRED ACCEPTANCE OF AWARD.   The Option may not be exercised unless and until the Company has received formal acceptance by Participant of the terms and conditions set forth herein as required by the Company.  Acceptance may be submitted either electronically, if available, or in writing.

8.     NOTICE.   Any notice required to be given hereunder to the Company shall be in writing addressed to the Company, attention Senior Vice President, Chief Human Resources Officer, One CVS Drive, Woonsocket, RI  02895, and any notice required to be given hereunder to Participant shall be addressed to Participant at his address as shown on the records of the Company, subject to the right of either party hereafter to designate in writing to the other some other address.

9.      RECOUPMENT OF OPTION AWARD.  The Option subject to this Agreement under the ICP shall be subject to the terms of the Company’s Recoupment Policy as it exists from time to time, which may require the Participant to immediately repay to the Company the value of any pre-tax economic benefit that he may derive from the grant of the Option hereunder. By accepting this Option grant, Participant acknowledges that a copy of the Company’s Recoupment Policy has been made available for the Participant’s reference.

10.     COMMITTEE AUTHORITY.  The Committee shall have the authority, in its sole discretion, to make any interpretations, determinations, and/or take any administrative actions with respect to the ICP and this Agreement, including whether any post-termination payments to Participant shall be deemed severance pay, the duration of any severance period, and/or whether a termination was without cause.

11.     GOVERNING LAW.   This Nonqualified Stock Option Agreement and the Option evidenced hereby shall be governed by the laws of Delaware, without giving effect to principles of conflict of laws.

12. ACKNOWLEDGEMENT.    This Agreement shall be fully effective only upon the Participant’s formal acceptance of the terms and conditions set forth above as required by the Company.

BY:  ___________________________________________________
       Lisa G. Bisaccia
       Executive Vice President, Chief Human Resources Officer
       CVS Health Corporation

Accepted By:   __________________________________
             Larry J. Merlo

 ____________________________
 Date    

3Exhibit

Exhibit 10.38

CVS HEALTH CORPORATION
BUSINESS PLANNING COMMITTEE
RESTRICTED STOCK UNIT AGREEMENT – ANNUAL GRANT
GRANT DATE:  APRIL __, ____

		
	1.
	Pursuant and subject to the provisions of the 2010 Incentive Compensation Plan, as amended (the “ICP”) of CVS Health Corporation (the “Company”), on the date set forth above (the “Grant Date”), the Company has awarded and hereby evidences the Restricted Stock Unit (“RSU”) Award to the person named below (the “Participant”), subject to the terms and conditions set forth and incorporated in this Restricted Stock Unit agreement (the “Agreement”).  The ICP is hereby made a part hereof and Participant agrees to be bound by all the provisions of the ICP.  Capitalized terms not otherwise defined herein shall have the meaning assigned to such term(s) in the ICP.  Except as expressly provided below in Sections 4 and 7, upon termination of employment the treatment of RSUs granted pursuant to this Agreement shall be governed under and subject to the terms of the Amended and Restated Employment Agreement between the Company and the Participant dated December 22, 2008, as amended December 21, 2012 (the “Employment Agreement”).  On the Grant Date specified above, the Fair Market Value (the “FMV”), which is the Closing Price of the Company’s common stock on the Grant Date, of each RSU equals $XXX.XX.

	
		
	Participant:
	Larry J. Merlo

	Employee ID:
	XXXXXX

	RSUs (#):
	XXXXX

		
	2.
	Each RSU represents a right to a future payment of one share (“Share”) of Common Stock ($0.01 par value) of the Company, subject to required tax withholding.

		
	3.
	(a)    To the extent dividends are paid on Shares while the RSUs remain outstanding and prior to the Settlement Date (as defined below), subject to Section 5(b), Participant shall be entitled to receive a cash payment in an amount equivalent to the cash dividends with respect to the number of Shares covered by the RSUs; provided, however, that no dividends shall be payable with respect to any RSUs forfeited on or prior to the dividend record date.

(b)    Participant hereby agrees that the Company may withhold from the dividend equivalent amounts referred to in Paragraph 3(a) above amounts sufficient to satisfy the applicable tax withholding in respect of such dividend equivalent payments.

		
	4.
	Subject to the terms and conditions of the ICP and this Agreement and subject to Participant’s continued employment, Participant shall be entitled to receive (and the Company shall deliver to Participant) the Shares on the Vesting Date(s) set forth herein, or as soon as administratively practicable, but within 30 days thereafter, (or in the Employment Agreement, as the case may be), unless delivery of the Shares has been deferred in accordance with Section 5 below (the date of such delivery of the Shares being hereafter referred to as the “Settlement Date”).  Each “Vesting Date” , except as otherwise provided in Section 7,  shall be in accordance with the schedule set forth below: 

		
	(a)
	50% of the RSUs shall vest on the third anniversary of the Grant Date (“Tranche A”);

		
	(b)
	50% of the RSUs shall vest on the fifth anniversary of the Grant Date (“Tranche B”);

Provided, however, that a fraction of the Shares in Tranche A and Tranche B shall vest earlier on the effective date of the Participant’s Approved Early Retirement or Normal Retirement (as such terms are defined in the Employment Agreement) so long as:

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	(i)
	Participant provides at least 12 months’ advance notice to the Committee of his intent to take Approved Early Retirement or Normal Retirement, 

		
	(ii)
	Participant fully cooperates with the Company in transitioning his duties during the period between the disclosure to the Committee of his intent to take Approved Early Retirement or Normal Retirement and his retirement date, 

		
	(iii)
	Participant continues to be employed by the Company through the Approved Early Retirement or Normal Retirement date, and 

		
	(iv)
	the Committee approves such vesting terms (such approval not to be unreasonably withheld), and, in the case of an Approved Early Retirement, approves such retirement.  

If the foregoing conditions are satisfied, the number of RSUs that vest on the Approved Early Retirement or Normal Retirement date shall be calculated as follows:  (A) the number of Shares from Tranche A that vest shall be the total number of Shares in Tranche A multiplied by a fraction in which the numerator is the whole number of months worked from the Grant Date through the Approved Early Retirement or Normal Retirement date and the denominator is thirty-six (36);  (B) the number of Shares from Tranche B that vest shall be the total number of Shares in Tranche B multiplied by a fraction in which the numerator is the whole number of months worked from the Grant Date through the Approved Early Retirement or Normal Retirement date and the denominator is 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.  The Vesting Date shall be the effective date of the Participant’s termination of employment as a result of Approved Early Retirement or Normal Retirement. Any Shares represented by RSUs that vest under this Section 4 shall settle in accordance with the original schedule set forth above.

		
	5.
	(a)    In accordance with rules promulgated by the Management Planning and Development Committee of the Board of Directors (the “Committee”), Participant, to the extent eligible under the CVS Health Deferred Stock Compensation Plan, may elect to defer delivery of Shares in settlement of RSUs covered by this Agreement.  Any such deferred delivery date elected by Participant shall become the Settlement Date for purposes of this RSU Agreement.

(b)    Notwithstanding Section 3(a), to the extent dividends are paid on such deferred Shares following the Vesting Date and prior to the Settlement Date, Participant shall be entitled to receive  a number of additional deferred Shares equal to: (x) the amount of dividend per Share as declared by the Company’s Board of Directors on the Company’s common stock multiplied by (y) the number of deferred Shares held by Participant on the record date of such dividend, divided by (z) the FMV of a Share on such dividend payment date.  

		
	6.
	On the Settlement Date the number of Shares to be delivered by the Company to Participant shall be reduced by the smallest number of Shares having a FMV at least equal to the dollar amount of Federal, state and local tax withholding required to be withheld by the Company with respect to such RSUs on such date.  

		
	7.
	(a)     Except as provided in Paragraphs 7(b) – (e) below, if, for any reason other than Approved Early Retirement or Normal Retirement, Participant’s employment with the Company and any subsidiary of the Company terminates, all RSUs not then vested in accordance with Section 4 above shall be treated in accordance with the Employment Agreement.  In the event of a conflict between the Employment Agreement and the provisions in Sections 7(b) – (e) of this Agreement, this Agreement shall control.

(b)    In the event Participant’s employment with the Company and any subsidiary of the Company, terminates for Cause (as defined in the Employment Agreement) or as a result of voluntary termination (as described in Section 10(d) of the Employment Agreement), all RSUs not then vested shall be immediately forfeited. 

		
	(c)
	(i)    In the event Participant’s employment with the Company and any subsidiary of the Company terminates prior to the third anniversary of the Grant Date, 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 RSUs shall vest on a pro rata basis as follows:  the total number of RSUs vested as of the termination date, which is the last date that the Participant is employed by the Company and any subsidiary of the Company, shall be equal to the number of RSUs granted on the Grant Date multiplied by the following fraction:  (A) the numerator shall be the whole number of months elapsed Participant’s termination date and (B) the denominator shall be thirty-six (36).  For purposes of 

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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 termination date is eight months and five days, the numerator in sub-section (A) above shall be nine.  The Vesting Date shall be the effective date of the Participant’s termination of employment. Any Shares represented by RSUs that vest under this section shall settle on the Settlement Date that would have applied under the original schedule set forth in Section 4 of this RSU Agreement.
(ii)    In the event the Participant’s employment with the Company and any subsidiary of the Company terminates on or after the third anniversary, but prior to the fifth anniversary, of the Grant Date, 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 remaining unvested RSUs shall vest on a pro rata basis according to the following formula:  50% of the RSUs granted on the Grant Date multiplied by the following fraction:  (C) the numerator shall be the whole number of months elapsed as of the termination date since the Grant Date as of Participant’s termination date and (D) the denominator shall be sixty (60).  For purposes of this calculation, the number of months in the numerator in sub-section (C) above shall include any partial month in which Participant has worked.  For example, if the time elapsed between the Grant Date and the termination date is fifty-four months and five days, the numerator in sub-section (C) above shall be fifty-five.  The Vesting Date shall be the effective date of the Participant’s termination of employment. Any Shares represented by RSUs that vest under this section shall settle on the Settlement Date that would have applied under the original schedule set forth in Section 4 of this RSU Agreement.

(d)    Notwithstanding the above, (i) the provisions of Section 10 of the ICP shall apply in the event of a Change in Control (as defined in such Section 10) and (ii) the provisions of Section 7(e)(iv) of the ICP shall apply.

(e)    For purposes of this Section 7, transfer of Participant’s employment from the Company to a subsidiary of the Company, transfer among or between subsidiaries of the Company, or transfer from a subsidiary of the Company to the Company shall not be treated as termination of employment.

		
	8.
	An RSU does not represent an equity interest in the Company and carries no voting rights.  Participant shall have no rights of a shareholder with respect to the RSUs until the Shares have been delivered to Participant.

		
	9.
	Neither the execution and delivery hereof nor the granting of the award evidenced hereby shall constitute or be evidence of any agreement or understanding, express or implied, on the part of the Company or its subsidiaries to employ Participant for any specific period.

10. Any notice required to be given hereunder to the Company shall be in writing addressed to:  CVS Health Corporation, Senior Vice President, Chief Human Resources Officer, One CVS Drive, Woonsocket, RI 02895. Any notice required to be given hereunder to Participant shall be addressed to such Participant at the address shown on the records of the Company, subject to the right of either party hereafter to designate, in writing, to the other, some other address.

11. All decisions and interpretations made by the Board of Directors or the Committee with regard to any question arising hereunder or under the ICP shall be binding and conclusive on all persons.  In the event of any inconsistency between the terms hereof and the provisions of the ICP, the ICP shall govern. 

12. By accepting this Award, Participant acknowledges that a copy of the ICP has been made available by the Company for Participant’s reference and agrees to be bound by the terms and conditions set forth in this Agreement and the ICP as in effect from time to time.

13. By accepting this Award, Participant further acknowledges that the Federal securities laws and/or Company’s policies regarding trading in its securities may limit or restrict Participant’s right to trade Shares, including without limitation, sales of Shares acquired in connection with RSUs.  Participant agrees to comply with such Federal securities law requirements and Company policies as such laws and policies may be amended from time to time.

14.  The Company intends that this Agreement not violate any applicable provision of, or result in any additional tax or penalty under, Section 409A of the Internal Revenue Code of 1986 (the “Code”), as amended, and that to the extent any provisions of this Agreement do not comply with Code Section 409A the Company will make such 

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changes in order to comply with Code Section 409A to the extent it considers reasonable.  In all events, the provisions of CVS Health Corporation’s 409A Universal Definitions Document are hereby incorporated by reference and to the extent required to avoid a violation of the applicable rules under all Section 409A by reason of Section 409A(a)(2)(B)(i) of the Code, payment of any amounts subject to Section 409A of the Code shall be delayed until the first business day of the seventh month immediately following the employment termination date.  For purposes of any provision of this Agreement providing for the payment of any amounts or benefits upon or following a termination of employment, references to a “termination of employment” (and corollary terms) shall be construed to refer to a “separation from service” (within the meaning of Treas. Reg. Section 1.409A-1(h)). Notwithstanding the foregoing, the Company makes no representations as to the tax treatment or consequences of any payment made hereunder, and Participant, by accepting this Award, acknowledges that Participant shall be solely responsible for same.

15.  The Award subject to this RSU Agreement under the ICP shall be subject to the terms of the Company’s Recoupment Policy as it exists from time to time, which may require the Participant to immediately repay to the Company the value of any pre-tax economic benefit that he  may derive from the Award. By accepting this Award Participant acknowledges that the Company’s Recoupment Policy has been made available for the Participant’s reference.

16. This Agreement shall be governed by the laws of Delaware, without giving effect to its choice of law provisions.

17.  This Agreement shall be fully effective only upon the Participant’s formal acceptance of the terms and conditions set forth above as required by the Company.

By:      __________________________________________________
Lisa G. Bisaccia
Executive Vice President, Chief Human Resources Officer
CVS Health Corporation

Accepted By:  _____________________________
 Larry J. Merlo
    
_____________________________          
Date

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