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Exhibit 10.1
CVS CORPORATION
EXECUTIVE RETENTION PROGRAM
1. PURPOSE. The purpose of the CVS Executive Retention Program (the "Program")
is to induce selected executives to remain with CVS Corporation ("CVS") by means
of special awards to be granted one-half in shares of CVS stock and one-half in
cash.
2. ADMINISTRATION. The Program shall be administered by the Compensation
Committee (the "Committee") of the Board of Directors (the "Board") of CVS. The
Committee shall have full and final authority to provide award agreements and
rules and regulations for the administration of the Program, construe and
interpret the provisions of the Program and award agreement, and to make all
other declaration and decisions as the Committee may deem necessary or valuable
for the administration of the Plan.
3. ELIGIBILITY. Executives employed by CVS who are selected by the Committee
shall be eligible to receive an award under this Program.
4. AWARDS. The Committee shall determine the persons (a "Participant") to whom
awards shall be made, the size of each Participant's award and the terms and
conditions relating to such award, including, but not limited to, vesting
requirements and the effect of the death of the Participant.
Except as otherwise determined by the Committee, as soon as practicable
after an award has vested the cash part of each award shall be paid and the CVS
stock part shall be settled by the issuance of new share certificates reflecting
the absence of any forfeiture provisions, provided, however, that if the
Participant is not employed by CVS of an affiliated entity on the date of such
payment the entire award shall be forfeited, including any shares previously
issued at the time of grant. Upon the occurrence of a change in control of CVS,
as defined in the CVS Corporation 1997 Incentive Compensation Plan (a "Change in
Control"), all awards shall be immediately 100% vested and nonforfeitable and
shall be paidout as soon as possible.
5. MISCELLANEOUS
(a) COMPLIANCE WITH LEGAL AND OTHER REQUIREMENTS. CVS may, to the
extent deemed necessary or advisable by the Committee, postpone the issuance or
delivery of CVS stock or payment of other benefits under any award until
completion of such registration or qualification of such stock or other required
action under any federal or state law, rule or regulation, listing or other
required action with respect to any stock exchange or automated quotation system
upon which such stock are listed or quoted, or compliance with any other
obligation or CVS, as the Committee may consider appropriate, and may require
any Participant to make such representations, furnish such information and
comply with or be subject to such other conditions as it may consider
appropriate in connection with the issuance or delivery of stock or payment of
other benefits in compliance with applicable laws, rules, and regulations,
listing requirements, or other obligations. The foregoing notwithstanding, in
connection with a Change in Control, CVS shall take or cause to be taken no
action, and shall undertake or permit to arise no legal or contractual
obligation, that results or would result in any postponement of the issuance or
delivery of stock or payment of benefits under any award or the imposition of
any other conditions on such issuance, delivery or payment, to the extent that
such postponement or other condition would represent a greater burden on a
Participant than existed on the 90th day preceding the Change in Control.
(b) LIMITS ON TRANSFERABILITY; BENEFICIARIES. No award or other right
or interest of a Participant under the Program shall be pledged, hypothecated or
otherwise encumbered or subject to any lien, obligation or liability of such
Participant to any party (other than CVS or a subsidiary), or assigned or
transferred by such Participant otherwise than by will or the laws of descent
and distribution or to a beneficiary upon the death of a Participant, and such
awards or rights that may be exercisable shall be exercised during the lifetime
of the Participant only by
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the Participant or his or her guardian or legal representative. A beneficiary,
or other person claiming any rights under the Program from or through any
Participant shall be subject to all terms and conditions of the Program and any
award agreement applicable to such Participant, except as otherwise determined
by the Committee, and to any additional terms and conditions deemed necessary or
appropriate by the Committee.
(c) ADJUSTMENTS. In the event that any dividend or other distribution
(whether in the form of cash, stock, or other property), recapitalization,
forward or reverse split, reorganization, merger, consolidation, spin-off,
combination, repurchase, share exchange, liquidation, dissolution or other
similar corporate transaction or event affects the stock such that an adjustment
is determined by the Committee to be appropriate under the Program, then the
Committee shall, in such manner as it may deem equitable, adjust the number and
kind of shares of stock subject to or deliverable in respect of outstanding
Awards.
(d) TAXES. CVS and any subsidiary is authorized to withhold from any
award granted, any payment relating to an award under the Plan, including from a
distribution or stock, or any payroll or other payment to a Participant, amounts
of withholding and other taxes due or potentially payable in connection with any
transaction involving an award, and to take such other action as the Committee
may deem advisable to enable CVS and Participants to satisfy obligations for the
payment of withholding or receive stock or other property and to make cash
payments in respect thereof in satisfaction of a Participant's tax obligations,
either on a mandatory or elective basis is the discretion of the Committee.
(e) CHANGES TO THE PLAN AND AWARDS. The Board may amend, alter, suspend
discontinue or terminate the Program or the Committee's authority to grant
awards under the Program without the consent of Participants, except that
without the consent of an affected Participant, no such Board action may
materially and adversely affect the rights of such Participant under any
previously granted and outstanding award. The Committee may waive any conditions
or rights under, or amend, alter, suspend, discontinue or terminate any award
theretofore granted and any award agreement relating thereto, except as
otherwise provided in the Program, provided that, without the consent of an
affected Participant, no such Committee action may materially and adversely
affect the rights of such Participant under such award.
(f) LIMITATION ON RIGHTS CONFERRED UNDER PROGRAM. Neither the Program
nor any action taken hereunder shall be construed as (i) giving any person or
Participant the right to continue as a Participant or in the employ or service
of CVS or a subsidiary, (ii) interfering in any way with the right of CVS or a
subsidiary to terminate any Participant's employment of service at any time,
(iii) giving a Participant any claim to be granted any award under the Program
or to be treated uniformly with other Participants and employees, or (iv)
conferring on a Participant any of the rights of a shareholder of CVS and until
the Participant is duly issued or transferred shares of stock in accordance with
the terms of an award.
(g) UNFUNDED STATUS OF AWARDS; CREATION OF TRUSTS. The Program intended to
constitute an "unfunded" plan for incentive and deferred compensation. With
respect to any payments not yet made to a Participant or obligation to deliver
stock pursuant to an award, nothing contained in any award shall give any such
Participant any rights that are greater than those of a general creditor of CVS,
provided that the Committee may authorize the creation of trusts and deposit
therein cash, stock, other awards or other property, or make other arrangements
to meet CVS' obligations under the Program. Such trusts or other arrangements
shall be consistent with the "unfunded" status of the Program unless the
Committee otherwise determines with the consent of each affected Participant.
(h) Any shares of stock to be issued in connection with an award may, in
the discretion of the Committee, be issued pursuant to the CVS Corporation 1997
Incentive Compensation Plan.
(i) GOVERNING LAW. The validity, construction and effect of the Program,
any rules and regulations under the Program, and any award agreement shall be
determined in accordance with the Delaware General Corporation Law, without
giving effect to principles of conflicts of laws, and applicable federal law.
