8-K

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

Date of report (Date of earliest event reported): January 16, 2007

CVS CORPORATION

(Exact Name of Registrant

as Specified in Charter)

Delaware

(State or Other Jurisdiction of Incorporation)

001-01011	050494040
(Commission File Number)	(IRS Employer Identification No.)
One CVS Drive
Woonsocket, Rhode Island	02895
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code: (401) 765-1500

     Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Section 8 - Other Events

      Item 8.01 Other Events

           CVS Corporation, a Delaware corporation (“CVS”), entered into an Agreement and Plan of Merger (as the same was amended on January 16, 2006 and as the same may be amended going forward in accordance with its terms, the “Merger Agreement”) dated November 1, 2006 with Caremark Rx, Inc., a Delaware corporation (“Caremark”), and Twain MergerSub Corp., a Delaware corporation and wholly owned subsidiary of CVS (“Merger Sub”). On January 16, 2007, CVS granted Caremark a waiver under the Merger Agreement to, and Caremark agreed that it will, effect a special cash dividend in an amount equal to $2.00 per outstanding share of Caremark common stock. Such special cash dividend will be declared by Caremark prior to the effective time of the merger and will be paid at or immediately following the effective time of the merger. Payment of this special cash dividend is conditioned on the completion of the merger. CVS and Caremark also agreed that, after the completion of the combination of CVS and Caremark, the combined company will effect an accelerated share repurchase transaction whereby the combined company will retire 150 million shares of common stock of the combined company (approximately 9.8% of the combined company’s pro-forma outstanding shares after giving effect to the merger).

      Item 9.01 Financial Statements and Exhibits

        Exhibit No.

       99.1       Waiver Agreement dated as of January 16, 2007 between CVS Corporation and Caremark Rx, Inc. with respect to the Agreement and Plan of Merger dated as of November 1, 2006 among CVS Corporation, Caremark Rx, Inc. and Twain MergerSub Corp., as amended

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

		CVS CORPORATION
Date:	January 18, 2007	By:	/s/ Douglas A. Sgarro
			Name:	Douglas A. Sgarro
			Title:	Executive Vice President
				and Chief Legal Officer

EX-99.1

EXHIBIT 99.1

[CVS Letterhead]

January 16, 2007

Caremark Rx, Inc.
211 Commerce Street
Suite 800
Nashville, TN 37201
Attention: General Counsel
Facsimile No.: (615) 743-6611

Re: Agreement and Plan of Merger dated as of November 1, 2006 (as the same has been amended on the date of this waiver and the same may be hereafter amended in accordance with its terms, the “Merger Agreement”) among Caremark Rx, Inc., a Delaware corporation (“Caremark”), CVS Corporation, a Delaware corporation (“CVS”), and Twain MergerSub Corp., a Delaware corporation and a wholly owned subsidiary of CVS (“MergerSub”)

Ladies & Gentlemen:

     CVS hereby grants a waiver to Caremark from the restrictions set forth in Section 6.01(b) of the Merger Agreement to permit Caremark to pay a one-time, extraordinary cash dividend to holders of record (collectively, the “Relevant Record Holders”) of Caremark Stock in the amount of $2.00 per share of Caremark Stock held by each such holder on the applicable record date (as determined in accordance with applicable law and the rules of the New York Stock Exchange, but in all events before the Effective Time) (the “Conditional Dividend Record Date”), which dividend (the “Conditional Extraordinary Dividend”) shall be declared prior to the Caremark Stockholder Meeting, but shall only become payable, and such payment shall be conditioned, upon the occurrence of the Effective Time.

In consideration of this waiver, Caremark hereby agrees to declare, and Caremark shall declare, the Conditional Extraordinary Dividend at such time as determined by the Caremark board of directors after the date of this waiver, but in all events before the Caremark Stockholder Meeting (which dividend shall be paid on and after the Effective Time), in each case on the terms and subject to the conditions set forth in the preceding paragraph. Furthermore, the parties hereto agree that, on and after the Effective Time, each Relevant Record Holder shall be entitled to receive the Conditional Extraordinary Dividend in respect of each share of

Caremark Stock held by each such holder on the Conditional Dividend Record Date, in addition to any Merger Consideration that such Relevant Record Holder shall be entitled to receive in respect of each such share of Caremark Stock under the Merger Agreement pursuant to the Merger. For the sake of clarity, nothing in this paragraph and no action taken pursuant to this paragraph, shall give rise to any adjustment to the Exchange Ratio pursuant to Section 2.10 of the Merger Agreement.

     Except to the limited extent set forth in this waiver and agreement, the restrictions set forth in Section 6.01(b) of the Merger Agreement shall remain in full force and effect and the Merger Agreement shall remain unaffected hereby. CVS intends for this waiver to be effective for purposes of Section 11.03(a) of the Merger Agreement.

     Furthermore, the parties hereto have agreed that, as promptly as practicable after the Effective Time, CVS will execute an accelerated share repurchase transaction on customary terms, whereby CVS will retire 150 million shares of CVS Stock. To implement this transaction, CVS will enter into an agreement with one or more financial institutions to purchase from each of them, and pay each of them for, the shares of CVS Stock to be retired. It is anticipated that the agreement with the financial institutions will provide for a purchase price adjustment mechanism customary for transactions of this nature. The purchase price adjustment in such agreement may be subject to limits on the amounts that may be owed by CVS or the financial institutions or both. CVS will borrow the funds necessary to consummate this transaction. The terms of any such borrowing shall be customary for transactions of this type. For the sake of clarity, nothing in this paragraph and no action contemplated by this paragraph, shall give rise to any adjustment to the Exchange Ratio pursuant to Section 2.10 of the Merger Agreement or give rise to a breach of any of the covenants in Section 7.01.

     Article 11 of the Merger Agreement (other than Section 11.04 thereof) is hereby incorporated by reference into this waiver and agreement and shall apply to this waiver and agreement equally as if set forth fully herein. All capitalized terms that are used, but not defined, in this Amendment shall have the meanings assigned to those terms in the Merger Agreement. All capitalized terms that are used, but not defined, in this Amendment shall have the meanings assigned to those terms in the Merger Agreement. For the avoidance of doubt, nothing in this waiver, including the declaration and payment of the Conditional Extraordinary Dividend, shall limit or in any way affect the right of a Caremark stockholder to be paid any regular quarterly cash dividends declared by Caremark as permitted by Section 6.1(b) of the Merger Agreement (or by CVS after the Effective Time) to which such Caremark stockholder would otherwise be entitled.

*     *     *     *     *

     This waiver shall be effective on the date first set forth above, subject to the conditions and limitations expressly set forth herein. If you agree with the foregoing, please indicate your agreement by signing in the place indicated below.

Sincerely,
CVS CORPORATION
By:	/s/ David B. Rickard
	Name:	David B. Rickard
	Title:	Executive Vice President, Chief Financial Officer and Chief Administrative Officer

Accepted and agreed as of the date first written above:

CAREMARK RX INC.
By:	/s/ Howard A. McLure
	Name:	Howard A. McLure
	Title:	Senior Executive Vice President and Chief Operating Officer

cc:	King & Spalding LLP
	1185 Avenue of the Americas
	New York, NY 10036-4003
	Attention: Michael O’Brien
	Tracey A. Zaccone
	Facsimile No.: (212) 556-2222