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):  May 22, 2007
CVS CAREMARK CORPORATION
(Exact Name of Registrant as Specified in Charter)
	Delaware
	(State or Other Jurisdiction of Incorporation)
001-01011		05-0494040
(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
(Former Name or Former Address, if Changed Since Last Report)

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))

Item 1.01. Entry into a Material Definitive Agreement.

On May 22, 2007, CVS Caremark Corporation, a Delaware corporation (the “Corporation”), entered into an Underwriting Agreement (the “Notes Underwriting Agreement”) with Lehman Brothers, Inc., Morgan Stanley & Co. Incorporated, Banc of America Securities LLC, BNY Capital Markets, Inc. and Wachovia Capital Markets, LLC, as representatives of the several underwriters named in Schedule 1 thereto (the “Underwriters”), pursuant to which the Corporation agreed to issue and sell to the Underwriters $4.5 billion of its Notes, consisting of $1,750,000,000 aggregate principal amount of its Floating Rate Senior Notes due June 1, 2010, $1,750,000,000 aggregate principal amount of its 5.750% Senior Notes due June 1, 2017 and $1,000,000,000 aggregate principal amount of its 6.250% Senior Notes due June 1, 2027 (collectively, the “Notes”).  Also on May 22, 2007, the Corporation entered into an Underwriting Agreement (the “ECAPS^SM Underwriting Agreement”) with Lehman Brothers, Inc., Morgan Stanley & Co. Incorporated , Banc of America Securities LLC, BNY Capital Markets, Inc. and Wachovia Capital Markets, LLC, as representatives of the Underwriters pursuant to which the Corporation agreed to issue and sell to the Underwriters $1.0 billion aggregate principal amount of its 6.302% Enhanced Capital Advantaged Preferred Securities due June 1, 2062 (the “ECAPS^SM” and, together with the Notes, the “Securities”).  The Securities were offered pursuant to the Corporation’s Registration Statement on Form S-3, File No. 333-143110, dated May 21, 2007.

From time to time, certain of the Underwriters and/or their respective affiliates have directly and indirectly engaged in various financial advisory, investment banking and commercial banking services for the Corporation and their affiliates, for which they received customary compensation, fees and expense reimbursement.  In addition, certain of the Underwriters and their affiliates are lenders under the Bridge Credit Facility and will receive a portion of the net proceeds of the offerings used to reduce outstanding debt under the Bridge Credit Facility.

The closing of the sale of the Securities will occur on May 25, 2007. The net proceeds to the Corporation from the sale of the Securities, after deducting the Underwriters’ discount and the estimated offering expenses payable by the Company, are approximately $5.4 billion. Copies of the Notes Underwriting Agreement and the ECAPS^SM Underwriting Agreement are filed as Exhibits 1.1 and 1.2, respectively, to this report on Form 8-K and shall be incorporated by reference into the Registration Statement.

The Notes will be governed by and issued pursuant to a Senior Indenture dated August 15, 2006 between the Corporation and The Bank of New York, as trustee. The Corporation may issue additional senior debt securities from time to time pursuant to the Senior Indenture. The form of Senior Indenture was filed as Exhibit 4.4 to the Registration Statement and shall be incorporated by reference into this report on Form 8-K. The form of the Notes was filed as Exhibit 4.5 to the Registration Statement and shall be incorporated by reference into this report on Form 8-K.

The ECAPS^SM will be governed and issued pursuant to a Subordinated Indenture, as supplemented by the First Supplemental Indenture (the “First Supplemental Indenture”), each dated as of May 25, 2007, between the Corporation and The Bank of New York Trust Company, N.A., as trustee.  The Corporation may issue additional subordinated debt securities from time to time pursuant to the Subordinated Indenture. The form of Subordinated Indenture was filed as Exhibit 4.6 to the Registration Statement and shall be incorporated by reference into this report on Form 8-K.  The form of First Supplemental Indenture is being filed as Exhibit 4.1 to this report on Form 8-K and shall be incorporated by reference into the Registration Statement.  The Corporation is also filing the form of the ECAPS^SM as Exhibit 4.2 to this report on Form 8-K and is hereby causing this exhibit to be incorporated by reference into the Registration Statement.

In connection with the issuance of the ECAPS^SM, Davis Polk & Wardwell rendered an opinion regarding certain tax matters.  A copy of that opinion is attached as Exhibit 8.1 to this report on Form 8-K.

Also in connection with the issuance of the ECAPS^SM, the Corporation entered into a Replacement Capital Covenant, dated as of May 25, 2007 (the “RCC”) whereby the Corporation agreed for the benefit of certain of its debtholders named therein that neither it nor any of its subsidiaries would repay, redeem or purchase, as applicable, the ECAPS^SM before June 1, 2047, unless during the applicable measurement period with respect to such repayment, redemption or purchase the Corporation and its subsidiaries shall have issued specified amounts of certain replacement capital securities on the terms and conditions set forth therein. A copy of the RCC is being filed as Exhibit 99.1 to this report on Form 8-K and shall be incorporated herein by reference.

Item 9.01  Financial Statements and Exhibits

(d)   Exhibits

Exhibit No.	Document
1.1	Underwriting Agreement dated May 22, 2007 between CVS Caremark Corporation and Lehman Brothers, Inc., Morgan Stanley & Co. Incorporated, Banc of America Securities LLC, BNY Capital Markets, Inc. and Wachovia Capital Markets, LLC, as representatives of the several underwriters named in Schedule 1 thereto.
1.2	Underwriting Agreement dated May 22, 2007 between CVS Caremark Corporation and Lehman Brothers, Inc., Morgan Stanley & Co. Incorporated, Banc of America Securities LLC, BNY Capital Markets, Inc. and Wachovia Capital Markets, LLC, as representatives of the several underwriters named in Schedule 1 thereto.
4.1	Form of First Supplemental Indenture between CVS Caremark Corporation and The Bank of New York Trust Company, N.A., a national banking association
4.2	Form of the ECAPSSM (included in Exhibit 4.1)
8.1	Tax Opinion
99.1	Replacement Capital Covenant, dated as of May 21, 2007

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 CAREMARK CORPORATION
Date:	May 25, 2007	By:	/s/ David B. Rickard
			Name:	David B. Rickard
			Title:	Executive Vice President, Chief Financial Officer and Chief Administrative Officer

EXHIBIT INDEX

Exhibit No.	Document
1.1	Underwriting Agreement dated May 22, 2007 between CVS Caremark Corporation and Lehman Brothers, Inc., Morgan Stanley & Co. Incorporated, Banc of America Securities LLC, BNY Capital Markets, Inc. and Wachovia Capital Markets, LLC, as representatives of the several underwriters named in Schedule 1 thereto. *
1.2	Underwriting Agreement dated May 22, 2007 between CVS Caremark Corporation and Lehman Brothers, Inc., Morgan Stanley & Co. Incorporated, Banc of America Securities LLC, BNY Capital Markets, Inc. and Wachovia Capital Markets, LLC, as representatives of the several underwriters named in Schedule 1 thereto.*
4.1	Form of First Supplemental Indenture between CVS Caremark Corporation and The Bank of New York Trust Company, N.A., a national banking association.*
4.2	Form of the ECAPSSM (included in Exhibit 4.1).*
8.1	Tax Opinion.
99.1	Replacement Capital Covenant, dated as of May 21, 2007.

*Incorporated by reference to CVS Caremark Corporation’s Registration Statement on Form S-3, File No. 333-143110, filed on May 21, 2007.

EX-1.1

Exhibit 1.1

Execution Copy

CVS CAREMARK CORPORATION

$1,750,000,000 Floating Rate Senior Notes due June 1, 2010

$1,750,000,000 5.750% Senior Notes due June 1, 2017

$1,000,000,000 6.250% Senior Notes due June 1, 2027

Underwriting Agreement

May 22, 2007

LEHMAN BROTHERS INC.

MORGAN STANLEY & CO. INCORPORATED

BANC OF AMERICA SECURITIES LLC

BNY CAPITAL MARKETS, INC. AND

WACHOVIA CAPITAL MARKETS, LLC

As Representatives of the several Underwriters

named in Schedule I hereto

c/o Lehman Brothers Inc.

745 Seventh Avenue

New York, New York 10019

Ladies and Gentlemen:

CVS Caremark Corporation, a Delaware corporation (the “Company”), proposes to issue and sell $1,750,000,000 aggregate principal amount of its Floating Rate Senior Notes due 2010 (the “Floating Rate Notes”), $1,750,000,000 aggregate principal amount of its 5.750% Senior Notes due 2017 (the “2017 Notes”) and $1,000,000,000 aggregate principal amount of its 6.250% Senior Notes due 2027 (the “2027 Notes” and, together with the Floating Rate Notes and the 2017 Notes, the “Notes”) to the several underwriters named on Schedule I hereto (the “Underwriters”), for which Lehman Brothers Inc., Morgan Stanley & Co. Incorporated, Banc of America Securities LLC, BNY Capital Markets, Inc. and Wachovia Capital Markets, LLC are acting as representatives (the “Representatives”). The Notes will (i) have terms and provisions which are summarized in the Disclosure Package as of the Applicable Time and the Prospectus dated as of the date hereof (each as defined in Section 1(a) hereof) and (ii) be issued pursuant to an Indenture dated as of August 15, 2006 (the “Indenture”) between the Company and The Bank of New York Trust Company, N.A., as Trustee (the “Trustee”). This agreement (this “Agreement”) is to confirm the agreement concerning the purchase of the Notes from the Company by the Underwriters.

1. Representations, Warranties and Agreements of the Company. The Company represents and warrants to, and agrees with, each Underwriter that:

(a) An “automatic shelf registration statement” (as defined in Rule 405 under the Securities Act of 1933, as amended (the “Securities Act”)) on Form S-3 in respect of the Notes (File No. 333-143110) (i) has been prepared by the Company in conformity with the requirements of the Securities Act, and the rules and regulations (the “Rules and Regulations”) of the Securities and Exchange Commission (the “Commission”) thereunder, (ii) has been filed with the Commission under the Securities Act not earlier than the date that is three years prior to the Closing Date (as defined in Section 3 hereof) and (iii) upon its filing with the Commission, automatically became and is effective under the Securities Act. Copies of such registration statement and any amendment thereto (excluding exhibits to such registration statement but including all documents incorporated by reference in each prospectus contained therein) have been delivered by the Company to the Representatives; and no other document with respect to such registration statement or any such document incorporated by reference therein has heretofore been filed or transmitted for filing with the Commission. For purposes of this Agreement, the following terms have the specified meanings:

“Applicable Time” means 5:00 p.m. (New York City time) on the date of this Agreement;

“Base Prospectus” means the base prospectus filed as part of the Registration Statement, in the form in which it has most recently been amended on or prior to the date hereof, relating to the Notes;

“Disclosure Package” means, as of the Applicable Time, the most recent Preliminary Prospectus, together with each Issuer Free Writing Prospectus filed or used by the Company on or before the Applicable Time and identified on Schedule II hereto, other than a road show that is an Issuer Free Writing Prospectus under Rule 433 of the Rules and Regulations;

“Effective Date” means any date as of which any part of the Registration Statement or any post-effective amendment thereto relating to the Notes became, or is deemed to have become, effective under the Securities Act in accordance with the Rules and Regulations (including pursuant to Rule 430B of the Rules and Regulations);

“Final Term Sheet” means the term sheet prepared pursuant to Section 4(a) of the Agreement and substantially in the form attached in Schedule III hereto;

“Issuer Free Writing Prospectus” means each “free writing prospectus” (as defined in Rule 405 of the Rules and Regulations) prepared by or on behalf of the Company or used or referred to by the Company in connection with the offering of the Notes, including the Final Term Sheet;

“Preliminary Prospectus” means any preliminary prospectus relating to the Notes, including the Base Prospectus and any preliminary prospectus supplement thereto, included in the Registration Statement or as filed with the Commission pursuant to Rule 424(b) of the Rules and Regulations and provided to the Representatives for use by the Underwriters;

“Prospectus” means the final prospectus relating to the Notes, including the Base Prospectus and the final prospectus supplement thereto relating to the Notes, as filed with the Commission pursuant to Rule 424(b) of the Rules and Regulations and provided to the Representatives for use by the Underwriters; and

“Registration Statement” means, collectively, the various parts of the above-referenced registration statement, each as amended as of the Effective Date for such part, including any Preliminary Prospectus and the Prospectus, all exhibits to such registration statement and all documents incorporated by reference therein.

Any reference to the “most recent Preliminary Prospectus” will be deemed to refer to the latest Preliminary Prospectus included in the Registration Statement or filed pursuant to Rule 424(b) of the Rules and Regulations prior to or on the date hereof (including, for purposes of this Agreement, any documents incorporated by reference therein prior to or on the date of this Agreement). Any reference to any Preliminary Prospectus or the Prospectus will be deemed to refer to and include any documents incorporated by reference therein pursuant to Form S-3 under the Securities Act as of the date of such Preliminary Prospectus or the Prospectus, as the case may be. Any reference to any amendment or supplement to any Preliminary Prospectus or the Prospectus will be deemed to refer to and include any document filed under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), after the date of such Preliminary Prospectus or the Prospectus, as the case may be, and incorporated by reference in such Preliminary Prospectus or the Prospectus, as the case may be; and any reference to any amendment to the Registration Statement will be deemed to include any annual report of the Company on Form 10-K filed with the Commission pursuant to Section 13(a) or 15(d) of the Exchange Act after the Effective Date that is incorporated by reference in the Registration Statement.

(b) The Commission has not issued any order preventing or suspending the effectiveness of the Registration Statement or preventing or suspending the use of any Preliminary Prospectus, any Issuer Free Writing Prospectus or the Prospectus; and no proceeding for any such purpose or pursuant to Section 8A of the Securities Act against the Company or related to the offering has been instituted or, to the Company’s knowledge, threatened by the Commission. The Commission has not issued any order directed to any document incorporated by reference in the most recent Preliminary Prospectus or the Prospectus, and no proceeding has been instituted

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or, to the Company’s knowledge, threatened by the Commission with respect to any document incorporated by reference in the most recent Preliminary Prospectus or the Prospectus. The Commission has not notified the Company of any objection to the use of the form of the Registration Statement.

(c) The Company is a “well-known seasoned issuer” (as defined in Rule 405 of the Rules and Regulations) and has not been, and continues not to be, an “ineligible issuer” (as defined in Rule 405 of the Rules and Regulations), in each case at all times relevant under the Securities Act in connection with the offering of the Notes.

(d) The Registration Statement conformed on the Effective Date and any amendment to the Registration Statement filed after the date hereof will conform, in all material respects, to the requirements of the Securities Act and the Rules and Regulations. The most recent Preliminary Prospectus conforms on the date hereof, and the Prospectus, and any amendment or supplement thereto, will conform as of its date and as of the Closing Date, in all material respects, to the requirements of the Securities Act and the Rules and Regulations. The documents incorporated by reference in the most recent Preliminary Prospectus or the Prospectus conformed, and any further documents so incorporated will conform, when filed with the Commission, in all material respects to the requirements of the Exchange Act or the Securities Act, as applicable, and the Rules and Regulations; and. no such documents have been filed with the Commission since the close of business of the Commission on the Business Day immediately prior to the date hereof.

(e) The Registration Statement does not, as of the date hereof, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading; provided, however, that no representation or warranty is made as to information contained in or omitted from the Registration Statement in reliance upon and in conformity with written information furnished to the Company through the Representatives by or on behalf of any Underwriter specifically for inclusion therein (which information is specified in Section 12 hereof).

(f) The Disclosure Package did not, as of the Applicable Time, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that no representation or warranty is made as to information contained in or omitted from the Disclosure Package in reliance upon and in conformity with written information furnished to the Company through the Representatives by or on behalf of any Underwriter specifically for inclusion therein (which information is specified in Section 12 hereof).

(g) The Prospectus, and any amendment or supplement thereto, will not, as of its date and on the Closing Date, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that no representation or warranty is made as to information contained in or omitted from the Prospectus in reliance upon and in conformity with written information furnished to the Company through the Representatives by or on behalf of any Underwriter specifically for inclusion therein (which information is specified in Section 12 hereof).

(h) The documents incorporated by reference in any Preliminary Prospectus or the Prospectus did not, and any further documents incorporated by reference therein will not, when filed with the Commission, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.

(i) The Company has been duly incorporated and is an existing corporation in good standing under the laws of the State of Delaware, with corporate power and authority to own its properties and conduct its business as described in the most recent Preliminary Prospectus and the Prospectus; and the Company is duly qualified to do business as a foreign corporation in good standing in all other jurisdictions in which its ownership or lease of property or the conduct of its business requires such qualification, except where the failure to be so qualified or be in good standing would not have a material adverse effect on the financial condition, business, properties, results of operations or affairs of the Company and its subsidiaries taken as a whole (a “Material Adverse Effect”).

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(j) Each subsidiary of the Company that is material to the Company and its subsidiaries taken as a whole (collectively, the “Significant Subsidiaries”) is listed on Exhibit A hereto, together with its jurisdiction of organization and the beneficial ownership of the Company therein. Each Significant Subsidiary has been duly organized and is an existing corporation or limited liability company in good standing under the laws of the jurisdiction of its formation, with corporate power and authority to own its properties and conduct its business as described in the most recent Preliminary Prospectus and the Prospectus; and each Significant Subsidiary of the Company is duly qualified to do business as a foreign entity in good standing in all other jurisdictions in which its ownership or lease of property or the conduct of its business requires such qualification, except where the failure to be so qualified or in good standing would not have a Material Adverse Effect; all of the issued and outstanding capital stock or membership interests of each Significant Subsidiary of the Company has been duly authorized and validly issued and is fully paid and nonassessable; and the capital stock of each Significant Subsidiary owned by the Company, directly or through subsidiaries, is owned, except to the extent set forth in Schedule B hereto, free and clear of any mortgage, pledge, lien, security interest, claim, encumbrance or defect of any kind.

(k) This Agreement has been duly authorized, executed and delivered by the Company.

(l) The Indenture has been duly authorized by the Company and, assuming due authorization by the Trustee, when duly executed and delivered by the Company and the Trustee, will constitute a valid and legally binding obligation of the Company, enforceable against the Company in accordance with its terms, except to the extent that enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to creditors’ rights and remedies generally and by general principles of equity and concepts of reasonableness (regardless of whether enforcement is sought in a proceeding at law or in equity); and the Indenture conforms in all material respects to the description thereof contained in the most recent Preliminary Prospectus and the Prospectus.

(m) The Notes have been duly authorized by the Company, and when executed, authenticated and delivered and paid for as provided in this Agreement and the Indenture, the Notes will have been duly executed, authenticated, issued and delivered and will constitute valid and legally binding obligations of the Company entitled to the benefits of the Indenture and enforceable against the Company in accordance with their terms, except to the extent that enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to creditors’ rights and remedies generally and by general principles of equity and concepts of reasonableness (regardless of whether enforcement is sought in a proceeding at law or in equity); and the Notes conform in all material respects to the description thereof contained in the Disclosure Package and the Prospectus.

(n) The execution, delivery and performance of the Indenture and this Agreement and the issuance and sale of the Notes will not require the consent, approval, authorization, or order of, or filing with, any governmental agency or body or any court (except such as have been obtained or made and such as may be required under state securities laws).

(o) The execution, delivery and performance of the Indenture and this Agreement and the issuance and sale of the Notes and compliance with the terms and provisions thereof will not conflict with or result in a breach or violation of any of the terms and provisions of, and do not and will not constitute a default (or an event which with the giving of notice or the lapse of time or both would constitute a default) under, or result in the creation or imposition of any lien, charge or encumbrance upon any material assets or properties of the Company or any of its subsidiaries under (A) the charter, by-laws or other organizational documents of the Company or any Significant Subsidiary, (B) any statute, any rule, regulation, order or decree of any governmental or regulatory agency or body or any court, domestic or foreign, having jurisdiction over the Company or any subsidiary or any of their properties, assets or operations, or (C) any indenture, mortgage, loan or credit agreement, note, lease, permit, license or other agreement or instrument to which the Company or any subsidiary is a party or by which the Company or any subsidiary is bound or to which any of the properties, assets or operations of the Company or any subsidiary is subject, except, in the case of clauses (B) and (C), for such breaches or violations which would not have a Material Adverse Effect.

(p) The Company and its subsidiaries have good and marketable title to all real properties owned by them, in each case free and clear of any mortgage, pledge, lien, security interest, claim or other

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encumbrance or defect; the Company and its subsidiaries hold any leased real property under valid, subsisting and enforceable leases or subleases with no exceptions that would materially interfere with the use made or to be made thereof by them; neither the Company nor any of its subsidiaries is in material default under any such lease or sublease; and no material claim of any sort has been asserted by anyone adverse to the rights of the Company or any subsidiary under any such lease or sublease or affecting or questioning the right of such entity to the continued possession of the leased or subleased properties under any such lease or sublease, except in each case as would not, individually or in the aggregate, have a Material Adverse Effect.

(q) Except as described in the most recent Preliminary Prospectus and the Prospectus, the Company and its subsidiaries possess adequate certificates, authorizations, licenses or permits issued by appropriate governmental agencies or bodies necessary to conduct the business now operated by them, except as would not have a Material Adverse Effect, and have not received any notice of proceedings relating to the revocation or modification of any such certificate, authorization, license or permit that, individually or in the aggregate, could have a Material Adverse Effect.

(r) The Company and each of its subsidiaries have filed all tax returns required to be filed, which returns are complete and correct in all material respects, and neither the Company nor any of its subsidiaries is in default in the payment of any taxes which were payable pursuant to said returns or any assessments with respect thereto, in each case except as would not, individually or in the aggregate, have a Material Adverse Effect.

(s) Neither the filing of the Registration Statement, the most recent Preliminary Prospectus or the Prospectus nor the offer or sale of the Notes as contemplated by this Agreement gives rise to any rights, other than those which have been duly waived or satisfied, for or relating to the registration of any securities of the Company.

(t) Except as described in the most recent Preliminary Prospectus and the Prospectus (A) neither the Company nor any of its Significant Subsidiaries is in violation of its charter or by-laws, (B) neither the Company nor any of its subsidiaries is in violation of any applicable law, ordinance, administrative or governmental rule or regulation, or any order, decree or judgment of any court or governmental agency or body having jurisdiction over the Company or any of its subsidiaries and (C) no event of default or event that, but for the giving of notice or the lapse of time or both, would constitute an event of default, exists, or as a result of the consummation of the sale of the Notes will exist, under any indenture, mortgage, loan agreement, note, lease, permit, license or other agreement or instrument to which the Company or any of its subsidiaries is a party or to which any of the properties, assets or operations of the Company or any such Subsidiary is subject, except, in the case of clauses (B) and (C), for such violations and defaults that would not have a Material Adverse Effect.

(u) Except as described in the most recent Preliminary Prospectus and the Prospectus, there are no pending actions, suits or proceedings against or, to the knowledge of the Company, affecting the Company, any of its subsidiaries or any of their respective properties, assets or operations that would have, individually or in the aggregate, a Material Adverse Effect, or could materially and adversely affect the ability of the Company to perform its obligations under this Agreement, the Indenture or any other document governing the sale of the Notes; and no such actions, suits or proceedings are, to the knowledge of the Company, threatened.

(v) The financial statements, together with the related schedules and notes included or incorporated by reference in the most recent Preliminary Prospectus and the Prospectus, present fairly, in all material respects, the respective financial position of the Company and its consolidated subsidiaries and Caremark Rx, Inc., as applicable, as of the dates shown and their results of operations and cash flows for the periods shown, and have been prepared in conformity with generally accepted accounting principles in the United States applied on a consistent basis, except as disclosed therein. The other financial and statistical information set forth in the most recent Preliminary Prospectus and the Prospectus present fairly, in all material respects, the information shown therein and have been, except as disclosed therein, compiled on a basis consistent with that of the financial statements included or incorporated by reference in the most recent Preliminary Prospectus and the Prospectus.

(w) The pro forma financial statements included or incorporated by reference in the most recent Preliminary Prospectus include assumptions that provide a reasonable basis for presenting the significant effects directly attributable to the transactions and events described therein, the related pro forma adjustments give

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appropriate effect to those assumptions, and the pro forma adjustments reflect the proper application of those adjustments to the historical financial statement amounts in the pro forma financial statements included or incorporated by reference in the most recent Preliminary Prospectus. The pro forma financial statements included or incorporated by reference in the most recent Preliminary Prospectus comply as to form in all material respects with the applicable requirements of Regulation S-X under the Act.

(x) Since the date of the latest audited financial statements of the Company included or incorporated by reference in the Preliminary Prospectus and the Prospectus, there has been no material adverse change, nor any development or event involving a prospective material adverse change, in the financial condition, business, properties or results of operations of the Company and its subsidiaries taken as a whole.

(y) There is no contract or document required to be described in the Registration Statement, any Preliminary Prospectus or the Prospectus or to be filed as an exhibit to the Registration Statement or to a document incorporated by reference into the Registration Statement, any Preliminary Prospectus or the Prospectus which is not described or filed as required.

(z) The Company is not and, after giving effect to the offering and sale of the Notes and the application of the proceeds thereof as described in the most recent Preliminary Prospectus and the Prospectus will not be required to register as, an “investment company” as defined in the Investment Company Act of 1940, as amended.

(aa) Each of the Company and its Significant Subsidiaries maintains a system of internal accounting controls over financial reporting. The Company's internal controls over financial reporting includes those policies and procedures that pertain to the Company's ability to record, process, summarize and report a system of internal accounting controls and procedures to provide reasonable assurance, at an appropriate cost/benefit relationship, that the unauthorized acquisition, use or disposition of assets are prevented or timely detected and that transactions are authorized, recorded and reported properly to permit the preparation of financial statements in accordance with generally accepted accounting principles and receipts and expenditures are duly authorized. The Company’s internal controls over financial reporting were effective and provided such reasonable assurance for the preparation of financial statements as of December 30, 2006 and, to the best of the Company’s knowledge, there have been no changes in the Company’s internal controls over financial reporting subsequent to December 30, 2006.

(bb) The Company has made the evaluations of the Company’s disclosure controls and procedures required under Rule 13a 15(b) under the Exchange Act and management’s conclusions regarding the effectiveness of such disclosure controls and procedures were included in the Company’s annual report on Form 10-K for the fiscal year ended December 30, 2006.

For purposes of this Section 1, as well as for Section 6 hereof, references to “the most recent Preliminary Prospectus and the Prospectus” or “the Disclosure Package and the Prospectus” are to each of the most recent Preliminary Prospectus or the Disclosure Package, as the case may be, and the Prospectus as separate or stand-alone documentation (and not the most recent Preliminary Prospectus or the Disclosure Package, as the case may be, and the Prospectus taken together), so that representations, warranties, agreements, conditions and legal opinions will be made, given or measured independently in respect of each of the most recent Preliminary Prospectus or the Disclosure Package, as the case may be, and the Prospectus.

2. Purchase of the Notes by the Underwriters. Subject to the terms and conditions and upon the basis of the representations and warranties herein set forth, the Company agrees to issue and sell to the Underwriters, and each of the Underwriters agrees, severally and not jointly, to purchase from the Company, at a price equal to 99.600% of the principal amount of the Floating Rate Notes, 98.301% of the principal amount of the 2017 Notes and 98.211% of the principal amount of the 2027 Notes, plus, in each case, accrued interest, if any, from May 25, 2007 to the Closing Date, the respective principal amount of the Notes set forth opposite such Underwriter’s name in Schedule I hereto.

3. Delivery of and Payment for the Notes. Delivery of the Notes will be made at the offices of Dewey Ballantine LLP, 1301 Avenue of the Americas, New York, NY 10019, or at such place or places as mutually may be agreed upon by the Company and the Underwriters, at 9:00 A.M., New York City time, on May

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25, 2007 or on such later date not more than seven Business Days after such date as may be determined by the Representatives and the Company (the “Closing Date”).

Delivery of the Notes will be made to the Representatives by or on behalf of the Company against payment of the purchase price therefor by wire transfer of immediately available funds. Delivery of the Notes will be made through the facilities of The Depository Trust Company unless the Representatives will otherwise instruct. Delivery of the Notes at the time and place specified in this Agreement is a further condition to the obligations of each Underwriter.

4. Covenants of the Company. The Company covenants and agrees with each Underwriter that:

(a) The Company (i) will prepare the Prospectus in a form approved by the Representatives and file the Prospectus pursuant to Rule 424(b) of the Rules and Regulations within the time period prescribed by such Rule; (ii) will not file any amendment or supplement to the Registration Statement or the Prospectus or file any document under the Exchange Act (except for filings of annual reports on Form 10-K and quarterly reports on Form 10-Q under the Exchange Act) before the termination of the offering of the Notes by the Underwriters if such document would be deemed to be incorporated by reference into the Prospectus, which filing is not consented to by the Representatives after reasonable notice thereof (such consent not to be unreasonably withheld or delayed); (iii) will advise the Representatives, promptly after it receives notice thereof, of the time when any amendment or supplement to the Registration Statement, the most recent Preliminary Prospectus or the Prospectus has been filed and will furnish the Representatives with copies thereof; (iv) will prepare the Final Term Sheet, substantially in the form of Schedule III hereto and approved by the Representatives and file the Final Term Sheet pursuant to Rule 433(d) of the Rules and Regulations within the time period prescribed by such Rule; (v) will advise the Representatives promptly after it receives notice thereof, of the issuance by the Commission or any state or other regulatory body of any stop order or any order suspending the effectiveness of the Registration Statement, suspending or preventing the use of any Preliminary Prospectus, the Prospectus or any Issuer Free Writing Prospectus or suspending the qualification of the Notes for offering or sale in any jurisdiction, of the initiation or threatening of any proceedings for any such purpose or pursuant to Section 8A of the Securities Act, of receipt by the Company from the Commission of any notice of objection to the use of the Registration Statement or any post-effective amendment thereto or of any request by the Commission for the amending or supplementing of the Registration Statement, the Prospectus or any Issuer Free Writing Prospectus or for additional information; and (vi) will use its reasonable best efforts to prevent the issuance of any stop order or other such order or any such notice of objection and, if a stop order or other such order is issued or any such notice of objection is received, to obtain as soon as possible the lifting or withdrawal thereof.

(b) The Company will furnish to each of the Underwriters and to counsel for the Underwriters such number of conformed copies of the Registration Statement, as originally filed and each amendment thereto (excluding exhibits other than this Agreement), any Preliminary Prospectus, the Final Term Sheet and any other Issuer Free Writing Prospectus, the Prospectus and all amendments and supplements to any of such documents (including any document filed under the Exchange Act and deemed to be incorporated by reference in the Registration Statement, any Preliminary Prospectus or the Prospectus), in each case as soon as available and in such quantities as the Representatives may from time to time reasonably request.

(c) During the period in which the Prospectus relating to the Notes (or in lieu thereof, the notice referred to in Rule 173(a) of the Rules and Regulations) is required to be delivered under the Securities Act, the Company will comply with all requirements imposed upon it by the Securities Act and by the Rules and Regulations, as from time to time in force, so far as is necessary to permit the continuance of sales of or dealings in the Notes as contemplated by the provisions of this Agreement and by the Prospectus. If during such period any event occurs as a result of which the Prospectus as then amended or supplemented would include an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, or if during such period it is necessary to amend the Registration Statement or amend or supplement the Prospectus or file any document to comply with the Securities Act, the Company will promptly notify the Representatives and will, subject to Section 4(a) hereof, amend the Registration Statement, or amend or supplement the Prospectus, as the case may be, or file any document (in each case, at the expense of the Company) so as to correct such statement or omission or to effect such compliance, and will furnish without charge to each Underwriter as many written and electronic copies of

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any such amendment or supplement as the Representatives may from time to time reasonably request. Neither the Representatives’ consent to nor its delivery to offerees or investors of, any such amendment or supplement shall constitute a waiver of any of the conditions set forth in Section 6 of this Agreement.

(d) As soon as practicable, the Company will make generally available to its security holders and the Underwriters an earnings statement satisfying the requirements of Section 11(a) of the Securities Act and Rule 158 of the Rules and Regulations.

(e) The Company agrees, whether or not this Agreement becomes effective or is terminated or the sale of the Notes to the Underwriters is consummated, to pay all fees, expenses, costs and charges in connection with: (i) the preparation, printing, filing, registration, delivery and shipping of the Registration Statement (including any exhibits thereto), any Preliminary Prospectus, any Issuer Free Writing Prospectus, the Prospectus and any amendments or supplements thereto; (ii) the printing, producing, copying and delivering of this Agreement, the Indenture, closing documents (including any compilations thereof) and any other agreements, memoranda, correspondence and other documents printed and delivered in connection with the offering, purchase, sale and delivery of the Notes; (iii) the services of the Company’s independent registered public accounting firm; (iv) the services of the Company’s counsel; (v) the qualification of the Notes under the securities laws of the several jurisdictions as provided in Section 4(i) hereof; (vi) any rating of the Notes by rating agencies; (vii) the services of the Trustee and any agent of the Trustee (including the fees and disbursements of counsel for the Trustee); (viii) any “road show” or other investor presentations relating to the offering of the Notes (including, without limitation, for meetings and travel); and (ix) otherwise incident to the performance of its obligations hereunder for which provision is not otherwise made in this Section 4(e). It is understood, however, that, except as provided in this Section 4(e) or Sections 7 and 9 hereof, the Underwriters will pay all of their own costs and expenses, including the fees and expenses of counsel to the Underwriters and any advertising expenses incurred in connection with the offering of the Notes. If the sale of the Notes provided for herein is not consummated by reason of acts of the Company or changes in circumstances of the Company pursuant to Section 9 of this Agreement which prevent this Agreement from becoming effective, or by reason of any failure, refusal or inability on the part of the Company to perform any agreement on its part to be performed or because any other condition of the Underwriters’ obligations hereunder is not fulfilled or if the Underwriters decline to purchase the Notes for any reason permitted under this Agreement (other than by reason of a default by any of the Underwriters pursuant to Section 8 or if the Underwriters terminate this Agreement under Section 9 of this Agreement upon the occurrence of any event specified in clause (iii), (iv), (vi), (vii) or (viii) of Section 6(f)), the Company will reimburse the Underwriters for all reasonable out-of-pocket disbursements (including fees and expenses of counsel to the Underwriters) incurred by the Underwriters in connection with any investigation or preparation made by them in respect of the marketing of the Notes or in contemplation of the performance by them of their obligations hereunder.

(f) Until termination of the offering of the Notes, the Company will timely file all reports, documents and amendments to previously filed documents required to be filed by it pursuant to Section 12, 13(a), 13(c), 14 or 15(d) of the Exchange Act.

(g) The Company will apply the net proceeds from the sale of the Notes as set forth in the most recent Preliminary Prospectus and the Prospectus under the caption “Use of Proceeds.”

(h) The Company will pay the required Commission filing fees relating to the Notes within the time period required by Rule 456(b)(1) of the Rules and Regulations without regard to the proviso therein and otherwise in accordance with Rules 456(b) and 457(r) of the Rules and Regulations.

(i) The Company will use reasonable best efforts to arrange for the qualification of the Notes and the determination of their eligibility for investment under the blue sky laws of such jurisdictions as the Representatives designate and will continue such qualifications in effect so long as required for the distribution of the Notes by the Underwriters, provided that the Company will not be required to qualify as a foreign corporation or to file a general consent to service of process or subject itself to taxation in any such state.

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5. Free Writing Prospectuses.

(a) The Company represents and warrants to, and agrees with, each Underwriter that (i) the Company has not made, and will not make, any offer relating to the Notes that would constitute an Issuer Free Writing Prospectus without the prior consent of the Representatives (which consent being deemed to have been given with respect to (A) the Final Term Sheet prepared and filed pursuant to Section 4(a) hereof and (B) any other Issuer Free Writing Prospectus identified on Schedule II hereto); (ii) each Issuer Free Writing Prospectus conformed or will conform in all material respects to the requirements of the Securities Act and the Rules and Regulations on the date of first use, and the Company has complied with any filing requirements applicable to such Issuer Free Writing Prospectus pursuant to Rule 433 of the Rules and Regulations; (iii) each Issuer Free Writing Prospectus will not, as of its issue date and through the time the Notes are delivered pursuant to Section 3 hereof, include any information that conflicts with the information contained in the Registration Statement, the most recent Preliminary Prospectus and the Prospectus; and (iv) each Issuer Free Writing Prospectus, when considered together with the information contained in the most recent Preliminary Prospectus, did not, as of the Applicable Time, does not, as of the date hereof, and will not, as of the Closing Date, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.

(b) Each Underwriter represents and warrants to, and agrees with, the Company and each other Underwriter that it has not made, and will not make any offer relating to the Notes that would constitute a “free writing prospectus” (as defined in Rule 405 of the Rules and Regulations) required to be filed with the Commission, without the prior consent of the Company and the Representatives.

(c) The Company agrees that if at any time following issuance of an Issuer Free Writing Prospectus any event occurred or occurs as a result of which such Issuer Free Writing Prospectus would conflict with the information in the Registration Statement, the most recent Preliminary Prospectus or the Prospectus or would include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances then prevailing, not misleading, the Company will give prompt notice thereof to the Representatives and, if requested by the Representatives, will prepare and furnish without charge to each Underwriter an Issuer Free Writing Prospectus or other document which will correct such conflict, statement or omission.

6. Conditions of Underwriters’ Obligations. The obligations of the Underwriters hereunder are subject to the accuracy, as of the date hereof and the Closing Date (as if made at the Closing Date), of the representations and warranties of the Company contained herein, to the performance by the Company of its obligations hereunder and to the following additional conditions:

(a) The Prospectus shall have been filed with the Commission in a timely fashion in accordance with Section 4(a) hereof; all filings (including, without limitation, the Final Term Sheet) required by Rule 424(b) or Rule 433 of the Rules and Regulations shall have been made within the time periods prescribed by such Rules, and no such filings will have been made without the consent of the Representatives (such consent not to be unreasonably withheld or delayed); no stop order suspending the effectiveness of the Registration Statement or any amendment or supplement thereto, preventing or suspending the use of any Preliminary Prospectus, any Issuer Free Writing Prospectus or the Prospectus, or suspending the qualification of the Notes for offering or sale in any jurisdiction shall have been issued; no proceedings for the issuance of any such order shall have been initiated or threatened pursuant to Section 8A of the Securities Act; no notice of objection of the Commission to use the Registration Statement or any post-effective amendment thereto shall have been received by the Company; and any request of the Commission for additional information (to be included in the Registration Statement or the Prospectus or otherwise) shall have been disclosed to the Representatives and complied with to the Representatives’ reasonable satisfaction.

(b) The Representatives shall have received a letter, dated the date of this Agreement, of KPMG LLP (“KPMG”), addressed to the Underwriters, confirming that they are independent public accountants within the meaning of the Securities Act and the applicable published rules and regulations thereunder (“Rules and Regulations”) and to the effect that:

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(i) in their opinion the financial statements and schedules examined by them and included or incorporated by reference in the most recent Preliminary Prospectus or the Prospectus comply as to form in all material respects with the applicable accounting requirements of the Securities Act and the related published Rules and Regulations;

(ii) they have performed the procedures specified by the American Institute of Certified Public Accountants for a review of interim financial information as described in Statement of Auditing Standards No. 100, Interim Financial Information, on the unaudited financial statements included or incorporated by reference in the most recent Preliminary Prospectus or the Prospectus;

(iii) on the basis of the review referred to in clause (ii) above, a reading of the latest available interim financial statements of the Company, inquiries of officials of the Company who have responsibility for financial and accounting matters and other specified procedures, nothing came to their attention that caused them to believe that:

(A)   the unaudited financial statements included or incorporated by reference in the most recent Preliminary Prospectus or the Prospectus do not comply as to form in all material respects with the applicable accounting requirements of the Securities Act and the related published Rules and Regulations or any material modifications should be made to such unaudited financial statements for them to be in conformity with generally accepted accounting principles;

(B)   at the date of the latest available balance sheet read by such accountants, and at a subsequent specified date not more than three business days prior to the date of this Agreement, there was any decrease in stockholders’ equity or change in the capital stock or any increase in short-term indebtedness or long-term debt of the Company and its consolidated subsidiaries or, at the date of the latest available balance sheet read by such accountants, there was any decrease in consolidated net current assets or total assets, as compared with amounts shown on the latest balance sheet included or incorporated by reference in the most recent Preliminary Prospectus or the Prospectus; or

(C)   for the period from the closing date of the latest income statement included or incorporated by reference in the most recent Preliminary Prospectus or the Prospectus to the closing date of the latest available income statement read by such accountants there were any decreases, as compared with the corresponding period of the previous year and with the period of corresponding length ended the date of the latest income statement included or incorporated by reference in the most recent Preliminary Prospectus or the Prospectus, in consolidated net sales, net operating income, the total or per share amounts of net earnings or in the ratio of earnings to fixed charges, or any increases or decreases, as the case may be, in other items specified by the Representatives;

(D)   except in all cases set forth in clauses (B) and (C) above for changes, increases or decreases which the most recent Preliminary Prospectus or the Prospectus discloses have occurred or may occur or which are described in such letter;

(iv) the pro forma financial statements, together with related notes, included or incorporated by reference in the most recent Preliminary Prospectus or the Prospectus are consistent with the historical statements, except for the pro forma adjustments specified therein, and give effect to assumptions made on a reasonable basis and present fairly the historical and proposed transactions contemplated hereby and by the most recent Preliminary Prospectus or the Prospectus, and nothing came to their attention that caused them to believe that the pro forma financial information included or incorporated by reference in the most recent Preliminary Prospectus or the Prospectus does not comply as to form in all material respects with the accounting requirements of the Securities Act and the related published Rules and Regulations or has not been properly compiled and that the pro forma adjustments have not been properly applied to the historical amounts in the compilation of those statements; and

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(v) they have compared specified dollar amounts (or percentages derived from such dollar amounts), numerical data and other financial information contained in the most recent Preliminary Prospectus or the Prospectus (in each case to the extent that such dollar amounts, percentages, numerical data and other financial information are derived from the general accounting records of the Company and its subsidiaries subject to the internal controls of the Company’s accounting system or are derived directly from such records by analysis or computation) with the results obtained from inquiries, a reading of such general accounting records and other procedures specified in such letter and have found such dollar amounts, percentages, numerical data and other financial information to be in agreement with such results except as otherwise specified in such letter.

(c) The Representatives shall have received a letter, addressed to the Underwriters, dated the Closing Date, of KPMG which meets the requirements of subsection (b) of this Section, except that the specified date referred to in such subsection will be a date not more than three days prior to the Closing Date for the purposes of this subsection.

(d) The Representatives shall have received a letter, dated the date of this Agreement, of Ernst & Young LLP (“E&Y”), addressed to the Underwriters, confirming that they are independent public accountants within the meaning of the Securities Act and the applicable Rules and Regulations and to the effect that:

(i) in their opinion the financial statements and schedules of Caremark Rx, Inc. examined by them and included or incorporated by reference in the most recent Preliminary Prospectus or the Prospectus comply as to form in all material respects with the applicable accounting requirements of the Securities Act and the related published Rules and Regulations;

(ii) they have compared specified dollar amounts (or percentages derived from such dollar amounts), numerical data and other financial information contained in the most recent Preliminary Prospectus or the Prospectus (in each case to the extent that such dollar amounts, percentages, numerical data and other financial information are derived from the general accounting records of Caremark Rx, Inc. and its subsidiaries subject to the internal controls of Caremark Rx, Inc.’s accounting system or are derived directly from such records by analysis or computation) with the results obtained from inquiries, a reading of such general accounting records and other procedures specified in such letter and have found such dollar amounts, percentages, numerical data and other financial information to be in agreement with such results except as otherwise specified in such letter.

(e) The Representatives shall have received a letter, addressed to the Underwriters, dated the Closing Date, of E&Y which meets the requirements of subsection (d) of this Section, except that the specified date referred to in such subsection will be a date not more than three days prior to the Closing Date for the purposes of this subsection.

(f) Subsequent to the execution and delivery of this Agreement, there shall not have occurred (i) any change, or any development involving a prospective change, in the condition (financial or other), business, properties or results of operations of the Company and its subsidiaries, taken as a whole, which, in the judgment of the Representatives, is material and adverse and makes it impractical or inadvisable to proceed with completion of the offering or the sale of and payment for the Notes; (ii) any downgrading in the rating of any debt securities of the Company by any “nationally recognized statistical rating organization” (as defined for purposes of Rule 436(g) under the Securities Act), or any public announcement that any such organization has under surveillance or review its rating of any debt securities of the Company (other than an announcement with positive implications of a possible upgrading, and no implication of a possible downgrading, of such rating); (iii) any change in U.S. or international financial, political or economic conditions or currency exchange rates or exchange controls as would, in the judgment of the Representatives, be likely to prejudice materially the success of the proposed issue, sale or distribution of the Notes, whether in the primary market or in respect of dealings in the secondary market; (iv) any material suspension or material limitation of trading in securities generally on the New York Stock Exchange or any setting of minimum prices for trading on such exchange; (v) any suspension of trading of any securities of the Company on any exchange or in the over-the-counter market; (vi) any banking moratorium declared by U.S. Federal or New York authorities; (vii) any major disruption of settlements of securities or clearance services in the United States; or (viii) any attack on the United States, outbreak or

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escalation of major hostilities or act of terrorism involving the United States, any declaration of war by Congress or any other substantial national or international calamity or emergency if, in the judgment of the Representatives, the effect of any such attack, outbreak, escalation, act, declaration, calamity or emergency makes it impractical or inadvisable to proceed with completion of the offering or sale of and payment for the Notes.

(g) The Representatives shall have received from Davis Polk & Wardwell, counsel for the Company, an opinion, addressed to the Underwriters, dated the Closing Date substantially in the form of ExhibitA hereto.

(h) The Representatives shall have received from Zenon P. Lankowsky, General Counsel and Secretary of the Company, an opinion, addressed to the Underwriters, dated the Closing Date substantially in the form of Exhibit B hereto.

(i) The Representatives shall have received from Dewey Ballantine LLP, counsel to the Underwriters, such opinion or opinions, addressed to the Underwriters, dated the Closing Date and in form and substance satisfactory to the Representatives, with respect to the Notes, Indenture, Registration Statement, Prospectus and Disclosure Package and other related matters as the Representatives may reasonably require, and the Company shall have furnished to such counsel such documents as they may reasonably request for the purpose of enabling them to pass upon such matters.

(j) The Representatives shall have received a certificate, dated the Closing Date, of the President or any Vice President and the principal financial or accounting officer of the Company in which such officers, to the best of their knowledge after reasonable investigation, shall state that (i) the representations and warranties of the Company in this Agreement are true and correct, (ii) the Company has complied with all the agreements and satisfied all the conditions on its part to be performed or satisfied hereunder at or prior to the Closing Date; (ii) no stop order suspending the effectiveness of the Registration Statement has been issued, no proceedings for any such purpose have been initiated or threatened and (iii) subsequent to the dates of the most recent financial statements in the most recent Preliminary Prospectus and the Prospectus, there has been no material adverse change, nor any development or event involving a prospective material adverse change, in the condition (financial or other), business, properties or results of operations of the Company and its subsidiaries, taken as a whole, other than those set forth in or contemplated by the most recent Preliminary Prospectus and the Prospectus or as described in such certificate.

The Company will furnish the Underwriters with such conformed copies of such opinions, certificates, letters and documents as the Underwriters reasonably request. The Representatives may in their sole discretion waive on behalf of the Underwriters compliance with any conditions to the obligations of the Underwriters hereunder.

7. Indemnification and Contribution.

(a) The Company will indemnify and hold harmless each Underwriter, its partners, members, directors and officers and affiliates and each person, if any, who controls such Underwriter within the meaning of Section 15 of the Securities Act, from and against any loss, claim, damage or liability (or any action in respect thereof), joint or several, to which such Underwriter or such person may become subject, under the Securities Act or otherwise, insofar as such loss, claim, damage or liability (or action in respect thereof) arises out of or is based upon (i) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, any Preliminary Prospectus, the Prospectus, or the Disclosure Package, each as amended or supplemented, any Issuer Free Writing Prospectus or any “issuer information” filed or required to be filed pursuant to Rule 433(d) of the Rules and Regulations, or (ii) the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein (in the case of any Preliminary Prospectus, Free Writing Prospectus, the Prospectus and the Disclosure Package, in the light of the circumstances under which they were made) not misleading, and will reimburse each Underwriter for any legal or other expenses as reasonably incurred by such Underwriter in connection with investigating, preparing to defend or defending against or appearing as a third-party witness in connection with any such loss, claim, damage, liability or action, notwithstanding the possibility that payments for such expenses might later be held to be improper, in which case such payments will be promptly refunded; provided, however, that the Company will not be liable under this Section 7(a) in any such case to the extent that any such loss, claim, damage, liability or action

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arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in reliance upon and in conformity with written information furnished to the Company by any Underwriter directly or through the Representatives specifically for use therein (which information is specified in Section 12 hereof). The foregoing indemnity agreement shall not inure to the benefit of any Underwriter if (i) such loss, claim, damage or liability (or action in respect thereof) arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in any Preliminary Prospectus, (ii) the Company informed the Representatives of such untrue statement or alleged untrue statement or omission or alleged omission prior to the Applicable Time, (iii) such untrue statement or alleged untrue statement or omission or alleged omission was corrected in an amended or supplemented Preliminary Prospectus (or, where permitted by law, an Issuer Free Writing Prospectus) and such corrected Preliminary Prospectus (or Issuer Free Writing Prospectus) was provided to the Underwriters such that the Underwriters had a reasonably sufficient amount of time prior to the Applicable Time to deliver such corrected Preliminary Prospectus (or Issuer Free Writing Prospectus) to the persons to whom the Underwriters are selling the Notes, (iv) the timely delivery of such corrected Preliminary Prospectus (or Issuer Free Writing Prospectus) to such person prior to the Applicable Time would have constituted a complete defense to the losses, claims, damages and liabilities asserted by such person and (v) such corrected Preliminary Prospectus (or Issuer Free Writing Prospectus) was not sent or given by or on behalf of such Underwriter to such person prior to the Applicable Time.

(b) Each Underwriter severally, but not jointly, will indemnify and hold harmless the Company, its directors, officers and affiliates and each person, if any, who controls the Company within the meaning of Section 15 of the Securities Act against any loss, claim, damage or liability (or any action in respect thereof) to which the Company or such person may become subject, under the Securities Act or otherwise, insofar as such loss, claim, damage or liability (or action in respect thereof) arises out of or is based upon (i) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, any Preliminary Prospectus, the Prospectus, the Disclosure Package, each as amended or supplemented, or any Issuer Free Writing Prospectus, or (ii) the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse the Company for any legal or other expenses reasonably incurred by the Company in connection with investigating, preparing to defend or defending against or appearing as a third-party witness in connection with any such loss, claim, damage, liability or action notwithstanding the possibility that payments for such expenses might later be held to be improper, in which case such payments will be promptly refunded; provided, however, that such indemnification or reimbursement will be available in each such case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written information furnished to the Company by such Underwriter directly or through the Representatives, specifically for use therein (which information is specified in Section 12 hereof).

(c) Promptly after receipt by an indemnified party under this Section of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against an indemnifying party under subsection (a) or (b) above, notify the indemnifying party of the commencement thereof; but the failure to notify the indemnifying party shall not relieve it from any liability that it may have under subsection (a) or (b) above, except to the extent that it has been materially prejudiced (through the forfeiture of substantive rights or defenses) by such failure; and provided further that the failure to notify the indemnifying party shall not relieve it from any liability that it may have to an indemnified party otherwise than under subsection (a) or (b) above. In case any such action is brought against any indemnified party and it notifies an indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein and, to the extent that it may wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party), and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party will not be liable to such indemnified party under this Section for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened action in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party unless such settlement (i) includes an unconditional release of such indemnified party from all liability on any claims that are the subject matter of such action and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act, by or on behalf of any indemnified party.

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(d) If the indemnification provided for in this Section is unavailable or insufficient to hold harmless an indemnified party under subsection (a) or (b) above, then the indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of the losses, claims, damages or liabilities referred to in subsection (a) or (b) above (i) in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand and the Underwriters on the other from the offering of the Notes or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company on the one hand and the Underwriters on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities as well as any other relevant equitable considerations. The relative benefits received by the Company on the one hand and the Underwriters on the other shall be deemed to be in the same proportion as the total net proceeds from the offering (before deducting expenses) received by the Company bear to the total discounts and commissions received by the Underwriters from the Company under this Agreement. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or the Underwriters and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. The amount paid by an indemnified party as a result of the losses, claims, damages or liabilities referred to in the first sentence of this subsection (d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any action or claim which is the subject of this subsection (d). Notwithstanding the provisions of this subsection (d), the Underwriters shall not be required to contribute any amount in excess of the amount by which the total price at which the Notes purchased by it were resold exceeds the amount of any damages which the Underwriters has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. The Underwriters’ obligations in this subsection (d) to contribute are several in proportion to their respective purchase obligations and not joint. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.

(e) The obligations of the Company under this Section shall be in addition to any liability which the Company may otherwise have and shall extend, upon the same terms and conditions, to each person, if any, who controls any Underwriter within the meaning of the Securities Act or the Exchange Act; and the obligations of the Underwriters under this Section shall be in addition to any liability which the Underwriters may otherwise have and shall extend, upon the same terms and conditions, to each director of the Company and to each person, if any, who controls the Company within the meaning of the Securities Act or the Exchange Act.

8. Substitution of Underwriters. If any Underwriter or Underwriters default in their obligations to purchase Notes hereunder and the aggregate principal amount of the Notes that such defaulting Underwriter or Underwriters agreed but failed to purchase does not exceed 10% of the total principal amount of the Notes, the Representatives may make arrangements satisfactory to the Company for the purchase of such Notes by other persons, including any of the Underwriters, but if no such arrangements are made by the Closing Date, the non-defaulting Underwriters shall be obligated severally, in proportion to their respective commitments, hereunder, to purchase the Notes that such defaulting Underwriter or Underwriters agreed but failed to purchase. If any Underwriter or Underwriters so default and the aggregate principal amount of the Notes with respect to which such default or defaults occur exceeds 10% of the total principal amount of the Notes and arrangements satisfactory to the Representatives and the Company for the purchase of such Notes by other persons are not made within 36 hours after such default, this Agreement will terminate without liability on the part of any non-defaulting Underwriter or the Company, except as provided in Section 7. As used in this Agreement, the term “Underwriter” includes any person substituted for an Underwriter under this Section. Nothing herein will relieve a defaulting Underwriter from liability for its default.

9. Termination. Until the Closing Date, this Agreement may be terminated by the Representatives on behalf of the Underwriters by giving notice as hereinafter provided to the Company if (i) the Company will have failed, refused or been unable, at or prior to the Closing Date, to perform any agreement on its part to be performed hereunder, (ii) any of the events described in Sections 6(f) of this Agreement, shall have occurred, or (iii) any other condition to the Underwriters’ obligations hereunder is not fulfilled. Any termination of this Agreement pursuant to this Section 9 will be without liability on the part of the Company or any Underwriter, except as otherwise provided in Sections 4(e) and 7 hereof.

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Any notice referred to above may be given at the address specified in Section 11 of this Agreement in writing or by telegraph or telephone, and if by telegraph or telephone, will be immediately confirmed in writing.

10. Survival of Certain Provisions. The agreements contained in Section 7 of this Agreement and the representations, warranties and agreements of the Company contained in Sections 1 and 4 of this Agreement will survive the delivery of the Notes to the Underwriters hereunder and will remain in full force and effect, regardless of any termination or cancellation of this Agreement or any investigation made by or on behalf of any indemnified party.

11. Notices. Except as otherwise provided in the Agreement, (a) whenever notice is required by the provisions of this Agreement to be given to the Company, such notice will be in writing by mail, telex or facsimile transmission addressed to the Company at One CVS Drive, Woonsocket, Rhode Island 02895, facsimile number (401) 765-7887, Attention: General Counsel, and (b) whenever notice is required by the provisions of this Agreement to be given to the several Underwriters, such notice will be in writing by mail, telex or facsimile transmission addressed to the Representatives in care of Lehman Brothers Inc., 745 Seventh Ave, New York, New York 10019, facsimile number (212) 526-0943, Attention: Syndicate Registration (with a copy to the General Counsel at the same address). The Company shall be entitled to act and rely upon any request, consent, notice or agreement given or made on behalf of the Underwriters by Lehman Brothers Inc., on behalf of the Representatives.

12. Information Furnished by Underwriters. The Underwriters severally confirm that the information appearing in the list of names of each of the Underwriters under the caption “Underwriting” in the most recent Preliminary Prospectus and the Prospectus, the concession and reallowance figures appearing in the third paragraph under the caption “Underwriting” in the most recent Preliminary Prospectus and the Prospectus, and the statements in the first two paragraphs of the subsection entitled “Price Stabilization, Short Positions and Penalty Bids” and the first paragraph of the subsection entitled “Electronic Distributions” under the caption “Underwriting” in the most recent Preliminary Prospectus and the Prospectus, constitute the only written information furnished to the Company by the Representatives on behalf of the Underwriters, referred to in Sections 1(e), 1(f), 1(g), 7(a) and 7(b) of this Agreement.

13. Nature of Relationship. The Company acknowledges and agrees that in connection with the offering and the sale of the Notes or any other services the Underwriters may be deemed to be providing hereunder, notwithstanding any preexisting relationship, advisory or otherwise, between the parties or any oral representations or assurances previously or subsequently made by the Underwriters: (i) no fiduciary or agency relationship between the Company and any other person, on the one hand, and the Underwriters, on the other hand, exists; (ii) the Underwriters are not acting as advisors, experts or otherwise, to the Company, including, without limitation, with respect to the determination of the public offering price of the Notes, and such relationship between the Company, on the one hand, and the Underwriters, on the other hand, is entirely and solely a commercial relationship, based on arms-length negotiations; (iii) any duties and obligations that the Underwriters may have to the Company shall be limited to those duties and obligations specifically stated herein; and (iv) the Underwriters and their respective affiliates may have interests that differ from those of the Company. The Company hereby waives any claims that the Company may have against the Underwriters with respect to any breach of fiduciary duty in connection with this offering.

14. Parties. This Agreement will inure to the benefit of and be binding upon the several Underwriters, the Company and their respective successors. This Agreement and the terms and provisions hereof are for the sole benefit of only those persons, except as specifically provided in Section 7 of this Agreement. Nothing in this Agreement will be construed to give any person, other than the persons referred to in this paragraph, any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision contained herein.

15. Definition of “Business Day”. For purposes of this Agreement, “Business Day” means any day on which the New York Stock Exchange is open for trading, other than any day on which commercial banks are authorized or required to be closed in New York City.

16. Governing Law. This Agreement will be governed by, and construed in accordance with, the laws of the State of New York without regard to principles of conflicts of laws.

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17. Headings. The headings herein are inserted for convenience of reference only and are not intended to be part of, or to affect the meaning or interpretation of, this Agreement.

18. Counterparts. This Agreement may be signed in one or more counterparts, each of which will constitute an original and all of which together will constitute one and the same agreement.

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Please confirm, by signing and returning to us two counterparts of this Agreement, that the foregoing correctly sets forth the Agreement between the Company and the several Underwriters.

Very truly yours,
CVS CAREMARK CORPORATION
By:	/s/ Carol A. DeNale
	Name:	Carol A. DeNale
	Title:	Vice President & Treasurer

Confirmed and accepted as of the date first above mentioned
LEHMAN BROTHERS INC.
By:	/s/ Andrew R. Taussig
	Name:	Andrew R. Taussig
	Title:	Vice Chairman

MORGAN STANLEY & CO. INCORPORATED
By:	/s/ Yurij Slyz
	Name:	Yurij Slyz
	Title:	Vice President

BANC OF AMERICA SECURITIES LLC
By:	/s/ Peter J. Carbone
	Name:	Peter J. Carbone
	Title:	Vice President

BNY CAPITAL MARKETS, INC.
By:	/s/ Philip Benedict
	Name:	Philip Benedict
	Title:	Vice President

WACHOVIA CAPITAL MARKETS, LLC
By:	/s/ Kevin Smith
	Name:	Kevin Smith
	Title:	Managing Director

As Representatives and on behalf of the several Underwriters

named in Schedule I hereto

SCHEDULE I

	Principal Amount of the		Principal Amount		Principal Amount
	Floating Rate Notes to		of the 2017 Notes to		of the 2027 Notes
Underwriters	be purchased		be purchased		to be purchased
Lehman Brothers Inc.	$	321,695,652	$	321,695,652	$	183,826,087
Morgan Stanley & Co. Incorporated	$	284,565,217	$	284,565,217	$	162,608,696
Banc of America Securities LLC	$	246,521,739	$	246,521,739	$	140,869,565
BNY Capital Markets, Inc	$	246,521,739	$	246,521,739	$	140,869,565
Wachovia Capital Markets, LLC	$	246,521,739	$	246,521,739	$	140,869,565
LaSalle Financial Services, Inc.	$	76,086,957	$	76,086,957	$	43,478,261
KeyBanc Capital Markets Inc.	$	76,086,957	$	76,086,957	$	43,478,261
SunTrust Capital Markets, Inc.	$	76,086,957	$	76,086,957	$	43,478,261
HSBC Securities (USA) Inc.	$	37,130,435	$	37,130,435	$	21,217,391
Mizuho Securities USA Inc.	$	37,130,435	$	37,130,435	$	21,217,391
Piper Jaffray & Co.	$	37,130,435	$	37,130,435	$	21,217,391
Wells Fargo Securities, LLC	$	37,130,435	$	37,130,435	$	21,217,391
BB&T Capital Markets, a division of Scott & Stringfellow, Inc.	$	27,391,304	$	27,391,304	$	15,652,174
Total	$	1,750,000,000	$	1,750,000,000	$	1,000,000,000

EX-1.2

Exhibit 1.2

Execution Copy

CVS CAREMARK CORPORATION

$1,000,000,000 6.302% Enhanced Capital Advantaged Preferred Securities (“ECAPS^SM”) due June 1, 2062

Underwriting Agreement

May 22, 2007

LEHMAN BROTHERS INC.

MORGAN STANLEY & CO. INCORPORATED

BANC OF AMERICA SECURITIES LLC

BNY CAPITAL MARKETS, INC. AND

WACHOVIA CAPITAL MARKETS, LLC

As Representatives of the several Underwriters

named in Schedule I hereto

c/o Lehman Brothers Inc.

745 Seventh Avenue

New York, New York 10019

Ladies and Gentlemen:

CVS Caremark Corporation, a Delaware corporation (the “Company”), proposes to issue and sell $1,000,000,000 aggregate principal amount of its 6.302% Enhanced Capital Advantaged Preferred Securities due 2062 (the “ECAPS^SM”) to the several underwriters named on Schedule I hereto (the “Underwriters”), for which Lehman Brothers Inc., Morgan Stanley & Co. Incorporated, Banc of America Securities LLC, BNY Capital Markets, Inc. and Wachovia Capital Markets, LLC are acting as representatives (the “Representatives”). The ECAPS^SM will (i) have terms and provisions which are summarized in the Disclosure Package as of the Applicable Time and the Prospectus dated as of the date hereof (each as defined in Section 1(a) hereof) and (ii) be issued pursuant to an Indenture dated as of May 25, 2007, as supplemented by the First Supplemental Indenture dated as of May 25, 2007 (as supplemented, the “Indenture”) between the Company and The Bank of New York Trust Company, N.A., as Trustee (the “Trustee”). This agreement (this “Agreement”) is to confirm the agreement concerning the purchase of the ECAPS^SM from the Company by the Underwriters.

1. Representations, Warranties and Agreements of the Company. The Company represents and warrants to, and agrees with, each Underwriter that:

(a) An “automatic shelf registration statement” (as defined in Rule 405 under the Securities Act of 1933, as amended (the “Securities Act”)) on Form S-3 in respect of the ECAPS^SM (File No. 333-143110) (i) has been prepared by the Company in conformity with the requirements of the Securities Act, and the rules and regulations (the “Rules and Regulations”) of the Securities and Exchange Commission (the “Commission”) thereunder, (ii) has been filed with the Commission under the Securities Act not earlier than the date that is three years prior to the Closing Date (as defined in Section 3 hereof) and (iii) upon its filing with the Commission, automatically became and is effective under the Securities Act. Copies of such registration statement and any amendment thereto (excluding exhibits to such registration statement but including all documents incorporated by reference in each prospectus contained therein) have been delivered by the Company to the Representatives; and no other document with respect to such registration statement or any such document incorporated by reference therein has heretofore been filed or transmitted for filing with the Commission. For purposes of this Agreement, the following terms have the specified meanings:

“Applicable Time” means 5:00 p.m. (New York City time) on the date of this Agreement;

“Base Prospectus” means the base prospectus filed as part of the Registration Statement, in the form in which it has most recently been amended on or prior to the date hereof, relating to the ECAPS^SM;

“Disclosure Package” means, as of the Applicable Time, the most recent Preliminary Prospectus, together with each Issuer Free Writing Prospectus filed or used by the Company on or before the Applicable Time and identified on Schedule II hereto, other than a road show that is an Issuer Free Writing Prospectus under Rule 433 of the Rules and Regulations;

“Effective Date” means any date as of which any part of the Registration Statement or any post-effective amendment thereto relating to the ECAPS^SM became, or is deemed to have become, effective under the Securities Act in accordance with the Rules and Regulations (including pursuant to Rule 430B of the Rules and Regulations);

“Final Term Sheet” means the term sheet prepared pursuant to Section 4(a) of the Agreement and substantially in the form attached in Schedule III hereto;

“Issuer Free Writing Prospectus” means each “free writing prospectus” (as defined in Rule 405 of the Rules and Regulations) prepared by or on behalf of the Company or used or referred to by the Company in connection with the offering of the ECAPS^SM, including the Final Term Sheet;

“Preliminary Prospectus” means any preliminary prospectus relating to the ECAPS^SM, including the Base Prospectus and any preliminary prospectus supplement thereto, included in the Registration Statement or as filed with the Commission pursuant to Rule 424(b) of the Rules and Regulations and provided to the Representatives for use by the Underwriters;

“Prospectus” means the final prospectus relating to the ECAPS^SM, including the Base Prospectus and the final prospectus supplement thereto relating to the ECAPS^SM, as filed with the Commission pursuant to Rule 424(b) of the Rules and Regulations and provided to the Representatives for use by the Underwriters; and

“Registration Statement” means, collectively, the various parts of the above-referenced registration statement, each as amended as of the Effective Date for such part, including any Preliminary Prospectus and the Prospectus, all exhibits to such registration statement and all documents incorporated by reference therein.

Any reference to the “most recent Preliminary Prospectus” will be deemed to refer to the latest Preliminary Prospectus included in the Registration Statement or filed pursuant to Rule 424(b) of the Rules and Regulations prior to or on the date hereof (including, for purposes of this Agreement, any documents incorporated by reference therein prior to or on the date of this Agreement). Any reference to any Preliminary Prospectus or the Prospectus will be deemed to refer to and include any documents incorporated by reference therein pursuant to Form S-3 under the Securities Act as of the date of such Preliminary Prospectus or the Prospectus, as the case may be. Any reference to any amendment or supplement to any Preliminary Prospectus or the Prospectus will be deemed to refer to and include any document filed under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), after the date of such Preliminary Prospectus or the Prospectus, as the case may be, and incorporated by reference in such Preliminary Prospectus or the Prospectus, as the case may be; and any reference to any amendment to the Registration Statement will be deemed to include any annual report of the Company on Form 10-K filed with the Commission pursuant to Section 13(a) or 15(d) of the Exchange Act after the Effective Date that is incorporated by reference in the Registration Statement.

(b) The Commission has not issued any order preventing or suspending the effectiveness of the Registration Statement or preventing or suspending the use of any Preliminary Prospectus, any Issuer Free Writing Prospectus or the Prospectus; and no proceeding for any such purpose or pursuant to Section 8A of the Securities Act against the Company or related to the offering has been instituted or, to the Company’s knowledge, threatened by the Commission. The Commission has not issued any order directed to any document incorporated by reference in the most recent Preliminary Prospectus or the Prospectus, and no proceeding has been instituted or, to the Company’s knowledge, threatened by the Commission with respect to any document incorporated by

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reference in the most recent Preliminary Prospectus or the Prospectus. The Commission has not notified the Company of any objection to the use of the form of the Registration Statement.

(c) The Company is a “well-known seasoned issuer” (as defined in Rule 405 of the Rules and Regulations) and has not been, and continues not to be, an “ineligible issuer” (as defined in Rule 405 of the Rules and Regulations), in each case at all times relevant under the Securities Act in connection with the offering of the ECAPS^SM.

(d) The Registration Statement conformed on the Effective Date and any amendment to the Registration Statement filed after the date hereof will conform, in all material respects, to the requirements of the Securities Act and the Rules and Regulations. The most recent Preliminary Prospectus conforms on the date hereof, and the Prospectus, and any amendment or supplement thereto, will conform as of its date and as of the Closing Date, in all material respects, to the requirements of the Securities Act and the Rules and Regulations. The documents incorporated by reference in the most recent Preliminary Prospectus or the Prospectus conformed, and any further documents so incorporated will conform, when filed with the Commission, in all material respects to the requirements of the Exchange Act or the Securities Act, as applicable, and the Rules and Regulations; and. no such documents have been filed with the Commission since the close of business of the Commission on the Business Day immediately prior to the date hereof.

(e) The Registration Statement does not, as of the date hereof, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading; provided, however, that no representation or warranty is made as to information contained in or omitted from the Registration Statement in reliance upon and in conformity with written information furnished to the Company through the Representatives by or on behalf of any Underwriter specifically for inclusion therein (which information is specified in Section 12 hereof).

(f) The Disclosure Package did not, as of the Applicable Time, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that no representation or warranty is made as to information contained in or omitted from the Disclosure Package in reliance upon and in conformity with written information furnished to the Company through the Representatives by or on behalf of any Underwriter specifically for inclusion therein (which information is specified in Section 12 hereof).

(g) The Prospectus, and any amendment or supplement thereto, will not, as of its date and on the Closing Date, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that no representation or warranty is made as to information contained in or omitted from the Prospectus in reliance upon and in conformity with written information furnished to the Company through the Representatives by or on behalf of any Underwriter specifically for inclusion therein (which information is specified in Section 12 hereof).

(h) The documents incorporated by reference in any Preliminary Prospectus or the Prospectus did not, and any further documents incorporated by reference therein will not, when filed with the Commission, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.

(i) The Company has been duly incorporated and is an existing corporation in good standing under the laws of the State of Delaware, with corporate power and authority to own its properties and conduct its business as described in the most recent Preliminary Prospectus and the Prospectus; and the Company is duly qualified to do business as a foreign corporation in good standing in all other jurisdictions in which its ownership or lease of property or the conduct of its business requires such qualification, except where the failure to be so qualified or be in good standing would not have a material adverse effect on the financial condition, business, properties, results of operations or affairs of the Company and its subsidiaries taken as a whole (a “Material Adverse Effect”).

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(j) Each subsidiary of the Company that is material to the Company and its subsidiaries taken as a whole (collectively, the “Significant Subsidiaries”) is listed on Exhibit A hereto, together with its jurisdiction of organization and the beneficial ownership of the Company therein. Each Significant Subsidiary has been duly organized and is an existing corporation or limited liability company in good standing under the laws of the jurisdiction of its formation, with corporate power and authority to own its properties and conduct its business as described in the most recent Preliminary Prospectus and the Prospectus; and each Significant Subsidiary of the Company is duly qualified to do business as a foreign entity in good standing in all other jurisdictions in which its ownership or lease of property or the conduct of its business requires such qualification, except where the failure to be so qualified or in good standing would not have a Material Adverse Effect; all of the issued and outstanding capital stock or membership interests of each Significant Subsidiary of the Company has been duly authorized and validly issued and is fully paid and nonassessable; and the capital stock of each Significant Subsidiary owned by the Company, directly or through subsidiaries, is owned, except to the extent set forth in Schedule B hereto, free and clear of any mortgage, pledge, lien, security interest, claim, encumbrance or defect of any kind.

(k) This Agreement has been duly authorized, executed and delivered by the Company.

(l) The Indenture has been duly authorized by the Company and, assuming due authorization by the Trustee, when duly executed and delivered by the Company and the Trustee, will constitute a valid and legally binding obligation of the Company, enforceable against the Company in accordance with its terms, except to the extent that enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to creditors’ rights and remedies generally and by general principles of equity and concepts of reasonableness (regardless of whether enforcement is sought in a proceeding at law or in equity); and the Indenture conforms in all material respects to the description thereof contained in the most recent Preliminary Prospectus and the Prospectus.

(m) The ECAPS^SM have been duly authorized by the Company, and when executed, authenticated and delivered and paid for as provided in this Agreement and the Indenture, the ECAPS^SM will have been duly executed, authenticated, issued and delivered and will constitute valid and legally binding obligations of the Company entitled to the benefits of the Indenture and enforceable against the Company in accordance with their terms, except to the extent that enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to creditors’ rights and remedies generally and by general principles of equity and concepts of reasonableness (regardless of whether enforcement is sought in a proceeding at law or in equity); and the ECAPS^SM conform in all material respects to the description thereof contained in the Disclosure Package and the Prospectus.

(n) The execution, delivery and performance of the Indenture and this Agreement and the issuance and sale of the ECAPS^SM will not require the consent, approval, authorization, or order of, or filing with, any governmental agency or body or any court (except such as have been obtained or made and such as may be required under state securities laws).

(o) The execution, delivery and performance of the Indenture and this Agreement and the issuance and sale of the ECAPS^SM and compliance with the terms and provisions thereof will not conflict with or result in a breach or violation of any of the terms and provisions of, and do not and will not constitute a default (or an event which with the giving of notice or the lapse of time or both would constitute a default) under, or result in the creation or imposition of any lien, charge or encumbrance upon any material assets or properties of the Company or any of its subsidiaries under (A) the charter, by-laws or other organizational documents of the Company or any Significant Subsidiary, (B) any statute, any rule, regulation, order or decree of any governmental or regulatory agency or body or any court, domestic or foreign, having jurisdiction over the Company or any subsidiary or any of their properties, assets or operations, or (C) any indenture, mortgage, loan or credit agreement, note, lease, permit, license or other agreement or instrument to which the Company or any subsidiary is a party or by which the Company or any subsidiary is bound or to which any of the properties, assets or operations of the Company or any subsidiary is subject, except, in the case of clauses (B) and (C), for such breaches or violations which would not have a Material Adverse Effect.

(p) The Company and its subsidiaries have good and marketable title to all real properties owned by them, in each case free and clear of any mortgage, pledge, lien, security interest, claim or other encumbrance or defect; the Company and its subsidiaries hold any leased real property under valid, subsisting and

4

enforceable leases or subleases with no exceptions that would materially interfere with the use made or to be made thereof by them; neither the Company nor any of its subsidiaries is in material default under any such lease or sublease; and no material claim of any sort has been asserted by anyone adverse to the rights of the Company or any subsidiary under any such lease or sublease or affecting or questioning the right of such entity to the continued possession of the leased or subleased properties under any such lease or sublease, except in each case as would not, individually or in the aggregate, have a Material Adverse Effect.

(q) Except as described in the most recent Preliminary Prospectus and the Prospectus, the Company and its subsidiaries possess adequate certificates, authorizations, licenses or permits issued by appropriate governmental agencies or bodies necessary to conduct the business now operated by them, except as would not have a Material Adverse Effect, and have not received any notice of proceedings relating to the revocation or modification of any such certificate, authorization, license or permit that, individually or in the aggregate, could have a Material Adverse Effect.

(r) The Company and each of its subsidiaries have filed all tax returns required to be filed, which returns are complete and correct in all material respects, and neither the Company nor any of its subsidiaries is in default in the payment of any taxes which were payable pursuant to said returns or any assessments with respect thereto, in each case except as would not, individually or in the aggregate, have a Material Adverse Effect.

(s) Neither the filing of the Registration Statement, the most recent Preliminary Prospectus or the Prospectus nor the offer or sale of the ECAPS^SM as contemplated by this Agreement gives rise to any rights, other than those which have been duly waived or satisfied, for or relating to the registration of any securities of the Company.

(t) Except as described in the most recent Preliminary Prospectus and the Prospectus (A) neither the Company nor any of its Significant Subsidiaries is in violation of its charter or by-laws, (B) neither the Company nor any of its subsidiaries is in violation of any applicable law, ordinance, administrative or governmental rule or regulation, or any order, decree or judgment of any court or governmental agency or body having jurisdiction over the Company or any of its subsidiaries and (C) no event of default or event that, but for the giving of notice or the lapse of time or both, would constitute an event of default, exists, or as a result of the consummation of the sale of the ECAPS^SM will exist, under any indenture, mortgage, loan agreement, note, lease, permit, license or other agreement or instrument to which the Company or any of its subsidiaries is a party or to which any of the properties, assets or operations of the Company or any such Subsidiary is subject, except, in the case of clauses (B) and (C), for such violations and defaults that would not have a Material Adverse Effect.

(u) Except as described in the most recent Preliminary Prospectus and the Prospectus, there are no pending actions, suits or proceedings against or, to the knowledge of the Company, affecting the Company, any of its subsidiaries or any of their respective properties, assets or operations that would have, individually or in the aggregate, a Material Adverse Effect, or could materially and adversely affect the ability of the Company to perform its obligations under this Agreement, the Indenture or any other document governing the sale of the ECAPS^SM; and no such actions, suits or proceedings are, to the knowledge of the Company, threatened.

(v) The financial statements, together with the related schedules and notes included or incorporated by reference in the most recent Preliminary Prospectus and the Prospectus, present fairly, in all material respects, the respective financial position of the Company and its consolidated subsidiaries and Caremark Rx, Inc., as applicable, as of the dates shown and their results of operations and cash flows for the periods shown, and have been prepared in conformity with generally accepted accounting principles in the United States applied on a consistent basis, except as disclosed therein. The other financial and statistical information set forth in the most recent Preliminary Prospectus and the Prospectus present fairly, in all material respects, the information shown therein and have been, except as disclosed therein, compiled on a basis consistent with that of the financial statements included or incorporated by reference in the most recent Preliminary Prospectus and the Prospectus.

(w) The pro forma financial statements included or incorporated by reference in the most recent Preliminary Prospectus include assumptions that provide a reasonable basis for presenting the significant effects directly attributable to the transactions and events described therein, the related pro forma adjustments give appropriate effect to those assumptions, and the pro forma adjustments reflect the proper application of those

5

adjustments to the historical financial statement amounts in the pro forma financial statements included or incorporated by reference in the most recent Preliminary Prospectus. The pro forma financial statements included or incorporated by reference in the most recent Preliminary Prospectus comply as to form in all material respects with the applicable requirements of Regulation S-X under the Act.

(x) Since the date of the latest audited financial statements of the Company included or incorporated by reference in the Preliminary Prospectus and the Prospectus, there has been no material adverse change, nor any development or event involving a prospective material adverse change, in the financial condition, business, properties or results of operations of the Company and its subsidiaries taken as a whole.

(y) There is no contract or document required to be described in the Registration Statement, any Preliminary Prospectus or the Prospectus or to be filed as an exhibit to the Registration Statement or to a document incorporated by reference into the Registration Statement, any Preliminary Prospectus or the Prospectus which is not described or filed as required.

(z) The Company is not and, after giving effect to the offering and sale of the ECAPS^SM and the application of the proceeds thereof as described in the most recent Preliminary Prospectus and the Prospectus will not be required to register as, an “investment company” as defined in the Investment Company Act of 1940, as amended.

(aa) Each of the Company and its Significant Subsidiaries maintains a system of internal accounting controls over financial reporting. The Company's internal controls over financial reporting includes those policies and procedures that pertain to the Company's ability to record, process, summarize and report a system of internal accounting controls and procedures to provide reasonable assurance, at an appropriate cost/benefit relationship, that the unauthorized acquisition, use or disposition of assets are prevented or timely detected and that transactions are authorized, recorded and reported properly to permit the preparation of financial statements in accordance with generally accepted accounting principles and receipts and expenditures are duly authorized. The Company’s internal controls over financial reporting were effective and provided such reasonable assurance for the preparation of financial statements as of December 30, 2006 and, to the best of the Company’s knowledge, there have been no changes in the Company’s internal controls over financial reporting subsequent to December 30, 2006.

(bb) The Company has made the evaluations of the Company’s disclosure controls and procedures required under Rule 13a 15(b) under the Exchange Act and management’s conclusions regarding the effectiveness of such disclosure controls and procedures were included in the Company’s annual report on Form 10-K for the fiscal year ended December 30, 2006.

For purposes of this Section 1, as well as for Section 6 hereof, references to “the most recent Preliminary Prospectus and the Prospectus” or “the Disclosure Package and the Prospectus” are to each of the most recent Preliminary Prospectus or the Disclosure Package, as the case may be, and the Prospectus as separate or stand-alone documentation (and not the most recent Preliminary Prospectus or the Disclosure Package, as the case may be, and the Prospectus taken together), so that representations, warranties, agreements, conditions and legal opinions will be made, given or measured independently in respect of each of the most recent Preliminary Prospectus or the Disclosure Package, as the case may be, and the Prospectus.

2. Purchase of the ECAPS^SM by the Underwriters. Subject to the terms and conditions and upon the basis of the representations and warranties herein set forth, the Company agrees to issue and sell to the Underwriters, and each of the Underwriters agrees, severally and not jointly, to purchase from the Company, at a price equal to 99.00% of the principal amount of the ECAPS^SM, plus accrued interest, if any, from May 25, 2007 to the Closing Date, the respective principal amount of the ECAPS^SM set forth opposite such Underwriter’s name in Schedule I hereto.

3. Delivery of and Payment for the ECAPS^SM. Delivery of the ECAPS^SM will be made at the offices of Dewey Ballantine LLP, 1301 Avenue of the Americas, New York, NY 10019, or at such place or places as mutually may be agreed upon by the Company and the Underwriters, at 9:00 A.M., New York City time, on May 25, 2007 or on such later date not more than seven Business Days after such date as may be determined by the Representatives and the Company (the “Closing Date”).

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Delivery of the ECAPS^SM will be made to the Representatives by or on behalf of the Company against payment of the purchase price therefor by wire transfer of immediately available funds. Delivery of the ECAPS^SM will be made through the facilities of The Depository Trust Company unless the Representatives will otherwise instruct. Delivery of the ECAPS^SM at the time and place specified in this Agreement is a further condition to the obligations of each Underwriter.

4. Covenants of the Company. The Company covenants and agrees with each Underwriter that:

(a) The Company (i) will prepare the Prospectus in a form approved by the Representatives and file the Prospectus pursuant to Rule 424(b) of the Rules and Regulations within the time period prescribed by such Rule; (ii) will not file any amendment or supplement to the Registration Statement or the Prospectus or file any document under the Exchange Act (except for filings of annual reports on Form 10-K and quarterly reports on Form 10-Q under the Exchange Act) before the termination of the offering of the ECAPS^SM by the Underwriters if such document would be deemed to be incorporated by reference into the Prospectus, which filing is not consented to by the Representatives after reasonable notice thereof (such consent not to be unreasonably withheld or delayed); (iii) will advise the Representatives, promptly after it receives notice thereof, of the time when any amendment or supplement to the Registration Statement, the most recent Preliminary Prospectus or the Prospectus has been filed and will furnish the Representatives with copies thereof; (iv) will prepare the Final Term Sheet, substantially in the form of Schedule III hereto and approved by the Representatives and file the Final Term Sheet pursuant to Rule 433(d) of the Rules and Regulations within the time period prescribed by such Rule; (v) will advise the Representatives promptly after it receives notice thereof, of the issuance by the Commission or any state or other regulatory body of any stop order or any order suspending the effectiveness of the Registration Statement, suspending or preventing the use of any Preliminary Prospectus, the Prospectus or any Issuer Free Writing Prospectus or suspending the qualification of the ECAPS^SM for offering or sale in any jurisdiction, of the initiation or threatening of any proceedings for any such purpose or pursuant to Section 8A of the Securities Act, of receipt by the Company from the Commission of any notice of objection to the use of the Registration Statement or any post-effective amendment thereto or of any request by the Commission for the amending or supplementing of the Registration Statement, the Prospectus or any Issuer Free Writing Prospectus or for additional information; and (vi) will use its reasonable best efforts to prevent the issuance of any stop order or other such order or any such notice of objection and, if a stop order or other such order is issued or any such notice of objection is received, to obtain as soon as possible the lifting or withdrawal thereof.

(b) The Company will furnish to each of the Underwriters and to counsel for the Underwriters such number of conformed copies of the Registration Statement, as originally filed and each amendment thereto (excluding exhibits other than this Agreement), any Preliminary Prospectus, the Final Term Sheet and any other Issuer Free Writing Prospectus, the Prospectus and all amendments and supplements to any of such documents (including any document filed under the Exchange Act and deemed to be incorporated by reference in the Registration Statement, any Preliminary Prospectus or the Prospectus), in each case as soon as available and in such quantities as the Representatives may from time to time reasonably request.

(c) During the period in which the Prospectus relating to the ECAPS^SM (or in lieu thereof, the notice referred to in Rule 173(a) of the Rules and Regulations) is required to be delivered under the Securities Act, the Company will comply with all requirements imposed upon it by the Securities Act and by the Rules and Regulations, as from time to time in force, so far as is necessary to permit the continuance of sales of or dealings in the ECAPS^SM as contemplated by the provisions of this Agreement and by the Prospectus. If during such period any event occurs as a result of which the Prospectus as then amended or supplemented would include an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, or if during such period it is necessary to amend the Registration Statement or amend or supplement the Prospectus or file any document to comply with the Securities Act, the Company will promptly notify the Representatives and will, subject to Section 4(a) hereof, amend the Registration Statement, or amend or supplement the Prospectus, as the case may be, or file any document (in each case, at the expense of the Company) so as to correct such statement or omission or to effect such compliance, and will furnish without charge to each Underwriter as many written and electronic copies of any such amendment or supplement as the Representatives may from time to time reasonably request. Neither the Representatives’ consent to nor its delivery to offerees or investors of, any such amendment or supplement shall constitute a waiver of any of the conditions set forth in Section 6 of this Agreement.

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(d) As soon as practicable, the Company will make generally available to its security holders and the Underwriters an earnings statement satisfying the requirements of Section 11(a) of the Securities Act and Rule 158 of the Rules and Regulations.

(e) The Company agrees, whether or not this Agreement becomes effective or is terminated or the sale of the ECAPS^SM to the Underwriters is consummated, to pay all fees, expenses, costs and charges in connection with: (i) the preparation, printing, filing, registration, delivery and shipping of the Registration Statement (including any exhibits thereto), any Preliminary Prospectus, any Issuer Free Writing Prospectus, the Prospectus and any amendments or supplements thereto; (ii) the printing, producing, copying and delivering of this Agreement, the Indenture, closing documents (including any compilations thereof) and any other agreements, memoranda, correspondence and other documents printed and delivered in connection with the offering, purchase, sale and delivery of the ECAPS^SM; (iii) the services of the Company’s independent registered public accounting firm; (iv) the services of the Company’s counsel; (v) the qualification of the ECAPS^SM under the securities laws of the several jurisdictions as provided in Section 4(i) hereof; (vi) any rating of the ECAPS^SM by rating agencies; (vii) the services of the Trustee and any agent of the Trustee (including the fees and disbursements of counsel for the Trustee); (viii) any “road show” or other investor presentations relating to the offering of the ECAPS^SM (including, without limitation, for meetings and travel); and (ix) otherwise incident to the performance of its obligations hereunder for which provision is not otherwise made in this Section 4(e). It is understood, however, that, except as provided in this Section 4(e) or Sections 7 and 9 hereof, the Underwriters will pay all of their own costs and expenses, including the fees and expenses of counsel to the Underwriters and any advertising expenses incurred in connection with the offering of the ECAPS^SM. If the sale of the ECAPS^SM provided for herein is not consummated by reason of acts of the Company or changes in circumstances of the Company pursuant to Section 9 of this Agreement which prevent this Agreement from becoming effective, or by reason of any failure, refusal or inability on the part of the Company to perform any agreement on its part to be performed or because any other condition of the Underwriters’ obligations hereunder is not fulfilled or if the Underwriters decline to purchase the ECAPS^SM for any reason permitted under this Agreement (other than by reason of a default by any of the Underwriters pursuant to Section 8 or if the Underwriters terminate this Agreement under Section 9 of this Agreement upon the occurrence of any event specified in clause (iii), (iv), (vi), (vii) or (viii) of Section 6(f)), the Company will reimburse the Underwriters for all reasonable out-of-pocket disbursements (including fees and expenses of counsel to the Underwriters) incurred by the Underwriters in connection with any investigation or preparation made by them in respect of the marketing of the ECAPS^SM or in contemplation of the performance by them of their obligations hereunder.

(f) Until termination of the offering of the ECAPS^SM, the Company will timely file all reports, documents and amendments to previously filed documents required to be filed by it pursuant to Section 12, 13(a), 13(c), 14 or 15(d) of the Exchange Act.

(g) The Company will apply the net proceeds from the sale of the ECAPS^SM as set forth in the most recent Preliminary Prospectus and the Prospectus under the caption “Use of Proceeds.”

(h) The Company will pay the required Commission filing fees relating to the ECAPS^SM within the time period required by Rule 456(b)(1) of the Rules and Regulations without regard to the proviso therein and otherwise in accordance with Rules 456(b) and 457(r) of the Rules and Regulations.

(i) The Company will use reasonable best efforts to arrange for the qualification of the ECAPS^SM and the determination of their eligibility for investment under the blue sky laws of such jurisdictions as the Representatives designate and will continue such qualifications in effect so long as required for the distribution of the ECAPS^SM by the Underwriters, provided that the Company will not be required to qualify as a foreign corporation or to file a general consent to service of process or subject itself to taxation in any such state.

5. Free Writing Prospectuses.

(a) The Company represents and warrants to, and agrees with, each Underwriter that (i) the Company has not made, and will not make, any offer relating to the ECAPS^SM that would constitute an Issuer Free Writing Prospectus without the prior consent of the Representatives (which consent being deemed to have been given with respect to (A) the Final Term Sheet prepared and filed pursuant to Section 4(a) hereof and (B) any other Issuer Free Writing Prospectus identified on Schedule II hereto); (ii) each Issuer Free Writing Prospectus

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conformed or will conform in all material respects to the requirements of the Securities Act and the Rules and Regulations on the date of first use, and the Company has complied with any filing requirements applicable to such Issuer Free Writing Prospectus pursuant to Rule 433 of the Rules and Regulations; (iii) each Issuer Free Writing Prospectus will not, as of its issue date and through the time the ECAPS^SM are delivered pursuant to Section 3 hereof, include any information that conflicts with the information contained in the Registration Statement, the most recent Preliminary Prospectus and the Prospectus; and (iv) each Issuer Free Writing Prospectus, when considered together with the information contained in the most recent Preliminary Prospectus, did not, as of the Applicable Time, does not, as of the date hereof, and will not, as of the Closing Date, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.

(b) Each Underwriter represents and warrants to, and agrees with, the Company and each other Underwriter that it has not made, and will not make any offer relating to the ECAPS^SM that would constitute a “free writing prospectus” (as defined in Rule 405 of the Rules and Regulations) required to be filed with the Commission, without the prior consent of the Company and the Representatives.

(c) The Company agrees that if at any time following issuance of an Issuer Free Writing Prospectus any event occurred or occurs as a result of which such Issuer Free Writing Prospectus would conflict with the information in the Registration Statement, the most recent Preliminary Prospectus or the Prospectus or would include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances then prevailing, not misleading, the Company will give prompt notice thereof to the Representatives and, if requested by the Representatives, will prepare and furnish without charge to each Underwriter an Issuer Free Writing Prospectus or other document which will correct such conflict, statement or omission.

6. Conditions of Underwriters’ Obligations. The obligations of the Underwriters hereunder are subject to the accuracy, as of the date hereof and the Closing Date (as if made at the Closing Date), of the representations and warranties of the Company contained herein, to the performance by the Company of its obligations hereunder and to the following additional conditions:

(a) The Prospectus shall have been filed with the Commission in a timely fashion in accordance with Section 4(a) hereof; all filings (including, without limitation, the Final Term Sheet) required by Rule 424(b) or Rule 433 of the Rules and Regulations shall have been made within the time periods prescribed by such Rules, and no such filings will have been made without the consent of the Representatives (such consent not to be unreasonably withheld or delayed); no stop order suspending the effectiveness of the Registration Statement or any amendment or supplement thereto, preventing or suspending the use of any Preliminary Prospectus, any Issuer Free Writing Prospectus or the Prospectus, or suspending the qualification of the ECAPS^SM for offering or sale in any jurisdiction shall have been issued; no proceedings for the issuance of any such order shall have been initiated or threatened pursuant to Section 8A of the Securities Act; no notice of objection of the Commission to use the Registration Statement or any post-effective amendment thereto shall have been received by the Company; and any request of the Commission for additional information (to be included in the Registration Statement or the Prospectus or otherwise) shall have been disclosed to the Representatives and complied with to the Representatives’ reasonable satisfaction.

(b) The Representatives shall have received a letter, dated the date of this Agreement, of KPMG LLP (“KPMG”), addressed to the Underwriters, confirming that they are independent public accountants within the meaning of the Securities Act and the applicable published rules and regulations thereunder (“Rules and Regulations”) and to the effect that:

(i) in their opinion the financial statements and schedules examined by them and included or incorporated by reference in the most recent Preliminary Prospectus or the Prospectus comply as to form in all material respects with the applicable accounting requirements of the Securities Act and the related published Rules and Regulations;

(ii) they have performed the procedures specified by the American Institute of Certified Public Accountants for a review of interim financial information as described in Statement of Auditing

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Standards No. 100, Interim Financial Information, on the unaudited financial statements included or incorporated by reference in the most recent Preliminary Prospectus or the Prospectus;

(iii) on the basis of the review referred to in clause (ii) above, a reading of the latest available interim financial statements of the Company, inquiries of officials of the Company who have responsibility for financial and accounting matters and other specified procedures, nothing came to their attention that caused them to believe that:

(A)   the unaudited financial statements included or incorporated by reference in the most recent Preliminary Prospectus or the Prospectus do not comply as to form in all material respects with the applicable accounting requirements of the Securities Act and the related published Rules and Regulations or any material modifications should be made to such unaudited financial statements for them to be in conformity with generally accepted accounting principles;

(B)   at the date of the latest available balance sheet read by such accountants, and at a subsequent specified date not more than three business days prior to the date of this Agreement, there was any decrease in stockholders’ equity or change in the capital stock or any increase in short-term indebtedness or long-term debt of the Company and its consolidated subsidiaries or, at the date of the latest available balance sheet read by such accountants, there was any decrease in consolidated net current assets or total assets, as compared with amounts shown on the latest balance sheet included or incorporated by reference in the most recent Preliminary Prospectus or the Prospectus; or

(C)   for the period from the closing date of the latest income statement included or incorporated by reference in the most recent Preliminary Prospectus or the Prospectus to the closing date of the latest available income statement read by such accountants there were any decreases, as compared with the corresponding period of the previous year and with the period of corresponding length ended the date of the latest income statement included or incorporated by reference in the most recent Preliminary Prospectus or the Prospectus, in consolidated net sales, net operating income, the total or per share amounts of net earnings or in the ratio of earnings to fixed charges, or any increases or decreases, as the case may be, in other items specified by the Representatives;

(D)   except in all cases set forth in clauses (B) and (C) above for changes, increases or decreases which the most recent Preliminary Prospectus or the Prospectus discloses have occurred or may occur or which are described in such letter;

(iv) the pro forma financial statements, together with related notes, included or incorporated by reference in the most recent Preliminary Prospectus or the Prospectus are consistent with the historical statements, except for the pro forma adjustments specified therein, and give effect to assumptions made on a reasonable basis and present fairly the historical and proposed transactions contemplated hereby and by the most recent Preliminary Prospectus or the Prospectus, and nothing came to their attention that caused them to believe that the pro forma financial information included or incorporated by reference in the most recent Preliminary Prospectus or the Prospectus does not comply as to form in all material respects with the accounting requirements of the Securities Act and the related published Rules and Regulations or has not been properly compiled and that the pro forma adjustments have not been properly applied to the historical amounts in the compilation of those statements; and

(v) they have compared specified dollar amounts (or percentages derived from such dollar amounts), numerical data and other financial information contained in the most recent Preliminary Prospectus or the Prospectus (in each case to the extent that such dollar amounts, percentages, numerical data and other financial information are derived from the general accounting records of the Company and its subsidiaries subject to the internal controls of the Company’s accounting system or are derived directly from such records by analysis or computation) with the results obtained from inquiries, a reading of such

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general accounting records and other procedures specified in such letter and have found such dollar amounts, percentages, numerical data and other financial information to be in agreement with such results except as otherwise specified in such letter.

(c) The Representatives shall have received a letter, addressed to the Underwriters, dated the Closing Date, of KPMG which meets the requirements of subsection (b) of this Section, except that the specified date referred to in such subsection will be a date not more than three days prior to the Closing Date for the purposes of this subsection.

(d) The Representatives shall have received a letter, dated the date of this Agreement, of Ernst & Young LLP (“E&Y”), addressed to the Underwriters, confirming that they are independent public accountants within the meaning of the Securities Act and the applicable Rules and Regulations and to the effect that:

(i) in their opinion the financial statements and schedules of Caremark Rx, Inc. examined by them and included or incorporated by reference in the most recent Preliminary Prospectus or the Prospectus comply as to form in all material respects with the applicable accounting requirements of the Securities Act and the related published Rules and Regulations;

(ii) they have compared specified dollar amounts (or percentages derived from such dollar amounts), numerical data and other financial information contained in the most recent Preliminary Prospectus or the Prospectus (in each case to the extent that such dollar amounts, percentages, numerical data and other financial information are derived from the general accounting records of Caremark Rx, Inc. and its subsidiaries subject to the internal controls of Caremark Rx, Inc.’s accounting system or are derived directly from such records by analysis or computation) with the results obtained from inquiries, a reading of such general accounting records and other procedures specified in such letter and have found such dollar amounts, percentages, numerical data and other financial information to be in agreement with such results except as otherwise specified in such letter.

(e) The Representatives shall have received a letter, addressed to the Underwriters, dated the Closing Date, of E&Y which meets the requirements of subsection (d) of this Section, except that the specified date referred to in such subsection will be a date not more than three days prior to the Closing Date for the purposes of this subsection.

(f) Subsequent to the execution and delivery of this Agreement, there shall not have occurred (i) any change, or any development involving a prospective change, in the condition (financial or other), business, properties or results of operations of the Company and its subsidiaries, taken as a whole, which, in the judgment of the Representatives, is material and adverse and makes it impractical or inadvisable to proceed with completion of the offering or the sale of and payment for the ECAPS^SM; (ii) any downgrading in the rating of any debt securities of the Company by any “nationally recognized statistical rating organization” (as defined for purposes of Rule 436(g) under the Securities Act), or any public announcement that any such organization has under surveillance or review its rating of any debt securities of the Company (other than an announcement with positive implications of a possible upgrading, and no implication of a possible downgrading, of such rating); (iii) any change in U.S. or international financial, political or economic conditions or currency exchange rates or exchange controls as would, in the judgment of the Representatives, be likely to prejudice materially the success of the proposed issue, sale or distribution of the ECAPS^SM, whether in the primary market or in respect of dealings in the secondary market; (iv) any material suspension or material limitation of trading in securities generally on the New York Stock Exchange or any setting of minimum prices for trading on such exchange; (v) any suspension of trading of any securities of the Company on any exchange or in the over-the-counter market; (vi) any banking moratorium declared by U.S. Federal or New York authorities; (vii) any major disruption of settlements of securities or clearance services in the United States; or (viii) any attack on the United States, outbreak or escalation of major hostilities or act of terrorism involving the United States, any declaration of war by Congress or any other substantial national or international calamity or emergency if, in the judgment of the Representatives, the effect of any such attack, outbreak, escalation, act, declaration, calamity or emergency makes it impractical or inadvisable to proceed with completion of the offering or sale of and payment for the ECAPS^SM.

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(g) The Representatives shall have received from Davis Polk & Wardwell, counsel for the Company, an opinion, addressed to the Underwriters, dated the Closing Date substantially in the form of ExhibitA hereto.

(h) The Representatives shall have received from Zenon P. Lankowsky, General Counsel and Secretary of the Company, an opinion, addressed to the Underwriters, dated the Closing Date substantially in the form of Exhibit B hereto.

(i) The Representatives shall have received from Dewey Ballantine LLP, counsel to the Underwriters, such opinion or opinions, addressed to the Underwriters, dated the Closing Date and in form and substance satisfactory to the Representatives, with respect to the ECAPS^SM, Indenture, Registration Statement, Prospectus and Disclosure Package and other related matters as the Representatives may reasonably require, and the Company shall have furnished to such counsel such documents as they may reasonably request for the purpose of enabling them to pass upon such matters.

(j) The Representatives shall have received a certificate, dated the Closing Date, of the President or any Vice President and the principal financial or accounting officer of the Company in which such officers, to the best of their knowledge after reasonable investigation, shall state that (i) the representations and warranties of the Company in this Agreement are true and correct, (ii) the Company has complied with all the agreements and satisfied all the conditions on its part to be performed or satisfied hereunder at or prior to the Closing Date; (ii) no stop order suspending the effectiveness of the Registration Statement has been issued, no proceedings for any such purpose have been initiated or threatened and (iii) subsequent to the dates of the most recent financial statements in the most recent Preliminary Prospectus and the Prospectus, there has been no material adverse change, nor any development or event involving a prospective material adverse change, in the condition (financial or other), business, properties or results of operations of the Company and its subsidiaries, taken as a whole, other than those set forth in or contemplated by the most recent Preliminary Prospectus and the Prospectus or as described in such certificate.

The Company will furnish the Underwriters with such conformed copies of such opinions, certificates, letters and documents as the Underwriters reasonably request. The Representatives may in their sole discretion waive on behalf of the Underwriters compliance with any conditions to the obligations of the Underwriters hereunder.

7. Indemnification and Contribution.

(a) The Company will indemnify and hold harmless each Underwriter, its partners, members, directors and officers and affiliates and each person, if any, who controls such Underwriter within the meaning of Section 15 of the Securities Act, from and against any loss, claim, damage or liability (or any action in respect thereof), joint or several, to which such Underwriter or such person may become subject, under the Securities Act or otherwise, insofar as such loss, claim, damage or liability (or action in respect thereof) arises out of or is based upon (i) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, any Preliminary Prospectus, the Prospectus, or the Disclosure Package, each as amended or supplemented, any Issuer Free Writing Prospectus or any “issuer information” filed or required to be filed pursuant to Rule 433(d) of the Rules and Regulations, or (ii) the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein (in the case of any Preliminary Prospectus, Free Writing Prospectus, the Prospectus and the Disclosure Package, in the light of the circumstances under which they were made) not misleading, and will reimburse each Underwriter for any legal or other expenses as reasonably incurred by such Underwriter in connection with investigating, preparing to defend or defending against or appearing as a third-party witness in connection with any such loss, claim, damage, liability or action, notwithstanding the possibility that payments for such expenses might later be held to be improper, in which case such payments will be promptly refunded; provided, however, that the Company will not be liable under this Section 7(a) in any such case to the extent that any such loss, claim, damage, liability or action arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in reliance upon and in conformity with written information furnished to the Company by any Underwriter directly or through the Representatives specifically for use therein (which information is specified in Section 12 hereof). The foregoing indemnity agreement shall not inure to the benefit of any Underwriter if (i) such loss, claim, damage or liability (or action in respect thereof) arises out of or is based upon an untrue statement or

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alleged untrue statement or omission or alleged omission made in any Preliminary Prospectus, (ii) the Company informed the Representatives of such untrue statement or alleged untrue statement or omission or alleged omission prior to the Applicable Time, (iii) such untrue statement or alleged untrue statement or omission or alleged omission was corrected in an amended or supplemented Preliminary Prospectus (or, where permitted by law, an Issuer Free Writing Prospectus) and such corrected Preliminary Prospectus (or Issuer Free Writing Prospectus) was provided to the Underwriters such that the Underwriters had a reasonably sufficient amount of time prior to the Applicable Time to deliver such corrected Preliminary Prospectus (or Issuer Free Writing Prospectus) to the persons to whom the Underwriters are selling the ECAPS^SM, (iv) the timely delivery of such corrected Preliminary Prospectus (or Issuer Free Writing Prospectus) to such person prior to the Applicable Time would have constituted a complete defense to the losses, claims, damages and liabilities asserted by such person and (v) such corrected Preliminary Prospectus (or Issuer Free Writing Prospectus) was not sent or given by or on behalf of such Underwriter to such person prior to the Applicable Time.

(b) Each Underwriter severally, but not jointly, will indemnify and hold harmless the Company, its directors, officers and affiliates and each person, if any, who controls the Company within the meaning of Section 15 of the Securities Act against any loss, claim, damage or liability (or any action in respect thereof) to which the Company or such person may become subject, under the Securities Act or otherwise, insofar as such loss, claim, damage or liability (or action in respect thereof) arises out of or is based upon (i) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, any Preliminary Prospectus, the Prospectus, the Disclosure Package, each as amended or supplemented, or any Issuer Free Writing Prospectus, or (ii) the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse the Company for any legal or other expenses reasonably incurred by the Company in connection with investigating, preparing to defend or defending against or appearing as a third-party witness in connection with any such loss, claim, damage, liability or action notwithstanding the possibility that payments for such expenses might later be held to be improper, in which case such payments will be promptly refunded; provided, however, that such indemnification or reimbursement will be available in each such case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written information furnished to the Company by such Underwriter directly or through the Representatives, specifically for use therein (which information is specified in Section 12 hereof).

(c) Promptly after receipt by an indemnified party under this Section of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against an indemnifying party under subsection (a) or (b) above, notify the indemnifying party of the commencement thereof; but the failure to notify the indemnifying party shall not relieve it from any liability that it may have under subsection (a) or (b) above, except to the extent that it has been materially prejudiced (through the forfeiture of substantive rights or defenses) by such failure; and provided further that the failure to notify the indemnifying party shall not relieve it from any liability that it may have to an indemnified party otherwise than under subsection (a) or (b) above. In case any such action is brought against any indemnified party and it notifies an indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein and, to the extent that it may wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party), and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party will not be liable to such indemnified party under this Section for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened action in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party unless such settlement (i) includes an unconditional release of such indemnified party from all liability on any claims that are the subject matter of such action and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act, by or on behalf of any indemnified party.

(d) If the indemnification provided for in this Section is unavailable or insufficient to hold harmless an indemnified party under subsection (a) or (b) above, then the indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of the losses, claims, damages or liabilities referred to in subsection (a) or (b) above (i) in such proportion as is appropriate to reflect the relative benefits

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received by the Company on the one hand and the Underwriters on the other from the offering of the ECAPS^SM or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company on the one hand and the Underwriters on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities as well as any other relevant equitable considerations. The relative benefits received by the Company on the one hand and the Underwriters on the other shall be deemed to be in the same proportion as the total net proceeds from the offering (before deducting expenses) received by the Company bear to the total discounts and commissions received by the Underwriters from the Company under this Agreement. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or the Underwriters and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. The amount paid by an indemnified party as a result of the losses, claims, damages or liabilities referred to in the first sentence of this subsection (d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any action or claim which is the subject of this subsection (d). Notwithstanding the provisions of this subsection (d), the Underwriters shall not be required to contribute any amount in excess of the amount by which the total price at which the ECAPS^SM purchased by it were resold exceeds the amount of any damages which the Underwriters has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. The Underwriters’ obligations in this subsection (d) to contribute are several in proportion to their respective purchase obligations and not joint. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.

(e) The obligations of the Company under this Section shall be in addition to any liability which the Company may otherwise have and shall extend, upon the same terms and conditions, to each person, if any, who controls any Underwriter within the meaning of the Securities Act or the Exchange Act; and the obligations of the Underwriters under this Section shall be in addition to any liability which the Underwriters may otherwise have and shall extend, upon the same terms and conditions, to each director of the Company and to each person, if any, who controls the Company within the meaning of the Securities Act or the Exchange Act.

8. Substitution of Underwriters. If any Underwriter or Underwriters default in their obligations to purchase ECAPS^SM hereunder and the aggregate principal amount of the ECAPS^SM that such defaulting Underwriter or Underwriters agreed but failed to purchase does not exceed 10% of the total principal amount of the ECAPS^SM, the Representatives may make arrangements satisfactory to the Company for the purchase of such ECAPS^SM by other persons, including any of the Underwriters, but if no such arrangements are made by the Closing Date, the non-defaulting Underwriters shall be obligated severally, in proportion to their respective commitments, hereunder, to purchase the ECAPS^SM that such defaulting Underwriter or Underwriters agreed but failed to purchase. If any Underwriter or Underwriters so default and the aggregate principal amount of the ECAPS^SM with respect to which such default or defaults occur exceeds 10% of the total principal amount of the ECAPS^SM and arrangements satisfactory to the Representatives and the Company for the purchase of such ECAPS^SM by other persons are not made within 36 hours after such default, this Agreement will terminate without liability on the part of any non-defaulting Underwriter or the Company, except as provided in Section 7. As used in this Agreement, the term “Underwriter” includes any person substituted for an Underwriter under this Section. Nothing herein will relieve a defaulting Underwriter from liability for its default.

9. Termination. Until the Closing Date, this Agreement may be terminated by the Representatives on behalf of the Underwriters by giving notice as hereinafter provided to the Company if (i) the Company will have failed, refused or been unable, at or prior to the Closing Date, to perform any agreement on its part to be performed hereunder, (ii) any of the events described in Sections 6(f) of this Agreement, shall have occurred, or (iii) any other condition to the Underwriters’ obligations hereunder is not fulfilled. Any termination of this Agreement pursuant to this Section 9 will be without liability on the part of the Company or any Underwriter, except as otherwise provided in Sections 4(e) and 7 hereof.

Any notice referred to above may be given at the address specified in Section 11 of this Agreement in writing or by telegraph or telephone, and if by telegraph or telephone, will be immediately confirmed in writing.

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10. Survival of Certain Provisions. The agreements contained in Section 7 of this Agreement and the representations, warranties and agreements of the Company contained in Sections 1 and 4 of this Agreement will survive the delivery of the ECAPS^SM to the Underwriters hereunder and will remain in full force and effect, regardless of any termination or cancellation of this Agreement or any investigation made by or on behalf of any indemnified party.

11. Notices. Except as otherwise provided in the Agreement, (a) whenever notice is required by the provisions of this Agreement to be given to the Company, such notice will be in writing by mail, telex or facsimile transmission addressed to the Company at One CVS Drive, Woonsocket, Rhode Island 02895, facsimile number (401) 765-7887, Attention: General Counsel, and (b) whenever notice is required by the provisions of this Agreement to be given to the several Underwriters, such notice will be in writing by mail, telex or facsimile transmission addressed to the Representatives in care of Lehman Brothers Inc., 745 Seventh Ave, New York, New York 10019, facsimile number (212) 526-0943, Attention: Syndicate Registration (with a copy to the General Counsel at the same address). The Company shall be entitled to act and rely upon any request, consent, notice or agreement given or made on behalf of the Underwriters by Lehman Brothers Inc., on behalf of the Representatives.

12. Information Furnished by Underwriters. The Underwriters severally confirm that the information appearing in the list of names of each of the Underwriters under the caption “Underwriting” in the most recent Preliminary Prospectus and the Prospectus, the concession and reallowance figures appearing in the third paragraph under the caption “Underwriting” in the most recent Preliminary Prospectus and the Prospectus, and the statements in the first two paragraphs of the subsection entitled “Price Stabilization, Short Positions and Penalty Bids” and the first paragraph of the subsection entitled “Electronic Distributions” under the caption “Underwriting” in the most recent Preliminary Prospectus and the Prospectus, constitute the only written information furnished to the Company by the Representatives on behalf of the Underwriters, referred to in Sections 1(e), 1(f), 1(g), 7(a) and 7(b) of this Agreement.

13. Nature of Relationship. The Company acknowledges and agrees that in connection with the offering and the sale of the ECAPS^SM or any other services the Underwriters may be deemed to be providing hereunder, notwithstanding any preexisting relationship, advisory or otherwise, between the parties or any oral representations or assurances previously or subsequently made by the Underwriters: (i) no fiduciary or agency relationship between the Company and any other person, on the one hand, and the Underwriters, on the other hand, exists; (ii) the Underwriters are not acting as advisors, experts or otherwise, to the Company, including, without limitation, with respect to the determination of the public offering price of the ECAPS^SM, and such relationship between the Company, on the one hand, and the Underwriters, on the other hand, is entirely and solely a commercial relationship, based on arms-length negotiations; (iii) any duties and obligations that the Underwriters may have to the Company shall be limited to those duties and obligations specifically stated herein; and (iv) the Underwriters and their respective affiliates may have interests that differ from those of the Company. The Company hereby waives any claims that the Company may have against the Underwriters with respect to any breach of fiduciary duty in connection with this offering.

14. Parties. This Agreement will inure to the benefit of and be binding upon the several Underwriters, the Company and their respective successors. This Agreement and the terms and provisions hereof are for the sole benefit of only those persons, except as specifically provided in Section 7 of this Agreement. Nothing in this Agreement will be construed to give any person, other than the persons referred to in this paragraph, any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision contained herein.

15. Definition of “Business Day”. For purposes of this Agreement, “Business Day” means any day on which the New York Stock Exchange is open for trading, other than any day on which commercial banks are authorized or required to be closed in New York City.

16. Governing Law. This Agreement will be governed by, and construed in accordance with, the laws of the State of New York without regard to principles of conflicts of laws.

17. Headings. The headings herein are inserted for convenience of reference only and are not intended to be part of, or to affect the meaning or interpretation of, this Agreement.

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18. Counterparts. This Agreement may be signed in one or more counterparts, each of which will constitute an original and all of which together will constitute one and the same agreement.

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Please confirm, by signing and returning to us two counterparts of this Agreement, that the foregoing correctly sets forth the Agreement between the Company and the several Underwriters.

Very truly yours,
CVS CAREMARK CORPORATION
By:	/s/ Carol A. DeNale
	Name:	Carol A. DeNale
	Title:	Vice President & Treasurer

Confirmed and accepted as of

the date first above mentioned

LEHMAN BROTHERS INC.
By:	/s/ Andrew R. Taussig
	Name:	Andrew R. Taussig
	Title:	Vice Chairman

MORGAN STANLEY & CO. INCORPORATED
By:	/s/ Yurij Slyz
	Name:	Yurij Slyz
	Title:	Vice President

BANC OF AMERICA SECURITIES LLC
By:	/s/ Peter J. Carbone
	Name:	Peter J. Carbone
	Title:	Vice President

BNY CAPITAL MARKETS, INC.
By:	/s/ Philip Benedict
	Name:	Philip Benedict
	Title:	Vice President

WACHOVIA CAPITAL MARKETS, LLC
By:	/s/ Kevin Smith
	Name:	Kevin Smith
	Title:	Managing Director

As Representatives and on behalf of the several Underwriters

named in Schedule I hereto

SCHEDULE I

	Principal Amount
	of ECAPSSM to be
Underwriters	purchased
Lehman Brothers Inc.	$	183,826,087
Morgan Stanley & Co. Incorporated	$	162,608,696
Banc of America Securities LLC	$	140,869,565
BNY Capital Markets, Inc.	$	140,869,565
Wachovia Capital Markets, LLC	$	140,869,565
LaSalle Financial Services, Inc.	$	43,478,261
KeyBanc Capital Markets Inc.	$	43,478,261
SunTrust Capital Markets, Inc.	$	43,478,261
HSBC Securities (USA) Inc.	$	21,217,391
Mizuho Securities USA Inc.	$	21,217,391
Piper Jaffray & Co.	$	21,217,391
Wells Fargo Securities, LLC	$	21,217,391
BB&T Capital Markets, a division of Scott & Stringfellow, Inc.	$	15,652,174
Total	$	1,000,000,000

EX-4.1

Exhibit 4.1

FIRST SUPPLEMENTAL INDENTURE

between

CVS CAREMARK CORPORATION

and

THE BANK OF NEW YORK TRUST COMPANY, N.A.

Supplemental to Subordinated Indenture

dated as of May 25, 2007

TABLE OF CONTENTS

Page

ARTICLE 1
DEFINITIONS
Section 1.01.  Definitions	1
ARTICLE 2
GENERAL TERMS AND CONDITIONS OF THE ECAPSSM
Section 2.01.  Designation, Principal Amount and Authorized Denominations	9
Section 2.02.  Payment of Principal	10
Section 2.03.  Form	13
Section 2.04.  Rate of Interest; Interest Payment Date	14
Section 2.05.  Interest Deferral.	15
Section 2.06.  Events of Default	16
Section 2.07.  Securities Registrar; Paying Agent; Delegation of Trustee Duties	18
Section 2.08.  No Sinking Fund	18
Section 2.09.  Subordination	18
Section 2.10.  Defeasance	18
ARTICLE 3
COVENANTS
Section 3.01.  Dividend and Other Payment Stoppages	18
ARTICLE 4
REDEMPTION OF THE ECAPSSM
Section 4.01.  Redemption Price	19
ARTICLE 5
REPAYMENT OF ECAPSSM
Section 5.01.  Repayments	20
Section 5.02.  Selection of the ECAPSSM to be Repaid	20
Section 5.03.  Notice of Repayment	21
Section 5.04.  Deposit of Repayment Amount	22
Section 5.05.  Repayment of ECAPSSM	22

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ARTICLE 6
MISCELLANEOUS
Section 6.01.  Effectiveness	22
Section 6.02.  Successors and Assigns	22
Section 6.03.  Effect of Recitals	23
Section 6.04.  Ratification of Indenture	23
Section 6.05.  Governing Law	23
Section 6.06.  Jury Trial Waiver	23
Section 6.07.  Severability	23

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FIRST SUPPLEMENTAL INDENTURE, dated as of May 25, 2007 (the “First Supplemental Indenture”), between CVS CAREMARK CORPORATION, a Delaware corporation (the “Company”), having its principal office at One CVS Drive, Woonsocket, Rhode Island 02895, and THE BANK OF NEW YORK TRUST COMPANY, N.A., a national banking association, as trustee (hereinafter called the “Trustee”).

RECITALS OF THE COMPANY

The Company and the Trustee entered into a Subordinated Indenture, dated as of May 25, 2007 (the “Indenture”).

Section 9.01 of the Indenture provides that the Company and the Trustee may, without the consent of any Holder, enter into a supplemental indenture to establish the form or terms of Debt Securities of any series as permitted by Section 2.01 or 3.01 thereof.

Pursuant to Sections 2.01 and 3.01 of the Indenture, the Company desires to provide for the establishment of a series of Debt Securities under the Indenture, and the form and terms thereof, as hereinafter set forth.

The Company has requested that the Trustee execute and deliver this First Supplemental Indenture.  The Company has delivered to the Trustee an Opinion of Counsel and an Officers’ Certificate pursuant to Sections 2.02 and 10.04 of the Indenture to the effect, among other things, that all conditions precedent provided for in the Indenture to the Trustee’s execution and delivery of this First Supplemental Indenture have been complied with.  All acts and things necessary have been done and performed to make this First Supplemental Indenture enforceable in accordance with its terms, and the execution and delivery of this First Supplemental Indenture has been duly authorized in all respects.

NOW, THEREFORE, THIS FIRST SUPPLEMENTAL INDENTURE WITNESSETH: For and in consideration of the premises and the purchase of the ECAPS^SM (as herein defined) by the Holders thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of the ECAPS^SM, as follows:

ARTICLE 1

DEFINITIONS

Section 1.01.  Definitions.  For all purposes of this First Supplemental Indenture, except as otherwise expressly provided or unless the context otherwise requires:

(a)           Terms defined in the Indenture have the same meanings when used in this First Supplemental Indenture unless otherwise defined herein.

(b)           The terms defined in this Article have the meanings assigned to them in this Article, and include the plural as well as the singular.

(c)           The words “herein,” “hereof” and “hereunder” and other words of similar import refer to this First Supplemental Indenture as a whole and not to any particular Article, Section or other subdivision, and any reference to an Article, Section or other subdivision refers to an Article, Section or other subdivision of this First Supplemental Indenture.

(d)           Any reference herein to “interest” shall include any Additional Interest.

In addition, the following terms used in this First Supplemental Indenture have the following respective meanings:

“Additional Interest” means the interest, if any, that shall accrue on any interest on the ECAPS^SM the payment of which has not been made on the applicable Interest Payment Date.

“Business Day” means each day other than (i) a Saturday or Sunday or (ii) a day on which banking institutions in The City of New York are authorized or required by law or executive order to remain closed or, on or after June 1, 2012, a day that is not a London banking day.

“Calculation Agent” means, with respect to the ECAPS^SM, The Bank of New York Trust Company, N.A., or any other banking institution or trust company appointed by the Company, acting as calculation agent in respect of the ECAPS^SM.

“Commercially Reasonable Efforts” to sell Qualifying Capital Securities means, commercially reasonable efforts to complete the offer and sale of Qualifying Capital Securities to Persons other than the Company or its Subsidiaries in public offerings or private placements.  The Company shall not be considered to have made Commercially Reasonable Efforts to effect a sale of Qualifying Capital Securities if it determines not to pursue or complete such sale solely due to pricing, coupon, dividend rate or dilution considerations.

“Common Stock” means any of the Company’s equity securities (including equity securities held as treasury shares) or rights to purchase equity securities that have no preference in payment or dividends or amounts payable upon the Company’s liquidation, dissolution or winding-up (including a security that tracks the performance of, or relates to the results of, a business, unit or

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division of the Company), and any equity securities that have no preference in payment or dividends or amounts payable upon the Company’s liquidation, dissolution or winding-up and are issued in exchange therefor in connection with a merger, consolidation, binding share exchange, business combination, recapitalization or other similar event.

“Company” has the meaning specified in the Recitals.

“Default” means any Event of Default as defined in Section 2.06(a)(i) and any event that is, or after notice or passage of time or both would be, an Event of Default.

“Default Amount” has the meaning specified in Section 2.06(a)(ii).

“ECAPS^SM” has the meaning specified in Section 2.01.

“Final Maturity Date” has the meaning specified in Section 2.02(b).

“First Supplemental Indenture” means this instrument as originally executed or as it may from time to time be supplemented or amended by one or more agreements supplemental hereto.

“Indenture” has the meaning specified in the Recitals.

“Interest Payment Dates” shall have the meaning specified in Section 2.04.

“Interest Period” means a Semi-Annual Interest Period or a Quarterly Interest Period, as the case may be.

“LIBOR Determination Date” means the second London Banking Day immediately preceding the LIBOR Reset Date for the relevant Quarterly Interest Period.

“LIBOR Reset Date” means March 1, June 1, September 1 and December 1 of each year during a Quarterly Interest Period, commencing on June 1, 2012.

“London Banking Day” means any day on which dealings in United States dollars are transacted or, with respect to any future date, are expected to be transacted in the London interbank market.

“Market Disruption Event” means the occurrence or existence of any of the following events or sets of circumstances:

(i)           Trading in securities generally, or shares of the Company’s

3

securities specifically, on the New York Stock Exchange or any other national securities exchange or in the over-the-counter market on which Qualifying Capital Securities are then listed or traded shall have been suspended or the settlement of such trading generally shall have been materially disrupted or minimum prices shall have been established on any such exchange or market by the United States Securities and Exchange Commission, by the relevant exchange or by any other regulatory agency or governmental body having jurisdiction such that trading shall have been materially disrupted;

(ii)           The Company would be required to obtain the consent or approval of the Company’s stockholders or a regulatory body (including, without limitation, any securities exchange) or governmental authority to issue Qualifying Capital Securities pursuant to Section 2.02 and such consent or approval has not yet been obtained notwithstanding the Company’s commercially reasonable efforts to obtain such consent or approval;

(iii)           A banking moratorium shall have been declared by the federal or state authorities of the United States such that market trading in the Qualifying Capital Securities has been materially disrupted or ceased;

(iv)           A material disruption shall have occurred in commercial banking or securities settlement or clearance services in the United States such that market trading in the Qualifying Capital Securities has been materially disrupted or ceased;

(v)           The United States shall have become engaged in hostilities, there shall have been an escalation in hostilities involving the United States, there shall have been a declaration of a national emergency or war by the United States or there shall have occurred any other national or international calamity or crisis such that market trading in the Qualifying Capital Securities has been materially disrupted or ceased;

(vi)           There shall have occurred such a material adverse change in general domestic or international economic, political or financial conditions, including without limitation as a result of terrorist activities, or the effect of international conditions on the financial markets in the United States shall be such that trading Qualifying Capital Securities shall have been materially disrupted;

(vii)           An event occurs and is continuing as a result of which the offering document for the offer and sale of Qualifying Capital Securities would, in the reasonable judgment of the Company, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading and either (x) the disclosure of that event at such time, in the reasonable judgment of the Company, is not otherwise required by law and would have a material adverse effect on the business of the

4

Company or (y) the disclosure relates to a previously undisclosed proposed or pending material business transaction, provided that no single suspension period contemplated by this clause (vii) shall exceed 90 consecutive days and multiple suspension periods contemplated by this clause (vii) shall not exceed an aggregate of 180 days in any 360-day period; or

(viii)           The Company reasonably believes that the offering document for such offer and sale of Qualifying Capital Securities would not be in compliance with a rule or regulation of the United States Securities and Exchange Commission (for reasons other than those referred to in clause (vii) above), and the Company determines it is unable to comply with such rule or regulation or such compliance is unduly burdensome, provided that no single suspension period contemplated by this clause (viii) shall exceed 90 consecutive days and multiple suspension periods contemplated by this clause (viii) shall not exceed an aggregate of 180 days in any 360-day period.

“Optional Deferral Period” means the period commencing on an Interest Payment Date with respect to which the Company elects to defer interest pursuant to Section 2.05 and ending on the earlier of (i) the tenth anniversary of that Interest Payment Date and (ii) the next Interest Payment Date on which the Company has paid all deferred and unpaid amounts (including compounded interest on such deferred amounts) with respect to all prior Interest Periods and all other accrued interest on the ECAPS^SM.

“Pari Passu Securities” means (i) indebtedness of the Company and other securities that by their terms rank equally with the ECAPS^SM in right of payment and upon liquidation, (ii) guarantees by the Company of indebtedness or other securities, which guarantees, by their terms rank equally with the ECAPS^SM, in right of payment and upon liquidation, and (iii) the Company’s trade accounts payable and accrued liabilities arising in the ordinary course of business.

“Qualifying Capital Securities” has the meaning specified in the Replacement Capital Covenant.

“Quarterly Interest Payment Date” shall have the meaning specified in Section 2.04.

“Quarterly Interest Period” means the period beginning on and including June 1, 2012 and ending on but excluding the next Interest Payment Date and each successive period beginning on and including an Interest Payment Date and ending on but excluding the next Interest Payment Date.

“Rating Agency Event” means a change by any nationally recognized statistical rating organization within the meaning of Section 3(a)(62) under the Securities Exchange Act of 1934, as amended, that currently publishes a rating for

5

the Company (in this definition, a “rating agency”) in assigning equity credit to securities such as the ECAPS^SM, as such methodology was in effect on May 25, 2007 (in this definition, the “current criteria”), which change results in (x) the length of time for which such current criteria are scheduled to be in effect is shortened with respect to the ECAPS^SM or (y) a lower equity credit rating being assigned by such rating agency to the ECAPS^SM as of the date of such change than the equity credit that would have been assigned to the ECAPS^SM as of the date of such change by such rating agency pursuant to its current criteria.

“Regular Record Date” for any Interest Payment Date means (i) so long as the ECAPS^SM remain in book-entry only form, the close of business on the Business Day immediately preceding the applicable Interest Payment Date or (ii) if the ECAPS^SM do not remain in book-entry only form, the close of business on the fifteenth calendar day immediately preceding the applicable Interest Payment Date.

“Repayment Date” means the Scheduled Maturity Date and each Quarterly Interest Payment Date thereafter until the Company shall have repaid or redeemed all of the ECAPS^SM.

“Replacement Capital Covenant” means the Replacement Capital Covenant, dated as of May 25, 2007, by the Company, as the same may be amended or supplemented from time to time in accordance with the provisions thereof and Section 2.02(a)(vii) hereof.

“Responsible Officer of the Paying Agent” means, with respect to The Bank of New York Trust Company, N.A. in its capacity as Paying Agent, any officer within the corporate trust department (or any successor department, unit or division of The Bank of New York Trust Company, N.A.) assigned to the paying agent office of The Bank of New York Trust Company, N.A., in its capacity as Paying Agent, who has direct responsibility for the administration of the Paying Agent functions of the Indenture.

“Reuters Screen LIBOR01” means the display designated on Reuters Screen LIBOR01, Inc. or any successor service or page for the purpose of displaying LIBOR offered rates of major banks, as determined by the Calculation Agent.

“Scheduled Maturity Date” has the meaning specified in Section 2.02(a).

“Securities Registrar” means, with respect to the ECAPS^SM, The Bank of New York Trust Company, N.A., or any other firm appointed by the Company, acting as securities registrar for the ECAPS^SM.

“Securities Registrar Office” means the office of the applicable

6

Securities Registrar at which at any particular time its corporate agency business shall principally be administered, which office at the date hereof in the case of The Bank of New York Trust Company, N.A., in its capacity as Securities Registrar under the Indenture, is located at 222 Berkeley Street, 2^nd floor, Boston, MA 02116, Attention: Corporate Trust Administration.

“Semi-Annual Interest Payment Date” shall have the meaning specified in Section 2.04.

“Semi-Annual Interest Period” means the period beginning on and including May 25, 2007 and ending on but excluding the first Interest Payment Date and each successive period beginning on and including an Interest Payment Date and ending on but excluding the next Interest Payment Date until June 1, 2012.

“Tax Event” means the receipt by the Company of an opinion of counsel experienced in such matters to the effect that, as a result of any: (i) amendment to or change (including any officially announced proposed change) in the laws or regulations of the United States or any political subdivision or taxing authority of or in the United States that is enacted or becomes effective after May 25, 2007, (ii) official administrative decision or judicial decision or administrative action or other official pronouncement interpreting or applying those laws or regulations that is announced after May 25, 2007, or (iii) threatened challenge asserted in connection with an audit of the Company or any of its Subsidiaries, or a threatened challenge asserted in writing against any other taxpayer that has raised capital through the issuance of securities that are substantially similar to the ECAPS^SM, which latter challenge becomes publicly known after May 25, 2007; there is more than an insubstantial risk that interest payable by the Company on the ECAPS^SM is not, or will not be, deductible by the Company, in whole or in part, for United States federal income tax purposes.

“Three-Month LIBOR” means, with respect to any Quarterly Interest Period, the rate (expressed as a percentage per annum) for deposits in U.S. dollars for a three-month period commencing on the first day of that Quarterly Interest Period that appears on Reuters Screen LIBOR01 as of 11:00 a.m. (London time) on the LIBOR Determination Date for that Quarterly Interest Period. If such rate does not appear on Reuters Screen LIBOR01, Three-Month LIBOR will be determined on the basis of the rates at which deposits in U.S. dollars for a three-month period commencing on the first day of that Quarterly Interest Period are offered to prime banks in the London interbank market by four major banks in the London interbank market selected by the Calculation Agent (after consultation with the Company), at approximately 11:00 a.m., London time, on the LIBOR Determination Date for that Quarterly Interest Period, in an amount that, in the Calculation Agent’s judgment, is representative of a single transaction in that

7

market at that time. The Calculation Agent will request the principal London office of each of such banks to provide a quotation of its rate. If at least two such quotations are provided, Three-Month LIBOR with respect to that Quarterly Interest Period will be the arithmetic mean of such quotations. If fewer than two quotations are provided, Three-Month LIBOR with respect to that Quarterly Interest Period will be the arithmetic mean of the rates quoted by three major banks in New York City selected by the Calculation Agent (after consultation with the Company), at approximately 11:00 a.m., New York City time, on the first day of that Quarterly Interest Period for loans in U.S. dollars to leading European banks for a three-month period commencing on the first day of that Quarterly Interest Period and in an amount that, in the Calculation Agent’s judgment (after consultation with the Company), is representative of a single transaction in that market at that time. However, if fewer than three banks selected by the Calculation Agent to provide quotations are quoting as described above, Three-Month LIBOR for that Quarterly Interest Period will be the same as Three-Month LIBOR as determined for the previous Quarterly Interest Period or, in the case of the Quarterly Interest Period beginning on June 1, 2012, Three-Month LIBOR will be6.302%. The establishment of Three-Month LIBOR for each Quarterly Interest Period by the Calculation Agent shall (in the absence of manifest error) be final and binding.

“Trading Day” means each day other than (i) a Saturday or Sunday or (ii) a day on which banking institutions in The City of New York are authorized or required by law or executive order to remain closed.

“Treasury Dealer” means Lehman Brothers Inc. (or its successor) or, if Lehman Brothers Inc. (or its successor) refuses to act as treasury dealer for the purpose of making the determination described in Section 4.01 or ceases to be a primary U.S. Government securities dealer, another nationally recognized investment banking firm that is a primary U.S. Government securities dealer specified by the Company for such purpose.

“Treasury Price” means, with respect to a redemption date, the bid-side price for the Treasury Security as of the third Trading Day preceding the redemption date, as set forth in the daily statistical release (or any successor release) published by the Federal Reserve Bank of New York on that Trading Day and designated “Composite 3:30 p.m.  Quotations for U.S. Government Securities,” as determined by the Treasury Dealer, except that: (i) if that release (or any successor release) is not published or does not contain that price information on that Trading Day, or (ii) if the Treasury Dealer determines that the price information is not reasonably reflective of the actual bid-side price of the Treasury Security prevailing at 3:30 p.m., New York City time, on that Trading Day, then Treasury Price will instead mean the bid-side price for the Treasury Security at or around 3:30 p.m., New York City time, on that Trading Day (expressed on a next Trading Day settlement basis) as determined by the Treasury

8

Dealer through such alternative means as are commercially reasonable under the circumstances.

“Treasury Rate” means, with respect to a redemption date, the semi-annual equivalent yield to maturity of the Treasury Security that corresponds to the Treasury Price (calculated by the Treasury Dealer in accordance with standard market practice and computed as of the second Trading Day preceding the redemption date).

“Treasury Security” means the United States Treasury security that the Treasury Dealer determines would be appropriate to use, at the time of determination and in accordance with standard market practice, in pricing the ECAPS^SM being redeemed in a tender offer based on a spread to United States Treasury yields.

ARTICLE 2

GENERAL TERMS AND CONDITIONS OF THE ECAPS^SM

Section 2.01.  Designation, Principal Amount and Authorized Denominations.

(a)           Designation.  Pursuant to Section 2.01 and 3.01 of the Indenture, there is hereby established a series of Debt Securities of the Company designated as the 6.302% Enhanced Capital Advantaged Preferred Securities due 2062 (the “ECAPS^SM”), the principal amount of which to be issued shall be in accordance with Section 2.01(b) hereof and Section 2.02 of the Indenture for the authentication and delivery of ECAPS^SM pursuant to the Indenture, and the form and terms of which shall be as set forth hereinafter.  

(b)           Principal Amount.  ECAPS^SM in an initial aggregate principal amount of $1,000,000,000 shall, upon execution of this First Supplemental Indenture, be executed by the Company and delivered to the Trustee or an Authenticating Agent for authentication, and the Trustee or an Authenticating Agent shall thereupon authenticate and deliver said ECAPS^SM in accordance with a Company Order.  Additional ECAPS^SM may be issued pursuant to this First Supplemental Indenture so long as such additional ECAPS^SM are fungible for U.S. tax purposes with the ECAPS^SM issued as of the date of this First Supplemental Indenture.  Any additional ECAPS^SM issued under this First Supplemental Indenture will rank equally and ratably in right of payment with the ECAPS^SM issued on the date of this First Supplemental Indenture and together will be treated as a single series of ECAPS^SM.

9

(c)           Authorized Denominations.  The denominations in which ECAPS^SM shall be issuable is $2,000 principal amount and integral multiples of $1,000 thereof.

Section 2.02.  Payment of Principal.

(a)           Scheduled Maturity Date.

(i)           The principal amount of, and all accrued and unpaid interest on, the ECAPS^SM shall be payable in full on June 1, 2037 or, if such day is not a Business Day, the following Business Day (the “Scheduled Maturity Date”); provided, however, that in the event the Company has delivered an Officers’ Certificate to the Trustee pursuant to clause (v) of this Section 2.02(a) in connection with the Scheduled Maturity Date, (x) the principal amount of ECAPS^SM payable on the Scheduled Maturity Date, if any, shall be the principal amount set forth in the notice of repayment, if any, accompanying such Officers’ Certificate, (y) such principal amount of ECAPS^SM shall be repaid on the Scheduled Maturity Date pursuant to Article 5 hereof, and (z) subject to clause (ii) of this Section 2.02(a) the remaining ECAPS^SM shall remain outstanding and shall be payable on the immediately succeeding Quarterly Interest Payment Date or such earlier date on which they are redeemed pursuant to Article 4 hereof or become due and payable pursuant to Section 6.02 of the Indenture.

(ii)           In the event the Company has delivered an Officers’ Certificate to the Trustee pursuant to clause (v) of this Section 2.02(a) in connection with any Quarterly Interest Payment Date, the principal amount of the ECAPS^SM repayable on such Quarterly Interest Payment Date shall be the principal amount set forth in the notice of repayment, if any, accompanying such Officers’ Certificate, and shall be repaid on such Quarterly Interest Payment Date pursuant to Article 5 hereof, and the remaining ECAPS^SM shall remain outstanding and shall be payable on the immediately succeeding Quarterly Interest Payment Date or such earlier date on which they are redeemed pursuant to Article 4 hereof or become due and payable pursuant to Section 6.02 of the Indenture.

(iii)           The obligation of the Company to repay the ECAPS^SM pursuant to this Section 2.02(a) on any date prior to the Final Maturity Date shall be subject to (x) its obligations under Article Eleven of the Indenture to the holders of Senior Indebtedness and (y) its obligations under Section 2.05 with respect to the payment of deferred interest on the ECAPS^SM.  In no event will the failure of the Company to comply with Section 2.02 hereof be an Event of Default.

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(iv)           Until the ECAPS^SM are paid in full:

(A)           the Company shall use Commercially Reasonable Efforts, subject to a Market Disruption Event to raise sufficient net proceeds from the issuance of Qualifying Capital Securities during a 180-day period ending on the date, not more than 15 and not less than 10 Business Days prior to the Scheduled Maturity Date, on which the Company delivers the notice required by clause (v) of this Section 2.02(a) and Section 5.01, to permit repayment of the ECAPS^SM in full on the Scheduled Maturity Date pursuant to clause (i) of this Section 2.02(a); and

(B)           if the Company is unable for any reason to raise sufficient proceeds from the issuance of Qualifying Capital Securities to permit repayment in full of the ECAPS^SM on the Scheduled Maturity Date or any subsequent Quarterly Interest Payment Date, the Company shall use Commercially Reasonable Efforts, subject to a Market Disruption Event to raise sufficient net proceeds from the issuance of Qualifying Capital Securities during a 90-day period ending on the date, not more than 15 and not less than 10 Business Days prior to the following Quarterly Interest Payment Date, on which the Company delivers the notice required by clause (v) of this Section 2.02(a) and Section 5.01, to permit repayment of the ECAPS^SM in full on such following Quarterly Interest Payment Date pursuant to clause (i)(z) of this Section 2.02(a); and

(C)           the Company shall apply any such net proceeds to the repayment of the ECAPS^SM as provided in clause (vi) of this Section 2.02(a).

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(v)           The Company shall, if it has not raised sufficient net proceeds from the issuance of Qualifying Capital Securities pursuant to clause (iv) above in connection with any Repayment Date, deliver an Officers’ Certificate to the Trustee no more than 15 and no less than 10 Business Days in advance of such Repayment Date stating the amount of net proceeds, if any, raised pursuant to clause (iv) above in connection with such Repayment Date.  The Company shall be excused from its obligation to use Commercially Reasonable Efforts to sell Qualifying Capital Securities pursuant to clause (iv) above if such Officers’ Certificate further certifies that:  (A) a Market Disruption Event was existing during the 180-day period preceding the date of such Officers’ Certificate or, in the case of any Repayment Date after the Scheduled Maturity Date, the 90-day period preceding the date of such Officers’ Certificate; and (B) either (a) the Market Disruption Event continued for the entire 180-day period or 90-day period, as the case may be, or (b) the Market Disruption Event continued for only part of the period but the Company was unable after using Commercially Reasonable Efforts to raise sufficient net proceeds during the rest of that period to permit repayment of the ECAPS^SM in full.  Each Officers’ Certificate delivered pursuant to this clause (v), unless no principal amount of ECAPS^SM is to be repaid on the applicable Repayment Date, shall be accompanied by a notice of repayment pursuant to Section 5.01 setting forth the principal amount of the ECAPS^SM to be repaid on such Repayment Date, if any, which amount shall be determined after giving effect to clause (vi) of this Section 2.02(a).

(vi)           Net proceeds of the issuance of any Qualifying Capital Securities that the Company is permitted to apply to repayment of the ECAPS^SM on any Repayment Date will be applied, first, to pay deferred interest (including compounded interest thereon, to the extent permitted by law), second, to pay current interest and, third, to repay the outstanding principal amount of ECAPS^SM, subject to a minimum principal amount of $5 million to be repaid on any Repayment Date; provided that if the Company is obligated to sell Qualifying Capital Securities and make payments on any outstanding Pari Passu Securities, in addition to the ECAPS^SM in respect thereof, then on any date and for any period such payments will be made on those other Pari Passu Securities having the same Scheduled Maturity Date as the ECAPS^SMpro rata in accordance with their respective outstanding principal amounts and no such payment shall be made on any other securities having a later Scheduled Maturity Date until the principal of and all accrued and unpaid interest on the ECAPS^SM has been paid in full.  If the applicable percentage of net proceeds that Company raises from the sale of Qualifying Capital Securities during the relevant 180 or 90-day period is less than $5 million,

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the Company will not be required to repay any ECAPS^SM on the Scheduled Maturity Date or the next Interest Payment Date, as applicable.  On the next Interest Payment Date as of which the Company has raised net proceeds of at least $5 million during the 180-day period preceding the applicable notice date (or, if shorter, the period since the Company last prepaid any principal amount of ECAPS^SM), the Company will be required to repay a principal amount of the ECAPS^SM equal to the entire net proceeds from the sale of Qualifying Capital Securities during such 180-day or shorter period.

Although under the Replacement Capital Covenant the principal amount of ECAPS^SM that the Company may repay, redeem or purchase at any time on or after the Scheduled Maturity Date may be based on the percentages described under Section 2 of the Replacement Capital Covenant of the net cash proceeds from certain issuances during the applicable measurement period of common stock, rights to acquire common stock, mandatorily convertible preferred stock, debt exchangeable for equity and certain Qualifying Capital Securities, the Company has no obligation under the Indenture or the ECAPS^SM to use Commercially Reasonable Efforts to issue any securities other than Qualifying Capital Securities or to use the proceeds of the issuance of any other securities to repay the ECAPS^SM on the Scheduled Maturity Date or at any time thereafter.

(vii)           The Company shall not amend the Replacement Capital Covenant to impose additional restrictions on the type or amount of Qualifying Capital Securities that the Company may include for purposes of determining when repayment, redemption or purchase of the ECAPS^SM is permitted, except with the consent of Holders of a majority by principal amount of the ECAPS^SM.  Except as aforesaid, the Company may amend or supplement the Replacement Capital Covenant in accordance with its terms and without the consent of the holders of the ECAPS^SM.

(b)           Final Maturity Date.  The principal of, and all accrued and unpaid interest on, all outstanding ECAPS^SM shall be due and payable on June 1, 2062 or, if such date is not a Business Day, the following Business Day (the “Final Maturity Date”), regardless of the amount of Qualifying Capital Securities the Company may have issued and sold by that time.

Section 2.03.  Form.  The ECAPS^SM shall be substantially in the form of Exhibit A attached hereto and shall be issued in fully registered definitive form without interest coupons.  Principal of and interest on the ECAPS^SM issued in definitive form will be payable, the transfer of such ECAPS^SM will be registrable and such ECAPS^SM will be exchangeable for ECAPS^SM bearing identical terms and provisions and notices and demands to or upon the Company in respect of the

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ECAPS^SM and the Indenture may be served at the Corporate Trust Office of the Trustee, and the Company appoints the Trustee as its agent for the foregoing purposes, provided that payment of interest may be made at the option of the Company by check mailed to the Holders at such address as shall appear in the Securities Register or by wire transfer in immediately available funds to the bank account number of the Holders specified in writing by the Holders not less than 10 days before the relevant Interest Payment Date and entered in the Securities Register by the Securities Registrar.  The ECAPS^SM may be presented for registration of transfer or exchange at the Securities Registrar Office.

The ECAPS^SM are initially solely issuable as Registered Global Securities.  Registered Global Securities shall be physically transferred to all beneficial owners in definitive form in exchange for their beneficial interests in a Registered Global Security if the Depositary with respect to such Registered Global Securities notifies the Company that it is unwilling or unable to continue as Depositary for such Registered Global Security, as the case may be, and a successor Depositary is not appointed by the Company within 90 days of such notice.

Section 2.04.  Rate of Interest; Interest Payment Date.

(a)           Rate of Interest.  The ECAPS^SM shall bear interest from and including May 25, 2007 to but excluding June 1, 2012, at the rate of 6.302% per annum, computed on the basis of a 360-day year comprised of twelve 30-day months.  Commencing on June 1, 2012, the ECAPS^SM shall accrue interest at an annual rate of Three-month LIBOR plus 2.065% (the “Floating Rate”), payable quarterly in arrears.  The amount of Floating Rate interest payable on the ECAPS^SM for any Quarterly Interest Period will be computed on the basis of a 360-day year and the actual number of days elapsed in the 360-day year.  Interest will accrue from and including the last date in respect of which interest has been paid or duly provided for to but excluding the Interest Payment Date on which the interest is actually paid.

(b)           Interest Payment Dates.  Subject to the other provisions hereof, interest on the ECAPS^SM shall be payable (i) semi-annually in arrears on June 1, and December 1 of each year, commencing on December 1, 2007, to and including June 1, 2012 (each such date, a “Semi-Annual Interest Payment Date”), or if any such day is not a Business Day, the following Business Day (and no interest shall accrue as a result of such postponement) and (ii) thereafter, quarterly in arrears on March 1, June 1, September 1 and December 1 of each year, commencing on September 1, 2012 (each such date, a “Quarterly Interest Payment Date” and, together with Semi-Annual Interest Payment Dates, each, an “Interest Payment Date”).  If a scheduled Quarterly Interest Payment Date is not a Business Day, such Interest Payment Date shall be postponed to the next succeeding day that is a Business Day; provided that if such Business Day is in

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the next succeeding calendar month, such Interest Payment Date shall be the immediately preceding Business Day.

(c)           Interest will be payable to the persons in whose name the ECAPS^SM are registered at the close of business on the Regular Record Date next preceding the relevant Interest Payment Date, except that interest payable at maturity shall be paid to the person to whom principal is paid.

Section 2.05.  Interest Deferral.

(a)           Option to Defer Interest Payments.

(i)           So long as there is no Event of Default existing under the Indenture, the Company shall have the right at any time and from time to time, to defer the payment of interest on the ECAPS^SM for one or more Interest Periods of up to 10 consecutive years per Optional Deferral Period, provided that no Optional Deferral Period shall extend beyond the Final Maturity Date or any earlier accelerated maturity date as described in Section 2.06 or the earlier repayment or redemption in full of the ECAPS^SM.  If the Company has paid all accrued and unpaid deferred interest (including Additional Interest) on the ECAPS^SM, the Company shall have the right to elect to begin a new Optional Deferral Period pursuant to this Section 2.05.

(ii)           At the end of any Optional Deferral Period, the Company shall pay all deferred interest on the ECAPS^SM to the Persons in whose names the ECAPS^SM are registered in the Securities Register at the close of business on the Regular Record Date with respect to the Interest Payment Date at the end of such Optional Deferral Period.

(iii)           The Company may elect to pay interest on any Interest Payment Date during any Optional Deferral Period to the extent permitted by Section 2.05(b).

(b)           Payment of Deferred Interest.  The Company may pay at any time all or any portion of the accrued and unpaid deferred interest during an Optional Deferral Period.  The Company is prohibited from paying current interest on the ECAPS^SM until the Company has paid all accrued an unpaid deferred interest.  At the end of the Optional Deferral Period or on any redemption date, the Company will be obligated to pay all accrued and unpaid deferred interest.

(c)           Notice of Deferral.  The Company shall give written notice of its election to commence or continue any Optional Deferral Period to the Trustee and the Holders of the ECAPS^SM at least one Business Day and not more than sixty Business Days before the next Interest Payment Date.  Notice of the Company’s

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election of an Optional Deferral Period shall be given to the Trustee and each holder of ECAPS^SM at such holder’s address appearing in the Security Register by first-class mail, postage prepaid.

Section 2.06.  Events of Default.  (a) (i) Solely for purposes of the ECAPS^SM, Section 6.01 of the Indenture shall be deleted and replaced by the following:

SECTION 6.01.  Events of Default.

“Event of Default”, wherever used herein with respect to the ECAPS^SM, means any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body):

(i)           default in the payment of any interest on the ECAPS^SM when due and payable, and such default continues for a period of 30 days; provided that a valid extension or deferral of the Interest Period in accordance with Section 2.05 will not constitute an Event of Default;

(ii)           default in the payment of principal on the ECAPS^SM when due, whether at the Stated Maturity, upon redemption, upon a declaration of acceleration, or otherwise, subject to the limitations set forth in Section 2.02 of this First Supplemental Indenture;

(iii)           an involuntary case or other proceeding shall be commenced against the Company with respect to the Company or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of the Company or for any substantial part of the property and assets of the Company, and such involuntary case or other proceeding shall remain undismissed and unstayed for a period of 60 days; or an order for relief shall be entered against the Company under any bankruptcy, insolvency or other similar law now or hereafter in effect; or

(iv)           the Company (1) commences a voluntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or consents to the entry of an order for relief in an involuntary case under any such law, (2) consents to the appointment of or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official of the Company or for all or substantially all of the property and assets of the Company or (3) effects any general assignment for the benefit of creditors.

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The foregoing will constitute Events of Default whatever the reason for any such Event of Default and whether it is voluntary or involuntary or is effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body.

The Company shall deliver to the Trustee, within 30 days after the occurrence thereof, an Officers’ Certificate of any Event of Default pursuant to clause 6.01(iii) or clause 6.01(iv) and any event which with the giving of notice or the lapse of time would become an Event of Default, its status and what action the Company is taking or proposes to take in respect thereof.

(ii)           Solely for purposes of the ECAPS^SM, Section 6.02 of the Indenture shall be deleted and replaced by the following:

SECTION 6.02.  Acceleration.

If an Event of Default occurs and is continuing, then, and in each and every such case, either the Trustee or the Holders of not less than 25% in aggregate principal amount of the ECAPS^SM then outstanding by notice in writing to the Company (and to the Trustee if given by Holders), may declare the entire outstanding principal amount of all ECAPS^SM, and the interest accrued thereon, if any, to be immediately due and payable (collectively, the “Default Amount”).  Upon such a declaration, the Default Amount shall be due and payable immediately.  Notwithstanding the foregoing, in case of an Event of Default specified in clause 6.01(iii) or clause 6.01(iv) of Section 6.01 with respect the ECAPS^SM, then the principal amount of all the ECAPS^SM then outstanding and interest accrued thereon, if any, shall be and become immediately due and payable, without any notice or other action by any Holder of the ECAPS^SM or the Trustee to the full extent permitted by applicable law.  The Holders of a majority in aggregate principal amount of the then outstanding ECAPS^SM by written notice to the Trustee may on behalf of all of the Holders of the ECAPS^SM rescind an acceleration and its consequences if the rescission would not conflict with any judgment or decree and if all existing Events of Default (except nonpayment of principal, interest or premium that has become due solely because of the acceleration) have been cured or waived.

(iii)  Solely for the purposes of the ECAPS^SM, Section 6.04 of the Indenture shall be deleted in its entirety and replaced by the following:

Section 6.04.  Waiver of Past Defaults.  Holders of at least a majority in principal amount of the outstanding ECAPS^SM, by notice to the Trustee, may waive an existing Default or Event of Default and its consequences, except (i) a Default in the payment of principal of or interest on any ECAPS^SM as specified in

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clauses 6.01(i) or 6.01(ii) of Section 6.01 or (ii) a Default in respect of a covenant or provision that under Section 9.02 cannot be modified or amended without the consent of the Holder of each outstanding ECAPS^SM affected.  Upon any such waiver, such Default shall cease to exist with respect to the ECAPS^SM, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Indenture, but no such waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereto.

Section 2.07.  Securities Registrar; Paying Agent; Delegation of Trustee Duties.

(a)           The Company appoints The Bank of New York Trust Company, N.A., as Securities Registrar and Paying Agent with respect to the ECAPS^SM.

(b)           Notwithstanding any provision contained herein, to the extent permitted by applicable law, the Trustee may delegate its duty to provide such notices and to perform such other duties as may be required to be provided or performed by the Trustee under the Indenture, and, to the extent such obligation has been so delegated, the Trustee shall not be responsible for monitoring the compliance of, nor be liable for the default or misconduct of, any such designee.

Section 2.08.  No Sinking Fund.  The ECAPS^SM shall not be subject to any sinking fund or analogous provisions.

Section 2.09.  Subordination.  The subordination provisions of Article 11 of the Indenture shall apply to the ECAPS^SM.

Section 2.10.  Defeasance.  The provisions of Article 8 of the Indenture (Discharge of Indenture; Defeasance) shall apply to the ECAPS^SM.

ARTICLE 3

COVENANTS

Section 3.01.  Dividend and Other Payment Stoppages.  Unless the Company has paid all accrued and unpaid Interest on the ECAPS^SM, or if an Event of Default has occurred and is continuing, the Company shall not, and shall not permit any Subsidiary of the Company to:

(a)           declare or pay any dividends or distributions on, or redeem, purchase, acquire or make a liquidation payment with respect to, any shares of capital stock of the Company;

(b)           make any payment of principal of, or interest or premium, if any, on 

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or repay, purchase or redeem any of the Company’s debt securities that rank upon the Company’s liquidation on a parity with or junior to the ECAPS^SM; or

(c)           make any guarantee payments on any guarantee of debt securities if the guarantee ranks equally with or junior in interest to the ECAPS^SM.

provided, however, the restrictions in clauses (a), (b) and (c) above do not apply to:  (i) any purchase, redemption or other acquisition of shares of its capital stock by the Company in connection with (A) any employment contract, benefit plan or other similar arrangement with or for the benefit of any one or more of its employees, officers, directors, consultants or independent contractors, (B) the satisfaction of the Company’s obligations pursuant to any contract entered into in the ordinary course of business prior to the beginning of the applicable Optional Deferral Period, (C) a dividend reinvestment or shareholder purchase plan, or (D) the issuance of the Company’s capital stock, or securities convertible into or exercisable for such capital stock, as consideration in an acquisition transaction entered into prior to the applicable Optional Deferral Period; (ii) any dividend or distribution by any of the Company’s subsidiaries to the Company or any of its other Subsidiaries; (iii) any exchange, redemption or conversion of any class or series of the Company’s capital stock, or the capital stock of one of its Subsidiaries, for any other class or series of its capital stock, or of any class or series of its indebtedness for any class or series of its capital stock; (iv) any purchase of fractional interests in shares of the Company’s capital stock pursuant to the conversion or exchange provisions of such capital stock or the securities being converted or exchanged; (v) any declaration of a dividend in connection with any shareholder rights plan, or the issuance of rights, stock or other property under any shareholder rights plan, or the redemption or purchase of rights pursuant thereto; (vi) any dividend in the form of stock, warrants, options or other rights where the dividend stock or stock issuable upon exercise of such warrants, options or other rights is the same stock as that on which the dividend is being paid or ranks equally with or junior to such stock; (vii) payments of current or deferred interest on Pari Passu Securities so long as any such payments are made on a pro rata basis with the ECAPS^SM; or (viii) payments of principal in respect of Pari Passu Securities having the same Scheduled Maturity Date as the ECAPS^SM and that are made on a pro rata basis with the ECAPS^SM.

ARTICLE 4

REDEMPTION OF THE ECAPS^SM

Section 4.01.  Redemption Price.  The ECAPS^SM shall be redeemable in accordance with Article 3 of the Indenture, provided that (a) the ECAPS^SM are redeemable in whole or in part at the option of the Company at any time on or after June 1, 2012 at a Redemption Price equal to 100% of the principal amount of the ECAPS^SM being redeemed plus accrued and unpaid interest to the redemption

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date, (b) the ECAPS^SM are redeemable in whole but not in part at the option of the Company at any time prior to June 1, 2012 and within 90 days following the occurrence and during the continuation of a Tax Event or Rating Agency Event, in each case at a Redemption Price equal to the greater of (i) 100% of the principal amount of the ECAPS^SM being redeemed or (ii) the present value of a principal payment on June 1, 2012 and scheduled payments of interest that would have accrued from the redemption date to June 1, 2012 on the ECAPS^SM being redeemed, discounted from their respective payment dates to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) (not including any portion of such payments of interest accrued to the redemption date) at a discount rate equal to the Treasury Rate plus 50 basis points, in either case plus accrued and unpaid interest to the redemption date, and (c) the ECAPS^SM are redeemable in whole or in part at the option of the Company at any time prior to June 1, 2012, but not within 90 days after the occurrence of a Tax Event or Rating Agency Event, in each case at a Redemption Price equal to the greater of (i) 100% of the principal amount of the ECAPS^SM being redeemed and (ii) the present value of a principal payment on June 1, 2012 and scheduled payments of interest that would have accrued from the redemption date to June 1, 2012 on the ECAPS^SM being redeemed, discounted from their respective payment dates to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) (not including any portion of such payments of interest accrued to the redemption date) at a discount rate equal to the Treasury Rate plus 25 basis points, in either case plus accrued and unpaid interest to the redemption date; provided that if the ECAPS^SM are not redeemed in whole, the Company may not affect such redemption unless at least $25 million aggregate principal amount of the ECAPS^SM, excluding any ECAPS^SM held by the Company or any of its affiliates, remains outstanding after giving effect to such redemption.

ARTICLE 5

REPAYMENT OF ECAPS^SM

Section 5.01.  Repayments.  The Company shall, not more than 65 nor less than 60 Business Days prior to each Repayment Date (unless a shorter notice shall be satisfactory to the Trustee), notify the Trustee of the principal amount of ECAPS^SM to be repaid on such date pursuant to Section 2.02(a).

Section 5.02.  Selection of the ECAPS^SM to be Repaid.  If less than all the ECAPS^SM are to be repaid on any Repayment Date (unless the ECAPS^SM are issued in the form of a Registered Global Security), the particular ECAPS^SM to be repaid shall be selected not more than 60 days prior to such Repayment Date by the Trustee, from the Outstanding ECAPS^SM not previously repaid or called for redemption, by lot or such other method as the Trustee shall deem fair and appropriate and which may provide for the selection for redemption of a portion

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of the principal amount of any ECAPS^SM, provided that the portion of the principal amount of any ECAPS^SM not repaid shall be in an authorized denomination (which shall not be less than the minimum authorized denomination).

The Trustee shall promptly notify the Company in writing of the ECAPS^SM selected for partial repayment and the principal amount thereof to be repaid.  For all purposes hereof, unless the context otherwise requires, all provisions relating to the repayment of ECAPS^SM shall relate, in the case of any ECAPS^SM repaid or to be repaid only in part, to the portion of the principal amount of such ECAPS^SM which has been or is to be repaid.

Section 5.03.  Notice of Repayment.  Notice of repayment shall be given by first-class mail, postage prepaid, mailed not earlier than the 15th day, and not later than the 10th Business Day, prior to the Repayment Date, to each Holder of ECAPS^SM to be repaid, at the address of such Holder as it appears in the Security Register.

Each notice of repayment shall identify the ECAPS^SM to be repaid (including the ECAPS^SM’ CUSIP number, if a CUSIP number has been assigned to the ECAPS^SM) and shall state:

(a)           the Repayment Date;

(b)           if less than all Outstanding ECAPS^SM are to be repaid, the identification (and, in the case of partial repayment, the respective principal amounts) of the particular ECAPS^SM to be repaid;

(c)           that on the Repayment Date, the principal amount of the ECAPS^SM to be repaid will become due and payable upon each such ECAPS^SM or portion thereof, and that interest thereon, if any, shall cease to accrue on and after said date; and

(d)           the place or places where such ECAPS^SM are to be surrendered for payment of the principal amount thereof.

Notice of repayment shall be given by the Company or, if the Company notifies the Trustee at least 24 hours in advance, at the Company’s request, by the Trustee in the name and at the expense of the Company and shall be irrevocable.  The notice if mailed in the manner herein provided shall be conclusively presumed to have been duly given, whether or not the Holders receive such notice.  In any case, a failure to give such notice by mail or any defect in the notice to any Holder of any ECAPS^SM designated for repayment as a whole or in part shall not affect the validity of the proceedings for the repayment of any other ECAPS^SM.

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Section 5.04.  Deposit of Repayment Amount.  Prior to 11:00 a.m. New York City time on the Repayment Date specified in the notice of repayment given as provided in Section 5.03, the Company will deposit with the Trustee or with one or more Paying Agents (or if the Company is acting as its own Paying Agent, the Company will segregate and hold in trust as provided in Section 2.06 of the Indenture) an amount of money, in immediately available funds, sufficient to pay the principal amount of, and any accrued interest on, all the ECAPS^SM which are to be repaid on that date.

Section 5.05.  Repayment of ECAPS^SM.  If any notice of repayment has been given as provided in Section 5.03, the ECAPS^SM or portion of the ECAPS^SM with respect to which such notice has been given shall become due and payable on the date and at the place or places stated in such notice.  On presentation and surrender of such ECAPS^SM at a place of payment in said notice specified, the said securities or the specified portions thereof shall be paid by the Company at their principal amount, together with accrued interest to but excluding the Repayment Date; provided that, except in the case of a repayment in full of all Outstanding ECAPS^SM, installments of interest whose Stated Maturity is on or prior to the Repayment Date will be payable to the Holders of such ECAPS^SM, registered as such at the close of business on the relevant Regular Record Dates according to their terms and the provisions of Section 4.01 of the Indenture.

Upon presentation of any ECAPS^SM repaid in part only, the Company shall execute and the Trustee shall authenticate and make available for delivery to the Holders thereof, at the expense of the Company, a new Debenture, of authorized denominations, in aggregate principal amount equal to the portion of the ECAPS^SM not repaid and so presented and having the same Scheduled Maturity Date and other terms.  If a Registered Global Security is so surrendered, such new ECAPS^SM will also be a new Registered Global Security.

If any ECAPS^SM required to be repaid shall not be so repaid upon surrender thereof, the principal of such ECAPS^SM shall, until paid, bear interest from the applicable Repayment Date at the rate prescribed therefore in the ECAPS^SM.

ARTICLE 6

MISCELLANEOUS

Section 6.01.  Effectiveness.  This First Supplemental Indenture will become effective upon its execution and delivery.

Section 6.02.  Successors and Assigns.  All covenants and agreements in the Indenture, as supplemented and amended by this First Supplemental Indenture, by the Company shall bind its successors and assigns, whether so

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expressed or not.

Section 6.03.  Effect of Recitals.  The recitals contained herein and in the ECAPS^SM, except the Trustee’s certificates of authentication, shall be taken as the statements of the Company, and neither the Trustee nor any Authenticating Agent assumes any responsibility for their correctness.  The Trustee makes no representations as to the validity or sufficiency of this First Supplemental Indenture or of the ECAPS^SM.  Neither the Trustee nor any Authenticating Agent shall be accountable for the use or application by the Company of the ECAPS^SM or the proceeds thereof.

Section 6.04.  Ratification of Indenture.  The Indenture as supplemented by this First Supplemental Indenture, is in all respects ratified and confirmed, and this First Supplemental Indenture shall be deemed part of the Indenture in the manner and to the extent herein and therein provided.

Section 6.05.  Governing Law.  This First Supplemental Indenture and the ECAPS^SM shall be governed by and construed in accordance with the laws of the State of New York.

Section 6.06.  Jury Trial Waiver.  EACH PARTY HERETO, AND EACH HOLDER OF ANY ECAPS^SM BY ACCEPTANCE THEREOF, HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS INDENTURE.

Section 6.07.  Severability.  If any provision of the Indenture, as supplemented and amended by this First Supplemental Indenture, shall be held or deemed to be or shall, in fact, be illegal, inoperative or unenforceable, the same shall not affect any other provision or provisions herein contained or render the same invalid, inoperative or unenforceable to any extent whatever.

*          *          *

This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument.

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IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental Indenture to be duly executed as of the day and year first above written.

CVS CAREMARK CORPORATION, as Company
By:
	Name:
	Title:

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THE BANK OF NEW YORK TRUST COMPANY, N.A. as Trustee
By:
	Name:
	Title:

25

EXHIBIT A

Form of ECAPS^SM

The ECAPS^SM are to be substantially in the following form and shall bear the following legend required by Section 2.02 of the Indenture:

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (“DTC”), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

UNLESS AND UNTIL THIS GLOBAL NOTE IS EXCHANGED IN WHOLE OR IN PART FOR A GLOBAL NOTE IN DEFINITIVE REGISTERED FORM, THIS GLOBAL NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY DTC TO A NOMINEE OF DTC OR BY A NOMINEE OF DTC TO DTC OR ANOTHER NOMINEE OF DTC OR BY DTC OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.

No. •	Principal Amount: $•
Issue Date: May 25, 2007•

CVS CAREMARK CORPORATION

6.302% ENHANCED CAPITAL ADVANTAGED PREFERRED SECURITIES

CVS CAREMARK CORPORATION, a corporation organized and existing under the laws of Delaware (hereinafter called the “Company”, which term includes any successor corporation under the Indenture hereinafter referred to), for value received, hereby promises to pay to CEDE & CO., or registered assigns, the principal sum of • DOLLARS ($•) as may be revised from time to time on Schedule I hereto and all accrued and unpaid interest thereof on June 1, 2037, or if such day is not a Business Day, the following Business Day (the

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“Scheduled Maturity Date”) or any subsequent Interest Payment Date (as hereafter defined) to the extent set forth in the First Supplemental Indenture.  If that amount is not paid in full on the Scheduled Maturity Date or any subsequent Interest Payment Date, the remaining amount, together with accrued and unpaid interest, will be due and payable on the Final Maturity Date.  The Final Maturity Date will be June 1, 2062, or if such day is not a Business Day, the following Business Day.

The Company further promises to pay interest on said principal sum from and including May 25, 2007, or from and including the most recent interest payment date on which interest has been paid or duly provided for, semi-annually (subject to deferral as set forth herein) in arrears on June 1 and December 1 of each year, commencing December 1, 2007, at the rate of 6.302% per annum (computed on the basis of a 360-day year comprised of twelve 30-day months) to but excluding June 1, 2012, and thereafter to pay interest on said outstanding principal sum quarterly in arrears on March 1, June 1, September 1, and December 1 of each year (each such date and, together with such June 1 and December 1 of each year, an “Interest Payment Date”), at a floating annual rate equal to Three-Month LIBOR (as defined in the First Supplemental Indenture) plus 2.065% (computed on the basis of a 360-day year and the actual number of days elapsed), until the principal hereof shall have become due and payable, plus Additional Interest, if any, until the principal hereof is paid or duly provided for or made available for payment.  Accrued interest that is not paid on the applicable Interest Payment Date, including interest deferred pursuant to Section 2.05 of the First Supplemental Indenture, will bear Additional Interest, to the extent permitted by law, at the interest rate in effect from time to time, from the relevant Interest Payment Date, compounded on each subsequent Interest Payment Date.  In the event that any Semi-Annual Interest Payment Date on which interest is payable on this Security is not a Business Day, then a payment of the interest payable on such date will be made on the next succeeding day that is a Business Day (and, in the case of payments on or prior to June 1, 2012, without any interest or other payment in respect of any such delay) with the same force and effect as if made on the date the payment was originally payable.  In the event that any Quarterly Interest Payment Date on which interest is payable on this Security is not a Business Day, then a payment of the interest payable on such date shall be postponed to the next succeeding day that is a Business Day, provided that if such Business Day is in the next succeeding calendar month, such Interest Payment Date shall be the immediately preceding Business Day, and interest will accrue to but excluding the date that interest is actually paid.  The interest installment so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in the Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest installment, which shall be (i) the close of business on the Business Day immediately preceding the

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applicable Interest Payment Date, so long as the ECAPS^SM remain in book-entry only form or (ii) if the ECAPS^SM do not remain in book-entry only form, the record date for each Interest Payment Date will be the close of business on the fifteenth calendar day immediately preceding the applicable Interest Payment Date.

The Company shall have the right, at any time and from time to time prior to the Final Maturity Date to defer the payment of interest on the ECAPS^SM as set forth in, and subject to the conditions specified in, the First Supplemental Indenture.

Unless the Company has paid all accrued and unpaid Interest on the ECAPS^SM, or if an Event of Default has occurred and is continuing, the Company shall not, and shall not permit any Subsidiary of the Company to, (i) declare or pay any dividends or distributions on, or redeem, purchase, acquire or make a liquidation payment with respect to, any shares of capital stock of the Company, (ii) make any payment of principal of, or interest or premium, if any, on or repay, purchase or redeem any of the Company’s debt securities that rank upon the Company’s liquidation on a parity with or junior to the ECAPS^SM, or (iii) make any guarantee payments on any guarantee of debt securities if the guarantee ranks equally with or junior in interest to the ECAPS^SM (other than (a) any purchase, redemption or other acquisition of shares of its capital stock by the Company in connection with (1) any employment contract, benefit plan or other similar arrangement with or for the benefit of any one or more of its employees, officers, directors, consultants or independent contractors, (2) the satisfaction of the Company’s obligations pursuant to any contract entered into in the ordinary course of business prior to the beginning of the applicable Optional Deferral Period, (3) a dividend reinvestment or shareholder purchase plan, or (4) the issuance of the Company’s capital stock, or securities convertible into or exercisable for such capital stock, as consideration in an acquisition transaction entered into prior to the applicable Optional Deferral Period; (b) any dividend or distribution by any of the Company’s subsidiaries to the Company or any of its other Subsidiaries; (c) any exchange, redemption or conversion of any class or series of the Company’s capital stock, or the capital stock of one of its Subsidiaries, for any other class or series of its capital stock, or of any class or series of its indebtedness for any class or series of its capital stock; (d) any purchase of fractional interests in shares of the Company’s capital stock pursuant to the conversion or exchange provisions of such capital stock or the securities being converted or exchanged; (e) any declaration of a dividend in connection with any shareholder rights plan, or the issuance of rights, stock or other property under any shareholder rights plan, or the redemption or purchase of rights pursuant thereto; (f) any dividend in the form of stock, warrants, options or other rights where the dividend stock or stock issuable upon exercise of such warrants, options or other rights is the same stock as that on which the dividend is being paid or ranks equally with or junior to such stock; (g) payments of current or

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deferred interest on Pari Passu Securities so long as any such payments are made on a pro rata basis with the ECAPS^SM; or (h) payments of principal in respect of Pari Passu Securities having the same Scheduled Maturity Date as the ECAPS^SM and that are made on a pro rata basis with the ECAPS^SM.

The Company shall give written notice of its election to begin or extend any Optional Deferral Period, to the Trustee and the Holders of this Security at least one Business Day and not more than sixty Business Days before the next Interest Payment Date.  Notice of the Company’s election of an Optional Deferral Period shall be given to the Trustee and each holder of this Security at such holder’s address appearing in the Security Register by first-class mail, postage prepaid.

Payment of the principal of (and premium, if any) and interest on this Security will be made at the office or agency of the Company maintained for that purpose in the United States, in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts; provided, however, that at the option of the Company payment of interest may be made (i) by check mailed to the address of the Person entitled thereto as such address shall appear in the Securities Register or (ii) by wire transfer in immediately available funds at the bank account number as may be designated by the Person entitled thereto as specified in the Securities Register in writing not less than ten days before the relevant Interest Payment Date.

The indebtedness evidenced by this Security is, to the extent provided in the Indenture, subordinate and junior in right of payment to the prior payment in full of all Senior Indebtedness, and this Security is issued subject to the provisions of the Indenture with respect thereto.  Each Holder of this Security, by accepting the same, (a) agrees to and shall be bound by such provisions, (b) authorizes and directs the Trustee on his behalf to take such actions as may be necessary or appropriate to effectuate the subordination so provided and (c) appoints the Trustee his attorney-in-fact for any and all such purposes.  Each Holder hereof, by his acceptance hereof, waives all notice of the acceptance of the subordination provisions contained herein and in the Indenture by each holder of Senior Indebtedness, whether now outstanding or hereafter incurred, and waives reliance by each such holder upon said provisions.

The Company and, by acceptance of this Security or a beneficial interest in this Security, each Holder hereof and any person acquiring a beneficial interest herein, agree that for United States federal, state and local tax purposes it is intended that this Security constitute indebtedness.

Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place.

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Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

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In Witness Whereof, the Company has caused this instrument to be duly executed.

CVS CAREMARK CORPORATION
By:
	Name:
	Title:

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

This is one of the Debt Securities of the series designated therein referred to in the within-mentioned Indenture.

Dated: May 25, 2007

THE BANK OF NEW YORK TRUST COMPANY, N.A.
By:
	Authorized Signatory

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(FORM OF REVERSE OF ECAPS^SM)

This Security is one of a duly authorized issue of securities of the Company (herein called the “ECAPS^SM”), issued and to be issued in one or more series under the Junior Subordinated Indenture, dated as of May 25, 2007 (herein called the “Base Indenture”), between the Company and The Bank of New York Trust Company, N.A., as trustee (the “Trustee”), as amended and supplemented by the First Supplemental Indenture, dated as of May 25, 2007, between the Company and the Trustee (the “First Supplemental Indenture”, and together with the Base Indenture, the “Indenture”), to which Indenture and all other indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Trustee, the Company and the Holders of the ECAPS^SM, and of the terms upon which the ECAPS^SM are, and are to be, authenticated and delivered.  By the terms of the Indenture, the Debt Securities are issuable in series that may vary as to amount, date of maturity, rate of interest, rank and in any other respect provided in the Indenture.

All terms used in this Security that are defined in the Indenture shall have the meanings assigned to them in the Indenture.

The ECAPS^SM shall be redeemable at the option of the Company in accordance with the terms of the Indenture.  In particular, the ECAPS^SM are redeemable (a) in whole or in part at the option of the Company at any time on or after June 1, 2012 at a Redemption Price equal to 100% of the principal amount of the ECAPS^SM being redeemed plus accrued and unpaid interest to the redemption date, (b) in whole but not in part prior to June 1, 2012 at any time within 90 days following the occurrence and during the continuation of a Tax Event or Rating Agency Event, in each case at a Redemption Price equal to the greater of (i) 100% of the principal amount of the ECAPS^SM being redeemed or (ii) the present value of a principal payment on June 1, 2012 and scheduled payments of interest that would have accrued from the redemption date to June 1, 2012 on the ECAPS^SM being redeemed, discounted from their respective payment dates to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) (not including any portion of such payments of interest accrued to the redemption date) at a discount rate equal to the Treasury Rate plus 50 basis points, in either case plus accrued and unpaid interest to the redemption date, and (c) the ECAPS^SM are redeemable in whole or in part at the option of the Company at any time prior to June 1, 2012, but not within 90 days after the occurrence of a Tax Event or Rating Agency Event, in each case at a Redemption Price equal to the greater of (i) 100% of the principal amount of the ECAPS^SM being redeemed and (ii) the present value of a principal payment on June 1, 2012 and scheduled payments of interest that would have accrued from the redemption date to June 1, 2012 on the ECAPS^SM being redeemed, discounted from their

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respective payment dates to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) (not including any portion of such payments of interest accrued to the redemption date) at a discount rate equal to the Treasury Rate plus 25 basis points, in either case plus accrued and unpaid interest to the redemption date; provided that if the ECAPS^SM are not redeemed in whole, the Company may not affect such redemption unless at least $25 million aggregate principal amount of the ECAPS^SM, excluding any ECAPS^SM held by the Company or any of its affiliates, remains outstanding after giving effect to such redemption.

No sinking fund is provided for the ECAPS^SM.

The Indenture contains provisions for satisfaction and discharge of the entire indebtedness of this Security upon compliance by the Company with certain conditions set forth in the Indenture.

The Indenture permits, with certain exceptions as therein provided, the Company and the Trustee at any time to enter into a supplemental indenture or indentures for the purpose of modifying in any manner the rights and obligations of the Company and of the Holders of the Debt Securities, with the consent of the Holders of not less than a majority in principal amount of the outstanding Debt Securities to be affected by such supplemental indenture.  The Indenture also contains provisions permitting Holders of specified percentages in principal amount of the Debt Securities at the time outstanding, on behalf of the Holders of all Debt Securities, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences.  Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security.

As provided in and subject to the provisions of the Indenture, if an Event of Default with respect to the Debt Securities at the time Outstanding occurs and is continuing, then and in every such case the Trustee or the Holders of not less than 25% in principal amount of the outstanding Debt Securities may declare the entire principal amount and all accrued but unpaid interest of all the Debt Securities to be due and payable immediately, by a notice in writing to the Company (and to the Trustee if given by Holders), provided that the payment of principal and interest (including any Additional Interest) on such Debt Securities shall remain subordinated to the extent provided in Article 11 of the Indenture.

No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of (and premium, if any) and

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interest on this Security at the times, place and rate, and in the coin or currency, herein prescribed.

As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is registrable in the Securities Register, upon surrender of this Security for registration of transfer at the office or agency of the Company maintained under Section 4.02 of the Indenture duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Securities Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Debt Securities, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees.  No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.

Prior to due presentment of this Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee shall treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary.

The Debt Securities are issuable only in registered form without coupons in minimum denominations of $2,000 and any integral multiples of $1,000 in excess thereof.  As provided in the Indenture and subject to certain limitations therein set forth, Debt Securities are exchangeable for a like aggregate principal amount of Debt Securities of a different authorized denomination, as requested by the Holder surrendering the same.

The Company and, by its acceptance of this Security or a beneficial interest therein, the Holder of, and any Person that acquires a beneficial interest in, this Security agree to treat for United States Federal income tax purposes (i) the Debt Securities as indebtedness of the Company, and (ii) the stated interest on the Debt Securities as ordinary interest income that is includible in the Holder’s or beneficial owner’s gross income at the time the interest is paid or accrued in accordance with the Holder’s or beneficial owner’s regular method of tax accounting, and otherwise to treat the Debt Securities as described in the Prospectus.

The Indenture and this Security shall be governed by and construed in accordance with the laws of the State of New York.

This is one of the Debt Securities referred to in the within mentioned Indenture.

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The Company will furnish to any Holder of a Debt Security upon written request and without charge to such Holder of a Debt Security a copy of the Indenture.  Requests may be made to:

CVS Caremark Corporation

670 White Plains Road, Suite 210

Scarsdale, New York 10583

Attention: Nancy R. Christal

Terms defined in the Indenture and not otherwise defined herein are used herein as therein defined.

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	ASSIGNMENT FORM
	To assign this Debt Security, complete the form below: I or we assign and transfer this Debt Security to: [Print or type assignee’s name, address and zip code] [Insert assignee’s soc. sec. or tax I.D. No.]
	and irrevocably appoint ______________ as agent to transfer this Debt Security on the books of CVS Caremark Corporation.  The agent may substitute another to act for him.
Date:_________________________		Your Signature:___________________

Sign exactly as your name appears on the face of this Debt Security.

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EX-8.1

Exhibit 8.1

DAVIS POLK & WARDWELL
Michael Mollerus 212 450 4471 MICHAEL.MOLLERUS@DPW.COM	450 LEXINGTON AVENUE NEW YORK, N.Y. 10017 212 450 4000 FAX 212 450 3800	Menlo Park Washington, D.C. London Paris Frankfurt Madrid Tokyo Beijing Hong Kong
	May 24, 2007

Re: CVS Caremark Corporation — 6.302% Enhanced Capital Advantaged Preferred Securities (ECAPSSM) Due 2062

CVS Caremark Corporation

One CVS Drive

Woonsocket, RI  02895

Ladies and Gentlemen:

We have acted as special tax counsel for CVS Caremark Corporation (the “Company”) in connection with the registration of an aggregate principal amount of $1,000,000,000 of the Company’s 6.302% Enhanced Capital Advantaged Preferred Securities Due 2062 (the “ECAPS”). We hereby confirm the opinion (the “Opinion”) set forth under the caption “Certain United States Federal Income Tax Considerations—Characterization of the ECAPS” in the prospectus supplement dated May 22, 2007 (the “Prospectus Supplement”) to the prospectus that is part of the Registration Statement on Form S-3 filed by the Company with the Securities and Exchange Commission on May 21, 2007 (the “Base Prospectus”). Capitalized terms used herein but not defined have the same meanings as provided in the Prospectus Supplement.

In rendering the Opinion, we have relied upon, among other things, (i) the Base Prospectus, (ii) the Prospectus Supplement, (iii) the Subordinated Indenture, (iv) the First Supplemental Indenture, and (v) the form of the ECAPS; and have made such other investigations as we have deemed necessary or appropriate as a basis for the Opinion.  In rendering the Opinion, we also have assumed that the transactions related to the issuance of the ECAPS will be consummated in accordance with the terms of the documents and forms of documents described herein.

CVS Caremark Corporation  2  May 24, 2007

We hereby consent to the use of our name under the caption “Certain United States Federal Income Tax Considerations—Characterization of the ECAPS” in the Prospectus Supplement. The issuance of such a consent does not concede that we are an “Expert” for the purposes of the Securities Act of 1933.

Very truly yours,

/s/ Davis Polk & Wardwell

EX-99.1

Exhibit 99.1

REPLACEMENT CAPITAL COVENANT, dated as of May 25, 2007 (this “Replacement Capital Covenant”), by CVS Caremark Corporation, a Delaware corporation (together with its successors and assigns, the “Corporation”), in favor of and for the benefit of each Covered Debtholder (as defined below).

RECITALS

A.      On the date hereof, the Corporation is issuing $1,000,000,000 aggregate principal amount of its 6.302% Enhanced Capital Advantaged Preferred Securities due 2062 (the “ECAPS^SM”).

B.      This Replacement Capital Covenant is the “Replacement Capital Covenant” referred to in the Prospectus Supplement, dated May 22, 2007, relating to the ECAPS^SM (the “Prospectus Supplement”).

C.      The Corporation is entering into and disclosing the content of this Replacement Capital Covenant in the manner provided below with the intent that the covenants provided for in this Replacement Capital Covenant be enforceable by each Covered Debtholder and that the Corporation be estopped from disregarding the covenants in this Replacement Capital Covenant, in each case to the fullest extent permitted by applicable law.

D.      The Corporation acknowledges that reliance by each Covered Debtholder upon the covenants in this Replacement Capital Covenant is reasonable and foreseeable by the Corporation and that, were the Corporation to disregard its covenants in this Replacement Capital Covenant, each Covered Debtholder would have sustained an injury as a result of its reliance on such covenants.

NOW, THEREFORE, the Corporation hereby covenants and agrees as follows in favor of and for the benefit of each Covered Debtholder.

SECTION 1. Definitions. Capitalized terms used in this Replacement Capital Covenant (including the Recitals) have the meanings set forth in Schedule I hereto.

SECTION 2. Limitations on Payment, Redemption and Purchase Of ECAPS^SM. The Corporation hereby promises and covenants to and for the benefit of each Covered Debtholder that the Corporation shall not pay, redeem or purchase, and will cause its Subsidiaries not to pay or purchase, as applicable, all or any part of the ECAPS^SM on or before the date that is 15 years prior to the Final Maturity Date except to the extent that the principal amount paid or the applicable redemption or purchase price does not exceed the sum of the following amounts raised during the applicable Measurement Period:

(a)      200% of (i) the aggregate amount of net cash proceeds received by the Corporation and its Subsidiaries from the sale of Common Stock and Rights to acquire Common Stock (including Common Stock and Rights to acquire Common Stock sold pursuant to the Corporation’s dividend reinvestment plan, direct stock purchase plan or employee benefit plans) to Persons other than the Corporation and its Subsidiaries and (ii) the aggregate Market Value of any Common Stock that the Corporation and its Subsidiaries have issued to Persons other than the Corporation and its Subsidiaries in connection with the conversion of any convertible or exchangeable securities, other than securities for which the Corporation or any of its Subsidiaries has received equity credit from any NRSRO, in each case since the most recent Measurement Date (without double counting proceeds received in any prior Measurement Period); plus

(b)      100% of the aggregate amount of net cash proceeds received by the Corporation and its Subsidiaries since the most recent Measurement Date (without double counting proceeds received in any prior Measurement Period) from the sale of Mandatorily Convertible Preferred Stock, Debt Exchangeable for Common Equity and Debt Exchangeable for Preferred Equity to Persons other than the Corporation and its Subsidiaries; plus

(c)      100% of the aggregate amount of net cash proceeds received by the Corporation and its Subsidiaries since the most recent Measurement Date (without double counting proceeds received in any prior Measurement Period) from the sale of Qualifying Capital Securities to Persons other than the Corporation and its Subsidiaries.

For the avoidance of doubt, any reference in this Replacement Capital Covenant to any payment, redemption or purchase of the Corporation’s securities will be deemed to include a defeasance of the Corporation’s obligations under such securities.

SECTION 3. Covered Debt. (a) The Corporation represents and warrants that the Initial Covered Debt is Eligible Debt.

(b)      During the 30-day period immediately preceding any Redesignation Date with respect to the Covered Debt then in effect, the Corporation shall identify the series of Eligible Debt that will become the Covered Debt on and after such Redesignation Date in accordance with the following procedures:

(i)      the Corporation shall identify each series of its then outstanding long-term indebtedness for money borrowed that is Eligible Debt;

(ii)      if only one series of the Corporation’s then outstanding long-term indebtedness for money borrowed is Eligible Debt, such series

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shall become the Covered Debt commencing on the related Redesignation Date;

(iii)      if the Corporation has more than one outstanding series of long-term indebtedness for money borrowed that is Eligible Debt, then the Corporation shall identify the series that has the latest occurring final maturity date as of the date the Corporation is applying the procedures in this Section 3(b) and such series shall become the Covered Debt on the related Redesignation Date;

(iv)      the series of outstanding long-term indebtedness for money borrowed that is determined to be Covered Debt pursuant to this Section 3(b) shall be the Covered Debt for purposes of this Replacement Capital Covenant for the period commencing on the related Redesignation Date and continuing to but not including the Redesignation Date as of which a new series of outstanding long-term indebtedness is next determined to be the Covered Debt pursuant to the procedures set forth in this Section 3(b); and

(v)      in connection with such identification of a new series of Covered Debt, the Corporation shall give the notice provided for in Section 3(c) below within the time frame provided for in such section.

Notwithstanding any other provisions of this Replacement Capital Covenant, if on any Redesignation Date the Corporation has then outstanding one or more series of Eligible Subordinated Debt, a series of Eligible Subordinated Debt shall be identified as Covered Debt in accordance with Section 3(b) and no Eligible Senior Debt shall then be Covered Debt.

If at any time the Covered Debt is held by a Trust, a holder of the capital securities of such Trust may institute a legal proceeding directly against the Corporation for the enforcement of this Replacement Capital Covenant, and such capital securities shall be deemed to be “Covered Debt” so long as the Covered Debt held by the Trust remains Covered Debt.

(c)      Notice. In order to give effect to the intent of the Corporation described in Recital C, the Corporation covenants that

(i)      simultaneously with the execution of this Replacement Capital Covenant or as soon as practicable after the date hereof, it shall (A) give notice to the Holders of the Initial Covered Debt, in the manner provided in the indenture relating to the Initial Covered Debt, of this Replacement Capital Covenant and the rights granted to such Holders hereunder and (B) file a copy of this Replacement Capital Covenant with the Commission as an exhibit to a current report on Form 8-K;

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(ii)      so long as the Corporation is a reporting company under the Exchange Act, the Corporation will include in each annual report filed with the Commission on Form 10-K under the Exchange Act a description of the covenant set forth in Section 2 and identify the series of long-term indebtedness for borrowed money that is Covered Debt as of the date such annual report on Form 10-K is filed with the Commission;

(iii)      if a series of the Corporation’s long-term indebtedness for money borrowed (A) becomes Covered Debt or (B) ceases to be Covered Debt pursuant to the procedures set forth in Section 3(b), the Corporation shall give notice of such occurrence within 30 days to the holders of such long-term indebtedness for money borrowed in the manner provided for in the indenture, fiscal agency agreement or other instrument under which such long-term indebtedness for money borrowed was issued and promptly report such change in the Corporation’s next quarterly report, annual report and in a current report on Form 8-K under the Exchange Act, including or incorporating by reference this Replacement Capital Covenant;

(iv)      if, and only if, the Corporation ceases to be a reporting company under the Exchange Act, the Corporation shall, rather than include the relevant information in Exchange Act filings pursuant to clauses (ii) and (iii) of this Section 3(c), cause a notice of the information required by clauses (ii) and (iii) of this Section 3(c) to be posted on (A) the Corporation’s website and (B) the Bloomberg screen and each similar third-party vendor’s screen for each series of Covered Debt (or any successor thereto) (each, an “Investor Screen”) and cause a hyperlink to the execution copy of this Replacement Capital Covenant to be included on the appropriate Investor Screen; and

(v)      promptly upon request by any Holder of Covered Debt, the Corporation shall provide such Holder with a conformed copy of this Replacement Capital Covenant.

SECTION 4. Termination, Amendment and Waiver. (a) The obligations of the Corporation pursuant to this Replacement Capital Covenant shall remain in full force and effect until the earliest (the “Termination Date”) to occur of (i) the date that is 15 years prior to the Final Maturity Date, (ii) the date on which all the ECAPS^SM have been paid, redeemed or purchased in full (in compliance with the terms of this Replacement Capital Covenant, (iii) the date, if any, on which the Holders of a majority in principal amount of the then effective series of Covered Debt consent or agree in writing to the termination of this Replacement Capital Covenant and the obligations of the Corporation hereunder and (iv) the date on which the Corporation ceases to have any series of outstanding Eligible Senior Debt or Eligible Subordinated Debt (in each case without giving effect to the

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rating requirement in clause (b) of the definition of each such term). Moreover, if an event of default under the Indenture resulting in an acceleration of the ECAPS^SM occurs, the Corporation does not have to comply with this Replacement Capital Covenant. From and after the Termination Date, the obligations of the Corporation pursuant to this Replacement Capital Covenant shall be of no further force and effect.

(b)      This Replacement Capital Covenant may be amended or supplemented from time to time by a written instrument signed by the Corporation with the consent of the Holders of at least a majority in principal amount then outstanding of the then effective series of Covered Debt, provided that this Replacement Capital Covenant may be amended or supplemented from time to time by a written instrument signed only by the Corporation (and without the consent of any Holder of the then effective series of Covered Debt) if (i) the effect of such amendment or supplement is solely to impose additional restrictions on the types of securities qualifying as Replacement Capital Securities and an officer of the Corporation has delivered to the Holders of the then effective series of Covered Debt in the manner provided for in the indenture, fiscal agency agreement or other instrument with respect to such Covered Debt a written certificate to that effect, (ii) such amendment or supplement is not adverse to the Covered Debtholders and an officer of the Corporation has delivered to the Holders of the then effective series of Covered Debt in the manner provided for the delivery of notices in the indenture, fiscal agency agreement or other instrument with respect to such Covered Debt a written certificate to that effect or (iii) such amendment or supplement eliminates Common Stock, Rights to acquire Common Stock, Debt Exchangeable for Common Equity and/or Mandatorily Convertible Preferred Stock as Replacement Capital Securities if, in the case of this clause (iii), the Corporation has been advised in writing by a nationally recognized independent accounting firm that there is more than an insubstantial risk that the failure to do so would result in a reduction in the Corporation’s earnings per share as calculated in accordance with generally accepted accounting principles in the United States.

(c)      For purposes of Sections 4(a) and 4(b), the Holders whose consent or agreement is required to terminate, amend or supplement the obligations of the Corporation under this Replacement Capital Covenant shall be the Holders of the then effective Covered Debt as of a record date established by the Corporation that is not more than 30 days prior to the date on which the Corporation proposes that such termination, amendment or supplement becomes effective.

SECTION 5. Miscellaneous. (a) This Replacement Capital Covenant shall be governed by and construed in accordance with the laws of the State of New York.

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(b)      This Replacement Capital Covenant shall be binding upon the Corporation and its successors and assigns and shall inure to the benefit of the Covered Debtholders as they exist from time to time (it being understood and agreed by the Corporation that any Person who is a Covered Debtholder at the time such Person acquires, holds or sells Covered Debt shall retain its status as a Covered Debtholder for so long as the series of long-term indebtedness for borrowed money owned by such Person is Covered Debt and, if such Person initiates a claim or proceeding to enforce its rights under this Replacement Capital Covenant after the Corporation has violated its covenants in Section 2 and before the series of long-term indebtedness for money borrowed held by such Person is no longer Covered Debt, such Person’s rights under this Replacement Capital Covenant shall not terminate prior to a Termination Date solely by reason of such series of long-term indebtedness for money borrowed no longer being Covered Debt).

(c)      All demands, notices, requests and other communications to the Corporation under this Replacement Capital Covenant shall be deemed to have been duly given and made if in writing and (i) if served by personal delivery upon the Corporation, on the day so delivered (or, if such day is not a Business Day, the next succeeding Business Day), (ii) if delivered by registered post or certified mail, return receipt requested, or sent to the Corporation by a national or international courier service, on the date of receipt by the Corporation (or, if such date of receipt is not a Business Day, the next succeeding Business Day) or (iii) if sent by telecopier, on the day telecopied, or if not a Business Day, the next succeeding Business Day; provided that the telecopy is promptly confirmed by telephone confirmation thereof, and in each case to the Corporation at the address set forth below, or at such other address as the Corporation may thereafter notify to Covered Debtholders or post on its website as the address for notices under this Replacement Capital Covenant:

CVS Caremark Corporation

One CVS Drive

Woonsocket, RI 02895

Attention: General Counsel

Any demand, notice, request or other communication to Covered Debtholders under this Replacement Capital Covenant may be given by the Corporation in any manner contemplated by the indenture, fiscal agency agreement or other instrument governing the Covered Debt. For all purposes of this Replacement Capital Covenant, the Corporation may deem and treat the registered Holder of any Covered Debt as the absolute owner of such Covered Debt, and the Corporation shall not be affected by any notice to the contrary. The rights of beneficial owners in any Covered Debt shall be exercised only through the registered Holder of such Covered Debt, and the Corporation may rely and shall be fully protected in relying upon information furnished by such registered

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Holder. Any demand, notice, request, consent, waiver or other action of a Holder shall bind every future Holder of the same Covered Debt and the Holder of every instrument evidencing Covered Debt issued upon the registration of transfer thereof or in exchange therefor.

(d)      No Covered Debtholder shall have any right to institute any proceeding, judicial or otherwise, with respect to this Replacement Capital Covenant, or for any other remedy with respect to this Replacement Capital Covenant, unless the Corporation shall have failed to comply with its obligations under this Replacement Capital Covenant.

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IN WITNESS WHEREOF, the Corporation has caused this Replacement Capital Covenant to be executed by its duly authorized officer, as of the day and year first above written.

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

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Schedule I

DEFINITIONS

“Alternative Payment Mechanism” means, with respect to any securities or combination of securities (together in this definition, “such securities”), provisions in the related transaction documents requiring the Corporation (i) to issue (or use commercially reasonable efforts to issue) one or more types of APM Qualifying Securities raising eligible proceeds at least equal to the deferred Distributions on such securities and (ii) to apply the proceeds to pay unpaid Distributions on such securities, commencing on the earlier of (x) the first Distribution Date after commencement of a deferral period on which the Corporation pays current Distributions on such securities and (y) the fifth anniversary of the commencement of such deferral period, and that:

(a)      define “eligible proceeds” to mean, for purposes of such Alternative Payment Mechanism, the net proceeds (after underwriters’ or placement agents’ fees, commissions or discounts and other expenses relating to the issuance or sale of the relevant securities, where applicable, and including the fair market value of property received by the Corporation or any of its Subsidiaries as consideration for such securities) that the Corporation has received during the 180 days prior to the related Distribution Date from the issuance of APM Qualifying Securities, subject to the Common Cap, the Preferred Cap and the Share Cap, as applicable (each as defined below);

(b)      permit the Corporation to pay current Distributions on any Distribution Date out of any source of funds but (x) require the Corporation to pay deferred Distributions only out of eligible proceeds and (y) prohibit the Corporation from paying deferred Distributions out of any source of funds other than eligible proceeds (other than following an acceleration of such securities or the occurrence of the final maturity thereof);

(c)      if deferral of Distributions continues for more than one year (or such shorter period as is provided for in the terms of such securities), require the Corporation not to pay, redeem or purchase any of the Corporation’s capital stock or the Corporation’s securities that rank pari passu with or junior to the most senior issuable APM Qualifying Securities until at least one year after all deferred Distributions have been paid (a “share repurchase provision”);

(d)      permit the Corporation, at its option, to provide that if the Corporation is involved in a merger, consolidation, amalgamation or conveyance, transfer or lease of assets substantially as an entirety to any other person (a “business combination”) where immediately after the consummation of the business combination more than 50% of the voting stock of the surviving entity of the business combination, or the person to whom all or substantially all of the

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Corporation’s assets are conveyed, transferred or leased, is owned by the shareholders of the other party to the business combination, then clauses (a), (b) and (c) above will not apply to any deferral period that is terminated on the next interest payment date following the date of consummation of the business combination;

(e)      limit the obligation of the Corporation to issue (or use commercially reasonable efforts to issue) APM Qualifying Securities that are Common Stock or Rights to acquire Common Stock, an amount from the issuance thereof pursuant to the Alternative Payment Mechanism (including at any point in time from all prior issuances thereof pursuant to the Alternative Payment Mechanism) (A) with respect to deferred Distributions during the first five years of any deferral period, to a number of shares of Common Stock and shares purchasable upon the exercise of Rights to acquire Common Stock not in excess of 2% of the total number of issued and outstanding shares of Common Stock as of the date of the then most recent publicly available consolidated financial statements of the Corporation (the “Common Cap”); provided (and it being understood) that the Common Cap shall cease to apply to such deferral period by a date (as specified in the related transaction documents) which shall be not later than the fifth anniversary of the commencement of such deferral period and (B) a maximum issuance cap on the issuance of APM Qualifying Securities consisting of Common Stock and Rights to acquire Common Stock, in each case to be set at the Corporation’s discretion (the “Share Cap”); provided that such Share Cap will be subject to the Corporation’s agreement to use commercially reasonable efforts to increase the Share Cap when reached to a number of shares of Common Stock that would allow the Corporation to satisfy its rights with respect to the Alternative Payment Mechanism and only to the extent it can do so and simultaneously satisfy its future fixed or contingent obligations under other securities and derivative instruments that provide for settlement or payment in shares of Common Stock.

(f)      limit the right of the Corporation to issue (or use commercially reasonable efforts to issue) APM Qualifying Securities that are Qualifying Non-Cumulative Preferred Stock or Mandatorily Convertible Preferred Stock, an amount from the issuance thereof pursuant to the related Alternative Payment Mechanism (including at any point in time from all prior issuances of Qualifying Non-Cumulative Preferred Stock and unconverted Mandatorily Convertible Preferred Stock pursuant to such Alternative Payment Mechanism) equal to 25% of the principal or stated amount of the securities that are the subject of the related Alternative Payment Mechanism (the “Preferred Cap”); and

(g)      in the case of securities other than Qualifying Non-Cumulative Preferred Stock, include a Bankruptcy Claim Limitation Provision;

provided (and it being understood) that:

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(A)      the Corporation shall not be obligated to issue (or use commercially reasonable efforts to issue) APM Qualifying Securities for so long as a Market Disruption Event has occurred and is continuing;

(B)      if, due to a Market Disruption Event or otherwise, the Corporation is able to raise and apply some, but not all, of the eligible proceeds necessary to pay all deferred Distributions on any Distribution Date, the Corporation will apply any available eligible proceeds to pay accrued and unpaid Distributions on the applicable Distribution Date in chronological order based on the date each payment was first deferred, subject to the Common Cap, Preferred Cap and Share Cap, as applicable; and

(C)      if the Corporation has outstanding more than one class or series of securities under which it is obligated to sell a type of APM Qualifying Securities and apply some part of the proceeds to the payment of deferred Distributions, then on any date and for any period the amount of net proceeds received by the Corporation from those sales and available for payment of deferred Distributions on such securities shall be applied to such securities on a pro rata basis in proportion to the total amounts that are due on such securities.

“APM Qualifying Securities” means, with respect to an Alternative Payment Mechanism, one or more of the following (as designated in the transaction documents for the Qualifying Capital Securities that include an Alternative Payment Mechanism, a Mandatory Trigger Provision or Debt Exchangeable for Preferred Equity):

(a) Common Stock;

(b) Rights to acquire Common Stock;

(c) Mandatorily Convertible Preferred Stock; or

(d) Qualifying Non-Cumulative Preferred Stock,

in each case, of the Corporation;

provided that if the APM Qualifying Securities for any Alternative Payment Mechanism, Mandatory Trigger Provision or Debt Exchangeable for Preferred Equity include both Common Stock and Rights to acquire Common Stock, such Alternative Payment Mechanism, Mandatory Trigger Provision or Debt Exchangeable for Preferred Equity may permit, but need not require, the

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Corporation to issue Rights to acquire Common Stock, or Qualifying Non-Cumulative Perpetual Preferred Stock; provided further that if such Alternative Payment Mechanism, Mandatory Trigger Provision or Debt Exchangeable for Preferred Equity includes all of the securities included in (a) through (d) above, it may allow for an amendment of the terms of such security to eliminate Common Stock, Rights to acquire Common Stock and Mandatorily Convertible Preferred Stock as APM Qualifying Securities if the Corporation has been advised in writing by a nationally recognized independent accounting firm that there is more than an insubstantial risk that the failure to do so would result in a reduction in the Corporation’s earnings per share as calculated in accordance with generally accepted accounting principals in the United States.

“Bankruptcy Claim Limitation Provision” means, with respect to any securities or combination of securities that have an Alternative Payment Mechanism or a Mandatory Trigger Provision (together in this definition, “such securities”), provisions that, upon any liquidation, dissolution, winding up or reorganization or in connection with any insolvency, receivership or proceeding under any bankruptcy law with respect to the issuer, limit the claim of the holders of such securities to Distributions that accumulate during (A) any deferral period, in the case of securities that have an Alternative Payment Mechanism or (B) any period in which the issuer fails to satisfy one or more financial tests set forth in the terms of such securities or related transaction agreements, in the case of securities having a Mandatory Trigger Provision, to:

(i)      in the case of securities having an Alternative Payment Mechanism or Mandatory Trigger Provision with respect to which the APM Qualifying Securities do not include Qualifying Non-Cumulative Preferred Stock or Mandatorily Convertible Preferred Stock, 25% of the stated or principal amount of such securities then outstanding;

(ii)      in the case of any other securities an amount not in excess of: (A) the amount of accumulated and unpaid Distributions (including compounded amounts) that relate to the earliest two years of the portion of the deferral period for which Distributions have not been paid or (B) the sum of (1) the amount of accumulated and unpaid Distributions (including compounded amounts) that relate to the earliest two years of the portion of the deferral period for which Distributions have not been paid and (2) an amount equal to the excess, if any, of the Preferred Cap over the aggregate amount of net proceeds from the sale of Qualifying Non-Cumulative Preferred Stock and unconverted Mandatorily Convertible Preferred Stock that the issuer has applied to pay such Distributions pursuant to the Alternative Payment Mechanism or the Mandatory Trigger Provision; provided that the holders of such securities are deemed to agree that, to the extent the remaining claim exceeds the amount set forth in subclause (1), the amount they receive in respect of such excess shall not exceed the

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amount they would have received had such claim ranked pari passu with the interests of the holders, if any, of Qualifying Non-Cumulative Preferred Stock.

“Business Day” means each day other than (a) a Saturday or Sunday or (b) a day on which banking institutions in The City of New York are authorized or required by law or executive order to remain closed or, on or after June 1, 2012, a day that is not a London banking day. A “London banking day” is any day on which dealings in deposits in U.S. dollars are transacted in the London interbank market.

“Commission” means the United States Securities and Exchange Commission.

“Common Stock” means any equity securities of the Corporation (including equity securities held as treasury shares) or rights to purchase equity securities that have no preference in payment or dividends or amounts payable upon the Corporation’s liquidation, dissolution or winding-up (including a security that tracks the performance of, or relates to the results of, a business, unit or division of the Corporation), and any equity securities that have no preference in payment or dividends or amounts payable upon the Corporation’s liquidation, dissolution or winding-up and are issued in exchange therefor in connection with a merger, consolidation, binding share exchange, business combination, recapitalization or other similar event.

“Corporation” has the meaning specified in the introduction to this instrument.

“Covered Debt” means (a) at the date of this Replacement Capital Covenant and continuing to but not including the first Redesignation Date, the Initial Covered Debt and (b) thereafter, commencing with each Redesignation Date and continuing to but not including the next succeeding Redesignation Date, the Eligible Debt identified pursuant to Section 3(b) as the Covered Debt for such period.

“Covered Debtholder” means each Person (whether a Holder or a beneficial owner holding through a participant in a clearing agency) that buys, holds or sells long-term indebtedness for money borrowed of the Corporation during the period that such long-term indebtedness for money borrowed is Covered Debt.

“Current Price” means, for the Common Stock on any date, the closing sale price per share (or if no closing sale price is reported, the average of the bid and ask prices or, if more than one in either case, the average of the average bid and the average ask prices) on that date as reported in composite transactions by

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the New York Stock Exchange or, if such Common Stock is not then listed on the New York Stock Exchange, as reported by the principal U.S. securities exchange on which such Common Stock is traded or quoted. If such Common Stock is not listed on any U.S. securities exchange on the relevant date, the “current price” shall be the last quoted bid price for such Common Stock in the over-the-counter market on the relevant date as reported by the National Quotation Bureau or similar organization. If such Common Stock is not so quoted, the “current price” shall be the average of the mid-point of the last bid and ask prices for such Common Stock on the relevant date from each of at least three nationally recognized independent investment banking firms selected by the Corporation for this purpose. If such Common Stock is not so quoted, and if bid and ask prices for such Common Stock are not available, the “current price” shall be determined by the expert opinion of a nationally recognized independent investment banking firm selected by the Corporation’s Board of Directors for this purpose.

“Debt Exchangeable for Common Equity” means a security (or combination of securities) that:

(a)      gives the holder a beneficial interest in (i) the Corporation’s debt securities that are not redeemable prior to settlement of the stock purchase contract referred to in subclause (ii) hereof and (ii) a fractional interest in a stock purchase contract for a share of the Corporation’s Common Stock that will be settled in three years or less, with the number of shares of Common Stock purchasable pursuant to such stock purchase contract to be within a range established at the time of issuance of such debt securities;

(b)      provides that the investors directly or indirectly grant the Corporation a security interest in such debt securities and their proceeds (including any substitute collateral permitted under the transaction documents) to secure the investors’ direct or indirect obligation to purchase the Corporation’s Common Stock pursuant to such stock purchase contracts;

(c)      includes a remarketing feature pursuant to which the Corporation’s debt securities are remarketed to new investors commencing not later than the last Distribution Date that is at least one (1) month prior to the settlement date of the stock purchase contract; and

(d)      provides for the proceeds raised in the remarketing to be used to purchase the Corporation’s Common Stock under the stock purchase contracts and, if there has not been a successful remarketing by the settlement date of the stock purchase contract, provides that the stock purchase contracts will be settled by the Corporation acquiring the Corporation’s respective debt securities or other collateral directly or indirectly pledged by investors in the Debt Exchangeable for Common Equity in satisfaction of the investors’ obligations under the stock purchase contracts.

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“Debt Exchangeable for Preferred Equity” means a security (or combination of securities, together in this definition “such securities”) that:

(a)      gives the holder a beneficial interest in (i) subordinated debt securities of the Corporation that include a provision requiring the Corporation to issue (or use commercially reasonable efforts to issue) one or more types of APM Qualifying Securities raising aggregate proceeds at least equal to the deferred Distributions on such subordinated debt securities commencing not later than the second anniversary of the commencement of such deferral period and that are the most junior subordinated debt of the Corporation (or rank pari passu with the most junior subordinated debt of the Corporation) and (ii) a fractional interest in a stock purchase contract for Qualifying Non-Cumulative Preferred Stock;

a. includes a remarketing feature pursuant to which the subordinated debt of the Corporation is remarketed to new investors commencing not later than the first Distribution Date that is at least five years after the date of issuance of the security or earlier in the event of an early settlement event based on: (i) the dissolution of the issuer of such securities or (ii) one or more capital ratios or financial tests set forth in the terms of such securities or related transaction agreements;

b. provides that the investors directly or indirectly grant the Corporation a security interest in such debt securities and their proceeds (including any substitute collateral permitted under the transaction documents) to secure the investors’ direct or indirect obligation to purchase the Corporation’s Qualifying Non- Cumulative Preferred Stock pursuant to such stock purchase contracts;

c. provides for the proceeds raised in the remarketing to be used to purchase Qualifying Non-Cumulative Preferred Stock;

d. includes a replacement capital covenant substantially similar to this Replacement Capital Covenant, provided that such replacement capital covenant will apply to such security (or combination of securities) and to the Qualifying Non-Cumulative Preferred Stock and will not include Debt Exchangeable for Preferred Equity or Debt Exchangeable for Common Equity in the definition of Qualifying Capital Securities;

e. after the issuance of such Qualifying Non-Cumulative Preferred Stock, provides the holder of the security with a beneficial interest in such Qualifying Non-Cumulative Preferred Stock; and

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f. includes a provision specifying that if the debt securities are not successfully remarketed by the sixth anniversary of the issue date of the securities, the Qualifying Non-Cumulative Preferred Stock will be acquired in exchange for the debt securities in satisfaction of the investors’ obligations under the stock purchase contracts.

“Distribution Date” means, as to any securities or combination of securities, the dates on which periodic Distributions on such securities are scheduled to be made.

“Distribution Period” means, as to any securities or combination of securities, each period from and including the later of the issue date and a Distribution Date for such securities to but excluding the next succeeding Distribution Date for such securities.

“Distributions” means, as to a security or combination of securities, dividends, interest payments or other income distributions to the holders thereof that are not Subsidiaries of the Corporation.

“ECAPS^SM” has the meaning specified in Recital A.

“Eligible Debt” means, at any time, indebtedness, other than the ECAPS^SM and securities that are pari passu with the ECAPS^SM, that is Eligible Subordinated Debt or, if no Eligible Subordinated Debt is then outstanding, Eligible Senior Debt.

“Eligible Senior Debt” means, at any time in respect of any issuer, each series of outstanding unsecured long-term indebtedness for money borrowed of such issuer that (a) upon a bankruptcy, liquidation, dissolution or winding-up of the issuer, ranks most senior among the issuer’s then outstanding classes of unsecured indebtedness for money borrowed, (b) is then assigned a rating by at least one NRSRO (provided that this clause (b) shall apply on a Redesignation Date only if on such date the issuer has outstanding senior long-term indebtedness for money borrowed that satisfies the requirements of clauses (a), (c) and (d) that is then assigned a rating by at least one NRSRO), (c) has an outstanding principal amount of not less than $100,000,000, (d) was issued through or with the assistance of a commercial or investment banking firm or firms acting as underwriters, initial purchasers or placement or distribution agents and (e) has a remaining life to maturity of not less than five years. For purposes of this definition as applied to securities with a CUSIP number, each issuance of long-term indebtedness for money borrowed that has (or, if such indebtedness is held by a trust or other intermediate entity established directly or indirectly by the issuer, the securities of such intermediate entity that have) a separate CUSIP number shall be deemed to be a series of the issuer’s long-term indebtedness for money borrowed that is separate from each other series of such indebtedness.

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“Eligible Subordinated Debt” means, at any time in respect of any issuer, each series of outstanding unsecured long-term indebtedness for money borrowed that (a) upon a bankruptcy, liquidation, dissolution or winding-up of the issuer, is senior to the ECAPS^SM and ranks subordinate to the issuer’s then outstanding series of unsecured indebtedness for money borrowed that ranks most senior, (b) is then assigned a rating by at least one NRSRO (provided that this clause (b) shall apply on a Redesignation Date only if on such date the issuer has outstanding subordinated long-term indebtedness for money borrowed that satisfies the requirements in clauses (a), (c) and (d) that is then assigned a rating by at least one NRSRO), (c) has an outstanding principal amount of not less than $100,000,000, (d) was issued through or with the assistance of a commercial or investment banking firm or firms acting as underwriters, initial purchasers or placement or distribution agents and (e) has a remaining life to maturity of not less than five years. For purposes of this definition as applied to securities with a CUSIP number, each issuance of long-term indebtedness for money borrowed that has (or, if such indebtedness is held by a trust or other intermediate entity established directly or indirectly by the issuer, the securities of such intermediate entity that have) a separate CUSIP number shall be deemed to be a series of the issuer’s long-term indebtedness for money borrowed that is separate from each other series of such indebtedness.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Final Maturity Date” means June 1, 2062.

“Holder” means, as to the Covered Debt then in effect, each holder of such Covered Debt as reflected on the securities register maintained by or on behalf of the Corporation with respect to such Covered Debt.

“Indenture” means the Indenture, dated as of May 25, 2007, between the Corporation and The Bank of New York Trust Company, N.A., as Trustee, as supplemented by the Supplemental Indenture, relating to the ECAPS^SM.

“Initial Covered Debt” means the Corporation’s 6.125% Senior Notes due August 15, 2016.

“Intent-Based Replacement Disclosure” means, as to any security or combination of securities, that the issuer and its subsidiaries have publicly stated their intention, either in the prospectus or other offering document under which such securities were initially offered for sale or in filings with the Commission made by the issuer and its subsidiaries under the Exchange Act prior to or contemporaneously with the issuance of such securities, that the issuer and its subsidiaries will pay, redeem or purchase such securities only with the proceeds of replacement capital securities that have terms and provisions at the time of payment, redemption or purchase that are as or more equity-like than the

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securities then being paid, redeemed or purchased, raised within 180 days prior to the applicable payment, redemption or purchase date.

“Mandatorily Convertible Preferred Stock” means preferred stock with (a) no prepayment obligation on the part of the issuer thereof, whether at the election of the holders or otherwise, and (b) a requirement that the preferred stock convert into Common Stock within three years from the date of its issuance at a conversion ratio within a range established at the time of issuance of the preferred stock.

“Mandatory Trigger Provision” means as to any security or combination of securities (together in this definition, “securities”), provisions in the terms thereof or of the related transaction agreements that:

(i)      require, or at its option in the case of non-cumulative perpetual preferred stock permit, the issuer of such securities to make payment of Distributions on such securities only to the extent it receives sufficient net proceeds from the issuance and sale of APM Qualifying Securities, within two years of a failure by the Corporation to satisfy one or more financial tests set forth in the terms of such securities or related transaction agreements, in an amount such that the net proceeds of such sale are at least equal to the amount of unpaid Distributions on such securities (including without limitation all deferred and accumulated amounts) and in either case require the application of the net proceeds of such sale to pay such unpaid Distributions; provided that (A) if the Mandatory Trigger Provision does not require such issuance and sale within one year of such failure, the amount of Common Stock or Rights to acquire Common Stock the net proceeds of which the issuer must apply to pay such Distributions pursuant to such provision may not exceed the Common Cap, and (B) the amount of Qualifying Non-Cumulative Preferred Stock and unconverted Mandatory Convertible Preferred Stock the net proceeds of which the issuer may apply to pay such Distributions pursuant to such provision may not exceed the Preferred Cap;

(ii)      if the provisions described in clause (i) do not require such issuance and sale within one year of such failure, require the issuer of such security and such issuer’s Subsidiaries not to redeem or repurchase any of such issuer’s capital stock or such issuer’s securities that rank pari passu with or junior to the most senior issuable APM Qualifying Securities until at least one year after such issuer applies the net proceeds of the sales described in clause (i) to pay such unpaid Distributions in full;

(iii)      other than in the case of Qualifying Non-Cumulative Preferred Stock, prohibit the issuer from repurchasing any APM Qualifying Securities or any securities that are pari passu with or junior to

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its APM Qualifying Securities, the proceeds of which were used to pay deferred Distributions since such failure before the date six months after the issuer applies the net proceeds of the sales described in clause (i) to pay such unpaid Distributions in full; and

(iv)      in the case of securities other than Qualifying Non-Cumulative Preferred Stock, include a Bankruptcy Claim Limitation Provision.

No remedy other than Permitted Remedies will arise by the terms of such securities or related transaction agreements in favor of the holders of such securities as a result of the issuer’s failure to pay Distributions because of the Mandatory Trigger Provision or as a result of the issuer’s exercise of its right under an Optional Deferral Provision or a Ten Year Optional Deferral Provision until Distributions have been deferred for one or more Distribution Periods that total together at least ten years.

“Market Disruption Events”, for purposes of sales of APM Qualifying Securities pursuant to the Alternative Payment Mechanism or a Mandatory Trigger Provision, means one or more events or circumstances set forth below:

• trading in securities generally, or in the Corporation’s securities specifically, on the New York Stock Exchange or any other national securities exchange or over-the-counter market on which APM Qualifying Securities are then listed or traded shall have been suspended or their settlement generally shall have been materially disrupted or minimum prices shall have been established on any such exchange or market by the Commission, such exchange or market or by any other regulatory body or governmental authority having jurisdiction such that trading shall have been materially disrupted or the establishment of such minimum prices has a material adverse effect on trading in, or the issuance and sale of, such APM Qualifying Securities;

• the Corporation is required to obtain the consent or approval of its stockholders or a regulatory body (including, without limitation, a securities exchange) or governmental authority to issue or sell APM Qualifying Securities and it fails to obtain such consent or approval notwithstanding its commercially reasonable efforts to obtain such consent or approval;

• a banking moratorium shall have been declared by the federal or state authorities of the United States such that market trading in any of the APM Qualifying Securities has been materially disrupted or ceased;

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• a material disruption shall have occurred in commercial banking or securities settlement or clearance services in the United States such that market trading in any of the APM Qualifying Securities has been materially disrupted or ceased;

• the United States shall have become engaged in hostilities, there shall have been an escalation in hostilities involving the United States, there shall have been a declaration of a national emergency or war by the United States or there shall have occurred any other national or international calamity or crisis such that market trading in any of the APM Qualifying Securities has been materially disrupted or ceased;

• there shall have occurred such a material adverse change in general domestic or international economic, political or financial conditions, including without limitation as a result of terrorist activities, or the effect of international conditions on the financial markets in the United States shall be such that trading in any of the APM Qualifying Securities has been materially disrupted;

• an event occurs and is continuing as a result of which the offering document for the offer and sale of APM Qualifying Securities would, in the Corporation’s reasonable judgment, contain an untrue statement of a material fact or omit to state a material fact required to be stated in that offering document or necessary to make the statements in that offering document not misleading and either (a) the disclosure of that event, in the Corporation’s reasonable judgment, would have a material adverse effect on its business or (b) the disclosure relates to a previously undisclosed proposed or pending material business transaction, the disclosure of which would impede its ability to consummate that transaction; provided that one or more events described under this bullet point shall not constitute a market disruption event with respect to more than 90 days in any 180-day period; or

• the Corporation reasonably believes that the offering document for the contemplated offer and sale of registered APM Qualifying Securities would not be in compliance with a rule or regulation of the SEC, for reasons other than those referred to in the preceding bullet point, and the Corporation determines that it is unable to comply with such rule or regulation or such compliance is unduly burdensome; provided that no single suspension contemplated by this bullet point may exceed 90 days in any 180-day period.

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“Market Value” means, on any date, (i) in the case of Common Stock, the closing sale price per share of Common Stock (or if no closing sale price is reported, the average of the bid and ask prices or, if more than one in either case, the average of the average bid and the average ask prices) on that date as reported in composite transactions by the New York Stock Exchange or, if the Common Stock is not then listed on the New York Stock Exchange, as reported by the principal U.S. securities exchange on which the Common Stock is traded or quoted; if the Common Stock is not either listed or quoted on any U.S. securities exchange on the relevant date, the market price will be the average of the midpoint of the bid and ask prices for the Common Stock on the relevant date submitted by at least three nationally recognized independent investment banking firms selected by the Corporation for this purpose and (ii) in the case of Rights to acquire Common Stock, a value determined by a nationally recognized independent investment banking firm selected by the Corporation’s Board of Directors (or a duly authorized committee thereof) for this purpose.

“Measurement Date” means, with respect to any payment, redemption or purchase of ECAPS^SM (a) on or prior to June 1, 2012, the date that is 180 days prior to delivery of notice of such payment or redemption or prior to the date of such purchase and (b) after June 1, 2012, the date that is 90 days prior to delivery of notice of such payment or redemption or prior to the date of such purchase.

“Measurement Period” means the period from a Measurement Date to the related notice date or purchase date. Measurement Periods cannot run concurrently.

“NRSRO” means a nationally recognized statistical rating organization within the meaning of Section 3(a)(62) under the Exchange Act.

“Optional Deferral Provision” means, as to any securities, a provision in the terms thereof or of the related transaction agreements that contains the following: (a) the issuer of such securities may, in its sole discretion, defer in whole or in part payment of Distributions on such securities for one or more consecutive Distribution Periods of up to five years or, if a Market Disruption Event is continuing, ten years, without any remedy other than Permitted Remedies and (b) an Alternative Payment Mechanism.

“Permitted Remedies” means, with respect to any securities, one or more of the following remedies:

(a)      rights in favor of the holders of such securities permitting such holders to elect one or more directors of the issuer (including any such rights required by the listing requirements of any stock or securities exchange on which such securities may be listed or traded), and

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(b)      complete or partial prohibitions preventing the issuer from paying Distributions on or purchasing Common Stock or other securities that rank pari passu with or junior as to Distributions to such securities for so long as Distributions on such securities, including unpaid Distributions, remain unpaid.

“Person” means any individual, corporation, partnership, joint venture, trust, limited liability company or corporation, unincorporated organization or government or any agency or political subdivision thereof.

“Prospectus Supplement” has the meaning specified in Recital C.

“Qualifying Capital Securities” means securities (other than Common Stock, Rights to acquire Common Stock and securities convertible into Common Stock, such as Mandatorily Convertible Preferred Stock and Debt Exchangeable for Common Equity) that, in the determination of the Corporation’s Board of Directors, reasonably construing the definitions and other terms of this Replacement Capital Covenant, meet one of the following criteria:

(i)      in connection with any redemption, repayment or purchase of ECAPS^SM on or prior to the date that is 50 years prior to the Final Maturity Date:

(A)      securities issued by the Corporation or its Subsidiaries that (1) rank pari passu with or junior to the ECAPS^SM upon the liquidation, dissolution or winding-up of the Corporation, (2) have no maturity or a maturity of at least 55 years and (3)(a) are subject to a replacement capital covenant substantially similar to this Replacement Capital Covenant and have a Ten-Year Optional Deferral Provision or (b) have a Mandatory Trigger Provision and an Optional Deferral Provision;

(B)      securities issued by the Corporation or its Subsidiaries that (1) rank pari passu with or junior to other preferred stock of the issuer, (2) have no maturity or a maturity of at least 40 years, (3) are subject to Intent-Based Replacement Disclosure and (4) have a Mandatory Trigger Provision and an Optional Deferral Provision;

(C)      securities issued by the Corporation or its Subsidiaries that (1) would rank junior to all of the senior and subordinated debt of the Corporation other than the ECAPS^SM, (2) have a Mandatory Trigger Provision and an Optional Deferral Provision and (3) have no maturity or a maturity of at least 55 years and are subject to Intent-Based Replacement Disclosure;

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(D)      cumulative preferred stock issued by the Corporation or its Subsidiaries that (1) has no prepayment obligation on the part of the issuer thereof, whether at the election of the holders or otherwise, and (2)(a) has no maturity or a maturity of at least 55 years and (b) is subject to a replacement capital covenant substantially similar to this Replacement Capital Covenant; or

(E)      Qualifying Non-Cumulative Preferred Stock; or

(ii)      in connection with any repayment, redemption or purchase of ECAPS^SM after the date that is 50 years prior to the Final Maturity Date and on or prior to the date that is 15 years prior to the Final Maturity Date:

(A)      all securities described under clause (i) of this definition;

(B)      securities issued by the Corporation or its Subsidiaries that (1) rank pari passu with or junior to the ECAPS^SM upon a liquidation, dissolution or winding-up of the Corporation, (2) have a Ten-Year Optional Deferral Provision, (3) have no maturity or a maturity of at least 55 years and (4) are subject to Intent-Based Replacement Disclosure;

(C)      securities issued by the Corporation or its Subsidiaries that (1) rank pari passu with or junior to the ECAPS^SM upon a liquidation, dissolution or winding-up of the Corporation, (2) have a Ten-Year Optional Deferral Provision and (3) have no maturity or a maturity of at least 55 years and are subject to Intent-Based Replacement Disclosure;

(D)      securities issued by the Corporation or its Subsidiaries that (1) rank pari passu with or junior to the ECAPS^SM upon a liquidation, dissolution or winding-up of the Corporation, (2) have no maturity or a maturity of at least 40 years and (3)(a) have a Ten-Year Optional Deferral Provision and are subject to a replacement capital covenant substantially similar to this Replacement Capital Covenant or (b) have a Mandatory Trigger Provision and an Optional Deferral Provision; or

(E)      other securities issued by the Corporation or its Subsidiaries that (1) rank upon a liquidation, dissolution or winding-up of the Corporation either (a) pari passu with or junior to the ECAPS^SM or (b) pari passu with the claims of the Corporation’s trade creditors and junior to all of the Corporation’s

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long-term indebtedness for money borrowed (other than the Corporation’s long-term indebtedness for money borrowed from time to time outstanding that by its terms ranks pari passu with such securities on a liquidation, dissolution or winding-up of the Corporation), and (2) either (a) have no maturity or a maturity of at least 40 years, are subject to Intent-Based Replacement Disclosure and have a Mandatory Trigger Provision and an Optional Deferral Provision or (b) have no maturity or a maturity of at least 25 years, are subject to a replacement capital covenant substantially similar to this Replacement Capital Covenant and have a Mandatory Trigger Provision and an Optional Deferral Provision.

“Qualifying Non-Cumulative Preferred Stock” means non-cumulative perpetual preferred stock of the Corporation or its Subsidiaries that ranks pari passu with or junior to other preferred stock of the issuer, that the transaction documents provide for no remedies as a consequence of non-payment of dividends other than Permitted Remedies and is either (a) subject to a replacement capital covenant substantially similar to this Replacement Capital Covenant or (b) has a provision that prohibits distributions upon the issuer’s failure to satisfy one or more financial tests set forth in the terms of the preferred stock and is subject to Intent-Based Replacement Disclosure.

“Redesignation Date” means, as to the Covered Debt in effect at any time, the earliest of (a) the date that is two years prior to the final maturity date of such Covered Debt, (b) if the Corporation elects to redeem, or the Corporation or a Subsidiary of the Corporation elects to pay or purchase, such Covered Debt either in whole or in part with the consequence that after giving effect to such redemption, payment or purchase the outstanding principal amount of such Covered Debt is less than $100,000,000, the applicable redemption, payment or purchase date and (c) if such Covered Debt is not Eligible Subordinated Debt, the date on which the Corporation issues long-term indebtedness for money borrowed that is Eligible Subordinated Debt.

“Replacement Capital Covenant” has the meaning specified in the introduction to this instrument.

“Replacement Capital Securities” means,

(i)      Common Stock and Rights to acquire Common Stock (including Common Stock and Rights to acquire Common Stock issued pursuant to the Corporation’s dividend reinvestment plan, direct stock purchase plan or employee benefit plans);

(ii)      Mandatorily Convertible Preferred Stock;

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(iii)      Debt Exchangeable for Common Equity;

(iv)Debt Exchangeable for Preferred Equity; and

(v)Qualifying Capital Securities.

“Rights to acquire Common Stock” means net share settled warrants to purchase Common Stock that have an exercise price at least 10% above the current stock market price of the issuer’s Common Stock as of their date of issuance, that do not entitle the issuer to redeem for cash and the holders of such warrants are not entitled to require the issuer to repurchase for cash in any circumstance.

“Subsidiary” means, with respect to any Person, at any time, any corporation, limited liability company, partnership or other entity, the shares of stock or other ownership interests of which having ordinary voting power to elect a majority of the board of directors or other managers of such corporation, limited liability company, partnership or other entity are at the time owned, or the management or policies of which are otherwise at the time controlled, directly or indirectly through one or more intermediaries (including other Subsidiaries) or both, by such Person.

“Supplemental Indenture” means, the Supplemental Indenture, dated as of May 25, 2007, between the Corporation and The Bank of New York Trust Company, N.A., as Trustee, relating to the ECAPS^SM.

“Ten-Year Optional Deferral Provision” means, as to any securities, a provision in the terms thereof or of the related transaction agreements to the effect that the issuer of such securities thereof may, in its sole discretion, defer in whole or in part payment of Distributions on such securities for one or more consecutive Distribution Periods of up to ten years without any remedy other than Permitted Remedies.

“Termination Date” has the meaning specified in Section 4(a).

“Trust” means a trust, the common securities of which are held directly or indirectly by the Corporation.

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