CVS Caremark Corporation (CVS)

Business Description and Sale of Albertson’s Inc. Standalone Drug Business

On January 22, 2006 Albertson’s, Inc. (“Albertsons”) entered into a series of agreements (the “Agreements”) providing for the sale of Albertsons to Supervalu, Inc. (“Supervalu”), CVS Corporation (“CVS”) and a consortium of investors including Cerberus Capital Management, L.P., Kimco Realty Corporation, Lubert-Adler Management, Inc., Klaff Realty, L.P. and Schottenstein Stores Corporation (the “Cerberus Group”). Pursuant to the agreement Albertsons entered into with CVS, the Asset Purchase Agreement, as amended (see Note 7 – Subsequent Events) (the “APA Agreement”), CVS acquired from Albertsons approximately 700 standalone drugstores located primarily in California, the Midwest and the Western United States and the real estate interests in these drugstores, and one distribution center located in La Habra, California (collectively, the “Standalone Drug Business” or the “Business”) for a purchase price of $3,930. The term “standalone” refers to the Albertsons freestanding drug stores, and excludes pharmacies located within the Albertsons grocery stores. Also, pursuant to a prescription drug inventory agreement as described in Note 7 – Subsequent Events, CVS paid a net amount of approximately $45 as additional purchase price to increase inventory levels subsequent to the date of the Statement of Net Assets Acquired but prior to the transaction closing (the “Closing”). Additionally, in accordance with the terms of the APA Agreement, CVS paid approximately $35 related to inventories at the distribution center in La Habra, California. In connection with the Closing, CVS received a net amount of $7 for the settlement of prepaid rent, accrued property taxes and accrued utilities. Supervalu and CVS have also agreed to share certain transaction costs related to the Closing, some of which were settled at the Closing and others at a later date.

New Albertson’s, Inc. (“New Albertsons”), a wholly owned subsidiary of Albertsons, was formed to facilitate the series of transactions (the “Transactions”) contemplated under the Agreements. After the Closing, New Albertsons became a wholly owned subsidiary of Supervalu and owns and operates Albertsons’ historical core supermarket business. In connection with the sale of the Standalone Drug Business, New Albertsons has entered into a transition services agreement with CVS to provide technology, accounting and other services to the Standalone Drug Business. The transition services agreement contemplates a six month term and provides for payments by CVS to New Albertsons of $3 in the aggregate. In addition, New Albertsons and CVS have entered into other arrangements to ensure product availability and to facilitate the transition of the acquired assets. These arrangements include leasing certain New Albertsons employees for a short term subsequent to the Closing, logistics services, inventory purchasing and sharing of certain expenses related to the enhancement of distribution processes benefiting CVS and New Albertsons.

Business Description and Sale of Albertson’s Inc. Standalone Drug Business

On January 22, 2006 Albertson’s, Inc. (“Albertsons”) entered into a series of agreements (the “Agreements”) providing for the sale of Albertsons to Supervalu, Inc. (“Supervalu”), CVS Corporation (“CVS”) and a consortium of investors including Cerberus Capital Management, L.P., Kimco Realty Corporation, Lubert-Adler Management, Inc., Klaff Realty, L.P. and Schottenstein Stores Corporation (the “Cerberus Group”). Pursuant to the agreement Albertsons entered into with CVS, the Asset Purchase Agreement, as amended (see Note 7 – Subsequent Events) (the “APA Agreement”), CVS acquired from Albertsons approximately 700 standalone drugstores located primarily in California, the Midwest and the Western United States and the real estate interests in these drugstores, and one distribution center located in La Habra, California (collectively, the “Standalone Drug Business” or the “Business”) for a purchase price of $3,930. The term “standalone” refers to the Albertsons freestanding drug stores, and excludes pharmacies located within the Albertsons grocery stores. Also, pursuant to a prescription drug inventory agreement as described in Note 7 – Subsequent Events, CVS paid a net amount of approximately $45 as additional purchase price to increase inventory levels subsequent to the date of the Statement of Net Assets Acquired but prior to the transaction closing (the “Closing”). Additionally, in accordance with the terms of the APA Agreement, CVS paid approximately $35 related to inventories at the distribution center in La Habra, California. In connection with the Closing, CVS received a net amount of $7 for the settlement of prepaid rent, accrued property taxes and accrued utilities. Supervalu and CVS have also agreed to share certain transaction costs related to the Closing, some of which were settled at the Closing and others at a later date.

New Albertson’s, Inc. (“New Albertsons”), a wholly owned subsidiary of Albertsons, was formed to facilitate the series of transactions (the “Transactions”) contemplated under the Agreements. After the Closing, New Albertsons became a wholly owned subsidiary of Supervalu and owns and operates Albertsons’ historical core supermarket business. In connection with the sale of the Standalone Drug Business, New Albertsons has entered into a transition services agreement with CVS to provide technology, accounting and other services to the Standalone Drug Business. The transition services agreement contemplates a six month term and provides for payments by CVS to New Albertsons of $3 in the aggregate. In addition, New Albertsons and CVS have entered into other arrangements to ensure product availability and to facilitate the transition of the acquired assets. These arrangements include leasing certain New Albertsons employees for a short term subsequent to the Closing, logistics services, inventory purchasing and sharing of certain expenses related to the enhancement of distribution processes benefiting CVS and New Albertsons.