CVS Caremark Corporation (CVS)

Certain Transactions with Directors and Officers

In accordance with SEC rules, the Board has adopted a written Related Person Transaction Policy (the “Policy”). The Audit Committee of the Board has been designated as the Committee responsible for reviewing, approving or ratifying any related person transactions under the Policy.

Pursuant to the Policy, all executive officers, directors, director nominees and any 5% beneficial owners of the Company’s securities are required to notify the Company’s CLO or Corporate Secretary of any financial transaction, arrangement or relationship, or series of similar transactions, arrangements or relationships, involving the Company in which an executive officer, director, director nominee, 5%

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beneficial owner or any immediate family member of such a person has a direct or indirect material interest. Such officers, directors, nominees, 5% beneficial owners and their immediate family members are considered “related persons” under the Policy.

For the above purposes, “immediate family member” includes a person’s spouse, parents, siblings, children, in-laws, step-relatives and any other person sharing the household (other than a tenant or household employee).

The CLO or the Corporate Secretary will present any reported new related person transactions, and proposed transactions involving related persons, to the Audit Committee at its next regular meeting. The Committee shall review transactions to determine whether the related person involved has a direct or indirect material interest in the transaction. The Committee may conclude, upon review of all relevant information, that the transaction does not constitute a related person transaction, and thus that no further review is required under the Policy. On an annual basis, the Committee shall review previously approved related person transactions, under the standards described below, to determine whether such transactions should continue.

In reviewing the transaction or proposed transaction, the Committee shall consider all relevant facts and circumstances, including without limitation the commercial reasonableness of the terms, the benefit and perceived benefit, or lack thereof, to the Company, opportunity costs of alternate transactions, the materiality and character of the related person’s direct or indirect interest, and the actual or apparent conflict of interest of the related person. The Committee will not approve or ratify a related person transaction unless it shall have determined that, upon consideration of all relevant information, the transaction is in, or not inconsistent with, the best interests of the Company and its stockholders.

If after the review described above, the Committee determines not to approve or ratify a related person transaction (whether such transaction is being reviewed for the first time or has previously been approved and is being re-reviewed), the transaction will not be entered into or continued, as the Committee shall direct.

Notwithstanding the foregoing, the following types of transactions are deemed not to create or involve a material interest on the part of the related person and will not be reviewed, nor will they require approval or ratification, under the Policy:

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The Board reviews the Policy on an annual basis and will make changes as appropriate.

Additionally, under the Company’s Corporate Governance Guidelines and its Code of Conduct, with respect to any transaction in which a director or executive officer has a personal interest, such that a potential conflict of interest could arise, the director or executive officer must report the matter immediately to the Company’s CLO or the Corporate Compliance Officer who will, where appropriate, report the matter to the Nominating and Corporate Governance Committee for evaluation and appropriate resolution.

If a director has a personal interest in a matter before the Board, the director shall disclose the interest to the full Board, will recuse himself or herself from participation in the discussion and will not vote on the matter.

Furthermore, proposed charitable contributions, or pledges of charitable contributions, by the Company within any given fiscal year in an aggregate amount exceeding $120,000, to an entity for which a director or a member of his or her immediate family serves as a director, officer, or member of such entity’s fund-raising organization or committee, will be subject to prior review and approval by the Audit Committee (with notification to the Nominating and Corporate Governance Committee).

In addition, under the Nominating and Corporate Governance Committee’s charter, such Committee shall evaluate the possibility that a director’s independence may be compromised or impaired for Board or committee purposes if director compensation exceeds customary levels, if the Company makes substantial charitable contributions to an organization with which a director is affiliated, or if the Company enters into consulting contracts with (or provides other indirect forms of compensation to) a director (which consulting contracts or other indirect forms of compensation are expressly prohibited for Audit Committee members).

On August 31, 2007, Mr. Terry Murray and his children acquired a 64.6% ownership interest in an entity that owns a shopping center in Guilford, CT. A CVS/pharmacy store has been a tenant of the shopping center since 1994 and is one of 11 existing tenants in the Center, occupying approximately 28% of the Center’s total space. The store’s lease was for an initial 10-year term with two five-year renewal options, which was first exercised in 2005. The lease, including the payments thereunder, was not changed in any way when the ownership interest in the shopping center was acquired by the Murrays. The amount paid by the CVS store to the shopping center in rent and related fees in 2008 was approximately $276,000. The second option may be exercised in 2010.

Certain Transactions with Directors and Officers

In accordance with SEC rules, the Board has adopted a written Related Person Transaction Policy (the “Policy”). The Audit Committee of the Board has been designated as the Committee responsible for reviewing, approving or ratifying any related person transactions under the Policy.

Pursuant to the Policy, all executive officers, directors, director nominees and any 5% beneficial owners of the Company’s securities are required to notify the Company’s CLO or Corporate Secretary of any financial transaction, arrangement or relationship, or series of similar transactions, arrangements or relationships, involving the Company in which an executive officer, director, director nominee, 5% beneficial owner or any immediate family member of such a person has a direct or indirect material interest. Such officers, directors, nominees, 5% beneficial owners and their immediate family members are considered “related persons” under the Policy.

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For the above purposes, “immediate family member” includes a person’s spouse, parents, siblings, children, in-laws, step-relatives and any other person sharing the household (other than a tenant or household employee).

The CLO or the Corporate Secretary will present any reported new related person transactions, and proposed transactions involving related persons, to the Audit Committee at its next regular meeting. The Committee shall review transactions to determine whether the related person involved has a direct or indirect material interest in the transaction. The Committee may conclude, upon review of all relevant information, that the transaction does not constitute a related person transaction, and thus that no further review is required under the Policy. On an annual basis, the Committee shall review previously approved related person transactions, under the standards described below, to determine whether such transactions should continue.

In reviewing the transaction or proposed transaction, the Committee shall consider all relevant facts and circumstances, including without limitation the commercial reasonableness of the terms, the benefit and perceived benefit, or lack thereof, to the Company, opportunity costs of alternate transactions, the materiality and character of the related person’s direct or indirect interest, and the actual or apparent conflict of interest of the related person. The Committee will not approve or ratify a related person transaction unless it shall have determined that, upon consideration of all relevant information, the transaction is in, or not inconsistent with, the best interests of the Company and its stockholders.

If after the review described above, the Committee determines not to approve or ratify a related person transaction (whether such transaction is being reviewed for the first time or has previously been approved and is being re-reviewed), the transaction will not be entered into or continued, as the Committee shall direct.

Notwithstanding the foregoing, the following types of transactions are deemed not to create or involve a material interest on the part of the related person and will not be reviewed, nor will they require approval or ratification, under the Policy:

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The Board reviews the Policy on an annual basis and will make changes as appropriate.

Additionally, under the Company’s Corporate Governance Guidelines and its Code of Conduct, with respect to any transaction in which a director or executive officer has a personal interest, such that a potential conflict of interest could arise, the director or executive officer must report the matter immediately to the Company’s CLO or the Corporate Compliance Officer who will, where appropriate, report the matter to the Nominating and Corporate Governance Committee for evaluation and appropriate resolution.

If a director has a personal interest in a matter before the Board, the director shall disclose the interest to the full Board, will recuse himself or herself from participation in the discussion and will not vote on the matter.

Furthermore, proposed charitable contributions, or pledges of charitable contributions, by the Company within any given fiscal year in an aggregate amount exceeding $120,000, to an entity for which a director or a member of his or her immediate family serves as a director, officer, employee or member of such entity’s fund-raising organization or committee, will be subject to prior review and approval by the Audit Committee (with notification to the Nominating and Corporate Governance Committee).

In addition, under the Nominating and Corporate Governance Committee’s charter, such Committee shall evaluate the possibility that a director’s independence may be compromised or impaired for Board or committee purposes if director compensation exceeds customary levels, if the Company makes substantial charitable contributions to an organization with which a director is affiliated, or if the Company enters into consulting contracts with (or provides other indirect forms of compensation to) a director (which consulting contracts or other indirect forms of compensation are expressly prohibited for Audit Committee members).

Mr. Andrew Crawford, the son of Mr. E. Mac Crawford, the former Chairman of the Board of CVS Caremark, was employed by the Company as Senior Vice President of Industry Analysis and Underwriting until he left the Company in October 2007. Compensation and benefits received by Andrew Crawford for 2007 consisted of: $250,000 in base salary, $295,000 in annual bonus amounts, $260,000 in transition bonus amounts relating to prior Caremark strategic initiatives and $60,000 in benefits and severance amounts. In addition, upon his resignation he received distributions of $910,000 in cash and $310,000 in restricted stock as severance amounts payable under his pre-existing Caremark employment agreement and carried forward under his continuing agreement with the Company. Further, Andrew Crawford exercised stock options that had been granted to him by Caremark prior to the merger with CVS, with an aggregate value of approximately $5,800,000.

Upon Mr. E. Mac Crawford’s retirement from his role as Chief Executive Officer of Caremark in connection with the merger of CVS and Caremark, he was entitled to certain benefits under Caremark arrangements which pre-dated the merger. Pursuant to his pre-existing employment agreement with Caremark, he received an aggregate severance payment of $26,400,000 and is entitled to continuation of welfare benefits (e.g., health, dental, disability and life insurance) on a tax-neutral basis through September 1, 2015. Under Caremark’s pre-existing Supplemental Executive Retirement Plan he is entitled to a pension benefit equal to 60% of his average annual base salary during the three years preceding his retirement. The benefit is calculated based on the present value of a monthly life annuity and is being paid in six annual installments. Under a pre-existing survivor benefit agreement, Caremark was required to transfer to Mr. Crawford a life insurance policy with a minimum death benefit of $17,000,000 and a minimum cash value of $3,666,256. Caremark maintained a life insurance policy for Mr. Crawford and in 2007 the Company made the final premium payment on this policy and transferred the policy to Mr. Crawford, together with a tax gross-up equal to the federal income taxes incurred by Mr. Crawford in connection with the policy transfer, as required under the survivor benefit agreement.

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Certain of Caremark’s executive officers and other eligible employees participated in a relocation program as a result of Caremark’s relocation of its corporate headquarters from Birmingham, Alabama to Nashville, Tennessee. In order to facilitate the relocation of these employees, Caremark entered into a relocation services agreement with an independent relocation company (the “Relocation Company”) pursuant to which eligible employees received certain relocation assistance and related services. In addition to assisting employees in finding appropriate housing in the new location, the agreement provided for the Relocation Company to purchase a transferring employee’s former residence at a value equal to the fair market valuation of the property or the amount that the employee had invested in the property, whichever was greater. Following execution of a purchase agreement between the Relocation Company and the transferring employee, the Relocation Company paid to the transferring employee the agreed purchase price of the employee’s residence using funds provided by Caremark. The Relocation Company then marketed the house for resale to an unrelated buyer, and Caremark incurred the costs associated with, and received the net proceeds from, that resale. The Relocation Company received a fee from Caremark for services provided to each employee. Under the relocation program, in 2004 Caremark relocated Mr. Crawford and the Relocation Company purchased Mr. Crawford’s former home for $2,903,305. The home was sold in 2007 and the Company incurred a loss and related costs totaling $975,000.

Certain Transactions with Directors and Officers

Under the Company’s Corporate Governance Guidelines and its Code of Conduct, with respect to any transaction in which a director or executive officer has a personal interest, such that a potential conflict of interest could arise, the director or executive officer must report the matter immediately to the Company’s Chief Legal Officer or the Corporate Compliance Officer who will, where appropriate, report the matter to the Nominating and Corporate Governance Committee for evaluation and appropriate resolution.

If a director has a personal interest in a matter before the Board, the director shall disclose the interest to the full Board, shall recuse himself or herself from participation in the discussion and shall not vote on the matter.

Furthermore, proposed charitable contributions, or pledges of charitable contributions, by the Company within any given fiscal year in an aggregate amount of $120,000 or more, to an entity for which a director or a member of his or her immediate family serves as a director, officer, employee or member of such entity’s fund-raising organization or committee, shall be subject to prior review and approval by the Audit Committee (with notification to the Nominating and Corporate Governance Committee).

In addition, under the Nominating and Corporate Governance Committee’s charter, such Committee shall evaluate the possibility that a director’s independence may be compromised or impaired for Board or committee purposes if director compensation exceeds customary levels, if the Company makes substantial charitable contributions to an organization with which a director is affiliated, or if the Company enters into consulting contracts with (or provides other indirect forms of compensation to) a director (which consulting contracts or other indirect forms of compensation are expressly prohibited for Audit Committee members).

Mr. Alfred J. Verrecchia, a former director who left the Board at the time of the CVS/Caremark merger, is Chairman of LIFESPAN, a non-profit organization that operates several Rhode Island hospitals and health care facilities. During 2006, the Company and its charitable foundations donated a total of $186,200 to LIFESPAN. The Company has $225,000 remaining of a pledge to LIFESPAN’s Pediatric Rehabilitation Program (the original pledge was $375,000 payable over the 5 years from 2005-2009).

Messrs. Eugene and Larry Goldstein, the sons of Stanley Goldstein, a former director of the Company who retired at the time of our 2006 annual meeting, each own minority interests in entities that lease two drugstores to the Company as follows. CVS has entered into a single store lease with a limited liability company of which Messrs. Eugene and Larry Goldstein each own 30%. During 2006, lease payments to this limited liability company amounted to approximately $188,000. CVS has also entered into a single-store lease with a company of which Messrs. Eugene and Larry Goldstein together own a 20% interest. During 2006 CVS lease payments to this company amounted to approximately $521,000. Both of these transactions were approved in the ordinary course of business by the CVS real estate committee and were reviewed by our Audit Committee. Consequently, the Company believes that the terms of these transactions were determined in an arms-length manner.

In September 2003, a limited liability company of which Messrs. Eugene and Larry Goldstein each own a 24.25% interest purchased a shopping center in which a CVS store is a tenant, pursuant to a lease negotiated with the prior owner. The terms of said lease were unchanged by the purchase of the shopping center. During 2006, lease payments to this limited liability company amounted to approximately $77,200.

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In December 2006, split dollar insurance arrangements between the Company and Mr. Goldstein were restructured. Under the revised insurance arrangements, two policies were transferred to a trust established by Mr. Goldstein and his wife; for two other policies in such trust the Company paid an aggregate net amount of approximately $2.3 million of premiums that had been suspended in order to satisfy Sarbanes-Oxley rules, and for another policy the ownership structure will be converted to a collateral assignment arrangement without any additional premium cost to the Company.

During 2006, Mr. Andrew Crawford was employed by Caremark as Senior Vice President of Industry Analysis and Underwriting. Compensation earned by, or paid to, Andrew Crawford for 2006 consisted of an annual salary of $283,500, cash bonuses of $417,658 (including the annual cash bonus and the second payment under a supplemental cash incentive plan) and other annual compensation of $65,360. Andrew Crawford is the son of Mr. E. Mac Crawford, CVS/Caremark’s Chairman of the Board.

Under Caremark’s employment agreement with Mr. E. Mac Crawford, in connection with Mr. Crawford’s retirement from Caremark, Mr. Crawford is entitled to receive (1) an aggregate severance payment equal to the sum of (A) his base salary for the remaining term of his employment agreement and (B) a separation payment equal to at least two times his base salary (the separation payment being the cash equivalent of Mr. Crawford’s annual bonus target) multiplied by the number of years (including fractions of years) remaining in the term of his employment agreement, and (2) continuation of welfare benefits (e.g., health, dental, disability and life insurance) for the remaining term of his employment agreement. Mr. Crawford’s employment agreement was to expire on September 1, 2015. Upon his resignation, Mr. Crawford was entitled to a cash severance payment as described in clause (1) in an amount of approximately $40,800,000. Mr. Crawford, however, as an indication of his commitment to the merger and his confidence in the long-term economic benefits to be derived from the merger, has agreed to accept cash severance payments in the reduced amount of $26,400,000.

Mr. Crawford participates in Caremark’s Supplemental Executive Retirement Plan and he became fully vested in all benefits payable under the plan in November of 2006. This plan entitles Mr. Crawford to a benefit equal to 60% of his “final average compensation” (defined as the average of his highest monthly base salary during any 36-month period during the 72 months preceding his termination) and becomes payable on a monthly basis on the first of the month following Mr. Crawford’s termination of employment with Caremark. The benefits will be paid in six annual installments. The installments will be paid on a level amortization basis, including principal and interest, with interest accruing at the rate of seven percent on any unpaid balance related to the installment payments. It is expected that the benefit will be funded through a trust established by Caremark.

Mr. Crawford and Caremark have entered into a Survivor Benefit Agreement. In connection with the termination of Mr. Crawford’s employment, Caremark is obligated to transfer to Mr. Crawford ownership of an insurance policy with a specified minimum death benefit at the time of such transfer equal to $17 million and a minimum cash value at the time of the transfer of $3,666,256. If Mr. Crawford recognizes taxable income for federal tax purposes at the time of the transfer of the insurance policy, Caremark is obligated to pay Mr. Crawford a tax gross-up amount equal to the amount of federal income taxes, including taxes attributable to payment of the gross-up amount.

Certain of Caremark’s executive officers and other eligible employees participated in a relocation program as a result of Caremark’s relocation of its corporate headquarters from Birmingham, Alabama to Nashville, Tennessee. In order to facilitate the relocation of these employees, Caremark entered into a relocation services agreement with an independent relocation company (the “Relocation Company”) pursuant to which eligible employees received certain relocation assistance and related services. In addition to assisting employees in finding appropriate housing in the new location, the agreement provides for the Relocation Company to purchase a transferring employee’s former residence at a value equal to the fair market evaluation of the property or the amount that the employee has invested in the property, whichever is greater. Following execution of a purchase agreement between the Relocation Company and the transferring

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employee, the Relocation Company pays to the transferring employee the agreed purchase price of the employee’s residence using funds provided by Caremark. The Relocation Company then markets the house for resale to an unrelated buyer, and Caremark incurs the costs associated with, and receives the net proceeds from, that resale. The Relocation Company receives a fee from Caremark for services provided to each employee. Under the relocation program in 2004, Caremark relocated Mr. Crawford. Caremark currently has an aggregate outstanding equity advance totaling $2,903,305 for Mr. Crawford, whose house has not yet been sold. The costs incurred by Caremark for Mr. Crawford’s relocation cannot be determined until his house has been sold.

In connection with the acquisition of Caremark International Inc. by Caremark in September 1996, the employment of Mr. Piccolo, now a director of CVS/Caremark, was terminated, entitling him to severance payments of $2,805,426 and certain other benefits provided in his severance agreement. Caremark and Mr. Piccolo also entered into a consulting agreement (the “Piccolo Agreement”). The term of the Piccolo Agreement was ten years, unless earlier terminated, and expired on September 5, 2006. Over the course of such ten-year period, Mr. Piccolo was paid consulting fees totaling approximately $5.4 million, and the final amount due was paid in September 2005. The “gross up” provisions of his severance agreement also apply to payments made pursuant to the Piccolo Agreement in the event such consulting payments are determined to be “excess parachute payments” as such term is defined in the Internal Revenue Code. Under the Piccolo Agreement, Mr. Piccolo and his spouse were eligible to participate in all health and medical employee benefit plans and programs available from time to time to employees of the Company until he reached the age of 65. Thereafter, Mr. Piccolo and his spouse were to be provided with a prescription drug program comparable to that provided to the Company’s employees. Mr. Piccolo was provided with adequate office space and secretarial support, as well as reimbursement of reasonable expenses, and was subject to certain non-compete and confidentiality restrictions. Following expiration of the Piccolo Agreement, each of the benefits described herein terminated, except that Mr. Piccolo and his spouse continue to be provided with a prescription drug program comparable to that provided to the Company’s employees.

Certain Transactions with Directors and Officers

During 2005, the Company and its charitable foundations donated a total of $330,000 to LIFESPAN, a non-profit organization that operates several Rhode Island hospitals and health care facilities. The Company has $300,000 remaining of a pledge to LIFESPAN’s Pediatric Rehabilitation Program (the original pledge was $375,000 payable over the 5 years from 2005-2009). Mr. Alfred Verrecchia, a director of the Company, is Chairman of LIFESPAN.

Messrs. Eugene and Larry Goldstein, the sons of Stanley Goldstein, a director of the Company who will be retiring at the time of our annual meeting, each own minority interests in entities that lease two drugstores to the Company. CVS has entered into a single store lease with a limited liability company of

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which Messrs. Eugene and Larry Goldstein each own 30%. During 2005, lease payments to this limited liability company amounted to approximately $188,000. CVS has also entered into a single-store lease with a company of which Messrs. Eugene and Larry Goldstein together own a 20% interest. During 2005 CVS lease payments to this company amounted to approximately $501,000. Both of these transactions were approved in the ordinary course of business by the CVS real estate committee and were reviewed by our Audit Committee. Consequently, CVS believes that the terms of these transactions were determined in an arms-length manner.

In September 2003, a limited liability company of which Messrs. Eugene and Larry Goldstein each own a 24.25% interest purchased a shopping center in which a CVS store is a tenant, pursuant to a lease negotiated with the prior owner. The terms of said lease were unchanged by the purchase of the shopping center. During 2005, lease payments to this limited liability company amounted to approximately $77,200.

Certain Transactions with Directors and Officers

During 2004, the Company and its charitable foundations donated a total of $122,000 to United Way of Massachusetts Bay (in part further to a pledge of $50,000 per year over the 5 years from 2002-2006). Ms. Marian Heard, a director of the Company, was President and Chief Executive Officer of United Way of Massachusetts Bay until her retirement from United Way in July 2004.

During 2004, the Company and its charitable foundations donated a total of $123,750 to LIFESPAN, a non-profit organization that operates several Rhode Island hospitals and health care facilities. Additionally, the Company has $200,000 remaining of a pledge to LIFESPAN’s Draw a Breath Asthma Program (the original pledge was $750,000 payable over the 6 years from 2000-2005). Mr. Alfred Verrecchia, a director of the Company since September 2004, is Chairman of LIFESPAN.

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Messrs. Eugene and Larry Goldstein, the sons of Stanley Goldstein, a director of the Company, each own minority interests in entities that lease two drugstores to the Company. CVS has entered into a single store lease with a limited liability company of which Messrs. Eugene and Larry Goldstein each own 30%. During 2004, lease payments to this limited liability company amounted to approximately $184,000. CVS has also entered into a single-store lease with a company of which Messrs. Eugene and Larry Goldstein together own a 20% interest. During 2004 CVS lease payments to this company amounted to approximately $501,000. Both of these transactions were approved in the ordinary course of business by the CVS real estate committee and were reviewed by our Audit Committee. Consequently, CVS believes that the terms of these transactions were determined in an arms-length manner.

In September 2003, a limited liability company of which Messrs. Eugene and Larry Goldstein each own a 24.25% interest purchased a shopping center in which a CVS store is a tenant, pursuant to a lease negotiated with the prior owner. The terms of said lease were unchanged by the purchase of the shopping center. During 2004, lease payments to this limited liability company amounted to approximately $77,200.

Additionally, in response to changes in the applicable rules, in November 2003 a split dollar insurance arrangement between CVS and Stanley Goldstein, entered into in connection with Mr. Goldstein’s waiver of his rights under the Supplemental Executive Retirement Plan described beginning on page 21, was restructured. Under the revised insurance arrangement, the Company will pay premiums over six years (in the same aggregate amount as under the prior arrangement) and will receive a refund of premium payments beginning no later than 2017.