$5,750,000,000 BRIDGE CREDIT AGREEMENT by and among CVS CORPORATION, THE LENDERS PARTY HERETO, LEHMAN COMMERCIAL PAPER INC., as Administrative Agent, MORGAN STANLEY SENIOR FUNDING, INC., as Syndication Agent, and THE BANK OF NEW YORK, BANK OF AMERICA, N.A., and WACHOVIA BANK, NATIONAL ASSOCIATION, as Co-Documentation Agents

 

 

If and to the extent such Lender shall not have so made such amount available to the Administrative Agent, such Lender and the Borrower severally agree to pay to the Administrative Agent, forthwith on demand, such corresponding amount (to the extent not previously paid by the other), together with interest thereon for each day from the date such amount is made available to the Borrower until the date such amount is paid to the Administrative Agent, at a rate per annum equal to, in the case of the Borrower, the applicable interest rate set forth in Section 3.4(a) and, in the case of such Lender, the Federal Funds Effective Rate from the date such payment is due until the third day after such date and, thereafter, at the Federal Funds Effective Rate plus 2%. Any such payment by the Borrower shall be without prejudice to its rights against such Lender. If such Lender shall pay to the Administrative Agent such corresponding amount, such amount so paid shall constitute such Lender’s Loan as part of such Loans for purposes of this Agreement, which Loan shall be deemed to have been made by such Lender on the Borrowing Date applicable to such Loans.

 

SECTION 3.2 Payments

 

(a) Each payment, including each prepayment, of principal and interest on the Loans and of the Facility Fee (collectively, together with all of the other fees to be paid to the Administrative Agent and the Lenders in connection with the Loan Documents, the “Fees”), and of all of the other amounts to be paid to the Administrative Agent and the Lenders in connection with the Loan Documents shall be made by the Borrower to the Administrative Agent at its office specified in Section 11.2 without setoff, deduction or counterclaim in funds immediately available in New York by 3:00 P.M. on the due date for such payment. The failure of the Borrower to make any such payment by such time shall not constitute a default hereunder, provided that such payment is made on such due date, but any such payment made after 3:00 P.M. on such due date shall be deemed to have been made on the next Domestic Business Day or Eurodollar Business Day, as the case may be, for the purpose of calculating interest on amounts outstanding on the Loans. If the Borrower has not made any such payment prior to 3:00 P.M., the Borrower hereby authorizes the Administrative Agent to deduct the amount of any such payment from such account(s) as the Borrower may from time to time designate in writing to the Administrative Agent, upon which the Administrative Agent shall apply the amount of such deduction to such payment. Promptly upon receipt thereof by the Administrative Agent, each payment of principal and interest on the Loans shall be remitted by the Administrative Agent in like funds as received to each Lender (a) first, pro rata according to the amount of interest which is then due and payable to the Lenders, and (b) second, pro rata according to the amount of principal which is then due and payable to the Lenders. Each payment of the Facility Fee payable to the Lenders shall be promptly transmitted by the Administrative Agent in like funds as received to each Lender pro rata according to such Lender’s Commitment Amount or, if the Commitments shall have terminated or been terminated, according to the outstanding principal amount of such Lender’s Loans.

 

(b) If any payment hereunder or under the Loans shall be due and payable on a day which is not a Domestic Business Day or Eurodollar Business Day, as the case may be, the due date thereof (except as otherwise provided in the definition of Eurodollar Interest Period) shall be extended to the next Domestic Business Day or Eurodollar Business Day, as the case  

 

 

may be, and (except with respect to payments of the Facility Fee) interest shall be payable at the applicable rate specified herein during such extension.

 

SECTION 3.3 Conversions; Other Matters

 

(a) The Borrower may elect at any time and from time to time to Convert one or more Eurodollar Advances to an ABR Advance by giving the Administrative Agent at least one Domestic Business Day’s prior irrevocable notice of such election, specifying the amount to be so Converted. In addition, the Borrower may elect at any time and from time to time to Convert an ABR Advance to any one or more new Eurodollar Advances or to Convert any one or more existing Eurodollar Advances to any one or more new Eurodollar Advances by giving the Administrative Agent no later than 10:00 A.M. at least two Eurodollar Business Days’ prior irrevocable notice, in the case of a Conversion to Eurodollar Advances, of such election, specifying the amount to be so Converted and the initial Eurodollar Interest Period relating thereto, provided that any Conversion of an ABR Advance to Eurodollar Advances shall only be made on a Eurodollar Business Day. The Administrative Agent shall promptly provide the Lenders with notice of each such election. Each Conversion of Loans from one Type to another shall be made pro rata according to the outstanding principal amount of the Loans of each Lender. ABR Advances and Eurodollar Advances may be Converted pursuant to this Section in whole or in part, provided that the amount to be Converted to each Eurodollar Advance, when aggregated with any Eurodollar Advance to be made on such date in accordance with Section 2.1 and having the same Eurodollar Interest Period as such first Eurodollar Advance, shall equal no less than $10,000,000 or an integral multiple of $1,000,000 in excess thereof.

 

(b) Notwithstanding anything in this Agreement to the contrary, upon the occurrence and during the continuance of a Default or an Event of Default, the Borrower shall have no right to elect to Convert any existing ABR Advance to a new Eurodollar Advance or to Convert any existing Eurodollar Advance to a new Eurodollar Advance. In such event, such ABR Advance shall be automatically continued as an ABR Advance or such Eurodollar Advance shall be automatically Converted to an ABR Advance on the last day of the Eurodollar Interest Period applicable to such Eurodollar Advance. The foregoing shall not affect any other rights or remedies that the Administrative Agent or any Lender may have under this Agreement or any other Loan Document.

 

(c) Each Conversion shall be effected by each Lender by applying the proceeds of each new ABR Advance or Eurodollar Advance, as the case may be, to the existing Advance (or portion thereof) being Converted (it being understood that such Conversion shall not constitute a borrowing for purposes of Article 4, Article 5 or Article 6).

 

(d) Notwithstanding any other provision of any Loan Document:

 

(i) if the Borrower shall have failed to elect a Eurodollar Advance under Section 2.2 or this Section 3.3, as the case may be, in connection with any borrowing of new Loans or expiration of an Eurodollar Interest Period with respect to any existing Eurodollar Advance, the amount of the Loans subject to such borrowing or such existing Eurodollar Advance shall thereafter be an ABR Advance until such time, if any, as the Borrower shall elect a new Eurodollar Advance pursuant to this Section 3.3,

 

 

(ii) the Borrower shall not be permitted to select a Eurodollar Advance the Eurodollar Interest Period in respect of which ends later than the Maturity Date, and

 

(iii) the Borrower shall not be permitted to have more than ten Eurodollar Advances outstanding at any one time, it being understood and agreed that each borrowing of Eurodollar Advances pursuant to a single Borrowing Request shall constitute the making of one Eurodollar Advance for the purpose of calculating such limitation.

 

SECTION 3.4 Interest Rates and Payment Dates

 

(a) Prior to Maturity. Except as otherwise provided in Section 3.4(b) and Section 3.4(c), the Loans shall bear interest on the unpaid principal balance thereof at the applicable interest rate or rates per annum set forth below:

LOANS	RATE
Loans constituting ABR Advances	Alternate Base Rate applicable thereto plus the Applicable Margin.
Loans constituting Eurodollar Advances	Eurodollar Rate applicable thereto plus the Applicable Margin.

 

(b) After Maturity, Late Payment Rate. After maturity, whether by acceleration, notice of intention to prepay or otherwise, the outstanding principal balance of the Loans shall bear interest at the Alternate Base Rate plus 2% per annum until paid (whether before or after the entry of any judgment thereon). Any payment of principal, interest or any Fees not paid on the date when due and payable shall bear interest at the Alternate Base Rate plus 2% per annum from the due date thereof until the date such payment is made (whether before or after the entry of any judgment thereon).

 

(c) Highest Lawful Rate. Notwithstanding anything to the contrary contained in this Agreement, at no time shall the interest rate payable to any Lender on any of its Loans, together with any Fees and all other amounts payable hereunder to such Lender to the extent the same constitute or are deemed to constitute interest, exceed the Highest Lawful Rate. If in respect of any period during the term of this Agreement, any amount paid to any Lender hereunder, to the extent the same shall (but for the provisions of this Section 3.4) constitute or be deemed to constitute interest, would exceed the maximum amount of interest permitted by the Highest Lawful Rate during such period (such amount being hereinafter referred to as an “Unqualified Amount”), then (i) such Unqualified Amount shall be applied or shall be deemed to have been applied as a prepayment of the Loans of such Lender, and (ii) if, in any subsequent period during the term of this Agreement, all amounts payable hereunder to such Lender in respect of such period which constitute or shall be deemed to constitute interest shall be less than the maximum amount of interest permitted by the Highest Lawful Rate during such period, then

 

 

the Borrower shall pay to such Lender in respect of such period an amount (each a “Compensatory Interest Payment”) equal to the lesser of (x) a sum which, when added to all such amounts, would equal the maximum amount of interest permitted by the Highest Lawful Rate during such period, and (y) an amount equal to the aggregate sum of all Unqualified Amounts less all other Compensatory Interest Payments.

 

(d) General. Interest shall be payable in arrears on each Interest Payment Date, on the Expiration Date and, to the extent provided in Section 2.6(d), upon each prepayment of the Loans. Any change in the interest rate on the Loans resulting from an increase or a decrease in the Alternate Base Rate or any reserve requirement shall become effective as of the opening of business on the day on which such change shall become effective. The Administrative Agent shall (i) in accordance with its customary practice, provide notice to the Borrower when interest payments are due, and (ii) as soon as practicable, notify the Borrower and the Lenders of the effective date and the amount of each change in the Prime Rate, but any failure to so notify shall not in any manner affect the obligation of the Borrower to pay interest on the Loans in the amounts and on the dates set forth herein. Each determination by the Administrative Agent of the Alternate Base Rate and the Eurodollar Rate pursuant to this Agreement shall be conclusive and binding on the Borrower absent manifest error. The Borrower acknowledges that to the extent interest payable on the Loans is based on the Alternate Base Rate, such rate is only one of the bases for computing interest on loans made by the Lenders, and by basing interest payable on ABR Advances on the Alternate Base Rate, the Lenders have not committed to charge, and the Borrower has not in any way bargained for, interest based on a lower or the lowest rate at which the Lenders may now or in the future make extensions of credit to other Persons. All interest (other than interest calculated with reference to the Prime Rate) shall be calculated on the basis of a 360-day year for the actual number of days elapsed, and all interest determined with reference to the Prime Rate shall be calculated on the basis of a 365/366-day year for the actual number of days elapsed.

 

SECTION 3.5 Indemnification for Loss

 

Notwithstanding anything contained herein to the contrary, if: (i) the Borrower shall fail to borrow a Eurodollar Advance or if the Borrower shall fail to Convert a Eurodollar Advance after it shall have given notice to do so in which it shall have requested a Eurodollar Advance pursuant to Section 2.2 or Section 3.3, as the case may be, (ii) a Eurodollar Advance shall be terminated for any reason prior to the last day of the Eurodollar Interest Period applicable thereto, (iii) any repayment or prepayment of the principal amount of a Eurodollar Advance is made for any reason on a date which is prior to the last day of the Eurodollar Interest Period applicable thereto, or (iv) the Borrower shall have revoked a notice of prepayment or notice of termination of the Commitments that was conditioned upon the effectiveness of other credit facilities or the consummation of the issuance of long term Indebtedness or equity securities pursuant to Section 2.5 or Section 2.6, the Borrower agrees to indemnify each Lender against, and to pay on demand directly to such Lender the amount (calculated by such Lender using any method chosen by such Lender which is customarily used by such Lender for such purpose) equal to any loss or expense suffered by such Lender as a result of such failure to borrow or Convert, or such termination, repayment, prepayment or revocation, including any loss, cost or expense suffered by such Lender in liquidating or employing deposits acquired to

 

 

fund or maintain the funding of such Eurodollar Advance or redeploying funds prepaid or repaid, in amounts which correspond to such Eurodollar Advance and any reasonable internal processing charge customarily charged by such Lender in connection therewith.

 

SECTION 3.6 Reimbursement for Costs, Etc.

 

If at any time or from time to time there shall occur a Regulatory Change and any Lender shall have reasonably determined that such Regulatory Change (i) shall have had or will thereafter have the effect of reducing (A) the rate of return on such Lender’s capital or the capital of any Person directly or indirectly owning or controlling such Lender (each a “Control Person”), or (B) the asset value (for capital purposes) to such Lender or such Control Person, as applicable, of the Loans, or any participation therein, in any case to a level below that which such Lender or such Control Person could have achieved or would thereafter be able to achieve but for such Regulatory Change (after taking into account such Lender’s or such Control Person’s policies regarding capital), (ii) will impose, modify or deem applicable any reserve, asset, special deposit or special assessment requirements on deposits obtained in the interbank eurodollar market in connection with the Loan Documents (excluding, with respect to any Eurodollar Advance, any such requirement which is included in the determination of the rate applicable thereto), (iii) will subject such Lender or such Control Person, as applicable, to any tax (documentary, stamp or otherwise) with respect to this Agreement or any Note, or (iv) will change the basis of taxation of payments to such Lender or such Control Person, as applicable, of principal, interest or fees payable under the Loan Documents (except, in the case of clauses (iii) and (iv) above, for any tax or changes in the rate of tax on such Lender’s or such Control Person’s net income) then, in each such case, within ten days after demand by such Lender, the Borrower shall pay to such Lender or such Control Person, as the case may be, such additional amount or amounts as shall be sufficient to compensate such Lender or such Control Person, as the case may be, for any such reduction, reserve or other requirement, tax, loss, cost or expense (excluding general administrative and overhead costs) (collectively, “Costs”) attributable to such Lender’s or such Control Person’s compliance during the term hereof with such Regulatory Change. Each Lender may make multiple requests for compensation under this Section.

 

Notwithstanding the foregoing, the Borrower will not be required to compensate any Lender for any Costs under this Section 3.6 arising prior to 45 days preceding the date of demand, unless the applicable Regulatory Change giving rise to such Costs is imposed retroactively. In the case of retroactivity, such notice shall be provided to the Borrower not later than 45 days from the date that such Lender learned of such Regulatory Change. The Borrower’s obligation to compensate such Lender shall be contingent upon the provision of such timely notice (but any failure by such Lender to provide such timely notice shall not affect the Borrower’s obligations with respect to (i) Costs incurred from the date as of which such Regulatory Change became effective to the date that is 45 days after the date such Lender reasonably should have learned of such Regulatory Change and (ii) Costs incurred following the provision of such notice).

 

SECTION 3.7 Illegality of Funding

 

Notwithstanding any other provision hereof, if any Lender shall reasonably determine that any law, regulation, treaty or directive, or any change therein or in the

 

 

interpretation or application thereof, shall make it unlawful for such Lender to make or maintain any Eurodollar Advance as contemplated by this Agreement, such Lender shall promptly notify the Borrower and the Administrative Agent thereof, and (a) the commitment of such Lender to make such Eurodollar Advances or Convert ABR Advances to such Eurodollar Advances shall forthwith be suspended, (b) such Lender shall fund its portion of each requested Eurodollar Advance as an ABR Advance and (c) such Lender’s Loans then outstanding as such Eurodollar Advances, if any, shall be Converted automatically to an ABR Advance on the last day of the then current Eurodollar Interest Period applicable thereto or at such earlier time as may be required. If the commitment of any Lender with respect to Eurodollar Advances is suspended pursuant to this Section and such Lender shall have obtained actual knowledge that it is once again legal for such Lender to make or maintain Eurodollar Advances, such Lender shall promptly notify the Administrative Agent and the Borrower thereof and, upon receipt of such notice by each of the Administrative Agent and the Borrower, such Lender’s commitment to make or maintain Eurodollar Advances shall be reinstated. If the commitment of any Lender with respect to Eurodollar Advances is suspended pursuant to this Section, such suspension shall not otherwise affect such Lender’s Commitment.

 

SECTION 3.8 Option to Fund; Substituted Interest Rate

 

(a) Each Lender has indicated that, if the Borrower requests a Eurodollar Advance, such Lender may wish to purchase one or more deposits in order to fund or maintain its funding of its Pro Rata Percentage of such Eurodollar Advance during the Eurodollar Interest Period with respect thereto; it being understood that the provisions of this Agreement relating to such funding are included only for the purpose of determining the rate of interest to be paid in respect of such Eurodollar Advance and any amounts owing under Section 3.5 and Section 3.6. Each Lender shall be entitled to fund and maintain its funding of all or any part of each Eurodollar Advance in any manner it sees fit, but all such determinations hereunder shall be made as if such Lender had actually funded and maintained its Pro Rata Percentage of each Eurodollar Advance during the applicable Eurodollar Interest Period through the purchase of deposits in an amount equal to the amount of its Pro Rata Percentage of such Eurodollar Advance and having a maturity corresponding to such Eurodollar Interest Period. Each Lender may fund its Loans from or for the account of any branch or office of such Lender as such Lender may choose from time to time, subject to Section 3.10.

 

(b) In the event that (i) the Administrative Agent shall have determined in good faith (which determination shall be conclusive and binding upon the Borrower) that by reason of circumstances affecting the interbank eurodollar market either adequate and reasonable means do not exist for ascertaining the Eurodollar Rate applicable pursuant to Section 2.2 or Section 3.3, or (ii) the Required Lenders shall have notified the Administrative Agent that they have in good faith determined (which determination shall be conclusive and binding on the Borrower) that the applicable Eurodollar Rate will not adequately and fairly reflect the cost to such Lenders of maintaining or funding loans bearing interest based on such Eurodollar Rate with respect to any portion of the Loans that the Borrower has requested be made as Eurodollar Advances or any Eurodollar Advance that will result from the requested conversion of any portion of the Loans into Eurodollar Advances (each, an “Affected Advance”), the Administrative Agent shall promptly notify the Borrower and the Lenders (by fax or other writing) of such

 

 

determination on or, to the extent practicable, prior to the requested Borrowing Date or conversion date for such Affected Advances. If the Administrative Agent shall give such notice, (A) any Affected Advances shall be made as ABR Advances, (B) the Loans (or any portion thereof) that were to have been Converted to Affected Advances shall be Converted to or continued as ABR Advances, and (C) any outstanding Affected Advances shall be Converted, on the last day of the then current Eurodollar Interest Period with respect thereto, to ABR Advances. Until any notice under clauses (i) or (ii), as the case may be, of this Section 3.8(b) has been withdrawn by the Administrative Agent (by notice to the Borrower) promptly upon either (x) the Administrative Agent having determined that such circumstances affecting the relevant market no longer exist and that adequate and reasonable means do exist for determining the Eurodollar Rate pursuant to Section 2.2 or Section 3.3, or (y) the Administrative Agent having been notified by such Required Lenders that circumstances no longer render the Loans (or any portion thereof) Affected Advances, no further Eurodollar Advances shall be required to be made by the Lenders nor shall the Borrower have the right to Convert all or any portion of the Loans to Eurodollar Advances.

 

SECTION 3.9 Certificates of Payment and Reimbursement

 

Each Lender agrees, in connection with any request by it for payment or reimbursement pursuant to Section 3.5 or Section 3.6, to provide the Borrower with a certificate, signed by an officer of such Lender, setting forth a description in reasonable detail of any such payment or reimbursement. Each determination by each Lender of such payment or reimbursement shall be conclusive absent manifest error.

 

SECTION 3.10 Taxes; Net Payments

 

(a) All payments made by the Borrower under the Loan Documents shall be made free and clear of, and without reduction for or on account of, any taxes required by law to be withheld from any amounts payable under the Loan Documents. In the event that the Borrower is prohibited by law from making such payments free of deductions or withholdings, then the Borrower shall pay such additional amounts to the Administrative Agent, for the benefit of the Lenders, as may be necessary in order that the actual amounts received by the Lenders in respect of interest and any other amounts payable under the Loan Documents after deduction or withholding (and after payment of any additional taxes or other charges due as a consequence of the payment of such additional amounts) shall equal the amount that would have been received if such deduction or withholding were not required. In the event that any such deduction or withholding can be reduced or nullified as a result of the application of any relevant double taxation convention, the Lenders and the Administrative Agent will, at the expense of the Borrower, cooperate with the Borrower in making application to the relevant taxing authorities seeking to obtain such reduction or nullification, provided that the Lenders and the Administrative Agent shall have no obligation to (i) engage in any litigation, hearing or proceeding with respect thereto or (ii) disclose any tax return or other confidential information. If the Borrower shall make any payment under this Section or shall make any deduction or withholding from amounts paid under any Loan Document, the Borrower shall forthwith forward to the Administrative Agent original or certified copies of official receipts or other evidence acceptable to the Administrative Agent establishing each such payment, deduction or

 

 

withholding, as the case may be, and the Administrative Agent in turn shall distribute copies thereof to each Lender. If any payment to any Lender under any Loan Document is or becomes subject to any withholding, such Lender shall (unless otherwise required by a Governmental Authority or as a result of any law, rule, regulation, order or similar directive applicable to such Lender) designate a different office or branch to which such payment is to be made from that initially selected thereby, if such designation would avoid such withholding and would not be otherwise disadvantageous to such Lender in any respect. In the event that any Lender determines that it received a refund or credit for taxes paid by the Borrower under this Section, such Lender shall promptly notify the Administrative Agent and the Borrower of such fact and shall remit to the Borrower the amount of such refund or credit applicable to the payments made by the Borrower in respect of such Lender under this Section.

 

(b) Any Foreign Lender that is entitled to an exemption from or reduction of withholding tax under the law of the jurisdiction in which the Borrower is located, or any treaty to which such jurisdiction is a party, with respect to payments under the Loan Documents shall deliver to the Borrower (with a copy to the Administrative Agent), at the time or times prescribed by applicable law, such properly completed and executed documentation prescribed by applicable law or reasonably requested by the Borrower as will permit such payments to be made without withholding or at a reduced rate. Notwithstanding any provision herein to the contrary, the Borrower shall have no obligation to pay to any Lender any amount which the Borrower is liable to withhold due to the failure of such Lender to file any statement of exemption required by the Internal Revenue Code.

 

SECTION 3.11 Facility Fee

 

The Borrower agrees to pay to the Administrative Agent for the pro rata account of each Lender a fee (the “Facility Fee”) during the period commencing on the Effective Date and ending on the Facility Fee Termination Date, payable quarterly in arrears on the last day of each March, June, September and December of each year, commencing on the last day of the calendar quarter in which the Effective Date shall have occurred, and on the Facility Fee Termination Date, at a rate per annum equal to the Applicable Margin of (i) prior to the date that is the earlier of (x) the third Borrowing Date and (y) the last day of the Commitment Period, the Available Commitment of such Lender plus the sum of the outstanding principal balance of all Loans of such Lender on such date and (ii) on any day thereafter, the sum of the outstanding principal balance of all Loans of such Lender on such date. The Facility Fee shall be computed on the basis of a 360-day year for the actual number of days elapsed.

 

SECTION 3.12 [Intentionally Omitted]

 

SECTION 3.13 Replacement of Lender

 

If the Borrower is obligated to pay to any Lender any amount under Section 3.6 or Section 3.10, the Borrower shall have the right within 90 days thereafter, in accordance with the requirements of Section 11.7(b), if no Default or Event of Default shall exist, to replace such Lender (the “Replaced Lender”) with one or more other assignees (each a “Replacement Lender”), provided that (i) at the time of any replacement pursuant to this Section, the Replacement Lender shall enter into one or more Assignment and Acceptance Agreements

 

 

pursuant to Section 11.7(b) (with the processing and recordation fee referred to in Section 11.7(b) payable pursuant to said Section 11.7(b) to be paid by the Replacement Lender) pursuant to which the Replacement Lender shall acquire the Commitment (if any) and the outstanding Loans of the Replaced Lender and, in connection therewith, shall pay the following: (a) to the Replaced Lender, an amount equal to the sum of (A) an amount equal to the principal of, and all accrued interest on, all outstanding Loans of the Replaced Lender and (B) an amount equal to all accrued, but unpaid, fees owing to the Replaced Lender and (b) to the Administrative Agent an amount equal to all amounts owed by such Replaced Lender to the Administrative Agent under this Agreement, including, without limitation, an amount equal to the principal of, and all accrued interest on, all outstanding Loans of the Replaced Lender, a corresponding amount of which was made available by the Administrative Agent to the Borrower pursuant to Section 3.1 and which has not been repaid to the Administrative Agent by such Replaced Lender or the Borrower, and (ii) all obligations of the Borrower owing to the Replaced Lender (other than those specifically described in clause (i) above in respect of which the assignment purchase price has been, or is concurrently being, paid) shall be paid in full to such Replaced Lender concurrently with such replacement. Upon the execution of the respective Assignment and Acceptance Agreements and the payment of amounts referred to in clauses (i) and (ii) of this Section 3.13, the Replacement Lender shall become a Lender hereunder and the Replaced Lender shall cease to constitute a Lender hereunder, except with respect to indemnification provisions under this Agreement that are intended to survive the termination of the Commitments and the repayment of the Loans.

 

ARTICLE 4

 

REPRESENTATIONS AND WARRANTIES

 

In order to induce the Administrative Agent and the Lenders to enter into this Agreement, and the Lenders to make Loans, the Borrower hereby makes the following representations and warranties to the Administrative Agent and the Lenders:

 

SECTION 4.1 Existence and Power

 

Each of the Borrower and the Subsidiaries is duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or formation (except, in the case of the Subsidiaries, where the failure to be in such good standing could not reasonably be expected to have a Material Adverse effect), has all requisite corporate power and authority to own its Property and to carry on its business as now conducted, and is qualified to do business as a foreign corporation and is in good standing in each jurisdiction in which it owns or leases real Property or in which the nature of its business requires it to be so qualified (except those jurisdictions where the failure to be so qualified or to be in good standing could not reasonably be expected to have a Material Adverse effect).

 

SECTION 4.2 Authority

 

The Borrower has full corporate power and authority to enter into, execute, deliver and perform the terms of the Loan Documents, all of which have been duly authorized by

 

 

all proper and necessary corporate action and are not in contravention of any applicable law or the terms of its Certificate of Incorporation and By-Laws. No consent or approval of, or other action by, shareholders of the Borrower, any Governmental Authority, or any other Person (which has not already been obtained) is required to authorize in respect of the Borrower, or is required in connection with the execution, delivery, and performance by the Borrower of the Loan Documents or is required as a condition to the enforceability of the Loan Documents against the Borrower.

 

SECTION 4.3 Binding Agreement

 

The Loan Documents constitute the valid and legally binding obligations of the Borrower, enforceable in accordance with their respective terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and by equitable principles relating to the availability of specific performance as a remedy.

 

SECTION 4.4 Litigation

 

As at February 2, 2007, there were no actions, suits, arbitration proceedings or claims (whether purportedly on behalf of the Borrower, any Subsidiary or otherwise) pending or, to the knowledge of the Borrower, threatened against the Borrower or any Subsidiary or any of their respective Properties, or maintained by the Borrower or any Subsidiary, at law or in equity, before any Governmental Authority which could reasonably be expected to have a Material Adverse effect. There are no proceedings pending or, to the knowledge of the Borrower, threatened against the Borrower or any Subsidiary (a) which call into question the validity or enforceability of any Loan Document, or otherwise seek to invalidate, any Loan Document, or (b) which might, individually or in the aggregate, materially and adversely affect any of the transactions contemplated by any Loan Document (it being understood that the Caremark Acquisition is not a transaction contemplated by any Loan Document for the purposes of this clause (b)).

 

SECTION 4.5 No Conflicting Agreements

 

(a) Neither the Borrower nor any Subsidiary is in default under any agreement to which it is a party or by which it or any of its Property is bound the effect of which could reasonably be expected to have a Material Adverse effect. No notice to, or filing with, any Governmental Authority is required for the due execution, delivery and performance by the Borrower of the Loan Documents.

 

(b) No provision of any existing material mortgage, material indenture, material contract or material agreement or of any existing statute, rule, regulation, judgment, decree or order binding on the Borrower or any Subsidiary or affecting the Property of the Borrower or any Subsidiary conflicts with, or requires any consent which has not already been obtained under, or would in any way prevent the execution, delivery or performance by the Borrower of the terms of, any Loan Document. The execution, delivery or performance by the Borrower of the terms of each Loan Document will not constitute a default under, or result in the

 

 

creation or imposition of, or obligation to create, any Lien upon the Property of the Borrower or any Subsidiary pursuant to the terms of any such mortgage, indenture, contract or agreement.

 

SECTION 4.6 Taxes

 

The Borrower and each Subsidiary has filed or caused to be filed all tax returns, and has paid, or has made adequate provision for the payment of, all taxes shown to be due and payable on said returns or in any assessments made against them, the failure of which to file or pay could reasonably be expected to have a Material Adverse effect, and no tax Liens (other than Liens permitted under Section 8.2) have been filed against the Borrower or any Subsidiary and no claims are being asserted with respect to such taxes which are required by GAAP to be reflected in the Financial Statements and are not so reflected, except for taxes which have been assessed but which are not yet due and payable. The charges, accruals and reserves on the books of the Borrower and each Subsidiary with respect to all federal, state, local and other taxes are considered by the management of the Borrower to be adequate, and the Borrower knows of no unpaid assessment which (a) could reasonably be expected to have a Material Adverse effect, or (b) is or might be due and payable against it or any Subsidiary or any Property of the Borrower or any Subsidiary, except such thereof as are being contested in good faith and by appropriate proceedings diligently conducted, and for which adequate reserves have been set aside in accordance with GAAP or which have been assessed but are not yet due and payable.

 

SECTION 4.7 Compliance with Applicable Laws; Filings

 

Neither the Borrower nor any Subsidiary is in default with respect to any judgment, order, writ, injunction, decree or decision of any Governmental Authority which default could reasonably be expected to have a Material Adverse effect. The Borrower and each Subsidiary is complying with all applicable statutes, rules and regulations of all Governmental Authorities, a violation of which could reasonably be expected to have a Material Adverse effect. The Borrower and each Subsidiary has filed or caused to be filed with all Governmental Authorities all reports, applications, documents, instruments and information required to be filed pursuant to all applicable laws, rules, regulations and requests which, if not so filed, could reasonably be expected to have a Material Adverse effect.

 

SECTION 4.8 Governmental Regulations

 

Neither the Borrower nor any Subsidiary nor any corporation controlling the Borrower or any Subsidiary or under common control with the Borrower or any Subsidiary is subject to regulation under the Investment Company Act of 1940, as amended, or is subject to any statute or regulation which regulates the incurrence of Indebtedness.

 

SECTION 4.9 Federal Reserve Regulations; Use of Proceeds

 

The Borrower is not engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying any margin stock within the meaning of Regulation U of the Board of Governors of the Federal Reserve System, as amended. No part of the proceeds of the Loans has been or will be used, directly or indirectly, and whether immediately, incidentally or ultimately, for a purpose which violates any law, rule

 

 

or regulation of any Governmental Authority, including, without limitation, the provisions of Regulations T, U or X of the Board of Governors of the Federal Reserve System, as amended. Anything in this Agreement to the contrary notwithstanding, no Lender shall be obligated to extend credit to or on behalf of the Borrower in violation of any limitation or prohibition provided by any applicable law, regulation or statute, including said Regulation U. Following application of the proceeds of each Loan, not more than 25% (or such greater or lesser percentage as is provided in the exclusions from the definition of “Indirectly Secured” contained in said Regulation U as in effect at the time of the making of such Loan) of the value of the assets of the Borrower and the Subsidiaries on a Consolidated basis that are subject to Section 8.2 will be Margin Stock. In addition, no part of the proceeds of any Loan will be used, whether directly or indirectly, and whether immediately, incidentally or ultimately, to make a loan to any director or executive officer of the Borrower or any Subsidiary.

 

SECTION 4.10 No Misrepresentation

 

No representation or warranty contained in any Loan Document and no certificate or written report furnished by the Borrower to the Administrative Agent or any Lender pursuant to any Loan Document contains or will contain, as of its date, a misstatement of material fact, or omits or will omit to state, as of its date, a material fact required to be stated in order to make the statements therein contained not misleading in the light of the circumstances under which made (it being understood that the Borrower makes no representation or warranty hereunder with respect to any projections or other forward looking information).

 

SECTION 4.11 Plans

 

Each Employee Benefit Plan of the Borrower, each Subsidiary and each ERISA Affiliate is in compliance with ERISA and the Internal Revenue Code, where applicable, except where the failure to so comply would not be material. The Borrower, each Subsidiary and each ERISA Affiliate have complied with the material requirements of Section 515 of ERISA with respect to each Pension Plan which is a Multiemployer Plan, except where the failure to so comply would not be material. The Borrower, each Subsidiary and each ERISA Affiliate has, as of the date hereof, made all contributions or payments to or under each Pension Plan required by law or the terms of such Pension Plan or any contract or agreement. No liability to the PBGC has been, or is reasonably expected by the Borrower, any Subsidiary or any ERISA Affiliate to be, incurred by the Borrower, any Subsidiary or any ERISA Affiliate. Liability, as referred to in this Section 4.11, includes any joint and several liability, but excludes any current or, to the extent it represents future liability in the ordinary course, any future liability for premiums under Section 4007 of ERISA. Each Employee Benefit Plan which is a group health plan within the meaning of Section 5000(b)(1) of the Internal Revenue Code is in material compliance with the continuation of health care coverage requirements of Section 4980B of the Internal Revenue Code and with the portability, nondiscrimination and other requirements of Sections 9801, 9802, 9803, 9811 and 9812 of the Internal Revenue Code.

 

SECTION 4.12 Environmental Matters

 

Neither the Borrower nor any Subsidiary (a) has received written notice or otherwise learned of any claim, demand, action, event, condition, report or investigation

 

 

 indicating or concerning any potential or actual liability which individually or in the aggregate could reasonably be expected to have a Material Adverse effect, arising in connection with (i) any non-compliance with or violation of the requirements of any applicable federal, state or local environmental health or safety statute or regulation, or (ii) the release or threatened release of any toxic or hazardous waste, substance or constituent, or other substance into the environment, (b) to the best knowledge of the Borrower, has any threatened or actual liability in connection with the release or threatened release of any toxic or hazardous waste, substance or constituent, or other substance into the environment which individually or in the aggregate could reasonably be expected to have a Material Adverse effect, (c) has received notice of any federal or state investigation evaluating whether any remedial action is needed to respond to a release or threatened release of any toxic or hazardous waste, substance or constituent or other substance into the environment for which the Borrower or any Subsidiary is or would be liable, which liability would reasonably be expected to have a Material Adverse effect, or (d) has received notice that the Borrower or any Subsidiary is or may be liable to any Person under the Comprehensive Environmental Response, Compensation and Liability Act, as amended, 42 U.S.C. Section 9601 et seq., or any analogous state law, which liability would reasonably be expected to have a Material Adverse effect. The Borrower and each Subsidiary is in compliance with the financial responsibility requirements of federal and state environmental laws to the extent applicable, including those contained in 40 C.F.R., parts 264 and 265, subpart H, and any analogous state law, except in those cases in which the failure so to comply would not reasonably be expected to have a Material Adverse effect.

 

SECTION 4.13 Financial Statements

 

The Borrower has heretofore delivered to the Lenders through the Administrative Agent copies of the audited Consolidated Balance Sheet of the Borrower and its Subsidiaries as of December 31, 2006, and the related Consolidated Statements of Operations, Shareholders’ Equity and Cash Flows for the fiscal year then ended. The financial statements referred to immediately above, including all related notes and schedules, are herein referred to collectively as the “Financial Statements.” The Financial Statements fairly present the Consolidated financial condition and results of the operations of the Borrower and the Subsidiaries as of the date and for the period indicated therein and, except as noted therein, have been prepared in conformity with GAAP as then in effect. Neither the Borrower nor any of the Subsidiaries has any obligation or liability of any kind (whether fixed, accrued, contingent, unmatured or otherwise) which, in accordance with GAAP as then in effect, should have been disclosed in the Financial Statements and was not. During the period from December 31, 2005 to and including February 2, 2007 there was no Material Adverse change, including as a result of any change in law or any change in the consolidated financial condition, operations, business or Property of the Borrower and its Subsidiaries taken as a whole.

 

 

ARTICLE 5

 

CONDITIONS OF LENDING —

LOANS ON THE FIRST BORROWING DATE

 

In addition to the requirements set forth in Article 6, the obligation of each Lender on the first Borrowing Date to make a Loan is subject to the fulfillment of the following conditions precedent prior to or simultaneously with the Effective Date:

 

SECTION 5.1 Evidence of Corporate Action

 

The Administrative Agent shall have received a certificate, dated the Effective Date, of the Secretary or an Assistant Secretary of the Borrower (i) attaching a true and complete copy of the resolutions of its Board of Directors and of all documents evidencing all other necessary corporate action (in form and substance reasonably satisfactory to the Administrative Agent) taken by the Borrower to authorize the Loan Documents and the transactions contemplated thereby, (ii) attaching a true and complete copy of its Certificate of Incorporation and By-Laws, (iii) setting forth the incumbency of the officer or officers of the Borrower who may sign the Loan Documents and any other certificates, requests, notices or other documents now or in the future required thereunder, and (iv) attaching a long-form certificate of good standing of the Secretary of State of the State of Delaware.

 

SECTION 5.2 Notes

 

The Administrative Agent shall have received a Note for each Lender that shall have requested one, executed by the Borrower.

 

SECTION 5.3 Opinion of Counsel to the Borrower

 

The Administrative Agent shall have received:

 

(a) an opinion of Zenon Lankowsky, counsel to the Borrower, dated the Effective Date, and in the form of Exhibit D-1; and

 

(b) an opinion of Davis Polk & Wardwell, special counsel to the Borrower, dated the Effective Date, and in the form of Exhibit D-2.

 

SECTION 5.4 Caremark Acquisition

 

The Administrative Agent shall have received a certificate of the Chief Financial Officer of the Borrower, dated as of the first Borrowing Date, certifying that the closing of the Caremark Acquisition has been or will be consummated substantially in accordance with all material terms and conditions of the Caremark Merger Agreement.

 

 

ARTICLE 6

 

CONDITIONS TO LENDING —

LOANS ON EACH BORROWING DATE

 

The obligation of each Lender on any Borrowing Date to make each Loan is subject to the fulfillment of the following conditions precedent:

 

SECTION 6.1 Compliance

 

On each Borrowing Date, and after giving effect to the Loans to be made on such Borrowing Date, (a) there shall exist no Default or Event of Default, and (b) the representations and warranties contained in this Agreement shall be true and correct with the same effect as though such representations and warranties had been made on such Borrowing Date, except those which are expressly specified to be made as of an earlier date.

 

SECTION 6.2 Requests

 

The Administrative Agent shall have received a Borrowing Request (which shall comply with the provisions of Section 2.2) from the Borrower.

 

SECTION 6.3 Loan Closings

 

All documents required by the provisions of this Agreement to have been executed or delivered by the Borrower to the Administrative Agent or any Lender on or before the applicable Borrowing Date shall have been so executed or delivered on or before such Borrowing Date.

 

ARTICLE 7

 

AFFIRMATIVE COVENANTS

 

The Borrower covenants and agrees that on and after the Effective Date and until the payment in full of the Loans and all other sums and amounts payable under the Loan Documents, the Borrower will:

 

SECTION 7.1 Legal Existence

 

Except as may otherwise be permitted by Section 8.3 and Section 8.4, maintain, and cause each Subsidiary to maintain, its corporate existence in good standing in the jurisdiction of its incorporation or formation and in each other jurisdiction in which the failure so to do could reasonably be expected to have a Material Adverse effect, except that the corporate existence of Subsidiaries operating closing or discontinued operations may be terminated.

 

 

SECTION 7.2 Taxes

 

Pay and discharge when due, and cause each Subsidiary so to do, all taxes, assessments, governmental charges, license fees and levies upon or with respect to the Borrower and such Subsidiary, and upon the income, profits and Property thereof unless, and only to the extent, that either (i)(a) such taxes, assessments, governmental charges, license fees and levies shall be contested in good faith and by appropriate proceedings diligently conducted by the Borrower or such Subsidiary, and (b) such reserve or other appropriate provision as shall be required by GAAP shall have been made therefor, or (ii) the failure to pay or discharge such taxes, assessments, governmental charges, license fees and levies could not reasonably be expected to have a Material Adverse effect.

 

SECTION 7.3 Insurance

 

Keep, and cause each Subsidiary to keep, insurance with responsible insurance companies in such amounts and against such risks as is usually carried by the Borrower or such Subsidiary.

 

SECTION 7.4 Performance of Obligations

 

Pay and discharge promptly when due, and cause each Subsidiary so to do, all lawful Indebtedness, obligations and claims for labor, materials and supplies or otherwise which, if unpaid, could reasonably be expected to (a) have a Material Adverse effect, or (b) become a Lien on the Property of the Borrower or any Subsidiary, except those Liens permitted under Section 8.2, provided that neither the Borrower nor such Subsidiary shall be required to pay or discharge or cause to be paid or discharged any such Indebtedness, obligation or claim so long as (i) the validity thereof shall be contested in good faith and by appropriate proceedings diligently conducted by the Borrower or such Subsidiary, and (ii) such reserve or other appropriate provision as shall be required by GAAP shall have been made therefor.

 

SECTION 7.5 Condition of Property

 

Except for ordinary wear and tear, at all times, maintain, protect and keep in good repair, working order and condition, all material Property necessary for the operation of its business (other than Property which is replaced with similar Property) as then being operated, and cause each Subsidiary so to do.

 

SECTION 7.6 Observance of Legal Requirements

 

Observe and comply in all material respects, and cause each Subsidiary so to do, with all laws, ordinances, orders, judgments, rules, regulations, certifications, franchises, permits, licenses, directions and requirements of all Governmental Authorities, which now or at any time hereafter may be applicable to it or to such Subsidiary, a violation of which could reasonably be expected to have a Material Adverse effect.

 

 

SECTION 7.7 Financial Statements and Other Information

 

Maintain, and cause each Subsidiary to maintain, a standard system of accounting in accordance with GAAP, and furnish to each Lender:

 

(a) As soon as available and, in any event, within 120 days after the close of each fiscal year, a copy of (x) the Borrower’s 10-K in respect of such fiscal year, and (y)(i) the Borrower’s Consolidated Balance Sheet as of the end of such fiscal year, and (ii) the related Consolidated Statements of Operations, Shareholders’ Equity and Cash Flows, as of and through the end of such fiscal year, setting forth in each case in comparative form the corresponding figures in respect of the previous fiscal year, all in reasonable detail, and accompanied by a report of the Borrower’s auditors, which report shall state that (A) such auditors audited such financial statements, (B) such audit was made in accordance with generally accepted auditing standards in effect at the time and provides a reasonable basis for such opinion, and (C) said financial statements have been prepared in accordance with GAAP;

 

(b) As soon as available, and in any event within 60 days after the end of each of the first three fiscal quarters of each fiscal year, a copy of (x) the Borrower’s 10-Q in respect of such fiscal quarter, and (y)(i) the Borrower’s Consolidated Balance Sheet as of the end of such quarter and (ii) the related Consolidated Statements of Operations, Shareholders’ Equity and Cash Flows for (A) such quarter and (B) the period from the beginning of the then current fiscal year to the end of such quarter, in each case in comparable form with the prior fiscal year, all in reasonable detail and prepared in accordance with GAAP (without footnotes and subject to year-end adjustments);

 

(c) Simultaneously with the delivery of the financial statements required by clauses (a) and (b) above, a certificate of the chief financial officer or treasurer of the Borrower certifying that no Default or Event of Default shall have occurred or be continuing or, if so, specifying in such certificate all such Defaults and Events of Default, and setting forth computations in reasonable detail demonstrating compliance with Section 8.1 and Section 8.9;

 

(d) Prompt notice upon the Borrower becoming aware of any change in a Pricing Level;

 

(e) Promptly upon becoming available, copies of all regular or periodic reports (including current reports on Form 8-K) which the Borrower or any Subsidiary may now or hereafter be required to file with or deliver to the Securities and Exchange Commission, or any other Governmental Authority succeeding to the functions thereof, and copies of all material news releases sent to all stockholders;

 

(f) Prompt written notice of: (i) any citation, summons, subpoena, order to show cause or other order naming the Borrower or any Subsidiary a party to any proceeding before any Governmental Authority which could reasonably be expected to have a Material Adverse effect, and include with such notice a copy of such citation, summons, subpoena, order to show cause or other order, (ii) any lapse or other termination of any license, permit, franchise or other authorization issued to the Borrower or any Subsidiary by any Governmental Authority, (iii) any refusal by any Governmental Authority to renew or extend any license, permit, franchise

 

 

or other authorization, and (iv) any dispute between the Borrower or any Subsidiary and any Governmental Authority, which lapse, termination, refusal or dispute, referred to in clause (ii), (iii) or (iv) above, could reasonably be expected to have a Material Adverse effect;

 

(g) Prompt written notice of the occurrence of (i) each Default, (ii) each Event of Default and (iii) each Material Adverse change;

 

(h) Promptly upon receipt thereof, copies of any audit reports delivered in connection with the statements referred to in Section 7.7(a);

 

(i) From time to time, such other information regarding the financial position or business of the Borrower and the Subsidiaries as the Administrative Agent, at the request of any Lender, may reasonably request; and

 

(j) Prompt written notice of such other information with documentation required by bank regulatory authorities under applicable “know your customer” and Anti-Money Laundering rules and regulations (including, without limitation, the PATRIOT Act), as from time to time may be reasonably requested by the Administrative Agent or any Lender.

 

SECTION 7.8 Records

 

Upon reasonable notice and during normal business hours, permit representatives of the Administrative Agent and each Lender to visit the offices of the Borrower and each Subsidiary, to examine the books and records (other than tax returns and work papers related to tax returns) thereof and auditors’ reports relating thereto, to discuss the affairs of the Borrower and each Subsidiary with the respective officers thereof, and to meet and discuss the affairs of the Borrower and each Subsidiary with the Borrower’s auditors.

 

SECTION 7.9 Authorizations

 

Maintain and cause each Subsidiary to maintain, in full force and effect, all copyrights, patents, trademarks, trade names, franchises, licenses, permits, applications, reports, and other authorizations and rights, which, if not so maintained, would individually or in the aggregate have a Material Adverse effect.

 

ARTICLE 8

 

NEGATIVE COVENANTS

 

The Borrower covenants and agrees that on and after the Effective Date and until the payment in full of the Loans and all other sums and amounts which are payable under the Loan Documents, the Borrower will not:

 

SECTION 8.1 Subsidiary Indebtedness

 

Permit the Indebtedness of all Subsidiaries (excluding the ESOP Guaranty) to exceed (on a combined basis) 10% of Tangible Net Worth.

 

 

SECTION 8.2 Liens

 

Create, incur, assume or suffer to exist any Lien against or on any Property now owned or hereafter acquired by the Borrower or any of the Subsidiaries, or permit any of the Subsidiaries so to do, except any one or more of the following types of Liens: (a) Liens in connection with workers’ compensation, unemployment insurance or other social security obligations (which phrase shall not be construed to refer to ERISA or the minimum funding obligations under Section 412 of the Code), (b) Liens to secure the performance of bids, tenders, letters of credit, contracts (other than contracts for the payment of Indebtedness), leases, statutory obligations, surety, customs, appeal, performance and payment bonds and other obligations of like nature, in each such case arising in the ordinary course of business, (c) mechanics’, workmen’s, carriers’, warehousemen’s, materialmen’s, landlords’ or other like Liens arising in the ordinary course of business with respect to obligations which are not due or which are being contested in good faith and by appropriate proceedings diligently conducted, (d) Liens for taxes, assessments, fees or governmental charges the payment of which is not required by Section 7.2, (e) easements, rights of way, restrictions, leases of Property to others, easements for installations of public utilities, title imperfections and restrictions, zoning ordinances and other similar encumbrances affecting Property which in the aggregate do not materially impair its use for the operation of the business of the Borrower or such Subsidiary, (f) Liens on Property of the Subsidiaries under capital leases and Liens on Property of the Subsidiaries acquired (whether as a result of purchase, capital lease, merger or other acquisition) and either existing on such Property when acquired, or created contemporaneously with or within 12 months of such acquisition to secure the payment or financing of the purchase price of such Property (including the construction, development, substantial repair, alteration or improvement thereof), and any renewals thereof, provided that such Liens attach only to the Property so purchased or acquired (including any such construction, development, substantial repair, alteration or improvement thereof) and provided further that the Indebtedness secured by such Liens is permitted by Section 8.1, (g) statutory Liens in favor of lessors arising in connection with Property leased to the Borrower or any of the Subsidiaries, (h) Liens of attachments, judgments or awards against the Borrower or any of the Subsidiaries with respect to which an appeal or proceeding for review shall be pending or a stay of execution or bond shall have been obtained, or which are otherwise being contested in good faith and by appropriate proceedings diligently conducted, and in respect of which adequate reserves shall have been established in accordance with GAAP on the books of the Borrower or such Subsidiary, (i) Liens securing Indebtedness of a Subsidiary to the Borrower or another Subsidiary, (j) Liens (other than Liens permitted by any of the foregoing clauses) arising in the ordinary course of its business which do not secure Indebtedness and do not, in the aggregate, materially detract from the value of the business of the Borrower and its Subsidiaries, taken as a whole, and (k) additional Liens securing Indebtedness of the Borrower and the Subsidiaries in an aggregate outstanding Consolidated principal amount not exceeding 10% of Tangible Net Worth.

 

SECTION 8.3 Dispositions

 

Make any Disposition, or permit any of its Subsidiaries so to do, of all or substantially all of the assets of the Borrower and the Subsidiaries on a Consolidated basis.

 

 

 

SECTION 8.4 Merger or Consolidation, Etc.

 

The Borrower will not consolidate with, be acquired by, or merge into or with any Person unless (x) immediately after giving effect thereto no Default or Event of Default shall or would exist and (y) either (i) the Borrower or (ii) a corporation organized and existing under the laws of one of the States of the United States of America shall be the survivor of such consolidation or merger, provided that if the Borrower is not the survivor, the corporation which is the survivor shall expressly assume, pursuant to an instrument executed and delivered to the Administrative Agent, and in form and substance satisfactory to the Administrative Agent, all obligations of the Borrower under the Loan Documents and the Administrative Agent shall have received such documents, opinions and certificates as it shall have reasonable requested in connection therewith.

 

SECTION 8.5 Acquisitions

 

Make any Acquisition, or permit any of the Subsidiaries so to do, except any one or more of the following: (a) Intercompany Dispositions permitted by Section 8.3 and (b) Acquisitions by the Borrower or any of the Subsidiaries (including the Caremark Acquisition), provided that immediately before and after giving effect to each such Acquisition no Default or Event of Default shall or would exist.

 

SECTION 8.6 Restricted Payments

 

Make any Restricted Payment or permit any of the Subsidiaries so to do, except any one or more of the following Restricted Payments: (a) any direct or indirect Subsidiary may make dividends or other distributions to the Borrower or to any other direct or indirect Subsidiary, and (b) the Borrower may make Restricted Payments, provided that, in the case of this clause (b), immediately before and after giving effect thereto, no Event of Default shall or would exist. Nothing in this Section 8.6 shall prohibit or restrict the declaration or payment of dividends in respect of the Series One ESOP Convertible Preferred Stock of the Borrower. 

 

SECTION 8.7 Limitation on Upstream Dividends by Subsidiaries

 

Permit or cause any of the Subsidiaries to enter into or agree, or otherwise be or become subject, to any agreement, contract or other arrangement (other than this Agreement) with any Person (each a “Restrictive Agreement”) pursuant to the terms of which (a) such Subsidiary is or would be prohibited from declaring or paying any cash dividends on any class of its stock owned directly or indirectly by the Borrower or any of the other Subsidiaries or from making any other distribution on account of any class of any such stock (herein referred to as “Upstream Dividends”), or (b) the declaration or payment of Upstream Dividends by a Subsidiary to the Borrower or another Subsidiary, on an annual or cumulative basis, is or would be otherwise limited or restricted (“Dividend Restrictions”). Notwithstanding the foregoing, nothing in this Section 8.7 shall prohibit:

 

(i) Dividend Restrictions set forth in any Restrictive Agreement in effect on the date hereof and any extensions, refinancings, renewals or replacements thereof, provided that the Dividend Restrictions in any such extensions, refinancings,

 

 

IN WITNESS WHEREOF, the parties hereto, by their respective officers thereunto duly authorized, have executed this Agreement on the date first above written.

 

CVS CORPORATION
By:	/s/ Carol A. DeNale
	Name:	Carol A. DeNale
	Title:	Vice President and Treasurer

 

 

LEHMAN BROTHERS INC.,    as Arranger
By:	/s/ Claire O’Connor
	Name:	Claire O’Connor
	Title:	Managing Director

 

 

LEHMAN COMMERCIAL PAPER INC.,    as Administrative Agent and a Lender
By:	/s/ Claire O’Connor
	Name:	Claire O’Connor
	Title:	Managing Director

 

 

MORGAN STANLEY SENIOR FUNDING, INC.,    as Arranger, Syndication Agent and a Lender
By:	/s/ Elizabeth Hendricks
	Name:	Elizabeth Hendricks
	Title:	Vice President

 

 

THE BANK OF NEW YORK, as Co-    Documentation Agent and a Lender
By:	/s/ Erin Morrissey
	Name:	Erin Morrissey
	Title:	Assistant Vice President

 

 

BANK OF AMERICA, N.A., as Co-    Documentation Agent and a Lender
By:	/s/ John Pocalyko
	Name:	John Pocalyko
	Title:	Senior Vice President

 

 

WACHOVIA BANK, NATIONAL ASSOCIATION,    as Co-Documentation Agent and a Lender
By:	/s/ Denis Waltrich
	Name:	Denis Waltrich
	Title:	Vice President

 

 

ABN AMRO Bank N.V., as a Lender
By:	/s/ Tracie Elliot
	Name:	Tracie Elliot
	Title:	Senior Vice President
By:	/s/ Thomas T. Rogers
	Name:	Thomas T. Rogers
	Title:	Managing Director

Branch Banking and Trust Company, as a Lender
By:	/s/ Eric Searls
	Name:	Eric Searls
	Title:	Assistant Vice President

HSBC Bank USA, as a Lender
By:	/s/ Michael Frawley
	Name:	Michael Frawley
	Title:	Senior Vice President

 

 

KeyBank National Association, as a Lender
By:	/s/ Marianne T. Meil
	Name:	Marianne T. Meil
	Title:	Senior Vice President

 

 

Mizuho Corporate Bank, Ltd., as a Lender
By:	/s/ Bertram H. Tang
	Name:	Bertram H. Tang
	Title:	Senior Vice President & Team Leader

 

 

SUMITOMO MITSUI BANKING    CORPORATION, as a Lender
By:	/s/ David A. Buck
	Name:	David A. Buck
	Title:	Senior Vice President

 

 

SunTrust Bank, as a Lender
By:	/s/ John N. Gregg, Jr.
	Name:	John N. Gregg, Jr.
	Title:	Managing Director

 

 

US Bank, N.A., as a Lender
By:	/s/ David J. Dannemiller
	Name:	David J. Dannemiller
	Title:	Vice President

 

 

Wells Fargo Bank, N.A., as a Lender
By:	/s/ Megan Donnelly
	Name:	Megan Donnelly
	Title:	Vice President

 

 

 

 

	[                      ], 2007
	New York, New York

 

FOR VALUE RECEIVED, the undersigned, CVS CORPORATION, a Delaware corporation (the “Borrower”), hereby promises to pay to the order of _________________________ (the “Lender”) the outstanding principal balance of the Lender’s Loan, together with interest thereon, at the rate or rates, in the amounts and at the time or times set forth in the Bridge Credit Agreement (as the same may be amended, supplemented or otherwise modified from time to time, the “Bridge Credit Agreement”), dated as of March [___], 2007, by and among the Borrower, the Lenders party thereto, Lehman Brothers Inc. and Morgan Stanley Senior Funding, Inc., as joint lead arrangers and joint bookrunners, Morgan Stanley Senior Funding, Inc., as syndication agent, The Bank of New York, Bank of America, N.A. and Wachovia Bank, National Association, as co-documentation agents, and Lehman Commercial Paper Inc., as administrative agent (in such capacity, the “Administrative Agent”), in each case at the office of the Administrative Agent located at 745 Seventh Avenue, New York, New York, or at such other place as the Administrative Agent may specify from time to time, in lawful money of the United States of America in immediately available funds.

Capitalized terms used herein that are not otherwise defined herein shall have the respective meanings ascribed thereto in the Bridge Credit Agreement.

The Loan evidenced by this Note is prepayable in the amounts, and on the dates, set forth in the Bridge Credit Agreement. This Note is one of the Notes under the Bridge Credit Agreement, and is subject to, and shall be construed in accordance with, the provisions thereof, and is entitled to the benefits set forth in the Loan Documents.

The Lender is hereby authorized to record on the schedule annexed hereto, and any continuation sheets which the Lender may attach thereto (a) the date and amount of the Loan made by the Lender, (b) the Eurodollar Interest Period for the Loan (Eurodollar Advance only) made by the Lender, (c) the Type of the Loan made by the Lender as an ABR Advance, a Eurodollar Advance, or a combination thereof, (d) the Eurodollar Rate applicable to the Loan (Eurodollar Advance only) made by the Lender and (e) the date and amount of each Conversion of the Loan made by the Lender, and each payment or prepayment of principal of, the Loan made by the Lender. The failure to so record or any error in so recording shall not affect the obligation of the Borrower to repay the Loan, together with interest thereon, as provided in the Bridge Credit Agreement.

 

Except as specifically otherwise provided in the Bridge Credit Agreement, the Borrower hereby waives presentment, demand, notice of dishonor, protest, notice of protest and all other demands, protests and notices in connection with the execution, delivery, performance, collection and enforcement of this Note.

This Note may only be amended by an instrument in writing executed pursuant to the provisions of Section 11.1 of the Bridge Credit Agreement.

	CVS CORPORATION
	By:
		Name:
		Title

 

 

Date of Loan	Type and Amount of Loan	Eurodollar Interest Period (Eurodollar Advance only)	Type of Loan (ABR or Eurodollar)	Eurodollar Rate (Eurodollar Advance only)	Date and Amount of Conversion of Loan	Date and Amount of Principal Payment or Prepayment	Notation Made by

 

 

 

 

[Date]

 

Lehman Commercial Paper Inc., as Administrative Agent

745 Seventh Avenue, 5^th Floor

New York, New York 10019

Attention: Maritza Ospina

 

Re:

Bridge Credit Agreement, dated as of March [___], 2007, by and among CVS Corporation, the Lenders party thereto, Lehman Brothers Inc. and Morgan Stanley Senior Funding, Inc., as Arrangers, Morgan Stanley Senior Funding, Inc., as Syndication Agent, The Bank of New York, Bank of America, N.A. and Wachovia Bank, National Association, as co-documentation agents, and Lehman Commercial Paper Inc., as Administrative Agent (as amended, supplemented or otherwise modified from time to time, “Bridge Credit Agreement”)

 

Capitalized terms used herein that are not otherwise defined herein shall have the respective meanings ascribed thereto in the Bridge Credit Agreement. 

 

Pursuant to Section 2.2 of the Credit Agreement, the Borrower hereby gives notice of its intention to borrow Loans in the aggregate sum of $____________ on ____________, which borrowing shall consist of the following:

 

ABR Advance or Eurodollar Advance	Amount	Eurodollar Interest Period (applicable only for a Eurodollar Advance)

The Borrower hereby represents and warrants that on the Borrowing Date set forth above, and after giving effect to the Loans requested hereby:

 

 

(a) There shall exist no Default or Event of Default.

 

(b) The representations and warranties contained in the Bridge Credit Agreement shall be true and correct, except those which are expressly specified to be made as of an earlier date.

 

The Borrower hereby instructs the Administrative Agent to deposit the proceeds of the Loans to the following account of the Borrower:

 

Account Name: Account Number Bank Name: Bank Address: ABA Number: Contact Name:

 

[Remainder of page intentionally left blank]

 

 

 

 

IN EVIDENCE of the foregoing, the undersigned has caused this Borrowing Request to be duly executed on its behalf.

 

 

 

 

 

[              ], 2007

 

The Lenders and

the Administrative Agent Referred to Below

c/o Lehman Commercial Paper Inc.,

as Administrative Agent

745 Seventh Avenue

New York, New York 10019

 

Ladies and Gentlemen:

 

I am general counsel of CVS Corporation, a Delaware corporation (the “Borrower”), and have acted as such in connection with the Bridge Credit Agreement, dated as of March [___], 2007, by and among the Borrower, the Lenders party thereto, Lehman Brothers Inc. and Morgan Stanley Senior Funding, Inc., as Arrangers, Morgan Stanley Senior Funding, Inc., as Syndication Agent, Lehman Commercial Paper Inc., as Administrative Agent, and The Bank of New York, Bank of America, N.A. and Wachovia Bank, National Association, as Co-Documentation Agents (as in effect on the date hereof, the “Bridge Credit Agreement”). Capitalized terms not otherwise defined herein shall have the meanings assigned to them in the Bridge Credit Agreement.

 

I have examined originals or copies, certified or otherwise identified to my satisfaction, of such documents, corporate records, certificates of public officials and other instruments and have conducted such other investigations of fact and law as I have deemed necessary or advisable for purposes of this opinion. In rendering my opinions set forth below, I have assumed (i) the due authorization, execution and delivery by all parties thereto (other than the Borrower) of the Bridge Credit Agreement, (ii) the authenticity of all documents submitted to me as originals and (iii) the conformity to original documents of all documents submitted to me as copies.

 

Based upon the foregoing, I am of the opinion that:

 

1.  The Borrower is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware. The Borrower has all requisite corporate power and authority to own its Property and to carry on its business as now conducted.

 

 

2.  The Borrower is qualified to do business as a foreign corporation and is in good standing in each jurisdiction in which it owns or leases real Property or in which the nature of its business requires it to be so qualified (except those jurisdictions where the failure to be so qualified or to be in good standing could not reasonably be expected to have a Material Adverse effect).

 

3.  The execution, delivery and performance by the Borrower of the Bridge Credit Agreement and the Notes are within the Borrower’s corporate powers and have been duly authorized by all necessary corporate action on the part of the Borrower.

 

4.  The execution, delivery and performance by the Borrower of the Bridge Credit Agreement and Notes do not require any action or approval on the part of the shareholders of the Borrower or any action by or in respect of, or filing with, any governmental body, agency or official under United States federal law or the Delaware General Corporation Law, and do not contravene, or constitute a default under, any provision of (i) United States federal law or the Delaware General Corporation Law, (ii) the Certificate of Incorporation or bylaws of the Borrower or (iii) any existing material mortgage, material indenture, material contract or material agreement, in each case binding on the Borrower or any Subsidiary or affecting the Property of the Borrower or any Subsidiary.

 

5.  The Bridge Credit Agreement and the Notes delivered by the Borrower on or prior to the date hereof have been duly executed and delivered by the Borrower and each constitutes the valid and binding agreement of the Borrower, in each case enforceable in accordance with their respective terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or similar laws from time to time in effect affecting the enforcement of creditors’ rights generally and to general principles of equity.

 

6.  The Borrower is not an “investment company” (as such term is defined in the United States Investment Company Act of 1940, as amended).

 

7.  To the best of my knowledge, there are no actions, suits, arbitration proceedings or claims (whether purportedly on behalf of the Borrower, any Subsidiary or otherwise) pending or threatened against the Borrower or any Subsidiary or any of their respective Properties, or maintained by the Borrower or any Subsidiary, at law or in equity, before any Governmental Authority which could reasonably be expected to have a Material Adverse effect. To the best of my knowledge, there are no proceedings pending or threatened against the Borrower or any Subsidiary (a) which call into question the validity or enforceability of, or otherwise seek to invalidate, any Loan Document or (b) which could reasonably be expected to, individually or in the aggregate, materially and adversely affect any of the transactions contemplated by any Loan Document.

 

8.  To the best of my knowledge, the Borrower is not in default under any agreement to which it is a party or by which it or any of its Property is bound the effect of which could reasonably be expected to have a Material Adverse effect.

 

 

9.  To the best of my knowledge, no provision of any judgment, decree or order, in each case binding on the Borrower or any Subsidiary or affecting the Property of the Borrower or any Subsidiary conflicts with, or requires any consent which has not already been obtained under, or would in any way prevent the execution, delivery or performance by the Borrower of the terms of, any Loan Document.

 

The foregoing opinion is subject to the following qualifications:

 

(a)  I express no opinion as to the effect (if any) of any law of any jurisdiction (except the Commonwealth of Massachusetts) in which any Lender is located which may limit the rate of interest that such Lender may charge or collect.

 

(b)  I express no opinion as to provisions in the Bridge Credit Agreement which purport to create rights of set-off in favor of participants or which provide for set-off to be made otherwise than in accordance with applicable laws.

 

(c)  I note that public policy considerations or court decisions may limit the rights of any party to obtain indemnification under the Bridge Credit Agreement.

 

I am a member of the bar of the Commonwealth of Massachusetts and the foregoing opinion is limited to the laws of the Commonwealth of Massachusetts, the federal law of the United States of America and the Delaware General Corporation Law. For purposes of paragraph 5 of this opinion, I have assumed that, with your permission and without any research or investigation, the laws of the State of New York are identical to the law of the Commonwealth of Massachusetts.

 

This opinion is rendered solely to you in connection with the above matter. This opinion may not be relied upon by you for any other purpose or relied upon by any other person without my prior written consent, except that any person that becomes a Lender in accordance with the provisions of the Bridge Credit Agreement may rely upon this opinion as if it were specifically addressed and delivered to such person on the date hereof.

 

Very truly yours,

 

 

 

 

 

 

[              ], 2007

 

The Lenders and

the Administrative Agent Referred to Below

c/o Lehman Commercial Paper Inc.,

as Administrative Agent

745 Seventh Avenue

New York, New York 10019

 

Re: CVS Corporation

 

Ladies and Gentlemen:

 

We have acted as special New York counsel to CVS Corporation, a Delaware corporation (the “Company”), in connection with the Bridge Credit Agreement, dated as of March [___], 2007, among the Company, the lenders listed on the signature pages thereof (the “Lenders”), Lehman Brothers Inc. and Morgan Stanley Senior Funding, Inc., as joint lead arrangers and joint bookrunners (in such capacity, the “Arrangers”), Morgan Stanley Senior Funding, Inc., as syndication agent (in such capacity, the “Syndication Agent”), Lehman Commercial Paper Inc., as administrative agent (in such capacity, the “Administrative Agent”), and The Bank of New York, Bank of America, N.A. and Wachovia Bank, National Association, as co-documentation agents (in such capacity, the “Co-Documentation Agents”) (as in effect on the date hereof, the “Bridge Credit Agreement”). Capitalized terms defined in the Bridge Credit Agreement and not otherwise defined herein are used herein as therein defined.

 

We have reviewed an executed copy of the Bridge Credit Agreement. In addition, we have examined originals or copies, certified or otherwise identified to our satisfaction, of such documents, corporate records, certificates of public officials and other instruments, and have conducted such other investigations of fact and law, as we have deemed necessary or advisable for purposes of this opinion.

 

Based upon the foregoing, and subject to the qualifications and assumptions set forth herein, we are of the opinion that (i) the Bridge Credit Agreement constitutes a valid and binding agreement of the Company, enforceable against the Company in accordance with its terms, and (ii) the execution, delivery and performance by the Company of the Bridge Credit Agreement (x) require no consent or other action by or in respect of, or filing with, any gov-

 

 

ernmental body, agency or official under New York State law, and (y) do not contravene, or constitute a default under, any provision of New York State law or regulation that in our experience is normally applicable to general business corporations in relation to transactions of the type contemplated by the Bridge Credit Agreement.

 

The foregoing opinions are subject to the following qualifications and assumptions:

 

(a) Our opinions are subject to the effects of applicable bankruptcy, insolvency and similar laws affecting creditors’ rights generally and equitable principles of general applicability, and the enforceability of indemnification provisions may be limited by Federal or State laws or policies underlying such laws.

 

(b) We express no opinion as to the effect (if any) of any law of any jurisdiction (except the State of New York) in which any Lender is located that may limit the rate of interest that such Lender may charge or collect.

 

(c) We express no opinion as to the effect of Section 548 of the United States Bankruptcy Code or any similar provisions of State law.

 

(d) We have assumed, with your permission and without independent investigation, that (i) the Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware, (ii) the execution, delivery and performance by the Company of the Bridge Credit Agreement are within its corporate powers and have been duly authorized by all necessary corporate and other action, and (iii) the execution, delivery and performance by the Company of the Bridge Credit Agreement (x) require no consent or other action by or in respect of, or filing with, any governmental body, agency or official under United States federal law or the Delaware General Corporation Law and (y) do not contravene, or constitute a default under, any provision of (a) United States federal law or regulation or the Delaware General Corporation Law, or (b) the certificate of incorporation or bylaws of the Company.

 

We are members of the bar of the State of New York and the foregoing opinion is limited to the laws of the State of New York.

 

This opinion is rendered solely to you in connection with the above matter. This opinion may not be relied upon by you for any other purpose or relied upon by any other person (other than an assignee permitted under Section 11.7 of the Bridge Credit Agreement) without our prior written consent.

 

Very truly yours,

 

 

 

 

 

Reference is made to the Bridge Credit Agreement, dated as of March [___], 2007 (as amended and in effect on the date hereof, the “Bridge Credit Agreement”), by and among CVS Corporation, the Lenders party thereto, Lehman Brothers Inc. and Morgan Stanley Senior Funding, Inc., as Arrangers, Morgan Stanley Senior Funding, Inc., as Syndication Agent, Lehman Commercial Paper Inc., as Administrative Agent, and The Bank of New York, Bank of America, N.A. and Wachovia Bank, National Association, as Co-Documentation Agents. Capitalized terms used herein that are not otherwise defined herein shall have the respective meanings ascribed thereto in the Bridge Credit Agreement.

 

The Assignor named below hereby sells and assigns, without recourse, to the Assignee named below, and the Assignee hereby purchases and assumes, without recourse, from the Assignor, effective as of the Assignment Date (defined below), the interests set forth below (the “Assigned Interest”) in the Assignor’s rights and obligations under the Bridge Credit Agreement, including, without limitation, the interests set forth below in the Commitment and the Loans owing to the Assignor that are outstanding on the Assignment Date, but excluding accrued interest and fees to and excluding the Assignment Date. The Assignee hereby acknowledges receipt of a copy of the Bridge Credit Agreement. From and after the Assignment Date, (i) the Assignee shall be a party to and be bound by the provisions of the Bridge Credit Agreement and, to the extent of the Assigned Interest, have the rights and obligations of a Lender under the Loan Documents and (ii) the Assignor shall, to the extent of the Assigned Interest, relinquish its rights and be released from its obligations under the Loan Documents.

 

This Assignment and Acceptance is being delivered to the Administrative Agent, together with (i) if the Assignee is a Foreign Lender, any documentation required to be delivered by the Assignee pursuant to Section 3.10(b) of the Bridge Credit Agreement, duly completed and executed by the Assignee, and (ii) if the Assignee is not already a Lender under the Bridge Credit Agreement, an Administrative Questionnaire in the form supplied by the Administrative Agent, duly completed by the Assignee. The [Assignee/Assignor]¹  shall pay the fee payable to the Administrative Agent pursuant to Section 11.7(b) of the Bridge Credit Agreement.

 

 

¹  Delete inapplicable term.

 

 

THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY, AND

CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

 

Date of Assignment:

 

Legal Name of Assignor:

 

Legal Name of Assignee:

 

Assignee’s Address for Notices:

 

Effective Date of

 

Assignment (the “Assignment Date”):

 

Commitment Assigned:

 

Principal Amount of Loans Assigned:

[SIGNATURE PAGE FOLLOWS]

 

 

The terms set forth above are hereby agreed to:

 

 

	[Name of Assignor], as Assignor
	By:
	[Name of Assignee], as Assignee
	By:

 

The undersigned hereby consent to the within assignment:

 

 

	CVS CORPORATION
	By:
	LEHMAN COMMERCIAL PAPER INC.,
	as Administrative Agent
	By:

 

 

 

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