CVS Corporation

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IN THE MA TTER OF CVS CORPORATION, ET AL.

CONSENT ORDER, ETe., f. REGARD TO ALLEGED VIOLATION OF SEe. 7 OF THE CLA YTON ACT AND SEe. 5 OF THE FEDERAL TRADE COYlMTSSION ACT Docket 3762. Complaint. Aug. 13, 1997--Decision, Aug 13, 1997 This consent order requires the respondents, among other things, to complete the divestiture of a total of 120 Revco drug stores or phannacy counters h- 114 stores in Virginia and six phaffacy counters in Binghamton, New York -- in order to restore competition. In addition, the respondents agreed to maintain the assets to be divested to preserve their viability and competitiveness pending the divestiture.

Appearances For the Commission: George Cwy, Ernest Elmore, Ann Malester and Wiliam Baer.

For the respondents: Zenon Lankowsky, in-house counsel for CVS. Jack Staph in-house counsel for Reveo. Ronan Harty, Davis Polk Wardwell New York Y. and Louis Sernoff Baker & Hostetler Washington, D.

COMPLAINT The Federal Trade Commission (" Commission ), having reason to believe that CVS Corporation, through a wholly-owned subsidiary, North Acquisition Corp. , has agreed to acquire Revco D. , Inc. , all corporations subj ect to the jurisdiction of the Commission, in violation of Section 7 of the Clayton Act, as amended, 15 U.S. e. 18 and Section 5 ofthe Federal Trade Commission Act ("FTC Act"), 15 USe. 45; and it appearing to the Commission that a proceeding in respect thereof would be in the public interest, hereby issues its complaint, stating its charges as follows: I. DEFIC\ITION I. For the purposes of this complaint MSA" means Metropolitan Statistical Area as defined by the United States Department of Commerce, Bureau ofthe Census.

Complaint 124F.TC. IT. RESPONDENTS 2. Respondent CVS Corporation ("CVS" ) is a corporation organized, existing, and doing business under and by virtue of the laws of the State of Delawarc, with its offce and principal place of business located at One CVS Drive, Woonsocket, Rhode Island. 3. Respondent Revco D. , Inc. ("Revco ) is a corporation organized, existing, and doing business under and by virtue of the laws of the State of Delaware, with its offcc and principal place of business located at 1925 Enterprise Parkway, Twinsburg, Ohio. 4. For purposes of this proceeding, respondents are, and at all times relevant herein have been, engaged in commerce as commerce" is defined in Section 1 of the Clayton Act, as amended 15 U.S. C. 12 , and are corporations whose businesses are in or affecting commerce as "commerce" is defined in Section 4 of the FTC Act, as amended, 15 U. e. 44.

II THE ACQL SIT10C\ 5. On February 6, 1997, CVS , through a wholly-owned subsidiary, North Acquisition Corp. , entered into an Agreement and Plan of Merger to acquire and mcrge with Revco ("the Acquisition IV. THE RELEV AKT MARKTS 6. For purposes of this complaint, the relevant line of commerce in which to analyze the effect of the Acquisition is the retail sale of phannacy services to third-party payors such as insurance carrers health maintenance organizations, preferred provider organizations and corporate employers. Phannacy services refers to the filling of prcscription drugs and related phannacy service benefits. Third-party payors offer retail phannacy service benefits to their bcncficiaries typically through intermediaries known as phannacy benefit management finns or PBMs, who create and administer retail pharmacy networks on behalf of third-party payors, so that the beneficiaries of these third-party payors may go to any pharmacy participating in the retail phannacy network to have their prescriptions filled.

7. For purposes of this complaint, the relevant sections of the country in which to analyze the effect ofthe Acquisition are: a. The State of Virginia; and b. The Binghamton, New York MSA.

CYS CORFORATJOI\, ET AL. 163 161 Dccision and Order 8. The relevant markets set forth in paragraphs six and seven are highly concentrated, whether measured by Herfindahl-Hirschmann Indices ("HHI") or two- finn and four-finn concentration ratios. 9. Entry into the relevant markets is diffcult or unlikely to occur at a suffcient scale to deter or counteract the effect ofthe Acquisition described in paragraph five.

10. CYS and Revco are actual competitors in the relevant markets.

V. EFFECT OF THE ACQUlSITO;- II. Thc effect of the Acquisition may be substantially to lessen competition and to tend to create a monopoly in the relevant markets in violation of Section 7 of the Clayton Act, as amended, 15 U.S. , and Section 5 of the Federal Trade Commission Act, 15 U. , in the following ways, among others:

a. By eliminating direct actual competition between CYS and Rcvco in the relevant markets;

b. By incrcasing thc likelihood that CYS wi1 unilaterally exercise market power in the relevant markets; and c. By increasing the likelihood of collusion in the relevant markets.

12. All of the above increase the likelihood that finns in the relevant markets will increase prices and restrict output both in the ncar future and in the long tenn.

VI. VIOLATIOC\S CHARGED 13. The acquisition agreement described in paragraph five constitutes a violation of Section 5 of the FTC Act, as amended, 15 e. 45.

14. The Acquisition described in paragraph five, if consummated would constitute a violation of Section 7 of the Clayton Act, as amended, 15 U. e. 18 , and Section 5 of the FTC Act, as amended 15 U.S. e. 45.

DECISIO'\ AND ORDER The Federal Trade Commission ("Commission ), having initiated an investigation of the proposed acquisition of Revco D. , Inc, Revco ) by CYS Corporation ("CYS"), and the respondents having been furnished thereafter with a copy of a draft of complaint that the Decision and Order 124 FTC Bureau of Competition presented to the Commission for its consideration and which, if issued by the Commission, would charge respondents with a violation of Section 7 of the Clayton Act, as amended, 15 U.S. e. 18 , and Section 5 of the Federal Trade Commission Act, as amended, 15 U. e. 45; and Respondents, their attorneys, and counsel for the Commission having thereafter executed an agreement containing a consent ordcr an admission by the respondents of all the jurisdictional facts set forth in the aforesaid draft of complaint, a statement that the signing of said agreement is for settlement purposes only and does not constitute an admission by respondents that the Jaw has been violated as alleged in such complaint, or that the facts as alleged in such complaint, other than jurisdictional facts, are true, and waivers and other provisions as required by the Commission s rules; and The Commission having thereafter considered the matter and having detennined that it had reason to believe that the respondents have violated the said Acts, and that a complaint should issue stating its charges in that respect, and having thereupon accepted the executed consent agrccmcnt and placed such agreement on thc public record for a period of sixty (60) days, now in further confonnity with the procedure described in Section 2.34 of its Rules, the Commission hereby issues its complaint, makes thc following jurisdictional findings and enters the following order:

I, Respondent CVS Corporation is a corporation organized existing, and doing business under and by virtue of the laws of the State of Delaware, with its offce and principal place of business located at One CVS Drive, Woonsocket, Rhode Island. 2. Respondent Rcvco D. , Inc. is a corporation organized existing, and doing business under and by virtue of the Jaws of the State of Delaware, with its offce and principal place of business located at 1925 Enterprise Parkway, Twinsburg, Ohio. 3. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of the respondents, and the proceeding is in the public interest.

ORDER it is ordered That, as used in this order, the following definitions shall apply:

CYS CORPORATION, ET AL. 165 161 Decision and Order A. CVS" means CVS Corporation, its directors, offcers employees, agents and representatives, predecessors, successors, and assigns; its subsidiaries, divisions, groups, and affliates controlled directly or indirectly, by CVS , and the respective directors, offcers employees, agents and representatives, successors, and assigns of each. CVS, after consummation of the Acquisition, includes Revco. B. Revco means Revco D. , Inc. , its directors, offcers employees, agcnts and representatives, predecessors, successors, and assigns; its subsidiaries, divisions, groups, and affliates controlled directly or indirectly, by Revco, and the respective directors, officers employees, agents and representatives, successors, and assigns of each.

e. Respondents mean CVS and Revco.

D. Commission means the Federal Trade Commission. E. Acquisition means CVS's proposed acquisition of all of the outstanding voting securities of and merger with Revco pursuant to the Agreement and Plan of Merger dated February 6 1997. F. Penney means le. Penney Company, Inc., a corporation organized, existing and doing business under and by virtue of the laws of thc State of Delaware, with its principal place of business located at 6501 Legacy Drive, PIano, Texas. G. Eckerd" means Eckerd Corporation, an affiliate of J. Penney. Eckerd is a corporation organized, existing and doing business under and by virtue of the laws of the State of Delaware with its principal place of business loeatcd at 8333 Bryan Dairy Road Largo, Florida.

H. Medicine Shoppe means Medicine Shoppe International Inc., a corporation organized, existing, and doing business under and by virtue of the laws of the State of Delaware, with its executive offces located at 1100 North Lindbergh, St. Louis, Missouri. Pharmacy Operations means Phannacy Operations, Inc. , a wholly-owned subsidiary of Medicine Shoppe. Phannacy Operations is a corporation organized, existing, and doing business under and by virtue of the laws of thc State of Delawarc, with offices located at 1100 North Lindbergh, St. Louis, Missouri. J. Acquirer(s) " means Eckerd, Medicine Shoppe or Phannacy Operations, and/or the entity or cntities approved by the Commission to acquire: the Virginia Assets to be Divested pursuant to paragraph II ,A. 1 of this order; the Revco Phannacy Assets pursuant to paragraph ILB. l or the New York Asscts to be Divested pursuant to ), Decision and Order 124 FTC. paragraph ILB.2 ofthis order; the Revco Virginia Assets pursuant to paragraph IILA of this order; or the CVS Binghamton Assets pursuant to paragraph IILB of this order. K. Landlord consents means all consents irom all landlords that are necessar to effect the complete transfer to the Acquirer(s) of the assets required to be divested pursuant to this order. L. MSA" means Metropolitan Statistical Area, which refers to gcographic areas as defined by the United States Department of Commerce, Bureau of the Census.

M. Retail drug store means a full-line retail store that carres a wide variety of prescription and nonprescription medicines and miscellaneous items, including, but not limited to, drugs phannaceuticals, patent medicines, sundries, tobacco products, and other merchandise.

N, Retail drug store assets means all assets constituting the retail drug store business, excluding those assets pertaining to either the Revco or CVS trade name, trade drcss, trade marks and service marks, and including, but not limited to: I. Leases and properties;

2. Zoning approvals and registrations;

3. Books, records, reports, dockets and lists relating to the retail drug store business;

4. Retaij drug store inventory and storage capacity; 5. All records of stock keeping units ("SKUs e.g, all fonns package sizes and other units in which prescription drugs are sold and which are used in records of sales;

6. Lists of all customers (including third party insurers) and all files of names, addresses, and telephone numbers of the individual customer contacts, and the unit and dollar amounts of sales, by product, to each customer;

7. All phannacy files, documents, instructions, papcrs, books computer files and records and all other records in any media relating to the retail drug store business;

8, All rights, titles and interests in and to the contracts entered into in thc ordinary course of business with customers (together with associated bid and perfonnance bonds), suppliers sales representatives, distributors, agents, personal property lessors personal property lessees, licensors, licensees, consignors and consignccs, and all names of prescription drug manufacturers and distributors under contract with Revco, at the Acquirer(s)' option; CVS CORPORATION, ET AL. 167 161 Decision and Order 9. All machinery, fixtures, equipment, vehicles, transportation facilities, furniture, tools and other tangible personal property; and 10. Goodwill, tangible and intangible, utilized in retail drug stores.

O. Revco Pharmacy Business means Revco s business of selling phannacy services including prescription drugs at any of the retail drug stores listed in Schedule A of this order, but does not include Revco s business of selling other products in those retail drug stores. P. Revco Pharmacy Assets means all assets constituting the Revco Phannacy Business, excluding those assets pertaining to the Revco trade names, trade dress, trade marks and service marks, and including but not Jimited to:

1. Leases, at Medicine Shoppe s option;

2. Zoning approvals and registrations, at Medicine Shoppe option;

3. Books, records, manuals, and operations reports, relating to the Revco Phannacy Business;

4. Inventory instructions, or, at Medicine Shoppe s option, Jists of SKUs all fonns, package sizes and other units in which prescription drugs are sold and which are used in records of sales and inventories;

5. Lists of all prescription drug customers, including but not limited to third part insurers, including all files of names, addresses and telephone numbers ofthe individual customer contacts, the unit and dollar amounts of sales, by product, to each customer, and store profit and loss statement(s); and 6. Goodwill, tangible and intangible, utilized in the sale of prescription drugs.

Q. Virginia Assets to be Divested" means the Revco Retail Drug Store Assets described in Schedule B of this order. R. Revco Virginia Assets means all of Revco s Retail Drug Store Assets located in the State of Virginia. S. New York Assets to be Divested" means the Revco Retail Drug Store Assets described in Schedule A of this order. T. CVS Binghamton Assets means all of the CVS Retail Drug Store Assets located in the Binghamton, New York MSA U. Eckerd Agreement means the Purchase and Sale Agreement between Eckerd and CVS executed on May 16 , 1997 , for the Decision and Order 124 FTC. divestiture by respondents to Eckerd of the Virginia Assets to be Divested.

V. Medicine Shoppe Agreement" means the Purchase and Sale Agreement between Phannacy Operations or Medicine Shoppe and CVS executed on May 21 , 1997, for the divestiture by respondents to Medicine Shoppe of the Revco Phannacy Assets to be Divested. II.

It is further ordered That:

A. Respondents shall divest, absolutely and in good faith, the Virginia Assets to be Divested to:

I. Eckerd, in aecordancc with the Eckerd Agreement dated May 1997, no later than a. Ten (10) days after the date on which this order becomes final b. Four (4) months after acceptance of the Agreement Containing Consent Order by the Commission whichever is later; or 2. An Acquirer that receives the prior approval ofthe Commission and only in a manner that receives the prior approval of the Commission, within three (3) months after thc date on which this order becomes final;

provided that the closing date of the Eckerd Agreement or any other agreement pursuant to which the Virginia Assets to be Divested are divested to an Acquirer shall not occur until after respondents have obtained all required Landlord Consents.

B. Respondents shall divest, absolutely and in good faith, either: 1. The Revco Phannacy Assets to Medicine Shoppe or Phannacy Operations in accordance with the Medicine Shoppe Agrccmcnt May , 1997, no later than a. Ten (10) days after the date on which this order becomes final b. Four (4) months after acceptancc of the Agrecment Containing Consent Order by the Commission whichever is later; or CVS CORPORA non, ET AL 169 161 Decision and Order 2. The New York Assets to be Divested to an Acquirer that receives the prior approval of thc Commission and only in a manner that receives the prior approval of the Commission, within three (3) months after thc date on which this order becomes final; provided that the closing date of thc Medicine Shoppe Agreement or any other agreement pursuant to which the New York Assets to be Divested are divested to an Acquirer shall not occur until after respondents have obtained all required landlord consents. e. The purpose of the divcstitures described herein is to ensure the continued operation of the divestiture assets as assets engaged in the retail sale of phannacy services to third party payors, and to remedy any lesscning of competition resulting from the Acquisition as alleged in the Commission s complaint. It is further ordered That:

A. If respondents fail to divest absolutely and in good faith the Virginia Assets to be Divested pursuant to paragraph ILA of this order, the Commission may appoint a trustee to divest the Revco Virginia Assets.

B. If respondents fail to divest absolutely and in good faith either the New York Assets to be Divested or the Revco Phannacy Assets pursuant to paragraph ILB of this order, the Commission may appoint a trustee to divest the CVS Binghamton Assets. e. In the event that the Commission or the Attorney General brings an action pursuant to Section 5(1) of the Federal Trade Commission Act, IS U.S.e. 45(1), or any other statute enforced by the Commission, respondents shall consent to the appointment of a trustee in such action. Neither the appointment of a trustee nor a decision not to appoint a trustce under this paragraph shall preclude thc Commission or the Attorney General from seeking civil penalties or any other relief available to it, including a court-appointed trustee pursuant to Section 5(1) of the Federal Trade Commission Act, or any other statute enforced by the Commission, for any failure by respondents to comply with this ordcr.

D. The trustee appointed to accomplish any divestiture pursuant to paragraphs IILA or II.B may be the same person. If a trustee is appointcd by the Commission or a court pursuant to paragraphs Il. or IILB ofthis order, respondents shall consent to the following tenns Decision and Order 124F.TC. and conditions regarding the trustee s powers, duties, authority, and responsibilities:

1. The Commission shall select the trustec(s), subject to the consent of respondents, which consent shall not be unreasonably withheld. The trustee shall be a person with experience and expertise in acquisitions and divestitures. Ifrespondents have not opposed, in writing, including the reasons for opposing, the selection of any proposed trustee within ten (10) days after notice by the staff of the Commission to respondents of the identity of any proposed trustee respondents shall be deemed to have consented to the selection ofthe proposed trustee.

2. Subject to the prior approval of the Commission, the trustee shall have the exclusive power and authority to accomplish the divestitures described in paragraphs III.A and II. 3. Within ten (10) days after appointment of the trustee respondent shall execute a trust agreement that, subject to the prior approval of the Commission, and in the case of a court-appointed trustee, of the court, transfers to the trustee all rights and powers necessary to pennit the trustee to effect each divestiture required by this order.

4. The trustee shall have twelve (12) months ftom the date the Commission approves the trust agreement described in paragraph III.D.3 to accomplish each divestiture, which shall be subject to the prior approval of the Commission. If, however, at the end of the twelve (12) month period, the trustee has submitted a plan for each divestiture required by this order or believes that each divestiture required by this order can be achieved within a reasonable time, then that divestitue period may be extended by the Commission, or, in the case of a court-appointed trustee, by the court; provided, however, the Commission may extcnd the period for each divestiture only two (2) times.

5. The trustce shall have full and complete access to the personnel, books, records and facilities related to the Revco Virginia Assets and the CVS Binghamton Assets or to any other relevant infonnation, as the trustee may request. Respondents shall develop such financial or other infonnation as such trustec may request and shall cooperate with the trustec. Respondents shall take no action to interfere with or impede the trustee s accomplishment of each divestitue. Any delays in any divestiture caused by respondents shall extcnd the time for that divestiture under this paragraph in an amount CVS CORPORATIO:-, ET AL 171 161 Decision and Order equal to the delay, as dctennined by the Commission or, for a court -appointed trustee, by the court.

6. The trustee shall use his or her best efforts to negotiate the most favorable price and tenns available in each contract that is submitted to the Commission, subject to respondents' absolute and unconditional obligation to make each divestiture required by this order at no minimum price. Each divestiture shall be made in the manner consistent with the tenns of this order; provided, however, if the trustee receives bona fide offers from more than one acquiring entity, and if the Commission detennines to approve more than one such acquiring entity, the trustee shall divest to the acquiring entity or entities selected by respondents from among those approved by the Commission.

7. The trustee shall serve, without bond or other security, at the cost and expense ofrcspondents, on such reasonable and customary tenns and conditions as the Commission or a court may set. The trustee shall have the authority to employ, at the cost and expense of respondents, and at reasonable fees, such consultants, accountants attorneys, investment bankers, business brokers, appraisers, and other representatives and assistants as are necessary to carr out the trustee s duties and responsibilities. The trustee shall account for all monies derived from each divestiture and all expenses incurred. After approval by the Commission and, in the case of a court-appointed trustee, by the court, of the account of the trustee, including fees for his or her services, all remaining monies shall be paid at the direction of the respondents, and the trustee s power shall be tenninated. The trustee s compensation shall be based at least in significant part on a commission arrangement contingent on the trustee s accomplishing each divestiture required by paragraphs IILA and II. 8. Respondents shall indemnify the trustee and hold the trustee hannless against any losses, claims, damages, liabilities, or expenses arising out of, or in connection with, the perfonnance of the trustee duties, including all reasonable fees of counsel and other expenses incurred in connection with the preparation for, or defense of any claim, whether or not resulting in any liability, except to the extent that such liabilities, losses, damages, claims, or expenses result from misfeasance, gross negligence, willful or wanton acts, or bad faith by the trustee.

172 FEDERAL TRADE COMMISSION DECISIO:-S Decision and Order 124 FTC. 9. If the trustee ceases to act or fails to act diligently, a substitute trustee shall be appointed in the same manner as provided in this paragraph.

10. The Commission or, in the case of a court-appointed trustee the court, may on its own initiative or at the request of the trustee issue such additional orders or directions as may be reasonably necessary or appropriate to accomplish each divestiture required by this order.

II. The trustee shall also divest such additional ancillary assets and businesses and effect such arrangcments as are necessary to assure the marketability and the viability and competitiveness of the Revco Virginia Assets and the CVS Binghamton Assets. 12. The trustee shall have no obligation or authority to operate or maintain the Revco Virginia Assets or the CVS Binghamton Assets. 13. The trustee shall report in writing to respondents and the Commission every sixty (60) days concerning the trustee s efforts to accomplish each divestiture required by this order. IV.

It is further ordered That:

A Pending thc divestiture of the Virginia Asscts to be Divested pursuant to paragraph II.A and cither the Revco Phannaey Assets or the New York Assets to be Divested pursuant to paragraph II.B, the Revco Virginia Assets pursuant to paragraph III.A, or the CVS Binghamton Asscts pursuant to paragraph III.B , respondents shall take such actions as are necessary to maintain the viability, marketability and competitiveness of all of these assets, and to prevent the destruction, removal, wasting, detcrioration, or impainnent of any of these assets except for ordinary wear and tear. B. Respondents shall comply with all tenns of thc Asset Maintenance Agrecment, attached to this order and made a part hereof as Appendix I. The Asset Maintenance Agreement shall continue in effect until such time as all the divestitures required by this order have been accomplished.

It is further ordered That within thirty (30) days after the date this order becomes final and every thirty (30) days thereafter until respondents have fully complied with the provisions of paragraphs II CVS CORPORA non, ET AL. 173 161 Decision and Order and II of this order, respondents shall submit to the Commission verified written reports setting forth in detail the manner and fonn in which it intends to comply, is complying, and has complied with the requirements of this order. Respondents shall include in their compliance rcports, among other things that are required from time to time, a full description of the efforts being made to comply with paragraphs II and II of the order, including a description of all substantive contacts or negotiations for each divestiture and the identity of all parties contacted. Respondents shall include in their compliance reports copies of all written communications to and from such parties, a1l internal memoranda, and all reports and recommendations concerning each divestiture. VI.

It is further ordered That respondents shall notify the Commission at least thirt (30) days prior to any proposed change in the corporate respondents such as dissolution, assigrent, sale resulting in the emergence of a successor corporation, or the creation or dissolution of subsidiaries or any other change in the corporation that may affect compliance obligations arising out of the order. VII.

It is further ordered That, for the purpose of detennining or securing compliance with this order, respondents shall pennit any duly authorized representative of the Commission: A. Access, during office hours and in the presence of counsel, to inspect and copy all books, ledgers, accounts, correspondence memoranda and other records and documents in the possession or under the control of respondents relating to any matters contained in this order; and B. upon five days' notice to respondents and without restraint or interfcrence from respondents, to interview offcers, directors, or employees of respondents.

SCHEDULE A REVCO NEW YORK STORE LISTING Reveo Store Number 2000 Revco Store 1\;-number 2002 523 Hooper Road 133 Front Street Endwell, NY 13760 Vestal, NY 13850 174 FEDERAL TRADE COMMISSIO:- DECISIONS Decision and Order 124 FTC. Revco Store Number 2003 Revco Store Number 2005 4700 Vestal Parkway East 1318 Front Street Vestal, NY Binghamton, 1\)' 13901 Revco Store :-number 2007 Revco Store Number 2020 1183-85 Vestal Avenue 3 I 0 Exchange Street Binghamton, NY 13903 Endicott :-Y 13760 SCHEDULE B REVCO VIRGINIA STORE LISTING Revco Store :-number 842 Revco Store Number 2380 Interstate Rt 40 & 46 4408 West Hundred Road Blackstone, VA 23 824 Chester, VA 2383 I Revco Store Kumber I 160 Revco Store Number 389 Colonial Square Shopping Center 220 Market Drive 12 Colonial Square Emporia, VA 23847 Colonial Heights VA 23834 Revco Store Number 4513Rcvco Store Number 972 Patrick Henr CenterUniversity Square Shopping Center 1506 S. Main Street20825 Woodpecker Road Ettick, VA 23803 Farmville, VA 23901 Revco Store Kumber 4001Revco Store Number 998 I IS Brunswick Square Ct.5207 Plaza Drive Lawrenceville, VA 23868Hopewell, VA 23860 Revco Store Kumber 2519Revco Store Number 1473 7199 Stonewall Pkwy.Tanbark Plaza Shopping Center Mechanicsville, VA 23 I I I74 Tanbark Plaza Lovingston, VA 22949 Revco Store Number 2522 Revco Store )Jumber 2517 Atlee Square Shopping Center Rockwood Square 9159 Atlee Road 10163 Hull Street Road Mechanicsville, VA 23116 MidIothian, VA 231 13 Revco Store )Jumber 187 Reveo Store Number 4504 4310 Westgate Drive 2733 S. Crater Road Petersburg, VA 23803 Petersburg, VA 23805 Revco Store Number 2754 Revco Store Number 2755 9 I 00 Pocahontas Trail New Kent Crossing Shopping Center Providence Forgo, VA 23 I 40 2587 Kew Kent Hwy. Quinton, VA 23141 Revco Store :-umher 383 Revco Store Kumber 390 12000 Ridgefield Pkwy. 6401 Jalme Road Richmond, VA 23233 Richmond, VA 23225 CVS CORPORATION, ET AL. 175 Decision and Order161 Revco Store Number 505Revco Store Number 398 7127 Staples MIl Road2805 West Broad SITeet Richmond, V A 23228Richmond, VA 23230 Revco Store Number 551Revco Store Number 538 326 East Broad StreetMeadowwood Square Richmond, VA 2321951 16 Richmond Hemico Turnpike Richmond, VA 23227 Revco Store :-number 1158 Revco Store Number 553 Glen Lea Shopping Center Cary Vilage Shopping Center 3824 Mechanicsville Pike 3142 West Cary SITee! Richmond, VA 23223 Richmond, VA 23221 Revco Store Number 1319 Revco Store Number 1313 Willow Place Shopping Center 6011 Nine Mile 5440 West Broad Richmond, VA 23223 Richmond, VA 23230 Revco Store Number 2551 Revco Store Number 1436 Robious Hall Shopping Center 2917 North Avenue 10030 Robious Road Richmond. VA 23222 Richmond, VA 23235 Revco Store Number 4019 Revco Store Number 439 I Hungarybrook Shopping Center Irongate Village Shopping Center 1292 Concord Avenue 6423 Iron Bridge Road Richmond, VA 23228 Richmond, VA 23234 Revco Store 0Jumber 4578 Revco Store Number 4585 Quicoccasin Station 1102 Courthouse Road 8920 Quioccasm Road RJchmond, VA 23236 Richmond, VA 22560 Revco Store Number 4000 Revco Store Number 4562 West Porn! Square While Oak Shopping Center 100 Winter SITeet Unit 105 1840 Tappahannock Blvd. West Point, V A 23181 Tappahannock, VA 22560 Revco Store Number 194 Revco Store Number 4387 1367 Kempsville Road Pantops Center Chesapeake, VA 23320 540 Pantops Center Charlottesville, VA 22911 Reveo Store Number 350 Rcvco Store Number 313 4321 Indian RJVer Road Liberty Plaza Chesapeake, VA 23325 1800 Liberty SITee! Chesapeake, V A 23324 Reveo Store Number 1186 Revco Store Number 1140 Wilson Village Shopping Center Poplar Hill Plaza 328 Battlefield Blvd. S. 3138 Western Branch Blvd. Chesapeake, VA 23320 Chesapeake, VA 23321 Decision and Order 124FTC Revco Store Number 4003 Reveo Store Number 4020 Las Gaviotas Shopping Center Taylor Road Plaza 1245 Cedar Road, Suite B 3325 Taylor Road, Suite 118 Chesapeake, VA 23320 Chesapeake, VA 23321 Revco Store :-number 4420 Reveo Store Number 4530 Centersvi1e Crossing Shopping Center Woodford Square Shopping Center 413 Centerville Turnpike 701-D North Battlefield Chesapeake, VA 23320 Chesapeake, VA 23320 Reveo Store Number 4552 Revco Store Number 4607 2313 S. Military Hwy. 3005 Old Mill Road Chesapeake, VA 23320 Chesapeake, VA 23323 Reveo Store Number 4541 Reveo Store Number 1268 Southhampton Shopping Center Heritage Square Shopping Center 1332 Annory Drive 4324 Geo. Washington Memorial Franklin, VA 23851 Highway Grafton, V A 23692 Revco Store Number 426 Revco Store Number 1073 Kecoughtan Shopping Center 1955 E. Pembroke Avenue 3857 Kecoughtan Road Hampton, VA 23663 Hampton, VA 23669 Reveo Store Number 1384 Revco Store Number 4326 41 I I West Mercury Blvd. 2305 Kecoughtan Road Hampton, VA 23666 Hampton, VA 23661 Revco Store Number 4679 Revco Store Kumber 2741 Big Bethel Road and Hampton Road Yark River Shopping Center Parkway 2318 York Crs. Drive Pob 1106 Hampton, VA 23666 Hayes, VA 23072 Reveo Store Number 1096Reveo Store Number 621 Newmarket Plaza Shopping CenterNewport Square Shopping Center 605 Newmarket Drive Newrnarket846 Newport Square Shop Center PlazaNewport News, VA 23601 :-ewport News, VA 23605 Roveo Store :-number 1613Revco Store Number 1143 13271 Warwick Blvd.14865 Warwick Blvd.

Newport :-ews, V A 23602Newport News, V A 23608 Revco Store :-number 4022Reveo Store Number 2589 Richneck CenterSoutheast Shopping Center 12917 Jefferson Avenue2305 Jefferson Avenue Newport :-ews, VA 23602Newport News, VA 23607 CVS CORPORATION, ET AL. 177 161 Decision and Order Reveo Store Number 4501 Revco Store Number 117 1045 I Jefferson Avenue Downtown Plaza Shopping Center Newport News, VA 23605 32 Downtown Plaza SIC :-orfolk, VA 235 I 0 Reveo Store Number 43 I Reveo Store Number 493 Southern Shopping Center Midtown Shopping Center No. 2 Southern SIC 7628 Granby Street Norfolk, VA 23505 Norfolk, VA 23505 Revco Store Kumber 500 Reveo Store Number 550 Colley Village Shopping Ccuter 6204-H N. Military Hwy. 2301 Colley Avenue Norfolk, VA 23518 KorfoIk, VA 23517 Revco Store Number 595 Revco Store :-number 703 742-A West 21st Street Scwells Point Shopping Center Norfolk, VA 23517 2330 Azalea Garden Road Norfolk, VA 23513 Revco Store Number 715 Revco Store :-number 882 I 101 East Little Creek Road Ocean View Shopping Center Norfolk, VA 23518 163 yVest Ocean View Avenue Norfolk, VA 23503 Revco Store ?'number 1029 Revco Store Number 1068 The Monticello BmIding Suburban Park Shopping Center 258 Granby Street 7526 Granby Street Norfolk. VA 23510 Norfolk, VA 23505 Revco Store Number 1097 Revco Store Number 2375 1853 East Little Creek Road 3212 Tidewater Road Norfolk, VA 23518 :-orfoIk, VA 23509 Revco Store )Jumbcr 2574 Revco Store Number 4009 890 Kempsville Road 475 Wythe Creek Road Norfolk, VA 23502 Poquoson, VA 23662 Revco Store Kumber 750 Revco Store Number 871 5788 Churehland Blvd. 3 I 16 Hrgh Street Portsmouth, VA 23703 Portsmouth, VA 23707 Revco Store Number 106 I Reveo Store Kumber 1 I 3531 Airline Blvd. 326 High Street Portsmouth, VA 23701 Portsmouth, VA 23704 Reveo Store :-number 2704 Revco Store Number 4327 2004 Victory Blvd. Manor Vilage Shopping Center Portsmouth. VA 23702 6219 Portsmouth Blvd. Portsmouth, VA 23701 Decision and Order 124 FTC Revco Store Number 835 Revco Store Number I I 12 Smithfield Plaza Shopping Center Holland Plaza Shopping Center 1280 Smithfield Plaza 1240 Holland Road Smithfield, VA 23430 Suffolk, Va 23434 Revco Store :-number 1376 Revco Store Number 4385 57 I East Constance Road Suffolk Shopping Center Suffolk, VA 23434 1405 North Main Street Suffolk, V A 23434 Revco Store Number 100 Revco Store Number 109 1949 Lynnhaven Parkway 422 I Pleasant Valley Road Virginia Beach, VA 23456 Virginia Beach, VA 23464 Revco Store Kumber 113 Revco Store Number I 16 1577 General Booth Blvd. Linkorn Shopping Center Virginia Beach. V A 23454 980 Laskin Road Virginia Beach, VA 23451 Revco Store Number 34 I Revco Store Number 344 6531 College Park Square 3333 Virginia Beach Blvd. Virginia Bcach, VA 23464 Virginia Beach, VA 23452 Revco Store Number 374 Revco Store Number 440 Fairfield Shopping Center Holland Shopping Center 5232 Fairfield SIC 4324 Holland Road Virginia Beach, VA 23464 Virginia Beach, VA 23452 Revco Store Number 464 Revco Store Number 603 Kemps River Crossing Hilltop :-orth Shopping Center 1309 Fordham Drive 750 Hilltop North SIC Virginia Beach, V A 23464 Virginia Beach, VA 2345 I Revco Store :-number 787 Revco Store :-number 881 1075 Independence Blvd. Birchwood Mall Vlfginia Beach. VA 23455 3756 Virginia Beach Blvd. Virginia Beach, VA 23452 Revco Store Number 883 Revco Store Number 1188 880 S. Military Hwy. Pembroke Meadows Shopping Center Virginia Beach, VA 23464 748 Independence Blvd. Virginia Beach, VA 23455 Revco Store Kumber I 183 Revco Store Kumber I I 10 5610 Princess Anne Road 2356-C Virginia Beach Blvd. V virginia Beach, V A 23462 Virgima Beach, VA 23454 Revco Store :-number 1200 Revco Store Number 1396 3600 South Plaza Trail Great :-eek Shopping Center Virginia Beach, VA 23452 1216 Great Keck Village SIC Virgima Beach, V A 23454 CVS CORFORATION, ET AL 179 161 Decision and Order Revco Store Number 1656 Revco Store Kumber 2725 Virginia Beach Blvd. and Dorset Street 2005 Sandbridge Road #101 Virginia Beach, VA 23462 Virginia Beach, VA 23456 Revco Store :-number 4406 Rcvco Store Number 45542 1012 Fallbrook Bend Shipp s Corner Shopping Center Virginia Beach, VA 23455 3208 Holland Road, Suite I I Virginia Beach, VA 23456 Revco Store Number 4555 Reveo Store Number 4599 Birdneck Shopping Center Lake Shores Plaza Shopping Center 1077 Virginia Beach Blvd. 5193 Shore Drive #109 Virginia Beach, VA 2345 I Virginia Beach, VA 23455 Revco Store Kumber 382 Reveo Store :-number 1147 Governor s Green Shopping Center James-York Shopping Center 451 I-K John Tyler Hwy. 70 I Merrimac Trail Wiliamsburg, VA 23185 Williamsburg, VA 23 I 85 Revco Store Number 2573 Reveo Store Number 1625 124 Waller Mill Road Shoppcs at Yorktown Williamsburg, VA 23185 US 17 & Goodwin K eek Road York, VA 23692 APPENDIX I ASSET MADiTEJ\ANCE AGREEMENT This Asset Maintenance Agreement ("Agrcement") is by and between CVS Corporation (" CVS" ), a corporation organized existing, and doing business under and by virtue of the laws of the State of Delawarc, with its offce and principal place of business located at One CVS Drive, Woonsocket, Rhode Island; Revco D. Inc. ("Revco ), a corporation organized, existing, and doing business under and by virtue of the laws of the State of Delaware, with its offce and principal place of business located at 1925 Enterprise Parkway, Twinsburg, Ohio (collectively "proposed respondents and the Federal Trade Commission ("Commission ), an independent agency of the United States Goverrent, established under the Federal Trade Commission Act of 1914 , 15 U. e. 41 et seq. (collectively "the Parties PREMISES Whereas CVS has proposed to acquire all of the outstanding voting securities of and to merge (through a wholly-owned Decision and Order 124 r.Te. subsidiar) with Revco D. , Inc., pursuant to an agreement and plan of merger dated February 6 1997 ("the proposed Acquisition ); and Whereas the Commission is now investigating the proposed Acquisition to detennine if it would violate any of the statutes the Commission enforces; and Whereas if the Commission accepts the attached Agreement Containing Consent Order ("consent order ), the Commission is required to place it on the public record for a period of sixty (60) days for public comment and may subsequently either withdraw such acceptance or issue and serve its complaint and its decision and final order in disposition of the proceeding pursuant to the provisions of Section 2. 34 of the Commission s Rules; and Whereas the Commission is concerned that if an agreement is not reached preserving the status quo ante of the Revco Virginia Assets the Virginia Assets to be Divested, the Revco Phannacy Assets, the Ncw York Asscts to be Divested, and the CVS Binghamton Assets as described in the attached consent order (hereinafter sometimes referred to as "Assets ) during the period prior to their divestiture any divestiture resulting ftom any administrative proceeding challenging the legality of the Acquisition might not be possible, or migbt produce a less than effective remedy; and Whereas the Commission is concerned that prior to any divestitures to the Acquirer(s) approved by the Commission, it may be necessary to preserve the continued viability and competitiveness of the Assets; and Whereas the purpose ofthis Agreement and of the consent order is to preserve the Assets pending the divestitures to the Acquirer(s) approved by the Commission under the terms ofthc order, in order to remedy any anti competitive effects of the proposed Acquisition; and Whereas proposed respondents entering into this Agreement shall in no way be construed as an admission by proposed respondents that the proposed Acquisition is i1ega!; and Whereas proposed respondents understand that no act or transaction contemplated by this Agreement shall be deemed immune or excmpt from the provisions of the antitrust laws or the Federal Trade Commission Act by reason of anything contained in this Agreement.

Now, therefore in consideration of the Commission s agreement that at the time it accepts the consent order for public commcnt it will waiting period, thegrant early termination of the Hart-Scott-Rodino Parties agree as follows:

CVS CORPORATIO:-, ET AL. 181 161 Decision and Order TERMS OF AGREEMENT 1. Proposed respondents agree to execute, and upon its issuance to be bound by, the attached consent order. The Parties further agree that each tenn defined in the attached consent order shall have the same meaning in this Agreement.

2. Proposed respondents agree that from the date proposed respondents sign this Agreement until the earlier of the dates listed in subparagraphs 2.a and 2. , proposed respondents will comply with the provisions of this Agreement:

a. Three (3) business days after the Commission withdraws its acceptance ofthe consent order pursuant to the provisions of Section 34 of the Commission s Rules; or b. The date the divestitures as set out in the consent order have been completed.

3. Proposed respondents shall maintain the viability and marketability of the Assets, and shall not cause the wasting or deterioration of the Assets, nor shall they sell, transfer, encumber or otherwise impair their marketability or viability. 4. Proposed respondents shall maintain the competitiveness of the Assets. This includes, but is not limited to, maintaining promotions and discount policies, and continuing specific store services (such as for example, hours of operation and operation of specific departments). In particular, proposed respondents shall continue to offer to customers who obtain phannacy services at the Assets the same type and quality of phannacy services that are offered at the proposed respondents' retail drug stores that are not subject to the consent order s divestiture provisions.

5. Should the Commission seek in any proceeding to compel proposed respondents to divest themselves of the Assets or to seek any other injunctive or equitable relief, proposed respondents shall not raise any objection based upon the expiration of the applicable Hart-Scott-Rodino Antitrust Improvements Act waiting period or thc fact that the Commission has not sought to enjoin the proposed Acquisition. Proposed respondents also waive all rights to contest the validity of this Agreement.

6. For the purpose of detennining or securing compliance with this Agreement, subject to any legally recognzed privilege, and upon written request with five (5) days' notice to proposed respondents and Decision and Order 124 FTC. to their principal offce(s), proposed respondents shall pennit any duly authorized representative or representatives of the Commission: a. Access during the offce hours of proposed respondents, in the presence of counsel, to inspect and copy all books, ledgers, accounts correspondence, memoranda and other records and documents in the possession or under the control of proposed respondents relating to compliance with this Agreement; and b. To interview offcers or employees of proposed respondents who may have counsel present, regarding any such matters. 7. This Agreement shall not be binding until approved by the Commission.

SULZER LIMITED 183 183 Modifying Order