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Exhibit 10.1

EMPLOYMENT AGREEMENT

        THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into as
of June 26, 2002, by and between Caremark Rx, Inc., a Delaware corporation
("Employer"), and A.D. Frazier, Jr. ("Officer").

Recitals

        WHEREAS, Employer wishes to retain the services of Officer, and Officer
wishes to serve Employer in the capacity of President and Chief Operating
Officer; and

        WHEREAS, Employer and Officer have agreed to set forth the terms and
conditions of Officer's employment with Employer in this Agreement.

Agreement

        NOW, THEREFORE, in consideration of the foregoing recitals and of the
mutual covenants and agreements contained in this Agreement, the parties agree
as follows:

        1.    Term.    Employer agrees to employ Officer, and Officer agrees to
serve Employer, on an "at will" basis for such period (such period being the
"Term") as Employer desires to employ Officer and Officer agrees to serve
Employer. Without limiting the generality of the foregoing sentence, Employer
shall have the right to terminate Officer at any time for any reason or no
reason without any obligation to Officer other than for Base Salary (as
hereinafter defined) earned but unpaid through the date of such termination and
for the obligations of Employer pursuant to Section 5 of this Agreement.

        2.    Employment of Officer.    

        (a)    Position.    Employer and Officer agree that, subject to the
provisions of this Agreement, Officer will serve as President and Chief
Operating Officer of Employer. Unless otherwise agreed by Employer and Officer,
Officer's employment will commence August 1, 2002, and Officer will be based at
Employer's Northbrook, Illinois corporate offices.

        (b)    Duties.    Officer will have general responsibility for the
overall operations of Employer and its subsidiaries and affiliates (including
entities acquired from time to time by Employer), but excluding, however, their
finance, legal, administration, corporate development/mergers and acquisitions,
aviation and discontinued operations functions. The scope of such duties may be
modified from time to time by agreement of Officer and Employer's Chief
Executive Officer. Officer shall devote substantially all of his time and
energies during business hours, faithfully and to the best of his ability, to
the supervision and conduct of the business and affairs of Employer and its
subsidiaries and affiliates; provided that, it shall not be a violation of this
Agreement for Officer to serve on the Board of Directors of R.J. Reynolds
Tobacco Corporation and Apache Corporation following commencement of employment.
Employer acknowledges and agrees that Officer currently serves on the Board of
Directors of Magellan Health Services, Inc. but intends to resign such position
upon commencement of employment.

        (c)    Board Membership.    Employer agrees that Officer will be
nominated for membership to Employer's Board of Directors at its next regular
meeting, currently scheduled for August 22, 2002.

        3.    Compensation.    

        (a)    Salary.    Employer shall pay Officer a base salary in the amount
of One Million Dollars ($1,000,000) per year (pro-rated for any partial year
during the Term) (the "Base Salary") payable in equal bi-weekly installments,
less state and federal tax and other legally required or authorized
withholdings. The Base Salary shall be subject to review and adjustment from
time-to-time at the discretion of the Chief Executive Officer of Employer.

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        (b)    Incentive Compensation.    During the Term, Officer shall be
eligible to receive from Employer incentive compensation in an amount up to 100%
percent of Base Salary (pro-rated for any partial calendar year during the
Term), less state and federal tax and other legally required or authorized
withholdings. The incentive compensation contemplated by this Section 3(b) shall
be payable to Officer and subject to review and adjustment from time-to-time
solely at the discretion of the Chief Executive Officer of Employer based upon
Officer's and Employer's performance.

        4.    Employment Benefits.    

        (a)    Fringe Benefits.    In addition to the compensation and other
remuneration provided for in this Agreement, Officer shall be entitled, during
the Term, to such other benefits of employment with Employer as are now or may
after the date of this Agreement be offered pursuant to Employer's standard and
executive benefits plans.

        (b)    Expenses.    During the Term, Employer shall reimburse Officer
promptly for all reasonable travel, entertainment, parking, business meeting and
similar expenditures in pursuit and furtherance of Employer's business upon
receipt of reasonable supporting documentation as required by Employer's
policies applicable to its officers generally.

        (c)    Stock Options.    Upon commencement of employment, Officer shall
receive a grant of 1,000,000 options to acquire Employer's common stock, subject
to the terms and conditions of Employer's stock option plans. The opportunity
for additional option grants will be reviewed at least annually at the
discretion of the Chief Executive Officer. Officer acknowledges that he will be
a Section 16 executive officer of Employer and will be subject to the trading
restrictions applicable to "Designated Individuals" under Employer's Stock
Trading Policy in effect from time to time.

        (d)    Country Club Membership.    During the Term, Officer shall be
entitled to payment of the dues for one country club suitable for use in
furthering the business interests of Employer.

        (e)    Use of Aircraft.    During the Term, Officer shall have
professional and personal use of Employer's Citation X or Lear 45 corporate
aircraft, subject to availability, with such use to be determined in accordance
with Employer's policy for security of executives.

        5.    Termination Benefits.    Employer shall provide to Officer the
applicable termination benefits and/or payments set forth below.

        (a)    Termination by Resignation, Disability or Death.    This
Agreement shall terminate upon Officer's voluntary resignation, disability or
death, and Officer shall be entitled to only Base Salary payable through the
date of termination and those benefits and payments he is entitled to receive
under Employer's applicable controlling benefit plans and policies. Officer
shall not be entitled to any severance or like payments.

        (b)    Termination for Cause.    If Employer terminates Officer's
employment for Cause, then Officer shall be entitled to only Base Salary payable
through the date of termination and those benefits and payments he is entitled
to receive under the applicable controlling benefit plans and policies. Officer
shall not be entitled to any severance or like payments. The term "Cause" shall
mean Officer (i) breaches Section 6 of this Agreement or any other material term
of this Agreement; (ii) is convicted by a court of competent jurisdiction of a
felony; (iii) refuses, fails or neglects to perform his duties under this
Agreement in a manner that is materially detrimental to the business or
reputation of Employer; (iv) engages in illegal, unethical or other wrongful
conduct that is materially detrimental to the business or reputation of
Employer; or (v) develops or pursues interests materially adverse to Employer;
provided, however, that in the case of clauses (i), (iii), or (v), no such
termination shall be effective unless (A) Employer shall have given Officer
30 days prior written notice of and opportunity to cure any conduct or
deficiency in performance by Officer that Employer believes justifies Officer's
termination under this Section 5(b); and

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(B) Officer shall not have cured such non-compliant conduct or performance
during such notice period. Employer and Officer may agree to waive the foregoing
requirement of 30 days notice and opportunity to cure in the case of termination
under clauses (i), (iii) or (v) above.

        (c)    Termination without Cause.    If Employer terminates this
Agreement without Cause, it shall provide Officer with the following termination
benefits: (i) 30 days prior written notice of Employer's intention to terminate
this Agreement without Cause; (ii) a lump sum payment equal to three (3) years
of Officer's Base Salary then in effect; (iii) a lump sum payment equal to any
portion of any bonus accrued for Officer on Employer's books through the date of
termination; (iv) continued coverage under Employer's standard and executive
benefit plans for three (3) years in accordance with the terms of the applicable
plans; provided, if the terms of the applicable plan do not permit continued
coverage, then Employer shall pay to Officer the value of the applicable
benefits in lump sum upon termination of employment; and (v) the applicable
stock option plan shall control the treatment of Officer's unexercised stock
options, if any. As a condition precedent to receiving the payments and benefits
described in this Section 5(c), Officer shall be required to execute a full
release of all claims for the benefit of Employer in a form provided by
Employer. Upon execution of this release, Employer shall provide the payments
and benefits described in this Section 5(c) within 10 business days.

        (d)    Termination Following a Change in Control.    

        (i)    Definitions.    For purposes of this Agreement, the term "Change
in Control" shall have the same definition of "Change in Control" contained in
the Caremark Rx, Inc. 1998 Stock Option Plan, as amended from time to time. The
term "Successor Employer" shall refer to the surviving corporation or entity
following a Change in Control of Employer. The term "Direct Competitor" shall
mean a company engaged in business activities that directly compete with
Employer's business activities at the time of the Change in Control.

        (ii)    Change in Control Involving Direct Competitor.    During the
first year following a Change in Control involving a Direct Competitor, Officer
may elect to terminate his employment by giving 30 days prior written notice to
Successor Employer. Notwithstanding the foregoing, Officer agrees not to
terminate his employment until at least 6 months after the Change in Control if
Successor Employer has notified Officer in writing within 10 business days
following the Change in Control that it would like Officer to remain employed
for a 6-month transition period.

        (iii)    Change in Control Not Involving Direct Competitor.    During
the first 6 months following a Change in Control not involving a Direct
Competitor, Officer may provide Successor Employer with a written request that
Successor Employer acknowledge and confirm in writing that it has assumed all of
Employer's obligations under this Agreement. If Successor Employer fails to
timely provide such written confirmation within 60 days of receipt of Officer's
written request, then Officer shall be deemed to be terminated by Successor
Employer at the end of such 60-day period.

        (iv)    By Successor Employer.    Successor Employer may terminate this
Agreement following a Change in Control by giving 30 days prior written notice
to Officer.

        (v)    Benefits.    Upon any termination of this Agreement following a
Change in Control, whether by Officer under (ii) above or by Successor Employer
under (iii) or (iv) above, Officer shall receive the following termination
benefits: (A) a lump sum payment equal to three (3) years of Officer's current
base salary; (B) a lump sum payment equal to three (3) years of Officer's
current annual incentive bonus; (C) continued coverage under Employer's standard
and executive benefit plans for three (3) years in accordance with the terms of
the applicable plans; provided, if the terms of the applicable plan do not
permit

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continued coverage, then Successor Employer shall pay to Officer the value of
the applicable benefits in lump sum upon termination of employment; and (D) the
applicable stock option plan shall control the treatment of Officer's
unexercised stock options, if any. As a condition precedent to receiving the
payments and benefits described in this Section 5(d), Officer shall be required
to execute a full release of all claims for the benefit of Successor Employer in
a form provided by Successor Employer. Upon execution of this release, Successor
Employer shall provide the payments and benefits described in this Section 5(d)
within 10 business days.

        (e)    Termination for Good Reason.    If Officer terminates this
Agreement for Good Reason, Employer shall provide Officer with the following
termination benefits: (i) a lump sum payment equal to three (3) years of
Officer's Base Salary then in effect; (ii) a lump sum payment equal to any
portion of any bonus accrued for Officer on Employer's books through the date of
termination; (iii) continued coverage under Employer's standard and executive
benefit plans for three (3) years in accordance with the terms of the applicable
plans; provided, if the terms of the applicable plan do not permit continued
coverage, then Employer shall pay to Officer the value of the applicable
benefits in lump sum upon termination of employment; and (iv) the applicable
stock option plan shall control the treatment of Officer's unexercised stock
options, if any. The term "Good Reason" shall mean Officer's duties as described
in Section 2 are materially diminished by Employer without Officer's prior
written consent; provided, however, no such termination for Good Reason shall be
effective unless (A) Officer shall have given Employer 30 days prior notice of
and opportunity to cure any action by Employer that Officer believes justifies
Officer's termination under this Section 5(e); and (B) Employer shall not have
cured such non-compliant action during such notice period. Employer and Officer
may agree to waive the foregoing requirement of 30 days notice and opportunity
to cure in the case of termination under this Section 5(e). As a condition
precedent to receiving the payments and benefits described in this Section 5(e),
Officer shall be required to execute a full release of all claims for the
benefit of Employer in a form provided by Employer. Upon execution of this
release, Employer shall provide the payments and benefits described in this
Section 5(e) within 10 business days.

        6.    Restrictive Covenants.    

        (a)    Definitions.    The following terms shall have the meanings set
forth below:

(i)"Caremark Parties" means Employer and its subsidiaries and affiliates.

(ii)"Confidential Information" means any data or information (other than Trade
Secrets) that is valuable to any of the Caremark Parties (or, if owned by
someone else, is valuable to that third party) and not generally known to the
public or to competitors in the pharmaceutical services industry, including, but
not limited to, any non-public information (regardless of whether in writing or
retained as personal knowledge) pertaining to research and development; product
costs and processes; shareholder information; pricing, costs or profit factors;
quality programs; strategic planning; business operations; financial condition;
annual budget and long-range business plans; marketing plans and methods;
contracts and bids; and personnel. The term "Confidential Information" does not
include information that (A) has become generally available to the public by the
act of one who has the right to disclose such information without violating any
right of the party to which such information pertains, or (B) is obtained by
Officer on a non-confidential basis from a third party and which Officer is are
not prohibited from disclosing by a legal, contractual or fiduciary duty owed to
any of the Caremark Parties.

(iii)"Restricted Business" means the business of providing pharmaceutical
services (including, without limitation, prescription benefit management
services, specialty distribution services and disease management services) to
employers, insurance companies, unions, government employee groups, governmental
entities, government program beneficiaries,

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managed care organizations, coalitions, other sponsors of health benefit plans
and/or individuals.

(iv)"Restricted Period" means during the Term and for a period of 3 years after
the end of the Term of this Agreement for purposes of Sections 6(d), (e) and
(f) and for a period of 5 years after the end of the Term of this Agreement for
purposes of Sections 6(b) and (c).

(v)"Territory" means the United States and Puerto Rico, or such lesser territory
in which the Caremark Parties are actually conducting business at the time of
enforcement.

(vi)"Trade Secret" means information including, but not limited to, any
technical or nontechnical data, formula, pattern, compilation, program, device,
method, technique, drawing, process (including, without limitation, any process
relating to customer bids or requests for proposal), financial data, financial
plan, product plan, list of actual or potential customers or suppliers or other
information similar to any of the foregoing, which (A) derives independent
economic value, actual or potential, from not being generally known to, and not
being readily ascertainable by proper means by, other persons who can derive
economic value from its disclosure or use and (B) is the subject of efforts that
are reasonable under the circumstances to maintain its secrecy.

        (b)    Trade Secrets.    Officer hereby covenants and agrees that he
will hold in confidence all Trade Secrets of the Caremark Parties and will not
disclose, publish or make use of such Trade Secrets at any time after the
Effective Date, except as is necessary to perform duties assigned him or as
specifically authorized in writing by Employer's Chief Executive Officer, for as
long as the information remains a Trade Secret.

        (c)    Confidential Information.    Officer hereby covenants and agrees
that, during the Restricted Period, he will hold in confidence all Confidential
Information of the Caremark Parties and will not disclose, publish or make use
of such Confidential Information, except as is necessary to perform duties
assigned to him or as specifically authorized in writing by Employer's Chief
Executive Officer.

        (d)    Nonsolicitation of Employees.    Officer hereby covenants and
agrees that he will not, during the Restricted Period, either directly or
indirectly, on his own behalf or on behalf of others, solicit or divert or
attempt to solicit or divert for employment or other engagement to provide
services, any person who, as of the date of this Agreement or at any time during
the Term, is or was employed by or engaged to provide services for any of the
Caremark Parties.

        (e)    Nonsolicitation of Customers and Suppliers.    Officer hereby
covenants and agrees that he will not, within the Territory and during the
Restricted Period, solicit or attempt to solicit on his own behalf or on behalf
of any business engaged in the Restricted Business, any person or entity who, as
of the Effective Date or at any time during the Term, is or was a customer or
supplier to any of the Caremark Parties or is an actively sought prospective
customer or supplier of any of the Caremark Parties.

        (f)    Noncompetition.    Officer hereby covenants and agrees that he
will not, within the Territory and during the Restricted Period, either directly
or indirectly, on his own behalf or in the service or on behalf of others,
engage in, establish, have any equity or profit interest in, make any loan to or
for the benefit of, or render services (of any product development or design,
operations, advertising, marketing, sales, administrative, logistics,
supervisory, strategic planning, management or consulting nature) to any
business, entity or individual engaged in the Restricted Business.

Notwithstanding anything in this Section 6 to the contrary, nothing herein shall
prohibit Officer, in the aggregate, from owning or acquiring a passive
investment of one percent (1%) or less of the

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issued and outstanding capital stock of a publicly-held corporation engaged in
the Restricted Business in the Territory, provided that Officer does not,
directly or indirectly, participate in the management or operation of such
publicly-held corporation or organization.

        (g)    State Law.    The restrictions set forth in Sections 6(a) and
(b) are in addition to and not in lieu of protections afforded to trade secrets
and confidential information under applicable state law. This Agreement shall
not be interpreted as diminishing or otherwise limiting Employer's right under
applicable state law to protect its trade secrets and confidential information.

        7.    Return of Materials.    Upon termination of this Agreement,
Officer will deliver to Employer all memoranda, notes, records, manuals or other
documents (including, but not limited to, written instruments, voice or data
recordings, or computer tapes, disks or files of any nature), including all
copies of such materials and all documentation prepared or produced in
connection therewith, pertaining to the businesses of the Caremark Parties or
containing Trade Secrets or Confidential Information, whether made or compiled
by Officer or otherwise made available to Officer.

        8.    Reasonable and Necessary Restrictions.    Officer acknowledges
that the restrictions, prohibitions and other provisions in Section 6, including
the definitions of Restricted Business, Restricted Period and Territory, are
reasonable, fair and equitable in scope, terms and duration, are necessary to
protect the legitimate business interests of Employer, and are a material
inducement to Employer to enter into this Agreement. Officer covenants that he
will not challenge the enforceability of this Agreement nor will he raise any
equitable defense to its enforcement.

        9.    Specific Performance.    Officer acknowledges that the obligations
undertaken by him pursuant to this Agreement are unique and that Employer will
likely have no adequate remedy at law if he fails to perform any of those
obligations. Officer therefore confirms that Employer has the right to specific
performance of the terms of this Agreement and that this right is essential to
protect the rights and interests of Employer and to protect the benefit of
Employer's bargain with Officer. Accordingly, in addition to any other remedies
that Employer may have at law or in equity, Employer shall have the right to
have all obligations, covenants, agreements and other provisions of this
Agreement specifically performed by Officer and the right to obtain preliminary
and permanent injunctive relief to secure specific performance and to prevent a
breach or contemplated breach of this Agreement by Officer.

        10.    Survival.    All rights and obligations of Employer and Officer
under this Agreement shall cease upon termination of this Agreement, except the
obligations of the parties set forth in Sections 5, 6, 7, 8 and 9 hereof shall
survive termination of this Agreement.

        11.    Miscellaneous.    

        (a)    Succession.    This Agreement shall inure to the benefit of and
shall be binding upon Employer, its successors and assigns. The obligations and
duties of Officer under this Agreement are personal and not assignable.

        (b)    Notices.    Any notice, request, instruction or other document to
be given under this Agreement by any party to the others shall be in writing and
delivered in person or by courier, telegraphed, telexed or sent by facsimile
transmission or mailed by certified mail, postage prepaid, return receipt
requested (such mailed notice to be effective on the date of such receipt is
acknowledged), as follows:

If to Officer:

A.D. Frazier, Jr.
200 East Delaware Place
#4D
Chicago, Illinois 60611

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If to Employer:

Caremark Rx, Inc.
3000 Galleria Tower
Suite 1000
Birmingham, Alabama 35244
Attn.: Chief Executive Officer

        or to such other place as either party may designate as to itself by
written notice to the other.

        (c)    Waiver; Amendment.    No provision of this Agreement may be
waived except by a written agreement signed by the waiving party. The waiver of
any term or of any condition of this Agreement shall not be deemed to constitute
the waiver of any other term or condition. This Agreement may be amended only by
a written agreement signed by the parties.

        (d)    Governing Law.    This Agreement shall be construed under and
governed by the internal laws of the State of Alabama, without regard to
Alabama's choice of law rules.

        (e)    Arbitration.    Any disputes or controversies arising under this
Agreement shall be settled by arbitration in Birmingham, Alabama in accordance
with the rules of the American Arbitration Association relating to the
arbitration of commercial disputes. The determination and findings of such
arbitrators shall be final and binding on all parties and may be enforced, if
necessary, in the courts of the State of Alabama.

        (f)    Captions.    Captions have been inserted solely for the
convenience of reference and in no way define, limit or describe the scope or
substance of any provisions of this Agreement.

        (g)    Entire Agreement.    This Agreement, and the other documents and
agreements referenced herein, represent the entire agreement of the parties
hereto relating to the subject matter hereof.

        (h)    Severability.    If this Agreement shall for any reason be or
become unenforceable by any party, this Agreement shall thereupon terminate and
become unenforceable by the other party as well. In all other respects, if any
provision of this Agreement is held invalid or unenforceable, the remainder of
this Agreement shall nevertheless remain in full force and effect and, if any
provision is held invalid or unenforceable with respect to particular
circumstances, it shall nevertheless remain in full force and effect in all
other circumstances.

        IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.

CAREMARK RX, INC.    
 
 
 
/s/  E. MAC CRAWFORD      

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E. Mac Crawford
Chairman and CEO
 
/s/  A.D. FRAZIER, JR.      

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A.D. Frazier, Jr.

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QuickLinks

Exhibit 10.1

EMPLOYMENT AGREEMENT