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                                                                    EXHIBIT 10.7

                              EMPLOYMENT AGREEMENT

         THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into
as of June 1, 2000, by and between Caremark Rx, Inc., a Delaware corporation
("Employer"), and Brad Karro ("Officer").

                                    RECITALS

         WHEREAS, Employer desires to continue to retain the services of Officer
and Officer desires to serve Employer in the capacity of Executive Vice
President of Corporate Development; and

         WHEREAS, Employer and Officer desire to set forth the terms and
conditions of Officer's continued employment with Employer under 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 4(4) of this Agreement.

         2.       Employment of Officer.

                  (1)      Position; Duties. Employer and Officer agree that,
subject to the provisions of this Agreement, Officer will serve as Executive
Vice President of Corporate Development of Employer.

         3.       Compensation.

                  (1)      Salary. Employer shall pay Officer a salary in the
amount of Two Hundred Ninety-Five Thousand Dollars ($295,000.00) 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 withholdings. The Base Salary shall be subject to review and adjustment
from time-to-time consistent with past practice.


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                  (2)      Incentive Compensation. During the Term, Officer
shall be eligible to receive from Employer incentive compensation in an amount
equal to Seventy-Five (75%) percent of Base Salary (pro-rated for any partial
calendar year during the Term), less state and federal tax and other legally
required and Officer-authorized withholdings. The incentive compensation
contemplated by this Section 3(2) shall be payable to Officer solely at the
discretion of the Chief Executive Officer of Employer based upon Officer's
performance. The incentive compensation that Officer shall be eligible to earn
under this Section 3(2) shall be subject to review and adjustment from
time-to-time consistent with past practice.

         4.       Benefits.

                  (1)      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 in effect for employees of Employer
at the same level as Officer.

                  (2)      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.

                  (3)      Stock Options. Officer shall participate in the stock
options plans of the Company. The opportunity for the grant of such options will
be reviewed at least annually.

                  (4)      Termination Benefits. Employer shall provide to
Officer the applicable benefits and/or payments set forth below.

                           (a)      Termination by resignation, disability or
                                    death. If this Agreement is terminated due
                                    to Officer's voluntary resignation,
                                    disability, or his death, then Officer shall
                                    be entitled to only those benefits and
                                    payments he is entitled to under the
                                    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 those
                                    benefits and payments he is entitled to
                                    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)
                                    materially breaches any 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
                                    substantially detrimental to the business of
                                    Employer, (iv) engages in illegal or other
                                    wrongful conduct substantially detrimental
                                    to the business or reputation


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                                    of Employer, or (v) develops or pursues
                                    interests substantially adverse to Employer;
                                    provided, however, that in the case of
                                    clauses (i), (iii), or (v), no such
                                    termination shall be effective unless (1)
                                    Employer shall have given Officer 30 days'
                                    prior written notice of any conduct or
                                    deficiency in performance by Officer that
                                    Employer believes could, if not discontinued
                                    or corrected, lead to Officer's termination
                                    under this Section 4(3) to provide Officer
                                    an opportunity to cure such non-compliant
                                    conduct or performance, and (2) Officer
                                    shall not have cured such non-compliant
                                    conduct or performance during such notice
                                    period.

                           (c)      Termination without Cause. If Employer
                                    terminates this Agreement without cause, it
                                    shall provide Officer with the following
                                    termination benefits: (i.) 30 days written
                                    notice of Employer's intention to terminate
                                    Officer's Agreement without cause; (ii.) A
                                    lump sum payment equivalent to one (1) year
                                    of Officer's current base salary; (iii.) A
                                    lump sum payment equivalent to one (1) year
                                    of Officer's current annual incentive bonus;
                                    (iv.) Continued coverage under Employer's
                                    standard and Executive benefit plans for one
                                    (1) year in accordance with the terms of the
                                    applicable plans, provided, if the terms of
                                    the applicable plan does 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. As a
                                    condition precedent to receiving the
                                    payments and benefits described in this
                                    paragraph 4 (3) (c), Officer shall be
                                    required to execute a full release of all
                                    claims for the benefit of Employer in a form
                                    provided exclusively by Employer. Upon
                                    execution of this release, Employer shall
                                    provide the payments and benefits described
                                    in this section 4 (3) (c), within 10 days.

                           (d)      Termination following a Change in Control.
                                    During the first six months following a
                                    change in control, Officer may provide the
                                    Successor Employer with written notice
                                    requesting the Successor Employer to
                                    reconfirm in writing that it intends to
                                    continue all of the terms and conditions of
                                    this Employment Agreement. If Successor
                                    Employer fails to respond to Officer within
                                    Sixty (60) days of receipt of Officer's
                                    written notice, or if Successor Employer
                                    declines to continue all of the terms and
                                    conditions of Officer's Employment
                                    Agreement, then Officer shall be deemed to
                                    be terminated following a change in control.
                                    If a successor Employer terminates this
                                    Agreement at any time following a change in
                                    control, it shall provide Officer with the
                                    following termination benefits: (i.) 30 days
                                    written notice of its intention to terminate
                                    this Agreement; (ii.) A lump sum payment
                                    equivalent to two (2) year's of Officer's
                                    current base salary; (iii.) A lump sum
                                    payment equivalent to two (2)


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                                    year's of Officer's current annual incentive
                                    bonus; (iv.) Continued coverage under
                                    Employer's standard and Executive benefit
                                    plans for two (2) year's in accordance with
                                    the terms of the applicable plans, provided,
                                    if the terms of the applicable plan does 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. As a condition precedent to
                                    receiving the payments and benefits
                                    described in this paragraph 4 (3) (d),
                                    Officer shall be required to execute a full
                                    release of all claims for the benefit of
                                    Employer in a form provided exclusively by
                                    Employer. Upon execution of this release,
                                    Employer shall provide the payments and
                                    benefits described in this section 4 (3)
                                    (d), within 10 days. For purposes of this
                                    Agreement, the term "Change in Control"
                                    shall mirror the definition of a "Change in
                                    Control" contained in the MedPartners' 1998
                                    Stock Option Plan.

         5.       Trade Secrets and Confidentiality

                  (1)      Trade Secrets. Officer agrees and covenants that,
both during the Term and after termination of his employment, Officer will hold
in a fiduciary capacity for the benefit of Employer, and shall not directly or
indirectly use or disclose, except as Employer authorizes in connection with the
performance of Officer's duties, any Trade Secret, as defined below, that
Officer may have or acquire during the Term for so long as the such information
remains a Trade Secret. The term "Trade Secret" as used in this Agreement shall
mean information including, but not limited to, technical or non-technical data,
a formula, a pattern, a compilation, a program, a device, a method, a technique,
a drawing, a process, financial data, financial plans, product plans, or a list
of actual or potential customers or suppliers, including without limitation,
information received by Employer or Officer from any client or potential client
of Employer, which:

                  a.       Derives economic value, actual or potential, from not
                           being generally known to, and not being readily
                           ascertainable by proper means by, other persons who
                           can obtain economic value from its disclosure or use;
                           and

                  b.       Is the subject of reasonable efforts by Employer or
                           the client from which the information was received to
                           maintain its secrecy.

                  (2)      Confidentiality. In addition to the covenants set
forth in Section 5(1), Officer agrees that, during the Term and for a period of
five (5) years after termination of his employment, Officer will hold in a
fiduciary capacity for the benefit of Employer and shall not directly or
indirectly use or disclose, except as Employer authorizes in connection with the
performance of Officer's duties, any Confidential or Proprietary Information, as
defined below, that Officer may have or acquire (whether or not developed or
compiled by Officer and whether or not Officer has been authorized to have
access to such Confidential or Proprietary Information) during the Term.


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The term "Confidential or Proprietary Information" as used in this Agreement
means any secret, confidential or proprietary information of Employer, including
information received by Employer or Officer from any client or potential client
of Employer, not otherwise included in the definition of "Trade Secret" in
Section 5(1) above. The term "Confidential or Proprietary Information" does not
include information that 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 client to which such information pertains.

                  (3)      Restrictions Supplemental to State Law. The
restrictions set forth in Sections 5(1) and (2) are in addition to and not in
lieu of protections afforded to trade secrets and confidential information under
applicable state law. Nothing in this Agreement is intended to or shall be
interpreted as diminishing or otherwise limiting Employer's right under
applicable state law to protect its trade secrets and confidential information.

         6.       Restrictive Covenants. As a material inducement for Employer
to enter into this Agreement, Officer agrees to the following restrictive
covenants.

                  (1)      Non-competition. During the term of this Agreement
and for a period of 3 years after the termination of this Agreement, directly or
indirectly, establish, engage, own, manage, operate, join or control, or
participate in the establishment, ownership, management, operation or control or
be a director, officer, employee, salesman, agent or representative of, or be a
consultant to, any person or entity in any business in competition with the
Caremark or its subsidiaries in any state where the they now conduct, or during
such 3 year period, begin conducting, any material business.

                  (2)      Non-solicitation. During the term of this Agreement
and for a period of 3 years after the termination of this Agreement, you shall
not, except with the Caremark's express prior written consent, directly or
indirectly, in any capacity, for the benefit of any person or entity: Solicit,
interfere with, or divert, any person who is a customer, patient, supplier,
employee, salesman, agent or representative of Caremark or its subsidiaries, in
connection with any business in competition with Caremark or its subsidiaries.

                  (3)      Modification of covenants. If any provision contained
in subparagraphs (1) or (2) above is later adjudicated to exceed the time,
geographic, scope, or other limitations permitted by governing law, then such
provisions will be reformed in such jurisdiction to the maximum permissible
time, geographic, or scope limitations.

         7.       Miscellaneous.

                  (1)      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 shall be personal and not
assignable.


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                  (2)      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:

                                    Brad Karro
                                    Caremark Rx, Inc.
                                    3000 Galleria Tower
                                    Suite 1000
                                    Birmingham, Alabama 35244

                           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.

                  (3)      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.

                  (4)      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.

                  (5)      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.

                  (6)      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.

                  (7)      Prior Agreements. This Agreement shall supersede and
void any prior existing agreements between Employer and Officer regarding
payments upon termination or due to


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change in control. Notwithstanding this section, nothing in this section 6(7) is
intended to have any affect upon Officer's Stock Option Awards or the terms of
Employer's Stock Option Plans, or the terms of any benefit plans.

                  (8)      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                          /s/ Brad Karro
------------------------------               -------------------------------
E. Mac Crawford                              Brad Karro
Chairman and CEO


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