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                                                                    EXHIBIT 10.6



                                CAREMARK RX, INC.
                            1994 STOCK INCENTIVE PLAN

                  The Caremark Rx, Inc. 1994 Stock Incentive Plan is the result
of the assumption and adoption by Caremark Rx, Inc., a Delaware corporation, of
the 1994 Stock Incentive Plan of InPhyNet Medical Management Inc., pursuant to
the provisions of that certain Plan and Agreement of Merger, dated as of June
26, 1997, by and among Caremark Rx Inc. and InPhyNet Medical Management Inc.

                  1.       PURPOSE.

                  The purpose of the Caremark Rx, Inc. 1994 Stock Incentive Plan
(the "Plan") is to provide a means through which the Company and its
Subsidiaries and Affiliates may attract able persons to enter and remain in the
employ of the Company and its Subsidiaries and Affiliates, and to provide a
means whereby those key persons upon whom the responsibilities of the successful
administration and management of the Company rest, and whose present and
potential contributions to the welfare of the Company are of importance, can
acquire and maintain stock ownership, thereby strengthening their commitment to
the welfare of the Company and promoting an identity of interest between
stockholders and these key persons.

                  A further purpose of the Plan is to provide such key
persons with additional incentive and reward opportunities designed to enhance
the profitable growth of the Company. So that the appropriate incentive can be
provided, the Plan provides for granting Incentive Stock Options, Nonqualified
Stock Options, Restricted Stock Awards, or any combination of the foregoing.

                  2.       DEFINITIONS.

                  The following definitions shall be applicable throughout the
Plan.

                  "Affiliate" means any affiliate of the Company within the
meaning of 17 CFR ss. 230.405.

                  "Award" means, individually or collectively, any Incentive
Stock Option, Nonqualified Stock Option or Restricted Stock Award.

                  "Beneficial Owner" or "Beneficial Ownership" shall have the
meaning ascribed to such term in Rule 13d-3 of the General Rules and Regulations
under the Exchange Act.

                  "Board" means the Board of Directors of the Company.

                  "Cause" means the Company, a Subsidiary or an Affiliate having
cause to terminate a Participant's employment under any existing employment
agreement between the Participant and the Company, a Subsidiary or an Affiliate
or, in the absence of such


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an employment agreement, upon (i) the determination by the Committee that the
Participant has ceased to perform his duties to the Company, or a Subsidiary or
an Affiliate (other than as a result of his incapacity due to physical or mental
illness or injury), which failure amounts to an intentional and extended neglect
of his duties to such party, (ii) the Committee's determination that the
Participant has engaged or is about to engage in conduct materially injurious to
the Company, or a Subsidiary or an Affiliate, or (iii) the Participant having
been convicted of a felony.

                  "Change in Control" a Change in Control of the Company shall
be deemed to have occurred as of the first day that any one or more of the
following conditions shall have been satisfied:

                           (a)      The acquisition by any Person of Beneficial
         Ownership of 20% or more of either (i) the then outstanding shares of
         Common Stock of the Company, or (ii) the combined voting power of the
         outstanding voting securities of the Company entitled to vote generally
         in the selection of Directors; provided, however, that for purposes of
         this subsection, the following transactions shall not constitute a
         Change of Control: (A) any acquisition directly from the Company
         through a public offering of shares of Common Stock of the Company, (B)
         any acquisition by the Company, (C) any acquisition by any employee
         benefit plan (or related trust) sponsored or maintained by the Company
         or any corporation controlled by the Company, or (D) any acquisition by
         any corporation pursuant to a transaction which complies with clauses
         (i), (ii) and (iii) of subsection (c) below;

                           (b)      The cessation, for any reason, of the
         individuals who constitute the Company's Board of Directors as of the
         date hereof ("Incumbent Board") to constitute at least a majority of
         the Company's Board of Directors; provided, however, that any
         individual becoming a Director following the date hereof whose
         election, or nomination for election by the Company's stockholders, was
         approved by a vote of at least a majority of the Directors then
         comprising the Incumbent Board shall be considered as though such
         individual was a member of the Incumbent Board, but excluding, for this
         purpose, any such individual whose initial assumption of office occurs
         because of an actual or threatened election contest with respect to the
         election or removal of Directors or other actual or threatened
         solicitation of proxies or consents by or on behalf of a Person other
         than the Company's Board of Directors;

                           (c)      The consummation of a reorganization, merger
         or consolidation or sale or other disposition of all or substantially
         all of the assets of the Company ("Business Combination") unless,
         following such Business Combination, (i) all or substantially all of
         the individuals and entities who were the Beneficial Owners,
         respectively, of the outstanding shares of Common Stock of the Company
         and the outstanding voting securities of the Company immediately before
         such Business Combination beneficially own, directly or indirectly,
         more than 50% of, respectively, the then outstanding shares of Common
         Stock and the combined voting power of the then outstanding voting
         securities entitled to vote generally in the election of Directors, as
         the case may be, of the Company resulting from such Business
         Combination (including, without limitation, a corporation which as a
         result of such transaction owns the Company or all or substantially all
         of the Company's assets either directly or through one or more
         subsidiaries) in substantially the same proportions as their ownership
         immediately before such Business Combination of the outstanding shares
         of Common Stock and the outstanding voting


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         securities of the Company, as the case may be; (ii) no party (excluding
         any corporation resulting from such Business Combination or any
         employee benefit plan (or related trust) of the Company or such
         corporation resulting from such Business Combination) beneficially
         owns, directly or indirectly, 20% or more of, respectively, the then
         outstanding shares of common stock of the corporation resulting from
         such Business Combination or the combined voting power of the then
         outstanding voting securities of such corporation except to the extent
         that such ownership existed before the Business Combination; and (iii)
         at least a majority of the members of the board of directors of the
         corporation resulting from such Business Combination were members of
         the Company's Board of Directors at the time of the execution of the
         initial agreement, or of the action of the Company's Board of
         Directors, providing for such Business Combination;

                           (d)      The approval by the stockholders of the
         Company of a complete liquidation or dissolution of the Company; or

                           (e)      Any other condition or event (i) that the
         Committee determines to be a "Change in Control" within the meaning of
         this Section 2 and (ii) that is set forth as a supplement to this
         Section 2 in the Stock Option Agreement.

                  "Code" means the Internal Revenue Code of 1986, as amended.
Reference in the Plan to any section of the Code shall be deemed to include any
amendments or successor provisions to such section and any regulations under
such section.

                  "Committee" means the Compensation Committee of the Board or
such other committee as the Board may appoint to administer the Plan.

                  "Common  Stock" means the common stock, par value $.001 per
share, of the Company.

                  "Company" means Caremark Rx, Inc.

                  "Date of Grant" means the date on which the granting of an
Award is authorized or such other date as may be specified in such
authorization.

                  "Disability" means the complete and permanent inability by
reason of illness or accident to perform the duties of the occupation at which a
Participant was employed when such disability commenced or, if the Participant
was retired when such disability commenced, the inability to engage in any
substantial gainful activity, as determined by the Committee based upon medical
evidence acceptable to it.


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                  "Eligible Employee" means any person regularly employed by the
Company or a Subsidiary or Affiliate on a full-time salaried basis, and any
independent contractor of the Company or a Subsidiary or Affiliate, who
satisfies all of the requirements of Section 6.

                  "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

                  "Fair Market Value" means, except as otherwise determined by
the Committee, an amount equal to the closing sale price of a share of Common
Stock as reported on The National Association of Securities Dealers' New York
Stock Exchange Composite Reporting Tape (or if the Common Stock is not traded on
The New York Stock Exchange, the closing sale price on the exchange on which it
is traded or as reported by an applicable automated quotation system) (the
"Composite Tape"), on the applicable date or, if no sales of Common Stock are
reported on such date, the closing sale price of a share of Common Stock on the
date the Common Stock was last reported on the Composite Tape (or such other
exchange or automated quotation system, if applicable).

                  "Holder" means a Participant who has been granted an Option or
a Restricted Stock Award.

                  "Incentive Stock Option" means an Option granted by the
Committee to a Participant under the Plan which is designated by the Committee
as an Incentive Stock Option pursuant to Section 422 of the Code.

                  "Non-Employee Director" means a Director of the Company who
(i) is not currently an officer or employee of the Company or any Subsidiary of
the Company; (ii) does not directly or indirectly receive any compensation from
the Company or any Subsidiary for services rendered as a consultant or in any
other non-director capacity that would exceed the $60,000 threshold for which
disclosure would be required under Item 404(a) of Regulation S-K; (iii) does not
possess an interest in any other transaction for which disclosure would be
required under Item 404(a) of Regulation S-K; and (iv) is not engaged in a
business relationship with the Company which would be disclosable under Item
404(b) of Regulation S-K.

                  "Nonqualified Stock Option" means an Option granted by the
Committee to a Participant under the Plan which is not designated by the
Committee as an Incentive Stock Option.

                  "Normal Termination" means termination:

                           (i)      with respect to the Company or a Subsidiary,
                  at retirement (excluding early retirement) pursuant to the
                  Company retirement plan then in effect;

                           (ii)     with respect to an Affiliate, at retirement
                  (excluding early retirement) pursuant to the retirement plan
                  of such Affiliate then in effect



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                  or, if the Affiliate has no such plan, at retirement upon or
                  after the attainment of age 65;

                           (iii)    on account of Disability;

                           (iv)     with the written approval of the Committee;
                  or

                           (v)      by the Company, a Subsidiary or Affiliate
                  without Cause

                           (vi)     voluntarily by the Holder for any reason
                  other than Cause or death.

                  "Option" means an Award granted under Section 7 of the Plan.

                  "Option Period" means the period described in Section 7(c).

                  "Participant" means an Eligible Employee who has been selected
to participate in the Plan and to receive an Award pursuant to Section 6.

                  "Person" shall have the meaning ascribed to such term in
Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d)
thereof, including a "group" as defined in Section 13(d) thereof.

                  "Plan" means the Caremark Rx, Inc. 1994 Stock Incentive Plan.

                  "Reporting Company" means the Company.

                  "Restricted Period" means, with respect to any share of
Restricted Stock, the period of time determined by the Committee during which
such share of Restricted Stock is subject to the restrictions set forth in
Section 8.

                  "Restricted Stock" means shares of Common Stock issued or
transferred to a Participant subject to the restrictions set forth in Section 8
and any new, additional or different securities a Participant may become
entitled to receive as a result of adjustments made pursuant to Section 10.

                  "Restricted Stock Award" means an Award granted under Section
8 of the Plan.

                  "Securities Act" means the Securities Act of 1933, as amended.

                  "Stock" means the Common Stock or such other authorized shares
of stock of the Company as the Committee may from time to time authorize for use
under the Plan.

                  "Subsidiary" means any subsidiary of the Company as defined in
Section 424(f) of the Code.


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                  3.       EFFECTIVE DATE, DURATION AND STOCKHOLDER APPROVAL.

                  The Plan became effective on May 7, 1994, and no further
Awards may be made after May 7, 2004.

                  The Plan shall continue in effect until all matters relating
to the payment of Awards and administration of the Plan have been settled.

                  4.       ADMINISTRATION.

                  The Committee shall administer the Plan. Each member of the
Committee shall, at the time he takes any action with respect to an Award under
the Plan, be a Non-Employee Director. The acts of a majority of the members
present at any meeting at which a quorum is present or acts approved in writing
by a majority of the Committee shall be deemed the acts of the Committee.

                  Subject to the provisions of the Plan, the Committee shall
have exclusive power to:

                           (a)      Select the Eligible Employees to participate
         in the Plan;

                           (b)      Determine the nature and extent of the
         Awards to be made to each Participant;

                           (c)      Determine the time or times when Awards will
         be made;

                           (d)      Determine the conditions to which the
         payment of Awards may be subject;

                           (e)      Prescribe the form or forms evidencing
         Awards;

                           (f)      Interpret and construe the terms and
         provisions of the Plan and any form or forms evidencing Awards granted
         under the Plan; and

                           (g)      Cause records to be established in which
         there shall be entered, from time to time, as Awards are made to
         Participants, the date of each Award, the number of Incentive Stock
         Options, Nonqualified Stock Options, and shares of Restricted Stock
         awarded by the Committee to each Participant, the expiration date, and
         the duration of any applicable Restricted Period.

                  The Committee shall have the authority, subject to the
provisions of the Plan, to establish, adopt, or revise such rules and
regulations and to make all such determinations relating to the Plan as it may
deem necessary or advisable for the administration of the Plan. The Committee's
interpretation of the Plan or any form or forms evidencing Awards granted
pursuant thereto and all decisions and determinations by the Committee with
respect to the Plan shall be final, binding, and conclusive on all parties
unless otherwise determined by the Board.


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                  5.       GRANT OF OPTIONS AND RESTRICTED STOCK AWARDS; SHARES
                           SUBJECT TO THE PLAN.

                  The Committee may, from time to time, grant Awards of Options
and/or Restricted Stock to one or more Participants; provided, however, that:

                           (a)      Subject to Section 10, the aggregate number
         of shares of Stock made subject to Awards may not exceed 2,950,000;

                           (b)      Such shares shall be deemed to have been
         used in payment of Awards whether they are actually delivered or the
         Fair Market Value equivalent of such shares is paid in cash. In the
         event any Option or Restricted Stock shall be surrendered, terminate,
         expire, or be forfeited, the number of shares of Stock no longer
         subject thereto shall thereupon be released and shall thereafter be
         available for new Awards under the Plan to the fullest extent permitted
         by Rule 16b-3 under the Exchange Act (if applicable at the time); and

                           (c)      Stock delivered by the Company in settlement
         of Awards under the Plan may be authorized and unissued Stock or Stock
         held in the treasury of the Company or may be purchased on the open
         market or by private purchase at prices no higher than the Fair Market
         Value at the time of purchase.

                  6.       ELIGIBILITY.

                           Participants shall be limited to officers, key
employees and independent contractors of the Company and its Subsidiaries and
Affiliates who have received written notification from the Committee or from a
person designated by the Committee, that they have been selected to participate
in the Plan.

                  7.       STOCK OPTIONS.

                  One or more Incentive Stock Options or Nonqualified Stock
Options may be granted to any Participant; provided, however, that Incentive
Stock Options may be granted only to employees of the Company or a Subsidiary.
Each Option so granted shall be subject to the following conditions:

                           (a)      Option Price. The Option Price ("Option
         Price") per share of Common Stock shall be set by the Committee at the
         time of grant but shall not be less than (i) in the case of an
         Incentive Stock Option, the Fair Market Value of a share of Stock at
         the Date of Grant, and (ii) in the case of a Nonqualified Stock
         Option, the par value per share of Stock.

                           (b)      Manner of Exercise and Form of Payment.
         Options which have become exercisable may be exercised by delivery of
         proper notification of exercise to the Committee. No shares of Common
         Stock shall be issued on the exercise of an Option unless the Option
         Price is paid in full at the time of the exercise. Payment shall be
         made in cash, which may be paid by check or other instrument acceptable
         to the Company. In addition, subject to compliance with


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         applicable laws and regulations and such conditions as the Committee
         may impose, the Committee may elect to accept payment of the Option
         Price in shares of Common Stock of the Company which are already owned
         by the Holder, valued at the Fair Market Value thereof on the date of
         exercise. The Committee may also allow a Holder to exercise an Option
         by the use of proceeds to be received from the sale of Common Stock
         issuable pursuant to the Option being exercised.

                           (c)      Other Terms and Conditions. If the Holder
         has not died or terminated, the Option shall become exercisable in such
         manner and within such period or periods ("Option Period"), not to
         exceed 10 years from its Date of Grant, as set forth in the vesting
         schedule set forth in Section 7(i) hereof, or as otherwise set forth in
         the Stock Option Agreement to be entered into in connection therewith.

                           (d)      Termination.

                           (i)      Except as otherwise provided in a Stock
                  Option Agreement or as provided in paragraphs (ii) and (iii)
                  below, each Option to the extent it has not been previously
                  exercised, shall terminate upon the earliest to occur of: (a)
                  the expiration of the term of the Option set forth in the
                  Stock Option Agreement; (b) the expiration of 12 months
                  following the Holder's death (if the Holder dies within the
                  Option Period or within 3 months after a Normal Termination
                  (or such other period as may have been established by the
                  Committee)); (c) immediately upon the Holder ceasing to be an
                  employee, officer or consultant or otherwise affiliated with
                  the Company for Cause; or (d) 90 days following a Normal
                  Termination.

                           (ii)     Except as otherwise provided in a Stock
                  Option Agreement, any Option granted after September 21, 1998
                  (a "Secondary Option"), to the extent it has not been
                  previously exercised, shall terminate upon the earliest to
                  occur of: (a) the expiration of the Secondary Option period
                  set forth in the Stock Option Agreement (as defined in
                  paragraph (e) heretofore); (b) the expiration of 12 months
                  following the Holder's death or Disability; (c) immediately
                  upon termination for Cause; or (d) the expiration of 90 days
                  following the Holder's termination of employment for any
                  reason other than Cause, Change in Control, death or
                  Disability.

                           (iii)    Notwithstanding the foregoing, any Secondary
                  Option, to the extent it has not been previously exercised
                  prior to a Change in Control shall remain exercisable for its
                  full original term upon and following such Change in Control.

                           (e)      Stock Option Agreement. Each Option granted
         under the Plan shall be evidenced by a "Stock Option Agreement" between
         the Company and the Holder of the Option. Each Stock Option Agreement
         shall incorporate by reference the terms and provisions of the Plan as
         in effect at the time of its



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         execution and may contain such other provisions not contrary to the
         Plan as may be determined by the Committee, subject to the following
         terms and conditions:

                           (i)      Each Option or portion thereof that is
                  exercisable shall be exercisable for the full amount or for
                  any part thereof, except as otherwise determined by the terms
                  of the Stock Option Agreement.

                           (ii)     Each share of Stock purchased through the
                  exercise of an Option shall be paid for in full at the time of
                  the exercise. Each Option shall cease to be exercisable, as to
                  any share of Stock, when the Holder purchases the share or
                  when the Option lapses.

                           (iii)    Options shall not be transferable by the
                  Holder except by will or the laws of descent and distribution
                  and shall be exercisable during the Holder's lifetime only by
                  him.

                           (iv)     Each Option shall become exercisable by the
                  Holder in accordance with the vesting schedule set forth in
                  Section 7(i) hereof, or as otherwise established by the
                  Committee for the Award.

                           (v)      Each Stock Option Agreement may contain an
                  agreement that, upon demand by the Committee for such a
                  representation, the Holder shall deliver to the Committee at
                  the time of any exercise of an Option a written representation
                  that the shares to be acquired upon such exercise are to be
                  acquired for investment and not for resale or with a view to
                  the distribution thereof.

                  Upon such demand, delivery of such representation prior to the
delivery of any shares issued upon exercise of an Option shall be a condition
precedent to the right of the Holder or such other person to purchase any
shares. In the event certificates for Stock are delivered under the Plan with
respect to which such investment representation has been obtained, the Committee
may cause a legend or legends to be placed on such certificates to make
appropriate reference to such representation and to restrict transfers in the
absence of compliance with applicable federal or state securities laws.

                           (f)      Grants to 10% Holders of Company Voting
         Stock. Notwithstanding Section 7(a), if an Incentive Stock Option is
         granted to a Holder who owns stock representing more than 10% of the
         voting power of all classes of stock of the Company or of the Company
         and its Subsidiaries, the period specified in the Stock Option
         Agreement for which the Option thereunder is granted and at the end of
         which such Option shall expire shall not exceed five years from the
         Date of Grant of such Option and the Option Price shall be at least
         110% of the Fair Market Value (on the Date of Grant) of the Stock
         subject to the Option.

                           (g)      Limitation. To the extent the aggregate Fair
         Market Value (as determined as of the Date of Grant) of Stock for which
         Incentive Stock Options are exercisable for the first time by any
         Participant during any calendar


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         year (under all plans of the Company and its Subsidiaries) exceeds
         $100,000, such excess Incentive Stock Options shall be treated as
         Nonqualified Stock Options.

                           (h)      Order of Exercise. Options granted under the
         Plan may be exercised in any order, regardless of the Date of Grant or
         the existence of any other outstanding Option.

                           (i)      Vesting of Options. Except as otherwise
         provided by the Committee in the applicable Stock Option Agreement,
         Options granted under the Plan shall vest and become exercisable as
         follows:

                           (i)      34% of the Options granted shall vest on the
                  Date of Grant;

                           (ii)     33% of the Options granted shall vest on
                  each of the first anniversary and second anniversary of the
                  Date of Grant; provided, however, that if during the first
                  year after the Date of Grant, the stock price of the Common
                  Stock closes at or above $12.00 (or such other price as
                  determined by the Committee and set forth in the applicable
                  Stock Option agreement) for any twenty (20) out of thirty (30)
                  consecutive trading days, the 33% of the Options due to vest
                  on the first anniversary of the Date of Grant shall vest
                  immediately at the end of such 20th day, and provided,
                  however, that if during the second year after the Date of
                  Grant, the stock price of the Common Stock closes at
                  or above $18.00 (or such other price as determined by the
                  Committee and set forth in the applicable Stock Option
                  agreement) for any twenty (20) out of thirty (30) consecutive
                  trading days, the 33% of the Options due to vest on the second
                  anniversary of the Date of Grant shall vest immediately at the
                  end of such 20th day.

                  8.       RESTRICTED STOCK AWARDS.

                           (a)      Award of Restricted Stock.

                           (i)      The Committee shall have the authority (1)
                  to grant Restricted Stock, (2) to issue or transfer Restricted
                  Stock to Participants, and (3) to establish terms, conditions
                  and restrictions applicable to such Restricted Stock,
                  including the Restricted Period, which may differ with respect
                  to each grantee, the time or times at which Restricted Stock
                  shall be granted or become vested and the number of shares or
                  units to be covered by each grant.

                           (ii)     The Holder of a Restricted Stock Award shall
                  execute and deliver to the Corporate Secretary of the Company
                  an agreement with respect to Restricted Stock and escrow
                  agreement satisfactory to the Committee and the appropriate
                  blank stock powers with respect to the Restricted Stock
                  covered by such agreements. If a Participant shall fail to
                  execute the agreement, escrow agreement and stock powers
                  within such period, the Award shall be null and void. Subject
                  to the restrictions set forth in Section 8(b), the Holder
                  shall generally have the rights and


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                  privileges of a stockholder as to such Restricted Stock,
                  including the right to vote such Restricted Stock. At the
                  discretion of the Committee, cash and stock dividends with
                  respect to the Restricted Stock may be either currently paid
                  or withheld by the Company for the Holder's account, and
                  interest may be paid on the amount of cash dividends withheld
                  at a rate and subject to such terms as determined by the
                  Committee. Cash or stock dividends so withheld by the
                  Committee shall not be subject to forfeiture.

                           (iii)    In the case of a Restricted Stock Award, the
                  Committee shall then cause stock certificates registered in
                  the name of the Holder to be issued and deposited together
                  with the stock powers with an escrow agent to be designated by
                  the Committee. The Committee shall cause the escrow agent to
                  issue to the Holder a receipt evidencing any stock certificate
                  held by it registered in the name of the Holder.

                           (b)      Restrictions.

                           (i)      Restricted Stock awarded to a Participant
                  shall be subject to the following restrictions until the
                  expiration of the Restricted Period: (1) the Holder shall not
                  be entitled to delivery of the stock certificate; (2) the
                  shares shall be subject to the restrictions on transferability
                  set forth in the grant; (3) the shares shall be subject to
                  forfeiture to the extent provided in subparagraph (d) and, to
                  the extent such shares are forfeited, the stock certificates
                  shall be returned to the Company, and all rights of the Holder
                  to such shares and as a stockholder shall terminate without
                  further obligation on the part of the Company.

                           (ii)     The Committee shall have the authority to
                  remove any or all of the restrictions on the Restricted Stock
                  whenever it may determine that, by reasons of changes in
                  applicable law or other changes in circumstances arising after
                  the date of the Restricted Stock Award such action is
                  appropriate.

                           (c)      Restricted Period. The Restricted Period of
Restricted Stock shall commence on the Date of Grant and shall expire from time
to time as to that part of the Restricted Stock indicated in a schedule
established by the Committee in the Award agreement.

                           (d)      Forfeiture Provisions. In the event a Holder
terminates employment during a Restricted Period, that portion of the Award with
respect to which restrictions have not expired ("Non-Vested Portion") shall be
treated as follows:

                           (i)      Resignation or discharge: The Non-Vested
         Portion of the Award shall be completely forfeited.


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                           (ii)     Normal Termination: The Non-Vested Portion
                  of the Award shall be prorated for service during the
                  Restricted Period and shall be received as soon as practicable
                  following termination.

                           (iii)    Death: The Non-Vested Portion of the Award
                  shall be prorated for service during the Restricted Period and
                  paid to the Participant's beneficiary as soon as practicable
                  following death.

                           (e)      Delivery of Restricted Stock. Upon the
                  expiration of the Restricted Period with respect to any shares
                  of Stock covered by a Restricted Stock Award, a stock
                  certificate evidencing the shares of Restricted Stock which
                  have not then been forfeited and with respect to which the
                  Restricted Period has expired (to the nearest full share)
                  shall be delivered without charge to the Holder, or his
                  beneficiary, free of all restrictions under the Plan.

                           (f)      SEC Restrictions. Each certificate
                  representing Restricted Stock awarded under the Plan shall
                  bear the following legend:

                  "Transfer of this certificate and the shares represented
                  hereby is restricted pursuant to the terms of a Restricted
                  Stock Agreement, dated as of __________, between Caremark Rx,
                  Inc. and __________. A copy of such Agreement is on file at
                  the offices of the Company in Birmingham, Alabama."

                  Stop transfer orders shall be entered with the Company's
transfer agent and registrar against the transfer of legend securities except in
compliance with the Securities Act.

                  9.       GENERAL.

                           (a)      Additional Provisions of an Award. The award
         of any benefit under the Plan may also be subject to such other
         provisions (whether or not applicable to the benefit awarded to any
         other Participant) as the Committee determines appropriate.

                           (b)      Privileges of Stock Ownership. Except as
         otherwise specifically provided in the Plan, no person shall be
         entitled to the privileges of stock ownership in respect of shares of
         Stock which are subject to Options or Restricted Stock Awards,
         hereunder until such shares have been issued to that person upon
         exercise of an Option according to its terms or upon sale or grant of
         those shares in accordance with a Restricted Stock Award.

                           (c)      Government and Other Regulations. The
         obligation of the Company to make payment of Awards or otherwise shall
         be subject to all applicable laws, rules, and regulations, and to such
         approvals by governmental agencies as may be required. The Company
         shall be under no obligation to register under the Securities Act any
         of the shares of Stock paid under the Plan. If the shares paid under
         the Plan may in certain circumstances be exempt from


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         registration under the Securities Act, the Company may restrict the
         transfer of such shares in such manner as it deems advisable to ensure
         the availability of any such exemption.

                           (d)      Withholding and Employment Taxes. At the
         time of exercise of an Option, the optionee shall remit to the Company
         in cash all applicable federal and state withholding and employment
         taxes. If and to the extent authorized and approved by the Committee in
         its sole discretion, an optionee may elect, by means of a form of
         election to be prescribed by the Committee, to have shares which are
         acquired upon exercise of an Option withheld by the Company or tender
         other shares of Common Stock or other securities of the Company owned
         by the optionee to the Company at the time the amount of such taxes is
         determined in order to pay the amount of such tax obligations, subject
         to the following limitations:

(1)      each election shall be irrevocable; and

(2)      such election shall be subject to the disapproval of the Committee at
         any time;

                  Any Common Stock or other securities so withheld or tendered
will be valued by the Company as of the date they are withheld or tendered.
Unless the Committee otherwise determines, the optionee shall pay to the Company
in cash, promptly when the amount of such obligations become determinable, all
applicable federal and state withholding taxes resulting from the lapse of
restrictions imposed on exercise of an Option, from a transfer or other
disposition of shares acquired upon exercise of an Option or otherwise related
to the Option or the shares acquired upon exercise of the Option.

                           (e)      Claim to Awards and Employment Rights. No
         employee or other person shall have any claim or right to be granted an
         Award under the Plan nor, having been selected for the grant of an
         Award, to be selected for a grant of any other Award. Neither this Plan
         nor any action taken hereunder shall be construed as giving any
         Participant any right to be retained in the employ of the Company or a
         Subsidiary or Affiliate.

                           (f)      Designation and Change of Beneficiary. Each
         Participant shall file with the Committee a written designation of one
         or more persons as the beneficiary who shall be entitled to receive the
         amounts payable with respect to an Award of Restricted Stock, if any,
         due under the Plan upon his death. A Participant may, from time to
         time, revoke or change his beneficiary designation without the consent
         of any prior beneficiary by filing a new designation with the
         Committee. The last such designation received by the Committee shall be
         controlling; provided, however, that no designation, or change or
         revocation thereof, shall be effective unless received by the Committee
         prior to the Participant's death, and in no event shall it be effective
         as of a date prior to such receipt.


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<PAGE>   14

                           (g)      Payments to Persons Other Than Participants.
         If the Committee shall find that any person to whom any amount is
         payable under the Plan is unable to care for his affairs because of
         illness or accident, or is a minor, or has died, then any payment due
         to such person or his estate (unless a prior claim therefor has been
         made by a duly appointed legal representative), may, if the Committee
         so directs the Company, be paid to his spouse, child, relative, an
         institution maintaining or having custody of such person, or any other
         person deemed by the Committee to be a proper recipient on behalf of
         such person otherwise entitled to payment. Any such payment shall be a
         complete discharge of the liability of the Committee and the Company
         therefor.

                           (h)      No Liability of Committee Members. No member
         of the Committee shall be personally liable by reason of any contract
         or other instrument executed by such member or on his behalf in his
         capacity as a member of the Committee nor for any mistake of judgment
         made in good faith, and the Company shall indemnify and hold harmless
         each member of the Committee and each other employee, officer or
         director of the Company to whom any duty or power relating to the
         administration or interpretation of the Plan may be allocated or
         delegated, against any cost or expense (including counsel fees) or
         liability (including any sum paid in settlement of a claim) arising out
         of any act or omission to act in connection with the Plan unless
         arising out of such person's own fraud or bad faith; provided, however,
         that approval of the Board shall be required for the payment of any
         amount in settlement of a claim against any such person. The foregoing
         right of indemnification shall not be exclusive of any other rights of
         indemnification to which such persons may be entitled under the
         Company's Certificate of Incorporation or ByLaws, as amended, as a
         matter of law, or otherwise, or any power that the Company may have to
         indemnify them or hold them harmless.

                           (i)      Governing Law. The Plan shall be governed by
         and construed in accordance with the internal laws of the State of
         Delaware without reference to the principles of conflicts of law
         thereof.

                           (j)      Funding. Except as provided under Section 8,
         no provision of the Plan shall require the Company, for the purpose of
         satisfying any obligations under the Plan, to purchase assets or place
         any assets in a trust or other entity to which contributions are made
         or otherwise to segregate any assets, nor shall the Company maintain
         separate bank accounts, books, records or other evidence of the
         existence of a segregated or separately maintained or administered fund
         for such purposes. Holders shall have no rights under the Plan other
         than as unsecured general creditors of the Company, except that insofar
         as they may become entitled to payment of additional compensation by
         performance of services, they shall have the same rights as other
         employees under general law.


                                       14
<PAGE>   15

                           (k)      Transferability.

(1)      Incentive Stock Options. No Incentive Stock Option granted under the
Plan may be sold, transferred, pledged, assigned or otherwise alienated or
hypothecated, other than by will or by the laws of descent and distribution.
Further, all Incentive Stock Options granted to an Eligible Employee under the
Plan shall be exercisable during his or her lifetime only by such Eligible
Employee.

(2)      Nonqualified Stock Options. No Nonqualified Stock Option granted under
the Plan may be sold, transferred, pledged, assigned or otherwise alienated or
hypothecated, other than by will or by the laws of descent and distribution.
Notwithstanding the foregoing, to the extent not prohibited by any statute, rule
or regulation applicable to the Plan, the Nonqualified Stock Options or the
registration with the Securities and Exchange Commission of the Common Stock to
be issued upon exercise of the Nonqualified Stock Options, the Committee may, in
its discretion, authorize all or a portion of Nonqualified Stock Options granted
to an Eligible Employee to be on terms which permit transfer by such Eligible
Employee to (i) the spouse, children or grandchildren of the Eligible Employee
("Immediate Family Members"), (ii) a trust or trusts for the exclusive benefit
of such Immediate Family Members, or (iii) a partnership in which such Immediate
Family Members are the only partners, provided that (x) there may be no
consideration for any such transfer, (y) the Stock Option Agreement pursuant to
which such Nonqualified Stock Options are granted must be approved by the
Committee, and must expressly provide for transferability in a manner consistent
with this Section, and (z) subsequent transfers of transferred Nonqualified
Stock Options shall be prohibited except those by will or the laws of descent
and distribution. Following transfer, any such Nonqualified Stock Options shall
continue to be subject to the same terms and conditions as were applicable
immediately prior to transfer, provided that for purposes of this Plan, the term
"Eligible Employee" shall be deemed to refer to the transferee. The events of
termination of employment shall continue to be applied with respect to the
original Eligible Employee following which the Nonqualified Stock Options shall
be exercisable by the transferee only to the extent, and for the periods
specified in Section 7(c). Notwithstanding the foregoing, should the Committee
provide that Options granted be transferable, the Company by such action incurs
no obligation to notify or otherwise provide notice to a transferee of early
termination of the Option. In the event of a transfer, as set forth above, the
original Eligible Employee is and will remain subject to and responsible for any
applicable withholding taxes upon the exercise of such Options.

                           (l)      Reliance on Reports. Each member of the
         Committee and each member of the Board shall be fully justified in
         relying, acting or failing to act, and shall not be liable for having
         so relied, acted or failed to act in good faith, upon any report made
         by the independent public accountant of the Company and its
         Subsidiaries or Affiliates and upon any other information furnished in
         connection with the Plan by any person or persons other than himself.

                           (m)      Relationship to Other Benefits. No payment
         under the Plan shall be taken into account in determining any benefits
         under any pension,




                                       15
<PAGE>   16

         retirement, profit sharing, group insurance or other benefit plan of
         the Company or any Subsidiary or Affiliate except as otherwise
         specifically provided.

                           (n)      Expenses. The expenses of administering the
         Plan shall be borne by the Company and its Subsidiaries and Affiliates.

                           (o)      Pronouns. Masculine pronouns and other words
         of masculine gender shall refer to both men and women.

                           (p)      Titles and Headings. The titles and headings
         of the sections in the Plan are for convenience of reference only, and
         in the event of any conflict, the text of the Plan, rather than such
         titles or headings shall control.

                  10.      CHANGES IN CAPITAL STRUCTURE.

                  Options and Restricted Stock Awards and any agreements
evidencing such Awards shall be subject to adjustment or substitution, as
determined by the Committee in its sole discretion, as to the number, price or
kind of a share of Stock or other consideration subject to such Awards or as
otherwise determined by the Committee to be equitable (i) in the event of
changes in the outstanding Stock or in the capital structure of the Company by
reason of stock dividends, stock splits, recapitalizations, reorganizations,
mergers, consolidations, combinations, exchanges, or other relevant changes in
capitalization occurring after the Date of Grant of any such Award or (ii) in
the event of any change in applicable laws or any change in circumstances which
results in or would result in any substantial dilution or enlargement of the
rights granted to, or available for, Participants in the Plan, or which
otherwise warrants equitable adjustment because it interferes with the intended
operation of the Plan. In addition, in the event of any such adjustments or
substitution, the aggregate number of shares of Stock available under the Plan
shall be appropriately adjusted by the Committee, whose determination shall be
conclusive. Any adjustment in Incentive Stock Options under this Section 10
shall be made only to the extent not constituting a "modification" within the
meaning of Section 424(h)(3) of the Code, and any adjustments under this Section
10 shall be made in a manner which does not adversely affect the exemption
provided pursuant to Rule 16b-3 under the Exchange Act. The Company shall give
each Participant notice of an adjustment hereunder and, upon notice, such
adjustment shall be conclusive and binding for all purposes.

                  11.      EFFECT OF CHANGE IN CONTROL.

                  (a)      In the event of a Change in Control, notwithstanding
         any vesting schedule provided for hereunder or by the Committee with
         respect to an Award of Options or Restricted Stock, such Option shall
         become immediately exercisable with respect to 100% of the shares
         subject to such Option and the Restricted Period shall expire
         immediately with respect to 100% of the Restricted Stock subject to
         Restrictions; provided, however, to the extent that so accelerating the
         time an Incentive Stock Option may first be exercised would cause the
         limitation provided in Section 7(g) to be exceeded, such Options shall
         instead first



                                       16
<PAGE>   17

         become exercisable in so many of the next following years as is
         necessary to comply with such limitation.

                  (b)      The obligations of the Company under the Plan shall
         be binding upon any successor corporation or organization resulting
         from the merger, consolidation or other reorganization of the Company,
         or upon any successor corporation or organization succeeding to
         substantially all of the assets and business of the Company. The
         Company agrees that it will make appropriate provisions for the
         preservation of Participant's rights under the Plan in any agreement or
         plan which it may enter into or adopt to effect any such merger,
         consolidation, reorganization or transfer of assets.

                  12.      SALE OF BUSINESS UNIT OF COMPANY

                  The Committee, in connection with the sale of any Subsidiary,
Affiliate, division or other business unit of the Company, may within the
Committee's sole and absolute discretion (1) cause any or all Options granted
hereunder to Participants whose Options or rights under Options will be
adversely affected by such transaction (a) to become immediately exercisable, or
(b) to remain exercisable after such transaction for such period as the
Committee deems appropriate under the circumstances, or both (a) and (b), or (2)
cause the restrictions on any or all shares of Restricted Stock awarded
hereunder to Participants whose Restricted Stock will be adversely affected by
such transaction to lapse immediately. The provisions of this Section 12 and the
actions of the Committee taken pursuant to this Section 12 shall be effective
upon action of the Committee alone without amendment to any Award agreement or
the consent of any Participant.

                  13.      NONEXCLUSIVITY OF THE PLAN.

                  Neither the adoption of this Plan by the Board nor the
submission of this Plan to the stockholders of the Company for approval shall be
construed as creating any limitations on the power of the Board to adopt such
other incentive arrangements as it may deem desirable, including, without
limitation, the granting of stock options otherwise than under this Plan, and
such arrangements may be either applicable generally or only in specific cases.

                  14.      AMENDMENTS AND TERMINATION.

                  The Committee may at any time terminate the Plan. With the
express written consent of an individual Participant, the Board may cancel or
reduce or otherwise alter the outstanding Awards thereunder if, in its judgment,
the tax, accounting, or other effects of the Plan or potential payouts
thereunder would not be in the best interest of the Company. The Committee may,
at any time, or from time to time, amend or suspend and, if suspended,
reinstate, the Plan in whole or in part; provided, however, that without further
stockholder approval, the Committee shall not:


                                       17
<PAGE>   18

                  (a)      Increase the maximum number of shares of Stock which
         may be issued on exercise of Options or pursuant to Restricted Stock
         Awards, except as provided in Section 10;

                  (b)      Change the maximum Option Price;

                  (c)      Extend the maximum Option term;

                  (d)      Extend the termination date of the Plan;

                  (e)      Cancel and regrant or reprice any outstanding Option,
         except as provided in Section 10; or

                  (f)      Change the class of persons eligible to receive
         Awards under the Plan.

                                      * * *

                  As originally adopted, as amended, by the Committee as of June
27, 1997 and as amended and restated as of August 17, 2000.



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