Document:

<PAGE>   1
                                                                    EXHIBIT 10.3

                             AMENDMENT NO. 1 TO THE
                             STOCKHOLDERS' AGREEMENT

         This Amendment No. 1 to the Stockholders' Agreement (this "AMENDMENT"),
dated as of October 20, 2000 is entered into by and among Advance Paradigm,
Inc., a Delaware corporation (the "COMPANY"), Rite Aid Corporation, a Delaware
corporation ("RITE AID"), Joseph Littlejohn & Levy Fund III, L.P., a Delaware
limited partnership ("JLL") and the other Persons named on the signature pages
hereof (such Persons and JLL are collectively referred to as the "JLL
STOCKHOLDERS"). The Company, Rite Aid and the JLL Stockholders are sometimes
referred to in this Amendment collectively as the "PARTIES." All terms used but
not defined in this Amendment shall have the meanings ascribed to such terms in
the Agreement (defined below).

                                    RECITALS

         WHEREAS, the Parties entered into that certain Stockholders' Agreement
(the "AGREEMENT") dated as of October 2, 2000.

         WHEREAS, the Parties have agreed to replace in its entirety Exhibit B
to the Agreement as set forth in this Amendment.

                                    AGREEMENT

         NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties hereto agree as follows:

         1. Amendment to Agreement. Exhibit B of the Agreement shall be deleted
and replaced in its entirety with the Second Amended and Restated Certificate of
Incorporation of the Company attached as Schedule 1 hereto.

         2. Status of Agreement. This Amendment shall be construed in connection
with, and as part of, the Agreement. The terms, conditions, covenants,
representations, agreements, rights and remedies set forth in the Agreement, as
modified herein, are hereby confirmed in all respects by the parties hereto and
shall continue in full force and effect.

         3. Applicable Law. This Amendment shall be governed by, and construed
in accordance with, the laws of the State of New York, without regard to the
conflicts of laws rules of such state.

         4. Counterparts. This Amendment may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.

                            [SIGNATURE PAGES FOLLOW]

<PAGE>   2

         IN WITNESS WHEREOF, this Amendment has been executed by the parties
hereto as of the day and year first above written.

                                       ADVANCE PARADIGM, INC.

                                       By  DANNY PHILLIPS
                                          --------------------------------------
                                          Name: Danny Phillips
                                          Title: Executive Vice President & CFO

                                       RITE AID CORPORATION

                                       By  ELLIOT S. GERSON
                                          --------------------------------------
                                          Name: Elliot S. Gerson
                                          Title: Sr. Executive Vice President

                                       JOSEPH LITTLEJOHN & LEVY FUND III, L.P.

                                       By  RAMSEY FRANK
                                          --------------------------------------
                                          Name: Ramsey Frank
                                          Title: Sr. Managing Director

                  AMENDMENT NO. 1 TO THE STOCKHOLDERS AGREEMENT

<PAGE>   3

                                  MILLER FAMILY HOLDINGS, LLC

                                  By      SHARON L. MILLER
                                      ------------------------------
                                      Name:  Sharon L. Miller
                                      Title:  Managing Partner

                                    SAUL FOX
                                  ----------------------------------
                                  Saul Fox

                                    DEXTER PAINE
                                  ----------------------------------
                                  Dexter Paine

                                    DAVID JESSICK
                                  ----------------------------------
                                  David Jessick

                                    JEAN-PIERRE MILLON
                                  ----------------------------------
                                  Jean-Pierre Millon

                                    JON GROVMAN
                                  ----------------------------------
                                  Jon Grovman

                                    CHARLES LEVY
                                  ----------------------------------
                                  Charles Levy

                                    CHRIS YING
                                  ----------------------------------
                                  Chris Ying

                                    JOHN MARCHETTI
                                  ----------------------------------
                                  John Marchetti

                                    STEPHEN WISE
                                  ----------------------------------
                                  Stephen Wise

                  AMENDMENT NO. 1 TO THE STOCKHOLDERS AGREEMENT
<PAGE>   4

                                    MICHAEL BERK
                                  ----------------------------------
                                  Michael Berk

                                    DOMINGO J. RODRIGUEZ
                                  ----------------------------------
                                  Domingo J. Rodriguez

                                    BRETT MILGRIM
                                  ----------------------------------
                                  Brett Milgrim

                                    NAVIN THUKKARAM
                                  ----------------------------------
                                  Navin Thukkaram

                                    CRAIG DOLINICK
                                  ----------------------------------
                                  Craig Dolinick

                                    JOHN KIM
                                  ----------------------------------
                                  John Kim

                                    MICHAEL CHANG
                                  ----------------------------------
                                  Michael Chang

                  AMENDMENT NO. 1 TO THE STOCKHOLDERS AGREEMENT
<PAGE>   5

                                   SCHEDULE 1

            SECOND AMENDED AND RESTATED CERTIFICATE OF INCORPORATION<PAGE>   1
                                                                    EXHIBIT 10.5

                              EMPLOYMENT AGREEMENT

         THIS EMPLOYMENT AGREEMENT (the "Agreement") is effective as of October
2, 2000 (the "Effective Date"), by and between Advance Paradigm, Inc. (the
"Company") and ________________ (the "Employee"). For purposes of this
Agreement, the Company and its affiliates shall collectively be referred to as
the "Companies".

         WHEREAS, the Company and Employee desire to enter into this Agreement
pursuant to which the Company will employ Employee in the capacity of
________________, ________________ for the period and on the terms and
conditions set forth herein;

         NOW, THEREFORE, in consideration of the promises and mutual covenants
and agreements herein contained, the parties hereto hereby agree as follows:

         1. EMPLOYMENT AND DUTIES. The Company hereby employs Employee, and
Employee hereby accepts such employment, in the capacity of ________________,
________________ of the Company, or other comparable position and title, with
such duties, functions, responsibilities and authority as are typically
consistent with such position and title and in accordance with the terms and
conditions hereinafter set forth. During the term of this Agreement, Employee
agrees that this position shall be his full-time employment; he shall comply
with the covenants of this Agreement; he shall devote his best efforts and all
of his business time, attention and skills to the successful continuation of the
business of the Company.

         2. TERM. The employment of Employee shall commence on the Effective
Date and shall end on the third anniversary thereof (the "Term").

         3. COMPENSATION. In consideration of the services to be rendered by
Employee to the Company hereunder, the Company hereby agrees to pay or otherwise
provide Employee the following compensation and benefits, it being understood
that the Company shall have the right to deduct therefrom all taxes which may be
required to be deducted or withheld therefrom under any provision of applicable
law (including but not limited to Social Security payments, income tax
withholding and other required deductions now in effect or which may become
effective by law any time during the Term):

                  (a) SALARY. Employee shall receive an annual salary of
______________ Dollars ($_________) with such increases thereto as may be
determined and paid by the Company ("Base Salary") in accordance with the
Company's salary payment practices and policies in effect from time to time for
senior managers of the Company.

                  (b) ADDITIONAL COMPENSATION. In addition to the Base Salary,
Employee shall be entitled to receive the compensation set forth in Exhibit A
attached hereto.

<PAGE>   2

                  (c) BENEFIT PLANS. Employee shall be entitled to participate
in any health, accident, disability and life insurance programs, and any other
fringe benefit program which the Company may adopt and implement for the benefit
of the Company's employees.

                  (d) EXPENSES. Employee shall be entitled to receive
reimbursement for all reasonable expenses incurred by Employee in connection
with the fulfillment of Employee's duties hereunder; provided, however, that
Employee has complied with all policies and procedures relating to the
reimbursement of such expenses as shall, from time to time, be established by
the Company.

                  (e) PAID TIME OFF. During the Term of employment, Employee
shall be permitted to take time off with such frequency and of such duration as
are consistent with the executive paid time off policies of the Company in
effect on the date of this Agreement so long as the absence of Employee does not
interfere in any material respect with the performance by Employee of Employee's
duties hereunder.

         4.       TERMINATION.

                  (a) DEATH OR DISABILITY. This Agreement shall terminate
automatically upon the Employee's death. If the Company determines in good faith
that the Disability of the Employee has occurred (pursuant to the definition of
"Disability" set forth below), it may give to the Employee written notice of its
intention to terminate the Employee's employment. In such event, the Employee's
employment with the Company shall terminate effective on the 30th day after
receipt of such notice by the Employee (the "Disability Effective Date"),
provided that, within the 30 days after such receipt, the Employee could not
have (as determined by the process set forth below) and shall not have returned
to the performance of the essential functions of the Employee's position with or
without reasonable accommodations (as defined in Title I of the American's with
Disabilities Act) ("Reasonable Accommodations"). For purposes of this Agreement,
"Disability" means Employee's incapacity due to physical or mental illness,
which is determined by a physician selected by the Company or its insurers and
acceptable to the Employee or the Employee's legal representative (such
agreement as to acceptability not to be withheld unreasonably), to prevent
Employee's substantial and continuous performance of the essential functions of
his position with or without Reasonable Accommodations for a period of more than
12 weeks after its commencement or for an aggregate of sixteen weeks in any
12-month period.

                  (b) CAUSE. The Company may terminate the Employee's employment
for "Cause." For purposes of this Agreement, "Cause" means:

                           (i) any willful and material act or acts of personal
         dishonesty taken by the Employee at the expense of the Company, or

                           (ii) any willful and material violation by the
         Employee of the Employee's obligations under this Agreement, or

                                       2
<PAGE>   3

                           (iii) the conviction of the Employee of a felony, or

                           (iv) failure to meet reasonable performance criteria
         for the Employee's position as established by the Company, after
         Employee fails to cure such non-performance within a reasonable time
         after receiving notice of the same.

         For purposes of this Section 4(b) (i) and (ii), the term "willful"
         shall mean any act of the Employee done in bad faith or without
         reasonable belief that the Employee's action was in the best interest
         of the Company.

                  (c) WITHOUT CAUSE. The Company may, at its option, terminate
         Employee's employment without Cause at any time upon written notice to
         Employee.

                  (d) BY EMPLOYEE FOR GOOD REASON. During the Period of
         Employment, the Employee's employment hereunder may be terminated by
         the Employee for Good Reason upon thirty (30) days prior written notice
         by Employee to the Company. For purposes of this Agreement, "Good
         Reason" shall mean, without the Employee's consent:

                           (i) the assignment to the Employee of any duties
                  inconsistent in any material respect with the Employee's
                  position (including status, titles and reporting
                  relationships), authority, duties or responsibilities as
                  contemplated by Section 1 of this Agreement, or any other
                  action by the Company which results in a significant
                  diminution in such, or new, position, authority, duties or
                  responsibilities, excluding for this Section 4(d) any isolated
                  and inadvertent action not taken in bad faith and which is
                  remedied by the Company within ten (10) days after receipt of
                  a notice thereof given by the Employee;

                           (ii) any failure by the Company to comply with any of
                  the provisions of Section 3 of this Agreement other than an
                  isolated and inadvertent failure not taken in bad faith and
                  which is remedied by the Company within ten (10) days after
                  receipt of notice thereof given by the Employee;

                           (iii) the Employee being required to relocate to a
                  principal place of employment more than twenty-five (25) miles
                  from his current principal place of employment; or

                           (iv) any purported termination by the Company of the
                  Employee's employment otherwise than as expressly permitted by
                  this Agreement.

                  (e) NOTICE OF TERMINATION. Any termination by the Company or
Employee shall be communicated by Notice of Termination to the Employee hereto
given in accordance with Section 13 of this Agreement. For purposes of this
Agreement, a "Notice of Termination" means a written notice which

                                       3
<PAGE>   4

                           (i) indicates the specific termination provision in
         this Agreement relied upon,

                           (ii) sets forth in reasonable detail the facts and
         circumstances claimed to provide a basis for termination of the
         Employee's employment under the provision so indicated, and

                           (iii) if the Date of Termination (as defined below)
         is other than the date of receipt of such notice, specifies the
         termination date.

         The failure by the Employee or Company to set forth in the Notice of
         Termination any fact or circumstance which contributes to a showing of
         the basis for termination shall not waive any right of such party
         hereunder or preclude such party from asserting such fact or
         circumstance in enforcing his or its rights hereunder.

                  (f) DATE OF TERMINATION. "Date of Termination" means the date
of receipt of the Notice of Termination or any later date specified therein, as
the case may be; provided, however, that

                           (i) if the Employee's employment is terminated by the
         Company other than for Cause or Disability, the Date of Termination
         shall be the date on which the Company notifies the Employee of such
         termination, and

                           (ii) if the Employee's employment is terminated by
         reason of death or Disability, the Date of Termination shall be the
         date of death of the Employee or the Disability Effective Date, as the
         case may be.

         5. OBLIGATIONS OF THE COMPANY UPON TERMINATION.

                  (a) DEATH. If the Employee's employment is terminated by
reason of the Employee's death, this Agreement shall terminate without further
obligations to the Employee's legal representatives under this Agreement, other
than those obligations accrued or earned and vested (if applicable) by the
Employee as of the Date of Termination, including, for this purpose the
obligation to pay the Employee

                           (i) the Base Salary through the Date of Termination
         at the rate in effect on the Date of Termination (the "Base Salary"),

                           (ii) the amount of any bonus earned by the Employee
         through the Date of Termination, and

                           (iii) any compensation previously deferred by the
         Employee (together with accrued interest, if any, thereon) and not yet
         paid by the Company and any accrued vacation pay not yet paid by the
         Company (such amounts specified in clauses (i), (ii) and (iii) are
         hereinafter referred to as "Accrued Obligations").

                                       4
<PAGE>   5

                  All such Accrued Obligations shall be paid to the employee's
estate or beneficiary, as applicable, in a lump sum in cash within 30 days of
the Date of Termination.

                  (b) DISABILITY. If the Employee's employment is terminated by
reason of the Employee's Disability, this Agreement shall terminate without
further obligations to the Employee, other than those obligations accrued or
earned and vested (if applicable) by the Employee as of the Date of Termination,
including for this purpose, all Accrued Obligations. All such Accrued
Obligations shall be paid to the Employee in a lump sum in cash within 30 days
of the Date of Termination. Employee shall be entitled after the Disability
Effective Date to receive disability benefits provided by the Company to
disabled employees or their families in accordance with such plans, programs,
practices and policies relating to disability, if any, in effect on the
Disability Effective Date.

                  (c) CAUSE. If the Employee's employment shall be terminated
for Cause, the Company's obligations to the Employee shall terminate other than
the obligation to pay to the Employee the portion of Base Salary earned and the
balance of paid time off earned by Employee through the Date of Termination plus
the amount of any compensation previously deferred by the Employee, if any,
consistent with Company policy.

                  (d) GOOD REASON; OTHER THAN FOR CAUSE, DISABILITY OR DEATH. If
the Company shall terminate the Employee's employment (other than for Cause or
Disability and except if the Employee's employment is terminated as a result of
his death) or if, during the Term, the Employee shall terminate his employment
for Good Reason:

         The Company shall pay to the Employee any accrued obligations as of the
         Date of Termination and with respect to items "A" and "B" below, in a
         lump sum in cash within thirty (30) days after the Date of Termination
         and with respect to items "C", "D" and "E" below, cause the Employee to
         receive the aggregate of the following amounts:

                           (A)      the Employee's Base Salary and car allowance
                                    (as set forth in Exhibit A attached hereto)
                                    as of the Date of Termination through the
                                    end of the Term, but in any event not less
                                    than twelve months of Employee's Base
                                    Salary;

                           (B)      the target bonus for the fiscal year in
                                    which the Date of Termination occurs, or the
                                    Employee's most recent annual bonus payment,
                                    if greater, multiplied by the number of
                                    years (including pro-ration for any partial
                                    year) between the Date of Termination and
                                    the end of the Term;

                           (C)      those other obligations and benefits accrued
                                    or earned and vested (if applicable) by the
                                    Employee as of the Date of Termination; and

                                       5
<PAGE>   6

                           (D)      any options granted effective October 2,
                                    2000 which would otherwise have been vested
                                    shall become fully vested; and

                           (E)      subject to applicable limitations imposed by
                                    law or by the terms of any of the Company's
                                    plan, programs or policies, for the
                                    remainder of the Term (determined without
                                    regard to the termination thereof pursuant
                                    to Section 4), or such longer period as any
                                    plan, program, practice or policy may
                                    provide, the Company shall continue benefits
                                    to the Employee and /or the Employee's
                                    family at least equal to those which would
                                    have been provided to them in accordance
                                    with Section 3(c) of this Agreement if the
                                    Employee's employment had not been
                                    terminated, including (but not by way of
                                    limitation) health insurance and life
                                    insurance.

                  (e) STOCK OPTIONS. Except as otherwise provided herein,
Employee shall have ninety (90) days from the Date of Termination to exercise
any vested but unexercised options previously granted to Employee to purchase
shares of the Common Stock of the Company. Any such exercise will be in
accordance with the terms and conditions of the applicable stock option plan and
stock option agreement.

         6. CONFIDENTIALITY. Employee acknowledges that, during the course of
Employee's performance of services for the Company, Employee will acquire
knowledge with respect to the Companies' business operations, including, by way
of illustration, the Company's existing and contemplated services, products,
trade secrets, ideas, know how, research and development, formulas, models,
compilations, processes, computer code generated or developed, software or
programs and related documentation, business and financial methods or practices,
plans, pricing, operating margins, marketing, merchandising and selling
techniques and information, customer lists, details of customer agreements,
sources of supply, employee compensation and benefit plans, patient records and
data, and other confidential information relating to the Companies' policy,
operating strategy, expansion strategy or business strategy (all of such
information herein referred to as the "Confidential Information"); provided,
that the term Confidential Information shall not include information which is
generally known to the public or the industry other than as a result of
Employee's breach. Employee shall not use, in any way, or disclose any of the
Confidential Information, directly or indirectly, either during the term of
Employee's employment or at anytime thereafter, except as required in the course
of Employee's employment. Employee acknowledges that all computer code,
programs, files, records, documents, information, data and similar items and
documentation relating to the business of the Companies (including all copies
thereof), whether prepared by Employee or otherwise, are the exclusive property
of the Companies and, upon termination of Employee's employment with the Company
(for whatever reason), Employee shall not take, but shall leave with the
Company, all such computer code, programs, files, records, documents,
information, data and similar items and documentation relating to the business
of the Companies (including all copies thereof). The obligations of this Section
6 are continuous and shall survive the termination of Employee's employment with
the Company.

                                       6
<PAGE>   7

         7. RESTRICTIONS ON COMPETITIVE EMPLOYMENT. During the term of
Employee's employment and for the twelve-month period following termination of
Employee's employment, except with the express written consent of the Board of
Directors or the Chief Executive Officer of the Company, Employee will not,
become engaged in, render services to, permit Employee's name to be used in
connection with, own, manage, operate, control, be employed by, participate in,
consult with, or be connected in any manner, whether as an officer, director,
employee, agent, consultant, stockholder (other than as the holder of less than
2% of the aggregate outstanding shares of a class of equity securities publicly
traded on a national securities exchange or quotation system) or other capacity
with the ownership, management, operation or control of, any business or
enterprise substantially engaged or about to become engaged substantially in the
Business of the Companies and is reasonably competitive with the Companies. The
Business of the Companies includes, but is not limited to, all those products
and services that are presently or hereafter marketed by the Companies, or that
are in the development stage at the time of termination of Employee's employment
and are actually marketed by the Companies and/or their affiliates thereafter,
as well as, the following businesses: (i) the third party prescription drug
claims processing business; (ii) the organization and administration of retail
pharmacy networks; (iii) the design, development or marketing of or consulting
as to, prescription drug benefit plans; (iv) the provision of mail service
pharmacy; (v) the collection, analysis and/or sale of data relating to
prescription drug utilization; (vi) formulary management and rebate
administration services; (vii) disease state management, case management or
demand management services and (viii) any other business in which the Companies
and/or any of their affiliates is then engaged. In the event this Agreement
expires and is neither renewed nor replaced, and Employee's employment
terminates when no employment agreement is in effect, then Employee's
obligations under this Section 7 shall continue, at the Company's option, for up
to one year provided that the Company continues to cause Employee to receive his
Base Salary during such non-compete period; and provided further that Employee
shall be released from his obligations under this Section 7 in the event the
Company ceases payment of the Base Salary.

         8. NONINTERFERENCE. Employee agrees that during the term of Employee's
employment and for the twelve month period following the termination of
Employee's employment by the Company, Employee shall not, directly or
indirectly, whether as principal, agent, officer, employee, investor,
consultant, stockholder, or otherwise, alone or in association with any other
person:

                  (a) Induce or attempt to influence, directly or indirectly,
any employee of the Companies to terminate his employment with the Companies,

                  (b) Disparage the good name or reputation of the Companies or
business of the Companies or engage in any conduct that brings the Companies or
the Companies' business into public ridicule or disrepute; or

                  (c) Solicit, induce or encourage any customer, prospective
customer, consultant, independent contractor or supplier of the Companies for
the purpose of offering products or services that, directly or indirectly,
compete or interfere with the Business of the

                                       7
<PAGE>   8

Companies. For purposes of this section, "prospective customer" shall mean any
party who has had contact with the Companies within the six-month period
immediately preceding termination of employment hereunder.

         9. INVENTIONS AND PATENTS. Employee agrees that all inventions, ideas,
innovations, improvements or discoveries relating to the business or the Company
of the Company's method of conducting business (including new contributions,
improvements, ideas and discoveries, whether patentable or copyrightable or not)
conceived or made by Employee during Employee's employment with the Company
shall be, and hereby are, assigned to the Company. Employee will promptly
disclose such inventions, ideas, innovations or improvements to Employee's
supervisor or Chief Executive Officer of the Company and perform all actions
reasonably requested by Employee's supervisor or Chief Executive Officer to
establish and confirm such ownership. The expense of securing any such patents
shall be borne by the Company.

         10. MITIGATION. In no event shall the Employee be obligated to seek
other employment or take any other action by way of mitigation of the amounts
payable to the Employee under any of the provisions of this Agreement.

         11. INDEMNIFICATION. The Company shall maintain, for the benefit of the
Employee, director and officer liability insurance in form at least as
comprehensive as, and in an amount that is at least equal to, that maintained by
the Company on the Effective Date. In addition, the Employee shall be
indemnified by the Company against liability as an officer and director of the
Company and any subsidiary or affiliate of the Company to the maximum extent
permitted by applicable law. The Employee's rights under this Section 11 shall
continue so long as he may be subject to such liability, whether or not this
Agreement may have terminated prior thereto.

         12. NO CONFLICTS. Employee represents to the Company that Employee has
neither entered into nor is bound by any agreement or obligation, whether
written or verbal, direct or indirect, that prohibits or impedes Employee's
ability to perform Employee's obligations hereunder, including without
limitation any agreement not to compete or agreement to solicit health plan
payors.

         13. NOTICES. Any notice or other communication required or permitted to
be given hereunder shall be in writing and deemed to have been given when
delivered in person or when dispatched by telegram or electronic facsimile
transfer (confirmed in writing by overnight mail or certified mail, return
receipt requested, postage prepaid, simultaneously dispatched) to the addressees
at the addresses specified below.

         IF TO EMPLOYEE:
                                   --------------------

                                   --------------------

                                   --------------------
                                   Phone No:
                                   Fax No.:

                                       8
<PAGE>   9

         IF TO THE COMPANY:        Advance Paradigm, Inc.
                                   5215 North O'Connor Blvd., Suite 1600
                                   Irving, Texas 75039
                                   Attention: Chief Executive Officer
                                   Phone No.: (469-420-6000
                                   Fax No.: (469) 420-6109

or to such other address or fax number as either party may from time to time
designate in writing to the other.

         14. ARBITRATION. Any dispute or controversy between the Company and the
Employee, whether arising out of or relating to this Agreement, the breach of
this Agreement, or otherwise, shall be settled by arbitration administered by
the American Arbitration Association ("AAA") in accordance with its Commercial
Arbitration Rules then in effect and judgment on the award rendered by the
arbitrator may be entered in any court having jurisdiction thereof. Any
arbitration shall be held before a single arbitrator who shall be selected by
the mutual agreement of the Company and the Employee, unless the parties are
unable to agree to an arbitrator, in which case, the arbitrator will be selected
under the procedures of the AAA. The arbitrator shall have the authority to
award any remedy or relief that a court of competent jurisdiction could order or
grant, including, without limitation, the issuance of an injunction. However,
either party may, without inconsistency with this arbitration provision, apply
to any court having jurisdiction over such dispute or controversy and seek
interim provisional, injunctive or other equitable relief until the arbitration
award is rendered or the controversy is otherwise resolved. Except as necessary
in court proceedings to enforce this arbitration provision or an award rendered
hereunder, or to obtain interim relief, neither a party nor an arbitrator may
disclose the existence, content or results of any arbitration hereunder without
the prior written consent of the Company and the Employee. The Company and the
Employee acknowledge that this Agreement evidences a transaction involving
interstate commerce. Notwithstanding any choice of law provision included in
this Agreement, the United States Federal Arbitration Act shall govern the
interpretation and enforcement of this arbitration provision. The arbitration
proceeding shall be conducted in Maricopa County, Arizona or such other location
to which the parties may agree. The Company shall pay the costs of any
arbitrator appointed hereunder.

         15. REIMBURSEMENT OF LEGAL EXPENSES. In the event that the Employee
recovers any monies relating to any claim or dispute involving the Employee's
employment with the Company, including any claim or dispute relating to (a) this
Agreement, (b) termination of the Employee's employment with the Company or (c)
the failure or refusal of the Company to perform fully in accordance with the
terms hereof, whether in mediation, arbitration or litigation, the Company shall
promptly reimburse the Employee for all costs and expenses (including, without
limitation, attorneys' fees) relating solely, or allocable, to such successful
claim. In any other case, the Employee and the Company shall each bear all their
own costs and attorneys' fees.

                                       9
<PAGE>   10

         16. REPRESENTATIONS.

                  (a) The Company represents and warrants that (i) the execution
         of this Agreement has been duly authorized by the Company, (ii) the
         execution, delivery and performance of this Agreement by the Company
         does not and will not violate any law, regulation, order, judgment or
         decree or any agreement, plan or corporate governance document of the
         Company and (iii) upon the execution and delivery of this Agreement by
         the Employee, this Agreement shall be the valid and binding obligation
         of the Company, enforceable in accordance with its terms, except to the
         extent enforceability may be limited by applicable bankruptcy,
         insolvency or similar laws affecting the enforcement of creditors'
         rights generally and by the effect of general principles of equity
         (regardless of whether enforceability is considered in a proceeding in
         equity or at law).

                  (b) The Employee represents and warrants to the Company that
         (i) the execution, delivery and performance of this Agreement by the
         Employee does not and will not violate any law, regulation, order
         judgment or decree or any agreement to which the Employee is a party or
         by which he is bound, (ii) the Employee is not a party to or bound by
         any employment agreement, noncompetition agreement or confidentiality
         agreement with any other person or entity that would interfere with
         this Agreement or his performance of services hereunder, and (iii) upon
         the execution and delivery of this Agreement by the Company, this
         Agreement shall be the valid and binding obligation of the Employee,
         enforceable in accordance with its terms, except to the extent
         enforceability may be limited by applicable bankruptcy, insolvency or
         similar laws affecting the enforcement of creditors' rights generally
         and by the effect of general principles of equity (regardless of
         whether enforceability is considered in a proceeding in equity or at
         law).

         17. SURVIVAL. No termination of Employee's employment (for whatever
reason) shall reduce or terminate Employee's covenants and agreements in
Sections 6, 7, 8 and 9 hereof.

         18. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties hereto relating to the subject matter hereof, and supersedes
all prior agreements and understandings, whether oral or written, with respect
to the same; provided that the foregoing shall in no event be deemed to preclude
or supercede any obligation that Rite Aid Corporation may have to Employee under
any agreement between Rite Aid and Employee. No modification, alteration,
amendment or recision of or supplement to this Agreement shall be valid or
effective unless the same is in writing and signed by the parties hereto.

         19. GOVERNING LAW. This Agreement and the rights and duties of the
parties hereunder shall be governed by, construed under and enforced in
accordance with the laws of the State of Arizona.

         20. ASSIGNMENT. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective heirs, personal
representatives, successors and permitted assigns. The rights, duties and
obligations under this Agreement are assignable by the

                                       10
<PAGE>   11

Company to a successor of all or substantially all of the business or assets of
the Company. The rights, duties and obligations of Employee under this Agreement
shall not be assignable.

         21. SEVERABILITY. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision in any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein except that
any court having jurisdiction shall have the power to reduce the duration, area
or scope of such invalid, illegal or unenforceable provision and, in its reduced
form, it shall be enforceable. It is the intent of the parties hereto that the
provisions hereof be enforceable to the fullest extent permitted by applicable
law. This agreement may be enforced by the Company or any of its affiliates
engaged in the Business.

         22. REMEDIES. The parties to this Agreement shall be entitled to
enforce their respective rights under this Agreement specifically, to recover
damages (including, without limitation, reasonable fees and expenses of counsel)
by reason of any breach of any provision of this Agreement and to exercise all
other rights existing in their respective favor. The parties hereto agree and
acknowledge that money damages may not be an adequate remedy for any breach or
threatened breach of the provisions of this Agreement and that any party may in
their respective sole discretion apply to any court of law or equity of
competent jurisdiction for specific performance and/or injunctive relief in
order to enforce or prevent any violations of the provisions of this Agreement.
Such injunction or decree shall be available without the posting of any bond or
other security.

         23. COUNTERPARTS. This Agreement may be executed by the parties hereto
in separate counterparts, with the same effect as if the parties had signed the
same document. All such counterparts shall be deemed an original, shall be
construed together and shall constitute one and the same instrument.

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

                                        ADVANCE PARADIGM, INC.

                                        By:
                                             -----------------------------------
                                             David D. Halbert, Chairman and CEO

                                        EMPLOYEE

                                        ----------------------------------------

                                       11
<PAGE>   12

                                   EXHIBIT "A"

                                 FRINGE BENEFITS

1.       Stock Options. Employee shall be granted an incentive stock option (the
                  "Option") to purchase ____________ shares of the Common Stock
                  (the "Shares") of the Company on the Effective Date. The
                  Option shall be subject to approval by the Company's Board of
                  Directors and granted pursuant to the provisions of the
                  Company's Amended and Restated Incentive Stock Option Plan
                  (the "Plan"). The Option shall vest and become exercisable as
                  to 20% of the shares on each of the first five anniversaries
                  of the Effective Date. The Option shall vest in full upon a
                  change in control transaction as defined in Employee's Option
                  Agreement.

2.       Incentive Bonus. Employee will be entitled to participate in the
                  Company's compensation plan for an annual bonus based on the
                  Company's audited financial performance for the fiscal year as
                  well as Employee's individual contribution to the Company. The
                  performance criteria used to calculate the Employee's Annual
                  Bonus during the Employment Period shall be determined by the
                  Company and will be established with a targeted bonus of
                  _____% of Employee's Salary per annum. Any Annual Bonus
                  payable with respect to a fiscal year shall be subject to the
                  approval of the Compensation Committee of the Board of
                  Directors and shall be paid in accordance with Company's
                  normal payroll practices.

3.       Car Allowance. Employee shall be provided a $______ per month car
                  allowance. At year end, the value of this benefit will be
                  reported as required by the IRS regulations on Employee's Form
                  W-2.

                                       12

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00020-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00020-of-00352.parquet"}]]