Document:

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                                                                   EXHIBIT 10.10

                       1998 NEW EMPLOYEE STOCK OPTION PLAN

ARTICLE 1. ESTABLISHMENT, OBJECTIVES AND DURATION

1.1      ESTABLISHMENT OF THE PLAN. Caremark Rx, Inc., a Delaware corporation
(hereinafter referred to as the "Company"), hereby establishes a compensation
plan to be known as the "Caremark Rx, Inc. 1998 New Employee Stock Option Plan"
(hereinafter referred to as the "Plan"), as set forth in this document. The Plan
permits the grant of Options and is intended to fit within the exception to the
New York Stock Exchange's shareholder approval requirement for options issued as
a material inducement to entering into an employment contract with the Company
set forth in section 312.03(a)(3) of the New York Stock Exchange Listed Company
Manual as of the date hereof.

The Plan shall become effective as of August 6, 1998 (the "Effective Date") and
shall remain in effect as provided in Section 1.3 hereof.

1.2      OBJECTIVES OF THE PLAN. The objectives of the Plan are to optimize the
profitability and growth of the Company through the use of stock options, which
are consistent with the Company's objectives and which link the interests of
Participants to those of the Company's stockholders; to provide Participants
with an inducement for excellence in individual performance; to promote teamwork
among Participants; and to induce individuals to join the Company and execute
employment agreements with the Company.

The Plan is further intended to provide flexibility to the Company in its
ability to motivate, attract, and retain the services of Participants who make
significant contributions to the Company's success and to allow Participants to
share in the success of the Company.

1.3      DURATION OF THE PLAN. The Plan shall commence on the Effective Date, as
described in Section 1.1 hereof, and shall remain in effect, subject to the
right of the Board of Directors or the Committee to amend or terminate the Plan
at any time pursuant to Article 11 hereof, until all Shares subject to it shall
have been purchased or acquired according to the Plan's provisions.

ARTICLE 2. DEFINITIONS

Whenever used in the Plan, the following terms shall have the meanings set forth
below, and when the meaning is intended, the initial letter of the word shall be
capitalized:

2.1      "AFFILIATE" means a "parent corporation" or "subsidiary corporation" as
defined in Section 424 of the Code.

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2.2      "AWARD" means, individually or collectively, a grant under this Plan of
Options.

2.3      "AWARD AGREEMENT" means either (i) an agreement entered into by the
Company and each Participant setting forth the terms and provisions applicable
to Awards granted under this Plan or (ii) a certificate executed by the Company
and delivered to the Participant evidencing and setting forth the terms and
provisions applicable to Awards granted under this Plan.

2.4      "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.

2.5      "BOARD" OR "BOARD OF DIRECTORS" means the Board of Directors of the
Company.

2.6      "CAUSE" shall be determined by the Committee, exercising good faith and
reasonable judgment, and shall mean the occurrence of any one or more of the
following:

         (a)      The willful and continued failure by the Participant to
substantially perform his duties (other than any such failure resulting from the
Participant's Disability) after a written demand for substantial performance is
delivered by the Committee to the Participant that specifically identifies the
manner in which the Committee believes that the Participant has not
substantially performed his duties, and the Participant has failed to remedy the
situation within 30 calendar days of receiving such notice; or

         (b)      The Participant's conviction for committing an act of fraud,
embezzlement, theft or another act constituting a felony; or

         (c)      The willful engaging by the Participant in gross misconduct
materially and demonstrably injurious to the Company, as determined by the
Committee. However, no act or failure to act on the Participant's part shall be
considered "willful" unless done, or omitted to be done, by the Participant not
in good faith and without reasonable belief that his action or omission was in
the best interest of the Company.

2.7      "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,

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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 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

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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 2.7 and (ii) that
is set forth as a supplement to this Section 2.7 in the Award Agreement.

2.8      "CODE" means the Internal Revenue Code of 1986, as amended from time to
time.

2.9      "COMMITTEE" means the Compensation Committee of the Board, as specified
in Article 3 herein, or such other Committee appointed by the Board to
administer the Plan with respect to grants of Awards.

2.10     "COMMON STOCK" means Caremark Rx, Inc. common stock, $.001 par value.

2.11     "COMPANY" means Caremark Rx, Inc., and also means any corporation of
which a majority of the voting capital stock is owned directly or indirectly by
Caremark Rx, Inc. or by any of its Subsidiaries, and any other corporation
designated by the Committee as being a Company hereunder (but only during the
period of such ownership or designation).

2.12     "DIRECTOR" means any individual who is a member of the Board of
Directors of Caremark Rx, Inc.

2.13     "DISABILITY", as applied to a Participant, means that the Participant
(a) has established to the satisfaction of the Committee that the Participant is
unable to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to last for a
continuous period of not less than 12 months (all within the meaning of Section
22(e)(3) of the Code), and (b) has satisfied any requirement imposed by the
Committee in regard to evidence of such disability.

2.14     "EFFECTIVE DATE" shall have the meaning ascribed to such term in
Section 1.1 hereof.

2.15     "ELIGIBLE PERSON" shall mean a person not previously employed by the
Company, whose grant of an Award is a material inducement to his/her entering
into an employment contract with the Company.

2.16     "EMPLOYEE" means any officer or employee of the Company.

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2.17     "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor act thereto.

2.18     "FAIR MARKET VALUE" Except as otherwise determined by the Committee,
the "Fair Market Value" of a share of Common Stock as of any date shall be 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).

2.19     "IMMEDIATE FAMILY MEMBERS" means the spouse, children and grandchildren
of a Participant.

2.20     "INSIDER" shall mean an individual who is, on the relevant date, a
Director, a 10% Beneficial Owner of any class of the Company's equity securities
that is registered pursuant to Section 12 of the Exchange Act or an officer of
the Company, as defined under Section 16 of the Exchange Act and as determined
by the Board of Directors from time to time.

2.21     "NONEMPLOYEE DIRECTOR" means an individual who is a member of the Board
of Directors of the Company but who is not an Employee of the Company.

2.22     "OPTION" means an option to purchase Shares granted under Article 6
herein and which is not intended to meet the requirements of Code Section 422.

2.23     "OPTION PRICE" means the price at which a Share may be purchased by a
Participant pursuant to an Option.

2.24     "PARTICIPANT" means an Eligible Person who has outstanding an Award
granted under the Plan.

2.25     "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.

2.26     "PLAN" means the Caremark Rx, Inc. 1998 New Employee Stock Option Plan.

2.27     "SHARES" means Common Stock of Caremark Rx, Inc., par value $.001 per
share.

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2.28     "SUBSIDIARY" means any corporation, partnership, joint venture or other
entity in which the Company has a majority voting interest.

ARTICLE 3. ADMINISTRATION

3.1      THE COMMITTEE. The Plan shall be administered by the Committee, or by
any other committee appointed by the Board, which Committee shall consist solely
of two or more "Nonemployee Directors" within the meaning of Rule 16b-3 under
the Exchange Act, or any successor provision. The members of the Committee shall
be appointed from time to time by, and shall serve at the discretion of, the
Board of Directors.

3.2      AUTHORITY OF THE COMMITTEE. Except as limited by law or by the
Certificate of Incorporation or Bylaws of the Company, and subject to the
provisions herein, the Committee shall have full power to select Participants
who shall participate in the Plan; determine the sizes and types of Awards;
determine the terms and conditions of Awards in a manner not inconsistent with
the Plan; construe and interpret the Plan and any agreement or instrument
entered into under the Plan as they apply to Participants; establish, amend or
waive rules and regulations for the Plan's administration as they apply to
Participants; alter, amend, suspend or terminate the Plan in whole or in part;
and (subject to the provisions of Article 11 herein) amend the terms and
conditions of any outstanding Award to the extent such terms and conditions are
within the discretion of the Committee as provided in the Plan. Further, the
Committee shall make all other determinations which may be necessary or
advisable for the administration of the Plan, as the Plan applies to Employees.
As permitted by law, the Committee may delegate its authority as identified
herein.

3.3      DECISIONS BINDING. All determinations and decisions made by the
Committee pursuant to the provisions of the Plan and all related orders and
resolutions of the Board shall be final, conclusive and binding on all persons,
including the Company, its stockholders, Employees, Participants and their
estates and beneficiaries.

3.4      COSTS OF PLAN. The costs and expenses incurred in the operation and
administration of the Plan shall be borne by the Company.

ARTICLE 4. SHARES SUBJECT TO THE PLAN AND MAXIMUM AWARDS

4.1      NUMBER OF SHARES AVAILABLE FOR GRANTS. Subject to adjustment as
provided in Section 4.2 herein, the number of Shares hereby reserved for
issuance to Participants under the Plan shall be Four Million (4,000,000).

Shares issued upon exercise of Options under the Plan may be either authorized
but unissued Shares or Shares reacquired by the Company. If, on or prior to the

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termination of the Plan, an Award granted thereunder expires or is terminated
for any reason without having been exercised or vested in full, the unpurchased
or unvested Shares covered thereby will again become available for the grant of
Awards under the Plan. Shares covered by Options surrendered in connection with
the exercise of other Options shall not be deemed to have been exercised and
shall again become available for the grant of awards under the Plan.

4.2      ADJUSTMENTS IN AUTHORIZED SHARES. In the event of any change in
corporate capitalization, such as a stock split, or a corporate transaction,
such as any merger, consolidation, separation, including a spin-off, or other
distribution of stock or property (excluding cash dividends) of the Company, any
reorganization (whether or not such reorganization comes within the definition
of such term in Code Section 368) or any partial or complete liquidation of the
Company, an adjustment shall be made in the number and class of Shares which may
be delivered under Section 4.1, in the number and class of and/or price of
Shares subject to outstanding Awards granted under the Plan, and in the Award
limits set forth in Section 4.1, as may be determined to be appropriate and
equitable by the Committee, in its sole discretion, to prevent dilution or
enlargement of rights; provided, however, that the number of Shares subject to
any Award shall always be a whole number.

ARTICLE 5. ELIGIBILITY AND PARTICIPATION

5.1      ELIGIBILITY. All Eligible Persons are eligible to participate in this
Plan.

5.2      ACTUAL PARTICIPATION. Subject to the provisions of the Plan, the
Committee may, from time to time, select from all Eligible Persons, those to
whom Awards shall be granted and shall determine the nature and amount of each
Award.

ARTICLE 6. STOCK OPTIONS

6.1      GRANT OF OPTIONS. Subject to the terms and provisions of the Plan,
Options may be granted to Eligible Persons in such number, and upon such terms,
and at any time and from time to time as shall be determined by the Committee.

6.2      AWARD AGREEMENT. Each Option grant shall be evidenced by an Award
Agreement that shall specify the Option Price, the duration of the Option, the
number of Shares to which the Option pertains, and such other provisions as the
Committee shall determine. The Award Agreement also shall specify that the
Option is intended to be a nonqualified stock option whose grant is intended not
to fall under the provisions of Code Section 422.

6.3      OPTION PRICE. The Option Price for each grant of an Option under this
Plan shall be at least equal to 100% of the Fair Market Value of a Share on the

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date the Option is granted.

6.4      VESTING OF OPTIONS. Unless otherwise designated by the Committee, each
Option granted pursuant to the Plan shall vest as follows:

         (a)      34% of the Options granted shall vest on the Option grant
date;

         (b)      33% of the Options granted shall vest on each of the first
anniversary and second anniversary of the Option grant date; provided, however,
that if during the first year after the Option grant date, the stock price of
the Company's common stock closes at or above $12.00 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 Option grant date shall vest immediately at the end of
such 20th day; and, provided further, that if during the second year after the
Option grant date, the stock price of the Company's common stock closes at or
above $18.00 for any twenty (20) out of thirty (30) consecutive trading days,
the 33% of Options due to vest on the second anniversary of the Option grant
date shall vest immediately at the end of such 20th day.

6.5      DURATION OF OPTIONS. Each Option granted to an Employee shall expire at
such time as the Committee shall determine at the time of grant; provided,
however, that no Option shall be exercisable later than the tenth anniversary
date of its grant.

6.6      EXERCISE OF OPTIONS. Options granted under this Article 6 shall be
exercisable at such times and be subject to such restrictions and conditions as
the Committee shall in each instance approve, which need not be the same for
each grant or for each Participant.

6.7      PAYMENT. Options granted under this Article 6 shall be exercised in
accordance with rules and procedures established by the Committee or, in the
absence of such rules and procedures, (i) in accordance with the Award Agreement
or (ii) by the delivery of a proper notice of exercise to the Company, setting
forth the number of Shares with respect to which the Option is to be exercised.

No shares of Common Stock shall be issued on the exercise of an Option unless
the Option Price is paid for in full at the time of exercise. Payment shall be
made in cash, check in a form acceptable to the Company or other instrument
acceptable to the Company. In addition, subject to compliance with applicable
laws and regulations and such conditions as the Committee may impose, the
Committee may elect to accept payment in shares of Common Stock of the Company
which are already owned by the Participant, valued at the Fair Market Value
thereof on the date of exercise. The Committee may also allow a Participant to
exercise an Option by use of proceeds to be received from the sale of Common
Stock issuable pursuant to the Option being exercised. Moreover, the Committee,

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acting in its absolute discretion, may authorize payment in any combination of
the foregoing payment options, and the Committee, acting in its absolute
discretion, may, subject to the applicable provisions of Delaware law, elect to
accept payment in the form of a note acceptable to the Committee or in the form
of any other property acceptable to the Committee.

As soon as practicable after receipt of proper notification of exercise and full
payment, the Company, if requested by the Participant shall deliver to the
Participant, in the Participant's name, Share certificates in an appropriate
amount based upon the number of Shares purchased under the Option(s).

6.8      RESTRICTIONS ON SHARE TRANSFERABILITY. The Committee may impose such
restrictions on any Shares acquired pursuant to the exercise of an Option
granted under this Article 6 as it may deem advisable, including, without
limitation, restrictions under applicable federal securities laws, under the
requirements of any stock exchange or market upon which such Shares are then
listed and/or traded, and under any blue sky or state securities laws applicable
to such Shares.

6.9      TERMINATION OF EMPLOYMENT. Except as otherwise provided in an Award
Agreement, any Option, to the extent it has not been previously exercised, shall
terminate upon the earliest to occur of: (a) the expiration of the Option period
set forth in the Option Award Agreement; (b) the expiration of 12 months
following the Participant's death or Disability; (c) immediately upon
termination for Cause; or (d) the expiration of 90 days following the
Participant's termination of employment for any reason other than Cause, Change
in Control, death, or Disability.

6.10     TRANSFERABILITY OF OPTIONS. To the extent not prohibited by any
statute, rule or regulation applicable to the Plan, the Options, or the
registration with the Securities and Exchange Commission of the Common Stock to
be issued upon exercise of the Options, the Committee may, in its discretion,
authorize all or a portion of Options granted to a Participant to be on terms
which permit transfer by such Participant to (i) 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 (A) there may be no consideration for any such transfer,
(B) the Award Agreement pursuant to which such Options are granted must be
approved by the Committee, and must expressly provide for transferability in a
manner consistent with this Section, and (C) subsequent transfers of transferred
Options shall be prohibited except those by will or the laws of descent and
distribution. Following transfer, any such 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 "Participant" shall
be deemed to refer to the transferee. The events of termination of employment
shall continue to be applied with respect to the original Participant, following

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which the Options shall be exercisable by the transferee only to the extent, and
for the periods specified in this Section 6.9. 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 Participant is and will remain subject to and
responsible for any applicable withholding taxes upon the exercise of such
Options.

ARTICLE 7. BENEFICIARY DESIGNATION

A Participant under the Plan may make written designation of a beneficiary on
forms prescribed by and filed with the Corporate Secretary of the Company. Such
beneficiary or, if no such designation of any beneficiary has been made, the
legal representative of such Participant or such other person entitled thereto
as determined by a court of competent jurisdiction, may exercise, in accordance
with and subject to the provisions of Article 6, any unterminated and unexpired
Option granted to such Participant to the same extent that the Participant
himself could have exercised such Option were he alive or able; provided,
however, that no Option granted under the Plan shall be exercisable for more
Shares than the Participant could have purchased thereunder on the date his
employment by, or other relationship with, the Company and its Subsidiaries was
terminated.

ARTICLE 8. RIGHTS OF EMPLOYEES

8.1      EMPLOYMENT. Nothing in the Plan shall interfere with or limit in any
way the right of the Company to terminate any Participant's employment at any
time, nor confer upon any Participant any right to continue in the employ of the
Company.

8.2      PARTICIPATION. No Employee shall have the right to be selected to
receive an Award under this Plan or, having been so selected, to be selected to
receive a future Award.

ARTICLE 9. CHANGE IN CONTROL

9.1      TREATMENT OF OUTSTANDING AWARDS. Except as may otherwise be provided in
the applicable Award Agreement and unless otherwise specifically prohibited
under applicable laws, or by the rules and regulations of any governing
governmental agencies or national securities exchanges, upon the occurrence of a
Change in Control, any Option granted hereunder shall become immediately
exercisable, and shall remain exercisable throughout its term.

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9.2      TERMINATION, AMENDMENT, AND MODIFICATIONS OF CHANGE IN CONTROL
PROVISIONS. Notwithstanding any other provision of this Plan or any Award
Agreement provision, the provisions of this Article 9 may not be terminated,
amended or modified on or after the date of a Change in Control to affect
adversely any Award theretofore granted under the Plan without the prior written
consent of the Participant with respect to said Participant's outstanding
Awards.

ARTICLE 10.       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, 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). The provisions of this
Article 10 and the actions of the Committee taken pursuant to this Article 10
shall be effective upon action of the Committee alone, without amendment to any
Award Agreement or the consent of any Participant.

ARTICLE 11.       AMENDMENT, MODIFICATION AND TERMINATION

11.1     AMENDMENT, MODIFICATION AND TERMINATION. Subject to Section 9.2 of this
Plan, the Board or the Committee may at any time and from time to time, alter,
amend, suspend or terminate the Plan in whole or in part.

Notwithstanding the foregoing, neither the Company nor the Board or Committee on
its behalf may cancel outstanding Awards and issue substitute Awards in
replacement thereof, reduce the exercise price of any outstanding Options or
alter the class of participants in the Plan without stockholder approval.

11.2     ADJUSTMENT OF AWARDS UPON THE OCCURRENCE OF CERTAIN UNUSUAL OR
NONRECURRING EVENTS. Subject to Section 9.2 of this Plan, the Committee may make
adjustments in the terms and conditions of, and the criteria included in, Awards
in recognition of unusual or nonrecurring events (including, without limitation,
the events described in Section 4.2 hereof) affecting the Company or the
financial statements of the Company or of changes in applicable laws,
regulations or accounting principles, whenever the Committee determines that
such adjustments are appropriate in order to prevent dilution or enlargement of
the benefits or potential benefits intended to be made available under the Plan.

11.3     AWARDS PREVIOUSLY GRANTED. No termination, amendment or modification of
the Plan shall adversely affect in any material way any Award previously granted
under the Plan, without the written consent of the Participant holding such
Award.

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ARTICLE 12.       WITHHOLDING

12.1     TAX WITHHOLDING. The Company shall have the power and the right to
deduct or withhold, or require a Participant to remit to the Company, an amount
sufficient to satisfy federal, state, and local taxes, domestic or foreign,
required by law or regulation to be withheld with respect to any taxable event
arising as a result of this Plan.

12.2     SHARE WITHHOLDING. To the extent provided by the Committee, a
Participant may elect to have any distribution to be made under this Plan to be
withheld or to surrender to the Company shares of Common Stock already owned by
the Participant to fulfill any tax withholding obligation.

ARTICLE 13.       INDEMNIFICATION

Each person who is or shall have been a member of the Committee, or of the
Board, shall be indemnified and held harmless by the Company against and from
any loss, cost, liability or expense that may be imposed upon or reasonably
incurred by him or her in connection with or resulting from any claim, action,
suit or proceeding to which he or she may be a party or in which he or she may
be involved by reason of any action taken or failure to act under the Plan and
against and from any and all amounts paid by him or her in settlement thereof,
with the Company's approval or paid by him or her in satisfaction of any
judgment in any such action, suit or proceeding against him or her, provided he
or she shall give the Company an opportunity, at its own expense, to handle and
defend the same before he or she undertakes to handle and defend it on his or
her own behalf. 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 a matter of law or
otherwise, or any power that the Company may have to indemnify them or hold them
harmless.

ARTICLE 14.       SUCCESSORS

All obligations of the Company under the Plan with respect to Awards granted
hereunder shall be binding on any successor to the Company, whether the
existence of such successor is the result of a direct or indirect purchase, of
all or substantially all of the business and/or assets of the Company, or a
merger, consolidation or otherwise.

ARTICLE 15.       LEGAL CONSTRUCTION

15.1     GENDER AND NUMBER. Except where otherwise indicated by the context, any
masculine term used herein also shall include the feminine; the plural shall
include the singular; and, the singular shall include the plural.

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15.2     SEVERABILITY. In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of the Plan, and the Plan shall be construed and enforced as
if the illegal or invalid provision had not been included.

15.3     REQUIREMENTS OF LAW. The granting of Awards and the issuance of Shares
under the Plan shall be subject to all applicable laws, rules, and regulations,
and to such approvals by any governmental agencies or national securities
exchanges as may be required.

15.4     SECURITIES LAW COMPLIANCE. With respect to Insiders, transactions under
this Plan are intended to comply with all applicable conditions of Rule 16b-3 or
its successors under the Exchange Act. To the extent any provision of the Plan
or action by the Committee fails to so comply, it shall be deemed null and void,
to the extent permitted by law and deemed advisable by the Committee.

15.5     GOVERNING LAW. To the extent not preempted by federal law, the Plan,
and all agreements hereunder, shall be construed in accordance with and governed
by the laws of the state of Delaware.

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                                                                   EXHIBIT 10.11

                              EMPLOYMENT AGREEMENT

         THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into
effective January 1, 2000, by and between Caremark Rx, Inc., a Delaware
corporation ("Employer"), and John Arlotta ("Officer").

                                    RECITALS

         WHEREAS, Employer desires to continue to retain the services of Officer
and Officer desires to serve Employer in the capacity of President/COO of
Caremark PSG; and

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

                                    AGREEMENT

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

         1)       Term.

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

         2)       Employment of Officer.

                  a)       Position; Duties. Employer and Officer agree that,
subject to the provisions of this Agreement, Officer will serve as President/COO
of Caremark PSG of Employer.

         3)       Compensation.

                  a)       Salary. Employer shall pay Officer a salary in the
amount of Five Hundred Thousand Dollars ($500,000.00) per year (pro-rated for
any partial year during the Term) (the "Base Salary") payable in equal Bi-weekly
installments, less state and federal tax and other legally required
withholdings. The Base Salary shall be subject to review and adjustment from
time-to-time consistent with past practice.

<PAGE>   2

                  b)       Incentive Compensation. During the Term, Officer
shall be eligible to receive from Employer incentive compensation in an amount
equal to One Hundred (100%) percent of Base Salary (pro-rated for any partial
calendar year during the Term), less state and federal tax and other legally
required and Officer-authorized withholdings. The incentive compensation
contemplated by this Section 3(2) shall be payable to Officer solely at the
discretion of the Chief Executive Officer of Employer based upon Officer's
performance. The incentive compensation that Officer shall be eligible to earn
under this Section 3(b) shall be subject to review and adjustment from
time-to-time consistent with past practice.

         4)       Benefits.

                  a)       Fringe Benefits. In addition to the compensation and
other remuneration provided for in this Agreement, Officer shall be entitled,
during the Term, to such other benefits of employment with Employer as are now
or may after the date of this Agreement be in effect for employees of Employer
at the same level as Officer.

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

                  c)       Corporate Apartment and Relocation. Employer shall
provide Officer an apartment for his use in the greater Northbrook, Illinois,
area at no expense to Officer. Additionally, if Officer elects to move from
Whitefish Bay, Wisconsin, to the Chicago area, Officer shall be eligible for
relocations costs in accordance with Employer's relocation policy for
executives, which shall include, without limitation, costs for movement of
household goods and certain closing costs associated with the sale of Officer's
prior residence and purchase of Officer's new residence.

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

         5)       Termination and Termination Benefits.

                  The following Section provides the basis for terminating this
Agreement and the applicable termination benefits payable to Officer. Employer
shall provide to Officer the applicable benefits and/or payments set forth
below.

                  a)       Termination Due to Retirement, Disability or Death.
If this Agreement is terminated due to Officer's voluntary retirement,
disability, or his death, then Officer shall be entitled to (i) payment of any
previously unpaid Base Salary through the date of termination; (ii) payment of
Officer's Performance Bonus under Section 3(b) through the date of termination,
calculated on the basis of the sum of the total achievable amounts of the
Performance Bonus for the current fiscal year, divided by twelve months, and
multiplied by the number of months Officer is employed during such fiscal year
through the date of termination, with any partial month of employment to be
treated as a full month; and (iii) payment of any life insurance, disability or
other

                                       -2-
<PAGE>   3

benefits, if any, for which Officer is then eligible under the terms of
Employer's employee retirement, benefit and welfare plans. For purposes of this
Section 5(a), the term "retirement" is defined as the date Officer reaches age
70-1/2, or the date Officer retires in accordance with Employer's retirement
arrangements established for Officer with Officer's consent. Further, for
purposes of this Section 5(a), the term "disability" is defined as any condition
in which Officer has made application for and has been declared eligible to
receive long term disability benefits pursuant to Employer's applicable
Long-Term Disability Plan. If no such plan exists, then Officer shall submit
supporting medical information to Employer that certifies he is totally and
permanently disabled and therefore, unable to perform his duties for a minimum
of at least 90 days. Employer's Chief Executive Officer shall determine, with
the assistance of a medical expert, whether Officer is disabled for purposes of
this Section in the absence of a Long-Term Disability Plan.

                  b)       Termination by Resignation. Officer shall have the
right to voluntarily terminate this Agreement by providing Employer with thirty
(30) days written notice. If Officer voluntarily terminates his employment,
other than for Good Reason as defined in Section 5(d), then Officer shall be
entitled to only those benefits and payments he is entitled to under the
applicable controlling benefit plans and policies. Officer shall not be entitled
to any severance or like payments.

                  c)       Termination for Cause. Employer shall have the right
to terminate this Agreement for Cause by providing Officer written notice as
provided below. If Employer terminates Officer for cause, then Officer shall be
entitled to only those benefits and payments he is entitled to under the
applicable controlling benefit plans and policies. Officer shall not be entitled
to any severance or like payments. The term "Cause" shall mean Officer (i)
materially breaches any material term of this Agreement, (ii) is convicted by a
court of competent jurisdiction of a felony, (iii) refuses, fails or neglects to
perform his duties under this Agreement in a manner substantially detrimental to
the business of Employer, (iv) engages in illegal or other wrongful conduct
substantially detrimental to the business or reputation of Employer, or (v)
develops or pursues interests substantially adverse to Employer; provided,
however, that in the case of clauses (i), (iii), or (v), no such termination
shall be effective unless (1) Employer shall have given Officer 30 days' prior
written notice of any conduct or deficiency in performance by Officer that
Employer believes could, if not discontinued or corrected, lead to Officer's
termination under this Section 5(c), to provide Officer an opportunity to cure
such non-compliant conduct or performance, and (2) Officer shall not have cured
such non-compliant conduct or performance during such notice period.

                  d)       Termination for Good Reason. Officer may terminate
this Agreement for Good Reason by providing 30 days written notice to Employer.
If Officer terminates this Agreement for Good Reason, then Officer shall be
entitled to the termination benefits described in Section 5(e) of this
Agreement. For purposes of this Section, "Good Reason" is defined as follows:
(i) A reduction in Officer's total compensation, other than a reduction in
connection with an across-the-board salary reduction affecting Employer's
Officers' at a comparable level to Officer; (ii) A material reduction in
Officer's title, duties or responsibilities unless replaced with a new title,
duties or new responsibilities of comparable stature or value to Employer within
30 days; (iii) A material breach of this Agreement by Employer that is not
remedied within 30 days after receiving written notice from Officer of such
failure; (iv) Any purported termination for Cause or Disability without

                                       -3-
<PAGE>   4

reasonable grounds for the termination; (v) Any change in Officer's primary work
location from the greater Chicago, Illinois area; or (vi) Officer ceases to be
operationally responsible for the Caremark Pharmaceutical Group business.
Notwithstanding the provisions contained in Sections 5(d)(ii) and Section
5(d)(vi), Employer may alter or change Officer's Title and duties as part of a
corporate restructuring, provided, Officer remains the functional Chief
Operational Officer for either the pharmaceutical benefits business or the
therapeutic services business.

                  e)       Termination without Cause. Employer may terminate
this Agreement without cause at any time and for any reason. If Employer
terminates this Agreement without cause, it shall provide Officer with the
following termination benefits: (i.) 30 days written notice of Employer's
intention to terminate Officer's Agreement without cause; (ii.) Continued
payment of Officer's current base salary for three (3) years; (iii.) Continued
payment of Officer's current annual incentive bonus for three (3) years; (iv.)
Continued coverage under Employer's standard and Officer benefit plans for three
(3) year's in accordance with the terms of the applicable plans, provided, if
the terms of the applicable plan does not permit continued coverage, then
Employer shall pay to Officer the value of the applicable benefits in lump sum
upon termination of employment; and (v.) A right to immediately vest in 100% of
all options to purchase Common Stock of Caremark Rx that have been granted to
Officer and a period of at least 90 days following termination to exercise all
such options.

                  f)       Termination following a Change in Control. During the
first six months following a change in control, Officer may provide the
Successor Employer with written notice requesting the Successor Employer to
reconfirm in writing that it intends to continue all of the terms and conditions
of this Employment Agreement. If Successor Employer fails to respond to Officer
within Sixty (60) days of receipt of Officer's written notice, or if Successor
Employer declines to continue all of the terms and conditions of Officer's
Employment Agreement, then Officer shall be deemed to be terminated following a
change in control. If a successor Employer terminates this Agreement at any time
following a change in control, it shall provide Officer with the following
termination benefits: (i.) 30 days written notice of its intention to terminate
this Agreement; (ii.) A lump sum payment equivalent to three (3) year's of
Officer's current base salary; (iii.) A lump sum payment equivalent to three (3)
year's of Officer's current annual incentive bonus; (iv.) Continued coverage
under Employer's standard and Officer benefit plans for three (3) year's in
accordance with the terms of the applicable plans, provided, if the terms of the
applicable plan does not permit continued coverage, then Employer shall pay to
Officer the value of the applicable benefits in lump sum upon termination of
employment; and (v.) The applicable Stock Option Plan shall control the
treatment of Officer's unexercised stock options. For purposes of this
Agreement, the term "Change in Control" shall mirror the definition of a "Change
in Control" contained in the Employer' 1998 Stock Option Plan.

                  g)       Full Release of Claims. As a condition precedent to
receiving the payments and benefits described in Section 5 of this Agreement,
Officer shall be required to execute a full release of all claims for the
benefit of Employer in a form provided exclusively by Employer. Upon execution
of this release, Employer shall provide and/or begin the payments and benefits
described in Section 5, within 10 days.

                                       -4-
<PAGE>   5

                  h)       Subsequent Employment. Subject to the covenants
contained in Section 8 of this Agreement, Officer shall be entitled to receive
severance compensation to the extent provided in this Agreement regardless of
whether Officer obtains other employment following termination of his employment
with Employer.

         6)       Certain Additional Payments By Employer.

                  a)       Anything in this Agreement to the contrary
notwithstanding and except as set forth below, if it shall be determined that
any payment or distribution by Employer to or for Officer's benefit (whether
paid or payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise, but determined without regard to any additional payments
required under this Section 5) (a "Payment") would be subject to the excise tax
imposed by Section 4999 of the Code or any interest or penalties are incurred by
Officer with respect to such excise tax (such excise tax, together with any such
interest and penalties, are hereinafter collectively referred to as the "Excise
Tax"), then Officer shall be entitled to receive an additional payment (a
"Gross-Up Payment") in an amount such that after payment by Officer of all taxes
(including any interest or penalties imposed with respect to such taxes),
including, without limitation, any income taxes (and any interest and penalties
imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment,
Officer retains an amount of the Gross-Up Payment equal to the excise Tax
imposed upon the Payments.

                  Notwithstanding the foregoing provisions of this Section 6, if
it shall be determined that Officer is entitled to a Gross-Up Payment, but that
the Payments do not exceed 110% of the greatest amount that could be paid to
Officer such that the receipt of Payments would not give rise to any Excise Tax
(the "Reduced Amount"), then no Gross-Up Payment shall be made to Officer and
the Payments, in the aggregate, shall be reduced to the Reduced Amount.

                  All determinations required to be made under this Section 6,
including whether and when a Gross-Up Payment is required and the amount of such
Gross-Up Payment and the assumptions to be utilized in arriving at such
determination, shall be made by a nationally recognized accounting firm as may
be designated by Officer (the "Accounting Firm") which shall provide detailed
supporting calculations both to Employer and Officer within 15 business days of
the receipt of notice from Officer that there has been a Payment, or such
earlier time as is requested by Employer. In the event that the Accounting Firm
is serving as accountant or auditor for an individual, entity or group effecting
a change in control, Officer shall appoint another nationally recognized
accounting firm to make the determinations required hereunder (which accounting
firm shall then be referred to as the Accounting Firm hereunder). All fees and
expenses of the Accounting Firm shall be borne by Employer. Any Gross-Up
Payment, as determined pursuant to this Section 6, shall be paid by Employer to
Officer within five days of the receipt of the Accounting Firm's determination.
Any determination by the Accounting Firm shall be binding upon Employer and
Officer. As a result of the uncertainty in the application of Section 4999 of
the Code at the time of the initial determination by the Accounting Firm
hereunder, it is possible that Gross-Up Payments which will not have been made
by Employer should have been made ("Underpayment"), consistent

                                       -5-
<PAGE>   6

with the calculations required to be made hereunder. In the event that Employer
exhausts its remedies pursuant to Section 6(b) and Officer is required to make a
payment of any Excise Tax, the Accounting firm shall determine the amount of the
Underpayment that has occurred and any such Underpayment shall be promptly paid
by Employer to or for Officer's benefit.

                  b)       Officer shall notify Employer in writing of any claim
by the Internal Revenue Service that, if successful, would require the payment
by Employer of the Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than ten business days after Officer is informed in
writing of such claim and shall apprise Employer of the nature of such claim and
the date on which such claim is requested to be paid. Officer shall not pay such
claim prior to the expiration of the 30-day period following the date of which
is gives such notice to Employer (or such shorter period ending on the date that
any payment of taxes with respect to such claim is due). If Employer notifies
Officer in writing prior to the expiration of such period that it desires to
contest such claim, Officer shall:

                           (i)      give Employer any information reasonably
requested by Employer relating to such claim;

                           (ii)     take such action in connection with
contesting such claim as Employer shall reasonably request in writing from time
to time, including, without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by Employer,

                           (iii)    cooperate with Employer in good faith in
order effectively to contest such claim, and

                           (iv)     permit Employer to participate in any
proceeding relating to such claim;

provided, however, that Employer shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold Officer harmless, on an after-tax
basis, from any Excise Tax or income tax (including interest and penalties)
imposed as a result of such representation and payment of costs and expenses.
Without limitation on the foregoing provisions of this Section 6, Employer shall
control all proceedings taken in connection with such contest and, it its sole
option, may pursue or forego any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in respect of such claim and
may, at its sole option, either direct Officer to pay the tax claimed and sue
for a refund or contest the claim in any permissible manner, and Officer agrees
to prosecute such contest to a determination before any administrative tribunal,
in a court of initial jurisdiction and in one or more appellate courts, as
Employer shall determine; provided, however, that if Employer directs Officer to
pay such claim and sue for a refund, Employer shall advance the amount of such
payment to Officer, on an interest-free basis, and shall indemnify and hold
Officer harmless, on an after-tax basis, from any Excise Tax or income tax
(including interest or penalties with respect thereto) imposed with respect to
such advance or with respect to any imputed income with respect to such advance;
and further provided that any extension of the statute of limitations relating
to payment of taxes for Officer's taxable year with respect to which such
contested amount is claimed

                                       -6-
<PAGE>   7

to be due is limited solely to such contested amount. Furthermore, Employers
control of the contest shall be limited to issues with respect to which a
Gross-Up Payment would be payable and the Officer shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal Revenue
Service or any other taxing authority.

                  c)       If, after Officer's receipt of an amount advanced by
Employer pursuant to Section 6(b), Officer becomes entitled to receive any
refund with respect to such claim, Officer shall (subject to Employer complying
with the requirements of this Section 6(b)) promptly pay to Employer the amount
of such refund (together with any interest paid or credited thereon after taxes
applicable thereto). If, after Officer's receipt of an amount advanced by
Employer pursuant to Section 6(b), a determination is made that Officer shall
not be entitled to any refund with respect to such claim and Employer does not
notify Officer in writing of its intent to contest such denial of refund prior
to the expiration of 30 days after such determination, then such advance shall
be forgiven and shall not be required to be repaid and the amount of such
advance shall offset, to the extent thereof, the amount of Gross-Up Payment
required to be paid.

         7)       Trade Secrets and Confidentiality

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

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

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

                  b)       Confidentiality. In addition to the covenants set
forth in Section 7(a), Officer agrees that, during the Term and for a period of
five (5) years after termination of his employment, Officer will hold in a
fiduciary capacity for the benefit of Employer and shall not directly or
indirectly use or disclose, except as Employer authorizes in connection with the
performance of Officer's duties, any Confidential or Proprietary Information, as
defined below, that Officer may have or acquire (whether or not developed or
compiled by Officer and whether or not Officer has been authorized to have
access to such Confidential or Proprietary Information) during the Term. The
term "Confidential or Proprietary Information" as used in this Agreement means
any secret,

                                       -7-
<PAGE>   8

confidential or proprietary information of Employer, including information
received by Employer or Officer from any client or potential client of Employer,
not otherwise included in the definition of "Trade Secret" in Section 7(a)
above. The term "Confidential or Proprietary Information" does not include
information that has become generally available to the public by the act of one
who has the right to disclose such information without violating any right of
the client to which such information pertains.

                  c)       Restrictions Supplemental to State Law. The
restrictions set forth in Sections 7(a) and 7(b) are in addition to and not in
lieu of protections afforded to trade secrets and confidential information under
applicable state law. Nothing in this Agreement is intended to or shall be
interpreted as diminishing or otherwise limiting Employer's right under
applicable state law to protect its trade secrets and confidential information.

         8)       Restrictive Covenants.

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

                  a)       Non-competition. During the term of this Agreement
and for a period of 3 years after the termination of this Agreement, you shall
not, except with Employer's express prior written consent, directly or
indirectly, establish, engage, own, manage, operate, join or control, or
participate in the establishment, ownership, management, operation or control or
be a director, officer, employee, salesman, agent or representative of, or be a
consultant to, any person or entity in any business in competition with Employer
or its subsidiaries in any state where the they now conduct, or during such 3
year period, begin conducting, any material business.

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

                  c)       Modification of covenants. If any provision contained
in Section 8 subparagraphs (a) or (b) above is later adjudicated to exceed the
time, geographic, scope, or other limitations permitted by governing law, then
such provisions will be reformed in such jurisdiction to the maximum permissible
time, geographic, or scope limitations.

         9)       Miscellaneous.

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

                                       -8-
<PAGE>   9

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

                           If to Officer:

                                    John Arlotta
                                    Caremark Rx
                                    2211 Sanders Road
                                    Northbrook, IL 60062

                           If to Employer:

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

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

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

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

                  e)       Arbitration. Any disputes or controversies arising
under this Agreement shall be settled by arbitration in Birmingham, Alabama in
accordance with the rules of the American Arbitration Association relating to
the arbitration of commercial disputes. The determination and findings of such
arbitrators shall be final and binding on all parties and may be enforced, if
necessary, in the courts of the State of Alabama. Notwithstanding the preceding
agreement between the parties for arbitration of any disputes or controversies
arising from this Agreement contained in this Section 9(e), Employer shall have
the right to proceed directly to the appropriate court of equity to enforce the
covenants contained in Section 8 of this Agreement and have access to the full
range of equitable and legal remedies available from such court of equity.

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

                                       -9-
<PAGE>   10

                  g)       Prior Agreements. This Agreement shall supersede and
void any prior existing agreements between Employer and Officer regarding
payments upon termination or due to change in control. Notwithstanding this
section, nothing in this Section 9 (g) is intended to have any affect upon
Officer's Stock Option Awards or the terms of Employer's Stock Option Plans, or
the terms of any benefit plans.

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

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

CAREMARK RX, INC.

/s/ E. Mac Crawford                                 /s/ John Arlotta
------------------------                            ----------------------------
E. Mac Crawford                                     John Arlotta
Chairman and CEO

                                      -10-

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