FORM OF PERFORMANCE SHARE UNITS AGREEMENT

THIS PERFORMANCE SHARE UNITS AGREEMENT (“Agreement”) is made and entered into as
of _________________ by and between COVENTRY HEALTH CARE, INC., a Delaware
corporation, (the “Company”) and ____________________ (“Holder”).

1.    Award.  The Company hereby awards Holder ____________________ Performance
Share Units (collectively, “PSUs”, singularly, “PSU”), subject to the terms and
conditions of this Agreement and the terms and conditions of the Amended and
Restated 2004 Incentive Plan.  If the terms of this Agreement conflict with or
are inconsistent with the terms of the Amended and Restated 2004 Incentive Plan,
the Amended and Restated 2004 Incentive Plan shall control.  Defined terms used
herein and not defined shall have the meanings ascribed to them in the Amended
and Restated 2004 Incentive Plan.

2.    Definition of PSU.  A PSU is a hypothetical share of the Company’s common
stock.  The value of a PSU on any given date shall be equal to the closing
market price of the Company’s common stock on the New York Stock Exchange as of
such date.  A PSU does not represent an equity interest in the Company and
carries no voting rights.  The Holder shall have no rights as a shareholder with
respect to the hypothetical shares of the Company’s common stock to which this
award relates.

3.    Restrictions, Performance Goals and
Conditions:   (a)  Restrictions. Commencing with the date hereof, the Holder
agrees that Holder has no right to, and shall not, sell, transfer, pledge or
assign, in whole or in part, the PSUs.  The PSUs (x) shall not be earned until
one of the performance goals set forth herein shall have been attained and (y)
shall not vest until the required time period with respect to the PSUs shall
have lapsed.
 
                 (b)  Performance Goals.  This award of PSUs (“Award”) is
performance-based and conditioned upon the Company’s attainment of one of the
performance goals set forth below:
 
 
 
 
 
 
 (c)  Vesting.  In the event that one of the performance goal(s) set forth in
Subsection 3(b), Performance Goals, shall have been met as of December 31, 20__,
then that portion of this Award that shall have been earned shall vest as of
December 31, 20__ or shall vest in accordance with Subsection (e), Death,
Disability or a Change in Control of the Company, below, as the case may be.

(d)  Forfeiture.  Holder must be actively and continuously employed by the
Company at the time of payout of this Award.  In the event of the termination of
Holder’s service as an employee of the Company for any reason during the term of
this Agreement and prior to payout of this Award, all PSUs shall be forfeited
and this Agreement shall become null and void.

(e)  Death, Disability or Change in Control of the Company.  Notwithstanding
Subsection (d) Forfeiture, above, if Holder’s termination of service as an
employee of the Company is the result of Holder’s death or Disability or a
Change in Control of the Company, all earned PSUs shall immediately vest as of
the date of Holder’s death or Disability or as of the date the Change in Control
is deemed to have occurred.

4.    Adjustments.  In the event of any merger, reorganization, consolidation,
recapitalization, extraordinary cash dividend, stock dividend, stock split or
other change in corporate structure affecting the Company’s common stock, such
substitution or adjustment shall be made in the number of PSUs as may be
determined to be appropriate by the Compensation Committee of the Company’s
Board of Directors, in its sole discretion, provided that the number of PSUs
subject to any award shall always be a whole number.  Additional shares of PSUs
shall be subject to the same restrictions and other terms and conditions that
apply to the original shares of PSUs with respect to which such adjustments are
made.

5.    Payment.  All payments under this Agreement shall be made in cash.  As
soon as reasonably practicable after vesting, the PSUs earned shall be paid to
Holder if Holder is actively and continuously employed with the Company at the
time of payout.  The amount of cash that shall be paid to Holder shall equal the
number of PSUs earned and vested multiplied by the average closing market price
of the Company’s common stock on the New York Stock Exchange for the trading
days from December 15, 20__ through January 15, 20__ for the performance period
ending on December 31, 20__, minus any withholding for taxes.

If Holder’s employment terminates as a result of Holder’s death or Disability or
a Change in Control of the Company, the amount of cash that shall be paid to
Holder or Holder’s beneficiaries shall equal the number of PSUs earned and
vested multiplied by the average closing market price of the Company’s common
stock on the New York Stock Exchange for the thirty trading days preceding the
date of death or Disability or the date a Change in Control of the Company is
deemed to have occurred, minus any withholding for taxes.

6.    Non transferability.  The Holder’s rights hereunder shall not be
transferable otherwise than as provided in the Amended and Restated 2004
Incentive Plan, and the terms thereof shall be binding on the executors,
administrators, heirs and successors of Holder.

7.    Defined Terms.  Defined terms used herein and not defined shall have the
meanings ascribed to them in the Amended and Restated 2004 Incentive Plan.

8.    Amendment:  Choice of Law.  This Agreement may be amended as provided in
the Amended and Restated 2004 Incentive Plan.  This Agreement shall be governed
by Maryland law.

 
 

 

 COVENTRY HEALTH CARE, INC.          HOLDER:
 
 
 
 
 
 
     Allen F. Wise      Chief Executive Officer