FORM OF RESTRICTED STOCK AWARD AGREEMENT

 

THIS RESTRICTED STOCK AWARD AGREEMENT (“Agreement”) is made and entered into as
of ____________ by and between COVENTRY HEALTH CARE, INC., a Delaware
corporation, (the “Company”) and __________ (“Holder”).

 

1.     Restricted Stock Award. The Company hereby awards Holder __________
shares of the Company’s Common Stock (the “Common Stock”), subject to the terms
and conditions of this Agreement and the terms and conditions of the Amended and
Restated 2004 Incentive Plan (hereinafter the “Restricted Stock,” which shall
include any additional shares or other securities received in respect of the
Restricted Stock through stock splits or stock dividends pursuant to Section 3
below or under the Company’s 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.

 

2.       Restrictions, Covenants and Conditions: (a)(i) Restrictions. Commencing
with the date hereof, Holder agrees that Holder has no right to, and shall not,
sell, transfer, pledge or assign, in whole or in part, the Restricted Stock
until (x) the Restrictive Covenants Agreement (see below) has been executed
within the prescribed time period allowed and (y) the required time period with
respect to each increment of Restricted Stock shall have lapsed.

 

(ii) Restrictive Covenants Agreement. This award of Restricted Stock is
contingent upon the Holder entering into a Restrictive Covenants Agreement
within the prescribed time period set forth therein. In the event the Holder
fails to enter into the Restrictive Covenants Agreement prior to or concurrently
with the acceptance of this Agreement, then this award of Restricted Stock shall
be forfeited, and this Agreement shall become null and void.

 

(iii) Lapse of Restrictions. If Holder has entered into the Restrictive
Covenants Agreement set forth in Subsection 2(a)(ii) above, then the
restrictions set forth in Section 2(a)(i)(x) above shall begin to lapse and be
no longer in force and effect, and the required time period referenced in
Section 2(a)(i)(y) above shall lapse in annual cumulative increments of______
the number of shares of Restricted Stock awarded herein, with the first annual
increment beginning on _______________. From and after each annual date, the
shares as to which the above restrictions have lapsed shall be owned by Holder
free and clear of all restrictions or limitations of this Agreement. As soon as
reasonably practicable after each date the restrictions shall lapse, the Company
shall deliver the unrestricted shares to Holder, by transferring the
unrestricted shares electronically to an E*Trade Securities brokerage account
established by the Company for the benefit of the Holder.

 

(b)    Except as provided in this Agreement to the contrary, the Holder shall
have, with respect to the Restricted Stock, all of the rights of a shareholder
of the Company, including the right to vote the shares and the right to receive
any cash dividends. Pursuant to Section 3 below, shares of stock or other
security dividends or stock splits issued with respect to Restricted Stock shall
be treated as additional shares of Restricted Stock that are subject to the same
restrictions and other terms and conditions that apply to the original shares of
Restricted Stock with respect to which such dividends or splits are issued.

 

(c)    Upon termination of Holder’s service as an employee of the Company for
any reason during the term of this Agreement, all shares still subject to
restriction will be forfeited, unless such termination is the result of Holder’s
death or Disability, in which case the Restricted Stock subject to restriction
will immediately vest.

 

(d)    In the event of a Change in Control of the Company, Restricted Stock as
to which restrictions have not lapsed will vest as of the date the Change in
Control, as applicable, is deemed to have occurred.

 

3.       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 Common Stock, such
substitution or adjustment shall be made in the maximum number of shares of
Restricted Stock 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 shares subject to any award shall always be a whole number.

 

4.       Restricted Account. Holder acknowledges that the Company will issue the
Restricted Stock covered by this Agreement in the name of Holder; provided,
however, such Restricted Stock shall be held in an uncertificated restricted
account in the custody of the Company and shall be subject to the terms of this
Agreement.

 

Holder further acknowledges that the Restricted Stock shall be held in the
Company’s custody until the restrictions lapse. Holder’s acceptance of this
Agreement constitutes an irrevocable endorsement of a stock power to the Company
in the event any or all of the Restricted Stock is forfeited. In the event of
forfeiture, the forfeited shares of Restricted Stock shall be returned to the
Company.

 

5.       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.

 

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

 

7.       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:

 

  By:    ___________________________           ____________________________

 

 

Title:

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