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                                                                    CONFIDENTIAL



                              EMPLOYMENT AGREEMENT

           AGREEMENT dated as of March 30, 1998 (the "Effective Date"), by and
between OXFORD HEALTH PLANS, INC. (the "Corporation"), having a principal office
in Norwalk, Connecticut, and Marvin P. Rich (the "Employee").

           WHEREAS, the Board of Directors of the Corporation (the "Board") has
approved and authorized the Corporation's entry into this Agreement with the
Employee; and

           WHEREAS, the parties desire to enter into this Agreement setting
forth the terms and conditions for the continued employment relationship of the
Corporation and the Employee;

           NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the Corporation and the Employee agree as follows:

           1. Employment. The Employee is employed as Chief Administrative
Officer. As Chief Administrative Officer the Employee shall render executive,
policy and other management services to the Corporation of the type customarily
performed by persons serving in a similar executive officer capacity, subject to
the powers by law vested in the Board and in the Corporation's stockholders. The
Employee shall report to the Chief Executive Officer of the Corporation, and
shall perform such other related duties as the Chief Executive Officer of the
Corporation may from time to time reasonably direct or request. The Employee
shall be a full time employee of the Corporation provided that the Employee
shall have the right to devote time to other directorships so long as such
activities do not impair the Employee's performance of the duties of his office.

           The Employee shall perform his duties and responsibilities under this
Agreement faithfully, diligently and to the best of the Employee's ability, and
in compliance with all applicable laws and the Corporation's Certificate of
Incorporation and Bylaws, as they may be amended from time to time.


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           2. Term. The initial term of employment under this Agreement shall be
for a period of four (4) years commencing on the Effective Date (the "Term").
This Agreement shall be extended automatically for two (2) additional years on
the fourth anniversary date of the Effective Date and on each second anniversary
of the Effective Date thereafter, unless either the Corporation or the Employee
gives contrary written notice to the other not less than three (3) months in
advance of such anniversary of the Effective Date. References herein to the Term
shall refer both to such initial term and such successive terms. Upon a "Change
in Control" (as defined in Section 7(a)) of the Corporation, the Term shall be
extended to two (2) years from the date of such Change in Control, unless notice
to terminate the Term has been properly provided prior to the date of such
Change in Control, and such Change in Control date shall be treated as the
Effective Date for purposes of renewals of this Agreement. The Term shall end
upon the termination of the Employee's employment under this Agreement.

           3. Compensation. (a) Base Salary. The Corporation agrees to pay the
Employee during the Term an annual base salary ("Base Salary") of no less than
$600,000. The Base Salary shall be reviewed at least annually during the Term by
the Board, and the Employee shall receive such increases in Base Salary, if any,
as the Compensation Committee of the Board (the "Committee") in its absolute
discretion may determine, together with such performance or merit increases, if
any, as the Committee in its absolute discretion may determine. Participation
with respect to discretionary bonuses, retirement and other employee benefit
plans and fringe benefits shall not reduce the Base Salary payable to the
Employee under this Section 3. The Base Salary shall be payable to the Employee
in equal installments in conformity with the Corporation's normal payroll
periods, but no less frequently than monthly.

                (b) Annual Bonus. During the Term, the Employee shall be
eligible to receive an annual performance bonus consistent with the
Corporation's management incentive program, as recommended by the Chief
Executive Officer of the Corporation 

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and approved by the Committee and the Chairman of the Corporation; provided,
however, that for each year during the Term such annual bonus shall be in an
amount not less than $600,000, and shall be payable in a manner consistent with
the payment of bonuses for other senior officers of the Corporation but in no
event later than the end of the first quarter after the end of the fiscal year
to which the bonus relates.

                (c) Sign-on Bonus. Upon the execution and delivery of this
Agreement, and subject to execution by the Employee of the Corporation's
standard non-disclosure and non-competition agreement, the Corporation shall pay
the Employee a sign-on bonus in the amount of $300,000.

                (d) Options. Subject to the approval of the Committee, upon the
execution and delivery of this Agreement the Corporation shall grant the
Employee options to acquire 800,000 shares of the Corporation's common stock
(the "Initial Grant"). Such options shall vest in four equal annual installments
over the four years from date of grant have an exercise price equal to the fair
market value of the Corporation's common stock on the date of grant and contain
such other provisions as are included in options granted by the Corporation
pursuant to the Corporation's 1991 Stock Option Plan (including, without
limitation, anti-dilution protection with respect to the shares underlying such
options). To the extent that any shares subject to the Initial Grant are not
covered by a valid registration statement under the Securities Act of 1933, as
amended, the Corporation shall grant the Employee "piggyback" rights to register
such shares on the registration statement that the Corporation uses to register
the shares of Corporation common stock underlying the stock options granted on
February 23, 1998, outside of the 1991 Plan to the Chief Executive Officer of
the Corporation.

                (e) Relocation Expenses. In connection with your commencement of
employment with the Corporation, the Employee shall be entitled to reimbursement
(on a grossed-up basis in order to achieve a net after-tax recovery to Employee
equal to the 

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amount of the expenses covered in this Section 3(e)) of the following relocation
expenses upon presentation of satisfactory receipts in accordance with the
Company's normal business expenses reimbursement practices and procedures: (i)
costs incurred in connection with the closing of the Employee's residence in
Michigan, (ii) costs incurred in connection with the closing of the Employee's
residence in Connecticut, (iii) first-class airfare costs for six round-trip
tickets (from Detroit, Michigan to White Plains, New York) for the Employee and
his partner, (iv) costs incurred in connection with the moving of Employee's
personal property, including furniture, and two automobiles from Michigan to
Connecticut, and (v) up to six months' reimbursement (not to exceed $30,000) of
the lesser of (x) the maintenance (i.e., association dues, mortgage or rent) of
the Michigan residence and (y) the maintenance (i.e., mortgage or rent) of the
Connecticut residence.

                (f) Relocation Loan. As soon as practicable after the execution
of this Agreement, but in no event later than thirty (30) days from the date of
this Agreement, the Corporation shall lend to the Executive $600,000 upon the
following terms: (i) interest at the lowest rate that will avoid imputed income;
(ii) four (4) year term; (iii) interest only annually; (iv) principal only at
the end of four (4) year term or earlier at option of Employee or upon
termination of employment.

           4. Withholding Obligation. The Corporation shall have the ability to
withhold from the compensation otherwise due to the Employee under this
Agreement any federal income tax, Federal Insurance Contribution Act tax,
Federal Unemployment Act tax, or other amounts required to be withheld from
compensation from time to time under the Internal Revenue Code of 1986, as
amended (the "Code"), or under any state or municipal laws or regulations.

           5.   Fringe Benefits.

                (a) Vacations and Leave. During the Term, the Employee shall be
entitled to an annual paid vacation of four (4) weeks per year or such longer
period as

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the Committee may approve. The Employee shall schedule the timing of paid
vacations in a reasonable manner. The Employee shall also be entitled to such
other leave, with or without compensation, as shall be mutually agreed upon by
the Committee and the Employee.

                (b) Participation in Retirement and Employee Benefit Plans.
During the Term, the Employee shall be entitled to participate in the
Corporation's 1991 Stock Option Plan, annual incentive compensation plan, the
Oxford Specialty Holdings, Inc. 1996 Equity Incentive Compensation Plan and any
other plan of the Corporation or its subsidiaries relating to stock options,
stock appreciation, stock purchases, pension, thrift, deferred compensation,
profit sharing, group life insurance, medical coverage, education or other
retirement or employee benefits that the Corporation may adopt for the benefit
of its executive employees. Corporation shall pay Employee's COBRA payments
until he is participating in the Corporation's health plan.

                (c) Disability. If the Employee shall become disabled or
incapacitated during the Term to the extent that he is unable to perform his
duties and responsibilities hereunder, he shall be entitled to receive
disability benefits of the type currently provided to him, or, if more favorable
to the Employee, benefits of the type provided for other executive employees in
similar positions with the Corporation.

                (d) Death. If the Employee shall die during the Term, no
payments shall be made pursuant to this Agreement other than those specified in
Section 6(g) below and as provided under the Corporation's employee benefit
plans in which the Executive participates.

                (e) Other Benefits. During the Term, the Employee shall be
entitled to participate in any other fringe benefits which are or may become
applicable to the Corporation's executive employees, including the use of an
automobile, a reasonable expense account, the payment of reasonable expenses for
attending annual and periodic meetings of trade associations, and any other
benefits which are commensurate with the 

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duties and responsibilities to be performed by the Employee under this
Agreement.

         6. Termination of Employment. The Employee's employment hereunder may
be terminated under the circumstances set forth in paragraphs (a) through (e)
below:

                  (a) Death. The Employee's employment hereunder shall terminate
upon his death.

                  (b) Disability. If, as a result of the Employee's incapacity
due to physical or mental illness, the Employee shall have been absent from his
duties hereunder on a full-time basis for the entire period of six (6) months in
any twelve (12) month period, and within thirty (30) days after written Notice
of Termination is given (which may occur before or after the end of such six (6)
month period) shall not have returned to the performance of his duties hereunder
on a full-time basis, the Corporation may terminate the Employee's employment
hereunder for "Disability."

                  (c) Cause. The Corporation may terminate the Employee's
employment hereunder for Cause or without Cause. Except as provided in Section
7(b) hereof following a Change in Control, termination for Cause shall mean
termination because the Employee (i) engages in conduct which is a material
violation of the Corporation's policy or which is fraudulent or unlawful or
which materially interferes with the Employee's ability to perform his duties
hereunder, or (ii) engages in gross negligence in the performance of, or
willfully fails to perform, his duties and responsibilities hereunder. Cause
shall not exist unless and until the Corporation has delivered to the Employee a
copy of a resolution duly adopted by two-thirds (2/3) of the entire Board at a
meeting of the Board called and held for such purpose (after reasonable notice
to the Employee and an opportunity for the Employee, together with counsel, to
be heard before the Board), finding that in the good faith opinion of the Board
an event set forth in clause (i) or (ii) has occurred and specifying the
particulars thereof in detail.

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                (d) Good Reason. The Employee may terminate his employment
hereunder with or without Good Reason; provided, however, that the Employee
agrees not to terminate his employment hereunder (other than for Good Reason or
for Retirement) during the ninety-day period following a Change in Control.
Except as provided in Section 7(c) hereof following a Change in Control, for
purposes of this Agreement "Good Reason" shall mean the occurrence of the
following without the Employee's consent: (i) a significant diminution by the
Corporation of the Employee's role with the Corporation, or a significant
detrimental change in the nature and/or scope of the Employee's duties and
responsibilities with the Corporation, in each case other than for Cause or
Disability, (ii) a reduction in the Employee's Base Salary or guaranteed bonus
opportunity, in each case other than for Cause or Disability, or (iii) the
Corporation's requiring the Employee to report to an officer of the Corporation
other than the Corporation's then current Chief Executive Officer. For purposes
of this Agreement, "Good Reason" shall not exist until after Employee has given
the Company notice of the applicable event within 90 days of such event and
which is not remedied within 30 days after receipt of written notice from
Employee specifically delineating such claimed event and setting forth
Employee's intention to terminate employment if not remedied; provided, that if
the specified event cannot reasonably be remedied within such 30-day period and
the Company commences reasonable steps within such 30-day period to remedy such
event and diligently continues such steps thereafter until a remedy is effected,
such event shall not constitute "Good Reason" provided that such event is
remedied within 60 days after receipt of such written notice.

                (e) Retirement. For purposes of this Agreement, "Retirement"
shall mean termination of the Employee's employment by either the Employee
(other than for Good Reason) or the Corporation (other than for Cause) on or
after the Employee's normal retirement age under the terms of the Corporation's
pension plan (or, any other tax-qualified plan, if no pension plan exists);
provided, that, following a Change in 

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Control such normal retirement age may not be reduced for purposes of this
Agreement without the consent of the Employee.

                (f) Date of Termination. For purposes of this Agreement, "Date
of Termination" means (1) the effective date on which the Employee's employment
by the Corporation terminates as specified in a Notice of Termination by the
Corporation or the Employee, as the case may be, or (2) if the Employee's
employment terminates by reason of death, the date of death of the Employee.
Notwithstanding the previous sentence, (i) if the Employee's employment is
terminated for Disability (as defined in Section 6(b)), then such Date of
Termination shall be no earlier than thirty (30) days following the date on
which a Notice of Termination is received, and (ii) if the Employee's employment
is terminated by the Corporation other than for Cause, then such Date of
Termination shall be no earlier than thirty (30) days following the date on
which a Notice of Termination is received.

                (g) Payment Upon Termination. Upon any termination of employment
hereunder, the Corporation shall pay the Employee, within ten (10) days
following his Date of Termination, a lump sum cash amount equal to the sum of
(i) the Employee's unpaid Base Salary through the Date of Termination, (ii) any
bonus payments which have become payable (other than deferred amounts), to the
extent not theretofore paid, and (iii) any vacation pay owed with respect to
accrued, but unused, vacation.

                (h) Termination Without Cause, For Good Reason or Upon Failure
to Renew. In addition to the payments set forth in Section 6(g) hereof, in the
event that the Employee's employment with the Corporation terminates either (1)
prior to a Change in Control or (2) following the two-year period immediately
subsequent to a Change in Control (including as a result of a notice of
non-renewal of the Term by the Corporation provided during such two-year
period), in each case as a result of (i) a termination by the Employee for Good
Reason, (ii) a termination by the Corporation without Cause (other than for
Retirement or Disability) or (iii) notice by the 

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Corporation of non-renewal of the Term (other than for Retirement), then the
Corporation shall pay to the Employee, in twenty-four (24) equal monthly
installments in conformity with the Corporation's normal payroll periods, an
amount equal to (x) the sum of the Base Salary earned by the Employee from the
Corporation and its subsidiaries during the twelve-month period immediately
preceding the Employee's Date of Termination, plus the annual bonus earned by
the Employee from the Corporation and its subsidiaries in respect of the fiscal
year immediately preceding the Employee's Date of Termination (provided, that
the amount determined under this clause (x) shall not be less than $2.4
million), divided by (y) twelve (12).

           7.   Termination of Employment Following a Change in Control.

         (a) Change in Control Defined. For purposes of this Agreement, a
"Change in Control" shall be deemed to have taken place if:

                (i) any "person" (as defined below) is or becomes the
      "beneficial owner" (as defined in Rule 13d-3 under the Securities Exchange
      Act of 1934 (the "Exchange Act")), directly or indirectly, of securities
      of the Corporation representing 30% or more of the total voting power
      represented by the Corporation's then outstanding voting securities;

               (ii) a change in the composition of the Board of Directors of the
      Corporation occurs, as a result of which fewer than two-thirds (2/3) of
      the incumbent directors are directors who either (A) had been directors of
      the Corporation on the "look-back date" (as defined below) or (B) were
      elected, or nominated for election, to the Board of Directors of the
      Corporation with the affirmative votes of at least a majority of the
      directors who had been directors of the Corporation on the "look-back
      date" and who were still in office at the time of the election or
      nomination;

              (iii) the stockholders of the Corporation approve a merger or
      consolidation of the Corporation with any other corporation, other than a
      merger or consolidation 

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      which would result in the voting securities of the Corporation outstanding
      immediately prior thereto continuing to represent (either by remaining
      outstanding or by being converted into voting securities of the surviving
      entity) at least 80% of the total voting power represented by the voting
      securities of the Corporation or such surviving entity outstanding
      immediately after such merger or consolidation; or

               (iv) the stockholders of the Corporation approve (A) a plan of
      complete liquidation of the Corporation or (B) an agreement for the sale
      or disposition by the Corporation of all or substantially all of the
      Corporation's assets. For purposes of paragraph (a)(i), the term "person"
      shall have the same meaning as when used in sections 13(d) and 14(d) of
      the Exchange Act, but shall exclude (1) a trustee or other fiduciary
      holding securities under an employee benefit plan of the Corporation or of
      a parent or subsidiary of the Corporation or (2) a corporation owned
      directly or indirectly by the stockholders of the Corporation in
      substantially the same proportions as their ownership of the common stock
      of the Corporation. For purposes of paragraph (a)(ii), the term "look-back
      date" shall mean the later of (A) the date twenty-four (24) months prior
      to the change in the composition of the Board and (B) the Effective Date.

      Any other provision of this Section 7(a) notwithstanding, the term "Change
      in Control" shall not include either of the following events, if
      undertaken at the election of the Corporation:

                        (x)   a transaction, the sole purpose of which is to
                              change the state of the Corporation's
                              incorporation; or

                        (y)   a transaction, the result of which is to sell all
                              or substantially all of the assets of the
                              Corporation to another corporation or entity (the
                              "surviving entity"); provided that the voting
                              power represented by the surviving entity's
                              securities (or other equity interests) is owned
                              directly or 

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                        indirectly by the stockholders of the Corporation
                        immediately following such transaction in substantially
                        the same proportions as their ownership of the voting
                        power represented by the Corporation's common stock
                        immediately preceding such transaction; and provided,
                        further, that the surviving entity expressly assumes
                        this Agreement. 

                  Notwithstanding anything in this Agreement to the contrary, if
the Employee's employment terminates prior to a Change in Control, and the
Employee reasonably demonstrates that such termination was at the request or
suggestion of a third party who has indicated an intention or taken steps
reasonably calculated to effect a Change in Control (a "Third Party"), then for
all purposes of this Agreement, the date of a Change in Control shall mean the
date immediately prior to the date of such termination of employment.

                  (b) Cause. During the two-year period following a Change in
Control, "Cause" shall mean (i) the willful and continued failure of the
Employee to substantially perform his duties with the Corporation (other than
any such failure resulting from the Employee's incapacity due to physical or
mental illness or any such failure subsequent to the Employee being delivered a
notice of termination without Cause by the Corporation or delivering a notice of
termination for Good Reason to the Corporation) after a written demand for
substantial performance is delivered to the Employee by the Board which
specifically identifies the manner in which the Board believes that the Employee
has not substantially performed the Employee's duties, or (ii) the willful
engaging by the Employee in illegal conduct or gross misconduct which is
demonstrably and materially injurious to the Corporation or its subsidiaries.
For purpose of this paragraph (b), no act or failure to act by the Employee
shall be considered "willful" unless done or omitted to be done by the Employee
in bad faith 

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and without reasonable belief that the Employee's action or omission was in the
best interests of the Corporation or its affiliates. Any act, or failure to act,
based upon authority given pursuant to a resolution duly adopted by the Board,
based upon the advice of counsel for the Corporation, shall be conclusively
presumed to be done, or omitted to be done, by the Employee in good faith and in
the best interests of the Corporation. Cause shall not exist unless and until
the Corporation has delivered to the Employee a copy of a resolution duly
adopted by two-thirds (2/3) of the entire Board at a meeting of the Board called
and held for such purpose (after reasonable notice to the Employee and an
opportunity for the Employee, together with counsel, to be heard before the
Board), finding that in the good faith opinion of the Board an event set forth
in clause (i) or (ii) has occurred and specifying the particulars thereof in
detail. Following a Change in Control, the Corporation must notify the Employee
of any event constituting Cause within ninety (90) days following the
Corporation's knowledge of its existence or such event shall not constitute
Cause under this Agreement.

                  (c) Good Reason. During the two-year period following a Change
in Control, "Good Reason" shall mean, without the Employee's express written
consent, the occurrence of any of the events set forth in Section 6(d) or any of
the following events:

                  (1) (i) the assignment to the Employee of any duties or
         responsibilities (including reporting responsibilities) inconsistent in
         any material and adverse respect with the Employee's duties and
         responsibilities with the Corporation immediately prior to such Change
         in Control (including any diminution of such duties or
         responsibilities); provided, however, that Good Reason shall not be
         deemed to occur upon a change in duties or responsibilities that is
         solely and directly a result of the Corporation no longer being a
         publicly traded entity, and does not involve any other event set forth
         in this paragraph (c), or (ii) a material and adverse change in the
         Employee's reporting 

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         responsibilities, titles or offices (other than membership on the
         Board) with the Corporation as in effect immediately prior to such
         Change in Control;

                  (2) a reduction by the Corporation in the Employee's rate of
         annual Base Salary or annual guaranteed bonus opportunity (including
         any adverse change in the formula for such annual bonus target) as in
         effect immediately prior to such Change in Control or as the same may
         be increased from time to time thereafter;

                  (3) any requirement of the Corporation that the Employee (i)
         be based anywhere more than thirty (30) miles from the office where the
         Employee is located at the time of the Change in Control or (ii) travel
         on the Corporation's business to an extent substantially greater than
         the travel obligations of the Employee immediately prior to such Change
         in Control;

                  (4) the failure of the Corporation to (i) continue in effect
         any employee benefit plan, compensation plan, welfare benefit plan or
         material fringe benefit plan in which the Employee is participating
         immediately prior to such Change in Control, or the taking of any
         action by the Corporation which would adversely affect the Employee's
         participation in or reduce the Employee's benefits under any such plan,
         unless the Employee is permitted to participate in other plans
         providing the Employee with substantially equivalent aggregate benefits
         (at substantially comparable cost with respect to welfare benefit
         plans), or (ii) provide the Employee with paid vacation in accordance
         with the most favorable plans, policies, programs and practices of the
         Corporation and its affiliated companies as in effect for the Employee
         immediately prior to such Change in Control; or

                  (5) the failure of the Corporation to obtain the assumption
         agreement from any successor as contemplated in Section 11(a) hereof.

                  Any event or condition described in Section 7(c)(1) through
         (4) which 

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occurs prior to a Change in Control, but with respect to which the Employee is
able to reasonably demonstrate was at the request or suggestion of a Third
Party, shall constitute Good Reason following a Change in Control for purposes
of this Agreement (as if a Change in Control had occurred immediately prior to
the occurrence of such event or condition) notwithstanding that it occurred
prior to the Change in Control. An isolated, insubstantial and inadvertent
action taken in good faith and which is remedied by the Corporation promptly
after receipt of notice thereof given by the Employee shall not constitute Good
Reason. The Employee's right to terminate employment for Good Reason shall not
be affected by the Employee's incapacity due to mental or physical illness and
the Employee's continued employment shall not constitute consent to, or a waiver
of rights with respect to, any event or condition constituting Good Reason.
Following a Change in Control, the Employee must provide notice of termination
of employment within ninety (90) days of the Employee's knowledge of an event
constituting Good Reason or such event shall not constitute Good Reason under
this Agreement.

                  (d) In addition to the payments set forth in Section 6(g)
above, in the event the Employee's employment with the Corporation terminates
within two (2) years following a Change in Control either (i) by the Corporation
without Cause (other than for Retirement or Disability) or (ii) by the Employee
for Good Reason, then the Corporation shall (1) pay to the Employee, within ten
(10) days following the Employee's Date of Termination, a lump sum cash amount
equal to two (2) times the sum of (i) the highest annual rate of Base Salary of
the Employee during the 3-year period immediately preceding the Employee's Date
of Termination and (ii) the highest annual bonus earned by Employee in respect
of the three (3) fiscal years of the Corporation immediately preceding the year
in which the Employee's Date of Termination occurs (provided, that if the
Employee has not been employed by the Corporation for such three-fiscal-year
period, the greater of (x) the target annual bonus 

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(without regard to any reduction that would give rise to Good Reason) for the
year in which the Employee's Date of Termination occurs and (y) the amount
otherwise determined under this clause (ii) without regard to this
parenthetical), provided that the amount determined under this clause (1) shall
not be less than $2.4 million, (2) cause each option subject to the Initial
Grant to immediately vest and become exercisable in full, and (3) continue to
provide, for a period of one (1) year following the Date of Termination, the
Employee (and the Employee's dependents if applicable) with the same level of
medical, dental, accident, disability and life insurance benefits upon
substantially the same terms and conditions (including cost of coverage to the
Employee) as existed immediately prior to the Employee's Date of Termination
(or, if more favorable to the Employee, as such benefits and terms and
conditions existed immediately prior to the Change in Control); provided, that,
if the Employee cannot continue to participate in the Corporation's plans
providing such benefits, the Corporation shall otherwise provide such benefits
on the same after-tax basis as if continued participation had been permitted.
Notwithstanding the foregoing, in the event the Employee becomes reemployed with
another employer and becomes eligible to receive welfare benefits from such
employer, the welfare benefits described herein shall be secondary to such
benefits during the period of the Employee's eligibility, but only to the extent
that the Corporation reimburses the Employee for any increased cost and provides
any additional benefits necessary to give the Employee the benefits hereunder.

                  (e)(i) Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any payment or
distribution, or any acceleration of vesting of any benefit or award, by the
Corporation or its affiliated companies to or for the benefit of the Employee
(whether paid or payable, distributed or distributable or accelerated or subject
to acceleration pursuant to the terms of this Agreement or otherwise, but
determined without regard to any additional payments required under this Section
7(e)) (a "Payment") would be subject to the excise tax imposed by Section 

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4999 of the Code, or any interest or penalties are incurred by the Employee 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
the Employee shall be entitled to receive an additional payment (a "Gross-Up
Payment") in an amount such that after payment by the Employee of all taxes
imposed upon the Gross-Up Payment and any interest or penalties imposed with
respect to such taxes, the Employee retains an amount of the Gross-Up Payment
equal to the sum of (x) the Excise Tax imposed upon the Payments and (y) the
product of any deductions disallowed because of the inclusion of the Gross-Up
Payment in the Employee's adjusted gross income and the highest applicable
marginal rate of federal income taxation for the calendar year in which the
Gross-Up Payment is to be made. For purposes of determining the amount of the
Gross-Up Payment, the Employee shall be deemed to (A) pay federal income taxes
at the highest marginal rates of federal income taxation for the calendar year
in which the Gross-Up Payment is to be made, (B) pay applicable state and local
income taxes at the highest marginal rate of taxation for the calendar year in
which the Gross-Up Payment is to be made, net of the maximum reduction in
federal income taxes which could be obtained from deduction of such state and
local taxes and (C) have otherwise allowable deductions for federal income tax
purposes at least equal to those which could be disallowed because of the
inclusion of the Gross-Up Payment in the Employee's adjusted gross income. The
payment of a Gross-Up Payment under this Section 7(e) shall in no event be
conditioned upon the Employee's termination of employment or the receipt of
severance benefits under this Agreement.

                  (ii) Subject to the provisions of Section 7(e)(i), all
determinations required to be made under this Section 7(e), 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 the public accounting 

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firm that is retained by the Corporation as of the date immediately prior to the
Change in Control (the "Accounting Firm") which shall provide detailed
supporting calculations both to the Corporation and the Employee within fifteen
(15) business days of the receipt of notice from the Corporation or the Employee
that there has been a Payment, or such earlier time as is requested by the
Corporation (collectively, the "Determination"). In the event that the
Accounting Firm is serving as accountant or auditor for the individual, entity
or group effecting the Change in Control, the Employee may appoint another
nationally recognized public 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
solely by the Corporation and the Corporation shall enter into any agreement
requested by the Accounting Firm in connection with the performance of its
services hereunder. The Gross-Up Payment under this Section 7(e) with respect to
any Payment shall be made no later than thirty (30) days following such Payment.
If the Accounting Firm determines that no Excise Tax is payable by the Employee,
it shall furnish the Employee with a written opinion to such effect, and to the
effect that failure to report the Excise Tax, if any, on the Employee's
applicable federal income tax return will not result in the imposition of a
negligence or similar penalty. The Determination by the Accounting Firm shall be
binding upon the Corporation and the Employee. As a result of the uncertainty in
the application of Section 4999 of the Code at the time of the Determination, it
is possible that Gross-Up Payments which will not have been made by the
Corporation should have been made ("Underpayment") or Gross-Up Payments are made
by the Corporation which should not have been made ("Overpayment"), consistent
with the calculations required to be made hereunder. In the event that the
Employee thereafter is required to make payment of any additional Excise Tax,
the Accounting Firm shall determine the amount of the Underpayment that has
occurred and any such Underpayment (together with interest at the rate provided
in Section 

                                      -17-
<PAGE>   18

1274(b)(2)(B) of the Code) shall be promptly paid by the Corporation to
or for the benefit of the Employee. In the event the amount of the Gross-Up
Payment exceeds the amount necessary to reimburse the Employee for his Excise
Tax, the Accounting Firm shall determine the amount of the Overpayment that has
been made and any such Overpayment (together with interest at the rate provided
in Section 1274(b)(2) of the Code) shall be promptly paid by the Employee to or
for the benefit of the Corporation. The Employee shall cooperate, to the extent
his expenses are reimbursed by the Corporation, with any reasonable requests by
the Corporation in connection with any contests or disputes with the Internal
Revenue Service in connection with the Excise Tax.

                  8.       Covenants Not to Compete; Confidentiality.

                  (a) The Employee covenants that if he voluntarily terminates
his employment with the Corporation prior to the end of the term of this
Agreement, unless such termination either is approved by the Board or is within
the two-year period following a Change in Control, he shall not, for a period of
one (1) year following such Date of Termination:

                  (1) engage or be interested, whether alone or together with or
         on behalf or through any other person, firm, association, trust,
         venture, or corporation, whether as sole proprietor, partner,
         shareholder, agent, officer, director, employee, adviser, consultant,
         trustee, beneficiary or otherwise, in any business principally and
         directly engaged in the operation of health maintenance organizations
         or the health insurance business or in the management of specialty
         medical care through case rate contracting; which business operates in
         a geographic area in which, at the time of such termination of
         employment, the Corporation is conducting business or plans to conduct
         business (a "competing business");

                  (2)  assist others in conducting any competing business;

                                      -18-
<PAGE>   19

                  (3) directly or indirectly recruit or induce or hire any
         person who is an employee of the Corporation or any of its
         subsidiaries, or solicit any of the Corporation's customers, clients or
         providers; or

                  (4) own any capital stock or any other securities of, or have
         any other direct or indirect interest in, any entity which owns or
         operates a competing business, other than the ownership of (i) less
         than five percent (5%) of any such entity whose stock is listed on a
         national securities exchange or traded in the over-the-counter market
         and which is not controlled by the Employee or any affiliate of the
         Employee or (ii) any limited partnership interest in such an entity.

                  Nothing contained in this section, however, shall prohibit the
Employee from taking any of the actions set forth in clause (1), (2), (3) or (4)
above if (i) the Employee's employment has been terminated other than for Cause,
or (ii) the Employee has terminated employment for Good Reason.

                  (b) In the event that the Employee breaches or threatens to
breach any of the terms of this Section 8, the Employee acknowledges that the
Corporation's remedy at law would be inadequate and that the Corporation shall
be entitled to an injunction restraining the Employee from committing or
continuing such breach.

                  9. Payment Obligation Absolute. Except with respect to
continued welfare benefits under Section 7(d), the Corporation's obligation to
pay the Employee the compensation and other benefits provided herein shall be
absolute and unconditional and shall not be affected by an circumstances,
including, without limitation, any set-off, counterclaim, recoupment, defense or
other right which the Corporation may have against the Employee. All amounts
payable by the Corporation hereunder shall be paid without notice or demand. 

                  10.      Notice.

                  (a) For purposes of this Agreement, all notices and other

                                      -19-
<PAGE>   20
communications required or permitted hereunder shall be in writing and shall be
deemed to have been duly given when delivered or five (5) days after deposit in
the United States mail, certified and return receipt requested, postage prepaid,
addressed as follows:

                  If to the Employee:

                  Marvin P. Rich
                  4811 South Chipping Glen
                  Bloomfield Hills, MI   48302

                  If to the Corporation:
                  Oxford Health Plans, Inc.
                  800 Connecticut Avenue
                  Norwalk, Connecticut 06854
                  Attention:  Secretary

or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.

                  (b) A written notice (a "Notice of Termination") of the
Employee's Date of Termination by the Corporation or the Employee, as the case
may be, to the other, shall (i) indicate the specific termination provision in
this Agreement relied upon, (ii) to the extent applicable, set 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) specify the Date of Termination. The failure by the Employee or the
Corporation to set forth in such notice any particular fact or 

                                      -20-
<PAGE>   21
circumstance which contributes to a showing of Good Reason or Cause shall not
waive any right of the Employee or the Corporation hereunder or preclude the
Employee or the Corporation from asserting such fact or circumstance in
enforcing the Employee's or the Corporation's rights hereunder.

                  11.      General Provisions.

                  (a) No Assignments. This Agreement is personal to each of the
parties hereto. Neither party may assign or delegate any of his or its rights or
obligations hereunder without first obtaining the written consent of the other
party; provided, however, that the Corporation agrees that concurrently with any
merger or sale of assets which would constitute a Change in Control hereunder,
it will cause any successor or transferee unconditionally to assume, by written
instrument delivered to the Employee (or his beneficiary or estate), all of the
obligations of the Corporation hereunder. Failure of the Corporation to obtain
such assumption prior to the effectiveness of any such merger or sale of assets,
shall be a breach of this Agreement and shall constitute Good Reason hereunder
and shall entitle the Employee to compensation and other benefits from the
Corporation in the same amount and on the same terms as the Employee would be
entitled hereunder if the Employee's employment were terminated following a
Change in Control under Section 7(d) hereof. For purposes of implementing the
foregoing, the date on which any such merger or sale of assets becomes effective
shall be deemed the date Good Reason occurs, and shall be the Date of
Termination if requested by the Employee. Notwithstanding the foregoing, this
Agreement shall inure to the benefit of and be enforceable by the Employee's
personal or legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees.

                  (b) Indemnification of Employee. In the event the employment
of the Employee is terminated by the Corporation without Cause or by the
Employee for Good Reason hereof and the Corporation fails to make timely payment
of the amounts 

                                      -21-
<PAGE>   22
then owed to the Employee under this Agreement, the Employee shall be
entitled to indemnification for all reasonable costs (as such costs are
incurred), including attorneys' fees and disbursements, incurred by the Employee
in taking action to collect such amounts or otherwise to enforce this Agreement,
plus interest on all such amounts at the annual rate of one percent above the
prime rate (defined as the base rate on corporate loans at large U.S. money
center commercial banks as published by the Wall Street Journal), compounded
monthly, for the period from the time payment is due until payment is made to
the Employee. The Employee shall also be entitled to interest (at the rate
described in the immediately preceding sentence) on such reasonable costs
incurred from the date the Employee delivers a receipt to the Corporation for
such costs until the date they are reimbursed to the Employee. Such
indemnification and interest shall be in addition to all rights to which the
Employee is otherwise entitled under this Agreement.

                  (c) Entire Agreement; Amendments or Additions; Action by
Board. This Agreement contains the entire agreement between the parties hereto
with respect to the transactions contemplated hereby and supersedes all prior
oral and written agreements, memoranda, understandings and undertakings between
the parties hereto relating to the subject matter hereof. No amendments or
additions to this Agreement shall be binding unless in writing and signed by
both parties. The prior approval by a two-thirds (2/3) affirmative vote of the
full Board shall be required in order for the Corporation to authorize any
amendments or additions to this Agreement, to give any consents or waivers of
provisions of this Agreement, or to take any other action under this Agreement
including any termination of the employment of the Employee with or without
Cause. For purposes of Board approval with respect hereto, if the Employee is
also a director of the Corporation, he shall abstain from acting on matters
pertaining to this Agreement and shall not be counted as a Board member for
purposes of the two-thirds (2/3) requirement.

                                      -22-
<PAGE>   23
                  (d) Governing Law. This Agreement shall be governed by the
laws of the State of Connecticut as to all matters, including, but not limited
to, matters of validity, construction, effect and practice.

                  (e) Arbitration. Except with respect to injunctive relief
under Section 8(b) hereof, any dispute or controversy under this Agreement shall
be settled exclusively by arbitration in Norwalk, Connecticut by three (3)
arbitrators in accordance with the rules of the American Arbitration Association
then in effect. Judgment may be entered on the arbitration award in any court
having jurisdiction. The Corporation shall bear all costs and expenses arising
in connection with any arbitration proceeding pursuant to this Section 11(e).

                  (f) Employment with Subsidiaries. Employment with the
Corporation for purposes of this Agreement shall include employment with any
subsidiary of the Corporation.

                  (g) Severability. The provisions of this Agreement shall be
deemed severable and the invalidity or unenforceability of any provision shall
not affect the validity or enforceability of the other provisions hereof.

                  (h) Section Headings. The section headings used in this
Agreement are included solely for convenience and shall not affect, or be used
in connection with, the interpretation of this Agreement.

                  (i) Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original and all of
which together shall constitute one and the same instrument.



                                      -23-
<PAGE>   24

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

                                                    OXFORD HEALTH PLANS, INC.   

                                                    By:    _____________________

Dated:  ________________                                   _____________________
                                                           Marvin P. Rich



                                      -24-