<PAGE>   1

                             SHAREHOLDERS' AGREEMENT

       THIS SHAREHOLDERS' AGREEMENT (this "Agreement"), dated as of May 5, 2000,
is by and among Coventry Health Care, Inc., a Delaware corporation (the
"Company"), Warburg, Pincus Ventures, L.P., a Delaware limited partnership
("WPV"), Warburg, Pincus Equity Partners, L.P., a Delaware limited partnership
("WPEP"), Warburg, Pincus Netherlands Equity Partners I, C.V., a Netherlands
limited partnership ("WPNI"), Warburg, Pincus Netherlands Equity Partners II,
C.V., a Netherlands limited partnership ("WPNII"), and Warburg, Pincus
Netherlands Equity Partners III, C.V., a Netherlands limited partnership
("WPNIII" and, together with WPV, WPEP, WPNI and WPNII, the "Warburg Entities").

                                R E C I T A L S:

       WHEREAS, pursuant to the terms of a Purchase Agreement, dated as of the
date hereof (the "Purchase Agreement"), by and among WPEP, WPNI, WPNII, WPNIII
and Principal Health Care, Inc. ("Principal"), WPEP, WPNI, WPNII and WPNIII have
agreed to purchase an aggregate of 10,000,000 shares of Common Stock, par value
$.01 per share, of the Company ("Common Stock"); and

       WHEREAS, pursuant to the terms of the Amended and Restated Securities
Purchase Agreement, dated as of April 2, 1997, as amended, by and among WPV,
Franklin Capital Associates III, L.P. and the Company (the "Warburg Agreement"),
and the Shareholders' Agreement, dated as of April 1, 1998, by and among the
Company, Principal and Principal Mutual Life Insurance Company (the "Principal
Agreement"), the consent of the Company is required for the purchase and sale of
the Common Stock as contemplated by the Purchase Agreement; and.

       WHEREAS, the Company has agreed to consent to the purchase and sale of
the Common Stock in accordance with the terms of the Purchase Agreement, subject
to the terms and conditions set forth herein.

       NOW THEREFORE, in consideration of the foregoing premises and the mutual
covenants and agreements set forth herein, and intending to be legally bound
hereby, the parties hereto agree as follows:

       SECTION 1. RESTRICTION ON RESALE; LEGEND.

       (a)    RESALE OF SECURITIES. The Warburg Entities hereby covenant that:

              (i)    they will not, directly or indirectly, sell or otherwise
                     Transfer any shares of Common Stock Owned by them, except
                     pursuant to an effective registration under the Securities
                     Act or in a transaction which, in the opinion of counsel
                     reasonably satisfactory to the Company, qualifies as an
                     exempt transaction under the Securities Act and the rules
                     and regulations promulgated thereunder; and


<PAGE>   2

              (ii)   on or before the fifth anniversary of the Closing Date,
                     they will not, directly or indirectly, sell or otherwise
                     Transfer, or permit any of their Affiliates, directly or
                     indirectly, to sell or to Transfer any shares of Common
                     Stock Owned by them to any person if such person (together
                     with the Affiliates of such person) would Own, after giving
                     effect to such sale or Transfer, more than 9.9% of the
                     outstanding shares of Common Stock, provided, however, that
                     the Warburg Entities may sell or Transfer shares of Common
                     Stock to one of their Affiliates if such Affiliate agrees
                     to be bound by the terms of this Agreement. The foregoing
                     restrictions shall not apply to any sale or Transfer made
                     (A) pursuant to an effective registration under the
                     Securities Act, (B) pursuant to and in compliance with Rule
                     144 under the Securities Act, (C) pursuant to a pro rata
                     distribution by any of the Warburg Entities to its partners
                     or (D) with the written consent of the Company's Board of
                     Directors.

       (b)    STOCK LEGEND. The stock certificates evidencing ownership of the
shares of Common Stock acquired by WPEP, WPNI, WPNII and WPNIII under the
Purchase Agreement will bear substantially the following legends:

       THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
       SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES
       LAW, AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT
       PURSUANT TO AN EFFECTIVE REGISTRATION UNDER THE ACT OR IN A TRANSACTION
       WHICH, IN THE OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY, IS
       EXEMPT FROM SUCH REGISTRATION.

       THE SECURITIES EVIDENCED HEREBY ARE SUBJECT TO RESTRICTIONS ON TRANSFER
       CONTAINED IN THAT CERTAIN SHAREHOLDERS' AGREEMENT, DATED MAY 5, 2000,
       BETWEEN THE COMPANY AND WARBURG, PINCUS EQUITY PARTNERS, L.P. AND CERTAIN
       OF ITS AFFILIATES, A COPY OF WHICH AGREEMENT IS ON FILE AT THE OFFICE OF
       THE SECRETARY OF THE COMPANY. ANY ATTEMPTED TRANSFER OF THE SECURITIES IN
       VIOLATION OF THE PROVISIONS OF THE SHAREHOLDERS' AGREEMENT SHALL BE VOID
       AB INITIO AND SHALL NOT BE RECOGNIZED BY THE COMPANY.

       The legend in the first paragraph above shall be removed by the Company
from and after the expiration of the holding period for restricted securities
under the Securities Act, if the Company shall receive an opinion of counsel,
from counsel reasonably acceptable to the Company, that such legend is not
required under the

                                       2
<PAGE>   3

Securities Act or any state securities laws. In addition, whenever any shares
cease to be subject to this Agreement and are not otherwise restricted
securities, the shareholder thereof shall be entitled to receive from the
Company, without expense, upon surrender to the Company of the certificate
representing such shares, a new certificate representing such shares, of like
tenor but without a legend of the character set forth above.

       SECTION 2. STANDSTILL. The Warburg Entities hereby covenant and agree
that, on or before the fifth anniversary of the Closing Date, they will not, and
will cause their respective Affiliates to not, without the prior written consent
of a majority of the members of the Company's Board of Directors, do any of the
following:

       (a)    acquire, offer or agree to acquire any shares of Common Stock (or
options or warrants to acquire, or securities convertible into or exchangeable
for, shares of Common Stock) if, as a result of such acquisition, the Warburg
Entities (together with any of their respective Affiliates) would Own more than
a number of shares of Common Stock in excess of a number equal to 34.9% of the
outstanding shares of Common Stock on a fully diluted basis;

       (b)    directly or indirectly commence or participate in a solicitation
of proxies either to oppose the election of any person to the Board of Directors
or to seek the removal of any Person from the Board of Directors, which person
has been nominated by the Nominating Committee of the Board of Directors;

       (c)    directly or indirectly make or solicit or assist any third party
to make a tender or exchange offer to purchase any shares of Common Stock or
make any public announcement concerning, or submit any written proposal to the
Board of Directors of the Company for a merger, share exchange, acquisition of
substantially all of the assets or similar transaction involving the Company.

       SECTION 3. SUSPENSION OF COVENANTS. The provisions of Section 1(a)(ii)
and 2 hereof shall thereafter cease to apply in the event of any of the
following:

       (a)    the Company issues voting securities in an acquisition by the
Company of another corporation or entity by merger, consolidation, exchange
offer, purchase of substantially all of the assets or stock, or other form of
business combination ("Company Acquisition") to any person as a result of which
such person, together with its affiliates, shall own a number of shares of
voting securities that shall equal or exceed the number of such shares owned by
the Warburg Entities and their respective Affiliates in the aggregate;

       (b)    the number of shares of Common Stock then owned by the Warburg
Entities and its Affiliates, in the aggregate, shall be less than 10% of the
then issued and outstanding shares of Common Stock; or

       (c)    the number of shares of Common Stock then owned by any person
(other than Mutual, or a person who acquired a number of shares of Common Stock
in a Company Acquisition which did not equal or exceed the number of shares
owned by

                                       3
<PAGE>   4

Mutual and its Affiliates in the aggregate, so long as the Company does
not permit such person to acquire additional shares of Common Stock) and the
Affiliates of such person, in the aggregate, shall be greater than 15% of the
issued and outstanding shares of Common Stock


SECTION 4. MISCELLANEOUS.

       4.1. DEFINITIONS. Capitalized terms used but not defined herein shall
have the meaning assigned to such terms in the Purchase Agreement. As used in
this Agreement, the following terms have the respective meaning set forth below:

       (a)    Affiliate: as to the Warburg Entities, any person a majority of
the voting securities of which are Owned by the Warburg Entities, and as to any
other person, as defined in Rule 12b-2 under the Exchange Act.

       (b)    Exchange Act: the Securities Exchange Act of 1934, as amended.

       (c)    person: an individual, partnership, joint-stock company, limited
liability company, corporation, trust or unincorporated organization, and a
government or agency or political subdivision thereof.

       (d)    Securities Act: the Securities Act of 1933, as amended.

       (e)    Owns, Own or Owned: shall mean beneficial ownership, within the
meaning of Rule 13d-3 under the Exchange Act.

       (f)    Transfer: shall mean any sale, assignment, pledge, hypothecation,
or other disposition or encumbrance.

       4.2. NOTICES. Any notice required to be given hereunder shall be
sufficient if in writing, and sent by facsimile and by courier service (with
proof of service), hand delivery or certified or registered mail (return receipt
requested and first-class postage prepaid), addressed: (x) if to the Company, at
the Company's principal business address at 6705 Rockledge Drive, Suite 100,
Bethesda, Maryland 20817, Attention: Dale Wolf (Facsimile: (301) 493-0760) or
(y) if to any of the Warburg Entities, at 466 Lexington Avenue, New York, NY
10019, Attention: Joel Ackerman (Facsimile: 212-878-9351), or (z) to such other
address as any party shall specify by written notice so given, and such notice
shall be deemed to have been delivered as of the date so telecommunicated,
personally delivered or if mailed, the date of receipt.

       4.3. ASSIGNMENT, BINDING EFFECT; BENEFIT. Unless expressly provided in
this Agreement, neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties hereto (whether by
operation of law or otherwise) without the prior written consent of the other
parties. Subject to the preceding sentence, this Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors and assigns.

                                       4
<PAGE>   5

       4.4. ENTIRE AGREEMENT. This Agreement and the Warburg Agreement (except
for Section 6.6 of the Warburg Agreement, which is superceded in its entirety by
this Agreement) constitute the entire agreement among the parties with respect
to the subject matter hereof and supersedes all prior agreements and
understandings among the parties with respect thereto. No addition to or
modification of any provision of this Agreement shall be binding upon any party
hereto unless made in writing and signed by all parties hereto.

       4.5. AMENDMENT. This Agreement may not be amended except by an instrument
in writing signed on behalf of each of the parties hereto.

       4.6. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without regard to its rules
of conflict of laws.

       4.7. HEADINGS. Headings of the sections of this Agreement are for the
convenience of the parties only, and shall be given no substantive or
interpretive effect whatsoever.

       4.8. INTERPRETATION. In this Agreement, unless the context otherwise
requires, words describing the singular number shall include the plural and vice
versa, and words denoting any gender shall include all genders and words
denoting natural persons shall include corporations and partnerships and vice
versa.

       4.9. WAIVERS. Except as provided in this Agreement, no action taken
pursuant to this Agreement, including, without limitation, any investigation by
or on behalf of any party, shall be deemed to constitute a waiver by the party
taking such action of compliance with any representations, warranties, covenants
or agreements contained in this Agreement. The waiver by any party hereto of a
breach of any provision hereunder shall not operate or be construed as a waiver
of any prior or subsequent breach of the same or any other provision hereunder.

       4.10. SEVERABILITY. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.

       4.11. ENFORCEMENT OF AGREEMENT. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement was
not performed in accordance with its specific terms or was otherwise breached.
It is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof, this being in addition to any other remedy to
which they are entitled at law or in equity.

                                       5
<PAGE>   6

       4.12. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
together shall be considered one and the same agreement.

                                       6
<PAGE>   7


       IN WITNESS WHEREOF, the parties have executed this Agreement and caused
the same to be duly delivered on their behalf on the day and year first written
above.

                                   COVENTRY HEALTH CARE, INC.

                                   By: /s/ Allen F. Wise
                                       ------------------
                                   Name: Allen F. Wise
                                   Title: President and Chief Executive Officer


WARBURG, PINCUS VENTURES, L.P.

By:         Warburg, Pincus & Co.,
            General Partner

By:   /s/ Stephen Distler
    --------------------------------

WARBURG, PINCUS EQUITY PARTNERS, L.P.

By:         Warburg, Pincus & Co.,
            General Partner

By:   /s/ Stephen Distler
    --------------------------------

WARBURG, PINCUS NETHERLANDS EQUITY PARTNERS I, C.V.

By:         Warburg, Pincus & Co.,
            General Partner

By:    /s/ Stephen Distler
   --------------------------------

WARBURG, PINCUS NETHERLANDS EQUITY PARTNERS II, C.V.

By:         Warburg, Pincus & Co.,
            General Partner

By:    /s/ Stephen Distler
   --------------------------------

WARBURG, PINCUS NETHERLANDS EQUITY PARTNERS III, C.V.

By:         Warburg, Pincus & Co.,
            General Partner

By:    /s/ Stephen Distler
   --------------------------------