Amendment of 1994 Non-Qualified Stock Option Plan

         FURTHER RESOLVED,  that Section 4 of the Mid Atlantic Medical Services,
Inc.  1994  Non-Qualified  Stock Option Plan ("1994 Plan") be, and it hereby is,
amended to read in its entirety as follows:

                  4.       COMMITTEE.  The "Committee" means a committee of the
         Board of Directors of MAMSI ("Board") as may be appointed, from time to
         time, by the Board.

                  a. The Board may appoint more than one Committee to administer
         the Plan. If it appoints more than one  Committee,  one Committee  (the
         "Stock Option  Committee") shall have the authority to grant Options to
         a key  employee  who is either,  at the date of grant of the Option,  a
         "covered employee" as defined in Section 162(m) of the Internal Revenue
         Code of 1986,  as  amended  ("Code"),  and the  regulations  thereunder
         (collectively, "Section 162(m)") or who is subject to Section 16 of the
         Securities Exchange Act of 1934, as amended ("Exchange Act");  however,
         such Committee  shall also have the authority to grant Options to other
         key employees. The Stock Option Committee shall be composed of at least
         two directors of MAMSI,  each of whom is a  "non-employee  director" as
         defined in Rule 16b-3 as  promulgated  by the  Securities  and Exchange
         Commission  under  Section 16 of the  Exchange Act  (together  with any
         successor  rule,  "Rule  16b-3") and an "outside  director"  within the
         meaning  of  Section  162(m).  If,  however,  at least  two of  MAMSI's
         directors   are  not  both   "non-employee   directors"   and  "outside
         directors," the Board may grant Options to a key employee who is either
         a "covered  employee" or subject to Section 16 of the Exchange  Act, in
         which  case  the  Board  may  also  administer  the  Plan  and the term
         "Committee"  as used herein  shall also  include  the Board.  The other
         Committee  (the "Select  Committee")  shall be composed of at least one
         director  of MAMSI,  who may be an officer of the  Company.  The Select
         Committee  shall have  authority to grant Options to a key employee who
         is not, at the date of grant of the Option, either a "covered employee"
         as defined in Section  162(m) or subject to Section 16 of the  Exchange
         Act.

                  b. The Board may, from time to time,  appoint  members of each
         Committee  in  substitution  for  those  members  who  were  previously
         appointed and may fill vacancies, however caused, in the Committee.


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                  c. The Stock Option  Committee and the Select  Committee shall
         each have the power and authority to administer  the Plan in accordance
         with Section 3 with respect to particular  classes of key employees (as
         specified in Section 4(a)) and, when used herein,  the term "Committee"
         shall mean either the Stock Option Committee or the Select Committee if
         the Board  appoints more than one Committee to administer the Plan. If,
         however,  there is a conflict  between the  determinations  made by the
         Stock Option  Committee and the Select  Committee,  the  determinations
         made by the Stock Option Committee shall control.

                  d.  Except  when  the   "Committee"  is  the  "Board"  in  the
         circumstance  described  in Section  4(a),  all  determinations  of the
         Committee  shall be made by a majority vote of its members.  A majority
         of a  Committee's  members shall  constitute a quorum.  Any decision or
         determination reduced to writing and signed by all of the members shall
         be fully as  effective  as if it had been made by a majority  vote at a
         meeting  duly called and held.  The  Committee  shall also have express
         authorization to hold Committee  meetings by conference  telephone,  or
         similar   communication   equipment  by  means  of  which  all  persons
         participating in the meeting can hear each other.

and it was

         FURTHER RESOLVED, that Section 9 of the 1994 Plan be, and it hereby is,
amended to read in its entirety as follows:

                  9.       AMENDMENT AND TERMINATION.

                  a.  Amendment.   The  Board  shall  have  complete  power  and
         authority  to  amend  the Plan at any time it is  deemed  necessary  or
         appropriate;  provided,  however, that the Board shall not, without the
         affirmative  approval  of a simple  majority  of the  holders of Common
         Stock,  represented,  by person or by proxy, and entitled to vote at an
         annual or special  meeting of the  holders  of Common  Stock,  make any
         amendment that requires  stockholder  approval under  applicable law or
         rule, unless the Board determines that compliance with such law or rule
         is no  longer  desired  with  respect  to the  Plan as a  whole  or the
         provision to be amended.  No  termination or amendment of the Plan may,
         without the consent of the person to whom any Option shall  theretofore
         have been granted  under the Plan,  adversely  affect the right of such
         individual  under such Option;  provided,  however,  that the Committee
         may, in its sole and absolute  discretion,  make provision in an Option
         Agreement  for  such   amendments   that,  in  its  sole  and  absolute
         discretion, it deems appropriate.




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                  b.  Termination.  The Board shall have the right and the power
         to terminate the Plan at any time. No Option shall be granted under the
         Plan after the termination of the Plan, but the termination of the Plan
         shall not have any other effect and any Option  outstanding at the time
         of the  termination  of the Plan may be amended and  exercised  and may
         vest after  termination of the Plan at any time prior to the expiration
         date of such  Option to the same  extent  such  Option  could have been
         amended  or  would  have  been  exercisable  or vest  had the  Plan not
         terminated.

and it was

         FURTHER RESOLVED, that Section 11(k) be, and it hereby is, added to the
1994 Plan in the following form:

                  k.  Compliance  with Rule  16b-3  and  Section  162(m).  It is
         intended that the Plan be applied and  administered  in compliance with
         Rule 16b-3 and with Section 162(m).  If any provision of the Plan would
         be in violation of Section 162(m) if applied as written, such provision
         shall not have  effect as  written  and shall be given  effect so as to
         comply with Section  162(m) as  determined by the Committee in its sole
         and absolute discretion.  The Board is authorized to amend the Plan and
         the Committee is authorized  to make any such  modifications  to Option
         Agreements to comply with Rule 16b-3 and Section 162(m), as they may be
         amended  from time to time,  and to make any other such  amendments  or
         modifications  deemed necessary or appropriate to better accomplish the
         purposes of the Plan in light of any amendments  made to Rule 16b-3 and
         Section 162(m).  Notwithstanding the foregoing, the Board may amend the
         Plan so that it (or certain of its  provisions)  no longer  comply with
         either  or  both  of  Rule  16b-3  or  Section   162(m)  if  the  Board
         specifically  determines  that such compliance is no longer desired and
         the  Committee  may grant  Options  that do not comply  with Rule 16b-3
         and/or  Section  162(m) if the  Committee  determines,  in its sole and
         absolute  discretion,  that it is in the  interest of the Company to do
         so.

and it was

Committees
----------

         FURTHER RESOLVED,  that the Corporation establish two committees of the
Board to  administer  the Plan,  the 1996 Plan,  the 1995 Plan and the 1994 Plan
(collectively, the "Option Plans"), which committees shall have the authority to
grant options under the Option Plans and otherwise  administer  the Option Plans
as more fully  provided in such Option  Plans,  (1) the first  committee,  which
shall be known as the "Stock Option  Committee,"  shall have  authority to grant
options to a participant  who is either,  at the date of grant of the Option,  a
"covered  employee" as defined in Section 162(m) of the Internal Revenue Code of
1986,  as  amended,  and  the  regulations  thereunder  (collectively,  "Section
162(m)") or who


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is  subject to Section 16 of the  Securities  Exchange  Act of 1934,  as amended
("Section 16"), as well as to other  participants  in the Option Plans,  and (2)
the second committee, which shall be known as the "Select Committee," shall have
the authority to grant options to a participant who is not, at the date of grant
of the  option,  either a "covered  employee"  as  defined in Section  162(m) or
subject to Section 16; and it was

         FURTHER RESOLVED,  that the Stock Option Committee shall be composed of
three directors and that directors James A. Wild,  Walter Girardin and Creighton
R. Schneck shall serve as members of the Stock Option  Committee,  with Mr. Wild
serving as Chairman,  each to serve until his successor is elected and qualified
or until he is removed or replaced; and it was

         FURTHER  RESOLVED,  that  director  George T. Jochum shall serve as the
sole member of the Select Committee, to serve until his successor is elected and
qualified or until he is removed or replaced; and it was.