EMPLOYMENT AGREEMENT

     THIS  EMPLOYMENT  AGREEMENT  ("Agreement"),  is made and entered into as of
this 14th day of February,  2001 ("Effective Date"), by and between Mid Atlantic
Medical  Services,  Inc., a Delaware  corporation  with its principal  executive
offices at 4 Taft Court,  Rockville,  Maryland 20850 ("Company"),  and Sharon C.
Pavlos ("Executive").

     WHEREAS,  the Company  wishes to assure itself of the services of Executive
for the period provided in this Agreement,  and Executive is willing to serve in
the employ of the Company on a full-time basis for said period;

     WHEREAS,  the Company and Executive desire to set forth the amounts payable
and benefits to be provided by the Company to Executive  while in the employment
of the Company and in the event of a termination of Executive's  employment with
the Company under the circumstances set forth herein;

     NOW THEREFORE,  in consideration of the mutual covenants  contained herein,
the parties hereto hereby agree as follows:

     1. Employment.  The Company agrees to continue Executive in its employ, and
Executive  agrees  to remain in the full  time  employ of the  Company,  for the
period stated in Section 3 hereof and upon the other terms and conditions herein
provided.

     2.  Position  and  Responsibilities.  The Company  employs  Executive,  and
Executive  agrees to serve,  as Associate  Senior  Executive  Vice President and
General  Counsel  of  the  Company  on the  conditions  hereinafter  set  forth.
Executive agrees to perform such services  consistent with her position as shall
from  time  to time be  assigned  to him by the  Company's  Board  of  Directors
("Board") or another executive designated by the Board. Such duties may include,
in addition to her duties as  Associate  Senior  Executive  Vice  President  and
General  Counsel,  the appointment of Executive as an officer and/or director of
any  present or future  subsidiary  or  affiliate  of the  Company  without  any
additional remuneration under this Agreement.  Executive shall devote all of her
business time, attention,  skill, and efforts to the faithful performance of the
duties hereunder.

     3. Term. The period of Executive's employment under this Agreement with the
Company  shall be deemed to have  commenced  as of January 1, 2001 and remain in
effect for three years unless terminated earlier as provided herein.

     4. Compensation and Reimbursement of Expenses.

          (a).  General.  For all  services  rendered by  Executive as Associate
     Senior  Executive  Vice  President  and General  Counsel in addition to any
     other capacity during employment under this Agreement  (including,  without
     limitation,  services as an executive, officer, or director of the Company,
     or any  subsidiary  or  affiliate  of the  Company,  or as a member  of any
     committee  of the Board of Directors  of the Company or any  subsidiary  or
     affiliate of the Company),  the Company shall pay Executive as compensation
     (i) an annual salary ("Base  Salary");  (ii) such bonuses if any, as may be
     awarded to Executive  from time to time  pursuant to any Bonus Plan adopted
     by the Company for its senior  management;  (iii) such other bonuses as may
     be  awarded  by the  Board or by a  committee  designated  by the  Board as
     described  below  ("Performance  Bonus");  (iv)  stock  options as forth in
     Section 4(b).

          (b).  Stock Options.

               (i). On January 15,  2001 and on each  subsequent  January 1 that
          this Agreement is in effect,  the Company will grant Executive options
          to purchase no less than  100,000  shares of MAMSI common stock at the
          stock price on the date of grant.  The  Compensation  Committee of the
          Board will annually  consider and submit to the Board a recommendation
          for option  grants in excess of the  minimum of  100,000.  All of such
          options, except for options granted in 2001, will vest 50% on the date
          of grant and 50% based on performance  targets to be determined by the
          Stock Option Committee and the Board at the first Board meeting in the
          year of the grant.

               (ii).  The  number  and kind of  shares  subject  to  outstanding
          options,  the purchase  price or exercise  price of such options,  the
          limit now set forth in Section 5.01 of the Company's stock option plan
          (and any similar  successor plan or provision) and the number and kind
          of  shares  available  for  options   subsequently  granted  shall  be
          appropriately  adjusted to reflect any stock  dividend,  stock  split,
          combination  or exchange  of shares,  merger,  consolidation  or other
          change in capitalization  with a similar  substantive  effect upon the
          options  granted.  The Stock Option Committee shall have the power and
          sole and absolute discretion to determine the nature and amount of the
          adjustment to be made in each case.

          (c). Base Salary. Base Salary shall be $375,000 for 2001. For 2002 and
     each year  thereafter,  the Base Salary will increase by an amount equal to
     50% of the percentage increase in the Company's prior year consolidated net
     income  as  determined  by  the  Company,  and  audited  by  the  Company's
     independent  certified public accountant but any annual increase may not be
     greater than 8 percent.  There shall be no decreases  in  Executive's  Base
     Salary, as adjusted, during the term of this Agreement. This increase would
     first apply to the year 2002 and would take effect retroactively to January
     1 of the then current year. Items of a non-recurring nature may be excluded
     in the calculations as mutually agreed to by the Company and the Executive.

          (d). Bonuses.

               (i).  Executive shall be paid a bonus as may be determined  under
          the  applicable  Bonus  Plan  adopted  by the  Company  for its senior
          management.

               (ii).  In  addition,  for  2001  and each  year  thereafter,  the
          Executive  shall be paid a Performance  Bonus based on the  percentage
          increase in the Company's net income, as determined by the Company and
          as audited by the Company's  independent  certified public accountant,
          according to the following formula:

<TABLE>
<CAPTION>

         Percentage Increase in Company              Performance Bonus Percentage
         Net Income
         <S>                                         <C>

         0% - 8.00%                                  -0-
         8.01% - 15.00%                              50% of % increase in net income
         15.01% - 25.00%                             75% of % increase in net income
         25.0% and up                                100% of % increase in net income up
                                                     to 50% of Base Salary
</TABLE>

The current year's Base Salary shall be multiplied  times the Performance  Bonus
percentage earned in the applicable year. The maximum Performance Bonus that may
be paid for any year is 50% of that  year's  Base  Salary.  For  years  2001 and
after, the Performance  Bonus will be subject to shareholder  approval.  If such
approval is not received,  the Company agrees to provide  Executive with similar
substitute compensation agreeable to the Company and Executive.

               (iii).  Items of a  non-recurring  nature may be  excluded in the
          calculations as mutually agreed to by the Company and the Executive.

          (e).  Reimbursements.  The Company shall also reimburse Executive,  in
     accordance  with such  policies and  procedures  as the Board may establish
     from time to time, for all reasonable travel and other expenses incurred by
     Executive  in the  performance  of her  obligations  under this  Agreement.
     Executive  shall also be  entitled  to  participate  in all  benefit  plans
     established by the Company for which Company executives are or shall become
     eligible.

     5. Termination of Employment.  Executive's  employment under this Agreement
may be terminated by the Company or Executive as follows:

          (a).  Disability.

               (i) If  Executive  fails to perform any of her duties  under this
          Agreement  on account of  Disability  (as  hereinafter  defined),  the
          Company may give notice to Executive to terminate  this Agreement on a
          date not less  than one  hundred  and  eighty  (180)  days  thereafter
          ("Notice  Period") and, if Executive has not resumed full  performance
          of her duties under this  Agreement  within such Notice  Period,  then
          Executive's employment under this Agreement will terminate on the date
          provided   in   the   notice    ("Disability    Termination    Date").
          Notwithstanding  the above, the Executive is specifically  entitled to
          receive all benefits in Section 5(a)(ii).

               (ii).  Executive  shall be paid her Base  Salary  by the  Company
          during the Notice Period. Within thirty (30) days after the Disability
          Termination  Date,  the Company shall pay  Executive's  Base Salary as
          then in effect  that has accrued to the last day of the month in which
          the Disability  Termination  Date occurs as well as any other payments
          or  benefits  that  Executive  is  entitled  to as an  employee of the
          Company.  Executive  shall also be entitled to receive a fully  vested
          retirement  benefit  and a  fully  vested  annuity  and tax  gross  up
          retirement  benefit  pursuant  to  Sections  5(d) and 5(h) and  health
          insurance benefits pursuant to Section 8 below.

               (iii).  Until  the end of the last day of the  month in which the
          Disability Termination Date occurs, the Company shall maintain and pay
          for health and other  insurance  benefits for Executive at least equal
          to those she had at the commencement of such Disability.

               (iv). As used in this Agreement, the term "Disability" shall mean
          the  inability  of  Executive  to perform all of her duties under this
          Agreement by reason of her medical,  mental, or emotional  disability,
          as determined by an independent  physician  selected with the approval
          of the Board and Executive.

          (b). Death. If Executive dies while employed under this Agreement, her
     employment  under this Agreement will terminate as of the date of her death
     ("Date of Death").  Within  thirty  (30) days after the Date of Death,  the
     Company shall pay to  Executive's  legal  representative  Executive's  Base
     Salary as then in effect  that has  accrued to the last day of the month in
     which the Date of Death  occurs as well as any other  payments  or benefits
     that  Executive  is  entitled  to as an  employee  of the  Company.  If the
     Executive  dies while  receiving  payments  pursuant to Section 5(c) below,
     said payment shall  continue for the period  remaining and shall be paid to
     the estate or named beneficiary of the Executive. Executive shall receive a
     fully vested retirement benefit and a fully vested annuity and tax gross up
     retirement  benefit pursuant to Sections 5(d) and 5(h) and health insurance
     benefits  pursuant  to Section 8 below.  On the Date of Death,  all granted
     stock options shall  immediately vest and Executive's heirs or estate shall
     be treated as if  Executive  remained an  employee  for  exercise  purposes
     consistent with the terms of the applicable stock option plan.

          (c).  Certain Other Events of  Termination.

               (i) In the  event  that (A) the  Company  terminates  Executive's
          employment for any reason (other than because of death, Disability, or
          "just  cause"  (as  defined  below),  (B) the  term of this  Agreement
          expires  and the  Company  does not  offer to extend  the  Executive's
          employment  in  a  similar  capacity,  (C)  Executive  terminates  her
          employment with the Company  because of the Company's  material breach
          of this  Agreement,  (D) Executive  terminates her employment with the
          Company  because the Company  requires  Executive to be based anywhere
          other than Executive's  current location or within  seventy-five miles
          (75) round trip of the Company's current principal  executive offices,
          or (E) Executive terminates her employment with the Company because of
          a substantial reduction of her duties and  responsibilities,  then the
          Executive  shall be entitled to the  severance  benefits  described in
          Section  5(c)(ii)  below.  The date of termination  under this Section
          5(c)(i) shall be referred to as the  "Executive  Termination  Date" in
          this Agreement.

               (ii).  Upon the  occurrence  of an  event  described  in  Section
          5(c)(i) above, the Executive shall be entitled to the following:

                    (A). The Company  shall pay the Executive an amount equal to
               one year's Base Salary as in effect on the Executive  Termination
               Date with the total amount being paid in equal bi-weekly payments
               over a period of one year commencing on the Executive Termination
               Date and in  accordance  with  regular  payroll  practices of the
               Company;

                    (B). The Company shall also pay the Executive the sum of the
               maximum  bonus  under the  senior  management  Bonus  Plan of the
               Company and the maximum  Performance  Bonus that Executive  could
               have been entitled to had she been employed  until the end of the
               year of termination  using the assumption that the parameters for
               earning  maximum bonuses were met for that year regardless of the
               actual  performance  of the Company.  Such bonus  payments  shall
               occur when  bonuses  are  normally  paid by the Company but in no
               event later than February 28 of the applicable year; and

                    (C).  All stock  options  which  Executive  has been granted
               shall immediately vest and become  exercisable.  For the purposes
               of the time period  available for exercising  such stock options,
               Executive  shall be considered to be in the continuous  employ of
               the Company unless terminated pursuant to subsection (e) below.

                    (D).  If the  Executive  becomes  entitled  to the  benefits
               provided in this Section 5(c)(ii), such benefits shall be in lieu
               of any other  severance  benefit  that the Company may provide or
               adopt except that the  Executive  shall be entitled to any vested
               retirement  benefits  including  a fully  vested  annuity and tax
               gross up retirement benefit provided under Sections 5(d) and 5(h)
               whether or not the  Executive  is vested in those  benefits as of
               the Executive  Termination Date and health insurance as set forth
               in  Section 8 below.  Nothing  in this  section  shall  limit the
               discretion of the Board to grant Executive additional benefits.

          (d). Retirement.

               (i). Subject to the vesting schedule set forth below,  retirement
          benefits shall be payable to Executive  beginning on the day Executive
          attains age sixty-two  (62), (1) if she is at that time still employed
          by the  Company,  and she elects to retire  from  employment  with the
          Company,  or (2) she is not at the time  employed by the Company,  and
          elects to begin receiving  retirement  benefits.  Notwithstanding  the
          above  provision,  the  Executive  and the  Company may agree that the
          Executive may continue to be employed by the Company and not to retire
          at age 62. In addition,  the Executive  may elect an early  retirement
          and may elect to receive payment of the retirement  benefit at anytime
          after  attaining age 55 but before age 62 by providing  written notice
          to the Company.  Such early  retirement  benefit  will be  actuarially
          adjusted  solely for actual  retirement  age as  described  in Section
          5(d)(ii)  below and will be subject to the vesting  schedule  provided
          below. The date on which the Executive retires shall be referred to as
          the "Retirement Termination Date".

               (ii). If Executive retires on or after reaching age 62, Executive
          will be entitled  to receive  from the  Company a  retirement  benefit
          which will  provide an annual  lifetime  benefit in an amount equal to
          three  percent  of the  average  annual  Base  Salary  and  all  bonus
          compensation for the two years with the highest compensation beginning
          on or after  January  1,  2001  times  the  total  number of months of
          service  with the  Company,  including  all months prior to January 1,
          1999,  which  shall be divided by 12 to a limit of 60% of  Executive's
          total compensation which is defined as the total amount of annual Base
          Salary and maximum  annual  senior  management  bonus and  Performance
          Bonus (using the assumption  that the  parameters for earning  maximum
          bonus were met for that year  regardless of the actual  performance of
          the Company) that Executive  could have earned in the calendar year of
          Executive's  termination  of  employment  with  the  Company.  For the
          purposes of  determining  the two years with the highest  compensation
          under  this  paragraph,  compensation  shall be  based  on all  wages,
          salaries and bonus amounts  earned in an  applicable  year rather than
          paid in that year. In addition, in the event of a Change in Control as
          defined in Section 5(g), the Executive  shall have been  considered to
          have earned the total amount of annual Base Salary and maximum  annual
          senior  management  bonus and Performance  Bonus (using the assumption
          that the parameters  for earning  maximum bonus were met for that year
          regardless  of  the  actual  performance  of  the  Company)  that  the
          Executive  could  have  earned in the  calendar  year of the Change in
          Control and for the purposes of calculating the Executive's retirement
          benefit,  such year shall be  considered in the  determination  of the
          Executive's  two years  with  highest  compensation.  If the Change in
          Control  occurs in 2001,  the  Executive's  2001 Base Salary,  maximum
          senior management bonus and maximum  Performance Bonus that could have
          been  earned in that year  regardless  of actual  company  performance
          shall  count as the  average  compensation  on which the amount of the
          retirement benefit is calculated.  However,  in no event will the lump
          sum payment  provided in Section 5(g)(2) be considered as compensation
          under the calculation of the retirement  benefit under this paragraph.
          In the event of a Change in Control,  an additional  twenty-four  (24)
          month  period  shall be added to the total  months of service  for the
          purpose of calculating the Executive's  retirement  benefit under this
          paragraph.  If Executive  elects early  retirement  and retires  after
          reaching  age 55 but  before  age 62,  the  annual  payment  shall  be
          adjusted so that the total amount of retirement benefits to be paid do
          not exceed the  actuarial  equivalent  of the amount  which would then
          have been payable in  retirement  benefits had  Executive  reached and
          retired  at  age  62.  For  the  purposes  of  determining   actuarial
          equivalency,  the  retirement  benefit will be reduced by .25% (.0025)
          per month for each month that the actual  retirement  age is below age
          62. The retirement benefit shall be indexed for inflation.

               (iii).  Retirement benefits will vest 50% upon the effective date
          of this  Agreement and the remaining 50% will vest if the Executive is
          employed  by the  Company on January 1, 2002 and will vest 100% upon a
          Change in  Control  (as  defined in Section  5(g)(1)  below,  death or
          Disability.

               (iv). At any time, Executive may elect a beneficiary to receive a
          survivor  benefit upon the Retirement  Termination  Date. If Executive
          dies  prior  to  retirement   without  naming  a   beneficiary,   then
          Executive's   surviving  spouse  shall  be  deemed  to  be  her  named
          beneficiary or if Executive has no surviving  spouse, to her issue per
          stirpes.

               (v). If  Executive  is employed by the Company on the  Retirement
          Termination  Date,  the Company shall pay to Executive her Base Salary
          as then in  effect  that has  accrued  to the last day of the month in
          which the Retirement  Termination Date occurs,  any payment or benefit
          that  Executive is entitled to as an employee of the Company,  and any
          non-reimbursed business expenses. The retirement benefit payable under
          this Section 5(d) is in addition to, and shall not be offset  against,
          any other  retirement  benefits to which the Executive may be entitled
          under  any   qualified  or   non-qualified   retirement   or  deferred
          compensation plan of the Company.

          (e). Termination by the Company for Just Cause

               (i). The Company may terminate  Executive's  employment for "Just
          Cause" at any time by giving  written  notice  thereof  to  Executive.
          (Except as provided below,  the date of such notice is the "Just Cause
          Termination  Date" unless  otherwise  provided in the notice).  Within
          thirty (30) days after the Just Cause  Termination  Date,  the Company
          shall pay to  Executive  her Base  Salary  as then in effect  that has
          accrued to the Just Cause  Termination Date, as well as any payment or
          benefit  that  Executive is entitled to as an employee of the Company,
          and any  non-reimbursed  business  expenses.  For the purposes of this
          subparagraph,   "Just  Cause"  shall  mean   termination   because  of
          Executive's   willful  and   intentional   business  or   professional
          misconduct,  breach of fiduciary duty,  intentional failure to perform
          stated  duties  other than such  failure  due to her  disability,  the
          conviction  of  Executive  of a felony,  or a  material  breach of any
          provision of this Agreement.  For the purposes of this  paragraph,  no
          act, or failure to act, on Executive's  part shall be deemed "willful"
          unless done, or omitted to be done, by Executive not in good faith and
          without  reasonable belief that her action or omission was in the best
          interests of the Company.  Unless  otherwise  determined by the Board,
          Executive  shall  have no  right  to  receive  compensation  or  other
          benefits  under  this  Agreement  after a  termination  for Just Cause
          except for vested  retirement  benefits and any vested annuity and tax
          gross up  retirement  benefit as described in Sections  5(d) and 5(h),
          any stock  options that have vested up to and including the Just Cause
          Termination Date and health insurance as set forth in Section 8 below.

               (ii).  Notwithstanding the foregoing,  the Executive shall not be
          deemed to have been  terminated  for Just  Cause  unless and until the
          occurrence of the following two events:

                    (A).  The  Executive  is  given a notice  from the  Board of
               Directors  of  the  Company  that   identifies   with  reasonable
               specificity  the  grounds  for the  proposed  termination  of the
               Executive's  employment and notifies the Executive that she shall
               have an opportunity to address the Board with her counsel present
               and  entitled  to address  the Board with  respect to the alleged
               grounds for termination at a meeting of the Board called and held
               for the purpose of determining  whether the Executive  engaged in
               conduct described in Section 5(e)(i). The notice shall, except as
               is otherwise provided in the last sentence of the subsection (i),
               provide  the  Executive  with  thirty (30) days from the day such
               notice  is given  to cure  the  alleged  grounds  of  termination
               contained  in  this  Agreement.  The  Board  of  Directors  shall
               determine,  reasonably  and in good faith,  whether the Executive
               has effectively cured the alleged grounds of termination.  If, in
               the reasonable  good faith opinion of the Board,  the grounds for
               termination  under Section 5(e)(i) may not reasonably be cured by
               the  Executive,   then  the  notice   required  by  this  Section
               5(e)(ii)(A) need not provide for any cure period; and

                    (B). The Executive is given a copy of certified resolutions,
               duly adopted by the affirmative  vote of not less than a majority
               of the entire  membership of the Board  (excluding the Executive,
               if  applicable) at a meeting of the Board called and held for the
               purpose of finding that, in the reasonable  good faith opinion of
               a majority of the Board,  the Executive was guilty of conduct set
               forth in Section 5(e)(i), which specify in detail the grounds for
               termination  and indicate that the grounds for  termination  have
               not been cured within the time limits,  if any,  specified in the
               notice referred to in Section 5(e)(ii)(A).

          (f).  Termination by Executive Without Cause.  Executive may terminate
     this Agreement without cause upon the provision of twelve (12) weeks' prior
     notice to the Company. The date of such termination shall be referred to as
     the  "Without  Cause  Termination  Date"  in this  Agreement.  Upon  such a
     termination, the Executive shall receive an amount equal to one year's Base
     Salary in  effect  at the time of  termination,  the full  bonus  under the
     senior management Bonus Plan of the Company based on the actual performance
     of the Company under the Bonus Plan and not pro-rated for months of service
     in the year of termination,  and the full Performance  Bonus that Executive
     would have received under this Agreement based on the actual performance of
     the  Company  and not  pro-rated  for  months  of  service  in the  year of
     termination.  Executive  also  shall be  entitled  to  receive  the  vested
     retirement  and  the  portion  of the  vested  annuity  and  tax  gross  up
     retirement  benefit  in  accordance  with  Sections  5(d)  and 5(h) of this
     Agreement which have vested prior to the Executive's  termination  date and
     any other  non-reimbursed  business  expenses  and health  insurance as set
     forth in Section 8 below.  Executive  must comply with Section 6 below.  No
     other payment shall be made to Executive  under this  Agreement  other than
     that provided in this paragraph.

          (g).  Change in Control.  Notwithstanding  any other  provision to the
     contrary,  the following provisions will govern in the event of a Change in
     Control as defined herein.

               (1).  Change in Control shall be deemed to have occurred upon the
          occurrence of any one of the following events:

                    (A).  The  acquisition  in one or more  transactions  by any
               individual,  entity  or group  (within  the  meaning  of  Section
               13(d)(3)  or  14(d)(2)  of the  Exchange  Act) in excess of fifty
               percent  (50%)  of  the  then-outstanding  voting  stock  of  the
               Company;  provided,  however,  that the term  "Change in Control"
               shall not include any such acquisition by any entity with respect
               to  which,  following  such  acquisition,  more  than  50% of the
               then-outstanding  shares of common  stock of such  entity is then
               beneficially  owned,  directly or indirectly by  individuals  and
               entities  who  were  beneficial  owners  of the  then-outstanding
               voting stock of the Company immediately prior to such acquisition
               in   substantially   the  same   proportion  as  their  ownership
               immediately  prior to such  acquisition  of the  then-outstanding
               voting stock of the Company; or

                    (B).   The   consummation   of  a  merger,   reorganization,
               consolidation,  share  exchange,  transfer  of  assets  or  other
               transaction   having   similar   effect   involving  the  Company
               ("Merger"),  unless,  following such Merger,  stock possessing at
               least fifty percent (50%) of the total  combined  voting power of
               the issued and outstanding shares of all classes of Company stock
               of the  corporation  resulting  from such Merger is  beneficially
               owned,  directly or indirectly,  by individuals  and entities who
               were beneficial  owners of the  then-outstanding  voting stock of
               the Company immediately prior to such Merger in substantially the
               same  proportion  as their  ownership  immediately  prior to such
               Merger; or

                    (C).  Consummation of a complete  liquidation or dissolution
               of the Company.

               (2).  In the event of a Change in  Control  as defined in Section
          5(g)(1)  above,  the  Executive  shall be  entitled  to the  following
          benefits  regardless  of whether  Executive  remains  employed  by the
          Company,  terminates her employment with the Company, or is terminated
          after the Change in Control:

                    (A).  The Company  shall pay the  Executive in a single lump
               sum  cash  payment  at the  time  of  Closing  (i.e.,  the  legal
               consummation  of the Change in  Control)  an amount  equal to two
               times the sum of (1) the  Executive's  Base  Salary;  and (2) the
               maximum  Performance  Bonus that Executive  could have earned for
               the year in which such  Change in Control  occurs  (50% times the
               then-current Base Salary as defined in Section 4 above);  and (3)
               the maximum annual senior  management  bonus the Executive  could
               have earned using the assumption  that the parameters for earning
               maximum  bonus  were met for that year  regardless  of the actual
               performance  of the Company under the  applicable  Bonus Plan for
               the  year in which  such  Change  in  Control  occurs  in lieu of
               payment  under  the  Bonus  Plan.  Upon  payment  of the lump sum
               provided under the  subsection,  the obligation of the Company to
               employ Executive under this Agreement shall cease;

                    (B).  All stock  options  which  Executive  has been granted
               shall immediately vest and become  exercisable in accordance with
               the applicable option plan and agreements;

                    (C). The Company  shall pay to the  Executive at the time of
               Closing  an  amount  equal  to the  sum of (x) any  excise  taxes
               imposed  on the  Executive  under  Section  4999 of the  Internal
               Revenue  Code and (y) income  taxes due from the  Executive  with
               respect to the  payment of the amount in (x) above as well as the
               payment for income taxes under this  subsection  5(g)(2)(C).  The
               determination  of  whether an excise tax is due in respect of any
               payment or  benefit,  the amount of the excise tax and the amount
               of  the  gross-up   payment  shall  be  made  by  an  independent
               accountant  jointly selected by the Company and the Executive and
               paid by the  Company.  If the  Executive  and the Company  cannot
               agree on the firm to serve as the accountant,  then the Executive
               and the  Company  shall  each  select one  nationally  recognized
               accounting  firm and those two firms  shall  jointly  select  the
               nationally  recognized  accounting  firm to serve as the auditor;
               and

                    (D). The Company shall purchase for the Executive an annuity
               as set forth in  Section  5(h)  below  based on the fully  vested
               retirement  benefit  provided  in  Section  5(d)  above.  For the
               purposes of calculating  the amount of such  retirement  benefits
               under Section  5(d)(ii),  an additional  twenty-four  (24) months
               shall be added to the total number of months of service Executive
               shall have worked for the Company and, in addition, the Executive
               shall have been  considered  to have  earned the total  amount of
               annual Base Salary and maximum annual senior management bonus and
               Performance  Bonus (using the assumption  that the parameters for
               earning  maximum  bonus were met for that year  regardless of the
               actual  performance of the Company) that the Executive could have
               earned in the  calendar  year of the Change in  Control  and such
               year shall be considered in the  determination of the Executive's
               two years  with  highest  compensation  under  Section  5(d)(ii).
               However,  in no  event  will the lump  sum  payment  provided  in
               Section   5(g)(2)  be  considered  as   compensation   under  the
               calculation of the retirement benefit under this paragraph.

               (3). The payment of any benefits described in Section 5(g)(2) and
          5(h) of this Agreement  shall become the joint and several  obligation
          and  responsibility  of the  Company  and  the  successor  company  or
          "person"  noted in  Section  5(g)  above if  applicable.  (4).  If the
          Executive  becomes  entitled to the benefits  provided  under  Section
          5(g)(2) above,  such benefits shall be in lieu of any other  severance
          or similar  benefits  that would  otherwise be payable under any other
          agreement, plan, program or policy of the Company; provided,  however,
          that this  section  shall not apply to any  retirement  benefit  under
          Sections  5(d) and 5 (h)  herein and shall not be offset  against  any
          other retirement benefits to which the Executive may be entitled under
          any qualified or  non-qualified  retirement  or deferred  compensation
          plan of the Company.

          (h). Annuities. Upon termination of the Executive's employment for any
     reason under this Section 5, the Company shall  purchase for her benefit an
     annuity that guarantees the payment of the earned  retirement  benefits for
     the life of Executive and the life of his beneficiary  should he predecease
     such beneficiary.  The annuity must be issued by a Company with at least an
     A+ rating  from  Best's  or a AA rating  from  Standard  & Poor's.  For the
     purposes of the purchase of such an annuity,  the  Executive  may elect the
     commencement  date of the annuity  payment.  Such annuity must be purchased
     within 90 days of termination  except in the case of a Change in Control as
     defined  below in which case the annuity must be purchased by the successor
     company prior to Closing  unless an alternate  date of purchase is mutually
     agreed to in  writing  by the  Company,  the  Executive  and the  successor
     company.  The parties  recognize  that the amount the Company or  successor
     company pays for the annuity will be taxable  income to the  Executive  and
     the Company or successor  company agrees to reimburse the Executive for all
     taxes,  including  taxes on the tax gross up, related to said purchase upon
     the  following  vesting  schedule:  50%  vesting  upon  execution  of  this
     Agreement;  100%  vesting on 1/1/02  and 100%  immediate  vesting  upon any
     Change in Control, death or Disability. In the case of a Change in Control,
     for the purposes of  calculating  any  actuarial  reduction in payments for
     early retirement in the value of the annuity, the Executive shall be deemed
     to be the greater of (1) age 55 or (2) Executive's actual age, plus 2 years
     and the  annuity  will  commence  retirement  payments  when the  Executive
     attains the age of 55.

     6.  Covenant  Not to  Compete.  Executive  covenants  and agrees  that,  in
consideration of the amounts to be paid Executive under this Agreement and other
good and valuable consideration, for a period of one (1) year beyond the Without
Cause Termination Date,  Executive shall not be employed as an executive officer
of, or control,  manage,  or  otherwise  participate  in the  management  of the
business  of a  "significant  competitor"  of the Company  within the  Company's
service  area.  The term  "significant  competitor"  shall  mean any  company or
division of a company  that,  on the  Executive  Termination  Date,  directly or
indirectly, is materially (10% or more of its revenues) engaged in the operation
or  management  of a  health  maintenance  organization  or  any  other  similar
provider, payer or insurer for medical services. The Company and Executive agree
that the terms and conditions of this Section 6 shall survive the termination of
this Agreement following the Without Cause Termination Date.

     7. Health  Insurance.  Upon  termination  of this Agreement for any reason,
including but not limited to, retirement,  death, Disability, Change of Control,
or termination  of Executive  with or without cause,  both the Executive and the
spouse of the Executive and in the event of the Executive's death, the surviving
spouse of the  Executive  will receive or be provided  health  coverage from the
Company or its successor during the term of their respective  lives. Such health
coverage  shall be  equivalent  to that provided to the Executive on the date of
termination  and shall be paid for by Executive  or the spouse of the  Executive
with the normal Company  contribution for active employees in effect at the date
of termination.

     8. Confidential Information. Executive shall fully comply with and abide by
the provisions of the Company's  Employee Manual and other announced policies in
effect from time to time,  including those provisions relating to the protection
of the Company's confidential information.  The Company and Executive agree that
the foregoing  provision shall survive the termination of this Agreement for any
reason whatsoever.

     9.  Indemnification.  Executive shall be entitled to indemnification to the
full extent provided for or allowed by applicable law, including indemnification
for  administrative  and criminal  matters,  irrespective  of insurance,  and to
advances  for  expenses  in  defending  against  such  claims.  The  Company and
Executive  agree that the foregoing  provision  shall survive the termination of
this Agreement for any reason whatsoever.  Notwithstanding  the above, the Board
shall have the  discretion  not to reimburse or indemnify  the Executive for any
expenses related to a just cause  termination as defined in Section 5(e) wherein
such action or omission was done,  or omitted to be done,  by  Executive  not in
good faith and without  reasonable belief that her action or omission was in the
best interests of the Company.

     10. Anti-Disparagement.  Upon termination of this Agreement for any reason,
both parties agree not to make disparaging or disrespectful  comments about each
other  orally or in writing or through  any other  medium to any  individual  or
entity, professional or trade association, regulator, competitor or media.

     11. Nonsolicitation.  For a period ending one year after any termination of
this  Agreement,  the Executive  shall not,  directly or indirectly,  induce any
person in the  employment  of the Company or any  subsidiary or affiliate of the
Company away from the Company or any  subsidiary  or affiliate of the Company to
accept employment or enter into any consulting arrangement with the Executive or
any entity with which Executive is associated.

     12. General Provisions.

          (a) Entire Agreement. This Agreement contains the entire understanding
     between the parties hereto and supersedes  any prior  employment  agreement
     between the Company and Executive.

          (b) No Duty to Mitigate.  Executive  shall not be required to mitigate
     the amount of any payment  provided for in this  Agreement by seeking other
     employment  or  otherwise,  nor  shall  any  amounts  received  from  other
     employment or otherwise by Executive  offset in any manner the  obligations
     of the Company hereunder.

          (c)  Nonassignability.  Neither this Agreement nor any right,  remedy,
     obligation or liability arising hereunder or by reason hereof is assignable
     by  Executive,  her  beneficiaries,  or legal  representatives  without the
     Company's prior written consent;  provided,  however,  that nothing in this
     Section 11(c) shall preclude (i) Executive  from  designating a beneficiary
     to receive  any  benefit  payable  hereunder  upon her  death,  or (ii) the
     executors,  administrators,  or other legal representatives of Executive or
     her estate from  assigning  any rights  hereunder  to the person or persons
     entitled thereto.

          (d)  Notices.  All  notices  and  other  communications   required  or
     permitted to be given under this Agreement shall be in writing and shall be
     deemed to have been duly given if delivered personally or sent by certified
     mail, return receipt requested, first-class postage prepaid, to the parties
     to this Agreement at the following addresses:

               (i) if to the Company at:
                   Mid Atlantic Medical Service, Inc.
                   4 Taft Court
                   Rockville, MD 20850

                   and

               (ii) if to  Executive  at the address set forth on the  signature
          page or to such other address as either party to this Agreement  shall
          have last designated by notice to the other party.

         All such  notices  and  communications  shall be  deemed  to have  been
received on the earlier of the date of receipt or the third  business  day after
the date of mailing thereof.

          (e) Binding Effect; Benefits. This Agreement shall be binding upon and
     inure to the benefit of the parties to this Agreement and their  respective
     successors and permitted  assigns.  Nothing in this  Agreement,  express or
     implied,  is intended or shall be construed to give any person,  other than
     the parties to this Agreement or their  respective  successors or permitted
     assigns, any legal or equitable right, remedy, or claim under or in respect
     of any agreement or any provision contained herein.

          (f) Waiver.  No provision of this  Agreement  may be amended,  waived,
     discharged,  or terminated  except by an instrument in writing and executed
     by each party. Any waiver of enforcement of any provision of this Agreement
     shall not operate or be construed as a continuing waiver or a waiver of any
     other provisions unless expressly stated in such instrument.

          (g) Amendment. This Agreement may be terminated, amended, modified, or
     supplemented  only by a written  instrument  executed by Executive  and the
     Company.

          (h) Governing Law. This  Agreement  shall be governed by and construed
     in accordance with the law of the State of Delaware,  regardless of the law
     that might be applied under principles of conflict of laws.

          (i) Severability.  If, for any reason, any provision of this Agreement
     is held invalid,  such  invalidity  shall not affect any other provision of
     this Agreement not held so invalid, and each such other provision shall, to
     the full extent  consistent with law, continue in full force and effect. If
     any  provision  of this  Agreement  shall be held  invalid  in  part,  such
     invalidity  shall in no way affect the rest of such  provision  not held so
     invalid, and the rest of such provision, together with all other provisions
     of this Agreement, shall to the full extent consistent with law continue in
     full force and effect.

     IN WITNESS  WHEREOF,  the Company has caused this  Agreement to be executed
and its seal to be affixed  hereunto by its officers  thereunto duly authorized,
and Executive has signed this Agreement, all as of the Effective Date.

ATTEST:                                      MID ATLANTIC MEDICAL SERVICES, INC.
By: /s/ Thomas P. Barbera                    By: /s/ Mark D. Groban, M.D.
Name:  Thomas P. Barbera                     Name: Mark D. Groban, M.D.
(Corporate Seal)                             Title:  Chairman of the Board

APPROVED BY:                                 EXECUTIVE:  Sharon C. Pavlos
Compensation Committee                       By:  /s/ Sharon C. Pavlos
By:  /s/ John P. Mamana, M.D.                Address: 4 Taft Court
Name:  John P. Mamana, M.D.                           Rockville, MD  20850
Title:  Chairman

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