MID ATLANTIC MEDICAL SERVICES, INC.
             Plan for Deferral of Selected Executives' Compensation

1.  Purpose.

     This Plan for the Deferral of Selected Executives' Compensation ("PDSEC" or
"Plan"),  adopted by Mid Atlantic Medical Services,  Inc.,  Rockville,  Maryland
(the  "Company"),  is for the purpose of  permitting  certain  executives of the
Company to defer the  receipt of  compensation  earned.  The Plan is intended to
constitute  an unfunded plan  maintained  primarily for the purpose of providing
deferred  compensation  for a select group of management  or highly  compensated
employees,  within  the  meaning of section  201(2) of the  Employee  Retirement
Income Security Act of 1974, as amended.

2.  Eligibility.

     The persons eligible to participate in the Plan  ("Participants")  shall be
those executives of the Company who have made  significant  contributions to the
success of the Company and who either (a) are level 19, have attained the age of
45 and have a minimum of 10 years of continuous service with the Company, or (b)
are level 20 and  above,  have  attained  the age of 50 and have a minimum  of 8
years of  continuous  service  with the  Company;  provided,  however,  that any
executives  contractually entitled to supplemental retirement benefits shall not
be eligible to participate.  The Chairman,  the CEO and President and the Senior
Executive  Vice  President  and CFO, and the  Associate  Senior  Executive  Vice
President, General Counsel and Secretary (the "Deferred Compensation Committee")
together shall  consider each  executive who has achieved the above  eligibility
requirements  and, the Deferred  Compensation  Committee in its sole discretion,
shall recommend to the Company's Compensation Committee the executives who shall
be allowed to participate in the PDSEC. The  determination of eligibility  shall
be  made  annually  for  each  executive  and  prior   participation   will  not
automatically qualify the executive for continued participation.

3.  Election to Defer.

     Each Participant's election to defer salary and/or bonus compensation for a
calendar year shall be made by written  irrevocable  election on a form provided
by the Company,  which shall be filed with the  Secretary  of the  Company.  All
deferral  elections  must be submitted no later than  November 1 of the calendar
year to which such bonus  relates and for the  deferral of salary  beginning  on
January 1 of the following year.

4.  Amount of Deferral.

     At  the  time  the  Participant  makes  his/her  deferral   election,   the
Participant  shall indicate whether the deferral shall apply to any or all of up
to 10% of the Participant's  base salary for the next calendar year and/or up to
100% of the  Participant's  bonus,  if any is earned,  for the current  calendar
year. The amount deferred may be expressed as either a percentage or flat dollar
amount. Salary deferrals shall be applied on a pro rata basis to each pay period
during the calendar year. Each  Participant's  initial  deferral  election shall
also  specify  whether  such  Participant's   interest  in  the  Plan  shall  be
distributed in a lump sum or installments as set forth in paragraph 9.
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5.  Duration and Termination.

     Any election to defer  compensation  shall be made separately for each year
that a Participant is allowed to participate in the PDSEC, i.e., elections shall
not carry-over  from one year to the next.  Separate  elections may be made with
respect to salary and bonus for each such year. No deferrals  shall be permitted
after the  termination  date of the  Participant's  employment with the Company.
Participants  will at all times be 100% vested in all of their  deferrals  under
the PDSEC and all earnings allocable thereto.

6.  Company Match.

     For each calendar year, the Company will contribute an amount equal to 100%
of  the  amount  of  compensation   for  such  calendar  year  deferred  by  the
Participant;  provided,  however,  that, for any calendar year, such match shall
not  apply to any  amount  deferred  by a  Participant  in  excess of 10% of the
Participant's  salary and bonus  included in W-2 earnings for the prior calendar
year. The Company match and earnings  thereon will vest in one-third  increments
on each December 31 of the year of contribution  and December 31 of the next two
years.  The Company match will fully vest upon death or long term  disability of
the  Participant,  a change  in  control  of the  Company  or the  Participant's
attainment of age 65. A change in control will occur:  (1) upon the  dissolution
or  liquidation  of  the  Company,   (2)  upon  a  reorganization,   merger,  or
consolidation  in which the Company is not the surviving  corporation,  (3) upon
the sale of  substantially  all of the  property  or  assets of the  Company  to
another  corporation  or (4) if at least 50% or more of the voting  stock of the
Company is sold  either  through a tender  offer or  otherwise  to a party or an
affiliated group of parties. No later than November 1 of the preceeding calendar
year to which any deferral  relates,  each  Participant  may make an irrevocable
election to receive all deferred compensation, any vested Company match, and all
earnings thereon at the time of a change in control.

7.  Earnings.

     Each amount of deferred  compensation  shall accrue earnings on a quarterly
basis  from the date of  deferral.  Earnings  shall  accrue at the prime rate as
periodically  adjusted  and  published  in the  Wall  Street  Journal.  All such
earnings  shall be deemed  to be  deferred  compensation  to be  distributed  in
accordance with the terms and in the manner set forth in this Plan. Participants
will receive quarterly account statements as soon as reasonable practicable.

8.  Time of Payment.

     The balance of a  Participant's  deferred  compensation  and earnings shall
become payable either:
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          a. On the first of January next following the date he/she ceases to be
     an employee of the Company; or

          b. On the first day of January next following the  Participant's  65th
     birthday, whichever is earlier.

9. Installment Payments.

     When the balance of a Participant's  deferred  compensation becomes payable
in  accordance  with  paragraph  8, such  balance  may,  at the  election of the
Participant  submitted in accordance  with  paragraph 4, be paid  immediately in
full or in a series of approximately equal cash installments,  payable quarterly
over a  five-year  period  and shall be subject to  applicable  withholding  for
taxes. During the time that such balance of deferred  compensation is being paid
in installments, earnings shall continue to be credited on the unpaid balance as
provided in paragraph 7 hereof and until the entire balance is fully paid.

10.  Beneficiary Designation.

     If a Participant dies before his/her deferred  compensation become payable,
or before he/she has received the entire balance thereof,  any remaining balance
thereof shall become payable on the first day of January next following  his/her
death, and shall be paid to his/her designated beneficiary quarterly over a five
(5) year period or in a single lump sum payment, as determined by the Company in
its discretion after consulting with the designated  beneficiary.  A Participant
may designate a beneficiary,  and change or revoke a designation of beneficiary,
at any time and from time to time,  by a writing filed with the Secretary of the
Company prior to his/her death.

     If a  Participant  has not  designated  a  beneficiary,  or if a designated
beneficiary  is not  living at the time of the  Participant's  death,  any death
benefits payable under the Plan shall be paid to the  Participant's  spouse,  if
then  living,  and if  the  Participant's  spouse  is not  then  living,  to the
Participant's estate.

11.      General Unsecured Obligation Only.

     A Participant's  deferred  compensation and all earnings thereon shall be a
general unsecured obligation of the Company and the Company shall not in any way
fund its  liability  for such  deferred  compensation  or  earnings  thereon  or
otherwise to segregate  assets to assure that payments are made to Participants.
Any  Company  memorandum  or record  of a  Participant's  deferred  compensation
account shall be solely for the Company's internal  bookkeeping purposes and the
Participant, his/her designated beneficiary or his/her estate shall not have any
legal interest whatsoever  therein.  Neither the shareholders nor the directors,
officers,  employees or agents of the Company shall be liable under the Plan and
all  persons  shall look  solely to the assets of the Company for the payment of
any claim under, or for the performance of, the Plan and the Participant  agrees
to hold the Company harmless from any liability arising from this Agreement.
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12.      Compliance with Law.

     This  Plan  is  intended  to  accomplish  the  authorized  deferral  of the
incidence  of federal  income  taxes on an  Participant's  compensation  and the
earnings  thereon until such time as the  Participant,  his/her  beneficiary  or
his/her  estate  received  actual  payment  of the same,  as  authorized  by the
Internal  Revenue Code and  applicable  law, and this Plan shall be construed in
accordance with such intended purpose.

13.      Amendment.

     This Plan may be amended  by the  Company at any time and from time to time
in the  Company's  sole  discretion  and  with  the  approval  of the  Board  of
Directors,  or terminated in its sole  discretion with the approval of the Board
of Directors. No amendment or termination of the Plan shall adversely affect any
benefit already  accrued by any Participant  under the Plan including any vested
Company match, except with the Participant's  consent,  unless in the opinion of
legal  counsel to the Company,  such  amendment or  termination  is necessary or
desirable to  accomplish  the purpose of this Plan or to comply with  applicable
law.

14.      Effective Date.

     This Plan shall be effective with respect to the Participant's compensation
earned for services  performed  on and after the first day of January  preceding
the date of the Plan's adoption by the Company's Board of Directors.

15.      Plan Benefits Are Non-Assignable.

     No sale, transfer,  alienation,  assignment,  pledge,  collateralization or
attachment  of any benefits  under the Plan shall be valid or  recognized by the
Company.  Neither the  Participant,  his/her spouse,  or designated  beneficiary
shall have any power to  hypothecate,  mortgage,  commute,  modify or  otherwise
encumber in advance any of the benefits payable hereunder, nor shall any of said
benefits be subject to seizure for the payment of any debts, judgments, alimony,
maintenance owed by the Participant or his/her  beneficiary,  or be transferable
by operation of law in the event of bankruptcy, insolvency, or otherwise.

16.      Effect of Plan on Company and Participants.

     The Plan shall be binding upon the Company,  its assigns, and any successor
company  which shall  succeed to  substantially  all of its assets and  business
through merger,  acquisition or consolidation,  and upon a Participant,  his/her
beneficiary, assigns, heirs, executors and administrators.

17.      Plan Creates No Guaranty of Continued Employment.

     The terms and  conditions  of the Plan shall not be deemed to  constitute a
contract of employment between the Company and any Participant.  Nothing in this
Plan shall of itself be deemed to give a Participant the right to be retained in
the  service of the  Company or to  interfere  with any right of the  Company to
discipline or discharge the Participant at any time.
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18.      Illegality or Invalidity of Any Plan Provision.

     In case any  provisions  of this Plan shall be found illegal or invalid for
any reason,  said illegality or invalidity  shall not affect the remaining parts
hereof,  but the Plan shall be  construed  and  enforced as if such  illegal and
invalid provision had never been included.

19.      Effect of Payment of Plan Benefits.

     The  payment of benefits  under the Plan to a  Participant  or  beneficiary
shall fully and completely discharge the Company and the Board of Directors from
all further  obligations  under this Plan with respect to a Participant  and any
outstanding  deferral  elections  shall  terminate  upon  such full  payment  of
benefits.

21.      Plan Administration.

     This Plan shall be  administered  by the Deferred  Compensation  Committee,
which shall have authority to make, amend, interpret and enforce all appropriate
rules and regulations for the  administration of this Plan and decide or resolve
any and all questions  including  interpretations  of this Plan, as may arise in
connection with the Plan. All decisions or actions of the Deferred  Compensation
Committee in respect of any question  arising out of or in  connection  with the
administration,  interpretation  and  application  of the Plan and the rules and
regulations  thereunder  shall be final  and  conclusive  and  binding  upon all
persons having any interest in the Plan. No member of the Deferred  Compensation
Committee  shall be  personally  liable  by  reason  of any act or  omission  in
connection  with the Plan  unless such action  constitutes  fraud,  bad faith or
willful misconduct. 22. Governing Law.

     This Plan 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.

23.       Covenant Not to Compete

     In  consideration  of the  benefits  afforded  to the  Participant  herein,
Participant  agrees  not to accept any  position,  as an  employee,  consultant,
principal,  partner,  officer,  director  or  agent  with a  health  maintenance
organization,  health insurance company, provider or provider group, hospital or
hospital system or any similar  provider,  payer or insurer for medical services
within  any  MAMSI  service  area  thorough  the  period  ending on the one year
anniversary of the Participant's  termination of employment with the Company for
any reason  other than a change in control  as  defined  above in  Paragraph  6.
Employee also agrees not to, directly or indirectly, refer, hire, or solicit for
hire any employee of MAMSI, or a MAMSI subsidiary, thorough the same period.

     Employee  specifically  acknowledges  and agrees that the  restriction  set
forth above are reasonable  and necessary to protect the legitimate  interest of
the Company and that the Company  would not have entered into this  Agreement in
the absence of such restriction.  Employee further  acknowledges and agrees that
any  violation of the  provisions  of this  section  will result in  irreparable

<PAGE>

injury to the Company,  that the remedy at law for any  violation or  threatened
violation of such section will be  inadequate  and that in the event of any such
breach,  the Company,  in addition to any other remedies or damages available to
it at law or in equity,  shall be entitled to temporary injunctive relief before
trial  from any court of  competent  jurisdiction  as a matter of course  and to
permanent injunctive relief without the necessity of proving actual damages. Mid
Atlantic Medical Services, Inc.

                        By:  /s/ Mark D. Groban, M.D.
                             ____________________________

                     Title:  Chairman of the Board
                             ____________________________