Document:

FIRST AMENDMENT TO NINTH AMENDED
                  AND RESTATED LOAN AGREEMENT

     This First Amendment to Ninth Amended and Restated Loan Agreement ("First
Amendment") entered into the 24th day of October, 2000, by and between M.S.
CARRIERS, INC., a Tennessee corporation ("Borrower"), and BANK OF AMERICA, N.A.,
Agent, a national banking association ("Lender").

                       W I T N E S S E T H

     WHEREAS, on October 24, 2000, Borrower and Lender entered into that certain
Ninth Amended and Restated Loan Agreement (the "Loan Agreement"); and

     WHEREAS, Borrower and Lender wish to amend certain provision of the Loan
Agreement;

     NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which is acknowledged, it
is agreed as follows:

     1.   Capitalized terms not defined herein shall have the meaning contained
in the Loan Agreement.

     2.   Section 1 (a) of the Loan Agreement is deleted in its entirety and
in lieu thereof shall read as follows:

          "(a) [Reserved]"

     3.   Section 1 (d) of the Loan Agreement is deleted in its entirety and
in lieu thereof shall read as follows:

               "(d)      "Applicable Margin" means for any Fiscal Quarter the
     applicable rate per annum in excess of the LIBOR Rate set forth in the
     table below:

                 Total Leverage Ratio                      Applicable
         Level   (as defined in Section 35 (a))            Margin Over
                                                           LIBOR Rate
         --------------------------------------------------------------
           I        Less than 1.75                            .50%

           II       Less than 2.50,                           .60%
                    but greater than or equal to 1.75

           III      Less than 2.75,                           .80%
                    but greater than or equal to 2.5

           IV       Less than 3.0,                           1.75%
                    But greater than or equal to 2.75

           V        Greater than 3.0                         1.90%

     4.   Section 1 (f) of the Loan Agreement is deleted in its entirety and
in lieu thereof shall

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read as follows:

               "(f)"Base Rate" means the Lender's LIBOR Rate for a LIBOR Period
     plus the Applicable Margin.  For purposes hereof, the Applicable Margin
     will be that shown as Level IV in the table contained in the definition of
     Applicable Margin for the period from October 24, 2000 until December 31,
     2000, Level V in the table contained in the definition of Applicable
     Margin for the period from January 1, 2001 through April 30, 2001 and
     thereafter as Level V in the table contained in the definition of
     Applicable Margin, provided, however, that if the Borrower delivers to the
     Lender the quarterly financial statements of the Borrower within the time
     limits contained in Section 19, which financial statements indicate that
     the applicable ratio set forth in the table in the definition of
     Applicable Margin justifies resetting the Applicable Margin to another
     Level, then the Applicable Margin shall be retroactively adjusted as of
     the first day of the then Fiscal Quarter to Level I, II, III, IV or V as
     applicable and shall continue to the last day of such Fiscal Quarter. The
     Applicable Margin will then be reset to Level V on the first day of the
     next Fiscal Quarter, subject to being again retroactively reset as set
     forth above. This will continue each Fiscal Quarter thereafter."

     5.   Section 1 (bbb) of the Loan Agreement is deleted in its entirety and
in lieu thereof shall read as follows:

          "(bbb)[Reserved]"

     6.   Section 1 (ppp) of the Loan Agreement is deleted in its entirety and
in lieu thereof shall read as follows:

          "(ppp)"Unused Fee Rate" means .15% if the then Applicable Margin is
     at Level I, .175% if the then Applicable Margin is at Level II, .225% if
     the then Applicable Margin is at Level III, .300% if the then Applicable
     Margin is at Level IV and .400% if the then Applicable Margin is at Level
     V (computed on a 360 day basis)."

     7.   Section 3(a) of the Loan Agreement is hereby deleted in its entirety
and in lieu thereof shall read as follows:

          "(a)   Issuance.  Subject to the terms and conditions hereof and the
     LOC Documents, if any, and any other terms and conditions which the
     Issuing Lender may reasonably require, the Issuing Lender shall from time
     to time upon request issue, in Dollars, letters of credit (the "Letters of
     Credit") for the account of the Borrower, from the Effective Date until
     the Revolving Loan  Maturity Date, in a form reasonably acceptable to the
     Issuing Lender; provided, however, that (i) the aggregate amount of  LOC
     Obligations shall not at any time exceed Fifteen Million and 00/100
     ($15,000,000.00),  (ii)  and  the  sum  of  the aggregate amount of LOC
     Obligations  outstanding  plus  Revolving  Loans  outstanding shall not
     exceed  the  Revolving  Committed  Amount.  The issuance and expiration
     date of each Letter of Credit shall be a Business Day.  The quarterly fee
     for each Letter of Credit shall be the face amount of the Letter of Credit
     times the applicable percentage in the table set forth in the following
     sentence, payable in advance.  If the Applicable Margin is at Level I, the
     fee shall be

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     .50%;  if the Applicable Margin is at Level II the fee shall be .60%, if
     the Applicable Margin is at Level III the fee shall be .80%, if the
     Applicable Margin is at Level IV the fee shall be 1.75%, and if the
     Applicable Margin is at Level V the fee shall be 1.90%.   Notwithstanding
     the foregoing, the quarterly fee will be 1.75% for the period from October
     24, 2000 until December 31, 2000 and 1.90% for the period from January 1,
     2001 through April 30, 2001.  The fee shall be fully earned upon issuance
     and shall not be refunded or pro rated in the event the Letter of Credit
     is released, expires or is drawn prior to the quarter-annual anniversary
     of the Letter of Credit. No Letter of Credit shall have an original expiry
     date more than one year from the date of issuance, or, as extended, shall
     have an expiry date extending beyond the Revolving Loan Maturity Date.
     Each Letter of Credit shall be either (x) a standby letter of credit
     issued to support the obligations of the Borrower which finance the
     working capital and business of the Borrower in the ordinary course of
     business or (y) a commercial letter of credit in respect to the purchase
     of goods or services by the Borrower in the ordinary course of business.
     Each Letter of Credit shall comply with the related LOC Documents."

     8.   Section 34 (k) of the Loan Agreement is deleted in its entirety and
in lieu thereof shall read as follows:

               "(k)Collateral Coverage.  Permit the fair market value of the
     trailers owned by Borrower in which Lender has a perfected first security
     interest to be less than one hundred twenty five percent (125%) of the
     aggregate amount of Revolving Loans outstanding, the aggregate amount of
     Reducing Revolving Loans outstanding and Letters of Credit issued.
     Borrower agrees to apply for liens no later than December 31, 2000 and
     this coverage will be reported to Lender at each fiscal quarter end
     beginning on March 21, 2001."

     9.   Section 35 (a) of the Loan Agreement is deleted in its entirety and
in lieu thereof shall read as follows:

               "(a)Total Leverage Ratio.  Maintain a ratio of Total Funded Debt
     divided by (Borrower's EBITDA plus the payments made by Borrower on
     Operating Leases during the applicable twelve month period plus the income
     or loss of Transportes EASO reported on Borrower's income statement plus
     the rental income (or loss) of the Joint Venture), of not more than 3.10
     to 1.0 through June 29, 2001, not more than 2.85 to 1.0 from June 30, 2001
     through September 29, 2001 and not more than 2.75 to 1.0 at the end of
     each Fiscal Quarter thereafter."

     10.  M.S. Carriers Warehousing & Distribution, Inc. ("Guarantor"), joins
in the execution of this First Amendment to consent to the transactions
contemplated hereby and to ratify, affirm and restate the provisions of the
Guaranty Agreement executed by Guarantor in favor of Lender.

     11.  Borrower shall pay all costs incidental to this First Amendment,
including, but not limited to, the fees and expenses of Lender's counsel.

     12.  Borrower warrants and represents that (a) the Loan Documents are
valid, binding and enforceable against the Borrower according to their terms;
(b) all warranties and representations
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made by Borrower in the Loan Documents are hereby again warranted and
represented to be true as of the date hereof, except with regard to matters
expressed only as of a specific time or which have been supplemented or
superseded by disclosures to Lender in writing and (c) no default presently
exists under the Loan Documents.  Borrower further acknowledges that Borrower's
obligations evidenced by the Loan Documents are not subject to any counterclaim,
defense or right of set-off and Borrower does hereby release Lender from any
claim, known or unknown, that Borrower may have against Lender as of the
execution of this First Amendment.

     13.  As amended hereby, the Loan Agreement remains in full effect, and all
agreements among the parties with respect to the subject hereof are represented
fully in this First Amendment and the other written documents among the
parties.  The provisions of the Loan Agreement regarding the arbitration of
disputes and other general matters also govern this First Amendment. The
validity, construction and enforcement hereof shall be determined according to
the substantive laws of the State of Tennessee.

     IN WITNESS WHEREOF, the parties have executed this First Amendment to be
effective the day and year first above written.

                                 BANK OF AMERICA, N.A., Agent

                                 By: /s Michael R. Frick

                                 Its: Vice President

                                  M.S. CARRIERS, INC.

                                  By: /s M.J. Barrow

                                  Its: CFO

                                           M.S. CARRIERS WAREHOUSING &
DISTRIBUTION,
                                           INC.

                                  By: /s M.J. Barrow

                                   Its: CFO

                                       4MID ATLANTIC MEDICAL SERVICES, INC.
                      2001 NON-QUALIFIED STOCK OPTION PLAN

Article I.  Purpose, Adoption and Term of the Plan

         1.01 Purpose.  The purpose of the Mid Atlantic Medical  Services,  Inc.
2001 Non-Qualified Stock Option Plan (hereinafter  referred to as the "Plan") is
to advance  the  interests  of the  Company  (as  hereinafter  defined)  and its
Subsidiaries  (as  hereinafter  defined) by  encouraging  and  providing for the
acquisition  of an equity  interest  in the Company by  non-employee  directors,
officers and key employees through the grant of options to purchase Common Stock
(as  hereinafter  defined).  The Plan will  enable  the  Company  to retain  the
services  of  non-employee  directors,  officers  and key  employees  upon whose
judgment,  interest, and special effort the successful conduct of its operations
is largely  dependent and to compete  effectively with other enterprises for the
services of non-employee directors,  officers and key employees as may be needed
for the continued improvement of its business.

         1.02 Adoption and Term. The Plan shall become effective on May 1, 2001,
subject to the prior  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.  The Plan shall terminate on May
1,  2011,  or  such  earlier  date as  shall  be  determined  by the  Board  (as
hereinafter  defined);  provided,  however,  that,  in the event the Plan is not
approved by 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 at or
before the Company's  2001 annual  meeting of holders of Common Stock,  the Plan
shall terminate on such date and any Options (as hereinafter defined) made under
the Plan prior to such date shall be void and of no force and effect.

Article II.  Definitions

         For purposes of the Plan,  capitalized  terms shall have the  following
meanings:

         2.01 "Beneficiary" means an individual, trust or estate who or that, by
will or the  laws of  descent  and  distribution,  succeeds  to the  rights  and
obligations of the Participant  under the Plan and an Option  Agreement upon the
Participant's death.

         2.02     "Board" means the Board of Directors of the Company.

         2.03 "Code"  means the Internal  Revenue Code of 1986,  as amended from
time to time,  or any  successor  thereto.  References  to a section of the Code
shall include that section and any comparable  section or sections of any future
legislation that amends, supplements, or supersedes said section.

         2.04     "Committee" means a committee of the 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
Participant  who is  either,  at the  Date of Grant of the  Option,  a  "covered
employee"  as defined  in Section  162(m) or who is subject to Section 16 of the
Exchange Act;  however,  such  Committee  shall also have the authority to grant
Options to other  Participants.  The Stock Option Committee shall be composed of
at least two directors of the Company, each of whom is a "non-employee director"
as defined in Rule 16b-3 and an "outside director" within the meaning of Section
162(m).  If,  however,  at least  two of the  Company's  directors  are not both
"non-employee directors" and "outside directors," the Board may grant Options to
a Participant 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,  who may be
an officer of the Company.  The Select  Committee  shall have 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 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.

                  (c) The Stock Option  Committee and the Select Committee shall
each have the power and  authority to  administer  the Plan in  accordance  with
Article III with respect to particular  classes of Participants (as specified in
Section 2.04(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.

         2.05     "Common Stock" means the Common Stock, par value $.01 per
share, of the Company.

         2.06     "Company" means Mid Atlantic Medical  Services,  Inc.,
a corporation  organized under the laws of
the State of Delaware, and its successors.

         2.07 "Date of Grant" means the date  designated by the Committee as the
date as of which it grants an Option,  which shall not be earlier  than the date
on which the Committee approves the granting of such Option.

         2.08     "Disability" has the meaning specified in Section 22(e)(3) of
 the Code.

         2.09     "Disability  Date"  means  the date as of which an  Employee
  Participant  is  determined  by the Committee to have a Disability.

         2.10     "Employee Participant" means a Participant who is not a
 Non-Employee Director.

         2.11     "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.

         2.12     "Exchange Act" means the Securities Exchange Act of 1934, as
 amended.

         2.13 "Fair Market  Value" of a share of Common  Stock means,  as of any
given date,  the closing  sales price of a share of Common Stock on such date on
the  principal  national  securities  exchange on which the Common Stock is then
traded  or, if the  Common  Stock is not then  traded on a  national  securities
exchange,  the closing sales price or, if none, the average of the bid and asked
prices of the Common Stock on such date as reported on the National  Association
of Securities Dealers Automated Quotation System ("Nasdaq");  provided, however,
that, if there were no sales  reported as of such date,  Fair Market Value shall
be  computed  as of the  last  date  preceding  such  date on  which a sale  was
reported;  provided,  further, that, if any such exchange or quotation system is
closed on any day on which Fair Market  Value is to be  determined,  Fair Market
Value shall be determined as of the first date  immediately  preceding such date
on which such exchange or quotation  system was open for trading.  If the Common
Stock is not admitted to trade on a securities exchange or quoted on Nasdaq, the
Fair  Market  Value of a share of Common  Stock as of any given date shall be as
determined in good faith by the Committee,  in its sole and absolute discretion,
which  determination may be based on, among other things,  the opinion of one or
more  independent and reputable  appraisers  qualified to value companies in the
Company's line of business. Notwithstanding the foregoing, the Fair Market Value
of a share of Common Stock shall never be less than par value per share.

         2.14  "Non-Employee  Director" means each member of the Board or of the
Board of Directors of a  Subsidiary,  in each case who is not an employee of the
Company or of any of its Subsidiaries.

         2.15 "Option  Agreement" means a written  agreement between the Company
and a  Participant  specifically  setting  forth the terms and  conditions of an
Option granted to a Participant under the Plan.

         2.16 "Option"  means any option to purchase  Common Stock granted under
the Plan to an Employee Participant or to a Non-Employee  Director.  All Options
granted  under the Plan shall be Options that do not qualify as incentive  stock
options under Section 422 of the Code.

         2.17 "Participant"  means any employee or Non-Employee  Director of the
Company  or any of its  Subsidiaries  selected  by the  Committee  to receive an
Option under the Plan in accordance with Articles V and/or VI.

         2.18     "Plan" means the Mid Atlantic  Medical  Services,  Inc. 2001
  Non-Qualified  Stock Option Plan asset forth herein, and as the same may be
 amended from time to time.

         2.19 "Rule 16b-3" means Rule 16b-3 promulgated by the SEC under Section
16 of the Exchange Act and any successor rule.

         2.20     "SEC" means the Securities and Exchange Commission.

         2.21     "Section 162(m)" means Section 162(m) of the Code and the
regulations thereunder.

         2.22 "Subsidiary" means a company more than 50% of the equity interests
of which are beneficially owned, directly or indirectly, by the Company.

         2.23  "Termination  of Employment"  means,  with respect to an Employee
Participant,  the  voluntary  or  involuntary  termination  of  a  Participant's
employment  with  the  Company  or any  of  its  Subsidiaries  for  any  reason,
including, without limitation, death, Disability, retirement or as the result of
the sale or other  divestiture  of the  Participant's  employer  or any  similar
transaction in which the Participant's  employer ceases to be the Company or one
of its Subsidiaries. Whether entering military or other government service shall
constitute Termination of Employment, and whether a Termination of Employment is
a result of Disability, shall be determined in each case by the Committee in its
sole and absolute discretion.

Article III.  Administration

         3.01 Committee. The Plan shall be administered by the Committee,  which
shall have exclusive and final authority in each determination,  interpretation,
or other action  affecting the Plan and its  Participants.  The Committee  shall
have the sole and absolute  discretion  to interpret  the Plan, to establish and
modify administrative rules for the Plan, to select the Non-Employee  Directors,
officers and other key  employees  to whom Options may be granted,  to determine
the terms and provisions of the respective  Option Agreements (which need not be
identical),  to determine all claims for benefits under the Plan, to impose such
conditions  and  restrictions  on  Options  as  it  determines  appropriate,  to
determine  whether the shares  delivered on exercise of Options will be treasury
shares or will be authorized but previously  unissued  shares,  and to take such
steps in connection with the Plan and Options  granted  hereunder as it may deem
necessary  or  advisable.  No action of the  Committee  will be  effective if it
contravenes or amends the Plan in any respect.

         3.02  Actions of the  Committee.  Except  when the  "Committee"  is the
"Board" in the circumstance described in the fourth sentence of Section 2.04(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.

Article IV.  Shares of Common Stock

         4.01 Number of Shares of Common Stock Issuable.  Subject to adjustments
as provided in Section 7.05,  the lesser of 2,000,000  shares of Common Stock or
an  amount  not to exceed 5% of the  total  amount of the class  outstanding  of
Common Stock as of the record date for the 2001 Annual Meeting,  rounded down to
the lowest multiple of hundred thousand  shares,  shall be available for Options
under the Plan.  Any and all of such  shares may be issued  pursuant  to Options
granted to Employee Participants or to Non-Employee Directors.  The Common Stock
to be offered under the Plan shall be authorized and unissued  Common Stock,  or
issued  Common Stock that shall have been  reacquired by the Company and held in
its treasury.

         4.02 Number of Shares of Common Stock  Awarded to any  Participant.  In
the event the purchase price of an Option is paid, or related tax or withholding
payments  are  satisfied,  in whole or in part through the delivery of shares of
Common  Stock  issuable  in  connection  with  the  exercise  of the  Option,  a
Participant  will be deemed to have  received  an Option  with  respect to those
shares of Common Stock.

         4.03     Shares  of  Common  Stock  Subject  to  Terminated  Options.
 The  Common  Stock  covered  by any unexercised portions of terminated
Options may again be subject to new Options under the Plan.

Article V.  Participation

         5.01  Eligible  Participants.   Employee  Participants  shall  be  such
officers and other key employees of the Company or its Subsidiaries,  whether or
not  directors  of the  Company,  as the  Committee,  in its sole  and  absolute
discretion,  may designate from time to time. Non-Employee Director Participants
shall be such Non-Employee Directors as the Committee,  in its sole and absolute
discretion,  may designate  from time to time. In making such  designation,  the
Committee  may take into  account  the nature of the  services  rendered  by the
officers, key employees and Non-Employee Directors,  their present and potential
contributions to the success of the Company and its Subsidiaries, and such other
factors  as the  Committee,  in its  sole  and  absolute  discretion,  may  deem
relevant.  The  Committee's  designation  of a Participant in any year shall not
require the Committee to designate  such person to receive  Options in any other
year.  The  Committee  shall  consider  such  factors as it deems  pertinent  in
selecting  Participants  and  in  determining  the  type  and  amount  of  their
respective  Options.  A Participant  may hold more than one Option granted under
the Plan.  During the term of the Plan,  no  Employee  Participant  may  receive
Options to purchase more than 1,000,000 shares of Common Stock under the Plan.

Article VI.  Stock Options

         6.01 Grant of Option. Any Option granted under the Plan shall have such
terms as the  Committee  may,  from  time to time,  approve,  and the  terms and
conditions of Options need not be the same with respect to each Participant.

         6.02 Terms of Options.  Options granted under the Plan shall be subject
to the following terms and conditions and shall be in such form and contain such
additional terms and conditions, not inconsistent with the terms of the Plan, as
the Committee shall deem desirable:

                  (a) Option  Price.  The option price per share of Common Stock
purchasable  under an Option shall be determined by the Committee at the time of
grant  but shall  not be less  than the Fair  Market  Value of a share of Common
Stock on the Date of Grant; provided,  however, that, except as required by Rule
16b-3 with  respect to Options  granted to persons  subject to Section 16 of the
Exchange Act, no amendment of an Option shall be deemed to be the grant of a new
Option for purposes of this Section 6.02(a).  Notwithstanding the foregoing, the
option price per share of Common Stock of an Option shall never be less than par
value per share.

                  (b)      Option  Term.  The term of each Option  shall be
fixed by the  Committee,  but no Option shall be exercisable more than ten
years after the Date of Grant.

                  (c)  Exercisability.  An  Option  Agreement  with  respect  to
Options may contain such performance  targets,  waiting periods,  exercise dates
and restrictions on exercise (including,  but not limited to, a requirement that
an Option is exercisable in periodic installments), and restrictions on transfer
of the  underlying  shares of Common Stock,  if any, as may be determined by the
Committee at the time of grant. To the extent not exercised,  installments shall
cumulate and be  exercisable,  in whole or in part,  at any time after  becoming
exercisable,  subject to the limitations set forth in Sections 6.02(b), (f), (g)
and (h).

                  (d)  Method  of  Exercise.  Subject  to  whatever  installment
exercise and waiting  period  provisions  that apply under  Section  6.02(c) and
subject to Sections 6.02(b), (f), (g) and (h), Options may be exercised in whole
or in part at any time during the term of the Option,  by giving  written notice
of exercise to the Company specifying the number of shares of Common Stock to be
purchased.  Such notice shall be  accompanied by payment in full of the purchase
price in such form as the Committee may accept (including  payment in accordance
with a cashless  exercise  program  approved  by the  Committee).  If and to the
extent the Committee  determines in its sole and absolute discretion at or after
grant,  payment  in full or in part may also be made in the  form of  shares  of
Common Stock already owned by the Participant (and for which the Participant has
good  title,  free and  clear of any  liens or  encumbrances)  based on the Fair
Market Value of the shares of Common Stock on the date the Option is  exercised;
provided,  however,  that any already  owned  Common Stock used for payment must
have been held by the Participant for at least six months. No Common Stock shall
be issued on exercise of an Option until payment,  as provided herein,  therefor
has been made.  A  Participant  shall  generally  have the right to dividends or
other rights of a stockholder with respect to Common Stock subject to the Option
only when certificates for shares of Common Stock are issued to the Participant.

                  (e)   Non-Transferability  of  Options.  No  Option  shall  be
transferable by the  Participant  otherwise than by will, by the laws of descent
and distribution, or pursuant to a domestic relations order.

                  (f) Acceleration or Extension of Exercise Time. The Committee,
in its sole and absolute discretion,  shall have the right (but shall not in any
case be  obligated)  to permit  purchase of Common  Stock  subject to any Option
granted to a Participant  prior to the time such Option would  otherwise  become
exercisable under the terms of the Option Agreement. In addition, the Committee,
in its sole and absolute discretion,  shall have the right (but shall not in any
case be obligated) to permit any Option granted to a Participant to be exercised
after the day the  Option  would  otherwise  expire,  subject,  however,  to the
limitation set forth in Section 6.02(b).

                  (g) Exercise of Options  Upon  Termination  of  Employment.
  The  following  provisions  apply to Options granted to Employee Participants:

                  (i) Exercise of Vested Options Upon Termination of Employment.

                                    (A)  Termination.  Unless the Committee,  in
                                         its  sole  and   absolute   discretion,
                                         provides for a shorter or longer period
                                         of time  in an  Option  Agreement  or a
                                         longer  period  of time  in  accordance
                                         with Section 6.02(f),  upon an Employee
                                         Participant's Termination of Employment
                                         other   than  by  reason  of  death  or
                                         Disability,  the  Employee  Participant
                                         may,  within  90 days  from the date of
                                         such    Termination    of   Employment,
                                         exercise  all or any part of his or her
                                         Options as were exercisable at the date
                                         of  Termination  of  Employment.  In no
                                         event,   however,  may  any  Option  be
                                         exercised    later    than   the   date
                                         determined pursuant to Section 6.02(b).

                                    (B)  Disability.  Unless the  Committee,  in
                                         its  sole  and   absolute   discretion,
                                         provides for a shorter or longer period
                                         of time  in an  Option  Agreement  or a
                                         longer  period  of time  in  accordance
                                         with Section 6.02(f),  upon an Employee
                                         Participant's   Disability   Date,  the
                                         Employee  Participant  may,  within one
                                         year   after   the   Disability   Date,
                                         exercise  all or a  part  of his or her
                                         Options, whether or not such Option was
                                         exercisable on the Disability Date, but
                                         only  to  the  extent  not   previously
                                         exercised.  In no event,  however,  may
                                         any Option be exercised  later than the
                                         date  determined  pursuant  to  Section
                                         6.02(b).

                                        (C) Death. Unless the Committee,  in its
                                        sole and absolute  discretion,  provides
                                        for  a  shorter  period  of  time  in an
                                        Option  Agreement,  in the  event of the
                                        death of an Employee  Participant  while
                                        employed by the Company or a Subsidiary,
                                        the Employee  Participant's  Beneficiary
                                        shall  be  entitled   to  exercise   any
                                        Options  that were vested at the date of
                                        the Employee  Participant's  death until
                                        the  initial  expiration  date  of  such
                                        Option  determined  pursuant  to Section
                                        6.02(b).  Notwithstanding  the above, if
                                        the Employee  Participant at the time of
                                        death  had  been  an   employee  of  the
                                        Company or a Subsidiary  for a period of
                                        ten   years,   50%   of   the   Employee
                                        Participant's   unvested   Option  would
                                        become vested and subject to exercise as
                                        stated   above   and  if  the   Employee
                                        Participant  at the  time of  death  had
                                        been an  employee  of the  Company  or a
                                        Subsidiary   for  a  period  of  fifteen
                                        years, all of the Employee Participant's
                                        unvested Options would become vested and
                                        subject to exercise as stated  above and
                                        shall  expire on the date of  expiration
                                        of the  Option  determined  pursuant  to
                                        Section 6.02(b).

                         (ii) Expiration of Unvested Options Upon Termination of
                    Employment.  Subject to Sections  6.02(f) and  6.02(g)(i)(B)
                    and (C), to the extent all or any part of an Option  granted
                    to an Employee  Participant  was not  exercisable  as of the
                    date of Termination  of Employment,  such right shall expire
                    at   the   date   of   such   Termination   of   Employment.
                    Notwithstanding  the foregoing,  the Committee,  in its sole
                    and  absolute  discretion  and under  such terms as it deems
                    appropriate,  may permit an Employee Participant to continue
                    to accrue  service with respect to the right to exercise his
                    or her Options.

                  (h) Exercise of Options Upon  Termination  of Service.  Unless
the Committee,  in its sole and absolute  discretion,  provides for a shorter or
longer  period  of time in an  Option  Agreement  or a longer  period of time in
accordance with Section 6.02(f),  if a Non-Employee  Director's service with the
Company or a Subsidiary terminates for any reason or if such person ceases to be
a  Non-Employee  Director,  such  Option may be  exercised  to the extent it was
exercisable  on the date of such  termination of service until the expiration of
the stated  term of the  Option,  but only to the  extent it was not  previously
exercised.

Article VII.  Terms Applicable to All Options Granted Under the Plan

         7.01 Plan Provisions  Control Option Terms. The terms of the Plan shall
govern all Options  granted under the Plan,  and in no event shall the Committee
have the  power to grant to a  Participant  any  Option  under  the Plan that is
contrary to any  provisions of the Plan. If any provision of any Option  granted
under the Plan conflicts with any of the terms in the Plan as constituted on the
Date of Grant of such Option,  the terms in the Plan as  constituted on the Date
of Grant of such Option shall control.

         7.02 Option Agreement. No person shall have any rights under any Option
granted under the Plan unless and until the Company and the  Participant to whom
such Option shall have been granted  shall have executed and delivered an Option
Agreement  authorized  by the  Committee  expressly  granting the Option to such
person and containing provisions setting forth the terms of the Option. If there
is any conflict  between the provisions of an Option  Agreement and the terms of
the Plan, the terms of the Plan shall control.

         7.03  Modification  of Option  After  Grant.  Except as provided by the
Committee,  in its sole and absolute  discretion,  in the Option Agreement or as
provided in Section 7.05, no Option granted under the Plan to a Participant  may
be modified (unless such modification does not materially  decrease the value of
the Option) after the Date of Grant except by express written  agreement between
the Company and the Participant,  provided that any such change (a) shall not be
inconsistent  with the  terms of the  Plan,  and (b)  shall be  approved  by the
Committee.

         7.04 Taxes.  The Company shall be entitled,  if the Committee  deems it
necessary or desirable,  to withhold (or secure payment from the  Participant in
lieu of withholding)  the amount of any withholding or other tax required by law
to be withheld or paid by the Company with respect to any Common Stock  issuable
under such  Participant's  Option,  and the Company may defer issuance of Common
Stock  upon  the  grant or  exercise  of an  Option  unless  indemnified  to its
satisfaction  against  any  liability  for any  such  tax.  The  amount  of such
withholding  or tax payment shall be determined by the Committee or its delegate
and  shall  be  payable  by the  Participant  at  such  time  as  the  Committee
determines.  A  Participant  shall be  permitted  to  satisfy  his or her tax or
withholding obligation by (a) having cash withheld from the Participant's salary
or other compensation payable by the Company or a Subsidiary, (b) the payment of
cash by the  Participant  to the  Company,  (c) the  payment in shares of Common
Stock already owned by the Participant  valued at Fair Market Value,  and/or (d)
the withholding from the Option,  at the appropriate time, of a number of shares
of Common  Stock  sufficient,  based upon the Fair  Market  Value of such Common
Stock, to satisfy such tax or withholding  requirements.  The Committee shall be
authorized,  in its  sole  and  absolute  discretion,  to  establish  rules  and
procedures  relating  to any such  withholding  methods  it deems  necessary  or
appropriate  (including,  without  limitation,  rules and procedures relating to
elections by Participants who are subject to the provisions of Section 16 of the
Exchange Act to have shares of Common Stock withheld from an Award to meet those
withholding obligations).

         7.05     Adjustments to Reflect Capital Changes; Change in Control.

                  (a) Recapitalization. The number and kind of shares subject to
outstanding  Options,  the purchase price or exercise price of such Options, the
limit set forth in the last sentence of Section 5.01 of the Plan, and the number
and kind of shares  available  for Options  subsequently  granted under the Plan
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 Plan or the Options
granted under the Plan. The 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.

                  (b) Sale or Reorganization. After any reorganization,  merger,
or consolidation in which the Company is the surviving entity,  each Participant
shall,  at no  additional  cost,  be  entitled  upon the  exercise  of an Option
outstanding  prior to such event to receive  (subject to any required  action by
stockholders),  in lieu of the number of shares of Common  Stock  receivable  on
exercise  pursuant  to such  Option,  the number and class of shares of stock or
other securities to which such Participant  would have been entitled pursuant to
the terms of the  reorganization,  merger,  or consolidation  if, at the time of
such  reorganization,  merger, or  consolidation,  such Participant had been the
holder of record of a number of shares of Common  Stock  equal to the  number of
shares  of  Common  Stock  receivable  on  exercise  pursuant  to  such  Option.
Comparable  rights shall accrue to each  Participant  in the event of successive
reorganizations, mergers, or consolidations of the character described above.

                  (c) Options to Purchase Stock of Acquired Companies. After any
reorganization,  merger,  or  consolidation  in  which  the  Company  shall be a
surviving  entity,  the  Committee  may  grant  substituted  Options  under  the
provisions of the Plan,  replacing  old options  granted under a plan of another
party to the reorganization, merger, or consolidation whose stock subject to the
old options may no longer be issued following such  reorganization,  merger,  or
consolidation.  The  foregoing  adjustments  and  manner of  application  of the
foregoing  provisions  shall  be  determined  by the  Committee  in its sole and
absolute discretion. Any such adjustments may provide for the elimination of any
fractional  shares of Common Stock that might  otherwise  become  subject to any
Options.

                  (d)  Changes  in  Control.   (i)  Upon  the   dissolution   or
liquidation of the Company, (ii) upon a reorganization, merger, or consolidation
in which the Company is not the  surviving  corporation,  (iii) upon the sale of
substantially  all  of  the  property  or  assets  of  the  Company  to  another
corporation,  or (iv) 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,  then  the  Plan and the  Options  issued  thereunder  shall
terminate,  unless  provisions are made in connection with such  transaction for
the assumption of Options theretofore  granted, or for the substitution for such
Options of new options of the  successor  corporation  or a parent or subsidiary
thereof,  with  appropriate  adjustment as to the number and kinds of shares and
the per share  exercise  prices.  In the event such Options shall be terminated,
all outstanding  Options shall be exercisable in full for at least 30 days prior
to such  termination  date,  whether  or not  exercisable  during  such  period,
subject,  however, to the limitation set forth in Section 6.02(b).  For purposes
of this Section 7.05(d),  the Company refers to Mid Atlantic  Medical  Services,
Inc.,  MD-Individual  Practice  Association,  Inc., Optimum Choice, Inc., and/or
Physicians Health Plan of Maryland,  Inc., jointly or separately.  The Committee
shall  determine  the date on which Options may become  exercisable  pursuant to
this Section 7.05(d).

         7.06 Surrender of Options.  Any Option  granted to a Participant  under
the Plan may be surrendered to the Company for cancellation on such terms as the
Committee and holder approve.

         7.07 No Right to Option; No Right to Employment. No director,  employee
or other person  shall have any claim or right to be granted an Option.  Neither
the Plan nor any  action  taken  hereunder  shall be  construed  as  giving  any
employee  any right to be  retained  in the employ of the  Company or any of its
Subsidiaries.

         7.08 Options Not Includable for Benefit Purposes.  Income recognized by
a  Participant  pursuant to the  provisions of the Plan shall not be included in
the  determination  of benefits under any employee pension benefit plan (as such
term is defined in Section 3(2) of ERISA) or group  insurance  or other  benefit
plans applicable to the Participant that are maintained by the Company or any of
its  Subsidiaries,  except as may be  provided  under the terms of such plans or
determined by resolution of the Board.

         7.09  Governing Law. The Plan and all  determinations  made and actions
taken  pursuant  to the Plan  shall  be  governed  by the  laws of the  State of
Delaware  other than the conflict of laws  provisions of such laws, and shall be
construed in accordance therewith.

         7.10 No Strict  Construction.  No rule of strict  construction shall be
implied  against  the  Company,  the  Committee,  or  any  other  person  in the
interpretation  of any of the terms of the Plan,  any Option  granted  under the
Plan or any rule or procedure established by the Committee.

         7.11 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.

         7.12 Captions.  The captions (i.e.,  all Article and Section  headings)
used in the Plan are for convenience only, do not constitute a part of the Plan,
and  shall  not be  deemed  to  limit,  characterize,  or  affect in any way any
provisions of the Plan,  and all provisions of the Plan shall be construed as if
no captions have been used in the Plan.

         7.13 Severability.  Whenever  possible,  each provision in the Plan and
every Option at any time  granted  under the Plan shall be  interpreted  in such
manner as to be effective and valid under  applicable  law, but if any provision
of the Plan or any Option at any time granted under the Plan shall be held to be
prohibited by or invalid under  applicable law, then (a) such provision shall be
deemed  amended to  accomplish  the  objectives  of the  provision as originally
written to the fullest extent  permitted by law, and (b) all other provisions of
the Plan and every other Option at any time granted  under the Plan shall remain
in full force and effect.

         7.14 Legends.  All  certificates  for Common Stock  delivered under the
Plan shall be subject to such  transfer  restrictions  set forth in the Plan and
such other  restrictions  as the Committee may deem  advisable  under the rules,
regulations,  and other  requirements  of the SEC, any stock exchange upon which
the Common Stock is then listed,  and any applicable federal or state securities
law.  The  Committee  may  cause  a  legend  or  legends  to be put on any  such
certificates to make appropriate references to such restrictions.

         7.15  Investment  Representation.  The  Committee  may, in its sole and
absolute  discretion,  demand that any Participant  awarded an Option deliver to
the  Committee  at the time of  grant  or  exercise  of such  Option  a  written
representation  that the shares of Common Stock to be acquired upon exercise are
to be  acquired  for  investment  and  not  for  resale  or  with a view  to the
distribution thereof. Upon such demand,  delivery of such written representation
by the Participant  prior to the delivery of any shares of Common Stock pursuant
to the  exercise  of his or her Option  shall be a  condition  precedent  to the
Participant's right to purchase or otherwise acquire such shares of Common Stock
by such grant or  exercise.  The Company is not  legally  obliged  hereunder  if
fulfillment  of its  obligations  under the Plan would violate  federal or state
securities laws.

         7.16     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  Participant 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.

                  (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 and would have been  exercisable  or would
have vested had the Plan not terminated.

         7.17     Costs and  Expenses.  All costs and expenses  incurred in
administering  the Plan shall be borne by the Company.

         7.18     Unfunded  Plan.  The Company  shall not be required to
establish  any special or separate fund or make any other segregation of
assets to assure the payment of any award under the Plan.
<PAGE>

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