UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of report (Date of earliest event reported) October 23, 2012 (October 17, 2012) COVENTRY HEALTH CARE, INC. (Exact name of registrant as specified in its charter). Delaware 1-16477 52-2073000 (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification Number) 6720-B Rockledge Drive, Suite 700, Bethesda, Maryland 20817 (Address of principal executive offices) (Zip Code) (301) 581-0600 (Registrant’s telephone number, including area code) Not Applicable (Former name or former address, if changed since last report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) Pre–commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) Pre–commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 1.01. Entry into a Material Definitive Agreement. On October 17, 2012, Coventry Health Care, Inc. (“Coventry”), Aetna Inc. (“Aetna”) and Jaguar Merger Subsidiary, Inc., a wholly owned subsidiary of Aetna (“Merger Sub”), entered into Amendment No. 1 (the “Amendment”) to the Agreement and Plan of Merger (the “Merger Agreement”), dated as of August 19, 2012, previously entered into by the parties. Pursuant to the Merger Agreement, as amended, subject to the satisfaction of certain conditions, Merger Sub will be merged with and into Coventry, with Coventry surviving the merger as a wholly owned subsidiary of Aetna (the “Merger”). Under the terms of the Merger Agreement (prior to the execution of the Amendment), Aetna and Coventry agreed to discuss the appropriate treatment of outstanding Coventry stock options with an exercise price greater than or equal to the Equity Award Cash Consideration (as defined in the Merger Agreement) (each such option, an “Underwater Option”). Based on those discussions, Aetna and Coventry entered into the Amendment, which provides that upon completion of the Merger, each Underwater Option will be cancelled. In addition, the Amendment provides that each holder of an Underwater Option who executes a customary acknowledgment and waiver will be eligible to receive an amount in cash calculated by reference to the exercise price of such Underwater Option and equivalent to $1.00 to $4.00 per share of Coventry common stock subject to such Underwater Option. For each active employee of Coventry, such payment will also be conditioned upon such employee remaining employed by the surviving corporation or Aetna for one year following the closing of the Merger (subject to acceleration upon termination of employment due to death, disability, an involuntary termination without cause or, in certain circumstances, a constructive termination). The maximum aggregate amount to be paid by Aetna pursuant to the Amendment with respect to the Underwater Options will not exceed $8 million. The Amendment also amends Section 6.01(d) of the Merger Agreement to reduce the aggregate dollar value of stock units that Coventry is permitted to issue between the execution of the Merger Agreement and the consummation of the transactions contemplated thereby to new hires in the ordinary course of business from $7,000,000 to $3,000,000. The foregoing description of the Amendment does not purport to be complete, and is qualified in its entirety by reference to the full text of the Amendment, which is attached hereto as Exhibit 2.1 and incorporated by reference herein, and the Merger Agreement, which is filed as Exhibit 2.1 to Coventry’s Current Report on Form 8-K filed on August 20, 2012 and incorporated by reference herein. A copy of the Amendment has been included to provide stockholders and other security holders with information regarding its terms and is not intended to provide any factual information about Aetna or Coventry. The representations, warranties and covenants, as applicable, contained in the Amendment and the Merger Agreement have been made solely for the purposes of the Amendment and the Merger Agreement and as of specific dates; were solely for the benefit of the parties to the Amendment and the Merger Agreement; are not intended as statements of fact to be relied upon by Aetna’s or Coventry’s stockholders and other security holders, but rather as a way of allocating the risk between the parties in the event the statements therein prove to be inaccurate; have been modified or qualified by certain confidential disclosures, as applicable, that were made between the parties in connection with the negotiation of the Amendment and the Merger Agreement, which disclosures, as applicable, are not reflected in either the Amendment or the Merger Agreement; may no longer be true as of a given date; and may apply standards of materiality in a way that is different from what may be viewed as material by stockholders or other security holders. Security holders are not third-party beneficiaries under the Amendment or the Merger Agreement (except with respect to stockholders’ right to receive the merger consideration following the effective time of the merger) and should not rely on the representations, warranties or covenants or any descriptions thereof as characterizations of the actual state of facts or condition of Coventry, Aetna or Merger Sub. Moreover, information concerning the subject matter of the representations and warranties may change after the date of the Merger Agreement, which subsequent information may or may not be fully reflected in Aetna’s or Coventry’s public disclosures. Coventry acknowledges that, notwithstanding the inclusion of the foregoing cautionary statements, it is responsible for considering whether additional specific disclosures of material information regarding contractual provisions are required to make the statements in this Form 8-K not misleading. Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. (e) Retention Agreement In connection with the execution of the Amendment, on October 17, 2012, Coventry entered into a retention agreement with Michael D. Bahr, Executive Vice President and Chief Operating Officer of Coventry, contingent upon completion of the Merger. Pursuant to the retention agreement, if Mr. Bahr remains employed by the surviving corporation or Aetna continuously for 12 months following completion of the Merger or if his employment is terminated after completion of the Merger but before the 12-month anniversary of the Merger due to death, disability, an involuntary termination without cause or a constructive termination, he will receive an aggregate payment of $226,563. The foregoing description of Mr. Bahr’s retention agreement does not purport to be complete, and is qualified in its entirety by reference to the full text of the agreement, which is attached hereto as Exhibit 10.1. Important Information For Investors And Stockholders This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. Aetna has filed with the Securities and Exchange Commission (“SEC”) a registration statement on Form S-4 (File No. 333-184041), including Amendment No. 1 thereto, in connection with the Merger containing a definitive proxy statement/prospectus. Coventry has also filed the definitive proxy statement/prospectus with the SEC. The registration statement was declared effective on October 18, 2012. Aetna and Coventry commenced mailing the definitive proxy statement/prospectus to Coventry stockholders on or about October 19, 2012. INVESTORS AND SECURITY HOLDERS OF COVENTRY ARE URGED TO READ THE DEFINITIVE PROXY STATEMENT/PROSPECTUS AND ANY OTHER DOCUMENTS FILED OR THAT WILL BE FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION. Investors and security holders may obtain free copies of the registration statement and the definitive proxy statement/prospectus and other documents filed with the SEC by Aetna or Coventry through the website maintained by the SEC at http://www.sec.gov . Copies of the documents filed with the SEC by Aetna are available free of charge on Aetna’s internet website at http://www.aetna.com or by contacting Aetna’s Investor Relations Department at 860-273-8204. Copies of the documents filed with the SEC by Coventry are available free of charge on Coventry’s internet website at http://www.cvty.com or by contacting Coventry’s Investor Relations Department at 301-581-5430. Aetna, Coventry, their respective directors and certain of their executive officers may be considered participants in the solicitation of proxies in connection with the proposed Merger. Information about the directors and executive officers of Coventry is set forth in its Annual Report on Form 10-K for the year ended December 31, 2011, which was filed with the SEC on February 28, 2012, its proxy statement for its 2012 annual meeting of stockholders, which was filed with the SEC on April 6, 2012, and its Current Report on Form 8-K, which was filed with the SEC on May 31, 2012. Information about the directors and executive officers of Aetna is set forth in its Annual Report on Form 10-K for the year ended December 31, 2011, which was filed with the SEC on February 24, 2012, its proxy statement for its 2012 annual meeting of stockholders, which was filed with the SEC on April 9, 2012 and its Quarterly Report on Form 10-Q for the quarter ended June 30, 2012, which was filed with the SEC on July 31, 2012. Other information regarding the participants in the proxy solicitations and a description of their direct and indirect interests, by security holdings or otherwise, are contained in the definitive proxy statement/prospectus and other relevant materials filed with the SEC. Cautionary Statement Regarding Forward-Looking Statements This communication may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. You can generally identify forward-looking statements by the use of forward-looking terminology such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “explore,” “evaluate,” “intend,” “may,” “might,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” or “will,” or the negative thereof or other variations thereon or comparable terminology. These forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond Aetna’s and Coventry’s control. Statements in this document that are forward-looking are subject to significant uncertainties and other factors, many of which are beyond Aetna’s and Coventry’s control. Important risk factors could cause actual future events to differ materially from those currently expected by Coventry’s management, including but not limited to: the failure to receive on a timely basis or otherwise, the required approvals of Coventry’s stockholders and government or regulatory agencies; the risk that a condition to closing of the Merger may not be satisfied; and the outcome of various litigation matters related to the proposed transaction. For a further discussion of risks and uncertainties, please see the risk factors described in Coventry’s Annual Report on Form 10-K for the year ended December 31, 2011 (“Coventry Annual Report”), Coventry’s Quarterly Report for the quarter ending March 31, 2012 (“Coventry First Quarter 10-Q”), and Coventry’s Quarterly Report for the quarter ending June 30, 2012 (together with Coventry’s First Quarter 10-Q, “Coventry Quarterly Reports”), each on file with the SEC. You should also read the Coventry Annual Report and the Coventry Quarterly Reports for a discussion of Coventry’s historical results of operations and financial condition. No assurances can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do occur, what impact they will have on the results of operations, financial condition or cash flows of Aetna or Coventry. Neither Aetna nor Coventry assumes any duty to update or revise forward-looking statements, whether as a result of new information, future events or otherwise, as of any future date. Item 9.01 Financial Statements and Exhibits. (d) Exhibits. Exhibit Number 2.1 Amendment No. 1 to the Agreement and Plan of Merger, dated as of October 17, 2012, by and among Coventry Health Care, Inc., Aetna Inc. and Jaguar Merger Subsidiary, Inc.* 10.1 Retention Agreement, dated October 17, 2012, by and between Coventry Health Care, Inc. and Michael D. Bahr. * Exhibit omitted pursuant to Item 601(b)(2) of Regulation S-K. Coventry agrees to furnish supplementally a copy of such exhibit to the SEC upon request. Signature(s) Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized. COVENTRY HEALTH CARE, INC. By: /s/ John J. Ruhlmann John J. Ruhlmann Senior Vice President and Corporate Controller Dated: October 23, 2012 Exhibits Exhibit Number 2.1 Amendment No. 1 to the Agreement and Plan of Merger, dated as of October 17, 2012, by and among Coventry Health Care, Inc., Aetna Inc. and Jaguar Merger Subsidiary, Inc.* 10.1 Retention Agreement, dated October 17, 2012, by and between Coventry Health Care, Inc. and Michael D. Bahr. * Exhibit omitted pursuant to Item 601(b)(2) of Regulation S-K. Coventry agrees to furnish supplementally a copy of such exhibit to the SEC upon request. Exhibit 2.1 AGREEMENT AND PLAN OF MERGER – AMENDMENT NO. 1 AMENDMENT NO. 1 (this “ Amendment ”) dated as of October 17, 2012 among Aetna Inc., a Pennsylvania corporation (“ Parent ”), Jaguar Merger Subsidiary, Inc., a Delaware corporation and a wholly owned subsidiary of Parent (“ Merger Subsidiary ”), and Coventry Health Care, Inc., a Delaware corporation (the “ Company ”). WITNESSETH: WHEREAS, Parent, Merger Subsidiary and the Company entered into that certain Agreement and Plan of Merger, dated as of August 19, 2012 (the “ Merger Agreement ”); and WHEREAS, Parent, Merger Subsidiary and the Company desire to amend certain provisions of the Merger Agreement as provided for in this Amendment. NOW, THEREFORE, in consideration of the foregoing, and for other good and valuable consideration, the receipt of which is hereby acknowledged, Parent, Merger Subsidiary and the Company hereby agree as follows: ARTICLE 1 A MENDMENTS Section 1.01 . Amendment to Section 1.01(b) . Section 1.01(b) of the Merger Agreement is amended to include: Term Section Applicable Payment 2.05 (b) Underwater Option 2.05 (b) Section 1.02 . Amendment to Section 2.05(b). Section 2.05(b) of the Merger Agreement is deleted in its entirety and the following is substituted in its place: (b) Each Company Stock Option, whether or not vested or exercisable, with a per share exercise price equal to or greater than the Equity Award Cash Consideration shall be canceled as of the Effective Time (each, an “ Underwater Option ”). Parent shall pay to each holder of each Underwater Option a cash amount determined based on Exhibit A-1 attached (in each case, the “ Applicable Payment ”); provided , however , that (i) any individual holding an Underwater Option who is an employee of the Company or an Affiliate of the Company as of the date of this Amendment shall receive the Applicable Payment only if such employee remains employed by Parent, Company or their respective Affiliates continuously through the 12-month anniversary of the Effective Date, in which case Parent shall cause such employee to be paid the Applicable Payment on the 12-month anniversary date, or if the employee’s employment is terminated sooner due to death, disability or an involuntarily termination without cause, Parent shall cause such employee (or such employee’s estate) to be paid the Applicable Payment promptly, but no later than 14 days, following the termination of such employee’s employment and (ii) payment of the Applicable Payment to each holder of an Underwater Option shall be conditioned upon the holder’s execution, by November 30, 2012, of a written acknowledgement of the foregoing payment conditions and waiver of claims with respect to the Underwater Options, in a form reasonably acceptable to Parent. For purposes of the foregoing, any employee whose employment is terminated without cause or due to a constructive termination within the meaning of an individually executed employment agreement between such employee and the Company or an Affiliate of the Company in effect as of October 17, 2012 shall be deemed to have been involuntarily terminated without cause for purposes of this Section 2.05(b). Section 1.03 . Amendment to Section 6.01(d). Section 6.01(d) of the Merger Agreement is amended to reduce the dollar amount appearing in clause (iii)(B) thereof from $7,000,000 to $3,000,000. ARTICLE 2 M ISCELLANEOUS Section 2.01 . Definitions. Capitalized terms used but not defined in this Amendment shall have the meaning assigned to such terms in the Merger Agreement. Section 2.02 . Notices . All notices, requests and other communications to any party to this Amendment shall be in writing (including facsimile transmission) and shall be given, if to Parent or Merger Subsidiary, to: Aetna Inc. 151 Farmington Avenue, RC6A Hartford, Connecticut 06156 Attention: General Counsel Facsimile: (860) 273-8340 2 with a copy (which shall not constitute notice) to: Davis Polk & Wardwell LLP 450 Lexington Avenue New York, New York 10017 Attention: David L. Caplan H. Oliver Smith Facsimile.: (212) 701-5800 if to the Company, to: Coventry Health Care, Inc. 6270-B Rockledge Drive, Suite 700 Bethesda, Maryland 20817 Attention: Thomas C. Zielinski Facsimile: (610) 729-7538 with a copy (which shall not constitute notice) to: Wachtell, Lipton, Rosen & Katz 51 West 52 nd Street New York, New York 10019 Attention: David A. Katz Facsimile: (212) 403-1000 and Bass, Berry & Sims PLC 150 Third Avenue South, Suite 2800 Nashville, Tennessee 37201 Attention: Bob F. Thompson Angela Humphreys Facsimile: (615) 742-2762; (615) 742-2718 or to such other address or facsimile number as such party may hereafter specify for the purpose by notice to the other parties hereto. All such notices, requests and other communications shall be deemed received on the date of receipt by the recipient thereof if received prior to 5:00 p.m. on a Business Day in the place of receipt. Otherwise, any such notice, request or communication shall be deemed to have been received on the next succeeding Business Day in the place of receipt. Section 2.03 . Amendments and Waivers . (a) Any provision of this Amendment may be amended or waived prior to the Effective Time if, but only if, such amendment or waiver is in writing and is signed, in the case of an amendment, by each party to this Amendment, or, in the case of a waiver, by each party against whom the waiver is to be effective; provided that, after the Company 3 Stockholder Approval has been obtained there shall be no amendment or waiver of this Amendment that would require the further approval of the stockholders of the Company under the Delaware Law without such approval having first been obtained. (b) No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by Applicable Law. Section 2.04 . Expenses . Except as otherwise provided herein, all costs and expenses incurred in connection with this Amendment shall be paid by the party incurring such cost or expense. Section 2.05 . Successors and Assigns . The provisions of this Amendment shall be binding upon and inure solely to the benefit of the parties hereto. No party may assign, delegate or otherwise transfer any of its rights or obligations under this Amendment without the prior written consent of each other party hereto, except that Parent or Merger Subsidiary may transfer or assign its rights and obligations under this Amendment, in whole or from time to time in part, to (i) one or more of their Affiliates at any time and (ii) after the Effective Time, to any Person; provided that such transfer or assignment shall not relieve Parent or Merger Subsidiary of its obligations hereunder or enlarge, alter or change any obligation of any other party hereto or due to Parent or Merger Subsidiary. Section 2.06 . Governing Law . This Amendment shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to the conflicts of law rules of such state. Section 2.07 . Jurisdiction/Venue . Each of the parties hereto (i) irrevocably consents to the service of the summons and complaint and any other process in any action or proceeding relating to the transactions contemplated hereby, on behalf of itself or its property, in accordance with Section 2.02 or in such other manner as may be permitted by Applicable Law, of copies of such process to such party, and nothing in this Section 2.07 shall affect the right of any party to serve legal process in any other manner permitted by Applicable Law, (ii) irrevocably and unconditionally consents and submits itself and its property in any action or proceeding to the exclusive general jurisdiction of the Delaware Court of Chancery and any state appellate court therefrom within the State of Delaware (or, only if the Delaware Court of Chancery declines to accept jurisdiction over a particular matter, any state or federal court within the State of Delaware) in the event any dispute arises out of this Amendment or the transactions contemplated hereby, or for recognition and enforcement of any judgment in respect thereof, (iii) agrees that it shall not attempt to deny or defeat 4 such personal jurisdiction by motion or other request for leave from any such court, (iv) agrees that any actions or proceedings arising in connection with this Amendment or the transactions contemplated hereby shall be brought, tried and determined only in the Delaware Court of Chancery (or, only if the Delaware Court of Chancery declines to accept jurisdiction over a particular matter, any state or federal court within the State of Delaware), (v) waives any objection that it may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same and (vi) agrees that it shall not bring any action relating to this Amendment or the transactions contemplated hereby in any court other than the aforesaid courts. Each of Parent, Merger Subsidiary and the Company agrees that a final judgment in any action or proceeding in such court as provided above shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Applicable Law. Section 2.08 . WAIVER OF JURY TRIAL . EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AMENDMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AMENDMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) EACH PARTY MAKES THIS WAIVER VOLUNTARILY AND (iv) EACH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AMENDMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 2.08. Section 2.09 . Counterparts; Effectiveness . This Amendment may be signed in any number of counterparts, including by facsimile or by email with .pdf attachments, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Amendment shall become effective when each party hereto shall have received a counterpart hereof signed and delivered (by electronic communication, facsimile or otherwise) by all of the other parties hereto. Until and unless each party has received a counterpart hereof signed by the other parties hereto, this Amendment shall have no effect and no party shall have any right or obligation hereunder (whether by virtue of any other oral or written agreement or other communication). Except as expressly amended herein, all other terms and conditions of the Merger Agreement shall remain in full force and effect. The 5 term “Agreement” as used in the Merger Agreement shall be deemed to refer to the Merger Agreement, as amended hereby. Section 2.10 . Severability. If any term, provision, covenant or restriction of this Amendment is held by a court of competent jurisdiction or other Governmental Authority to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Amendment shall remain in full force and effect and shall in no way be affected, impaired or invalidated so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such a determination, the parties shall negotiate in good faith to modify this Amendment so as to effect the original intent of the parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the fullest extent possible. (Remainder of Page Intentionally Left Blank) 6 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their respective authorized officers as of the day and year first above written. AETNA INC. By: /s/ Mark T. Bertolini Name: Mark T. Bertolini Title: Chairman, Chief Executive Officer and President JAGUAR MERGER SUBSIDIARY, INC. By: /s/ Mark L. Keim Name: Mark L. Keim Title: President COVENTRY HEALTH CARE, INC. By: /s/ Thomas C. Zielinski Name: Thomas C. Zielinski Title: Executive Vice President and General Counsel Exhibit 10.1 Execution Version RETENTION AGREEMENT THIS RETENTION AGREEMENT (this “ Agreement ”), dated October 17, 2012, is by and between Coventry Health, Inc., a Delaware corporation (the “ Company ”), and Michael D. Bahr (“ Employee ”). RECITALS WHEREAS, the Company has entered into a Merger Agreement (the “ Merger Agreement ”) dated as of August 19, 2012, as amended, by and among the Company, Aetna, Inc., a Pennsylvania corporation (“ Aetna ”) and Jaguar Merger Subsidiary, Inc., a Delaware corporation and a wholly owned subsidiary of Aetna (“ Merger Sub ”), pursuant to which Merger Sub will be merged with and into the Company, with the Company being the surviving corporation (the “ Merger ”) effective as of the Effective Time, as defined in the Merger Agreement (the “ Effective Time ”); and WHEREAS, the Company and Employee desire, for good and valuable consideration, to enter into this Agreement whereby the Company promises a retention award in exchange for Employee’s fulfillment of certain obligations hereunder. NOW, THEREFORE, in consideration of the promises, covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: Section 1. Retention Award . Subject to the conditions set forth below, the Company shall pay to Employee (or, in the event of Employee’s death, to Employee’s estate), in consideration of the cancellation of the Employee’s Underwater Options (as defined in the Merger Agreement) and the release set forth in Section 2 below, the amount computed pursuant to Appendix A (the “ Retention Payment ”) as of the earlier of the 12-month anniversary of the Effective Date, or a date within 14 days after the termination of Employee’s employment if Employee’s employment is terminated due to death, disability, Termination Without Cause or Constructive Termination (within the meanings of such terms set forth in Employee’s Employment Agreement with the Company dated May 18, 2010) (a “ Qualifying Termination ”); provided , however , that Employee shall forfeit any and all entitlement to receive such payment if Employee’s employment terminates prior to the 12-month anniversary of the Effective Date for any reason other than a Qualifying Termination. Section 2. Release . In consideration of the Retention Payment set forth in Section 1 above and Appendix A hereto, Employee hereby releases the Company and each of its respective past and present shareholders, past and present subsidiaries, affiliates and related companies, their successors and assigns and all past and present directors, officers, employees, attorneys and agents of these entities, personally, and as directors, officers, employees, attorneys and agents, from any and all liabilities, claims or losses in respect of the Employee’s Company Stock Options (as such term is defined in the Merger Agreement), other than liabilities, claims or losses relating to Employee’s rights under this Agreement. Employee agrees that Employee shall not bring or participate in any claim or action contrary to the foregoing release. Section 3. Miscellaneous . 3.1. Withholding . All amounts paid hereunder will be subject to the Company’s withholding of applicable taxes. All payments hereunder are intended to qualify for the short-term deferral exception to Section 409A of the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder. 3.2. Entire Agreement; Amendments . This Agreement constitutes the entire agreement of the parties with regard to the subject matter hereof and supersedes any and all prior understandings, agreements or correspondence between the parties. This Agreement may be amended only by a written instrument duly executed by all parties or their respective heirs, successors, assigns or legal personal representatives. 3.3. Counterparts . This Agreement may be executed in two or more counterparts, all of which taken together shall be deemed one original. 3.4. One-Time Bonus . The Retention Payment is a one-time retention bonus and creates no obligation by the Company or its affiliates to make further similar bonus payments; provided that, subject to Section 3 hereof, the Retention Payment shall not preclude, reduce or be offset against any payments or benefits to which the Employee may be entitled under any other agreement, plan or arrangement of the Company, Aetna, or their respective affiliates. 3.5. Governing Law . This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, excluding any conflict-of-laws rules or principles that might refer the governance or the construction of this Agreement to the law of another jurisdiction. 3.6. Third Party Beneficiary . This Agreement has been made and is solely for the benefit of the parties hereto and their respective successors and permitted assigns. Nothing in this Agreement, expressed or implied, is intended to confer on any person other than the other than the parties to it, and their respective heirs, successors, legal representatives and permitted assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement. Notwithstanding the foregoing, following the Effective Time, Aetna shall receive the same benefits and have the same rights of enforcement as the Company under this Agreement. 3.7. Effectiveness . The operative effect of this Agreement is conditioned upon the occurrence under the Merger Agreement of the Closing (as defined in the Merger Agreement). [Signature page follows] IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by themselves or their duly authorized representative as of the date first written above. EMPLOYEE /s/ Michael D. Bahr Michael D. Bahr COVENTRY HEALTH CARE, INC. By: /s/ Thomas C. Zielinski [Signature Page to Underwater Option Holder Retention Agreement] APPENDIX A The Retention Payment shall be a cash payment equal to the sum of the Applicable Amount with respect to each Underwater Option held by Employee which is canceled pursuant to Section 2.05(b) of the Merger Agreement. The “ Applicable Amount ” with respect to each such Underwater Option shall be the Per Share Amount indicated below for such Underwater Option times the number of shares of Company Common Stock subject such Underwater Option as of the Effective Time. Applicable Payment Amount Exercise Price of Underwater Option Per Share Amount Below $45.00 $4.00 $45.00 - $49.99 $3.00 $50.00 - $52.49 $2.25 $52.50 - $54.99 $1.75 $55.00 -$ 58.99 $1.25 $59.00 - $61.00 $1.00 Notwithstanding the foregoing, if the aggregate amount of the Retention Payment and all other payments that would be payable under amended Section 2.05(b) of the Merger Agreement (assuming payment to all eligible option holders) exceeds $8,000,000, the Per Share Amounts above and the per share amounts that would be payable to all others under amended Section 2.05(b) of the Merger Agreement (assuming payment to all eligible option holders) shall be reduced pro rata so that the aggregate amount that would be payable under amended Section 2.05(b) of the Merger Agreement (assuming payment to all eligible option holders) shall be equal to $8,000,000 and the Retention Payment shall be adjusted accordingly. For the avoidance of doubt, the Retention Payment shall be based solely on the Company Stock Options (if any) with a per share exercise price equal to or greater than the Equity Award Cash Consideration (the “Underwater Options”) (in each case, as defined in the Merger Agreement) which are held by Employee as of the Effective Time and are canceled pursuant to Section 2.05(b) of the Merger Agreement.