exv4w5






Exhibit 4.5


 







HEALTHMARKETS, INC.




Matching Agency Contribution Plan




(As Amended and Restated Effective April 5, 2006)

(“MAC”)



 







	 	 	 
	Sponsoring Company	 	Participating Agencies
	HealthMarkets, Inc.

	 	Cornerstone America,
	9151 Boulevard 26

	 	a division of Mid-West National Life Insurance 


	North Richland Hills, Texas 76180

	 	Company of Tennessee

Central Park Office Tower
	 

	 	2350 Airport Freeway
	 

	 	Suite 100
	 

	 	Bedford, Texas 76022
	 
	 	 
	 

	 	Success Driven Awards, Inc.
	 

	 	c/o HealthMarkets, Inc.
	 

	 	9151 Boulevard 26
	 

	 	North Richland Hills, Texas 76180






For Information Contact:




Ms. Karie Graves

500 Grapevine Highway

Suite 300

Hurst, Texas 76054

(817) 255-3839

Karie.Graves@hmamg.com




As Amended and Restated: April 5, 2006




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HEALTHMARKETS, INC.




Matching Agency Contribution Plan (MAC)




ARTICLE I.




DEFINITIONS




     The following capitalized terms shall have the respective meaning assigned to them below. If
not otherwise defined in this plan document, capitalized terms shall have the meaning assigned to
them in ACE.



     1.1.
“ACE” means the HealthMarkets Agents’ Contribution to Equity Plan, as amended and
restated effective April 5, 2006.



     1.2. “Administrator” means HealthMarkets, or any person or persons authorized by the Board of
Directors of HealthMarkets (the “Board”) to administer MAC.



     1.3. “Affiliates” means a wholly owned subsidiary of HealthMarkets.



     1.4. “Agent” means any independent insurance agent or independent field services
representative (“FSR”) who is contracted or associated with a Participating Agency and who is not
an employee of such Participating Agency.



     1.5. “Agent Plan Administrative Committee” shall have the meaning set forth in Section 2.8
hereof.



     1.6. “ASAP” means the HealthMarkets Agents’ Stock Accumulation Plan, as amended and restated
as of April 5, 2006.



     1.7. “Board” shall mean the Board of Directors of HealthMarkets, as constituted from time to
time.



     1.8. “Bonus Credits” means Equivalent Shares which a Participating Agency in its sole
discretion may request the Administrator on behalf of the Sponsoring Company to post to MAC
Accounts of certain Participants, including but not limited to any credits under ASAP or any other
cash and wealth program of the Sponsoring Company or any Participating Agency or Affiliate
transferred to MAC.



     1.9. “Calendar Year” means the twelve (12) month period commencing on January 1 and ending on
December 31.



     1.10. “Contract” means “Independent Insurance Agent Commission-Only Contract and/or FSR
Agreement between the Participant and a Participating Agency.”



     1.11. “Disability” means a Participant’s physical or mental disability to be determined by
reference to the effective Social Security guidelines.



     1.12. “Dividend Credits” means Equivalent Shares that the Administrator posts to each
Participant’s MAC Account in any month on behalf of the Sponsoring Company pursuant to Section 4.5.



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     1.13. “Dynamic Equity Fund Plan” or “DEF Plan” means the equity program maintained by
HealthMarkets for the benefit of agents contracted with Participating Agencies, which program
collectively includes ASAP, ACE and MAC.



     1.14. “Effective Date” means April 5, 2006.



     1.15. “Equivalent Shares” means a book credit representing the number of whole Shares which
would have been purchased had MAC Credits been invested in Shares on the date such credits were
posted to each Participant’s MAC Account.



     1.16. “Fair Market Value” of a Share shall be determined as of each Valuation Date or Special
Dividend Valuation Date, as applicable, by the Board in good faith. In determining “Fair Market
Value,” the Board will consider (among other factors it deems appropriate) the valuation prepared
by The Blackstone Group (“Blackstone”) in the ordinary course of business for reporting to its
advisory board and investors. Within not more than ten (10) business days following each Valuation
Date or Special Dividend Valuation Date, as applicable, Blackstone will deliver to the Board its
current valuation, and within not more than five (5) business days thereafter the Board shall
deliver to the Sponsoring Company, the Administrator and each Participating Agency its
determination of Fair Market Value of a Share as of the immediately preceding Valuation Date or
Special Dividend Valuation Date, as applicable. References throughout this plan document to the
“current” or “then” Fair Market Value or the Fair Market Value “as of” a particular date shall be
deemed to mean, in each case, the Fair Market Value of a Share as of the immediately preceding
Valuation Date or Special Dividend Valuation Date, as applicable. Notwithstanding the foregoing,
if there is a regular public trading market for such Shares, “Fair Market Value” shall mean, as of
any given date, the mean between the highest and lowest reported sales prices of a Share during
normal business hours on the New York Stock Exchange Composite Tape or, if not listed on such
exchange, on any other national securities exchange on which the Shares are listed or on NASDAQ.



     1.17. “Forfeiture Credit Pools” means separate pools of Matching Credits, Dividend Credits
and/or certain Bonus Credits, in each case which are forfeited under Article V by Participants in
MAC who experience a Termination Date or a Complete Withdrawal under Section 8.3(a) of ACE between
July 1 of the prior Plan Year and June 30 of the current Plan Year.



     1.18. “Forfeiture Credits” means Matching Credits, Dividend Credits and/or certain Bonus
Credits transferred by the Administrator from the Forfeiture Credit Pools to the MAC Accounts of
Participants who qualify under Section 4.4.



     1.19. “Founder’s Credits” means Equivalent Shares that the Administrator posts to the MAC
Accounts of Participants who qualify under Section 4.3.



     1.20. “HealthMarkets” means HealthMarkets, Inc. (formerly UICI), a Delaware corporation.



     1.21. “MAC means this HealthMarkets Matching Agency Contribution Plan, as amended and restated
effective April 5, 2006.



     1.22. “MAC Account” means a separate book account of each Participant’s MAC Equivalent Shares,
as maintained by the Administrator.



     1.23. “MAC Credits” means Matching Credits, Bonus Credits, Forfeiture Credits, Dividend
Credits and Founder’s Credits that the Administrator posts to Participants’ MAC Accounts, as set
forth in Article IV.



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     1.24. “MAC Credit Addendum” means the addendum filed with the Administrator by each
Participating Agency, which sets forth the production requirements and the Matching Percentage
applicable to a Participating Agency’s participating Agents. Such MAC Credit Addenda are
incorporated by reference into this MAC plan document.



     1.25. “MAC Payment” means the vested portion of the MAC Credits transferred to a Participant’s
ACE Account pursuant to Section 5.7.



     1.26. “Matching Credit” means Equivalent Shares that the Administrator posts to each
Participant’s MAC Account in any month on behalf of the Sponsoring Company, pursuant to Section
4.1.



     1.27. “Matching Percentage” means the percentage designated from time to time by each
Participating Agency on an MAC Credit Addendum for purposes of determining the Matching Credits to
be posted pursuant to Section 4.1 to a Participant’s MAC Account by the Administrator on behalf of
the Sponsoring Company; provided, however, that the Matching Percentage is established initially at
one hundred percent (100%).



     1.28. “Participant” means an Agent who is eligible to participate in MAC pursuant to Section
3.1 of MAC.



     1.29. “Participating Agency” means any insurance agency, company, or other organization,
which, with the consent of the Sponsoring Company, adopts MAC.



     1.30. “Period of Ineligibility” means a period of twelve (12) consecutive calendar months
during which a person who was a Participant in MAC prior to the commencement of such period is not
eligible to participate in MAC due to such Participant’s complete withdrawal from ACE under Section
8.3(a) of ACE.



     1.31. “Plan Year” means the Calendar Year.



     1.32. “Share” means a share of HealthMarkets’ Class A-2 common stock, $.01 par value per
share.



     1.33. “Special Dividend” means any cash dividend declared and paid by the Sponsoring Company
with respect to Shares that has been so designated by the Board as a Special Dividend for purposes
of ACE.



     1.34. “Special Dividend Valuation Date” shall mean the date on which the Board designates and
declares a Special Dividend.



     1.35. “Sponsoring Company” shall mean HealthMarkets.



     1.36. “Termination Date” means the date on which the Participant’s contractual relationship
with a Participating Agency is terminated due to such Participant’s Disability (as defined in
Section 1.14) or such Participant’s death, or the actual date on which the Participant otherwise
ceases to be a member of or contracted with a Participating Agency.



     1.37. “Valuation Date” shall mean each March 31, June 30, September 30 and December 31 of each
Plan Year.



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     1.38. “Years of Participation” means the number of consecutive full Plan Years elapsed since
the date the Participant became eligible and has filed with the Administrator a properly completed
Participant’s Election Form subsequent to the end of such Participant’s most recent Period of
Ineligibility, if any.



ARTICLE II.




GENERAL




     2.1. History and Purpose – HealthMarkets has established the following plans for the benefit
of agents contracted with Participating Agencies that sell insurance policies and ancillary
products issued by or reinsured by insurance company subsidiaries of HealthMarkets and the FSRs
that enroll members in various membership associations:




	 	(a)	 	the HealthMarkets Agents’ Contribution to Equity Plan I (“ACE I”), as amended
and restated as of July 1, 2004;
	 
	 	(b)	 	the HealthMarkets Agents’ Contribution to Equity Plan II (“ACE II”), as adopted
as of October 1, 2004;
	 
	 	(c)	 	the HealthMarkets Matching Agency Contribution Plan I (“MAC I”), as amended and
restated as of July 1, 2004; and
	 
	 	(d)	 	the HealthMarkets Matching Agency Contribution Plan II (“MAC II”), as adopted
as of October 1, 2004.




Collectively, ACE I and ACE II are sometimes referred to herein as the “Agent Contribution Plans”;
MAC I and MAC II sometimes collectively referred to as the “Agent Matching Plans”; and the Agent
Contribution Plans and the Agent Matching Plans, together with ASAP, are sometimes collectively
referred to as the “Dynamic Equity Fund Plans” or “DEF Plans”. The Sponsoring Company maintains
the DEF Plans to promote the mutual interests of HealthMarkets and its stockholders, on the one
hand, and the agents contracted with Participating Agencies that sell insurance policies and
ancillary products issued by or reinsured by insurance company subsidiaries of HealthMarkets and
the FSRs that enroll members in various membership associations, on the other hand. Through the
DEF Plans, the Sponsoring Company seeks to provide a continuing incentive to such agents and FSRs
to sell such insurance policies and ancillary products and to enroll such members, thereby
providing HealthMarkets and its stockholders with the benefit of having agents and FSRs whose
performance is motivated through a closer identity of interests with HealthMarkets’ stockholders.




     2.2. Amended and Restated Agent Matching Plans - As of the Effective Date, (a) the Agent
Matching Plans shall be consolidated as one plan and thereafter referred to as the “HealthMarkets
Agents’ Matching Total Ownership Plan,” or “MAC”, (b) each of the Agent Matching Plans shall be and
is hereby amended and restated in its entirety as provided in this plan document, and (c) the Agent
Contribution Plans shall be consolidated as one plan and thereafter referred to therein and herein
as the “HealthMarkets Agents’ Total Ownership Plan,” or “ACE”.



     2.3. Shares – As of the Effective Time (as defined in the Agreement and Plan of Merger, dated
as of September 15, 2005 (the “Merger Agreement”), among the Sponsoring Company and certain
entities formed by Blackstone, DLJ Merchant Banking Partners IV, L.P. and Goldman, Sachs & Co.),
each Matching Credit then posted to a Participant’s MAC Account under any Agent Matching Plan shall
represent an equivalent book credit representing one Share (as defined in Section 1.32 above) and
shall



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thereafter constitute a Matching Credit in accordance with and subject to the terms of MAC.
The rights and obligations of the holders of each Share shall be as set forth in the Certificate of
Incorporation of HealthMarkets to be effective as of the Effective Time (as defined in the Merger
Agreement), the terms of which are specifically incorporated herein by reference thereto.



     2.4.
Non-Qualified Plan. - MAC is not intended to be a qualified plan under Section 401(a) of
the Internal Revenue Code of 1986 (the “Code”) or an employee benefit plan under the Employee
Retirement Income Security Act of 1974 (“ERISA”) and is not subject to the vesting, funding,
nondiscrimination, or other requirements imposed on such plans by the Code and ERISA.



     2.5. Applicable Laws - MAC shall be construed and administered according to the internal laws
of the State of Texas.



     2.6. Gender And Number - Where the context requires, words in any gender include the other
gender, words in the singular include the plural, and words in the plural include the singular.



     2.7. Evidence - Evidence required of anyone under MAC may include, but is not limited to,
valid certificates, affidavits, documents, or other information considered pertinent and reliable
by the Administrator.



     2.8. MAC Administration



     (a) Subject in all respects to the specific provisions hereof, the Sponsoring Company hereby
appoints the Administrator to manage the operation and administration of MAC.



     (b) The Administrator shall appoint a committee (the “Agent Plan Administrative Committee”),
to consist of five persons, of which four persons shall be members of management of the Company and
one person shall be a representative designated by The Blackstone Group (the “Blackstone
Designee”). The initial members of the Administrative Committee shall be William J. Gedwed, Mark
Hauptman, Bruce Madrid, Troy McQuagge and Matthew S. Kabaker (who shall constitute the Blackstone
Designee). Any vacancy occurring in the Agent Plan Administrative Committee (by death or
resignation or otherwise) may be filled by the affirmative vote of a majority of the remaining
members, provided, however, that each such successor member of the Agent Plan Administrative
Committee shall be approved by The Blackstone Group.



     (c) The Agent Plan Administrative Committee shall act in an advisory capacity to the
Administrator and the Board in connection with the administration of MAC. The Agent Plan
Administrative Committee shall meet as, if and when required under the terms of MAC, shall cause
minutes of its proceedings to be prepared and shall regularly report to the Board with respect to
its decisions and deliberations and otherwise upon the request of the Board. At all meetings of
the Agent Plan Administrative Committee, a majority of the members (which for this purpose must
include the Blackstone Designee) shall constitute a quorum for the transaction of business, and the
vote of a majority of the members present at a meeting at which a quorum is in attendance shall be
the act of the Agent Plan Administrative Committee, in each case if and so long as either the Board
or the Blackstone Designee consents to the taking of such action by the Agent Plan Administrative
Committee.



     (d) Notice of meetings of the Agent Plan Administrative Committee shall be made to each member
within not less than two (2) business days prior to such meeting, which notice shall be made either
(i) in person, (ii) in writing, (iii) by email, telecopy, or similar means, or (iv) by any other
method permitted by law. Any action which may be taken at a meeting of the Agent Plan
Administrative Committee may be taken without a meeting if a consent in writing, setting forth the
action so taken, shall



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be signed by all of the members, and such consent shall have the same force and effect as a
unanimous vote of such members. The consent may be in one or more counterparts so long as each
member signs one of the counterparts. Members may participate in and hold a meeting by means of a
conference telephone or similar communications equipment by means of which persons participating in
the meeting can hear each other.



     (e) The Company shall indemnify and hold harmless, to the full extent permitted by law, each
of the members of the Agent Plan Administration Committee against any and all losses, claims,
damages or liabilities, joint or several, and expenses (including without limitation reasonable
attorneys’ fees and any and all reasonable expenses incurred investigating, preparing or defending
against any litigation, commenced or threatened, or any claim, and any and all amounts paid in any
settlement of any such claim or litigation) to which such member may become subject, insofar as
such losses, claims, damages or liabilities (or actions or proceedings in respect thereof) or
expenses arise out of or are based upon the such person’s activities as a member of the Agent Plan
Administration Committee. The provisions of this Section 2.8(e) are intended to be for the benefit
of, and shall be enforceable by, each member of the Agent Plan Administration Committee and their
respective successors, heirs and representatives.



     (f) A designee of each of the GS Investor Group and the DLJ Investor Group shall be entitled
to notice of, to attend and to observe the proceedings of each meeting of the Agent Plan
Administrative Committee. For this purpose “DLJ Investor Group” shall mean DLJ Merchant Banking
Partners IV, L.P., DLJ Offshore Partners IV, L.P., MBP IV Investors, L.P., CSFB Strategic Partners
Holdings III, L.P. and any Permitted Transferee (as such term is defined in that certain
Stockholders Agreement, dated as of April 5, 2006, between HealthMarkets and the stockholders named
therein (the “Stockholders Agreement”)) thereof, and “GS Investor Group” shall mean Mulberry
Holdings I, LLC and Mulberry Holdings II, LLC and any Permitted Transferee (as such term is defined
in the Stockholders Agreement) thereof.



     2.9. Action By the Sponsoring Company, Administrator, the Agent Plan Administrative Committee
or Participating Agency - Any action required or permitted to be taken by the Sponsoring Company,
the Administrator, the Agent Plan Administrative Committee or any Participating Agency under MAC
shall be taken by an officer duly authorized to take such action by the Board, Administrator, the
Agent Plan Administrative Committee or a Participating Agency, as the case may be. If a
Participating Agency is not a corporation, any action required or permitted to be taken under MAC
shall be by the individual or individuals authorized to take such action on behalf of a
Participating Agency, as identified to Administrator. The Administrator shall have no duty to
investigate or confirm the validity of such identified individual’s authority to act.



ARTICLE III.




PARTICIPATION




     3.1. Eligibility For Participation - Subject to the terms and conditions of MAC, each Agent
will become eligible for participation in MAC after completion of one (1) full Calendar Year
following the date the Agent entered into a written Contract with a Participating Agency and has
fulfilled all eligibility requirements under ASAP or, in the case of a Complete Withdrawal by a
Participant pursuant to Section 8.3(a) of ACE, such Agent has completed the Period of
Ineligibility, provided that such Agent has properly completed a Participant’s Election Form and
such form has been received and acknowledged by the Administrator.



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     3.2. Termination - The Participant shall become ineligible to participate in MAC on his or her
Termination Date.



     3.3. Participation Not Contract Of Employment - MAC does not constitute a contract of
employment, and participation in MAC will not give any Participant the right to be retained in the
service of a Participating Agency or HealthMarkets either as an employee or an independent
contractor, nor to any right or claim to any benefit under MAC, unless such right or claim has
specifically accrued under the terms of MAC.



ARTICLE IV.




MAC CREDITS




     4.1. Matching Credit - For any given month, a Participant must meet the production requirement
set forth on the applicable MAC Credit Addendum and make an ACE contribution to be eligible for the
Matching Credit; provided, however, that in no event shall the value of a monthly Matching Credit
exceed $2,000 in any given month. Each month the Administrator will post on behalf of a
Participating Agency a Matching Credit to the MAC Account of each Participant eligible for such
Matching Credit. Except as provided in the applicable MAC Credit Addendum, the Matching Credit
posted to each Participant’s MAC Account, if any, shall equal the number of Shares purchased under
ACE for that month with the Participant’s ACE contribution, excluding any Enhancement Amounts (as
that term is defined in ACE), multiplied by the Matching Percentage. The posting date of the
Matching Credit will be the same day as the Participant’s Credit Date (as that term is defined in
ACE) for the Participant’s ACE contributions for the month.



     4.2. Bonus Credits - A Participating Agency in its discretion (with the approval of the Agent
Plan Administrative Committee) may request the Administrator from time to time to post Bonus
Credits to all, or to a group constituting of less than all, Participants’ MAC Accounts. Unless
otherwise directed by the Administrator and approved by the Agent Plan Administrative Committee in
any Plan Year and communicated to Participants, Bonus Credits forfeited under Article V do not
become a part of the Forfeiture Credit Pool.



     4.3. Founder’s Credits – Each MAC Participant shall have one Founder’s Credit posted to his or
her MAC Account for each Matching Credit that is so posted during the twelve (12) months following
the Effective Time. Founder’s Credits shall be subject to the same terms and conditions as
Matching Credits, provided, however, that Founder’s Credits forfeited under Article V shall not
become a part of the Forfeiture Credit Pool.



     4.4. Allocation of Forfeiture Credits –



     (a) Subject to the special allocation provisions of subparagraph (d) hereof, on June 30 of
each Plan Year, the Administrator will determine and post a Forfeiture Credit to each active
Participant’s MAC Account from the Forfeiture Credit Pool. Each Participant’s Forfeiture Credit
shall be determined, to the nearest whole Equivalent Share, by multiplying the Forfeiture Credit
Pool by a fraction, (i) the numerator of which is the total Matching Credits which were posted to
the Participant’s MAC Account for the period beginning July 1 of the previous Plan Year and ending
June 30 of the current Plan Year (the “Calculation Period”) , and (ii) the denominator of which is
the aggregate of the Matching Credits posted to all active Participants’ MAC Accounts for the
Calculation Period; provided, however, that, for purposes of calculating the numerator and the
denominator of such fraction, the total number of Matching Credits credited to any Participant’s
MAC Account during such Calculation Period shall be deemed not to exceed the amount of $15,000
divided by the Fair Market Value of Shares as of the Valuation Date



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immediately preceding such June 30. For purposes of this Section 4.4, an active Participant
is a Participant who is under Contract with a Participating Agency at June 30 of the current Plan
Year.



     (b) If and to the extent that (i) the Administrator posts Bonus Credits pursuant to Section
4.2 to MAC Accounts of a group of Participants constituting less than all Participants’ MAC
Accounts (such group of Participants herein referred to as the “Participant Sub-Group”), (ii) the
Participating Agency determines in its discretion (with the approval of the Agent Plan
Administrative Committee) that, if forfeited, such Bonus Credits shall become a part of the
Forfeiture Credit Pool, and Participants in the Participant Sub-Group are so notified at the time
such Bonus Credits (“Designated Bonus Credits”) are initially granted, then in such event a
Participating Agency may direct the Administrator to post the forfeited Designated Bonus Credits to
the MAC Accounts of the active Participants in the Participant Sub-Group. A Participant in the
Participant Sub-Group who has received the Designated Bonus Credits and is active as of June 30 of
the then current year will receive a portion of the forfeited Designated Bonus Credits for the
period of July 1 of the prior year to June 30 of the current year determined, to the nearest whole
Equivalent Share, by multiplying the number of forfeited Designated Bonus Credits by a fraction,
(i) the numerator of which is the number of total Designated Bonus Credits which were posted to the
Participant’s MAC Account for the period beginning July 1 of the previous Plan Year and ending June
30 of the current Plan Year (the “Calculation Period”) and (ii) the denominator of which is the
aggregate of the Designated Bonus Credits posted to all active Participants’ MAC Accounts for the
Calculation Period; provided, however, that, for purposes of calculating the numerator and the
denominator of such fraction, the total number of Designated Bonus Credits credited to any
Participant’s MAC Account during such Calculation Period shall be deemed not to exceed the amount
of $15,000 divided by the Fair Market Value of Shares as of the Valuation Date immediately
preceding such June 30.



     (c) If and to the extent that (i) the Administrator posts Dividend Credits pursuant to Section
4.5 and (ii) the Participating Agency determines in its discretion (with the approval of the Agent
Plan Administrative Committee) that such Dividend Credits, if forfeited, shall become a part of the
Forfeiture Credit Pool and Participants who initially received such Dividend Credits are so
notified at the time such Dividend Credits are granted, then in such event a Participating Agency
may direct the Administrator to post the forfeited Dividend Credits to the MAC Accounts of the
active Participants who initially received such Dividend Credits. A Participant who has received
the Dividend Credits while a Participant in MAC and is active as of June 30 of the then current
year will receive a portion of the forfeited Dividend Credits for the period of July 1 of the prior
year to June 30 of the current year determined, to the nearest whole Equivalent Share, by
multiplying the number of forfeited Dividend Credits by a fraction, (i) the numerator of which is
the total Dividend Credits which were posted to the Participant’s MAC Account for the period
beginning July 1 of the previous Plan Year and ending June 30 of the current Plan Year (the
“Calculation Period”), and (ii) the denominator of which is the aggregate of Dividend Credits
posted to all active Participants’ MAC Accounts for the same period; provided, however, that, for
purposes of calculating the numerator and the denominator of such fraction, the total number of
Dividend Credits credited to any Participant’s MAC Account during such Calculation Period shall be
deemed not to exceed the amount of $15,000 divided by the Fair Market Value of Shares as of the
Valuation Date immediately preceding such June 30.



     (d) The following special allocation provisions shall be applicable notwithstanding the
foregoing provisions of subparagraph (a):




	 	1.	 	On the December 31 of the Calendar Year in which a Participant shall have
completed ten (10) Years of Participation in MAC, the Administrator shall calculate the
number of Forfeiture Credits to which such Participant would be entitled if the
allocation of the Forfeiture Credit Pool had been made on such December 31 rather than
on the succeeding June 30 as otherwise provided in subparagraph (a) (such number of




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	 	 	 	Forfeiture Credits herein referred to as the “10-Year Frozen Credit Amount”), and,
on the June 30 subsequent to such December 31, in lieu of allocation in accordance
with subparagraph (a) hereof and if and so long as such Participant is then active
as of such June 30, the Administrator shall post to such Participant’s MAC Account a
number of Forfeiture Credits equal to the 10-Year Frozen Credit Amount.
	 
	 	2.	 	On the December 31 of the Calendar Year in which a Participant shall have
completed fifteen (15) Years of Participation in MAC, the Administrator shall calculate
the number of Forfeiture Credits to which such Participant would be entitled if the
allocation of the Forfeiture Credit Pool had been made on such December 31 rather than
on the succeeding June 30 as otherwise provided in subparagraph (a) (such number of
Forfeiture Credits herein referred to as the “15-Year Frozen Credit Amount”), and on
the June 30 subsequent to such December 31, in lieu of allocation in accordance with
subparagraph (a) hereof and if and so long as such Participant is then active as of
such June 30, the Administrator shall post to such Participant’s MAC Account a number
of Forfeiture Credits equal to the 15-Year Frozen Credit Amount.
	 
	 	3.	 	On the December 31 of the Calendar Year in which a Participant shall have
completed sixteen (16) Years of Participation in MAC, and on each December 31
thereafter, the Administrator shall calculate the number of Forfeiture Credits to which
such Participant would be entitled if the allocation of the Forfeiture Credit Pool had
been made on such December 31 rather than on the succeeding June 30 as otherwise
provided in subparagraph (a) (such number of Forfeiture Credits herein referred to as
the “16-Year Frozen Credit Amount”), and on the June 30 subsequent to each such
December 31 the Administrator, in lieu of allocation in accordance with subparagraph
(a) hereof and if and so long as such Participant is then active as of such June 30,
shall post to such Participant’s MAC Account a number of Forfeiture Credits equal to
the 16-Year Frozen Credit Amount.





     4.5. Dividends; Dividend Credits - A book credit equal to amount of cash dividends, if any,
with respect to a Share, multiplied by the number of MAC Credits in a Participant’s MAC Account,
shall be credited to such Participant’s MAC Account not later than and the 15th day of
the third month after the close of the Plan Year in which such dividends are received by the
Administrator. Such book credit shall be in the form of Equivalent Shares to the nearest whole
Share that could be purchased with such payment at Fair Market Value per Share determined as of the
immediately preceding Valuation Date or Special Dividend Valuation Date, as applicable.



     4.6. Shares Subject to MAC - The Shares with respect to which awards may be made under MAC
shall be Shares currently authorized but unissued, Shares currently held and/or Shares subsequently
acquired by HealthMarkets or any subsidiary of HealthMarkets, as treasury shares (including Shares
purchased on the open market or in private transactions). Subject to the provisions of this
Section 4.6, the number of Shares which may be delivered under MAC shall not exceed 3,000,000
Shares in the aggregate. HealthMarkets will at all times reserve and keep available a sufficient
number of Shares to satisfy the requirements of MAC. In the event that Equivalent Shares are
forfeited pursuant to the provisions of MAC, such Equivalent Shares shall again be available for
awards under MAC.






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ARTICLE V.




VESTING AND PAYMENT TO ACE




     5.1. Vesting - Subject to Section 5.2, 5.3, 5.4 and 5.5, a portion of a Participant’s
previously
unvested MAC Account balance shall vest on each January 1 based on the Participant’s
consecutive Years of Participation on that date in accordance with the following schedule. For
purposes of determining the vested percentage of a Participant’s MAC Account balance, Years of
Participation prior to any Period of Ineligibility will not be counted. Except as set forth in
Section 5.4, a Participant’s Contract with a Participating Agency must be in effect on December 31
of the prior Plan Year in order to proceed on the vesting schedule on any January 1.




	 	 	 
	 	 	VESTED PERCENTAGE OF PREVIOUSLY
	 	 	UNVESTED
	COMPLETE YEARS OF	 	MAC CREDITS
	PARTICIPATION	 	ON JANUARY 1
	Less than 1
	 	0%
	1 but less than 5
	 	15%
	5 but less than 8
	 	20%
	8 but less than 9
	 	25%
	9 but less than 10
	 	50%
	10
	 	100%






     5.2. Alternate Vesting Schedule for Certain Participants - If a Participant has completed ten
(10) consecutive years of vesting under MAC and has not had a complete withdrawal under ACE and has
not incurred a Period of Ineligibility under ACE, then his or her MAC Account balance under MAC
shall vest on each January 1 based on the Participant’s consecutive Years of Participation on that
date in accordance with the following schedule. Except as set forth in Section 5.4, a
Participant’s Contract with a Participating Agency must be in effect on December 31 of the prior
Plan Year in order to proceed on the vesting schedule on any January 1.



	 	 	 
	 	 	VESTED PERCENTAGE OF PREVIOUSLY
	 	 	UNVESTED
	COMPLETE YEARS OF	 	MAC CREDITS
	PARTICIPATION	 	ON JANUARY 1
	Less than 1	 	0%
	
1 but less than 2
	 	20.00%

	2 but less than 3
	 	33.33%

	3 but less than 4	 	
45.46%

	
4 but less than 5

	 	
63.64%

	
5 or more

	 	

100.00%






     5.3. Alternate Vesting Schedule for Certain Participants Who Have completed the Alternate
Vesting Schedule in 5.2 – If a Participant has completed ten (10) consecutive years of vesting
under MAC and five (5) additional years of vesting as outlined in Section 5.2 under MAC and has not
had a complete withdrawal under ACE, and has not incurred a Period of Ineligibility under ACE, then
his or her MAC Account balance under MAC shall vest one hundred percent (100%) each January 1.
Except as set forth in Section 5.4, a Participant’s Contract with a Participating Agency must be in
effect on December 31 of the prior Plan Year in order to proceed on the vesting schedule on any
January 1.



     5.4. Vesting on Termination due to Death or Disability - If a Participant experiences a
Termination Date due to death or Disability, the Participant’s MAC Credits that have not vested as
of such Termination Date will become one hundred percent (100%) vested.



11









 





     5.5. Discretionary Vesting Acceleration - Notwithstanding the foregoing, the Sponsoring
Company reserves the right in its discretion (with the approval of the Agent Plan Administrative
Committee) to modify and/or accelerate the vesting schedule hereinabove set forth as to any
individual Participant in MAC.



     5.6. Forfeitures - Subject to Section 5.4 and 5.5, if a Participant’s contractual relationship
with all Participating Agencies is terminated with or without cause during the current Plan Year or
if a Participant experiences a complete withdrawal from ACE under Section 8.3(a) of ACE, then the
nonvested portion of his or her MAC Account shall be forfeited as of his or her Termination Date.
Forfeited Matching Credits and/or certain Bonus Credits and/or Dividend Credits shall be
accumulated into a Forfeiture Credit Pool to be allocated and posted pursuant to Section 4.4.



     5.7. MAC Payment - As soon as administratively practicable after January 1 of each Plan Year,
the Sponsoring Company will make an MAC Payment to the ACE Account of each of its active Agents
participating in MAC in an amount equal to the newly vested MAC Credits under his or her MAC
Account (to the nearest whole Equivalent Share). The MAC Payment shall be made in the form of
Shares or cash equal to the amount necessary to purchase a number of Shares equal to the
Participant’s then vested MAC Credits. Shares acquired for purposes of the MAC Payment may be
newly issued Shares, Shares acquired by open market purchase and/or Shares purchased from ACE
Participants, as determined by the Administrator in its sole discretion. At the time the MAC
Payment is made to the Participant’s ACE Account, the number of such vested MAC Credits will be
deducted from the Participant’s MAC Account. For purposes of this Section 5.7, an active Agent
participating in MAC is a Participant under contract with a Participating Agency on December 31 of
the prior Plan Year.



     5.8. Reduction of MAC Payment - In the event the Sponsoring Company, the Administrator or a
Participating Agency shall be held liable under the federal securities laws, the securities laws of
any state or otherwise to any Participant for any loss incurred by such Participant’s ACE Account,
then the MAC Payment and any prior MAC Payment shall be reduced on a dollar-for-dollar basis by the
amount the Administrator on behalf of the Sponsoring Company credits the Participant’s ACE Account
in respect to such liability.



     5.9. Value of Vested MAC Credits –



     (a) The value of vested MAC Credits shall be determined as of the January 1 on which such MAC
Credits vest by multiplying the number of MAC Credits then vesting times the Fair Market Value per
Share as determined as of the immediately preceding Valuation Date.



     (b) The value of MAC Credits vesting upon the death of a Participant shall be determined by
multiplying the number of such MAC Credits then vesting by the Fair Market Value per Share as
determined as of the Valuation Date immediately preceding the date of death.



     (c) The value of MAC Credits vesting upon the Disability of a Participant shall be determined
by multiplying the number of such MAC Credits then vesting by the Fair Market Value per Share as
determined as of the Valuation Date immediately preceding the date the Plan Administrator receives
notification of Disability.








12









 





ARTICLE VI.



AMENDMENT AND TERMINATION OF PLAN




     6.1. Amendment



     (a) Subject to Section 5.8, the Sponsoring Company through the Administrator reserves the
right to amend MAC at any time for any reason, provided, however, that (a) no such amendment may
(i) reduce a Participant’s MAC Payment to an amount less than the amount the Participant would be
entitled to receive if he or she experienced a Termination Date with a Participating Agency on the
day immediately preceding the effective date of the Amendment and (b) any proposed amendment to the
Plan will be subject to approval of the shareholders of HealthMarkets if such amendment would have
the effect of (i) materially increasing the benefits accruing to participants under the Plan, (ii)
materially increasing the aggregate number of securities that may be issued under the Plan or (iii)
materially modifying the requirements as to eligibility for participation in the Plan.



     (b) Any Participating Agency may, with approval of the Sponsoring Company, revise any part of
its MAC Credit Addendum, including the stated Matching Percentage, by filing an amended MAC Credit
Addendum with the Administrator. Amendments will become effective forty-five (45) days after
notice of such amendment is distributed to Participants in accordance with procedures established
by the Administrator, in its sole discretion, from time to time.



     6.2. Termination - While HealthMarkets expects and intends to continue MAC, it reserves the
right to terminate MAC at any time. MAC will terminate as to all Participants on the first to occur
of the following:




	 	(a)	 	the date MAC is terminated by HealthMarkets;
	 
	 	(b)	 	the date that HealthMarkets is judicially declared bankrupt or insolvent; or
	 
	 	(c)	 	the date of the dissolution, merger, consolidation, or reorganization of
HealthMarkets, or the sale of all or substantially all of HealthMarkets’ assets, except
that arrangements may be made whereby MAC will be continued by any successor to
HealthMarkets or any purchaser of substantially all of HealthMarkets’ assets, in which
case the successor or purchaser will be substituted for HealthMarkets under MAC.





     6.3. Withdrawal of Participating Agency - A Participating Agency may withdraw its
participation in MAC, or the Sponsoring Company through the Administrator may terminate any
Participating Agency’s participation in MAC, in each case by submitting written notification of
such event to the other party at least thirty (30) days prior to the effective date of such
withdrawal or termination of participation. In the event a Participating Agency notifies the
Administrator that it ceases to adopt MAC, or the Sponsoring Company through the Administrator
withdraws its consent to the adoption of MAC by a Participating Agency, MAC shall terminate as to
all Participants who are members of or contracted with such Participating Agency, as of the
effective date of either such notice.



     6.4. MAC Payments on Termination - On termination of MAC in accordance with Sections 6.2 or
6.3, vesting of MAC Credits will be at the sole discretion of the Sponsoring Company. Each
Participant’s final MAC Payment, if any, will be made as soon as administratively practicable
following the date of such termination in accordance with Section 5.7. Subject to Section 5.8, no
termination may retroactively reduce MAC Credits previously transferred to a Participant’s ACE
Account.



     6.5. Notice of Amendment - The Administrator will notify affected Participants of any material
amendment or termination of MAC.



     6.6. Rights of Participants - Subject in all respects to the right of the Sponsoring Company
as provided in Section 6.1 hereof to amend MAC at any time and the right of the Sponsoring Company
to terminate MAC as provided in Section 6.2 hereof at any time, it is agreed and hereby
acknowledged that



13









 







the obligations, if any, to maintain and fund MAC shall be and remain solely the obligations
of HealthMarkets in its capacity as Sponsoring Company and not the obligations of any of
HealthMarkets’ subsidiaries, and no Participant hereunder shall have recourse to or other rights
against any of HealthMarkets’ subsidiaries in connection with the funding or administration of MAC.
Notwithstanding the foregoing, the Sponsoring Company reserves the right to fund and/or administer
MAC through one or more of its subsidiaries.



     6.7. Prior Plan Agreements Superseded. The terms of MAC as herein set forth shall supersede
in all respects and be in complete substitution for all other prior agreements and understandings
with respect to the subject matter hereof, including without limitation the terms of MAC I and MAC
II.



     6.8. Certificate of Incorporation – For the purposes of clarity, each Share transferred to a
Participant’s ACE Account under MAC shall be subject to the provisions of the Certificate of
Incorporation, including any transfer, forced sale, redemption and other restrictions set forth
therein.



14









 





HealthMarkets

Matching Agency Contribution Plan

MAC

MAC Credit Addendum




	 	 	 
	Participating Agency:

	 	Cornerstone America,
	 

	 	a division of Mid-West National
Life Insurance Company of Tennessee
	 

	 	Central Park Office Tower
	 

	 	2350 Airport Freeway
	 

	 	Suite 100
	 

	 	Bedford, Texas 76022
	 
	 	 
	 

	 	Success Driven Awards, Inc.
	 

	 	c/o HealthMarkets, Inc.
	 

	 	9151 Boulevard 26
	 

	 	North Richland Hills, Texas 76180







	I.	 	MATCHING PERCENTAGE - Subject to the following provisions and Article IV of the MAC plan
document, the Matching Percentage is established at 100%.






	II.	 	QUALIFYING PRODUCTION REQUIREMENT - Subject to the following provisions and Article IV of the
MAC plan document, each Participant will be eligible for a Matching Credit




15









 












each month if he or she attains the following production requirements stated in terms of
qualified production credits (“QPCs”) of insurance policies and/or ancillary products
submitted during the immediately preceding three (3) month period:



	 	 	 	 	 
	 	 	Personal QPCs	 	Team QPCs
	Writing Agents

	 	40,000 QPCs
	 	N/A
	District Sales Leader

	 	40,000 QPCs
	 	160,000 QPCs
	Divisional Sales Leader

	 	40,000 QPCs
	 	360,000 QPCs
	Regional Sales Leader

	 	40,000 QPCs
	 	2,500,000 QPCs






     This Addendum is effective as of April 5, 2006.



	 	 	 	 	 	 	 
	 	 	HealthMarkets, Inc.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Its:
	 	 

	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 	 	Cornerstone America, a division of	 	 
	 	 	Mid-West National Life Insurance Company of	 	 
	 	 	Tennessee	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Its:
	 	 

	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 	 	Success Driven Awards, Inc.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Its:
	 	 

	 	 
	 

	 	 	 	 

	 	 






16









 





HealthMarkets, Inc.

Matching Agency Contribution Plan

(“MAC”)




First Amendment




               This First Amendment (the “First Amendment”) amends that certain HealthMarkets, Inc. Matching
Agency Contribution Plan as amended and restated effective April 5, 2006 (“MAC”) as and solely to
the extent expressly set forth herein. Except as otherwise expressly stated in this First
Amendment, all capitalized terms used herein shall have the meanings assigned to those terms under
MAC.



               1. Pursuant to Section 6.1(a) of MAC, HealthMarkets, Inc. (the “Company”) hereby amends
Section 1.16 of MAC by deleting Section 1.16 in its entirety and inserting in lieu thereof and in
substitution therefor the following:




“Fair Market Value” of a Share shall be determined as of each Valuation Date or Special Dividend
Valuation Date, as applicable, by the Board in good faith. In determining “Fair Market Value,”
the Board will consider (among other factors it deems appropriate) the valuation prepared by The
Blackstone Group (“Blackstone”) in the ordinary course of business for reporting to its advisory
board and investors. Within not more than ten (10) business days following each Valuation Date
or Special Dividend Valuation Date, as applicable, within not more than eighty-five (85)
business days following the Valuation Date coinciding with December 31, 2006, and within not
more than forty (40) business days following the Valuation Date coinciding with December 31 of
each Plan Year thereafter, Blackstone will deliver to the Board its current valuation, and
within not more than five (5) business days thereafter the Board shall deliver to the Sponsoring
Company, the Administrator and each Participating Agency its determination of Fair Market Value
of a Share as of the immediately preceding Valuation Date or Special Dividend Valuation Date, as
applicable. References throughout this plan document to the “current” or “then” Fair Market
Value or the Fair Market Value “as of” a particular date shall be deemed to mean, in each case,
the Fair Market Value of a Share as of the immediately preceding Valuation Date or Special
Dividend Valuation Date, as applicable. Notwithstanding the foregoing, if there is a regular
public trading market for such Shares, “Fair Market Value” shall mean, as of any given date, the
mean between the highest and lowest reported sales prices of a Share during normal business
hours on the New York Stock Exchange Composite Tape or, if not listed on such exchange, on any
other national securities exchange on which the Shares are listed or on NASDAQ.



               2. The terms of MAC, as amended and supplemented hereby, are confirmed in all respects
and remain in full force and effect.



               3. This First Amendment is effective as of March 14, 2007.



	 	 	 	 	 	 	 
	 	 	HealthMarkets, Inc.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 
	 

	 	Name:
	 	 

Peggy G. Simpson
	 	 
	 
	 

	 	Its:
	 	Corporate Secretary	 	 






17









 





HealthMarkets, Inc.

Matching Agency Contribution Plan

(“MAC”)




Second Amendment




               This Second Amendment (this “Second Amendment”) amends that certain HealthMarkets, Inc.
Matching Agency Contribution Plan as amended and restated effective April 5, 2006, as further
amended by that certain First Amendment to the HealthMarkets, Inc. Matching Agency Contribution
Plan effective March 14, 2007 (as amended, “MAC”) as and solely to the extent expressly set forth
herein. Except as otherwise expressly stated in this Second Amendment, all capitalized terms used
herein shall have the meanings assigned to those terms under MAC.



               4. Pursuant to Section 6.1 of MAC, HealthMarkets, Inc. (the “Company”) hereby amends Section
4.5 of MAC by deleting Section 4.5 in its entirety and inserting in lieu thereof and in
substitution therefor the following:




“Dividends; Dividend Credits - A book credit equal to amount of cash dividends, if any, with
respect to a Share, multiplied by the number of MAC Credits in a Participant’s MAC Account,
shall be credited to such Participant’s MAC Account promptly after such dividends are received
by the Administrator. Such book credit shall be in the form of Equivalent Shares to the nearest
whole Share that could be purchased with such payment at Fair Market Value per Share determined
as of the immediately preceding Valuation Date or Special Dividend Valuation Date, as
applicable.”



               5. The terms of MAC, as amended and supplemented hereby, are confirmed in all respects
and remain in full force and effect.



               6. This Second Amendment is effective as of May 3, 2007.



	 	 	 	 	 	 	 
	 	 	HealthMarkets, Inc.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 
	 

	 	Name:
	 	 

Peggy G. Simpson
	 	 
	 
	 

	 	Its:
	 	Corporate Secretary	 	 







18












 





HealthMarkets, Inc.

Matching Agency Contribution Plan

(“MAC”)




Third Amendment




     This Third Amendment (the “Third Amendment”) amends that certain HealthMarkets, Inc. Matching
Agency Contribution Plan as amended and restated effective April 5, 2006, as further amended by
that certain First Amendment to the HealthMarkets, Inc. Matching Agency Contribution Plan effective
as of March 14, 2007 and that certain Second Amendment to the HealthMarkets, Inc. Matching Agency
Contribution Plan effective as of May 3, 2007 (as amended, “MAC”) as and solely to the extent
expressly set forth herein. Except as otherwise expressly stated in this Third Amendment, all
capitalized terms used herein but not defined shall have the meanings assigned to those terms under
MAC.



     1. Pursuant to Section 6.1 of MAC, HealthMarkets, Inc. hereby amends MAC by deleting Section
1.16 in its entirety and inserting in lieu thereof and in substitution therefor the following:




“Fair Market Value” of a Share shall be determined as of each Valuation Date or Special
Dividend Valuation Date, as applicable, by the Board in good faith. In determining “Fair
Market Value,” the Board will consider (among other factors it deems appropriate) the
valuation prepared by The Blackstone Group (“Blackstone”) in the ordinary course of
business for reporting to its advisory board and investors. Following each Valuation Date
or Special Dividend Valuation Date, as applicable, Blackstone will deliver to the Board its
current valuation by no later than the earlier of: (1) any public announcement of the
Company’s financial results for the most recent fiscal period, or (2) the day that the
Company files with the United States Securities and Exchange Commission (the “SEC”) its
next Quarterly Report on Form 10-Q or, in the case of a Valuation Date coinciding with
December 31 of each Plan Year, by no later than the date that the Company files with the
SEC its next Annual Report on Form 10-K, and promptly thereafter the Board shall deliver to
the Sponsoring Company, the Administrator and each Participating Agency its determination
of Fair Market Value of a Share as of the immediately preceding Valuation Date or Special
Dividend Valuation Date, as applicable. References throughout this plan document to the
“current” or “then” Fair Market Value or the Fair Market Value “as of” a particular date
shall be deemed to mean, in each case, the Fair Market Value of a Share as of the
immediately preceding Valuation Date or Special Dividend Valuation Date, as applicable.
Notwithstanding the foregoing, if there is a regular public trading market for such Shares,
“Fair Market Value” shall mean, as of any given date, the mean between the highest and
lowest reported sales prices of a Share during normal business hours on the New York Stock
Exchange Composite Tape or, if not listed on such exchange, on any other national
securities exchange on which the Shares are listed or on NASDAQ.



     2. The terms of MAC, as amended and supplemented hereby, are confirmed in all
respects and remain in full force and effect.



     3. This Third Amendment is effective as of August 15, 2008.



	 	 	 	 	 
	 	HealthMarkets, Inc.

 	 
	 	By:  	 	 
	 	  	Name: 	Peggy G. Simpson
	 	  	Its: 	Corporate Secretary



19









 






HealthMarkets, Inc.

Matching Agency Contribution Plan

(“MAC”)




Fourth Amendment





     This Fourth Amendment (the “Fourth Amendment”) amends that certain HealthMarkets, Inc.
Matching Agency Contribution Plan as amended and restated effective April 5, 2006, as further
amended by that certain First Amendment to the HealthMarkets, Inc. Matching Agency Contribution
Plan effective March 14, 2007, that certain Second Amendment to the HealthMarkets, Inc. Matching
Agency Contribution Plan effective May 3, 2007 and that certain Third Amendment to the
HealthMarkets, Inc. Matching Agency Contribution Plan effective August 15, 2008 (as amended,
“MAC”), as and solely to the extent expressly set forth herein. Except as otherwise expressly
stated in this Fourth Amendment, all capitalized terms used herein shall have the meanings assigned
to those terms under MAC.



     1. Pursuant to Section 6.1 of MAC, effective as of December 31, 2008 HealthMarkets, Inc. (the
“Company”) hereby amends MAC by deleting Section 1.11 in its entirety and inserting in lieu thereof
and in substitution therefore the following:




     “Disability” means (i) for a Participant who has not attained full Social
Security retirement age, the physical or mental disability of such Participant
that constitutes a total disability as determined by the Social Security
Administration and (ii) for a Participant who has attained full Social Security
retirement age, the physical or mental disability of such Participant that
constitutes a total disability as determined by the Plan Administrator.



     2. Pursuant to Section 6.1 of MAC, effective as of September 1, 2008 the Company hereby amends
MAC by deleting Section 1.27 in its entirety and inserting in lieu thereof and in substitution
therefore the following:




     “Matching Percentage” means the percentage designated from time to time by
each Participating Agency on a MAC Credit Addendum for purposes of determining the
Matching Credits to be posted pursuant to Section 4.1 to a Participant’s MAC
Account by the Administrator on behalf of the Sponsoring Company; provided,
however, that the Matching Percentage is established initially at one hundred
percent (100%). Notwithstanding the foregoing, subject to the last sentence of
this Section 1.27, the Matching Percentage shall be increased and shall be equal
to two hundred percent (200%) with respect to such eligible Agent’s Matching
Credits posted during the period beginning on September 1, 2008 and ending on
December 31, 2010 (the “New Horizon Period”) for any Participant so long as: (i)
the Participant has completed in a timely manner any New Horizon enrollment
form(s) required by the Administrator and (ii) the Participant does not request
during the New Horizon Period a partial withdrawal under Section 8.2 of ACE (other
than a partial withdrawal under Section 8.2(a)(3) of ACE), a complete withdrawal
under Section 8.3 of ACE (other than a complete withdrawal under Section 8.3(b) of
ACE as a result of death or Disability) or a special ACE distribution and
withdrawal under Section 8.5 of ACE (other than a special ACE distribution and
withdrawal under Section 8.5(a) of ACE as of the Initial Dream Team I Withdrawal
Date, but not in any period succeeding the Initial Dream Team I
Withdrawal Date). The additional one hundred percent (100%) added to the
Matching Percentage during the New Horizon Period, together with the additional
$1,000 added to the maximum monthly Matching Credit during the New Horizon Period
as described in the first sentence of Section 4.1, shall be referred to herein as
the “New Horizon Enhancement.” The New



20









 







Horizon Enhancement shall apply only
during the period of the Participant’s enrollment in New Horizon and shall apply
solely to first year commissions and/or compensation and not to renewal
commissions and/or compensation.



     3. Pursuant to Section 6.1 of MAC, effective as of September 1, 2008 the Company hereby amends
MAC by deleting Section 4.1 in its entirety and inserting in lieu thereof and in substitution
therefore the following:




     Matching Credit — For any given month, a Participant must meet the production
requirement set forth on the applicable MAC Credit Addendum and make an ACE
contribution to be eligible for the Matching Credit; provided, however, that in no
event shall the value of a monthly Matching Credit exceed $2,000 in any given
month; provided, further, that during the New Horizon Period in no event shall the
value of a monthly Matching Credit exceed $3,000 in any given month so long as:
(i) the Participant has completed in a timely manner any New Horizon enrollment
form(s) required by the Administrator and (ii) the Participant does not request
during the New Horizon Period a partial withdrawal under Section 8.2 of ACE (other
than a partial withdrawal under Section 8.2(a)(3) of ACE), a complete withdrawal
under Section 8.3 of ACE (other than a complete withdrawal under Section 8.3(b) of
ACE as a result of death or Disability) or a special ACE distribution and
withdrawal under Section 8.5 of ACE (other than a special ACE distribution and
withdrawal under Section 8.5(a) of ACE as of the Initial Dream Team I Withdrawal
Date, but not in any period succeeding the Initial Dream Team I Withdrawal Date).
Each month the Administrator will post on behalf of a Participating Agency a
Matching Credit to the MAC Account of each Participant eligible for such Matching
Credit. Except as provided in the applicable MAC Credit Addendum, the Matching
Credit posted to each Participant’s MAC Account, if any, shall equal the number of
Shares purchased under ACE for that month with the Participant’s ACE contribution,
excluding any Enhancement Amounts (as that term is defined in ACE), multiplied by
the Matching Percentage. The posting date of the Matching Credit will be the same
day as the Participant’s Credit Date (as that term is defined in ACE) for the
Participant’s ACE contributions for the month.



     4. Pursuant to Section 6.1 of MAC, effective as of December 31, 2008 the Company hereby amends
MAC by deleting Section 5.4 in its entirety and inserting in lieu thereof and in substitution
therefore the following:




     Vesting and Payment on Termination Due to Death or Disability — If a Participant
experiences a Termination Date due to death or Disability, the Participant’s MAC Credits
that have not vested as of such Termination Date will become one hundred percent (100%)
vested and the Sponsoring Company will make a MAC Payment to the Participant’s ACE Account
with respect to such vested MAC Credits as soon as administratively practicable after such
Termination Date.



     5. Pursuant to Section 6.1 of MAC, effective as of September 1, 2008 the Company
hereby amends MAC by adding the following as a new Section 5.10:




     Vesting of New Horizon Enhancement — Notwithstanding any other provision of
Article V, any portion of a Participant’s MAC Account balance that is a New
Horizon Enhancement shall remain unvested until January 1, 2011, on which date
such portion of the Participant’s MAC Account shall become vested otherwise in
accordance with the terms of Article V, with the Participant receiving credit for
any vesting that otherwise



21









 







would have occurred during the New Horizon Period.
Notwithstanding any other provision of Article V, any portion of a Participant’s
MAC Account balance that is a New Horizon Enhancement that is forfeited shall not
become part of the Forfeiture Credit Pool.



     6. Pursuant to Section 6.1 of MAC, effective as of December 31, 2008 the Company hereby amends
MAC by adding the following as a new Section 6.9:




     Section 409A of the Code. To the extent applicable, it is intended that the
compensation arrangements under MAC be in full compliance with Section 409A of the Internal
Revenue Code of 1986, as amended, and the regulations and any other formal guidance
promulgated with respect to such Section by the U.S. Department of the Treasury or the
Internal Revenue Service (collectively, “Section 409A”). The MAC will be construed, to the
maximum extent permitted, in a manner to give effect to such intention. To the extent that
any provision of MAC would result in a Participant being subject to payment of the
additional tax, interest and penalty under Section 409A, the Sponsoring Company through the
Administrator reserves the right to amend MAC at any time in order to bring MAC into
compliance with Section 409A; and thereafter interpret its provisions in a manner that
complies with Section 409A. In no event whatsoever (including, but not limited to, as a
result of this Section or otherwise) will the Sponsoring Company or any of its affiliates
be liable for any tax, interest or penalties that may be imposed on a Participant under
Section 409A. Neither the Sponsoring Company nor any of its affiliates will have any
obligation to indemnify or otherwise hold a Participant harmless from any or all such
taxes, interest or penalties, or liability for any damages related thereto.



     7. The terms of MAC, as amended and supplemented hereby, are confirmed in all respects and
remain in full force and effect.



	 	 	 	 	 
	 	HealthMarkets, Inc.

 	 
	 	By:  	 	 
	 	  	Name: 	Peggy G. Simpson
	 	  	Its: 	Corporate Secretary



22