Document:

exv10w3

Exhibit 10.3

	Form 1   The Nonqualified Plan Participation Agreement Step 1   Participant
Information and Acceptance of the PlanNonqualified Plan Participation Agreement
This Nonqualified Plan Participation Agreement (Agreement) is entered into by and between GM
Offshore, Inc., having its principal place of business at 10111 Richmond Avenue, Suite 340,
Houston, TX 77042 (hereinafter the Employer) and First Name
M.I. Last NameSocial Security Number Date of Birth
(hereinafter the Participant) The Employer has previously adopted Nonqualified Excess
Plan of GM Offshore, Inc. (hereinafter the Plan) primarily for the purpose of providing deferred
compensation benefits for a select group of management or highly compensated participants. The
Participant, in recognition of his/her valuable service to the Employer, has been selected by the
Committee as an eligible participant in the Plan. In consideration of the mutual covenants and
conditions contained herein, and for such good and valuable consideration, the receipt and adequacy
of which is hereby admitted and acknowledged, the parties hereto agree as follows:

 

 

	Step 2  Deferral Election ?I elect to receive Employer Credits but do not
elect to defer any additional compensation. OR Please complete the appropriate boxes
below Percentage from each Paycheck or Payroll No Deferral (check the box) Deferral of Base
Salary: (Minimum 1% / Maximum 50% ) % Deferral of Service Bonus: (Minimum 10% / Maximum 100% )
% Deferral of Performance-Based Compensation: (Minimum 10% / Maximum 100% ) % Deferral of
Director’s Fees: (Minimum 5% / Maximum 100% ) % Participant Name (Please Print)

 

 

	Step 3  Account Set Up Select one of the two options below to set up the account:
If no selection is made, the entire account will be allocated as specified below
? Allocate both OR ? Allocate 100%
Participant Deferrals andof the Employer Credits to the
Employer Credits as specifiedRetirement Account and
below. Please check your plan’sParticipant Deferrals as
vesting requirements beforespecified below.
selecting this option.
Retirement Account% In-Service Account(s)
(Distribution date must be at least 2 years after the account is established) Choose either
lump sum payment or number of years to receive annual payments: (Maximum 5 years) New
Account: % / / to be paid as: ?
Lump sum ? Annual installments for years (Date payout begins)
Existing Account: % / / to be
paid as: ? Lump sum ? Annual installments for years
(Date payout begins) Education Account(s) (Distribution date
must be at least 2 years after the account is established) Choose number of years to receive
annual payments: (Maximum 6 years) % / /
years
(Name of Student) (Date payout begins) % /
/ years
(Name of Student) (Date payout begins) %
/ / years
(Name of Student) (Date payout begins) %
/ / years
(Name of Student)
(Date payout begins) 100% *
* If incomplete, allocation will default to 100% Retirement Account. ** If your
allocation is directed to an In-Service or Education Account scheduled for distribution in a
calendar year in which contributions are made, that portion of your allocation will default to the
Retirement Account.

 

 

	Step 4 – Acknowledgement of Plan Provisions Acknowledgements: The Participant hereby
acknowledges the following: The obligation of the Employer to make payments under the Plan and the
Agreement is a contractual liability of the Employer to the Participant. Such payments shall be
made from the general funds of the Employer, and the Employer shall not be required to establish or
maintain any special or separate fund, or otherwise to segregate assets to make the payment. The
Participant shall not have any interest in any particular assets of the Employer by reason of the
Employer’s obligation under the Plan and this Agreement. To the extent that the Participant or any
other person acquires a right to receive payments under the Plan and this Agreement, such rights
shall be no greater than the right of an unsecured creditor of the Employer. This Agreement shall
continue in effect, unless modified or revoked in writing, until the earlier of the date on which
the Participant terminates his or her services to the Employer or the date on which the Participant
ceases to be an active participant in the Plan. Deferrals and Employer Credits shall be credited
according to the allocation and distribution election in effect at the time the deferral is
credited to the Deferred Compensation Account. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which together shall constitute
one and the same instrument. IN WITNESS WHEREOF, This Agreement has been executed by and
on behalf of the parties hereto as of the date first written below. Signature of Participant
Participant Name (Please Print) Date Committee Approval Signature of Committee
(Individual Authorized to Act on Behalf of Committee) Title of Individual Authorized to Act on
Behalf of Committee            Participant’s Plan Participation Date Participant’s Date of Hire
/ / / /exv10w2

Exhibit 10.2

SUMMARY OF ANNUAL COMPENSATION OF OUTSIDE DIRECTORS

The following table summarizes the annual compensation of our outside directors to be effective on
January 1, 2011. Employee directors are not compensated for service as a director.

	 	 	 

	Cash Retainer

	 	$55,000
	 
	 	 
	Audit Committee Chairperson Retainer

	 	$20,000
	 
	 	 
	Committee Chairperson Retainer (other 

than Audit Committee)

	 	$15,000
	 
	 	 
	Board Meeting Attendance Fee

	 	$2,000
	 
	 	 
	Committee Meeting Attendance Fee

	 	$2,000
	 
	 	 
	Deferred Compensation Plan (1)
	 	 
	 
	 	 
	Travel and Other Expenses

	 	Actual expenses incurred in the
performance of their services as
Directors are reimbursed.
	 
	 	 
	Director education institutes/activities

	 	Reimbursed for costs and expenses.
	 
	 	 
	Accidental Death and Dismemberment
Insurance and Business Travel Insurance

	 	Up to $200,000 accidental death
and dismemberment insurance and
an additional $200,000 in the
event a director is involved in
an accident while traveling on
business relating to our affairs.
	 
	 	 
	Charitable Matching Gift Program

	 	Annual maximum of $10,000 per
director is matched to eligible
educational institutions and
charitable organizations.

 

NOTES TO TABLE

(1) Under the terms of the Harris Corporation 2005 Directors’ Deferred Compensation Plan (As
Amended and Restated Effective January 1, 2009), as amended (the “2005 Directors’ Plan”), on
January 1, April 1, July 1, and October 1 (each such day an “Award Date”) of each year, Harris
credits each non-employee director’s account with a number of Harris stock equivalent units having
a fair market value equal to $29,000 (for an annual rate of $116,000), which amount may be changed
from time to time by the Board. In addition, under the 2005 Directors’ Plan, prior to the
commencement of a calendar year each non-employee director may make an irrevocable election to
defer all or a portion of his or her director compensation for the subsequent year or years.
Amounts deferred at the election of the non-employee director may be invested in investment
alternatives similar to those available under the Harris Corporation 401(k) Retirement Plan or in
Harris stock equivalent units, pursuant to which a non-employee director’s account is credited with
a number of units of Harris stock equivalents based upon the fair market value of Harris common
stock on the date of deferral. Such Harris stock equivalent units are equivalent in value to our
shares of common stock. A non-employee director may not transfer or reallocate amounts invested in
other investments into Harris stock equivalents. Amounts credited in Harris stock equivalents may
be reallocated into any other investment alternatives, provided director minimum stock ownership
guidelines are satisfied. Deferred amounts and investment earnings on such amounts are payable in
cash following the non-employee director’s resignation, retirement, or death. Each Harris stock
equivalent unit is credited with dividend equivalents, which are deemed reinvested in additional
Harris stock equivalent units on the dividend payment date.

 

 

Amounts invested in Harris stock equivalents shall be appropriately adjusted in the event of any
stock dividend or split, recapitalization, merger, spin-off, extraordinary dividends, or other
similar events.

A non-employee director may elect to receive amounts deferred under the 2005 Directors’ Plan,
including amounts deferred in the form of Harris stock equivalent units, either in a cash lump sum
on a date certain within five years of his or her resignation or retirement or in annual
substantially equal cash installments over a designated number of years beginning on a date certain
within five years of a director’s resignation or retirement, provided that all amounts are fully
paid within ten years of resignation or retirement.

Within ninety (90) days of a Change of Control (as defined in the 2005 Directors’ Plan), and to the
extent permitted by Section 409A of the Internal Revenue Code, each non-employee director (or
former non-employee director) will receive a lump sum cash payment equal to the then remaining
balance in his or her account.

The foregoing summary description of the 2005 Directors’ Plan is not complete and is qualified in
its entirety by, and should be read in conjunction with, the complete text of the 2005 Directors’
Deferred Compensation Plan.Exhibit 10.1

Exhibit 10.1

EXECUTION COPY

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered into as of October 26, 2010,
by and between HealthMarkets, Inc., a Delaware corporation (together with its successors and
assigns, “HealthMarkets” or the “Company”) and B. Curtis Westen (the “Executive”). Certain
capitalized terms used herein are defined in Section 23.

WHEREAS, the Company and the Executive are party to an Employment Agreement dated as of
September 8, 2009 (the “Prior Agreement”);

WHEREAS, pursuant to the Prior Agreement, the Executive’s employment is for an initial term
commencing on September 8, 2009 and ending on December 31, 2010 (the “Initial Employment Term”);

WHEREAS, following the Initial Employment Term, the Company and the Executive wish to modify
the terms of the Executive’s continued employment; and

WHEREAS, the Company desires to memorialize the terms of the Executive’s continued employment
effective as of January 1, 2011 (the “Effective Date”) under this Agreement;

NOW, THEREFORE, in consideration of the premises and of the mutual covenants herein contained,
it is agreed as follows:

1. Employment. Prior to the Effective Date, the Prior Agreement (including, but not
limited to, the compensation terms set forth in Section 4 of the Prior Agreement) shall continue to
govern the terms of the Executive’s employment with the Company. Effective as of the Effective
Date, the Company hereby agrees to continue to employ the Executive, and the Executive hereby
agrees to continue to be employed by the Company, upon the terms and conditions set forth herein.
The employment relationship between the Company and the Executive shall be governed by the general
employment policies and practices of the Company, including, without limitation, those relating to
the Company’s Code of Professional Conduct, the treatment of confidential information and avoidance
of conflicts; provided, however, that when the terms of this Agreement differ from
or are in conflict with the Company’s general employment policies or practices, the terms of this
Agreement shall control. The Executive shall serve as an officer and/or an employee of any
Subsidiary, as may be requested from time to time by the Reporting Person (as such term is defined
in Section 3(a) below), and without any additional compensation, unless otherwise determined by the
Reporting Person. In addition, the Executive’s service as an officer and/or an employee of any
Subsidiary will be encompassed within any reference made in this Agreement to employment by the
Company.

2. Term. Subject to earlier termination of the Executive’s employment as provided
under Section 8, the Executive’s employment shall be for a term commencing on the Effective Date
and ending on December 31, 2011 (the “Employment Term”).

 

 

 

3. Position and Duties of the Executive.

(a) During the Employment Term, the Executive shall serve as the Executive Vice President and
General Counsel and shall report directly to the Chief Executive Officer of the Company (the
“Reporting Person”). The Executive shall have such duties, responsibilities and authority
commensurate with the Executive’s position and such related duties and responsibilities, as from
time to time may be assigned to the Executive by the Reporting Person, consistent with the
Executive’s position in the Company. During the Employment Term, the Executive shall perform his
duties from his home office in Denver, Colorado; provided that, at the reasonable request
of the Reporting Person, and as reasonably agreed by Executive, the Executive may from time to time
perform his duties at the Company’s offices in the Dallas/Fort Worth, Texas area or at any other
location where business of the Company is being conducted.

(b) During the Employment Term, the Executive shall be required to be available to provide an
average of thirty (30) hours per week of services except as may from time to time be otherwise
agreed by the Reporting Person and Executive and during vacations (as set forth in Section 7
hereof) and authorized leave. During the Employment Term and provided that such activities do not
either (i) contravene this Agreement (including, without limitation, the provisions of Section
3(a), 3(b), 11 or 12 of this Agreement) or (ii) materially interfere with the performance of the
Executive’s duties hereunder, the Executive may (a) engage in charitable activities and community
affairs, (b) serve on the boards of, or advisory committees to, trade associations or charitable
organizations, (c) manage his personal and family investments and affairs, including, without
limitation, personal real estate investing, and (d) serve on boards or advisory committees of
professional associations approved by the Board or as otherwise may be approved by the Board. The
Executive may retain all fees and other compensation from any such service, and the Company shall
not reduce his compensation by the amount of such fees.

4. Compensation.

(a) Base Salary. As of the Effective Date and during the Employment Term, the Company
shall pay to the Executive a base salary of $350,000 per annum (the “Base Salary”). The
Executive’s Base Salary shall be payable in cash at the times and in the manner consistent with the
Company’s general policies regarding compensation of executive employees.

(b) Cash Incentive Compensation.

(i) With respect to the Company’s 2010 fiscal year, the Executive shall be
entitled to receive an annual bonus consistent with the terms of the applicable
annual management incentive program, as amended by the compensation program adopted
by the Company on September 2, 2010, payable no later than March 15, 2011. With
respect to the Company’s 2011 fiscal year, the Executive will participate in the
Company’s annual management incentive program or arrangement approved by the Board
(or any authorized committee thereof) or any successor program or plan thereto or
thereunder on terms and conditions no less favorable to the Executive than those
available to similarly situated executives of the Company, with a target bonus
opportunity of 100% of Base Salary (the “Target Bonus Percentage”) and a maximum
bonus opportunity of 200% percent of Base Salary (the “Annual Bonus Percentage”);
provided, however, that in accordance with the compensation program
adopted by the
Company on September 2, 2010, fifty percent (50%) of the Executive’s annual
bonus compensation for the Company 2011 fiscal year shall be guaranteed at the

 

2

 

Target Bonus Percentage and payable in four equal installments on March 31, 2011,
June 30, 2011, September 30, 2011 and December 31, 2011 (each of such four dates, a
“vesting date,” and the payments “Guaranteed Bonus Payments”). The Board (or any
authorized committee thereof) shall have the authority to establish performance
metrics and such other terms and conditions of the annual management incentive
program pursuant to which such bonuses may be earned, provided that any such
performance targets for a fiscal year shall be no less favorable to the Executive
than the annual performance targets established for such fiscal year for other
senior executives of the Company (other than (i) annual performance targets
established for the Chief Executive Officer of the Company and (ii) any performance
targets established in connection with an executive’s commencement of employment
with, or promotion within, the Company). Such annual bonuses shall be paid to the
Executive 100% in cash no later than the date such bonuses are generally paid to
other senior executives of the Company, but in all events by March 15 of the year
following the fiscal year for which such annual bonus was earned (unless the
Executive has elected to defer receipt of any such bonuses).

(ii) Retention Payment. In addition to the amounts described in
Sections 4(b)(i), the Executive shall be granted the right to receive four quarterly
retention bonuses, each in the amount of $135,000 in cash (the “Retention
Payments”). Such bonuses shall vest on each of (A) March 31, 2011, (B) June 30,
2011, (C) September 30, 2011 and (D) December 31, 2011 (each of such four dates, a
“Vesting Date”), subject in each case, except as otherwise provided in Section 9
hereof, to the Executive’s continued employment through such Vesting Date. The
quarterly Retention Payments shall be paid to the Executive as soon as practicable
after the applicable Vesting Date, but in no event later than the thirtieth
(30th) day following such Vesting Date.

(c) Initial LTIP Award. The Initial LTIP Award (as defined in the Prior Agreement)
shall vest on the earlier of (i) the date of the termination of the Executive’s employment or (ii)
December 31, 2011. The vested Initial LTIP Award shall be delivered to the Executive, 100% in
cash, on the earlier of immediately prior to a Change of Control or on January 26, 2012.

5. Employee Benefits. In addition to the compensation described in Section 4, during
the Employment Term, the Executive shall be eligible to participate in the employee benefit plans,
programs and arrangements, and to receive perquisites, provided from time to time to similarly
situated executives of the Company and its Subsidiaries generally on a basis no less favorable to
the Executive than to other senior executives of the Company or its Subsidiaries (other than the
Chief Executive Officer of the Company) who participate in such plans, programs, arrangements or
benefits (not taking into account, for purposes of the foregoing, any sign on or initial awards
made to other executives or any benefits or perquisites provided to executives in connection with
commencement of their employment with, or promotion within, the Company) generally.

 

3

 

6. Expenses. During the Employment Term, the Company shall pay or reimburse the
Executive for reasonable and necessary expenses incurred by the Executive in connection with the
Executive’s performance of the Executive’s duties on behalf of the Company and its Subsidiaries in
accordance with the expense policy of the Company applicable to similarly situated executives of
the Company and its Subsidiaries generally.

7. Vacation. The Executive shall be entitled to a number of days of vacation per year
in accordance with the Company’s policies, whether written or unwritten, regarding vacation for
similarly situated executives of the Company and its Subsidiaries generally; provided that in all
events he shall be entitled to no less than 4 weeks of vacation per calendar year, pro-rated for
any partial year. Subject to the Company’s policies, the duration of such vacations and the time
or times when they shall be taken will be determined by the Executive in consultation with the
Company; provided, however, that the Executive shall be guaranteed any vacation
time that has been approved by the Reporting Person in advance of the date hereof.

8. Termination.

(a) Termination of Employment by the Company. The Executive’s employment hereunder
may be terminated by the Company or any of its Subsidiaries that employ the Executive for any
reason or no reason (including with or without Cause or notification by the Company at any time
during the Employment Term) by written notice as provided in Section 17.

(b) Voluntary Termination by the Executive. The Executive may voluntarily terminate
the Executive’s employment with or without Good Reason at any time by notice to the Company as
provided in Section 17.

(c) Benefits Period. Subject to any benefit continuation requirements of applicable
laws, in the event the Executive’s employment hereunder is terminated for any reason whatsoever,
the compensation and benefits obligations of the Company under Sections 4 and 5 shall cease as of
the effective date of such termination, except for any compensation and benefits earned but unpaid
through such date.

(d) Resignation from All Positions. Notwithstanding any other provision of this
Agreement to the contrary, upon the termination of the Executive’s employment for any reason,
unless otherwise requested by the Board, the Executive shall immediately resign from all positions
that he holds with the Company, its Subsidiaries and any of their affiliates (and with any other
entities with respect to which the Company has requested the Executive to perform services), as
applicable, including, without limitation, the Board and all boards of directors of any affiliates.
The Executive hereby agrees to execute any and all documentation to effectuate such resignations
upon request by the Company, but he shall be treated for all purposes as having so resigned upon
termination of his employment, regardless of when or whether he executes any such documentation.

 

4

 

9. Termination Payments and Benefits. If, during the Employment Term, the Executive’s
employment hereunder is terminated by the Company without Cause, by reason of the Executive’s death
or Disability, or the Executive terminates his employment for Good Reason, subject to (i) the
Executive’s execution and non-revocation of a release of claims against
the Company within 60 days following the date of the Executive’s termination of employment, in
the form attached hereto as Exhibit A, (ii) the terms of Section 13 and (iii) the Executive’s
continued compliance with the covenants of Sections 11 and 12 (collectively, the “Restrictive
Covenants”) as set forth in Section 9(f), the Company shall pay to the Executive such payments and
make available to the Executive such benefits as are set forth in this Section 9. In addition,
upon any termination of employment, the Executive shall be entitled to the payments and benefits
and entitlements as are described in Section 9(e).

(a) Bonus Entitlement. Solely if the Executive’s termination of employment occurs
after the last day of the first quarter of the Company’s 2011 fiscal year, the Executive will be
entitled to receive an amount equal to the product of (i) the bonus that would have been paid to
the Executive had the Executive remained employed through the date on which bonuses are paid to
senior executives of the Company generally based upon the achievement of the applicable performance
goals (and determined based on the exercise of negative discretion no less favorable to the
Executive than that exercised with respect to active senior executives of the Company generally
and, if the payment is not subject to Section 162(m) as of the date of termination, as if the
Executive had achieved any subjective performance targets at 100%) and (ii) a fraction, the
numerator of which is the number of days which have elapsed from the first day of the fiscal year
in which the date of termination occurs through the date of termination and the denominator of
which is 365 (such amount, if any, the “Pro-Rata Bonus”), which Pro-Rata Bonus shall be paid no
later than March 15, 2012. Any pro-rata “Guaranteed Bonus Payment” representing a pro-rata share
of a quarterly “Guaranteed Bonus Payment” shall be paid within thirty (30) days of the termination
of the Executive’s employment.

(b) Retention Payment. To the extent then unvested, the Executive shall vest in a
pro-rata portion of the unvested quarterly Retention Payment that is scheduled to vest on the next
Vesting Date, and such vested portion shall be paid as soon as practicable after the date of the
termination of employment, but in no event more than thirty (30) days after such date. The
pro-rata payment will be determined by multiplying $135,000 by a fraction, the numerator of which
is the number of days which have elapsed from the first day of the fiscal quarter in which the date
of termination of employment occurs through the date of termination of employment and the
denominator of which is 91. For the avoidance of doubt, all quarterly Retention Payments that are
unvested as of the date of the termination of the Executive’s employment (including the portion
that does not vest in accordance with the prior sentence) shall be forfeited as of such date.

(c) Any payments under this Section 9 to the Executive shall not be taken into account for
purposes of any retirement plan (including any supplemental retirement plan or arrangement) or
other benefit plan sponsored by the Company, except as otherwise expressly required by such plans
or applicable law.

 

5

 

(d) Section 409A of the Code; Specified Employee. Notwithstanding the preceding
provisions of this Section 9, in the event that the Executive is a “specified employee” (within the
meaning of Section 409A of the Code) on the date of termination of Executive’s employment with the
Company and any payment which constitutes a “deferral of compensation” within the meaning of
Section 409A of the Code to be paid within the first six months following such date (the “Initial
Payment Period”) exceeds the amount referenced in Treas. Regs. Section 1.409A-1(b)(9)(iii)(A) (the
“Limit”) and does not otherwise qualify under the short-term deferral
exemption, then (i) any portion of such payment that is payable during the Initial Payment
Period that does not exceed the Limit or can be paid within the short-term deferral exemption shall
be paid at the times set forth in Section 9(a), (ii) any portion of such payment that exceeds the
Limit and cannot be paid within the short-term deferral exemption (and would have been payable
during the Initial Payment Period but for the Limit) shall be paid, with Interest, on the first
business day of the first calendar month that begins after the six-month anniversary of Executive’s
“separation from service” (within the meaning of Section 409A of the Code) and (iii) any portion of
such payment that is payable after the Initial Payment Period shall be paid at the times set forth
in Section 9(a), respectively. For purposes of this paragraph, “Interest” shall mean interest at
the applicable federal rate provided for in Section 7872(f)(2)(A) of the Code, from the date on
which payment would otherwise have been made but for any required delay through the date of
payment.

(e) Other/Vested Benefits. In the case of any termination, the Executive (or his
estate) shall be entitled to (i) any additional payments, benefits or entitlements to which he is
entitled in accordance with the applicable terms of any applicable plan, policy, program,
arrangement or other agreement of the Company or any Subsidiary or affiliate or, if applicable,
pursuant to Section 10 and Section 19 hereof, and (ii) payment of any amounts which are vested or
have been earned or are due and remain unpaid, including, without limitation, base salary through
the date of termination, any unreimbursed business expenses, any bonus payment for any performance
period which has ended prior to the date of termination for which the Executive has not been paid
and the vested Initial LTIP Award (payable at such times as such Initial LTIP Award would otherwise
have been paid had he remained employed by the Company) and any vested quarterly Guaranteed Bonus
Payment or Retention Payment.

(f) Return of Payments/Clawback. Not in any way in limitation of any right or remedy
otherwise available to the Company, if the Executive does not comply with any of the Restrictive
Covenants (subject to the Company providing the Executive with written notice of any such
non-compliance), (i) the Pro-Rata Bonus and any payments in respect of any Initial LTIP Award then
or thereafter due from the Company to the Executive shall be terminated immediately, (ii) the
Company’s obligation to pay or provide and the Executive’s right to receive such payments or
benefits shall terminate and be of no further force or effect and (iii) the Executive shall be
required to pay back to the Company any amounts in respect of any Pro-Rata Bonus or Initial LTIP
Award previously paid to him, in each case without limiting or affecting the Executive’s
obligations under the Restrictive Covenants or the Company’s other rights and remedies available at
law or equity.

(g) No Obligation to Mitigate. The Executive is under no obligation to mitigate
damages or the amount of any payment provided for hereunder by seeking other employment or
otherwise and, except as provided for in Section 9(f) above, such amounts shall not be reduced
whether or not the Executive obtains other employment.

 

6

 

10. Certain Additional Payments by the Company.

(a) Anything in this Agreement to the contrary notwithstanding and except as set forth below,
in the event it shall be determined that any Payment would be subject to the Excise Tax, then the
Executive shall be entitled to receive an additional payment (the “Gross-Up Payment”) in an amount
such that, after payment by the Executive of all taxes (and any interest or
penalties imposed with respect to such taxes), including, without limitation, any income and
employment taxes (and any interest and penalties imposed with respect thereto) and Excise Tax
imposed upon the Gross-Up Payment, but excluding any income taxes and penalties imposed pursuant to
Section 409A of the Code, the Executive retains an amount of the Gross-Up Payment equal to the
Excise Tax imposed upon the Payments. Notwithstanding the foregoing provisions of this Section
10(a), if it shall be determined that the Executive is entitled to the Gross-Up Payment, but that
the Parachute Value of all Payments does not exceed 110% of the Safe Harbor Amount, then no
Gross-Up Payment shall be made to the Executive and the amounts payable under this Agreement shall
be reduced so that the Parachute Value of all Payments, in the aggregate, equals the Safe Harbor
Amount. The reduction of the amounts payable hereunder, if applicable, shall be made by reducing
the payments and benefits under the following sections in the following order: (i) Section 9(a),
(ii) Section 9(b), (iii) any cash payments under Section 9(e), and (iv) any non-cash amounts under
Section 9(e). For purposes of reducing the Payments to the Safe Harbor Amount, only amounts
payable under this Agreement (and no other Payments) shall be reduced. If the reduction of the
amount payable under this Agreement would not result in a reduction of the Parachute Value of all
Payments to the Safe Harbor Amount, no amounts payable under the Agreement shall be reduced
pursuant to this Section 10(a). The Company’s obligation to make Gross-Up Payments under this
Section 10 shall not be conditioned upon the Executive’s termination of employment.

(b) Subject to the provisions of Section 10(c), all determinations required to be made under
this Section 10, including whether and when a Gross-Up Payment is required, the amount of such
Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be
made by a nationally recognized certified public accounting firm as may be designated by the
Company (the “Accounting Firm”). The Accounting Firm shall provide detailed supporting
calculations both to the Company and the Executive within 15 business days of the receipt of notice
from the Executive that there has been a Payment or such earlier time as is requested by the
Company. All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any
determination by the Accounting Firm shall be binding upon the Company and the Executive (absent
manifest error). As a result of the uncertainty in the application of Section 4999 of the Code at
the time of the initial determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments that will not have been made by the Company should have been made (the
“Underpayment”), consistent with the calculations required to be made hereunder. In the event the
Company exhausts its remedies pursuant to Section 10(c) (or decides not to contest a claim) and the
Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall
determine the amount of the Underpayment that has occurred and any such Underpayment shall be
promptly paid by the Company to or for the benefit of the Executive.

 

7

 

(c) The Executive shall notify the Company in writing of any claim by the Internal Revenue
Service that, if successful, would require the payment by the Company of the Gross-Up Payment.
Such notification shall be given as soon as practicable, but no later than 10 business days after
the Executive is informed in writing of such claim. The Executive shall apprise the Company of the
nature of such claim and the date on which such claim is requested to be paid. The Executive shall
not pay such claim prior to the expiration of the 30-day period following the date on which the
Executive gives such notice to the Company (or such shorter period ending on the date that any
payment of taxes with respect to such claim is due). If the
Company notifies the Executive in writing prior to the expiration of such period that the
Company desires to contest such claim, the Executive shall:

(i) give the Company any information reasonably requested by the Company
relating to such claim,

(ii) take such action in connection with contesting such claim as the Company
shall reasonably request in writing from time to time, including, without
limitation, accepting legal representation with respect to such claim by an attorney
reasonably selected by the Company,

(iii) cooperate with the Company in good faith in order to effectively contest
such claim, and

(iv) permit the Company to participate in any proceedings relating to such
claim;

provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection with such contest,
and shall indemnify and hold the Executive harmless, on an after-tax basis, for any Excise Tax or
income tax (including interest and penalties) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions of this Section
10(c), the Company shall control all proceedings taken in connection with such contest, and, at its
sole discretion, may pursue or forgo any and all administrative appeals, proceedings, hearings and
conferences with the applicable taxing authority in respect of such claim and may, at its sole
discretion, either pay the tax claimed to the appropriate taxing authority on behalf of the
Executive and direct the Executive to sue for a refund or contest the claim in any permissible
manner, and the Executive agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as
the Company shall determine; provided, however, that, if the Company pays such
claim and directs the Executive to sue for a refund, the Company shall indemnify and hold the
Executive harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or
penalties) imposed with respect to such payment or with respect to any imputed income in connection
with such payment; and provided, further, that any extension of the statute of
limitations relating to payment of taxes for the taxable year of the Executive with respect to
which such contested amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Company’s control of the contest shall be limited to issues with respect to which
the Gross-Up Payment would be payable hereunder, and the Executive shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal Revenue Service or any other
taxing authority.

 

8

 

(d) If, after the receipt by the Executive of a Gross-Up Payment or payment by the Company of
an amount on the Executive’s behalf pursuant to Section 10(c), the Executive becomes entitled to
receive any refund with respect to the Excise Tax to which such Gross-Up Payment relates or with
respect to such claim, the Executive shall (subject to the Company’s complying with the
requirements of Section 10(c), if applicable) promptly pay to the Company the amount of such refund
(together with any interest paid or credited thereon after taxes applicable
thereto). If, after payment by the Company of an amount on the Executive’s behalf pursuant to
Section 10(c), a determination is made that the Executive shall not be entitled to any refund with
respect to such claim and the Company does not notify the Executive in writing of its intent to
contest such denial of refund prior to the expiration of 30 days after such determination, then the
amount of such payment shall offset, to the extent thereof, the amount of Gross-Up Payment required
to be paid.

(e) Any Gross-Up Payment, as determined pursuant to this Section 10, shall be paid by the
Company to the Executive within five (5) days of the receipt of the Accounting Firm’s
determination; provided, however, that the Gross-Up Payment shall in all events be
paid no later than the end of the Executive’s taxable year next following the Executive’s taxable
year in which the Excise Tax (and any income or other related taxes or interest or penalties
thereon) on a Payment are remitted to the Internal Revenue Service or any other applicable taxing
authority; or, in the case of amounts relating to a claim described in Section 10(c) that does not
result in the remittance of any federal, state, local and foreign income, excise, social security
and other taxes, the calendar year in which the claim is finally settled or otherwise resolved.
Notwithstanding any other provision of this Section 10, the Company may, in its sole discretion,
withhold and pay over to the Internal Revenue Service or any other applicable taxing authority, for
the benefit of the Executive, all or any portion of any Gross-Up Payment, and the Executive hereby
consents to such withholding.

(f) Definitions. The following terms shall have the following meanings for purposes
of this Section 10.

“Excise Tax” shall mean the excise tax imposed by Section 4999 of the Code or other similar
tax (other than Section 409A of the Code) which may hereafter be imposed, together with any
interest or penalties imposed with respect to such excise tax.

“Parachute Value” of a Payment shall mean the present value as of the date of the change of
control for purposes of Section 280G of the Code of the portion of such Payment that constitutes a
“parachute payment” under Section 280G(b)(2), as determined by the Accounting Firm for purposes of
determining whether and to what extent the Excise Tax will apply to such Payment.

A “Payment” shall mean any payment, benefit, entitlement or distribution in the nature of
compensation (within the meaning of Section 280G(b)(2) of the Code) to or for the benefit of the
Executive, whether paid or payable pursuant to this Agreement or otherwise (including, without
limitation, any payment, benefit, entitlement or distribution paid or provided by the person or
entity effecting the change in control).

The “Safe Harbor Amount” means 2.99 times the Executive’s “base amount,” within the meaning of
Section 280G(b)(3) of the Code.

 

9

 

11. Confidentiality; Return of Property.

(a) The Executive acknowledges that in the course of his employment by the Company, he will or
may have access to and become informed of confidential or proprietary information of the Company
and its Subsidiaries (“Confidential Information”), which is a
competitive asset, including, without limitation, (i) the terms of any agreement between the
Company and any employee, customer or supplier, (ii) pricing strategy, (iii) merchandising and
marketing methods, (iv) product development ideas and strategies, (v) personnel training and
development programs, (vi) financial results, (vii) strategic plans and demographic analyses,
(viii) proprietary computer and systems software, and (ix) any non-public information concerning
the Company, its employees, suppliers or customers. The Executive agrees that he will keep all
Confidential Information in strict confidence during the term of his employment by the Company and
thereafter, and will never directly or indirectly make known, divulge, reveal, furnish, make
available, or use any Confidential Information (except in the course of his regular authorized
duties on behalf of the Company). The Executive agrees that the obligations of confidentiality
under this Section 11 shall survive termination of the Executive’s employment with the Company
regardless of any actual or alleged breach by the Company of this Agreement, until and unless (x)
any such Confidential Information shall have become, through no fault of the Executive, generally
known to the public or the Executive is required by lawful service of process, subpoena, court
order, law or the rules or regulations of any regulatory body to which he is subject to make
disclosure or, (y) the Executive brings a claim or action to enforce any of his rights with respect
to any compensation, including, without limitation, any annual bonus or the Initial LTIP Award
(provided such disclosure is only to the extent reasonably necessary with respect to enforcement of
such right and the Executive takes appropriate steps to have such Confidential Information entered
into any proceeding under seal), provided that in the case of clause (y), the Executive has
provided to the Company, unless prohibited by law or regulation, a copy of the documents seeking
disclosure of such information and giving the Company prompt notice upon receipt of such documents
and prior to their disclosure. All records, files, memoranda, reports, customer lists, drawings,
plans, documents and the like relating to the Company’s business that the Executive uses, prepares
or comes into contact with during the course of the Executive’s employment shall remain the sole
property of the Company and/or its affiliates, as applicable, and shall be turned over to the
Company upon termination of the Executive’s employment, except to the extent the Executive is
permitted to retain such information or property as set forth in Section 11(b). The Executive’s
obligations under this Section 11 are in addition to, and not in limitation of or preemption of,
all other obligations of confidentiality which the Executive may have to the Company under general
legal or equitable principles.

(b) Except in the ordinary course of the Company’s business, the Executive has not made, nor
shall at any time following the date of this Agreement, make or cause to be made, any copies,
pictures, duplicates, facsimiles or other reproductions or recordings or any abstracts or summaries
including or reflecting Confidential Information. All such documents and other property furnished
to the Executive by the Company or any of its Subsidiaries or affiliates or otherwise acquired or
developed by the Company or any of its Subsidiaries or affiliates shall at all times be the
property of the Company. Upon termination of the Executive’s employment with the Company, the
Executive will return to the Company any such documents or other property of the Company or any of
its Subsidiaries or affiliates which are in the possession, custody or control of the Executive.
Notwithstanding the foregoing, the Executive shall be permitted to retain his personal papers
(provided that such papers do not contain any Confidential Information related to the Company), any
information relating to his compensation, other entitlements or obligations, any information he
reasonably believes is necessary for tax purposes and his personal rolodex.

 

10

 

(c) Without the prior written consent of the Company (which may be withheld for any reason or
no reason), except in the ordinary course of the Company’s business, the Executive shall not at any
time following the date of this Agreement use for the benefit or purposes of the Executive or for
the benefit or purposes of any other person, firm, partnership, association, trust, venture,
corporation or business organization, entity or enterprise or disclose in any manner to any person,
firm, partnership, association, trust, venture, corporation or business organization, entity or
enterprise any Confidential Information (except as permitted in Section 11).

12. Covenant Not to Compete; Covenant Not to Solicit. For a period commencing on the
Effective Date and for a period ending one (1) year after the termination of the Executive’s
employment with the Company for any reason or no reason, including termination for Cause or the
Executive’s voluntary resignation without Good Reason, the Executive acknowledges and agrees that
he will not, directly or indirectly, individually or on behalf of any other person or entity:

(a) engage in any business which directly competes with the business in which the Company or
any of the Company’s Subsidiaries or affiliates (collectively, the “Company Group”) were engaged
(or had taken substantial steps to engage in); or

(b) solicit for hire, hire or employ (whether as an officer, director or insurance agent) any
person who is an employee or independent contractor of any member of the Company Group or has been
an employee or independent contractor of any member of the Company Group at any time during the
six-month period prior to the Executive’s termination of employment or solicit, aid or induce any
such person to leave his or her employment with any member of the Company Group to accept
employment with any other person or entity.

(c) Executive’s ownership of less than one percent (1%) of any class of stock in a
publicly-traded corporation shall not be deemed a breach of this Section 12 and notwithstanding the
foregoing, it shall not be a violation of this Section 12 for the Executive (i) to join a division,
business line, subsidiary or affiliate of a commercial enterprise with multiple divisions or
business lines if such division, business line, subsidiary or affiliate is not competitive with the
businesses of the Company Group, provided that the Executive performs services solely for such
non-competitive division, business line, subsidiary or affiliate, and performs no functions on
behalf of (and has no involvement with or direct or indirect responsibilities with respect to)
businesses competitive with the businesses of the Company Group, with competitiveness determined
for these purposes as set forth in Section 12(a) or (ii) to provide services to a private equity
firm or hedge fund, in either case, that holds investments in a business which directly competes
with the business in which the Company Group is engaged so long as the Executive has no involvement
with or direct or indirect responsibilities with respect to (A) the management, operations or
supervision of such investments or (B) advising such firm with respect to such investments. In
addition, it shall not be a violation of this Section 12 for the Executive to remain as a board
member of the entities for which he was serving as a board member on the date of his termination of
employment, provided such membership is consistent with Section 3(b) hereof.

 

11

 

(d) Upon a Change of Control, the definition of Company Group and their respective employees
and independent contractors for the purposes of this Section 12 shall refer
only to the Company, its Subsidiaries and its affiliates (and the businesses in which they
were engaged) as of immediately prior to such Change of Control.

(e) The Executive acknowledges and agrees that a violation of the foregoing provisions of
Section 11 or Section 12 would result in material detriment to the Company, would cause irreparable
harm to the Company, and that the Company’s remedy at law for any such violation would be
inadequate. In recognition of the foregoing, the Executive agrees that, in addition to any other
relief afforded by law or this Agreement, including damages sustained by a breach of this Agreement
and without the necessity or proof of actual damages, the Company shall have the right to enforce
this Agreement by specific remedies, which shall include, among other things, temporary and
permanent injunctions, it being the understanding of the undersigned parties hereto that damages
and injunctions all shall be proper modes of relief and are not to be considered as alternative
remedies.

(f) Except as otherwise set forth in Section 11 and this Section 12, there shall be no other
restrictions on the Executive’s rights to compete, solicit or hire or use or disclose confidential
information following the Executive’s termination of employment other than those under applicable
law.

13. Compliance with Section 409A of the Code.

(a) The Agreement is intended to comply with the requirements of Section 409A of the Code or
an exemption. Notwithstanding anything in the Agreement to the contrary, distributions upon
termination of employment may only be made upon a “separation from service” as determined under
Section 409A. Each payment under this Agreement shall be treated as a separate payment for
purposes of Section 409A. In no event may the Executive, directly or indirectly, designate the
calendar year of any payment to be made under this Agreement. In the event the parties determine
that the terms of this Agreement do not comply with Section 409A, they will negotiate reasonably
and in good faith to amend the terms of this Agreement such that it complies (in a manner that
attempts to minimize the economic impact of such amendment on the Executive and the Company) within
the time period permitted by the applicable Department of Treasury Regulations.

(b) All reimbursements and in-kind benefits provided under this Agreement shall be made or
provided in accordance with the requirements of Section 409A of the Code. In order to comply with
Section 409A of the Code, in no event shall the payments by the Company under Section 6 be made
later than the end of the calendar year next following the calendar year in which such fees and
expenses were incurred, provided, that the Executive shall have submitted an invoice for such fees
and expenses at least 10 days before the end of the calendar year next following the calendar year
in which such fees and expenses were incurred. The amount of any such fees and expenses that the
Company is obligated to pay in any given calendar year shall not affect the fees and expenses that
the Company is obligated to pay in any other calendar year, and the Executive’s right to have the
Company pay such fees and expenses may not be liquidated or exchanged for any other benefit.

 

12

 

(c) The Company and the Executive shall take all steps necessary (including with regard to any
post-termination services the Executive provides) to ensure that any termination of
employment described in this Agreement constitutes a “separation from service” within the
meaning of Section 409A of the Code, and notwithstanding anything contained in this Agreement to
the contrary, the date on which such “separation from service” takes place shall be the date of the
termination of the Executive’s employment.

14. Prior Agreement. As of the Effective Date, this Agreement, including its
Exhibits, supersedes any and all prior and/or contemporaneous agreements, either oral or in
writing, between the parties hereto, or between either or both of the parties hereto and the
Company, with respect to the subject matter hereof including, without limitation, the Prior
Agreement and any term sheets relating thereto. Each party to this Agreement acknowledges that no
representations, inducements, promises, or other agreements, orally or otherwise, have been made by
any party, or anyone acting on behalf of any party, pertaining to the subject matter hereof, which
are not embodied herein, and that no prior and/or contemporaneous agreement, statement or promise
pertaining to the subject matter hereof that is not contained in this Agreement shall be valid or
binding on either party. In the event of any conflict between any provision of this Agreement, and
any other provision of any plan, policy, program, arrangement or other agreement of the Company or
any Subsidiary or any affiliate of the Company, this Agreement (or such Exhibit) shall control.

15. Withholding of Taxes. The Company may withhold from any amounts payable or
transfer made under any compensation or other amount owing to the Executive under this Agreement
all applicable federal, state, city or other withholding taxes as the Company is required to
withhold pursuant to any law or government regulation or ruling.

16. Successors and Binding Agreement.

(a) The Company will require any successor (whether direct or indirect, by purchase, merger,
consolidation, reorganization or otherwise) to all or substantially all of the business or assets
of the Company or of any Subsidiary or any division or business unit thereof for which the
Executive performs services, by agreement in form and substance satisfactory to the Executive (and
any such successor, the “Successor”), expressly to assume and agree to perform this Agreement in
the same manner and to the same extent the Company would be required to perform if no such
succession had taken place. This Agreement will be binding upon and inure to the benefit of the
Company and any successor to the Company, including without limitation any persons acquiring
directly or indirectly all or substantially all of the business or assets of the Company or of any
Subsidiary or any division or business unit thereof for which the Executive performs services
whether by purchase, merger, consolidation, reorganization or otherwise (and such successor shall
thereafter be deemed the “Company” for the purposes of this Agreement), but will not otherwise be
assignable, transferable or delegable by the Company.

(b) This Agreement will inure to the benefit of and be enforceable by the Executive’s personal
or legal representatives, executors, administrators, successors, heirs, distributees and legatees.

 

13

 

(c) This Agreement is personal in nature and neither of the parties hereto shall, without the
consent of the other, assign, transfer or delegate this Agreement or any rights or obligations
hereunder except as expressly provided in Sections 16(a) and 16(b). Without limiting
the generality or effect of the foregoing, the Executive’s right to receive payments hereunder
will not be assignable, transferable or delegable, whether by pledge, creation of a security
interest, or otherwise, other than by a transfer by the Executive’s will or by the laws of descent
and distribution and, in the event of any attempted assignment or transfer contrary to this Section
16(c), the Company shall have no liability to pay any amount so attempted to be assigned,
transferred or delegated.

17. Notices. For all purposes of this Agreement, all communications, including
without limitation notices, consents, requests or approvals, required or permitted to be given
hereunder will be in writing and will be deemed to have been duly given when hand delivered or
dispatched by electronic facsimile transmission (with receipt thereof confirmed), or five (5)
business days after having been mailed by United States registered or certified mail, return
receipt requested, postage prepaid, or three (3) business days after having been sent by a
nationally recognized overnight courier service such as Federal Express, UPS, or Purolator,
addressed to the Company (to the attention of the Secretary of the Company) at its principal
executive offices and to the Executive at his principal residence, or to such other address as any
party may have furnished to the other in writing and in accordance herewith, except that notices of
changes of address shall be effective only upon receipt.

18. Governing Law. The validity, interpretation, construction and performance of this
Agreement will be governed by and construed in accordance with the substantive laws of the State of
Delaware, without giving effect to the principles of conflict of laws of such State.

19. Indemnification. The Company will indemnify the Executive (and his legal
representative, heirs or other successors) to the fullest extent permitted (including a payment of
expenses in advance of final disposition of a proceeding) by the Company’s certificate of
incorporation, or if greater, by applicable law, and the Executive shall be entitled to the
protection of any insurance policies the Company may elect to maintain generally for the benefit of
its directors and officers, against all costs, charges and expenses whatsoever incurred or
sustained by him or his legal representatives, heirs or other successors (including but not limited
to any judgment entered by a court of law or any costs, including reasonable attorneys’ fees the
Executive incurs to enforce the terms of this Section 19) at the time such costs, charges and
expenses are incurred or sustained, in connection with any action, suit or proceeding to which the
Executive (or his legal representatives or other successors) may be made a party by reason of his
having accepted employment with the Company or by reason of his being or having been a director,
officer or employee of the Company, or any Subsidiary of the Company, or his serving or having
served any other enterprise as a director, officer or employee at the request of the Company
(including any acts or omissions which are alleged to have occurred in such service), and to the
extent the Company maintains such an insurance policy or policies, the Executive shall be covered
by such policy or policies, in accordance with its or their terms to the maximum extent of the
coverage available for any Company officer or director. The Executive’s rights under this Section
19 shall continue without time limit for so long as he may be subject to any such liability,
whether or not the Employment Term may have ended.

 

14

 

20. Validity. If any provision of this Agreement or the application of any provision
hereof to any person or circumstances is held invalid or unenforceable, the remainder of this
Agreement and the application of such provision to any other person or circumstances will not be
affected, and the provision so held to be invalid or unenforceable will be reformed to the
extent (and only to the extent) necessary to make it enforceable or valid.

21. Survival of Provisions. Notwithstanding any other provision of this Agreement,
the parties’ respective rights and obligations under Sections 9, 10, 11, 12, 13, 14, 15, 16, 19, 21
and 23 (and the terms defined therein) will survive any termination or expiration of this Agreement
or the termination of the Executive’s employment for any reason whatsoever.

22. Miscellaneous. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in writing signed by the
Executive and the Company. No waiver by either party hereto at any time of any breach by the other
party hereto or compliance with any condition or provision of this Agreement to be performed by
such other party will be deemed a waiver of similar or dissimilar provisions or conditions at the
same or at any prior or subsequent time. Unless otherwise noted, references to “Sections” are to
sections of this Agreement. The captions used in this Agreement are designed for convenient
reference only and are not to be used for the purpose of interpreting any provision of this
Agreement.

23. Defined Terms.

(a) “401(k) Plan” means the HealthMarkets 401(k) and Savings Plan.

(b) “Accounting Firm” has the meaning specified in Section 10(b).

(c) “Agreement” has the meaning specified in the introductory paragraph herein.

(d) “Annual Bonus Percentage” has the meaning specified in Section 4(b).

(e) “Base Salary” has the meaning specified in Section 4(a).

(f) “Board” means the Board of Directors of the Company.

(g) “Cause” means the occurrence of any of the following:

(i) the Executive engages in fraudulent activity, embezzlement or
misappropriation relating to the business of the Company or any of its affiliates or
Subsidiaries;

(ii) the Executive is convicted by a court of competent jurisdiction of, or
pleads guilty or nolo contendere to, any felony (other than a traffic violation) or
any crime involving moral turpitude;

(iii) the Executive commits a breach of the Restrictive Covenants, which breach
has not been remedied within 30 days of the delivery to Executive by the Board of
written notice of the facts constituting the breach, and which breach if not cured
would have a material adverse effect on the Company;

 

15

 

(iv) the Executive’s willful and continued failure after written notice from
the Board to perform his material duties for the Company or its Subsidiaries (other
than on account of approved leave of absence and/or Disability); or

(v) the Executive engages in (x) gross neglect or (y) willful misconduct, in
both cases relating to the Executive’s performance of his duties for the Company.

The cessation of the Executive’s employment shall not be deemed to be for Cause
pursuant to clauses (i), (iii), (iv) or (v) hereof unless and until the Board has
provided the Executive with written notice of the acts or omissions giving rise to
Cause and an opportunity to be heard before the full Board (represented by counsel),
and after such hearing there shall have been delivered to the Executive a copy of a
resolution duly adopted by the affirmative vote of no less than 51% of the entire
membership of the Board (excluding the Executive) at a meeting of the Board called
and held for such purpose, finding that, in the good faith opinion of the Board, the
Executive is guilty of the conduct described in clauses (i), (iii), (iv) or (v)
above.

(h) “Change of Control” has the meaning specified in Section 4( c).

(i) “Code” means the Internal Revenue Code of 1986, as amended.

(j) “Committee” means the Executive Compensation Committee of the Board.

(k) “Company” has the meaning specified in the introductory paragraph of this Agreement.

(l) “Company Group” has the meaning specified in Section 12(a).

(m) “Confidential Information” has the meaning specified in Section 11(a).

(n) “Disability” shall mean the Executive’s incapacity due to physical or mental illness to
substantially perform his duties on a full-time basis for at least 26 consecutive weeks or an
aggregate period in excess of 26 weeks in any one fiscal year, and within 30 days after a notice of
termination is thereafter given by the Company, the Executive shall not have returned to the
full-time performance of the Executive’s duties; provided, however, if the
Executive shall not agree with a determination to terminate his employment because of Disability,
the question of the Executive’s Disability shall be subject to the certification of a qualified
medical doctor selected by the Company or its insurers and acceptable to the Executive or, in the
event of the Executive’s incapacity to accept a doctor, the Executive’s legal representative.

(o) “Effective Date” has the meaning specified in the preamble of this Agreement.

(p) “Employment Term” has the meaning specified in Section 2.

 

16

 

(q) “Executive” has the meaning specified in the introductory paragraph of this Agreement.

(r) “Good Reason” means the occurrence, without the Executive’s consent, of any of the
following events:

(i) a material diminution in the Executive’s authorities, titles, reporting
responsibilities or offices (excluding for this purpose an isolated, insubstantial
and inadvertent action not taken in bad faith which is promptly remedied after notice
by the Executive to the Company;

(ii) a material decrease in the Executive’s Base Salary or Target Bonus
Percentage, which for this purpose shall mean one or more reductions that,
individually or in the aggregate, exceed 5% of the Executive’s highest Base Salary or
Target Bonus Percentage (excluding for this purpose an isolated, insubstantial and
inadvertent action not taken in bad faith which is promptly remedied after notice by
the Executive to the Company) (it being understood that in no event shall the
Company’s failure to grant equity or equity-based compensation awards or awards in
lieu thereof to the Executive or the Company’s grant of such awards to other senior
executives of the Company constitute a basis for the Executive to resign for Good
Reason);

(iii) a material reduction in the Executive’s participation in the Company’s
benefit plans and policies to a level materially less favorable to the Executive
unless such reduction applies to a majority of the senior level executives of the
Company;

(iv) any change in reporting structure so that the Executive reports to someone
other than the Chief Executive Officer of the Company or the Board (or the Chief
Executive Officer or board of directors of any Successor);

(v) following a Change of Control, failure of the Executive to be the General
Counsel of the successor entity (including the ultimate parent of such entity);

(vi) any failure of the Company to obtain within 30 days following a transaction
the assumption in writing by any successor to all or substantially all of the
business or assets of the Company to perform this Agreement, except where such
assumption occurs by operation of law; or

(vii) a determination by the Reporting Person and the Executive that Executive’s
position must be performed primarily at the Company’s offices in the Dallas/Fort
Worth, Texas, area or at any other location where business of the Company is being
conducted.

 

17

 

Notwithstanding the foregoing, the Executive shall only be entitled to resign for
Good Reason if (1) the Executive first provides a notice of his intent to resign
within 120 days following the date he first learns of the event(s) giving rise to
Good Reason, (2) the Company fails to cure such events or circumstances within 30
days following the Company’s receipt of such notice and (3) the Executive terminates
his employment within two years following the occurrence of the event(s) on which the
Good Reason termination is based.

(s) “Gross-Up Payment” has the meaning specified in Section 10(a).

(t) “HealthMarkets” has the meaning specified in the introductory paragraph of this Agreement.

(u) “HealthMarkets Affiliates” has the meaning specified in paragraph 1 of Exhibit A attached
hereto.

(v) “Initial LTIP Award” has the meaning specified in Section 4(d)(i).

(w) “Initial Payment Period” has the meaning specified in Section 9(d).

(x) “Limit” has the meaning specified in Section 9(d).

(y) “Pro-Rata Bonus” has the meaning specified in Section 9(b).

(z) “Release” has the meaning specified in the introductory paragraph of Exhibit A attached
hereto.

(aa) “Reporting Person” has the meaning specified in Section 3(a).

(bb) “Restrictive Covenants” has the meaning specified in Section 9.

(cc) “Revocation Date” has the meaning specified in paragraph 3 of Exhibit A attached hereto.

(dd) “Subsidiary” shall mean any entity, corporation, partnership (general or limited),
limited liability company, firm, business organization, enterprise, association or joint venture in
which the Company directly or indirectly controls ten percent (10%) or more of the voting interest;
provided that such controlling interest shall be fifty percent (50%) for purposes of
Sections 23(i)(i) and 23(i)(iv) of this Agreement.

(ee) “Successor” has the meaning specified in Section 16(a).

(ff) “Target Bonus Percentage” has the meaning specified in Section 4(b).

(gg) “Underpayment” has the meaning specified in Section 10(a) .

24. Counterparts. This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original but all of which together will constitute one and the same
agreement.

 

18

 

IN WITNESS WHEREOF, with the Company signatory listed below having been duly authorized by the
Company to enter into this Agreement by the Company, the parties hereto have executed this
Agreement as of the day and year first written.

	 	 	 	 	 
	 	 	 
	 	
 	 
	 	B. Curtis Westen 	 

	 	 	 	 	 
	 	HealthMarkets, Inc.

 	 
	 	By:  	 	 
	 	 	Phillip J. Hildebrand 	 
	 	 	Chief Executive Officer 	 
	 

 

19

 

Exhibit A

Form of Release

In consideration of the payments and promises contained in your Employment Agreement with
HealthMarkets, Inc. (the “Company”) dated as of September 8, 2009, and in full compromise and
settlement of any of your potential claims and causes of action relating to or arising out of your
employment relationship with the Company or the termination of that relationship, and any and all
other claims or causes of action that you have or may have against the HealthMarkets Affiliates (as
defined below) up to the date of execution of this release, except to the extent such claims or
causes of action are not released by you in Paragraph 2 hereof (the “Release”), you hereby:

1. knowingly and voluntarily agree to irrevocably and unconditionally waive and release the
Company and any other entity controlled by, controlling or under common control with the Company,
and their respective predecessors and successors and their respective directors, officers,
employees, representatives, attorneys, including all persons acting by, through, under or in
concert with any of them (collectively, the “HealthMarkets Affiliates”), from any and all charges,
complaints, claims, liabilities, obligations, promises, sums of money, agreements, controversies,
damages, actions, lawsuits, rights, demands, sanctions, costs (including attorneys’ fees), losses,
debts and expenses of any nature whatsoever, existing on, or at any time prior to, the date hereof
in law, in equity or otherwise, which you, your successors, heirs or assigns had or have upon or by
reason of any fact, matter, cause, or thing whatsoever, and specifically including any matter that
may be based on the sole or contributory negligence (whether active, passive or gross) of any
HealthMarkets Affiliate. This release includes, but is not limited to, a release of all claims or
causes of action arising out of or relating to your employer-employee relationship with the Company
or the termination of that relationship, and any other claim, including, without limitation,
alleged breach of express or implied written or oral contract, alleged breach of employee handbook,
alleged wrongful discharge, and tort claims, or claims or causes of action arising under any
federal, state, or local law, including, but not limited to, the Age Discrimination in Employment
Act, 29 U.S.C. § 621, et seq., the Reconstruction Era Civil Rights Act of 1866 and 1871, 42 U.S.C.
§§ 1981 and 1983, the Civil Rights Act of 1964, Title VII, 42 U.S.C. §§ 2000(e) et seq., The Civil
Rights Act of 1991, 42 U.S.C. § 1981(a) et seq., the Equal Pay Act of 1963, 29 U.S.C. § 206(d) et
seq., the Americans with Disabilities Act of 1990, 42 U.S.C. §§ 12101 et seq. the Rehabilitation
Act of 1973, 29 U.S.C. § 701 et seq., the Worker Adjustment and Retraining Notification Act, 29
U.S.C. §§ 2101-2109, the Sarbanes-Oxley Act of 2002, as amended, and any claim under any other
statutes of the State of Texas, or other jurisdictions, and the facts, circumstances, allegations,
and controversies relating or giving rise thereto that have accrued to the date of execution of
this Release;

 

 

 

2. agree that you will not commence, maintain, initiate, or prosecute, or cause, encourage,
assist, volunteer, advise or cooperate with any other person to commence, maintain, initiate or
prosecute, any action, lawsuit, proceeding, investigation, or claim before any court, legislative
body or committee, or administrative agency (whether state, federal or otherwise) against the
HealthMarkets Affiliates relating to any claims, liabilities, obligations, promises, sums of money,
agreements, controversies, damages, actions, lawsuits, rights, demands,
sanctions, costs (including attorneys’ fees), losses, debts and expenses described in the
foregoing Paragraph 1; provided, however, that, notwithstanding anything to the
contrary in the foregoing, nothing hereunder (including Paragraph 1 hereof) shall be deemed to
affect, impair or diminish in any respect (or deemed to be a release by you of any claims or an
agreement not to sue or bring an action with respect to) (i) any vested rights as of the date of
termination or entitlement you may have under the ESOP or 401(k) Plan; (ii) any other vested rights
as of the date of termination you may have under any employee plan or program in which you have
participated in your capacity as an employee of the Company or any other HealthMarkets Affiliate;
(iii) your right to seek to collect unemployment benefits that you may be entitled to as a result
of your employment with the Company or your right to seek benefits under workers’ compensation
insurance, if applicable; (iv) your rights to enforce this Release and/or the Employment Agreement,
including Exhibit A, including but not limited to your right to bring a claim for breach of this
Release or the Employment Agreement, including Exhibit A; (v) any rights you may have under that
Section 10 (Certain Additional Payments by the Company) or Section 19 (Indemnification) of the
Employment Agreement; (vi) any rights to indemnification and/or advancement of expenses that you
have or may have under the terms of the HealthMarkets Amended and Restated Bylaws and/or
Certificate of Incorporation or any rights you have pursuant to any applicable directors’ and
officers’ liability insurance policies; (vii) your rights as a shareholder of the Company; or
(viii) your right to bring a claim under the Age Discrimination in Employment Act to challenge the
validity of this Release, to file a charge under the civil rights statutes, or to otherwise
participate in an investigation or proceeding conducted by the Equal Employment Opportunity
Commission or other investigative agency;

3. acknowledge that: (i) this entire Release is written in a manner calculated to be
understood by you; (ii) you have been advised to consult with an attorney before executing this
Release; (iii) you were given a period of at least twenty-one days within which to consider this
Release; and (iv) to the extent you execute this Release before the expiration of the
twenty-one-day period, you do so knowingly and voluntarily and only after consulting your attorney.
You shall have the right to cancel and revoke this Release during a period of seven days following
the date on which you execute it, and this Release shall not become effective, and no money will be
paid to you in respect of severance, until the day after the expiration of such seven-day period
(the “Revocation Date”). In order to revoke this Release, you shall deliver to the Company, prior
to the Revocation Date, a written notice of revocation. Upon such revocation, this Release shall
be null and void and of no further force or effect;

4. agree to make yourself reasonably available to the Company following the date of your
termination to assist the HealthMarkets Affiliates, as may be requested by the Company at mutually
convenient times and places taking into account your other business and personal commitments, with
respect to the business of the Company and pending and future litigations, arbitrations,
governmental investigations or other dispute resolutions relating to or in connection with the
Company with respect to matters of which you have relevant knowledge. Notwithstanding the
foregoing, you shall not be required to cooperate if such cooperation is adverse to your legal
interests. In addition, the Company agrees to pay promptly any reasonable expenses incurred by you
in connection with such cooperation, including, without limitation, business class airfare,
reasonable meals, reasonable hotels and reasonable legal fees to the extent the Company and you
agree (the Company’s agreement not to be unreasonably withheld) separate representation is
warranted by the circumstances; and

 

A-2

 

5. agree not to, either in writing or by any other medium, make any disparaging or derogatory
statement about the HealthMarkets Affiliates or any of their respective officers, directors,
employees, affiliates, Subsidiaries, successors, assigns or businesses, as the case may be;
provided, however, that you may make such statements as are necessary to comply
with law.

 

A-3

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00179-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00179-of-00352.parquet"}], [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00179-of-00352.parquet"}]]