Document:

exv10w3

 

Exhibit 10.3

PATTERSON-UTI ENERGY, INC.

SEVERANCE AGREEMENT

     THIS SEVERANCE AGREEMENT (this “Agreement”) is entered this 31st day of August
2007, to be effective as of April 9, 2007 (the “Effective Date”), by and between Patterson-UTI
Energy, Inc., a Delaware corporation (the “Company”) and Douglas J. Wall (the “Employee”). Certain
capitalized terms used herein are defined in Section 18.

     WHEREAS, the Employee was hired on April 9, 2007 as the chief operating officer of the
Company;

     WHEREAS, as an inducement for the Employee to accept the Company’s offer of employment, the
Company agreed to provide the Employee a severance benefit under certain circumstances; and

     WHEREAS, the Company considers it to be in the best interests of the Company to enter into a
severance agreement with the Employee;

     NOW, THEREFORE, the Company and the Employee agree as follows:

     1. Term of this Agreement. The term of this Agreement shall begin on the Effective Date and
shall terminate on the third anniversary of the Effective Date; provided, however, following the
Employee’s termination by reason of a Qualifying Termination that occurs prior to the third
anniversary of the Effective Date, this Agreement shall continue in effect with respect to all
rights and obligations accruing as a result of Employee’s termination by reason of such Qualifying
Termination.

2. Payments Upon a Qualifying Termination of Employment.

     (a) If during the term of this Agreement the employment of Employee shall terminate by reason
of a Qualifying Termination, then the Company shall pay to Employee (or Employee’s beneficiary or
estate) as compensation for services rendered to the Company a lump-sum cash amount equal to
$750,000 less any amounts received by or payable to Employee under Section 7(a)(iii)(3) of the CIC
Agreements or any similar payments under any other change in control agreement entered into between
the Employee and the Company.

     (b) The amount payable under Section 2(a), if any, shall be paid not more than ten (10) days
immediately following the Date of Qualifying Termination; provided, however, that if, for purposes
of section 409A of the Code, the Employee is determined to be a “specified employee” for the year
in which such Date of Qualifying Termination occurs, such amount shall be paid on the first
business day following the six-month anniversary of the Date of Qualifying Termination.

     3. Notices. Notices required or permitted to be given by either party pursuant to this
Agreement shall be in writing and shall be deemed to have been given when delivered personally to
the other party or when deposited with the United States Postal Service as certified or registered
mail with postage prepaid and addressed:

     (i) if to the Employee, at the Employee’s address last shown on the Company’s records,
and

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     (ii) if to the Company, at 4510 Lamesa Highway, Snyder, Texas 79549, directed to the
attention of the General Counsel;

     (iii) or, in either case, to such other address as the party to whom or which such
notice is to be given shall have specified by notice given to the other party.

     4. Release of Claims. Notwithstanding anything to the contrary contained herein, the Company
(or its successor) may condition Employee’s right to receive severance payments under this
Agreement upon the execution and delivery by the Employee (or Employee’s beneficiary) of a general
release in favor of Company and its successors and affiliates, and their officers, directors and
employees, in such form as the Company may specify. Any payment or benefit that is so conditioned
may be deferred until the expiration of the revocation period prescribed by the Age Discrimination
in Employment Act of 1967, as amended (or any similar revocation period then in effect).

     5. Costs; Breach. If it is necessary for the Company to commence litigation against Employee
for breach of this Agreement or for Employee to enforce his rights under this Agreement by reason
of a dispute, breach or default by Company hereunder, then, the losing party will in all cases be
responsible for the prevailing party’s and his or its reasonable attorneys fees, costs and expenses
incurred in connection with the litigation or arbitration.

     6. Binding Effect; Successors. This Agreement shall be binding upon and shall inure to the
benefit of the Company and its successors and assigns, and shall inure to the benefit of and be
binding upon Employee and his executors, administrators, heirs, and legal representatives. The
Employee may not transfer, sell or otherwise assign his rights, obligations, or benefits under this
Agreement.

     7. Withholding Taxes. The Company may withhold from all payments to be paid to the Employee
pursuant to this Agreement all taxes that, by applicable federal or state law, the Company is
required to so withhold.

     8. Amendment and Waiver. No provision of this Agreement may be amended or waived (whether by
act or course of conduct or omission or otherwise) unless that amendment or waiver is by written
instrument signed by the parties hereto. No waiver by either party of any breach of this Agreement
shall be deemed a waiver of any other or subsequent breach.

     9. Governing Law. The validity, interpretation, construction and enforceability of this
Agreement shall be governed by the laws of the State of Texas, exclusive of the conflict of laws
provisions thereof.

     10. Validity. The invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement, which shall remain
in full force and effect.

     11. Counterparts. This Agreement may be executed in counterparts, each of which shall be
deemed an original but all of which together will constitute the same instrument.

12. Other Employment Arrangements.

     (a) This Agreement does not affect the Employee’s existing or future employment arrangements
with the Company, except as specifically provided herein. The Employee’s employment with the
Company

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shall continue to be governed by the Employee’s existing or future employment agreements with
the Company, if any, or, in the absence of any employment agreement, shall continue to be at the
will of the Board of Directors of the Company or, if the Employee is not an officer of the Company
at the time of the termination of the Employee’s employment with the Company, the will of the Chief
Executive Officer of the Company, except that if the Employee’s employment with the Company is
terminated (whether by the Employee or the Company), then the Employee shall be entitled to receive
certain benefits, if any, as provided in this Agreement.

     (b) Nothing in this Agreement shall prevent or limit the Employee’s continuing or future
participation in any plan, program, policy or practice of or provided by the Company or any of its
affiliates and for which the Employee may qualify, nor shall anything herein limit or otherwise
affect such rights as the Employee may have under any other contract or agreement with the Company
or any of its affiliates. Amounts which are vested benefits or which the Employee is otherwise
entitled to receive under any plan, program, policy or practice of or provided by, or any contract
or agreement with, the Company or any of its affiliates at or subsequent to the date of termination
of the Employee’s employment with the Company shall be payable or otherwise provided in accordance
with such plan, program, policy or practice or contract or agreement except as explicitly modified
by this Agreement.

     13. Survival. Except as otherwise set forth herein, all obligations of the parties under this
Agreement which expressly, or by their nature, survive the expiration or termination of this
Agreement shall continue in full force and effect subsequent to and notwithstanding the expiration
or termination of the Employee’s employment until they are satisfied in full or by their nature
expire.

     14. Arbitration. Except as otherwise explicitly provided in Section 11 of the CIC Agreement,
any dispute between the parties arising out of this Agreement, whether as to this Agreement’s
construction, interpretation or enforceability or as to any party’s breach or alleged breach of any
provision of this Agreement, shall be submitted to arbitration in accordance with the following
procedures:

     (i) Either party may demand such arbitration by giving notice of that demand to the
other party. The notice shall state (x) the matter in controversy, and (y) the name of the
arbitrator selected by the party giving the notice.

     (ii) Not more than 15 days after such notice is given, the other party shall give
notice to the party who demanded arbitration of the name of the arbitrator selected by the
other party. If the other party shall fail to timely give such notice, the arbitrator that
the other party was entitled to select shall be named by the Arbitration Committee of the
American Arbitration Association. Not more than 15 days after the second arbitrator is so
named, the two arbitrators shall select a third arbitrator. If the two arbitrators shall
fail to timely select a third arbitrator, the third arbitrator shall be named by the
Arbitration Committee of the American Arbitration Association.

     (iii) The dispute shall be arbitrated at a hearing that shall be concluded within ten
days immediately following the date the dispute is submitted to arbitration unless a
majority of the arbitrators shall elect to extend the period of arbitration. Any award made
by a majority of the arbitrators (x) shall be made within ten days following the conclusion
of the arbitration hearing, (y) shall be conclusive and binding on the parties, and (z) may
be made the subject of a judgment of any court having jurisdiction.

     (iv) All expenses of the arbitration shall be borne by the losing party.

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     The agreement of the parties contained in the foregoing provisions of this Section 14 shall be
a complete defense to any action, suit or other proceeding instituted in any court or before any
administrative tribunal with respect to any dispute between the parties arising out of this
Agreement.

     15. Deferred Compensation—Section 409A of the Code.

     This Agreement is intended to meet the requirements of section 409A of the Code and shall be
administered in a manner that is intended to meet those requirements and shall be construed and
interpreted in accordance with such intent. To the extent that a payment hereunder is subject to
section 409A of the Code, except as the Board of Directors of the Company and Employee otherwise
determine in writing, the payment shall be paid in a manner that will meet the requirements of
section 409A of the Code, including regulations or other guidance issued with respect thereto, such
that the payment shall not be subject to the additional tax or interest applicable under section
409A of the Code.

     16. Offer Letter. The Employee and the Company hereby acknowledge that this Agreement is the
severance agreement contemplated by the offer letter provided to the Employee in connection with
his employment by the Company.

     17. Section Headings. Section headings are for convenience only and shall not define or limit
the provisions of this Agreement.

     18. Definitions.

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

     (i) gross negligence or willful misconduct in connection with his duties or in the
course of his employment with the Company;

     (ii) an act of fraud, embezzlement or theft in connection with his duties or in the
course of his employment with the Company;

     (iii) intentional wrongful damage to property of the Company;

     (iv) intentional wrongful disclosure of secret processes or confidential information of
the Company;

     (v) an act leading to a conviction of a felony or a misdemeanor involving moral
turpitude; or

     (vi) a material breach by Employee of any agreement with the Company.

For purposes of this definition, no act, or failure to act, on the part of the Employee shall be
deemed “intentional” if it was due primarily to an error in judgment or negligence, but shall be
deemed “intentional” only if done, or omitted to be done, by the Employee not in good faith and
without reasonable belief that his action or omission was in the best interest of the Company.

     (b) “CIC Agreement” means the Patterson-UTI Energy, Inc. Change in Control Agreement, dated
August 31, 2007, by and between Employee and Company.

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     (c) “Code” means the Internal Revenue Code of 1986, as amended from time to time.

     (d) “Date of Qualifying Termination” means the effective date on which Employee’s employment
by the Company terminates due to a Qualifying Termination as specified in a prior written notice by
the Company or Employee, as the case may be, to the other, delivered pursuant to Section 3.

     (e) “Qualifying Termination” means a termination of Employee’s Employment (1) by the Company
for any reason other than Cause or (2) by the Employee due to the Company reducing his annual base
salary to an amount that is less than $450,000 per year; provided, however, that a termination by
the Employee due to a reduction in his annual base salary shall not be a Qualifying Termination
unless (A) Employee gives the Board of Directors of the Company written notice of his objection to
such reduction within thirty (30) days after the later of the approval or occurrence of the
reduction, (B) such reduction is not corrected by the Company within thirty (30) days of its
receipt of such notice and (C) Employee resigns his employment with the Company and its
subsidiaries not more than thirty (30) days following the expiration of the 30-day period described
in the foregoing clause (B). For the avoidance of doubt, the following do not constitute a
Qualifying Termination under this Agreement: a termination of Employee’s employment (1) by the
Company for Cause, (2) as a result of Employee’s death or (3) by the Company due to Employee’s
inability to discharge his duties to the Company for a period of ninety (90) or more consecutive
days by reason of physical or mental illness, injury, or incapacity, which illness, injury or
incapacity is reasonably expected to (or does in fact) continue for six (6) months or more, or (4)
by Employee for any reason other than due to the Company reducing his annual base salary to an
amount that is less than $450,000.

[SIGNATURE PAGE TO FOLLOW]

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     This Agreement contains provisions requiring arbitration of disputes. By signing this
Agreement, Employee acknowledges that: he has read the entire Agreement; he has received a
copy of the Agreement; he has had the opportunity to ask questions and consult counsel or other
advisors about its terms; and he agrees to be bound by it.

     IN WITNESS WHEREOF, 
the Company and Employee have executed this Agreement this 31st day of
August 2007, to be effective as of the Effective Date.

	 	 	 	 	 
	 

	 	PATTERSON-UTI ENERGY, INC.	 	 
	 
	 	 	 	 
	 

	 	/s/ John E. Vollmer III
 

John E. Vollmer III
	 	 
	 

	 	Senior Vice President – Corporate Development and	 	 
	 

	 	Chief Financial Officer	 	 
	 
	 	 	 	 
	 

	 	DOUGLAS J. WALL	 	 
	 
	 	 	 	 
	 

	 	/s/ Douglas J. Wall
 

	 	 

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NONQUALIFIED STOCK OPTION AGREEMENT

     This AGREEMENT (this “Agreement”) is made as of August 30, 2007 (the “Grant Date”) by and
between HealthMarkets, Inc., a Delaware corporation (the
“Company”), and Harvey C. DeMovick, Jr.
(“Optionee”). As a condition precedent to the Company’s grant of the Option (as defined in Section
2 of this Agreement) to Optionee, Optionee is executing and delivering a counterpart of the
Stockholders’ Agreement and thereby agrees to be bound by the terms thereof.

     1. Certain Definitions. Capitalized terms used, but not otherwise defined, in this
Agreement will have the meanings given to such terms in the Company’s 2006 Management Option Plan
(the “Plan”). As used in this Agreement:

          (a) “Call Right” has the meaning specified in Section 8 of this Agreement.

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

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

          (d) “Disability” shall mean the Optionee’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 Optionee shall not have returned to the
full-time performance of the Optionee’s duties; provided, however, if the Optionee shall not agree
with a determination to terminate his employment because of Disability, the question of the
Optionee’s Disability shall be subject to the certification of a qualified medical doctor selected
by the Company or its insurers and acceptable to the Optionee or, in the event of the Optionee’s
incapacity to accept a doctor, the Optionee’s legal representative.

          (e) “Fair Market Value” shall have the meaning specified in the Stockholders Agreement.

          (f) “Grant Date” has the meaning specified in the introductory paragraph of this Agreement.

          (g) “Option” has the meaning specified in Section 2 of this Agreement.

          (h) “Optionee” has the meaning specified in the introductory paragraph of this Agreement.

          (i) “Option Price” has the meaning specified in Section 2 of this Agreement.

          (j) “Option Shares” has the meaning specified in Section 2 of this Agreement.

          (k) “Plan” has the meaning specified in Section 1 of this Agreement.

 

 

          (l)
“Term Sheet” means the Stock Option Plan/Grant Term Sheet marked as “Exhibit B” to the
Term Sheet by and between the Company and Optionee effective as of
August 30, 2007.

          (m) “Termination for Cause” means the termination by the Company or any Subsidiary of
Optionee’s service with the Company or any Subsidiary as a result of (i) the commission by Optionee
of an act of gross negligence, willful misconduct, fraud, embezzlement, misappropriation or breach
of fiduciary duty against the Company or any of its affiliates or Subsidiaries, or the conviction
of Optionee by a court of competent jurisdiction of, or a plea of guilty or nolo contendere to, any
felony or any crime involving moral turpitude or any crime which reasonably could affect the
reputation of the Company or the Optionee’s ability to perform the duties with the Company or any
Subsidiary, (ii) the commission by Optionee of a material breach of any of his duties to the
Company or any Subsidiary or his covenants in the Stockholders Agreement, which breach has not been
remedied within 30 days of the delivery to the Optionee 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, or (iii) the habitual and willful neglect by Optionee of his obligations or duties as a
Director of the Company or any Subsidiary.

     2. Grant of Stock Option. Subject to and upon the terms, conditions, and restrictions
set forth in this Agreement and in the Plan, the Company hereby grants to Optionee an option (the
“Option”) to purchase 6,102 shares of the Company’s Class A-1 Common Stock (the “Option Shares”),
subject to adjustment as set forth herein. The Option may be exercised from time to time in
accordance with the terms of this Agreement. Subject to adjustment as hereinafter provided, all of
the Option Shares may be purchased pursuant to this Option at an
exercise price (the “Option Price”) of $40.97 per
share. The Option is intended to be a nonqualified stock option and shall not be treated as an
“incentive stock option” within the meaning of that term under Section 422 of the Code, or any
successor provision thereto.

     3. Term of Option. The term of the Option shall commence on the Grant Date and,
unless earlier terminated in accordance with Section 7 hereof, shall expire ten (10) years from the
Grant Date.

     4. Right to Exercise. Unless terminated as hereinafter provided, the Option shall
become exercisable only as follows:

          (a) The Option shall become exercisable with respect to 20% of the Option Shares on each of
the first five anniversaries of the Grant Date if Optionee remains in the continuous service as a
Director of the Company or any Subsidiary as of each such date.

          (b) Notwithstanding the foregoing, (i) the Option granted hereby shall become immediately
exercisable with respect to all of the Option Shares upon the occurrence of a Change of Control if
Optionee remains in the continuous service as a Director of the Company or any Subsidiary until the
date of the consummation of such Change of Control.

          (c) Optionee shall be entitled to the privileges of ownership with respect to Option Shares
purchased and delivered to Optionee upon the exercise of all or part of this Option.

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     5. Option Nontransferable. Optionee may not transfer or assign all or any part of the
Option other than by will or by the laws of descent and distribution. This Option may be
exercised, during the lifetime of Optionee, only by Optionee, or in the event of Optionee’s legal
incapacity, by Optionee’s guardian or legal representative acting on behalf of Optionee in a
fiduciary capacity under state law and court supervision.

     6. Notice of Exercise; Payment.

          (a) To the extent then exercisable, the Option may be exercised in whole or in part by written
notice to the Company stating the number of Option Shares for which the Option is being exercised
and the intended manner of payment. The date of such notice shall be the exercise date. Payment
equal to the aggregate Option Price of the Option Shares being purchased pursuant to an exercise of
the Option must be tendered in full with the notice of exercise to the Company in one or a
combination of the following methods as specified by Optionee in the notice of exercise: (i) cash
in the form of currency or check or by wire transfer as directed by the Company, (ii) solely
following an IPO or shares of the Company’s Class A-1 Common Stock otherwise being traded on an
established securities market, through the surrender to the Company of shares of Class A-1 Common
Stock owned by Optionee for at least six months as valued at their Fair Market Value on the date of
exercise or (iii) through such other form of consideration as is deemed acceptable by the Board.

          (b) As soon as practicable upon the Company’s receipt of the Optionee’s notice of
exercise and payment, the Company shall direct the due issuance of the Option Shares so purchased.

          (c) As a further condition precedent to the exercise of this Option in whole or in part,
Optionee shall comply with all regulations and the requirements of any regulatory authority having
control of, or supervision over, the issuance of the shares of Class A-1 Common Stock and in
connection therewith shall execute any documents which the Board shall in its sole discretion deem
necessary or advisable.

     7. Termination of Agreement. The Agreement and the Option granted hereby shall
terminate automatically and without further notice on the earliest of the following dates:

          (a) after Optionee’s termination of service as a Director of the Company and its Subsidiaries,
the lesser of (i) ninety (90) calendar days following the Optionee’s date of termination or (ii)
the remaining term of the Option;

          (b) The date of Optionee’s termination of service as a Director of the Company and its
subsidiaries for Cause; or

          (c) Ten (10) years from the Grant Date.

     In the event the Optionee’s employment is terminated in the circumstances described in Section
7(b) hereof, this Agreement shall terminate at the time of such termination

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notwithstanding any other provision of this Agreement and Optionee’s option will cease to be
exercisable to the extent exercisable as of such termination and will not be or become exercisable
after such termination. Upon the Optionee’s termination of service as Director of the Company,
and, if applicable, its Subsidiaries, all Options which are not then exercisable shall immediately
terminate.

     8. Call Right. Upon termination of Optionee’s service as a Director for any reason
prior to an IPO, the Company will have the right to purchase (the “Call Right”) any Option Shares
that Optionee received pursuant to the terms and conditions set forth in Article VI Call Rights of
the Stockholders Agreement.

     9. Initial Public Offering. Option Shares acquired on exercise of any Option will be
subject to the terms and conditions of the Stockholders’ Agreement. The Company and Optionee
acknowledge that they will agree to provide the Company with the right to require Optionee and
other executives of the Company or any Subsidiary to waive any registration rights with regard to
such Option Shares upon an IPO, in which a case the Company will implement an IPO bonus plan in
cash, stock or additional options to compensate for Optionee’s and the other executives’ loss of
liquidity.

     10. No Contract. Nothing contained in this Agreement shall (a) confer upon Optionee
any right to continue in service as a Director of the Company or any Subsidiary, or (b) limit or
affect in any manner the right of the Company’s stockholders to elect or remove Directors.

     11. Compliance with Law. The Company shall make reasonable efforts to comply with all
applicable federal and state securities laws; provided, however, that notwithstanding any other
provision of this Agreement, the Option shall not be exercisable if the exercise thereof would
result in a violation of any such law.

     12. Adjustments. The Board may make or provide for such substitution or adjustments
in the number of Option Shares covered by this Option, in the Option Price applicable to such
Option, and in the kind of shares covered thereby and/or such other equitable substitution or
adjustments as the Board may determine to prevent dilution or enlargement of Optionee’s rights that
otherwise would result from (a) any stock dividend, extraordinary cash-dividend, stock split,
combination of shares, recapitalization, or other change in the capital structure of the Company,
(b) any merger, consolidation, spin-off, split-off, spin-out, split-up, reclassification,
reorganization, partial or complete liquidation, or other distribution of assets or issuance of
rights or warrants to purchase securities, or (c) any other corporate transaction or event having
an effect similar to any of the foregoing. Such substitutions and adjustments may include, without
limitation, canceling any and all Options in exchange for cash payments equal to the excess, if
any, of the value of the consideration paid to a shareholder of an Option Share over the Option
Price per share subject to such Option in connection with such an adjustment event.

     13. Relation to Other Benefits. Any economic or other benefit to Optionee under this
Agreement shall not be taken into account in determining any benefits to which Optionee

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may be entitled under any plan maintained by the Company or any Subsidiary and shall not affect the
amount of any life insurance coverage available to any beneficiary under any life insurance plan,
if any, covering Optionee.

     14. Amendments. Any amendment to the Plan shall be deemed to be an amendment to this
Agreement to the extent that the amendment is applicable hereto; provided, however, that no
amendment shall adversely affect the rights of Optionee under this Agreement without Optionee’s
written consent.

     15. Severability. If one or more of the provisions of this Agreement is invalidated
for any reason by a court of competent jurisdiction, any provision so invalidated shall be deemed
to be separable from the other provisions hereof, and the remaining provisions hereof shall
continue to be valid and fully enforceable.

     16. Relation to Plan.  This Agreement is subject to the terms and conditions of the
Plan. In the event of any inconsistent provisions between this Agreement and the Plan, the Plan
shall govern. The Board acting pursuant to the Plan, as constituted from time to time, shall,
except as expressly provided otherwise herein, have the right to determine any questions which
arise in connection with the Option or its exercise.

     17. Successors and Assigns. The provisions of this Agreement shall inure to the
benefit of, and be binding upon, the successors, administrators, heirs, legal representatives and
assigns of Optionee, and the successors and assigns of the Company.

     18. Governing Law. The interpretation, performance, and enforcement of this Agreement
shall be governed by the laws of the State of Delaware, without giving effect to the principles of
conflict of laws thereof and all parties, including their successors and assigns, consent to the
jurisdiction of the state and federal courts of Delaware.

     19. Prior Agreement. As of the Grant Date, this Agreement 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 stock option
granted, including, without limitation, the stock option provisions of the Term Sheet. 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 o f 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.

     20. 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 business
days after having been mailed by United States registered or certified mail, return receipt
requested, postage prepaid, or three business days after having been sent by a nationally
recognized overnight courier service such as Federal Express, UPS, or Purolator, addressed to

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the Company (to the attention of the Secretary of the Company) at its principal executive offices
and to Optionee 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.

     21. 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.

     IN WITNESS WHEREOF, the Company has caused this Agreement to be executed on its behalf by its
duly authorized officer and Optionee has executed this Agreement, as of the day and year first
above written.

	 	 	 	 	 
	 	HealthMarkets, Inc.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	 	 
	 	
 	 
	 	Harvey C. DeMovick, Jr. 	 
	 	 	 
	 

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