Document:

Exhibit 10.3

Exhibit 10.3

EXECUTION

RESTRICTED SHARE AGREEMENT

This AGREEMENT, is made as of September 27, 2010 (the “Effective Date”), by and between
HealthMarkets, Inc., a Delaware corporation (together with its successors and assigns, the
“Company”), and Kenneth Fasola (the “Executive”);

WHEREAS, on the Effective Date the Company and the Executive entered into an employment
agreement with respect to the Executive’s employment as an executive of the Company and certain
related terms, dated as of September 24, 2010 (the “Employment Agreement”);

WHEREAS, the Company, acting through the Compensation Committee with the consent of the Board
has agreed to grant to the Executive, effective on the Effective Date, restricted shares of the
Company’s Class A-1 Common Stock (the “Restricted Shares”) on the terms and subject to the
conditions set forth in this Agreement;

WHEREAS, the Restricted Shares shall be subject to the terms of the Stockholders Agreement (as
amended with respect to the Executive by the Employment Agreement).

NOW, THEREFORE, in consideration of the promises and of the mutual agreements contained in
this Agreement, the parties hereto hereby agree as follows:

1. Capitalized Terms. Capitalized terms not defined herein shall have the definitions
ascribed to such terms in the Plan or the Employment Agreement, as the case may be.

2. Grant. Subject to and upon the terms, conditions, and restrictions set forth in
this Agreement, the Company hereby grants to the Executive 200,000 Restricted Shares as of the date
hereof.

3. Issuance of Stock. The Restricted Shares shall be subject to the restrictions
described herein. The Restricted Shares shall bear appropriate legends with respect to the
restrictions described herein.

4. Vesting. Subject to the Executive’s remaining in the continuous employ of the
Company or any Subsidiary through the applicable vesting date, except as otherwise provided in
Section 6 hereof, and the Company’s achievement of an “Adjusted EBITDA” of at least $5 million for
at least one fiscal quarter occurring during the time period from the date of this Agreement
through the first anniversary of the date hereof, the Restricted Shares shall vest in twenty (20)
equal quarterly installments with the first installment vesting on the last day of the third
calendar month following the Effective Date (December 31, 2010); provided, that to the extent the
performance hurdle is satisfied after any such Restricted Shares would have otherwise vested (if
the passage of time was the only vesting requirement), the portion of the Restricted Shares that
would have vested on such date shall not vest on such date, but shall instead vest on the date of
satisfaction of the performance hurdle (including, in the case of the achievement of the
performance hurdle, if the Executive’s employment is terminated under the circumstances set forth
in Section 6(b) and 6(c) below prior to the satisfaction of the performance hurdle); provided,
further, that the Restricted Shares shall immediately vest in full upon a Change of Control
(whether or not the performance hurdle is satisfied as of the time of the Change of Control). For
the purposes of this Section 4, Adjusted EBITDA is to be determined consistent with past practices
and to be based on being fully accrued for Senior Executive amounts. Adjusted EBITDA excludes all
transaction amounts and awards, special Board directed programs and actions, Insphere formation and
transformation expenses and related balance sheet adjustments.

 

 

 

5. Restrictions. No portion of the Restricted Shares or rights granted hereunder may
be sold, transferred, assigned, pledged or otherwise encumbered or disposed of by the Executive
until such portion of the Restricted Shares becomes vested, and any purported sale, transfer,
assignment, pledge, encumbrance or disposition shall be void and unenforceable against the Company.

6. Termination of Employment.

(a) General. Except as provided immediately below, if the Executive’s employment
terminates for any reason, the Restricted Shares, to the extent not then vested will be immediately
forfeited; provided that if the performance hurdle is satisfied after the date the Executive’s
employment terminates, the Executive shall be deemed to have vested in the number of Restricted
Shares that would have vested if he remained employed through such date.

(b) Without Cause; for Good Reason. If the Executive’s employment is terminated by
the Company without Cause (which shall for purposes of this Agreement include a termination of the
Executive’s employment upon conclusion of the Employment Term (as defined in the Employment
Agreement) after the Company’s giving the Executive a notice of non-renewal of the Employment Term)
or by the Executive for Good Reason, as of the date of termination, the Restricted Shares that
would have vested if the Executive had remained employed through the first anniversary of the date
of termination will vest. Notwithstanding the foregoing, if the Executive’s employment is
terminated without Cause or for Good Reason (i) after a definitive agreement is entered into which
will result in a Change of Control (provided such agreement results in a Change of Control) or (ii)
within six months prior to a Change of Control, the Restricted Shares shall be treated as if they
had fully vested as of the date of the Change of Control (whether or not the performance hurdle is
satisfied as of the date of the Change of Control).

(c) Death; Disability. If the Executive’s employment is terminated by reason of the
Executive’s death or Disability, as of the date of termination, the Restricted Shares that would
have vested if the Executive had remained employed through the first anniversary of the date of
termination will vest; provided, however, that it shall be a condition to the vesting of the
Restricted Shares in the event of the Executive’s death that the Person receiving the Shares shall
(i) have agreed in a form satisfactory to the Company to be bound by the provisions of this
Agreement and, if there has been no Change of Control or an IPO, the Stockholders Agreement (as
modified by the Employment Agreement) and (ii) comply with all regulations and the requirements of
any regulatory authority having control of, or supervision over, the issuance of the Shares and in
connection therewith shall execute any documents which the Board shall in its sole discretion deem
necessary or advisable.

(d) Cause. Notwithstanding the foregoing or any provision of this Agreement or the
Employment Agreement to the contrary, if the Executive’s employment is terminated by the Company
for Cause, all unvested Restricted Shares will be immediately forfeited as of the date of
termination; provided that if the performance hurdle is satisfied after the date the Executive’s
employment terminates, the Executive shall be deemed to have vested in the number of Restricted
Shares that would have vested if he remained employed through such date.

7. Call Right. Upon termination of the Executive’s employment for any reason prior to
an IPO or a Change of Control, the Company will have the right to purchase (the “Call Right”) any
Shares that the Executive received pursuant to the terms and conditions set forth in the
Stockholders Agreement, as amended by the Employment Agreement.

 

 

 

8. Initial Public Offering. The Restricted Shares shall be subject to the terms and
conditions of the Stockholders’ Agreement, as amended by the Employment Agreement. The Company
and the Executive acknowledge that they will agree to provide the Company with the right to
require the Executive and other executives of the Company or any Subsidiary to waive any
registration rights with regard to such Shares upon an IPO, in which case the Company will
implement an IPO bonus plan in cash, stock or additional options to compensate for the Executive’s
and the other executives’ loss of liquidity; provided that if the Executive’s employment is
terminated without Cause or for Good Reason, then the Executive shall fully vest upon the date of
termination in any grant made under such IPO bonus plan.

9. Executive Shareholder Rights. Prior to the date on which the Restricted Shares
vest, except as otherwise set forth herein, the Executive shall have all rights of a shareholder
with respect to the Restricted Shares. Notwithstanding the foregoing, cash dividends, if any, paid
with respect to any Restricted Shares which have not vested at the time of the dividend payment
shall be paid to and held in the custody of the Company, and shall be subject to the same
restrictions that apply to the corresponding Restricted Shares, and shall be released from the
custody of the Company at such time as the restrictions on the underlying Shares to which the
dividends relate have lapsed. At such time as any Restricted Share vests, any such custodial
dividends held by the Company (including any interest thereon payable in accordance with this
Section 9) with respect to such vested share shall be paid to the Executive.

10. No Employment Contract. Nothing contained in this Agreement shall (a) confer upon
the Executive any right to be employed by or remain employed by the Company or any Subsidiary, or
(b) limit or affect in any manner the right of the Company or any Subsidiary to terminate the
employment or adjust the compensation of the Executive.

11. Taxes and Withholding. The Company or any Subsidiary may withhold, or require the
Executive to remit to the Company or any Subsidiary, an amount sufficient to satisfy federal,
state, local or foreign taxes (including the Executive’s FICA obligation) in connection with any
payment made or benefit realized by the Executive or other person under this Agreement or
otherwise, and the amounts available to the Company or any Subsidiary for such withholding are
insufficient, it shall be a condition to the receipt of such payment or the realization of such
benefit that the Executive or such other person make arrangements satisfactory to the Company or
any Subsidiary for payment of the balance of such taxes required to be withheld. The Executive may
elect to have such withholding obligation satisfied by surrendering to the Company a portion of the
Shares that is issued or transferred to the Executive upon the vesting of the Restricted Shares
(but only to the extent of the minimum withholding required by law), and the Shares so surrendered
by the Executive shall be credited against any such withholding obligation at the Fair Market Value
of such Shares on the date of such surrender (and the amount equal to the Fair Market Value of such
shares shall be remitted to the appropriate tax authorities). The Executive shall also have the
put right set forth in subclause (ii) of the last sentence of Section 17 of the Employment
Agreement.

12. 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 Restricted Shares shall not vest if the vesting thereof would
result in a violation of any such law.

13. Adjustments. In the event of any stock split, reverse stock split, share
dividend, merger, consolidation or other event after the Effective Date that makes an equitable
adjustment appropriate, the Board shall make such substitution or adjustment (including cash
payments) in the number and kind of Restricted Shares covered thereby and/or such other equitable
substitution or adjustments as it determines in good faith to be equitable. In connection with a
Change of Control, such substitutions and adjustments may include, without limitation, canceling
any and all Restricted Shares in
exchange for cash payments equal to the Fair Market Value of the Restricted Shares in
connection with such an adjustment event.

 

 

 

14. Relation to Other Benefits. Any economic or other benefit to the Executive under
this Agreement shall not be taken into account in determining any benefits to which the Executive
may be entitled under any profit-sharing, retirement or other benefit or compensation 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 covering employees of the
Company or any Subsidiary.

15. 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 the Executive under this Agreement or the Employment
Agreement without the Executive’s written consent.

16. 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.

17. Relation to Plan. This Agreement is subject to the terms and conditions of the
Plan; provided, however, that in the event of any inconsistent provisions between this Agreement
and the Plan, this Agreement shall govern. In addition, in the event of any inconsistent
provisions between the Plan and the Employment Agreement, the Employment Agreement 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 (in good faith) any questions which arise in
connection with the Restricted Shares.

18. 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 the Executive, and the successors and assigns of the Company.

19. 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.

20. Prior Agreement; Employment Agreement. As of the date that the Executive
countersigns this Agreement, this Agreement will supersede 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 (other than the
Employment Agreement and its Exhibits). 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 or in Sections 4(c) and 10(i) of the Employment Agreement, and that no
prior and/or contemporaneous agreement, statement or promise pertaining to the subject matter
hereof that is not contained in this Agreement (or Sections 4(c) and 10(i) of the Employment
Agreement) shall be valid or binding on either party. Sections 24 and 25 of the Employment
Agreement shall be incorporated in full herein; provided that any reference to “this Agreement”
shall be a reference to this Agreement.

 

 

 

21. 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 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.

22. 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.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

 

 

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

	 	 	 	 	 
	 	HealthMarkets, Inc.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	
 	 
	 	EXECUTIVE 	 
	 	Name:  Kenneth FasolaExhibit 10.4

Exhibit 10.4

HEALTHMARKETS, INC.

FORM OF SUBSCRIPTION AGREEMENT

HealthMarkets, Inc.

9151 Boulevard 26

North Richland Hills, Texas 76180

Ladies and Gentlemen:

1. Subscription for Class A-1 Common Stock. The undersigned subscriber (the
“Subscriber”) hereby irrevocably tenders this Subscription Agreement (this
“Agreement”) to HealthMarkets, Inc., a Delaware corporation (the “Company”),
subscribes for and offers to purchase and acquire [_____] shares of Class A-1 Common Stock, par value
$0.01 per share, of the Company and agrees to pay therefor, and in full payment thereof, $[_____] per
share, in cash, in the aggregate amount of $[_____] (the “Subscription Price”). In
accordance with the terms of this Agreement, the Subscriber shall make payment of the Subscription
Price by check or wire transfer as directed by the Company. Simultaneously with the foregoing, the
Company will instruct Mellon Investor Services to credit a book entry account in the Subscriber’s
name to evidence the number of shares of Class A-1 Common Stock purchased by the Subscriber.

2. Subscriber Representations and Warranties. The Subscriber hereby represents,
warrants acknowledges and agrees as follows:

(a) Authorization. The Subscriber has full power and authority to execute,
deliver and perform this Agreement and to acquire the Class A-1 Common Stock. This
Agreement constitutes a valid and binding obligation of the Subscriber, enforceable in
accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization and
moratorium laws and other laws of general application affecting enforcement of creditors’
rights generally.

(b) Purchase for Own Account. The Class A-1 Common Stock will be acquired for
investment only and solely for the Subscriber’s own account, and not as a nominee or agent
for any other person, and not with a view to the public resale or distribution thereof
within the meaning of the Securities Act of 1933, as amended (the “Securities Act”),
and the Subscriber has no present intention of selling, granting any participation in, or
otherwise distributing the same.

(c) Disclosure of Information. The Subscriber has had the opportunity to
review all documents and information which the Subscriber has requested concerning its
investment and the Company. The Subscriber has had the opportunity to ask questions of and
receive answers regarding the Company’s business, management and financial affairs and the
terms and conditions of the Class A-1 Common Stock.

 

 

 

(d) Investment Experience; Ability to Bear Economic Risk. The Subscriber (i)
understands that the purchase of the Class A-1 Common Stock involves substantial risk, (ii)
has adequate means of providing for his current needs and possible contingencies, (iii) has
no need for liquidity in his investment in the Company, and (iv)
can bear the economic risk of losing his entire investment in the Company. The
Subscriber has a preexisting personal or business relationship with the Company and/or
certain of its officers, directors or controlling persons of a nature and duration that
enables the Subscriber to be aware of the character, business acumen and financial
circumstances of the Company and such persons.

(e) Independent Investment Decision. The Subscriber acknowledges that he has,
independently and without reliance upon the Company or any other person, and based on such
information as the Subscriber has deemed appropriate, made his own investment analysis and
decision to enter into this Agreement. No representations or warranties, oral or otherwise,
have been made to the Subscriber or any party acting on the Subscriber’s behalf other than
those contained in this Agreement.

(f) Restricted Securities. The Subscriber understands that the Class A-1
Common Stock will not be registered under the Securities Act and that, as such, the Class
A-1 Common Stock may be resold without registration under the Securities Act, or pursuant to
an exemption from, or in a transaction not subject to, the registration requirements of the
Securities Act.

(g) United States Person. The Subscriber is a “United States Person” within
the meaning of Section 7701(a)(30) of the Internal Revenue Code.

3. Company Representations and Warranties. The Company hereby represents, warrants
acknowledges and agrees as follows:

(a) Authorization of Class A-1 Common Stock. The shares of Class A-1 Common
Stock issued in connection with this Agreement are duly authorized and, when issued and
delivered in accordance with the terms hereof, will be validly issued, fully paid and
nonassessable, free and clear of any lien, security interest or other charge or encumbrance
of any kind (collectively, “Liens”) or pre-emptive right.

(b) Authorization; No Conflicts. The Company is a Delaware corporation and has
all necessary corporate power and authority to execute, deliver and perform its obligations
under this Agreement and to issue and deliver to the Subscriber the shares of Class A-1
Common Stock. This Agreement constitutes a valid and binding obligation of the Company,
enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization and moratorium laws and other laws of general application affecting
enforcement of creditors’ rights generally. The execution and delivery of this Agreement
and the issuance of the shares of Class A-1 Common Stock will not (i) require any consent or
approval of, or filing with, any governmental body, agency or official or of any other third
party, (ii) violate, conflict with or cause a breach or a default under the Company’s
certificate of incorporation or by-laws or any agreement to which the Company is a party,
and (iii) violate any judgment, injunction, order, decree, statute, rule or regulation
applicable to the Company.

 

-2-

 

(c) Stockholders Agreement. Reference is hereby made to (i) that certain
Stockholders Agreement (the “Stockholders Agreement”), dated as of April 5, 2006, by
and among the Company and the Stockholders (as defined therein), and that certain
Employment Agreement (the “Employment Agreement”), dated as of the date hereof, by
and among the Company, the Subscriber and Blackstone Management Associates IV L.L.C. The
Company hereby acknowledges that, pursuant to the Employment Agreement, the Subscriber has
agreed to become a party to the Stockholders Agreement (as amended by the Employment
Agreement) and that the Employment Agreement shall act as a joinder for all purposes under
the Stockholders Agreement.

4. Notices. All notices delivered hereunder shall be in writing and shall be deemed
to have been given when hand delivered, when received if sent by facsimile or by same day or
overnight recognized commercial courier service or three days after mailed by registered or
certified mail, addressed to the address set forth on the signature page for the party to which
notice is given, or to such changed address(es) as such party may have fixed by notice, provided
however, that any notice of change of address shall be effective only upon receipt.

5. Governing Law. This Agreement shall be governed by, and construed in accordance
with, the laws of the State of Delaware, without giving effect to the principles of conflict of
laws of that State.

6. Further Assurances. The Subscriber will provide the Company with such documents
supporting the representations of the Subscriber in this Agreement as the Company may reasonably
request.

7. Amendment. Neither this Agreement nor any provisions hereof shall be modified,
discharged or terminated except by an instrument in writing signed by the Company and the
Subscriber.

8. Severability. Whenever possible, each provision or portion of any provision of
this Agreement will be interpreted in such manner as to be effective and valid under applicable law
but if any provision or portion of this Agreement is held to be invalid, illegal or unenforceable
in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or
unenforceability will not affect any other provision or portion of any provision in such
jurisdiction, and this Agreement will be reformed, construed and enforced in such jurisdiction as
if such invalid, illegal or unenforceable provision or portion of any provision had never been
contained herein.

9. Successors and Assigns. Except as otherwise provided herein, the terms and
conditions of this Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties. Nothing in this Agreement, express or implied, is intended
to confer upon any party other than the parties hereto or their respective successors and assigns
any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement.

 

-3-

 

10. Entire Agreement. This Agreement and the other agreements or documents referred
to herein (including, without limitation, Sections 4(d), 8 and 9(d) of the Employment Agreement)
contain the entire agreement of the parties, and there are no representations,
warranties, covenants or other agreements except as stated or referred to herein and in such
other agreements or documents.

11. Expenses. Except as set forth in the Employment Agreement, each party hereto
shall pay its own costs and expenses in connection with the transactions contemplated hereby.

[Signatures Appear on the Next Page]

 

-4-

 

The Subscriber has executed or caused this Agreement to be duly executed this
 _____ 

day of September,
2010.

Number of Shares Subscribed For: [_____]

Amount Tendered Herewith [x Price Per Share of $ $[____]] $[______]

	 	 	 	 	 	 	 
	 

	 	Subscriber:	 	 	 	 
	 

	 	Name:
	 	 

KENNETH FASOLA
	 	 
	 
	 	 	 	 	 	 
	 

	 	Address:	 	 	 	 
	 

	 	 	 	[INSERT ADDRESS]	 	 
	 

	 	 	 	[INSERT ADDRESS]	 	 

Accepted on this
 _____ 

day of September, 2010.

HealthMarkets, Inc.

	 	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

Name:
	 	 
	 

	 	Title:	 	 

Wire Transfer Instructions:

JPMorgan Chase

ABA# 021000021

Account Name: HealthMarkets, Inc

Account#: 713444768

Address: NRH, TX

 

-5-

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00178-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00178-of-00352.parquet"}]]