Document:

exv10w9

Exhibit 10.9

EXECUTION VERSION

FORM OF NONQUALIFIED STOCK OPTION AGREEMENT

     This AGREEMENT (this “Agreement”) is made as of September 8, 2009 (the “Effective Date”) by
and between HealthMarkets, Inc., a Delaware corporation (together with its successors and assigns,
the “Company”), and Anurag Chandra (“Optionee”).

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

     WHEREAS, the Company and the Optionee are party to a Nonqualified Stock Option Agreement as of
October 15, 2008 (the “Prior Stock Option Agreement”);

     WHEREAS, the Company and the Optionee wish to cancel the Prior Stock Option Agreement in its
entirety with this Agreement;

     WHEREAS, the Company, acting through the Compensation Committee with the consent of the Board
has agreed to grant to Optionee, effective on the Effective Time, Options (as defined in Section 2
of this Agreement) under the Company’s 2006 Management Option Plan (the “Plan”) to purchase a
number of shares of the Company’s Class A-1 Common Stock (the “Shares”) on the terms and subject to
the conditions set forth in this Agreement and the Plan;

     WHEREAS, future securities in the Company (including those being acquired pursuant to this
Agreement) owned by Optionee shall be subject to the terms of the Stockholders 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. 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) “Board” means the Board of Directors of the Company.

          (b) “Cause” has the meaning specified in the Employment Agreement.

          (c) “Change of Control” has the meaning specified in the Employment Agreement.

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

          (e) “Disability” has the meaning specified in the Employment Agreement.

          (f) “Fair Market Value” shall have the meaning specified in, and shall be construed and
determined in accordance with the procedures set forth in, the Employment Agreement.

          (g) “Good Reason” has the meaning specified in the Employment Agreement.

     2. Grant of Stock Option/Exercise Price. Subject to and upon the terms, conditions,
and restrictions set forth in this Agreement, including, without limitation, Section 9 and the
Plan, the

 

 

Company hereby grants to Optionee options to purchase 303,990 Shares (the “Options”) as of the
date hereof. The Shares subject to the Option may be purchased pursuant to the Options at a price
(the “Option Price”) equal to $19.37 per Share. The Options are intended to be nonqualified stock
options 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 Options. The term of the Options shall commence at the Effective Date and,
unless earlier terminated in accordance with the terms of this Agreement, shall expire ten (10)
years from the Effective Date.

     4. Right to Exercise. Unless terminated as hereinafter provided and except as
otherwise provided in Section 7, the Options shall become exercisable (i.e., vested) in quarterly
installments determined based on 30% of the Options vesting by the first anniversary of June 4,
2009 (such that 7.5% of the Option shall vest quarterly up through such first anniversary), an
additional 20% vesting by each of the second, third and fourth anniversaries of June 4, 2009 (such
that 5% of the Option shall vest quarterly after such first anniversary) and the remaining 10%
vesting by the fifth anniversary of June 4, 2009 (such that 2.5% of the Option shall vest quarterly
after such fourth anniversary), in each case, subject to Optionee’s remaining in the continuous
employ of the Company or any Subsidiary through the applicable vesting date; provided, that to the
extent the Effective Time occurs after any such quarterly vesting date or the vesting required upon
a termination of employment in Sections 7(b) or 7(c), the portion of the Options that would have
vested on such date shall not vest on such date, but shall instead vest on the Effective Time;
provided further, that such Options shall become fully exercisable upon a Change of
Control.

     5. Option Nontransferable. Optionee may not transfer or assign all or any part of the
Options other than by will or by the laws of descent and distribution. The Options 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. Optionee shall be entitled to the
privileges of ownership with respect to Shares purchased and delivered to Optionee upon the
exercise of all or part of the Options.

     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 Shares for which the Options are 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 Shares being purchased pursuant to an exercise of the Options
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) through the surrender to the
Company of Shares as valued at their Fair Market Value on the date of exercise (including by having
the Company withhold Shares upon exercise of the Option) or (iii) through such other form of
consideration as is deemed acceptable by the Board. In this regard, while the Shares are not
publicly traded, upon the Optionee’s request (or that of any Person authorized to exercise to the
Option as set forth herein or in the Plan), the Board shall communicate to the Optionee (or such
other Person) the Fair Market Value of the Shares as of the date of such request in a timely manner
to enable the Optionee (or such other Person) to exercise his vested Options.

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

 

 

          (c) As a further condition precedent to the exercise of the Options 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 and in connection therewith shall
execute any documents which the Board shall in its sole discretion deem necessary or advisable.

     7. Termination of Employment.

          (a) General. Except as provided immediately below, if Optionee’s employment
terminates for any reason, the Options, to the extent not then vested (i.e., exercisable), will be
immediately forfeited and all vested Options will remain exercisable for the shorter of (1) 90 days
following the date of termination and (2) the remainder of their original scheduled term; provided
that if such termination is prior to the Effective Time, the Options that would have vested as of
the date of termination if vesting was based solely on the passage of time shall vest as of the
Effective Time and Optionee shall have 90 days following the Effective Time to exercise such vested
Options. For the avoidance of doubt, any reference to any Option being or becoming vested shall
also mean it has become or will become “exercisable”.

          (b) Without Cause; for Good Reason. If Optionee’s employment is terminated by the
Company without Cause (which shall for purposes of this Agreement include a termination of the
Optionee’s employment upon conclusion of the Employment Term (as defined in the Employment
Agreement) after the Company’s giving the Optionee a notice of non-renewal of the Employment Term)
or by Optionee for Good Reason, to the extent not previously cancelled or expired, as of the date
of termination Optionee’s unvested Options that would have vested if Optionee had remained employed
through the first anniversary of the date of termination will vest and all vested Options will
remain exercisable for the shorter of (1) one year following the date of termination and (2) the
remainder of their original scheduled term. Notwithstanding the foregoing, if Optionee’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 Options shall be treated as if they had
fully vested as of the date of the Change of Control.

          (c) Death; Disability. If Optionee’s employment is terminated by reason of Optionee’s
death or Disability, to the extent not previously cancelled or expired, as of the date of
termination Optionee’s unvested Options that would have vested if Optionee had remained employed
through the first anniversary of the date of termination will vest and all vested Options will
remain exercisable for the shorter of (1) one year following the date of termination and (2) the
remainder of their original scheduled term; provided, however, that it shall be a condition to the
exercise of the Options in the event of Optionee’s death that the Person exercising the Options
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 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 Optionee’s employment is terminated by the Company for
Cause, all options, whether or not vested, will be immediately forfeited as of the date of
termination.

     8. Call Right. The Company will have the right to purchase (the “Call Right”) any
Shares that Optionee received pursuant to the terms and conditions of the Stockholders Agreement.

 

 

     9. Effective Time. The Options granted hereby shall be and become effective (the
“Effective Time”) upon the the delivery of an executed counterpart of this Agreement to the Company
by Optionee. Notwithstanding the foregoing, the Options granted hereby shall be subject to the
approval of the stockholders of the Company of an amendment to the Plan increasing the authorized
Share number thereunder (and thereby permitting the grant of the Options thereunder) and the
maximum number of Options that may be granted to any individual under the Plan. For the avoidance
of doubt, in the event that such stockholder approval is not obtained by the earlier of (x) the
Amendment Approval Date or (y) a Change of Control, this Agreement and the grant of Options
hereunder (and the cancelling of the Prior Stock Option Agreement) shall be null and void ab initio
and be of no further force or effect.

     10. Initial Public Offering. 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 Shares upon an IPO, in which 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;
provided that if the Optionee’s employment is terminated without Cause or for Good Reason, then the
Optionee shall fully vest upon the date of termination in any grant made under such IPO bonus plan.

     11. No Employment Contract. Nothing contained in this Agreement shall (a) confer upon
Optionee 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 Optionee.

     12. Taxes and Withholding. The Company or any Subsidiary may withhold, or require
Optionee to remit to the Company or any Subsidiary, an amount sufficient to satisfy federal, state,
local or foreign taxes (including Optionee’s FICA obligation) in connection with any payment made
or benefit realized by Optionee 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 Optionee 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 Company or any Subsidiary may elect to have
such withholding obligation satisfied by having Optionee surrender to the Company or any Subsidiary
a portion of the Shares that is issued or transferred to Optionee upon the exercise of an Option
(but only to the extent of the minimum withholding required by law), and the Shares so surrendered
by Optionee shall be credited against any such withholding obligation at the Fair Market Value of
such shares on the date of such surrender.

     13. 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 Options shall not be exercisable if the exercise thereof would
result in a violation of any such law.

     14. 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 of Shares covered by the Options, in the Option Price applicable to such
Options, and in the kind of shares covered thereby and/or such other equitable substitution or
adjustments as it determines in good faith to be equitable. In addition to, and notwithstanding
the foregoing, the Option Price shall be adjusted downward (to the extent practicable without
causing adverse tax consequences to Optionee) for any dividends paid to the Sponsors after the
Effective Date. In connection with a Change of Control, 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 a Share over the Option Price per Share subject to such Option in connection with such an
adjustment event.

     15. 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 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.

     16. 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.

     17. 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.

     18. 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. 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 Option or its exercise.

     19. 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.

     20. 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.

     21. Prior Agreement; Employment Agreement. As of the date that the Optionee
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 23 and 24 of the Employment
Agreement shall be incorporated in full herein, provided that any reference to “the Executive”
shall be deemed to be a reference to the Optionee and any reference to “this Agreement” shall be a
reference to this Agreement. Without limiting the generality of the foregoing, by execution of
this Agreement, the Optionee hereby agrees that effective immediately, the Prior Stock Option
Agreement and the options granted thereunder, whether vested or unvested, shall be cancelled and
void and the Prior Stock Option Agreement shall be of no further force or effect unless this
Agreement becomes null and void in accordance with the last sentence of Section 9 above.

 

 

     22. 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 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.

     23. 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:	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	OPTIONEE	 	 	 	 
	 

	 	Name:
	 	Anurag Chandraexv10w10

Exhibit 10.10

EXECUTION VERSION

FORM OF

RESTRICTED SHARE AGREEMENT

     This AGREEMENT, is made as of September 8, 2009 (the “Effective Date”), by and between
HealthMarkets, Inc., a Delaware corporation (together with its successors and assigns, the
“Company”), and Anurag Chandra (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 (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 Time, 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.

     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 Employment Agreement.

     2. Grant. Subject to and upon the terms, conditions, and restrictions set forth in
this Agreement, including, without limitation, Section 9, the Company hereby grants to the
Executive 303,990 Restricted Shares as of the date hereof pursuant to Section 4(c)(ii) of the
Employment Agreement.

     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” (as determined in
accordance with Schedule 1 to the Employment Agreement) of at least $10 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 quarterly installments
determined based on 30% of the Restricted Shares vesting by the first anniversary of June 4, 2009
(such that 7.5% of the Restricted Shares shall vest quarterly up through such first anniversary),
an additional 20% vesting by each of the second, third and fourth anniversaries of June 4, 2009
(such that 5% of the Restricted Shares shall vest quarterly after such first anniversary) and the
remaining 10% vesting by the fifth anniversary of June 4, 2009 (such that 2.5% of the Restricted
Shares shall vest quarterly after such fourth anniversary); provided, that to the extent the
Effective Time occurs or 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 Effective Time or the date of satisfaction of the performance hurdle, as
applicable (including, in the case of achievement of the performance hurdle, if the Executive’s
employment is terminated under the

 

 

circumstances set forth in Sections 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).

     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.
The period of time between the Effective Date and the date all Restricted Shares become vested is
referred to herein as the “Restriction Period.”

     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 Effective Time or 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 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 Effective Time or 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. The Company will have the right to purchase (the “Call Right”) any
Shares that Optionee received pursuant to the terms and conditions of the Stockholders Agreement.

 

 

     8. Initial Public Offering. The Restricted Shares shall be subject to the terms and
conditions of the Stockholders’ Agreement, as amended by Section 8 of 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. Effective Time. The Restricted Shares granted hereby shall be and become effective
upon the later of (i) the delivery of an executed counterpart of this Agreement to the Company by
the Executive and (ii) the approval of the stockholders of the Company of a plan permitting the
issuance of Restricted Shares (the “Plan”) (such later date, the “Effective Time”). For the
avoidance of doubt, in the event that such stockholder approval is not obtained by the earlier of
(x) the Amendment Approval Date or (y) a Change of Control, this Agreement and the grant of
Restricted Shares hereunder shall be null and void ab initio and be of no further force or effect.
The Company also represents to the Executive that no provision of the Plan that is inconsistent
with this Agreement or the Employment Agreement will adversely affect the Restricted Shares.

     10. 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 10) with respect to such vested share shall be paid to the Executive.

     11. 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.

     12. 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 16 of the Employment
Agreement.

 

 

     13. 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.

     14. 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.

     15. 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.

     16. 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.

     17. 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.

     18. 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.

     19. 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.

     20. 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.

     21. 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 23 and 24 of the Employment Agreement shall be incorporated
in full herein, provided that any reference to “this Agreement” shall be a reference to this
Agreement.

     22. 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.

     23. 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 the Executive has executed this Agreement, as of the day and year first
above written.

	 	 	 	 	 	 	 
	 	 	HealthMarkets, Inc.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 	 	EXECUTIVE	 	 
	 	 	Name: Anurag Chandra

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