AMENDED AND RESTATED
HEALTHMARKETS 2006 MANAGEMENT OPTION PLAN
1.
Purpose . The purpose of the Amended and Restated
HealthMarkets 2006 Management Option Plan is to attract and retain
officers and other key employees for HealthMarkets, Inc. (formerly
UICI), a Delaware corporation, and its Subsidiaries (as defined
below) and to provide to such persons incentives and rewards for
superior performance.
2.
Definitions . As used in this Plan:
“
409A Guidance ” has the meaning provided in
Section 16 of this Plan.
“
Affiliate ” of a Person means any Person which
directly or indirectly controls, is controlled by, or is under
common control with such Person.
“
Blackstone ” means The Blackstone Group.
“
Board ” means the Board of Directors of the Company
and, to the extent of any delegation by the Board to a committee
(or subcommittee thereof) pursuant to Section 13 of this Plan,
such committee (or subcommittee).
“
Business Combination ” has the meaning provided in
Section 8 of this Plan.
“
Change of Control ” has the meaning provided in
Section 8 of this Plan.
“
Class A-1 Common Stock ” means the shares of
Class A-1 Common Stock, par value $0.01 per share, of the
Company or any security into which such shares of Class A-1
Common Stock may be changed by reason of any transaction or event
of the type referred to in Section 7 of this Plan.
“
Code ” means the Internal Revenue Code of 1986, as
amended from time to time.
“
Company ” means HealthMarkets, Inc. (formerly UICI), a
Delaware corporation.
“
Controlling Interest ” in an entity will mean
(x) beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) of more than
50% of the equity securities representing more than 50% of the
voting power of the outstanding equity securities of the
entity.
“
Date of Grant ” means the date specified by the Board
on which a grant of Option Rights shall become effective (which
date shall not be earlier than the date on which the Board takes
action with respect thereto).
“
Director ” means a member of the Board.
“
Effective Time ” has the meaning provided in
Section 1.3 of the Merger Agreement.
“
Exchange Act ” means the Securities Exchange Act of
1934, as amended, and the rules and regulations thereunder, as such
law, rules and regulations may be amended from time to
time.
“
Fair Market Value ” shall have the meaning set forth
in the Stockholders Agreement.
“
Incentive Stock Options ” means Option Rights that are
intended to qualify as “incentive stock options” under
Section 422 of the Code or any successor provision.
“
Individual ” has the meaning provided in
Section 8 of this Plan.
“
IPO ” shall have the meaning set forth in the
Stockholders Agreement.
“
Management Objectives ” means the measurable
performance objective or objectives established, when so determined
by the Board, pursuant to this Plan for Participants who have
received grants of Option Rights pursuant to this Plan. Management
Objectives may be described in terms of Company-wide objectives or
objectives that are related to the performance of the individual
Participant or of the Subsidiary, division, department, region or
function within the Company or Subsidiary in which the Participant
is employed. The Management Objectives may be made relative to the
performance of other corporations.
If
the Board determines that a change in the business, operations,
corporate structure or capital structure of the Company, or the
manner in which it conducts its business, or other events or
circumstances render the Management Objectives unsuitable, the
Board may in its discretion modify such Management Objectives or
the related minimum acceptable level of achievement, in whole or in
part, as the Board deems appropriate and equitable.
“
Merger Agreement ” means the Agreement and Plan of
Merger dated September 15, 2005 by and among Premium Finance
LLC, a Delaware limited liability company, Mulberry Finance Co.,
Inc., a Delaware corporation, DLJMB IV First Merger LLC, a Delaware
limited liability company, Premium Acquisition, Inc., a Delaware
corporation (“ Merger Co 1 ”), Mulberry
Acquisition, Inc., a Delaware corporation (“ Merger Co
2 ”), DLJMB IV First Merger Co Acquisition Inc., a
Delaware corporation (“ Merger Co 3 ,” and,
together with Merger Co 1 and Merger Co 2, the “ Merger
Cos ”) and the Company, pursuant to which each of the
Merger Cos will be merged into the Company (the “
Merger ”) at the Effective Time.
“
Non-Employee Director ” means a director who is not an
employee of the Company or any Subsidiary.
“
Non-Qualified Stock Options ” means Option Rights
which are not intended to be Incentive Stock Options.
“
Optionee ” means the optionee named in an agreement
evidencing an outstanding Option Right.
“
Option Price ” means the purchase price payable on
exercise of an Option Right.
“
Option Right ” means the right to purchase shares of
Class A-1 Common Stock upon exercise of an option granted
pursuant to Section 4 of this Plan.
“
Outstanding Company Voting Securities ” means the
then-outstanding equity securities of the Company entitled to vote
generally in the election of directors.
“
Participant ” means a person who is selected by the
Board to receive Option Rights under this Plan and who is at the
time an officer or other employee of the Company or any one or more
of its Subsidiaries, or who has agreed to commence serving in any
of such capacities within 90 days of the Date of Grant, and shall
also include each Non-Employee Director who receives an award of
Option Rights.
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“
Permitted Holders ” has the meaning provided in
Section 8 of this Plan.
“
Person ” means any individual, sole proprietorship,
partnership, corporation, limited liability company, unincorporated
society or association, trust or other entity.
“
Plan ” means this Amended and Restated HealthMarkets
2006 Management Option Plan.
“
Stockholders Agreement ” means the UICI
Stockholders’ Agreement by and among investment funds
affiliated with The Blackstone Group, L.P., Goldman Sachs & Co.
and DLJ Merchant Banking Partners IV, L.P., the Company, and other
signatories thereto dated April 5 , 2006, as may be amended
from time to time.
“
Subsidiary ” means a corporation, company or other
entity (i) more than fifty percent (50%) of whose outstanding
shares or securities (representing the right to vote for the
election of directors or other managing authority) are, or
(ii) which does not have outstanding shares or securities (as
may be the case in a partnership, limited liability company, joint
venture or unincorporated association), but more than fifty percent
(50%) of whose ownership interest representing the right generally
to make decisions for such other entity is, now or hereafter, owned
or controlled, directly or indirectly, by the Company except that
for purposes of determining whether any person may be a Participant
for purposes of any grant of Incentive Stock Options,
“Subsidiary” means any corporation in which at the time
the Company owns or controls, directly or indirectly, more than
fifty percent (50%) of the total combined voting power represented
by all classes of stock issued by such corporation.
“
Tandem Option ” shall have the meaning assigned to
such term in Section 24 of the several agreements evidencing
the grant of the Option Rights granted to the Option Holders on May
8, 2006.
“
Ten Percent Employee ” means an employee of the
Company or any of its Subsidiaries who owns Class A-1 Common
Stock possessing more than ten percent (10%) of the total combined
voting power of all classes of stock of the Company.
3.
Shares Available Under this Plan . (a) Subject
to adjustment as provided in Section 3(b) and Section 7 of
this Plan, the number of shares of Class A-1 Common Stock that
may be issuable pursuant to Option Rights shall not exceed in the
aggregate 3,239,741 shares of Class A-1 Common Stock, plus any
shares issuable (not to exceed 849,600 shares) pursuant to the
Tandem Options to the extent that the Option Rights with respect to
which the Tandem Options are granted are not cancelled upon grant
of the Tandem Options. Subject to adjustment as provided in Section
3(b) and Section 7 of this Plan, the number of shares of
Class A-1 Common Stock that may be issuable to any single
Participant during the term of this Plan pursuant to Option Rights
shall not exceed in the aggregate 3,239,741 shares of
Class A-1 Common Stock, plus any shares issuable (not to
exceed 849,600 shares) pursuant to the Tandem Options to the extent
that the Option Rights with respect to which the Tandem Options are
granted are not cancelled upon grant of the Tandem Options. The
total number of available shares of Class A-1 Common Stock
that may be issuable upon exercise of Option Rights intended to be
Incentive Stock Options shall not exceed 3,239,741, plus any shares
issuable (not to exceed 849,600 shares) pursuant to the Tandem
Options to the extent that the Option Rights with respect to which
the Tandem Options are granted are not cancelled upon grant of the
Tandem Options. Such shares may be shares of original issuance or
treasury shares or a combination thereof.
(b) The
number of shares available in Section 3(a) above shall be adjusted
to account for shares relating to options that expire, are
forfeited or are transferred, surrendered or relinquished upon the
payment of any Option Price by the transfer to the Company of
shares of Class A-1 Common Stock or
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upon
satisfaction of any withholding amount. Upon payment in cash of the
benefit provided by any award granted under this Plan, any shares
that were covered by that award shall again be available for issue
or transfer hereunder; provided, however, that shares of
Class A-1 Common Stock withheld to satisfy tax withholding
obligations shall be deemed delivered for purposes of the
limitation set forth in the third sentence of
Section 3(a).
4.
Option Rights . The Board may, from time to time and
upon such terms and conditions as it may determine, authorize the
granting to Participants of options to purchase shares of Class A-1
Common Stock. Each such grant may utilize any or all of the
authorizations, and shall be subject to all of the requirements
contained in the following provisions:
(a) Option
Rights granted under this Plan may be (i) Incentive Stock
Options, (ii) Non-Qualified Stock Options, or
(iii) combinations of the foregoing.
(b) Each
grant shall specify the number of shares of Class A-1 Common
Stock to which it pertains subject to the limitations set forth in
Section 3 of this Plan.
(c) Each
grant shall specify an Option Price per share. The Option Price of
an Option Right may not be less than 100% of the Fair Market Value
on the Date of Grant, except that the Option Price of an Incentive
Stock Option issued to a Ten Percent Employee may not be less than
110% of the Fair Market Value on the Date of Grant.
(d) The
Option Price shall be payable in (i) cash in the form of
currency or check or by wire transfer as directed by the Company or
(ii) such other form of consideration as is deemed acceptable
by the Board.
(e) The
Company may provide for payment of the Option Price by the
Optionee, in installments, if the Optionee so elects, with or
without interest, upon terms determined by the Board.
(f) Successive
grants may be made to the same Participant whether or not any
Option Rights previously granted to such Participant remain
unexercised.
(g) Each
grant shall specify the period or periods of continuous service by
the Optionee with the Company or any Subsidiary that is necessary
before the Option Rights or installments thereof will become
exercisable and may provide for the earlier exercise of such Option
Rights in the event of a Change of Control or such other times as
the Board shall determine.
(h) Any
grant of Option Rights may specify Management Objectives that must
be achieved as a condition to the exercise of such
rights.
(i) The
Board may, at or after the Date of Grant of any Option Rights
(other than Incentive Stock Options), provide for the payment of
dividend equivalents to the Optionee.
(j) No
Option Right shall be exercisable more than 10 years from the
Date of Grant (5 years with respect to Incentive Stock Options
granted to a Ten Percent Employee).
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