HealthMarkets,
LLC
c/o HealthMarkets, Inc.
9151 Grapevine Highway
North Richland Hills, Texas 76180
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William J.
Gedwed
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President and
Chief Executive Officer
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Reference is
made to the Placement Agreement, dated as of August 9, 2006
(the “Placement Agreement”), between and among
Grapevine Finance LLC (the “Issuer”), HealthMarkets LLC
(“HealthMarkets”) and The Blackstone Group L.P.
(“Blackstone”), pursuant to which Blackstone agreed to
act as Placement Agent in connection with the offering and sale by
the Issuer of the Issuer’s 6.7120% Notes due July 15,
2021 in the aggregate principal amount of $72,350,000 (the
“Notes”). This letter confirms the understanding and
agreement (“Agreement”) between Blackstone and
HealthMarkets, Inc. (the “Company”) regarding the
compensation to be paid to Blackstone by HealthMarkets in
connection with the transactions contemplated by the Placement
Agreement.
Upon the later
of (a) consummation of the sale of the Notes or
(b) approval of this Agreement and the transactions
contemplated hereby by a majority of directors of the Company not
affiliated with Blackstone, the Company agrees to pay Blackstone a
placement fee in the amount of 2.1% of the aggregate principal
amount of the Notes.
In addition to
any fees that may be payable to Blackstone under this Agreement,
the Company agrees to reimburse Blackstone, upon request made from
time to time, for Blackstone’s reasonable out-of-pocket
expenses incurred in connection with the services rendered by
Blackstone under the Placement Agreement (including, without
limitation, travel and lodging, data, word processing, graphics and
communication charges, research costs, courier services and fees,
expenses and disbursements of any legal counsel retained by
Blackstone).
Except as
required by applicable law, any advice to be provided by Blackstone
under the terms of the Agreement shall not be disclosed publicly or
made available to third parties without the prior written consent
of Blackstone. In addition, Blackstone may not be otherwise
publicly referred to without its prior written consent. All
services, advice, information and reports provided by Blackstone to
the Company in connection with the services to be provided under
the terms of the Placement Agreement shall be for the sole benefit
of the Company and the Issuer and shall not be relied upon by any
other person.
In the event
that Blackstone is requested or authorized by you or required by
government regulation, subpoena or other legal process to produce
documents, or to make its current or former personnel available as
witnesses at deposition or trial, arising as a result of or in
connection with Blackstone’s engagement for the Company, the
Company will, so long as Blackstone is not a party to the
proceeding in which the information is sought, pay Blackstone the
reasonable fees and expenses of its counsel incurred in responding
to such a request. Nothing in this paragraph shall affect in any
way the Company’s obligations pursuant to the separate
indemnification agreement attached hereto.
The Company
acknowledges and agrees that Blackstone has been retained to act
solely as placement agent. In such capacity, Blackstone shall act
as an independent contractor, and any duties of Blackstone arising
out of its engagement pursuant to the Placement Agreement and this
Agreement shall be owed solely to the Company. Because Blackstone
will be acting on the Company’s behalf in this capacity, it
is customary for us to receive indemnification, and a copy of an
Indemnification Agreement, dated as of July 20, 2006, between
Blackstone and the Company is attached to this Agreement as Annex
A.
The Company
does not appear on the Specially Designated Nationals and Blocked
Persons List of the Office of Foreign Assets Control of the United
States Department of the Treasury, nor is it a prohibited party
according to other U.S. government regulatory or enforcement
agencies.
The Company
acknowledges that Blackstone may, at its option and expense, place
an announcement in such newspapers and periodicals as it may
choose, stating that Blackstone has acted as placement agent in
connection with the offering and sale of the Notes.
Notwithstanding
anything to the contrary provided elsewhere herein, none of the
provisions of this Agreement shall in any way limit the activities
of Blackstone Group Holdings L.L.C. and its affiliates in their
businesses distinct from the corporate advisory business of The
Blackstone Group L.P., provided that the confidential information
obtained by Blackstone pursuant to this Agreement is not made
available to representatives of Blackstone Group Holdings L.L.C.
and its affiliates who are not involved in the corporate advisory
business of The Blackstone Group L.P.
Blackstone
acknowledges and agrees that the terms of this Agreement (including
the form of indemnification agreement attached hereto as Annex A)
and the transactions contemplated hereby constitute a transaction
between the Company and a “related party,” and, as
such, is subject to the prior approval and consent of a majority of
the directors of the Company who are not affiliated with
Blackstone.
This Agreement
(including the attached indemnification agreement) embodies the
entire agreement and understanding between the parties hereto and
supersedes all prior agreements and understandings relating to the
subject matter hereof. If any provision of this Agreement is
determined to be invalid or unenforceable in any respect, such
determination will not affect or impair such provision or the
remaining provisions of this Agreement in any other respect, which
will remain in full force and effect. No waiver, amendment or other
modification of this Agreement shall be effective unless in writing
and signed by each party to be bound thereby. This Agreement shall
be governed by, and construed in accordance with, the laws of the
state of New York applicable to contracts executed in and to be
performed in that state.
2
The Company
hereby agrees that any action or proceeding based hereon or arising
out of Blackstone’s engagement under the Placement Agreement
shall be brought and maintained by the Company exclusively in the
courts of the State of New York located in the City and County of
New York or in the United States District Court for the Southern
District of New York. The Company irrevocably submits to the
jurisdiction o
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