X0202 4 2006-06-14 0 0000773660 HealthMarkets, Inc. N/A 0001182235 GEDWED WILLIAM J 9151 BOULEVARD 26 NORTH RICHLAND HILLS TX 76180 1 1 0 0 President & CEO Class A-1 Common Stock 2006-06-14 4 M 0 448 9.00 A 56224.32 D Stock Option 9.00 2006-06-14 4 M 0 448 9.00 D 2002-05-17 2006-06-16 Class A-1 Common Stock 448 0 D Stock Option 0.00 2007-05-08 2016-05-08 Class A-1 Common Stock 69534 69534 D Stock Option 37.00 2007-05-08 2016-05-08 Class A-1 Common Stock 69533 69533 D Stock Option 9.25 2003-05-03 2007-06-02 Class A-1 Common Stock 69 69 D Stock Option 9.25 2002-08-03 2006-09-02 Class A-1 Common Stock 123 123 D Stock Option 9.25 2002-11-02 2006-12-02 Class A-1 Common Stock 118 118 D Stock Option 9.25 2003-02-08 2007-03-10 Class A-1 Common Stock 135 135 D Stock Option 9.25 2006-03-16 2010-06-14 Class A-1 Common Stock 22523 22523 D The initial exercise price of the option is $37.00. The exercise price of the option will accrete by 10% per year, starting on May 8, 2008. If the optionee exercises the option prior to May 8, 2008, the exercise price will be $37.00. If the optionee exercises the option on or after May 8, 2008 but prior to May 8, 2009, the exercise price will be $40.70. If the optionee exercises the option on or after May 8, 2009 but prior to May 8, 2010, the exercise price will be $44.77. If the optionee exercises the option on or after May 8, 2010 but prior to May 8, 2011, the exercise price will be $49.25. If the optionee exercises the option on or after May 8, 2011, the exercise price will be $54.17. The option vests in different increments on each of the first five anniversaries of May 8, 2006. Twenty-five percent of the option vests on May 8, 2007. Twenty-five percent of the option vests on May 8, 2008. Seventeen percent of the option vests on May 8, 2009. Seventeen percent of the option vests on May 8, 2010. The remaining 16% of the option vests on May 8, 2011. The options vest in 20% increments on each of the first, second, third, fourth and fifth anniversaries of May 8, 2006 In connection with the merger consummated on April 5, 2006, the options vested in full (i.e., became fully exercisable). The exercise price per Class A-1 share ($20.10) and the number of Class A-1 shares issuable upon exercise (114) were adjusted in a manner that preserves the aggregate "in the money" value of the option. The options otherwise remain subject in all respects to the terms of the 1987 Restated and Amended Stock Option Plan. In connection with the merger consummated on April 5, 2006, the options vested in full (i.e., became fully exercisable). The exercise price per Class A-1 share ($14.85) and the number of Class A-1 shares issuable upon exercise (154) were adjusted in a manner that perserves the aggregate "in the money" value of the option. The options otherwise remain subject in all respects to the terms of the 1987 Restated and Amended Stock Option Plan. In connection with the merger consummated on April 5, 2006, the options vested in full (i.e., became fully exercisable). The exercise price per Class A-1 share ($15.19) and the number of Class A-1 shares issuable upon exercise (150) were adjusted in a manner that perserves the aggregate "in the money" value of the option. The options otherwise remain subject in all respects to the terms of the 1987 Restated and Amended Stock Option Plan. In connection with the merger consummated on April 5, 2006, the options vested in full (i.e., became fully exercisable). The exercise price per Class A-1 share ($14.19) and the number of Class A-1 shares issuable upon exercise (164) were adjusted in a manner that perserves the aggregate "in the money" value of the option. The options otherwise remain subject in all respects to the terms of the 1987 Restated and Amended Stock Option Plan. In connection with the merger consummated on April 5, 2006, the options vested in full (i.e., became fully exercisable). The exercise price per Class A-1 share ($30.75) and the number of Class A-1 shares issuable upon exercise (100,000) were adjusted in a manner that perserves the aggregate "in the money" value of the option. The options otherwise remain subject in all respects to the terms of the 1987 Restated and Amended Stock Option Plan. William J. Gedwed By: /s/ Peggy G. Simpson, POA 2006-06-15