Employment Agreement (48K)
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{DOCUMENT}
{TYPE}EX-99.D
{SEQUENCE}3
{FILENAME}y46661ex99-d.txt
{DESCRIPTION}EMPLOYMENT AGREEMENT
{TEXT}
{PAGE} 1
EXHIBIT D
EMPLOYMENT AGREEMENT
AGREEMENT dated as of July 30, 1999 by and between UNIVERSAL
AMERICAN FINANCIAL CORP. (the "Company") and RICHARD BARASCH ("Executive").
WHEREAS, the Company and Executive wish to enter into an
agreement relating to the employment of Executive by the Company;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein and for other good and valuable consideration, the parties
agree as follows:
1. Term of Employment.
(a) Employment Term. Subject to the provisions of
Section 8 of this Agreement, Executive shall be employed by the Company
for a period commencing on the closing of the transaction (the
"Transaction") contemplated by the Share Purchase Agreement between the
Company and Capital Z Financial Services Fund II, L.P. (the
"Commencement Date") and ending on third anniversary of the
Commencement Date (the "Employment Term"), on the terms and subject to
the conditions set forth in this Agreement. Notwithstanding the
preceding sentence, the Employment Term shall be automatically extended
for an additional one-year period, unless the Company or Executive
provides the other party hereto 6 months prior written notice before
the expiration of the Employment Term that the Employment Term shall
not be so extended. "Employment Term" shall include any extension that
becomes applicable pursuant to the preceding sentence.
2. Position.
(a) During the Employment Term, Executive shall serve
as the Company's Chairman of the Board of Directors and Chief Executive
Officer. In such position, Executive shall have the powers, duties and
responsibilities which are customary for a Chairman and Chief Executive
Officer of a corporation of the size, type and nature of the Company,
and shall report exclusively to the Board of Directors of the Company
(the "Board").
(b) During the Employment Term, Executive will devote
his full business time to the performance of his duties hereunder and
will not engage in any other business, profession or occupation for
compensation or otherwise which would conflict with the rendition of
such services either directly or indirectly, without the prior written
consent of the Board. Nothing contained herein shall preclude Executive
from (i) serving on
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corporate, civic and charitable boards or committees and (ii) managing
his personal investments; provided that none of the activities set
forth in clauses (i) and (ii) interfere in any material respect with
the performance of Executive's employment hereunder or conflict in any
material respect with the business of the Company.
3. Base Salary. During the Employment Term, the Company shall
pay Executive a base salary (the "Base Salary") at the annual rate of $475,000,
payable in regular installments in accordance with the Company's usual payment
practices. Executive shall be entitled to such annual increases in his Base
Salary, if any, as may be determined in the sole discretion of the Board.
4. Bonus.
(a) For fiscal year 1999, the Executive shall be
eligible to earn a target annual bonus ("Bonus") equal to (i) for the
period prior to the Commencement Date, a pro rated bonus based on the
existing Company executive bonus plan plus (ii) the product of Base
Salary times a fraction, the numerator of which is the number of days
from the Commencement Date through the end of such fiscal year and the
denominator of which is 365 and shall be based on the achievement of
goals established in good faith by the Board in consultation with
Executive; provided, however, that if such goals are not established
such amount shall be determined by reference to the existing Company
executive bonus plan; provided, further, that with respect to any Bonus
over 100% of Base Salary, the Company shall use its best efforts to
structure such Bonus to satisfy the exception for qualified
performance-based compensation under Section 162(m) of the Internal
Revenue Code of 1986, as amended (the "Code"). If the Bonus is not so
structured, the portion of the Bonus payment not deductible by the
Company shall be deferred, on terms reasonably satisfactory to
Executive, until such time as it shall be fully deductible by the
Company.
(b) With respect to each fiscal year during the
Employment Term, commencing with 2000, Executive shall be eligible to
earn a Bonus based two-thirds upon the Company's operating performance
results and one-third on individual performance goals (the "Targets").
The financial Target shall be established in good faith by the Board in
consultation with Executive. If the Targets are satisfied, Executive's
Bonus shall be 100% of Base Salary (the "Target Bonus"); provided that,
based on criteria established by the Compensation Committee, the
Executive has an opportunity to earn a maximum Bonus of up to 200% of
Base Salary; provided, further, that with respect to any Bonus over
100% of Base Salary, the Company shall use its best efforts to
structure such Bonus to satisfy the exception for qualified
performance-based compensation under Section 162(m) of the Code. If the
Bonus is not so structured, the portion of the Bonus payment not
deductible by the Company shall be deferred, on terms reasonably
satisfactory to Executive, until such time as it shall be fully
deductible by the Company.
(c) Subject to Section 4(a) and (b) above, as soon as
practicable after the end of the fiscal year (but in no event later
than 45 days after the end of the fiscal year),
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the Bonus shall be paid (i) 50% in cash and (ii) 50% in shares of the
common stock, par value $1.00 per share, of the Company issued by the
Company ("Shares") based on the Market Value (as defined below) of the
Shares on the date of issuance. For purposes of this paragraph, "Market
Value" means the 20-day average of the closing price of the Shares on
Nasdaq or, if the Shares are not then-traded on Nasdaq, on such other
national stock exchange on which the Shares are principally traded.
5. Equity Arrangements.
(a) The Executive shall be entitled to an initial
grant on the Commencement Date (the "Initial Grant") of stock options
to purchase 600,000 Shares (the "Options"). The Options shall be
granted at $3.15, adjusted pursuant to Section 1.6 of the Share
Purchase Agreement between the Company and Capital Z Financial Services
Fund II, L.P. and shall have a 10 year term. Options representing the
right to purchase 400,000 Shares shall vest ratably over a five year
period, subject to Executive's continued employment with the Company,
with 1/5 of such Shares initially granted vesting on the date of grant
and each of the first, second, third and fourth anniversaries of the
date of grant. Options representing the right to purchase 200,000
Shares shall vest on the seventh anniversary of the grant date but
shall become immediately exercisable if Capital Z Financial Services
Fund II, L.P. ("Cap. Z") has achieved an internal rate of return on its
equity interest in the Company as of the Commencement Date greater than
30% (i) as a result of a transaction in which Cap. Z disposes of at
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