EXHIBIT 10.09
EXECUTIVE DEFERRED COMPENSATION AGREEMENT
BETWEEN SURETY CAPITAL CORPORATION
AND
____________________
This Agreement ("Agreement") is entered into by Surety Capital Corporation,
a Delaware corporation (the "Corporation"), and ________________ ("_______").
The Corporation and _______ are collectively referred to as the "Parties."
In consideration of the mutual covenants set forth below, it is agreed as
follows:
1. PURPOSE. The purpose of this Agreement is to assist the Corporation
in attracting and retaining in its employ executives of outstanding competence
by providing such executives with an economic incentive to continue their
employment with the Corporation.
2. DEFINITIONS. For purposes of this Agreement, the following terms
shall have the following meanings:
(a) "CAUSE" shall mean any act that is materially adverse to the best
interests of the Corporation and constitutes, on the part of _______, common law
fraud, a felony or other gross malfeasance of duty.
(b) "CHANGE IN CONTROL" shall be deemed to have occurred if (A) any
"person" (as such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended, the "Exchange Act"), other than a trustee or
other fiduciary holding securities under an employee benefit plan of the
Corporation, is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the
Corporation representing twenty percent (20%) or more of the combined voting
power of the Corporation's then outstanding voting securities; or (B) during any
period of two (2) consecutive years during the term of this Agreement,
individuals who at the beginning of such period constitute the Board of
Directors of the Corporation cease for any reason to constitute at least a
majority thereof, unless the election of each director who was not a director at
the beginning of such period has been approved in advance by directors
representing at least two-thirds (2/3rds) of the directors then in office who
were directors at the beginning of the period.
(c) "DISABILITY" shall mean the inability of _______ to manage the
Corporation's property, business or financial affairs by reason of illness,
infirmity, insanity, mental incompetency or otherwise, determined to be (or
reasonably expected to be, based upon then available medical information) of not
less than twelve (12) calendar months' duration. The initial determination (or
reasonable expectancy) shall be determined by the opinion of the Physician
(defined as a person licensed to practice medicine in
Texas) regularly attending _______. If the Corporation's Board of Directors
(the "Corporation's Board") disagree with the Physician's opinion, or if _______
has not engaged a Physician, the Corporation's Board may engage at the
Corporation's expense a Physician to examine _______, and _______ consents to
such examination and to waive, if applicable, any privilege between the
Physician and _______ that may arise as a result of said examination. If
_______ has not engaged a Physician, the opinion of the Physician engaged by the
Corporation's Board shall control. If _______ has engaged a Physician, and if,
after conferring, _______'s Physician and the Corporation's Physician cannot
agree on a final opinion, they shall within thirty (30) days thereafter choose a
third consulting Physician whose opinion shall control. The expense of the
third consulting Physician shall be borne equally by _______ and the
Corporation.
(d) "GOOD REASON" shall mean:
(1) a material reduction of _______'s duties, responsibilities
and status with the Corporation as they existed immediately before the effective
date of a Change in Control;
(2) a reduction of _______'s base salary from that in effect
immediately before the effective date of a Change in Control; or
(3) _______'s relocation to offices of the Corporation more than
thirty (30) miles from the location of the Corporation's principal offices
immediately before the effective date of a Change in Control.
3. AMOUNT OF DEFERRAL. Subject to the limitations set forth in this
Agreement, _______ shall be entitled to deferred compensation payments on his
continuing employment with the Corporation until he reaches age sixty-five (65)
or at such earlier age as provided for in this Agreement. Although the varying
amounts payable to _______ as deferred compensation in the event of a
termination of his employment prior to his reaching age sixty-five (65) are set
forth in this Agreement, no funds or other property shall be set aside for the
payment of any amounts due to _______. _______'s rights are limited to the
rights to receive payments as provided under this Agreement, and his position
with respect thereto is that of a general, unsecured creditor of the
Corporation.
(a) DEFERRAL AMOUNT AT AGE SIXTY-FIVE. On _______'s reaching age
sixty-five (65) and his employment by the Corporation not having been terminated
as provided for in subsections (b) and (c) below prior to such date, he shall be
entitled to, and the Corporation agrees to pay, payments equaling Twenty-Five
Thousand and 00/100 Dollars ($25,000.00) per year for a period of fifteen (15)
years. _______ shall be entitled to the payments without regard to whether he
continues in the employment of the Corporation after age sixty-five (65).
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(b) DEFERRAL AMOUNT PRIOR TO AGE SIXTY-FIVE - EMPLOYMENT TERMINATION
DUE TO CHANGE IN CONTROL, DISABILITY, BY DEATH, OR FOR REASONS OTHER THAN FOR
CAUSE. If _______'s employment by the Corporation is terminated prior to his
reaching age sixty-five (65):
(1) for any reason other than for Cause (as herein defined)
during the period commencing with the effective date of a Change in Control and
ending two (2) years thereafter,
(2) by _______ with Good Reason (as herein defined) during the
period commencing with the effective date of a Change in Control and ending two
(2) years thereafter,
(3) as a result of the Disability (as herein defined) of
_______,
(4) as a result of the death of _______, or
(5) for any other reason other than Cause
he shall be entitled to a single payment either in the amount of
the then cash surrender value of that certain $300,000 universal key man life
insurance policy on the life of _______ (Policy Number __________ issued by
American General Life Insurance Company and owned by the Corporation) or, in the
event such life insurance policy is no longer then in effect, in the amount set
forth on Exhibit A to this Agreement.
(c) DEFERRAL AMOUNT PRIOR TO AGE SIXTY-FIVE - FOR CAUSE EMPLOYMENT
TERMINATION. If _______'s employment by the Corporation is terminated for Cause
prior to his reaching age sixty-five (65), he shall not be entitled to any
amounts under this Agreement, and the Corporation's obligations under this
Agreement shall terminate on the date of termination of _______'s employment.
4. PAYMENT PROCEDURES FOR DEFERRED AMOUNTS.
(a) DEFERRAL PAYMENTS AT AGE SIXTY-FIVE. If the deferred compensation
payable to _______ is determined under the provisions of Section 3(a), the first
installment of the annual deferred compensation amount of Twenty-Five Thousand
and 00/100 Dollars ($25,000.00) shall be paid to him on or before thirty (30)
days following his reaching age sixty-five (65), and the fourteen successive
annual installments shall be paid to him on or before the annual anniversary
date of the first installment.
(b) DEFERRAL PAYMENTS PRIOR TO AGE SIXTY-FIVE.
(1) If _______'s employment by the Corporation is terminated
under the provisions of Section 3(b), the payment amount as determined pursuant
to Section 3(b) shall be paid to _______ within ninety (90) days after the
termination of his employment,
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and such payment shall terminate all obligations of the Corporation under this
Agreement.
(2) If _______'s employment by the Corporation is terminated
under the provisions of Section 3(c), no payment shall be owed to _______, and
the Corporation's obligations under this Agreement shall terminate on the
effective date of _______'s termination of employment.
(c) PARTY TO RECEIVE PAYMENT. All payments owed under this Agreement
shall be made to _______ or, in the event of _______'s death, to the beneficiary
designated by _______ or to _______'s estate in the event he does not designate
a beneficiary. _______ shall have the right to designate a beneficiary to
receive any payments under this Agreement which may remain unpaid at the time of
his death. The designation shall be delivered in writing to the Corporation's
Board. The designation may be changed by _______ at any time in a similar
manner without the consent of any prior designated beneficiary. If no
designation of a beneficiary is delivered by _______ to the Corporation's Board,
any payments remaining unpaid at the time of the _______'s death shall be paid
to his estate at such time and in such manner as if he had remained living. If
in the judgment of the Corporation's Board _______ or his beneficiary is
legally, physically or mentally incapable of personally receiving any payments
due under this Agreement, the payment shall be made to the guardian or other
legal representative of _______ or his beneficiary, or to such other person or
institution who in the opinion of the Corporation's Board is then maintaining or
has custody of _______ or the beneficiary. Payment shall constitute a full
discharge with respect to such benefits.
5. INSURANCE. To provide a fund with which to pay any amounts owed under
this Agreement, the Corporation may (but shall not be obligated to) apply for
insurance on _______'s life. The Corporation shall be the owner and beneficiary
of any such insurance policy, and it may discontinue the insurance coverage at
any time without any obligation to obtain replacement insurance. _______ agrees
to submit to such reasonable physical examinations and to provide any
information as may be necessary in connection with the purchase of such
insurance. The Corporation shall collect all proceeds or termination value of
the insurance, if any, and may (but shall not be obligated to) apply the
proceeds toward the payment of any amounts owed under this Agreement. Any
insurance policy owned by the Corporation on _______'s life, and the proceeds or
termination value of such policy, shall not be encumbered or otherwise
restricted by the Corporation's obligations under this Agreement, except to the
extent such policy or proceeds are the general assets of the Corporation. If
_______'s employment by the Corporation is terminated for any reason other than
his death and the Corporation then owns a life insurance policy on his life, the
Corporation agrees that, if permitted by the issuing company and not prohibited
by any agreement or limitation to which the Corporation may then subject,
_______ may acquire the life insurance policy from the Corporation for the
lesser of: (1) the
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then cash surrender value of the policy, or (2) the total premium payments made
by the Corporation with respect to the policy prior to such date (as same is
determined by the issuing company).
6. RESTRICTIONS. No right or benefit under this Agreement shall be
subject to anticipation, alienation, sale, assignment, pledge, encumbrance, or
charge and any such actions shall be void. No right or benefit under this
Agreement shall in any manner be liable for or subject to the debts, contracts,
liabilities, or torts of the person entitled to such benefits. If _______ or a
beneficiary of _______ should become bankrupt or attempt to anticipate,
alienate, sell, assign, pledge, encumber, or charge any right to a benefit under
this Agreement, the right or benefit shall automatically terminate as to _______
or the beneficiary; but, in such event, Corporation may hold or apply the same
or any part thereof for the benefit of _______'s spouse, children, or other
dependents or any of them, in such manner and in such portion as the
Corporation's Board may deem proper in its sole discretion.
7. UNSECURED PROMISE. This Agreement shall create only an unfunded,
unsecured promise by the Corporation to pay the benefits provided herein.
_______ does not have, nor will _______ have, any claim, by means of a security
or collateral interest or otherwise, to any of the assets of the Corporation,
the same being owned solely by the Corporation.
8. ADJUSTMENT TO PAYMENT AMOUNT. The deferred compensation amount
payable to _______ under this Agreement, if any, shall be reduced by any amounts
_______ owes the Corporation. These amounts may include, but are not limited
to, amounts owed by _______ for loans, advances, and expense reimbursements.
9. CONTINUATION OF EMPLOYMENT. Neither this Agreement nor _______'s
right to receive payment of any benefits under this Agreement shall be construed
as giving _______ any right to be retained as an employee of the Corporation.
10. INVALID PROVISION. In the event any of the provisions, or portions
thereof, of this Agreement are held to be invalid, illegal or unenforceable by
any court of competent jurisdiction, the validity, legality and enforceability
of the remaining provisions, or portions thereof, shall not be affected.
Moreover, so far as is reasonable and possible, effect shall be given to the
intent manifested by the portion held invalid, illegal, or unenforceable.
11. CONSTRUCTION.
(a) FORM AND GENDER. Whenever required by the context in which it is
used, the singular number shall include the plural, and the plural number shall
include the singular. In like manner, the masculine gender shall include the
feminine, and the feminine gender shall include the masculine.
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(b) CAPTIONS. The captions or headings in this Agreement are made
for convenience and general reference only and shall not be construed to
describe, define, or limit the scope or intent of the provisions of this
Agreement.
12. GOVERNING LAW. This Agreement has been executed in and shall be
governed by the laws of the State of Texas. The Parties agree that the terms of
this Agreement shall be performed and all legal proceedings involving this
Agreement shall be conducted in Tarrant County, Texas.
13. INUREMENT. This Agreement shall extend to and be binding upon _______
and his heirs, legatees, legal representatives, and successors, and on the
Corporation, its successors or assigns. The rights of _______ under this
Agreement may not be assigned.
14. AMENDMENT. All amendments or changes to this Agreement shall be in
writing.
15. COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be an original Agreement. All counterparts
together shall represent but one and the same instrument. The counterpart
executed and held in the Corporation's corporate minute book shall control in
the event of any dispute or in cases of difference between the counterparts.
16. FURTHER ASSURANCES. Each party to this Agreement agrees to perform
any further acts and to execute and deliver any documents or legal instruments
which may be reasonably necessary to carry out the provisions of this Agreement.
Each party also agrees not to enter into any Agreement or contract with others
that will tend to alter, amend, abrogate or in any way adversely affect the
provisions of the Agreement.
17. ENTIRE AGREEMENT. This Agreement contains the entire understanding
between the undersigned concerning the subject matter of the Agreement. There
are no other representations, Agreements, arrangements, or understandings, oral
or written, between or among the parties, relating to the subject matter of this
Agreement, which are not fully expressed herein.
18. AUTHORIZATION. The Corporation is authorized to enter into this
Agreement by virtue of resolutions duly adopted by Corporation's Board.
19. EFFECTIVE DATE. The effective date of this Agreement is August 15,
1995.
SURETY CAPITAL CORPORATION
By:_____________________________ ___________________________
Name:___________________________ ________________
Title:__________________________
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EXHIBIT A
TO
EXECUTIVE DEFERRED COMPENSATION AGREEMENT
BETWEEN SURETY CAPITAL CORPORATION
AND
_____________________
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SURETY CAPITAL CORPORATION
0000 XXXXXXXX XXXX XXXX, XXXXX 000
XXXXX, XXXXX 00000
August 15, 1995
Mr. ____________________
Surety Capital Corporation
0000 Xxxxxxxx Xxxx Xxxx, Xxxxx 000
Xxxxx, Xxxxx 00000
Re: Executive Deferred Compensation Agreement Between
Surety Capital Corporation and ________________
Dear _____________:
A copy of your Executive Deferred Compensation Agreement (the "Agreement")
with Surety Capital Corporation ("Surety") is attached for your review and
records. This Agreement has been approved by the Board of Directors of Surety,
and it contains the entire agreement between yourself and Surety with regard to
all deferred compensation benefits previously discussed with you.
If the Agreement is acceptable to you, please sign the enclosed copy of
this letter and return the signed copy to my attention. Also, please complete,
sign, have notarized, and return the enclosed beneficiary designation form.
Your signature on the enclosed letter and your completion of the beneficiary
designation form will complete the paperwork for the Agreement.
If any questions arise, please do not hesitate to let me know.
Sincerely,
C. Xxxx Xxxx,
Chairman
Agreed and Accepted Effective
August 15, 1995
By:_________________________________________
_______________________
Attachments:
Beneficiary Designation Form
Executive Deferred Compensation Agreement
DESIGNATION OF BENEFICIARY
TO: Surety Capital Corporation
Board of Directors
FROM: ____________________
Pursuant to Section 4(c) of the Executive Deferred Compensation Agreement
Between ________________ and Surety Capital Corporation (the "Agreement")
permitting the designation of a beneficiary or beneficiaries by myself for
benefits payable under the Agreement, I hereby designate the following person or
persons as primary and secondary beneficiaries of any amounts under the
Agreement payable by reason of my death:
PRIMARY BENEFICIARY
Name: _____________________________________________________________________
Address:___________________________________________________________________
___________________________________________________________________
Social Security Number: ___________________________________________________
Relationship:
________________________________________________________________________________
SECONDARY BENEFICIARY
Name: _____________________________________________________________________
Address:___________________________________________________________________
________________________________________________________________________________
Social Security Number: ___________________________________________________
Relationship: _____________________________________________________________
I RESERVE THE RIGHT TO REVOKE OR CHANGE ANY BENEFICIARY DESIGNATION. I
HEREBY REVOKE ALL PRIOR DESIGNATIONS (IF ANY) OF PRIMARY BENEFICIARIES AND
SECONDARY BENEFICIARIES.
All sums payable under the Agreement by reason of my death shall be paid to
my primary beneficiary, if he or she survives me. If no primary beneficiary
survives me, the sums shall be paid to the secondary beneficiary. If none of
the named beneficiaries survive me, any amounts payable under the Agreement
shall be paid in accordance with the provisions of the Agreement.
___________________________
___________________________
STATE OF TEXAS
COUNTY OF TARRANT
This instrument was acknowledged before me on _______________, 1995 by
_______________.
sure ___________________________________________
Notary Public in and for the State of Texas
