EXHIBIT 10.16
POST RETIREMENT SERVICES AGREEMENT BETWEEN
SURETY CAPITAL CORPORATION
AND C. XXXX XXXX
This Agreement ("Agreement") is entered into by Surety Capital
Corporation, a Delaware corporation (the "Corporation"), and C. Xxxx Xxxx
("Bean"). The Corporation and Bean are collectively referred to as the
"Parties." The Corporation's business operations that are conducted by its
subsidiaries are referred to as its "Banking Business."
In consideration of the mutual covenants set forth below, it is agreed
as follows:
1. SATISFACTION OF THE CORPORATION'S OBLIGATIONS. The Corporation's
obligations under this Agreement may be satisfied directly by the Corporation
or, at the Corporation's election, by its subsidiary Surety Bank, National
Association (the "Bank").
2. PURPOSES. The purposes of this Agreement are to provide:
(a) Bean with compensation and benefits for certain consulting
services to be rendered by Bean on behalf of the Corporation on a part-time
basis after his retirement as a full-time employee of the Corporation; and
(b) the Corporation with the part-time consulting services of Bean
after his retirement as a full-time employee of the Corporation in the
activities of (1) promoting the Corpora tion's ongoing operations with
businesses and business professionals in the service areas covered by the
Corporation's Banking Business, (2) representing the Corporation at functions
and events relating to the Corporation's business activities and its Banking
Business, (3) providing the Corporation with information that may come to Bean's
attention as to potential business acquisitions for the Corporation or its
subsidiaries, (4) providing the Corporation with advisory services specifically
related to acquisitions for the Banking Business, and (5) providing the
Corporation with services in connection with the furtherance of stockholder
relations (all of the foregoing being referred to in this Agreement as the
"Services").
3. DEFINITIONS. For purposes of this Agreement, certain terms are
defined as follows:
(a) "ACCELERATED PAYMENT" means either the payment by the
Corporation pursuant to SECTION 7 or pursuant to SECTION 8.
(b) "CAUSE" means any act that is materially adverse to the best
interests of the Corporation and constitutes, on the part of Bean, common law
fraud, a felony or other gross malfeasance of duty.
(c) "CHANGE IN CONTROL OF THE CORPORATION" 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 Corporation's
Board of Directors (the "Board") 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.
(d) "DISABILITY" means the inability of Bean to perform the
Services required by this Agreement by reason of illness, infirmity, insanity,
mental incompetency or otherwise. This determination will be made in good faith
by Board and concurred in by Bean. If there is a dispute between the Parties as
to the existence of a Disability, Bean, the Board, and Bean's physician (defined
as a person licensed to practice medicine in Texas who is regularly attending
Bean) will consult and reach a determination. If Bean does not have a regularly
engaged physician, the Board may engage at the Corporation's expense a physician
to examine Bean, and Bean consents to such examination and to waive, if
applicable, any privilege between the physician and Bean that may arise as a
result of said examination. If Bean has not engaged a physician, the opinion of
the physician engaged by the Board shall control.
4. BEAN'S SERVICES. The Services to be provided by Bean under this
Agreement will be furnished by Bean as an independent contractor and not as an
employee and will commence at the time Bean retires from providing his active,
full-time services to the Corporation in its day-to-day operations and will
terminate on the fifteenth (15th) anniversary date of Bean's retirement date,
unless terminated earlier, in accordance with the provisions of this SECTION 4.
The nature and extent of the actual activities to be conducted by Bean will be
mutually agreed to by Bean and the Corporation from time to time during such
period; however, the manner and means by which such activities are performed by
Bean shall be determined by Bean. Bean will devote such time to the performance
of his duties under this Agreement as is reasonably necessary for a satisfactory
performance of his duties under this Agreement.
(a) This Agreement may be terminated by the Corporation under the
following circumstances: (1) for Cause or (2) in the event of Bean's Disability
or death.
(b) This Agreement may be terminated by Bean under the following
circumstances: (1) in the event of a default by the Corporation of its
obligations under this Agreement, immediately after providing the Corporation
with written notice thereof, or (2) at any time for any reason, in his sole
discretion, after providing the Corporation with thirty (30) days written notice
of such intent.
(c) This Agreement shall terminate upon the occurrence of a Change
in Control of the Corporation.
(d) In the event of a termination of this Agreement by the
Corporation pursuant to SECTION 4(a), the Corporation will have no further
obligations under this Agreement, except to the extent payments and benefits are
owed pursuant to SECTION 6 for periods prior to the termination of this
Agreement. In the event of a termination of this Agreement by Bean pursuant to
SECTION 4(b)(2), the Corporation will have no further obligations under this
Agreement, except to the extent payments and benefits are owed pursuant to
SECTION 6 for periods prior to the termination of this Agreement. If the
termination of this Agreement is pursuant to SECTION 4(b)(1) as a result of a
default by the Corporation in the performance of its obligations hereunder or
pursuant to SECTION 4(c) as a result of a Change in Control of the Corporation,
the Corporation will be obligated to pay any amounts owed under SECTION 6 and to
also pay the Accelerated Payment due pursuant to either SECTION 7 or SECTION 8,
as the case may be, which obligation shall survive the termination of this
Agreement. The Corporation shall also pay to Bean all legal fees and expenses
incurred by Bean in seeking to obtain or enforce any right or benefit provided
by this Agreement.
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5. COMPENSATION FOR SERVICES. During the period that Bean performs
the Services for the Corporation after he retires from providing his active,
full-time services to the Corporation in its day-to-day operations, the
Corporation will provide the following working benefits to Bean:
(a) OFFICE AND STAFF. The Corporation will maintain an office and
secretarial staff for Bean at the Corporation's main facility for its Banking
Business similar to that provided for the Corporation's senior executive
officers. If the Bank's main facility, currently located at 0000 Xxxxxxxx Xxxx
Xxxx, Xxxxx, Xxxxx, is moved more than twenty (20) miles from its current
location, the office may be maintained in any full service facility that is used
in the Banking Business and that is within such twenty (20) mile area. If there
is no such facility in the area, the office and staff will be maintained in a
Class A office facility within such area.
(b) HOME OFFICE. The Corporation will provide or reimburse Bean
for his costs related to maintaining a business office at his home. These costs
are to include, but are not limited to, those for a fax machine, mobile
telephone and home business telephone line.
(c) OUT-OF-POCKET EXPENSES. The Corporation will reimburse Bean
for meals and other out-of-pocket expenses that he incurs in connection with his
providing the Services. Bean agrees in this regard to follow the Corporation's
normal substantiation and reimbursement policies in connection with such
expenses.
6. PAYMENTS AND BENEFITS FOR SERVICES RENDERED. At the time Bean
retires from providing his active, full-time services to the Corporation in its
day-to-day operations, the Corporation agrees to provide to Bean the
compensation and benefits listed below.
(a) ANNUAL PAYMENT. Upon Bean's retirement from full-time
employment, the Corporation will begin payments to Bean in the amount of $53,825
per year. This amount will be pro-rated for partial years and will be paid to
Bean, at his option, in annual, monthly or bi-monthly installments.
(b) INSURANCE COVERAGE. The Corporation will provide Bean, or
reimburse Bean for the cost of, health, accident and medical insurance coverage
that is equivalent to the coverage provided to those persons serving from time
to time as the senior executive officers of the Corporation and the Bank.
(c) AUTOMOBILE. The Corporation will provide Bean with a
Corporation-owned automobile equivalent to the type provided to those person's
serving from time to time as the senior executive officers of the Corporation
and the Bank. The automobile may be replaced from time to time as determined by
the Corporation, but at least once each three years. The Corporation will pay or
reimburse Bean for gas, insurance, maintenance and other automobile-related
expenses. Bean will maintain automobile mileage and other records as requested
by the Corporation, and the Corporation will make the necessary personal use
reports to the Internal Revenue Service.
7. DEFAULT. If the Corporation defaults in its performance of any
provision under SECTION 6 of this Agreement, the payments, insurance coverage,
reimbursements and benefits under SECTION 6(a), (b) AND (c) shall be accelerated
and immediately due and payable to Bean. In such event, the Parties agree that
it may be difficult, if not impossible, to accurately determine the amount of
damages that Bean may incur by reason of such default; therefore, the Parties
agree that the sum of the amounts calculated under the following subsections
shall be used to determine the amount then owed to Bean for such default (the
"Accelerated Payment"). The Accelerated Payment shall be immediately due and
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payable to Bean (payable by certified or cashier's check) upon the occurrence of
the default. All or any portion of such total that is not paid to Bean within
thirty (30) days of the default will bear interest at ten percent (10%) per
annum until paid.
(a) ANNUAL PAYMENT. The amount owed under SECTION 6(a) shall be
equal to the discounted present value of $53,825 per year for the number of
years equal to eighty-five (85) minus Bean's age at the time of the default. The
discount interest rate for these purposes will be five percent (5%) per year.
(b) INSURANCE COVERAGE. The amount owed under SECTION 6(b) shall
be equal to the "insurance cost" (as defined below) times the number of years
equal to eighty-five (85) minus Bean's age at the time of the default. The
insurance cost for these purposes will be the cost of the coverage and
reimbursement provided under SECTION 6(b) for the immediately preceding twelve
(12) calendar month period.
(c) AUTOMOBILE. The amount owed under SECTION 6(c) shall be equal
to the "automobile cost" (as defined below) times the number of years equal to
eighty-five (85) minus Bean's age at the time of the default. The automobile
cost for these purposes will be equal to the amount paid or reimbursed to Bean
by the Corporation for gas, insurance, maintenance and other automobile-related
expenses under SECTION 6(c) for the immediately preceding twelve (12) calendar
month period. In addition to the foregoing dollar amount, the Corporation will
transfer to Bean the title to the automobile then in his possession under
SECTION 6(c).
8. CHANGE IN CONTROL OF THE CORPORATION. In the event of a Change in
Control of the Corporation, the Corporation shall pay to Bean the Accelerated
Payment, calculated in accordance with SECTION 7 as of the effective date of the
Change in Control. The Accelerated Payment shall be due and payable to Bean
(payable by certified or cashier's check) immediately prior to the effectiveness
of the Change in Control of the Corporation. All or any portion of such total
that is not paid to Bean immediately prior to the effectiveness of the Change in
Control of the Corporation will bear interest at ten percent (10%) per annum
until paid.
9. NATURE OF ACCELERATED PAYMENT AS A RESULT OF A CHANGE IN CONTROL
PAYMENT. The benefits payable to Bean under this Agreement in the event of a
Change in Control of the Corporation shall be considered severance pay in
consideration of Bean's past service and Bean's continued service after the date
this Agreement. Bean shall not be required to mitigate the amount of any
payment provided for in SECTION 8 by seeking other employment or otherwise, nor
shall the amount of any payment or benefit provided for in SECTION 8 be reduced
by any compensation earned by Bean as the result of employment by another
employer or by retirement benefits after the date of termination, or otherwise.
10. RESTRICTIONS. Bean's rights or benefits under this Agreement
shall not be subject to anticipation, alienation, sale, assignment, pledge,
encumbrance or charge and any such actions shall be void. Bean's rights or
benefits under this Agreement shall not in any manner be liable for or subject
to the debts, contracts, liabilities or torts of the person entitled to such
benefits.
11. TAXES. As an independent contractor, Bean shall be responsible
for the payment of all federal income taxes and his own self-employment and
social security taxes, the liability for which arises from or relates to any and
all payments made by the Corporation to Bean under this Agreement, including
payments pursuant to SECTIONS 6, 7 AND 8. Bean hereby agrees to indemnify and
hold harmless the Corporation from and for any liability or claim respecting the
foregoing taxes which are
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the sole obligation and liability of Bean. Bean's obligation to indemnify the
Corporation as provided by this SECTION 11 shall survive the termination of this
Agreement.
12. NOTICES. Any notice required or permitted by either Party must
be in writing and must be delivered either personally to the other Party or by
certified mail, return receipt requested, at the Party's address indicated
below, and any notice will be effective upon delivery in the case of personal
delivery and, in the case of delivery by certified mail, three (3) business days
after the date of deposit in the United States mail, postage prepaid. The
addresses of the Parties are as follows:
If to Corporation: Surety Capital Corporation
0000 Xxxxxxxx Xxxx Xxxx, Xxxxx 000
Xxxxx, Xxxxx 00000
Telephone: 000-000-0000
Telecopy: 000-000-0000
With a copy to: Xxxxxxxx X. Xxxxxxx
Xxxxx & Xxxxxxx, L.L.P.
000 Xxxx Xxxxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxxx, Xxxxx 00000-0000
Telephone: 000-000-0000
Telecopy: 000-000-0000
If to Bean: Mr. C. Xxxx Xxxx
0000 Xxxxxxxx Xxxxx Xxxxx
Xxxx Xxxxx, Xxxxx 00000
Telephone: 000-000-0000
The names and address of the parties to receive notice as stated in this section
may be changed at any time by notice given in accordance with this section. As
used in this Agreement, the term "business day" means any day of the week,
Monday through Friday, that is not recognized by the United States Postal
Service as a national holiday and on which national banks are open for business.
13. INDEPENDENT CONTRACTOR STATUS. It is expressly agreed and
stipulated by the Parties hereto that Bean in an independent contractor and that
Bean shall not be deemed nor construed to be an employee of the Corporation or
the Bank for federal income tax purposes or within the meaning of the Workers'
Compensation Act of the state of Texas.
14. 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.
15. 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.
16. 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 will be performed and all legal proceedings involving this
Agreement will be conducted in Tarrant County, Texas.
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17. INUREMENT. This Agreement shall extend to and be binding upon
Bean and his heirs, legatees, legal representatives and successors, and on the
Corporation, its successors or assigns. The rights of the Corporation under
this Agreement may not be assigned without Bean's consent.
18. AMENDMENT. All amendments or changes to this Agreement shall be in
writing.
19. 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.
20. 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.
21. 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.
22. AUTHORIZATION. The Corporation is authorized to enter into this
Agreement by virtue of resolutions duly adopted by Board.
23. EFFECTIVE DATE. The effective date of this Agreement is
January 20, 1998.
SURETY: SURETY CAPITAL CORPORATION
By: /s/ Xxxxx X. Xxxxxxx
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Name: Xxxxx X. Xxxxxxx
Title: Vice Chairman of the Board
BEAN: /s/ C. Xxxx Xxxx
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C. Xxxx Xxxx
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