EXHIBIT 10.13
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, ▇▇▇▇▇▇'▇ 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 ▇▇▇▇▇▇'▇ duties, responsibilities and
status with the Corporation as they existed immediately before the
effective date of a Change in Control;
(2) a reduction of ▇▇▇▇▇▇'▇ base salary from that in effect
immediately before the effective date of a Change in Control; or
(3) ▇▇▇▇▇▇'▇ 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 ▇▇▇▇▇▇. ▇▇▇▇▇▇'▇ 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 ▇▇▇▇▇▇'▇ 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 No/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).
(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 ▇▇▇▇▇▇'▇ 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 A10161400L 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 ▇▇▇▇▇▇'▇ 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 ▇▇▇▇▇▇'▇
employment.
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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 No/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 ▇▇▇▇▇▇'▇ 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, and such payment shall
terminate all obligations of the Corporation under this Agreement.
(2) If ▇▇▇▇▇▇'▇ 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 ▇▇▇▇▇▇'▇ termination of employment.
(c) Party to Receive Payment. All payments owed under this
Agreement shall be made to ▇▇▇▇▇▇ or, in the event of ▇▇▇▇▇▇'▇ death,
to the beneficiary designated by ▇▇▇▇▇▇ or to ▇▇▇▇▇▇'▇ 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
▇▇▇▇▇▇'▇ 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 ▇▇▇▇▇▇'▇ 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 ▇▇▇▇▇▇'▇ 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
▇▇▇▇▇▇'▇ 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 then cash surrender value
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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 ▇▇▇▇▇▇'▇ 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 ▇▇▇▇▇▇'▇ 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.
(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.
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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 January 21,
1997.
SURETY CAPITAL CORPORATION
By: /s/ C. ▇▇▇▇ ▇▇▇▇ /s/ ▇. ▇. ▇▇▇▇▇▇
---------------------- ----------------
Name: C. ▇▇▇▇ ▇▇▇▇ ▇. ▇. ▇▇▇▇▇▇
Title: Chairmal of the Board
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EXHIBIT A
to
EXECUTIVE DEFERRED COMPENSATION AGREEMENT
BETWEEN SURETY CAPITAL CORPORATION
AND ▇. ▇. ▇▇▇▇▇▇
Age on Date of Section 3(b) Payment
Employment for Termination
Termination of Agreement
34 $ 1,334.00
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35 $ 2,757.00
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36 $ 4,275.00
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37 $ 5,894.00
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38 $ 7,620.00
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39 $ 9,506.00
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40 $ 12,276.00
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41 $ 15,462.00
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42 $ 18,837.00
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43 $ 22,375.00
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44 $ 26,239.00
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45 $ 30,314.00
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46 $ 34,664.00
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47 $ 39,301.00
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48 $ 44,901.00
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49 $ 50,907.00
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50 $ 57,108.00
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51 $ 63,939.00
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52 $ 70,931.00
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53 $ 78,325.00
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54 $ 85,564.00
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55 $ 93,279.00
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56 $ 101,496.00
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57 $ 110,257.00
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58 $ 119,612.00
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59 $ 129,628.00
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60 $ 140,368.00
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61 $ 151,872.00
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62 $ 164,260.00
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63 $ 177,620.00
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64 $ 192,043.00
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SURETY CAPITAL CORPORATION
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
January 21, 1997
▇▇. ▇. ▇. ▇▇▇▇▇▇
Surety Capital Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
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,
/s/ C. ▇▇▇▇ ▇▇▇▇
C. ▇▇▇▇ ▇▇▇▇, Chairman
Agreed and Accepted Effective
January 21, 1997
By: /s/ ▇. ▇. ▇▇▇▇▇▇
▇. ▇. ▇▇▇▇▇▇
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 DESIGNA- TION. 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.
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▇. ▇. ▇▇▇▇▇▇
STATE OF TEXAS
COUNTY OF TARRANT
This instrument was acknowledged before me on _______________, 1997 by ▇.
▇. ▇▇▇▇▇▇.
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Notary Public in and for the State of Texas