EXHIBIT 10.14
SURETY CAPITAL CORPORATION
0000 Xxxxxxxx Xxxx Xxxx, Xxxxx 000
Xxxxx, Xxxxx 00000
January 21, 1997
Xx. X. X. Xxxxxx
Surety Capital Corporation
0000 Xxxxxxxx Xxxx Xxxx, Xxxxx 000
Xxxxx, Xxxxx 00000
Re: Level Term Life Insurance
Dear Xxx:
We have previously discussed Surety Capital Corporation ("Surety")
providing life insurance coverage for you during the period you are an employee
of Surety, and this letter is intended to outline the agreement we have reached
for such coverage.
1. Insurance Coverage and Premium Payments.
(a) You have applied for and received a term life insurance
policy insuring your life in the face amount of $250,000. This policy
was issued by First Colony Life Insurance Company (Policy #2748840),
and Surety will be provided with a copy of the insurance application
and policy. You are the owner of the policy and Surety has no
ownership interest in the policy or the proceeds payable under the
policy, but Surety will pay the policy premiums until the earlier of
(1) your reaching age sixty-five (65), or (2) a termination of your
employment by Surety (subject to the other provisions in this letter).
(b) During the term of your employment by Xxxxxx, you will
provide Surety with a copy of the periodic premium statement, and
Surety will either pay same prior to its due date or, if you have
previously paid the statement, Surety will reimburse the premium
amount to you within thirty days after Xxxxxx's receipt of the
statement. The premium amount that Surety is obligated to reimburse
shall be limited to the cost of level term life insurance from the
issuing insurance company for a male who is your age and who qualifies
for the company's standard rating for a non-smoker without any
restrictive health conditions.
2. Premium Payments - Employment Termination Prior to Age Sixty-Five.
The following provisions shall apply with regard to Surety's obligation to
pay the premium payments in the event of a termination of your employment
prior to your reaching age sixty-five (65).
(a) If your employment by Surety is terminated prior to your
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 you 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 your Disability, or
Xx. X. X. Xxxxxx
January 21, 1997
Page 2
(4) for any other reason other than Cause,
Surety shall be obligated to continue the premium payments
until the earlier of your reaching age sixty-five (65) or your
death.
(b) If your employment by Surety is terminated for Cause prior to
your reaching age sixty-five (65), Surety shall have no further
obligations to pay the premiums on the policy, and Surety's
obligations under this Agreement shall terminate on the date of your
employment termination.
(c) For purposes of this letter, the following terms shall have
the following meanings:
(1) "Cause" shall mean any act that is materially adverse to
the best interests of Surety and constitutes, on your part,
common law fraud, a felony or other gross malfeasance of duty.
(2) "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 Surety, is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of
Surety representing twenty percent (20%) or more of the combined
voting power of Surety's then outstanding voting securities; or
(B) during any period of two (2) consecutive years during the
term of this letter, individuals who at the beginning of such
period constitute the Board of Directors of Surety 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.
(3) "Disability" shall mean your inability to manage
Surety'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 your
regularly attending Physician (defined as a person licensed to
practice medicine in Texas). If Surety's Board of Directors
("Surety's Board") disagree with your Physician's opinion, or if
you have not engaged a Physician, Surety's Board may engage, at
its expense, a Physician to examine you, and you consent to such
examination and waive, if applicable, any privilege between the
Physician and yourself that may arise as a result of said
examination. If you have not engaged a Physician, the opinion of
the Physician engaged by Xxxxxx's Board shall control. If you
have engaged a Physician, and if, after conferring, your
Physician and Xxxxxx'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 you and
Surety.
(4) "Good Reason" shall mean:
(A) a material reduction of your duties,
responsibilities and status with Surety as they existed
immediately before the effective date of a Change in
Control;
Xx. X. X. Xxxxxx
January 21, 1997
Page 3
(B) a reduction of your base salary from that in effect
immediately before the effective date of a Change in
Control; or
(C) your relocation to offices of Surety more than
thirty (30) miles from the location of Surety's principal
offices immediately before the effective date of a Change in
Control.
3. Other Documents. Both you and Surety agree to enter into such other
documents or agreements that may be necessary to fulfill the provisions of this
letter.
If this letter properly outlines your understanding of Surety's
obligations, please sign one copy of this letter and return it to the
undersigned.
Sincerely,
/s/ X. Xxxx Xxxx
X. Xxxx Xxxx, Chairman
Agreed and Accepted:
/s/ X. X. Xxxxxx
----------------
X. X. Xxxxxx
Date: January 21, 1997
