EXHIBIT 10.09
SURETY CAPITAL CORPORATION
0000 Xxxxxxxx Xxxx Xxxx, Xxxxx 000
Xxxxx, Xxxxx 00000
CHANGE IN CONTROL AGREEMENT
October 18, 1999
Mr. ____________________
________________________
________________________
Dear ________________:
Surety Capital Corporation (the "Company") and Surety Bank,
N. A. (the "Bank") consider it essential to the best interests
of the Company, its stockholders, and the Bank to xxxxxx the
continued employment of key management personnel. In this
connection, the Board of Directors of the Company (the "Board")
and the Board of Directors of the Bank (the "Bank Board")
recognize that the possibility of a Change in Control of the
Company (defined below) exists and that such possibility, and
the uncertainty and questions which it necessarily raises among
management, may result in the departure or distraction of
management personnel to the detriment of the Company, its
stockholders, and the Bank in a period when their undivided
attention and commitment to the business of the Company and the
Bank are particularly important.
Accordingly, the Board and the Bank Board have determined
that appropriate steps should be taken to reinforce and
encourage the continued attention and dedication of members of
the Company's and the Bank's management, including yourself, to
their assigned duties without distraction in the face of
potentially disturbing circumstances arising from the
possibility of a Change in Control of the Company.
In order to induce you to remain in the employ of the
Company and the Bank, the Company and the Bank agree that you
shall receive the benefits set forth in this letter agreement
("Agreement") in the event of a Change in Control of the Company
under the circumstances described below.
1. Definitions. For purposes of this Agreement, the
following terms shall have the meanings set forth below. As
used in this Agreement, the terms "Company" and "Bank" as
defined above shall mean the Company or Bank, as appropriate,
and any successor to its business and/or assets which assumes
and agrees to perform this Agreement by operation of law or
otherwise.
(a) "Cause" shall mean any act that is materially
adverse to the best interests of the Company or the Bank that
constitutes, on your part, common law fraud, a felony or other
gross malfeasance of duty.
Mr. _____________
October 18, 1999
Page 2
(b) A "Change in Control of the Company" shall be
deemed to have occurred if (A) any "person" or "group" (as such
terms are used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended, the "Exchange Act"), other
than a majority-owned subsidiary of the Company or a trustee or
other fiduciary holding securities under an employee benefit
plan of the Company, is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing fifteen
percent (15%) or more of the combined voting power of the
Company'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 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 a majority of the
directors then in office who were directors at the beginning of
the period; or (C) a merger or consolidation occurs in which the
Company is a party, whether or not the Company is the surviving
corporation, in which outstanding shares of Common Stock are
converted into shares of the successor corporation or a holding
company thereof representing fifty percent (50%) or less of the
voting power of all capital stock thereof outstanding
immediately after the merger or consolidation) or other
securities (of either the Company or another company) or cash or
other property; or (D) the sale of all, or substantially all, of
the Company's or Bank's assets occurs; or (E) the stockholders
of the Company approve a plan of complete liquidation of the
Company or the Bank.
(c) "Change in Control Payment" shall mean either the
Lump Sum Payment or the Stock Payment provided for in Section
3(c) or (d) of this Agreement.
(d) "Common Stock" shall mean the common stock, $0.01
par value, of the Company.
(e) "Date of Termination" shall mean the last day of
employment as stated in the Notice of Termination.
(f) "Good Reason" shall mean:
(1) a material reduction of your duties,
responsibilities and status with the Company or the Bank as they
existed immediately before the effective date of a Change in
Control of the Company;
(2) a reduction of your base salary from that in
effect immediately before the effective date of a Change in
Control of the Company; or
(3) your relocation to offices of the Company
more that thirty (30) miles from your office location
immediately before the effective date of a Change in Control of
the Company.
Mr. _____________
October 18, 1999
Page 3
(g) "Lump Sum Payment" shall have the meaning set
forth in Section 3(c) of this Agreement.
(h) "Market Value of the Common Stock" shall mean:
(A) if the Common Stock is listed on a national securities
exchange, the closing price of the Common Stock on the relevant
date, as reported on the composite tape; (B) if the Common Stock
is not listed on a national securities exchange, but is traded
in the over-the-counter market, the average of the bid and asked
prices for the Common Stock on the relevant date; and (C) if the
fair market value of the Common Stock cannot be determined
pursuant to clause (A) or (B) above, such price as the Board
shall in good faith determine.
(i) "Notice of Termination" shall have the meaning
set forth in Section 3(b) of this Agreement.
(j) "Stock Payment" shall have the meaning set forth
in Section 3(d) of this Agreement.
2. Term of Agreement. This Agreement shall commence on
the date hereof and shall continue in effect through December 1,
2000; provided, however, that commencing on December 1, 2000,
and the first day of each December thereafter, the term of this
Agreement shall automatically be extended for one (1) additional
year unless, not later than April 30 of such year, the Company
shall have given notice to you (on the Company's behalf and on
behalf of the Bank) that it does not wish to extend this
Agreement; provided, further, that notwithstanding any such
notice by the Company not to extend, if a Change in Control of
the Company shall have occurred during the original or extended
term of this Agreement, this Agreement shall continue in effect
until all payments, if any, required to be made by the Company
and the Bank to you under this Agreement shall have been paid in
full.
3. Compensation Following Change of Control.
(a) Change in Control Payment. Subject to the terms
and conditions of this Agreement, if, during the period
commencing on the effective date of a Change in Control of the
Company and ending two (2) years thereafter:
(1) your employment with the Company or the Bank
is terminated by the Company or the Bank for any reason other
than for Cause; or
(2) you terminate your employment with the
Company or the Bank with Good Reason,
you shall be entitled to receive from the Company (or its
successor, as the case may be) a Change in Control Payment
which, at your election, shall be in either the form of a Lump
Sum Payment or a Stock Payment, as provided in Section 3(c) or
(d), below. In the event the Company (or its successor, as the
case may be) is unable for any reason whatsoever to pay the Lump
Sum Payment in accordance with the terms of this Agreement, the
Bank shall pay to you the Lump Sum Payment in accordance with
the terms of this Agreement.
Mr. _____________
October 18, 1999
Page 4
(b) Notice of Termination. Any termination of your
employment by the Company or the Bank or by you shall be
communicated by written notice to the other party or parties
("Notice of Termination"). The Notice of Termination shall set
forth in reasonable detail the facts and circumstances claimed
to provide a basis for the termination of your employment,
together with the Date of Termination (subject to the other
party selecting an earlier Date of Termination in accordance
with this Agreement, in which event such earlier date shall
control).
(c) Lump Sum Payment. The Lump Sum Payment shall
consist of a certified check in an amount equal to your annual
base salary rate as an employee of the Company and the Bank (but
excluding all other compensation, including bonuses and fringe
benefits) in effect immediately before the effective date of the
Change in Control of the Company. The Lump Sum Payment shall be
reduced by any deductions or withholdings required under
applicable law.
(d) Stock Payment. The Stock Payment shall consist
of shares of Common Stock of the Company in an amount equal to
the result obtained by dividing the Lump Sum Payment by the
Market Value of the Common Stock on the effective date of the
Change in Control of the Company, rounded to the nearest whole
share.
(e) Election. Within thirty (30) days after the Date
of Termination following the effective date of a Change in
Control of the Company, you shall notify the Company in writing
of your election to receive the Change in Control Payment in
either the form of a Lump Sum Payment or a Stock Payment.
Within ten (10) days following receipt of such notice, the
Company shall issue and deliver to you, or your designee or
other legal representative, either a certified check payable to
you in the amount of the Lump Sum Payment or stock
certificate(s) evidencing the Common Stock subject to the Stock
Payment, as the case may be. If the Company does not, for any
reason whatsoever, deliver the certified check payable to you in
the amount of the Lump Sum Payment, the Bank shall deliver to
you such certified check.
(f) Other Compensation and Benefits. The Change in
Control Payment shall be in addition to your base salary through
the Date of Termination at the rate in effect as of the Date of
Termination and any other payments you would otherwise be
entitled to receive from the Company or the Bank as a result of
the termination of your employment, including any benefits
payable under any employee benefit plan then in effect. The
Company shall also pay to you all legal fees and expenses
incurred by you in seeking to obtain or enforce any right or
benefit provided by this Agreement. If the Company does not pay
these amounts, these amounts shall be paid by the Bank.
Mr. _____________
October 18, 1999
Page 5
(g) Nature of Change in Control Payment. The
benefits payable to you under this Agreement shall be considered
severance pay in consideration of your past service and your
continued service after the date this Agreement. You shall not
be required to mitigate the amount of any payment provided for
in this Section 3 by seeking other employment or otherwise, nor
shall the amount of any payment or benefit provided for in this
Section 3 be reduced by any compensation earned by you as the
result of employment by another employer or by retirement
benefits after the date of termination, or otherwise.
4. Additional Requirements with Respect to the Stock
Payment.
(a) All stock certificates representing any shares of
Common Stock subject to the Stock Payment shall have endorsed
thereon the following legends:
(1) "THESE SECURITIES HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED
FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT AS TO THE SECURITIES UNDER SAID ACT OR AN
OPINION OF COUNSEL SATISFACTORY TO THE CORPORATION THAT SUCH
REGISTRATION IS NOT REQUIRED."
(2) Any legend required to be placed thereon by
the Delaware Secretary of State or required by applicable blue
sky laws of any state.
(b) Registration Statement; Warranties and
Representations. The Company agrees to use its reasonable best
efforts to register the Common Stock you receive under the
Securities Act of 1933, as amended, on a Form S-8 registration
statement, or other appropriate form of registration statement.
For these purposes, the Company shall be considered to have used
its reasonable best efforts if the registration occurs within
one hundred twenty (120) days after the election under Section
3(e). If for any reason the Company is unable to or does not
register the Common Stock you receive, such Common Stock will
not be transferable except in accordance with appropriate
securities law exemptions. Accordingly, in connection with your
receipt of Common Stock pursuant to the Stock Payment, the
Company may require you to represent and warrant at the time you
receive the Common Stock pursuant to the Stock Payment that the
Common Stock is being acquired by you for your own account for
investment and without an intention to sell or distribute such
Common Stock if, in the opinion of counsel for the Company, such
a representation is required by applicable law.
(c) Rights as a Stockholder. You shall not have any
rights as a stockholder with respect to the Common Stock subject
to the Stock Payment until your election to receive the Change
in Control Payment in the form of a Stock Payment in accordance
with Section 3(e) of this Agreement and until the stock
certificates representing such shares of Common Stock have
actually been issued and delivered to you.
Mr. _____________
October 18, 1999
Page 6
5. Successors. The Company or the Bank, as appropriate,
will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company
or the Bank to assume expressly and agree to perform this
Agreement. Failure of the Company or the Bank to obtain such
assumption and agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement and shall entitle
you to compensation from the Company or the Bank in the same
amount and on the same terms as you would be entitled hereunder
following a Change in Control of the Company, except that for
purposes of implementing the foregoing, the date on which any
such succession becomes effective shall be deemed the date on
which you become entitled to such compensation.
6. Binding Agreement. This Agreement shall inure to the
benefit of and be enforceable by your personal or legal
representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If you should die while
any amount would still be payable to you hereunder if you had
continued to live, all such amounts, unless otherwise provided
herein, shall be paid in accordance with the terms of this
Agreement to your devisee, legatee or other designee or, if
there is no such designee, to your estate.
7. Notice. Any notice required or permitted by any party
to this Agreement shall be in writing and may be delivered
personally to the party being given notice or to the person in
charge of the office of the party being given such notice 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 upon deposit in the mail,
postage prepaid, in the case of delivery by mail. The addresses
of the parties are as follows:
COMPANY: Surety Capital Corporation
0000 Xxxxxxxx Xxxx Xxxx, Xxxxx 000
Xxxxx, Xxxxx 00000
Attn: Xxxxxxx X. Ireland, Chairman
BANK: Surety Bank, National Association
0000 Xxxxxxxx Xxxx Xxxx, Xxxxx 000
Xxxxx, Xxxxx 00000
Attn: Xxxxxxx X. Ireland, Chairman
__________: _________________________
_________________________
_________________________
The names and addresses of persons to receive notice as stated
in this Section 7 may be changed by notice given in accordance
with this Section 7.
Mr. _____________
October 18, 1999
Page 7
8. Miscellaneous. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification
or discharge is agreed to in writing and signed by you and such
officer as may be specifically designated by the Board and the
Bank Board. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such
other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or
otherwise, express or implied, with respect to the subject
matter hereof have been made by either party which are not
expressly set forth in this Agreement. The validity,
interpretation, construction and performance of this Agreement
shall be governed by the laws of the State of Texas.
9. Validity. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which
shall remain in full force and effect.
10. Counterparts. This Agreement may be executed in
several counterparts, each of which shall be deemed to be an
original but all of which together will constitute one and the
same instrument.
If this letter sets forth our agreement on the subject
matter hereof, please sign and return to the Company the
enclosed copy of this letter which will then constitute our
agreement on this subject.
Sincerely,
SURETY CAPITAL CORPORATION
By:
SURETY BANK, NATIONAL ASSOCIATION
By:
AGREED TO:
____________________
____________________