EXHIBIT 10.09
AMENDED
EXECUTIVE DEFERRED COMPENSATION AGREEMENT
BETWEEN SURETY CAPITAL CORPORATION
AND
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This Agreement ("Agreement") is entered into by Surety Capital
Corporation, a Delaware corporation (the "Corporation"), and ________________
("________"), and it amends and restates, in its entirety, the Executive
Deferred Compensation Agreement between the Corporation and ________ dated
_________, 199___. 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) "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.
(c) "GOOD REASON" shall mean:
(1) a material reduction of ________'s duties,
responsibilities and status with the Corporation;
(2) a reduction of ________'s base salary; or
(3) ________'s relocation to offices of the Corporation more
than thirty (30) miles from the current location of the Corporation's principal
offices.
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 (d) below prior to such date, ________
shall be entitled to, and the Corporation agrees to pay to ________, fifteen
(15) annual payments equal to the greater of:
(1) twenty-five percent (25%) of his then annual base salary,
(2) twenty-five percent (25%) of his average annual base
salary for the Corporation's two (2) fiscal years prior to, and the
Corporation's fiscal year of, his reaching age sixty-five (65), or
(3) Twenty-Five Thousand and 00/100 Dollars ($25,000.00).
(b) DEFERRAL AMOUNT PRIOR TO AGE SIXTY-FIVE - EMPLOYMENT
TERMINATION FOR REASONS OTHER THAN FOR CAUSE. ________ shall be entitled to the
payments provided for in SECTION 3(C) if his employment by the Corporation is
terminated prior to his reaching age sixty-five (65) for any of the following
reasons:
(1) for any reason other than for Cause (as herein defined),
(2) by ________ with Good Reason (as herein defined),
(3) as a result of the Disability (as herein defined) of
________, or
(4) as a result of the death of ________.
(c) PAYMENTS FOR EMPLOYMENT TERMINATION PRIOR TO AGE SIXTY-FIVE.
(1) If ________'s employment is terminated prior to age sixty-
five for any of the reasons under SECTION 3(B), he shall be entitled to the
following payment (the "Early Termination Payment"):
(A) the greater of (i) twenty-five percent (25%) of
________'s annual base salary on the date of termination, (ii) twenty-five
percent (25%) of ________'s average annual base salary for the Corporation's two
(2) fiscal years prior to, and the Corporation's fiscal year of, the year of his
termination of employment; or (iii) Twenty-Five Thousand Dollars ($25,000.00),
(B) multiplied times Fifteen (15), and
(C) the result multiplied times that percentage obtained
by dividing (i) the number of years of ________'s service to the Corporation
commencing with calendar year 199___
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and ending with the calendar year in which ________'s employment by the
Corporation is terminated pursuant to SECTION 3(B) (the "Termination Year")
(such numerator to be inclusive of 199___ and the Termination Year by (ii)
_____.
(2) If the Early Termination Payment pursuant to SECTION
3(C)(1) exceeds $250,000, the Corporation shall pay the Early Termination
Payment in fifteen (15) equal annual payments.
(3) If the Early Termination Payment pursuant to SECTION
3(C)(1) is equal to or less than $250,000, ________ shall be entitled, as he may
elect, to either of the following payment schedules:
(A) a single lump sum payment in an amount equal to the
Early Termination Payment; or
(B) Fifteen (15) equal annual payments collectively equal
to the Early Termination Payment.
(d) 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 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. If ________'s
employment by the Corporation continues after he reaches age sixty-five (65), he
may elect to: (1) defer the commencement of the payments until his employment
terminates, but with the deferred payments to be determined at age sixty-five
(65) as provided for in SECTION 3(A), or (2) have the payments begin during his
continued employment by the Corporation.
(b) DEFERRAL PAYMENTS PRIOR TO AGE SIXTY-FIVE.
(1) If ________'s employment by the Corporation is terminated
under the provisions of SECTION 3(B) and he elects to receive a single payment
under SECTION 3(C)(3)(A), the single payment 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 ________'s employment by the Corporation is terminated
under the provisions of SECTION 3(B) and the provisions of SECTION 3(C)(2) apply
or he elects to receive fifteen (15) payments under SECTION 3(C)(3)(B), the
first installment shall be paid to him on or before thirty (30) days following
the employment termination date, and the fourteen successive annual installments
shall be paid to him on or before the annual anniversary date of the first
installment.
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(3) If ________ fails to notify the Corporation in writing of his
election under SECTION 3(C)(3) within twenty-five (25) days after his employment
termination date, the Corporation may select either of the payment options and
such selection shall be binding on ________.
(4) If ________'s employment by the Corporation is terminated
under the provisions of SECTION 3(D), 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. 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 be subject,
________ may acquire the life insurance policy from the Corporation for the
lesser of: (1) the 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, the 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.
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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.
(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
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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 29,
1997.
SURETY CAPITAL CORPORATION
By:
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C. ▇▇▇▇ ▇▇▇▇, Chairman ------------------------
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SURETY CAPITAL CORPORATION
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August 29, 1997
Mr. _________________
Surety Capital Corporation
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Re: Amended Executive Deferred Compensation Agreement
Between Surety Capital Corporation and _______________
Dear ________:
A copy of your Amended 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. The
Agreement replaces the _________, 199___ Executive Deferred Compensation
Agreement previously entered into by Surety.
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. ▇▇▇▇ ▇▇▇▇, Chairman
Agreed and Accepted Effective
August 29, 1997
By:
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Attachments:
Beneficiary Designation Form
Executive Deferred Compensation Agreement
DESIGNATION OF BENEFICIARY
TO: Surety Capital Corporation
Board of Directors
FROM:
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Pursuant to SECTION 4(C) of the Amended Executive Deferred Compensation
Agreement Between _________________ and Surety Capital Corporation (the
"Agreement") dated August 29, 1997, 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
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Name:
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Address:
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Social Security Number:
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Relationship:
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Secondary Beneficiary
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Name:
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Address:
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Social Security Number:
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Relationship:
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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