Cash Performance Bonus Opportunity Agreement
EXHIBIT 10.10
Cash Performance Bonus Opportunity Agreement
This Cash Performance Bonus Opportunity Agreement (this “Agreement”) is made as of June 1, 2013, by and between T.B.A. Insurance Group, Ltd., a Texas limited partnership (the “Employer”), and you, the undersigned executive employee of the Employer (the “Employee” or “you”).
Agreement | This Agreement and the Notice of Award of Cash Performance Bonus Opportunity (the “Notice”) that was provided to you by the Employer along with this Agreement govern the award of the contingent cash bonus opportunity specified in the Notice, which contingent cash bonus opportunity, as so specified, shall hereinafter be referred to as the “Award.” The Notice is hereby incorporated into and made a part of this Agreement. Capitalized terms not defined in this Agreement are defined in the Notice. In the event of a conflict between the terms of this Agreement and the Notice, the terms of this Agreement shall prevail. |
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If you die or you terminate your employment with the Employer on account of Disability before June 1, 2016, but on or after December 31, 2015, then, even though your employment will have terminated before June 1, 2016, you or your estate will nevertheless be entitled to the same bonus you would have become entitled to if you had remained employed by the Employer until June 1, 2016.
If you die or you terminate employment on account of Disability before December 31, 2015, then, if the Performance Goal is attained, you or your estate will be entitled to a reduced bonus equal to (a) the bonus you would have been entitled to if you had not ceased to be employed by the Employer before June 1, 2016, multiplied by (b) a fraction, the numerator of which is the number of consecutive days commencing with January 1, 2013 and ending with the date on which you died or terminated employment on account of Disability, and the denominator of which is 1,096. |
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| payment or other benefit to compensate you for your failure to receive any portion of the cash bonus. The Employer will determine when your employment has terminated and whether your termination of employment was on account of death or Disability. |
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If you go on a leave of absence or begin working on a part-time basis, then except as required by law, the Employer may in its discretion reduce the amount of your bonus (including to $0), except to the extent it is prohibited from doing so by law or by the terms of a written agreement between you and the Employer governing or supplementing the written terms of your leave or part-time schedule. |
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| affiliate, and you agree that you do not have any ownership or other rights in or to the Confidential Information. |
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| who has been an employee of the Employer and/or one of its affiliates at any time during the twelve (12) months prior to your date of termination or cessation of employment, to leave the employment of the Employer or its affiliates. |
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| Employer will suffer irreparable harm which cannot be adequately or solely measured by rules of law. Therefore, you and the Employer agree that, in the event you shall breach or violate any of the restrictive covenants set forth in this Agreement, the Employer, in addition to all the remedies which may be available to it, and without waiver of any claim for money damages or the necessity of securing or posting a bond or any other security in connection with such remedy, may proceed against you by injunction or other appropriate remedy to prevent you from violating such provisions. |
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| contrary, in the case of a Change of Control Payment, on the one hand, or a Change of Control Termination Payment, on the other hand, the exact date of payment shall be determined by the Company in its sole discretion and the Change of Control must be considered a change of control under Treasury Regulation Section 1.409A-3(a)(5). Notwithstanding any provision herein to the contrary, Employee may, in accordance with the foregoing, be entitled to a Change of Control Payment or a Change of Control Termination Payment, but not both such payments. |
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Federal Income Tax | No portion of the bonus that is the subject of the Award is includable in your or, if paid after your death, your beneficiary’s gross income for Federal income tax purposes until such portion is paid to you or your estate in cash. However, when the bonus is paid to you in cash, it will be ordinary income to you and will be included in an IRS Form W-2, Wage and Tax Statement, issued to you by the Employer for the calendar year in which the payment occurs. |
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(Remainder of Page Intentionally Left Blank – Signature Page Follows)
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered as of the date first set forth above.
| EMPLOYEE: | |
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| /s/ John Pearson | |
| John Pearson | |
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| T.B.A. INSURANCE GROUP, LTD. | |
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| By: SNC Financial GP, LLC, its general partner | |
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| By: | /s/ Terry Ledbetter |
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| Name: | Terry Ledbetter |
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| Title: | President |
Exhibit A
If 2013-15 CCUM |
| But less than |
| The bonus |
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NA |
| $80 million |
| $0 |
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$80 million |
| $81 million |
| $150,000 |
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$81 million |
| $82 million |
| $165,000 |
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$82 million |
| $83 million |
| $180,000 |
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$83 million |
| $84 million |
| $195,000 |
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$84 million |
| $85 million |
| $210,000 |
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$85 million |
| $86 million |
| $225,000 |
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$86 million |
| $87 million |
| $240,000 |
|
$87 million |
| $88 million |
| $255,000 |
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$88 million |
| $89 million |
| $270,000 |
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$89 million |
| $90 million |
| $285,000 |
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$90 million |
| $91 million |
| $300,000 |
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$91 million |
| $92 million |
| $322,500 |
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$92 million |
| $93 million |
| $345,000 |
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$93 million |
| $94 million |
| $367,500 |
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$94 million |
| $95 million |
| $390,000 |
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$95 million |
| $96 million |
| $412,500 |
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$96 million |
| $97 million |
| $435,000 |
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$97 million |
| $98 million |
| $457,500 |
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$98 million |
| $99 million |
| $480,000 |
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$99 million |
| $100 million |
| $502,500 |
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$100 million |
| $101 million |
| $525,000 |
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$101 million |
| $102 million |
| $547,500 |
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$102 million |
| $103 million |
| $570,000 |
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$103 million |
| $104 million |
| $592,500 |
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$104 million |
| $105 million |
| $615,000 |
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$105 million |
| $106 million |
| $637.500 |
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$106 million |
| $107 million |
| $660,000 |
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$107 million |
| $108 million |
| $682,500 |
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$108 million |
| $109 million |
| $705,000 |
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$109 million |
| $110 million |
| $727.500 |
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$110 million |
| NA |
| $750,000 |
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Amendment to
Cash Performance Bonus Opportunity Agreement
This Amendment (this “Amendment”) is dated as of May __20, 2014, and confirms the discussions between John Pearson (“Employee”) and T.B.A. Insurance Group, Ltd., a Texas limited partnership (the “Employer”), regarding, among other things, the possible bonus payable to Employee based on the Employer’s cumulative corporate underwriting margin over the 2013-2015 period.
WHEREAS, Employer and Employee are parties to that certain Cash Performance Bonus Opportunity Agreement dated as of June 1, 2013 (the “Bonus Agreement”);
WHEREAS, Employer and Employee now desire to amend the Bonus Agreement in certain respects; and
WHEREAS, the Bonus Agreement provides that it may be amended pursuant to a written agreement between Employee and the Employer:
NOW, THEREFORE, BE IT RESOLVED that for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties covenant and agree to amend the Bonus Agreement in the following respects:
1. | The Section of the Bonus Agreement entitled “Change of Control” is deleted in its entirety. |
2. | The Section of the Bonus Agreement entitled “Effect of Employer’s Change of Control, or Dissolution; Ability of Employer to Terminate Award Prematurely for Any Reason” is amended by adding at the end thereof the following new paragraph: |
For purposes of this Agreement, the term “Change of Control” shall have the meaning set forth in the State National Companies, Inc. 2014 Long-Term Incentive Plan.
3. | The Section of the Bonus Agreement entitled “Federal Income Tax Treatment” is amended by adding at the end thereof the following new paragraph: |
Notwithstanding anything herein to the contrary, if the Employer reasonably anticipates that if a distribution were made as scheduled under the Agreement it would result in a loss of the Employer’s tax deduction due to the application of Section 162(m) of the Internal Revenue Code, such distribution may be delayed and paid during the Employer’s first taxable year in which the Employer reasonably anticipates that the Employer’s tax deduction will not be limited or eliminated by the application of Section 162(m) of the Internal Revenue Code. Notwithstanding the foregoing, no distribution under the Agreement may
be deferred in accordance with this paragraph unless all scheduled distributions to the Employee and all similarly situated individuals that could be delayed in accordance with Treas. Reg. Section 1.409A-2(b)(7)(i) are also delayed.
RESOLVED FURTHER that the amendments to the Bonus Agreement set forth above shall be effective immediately upon the closing of the proposed private common stock offering (the “Private Offering”) by the Company’s ultimate parent entity, State National Companies, Inc., a Delaware corporation (“SNCI”), provided (1) that such closing occurs prior to July 30, 2014 and (2) the purchase price per share of common stock sold to investors in the Private Offering implies an enterprise value for SNCI immediately prior to such closing of at least $300 million. If the Private Offering is not completed upon these terms, this Amendment shall be void ab initio and of no further force or effect and the Bonus Agreement shall remain in effect unchanged.
(Remainder of Page Intentionally Left Blank – Signature Page Follows)
IN WITNESS WHEREOF, this Amendment has been duly executed and delivered as of the date first set forth above.
| EMPLOYEE: | |
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| /s/ John M. Pearson | |
| John Pearson | |
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| T.B.A. INSURANCE GROUP, LTD. | |
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| By: SNC Financial GP, LLC, its general partner | |
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| By: | /s/ Terry L. Ledbetter |
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| Name: | Terry L. Ledbetter |
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| Title: | President |