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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. _____)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as
permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or
240.14a-12
Surety Capital Corporation
------------------------------------------------
(Name of Registrant as Specified In Its Charter)
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-
6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction
applies:
(2) Aggregate number of securities to which transaction
applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth
the amount on which the filing fee is calculated and state
how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or
Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
PAGE
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SURETY CAPITAL CORPORATION
1845 Precinct Line Road, Suite 100
Hurst, Texas 76054
___________________
Notice of Annual Meeting of Stockholders
To Be Held June 4, 1999
___________________
To the Stockholders of
SURETY CAPITAL CORPORATION:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
Surety Capital Corporation, a Delaware corporation (the "Company"), will
be held at 3:00 p.m. local time at Surety Bank, National Association,
600 Pat Booker Road, Universal City, Texas 78148, on Friday, June 4, 1999,
for the following purposes:
1. To elect the eight (8) persons listed in the Proxy Statement
dated May 5, 1999, accompanying this Notice, to serve as Directors
of the Company; and
2. To transact such other business as may properly come before
the Annual Meeting of Stockholders or any adjournment(s) thereof.
The Board of Directors has fixed the close of business on
April 19, 1999 as the Record Date for the determination of stockholders
entitled to notice of and to vote at this meeting and any adjournment(s)
thereof. Only stockholders of record at the close of business on the
Record Date are entitled to notice of and to vote at the meeting. A
complete list of such stockholders will be available for inspection at the
offices of the Company in Hurst, Texas, during regular business hours for
a period of ten days before the meeting.
All stockholders are cordially invited to attend the meeting.
Stockholders are urged, whether or not they plan to attend the meeting, to
complete, date and sign the accompanying proxy and to return it promptly in
the enclosed postage-paid return envelope. You may revoke the proxy at any
time before the proxy is exercised by delivering written notice of
revocation to the Secretary of the Company, by delivering a subsequently
dated proxy, or by attending the meeting and withdrawing the proxy.
By Order of the Board of Directors,
G. M. Heinzelmann, III, President
Hurst, Texas
May 5, 1999
PAGE
<PAGE>
SURETY CAPITAL CORPORATION
1845 Precinct Line Road, Suite 100
Hurst, Texas 76054
PROXY STATEMENT
for
ANNUAL MEETING OF STOCKHOLDERS
To be Held on June 4, 1999
INTRODUCTION
This Proxy Statement is furnished to the stockholders of Surety
Capital Corporation (the "Company") in connection with the solicitation by
the Board of Directors of the Company (the "Board") of proxies to be used at
the Annual Meeting of Stockholders of the Company to be held at 3:00 p.m.
local time at Surety Bank, National Association, 600 Pat Booker Road,
Universal City, Texas 78148 on Friday, June 4, 1999 and at any adjournment
or adjournments thereof. Proxies in the form enclosed will be voted at the
meeting if properly executed, returned to the Company prior to the meeting
and not revoked. The approximate date on which this Proxy Statement and the
accompanying proxy card are being sent to stockholders is May 5, 1999.
REVOCABILITY OF PROXY
Your proxy may be revoked at any time before it is voted by
delivering written notice of revocation to the Secretary of the Company, by
delivering a subsequently dated proxy or by attending the meeting and
withdrawing the proxy. Your attendance at the meeting will not constitute
automatic revocation of the proxy.
ACTION TO BE TAKEN AT THE MEETING
The accompanying proxy, unless the stockholder otherwise specifies
in the proxy, will be voted (i) for the election as directors of the nominees
listed under "Election of Directors" and (ii) at the discretion of the proxy
holders, on any other matter that may properly come before the meeting or
any postponements or adjournments thereof.
Where stockholders have appropriately specified how their proxies
are to be voted, they will be voted accordingly. If any other matter of
business is brought before the meeting, the proxy holders may vote the
proxies at their discretion. The directors do not know of any such other
matter or business.
PERSONS MAKING THE SOLICITATION
The accompanying proxy is being solicited by the Board of Directors
of the Company. The cost of soliciting your proxy will be borne entirely by
the Company and no other person or persons will bear such costs either
directly or indirectly. In addition to the use of the mails, proxies may be
solicited by personal interview, telephone and telegram by directors,
officers and employees of the Company.
OUTSTANDING SHARES AND VOTING RIGHTS
General
The Board has fixed the close of business on April 19, 1999 as the
record date (the "Record Date") for the determination of stockholders
entitled to notice of and to vote at the Annual Meeting. Only stockholders
PAGE
<PAGE>
of record on the Record Date are entitled to notice of and to vote at the
Annual Meeting or any adjournment(s) thereof. At the close of business on
the Record Date, there were 5,760,235 shares of common stock, $0.01 par value
(the "Common Stock"), of the Company issued and outstanding.
QUORUM AND VOTING
The presence, in person or by proxy, of the holders of a majority
of the outstanding shares of Common Stock is necessary to constitute a quorum
at the meeting. In deciding all questions, a holder of Common Stock is
entitled to one vote, in person or by proxy, for each share held in his or
her name on the Record Date. At all meetings of the stockholders, except
where the provision is made by law or by the Company's Certificate of
Incorporation or Bylaws, all matters shall be decided by the vote of a
majority of the votes cast by the stockholders present in person or by proxy
and entitled to vote thereon. Abstentions will be included in vote totals
and, as such, will have the same effect on each proposal other than the
election of directors as a negative vote. Broker non-votes, if any, will not
be included in vote totals and, as such, will have no effect on any proposal.
BOARD OF DIRECTORS
Various meetings of the Board are held each year, including an
organizational meeting following the conclusion of the Annual Meeting of
Stockholders. Additionally, the Board has established an Audit Committee
and a Stock Option Committee.
Audit Committee
Members: William B. Byrd, Joseph S. Hardin, Michael L. Milam,
Garrett Morris and Cullen W. Turner.
The function of the Audit Committee is to (i) meet with the
independent public accountants of the Company to review the annual audit and
its results, (ii) implement internal audit controls and procedures of the
Company and its subsidiary, Surety Bank, National Association (the "Bank"),
and (iii) make recommendations to the Board as to the engagement of the
independent public accountants of the Company.
Stock Option Committee
Members: William B. Byrd, Joseph S. Hardin and Cullen W. Turner.
The function of the Stock Option Committee is to administer the
Company's 1988, 1995 and 1998 Incentive Stock Option Plans, the 1996 Stock
Option Plan for Directors, the 1997 Non-Qualified Stock Option Plan for
Non-Employee Directors and the 1997 Non-Qualified Stock Option Plan for
Officers and Key Employees. (See "EXECUTIVE COMPENSATION AND OTHER
INFORMATION: Option Exercises and Holdings" and "BOARD OF DIRECTORS:
Directors' Fees and Compensation.")
Directors' Fees and Compensation
In February 1997 the Company began to hold combined meetings of the
Board and the Bank Board, and the Bank pays each director $1,000 for
attendance at each combined meeting. The total amount paid as directors'
fees in the fiscal year ended December 31, 1998 was $119,000. Effective
January 1, 1999 the Bank pays each director $500 for attendance at each
combined meeting.
The Company has adopted the 1996 Stock Option Plan for Directors
(the "1996 Directors Plan") and the 1997 Non-Qualified Stock Option Plan for
-2-
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<PAGE>
Non-Employee Directors (the "1997 Directors Plan"). Under the 1996 and 1997
Directors Plans an aggregate of 250,000 shares of Common Stock of the Company
were set aside for issuance pursuant to the exercise of options granted
thereunder, of which 190,000 shares are subject to outstanding options and
54,000 shares remain available for grant. The 1996 Directors Plan is a
formula plan pursuant to which annual options are automatically granted to
directors of the Company who are not employees of the Company or the Bank at
fair market value. All options under the 1996 Directors Plan are
non-qualified stock options, and vest one year following the date of grant.
On the first business day of calendar each year, each non-employee director
is automatically granted an option to purchase 2,000 shares of Common Stock
of the Company at the closing price of the Common Stock as reported on the
American Stock Exchange on the grant date. In 1998 each non-employee
director of the Company received an option to purchase 2,000 shares of
Common Stock of the Company at an exercise price of $6.9375 per share.
The 1997 Directors Plan provides for the one time grant of 25,000 non-
qualified stock options to directors of the Company who were not employees
of the Company or the Bank at fair market value. In 1997 each non-employee
director of the Company received an option to purchase 25,000 shares of
Common Stock of the Company at exercise prices ranging from $4.18 to
$5.375 per share. These options vest over five years.
Attendance at Board and Committee Meetings
During fiscal year 1998 there were fourteen (14) meetings of the
Board, one (1) meeting of the Audit Committee and one (1) meeting of the
Stock Option Committee. Each director attended at least 75% of the total
number of meetings of the Board and each committee of the Board of which he
or she was a member during fiscal year 1998.
AUDITORS
The Board has not selected auditors for the 1999 fiscal year.
The Company is satisfied with the accounting and audit services performed
by its current auditors. However, as part of the Company's ongoing cost
reduction efforts and reevaluation of all external relationships, the Audit
Committee is in the process of obtaining proposals for such services from
several accounting firms, including its current auditors. After review of
such proposals, the Audit Committee will make its recommendation to the
Board regarding the appointment of auditors for the 1999 fiscal year.
PricewaterhouseCoopers LLP is the accounting firm which examined and
reported on the Company's financial statements for the last fiscal year.
It is expected that representatives of the firm will be present at the
Annual Meeting to make any statements they desire to make and to answer
appropriate questions directed to them.
PROPOSAL NO. 1:
ELECTION OF DIRECTORS
The bylaws of the Company provide that the Board shall consist of
such number of directors as shall be determined by resolution of the Board.
By a resolution adopted by the Board on April 23, 1999, the number of
directors comprising the Board was set at eight (8). The Board has nominated
the eight (8) individuals named below to serve as directors of the Company.
Names of the nominees for directors and other information about
them appears in the following table. All of the nominees have consented to
serve if elected. If for any unforeseen reason a nominee is unable to serve
if elected, the persons named in the accompanying proxy may exercise their
discretion to vote for a substitute nominee selected by the Board. However,
the Board has no reason to anticipate that any of the nominees will not be
able to serve, if elected.
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<PAGE>
Name and Age of
Nominee; Years Principal Occupation for Past
Served as Director Five Years; Other Directorships
- ------------------ -------------------------------
C. Jack Bean C. Jack Bean has served as Chairman of the Board
Age 71 and Chief Executive Officer of the Company since he
Director Since 1987 returned from retirement in February 1999, and has
served as a director of the Company since March
1987. Mr. Bean previously served as Chairman of
the Board and Chief Executive Officer of the
Company from March 1987 until his retirement in
August 1998, and as President of the Company from
March 1987 to July 1992. Mr. Bean was the owner
and founder of Surety Finance Company, the
predecessor company to the Company's business, from
1985 until March 1987. Mr. Bean has served as
Chairman of the Board, Chief Executive Officer and
President of the Bank since he returned from
retirement in February 1999, and has served as a
director of the Bank since December 1989. He
previously served as Chairman of the Board of the
Bank from December 1989 until his retirement in
August 1998. Mr. Bean has served as a director of
Dallas Fire Insurance Company, a licensed Texas
stock insurance company, since November 1996. The
president of Dallas Fire Insurance Company is also
a director of the Company.
G. M. Heinzelmann, III G. M. Heinzelmann, III has been President of the
Age 36 Company since July 1992 and a director since
Director Since 1993 July 1993. He previously served as Vice President
of the Company from May 1987 to July 1992.
Mr. Heinzelmann has served as Executive Vice
President and a director of the Bank since December
1989 and as Manager of the insurance premium
finance division of the Company, and subsequently
the Bank, since May 1987.
William B. Byrd William B. Byrd has served as a director of
Age 67 the Company since April 1993. He has been involved
Director Since 1993 in personal investment activities, real estate
brokerage and management, and ranching for the past
five years. Mr. Byrd has served as a director of
the Bank since January 1994.
Joseph S. Hardin Joseph S. Hardin has served as a director of the
Age 83 Company since April 1989. He has been involved in
Director Since 1989 personal investment activities for the past five
years. Mr. Hardin has served as a director of the
Bank since May 1994.
Margaret E. Holland Margaret E. Holland has served as a director of the
Age 46 Company since September 1997. She has been a
Director Since 1997 partner in the law firm of Tracy & Holland, L.L.P.
since October 1992. Ms. Holland has served as a
director of the Bank since September 1997.
Michael L. Milam Michael L. Milam has served as a director of the
Age 46 Company since May 1994. He has been president of
Director Since 1994 Dallas Fire Insurance Company, a licensed Texas
stock insurance company, since December 1988.
Mr. Milam has served as a director of the Bank
since May 1994.
Garrett Morris Garrett Morris has served as a director of the
Age 83 Company since May 1994. He has been a member of
Director Since 1994 the law firm of Morris and Schieffer since 1989.
Mr. Morris has served as a director of the Bank
since May 1994.
-4-
PAGE
<PAGE>
Name and Age of
Nominee; Years Principal Occupation for Past
Served as Director Five Years; Other Directorships
- ------------------ -------------------------------
Cullen W. Turner Cullen W. Turner has served as a director of the
Age 58 Company since March 1987. He has been involved
Director Since 1987 in personal investment activities for the past five
years. Mr. Turner has served as a director of the
Bank since December 1993.
G. M. Heinzelmann, III, President and a director of the Company,
is the son-in-law of C. Jack Bean, Chairman of the Board and Chief Executive
Officer of the Company. Otherwise, there is no family relationship between
any of the nominees, directors and any executive officer of the Company.
No director presently holds any other directorships in companies
with a class of securities registered pursuant to Section 12 of the
Securities Exchange Act of 1934 or subject to the requirements of Section 15
of that act.
The affirmative vote of the holders of a majority of the issued
and outstanding shares of Common Stock represented and entitled to vote at
the Annual Meeting or any adjournment(s) thereof is necessary for the
election of directors. Assuming the receipt by each such person of the
affirmative vote of at least a majority of the shares of Common Stock
represented at the Annual Meeting, the eight (8) persons receiving the
greatest number of votes will be elected as directors.
THE BOARD RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE ELECTION
AS DIRECTORS OF THE EIGHT (8) PERSONS NAMED UNDER "PROPOSAL NO. 1: ELECTION
OF DIRECTORS."
ACTION TO BE TAKEN UNDER THE PROXY
The accompanying proxy will be voted "FOR" the election of the
eight (8) persons recommended by the Board and named under "PROPOSAL NO. 1:
ELECTION OF DIRECTORS" as nominees for directors of the Company.
The accompanying proxy will also be voted in connection with the
transaction of such other business as may properly come before the Annual
Meeting of Stockholders, or any adjournment or adjournments thereof.
Management knows of no other matters to be considered at the Annual Meeting
of Stockholders. If, however, any other matters properly come before the
Annual Meeting of Stockholders, or any adjournment or adjournments thereof,
the persons named in the accompanying proxy will vote such proxy in
accordance with their best judgment on any such matter. The persons named
in the accompanying proxy will also, if in their judgment it is deemed
advisable, vote to adjourn the meeting from time to time.
STOCK OWNERSHIP
By Management
The following table shows beneficial ownership of shares of Common
Stock of the Company by all current directors, nominees for director and
executive officers of the Company named under the caption "EXECUTIVE
COMPENSATION AND OTHER INFORMATION," individually, and, together with all
current executive officers of the Company as a group, as of March 31, 1999:
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Amount and
Name of Individual Nature of
or Number of Beneficial Percent
Persons In Group Ownership(1) of Class(2)
- ----------------------- ------------------ -----------
C. Jack Bean 153,080 shares (3) 2.66%
William B. Byrd 24,800 shares (4) *
Joseph S. Hardin 207,583 shares (5) 3.59%
G. M. Heinzelmann, III 96,748 shares (6) 1.65%
Margaret E. Holland 12,250 shares (7) *
Michael L. Milam 51,250 shares (8) *
Garrett Morris 21,250 shares (9) *
Cullen W. Turner 137,100 shares(10) 2.37%
All directors and
executive officers as
a group (8 persons) 704,061 shares(11) 11.86%
* Less than 1% of all the issued and outstanding shares of
Common Stock.
(1) Based on information furnished by persons named and, except
as otherwise indicated below, each person has sole voting and
dispositive power with respect to all shares of Common Stock owned
by such person.
(2) Based on 5,760,235 shares of Common Stock issued and
outstanding at March 31, 1999, as adjusted for shares
convertible or exercisable within sixty (60) days which
are deemed outstanding for a specific stockholder pursuant
to Rule 13d-3(d)(1) under the Securities Exchange Act of 1934.
(3) Includes 153,080 shares of Common Stock owned of record.
(See "EXECUTIVE COMPENSATION AND OTHER INFORMATION: Option
Exercises and Holdings.")
(4) Includes 10,800 shares of Common Stock owned of record; 4,000
shares of Common Stock which Mr. Byrd has the right to acquire
within sixty (60) days from the date hereof pursuant to options
granted to him under the 1996 Stock Option Plan for Directors of
the Company; and 10,000 shares of Common Stock which Mr. Byrd has
the right to acquire within sixty (60) days from the date hereof
pursuant to options granted to him under the 1997 Non-Qualified
Stock Option Plan for Non-Employee Directors of the Company.
(See "BOARD OF DIRECTORS: Directors' Fees and Compensation.")
(5) Includes 191,583 shares of Common Stock held by a trust for which
Mr. Hardin serves as a co-trustee; 6,000 shares of Common Stock
which Mr. Hardin has the right to acquire within sixty (60) days
from the date hereof pursuant to options granted to him under
the 1996 Stock Option Plan for Directors of the Company; and
10,000 shares of Common Stock which Mr. Hardin has the right
to acquire within sixty (60) days from the date hereof pursuant
to options granted to him under the 1997 Non-Qualified Stock Option
Plan for Non-Employee Directors of the Company. (See "BOARD OF
DIRECTORS: Directors' Fees and Compensation.")
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(6) Includes 8,956 shares of Common Stock owned of record; 37,792
shares of Common Stock which Mr. Heinzelmann has the right to
acquire within sixty (60) days from the date hereof pursuant to
options granted to him under the 1988 and 1995 Incentive Stock
Option Plans of the Company; and 50,000 shares of Common Stock
which Mr. Heinzelmann has the right to acquire within sixty (60)
days from the date hereof pursuant to options granted to him under
the 1997 Non-Qualified Stock Option Plan for Officers and Key
Employees of the Company. (See "EXECUTIVE COMPENSATION AND OTHER
INFORMATION: Stock Option Plans" and "Option Exercises and Holdings.")
(7) Includes 250 shares of Common Stock owned of record; 2,000
shares of Common Stock which Ms. Holland has the right to acquire
within sixty (60) days from the date hereof pursuant to options
granted to her under the 1996 Stock Option Plan for Directors of
the Company; and 10,000 shares of Common Stock which Ms. Holland
has the right to acquire within sixty (60) days from the date
hereof pursuant to options granted to her under the 1997 Non-
Qualified Stock Option Plan for Non-Employee Directors of the
Company. (See "BOARD OF DIRECTORS: Directors' Fees and
Compensation.")
(8) Includes 250 shares of Common Stock owned of record; 35,000
shares of Common Stock held by Dallas Fire Insurance Company,
which is a wholly-owned subsidiary of a corporation in which Mr.
Milam has a 50% ownership interest; 6,000 shares of Common Stock
which Mr. Milam has the right to acquire within sixty (60) days
from the date hereof pursuant to options granted to him under the
1996 Stock Option Plan for Directors of the Company; and 10,000
shares of Common Stock which Mr. Milam has the right to acquire
within sixty (60) days from the date hereof pursuant to options
granted to him under the 1997 Non-Qualified Stock Option Plan for
Non-Employee Directors of the Company. (See "BOARD OF DIRECTORS:
Directors' Fees and Compensation.")
(9) Includes 9,250 shares of Common Stock owned of record; 2,000
shares of Common Stock which Mr. Morris has the right to acquire
within sixty (60) days from the date hereof pursuant to options
granted to him under the 1996 Stock Option Plan for Directors of
the Company; and 10,000 shares of Common Stock which Mr. Morris
has the right to acquire within sixty (60) days from the date
hereof pursuant to options granted to him under the 1997 Non-
Qualified Stock Option Plan for Non-Employee Directors of the
Company. (See "BOARD OF DIRECTORS: Directors' Fees and
Compensation.")
(10) Includes 66,100 shares of Common Stock owned of record;
55,000 shares of Common Stock held by a trust for which Mr. Turner
serves as trustee; 6,000 shares of Common Stock which Mr. Turner
has the right to acquire within sixty (60) days from the date
hereof pursuant to options granted to him under the 1996 Stock
Option Plan for Directors of the Company; and 10,000 shares of
Common Stock which Mr. Turner has the right to acquire within sixty
(60) days from the date hereof pursuant to options granted to him
under the 1997 Non-Qualified Stock Option Plan for Non-Employee
Directors of the Company. (See "BOARD OF DIRECTORS: Directors'
Fees and Compensation.")
(11) Includes 13,744 shares of Common Stock of the Company
currently exercisable pursuant to the Company's 1988 Incentive
Stock Option Plan; 24,048 shares of Common Stock of the Company
currently exercisable pursuant to the Company's 1995 Incentive
Stock Option Plan; 26,000 shares of Common Stock of the Company
currently exercisable pursuant to the Company's 1996 Stock
Option Plan for Directors; 60,000 shares of Common Stock of the
Company currently exercisable pursuant to the Company's 1997
Non-Qualified Stock Option Plan for Non-Employee Directors;
and 50,000 shares of Common Stock of the Company currently
exercisable pursuant to the 1997 Non-Qualified Stock Option Plan
for Officers and Key Employees.
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By Others
The following table sets forth certain information with respect to
stockholders of the Company who were known to be beneficial owners of more
than five percent (5%) of the issued and outstanding shares of the Common
Stock of the Company as of March 31, 1999:
Amount and
Name of Individual Nature of
or Number of Beneficial Percent
Persons In Group Ownership(1) of Class(2)
- ----------------------- ------------------ -----------
Carlson Capital, L.P.
301 Commerce Street, Suite 3300
Fort Worth, Texas 76102 338,200 shares 5.87%
First Manhattan Co.
437 Madison Avenue
New York, New York 10022 354,200 shares(3) 6.15%
First Union Corporation
One First Union Center
Charlotte, North Carolina 28288 410,000 shares 7.12%
John Hancock Advisers, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199 348,700 shares 6.05%
Pilgrim Bank and Thrift Fund, Inc.
40 North Central Avenue, Suite 1200
Phoenix, Arizona 85004 544,200 shares(4) 9.45%
Pine Capital Management Incorporated
353 Sacramento Street, 10th Floor
San Francisco, California 94111 593,430 shares(5) 10.30%
(1) Based on information furnished by the entities named and,
except as otherwise indicated below, each entity has sole voting
and dispositive power with respect to all shares of Common Stock
owned by such entity.
(2) Based on 5,760,235 shares of Common Stock issued and
outstanding at March 31, 1999, as adjusted for shares convertible
or exercisable within sixty (60) days which are deemed outstanding
for a specific stockholder pursuant to Rule 13d-3(d)(1) under the
Securities Exchange Act of 1934.
(3) First Manhattan Co. has shared voting and dispositive power
with respect to these shares.
(4) Pilgrim Bank and Thrift Fund, Inc. has sole voting power with
respect to these shares. Pilgrim Investments, Inc., in its
capacity as investment advisor to Pilgrim Bank and Thrift Fund, Inc.,
has shared dispositive power with respect to these shares.
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(5) Pine Capital Management, Incorporated has shared voting power
with its clients, none of which own over five percent (5%) of the
issued and outstanding shares of the Company, and sole dispositive
power with respect to these shares.
COMPLIANCE WITH SECTION 16(a)
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's directors, executive officers and holders of more
than ten percent (10%) of the Common Stock to file with the Securities and
Exchange Commission (the "SEC") and the American Stock Exchange ("AMEX")
initial reports of ownership and reports of changes in ownership of the
Common Stock. Such persons are required by SEC regulations to furnish the
Company with copies of all Section 16(a) reports they file with the SEC.
Based solely on the Company's review of the copies of such forms it has
received during the year, the Company believes that during the year ended
December 31, 1998, all the Company's directors, executive officers and
holders of more than ten percent (10%) of the Common Stock complied with all
Section 16(a) filing requirements.
To the best knowledge of management of the Company, during fiscal
year 1998 no director, officer or ten percent (10%) beneficial owner of
Common Stock of the Company failed to file with the SEC and AMEX any required
reports on Form 3, 4 or 5 regarding transactions in securities of the Company.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
Summary of Cash and Certain Other Compensation
The following table provides certain summary information concerning
compensation paid or accrued by the Company and the Bank to or on behalf of
the Company's Chairman of the Board and Chief Executive Officer and each of
the two (2) other most highly compensated executive officers of the Company
(determined as of the end of the last fiscal year) (hereafter referred to as
the "named executive officers") for the fiscal years ended December 31, 1998,
1997 and 1996:
SUMMARY COMPENSATION TABLE
Annual Compensation
<TABLE>
<CAPTION>
All Other
Name and Compensation
Principal Position Year Salary($)(1) Bonus($) ($)(2)
- ------------------ ---- ------------ -------- ------------
<S> <C> <C> <C> <C>
C. Jack Bean 1998 $121,667 $ 0 $ 30,700(4)
Chairman of the Board and 1997 $157,200 $ 0 $ 2,318
Chief Executive Officer of 1996 $139,346 $19,850 $ 2,407
the Company; Chairman of
the Board of the Bank(3)
Bobby W. Hackler 1998 $137,800 $ 0 $ 2,500
Chairman of the Board and 1997 $123,301 $ 0 $ 2,318
Chief Executive Officer of 1996 $103,946 $15,200 $ 2,622
the Company; Chairman of
the Board, Chief Executive
Officer and President of
the Bank(3)
G. M. Heinzelmann, III 1998 $126,300 $ 0 $ 2,858
President of the Company; 1997 $113,000 $ 0 $ 2,318
Executive Vice President 1996 $ 94,500 $13,800 $ 2,383
of the Bank
</TABLE>
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(1) Includes salary and directors' fees paid by the Bank, before
any salary reduction for contributions to the Bank's Savings
Plan under Section 401(k) of the Internal Revenue Code of
1986, as amended (the "Code").
(2) The amounts shown in this column consist of matching
contributions under the Bank's Savings Plan under Section
401(k) of the Code, which was adopted by the Bank in 1993,
unless otherwise indicated.
(3) Mr. Bean held these positions until his retirement on August 31,
1998. Mr. Hackler served as Vice Chairman and Chief Operating
Officer of the Company and as Vice Chairman, President and Chief
Executive Officer of the Bank until August 31, 1998, when he
assumed the positions indicated in the table upon Mr. Bean's
retirement.
(4) Includes $1,200 for a matching contribution under the Bank's
Savings Plan under Section 401(k) of the Code and $29,500
representing the fair market value of an automobile gifted to
Mr. Bean by the Bank upon his retirement.
Stock Option Plans
Description of Stock Option Plans. The Board has adopted the
1988, 1995 and 1998 Incentive Stock Option Plans of Surety Capital
Corporation and the 1997 Non-Qualified Stock Option Plan for Officers and
Key Employees of Surety Capital Corporation (the "Stock Option Plans") for
officers and/or key employees of the Company. The 1988, 1995 and 1998 Stock
Option Plans have been approved by the stockholders of the Company. The
1997 Stock Option Plan was adopted by the Board on January 2, 1997 and is
not subject to stockholder approval. The purpose of the Stock Option Plans
is to attract and retain capable employees and provide an incentive to
such employees to remain in the employ of the Company.
Options for the purchase of Common Stock under the Stock Option
Plans may be granted to officers or key employees selected from time to
time by the Stock Option Committee of the Board. The exercise price for
any options granted pursuant to the Stock Option Plans must be at least
equal to the fair market value of the Common Stock on the date the options
are granted. Under the Stock Option Plans an aggregate of 1,200,000 shares
of Common Stock of the Company were set aside for issuance pursuant to
the exercise of options granted thereunder, of which 252,792 shares are
subject to outstanding options and 543,110 shares remain available for
grant. To exercise the options, grantees must pay the exercise price in
cash or Common Stock, or any combination of cash and Common Stock. Options
granted under the 1988, 1995 and 1998 Stock Option Plans are incentive
stock options and options granted under the 1997 Stock Option Plan are
non-qualified stock options.
Option Grants. The following table provides information on stock
options granted in fiscal year 1998 to the named executive officers:
-10-
PAGE
<PAGE>
OPTION GRANTS IN FISCAL YEAR 1998(1)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
Potential
Realizable Value
at Assumed Annual
Individual Grants Rates of Stock
Price Appreciation
for Option Term
- -----------------------------------------------------------------------------------------------------------------
Number of Percent
Securities of Total
Underlying Options Exercise
Options Granted to or Base
Granted Employees in Price Expiration
Name (#)(2) Fiscal Year ($/Sh)(3) Date 5%($)(4) 10%($)(4)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
C. Jack Bean 4,891 32.61% $6.9375 01-02-08 $ 21,339 $ 54,078
6,522 32.61% $6.9375 01-02-08 $ 28,455 $ 72,111
7,000 35.00% $4.875 04-21-08 $ 21,461 $ 54,386
10,000 100.00% $5.00 05-19-08 $ 31,445 $ 79,687
Bobby W. Hackler 3,740 24.93% $6.9375 01-02-08 $ 16,317 $ 41,352
4,986 24.93% $6.9375 01-02-08 $ 21,754 $ 55,128
5,400 27.00% $4.875 04-21-08 $ 16,556 $ 41,955
G. M. Heinzelmann, III 3,399 22.66% $6.9375 01-02-08 $ 14,830 $ 37,581
4,532 22.66% $6.9375 01-02-08 $ 19,773 $ 50,108
5,000 25.00% $4.875 04-21-08 $ 15,329 $ 38,847
</TABLE>
- -----------------------------------
(1) This table reflects incentive stock options covering 28,070
shares of Common Stock granted on January 2, 1998 under the 1995
Incentive Stock Option Plan of Surety Capital Corporation (the
"1995 Plan"); incentive stock options covering 17,400 shares of
Common Stock granted on April 21, 1998 under the 1995 Plan; and
incentive stock options covering 10,000 shares of Common Stock
granted on May 19, 1998 under the 1998 Incentive Stock Option Plan
of Surety Capital Corporation (the "1998 Plan") to the named
executive officers. Of the options granted under the 1995 Plan,
29,430 vested on the date of grant and 16,040 vested in January 1999
upon the public announcement by the Company of its 1998 operating
results, since reported earnings per weighted average share
outstanding for the Company's 1998 fiscal year equaled or exceeded
reported earnings per weighted average share outstanding for the
Company's 1997 fiscal year. Options granted under the 1995 Plan
have been granted for a term of ten years, subject to earlier
termination upon the occurrence of certain events related to
termination of employment. Options granted under the 1998 Plan
vested on the date of grant and have been granted for a term of ten
years, subject to earlier termination upon the occurrence of
certain events related to termination of employment.
(2) Under the terms of the Stock Option Plans, the Stock Option
Committee retains the discretion, subject to plan limits, to
modify the terms of outstanding options.
(3) Based on 100% of the fair market value of the shares
underlying options on the date of grant.
(4) The dollar amounts under these columns are the result of
calculations of the potential realizable value under the 5% and 10%
rates set by the Securities and Exchange Commission. The assumed
appreciation rates of 5% and 10% (compounded annually on the $6.9375,
$4.875 and $5.00 market values at the dates of grant) from the date
of grant are not intended to forecast possible future appreciation,
if any, of the Company's stock price. These amounts show potential
realizable value of the options at the end of the ten year term.
-11-
PAGE
<PAGE>
Option Exercises and Holdings. The following table provides
information with respect to the named executive officers concerning the
exercise of incentive stock options during the last fiscal year and
unexercised incentive stock options held as of the end of the last fiscal
year under the Stock Option Plans:
AGGREGATED OPTION EXERCISES
IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
- ------------------------------------------------------------------
Value of
Number of Unexercised
Unexercised In-the-Money
Options at Options at
FY-End (#) FY-End ($)
-------------------------------------
Value
Shares Acquired Realized Exercisable/ Exercisable/
Name on Exercise (#) ($)(1) Unexercisable Unexercisable(2)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
C. Jack Bean 42,000 ($4,875.00) 0/0 $ 0/$0
Bobby W. Hackler 3,100 $2,131.25 94,535/75,000 $ 0/$0
G. M. Heinzelmann, III 2,800 $1,225.00 90,592/75,000 $ 0/$0
</TABLE>
- ------------------------
(1) Fair market value at exercise minus the exercise price.
(2) Market value of underlying securities as of the fiscal year-end
($2.00), minus the exercise or base price.
Termination of Employment, Change in Control and Executive Deferred
Compensation Agreements
The Company has entered into termination of employment, change in
control and executive deferred compensation agreements with certain of
its executive officers, as more fully described below. While these
agreements were not adopted to deter takeovers, they may have an incidental
anti-takeover effect by making it more expensive for a bidder to acquire
control of the Company.
Change in Control Agreements. The Company entered into change in
control agreements with the following executive officers of the Company:
C. Jack Bean, Bobby W. Hackler, G. M. Heinzelmann, III and B. J. Curley.
The change in control agreements provide for the payment under certain
circumstances of benefits to these officers in the event of a change in
control of the Company followed by the termination of employment of the
officers. A "change in control" is deemed to have occurred if (i) any
person becomes the beneficial owner, directly or indirectly, of twenty
percent (20%) or more of the Common Stock of the Company, or (ii) during
any period of two (2) consecutive years during the term of the change in
control agreements, individuals who at the beginning of such period
constitute the Board of Directors 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 of the directors then in office
who were directors at the beginning of the period. Effective August 31,
1998, Mr. Bean resigned his positions as an executive officer of the Company
and the Bank. Effective February 3, 1999, Mr. Hackler resigned his
positions as an executive officer and director of the Company and the Bank.
Effective April 22, 1999, Mr. Curley resigned his positions as an executive
officer and director of the Company and the Bank. Upon their resignations,
each officer's change in control agreement became of no further force and
effect.
-12-
PAGE
<PAGE>
Under the change in control agreements, officers who, during the
period commencing on the effective date of a change of control and ending
two (2) years thereafter, are terminated by the Company for any reason other
than for cause or who terminate their employment with the Company with good
reason are entitled to receive a change in control payment at the time of
such termination. The change in control payment payable under the change
in control agreements may, at the election of the officers, be either in the
form of a lump sum cash payment or in the form of Common Stock of the
Company. The amount of the lump sum cash payment is equal to each officer's
annual base salary rate (but excluding all other compensation, such as
bonuses and fringe benefits) in effect immediately before the effective date
of the change in control, multiplied by three (3). The stock payment
consists of shares of Common Stock of the Company in an amount equal to the
result obtained by dividing the cash payment the officer would otherwise be
entitled to receive by the market value of the Common Stock on the effective
date of the change in control.
The change in control agreements continue in effect through
September 1, 1999. On each successive September 1, the terms of the change
in control agreements will be automatically extended for one (1) additional
year, unless not later than by December 31 of the preceding year the Company
shall have given notice to the officers that it does not wish to extend
such change in control agreements.
Level-Term Life Insurance Agreements. The Company entered into
level-term life insurance agreements with the following executive officers
of the Company pursuant to which the Company purchased $250,000 insurance
policies on their respective lives: Bobby W. Hackler, G. M. Heinzelmann, III
and B. J. Curley. The Company will pay the premiums on such policies, which
are owned by the insureds, until the earlier of (i) the insureds reaching
age 65, or (ii) the termination of the insureds' employment by the Company.
However, under certain circumstances if the insureds are terminated prior to
reaching age 65, the Company remains obligated to pay the premiums on the
policies until the insureds reach age 65 or die. The annual premiums on
these policies for 1998 were $1,270, $300 and $637.50, respectively.
Effective February 3, 1999, Mr. Hackler resigned his positions as an
executive officer and director of the Company and the Bank. Effective
April 22, 1999, Mr. Curley resigned his positions as an executive officer
and director of the Company and the Bank. Upon their resignations, each
officer's level-term life insurance agreement became of no further force
and effect. Accordingly, the Company is no longer obligated to pay the
premiums on the policies on the lives of Mr. Hackler and Mr. Curley.
Stock Option Plans. The Stock Option Plans contain certain
"change in control" provisions designed to attract and retain valued
employees of the Company and to ensure that such employees' performance is
not undermined by the possibility, threat or occurrence of a change in
control. The 1988 and 1995 Plans provide that in the event of a change in
control of the Company (in the form of a dissolution or liquidation of the
Company or a merger or consolidation in which the Company is not the
surviving corporation) any options granted under the plans become fully
exercisable, notwithstanding any vesting schedule relating to such options
to the contrary. The 1997 and 1998 Plans provide for the acceleration of a
ny applicable vesting schedule upon a "change in control," which definition
not only includes the dissolution or liquidation of the Company or a merger
or consolidation in which the Company is not the surviving corporation, but
also the acquisition by a person or group of 20% or more of the combined
voting power of the Company's capital stock or under certain circumstances
a change in the constitution of the Board.
-13-
PAGE
<PAGE>
Executive Deferred Compensation Agreements. The Company entered
into executive deferred compensation agreements, which are nonfunded,
nontrusted and nonqualified deferred compensation plans (the "EDC
Agreements"), with the following executive officers of the Company:
Bobby W. Hackler, G. M. Heinzelmann, III and B. J. Curley. The purpose of
the EDC Agreements is to provide an economic incentive to the executive
officers to remain in the employ of the Company until reaching age 65.
Effective February 3, 1999, Mr. Hackler resigned his positions as an
executive officer and director of the Company and the Bank. Mr. Hackler
received a total of $129,750 as payment in full under his EDC Agreement, and
his EDC Agreement is of no further force and effect. Effective April 22,
1999, Mr. Curley resigned his positions as an executive officer and director
of the Company and the Bank, and the terms of his separation agreement are
currently under negotiation.
The following table provides information with respect to amounts
that will be paid to Mr. Heinzelmann if certain conditions under his EDC
Agreement are met.
LONG-TERM INCENTIVE PLANS
CUMULATIVE AWARDS THROUGH FISCAL YEAR 1998
<TABLE>
<CAPTION>
Estimated Future Payouts Under
Non-Stock Price-Based Plans
------------------------------------------------
Number of Performance or
Shares, Other Period Until
Units or Maturation Threshold Target Maximum
Name Other Rights (#) or Payout(2) ($ or #)(3) ($ or #)(4) ($ or #)(5)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
G. M. Heinzelmann, III (1) Contingent $51,955 $51,955 $428,625
</TABLE>
- ---------------------
(1) Mr. Heinzelmann's EDC Agreement provides for deferred
compensation payments as follows: (a) if Mr. Heinzelmann
continues employment with the Company until reaching age 65,
fifteen (15) annual payments each equal to the greater of
(i) 25% of Mr. Heinzelmann's then annual base salary, (ii)
25% of his average annual base salary for the Company's two fiscal
years prior to, and the Company's fiscal year of, his reaching
age 65, or (iii) $25,000; (b) a payment if Mr. Heinzelmann's
employment is terminated prior to reaching age 65 (i) for any
reason other than cause, (ii) by Mr. Heinzelmann for good reason,
(iii) because of disability, or (iv) because of death, in the
amount of the greater of (1) 25% of his annual base salary on the
date of termination, (2) 25% of his average annual base salary
for the Company's two fiscal years prior to, and the Company's
fiscal year of, the year of his termination of employment; or
(3) $25,000, multiplied times 15, and the result multiplied
times that percentage obtained by dividing (y) the number of years
of Mr. Heinzelmann's service to the Company commencing with
calendar year 1995 and ending with the calendar year in which
Mr. Heinzelmann's employment by the Company is terminated by
(z) 33 ; or (c) no payment in the event of termination of
employment for cause. If the payment described in (b) above
exceeds $250,000, the Company shall pay Mr. Heinzelmann in
fifteen (15) equal annual payments. If the payment described in
(b) above is equal to or less than $250,000, Mr. Heinzelmann may
elect to receive a single lump sum payment or fifteen (15) equal
annual payments collectively equal to the total amount of payment.
(2) The payments due under Mr. Heinzelmann's EDC Agreement will
commence within thirty (30) days after he reaches age 65, within
thirty (30) days of an earlier employment termination if Mr.
Heinzelmann elects to receive fifteen (15) annual payments, or
within ninety (90) days of an earlier employment termination if
he elects to receive a lump sum payment.
-14-
PAGE
<PAGE>
(3) The threshold amount payable under Mr. Heinzelmann's EDC
Agreement is the minimum amount payable annually, and assumes a
termination of employment during 1998 under circumstances other
than for cause and that Mr. Heinzelmann elected to receive fifteen
(15) annual payments rather than a lump sum payment.
(4) The target amount payable under Mr. Heinzelmann's EDC
Agreement is the same as the threshold amount under footnote
(3) above, as it changes annually.
(5) The maximum amount payable under Mr. Heinzelmann's EDC
Agreement is calculated on the assumptions that employment
continues until age 65 and that the 1998 base salary is the
base salary for the year Mr. Heinzelmann reaches age 65 and retires.
Post Retirement Services Agreement. The Company and the Bank have
entered into a post retirement services agreement with C. Jack Bean in
recognition of his activities as a founder of the Company and of his long
tenure as the principal executive officer of the Company and the Bank. The
purposes of the agreement are to provide Mr. Bean with compensation and
benefits for certain consulting services Mr. Bean is providing to the
Company and the Bank on a part-time basis after his retirement as a
full-time employee of the Company on August 31, 1998. Upon Mr. Bean's
retirement the Company (to the extent of 25% thereof) and the Bank (to
the extent of 75% thereof) began making payments to Mr. Bean in the amount
of $53,825 per year, in addition to providing certain other benefits,
including health insurance coverage and reimbursement for certain expenses
incurred in connection with his post retirement consulting services to
the Company and the Bank. Although Mr. Bean resumed certain of his
positions as an executive officer of the Company and the Bank in February
1999, he continues to receive compensation under this agreement rather
than a salary from the Company or the Bank.
If the Company or the Bank defaults in the performance of any
provisions of the agreement or the occurrence of a change in control of
the Company, the Company (to the extent of 25% thereof) and the Bank (to
the extent of 75% thereof) will pay Mr. Bean an accelerated payment
calculated as follows: (1) the annual payment will be equal to the
discounted present value of $53,825 per year for the number of years equal
to eighty-five (85) minus Mr. Bean's age at the time of the default
or change in control, and (2) the insurance coverage payment will be equal
to the insurance cost times the number of years equal to eighty-five (85)
minus Mr. Bean's age at the time of the default or change in control. The
discount interest rate for purposes of clause (a) in the preceding sentence
will be five percent (5%) per year; the insurance cost for purposes of
clause (b) in the preceding sentence will be the cost of the coverage and
reimbursement provided in the immediately preceding twelve (12) calendar
month period.
Compensation Committee Interlocks and Insider Participation
Neither the Company nor the Bank currently has a Compensation
Committee or other Board committee performing equivalent functions. The
Company did not pay any cash compensation to the named executive officers
during the fiscal year ended December 31, 1998; all such compensation was
paid by the Bank. The Company monitors salaries through its review of
the Bank's budgeting process. The named executive officers of the Company
are members of the Board of Directors of the Bank (the "Bank Board"), and in
such capacity participated in deliberations regarding compensation for
executive officers of the Company during the fiscal year ended December 31,
1998.
-15-
PAGE
<PAGE>
Stock Option Committee and Bank Board Joint Report on Executive Compensation
As described above, the Company does not currently have a
Compensation Committee or other Board committee performing equivalent
functions. The named executive officers of the Company receive no salary or
fees from the Company. All compensation paid to the named executive
officers is paid by the Bank, and the Bank Board is responsible for
determining these salaries. The Company monitors salaries through its
review of the Bank's budgeting process.
The Company has a Stock Option Committee, comprised of outside
directors, which is responsible for reviewing performance and awarding
stock options to the executive officers and key employees of the Company.
The Stock Option Committee recommended a stock option award of 55,000 shares
to be divided among the named executive officers and one other officer pro
rata based on their respective 1998 base salaries. The Committee also
recommended a stock option award of 10,000 shares to C. Jack Bean in
recognition of his activities as a founder of the Company and of his long
tenure as the principal executive officer of the Company and the Bank.
The Bank does not have a Compensation Committee. The Bank Board
performs the equivalent function of such a committee and regularly monitors
the performance of the Bank's executive officers through its monthly review
of the Bank's performance. The Bank Board establishes and approves executive
compensation as part of its annual budgeting process. Base salaries for
1998 for the named executive officers were based upon a review of comparable
positions in the banking industry. The Federal Reserve Bank's Eleventh
District survey of salaries was the primary source used for such comparison.
Also, individual performance of each named executive officer was considered
in determining compensation. The Bank Board may also, in its discretion,
award bonuses to executive officers based upon individual and corporate
performance. Based on the loss recorded for 1998, the Bank Board voted to
not award bonuses to the named executive officers for 1998.
A significant portion of the Company's and the Bank's executive
compensation is linked directly to individual and corporate performance.
The Boards of Directors of the Company and of the Bank will continue to
review all elements of executive compensation to ensure that the total c
ompensation program, and each element thereof, meets the Company's
objectives and philosophy.
Stock Option Committee of Board of Directors of Surety
Surety Capital Corporation Bank, National Association
William B. Byrd C. Jack Bean, Chairman
Joseph S. Hardin William B. Byrd
Cullen W. Turner Joseph S. Hardin
G. M. Heinzelmann, III
Margaret E. Holland
Michael L. Milam
Garrett Morris
Cullen W. Turner
Performance Graph
The following graph compares the cumulative total stockholder
return on the Common Stock of the Company with that of the MG Industry
Group 415 - Regional- Southwest Banks Index, a bank stock index published by
Media General Financial Services, Inc., and the American Stock Exchange
Index, a broad market index published by the American Stock Exchange. The
comparison for each of the periods assumes that $100 was invested on
December 31, 1993 in each of the Common Stock of the Company, the stocks
-16-
PAGE
<PAGE>
included in the MG Industry Group 415 - Regional-Southwest Banks Index, and
the stocks included in the American Stock Exchange Index. These indexes,
which reflect formulas for dividend reinvestment and weighting of individual
stocks, do not necessarily reflect returns that could be achieved by
individual investors.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
AMONG THE COMPANY, THE MG INDUSTRY GROUP 415 -
REGIONAL-SOUTHWEST BANKS INDEX,
AND THE AMERICAN STOCK EXCHANGE INDEX
<TABLE>
<CAPTION>
1993 1994 1995 1996 1997 1998
------- ------ ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Company $100.00 $68.49 $ 76.71 $ 89.04 $153.42 $ 43.84
MG Industry Group 415 $100.00 $98.92 $138.12 $173.64 $275.50 $242.38
American Stock Exchange $100.00 $88.33 $113.86 $120.15 $144.57 $142.61
</TABLE>
CERTAIN TRANSACTIONS
Certain Relationships and Related Transactions
The Certificate of Incorporation of the Company limits the
liability of directors to the full extent permitted by Delaware law. The
Certificate of Incorporation also provides that the Company will indemnify
directors and officers to the full extent provided by Delaware law.
From time to time, the Bank makes loans to officers, directors and
principal stockholders (and their affiliates) of the Company or the Bank.
All loans to such persons are made in the ordinary course of business; are
made on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with
other persons; and do not involve more than the normal risk of collectibility
or present other unfavorable features.
-17-
PAGE
<PAGE>
During 1998 the Company extended loans of $482,000 to insureds to
finance premiums paid to Dallas Fire Insurance Company, an insurance company
of which Michael L. Milam, a director of the Company, is president. During
1998 the Company paid $182,335 for legal services to Tracy & Holland, L.L.P.,
a law firm in which Margaret E. Holland is a partner. Ms. Holland is a
director of the Company.
PROPOSALS FOR NEXT ANNUAL MEETING
Any proposals from stockholders to be presented for consideration
for inclusion in the proxy material in connection with the 2000 annual
meeting of stockholders of the Company must be submitted in accordance with
the rules of the SEC and received by the Secretary of the Company at the
Company's principal executive offices no later than the close of business on
December 29, 1999.
GENERAL
The accompanying proxy is being solicited on behalf of the Board
of Directors of the Company. Costs of solicitation will be borne by the
Company. In addition to the use of the mails, proxies may be solicited by
personal interview, telephone, and telegram by directors, officers and
employees of the Company. Arrangements have also been made with brokerage
houses, banks and other custodians, nominees, and fiduciaries for the
forwarding of soliciting materials to the beneficial owners of the Common
Stock held of record by such persons, and the Company will reimburse them
for reasonable out-of-pocket expenses incurred by them in connection
therewith.
All information contained in this Proxy Statement relating to the
occupations, affiliations, and securities holdings of directors and officers
of the Company and their relationship and transactions with the Company is
based upon information received from the individual directors and officers.
All information relating to any beneficial owner of more than five percent
(5%) of the Common Stock is based upon information contained in reports
filed by such owner with the SEC.
The Annual Report to stockholders of the Company for the fiscal year ended
December 31, 1998, which includes financial statements, accompanying this
Proxy Statement, does not form any part of the material for the solicitation
of proxies.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL
YEAR ENDED DECEMBER 31, 1998, INCLUDING FINANCIAL STATEMENTS AND SCHEDULES
THERETO, MAY BE OBTAINED WITHOUT CHARGE (EXCEPT FOR EXHIBITS TO SUCH REPORT,
WHICH WILL BE FURNISHED UPON PAYMENT OF THE COMPANY'S REASONABLE EXPENSES
IN FURNISHING SUCH EXHIBITS) TO ANY PERSON TO WHOM A PROXY STATEMENT IS
DELIVERED, UPON ORAL OR WRITTEN REQUEST OF SUCH PERSON AND BY FIRST CLASS
MAIL OR OTHER EQUALLY PROMPT MEANS WITHIN ONE BUSINESS DAY OF RECEIPT OF
SUCH REQUEST. ANY PERSON DESIRING A COPY OF THE ANNUAL REPORT ON FORM 10-K
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998, OR THE EXHIBITS THERETO, SHOULD
ADDRESS HIS REQUEST TO MR. ROBERT L. BINTLIFF, 1845 PRECINCT LINE ROAD, SUITE
100, HURST, TEXAS 76054.
By Order of the Board of Directors,
May 5, 1999 G. M. Heinzelmann, III, President
-18-
PAGE
<PAGE>
SURETY CAPITAL CORPORATION
Proxy Solicited on Behalf of the Board of Directors of the Corporation
For Annual Meeting of Stockholders June 4, 1999
The undersigned hereby constitutes and appoints C. Jack Bean
and G. M. Heinzelmann, III, and each of them, proxies with full power of
substitution, to vote, as directed below, all the shares of common stock of
Surety Capital Corporation (the "Corporation") held of record by the
undersigned at the close of business on April 19, 1999, at the Annual
Meeting of Stockholders to be held at Surety Bank, National Association,
600 Pat Booker Road, Universal City, Texas 78148, at 3:00 p.m. on June 4,
1999, and at any adjournment or adjournments thereof.
1. ELECTION OF DIRECTORS -- Nominees: C. Jack Bean, William B.
Byrd, Joseph S. Hardin, G. M. Heinzelmann, III, Margaret E.
Holland, Michael L. Milam, Garrett Morris and Cullen W.
Turner.
MARK ONLY ONE BOX _____ VOTE FOR all nominees listed
above, except vote to be
withheld from the following
nominees, if any: ____________
_____ VOTE TO BE WITHHELD from all
nominees.
2. OTHER BUSINESS. In their discretion upon such other business
as may properly come before the meeting, or any adjournment
or adjournments thereof.
FOR ___ AGAINST ___ ABSTAIN ___
This proxy when properly executed will be voted as directed herein by
the undersigned. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR all
the nominees listed above and, in the discretion of the persons named herein
as proxies, upon such other business as may come before the meeting and any
adjournment or adjournments thereof. The undersigned hereby revokes any
proxy or proxies heretofore given and hereby confirms all that said attorneys
and proxies, or any of them, or their substitutes may do by virtue hereof.
In addition, receipt of the 1998 Annual Report, the Notice of Annual Meeting
and the Proxy Statement of Surety Capital Corporation dated May 5, 1999 is
hereby acknowledged.
SHARES OF COMMON STOCK: ________________ DATED _________________, 1999
_____________________________
_____________________________
Signature of Shareholder(s)
_____________________________
Please date this proxy and sign Street Address
your name exactly as it appears
hereon, and mail today. When
signing on behalf of a corporation, _____________________________
partnership, estate, trust, or City State Zip Code
the like, indicate title of persons
signing. For joint accounts, each
joint owner should sign.
NOTE: I _____ WILL _____ WILL NOT ATTEND THE STOCKHOLDERS' MEETING ON
JUNE 4, 1999.
