EXHIBIT 10.7
EXECUTIVE EMPLOYMENT AGREEMENT
This EXECUTIVE EMPLOYMENT AGREEMENT (this "Agreement") is made and
entered into by and between Texas Capital Bancshares, Inc. (the "Company"),
having a business address at 0000 XxXxxxxx, Xxxxx 000, Xxxxxx, Xxxxx 00000 and
Xxxxx Xxxxxxxxx ("Executive").
RECITALS
The Board of Directors of the Company (the "Board of Directors") has
determined that it is in the best interests of the Company to employ Executive
and to reinforce and encourage the continued attention and dedication of members
of the Company's management, including the Executive, to their assigned duties
without distraction in potentially disturbing circumstances arising from the
possibility of a change in the control of the Company or the assertion of claims
and actions against employees.
The Company wishes to assure itself of the services of the Executive
for the period provided in this Agreement and the Executive wishes to serve in
the employ of the Company on the terms and conditions hereinafter provided.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the Company and the Executive hereby agree as
follows:
1. EMPLOYMENT. Upon the terms and subject to the conditions contained
in this Agreement, the Executive agrees to provide full-time services for the
Company during the Employment Term. The Executive agrees to devote his best
efforts to the business of the Company, and shall perform his duties in a
diligent, trustworthy, and business-like manner, all for the purpose of
advancing the business of the Company. The Executive agrees to devote his entire
business time, attention, skill and energy exclusively to the business of the
Company. The Executive is encouraged to engage in appropriate civic, charitable
or religious activities and devote a reasonable amount of time to private
investments or boards or other activities provided that such activities do not
interfere or conflict with the Executive's responsibilities and are not and are
not likely to be contrary to the Company's interests.
2. DUTIES. The duties of the Executive shall be those duties which can
reasonably be expected to be performed by a person with the title of Executive
Vice President and Chief Financial Officer and such other duties as may
otherwise be directed from time to time by the Chairman/Chief Executive Officer
or the Board of Directors. The Executive will comply with the lawful policies
and standards that the Company may establish or modify from time to time.
3. EMPLOYMENT TERM. Subject to the terms and conditions hereof, the
Company agrees to employ the Executive for a term commencing on October 6, 2003
(the "Effective Date") and continuing through October 6, 2005 (the "Employment
Term"), unless otherwise terminated as set forth herein or renewed with the
written agreement of both parties hereto before the expiration hereof.
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4. SALARY AND BENEFITS.
(a) Base Salary. The Company shall, during the Employment
Term, pay the Executive a base salary of at least $250,000.00 per year,
payable in accordance with the Company's regular payroll practice in
effect from time to time, less applicable withholding and payroll
deductions. The Company agrees to consider increasing such base salary
at least annually during the Employment Term, but shall not be
obligated to effectuate such an increase.
(b) Bonus. During the Employment Term, the Executive will be
included in the Executive Bonus Plan adopted and revised from time to
time by the Board of Directors. The Company will pay Executive a bonus
of $50,000.00 on March 31, 2004 and a bonus of $50,000.00 on September
30, 2004, provided Executive is actively employed with the Company on
the date of payment.
(c) Equity Compensation. Concurrently with the execution of
this Agreement, the Executive shall receive a restricted stock award
under the Company's 1999 Omnibus Stock Plan upon the terms and
conditions set forth in Attachment A to this Agreement, which is hereby
incorporated herein by reference, and an award of 50,000 stock options,
which shall be subject to annual vesting based on a five (5)-year
graded vesting schedule. During the Employment Term, the Executive will
be eligible to receive, at the discretion of the Board of Directors,
grants of stock options under the Plan.
(d) Employee Benefits and Perquisites. The Executive shall be
entitled to participate in the employee benefit programs and receive
other perquisites generally available to employees of the Company
holding positions similar to the Executive.
5. TERMINATION OF EMPLOYMENT. The Board of Directors of the Company or
the Executive may terminate the employment of the Executive at any time subject
to the provisions of this Section 5.
(a) Voluntary Resignation or Termination for Cause. If the
Executive shall voluntarily terminate his employment for other than
Good Reason, or if the Company shall terminate the employment of the
Executive for Cause, the Employment Term shall terminate immediately
and the Company shall have no further obligation to make any payment
under this Agreement other than Executive's salary through the
termination date. Notwithstanding the foregoing, with respect to any
stock options or other plans or programs in which the Executive is
participating at the time of termination of his employment, the
Executive's rights and benefits under each such plan shall be
determined in accordance with the terms, conditions, and limitations of
the plan and any separate agreement executed by the Executive which may
then be in effect.
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If Executive resigns his employment without Good Reason prior to
October 6, 2004, Executive shall pay the Company the sum of $62,500
within thirty (30) days of the termination date.
For the purposes of this Agreement, the Company shall have "Cause" to
immediately terminate the Executive's employment hereunder upon (i) the
continued failure by the Executive after notice to perform his duties
with the Company (other than any such failure resulting from death or
incapacity due to physical or mental illness), (ii) a conviction of, or
a plea of "guilty" or "no contest" to, a felony or a crime involving
dishonesty or a breach of trust, (iii) an act or omission that
constitutes gross misconduct or moral turpitude, (iv) a breach of any
duty owed to the Company, including but not limited to the duties of
loyalty and confidentiality that is injurious to the Company, or (v)
engaging in an act of fraud or misappropriation against the Company.
(b) Termination Without Cause; Resignation for Good Reason. If
during the term of this Agreement, the Executive's employment is
terminated by the Company without Cause or the Executive voluntarily
terminates his employment for Good Reason, and the Executive executes a
Release of any and all claims relating to or arising from his
employment that he may have against the Company Group (as defined in
Section 7 below) or any officer, director, agent, or employee of any
entity that is part of the Company Group based on any act or omission
through the date Executive's employment terminates ("Date of
Termination"):
(i) The Company shall increase the annual
compensation of the Executive to the "adjusted compensation"
as defined herein and shall continue to pay such adjusted
compensation through the end of the Employment Term.
(ii) The Company shall maintain in full force and
effect for the continued benefit of the Executive, for a one
year period after the Date of Termination, all health
insurance benefits provided that his continued participation
is possible under the general terms and provisions of such
health insurance plans and programs.
For purposes of this Agreement, "Good Reason" shall mean:
(A) Without his express written consent, the
assignment of Executive to a position organizationally or
functionally inferior to his position with the Company on the
date of this Agreement;
(B) Without his express written consent, a reduction
by the Company in the Executive's base salary as in effect on
the date hereof, unless such reduction is a proportionate
reduction of the compensation of the Executive and all other
senior officers of the Company as a part of a Company-wide
effort to enhance the financial condition of the Company;
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(C) Without his express written consent, the
Company's requiring the Executive to be based anywhere other
than the Dallas/Fort Worth Metroplex, except for required
travel on the Company's business;
(D) The failure by the Company to continue to allow
Executive to be eligible to participate in any stock option
plan in which the Executive is participating (or plans
providing substantially similar benefits) without the
Executive's consent.
For purposes of this Agreement, "adjusted compensation" shall
mean the annual base salary of Executive then in effect, plus
the bonus paid to Executive for the preceding calendar year,
multiplied by 150%.
(c) Death or Disability. The Company may terminate the
Executive's employment upon the death or Disability of the Executive.
As used herein, "Disability" means an illness or other disability which
prevents the Executive from discharging his responsibilities under this
Agreement for a period of 180 calendar days during any calendar year
during the Employment Term, as determined in good faith by the Board of
Directors. If the Company terminates the Executive's employment upon
the death or Disability of the Executive, the Company shall continue to
pay the Executive or his estate the base salary that would have been
due through the first anniversary of the Date of Termination.
(d) Notice of Termination. Any termination of this Agreement
by the Company for Cause, without Cause or as a result of the
Executive's Disability, or by the Executive for Good Reason, shall be
communicated by Notice of Termination to the other party hereto given
in accordance with this Agreement. For purposes of this Agreement, a
"Notice of Termination" means a written notice which (i) indicates the
specific termination provision in this Agreement relied upon and (ii)
specifies the Date of Termination, if such date is other than the date
of receipt of such notice.
6. CHANGE IN CONTROL.
(a) For purposes of this Agreement, a "Change in Control" of
the Company shall be deemed to have occurred at such time as:
(i) any "person" (as the term is used in Sections
13(d) and 14(d) of the Exchange Act) is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of voting securities of
the Company representing 25% or more of the Company's
outstanding voting securities or rights to acquire such
securities except for any voting securities issued or
purchased under any employee benefit plan of the Company or
its Subsidiaries; or
(ii) individuals who constitute the Board of
Directors on the date hereof (the "Incumbent Board") cease for
any reason to constitute at least a majority thereof, provided
that any person becoming a director subsequent to the
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date hereof whose election was approved by a vote of at least
three-quarters of the directors comprising the Incumbent
Board, or whose nomination for election by the Company's
stockholders was approved by a Nominating Committee solely
composed of members which are Incumbent Board members, shall
be, for purposes of this clause (ii), considered as though he
were a member of the Incumbent Board; or
(iii) a plan of reorganization, merger,
consolidation, sale of all or substantially all of the assets
of the Company or similar transaction occurs or is effectuated
in which the Company is not the resulting entity; provided,
however, that such an event listed above will be deemed to
have occurred or to have been effectuated upon receipt of all
required regulatory approvals not including the lapse of any
required waiting periods; or
(iv) the Board of Directors determines in its sole
discretion that a Change in Control has occurred.
(b) If, during the Employment Term, a Change in Control occurs, then
(i) the Executive shall be entitled to the benefits provided in paragraphs (c)
and (d) of this Section 6 upon (I) the termination of the Executive's employment
by the Company without Cause after the occurrence of such Change of Control, or
(II) the termination of the Executive's employment by the Executive for Good
Reason after the occurrence of such Change of Control; and (ii) the Executive
shall be entitled to the benefits provided in paragraph (e) of this Section 6.
(c) Upon the Executive's entitlement to benefits pursuant to Section
6(b), the Company shall pay Executive, as liquidated damages in place of any
amounts otherwise payable to the Executive under Section 5, a single lump sum
equal to (i) the Executive's Annual Compensation during the most recently
completed fiscal year multiplied by (ii) 2.67. As used herein, "Annual
Compensation" shall include Base Salary and any bonuses paid to the Executive
with respect to any such year. Such payment shall be made in a lump sum no later
than 30 days after the Date of Termination. Such payments shall not be reduced
in the event Executive obtains other employment following termination of
employment.
(d) Upon the Executive's entitlement to benefits pursuant to Section
6(b), the Company will cause to be continued life, medical and dental coverage
substantially equivalent to the coverage maintained by the Company for Executive
prior to his severance at no premium cost to Executive. Such coverage and
payments shall cease upon the earliest of (i) the expiration of 60 months
following the Date of Termination, (ii) the date upon which the Executive
obtains other employment which provides similar coverage, or (iii) the date upon
which Executive qualifies for Medicare benefits under federal law.
(e) Upon the Executive's entitlement to benefits pursuant to Section
6(b)(ii), the Change of Control vesting provisions of the Executive's restricted
stock award, which are described in Attachment B to this Agreement, shall apply.
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(f) If a Change in Control occurs after the end of the Employment Term
and prior to the date the Executive's restricted stock units granted under
Section 5(c) have vested, then (i) if the Executive's employment is terminated
after such Change of Control for: (I) death or disability, (II) by the Company
without Cause, or (III) by the Executive with Good Reason, then the Executive
shall be paid a single lump sum equal to (A) the Executive's Annual Compensation
during the most recently completed fiscal year multiplied by (B) 2.67; and (ii)
the Change of Control vesting provisions of the Executive's restricted stock
award, which are described in Attachment B to this Agreement, shall apply. The
payment under the preceding sentence shall be made in a single lump sum no later
than 30 days after the Date of Termination and shall not be reduced in the event
the Executive obtains other employment following termination of employment.
(g) If a Change of Control occurs prior to the earlier of (i) October
6, 2005, or (ii) 15 months following the consummation of an initial public
offering of the Company's common stock, the No Competition provision of Section
12 and the No Tampering provision of Section 13 shall apply during the 12-month
period commencing on the earlier of (i) October 6, 2005, or (ii) 15 months
following the consummation of an initial public offering of the Company's common
stock. The Executive and the Company hereby agree that the benefits provided
pursuant to Sections 6(c), 6(d) and 6(e) above are compensation for the
extension of these No Competition and No Tampering provisions of this Agreement.
(h) If a Change of Control occurs after the earlier of (i) October 6,
2005, or (ii) 15 months following the consummation of an initial public offering
of the Company's common stock, and prior to the date all of the Executive's
restricted stock units granted under Section 5(c) have vested, the No
Competition provision of Section 12 and the No Tampering provision of Section 13
shall apply during the 12-month period commencing on the earlier of (i) October
6, 2005, or (ii) 15 months following the consummation of an initial public
offering of the Company's common stock. The Executive and the Company hereby
agree that the benefits provided pursuant to Sections 6(f), above are
compensation for the extension of these No Competition and No Tampering
provisions of this Agreement..
(i) Notwithstanding the other provisions of this Section 6, in the
event that:
(i) the aggregate payments or benefits to be made or afforded
to the Executive, which are deemed to be parachute payments as defined
in Section 280G of the Internal Revenue Code of 1986, as amended (the
"Code") or any successor thereof, (the "Termination Benefits") would be
deemed to include an "excess parachute payment" under Section 280G of
the Code; and
(ii) if such Termination Benefits were reduced to an amount
(the "Non-Triggering Amount"), the value of which is one dollar ($1.00)
less than an amount equal to three (3) times Executive's "base amount,"
as determined in accordance with Section 280G and the Non-Triggering
Amount less the product of the marginal rate of any applicable state
and federal income tax and the Non-
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Triggering Amount would be greater than the aggregate value of the
Termination Benefits (without such reduction) minus (a) the amount of
tax required to be paid by the Executive thereon by Section 4999 of the
Code and further minus (b) the product of the Termination Benefits and
the marginal rate of any applicable state and federal income tax, then
the Termination Benefits shall be reduced to the Non-Triggering Amount.
The allocation of the reduction required hereby among the Termination
Benefits shall be determined by the Executive.
7. CONFIDENTIAL INFORMATION. The Company agrees to provide Executive
with its Confidential Information (as defined below). The Executive recognizes
and acknowledges that he will have access to certain information of members of
the Company Group (as defined below) and that such information is confidential
and constitutes valuable, special and unique property of such members of the
Company Group. In exchange for the Company's agreement to provide him with its
Confidential Information (as defined below), the Executive agrees that he shall
not at any time, either during or subsequent to the Employment Term, disclose to
others, use, copy or permit to be copied, except in pursuance of his duties for
and on behalf of the Company, its successors, assigns or nominees, any
Confidential Information of any member of the Company Group (regardless of
whether developed by the Executive) without the prior written consent of the
Company or as required by law.
As used herein, "Company Group" means the Company and any entity that
directly or indirectly controls, is controlled by, or is under the common
control with, the Company, and for the purposes of this definition "control"
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of such entity, whether through the
ownership of voting securities, by contract or otherwise.
The term "Confidential Information" with respect to the Company means
any secret or confidential information or know-how and shall include, but shall
not be limited to, marketing plans, lending practices, business plans, the
plans, customers, costs, prices, uses, and application of products and services,
results of investigations, studies or experiments owned or used by the Company,
and all apparatus, products, processes, compositions, samples, formulas,
computer programs, computer hardware designs, computer firmware designs, and
servicing, marketing or manufacturing methods and techniques at any time used,
developed, investigated, made or sold by the Company, before or during the
Employment Term, that are not readily available to the public or that are
maintained as confidential by the Company. The Executive shall maintain in
confidence any Confidential Information of third parties received as a result of
his employment with the Company in accordance with the Company's obligations to
such third parties and the policies established by the Company.
8. DELIVERY OF DOCUMENTS UPON TERMINATION. The Executive shall
immediately deliver to the Company or its designee at the termination of his
employment all correspondence, memoranda, notes, records, drawings, sketches,
plans, customer lists, product compositions, and other documents and all copies
thereof, made, composed or received by the Executive, solely or jointly with
others, that are in the Executive's possession, custody, or control at
termination and that are related in any manner to the past, present, or
anticipated business of any member of the Company Group. In this regard, the
Executive hereby grants and conveys to the Company all
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right, title and interest in and to, including without limitation, the right to
possess, print, copy, and sell or otherwise dispose of, any reports, records,
papers, summaries, photographs, drawings or other documents, and writings, and
copies, abstracts or summaries thereof, that may be prepared by the Executive or
under his direction or that may come into his possession in any way during the
term of his employment with the Company that relate in any manner to the past,
present or anticipated business of any member of the Company Group.
9. DISCLOSURE AND RECEIPT OF CONFIDENTIAL INFORMATION. The Executive
shall not, at any time during his employment, knowingly receive from persons not
employed by the Company, any Confidential Information, as described above, not
belonging to the Company, unless a valid agreement is authorized by the Company
and is signed by both the Company and by the disclosing party. The Executive
shall not use or disclose to other employees of the Company, during his
employment with Company, Confidential Information belonging to his former
employers, former business associates, or any other third parties unless written
permission has been given by such third parties to the Company and accepted by
the Company to allow the Company to use and/or disclose such information. The
Executive shall defend and indemnify the Company Group for any breach of the
covenant contained in the preceding sentence.
10. INTELLECTUAL PROPERTY. The Executive shall hold in trust for the
benefit of the Company, and shall disclose promptly and fully to the Company in
writing, and hereby assigns, and binds his heirs, executors, and administrators
to assign, to the Company any and all inventions, discoveries, ideas, concepts,
improvements, copyrightable works, and other developments (the "Developments")
conceived, made, discovered or developed by him, solely or jointly with others,
during the term of his employment by the Company, whether during or outside of
usual working hours and whether on the Company's premises or not, that relate in
any manner to the past, present or anticipated business of any member of the
Company Group. All works of authorship created by the Executive during the
Employment Term and any extension hereof, solely or jointly with others, shall
be considered works made for hire under the Copyright Act of 1976, as amended,
and shall be owned entirely by the Company. Any and all such Developments shall
be the sole and exclusive property of the Company, whether patentable,
copyrightable, or neither, and the Executive shall assist and fully cooperate in
every way, at the Company's expense, in securing, maintaining, and enforcing,
for the benefit of the Company or its designee, patents, copyrights or other
types of proprietary or intellectual property protection for such Developments
in any and all countries.
11. FURTHER ACTS. At the request of the Company (but without additional
compensation from the Company during his employment by the Company) the
Executive shall execute any and all papers and perform all lawful acts that the
Company may deem necessary or appropriate to further evidence or carry out the
transactions contemplated by this Agreement including, without limitation, such
acts as may be necessary for the preparation, filing, prosecution, and
maintenance of applications for United States letters patent and foreign letters
patent, or for United States and foreign copyright, on the Developments.
12. NO COMPETITION. Until October 6, 2005, and while employed by the
Company, the Executive shall not directly or indirectly engage in the business
of operating a state or national bank or company providing similar services, or
any other business in which any member
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of the Company Group directly or indirectly engages during the Employment Term;
provided, however, that the restriction in this Section 12 shall apply only to
the reasonable and limited geographic area consisting of any state where any
member of the Company Group has an office, bank location or place of business,
and Texas and any state that has a contiguous border with the State of Texas.
For purposes of this Section 12, the Executive shall be deemed to engage in such
a business if he directly or indirectly, engages or invests in, owns, manages,
operates, controls or participates in the ownership, management, operation or
control of, is employed by, associated or in any manner connected with, or
renders services or advice to, any business engaged in operating a state or
national bank or other company providing similar services to those provided by
the any member of the Company Group during the Employment Term; provided,
however, that the Executive may invest in the securities of any enterprise (but
without otherwise participating in the activities of such enterprise) if (x)
such securities are listed on any national or regional securities exchange or
have been registered under Section 12 of the Securities Exchange Act of 1934 and
(y) the Executive does not beneficially own (as defined Rule 13d-3 promulgated
under the Securities Exchange Act of 1934) in excess of 5% of the outstanding
capital of such enterprise.
The Executive agrees that if a court of competent jurisdiction
determines that the length of time or any other restriction, or portion thereof,
set forth in this Section 12 is overly restrictive and unenforceable, the court
may reduce or modify such restrictions to those which it deems reasonable and
enforceable under the circumstances, and as so reduced or modified, the parties
hereto agree that the restrictions of this Section 12 shall remain in full force
and effect. The Executive further agrees that if a court of competent
jurisdiction determines that any provision of this Section 12 is invalid or
against public policy, the remaining provisions of this Section 12 and the
remainder of this Agreement shall not be affected thereby, and shall remain in
full force and effect.
The Executive acknowledges that the business of the Company and its
Affiliates is national in scope and that the restrictions imposed by this
Agreement are legitimate, reasonable and necessary to protect the Company's and
its affiliates' investment in their businesses and the goodwill thereof. The
Executive acknowledges that the scope and duration of the restrictions contained
herein are reasonable in light of the time that the Executive has been engaged
in the business of the Company and its affiliates, the Executive's reputation in
the markets for the Company's and its affiliates' businesses and the Executive's
relationship with the suppliers, customers and clients of the Company and its
affiliates. The Executive further acknowledges that the restrictions contained
herein are not burdensome to the Executive in light of the consideration paid
therefor.
13. NO TAMPERING. Until October 6, 2005 and while employed by the
Company (and for any period following the Employment Term during which Executive
is receiving base salary pursuant to Section 5(b)(i) hereof), the Executive
shall not (a) request, induce or attempt to influence any distributor or
supplier of goods or services to any member of the Company Group to curtail or
cancel any business they may transact with any member of the Company Group; (b)
request, induce or attempt to influence any customer of any member of the
Company Group that have done business with or potential customers which have
been in contact with any member of the Company Group to curtail or cancel any
business they may transact with any member of the
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Company Group; (c) request, induce or attempt to influence any employee of any
member of the Company Group to terminate his or her employment with such member
of the Company Group; or (d) hire or employ or attempt to hire or employ any
employee of any member of the Company Group.
Should Executive voluntarily terminate his employment with the Company
for other than Good Cause prior to October 6, 2005, the Company may at its
option, elect to extend the duration of the prohibitions against Executive
contained in (c) and (d) of this Section 13 for a period of an additional 12
months following the date of such termination. To exercise such option the
Company must provide written notice of such election to Executive within 30 days
after such termination and pay to Executive an amount equal to the base pay and
bonus, if any, earned by Executive during his last 12 months of employment with
the Company (less any required withholding or other taxes). In such event such
amount shall be paid in equal monthly installments over such 12 month period.
14. NON-DISPARAGEMENT. The Executive and the Company agree that neither
party shall at any time disparage, make negative comments or express negative
opinions regarding the other party, either publicly or privately, in any
communications with third-parties, verbal, written or otherwise.
15. PUBLICITY AND ADVERTISING. The Executive agrees that the Company
may use his name, picture, or likeness for any advertising, publicity or other
business purpose at any time, during the term of this Agreement and may continue
to use materials generated during the term of this Agreement for a period of six
months thereafter. Such use of the Executive's name, picture, or likeness shall
not be deemed to result in any invasion of the Executive's privacy or in
violation of any property right the Executive may have; and the Executive shall
receive no additional consideration if his name, picture or likeness is so used.
The Executive further agrees that any negatives, prints or other material for
printing or reproduction purposes prepared in connection with the use of his
name, picture or likeness by the Company shall be and are the sole property of
the Company.
16. REMEDIES. The Executive acknowledges that a remedy at law for any
breach or attempted breach of the Executive's obligations under Sections 7
through 15 may be inadequate, agrees that the Company is entitled to specific
performance and injunctive and other equitable remedies in case of any such
breach or attempted breach. The Company shall have the right to offset against
amounts to be paid to the Executive pursuant to the terms hereof any amounts
from time to time owing by the Executive to the Company. The termination of
Executive's employment shall not be deemed to be a waiver by the Company of any
breach by the Executive of this Agreement or any other obligation owed the
Company, and notwithstanding such a termination the Executive shall be liable
for all damages attributable to such breach. The Executive acknowledges that the
scope and duration of the restrictions contained herein are reasonable in light
of the time that the Executive has been engaged in the business of the Company
and its affiliates, the Executive's reputation in the markets for the Company's
and its affiliates' businesses and the Executive's relationship with the
suppliers, customers and clients of the Company and its affiliates. The
Executive further acknowledges that the restrictions contained herein are not
burdensome to the Executive in light of the consideration paid therefor.
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17. INDEMNIFICATION.
(a) In the event that the Executive is made a party or is
threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative, other than an action by or in the right of the Company,
by reason of the fact that the Executive is or was a director, officer,
employee, trustee or agent of the Company, or is or was serving at the
request of the Company as a director, officer, employee trustee or
agent of another corporation, partnership, joint venture, trust or
other enterprise (including employee benefit plans), expressly
including service as a director, officer or in a similar position with
any exchange, board of trade, clearing corporation or similar
institution on which the Company or any other corporation a majority of
the stock of which is owned directly or indirectly by the Company had
membership privileges at the relevant time during which any such
position was held, shall be indemnified by the Company against
expenses, including attorneys' fees, judgments, fines and amounts paid
in settlement actually and reasonably incurred by the Executive in
connection with such action, suit or proceeding if he acted in good
faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the Company, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his conduct
was unlawful; provided, that funds paid or required to be paid to the
Executive as a result of the provisions of this Section 17 shall be
returned to the Company or reduced, as the case may be, to the extent
that the Executive receives funds pursuant to an indemnification from
any other corporation or organization. With respect to any employee
benefit plan which imposes duties on, or involves services by, the
Executive, if the Executive acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and
beneficiaries of an employee benefit plan, he shall be deemed to have
acted in a manner not opposed to the best interests of the corporation.
If the Executive could be indemnified pursuant to the first sentence of
this Section 17(a) except for the fact that the subject action or suit
is or was by or in the right of the Company, he shall be indemnified by
the Company against expenses including attorneys' fees actually and
reasonably incurred by him in connection with the defense or settlement
of such action or suit, except that no indemnification shall be made in
respect of such action or suit, in respect of any claim, issue or
matter as to which the Executive shall have been adjudged to be liable
for negligence or misconduct in the performance of his duty to the
Company unless and only to the extent that the court in which such
action or suit was brought shall determine upon application that,
despite the adjudication of liability but in view of all the
circumstances of the case, the Executive is fairly and reasonably
entitled to indemnity for such expenses which such court shall deem
proper.
(b) To the extent that the Executive has been successful on
the merits or otherwise in defense of any action, suit or proceeding
referred to in Section 17(a), or in defense of any claim, issue or
matter therein, he shall be indemnified by the Company against
expenses, including attorneys' fees, actually and reasonably incurred
by him in connection therewith without the necessity of any action
being taken by the Company. In all cases wherein such indemnification
is provided by this Section 17, unless ordered by a court,
indemnification shall be made by the Company only as authorized in the
specific case upon a determination that indemnification of the
Executive is proper in the
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circumstances because he has met the applicable standard of conduct
specified in this Section 17. Such determination shall be made (i) by a
majority vote of the directors who are not parties to such action, suit
or proceeding, even though less than a quorum or (ii) by a committee of
such directors designated by majority vote of such directors, even
though less than a quorum or (iii) if there are no such directors, or
if such directors so direct, by independent legal counsel in a written
opinion or (iv) by the Board of Directors by a majority vote of a
quorum consisting of directors who were not parties to such action,
suit or proceeding or (v) if such quorum is not obtainable, or, even if
obtainable a quorum of disinterested directors so directs, by
independent legal counsel in a written opinion, or (vi) by the holders
of a majority of the shares of capital stock of the Company entitled to
vote thereon.
(c) The termination of any action, suit or proceeding by
judgment, order, settlement, conviction or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a
presumption that the Executive did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the Company, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was
unlawful. Entry of a judgment by consent as part of a settlement shall
not be deemed a final adjudication of liability for negligence or
misconduct in the performance of duty, nor of any other issue or
matter.
(d) Expenses incurred in defending a civil, criminal,
administrative or investigative action, suit or proceeding may be paid
by the Company in advance of the final disposition of such action, suit
or proceeding as authorized by the Board of Directors in the specific
case upon receipt of an undertaking by the Executive to repay such
amount if it shall ultimately be determined that he is not entitled to
be indemnified by the Company.
(e) The indemnification hereby provided shall not be deemed
exclusive of any other rights to which the Executive may be entitled
under any bylaw, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in an official capacity and
as to action in another capacity while holding such office, and shall
continue as to the Executive once he has ceased to provide services to
the Company.
18. MISCELLANEOUS PROVISIONS.
(a) Executive's Heirs, etc. The Executive may not assign his
rights or delegate his duties or obligations hereunder without the
written consent of the Company. This Agreement shall inure to the
benefit of and be enforceable by the Executive's personal or legal
representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. This Agreement shall be binding on
the Company's successors.
(b) Notice. For the purposes of this Agreement, notices and
all other communications provided for in the Agreement shall be in
writing and shall be deemed to have been duly given when delivered or
mailed by United States registered or certified mail, return receipt
requested, postage prepaid, addressed to the respective addresses set
forth on the first page of this Agreement, provided that all notices to
the Company shall
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be directed to the attention of the Chief Executive Officer of the
Company with a copy to the Secretary of the Company, or to such other
address as is specified in writing in accordance herewith, except that
notices of change of address shall be effective only upon receipt.
(c) Amendment; Waiver. No provisions of this Agreement may be
modified, waived or discharged unless such waiver, modification or
discharge is agreed to in writing signed by the Executive and such
officer as may be specifically designated by the Board of Directors of
the Company. No waiver by either party hereto at any time of any breach
by the other party hereto of, or compliance with any condition or
provision of this Agreement to be performed by such other party, shall
be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to
the subject matter hereof have been made by either party, which are not
set forth expressly in this Agreement.
(d) Dispute Resolution. The Executive and the Company agree
that any dispute between the Executive and the Company will be finally
resolved by binding arbitration in Dallas, Texas in accordance with the
Federal Arbitration Act ("FAA"). The Executive and the Company agree to
follow the Dispute Resolution Procedures set forth in Attachment B to
this Agreement.
(e) Invalid Provisions. Should any portion of this Agreement
be adjudged or held to be invalid, unenforceable or void, such holding
shall not have the effect of invalidating or voiding the remainder of
this Agreement and the parties hereto agree that the portion so held
invalid, unenforceable or void shall, if possible, be deemed amended or
reduced in scope, or otherwise be stricken from this Agreement to the
extent required for the purposes of validity and enforcement thereof.
(f) Survival of the Executive's Obligations. The Executive's
obligations under this Agreement shall survive regardless of whether
the Executive's employment by the Company is terminated, voluntarily or
involuntarily, by the Company or the Executive, with or without Cause.
(g) Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original but
all of which together with constitute one and the same instrument.
(h) Governing. This Agreement shall be governed by and
construed under the laws of the State of Texas.
(i) Captions and Gender. The use of captions and Section
headings herein is for purposes of convenience only and shall not
affect the interpretation or substance of any provisions contained
herein. Similarly, the use of the masculine gender with respect to
pronouns in this Agreement is for purposes of convenience and includes
either sex who may be a signatory.
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IN WITNESS WHEREOF, the parties hereto have signed this Agreement as of
the ____ day of __________, 2002.
EXECUTIVE
[Name]
TEXAS CAPITAL BANCSHARES, INC.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
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ATTACHMENT A
TERMS AND CONDITIONS OF RESTRICTIVE STOCK UNITS
EQUITY COMPENSATION
The equity compensation paid to the Executive under Section 4(c) of the
Agreement will be in the form of Restricted Stock Units ("RSUs"). RSUs are award
units under the 1999 Omnibus Stock Plan of the Company that represent agreements
by the Company to deliver a share of the Company's common stock to the Executive
if the delivery conditions of the RSUs are met.
53,750 RSUs will be awarded to the Executive pursuant to a Restricted
Stock Unit Grant Agreement (the "RSU Agreement") between the Executive and the
Company.
CONDITIONS TO DELIVERY OF STOCK; DEFERRAL; VESTING
For the shares of the Company's common stock underlying the RSUs to be
delivered: (1) the Deferral Date must have been reached and (2) the RSUs must be
vested.
Deferral. To allow taxation with respect to the RSUs to be delayed,
delivery of the Company's common stock underlying the RSUs will take place upon
a date or dates selected by Executive (the "Deferral Date") prior to entering
into the RSU Agreement. Such date or dates must be after vesting, but in no
event may the last date be after __________.
Vesting. 3,750 RSUs will become vested if Executive remains employed by
the Company on the first anniversary of his date of hire. All remaining unvested
RSUs will vest on October 6, 2009 if Executive remains employed by the Company
on that date. Vesting may be accelerated if the closing price of the Company's
common stock exceeds a target price for at least 45 of 60 consecutive trading
days. The following schedule (the "Accelerated Vesting Schedule") sets forth the
target prices and corresponding incremental and cumulative accelerated vested
amounts:
INCREMENTAL CUMULATIVE
ACCELERATED ACCELERATED
TARGET PRICE AMOUNT AMOUNT
------------ ----------- -----------
$12.50 15%.............................. 15%
$15.00 15%.............................. 30%
$17.50 20%.............................. 50%
$20.00 25%.............................. 75%
$22.50 25%.............................. 100%
No more than 40% of the RSUs may vest on an accelerated basis during
any calendar year.
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EFFECT OF CHANGE OF CONTROL
The following occurs upon a Change of Control:
(1) the Deferral Date remains unchanged;
(2) all vested RSUs at the time of the Change of Control remain
vested;
(3) all unvested RSUs at the time of the Change of Control vest
according to the Change of Control Vesting Schedule; and
(4) the board of directors of the Company may elect to provide an
alternative form of compensation to be delivered with respect
to vested RSUs on the Deferral Date, in their sole discretion,
if warranted by the transaction that causes the Change of
Control ("Alternative RSU Compensation").
Change of Control Vesting Schedule. Upon a Change of Control, all
unvested RSUs at the time of the Change of Control vest according to the
following:
(1) 50% vest immediately upon the Change of Control;
(2) if the Executive continues to be employed by the Company two
years after the Change of Control, all remaining RSUs vest two
years after the Change of Control or on October 6, 2009, if
earlier;
(3) if the Executive's employment is terminated after the Change
of Control for death/disability, by the Company without Cause
or by the Executive with Good Reason, all remaining RSUs vest
upon the Termination Date; or
(4) if the Executive's employment was terminated after the Change
of Control by the Company with Cause or by the Executive
without Good Reason, all remaining unvested RSUs are
forfeited.
ALTERNATIVE RSU COMPENSATION
As a result of the circumstances surrounding a Change of Control or
anticipated Change of Control, the Company's board of directors, in its sole and
absolute discretion, may elect prior to a Change of Control to allow
compensation in a form other than the Company's common stock to be delivered
with respect to vested RSUs upon the Deferral Date. Such alternative
compensation could include: (1) a dollar denominated deferred compensation
arrangement bearing a defined market interest rate; or (2) if the Change of
Control were to take the form of an acquisition of the Company, RSUs with
respect to a number of shares of stock of the acquiring company with an
aggregate market value equivalent to the RSUs with respect to the Company's
common stock. In addition, the Company's board of directors may elect to place
the assets underlying the RSUs, whether in the form of the Company's common
stock or an alternate form of asset, into a "Rabbi Trust", which would provide
additional surety that the obligations represented by the RSUs would be
fulfilled.
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ATTACHMENT B
DISPUTE RESOLUTION PROCEDURES
The parties agree to make a good faith effort to informally resolve any dispute
before submitting the dispute to arbitration in accordance with the following
procedures:
A. The party claiming to be aggrieved shall furnish to the other a written
statement of the grievance, all persons whose testimony would support
the grievance, and the relief requested or proposed. The written
statements must be delivered to the other party within the time limits
for bringing an administrative or court action based on that claim.
B. If the other party does not agree to furnish the relief requested or
proposed, or otherwise does not satisfy the demand of the party
claiming to be aggrieved within 30 days and the aggrieved party wishes
to pursue the issue, the aggrieved party shall by written notice demand
that the dispute be submitted to non-binding mediation before a
mediator jointly selected by the parties.
C. If mediation does not produce a resolution of the dispute and either
party wishes to pursue the issue, that party shall be entitled to
request binding arbitration of the dispute by giving written notice to
the other party within 30 days after mediation. The parties will
attempt to agree on a mutually acceptable arbitrator and, if no
agreement is reached, the parties will request a list of nine
arbitrators from the American Arbitration Association and select by
alternately striking names. The arbitration will be conducted
consistent with the American Arbitration Association's National Rules
for Resolution of Employment Disputes ("Rules") that are in effect at
the time of the arbitration. If there is any conflict between those
Rules and the terms of this Agreement, including all attachments
thereto, this Agreement will govern. The arbitrator shall have
authority to decide whether the conduct complained of under Subsection
(a) above violates the legal rights of the parties. In any such
arbitration proceeding, any hearing must be transcribed by a certified
court reporter and any decision must be supported by written findings
of fact and conclusions of law. The arbitrator's findings of fact must
be supported by substantial evidence on the record as a whole and the
conclusions of law and any remedy must be provided for by and
consistent with the laws of
Texas and federal law. The arbitrator shall
have no authority to add to, modify, change or disregard any lawful
term of this Agreement. The Company will pay the arbitrator's fee.
D. Arbitration shall be the exclusive means for final resolution of any
dispute between the parties, except 1) for workers' compensation and
unemployment claims and 2) when injunctive relief is necessary to
preserve the status quo or to prevent irreparable injury, including but
not limited to an alleged or threatened breach of Sections 7-14 of this
Agreement. Injunctive relief may be sought from any court of competent
jurisdiction located in
Texas.
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