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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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:
<TABLE>
<S> <C>
[ ] 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 Rule 14a-12
</TABLE>
TEXAS CAPITAL BANCSHARES, INC.
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(Name of Registrant as Specified In Its Charter)
N/A
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(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:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] 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:
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(2) Form, Schedule or Registration Statement No.:
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(4) Date Filed:
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<PAGE> 2
TEXAS CAPITAL BANCSHARES, INC.
2100 McKinney Avenue
9th Floor
Dallas, Texas 75201
June 16, 2000
Dear Stockholder:
You are cordially invited to attend the annual meeting of stockholders
of Texas Capital Bancshares, Inc., a Delaware corporation and the holding
company for Texas Capital Bank, National Association. The annual meeting will be
on Tuesday, July 18, 2000 at 5:00 p.m. in the offices of Texas Capital Bank,
National Association at 2100 McKinney Avenue, 9th Floor, Dallas, Texas 75201.
The attached Notice of Annual Meeting of Stockholders and Proxy
Statement describes the formal business to be transacted at the annual meeting.
Certain directors and officers will be present at the annual meeting and will be
available to respond to any questions you may have.
We urge you to review carefully the accompanying materials and to
return the enclosed proxy card promptly. Please sign, date and return the
enclosed proxy card without delay. If you attend the annual meeting you may vote
in person even if you have previously mailed a proxy.
On behalf of the board of directors and all the employees of TCBI and
its operating entities, I wish to thank you for your continued support. We
appreciate your interest.
Sincerely,
Joseph M. Grant
Chairman and Chief Executive Officer
<PAGE> 3
TEXAS CAPITAL BANCSHARES, INC.
2100 McKinney Avenue
9th Floor
Dallas, Texas 75201
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the annual meeting of stockholders of Texas
Capital Bancshares, Inc., a Delaware corporation and the holding company for
Texas Capital Bank, National Association, will be on Tuesday, July 18, 2000, at
5:00 p.m. in the offices of Texas Capital Bank, National Association at 2100
McKinney Avenue, 9th Floor, Dallas, Texas 75201.
A proxy statement and proxy card for this annual meeting are enclosed.
The annual meeting is for the purpose of considering and voting upon the
following matters:
1. election of thirteen (13) directors for terms of one year each
or until their successors are elected and qualified, and
2. approval of the 2000 Employee Stock Purchase Plan, and
3. transaction of other business that properly comes before the
annual meeting or any postponement or adjournment thereof.
Information about the matters to be acted upon at the annual meeting is
set forth in the accompanying proxy statement. Our board of directors recommends
that you vote FOR each of the nominees for director and FOR the approval of the
2000 Employee Stock Purchase Plan.
Only those stockholders who owned shares of our voting common stock on
June 15, 2000, the record date established by our board of directors, will be
entitled to vote at the annual meeting and at any postponements or adjournments
thereof. If there are not sufficient votes for a quorum or approval of any of
the foregoing proposals at the time of the annual meeting, the board may adjourn
or postpone the annual meeting in order to solicit further proxies.
Stockholders are cordially invited to attend the annual meeting in
person. However, to assure your representation at that annual meeting, we urge
you to mark, sign, date and return the enclosed proxy. If you attend the annual
meeting, you may vote in person even if you have returned a proxy. A list of
stockholders entitled to vote at the annual meeting will be available for
inspection by any stockholder from July 7, 2000 until the annual meeting at the
site of the annual meeting. The list will also be available at the annual
meeting.
By order of the board of directors,
Larry A. Makel
Secretary
June 16, 2000
Dallas, Texas
<PAGE> 4
PROXY STATEMENT
TABLE OF CONTENTS
<TABLE>
<S> <C>
MEETING INFORMATION...............................................................................................1
RECORD DATE AND VOTING SECURITIES.................................................................................1
QUORUM AND VOTING.................................................................................................1
SOLICITATION AND VOTING OF PROXIES................................................................................2
PROPOSAL NO. 1: ELECTION OF DIRECTORS.............................................................................2
Nominees.....................................................................................................2
Required Vote, Recommendation................................................................................4
PROPOSAL NO. 2: PROPOSED ADOPTION OF 2000 EMPLOYEE STOCK PURCHASE PLAN............................................5
Purpose of the 2000 Employee Stock Purchase Plan.............................................................5
Eligibility..................................................................................................5
Operation....................................................................................................5
Termination of Participation.................................................................................6
Transfer Restrictions........................................................................................6
Authorized Shares, Limits on Contributions...................................................................6
Administration...............................................................................................6
Amendment or Termination of the 2000 Employee Stock Purchase Plan............................................6
Federal Income Tax Consequences..............................................................................7
Required Vote, Recommendation................................................................................7
OTHER MATTERS.....................................................................................................7
MEETINGS OF THE BOARD OF DIRECTORS................................................................................7
COMMITTEES OF THE BOARD OF DIRECTORS..............................................................................7
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT....................................................8
DIRECTORS' COMPENSATION...........................................................................................9
EXECUTIVE COMPENSATION........................................................................................... 9
Compensation Committee Report on Executive Compensation......................................................9
Summary Compensation Table..................................................................................11
Fiscal Year-End Option/SAR Values...........................................................................11
Compensation and Stock Option Committee Interlocks and Insider Participation................................12
Indebtedness of Management and Transactions With Certain Related Persons....................................12
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE..........................................................12
INDEPENDENT AUDITORS.............................................................................................12
ADDITIONAL INFORMATION...........................................................................................12
Stockholder Nominees for Director for This Annual Meeting...................................................12
Stockholder Proposals For Annual Meeting Held in 2001.......................................................12
Form 10.....................................................................................................13
</TABLE>
<PAGE> 5
TEXAS CAPITAL BANCSHARES, INC.
2100 McKinney Avenue
9th Floor
Dallas, Texas 75201
PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS
ON JULY 18, 2000
--------------------------------------------
MEETING INFORMATION
This proxy statement is being furnished to Texas Capital Bancshares,
Inc. ("TCBI") stockholders on June 16, 2000, in connection with the solicitation
of proxies by the board of directors to be voted at the annual meeting of
stockholders. The annual meeting will be on Tuesday, July 18, 2000, at 5:00 p.m.
in the offices of Texas Capital Bank, National Association (the "Bank") at 2100
McKinney Avenue, 9th Floor, Dallas, Texas 75201. TCBI is the parent of the Bank.
The purpose of the annual meeting is to consider and act upon:
1. election of thirteen (13) directors,
2. approval of the 2000 Employee Stock Purchase Plan, and
3. other matters as may properly come before the annual meeting
or any postponements or adjournments thereof.
RECORD DATE AND VOTING SECURITIES
You are entitled to one vote for each share of voting common stock you
own. However, you will not be entitled to vote any shares of Series A-1
Nonvoting Common Stock you own.
Your proxy will be voted in accordance with the directions you specify
in the proxy. If you do not provide directions in the proxy but sign the proxy
and return it, your proxy will be voted (a) FOR each of the nominees for
director named in the proxy statement, (b) FOR the 2000 Employee Stock Purchase
Plan, and (c) in the discretion of the proxy holders, for any other proposals
that properly come before the annual meeting.
Only those stockholders that owned shares of our voting common stock on
June 15, 2000, the record date established by the board of directors, will be
entitled to vote at the annual meeting. At the close of business on the record
date, there were 9,434,429 shares of voting common stock outstanding that are
entitled to be voted and are held by 766 stockholders.
QUORUM AND VOTING
In order to have a quorum to transact business at the annual meeting,
at least a majority of the total number of issued and outstanding shares of
common stock must be present at the annual meeting, in person or by proxy. If
there are not sufficient votes for a quorum or to approve any proposal at the
time of the annual meeting, the board may postpone or adjourn the annual meeting
in order to permit the further solicitation of proxies. Abstentions and broker
non-votes will be counted toward a quorum but will not be counted in the votes
for each of the proposals presented at the meeting.
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SOLICITATION AND VOTING OF PROXIES
It is important that you are represented by proxy or are present in
person at the annual meeting. We request that you vote by completing the
enclosed proxy card and returning it signed and dated in the enclosed
postage-paid envelope. Your proxy will be voted in accordance with the
directions you provide. If you sign, date and return your proxy but do not
provide any instructions, your proxy will be voted FOR each of the nominees as
directors and FOR the approval of the 2000 Employee Stock Purchase Plan.
Other than the two matters listed above, we are not aware of any
additional matters that will be presented for consideration at the annual
meeting. However, if any additional matters are properly brought before the
annual meeting, your proxy will be voted in the discretion of the proxy holder.
You may revoke your proxy at any time prior to its exercise by:
1. filing a written notice of revocation with the secretary of
TCBI,
2. delivering to TCBI a duly executed proxy bearing a later date,
or
3. attending the annual meeting, filing a notice of revocation
with the secretary and voting in person.
TCBI will pay the costs of this proxy solicitation. The directors,
officers and regular employees of TCBI and the Bank may also solicit proxies by
telephone or in person but will not be paid additional compensation to do so.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
We currently have thirteen (13) directors on the board of directors.
Directors serve a one-year term or until their successors are elected and
qualified. Each of the nominees currently serves as a director and has indicated
his willingness to continue to serve as a director if elected. However, if any
of the nominees is unable or declines to serve for any reason, your proxy will
be voted (unless you specify otherwise) for the election of a substitute nominee
selected by the proxy holders.
NOMINEES
At the annual meeting, the stockholders will elect thirteen (13)
directors. The board of directors recommends a vote FOR each of the nominees set
forth below:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
GREGG L. ENGLES 42 Director
Chairman and CEO, Suiza Foods Corporation
JOHN C. GOFF 44 Director
Managing Principal, Goff Moore Strategic Partners, L.P. and Vice
Chairman and CEO of Crescent Real Estate Equities Co.
JOSEPH M. (JODY) GRANT 61 Chairman, Chief Executive Officer
Chairman and CEO, Texas Capital Bancshares, Inc. and Director
FREDERICK B. HEGI, JR. 56 Director
Principal, Wingate Partners
</TABLE>
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<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
JAMES R. HOLLAND, JR. 56 Director
President and CEO, Unity Hunt, Inc.
RALEIGH HORTENSTINE III 53 President and Director
President, Texas Capital Bancshares, Inc.
GEORGE F. JONES, JR. 56 Director
President and CEO, Texas Capital Bank, N.A.
WALTER W. (BO) MCALLISTER III 58 Director
Chairman, Texas Insurance Agency, Inc.
R. DRAYTON MCLANE, JR. 63 Director
Chairman, McLane Group, L.P.
LEE ROY MITCHELL 63 Director
Chairman and CEO, Cinemark USA, Inc.
MARSHALL B. PAYNE 43 Director
Vice President, Cardinal Investment Company, Inc.
JOHN C. SNYDER 58 Director
Chairman, Santa Fe Snyder Corporation
THEODORE H. STRAUSS 75 Director
Senior Managing Director, Bear Stearns & Co., Inc.
</TABLE>
GREGG L. ENGLES has served as Chairman and Chief Executive Officer of
Suiza Foods Corporation since March 1995. Mr. Engles currently serves on the
board of directors of Evercom, Inc., Independent Packaging, L.P. and Electrolux,
LLC. Mr. Engles also currently serves on the board of directors of various
subsidiaries of Suiza Foods Corporation. He has been a director of TCBI since
June 1999.
JOHN C. GOFF is the Managing Principal of Goff Moore Strategic
Partners, L.P., a private investment partnership that is currently involved in
the management of over $800 million in investments. Goff Moore is the successor
to Rainwater, Inc., where Mr. Goff served as senior investment advisor and
principal from 1987 to 1994. In 1990, Mr. Goff was responsible for Mr. Richard
E. Rainwater's foray into real estate, designing the strategy and acquiring the
assets that led to the initial public offering of Crescent Real Estate Equities
Company in April 1994. Mr. Goff served as CEO of Crescent until 1997, when he
assumed his current role as Vice Chairman. He currently serves as Vice Chairman
and CEO of Crescent. Additionally, Mr. Goff serves as Vice Chairman, President
and CEO of Crescent Operating, Inc. and also serves on the board of directors of
Gainsco, Inc., The Staubach Company, Open Connect Systems, Inc., Broadband
Office, Inc. and the National Association of Real Estate Investment Trusts. He
is a graduate of the University of Texas at Austin and is a Certified Public
Accountant. He has served as a director of TCBI since June 1999.
JOSEPH M. (JODY) GRANT has served as Chairman and Chief Executive
Officer of TCBI since December 1998 and as Chief Executive Officer of BankDirect
since January 1999. Mr. Grant retired as Executive Vice President and Chief
Financial Officer of Electronic Data Systems on March 31, 1998, a position he
had held since 1990. Previously, he was chairman and chief executive officer of
Texas American Bancshares from 1986 through 1989. Mr. Grant currently serves on
the board of directors of Metamor Worldwide, Inc., an e-commerce service
company, and Data Return Corporation, and is an advisory director of Wingate
Partners, Dallas, Texas.
FREDERICK B. HEGI, JR. is a founding partner of Wingate Partners since
July 1987. Mr. Hegi currently serves as Chairman of the board of directors of
United Stationers, Inc., a wholesale distributor of
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office products; Loomis, Fargo & Co., a provider of armored cars, ATM and
related services; Tahoka First Bancorp, Inc. and Cedar Creek Bancshares, Inc. He
also serves as Chairman and Chief Executive Officer of Kevco, Inc., a wholesale
distributor of building products. Mr. Hegi also currently serves on the board of
directors of Lone Star Technologies, Inc., Cattle Resources, Inc. and Pro Parts
Xpress, Inc. He has been a director of TCBI since June 1999.
JAMES R. HOLLAND, JR. has served as the President and Chief Executive
Officer of Unity Hunt, Inc. since 1991 and Chief Executive Officer of Hunt
Capital Group, Inc. since 1993. Mr. Holland currently serves on the board of
directors of prosofttraining.com Inc. He has been a director of TCBI since June
1999.
RALEIGH HORTENSTINE III has served as President of TCBI since March
1999 and as a director of TCBI since June 1999. He served as Executive Vice
President of Bank of America, NA in Charlotte, North Carolina from October 1996
to 1998 and as Managing Director from 1982 to October 1996.
GEORGE F. JONES, JR. has served as a director of TCBI since June 1999
and as President and Chief Executive Officer of the Bank since December 1998.
From October 1997 to December 1998, Mr. Jones served as the Chairman of the
board of directors of Resource Bank, N.A., a commercial bank acquired by TCBI.
From March 1995 to October 1997, he served as Vice President of Mack Financial
Group, Inc., a financial investment company. From 1986 to 1993, Mr. Jones served
as President and Chief Executive Officer of Northpark Bank, which was acquired
by Comerica Bank.
WALTER (BO) W. MCALLISTER, III has served as Chairman of the board of
directors of Texas Insurance Agency, Inc., a property and casualty insurance
agency, since 1992. He currently also serves as a trustee for 11 mutual funds
managed by US Global Investors. He has been a director of TCBI since June 1999.
R. DRAYTON MCLANE, JR. has served as Chairman of the McLane Group, L.P.
and the Houston Astros since 1992 and serves as an executive officer of all the
McLane Group subsidiaries. He also serves as Chairman of the Board of Trustees
of Scott and White Memorial Hospital, director of Peapod, Inc., an on-line
grocery shopping and delivery service, and director of IGA International, a
supermarket development company. He has been a director of TCBI since June 1999.
LEE ROY MITCHELL has served as Chairman and Chief Executive Officer of
Cinemark USA, Inc. since 1985 and serves as an executive officer for many of its
subsidiaries. He has been a director of TCBI since June 1999.
MARSHALL B. PAYNE has served as the Vice President of Cardinal
Investment Company, Inc. since July 1983. Mr. Payne also currently serves on the
board of directors of LBP, Inc., ACE Cash Express, Inc., Restoration Hardware,
Inc. and various private companies. He has been a director of TCBI since June
1999.
JOHN C. SNYDER, from 1978 to 1999, served as Chairman and Chief
Executive Officer of Snyder Oil Corp., a predecessor of Santa Fe Snyder
Corporation where he currently serves as Chairman of the board of directors. He
also currently serves as a director of SOCO International plc, a UK oil and gas
exploration company. He has been a director of TCBI since June 1999.
THEODORE H. STRAUSS is a Senior Managing Director of Bear Stearns &
Co., Inc. Mr. Strauss also serves on the board of directors of Hollywood Casino
Corporation, Clear Channel Communications, Inc. and Sizeler Property Investors,
Inc. He has been a director of TCBI since June 1999.
REQUIRED VOTE, RECOMMENDATION
To elect a nominee, a majority of the shares eligible to vote must be
voted FOR that nominee. The board of directors recommends a vote FOR the
election of each of the nominees.
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PROPOSAL NO. 2
PROPOSED ADOPTION OF 2000 EMPLOYEE STOCK PURCHASE PLAN
On May 31, 2000, the board adopted the 2000 Employee Stock Purchase
Plan. We are seeking approval of the plan to ensure that it qualifies as an
"employee plan" within the meaning of Section 423 of the Internal Revenue Code.
If the plan is approved by the stockholders, all tax consequences of purchasing
shares under the plan will be deferred until the participant sells or otherwise
disposes of the shares or dies. Even if stockholder approval is not obtained,
the plan will become effective; however, the deferred tax benefits will be lost
to the participants.
Our board of directors recommends the approval of the plan. The plan
will provide eligible employees of TCBI (and its participating subsidiaries)
with an incentive to advance the best interests of the company and its
subsidiaries by providing them a means of voluntarily purchasing common stock at
a favorable price and upon favorable terms.
The following is a summary of the principal provisions of the plan, but
it is not intended to be a complete description of all of the terms and
provisions of the plan. A copy of the plan is attached hereto as Appendix A.
PURPOSE OF THE 2000 EMPLOYEE STOCK PURCHASE PLAN
The plan is intended to advance the interests of TCBI and our
stockholders. Eligible employees of TCBI or any of our subsidiaries will have an
additional incentive to promote the success of TCBI's business. They will also
increase their proprietary interest in the success of TCBI.
Participation in the plan is voluntary and dependent upon each eligible
employee's election to participate and his or her determination of the level of
participation. We believe that the plan is a necessary tool to help us compete
effectively.
ELIGIBILITY
Only eligible employees may participate in the plan. An "eligible
employee" is any employee of TCBI (or any of its participating subsidiaries)
who:
(a) has been employed continuously for at least 90 days,
(b) works for at least 20 hours per week, and
(c) works for at least 5 months per calendar year.
However, certain employees who own 5% or more of voting common stock, as well as
the founders of the company, may not participate in the plan.
OPERATION
The plan operates in successive six-month offering periods beginning on
each January 1 and July 1. The first offering period will be July 1, 2000
through December 31, 2000.
In order to participate, for each offering period, an eligible employee
must complete a form and designate the amount or whole percentage (between 1%
and 10%) of salary to be withheld from the employee's pay during that offering
period. A participant may use bonus compensation to participate in the plan if
the board gives permission to do so. On the first day of each offering period,
we will grant to each participant in the plan an option to purchase shares of
common stock. However, no participant will be granted an option to the extent
the fair market value of the shares eligible to be purchased by the participant
exceeds $25,000 during the calendar year. Any amounts withheld from the
employee's salary will be placed in an account maintained under the plan in the
employee's name. A participant may change the level of contribution or terminate
participation in the plan only 2 times during each offering period.
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On the last day of the offering period, each participant's option will
be exercised automatically. With the funds in the participant's account, the
plan will purchase common stock at a price that is the lesser of (a) 85% of the
fair market value on the first day of the offering period and (b) 85% of the
fair market value on the last day of the offering period. The participant will
not have any rights as a stockholder with respect to shares acquired upon
exercise of an option until the participant receives a stock certificate for the
shares.
TERMINATION OF PARTICIPATION
A participant may elect to terminate contributions to the plan and
receive the account balance in cash during an offering period at any time prior
to the last day of the offering period. To terminate contributions, the
participant must properly complete and file a withdrawal form. A participant's
participation in the plan will also terminate if (a) the participant's
employment by TCBI (or a participating subsidiary) terminates for any reason, or
(b) the participant is no longer an eligible employee.
If a participant's participation in the plan terminates during an
offering period for any of the reasons discussed in the preceding paragraph:
(a) the employee may not make any further contributions to the
plan for that offering period,
(b) the employee's option for that offering period will
automatically terminate, and
(c) the plan will pay to the employee all funds in the employee's
account in cash without interest.
A participant's termination from participation in the plan will not
affect the employee's ability to participate in any future offering period if
the person qualifies as an eligible employee. Nothing in the plan confers upon
any participant or eligible employee any right to remain employed by TCBI or a
subsidiary.
TRANSFER RESTRICTIONS
Generally, options and other interests in the plan may not be assigned
or transferred.
AUTHORIZED SHARES, LIMITS ON CONTRIBUTIONS
Up to 80,000 shares of common stock may be issued pursuant to the plan.
The shares issued may be authorized but unissued shares, treasury shares or
shares purchased on the open market. If a merger, consolidation,
recapitalization, stock split, stock dividend, combination of shares, or other
change affects the common stock, a proportionate and equitable adjustment will
be made to the number of shares subject to the plan and outstanding options.
ADMINISTRATION
The plan may be administered by the board or by a committee appointed
by the board. The committee has the authority to administer, construe and
interpret the plan, amend and rescind rules for administering the plan, and make
all other determinations necessary or advisable for the administration of the
plan. The committee may delegate certain administrative functions to third
parties, including officers of TCBI. The plan will not limit the authority of
the board or the committee to grant awards or authorize any other compensation,
with or without reference to the common stock, under any other plan or
authority.
AMENDMENT OR TERMINATION OF THE 2000 EMPLOYEE STOCK PURCHASE PLAN
The board may amend, modify or terminate the plan at any time and in
any manner (without notice) if the existing rights of participants, determined
as of the effective date of the amendment, modification or termination are not
materially adversely affected by such amendment, modification or termination.
Unless previously terminated by the board, the plan will terminate ten years
from the effective date of the plan or when no shares remain available for
options under the plan.
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FEDERAL INCOME TAX CONSEQUENCES
We intend for the plan to qualify as an "employee plan" under Section
423 of the Internal Revenue Code if it is approved by the stockholders.
Withholding from a participant's salary is made after taxes have been withheld
from the participant's salary. Generally, the participant will not have any
taxable income during the offering period. However, the participant will
recognize income (or loss) when the participant sells or disposes of the shares
acquired under the plan. If the participant holds the shares (a) for at least 2
years after the first day of the offering period in which the shares were
purchased and (b) for at least 1 year after the last day of the offering period
in which the shares were purchased, the gain on the sale of the shares will be
taxed as ordinary income to the extent of the lesser of: (i) the amount by which
the fair market value of the shares on the first day of the offering period
exceeds the price at which the shares were purchased by the employee, or (ii)
the amount by which the fair market value of the shares at the time of their
sale exceeds the price at which the shares were purchased by the employee. Any
portion of the gain not taxed as ordinary income will be taxed at capital gain
tax rates. TCBI is not entitled to a federal income tax deduction with respect
to any shares that are held for the required holding period specified above.
The foregoing is only a summary of certain federal income tax
consequences, is not exhaustive and, among other considerations, does not
describe state, local or tax withholding consequences. If the stockholders do
not approve the plan, options granted under the plan will be treated as
non-qualified stock options, resulting in adverse tax consequences to employees
participating in the plan.
REQUIRED VOTE, RECOMMENDATION
To approve the plan, a majority of the shares eligible to vote must be
voted FOR the proposal. The board of directors recommends a vote FOR the
approval of the plan.
OTHER MATTERS
We do not currently know of any other matters that may come before the
annual meeting. However, if any other matters are properly presented at the
annual meeting, the proxy holders will vote your proxy in their discretion on
such matters.
MEETINGS OF THE BOARD OF DIRECTORS
The business of TCBI is managed under the direction of the board of
directors. The board meets on a regularly scheduled basis to review significant
developments affecting the company and to act on matters requiring board
approval. It also holds special meetings when an important matter requires board
action between scheduled meetings. The board met four times during the fiscal
year ended December 31, 1999. With the exception of Gregg L. Engles, John C.
Goff, Frederick B. Hegi, Jr., R. Drayton McLane, Jr. and John C. Snyder, during
such period, all members of the board of directors participated in at least 75%
of all board meetings and their respective committee meetings.
COMMITTEES OF THE BOARD OF DIRECTORS
The board had three standing committees during fiscal year 1999. The
executive committee serves as the nominating committee.
o EXECUTIVE COMMITTEE. The Executive Committee has the power to
act on behalf of the board and to direct and manage the
business and affairs of TCBI whenever the board is not in
session. Committee members are Theodore H. Strauss (Chairman),
Joseph M. Grant (Ex-officio), John C. Goff, James R. Holland,
Jr., R. Drayton McLane, Jr. and Marshall B. Payne. During
fiscal year 1999, the Executive Committee did not meet.
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o AUDIT COMMITTEE. The Audit Committee reviews the professional
services and independence of the company's independent
auditors and its accounts, procedures and internal controls.
The Audit Committee recommends to the board the firm selected
to be our independent auditors and monitors the performance of
such firm, reviews and approves the scope of the annual audit,
reviews and evaluates with the independent auditors our annual
audit and annual consolidated financial statements, reviews
with management the status of internal accounting controls,
evaluates problem areas having a potential financial impact on
TCBI that may be brought to its attention by management, the
independent auditors or the board, and evaluates all of our
public financial reporting documents. Committee members are
Walter W. (Bo) McAllister III (Chairman), Gregg L. Engles and
James R. Holland, Jr. During fiscal year 1999, the Audit
Committee met two times.
o COMPENSATION COMMITTEE. The Compensation Committee reviews and
approves salaries and bonuses for officers and key employees
of TCBI. Committee members are Frederick B. Hegi, Jr.
(Chairman), John C. Goff, Lee Roy Mitchell and John C. Snyder.
During fiscal year 1999, the Compensation Committee met once.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of June 15, 2000
concerning the beneficial ownership of each class of common stock by: (a) each
director, director nominee and executive officer, (b) each person we know to
beneficially own more than 5% of the issued and outstanding shares of a class of
common stock, and (c) all of our executive officers and directors as a group.
The persons named in the table have sole voting and investment power with
respect to all shares they owned, unless otherwise noted.
<TABLE>
<CAPTION>
Number of Shares of Percent of Shares
common stock of common stock
Name (1) Beneficially Owned Outstanding (2)
-------- ------------------- -----------------
<S> <C> <C>
Joseph M. (Jody) Grant 392,793 (3) 4.1%
Raleigh Hortenstine III 171,667 (4) 1.8%
George F. Jones, Jr. 117,724 (5) 1.2%
Gregory B. Hultgren 61,000 (6) *
Gregg L. Engles 22,066 *
John C. Goff 462,287 (7) 4.9%
Frederick B. Hegi, Jr. 102,759 (8) 1.1%
James R. Holland, Jr. 235,518 (9) 2.5%
Walter W. (Bo) McAllister III 18,750 *
R. Drayton McLane, Jr. 248,771 2.6%
Lee Roy Mitchell 104,109 (10) 1.1%
Marshall B. Payne 40,966 *
John C. Snyder 120,666 1.3%
Theodore H. Strauss 80,817 (11) *
All 14 officers and directors as a group 2,180,716 23.0%
</TABLE>
--------------
* Less than 1% of the issued and outstanding shares of the class.
(1) Unless otherwise stated, the address for each person in this table is
2100 McKinney Avenue, Suite 900, Dallas, Texas 75201.
(2) Based upon 9,434,429 shares of common stock issued and outstanding as
of June 15, 2000.
8
<PAGE> 13
(3) Includes 7,000 shares that may be acquired upon exercise of options and
15,000 shares held in a trust of which Mr. Grant is the beneficiary.
Also includes 113,208 and 56,604 shares that, pursuant to an agreement
among our founders, TCBI has the option to purchase if Mr. Grant ceases
to be employed by TCBI before December 10, 2000 and 2001, respectively.
(4) Includes 114,800 shares held by Hortenstine Family Investments, L.P.,
of which Mr. Hortenstine is the General Partner, and 21,667 shares that
may be acquired upon exercise of options. Also includes 14,222 and
7,111 shares that, pursuant to an agreement among our founders, TCBI
has the option to purchase if Mr. Hortenstine ceases to be employed by
TCBI before December 10, 2000 and 2001, respectively.
(5) Includes 101,459 shares held by G & M Partners Ltd., of which Mr. Jones
is the Managing General Partner, and 5,000 shares that may be acquired
upon exercise of options. Also includes 25,600 and 12,800 shares that,
pursuant to an agreement among our founders, TCBI has the option to
purchase if Mr. Jones ceases to be employed by TCBI before December 10,
2000 and 2001, respectively.
(6) Includes 51,800 shares held by Mr. Hultgren and Rose M. Hultgren, his
wife, as tenants in common, 4,000 shares that may be acquired upon
exercise of options and 2,000 shares that may be acquired upon exercise
of options held by Ms. Hultgren. Also includes 11,662 and 5,831 shares
that, pursuant to an agreement among our founders, TCBI has the option
to purchase if Mr. Hultgren ceases to be employed by TCBI before
December 10, 2000 and 2001, respectively.
(7) Shares held by Goff Moore Strategic Partners, L.P., of which Mr. Goff
is the managing principal.
(8) Includes 68,566 shares held Valley View Capital Corp. Retirement
Savings Trust for the benefit of Dr. Hegi and 12,126 shares held by the
F.B. Hegi Trust of which Dr. Hegi is the beneficiary.
(9) Shares held by Hunt Capital Partners, L.P. of which Mr. Holland is
President and Chief Executive Officer.
(10) Shares held by T & LRM Family Partnership Ltd. Mr. Mitchell is the
Chief Executive Officer of PBA Development, Inc., the general partner
of T & LRM.
(11) Includes 47,000 shares held by the Theodore H. Strauss 1999 Irrevocable
Trust Agreement of which Mr. Strauss is the beneficiary. Also includes
17,350 and 8,675 shares that, pursuant to an agreement among our
founders, TCBI has the option to purchase if Mr. Strauss ceases to be a
director of TCBI before December 10, 2000 and 2001, respectively.
In addition to the voting common stock, we have also issued a class of
nonvoting common stock entitled Series A-1 Nonvoting Common Stock. As of June
15, 2000, there were 390,213 shares of Series A-1 Nonvoting Common Stock issued
and outstanding, all of which were held by Goff Moore Strategic Partners, L.P.
DIRECTORS' COMPENSATION
Directors do not receive any fees for attending meetings or any other
compensation in their capacity as directors. Directors are reimbursed for their
travel and reasonable out-of-pocket expenses incurred by them in performing
their duties.
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee has the following goals for compensation
programs impacting the executive officers of TCBI and the Bank:
o to provide motivation for the executive officers and to
enhance stockholder value by linking their compensation to the
value of common stock,
o to retain the executive officers who have led TCBI and the
Bank to high performance levels,
9
<PAGE> 14
o to allow TCBI and the Bank to attract high quality executive
officers in the future by providing total compensation
opportunities consistent with those provided in the industry
and commensurate with TCBI's and the Bank's level of
performance, and
o to maintain reasonable "fixed" compensation costs by targeting
base salaries at a competitive average.
The executive compensation package available to executive officers is
composed of (a) base salary, (b) annual bonus awards, and (c) long-term
incentive compensation, including options and stock awards. None of TCBI's or
the Bank's executive officers have employment agreements.
BASE SALARY. In determining salary levels, the Compensation Committee
considers the entire compensation package for executive officers, including the
equity compensation provided under stock plans. We intend for the salary levels
to be consistent with competitive practices of comparable institutions and each
executive's level of responsibility. The Compensation Committee determines the
level of any salary increase to take effect at the beginning of each fiscal year
after reviewing (a) the qualifications, experience and performance of the
executive officers, (b) the compensation paid to persons having similar duties
and responsibilities in other institutions, and (c) the size of the bank and the
complexity of its operations. The Compensation Committee consulted a survey of
compensation paid to executive officers performing similar duties for depository
institutions and their holding companies, with particular focus on the level of
compensation paid by comparable institutions.
ANNUAL BONUS AWARDS. In determining bonus awards, the Compensation
Committee considers the entire compensation package of the executive officers.
The bonus awards are intended to be consistent with each executive officer's
level of responsibility and with the competitive practices of comparable
financial institutions. The Compensation Committee met once during the year to
determine bonus compensation, but TCBI did not pay any bonuses to our executive
officers during fiscal year 1999.
LONG TERM INCENTIVE COMPENSATION. We maintain the Texas Capital
Bancshares, Inc. 1999 Omnibus Stock Plan under which employees may receive
discretionary grants and awards as determined and awarded solely in the
discretion of the Compensation Committee and approved by the full board. The
Compensation Committee believes that stock ownership is a significant incentive
in aligning the interests of employees and stockholders and building our
stockholders' wealth.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER. After taking into
consideration the factors discussed above, the Compensation Committee entered
into a deferred compensation agreement with Mr. Grant providing him a base
salary of $275,000 for fiscal year 1999, payable to Mr. Grant in shares of
common stock of TCBI. Pursuant to the timely deferral election by Mr. Grant, as
evidenced by a duly executed deferred compensation agreement, these shares were
placed in a grantor trust of which he is the beneficiary. Pursuant to the terms
of the deferred compensation agreement and grantor trust, these shares shall
remain general assets of TCBI, subject to the claims of TCBI's general creditors
and constitute an unfunded, unsecured promise to pay such compensation to Mr.
Grant at a designated future time.
This report is submitted by the members during fiscal 1999 of the
Compensation Committee:
<TABLE>
<S> <C> <C> <C>
/s/ Lee Roy Mitchell /s/ Frederick B. Hegi, Jr. /s/ John C. Goff /s/ John C. Snyder
</TABLE>
10
<PAGE> 15
SUMMARY COMPENSATION TABLE
The following table shows, for the years ending December 31, 1999 and
1998, the cash compensation paid and other compensation paid or accrued to the
Chief Executive Officer and four other executive officers of TCBI who earned
and/or received a salary and bonus in excess of $100,000 (the "Named
Executives").
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
----------------------------------------------------------------------------
AWARDS PAYOUTS
------------------------------------
RESTRICTED SECURITIES
OTHER ANNUAL STOCK UNDERLYING LTIP ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS COMPENSATION AWARDS OPTIONS/SARS PAYOUTS COMPENSATION
--------------------------- ---- ---------- ------- ------------ ---------- ------------ ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
JOSEPH M. (JODY) GRANT 1999 $ 6,500 (1) $ 0 $ 0 0 0 0 $ 5,976 (3)
Chairman and Chief 1998 $ 0 $ 0 $ 0 0 35,000 0 $ 0
Executive Officer of
TCBI
RALEIGH HORTENSTINE III 1999 $251,800 $ 0 $ 0 0 0 0 $ 4,377 (3)
President of TCBI 1998 $ 0 $62,500 $ 0 0 75,000 0 $ 0
GREGORY B. HULTGREN 1999 $144,200 $ 0 $ 7,200 (2) 0 0 0 $ 0
Executive Vice 1998 $ 0 $35,000 $ 0 0 20,000 0 $ 0
President and Chief
Financial Officer of
TCBI
GEORGE F. JONES, JR. 1999 $229,200 $ 0 $ 7,200 (2) 0 0 0 $ 6,106 (3)
President and Chief 1998 $ 0 $37,500 $ 0 0 25,000 0 $ 0
Executive Officer of
the Bank
</TABLE>
---------------
(1) Mr. Grant has entered into a deferred compensation agreement with TCBI
that allows TCBI to pay Mr. Grant in shares of common stock of TCBI.
(2) Represents amounts paid to reimburse automotive expenses.
(3) Represents amounts paid for dues to certain country clubs.
FISCAL YEAR-END OPTION/SAR VALUES
We did not grant any options to the Named Executives during fiscal year
1999. The Named Executives did not exercise any of their options during fiscal
year 1999. The following table sets forth the number and value of options that
the Named Executives owned as of June 15, 2000:
<TABLE>
<CAPTION>
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS/SARS IN-THE-MONEY OPTIONS/SARS
NAME AT FISCAL YEAR-END AT FISCAL YEAR-END (1)
---- ------------------------------- -------------------------
<S> <C> <C>
Joseph M. (Jody) Grant 35,000 (2) $ 70,000
Raleigh Hortenstine III 75,000 (3) $ 220,500
Gregory B. Hultgren 20,000 (2) $ 40,000
George F. Jones, Jr. 25,000 (2) $ 50,000
</TABLE>
-------------------
(1) Value of options based on a fair market value per share of $14.50,
which is based upon the most recent private sales of common stock.
(2) Options issued on October 1, 1998 of which one-fifth are currently
exercisable and one-fifth vests on each of October 1, 2000, 2001, 2002
and 2003 with an exercise price of $12.50 per share.
(3) Includes 25,000 options issued on October 1, 1998 of which 5,000
options are currently exercisable and 5,000 options vest on each of
October 1, 2000, 2001, 2002 and 2003 with an exercise price of $12.50
per share; and 50,000 options issued in lieu of founder's shares on
July 1, 1998 of which 16,666 options are currently exercisable and
16,667 options vest on each of July 1, 2000 and 2001 with an exercise
price of $11.09 per share.
11
<PAGE> 16
COMPENSATION AND STOCK OPTION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the executive officers of TCBI or the Bank serves on the
Compensation Committee of the board of directors of TCBI or any compensation
committee of any other company.
INDEBTEDNESS OF MANAGEMENT AND TRANSACTIONS WITH CERTAIN RELATED PERSONS
In the ordinary course of business, the Bank has made loans, and may
continue to make loans in the future, to the Bank's and TCBI's officers,
directors and employees. The Bank makes all loans to executive officers and
directors in the ordinary course of business, on substantially the same terms as
those with other customers.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities and Exchange Act of 1934 requires our
officers and directors, and persons who own more than 10% of a registered class
of our equity securities, to file initial reports of ownership and reports of
changes in ownership with the SEC. None of the officers, directors or 10%
stockholders were required to file such reports during fiscal year 1999.
INDEPENDENT AUDITORS
We have selected Ernst & Young LLP as independent auditors to examine
our accounts for fiscal year 2000. Representatives of Ernst & Young LLP are
expected to be present at the annual meeting and will have the opportunity to
make a statement if they desire to do so. They will also be available to answer
appropriate questions.
ADDITIONAL INFORMATION
STOCKHOLDER NOMINEES FOR DIRECTOR FOR THIS ANNUAL MEETING
You may submit proposals for nominees for our board of directors in
accordance with Article II, Sections 9 and 10 of our bylaws. If you would like
to submit a nomination for director to be considered at this annual meeting, you
must deliver notice of any director nominations to us no later than the close of
business on June 26, 2000. Director nominations should be directed to:
Texas Capital Bancshares, Inc.
2100 McKinney Avenue, 9th Floor
Dallas, Texas 75201
Attn: Secretary
STOCKHOLDER PROPOSALS FOR ANNUAL MEETING HELD IN 2001
Stockholder proposals for the 2001 Annual Meeting of Stockholders
submitted pursuant to Rule 14a-8 promulgated under the Securities and Exchange
Act of 1934 must be received by February 27, 2001, to be considered for
inclusion in the proxy statement and proxy for the 2001 Annual Meeting.
Stockholder proposals for the 2001 Annual Meeting for which the proponents do
not desire them to be included in the 2001 proxy statement and proxy must be
received by May 31, 2001. Proposals should be directed to:
Texas Capital Bancshares, Inc.
2100 McKinney Avenue, 9th Floor
Dallas, Texas 75201
Attn: Secretary
12
<PAGE> 17
FORM 10
Our Form 10 for Registration of Securities Pursuant to Section 12(g) of
the Securities Exchange Act of 1934, filed with the Securities and Exchange
Commission on May 1, 2000, including financial statements for fiscal year 1999,
accompanies this proxy statement. The Form 10 is not to be deemed part of this
Proxy Statement. The Form 10 is subject to a review period by the Securities and
Exchange Commission and, therefore, remains subject to change. If we make any
material amendment to the Form 10 prior to the annual meeting, we will forward
to you the amended Form 10.
By Order of the board of directors
Larry A. Makel
Secretary
Dallas, Texas
June 16, 2000
13
<PAGE> 18
APPENDIX A
TEXAS CAPITAL BANCSHARES INC.
2000 EMPLOYEE STOCK PURCHASE PLAN
ARTICLE I
ESTABLISHMENT OF THE PLAN
Texas Capital Bancshares, Inc. hereby establishes the Texas Capital
Bancshares, Inc. 2000 Employee Stock Purchase Plan (the "Plan") upon the terms
and conditions hereinafter stated.
ARTICLE II
PURPOSE OF THE PLAN
The purpose of the Plan is to provide employees of Texas Capital
Bancshares, Inc. and its Subsidiaries (hereinafter referred to as "Bancshares")
with an opportunity to purchase Common Stock of Bancshares. It is the intention
of Bancshares to have the Plan qualify as an "Employee Stock Purchase Plan"
under Section 423 of the Internal Revenue Code of 1986, as amended (the "Code").
The provisions of the Plan shall, accordingly, be construed so as to extend and
limit participation in a manner consistent with the requirements of that section
of the Code.
ARTICLE III
DEFINITIONS
(a) "Account" shall mean the bookkeeping account maintained by
Bancshares, or by a record keeper on behalf of Bancshares, for a Participant
pursuant to Article VII(a).
(b) "Board" shall mean the Board of Directors of Bancshares.
(c) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(d) "Committee" shall mean the committee that may be appointed by the
Board to administer this Plan pursuant to Article XII.
(e) "Common Stock" shall mean the common stock of Bancshares.
(f) "Compensation" shall mean an Eligible Employee's regular earnings,
overtime pay, sick pay and vacation pay. Compensation also includes any amounts
contributed as salary reduction contributions to a plan qualifying under Section
401(k) of the Code. Any other form of remuneration is excluded from
Compensation, including (but not limited to) the following: commissions,
incentive compensation, bonuses, prizes, awards, housing allowances, stock
option exercises, stock appreciation rights, restricted stock exercises,
performance awards, auto allowances, tuition reimbursement and other forms of
imputed income.
(g) "Contributions" shall mean all bookkeeping amounts credited to the
Account of a Participant pursuant to Article VII(a).
(h) "Eligible Employee" shall mean any common law employee of
Bancshares. Notwithstanding the foregoing, "Eligible Employee" shall not include
any employee who (i) has not as of the Grant Date completed at least 90 days of
continuous full-time employment with Bancshares, (ii) whose customary employment
is for less than 20 hours per week, or (iii) whose customary employment is for
not more than five months in a calendar year.
(i) "Effective Date" shall mean July 1, 2000.
A-1
<PAGE> 19
(j) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(k) "Exercise Date" shall mean, with respect to an Offering Period, the
last day of that Offering Period.
(l) "Fair Market Value" shall mean the value of Bancshares' Common
Stock on a particular date as determined by the Board (or Committee) in good
faith; provided that, in the event the Common Stock becomes registered under
Section 12 of the Exchange Act, the Fair Market Value of Bancshares' Common
Stock shall mean the last reported sale price per share of Common Stock on such
date, or in case no such sale takes place on such date, the average of the
closing and asking prices, in either case as reported in the principal
consolidated transaction reporting system with respect to securities listed or
admitted to trading on a national securities exchange or included for quotation
on the Nasdaq market, or if the Common Stock is not listed or admitted for
trading or included for quotation, the last quote price, or if the Common Stock
is not so quoted, the average of the high bid and low asked prices, in the
over-the-counter market, as reported by the NASD Automatic Quotation System or,
if such system is no longer in use, the principal other automated quotations
system that may then be in use or, if the Common Stock is not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Common Stock as selected in
good faith by the Committee. If the relevant date is not a trading day, the
determination shall be made as of the next preceding trading day. As used
herein, the term "trading day" means a day on which public trading of securities
occurs and as reported in the principal consolidated reporting system referred
to above, or if the Common Stock is not listed or admitted to trading on a
national market securities exchange or included for quotation on the Nasdaq
National Market, any business day.
(m) "Grant Date" shall mean the first day of each Offering Period.
(n) "Offering Period" shall mean the six-consecutive month period
commencing on each January 1 and July 1.
(o) "Option" shall mean the stock option to acquire Shares granted to a
Participant pursuant to Article VIII.
(p) "Option Price" shall mean the per share exercise price of an Option
as determined in accordance with Article VIII(b).
(q) "Participant" shall mean an Eligible Employee who has elected to
participate in this Plan and who has filed a valid and effective Subscription
Agreement to make Contributions pursuant to Article VI.
(r) "Plan" shall mean this Texas Capital Bancshares Inc. 2000 Employee
Stock Purchase Plan, as amended from time to time.
(s) "Rule 16b-3" shall mean Rule 16b-3 promulgated under Section 16.
(t) "Section 16" shall mean Section 16 of the Exchange Act.
(u) "Share" shall mean a share of Common Stock.
(v) "Subscription Agreement" shall mean the written agreement filed by
an Eligible Employee with Bancshares pursuant to Article VI to participate in
this Plan.
(w) "Subsidiaries" shall mean any present or future corporation(s)
which (i) would be a "subsidiary corporation" of Texas Capital Bancshares, Inc.
as that term is defined in Section 424 of the Code and is (ii) designated as a
participant in the Plan by the Board.
A-2
<PAGE> 20
ARTICLE IV
ELIGIBILITY
(a) Any person who is an Eligible Employee as of the Grant Date of a
given Offering Period shall be eligible to participate in such Offering Period
under the Plan, subject to the requirements of Article VI and the limitations
imposed by Section 423(b) of the Code.
(b) Notwithstanding anything else contained herein, a person who is
otherwise an Eligible Employee shall not be granted any Option or other right to
purchase Shares under this Plan to the extent it would, if exercised, cause the
person to own "stock" (as such term is defined for purposes of Section 423(b)(3)
of the Code) possessing 5% or more of the total combined voting power or value
of all classes of stock of Bancshares. In addition, no Employee shall be granted
an Option which permits his rights to purchase Shares under the Plan (and under
all employee stock purchase plans of Bancshares qualified under Section 423 of
the Code) at a rate which exceed $25,000 of the fair market value of the stock
of Bancshares (determined at the time the right to purchase such Stock is
granted) for each calendar year during which such right is outstanding. For this
purpose, a right to purchase Shares accrues when it first becomes exercisable
during the calendar year. In determining whether the stock ownership of an
Eligible Employee equals or exceeds the 5% limit set forth above, the rules of
Section 424(d) of the Code (relating to attribution of stock ownership) shall
apply.
ARTICLE V
OFFERING PERIODS
The Plan shall be implemented by a series of Offering Periods of six (6)
months duration, with new Offering Periods commencing on or about January 1 and
July 1 of each year (or at such other time or times as may be determined by the
Board). The initial Offering Period shall commence on the Effective Date. The
Plan shall continue until terminated in accordance with Article XVIII hereof.
The Board shall have the power to change the duration and/or the
frequency of Offering Periods with respect to future offerings without
shareholder approval if such change is announced at least five (5) days prior to
the scheduled beginning of the first offering Period to be affected.
ARTICLE VI
PARTICIPATION
An Eligible Employee may become a participant in this Plan by
completing a Subscription Agreement on a form approved by and in a manner
prescribed by the Board (or Committee). To become effective, Subscription
Agreements must be filed with Bancshares prior to the next occurring Grant Date
and must set forth the percentage or dollar amount of the Eligible Employee's
Compensation (which shall not be less than 1% and not more than 10% of such
Eligible Employee's Compensation) to be credited to the Participant's Account as
Contributions for each pay period. Subscription Agreements shall contain the
Eligible Employee's authorization and consent to Bancshares' withholding from
his or her Compensation the amount of his or her Contributions. A Subscription
Agreement shall automatically remain valid for subsequent Offering Periods until
revoked by a Subscription Agreement filed pursuant to Article VII(d) or
terminated by the Participant.
ARTICLE VII
PAYMENT OF CONTRIBUTIONS
(a) Bancshares shall maintain on its books, or cause to be maintained
by a recordkeeper, an Account in the name of each Participant. The percentage of
Compensation elected to be applied as Contributions by a Participant shall be
deducted from such Participant's Compensation on each payday during the period
for payroll deductions set forth below and such payroll deductions shall be
credited to that Participant's Account as soon as administratively practicable
after such date. A Participant may not make any additional payments to his or
her Account. A Participant's Account shall be reduced by any amounts used to pay
the Option Price of Shares acquired, or by any other amounts distributed
pursuant to the terms hereof.
A-3
<PAGE> 21
(b) Payroll deductions with respect to an Offering Period shall
commence as of the first day of the payroll period which coincides with or
immediately follows the applicable Grant Date and shall end on the last day of
the payroll period which coincides with or immediately precedes the applicable
Exercise Date, unless sooner terminated by the Participant as provided in this
Article or until his or her participation terminates pursuant to Article XI.
(c) A Participant may terminate his or her Contributions during an
Offering Period by completing and filing with Bancshares, in such form and on
such terms as the Board may prescribe, a written withdrawal form which shall be
signed by the Participant. Such termination shall be effective as soon as
administratively practicable after its receipt by Bancshares.
(d) A Participant may change the level of his or her Contributions by
completing and filing with Bancshares, in such form and on such terms as the
Board may prescribe, a new Subscription Agreement which shall be signed by the
Participant. The Subscription Agreement must set forth the percentage or dollar
amount of the Eligible Employee's Compensation (which shall not be less than 1%
and not more than 10% of such Eligible Employee's Compensation) to be credited
to the Participant's Account as Contributions for each pay period. Any such
changes must be filed with Bancshares prior to the next occurring Grant Date.
Such change shall be effective as of the next occurring Grant Date. Any
Subscription Agreement made pursuant to this Article VII(d) will revoke any then
outstanding Subscription Agreement.
ARTICLE VIII
GRANT OF OPTION
(a) On each Grant Date, each Eligible Employee who is a participant
during that Offering Period shall be granted an Option to purchase a number of
Shares. The Option shall be exercised on the Exercise Date. The number of Shares
subject to the Option shall be determined by dividing the Participant's Account
balance as of the applicable Exercise Date by the Option Price.
(b) The Option Price per Share of the Shares subject to an option shall
be 85% of the Fair Market Value of a Share on the applicable Grant Date of each
Offering Period.
ARTICLE IX
EXERCISE OF OPTION
Unless a Participant's participation is terminated as provided in
Article XI, his or her option to purchase Shares shall be exercised
automatically on the Exercise Date for that Offering Period, without any further
action on the Participant's part, and the maximum number of Shares subject to
such option shall be purchased at the Option Price with the balance in such
Participant's Account. The Board (or Committee), in its discretion and prior to
the applicable offering Period, shall limit the purchase of fractional Shares
under the Plan; provided that if any amount (which is not sufficient to purchase
a whole Share) remains in a Participant's Account after the exercise of his or
her Option on the Exercise Date: (i) such amount shall be credited to such
Participant's Account for the next Offering Period, if he or she is then a
Participant; or (ii) if such Participant is not a Participant in the next
offering Period, or if the Board (or Committee) so elects, such amount shall be
refunded to such Participant as soon as administratively practicable after such
date.
ARTICLE X
DELIVERY
As soon as administratively practicable after an Exercise Date,
Bancshares shall deliver to each Participant a certificate representing the
Shares purchased upon exercise of his or her Option. Bancshares may make
available an alternative arrangement for delivery of Shares to a recordkeeping
service. The Board (or Committee), in its discretion, either may require or
permit the Participant to elect that such certificates be delivered to such
recordkeeping service. Bancshares may serve as the recordkeeping service. In the
event Bancshares is required to
A-4
<PAGE> 22
obtain from any commission or agency the authority to issue any such
certificate, Bancshares will seek to obtain such authority. Inability of
Bancshares to obtain from any such commission or agency the authority which
counsel for Bancshares deems necessary for the lawful issuance of any such
certificate shall relieve Bancshares from liability to any Participant except to
return to the Participant the amount of the balance in his or her Account.
ARTICLE XI
TERMINATION OF EMPLOYMENT; CHANGE IN ELIGIBLE STATUS
(a) Upon a Participant's termination from employment with Bancshares for
any reason or in the event that a Participant is no longer an Eligible Employee
or if the Participant elects to terminate Contributions pursuant to Article VII,
at any time prior to the last day of an Offering Period in which he or she
participates, such Participant's Account shall be paid to him or her in cash,
or, in the event of such Participant's death, paid to the person or persons
entitled thereto under Article XIII, and such Participant's Option for that
Offering Period shall be automatically terminated.
(b) A Participant's termination of Plan participation precludes the
Participant from again participating in this Plan during that Offering Period.
However, such termination shall not have any effect upon his or her ability to
participate in any succeeding Offering Period, provided that the applicable
eligibility and participation requirements are again met. A Participant's
termination from Plan participation shall be deemed to be a revocation of that
Participant's Subscription Agreement and such Participant must file a new
Subscription Agreement to resume Plan participation in any succeeding Offering
Period.
ARTICLE XII
ADMINISTRATION
The Board, or a committee named by the Board, shall supervise and
administer the Plan and shall have full power to adopt, amend and rescind any
rules deemed desirable and appropriate for the administration of the Plan and
not inconsistent with the Plan, to construe and interpret the Plan, and to make
all other determinations necessary or advisable for the administration of the
Plan.
ARTICLE XIII
DESIGNATION OF BENEFICIARY
(a) A Participant may file, in a manner prescribed by the Board, a
written designation of a beneficiary who is to receive any Shares or cash from
such Participant's Account under this Plan in the event of such Participant's
death. If a Participant's death occurs subsequent to the end of an Offering
Period but prior to the delivery to him or her of any Shares deliverable under
the terms of this Plan, such Shares and any remaining balance of such
Participant's Account shall be paid to such beneficiary (or such other person as
set forth in Article XIII(b)) as soon as administratively practicable after
Bancshares receives notice of such Participant's death and any outstanding
unexercised option shall terminate. If a Participant's death occurs at any other
time, the balance of such Participant's Account shall be paid to such
beneficiary (or such other person as set forth in Article XIII(b)) in cash as
soon as administratively practicable after Bancshares receives notice of such
Participant's death and such Participant's Option shall terminate. If a
Participant is married and the designated beneficiary is not his or her spouse,
spousal consent shall be required for such designation to be effective.
(b) Beneficiary designations may be changed by the Participant (and his
or her spouse, if required) at any time on forms provided and in the manner
prescribed by the Board. If a Participant dies with no validly designated
beneficiary under this Plan who is living at the time of such Participant's
death, Bancshares shall deliver all Shares and/or cash payable pursuant to the
terms hereof to the executor or administrator of the estate of the Participant,
or if no such executor or administrator has been appointed, Bancshares, in its
discretion, may deliver such Shares and/or cash to the spouse or to any one or
more dependents or relatives of the Participant, or if no spouse, dependent or
relative is known to Bancshares, then to such other person as Bancshares may
designate.
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ARTICLE XIV
TRANSFERABILITY
Neither Contributions credited to a Participant's Account nor any
Options or rights with respect to the exercise of options or right to receive
Shares under this Plan may be anticipated, alienated, encumbered, assigned,
transferred, pledged or otherwise disposed of in any way (other than by will,
the laws of descent and distribution, or as provided in Article XIII) by the
Participant. Any such attempt at anticipation, alienation, encumbrance,
assignment, transfer, pledge or other disposition shall be without effect and
all amounts shall be paid and all shares shall be delivered in accordance with
the provisions of this Plan. Amounts payable or Shares deliverable pursuant to
this Plan shall be paid or delivered only to the Participant or, in the event of
the Participant's death, to the Participant's beneficiary pursuant to Article
XIII.
ARTICLE XV
USE OF FUNDS; INTEREST
All Contributions received or held by Bancshares under this Plan will
be included in the general assets of Bancshares and may be used for any
corporate purpose. No interest will be paid to any Participant or credited to
his or her Account under this Plan.
ARTICLE XVI
STATEMENTS
Statements shall be provided to Participants as soon as
administratively practicable following an Exercise Date. Each Participant's
statement shall set forth, as of such Exercise Date, the Participant's Account
balance immediately prior to the exercise of his or her Option, the Fair Market
Value of a Share, the Option Price, the number of Shares purchased and his or
her remaining Account balance, if any.
ARTICLE XVII
ADJUSTMENTS OF AND CHANGES IN THE STOCK
(a) The following provisions will apply if any extraordinary dividend
or other extraordinary distribution occurs in respect of the Shares (whether in
the form of cash, Common Stock, other securities, or other property), or any
reclassification, recapitalization, stock split (including a stock split in the
form of a stock dividend), reverse stock split, reorganization, merger,
combination, consolidation, split-up, spin-off, combination, repurchase, or
exchange of Common Stock or other securities of Bancshares, or any similar,
unusual or extraordinary corporate transaction (or event in respect of the
Common Stock) or a sale of substantially all the assets of Bancshares occurs.
The Board will, in such manner and to such extent (if any) as it deems
appropriate and equitable:
(i) proportionately adjust any or all of: (a) the number and
type of Shares (or other securities) that thereafter may be made the
subject of Options; (b) the number, amount and type of Shares (or other
securities or property) subject to any or all outstanding Options; (c)
the Option Price of any or all outstanding options; or (d) the
securities, cash or other property deliverable upon exercise of any
outstanding options, or
(ii) in the case of an extraordinary dividend or other
distribution, recapitalization, reclassification, merger,
reorganization, consolidation, combination, sale of assets, split up,
exchange, or spin off, make provision for the substitution, settlement,
or exchange of any or all outstanding Options or the cash, securities
or property deliverable to the holder of any or all outstanding Options
based upon the distribution or consideration payable to holders of the
Common Stock upon or in respect of such event.
In each case, no such adjustment will be made that would cause this Plan to
violate Section 423 of the Code or any successor provisions without the written
consent of a simple majority of the Participants materially adversely affected
thereby. In any of such events, the Committee may take such action sufficiently
prior to such event if
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<PAGE> 24
necessary to permit the Participant to realize the benefits intended to be
conveyed with respect to the underlying shares in the same manner as is
available to stockholders generally.
(b) Upon a dissolution of Bancshares, or any other event described in
Article XVII(a) that Bancshares does not survive, the Plan and, if prior to the
last day of an offering Period, any outstanding option granted with respect to
that Offering Period shall terminate, subject to any provision that has been
expressly made by the Board through a plan or reorganization approved by the
Board or otherwise for the survival, substitution, assumption, exchange or other
settlement of the Plan and Options. In the event a Participant's Option is
terminated pursuant to this Article XVII(b), such Participant's Account shall be
paid to him or her in cash.
ARTICLE XVIII
TERM OF PLAN; AMENDMENT OR TERMINATION
(a) This Plan shall become effective as of the Effective Date. No new
Offering Periods shall commence on or after the tenth anniversary of the
Effective Date and this Plan shall terminate on such date unless sooner
terminated pursuant to this Article.
(b) The Board may amend, modify or terminate this Plan at any time
without notice. Shareholder approval for any amendment or modification shall not
be required, except to the extent required by Section 423 of the Code or other
applicable law, or deemed necessary or advisable by the Board. No amendment,
modification, or termination pursuant to this Article shall, without the written
consent of the Participants, affect in any manner materially adverse to the
Participants any rights or benefits of such Participants or obligations of
Bancshares under any option granted under this Plan prior to the effective date
of such change. Changes contemplated by Article XVII shall not be deemed to
constitute changes or amendments requiring Participant consent. Notwithstanding
the foregoing, the Board shall have the right to designate from time to time the
Subsidiaries, if any, whose employees may be eligible to participate in this
Plan and such designation shall not constitute any amendment to this Plan
requiring shareholder approval.
ARTICLE XIX
NOTICES
All notices or other communications by a Participant to Bancshares
contemplated by the Plan shall be deemed to have been duly given when received
in the form and manner specified by the Board (or Committee) at the location, or
by the person, designated by the Board (or Committee) for that purpose.
ARTICLE XX
CONDITIONS UPON ISSUANCE OF SHARES
Shares shall not be issued with respect to an Option unless the
exercise of such Option and the issuance and delivery of such Shares complies
with all applicable provisions of law, domestic or foreign, including, without
limitation, the Securities Act of 1933, as amended, the Exchange Act, any
applicable state securities laws, the rules and regulations promulgated
thereunder, and the requirements of any stock exchange upon which the Shares may
then be listed.
As a condition precedent to the exercise of any Option, if, in the
opinion of counsel for Bancshares such a representation is required under
applicable law, Bancshares may require any person exercising such Option to
represent and warrant that the Shares subject thereto are being acquired only
for investment and without any present intention to sell or distribute such
Shares.
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<PAGE> 25
ARTICLE XXI
PLAN CONSTRUCTION
(a) It is the intent of Bancshares that transactions in and affecting
Options in the case of Participants who are or may be subject to the
prohibitions of Section 16 satisfy any then applicable requirements of Rule
16b-3 so that such persons (unless they otherwise agree) will be entitled to the
exemptive relief of Rule 16b-3 in respect of those transactions and will not be
subject to avoidable liability thereunder. Accordingly, this Plan shall be
deemed to contain and the Shares issued upon exercise thereof shall be subject
to, such additional conditions and restrictions as may be required by Rule 16b3
to qualify for the maximum exemption from Section 16 with respect to Plan
transactions.
(b) If any provision of this Plan or of any option would otherwise
frustrate or conflict with the intents expressed above, that provision to the
extent possible shall be interpreted so as to avoid such conflict. If the
conflict remains irreconcilable, the Board may disregard the provision if it
concludes that to do so furthers the interest of Bancshares and is consistent
with the purposes of this Plan as to such persons in the circumstances.
ARTICLE XXII
EMPLOYEES' RIGHTS
Nothing in this Plan (or in any agreement related to this Plan) shall
confer upon any Eligible Employee or Participant any right to continue in the
service or employ of Bancshares or constitute any contract or agreement of
service or employment, or interfere in any way with the right of Bancshares to
reduce such person's compensation or other benefits or to terminate the services
or employment or such Eligible Employee or Participant, with or without cause,
but nothing contained in this Plan or any document related hereto shall affect
any other contractual right of any Eligible Employee or Participant. No
Participant shall have any rights as a shareholder until a certificate for
Shares has been issued in the Participant's name following exercise of his or
her Option. No adjustment will be made for dividends or other rights as a
shareholder for which a record date is prior to the issuance of such Share
certificate. Nothing in this Plan shall be deemed to create any fiduciary
relationship between Bancshares and any Participant.
ARTICLE XXIII
COMMON STOCK AVAILABLE FOR THE PLAN
The aggregate number of Shares of Common Stock which may be issued
pursuant to this Plan shall be 80,000 Shares of Bancshares' Common Stock. If,
and to the extent, that the number of issued Shares of Common Stock shall be
increased or reduced by change in par value, split up, reclassification,
distribution of a dividend payable in Common Stock, or the like, the number of
Shares subject to grant hereunder and the Option Price thereof shall be
proportionately adjusted.
ARTICLE XXIV
DISPOSITIONS OF STOCK, RIGHT OF FIRST REFUSAL AND REPURCHASE
(a) Prior to the date on which Bancshares' Common Stock is offered for
sale to the public following successful registration of the stock with the
Securities and Exchange Commission, the Participant may not sell, exchange,
transfer, pledge or otherwise dispose of any Common Stock acquired through the
exercise of an Option granted hereunder until after the expiration of a six (6)
month holding period measured from the Exercise Date following the transfer of
such Common Stock to the Participant.
(b) In the event that, prior to the date on which Bancshares' Common
Stock is offered for sale to the public following successful registration of the
Common Stock with the Securities and Exchange Commission, the Participant shall
incur a termination of employment for any reason, Bancshares, following the six
(6) month holding period described in Article XXIV(a), shall have the right, but
not the obligation, to repurchase at any time some or all of Participant's
Shares of Common Stock acquired through the exercise of an Option granted herein
at the Fair Market Value of such Common Stock at the date of repurchase.
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<PAGE> 26
(c) Prior to the date on which Bancshares' Common Stock is offered for
sale to the public following successful registration of the stock with the
Securities and Exchange Commission, Bancshares, following the six (6) month
holding period described in Article XXIV(a), shall have the right of first
refusal with respect to Participant's Shares of Common Stock at a purchase price
equal to the lower of the Fair Market Value at date of repurchase or the price
offered by a bona fide purchaser. The Participant shall, as a condition
precedent to his or her right to sell such shares of Common Stock to purchaser,
comply with the following procedure:
(i) By written notice (the "Notice"), the Participant shall
inform Bancshares of the purchaser's offer, the number of Shares of
Common Stock proposed to be transferred , the price per Share, the
proposed closing date (which shall be no sooner than fifty (50) days
from the date of the Notice), all other terms and conditions of the
purchaser's offer and shall further contain an offer to sell all of the
offered Shares to Bancshares or its assign pursuant to the terms and
provisions of this Article XXIV and on the same terms and conditions
contained in the purchaser's offer.
(ii) Bancshares, at its option, exercisable within twenty (20)
days of the receipt of the Notice, may purchase all or any part of the
offered Shares. In addition, Bancshares shall be entitled to assign its
right to purchase the offered Shares to one or more third parties.
(iii) If Bancshares shall elect to purchase some or all of the
offered Shares, it shall deliver notice of the exercise of its option
to the Participant not later than the twentieth day following receipt
of the Notice. In addition, if Bancshares shall assign some or all of
its right to purchase the offered Shares to a third party, it shall
deliver notice of such assignment, together with the number of the
offered shares to be purchased by such third party, not later than the
twentieth day following receipt of the Notice. Following delivery of
Bancshares' (or the third party) notice of exercise of the option
granted herein to purchase the offered Shares, Bancshares shall set a
closing date, which shall not be later than twenty days following the
delivery of Bancshares' (or the third party's) notice of intent to
purchase offered Shares.
(iv) To the extent that Bancshares and its assigns shall elect
to purchase less than all of the offered Shares, the Participant shall
thereafter be entitled to sell those offered Shares not being so
purchased upon the terms and conditions set forth in the Notice. Any
modification of such terms and conditions shall require additional
compliance with the provisions set forth in this Article XXIV.
(d) In the event that Bancshares exercises its rights under this
Article XXIV with regard to, the Participant's Shares, it has the right to
tender such purchase price in installments, with interest, over a period not to
exceed twelve (12) months. For purposes of such an installment payment, interest
shall be calculated and paid not less frequently than annually, and shall equal
the prime rate of interest charged by Bancshares' primary bank.
ARTICLE XXV
MISCELLANEOUS
(a) This Plan and related documents shall be governed by, and construed
in accordance with, the laws of the State of Delaware. If any provision shall be
held by a court of competent jurisdiction to be invalid and unenforceable, the
remaining provisions of this Plan shall continue to be fully effective.
(b) Captions and headings are given to the articles of this Plan solely
as a convenience to facilitate reference. Such captions and headings shall not
be deemed in any way material or relevant to the construction of interpretation
of this Plan or any provision hereof.
(c) The adoption of this Plan shall not affect any other compensation
or incentive plans in effect for Bancshares. Nothing in this Plan shall be
construed to limit the right of Bancshares (i) to establish any other forms of
incentives or compensation for employees of Bancshares, or (ii) to grant or
assume options (outside the scope of and in addition to those contemplated by
this Plan) in connection with any proper corporate purpose.
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IN WITNESS WHEREOF, Bancshares has caused its duly authorized officers
to execute this Texas Capital Bancshares, Inc. 2000 Employee Stock Purchase
Plan, and to apply the Corporate seal hereto as of May 31, 2000.
TEXAS CAPITAL BANCSHARES, INC.
By: /s/ Joseph M. Grant
------------------------------------
Joseph M. Grant
Chairman and Chief Executive Officer
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<PAGE> 28
REVOCABLE PROXY
TEXAS CAPITAL BANCSHARES, INC.
ANNUAL MEETING OF STOCKHOLDERS
July 18, 2000
5:00 P.M
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Joseph M. Grant and Raleigh Hortenstine
III, each with full power of substitution, to act as proxies for the
undersigned, and to vote all shares of common stock of Texas Capital Bancshares,
Inc. that the undersigned is entitled to vote at the Annual Meeting of
Stockholders, on Tuesday, July 18, 2000 at 5:00 p.m. in the offices of Texas
Capital Bank, National Association at 2100 McKinney Avenue, 9th Floor, Dallas,
Texas 75201, and at any and all adjournments thereof, as set forth below.
This proxy is revocable and will be voted as directed, but if no
instructions are specified, this proxy will be voted FOR the nominees as
directors specified and FOR each of the proposals listed. If any other business
is presented at the annual meeting, including whether or not to adjourn the
meeting, this proxy will be voted by those named in this proxy in their
discretion. At the present time, the board of directors knows of no other
business to be presented at the annual meeting.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
<PAGE> 29
[X] Please mark your votes as indicated
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE
LISTED NOMINEES AND "FOR" EACH OF THE PROPOSALS.
1. The Election as Directors of All Nominees Listed (except as marked to
the contrary below).
[X] FOR [X] VOTE WITHHELD
<TABLE>
<S> <C> <C>
Gregg L. Engles Raleigh Hortenstine III Lee Roy Mitchell
John C. Goff George F. Jones, Jr. Marshall B. Payne
Joseph M. (Jody) Grant Walter W. (Bo) McAllister III John C. Snyder
Frederick B. Hegi, Jr. R. Drayton McLane, Jr. Theodore H. Strauss
James R. Holland, Jr.
</TABLE>
INSTRUCTION: To withhold your vote for any individual nominee, write the
nominee's name below:
--------------------------------------------------------------------------------
2. Approval of the Texas Capital Bancshares, Inc. 2000 Employee Stock
Purchase Plan.
[X] FOR [X] AGAINST [X] ABSTAIN
PLEASE COMPLETE, DATE, SIGN AND PROMPTLY MAIL THIS PROXY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE.
The undersigned acknowledges receipt from Texas Capital Bancshares, Inc. prior
to the execution of this proxy of a Notice of Annual Meeting of Stockholders,
the Texas Capital Bancshares, Inc. Proxy Statement, dated June 16, 2000, and the
Form 10 for Registration of Securities Pursuant to Section 12(g) of the
Securities Exchange Act of 1934.
----------------------------------------- ------------------------
Signature of Stockholder Date
----------------------------------------- ------------------------
Signature of Stockholder Date
PLEASE SIGN EXACTLY AS YOUR NAME APPEARS ON THE LABEL ON THE REVERSE SIDE OF
THIS CARD. When signing as attorney, executor, administrator, trustee or
guardian, please give your full title. If shares are held jointly, each holder
may sign but only one signature is required.
