Document:

Exhibit 4.3

 

	
 
    	
 
    	
FILED
    
	
 
    	
 
    	
In the Office of the
    
	
 
    	
 
    	
Secretary of State of   Texas
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
AUG 22 2011
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Corporations Section
    

 

STATEMENT OF DESIGNATIONS

OF

SENIOR NON-CUMULATIVE PERPETUAL PREFERRED STOCK, SERIES C

OF

 

VERITEX HOLDINGS, INC.

 

 

Veritex Holdings, Inc., a corporation organized and existing under the laws of the State of Texas (the “Issuer”), in accordance with the provisions of Sections 21.155 of the Business Organizations Code thereof, does hereby certify:

 

The board of directors of the Issuer (the “Board of Directors”) or an applicable committee of the Board of Directors, in accordance with the certificate of formation and bylaws of the Issuer and applicable law, adopted the following resolution on August 16, 2011 creating a series of 8,000 shares of Preferred Stock of the Issuer designated as “Senior Non-Cumulative Perpetual Preferred Stock, Series C”.

 

RESOLVED, that pursuant to the provisions of the certificate of formation and the bylaws of the Issuer and applicable law, a series of Preferred Stock, par value $0.01 per share, of the Issuer be and hereby is created, and that the designation and number of shares of such series, and the voting and other powers, preferences and relative, participating, optional or other rights, and the qualifications, limitations and restrictions thereof, of the shares of such series, are as follows:

 

Part 1.  Designation and Number of Shares. There is hereby created out of the authorized and unissued shares of preferred stock of the Issuer a series of preferred stock designated as the “Senior Non-Cumulative Perpetual Preferred Stock  , Series C”  (the “Designated Preferred Stock”).  The authorized number of shares of Designated Preferred Stock shall be 8,000.

 

Part 2.  Standard Provisions. The Standard Provisions contained in Schedule A attached hereto are incorporated herein by reference in their entirety and shall be deemed to be a part of this Statement of Designations to the same extent as if such provisions had been set forth in full herein. 

 

Part 3. Definitions. The following terms are used in this Statement of Designations (including the Standard Provisions in Schedule A hereto) as defined below:

 

(a)                                 “Common Stock”  means the common stock, par value $0.01 per share, of the Issuer. 

 

(b)                                 “Definitive Agreement”  means that certain Securities Purchase Agreement by and between Issuer and Treasury, dated as of the Signing Date. 

 

(c)                                  “Junior Stock”  means the Common Stock and any other class or series of stock of the Issuer the terms of which expressly provide that it ranks junior to Designated

 

 

Preferred Stock as to dividend and redemption rights and/or as to rights on liquidation, dissolution or winding up of the Issuer. 

 

(d)                                 “Liquidation Amount”  means $1,000 per share of Designated Preferred Stock. 

 

(e)                                  “Minimum Amount”  means (i) the amount equal to twenty-five percent (25%) of the aggregate Liquidation Amount of Designated Preferred Stock issued on the Original Issue Date or (ii) all of the outstanding Designated Preferred Stock, if the aggregate liquidation preference of the outstanding Designated Preferred Stock is less than the amount set forth in the preceding clause (i). 

 

(f)                                   “Parity Stock”  means any class or series of stock of the Issuer (other than Designated Preferred Stock) the terms of which do not expressly provide that such class or series will rank senior or junior to Designated Preferred Stock as to dividend rights and/or as to rights on liquidation, dissolution or winding up of the Issuer (in each case without regard to whether dividends accrue cumulatively or non-cumulatively).  Without limiting the foregoing, Parity Stock shall include the Issuer’s Fixed Rate Cumulative Perpetual Preferred Stock, Series A and Fixed Rate Cumulative Perpetual Preferred Stock, Series B. 

 

(g)                                  “Signing Date”  means August 25, 2011. 

 

(h)                                 “Treasury”  means the United States Department of the Treasury and any successor in interest thereto. 

 

Part 4. Certain Voting Matters. Holders of shares of Designated Preferred Stock will be entitled to one vote for each such share on any matter on which holders of Designated Preferred Stock are entitled to vote, including any action by written consent.

 

[Remainder of Page Intentionally Left Blank]

 

2

 

IN WITNESS WHEREOF, Veritex Holdings, Inc. has caused this Statement of Designations to be signed by C. Malcolm Holland, III, its President and Chief Executive Officer, this 19th day of August, 2011. 

 

	
 
    	
 
    
	
 
    	
Veritex Holdings, Inc. 
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ C. Malcolm Holland
    
	
 
    	
 
    	
Name: C. Malcolm Holland, III
    
	
 
    	
 
    	
Title: President and Chief Executive Officer
    

 

 

Schedule A

 

STANDARD PROVISIONS

 

Section 1. General Matters. Each share of Designated Preferred Stock shall be identical in all respects to every other share of Designated Preferred Stock. The Designated Preferred Stock shall be perpetual, subject to the provisions of Section 5 of these Standard Provisions that form a part of the Statement of Designations. The Designated Preferred Stock shall rank equally with Parity Stock and shall rank senior to Junior Stock with respect to the payment of dividends and the distribution of assets in the event of any dissolution, liquidation or winding up of the Issuer, as set forth below. 

 

Section 2. Standard Definitions. As used herein with respect to Designated Preferred Stock:

 

(a)                                 “Acquiror,”  in any Holding Company Transaction, means the surviving or resulting entity or its ultimate parent in the case of a merger or consolidation or the transferee in the case of a sale, lease or other transfer in one transaction or a series of related transactions of all or substantially all of the consolidated assets of the Issuer and its subsidiaries, taken as a whole. 

 

(b)                            “Affiliate”  means, with respect to any person, any person directly or indirectly controlling, controlled by or under common control with, such other person. For purposes of this definition, “control” (including, with correlative meanings, the terms “controlled by” and “under common control with”) when used with respect to any person, means the possession, directly or indirectly through one or more intermediaries, of the power to cause the direction of management and/or policies of such person, whether through the ownership of voting securities by contract or otherwise.

 

(c)                             “Applicable Dividend Rate”  has the meaning set forth in Section 3(a). 

 

(d)                            “Appropriate Federal Banking Agency”  means the “appropriate Federal banking agency” with respect to the Issuer as defined in Section 3(q) of the Federal Deposit Insurance Act (12 U.S.C. Section 1813(q)), or any successor provision. 

 

(e)                             “Bank Holding Cornpany”  means a company registered as such with the Board of Governors of the Federal Reserve System pursuant to 12 U.S.C. §1842 and the regulations of the Board of Governors of the Federal Reserve System thereunder. 

 

(f)                              “Baseline” means the “Initial Small Business Lending Baseline” set forth on the Initial Supplemental Report (as defined in the Definitive Agreement), subject to adjustment pursuant to Section 3(a). 

 

(g)                             “Business Combination” means a merger, consolidation, statutory share exchange or similar transaction that requires the approval of the Issuer’s stockholders. 

 

A-1

 

(h)                            “Business Day” means any day except Saturday, Sunday and any day on which banking institutions in the State of New York or the District of Columbia generally are authorized or required by law or other governmental actions to close. 

 

(i)                                “Bylaws” means the bylaws of the Issuer, as they may be amended from time to time. 

 

(j)                               “Call Report” has the meaning set forth in the Definitive Agreement. 

 

(k)                            “Statement of Designations” means the Statement of Designations or comparable instrument relating to the Designated Preferred Stock, of which these Standard Provisions form a part, as it may be amended from time to time.

 

(l)                                “Charge-Offs” means the net amount of loans charged off by the Issuer or, if the Issuer is a Bank Holding Company or a Savings and Loan Holding Company, by the IDI Subsidiary(ies) during quarters that begin on or after the Signing Date, determined as follows:

 

(i)                                     if the Issuer or the applicable IDI Subsidiary is a bank, by subtracting (A) the aggregate dollar amount of recoveries reflected on line RIAD4605 of its Call Reports for such quarters from (B) the aggregate dollar amount, of charge-offs reflected on line RIAD4635 of its Call Reports for such quarters (without duplication as a result of such dollar amounts being reported on a year-to-date basis); or

 

(ii)                                  if the Issuer or the applicable IDI Subsidiary is a thrift, by subtracting (A) the sum of the aggregate dollar amount of recoveries reflected on line VA140 of its Call Reports for such quarters and the aggregate dollar amount of adjustments reflected on line VA150 of its Call Reports for such quarters from (B) the aggregate dollar amount of charge-offs reflected on line VA160 of its Call Reports for such quarters. 

 

(m)                        “Charter” means the Issuer’s certificate or articles of incorporation, articles of association, or similar organizational document. 

 

(n)                            “CPP Lending Incentive Fee” has the meaning set forth in Section 3(e). 

 

(o)                            “Current Period” has the meaning set forth in Section 3(a)(i)(2). 

 

(p)                            “Dividend Payment Date” means January 1, April 1, July 1, and October 1 of each year. 

 

(q)                            “Dividend Period” means the period from and including any Dividend Payment Date to, but excluding, the next Dividend Payment Date; provided, however, the initial Dividend Period shall be the period from and including the Original Issue Date to, but excluding, the next Dividend Payment Date (the “Initial Dividend Period”). 

 

(r)                               “Dividend Record Date” has the meaning set forth in Section 3(b). 

 

A-2

 

(s)                              “Dividend Reference Period” has the meaning set forth in Section 3(a)(i)(2).

 

(t)                               “GAAP” means generally accepted accounting principles in the United States.

 

(u)                            “Holding Company Preferred Stock” has the meaning set forth in Section 7(c)(v).

 

(v)                            “Holding Company Transaction” means the occurrence of (a) any transaction (including, without limitation, any acquisition, merger or consolidation) the result of which is that a “person” or “group” within the meaning of Section 13(d) of the Securities Exchange Act of 1934, as amended, (i) becomes the direct or indirect ultimate “beneficial owner,” as defined in Rule 13d-3 under that Act, of common equity of the Issuer representing more than 50% of the voting power of the outstanding Common Stock or (ii) is otherwise required to consolidate the Issuer for purposes of generally accepted accounting principles in the United States, or (b) any consolidation or merger of the Issuer or similar transaction or any sale, lease or other transfer in one transaction or a series of related transactions of all or substantially all of the consolidated assets of the Issuer and its subsidiaries, taken as a whole, to any Person other than one of the Issuer’s subsidiaries; provided that, in the case of either clause (a) or (b), the Issuer or the Acquiror is or becomes a Bank Holding Company or Savings and Loan Holding Company. 

 

(w)                          “IDI Subsidiary” means any Issuer Subsidiary that is an insured depository institution. 

 

(x)                            “Increase in QSBL” means:

 

(i)                           with respect to the first (1st) Dividend Period, the difference obtained by subtracting (A) the Baseline from (B) QSBL set forth in the Initial Supplemental Report (as defined in the Definitive Agreement); and

 

(ii)                        with respect to each subsequent Dividend Period, the difference obtained by subtracting (A) the Baseline from (B) QSBL for the Dividend Reference Period for the Current Period. 

 

(y)                                 “Initial Dividend Period” has the meaning set forth in the definition of “Dividend Period”.

 

(z)                                  “Issuer Subsidiary” means any subsidiary of the Issuer. 

 

(aa)                          “Liquidation Preference” has the meaning set forth in Section 4(a). 

 

(bb)                          “Non-Qualifying Portion Percentage” means, with respect to any particular Dividend Period, the percentage obtained by subtracting the Qualifying Portion Percentage from one (1). 

 

A-3

 

(cc)                            “Original Issue Date” means the date on which shares of Designated Preferred Stock are first issued. 

 

(dd)                          “Percentage Change in QSBL” has the meaning set forth in Section 3(a)(ii). 

 

(ee)                            “Person” means a legal person, including any individual, corporation, estate, partnership, joint venture, association, joint-stock company, limited liability company or trust. 

 

(ff)                              “Preferred Director” has the meaning set forth in Section 7(c). 

 

(gg)                            “Preferred Stock” means any and all series of preferred stock of the Issuer, including the Designated Preferred Stock. 

 

(hh)                          “Previously Acquired Preferred Shares” has the meaning set forth in the Definitive Agreement. 

 

(ii)                                  “Private Capital” means, if the Issuer is Matching Private Investment Supported (as defined in the Definitive Agreement), the equity capital received by the Issuer or the applicable Affiliate of the Issuer from one or more non-governmental investors in accordance with Section 1.3(m) of the Definitive Agreement. 

 

(jj)                                “Publicly-traded” means a company that (i) has a class of securities that is traded on a national securities exchange and (ii) is required to file periodic reports with either the Securities and Exchange Commission or its primary federal bank regulator. 

 

(kk)                          “Qualified Small Business Lending” or “QSBL” means, with respect to any particular Dividend Period, the “Quarter-End Adjusted Qualified Small Business Lending” for such Dividend Period set forth in the applicable Supplemental Report. 

 

(II)                              “Qualifying Portion Percentage” means, with respect to any particular Dividend Period, the percentage obtained by dividing (i) the Increase in QSBL for such Dividend Period by (ii) the aggregate Liquidation Amount of then-outstanding Designated Preferred Stock. 

 

(mm)                  “Savings and Loan Holding Company” means a company registered as such with the Office of Thrift Supervision pursuant to 12 U.S.C. §1467a(b) and the regulations of the Office of Thrift Supervision promulgated thereunder. 

 

(nn)                          “Share Dilution Amount” means the increase in the number of diluted shares outstanding (determined in accordance with GAAP applied on a consistent basis, and as measured from the date of the Issuer’s most recent consolidated financial statements prior to the Signing Date) resulting from the grant, vesting or exercise of equity-based compensation to employees and equitably adjusted for any stock split, stock dividend, reverse stock split, reclassification or similar transaction. 

 

(oo)                          “Signing Date Tier 1 Capital Amount” means $30,348,000.00. 

 

A-4

 

(pp)                          “Standard Provisions” mean these Standard Provisions that form a part of the Statement of Designations relating to the Designated Preferred Stock. 

 

(qq)                          “Supplemental Report” means a Supplemental Report delivered by the Issuer to Treasury pursuant to the Definitive Agreement. 

 

(rr)                                “Tier 1 Dividend Threshold” means, as of any particular date, the result of the following formula:

 

( ( A + B – C ) * 0.9 ) – D

 

where:

 

A = Signing Date Tier 1 Capital Amount;

 

B = the aggregate Liquidation Amount of the Designated Preferred Stock issued to Treasury;

 

C = the aggregate amount of Charge-Offs since the Signing Date; and

 

D = (i) beginning on the first day of the eleventh (11th) Dividend Period, the amount equal to ten percent (10%) of the aggregate Liquidation Amount of the Designated Preferred Stock issued to Treasury as of the Effective Date (without regard to any redemptions of Designated Preferred Stock that may have occurred thereafter) for every one percent (1%) of positive Percentage Change in Qualified Small Business Lending between the ninth (9th) Dividend Period and the Baseline; and

 

(ii) zero (0) at all other times. 

 

(ss)                              “Voting Parity Stock” means, with regard to any matter as to which the holders of Designated Preferred Stock are entitled to vote as specified in Section 7(d) of these Standard Provisions that form a part of the Statement of Designations, any and all series of Parity Stock upon which like voting rights have been conferred and are exercisable with respect to such matter. 

 

Section 3. Dividends. 

 

(a)                       Rate. 

 

(i)                                     The “Applicable Dividend Rate” shall be determined as follows:

 

(1)                                 With respect to the Initial Dividend Period, the Applicable Dividend Rate shall be one percent (1.0000000%). 

 

A-5

 

(2)                                 With respect to each of the second (2nd) through the tenth (10th) Dividend Periods, inclusive (in each case, the “Current Period”), the Applicable Dividend Rate shall be:

 

(A)                               (x) the applicable rate set forth in column “A” of the table in Section 3(a)(iii), based on the Percentage Change in QSBL between the Dividend Period that was two Dividend Periods prior to the Current Period (the “Dividend Reference Period”) and the Baseline, multiplied by (y) the Qualifying Portion Percentage; plus

 

(B)                               (x) five percent (5%) multiplied by (y) the Non-Qualifying Portion Percentage. 

 

In each such case, the Applicable Dividend Rate shall be determined at the time the Issuer delivers a complete and accurate Supplemental Report to Treasury with respect to the Dividend Reference Period. 

 

(3)                                 With respect to the eleventh (11th) through the eighteenth (18th) Dividend Periods, inclusive, and that portion of the nineteenth (19th) Dividend Period prior to, but not including, the four and one half (41/2) year anniversary of the Original Issue Date, the Applicable Dividend Rate shall be:

 

(A)                               (x) the applicable rate set forth in column “B” of the table in Section 3(a)(iii), based on the Percentage Change in QSBL between the ninth (9th) Dividend Period and the Baseline, multiplied by (y) the Qualifying Portion Percentage, calculated as of the last day of the ninth (9th) Dividend Period; plus

 

(B)                               (x) five percent (5%) multiplied by (y) the Non-Qualifying Portion Percentage, calculated as of the last day of the ninth (9th) Dividend Period. 

 

In such case, the Applicable Dividend Rate shall be determined at the time the Issuer delivers a complete and accurate Supplemental Report to Treasury with respect to the ninth (9th) Dividend Period. 

 

(4)                                 With respect to (A) that portion of the nineteenth (19th) Dividend Period beginning on the four and one half (41/2) year anniversary of the Original Issue Date and (B) all Dividend Periods thereafter, the Applicable Dividend Rate shall be nine percent (9%). 

 

(5)                                 Notwithstanding anything herein to the contrary, if the Issuer fails to submit a Supplemental Report that is due during any of the second (2nd) through tenth (10th)

 

A-6

 

Dividend Periods on or before the sixtieth (60th) day of such Dividend Period, the Issuer’s QSBL for the Dividend Period that would have been covered by such Supplemental Report shall be zero (0) for purposes hereof. 

 

(6)                                 Notwithstanding anything herein to the contrary, but subject to Section 3(a)(i)(5) above, if the Issuer fails to submit the Supplemental Report that is due during the tenth (10th) Dividend Period, the Issuer’s QSBL shall be zero (0) for purposes of calculating the Applicable Dividend Rate pursuant to Section 3(a)(i)(3) and (4).  The Applicable Dividend Rate shall be re-determined effective as of the first day of the calendar quarter following the date such failure is remedied, provided it is remedied prior to the four and one half (41/2) anniversary of the Original Issue Date. 

 

(7)                                 Notwithstanding anything herein to the contrary, if the Issuer fails to submit any of the certificates required by Sections 3.1(d)(ii) or 3.1(d)(iii) of the Definitive Agreement when and as required thereby, the Issuer’s QSBL shall be zero (0) for purposes of calculating the Applicable Dividend Rate pursuant to Section 3(a)(i)(2) or (3) above until such failure is remedied. 

 

(ii)                                  The “Percentage Change in Qualified Lending” between any given Dividend Period and the Baseline shall be the result of the following formula, expressed as a percentage:

 

	
 
    	

    	
( QSBL for the Dividend   Period – Baseline )
    	

    	
x 100
    
	
Baseline
    

 

A-7

 

(iii)                               The following table shall be used for determining the Applicable Dividend Rate:

 

	
 
    	
 
    	
 
    	
The Applicable Dividend Rate shall be:
    	
 
    
	
 
    	
If the Percentage Change in
   Qualified Lending is:
    	
 
    	
Column “A”
    (each of the
   2nd — 10th
   Dividend Periods)
    	
 
    	
Column “B”
    (11th — 18th, and
   the first part of the
   19th, Dividend
   Periods)
    	
 
    
	
 
    	
0% or less
    	
 
    	
5
    	
%
    	
7
    	
%
    
	
 
    	
More than 0%, but less   than 2.5%
    	
 
    	
5
    	
%
    	
5
    	
%
    
	
 
    	
2.5% or more, but less   than 5%
    	
 
    	
4
    	
%
    	
4
    	
%
    
	
 
    	
5% or more, but less than   7.5%
    	
 
    	
3
    	
%
    	
3
    	
%
    
	
 
    	
7.5% or more, but less   than 10%
    	
 
    	
2
    	
%
    	
2
    	
%
    
	
 
    	
10% or more
    	
 
    	
1
    	
%
    	
1
    	
%
    

 

(iv)                         If the Issuer consummates a Business Combination, a purchase of loans or a purchase of participations in loans and the Designated Preferred Stock remains outstanding thereafter, then the Baseline shall thereafter be the “Quarter-End Adjusted Small Business Lending Baseline” set forth on the Quarterly Supplemental Report (as defined in the Definitive Agreement). 

 

(b)                                 Payment. Holders of Designated Preferred Stock shall be entitled to receive, on each share of Designated Preferred Stock if, as and when declared by the Board of Directors or any duly authorized committee of the Board of Directors, but only out of assets legally available therefor, non-cumulative cash dividends with respect to:

 

(i)                                     each Dividend Period (other than the Initial Dividend Period) at a rate equal to one-fourth (1/4) of the Applicable Dividend Rate with respect to each Dividend Period on the Liquidation Amount per share of Designated Preferred Stock, and no more, payable quarterly in arrears on each Dividend Payment Date; and

 

(ii)                                  the Initial Dividend Period, on the first such Dividend Payment Date to occur at least twenty (20) calendar days after the Original Issue Date, an amount equal to (A) the Applicable Dividend Rate with respect to the Initial Dividend Period multiplied by (B) the number of days from the Original Issue Date to the last day of the Initial Dividend Period (inclusive) divided by 360. 

 

In the event that any Dividend Payment Date would otherwise fall on a day that is not a Business Day, the dividend payment due on that date will be postponed to the next day that is a Business Day and no additional dividends will accrue as a result of that postponement. For avoidance of doubt, “payable quarterly in arrears” means that, with respect to any particular Dividend Period, dividends begin accruing on the first day of such Dividend Period and are payable on the first day of the next Dividend Period. 

 

The amount of dividends payable on Designated Preferred Stock on any date prior to the end of a Dividend Period, and for the initial Dividend Period, shall be computed on the

 

A-8

 

basis of a 360-day year consisting of four 90-day quarters, and actual days elapsed over a 90-day quarter. 

 

Dividends that are payable on Designated Preferred Stock on any Dividend Payment Date will be payable to holders of record of Designated Preferred Stock as they appear on the stock register of the Issuer on the applicable record date, which shall be the 15th calendar day immediately preceding such Dividend Payment Date or such other record date fixed by the Board of Directors or any duly authorized committee of the Board of Directors that is not more than 60 nor less than 10 days prior to such Dividend Payment Date (each, a “Dividend Record Date”). Any such day that is a Dividend Record Date shall be a Dividend Record Date whether or not such day is a Business Day. 

 

Holders of Designated Preferred Stock shall not be entitled to any dividends, whether payable in cash, securities or other property, other than dividends (if any) declared and payable on Designated Preferred Stock as specified in this Section 3 (subject to the other provisions of the Statement of Designations). 

 

(c)                                  Non-Cumulative. Dividends on shares of Designated Preferred Stock shall be non-cumulative. If the Board of Directors or any duly authorized committee of the Board of Directors does not declare a dividend on the Designated Preferred Stock in respect of any Dividend Period:

 

(i)                           the holders of Designated Preferred Stock shall have no right to receive any dividend for such Dividend Period, and the Issuer shall have no obligation to pay a dividend for such Dividend Period, whether or not dividends are declared for any subsequent Dividend Period with respect to the Designated Preferred Stock; and

 

(ii)                        the Issuer shall, within five (5) calendar days, deliver to the holders of the Designated Preferred Stock a written notice executed by the Chief Executive Officer and the Chief Financial Officer of the Issuer stating the Board of Directors’ rationale for not declaring dividends. 

 

(d)                                 Priority of Dividends; Restrictions on Dividends.

 

(i)                                     Subject to Sections 3(d)(ii), (iii) and (v) and any restrictions imposed by the Appropriate Federal Banking Agency or, if applicable, the Issuer’s state bank supervisor (as defined in Section 3(r) of the Federal Deposit Insurance Act (12 U.S.C. § 1813(q)), so long as any share of Designated Preferred Stock remains outstanding, the Issuer may declare and pay dividends on the Common Stock, any other shares of Junior Stock, or Parity Stock, in each case only if (A) after giving effect to such dividend the Issuer’s Tier 1 capital would be at least equal to the Tier I Dividend Threshold, and (B) full dividends on all outstanding shares of Designated Preferred Stock for the most recently completed Dividend Period have been or are contemporaneously declared and paid.

 

(ii)                                  If a dividend is not declared and paid in full on the Designated Preferred Stock in respect of any Dividend Period, then from the last day of such Dividend Period until the last day of the third (3rd) Dividend Period immediately

 

A-9

 

following it, no dividend or distribution shall be declared or paid on the Common Stock or any other shares of Junior Stock (other than dividends payable solely in shares of Common Stock) or Parity Stock; provided, however, that in any such Dividend Period in which a dividend is declared and paid on the Designated Preferred Stock, dividends may be paid on Parity Stock to the extent necessary to avoid any material breach of a covenant by which the Issuer is bound. 

 

(iii)                               When dividends have not been declared and paid in full for an aggregate of four (4) Dividend Periods or more, and during such time the Issuer was not subject to a regulatory determination that prohibits the declaration and payment of dividends, the Issuer shall, within five (5) calendar days of each missed payment, deliver to the holders of the Designated Preferred Stock a certificate executed by at least a majority of the Board of Directors stating that the Board of Directors used its best efforts to declare and pay such dividends in a manner consistent with (A) safe and sound banking practices and (B) the directors’ fiduciary obligations. 

 

(iv)                              Subject to the foregoing and Section 3(e) below and not otherwise, such dividends (payable in cash, securities or other property) as may be determined by the Board of Directors or any duly authorized committee of the Board of Directors may be declared and paid on any securities, including Common Stock and other Junior Stock, from time to time out of any funds legally available for such payment, and holders of Designated Preferred Stock shall not be entitled to participate in any such dividends. 

 

(v)                                 If the Issuer is not Publicly-Traded, then after the tenth (10th) anniversary of the Signing Date, so long as any share of Designated Preferred Stock remains outstanding, no dividend or distribution shall be declared or paid on the Common Stock or any other shares of Junior Stock (other than dividends payable solely in shares of Common Stock) or Parity Stock. 

 

(e)                                  Special Lending Incentive Fee Related to CPP. If Treasury held Previously Acquired Preferred Shares immediately prior to the Original Issue Date and the Issuer did not apply to Treasury to redeem such Previously Acquired Preferred Shares prior to December 16, 2010, and if the Issuer’s Supplemental Report with respect to the ninth (9th) Dividend Period reflects an amount of Qualified Small Business Lending that is less than or equal to the Baseline (or if the Issuer fails to timely file a Supplemental Report with respect to the ninth (9th) Dividend Period), then beginning on July 1, 2014 and on all Dividend Payment Dates thereafter ending on April 1, 2016, the Issuer shall pay to the Holders of Designated Preferred Stock, on each share of Designated Preferred Stock, but only out of assets legally available therefor, a fee equal to 0.5% of the Liquidation Amount per share of Designated Preferred Stock (“CPP Lending Incentive Fee”). All references in Section 3(d) to “dividends” on the Designated Preferred Stock shall be deemed to include the CPP Lending Incentive Fee. 

 

Section 4. Liquidation Rights.

 

(a)                                 Voluntary or Involuntary Liquidation. In the event of any liquidation, dissolution or winding up of the affairs of the Issuer, whether voluntary or involuntary, holders of Designated Preferred Stock shall be entitled to receive for each share of Designated Preferred

 

A-10

 

Stock, out of the assets of the Issuer or proceeds thereof (whether capital or surplus) available for distribution to stockholders of the Issuer, subject to the rights of any creditors of the Issuer, before any distribution of such assets or proceeds is made to or set aside for the holders of Common Stock and any other stock of the Issuer ranking junior to Designated Preferred Stock as to such distribution, payment in full in an amount equal to the sum of (i) the Liquidation Amount per share and (ii) the amount of any accrued and unpaid dividends on each such share (such amounts collectively, the “Liquidation Preference”).

 

(b)                            Partial Payment. If in any distribution described in Section 4(a) above the assets of the Issuer or proceeds thereof are not sufficient to pay in full the amounts payable with respect to all outstanding shares of Designated Preferred Stock and the corresponding amounts payable with respect of any other stock of the Issuer ranking equally with Designated Preferred Stock as to such distribution, holders of Designated Preferred Stock and the holders of such other stock shall share ratably in any such distribution in proportion to the full respective distributions to which they are entitled.

 

(c)                             Residual Distributions. If the Liquidation Preference has been paid in full to all holders of Designated Preferred Stock and the corresponding amounts payable with respect of any other stock of the Issuer ranking equally with Designated Preferred Stock as to such distribution has been paid in full, the holders of other stock of the Issuer shall be entitled to receive all remaining assets of the Issuer (or proceeds thereof) according to their respective rights and preferences.

 

(d)                            Merger, Consolidation and Sale of Assets Is Not Liquidation. For purposes of this Section 4, the merger or consolidation of the Issuer with any other corporation or other entity, including a merger or consolidation in which the holders of Designated Preferred Stock receive cash, securities or other property for their shares, or the sale, lease or exchange (for cash, securities or other property) of all or substantially all of the assets of the Issuer, shall not constitute a liquidation, dissolution or winding up of the Issuer.

 

Section 5. Redemption.

 

(a)                            Optional Redemption.

 

(i)                                     Subject to the other provisions of this Section 5:

 

(1)         The Issuer, at its option, subject to the approval of the Appropriate Federal Banking Agency, may redeem, in whole or in part, at any time and from time to time, out of funds legally available therefor, the shares of Designated Preferred Stock at the time outstanding; and

 

(2)         If, after the Signing Date, there is a change in law that modifies the terms of Treasury’s investment in the Designated Preferred Stock or the terms of Treasury’s Small Business Lending Fund program in a materially adverse respect for the Issuer, the Issuer may, after consultation with the Appropriate Federal Banking Agency,

 

A-11

 

redeem all of the shares of Designated Preferred Stock at the time outstanding.

 

(ii)                                  The per-share redemption price for shares of Designated Preferred Stock shall be equal to the sum of:

 

(1)         the Liquidation Amount per share,

 

(2)         the per-share amount of any unpaid dividends for the then current Dividend Period at the Applicable Dividend Rate to, but excluding, the date fixed for redemption (regardless of whether any dividends are actually declared for that Dividend Period; and

 

(3)         the pro rata amount of CPP Lending Incentive Fees for the current Dividend Period.

 

The redemption price for any shares of Designated Preferred Stock shall be payable on the redemption date to the holder of such shares against surrender of the certificate(s) evidencing such shares to the Issuer or its agent. Any declared but unpaid dividends for the then current Dividend Period payable on a redemption date that occurs subsequent to the Dividend Record Date for a Dividend Period shall not be paid to the holder entitled to receive the redemption price on the redemption date, but rather shall be paid to the holder of record of the redeemed shares on such Dividend Record Date relating to the Dividend Payment Date as provided in Section 3 above.

 

(b)                            No Sinking Fund. The Designated Preferred Stock will not be subject to any mandatory redemption, sinking fund or other similar provisions. Holders of Designated Preferred Stock will have no right to require redemption or repurchase of any shares of Designated Preferred Stock.

 

(c)                             Notice of Redemption. Notice of every redemption of shares of Designated Preferred Stock shall be given by first class mail, postage prepaid, addressed to the holders of record of the shares to be redeemed at their respective last addresses appearing on the books of the Issuer, Such mailing shall be at least 30 days and not more than 60 days before the date fixed for redemption. Any notice mailed as provided in this Subsection shall be conclusively presumed to have been duly given, whether or not the holder receives such notice, but failure duly to give such notice by mail, or any defect in such notice or in the mailing thereof, to any holder of shares of Designated Preferred Stock designated for redemption shall not affect the validity of the proceedings for the redemption of any other shares of Designated Preferred Stock. Notwithstanding the foregoing, if shares of Designated Preferred Stock are issued in book-entry form through The Depository Trust Company or any other similar facility, notice of redemption may be given to the holders of Designated Preferred Stock at such time and in any manner permitted by such facility. Each notice of redemption given to a holder shall state: (1) the redemption date; (2) the number of shares of Designated Preferred Stock to be redeemed and, if less than all the shares held by such holder are to be redeemed, the number of such shares

 

A-12

 

to be redeemed from such holder; (3) the redemption price; and (4) the place or places where certificates for such shares are to be surrendered for payment of the redemption price.

 

(d)                            Partial Redemption. In case of any redemption of part of the shares of Designated Preferred Stock at the time outstanding, the shares to be redeemed shall be selected either pro rata or in such other manner as the Board of Directors or a duly authorized committee thereof may determine to be fair and equitable, but in any event the shares to be redeemed shall not be less than the Minimum Amount. Subject to the provisions hereof, the Board of Directors or a duly authorized committee thereof shall have full power and authority to prescribe the terms and conditions upon which shares of Designated Preferred Stock shall be redeemed from time to time, subject to the approval of the Appropriate Federal Banking Agency. If fewer than all the shares represented by any certificate are redeemed, a new certificate shall be issued representing the unredeemed shares without charge to the holder thereof.

 

(e)                             Effectiveness of Redemption. If notice of redemption has been duly given and if on or before the redemption date specified in the notice all funds necessary for the redemption have been deposited by the Issuer, in trust for the pro rata benefit of the holders of the shares called for redemption, with a bank or trust company doing business in the Borough of Manhattan, The City of New York, and having a capital and surplus of at least $500 million and selected by the Board of Directors, so as to be and continue to be available solely therefor, then, notwithstanding that any certificate for any share so called for redemption has not been surrendered for cancellation, on and after the redemption date dividends shall cease to accrue on all shares so called for redemption, all shares so called for redemption shall no longer be deemed outstanding and all rights with respect to such shares shall forthwith on such redemption date cease and terminate, except only the right of the holders thereof to receive the amount payable on such redemption from such bank or trust company, without interest. Any funds unclaimed at the end of three years from the redemption date shall, to the extent permitted by law, be released to the Issuer, after which time the holders of the shares so called for redemption shall look only to the Issuer for payment of the redemption price of such shares.

 

(f)                              Status of Redeemed Shares. Shares of Designated Preferred Stock that are redeemed, repurchased or otherwise acquired by the Issuer shall revert to authorized but unissued shares of Preferred Stock (provided that any such cancelled shares of Designated Preferred Stock may be reissued only as shares of any series of Preferred Stock other than Designated Preferred Stock).

 

Section 6. Conversion. Holders of Designated Preferred Stock shares shall have no right to exchange or convert such shares into any other securities.

 

Section 7. Voting Rights.

 

(a)                            General. The holders of Designated Preferred Stock shall not have any voting lights except as set forth below or as otherwise from time to time required by law.

 

(b)                            Board Observation Rights. Whenever, at any time or times, dividends on the shares of Designated Preferred Stock have not been declared and paid in full within five (5) Business Days after each Dividend Payment Date for an aggregate of five (5) Dividend Periods

 

A-13

 

or more, whether or not consecutive, the Issuer shall invite a representative selected by the holders of a majority of the outstanding shares of Designated Preferred Stock, voting as a single class, to attend all meetings of its Board of Directors in a nonvoting observer capacity and, in this respect, shall give such representative copies of all notices, minutes, consents, and other materials that it provides to its directors in connection with such meetings; provided, that the holders of the Designated Preferred Stock shall not be obligated to select such a representative, nor shall such representative, if selected, be obligated to attend any meeting to which he/she is invited. The rights of the holders of the Designated Preferred Stock set forth in this Section 7(b) shall terminate when full dividends have been timely paid on the Designated Preferred Stock for at least four consecutive Dividend Periods, subject to revesting in the event of each and every subsequent default of the character above mentioned.

 

(c)                             Preferred Stock Directors. Whenever, at any time or times, (i) dividends on the shares of Designated Preferred Stock have not been declared and paid in full within five (5) Business Days after each Dividend Payment Date for an aggregate of six (6) Dividend Periods or more, whether or not consecutive, and (ii) the aggregate liquidation preference of the then-outstanding shares of Designated Preferred Stock is greater than or equal to $25,000,000, the authorized number of directors of the Issuer shall automatically be increased by two and the holders of the Designated Preferred Stock, voting as a single class, shall have the right, but not the obligation, to elect two directors (hereinafter the “Preferred Directors” and each a “Preferred Director”) to fill such newly created directorships at the Issuer’s next annual meeting of stockholders (or, if the next annual meeting is not yet scheduled or is scheduled to occur more than thirty days later, the President of the Company shall promptly call a special meeting for that purpose) and at each subsequent annual meeting of stockholders until full dividends have been timely paid on the Designated Preferred Stock for at least four consecutive Dividend Periods, at which time such right shall terminate with respect to the Designated Preferred Stock, except as herein or by law expressly provided, subject to revesting in the event of each and every subsequent default of the character above mentioned; provided that it shall be a qualification for election for any Preferred Director that the election of such Preferred Director shall not cause the Issuer to violate any corporate governance requirements of any securities exchange or other trading facility on which securities of the Issuer may then be listed or traded that listed or traded companies must have a majority of independent directors. Upon any termination of the right of the holders of shares of Designated Preferred Stock to vote for directors as provided above, the Preferred Directors shall cease to be qualified as directors, the term of office of all Preferred Directors then in office shall terminate immediately and the authorized number of directors shall be reduced by the number of Preferred Directors elected pursuant hereto. Any Preferred Director may be removed at any time, with or without cause, and any vacancy created thereby may be filled, only by the affirmative vote of the holders a majority of the shares of Designated Preferred Stock at the time outstanding voting separately as a class. If the office of any Preferred Director becomes vacant for any reason other than removal from office as aforesaid, the holders of a majority of the outstanding shares of Designated Preferred Stock, voting as a single class, may choose a successor who shall hold office for the unexpired term in respect of which such vacancy occurred.

 

(d)                            Class Voting Rights as to Particular Matters. So long as any shares of Designated Preferred Stock are outstanding, in addition to any other vote or consent of stockholders required by law or by the Charter, the written consent of (x) Treasury if Treasury

 

A-14

 

holds any shares of Designated Preferred Stock, or (y) the holders of a majority of the outstanding shares of Designated Preferred Stock, voting as a single class, if Treasury does not hold any shares of Designated Preferred Stock, shall be necessary for effecting or validating:

 

(i)                           Authorization of Senior Stock. Any amendment or alteration of the Statement of Designations for the Designated Preferred Stock or the Charter to authorize or create or increase the authorized amount of, or any issuance of, any shares of, or any securities convertible into or exchangeable or exercisable for shares of, any class or series of capital stock of the Issuer ranking senior to Designated Preferred Stock with respect to either or both the payment of dividends and/or the distribution of assets on any liquidation, dissolution or winding up of the Issuer;

 

(ii)                        Amendment of Designated Preferred Stock. Any amendment, alteration or repeal of any provision of the Statement of Designations for the Designated Preferred Stock or the Charter (including, unless no vote on such merger or consolidation is required by Section 7(d)(iii) below, any amendment, alteration or repeal by means of a merger, consolidation or otherwise) so as to adversely affect the rights, preferences, privileges or voting powers of the Designated Preferred Stock;

 

(iii)                     Share Exchanges, Reclassifications, Mergers and Consolidations. Subject to Section 7(d)(v) below, any consummation of a binding share exchange or reclassification involving the Designated Preferred Stock, or of a merger or consolidation of the Issuer with another corporation or other entity, unless in each case (x) the shares of Designated Preferred Stock remain outstanding or, in the case of any such merger or consolidation with respect to which the Issuer is not the surviving or resulting entity, are converted into or exchanged for preference securities of the surviving or resulting entity or its ultimate parent, and (y) such shares remaining outstanding or such preference securities, as the case may be, have such rights, preferences, privileges and voting powers, and limitations and restrictions thereof that are the same as the rights, preferences, privileges and voting powers, and limitations and restrictions thereof, of Designated Preferred Stock immediately prior to such consummation, taken as a whole; provided, that in all cases, the obligations of the Issuer are assumed (by operation of law or by express written assumption) by the resulting entity or its ultimate parent;

 

(iv)                    Certain Asset Sales. Any sale of all, substantially all, or any material portion of, the assets of the Company, if the Designated Preferred Stock will not be redeemed in full contemporaneously with the consummation of such sale; and

 

(v)                       Holding Company Transactions. Any consummation of a Holding Company Transaction, unless as a result of the Holding Company Transaction each share of Designated Preferred Stock shall be converted into or exchanged for one share with an equal liquidation preference of preference securities of the Issuer or the Acquiror (the “Holding Company Preferred Stock”). Any such Holding Company Preferred Stock shall entitle holders thereof to dividends from the date of issuance of such Holding Company Preferred Stock on terms that are equivalent to the terms set forth herein, and shall have such other rights, preferences, privileges and voting powers, and limitations and restrictions thereof that are the same as the rights, preferences, privileges and voting

 

A-15

 

powers, and limitations and restrictions thereof, of Designated Preferred Stock immediately prior to such conversion or exchange, taken as a whole;

 

provided, however, that for all purposes of this Section 7(d), any increase in the amount of the authorized Preferred Stock, including any increase in the authorized amount of Designated Preferred Stock necessary to satisfy preemptive or similar rights granted by the Issuer to other persons prior to the Signing Date, or the creation and issuance, or an increase in the authorized or issued amount, whether pursuant to preemptive or similar rights or otherwise, of any other series of Preferred Stock, or any securities convertible into or exchangeable or exercisable for any other series of Preferred Stock, ranking equally with and/or junior to Designated Preferred Stock with respect to the payment of dividends (whether such dividends are cumulative or non-cumulative) and the distribution of assets upon liquidation, dissolution or winding up of the Issuer will not be deemed to adversely affect the rights, preferences, privileges or voting powers, and shall not require the affirmative vote or consent of, the holders of outstanding shares of the Designated Preferred Stock.

 

(e)                             Changes after Provision for Redemption. No vote or consent of the holders of Designated Preferred Stock shall be required pursuant to Section 7(d) above if, at or prior to the time when any such vote or consent would otherwise be required pursuant to such Section, all outstanding shares of the Designated Preferred Stock shall have been redeemed, or shall have been called for redemption upon proper notice and sufficient funds shall have been deposited in trust for such redemption, in each case pursuant to Section 5 above.

 

(f)                              Procedures for Voting and Consents. The rules and procedures for calling and conducting any meeting of the holders of Designated Preferred Stock (including, without limitation, the fixing of a record date in connection therewith), the solicitation and use of proxies at such a meeting, the obtaining of written consents and any other aspect or matter with regard to such a meeting or such consents shall be governed by any rules of the Board of Directors or any duly authorized committee of the Board of Directors, in its discretion, may adopt from time to time, which rules and procedures shall conform to the requirements of the Charter, the Bylaws, and applicable law and the rules of any national securities exchange or other trading facility on which Designated Preferred Stock is listed or traded at the time.

 

Section 8. Restriction on Redemptions and Repurchases.

 

(a)                            Subject to Sections 8(b) and (c), so long as any share of Designated Preferred Stock remains outstanding, the Issuer may repurchase or redeem any shares of Capital Stock (as defined below), in each case only if (i) after giving effect to such dividend, repurchase or redemption, the Issuer’s Tier 1 capital would be at least equal to the Tier 1 Dividend Threshold and (ii) dividends on all outstanding shares of Designated Preferred Stock for the most recently completed Dividend Period have been or are contemporaneously declared and paid (or have been declared and a sum sufficient for the payment thereof has been set aside for the benefit of the holders of shares of Designated Preferred Stock on the applicable record date).

 

(b)                            If a dividend is not declared and paid on the Designated Preferred Stock in respect of any Dividend Period, then from the last day of such Dividend Period until the last day of the third (3rd) Dividend Period immediately following it, neither the Issuer nor any Issuer

 

A-16

 

Subsidiary shall, redeem, purchase or acquire any shares of Common Stock, Junior Stock, Parity Stock or other capital stock or other equity securities of any kind of the Issuer or any Issuer Subsidiary, or any trust preferred securities issued by the Issuer or any Affiliate of the Issuer (“Capital Stock”), (other than (i) redemptions, purchases, repurchases or other acquisitions of the Designated Preferred Stock and (ii) repurchases of Junior Stock or Common Stock in connection with the administration of any employee benefit plan in the ordinary course of business (including purchases to offset any Share Dilution Amount pursuant to a publicly announced repurchase plan) and consistent with past practice; provided that any purchases to offset the Share Dilution Amount shall in no event exceed the Share Dilution Amount, (iii) the acquisition by the Issuer or any of the Issuer Subsidiaries of record ownership in Junior Stock or Parity Stock for the beneficial ownership of any other persons (other than the Issuer or any other Issuer Subsidiary), including as trustees or custodians, (iv) the exchange or conversion of Junior Stock for or into other Junior Stock or of Parity Stock or trust preferred securities for or into other Parity Stock (with the same or lesser aggregate liquidation amount) or Junior Stock, in each case set forth in this clause (iv), solely to the extent required pursuant to binding contractual agreements entered into prior to the Signing Date or any subsequent agreement for the accelerated exercise, settlement or exchange thereof for Common Stock, (v) redemptions of securities held by the Issuer or any wholly-owned Issuer Subsidiary or (vi) redemptions, purchases or other acquisitions of capital stock or other equity securities of any kind of any Issuer Subsidiary required pursuant to binding contractual agreements entered into prior to (x) if Treasury held Previously Acquired Preferred Shares immediately prior to the Original Issue Date, the original issue date of such Previously Acquired Preferred Shares, or (y) otherwise, the Signing Date).

 

(c)                             If the Issuer is not Publicly-Traded, then after the tenth (10th) anniversary of the Signing Date, so long as any share of Designated Preferred Stock remains outstanding, no Common Stock, Junior Stock or Parity Stock shall be, directly or indirectly, purchased, redeemed or otherwise acquired for consideration by the Issuer or any of its subsidiaries.

 

Section 9. No Preemptive Rights. No share of Designated Preferred Stock shall have any rights of preemption whatsoever as to any securities of the Issuer, or any warrants, rights or options issued or granted with respect thereto, regardless of how such securities, or such warrants, rights or options, may be designated, issued or granted.

 

Section 10. References to Line Items of Supplemental Reports. If Treasury modifies the form of Supplemental Report, pursuant to its rights under the Definitive Agreement, and any such modification includes a change to the caption or number of any line item on the Supplemental Report, then any reference herein to such line item shall thereafter be a reference to such re-captioned or re-numbered line item.

 

Section 11. Record Holders. To the fullest extent permitted by applicable law, the Issuer and the transfer agent for Designated Preferred Stock may deem and treat the record holder of any share of Designated Preferred Stock as the true and lawful owner thereof for all purposes, and neither the Issuer nor such transfer agent shall be affected by any notice to the contrary.

 

A-17

 

Section 12. Notices. All notices or communications in respect of Designated Preferred Stock shall be sufficiently given if given in writing and delivered in person or by first class mail, postage prepaid, or if given in such other manner as may be permitted in this Statement of Designations, in the Charter or Bylaws or by applicable law. Notwithstanding the foregoing, if shares of Designated Preferred Stock are issued in book-entry form through The Depository Trust Company or any similar facility, such notices may be given to the holders of Designated Preferred Stock in any manner permitted by such facility.

 

Section 13. Replacement Certificates. The Issuer shall replace any mutilated certificate at the holder’s expense upon surrender of that certificate to the Issuer. The Issuer shall replace certificates that become destroyed, stolen or lost at the holder’s expense upon delivery to the Issuer of reasonably satisfactory evidence that the certificate has been destroyed, stolen or lost, together with any indemnity that may be reasonably required by the Issuer.

 

Section 14. Other Rights. The shares of Designated Preferred Stock shall not have any rights, preferences, privileges or voting powers or relative, participating, optional or other special rights, or qualifications, limitations or restrictions thereof, other than as set forth herein or in the Charter or as provided by applicable law.

 

A-18Exhibit 10.1

 

Retention and Nonsolicitation Agreement

 

This Retention and Nonsolicitation Agreement (“Agreement”) is made and entered into as of March 23, 2011 (the “Effective Date”), by and between Veritex Community Bank (“Bank”), Veritex Holdings, Inc. (“Veritex”) and William C. Murphy (“Employee”).

 

W i t n e s s e t h:

 

Whereas, it is the intent of the parties hereto, consistent with the provisions subject to and set forth hereinafter, that Employee will be a director, officer and employee of the Bank and a director of Veritex and the parties would not enter into such relationship except for the following covenants and agreements;

 

Now, Therefore, in consideration of the premises and mutual covenants and agreements herein contained, the receipt and sufficiency of which are hereby acknowledged, Bank and Employee agree as follows:

 

1.                                      Employment. Commencing on March 23, 2011 and ending on March 31, 2015 (“Term”), the Bank agrees to employ Employee and, subject to approval, Employee agrees to act as Director and Vice Chairman of the Board of the Bank and Veritex. Employee hereby accepts such employment on the terms and conditions set forth in this Agreement.

 

2.                                      Position and Responsibilities. During the Term, Employee shall have such duties, functions, responsibilities and authority customarily appertaining to the positions set forth above. During the Term, Employee shall devote sufficient business time and efforts to the performance of his duties hereunder. Employee’s duties include assisting in marketing the Bank’s services and products and assisting in the planning and strategizing of the Bank’s development. It is, however, understood and agreed that the preceding sentence shall not prohibit Employee from spending a reasonable amount of time managing his personal investments and discharging his civic responsibilities as long as such activities do not interfere with the discharge of his duties hereunder.

 

3.                                      Compensation. During the Term, the Bank shall pay Employee for all services and agreements of Employee pursuant to this Agreement, an annual base salary of $185,000.00 per year with merit increases, bonus and other incentives, if any, in accordance with the Bank’s salary administration program based upon performance, which shall be payable in accordance with the Bank’s customary payroll practices with respect to time and manner of payment.

 

1

 

4.                                      Benefits. In addition to the compensation described in Paragraph 3. hereof, Employee shall be entitled to the following benefits:

 

a.                                      During the Term, the Bank shall provide Employee such benefits as the Bank makes available to the Bank’s other employees, including participation in Veritex’s and/or the Bank’s 401(k) Plan, health insurance and retirement plans.

 

b.                                      During the Term, the Bank shall reimburse Employee for expenses related to business entertainment expenses and dues for Preston Trail Golf Club and Dallas Country Club.

 

c.                                       Upon receipt of regulatory approval, reasonably satisfactory to Bank and Employee, Employee and Veritex Holdings, Inc. will enter into the Stock Option Agreement pursuant to the Veritex Holdings, Inc. 2010 Equity Incentive Plan, a form of which Agreement is attached hereto as Exhibit A.

 

d.                                      Employee shall be entitled to receive not less than thirty (30) days vacation each calendar year.

 

e.                                       During the Term, Employee shall be included in the officer cellular telephone and data reimbursement plan.

 

5.                                      Involuntary Termination and/or Suspension of Employment. Employee’s employment with the Bank shall only be terminated or, as applicable, suspended upon the occurrence of any one or more of the following events:

 

a.                                      The Bank gives written notice of termination for good cause to Employee. For purposes of this Agreement, “good cause” shall mean Employee’s personal dishonesty, incompetence, breach of fiduciary duty involving personal profit, the commission of a felony, or fails to reasonably perform in accordance with this Agreement.

 

b.                                      Employee’s death;

 

c.                                       Effective as of the date of an order under which Employee is removed and/or permanently prohibited from participating in the conduct of the Bank’s affairs by an order issued under Section 8(e)(4) or (g)(1) of the Federal Deposit Insurance Act; provided, however, said termination shall not affect Employee’s vested rights under this Agreement or any other agreement between the Employee and the Bank.

 

d.                                      If Employee is suspended and/or temporarily prohibited from participating in the conduct of the Bank’s affairs by a notice served under Section 8(e)(3) or (g)(1) of the Federal Deposit Insurance Act, the Bank’s obligations under this Agreement shall be suspended as of the date of service unless stayed by appropriate proceedings. Further, if the charges in the notice are dismissed, the Bank will (i) pay Employee all of the compensation withheld while their

 

2

 

obligations under this Agreement were suspended, and (ii) reinstate their obligations which were suspended.

 

6.                                      Voluntary Termination of Employment. Employee’s employment with the Bank may also be terminated:

 

a.                                      By the resignation of Employee at any time upon not less than sixty (60) days’ prior written notice to the Bank; provided that, upon Employee’s resignation under this Paragraph 6.a., Employee shall only be entitled to compensation for services performed by Employee up to the effective date of termination, as specified in such notice of resignation, and Employee shall not be entitled to other compensation or benefits, save and except for options, or grants that have fully vested as of the date of any such termination under this Agreement; or

 

b.                                      By the Bank’s Board of Directors, at any time; provided that upon Employee’s termination under this Paragraph 6.b., Employee shall be entitled to continue to receive all compensation and benefits due to him under Paragraphs 3. and 4. above as if his employment under this Agreement had not been terminated.

 

7.                                      Non-Solicitation. If Employee’s employment is terminated with the Bank, in accordance with Section 5. or 6.a. above, prior to the expiration of the Initial Term, Employee does hereby agree that for a period of one (1) year thereafter, the Employee shall not, directly or indirectly, for his own account or for the benefit of any other person:

 

a.                                      Directly or indirectly:

 

(1)                                 Employ or solicit for employment, any employee of the Bank; or

 

(2)                                 Solicit or induce, or in any manner attempt to solicit or induce, any client or customer of the Bank to cease being a client of the Bank.

 

b.                                      Provided, however, the provisions set forth in Paragraph 7.a. hereof shall not apply if the termination of employment occurs subsequent to:

 

(1)                                 The sale of all or substantially all of the assets of either Veritex or the Bank; or

 

(2)                                 The occurrence of a merger involving either Veritex or the Bank; or

 

(3)                                 If more than fifty percent (50%) of the issued and outstanding shares of common stock of either Veritex or the Bank is sold within any six (6) month period.

 

3

 

8.                                      Injunctive Relief. In the event of a breach by the Employee of any of the provisions of Paragraph 7., the Bank shall be entitled as a matter of right to obtain a restraining order, an injunction or other equitable relief from Employee. Such right to equitable relief shall not be exclusive but shall be in addition to all other rights and remedies to which the Bank may be entitled at law or in equity.

 

9.                                      Notices. Any notice required or desired to be given under this Agreement shall be deemed given if in writing mailed or delivered as follows:

 

	
If to Employee:
    	
William C. Murphy 
    
	
 
    	
3412 Caruth Boulevard 
    
	
 
    	
Dallas, Texas 75225
    
	
 
    	
Telephone No. 214-369-1909
    
	
 
    	
Facsimile No. 214-369-2349
    
	
 
    	
 
    
	
If to the Bank:
    	
Veritex Community Bank
    
	
 
    	
10000 North Central   Expressway, Suite 1325 
    
	
 
    	
Dallas, Texas 75231
    
	
 
    	
Attention: Malcolm Holland
    
	
 
    	
Facsimile No. (214)   890-4089
    
	
 
    	
 
    
	
With copy to:
    	
D. Woodard Glenn
    
	
 
    	
D. Woodard Glenn, P.C.
    
	
 
    	
2626 Cole Avenue, Suite   510 
    
	
 
    	
Dallas, Texas 75204
    
	
 
    	
Telephone No. (214)   871-9333 
    
	
 
    	
Facsimile No. (214)   871-7131
    

 

10.                               Entire Agreement. This Agreement contains the entire agreement of the parties regarding the employment of Employee by the Bank and supersedes any prior agreement, arrangement or understanding, whether oral or written, between the Bank and Employee concerning Employee’s employment hereunder (including the Employment Agreement).

 

11.                               Choice of Law. This Agreement shall be governed by, and enforced according to, the laws of the State of Texas. The invalidity of any provision shall be automatically reformed to the extent permitted by applicable law and shall not affect the enforceability of the remaining provisions hereof.

 

12.                               Assignment. This Agreement is for the personal service of Employee and may not be assigned by Employee but may be assigned by the Bank to any affiliate or successor-in-interest to the Bank’s business. In the event the Bank makes such an assignment, Employee shall continue to perform, on behalf of such affiliate or successor, the services required of Employee by this Agreement and the provisions of this Agreement shall be binding upon, and inure to the benefit of, such successor or affiliate. This Agreement shall be binding upon and ‘inure to the benefit of Employee, his heirs, representatives and estate.

 

4

 

13.                               Modification; Termination. This Agreement may be modified only by a written agreement signed by Employee and by a duly authorized officer of the Bank. The failure to insist upon compliance with any provision hereof shall not be deemed a waiver of such provision or any other provision hereof.

 

14.                               Counterparts. This Agreement may be executed in several identical counterparts, and by the parties hereto on separate counterparts, and each counterpart, when so executed and delivered, shall constitute an original instrument, and all such separate counterparts shall constitute but one and the same instrument.

 

15.                               Regulatory Compliance. Any payments made to Employee pursuant to this Agreement, or otherwise, are subject to and conditioned upon their compliance with 12 USC §1828(k) and any regulations promulgated thereunder.

 

16.                               Approval. During the terms of this Agreement, Veritex and the Bank will use their reasonable best efforts to cause Employee to be elected as a Director and as Vice Chairman of each of their Board of Directors.

 

In Witness Whereof, the parties have executed this Agreement to be effective as of March 23, 2011.

 

	
 
    	
Veritex Community Bank
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   C. Malcolm Holland
    
	
 
    	
 
    	
(Signature)
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
C.   Malcolm Holland  CEO
    
	
 
    	
 
    	
(Printed Name & Title)
    
	
 
    	
 
    	
 
    
	
 
    	
Veritex Holdings, Inc.
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ C. Malcolm Holland
    
	
 
    	
 
    	
(Signature)
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
C. Malcolm Holland  Chairman
    
	
 
    	
 
    	
(Printed Name & Title)
    
	
 
    	
 
    	
 
    
	
 
    	
Employee:
    
	
 
    	
 
    
	
 
    	
/s/ William C. Murphy
    
	
 
    	
William C. Murphy
    

 

5

 

Exhibit “A”

 

 

STOCK OPTION AGREEMENT PURSUANT TO THE
 VERITEX HOLDINGS, INC. 2010 EQUITY INCENTIVE PLAN

 

This STOCK OPTION AGREEMENT (this “Agreement”) is made as of the         day of                         , 20      , by Veritex Holdings, Inc. (the “Company”), and                                                (“Holder”).

 

In connection with and pursuant to the Veritex Holdings, Inc. 2010 Stock Option and Equity Incentive Plan (the “Plan”), as amended or modified from time to time, a stock option is granted by the Board to Holder pursuant and subject to, the Plan on the following terms and conditions:

 

SECTION I
  DEFINED TERMS

 

Unless otherwise defined herein or, unless the context requires a different definition, capitalized terms used herein shall have the meanings assigned to them in the Plan.

 

SECTION II

OPTIONS, OPTION PRICE AND TIME OF EXERCISE

 

Effective as of                  ,                 , the Company grants to Holder, subject to the terms and provisions set forth hereinafter and in the Plan, the right and option to purchase all or any part of the number of shares set forth in Exhibit A of the presently authorized but unissued common stock (“Common Stock”), of the Company at the purchase price per share set forth as the Option Price in Exhibit A (the option hereby granted being hereinafter referred to as the “Option”).

 

The Option shall not be considered granted (as of the effective date described above) or become exercisable unless and until Holder delivers to the Company a fully executed counterpart hereof. Thereafter, the Option shall be exercisable in accordance with the Exercise Schedule set forth on Exhibit A, subject to any termination, acceleration or change in such Exercise Schedule set forth in this Agreement apart from Exhibit A.

 

Neither the Option nor any other rights granted under this Agreement may be exercised after the Expiration Date set forth on Exhibit A and, before that time, the Option may be terminated as hereinafter provided. If Holder does not purchase the full number of shares to which he is entitled in any one year, he may purchase such shares in the next year specified in the Exercise Schedule hereto, in addition to the shares which he is otherwise entitled to purchase in the next year.

 

1

 

SECTION III
 EXERCISE PROCEDURE, WITHHOLDING

 

Holder shall exercise the Option by notifying the Company of the number of shares that he desires to purchase and by delivering with such notice the full payment for the purchase price of the shares being purchased. Such purchase price shall be payable in cash. The Option can be exercised subject to the Repurchase Option and the Right of First Refusal as to all Shares as set forth hereinafter.

 

The Company will, as soon as is reasonably possible, notify the Holder of the amount of withholding tax, if any, that must be paid under federal, state and local law due to exercise of the Option. The Company shall have no obligation to deliver certificates for the shares purchased until Holder pays to the Company the amount of withholding specified in the Company’s notice in cash.

 

SECTION IV
 TERMINATION OF EMPLOYMENT/SERVICE

 

If an Optionee’s employment (or other service) with the Company terminates for any reason whatsoever, regardless of the circumstances thereof, and including without limitation upon death, disability, retirement, discharge, or resignation for any reason, whether voluntary or involuntarily the Options, to the extent not previously exercised, will terminate on the date of such termination of employment (or service).

 

SECTION V
  ACCELERATION OF EXERCISE

 

Upon the occurrence of a Change in Control, the Option (to the extent not previously terminated or forfeited) shall become fully exercisable as to all shares subject to it.

 

SECTION VI 
 NON-ASSIGNABILITY AND TERM OF OPTION

 

The Option shall not be transferrable or assignable by the Holder, other than by will or the laws of descent and distribution and the Option shall be exercisable, during the Holder’s lifetime, only by him or, during periods of legal disability, by his legal representative. No Option shall be subject to execution, attachment, or similar process.

 

In no event may the Option be exercisable to any extent by anyone after the Expiration Date specified in Exhibit A. It is expressly agreed that, anything contained herein to the contrary notwithstanding, this Agreement shall not constitute, or be evidence of, any agreement or understanding, express or implied, that the Company or a Subsidiary will employ Holder for any period of time or in any position or for any particular compensation.

 

2

 

SECTION VII
 COMPANY RIGHT OF REPURCHASE

 

(a)           Exercise the Right. The Company shall have the right (the “Repurchase Right”)to repurchase some or all of the Option Shares which the Optionee has elected to exercise from the Optionee, upon the occurrence of any of the events specified in Section 7(b) below (each, a “Repurchase Event”). The Repurchase Right may be exercised by the Company within 180 days following the date of such Repurchase Event (the “Repurchase Period”). The Repurchase Right shall be exercised by the Company by giving the holder written notice on or before the last day of the Repurchase Period of its intention to exercise the Repurchase Right, and, together with such notice, tendering to the holder an amount equal to the Repurchase Price of the Shares, determined as provided in Section 7(c). The Company may assign the Repurchase Right to one or more persons or legal entities. Upon exercise of the Repurchase Right in the manner provided in this Section 7(a), the Optionee shall deliver to the Company the stock certificate or certificates representing the Option Shares being repurchased, duly endorsed and free and clear of any and all liens, charges, and encumbrances.

 

If Option Shares are not purchased under the Repurchase Right, the Optionee and his or her successor in interest, if any, will hold any such shares in his or her possession subject to all the provisions of this Section 7 and Section 8 hereof.

 

(b)           Company’s Right to Exercise Repurchase Right. The Company shall have the Repurchase Right in the event that any of the following events shall occur:

 

(i)           The termination of the Optionee’s employment with the Company and its Subsidiaries for any reason whatsoever, regardless of the circumstances thereof, and including without limitation upon death, disability, retirement, discharge, or resignation for any reason, whether voluntary or involuntarily; or

 

(ii)          The (x) filing of a voluntary petition under any bankruptcy or insolvency law, or a petition for the appointment of a receiver or the making of an assignment for the benefit of creditors, with respect to the Optionee, or (y) the Optionee being subjected involuntarily to a petition or assignment or to an attachment or other legal or equitable interest with respect to his or her assets, which involuntary petition or assignment or attachment is not discharged within 60 days after its date, or (z) the Optionee being subject to a transfer of Option Shares by operation of law, except by reason of death.

 

(c)           Determination of Repurchase Price. For purposes of this Section 7, the Repurchase Price of the Option Shares shall be, the lesser of the Option Price or the Fair Market Value of the Option Shares as determined by the Board as of the date of the Repurchase Event. The Fair Market Value, if shares of the Common Stock are not then publicly traded, shall be determined by any reasonable method chosen by the Board including, for example, any valuation method described in Treasury Regulation Sec. 20.2031.2, or as determined pursuant to the applicable Stock Option Agreement or Stock Grant Agreement.

 

3

 

(d)         Expiration of Company’s Repurchase Right. The Repurchase Right shall remain in effect until and shall terminate upon the closing of an Initial Public Offering.

 

SECTION VIII
  COMPANY’S RIGHT OF FIRST REFUSAL

 

(a)         Exercise of Right. If, at a time other than within the period specified in this Section 8(a) and without limiting any other restrictions on transfer of any Option Shares set forth in any other agreement or otherwise, the Optionee desires to transfer all or any part of the Option Shares to any person other than the Company (an “Offeror”); the Optionee shall: (i) obtain in writing an irrevocable and unconditional bona fide offer (the “Offer”) for the purchase thereof from the Offeror; and (ii) give written notice (the “Option Notice”) to the Company setting forth the Optionee’s desire to transfer such shares, which Option Notice shall be accompanied by a photocopy of the Offer and shall set forth the name and address of the Offeror and the price and terms of the Offer. Upon receipt of the Option Notice, the Company shall have an assignable option to purchase any or all of such Option Shares (the “Company Option Shares”) specified in the Option Notice, such option to be exercisable by giving, within 30 days after receipt of the Option Notice, a written counter notice to the Optionee. If the Company elects to purchase any or all of such Company Option Shares, it shall be obligated to purchase, and the Optionee shall be obligated to sell to the Company, such Company Option Shares at the price and terms indicated in the Offer within 20 days after the date of the delivery by the Company of such counter notice.

 

(b)         Sale of Option Shares to Offeror. The Optionee may, for 30 days after the expiration of the 20-day option period as set forth in Section 8(a), sell to the Offeror, pursuant to the terms of the Offer, any or all of such Company Option Shares not purchased or agreed to be purchased by the Company or its assignee. If any or all of such Company Option Shares are not sold pursuant to an Offer within the time permitted above, the unsold Company Option Shares shall remain subject to the terms of this Section 8.

 

(c)          Adjustment for Changes in Capital Structure. If there shall be any change in the Common Shares of the Company through merger, consolidation, reorganization, recapitalization, stock dividend, stock split, combination or exchange of shares, or the like, the restrictions contained in this Section 8, shall exchange for, or by virtue of his or her ownership of Option Shares.

 

(d)         Failure to Deliver Option Shares. If the Optionee fails or refuses to deliver on a timely basis duly endorsed certificates representing Company Option Shares to be sold to the Company or its assignee pursuant to this Section 8, the Company shall have the right to deposit the purchase price for such Company Option Shares in a special account with any bank or trust company, giving notice of such deposit to the Optionee, whereupon such Company Option Shares shall be deemed to have been purchased by the Company. All such monies shall be held by the bank or trust company for the benefit of the Optionee. All monies deposited with the bank or trust company but remaining unclaimed for two years after the date of deposit shall be repaid by the bank or trust company to the Company on demand, and the Optionee shall thereafter look

 

4

 

only to the Company for payment. The Company may place a legend on any certificate for Option Shares delivered to the Optionee reflecting the restrictions on transfer provided in this Section 8.

 

(e)           Expiration of Company’s Right of First Refusal. The first refusal of rights of the Company set forth above shall remain in effect until the closing of an Initial Public Offering.

 

SECTION IX
 RIGHTS OF HOLDER IN STOCK

 

Neither Holder, nor his successor in interest, shall have any of the rights of a shareholder of the Company with respect to the shares for which the Option is issued until such shares are issued by the Company.

 

SECTION X
 NOTICES

 

Any notice to be given hereunder shall be in writing and shall be addressed to the Company, in care of the                   , and any notice to be given to the Holder shall be addressed to the address designated below the signature appearing hereinafter, or at such other address as either party may hereafter designate in writing to the other. Any such notice shall have been deemed duly given upon three (3) days of sending such notice enclosed in a properly sealed envelope, addressed as aforesaid, registered or certified and deposited (with the proper postage and registration or certificate fee prepaid) in the United States mail.

 

SECTION XI
  SUCCESSORS OR ASSIGNS OF THE COMPANY

 

The Option shall be binding upon and shall inure to the benefit of any successor of the Company.

 

SECTION XII
  MISCELLANEOUS

 

(a)                                 Designation of Beneficiary. The Holder shall have the right to appoint any individual or legal entity in writing, on Exhibit C hereto, as his beneficiary to receive any Option (to the extent not previously terminated or forfeited) under this Agreement upon the Holder’s death. Such designation under this Agreement may be revoked by the Holder at any time and a new beneficiary may be appointed by the Holder by execution and submission to the Board of a revised Exhibit C to this Agreement. In order to be effective, a designation  of beneficiary must be completed by the Holder on Exhibit C and received to the Board, or its designee, prior to the date of the Holder’s death. In the absence of such designation, the Holder’s beneficiary shall be the legal representative of the Holder’s estate.

 

5

 

(b)                                 Incapacity of Holder or Beneficiary. If any person entitled to a distribution under this Agreement is deemed by the Board to be incapable of making an election hereunder or of personally receiving and giving a valid receipt for such distribution hereunder, then, unless and until an election or claim therefore shall have been made by a duly appointed guardian or other legal representative of such person, the Board may provide for such election or distribution or any part thereof to be made to any other person or institution then contributing toward or providing for the care and maintenance of such person. Any such distribution shall be a distribution for the account of such person and a complete discharge of any liability of the Board, the Company and the Plan therefore.

 

(c)                                  Incorporation of the Plan. The terms and provisions of the Plan, as the same may be amended from time to time, are hereby incorporated in this Agreement. Unless otherwise specifically stated herein, such terms and provisions shall control in the event of any inconsistency between the Plan and this Agreement.

 

(d)                                 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF TEXAS AND ALL APPLICABLE FEDERAL LAWS. THE SECURITIES ISSUED HEREUNDER SHALL BE GOVERNED BY AND IN ACCORDANCE WITH THE CORPORATE SECURITIES LAWS OF THE STATE OF TEXAS.

 

(e)                                  Gender. Reference to the masculine herein shall be deemed to include the feminine, wherever appropriate.

 

(f)                                   Counterparts. This Agreement may be executed in one or more counterparts, which shall together constitute a valid and binding agreement.

 

IN WITNESS WHEREOF, this Agreement has been executed by the Company and the Holder as of the date and year first written above.

 

	
HOLDER
    	
 
    	
COMPANY
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
VERITEX HOLDINGS, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
Name
    	
 
    	
Its:
    	
 
    
	
Address
    	
 
    	
 
    

 

6

 

EXHIBIT A

 

	
1.  Board Approval Date:
    	
 
    
	
2.  Date of Grant:
    	
 
    
	
3.  Holder:
    	
 
    
	
4.  Number of Shares:
    	
15,000 (Tranche 1) 35,000 (Tranche 2)
    
	
 
    	
of shares of Common Stock
    
	
 
    	
 
    
	
5.  Initial Vesting Date:
    	
 
    
	
6.  Option Price per Share:
    	
Ten Dollars ($10.00)
    
	
 
    	
 
    
	
7.  Vesting Schedule:
    	
Tranche 1:
    
	
 
    	
·  20% of   Tranche 1 Options vest at the earlier of the date that is one   (1) calendar year from the Date of Grant as set forth hereinabove;
    
	
 
    	
·  20% of Tranche 1 Options   vest at the earlier of the date that is two(2) calendar year from the   Date of Grant as set forth hereinabove;
    
	
 
    	
·  20% of Tranche 1 Options   vest at the earlier of the date that is three (3) calendar year from the   Date of Grant as set forth hereinabove;
    
	
 
    	
·  20% of Tranche 1 Options   vest at the earlier of the date that is four (4) calendar year from the   Date of Grant as set forth hereinabove;
    
	
 
    	
·  20% of Tranche 1 Options   vest at the earlier of the date that is five (5) calendar year from the   Date of Grant as set forth hereinabove;
    
	
 
    	
 
    
	
 
    	
Tranche 2: Tranche 2 options vest as   follows:
    
	
 
    	
·  35% vest at Change of   Control;
    
	
 
    	
·  35% vest at Change of   Control and Investors receive a 20% IRR or 2.5X their Original Investment;
    
	
 
    	
·  30% vest at Change of   Control and Investors receive a 30% IRR or 3.5X their Original Investment
    
	
 
    	
 
    
	
8.  Definitions:
    	
a. Investors
    
	
 
    	
 
    
	
 
    	
b. IRR
    
	
 
    	
 
    
	
 
    	
c. Original Investment
    

 

7

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00235-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00235-of-00352.parquet"}]]