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EXHIBIT 10.3

 

 

PLEDGE AND SECURITY AGREEMENT

Between

 

 

 

CBTX, INC.

 

FROST BANK

9 Greenway Plaza, Suite 110

 

P.O. Box 1600

Houston, Texas 77046

and

San Antonio, Texas 78296

 

This PLEDGE AND SECURITY Agreement (this “Agreement”), dated as of December 13,
2018, will serve to set forth the terms of the financing transaction by and
between CBTX, INC., a Texas corporation (“Borrower”), and FROST BANK, a Texas
state bank (“Secured Party”).

1.Definitions.  As used in this Agreement, the following terms shall have the
meanings indicated below:

(a)The term “Code” shall mean the Uniform Commercial Code as in effect in the
State of Texas or of any other state having jurisdiction with respect to any of
the rights and remedies of Secured Party on the date of this Agreement or as it
may hereafter be amended from time to time.

(b)The term “Collateral” shall mean all personal property of Grantor
specifically described on SCHEDULE A attached hereto and made a part hereof. The
term Collateral, as used herein, shall also include (i) all certificates,
instruments and/or other documents evidencing the foregoing; (ii) all renewals,
replacements and substitutions of all of the foregoing, (iii) all Additional
Property (as hereinafter defined); and (iv) all “Products” and “Proceeds” (each
as defined in the Code) of all of the foregoing.  The designation of Proceeds
does not authorize Grantor to sell, transfer or otherwise convey any of the
foregoing property.  The delivery at any time by Grantor to Secured Party of any
property as a pledge to secure payment or performance of any indebtedness or
obligation whatsoever shall also constitute a pledge of such property as
Collateral hereunder.

(c)The term “Grantor” shall mean Borrower, a Texas corporation, whose
organization number is 800765321 and who is organized in the State of Texas.

(d)The term “Indebtedness” shall mean (i) all indebtedness, obligations and
liabilities of Borrower to Secured Party of any kind or character, now existing
or hereafter arising, whether direct, indirect, related, unrelated, fixed,
contingent, liquidated, unliquidated, joint, several or joint and several, and
regardless of whether such indebtedness, obligations and liabilities may, prior
to their acquisition by Secured Party, be or have been payable to or in favor of
a third party and subsequently acquired by Secured Party (it being contemplated
that Secured Party may make such acquisitions from third parties), including
without limitation all indebtedness, obligations and liabilities of Borrower to
Secured Party now existing or hereafter arising by note, draft, acceptance,

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guaranty, endorsement, letter of credit, assignment, purchase, overdraft,
discount, indemnity agreement, Interest Rate Protection Agreement (as hereafter
defined), or otherwise, including, without limitation that one certain Revolving
Promissory Note (the “Note”) dated of even date herewith, in the original
principal amount of $30,000,000.00 executed by Borrower and payable to the order
of Secured Party; (ii) all accrued but unpaid interest on any of the
indebtedness described in (i) above; (iii) all obligations of Borrower to
Secured Party under any documents evidencing, securing, governing and/or
pertaining to all or any part of the indebtedness described in (i) and (ii)
above; (iv) all costs and expenses incurred by Secured Party in connection with
the collection and administration of all or any part of the indebtedness and
obligations described in (i), (ii) and (iii) above or the protection or
preservation of, or realization upon, the collateral securing all or any part of
such indebtedness and obligations, including without limitation all reasonable
attorneys’ fees; and (v) all renewals, extensions, modifications and
rearrangements of the indebtedness and obligations described in (i), (ii), (iii)
and (iv) above.

(e)The term “Interest Rate Protection Agreement” shall mean any interest rate
swap agreement, interest rate exchange agreement, currency exchange agreement,
foreign exchange agreement, interest rate and currency exchange agreement,
forward rate agreement, rate floor agreement, interest rate protection
agreement, interest rate cap agreement, rate collar agreement, any option
agreement respecting the foregoing, International Swaps and Derivatives
Association, Inc. (ISDA) Master Agreement, or any similar agreement or
arrangement and any schedule, confirmation, exhibit, document or instrument
evidencing any interest in a transaction covered by any such agreement, now
existing or hereafter entered into by Borrower and Secured Party or an affiliate
of Secured Party in connection with any Indebtedness to hedge the risk of
variable interest rate volatility or fluctuations of interest rates, as the same
may be modified, supplemented, amended or revised and in effect from time to
time.

(f)The term “Loan Documents” shall mean all instruments and documents
evidencing, securing, governing, guaranteeing and/or pertaining to the
Indebtedness.

(g)The term “Margin Stock” shall mean margin stock as defined in Section 221.2
of Regulation U, promulgated by the Board of Governors of the Federal Reserve
System, 12 C.F.R. Part 221, as amended.

(h)The term “Obligated Party” shall mean any party other than Borrower who
secures, guarantees and/or is otherwise obligated to pay all or any portion of
the Indebtedness, including Grantor, if different from Borrower.

All words and phrases used herein which are expressly defined in Section 1.201,
Chapter 8 or Chapter 9 of the Code shall have the meaning provided for
therein.  Other words and phrases defined elsewhere in the Code shall have the
meaning specified therein except to the extent such meaning is inconsistent with
a definition in Section 1.201, Chapter 8 or Chapter 9 of the Code.

2.Security Interest.  As security for the Indebtedness, Grantor, for value
received, hereby grants to Secured Party a continuing first priority security
interest in the Collateral.

 

 

 

 

CBTX, Inc.

 

 

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3.Additional Property.  Collateral shall also include the following property
(collectively, the “Additional Property”) which Grantor becomes entitled to
receive or shall receive in connection with any other Collateral:  (a) any stock
certificate, including without limitation, any certificate representing a stock
dividend or any certificate in connection with any recapitalization,
reclassification, merger, consolidation, conversion, sale of assets, combination
of shares, stock split or spin‑off; (b) any option, warrant, subscription or
right, whether as an addition to or in substitution of any other Collateral;
(c) any dividends or distributions of any kind whatsoever, whether distributable
in cash, stock or other property; (d) any interest, premium or principal
payments; and (e) any conversion or redemption Proceeds; provided, however, that
until the occurrence of an Event of Default (as hereinafter defined), Grantor
shall be entitled to all cash dividends and all interest paid on the Collateral
(except interest paid on any certificate of deposit pledged hereunder) free of
the security interest created under this Agreement.  All Additional Property
received by Grantor shall be received in trust for the benefit of Secured
Party.  All Additional Property and all certificates or other written
instruments or documents evidencing and/or representing the Additional Property
that is received by Grantor, together with such instruments of transfer as
Secured Party may request, shall immediately be delivered to or deposited with
Secured Party and held by Secured Party as Collateral under the terms of this
Agreement.  If the Additional Property received by Grantor shall be shares of
stock or other securities, such shares of stock or other securities shall be
duly endorsed in blank or accompanied by proper instruments of transfer and
assignment duly executed in blank with, if requested by Secured Party,
signatures guaranteed by a bank or member firm of the New York Stock Exchange,
all in form and substance satisfactory to Secured Party.  Secured Party shall be
deemed to have possession of any Collateral in transit to Secured Party or its
agent.

4.Voting Rights.  As long as no Event of Default shall have occurred hereunder,
any voting rights incident to any stock or other securities pledged as
Collateral may be exercised by Grantor; provided, however, that Grantor will not
exercise, or cause to be exercised, any such voting rights, without the prior
written consent of Secured Party, if the direct or indirect effect of such vote
will result in an Event of Default hereunder.

5.Maintenance of Collateral.  Other than the exercise of reasonable care to
assure the safe custody of any Collateral in Secured Party's possession from
time to time, Secured Party does not have any obligation, duty or responsibility
with respect to the Collateral.  Without limiting the generality of the
foregoing, Secured Party shall not have any obligation, duty or responsibility
to do any of the following:  (a) ascertain any maturities, calls, conversions,
exchanges, offers, tenders or similar matters relating to the Collateral or
informing Grantor with respect to any such matters; (b) fix, preserve or
exercise any right, privilege or option (whether conversion, redemption or
otherwise) with respect to the Collateral unless (i) Grantor makes written
demand to Secured Party to do so, (ii) such written demand is received by
Secured Party in sufficient time to permit Secured Party to take the action
demanded in the ordinary course of its business, and (iii) Grantor provides
additional collateral, acceptable to Secured Party in its sole discretion;
(c) collect any amounts payable in respect of the Collateral (Secured Party
being liable to account to Grantor only for what Secured Party may actually
receive or collect thereon); (d) sell all or any portion of the Collateral to
avoid market loss; (e) sell all or any portion of the Collateral unless and
until (i) Grantor makes written demand upon Secured Party to sell the
Collateral, and (ii) Grantor provides additional collateral, acceptable to
Secured Party in its sole discretion; or (f) hold the Collateral for or on
behalf of any party other than Grantor.

 

 

 

 

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6.Representations and Warranties.  Grantor hereby represents and warrants the
following to Secured Party:

(a)Authority.  The execution, delivery and performance of this Agreement and all
of the other Loan Documents by Grantor have been duly authorized by all
necessary corporate action of Grantor, to the extent Grantor is a corporation,
by all necessary partnership action, to the extent Grantor is a partnership, by
all necessary company action of Grantor, to the extent Grantor is a limited
liability company, by the provisions of the trust documents, to the extent
Grantor is a trust.

(b)Accuracy of Information.  All information heretofore, herein or hereafter
supplied to Secured Party by or on behalf of Grantor with respect to the
Collateral is true and correct.  The exact legal name and organization number of
Grantor is correctly shown above.

(c)Enforceability.  This Agreement and the other Loan Documents constitute
legal, valid and binding obligations of Grantor, enforceable in accordance with
their respective terms, except as limited by bankruptcy, insolvency or similar
laws of general application relating to the enforcement of creditors' rights and
except to the extent specific remedies may generally be limited by equitable
principles.

(d)Ownership and Liens.  Grantor has good and marketable title to the Collateral
free and clear of all liens, security interests, encumbrances or adverse claims,
except for the security interest created by this Agreement and the security
interests and other encumbrances expressly permitted by the other Loan
Documents.  No dispute, right of setoff, counterclaim or defense exists with
respect to all or any part of the Collateral.  Grantor has not executed any
other security agreement currently affecting the Collateral and no financing
statement or other instrument similar in effect covering all or any part of the
Collateral is on file in any recording office except as may have been executed
or filed in favor of Secured Party.

(e)No Conflicts or Consents.  Neither the ownership, the intended use of the
Collateral by Grantor, the grant of the security interest by Grantor to Secured
Party herein nor the exercise by Secured Party of its rights or remedies
hereunder, will (i) conflict with any provision of (A) any domestic or foreign
law, statute, rule or regulation, (B) the articles or certificate of
incorporation, certificate of organization, charter, bylaws, partnership
agreement or trust agreement, as the case may be, of Grantor, or (C) any
agreement, judgment, license, order or permit applicable to or binding upon
Grantor or otherwise affecting the Collateral, or (ii) result in or require the
creation of any lien, charge or encumbrance upon any assets or properties of
Grantor or of any person except as may be expressly contemplated in the Loan
Documents.  Except as expressly contemplated in the Loan Documents, no consent,
approval, authorization or order of, and no notice to or filing with, any court,
governmental authority or third party is required in connection with the grant
by Grantor of the security interest herein or the exercise by Secured Party of
its rights and remedies hereunder.

(f)Security Interest.  Grantor has and will have at all times full right, power
and authority to grant a security interest in the Collateral to Secured Party in
the manner provided herein, free and clear of any lien, security interest or
other charge or encumbrance. This Agreement creates a legal, valid and binding
security interest in favor of Secured Party in the Collateral.

 

 

 

 

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(g)Location/Identity.  Grantor’s principal residence or place of business and
chief executive office (as those terms are used in the Code), as the case may be
is located at the address set forth herein.  Except as specified elsewhere
herein, all Collateral and records concerning the Collateral shall be kept at
such address. Grantor’s organizational structure, state of organization, and
organizational number (the “Organizational Information”) are as set forth
herein.  Except as specified herein, the Organizational Information shall not
change.

(h)Solvency of Grantor.  As of the date hereof, and after giving effect to this
Agreement and the completion of all other transactions contemplated by Grantor
at the time of the execution of this Agreement, (i) Grantor is and will be
solvent; (ii) the fair saleable value of Grantor’s assets exceeds and will
continue to exceed Grantor’s liabilities (both fixed and contingent);
(iii) Grantor is paying and will continue to be able to pay its debts as they
mature, and (iv) if Grantor is not an individual, Grantor has and will have
sufficient capital to carry on Grantor’s businesses and all businesses in which
Grantor is about to engage.

(i)Securities.  Any certificates evidencing securities pledged as Collateral are
valid and genuine and have not been altered.  All securities pledged as
Collateral have been duly authorized and validly issued, are fully paid and
non‑assessable, and were not issued in violation of the preemptive rights of any
party or of any agreement by which Grantor or the issuer thereof is bound.  No
restrictions or conditions exist with respect to the transfer or voting of any
securities pledged as Collateral, except as has been disclosed to Secured Party
in writing.  To the best of Grantor’s knowledge, no issuer of such securities
(other than securities of a class which are publicly traded) has any outstanding
stock rights, rights to subscribe, options, warrants or convertible securities
outstanding or any other rights outstanding entitling any party to have issued
to such party capital stock of such issuer, except as has been disclosed to
Secured Party in writing.

(j)Margin Regulations; Investment Company Act; Public Utility Holding Company
Act. 

(i)    Grantor is not engaged and will not engage, principally or as one of its
important activities, in the business of purchasing or carrying Margin Stock or
extending credit for the purpose of purchasing or carrying Margin Stock. 

(ii)    None of Grantor, any person controlling Grantor, or any subsidiary
(i) is a “holding company,” or a “subsidiary company” of a “holding company,” or
an “affiliate” of a “holding company” or of a “subsidiary company” of a “holding
company,” within the meaning of the Energy Policy Act of 2005, as amended; or
(ii) is or is required to be registered as an “investment company” under the
Investment Company Act of 1940, as amended.

(k)Patriot Act.  All capitalized words and phrases and all defined terms used in
the USA Patriot Act of 2001, 107 Public Law 56 (October 26, 2001) (the “Patriot
Act”) and in other statutes and all orders, rules and regulations of the United
States government and its various executive department, agencies and offices
related to the subject matter of the Patriot Act, including, but not limited to,
Executive Order 13224 effective September 24, 2001, are hereinafter collectively
referred to as the “Patriot Rules” and are incorporated into this
Agreement.  Borrower (and Grantor, if different from Borrower) represents and
warrants to Secured Party that neither it

 

 

 

 

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nor any of its principals, shareholders, members, partners, or affiliates, as
applicable, is a person named as a Specially Designated National and Blocked
Person (as defined in Presidential Executive Order 13224) and that it is not
acting, directly or indirectly, for or on behalf of any such person.  Borrower
(and Grantor, if different from Borrower) further represents and warrants to
Secured Party that Borrower (and Grantor, if different from Borrower) and its
principals, shareholders, members, partners, or affiliates, as applicable, are
not, directly or indirectly, engaged in, nor facilitating, the transactions
contemplated by this Agreement on behalf of any person named as a Specially
Designated National and Blocked Person. Borrower (and Grantor, if different from
Borrower) hereby agrees to defend, indemnify and hold harmless Secured Party
from and against any and all claims, damages, losses, risks, liabilities, and
expenses (including reasonable attorneys; fees and costs) arising from or
related to any breach of the foregoing representations and warranties.

7.Affirmative Covenants.  Grantor will comply with the covenants contained in
this Section 7 at all times during the period of time this Agreement is
effective unless Secured Party shall otherwise consent in writing.

(a)Ownership and Liens.  Grantor will maintain good and marketable title to all
Collateral free and clear of all liens, security interests, encumbrances or
adverse claims, except for the security interest created by this Agreement and
the security interests and other encumbrances expressly permitted by the other
Loan Documents.  Grantor will not permit any dispute, right of setoff,
counterclaim or defense to exist with respect to all or any part of the
Collateral.  Grantor will cause any financing statement or other security
instrument with respect to the Collateral to be terminated, except as may exist
or as may have been filed in favor of Secured Party.  Grantor hereby irrevocably
appoints Secured Party as Grantor's attorney‑in‑fact, such power of attorney
being coupled with an interest, with full authority in the place and stead of
Grantor and in the name of Grantor or otherwise, for the purpose of terminating
any financing statements currently filed with respect to the
Collateral.  Grantor will defend at its expense Secured Party's right, title and
security interest in and to the Collateral against the claims of any third
party.

(b)Inspection of Books and Records.  Grantor will keep adequate records
concerning the Collateral and will permit Secured Party and all representatives
and agents appointed by Secured Party to inspect Grantor’s books and records of
or relating to the Collateral at any time during normal business hours, to make
and take away photocopies, photographs and printouts thereof and to write down
and record any such information.

(c)Adverse Claim.  Grantor covenants and agrees to promptly notify Secured Party
of any claim, action or proceeding affecting title to the Collateral, or any
part thereof, or the security interest created hereunder and, at Grantor’s
expense, defend Secured Party’s security interest in the Collateral against the
claims of any third party.  Grantor also covenants and agrees to promptly
deliver to Secured Party a copy of all written notices received by Grantor with
respect to the Collateral, including without limitation, notices received from
the issuer of any securities pledged hereunder as Collateral.

(d)Further Assurances.  Grantor will contemporaneously with the execution hereof
and from time to time thereafter at its expense promptly execute and deliver all
further

 

 

 

 

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instruments and documents and take all further action necessary or appropriate
or that Secured Party may request in order (i) to perfect and protect the
security interest created or purported to be created hereby and the first
priority of such security interest; (ii) to enable Secured Party to exercise and
enforce its rights and remedies hereunder in respect of the Collateral; and
(iii) to otherwise effect the purposes of this Agreement, including without
limitation:  (A) executing (if requested) and filing any financing or
continuation statements, or any amendments thereto, (B) obtaining written
confirmation from the issuer of any securities pledged as Collateral of the
pledge of such securities, in form and substance satisfactory to Secured Party,
(C) cooperating with Secured Party in registering the pledge of any securities
pledged as Collateral with the issuer of such securities, (D) delivering notice
of Secured Party’s security interest in any securities pledged as Collateral to
any financial intermediary, clearing corporation or other party required by
Secured Party, in form and substance satisfactory to Secured Party, and
(E) obtaining written confirmation of the pledge of any securities constituting
Collateral from any financial intermediary, clearing corporation or other party
required by Secured Party, in form and substance satisfactory to Secured
Party.  If all or any part of the Collateral is securities issued by an agency
or department of the United States, Grantor covenants and agrees, at Secured
Party’s request, to cooperate in registering such securities in Secured Party’s
name or with Secured Party's account maintained with a Federal Reserve Bank.

(e)Control Agreements.  Grantor will cooperate with Secured Party in obtaining a
control agreement in form and substance satisfactory to Secured Party with
respect to Collateral for which such agreement is required for perfection of a
security interest pursuant to the Code (as determined by Secured Party in its
sole discretion).

8.Negative Covenants.  Grantor will comply with the covenants contained in this
Section 8 at all times during the period of time this Agreement is effective,
unless Secured Party shall otherwise consent in writing.

(a)Transfer or Encumbrance.  Grantor will not (i) sell, assign (by operation of
law or otherwise) or transfer Grantor’s  rights in any of the Collateral;
(ii) grant a lien or security interest in or execute, authorize, file or record
any financing statement or other security instrument with respect to the
Collateral to any party other than Secured Party; or (iii) deliver actual or
constructive possession of any certificate, instrument or document evidencing
and/or representing any of the Collateral to any party other than Secured Party.

(b)Impairment of Security Interest.  Grantor will not take or fail to take any
action which would in any manner impair the value or enforceability of Secured
Party's security interest in any Collateral.

(c)Dilution of Ownership.  As to any securities pledged as Collateral (other
than securities of a class which are publicly traded), Grantor will not consent
to or approve of the issuance of (i) any additional shares of any class of
securities of such issuer (unless immediately upon issuance additional
securities are pledged and delivered to Secured Party pursuant to the terms
hereof to the extent necessary to give Secured Party a security interest after
such issuance in at least the same percentage of such issuer’s outstanding
securities as Secured Party had before such issuance); (ii) any instrument
convertible voluntarily by the holder thereof or automatically upon the
occurrence or non‑occurrence of any event or condition into, or exchangeable
for, any such securities; or (iii) any

 

 

 

 

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warrants, options, contracts or other commitments entitling any third party to
purchase or otherwise acquire any such securities.

(d)Restrictions on Securities.  Grantor will not enter into any agreement
creating, or otherwise permit to exist, any restriction or condition upon the
transfer, voting or control of any securities pledged as Collateral, except as
consented to in writing by Secured Party.

9.Rights of Secured Party.  Secured Party shall have the rights contained in
this Section 9 at all times during the period of time this Agreement is
effective.

(a)Power of Attorney.  Grantor hereby irrevocably appoints Secured Party as
Grantor’s attorney‑in‑fact, such power of attorney being coupled with an
interest, with full authority in the place and stead of Grantor and in the name
of Grantor or otherwise, to take any action and to execute any instrument which
Secured Party may from time to time in Secured Party’s discretion deem necessary
or appropriate to accomplish the purposes of this Agreement, including without
limitation, the following action:  (i) transfer any securities, instruments,
documents or certificates pledged as Collateral in the name of Secured Party or
its nominee; (ii) use any interest, premium or principal payments, conversion or
redemption Proceeds or other cash Proceeds received in connection with any
Collateral to reduce any of the Indebtedness; (iii) exchange any of the
securities pledged as Collateral for any other property upon any merger,
consolidation, reorganization, recapitalization or other readjustment of the
issuer thereof, and, in connection therewith, to deposit and deliver any and all
of such securities with any committee, depository, transfer agent, registrar or
other designated agent upon such terms and conditions as Secured Party may deem
necessary or appropriate; (iv) exercise or comply with any conversion, exchange,
redemption, subscription or any other right, privilege or option pertaining to
any securities pledged as Collateral; provided, however, except as provided
herein, Secured Party shall not have a duty to exercise or comply with any such
right, privilege or option (whether conversion, redemption or otherwise) and
shall not be responsible for any delay or failure to do so; and (v) file any
claims or take any action or institute any proceedings which Secured Party may
deem necessary or appropriate for the collection and/or preservation of the
Collateral or otherwise to enforce the rights of Secured Party with respect to
the Collateral.  Notwithstanding the foregoing, the Secured Party shall only
have the right to exercise the power of attorney provided in this Section 9(a)
after the occurrence and during the continuance of an Event of Default.

(b)Performance by Secured Party.  If Grantor fails to perform any agreement or
obligation provided herein, Secured Party may itself perform, or cause
performance of, such agreement or obligation, and the expenses of Secured Party
incurred in connection therewith shall be a part of the Indebtedness, secured by
the Collateral and payable by Grantor on demand.

Notwithstanding any other provision herein to the contrary, Secured Party does
not have any duty to exercise or continue to exercise any of the foregoing
rights and shall not be responsible for any failure to do so or for any delay in
doing so.

10.Events of Default.  Each of the following constitutes an “Event of Default”
under this Agreement:

 

 

 

 

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(a)Default in Payment.  The failure, refusal or neglect of Borrower to make any
payment of principal or interest on the Indebtedness, or any portion thereof, as
the same shall become due and payable;

(b)Non-Performance of Covenants.  The failure of Borrower or any Obligated Party
to timely and properly observe, keep or perform any covenant, agreement,
warranty or condition  (i) required herein and such failure shall remain
unremedied for a period of thirty (30) days after the occurrence thereof or (ii)
in any of the other Loan Documents after giving effect to any applicable grace
or cure periods;

(c)Default Under other Loan Documents.  The occurrence of an event of default
under any of the other Loan Documents after giving effect to any grace or cure
periods applicable thereto;

(d)False Representation.  Any representation or warranty contained herein or in
any of the other Loan Documents made by Borrower or any Obligated Party is false
or misleading in any material respect;

(e)Default to Third Party.  The occurrence of any event which permits the
acceleration of the maturity of any indebtedness owing by Borrower or any
Obligated Party to any third party under any agreement or undertaking;

(f)Bankruptcy or Insolvency. If Borrower or any Obligated Party: (i) becomes
insolvent, or makes a transfer in fraud of creditors, or makes an assignment for
the benefit of creditors, or admits in writing its inability to pay its debts as
they become due; (ii) generally is not paying its debts as such debts become
due; (iii) has a receiver, trustee or custodian appointed for, or take
possession of, all or substantially all of the assets of such party or any of
the Collateral, either in a proceeding brought by such party or in a proceeding
brought against such party and such appointment is not discharged or such
possession is not terminated within ninety  (90) days after the effective date
thereof or such party consents to or acquiesces in such appointment or
possession; (iv) files a petition for relief under the United States Bankruptcy
Code or any other present or future federal or state insolvency, bankruptcy or
similar laws (all of the foregoing hereinafter collectively called “Applicable
Bankruptcy Law”) or an involuntary petition for relief is filed against such
party under any Applicable Bankruptcy Law and such involuntary petition is not
dismissed within ninety  (90) days after the filing thereof, or an order for
relief naming such party is entered under any Applicable Bankruptcy Law, or any
composition, rearrangement, extension, reorganization or other relief now or
hereafter existing is requested or consented to by such party; (v) fails to have
discharged within a period of ninety  (90) days any attachment, sequestration or
similar writ levied upon any property of such party; or (vi) fails to pay within
thirty (30) days any final money judgment against such party;

(g)Execution on Collateral.  The Collateral or any portion thereof is taken on
execution or other process of law in any action against Grantor;  

(h)Abandonment.  Grantor abandons the Collateral or any portion thereof;

 

 

 

 

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(i)Action by Other Lienholder.  The holder of any lien or security interest on
any of the assets of Grantor, including without limitation, the Collateral
(without hereby implying the consent of Secured Party to the existence or
creation of any such lien or security interest on the Collateral), (i) suffers a
payment default by Grantor; (ii) suffers a non-monetary default by Grantor that
is not cured by or before the expiration of any applicable grace or cure periods
and permits the creditor to accelerate the indebtedness that is the subject of
the default; or (iii) institutes foreclosure or other proceedings for the
enforcement of its remedies thereunder;

(j)Liquidation, Death and Related Events.  If Borrower or any Obligated Party is
an entity, the liquidation, dissolution, merger or consolidation of any such
entity or, if Borrower or any Obligated Party is an individual, the death or
legal incapacity of any such individual;

(k)Dilution of Ownership.  The issuer of any securities (other than securities
of a class which are publicly traded) constituting Collateral hereafter issues
any shares of any class of capital stock (unless immediately upon issuance,
additional securities are pledged and delivered to Secured Party pursuant to the
terms hereof to the extent necessary to give Secured Party a security interest
after such issuance in at least the same percentage of such issuer's outstanding
securities as Secured Party had before such issuance) or any options, warrants
or other rights to purchase any such capital stock;

(l)Bankruptcy of Issuer.  (i) The issuer of any securities constituting
Collateral files a petition for relief under any Applicable Bankruptcy Law;
(ii) an involuntary petition for relief is filed against any such issuer under
any Applicable Bankruptcy Law and such involuntary petition is not dismissed
within thirty (30) days after the filing thereof; or (iii) an order for relief
naming any such issuer is entered under any Applicable Secured Bankruptcy Law,
or

(m)Search Report.  If Secured Party shall have elected to file any financing
statement with respect to the Collateral, Secured Party shall receive at any
time following the execution of this Agreement a search report indicating that
Secured Party's security interest is not prior to all other security interests
or other interests reflected in the report.

11.Remedies and Related Rights.  If an Event of Default shall have occurred, and
without limiting any other rights and remedies provided herein, under any of the
other Loan Documents or otherwise available to Secured Party, Secured Party may
exercise one or more of the rights and remedies provided in this Section 11.

(a)Remedies.  Secured Party may from time to time at its discretion, without
limitation and without notice:

(i)Exercise in respect of the Collateral all the rights and remedies of a
secured party under the Code (whether or not the Code applies to the affected
Collateral);

(ii)Reduce its claim to judgment or foreclose or otherwise enforce, in whole or
in part, the security interest granted hereunder by any available judicial
procedure;

(iii)Sell or otherwise dispose of, at its office, on the premises of Grantor or
elsewhere, the Collateral, as a unit or in parcels, by public or private
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one or more contracts (it being agreed that the sale or other disposition of any
part of the Collateral shall not exhaust Secured Party’s power of sale, but
sales or other dispositions may be made from time to time until all of the
Collateral has been sold or disposed of or until the Indebtedness has been paid
and performed in full), and at any such sale or other disposition it shall not
be necessary to exhibit any of the Collateral;

(iv)Buy the Collateral, or any portion thereof, at any public sale;

(v)Buy the Collateral, or any portion thereof, at any private sale if the
Collateral is of a type customarily sold in a recognized market or is of a type
which is the subject of widely distributed standard price quotations;

(vi)Apply for the appointment of a receiver for the Collateral, and Grantor
hereby consents to any such appointment; and

(vii)At its option, retain the Collateral in satisfaction of the Indebtedness
whenever the circumstances are such that Secured Party is entitled to do so
under the Code or otherwise, to the full extent permitted by the Code, Secured
Party shall be permitted to elect whether such retention shall be in full or
partial satisfaction of the Indebtedness.

In the event Secured Party shall elect to sell the Collateral, Secured Party may
sell the Collateral without giving any warranties as and shall be permitted to
specifically disclaim any warranties of title or the like.  Further, if Secured
Party sells any of the Collateral on credit, Grantor will be credited only with
payments actually made by the purchaser, received by Secured Party and applied
to the Indebtedness.  In the event the purchaser fails to pay for the
Collateral, Secured Party may resell the Collateral and Grantor shall be
credited with the proceeds of the sale.  Grantor agrees that in the event
Grantor or any Borrower is entitled to receive any notice under the Code, as it
exists in the state governing any such notice, of the sale or other disposition
of any Collateral, reasonable notice shall be deemed given when such notice is
deposited in a depository receptacle under the care and custody of the United
States Postal Service, postage prepaid, at such party’s address set forth on the
first page hereof, ten (10) days prior to the date of any public sale, or after
which a private sale, of any of such Collateral is to be held.  Secured Party
shall not be obligated to make any sale of Collateral regardless of notice of
sale having been given.  Secured Party may adjourn any public or private sale
from time to time by announcement at the time and place fixed therefor, and such
sale may, without further notice, be made at the time and place to which it was
so adjourned.  Grantor further acknowledges and agrees that the redemption by
Secured Party of any certificate of deposit pledged as Collateral shall be
deemed to be a commercially reasonable disposition under Section 9.610 of the
Code.

(b)Private Sale of Securities.  Grantor recognizes that Secured Party may be
unable to effect a public sale of all or any part of the securities pledged as
Collateral because of restrictions in applicable federal and state securities
laws and that Secured Party may, therefore, determine to make one or more
private sales of any such securities to a restricted group of purchasers who
will be obligated to agree, among other things, to acquire such securities for
their own account, for investment and not with a view to the distribution or
resale thereof.  Grantor acknowledges that each any such private sale may be at
prices and other terms less favorable than what might have been

 

 

 

 

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obtained at a public sale and, notwithstanding the foregoing, agrees that each
such private sale shall be deemed to have been made in a commercially reasonable
manner and that Secured Party shall have no obligation to delay the sale of any
such securities for the period of time necessary to permit the issuer to
register such securities for public sale under any federal or state securities
laws.  Grantor further acknowledges and agrees that any offer to sell such
securities which has been made privately in the manner described above to not
less than five (5) bona fide offerees shall be deemed to involve a "public sale"
for the purposes of Chapter 9 of the Code, notwithstanding that such sale may
not constitute a "public offering" under any federal or state securities laws
and that Secured Party may, in such event, bid for the purchase of such
securities.

(c)Application of Proceeds.  If any Event of Default shall have occurred,
Secured Party may at its discretion apply or use any cash held by Secured Party
as Collateral, and any cash proceeds received by Secured Party in respect of any
sale or other disposition of, collection from, or other realization upon, all or
any part of the Collateral as follows in such order and manner as Secured Party
may elect:

(i)To the repayment or reimbursement of the reasonable costs and expenses
(including, without limitation, reasonable attorneys' fees and expenses)
incurred by Secured Party in connection with (A) the administration of the Loan
Documents, (B) the custody, preservation, use or operation of, or the sale of,
collection from, or other realization upon, the Collateral, and (C) the exercise
or enforcement of any of the rights and remedies of Secured Party hereunder;

(ii)To the payment or other satisfaction of any liens and other encumbrances
upon the Collateral;

(iii)To the satisfaction of the Indebtedness;

(iv)By holding such cash and proceeds as Collateral;

(v)To the payment of any other amounts required by applicable law (including
without limitation, Section 9.615(a)(3) of the Code or any other applicable
statutory provision); and

(vi)By delivery to Grantor or any other party lawfully entitled to receive such
cash or proceeds whether by direction of a court of competent jurisdiction or
otherwise.

(d)Deficiency.  In the event that the proceeds of any sale of, collection from,
or other realization upon, all or any part of the Collateral by Secured Party
are insufficient to pay all amounts to which Secured Party is legally entitled,
Borrower and any party who guaranteed or is otherwise obligated to pay all or
any portion of the Indebtedness shall be liable for the deficiency, together
with interest thereon as provided in the Loan Documents, to the full extent
permitted by the Code.

(e)Non-Judicial Remedies.  In granting to Secured Party the power to enforce its
rights hereunder without prior judicial process or judicial hearing, Grantor
expressly waives, renounces and knowingly relinquishes any legal right which
might otherwise require Secured Party

 

 

 

 

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to enforce its rights by judicial process.  Grantor recognizes and concedes that
non‑judicial remedies are consistent with the usage of trade, are responsive to
commercial necessity and are the result of a bargain at arm's length.  Nothing
herein is intended to prevent Secured Party or Grantor from resorting to
judicial process at either party's option.

(f)Other Recourse.  Grantor waives any right to require Secured Party to proceed
against any third party, exhaust any Collateral or other security for the
Indebtedness, or to have any third party joined with Grantor in any suit arising
out of the Indebtedness or any of the Loan Documents, or pursue any other remedy
available to Secured Party.  Grantor further waives any and all notice of
acceptance of this Agreement and of the creation, modification, rearrangement,
renewal or extension of the Indebtedness.  Grantor further waives any defense
arising by reason of any disability or other defense of any third party or by
reason of the cessation from any cause whatsoever of the liability of any third
party.  Until all of the Indebtedness shall have been paid in full, Grantor
shall have no right of subrogation and Grantor waives the right to enforce any
remedy which Secured Party has or may hereafter have against any third party,
and waives any benefit of and any right to participate in any other security
whatsoever now or hereafter held by Secured Party.  Grantor authorizes Secured
Party, and without notice or demand and without any reservation of rights
against Grantor and without affecting Grantor's liability hereunder or on the
Indebtedness, to (i) take or hold any other property of any type from any third
party as security for the Indebtedness, and exchange, enforce, waive and release
any or all of such other property; (ii) apply such other property and direct the
order or manner of sale thereof as Secured Party may in its discretion
determine; (iii) renew, extend, accelerate, modify, compromise, settle or
release any of the Indebtedness or other security for the Indebtedness;
(iv) waive, enforce or modify any of the provisions of any of the Loan Documents
executed by any third party; and (v) release or substitute any third party. 

(g)Voting Rights.  Upon the occurrence of an Event of Default, Grantor will not
exercise any voting rights with respect to securities pledged as
Collateral.  Grantor hereby irrevocably appoints Secured Party as Grantor’s
attorney‑in‑fact (such power of attorney being coupled with an interest) and
proxy to exercise any voting rights with respect to Grantor's securities pledged
as Collateral upon the occurrence of an Event of Default.

(h)Dividend Rights and Interest Payments.  Upon the occurrence of an Event of
Default:

(i)All rights of Grantor to receive and retain the dividends and interest
payments which it would otherwise be authorized to receive and retain pursuant
to Section 3 shall automatically cease, and all such rights shall thereupon
become vested with Secured Party which shall thereafter have the sole right to
receive, hold and apply as Collateral such dividends and interest payments; and

(ii)All dividend and interest payments which are received by Grantor contrary to
the provisions of Section 11(h)(i) shall be received in trust for the benefit of
Secured Party, shall be segregated from other funds of Grantor, and shall be
forthwith paid over to Secured Party in the exact form received (properly
endorsed or assigned if requested by Secured Party), to be held by Secured Party
as Collateral.

 

 

 

 

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12.Indemnity.  GRANTOR (and BORROWER, if BORROWER is not the GRANTOR)
each hereby indemnifies and agrees to hold harmless Secured Party, and its
officers, directors, employees, agents and representatives (each an “Indemnified
Person”) from and against any and all liabilities, obligations, claims, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature (collectively, the “Claims”) which may be imposed on,
incurred by, or asserted against, any Indemnified Person arising in connection
with the Loan Documents, the Indebtedness or the Collateral (including without
limitation, the enforcement of the Loan Documents and the defense of any
Indemnified Person’s actions and/or inactions in connection  with the Loan
Documents).  The indemnification provided for in this Section shall survive the
termination of this Agreement and shall extend and continue to benefit each
individual or entity who is or has at any time been an Indemnified Person
hereunder; PROVIDED THAT, SUCH INDEMNIFICATION SHALL NOT, AS TO ANY INDEMNIFIED
PERSON, BE AVAILABLE TO THE EXTENT THAT SUCH CLAIMS ARE DETERMINED BY A COURT OF
COMPETENT JURISDICTION BY FINAL AND NONAPPEALABLE JUDGMENT TO HAVE RESULTED FROM
THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH INDEMNIFIED PERSON.

13.Miscellaneous.

(a)Entire Agreement.  This Agreement contains the entire agreement of Secured
Party and Grantor (and Borrower, if Borrower is not the Grantor) with respect to
the Collateral.  If the parties hereto are parties to any prior agreement,
either written or oral, relating to the Collateral, the terms of this Agreement
shall amend and supersede the terms of such  prior  agreements as to
transactions on or after the effective date of this Agreement, but all security
agreements, financing statements, guaranties, other contracts and notices for
the benefit of Secured Party shall continue in full force and effect to secure
the Indebtedness unless Secured Party specifically releases its rights
thereunder by separate release.

(b)Amendment.  No modification, consent or amendment of any provision of this
Agreement or any of the other Loan Documents shall be valid or effective unless
the same is in writing and authenticated by the party against whom it is sought
to be enforced, except to the extent of amendments specifically permitted by the
Code without authentication by the Grantor.

(c)Actions by Secured Party.  The lien, security interest and other security
rights of Secured Party hereunder shall not be impaired by (i) any renewal,
extension, increase or modification with respect to the Indebtedness; (ii) any
surrender, compromise, release, renewal, extension, exchange or substitution
which Secured Party may grant with respect to the Collateral; or (iii) any
release or indulgence granted to any endorser, guarantor or surety of the
Indebtedness.  The taking of additional security by Secured Party shall not
release or impair the lien, security interest or other security rights of
Secured Party hereunder or affect the obligations of Grantor (or Borrower, if
Borrower is not the Grantor) hereunder.

 

 

 

 

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(d) Waiver by Secured Party.  Secured Party may waive any Event of Default
without waiving any other prior or subsequent Event of Default.  Secured Party
may remedy any default without waiving the Event of Default remedied.  Neither
the failure by Secured Party to exercise, nor the delay by Secured Party in
exercising, any right or remedy upon any Event of Default shall be construed as
a waiver of such Event of Default or as a waiver of the right to exercise any
such right or remedy at a later date.  No single or partial exercise by Secured
Party of any right or remedy hereunder shall exhaust the same or shall preclude
any other or further exercise thereof, and every such right or remedy hereunder
may be exercised at any time.  No waiver of any provision hereof or consent to
any departure therefrom shall be effective unless the same shall be in writing
and signed by Secured Party and then such waiver or consent shall be effective
only in the specific instances, for the purpose for which given and to the
extent therein specified.  No notice to or demand in any case shall of itself
entitle Grantor (or Borrower, if Borrower is not the Grantor) to any other or
further notice or demand in similar or other circumstances.

(e)Costs and Expenses.  Grantor (and Borrower, if Borrower is not the Grantor)
will upon demand pay to Secured Party the amount of any and all costs and
expenses (including without limitation, attorneys' fees and expenses), which
Secured Party may incur in connection with (i) the transactions which give rise
to the Loan Documents; (ii) the preparation of this Agreement and the perfection
and preservation of the security interests granted under the Loan Documents;
(iii) the administration of the Loan Documents; (iv) the custody, preservation,
use or operation of, or the sale of, collection from, or other realization upon,
the Collateral; (v) the exercise or enforcement of any of the rights of Secured
Party under the Loan Documents; or (vi) the failure by Grantor (or Borrower, if
Borrower is not the Grantor) to perform or observe any of the provisions hereof.

(f)Controlling Law; Venue.  This Agreement is executed and delivered as an
incident to a lending transaction negotiated and consummated in Bexar County,
Texas, and shall be governed by and construed in accordance with the laws of the
State of Texas. Grantor (and Borrower, if Borrower is not the Grantor), for
itself and its successors and assigns, hereby irrevocably (i) submits to the
nonexclusive jurisdiction of the state and federal courts in Texas;  (ii)
waives, to the fullest extent permitted by law, and objection that it may now or
in the future have to the laying of venue of any litigation arising out of or in
connection with any Loan Document brought in the District Court of Bexar County,
Texas, or in the United States District Court for the Western District of Texas,
San Antonio, Division;  (iii) waives any objection it may now or hereafter have
as to the venue of any such action or proceeding brought in such court or that
such court is an inconvenient forum;  (iv) agrees that any legal proceeding
against any party to any Loan Document arising out of or in connection with any
of the Loan Documents may be brought in one of the foregoing courts; and (v)
agrees that service of process upon it may be made by certified or registered
mail, return receipt requested, at its address specified herein.  Nothing herein
shall affect the right of Secured Party to serve process in any other manner
permitted by law or shall limit the right of Secured Party to bring any action
or proceeding against Grantor (and Borrower, if Borrower is not the Grantor) or
with respect to any of Grantor’s (or Borrower’s, if Borrower is not the
Grantor) property in courts in other jurisdictions.  The scope of each of the
foregoing waivers is intended to be all encompassing of any and all disputes
that may be filed in any court and that relate to the subject matter of this
transaction, including, without limitation, contract claims, tort claims, breach
of duty claims, and all other common law and statutory claims. Grantor (and

 

 

 

 

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Borrower, if Borrower is not the Grantor) acknowledges that these waivers are a
material inducement to Secured Party’s agreement to enter into agreements and
obligations evidenced by the Loan Documents, that Secured Party has already
relied on these waivers and will continue to rely on each of these waivers in
related future dealings.  The waivers in this section are irrevocable, meaning
that they may not be modified either orally or in writing, and these waivers
apply to any future renewals, extensions, amendments, modifications, or
replacements in respect of the applicable Loan Document. In connection with any
litigation, this Agreement may be filed as a written consent to a trial by the
court.

(g)Severability.  If any provision of this Agreement is held by a court of
competent jurisdiction to be illegal, invalid or unenforceable under present or
future laws, such provision shall be fully severable, shall not impair or
invalidate the remainder of this Agreement and the effect thereof shall be
confined to the provision held to be illegal, invalid or unenforceable.

(h)No Obligation.  Nothing contained herein shall be construed as an obligation
on the part of Secured Party to extend or continue to extend credit to Borrower.

(i)Notices.  All notices, requests, demands or other communications required or
permitted to be given pursuant to this Agreement shall be in writing and given
by (i) personal delivery; (ii) expedited delivery service with proof of
delivery; or (iii) United States mail, postage prepaid, registered or certified
mail, return receipt requested, sent to the intended addressee at the address
set forth on the first page hereof or to such different address as the addressee
shall have designated by written notice sent pursuant to the terms hereof and
shall be deemed to have been received either, in the case of personal delivery,
at the time of personal delivery, in the case of expedited delivery service, as
of the date of first attempted delivery at the address and in the manner
provided herein, or in the case of mail, upon deposit in a depository receptacle
under the care and custody of the United States Postal Service.  Either party
shall have the right to change its address for notice hereunder to any other
location within the continental United States by notice to the other party of
such new address at least thirty (30) days prior to the effective date of such
new address.

(j)Binding Effect and Assignment.  This Agreement (i) creates a continuing
security interest in the Collateral; (ii) shall be binding on Grantor and the
heirs, executors, administrators, personal representatives, successors and
assigns of Grantor (and Borrower, if Borrower is not the Grantor); and
(iii) shall inure to the benefit of Secured Party and its successors and
assigns.  Without limiting the generality of the foregoing, Secured Party may
pledge, assign or otherwise transfer the Indebtedness and its rights under this
Agreement and any of the other Loan Documents to any other party.  Grantor's
(and Borrower’s, if Borrower is not the Grantor) rights and obligations
hereunder may not be assigned or otherwise transferred without the prior written
consent of Secured Party.

(k)Termination.  It is contemplated by the parties hereto that from time to time
there may be no outstanding Indebtedness, but notwithstanding such occurrences,
this Agreement shall remain valid and shall be in full force and effect as to
subsequent outstanding Indebtedness.  Upon (i) the satisfaction in full of the
Indebtedness; (ii) the termination or expiration of any commitment of Secured
Party to extend credit to Borrower; (iii) written request for the termination
hereof delivered by Grantor to Secured Party; and (iv) written release delivered
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Grantor, this Agreement and the security interests created hereby shall
terminate.  Upon termination of this Agreement and Grantor’s written request,
Secured Party will, at Grantor’s sole cost and expense, return to Grantor such
of the Collateral as shall not have been sold or otherwise disposed of or
applied pursuant to the terms hereof and execute and deliver to Grantor such
documents as Grantor shall reasonably request to evidence such termination.

(l)Cumulative Rights.  All rights and remedies of Secured Party hereunder are
cumulative of each other and of every other right or remedy which Secured Party
may otherwise have at law or in equity or under any of the other Loan Documents,
and the exercise of one or more of such rights or remedies shall not prejudice
or impair the concurrent or subsequent exercise of any other rights or
remedies.  Further, except as specifically noted as a waiver herein, no
provision of this Agreement is intended by the parties to this Agreement to
waive any rights, benefits or protection afforded to Secured Party under the
Code.

(m)Gender and Number.  Within this Agreement, words of any gender shall be held
and construed to include the other gender, and words in the singular number
shall be held and construed to include the plural and words in the plural number
shall be held and construed to include the singular, unless in each instance the
context requires otherwise.

(n)Descriptive Headings.  The headings in this Agreement are for convenience
only and shall in no way enlarge, limit or define the scope or meaning of the
various and several provisions hereof.

14.Financing Statement Filings.  Grantor recognizes that financing statements
pertaining to the Collateral have been or may be filed in one or more of the
following jurisdictions:  the location of Grantor’s principal residence, the
location of Grantor’s place of business, the location of Grantor’s chief
executive office, or other such place as the Grantor may be “located” under the
provisions of the Code; where Grantor maintains any Collateral, or has its
records concerning any Collateral, as the case may be.  Without limitation of
any other covenant herein, Grantor will neither cause or permit any change in
the location of (i) any Collateral; (ii) any records concerning any Collateral;
or (iii) Grantor’s principal residence, the location of Grantor’s place of
business, or the location of Grantor’s chief executive office, as the case may
be, to a jurisdiction other than as represented in Section 6(g) hereof, nor will
Grantor change its name or the Organizational Information as represented in
Section 6(g), unless Grantor shall have notified Secured Party in writing of
such change at least thirty (30) days prior to the effective date of such
change, and shall have first taken all action required by Secured Party for the
purpose of further perfecting or protecting the security interest in favor of
Secured Party in the Collateral.  In any written notice furnished pursuant to
this Section 14, Grantor will expressly state that the notice is required by
this Agreement and contains facts that may require additional filings of
financing statements, amendments or other notices for the purpose of continuing
perfection of Secured Party's security interest in the Collateral.

Without limiting Secured Party’s rights hereunder, Grantor authorizes Secured
Party to file financing statements or amendments thereto under the provisions of
the Code as amended from time to time.

 

 

 

 

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15.Consent to Disclose Information.  Borrower (and Grantor, if Grantor is not
the Borrower) authorizes and consents to the disclosure by Secured Party of all
information relating to the Note to any other party to the account pledged as
Collateral and upon which a security interest is granted herein, including, but
not limited to, information regarding the name of the Borrower and the amount,
date and maturity of the Note.

16.  Counterparts; Facsimile Documents and Signatures.  This Agreement may be
separately executed in any number of counterparts, each of which will be an
original, but all of which, taken together, will be deemed to constitute one and
the same instrument.  For purposes of negotiating and finalizing this Agreement,
if this document or any document executed in connection with it is transmitted
by facsimile machine, electronic mail or other electronic transmission, it will
be treated for all purposes as an original document.  Additionally, the
signature of any party on this document transmitted by way of a facsimile
machine or electronic mail will be considered for all purposes as an original
signature.  Any such transmitted document will be considered to have the same
binding legal effect as an original document.  At the request of any party, any
faxed or electronically transmitted document will be re-executed by each
signatory party in an original form.

17.Imaging of Documents.  Grantor (and Borrower, if Borrower is not the Grantor)
understands and agrees that (i)  Secured Party’s document retention policy may
involve the electronic imaging of executed Loan Documents and the destruction of
the paper originals; and (ii) Grantor (and Borrower, if Borrower is not the
Grantor) waives any right that it may have to claim that the imaged copies of
the Loan Documents are not originals.

[Signature page follows.]

 

 

 

 

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EXECUTED as of the date first written above.

BORROWER:

 

 

SECURED PARTY:

CBTX, INC., a Texas corporation

 

FROST BANK, a Texas state bank

 

 

 

By: /s/Robert R. Franklin, Jr.

Robert R. Franklin, Jr., Chairman, President and Chief Executive Officer

 

 

 

 

By: /s/Travis Baughman

Travis Baughman

Senior Vice President

Correspondent Banking

 

 

 

 

 

 

 

 

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SCHEDULE A

 

The following property is a part of the Collateral as defined in Section 1(b):

 

One Hundred Thousand (100,000) shares of common stock of COMMUNITYBANK OF TEXAS,
N.A., a national banking association, as evidenced by Certificate No. 005 issued
in the name of Grantor.

 

 

 

 

 

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