Exhibit 10.3

Picture 1 [cbtx20170930ex1036465c7001.jpg]

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,
2017, 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, 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

 

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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.

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

 

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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.

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

 

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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.

(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.

 

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(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 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

 

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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 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,

 

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(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 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.

 

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(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:

(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;

 

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(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;

(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;

 

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(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 proceedings, and by way of 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;

 

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(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 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

 

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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 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

 

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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.

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

 

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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.

(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.

 

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(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 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.

 

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(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 by Secured Party to 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.

 

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(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.

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

 

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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.

 

By:

/s/ Travis Baughman

 

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

 

Name:

Travis Baughman

 

 

Title:

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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