Document:

Exhibit 10.2

 

EMPLOYMENT AGREEMENT

 

This EMPLOYMENT AGREEMENT
(the “Agreement”) is made and shall be effective as of the 26th day of August, 2022 (the “Effective Date”),
by and among COMMUNITYBANK OF TEXAS, NATIONAL ASSOCIATION, having a principal place of business at 9 Greenway Plaza, Suite 110, Houston,
TX 77046 (together with its successors and assigns, the “Bank”), and J. Pat Parsons, an individual who resides in the
State of Texas (“Employee”). CBTX, Inc., a Texas corporation and sole parent of the Bank (“CBTX”)
is joining in this Agreement for the limited purpose of reflecting its agreement to the matters set forth herein as to it, but such joinder
is not intended to make CBTX the common law employer of Employee for any purpose.

 

WHEREAS, Employee is currently
employed by CBTX pursuant to that certain Employment Agreement dated February 28, 2008, as amended by that certain amendment dated December
30, 2008 (the “CBTX Employment Agreement”);

 

WHEREAS, this Agreement is
being entered into in connection with the Agreement and Plan of Merger, dated as of November 5, 2021 (the “Merger Agreement”),
by and between CBTX and Allegiance Bancshares, Inc., a Texas corporation (“Allegiance”); and

 

WHEREAS, immediately following
the date and time at which the merger of Allegiance with and into CBTX (the “Merger”) is effective pursuant to the
Merger Agreement, referred to herein as the “Effective Time”, Employee shall commence employment with the Bank pursuant
to the terms of this Agreement;

 

NOW, THEREFORE, in consideration
of the premises and the mutual covenants hereinafter set forth, and intending to be legally bound hereby, it is hereby agreed as follows:

 

Article 1: Effective Date;
Bank Merger; Termination of CBTX Employment Agreement.

 

1.1              
EFFECTIVE DATE OF AGREEMENT. This Agreement shall become effective at the Effective Time. If the Merger Agreement terminates for
any reason without consummation of the Merger, this Agreement shall be null and void ab initio.

 

1.2              
BANK MERGER. Following the completion of the merger, the Bank will merge (the “Bank Merger”) with and into Allegiance
Bank, a Texas state banking association and wholly owned subsidiary of Allegiance (“Allegiance Bank”), with Allegiance
Bank as the surviving bank (the “Combined Bank”). From and after the Bank Merger, all references herein to the “Bank”
shall mean the Combined Bank.

 

1.3              
TERMINATION OF CBTX EMPLOYMENT AGREEMENT. At the Effective Time, the CBTX Employment Agreement and all of the respective rights
and obligations of CBTX and Employee thereunder shall cease and terminate. Employee acknowledges and agrees that he is not entitled to
any further compensation or payment pursuant to the terms of the CBTX Employment Agreement.

 

Article 2: Employment, Compensation,
and Expenses

 

2.1              
EMPLOYMENT. The Bank shall employ Employee, and Employee accepts such employment with the Bank upon all of the terms and conditions
described in this Agreement and for the Term as set forth on Exhibit A (the “Term”).

 

     

     

    

 

2.2              
WORK RESPONSIBILITIES. Subject to the terms of this Agreement, Employee shall be employed in the position of Vice Chairman of the
Bank, and shall perform the functions and responsibilities of that position. Additional or different duties may be assigned by the Board
of Directors of the Bank (the “Board”). Employee’s position, job descriptions, duties and responsibilities may
be modified from time to time in the sole discretion of the Board.

 

2.3              
COMPENSATION. As consideration for the services and covenants described in this Agreement, the Bank agrees to compensate Employee
in the following manner:

 

a.       Salary. The Bank agrees to pay the Annual Base Salary stated on the attached Exhibit A in regular installments in accordance
with the Bank’s usual payment practices.

 

b.       Employment Benefits and Compensation Plans, Policies, and Arrangements. Employee shall be entitled to employment benefits
such as but not limited to vacation, holidays, leaves of absence, health insurance, dental insurance, etc., if any, available to employees
of the Bank generally, in accordance with any policies, procedures, or benefit plans adopted by the Bank from time to time during the
existence of this Agreement. Moreover, Employee shall be eligible to receive such other compensation as stated on Exhibit A. Employee’s
rights or those of Employee’s dependents under any such benefits or compensation policies, plans or arrangements shall be governed
solely by the terms of such policies, plans, or arrangements. The Bank reserves to itself, or its designated administrators, exclusive
authority and discretion to determine all issues of eligibility, interpretation and administration of each such benefit or compensation
plan, policy or arrangement. The Bank’s employment benefits and compensation arrangements, and policies related thereto, are subject
to termination, modification or limitation at the Bank’s sole discretion.

 

c.       Total Compensation. Employee agrees that the compensation stated above and as stated on Exhibit A constitutes the full and
exclusive monetary consideration and compensation for all services rendered under this Agreement and for all promises and obligations
under this Agreement.

 

2.4              
BUSINESS EXPENSES. The Bank shall pay Employee’s reasonable business expenses, including expenses incurred for travel on
Bank business, in accordance with the policies and procedures of the Bank, as may be adopted or amended from time to time at the Bank’s
sole discretion. If Employee incurs business expenses under this Agreement, Employee shall submit to the Bank a periodic request for reimbursement
together with supporting documentation satisfactory to the Bank.

 

2.5              
LOYAL PERFORMANCE OF RESPONSIBILITIES. Employee shall devote the whole of Employee’s professional time, attention and energies
to the performance of Employee’s work responsibilities and shall not, either directly or indirectly, alone or in partnership, consult
with, advise work for or have any interest in any other business or pursuit during Employee’s employment under this Agreement. Included
in the foregoing, but not limited thereto, during the Term Employee shall not, directly or indirectly, engage in, or serve as an officer,
director, employee, partner, agent or consultant, or otherwise hold any ownership interest in any entity which engages in any business
which competes with that of the Bank. Any modification of this paragraph shall be made only by an agreement in writing signed by Employee
and an authorized representative of the Bank.

 

Article 3: Confidential
Information; Post-Employment Obligations; Bank Property

 

3.1              
BANK PROPERTY. All written materials, records, data, customer lists, and other documents prepared or possessed by Employee during
Employee’s employment by the Bank are the Bank’s property. All information, ideas, concepts, improvements, discoveries, and
inventions that are conceived, made, developed, or acquired by Employee individually or in conjunction with others during Employee’s
employment (whether during business hours and whether on Bank’s premises or otherwise) which relate to Bank business, products,
or services are the Bank’s sole and exclusive property. All memoranda, notes, records, files, correspondence, drawings, manuals,
models, specifications, computer programs, maps, and all other documents, data, or materials of any type embodying such information, ideas,
concepts, improvements, discoveries, and inventions are Bank property. At the termination of Employee’s employment with the Bank
for any reason, Employee shall return all of the Bank’s documents, data, or other Bank property to the Bank.

 

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3.2              
CONFIDENTIAL INFORMATION, NON-DISCLOSURE. Employee acknowledges that the business of the Bank, CBTX, Allegiance, Allegiance Bank,
and their respective subsidiaries and affiliates (the “Bank Group”) is highly competitive and that the Bank Group has
provided and will continue to provide Employee with access to Confidential Information relating to the business of the Bank Group. “Confidential
Information” means and includes the Bank Group’s confidential and/or proprietary information and/or trade secrets that have
been developed or used and/or will be developed and that cannot be obtained readily by third parties from outside sources. Confidential
Information includes, by way of example and without limitation, the following: information regarding customers, employees, contractors,
and the industry not generally known to the public; strategies, methods, books, records, and documents; technical information concerning
products, equipment, services, and processes; procurement procedures and pricing techniques; the names of and other information concerning
customers, investors, and business affiliates (such as contact name, service provided, pricing for that customer, amount of services used,
credit and financial data, and/or other information relating to the Bank Group’s relationship with that customer); pricing strategies
and price curves; plans and strategies for expansion or acquisitions; budgets; customer lists; research; financial and sales data; trading
terms; evaluations, opinions, and interpretations of information and data; marketing and merchandising techniques; prospective customers’
names and marks; grids and maps; electronic databases; models; specifications; computer programs; internal business records; contracts
benefiting or obligating the Bank Group; bids or proposals submitted to any third party; technologies and methods; training methods and
training processes; organizational structure; salaries of personnel; payment amounts or rates paid to consultants or other service providers;
and other such confidential or proprietary information. Employee acknowledges that this Confidential Information constitutes a valuable,
special, and unique asset used by the Bank Group in its business to obtain a competitive advantage over their competitors. Employee further
acknowledges that protection of such Confidential Information against unauthorized disclosure and use is of critical importance to the
Bank Group in maintaining its competitive position.

 

Employee also will have access
to, or knowledge of, Confidential Information of third parties, such as actual and potential customers, suppliers, partners, joint venturers,
investors, financing sources and the like, of the Bank Group.

 

Employee agrees that Employee
will not, at any time during or after Employee’s employment with the Bank, make any unauthorized disclosure of any Confidential
Information of the Bank Group, or make any use thereof, except in the carrying out of Employee’s employment responsibilities hereunder.
Employee also agrees to preserve and protect the confidentiality of third party Confidential Information to the same extent, and on the
same basis, as the Bank’s Confidential Information.

 

3.3              
NON-COMPETITION OBLIGATIONS. Employee acknowledges that the Bank is providing Employee with access to Confidential Information.
Ancillary to Employee’s agreement not to disclose Confidential Information, to protect the Confidential Information described above,
and in consideration for Employee’s receiving continued access to this Confidential Information and compensation stated in this
Agreement, the Bank and Employee agree to the following non-competition provisions. Employee agrees that during the period of Employee’s
non-competition obligations as stated on Exhibit A, Employee will not, directly or indirectly, for Employee or others, in the geographic
region stated on Exhibit A, or, if Employee’s geographic region has changed, in any and all geographic regions in which Employee
has worked for the 12-month period immediately preceding Employee’s termination of Employment:

 

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a.       engage in any business conducted by the Bank Group related to community banking and/or financial activities in which the Bank Group
is doing business, has plans to engage in business, or has engaged in business in the preceding 12-month period;

 

b.       perform any job, task, function, or responsibility that Employee has provided for the Bank Group in the preceding 12-month period;
or

 

c.       render advice or services to, or otherwise assist, any other person, association or entity in the business of “a,”
or “b” above.

 

Employee understands that
the foregoing restrictions may limit Employee’s ability to engage in certain businesses in the geographic region and during the
period provided for above, but acknowledges that these restrictions are necessary to protect the Confidential Information the Bank has
provided to Employee.

 

Employee agrees that this
provision defining the scope of activities constituting prohibited competition with the Bank Group is narrow and reasonable for the following
reasons: (i) Employee is free to seek employment with other companies providing services that do not directly or indirectly compete with
any business of the Bank Group; (ii) Employee is free to seek employment with other companies in the banking business that do not directly
or indirectly compete with any business of the Bank Group; and (iii) there are many other companies in the banking business that do not
directly or indirectly compete with any business of the Bank Group. Thus, this restriction on Employee’s ability to compete does
not prevent Employee from using and offering the skills that Employee possessed prior to receiving Confidential Information, specialized
training, and knowledge from the Bank.

 

3.4              
NON-SOLICITATION OF CUSTOMERS. During Employee’s employment, and for a period of twelve (12) months following the termination
of employment for any reason, Employee will not call on, service, solicit, or accept competing business from customers of the Bank Group
with whom Employee, within the previous twenty-four (24) months, (i) had or made contact, or (ii) had access to information and files
regarding. These restrictions are limited by geography to the specific places, addresses, or locations where a customer is present and
available for soliciting or servicing.

 

3.5              
NON-SOLICITATION OF EMPLOYEES. During Employee’s employment, and for a period of twelve (12) months following the termination
of employment for any reason, Employee will not, either directly or indirectly, call on, solicit, or induce any other employee or officer
of the Bank Group or its affiliates whom Employee had contact with, knowledge of, or association with in the course of employment with
the Bank Group to terminate his or her employment, and will not assist any other person or entity in such a solicitation.

 

3.6              
EARLY RESOLUTION CONFERENCE/ARBITRATION. The parties are entering into this Agreement with the express understanding that this
Agreement is clear and fully enforceable as written. If Employee ever decides later to contend that any restriction on activities imposed
by this Agreement no longer is enforceable as written or does not apply to an activity in which Employee intends to engage on behalf of
a competing business, Employee first will notify the Bank in writing and meet with a Bank representative at least fourteen (14) days before
engaging in any activity that foreseeably could fall within the questioned restriction to discuss resolution of such claims (an “Early
Resolution Conference”). Should the parties not be able to resolve disputes at the Early Resolution Conference, the parties
agree to use confidential, binding arbitration to resolve the disputes. The arbitration shall be conducted in accordance with then-current
employment arbitration rules of the Judicial Arbitration & Mediation Services, Inc. (JAMS) before an arbitrator licensed to practice
law in the state in which the Early Resolution Conference occurred or should have occurred. Either party may seek a temporary restraining
order, injunction, specific performance, or other equitable relief regarding the provisions of this Section 3.6 if the other party fails
to comply with obligations stated herein. The parties’ agreement to arbitrate applies only to the matters subject to an Early Resolution
Conference.

 

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3.7              
WARRANTY AND INDEMNIFICATION. Employee warrants that Employee is not a party to any other restrictive agreement limiting Employee’s
activities for the Bank. Employee further warrants that at the time of the signing of this Agreement, Employee knows of no written or
oral contract or of any other impediment that would inhibit or prohibit employment with the Bank and that Employee will not knowingly
use any trade secret, confidential information, or other intellectual property right of any other party in the performance of Employee’s
duties hereunder. Employee shall hold the Bank harmless from any and all suits and claims arising out of any breach of such restrictive
agreement or contracts.

 

3.8              
EQUITABLE RELIEF. Employee and the Bank agree that in the event of a breach or threatened breach by Employee of any paragraph in
Article 3 of this Agreement, the Bank will not have an adequate remedy at law. Thus, in the event of such a breach or threatened breach,
the Bank will be entitled to such equitable and injunctive relief as may be available to prevent and restrain Employee from breaching
the provisions of any paragraph in Article 3. The availability to obtain injunctive relieve will not prevent the Bank from pursuing any
other equitable or legal relief, including the recovery of damages from such breach or threatened breach.

 

Article 4: Termination of
Employment

 

4.1              
AT-WILL EMPLOYMENT. The Bank and Employee acknowledge and agree that Employee’s employment is at-will and that either the
Bank or Employee may, at any time, with or without cause and with or without notice, terminate the employment relationship, including
all compensation and benefits under this Agreement. Unless Employee’s employment with the Bank is earlier terminated, Employee’s
employment with the Bank shall automatically terminate upon the expiration of the Term. It is the express intent of the parties that Employee
is employed at-will; nothing in this Agreement or the relationship between the parties now or in the future may be construed or interpreted
to create an employment relationship for a specific length of time or a right to continued employment Similarly, no manager, supervisor
or employee of the Bank has any authority to limit the Bank’s discretion to modify terms and conditions of employment. Only the
Board has the authority to make any such agreement and then only in writing. No implied contract concerning any employment-related decision
or term or condition of employment can be established by any other statement, conduct, policy or practice. Examples of terms and conditions
of employment that are within the sole discretion of the Bank include, but are not limited to, the following: promotions; demotions; transfers;
hiring and discharge decisions; compensation; training; benefits; qualifications; discipline; layoff or recall; rules; hours and schedules;
work assignments; job duties and responsibilities; production standards; subcontracting; reduction, cessation or expansion of operations;
sale, relocation, merger or consolidation of operations; determinations concerning the use of equipment, methods or facilities; or any
other terms or conditions of employment that the Bank may determine to be necessary for the safe, efficient and economic operation of
its business. Except as otherwise provided in Section 4.2, if Employee’s employment with the Bank ends for any reason, Employee
shall be entitled only to his earned but unpaid base salary through the date of such termination, a cash payment for accrued but unused
paid time off, any earned but unpaid cash bonuses for any prior period which remain unpaid as of the Employee’s date of termination
(without duplication for any amount payable pursuant to Section 4.2(b)), and unpaid expense reimbursements, and all future compensation
and benefits shall cease (except for compensation and benefits vested per plan terms).

 

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4.2              
SEVERANCE. Notwithstanding the foregoing, in the event of termination (a) by the Bank without “Cause,” (b) by Employee
for “Good Reason,” or (c) upon the expiration of the Term:

 

a.       The Bank shall pay to Employee, within sixty (60) days of the date of termination, the amount (the “Cash Severance”)
equal to the sum of (i) 150% of one year’s annual base salary and (ii) the amount equal to twelve (12) times the monthly COBRA premium
for continuation coverage under the Bank’s group health plans, based on Employee’s coverage elections under such plans as
of the date of termination; and

 

b.       The Bank shall pay to Employee a prorated bonus (the “Pro Rata Bonus”) for the calendar year of termination
of Employee’s employment, calculated as the cash bonus that Employee would have received for such calendar year based on actual
performance (assuming for this purpose that all individual performance goals and objectives are achieved at 100%) had Employee continued
in employment with the Bank (provided, that, for avoidance of doubt, such amount shall not be less than $150,000), multiplied by a fraction,
the numerator of which is the number of calendar days during the calendar year of termination that Employee was employed and the denominator
of which is the total number of calendar days during the calendar year of termination. The Pro Rata Bonus shall be payable when annual
bonuses are paid to other senior executives of the Bank, but in no event later than March 15 of the calendar year following the calendar
year in which Employee’s employment with the Bank ends.

 

The Bank’s obligation
to pay the Cash Severance and the Pro Rata Bonus are conditioned on (x) Employee’s timely execution, delivery and non-revocation
of a release and waiver of claims in a form acceptable to the Bank, and (y) Employee’s compliance with his obligations under this
Agreement.

 

4.3              
CAUSE. For purposes of this Agreement, “Cause” shall mean:

 

a.       an act or acts of dishonesty or disloyalty by Employee materially and adversely affecting any member of the Bank Group;

 

b.       Employee’s material breach of any of his obligations of this Agreement;

 

c.       Employee’s gross negligence or willful misconduct in performance of the duties and services required of him under this Agreement;
or

 

d.       Employee’s conviction of a felony or Employee’s conviction of a misdemeanor involving moral turpitude.

 

4.4              
GOOD REASON. For purposes of this Agreement, “Good Reason” shall mean the occurrence of any of the following
after the Effective Time:

 

a.       the assignment to Employee of any duties materially inconsistent in any respect with Employee’s position (including situs,
office and title), authority, duties and responsibilities as contemplated by Section 2.2 of this Agreement, excluding any isolated, insubstantial
or inadvertent action not taken in bad faith and which is remedied by the Bank promptly after notice of such action;

 

b.       any material failure by the Bank to comply with any of the provisions of this Agreement;

 

c.       the Bank requiring Employee to be based at any office outside the Beaumont metropolitan area or other mutually agreed location;
or

 

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d.       any reduction in annual salary as stated in Section 2.3(a) or as hereafter increased.

 

4.5              
Notwithstanding any provisions of this Agreement to the contrary, in the event that the aggregate payments or benefits to be made
or afforded pursuant to this Agreement, would be deemed to include an “excess parachute payment” under Section 280G of the
Internal Revenue Code, then the severance benefits shall be reduced to an amount which is One Dollar ($1.00) less than the greatest amount
allowed to be paid under Section 280G without constituting an “excess parachute payment”.

 

4.6              
DEEMED RESIGNATIONS. Unless otherwise agreed to in writing by Employee and the applicable member of the Bank Group prior to the
termination of Employee’s employment, any termination of Employee’s employment with the Bank will constitute an automatic
resignation of Employee as an officer of any member of the Bank Group. For avoidance of doubt, termination of Employee’s employment
with the Bank will not, by itself, result in Employee’s resignation as a member of the Board of Directors of CBTX or the Bank.

 

Article 5: Miscellaneous

 

5.1              
GOVERNING LAW. This Agreement shall be construed in accordance with and governed by the laws of the State of Texas.

 

5.2              
INTERPRETATION. This Agreement shall be interpreted in accordance with the plain meaning of the terms and not strictly for or against
either party. This Agreement is intended to comply with Section 409A of the Internal Revenue Code and the regulations thereunder (“Section
409A”) and will be interpreted and operated in a manner consistent with that intent. To the extent that any amounts paid to
Employee under this Agreement are subject to Section 409A and Employee is a specified employee, as defined under Section 409A, any such
amounts payable on account of Employee’s separation from service shall be delayed six months following Employee’s separation
from service to the extent required by Section 409A. Any reimbursements of expenses that are subject to Section 409A under this Agreement
shall be paid no later than the year following the year in which the expenses are incurred. All references in this Agreement to a termination
of employment or any other similar reference shall be interpreted as references to a separation from service, within the meaning of Section
409A, with the Bank and all entities treated as a single employer with the Bank pursuant to Section 409A. Whenever in this Agreement the
provision of payment or benefit is conditioned on Employee’s execution and non-revocation of a waiver and release of claims, such
waiver and release must be executed, and all revocation periods must have expired, within sixty (60) days after the date of termination
of Employee’s employment, but the Bank may elect to commence payment at any time during such sixty (60)-day period, provided,
however, to the extent that the payment or benefit is “deferred compensation” within the meaning of and subject to
Section 409A, such payment shall be made in the later year if the sixty (60) day period spans two taxable years.

 

5.3              
HEADINGS. The headings of this Agreement are intended solely for the convenience of reference and should be given no effect in
the construction or interpretation of this Agreement.

 

5.4              
ENTIRE AGREEMENT. This Agreement embodies the complete agreement and understanding of the parties related to Employee’s employment
by the Bank, superseding any and all other prior or contemporaneous oral or written agreements between the parties hereto with respect
to the employment of Employee by the Bank or any other member of the Bank Group, and contains all of the covenants and agreements of any
kind whatsoever between the parties with respect to such employment. Each party acknowledges that no representations, inducements, promises
or agreements, whether oral or written, express or implied, have been made by either party or anyone acting on behalf of a party, that
are not incorporated herein and that no other agreement or promise not contained herein shall be valid or binding.

 

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5.5              
Employment Taxes. All payments made pursuant to this Agreement will be subject to
withholding of applicable income and employment taxes.

 

5.6              
MODIFICATION. This Agreement may be amended only by an agreement in writing signed by Employee and the Bank.

 

5.7              
WAIVER. The failure of either party to insist, in any one or more instances, upon performance of the terms or conditions of this
Agreement shall not be construed as a waiver or a relinquishment of any right granted under this Agreement or of the future performance
of any such term, covenants or condition.

 

5.8              
INVALIDITY. Should any provision(s) in this Agreement be held by a court of competent jurisdiction to be invalid, void or unenforceable,
the remaining provisions shall be unaffected and shall continue in full force and effect, and the invalid, void or unenforceable provision(s)
shall be deemed not to be part of this Agreement.

 

5.9              
VOLUNTARY AGREEMENT. Employee and the Bank represent and agree that each has reviewed all aspects of this Agreement, has carefully
read and fully understands all provisions of this Agreement, and is voluntarily entering into this Agreement. Each party represents and
agrees that such party has had the opportunity to review any and all aspects of this Agreement with the legal, tax or other advisor or
advisors of such party’s choice before executing this Agreement.

 

5.10          
SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure to the benefit of and shall be enforceable by and against
Employee’s heirs, beneficiaries and legal representatives. It is agreed that the rights and obligations of Employee may not be delegated
or assigned except as specifically set forth in this Agreement. In the event of a sale of all or substantially all of the Bank’s
capital stock, sale of all or substantially all of the Bank’s assets, or consolidation or merger of the Bank with or into another
corporation or entity or individual, the Bank may assign its rights and obligations under this Agreement to its successor-in-interest,
and such successor-in-interest shall be deemed to have acquired all rights and assumed all obligations of the Bank under this Agreement.

 

5.11          
Whistleblower Protections and Trade Secrets. Notwithstanding anything to the contrary
contained herein, nothing in this Agreement prohibits Employee from reporting possible violations of federal law or regulation to any
United States governmental agency or entity in accordance with the provisions of and rules promulgated under Section 21F of the Securities
Exchange Act of 1934 or Section 806 of the Sarbanes-Oxley Act of 2002, or any other whistleblower protection provisions of state or federal
law or regulation (including the right to receive an award for information provided to any such government agencies). Furthermore, in
accordance with 18 U.S.C. § 1833, notwithstanding anything to the contrary in this Agreement: (a) Employee shall not be in breach
of this Agreement, and shall not be held criminally or civilly liable under any federal or state trade secret law (x) for the disclosure
of a trade secret that is made in confidence to a federal, state, or local government official or to an attorney solely for the purpose
of reporting or investigating a suspected violation of law, or (y) for the disclosure of a trade secret that is made in a complaint or
other document filed in a lawsuit or other proceeding, if such filing is made under seal; and (b) if Employee files a lawsuit for retaliation
by the Bank for reporting a suspected violation of law, Employee may disclose the trade secret to Employee’s attorney, and may use
the trade secret information in the court proceeding, if Employee files any document containing the trade secret under seal, and does
not disclose the trade secret, except pursuant to court order.

 

5.12          
COUNTERPARTS. This Agreement may be executed in counterparts and each counterpart, when executed, shall have the validity of a
second original. Photographic or facsimile copies of any such signed counterparts may be used in lieu of the original for any purpose.

 

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	DATED: August 26, 2022  	/s/ J. Pat Parsons
	 	J. Pat Parsons
	 	 
	DATED: August 26, 2022  	/s/ Robert R. Franklin
	 	For CommunityBank of Texas, N.A.
	 	 
	DATED: August 26, 2022  	/s/ Robert R. Franklin
	 	For CBTX, Inc.

 

[Signature Page to Employment Agreement]

 

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Exhibit “A” to

J. Pat Parsons Employment Agreement

 

	Employee Name:	J. Pat Parsons
	Term:	The period beginning at the Effective Time and ending at the close of business on December 31, 2023.
	Position:	Vice Chairman of the Bank
	Location:	
    Beaumont, Texas

	Annual Base Salary:	
    $300,000.00 subject to annual review by the Board.

    

	Deferred Compensation:	Employee will continue to receive the deferred compensation payable under the terms of the CBTX Employment Agreement (i.e., $100,000 per year, payable in substantially equal installments on each regularly scheduled payroll date, with the final payment payable on the payroll date for the payroll period that includes July 29, 2023).  The deferred compensation shall be payable to Employee, Employee’s designee, or his Estate. 
	Bonus:	Participation in the Bank’s Annual Bonus plan in which other executive officers and/or employees may participate subject to the terms of the plans.  Employee’s bonus amount for each calendar year during the Term shall be not less than $150,000 (and the actual amount of Employee’s bonus for any calendar year during the Term may be more than such amount depending on actual performance); provided, that Employee’s bonus for 2022 will be adjusted based on any prorated cash bonus (if any) paid to Employee upon closing of the Merger.
	Equity Awards:	Employee shall be eligible to participate in the CBTX, Inc. 2022 Omnibus Incentive Plan (together with any successor equity incentive plan, the “CBTX Equity Plan”) and to receive grants of equity awards under the CBTX Equity Plan as may be approved from time to time by the Compensation Committee of the Board of Directors of CBTX in its sole discretion.

 

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	Annual Physical:	The Bank will pay the entire cost of an annual executive physical for Employee.
	Paid Time Off:	
    Six weeks per calendar year; provided, however, for the portion
    of the 2022 calendar year that begins after the date of the Merger the number of days of paid time off shall be six weeks minus
    the number of days of paid time off taken by Employee during the period that began January 1, 2022 and ends on the date immediately preceding
    the date on which the Merger occurs.

     

    Paid time off not taken during a calendar year shall not carry
over to the next calendar year. Accrued but unused paid time off shall be paid upon termination.

	
    Geographic Region of Non-Competition:

     
	100 miles surrounding any facility owned or operated by any member of the Bank Group.
	Period of Non-Competition obligations:	During the Term and for two years after termination of employment.

 

    11ex_416868.htm

Exhibit 10.1

 

SECOND AMENDMENT TO CREDIT AGREEMENT 

 

THIS SECOND AMENDMENT TO CREDIT AGREEMENT is made effective as of August 22, 2022 (the “Amendment”), by and among ENERGY 11 OPERATING COMPANY, LLC, a Delaware limited liability company (“Energy 11 Operating”) and ENERGY 11, L.P., a Delaware limited partnership (“Energy 11 LP”; Energy 11 Operating and Energy 11 LP are jointly, severally and collectively referred to herein as the “Borrowers” and each individually as a “Borrower”), ENERGY 11 GP, LLC, a Delaware limited liability company (“the “Guarantor”), each of the Lenders from time to time party hereto, BANCFIRST, an Oklahoma chartered bank (in its individual capacity, “BancFirst”), as administrative agent for the Lenders (in such capacity, together with its successors in such capacity, the “Administrative Agent”).

 

W I T N E S S E T H:

 

WHEREAS, Borrowers and Lenders entered into that certain Credit Agreement executed on May 13, 2021, as amended by that certain First Amendment to Credit Agreement dated as of March 10, 2022 (the “Existing Credit Agreement”), for the purpose and consideration therein expressed; and

 

WHEREAS, the loan described in the Existing Credit Agreement is currently evidenced by those certain promissory notes from Borrowers in favor of each of the Lenders dated as of May 13, 2021 in the aggregate principal amount of $60,000,000.00 (the “Existing Notes”);

 

WHEREAS, Borrowers and Lenders desire to amend the Existing Credit Agreement as set forth herein; and

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements contained herein and in the Existing Credit Agreement, in consideration of the loans and other extensions of credit which may hereafter be made by Bank to Borrower, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto do hereby agree as follows:

 

ARTICLE I.

DEFINITIONS AND REFERENCES

 

Section 1.1         Terms Defined in the Existing Credit Agreement. Unless the context otherwise requires or unless otherwise expressly defined herein, the terms defined in the Existing Credit Agreement shall have the same meanings whenever used in this Amendment.

 

Section 1.2         Other Defined Terms. Unless the context otherwise requires, the following terms when used in this Amendment shall have the meanings assigned to them in this Section 1.2.

 

“Amendment” means this Second Amendment to Credit Agreement.

 

 

 

 

“Amendment Documents” means this Amendment, any amendments to existing security documents deemed necessary by Administrative Agent and all other Loan Documents executed and delivered in connection herewith.

 

“Credit Agreement” means the Existing Credit Agreement as amended hereby.

 

ARTICLE II.

AMENDMENTS TO EXISTING CREDIT AGREEMENT

 

Section 2.1.         Amendment to Section 2.06 of the Existing Credit Agreement.

 

(a)         All references to the phrase “Borrowing Base and Monthly Commitment Reduction and Half Life” set forth in Section 2.06 of the Existing Credit Agreement are hereby deleted and replaced with “Borrowing Base and Monthly Commitment Reduction and Half Life and PV-9”.

 

(b)         All references to the phrase “Borrowing Base, Monthly Commitment Reduction and Half Life” set forth in Section 2.06 of the Existing Credit Agreement are hereby deleted and replaced with “Borrowing Base, Monthly Commitment Reduction, Half Life and PV-9”.

 

(c)         Paragraph “(c)”, Scheduled and Interim Redetermination Procedure, of Section 2.06 is hereby amended and restated in its entirety as follows:

 

(c)         Scheduled and Interim Redetermination Procedure.

 

(i)         Each Scheduled Redetermination and each Interim Redetermination shall be effectuated as follows: upon receipt by the Administrative Agent of (A) the Reserve Report and the certificate required to be delivered by the Borrowers, in the case of a Scheduled Redetermination, pursuant to Section 8.12(a) and (c), and, in the case of an Interim Redetermination, pursuant to Section 8.12(a) and (c), and (B) such other reports, data and supplemental information, including, without limitation, the information provided pursuant to Section 8.12(c), as may, from time to time, be reasonably requested by the Required Lenders (the Reserve Report, such certificate and such other reports, data and supplemental information being the “Engineering Reports”), the Administrative Agent shall evaluate the information contained in the Engineering Reports and shall, in good faith, propose a new Borrowing Base (the “Proposed Borrowing Base”), Monthly Commitment Reduction (the “Proposed MCR”), Half Life (the “Proposed Half Life”) and PV-9 (the “Proposed PV-9”; the Proposed Borrowing Base, Proposed MCR, Proposed Half Life and Proposed PV-9 are collectively referred to herein as the “Proposed Measurements”) based upon such information and such other information (including, without limitation, the status of title information with respect to the proved Oil and Gas Properties as described in the Engineering Reports and the existence of any other Debt) as the Administrative Agent deems appropriate in its sole discretion and consistent with its normal oil and gas lending criteria as it exists at the particular time. In no

 

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event shall the Proposed Borrowing Base exceed the Aggregate Maximum Credit Amount.

 

(ii)         The Administrative Agent shall notify the Borrowers and the Lenders of the Proposed Measurements (the “Proposed Borrowing Base Notice”):

 

(A)         in the case of a Scheduled Redetermination (1) if the Administrative Agent shall have received the Engineering Reports required to be delivered by the Borrowers pursuant to Section 8.12(a) and (c) in a timely and complete manner, then on or before March 1st (or such date promptly thereafter as reasonably practicable) and September 1st (or such date promptly thereafter as reasonably practicable) of such year following the date of delivery or (2) if the Administrative Agent shall not have received the Engineering Reports required to be delivered by the Borrowers pursuant to Section 8.12(a) and (c) in a timely and complete manner, then promptly after the Administrative Agent has received complete Engineering Reports from the Borrowers and has had a reasonable opportunity to determine the Proposed Measurements in accordance with Section 2.06(c)(i), and in any event within fifteen (15) days after the Administrative Agent has received the required Engineering Reports; and

 

(B)         in the case of an Interim Redetermination, promptly, and in any event, within fifteen (15) days after the Administrative Agent has received the required Engineering Reports.

 

(iii)         Any Proposed Borrowing Base that would increase the Borrowing Base then in effect and any Proposed PV-9 that would increase the PV-9 then in effect must be approved or deemed to have been approved by all of the Lenders as provided in this Section 2.06(c)(iii); and any Proposed Borrowing Base that would decrease or maintain the Borrowing Base then in effect and any Proposed PV-9 that would decrease or maintain the PV-9 then in effect must be approved or be deemed to have been approved by the Required Lenders as provided in this Section 2.06(c)(iii). Upon receipt of the Proposed Borrowing Base Notice, each Lender shall have fifteen (15) days to agree with the Proposed Borrowing Base and with the Proposed PV-9 or disagree with the Proposed Borrowing Base and with the Proposed PV-9 by proposing an alternate Borrowing Base and/or alternate PV-9. If at the end of such fifteen (15) days, any Lender has not communicated its approval or disapproval in writing to the Administrative Agent, such silence shall be deemed to be an approval of the Proposed Borrowing Base and of the Proposed PV-9. If, at the end of such 15-day period, all of the Lenders, in the case of a Proposed Borrowing Base that would increase the Borrowing Base then in effect or in the case of a Proposed PV-9 that would increase the PV-9 then in effect, or the Required Lenders, in the case of a Proposed Borrowing Base that would decrease or maintain the Borrowing Base and or the PV-9 then in effect, have approved or deemed to have approved, as aforesaid, then the Proposed Borrowing Base shall become the new Borrowing Base and the Proposed PV-9 shall become the new PV-9, effective on the date

 

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specified in Section 2.06(d). If, however, at the end of such 15-day period, all of the Lenders or the Required Lenders, as applicable, have not approved or deemed to have approved, as aforesaid, then the Administrative Agent shall (A) notify the Borrowers of the Proposed Measurements and which Lenders have not approved or been deemed to have approved of the Proposed Borrowing Base and/or the Proposed PV-9 and (B) poll the Lenders to ascertain the highest Borrowing Base and PV-9 then acceptable to a number of Lenders sufficient to constitute the Required Lenders for purposes of this Section 2.06(d) and, so long as such amount does not increase the Borrowing Base and/or the PV-9 then in effect, such amount shall become the new Borrowing Base and/or PV-9, effective on the date specified in Section 2.06(d).

 

(e)         Effectiveness of a Redetermined Borrowing Base. After a redetermined Borrowing Base, Monthly Commitment Reduction, Half Life and PV-9 are approved or are deemed to have been approved by all of the Lenders or the Required Lenders, as applicable, pursuant to Section 2.06(c)(iii), the Administrative Agent shall notify the Borrowers and the Lenders of the amount of the redetermined Borrowing Base, redetermined Monthly Commitment Reduction, redetermined Half Life and redetermined PV-9 (the “New Borrowing Base Notice”), and such figures shall become the new Borrowing Base, effective and applicable to the Borrowers, the Agents, and the Lenders:

 

(i)         in the case of a Scheduled Redetermination, (A) if the Administrative Agent shall have received the Engineering Reports required to be delivered by the Borrowers pursuant to Section 8.12(a) and (c) in a timely and complete manner, then on the March 1st or September 1st, as applicable, following such notice, or (B) if the Administrative Agent shall not have received the Engineering Reports required to be delivered by the Borrowers pursuant to Section 8.12(a) and (c) in a timely and complete manner, then on the Business Day next succeeding delivery of such notice; and

 

(ii)         in the case of an Interim Redetermination, on the Business Day next succeeding delivery of such notice.

 

Such amounts shall then become the Borrowing Base, Monthly Commitment Reduction, Half Life and PV-9 until the next Scheduled Redetermination Date, the next Interim Redetermination Date or the next adjustment to such amounts under Section 8.13(c) or Section 9.12, whichever comes first. Notwithstanding the foregoing, no Scheduled Redetermination or Interim Redetermination shall become effective until the New Borrowing Base Notice related thereto is received by the Borrowers.

 

Section 2.2         Amendment to Section 8.19 of the Existing Credit Agreement.

 

(a)         Section 8.19 of the Existing Credit Agreement is hereby amended and restated as follows:

 

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8.19         Required Swap Agreements. 

 

Subject to Section 9.19 below: (i) if the aggregate Revolving Exposure of all Lenders is greater than 30% of the PV-9 (calculated on a roll forward basis), Borrowers shall enter into Swap Agreements with an Approved Counterparty of at least 50% of the reasonably anticipated projected production from proved, developed, producing Oil and Gas Properties of the Borrowers (or more current reports of production approved by Agent) but no more than 85% of such projected volumes for periods of up to, but not in excess of 24 months (ii) if the aggregate Revolving Exposure of all Lenders is less than or equal to 30% but greater than 20% of the PV-9 (calculated on a roll forward basis), Borrowers shall enter into Swap Agreements with an Approved Counterparty of at least 50% of its current volumes of the reasonably anticipated projected production from proved, developed, producing Oil and Gas Properties of the Borrowers for periods of up to, but not in excess of 12 months; and (iii) Borrowers, in their discretion, may enter into Swap Agreements with an Approved Counterparty if the aggregate Revolving Exposure of all Lenders is less than or equal to 20% of the PV-9 (calculated on a roll forward basis). For the purposes hereof, the roll forward PV-9 shall be determined by Agent in accordance with the procedures set forth in Section 2.06 above.

 

ARTICLE III.

CONDITIONS OF EFFECTIVENESS

 

Section 3.1         Effective Date. This Amendment shall become effective as of the date first above written when and only when:

 

(a)         Amendment Documents. Bank shall have received duly executed and delivered counterparts of each Amendment Document (i) in form, substance and date satisfactory to Bank and (ii) in such numbers as Bank or its counsel may reasonably request.

 

(b)         Collateral Matters. Borrower shall have executed and delivered an amendment to any Loan Document including, additional mortgages or deeds of trust, deemed necessary by Bank.

 

(c)         Officer’s Certificate. Bank shall have received a certificate of the manager or other responsible officer of Borrower certifying as of the date of this Amendment (i) that there have been no changes to its organizational ddocuments since the Closing Date, (ii) the resolutions of Borrower approving this Amendment, the other Amendment Documents and the related transactions, and (iii) the signature and incumbency certificates of the officers of Borrower (which certification may, if applicable, be by reference to previously delivered incumbency certificates).

 

(d)         Existence & Good Standing Certificates. Borrower shall be in existence and in good standing with the State of Oklahoma.

 

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(e)         Completion of Proceedings. All partnership, limited liability company, corporate and other proceedings taken or to be taken in connection with the transactions contemplated by this Amendment shall be reasonably satisfactory in form and substance to Bank.

 

(f)         Other Documentation. Bank shall have received all documents and instruments which Bank has then reasonably requested, in addition to those described in this Section 3.1. All such additional documents and instruments shall be reasonably satisfactory to Bank in form, substance and date.

 

(g)         No Default. No event shall have occurred and be continuing that would constitute an Event of Default or a Default.

 

(h)         Loan Fee. Administrative Agent and Lenders shall have received any loan fees due pursuant to the terms of the Existing Credit Agreement or any fee letter or other understanding.

 

ARTICLE IV.

REPRESENTATIONS AND WARRANTIES

 

Section 4.1         Representations and Warranties of Borrower. In order to induce Bank to enter into this Amendment, Borrower represents and warrants to Bank that:

 

(a)         All representations and warranties made by it in any Loan Document are true and correct in all material respects (without duplication of any materiality qualifier contained therein) on and as of time of the effectiveness hereof as if such representations and warranties had been made as of the time of the effectiveness hereof (except to the extent that such representation or warranty was made as of a specific date, in which case such representation or warranty shall be true and correct in all material respects (without duplication of any materiality qualifier contained therein) as of such specific date).

 

(b)         It has duly taken all limited liability company action necessary to authorize the execution and delivery by it of the Amendment Documents to which it is a party and to authorize the consummation of the transactions contemplated thereby and the performance of its obligations thereunder.

 

(c)         The execution and delivery by it of the Amendment Documents to which it is a party, the performance by it of its obligations under such Amendment Documents, and the consummation of the transactions contemplated by such Amendment Documents, do not and will not (a) conflict with, violate or result in a breach of any provision of (i), to its knowledge, any Law, (ii) its organizational documents, or (iii) any material agreement, judgment, license, order or permit applicable to or binding upon it, (b) result in the acceleration of any indebtedness owed by it, or (c) result in or require the creation of any lien upon any of its assets or properties except as expressly contemplated or permitted in the Loan Documents. Except (x) as expressly contemplated in the Amendment Documents and (y) such as have been obtained or made and are in full force and effect, to its knowledge, no permit, consent, approval, authorization or order of, and no notice to or filing with, any governmental authority or third party is required on the part

 

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of or in its respect in connection with the execution, delivery or performance by it of any Amendment Document or to consummate any transactions contemplated by the Amendment Documents.

 

(d)         This Amendment is, and the other Amendment Documents when duly executed and delivered will be, legal, valid and binding obligations of it, enforceable against it in accordance with their terms except as such enforcement may be limited by bankruptcy, insolvency or similar Laws of general application relating to the enforcement of creditors’ rights and by general principles of equity.

 

ARTICLE V.

MISCELLANEOUS

 

Section 5.1         Borrowing Base. From the date hereof through the next Borrowing Base Determination, the Borrowing Base shall be $45,000,000.00, the Monthly Commitment Reduction shall be $1,000,000.00, the Half Life shall be 60 months, and the PV-9 shall be $236,000,000. Borrowers acknowledge that this Amendment satisfies all notification requirements set forth in the Agreement pertaining to the Borrowing Base.

 

Section 5.2         Ratification of Agreements. The Existing Credit Agreement as hereby amended is hereby ratified and confirmed in all respects. The Loan Documents, as they may be amended or affected by the various Amendment Documents, are hereby ratified and confirmed in all respects. Any reference to the Loan Agreement in any Loan Document shall be deemed to be a reference to the Existing Credit Agreement as hereby amended. The execution, delivery and effectiveness of this Amendment and the other Amendment Documents shall not, except as expressly provided herein or therein, operate as a waiver of any right, power or remedy of Bank under the Loan Agreement, the Note, or any other Loan Document nor constitute a waiver of any provision of the Loan Agreement, the Note or any other Loan Document.

 

Section 5.3         Waiver and Release. In consideration of the amendments contained herein, Borrower hereby waives and releases the Bank from any and all claims and defenses, known or unknown, with respect to the Existing Credit Agreement and the other Loan Documents and the transactions contemplated thereby. Borrower agrees to execute and deliver all documents and instruments requested by Bank in connection with the subject matter hereof, which shall be reasonably satisfactory to Bank in form, substance and date and each such document or instrument is a Loan Document.

 

Section 5.4         Survival of Agreements. All of Borrower’s various representations, warranties, covenants and agreements in the Amendment Documents shall survive the execution and delivery thereof and the performance thereof, including the making or granting of the Loans and the delivery of the other Loan Documents, and shall further survive until all of the Indebtedness is paid in full to Bank and all of Bank’s obligations to Borrower are terminated.

 

Section 5.5         Fees and Expenses. The Borrower hereby agrees to pay all reasonable attorney fees and legal expenses incurred by Bank in preparation, execution and implementation of this Amendment.

 

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Section 5.6         Loan Documents. The Amendment Documents are each a Loan Document, and all provisions in the Existing Credit Agreement pertaining to Loan Documents apply thereto.

 

Section 5.7         Governing Law. This Amendment shall be governed by, and construed in accordance with, the Laws of the State of Oklahoma.

 

Section 5.8         Counterparts; Fax. This Amendment may be separately executed in counterparts and by the different parties hereto in separate counterparts, each of which when so executed shall be deemed to constitute one and the same Amendment. The Amendment Documents may be validly executed by facsimile or other electronic transmission.

 

THIS AMENDMENT AND THE OTHER AMENDMENT DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS OF THE PARTIES.

 

The remainder of this page has been left intentionally blank.

 

 

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the date first above written.

 

 

	BORROWERS:	ENERGY 11 OPERATING COMPANY, LLC, a Delaware limited liability company
	 	 
	 	 
	 	By: ENERGY 11, L.P., a Delaware limited partnership
	 	Title: Sole Member
	 	 
	 	By:         ENERGY 11 GP, LLC, a Delaware limited liability company
	 	Title:         General Partner
	 	 
	 	By:          /s/ David McKenney                  
	 	David McKenney, Manager
	 	 
	 	 
	 	ENERGY 11, L.P.
	 	By:      ENERGY 11 GP, LLC, a Delaware limited liability company
	 	Title:      General Partner
	 	 
	 	By:     /s/ David McKenney                  
	 	           David McKenney, Manager
	 	 
	GUARANTOR:	ENERGY 11 GP, LLC, a Delaware limited liability company
	 	 
	 	By:     /s/ David McKenney                  
	 	           David McKenney, Manager

 

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ADMINISTRATIVE

AGENT/LENDER:                                                     BANCFIRST, as Administrative Agent and a Lender

 

By:          /s/ Heather Healey Whiteside         

Heather Healey Whiteside, Vice President

 

 

 

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LENDER:                                                                     MIDFIRST BANK

 

By:          /s/ Chay Kramer         

Chay Kramer, Vice President

 

 

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LENDER:                                                                     GATEWAY FIRST BANK

 

By:          /s/ Charlie Crouse         

Charlie Crouse, Senior Commercial Banking Executive

 

 

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LENDER:                                                                     PEGASUS BANK

 

By:          /s/ Brian Petet         

Brian Petet, Executive Vice President

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Signature Page to Second Amendment to Credit Agreement 

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