Document:

EXHIBIT
10.1

 

1.       CONSULTANT
AGREEMENT

 

This
sets forth the agreement dated as of July 19, 2019 between RedHawk Holdings Corp., RedHawk Medical Products & Services LLC,
and any related or affiliated entities (individually and collectively, “RedHawk”), on one side, and Drew Pinsky, Inc.
(“DPI”) f/s/o Dr. Drew Pinsky (“Consultant”), on the other, upon the following terms and conditions for
Consultant to be the exclusive spokesperson for the SANDD mini needle incineration unit, SANDD Pro needle incineration unit and
any related products and/or accessories (individually and collectively, the “Product”). For good and valuable consideration,
the parties hereby agree as follows:

 

		1.	For
                                         the Product video testimonials (one to three, 2-3 minute spots and one 30 minute infomercial)
                                         featuring Consultant (individually and collectively “Spots” herein), The
                                         test period will be 90 days, then an additional 30 days only if any corrective action
                                         or edits on the Spots are necessary.

 

		2.	The
                                         Product Spots test period will commence no later than September 15, 2019.

 

		3.	Territory:
                                         Worldwide.

 

		4.	The
                                         initial period (“Initial Period”) shall commence as of the date hereof and
                                         shall continue for a period of two (2) years following the commencement of the “Campaign”
                                         which shall be deemed to start on any initial broadcast/distribution/airing/mailing of
                                         the Spots following the test period, publicity/promotion materials, social media or other
                                         media using Consultant’s name and/or likeness in connection with Product (“Media
                                         Materials”) following the test period. However, in all events the Campaign shall
                                         be commenced no later than 90 days after the test period ends. There shall be an automatic,
                                         immediately consecutive two (2)-year extension period (“Extension Period”)
                                         which shall commence upon the expiration of the Initial Period unless DPI sends RedHawk
                                         written notice of DPI’s intention to not extend at least 60 days prior to the end
                                         of the Initial Period. The Initial Period and the Extension Period are sometimes individually
                                         and collectively referred to as the “Media Period” herein. The “Term”
                                         of this agreement shall commence as of the date hereof and continue for the duration
                                         of the Media Period and for one (1) year thereafter for the collection and payment of
                                         the “Royalty” (as defined below).

 

		5.	Media/Usage:
                                         Product Spots, Direct Response TV commercials, Audiovisual Digital platforms, Search
                                         Engine Marketing, Social Media, PR, email to existing customers of RedHawk or 3rd
                                         party agencies opt-in email lists who have opted to receive emails (not
                                         any unsolicited or so-called spam emails or email blasts) and Product inserts shall all
                                         solely be in connection with marketing, promotion and advertising of the Product.

 

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		6.	Consultant
                                         will have prior approval (not to be unreasonably withheld) over any creative or other
                                         promotional materials that uses his name, likeness, copy (including, without limitation,
                                         the copy, comments, guests, co-hosts, statistics and/or testimonials of Consultant or
                                         others in the Media Materials) and/or his performance, all of which shall be used solely
                                         in connection with marketing, promotion and advertising of the Product pursuant to the
                                         terms of this agreement. Notwithstanding anything contained herein, there shall be no
                                         use of Consultant’s name or likeness on product packaging, outdoor/billboard advertising,
                                         point of purchase, magazine/newspaper ads, etc. without DPI’s prior written consent
                                         in its sole discretion in each instance. DPI shall also have prior written approval over
                                         any press releases as well as any filing and/or offering that uses Consultant’s
                                         name or likeness.

 

		7.	The
                                         Spots and all other Media Materials shall be produced during:

 

		(a)	One
                                         (1) preproduction day (up to 3 hours, not including travel time or fitting) plus two
                                         (2) one-hour script calls in advance of preproduction.

 

		(b)	Two
                                         (2) 10-hour days for filming from call time to release.

 

		(c)	One
                                         (1) 4-hour voiceover session which shall be on a different day.

                                         

 

		(d)	The
                                         foregoing preproduction day, calls, filming days and voiceover session shall all be scheduled
                                         on mutually approved days.

                                         

 

		(e)	Consultant
                                         shall have approval over Consultant’s hair, makeup and wardrobe for the Spots and
                                         Media Materials.

 

		8.	(a)
                                           Consultant shall provide six (6) social media posts during each year of the Media
                                         Period that will be organic and honest (RedHawk shall be responsible for FTC compliance,
                                         e.g., #sponsored, etc.) and RedHawk acknowledges that what Consultant posts must
                                         be truthful, factual and conform with FTC or any other governmental or medical entity
                                         rules, regulations and guidelines.

 

		(b)	DPI
shall additionally furnish the services of Consultant to perform the following services as brand ambassador for the Product:

 

		(i)	provide
video testimonial in the Spots for the Products;

 

		(ii)	provide
up to two (2) posts monthly on Twitter, Instagram, FB, etc.;

 

		(iii)	two
(2) mutually approved appearances annually subject to Consultant’s reasonable availability; and

 

		(iv)	such
other additional posts, services, appearances, etc., as mutually agreed to by Consultant and RedHawk.

 

		(c)	In
connection with providing the foregoing services, subject to the terms of this agreement, DPI and Consultant hereby grant to RedHawk
and its assigns a nonexclusive license for a period equal to the Media Period specified in paragraph 4 of this agreement, to use
Consultant’s name, pre-approved image, pre-approved likeness, pre-approved voice-over and pre-approved performances solely
in the marketing and exploitation of the RedHawk’s Products as set forth herein pursuant to the terms of this agreement.
Without limiting the generality of the foregoing, any use or exploitation of marketing and other tangible material generated as
result of the services listed above shall be mutually approved by both RedHawk and Consultant in each instance.

 

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		9.	RedHawk
                                         acknowledges and agrees that Consultant is under greater scrutiny than other celebrities,
                                         spokespersons or endorsers because he is a medical doctor who must comply with the rules,
                                         regulations and guidelines governing medical doctors (including, without limitation,
                                         the AMA, American College of Physicians, etc.) so this must at all times be taken into
                                         account in connection with the development, production, distribution, creation and his
                                         review of the Media Materials.

 

		10.	RedHawk
                                         will provide Consultant current and ongoing study results as and when received during
                                         the Term.

 

		11.	Any
                                         unused production days can be used within the first 90 days and shall not rollover to
                                         be used at another time beyond the first 90 days.

 

		12.	As
                                         a material inducement for DPI to enter this agreement, DPI shall be paid a “Royalty”
                                         or “Royalties” equal to three percent (3%) of 100% of the “Net Sales”
                                         (as defined herein) of the Products during the Term, but in no event shall the Royalty
                                         be less than (i) $3.50 per mini/consumer Product unit sold, licensed or leased (currently
                                         anticipated to be $199 per unit retail) or (ii) $13.50 per professional/industrial Product
                                         unit sold, licensed or leased (currently anticipated to be $749 per unit retail). Notwithstanding
                                         the foregoing, if there is an opportunity for a major, large volume sale and/or lease
                                         opportunity (e.g., a million units to the Veterans Administration) that requires
                                         a significant discount, then RedHawk and DPI shall discuss in good faith on a case-by-case
                                         basis a reduction in the minimum Royalty per unit for such opportunity which in all events
                                         would be proportional to reductions in the sales commissions, etc. for such major, large
                                         volume sale/lease opportunity. As used herein, “Net Sales” shall mean any
                                         and all gross monies or other compensation earned, credited, received and/or collected
                                         in connection with the sales, licensing, renting and/or leasing of any and all Products
                                         throughout the Territory during the Term whether via television, retail, wholesale, industrial,
                                         over-the- counter, online, direct response, lease, license or from third party, arm’s-length
                                         distributors and/or third party, arm’s-length subdistributors, in any and all channels,
                                         less only (i) a direct, actual, third party, out-of-pocket sales commissions (not to
                                         exceed 19.25%) and (ii) actual, direct, out-of-pocket, third party costs of manufacturing
                                         the Products. Notwithstanding anything contained herein, trade discounts shall not exceed
                                         more than ten percent (10%) of Net Sales in any applicable quarterly payment period.
                                         DPI shall receive quarterly payments (in the quarter immediately following the quarter
                                         in which earned) with detailed Royalty statements during the Term and DPI shall have
                                         the right to audit all books and records related to the Product for a period of up to
                                         three years following DPI’s receipt of any statement. If DPI’s audit reveals
                                         a discrepancy between the amount RedHawk paid and the amount actually owed to DPI pursuant
                                         to this agreement, RedHawk shall promptly pay the discrepancy and, if such discrepancy
                                         exceeds five percent (5%), then RedHawk shall also promptly reimburse DPI the costs of
                                         such audit.

 

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		13.	(a)      As
                                         a material inducement for DPI to enter into this agreement, RedHawk Holdings Corp. shall
                                         issue to Consultant via Form S-8 to be filed by RedHawk Holdings Corp. (the “Registration
                                         Statement”) (i) within 30 days of DPI’s signing this agreement, 68,700,000
                                         shares of the common stock of RedHawk Holdings Corp., which shall be equal to five percent
                                         (5%) of the issued and outstanding equity of RedHawk Holdings Corp. as of the date hereof,
                                         on a fully diluted basis, upon approval of creative materials for production days by
                                         Consultant (the “Initial Shares”), and (ii) upon the completion of the first
                                         year of the Term, 68,700,000 additional shares of the common stock of RedHawk Holdings
                                         Corp., which shall be equal to an additional five percent (5%) of the issued and outstanding
                                         equity of RedHawk Holdings Corp. as of the date hereof, on a fully diluted basis (the
                                         “Additional Shares”). Notwithstanding anything to the contrary, upon issuance
                                         of the Additional Shares, Consultant shall have been issued a total of ten percent (10%)
                                         of the issued and outstanding equity of RedHawk Holdings Corp., on a fully diluted basis,
                                         as of the date of the issuance of the Additional Shares; but in the event that Consultant
                                         would hold a lesser stake at such time (except to the extent caused by any sale of shares
                                         by Consultant), RedHawk Holdings Corp. shall issue with the Additional Shares that number
                                         of extra shares (“Extra Shares”) to Consultant such that all shares issued
                                         to Consultant through such date shall be equal to ten percent (10%) of the issued and
                                         outstanding equity of RedHawk Holdings Corp. on such date, on a fully-diluted basis (the
                                         Initial Shares, the Additional Shares, and the Extra Shares, collectively the “Equity
                                         Interest”), except as otherwise set forth in subsection (b), below. In all events,
                                         the Equity Interest shall include price protection such that if RedHawk issues shares
                                         to anyone else at a lower price than Consultant also benefits on a most favored nations
                                         basis. Consultant’s Equity Interest shall in all events be calculated (and be in
                                         the same form) as any and all shareholders in RedHawk (or related entities’) equity
                                         interest (e.g., of the same class or series; having the same rights, preferences
                                         and privileges; subject to the same restrictions; subject to dilution or anti-dilution
                                         protection upon the same basis as any other shareholder). For the purposes of compliance
                                         with IRS Section 83(b), the Equity Interest is not subject to any restrictions. Upon
                                         request by Consultant, RedHawk shall appoint Consultant, and one additional person selected
                                         by Consultant, to RedHawk Holdings Corp.’s Board of Directors. For so long as Consultant
                                         retains any portion of the Equity Interest, RedHawk shall not sell all or substantially
                                         all of the underlying patents or other assets of RedHawk Medical Products & Services
                                         LLC or any entity holding the underlying patents for the Product or effect any merger,
                                         consolidation, or acquisition of such entity, without the prior written consent of Consultant.

 

(b)       In
furtherance of separate agreements by and among Consultant and his advisors that obligate Consultant to share certain components
of his compensation with his advisors, RedHawk Holdings Corp. agrees to issue 15% of Consultant’s Initial Shares to Worldwide
Warranty Corporation and 5% of Consultant’s Initial Shares to Steven J. Younger, each in a transaction not involving a public
offering pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”); for avoidance
of doubt, the remaining 80% of Consultant’s Initial Shares shall be issued to Consultant. Upon the completion of the first
year of the Term, RedHawk Holdings Corp. shall issue 15% of Consultant’s Additional Shares (and, if applicable, Extra Shares)
to Worldwide Warranty Corporation and 5% of Consultant’s Additional Shares (and, if applicable, Extra Shares) to Steven
J. Younger, each in a transaction not involving a public offering pursuant to Section 4(a)(2) of the Securities Act of 1933; for
avoidance of doubt, the remaining 80% of Consultant’s Additional Shares (and, if applicable, Extra Shares) shall be issued
to Consultant.

 

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In
connection with this Section 13(b), the parties hereby agree and acknowledge that:

 

(i)
the Registration Statement shall register only Consultant’s Equity Interest, in accordance with the instructions to Form
S-8. The Initial Shares and Additional Shares (and, if applicable, Extra Shares) issued to Worldwide Warranty Corporation and
Steven J. Younger shall not be registered on the Registration Statement (except as set forth in subsection (iii) below);

 

(ii)
Worldwide Warranty Corporation and Steven J. Younger will receive Initial Shares and Additional Shares (and, if applicable, Extra
Shares) that have not been registered under the Securities Act or under the laws of any state; accordingly, such shares shall
be restricted securities under the Securities Act and certificates (if any) representing such shares issued to Worldwide Warranty
Corporation and Steven J. Younger will contain legends substantially as follows:

 

“THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, ASSIGNED, PLEDGED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT COVERING THE TRANSFER OR AN OPINION OF COUNSEL SATISFACTORY TO THE CORPORATION
THAT REGISTRATION UNDER THE SECURITIES ACT OR STATE SECURITIES LAWS IS NOT REQUIRED FOR SUCH TRANSFER.”

 

(iii)
Notwithstanding the foregoing, in the event Consultant designates a principal of Worldwide Warranty Corporation to be appointed
to RedHawk Holdings Corp.’s Board of Directors pursuant to Section 13(a) above, upon request by Consultant, RedHawk Holdings
Corp. shall enter into a consulting agreement with such principal for his services as a director, and any Additional Shares (and,
if applicable, Extra Shares) issuable to Worldwide Warranty Corporation shall instead be registered on the Registration Statement
(or a subsequently-filed Form S-8) and issued to such designated principal of Worldwide Warranty Corporation.

 

		14.	All
                                         services shall be pursuant to a mutually approved schedule taking into account Consultant’s
                                         professional availability.

 

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		15.	Consultant
                                         shall have approval of the Media Materials and specifically the Spots with respect to
                                         any use of his name, likeness and/or performance as well as any statements attributed
                                         to or implied as endorsed by Consultant or other participants.

 

		(a)	Product
                                         messaging associated with Consultant shall be preapproved by Consultant in writing in
                                         each instance.

 

		(b)	RedHawk
                                         currently carries $1 million per occurrence and $1 million in the aggregate of product
                                         liability, $1 million per occurrence and $2 million in the aggregate general liability
                                         insurance. Within 90 days of the date hereof, RedHawk shall increase its minimum limits
                                         to $5 million per occurrence/ $10 million aggregate which will also name DPI and Consultant
                                         as additional named insureds. RedHawk shall obtain and maintain at its sole expense during
                                         the Term hereof, and for a period of three (3) years thereafter, a comprehensive general
                                         liability insurance policy, a product liability insurance policy, an advertising liability
                                         insurance policy, and an errors and omissions liability insurance for the Spots, the
                                         Product and any other use of Consultant’s name, likeness or the Media Materials
                                         or other claims related to the rights granted hereunder that covers claims including,
                                         without limitation, bodily injury, death, property damage liability, infringement of
                                         intellectual property rights, and/or advertising injury. Such insurance shall specifically
                                         name DPI and Consultant as additional named insureds. The insurance policies will provide
                                         that thirty days’ written notice shall be furnished to DPI and Consultant prior
                                         to any cancellation or material modification. Notwithstanding anything to the contrary
                                         contained herein, prior to any use of the Media Materials, RedHawk will furnish DPI and
                                         Consultant with certificates from the insurer evidencing that $5M/$10M insurance coverage
                                         has been effected in accordance with this paragraph. RedHawk’s insurance shall
                                         be primary to any insurance carried by Consultant/DPI, which shall be non-contributory.

 

		16.	All
                                         production shall be in Southern California and the production shall be produced by a
                                         SAG/AFTRA signatory.

 

		17.	RedHawk
                                         shall provide Consultant on a continuing, timely basis with all clinical studies, efficacy
                                         studies, test results and/or other information RedHawk has or is aware of relating to
                                         the Product.

 

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		18.	RedHawk
                                         hereby represents and warrants that: (i) it has the full right, power and authority to
                                         enter this agreement (and that the consent or permission of no other person or entity
                                         including without limitation any prior investor(s), partner(s) and/or shareholder(s)
                                         are required to perform its obligations and grant the rights granted hereunder; (ii)
                                         it shall not engage in any false, misleading or deceptive advertising or fulfillment
                                         practices; (iii) all Product claims shall be reviewed and verified by reputable, knowledgeable
                                         experts to confirm their accuracy and veracity; and (iv) RedHawk shall do a thorough
                                         background check on any expert and/or participant to be interviewed/publicly involved
                                         hereunder to ensure there are no convictions, incidents or circumstances that would detract
                                         from DPI’s or Consultant’s reputation. Each party represents and warrants
                                         that the execution, delivery and performance of this agreement will not constitute a
                                         breach or default under, or conflict with, any contract, agreement, commitment or understanding
                                         to which such party is a party or by which such party is bound. Each party represents
                                         and warrants that the materials it provides or develops for use by the other party are
                                         original, truthful and accurate; are not misleading and do not infringe the rights of
                                         any third party or defame any person or entity. RedHawk hereby agrees to save, defend,
                                         indemnify and hold DPI and Consultant, its and his respective officers, directors, employees
                                         and representatives harmless from and against any and all third party expenses, damages,
                                         claims, whether valid or invalid, suits, losses, actions, judgments, liabilities, and
                                         costs whatsoever (including, without limitation, reasonable attorney fees) (collectively,
                                         “Losses”) arising out of, connected with, or resulting from: (i) any breach
                                         of or alleged breach of RedHawk’s representations, warranties and/or covenants
                                         contained herein, or any failure or omission to perform the obligations set forth herein;
                                         (ii) any product liability claims arising from use, sale and/or distribution of the Product;
                                         (iii) misconduct or negligence by RedHawk or its employees in rendering services or granting
                                         rights hereunder; or (iv) any other claim in connection with RedHawk’s manufacture,
                                         distribution, financing, fundraising, sale, publicity and/or promotion in connection
                                         with the Product.

 

		19.	All
                                         notices and payments required to be provided or paid by a party hereunder shall be provided
                                         in writing and shall be sent to the other party at the following address:

 

	If to RedHawk:	RedHawk
Medical Products & Services LLC

        8000
Innovation Park Dr.

        Baton
Rouge, LA 70820

        Attn:
Darcy Klug & Howdy Kabrins

	 	 
	If to DPI:	Myman
Greenspan Fox Rosenberg Mobasser

        Younger
& Light LLP

        11601
Wilshire Blvd. Suite 2200

        Los
Angeles, CA 90025

        Attn:
Steve Younger

	 	 
	With a copy to:	Lapides
Entertainment

        16255
Ventura Blvd., Suite 625

        Encino,
CA 91436

        Attn:
Howard Lapides & Jackie Stern

 

		20.	In
                                         the event of a dispute arising out of or relating to this agreement or the transactions
                                         contemplated hereby, the parties shall submit to binding arbitration before JAMS, Inc.
                                         (“JAMS”). Any arbitration hereunder shall be conducted under the Dispute
                                         Resolution Rules of the JAMS as modified herein and shall take place in Los Angeles,
                                         California before a single arbitrator, mutually approved, who shall be a lawyer. All
                                         arbitration proceedings shall be confidential. Neither party shall disclose any information
                                         about the evidence produced by the other party in the arbitration proceedings, except
                                         in the course of judicial, regulatory, or arbitration proceeding, or as may be demanded
                                         by government authority. The arbitrator shall apply California law, shall have authority
                                         to award any remedy or relief that a court of the State of California could grant in
                                         conformity to applicable law. The prevailing party shall receive reimbursement of reasonable
                                         outside attorneys’ fees and its costs.

                                         

 

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		21.	It
                                         is understood and agreed, and it is the intention of the parties hereto, that both DPI
                                         and Consultant are independent contractors, and neither is the employee, agent, or partner
                                         of RedHawk. Each party acknowledges that: (i) it has carefully read this agreement; (ii)
                                         it has had the assistance of legal counsel of its choosing (and such other professionals
                                         and advisors as it has deemed necessary) in the review and execution hereof, or adequate
                                         opportunity to secure same; (iii) the meaning and effect of the various terms and provisions
                                         hereof have been explained to it by such counsel/advisor(s) (or it has conducted such
                                         independent review as necessary fully to understand said terms and conditions); (iv)
                                         it has executed this Agreement of its own free will; and (v) RedHawk may file this agreement
                                         publicly with the Securities and Exchange Commission to satisfy its disclosure obligations
                                         pursuant to federal securities laws, regulations and requirements. This agreement may
                                         be amended or modified only by the written agreement executed by both RedHawk and DPI.
                                         Nothing contained herein shall require the commission of any act or the payment of any
                                         compensation which is contrary to any law, rule or regulation. If there shall exist any
                                         conflict between this agreement and any such law, rule or regulation, the latter shall
                                         prevail; and the provision(s) hereof affected shall be curtailed, limited or eliminated
                                         only to the extent necessary to remove such conflict and, as so modified, this agreement
                                         shall continue in full force and effect. This agreement shall be deemed to have been
                                         drafted by all the parties hereto, since all parties were assisted by their counsel in
                                         reviewing and agreeing thereto, and no ambiguity shall be resolved against any party
                                         by virtue of its participation in the drafting of this agreement. The payment, accounting
                                         and auditing obligations as well as the representations, warranties and indemnity obligations
                                         shall all survive any termination or expiration of this agreement for any reason with
                                         or without cause.

 

		22.	This
                                         agreement sets forth the entire agreement of the parties hereto with respect to the subject
                                         matter hereof, and supersedes any and all prior or contemporaneous understandings, correspondence
                                         or agreements, whether written or oral. This agreement can be amended or modified only
                                         by written agreement signed by both parties. This agreement shall be governed and construed
                                         in accordance with the laws of the State of California and subject to the exclusive jurisdiction
                                         of the federal and state courts located in the State of California. Each provision of
                                         this agreement is severable and if any provision shall be finally determined to be invalid,
                                         illegal, or unenforceable in any jurisdiction, the remaining provisions shall not be
                                         affected thereby, nor shall said provision be invalid or unenforceable in any other jurisdiction.
                                         Either party’s failure to enforce any provision of this agreement or to require
                                         performance by the other party shall not be construed as a waiver of such provision nor
                                         affect the validity of this agreement or any part thereof, or either party’s right
                                         to enforce any provision thereafter. This agreement may be executed in two or more counterparts,
                                         all of which together shall be considered one and the same agreement, and shall become
                                         effective when one or more such counterparts have been signed by each of the parties
                                         and delivered (including by email or scanned pdf) to the other party.

 

[Signature
Page Follows]

 

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ACKNOWLEDGED
AND AGREED:

 

	REDHAWK HOLDINGS CORP	 	DREW PINSKY, INC.	 
	 	 	 	 	 	 
	By:	/s/ G. Darcy Klug	 	By:	/s/ Drew Pinsky	 
	 	an authorized signatory	 	 	an authorized signatory	 
	 	 	 	 	 	 
	G. Darcy Klug	 	Drew Pinsky MD	 
	 	(print name)	 	 	(print name)	 
	 	 	 	 	 	 
	 Its:	 CEO and CFO	 	Its:	 	 

  

	REDHAWK MEDICAL PRODUCTS & SERVICES LLP
	 	 	 
	By:	/s/ G. Darcy Klug	 
	 	an authorized signatory	 
	 	 	 
	G. Darcy Klug	 
	 	(print name)	 
	 	 	 
	 Its:	 CEO and CFO	 

 

INDUCEMENT

 

I,
Dr. Drew Pinsky, agree to perform all obligations to be performed by me under this agreement and make all representations and
warranties made by Consultant in this agreement in order to effectuate the terms and conditions of this agreement. I agree to
look solely to Consultant for payment of any compensation due me. I hereby accept and acknowledge each and all provisions of this
agreement to the same extent as if I had signed this agreement directly.

 

	/s/ Dr. Drew Pinsky	 	Date:	7/19/2019
	Dr. Drew PinskyExhibit 10.1

  

   

  

  
    FORM OF VOTING AGREEMENT

    

    

    THIS VOTING AGREEMENT (this “Voting Agreement”), dated as of July 25, 2019, is executed by and among South Plains Financial, Inc., a Texas corporation (“SPFI”), City Bank, a Texas
      banking association (“City Bank”), West Texas State Bank, a Texas banking association (“WTSB”), and the shareholders of WTSB who are signatories hereto (referred to herein individually as a “Shareholder” and collectively as the “Shareholders”). 

      Terms with their initial letters capitalized and not otherwise defined herein have the meanings given to them in the Agreement (as defined below).

    

    

    RECITALS

    

    

    WHEREAS, concurrently with the execution of this Voting Agreement, SPFI, City Bank and WTSB are entering into that certain Agreement and Plan of Merger, dated as of the date hereof (as such agreement
      may be amended or supplemented from time to time, the “Agreement”), pursuant to which SPFI will acquire for cash all of the issued and outstanding common shares, par value $5.00 per share, of WTSB (the “WTSB Stock”) and any rights to
      acquire shares of WTSB Stock through the merger of a wholly-owned subsidiary of SPFI (“Merger Sub”) with and into WTSB, with WTSB surviving the merger (the “Merger”), and which further contemplates that WTSB and City Bank will be
      combined through a bank-level merger, with City Bank continuing as the surviving entity, pursuant to a separate agreement and plan of merger;

    

    

    WHEREAS, as a condition and inducement to SPFI’s and City Bank’s willingness to enter into the Agreement, each of the Shareholders has agreed to vote their WTSB Stock in favor of approval of the
      Agreement and the transactions contemplated thereby; and

    

    

    WHEREAS, SPFI and City Bank are relying on this Voting Agreement in incurring expenses in reviewing WTSB’s business, in proceeding with the filing of applications for regulatory approvals and in
      undertaking other actions necessary for the consummation of the Merger.

    

    

    NOW, THEREFORE, in consideration of the substantial expenses that SPFI and City Bank will incur in connection with the transactions contemplated by the Agreement and to induce SPFI and City Bank to
      execute the Agreement and to proceed to incur such expenses, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereby, severally and not jointly, agree as follows:

    

    

    AGREEMENT

    

    

    1.           Each of the Shareholders hereby severally, but not jointly, represents and warrants to SPFI and City Bank that:

    

    

    (a)         such Shareholder is the registered owner or beneficial owner of, or has full voting power with respect to, the number of shares of WTSB Stock set forth below such
      Shareholder’s name on such Shareholder’s signature page to this Voting Agreement (the “Shares”) free and clear of all liens or encumbrances;

    

    

    (b)         except pursuant to this Voting Agreement, there are no options, warrants or other rights, agreements, arrangements or commitments of any character to which such
      Shareholder is a party relating to the pledge, disposition or voting of any of the Shares and there are no voting trusts or voting agreements with respect to the Shares;

    

    

    
      

      
        

    

    
    (c)         such Shareholder does not beneficially own any shares of WTSB Stock other than (i) the Shares, and (ii) any options, warrants or other rights to acquire any additional
      shares of WTSB Stock or any security exercisable for or convertible into shares of WTSB Stock set forth on the signature page of this Voting Agreement; and

    

    

    (d)          such Shareholder has had an opportunity to obtain the advice of legal counsel prior to executing this Voting Agreement.

    

    

    2.           Each Shareholder hereby agrees during the term of this Voting Agreement to vote the Shares, and any additional shares of WTSB Stock or other voting securities of WTSB acquired by such
      Shareholder after the date hereof, (a) in favor of the approval and adoption of the Agreement and the transactions contemplated thereby at the meeting of shareholders of WTSB called for the purpose of considering and voting upon the approval of the
      Agreement and the transactions contemplated thereby (the “WTSB Meeting”) and (b) against approval of any Acquisition Proposal or any other proposal made in opposition to or in competition with this Voting Agreement or the Agreement (such
      Acquisition Proposal or other proposal, an “Opposing Proposal”) presented at the WTSB Meeting or any other meeting of shareholders held prior or subsequent to the WTSB Meeting or for which WTSB otherwise seeks the approval of the shareholders
      of WTSB.

    

    

    3.          Each Shareholder shall not invite or seek any Opposing Proposal, support (or publicly suggest that anyone else should support) any Opposing Proposal that may be made, or ask the board of
      directors of WTSB to consider, support or seek any Opposing Proposal or otherwise take any action designed to make any Opposing Proposal more likely.  None of the Shareholders shall meet or otherwise communicate with any person or entity that makes
      or is considering making an Opposing Proposal or any representative of such person or entity after becoming aware that the person or entity has made or is considering making an Opposing Proposal.  Each Shareholder shall promptly advise WTSB of each
      contact the Shareholder or any of the Shareholder’s representatives may receive from any person or entity relating to any Opposing Proposal or otherwise indicating that any person or entity may wish to participate or engage in any transaction arising
      out of any Opposing Proposal and shall provide WTSB with all information that is reasonably requested by SPFI and/or City Bank and is reasonably available to the Shareholder regarding any such Opposing Proposal or possible Opposing Proposal, unless
      such Shareholder knows WTSB has provided SPFI and/or City Bank with such information, and WTSB shall in turn provide any such information to SPFI and/or City Bank.  Each Shareholder shall not make any claim or join in any litigation alleging that the
      board of directors of WTSB is required to consider, endorse or support any Opposing Proposal or to invite or seek any Opposing Proposal.  Each Shareholder shall not take any other action that is reasonably likely to make consummation of the Merger
      less likely or to impair SPFI’s or City Bank’s ability to exercise any of the rights granted by the Agreement.

    

    

    4.           While this Voting Agreement is in effect, each Shareholder shall not, directly or indirectly, (a) sell, transfer, assign, pledge, encumber, hypothecate, cause to be redeemed or otherwise
      dispose (any such transaction, a “Transfer”) of any or all Shares or any shares of WTSB Stock subsequently acquired, (b) grant any proxy or interest in or with respect to any Shares or (c) deposit any Shares into a voting trust or enter into a
      voting agreement or arrangement with respect to any shares of WTSB Stock or grant any proxy with respect thereto, other than to other members of the board of directors of WTSB for the purpose of voting to approve the Agreement and the transactions
      contemplated thereby.  This Section 4 shall not prohibit (w) Transfers to any member of the Shareholder’s family, subject to the transferee’s agreeing in writing to be bound by the terms of this Voting Agreement, (x) Transfers for estate and tax
      planning purposes, including Transfers to relatives, trusts and charitable organizations, subject to the transferee agreeing in writing to be bound by the terms of this Voting Agreement and the delivery of such agreement to SPFI and City Bank, (y)
      Transfers to any other shareholder of WTSB who has executed a copy of this Voting Agreement on the date hereof, and (z) such Transfers as SPFI and City Bank may otherwise permit in its sole discretion in writing.  Any attempted Transfer of Shares or
      any shares of WTSB Stock subsequently acquired or any interest therein in violation of this Section 4 shall be null and void.

    

    

    
      

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    5.           Each Shareholder acknowledges that SPFI and City Bank are relying on this Voting Agreement in reviewing the business of WTSB in proceeding with the filing of applications for regulatory
      approvals and in undertaking other actions necessary for the consummation of the Merger.  WTSB and each Shareholder acknowledges that the performance of this Voting Agreement is intended to benefit SPFI, City Bank and WTSB.

    

    

    6.           This Voting Agreement shall continue in effect until the earlier to occur of (a) the termination of the Agreement in accordance with its terms, (b) the consummation of the Merger, or (c)
      the fifth (5th) anniversary of the date of this Voting Agreement.

    

    

    7.           Nothing in this Voting Agreement shall be deemed to restrict any of the Shareholders from taking any action on behalf of WTSB solely in the capacity of a director or officer of WTSB (if
      applicable) that such Shareholder believes is necessary to fulfill the Shareholder’s duties and obligations as a director or officer (if applicable).  Each Shareholder is executing this Voting Agreement solely in his or her capacity as a shareholder
      of WTSB.

    

    

    8.           Each Shareholder has the legal capacity, power and authority to enter into and perform all of the Shareholder’s obligations under this Voting Agreement.  This Voting Agreement has been
      duly and validly executed and delivered by the Shareholder and constitutes the legal, valid and binding obligation of the Shareholder, enforceable against the Shareholder in accordance with its terms except as the enforceability may be limited by
      bankruptcy, insolvency or other laws affecting creditors rights (whether enforce in law or in equity).  If the Shareholder is married and his or her Shares constitute community property, this Voting Agreement has been duly authorized, executed and
      delivered by, and constitutes a valid and binding agreement of, such Shareholder’s spouse, enforceable against such spouse in accordance with its terms.

    

    

    9.           Each Shareholder hereby (a) confirms such Shareholder’s knowledge of the availability of the rights of dissenting shareholders under the Texas Business Organizations Code (the “TBOC”)

      with respect to the Merger and (b) confirms receipt of a copy of the provisions of the TBOC related to the rights of dissenting shareholders attached hereto as Annex A.  Each Shareholder hereby waives and agrees not to assert, and shall use
      its best efforts to cause any of its affiliates who hold of record any of the Shareholder’s Shares to waive and not to assert, any appraisal rights with respect to the Merger that the Shareholder or such affiliate may now or hereafter have with
      respect to any Shares (or any other shares of capital stock of WTSB that the Shareholder shall hold of record at the time that Shareholder may be entitled to assert appraisal rights with respect to the Merger) whether pursuant to the TBOC or
      otherwise.

    

    

    10.        This Voting Agreement may not be modified, amended, altered or supplemented with respect to a particular Shareholder except upon the execution and delivery of a written agreement executed
      by each of SPFI, City Bank, WTSB and the Shareholder.  Any such amendment, modification, alteration or supplement shall only apply to the Shareholder(s) executing such written agreement and this Voting Agreement shall remain in full force and effect
      with respect to Shareholders who do not execute such written agreement.

    

    

    11.         For the convenience of the parties hereto, this Voting Agreement may be executed simultaneously in two or more counterparts, each of which will be deemed an original but all of which
      shall constitute one and the same instrument.  An email or electronic scan in “.pdf” format of a signed counterpart of this Voting Agreement will be sufficient to bind the party or parties whose signature(s) appear thereon.

    

    

    
      

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    12.         This Voting Agreement, together with the Agreement and the agreements contemplated thereby, embody the entire agreement and understanding of the parties hereto in respect to the subject
      matter contained herein.  This Voting Agreement supersedes all prior agreements and understandings among the parties with respect to such subject matter contained herein.  In the event of a conflict between the terms of this Voting Agreement and the
      terms of the Agreement, the terms of the Agreement shall control.

    

    

    13.         All notices, requests, demands and other communications required or permitted to be given under this Voting Agreement shall be in writing and shall be deemed to have been duly given if
      delivered in person, mailed by first class mail (postage prepaid) or sent by email, courier or personal delivery to the parties at the following addresses unless by such notice a different address shall have been designated:

    

    

    If to SPFI or City Bank:

    

    

    Mr. Curtis C. Griffith

    Chairman and CEO

    South Plains Financial, Inc.

    5219 City Bank Parkway

    Lubbock, Texas  79407

    Facsimile:  (806) 791-5331

    Electronic mail: cgriffith@city.bank

    

    

    With a copy (which shall not constitute notice) to:

    

    

    Mrs. Heather A. Eastep

    Hunton Andrews Kurth LLP

    2200 Pennsylvania Avenue NW

    Washington, DC  20037

    Facsimile:  (202) 778-2201

    Electronic mail: heastep@HuntonAK.com

    

    

    If to WTSB:

    

    

    Mr. R. Jay Phillips

    Chairman and CEO

    West Texas State Bank

    1501 West University Boulevard

    Odessa, Texas  79764

    Facsimile: (432) 570-8728

    Electronic mail: rjayphillips@wtstatebk.com

    

    

    With a copy (which shall not constitute notice) to:

    

    

    Mr. Sanford M. Brown

    Alston & Bird LLP

    2200 Ross Avenue

    Suite 2300

    Dallas, Texas  75201

    Facsimile: (214) 922-3899

    Electronic mail: sanford.brown@alston.com

    

    

    
      

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    If to a Shareholder:

    

    

    At the address set forth on such Shareholder’s signature page to this Voting Agreement.

    

    

    All notices sent by mail as provided above shall be deemed delivered three (3) days after deposit in the mail, all notices sent by courier as provided above shall be deemed delivered one (1) day
      after being sent and all notices sent by email shall be deemed delivered upon confirmation of receipt.  All other notices shall be deemed delivered when actually received.  Any party to this Voting Agreement may change its address for the giving of
      notice specified above by giving notice as provided herein.  Notices permitted to be sent via email shall be deemed delivered only if sent to such persons at such email addresses as may be set forth in writing (and confirmation of receipt is received
      by the sending party).

    

    

    14.         From time to time, at SPFI’s or City Bank’s request and without further consideration, each Shareholder shall execute and deliver such additional documents reasonably requested by SPFI or
      City Bank as may be necessary or desirable to consummate and make effective, in the most expeditious manner practicable, the transactions contemplated by this Voting Agreement.

    

    

    15.         Each Shareholder recognizes and acknowledges that a breach by the Shareholder of any covenants or agreements contained in this Voting Agreement will cause SPFI and/or City Bank to sustain
      damages for which it would not have an adequate remedy at law for money damages, and therefore the parties hereto agree that, in the event of any such breach, SPFI and/or City Bank shall be entitled to seek the remedy of specific performance of such
      covenants and agreements and injunctive and other equitable relief, without the necessity of posting bond or proving actual damages, in addition to any other remedy to which it may be entitled, at law or in equity.

    

    

    16.         THIS VOTING AGREEMENT IS TO BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS WITHOUT REGARD FOR CONFLICT OF LAWS PRINCIPLES THEREOF.  ANY SUIT, ACTION OR
      OTHER PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS VOTING AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY MUST BE BROUGHT IN THE COURTS OF THE STATE OF TEXAS, COUNTY OF LUBBOCK, OR, IF IT HAS OR CAN ACQUIRE JURISDICTION, IN
      THE U.S. DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS (LUBBOCK DIVISION), AND EACH PARTY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF SUCH COURT IN ANY SUCH SUIT, ACTION OR OTHER PROCEEDING.

    

    

    17.         EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS VOTING AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY
      HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY SUIT, ACTION OR OTHER PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO
      THIS VOTING AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS VOTING AGREEMENT.  EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT:  (A) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY
      WOULD NOT, IN THE EVENT OF ANY ACTION, SUIT OR PROCEEDING, SEEK TO ENFORCE THE FOREGOING WAIVER, (B) EACH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) EACH PARTY MAKES THIS WAIVER VOLUNTARILY AND (D) EACH PARTY HAS BEEN
      INDUCED TO ENTER INTO THIS VOTING AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 17.

    

    

    
      

      5

      
        

    

    18.        All of the terms, covenants, representations, warranties and conditions of this Voting Agreement are binding upon, and inure to the benefit of and are enforceable by, the parties and their
      respective successors, representatives and permitted assigns.  No party hereto may assign this Voting Agreement, by operation of law or otherwise, in whole or in part, without the prior written consent of the other parties, and any purported
      assignment made or attempted in violation of this Section 18 shall be null and void.  Nothing contained in this Voting Agreement, express or implied, is intended to confer upon any persons or entities, other than the parties hereto or their
      respective successors, any rights, remedies, obligations or liabilities under or by reason of this Voting Agreement.

    

    

    19.        If any provision of this Voting Agreement is held invalid or unenforceable by any court of competent jurisdiction, there will be added automatically as a part of this Voting Agreement a
      provision mutually agreed to which is similar in terms to such invalid or unenforceable provision as may be possible and still be valid and enforceable, and the other provisions of this Voting Agreement will remain in full force and effect.  Any
      provision of this Voting Agreement held invalid or unenforceable only in part or degree will remain in full force and effect to the extent not held invalid or unenforceable.

    

    

    [Signature Page Follows]

    

    

    
      

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    IN WITNESS WHEREOF, the parties hereto have executed this Voting Agreement as of the date first above written.

    

    

    	 	
            SOUTH PLAINS FINANCIAL, INC.

          
	 	 	 
	 	
            By:

          	

          
	 	 	
            Curtis C. Griffith, Chairman & Chief Executive Officer

          
	 	 	 
	 	
            CITY BANK

          
	 	 	 
	 	
            By:

          	

          
	 	 	
            Cory T. Newsom, President & Chief Executive Officer

          
	 	 	 
	 	
            WEST TEXAS STATE BANK

          
	 	 	 
	 	
            By:

          	

          
	 	 	
            R. Jay Phillips, Chairman & Chief Executive Officer

          

    

    

    	 	
            SHAREHOLDER

          
	 	 

    
      	
               

            	
               

            
	
               

            	
              Name:

            	 

    

    
      	
               

            	
              Number of Shares:

            	 

    

    

    

    
      	
               

            	
              Address for notice purposes:

            
	
               

            	
               

            	
               

            
	
               

            	
               

            	
               

            
	
               

            	
               

            	
               

            

    

    

    

    
      [Signature Page to Voting Agreement]

    

    

    

    
      

      
        

    

    ANNEX A

    

    

    DISSENTERS’ RIGHTS

    

    

    § 10.351. APPLICABILITY OF SUBCHAPTER.

    

    

    (a)          This subchapter does not apply to a fundamental business transaction of a domestic entity if, immediately before the effective date of the fundamental business transaction, all of the
      ownership interests of the entity otherwise entitled to rights to dissent and appraisal under this code are held by one owner or only by the owners who approved the fundamental business transaction.

    

    

    (b)         This subchapter applies only to a “domestic entity subject to dissenters’ rights,” as defined in Section 1.002.  That term includes a domestic for-profit corporation, professional
      corporation, professional association, and real estate investment trust.  Except as provided in Subsection (c), that term does not include a partnership or limited liability company.

    

    

    (c)          The governing documents of a partnership or a limited liability company may provide that its owners are entitled to the rights of dissent and appraisal provided by this subchapter.

    

    

    § 10.352. DEFINITIONS.

    

    

    In this subchapter:

    

    

    (1)          “Dissenting owner” means an owner of an ownership interest in a domestic entity subject to dissenters’ rights who:

    

    

    (A)          provides notice under Section 10.356; and

    

    

    (B)          complies with the requirements for perfecting that owner’s right to dissent under this subchapter.

    

    

    (2)          “Responsible organization” means:

    

    

    (A)          the organization responsible for:

    

    

    (i)          the provision of notices under this subchapter; and

    

    

    (ii)         the primary obligation of paying the fair value for an ownership interest held by a dissenting owner;

    

    

    (B)          with respect to a merger or conversion:

    

    

    (i)          for matters occurring before the merger or conversion, the organization that is merging or converting; and

    

    

    (ii)         for matters occurring after the merger or conversion, the surviving or new organization that is primarily obligated for the payment of the fair value of the dissenting owner’s ownership
      interest in the merger or conversion;

    

    

    (C)         with respect to an interest exchange, the organization the ownership interests of which are being acquired in the interest exchange; and

    

    

    (D)         with respect to the sale of all or substantially all of the assets of an organization, the organization the assets of which are to be transferred by sale or in another manner.

    

    

    
      

      
        

    

    § 10.353. FORM AND VALIDITY OF NOTICE.

    

    

    (a)          Notice required under this subchapter:

    

    

    (1)          must be in writing; and

     

    

    (2)          may be mailed, hand-delivered, or delivered by courier or electronic transmission.

    

    

    (b)          Failure to provide notice as required by this subchapter does not invalidate any action taken.

    

    

    § 10.354. RIGHTS OF DISSENT AND APPRAISAL.

    

    

    (a)          Subject to Subsection (b), an owner of an ownership interest in a domestic entity subject to dissenters’ rights is entitled to:

    

    

    (1)          dissent from:

    

    

    (A)         a plan of merger to which the domestic entity is a party if owner approval is required by this code and the owner owns in the domestic entity an ownership interest that was entitled to
      vote on the plan of merger;

    

    

    (B)         a sale of all or substantially all of the assets of the domestic entity if owner approval is required by this code and the owner owns in the domestic entity an ownership interest that
      was entitled to vote on the sale;

    

    

    (C)         a plan of exchange in which the ownership interest of the owner is to be acquired;

    

    

    (D)         a plan of conversion in which the domestic entity is the converting entity if owner approval is required by this code and the owner owns in the domestic entity an ownership interest that
      was entitled to vote on the plan of conversion; or

    

    

    (E)         a merger effected under Section 10.006 in which:

    

    

    (i)          the owner is entitled to vote on the merger; or

    

    

    (ii)         he ownership interest of the owner is converted or exchanged; and

    

    

    (2)          Subject to compliance with the procedures set forth in this subchapter, obtain the fair value of that ownership interest through an appraisal.

    

    

    (b)          Notwithstanding Subsection (a), subject to Subsection (c), an owner may not dissent from a plan of merger or conversion in which there is a single surviving or new domestic entity or
      non-code organization, or from a plan of exchange, if:

    

    

    (1)        the ownership interest, or a depository receipt in respect of the ownership interest, held by the owner is part of a class or series of ownership interests, or depository receipts in
      respect of ownership interests, that are, on the record date set for purposes of determining which owners are entitled to vote on the plan of merger, conversion, or exchange, as appropriate:

    

    

    (A)         listed on a national securities exchange or a similar system;

    

    

    (B)         listed on the Nasdaq Stock Market or a successor quotation system;

    

    

    
      

      
        

    

    (C)         designated as a national market security on an interdealer quotation system by the National Association of Securities Dealers, Inc., or a successor system; or

    

    

    (D)         held of record by at least 2,000 owners;

    

    

    (2)         the owner is not required by the terms of the plan of merger, conversion, or exchange, as appropriate, to accept for the owner’s ownership interest any consideration that is different
      from the consideration to be provided to any other holder of an ownership interest of the same class or series as the ownership interest held by the owner, other than cash instead of fractional shares or interests the owner would otherwise be
      entitled to receive; and

    

    

    (3)         the owner is not required by the terms of the plan of merger, conversion, or exchange, as appropriate, to accept for the owner’s ownership interest any consideration other than:

    

    

    (A)       ownership interests, or depository receipts in respect of ownership interests, of a domestic entity or non-code organization of the same general organizational type that, immediately after
      the effective date of the merger, conversion, or exchange, as appropriate, will be part of a class or series of ownership interests, or depository receipts in respect of ownership interests, that are:

    

    

    (i)          listed on a national securities exchange or authorized for listing on the exchange on official notice of issuance;

    

    

    (ii)         approved for quotation as a national market security on an interdealer quotation system by the National Association of Securities Dealers, Inc., or a successor entity; or

    

    

    (iii)        held of record by at least 2,000 owners;

    

    

    (B)         cash instead of fractional ownership interests the owner would otherwise be entitled to receive; or

    

    

    (C)         any combination of the ownership interests and cash described by Paragraphs (A) and (B).

    

    

    (c)          Subsection (b) shall not apply to a domestic entity that is a subsidiary with respect to a merger under Section 10.006.

    

    

    § 10.355. NOTICE OF RIGHT OF DISSENT AND APPRAISAL.

    

    

    (a)          A domestic entity subject to dissenters’ rights that takes or proposes to take an action regarding which an owner has a right to dissent and obtain an appraisal under Section 10.354
      shall notify each affected owner of the owner’s rights under that section if:

    

    

    (1)          the action or proposed action is submitted to a vote of the owners at a meeting; or

    

    

    (2)          approval of the action or proposed action is obtained by written consent of the owners instead of being submitted to a vote of the owners.

    

    

    (b)         If a parent organization effects a merger under Section 10.006 and a subsidiary organization that is a party to the merger is a domestic entity subject to dissenters’ rights, the
      responsible organization shall notify the owners of that subsidiary organization who have a right to dissent to the merger under Section 10.354 of their rights under this subchapter not later than the 10th day after the effective date of the merger. 
      The notice must also include a copy of the certificate of merger and a statement that the merger has become effective.

    

    

    
      

      
        

    

    (c)          A notice required to be provided under Subsection (a) or (b) must:

    

    

    (1)          be accompanied by a copy of this subchapter; and

    

    

    (2)          advise the owner of the location of the responsible organization’s principal executive offices to which a notice required under Section 10.356(b)(2) may be provided.

    

    

    (d)          In addition to the requirements prescribed by Subsection (c), a notice required to be provided under Subsection (a)(1) must accompany the notice of the meeting to consider the action,
      and a notice required under Subsection (a)(2) must be provided to:

    

    

    (1)          each owner who consents in writing to the action before the owner delivers the written consent; and

    

    

    (2)          each owner who is entitled to vote on the action and does not consent in writing to the action before the 11th day after the date the action takes effect.

    

    

    (e)          Not later than the 10th day after the date an action described by Subsection (a)(1) takes effect, the responsible organization shall give notice that the action has been effected to each
      owner who voted against the action and sent notice under Section 10.356(b)(2).

    

    

    § 10.356. PROCEDURE FOR DISSENT BY OWNERS AS TO ACTIONS; PERFECTION OF RIGHT OF DISSENT AND APPRAISAL.

    

    

    (a)          An owner of an ownership interest of a domestic entity subject to dissenters’ rights who has the right to dissent and appraisal from any of the actions referred to in Section 10.354 may
      exercise that right to dissent and appraisal only by complying with the procedures specified in this subchapter.  An owner’s right of dissent and appraisal under Section 10.354 may be exercised by an owner only with respect to an ownership interest
      that is not voted in favor of the action.

    

    

    (b)          To perfect the owner’s rights of dissent and appraisal under Section 10.354, an owner:

    

    

    (1)          with respect to the ownership interest for which the rights of dissent and appraisal are sought:

    

    

    (A)         must vote against the action if the owner is entitled to vote on the action and the action is approved at a meeting of the owners; and

    

    

    (B)         may not consent to the action if the action is approved by written consent; and

    

    

    (2)          must give to the responsible organization a notice dissenting to the action that:

    

    

    (A)         is addressed to the president and secretary of the responsible organization;

    

    

    (B)         demands payment of the fair value of the ownership interests for which the rights of dissent and appraisal are sought;

    

    

    
      

      
        

    

    (C)         provides to the responsible organization an address to which a notice relating to the dissent and appraisal procedures under this subchapter may be sent;

    

    

    (D)         states the number and class of the ownership interests of the domestic entity owned by the owner and the fair value of the ownership interests as estimated by the owner; and

    

    

    (E)         is delivered to the responsible organization at its principal executive offices at the following time:

    

    

    (i)          before the action is considered for approval, if the action is to be submitted to a vote of the owners at a meeting;

    

    

    (ii)         not later than the 20th day after the date the responsible organization sends to the owner a notice that the action was approved by the requisite vote of the owners, if the action is to
      be undertaken on the written consent of the owners; or

    

    

    (iii)        not later than the 20th day after the date the responsible organization sends to the owner a notice that the merger was effected, if the action is a merger effected under Section
      10.006.

    

    

    (c)          An owner who does not make a demand within the period required by Subsection (b)(2)(E) is bound by the action and is not entitled to exercise the rights of dissent and appraisal under
      Section 10.354.

    

    

    (d)         Not later than the 20th day after the date an owner makes a demand under this section, the owner must submit to the responsible organization any certificates representing the ownership
      interest to which the demand relates for purposes of making a notation on the certificates that a demand for the payment of the fair value of an ownership interest has been made under this section.  An owner’s failure to submit the certificates
      within the required period has the effect of terminating, at the option of the responsible organization, the owner’s rights to dissent and appraisal under Section 10.354 unless a court, for good cause shown, directs otherwise.

    

    

    (e)          If a domestic entity and responsible organization satisfy the requirements of this subchapter relating to the rights of owners of ownership interests in the entity to dissent to an
      action and seek appraisal of those ownership interests, an owner of an ownership interest who fails to perfect that owner’s right of dissent in accordance with this subchapter may not bring suit to recover the value of the ownership interest or money
      damages relating to the action.

    

    

    § 10.357. WITHDRAWAL OF DEMAND FOR FAIR VALUE OF OWNERSHIP INTEREST.

    

    

    (a)          An owner may withdraw a demand for the payment of the fair value of an ownership interest made under Section 10.356 before:

    

    

    (1)          payment for the ownership interest has been made under Sections 10.358 and 10.361; or

    

    

    (2)          a petition has been filed under Section 10.361.

    

    

    
      

      
        

    

    (b)          Unless the responsible organization consents to the withdrawal of the demand, an owner may not withdraw a demand for payment under Subsection (a) after either of the events specified in
      Subsections (a)(1) and (2).

    

    

    § 10.358. RESPONSE BY ORGANIZATION TO NOTICE OF DISSENT AND DEMAND FOR FAIR VALUE BY DISSENTING OWNER.

    

    

    (a)          Not later than the 20th day after the date a responsible organization receives a demand for payment made by a dissenting owner in accordance with Section 10.356, the responsible
      organization shall respond to the dissenting owner in writing by:

    

    

    (1)          accepting the amount claimed in the demand as the fair value of the ownership interests specified in the notice; or

    

    

    (2)          rejecting the demand and including in the response the requirements prescribed by Subsection (c).

    

    

    (b)        If the responsible organization accepts the amount claimed in the demand, the responsible organization shall pay the amount not later than the 90th day after the date the action that is
      the subject of the demand was effected if the owner delivers to the responsible organization:

    

    

    (1)          endorsed certificates representing the ownership interests if the ownership interests are certificated; or

    

    

    (2)          signed assignments of the ownership interests if the ownership interests are uncertificated.

    

    

    (c)          If the responsible organization rejects the amount claimed in the demand, the responsible organization shall provide to the owner:

    

    

    (1)          an estimate by the responsible organization of the fair value of the ownership interests; and

    

    

    (2)          an offer to pay the amount of the estimate provided under Subdivision (1).

    

    

    (d)          An offer made under Subsection (c)(2) must remain open for a period of at least 60 days from the date the offer is first delivered to the dissenting owner.

    

    

    (e)          If a dissenting owner accepts an offer made by a responsible organization under Subsection (c)(2) or if a dissenting owner and a responsible organization reach an agreement on the fair
      value of the ownership interests, the responsible organization shall pay the agreed amount not later than the 60th day after the date the offer is accepted or the agreement is reached, as appropriate, if the dissenting owner delivers to the
      responsible organization:

    

    

    (1)          endorsed certificates representing the ownership interests if the ownership interests are certificated; or

    

    

    (2)          signed assignments of the ownership interests if the ownership interests are uncertificated.

    

    

    
      

      
        

    

    § 10.359. RECORD OF DEMAND FOR FAIR VALUE OF OWNERSHIP INTEREST.

    

    

    (a)          A responsible organization shall note in the organization’s ownership interest records maintained under Section 3.151 the receipt of a demand for payment from any dissenting owner made
      under Section 10.356.

    

    

    (b)          If an ownership interest that is the subject of a demand for payment made under Section 10.356 is transferred, a new certificate representing that ownership interest must contain:

    

    

    (1)          a reference to the demand; and

    

    

    (2)          the name of the original dissenting owner of the ownership interest.

    

    

    § 10.360. RIGHTS OF TRANSFEREE OF CERTAIN OWNERSHIP INTEREST.  A transferee of an ownership interest that is the subject of a demand for payment made under Section 10.356 does not acquire additional rights
      with respect to the responsible organization following the transfer.  The transferee has only the rights the original dissenting owner had with respect to the responsible organization after making the demand.

    

    

    § 10.361. PROCEEDING TO DETERMINE FAIR VALUE OF OWNERSHIP INTEREST AND OWNERS ENTITLED TO PAYMENT;  APPOINTMENT OF APPRAISERS.

    

    

    (a)          If a responsible organization rejects the amount demanded by a dissenting owner under Section 10.358 and the dissenting owner and responsible organization are unable to reach an
      agreement relating to the fair value of the ownership interests within the period prescribed by Section 10.358(d), the dissenting owner or responsible organization may file a petition requesting a finding and determination of the fair value of the
      owner’s ownership interests in a court in:

    

    

    (1)          the county in which the organization’s principal office is located in this state; or

    

    

    (2)          the county in which the organization’s registered office is located in this state, if the organization does not have a business office in this state.

    

    

    (b)          A petition described by Subsection (a) must be filed not later than the 60th day after the expiration of the period required by Section 10.358(d).

    

    

    (c)         On the filing of a petition by an owner under Subsection (a), service of a copy of the petition shall be made to the responsible organization.  Not later than the 10th day after the date
      a responsible organization receives service under this subsection, the responsible organization shall file with the clerk of the court in which the petition was filed a list containing the names and addresses of each owner of the organization who has
      demanded payment for ownership interests under Section 10.356 and with whom agreement as to the value of the ownership interests has not been reached with the responsible organization.  If the responsible organization files a petition under
      Subsection (a), the petition must be accompanied by this list.

    

    

    (d)          The clerk of the court in which a petition is filed under this section shall provide by registered mail notice of the time and place set for the hearing to:

    

    

    
      

      
        

    

    (1)          the responsible organization; and

    

    

    (2)          each owner named on the list described by Subsection (c) at the address shown for the owner on the list.

    

    

    (e)          The court shall:

    

    

    (1)          determine which owners have:

    

    

    (A)         perfected their rights by complying with this subchapter; and

    

    

    (B)         become subsequently entitled to receive payment for the fair value of their ownership interests; and

    

    

    (2)          appoint one or more qualified appraisers to determine the fair value of the ownership interests of the owners described by Subdivision (1).

    

    

    (f)          The court shall approve the form of a notice required to be provided under this section.  The judgment of the court is final and binding on the responsible organization, any other
      organization obligated to make payment under this subchapter for an ownership interest, and each owner who is notified as required by this section.

    

    

    § 10.362. COMPUTATION AND DETERMINATION OF FAIR VALUE OF OWNERSHIP INTEREST.

    

    

    (a)          For purposes of this subchapter, the fair value of an ownership interest of a domestic entity subject to dissenters’ rights is the value of the ownership interest on the date preceding
      the date of the action that is the subject of the appraisal.  Any appreciation or depreciation in the value of the ownership interest occurring in anticipation of the proposed action or as a result of the action must be specifically excluded from the
      computation of the fair value of the ownership interest.

    

    

    (b)          In computing the fair value of an ownership interest under this subchapter, consideration must be given to the value of the organization as a going concern without including in the
      computation of value any:

    

    

    (1)          payment for a control premium or minority discount other than a discount attributable to the type of ownership interests held by the dissenting owner; and

    

    

    (2)          limitation placed on the rights and preferences of those ownership interests.

    

    

    (c)          The determination of the fair value of an ownership interest made for purposes of this subchapter may not be used for purposes of making a determination of the fair value of that
      ownership interest for another purpose or of the fair value of another ownership interest, including for purposes of determining any minority or liquidity discount that might apply to a sale of an ownership interest.

    

    

    § 10.363. POWERS AND DUTIES OF APPRAISER; APPRAISAL PROCEDURES.

    

    

    (a)          An appraiser appointed under Section 10.361 has the power and authority that:

    

    

    (1)          is granted by the court in the order appointing the appraiser; and

    

    

    
      

      
        

    

    (2)          may be conferred by a court to a master in chancery as provided by Rule 171, Texas Rules of Civil Procedure.

    

    

    (b)          The appraiser shall:

    

    

    (1)          determine the fair value of an ownership interest of an owner adjudged by the court to be entitled to payment for the ownership interest; and

    

    

    (2)          file with the court a report of that determination.

    

    

    (c)         The appraiser is entitled to examine the books and records of a responsible organization and may conduct investigations as the appraiser considers appropriate.  A dissenting owner or
      responsible organization may submit to an appraiser evidence or other information relevant to the determination of the fair value of the ownership interest required by Subsection (b)(1).

    

    

    (d)          The clerk of the court appointing the appraiser shall provide notice of the filing of the report under Subsection (b) to each dissenting owner named in the list filed under Section
      10.361 and the responsible organization.

    

    

    § 10.364. OBJECTION TO APPRAISAL; HEARING.

    

    

    (a)          A dissenting owner or responsible organization may object, based on the law or the facts, to all or part of an appraisal report containing the fair value of an ownership interest
      determined under Section 10.363(b).

    

    

    (b)         If an objection to a report is raised under Subsection (a), the court shall hold a hearing to determine the fair value of the ownership interest that is the subject of the report.  After
      the hearing, the court shall require the responsible organization to pay to the holders of the ownership interest the amount of the determined value with interest, accruing from the 91st day after the date the applicable action for which the owner
      elected to dissent was effected until the date of the judgment.

    

    

    (c)          Interest under Subsection (b) accrues at the same rate as is provided for the accrual of prejudgment interest in civil cases.

    

    

    (d)          The responsible organization shall:

    

    

    (1)          immediately pay the amount of the judgment to a holder of an uncertificated ownership interest; and

    

    

    (2)          pay the amount of the judgment to a holder of a certificated ownership interest immediately after the certificate holder surrenders to the responsible organization an endorsed
      certificate representing the ownership interest.

    

    

    (e)          On payment of the judgment, the dissenting owner does not have an interest in the:

    

    

    (1)          ownership interest for which the payment is made; or

    

    

    (2)          responsible organization with respect to that ownership interest.

    

    

    
      

      
        

    

    § 10.365. COURT COSTS;  COMPENSATION FOR APPRAISER.

    

    

    (a)          An appraiser appointed under Section 10.361 is entitled to a reasonable fee payable from court costs.

    

    

    (b)          All court costs shall be allocated between the responsible organization and the dissenting owners in the manner that the court determines to be fair and equitable.

    

    

    § 10.366. STATUS OF OWNERSHIP INTEREST HELD OR FORMERLY HELD BY DISSENTING OWNER.

    

    

    (a)          An ownership interest of an organization acquired by a responsible organization under this subchapter:

    

    

    (1)          in the case of a merger, conversion, or interest exchange, shall be held or disposed of as provided in the plan of merger, conversion, or interest exchange; and

    

    

    (2)          in any other case, may be held or disposed of by the responsible organization in the same manner as other ownership interests acquired by the organization or held in its treasury.

    

    

    (b)          An owner who has demanded payment for the owner’s ownership interest under Section 10.356 is not entitled to vote or exercise any other rights of another owner with respect to the
      ownership interest except the right to:

    

    

    (1)          receive payment for the ownership interest under this subchapter; and

    

    

    (2)          bring an appropriate action to obtain relief on the ground that the action to which the demand relates would be or was fraudulent.

    

    

    (c)          An ownership interest for which payment has been demanded under Section 10.356 may not be considered outstanding for purposes of any subsequent vote or action.

    

    

    § 10.367. RIGHTS OF OWNERS FOLLOWING TERMINATION OF RIGHT OF DISSENT.

    

    

    (a)          The rights of a dissenting owner terminate if:

    

    

    (1)          the owner withdraws the demand under Section 10.356;

    

    

    (2)          the owner’s right of dissent is terminated under Section 10.356;

    

    

    (3)          a petition is not filed within the period required by Section 10.361; or

    

    

    (4)          after a hearing held under Section 10.361, the court adjudges that the owner is not entitled to elect to dissent from an action under this subchapter.

    

    

    (b)          On termination of the right of dissent under this section:

    

    

    (1)          the dissenting owner and all persons claiming a right under the owner are conclusively presumed to have approved and ratified the action to which the owner dissented and are bound by
      that action;

    

    

    (2)         the owner’s right to be paid the fair value of the owner’s ownership interests ceases and the owner’s status as an owner of those ownership interests is restored without prejudice in any
      interim proceeding if the owner’s ownership interests were not canceled, converted, or exchanged as a result of the action or a subsequent fundamental business transaction; and

    

    

    
      

      
        

    

    (3)         the dissenting owner is entitled to receive dividends or other distributions made in the interim to owners of the same class and series of ownership interests held by the owner as if a
      demand for the payment of the ownership interests had not been made under Section 10.356, subject to any change in or adjustment to ownership interests because of the cancellation or exchange of the ownership interests after the date a demand under
      Section 10.356 was made pursuant to a fundamental business transaction.

    

    

    § 10.368. EXCLUSIVITY OF REMEDY OF DISSENT AND APPRAISAL.

    

    

    In the absence of fraud in the transaction, any right of an owner of an ownership interest to dissent from an action and obtain the fair value of the ownership interest under this subchapter is the exclusive remedy for
      recovery of:

    

    

    (1)          the value of the ownership interest or money damages to the owner with respect to the ownership interest; and

    

    

    (2)          the owner’s right in the organization with respect to a fundamental business transaction.

    

    

    [END]

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