Exhibit 10.1

 

AMENDMENT NUMBER EIGHTEEN
TO
TEXAS REGIONAL BANCSHARES, INC.
AMENDED AND RESTATED EMPLOYEE STOCK OWNERSHIP PLAN
(WITH 401(K) PROVISIONS)

 

Texas Regional Bancshares, Inc., a corporation organized and operating under the
laws of the State of Texas, and registered as a bank holding company under the
Bank Holding Company Act of 1956, as amended (the “Company”), together with
Texas State Bank, a Texas state banking association; TSB Securities, Inc., Port
Arthur Abstract and Title Company, Southeast Texas Title Company, and Valley
Mortgage Company, Inc., all Texas corporations; and Southeast Texas Insurance
Services, L.P., a Texas limited partnership of which Southeast Texas Insurance
Services Holdings, LLC is the general partner (collectively, the “Participating
Employers”); and the Trustees and the Administrative Committee members of the
Texas Regional Bancshares, Inc. Amended and Restated Employee Stock Ownership
Plan (with 401(k) Provisions) adopt the following amendments to the Plan
generally effective as of May 1, 2005.

 

WHEREAS, the Company has established and maintains the Texas Regional
Bancshares, Inc. Amended and Restated Employee Stock Ownership Plan (with 401(k)
Provisions) (the “Plan”); and

 

WHEREAS, the Company and the Participating Employers desire to amend the Plan to
add in-kind distributions of Participants’ account balances in circumstances
where such distributions are feasible and to simplify certain other Plan
provisions; and

 

WHEREAS, under Section 2.2 of the Plan, the Plan Administrator is the Company
unless another person or entity has been appointed pursuant to Section 3.2 of
the Plan as Plan Administrator; and

 

WHEREAS, the Company and the Participating Employers desire to appoint the
Plan’s existing Administrative Committee as the Plan Administrator under ERISA;
and

 

WHEREAS, the Participating Employers have joined in the Plan for the purpose of
providing benefits under the Plan to their eligible employees; and

 

WHEREAS, pursuant to Section 10.1 of the Plan, the Company has the right to
amend the Plan, provided that the Trustees join in such Amendment if the
provisions of the Plan affecting the Trustees are amended; and

 

WHEREAS, pursuant to Section 13.6 of the Plan, the Company has the right to
amend the Plan, provided that the Participating Employers join in such
Amendment; and

 

WHEREAS, the Company and the Participating Employers desire to amend the Plan to
document the effective date of each Participating Employer’s adoption of the
Plan and to authorize the Company to adopt future amendments, to appoint
fiduciaries, and to take other actions with respect to the Plan, all without the
joinder of the Participating Employers.

 

NOW, THEREFORE, IT IS HEREBY RESOLVED THAT the Plan is amended effective May 1,
2005, except as specifically provided below, as follows:

 

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1.                                      PLAN SECTION 2.20 IS AMENDED AND
RESTATED IN ITS ENTIRETY TO READ AS FOLLOWS:

 

2.20                           “Employer” means Texas Regional Bancshares, Inc.
and any successor which shall maintain this Plan; and any predecessor which has
maintained this Plan.  In addition, where appropriate, the term Employer shall
include any Participating Employer (as defined in Section 13.1) which shall
adopt this Plan.  For purposes of Article IX, TRUSTEE, and Sections 10.1 and
10.2, relating to the Employer’s authority to amend or terminate the Plan,
however, the term “Employer” shall mean only Texas Regional Bancshares, Inc.,
which shall act under those provisions without the need to consult any
Participating Employer.

 

2.                                      PLAN SECTION 2.30 IS AMENDED AND
RESTATED IN ITS ENTIRETY, EFFECTIVE JANUARY 1, 2004, TO READ AS FOLLOWS:

 

2.30                           “Forfeiture” means that portion of a
Participant’s Account that is not Vested.  A Forfeiture occurs on the earlier
of:

 

(a)                                  the distribution of the entire Vested
portion of the Participant’s Account of a Former Participant who has severed
employment with the Employer.  For purposes of this provision, if the Former
Participant has a Vested benefit of zero, then such Former Participant shall be
deemed to have received a distribution of such Vested benefit as of the year in
which the severance of employment occurs, or

 

(b)                                 the last day of the Plan Year in which a
Former Participant who has severed employment with the Employer incurs five (5)
consecutive 1-Year Breaks in Service.

 

3.                                      PLAN SECTION 2.55 IS AMENDED AND
RESTATED IN ITS ENTIRETY TO READ AS FOLLOWS:

 

2.55                           “Participant’s Transfer/Rollover Account” means
the account established and maintained by the Administrator for each Participant
with respect to the Participant’s total interest in the Plan resulting from
amounts transferred to this Plan from a direct plan-to-plan transfer and/or with
respect to such Participant’s interest in the Plan resulting from amounts
transferred from another qualified plan or “conduit” Individual Retirement
Account in accordance with Section 5.11.

 

A separate accounting shall be maintained with respect to that portion of the
Participant’s Transfer/Rollover Account attributable to transfers (within the
meaning of Code Section 414(1)) and “rollovers.”

 

A Participant’s Transfer/Rollover Account shall include Bank of Texas
Transfer/Rollover Accounts, Harlingen National Bank Transfer/Rollover Accounts,
Riverway Bank Transfer/Rollover Accounts, Texas Country Bank Transfer/Rollover
Accounts, First State Bank, Bishop Transfer/Rollover Accounts, all of which are
fully vested, and any other such accounts resulting from mergers of other plans
into this Plan.

 

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4.                                      Plan Section 4.7 is amended and restated
in its entirety effective January 1, 2005, to read as follows:

 

4.7                                 REHIRED EMPLOYEES AND BREAKS IN SERVICE

 

(a)                                  Participation.

 

(1)                                  A Former Participant shall participate in
the Plan as of the date of reemployment.

 

(2)                                  A rehired Eligible Employee who had
fulfilled the requirements of Section 4.1 for participation in salary reduction
elections and Employer Discretionary Matching Contributions prior to severance
from employment may participate in such contributions immediately upon
reemployment unless the Employee has incurred a 1-Year Break in Service.  If a
1-Year Break in Service was incurred, the Employee’s prior service will be
disregarded for eligibility purposes, and the Eligible Employee shall be treated
as a new employee.

 

(3)                                  A rehired Eligible Employee who had
fulfilled the requirements of Section 4.1 for participation in Employer
Discretionary Optional Contributions prior to severance from employment, but who
had not reached his or her effective date of participation under Section 4.2
shall participate in such those contributions as described in Section 4.2 unless
the Employee has incurred a 1-Year Break in Service.  If a 1-Year Break in
Service was incurred, the Employee’s prior service will be disregarded for
eligibility purposes, and the Eligible Employee shall be treated as a new
employee.

 

(4)                                  A rehired Eligible Employee who had not
fulfilled the requirements of Section 4.1 for participation in salary reduction
elections and Employer Discretionary Matching Contributions prior to severance
from employment shall continue to earn Years of Service for eligibility purposes
upon reemployment unless the Employee has incurred a 1-Year Break in Service. 
If a 1-Year Break in Service was incurred, the Employee’s prior service will be
disregarded for eligibility purposes, and the Eligible Employee shall be treated
as a new employee for purposes of such contributions.

 

(5)                                  A rehired Eligible Employee who had not
fulfilled the requirements of Section 4.1 for participation in Employer
Discretionary Optional Contributions prior to severance from employment shall
continue to earn Years of Service for eligibility purposes upon reemployment
unless the Employee has incurred a 1-Year Break in Service.  If a 1-Year Break
in Service was incurred, the Employee’s prior service will be disregarded for
eligibility purposes, and the Eligible Employee shall be treated as a new
employee for purposes of such contributions.

 

(b)                                 Vesting.  All Years of Service, as defined
for vesting purposes under Section 2.76, shall be credited for all Accounts
under the Plan except as specifically provided below for a Former Participant
who is partially vested in any pre-break Account that is subject to vesting
under the Plan.

 

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(1)                                  After a partially Vested Former Participant
incurs five consecutive 1-Year Breaks in Service, the Vested portion of said
Former Participant’s Account attributable to pre-break service shall not be
increased as a result of post-break service, nor shall the Participant’s Account
attributable to post-break service be increased as a result of pre-break
service.  In such case, separate accounts will be maintained as follows:

 

(i)                                     one account for nonforfeitable benefits
attributable to pre-break service; and

 

(ii)                                  one account representing the Participant’s
Employer- derived account balance in the Plan attributable to post-break
service.

 

(2)                                  If a partially Vested Participant becomes a
Former Participant due to severance of employment with the Employer and is
reemployed by the Employer before five consecutive 1-Year Breaks in Service, and
such Former Participant had received a distribution of his or her entire Vested
interest prior to reemployment, then the forfeited account shall be reinstated
only if the Former Participant repays the full amount which had been
distributed.  Such repayment must be made before the earlier of five years after
the first date on which the Participant is subsequently reemployed by the
Employer or the close of the first period of five consecutive 1-Year Breaks in
Service commencing after the distribution.  If a distribution occurs for any
reason other than a severance of employment, the time for repayment may not end
earlier than five years after the date of distribution.  If the Former
Participant does repay the full amount distributed, the forfeited portion of the
Participant’s Account must be restored in full, unadjusted by any gains or
losses occurring subsequent to the Valuation Date preceding the distribution. 
The source for such reinstatement may be Forfeitures occurring during the Plan
Year.  If such source is insufficient, then the Employer will contribute an
amount which is sufficient to restore any such forfeited Accounts, provided,
however, that if a discretionary contribution is made for such year, such
contribution shall first be applied to restore any such Accounts and the
remainder shall be allocated in accordance with Section 4.4.

 

5.                                      PLAN SUBSECTION 5.11(A), RELATING TO
ROLLOVERS AND TRANSFERS FROM OTHER PLANS, IS AMENDED AND RESTATED IN ITS
ENTIRETY TO READ AS FOLLOWS:

 

(a)                                  With the consent of the Administrator,
amounts may be transferred (within the meaning of Code Section 414(l)) to this
Plan from other tax qualified plans under Code Section 401(a) by Eligible
Employees, provided that the trust from which such funds are transferred permits
the transfer to be made and the transfer will not jeopardize the tax exempt
status of the Plan or Trust or create adverse tax consequences for the Employer.
Prior to accepting any transfers to which this Section applies, the
Administrator may require an opinion of counsel that the amounts to be
transferred meet the requirements of this Section.  The amounts transferred
shall be set up in a separate account herein referred to as a Participant’s
Transfer/Rollover Account. Furthermore, unless a Participant is fully vested in
the amounts transferred, for vesting purposes, the Participant’s portion of the
Participant’s Transfer/Rollover Account attributable to any transfer shall be
subject to Section 8.4(b).

 

Except as permitted by Regulations (including Regulation 1.411(d)-4), amounts
attributable to elective contributions (as defined in Regulation
1.401(k)-1(g)(3)), including amounts treated as elective contributions, which
are transferred from another qualified plan in a

 

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plan-to-plan transfer (other than a direct rollover) shall be subject to the
distribution limitations provided for in Regulation 1.401(k)-1(d).

 

6.                                      PLAN SUBSECTION 5.12(A), RELATING TO
PARTICIPANT-DIRECTED INVESTMENTS, IS AMENDED AND RESTATED IN ITS ENTIRETY TO
READ AS FOLLOWS:

 

(a)                                  Effective as of December 1, 2001,
Participants may, subject to Section 5.12(d) and a procedure established by the
Administrator (the Participant Direction Procedures) and applied in a uniform
nondiscriminatory manner, direct the Trustee, in writing (or in such other form
which is acceptable to the Trustee), to invest all or a portion of their
individual account balances attributable to their Deferred Compensation in
specific assets, specific funds or other investments permitted under the Plan
and the Participant Direction Procedures.

 

Effective as of January 1, 2002, Participants may, subject to the Participant
Direction Procedures, direct the Trustee, in writing (or in such other form
which is acceptable to the Trustee), to invest all or a portion of their
individual account balances attributable to their Participant’s
Transfer/Rollover Accounts in specific assets, specific funds or other
investments permitted under the Plan and the Participant Direction Procedures.

 

That portion of the interest of any Participant so directing will thereupon be
considered a Participant’s Directed Account.

 

7.                                      PLAN SUBSECTION 5.12(D), RELATING TO THE
PLAN’S MEANS OF DISTRIBUTION, IS AMENDED AND RESTATED IN ITS ENTIRETY TO READ AS
FOLLOWS:

 

(d)                                 Each “Qualified Participant” may elect
within ninety (90) days after the close of each Plan Year during the “Qualified
Election Period” to direct the Trustee in writing to invest twenty-five percent
(25%) of the total number of shares of Company Stock acquired by or contributed
to the Plan that have ever been allocated to such “Qualified Participant’s”
Company Stock Account, excluding any portion of said Company Stock Account
attributable to Elective Contributions or to the Participant’s Transfer/Rollover
Account (reduced by the number of shares of Company Stock previously diversified
or distributed, pursuant to a prior election, in cash, in mutual fund interests
as permitted by Section 8.6(a), and/or in Company Stock) in the specific assets,
specific funds or other investments permitted under the Plan, which investment
options shall consist of at least three (3) investment options not inconsistent
with any Regulations promulgated by the Secretary of the Treasury.  The Trustee
shall invest the portion of the “Qualified Participant’s” Company Stock that is
subject to the diversification election within ninety (90) days after the period
during which the Participant’s election may be made.  In the case of the
election year in which the last election can be made by the Participant, the
preceding sentence shall be applied by substituting “50 percent” for “25
percent.”  If the “Qualified Participant” elects to direct the Trustee as to the
distribution of the Participant’s Company Stock Account, such direction shall be
effective no later than 180 days after the close of the Plan Year to which such
direction applies.

 

Notwithstanding the above, if the fair market value (determined pursuant to
Section 6.1 at the Plan Valuation Date immediately preceding the first day on
which a “Qualified Participant” is eligible to make an election) of Company
Stock acquired by or contributed to the

 

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Plan and allocated to a “Qualified Participant’s” Company Stock Account is $500
or less, then such Company Stock shall not be subject to this paragraph.  For
purposes of determining whether the fair market value exceeds $500, Company
Stock held in accounts of all employee stock ownership plans (as defined in Code
Section 4975(e)(7)) and tax credit employee stock ownership plans (as defined in
Code Section 409(a)) maintained by the Employer or any Affiliated Employer shall
be considered as held by the Plan.

 

8.                                      PLAN SUBSECTION 8.5(A), RELATING TO
LUMP-SUM DISTRIBUTIONS, IS AMENDED AND RESTATED IN ITS ENTIRETY EFFECTIVE
JANUARY 1, 2004, TO READ AS FOLLOWS:

 

(a)                                  The Administrator, pursuant to the election
of the Participant, shall direct the Trustee to distribute to a Participant or
such Participant’s Beneficiary any amount to which the Participant is entitled
under the Plan in one lump-sum payment or in partial lump-sum payments, each
less than the entire remaining Participant’s Combined Account.

 

9.                                      PLAN SUBSECTION 8.5(J), RELATING TO BANK
OF TEXAS TRANSFER/ROLLOVER ACCOUNTS, IS DELETED.

 

10.                               PLAN SUBSECTION 8.6(A), RELATING TO THE PLAN’S
MEANS OF DISTRIBUTION, IS AMENDED AND RESTATED IN ITS ENTIRETY TO READ AS
FOLLOWS:

 

(a)                                  Distribution of a Participant’s benefit may
be made in cash or Company Stock, or both, provided, however, that if a
Participant or Beneficiary so demands, such benefit shall be distributed only in
the form of Company Stock.  Prior to making a distribution of benefits, the
Administrator shall advise the Participant or the Participant’s Beneficiary, in
writing (or such other form as permitted by the Internal Revenue Service), of
the right to demand that benefits be distributed solely in Company Stock.  In
addition, a Participant may elect distribution of interests in mutual funds to
the extent that such mutual fund interests are allocated to the Participant’s
Combined Account at the time of distribution, provided that the distributee of
such interests in mutual funds is capable of holding such interests.

 

11.                             PLAN SUBSECTION 8.6(D), RELATING TO THE PLAN’S
MEANS OF DISTRIBUTION, IS AMENDED AND RESTATED IN ITS ENTIRETY TO READ AS
FOLLOWS:

 

(d)                                 Notwithstanding anything contained herein to
the contrary, if the Employer charter or by-laws restrict ownership of
substantially all shares of Company Stock to Employees and the Trust Fund, as
described in Code Section 409(h)(2)(B)(ii)(I), the Administrator shall
distribute a Participant’s Combined Account entirely in cash and/or mutual fund
interests as described in Section 8.6(a) without granting the Participant the
right to demand distribution in shares of Company Stock.

 

12.                               PLAN SUBSECTION 8.6(F)(FIRST PARAGRAPH ONLY),
RELATING TO ACCOUNTS THAT ARE SUBJECT TO THE ANNUITY DISTRIBUTION RULES, IS
AMENDED AND RESTATED IN ITS ENTIRETY EFFECTIVE JANUARY 1, 2003, TO READ AS
FOLLOWS:

 

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(f)                                    Notwithstanding anything contained herein
to the contrary, this Section 8.6(f) shall apply with respect to any
Participant’s Target Benefit Capital Accumulation.

 

13.                               PLAN SUBPARAGRAPH 8.6(F)(1)(I), RELATING TO
THE QUALIFIED JOINT AND SURVIVOR ANNUITY, IS AMENDED AND RESTATED IN ITS
ENTIRETY TO READ AS FOLLOWS:

 

(i)                                     General.  Unless otherwise elected as
provided below, the Participant’s Target Benefit Capital Accumulation (less
amounts attributable to Employee contributions within the meaning of Code
Section 72(o)) of a Participant who is married on the Annuity Starting Date and
who does not die before the Annuity Starting Date shall be paid in the form of a
Qualified Joint and Survivor Annuity.  If said Participant has elected a life
annuity option under this Plan, the vested portion of the Participant’s Combined
Account shall be paid in the form of a Qualified Joint and Survivor Annuity,
unless otherwise elected as provided below.

 

An unmarried Participant shall receive the value of his benefit in the form of a
life annuity.  Such unmarried Participant, however, may elect in writing to
waive the life annuity.  The election must comply with the provisions of Section
8.6(f)(1)(ii) of this Plan as if it were an election to waive the Qualified
Joint and Survivor Annuity by a married Participant, but without the spousal
consent requirement.

 

The Participant may elect to have any annuity provided for in this Section
distributed upon the attainment of the “earliest retirement age” under the
Plan.  The “earliest retirement age” is the earliest date on which, under the
Plan, the Participant could elect to receive retirement benefits.

 

14.                               PLAN SUBPARAGRAPH 8.6(F)(2)(I), RELATING TO
THE QUALIFIED PRERETIREMENT SURVIVOR ANNUITY, IS AMENDED AND RESTATED IN ITS
ENTIRETY TO READ AS FOLLOWS:

 

(i)                                     General.  Unless otherwise elected as
provided below, in the case of a Vested Participant (or former Vested
Participant) who dies before the Annuity Starting Date and who has a surviving
spouse, the Participant’s Target Benefit Capital Accumulation shall be paid to
his or her surviving spouse in the form of a Qualified Preretirement Survivor
Annuity.  Further, if said Vested Participant (or former Vested Participant) has
elected a life annuity option prior to December 31, 2001 under this Plan, the
vested portion of the Participant’s Combined Account shall be paid to the
surviving spouse in the form of a Qualified Preretirement Survivor Annuity.

 

The Participant’s spouse may direct that payment of the Qualified Preretirement
Survivor Annuity commence within a reasonable period after the Participant’s
death.  If the spouse does not so direct, payment of such benefit will commence
at the time the Participant would have

 

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attained the later of his Normal Retirement Age or age 62.  However, the spouse
may elect a later commencement date.  Any distribution to the Participant’s
spouse shall be subject to the rules specified in Section 8.5(e).

 

15.                               PLAN SUBPARAGRAPH 8.6(F)(2)(V), RELATING TO
THE PLAN’S MEANS OF DISTRIBUTING CERTAIN DEATH BENEFITS, IS AMENDED AND RESTATED
IN ITS ENTIRETY TO READ AS FOLLOWS:

 

(v)                                 To the extent the death benefit is not paid
in the form of a Qualified Preretirement Survivor Annuity, it shall be paid to
the Participant’s Beneficiary by one lump-sum payment in cash and/or Company
Stock.

 

16.                               PLAN SUBSECTION 8.6(G), RELATING TO CERTAIN
PREVIOUSLY ELIMINATED DISTRIBUTION OPTIONS, IS DELETED EFFECTIVE
JANUARY 1, 2003.

 

17.                               PLAN SUBSECTION 8.6(H), RELATING TO CERTAIN
PREVIOUSLY ELIMINATED DISTRIBUTION OPTIONS, IS DELETED EFFECTIVE
JANUARY 1, 2003.

 

18.                               PLAN SUBSECTION 8.6(I), RELATING TO CERTAIN
PREVIOUSLY ELIMINATED DISTRIBUTION OPTIONS, IS DELETED EFFECTIVE
JANUARY 1, 2003.

 

19.                               PLAN SECTION 8.11 IS AMENDED AND RESTATED IN
ITS ENTIRETY TO READ AS FOLLOWS:

 

8.11                           IN-SERVICE DISTRIBUTION

 

(a)                                  At such time as an Employee has attained
the age of 59 ½ years or at any time thereafter, the Employee may elect to
commence distribution of all or a portion of any of the following amounts:

 

(1)                                  The portion of the Employee’s Elective
Account that is attributable to Salary Reduction Contributions and any Employer
Qualified Non-Elective Contributions.

 

(2)                                  The portion of the Employee’s
Transfer/Rollover Account that is attributable to Matching Contributions made to
a plan that was subsequently merged into this Plan.

 

(3)                                  The portion of the Employee’s
Transfer/Rollover Account that is attributable to after-tax employee
contributions made to a plan that was subsequently merged into this Plan.

 

(4)                                  The portion of an Employee’s
Transfer/Rollover Account that is attributable to “rollovers” (as defined in
Section 5.11(b)).

 

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(5)                                  The Employee’s Bank of Texas
Transfer/Rollover Account (if any), as defined in Section 2.55.

 

(b)                                 At such time as an Employee has attained the
age of 70 ½ years or at any time thereafter, the Employee may elect to commence
distribution of all or a portion of any of the Participant’s Accounts.

 

(c)                                  In the event that a distribution is made to
a Participant under this Section, the Participant shall continue to be eligible
to participate in the Plan on the same basis as any other Eligible Employee. 
Any distribution made pursuant to this Section shall be made in a manner
consistent with Article VIII, including, but not limited to, all applicable
notice and consent requirements.

 

20.                               Article XIII of the Plan is amended and
restated in its entirety to read as follows:

 

ARTICLE XIII

PARTICIPATING EMPLOYERS

 

13.1                           ADOPTION BY OTHER EMPLOYERS

 

Notwithstanding anything herein to the contrary, with the consent of Texas
Regional Bancshares, Inc. and Trustee, any other corporation or entity, whether
an affiliate or subsidiary or not, may adopt this Plan and all of the provisions
hereof, and participate herein and be known as a Participating Employer, by a
properly executed document evidencing said intent and will of such Participating
Employer.

 

13.2                           REQUIREMENTS OF PARTICIPATING EMPLOYERS

 

(a)                                  Each such Participating Employer shall be
required to use the same Trustee as provided in this Plan.

 

(b)                                 The Trustee may, but shall not be required
to, commingle, hold and invest as one Trust Fund all contributions made by
Participating Employers, as well as all increments thereof.

 

(c)                                  At the option of Texas Regional Bancshares,
Inc. and with the approval of the Administrator, any expenses of the Plan which
are to be paid by the Employer or borne by the Trust Fund shall be paid by Texas
Regional Bancshares, Inc. or by each Participating Employer in the same
proportion that the total amount standing to the credit of all Participants
employed by such Employer bears to the total standing to the credit of all
Participants.

 

13.3                           DESIGNATION OF AGENT

 

Each Participating Employer shall be deemed to be a party to this Plan;
provided, however, that with respect to all of its relations with the Trustee
and Administrator for the purpose of this Plan, each Participating Employer
shall be deemed to have designated irrevocably Texas Regional Bancshares, Inc.
as its agent.

 

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13.4                           EMPLOYEE TRANSFERS

 

In the event an Employee is transferred between Participating Employers,
accumulated service and eligibility shall be carried with the Employee
involved.  No such transfer shall effect a termination of employment hereunder
if the transfer involves an Affiliated Employer, and the Participating Employer
to which the Employee is transferred shall thereupon become obligated hereunder
with respect to such Employee in the same manner as was the Participating
Employer from whom the Employee was transferred.

 

13.5                           PARTICIPATING EMPLOYER CONTRIBUTION AND
FORFEITURES

 

With respect to Participating Employers that are not Affiliated Employers, any
contribution or Forfeiture subject to allocation during each Plan Year shall be
allocated only among those Participants of the Participating Employer making the
contribution or by which the forfeiting Participant was employed.  However, if
the contribution is made, or the forfeiting Participant was employed, by an
Affiliated Employer, such contribution or Forfeiture shall be allocated among
all Participants of all Participating Employers who are Affiliated Employers in
accordance with the provisions of this Plan.  On the basis of the information
furnished by the Administrator, the Trustee may keep separate books and records
concerning the affairs of each non-Affiliated Participating Employer hereunder
and as to the accounts and credits of the Employees of each non-Affiliated
Participating Employer.  The Trustee may, but need not, register Contracts so as
to evidence that a particular Participating Employer is the interested Employer
hereunder, but in the event of an Employee transfer to or from a non-Affiliated
Participating Employer to another Employer, the employing Participating Employer
shall immediately notify the Trustee thereof.

 

13.6                           AMENDMENT

 

Amendment of this Plan shall only be by the written action of Texas Regional
Bancshares, Inc. and with the consent of the Trustee where such consent is
necessary in accordance with the terms of this Plan.

 

13.7                           DISCONTINUANCE OF PARTICIPATION

 

No Participating Employer shall be permitted to discontinue or revoke its
participation in the Plan without the consent of Texas Regional Bancshares,
Inc.  Texas Regional Bancshares, Inc., may, however, discontinue the
participation of any Participating Employer at any time without the consent of
any person.  At the time of any such discontinuance or revocation, satisfactory
evidence thereof shall be delivered to the Trustee by Texas Regional Bancshares,
Inc.  The Trustee shall thereafter transfer, deliver and assign Contracts and
other Trust Fund assets allocable to the Participants of such Participating
Employer to such new trustee as shall have been designated by such Participating
Employer, in the event that it has established a separate qualified retirement
plan for its Employees, provided, however, that no such transfer shall be made
if the result is the elimination or reduction of any “Section 411(d)(6)
protected benefits” as described in Section 9.1(c). If no successor is
designated, the Trustee shall retain such assets for the Employees of said
Participating Employer pursuant to the provisions of Article VII hereof.  In no
such event shall any part of the corpus or income of the Trust as it relates to
a non-Affiliated Employer be used for or diverted for purposes other than for
the exclusive benefit of the Employees of such non-Affiliated Employer.

 

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13.8                           ADMINISTRATOR’S AUTHORITY

 

The Administrator shall have authority to make any and all necessary rules or
regulations, binding upon all Participating Employers and all Participants, to
effectuate the purpose of this Article.

 

21.                               SCHEDULE B TO THE PLAN, EFFECTIVE DATE OF
PARTICIPATING EMPLOYER ADOPTION, IS ADOPTED IN THE FORM ATTACHED TO THIS
AMENDMENT AS EXHIBIT “A.”

 

22.                               PURSUANT TO SECTION 3.2 OF THE PLAN, THE
ADMINISTRATIVE COMMITTEE IS HEREBY APPOINTED TO SERVE AS THE PLAN ADMINISTRATOR
OF THE PLAN, EFFECTIVE MAY 1, 2005.

 

IN WITNESS WHEREOF, this Eighteenth Amendment to the Texas Regional Bancshares,
Inc. Amended and Restated Employee Stock Ownership Plan (with 401(k) Provisions)
has been executed this 10th day of May, 2005 to be effective as of the dates
provided above.

 

 

TEXAS REGIONAL BANCSHARES, INC.

 

 

 

 

By:

/s/ G. E. Roney

 

 

 

Glen E. Roney,

 

 

Chairman of the Board and

 

 

Chief Executive Officer

 

 

 

 

TEXAS STATE BANK

 

 

 

 

By:

/s/ G. E. Roney

 

 

 

Glen E. Roney,

 

 

Chairman of the Board, Chief Executive

 

 

Officer and Trust Officer

 

 

 

 

TSB SECURITIES, INC.

 

 

 

 

By:

/s/ John R. Booth, Jr.

 

 

 

John R. Booth, Jr.,

 

 

President

 

 

 

 

PORT ARTHUR ABSTRACT AND TITLE COMPANY

 

 

 

 

By:

/s/ Ken N. Whitlow

 

 

 

Ken N. Whitlow,

 

 

President

 

11

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SOUTHEAST TEXAS TITLE COMPANY

 

 

 

 

By:

/s/ Ken N. Whitlow

 

 

 

Ken N. Whitlow,

 

 

President

 

 

 

 

SOUTHEAST TEXAS INSURANCE SERVICES, L.P.

 

 

 

 

By:

/s/ Susan Byrom

 

 

 

Susan Byrom

 

 

President, Southeast Texas Insurance
Services Holdings, LLC

 

 

 

 

VALLEY MORTGAGE COMPANY, INC.

 

 

 

 

By:

/s/ Paul Schwab

 

 

 

Paul Schwab,

 

 

President

 

 

AGREED TO AND ACCEPTED BY:

 

 

/s/ G. E. Roney

 

Glen E. Roney, Trustee

 

 

 

 

 

/s/ Morris Atlas

 

Morris Atlas, Trustee

 

 

 

 

 

/s/ Robert F. Boggus

 

Robert F. Boggus, Trustee

 

 

12

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AGREED TO AND ACCEPTED BY:

 

 

 

 

 

/s/ G. E. Roney

 

Glen E. Roney, Committee Chairman

 

 

 

 

 

/s/ Doug G. Bready

 

Douglas G. Bready, Committee Member

 

 

 

 

 

 

 

Danny L. Buttery, Committee Member

 

 

 

 

 

/s/ Tony J. Gorman

 

Tony J. Gorman, Committee Member

 

 

 

 

 

/s/ Stanley Grisham

 

Stan Grisham, Committee Member

 

 

 

 

 

/s/ John A. Martin

 

John A. Martin, Committee Member

 

 

 

 

 

/s/ Paul Moxley

 

Paul S. Moxley, Committee Member

 

 

 

 

 

/s/ J. Pat Parsons

 

J. Pat Parsons, Committee Member

 

 

 

 

 

/s/ Lois Ann Stanton

 

Lois Ann Stanton, Committee Member

 

 

 

 

 

/s/ Carroll W. Sturgis

 

Carroll W. Sturgis, Jr., Committee Member

 

 

13

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Schedule B

 

Effective Date of Participating Employer Adoption

 

The following Participating Employers have adopted the Texas Regional
Bancshares, Inc. Amended and Restated Employee Stock Ownership Plan (with 401(k)
Provisions) for the benefit of their eligible employees effective as of the
dates indicated below.

 

Name of Company

 

Effective Date
of Adoption

 

 

 

 

 

TEXAS REGIONAL BANCSHARES, INC.

 

January 1, 1984

 

 

 

 

 

TEXAS STATE BANK

 

January 1, 1984

 

 

 

 

 

TSB SECURITIES, INC.

 

January 1, 1997

 

 

 

 

 

PORT ARTHUR ABSTRACT AND TITLE COMPANY

 

March 12, 2004

 

 

 

 

 

SOUTHEAST TEXAS TITLE COMPANY

 

March 12, 2004

 

 

 

 

 

SOUTHEAST TEXAS INSURANCES SERVICES, L.P.

 

March 12, 2004

 

 

 

 

 

VALLEY MORTGAGE COMPANY, INC.

 

November 23, 2004

 

 

EXHIBIT “A”

 

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