Exhibit 10.3


 


AMENDMENT
NUMBER SEVENTEEN

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 the
Trustees of the Texas Regional Bancshares, Inc. Amended and Restated
Employee Stock Ownership Plan (with 401(k) Provisions) adopt the following
amendments to the Plan effective as of March 28, 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, 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, previously the Board of Directors
amended the Plan to provide that eligible employees of Southeast Texas
Bancshares, Inc. and its affiliates, as a result of becoming employees of
the Company, Texas State Bank, and its subsidiaries pursuant to certain mergers
occurring in 2004, would, if otherwise eligible for an Employer Discretionary
Optional Contribution in 2004, be credited for that purpose with Hours of
Service performed for their former employers during the period January 1,
2004 to March 12, 2004; and


 


WHEREAS, the Directors now desire to further
amend the Plan to provide that such otherwise eligible employees shall also be
credited with Hours of Service performed for their former employers during the
period January 1, 2004 to March 12, 2004 for the purpose of sharing
in the Employer Discretionary Matching Contributions made for Plan Year 2004;
and


 


WHEREAS, pursuant to the Economic Growth and
Tax Relief Reconciliation Act of 2001, effective March 28, 2005, the Plan
is required to provide “automatic rollovers” to non-electing terminated
participants receiving involuntary distributions exceeding $1,000; and


 


WHEREAS, the Directors desire to amend the
Plan to eliminate involuntary distributions exceeding $1,000 to terminated
participants, effective March 28, 2005.


 


NOW, THEREFORE, IT IS HEREBY RESOLVED THAT
the Plan is hereby amended effective March 28, 2005, except as
specifically provided below, as follows:


 


1.              PLAN SUBSECTION 8.4(A) IS AMENDED AND RESTATED IN ITS ENTIRETY
TO READ AS FOLLOWS:


 


(a)                                  If a Participant’s employment with the
Employer is terminated for any reason other than death, Total and Permanent
Disability or retirement, then such Participant shall be entitled to such
benefits as are provided hereinafter pursuant to this Section 8.4.


 


If a portion of a
Participant’s Account is forfeited, Company Stock allocated to the Participant’s
Company Stock Account must be forfeited only after the Participant’s Other
Investments Account has been depleted. 
If interest in more than one class of Company Stock has been allocated
to a Participant’s Account, the Participant must be treated as forfeiting the
same proportion of each such class.


 


Distribution of
the funds due to a Terminated Participant shall be made on the occurrence of an
event which would result in the distribution had the Terminated Participant
remained in the employ of the Employer (upon the Participant’s death, Total and
Permanent Disability, Early or Normal Retirement).  However, at the election of the Participant,
the Administrator shall direct the Trustee that the entire Vested portion of
the Terminated Participant’s Combined Account shall be payable to such
Terminated Participant.  Any distribution
under this paragraph shall be made in a manner which is consistent with and
satisfies the provisions of Section 8.5 and 8.6, including, but not
limited to, all notice and consent requirements of Code Section 411(a)(11)
and the Regulations thereunder.


 


If the value of a
Terminated Participant’s Vested benefit derived from Employer and Employee
contributions does not exceed $1,000, then the Administrator shall direct the
Trustee to cause the entire Vested benefit to be paid to such Participant in a
single lump sum.


 


1





















 


For purposes of
this Section 8.4, if the value of a Terminated Participant’s Vested
benefit is zero, the Terminated Participant shall be deemed to have received a
distribution of such Vested benefit.


 


2.                                      PLAN SUBSECTION 8.5(B) IS AMENDED AND RESTATED IN ITS ENTIRETY
TO READ AS FOLLOWS:


 


(b)                                 Any distribution to a Participant who has
a benefit which exceeds $1,000 shall require such Participant’s written (or in
such other form as permitted by the Internal Revenue Service) consent if such
distribution occurs prior to the time the benefit is “immediately distributable.”
A benefit is “immediately distributable” if any part of the benefit could be
distributed to the Participant (or surviving spouse) before the Participant
attains (or would have attained if not deceased) the later of the Participant’s
Normal Retirement Age or age 62.  Any
distribution to a Beneficiary or “alternate payee” (as defined in Section 8.10),
however, shall require such Beneficiary’s or alternate payee’s consent only if
the benefit exceeds $5,000.  With regard
to this required consent:


 


(1)                                  The Participant, Beneficiary, or
alternate payee must be informed of the right to defer receipt of the
distribution.  If a Participant,
Beneficiary, or alternate payee fails to consent, it shall be deemed an
election to defer the distribution of any benefit.  However, any election to defer the receipt of
benefits shall not apply with respect to distributions which are required under
Section 8.5(e).


 


(2)                                  Notice of the rights specified under this
paragraph shall be provided no less than thirty (30) days and no more than
ninety (90) days before the date the distribution commences.


 


(3)                                  Written (or such other form as permitted
by the Internal Revenue Service) consent of the Participant to the distribution
must not be made before the Participant, Beneficiary, or alternate payee
receives the notice and must not be made more than ninety (90) days before the
date the distribution commences.


 


(4)                                  No consent shall be valid if a
significant detriment is imposed under the Plan on any Participant,
Beneficiary, or alternate payee who does not consent to the distribution.


 


Any such
distribution may commence less than thirty (30) days after the notice required
under Regulation 1.411 (a)-11 (c) is given, provided that: (1) the
Administrator clearly informs the Participant, Beneficiary, or alternate payee
that he or she has a right to a period of at least thirty (30) days after
receiving the notice to consider the decision of whether or not to elect a
distribution (and, if applicable, a particular distribution option), and
(2) the Participant, Beneficiary, or alternate payee, after receiving the
notice, affirmatively elects a distribution.


 


3.                                      PLAN SUBPARAGRAPH 8.6(F)(1)(V) IS AMENDED AND RESTATED IN ITS ENTIRETY TO
READ AS FOLLOWS:


 


(v)                                 Cash-Out Distributions. 
If the value of the Participant’s benefit under this Plan does not
exceed $1,000, the Administrator may immediately distribute such benefit
without such Participant’s consent.  No
distribution may be made under the preceding sentence after the Annuity
Starting Date unless the Participant and his spouse consent in writing to such
distribution.


 


4.                                      PLAN SUBPARAGRAPH 8.6(F)(1)(VI) IS AMENDED AND RESTATED IN ITS ENTIRETY
TO READ AS FOLLOWS:


 


(vi)                              Restrictions on Cash-Out Distributions in
Excess of $1,000.  Any distribution to a Participant who has a
benefit which exceeds $1,000 shall require such Participant’s written (or in
such other form as permitted by the Internal Revenue Service) consent if such
distribution commences prior to the time the benefit is “immediately
distributable.” A benefit is “immediately distributable” if any part of the
benefit could be distributed to Participant (or surviving spouse) before the
Participant attains (or would have attained if not deceased) the later of his
Normal Retirement Age or age 62.  Further,
the spouse of a Participant must consent in writing to any immediate
distribution.  With regard to this
required consent:


 


(1)                                  No consent shall be valid unless the
Participant has received a general description of the material features and an
explanation of the relative values of the optional forms of benefit available
under the Plan that would satisfy the notice requirements of Code Section 417.


 


(2)                                  The Participant must be informed of his
right to defer receipt of the distribution. 
If a Participant fails to consent, it shall be deemed an election to
defer the commencement of payment of any benefit.  However, any election to defer the receipt of


 


2





















 


benefits shall not
apply with respect to distributions which are required under Section 8.5(e).


 


(3)                                  Notice of the rights specified under this
paragraph shall be provided no less than thirty (30) days and no more than
ninety (90) days before the Annuity Starting Date.


 


(4)                                  Written (or such other form as permitted
by the Internal Revenue Service) consent of the Participant to the distribution
must not be made before the Participant receives the notice and must not be
made more than ninety (90) days before the Annuity Starting Date.


 


(5)                                  No consent shall be valid if a
significant detriment is imposed under the Plan on any Participant who does not
consent to the distribution.


 


Distributions from the
Plan will be made in accordance with the requirements of Code Section 401(a)(9) and
the Regulations thereunder (including Regulation 1.401(a)(9)-2, the provisions
of which are incorporated herein by reference).


 


5.                                      PLAN SUBPARAGRAPH 8.6(F)(2)(IV) IS AMENDED AND RESTATED IN ITS ENTIRETY
TO READ AS FOLLOWS:


 


(iv)                              Cash-Out Distributions and Restrictions
on Cash-Out Distributions.  If the value of the
Participant’s benefit under this Plan does not exceed $5,000, the Administrator
may immediately distribute such benefit without the consent of the Participant’s
spouse.  No distribution may be made
under the preceding sentence after the Annuity Starting Date unless the spouse
consents in writing.  If the value
exceeds $5,000, an immediate distribution of such benefit shall require written
consent of the surviving spouse.  Any
written consent required under this paragraph must be obtained not more than
ninety (90) days before commencement of the distribution and shall be made in a
manner consistent with Section 8.6(f)(1)(iv).


 


Distributions from this
Plan will be made in accordance with the requirements of Code Section 401(a)(9) and
the Regulations thereunder (including Regulation 1.401(a)(9)-2, the provisions
of which are incorporated herein by reference).


 


6.                                      PLAN SECTION 8.8, LOCATION OF PARTICIPANT OR BENEFICIARY UNKNOWN, IS
AMENDED AND RESTATED IN ITS ENTIRETY TO READ AS FOLLOWS:


 


8.8                                 LOCATION OF PARTICIPANT OR BENEFICIARY
UNKNOWN


 


In the event that
all, or any portion, of the distribution payable to a Participant or
Beneficiary hereunder shall, at the later of the Participant’s attainment of
age 62 or Normal Retirement Age, remain unpaid solely by reason of the
inability of the Administrator, after sending a registered letter, return
receipt requested, to the last known address, and after further diligent
effort, to ascertain the whereabouts of such Participant or Beneficiary, the
amount so distributable shall be treated as a Forfeiture pursuant to the
Plan.  In the event a Participant or
Beneficiary is located subsequent to the Forfeiture, such benefit shall be
restored, first from Forfeitures, if any, and then from an additional Employer
contribution if necessary.  However,
regardless of the preceding, a benefit which is lost by reason of escheat under
applicable state law is not treated as a Forfeiture for purposes of this Section nor
as an impermissible forfeiture under the Code.


 


7.                                      Section 5.2
of Amendment Number One to the Plan (as restated in Amendment Number Twelve), Rollovers
Disregarded in Determining Value of Account Balance for Involuntary
Distributions, is amended and restated in its entirety to read as follows:


 


5.2                                 Rollovers Disregarded in Determining Value of
Account Balance for Involuntary Distributions.  For purposes of involuntary
distributions to Beneficiaries and alternate payees under Sections
8.5(b) and 8.6(f) of the Plan (but not for purposes of involuntary distributions
to terminated Participants), the value of a Participant’s nonforfeitable
account balance shall be determined without regard to that portion of the
account balance that is attributable to rollover contributions (and earnings
allocable thereto) within the meanings of sections 402(c), 403(a)(4),
403(b)(8), 408(d)(3)(A)(ii), and 457(e)(16) of the Code.  If the value of the Participants’
nonforfeitable account balance as so determined is $5,000 or less, the Plan
shall immediately distribute the Participant’s entire nonforfeitable account
balance.


 


3





















 


8.                                      Schedule A
to the Plan, Service of Acquired Employees, shall be and hereby is
amended and restated, effective March 12, 2004, in the form attached to
this Amendment as Exhibit “A.”


 


IN WITNESS WHEREOF, this Seventeenth
Amendment to the Texas Regional Bancshares, Inc. Amended and Restated
Employee Stock Ownership Plan (with 401(k) Provisions) has been executed this
8th day of March, 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

  
	
   

  	
   

  
	
   

  	
   

  
	
  AGREED TO AND ACCEPTED BY:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ G.E. Roney

  	
   

  	
   

  
	
  Glen E. Roney, Trustee

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Morris Atlas

  	
   

  	
   

  
	
  Morris Atlas, Trustee

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Frank N. Boggus

  	
   

  	
   

  
	
  Frank N. Boggus, Trustee

  	
   

  
						



 


4





















 


TEXAS
REGIONAL BANCSHARES, INC.
AMENDED AND RESTATED
EMPLOYEE STOCK

OWNERSHIP PLAN (WITH 401(K) PROVISIONS


 


Schedule “A”


 


Service
of Acquired Employees


 


The Employer, Texas Regional
Bancshares, Inc., grants “Years of Service” (as that term is defined in
Plan Section 2.76) to the following groups of acquired Employees for the
following periods of service with other employers, as of the dates indicated
below, and for the Plan purposes indicated below:


 


	
  Acquired Group

  (including date of hire)

  	
   

  	
  Participation Service

  (including limits)

  	
   

  	
  Vesting Service (including

  limits)

  	
   

  	
  Entry Date

  (including limits)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Mid Valley Bank, 1992 (former participants
  in Mid Valley Bank Employees’ Pension Plan only)

  	
   

  	
  Yes; all service with Mid Valley Bank

  	
   

  	
  Yes; all service with Mid Valley Bank

  	
   

  	
  Immediately upon employment by Employer
  (and for compensation earned from Mid Valley Bank in 1992 and the Employer)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  First National Bank of South Texas, 1995
  (employees of Rio Grande City and Roma branches as of acquisition by Texas
  State Bank)

  	
   

  	
  Yes; all service with First National Bank
  of South Texas

  	
   

  	
  Yes; all service with First National Bank
  of South Texas

  	
   

  	
  Immediately upon employment by Employer
  (but only for compensation earned from the Employer)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  First State Bank & Trust Co., The
  Border Bank, 1996 (employees as of time of merger into Texas State Bank)

  	
   

  	
  Yes; all service with First State
  Bank & Trust Co., The Border Bank

  	
   

  	
  Yes; all service with First State
  Bank & Trust Co., The Border Bank

  	
   

  	
  Immediately upon employment by Employer
  (but only for compensation earned from the Employer)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Brownsville National Bank, Texas Bank &
  Trust, and Bank of Texas, 1998

  	
   

  	
  Yes; all service with Brownsville National
  Bank, Texas Bank & Trust, and Bank of Texas

  	
   

  	
  Yes; all service with Brownsville National
  Bank, Texas Bank & Trust, and Bank of Texas

  	
   

  	
  Immediately upon employment by Employer (but
  only for compensation earned from the Employer)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Harlingen Bancshares, Inc., HN
  Bancshares of Delaware, Inc., and Harlingen National Bank, August 15,
  1999

  	
   

  	
  Yes; all service with Harlingen
  Bancshares, Inc., HN Bancshares of Delaware, Inc., and Harlingen
  National Bank

  	
   

  	
  Yes; all service with Harlingen
  Bancshares, Inc., HN Bancshares of Delaware, Inc., and Harlingen
  National Bank

  	
   

  	
  Immediately upon employment by Employer
  (but only for compensation earned from the Employer)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Frost National Bank and Overton Park Bank
  (Frost National Bank data processing location in Grapevine, Texas), March 12,
  2002

  	
   

  	
  Yes; all service with Frost National Bank
  and Overton Park Bank

  	
   

  	
  Yes; all service with Frost National Bank
  and Overton Park Bank

  	
   

  	
  Immediately upon employment by Employer
  (but only for compensation earned from the Employer)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Riverway Holdings, Inc., Riverway
  Holdings of Delaware, Inc., and Riverway Bank, time of 2002 merger

  	
   

  	
  Yes; all service with Riverway
  Holdings, Inc., Riverway Holdings of Delaware, Inc., and Riverway
  Bank

  	
   

  	
  Yes; all service with Riverway
  Holdings, Inc., Riverway Holdings of Delaware, Inc., and Riverway
  Bank

  	
   

  	
  Immediately upon employment by Employer
  (but only for compensation earned from the Employer)

  



 


5





















 


	
  San Juan Bancshares, Inc., San Juan
  Delaware Financial Corporation, Texas Country Bank, time of 2002 merger

  	
   

  	
  Yes; all service with San Juan
  Bancshares, Inc., San Juan Delaware Financial Corporation, Texas Country
  Bank

  	
   

  	
  Yes; all service with San Juan
  Bancshares, Inc., San Juan Delaware Financial Corporation, Texas Country
  Bank

  	
   

  	
  Immediately upon employment by Employer
  (but only for compensation earned from the Employer)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Corpus Christi Bancshares, Inc.,
  CCB-Nevada, Inc., and The First State Bank; February 14, 2003

  	
   

  	
  Yes; all service with Corpus Christi
  Bancshares, Inc., CCB-Nevada, Inc., and The First State Bank

  	
   

  	
  Yes; all service with Corpus Christi
  Bancshares, Inc.,  CCB-Nevada, Inc.,
  and The First State Bank

  	
   

  	
  Immediately upon employment by Employer
  (but only for compensation earned from the Employer)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Southeast Texas Bancshares, Inc., Community Bank & Trust, SSB, Port
  Arthur Abstract and Title Company, Southeast Texas Title Company, and
  Southeast Texas Insurance Services, L.P. (“its subsidiaries”) (for employees
  on date of merger) March 12, 2004

  	
   

  	
  Yes; all service with Southeast Texas
  Bancshares, Inc., its subsidiaries, and Secure Trust if credited by Southeast
  Texas Bancshares, Inc. (for employees on date of merger)

  	
   

  	
  Yes; all service with Southeast Texas
  Bancshares, Inc., its subsidiaries, and Secure Trust if credited by Southeast
  Texas Bancshares, Inc. (for employees on date of merger)

  	
   

  	
  Immediately upon employment by Employer
  (but only for eligible employees age 21 or more, and only for compensation
  earned from the Employer); in addition, Hours of Service with Southeast Texas
  Bancshares, Inc. and subsidiaries served from January 1, 2004-March 12,
  2004 shall be credited for purposes of allocating Employer Discretionary
  Optional Contributions and Employer Discretionary Matching Contributions if
  the employee is otherwise eligible

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Valley Mortgage Company, Inc., November 23,
  2004

  	
   

  	
  Yes; all service with Valley Mortgage
  Company, Inc. (for employees on date of merger)

  	
   

  	
  Yes; all service with Valley Mortgage
  Company, Inc. (for employees on date of merger)

  	
   

  	
  Immediately upon employment by Employer
  (but only for eligible employees age 21 or more, and only for compensation
  earned from the Employer)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Mercantile Bank & Trust and its
  subsidiaries Mercantile Texas Realty Services, Inc. and Mercantile
  Securities, Inc., January 14, 2005

  	
   

  	
  Yes; all service with Mercantile
  Bank & Trust and its subsidiaries Mercantile Texas Realty
  Services, Inc. and Mercantile Securities, Inc. (for employees on
  date of merger)

  	
   

  	
  Yes; all service with Mercantile
  Bank & Trust and its subsidiaries Mercantile Texas Realty
  Services, Inc. and Mercantile Securities, Inc., (for employees on
  date of merger)

  	
   

  	
  Immediately upon employment by Employer
  (but only for eligible employees age 21 or more, and only for compensation
  earned from the Employer)

  



 


6