Document:

Exhibit 10.1

AMENDMENT
NUMBER THIRTEEN

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 April 20, 2004.

 

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, Community Bank & Trust, SSB, which
recently merged with and into Texas State Bank, the Company’s wholly owned
banking subsidiary, sponsors several common trust funds, as that term is
defined below; and

 

WHEREAS, the Directors and the Trustees believe that
it is in the best interest of the Participants of the Plan and their
Beneficiaries to provide the Trustees the ability to invest in one or more
common trust funds in accordance with (i) Revenue Procedure 92-51, Revenue
Ruling 81-100 and other rules and regulations prevailing from time to time
issued by the Comptroller of the Currency, Administrator of National Banks,
U.S. Department of the Treasury, pertaining to the collective investment of
trust funds for national banks; (ii) Code Section 584, and the regulations
thereunder; and (iii) other applicable federal and Texas laws.

 

NOW, THEREFORE, IT IS HEREBY AGREED THAT the Plan is
hereby amended effective as of April 20, 2004, as follows:

 

Plan Section 9.2, INVESTMENT POWERS AND DUTIES OF
THE TRUSTEE, is amended and restated in its entirety to read as follows:

 

9.2  INVESTMENT POWERS AND DUTIES OF THE TRUSTEE

 

(a)           The Trustee shall
invest and reinvest the Trust Fund to keep the Trust Fund invested without
distinction between principal and income and in such securities or property,
real or personal, wherever situated, as the Trustee shall deem advisable,
including, but not limited to, stocks, common or preferred, open-end or
close-end mutual fund bonds and other evidences of indebtedness or ownership, a
common trust fund maintained by a fiduciary which is a bank or insurance
company (“Common Trust Fund”), and real estate or any interest therein.  The Trustee shall at all times in making
investments of the Trust Fund consider, among other factors, the short and
long-term financial needs of the Plan on the basis of information furnished by
the Employer.  In making such
investments, the Trustee shall not be restricted to securities or other
property of the character expressly authorized by applicable State law for
trust investments; however, the Trustee shall give due regard to any
limitations imposed by the Code or the Act so that at all times the Plan may
qualify as an Employee Stock Ownership Plan and Trust.

(b)           The Trustee may
employ a bank or trust company pursuant to the terms of its usual and customary
bank agency agreement, under which the duties of such bank or trust company
shall be of a custodial, clerical and record-keeping nature.

(c)           In the event that
the Trustee invests any part of the Trust Fund, pursuant to the directions of
the Administrator, in any shares of stock issued by the Employer, and the
Administrator thereafter directs the Trustee to dispose of such investment, or
any part thereof, under circumstances which, in the opinion of counsel for the
Trustee, require registration of the securities under the Securities Act of
1933 and/or qualification of the securities under the Blue Sky laws of any
state or states, then the Employer, at its own expense, will take or cause to
be taken any and all such action as may be necessary or appropriate to effect
such registration and/or qualification.

(d)           In the event that
the Trustee invests any part of the Trust Fund in a Common Trust Fund (as
defined in subparagraph (a) above), such Common Trust Fund shall be maintained
by a bank within the meaning of Code Section 581 (“Bank”).  Provided that the Company or any other party
in interest (as defined in Section 3(14) of the Act)

 

 

qualifies as a Bank, such entity may serve as the Bank
for one or more Common Trust Funds.  If
the Company or other party in interest is the Bank for a Common Trust Fund and
ceases to qualify as a Bank, or wishes no longer to have or maintain management
and investment duties, the Company shall appoint a successor to maintain the
Common Trust Fund, and such successor must qualify as a Bank.  The Bank shall have exclusive managerial and
investment authority over its Common Trust Funds.  The managerial and investment authority over
the Common Trust Fund may be delegated to a committee, provided that such
committee is composed exclusively of Bank officers, directors, and
employees.  Each Common Trust Fund shall
be created and maintained exclusively for the collective investment and
reinvestment of contributions to the Common Trust Fund by the Bank or an
affiliate Bank, provided that such affiliate Bank qualifies as a Bank, either
acting alone or with one or more other fiduciaries in their capacity as
fiduciary of the Common Trust Fund.  In
acquiring, investing, re-investing, exchanging, retaining, selling, supervising
and managing the Common Trust Fund, the Bank shall act as a fiduciary as to the
participants in the Common Trust Fund. 
The Bank shall have full fiduciary powers, including management,
administrative, and investment authority. 
The Bank’s management, administrative and investment authority shall be
exercised in accordance with the Plan. 
Each Common Trust Fund shall be administered in conformity with the
rules and regulations prevailing from time to time and issued by the Comptroller
of the Currency, Administrator of National Banks, U.S. Department of the
Treasury, pertaining to collective investment of trust funds by national banks;
Code Section 584 governing group trust funds and the regulations thereunder;
and other applicable federal and Texas laws. 
If liquidating or segregated accounts are used to segregate investments
in the Common Trust Fund, these accounts are subject to and governed by all of
the provisions of the Plan.  Further, no
Common Trust Fund accounts shall be represented by transferable certificates.  Admissions to and withdrawals from the Common
Trust Fund by participants in the Fund shall be made on the basis of a
valuation of the assets of the Fund and as of the date of the valuation.

 

IN WITNESS WHEREOF, this Thirteenth Amendment to the Texas Regional
Bancshares, Inc. Amended and Restated Employee Stock Ownership Plan (with
401(k) Provisions) has been executed this 12th day of October, 2004
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, TrusteeExhibit 10.1

 

Non-Qualified Stock Option Agreement under

Assured Guaranty Ltd. 2004 Long-Term Incentive Plan

 

THIS
AGREEMENT, entered into as of the Grant Date (as defined in paragraph 1), by
and between the Participant and Assured Guaranty Ltd. (the “Company”):

 

WITNESSETH THAT:

 

WHEREAS,
the Company maintains the Assured Guaranty Ltd. 2004 Long-Term Incentive Plan
(the “Plan”), and the Participant has been selected by the committee
administering the Plan (the “Committee”) to receive a Non-Qualified Stock Option
Award under the Plan;

 

NOW,
THEREFORE, IT IS AGREED, by and between the Company and the Participant, as
follows:

 

1.  Terms of Award.   The following words and phrases used in this
Agreement shall have the meanings set forth in this paragraph 1:

 

(a)                                  The
“Participant” is                                                                                  .

 

(b)                                 The
“Grant Date” is                                                                                  .

 

(c)                                  The
number of “Covered Shares” shall be                       shares
of Stock.

 

(d)                                 The
“Exercise Price” is $                   per
share.

 

Other words and phrases
used in this Agreement are defined pursuant to paragraph 17 or elsewhere in
this Agreement.

 

2.  Non-Qualified Stock Option.  This Agreement specifies the terms of the
option (the “Option”) granted to the Participant to purchase the number of
Covered Shares of Stock at the Exercise Price per share as set forth in
paragraph 1.  The Option is not intended
to constitute an “incentive stock option” as that term is used in Code section 422.

 

3.  Date of Exercise.  Subject to the limitations of this Agreement,
each Installment of Covered Shares of the Option shall be exercisable on and
after the Vesting Date for such Installment as described in the following schedule (but
only if the Date of Termination has not occurred before the Vesting Date):

 

 

	
  INSTALLMENT

  	
   

  	
  VESTING DATE APPLICABLE

  TO INSTALLMENT

  
	
  1/3 of Covered Shares

  	
   

  	
  One year anniversary of the Grant Date

  
	
  1/3 of Covered Shares

  	
   

  	
  Two year anniversary of the Grant Date

  
	
  1/3 of Covered Shares

  	
   

  	
  Three year anniversary of the Grant Date

  

 

Notwithstanding the
foregoing provisions of this paragraph 3, the Option shall become vested and
exercisable as follows:

 

(a)                                  The
Option shall become fully exercisable upon the Date of Termination, if the Date
of Termination occurs by reason of the Participant’s death or Disability.

 

(b)                                 The
Option shall become fully exercisable upon a Change in Control that occurs on
or before the Date of Termination.

 

The Option may be
exercised on or after the Date of Termination only as to that portion of the
Covered Shares for which it was exercisable immediately prior to (or became
exercisable on) the Date of Termination. 
Notwithstanding the foregoing provisions of this paragraph 3, as of the
Participant’s Date of Termination for Cause, the Option shall be canceled as to
any Covered Shares as to which it has not previously been exercised.

 

4.  Expiration.  The Option shall not be exercisable after the
Company’s close of business on the last business day that occurs prior to the
Expiration Date.  The “Expiration Date”
shall be the earliest to occur of:

 

(a)                                  the
ten-year anniversary of the Grant Date;

 

(b)                                 if
the Participant’s Date of Termination occurs by reason of death or Disability,
the three-year anniversary of such Date of Termination;

 

(c)                                  if
the Participant’s Date of Termination occurs for Cause, the Date of
Termination;

 

(d)                                 if
the Participant’s Date of Termination occurs by reason of the Participant’s
Retirement, the ten-year anniversary of the Grant Date; or

 

(e)                                  if
the Participant’s Date of Termination occurs for any reason other than those
listed in subparagraph (b), (c), or (d) of this paragraph 4, the 90 day
anniversary of such Date of Termination.

 

5.  Method of Option Exercise.  Subject to this Agreement and the Plan, the
Option may be exercised in whole or in part by filing a written notice with the
Secretary of the Company at its corporate headquarters prior to the Company’s
close of business on the last business day that occurs prior to the Expiration
Date.  Such notice shall specify the
number of shares of Stock which the Participant elects to purchase, and shall
be accompanied by payment of the Exercise

 

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Price for such shares of
Stock indicated by the Participant’s election. 
Payment shall be by cash or by check payable to the Company.  Except as otherwise provided by the Committee
before the Option is exercised: (i) all or a portion of the Exercise Price may
be paid by the Participant by delivery of shares of Stock owned by the
Participant and acceptable to the Committee having an aggregate Fair Market
Value (valued as of the date of exercise) that is equal to the amount of cash
that would otherwise be required; and (ii) the Participant may pay the Exercise
Price by authorizing a third party to sell shares of Stock (or a sufficient
portion of the shares) acquired upon exercise of the Option and remit to the
Company a sufficient portion of the sale proceeds to pay the entire Exercise
Price and any tax withholding resulting from such exercise.  The Option shall not be exercisable if and to
the extent the Company determines that such exercise would violate applicable state
or Federal securities laws or the rules and regulations of any securities
exchange on which the Stock is traded. 
If the Company makes such a determination, it shall use all reasonable
efforts to obtain compliance with such laws, rules and regulations.  In making any determination hereunder, the
Company may rely on the opinion of counsel for the Company.

 

6.  Withholding.  All deliveries and distributions under this
Agreement are subject to withholding of all applicable taxes.  At the election of the Participant, and
subject to such rules and limitations as may be established by the Committee
from time to time, such withholding obligations may be satisfied through the
surrender of shares of Stock which the Participant already owns, or to which
the Participant is otherwise entitled under the Plan; provided, however, that
such shares may be used to satisfy not more than the Company’s minimum
statutory withholding obligation (based on minimum statutory withholding rates
for Federal and state tax purposes, including payroll taxes, that are applicable
to such supplemental taxable income).

 

7.  Transferability.  Except as otherwise provided by the
Committee, the Option is not transferable other than as designated by the
Participant by will or by the laws of descent and distribution, and during the
Participant’s life, may be exercised only by the Participant.

 

8.  Cancellation and Rescission of Options.

 

(a)                                  The
Committee may cancel, rescind, suspend, withhold or otherwise limit or restrict
the Option at any time if the Participant engages in any “Detrimental Activity.”

 

(b)                                 Upon
exercise of the Option, the Participant shall certify, to the extent provided
by the Committee, in a manner acceptable to the Committee, that the Participant
is not engaging and has not engaged in any Detrimental Activity.  In the event a Participant has engaged in any
Detrimental Activity prior to, or during the six months after, any exercise of
the Option, such exercise may be rescinded by the Committee within two years
thereafter.  In the event of any such
rescission, the Participant shall pay to the Company the amount of any gain
realized as a result of the rescinded exercise, in such manner and on such
terms and conditions as may be required, and the Company shall be entitled to
set-off against the amount of any such gain any amount owed to the Participant
by the Company and/or Subsidiary.

 

9.  Heirs and Successors.  This Agreement shall be binding upon, and
inure to the benefit of, the Company and its successors and assigns, and upon
any person acquiring, whether by

 

3

 

merger, consolidation,
purchase of assets or otherwise, all or substantially all of the Company’s
assets and business.  If any rights
exercisable by the Participant or benefits deliverable to the Participant under
this Agreement have not been exercised or delivered, respectively, at the time
of the Participant’s death, such rights shall be exercisable by the Designated
Beneficiary, and such benefits shall be delivered to the Designated
Beneficiary, in accordance with the provisions of this Agreement and the
Plan.  The “Designated Beneficiary” shall
be the beneficiary or beneficiaries designated by the Participant in a writing
filed with the Committee in such form and at such time as the Committee shall
require.  If a deceased Participant fails
to designate a beneficiary, or if the Designated Beneficiary does not survive
the Participant, any rights that would have been exercisable by the Participant
and any benefits distributable to the Participant shall be exercised by or
distributed to the legal representative of the estate of the Participant.  If a deceased Participant designates a
beneficiary and the Designated Beneficiary survives the Participant but dies
before the Designated Beneficiary’s exercise of all rights under this Agreement
or before the complete distribution of benefits to the Designated Beneficiary
under this Agreement, then any rights that would have been exercisable by the
Designated Beneficiary shall be exercised by the legal representative of the estate
of the Designated Beneficiary, and any benefits distributable to the Designated
Beneficiary shall be distributed to the legal representative of the estate of
the Designated Beneficiary.

 

10.  Administration.  The authority to manage and control the operation
and administration of this Agreement shall be vested in the Committee, and the
Committee shall have all powers with respect to this Agreement as it has with
respect to the Plan.  Any interpretation
of this Agreement by the Committee and any decision made by it with respect to
this Agreement is final and binding on all persons.  The Committee shall have the authority to
obtain such information from the Participant (including tax return information)
as it determines may be necessary to confirm that the Participant is in
compliance with the requirements applicable to Cause or Detrimental Activity,
and if the Participant fails to provide such information, the Committee may
conclude that the Participant is not in compliance with such requirements.

 

11.  Plan Governs.  Notwithstanding anything in this Agreement to
the contrary, this Agreement shall be subject to the terms of the Plan, a copy
of which may be obtained by the Participant from the office of the Secretary of
the Company; and this Agreement is subject to all interpretations, amendments,
rules and regulations promulgated by the Committee from time to time pursuant
to the Plan.

 

12.  Not An Employment Contract.  The Option will not confer on the Participant
any right with respect to continuance of employment or other service with the
Company or any Subsidiary, nor will it interfere in any way with any right the
Company or any Subsidiary would otherwise have to terminate or modify the terms
of such Participant’s employment or other service at any time.

 

13.  Notices.  Any written notices provided for in this
Agreement or the Plan shall be in writing and shall be deemed sufficiently
given if either hand delivered or if sent by fax or overnight courier, or by
postage paid first class mail.  Notices
sent by mail shall be deemed received three business days after mailing but in
no event later than the date of actual receipt. 
Notices shall be directed, if to the Participant, at the Participant’s
address indicated by the Company’s records, or if to the Company, at the
Company’s principal executive office.

 

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14.  Fractional Shares.  In lieu of issuing a fraction of a share upon
any exercise of the Option, resulting from an adjustment of the Option pursuant
to the Plan or otherwise, the Company will be entitled to pay to the
Participant an amount equal to the fair market value of such fractional share.

 

15.  No Rights As Shareholder.  The Participant shall not have any rights of
a shareholder with respect to the shares subject to the Option, until a stock
certificate has been duly issued following exercise of the Option as provided
herein.

 

16.  Amendment.  This Agreement may be amended in accordance
with the provisions of the Plan, and may otherwise be amended by written
agreement of the Participant and the Company without the consent of any other
person.

 

17.  Definitions.  For purposes of this Agreement, words and
phrases shall be defined as follows:

 

(a)                                  Cause.  The term “Cause” shall mean (i) the rendering
of services for any organization or engaging directly or indirectly in any
business which is or becomes competitive with the Company or the Subsidiaries
(including, without limitation, Financial Security Assurance Inc., MBIA, Inc.,
AMBAC Financial Group Inc., and Radian Group Inc.), or which organization or
business, or the rendering of services to such organization or business, is or
becomes otherwise prejudicial to or in conflict with the interests of the
Company or the Subsidiaries; (ii) the disclosure to anyone outside the Company
or the Subsidiaries, or the use in other than the Company’s or the Subsidiaries’
business, without prior written authorization from the Company or the
Subsidiaries, of any confidential information or material, relating to the business
of the Company or the Subsidiaries, acquired by the Participant either during
or after employment with the Company or the Subsidiaries; (iii) a violation of
any rules, policies, procedures or guidelines of the Company or the
Subsidiaries, including but not limited to the Company’s business conduct
guidelines; (iv) any attempt directly or indirectly to induce any employee of
the Company to be employed or perform services elsewhere or any attempt
directly or indirectly to solicit the trade or business of any current or
prospective customer, supplier or partner of the Company; (v) the Participant
being convicted of, or entering a guilty plea with respect to, a crime, whether
or not connected with the Company; or (vi) any other conduct or act determined
to be injurious, detrimental or prejudicial to any interest of the Company.

 

(b)                                 Change
in Control.  The term “Change in
Control” shall be defined as set forth in the Plan.

 

(c)                                  Date
of Termination.  A Participant’s “Date
of Termination” means, with respect to an employee, the date on which the
Participant’s employment with the Company and Subsidiaries terminates for any
reason, and with respect to a Director, the date immediately following the last
day on which the Participant serves as a Director; provided that a Date of
Termination shall not be deemed to occur by reason of a Participant’s transfer
of employment between the Company and a Subsidiary or between two Subsidiaries;
further provided that a Date of Termination shall not be deemed to occur by
reason of a Participant’s cessation of service as a Director if immediately

 

5

 

following
such cessation of service the Participant becomes or continues to be employed
by the Company or a Subsidiary, nor by reason of a Participant’s termination of
employment with the Company or a Subsidiary if immediately following such
termination of employment the Participant becomes or continues to be a
Director; and further provided that a Participant’s employment shall not be considered
terminated while the Participant is on a leave of absence from the Company or a
Subsidiary approved by the Participant’s employer.

 

(d)                                 Detrimental
Activity.  The term “Detrimental
Activity” shall mean the occurrence of actions described in clause (i)
(relating to competition), (ii) (relating to confidentiality), or (iv)
(relating to solicitation), all as set forth under the definition of “Cause”
above.

 

(e)                                  Director.  The term “Director” means a member of the
Board, who may or may not be an employee of the Company or a Subsidiary.

 

(f)                                    Disability.  The Participant shall be considered to have a
“Disability” during the period in which the Participant is unable, by reason of
a medically determinable physical or mental impairment, to engage in any substantial
gainful activity, which condition, in the opinion of a physician selected by
the Committee, is expected to have a duration of not less than 120 days.

 

(g)                                 Retirement.  “Retirement” of a Participant shall mean with
respect to an employee of the Company or a Subsidiary, the occurrence of a
Participant’s Date of Termination with the consent of the Participant’s
employer after the Participant has completed five years of service and attained
age 55.  For purposes of this definition,
years of service shall be determined in accordance with rules established by
the Committee, and shall take into account service with the Company and its
Subsidiaries, as well as service with ACE Limited and its subsidiaries
occurring prior to the initial public offering of stock of the Company.

 

(h)                                 Plan
Definitions.  Except where the
context clearly implies or indicates the contrary, a word, term, or phrase used
in the Plan is similarly used in this Agreement.

 

IN
WITNESS WHEREOF, the Participant has executed the Agreement, and the Company
has caused these presents to be executed in its name and on its behalf, all as
of the Grant Date.

 

	
  Assured Guaranty
  Ltd.

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
  Its:

  	
   

  	
   

  
	
   

  	
   

  
	
  Participant

  	
   

  
	
   

  	
   

  
	
   

  	
   

  

 

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