Document:

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                                 EXHIBIT 10.8

                       TEXAS REGIONAL BANCSHARES, INC.

                     2002 NONSTATUTORY STOCK OPTION PLAN

      Texas Regional Bancshares, Inc., a Texas corporation (hereinafter called
the "Corporation") believes that allowing certain key employees to obtain shares
of the Class A Voting Common Stock of the Corporation through the use of stock
options hereinafter provided for will be beneficial to the initial and continued
success of the Corporation. In furtherance of the foregoing, the Corporation
hereby establishes the Texas Regional Bancshares, Inc. 2002 Nonstatutory Stock
Option Plan (the "Plan").

      1. PURPOSE. The purpose of the Plan is to secure for the Corporation and
its stockholders the benefits which flow from providing key employees of the
Corporation and its subsidiaries with the incentive inherent in common stock
ownership. It is generally recognized that stock option plans aid in retaining
competent employees and furnish a device to attract employees of exceptional
ability to the Corporation because of the opportunity offered to acquire a
proprietary interest in the business. For purposes of the Plan, a subsidiary is
any corporation in which the Corporation owns, directly or indirectly, stock
possessing fifty percent (50%) or more of the total combined voting power of all
classes of stock or over which the Corporation has effective operating control.
The Corporation intends that stock options granted or exercised under this Plan
not qualify as "Incentive Stock Options" under Section 422 of the Internal
Revenue Code of 1986, as amended from time to time, and pertinent regulations.

      2. AMOUNT OF STOCK.

              (a) The total number of shares of Class A Voting Common Stock to
         be subject to options granted pursuant to the Plan shall not exceed one
         hundred thousand (100,000) shares of the Corporation's Class A Voting
         Common Stock (hereinafter referred to as the "Common Stock" or the
         "Stock") each having a par value of $1.00.

              (b) In the event of (i) stock dividends, stock splits, or
         subdivisions, combinations or reclassifications of the Stock, or (ii)
         the merger or consolidation of the Corporation with any other business
         entity, the sale of all or substantially all of the Corporation's
         assets, the liquidation or dissolution the Corporation, or any other
         form of corporate reorganization or other similar capital change, the
         number and kind of shares of stock of the Corporation described in the
         Plan or to be granted under the Plan, the number and kind of shares of
         stock of the Corporation subject to options then outstanding under the
         Plan, the maximum number of shares for which options may be issued
         under the Plan, the option price and other relevant provisions shall be
         appropriately adjusted. The determination of the Board of Directors, or
         the Committee appointed by the Board as herein provided, as to any
         dispute related to adjustments shall be binding on all persons.

              (c) In the event that options granted under this Plan shall
         expire, terminate unexercised or otherwise lapse without being
         exercised in whole or in part, the shares covered by the unexercised
         portion of the expired, terminated or lapsed options shall be available
         for future grants under the Plan, within the limits herein described.

              (d) The stock to be issued under the Plan may constitute an
         original issue of authorized stock or may consist of previously issued
         stock acquired by the Corporation, as shall be determined by the Board
         or the Committee.

      3. STOCK OPTION COMMITTEE. The Board of Directors of the Corporation (the
"Board") shall from time to time appoint a Stock Option Committee (the
"Committee") to serve under this Plan. The Committee shall consist of either:

              (i) Three or more directors, none of whom are, on the date
         selected for the Committee, and for one year prior thereto, eligible
         for selection under the Plan, any other plan of the Corporation or any
         affiliate of the Corporation to acquire stock, stock options or stock
         appreciation rights of the Corporation or any of its affiliates, and
         who otherwise meet the definition of a "Non-Employee Director for
         purposes of Rule 16b-3(d)(1) as promulgated by the Securities and
         Exchange Commission pursuant to the Securities Exchange Act of 1934, as
         amended; or

              (ii) The entire Board of Directors of the Corporation, so long as
         a majority of the Board and a majority of the Directors acting as
         members of the Committee are not, at the time of selection for the
         Committee, and for one year prior thereto, eligible for selection under
         the Plan, any other plan of the Corporation or any affiliate of the
         Corporation to acquire stock, stock options or stock appreciation
         rights of the Corporation or any of its affiliates.

      A person serving on the Committee shall not be considered as being
eligible to acquire stock, stock options, or stock appreciation rights if such
eligibility is under the terms of an employee benefit plan of the Corporation
which is open to all employees of the Corporation and the eligibility and
allocation criteria are fixed and uniform for all employees.

      Persons serving on the Committee may receive options if such options being
granted to any such person are subject to shareholder approval and are
independent of any type of plan.

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      The Committee shall have authority, consistent with the Plan:

              (a) to determine which of the key employees of the Corporation and
         its subsidiaries shall be granted options;

              (b) to determine the time or times when options shall be granted
         and the number of shares of Common Stock to be subject to each option;

              (c) to determine the option price of the shares subject to each
         option and the method of payment of such price;

              (d) to determine the time or times when each option becomes
         exercisable and the duration of the exercise period, subject to the
         limitations contained in Paragraph 6(b);

              (e) to prescribe the form or forms of the instruments evidencing
         any options granted under the Plan and of any other instruments
         required under the Plan and to change such forms from time to time;

              (f) to adopt, amend and rescind rules and regulations for the
         administration of the Plan and the options and for its own acts and
         proceedings;

              (g) to decide all questions and settle all controversies and
         disputes which may arise in connection with the Plan; and

              (h) to take other actions permitted of the Committee by this Plan,
         authority hereafter granted by the Board or as permitted by law.

      All decisions, determinations and interpretations of the Committee shall
be final and binding on all parties concerned.

      4. ELIGIBILITY AND PARTICIPATION. Options may be granted pursuant to the
Plan to employees of the Corporation and any parent or subsidiary of the
Corporation (hereinafter sometimes called an "employee" or collectively the
"employees").

      From time to time the Committee shall select the employees to whom options
may be granted by the Board and shall determine the number of shares to be
covered by each option so granted. Future as well as present employees
(including employees who are directors) shall be eligible to participate in the
Plan. If the entire Board constitutes the Committee, then members of the
Committee that are otherwise eligible to participate in the Plan shall be
allowed to participate in the Plan, provided that such eligible members
constitute a minority of the Board, and provided further, that any individual
member of the Committee allowed to participate will be prohibited from voting
upon or in any way influencing the other members of the Committee in designating
such individual member as a recipient of option grants or in exercising any
other discretion granted to the Committee regarding the option grants to such
individual member. If the Committee is appointed under the terms of subparagraph
(i) of Section 3 hereof, then members of the Committee (including those who are
key employees of the Corporation or a subsidiary corporation of the Corporation)
shall not be eligible to participate in the Plan.

      The adoption of the Plan does not confer upon any employee of the
Corporation or a subsidiary any right to continue employment with the
Corporation or a subsidiary, as the case may be, nor does it interfere in any
way with the right of the Corporation or a subsidiary to terminate the
employment of any of its employees at any time.

      5. OPTION AGREEMENT. The terms and provisions of options granted pursuant
to the Plan shall be set forth in agreements (which need not be identical) in
such form and containing such provisions as are consistent with this Plan as the
Board or the Committee may from time to time approve (individually an "Option
Agreement" and collectively the "Option Agreements"). An Option Agreement may
incorporate all or any of the terms hereof by reference and shall comply with
and be subject to the terms and conditions herein provided.

      6. PRICE. The purchase price per share of Common Stock purchasable under
options granted pursuant to the Plan shall be an amount equal to one hundred
percent (100%) of the fair market value of the stock, as determined by the Board
or the Committee, at the time the options are granted. The full purchase price
of shares purchased shall be paid upon exercise of the option in the manner and
by the means set forth in the employee's Option Agreement. The consideration
shall be paid either in cash, by check, or for such other consideration as the
Board or Committee may approve. Under certain circumstances the purchase price
per share shall be subject to adjustment as referred to in Section 11 or 13 of
this Plan and as described in the Option Agreement executed pursuant to a grant
under this Plan; however, the price per share of Common Stock purchasable under
options granted pursuant to the Plan shall not be subject to adjustment after
the date of grant in the absence of the occurrence of an event described in
Section 11 or 13.

      7. EXERCISE PERIOD. The right to purchase any Common Stock pursuant to the
exercise of an option granted under this Plan may be either cumulative or
non-cumulative, as determined by the Board or the Committee. Any Common Stock
purchasable pursuant to the exercise of an option granted under this Plan will
be purchasable in accordance with the schedule set forth in the Option Agreement
between the Corporation and the employee receiving the option, subject to any
other limitation provided in this Plan or in the employee's Option Agreement. A
person electing to exercise an option shall give notice as described in his or
her Option Agreement, such notice to be accompanied by such instruments or
documents as may be required by the Option Agreement and the Committee, and
unless otherwise directed by the Committee, the employee shall at the time of

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exercise tender the purchase price of the shares he or she has elected to
purchase. Unless otherwise provided in the particular Option Agreement, in the
event the portion of Common Stock purchasable under the Option Agreement
involves a fraction of a share, the amount purchasable at that time shall be
rounded upward to the next complete share to allow the purchase of a complete
share of Common Stock.

      8. OPTION PERIOD. No option granted pursuant to the Plan shall be
exercisable after the expiration of ten (10) years from the date the option is
first granted. The expiration date for any option or portion thereof, which may
be any period not in excess of ten (10) years following the date of grant of the
option, shall be stated in the Option Agreement and is hereinafter called the
"Expiration Date".

      Notwithstanding any other provision of this Plan, no option shall be
granted under this Plan more than ten (10) years after the date this Plan is
adopted by the Board, or the date this Plan is approved by the Common Stock
stockholders, whichever is earlier.

      9. TERMINATION OF EMPLOYMENT. The Option Agreement may provide that:

         (a) If, prior to the Expiration Date for any option granted hereunder,
         the employee shall for any reason whatever, other than (1) his
         permanent and total disability as defined in (c) below, or (2) his
         death, cease to be employed by the Corporation, or a parent or
         subsidiary corporation of the Corporation, then any unexercised portion
         of such option shall automatically terminate upon the date of such
         termination of employment.

         (b) If, prior to the Expiration Date for any option granted hereunder,
         the employee shall die at a time when he had been employed by the
         Corporation, or a parent or subsidiary corporation of the Corporation,
         from the date of granting of such option until the date of his death,
         then the legal representatives of his estate or a legatee or legatees
         of the option shall have the right, for a period of three (3) months
         after his death, to purchase all or any part of the Stock subject to
         the option outstanding and unexpired as of his date of death.

         (c) If, prior to the Expiration Date for any option granted hereunder,
         the employee shall cease to be employed by the Corporation, or a parent
         or subsidiary corporation of the Corporation, because he becomes
         permanently and totally disabled, as hereafter defined, and prior to
         such termination of employment by reason of disability the employee had
         been employed by the Corporation, or a parent or subsidiary of the
         Corporation, at all times since the date of the granting of such
         option, then such employee or his legal representative shall have the
         right, for a period of one (1) year from the date of such termination
         of employment by reason of disability, to exercise any right to
         purchase Stock pursuant to the option.

              An employee is "permanently and totally disabled" if he is unable
         to engage in any substantial gainful activity by reason of any
         medically determinable physical or mental impairment which can be
         expected to result in death or which has lasted or can be expected to
         last for a continuous period of not less than twelve (12) months. Such
         determination of permanent and total disability shall be made as
         allowable under Section 22, and applicable regulations, of the Internal
         Revenue Code of 1986, as amended, or any other applicable method
         necessary for the continued qualification of this Plan under Section
         422 of the Internal Revenue Code. In the absence of any specific
         requirements for this determination, the decision of the Board or the
         Committee, as aided by any physicians they designate, shall be
         conclusive.

      Nothing in (a), (b), or (c) shall extend the time for exercising any
option granted pursuant to the Plan beyond the Expiration Date for the option.
Any Option Agreement may contain or otherwise provide for conditions giving rise
to the forfeiture of Stock or a repurchase right with respect to Stock acquired
pursuant to an Option Agreement executed pursuant to this Plan, and may also
provide for such restrictions on the transferability of shares of Stock acquired
pursuant to an Option Agreement executed pursuant to this Plan, that the Board
or the Committee in its sole and absolute discretion may deem proper or
advisable. The conditions giving rise to forfeiture or right of repurchase may
include, but need not be limited to, the requirement that the optionee render
substantial services to the Corporation or any subsidiary of the Corporation for
a specified period of time. The restrictions on transferability may include, but
need not be limited to, options and rights of first refusal in favor of the
Corporation.

      10.ASSIGNABILITY. The Option Agreement shall provide that the option
granted thereby shall not be transferable or assignable by the employee
otherwise than by will or by the laws of descent and distribution, and during
the lifetime of the employee shall be exercisable only by him or her.

      11.ADJUSTMENTS AND MODIFICATIONS. The Option Agreement may contain such
provisions as the Board or the Committee may approve concerning the effect upon
the option granted thereby and upon the per share or per unit option price, of
(i) stock dividends, stock splits, or subdivisions, combinations or
reclassifications of the Stock, or (ii) the merger or consolidation of the
Corporation with any other business entity, the sale of all or substantially all
of the Corporation's assets, the liquidation or dissolution the Corporation, or
any other form of corporate reorganization or other similar capital change.
Subject to the terms and conditions and within the limitations of this Plan, the
Board or Committee may modify, extend, or renew outstanding rights granted under
this Plan, or accept the surrender of outstanding rights (to the extent not
theretofore exercised). Notwithstanding

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the foregoing, no modification of an option shall, without the consent of the
optionee, alter or impair any rights of the optionee under the option.

      12.ISSUANCE REQUIREMENTS. The Corporation shall not be obligated to issue
any shares unless and until, in the opinion of the Corporation's counsel, (i)
all applicable laws and regulations have been complied with, (ii) in the event
the Corporation's Common Stock is at the time listed upon any stock exchange or
approved for trading on the Nasdaq Stock Market, the shares to be issued have
been listed or trading shall otherwise be authorized upon official notice of
issuance, and (iii) all other legal matters in connection with the issuance and
delivery of shares shall have been approved by the Corporation's counsel. The
participant shall take any action reasonably requested by the Corporation in
connection therewith. Without limiting the generality of the foregoing, the
Corporation may require from the participant such investment representation or
such agreement, if any, as counsel for the Corporation may consider necessary in
order to comply with the Securities Act of 1933 as then in effect, and may
require that the participant agree that any sale of the shares will be made only
in such manner permitted by law. A legend to this effect may be affixed to the
certificates evidencing such shares. A participant shall have the rights of a
stockholder only as to shares actually acquired by him under the Plan.

      13. CORPORATE MERGER, CONSOLIDATION, REORGANIZATION, ETC.

              (a) In the event of a dissolution or liquidation of the
         Corporation or a merger or consolidation in which the Corporation is
         not the surviving corporation, any outstanding options hereunder may be
         terminated by the Corporation as of the effective date of such
         dissolution, liquidation, merger or consolidation by giving notice to
         each holder thereof or his or her personal representative of its
         intention to do so and by permitting the exercise during a period of
         not more than a specified number of days determined by the Board next
         preceding such effective date, or the Expiration Date, whichever is
         earlier, of all of such outstanding options in whole or in part without
         regard to the provisions of Section 7 hereof. Subject to the preceding
         sentence, if the Corporation is reorganized or merged or consolidated
         with another corporation, while unexercised options are outstanding
         under the Plan, and the Corporation is not the surviving corporation,
         there shall be substituted for the Common Stock subject to the
         unexercised and outstanding options an appropriate number of shares of
         each class of stock or other securities of the reorganized or merged or
         consolidated corporation which were distributed to shareholders of the
         Corporation in respect of the Common Stock. Such substitution may be
         accomplished by the assumption of such options by the surviving
         corporation or the substitution for the old options of new options by
         the surviving corporation.

              (b) The existence of the Plan and any options granted hereunder
         shall not affect in any way the right or power of the Board or the
         stockholders of the Company to make or authorize any adjustment,
         recapitalization, reorganization, reclassification or other change in
         the Company's capital structure or its business, any merger,
         consolidation or separation of the Company, any issue of bonds,
         debentures, preferred or prior preference stocks ahead of or affecting
         Common Stock or the rights thereof, the dissolution or liquidation of
         the Company or any sale or transfer of all or any part of its assets or
         business, or any other corporate act or proceeding.

      14.AMENDMENT OF THE PLAN. The Board of Directors of the Corporation may
from time to time alter, amend, suspend or discontinue the Plan and make rules
for its administration.

      15. OPTIONS DISCRETIONARY. The granting of options under the Plan shall be
entirely discretionary and nothing in the Plan shall be deemed to give any key
employee any right to participate in the Plan or to receive options.

      16. STOCKHOLDER APPROVAL. The Plan will be submitted to the Common Stock
stockholders of the Corporation within twelve (12) months of the date of the
adoption of the Plan by the Board.

      17.TERMINATION OF PLAN. This Plan shall terminate ten (10) years after its
approval by the Common Stock stockholders or adoption by the Board, whichever is
earlier. Any option outstanding under this Plan at the time of its termination
shall remain in effect until the option shall have been exercised or the
Expiration Date, whichever is earlier.

      18.REPLACEMENT OPTIONS. The Corporation may grant options under the Plan
on terms differing from those provided for in this Plan where such options are
granted in substitution for options held by employees of other corporations who
have become employees of the Corporation or a subsidiary as the result of a
merger, consolidation or other reorganization of the employing corporation with
the Corporation or subsidiary, or the acquisition by the Corporation or a
subsidiary of the business, property or stock of the employing corporation. The
Committee may direct that the substitute options be granted on such terms and
conditions as the Committee considers appropriate in the circumstances.

      19. ADOPTION OF PLAN BY BOARD. The undersigned hereby certifies that this
Plan is the true and correct 2002 Texas Regional Bancshares, Inc., Nonstatutory
Stock Option Plan of the Corporation voted upon and adopted at a meeting of the
Board of Directors duly held on the 12th day of March, 2002.

                                /S/ NANCY F. SCHULTZ

                                     Secretary<PAGE>

                                EXHIBIT 10.12

                             AMENDMENT NUMBER TWO
                                      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 "Bank"), 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 January 1, 2002.

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

      WHEREAS, the Bank of Texas merged with and into the Bank's wholly-owned
subsidiary, Texas State Bank; and

      WHEREAS, prior to the merger, the Bank of Texas had established and
maintained the Bank of Texas Profit Sharing Plan and related Trust (the "Bank of
Texas Plan"); and

      WHEREAS, as a result of the merger, Texas Regional Bancshares, Inc. became
the successor employer to Bank of Texas for purposes of the Bank of Texas Plan;
and

      WHEREAS, the Bank, the Trustees of the ESOP and the Trustees of the Bank
of Texas Plan entered into that certain Agreement of Merger of Defined
Contribution Plans dated to be effective as of January 1st, 2002 pursuant to
which the Bank of Texas Plan was merged with and into the ESOP; and

      WHEREAS, as a result of another merger, the Bank became the successor of
Harlingen National Bank as plan sponsor of the Harlingen National Bank 401(k)
Plan (the "Harlingen National Bank Plan"); and

      WHEREAS, the Bank, the Trustees of the ESOP and the Trustees of the
Harlingen National Bank Plan entered into that certain Agreement of Merger of
Defined Contribution Plans dated to be effective as of January 1st, 2002
pursuant to which the Harlingen National Bank Plan was merged with and into the
ESOP; and

      WHEREAS, due to the mergers of the Bank of Texas Plan and the Harlingen
National Bank Plan with and into the ESOP, the Bank and the Trustees of the ESOP
desire to adopt certain amendments to the ESOP;

      NOW THEREFORE, IT IS HEREBY AGREED THAT the ESOP plan document will be and
is hereby amended effective as of January 1, 2002 as follows:

      1. Section 5.11(a) of the ESOP plan document shall be and hereby is
amended in its entirety to state as follows:

            With the consent of the Administrator, amounts may be transferred
      (within the meaning of Code Section 414(o) 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).

            Notwithstanding the foregoing, effective as of January 1, 2002 (the
      "Merger Date"), pursuant to the consent of the Administrator and the
      Trustee, the plan assets of the Bank of Texas Plan have been transferred
      to this Plan and, from and after said date, shall be subject to the
      provisions of this Plan and the related Trust, as amended. The amounts
      transferred shall be set up in a separate account herein referred to as a
      Participant's Bank of Texas Transfer/Rollover Account. As of the Merger
      Date, the participants of the Bank of Texas Plan were fully vested in
      their accounts in the Bank of Texas Plan. Therefore, Participants shall be
      fully vested in their Participant's Bank of Texas Transfer/Rollover
      Account.

            Further, effective as of January 1, 2002 (the "Merger Date"),
      pursuant to the consent of the Administrator and the Trustee, the plan
      assets of the Harlingen National Bank Plan have been transferred to this
      Plan and, from and after said date, shall be subject to the provisions of
      this Plan and the related Trust, as amended. The amounts transferred shall
      be set up in a separate account herein referred to as a Participant's
      Harlingen National Bank Transfer/Rollover Account. As of the Merger Date,
      the participants of the Harlingen National Bank Plan were fully vested in
      their accounts in the Harlingen National Bank Plan. Therefore,
      Participants shall be fully vested in their Participant's Harlingen
      National Bank Transfer/Rollover Account.

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      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 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).

      2. Section 5.12(a) of the ESOP plan document shall be and is hereby
amended in its entirety to state as follows:

      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, including but not limited to
      their Participant's Bank of Texas Transfer/Rollover Accounts and their
      Participant's Harlingen National Bank 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.

      3. Section 8.5 of the ESOP plan document shall be and is hereby amended to
add the following Subsection 8.5(j):

      Notwithstanding anything herein to the contrary, a Participant may elect
      to receive a distribution of his Participant's Bank of Texas
      Transfer/Rollover Account prior to his separation from service after
      attaining age 59 1/2 years of age. A Participant must make an election
      under this Section 8.5(j) on a form prescribed by the Administrator at
      any time during the Plan Year for which his election is to be effective.
      In his written election, the Participant must specify the percentage or
      dollar amount he wishes the Trustee to distribute to him. The
      Participant's election relates solely to the percentage or dollar amount
      specified in his election form and his right to elect to receive an
      amount, if any, for a particular Plan Year greater than the dollar amount
      or percentage specified in his election form terminates on the Anniversary
      Date. The Trustee must make a distribution to a Participant in accordance
      with his election under this Section 8.5(j) within the 90-day period (or
      as soon as administratively practicable) after the Participant files his
      written election with the Trustee. The Trustee will distribute the balance
      of the Participant's Bank of Texas Transfer/Rollover Account not
      distributed pursuant to his election(s) in accordance with the other
      distribution provisions of this Plan.

      4. The first sentence of Subsection 8.6(f) shall be amended in its
entirety to state as follows:

      Notwithstanding anything contained herein to the contrary, this Section
      8.6(f) shall apply with respect to any Participant's Target Benefit
      Capital Accumulation, and with respect to the vested portion of a
      Participant's Combined Account, if the Participant has elected a life
      annuity option under this Plan.

      5. Section 8.6 of the ESOP plan document shall be and is hereby amended to
add the following Subsection 8.6(g):

      Notwithstanding anything to the contrary herein, until the earlier of the
      90th day after the date on which a Participant has been furnished with a
      summary that reflects the amendment of the distribution options under
      this Plan, or the first day of the second plan year following the year in
      which said amendment was adopted, distributions from this Plan, other
      than distributions from a Participant's Bank of Texas Transfer/Rollover
      Account or a Participant's Harlingen National Bank Transfer/Rollover
      Account, shall be subject to the requirements of Subsection 8.6(f) of this
      Plan. In addition, a Participant may elect, subject to the provisions of
      Subsection 8.6(f), to receive his distribution in the form of a single
      distribution. Further, the following alternative modes of distribution
      may be selected by the Participant, subject to the provisions of
      Subsection 8.6(f):

      1. Distribution in a single distribution at some earlier or later date;

      2. Distribution in substantially equal, annual installments over a period
not exceeding ten (10) years (provided that such period does not exceed the life
expectancy of the Participant);

      3. Distribution in the form of a life annuity; or

      4. Any combination of the foregoing.

      In no instance shall benefits be distributed pursuant to one of the forms
      stated above if distribution would cause the benefits payable under the
      Plan with respect to a Participant in the event of his death to be more
      than fifty percent (50%) of the present value of total payments to be
      made to the Participant and Beneficiaries within the meaning of paragraph
      (b)(1)(i) of Regulation 1.401-1.

      6. Section 8.6 of the ESOP plan document shall be and hereby is amended to
add the following Subsection 8.6(h):

<PAGE>

      Notwithstanding anything to the contrary herein, until the earlier of
      the 90th day after the date on which a Participant has been furnished
      with a summary that reflects the amendment of the distribution options
      related to the Participant's Bank of Texas Transfer/Rollover Account
      resulting from the merger of the Bank of Texas Plan into this Plan, or
      the first day of the second plan year following the year in which this
      amendment was adopted, distributions from a Participant's Bank of Texas
      Transfer/Rollover Account shall be subject to the requirements of
      Subsection 8.6(f) of this Plan. In addition, subject to the provisions
      of Subsection 8.6(f), a Participant or Beneficiary may elect one, or any
      combination, of the following methods of distribution with respect to
      the Participant's Bank of Texas Transfer/Rollover Account: (a) payment in
      lump sum; or (b) payment in monthly, quarterly or annual installments
      over a fixed reasonable period of time, not exceeding the life expectancy
      of the Participant, or the joint life and last survivor expectancy of the
      Participant and his Beneficiary. Further, subject to the provisions of
      Subsection 8.6(f), a Participant may elect to receive a distribution of
      the Participant's Bank of Texas Transfer/Rollover Account in the form of
      an annuity contract with payment options elected by the Participant
      provided that payments do not extend over a period beyond either the life
      of the Participant (or the lives of the Participant and his designated
      Beneficiary) or the life expectancy or the Participant (or the life
      expectancy of the Participant and his designated Beneficiary).

      7. Section 8.6 of the ESOP plan document shall be and hereby is amended to
add the following Subsection 8.6(i):

      Notwithstanding anything to the contrary herein, until the earlier of the
      90th day after the date on which a Participant has been furnished with a
      summary that reflects the amendment of the distribution options related
      to the Participant's Harlingen National Bank Transfer/Rollover Account
      resulting from the merger of the Harlingen National Bank Plan into this
      Plan, or the first day of the second plan year following the year in
      which this amendment was adopted, distributions from a Participant's
      Harlingen National Bank Transfer/Rollover Account shall be subject to
      the requirements of Subsection 8.6(f) of this Plan. In addition, subject
      to the provisions of Subsection 8.6(f), a Participant may elect to
      receive distributions from the Participant's Harlingen National Bank
      Transfer/Rollover Account in the following optional forms of retirement
      benefit: a straight life annuity, single life annuities with certain
      periods of five, ten, or fifteen years; a single life annuity with
      installment refund; survivorship life annuities with installment refund
      and survivor percentages of 50, 66 2/3, or 100; fixed period annuities
      for any period of whole months which is not less than 60 and does not
      exceed the life expectancy of the Participant and the designated
      Beneficiary where the life expectancy is not recalculated; a series of
      installments chosen by the Participant with a minimum payment each year
      beginning with the year the Participant turns age 70 1/2 (subject to
      Section 8.5(e) of this Plan); and a single lump sum. If the installment
      distribution form is elected, the minimum payment will be based on a
      period equal to the joint and last survivor expectancy computed by use
      of the expected return multiples in Tables V and VI of section 1.72-9 of
      the Regulations, and unless otherwise elected by the Participant and his
      spouse by the time distributions are required to begin, recalculated
      annually. Any such election by a Participant (or spouse) shall be
      irrevocable as to the Participant (or spouse) and shall apply to all
      subsequent years. The life expectancy of a nonspouse may not be
      recalculated. The balance of a Participant's Harlingen National Bank
      Transfer/Rollover Account, if any, will be payable on the Participant's
      death to his Beneficiary in a single sum.

      The optional forms of death benefit are a single sum payment and any
      annuity that is an optional form of retirement benefit. However, a series
      of installments shall not be available if the Beneficiary is not the
      spouse of the Participant.

      Any election of an optional for of benefit shall be subject to the
      requirements of Subsection 8.6(f) of this Plan.

      IN WITNESS WHEREOF, this Second Amendment to the Texas Regional
Bancshares, Inc. Amended and Restated Employee Stock Ownership Plan (with 401(k)
Provisions) has been executed this 11th day of December, 2001 to be effective as
of the dates provided above.

                                       TEXAS REGIONAL BANCSHARES, INC.

                                       BY: /s/ G.E. RONEY
                                           ------------------------------------
                                               G.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

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