XXXX X. XXXXX
AMENDED AND RESTATED
DEFERRED COMPENSATION PLAN
This Amended and Restated Deferred Compensation Plan, made and entered
into as of January 9, 1996 between Texas State Bank of McAllen, a Texas
banking corporation, having its principal office in McAllen, Texas (said Bank
being hereinafter referred to as the "Company") and Xxxx X. Xxxxx of McAllen,
Texas (hereinafter referred to as the "Employee"), amends the Xxxx X. Xxxxx
Deferred Compensation Plan originally executed as of December 31, 1993, to
incorporate changes necessary for a favorable private letter ruling from the
IRS and restates the Plan, as amended, in its entirety.
WHEREAS, the Employee serves as the Chief Executive Officer of the
Company and in that capacity his services are valued by the Company, and it
is the desire of the Company to have the benefit of the Employee's continued
loyalty, service and counsel and also to assist him in providing for the
contingencies of death and old age dependence; and
WHEREAS, the Company has made a determination to provide the Employee
certain retirement and death benefits as more particularly hereinafter
described:
NOW, THEREFORE, it is hereby agreed by and between the Employee and the
Company that:
1. RETIREMENT BENEFIT. Provided that the Employee complies with the
terms and provisions hereof (including the requirement of continued
employment, subject to the exceptions provided in paragraph 6 hereof) the
Company will pay to Employee $100,000 per year, beginning October 29, 2002,
and continuing regularly on the same calendar day of each year thereafter,
until the Employee has been paid the aggregate sum of $1,500,000. In the
event that the Employee should die after said payments have commenced but
before the aggregate amount herein provided is fully paid, the unpaid balance
of payments due will continue to be paid by the Company to those
beneficiaries designated in paragraph 2 below.
2. DEATH BENEFIT. Should the Employee die before October 29, 2002,
while in the employ of the Company (subject to the exceptions provided in
paragraph 3(a) hereof), the Company beginning at a date to be determined by
the Company but within 30 days from the date of death, will pay $100,000 per
year until the aggregate sum of $1,500,000 has been paid, to the following
beneficiary or beneficiaries:
Xxxx X. Xxxxx, provided that if Xxxx X. Xxxxx does not
survive the Employee for a period of at least thirty (30)
days, such sum shall be payable to the Employee's estate.
The beneficiary or beneficiaries named herein may be changed (without the
consent of any prior beneficiary) at any time by the Employee by written
notification to the Company.
3. CONDITIONS. The obligations of the Company under the terms hereof
are subject to the following conditions and requirements:
a. The obligation of the Company to make payments as herein
provided is conditioned upon, the employment of the Employee by the Company
of one or more of its subsidiaries continuously until the earlier of the date
of Employee's death or October 29, 2002, except that such requirement and
limitation shall not be applicable (and the Employee shall not be required to
be continuously employed by the Company) if, prior to such date, (i) the
Employee's annual cash compensation paid by the Company is substantially
reduced from the cash compensation paid by the Company to the Employee during
1993, or (ii) Employee's duties on behalf of the Company are modified such
that Employee is no longer performing the function of Chief Executive Officer
of the Company, or (iii) Employee ceases his employment as a result of a
disability that makes it impossible for Employee to carry his duties as Chief
Executive Officer of the Company, or (iv) Employee is discharged the Company
without cause.
b. The obligation of the Company to make payments as herein
provided is further conditioned upon the requirement that, during the period
that retirement payments are being, made, the Employee shall not engage in
business activities which are in competition with the Company without first
obtaining the written consent of the Company.
4. LEAVE OF ABSENCE. The Company may, in its sole discretion, permit
the Employee to take a leave of absence for a period not to exceed one year.
During this time, the Employee shall still be considered an employee of the
Company for purposes of this Agreement.
5. ASSIGNABILITY. The Employee's rights to benefit payments under this
Agreement are not subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance, attachment, or garnishment by
creditors of the Employee or the Employee's beneficiaries.
6. EMPLOYMENT RIGHTS. This Agreement creates no right in the Employee
to continue in the Company's employ for any specified length of time, nor
does it create any obligations on the part of the Company, except as
expressly set forth in this Agreement.
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7. TRUST. The Employee acknowledges that he has the status of a
general unsecured creditor of the Company, and the Plan constitutes a mere
promise by the Company to make benefit payments in the future. Any trust
created by the Company and any assets held by the trust to assist the Company
in meeting its obligations under the Plan will conform to the terms of the
model trust described in Revenue Procedure 92-64. It is the intention of the
parties that this deferred compensation plan be unfunded for tax purposes and
for purposes of Title I of ERISA. The Company has executed and made the
initial funding of a trust in the form of that certain Amended and Restated
Trust Under Xxxx X. Xxxxx Amended and Restated Deferred Compensation Plan
attached hereto as Annex A, which is intended to conform to the terms of the
model trust described in Revenue Procedure 92-64. The amount of the initial
funding was determined by the Company in its sole discretion. The purpose of
the Trust is to receive contributions from the Company and make disbursements
to the Employee pursuant to this Agreement. To the extent that the Company
has funded the Trust, the payments to be made to Employee pursuant to this
Agreement shall be paid out of assets of the Trust, provided that Employee
acknowledges and agrees that notwithstanding the funding of such Trust, the
Employee shall nonetheless have only an unsecured claim against the general
assets of the Company. Employee acknowledges that any assets held by the
Trust will be subject to the claims of the Company's general creditors under
federal and state law in the event the Company becomes Insolvent, as
described or defined in Section 3(a) of the Trust. In the event of a
shortfall in funds available in the Trust, the deficit shall be paid by the
Company. Notwithstanding anything herein to the contrary, upon a Change of
Control (as defined in the Trust), the Company shall fully fund the Trust
with funds adequate to fully discharge any then remaining obligation of the
Company under the terms of this Agreement.
8. GOVERNING LAW. This Agreement shall be governed by the laws of the
State of Texas.
9. AMENDMENTS. This Agreement may be amended, but only by an
instrument in writing executed by both the Company and the Employee. As soon
as reasonably practicable, the Company will initiate a private letter ruling
request with the Internal Revenue Service, on terms and provisions reasonably
acceptable to the Company and the Employee to the effect that the benefits
payable to the Employee under the terms of this Plan will not be taxable to
the Employee until actual receipt thereof by the Employee. Notwithstanding
the foregoing or anything herein to the contrary, the Company and the
Employee covenant to mutually agree to amend this Plan, as and to the extent
reasonably necessary to obtain such a favorable private letter ruling.
Except as otherwise provided in this paragraph, Employee and the Company
agree that the agreements and obligations herein set forth shall be binding
upon the Company and the Employee and their respective successors, assigns,
beneficiaries, heirs, executors and administrators.
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EXECUTED as of the date first written above.
TEXAS STATE BANK OF McALLEN
By: /s/ XXXXXX X. XXXXXXXXXX
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Name: Xxxxxx X. Xxxxxxxxxx
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Title: EVP & CFO
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/s/ XXXX X. XXXXX
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Xxxx X. Xxxxx
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