Exhibit 4.2
METROCORP BANCSHARES,
INC.
2007 STOCK AWARDS AND INCENTIVE
PLAN
I. PURPOSE
The purpose of the METROCORP
BANCSHARES, INC. 2007 STOCK AWARDS AND INCENTIVE PLAN (the
“Plan” ) is to provide a means through which
MetroCorp Bancshares, Inc (the “Company” ), and
its Affiliates, may attract able persons to enter the employ of the
Company and its Affiliates and to provide a means whereby those
employees, Directors and consultants, upon whom the
responsibilities of the successful administration and management of
the Company and its Affiliates rest, and whose present and
potential contributions to the welfare of the Company and its
Affiliates are of importance, can acquire and maintain stock
ownership, thereby strengthening their concern for the welfare of
the Company and its Affiliates and their desire to remain in the
Company’s and its Affiliates’ employ. A further purpose
of the Plan is to provide such employees, Directors and consultants
with additional incentive and reward opportunities designed to
enhance the profitable growth of the Company. Accordingly, the Plan
provides for granting Incentive Stock Options, Nonqualified Stock
Options, Stock Appreciation Rights, Restricted Stock Awards,
Performance Awards, Phantom Stock Awards, or any combination of the
foregoing, as is best suited to the circumstances of the particular
employee, Director or consultant as provided herein.
II. DEFINITIONS
The following definitions shall be
applicable throughout the Plan unless specifically modified by any
paragraph:
(a) “Affiliate”
means any entity with whom the Company would be considered a single
employer under Code Section 414(b) or 414(c); provided,
however, that in applying Code Section 1563(a)(1),
(2) and (3) for purposes of determining a controlled
group of corporations under Code Section 414(b), the language
“at least 50 percent” is used instead of “at
least 80 percent” each place it appears in Code
Section 1563(a)(1), (2) and (3), and in applying Treasury
Regulation Section 1.414(c)-2 for purposes of determining
trades or businesses that are under common control for purposes of
Code Section 414(c), the language “at least 50
percent” is used instead of “at least 80 percent”
each place it appears in Section 1.414(c)-2.
(b) “Award”
means, individually or collectively, any Option, Restricted Stock
Award, Phantom Stock Award, Performance Award or Stock Appreciation
Right.
(c) “Board” means
the Board of Directors of the Company.
(d) “Change of
Control” means the occurrence of any of the following
events: (i) the Company shall not be the surviving entity in
any merger, consolidation or other reorganization (or survives only
as a subsidiary of an entity other than a previously wholly-owned
subsidiary of the Company), (ii) the Company’s
subsidiary bank is merged or consolidated into, or otherwise
acquired by, an entity other than a wholly-owned subsidiary of the
Company; (iii) the Company sells, leases or exchanges all or
substantially all of its assets to any other person or entity
(other
than a wholly-owned subsidiary of the Company),
(iv) the Company is to be dissolved and liquidated,
(v) any person or entity, including a “group” as
contemplated by Section 13(d)(3) of the 1934 Act, acquires or
gains ownership or control (including, without limitation, power to
vote) of more than 50% of the outstanding shares of the
Company’s voting stock (based upon voting power), or
(vi) as a result of or in connection with a contested election
of directors, the persons who were directors of the Company before
such election shall cease to constitute a majority of the
Board.
(e) “Change of Control
Value” shall mean (i) the per share price offered to
stockholders of the Company in any such merger, consolidation,
reorganization, sale of assets or dissolution transaction,
(ii) the price per share offered to stockholders of the
Company in any tender offer or exchange offer whereby a Change of
Control takes place, or (iii) if such Change of Control occurs
other than pursuant to a tender or exchange offer, the Fair Market
Value per share of the shares into which Awards are exercisable, as
determined by the Committee, whichever is applicable. In the event
that the consideration offered to stockholders of the Company
consists of anything other than cash, the Committee shall determine
the fair cash equivalent of the portion of the consideration
offered which is other than cash.
(f) “Code” means
the Internal Revenue Code of 1986, as amended. Reference in the
Plan to any section of the Code shall be deemed to include any
amendments or successor provisions to any section and any
regulations under such section.
(g) “Committee”
means the Board or a committee designated by the Board. If the
Company is subject to Section 16 of the 1934 Act, the
Committee shall be composed entirely of not less than two
(2) non-employee directors (within the meaning of
Rule 16b-3), each of whom shall be an “outside
director” for purposes of Code Section 162(m)(4), and
shall be appointed by and serve at the pleasure of the
Board.
(h) “Company”
means MetroCorp Bancshares, Inc.
(i) A
“consultant” means an individual (other than a
Director) who performs services for the Employer as an independent
contractor.
(j) A “covered employee”
means an individual described in Code
Section 162(m)(3).
(k) “Director”
means an individual elected to the Board by the stockholders of the
Company or by the Board under applicable corporate law who is
serving on the Board on the date the Plan is adopted by the Board
or is elected to the Board after such date.
(l) An “employee”
means any person (including an officer or a Director) whom the
Employer has classified as an employee, regardless of whether such
person is retroactively or prospectively classified as a common law
employee by any state or federal governmental agency or
court.
(m) “Employer”
means the Company or an Affiliate.
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(n) “Fair Market
Value” means, as of any specified date, the mean of the
high and low sales prices of the Stock (i) reported by any
interdealer quotation system on which the Stock is quoted on that
date or (ii) if the Stock is listed on a national stock
exchange, reported on the stock exchange composite tape on that
date; or, in either case, if no prices are reported on that date,
on the last preceding date on which such prices of the Stock are so
reported. If the Stock is traded over the counter at the time a
determination of its fair market value is required to be made
hereunder, its fair market value shall be deemed to be equal to the
average between the reported high and low or closing bid and asked
prices of Stock on the most recent date on which Stock was publicly
traded. In the event Stock is not publicly traded at the time a
determination of its value is required to be made hereunder, the
determination of its fair market value shall be made by the
Committee in such manner as it deems appropriate.
(o) “Holder”
means an individual who has been granted an Award.
(p) “Incentive Stock
Option” means an incentive stock option within the
meaning of section 422(b) of the Code.
(q) “1934 Act”
means the Securities Exchange Act of 1934, as amended.
(r) “Nonqualified Stock
Option” means an option granted under Paragraph VII of
the Plan to purchase Stock which does not constitute an Incentive
Stock Option.
(s) “Option”
means an Award granted under Paragraph VII of the Plan and includes
both Incentive Stock Options to purchase Stock and Nonqualified
Stock Options to purchase Stock.
(t) “Option
Agreement” means a written agreement between the Company
and a Holder with respect to an Option.
(u) “Parent
Corporation” means a “parent corporation” of
the Company within the meaning of Code
Section 424(e).
(v) “Performance
Award” means an Award granted under Paragraph X of
the Plan.
(w) “Performance Award
Agreement” means a written agreement between the Company
and a Holder with respect to a Performance Award.
(x) “Phantom Stock
Award” means an Award granted under Paragraph XI of
the Plan.
(y) “Phantom Stock Award
Agreement” means a written agreement between the Company
and a Holder with respect to a Phantom Stock Award.
(z) “Plan” means
the MetroCorp Bancshares, Inc. 2007 Stock Awards and Incentive
Plan, as amended from time to time.
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(aa) “Restricted Stock
Agreement” means a written agreement between the Company
and a Holder with respect to a Restricted Stock Award.
(bb) “Restricted Stock
Award” means an Award granted under Paragraph IX of
the Plan.
(cc) “Rule 16b-3”
means SEC Rule 16b-3 promulgated under the 1934 Act, as such may be
amended from time to time, and any successor rule, regulation or
statute fulfilling the same or a similar function.
(dd) “Spread”
means, in the case of a Stock Appreciation Right, an amount equal
to the excess, if any, of the Fair Market Value of a share of Stock
on the date such right is exercised over the exercise price of such
Stock Appreciation Right.
(ee) “Stock”
means the common stock, $1.00 par value, of the Company.
(ff) “Stock Appreciation
Right” means an Award granted under Paragraph VIII
of the Plan.
(gg) “Stock Appreciation
Rights Agreement” means a written agreement between the
Company and a Holder with respect to an Award of Stock Appreciation
Rights.
(hh) “Subsidiary
Corporation” means a “subsidiary corporation”
of the Company within the meaning of Code
Section 424(f).
III. EFFECTIVE DATE AND DURATION
OF THE PLAN
This Plan shall be effective on
January 26, 2007, which is the date of its adoption by the
Board (the “Effective Date”), subject to the approval
of the Plan by the Company’s stockholders within twelve
months after the Effective Date. If the Plan is not so approved by
the Company’s stockholders, (a) the Plan shall not be
effective, and (b) any grants of Awards under the Plan shall
immediately expire and be of no force and effect. No Awards may be
granted under the Plan after the tenth anniversary of the Effective
Date. The Plan shall remain in effect until all Awards granted
under the Plan have been satisfied or expired.
IV. ADMINISTRATION
(a) Committee. The Plan shall
be administered by the Committee.
(b) Powers. Subject to the
provisions of the Plan, the Committee shall have sole authority, in
its discretion, to determine which employees, Directors or
consultants shall receive an Award, the time or times when such
Award shall be made, whether an Incentive Stock Option,
Nonqualified Option or Stock Appreciation Right shall be granted,
the number of shares of Stock which may be issued under each
Option, Stock Appreciation Right or Restricted Stock Award, and the
value of each Performance Award and Phantom Stock Award. In making
such determinations the Committee may take into account the nature
of the services rendered by the
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respective employees, their present and
potential contributions to the Employer’s success and such
other factors as the Committee in its discretion shall deem
relevant.
(c) Additional Powers. The
Committee shall have such additional powers as are delegated to it
by the other provisions of the Plan. Subject to the express
provisions of the Plan, the Committee is authorized to construe the
Plan and the respective agreements executed thereunder, to
prescribe such rules and regulations relating to the Plan as it may
deem advisable to carry out the Plan, and to determine the terms,
restrictions and provisions of each Award, including such terms,
restrictions and provisions as shall be requisite in the judgment
of the Committee to cause designated Options to qualify as
Incentive Stock Options, and to make all other determinations
necessary or advisable for administering the Plan. The Committee
may correct any defect or supply any omission or reconcile any
inconsistency in any agreement relating to an Award in the manner
and to the extent it shall deem expedient to carry it into effect.
The determinations of the Committee on the matters referred to in
this Article IV shall be conclusive.
(d) Expenses. All expenses
and liabilities incurred by the Committee in the administration of
this Plan shall be borne by the Company. The Committee may employ
attorneys, consultants, accountants or other persons to assist the
Committee in the carrying out of its duties hereunder.
V. STOCK SUBJECT TO THE
PLAN
(a) Stock Grant and Award
Limits. The Committee may from time to time grant Awards to one
or more employees, Directors or consultants determined by it to be
eligible for participation in the Plan in accordance with the
provisions of Paragraph VI. Subject to Paragraph XII, the
maximum aggregate number of shares of Stock that may be issued
under the Plan is 650,000, any or all of which may be issued
through Incentive Stock Options. Shares of Stock shall be deemed to
have been issued under the Plan only to the extent actually issued
and delivered pursuant to an Award. To the extent that an Award
(other than an Award of Restricted Stock) lapses or is canceled or
the rights of its Holder terminate or the Award is cashed-out, any
Stock subject to such Award shall again be available for grant
under an Award. Should any shares of Restricted Stock be forfeited,
such shares may not again be subject to an Award under the Plan.
Any shares of Stock which may remain unissued and which are not
subject to outstanding Awards at the termination of this Plan shall
cease to be reserved for the purpose of this Plan, but until
termination of this Plan or the termination of the last of the
Awards granted under this Plan, whichever last occurs, the Company
shall at all times reserve a sufficient number of shares to meet
the requirements of this Plan. Separate stock certificates shall be
issued by the Company for those shares acquired pursuant the
exercise of an Incentive Stock Option and for those shares acquired
pursuant to the exercise of a Nonqualified Stock Option.
Notwithstanding any provision in the
Plan to the contrary, no more than 50,000 shares of Stock may be
subject to Options granted under the Plan to any one individual
during any 12 month period, no more than 50,000 shares of Stock may
be subject to Stock Appreciation Rights granted under the Plan to
any one individual during any 12 month period, and no more than
20,000 shares of Stock may be granted under the Plan as a
Restricted Stock Award to any one
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individual during any 12 month period. The
number of shares of Stock that may be issued to individuals as set
forth in the preceding sentence shall be subject to adjustment in
the same manner as provided in Section XII hereof with respect
to shares of Stock subject to Options, Stock Appreciation Rights or
Restricted Stock Awards then outstanding. The limitations set forth
in this paragraph shall be applied in a manner which will permit
compensation generated under the Plan with respect to
“covered employees” to constitute
“performance-based” compensation for purposes of
Section 162(m) of the Code, including, without limitation,
counting against such maximum number of shares of Stock, to the
extent required under Section 162(m) of the Code and
applicable interpretive authority thereunder, any shares of Stock
subject to Options or Stock Appreciation Rights that expire, are
canceled or repriced or Restricted Stock Awards that are
forfeited.
(b) Stock Offered. The stock
to be offered pursuant to the grant of an Award may be authorized
but unissued Stock or Stock previously issued and outstanding and
reacquired by the Company.
VI. ELIGIBILITY
The Committee, in its sole
discretion, shall determine who shall receive Awards under the
Plan. Awards other than Incentive Stock Options may be granted to
all employees, directors and consultants of the Company or its
Affiliates, including Affiliates that become such after adoption of
the Plan. Incentive Stock Options may be granted to all employees
of the Company, a Parent Corporation or a Subsidiary Corporation,
including an entity that becomes a Parent Corporation or a
Subsidiary Corporation after adoption of the Plan. A recipient of
an Award must be an employee, Director or consultant at the time
the Award is granted. An Award may be granted on more than one
occasion to the same person, and, subject to the limitations set
forth in the Plan, such Award may include an Incentive Stock Option
or a Nonqualified Stock Option, a Stock Appreciation Right, a
Restricted Stock Award, a Performance Award, a Phantom Stock Award
or any combination thereof.
VII. STOCK OPTIONS
(a) Option Period. The term
of each Option shall be as specified by the Committee at the date
of grant.
(b) Limitations on Exercise of
Option. An Option shall be exercisable in whole or in such
installments and at such times as determined by the
Committee.
(c) Special Limitations on
Incentive Stock Options. Except as otherwise provided under the
Code or applicable regulations, to the extent that the aggregate
Fair Market Value (determined at the time the option is granted) of
the Stock with respect to which Incentive Stock Options (determined
without regard to this sentence) are exercisable for the first time
by any Holder during any calendar year under all plans of the
Company and its Parent Corporation or Subsidiary Corporations
exceeds $100,000, such options shall be treated as Nonqualified
Stock Options. The Committee shall determine, in accordance with
applicable provisions of the Code, Treasury Regulations and other
administrative pronouncements, which of a Holder’s
Incentive
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Stock Options will not constitute Incentive
Stock Options because of such limitation and shall notify the
Holder of such determination as soon as practicable after such
determination. No Incentive Stock Option shall be granted to an
individual if, at the time the Option is granted, such individual
owns stock possessing more than 10% of the total combined voting
power of all classes of stock of the Company or of its Parent
Corporation or Subsidiary Corporation, within the meaning of
section 422(b)(6) of the Code, unless (i) at the time
such Option is granted the exercise price is at least 110% of the
Fair Market Value of the Stock subject to the Option and
(ii) such Option by its terms is not exercisable after the
expiration of five years from the date of grant.
(d) Option Agreement. Each
Option shall be evidenced by an Option Agreement in such form and
containing such provisions not inconsistent with the provisions of
the Plan as the Committee from time to time shall approve,
including, without limitation, provisions to qualify an Incentive
Stock Option under section 422 of the Code. An Option
Agreement may provide for the payment of the exercise price, in
whole or in part, by (i) cash, cashier’s check, bank
draft, or postal or express money order payable to the order of the
Company, (ii) subject to the approval by the Committee,
certificates representing “mature shares” of Stock
theretofore owned by the Optionee duly endorsed for transfer to the
Company, or (iii) any combination of the preceding, equal in
value to the full amount of the exercise price. For purposes of
this Plan, “mature shares” means shares of Common Stock
for which the Optionee has good title, free and clear of all liens
and encumbrances, transferability restrictions or risk of
forfeiture, and which the Optionee either (i) has held for at
least six months or (ii) has purchased on the open market.
Each Option shall specify the effect of termination of employment
or service as a Director or consultant (by retirement, disability,
death or otherwise) on the exercisability of the Option. An Option
Agreement may also include, without limitation, provisions relating
to (i) vesting of Options, subject to the provisions hereof
accelerating such vesting on a Change of Control, (ii) tax
matters (including provisions (y) permitting the delivery of
additional shares of Stock or the withholding of shares of Stock
from those acquired upon exercise to satisfy federal or state
income tax withholding requirements and (z) dealing with any
other applicable employee wage withholding requirements), and
(iii) any other matters not inconsistent with the terms and
provisions of this Plan that the Committee shall in its sole
discretion determine. The terms and conditions of the respective
Option Agreements need not be identical.
(e) Exercise price and
Payment. The price at which a share of Stock may be purchased
upon exercise of an Option shall be determined by the Committee,
but (i) such exercise price shall never be less than the Fair
Market Value of Stock on the date the Option is granted and
(ii) such exercise price shall be subject to adjustment as
provided in Paragraph XII. The Option or portion thereof may
be exercised by delivery of an irrevocable notice of exercise to
the Company. The exercise price of the Option or portion thereof
shall be paid in full in the manner prescribed by the
Committee.
(f) Stockholder Rights and
Privileges. The Holder shall be entitled to all the privileges
and rights of a stockholder only with respect to such shares of
Stock as have been purchased under the Option and for which
certificates of stock have been registered in the Holder’s
name.
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(g) Options and Rights in
Substitution for Stock Options Granted by Other Corporations.
Options and Stock Appreciation Rights may be granted under the Plan
from time to time in substitution for stock options held by
individuals employed by corporations who become employees as a
result of a merger or consolidation of the employing corporation
with the Company, an Affiliate, or any Subsidiary Corporation,
o
