Exhibit 4.2
FIDELITY & TRUST
FINANCIAL CORPORATION
2005 LONG-TERM INCENTIVE
PLAN
1.
Purpose of the
Plan
The purpose of the
Fidelity & Trust Financial Company 2005 Long-Term
Incentive Plan is to promote the interests of the Company and its
stockholders by strengthening the Company’s ability to
attract, motivate, and retain personnel upon whose judgment,
initiative, and efforts the financial success and growth of the
business of the Company largely depend, to offer such personnel
additional incentives to put forth maximum efforts for the success
of the business, and to afford them an opportunity to acquire a
proprietary interest in the Company through stock ownership and
other rights.
2.
Definitions
Wherever the following capitalized
terms are used in this Plan, they shall have the meanings specified
below:
(a)
“Award” means an award
of an Option, Restricted Stock Award or Stock Appreciation Right
granted under the Plan.
(b)
“Award Agreement” means
an agreement entered into between the Company and a Participant
setting forth the terms and conditions of an Award granted to a
Participant.
(c)
“Board” means the Board
of Directors of the Company.
(d)
“Change in Control”
shall have the meaning specified in Section 9
hereof.
(e)
“Code” means the
Internal Revenue Code of 1986, as amended.
(f)
“Common Stock” means the
common stock of the Company.
(g)
“Company” means
Fidelity & Trust Financial Company, a Maryland
corporation.
(h)
“Date of Grant” means
the date on which an Award is made by the Board, or such later date
as the Board may specify to be the effective date of the
Award.
(i)
“Effective Date” means
the Effective Date of this Plan, as set forth in Section 12.1
hereof.
(j)
“Eligible Person” means
any person who is an Employee of the Company or any of its
Subsidiaries and, in the case of Awards other than Incentive Stock
Options, any consultant or other independent contractor and any
non-employee director providing services to the Company or a
Subsidiary.
(k)
“Employee” means any
person who is employed by the Company or a Subsidiary as a
common-law employee and whose wages are reported on a
Form W-2. The Company classification as to who is an
Employee shall be determinative for purposes of an
individual’s eligibility under the Plan.
(l)
“Exchange Act” means the
Securities Exchange Act of 1934, as amended.
(m)
“Fair Market Value” of a
share of Common Stock as of a given date means:
(i)
if the Common Stock is publicly
traded, the closing sales price (or, if there is no such price, the
average of the highest bid and lowest asked prices) of the Common
Stock on the last trading day
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immediately preceding the date as of
which fair market value is to be determined as reported by the
principal exchange or market on which the Common Stock is traded,
or, in the absence of any reported sales of shares of Common Stock
on such date, on the first preceding date on which any such sale
shall have been reported; or
(ii)
if the Common Stock is not publicly
traded, the fair market value of the Common Stock as the Board
shall determine in good faith.
(n)
“Incentive Stock Option”
means an option to purchase Common Stock that is intended to
qualify as an incentive stock option under section 422 of the Code
and the Treasury Regulations thereunder.
(o)
“Nonqualified Stock
Option” means an option to purchase Common Stock that is not
an Incentive Stock Option.
(p)
“Option” means an Award
of an Incentive Stock Option or a Nonqualified Stock Option granted
under Section 6 hereof.
(q)
“Participant” means any
Eligible Person who holds an outstanding Award under the
Plan.
(r)
“Plan” means this
Fidelity & Trusty Financial Corporation 2005 Long-Term
Incentive Plan as set forth herein, as it may be amended from time
to time.
(s)
“Restricted Stock Award”
means an Award granted under Section 8 hereof.
(t)
“Stock Appreciation
Right” or “SAR” means an Award granted under
Section 7 hereof.
(u)
“Subsidiary” means an
entity (whether or not a corporation) that is wholly or majority
owned or controlled, directly or indirectly, by the Company, or any
other affiliate of the Company that is so designated, from time to
time, by the Board; provided, however, that with respect to
Incentive Stock Options, the term “Subsidiary” shall
include only an entity that qualifies under section 424(f) of
the Code as a “subsidiary corporation” with respect to
the Company.
3.
Shares of Common Stock Subject to
the Plan
3.1
Number of Shares
. Subject to Section 3.2,
the aggregate number of shares of Common Stock that may be issued
pursuant to all Awards under the Plan is 211,500 shares of Common
Stock. The shares of Common Stock to be delivered under the
Plan will be made available from authorized but unissued shares of
Common Stock or issued shares that have been reacquired by the
Company. To the extent that any Award payable in Common Stock is
forfeited, cancelled, returned to the Company for failure to
satisfy vesting requirements or upon the occurrence of other
forfeiture events, or otherwise terminates without payment being
made thereunder, shares of Common Stock covered thereby will no
longer be charged against the foregoing maximum share limitation
and may again be made subject to Awards under the Plan pursuant to
such limitation.
3.2
Adjustments
. If there shall occur any
recapitalization, reclassification, stock dividend, stock split,
reverse stock split, or other distribution with respect to the
shares of Common Stock, or other change in corporate structure
affecting the Common Stock, the Board may, in the manner and to the
extent that it deems appropriate and equitable to the Participants
and consistent with the terms of this Plan, cause an adjustment to
be made in: (i) the maximum number and kind of shares provided
in Section 3.1 hereof; (ii) the number and kind of shares
of Common Stock or other rights subject to then outstanding Awards;
(iii) the price for each share or other right subject to then
outstanding Awards; or (iv) any other terms of an Award that
are affected by the event. Notwithstanding the foregoing, in the
case of Incentive Stock Options, any such adjustments shall be made
in a manner consistent with the requirements of section
424(a) of the Code.
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4.
Administration of the
Plan
4.1
Board . The Plan shall be administered by the
Board. The Board shall have such powers and authority as may be
necessary or appropriate for the Board to carry out its functions
as described in the Plan. No member of the Board shall be
liable for any action or determination made in good faith by the
Board with respect to the Plan or any Award thereunder. Except to
the extent prohibited by applicable law or the applicable
rules of a stock exchange, the Board shall have the right,
power and authority to delegate administration of the Plan, in
whole or in part, to a committee of the Board, subject to such
limitations as the Board shall determine.
4.2
Discretionary
Authority . Subject
to the express limitations of the Plan, the Board shall have
authority, in its sole discretion, to determine the Eligible
Persons to whom, and the time or times at which, Awards may be
granted, the number of shares or other rights subject to each
Award, the exercise, base or purchase price of an Award (if any),
the time or times at which an Award will become vested, exercisable
or payable, the duration of the Award, and all other terms and
conditions of the Award. The Board shall also have discretionary
authority to interpret the Plan, to make all factual determinations
under the Plan, and to make all other determinations necessary or
advisable for Plan administration. The Board may prescribe, amend,
and rescind rules and regulations relating to the Plan. All
interpretations, determinations, and actions by the Board shall be
final, conclusive, and binding upon all parties.
4.3
Changes to Awards
. The Board shall have the
authority to affect, at any time and from time to time:
(i) the cancellation of any or all outstanding Awards and the
grant in substitution therefor of new Awards covering the same or
different numbers of shares of Common Stock and having an exercise
or base price which may be the same as or different than the
exercise or base price of the cancelled Awards; or (ii) the
amendment of the terms of any and all outstanding Awards;
provided , however , that no such action by the Board
may adversely impair the rights of a Participant (or any permitted
transferee) under any outstanding Award without the consent of the
Participant (or transferee). The Board may in its discretion
accelerate the vesting or exercisability of an Award at any time or
on the basis of any specified event.
5.
Eligibility and
Awards
All Eligible Persons are eligible to
be designated by the Board to receive an Award under the Plan. The
Board has authority, in its sole discretion, to determine and
designate from time to time those Eligible Persons who are to be
granted Awards, the types of Awards to be granted and the number of
shares subject to the Awards that are granted under the Plan. Each
Award will be evidenced by an Award Agreement between the Company
and the Participant that shall include such terms and conditions
(consistent with the Plan) as the Board may determine;
provided, however , that failure to issue an Award
Agreement shall not invalidate an Award.
6.
Stock Options
6.1
Grant of Option
. An Option may be granted to
any Eligible Person selected by the Board; provided,
however , that only Employees of the Company or a Subsidiary
shall be eligible to receive Incentive Stock Options. Subject to
the applicable provisions of section 422 of the Code, each Option
shall be designated, in the discretion of the Board, as an
Incentive Stock Option or a Nonqualified Stock Option.
6.2
Exercise Price
. The exercise price under any
Option shall be determined by the Board; provided,
however , that the exercise price per share under an
Incentive Stock Option shall not be less than 100 percent of the
Fair Market Value per share of the Common Stock on the Date of
Grant.
6.3
Vesting Term of Option
. The Board, in its sole
discretion, shall prescribe the time or times at which, or the
conditions upon which, an Option shall become vested and
exercisable, and may accelerate the exercisability of any Option at
any time. The period during which a vested Option may be exercised
shall be ten years from the Date of Grant, unless a shorter
exercise period is specified by the Board in an Award Agreement,
subject to such limitations as may apply under an Award relating to
the termination of a Participant’s employment or other
service with the Company or any Subsidiary.
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6.4
Option Exercise and
Withholding .
Subject to such terms and conditions as shall be specified in an
Award Agreement, an Option may be exercised in whole or in part at
any time during the term thereof by written notice to the Company,
together with payment of the aggregate exercise price therefor.
Payment of the exercise price shall be made: (i) in cash or by
check; (ii) at the discretion of the Board, in shares of
Common Stock acceptable to the Board, valued at the Fair Market
Value of such shares on the date of exercise; (iii) at the
discretion of the Board, by a combination of the methods described
above; or (iv) by such other method as may be approved by the
Board from time to time. In addition to and at the time of payment
of the exercise price, the Participant shall pay to the Company the
full amount of any and all applicable income tax and employment tax
amounts required to be withheld in connection with such exercise,
payable under such of the methods described above for the payment
of the exercise price of the Options as may be approved by the
Board.
6.5
Limited Transferability of
Nonqualified Options . All Options shall be nontransferable
except: (i) upon the Participant’s death, by the
Participant’s will or the laws of descent and distribution;
or (ii) in the case of Nonqualified Stock Options only, on a
case-by-case basis as may be approved by the Board in its
discretion.
6.6
Additional Rules for Incentive
Stock Options.
(a)
Annual Limits
. No Incentive Stock Option
shall be granted to a Participant as a result of which the
aggregate Fair Market Value (determined as of the Date of Grant) of
the stock with respect to which Incentive Stock Options are
exercisable for the first time in any calendar year under the Plan
and any other stock option plans of the Company or any Subsidiary,
would exceed the maximum amount permitted under section
422(d) of the Code. This limitation shall be applied by taking
Options into account in the order in which granted.
(b)
Termination of
Employment . An
Award of an Incentive Stock Option may provide that such Option may
be exercised not later than three months following termination of
employment of the Participant with the Company and all
Subsidiaries, subject to special rules relating to death and
disability, as and to the extent
