|
Exhibit 4.2
MAINSTREET BANKSHARES,
INC.
2004 KEY EMPLOYEE STOCK
OPTION PLAN
ARTICLE I
Establishment, Purpose and
Duration
1.1 Establishment of the
Plan . MainStreet Bankshares, Inc., a Virginia corporation (the
“Company”), hereby establishes an incentive
compensation plan for the Company to be known as the “2004
Key Employee Stock Option Plan” (the “Plan”), as
set forth in this document. Unless otherwise defined herein, all
capitalized terms shall have the meanings set forth in Section 2.1
herein. The Plan permits the grant of Non-Qualified Stock Options
and, when approved by vote of shareholders of the Company,
Incentive Stock Options.
The Plan was adopted by the
Board of Directors of the Company on January 21, 2004,
(“Effective Date”), but Incentive Stock Options may not
be awarded hereunder unless and until the Plan has been approved by
vote of the Company’s shareholders.
1.2 Purpose of the
Plan . The purpose of the Plan is to promote the success of the
Company by providing incentives to Key Employees that will promote
the identification of their personal interest with the long-term
financial success of the Company and with growth in shareholder
value. The Plan is designed to provide flexibility to the Company
in its ability to motivate, attract and retain the services of Key
Employees upon whose judgment, interest and special effort the
successful conduct of its operation is largely
dependent.
1.3 Duration of the
Plan . The Plan shall commence on the Effective Date, as
described in Section 1.1 herein and shall remain in effect, subject
to the right of the Board of Directors to terminate the Plan at any
time pursuant to Article IX herein, until the fifth anniversary of
the Effective Date, at which time it shall terminate except with
respect to Awards made prior to and outstanding on that date which
shall remain valid in accordance with their terms.
ARTICLE II
Definitions
2.1 Definitions .
Except as otherwise defined in the Plan, the following terms shall
have the meanings set forth below:
(a) “Affiliate”
shall have the meaning ascribed to it in Rule 12b-2 under the
Exchange Act.
(b) “Agreement”
means a written agreement implementing the grant of each Award
signed by an authorized officer of the Company and by the
Participant.
(c) “Award”
means, individually or collectively, a grant under this Plan of
Incentive Stock Options or Non-Qualified Stock Options.
(d) “Award Date”
or “Grant Date” means the date on which an Award is
made by the Committee under this Plan.
(e) “Beneficial
Owner” shall have the meaning ascribed to such term in Rule
13d-3 under the Exchange Act.
(f) “Board” or
“Board of Directors” means the Board of Directors of
the Company, unless otherwise indicated.
(g) “Change in
Control” shall be deemed to have occurred if the conditions
set forth in any one of the following paragraphs shall have been
satisfied:
(i) any Person (other than
the Company, a trustee or other fiduciary holding securities under
any employee benefit plan of the Company), who or which, together
with all Affiliates and Associates of such Person, is or becomes
the Beneficial Owner, directly or indirectly, of securities of the
Company representing 30% or more of the combined voting power of
the Company’s then outstanding securities; or
(ii) if, at any time after
the Effective Date, the composition of the Board of Directors of
the Company shall change such that a majority of the Board of the
Company shall no longer consist of Continuing Directors;
or
(iii) if at any time, (1) the
Company shall consolidate with, or merge with, any other Person and
the Company shall not be the continuing or surviving corporation,
(2) any Person shall consolidate with or merge with the Company and
the Company shall be the continuing or surviving corporation and,
in connection therewith, all or part of the outstanding Stock shall
be changed into or exchanged for stock or other securities of any
other Person or cash or any other property, (3) the Company shall
be a party to a statutory share exchange with any other Person
after which the Company is a subsidiary of any other Person, or (4)
the Company shall sell or otherwise transfer 50% or more of the
assets or earning power of the Company to any Person or
Persons.
(h) “Code” means
the Internal Revenue Code of 1986, as amended from time to
time.
(i) “Committee”
means the committee of the Board of Directors of the Company
appointed by the Company to administer the Plan pursuant to Article
III herein, all of the members of which shall be
“disinterested persons” as defined in Rule 16b-3, as
amended, under the Exchange Act or any similar or successor rule.
Unless otherwise determined by the Board of Directors of the
Company, the members of the committee
2
responsible for executive
compensation who are not employees of the Company shall constitute
the Committee.
(j) “Continuing
Director” means an individual who was a member of the Board
of Directors on the Effective Date or whose subsequent nomination
for election or re-election to the Board of Directors was
recommended or approved by the affirmative vote of two-thirds of
the Continuing Directors then in office.
(k) “Exchange
Act” means the Securities Exchange Act of 1934, as
amended.
(l) “Fair Market
Value” of a Share means the fair market value as quoted on a
recognized stock quotation system, exchange or bulletin board or,
in the alternative, as determined pursuant to a reasonable method
adopted by the Committee in good faith for such purpose.
(m) “Incentive Stock
Option” or “ISO” means an option to purchase
Stock, granted under Article VI herein, after the approval of this
Plan by vote of the Company’s shareholders which is
designated as an incentive stock option and is intended to meet the
requirements of Section 422(a) of the Code.
(n) “Key
Employee” means an officer or other key employee of the
Company or of a Parent, Subsidiary or an Affiliate, who, in the
opinion of the Committee, can contribute significantly to the
growth and profitability of, or perform services of major
importance to the Company.
(o) “Non-Qualified
Stock Option” or “NQSO” means an option to
purchase Stock, granted under Article VI herein, which is not
intended to be an Incentive Stock Option.
(p) “Option”
means an Incentive Stock Option or a Non-Qualified Stock
Option.
(q) “Option
Price” shall have the meaning given thereto in 6.3
hereof.
(r) “Parent”
means any corporation (other than the Company) in an unbroken chain
of corporations ending with the Company, if each of the
corporations, other than the Company, owns stock possessing 50% or
more of the total combined voting power of all classes of stock in
one of the other corporations in such chain. A corporation that
attains the status of Parent on a date after Effective Date shall
be considered a Parent commencing on that later date.
(s) “Participant”
means a Key Employee who is granted an Award under the
Plan.
3
(t) “Person”
shall have the meaning ascribed to such term in Section 3(a)(9) of
the Exchange Act and used in Sections 13(d) and 14(d) thereof,
including a “group” as defined in Section
13(d).
(u) “Plan” means
the MainStreet Bankshares, Inc. 2004 Key Employee Stock Option
Plan, as described and as hereafter from time to time
amended.
(v) “Stock” or
“Shares” means the common stock of the
Company.
(w) “Subsidiary”
shall mean a corporation (other than the Company) in an unbroken
chain of corporations beginning with the Company, if each of the
corporations, other than the last corporation, in the unbroken
chain owns stock possession at least 50% of the total combined
voting power of all classes of stock in one of the other
corporations in such chain. A corporation that attains the status
of a subsidiary on a date after the Effective Date shall be
considered a Subisidary commencing on that later date.
ARTICLE III
Administration
3.1 The Committee .
The Plan shall be administered by the Committee which shall have
all powers necessary or desirable for such administration. The
express grant in this Plan of any specific power to the Committee
shall not be construed as limiting any power or authority of the
Committee. In addition to any other powers and, subject to the
provisions of the Plan, the Committee shall have the following
specific powers: (i) to determine the terms and conditions upon
which the Awards may be made and exercised; (ii) to determine all
terms and provisions of each Agreement, which need not be
identical; (iii) to construe and interpret the Agreements and the
Plan; (iv) to establish, amend or waive rules or regulations for
the Plan’s administration; (v) to accelerate the
exercisability of any Award or the termination of any Period of
Restriction; and (vi) to make all other determinations and take all
other actions necessary or advisable for the administration of the
Plan.
3.2 Selection of
Participants . The Committee shall have the authority to grant
Awards under the Plan, from time to time, to such Key Employees as
may be selected by it. Each Award shall be evidenced by an
Agreement.
3.3 Decisions Binding
. All determinations and decisions made by the Board or the
Committee pursuant to the provisions of the Plan shall be final,
conclusive and binding.
3.4 Rule 16b-3
Requirements . Notwithstanding any other provision of the Plan,
the Board or the Committee may impose such conditions on any Award
and amend the Plan in any such respects, as may be required to
satisfy the requirements of Rule 16b-3, as amended (or any
successor or similar rule), under the Exchange Act.
3.5 Indemnification of
Committee . In addition to such other rights of indemnification
as they may have as directors or as members of the Committee, the
members of the Committee
4
shall have the indemnity rights and the
Company shall have the indemnity obligations provided in the
Company’s Articles of Incorporation and Bylaws with respect
to the conduct of the Committee. In carrying out its
responsibilities, the Committee shall also have the right to
consult lawyers, experts and other consultants of its choosing at
the Company’s expense.
ARTICLE IV
Stock Subject to the
Plan
4.1 Number of Shares .
Subject to adjustment as provided in Section 4.3 herein, the
maximum aggregate number of Shares that may be issued pursuant to
Awards made under the Plan shall not exceed 137,000. Except as
provided in Sections 4.2 herein, the issuance of Shares in
connection with the exercise of Awards under the Plan shall reduce
the number of Shares available for future Awards under the
Plan.
4.2 Lapsed Awards or
Forfeited Shares . If any Award granted under this Plan (for
which no material benefits of ownership have been received,
including dividends) terminates, expires, or lapses for any reason
other than by virtue of exercise of the Award, any Stock subject to
such Award again shall be available for the grant of an Award under
the Plan.
4.3 Adjustments . In
the event of a subdivision of the outstanding Shares, a declaration
of a dividend payable in Shares or a combination or consolidation
of the outstanding Shares (by reclassification or otherwise) into a
lesser number of Shares, corresponding adjustments shall
automatically be made in each of the following:
| |
(a) |
the number of Options for future Awards; |
| |
(b) |
the number of Shares covered by each outstanding Option;
or |
| |
(c) |
the Exercise Price of each outstanding Option. |
In the event of a declaration
of an extraordinary dividend payable in a form other than Shares in
an amount that has a material effect on the price of Shares, a
recapitalization, a spin-off or a similar occurrence, the Committee
may make such adjustments as it, in its sole discretion, deems
appropriate in one or more of the foregoing. Except as provided in
this Article, a Participant shall have no rights by reason of any
issuance by the Company of stock of any class or securities
convertible into stock of any class, any subdivision or
consolidation of any shares of stock of any class or securities
convertible into stock of any class, any subdivision or
consolidation of shares of stock of any class, the payment of any
stock dividend or any other increase or decrease in the number of
shares of stock of any class.
4.4 Dissolution or
Liquidation . To the extent not previously exercised or
settled, Options shall terminate immediately prior to the
dissolution or liquidation of the Company.
4.5 Reorganization .
In the event that the Company is a party to a merger or other
reorganization, outstanding Awards shall be subject to the
agreement of merger or reorganization. Subject to the rights of the
Committee under Article VII, such agreemen
| 
