**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 whichMetroCorp Bancshares, Inc (the *“Company”*), and its Affiliates, may attract able persons toenter 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 andmanagement of the Company and its Affiliates rest, and whose present and potential contributions tothe welfare of the Company and its Affiliates are of importance, can acquire and maintain stockownership, thereby strengthening their concern for the welfare of the Company and its Affiliatesand their desire to remain in the Company’s and its Affiliates’ employ. A further purpose of thePlan is to provide such employees, Directors and consultants with additional incentive and rewardopportunities designed to enhance the profitable growth of the Company. Accordingly, the Planprovides for granting Incentive Stock Options, Nonqualified Stock Options, Stock AppreciationRights, Restricted Stock Awards, Performance Awards, Phantom Stock Awards, or any combination ofthe foregoing, as is best suited to the circumstances of the particular employee, Director orconsultant as provided herein.**II. DEFINITIONS**     The following definitions shall be applicable throughout the Plan unless specifically modifiedby any paragraph:     (a) *“Affiliate”*means any entity with whom the Company would be considered a single employerunder 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 Section414(b), the language “at least 50 percent” is used instead of “at least 80 percent” each place itappears in Code Section 1563(a)(1), (2) and (3), and in applying Treasury Regulation Section1.414(c)-2 for purposes of determining trades or businesses that are under common control forpurposes of Code Section 414(c), the language “at least 50 percent” is used instead of “at least 80percent” each place it appears in Section 1.414(c)-2.     (b) *“Award”*means, individually or collectively, any Option, Restricted Stock Award, PhantomStock 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 Companyshall not be the surviving entity in any merger, consolidation or other reorganization (or survivesonly 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, anentity 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 orentity (other than a wholly-owned subsidiary of the Company), (iv) the Company is to be dissolvedand 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 tovote) of more than 50% of the outstanding shares of the Company’s voting stock (based upon votingpower), or (vi) as a result of or in connection with a contested election of directors, the personswho were directors of the Company before such election shall cease to constitute a majority of theBoard.     (e) *“Change of Control Value”*shall mean (i) the per share price offered to stockholders ofthe Company in any such merger, consolidation, reorganization, sale of assets or dissolutiontransaction, (ii) the price per share offered to stockholders of the Company in any tender offer orexchange offer whereby a Change of Control takes place, or (iii) if such Change of Control occursother than pursuant to a tender or exchange offer, the Fair Market Value per share of the sharesinto which Awards are exercisable, as determined by the Committee, whichever is applicable. In theevent that the consideration offered to stockholders of the Company consists of anything other thancash, the Committee shall determine the fair cash equivalent of the portion of the considerationoffered which is other than cash.     (f) *“Code”*means the Internal Revenue Code of 1986, as amended. Reference in the Plan to anysection of the Code shall be deemed to include any amendments or successor provisions to anysection and any regulations under such section.     (g) *“Committee”*means the Board or a committee designated by the Board. If the Company issubject to Section 16 of the 1934 Act, the Committee shall be composed entirely of not less thantwo (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 atthe pleasure of the Board.     (h) *“Company”*means MetroCorp Bancshares, Inc.     (i) A *“consultant”*means an individual (other than a Director) who performs services for theEmployer 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 orby the Board under applicable corporate law who is serving on the Board on the date the Plan isadopted 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 hasclassified as an employee, regardless of whether such person is retroactively or prospectivelyclassified as a common law employee by any state or federal governmental agency or court.     (m) *“Employer”*means the Company or an Affiliate.
-2-

 
     (n) *“Fair Market Value”*means, as of any specified date, the mean of the high and low salesprices of the Stock (i) reported by any interdealer quotation system on which the Stock is quotedon that date or (ii) if the Stock is listed on a national stock exchange, reported on the stockexchange 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 istraded over the counter at the time a determination of its fair market value is required to be madehereunder, its fair market value shall be deemed to be equal to the average between the reportedhigh and low or closing bid and asked prices of Stock on the most recent date on which Stock waspublicly traded. In the event Stock is not publicly traded at the time a determination of itsvalue is required to be made hereunder, the determination of its fair market value shall be made bythe 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 section422(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 topurchase Stock which does not constitute an Incentive Stock Option.     (s) *“Option”*means an Award granted under Paragraph VII of the Plan and includes bothIncentive 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 respectto an Option.     (u) *“Parent Corporation”*means a “parent corporation” of the Company within the meaning ofCode 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 Holderwith 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 Holderwith respect to a Phantom Stock Award.     (z) *“Plan”*means the MetroCorp Bancshares, Inc. 2007 Stock Awards and Incentive Plan, asamended from time to time.
-3-

 
     (aa) *“Restricted Stock Agreement”*means a written agreement between the Company and a Holderwith 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 amendedfrom time to time, and any successor rule, regulation or statute fulfilling the same or a similarfunction.     (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 theexercise 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 aHolder with respect to an Award of Stock Appreciation Rights.     (hh) *“Subsidiary Corporation”*means a “subsidiary corporation” of the Company within themeaning 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 theBoard (the “Effective Date”), subject to the approval of the Plan by the Company’s stockholderswithin twelve months after the Effective Date. If the Plan is not so approved by the Company’sstockholders, (a) the Plan shall not be effective, and (b) any grants of Awards under the Planshall immediately expire and be of no force and effect. No Awards may be granted under the Planafter the tenth anniversary of the Effective Date. The Plan shall remain in effect until allAwards 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, NonqualifiedOption or Stock Appreciation Right shall be granted, the number of shares of Stock which may beissued under each Option, Stock Appreciation Right or Restricted Stock Award, and the value of eachPerformance Award and Phantom Stock Award. In making such determinations the Committee may takeinto account the nature of the services rendered by the
-4-

 
respective employees, their present and potential contributions to the Employer’s success andsuch 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 itby the other provisions of the Plan. Subject to the express provisions of the Plan, the Committeeis authorized to construe the Plan and the respective agreements executed thereunder, to prescribesuch rules and regulations relating to the Plan as it may deem advisable to carry out the Plan, andto 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 causedesignated Options to qualify as Incentive Stock Options, and to make all other determinationsnecessary or advisable for administering the Plan. The Committee may correct any defect or supplyany omission or reconcile any inconsistency in any agreement relating to an Award in the manner andto the extent it shall deem expedient to carry it into effect. The determinations of the Committeeon the matters referred to in this Article IV shall be conclusive.     (d) *Expenses.*All expenses and liabilities incurred by the Committee in the administration ofthis 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 ormore employees, Directors or consultants determined by it to be eligible for participation in thePlan in accordance with the provisions of Paragraph VI. Subject to Paragraph XII, the maximumaggregate number of shares of Stock that may be issued under the Plan is 350,000, any or all ofwhich may be issued through Incentive Stock Options. Shares of Stock shall be deemed to have beenissued under the Plan only to the extent actually issued and delivered pursuant to an Award. Tothe extent that an Award (other than an Award of Restricted Stock) lapses or is canceled or therights of its Holder terminate or the Award is cashed-out, any Stock subject to such Award shallagain 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 mayremain unissued and which are not subject to outstanding Awards at the termination of this Planshall cease to be reserved for the purpose of this Plan, but until termination of this Plan or thetermination of the last of the Awards granted under this Plan, whichever last occurs, the Companyshall 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 theexercise of an Incentive Stock Option and for those shares acquired pursuant to the exercise of aNonqualified Stock Option.     Notwithstanding any provision in the Plan to the contrary, no more than 50,000 shares of Stockmay 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 thePlan to any one individual during any 12 month period, and no more than 20,000 shares of Stock maybe granted under the Plan as a Restricted Stock Award to any one
-5-

 
individual during any 12 month period. The number of shares of Stock that may be issued toindividuals as set forth in the preceding sentence shall be subject to adjustment in the samemanner as provided in Section XII hereof with respect to shares of Stock subject to Options, StockAppreciation Rights or Restricted Stock Awards then outstanding. The limitations set forth in thisparagraph shall be applied in a manner which will permit compensation generated under the Plan withrespect to “covered employees” to constitute “performance-based” compensation for purposes ofSection 162(m) of the Code, including, without limitation, counting against such maximum number ofshares of Stock, to the extent required under Section 162(m) of the Code and applicableinterpretive authority thereunder, any shares of Stock subject to Options or Stock AppreciationRights 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 beauthorized but unissued Stock or Stock previously issued and outstanding and reacquired by theCompany.**VI. ELIGIBILITY**     The Committee, in its sole discretion, shall determine who shall receive Awards under thePlan. Awards other than Incentive Stock Options may be granted to all employees, directors andconsultants of the Company or its Affiliates, including Affiliates that become such after adoptionof the Plan. Incentive Stock Options may be granted to all employees of the Company, a ParentCorporation or a Subsidiary Corporation, including an entity that becomes a Parent Corporation or aSubsidiary 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 oneoccasion to the same person, and, subject to the limitations set forth in the Plan, such Award mayinclude an Incentive Stock Option or a Nonqualified Stock Option, a Stock Appreciation Right, aRestricted 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 dateof grant.     (b) *Limitations on Exercise of Option.*An Option shall be exercisable in whole or in suchinstallments and at such times as determined by the Committee.     (c) *Special Limitations on Incentive Stock Options.*Except as otherwise provided under theCode or applicable regulations, to the extent that the aggregate Fair Market Value (determined atthe 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 Holderduring any calendar year under all plans of the Company and its Parent Corporation or SubsidiaryCorporations exceeds $100,000, such options shall be treated as Nonqualified Stock Options. TheCommittee shall determine, in accordance with applicable provisions of the Code, TreasuryRegulations and other administrative pronouncements, which of a Holder’s Incentive
-6-

 
Stock Options will not constitute Incentive Stock Options because of such limitation and shallnotify the Holder of such determination as soon as practicable after such determination. NoIncentive 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 allclasses of stock of the Company or of its Parent Corporation or Subsidiary Corporation, within themeaning of section 422(b)(6) of the Code, unless (i) at the time such Option is granted theexercise 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 dateof grant.     (d) *Option Agreement.*Each Option shall be evidenced by an Option Agreement in such form andcontaining such provisions not inconsistent with the provisions of the Plan as the Committee fromtime to time shall approve, including, without limitation, provisions to qualify an Incentive StockOption under section 422 of the Code. An Option Agreement may provide for the payment of theexercise price, in whole or in part, by (i) cash, cashier’s check, bank draft, or postal or expressmoney 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 endorsedfor transfer to the Company, or (iii) any combination of the preceding, equal in value to the fullamount of the exercise price. For purposes of this Plan, “mature shares” means shares of CommonStock 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 forat least six months or (ii) has purchased on the open market. Each Option shall specify the effectof 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 hereofaccelerating 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 fromthose 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 othermatters not inconsistent with the terms and provisions of this Plan that the Committee shall in itssole discretion determine. The terms and conditions of the respective Option Agreements need notbe identical.     (e) *Exercise price and Payment.*The price at which a share of Stock may be purchased uponexercise of an Option shall be determined by the Committee, but (i) such exercise price shall neverbe less than the Fair Market Value of Stock on the date the Option is granted and (ii) suchexercise price shall be subject to adjustment as provided in Paragraph XII. The Option or portionthereof may be exercised by delivery of an irrevocable notice of exercise to the Company. Theexercise price of the Option or portion thereof shall be paid in full in the manner prescribed bythe Committee.     (f) *Stockholder Rights and Privileges.*The Holder shall be entitled to all the privileges andrights of a stockholder only with respect to such shares of Stock as have been purchased under theOption and for which certificates of stock have been registered in the Holder’s name.
-7-

 
     (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 insubstitution for stock options held by individuals employed by corporations who become employees asa result of a merger or consolidation of the employing corporation with the Company, an Affiliate,or any Subsidiary Corporation, or the acquisition by the Company, an Affiliate or a SubsidiaryCorporation of the assets of the employing corporation, or the acquisition by the Company, anAffiliate or a Subsidiary Corporation of stock of the employing corporation with the result thatsuch employing corporation becomes a Subsidiary Corporation.     (h) All Options granted under this Plan are subject to, and may not be exercised before, theapproval of this Plan by the stockholders of the Company prior to the first anniversary date of theBoard meeting held to approve this Plan, by the affirmative vote of the holders of a majority ofthe outstanding shares of the Company present, or represented by proxy, and entitled to vote at ameeting at which a quorum is present, or by written consent in accordance with the laws of theState of Texas.**VIII. STOCK APPRECIATION RIGHTS**     (a) *Stock Appreciation Rights.*A Stock Appreciation Right is the right to receive an amountequal to the Spread with respect to a share of Stock upon the exercise of such Stock AppreciationRight. Stock Appreciation Rights may be granted in connection with the grant of an Option, inwhich case the Option Agreement will provide that exercise of Stock Appreciation Rights will resultin the surrender of the right to purchase the shares under the Option as to which the StockAppreciation Rights were exercised. Alternatively, Stock Appreciation Rights may be grantedindependently of Options in which case each Award of Stock Appreciation Rights shall be evidencedby a Stock Appreciation Rights Agreement which shall contain such terms and conditions as may beapproved by the Committee. The Spread with respect to a Stock Appreciation Right may be payableeither in cash, shares of Stock with a Fair Market Value equal to the Spread or in a combination ofcash and shares of Stock. With respect to Stock Appreciation Rights that are subject to Section 16of the 1934 Act, however, the Committee shall, except as provided in Paragraph XII(c), retain solediscretion (i) to determine the form in which payment of the Stock Appreciation Right will be made(*i.e.,*cash, securities or any combination thereof) or (ii) to approve an election by a Holder toreceive cash in full or partial settlement of Stock Appreciation Rights. Each Stock AppreciationRights Agreement shall specify the effect of termination of employment or service as a Director orconsultant (by retirement, disability, death or otherwise) on the exercisability of the StockAppreciation Rights.     (b) *Other Terms and Conditions.*At the time of such Award, the Committee may, in its solediscretion, prescribe additional terms, conditions or restrictions relating to Stock AppreciationRights. Such additional terms, conditions or restrictions shall be set forth in the StockAppreciation Rights Agreement made in conjunction with the Award. Such Stock Appreciation RightsAgreements may also include, without limitation, provisions relating to (i) vesting of Awards,subject to the provisions hereof accelerating vesting on a Change of Control, (ii) tax matters(including provisions covering applicable wage withholding requirements), and (iii) any othermatters not inconsistent with the terms and provisions of this Plan, that the
-8-

 
Committee shall in its sole discretion determine. The terms and conditions of the respectiveStock Appreciation Rights Agreements need not be identical.     (c) *Exercise Price.*The exercise price of each Stock Appreciation Right shall be determinedby the Committee, but such exercise price (i) shall never be less than the Fair Market Value of ashare of Stock on the date the Stock Appreciation Right is granted (or such greater exercise priceas may be required if such Stock Appreciation Right is granted in connection with an IncentiveStock Option that must have an exercise price equal to 110% of the Fair Market Value of the Stockon the date of grant pursuant to Paragraph VII(c)) and (ii) shall be subject to adjustment asprovided in Paragraph XII.     (d) *Exercise Period.*The term of each Stock Appreciation Right shall be as specified by theCommittee at the date of grant.     (e) *Limitations on Exercise of Stock Appreciation Right.*A Stock Appreciation Right shall beexercisable in whole or in such installments and at such times as determined by the Committee.**IX. RESTRICTED STOCK AWARDS**     (a) *Forfeiture Restrictions to be Established by the Committee.*Shares of Stock that are thesubject of a Restricted Stock Award shall be subject to restrictions on disposition by the Holderand an obligation of the Holder to forfeit and surrender the shares to the Company under certaincircumstances (the *“Forfeiture Restrictions”*). The Forfeiture Restrictions shall be determined bythe Committee in its sole discretion and set forth in the Restricted Stock Agreement, and theCommittee may provide that the Forfeiture Restrictions shall lapse upon (i) the attainment of oneor more performance goals established by the Committee that are based on Earnings Per Share goalattainment, Efficiency Ratio goal attainment, Non-Performing Loan goal attainment, and/or AssetGrowth goal attainment (ii) the Holder’s continued employment with the Employer for a specifiedperiod of time, or (iii) a combination of the factors listed in clauses (i) and (ii) of thissentence. Each Restricted Stock Award may have different Forfeiture Restrictions, in thediscretion of the Committee. The Forfeiture Restrictions applicable to a particular RestrictedStock Award shall not be changed except as permitted by Paragraph IX(b) or Paragraph XII.     (b) *Other Terms and Conditions.*Stock awarded pursuant to a Restricted Stock Award shall berepresented by a stock certificate registered in the name of the Holder of such Restricted StockAward. Unless otherwise provided in the Restricted Stock Agreement, the Holder shall have theright to receive dividends with respect to Stock subject to a Restricted Stock Award, to vote Stocksubject thereto and to enjoy all other stockholder rights, except that (i) the Holder shall not beentitled to delivery of the stock certificate until the Forfeiture Restrictions shall have expired,(ii) the Company shall retain custody of the Stock until the Forfeiture Restrictions shall haveexpired, (iii) the Holder may not sell, transfer, pledge, exchange, hypothecate or otherwisedispose of the Stock until the Forfeiture Restrictions shall have expired, and (iv) a breach of theterms and conditions established by the Committee pursuant to the Restricted Stock Agreement shallcause a forfeiture of the Restricted Stock
-9-

 
Award. Unless otherwise provided in a Restricted Stock Agreement, dividends payable withrespect to a Restricted Stock Award will be paid to a Holder in cash on the day on which thecorresponding dividend on shares of Stock is paid to shareholders, or as soon as administrativelypracticable thereafter, but in no event later than the fifteenth (15th) day of the thirdcalendar month following the day on which the corresponding dividend on shares of Stock is paid toshareholders. The Committee may provide in a Restricted Stock Agreement that payment of dividendswith respect to a Restricted Stock Award shall be subject to the attainment of one or moreperformance goals established by the Committee that are based on the criteria set forth inparagraph (a) above.     At the time of such Award, the Committee may, in its sole discretion, prescribe additionalterms, conditions or restrictions relating to Restricted Stock Awards, including, but not limitedto, rules pertaining to the termination of employment or service as a Director or consultant (byretirement, disability, death or otherwise) of a Holder prior to expiration of the ForfeitureRestrictions. Such additional terms, conditions or restrictions shall be set forth in a RestrictedStock Agreement made in conjunction with the Award. Such Restricted Stock Agreement may alsoinclude, without limitation, provisions relating to (i) vesting of Awards, subject to anyprovisions hereof accelerating vesting on a Change of Control, (ii) tax matters (includingprovisions (y) covering any applicable employee wage withholding requirements and (z) prohibitingan election by the Holder under section 83(b) of the Code), and (iii) any other matters notinconsistent with the terms and provisions of this Plan that the Committee shall in its solediscretion determine. The terms and conditions of the respective Restricted Stock Agreements neednot be identical.     (c) *Payment for Restricted Stock.*The Committee shall determine the amount and form of anypayment for Stock received pursuant to a Restricted Stock Award, provided that in the absence ofsuch a determination, a Holder shall not be required to make any payment for Stock receivedpursuant to a Restricted Stock Award, except to the extent otherwise required by law.     (d) *Agreements.*At the time any Award is made under this Paragraph IX, the Company and theHolder shall enter into a Restricted Stock Agreement setting forth each of the matters as theCommittee may determine to be appropriate. The terms and provisions of the respective RestrictedStock Agreements need not be identical.     (e) *Acceleration.*The Committee at any time may accelerate the time or conditions under whichthe Forfeiture Restrictions lapse.     (f) *Certification.*With respect to a Restricted Stock Award granted to a “covered employee,”if the lapse of the Forfeiture Restrictions imposed upon such Restricted Stock Award, or thepayment of dividends with respect to such Restricted Stock Award, is conditioned in whole or inpart on the attainment of performance goals, such Forfeiture Restrictions shall not lapse and suchdividends shall not be paid unless and until the Committee certifies in writing that suchperformance goals and any other conditions on the lapse of Forfeiture Restrictions or payment ofdividends have been satisfied.
-10-

 
**X. PERFORMANCE AWARDS**     (a) *Performance Period.*The Committee shall establish, with respect to and at the time ofgrant of each Performance Award, a performance period over which the performance of the Holdershall be measured.     (b) *Performance Awards.*Each Performance Award shall have a maximum value established by theCommittee at the time of such Award.     (c) *Performance Measures.*Prior to or upon the commencement of each performance period (or atsuch later time as may be permitted for qualified performance-based compensation under Section162(m) and the regulations thereunder), the Committee shall establish written performance goals foreach Performance Award granted to a Holder for such performance period. The performance goalsshall be based on one or more of the following criteria: Earnings Per Share goal attainment,Efficiency Ratio goal attainment, Non-Performing Loan goal attainment, and/or Asset Growth goalattainment.     At the time of establishing the performance goals, the Committee shall specify (i) the formulato be used in calculating the compensation payable to a Holder if the performance goals areobtained, and (ii) the individual employee or class of employees to which the formula applies. TheCommittee may also specify a minimum acceptable level of achievement of the relevant performancegoals, as well as one or more additional levels of achievement, and a formula to determine thepercentage of the Performance Award deemed to have been earned by the Holder upon attainment ofeach such level of achievement, which percentage may exceed 100%. The performance goals and amountof each Performance Award need not be the same as those relating to any other Performance Award,whether made at the same or a different time. Notwithstanding the terms of any Performance Award,the maximum payout under this Plan pursuant to a Performance Award to any individual for anycalendar year shall not exceed $100,000.     Notwithstanding the terms of any Performance Award, the Committee, in its sole and absolutediscretion, may reduce the amount of the Performance Award payable to any Holder for any reason,including the Committee’s judgment that the performance goals have become an inappropriate measureof achievement, a change in the employment status, position or duties of the Holder, unsatisfactoryperformance of the Holder, or the Holder’s service for less than the entire performance period.Notwithstanding the foregoing, the reduction of a Performance Award payable to a Holder may notresult in an increase in the amount of a Performance Award payable to another Holder.     (d) *Awards Criteria.*In determining the value of Performance Awards, the Committee shall takeinto account a Holder’s responsibility level, contributions, performance, potential, other Awardsand such other considerations as it deems appropriate.     (e) *Certification.*Promptly after the date on which the necessary information for aparticular performance period becomes available, the Committee shall determine, and certify inwriting (with respect to each Holder who is a “covered employee”), the extent to which the
-11-

 
Performance Award for such performance period has been earned, through the achievement of therelevant performance goals, by each Holder for such performance period.     (f) *Payment.*As soon as administratively feasible after the Committee has determined andcertified in writing (if required with respect to a “covered employee”) the extent to which aPerformance Award has been earned, but in no event later than March 15 of the calendar yearimmediately following the calendar year in which the performance period ends, the Holder of aPerformance Award shall be entitled to receive payment of an amount, not exceeding the maximumvalue of the Performance Award, based on the achievement of the performance measures for suchperformance period, as determined by the Committee. Payment of a Performance Award may be made incash, Stock or a combination thereof, as determined by the Committee. Payment shall be made in alump sum. Any payment to be made in Stock shall be based on the Fair Market Value of the Stock onthe payment date.     (g) *Termination of Employment.*A Performance Award shall terminate if the Holder does notremain continuously in the employ of the Employer at all times during the applicable performanceperiod.     (h) *Agreements.*At the time any Award is made under this Paragraph X, the Committee mayrequire the Holder to enter into a Performance Award Agreement with the Company setting forth eachof the matters contemplated hereby, and, in addition such matters are set forth in Paragraph IX(b)as the Committee may determine to be appropriate. The terms and provisions of the respectiveagreements need not be identical.**XI. PHANTOM STOCK AWARDS**     (a) *Phantom Stock Awards.*Phantom Stock Awards are rights to receive shares of Stock (or cashin an amount equal to the Fair Market Value thereof), or rights to receive an amount equal to anyappreciation in the Fair Market Value of Stock (or portion thereof) over a specified period oftime, which vest over a period of time or upon the occurrence of an event (including withoutlimitation a Change of Control) as established by the Committee, without payment of any amounts bythe Holder thereof (except to the extent otherwise required by law) or satisfaction of anyperformance criteria or objectives. Each Phantom Stock Award shall have a maximum valueestablished by the Committee at the time of such Award.     (b) *Award Period.*The Committee shall establish, with respect to and at the time of eachPhantom Stock Award, a period over which or the event upon which the Award shall vest with respectto the Holder.     (c) *Awards Criteria.*In determining the value of Phantom Stock Awards, the Committee shalltake into account an employee’s responsibility level, performance, potential, other Awards and suchother considerations as it deems appropriate.     (d) *Payment.*Following the end of the vesting period for a Phantom Stock Award, but in noevent later than March 15 of the calendar year immediately following the calendar year in which thevesting period ends, the Holder of a Phantom Stock Award shall be entitled to
-12-

 
receive payment of an amount, not exceeding the maximum value of the Phantom Stock Award,based on the then vested value of the Award. Payment of a Phantom Stock Award may be made in cash,Stock or a combination thereof as determined by the Committee. Payment shall be made in a lumpsum. Any payment to be made in Stock shall be based on the Fair Market Value of the Stock on thepayment date. Cash dividend equivalents may be paid during or after the vesting period withrespect to a Phantom Stock Award, as determined by the Committee.     (e) *Termination of Employment.*A Phantom Stock Award shall terminate if the Holder does notremain continuously in the employ of the Employer at all times during the applicable vestingperiod, except as may be otherwise set forth in the Award at the time of grant.     (f) *Agreements.*At the time any Award is made under this Paragraph XI, the Company and theHolder shall enter into a Phantom Stock Award Agreement setting forth each of the matterscontemplated hereby and, in addition, such matters as are set forth in Paragraph IX(b) as theCommittee may determine to be appropriate. The terms and provisions of the respective agreementsneed not be identical.**XII. RECAPITALIZATION OR REORGANIZATION**     (a) The shares with respect to which Awards may be granted are shares of Stock as presentlyconstituted, but if, and whenever, prior to the expiration of an Award theretofore granted, theCompany shall effect a subdivision or consolidation by the Company, the number of shares of Stockwith respect to which such Award may thereafter be exercised or satisfied, as applicable, (i) inthe event of an increase in the number of outstanding shares shall be proportionately increased,and the exercise price per share shall be proportionately reduced, and (ii) in the event of areduction in the number of outstanding shares shall be proportionately reduced, and the exerciseprice per share shall be proportionately increased.     (b) If the Company recapitalizes or otherwise changes its capital structure, thereafter uponany exercise or satisfaction, as applicable, of an Award theretofore granted the Holder shall beentitled to (or entitled to purchase, if applicable) under such Award, in lieu of the number ofshares of Stock then covered by such Award, the number and class of shares of stock and securitiesto which the Holder would have been entitled pursuant to the terms of the recapitalization if,immediately prior to such recapitalization, the Holder had been the holder of record of the numberof shares of Stock then covered by such Award.     (c) In the event of a Change of Control, all outstanding Awards shall immediately vest andbecome exercisable or satisfiable, as applicable, and the Committee, in its discretion, may takeany other action with respect to outstanding Awards that it deems appropriate, which action mayvary among Awards granted to individual Holders; provided, however, that such action shall notreduce the value of an Award. In particular, with respect to Options, the actions the Committeemay take upon a Change of Control include, but are not limited to, the following: (i) acceleratingthe time at which Options then outstanding may be exercised so that such Options may be exercisedin full for a limited period of time on or before a specified date (before or after such Change ofControl) fixed by the Committee, after which specified date all unexercised Options and all rightsof Holders thereunder shall terminate, (ii) requiring the
-13-

 
mandatory surrender to the Company by selected Holders of some or all of the outstandingOptions held by such Holders (irrespective of whether such Options are then exercisable) as of adate, before or after such Change of Control, specified by the Committee, in which event theCommittee shall thereupon cancel such Options and the Company shall pay to each such Holder anamount of cash per share equal to the excess, if any, of the Change of Control Value of the sharessubject to such Option over the exercise price(s) under such Options for such shares, (iii) makesuch adjustments to Options then outstanding as the Committee deems appropriate to reflect suchChange of Control (provided, however, that the Committee may determine in its sole discretion thatno adjustment is necessary to Options then outstanding), or (iv) provide that the number and classof shares of Stock covered by an Option theretofore granted shall be adjusted so that such Optionshall thereafter cover the number and class of shares of Stock or other securities or property(including, without limitation, cash) to which the Holder would have been entitled pursuant to theterms of the agreement of merger, consolidation or sale of assets and dissolution if, immediatelyprior to such merger, consolidation or sale of assets and dissolution, the Holder had been theholder of record of the number of shares of Stock then covered by such Option. The provisionscontained in this paragraph shall not terminate any rights of the Holder to further paymentspursuant to any other agreement with the Company following a Change of Control. Notwithstandinganything herein to the contrary, in the event of a Change of Control described in ParagraphII(d)(ii), the Committee may determine, in its discretion, that the treatment of Awards asdescribed in this Paragraph shall apply only to Awards granted to employees, Directors orconsultants of the affected bank.     (d) In the event of changes in the outstanding Stock by reason of recapitalization,reorganizations, mergers, consolidations, combinations, exchanges or other relevant changes incapitalization occurring after the date of the grant of any Award and not otherwise provided for bythis Paragraph XII, any outstanding Awards and any agreements evidencing such Awards shall beequitably adjusted as to the number and price of shares of Stock or other consideration subject tosuch Awards, but only to the same extent that any equitable adjustment is made to shares ofoutstanding Stock. In the event of any such change in the outstanding Stock, the aggregate numberof shares available under the Plan may be appropriately adjusted by the Committee, whosedetermination shall be conclusive.     (e) The existence of the Plan and the Awards granted hereunder shall not affect in any way theright or power of the Board or the stockholders of the Company to make or authorize any adjustment,recapitalization, reorganization or other change in the Company’s capital structure or itsbusiness, any merger or consolidation of the Company, any issue of debt or equity securities aheadof or affecting Stock or the rights thereof, the dissolution or liquidation of the Company or anysale, lease, exchange or other disposition of all or any part of its assets or business or anyother corporate act or proceeding.     (f) Any adjustment provided for in Subparagraphs (a), (b), (c) or (d) above shall be subjectto any required stockholder action.     (g) Except as hereinbefore expressly provided, the issuance by the Company of shares of stockof any class or securities convertible into shares of stock of any class, for cash, property, laboror services, upon direct sale, upon the exercise of rights or warrants to subscribe
-14-

 
therefor, or upon conversion of shares of obligations of the Company convertible into suchshares or other securities, and in any case whether or not for fair value, shall not affect, and noadjustment by reason thereof shall be made with respect to, the number of shares of Stock subjectto Awards theretofore granted or the exercise price per share, if applicable.**XIII. AMENDMENT AND TERMINATION OF THE PLAN**     The Board in its discretion may terminate the Plan at any time with respect to any shares forwhich Awards have not theretofore been granted. The Board shall have the right to alter or amendthe Plan or any part thereof from time to time; provided that, except as provided herein or in anagreement governing an Award, no change in any Award theretofore granted may be made which wouldimpair the rights of the Holder without the consent of the Holder (unless such change is requiredin order to cause the benefits under the Plan to qualify as performance-based compensation withinthe meaning of section 162(m) of the Code, if applicable, and applicable interpretive authoritythereunder), and provided, further, that the Board may not, without approval of the stockholders,amend the Plan:     (a) to increase the maximum number of shares which may be issued on exercise or surrender ofan Award, except as provided in Paragraph XII;     (b) to change the class of employees eligible to receive Awards or materially increase thebenefits accruing to employees under the Plan;     (c) to extend the maximum period during which Awards may be granted under the Plan;     (d) to modify materially the requirements as to eligibility for participation in the Plan;     (e) to decrease any authority granted to the Committee hereunder in contravention of Rule16b-3; or     (f) if such approval is required to comply with Rule 16b-3, if applicable, any rulepromulgated by the exchange on which Stock is tradable, or Sections 162(m) or 422 of the Code orany successor provisions, if applicable.
-15-

 
**XIV. MISCELLANEOUS**     (a) *No Right to An Award.*Neither the adoption of the Plan by the Company nor any action ofthe Board or the Committee shall be deemed to give an employee any right to be granted an Award topurchase Stock, a right to a Stock Appreciation Right, a Restricted Stock Award, a PerformanceAward or a Phantom Stock Award or any of the rights hereunder except as may be evidenced by anAward or by an Option Agreement, Stock Appreciation Rights Agreement, Restricted Stock Agreement,Performance Award Agreement or Phantom Stock Award Agreement on behalf of the Company, and thenonly to the extent and on the terms and conditions expressly set forth therein. The Plan shall beunfunded. The Company shall not be required to establish any special or separate fund or to makeany other segregation of funds or assets to assure the payment of any Award.     (b) *Employees’ Rights Unsecured*. The right of an employee to receive Stock, cash or any otherpayment under this Plan shall be an unsecured claim against the general assets of the Company. TheCompany may, but shall not be obligated to, acquire shares of Stock from time to time inanticipation of its obligations under this Plan, but a Holder shall have no right in or against anyshares of Stock so acquired. All Stock shall constitute the general assets of the Company and maybe disposed of by the Company at such time and for such purposes as it deems appropriate.     (c) *No Employment Rights Conferred.*Nothing contained in the Plan shall (i) confer upon anyemployee any right with respect to continuation of employment with any Employer or (ii) interferein any way with the right of any Employer to terminate an employee’s employment at any time.     (d) *Other Laws; Withholding.*The Company shall not be obligated to issue any Stock pursuantto any Award granted under the Plan at any time when the shares covered by such Award have not beenregistered under the Securities Act of 1933 and such other state and federal laws, rules orregulations as the Company or the Committee deems applicable and, in the opinion of legal counselfor the Company, there is no exemption from the registration requirements of such laws, rules orregulations available for the issuance and sale of such shares. Unless the Awards and Stockcovered by this Plan have been registered under the Securities Act of 1993, or the Company hasdetermined that such registration is unnecessary, each Holder exercising an Award under this Planmay be required by the Company to give representation in writing that such Holder is acquiring suchshares for his or her own account for investment and not with a view to, or for sale in connectionwith, the distribution of any part thereof. No fractional shares of Stock shall be delivered, norshall any cash in lieu of fractional shares be paid. The Company shall have the right to deduct inconnection with all Awards any taxes required by law to be withheld and to require any paymentsrequired to enable it to satisfy its withholding obligations.     (e) *No Restriction on Corporate Action.*Nothing contained in the Plan shall be construed toprevent the Company, an Affiliate or any Subsidiary from taking any corporate action which isdeemed by the Company, an Affiliate or any Subsidiary to be appropriate or in its best interest,whether or not such action would have an adverse effect on the Plan or any Award
-16-

 
made under the Plan. No employee, beneficiary or other person shall have any claim againstthe Company, an Affiliate or any Subsidiary as a result of any such action.     (f) *Restrictions on Transfer.*An Award shall not be transferable otherwise than by will orthe laws of descent and distribution and shall be exercisable during the Holder’s lifetime only bysuch Holder or the Holder’s guardian or legal representative.     (g) *Beneficiary Designation*. Each Holder may name, from time to time, any beneficiary orbeneficiaries (who may be named contingently or successively) to whom any benefit under the Plan isto be paid in case of his or her death before he or she receives any or all of such benefit. Eachdesignation will revoke all prior designations by the same Holder, shall be in a form prescribed bythe Committee, and will be effective only when filed by the Holder in writing with the Committeeduring his lifetime. In the absence of any such designation, benefits remaining unpaid at theHolder’s death shall be paid to his estate.     (h) *Rule 16b-3.*It is intended that the Plan and any grant of an Award made to a personsubject to Section 16 of the 1934 Act meet all of the requirements of Rule 16b-3. If any provisionof the Plan or any such Award would disqualify the Plan or such Award under, or would otherwise notcomply with, Rule 16b-3, such provision or Award shall be construed or deemed amended to conform toRule 16b-3.     (i) *Section **162(m)**.*If the Company is subject to Section 162(m) of the Code, it is intendedthat the Plan comply fully with and meet all the requirements of Section 162(m) of the Code so thatAwards may, if intended, constitute “performance-based” compensation within the meaning of suchsection. If any provision of the Plan would disqualify the Plan or would not otherwise permit thePlan to comply with Section 162(m) as so intended, such provision shall be construed or deemedamended to conform to the requirements or provisions of Section 162(m); provided that no suchconstruction or amendment shall have an adverse effect on the economic value to a Holder of anyAward previously granted hereunder. With respect to any Restricted Stock Awards or PerformanceAwards granted to a “covered employee,” if the lapsing of the Forfeiture Restrictions of suchRestricted Stock Awards, or the payment of such Performance Award, is contingent on thesatisfaction of performance goals, (i) such performance goals shall be established in writing bythe Committee not later than ninety (90) days after the commencement of the period of service towhich the performance goals relate; provided, however, that the performance goals must beestablished before twenty-five percent (25%) of such period of service has elapsed, and (ii) theForfeiture Restrictions shall not lapse, and/or the Performance Award shall not be paid, unless theshareholder approval requirements under Treasury Regulation § 1.162-27(e)(4) have been satisfied.The performance goals shall comply with the requirements of Treasury Regulation § 1.162-27(e)(2).     (j) *Indemnification*. Each person who is or shall have been a member of the Committee or of theBoard shall be indemnified and held harmless by the Company against and from any loss, cost,liability, or expense that may be imposed upon or reasonably incurred by him in connection with orresulting from any claim, action, suit, or proceeding to which he may be a party or in which he maybe involved by reason of any action taken or failure to act under the Plan and against and from anyand all amounts paid by him in settlement thereof, with the
-17-

 
Company’s approval, or paid by him in satisfaction of any judgment in any such action, suit,or proceeding against him, provided he shall give the Company an opportunity, at its own expense,to handle and defend the same before he undertakes to handle and defend it on his own behalf. Theforegoing right of indemnification shall not be exclusive of any other rights or indemnification towhich such persons may be entitled under the Company’s Articles of Incorporation or Bylaws, as amatter of law, or otherwise, or any power that the Company may have to indemnify them or hold themharmless.     (k) *Governing Law.*This Plan shall be construed in accordance with the laws of the State ofTexas.
-18-

 
     IN WITNESS WHEREOF, and as conclusive evidence of the adoption of the foregoing by the Board,MetroCorp Bancshares, Inc. has caused this document to be duly executed in its name and behalf byits proper officer thereunto duly authorized as of this26th day ofJanuary, 2007.         By:  /s/George M. Lee     George M. Lee     Presidentand Chief Executive Officer   
-19-