exv4w2



 





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 350,000, 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, or the acquisition by the Company, an Affiliate or a Subsidiary
Corporation of the assets of the employing corporation, or the acquisition by the Company, an
Affiliate or a Subsidiary Corporation of stock of the employing corporation with the result that
such employing corporation becomes a Subsidiary Corporation.



     (h) All Options granted under this Plan are subject to, and may not be exercised before, the
approval of this Plan by the stockholders of the Company prior to the first anniversary date of the
Board meeting held to approve this Plan, by the affirmative vote of the holders of a majority of
the outstanding shares of the Company present, or represented by proxy, and entitled to vote at a
meeting at which a quorum is present, or by written consent in accordance with the laws of the
State of Texas.



VIII. STOCK APPRECIATION RIGHTS




     (a) Stock Appreciation Rights. A Stock Appreciation Right is the right to receive an amount
equal to the Spread with respect to a share of Stock upon the exercise of such Stock Appreciation
Right. Stock Appreciation Rights may be granted in connection with the grant of an Option, in
which case the Option Agreement will provide that exercise of Stock Appreciation Rights will result
in the surrender of the right to purchase the shares under the Option as to which the Stock
Appreciation Rights were exercised. Alternatively, Stock Appreciation Rights may be granted
independently of Options in which case each Award of Stock Appreciation Rights shall be evidenced
by a Stock Appreciation Rights Agreement which shall contain such terms and conditions as may be
approved by the Committee. The Spread with respect to a Stock Appreciation Right may be payable
either in cash, shares of Stock with a Fair Market Value equal to the Spread or in a combination of
cash and shares of Stock. With respect to Stock Appreciation Rights that are subject to Section 16
of the 1934 Act, however, the Committee shall, except as provided in Paragraph XII(c), retain sole
discretion (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 to
receive cash in full or partial settlement of Stock Appreciation Rights. Each Stock Appreciation
Rights Agreement 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 Stock
Appreciation Rights.



     (b) Other Terms and Conditions. At the time of such Award, the Committee may, in its sole
discretion, prescribe additional terms, conditions or restrictions relating to Stock Appreciation
Rights. Such additional terms, conditions or restrictions shall be set forth in the Stock
Appreciation Rights Agreement made in conjunction with the Award. Such Stock Appreciation Rights
Agreements 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 other
matters not inconsistent with the terms and provisions of this Plan, that the



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Committee shall in its sole discretion determine. The terms and conditions of the respective
Stock Appreciation Rights Agreements need not be identical.



     (c) Exercise Price. The exercise price of each Stock Appreciation Right shall be determined
by the Committee, but such exercise price (i) shall never be less than the Fair Market Value of a
share of Stock on the date the Stock Appreciation Right is granted (or such greater exercise price
as may be required if such Stock Appreciation Right is granted in connection with an Incentive
Stock Option that must have an exercise price equal to 110% of the Fair Market Value of the Stock
on the date of grant pursuant to Paragraph VII(c)) and (ii) shall be subject to adjustment as
provided in Paragraph XII.



     (d) Exercise Period. The term of each Stock Appreciation Right shall be as specified by the
Committee at the date of grant.



     (e) Limitations on Exercise of Stock Appreciation Right. A Stock Appreciation Right shall be
exercisable 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 the
subject of a Restricted Stock Award shall be subject to restrictions on disposition by the Holder
and an obligation of the Holder to forfeit and surrender the shares to the Company under certain
circumstances (the “Forfeiture Restrictions”). The Forfeiture Restrictions shall be determined by
the Committee in its sole discretion and set forth in the Restricted Stock Agreement, and the
Committee may provide that the Forfeiture Restrictions shall lapse upon (i) the attainment of one
or more performance goals established by the Committee that are based on Earnings Per Share goal
attainment, Efficiency Ratio goal attainment, Non-Performing Loan goal attainment, and/or Asset
Growth goal attainment (ii) the Holder’s continued employment with the Employer for a specified
period of time, or (iii) a combination of the factors listed in clauses (i) and (ii) of this
sentence. Each Restricted Stock Award may have different Forfeiture Restrictions, in the
discretion of the Committee. The Forfeiture Restrictions applicable to a particular Restricted
Stock 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 be
represented by a stock certificate registered in the name of the Holder of such Restricted Stock
Award. Unless otherwise provided in the Restricted Stock Agreement, the Holder shall have the
right to receive dividends with respect to Stock subject to a Restricted Stock Award, to vote Stock
subject thereto and to enjoy all other stockholder rights, except that (i) the Holder shall not be
entitled 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 have
expired, (iii) the Holder may not sell, transfer, pledge, exchange, hypothecate or otherwise
dispose of the Stock until the Forfeiture Restrictions shall have expired, and (iv) a breach of the
terms and conditions established by the Committee pursuant to the Restricted Stock Agreement shall
cause a forfeiture of the Restricted Stock



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Award. Unless otherwise provided in a Restricted Stock Agreement, dividends payable with
respect to a Restricted Stock Award will be paid to a Holder in cash on the day on which the
corresponding dividend on shares of Stock is paid to shareholders, or as soon as administratively
practicable thereafter, but in no event later than the fifteenth (15th) day of the third
calendar month following the day on which the corresponding dividend on shares of Stock is paid to
shareholders. The Committee may provide in a Restricted Stock Agreement that payment of dividends
with respect to a Restricted Stock Award shall be subject to the attainment of one or more
performance goals established by the Committee that are based on the criteria set forth in
paragraph (a) above.



     At the time of such Award, the Committee may, in its sole discretion, prescribe additional
terms, conditions or restrictions relating to Restricted Stock Awards, including, but not limited
to, rules pertaining to the termination of employment or service as a Director or consultant (by
retirement, disability, death or otherwise) of a Holder prior to expiration of the Forfeiture
Restrictions. Such additional terms, conditions or restrictions shall be set forth in a Restricted
Stock Agreement made in conjunction with the Award. Such Restricted Stock Agreement may also
include, without limitation, provisions relating to (i) vesting of Awards, subject to any
provisions hereof accelerating vesting on a Change of Control, (ii) tax matters (including
provisions (y) covering any applicable employee wage withholding requirements and (z) prohibiting
an election by the Holder under section 83(b) of the Code), 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 Restricted Stock Agreements need
not be identical.



     (c) Payment for Restricted Stock. The Committee shall determine the amount and form of any
payment for Stock received pursuant to a Restricted Stock Award, provided that in the absence of
such a determination, a Holder shall not be required to make any payment for Stock received
pursuant 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 the
Holder shall enter into a Restricted Stock Agreement setting forth each of the matters as the
Committee may determine to be appropriate. The terms and provisions of the respective Restricted
Stock Agreements need not be identical.



     (e) Acceleration. The Committee at any time may accelerate the time or conditions under which
the 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 the
payment of dividends with respect to such Restricted Stock Award, is conditioned in whole or in
part on the attainment of performance goals, such Forfeiture Restrictions shall not lapse and such
dividends shall not be paid unless and until the Committee certifies in writing that such
performance goals and any other conditions on the lapse of Forfeiture Restrictions or payment of
dividends have been satisfied.



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X. PERFORMANCE AWARDS




     (a) Performance Period. The Committee shall establish, with respect to and at the time of
grant of each Performance Award, a performance period over which the performance of the Holder
shall be measured.



     (b) Performance Awards. Each Performance Award shall have a maximum value established by the
Committee at the time of such Award.



     (c) Performance Measures. Prior to or upon the commencement of each performance period (or at
such later time as may be permitted for qualified performance-based compensation under Section
162(m) and the regulations thereunder), the Committee shall establish written performance goals for
each Performance Award granted to a Holder for such performance period. The performance goals
shall 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 goal
attainment.



     At the time of establishing the performance goals, the Committee shall specify (i) the formula
to be used in calculating the compensation payable to a Holder if the performance goals are
obtained, and (ii) the individual employee or class of employees to which the formula applies. The
Committee may also specify a minimum acceptable level of achievement of the relevant performance
goals, as well as one or more additional levels of achievement, and a formula to determine the
percentage of the Performance Award deemed to have been earned by the Holder upon attainment of
each such level of achievement, which percentage may exceed 100%. The performance goals and amount
of 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 any
calendar year shall not exceed $100,000.



     Notwithstanding the terms of any Performance Award, the Committee, in its sole and absolute
discretion, 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 measure
of achievement, a change in the employment status, position or duties of the Holder, unsatisfactory
performance 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 not
result 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 take
into account a Holder’s responsibility level, contributions, performance, potential, other Awards
and such other considerations as it deems appropriate.



     (e) Certification. Promptly after the date on which the necessary information for a
particular performance period becomes available, the Committee shall determine, and certify in
writing (with respect to each Holder who is a “covered employee”), the extent to which the



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Performance Award for such performance period has been earned, through the achievement of the
relevant performance goals, by each Holder for such performance period.



     (f) Payment. As soon as administratively feasible after the Committee has determined and
certified in writing (if required with respect to a “covered employee”) the extent to which a
Performance Award has been earned, but in no event later than March 15 of the calendar year
immediately following the calendar year in which the performance period ends, the Holder of a
Performance Award shall be entitled to receive payment of an amount, not exceeding the maximum
value of the Performance Award, based on the achievement of the performance measures for such
performance period, as determined by the Committee. Payment of a Performance Award may be made in
cash, Stock or a combination thereof, as determined by the Committee. Payment shall be made in a
lump sum. Any payment to be made in Stock shall be based on the Fair Market Value of the Stock on
the payment date.



     (g) Termination of Employment. A Performance Award shall terminate if the Holder does not
remain continuously in the employ of the Employer at all times during the applicable performance
period.



     (h) Agreements. At the time any Award is made under this Paragraph X, the Committee may
require the Holder to enter into a Performance Award Agreement with the Company setting forth each
of 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 respective
agreements need not be identical.



XI. PHANTOM STOCK AWARDS




     (a) Phantom Stock Awards. Phantom Stock Awards are rights to receive shares of Stock (or cash
in an amount equal to the Fair Market Value thereof), or rights to receive an amount equal to any
appreciation in the Fair Market Value of Stock (or portion thereof) over a specified period of
time, which vest over a period of time or upon the occurrence of an event (including without
limitation a Change of Control) as established by the Committee, without payment of any amounts by
the Holder thereof (except to the extent otherwise required by law) or satisfaction of any
performance criteria or objectives. Each Phantom Stock Award shall have a maximum value
established by the Committee at the time of such Award.



     (b) Award Period. The Committee shall establish, with respect to and at the time of each
Phantom Stock Award, a period over which or the event upon which the Award shall vest with respect
to the Holder.



     (c) Awards Criteria. In determining the value of Phantom Stock Awards, the Committee shall
take into account an employee’s responsibility level, performance, potential, other Awards and such
other considerations as it deems appropriate.



     (d) Payment. Following the end of the vesting period for a Phantom Stock Award, but in no
event later than March 15 of the calendar year immediately following the calendar year in which the
vesting period ends, the Holder of a Phantom Stock Award shall be entitled to



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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 lump
sum. Any payment to be made in Stock shall be based on the Fair Market Value of the Stock on the
payment date. Cash dividend equivalents may be paid during or after the vesting period with
respect to a Phantom Stock Award, as determined by the Committee.



     (e) Termination of Employment. A Phantom Stock Award shall terminate if the Holder does not
remain continuously in the employ of the Employer at all times during the applicable vesting
period, 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 the
Holder shall enter into a Phantom Stock Award Agreement setting forth each of the matters
contemplated hereby and, in addition, such matters as are set forth in Paragraph IX(b) as the
Committee may determine to be appropriate. The terms and provisions of the respective agreements
need not be identical.



XII. RECAPITALIZATION OR REORGANIZATION




     (a) The shares with respect to which Awards may be granted are shares of Stock as presently
constituted, but if, and whenever, prior to the expiration of an Award theretofore granted, the
Company shall effect a subdivision or consolidation by the Company, the number of shares of Stock
with respect to which such Award may thereafter be exercised or satisfied, as applicable, (i) in
the 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 a
reduction in the number of outstanding shares shall be proportionately reduced, and the exercise
price per share shall be proportionately increased.



     (b) If the Company recapitalizes or otherwise changes its capital structure, thereafter upon
any exercise or satisfaction, as applicable, of an Award theretofore granted the Holder shall be
entitled to (or entitled to purchase, if applicable) under such Award, in lieu of the number of
shares of Stock then covered by such Award, the number and class of shares of stock and securities
to 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 number
of shares of Stock then covered by such Award.



     (c) In the event of a Change of Control, all outstanding Awards shall immediately vest and
become exercisable or satisfiable, as applicable, and the Committee, in its discretion, may take
any other action with respect to outstanding Awards that it deems appropriate, which action may
vary among Awards granted to individual Holders; provided, however, that such action shall not
reduce the value of an Award. In particular, with respect to Options, the actions the Committee
may take upon a Change of Control include, but are not limited to, the following: (i) accelerating
the time at which Options then outstanding may be exercised so that such Options may be exercised
in full for a limited period of time on or before a specified date (before or after such Change of
Control) fixed by the Committee, after which specified date all unexercised Options and all rights
of Holders thereunder shall terminate, (ii) requiring the



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mandatory surrender to the Company by selected Holders of some or all of the outstanding
Options held by such Holders (irrespective of whether such Options are then exercisable) as of a
date, before or after such Change of Control, specified by the Committee, in which event the
Committee shall thereupon cancel such Options and the Company shall pay to each such Holder an
amount of cash per share equal to the excess, if any, of the Change of Control Value of the shares
subject to such Option over the exercise price(s) under such Options for such shares, (iii) make
such adjustments to Options then outstanding as the Committee deems appropriate to reflect such
Change of Control (provided, however, that the Committee may determine in its sole discretion that
no adjustment is necessary to Options then outstanding), or (iv) provide that the number and class
of shares of Stock covered by an Option theretofore granted shall be adjusted so that such Option
shall 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 the
terms of the agreement of merger, consolidation or sale of assets and dissolution if, immediately
prior to such merger, consolidation or sale of assets and dissolution, the Holder had been the
holder of record of the number of shares of Stock then covered by such Option. The provisions
contained in this paragraph shall not terminate any rights of the Holder to further payments
pursuant to any other agreement with the Company following a Change of Control. Notwithstanding
anything herein to the contrary, in the event of a Change of Control described in Paragraph
II(d)(ii), the Committee may determine, in its discretion, that the treatment of Awards as
described in this Paragraph shall apply only to Awards granted to employees, Directors or
consultants 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 in
capitalization occurring after the date of the grant of any Award and not otherwise provided for by
this Paragraph XII, any outstanding Awards and any agreements evidencing such Awards shall be
equitably adjusted as to the number and price of shares of Stock or other consideration subject to
such Awards, but only to the same extent that any equitable adjustment is made to shares of
outstanding Stock. In the event of any such change in the outstanding Stock, the aggregate number
of shares available under the Plan may be appropriately adjusted by the Committee, whose
determination shall be conclusive.



     (e) The existence of the Plan and the Awards granted hereunder shall not affect in any way the
right 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 its
business, any merger or consolidation of the Company, any issue of debt or equity securities ahead
of or affecting Stock or the rights thereof, the dissolution or liquidation of the Company or any
sale, lease, exchange or other disposition of all or any part of its assets or business or any
other corporate act or proceeding.



     (f) Any adjustment provided for in Subparagraphs (a), (b), (c) or (d) above shall be subject
to any required stockholder action.



     (g) Except as hereinbefore expressly provided, the issuance by the Company of shares of stock
of any class or securities convertible into shares of stock of any class, for cash, property, labor
or services, upon direct sale, upon the exercise of rights or warrants to subscribe



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therefor, or upon conversion of shares of obligations of the Company convertible into such
shares or other securities, and in any case whether or not for fair value, shall not affect, and no
adjustment by reason thereof shall be made with respect to, the number of shares of Stock subject
to 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 for
which Awards have not theretofore been granted. The Board shall have the right to alter or amend
the Plan or any part thereof from time to time; provided that, except as provided herein or in an
agreement governing an Award, no change in any Award theretofore granted may be made which would
impair the rights of the Holder without the consent of the Holder (unless such change is required
in order to cause the benefits under the Plan to qualify as performance-based compensation within
the meaning of section 162(m) of the Code, if applicable, and applicable interpretive authority
thereunder), 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 of
an Award, except as provided in Paragraph XII;



     (b) to change the class of employees eligible to receive Awards or materially increase the
benefits 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 Rule
16b-3; or



     (f) if such approval is required to comply with Rule 16b-3, if applicable, any rule
promulgated by the exchange on which Stock is tradable, or Sections 162(m) or 422 of the Code or
any successor provisions, if applicable.



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XIV. MISCELLANEOUS




     (a) No Right to An Award. Neither the adoption of the Plan by the Company nor any action of
the Board or the Committee shall be deemed to give an employee any right to be granted an Award to
purchase Stock, a right to a Stock Appreciation Right, a Restricted Stock Award, a Performance
Award or a Phantom Stock Award or any of the rights hereunder except as may be evidenced by an
Award 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 then
only to the extent and on the terms and conditions expressly set forth therein. The Plan shall be
unfunded. The Company shall not be required to establish any special or separate fund or to make
any 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 other
payment under this Plan shall be an unsecured claim against the general assets of the Company. The
Company may, but shall not be obligated to, acquire shares of Stock from time to time in
anticipation of its obligations under this Plan, but a Holder shall have no right in or against any
shares of Stock so acquired. All Stock shall constitute the general assets of the Company and may
be 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 any
employee any right with respect to continuation of employment with any Employer or (ii) interfere
in 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 pursuant
to any Award granted under the Plan at any time when the shares covered by such Award have not been
registered under the Securities Act of 1933 and such other state and federal laws, rules or
regulations as the Company or the Committee deems applicable and, in the opinion of legal counsel
for the Company, there is no exemption from the registration requirements of such laws, rules or
regulations available for the issuance and sale of such shares. Unless the Awards and Stock
covered by this Plan have been registered under the Securities Act of 1993, or the Company has
determined that such registration is unnecessary, each Holder exercising an Award under this Plan
may be required by the Company to give representation in writing that such Holder is acquiring such
shares for his or her own account for investment and not with a view to, or for sale in connection
with, the distribution of any part thereof. No fractional shares of Stock shall be delivered, nor
shall any cash in lieu of fractional shares be paid. The Company shall have the right to deduct in
connection with all Awards any taxes required by law to be withheld and to require any payments
required to enable it to satisfy its withholding obligations.



     (e) No Restriction on Corporate Action. Nothing contained in the Plan shall be construed to
prevent the Company, an Affiliate or any Subsidiary from taking any corporate action which is
deemed 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



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made under the Plan. No employee, beneficiary or other person shall have any claim against
the 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 or
the laws of descent and distribution and shall be exercisable during the Holder’s lifetime only by
such Holder or the Holder’s guardian or legal representative.



     (g) Beneficiary Designation. Each Holder may name, from time to time, any beneficiary or
beneficiaries (who may be named contingently or successively) to whom any benefit under the Plan is
to be paid in case of his or her death before he or she receives any or all of such benefit. Each
designation will revoke all prior designations by the same Holder, shall be in a form prescribed by
the Committee, and will be effective only when filed by the Holder in writing with the Committee
during his lifetime. In the absence of any such designation, benefits remaining unpaid at the
Holder’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 person
subject to Section 16 of the 1934 Act meet all of the requirements of Rule 16b-3. If any provision
of the Plan or any such Award would disqualify the Plan or such Award under, or would otherwise not
comply with, Rule 16b-3, such provision or Award shall be construed or deemed amended to conform to
Rule 16b-3.



     (i) Section 162(m). If the Company is subject to Section 162(m) of the Code, it is intended
that the Plan comply fully with and meet all the requirements of Section 162(m) of the Code so that
Awards may, if intended, constitute “performance-based” compensation within the meaning of such
section. If any provision of the Plan would disqualify the Plan or would not otherwise permit the
Plan to comply with Section 162(m) as so intended, such provision shall be construed or deemed
amended to conform to the requirements or provisions of Section 162(m); provided that no such
construction or amendment shall have an adverse effect on the economic value to a Holder of any
Award previously granted hereunder. With respect to any Restricted Stock Awards or Performance
Awards granted to a “covered employee,” if the lapsing of the Forfeiture Restrictions of such
Restricted Stock Awards, or the payment of such Performance Award, is contingent on the
satisfaction of performance goals, (i) such performance goals shall be established in writing by
the Committee not later than ninety (90) days after the commencement of the period of service to
which the performance goals relate; provided, however, that the performance goals must be
established before twenty-five percent (25%) of such period of service has elapsed, and (ii) the
Forfeiture Restrictions shall not lapse, and/or the Performance Award shall not be paid, unless the
shareholder 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 the
Board 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 or
resulting from any claim, action, suit, or proceeding to which he may be a party or in which he may
be involved by reason of any action taken or failure to act under the Plan and against and from any
and all amounts paid by him in settlement thereof, with the



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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. The
foregoing right of indemnification shall not be exclusive of any other rights or indemnification to
which such persons may be entitled under the Company’s Articles of Incorporation or Bylaws, as a
matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them
harmless.



     (k) Governing Law. This Plan shall be construed in accordance with the laws of the State of
Texas.



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     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 by
its proper officer thereunto duly authorized as of this
26th day of
January, 2007.



	 	 	 	 	 
	 	 	 
	 	By:  	/s/
George M. Lee 	 
	 	  	George M. Lee 	 
	 	  	President
and Chief Executive Officer 	 
	 




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