CAPITOL BANCORP LTD. RESTRICTED STOCK AGREEMENT
Exhibit 10(q)
THIS RESTRICTED STOCK AGREEMENT (this “Agreement”), is made effective as of the 1st
day of August, 2003, between Capitol Bancorp Ltd., a Michigan corporation (the “Corporation”) and
Xxxxxx X. Xxxx (the “Employee”) and is made pursuant and subject to the provisions of the Capitol
Bancorp Ltd. Management Incentive Plan, which is incorporated herein by reference, and any future
amendments thereto (the “Plan”), a copy of which is attached. All terms used herein that are
defined in the Plan shall have the same meanings given them in the Plan.
1. Award of Restricted Stock. The Corporation hereby awards to the Employee, subject
to the terms and conditions of the Plan and the provisions of this Agreement, 214,169 shares of
Common Stock of the Corporation (the “Restricted Stock”).
2. Terms and Conditions. The award of the Restricted Stock hereunder is subject to
the following terms and conditions:
(a) Contingent Vesting. The award of the Restricted Stock to the Employee is intended
to encourage the Employee to cause the operating earnings of the Corporation to grow by at least 5%
per calendar year. At each of the vesting dates set forth in paragraph 2(b), the Restricted Stock
will be eligible to vest only if the Corporation achieves a 5% annual growth in fully diluted
earnings per share based on operating income in at least one of the two preceding calendar years.
If the earnings growth requirement has not been met at any of the vesting dates set forth in
paragraph 2(b), all of the shares of the Restricted Stock eligible for vesting on that date shall
be cancelled.
(b) Restricted Period. Except as provided in paragraphs 2(a) and 3, the Restricted
Stock shall vest and become nonforfeitable in accordance with the schedule set forth below:
| 5% Earnings | Percent of | |||||||
| Date | Growth Requirement | Award Vested | ||||||
January 1, 2005 |
2004 vs. 2003 | 20 | % | |||||
| or | ||||||||
| 2003 vs. 2002 | ||||||||
January 1, 2006 |
2005 vs. 2004 | 20 | % | |||||
| or | ||||||||
| 2004 vs. 2003 | ||||||||
January 1, 2007 |
2006 vs. 2005 | 20 | % | |||||
| or | ||||||||
| 2005 vs. 2004 | ||||||||
| 5% Earnings | Percent of | |||||||
| Date | Growth Requirement | Award Vested | ||||||
January 1, 2008 |
2007 vs. 2006 | 20 | % | |||||
| or | ||||||||
| 2006 vs. 2005 | ||||||||
January 1, 2009 |
2008 vs. 2007 | 20 | % | |||||
| or | ||||||||
| 2007 vs. 2006 | ||||||||
The period from the date hereof until the shares of the Restricted Stock have become 100% vested
shall be referred to as the “Restricted Period.”
(c) Issuance of Certificates; Restrictive Legend. The stock certificate(s) evidencing
the Restricted Stock shall be issued and registered on the Corporation’s books and records in the
name of the Employee as soon as practicable following the date of this Agreement. The Corporation
shall retain physical possession and custody of each stock certificate representing the Restricted
Stock until such time as the Restricted Stock becomes vested in accordance with paragraph 2(b)
above. The Employee will deliver to the Corporation a stock power in substantially the form of
Exhibit A attached hereto, endorsed in blank, with respect to each award of the Restricted Stock.
Each stock certificate shall bear a restrictive legend in substantially the following form:
“The shares represented by this certificate are restricted and may be transferred
only in accordance with the Restricted Stock Agreement between Capitol Bancorp Ltd.
and Xxxxxx X. Xxxx, dated August 1, 2003.”
Upon the written request of the Employee following the vesting of any portion of the shares of
the Restricted Stock, the Corporation will promptly issue a stock certificate, without such
restrictive legend, with respect to the vested portion of the shares of the Restricted Stock
registered on the Corporation’s books and records in the name of the Employee. Following the
expiration of the Restricted Period, the Corporation will promptly issue a stock certificate,
without such restrictive legend, for any shares of the Restricted Stock that have vested and have
not been reissued without a restrictive legend as provided in the preceding sentence.
(d) Transferability. During the Restricted Period, the Employee shall not sell,
assign, transfer, pledge, exchange, hypothecate, or otherwise dispose of unvested shares of the
Restricted Stock. Upon receipt by the Employee of stock certificate(s) representing vested shares
without a restrictive legend pursuant to paragraph 2(c) above, the Employee may hold or dispose of
the shares represented by such certificate(s), subject to compliance with (i) the terms and
conditions of the Plan and this Agreement and (ii) applicable securities laws of the United States
of America and the State of Michigan.
(e) Shareholder Rights. Prior to any forfeiture of the shares of the Restricted Stock
and while such shares are restricted, the Employee shall, subject to the terms of this Agreement
and the restrictions of the Plan, have all rights of a shareholder with respect to the
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shares of the Restricted Stock awarded hereunder, including the right to receive dividends and
other distributions as and when declared by the Board of Directors of the Corporation and the right
to vote the shares of the Restricted Stock.
(f) Tax Withholding. The Corporation shall have the right to retain and withhold from
any award of the Restricted Stock, the amount of taxes required by any government to be withheld or
otherwise deducted and paid with respect to such award. At its discretion, the Corporation may
require the Employee receiving shares of the Restricted Stock to pay or otherwise reimburse the
Corporation in cash for any such taxes required to be withheld by the Corporation and withhold any
distribution in whole or in part until the Corporation is so paid or reimbursed. In lieu thereof,
the Corporation shall have the unrestricted right to withhold, from any other cash amounts due (or
to become due) from the Corporation to the Employee, an amount equal to such taxes required to be
withheld by the Corporation to reimburse the Corporation for any such taxes (or retain and withhold
a number of vested shares of the Restricted Stock, having a market value not less than the amount
of such taxes, and cancel in whole or in part any such shares so withheld, in order to reimburse
the Corporation for any such taxes).
3. Death; Disability; Retirement; Termination of Employment. The shares of the
Restricted Stock not yet vested shall become 100% vested and transferable in the event that the
Employee dies or becomes permanently and total disabled (within the meaning of Section 3(a) of that
certain employment agreement between the Employee and the Company dated effective March 13, 2003
(the “Employment Agreement”)) while employed by the Corporation or an affiliate during the
Restricted Period. In the event that the Employee terminates his employment with the Corporation
for Good Reason (as defined in Section 3(c) of the Employment Agreement), or is terminated by the
Corporation other than for cause (as defined in Section 3(b) of the Employment Agreement) or
disability, the shares of the Restricted Stock not yet vested shall become 100% vested and
transferable. In all events other than those previously addressed in this paragraph, if the
Employee ceases to be an employee of the Corporation or an affiliate, the Employee shall be vested
only as to that percentage of shares of the Restricted Stock which are vested at the time of the
termination of his employment and the Employee shall forfeit the right to the shares of the
Restricted Stock which are not yet vested on the termination date. Unvested shares of the
Restricted Stock that are forfeited shall be immediately transferred to the Corporation without any
payment by the Corporation, and the Corporation shall have the full right to cancel any evidence of
the Employee’s ownership of such forfeited shares or take any other action necessary to demonstrate
that the Employee no longer owns such forfeited shares automatically upon such forfeiture.
Following such forfeiture, the Employee shall have no further rights with respect to such forfeited
shares.
4. Change of Control or Capital Structure. Subject to any required action by the
shareholders of the Corporation, the number of shares of the Restricted Stock covered by this award
shall be proportionately adjusted and the terms of the restrictions on such shares shall be
adjusted as the Administrator shall determine to be equitably required for any increase or decrease
in the number of issued and outstanding shares of Common Stock of the Corporation resulting from a
stock split, reverse stock split, stock dividend, combination or reclassification of the Common
Stock, or any other increase or decrease in the number of issued shares of Common Stock effected
without receipt of consideration by the Corporation; provided, however, that
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conversion of any convertible securities of the Corporation shall not be deemed to have been
“effected without receipt of consideration.” Such adjustment shall be made by the Board, whose
determination in that respect shall be final, binding and conclusive. Except as expressly provided
herein, no issuance by the Corporation of shares of stock of any class, or securities convertible
into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made
with respect to, the number of shares of Common Stock subject to this Agreement. In the event of a
Change of Control (as such term is defined in Exhibit D of the Employment Agreement), the shares of
the Restricted Stock not yet vested shall become 100% vested and transferable. In the event of a
change in the Common Stock of the Corporation as presently constituted, which is limited to a
change of all or part of its authorized shares without par value into the same number of shares
with a par value, or any subsequent change into the same number of shares with a different par
value, the shares resulting from any such change shall be deemed to be the Common Stock within the
meaning of the Plan. The award of the Restricted Stock pursuant to the Plan and this Agreement
shall not affect in any way the right or power of the Corporation to make adjustments,
reclassifications, reorganizations or changes of its capital or business structure or to merge or
to consolidate or to dissolve, liquidate, sell or transfer all or any part of its business or
assets.
5. Governing Law. This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Michigan, except to the extent that federal law shall be
deemed to apply.
6. Conflicts. In the event of any conflict between the provisions of the Plan and the
provisions of this Agreement, the provisions of the Plan shall govern. All references herein to
the Plan shall mean the Plan as amended.
7. Employee Bound by Plan. The Employee hereby acknowledges receipt of a copy of the
Plan and agrees to be bound by all the terms and provisions thereof.
8. Binding Effect. Subject to the limitations stated herein and in the Plan, this
Agreement shall be binding upon and inure to the benefit of the legatees, distributees, and
personal representatives of the Employee and the successors of the Corporation.
IN WITNESS WHEREOF, this Agreement has been made effective as of the date first set forth
above.
| THE EMPLOYEE: | /s/ Xxxxxx X. Xxxx | ||||
| Xxxxxx X. Xxxx | |||||
| THE CORPORATION: | CAPITOL BANCORP LTD., | ||||
| a Michigan corporation | |||||
| By: | /s/ Xxx X. Xxxxxxxxxxx | ||||
| Xxx X. Xxxxxxxxxxx | |||||
| Its: | Chief Financial Officer | ||||
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Exhibit 10(q)
EXHIBIT A
FOR VALUE RECEIVED I, Xxxxxx X. Xxxx, hereby sell, assign and transfer unto CAPITOL BANCORP
LTD., a Michigan corporation (the “Corporation”), Two Hundred Fourteen Thousand One Hundred
Sixty-nine (214,169) shares of the Common Stock of Capitol Bancorp Ltd. standing in my name on the
books of the Corporation represented by Certificate Nos. CBL 11522, CBL 11523, CBL 11524, CBL 11525
and CBL 11526 herewith and do hereby irrevocably constitute and appoint Xxxxx X. English, Esq., or
his designee or successor, attorney to transfer the said stock on the books of the Corporation with
full power of substitution in the premises.
Dated: August 1, 2003 |
||
/s/ Xxxxxx X. Xxxx |
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