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EXHIBIT 10.7
INCENTIVE STOCK OPTION AGREEMENT
PURSUANT TO THE
MICHIGAN COMMUNITY BANKCORP, LTD.
1998 EMPLOYEE STOCK OPTION PLAN
THIS AGREEMENT, dated this _________ day of ______________, 19___, is
made between MICHIGAN COMMUNITY BANKCORP, LTD. (the "Corporation") and
_________________________ (the "Optionee").
WHEREAS, the Optionee is now in the employ of the Corporation or its
Subsidiary, as defined in the Michigan Community Bankcorp, Ltd. 1998 Employee
Stock Option Plan (the "Plan"), and the Corporation desires to have the Optionee
remain in such employ and to afford the Optionee the opportunity to acquire
stock ownership in the Corporation so that the Optionee may have a direct
proprietary interest in the Corporation's success; and
WHEREAS, the Corporation and its shareholders have approved the Plan,
pursuant to which the Corporation may, from time to time, enter into stock
option agreements with certain of its Eligible Employees, as therein defined.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements hereinafter set forth, the parties hereto hereby
mutually covenant and agree as follows.
1. GRANT OF OPTION
Subject to the terms and conditions set forth herein, the Corporation
hereby grants to the Optionee during the period commencing on the day after the
Corporation's Common Stock (the "Stock") is registered with the Securities and
Exchange Commission related to its initial public offering (the "Operative
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Date") and ending on the earlier of the applicable date specified in Section 4
or the date ten (10) years from the date of this Agreement (the "Option Period")
Incentive Stock Options to purchase from the Corporation, at a price of per
share equal to the Initial Offering Price (as defined in the Plan), up to but
not exceeding in the aggregate __________ shares of the Corporation's Common
Stock ("Stock"), such number being subject to adjustment as provided in the
Plan. In the event the Corporation shall not have caused the Stock to be
registered with the Securities and Exchange Commission for purposes of its
initial public offer on or before twelve (12) months from the date hereof, the
grant of the option hereunder shall be terminated and ineffectual ab initio.
2. EXERCISE OF OPTION
Subject to such other limitations as may be provided by the Committee
(as defined in the Plan) or the Corporation's Board of Directors, the Option
granted in Section 1 of this Agreement may be exercised as follows:
(a) The Optionee shall have the right hereunder to purchase from the
Corporation the aggregate number of shares of Stock optioned hereunder on or
after the following dates in cumulative fashion as follows:
(1) On and after the Operative Date up to seventy (70%)
percent of the shares optioned hereunder;
(2) On and after the first anniversary of the Operative
Date, up to eighty-five (85%) percent of the shares optioned hereunder;
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(3) On and after the second anniversary of the Operative
Date, up to ninety-five (95%) percent of the shares
optioned hereunder; and
(4) On and after the third anniversary of the Operative
Date, all shares optioned hereunder.
(b) To the extent not exercised, installments shall accumulate and be
exercisable by the Optionee, in whole or in part, in any subsequent year
included in the Option Period but not later than the expiration of the Option
Period.
(c) No less than one thousand (1,000) shares may be purchased upon
any one exercise of the Option granted hereby, unless the number of shares
purchased at such time is the total number of shares in respect of which the
Option hereby granted is then exercisable.
(d) In no event shall any Option granted hereby be exercisable for a
fractional share. (e) From time to time, in its discretion, the Committee may
offer the Optionee the right to cancel any Options granted hereunder in exchange
for such consideration as the Committee shall determine.
(f) Notwithstanding anything contained in this Agreement to the
contrary, upon a Change in Control (as defined in the Plan), any outstanding
Option granted hereunder immediately shall become exercisable in full,
regardless of any installment provision applicable to such Option; provided,
however, that to the extent that the acceleration of a grant is deemed to
constitute a "golden parachute payment" under Section 280G of the Code (as
defined in the Plan) and such payment, when aggregated with other golden
parachute payments to the Optionee results in an "excess golden parachute
payment" under Section 280G of the Code, any
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accelerated payment under this Section 2(f) shall be reduced to the
highest permissible amount that shall not subject the Optionee to an excess
golden parachute excise tax under Section 4999 of the Code and shall entitle the
Corporation to retain its full compensation tax deduction for the payment.
3. METHOD OF EXERCISING OPTION AND PAYMENT OF OPTION PRICE
(a) The Option hereby granted shall be exercised by the Optionee by
delivering to the Secretary of the Corporation, from time to time, on any
business day (the "Exercise Date"), written notice specifying the number of
shares the Optionee then desires to purchase (the "Notice"), and cash,
certified check, bank draft or money order to the order of the Corporation
for an amount in United States Dollars equal to the option price for the number
of shares specified in the Notice (the "Total Option Price"). In lieu of such
form of payment, an Optionee may pay all or part of such purchase price, in
whole or in part, by tendering shares of the Corporation's Stock, duly endorsed
for transfer (or with duly executed stock powers attached). Shares of the Stock
surrendered upon exercise shall be valued at Fair Market Value (as defined in
the Plan) on the last trading date immediately preceding the date on which the
certificate(s) for such shares, duly endorsed for transfer or accompanied by
appropriate stock powers, are surrendered to the Corporation. The Total Option
Price shall be delivered to the Secretary of the Corporation with the Notice
not later than the end of the first business day after the Exercise Date.
(b) The Notice, at the option of the Corporation, shall also state the
following:
I hereby represent and warrant that I am purchasing these shares
solely with a view to bona fide investment for my own individual
account and not with any present
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intention to resell the same. I further represent and warrant that I
will dispose of said shares only in compliance with the applicable
federal and state laws or regulations relating to the sale of
securities.
(c) Within five (5) business days after the Exercise Date, the
Corporation shall, subject to the receipt of withholding tax, if any, issue to
the Optionee the number of shares with respect to which such Option shall be so
exercised, and shall deliver to the Optionee a certificate (or certificates)
therefor. The certificate(s) shall bear the following legend:
THIS COMMON STOCK HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT") OR APPLICABLE STATE SECURITIES LAW AND MAY
BE OFFERED, SOLD OR TRANSFERRED ONLY IF REGISTERED PURSUANT TO THE
PROVISIONS OF THE ACT OR APPLICABLE STATE SECURITIES LAW OR IF THE
PROVISIONS OF RULE 144(K) UNDER THE ACT ARE APPLICABLE OR IF, IN THE
OPINION OF COUNSEL SATISFACTORY TO THE CORPORATION, AN EXEMPTION FROM
SUCH REGISTRATION IS AVAILABLE.
4. TERMINATION
The Options granted hereby shall terminate and be of no force or effect
upon the expiration of ten (10) years from the date of this Agreement, unless
terminated prior to such time as provided below. If the Optionee ceases
employment with the Corporation, the Optionee's Options shall terminate or be
exercisable as follows:
(a) Termination Before Option Becomes Exercisable. If, prior to the
date that an Option first becomes exercisable, an Optionee's employment with the
Corporation is terminated for any reason other than a Change in Control (as
defined in the Plan), the Options granted hereby shall terminate as of the date
of termination.
(b) Termination After Option Becomes Exercisable. If an Optionee
terminates employment with the Corporation after an
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Option first becomes exercisable, such Option may be exercised, to the extent
that such Option was exercisable on the date of termination of employment, until
the earlier of three (3) months after such termination or the original
expiration date of the Option.
(c) Disability. Upon the Optionee's disability (as that term is defined
in the Plan), the Options granted hereby are exercisable by the Optionee within
twelve (12) months (or such shorter time as may be provided by law or the terms
of the Options as specified in Section 1) from the date of the Optionee's
Disability. This Section 4(c) shall apply only to the Optionees who are
Employees (as defined in the Plan) and only to the extent that the Option was
exercisable on the date of Disability.
(d) Death. If the Optionee dies while in the employment of the
Corporation, the Optionee's estate, personal representative or beneficiary (as
applicable) shall have the right to exercise the Options granted hereby within
twelve (12) months from the date of the Optionee's death (or within such shorter
time as may be provided by law or the terms of the Options as specified in
Section 1) to the extent that the Option was exercisable on the date of the
Optionee's death.
Any determination made by the Committee with respect to any matter
referred to in this Section 4 shall be final and conclusive on all persons
affected thereby. Employment by the Corporation shall be deemed to include
employment of the Optionee by, and to continue during any period in which the
Optionee is in the employ of, any Subsidiary (as defined in the Plan).
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5. OPTIONEE
Whenever the word "Optionee" is used in any provision of this Agreement
under circumstances where the provision should logically be construed to apply
to the estate, personal representative or beneficiary to whom this Option may be
transferred by will or by the laws of descent and distribution, the word
"Optionee" shall be deemed to include such person.
6. ASSIGNABILITY
Except as otherwise provided herein, this Option is not transferable by
the Optionee otherwise than by will or the laws of descent and distribution and
is exercisable during the Optionee's lifetime only by the Optionee. No
assignment or transfer of this Option, or of the rights represented thereby,
whether voluntary or involuntary, by operation of law or otherwise, except by
will or the laws of descent and distribution, shall vest in the assignee or
transferee any interest or right herein whatsoever, but immediately upon any
attempt to assign or transfer this Option, the same shall terminate and be of no
force or effect.
7. RIGHTS AS A SHAREHOLDER
The Optionee shall not be deemed for any purpose to be a shareholder of
the Corporation with respect to the shares represented by this Option until this
Option shall have been exercised, payment and issue shall have been made as
herein provided, and the Optionee's name shall have been entered as a
shareholder of record on the books of the Corporation.
8. NO ASSURANCE OF EMPLOYMENT
The existence of this Option shall not be deemed to grant the Optionee
any right regarding continued employment by the Corporation or any Subsidiary,
to change any terms or conditions
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of employment of Optionee or to waive any claim which the Corporation or any
Subsidiary have against Optionee.
9. THE CORPORATION'S RIGHTS
The existence of this Option shall not affect in any way the right or
power of the Corporation or its shareholders to make or authorize any or all
adjustments, recapitalizations, reorganizations or other changes in the
Corporation's capital structure or its business, or any merger or consolidation
of the Corporation, or any issue of bonds, debentures, preferred or other stocks
with preference ahead of or convertible into, or otherwise affecting the Stock
of the Corporation or the rights thereof, or the dissolution or liquidation of
the Corporation, or any sale or transfer of all or any part of the Corporation's
assets or business, or any other corporate act or proceeding, whether of a
similar character or otherwise.
10. RECAPITALIZATION; MERGER AND CONSOLIDATION
(a) If the shares of the Corporation's Stock as a whole are increased,
decreased or changed into or exchanged for a different number or kind of shares
or securities of the Corporation, whether through merger, consolidation,
reorganization, recapitalization, reclassification, stock dividend, stock split,
combination of shares, exchange of shares, change in corporate structure or the
like, an appropriate and proportionate adjustment shall be made in the number
and kinds of shares of Stock subject to the Plan and in the number, kinds and
per share exercise price of shares subject to any unexercised Options or
portions thereof granted prior to any such change. Any such adjustment in an
outstanding Option, however, shall be made without a change in the total price
applicable to the unexercised portion for the Option, but with a corresponding
adjustment in
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the price for each share of Stock covered by the Option. No fractional shares
shall be issued as a result of any adjustment.
(b) Upon dissolution or liquidation of the Corporation, or upon
reorganization, merger or consolidation in which the Corporation is not the
surviving corporation or upon the sale of substantially all of the property of
the Corporation to another company, the Plan and the Options issued thereunder
shall terminate, unless provision is made in connection with such transaction
for the assumption of Options theretofore granted or the substitution of such
Options of new options of the successor employer company or a parent or
subsidiary thereof, with appropriate adjustment as to the number and kinds of
shares and the per share exercise prices. In the event of such termination, all
outstanding Options shall be exercisable in full for at least thirty (30) days
prior to the termination date whether or not otherwise exercisable during such
period but not later than the date the Option otherwise would expire.
11. PREEMPTION BY APPLICABLE LAWS OR REGULATIONS
Anything in this Agreement to the contrary notwithstanding, if, at any
time specified herein for the issuance of shares to the Optionee, any law,
regulation or requirements of any governmental authority having appropriate
jurisdiction shall require either the Corporation or the Optionee to take any
action prior to or in connection with the shares of Stock then to be issued,
sold or repurchased, the issue, sale or repurchase of such shares of Stock shall
be deferred until such action shall have been taken.
12. RESOLUTION OF DISPUTES
Any dispute or disagreement which shall arise under, as a result of or
pursuant to this Agreement shall be determined by
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the Committee in its absolute and uncontrolled discretion, and any such
determination or any other determination by the Committee under or pursuant to
this Agreement and any interpretation by the Committee of the terms of this
Agreement shall be final, binding and conclusive on all persons affected
thereby.
13. AMENDMENTS
The Board (as defined in the Plan) shall have the right, in its
absolute and uncontrolled discretion, to alter or amend this Agreement, from
time to time, in any manner, for the purpose of promoting the objectives of the
Plan, but no amendment or modifications, without the approval of the
shareholders of the Corporation, shall (a) materially increase the benefits
accruing to Plan Participants, (b) increase the amount of Stock for which such
grants and awards may be made under the Plan, except as permitted under Section
8 of the Plan, or (c) change the provisions relating to the eligibility of
individuals to whom grants and awards may be made under the Plan. No amendment,
modification or termination of the Plan shall in any manner affect any Option
granted under the Plan without the consent of the individual holding the Option.
14. NOTICE
Any notice which either party hereto may be required or permitted to
give to the other shall be in writing and may be delivered personally or by
mail, postage prepaid, addressed as follows: To the Corporation at
__________________________________ ___________________________________,
Attention: Office of the Secretary) or at such other address as the Corporation,
by notice to the Optionee, may designate in writing from time to time; to the
Optionee, at his or her address as shown on the records of
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the Corporation or at such other address as the Optionee, by notice to the
Secretary of the Corporation, may designate in writing from time to time.
15. TAX WITHHOLDING
The Corporation or a Subsidiary shall have the right to deduct from any
payment hereunder any federal, state, local or employment taxes which it deems
are required by law to be withheld, or require the Optionee to remit sufficient
funds to satisfy applicable withholding upon the exercise of an Option. At the
request of the Optionee, or as required by law, such sums as may be required for
the payment of any estimated or accrued income tax liability may be withheld and
paid over to the governmental entity entitled to receive the same. An Optionee
may make a written election to tender previously-acquired shares of Stock or
have shares of Stock withheld from the exercise, provided that the shares have
an aggregate Fair Market Value sufficient to satisfy, in whole or in part, the
applicable withholding taxes.
16. FRACTIONAL SHARES
Any fractional shares concerning this Option shall be eliminated at the
time of exercise by rounding down for fractions of less than one-half (1/2) and
rounding up for fractions of equal to or more than one-half (1/2). No cash
settlements shall be made with respect to fractional shares eliminated by
rounding.
17. GOVERNING LAW
All matters relating to this Agreement shall be governed by the laws of
the State of Michigan, without regard to the principles of the conflict of laws,
except to the extent preempted by the laws of the United States.
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18. CONSTRUCTION
This Agreement has been entered into in accordance with the terms of
the Plan, and wherever a conflict may arise between the terms of this Agreement
and the terms of the Plan, the terms of the Plan shall control.
19. QUALIFIED NATURE OF AGREEMENT
This Agreement is intended to be an agreement concerning a stock option
arrangement which is qualified under Section 422 of the Code (as defined in the
Plan), and this Agreement shall be so construed.
20. GENERAL
The Corporation shall at all times during the term of this Option
reserve and keep available such number of shares of Stock as will be sufficient
to satisfy the requirements herein, shall pay all original issue and transfer
taxes with respect to the issue and transfer of shares pursuant hereto and all
other fees and expenses necessarily incurred by the Corporation in connection
therewith, and will, from time to time, use its best efforts to comply with all
laws and regulations which, in the opinion of counsel for the Corporation, shall
be applicable thereto.
21. REGULATORY COMPLIANCE.
No Stock shall be issued hereunder until the Corporation has received
all necessary regulatory approvals and has taken all necessary steps to
assurance compliance with federal and state securities laws or has determined to
its satisfaction and the satisfaction of its counsel that an exemption from the
requirements of the federal and applicable state securities are available.
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22. INCORPORATION OF PLAN
This Agreement is entered into under the applicable provisions of the
Plan which is attached hereto and made a part hereof.
IN WITNESS WHEREOF, the Corporation has caused this Agreement to be
executed by its duly authorized officer, and the Optionee has hereunto set the
Optionee's hand and seal, all on the date and year first above written.
MICHIGAN COMMUNITY BANKCORP, OPTIONEE:
LTD.
By:_________________________ __________________________
Its____________________
Date:_______________________ Date:_____________________
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