Exhibit 10(q)
CAPITOL BANCORP LTD.
RESTRICTED STOCK AGREEMENT
     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 Joseph D. Reid (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        

 

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                      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 Joseph D. Reid, 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/ Joseph D. Reid           Joseph D. Reid
 
        THE CORPORATION:   CAPITOL BANCORP LTD.,     a Michigan corporation
 
       
 
  By:   /s/ Lee W. Hendrickson
 
       
 
      Lee W. Hendrickson
 
  Its:   Chief Financial Officer

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Exhibit 10(q)
EXHIBIT A
     FOR VALUE RECEIVED I, Joseph D. Reid, 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 Brian K.
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/ Joseph D. Reid
   
 
Joseph D. Reid