**Exhibit 10.26****BROOKE CAPITAL CORPORATION****2007 BROOKE CAPITAL CORPORATION EQUITY INCENTIVE PLAN****RESTRICTED SHARES AGREEMENT**     This Restricted Shares Agreement (“**Agreement**”) is entered into by and between BROOKE CAPITALCORPORATION, a Kansas corporation (the “**Company**”), and the recipient named below (the “**Recipient**”).     WHEREAS, in accordance with the Company’s 2007 BROOKE CAPITAL CORPORATION EQUITY INCENTIVEPLAN (the “**Plan**”), the Recipient has been selected by the Compensation Committee under the Plan(the “**Committee**”) to receive the following award under the Plan of Restricted Shares, defined inthe Plan to mean shares of the Company’s Common Stock issued to a recipient thereunder subject tosuch terms and conditions, including, without limitation, forfeiture or resale to the Company, andto such restrictions against sale, transfer or other disposition, as the Committee may determine atthe time of issuance:Date of Grant of Restricted Shares: August 15, 2007Number of Restricted Shares awarded: 10,000Vesting Schedule (Manner in which restrictions on Restricted Shares lapse):The Restricted Shares shall vest in one-third annual increments beginning on the firstanniversary of the Date of Grant specified above, meaning that one-third of the number ofRestricted Shares specified above (rounded down to the nearest whole number) shall vest (no longerbe subject to forfeiture and the restrictions set forth in Exhibit 1 hereto) on August 15 of eachof 2008, 2009, and 2010, subject to the terms of Exhibit 1 attached hereto and by this referenceincorporated herein. The foregoing notwithstanding, the Restricted Shares shall vest immediatelyupon (i) the sale of all or substantially all of the assets of the Company or (ii) the sale byBrooke Corporation of all of its Company Common Stock; and     WHEREAS, the Recipient recognizes Awards made under the Plan are subject to certainconditions, restrictions and risk of forfeiture;     NOW, THEREFORE, in consideration of the foregoing, the premises and the mutual covenants andagreements set forth herein, the parties hereby agree to the terms and conditions of the Plan, asthe same may be amended from time to time, and the terms, conditions and mutual covenants as setforth in Exhibit 1 attached hereto and made a part hereof in connection with the award ofRestricted Shares set forth above.     The parties hereto have executed this Agreement effective as of the Date of Grant.         RECIPIENT:   BROOKE CAPITAL CORPORATION           WILLIAM R. MORTON, JR.                 (Signature of Recipient)                           William R. Morton, Jr.   By: ROBERT D. ORR           (Printed or Typed Name of Recipient)     Robert D. Orr, President                     ###-##-####                 (Social Security Number)        
 

 
BROOKE CAPITAL CORPORATION2007 BROOKE CAPITAL CORPORATION EQUITY INCENTIVE PLANRESTRICTED SHARES AGREEMENT — **EXHIBIT 1**I. RESTRICTED SHARES     (A) Issuance of Shares; Delivery of Shares.     (1) Restricted Shares (the “**Shares**”) issued under the Plan shall be held by the Company, orits transfer agent or other designee, and shall be subject to forfeiture by or delivery to theRecipient as set forth in this Exhibit 1 to the Agreement. Shares shall be considered to be held bythe Company for purposes of Section I(E) until such time as the Shares vest in accordance with theterms of the vesting schedule set forth in the Agreement to which this Exhibit 1 applies. Definedterms in such Agreement shall also apply to this Exhibit 1.     (2) Any Shares to be delivered to the Recipient by the Company in accordance with the terms ofthe Plan shall be delivered free of restrictions in certificate form, unless otherwise requested bythe Recipient and approved by the Company.     (B) Dividends and Voting Rights. During the time that the Company, or its transfer agent orother designee, continues to hold any Shares subject hereunder to forfeiture by (and delivery to)the Recipient, the Recipient shall be entitled to receive any dividends paid with respect to suchShares and to vote such Shares on any matters submitted by the Company to its shareholders.     (C) Transfer Restrictions.     (1) During the period that Shares issued under the Plan are held by the Company hereunder fordelivery to the Recipient, such Shares and the rights and privileges conferred shall not betransferred, assigned, pledged, or hypothecated in any way (whether by operation of law orotherwise) and shall not be subject to sale under execution, attachment or similar process. Uponany attempt, contrary to the terms hereof, to transfer, assign, pledge, hypothecate, or otherwiseso dispose of such Shares or any right or privilege conferred hereby, or upon any attempted saleunder any execution, attachment, or similar process upon such Shares or the rights and privilegeshereby granted, then and in any such event this Agreement and the rights and privileges herebygranted shall, except as provided in Section II(K), immediately terminate. Immediately after suchtermination, the Recipient’s rights to delivery of such Shares shall forfeit and the Recipienthereby authorizes the Company and its stock transfer agent to cause the delivery, transfer andconveyance of such Shares to the Company.     (2) If at any time counsel for the Company determines that qualification of the Shares underany state or federal securities law, or the consent or approval of any governmental regulatoryauthority, is necessary or desirable as a condition of the transfer of such Shares (including asale, assignment, pledge, grant of a security interest in respect of, attachment, or disposal ofthe Shares in any manner, by operation of law or otherwise) or offer to transfer such Shares, theRecipient shall not transfer or offer to transfer such Shares, in whole or in part, and any suchattempted transfer or offer to transfer will be void and of no effect, unless and until suchqualification, consent, or approval shall have been effected or obtained free of any conditionssuch counsel deems unacceptable.     (D) Legend. While any Shares are held by the Company or its transfer agent or other designeeand subject to forfeiture by or delivery to the Recipient, such Shares shall be subject to, and anycertificate or certificates representing such Shares shall contain, the following restrictivetransfer legend:
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“THE TRANSFERABILITY OF THIS CERTIFICATE AND THE SHARES OF STOCK REPRESENTEDHEREBY ARE SUBJECT TO THE TERMS ANDCONDITIONS (INCLUDING FORFEITURE) OF THE 2007 BROOKE CAPITAL CORPORATION EQUITYINCENTIVE PLAN OF BROOKE CAPITAL CORPORATION AND AN AGREEMENT ENTERED INTO BETWEENTHE REGISTERED OWNER AND BROOKE CAPITAL CORPORATION. COPIES OF SUCH PLAN ANDAGREEMENT ARE ON FILE WITH THE SECRETARY OF BROOKE CAPITAL CORPORATION.”     (E) Forfeiture and Return of Shares. On the date the Recipient ceases for whatever reason tobe either (i) an employee of the Company or one of its “**subsidiary corporations**,” as such term isdefined in Section 424(f) of the Internal Revenue Code (an “**Employee**”) and is not immediatelythereafter and continuously employed as a regular active Employee of the Company or another suchsubsidiary corporation of the Company or (ii) a director of the Company or any of its subsidiarycorporations (“**Last Day of Affiliation**”), all Shares held on such Last Day of Affiliation by theCompany, or its transfer agent or other designee, shall be forfeited by the Recipient and theRecipient hereby authorizes the Company and its stock transfer agent to cause the delivery,transfer and conveyance of such Shares to the Company. Thereafter, this Agreement shall terminateand the Company and the Recipient shall, except as provided in Section II(K), have no furtherrights or obligations hereunder.     (F) Withholding Taxes.     (1) Except with respect to those Shares for which an election under Section 83(b) of theInternal Revenue Code **(“8****3(b)****Election”)**has been made by Recipient, on the date any federal,state, local or foreign taxes are required to be withheld by the Company or the Recipient’semployer in connection with Shares awarded pursuant to the Plan (except dividends paid with respectto the Shares), the Recipient shall make an irrevocable election to (a) pay to the Company in cashthe amount of any such tax withholding obligations or (b) have the Company withhold a portion ofsuch Shares to satisfy all or part of any such tax withholding obligations, with the value of eachsuch withheld Share equal to the fair market value of Common Stock on the date the tax withholdingis required to be made. The Recipient must make and deliver such irrevocable election to theCompany in writing within five business days after the date the tax withholding obligations arise,or such shorter time period as the Company may require (the “**Delivery Deadline**”). Any such electionto make a payment to the Company in the amount of the tax withholding obligations must includepayment. If the election is not made on or before the Delivery Deadline or if the election to makea payment to the Company in the amount of all or part of the tax withholding obligations is timelymade but does not include payment, the Company will withhold Shares to satisfy all of any such taxwithholding obligations, with the value of each such withheld Share equal to the fair market valueof Common Stock on the date the tax withholding is required to be made. If only whole Shares may bewithheld to satisfy the tax withholding obligations, the Company will round up to the closest wholeshare necessary to completely satisfy the tax obligations. The dollar amount of any differencebetween the amount required to be withheld and the amount actually withheld will be credited asadditional federal tax withholdings on the Recipient’s Form W-2 for the year in which theobligations arise. Notwithstanding the foregoing, the Company, in its sole discretion, may requirethe Recipient to pay to the Company in cash the amount of tax required to be withheld in lieu ofpermitting or causing the Company to withhold Shares to satisfy the tax withholding obligation, ifthe Company determines that withholding of Shares will result in the violation of any state orfederal securities law by the Recipient or by the Company or any of its subsidiaries, or requirethe Recipient to disgorge any profits associated with an acquisition or disposition of CommonStock.     (2) With respect to those Shares for which an 83(b) Election has been made by the Recipient,the Recipient shall pay to the Company the amount of any federal, state, local or foreign taxesrequired to be withheld by the Company or the Recipient’s employer as a result of making the 83(b)Election promptly after such election has been made.
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     (3) On the date any federal, state, local or foreign taxes are required to be withheld by theCompany or the Recipient’s employer in connection with dividends paid with respect to any Sharesthat have not been delivered to the Recipient pursuant to Section I(A)and with respect to which an83(b) Election has not been made, the Company shall withhold the amount of such tax obligationsfrom suchdividend payment or instruct the Recipient’s employer to withhold such amount from the Recipient’snext payment(s) of wages. The Recipient authorizes the Company to so instruct the Recipient’semployer and authorizes the Recipient’s employer to make such withholdings from payment(s) of wagesif the Company does not withhold the tax obligations from the dividend payments.II. MISCELLANEOUS     (A) No Employment Contract. This Agreement does not confer on the Recipient any right tocontinued employment for any period of time, is not an employment contract, shall not interferewith or restrict in any manner the rights of the Company or any of its subsidiary corporations,which are hereby exclusively reserved, to discharge the Recipient at any time for any reasonwhatsoever with or without cause, and shall not in any manner modify any effective contract ofemployment between the Recipient and the Company or any subsidiary corporation of the Company.     (B) No Right to Future Awards. The parties acknowledge that this Agreement does not confer onthe Recipient any right or guarantee to future awards under the Plan. The Committee shall retainfull authority and discretion to make determinations regarding eligibility for awards under thePlan, including the types, sizes, terms and conditions of awards granted under the Plan. TheCompany expressly reserves the right to change, modify or amend the terms and conditions of anyfuture awards of grants under the Plan.     (C) Adjustment of Shares. In the event that the outstanding shares of the Company’s CommonStock subject to the award of Restricted Shares are changed into or exchanged for a differentnumber or kind of shares of the Company or other securities of the Company by reason of merger,consolidation, recapitalization, reclassification, stock split, stock dividend or combination ofshares, the Board of Directors of the Company shall make an appropriate and equitable adjustment inthe number and kind of shares of such Common Stock as to which the award of Restricted Shares, orportions thereof then held by the Company in accordance with this Agreement (i.e., Shares not yetdelivered), shall be subject, to the end that after such event the Recipient’s proportionateinterest shall be maintained as close as possible to the Recipient’s interest before the occurrenceof such event. Any such adjustment made by the Committee shall be final and binding upon theRecipient, the Company and all other interested persons.     (D) Merger, Consolidation, Reorganization, Liquidation, etc. If the Company shall become aparty to any corporate merger, consolidation, major acquisition of property for stock,reorganization, or liquidation, the Board of Directors shall, acting in its absolute and solediscretion, make such arrangements, which shall be binding upon the Recipient of Shares not yetdelivered, for the substitution of a new award or other contractual rights with regard to thisaward.     (E) Interpretation and Regulations. The Committee shall have full power and authority toconstrue, interpret and administer the Plan and, subject to the powers in the Plan specificallyreserved to the Board of Directors of the Company and subject to any other provisions of the Plan,to make determinations which shall be final, conclusive and binding upon all persons including,without limitation, the Company, the shareholders of the Company, the Board of Directors, theRecipient and any persons having any interest in any awards which may be granted under the Plan.The Committee shall have the sole power to determine, solely for purposes of the Plan and thisAgreement, the date of and circumstances which shall constitute a cessation or termination ofemployment and further to determine, solely for purposes of the Plan and this Agreement, whatconstitutes continuous employment with respect to the delivery of Shares under the Plan (exceptthat absence on leave approved by the Committee or
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transfers of continuous employment among thesubsidiary corporations of the Company shall not be considered an interruption of continuousemployment for any purpose under the Plan).     (F) Waiver. The failure of the Company to enforce at any time any terms, covenants orconditions of this Agreement shall not be construed to be a waiver of such terms, covenants orconditions or of any other provision. Any waiver or modification of the terms, covenants orconditions of thisAgreement shall only be effective if reduced to writing and signed by both Recipient and an officerof the Company.     (G) Notices. Any notice to be given to the Company or election to be made under the terms ofthis Agreement shall be addressed to the Company (Attention: Human Resources Department) at 10950Grandview Drive, Suite 600, Overland Park, KS 66210, or at such other address as the Company mayhereafter designate in writing to the Recipient. Any notice to be given to the Recipient shall beaddressed to the Recipient at the last-known residence address of the Recipient contained in theRecipient’s personnel file or at such other address as the Recipient may hereafter designate inwriting to the Company. Any such notice shall be deemed to have been duly given when delivered byhand delivery (to the Human Resources Department, if delivered by the Recipient, and to theRecipient, if delivered by the Company) or deposited in the United States mails via regular orcertified mail, addressed as aforesaid, postage prepaid.     (H) Choice of Law. This Agreement shall be governed by and construed and enforced inaccordance with the laws of the State of Kansas without reference to principles of conflicts oflaws.     (I) Headings. The section headings herein are for convenience only and shall not be consideredin construing this Agreement.     (J) Amendment. No amendment, supplement, or waiver to this Agreement is valid or bindingunless in writing and signed by both parties.     (K) Survival. Sections I(C), I(E), I(F), II(A), II(B), II(E), II(F), II(G), II(H), and II(J)and this Section II(K) shall survive any termination of this Agreement and shall be applicable toany Shares delivered to the Recipient pursuant to the terms of the Plan.     (L) Execution of Agreement. This Agreement shall not be enforceable by either party, andRecipient shall have no rights with respect to the Shares, unless and until (1) this Agreement issigned by Recipient and on behalf of the Company by an officer of the Company, provided that thesignature by such officer of the Company on behalf of the Company may be a facsimile or stampedsignature, and (2) returned to the Company.
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