exhibit10_2.htm


    EXHIBIT
10.2

       

      Tax Separation
Agreement

       

      THIS TAX
SEPARATION AGREEMENT is dated as of ____________, 2009, by and between CAPITOL
BANCORP LTD. (“Parent”),
a Michigan corporation, and MICHIGAN COMMERCE BANCORP LIMITED (“Spinco”),
a Michigan corporation.

       

      WHEREAS,
as of the date hereof, Parent is the common parent of an affiliated group of
domestic corporations within the meaning of Section 1504(a) of the Code,
and the members of the affiliated group have heretofore joined in filing
consolidated federal income Tax returns (the “Affiliated
Group”);

       

      WHEREAS,
Parent and Spinco have entered into a Separation Agreement and Plan of
Distribution (as defined herein) whereby, subject to the terms and conditions
thereof, Parent will, in accordance with the Separation Agreement, including the
transfer of all the assets and liabilities of the Spinco Business (as defined
herein) and subject to the terms and conditions of the Separation Agreement,
distribute (the “Distribution”)
to Parent’s stockholders 95.1% of common stock of Spinco (“Spinco Common
Stock”);

       

      WHEREAS,
Parent and Spinco intend that the Distribution will qualify as a distribution
described in Section 355 of the Code and will not result in the reorganization
of any taxable gain or income to Parent, Spinco or any of their respective
stockholders.

       

      WHEREAS,
as a result of the Distribution, Spinco and its subsidiaries shall cease to be
members of the Affiliated Group for all applicable tax purposes;
and

       

      WHEREAS,
the Parties desire to enter into this Tax Separation Agreement to provide for
certain Tax matters, including the assignment of responsibility for the
preparation and filing of Tax Returns, the payment of and indemnification for
Taxes, entitlement to refunds of Taxes, and the prosecution and defense of any
Tax controversies;

       

      NOW,
THEREFORE, in consideration of the mutual agreements, provisions and covenants
contained in this Agreement, the Parties hereby agree as follows:

       

      ARTICLE
I.

       

      DEFINITIONS

       

      1.1. General. 
Capitalized
terms used in this Agreement and not defined herein shall have the meanings that
such terms have in the Separation Agreement.  As used in this
Agreement, the following terms shall have the following meanings:

       

      “Affiliated
Group” shall have the meaning specified in the preamble
hereof.

       

      “Agreement”
shall mean this Tax Separation Agreement.

       

      “Business
Day” or “Business
Days” shall mean a day which is not a Saturday, Sunday or a day on which
banks in Lansing, Michigan are authorized or required by law to
close.

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      “Closing of the
Books Method” shall mean the apportionment of items between portions of a
taxable period based on a closing of the books and records on the Distribution
Date (as if the Distribution Date was the end of the taxable period), provided that any
items not susceptible to such apportionment (such as real or personal property
taxes imposed on a periodic basis) shall be apportioned on the basis of elapsed
days during the relevant portion of the taxable period.

       

      “Code”
shall mean the Internal Revenue Code of 1986, as amended.

       

      “Confidentiality
Agreement” shall mean any agreement pursuant to which the parties named
therein have agreed to terms under which they were permitted to review certain
financial information relating to Spinco or the Spinco Business.

       

      “Combined
Group” shall mean a combined, unitary, or consolidated tax group that
includes Parent or any of its subsidiaries, not including Spinco or any of its
subsidiaries, on the one hand, and Spinco or any of its subsidiaries, on the
other hand.

       

      “Consolidated
Return” shall mean any Tax Return relating to Income Taxes filed pursuant
to Section 1502 of the Code, or any comparable combined, consolidated, or
unitary group Tax Return relating to Income Taxes filed under state or local tax
law which, in each case, includes Parent and at least one
subsidiary.

       

      “Distribution”
shall have the meaning specified in the Separation Agreement.

       

      “Distribution
Date” shall mean the Business Day on which the Distribution is
effected.

       

      “Final
Determination” shall mean the final resolution of liability for any Tax
for any taxable period, including any related interest or penalties, by or as a
result of: (i) a final and unappealable decision, judgment, decree or other
order by any court of competent jurisdiction; (ii) a closing agreement or
accepted offer in compromise under Section 7121 or 7122 of the Code, or
comparable agreement under the laws of other jurisdictions which resolves the
entire Tax liability for any taxable period; or (iii) any allowance of a
refund or credit in respect of an overpayment of Tax, but only after the
expiration of all periods during which such refund may be recovered by the
jurisdiction imposing the Tax.

       

      “Income
Tax” shall mean any income, franchise or similar Taxes imposed on (or
measured by) net income or net profits.

       

      “Income Tax
Returns” shall mean all Tax Returns relating to Income
Taxes.

       

      “Indemnification
Tax Benefit” shall have the meaning specified in
Section 2.4(b).

       

      “Indemnified
Tax” shall have the meaning specified in
Section 2.4(b).

       

      “Internal
Distribution” shall have the meaning set forth in the preamble
hereof.

       

      “IRS” shall
mean the Internal Revenue Service.

       

      “Other Tax”
shall mean any Tax other than an Income Tax.

       

      
        
           

        

        
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      “Party”
shall mean either Parent or Spinco, as the case maybe.

       

      “Payment
Period” shall have the meaning specified in
Section 2.4(c).

       

      “Parent”
shall have the meaning specified in the preamble hereof.

       

      “Proceeding”
shall mean any audit, examination or other proceeding brought by a Taxing
Authority with respect to Taxes.

       

      “Refund”
shall have the meaning specified in Section 2.2.

       

      “Retained
Liabilities” shall have the meaning specified in the Separation
Agreement.

       

      “Retained
Liability Payment” shall have the meaning specified in
Section 2.5.

       

      “Retained
Liability Tax Benefit” shall have the meaning specified in
Section 2.5.

       

      “Separation
Agreement” shall mean the agreement entitled “Separation Agreement and
Plan of Distribution,” entered into by and between Parent and Spinco, dated as
of ___________, 2009.

       

      “Spinco”
shall have the meaning set forth in the preamble hereof.

       

      “Spinco
Business” shall have the meaning specified in the Separation
Agreement.

       

      “Spinco Common
Stock” shall have the meaning set forth in the preamble
hereof.

       

      “Straddle
Period” shall mean any taxable period commencing prior to, and ending
after, the Distribution Date.

       

      “Tax” or
“Taxes”
shall mean any federal, state, local or foreign income, gross receipts,
property, sales, use, license, excise, franchise, employment, payroll,
withholding, alternative or add on minimum, ad valorem, transfer or excise tax,
or any other tax, custom, duty, governmental fee or other like assessment or
charge of any kind whatsoever, together with any interest or penalty, imposed by
any Taxing Authority.

       

      “Taxing
Authority” shall mean any governmental authority (whether United States
or non-United States, and including, any state, municipality, political
subdivision or governmental agency) responsible for the imposition of any
Tax.

       

      “Tax
Returns” shall mean all reports or returns (including information returns
and amended returns) required to be filed or that may be filed for any period
with any Taxing Authority in connection with any Tax or Taxes (whether domestic
or foreign).

       

      1.2. References;
Interpretation.  References
in this Agreement to any gender include references to all genders, and
references to the singular include references to the plural and vice
versa.  The words “include,” “includes” and “including” when used in
this Agreement shall be deemed to be followed by the phrase “without
limitation.” Unless the context otherwise requires, references in this Agreement
to Articles, Sections, Exhibits and Schedules shall be 

       

      
        
           

        

        
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      deemed
references to Articles and Sections of, and Exhibits and Schedules to, such
Agreement.  Unless the context otherwise requires, the words “hereof,”
“hereby” and “herein” and words of similar meaning when used in this Agreement
refer to this Agreement in its entirety and not to any particular Article,
Section or provision of this Agreement.

       

      ARTICLE
II.

      ALLOCATION OF TAX
LIABILITIES

       

      2.1. Indemnity.

       

      (a)   Without
duplication, Parent shall indemnify Spinco from all liability for
(i) Income Taxes of Spinco or any of its subsidiaries or relating to the
Spinco Business with respect to taxable periods ending on or before the
Distribution Date, (ii) Income Taxes of Spinco or any of its subsidiaries
or relating to the Spinco Business for any Straddle Period, but only to the
extent attributable to the portion of the Straddle Period ending on or before
the Distribution Date, (iii) Income Taxes of any member of the Affiliated
Group or any Combined Group, other than Spinco or any of its subsidiaries, for
any taxable period, and (iv) Income Taxes resulting from the Internal
Distribution.  Taxes for a Straddle Period shall be apportioned in
accordance with the Closing of the Books Method.

       

      (b)   Spinco
shall indemnify Parent from all liability for (i) Other Taxes (excluding
any such Taxes covered by Section 2.6) of Spinco or relating to the Spinco
Business for any taxable period, (ii) any Income Taxes of Spinco or its
subsidiaries or relating to the Spinco Business accruing after the Distribution
Date under the Closing of the Books Method, including the portion of any
Straddle Period beginning on the Distribution Date.

       

      2.2. Refunds.

       

      (a)   Subject
to Section 3.5, if a Party receives a refund, offset, credit, or other
benefit (including interest received thereon) (a “Refund”)
of Tax which the other Party would have been obligated to indemnify had the
Refund been a payment, then the Party receiving the Refund shall promptly pay
the amount of the Refund to the other Party, less reasonable costs and expenses
incurred in connection with such Refund, including any Taxes on such Refund or
interest thereon (net of any tax benefit actually realized for paying over such
Refund).

       

      (b)   Each
Party shall, if reasonably requested by the other Party, cause the relevant
entity to file for and use its reasonable best efforts to obtain and expedite
the receipt of any Refund to which such requesting Party is entitled under this
Section 2.2.

       

      2.3. Contests.

       

      (a)   In the
case of any Proceeding that relates to Taxes for which Parent is responsible
under Section 2.1 hereof, Parent shall have the right to control, in its
sole discretion, the conduct of such Proceeding.  Subject to the
foregoing, Spinco shall have the right to participate jointly in any Proceeding
if the consequences of the resolution of such Proceeding could reasonably be
expected to affect the tax liability of Spinco for any tax period to the extent
such tax liability of Spinco is not subject to an indemnification by Parent
herein under.

       

      
        
           

        

        
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      (b)   In the
case of any Proceeding that relates to Taxes for which Spinco is responsible
under Section 2.1 hereof, Spinco shall have the sole right to control the
conduct of such Proceeding.  Subject to the foregoing, Parent shall
have the right to participate jointly in any Proceeding if the consequences of
the resolution of such Proceeding could reasonably be expected to affect the tax
liability of Parent for any tax period to the extent such tax liability of
Parent is not subject to an indemnification by Spinco herein under.

       

      (c)   In the
case of any Proceeding that relates to a Straddle Period of Spinco or the Spinco
Business, the parties shall use reasonable efforts to cause such Proceeding to
be bifurcated between the period ending on the Distribution Date and the period
beginning after the Distribution Date.  If the parties are able to
cause the audit to be so bifurcated, then Sections 2.3(a) and (b) hereof
shall govern the control of such Proceedings.  To the extent that the
parties are unable to cause such bifurcation, Parent and Spinco shall jointly
control such Proceeding.

       

      (d)   After the
Distribution Date, each Party shall promptly notify the other Party in writing
upon receipt of written notice of the commencement of any Proceeding or of any
demand or claim upon it, which, if determined adversely, would be grounds for
indemnification from such other Party pursuant to Section 2.1 or could
reasonably be expected to have an adverse Tax effect on the other
Party.  The failure of one Party to promptly forward such notification
in accordance with the immediately preceding sentence shall not relieve the
other Party of any obligation under this Agreement, except to the extent that
the failure to promptly forward such notification actually prejudices the
ability of the other Party to contest such Proceeding.  Each Party
shall, on a timely basis, keep the other Party informed of all developments in
the Proceeding and provide such other Party with copies of all pleadings,
briefs, orders, and other correspondence pertaining thereto.

       

      2.4. Treatment
of Payments; After Tax Basis.

       

      (a)   Parent
and Spinco agree to treat any indemnification payments (other than payments of
interest pursuant to Section 2.4(c)) pursuant to this Agreement, including
any payments made pursuant to Section 2.5, as either a capital contribution
or a distribution, as the case may be, between Parent and Spinco occurring
immediately prior to the Distribution, and to challenge in good faith any other
characterization of such payments by any Taxing Authority.  If,
notwithstanding such good faith efforts, the receipt or accrual of any such
payment (other than payments of interest pursuant to Section 2.4(c))
results in taxable income to the indemnified Party, such payment shall be
increased so that, after the payment of any Taxes with respect to the payment,
the indemnified Party shall have realized the same net amount it would have
realized had the payment not resulted in taxable income.

       

      (b)   To the
extent that any liability for Taxes that is subject to indemnification under
Section 2.1 (an “Indemnified
Tax”) gives rise to an Indemnification Tax Benefit to the indemnified
Party in any taxable period, the indemnified Party will promptly remit to the
indemnifying Party the amount of any such Indemnification Tax Benefit actually
realized.  For purposes of this Agreement, “Indemnification
Tax Benefit” means a reduction in the amount of Taxes that are required
to be paid or increase in refund due, whether resulting from a deduction, from
reduced gain or increased loss from disposition of an asset, or
otherwise.  For purposes of this Agreement, an indemnified Party will
be deemed to have actually realized an 

       

      
        
           

        

        
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      Indemnification
Tax Benefit at the time the amount of Taxes such indemnified Party is required
to pay is reduced or the amount of any refund due is increased.  The
amount of any Indemnification Tax Benefit in this Section 2.4(b) shall be
calculated by comparing (i) the indemnified Party’s actual Tax liability
taking into account any Indemnified Tax with (ii) what the indemnified
Party’s Tax liability would have been without taking into account any
Indemnified Tax.  If, pursuant to this Agreement, the indemnified
Party makes a remittance to the indemnifying Party of any Indemnification Tax
Benefit and all or part of such Indemnification Tax Benefit is subsequently
disallowed, the indemnifying Party will promptly pay to the indemnified Party
that portion of such remittance equal to the portion of the Indemnification Tax
Benefit that is disallowed.

       

      (c)   Payments
made pursuant to this Agreement that are not made within the period prescribed
in this Agreement or, if no period is prescribed, within thirty (30) days
after demand for payment is made (the “Payment
Period”) shall bear interest for the period from and including the date
immediately following the last date of the Payment Period through and including
the date of payment at a rate equal to the monthly average of the “prime rate”
as published in the Wall Street Journal, compounded
semi-annually.  Such interest will be payable at the same time as the
payment to which it relates and shall be calculated on the basis of a year of
365 days and the actual number of days for which due; provided, however, that this
provision for interest shall not be construed to give the Party responsible for
such payment the right to defer payment beyond the due date
hereunder.

       

      2.5. Retained
Liabilities. 
To the
extent that any payments made by Parent in respect of the Retained Liabilities
(a “Retained
Liability Payment”) gives rise to a Retained Liability Tax Benefit to
Spinco in any taxable period, Spinco will promptly remit to Parent the amount of
any such Retained Liability Tax Benefit actually realized.  For
purposes of this Agreement, “Retained
Liability Tax Benefit” means a reduction in the amount of Taxes that are
required to be paid or increase in refund due, whether resulting from a
deduction, credit, increased basis, or otherwise.  For purposes of
this Agreement, Spinco will be deemed to have actually realized a Retained
Liability Tax Benefit at the time the amount of Taxes Spinco is required to pay
is reduced or the amount of any refund due is increased.  The amount
of any Retained Liability Tax Benefit in this Section 2.5 shall be
calculated by comparing (i) Spinco’s actual Tax liability taking into
account any Retained Liability Payment with (ii) what Spinco’s Tax
liability would have been without taking into account any Retained Liability
Payment. If, pursuant to this Agreement, Spinco makes a remittance to Parent of
any Retained Liability Tax Benefit and all or part of such Retained Liability
Tax Benefit is subsequently disallowed, Parent will promptly pay to Spinco that
portion of such remittance equal to the portion of the Retained Liability Tax
Benefit that is disallowed.

       

      2.6. Transfer
Taxes. 
Notwithstanding
anything to the contrary herein, Parent shall bear any and all stamp, duty,
transfer, sales and use or similar Taxes incurred in connection with the
Distribution and Internal Distribution.

       

      ARTICLE
III.

      RETURNS AND TAXES
ATTRIBUTABLE TO SPINCO

       

      
        
           

        

        
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      3.1. Parent’s
Responsibility for the Preparation of Tax Returns and for the Payment of
Taxes.

       

      (a)   Parent
shall prepare and file or cause to be prepared and filed all Tax Returns of
Spinco or any of its subsidiaries or relating to the Spinco Business that are
due on or before the Distribution Date (taking into account any valid extensions
thereof), all Income Tax Returns relating to taxable periods ending on or before
the Distribution Date and all Income Tax Returns of the Affiliated Group or any
Combined Group.

       

      (b)   To the
extent that Spinco or any of its subsidiaries or the Spinco Business is included
in any Consolidated Return for a taxable period that includes the Distribution
Date, Parent shall include in such Consolidated Return the results of Spinco and
the Spinco Business on the basis of the Closing of the Books Method. To the
extent permitted by law or administrative practice with respect to other Income
Tax Returns, the taxable period relating to Spinco or the Spinco Business shall
be treated as ending on the Distribution Date, and if the taxable period does
not, in fact, end on the Distribution Date, the Parties shall apportion all tax
items between the portions of the taxable period before and after the
Distribution Date on the Closing of the Books Method.

       

      3.2. Spinco’s
Responsibility for the Preparation of Tax Returns and for the Payment of
Taxes. 
Spinco
shall prepare and file or cause to be prepared and filed all Tax Returns
relating to Other Taxes of Spinco or any of its subsidiaries or the Spinco
Business that have not been filed before the Distribution
Date.  Spinco shall prepare and file or cause to be prepared and filed
all Income Tax Returns relating to taxable periods of Spinco and its
subsidiaries after the Distribution Date, except for Income Tax Returns of the
Affiliated Group or any Combined Group and Income Tax Returns of Spinco for any
Straddle Period as described in Sections 3.1 and 3.3.

       

      3.3. Responsibility
for the Preparation of Straddle Period Income Tax Returns and for the Payment of
Straddle Period Income Taxes.  Parent
shall prepare and file or cause to be prepared and filed all Income Tax Returns
of Spinco for any Straddle Period.  All such Income Tax Returns that
are to be prepared and filed by Parent pursuant to this paragraph shall be
submitted to Spinco not later than thirty (30) days prior to the due date
for filing of such Tax Returns (or if such due date is within 45 days following
the Distribution Date, as promptly as practicable following the Distribution
Date). Spinco shall have the right to review such Tax Returns and to review all
work papers and procedures used to prepare any such Tax Return.  If
Spinco, within ten (10) business days after delivery of any such Tax
Return, notifies Parent in writing that it objects to any of the items in such
Tax Return, Parent and Spinco shall attempt in good faith to resolve the dispute
and, if they are unable to do so, the disputed items shall be resolved (within a
reasonable time, taking into account the deadline for filing such Tax Return) by
an internationally recognized independent accounting firm chosen by both Parent
and Spinco.  Upon resolution of all such items, the relevant Straddle
Period Tax Return shall be filed on that basis.  The costs, fees and
expenses of such accounting firm shall be borne equally by Parent and
Spinco.

       

      3.4. Manner
of Preparation. 
All
Income Tax Returns filed on or after the Distribution Date shall be prepared and
filed on a timely basis (including pursuant to extensions) 

       

      
        
           

        

        
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      by the
Party responsible for such filing under this Agreement.  In the
absence of a Final Determination to the contrary, a controlling change in law or
circumstances, or accounting method changes pursuant to applications that are
approved by the Internal Revenue Service, all Income Tax Returns of Spinco for
tax periods commencing prior to the Distribution Date shall be prepared on a
basis consistent with the elections, accounting methods, conventions,
assumptions and principles of taxation used with respect to the Spinco Business
for the most recent taxable periods for which Tax Returns of the Affiliated
Group have been filed.

       

      3.5. Carrybacks.  Spinco
agrees and will cause its subsidiaries not to carry back any net operating
losses, capital losses or credits for any taxable period ending after the
Distribution Date to a taxable period, or portion thereof, ending on or before
the Distribution Date.  To the extent that Spinco or any of its
subsidiaries is required by applicable law to carry back any such net operating
losses, capital losses or credits, any refund of Taxes attributable to such
carryback shall be for Parent’s account.

       

      3.6. Retention
of Records; Cooperation; Access.

       

      (a)   Parent
and Spinco shall, and shall cause each of their subsidiaries to retain adequate
records, documents, accounting data and other information (including computer
data) necessary for the preparation and filing of all Tax Returns required to be
filed by Parent or Spinco and for any Tax matter covered by this Agreement,
including any Proceeding relating to such Tax Returns or to any Taxes payable by
Parent or Spinco or any of their subsidiaries.

       

      (b)   Subject
to the provisions of Section 3.7, Parent and Spinco shall reasonably
cooperate with one another in a timely manner with respect to any Tax matter
covered by this Agreement, including any Proceeding described in
Section 2.3.  Parent and Spinco shall, and shall cause each of
their subsidiaries to cooperate and provide reasonable access to (i) all
records, documents, accounting data and other information (including computer
data) necessary for the preparation and filing of all Tax Returns required to be
filed by Parent or Spinco and for any Proceeding relating to such Tax Returns or
to any Taxes payable by Parent or Spinco and (ii) its personnel and
premises, for the purpose of the preparation, review or audit of such Tax
Returns, or in connection with any Tax matter covered by this Agreement,
including any Proceeding described in Section 2.3 as reasonably requested
by either Parent or Spinco.  The Party requesting or otherwise
entitled to any books, records, information, officers or employees pursuant to
this Section 3.6(b) shall bear all reasonable out-of-pocket costs and
expenses (except reimbursement of salaries, employee benefits and general
overhead) incurred in connection with providing such books, records,
information, officers or employees; provided, however, that any
costs (including but not limited to attorneys’ fees and expenses) arising from
the requested Party’s failure to cooperate under this Section 3.6(b) shall
be payable by such Party.

       

      (c)   The
obligations set forth above in Sections 3.6(a) and 3.6(b) shall continue until
the longer of (i) the time of a Final Determination or (ii) expiration
of all applicable statutes of limitations, to which the records and information
relate.  For purposes of the preceding sentence, each Party shall
assume that no applicable statute of limitations has expired unless such Party
has received notification or otherwise has actual knowledge that such statute of
limitations has expired.

       

      
        
           

        

        
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      3.7. Confidentiality;
Ownership of Information; Privileged Information.  The
provisions of Article [  ] of the Separation Agreement relating to
confidentiality of information, ownership of information, privileged information
and related matters shall apply with equal force to any records and information
prepared and/or shared by and among the Parties in carrying out the intent of
this Agreement.

       

      ARTICLE
IV.

      MISCELLANEOUS

       

      4.1. Complete
Agreement; Construction. 
This
Agreement shall constitute the entire agreement between the Parties with respect
to the subject matter hereof and shall supersede all previous negotiations,
commitments and writings with respect to such subject matter.

       

      4.2. Counterparts.  This
Agreement may be executed in one or more counterparts, all of which shall be
considered one and the same agreement, and shall become effective when one or
more such counterparts have been signed by both Parties.

       

      4.3. Survival
of Agreements. 
Except as
otherwise contemplated by this Agreement, all covenants and agreements of the
Parties contained in this Agreement shall survive the Distribution
Date.

       

      4.4. Notices.  All
notices and other communications hereunder shall be in writing and hand
delivered or mailed by registered or certified mail (return receipt requested)
or sent by any means of electronic message transmission with delivery confirmed
(by voice or otherwise) to the Parties at the following addresses (or at such
other addresses for a Party as shall be specified by like notice) and will be
deemed given on the date on which such notice is received:

       

      To
Parent:                     
Capitol Bancorp Limited

      Capitol Bancorp Center

      200 Washington Square
North

      Lansing,
MI  48933

      Attention: General Counsel

      Fax: (517) 374-2546

      


      With
copies
to:             Honigman
Miller Schwartz and Cohn LP

      444 West Michigan Avenue

      Kalamazoo,
MI  49007

      Attention: Phillip D. Torrence,
Esq.

      Fax: (269) 337-7703

      


      To
Spinco:                    
Michigan Commerce Bancorp Limited.

      222 Washington Square North, Suite
One

      Lansing,
MI  48933

      Attention: Jeffrey D.
Saunders

      Fax: (517) 374-2523

       

       

      
        
           

        

        
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      With
copies to:           
 ____________________

      ____________________

      ____________________

      Attention: ____________

      Fax: _________________

      


      4.5. Waivers. 
The failure of any Party to require strict performance by the other Party of any
provision in this Agreement will not waive or diminish that Party’s right to
demand strict performance thereafter of that or any other provision
hereof.

       

      4.6. Amendments.  This
Agreement may not be modified or amended except by an agreement in writing
signed by the Parties hereto.

       

      4.7. Assignment.  This
Agreement shall not be assignable, in whole or in part, directly or indirectly,
by any Party hereto without the prior written consent of the other Party hereto,
and any attempt to assign any rights or obligations arising under this Agreement
without such consent shall be void.

       

      4.8. Successors
and Assigns. 
The
provisions to this Agreement shall be binding upon, inure to the benefit of and
be enforceable by the Parties and their respective successors and permitted
assigns.

       

      4.9. Additional
Members. 
Any new
members of the Affiliated Group shall automatically become a Party to this
Agreement upon becoming members.

       

      4.10. Third
Party Beneficiaries. 
This
Agreement is solely for the benefit of the Parties hereto and should not be
deemed to confer upon third parties any remedy, claim, liability, reimbursement,
claim of action or other right in excess of those existing without reference to
this Agreement.

       

      4.11. Title
and Headings. 
Titles
and headings to sections herein are inserted for the convenience of reference
only and are not intended to be a part of or to affect the meaning or
interpretation of this Agreement.

       

      4.12. Exhibits.  The
Exhibits to this Agreement shall be construed with and as an integral part of
this Agreement to the same extent as if the same had been set forth verbatim
herein.

       

      4.13. .This
Agreement shall be construed in accordance with, and governed by, the laws of
the State of Michigan, without regard to the conflicts of law rules of such
state. Each of the parties hereto (a) consents to submit itself to the
personal jurisdiction of the courts of the State of Michigan or any federal
court with subject matter jurisdiction located in the Western District of
Michigan (and any appeals court therefrom) in the event any dispute arises out
of this Agreement or any transaction contemplated hereby, (b) agrees that
it will not attempt to deny or defeat such personal jurisdiction by motion or
other request for leave from any such court, and (c) agrees that it will
not bring any action relating to this Agreement or any transaction contemplated
hereby in any court other than such courts.

       

      
        
           

        

        
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      4.14. Severability.  In the
event any one or more of the provisions contained in this Agreement should be
held invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein and therein
shall not in any way be affected or impaired thereby.  The Parties
shall endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions, the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.

       

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      IN
WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed as
of the day and year first above written.

       

      


      CAPITOL
BANCORP LIMITED

       

      By:           _______________________

      Name:      _______________________

      Title:        _______________________

      


      MICHIGAN
COMMERCE BANCORP LIMITED

      


      By:           _______________________

      Name:      _______________________

      Title:        _______________________

      


      


       

      


      


      


      


       

       

      
 

      


      


      


      
        

        
          
            
              Signature
Page to Tax Separation Agreement