exhibit10_11.htm


    EXHIBIT
10.11

    
 

    Loan
Agreement

     

    THIS LOAN
AGREEMENT (this “Agreement”)
is made as of the ___ day of ________ 2009, by and between CAPITOL BANCORP LTD.
(“Lender”),
a Michigan corporation, and MICHIGAN COMMERCE BANCORP LIMITED (“Borrower”),
a Michigan corporation.

     

    


     

    ARTICLE
1.

    GENERAL
DEFINITIONS

     

    1.1 Defined
Terms.

     

    When used
herein, the following terms shall have the meanings set forth
below:

     

    “Agreement”
- has the meaning assigned to such term in the first paragraph
hereof.

     

    “Interest
Rate” - has the meaning assigned to such term in Section 2.3 of this
Agreement.

     

    “Borrower”
- has the meaning assigned to such term in the first paragraph of this
Agreement.

     

    “Business
Day” - means any day other than a Saturday, Sunday or other day on which
commercial banks in the State of Michigan are authorized or required by law to
close.

     

    “Closing
Date” - has the meaning assigned to such term in Section 2.1 of this
Agreement.

     

    “Default” -
an event or condition the occurrence of which would, with a lapse of time or the
giving of notice or both, become an Event of Default.

     

    “Event of
Default” - has the meaning assigned to such term in Section 5.1 of
this Agreement.

     

    “GAAP” -
has the meaning assigned to such term in Section 1.2 of this
Agreement.

     

    “Highest Lawful
Rate” - means the maximum rate of interest, if any, that at any time or
from time to time may be contracted for, taken, charged or received by the
Lender on the obligations owed to it under the laws applicable to the Lender and
this transaction.

     

    “Indebtedness”
- means, with respect to any person and without duplication, (a) all
indebtedness for borrowed money; (b) all obligations issued, undertaken or
assumed as the deferred purchase price of property or services (other than trade
payables entered into in the ordinary course of business on ordinary terms);
(c) all non-contingent reimbursement or payment obligations with respect to
any letters of credit (including standby and commercial), banker’s acceptances,
bank guaranties, surety bonds and similar instruments; (d) all obligations
evidenced by notes, bonds, debentures or similar instruments, including
obligations so evidenced incurred in connection with the acquisition of
property, assets or businesses; (e) all indebtedness created or arising
under any conditional sale or other title retention agreement, or incurred as
financing, 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    in either
case with respect to property acquired by such person (even though the rights
and remedies of the seller or bank under such agreement in the event of default
are limited to repossession or sale of such property); (f) all obligations
with respect to capital leases (g) all net obligations with respect to any
agreement (including any master agreement and any agreement, whether or not in
writing, relating to any single transaction) that is an interest rate swap
agreement, basis swap, forward rate agreement, commodity swap, commodity option,
equity or equity index swap or option, bond option, interest rate option,
forward foreign exchange agreement, rate cap, collar or floor agreement,
currency swap agreement, cross-currency rate swap agreement, currency option or
any other, similar agreement (including any option to enter into any of the
foregoing); (h) all indebtedness referred to in clauses (a) through
(g) above secured by (or for which the holder of such Indebtedness has an
existing right, contingent or otherwise, to be secured by) any lien upon or in
property (including accounts and contracts rights) owned by such person, even
though such person has not assumed or become liable for the payment of such
Indebtedness; and (i) all obligations in respect of guaranteeing,
purchasing or otherwise discharging indebtedness or obligations of others of the
kinds referred to in clauses (a) through (g) above.

     

    “Interest
Expense” - means, with respect to any fiscal period of the Borrower,
interest expense of the Borrower and its subsidiaries for such period,
determined on a consolidated basis in accordance with GAAP.

     

    “Interest Payment
Date” - has the meaning assigned to such term in Section 2.3 of this
Agreement.

     

     “Lender”
- has the meaning assigned to such term in the first paragraph of this
Agreement.

     

    “Loan” -
has the meaning assigned to such term in Section 2.1 of this
Agreement.

     

    “Maturity
Date” - has the meaning assigned to such term in Section 2.2 of this
Agreement.

     

    “Note” -
has the meaning assigned to such term in Section 2.1 of this
Agreement.

     

    1.2 Accounting
Terms.  Any
accounting terms used in this Agreement which are not specifically defined shall
have the meanings customarily given them in accordance with generally accepted
accounting principles (“GAAP”) at
the time in effect.

     

     

    ARTICLE
2.

    LOAN

     

    2.1 The
Loan.  Subject
to the terms and conditions of this Agreement, Lender agrees to accept from
Borrower on the Closing Date a demand note in the principal amount of $2,500,000 (the “Note”),
substantially in the form of Exhibit A hereto. The indebtedness of the Borrower
evidenced by the Note is hereinafter referred to as the “Loan”.

     

    
      
        
        

      

      
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    2.2 Principal
Payments of the Loan.  The
Borrower shall principal upon demand but in no event later than three years from
the date of the Note (the “Maturity
Date”).

     

    2.3 Interest. 
The Loan
shall bear interest on the principal amount thereof outstanding from and after
the Closing Date at a rate per annum equal to 8% (the “Interest
Rate”), payable quarterly as defined in the Note.  Anything
contained herein to the contrary notwithstanding, after the Maturity Date, after
the date on which the Loan shall have become due and payable pursuant to
Section 7 or in any period during which a Default shall exist, the Loan
shall bear interest at a rate per annum equal to the Interest Rate plus 2.0% and
such interest shall be due and payable on demand.

     

     

    ARTICLE
3.

    REPRESENTATIONS AND
WARRANTIES

     

    As an
inducement to Lender to make the Loan, Borrower warrants and represents to
Lender that:

     

    3.1 Organization
and Qualification.  Borrower
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Michigan.

     

    3.2 Corporate
Powers.  Borrower
has the right and power and is duly authorized and empowered to enter into,
execute, deliver and perform this Agreement and the Note. This Agreement and the
Note are the legal, valid and binding obligations of Borrower, enforceable
against Borrower in accordance with their respective terms.

     

    3.3 Compliance
with Laws, Other Instruments, etc.  Neither
the execution, delivery and performance by the Borrower of this Agreement and
the Note will (a) contravene, result in any breach of, or constitute a
default under, or result in the creation of any lien in respect of any property
of the Borrower or any subsidiary under, any indenture, mortgage, deed of trust,
loan, purchase or credit agreement, lease, corporate charter or by-laws, or any
other agreement or instrument to which the Borrower or any subsidiary is bound
or by which the Borrower or any subsidiary or any of their respective properties
may be bound or affected other than in respect of those certain indentures,
mortgages, deeds of trust, loans, purchase or credit agreements or leases, or
any other agreements or instruments for which written consents shall have been
obtained either prior to, or contemporaneously with, the closing of this
Agreement; (b) conflict with or result in a breach of any of the terms,
conditions or provisions of any order, judgment, decree, or ruling of any court,
arbitrator or governmental authority applicable to the Borrower or any
subsidiary, or (c) violate any provision of any statute or other rule or
regulation of any governmental authority applicable to the Borrower or any
subsidiary.

     

    3.4 Governmental
Authorizations, etc.  No
consent, approval or authorization of, or registration, filing or declaration
with, any governmental authority is required in connection with the execution,
delivery or performance by the Borrower of this Agreement or the
Note.

     

    3.5 Litigation:
Observance of Agreements, Statutes and Orders.  There


     

    
      
        
        

      

      
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    are no
actions, suits or proceedings pending or, to the knowledge of the Borrower,
threatened against or affecting the Borrower or any subsidiary or any property
of the Borrower or any subsidiary in any court or before any arbitrator of any
kind or before or by any governmental authority that, individually or in the
aggregate, could reasonably be expected to have a material adverse effect on the
business, financial position or prospects of the Borrower. Neither the Borrower
nor any subsidiary is in default under any term of any agreement or instrument
to which it is a party or by which it is bound, or any order, judgment, decree
or ruling of any court, arbitrator or governmental authority or is in violation
of any applicable law, ordinance, rule or regulation of any governmental
authority.

     

    3.6 Taxes. 
The
Borrower and its subsidiaries have filed all tax returns that are required to
have been filed in any jurisdiction, and have paid all taxes shown to be due and
payable on such returns and all other taxes and assessments levied upon them or
their properties, assets, income or franchises, to the extent such taxes and
assessments have become due and payable and before they have become delinquent,
except for any taxes and assessments (a) the amount of which is not
individually or in the aggregate material or (b) the amount, applicability
or validity of which is currently being contested in good faith by appropriate
proceedings and with respect to which the Borrower or a subsidiary, as the case
may be, has established adequate reserves in accordance with GAAP. The Borrower
knows of no basis for any other tax or assessment that could reasonably be
expected to have a material adverse effect on its business, financial position
or prospects. The charges, accruals and reserves on the books of the Borrower
and its subsidiaries in respect of federal, state or other taxes for all fiscal
periods are adequate.

     

     

    ARTICLE
4.

    AFFIRMATIVE
COVENANTS

     

    4.1 Affirmative
Covenants.  Borrower
covenants that, unless otherwise consented to by Lender in writing, it will:
(a) preserve and maintain its corporate existence and all rights,
privileges and franchises in connection therewith; (b) file all federal,
state and local tax returns and other reports that the Borrower is required by
law to file, maintain adequate reserves for the payment of all taxes,
assessments, governmental charges and levies imposed upon it, its income or its
profits, or upon any property belonging to it, and pay and discharge all such
taxes, assessments, governmental charges and levies prior to the date on which
penalties attach thereto, except where the same are being contested in good
faith by appropriate proceedings and provided that in such event adequate book
reserves have been established with respect to each such claim being contested;
(c) maintain its property in good condition and make all necessary
renewals, repairs, replacements, additions and improvements thereto;
(d) not be in violation of any federal, state, or local laws, ordinances,
governmental rules and regulations to which it is subject, and not fail to
obtain any licenses, permits, franchises or other governmental authorizations
necessary to the ownership of its properties or to the conduct of its business,
which violation or failure to obtain might materially and adversely affect the
business, prospects, profits, properties or condition (financial or otherwise)
of Borrower; (e) keep adequate records and books of account with respect to
its business activities in which proper entries are made in accordance with GAAP
reflecting all its financial transactions.

     

    
      
        
        

      

      
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    ARTICLE
5.

    EVENTS OF
DEFAULT;  RIGHTS AND REMEDIES ON DEFAULT

     

    5.1 Events
of Default.  The
occurrence of any one or more of the following events shall constitute an “Event
of Default”: (a) (i) the failure to make any payment of principal on
the Note when due as provided for herein or in the Note or (ii) the failure
to make any payment of interest on the Note within 5 Business Days after the due
date thereof as provided for herein or in the Note; (b) any warranty,
representation or other statement made or furnished to Lender by or on behalf of
Borrower or in any instrument furnished in compliance with or in reference to
this Agreement proves to have been false or misleading in any material respect
when made or furnished; (c) Borrower fails or neglects to perform, keep or
observe any other term, provision, condition or covenant contained in this
Agreement, which is required to be performed, kept or observed by Borrower and
the same is not cured to Lender’s satisfaction within 30 days after such
occurrence becomes known to any officer of Borrower; (d) the occurrence of
any default or event of default or failure of performance on the part of
Borrower or any subsidiary (including specifically, but without limitation, due
to nonpayment) under any agreement, document or instrument to which Borrower or
such subsidiary is a party or by which Borrower or such subsidiary is bound,
creating or relating to any other Indebtedness of Borrower or such subsidiary;
and (e) dissolution, termination of existence, insolvency (failure of
Borrower or any subsidiary to pay its debts as they mature), appointment of a
receiver, trustee, custodian or similar fiduciary, assignment for the benefit of
creditors or the commencement of any proceedings under the Bankruptcy Code by or
against Borrower or any subsidiary (if against Borrower or a subsidiary, the
continuation of such proceeding for more than 60 days).

     

    5.2   Acceleration
of the Obligations.  Upon the
occurrence of an Event of Default as above provided, all or any portion of the
Loan due or to become due from Borrower to Lender, whether under this Agreement,
the Note or otherwise, shall, at the option of Lender, and without notice or
demand by Lender, become at once due and payable together with all accrued and
unpaid interest thereon; Borrower will thereafter forthwith pay to Lender, in
addition to any and all sums and charges due, the entire principal of and
interest accrued on the Loan.

     

    5.3 Remedies. 
Upon and
after the occurrence of an Event of Default, Lender shall have any and all
rights and remedies available to Lender at law or in equity.

     

    5.4 Remedies
Cumulative.  All
covenants, conditions, provisions, warranties, guaranties, indemnities and other
undertakings of Borrower contained in this Agreement, or in any document
referred to herein or contained in any agreement supplementary hereto, or in any
schedule or contained in any other agreement between Lender and Borrower,
heretofore, concurrently or hereafter entered into, shall be deemed cumulative
to and not in derogation or substitution of any of the terms, covenants,
conditions or agreements of Borrower herein contained.

     

    
      
        
        

      

      
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    ARTICLE
6.

    MISCELLANEOUS

     

    6.1 Transaction
Expenses.  The
Borrower will pay all costs and expenses (including reasonable attorneys’ fees)
incurred in connection with the Loan and in connection with any amendments,
waivers or consents under or in respect of this Agreement or the Note (whether
or not such amendment, waiver or consent becomes effective), including, without
limitation: (a) the costs and expenses incurred in enforcing or defending
any rights under this Agreement or the Note or in responding to any subpoena or
other legal process or informal investigative demand issued in connection with
this Agreement or the Note, or by reason of being the Lender, and (b) the
costs and expenses, including financial advisors’ fees, incurred in connection
with the insolvency or bankruptcy of the Borrower or any subsidiary or in
connection with any work-out or restructuring of the transactions contemplated
hereby and by the Note. The Borrower will also pay the reasonable attorneys’
fees and disbursements of counsel to the Lender incurred in connection with
enforcing or defending any rights under this Agreement or the Note, responding
to any subpoena or other legal process or informal investigative demand issued
in connection with this Agreement or the Note, the insolvency or bankruptcy of
the Borrower or any subsidiary or any work-out or restructuring of the
transactions contemplated hereby and by the Note.

     

    6.2 Survival
of Representations and Warranties.  All
warranties and representations shall survive the making of the
Loan.

     

    6.3 Successors
and Assigns.  All
covenants and other agreements contained in this Agreement by or on behalf of
any of the parties hereto bind and inure to the benefit of their respective
successors and assigns, whether so expressed or not.

     

    6.4 Payments
Due on Non-Business Days.  Anything
in this Agreement or the Note to the contrary notwithstanding, any payment of
principal of or interest on the Note that is due on a date other than a Business
Day shall be made on the next succeeding Business Day without including the
additional days elapsed in the computation of the interest payable on such next
succeeding Business Day.

     

    6.5 Construction. 
Each
covenant contained herein shall be construed (absent express provision to the
contrary) as being independent of each other covenant contained herein, so that
compliance with any one covenant shall not (absent such an express contrary
provision) be deemed to excuse compliance with any other covenant. Where any
provision herein refers to action to be taken by any person, or which such
person is prohibited from taking, such provision shall be applicable whether
such action is taken directly or indirectly by such person. The headings in this
Agreement and in any related agreement, document or instrument are for purposes
of reference and shall not limit or otherwise affect the meaning hereof or
thereof.

     

    6.6 Severability. 
Wherever
possible, each provision of this Agreement shall be interpreted in such manner
as to be effective and valid under applicable law, but if any provision of this
Agreement shall be prohibited by or invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.

     

    
      
        
        

      

      
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    6.7 Modification
of Agreement.  This
Agreement and the Note may not be modified, altered or amended, except by an
agreement in writing signed by Borrower and Lender.

     

    6.8 Governing
Law.  THIS
AGREEMENT HAS BEEN NEGOTIATED, EXECUTED AND DELIVERED AT AND SHALL BE DEEMED TO
HAVE BEEN MADE AT LANSING, MICHIGAN. THE LOAN PROVIDED FOR HEREIN IS TO BE
FUNDED AND REPAID AT AND THIS AGREEMENT IS OTHERWISE TO BE PERFORMED AT LANSING,
MICHIGAN AND THIS AGREEMENT SHALL BE INTERPRETED, AND THE RIGHTS AND LIABILITIES
OF THE PARTIES HERETO DETERMINED, IN ACCORDANCE WITH THE LAWS OF THE STATE OF
MICHIGAN.

     

    6.9 Notices. 
Except as
otherwise provided herein, any notice required hereunder shall be in writing,
and shall be deemed to have been validly served, given or delivered upon deposit
in the United States mails, with proper postage prepaid, and addressed to the
party to be notified as set forth in the first paragraph of this Agreement or to
such other address as each party may designate for itself by like notice given
in accordance with this Section.

     

    IN
WITNESS WHEREOF, this Agreement has been duly executed as of the day and year
specified at the beginning hereof.

     

    CAPITOL
BANCORP LTD.

     

    By:           _________________________

    Name:      _________________________

    Title:        _________________________

     

    MICHIGAN
COMMERCE BANCORP LIMITED

     

    
      	 
      


    

    By:           _________________________

    Name:      _________________________

    Title:        _________________________

     


    
      
         


      

      
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    EXHIBIT
A

     

    PROMISSORY
NOTE

     

    
      
        

      

    

     

    Borrower:  Michigan
Commerce Bancorp
Limited                                                                                                                                                Lender:  Capitol
Bancorp Ltd.

    
      
        

      

    

    PRINCIPAL
AMOUNT:
$2,500,000.00                                                                                                                                    INTEREST RATE:
8.00%

    DATE
OF NOTE: _________

    


    Promise to
Pay.  Michigan Commerce Bancorp Ltd. (“Borrower”) promises to
pay to Capitol Bancorp Ltd. (“Lender”), or order, in lawful money of the United
States of America, the principal amount of up to Two Million Five Hundred
Thousand and 00/100 Dollars ($2,500,000.00), together with interest on the
unpaid principal balance from the date hereof until paid in full.

    


    Payment. Borrower will pay
this loan in one principal payment of all outstanding principal plus interest
upon demand, or if no demand is made sooner, on ____________.  The
final payment due on demand or at maturity will be for all principal and all
accrued interest not yet paid.  In addition, Borrower will pay regular
quarterly payments of all accrued unpaid interest due as of each payment date,
beginning _________ with all subsequent interest payments to be due on the same
day of each quarter thereafter.  The annual interest rate for this
Note is  8.00% and shall be computed on a 365/360 basis; that is, by
applying the ratio of the annual interest rate over a year of 360 days,
multiplied by the outstanding principal balance, multiplied by the
actual  number of days the principal is outstanding.

    


    Prepayment. Borrower may pay
without penalty all or a portion of the amount owed earlier than it is
due.  Early payments will not, unless agreed to by Lender in writing,
relieve Borrower of Borrower’s obligation to continue to make payments under the
payment schedule.  Rather, early payments will reduce the principal
balance due.

    


    Governing Law.  This
Note will be governed by federal law applicable to Lender and, to the extent not
preempted by federal law, the laws of the State of Michigan without regard to
its conflicts of law provisions.  This Note has been accepted by
Lender in the State of Michigan.

    


    Successor
Interests.  The terms of this Note shall be binding upon
Borrower, and upon Borrower’s successors and assigns, and shall inure to the
benefit of Lender and its successors and assigns.

    


    General Provisions. If any
part of this Note cannot be enforced, this fact will not affect the rest of the
Note.  Lender may delay or forgo enforcing any of its rights or
remedies under this Note without losing them. Borrower and any other person who
signs, guarantees or endorses this Notes, to the extent allowed by law, waive
presentment, demand for payment, and notice of dishonor. Upon any change in the
terms of this Note, and unless otherwise expressly stated in writing, no party
who signs this Note, whether as maker, guarantor, accommodation maker or
endorser, shall be released from liability.   All such parties
agree that Lender may renew or extend (repeatedly and for any length of time)
this loan and take any other action deemed necessary by Lender without the
consent of or notice to anyone.

    


    BORROWER:

    


    MICHIGAN
COMMERCE BANCORP LIMITED

    


    


    By:
_________________________________________

    


    Title:
_______________________________________

    


    



    
      
         


      

      
        EXHIBIT
A-1