Document:

Exhibit
4.(r)

 

 

PREFERRED SECURITIES GUARANTEE AGREEMENT

 

BY AND BETWEEN

 

CAPITOL BANCORP LTD.

 

AND

 

WELLS FARGO BANK, N.A.

 

DATED AS OF
                ,
2008

 

 

 

TABLE OF
CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE I

  	
  DEFINITIONS AND INTERPRETATION

  	
  1

  
	
   

  	
   

  	
   

  
	
  SECTION 1.1

  	
  DEFINITIONS AND INTERPRETATION

  	
  1

  
	
   

  	
   

  	
   

  
	
  ARTICLE II

  	
  TRUST INDENTURE ACT

  	
  4

  
	
   

  	
   

  	
   

  
	
  SECTION 2.1

  	
  TRUST INDENTURE ACT; APPLICATION

  	
  4

  
	
  SECTION 2.2

  	
  LISTS OF HOLDERS OF SECURITIES

  	
  5

  
	
  SECTION 2.3

  	
  REPORTS BY THE GUARANTEE TRUSTEE

  	
  5

  
	
  SECTION 2.4

  	
  PERIODIC REPORTS TO GUARANTEE TRUSTEE

  	
  5

  
	
  SECTION 2.5

  	
  EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT

  	
  5

  
	
  SECTION 2.6

  	
  EVENTS OF DEFAULT; WAIVER

  	
  5

  
	
  SECTION 2.7

  	
  EVENT OF DEFAULT; NOTICE

  	
  6

  
	
  SECTION 2.8

  	
  CONFLICTING INTERESTS

  	
  6

  
	
   

  	
   

  	
   

  
	
  ARTICLE III

  	
  POWERS, DUTIES AND RIGHTS OF GUARANTEE TRUSTEE

  	
  6

  
	
   

  	
   

  	
   

  
	
  SECTION 3.1

  	
  POWERS AND DUTIES OF THE GUARANTEE TRUSTEE

  	
  6

  
	
  SECTION 3.2

  	
  CERTAIN RIGHTS OF GUARANTEE TRUSTEE

  	
  8

  
	
  SECTION 3.3

  	
  NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF GUARANTEE

  	
  10

  
	
  SECTION 3.4

  	
  SECURITIES

  	
  10

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV

  	
  GUARANTEE TRUSTEE

  	
  10

  
	
   

  	
   

  	
   

  
	
  SECTION 4.1

  	
  GUARANTEE TRUSTEE; ELIGIBILITY

  	
  10

  
	
  SECTION 4.2

  	
  APPOINTMENT, REMOVAL AND RESIGNATION OF GUARANTEE TRUSTEE

  	
  11

  
	
   

  	
   

  	
   

  
	
  ARTICLE V

  	
  GUARANTEE

  	
  11

  
	
   

  	
   

  	
   

  
	
  SECTION 5.1

  	
  GUARANTEE

  	
  11

  
	
  SECTION 5.2

  	
  WAIVER OF NOTICE AND DEMAND

  	
  12

  
	
  SECTION 5.3

  	
  OBLIGATIONS NOT AFFECTED

  	
  12

  
	
  SECTION 5.4

  	
  RIGHTS OF HOLDERS

  	
  13

  
	
  SECTION 5.5

  	
  GUARANTEE OF PAYMENT

  	
  13

  
	
  SECTION 5.6

  	
  SUBROGATION

  	
  13

  
	
  SECTION 5.7

  	
  INDEPENDENT OBLIGATIONS

  	
  13

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI

  	
  LIMITATION OF TRANSACTIONS; SUBORDINATION

  	
  14

  
	
   

  	
   

  	
   

  
	
  SECTION 6.1

  	
  LIMITATION OF TRANSACTIONS

  	
  14

  
	
  SECTION 6.2

  	
  RANKING

  	
  14

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII

  	
  TERMINATION

  	
  14

  
	
   

  	
   

  	
   

  
	
  SECTION 7.1

  	
  TERMINATION

  	
  14

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII

  	
  INDEMNIFICATION

  	
  15

  
	
   

  	
   

  	
   

  
	
  SECTION 8.1

  	
  EXCULPATION

  	
  15

  
					

 

i

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  SECTION 8.2

  	
  INDEMNIFICATION

  	
  15

  
	
  SECTION 8.3

  	
  COMPENSATION

  	
  15

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX

  	
  MISCELLANEOUS

  	
  16

  
	
   

  	
   

  	
   

  
	
  SECTION 9.1

  	
  SUCCESSORS AND ASSIGNS

  	
  16

  
	
  SECTION 9.2

  	
  AMENDMENTS

  	
  16

  
	
  SECTION 9.3

  	
  NOTICES

  	
  16

  
	
  SECTION 9.4

  	
  BENEFIT

  	
  17

  
	
  SECTION 9.5

  	
  GOVERNING LAW

  	
  17

  
	
  SECTION 9.6

  	
  COUNTERPARTS

  	
  17

  
				

 

ii

 

CROSS REFERENCE
TABLE

 

	
  Section of Trust Indenture Act

  of 1939, as amended

  	
   

  	
  Section of Guarantee Agreement

  
	
  310(a)

  	
   

  	
  4.1(a)

  
	
  310(b)

  	
   

  	
  4.1(c), 2.8

  
	
  310(c)

  	
   

  	
  Not Applicable

  
	
  311(a)

  	
   

  	
  2.2(b)

  
	
  311(b)

  	
   

  	
  2.2(b)

  
	
  311(c)

  	
   

  	
  Not Applicable

  
	
  312(a)

  	
   

  	
  2.2(a)

  
	
  312(b)

  	
   

  	
  2.2(b)

  
	
  313

  	
   

  	
  2.3

  
	
  314(a)

  	
   

  	
  2.4

  
	
  314(b)

  	
   

  	
  Not Applicable

  
	
  314(c)

  	
   

  	
  2.5

  
	
  314(d)

  	
   

  	
  Not Applicable

  
	
  314(e)

  	
   

  	
  1.1, 2.5, 3.2

  
	
  314(f)

  	
   

  	
  2.1, 3.2

  
	
  315(a)

  	
   

  	
  3.1(d)

  
	
  315(b)

  	
   

  	
  2.7

  
	
  315(c)

  	
   

  	
  3.1

  
	
  315(d)

  	
   

  	
  3.1(d)

  
	
  316(a)

  	
   

  	
  1.1, 2.6, 5.4

  
	
  316(b)

  	
   

  	
  5.3

  
	
  317(a)

  	
   

  	
  3.1

  
	
  317(b)

  	
   

  	
  Not Applicable

  
	
  318(a)

  	
   

  	
  2.1(a)

  
	
  318(b)

  	
   

  	
  2.1

  
	
  318(c)

  	
   

  	
  2.1(b)

  

 

Note: This Cross-Reference Table does not constitute
part of this Agreement and shall not affect the interpretation of any of its
terms or provisions.

 

iii

 

PREFERRED SECURITIES GUARANTEE AGREEMENT

 

This
PREFERRED SECURITIES GUARANTEE AGREEMENT (this “Preferred Securities Guarantee”),
dated as of
                ,
2008, is executed and delivered by CAPITOL BANCORP LTD., a Michigan corporation
(the “Guarantor”), and WELLS FARGO BANK, N.A., as trustee (the “Guarantee
Trustee”), for the benefit of the Holders (as defined herein) from  time
to time of the Preferred Securities (as defined herein) of Capitol Trust XII, a
Delaware statutory trust (the “Trust”).

 

RECITALS

 

WHEREAS,
pursuant to an Amended and Restated Trust Agreement (the “Trust Agreement”),
dated as of
                    ,
2008 among the trustees of the Trust named therein, the Guarantor, as
depositor, and the holders from time to time of undivided beneficial interests
in the assets of the Trust, the Trust is issuing on the date hereof 2,000,000
preferred securities, having an aggregate Liquidation Amount of $50,000,000
designated the       % Cumulative Trust Preferred
Securities;

 

WHEREAS,
as incentive for the Holders to purchase the Preferred Securities, the
Guarantor desires irrevocably and unconditionally to agree, to the extent set
forth in this Preferred Securities Guarantee, to pay to the Holders of the
Preferred Securities the Guarantee Payments (as defined herein) and to make
certain other payments on the terms and conditions set forth herein.

 

NOW,
THEREFORE, in consideration of the purchase by each Holder of Preferred
Securities, which purchase the Guarantor hereby agrees shall benefit the
Guarantor, the Guarantor executes and delivers this Preferred Securities
Guarantee for the benefit of the Holders.

 

ARTICLE I

DEFINITIONS AND INTERPRETATION

 

SECTION 1.1       DEFINITIONS AND INTERPRETATION.

 

In
this Preferred Securities Guarantee, unless the context otherwise requires:

 

(a)           capitalized terms used in this Preferred
Securities Guarantee but not defined in the preamble above have the respective
meanings assigned to them in this Section 1.1;

 

(b)           terms defined in the Trust Agreement as
at the date of execution of this Preferred Securities Guarantee have the same
meaning when used in this Preferred Securities Guarantee, unless otherwise
defined in this Preferred Securities Guarantee;

 

(c)           a term defined anywhere in this Preferred
Securities Guarantee has the same meaning throughout;

 

 

(d)           all references to “the Preferred
Securities Guarantee” or “this Preferred Securities Guarantee” are to this
Preferred Securities Guarantee as modified, supplemented or amended from time
to time;

 

(e)           all references in this Preferred
Securities Guarantee to Articles and Sections are to Articles and Sections of
this Preferred Securities Guarantee,  unless otherwise specified;

 

(f)            a term defined in the Trust Indenture Act
has the same meaning when used in this Preferred Securities Guarantee, unless
otherwise defined in this Preferred Securities Guarantee or unless the context
otherwise requires; and

 

(g)           a reference to the singular includes the
plural and vice versa.

 

“Affiliate”
has the same meaning as given to that term in Rule 405 of the Securities
Act of 1933, as amended, or any successor rule thereunder.

 

“Business
Day” means any day other than a Saturday, Sunday, a day on which federal or
state banking institutions in New York, New York are authorized or required by
law, executive order or regulation to close or a day on which the Corporate
Trust Office of the Guarantee Trustee is closed for business.

 

“Corporate
Trust Office” means the office of the Guarantee Trustee at which the corporate
trust business of the Guarantee Trustee
shall, at any particular time, be principally administered, which office
at the date of execution of this Preferred Securities Guarantee is located at
919 North Market Street, Suite 1600, Wilmington, Delaware 19801, Attention:
Corporate Trust Services.

 

“Covered
Person” means any Holder or beneficial owner
of Preferred Securities.

 

“Debenture
Issuer” means Capitol Bancorp Ltd., issuer of the Debentures under the
Indenture.

 

“Debentures”
means the       % Junior Subordinated Debentures
due
                  ,
2038, of the Debenture Issuer held by the Property Trustee of the Trust.

 

“Event
of Default” means a default by the Guarantor on any of its payment or other
obligations under this Preferred Securities Guarantee.

 

“Guarantee
Payments” means the following payments or distributions, without duplication,
with respect to the Preferred Securities, to the extent not paid or made by the
Trust; (i) any accrued and unpaid Distributions that are required to be
paid on such Preferred Securities, to the extent the Trust shall have funds
available therefor, (ii) the redemption price, including all accrued and
unpaid Distributions to the date of redemption (the “Redemption Price”), to the
extent the Trust has funds available therefor, with respect to any Preferred
Securities called for redemption by the Trust, and (iii) upon a voluntary
or involuntary dissolution, winding-up or termination of the Trust (other than
in connection with the distribution of Debentures to the Holders in exchange
for Preferred Securities as provided in the Trust Agreement), the lesser of 

 

2

 

(a) the aggregate of the Liquidation Amount and
all accrued and unpaid Distributions on the Preferred Securities to the date of
payment, to the extent the Trust shall have funds available therefor, and (b) the
amount of assets of the Trust remaining available for distribution to Holders
in liquidation of the Trust after satisfaction of liabilities to creditors of
the Trust in accordance with applicable law (in either case, the “Liquidation
Distribution”).

 

“Guarantee Trustee” means Wells Fargo Bank, N.A.,
until a Successor Guarantee Trustee has been appointed and has accepted such
appointment pursuant to the terms of
this  Preferred Securities
Guarantee and thereafter means each such Successor Guarantee Trustee.

 

“Guarantor” means Capitol Bancorp Ltd., a Michigan
corporation.

 

“Holder” shall mean any holder, as registered on the
books and records of the Trust, of any Preferred Securities; provided, however,
that, in determining whether the holders of the requisite percentage of
Preferred Securities have given any request, notice, consent or waiver
hereunder, “Holder” shall not include the Guarantor, the Guarantee Trustee or
any of their respective Affiliates.

 

“Indemnified Person” means the Guarantee Trustee, any
Affiliate of the Guarantee Trustee, or any officers, directors, shareholders,
members, partners, employees, representatives, nominees, custodians or agents
of the Guarantee Trustee.

 

“Indenture” means the Indenture dated as of
                  ,
2008, among the Debenture Issuer and Wells Fargo Bank, N.A., as trustee, and
any indenture supplemental thereto pursuant to which the  Debentures
are to be issued to the Property Trustee of the Trust.

 

“Liquidation Amount” means the stated value of $25
per Preferred Security.

 

“Liquidation Distribution” has the meaning provided
therefor in the definition of Guarantee Payments.

 

“Majority in Liquidation Amount of the Preferred
Securities” means the holders of more than 50% of the Liquidation Amount of all
of the Preferred Securities.

 

“Officers’ Certificate” means, with respect to any
Person, a certificate signed by two authorized officers of such Person, at
least one of whom shall be the principal executive officer, principal financial
officer, principal accounting officer, treasurer or any vice president of such
Person. Any Officers’ Certificate delivered with respect to compliance with a
condition or covenant provided for in this Preferred Securities Guarantee shall
include:

 

(a)           a statement that each officer signing the
Officers’ Certificate has read the covenant or condition and the definition
relating thereto;

 

(b)           a brief statement of the nature and scope
of the examination or investigation undertaken by each officer in rendering the
Officers’ Certificate;

 

3

 

(c)           a statement that each such officer has
made such examination or investigation as, in such officer’s opinion, is
necessary to enable such officer to express an informed opinion as to whether
or not such covenant or condition has been complied with; and

 

(d)           a statement as to whether, in the opinion
of each such officer, such condition or covenant has been complied with.

 

“Person”
means a legal person, including any individual, corporation, estate,
partnership, joint venture, association, joint stock company, limited liability
company, trust, unincorporated association, or government or any agency or
political subdivision thereof, or any other entity of whatever nature.

 

“Preferred
Securities” means the
        %  Cumulative
Trust Preferred Securities representing undivided beneficial interests in the
assets of the Trust which rank pari passu with Common Securities issued by the
Trust; provided, however, that upon the occurrence of an Event of Default, the
rights of holders of Common Securities to payment in respect of distributions
and payments upon liquidation, redemption and otherwise are subordinated to the
rights of holders of Preferred Securities.

 

“Redemption
Price” has the meaning provided therefor in the definition of Guarantee
Payments.

 

“Responsible
Officer” means, with respect to the Guarantee Trustee, any officer within the
Corporate Trust Office of the Guarantee Trustee with direct responsibility for
the administration of this Preferred Securities Guarantee, including any
vice-president, any assistant vice-president, any trust officer, or other
officer or assistant officer of the Guarantee Trustee customarily performing
functions similar to those performed by any of the above designated officers
and also means, with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of that officer’s knowledge of
and familiarity with the particular subject.

 

“Successor
Guarantee Trustee” means a successor Guarantee Trustee possessing the
qualifications to act as Guarantee Trustee under Section 4.1.

 

“Trust
Indenture Act” means the Trust Indenture Act of 1939, as amended.

 

ARTICLE II

TRUST INDENTURE ACT

 

SECTION 2.1       TRUST INDENTURE ACT; APPLICATION.

 

(a)           This Preferred Securities Guarantee is
subject to the provisions of the Trust Indenture Act that are required to be
part of this Preferred Securities Guarantee and shall, to the extent
applicable, be governed by such provisions.

 

(b)           If and to the extent that any provision
of this Preferred Securities Guarantee limits, qualifies or conflicts with the
duties imposed by Sections 310 to 317, inclusive, of the Trust Indenture Act,
such imposed duties shall control.

 

4

 

SECTION 2.2       LISTS OF HOLDERS OF SECURITIES.

 

(a)           In the event the Guarantee Trustee is not
also acting in the capacity of the Property Trustee under the Trust Agreement,
the Guarantor shall cause to be provided to the Guarantee Trustee at such times
as the Guarantee Trustee may request a list, in such form as the Guarantee
Trustee may reasonably require, of the names and addresses of the Holders of
the Preferred Securities (“List of Holders”) as of the date (i) within one
Business Day after March 15, June 15, September 15 and December 15,
and (ii) at any other time within 30 days of receipt by the Guarantor of a
written request for a List of Holders as of a date no more than 15 days before
such List of Holders is given to the Guarantee Trustee; provided, that the
Guarantor shall not be obligated to provide such List of Holders at any time
the List of Holders does not differ from the most recent List of Holders caused
to have been given to the Guarantee Trustee by the Guarantor. The Guarantee
Trustee may destroy any List of Holders previously given to it on receipt of a
new List of Holders.

 

(b)           The Guarantee Trustee shall comply with
its obligations under Sections 311(a), 311(b) and Section 312(b) of
the Trust Indenture Act.

 

SECTION 2.3       REPORTS BY THE GUARANTEE TRUSTEE.

 

On or
before July 15 of each year, commencing July 15, 2009, the Guarantee
Trustee shall provide to the Holders of the Preferred Securities such reports
if and to the extent required by Section 313 of the Trust Indenture Act,
in the form and in the manner provided by Section 313 of the Trust
Indenture Act. The Guarantee Trustee shall also comply with the requirements of
Section 313(d) of the Trust Indenture Act.

 

SECTION 2.4       PERIODIC REPORTS TO GUARANTEE TRUSTEE.

 

The
Guarantor shall provide to the Guarantee Trustee such documents, reports and
information as required by Section 314 (if any) and the compliance
certificate required by Section 314 of the Trust Indenture Act in the
form, in the manner and at the times required by Section 314 of the Trust
Indenture Act.

 

SECTION 2.5       EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT.

 

The
Guarantor shall provide to the Guarantee Trustee such evidence of compliance
with any conditions precedent, if any, provided for in this Preferred
Securities Guarantee that relate to any of the matters set forth in Section 314(c) of
the Trust Indenture Act. Any certificate or opinion required to be given by an
officer pursuant to Section 314(c)(1) shall be given in the form of
an Officers’ Certificate.

 

SECTION 2.6       EVENTS OF DEFAULT; WAIVER.

 

The
Holders of a Majority in Liquidation Amount of Preferred Securities may, by
vote, on behalf of the Holders of all of the Preferred Securities, waive any
past Event of Default and its consequences. Upon such waiver, any such Event of
Default shall cease to exist, and any Event of Default arising therefrom shall
be deemed to have been cured, for every purpose of this 

 

5

 

Preferred Securities Guarantee, but no such waiver
shall extend to any subsequent or other default or Event of
Default or impair any right consequent therefrom.

 

SECTION 2.7       EVENT OF DEFAULT; NOTICE.

 

(a)           The Guarantee Trustee shall, within 90
days after the occurrence of an Event of Default, transmit by mail, first class
postage prepaid, to the Holders of the Preferred Securities, notices of all
Events of Default actually known to a Responsible Officer of the Guarantee
Trustee, unless such defaults have been cured or waived before the giving of
such notice; provided, that, except in the case of a default by Guarantor on
any of its payment obligations, the Guarantee Trustee shall be protected in
withholding such notice if and so long as a Responsible Officer of the
Guarantee Trustee in good faith determines that the withholding of such notice
is in the interests of the Holders of the Preferred Securities.

 

(b)           The Guarantee Trustee shall not be deemed
to have knowledge of any Event of Default unless the Guarantee Trustee shall
have received written notice, or of which a Responsible Officer of the
Guarantee Trustee charged with the administration of the Trust Agreement shall
have obtained actual knowledge.

 

SECTION 2.8       CONFLICTING INTERESTS.

 

The
Trust Agreement shall be deemed to be specifically described in this Preferred
Securities Guarantee for the purposes of clause (i) of the first proviso
contained in Section 310(b) of the Trust Indenture Act.

 

ARTICLE III

POWERS, DUTIES AND RIGHTS OF GUARANTEE TRUSTEE

 

SECTION 3.1       POWERS AND DUTIES OF THE GUARANTEE TRUSTEE.

 

(a)           This Preferred Securities Guarantee shall
be held by the Guarantee Trustee for the benefit of the Holders of the
Preferred Securities, and the Guarantee Trustee shall not transfer this
Preferred Securities Guarantee to any Person except a Holder of Preferred
Securities exercising his or her rights
pursuant to Section 5.4(b) or to a Successor Guarantee Trustee on
acceptance by such Successor Guarantee Trustee of its appointment to act as
Successor Guarantee Trustee. The right, title and interest of the Guarantee
Trustee shall automatically vest in any Successor Guarantee Trustee, and such
vesting and cessation of title shall be effective whether or not conveyancing
documents have been executed and delivered pursuant to the appointment of such
Successor Guarantee Trustee.

 

(b)           If an Event of Default actually known to
a Responsible Officer of the Guarantee Trustee has occurred and is continuing,
the Guarantee Trustee shall enforce this Preferred Securities Guarantee for the
benefit of the Holders of the Preferred Securities.

 

(c)           The Guarantee Trustee, before the occurrence of any
Event of Default and after the curing of all Events of Default that may have
occurred, shall undertake to perform only such duties as are specifically set
forth in this Preferred Securities Guarantee, and no implied covenants shall
be read into this Preferred Securities Guarantee against the Guarantee Trustee.
In 

 

6

 

case an Event of Default has occurred (that has not
been cured or waived pursuant to Section 2.6) and is actually known to a
Responsible Officer of the Guarantee Trustee, the Guarantee Trustee shall
exercise such of the rights and powers vested in it by this Preferred
Securities Guarantee, and use the same degree of care and skill in its exercise thereof, as a prudent person would
exercise or use under the circumstances in the conduct of his or her own
affairs.

 

(d)           No provision of this Preferred Securities
Guarantee shall be construed to relieve the Guarantee Trustee from liability
for its own negligent action, its own negligent failure to act, or its own
willful misconduct, except that:

 

(i)            prior to the occurrence of any Event of
Default and after the curing or waiving of all such Events of Default that may
have occurred:

 

(A)          the rights, immunities, duties and obligations of the
Guarantee Trustee shall be determined solely by the express provisions of this
Preferred Securities Guarantee, and the Guarantee Trustee shall not be liable
except for the performance of such duties and obligations as are specifically
set forth in this Preferred Securities Guarantee, and no implied covenants,
duties or obligations shall be read into this Preferred Securities Guarantee
against the Guarantee Trustee; and

 

(B)           in the absence of bad faith on the part of the
Guarantee Trustee, the Guarantee Trustee may conclusively rely, as to the truth
of the statements and the correctness of the opinions expressed therein, upon
any certificates or opinions furnished to the Guarantee Trustee and conforming
to the requirements of this Preferred Securities Guarantee; but in the case of
any such certificates or opinions that by any provision hereof are specifically
required to be furnished to the Guarantee Trustee, the Guarantee Trustee shall
be under a duty to examine the same to determine whether or not they conform to
the requirements of this Preferred Securities Guarantee;

 

(ii)           the Guarantee Trustee shall not be liable
for any error of judgment made in good faith by a Responsible Officer of the
Guarantee Trustee, unless it shall be proved that the Guarantee Trustee was
negligent in ascertaining the pertinent facts upon which such judgment was
made;

 

(iii)          the
Guarantee Trustee shall not be liable with respect to any action taken or
omitted to be taken by it in good faith in accordance with the direction of the
Holders of not less than a Majority in Liquidation Amount of the Preferred
Securities relating to the time, method and place of conducting any proceeding
for any remedy available to the Guarantee Trustee, or exercising any trust or
power conferred upon the Guarantee Trustee under this Preferred Securities
Guarantee; and

 

(iv)          notwithstanding the foregoing, no provision of this
Preferred Securities Guarantee shall require the Guarantee Trustee to expend or
risk its own funds or otherwise incur personal financial liability in the
performance of any of its duties or in the exercise of any of its rights or
powers, if the Guarantee Trustee shall have reasonable grounds for 

 

7

 

believing
that the repayment of such funds or liability is not
reasonably assured to it under the terms of this Preferred Securities Guarantee
or indemnity, reasonably satisfactory to the Guarantee Trustee, against such
risk or liability is not reasonably assured to it.

 

(e)           Whether or not
herein expressly so provided, every provision of this Preferred Securities Guarantee relating to the conduct or
affecting the liability of or affording protection to the Guarantee Trustee
shall be subject to the provisions of this Section 3.1.  To the extent that, at law or in equity, the
Guarantee Trustee has duties and liabilities relating to the Guarantor or the
Holders, the Guarantee Trustee shall not be liable to any Holder for the
Guarantee Trustee’s good faith reliance on the provisions of this Preferred
Securities Guarantee.  The provisions of
this Preferred Securities Guarantee, to the extent that they restrict the
duties and liabilities of the Guarantee Trustee otherwise existing at law or in
equity, are agreed by the Guarantor and the Holders to replace such other
duties and liabilities of the Guarantee Trustee.

 

SECTION 3.2       CERTAIN RIGHTS OF GUARANTEE TRUSTEE.

 

(a)           Subject to the provisions of Section 3.1:

 

(i)            the Guarantee Trustee may conclusively
rely, and shall be fully protected in acting or refraining from acting in good
faith and in accordance with the terms hereof upon, any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document believed by it to be genuine and to
have been signed, sent or presented by the proper party or parties;

 

(ii)           any direction or act of the Guarantor
contemplated by this Preferred Securities Guarantee shall be sufficiently
evidenced by an Officers’ Certificate;

 

(iii)          whenever,
in the administration of this Preferred Securities Guarantee, the Guarantee
Trustee shall deem it desirable that a matter be proved or established before
taking, suffering or omitting any action hereunder, the Guarantee Trustee
(unless other evidence is herein specifically prescribed) may, in the absence
of bad faith on its part, request and conclusively rely upon an Officers’
Certificate which, upon receipt of such request, shall be promptly delivered by the  Guarantor;

 

(iv)          the Guarantee Trustee shall have no duty
to see to any recording, filing or registration of any instrument or other writing
(or any rerecording, refiling or registration thereof);

 

(v)           the Guarantee Trustee may consult with
counsel, and the written advice or opinion of such counsel with respect to
legal matters shall be full and complete authorization and protection in respect
of any action taken, suffered or omitted by it hereunder in good faith in
reliance thereon and in accordance with such advice or opinion. Such counsel
may be counsel to the Guarantee Trustee, Guarantor or any of its Affiliates and
may include any of its employees. The Guarantee
Trustee shall have the right at any time to seek instructions concerning the
administration of this Preferred Securities Guarantee from any court of  competent jurisdiction;

 

8

 

(vi)          the Guarantee
Trustee shall be under no obligation to exercise any of the rights or powers
vested in it by this Preferred Securities Guarantee at the request or direction of
any Holder, unless such Holder shall have provided to the Guarantee Trustee such
security and indemnity, reasonably satisfactory to the Guarantee Trustee,
against the costs, expenses (including attorneys’ fees and expenses and the
expenses of the Guarantee Trustee’s agents, nominees or custodians) and
liabilities that might be incurred by it in complying with such request or
direction, including such reasonable advances as may be requested by the
Guarantee Trustee; provided that, nothing contained in this Section 3.2(a)(vi) shall
be taken to relieve the Guarantee Trustee, upon the occurrence of an Event of
Default, of its obligation to exercise the rights and powers vested in it by
this Preferred Securities Guarantee;

 

(vii)         the
Guarantee Trustee shall not be bound to make any investigation into the facts
or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document, but the
Guarantee Trustee, in its  discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit, and if
the Guarantee Trustee has a reasonable need to make such inquiry or
investigation, it shall be entitled to examine the books, records and premises
of the Guarantor, personally or by agent or attorney, during normal business
hours, on reasonable notice to the Guarantor, and after signing a
confidentiality agreement containing terms and provisions that are reasonable
under the circumstances;

 

(viii)        the
Guarantee Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through agents,
nominees, custodians or attorneys, and the Guarantee Trustee shall not be
responsible for any misconduct or negligence on the part of any agent or
attorney appointed with due care by it hereunder;

 

(ix)           no third party shall be required to
inquire as to the authority of the Guarantee Trustee to so act or as to its
compliance with any of the terms and provisions of this Preferred Securities
Guarantee, both of which shall be conclusively evidenced by the Guarantee
Trustee’s or its agent’s taking such action; and

 

(x)            whenever in the administration of this
Preferred Securities Guarantee the Guarantee
Trustee shall
deem it desirable to receive instructions with respect to enforcing any remedy
or right or taking any other action hereunder, the Guarantee Trustee (i) may
request instructions from the
Holders of a Majority in Liquidation Amount of the Preferred Securities, (ii) may
refrain from enforcing such remedy or right or taking such other action until
such instructions are received, and (iii) shall be protected in
conclusively relying on or acting in accordance with such instructions.

 

(xi)           except as otherwise expressly provided by
this Preferred Securities Guarantee, the Guarantee Trustee shall not be under
any obligation to take any action that is discretionary under the provisions of
this Preferred Securities Guarantee.

 

(b)           No provision of this Preferred Securities
Guarantee shall be deemed to impose any duty or obligation on the Guarantee Trustee to perform any act or acts or exercise any right,
power, duty or obligation conferred or imposed on it in any jurisdiction in
which it shall be illegal, or in which the Guarantee Trustee shall be unqualified
or incompetent in accordance with applicable law, to perform any such act or
acts or to exercise any such right, 

 

9

 

power,
duty or obligation. No permissive power or authority available to the Guarantee
Trustee shall be construed to be a duty.

 

SECTION 3.3                     NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF GUARANTEE.

 

The
Recitals contained in this Guarantee shall be taken as the statements of the
Guarantor, and the Guarantee Trustee does not assume any responsibility for
their correctness. The Guarantee Trustee makes no representation as to the
validity or sufficiency of this Preferred Securities Guarantee.

 

SECTION 3.4                     SECURITIES.

 

The Guarantee Trustee or any other agent of the
Guarantee Trustee, in its individual or any other capacity, may become the
owner or pledgee of Common or Preferred Securities.

 

ARTICLE IV

GUARANTEE TRUSTEE

 

SECTION 4.1                     GUARANTEE TRUSTEE; ELIGIBILITY.

 

(a)           There shall at all times be a Guarantee
Trustee which shall:

 

(i)            not be an Affiliate of the Guarantor; and

 

(ii)           be a corporation or national banking
association organized and doing business under the laws of the United States of
America or any state or territory thereof or of the District of Columbia, or a
corporation or Person permitted by the Securities and Exchange Commission to
act as an institutional trustee under the Trust Indenture Act, authorized under
such laws to exercise trust powers, having a combined capital and surplus of at
least $50,000,000, and subject to supervision or examination by federal, state,
territorial or District of Columbia authority. If such entity publishes reports
of condition at least annually, pursuant to law or to the requirements of the
supervising or examining authority referred to above, then, for the purposes of this Section 4.1(a)(ii),
the combined capital and surplus of such entity shall be deemed to be its
combined capital and surplus as set forth in its most recent report of
condition so published.

 

(b)           If at any time the Guarantee Trustee shall
cease to be eligible to so act under Section 4.1(a), the Guarantee Trustee
shall immediately resign in the manner and with the effect set out in Section 4.2(c).

 

(c)           If the Guarantee Trustee has or  shall acquire any “conflicting interest” within
the meaning of Section 310(b) of the Trust Indenture Act, the Guarantee
Trustee and Guarantor shall in all respects comply with the provisions of Section 310(b) of
the Trust Indenture Act.

 

10

 

SECTION 4.2                     APPOINTMENT, REMOVAL AND RESIGNATION OF GUARANTEE
TRUSTEE.

 

(a)           Subject to Section 4.2(b), the
Guarantee Trustee may be appointed or removed without cause at any time by the
Guarantor.

 

(b)           The Guarantee Trustee shall not be
removed in accordance with Section 4.2(a) until a Successor Guarantee
Trustee has been appointed and has accepted such appointment by written
instrument executed by such Successor Guarantee Trustee and delivered to the
Guarantor.

 

(c)           The Guarantee Trustee appointed to office
shall hold office until a Successor Guarantee Trustee shall have been appointed
or until its removal or resignation. The Guarantee Trustee may resign from
office (without need for prior or subsequent accounting) by an instrument in
writing executed by the Guarantee Trustee and delivered to the Guarantor, which
resignation shall not take effect until a Successor Guarantee Trustee has been
appointed and has accepted such appointment by instrument in writing executed
by such Successor Guarantee Trustee and delivered to the Guarantor and the
resigning Guarantee Trustee.

 

(d)           If no Successor Guarantee Trustee shall
have been appointed and accepted appointment as provided in this Section 4.2
within 30 days after delivery to the Guarantor of an instrument of resignation
or the delivery of a notice of removal, the resigning or removed Guarantee
Trustee may, at the Guarantor’s expense, petition any court of competent
jurisdiction for appointment of a Successor Guarantee Trustee. Such court may
thereupon, after prescribing such notice, if any, as it may deem proper,
appoint a Successor Guarantee Trustee.

 

(e)           No Guarantee Trustee shall be liable for
the acts or omissions to act of any Successor Guarantee Trustee.

 

(f)            Upon termination of this Preferred
Securities Guarantee or removal or resignation of the Guarantee Trustee
pursuant to this Section 4.2, the Guarantor shall pay to the Guarantee
Trustee all fees and expenses accrued to the date of such termination, removal
or resignation.

 

ARTICLE V

GUARANTEE

 

SECTION 5.1                     GUARANTEE.

 

The Guarantor
irrevocably and unconditionally agrees to pay in full to the Holders the
Guarantee Payments (without duplication of amounts theretofore paid by the
Trust), as and when due, regardless of any defense, right of set-off or
counterclaim that the Trust may have or assert. The Guarantor’s obligation to
make a Guarantee Payment may be satisfied by direct payment of the required
amounts by the Guarantor to the Holders or by causing the Trust to pay such
amounts to the Holders.  The Guarantor
shall give prompt written notice to the Guarantee Trustee in the event it makes
any direct payment to the Holders of Preferred Securities hereunder.

 

11

 

SECTION 5.2                     WAIVER OF NOTICE AND DEMAND.

 

The
Guarantor hereby waives notice of acceptance of this Preferred Securities
Guarantee and of any liability to which it applies or may apply, presentment,
demand for payment, any right to require a proceeding first against the Trust
or any other Person before proceeding against the Guarantor, protest, notice of
nonpayment, notice of dishonor, notice of redemption and all other notices and
demands.

 

SECTION 5.3                     OBLIGATIONS NOT AFFECTED.

 

The
obligations, covenants, agreements and duties of the Guarantor under this
Preferred Securities Guarantee shall in no way be affected or impaired by
reason of the happening from time to time of any of the following:

 

(a)           the release or waiver, by operation of
law or otherwise, of the performance or observance by the Trust of any express
or implied agreement, covenant, term or condition relating to the Preferred
Securities to be performed or observed by the Trust;

 

(b)           the extension of time for the payment by
the Trust of all or any portion of the Distributions, Redemption Price,
Liquidation Distribution or any other sums payable under the terms of the
Preferred Securities or the extension of time for the performance of any other
obligation under, arising out of, or in connection with, the Preferred
Securities (other than an extension of time for payment of Distributions,
Redemption Price, Liquidation Distribution or other sum payable that results
from the extension of any interest payment period on the Debentures or any
extension of the maturity date of the Debentures permitted by the Indenture);

 

(c)           any failure, omission, delay or lack of
diligence on the part of the Holders to enforce, assert or exercise any right,
privilege, power or remedy conferred on the Holders pursuant to the terms of
the Preferred Securities, or any action on the part of the Trust granting
indulgence or extension of any kind;

 

(d)           the voluntary or involuntary liquidation,
dissolution, sale of any collateral, receivership, insolvency, bankruptcy,
assignment for the benefit of creditors, reorganization, arrangement,
composition or readjustment of debt of, or other similar proceedings affecting,
the Trust or any of the assets of the Trust;

 

(e)           any invalidity of, or defect or
deficiency in, the Preferred Securities;

 

(f)            any failure or omission to receive any
regulatory approval or consent required in connection with the Preferred
Securities (or the common equity securities issued by the Trust), including the
failure to receive any approval of the Board of Governors of the Federal
Reserve System required for the redemption of the Preferred Securities;

 

(g)           the settlement or compromise of any
obligation guaranteed hereby or hereby incurred; or

 

(h)           any other circumstance whatsoever that
might otherwise constitute a legal or equitable discharge or defense of a
guarantor, it being the intent of this Section 5.3 that the 

 

12

 

obligations
of the Guarantor hereunder shall be absolute and unconditional under any and
all circumstances.

 

There
shall be no obligation of the Holders to give notice to, or obtain consent of,
the Guarantor with respect to the happening of any of the foregoing.

 

SECTION 5.4                     RIGHTS OF HOLDERS.

 

(a)           Subject to Section 5.4(b), the
Holders of a Majority in Liquidation Amount of the Preferred Securities have
the right to direct the time, method and place of conducting of any proceeding
for any remedy available to the Guarantee Trustee in respect of this Preferred
Securities Guarantee or exercising any trust or power conferred upon the
Guarantee Trustee under this Preferred Securities Guarantee.

 

(b)           Any Holder of Preferred Securities may
institute and prosecute a legal proceeding directly against the Guarantor to
enforce its rights under this Preferred Securities Guarantee, without first
instituting a legal proceeding against the Trust, the Guarantee Trustee or any
other Person.

 

SECTION 5.5                     GUARANTEE OF PAYMENT.

 

This
Preferred Securities Guarantee creates a guarantee of payment and not of
collection.

 

SECTION 5.6                     SUBROGATION.

 

The
Guarantor shall be subrogated to all (if any) rights of the Holders of
Preferred Securities against the Trust in respect of any amounts paid to such
Holders by the Guarantor under this Preferred Securities Guarantee; provided,
however, that the Guarantor shall not (except to the extent required by mandatory
provisions of law) be entitled to enforce or exercise any right that it may
acquire by way of subrogation or any indemnity, reimbursement or other
agreement, in all cases as a result of payment under this Preferred Securities
Guarantee, if, at the time of any such payment, any amounts are due and
unpaid under this Preferred Securities Guarantee. If any amount shall be paid
to the Guarantor in violation of the preceding sentence, the Guarantor agrees
to hold such amount in trust for the Holders and to pay over such amount to the
Holders.

 

SECTION 5.7                     INDEPENDENT OBLIGATIONS.

 

The
Guarantor acknowledges that its obligations hereunder are independent of the
obligations of the Trust with respect to the Preferred Securities, and that the
Guarantor shall be liable as principal and as debtor hereunder to make
Guarantee Payments pursuant to the terms of this Preferred Securities Guarantee
notwithstanding the occurrence of any event referred to in subsections (a) through
(h), inclusive, of Section 5.3 hereof.

 

13

 

ARTICLE VI

LIMITATION OF TRANSACTIONS; SUBORDINATION

 

SECTION 6.1                     LIMITATION OF TRANSACTIONS.

 

So
long as any Preferred Securities remain outstanding, if there shall have
occurred an Event of Default under this Preferred Securities Guarantee, an
event of default under the Trust Agreement or during an Extended Interest
Payment Period (as defined in the Indenture), then (a) the Guarantor shall
not declare or pay  any dividend on, make any distributions with respect
to, or redeem, purchase, acquire or make a liquidation payment with respect to,
any of its capital stock (other than (i) dividends or distributions in
common stock of the Guarantor, or any declaration of a non-cash dividend in
connection with the implementation of a shareholder rights plan, or the
issuance of stock under any such plan in the future, or the redemption or
repurchase of any such rights pursuant thereto, (ii) purchases of common
stock of the Guarantor related to the rights under any of the Guarantor’s
benefit plans for its directors, officers, or employees, or (iii) as a
result of a reclassification of its capital stock for another class of its
capital stock) and (b) the Guarantor shall not make any payment of
interest or principal on or repay, repurchase or redeem any debt securities
issued by the Guarantor which rank pari
passu with or junior
to the Debentures, other than payments under this Preferred Securities
Guarantee.

 

SECTION 6.2                     RANKING.

 

This
Preferred Securities Guarantee will constitute an unsecured obligation of the
Guarantor and will rank subordinate and junior in right of payment to all
Senior Debt, Subordinated Debt and Additional Senior Obligations, as defined in
the Indenture, of the Guarantor, to the extent and in the manner set forth in
the Indenture, and the applicable provisions of the Indenture will apply, in
all relevant respects, to the obligations of the Guarantor hereunder.

 

ARTICLE VII

TERMINATION

 

SECTION 7.1                     TERMINATION.

 

This
Preferred Securities Guarantee shall terminate upon (i) full payment of
the Redemption Price of all Preferred Securities, (ii) full payment of the
amounts payable in accordance with the Trust Agreement upon liquidation of the
Trust, or (iii) distribution of the Debentures to the Holders
of the  Preferred Securities.
Notwithstanding the foregoing, this Preferred Securities Guarantee shall
continue to be effective or shall be reinstated, as the case may be, if at any
time any Holder of Preferred Securities must restore payment of any sums paid
under the Preferred Securities or under this Preferred Securities Guarantee.

 

14

 

ARTICLE VIII

INDEMNIFICATION

 

SECTION 8.1                     EXCULPATION.

 

(a)           No Indemnified Person shall be liable,
responsible or accountable in damages or otherwise to the Guarantor or any
Covered Person for any loss, damage or claim incurred by reason of any act or
omission performed or omitted by such Indemnified Person in good faith in
accordance with this Preferred Securities Guarantee and in a manner that such
Indemnified Person reasonably believed to be within the scope of the authority
conferred on such Indemnified Person by this Preferred Securities Guarantee or
by law, except that an Indemnified Person shall be liable for any such loss,
damage or claim incurred by reason of such Indemnified Person’s negligence or
willful misconduct with respect to such acts or omissions.

 

(b)           An Indemnified Person shall be fully
protected in relying in good faith upon the records of the Guarantor and upon
such information, opinions, reports or statements presented to the Guarantor by
any Person as to matters the Indemnified Person reasonably believes are within
such other Person’s professional or expert competence and who has been selected
with reasonable care by or on behalf of the Guarantor, including information,
opinions, reports or statements as to the
value and
amount of the assets, liabilities, profits, losses, or any other facts
pertinent to the existence and amount of assets from which Distributions to
Holders of Preferred Securities might properly be paid.

 

SECTION 8.2                     INDEMNIFICATION.

 

The
Guarantor agrees to indemnify each Indemnified Person for, and to hold each
Indemnified Person harmless against, any loss, liability or expense incurred
without negligence or bad faith on its part, arising out of or in connection
with the acceptance or administration of the trust or trusts hereunder,
including the costs and expenses (including reasonable legal fees and expenses)
of defending itself against, or investigating, any claim or liability in
connection with the exercise or performance of any of its powers or duties
hereunder. The obligation to indemnify as set forth in this Section 8.2
shall survive the termination of this Preferred Securities Guarantee.  In no event shall the Guarantee Trustee be
liable for any indirect, special, punitive or consequential loss or damage of
any kind whatsoever, including, but not limited to, lost profits, even if the
Guarantee Trustee has been advised of the likelihood of such loss or damage and
regardless of the form of action.  In no event shall the Guarantee Trustee
be liable for any failure or delay in the performance of its obligations
hereunder because of circumstances beyond its control, including, but not
limited to, acts of God, flood, war (whether declared or undeclared),
terrorism, fire, riot, embargo, government action, including any laws,
ordinances, regulations, governmental action or the like which delay, restrict
or prohibit the providing of the services contemplated by this Preferred
Securities Guarantee.

 

SECTION 8.3                     COMPENSATION.

 

The Guarantor agrees to pay to the Guarantee Trustee
from time to time reasonable compensation for all services rendered by it
hereunder (which compensation shall not be limited by any provisions of law in
regard to the compensation of a trustee of an express trust) 

 

15

 

and to reimburse the
Guarantee Trustee upon request for all reasonable expenses, disbursements and
advances (including the reasonable fees and expenses of its attorneys and
agents) incurred or made by the Guarantee Trustee in accordance with any
provision of this Preferred Securities Guarantee.

 

ARTICLE IX

MISCELLANEOUS

 

SECTION 9.1                     SUCCESSORS AND ASSIGNS.

 

All guarantees
and agreements contained in this Preferred Securities Guarantee shall bind the
successors, assigns, receivers, trustees and representatives of the Guarantor
and shall inure to the benefit of the Holders of the Preferred Securities then
outstanding.

 

SECTION 9.2                     AMENDMENTS.

 

This
Preferred Securities Guarantee can only be amended by an instrument in writing
signed by the Guarantor and the Guarantor Trustee. Except with respect to any
changes that do not materially adversely affect the rights of Holders (in which
case no consent of Holders will be required), this Preferred Securities
Guarantee may only be amended with the prior
approval of the Holders of at least a Majority in Liquidation Amount of
the Preferred Securities. The provisions of Article VI of the Trust
Agreement with respect to meetings of Holders of the Preferred Securities apply
to the giving of such approval.

 

SECTION 9.3                     NOTICES.

 

All
notices provided for in this Preferred Securities Guarantee shall be in
writing, duly signed by the party giving such notice, and shall be delivered,
telecopied or mailed by registered or certified mail, as follows:

 

(a)           If given to the Guarantee Trustee, at the
Guarantee Trustee’s mailing address set forth below (or such other address as
the Guarantee Trustee may give notice of to the Holders of the Preferred
Securities):

 

Wells Fargo Bank,
N.A.

919 North Market Street

Suite 1600

Wilmington, Delaware 19801

Attention: Corporate Trust Services

 

(b)           If given to the Guarantor, at the
Guarantor’s mailing address set forth below (or such other address as the
Guarantor may give notice of to the Holders of the Preferred Securities):

 

Capitol
Bancorp Center

200
Washington Square North

Lansing,
Michigan 48933

Attention:
Cristin K. Reid

 

16

 

(c)           If given to any Holder of Preferred
Securities, at the address set forth on the books and records of the Trust.

 

All
such notices shall be deemed to have been given when received in person,
telecopied with receipt confirmed, or mailed by first class mail, postage
prepaid except that if a notice or other document is refused delivery or cannot
be delivered because of a changed address of which no notice was given, such
notice or other document shall be deemed to have been delivered on the date of
such refusal or inability to deliver.

 

SECTION 9.4                     BENEFIT.

 

This
Preferred Securities Guarantee is solely for the benefit of the Holders of the
Preferred Securities and, subject to Section 3.1(a), is not separately
transferable from the Preferred Securities.

 

SECTION 9.5                     GOVERNING LAW.

 

THIS
PREFERRED SECURITIES GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

 

SECTION 9.6                     COUNTERPARTS.

 

This
Preferred Securities Guarantee may be executed in any number of counterparts,
each of which shall be an original, but such counterparts shall together
constitute but one and the same instrument.

 

[SIGNATURE PAGE TO
FOLLOW]

 

17

 

This
Preferred Securities Guarantee is executed as of the day and year first above
written.

 

	
   

  	
  CAPITOL BANCORP LTD., AS

  GUARANTOR

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  WELLS FARGO BANK, N.A., AS

  GUARANTEE TRUSTEE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
					

 

18Filed by sedaredgar.com - Chancery Resources Inc. - Exhibit 10.1

SHARE CANCELLATION/RETURN TO TREASURY
AGREEMENT

THIS AGREEMENT made the 27th day of May, 2008

BETWEEN:

Chancery Resources, Inc. 
(the
"Company") 

AND: 

Geoffrey Gachallan

("Gachallan")

WHEREAS:

A. Gachallan is the holder of 121,000,000 post split shares of
the Company’s common stock and agrees herein to cancel 119,000,000 of such
shares (the “Gachallan Shares”);

B. Gachallan agrees to the cancellation of the Gachallan Shares
as he has ceased acting as a director or officer of the Company, has no
involvement with the Company’s current or proposed business operations and seeks
to benefit the Company’s minority shareholders with such cancellation; and

C. Each of the Company, and Gachallan deem it to be in their
respective best interests to immediately cancel the Gachallan Shares.

NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration
of the mutual covenants contained herein (the sufficiency whereof is hereby
acknowledged by the parties hereto), the parties hereby agree to and with each
other as follows:

	1. 	
      CANCELLATION OF GACHALLAN SHARES

	 	 	 
		1.1 	
      The Gachallan Shares shall be cancelled effective on the
      date of this Agreement.

	 	 	 
	2. 	
      RELEASE

	 	 	 
		2.1 	
      Gachallan, together with his heirs, executors,
      administrators, and assigns, does hereby remise, release and forever
      discharge the Company, its respective directors, officers, shareholders,
      employees and agents, and their respective successors and assigns, of and
      from all claims, causes of action, suits and demands whatsoever which
      Gachallan ever had, now or may have howsoever arising out of the original
      grant and this cancellation of the Gachallan Shares.

	 	 	 
	3. 	
      COUNTERPARTS

	 	 	 
		3.1 	
      This Agreement may be executed in several counterparts,
      each of which will be deemed to be an original and all of which will
      together constitute one and the same instrument.

	 	 	 
	4. 	
      ELECTRONIC MEANS

	 	 	 
		4.1 	
      Delivery of an executed copy of this Agreement by
      electronic facsimile transmission or other means of electronic
      communication capable of producing a printed copy will be deemed to be
      execution and delivery of this Agreement as of the date set forth on page
      one of this Agreement.

- 2 -

	5. 	
      FURTHER ASSURANCES

	 	 	 
		5.1 	
      As and so often as may be required, the parties will
      execute and deliver all such further documents, do or cause to be done all
      such further acts and things, and give all such further assurances as in
      the opinion of the Company or its counsel are necessary or advisable to
      give full effect to the provisions and intent of this Agreement.

	 	 	 
	6. 	
      PROPER LAW

	 	 	 
		6.1 	
      This Agreement will be governed by and construed in
      accordance with the law of the State of Nevada.

	 	 	 
	7. 	
      INDEPENDENT LEGAL ADVICE

	 	 	 
		7.1 	
      Gachallan hereby acknowledge that this Agreement was
      prepared by Macdonald Tuskey for the Company and that Macdonald Tuskey
      does not represent Gachallan. By signing this Agreement, Gachallan
      confirms that he fully understands this Agreement and (a) has obtained
      independent legal advice or (b) waives the right to obtain independent
      legal advice.

IN WITNESS WHEREOF the parties have executed and
delivered this Agreement.

CHANCERY RESOURCES, INC.

	Per: 	/s/ Julio Restrepo Gutierrez 
	  	Authorized Signatory 

/s/ Greg Gachallan
GREG
GACHALLAN

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00143-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00143-of-00352.parquet"}]]