Document:

exhibit10_1.htm

    EXHIBIT 10.1

    

    

    
      

      

    

    

    

    

    

    

    

    

    

    

    TRANSITION
SERVICES AGREEMENT

     

     

    by and
between

     

     

    Capitol
Bancorp Ltd.

     

     

    and

     

     

    Michigan
Commerce Bancorp Limited

     

    

     

    

     

    

     

    Dated
as of _______ ___, 2009

     

    

    

    

    

    

    

    

    

    

    

     

    
      

      

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    TABLE
OF CONTENTS

     

    Page

     

     

    
      
        	
                 
      

              	      
                ARTICLE 1
      DEFINITIONS

              	
                1

              

      

    

     

    
      	
               
      

            	
              1.1.

            	
              Definitions. 

            	
              1

            

    

    
      	
               
      

            	
              1.2.

            	
              Currency. 

            	
              4

            

    

     

    
      
        	
                 
      

              	      
                ARTICLE 2 TRANSITION
      SERVICE SCHEDULES

              	
                4

              

      

    

     

    
      
        	
                 
      

              	      
                ARTICLE 3
      SERVICES

              	
                5

              

      

    

     

    
      	
               
      

            	
              3.1.

            	
              Services
      Generally. 

            	
              5

            

    

    
      	
               
      

            	
              3.2.

            	
              Service
      Levels. 

            	
              5

            

    

    
      	
               
      

            	
              3.3.

            	
              Impracticability. 

            	
              5

            

    

    
      	
               
      

            	
              3.4.

            	
              Additional
      Resources. 

            	
              6

            

    

     

    
      
        	
                 
      

              	      
                ARTICLE 4 OPERATING
      COMMITTEE

              	
                6

              

      

    

     

    
      	
               
      

            	
              4.1.

            	
              Organization. 

            	
              6

            

    

    
      	
               
      

            	
              4.2.

            	
              Decision
      Making. 

            	
              6

            

    

    
      	
               
      

            	
              4.3.

            	
              Meetings. 

            	
              6

            

    

     

    
      
        	
                 
      

              	      
                ARTICLE 5
      TERM

              	
                6

              

      

    

     

    
      
        	
                 
      

              	      
                ARTICLE 6
      COMPENSATION

              	
                7

              

      

    

     

    
      	
               
      

            	
              6.1.

            	
              Charges for
      Services. 

            	
              7

            

    

    
      	
               
      

            	
              6.2.

            	
              Payment
      Terms. 

            	
              7

            

    

    
      	
               
      

            	
              6.3.

            	
              Taxes

            	
              7

            

    

    
      	
               
      

            	
              6.4.

            	
              Performance under
      Ancillary Agreements. 

            	
              7

            

    

    
      	
               
      

            	
              6.5.

            	
              Error Correction;
      True-up; Accounting. 

            	
              8

            

    

     

    
      
        	
                 
      

              	      
                ARTICLE 7 GENERAL
      OBLIGATIONS

              	
                8

              

      

    

     

    
      	
               
      

            	
              7.1.

            	
              Performance
      Metrics. 

            	
              8

            

    

    
      	
               
      

            	
              7.2.

            	
              Disclaimer of
      Warranties. 

            	
              8

            

    

    
      	
               
      

            	
              7.3.

            	
              Transitional Nature of
      Services; Changes. 

            	
              8

            

    

    
      	
               
      

            	
              7.4.

            	
              Responsibilities for
      Errors; Changes. 

            	
              9

            

    

    
      	
               
      

            	
              7.5.

            	
              Cooperation and
      Consents. 

            	
              9

            

    

    
      	
               
      

            	
              7.6.

            	
              Alternatives. 

            	
              10

            

    

    
      	
               
      

            	
              7.7.

            	
              Personnel. 

            	
              10

            

    

    
      	
               
      

            	
              7.8.

            	
              Insurance. 

            	
              10

            

    

     

    
      
        	
                 
      

              	      
                ARTICLE 8
      TERMINATION

              	
                11

              

      

    

     

     

    
      
         

      

      
        i

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              8.1.

            	
              Termination. 

            	
              11

            

    

    
      	
               
      

            	
              8.2.

            	
              Survival. 

            	
              12

            

    

    
      	
               
      

            	
              8.3.

            	
              Payment. 

            	
              12

            

    

    
      	
               
      

            	
              8.4.

            	
              User ID;
      Passwords. 

            	
              12

            

    

     

    
      
        	
                 
      

              	      
                ARTICLE 9 RELATIONSHIP
      BETWEEN THE PARTIES

              	
                12

              

      

    

     

    
      
        	
                 
      

              	      
                ARTICLE 10
      SUBCONTRACTORS

              	
                12

              

      

    

     

    
      	
               
      

            	
              10.1.

            	
              Subcontractors. 

            	
              12

            

    

    
      	
               
      

            	
              10.2.

            	
              Assignment. 

            	
              13

            

    

     

    
      
        	
                 
      

              	      
                ARTICLE 11
      INTELLECTUAL PROPERTY

              	
                13

              

      

    

     

    
      	
               
      

            	
              11.1.

            	
              Allocation of Rights
      by Ancillary Agreements. 

            	
              13

            

    

    
      	
               
      

            	
              11.2.

            	
              Existing Ownership
      Rights Unaffected. 

            	
              13

            

    

    
      	
               
      

            	
              11.3.

            	
              Third Party
      Software. 

            	
              13

            

    

    
      	
               
      

            	
              11.4.

            	
              Termination of
      Licenses. 

            	
              14

            

    

     

    
      
        	
                 
      

              	      
                ARTICLE 12 NO
      OBLIGATION

              	
                14

              

      

    

     

    
      
        	
                 
      

              	      
                ARTICLE 13
      CONFIDENTIALITY

              	
                14

              

      

    

     

    
      	
               
      

            	
              13.1.

            	
              Confidentiality. 

            	
              14

            

    

    
      	
               
      

            	
              13.2.

            	
              Confidential
      Information. 

            	
              14

            

    

    
      	
               
      

            	
              13.3.

            	
              Permitted
      Purpose. 

            	
              15

            

    

    
      	
               
      

            	
              13.4.

            	
              Disclosure. 

            	
              15

            

    

    
      	
               
      

            	
              13.5.

            	
              Custody. 

            	
              15

            

    

    
      	
               
      

            	
              13.6.

            	
              Expiration of
      Confidentiality Provisions. 

            	
              15

            

    

     

    
      
        	
                 
      

              	      
                ARTICLE 14 LIMITATION
      OF LIABILITY AND INDEMNIFICATION

              	
                15

              

      

    

     

    
      	
               
      

            	
              14.1.

            	
              Indemnification. 

            	
              15

            

    

    
      	
               
      

            	
              14.2.

            	
              Limitation of
      Liability. 

            	
              16

            

    

    
      	
               
      

            	
              14.3.

            	
              Provisions Applicable
      with respect to Indemnification
    Obligations. 

            	
              17

            

    

    
      	
               
      

            	
              14.4.

            	
              Survival. 

            	
              17

            

    

     

    
      
        	
                 
      

              	      
                ARTICLE 15 DISPUTE
      RESOLUTION

              	
                17

              

      

    

     

    
      
        	
                 
      

              	      
                ARTICLE 16
      ASSIGNMENT

              	
                17

              

      

    

     

    
      	
               
      

            	
              16.1.

            	
              Prohibition of
      Assignment. 

            	
              17

            

    

    
      	
               
      

            	
              16.2.

            	
              Assignment to the
      Capitol
      Group. 

            	
              17

            

    

     

    
      
        	
                 
      

              	      
                ARTICLE 17
      MISCELLANEOUS

              	
                17

              

      

    

     

     

    
      
         

      

      
        ii

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              17.1.

            	
              Notices. 

            	
              17

            

    

    
      	
               
      

            	
              17.2.

            	
              Governing
      Law. 

            	
              17

            

    

    
      	
               
      

            	
              17.3.

            	
              Judgment
      Currency. 

            	
              18

            

    

    
      	
               
      

            	
              17.4.

            	
              Entire
      Agreement. 

            	
              18

            

    

    
      	
               
      

            	
              17.5.

            	
              Conflicts. 

            	
              18

            

    

    
      	
               
      

            	
              17.6.

            	
              Force
      Majeure. 

            	
              18

            

    

    
      	
               
      

            	
              17.7.

            	
              Amendment and
      Waiver. 

            	
              19

            

    

    
      	
               
      

            	
              17.8.

            	
              Further
      Assurances. 

            	
              19

            

    

    
      	
               
      

            	
              17.9.

            	
              Severability. 

            	
              19

            

    

    
      	
               
      

            	
              17.10.

            	
              Counterparts. 

            	
              19

            

    

    

     

    

     

    
      
         

      

      
        iii

        
          

        

      

      
         

      

    

    Transition Services
Agreement

     

    THIS
TRANSITION SERVICES AGREEMENT (this “Agreement”),
dated as of _____________, 2009, by and between CAPITOL BANCORP LTD., a Michigan
corporation (“Capitol”),
and MICHIGAN COMMERCE BANCORP LIMITED, a Michigan corporation (“MCBL”) and
together with Capitol, the “Parties”,
and each individually, a “Party”.
Capitalized terms used but not defined herein shall have the meaning ascribed to
them in the Separation Agreement (as defined below).

     

    RECITALS

     

    WHEREAS,
Capitol and MCBL have entered into a Separation Agreement and Plan of
Distribution, dated _____________, 2009, pursuant to which the Parties set out
the terms and conditions relating to the separation of the MCBL Business (such
that the MCBL Business is to be held, as at the Effective Time, directly or
indirectly, by MCBL (such agreement, as amended, restated or modified from time
to time, the “Separation
Agreement”).

     

    WHEREAS,
in connection therewith, Capitol and the other members of the Capitol Group, on
the one hand, and MCBL and the other members of the MCBL Group, on the other
hand, will provide certain transitional services to each other following the
Distribution Date, subject to the terms and conditions of this
Agreement.

     

    NOW,
THEREFORE, in consideration of the foregoing premises and the mutual agreements
and covenants contained in this Agreement and other good and valuable
consideration the receipt and sufficiency of which are hereby acknowledged, the
Parties agree as follows:

     

    ARTICLE
1

    DEFINITIONS

     

    1.1. Definitions.  For the
purposes of this Agreement, the following words and expressions and variations
thereof, unless a clearly inconsistent meaning is required under the context,
shall have the meanings specified or referred to in this
Section 1.1:

     

    “Affiliate”
of any Person means any other Person that, directly or indirectly, controls, is
controlled by, or is under common control with such first Person as of the date
on which or at any time during the period for when such determination is being
made. For purposes of this definition, “control” means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities or other interests, by contract or otherwise, and
the terms “controlling” and
“controlled”
have meanings correlative to the foregoing.

     

    “Agreement”
has the meaning set forth in the Preamble to this Agreement and in Article
II.

     

    “Ancillary
Agreement” has the meaning set forth in the Separation
Agreement.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    “Applicable
Law” means any applicable law, statute, rule or regulation of any
Governmental Authority or any outstanding order, judgment, injunction, ruling or
decree by any Governmental Authority.

     

    “Business
Concern” means any corporation, company, limited liability company,
partnership, joint venture, trust, unincorporated association or any other form
of association.

     

    “Business
Day” means any day excluding (i) Saturday, Sunday and any other day
which, in Lansing, Michigan, is a legal holiday or (ii) a day on which
banks are authorized by Applicable Law to close in Lansing,
Michigan.

     

    “Chief
Representative” has the meaning set forth in
Section 7.7(c).

     

    “Commercially
Reasonable Efforts” means the efforts that a reasonable and prudent
Person desirous of achieving a business result would use in similar
circumstances to ensure that such result is achieved as expeditiously as
possible in the context of commercial relations of the type envisaged by this
Agreement; provided, however, that an
obligation to use Commercially Reasonable Efforts under this Agreement does not
require the Person subject to that obligation to assume any material obligations
or pay any material amounts to a Third Party.

     

    “Confidential
Information” has the meaning set forth in Section 13.2.

     

    “Consent”
means any written approval, consent, ratification, waiver or other
authorization.

     

    “Contract”
means any contract, agreement, lease, license, commitment, consensual
obligation, promise or undertaking (whether written or oral and whether express
or implied) that is legally binding on any Person or any part of its property
under Applicable Law.

     

    “Distribution
Date” has the meaning set forth in the Separation Agreement.

     

    “Dollars”
or “$” means
the lawful currency of the United States of America.

     

    “Effective
Time” has the meaning set forth in the Separation Agreement.

     

    “Event of
Default” has the meaning set forth in Section 8.1.

     

    “Expiration
Date” has the meaning set forth in Article V.

     

    “Fair Market
Value” means, in relation to the pricing of services under this
Agreement, terms that would be agreed between non-affiliated third parties for
comparable services on a comparable scale, as initially proposed in the
reasonable judgment of Capitol and reasonably approved by MCBL.

     

    “Force Majeure
Event” has the meaning set forth in Section 17.6.

     

    “Governmental
Authority” means any court, arbitration panel, governmental or regulatory
authority, agency, stock exchange, commission or body.

     

     

    
      
         

      

      
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    “Governmental
Authorization” means any Consent, license, certificate, franchise,
registration or permit issued, granted, given or otherwise made available by, or
under the authority of, any Governmental Authority or pursuant to any Applicable
Law.

     

    “Group”
means the Capitol Group or the MCBL Group, as the context requires.

     

    “Impracticability”
has the meaning set forth in Section 3.3.

     

    “Investment
Agreement” has the meaning set forth in the Recitals to this
Agreement.

     

    “Liabilities”
has the meaning set forth in the Separation Agreement.”

     

    “MCBL” has
the meaning set forth in the Preamble to this Agreement.

     

    “MCBL
Group” means MCBL, its Subsidiaries and Affiliates from time to time
after the Effective Time.

     

    “MCBL Indemnified
Parties” has the meaning set forth in Section 14.1.

     

    “Operating
Committee” has the meaning set forth in Section 4.1.

     

    “Party” has
the meaning set forth in the Preamble to this Agreement.

     

    “Capitol”
has the meaning set forth in the Preamble to this Agreement.

     

    “Capitol
Group” means Capitol, its Subsidiaries and Affiliates from time to time
after the Effective Time.

     

    “Capitol Group
Company” means any Person forming part of the Capitol Group.

     

    “Capitol
Indemnified Parties” has the meaning set forth in
Section 14.1.

     

    “Permitted
Purpose” has the meaning set forth in Section 13.3.

     

    “Person”
means any individual, Business Concern or Governmental Authority.

     

    “Prime
Rate” means the rate of interest announced by Bloomberg from time to time
as the “prime rate,” “prime lending rate,” “base rate” or similar reference
rate. In the event the Prime Rate is discontinued as a standard, the holder
hereof shall designate a comparable reference rate as a substitute therefor. For
purposes hereof, the Prime Rate as published by Bloomberg at www.Bloomberg.com
under “Market Data: Rates & Bonds: Key Rates” at the close of business
on each business day shall be the Prime Rate for that day and any immediately
succeeding non-business day or days.

     

    “SEC” means
the Securities and Exchange Commission.

     

    “Sales
Taxes” means any sales, use, consumption, goods and services, value added
or similar tax, duty or charge imposed pursuant to Applicable Law.

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    “Separation
Agreement” has the meaning set forth in the Recitals to this
Agreement.

     

    “Service(s)”
has the meaning set forth in Section 3.1(c).

     

    “Service
Manager” has the meaning set forth in Section 7.7(c).

     

    “Service
Provider” means Capitol or a member of the Capitol Group, or MCBL or a
member of the MCBL Group, as the case may be, when it is providing a Service to
MCBL or a member of the MCBL Group, or Capitol or a member of the Capitol Group,
as the case may be, hereunder in accordance with a Transition Service
Schedule.

     

    “Service
Recipient” means Capitol or a member of the Capitol Group, or MCBL or a
member of the MCBL Group, as the case may be, when it is receiving a Service
from MCBL or a member of the MCBL Group, or Capitol or a member of the Capitol
Group, as the case may be, hereunder in accordance with a Transition Service
Schedule.

     

     “Subcontractor”
has the meaning set forth in Section 10.1.

     

    “Subsidiary”
of any Person means any corporation, partnership, limited liability entity,
joint venture or other organization, whether incorporated or unincorporated, of
which a majority of the total voting power of capital stock or other interests
entitled (without the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by such Person.

     

    “Term” has
the meaning set forth in Article V.

     

    “Third
Party” means a Person that is not a Party to this Agreement, other than a
member of the Capitol Group or a member of the MCBL Group.

     

    “Transition
Service Schedule” has the meaning set forth in Article II.

     

    1.2. Currency.  Except as
otherwise provided in a Transition Service Schedule, all references to currency
herein are to lawful money of the United States of America.

     

    ARTICLE
2

    TRANSITION SERVICE
SCHEDULES

     

    This
Agreement will govern individual transition Services as requested by either MCBL
or any other member of the MCBL Group, on the one hand, or Capitol or any other
member of the Capitol Group, on the other hand, the details of which are set
forth in the Transition Service Schedules attached to and forming part of this
Agreement. Each Service shall be covered by this Agreement upon execution of a
transition service schedule in the form attached hereto (each transition service
schedule, a “Transition
Service Schedule”).

     

    For each
Service, the Parties shall set forth in a Transition Service Schedule
substantially in the form of Schedule 1 hereto,
among other things, (i) the time period during which the Service will be
provided if different from the Term of this Agreement, (ii) a summary of
the Service to be provided and (iii) the method for determining the charge,
if any, for the Service and 

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    any other
terms applicable thereto.  Obligations regarding a Transition Service
Schedule shall be effective upon the later of the Distribution Date or the date
of execution of the applicable Transition Service Schedule.  This
Agreement and all the Transition Service Schedules shall be defined as the
"Agreement"
and incorporated herein wherever reference to it is made.

     

    ARTICLE
3

    SERVICES

     

    3.1. Services
Generally.

     

    (a)   Except as
otherwise provided herein, for the Term here of, Capitol and other members of
the Capitol Group shall provide to MCBL and the other members of the MCBL Group,
and shall cause the other applicable members of the Capitol Group to provide or
cause to be provided to MCBL and the other members of the MCBL Group, the
Services described in the Transition Service Schedule(s) attached hereto
identified on such Schedules as Services to be provided by members of the
Capitol Group.

     

    (b)   Except as
otherwise provided herein, for the Term hereof, MCBL and other members of the
MCBL Group shall provide to Capitol and the other members of the Capitol Group,
and shall cause the other applicable members of the MCBL Group to provide or
cause to be provided to Capitol and the other members of the Capitol Group, the
Services described in the Transition Service Schedule(s) attached hereto
identified on such Schedules as Services to be provided by members of the MCBL
Group.

     

    (c)   The
Service(s) described on a single Transition Service Schedule shall be referred
to herein as a “Service"
Collectively, the services described on all the Transition Service Schedules
shall be referred to herein as the "Services”
Capitol and MCBL shall cause the members of their respective Groups to, if
applicable, comply with the terms and conditions set forth in this Agreement or
in the Transition Services Schedules.

     

    3.2. Service
Levels. 
Except as
otherwise provided in a Transition Service Schedule for a specific service:
(i) the Service Provider shall provide the Services only to the extent such
Services are being provided immediately prior to the Distribution Date and at a
level of service substantially similar to that provided immediately prior to the
Distribution Date and (ii) the Services will be available only for purposes
of conducting the business of the Service Recipient substantially in the manner
it was conducted prior to the Effective Time; provided, however, that nothing
in this Agreement will require a Party to favor the other Party over its other
business operations.  Except as otherwise provided in a Transition
Service Schedule in respect of a specific Service, each Party will not be
entitled to any new service.

     

    3.3. Impracticability.  A Service
Provider shall not be required to provide any Service to the extent the
performance of such Service becomes impracticable as a result of a cause or
causes outside the reasonable control of the Service Provider, including
unfeasible technological requirements, or to the extent the performance of such
Services would require the Service Provider to violate any Applicable Law, or
would result in the breach of any license, Governmental Authorization or
Contract (an "Impracticability").

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    3.4. Additional
Resources. 
In
accordance with Section 7.7 below and except as specifically provided in a
Transition Service Schedule for a specific Service, in providing the Services, a
Service Provider shall not be obligated to: (i) hire any additional
employees; (ii) maintain the employment of any specific employee;
(iii) purchase, lease or license any additional facilities, equipment or
software; or (iv) pay any costs related to the transfer or conversion of
the Service Recipient’s data to the Service Provider or any alternate supplier
of Services.

     

    ARTICLE
4

    OPERATING
COMMITTEE

     

    4.1. Organization.  The
Parties shall create an operating committee (the “Operating
Committee”) and shall each appoint one (1) employee to the Operating
Committee for the Term.  The Operating Committee will oversee the
implementation and application of this Agreement and shall at all times
reasonably and in good faith attempt to resolve any dispute between the
Parties.  Each of the Parties shall have the right to change its
Operating Committee member at any time with employees of comparable knowledge,
expertise and decision-making authority.

     

    4.2. Decision
Making. 
All
Operating Committee decisions shall be taken unanimously.  If the
Operating Committee fails to make a decision, resolve a dispute, agree upon any
necessary action, or if a Party so requests, in the event of a material breach
of this Agreement, a senior officer of Capitol and a senior officer of MCBL,
neither of whom shall have any direct oversight or responsibility for the
subject matter in dispute, shall attempt within a period of fourteen
(14) days to conclusively resolve any such unresolved issue.

     

    4.3. Meetings.  During
the Term, the Operating Committee members shall meet, in person or via
teleconference, at least once in each week during the first six (6) months
and thereafter on a monthly basis, or less frequently if agreed by the members
of the Operating Committee.  In addition, the Operating Committee
shall meet as often as necessary in order to promptly resolve any disputes
submitted to it by any representative of either Party.

     

    ARTICLE
5

    TERM

     

    The term
of this Agreement shall commence on the Distribution Date and end twelve
(12) months following the Distribution Date, unless earlier terminated
under Article VIII or extended as hereinafter provided (the “Term”).  Each
Party shall have the right to extend the term of the agreement for a renewal
term of three months upon written notice to the other Party no later than thirty
(30) days prior to the expiration of the initial term (the last day of the
initial term or renewal term, as applicable, the “Expiration
Date”).  Under certain circumstances and for certain Services,
as specified in the applicable Transition Service Schedule, each Party shall
have the right to extend the term of the agreement for a second renewal term of
three (3) additional months.  The Parties may agree on an earlier
expiration date respecting a specific Service by specifying such date on the
Transition Service Schedule for that Service.  Services shall be
provided up to and including the date set forth in the applicable Transition
Service Schedule, subject to earlier termination as provided in Article
VIII.  It shall be the sole responsibility of the Service Recipient,
upon and after expiration or early termination of this 

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

     

    Agreement
with respect to a specific Service, to perform, render and provide for itself
(or to make arrangements with one or more Third Party service providers to
perform, render and provide) such Service, and to do all necessary planning and
make all necessary preparations in connection therewith.

     

    ARTICLE
6

    COMPENSATION

     

    6.1. Charges
for Services. 
The
Service Recipient shall pay the Service Provider the charges, if any, set forth
on the Transition Service Schedules for each of the Services listed therein as
adjusted, from time to time, in accordance with the processes and procedures
established under Section 7.1 hereof, or, if no such charges are
specifically indicated otherwise on a Transition Service Schedule, the Fair
Market Value of the Services.  If there is any inconsistency between
the Transition Service Schedule and this Section 6.1, the terms of the
Transition Service Schedule shall govern.  The Parties also intend,
having regard to the reciprocal and transitional nature of this Agreement and
other factors, for charges to be easy to administer and justify; and, therefore,
they hereby acknowledge that it may be counterproductive to try to recover every
cost, charge or expense, particularly those that are insignificant or de
minimis.

     

    6.2. Payment
Terms. 
Except as
otherwise specified in a Transition Service Schedule, the Service Provider shall
invoice the Service Recipient monthly (or on such other basis as the Parties may
mutually determine) for all charges pursuant to this Agreement.  Such
invoices shall specify the Services provided to the Service Recipient during the
preceding month and identifying the Service fee applicable to each Service so
specified, and shall be accompanied by reasonable documentation or other
reasonable explanations supporting such charges.  Except as otherwise
specified in a Transition Service Schedule, the Service Recipient shall pay, net
of applicable withholding tax, if any, the Service Provider for all Services
provided hereunder within thirty (30) days after receipt of an invoice
therefor by wire transfer of immediately available funds to the account
designated by the Service Provider for this purpose.  Late payments
shall bear interest at a rate per annum equal to the Prime Rate plus 2.0%,
calculated for the actual number of days elapsed, accrued from and excluding the
date on which such payment was due up to and including the date of
payment.

     

    6.3. Taxes.  The fees
and charges payable by the Service Recipient under this Agreement and set forth
on the Transition Service Schedules shall be exclusive of any Sales Taxes or
excise taxes or any customs or import charges or duties or any similar charges
or duties which may be imposed by any Governmental Authority in connection with
the purchase or delivery of the Services or materials to the Service
Recipient.  The Service Recipient shall remit to the Service Provider
any Sales Taxes properly payable to the Service Provider pursuant to this
Agreement.  Applicable Sales Taxes shall be indicated by the Service
Provider separately on all of the Service Provider’s invoices.  The
Parties shall co-operate with each other to minimize any applicable Sales Taxes
and each shall provide the other with any reasonable certificates or documents
which are useful for such purpose.

     

    6.4. Performance
under Ancillary Agreements.  Notwithstanding
anything to the contrary contained herein, the Service Recipient shall not be
charged under this Agreement 

     

    
      
         

      

      
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    for any
obligations that are specifically required to be performed under the Separation
Agreement or any other Ancillary Agreement; and any such other obligations shall
be performed and charged for (if applicable) in accordance with the terms of the
Separation Agreement or such other Ancillary Agreement.

     

    6.5. Error
Correction; True-up; Accounting.  The
Parties shall agree to develop, through the Operating Committee or otherwise,
mutually acceptable reasonable processes and procedures for conducting internal
audits and making adjustments to charges as a result of the movement of
employees and functions between the Parties, the discovery of errors or
omissions in charges, as well as a true-up of amounts owed. In no event shall
such processes and procedures extend beyond eighteen (18) months after
completion of a Service.

     

    ARTICLE
7

    GENERAL
OBLIGATIONS

     

    7.1. Performance
Metrics. 
Subject
to Sections 3.2 to 3.4 and any other terms and conditions of this Agreement,
each Party shall maintain, and shall cause the relevant other members of its
respective Group to maintain, sufficient resources to perform their obligations
hereunder.  Specific performance metrics for each Party for a specific
Service may be set forth in the corresponding Transition Service
Schedule.  Where none is set forth, each Party and the other relevant
members of its respective Group shall use Commercially Reasonable Efforts to
provide Services, or to cause the Services to be provided, in accordance with
the policies, procedures, service levels and practices in effect before the
Distribution Date and shall exercise the same care and skill as each Party
exercises in performing similar services for itself or for the other members of
its respective Group.  To the extent within the possession and control
of a Service Recipient, such Service Recipient shall provide, and shall cause
the other relevant members of its respective Group to provide, the Service
Provider with information and documentation sufficient for the Service Provider
and the other relevant members of its respective Group to perform the Services
they are obligated to perform hereunder as they were performed before the
Distribution Date and shall make available, as reasonably requested by the
Service Provider, sufficient resources and timely decisions, approvals and
acceptances in order that the Service Provider may perform its obligations
hereunder in a timely manner.

     

    7.2. Disclaimer
of Warranties. 
Except as
expressly provided in this Agreement, no Party makes any warranties or
conditions, express, implied, conventional or statutory, including but not
limited to, the implied warranties or conditions of merchantability, of quality
or fitness for a particular purpose, with respect to the Services or other items
or deliverables provided by it or any other member of its respective Group
hereunder or any transactions contemplated herein.

     

    7.3. Transitional
Nature of Services; Changes.  The
Parties acknowledge the transitional nature of the Services and that a Service
Provider may make changes from time to time in the manner of performing the
Services if the Service Provider is making similar changes in performing similar
services for itself and if the Service Provider provides to the Service
Recipient reasonable notice of the circumstances regarding such
changes.

     

    
      
         

      

      
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    7.4. Responsibilities
for Errors; Changes. 
Except as
set forth in Article XIV and in the case of Service Provider’s gross negligence,
bad faith or willful misconduct, the Service Provider’s sole responsibility to
the Service Recipient:

     

    (a)   for
material errors or omissions in Services, shall be to furnish correct
information, payment and/or adjustment in the Services, at no additional cost or
expense to the Service Recipient; provided that the
Service Provider must promptly advise the Service Recipient of any such material
error or omission of which it becomes aware; and

     

    (b)   for
failure to deliver any Service because of Impracticability, shall be to use
Commercially Reasonable Efforts, subject to Section 3.3, to make the
Services available or to resume performing the Services as promptly as
reasonably practicable.

     

    7.5. Cooperation
and Consents. 
The
Parties shall, and shall cause the other relevant members of their respective
Groups to, cooperate with each other in all matters relating to the provision
and receipt of Services.  Such cooperation shall include exchanging
information, performing true-ups and adjustments, and obtaining all Third Party
Consents, licenses or sublicenses necessary to permit each Party to perform its
obligations hereunder (including by way of example, not by way of limitation,
rights to use Third Party software needed for the performance of
Services).  Pursuant to Section 11.3, the costs of obtaining such
Third Party Consents, licenses or sublicenses shall be borne by the Service
Recipient.  The Parties shall maintain, and shall cause the other
relevant members of their respective Groups to maintain, in accordance with its
standard document retention procedures, documentation supporting the information
relevant to cost calculations contained in the Transition Service
Schedules.

     

    With
respect to those Services that, in the reasonable opinion of a Service
Recipient, relate to matters of internal control over financial reporting and
with respect to which such Service Recipient reasonably believes testing of
certain key controls maintained by the Service Provider is necessary in order to
permit such Service Recipient’s management to perform an adequate assessment of
internal control over financial reporting (and to permit its auditors or
internal auditors to audit its internal control over financial reporting), upon
request by such Service Recipient no later than sixty (60) days before the
end of a calendar year where such management assessment and related audit of its
internal control over financial reporting is actually required for SEC
reporting, the Service Provider and such Service Recipient shall jointly
identify key controls over financial reporting maintained by the Service
Provider.  The Service Provider will provide such Service Recipient’s
external and internal auditors access to information, systems and those
individuals responsible for execution of any key controls maintained by the
Service Provider so as to enable the independent auditors or internal auditors
to determine such controls over the practices and procedures relating to the
Service Provider’s performance of such Services under this Agreement are in
effect.  The Service Provider will, and will use Commercially
Reasonable Efforts to cause its external and internal auditors to, provide
information to such Service Recipient and the Service Recipient’s external and
internal auditors in order to allow such Service Recipient or the Service
Recipient’s internal and external auditors to perform procedures with respect to
key controls which must be tested as part of such Service Recipient’s management
assessment process and required by generally accepted auditing standards,
including, without limitation, PCAOB auditing standards, and by Section 404
of the Sarbanes-Oxley Act of 2002 and the rules promulgated and guidance issued
thereunder.  All 

     

    
      
         

      

      
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    expenditures
incurred by a Service Provider in performing its obligations under this
paragraph shall be payable by the Service Recipient.

     

    7.6. Alternatives.  If the
Service Provider reasonably believes it is unable to provide any Service because
of a failure to obtain necessary Consents, licenses or sublicenses pursuant to
Section 7.5 or because of Impracticability, the Parties shall reasonably
and in good faith cooperate to determine the best alternative
approach.  Until such alternative approach is found or the problem
otherwise resolved to the reasonable satisfaction of the Parties, the Service
Provider shall use Commercially Reasonable Efforts subject to Sections 3.2, 3.3
and 3.4, to continue providing the Service.  To the extent an agreed
upon alternative approach requires the occurrence of costs or expenditures above
and beyond that which is included in the Service Provider’s charge for the
Service in question, such additional costs and expenditures shall be discussed
between the Parties and, unless otherwise agreed, be borne by the Service
Recipient.

     

    7.7. Personnel.

     

    (a)   Right to designate and change
personnel.  The Service Provider will have the right to
designate which personnel it will assign to perform the Services.  The
Service Provider also will have the right to remove and replace any such
personnel at any time or designate any of its Affiliates or a Subcontractor at
any time to perform the Services, subject to the provisions of Article X; provided, however, that the
Service Provider will use Commercially Reasonable Efforts to limit the
disruption to the Service Recipient in the transition of the Services to
different personnel or to a Subcontractor.  In the event that
personnel with the designated level of experience are not then employed by the
Service Provider, the Service Provider will use Commercially Reasonable Efforts
to provide such personnel or Subcontractor personnel having an adequate level of
experience; provided, however, that the
Service Provider will have no obligation to retain any individual employee for
the sole purpose of providing the applicable Services.

     

    (b)   Financial
Responsibility.  The Service Provider will pay for all
personnel expenses, including wages, of its employees performing the
Services.

     

    (c)   Service Managers and Chief
Representatives.  During the Term of this Agreement, each Party
will appoint (i) one of its employees (the “Service
Manager”) who will have overall responsibility for managing and
coordinating the delivery of the Services and who shall serve as such Party’s
representative on the Operating Committee and (ii) one of its employees for
each service as indicated in each Transition Service Schedule (the “Chief
Representative”).  The Service Manager and the Chief
Representatives will coordinate and consult with the Service
Recipient.  The Service Provider may, at its discretion, select other
individuals to serve in these capacities during the Term of this Agreement upon
providing notice to the other Party.  For greater certainty, a Chief
Representative may serve as such in respect of one or more Transition Service
Schedules.

     

    7.8. Insurance.  Each
Party shall obtain and maintain at its own expense insurance of the type
generally maintained in the ordinary course of its business.  Except
as otherwise specified in a Transition Service Schedule, the Service Provider
shall not be required to obtain and maintain any particular insurance in
relation to providing any Service.

     

    
      
         

      

      
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    ARTICLE
8

    TERMINATION

     

    8.1. Termination.  The
Service Recipient may terminate any Service, with or without cause, at any time
upon at least sixty (60) days prior notice to the Service
Provider.  As soon as reasonably practicable following receipt of any
such notice, the Service Provider shall advise the Service Recipient as to
whether termination of such Service will (a) require the termination or
partial termination of, or otherwise affect the provision of, certain other
Services, or (b) result in any early termination costs, including those
related to Subcontractors.  In the event that such termination is
expected by the Service Provider to result in any early termination costs, the
Service Provider will provide to the Service Recipient such information as it
has reasonably available regarding the estimated amount of such costs, which in
the case of a Subcontractor may be based upon information provided by such
Subcontractor.  Any early termination costs shall be borne by the
Service Recipient as set forth in Section 8.3.  If either will be
the case, the Service Recipient may withdraw its termination notice within five
(5) Business Days.  If the Service Recipient does not withdraw
the termination notice within such period, such termination will occur in
accordance with the original notice.

     

    In
addition, the Parties agree that either Party may terminate this Agreement (and
the corresponding Transition Service Schedule) with respect to a specific
Service upon providing notice to the other Party in the event that an Event of
Default occurs in relation to such other Party, and such termination shall take
effect immediately upon the non-defaulting Party providing such notice to the
other (except as otherwise specified in clause (d) below).

     

    For the
purposes of this Agreement, each of the following shall individually and
collectively constitute an “Event of
Default”:

     

    (a)   in
relation to the Service Recipient, if the Service Recipient defaults in payment
to the Service Provider of any payments which are due and payable by it to the
Service Provider pursuant to this Agreement, and such default is not cured
within thirty (30) days following receipt by the Service Recipient of
notice of such default;

     

    (b)   in
relation to the Service Provider, if the Service Provider defaults in payment to
the Service Recipient of any payments which are due and payable by it to the
Service Recipient pursuant to this Agreement (if any), and such default is not
cured within thirty (30) days following receipt by the Service Provider of
notice of such default;

     

    (c)   either
Party breaches any of its material obligations to the other Party pursuant to
this Agreement (other than as set out in paragraphs (a) and
(b) above), and fails to cure it within thirty (30) days after receipt
of notice from the non-defaulting Party specifying the default in reasonable
detail and demanding that it be rectified, provided that if such
breach is not capable of being cured within thirty (30) days after receipt
of such notice and the Party in default has diligently pursued efforts to cure
the default within the thirty (30) day period, no Event of Default under
this paragraph (c) shall occur;

     

    (d)   either
Party (i) is bankrupt or insolvent or takes the benefit of any statute in
force for bankrupt or insolvent debtors, or (ii) files a proposal or takes
any action or 

     

    
      
         

      

      
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    proceeding
before any court of competent jurisdiction for its dissolution, winding-up or
liquidation, or for the liquidation of its assets, or a receiver is appointed in
respect of its assets, which order, filing or appointment is not rescinded
within sixty (60) days.

     

    8.2. Survival.  Notwithstanding
the foregoing, in the event of any termination or expiration with respect to one
or more Services, but less than all Services, this Agreement shall continue in
full force and effect with respect to any Services not terminated or
expired.

     

    8.3. Payment.  Immediately
following the Expiration Date, the Service Provider shall cease, or cause the
other members of the Group to which it belongs, or its Subcontractors to cease,
providing the Services, and the Service Recipient shall promptly pay or cause
the other members of the Group to which it belongs, to promptly pay all fees
accrued pursuant to Article VI but unpaid to the Service Provider; provided, however, that in case
of earlier termination without cause, the Service Recipient shall in accordance
with Section 8.1 above reimburse the Service Provider only to the extent of
the reasonable termination costs actually incurred by the Service Provider
resulting from the Service Recipient’s early termination of such Services,
including those owed to Subcontractors.  The Service Provider will use
Commercially Reasonable Efforts to mitigate any such termination
costs.

     

    8.4. User
ID; Passwords. 
The
Parties shall use Commercially Reasonable Efforts upon the termination or
expiration of this Agreement or of any specific Service hereto to ensure that
access by one Party to the other Party’s systems is cancelled.

     

    ARTICLE
9

    RELATIONSHIP BETWEEN THE
PARTIES

     

    The
Service Provider is and will remain at all times an independent contractor in
the performance of all Services hereunder.  In all matters relating to
this Agreement, the Service Provider will be solely responsible for the acts of
its employees and agents, and employees or agents of the Service Provider shall
not be considered employees or agents of the Service
Recipient.  Except as otherwise provided herein, the Service Provider
will not have any right, power or authority to create any obligation, express or
implied, on behalf of the Service Recipient nor shall the Service Provider act
or represent or hold itself out as having authority to act as an agent or
partner of the Service Recipient, or in any way bind or commit the Service
Recipient to any obligations.  Nothing in this Agreement is intended
to create or constitute a joint venture, partnership, agency, trust or other
association of any kind between the Parties or Persons referred to herein, and
each Party shall be responsible only for its respective obligations as set forth
in this Agreement.  Neither the Service Provider nor its employees
shall be considered an employee or agent of the Service Recipient for any
purpose, except as expressly agreed by the Parties.  The Service
Provider shall have sole responsibility for the supervision, daily direction and
control, payment of salary (including withholding of income taxes and deductions
at source), worker’s compensation, disability benefits and the like of its
employees.

     

    ARTICLE
10

    SUBCONTRACTORS

     

    10.1. Subcontractors.

     

    
      
         

      

      
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    The
Service Provider may, subject to Section 10.2, engage a “Subcontractor”
to perform all or any portion of the Service Provider’s duties under this
Agreement, provided that any
such Subcontractor agrees in writing to be bound by confidentiality obligations
at least as protective as the terms of Section 8.4 of the Separation
Agreement regarding confidentiality and non-use of information, and provided further that
the Service Provider remains responsible for the performance of such
Subcontractor and for paying the Subcontractor.  As used in this
Agreement, “Subcontractor”
will mean any Person or entity engaged to perform hereunder, other than
employees of the Service Provider or its Affiliates.

     

    10.2. Assignment.  In the
event of any subcontracting by the Service Provider to a non-Affiliate of the
Service Provider of all or any portion of the Service Provider’s duties under
this Agreement, the Service Provider shall assign and transfer to the Service
Recipient the full benefit of all such non-Affiliate subcontractor’s performance
covenants, guarantees, warranties or indemnities (if any), to the extent same
are transferable or assignable, in respect of the portion of the Services
provided to the Service Recipient pursuant to such subcontracting; and if any
such guarantees, warranties, indemnities and benefits are not assignable, the
Service Provider shall use Commercially Reasonable Efforts to procure the
benefit of same for the Service Recipient through other legal permissible
means.  The Service Provider will also reasonably endeavor to permit
the assignment of any Subcontractor engagement to a Service Recipient or its
Affiliates at the request of the Service Recipient upon termination of Service
hereunder.

     

    ARTICLE
11

    INTELLECTUAL
PROPERTY

     

    11.1. Allocation
of Rights by Ancillary Agreements.  This
Agreement and the performance of this Agreement will not affect the ownership of
any patent, trademark or copyright or other intellectual property rights
allocated in the Separation Agreement or any of the Ancillary
Agreements.

     

    11.2. Existing
Ownership Rights Unaffected.  Neither
Party will gain, by virtue of this Agreement, any rights of ownership of
copyrights, patents, trade secrets, trademarks or any other intellectual
property rights owned by the other.

     

    The
Service Recipient agrees to reimburse the Service Provider for any reasonable
out-of-pocket expenses arising out of the obligations under this
Section 11.2.  The Service Provider hereby waives, and shall
cause its employees to waive, the whole of its and their rights to any copyright
material developed under this Agreement.

     

    11.3. Third
Party Software. 
In
addition to the consideration set forth elsewhere in this Agreement, the Service
Recipient shall also pay any amounts (and applicable Sales Taxes) that are
required to be paid to any licensors of software that is used by the Service
Provider (other than as a part of its normal operations), to the extent that
such software is used in connection with the provision of any Service hereunder,
and any amounts (and applicable Sales Taxes) that are required to be paid by the
Service Provider to any such licensors to obtain the Consent of such licensors
to allow the Service Provider to provide any of the Services
hereunder.  Subject to the immediately preceding sentence and to the
terms of the Separation Agreement, the 

     

    
      
         

      

      
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    Service
Provider will use Commercially Reasonable Efforts to obtain any Consent that may
be required from such licensors in order to provide any of the transition
Services hereunder.

     

    11.4. Termination
of Licenses. 
Any
license granted hereunder by the Service Provider shall terminate ipso facto
upon the expiration or early termination of this Agreement.

     

    ARTICLE
12

    NO
OBLIGATION

     

    Neither
Party assumes any responsibility or obligation whatsoever, other than the
responsibilities and obligations expressly set forth in this Agreement
(including the exhibits and schedules hereto), in the Separation Agreement or in
a separate written agreement between the Parties.

     

    ARTICLE
13

    CONFIDENTIALITY

     

    13.1. Confidentiality.  The terms
of the Confidentiality provisions set forth in Section 8.4 of the Separation
Agreement shall apply to all confidential information disclosed in the course of
the Parties’ interactions under this Agreement.  This Article XIII of
the Agreement sets out additional requirements regarding confidential
information for the purposes of this Agreement.

     

    13.2. Confidential
Information. 
The term
“Confidential
Information” means all business or operational information concerning a
Service Recipient (including (i) earnings reports and forecasts,
(ii) macro-economic reports and forecasts, (iii) business and
strategic plans, (iv) general market evaluations and surveys,
(v) litigation presentations and risk assessments, (vi) budgets,
(vii) financing and credit-related information, (viii) specifications,
ideas and concepts for products and services, (ix) quality assurance
policies, procedures and specifications, (x) customer information,
(xi) Software, (xii) training materials and information, and
(xiii) all other know-how, methodology, procedures, techniques and trade
secrets related to design, development and operational processes) which, prior
to or following the Effective Time, has been disclosed by such Service Recipient
to the Service Provider, in written, oral (including by recording), electronic,
or visual form to, or otherwise has come into the possession of, the Service
Provider (except to the extent that such information can be shown to have been
(i) in the public domain through no action of the Service Provider,
(ii) lawfully acquired from other sources by the Service Provider to which
it was furnished or (iii) independently developed by the Service Provider;
provided, however, in the case
of clause (ii) that, to the knowledge of the Service Provider, such sources
did not provide such information in breach of any confidentiality
obligations).

     

    
      
         

      

      
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    13.3. Permitted
Purpose. 
The term
“Permitted
Purpose” means the provision of a Service by the Service Provider to the
Service Recipient under this Agreement.

     

    13.4. Disclosure.  The
Service Provider may use Confidential Information in connection with a Permitted
Purpose, provided that for
purposes of this Agreement, Confidential Information shall not be used by the
Service Provider for any purpose other than a Permitted Purpose or in any way
that is detrimental to the Service Recipient.  In
particular,

     

    (a)   the
Service Provider shall not disclose any Confidential Information to any employee
of the Service Provider who does not have a need to know such Confidential
Information in order to perform the Permitted Purpose; and

     

    (b)   the
Service Provider shall not use the Confidential Information other than for such
purposes as shall be expressly permitted under this Agreement.

     

    13.5. Custody.  The
Confidential Information, including any derivative documents prepared by the
Service Provider, will be held in safe custody and kept confidential on the
terms set forth in this Agreement.  Each employee of the Service
Provider who is authorized to have or be aware of Confidential Information will
store that information in his possession in separate paper and/or electronic
files.

     

    13.6. Expiration
of Confidentiality Provisions.  The
obligations of the Parties under this Article XIII shall survive the expiration
or earlier termination of this Agreement; provided, however, that in any
event, the obligations of the Parties under this Article XIII shall expire on
the fifth anniversary of the expiration or earlier termination of this
Agreement.

     

    ARTICLE
14

    LIMITATION OF LIABILITY AND
INDEMNIFICATION

     

    14.1. Indemnification.  Capitol
shall indemnify, defend and hold harmless MCBL, each other member of the MCBL
Group and each of their respective directors, officers and employees, and each
of the heirs, executors, trustees, administrators, successors and assignors of
any of the foregoing (collectively, the “MCBL Indemnified
Parties”), from and against any and all Liabilities of the MCBL
Indemnified Parties incurred by, borne by or asserted against any of them
relating to, arising out of or resulting from any of the following items
(without duplication):

     

    (a)   the
breach or the failure of performance by Capitol of any of the covenants,
promises, undertakings or agreements which it is obligated to perform under this
Agreement;

     

    (b)   death of
or injury of any person whomsoever, including but not limited to directors,
officers, employees, servants or agents of MCBL, of another member of the MCBL
Group or contractors, resulting from the acts or omissions of Capitol or its
Affiliates under or in connection with this Agreement, to the extent that such
Liabilities are not covered by worker’s compensation;

     

    (c)   loss of,
or damage to, or destruction of any property whatsoever, including without
limitation, property of MCBL or of another member of the MCBL Group, resulting
from 

     

    
      
         

      

      
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    the acts
or omissions of Capitol or its Affiliates under or in connection with this
Agreement, to the extent such liabilities are not covered by insurance;
or

     

    (d)   any claim
or assertion that the execution or performance by MCBL of its obligations under
this Agreement violates or interferes with any contractual or other right or
obligation or relationship of Capitol to or with any other Person, caused by,
arising out of, or in any way related to this Agreement, but subject however to
the limitations of liability provided in Section 14.2 of this
Agreement.

     

    MCBL
shall indemnify, defend and hold harmless Capitol, each other member of the
Capitol Group and each of their respective directors, officers and employees,
and each of the heirs, executors, trustees, administrators, successors and
assignors of any of the foregoing (collectively, the “Capitol
Indemnified Parties”), from and against any and all Liabilities of the
Capitol Indemnified Parties incurred by, borne by or asserted against any of
them relating to, arising out of or resulting from any of the following items
(without duplication):

     

    (a)   the
breach or the failure of performance by MCBL of any of the covenants, promises,
undertakings or agreements which it is obligated to perform under this
Agreement;

     

    (b)   death of
or injury of any person whomsoever, including but not limited to directors,
officers, employees, servants or agents of Capitol, of another member of the
Capitol Group or contractors, resulting from the acts or omissions of MCBL or
its Affiliates under or in connection with this Agreement, to the extent that
such Liabilities are not covered by worker’s compensation;

     

    (c)   loss of,
or damage to, or destruction of any property whatsoever, including without
limitation, property of Capitol or of another member of the Capitol Group,
resulting from the acts or omissions of MCBL or its Affiliates under or in
connection with this Agreement, to the extent such liabilities are not covered
by insurance; or

     

    (d)   any claim
or assertion that the execution or performance by Capitol of its obligations
under this Agreement violates or interferes with any contractual or other right
or obligation or relationship of MCBL to or with any other Person, caused by,
arising out of, or in any way related to this Agreement, but subject however to
the limitations of liability provided in Section 14.2 of this
Agreement.

     

    14.2. Limitation
of Liability. 
Notwithstanding
the provisions of Section 14.1, the total aggregate liability of a Party to
the other Party for all events, acts or omissions of such Party under or in
connection with this Agreement or the Services provided by such Party hereunder,
whether based on an action or claim in contract, warranty, equity, negligence,
tort or otherwise, shall not exceed an amount equal to the value of the Services
payable by such Party to the other Party under this Agreement; provided that the
foregoing limit shall not apply with respect to any liability arising out of or
relating to such Party’s gross negligence or willful misconduct or the gross
negligence or willful misconduct of its personnel, contractors, subcontractors
or agents or other Persons for which it is responsible under Applicable
Law.

     

     

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

     

    In no
event shall any member of the Capitol Group or the MCBL Group be liable to any
member of the other Group for any special, consequential, indirect, collateral,
incidental or punitive damages, lost profits, or failure to realize expected
savings, or other commercial or economic loss of any kind, however caused and on
any theory of liability (including negligence), arising in any way out of this
Agreement, whether or not such Person has been advised for the possibility of
any such damages; provided, however, that the
foregoing limitations shall not limit either Party’s indemnification obligations
for liabilities to with respect to Third Party Claims as set forth in Article 6
of the Separation Agreement.

     

    14.3. Provisions
Applicable with respect to Indemnification Obligations.  Article 6
of the Separation Agreement shall apply mutatis
mutandis  with respect to any Liability subject to
indemnification or reimbursement pursuant to Article XIV of this
Agreement.

     

    14.4. Survival.  The
rights and obligations of the Parties under this Article XIV shall survive the
expiration or earlier termination of this Agreement.

     

    ARTICLE
15

    DISPUTE
RESOLUTION

     

    The
Separation Agreement with respect to Dispute Resolution, effective as of the
Effective Time, among the Parties and other parties thereto shall govern all
disputes, controversies or claims (whether arising in contract, delict, tort or
otherwise) between the Parties that may arise out of, or relate to, or arise
under or in connection with, this Agreement or the transactions contemplated
hereby (including all actions taken in furtherance of the transactions
contemplated hereby), or the commercial or economic relationship of the Parties
relating hereto or thereto.

     

    ARTICLE
16

    ASSIGNMENT

     

    16.1. Prohibition
of Assignment. 
Neither
Party shall assign or transfer this Agreement, in whole or in part, or any
interest or obligation arising under this Agreement except as permitted by
Section 7.7(a), Article X and Section 16.2, without the prior written
consent of the other Party.

     

    16.2. Assignment
to the Capitol Group. 
Capitol
may elect to have one or more of the members of the Capitol Group assume the
rights and obligations of Capitol under this Agreement.

     

    ARTICLE
17

    MISCELLANEOUS

     

    17.1. Notices.  All
notices and other communications hereunder shall be given in the manner set
forth in Section 9.2 of the Separation Agreement.

     

    17.2. Governing
Law; consent to jurisdiction.  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

     

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

     

    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.

     

    17.3. Judgment
Currency. 
The
obligations of a Party to make payments hereunder shall not be discharged by an
amount paid in any currency other than Dollars, whether pursuant to a court
order or judgment or arbitral award or otherwise, to the extent that the amount
so paid upon conversion to Dollars and transferred to an account indicated by
the Party to receive such funds under normal banking procedures does not yield
the amount of Dollars due; and each Party hereby, as a separate obligation and
notwithstanding any such judgment, agrees to indemnify each other Party against,
and to pay to such Party on demand, in Dollars, any difference between the sum
originally due in Dollars and the amount of Dollars received upon any such
conversion and transfer.

     

    17.4. Entire
Agreement. 
This
Agreement, the other Ancillary Agreements, the Separation Agreement and
exhibits, schedules and appendices hereto, including the Transition Services
Schedules, and thereto and the specific agreements contemplated herein or
thereby, contain the entire agreement between the Parties with respect to the
subject matter hereof and supersedes all previous agreements, negotiations,
discussions, writings, understandings, commitments and conversations with
respect to such subject matter.  No agreements or understandings exist
between the Parties other than those set forth or referred to herein or
therein.

     

    17.5. Conflicts.  In case
of any conflict or inconsistency between this Agreement and the Separation
Agreement, this Agreement shall prevail.  In case of any conflict or
inconsistency between the terms and conditions of this Agreement (excluding, for
the purpose of this Section 17.5, any Transition Service Schedule thereto)
and the terms of any Transition Service Schedule, the provisions of the
Transition Service Schedule shall prevail.

     

    17.6. Force
Majeure. 
No Party
shall be deemed in default of this Agreement to the extent that any delay or
failure in the performance of its obligations under this Agreement results from
superior force (“Force
Majeure”) or any act, occurrence or omission beyond its reasonable
control and without its fault or negligence, such as fires, explosions,
accidents, strikes, lockouts or labor disturbances, floods, droughts,
earthquakes, epidemics, seizures of cargo, wars (whether or not declared), civil
commotion, acts of God or the public enemy, action of any government,
legislature, court or other Governmental Authority, action by any authority,
representative or organization exercising or claiming to exercise powers of a
government or Governmental Authority, compliance with Applicable Law, blockades,
power failures or curtailments, inadequacy or shortages or curtailments or
cessation of supplies of raw materials or other supplies, failure or breakdown
of equipment of facilities or, in the case of computer systems, any failure in
electrical or air conditioning equipment (a “Force Majeure
Event”).   If a Force Majeure Event has occurred and its
effects are continuing, then, upon notice by the Party who is delayed or
prevented from performing its obligations to the other Party, (i) the
affected 

     

    
      
         

      

      
        18

        
          

        

      

      
         

      

    

     

    provisions
or other requirements of this Agreement shall be suspended to the extent
necessary during the period of such disability, (ii) the Party which is
delayed or prevented from performing its obligations by a Force Majeure Event
shall have the right to apportion its Services in an equitable manner to all
users and (iii) such Party shall have no liability to the other Party or
any other Person in connection therewith.  The Party which is delayed
or prevented from performing its obligations by the Force Majeure Event shall
resume full performance of this Agreement as soon as reasonably practicable
following the cessation of the Force Majeure Event (or the consequences
thereof).

     

    17.7. Amendment
and Waiver. 
This
Agreement may not be altered or amended, nor may any rights hereunder be waived,
except by an instrument in writing executed by the Parties.  No waiver
of any terms, provision or condition of or failure to exercise or delay in
exercising any rights or remedies under this Agreement, in any one or more
instances, shall be deemed to be, or construed as, a further or continuing
waiver of any such term, provision, condition, right or remedy or as a waiver of
any other term, provision or condition of this Agreement.

     

    17.8. Further
Assurances. 
Each
Party agrees to use Commercially Reasonable Efforts to execute any and all
documents and to perform such other acts as may be necessary or expedient to
further the purposes of this Agreement and the relations contemplated
hereby.  Without limiting the foregoing and the provisions of the
Separation Agreement, each Party shall make available during normal business
hours for inspection and copying by the other Party and such other Persons as
the other Party shall designate in writing, all books and records in the
possession which relate to the Services and which are necessary to confirm the
said Party’s compliance with its obligations under this Agreement.

     

    17.9. Severability.  The
provisions of this Agreement are severable and should any provision hereof be
void, voidable or unenforceable under any applicable law, such provision shall
not affect or invalidate any other provision of this Agreement, which shall
continue to govern the relative rights and duties of the Parties as though such
void, voidable or unenforceable provision were not a part hereof.

     

    17.10. Counterparts.  This
Agreement may be executed in one or more counterparts, each of which shall be
deemed an original instrument, but all of which together shall constitute but
one and the same Agreement.

     

    Signatures
on the Following Page

     

    
      
         

      

      
        19

        
          

        

      

      
         

      

    

    IN
WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement
as of the day and year first above written.

     

    

    

    CAPITOL
BANCORP LTD.

     

    By:           _______________________

    Name:      _______________________

    Title:        _______________________

    

    MICHIGAN
COMMERCE BANCORP LIMITED

    

    By:           _______________________

    Name:     
_______________________

    Title:        _______________________

    

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    
      
        
          Signature
Page to Transition Services Agreement

        

         

      

      
         

        
          

        

      

      
         

      

    

    Transition
Services Schedule 1

     

    

     

    The
following transition services will be provided by Capitol to the MCBL Group,
each listed service is separable from the others and can be terminated either
individually or in total by either party with the requisite notification to the
other party.

     

    

     

    Loan Review
Services.  Capitol will provide loan review services to the
MCBL Group for monthly fee of $_________.  Such services include the
following:

     

    
      	
              ·  

            	
              Review
      of MCBL Group’slending practices on a periodic basis to determine
      compliance with regulations, Board policies and internal
      procedures.

            

    

     

    
      	
              ·  

            	
              Issue
      reports on the findings of such
reviews.

            

    

     

    
      	
              ·  

            	
              Review
      loan files on periodic basis.

            

    

     

    

     

    Internal Audit and Compliance
Services.  Capitol will provide internal audit and compliance
services to the MCBL Group for a monthly fee of $__________.  Such
services include the following:

     

    
      	
              ·  

            	
              Annual
      review of the MCBL Group’s branches and departments to determine adherence
      to regulations, Board policies and internal
  procedures.

            

    

     

    
      	
              ·  

            	
              Issue
      audit reports on the findings of such
reviews.

            

    

     

    
      	
              ·  

            	
              Provide
      guidance to the MCBL Group on new regulations and compliance
      matters.  Assist in the preparation of policies and procedures
      that cover required aspects of new
regulations.

            

    

     

    
      	
              ·  

            	
              Assist
      in review of and filing of HMDA
data.

            

    

     

    
      	
              ·  

            	
              Assist
      in Community Reinvestment Act related
matters

            

    

     

    

     

    Bank Analysis and Performance
Services.  Capitol will provide bank analysis and performance
services to the MCBL Group for a monthly fee of $_______.  Such
services include the following:

     

    
      	
              ·  

            	
              Assistance
      in the preparation and filing of regulatory waiver
    requests.

            

    

     

    
      	
              ·  

            	
              Preparation
      of liquidity reports.

            

    

     

     

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

     

    
      	
              ·  

            	
              Preparation
      and analysis of trend information related to the MCBL Group’s historical
      and future performance.

            

    

     

    
      	
              ·  

            	
              Provide
      consultation on interest rate risk management procedures and
      practices.

            

    

     

    
      	
              ·  

            	
              Provide
      consultation on investment alternatives on an as needed
    basis.

            

    

     

    

     

    Marketing
Services:  Capitol will provide marketing services to the MCBL
Group for a monthly fee of $_______.  Such services include the
following:

     

    
      	
              ·  

            	
              Development
      of marketing materials for use by the MCBL Group in the promotion of its
      services within the branches as well through public advertising on an
      as-needed basis.

            

    

     

    
      	
              ·  

            	
              Provide
      creative services for the design of brochures, internal communications and
      new products.

            

    

     

    
      	
              ·  

            	
              Ensure
      that marketing material is compliant with all laws and
      regulations.

            

    

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    Transition
Services Schedule 2

     

    

     

    The
following transition services will be provided by the MCBL Group to the Capitol
Group, each listed service is separable from the others and can be terminated
either individually or in total by either party with the requisite notification
to the other party.

    

    

    Repetitive Loan
Operations.   MCBL Group will provide repetitive loan services
to the Capitol Group under the terms and considitions established in the
Operations Service Level Agreement between Capitol and Michigan Commerce Bank
dated April 21, 2009.

    

    Retail
Operations.  MCBL Group will provide retail operation services
to the Capitol Group under the terms and considitions established in the
Operations Service Level Agreement between Capitol and Michigan Commerce Bank
dated April 21, 2009.

    

    Bank Secrecy Act and Compliance
Operations.   MCBL Group will provide Bank Secrecy Act and
compliance operations services to the Capitol Group under the terms and
considitions established in the Operations Service Level Agreement between
Capitol and Michigan Commerce Bank dated April 21, 2009.

    

    Credit
Operations.  MCBL Group will provide credit operations services
to the Capitol Group under the terms and considitions established in the
Operations Service Level Agreement between Capitol and Michigan Commerce Bank
dated April 21, 2009.

    

    Special Assets
Group.  MCBL Group will provide special asset group services to
the Capitol Group for a monthly fee of $__________.

    

    

    

    

     

    
      
         

      

      
        3exhibit10_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.

       

      
        
           

        

        
          2

          
            

          

        

        
           

        

      

       

      “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 

       

      
        
           

        

        
          3

          
            

          

        

        
           

        

      

       

      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.

       

      
        
           

        

        
          4

          
            

          

        

        
           

        

      

       

      (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 

       

      
        
           

        

        
          5

          
            

          

        

        
           

        

      

       

      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.

       

      [Remainder
of Page Intentionally Left Blank]

       

      
        
           

        

        
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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

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