EXECUTION VERSION

STOCK PURCHASE AGREEMENT

by and among

TALMER BANCORP, INC.

CAPITOL BANCORP LTD.


and


FINANCIAL COMMERCE CORPORATION

Dated as of October 11, 2013

---

 

Section 1.01.	Definitions	2
Section 1.02.	Currency	12
Section 1.03.	Governing Law	13

Section 2.01.	Purchase And Sale Of The Shares And Other Purchased Assets	13
Section 2.02.	Consideration	13
Section 2.03.	Payments	13
Section 2.04.	Excluded Liabilities	13
Section 2.05.	Bank Merger	14

Section 3.01.	Corporate Status And Authority; Non-contravention	14
Section 3.02.	Capitalization Of The Banks	17
Section 3.03.	Business Operations	18
Section 3.04.	Regulatory Reports	21
Section 3.05.	Deposits	21
Section 3.06.	Financial Matters	22
Section 3.07.	Tax Matters	24
Section 3.08.	Litigation And Claims	25
Section 3.09.	Employees	25
Section 3.10.	Employee Benefit Plans; Labor	26
Section 3.11.	Properties and Leases	28
Section 3.12.	Absence of Certain Changes	29
Section 3.13.	Commitments and Contracts	29
Section 3.14.	Risk Management Instruments	31
Section 3.15.	Environmental Matters	31
Section 3.16.	Insurance	32
Section 3.17.	Intellectual Property	33
Section 3.18.	Related Party Transactions	34
Section 3.19.	Community Reinvestment Act	34
Section 3.20.	Anti-money Laundering	34
Section 3.21.	Customer Information Security	35
Section 3.22.	Loan Portfolio	35
Section 3.23.	Brokers or Finders	37
Section 3.24.	Disclaimer of Other Representations and Warranties	37

Section 4.01.	Corporate Status And Authority; Non-contravention	37
Section 4.02.	Governmental Authorizations	38
Section 4.03.	Investment Intent	38
Section 4.04.	Non-Reliance	38
Section 4.05.	Sufficient Funds	38
Section 4.06.	Litigation And Claims	38

Section 5.01.	Operations Until Closing	39
Section 5.02.	Confidentiality	44
Section 5.03.	Return of Information	45
Section 5.04.	Consents And Approvals	45
Section 5.05.	Certain Company Contracts	47
Section 5.06.	Notices Of Certain Events	48
Section 5.07.	Stalking-Horse Bidder Fee	48
Section 5.08.	Debtor-in-Possession	49
Section 5.09.	The Sale Motion	49
Section 5.10.	The Bidding Procedures	50
Section 5.11.	Sale Order	50
Section 5.12.	Non-Solicitation of Competing Bids	52
Section 5.13.	Public Announcements	52
Section 5.14.	Tax Election	53
Section 5.15.	Preparation and Filing of Tax Returns; Taxes	53
Section 5.16.	Tax Cooperation	54
Section 5.17.	Tax Proceedings	54
Section 5.18.	Transfer Taxes	55
Section 5.19.	Bankruptcy Filings	55
Section 5.20.	Transfer of Business-Related Assets and Contracts	56
Section 5.21.	Plan	56
Section 5.22.	Appeal	56
Section 5.23.	License Agreement	56
Section 5.24.	Transition Services Agreement	56
Section 5.25.	Benefit Arrangments	57
Section 5.26.	Certain Employee Matters	57

Section 6.01.	Conditions to Purchaser's Obligations	58
Section 6.02.	Conditions to the Company's Obligations	60
Section 6.03.	Mutual Condition	61
Section 6.04.	Termination	61

Section 7.01.	Time and Place	63
Section 7.02.	Company's Closing Deliverables	63
Section 7.03.	Purchaser's Closing Deliverables	64
Section 7.04.	Concurrent Delivery	64
Section 7.05.	Transfer of Shares and Other Purchased Assets	65

Section 8.01.

Survival

65

Section 9.01.	Notices	65
Section 9.02.	Further Assurances	66
Section 9.03.	Time of the Essence	66
Section 9.04.	Entire Agreement	66
Section 9.05.	Assignment	67
Section 9.06.	Invalidity	67
Section 9.07.	Waiver and Amendment	67
Section 9.08.	Third-Party Beneficiaries	67
Section 9.09.	Surviving Provisions on Termination	67
Section 9.10.	Captions	67
Section 9.11.	Counterparts	67
Section 9.12.	Specific Performance	67
Section 9.13.	Jurisdiction	68
Section 9.14.	Waiver Of Jury Trial	68
Section 9.15.	Legal and Other Fees and Expenses	68

SCHEDULES AND EXHIBITS

Schedule 2.01

Acquired Company Assets

Schedule 5.05(b)

Rejected Contracts

Exhibit A

Bidding Procedures

Exhibit B

Bidding Procedures Order

Exhibit C

Sale Motion

---

 

STOCK PURCHASE AGREEMENT

THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made as of October 11, 2013, by and among Talmer Bancorp, Inc., a Michigan corporation ("Purchaser"), Capitol Bancorp Ltd., a Michigan corporation ("Ultimate Parent"), and Financial Commerce Corporation, a Michigan corporation ("Intermediate Parent" and, collectively with Ultimate Parent and (where the context requires) their respective affiliates, the "Company").

RECITALS

A.

Ultimate Parent is the record and beneficial owner of a majority of the issued and outstanding shares of capital stock of Intermediate Parent and Intermediate Parent is the record and beneficial owner of all of the issued and outstanding shares of capital stock of Indiana Community Bank, an Indiana state- chartered bank (the "Indiana Bank"), Michigan Commerce Bank, a Michigan state-chartered bank (the "Michigan Bank"), Bank of Las Vegas, a Nevada state-chartered bank (the "Nevada Bank") and Sunrise Bank of Albuquerque, a New Mexico state-chartered bank (the "New Mexico Bank") (Indiana Bank, Michigan Bank, Nevada Bank and New Mexico Bank, collectively, the "Banks").

B.

Ultimate Parent wishes to cause Intermediate Parent, and Intermediate Parent wishes to sell, and Purchaser wishes to purchase, all of the shares of capital stock of the Surviving Bank as of the Closing Date (as hereinafter defined) (the "Shares") and certain other assets of the Company, all free and clear of all Encumbrances (as hereinafter defined) and on the terms and conditions set forth in this Agreement.

C.

Ultimate Parent and Intermediate Parent filed voluntary bankruptcy petitions (the "Bankruptcy Cases") which are being jointly administered under chapter 11 of Title 11 of the United States Code, 11 U.S.C. §§ 101, et seq. (the "Bankruptcy Code"), in the United States Bankruptcy Court for the Eastern District of Michigan (the "Bankruptcy Court"), on August 9, 2012.

D.

The parties intend for the sale and purchase of the Shares and the Other Purchased Assets (as hereinafter defined), including the assumption and assignment of the Assumed Bank Related Contracts (as hereinafter defined), if any (the "Sale"), to be effectuated pursuant to an order of the Bankruptcy Court under Sections 105, 363 and 365 of the Bankruptcy Code approving such transactions (the "Sale Order").

E.

Concurrently with or as soon as practicable after the execution and delivery of this Agreement, the Banks will enter a merger agreement pursuant to which Indiana Bank, Nevada Bank and New Mexico Bank will merge with and into Michigan Bank (the "Bank Merger"), with Michigan Bank as the surviving entity (the "Surviving Bank") and, subject to Bankruptcy Court and regulatory approval, the Company will file all necessary documentation and applications to consummate the Bank Merger prior to Closing, in form and substance reasonably acceptable to Purchaser.

F.	In consideration of the covenants, agreements, representations and warranties set forth below, and for other good and valuable consideration, the receipt and sufficiency of

 

---

which are hereby acknowledged, the parties, intending to be legally bound, covenant and agree as follows:

ARTICLE 1
INTERPRETATION

Section 1.01.                                Definitions .  In this Agreement, unless the context otherwise requires or unless otherwise specifically provided herein:

 

 

---

 

---

 

Purchaser or any of its Affiliates (or its partners, members or equity holders); (v) cause any Person other than the Purchaser to be deemed to control any of the Banks; or (vi) require an Equity Contribution at the Closing to the Banks in excess of Ninety Million Dollars ($90,000,000); provided, however, that the following shall not be deemed to be a "Burdensome Condition":  (x) those restraints, limitations, terms, requirements, provisions or conditions to the extent specifically applicable to the Banks or their Subsidiaries as of the date hereof by reason of their condition as of the date hereof and specifically disclosed to Purchaser in Section 3.03 of the Disclosure Schedule and (y) any restraint, limitation, term, requirement, provision or condition that applies to Purchaser, its Affiliates, or generally to bank holding companies and banks as provided by statute, regulation, or written and publicly available supervisory guidance of general applicability, in each case, as in effect on the date hereof, to the extent not disproportionately impacting any of the Banks.

 

---

 

---

 

---

 

appeal, motion to amend or make additional findings of fact, motion to alter or amend judgment, motion for rehearing or motion for new trial has been timely filed or, if any of the foregoing has been timely filed, it has been disposed of in a manner that upholds and affirms the subject order in all material respects without the possibility for further appeal or rehearing thereon; and (b) as to which the time for instituting or filing an appeal, motion for rehearing or motion for new trial shall have expired, excluding any additional time periods that may begin as a result of Federal Rule 60(b).

 

---

 

---

 

---

 

 

---

 

---

 

---

Section 1.02.                                Currency.   Except where otherwise expressly provided, all monetary amounts in this Agreement are stated and shall be paid in United States currency.

Section 1.03.                                Governing Law.  This Agreement and the agreements contemplated hereby shall be construed and interpreted, and the rights of the parties shall be determined, in accordance with the Bankruptcy Code and the substantive laws of the State of Michigan, in each case without regard to the conflict of laws principles thereof or of any other jurisdiction.

ARTICLE 2
PURCHASE OF SHARES AND OTHER ASSETS; EQUITY CONTRIBUTION; MERGER

Section 2.01.                                Purchase And Sale Of The Shares And Other Purchased Assets.  Subject to the terms and conditions set forth in this Agreement, and subject to the entry of a Sale Order and payment of the Cash Purchase Price, (a) Intermediate Parent agrees to (and Ultimate Parent agrees cause Intermediate Parent to) sell, assign and transfer to Purchaser, free and clear of all Encumbrances, and Purchaser agrees to purchase from Intermediate Parent, on the Closing Date, effective as of and from the Closing, all of the Shares and (b) Ultimate Parent agrees to (or to cause its applicable Affiliates to) sell, assign and transfer to, at Purchaser's election, the Surviving Bank, Purchaser or such Affiliate of Purchaser as Purchaser may designate, free and clear of all Encumbrances, (i) all of the Assumed Bank Related Contracts; (ii) all right, title and interest of the Company to any proceeds received or to be received after December 31, 2012 related to any Assumed Bank Related Contract, including any such proceeds from any insurance claims to the extent (but, in the case of insurance claims, only to the extent) related to the Banks or their Subsidiaries or the Business; (iii) all of the domain names, trademarks and service marks registered to the Company set forth in Section 3.17 of the Disclosure Schedule except for those marks covered by the license provided in Section 5.23 of this Agreement or otherwise marked with *** on Section 3.17 of the Disclosure Schedule; (iv) those assets of the Company set forth on Schedule 2.01 attached hereto (the assets identified in clauses (i), (ii), (iii) and (iv) collectively, the "Other Purchased Assets").

Section 2.02.                                Consideration.  The amount payable for the Shares and the Other Purchased Assets will be (i) Four Million Dollars ($4,000,000) (the "Cash Purchase Price"), which shall, subject to the terms and conditions hereof, be payable, as set forth in Section 2.03 below, at Closing, plus (ii) the Cure Costs for Assumed Bank Related Contracts, and (iii) the Equity Contribution.  Concurrently with the Closing, Purchaser shall assume the Assumed Contract Liabilities.

 

---

Section 2.03.                                Payments.  On the Closing Date, Purchaser shall (i) pay the Cash Purchase Price less the amount of the Tax Escrow Amount, if any, to the Intermediate Parent by wire transfer to an account designated by the Ultimate Parent in writing at least two (2) Business Days prior to the Closing Date (ii) effect the Equity Contribution, and (iii) pay any Cure Costs due to a non-debtor counterparty to each of the Assumed Bank Related Contracts.

Section 2.04.                                Excluded Liabilities.  Notwithstanding anything in this Agreement to the contrary, neither Purchaser, Surviving Bank, nor any Affiliate of the foregoing shall assume, and shall not be deemed to have assumed, or be bound by any duties, responsibilities, obligations or liabilities, of Company or any of its Affiliates (other than the Banks and their Subsidiaries) of any kind or nature, known, unknown, contingent or otherwise, whether direct or indirect, matured or unmatured, other than the Assumed Contract Liabilities (collectively, the "Excluded Liabilities").

Section 2.05.                                Bank Merger.  Concurrently with or as soon as practicable after the execution and delivery of this Agreement, the Banks will enter into the Bank Merger Agreement to effect the Bank Merger, in form and substance reasonably acceptable to Purchaser.  The Parties intend that the Bank Merger will become effective simultaneously with or immediately prior to the Closing.

ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY

Except as set forth in a corresponding section or subsection, as applicable, of the Disclosure Schedule, each of Ultimate Parent and Intermediate Parent hereby makes the following representations and warranties to Purchaser as of the date hereof and as of the Closing Date.  The inclusion of an item in the Disclosure Schedule shall not be deemed an admission by the Company or the Banks that such item represents a material fact, event, or circumstance or has had or would be reasonably expected to have a Material Adverse Effect. Disclosure in any section of the Disclosure Schedule shall apply only to such section of such Disclosure Schedule, except to the extent that it is reasonably apparent from the face of such disclosure that such disclosure is relevant to another section of such Disclosure Schedule.

Section 3.01.                                Corporate Status And Authority; Non-contravention.

 

---

 

the corporate power and authority to own or lease all of its properties and assets and to conduct its business in the manner in which its business is now being conducted.  The Intermediate Parent is duly registered as a bank holding company under the BHCA.  The Intermediate Parent is duly qualified to do business and is in good standing in each jurisdiction in which its ownership of properties or conduct of business requires such qualification except where failure to be so qualified, individually or in the aggregate, has not had and would not reasonably be expected to have a Material Adverse Effect.

 

---

 

qualified has not had and would not reasonably be expected to have a Material Adverse Effect.  Nevada Bank is a Nevada state-chartered bank which is duly licensed by the State of Nevada Financial Institutions Division to engage in commercial banking.  Nevada Bank conducts operations only in Nevada.  The FDIC has not been appointed receiver of Nevada Bank.  Complete and correct copies of the Charter Documents of Nevada Bank, as currently in effect, have prior to the date hereof been delivered to Purchaser.

 

---

 

performance by it or of its obligation hereunder or the consummation by it of the Contemplated Transactions.

Section 3.02.                                Capitalization Of The Banks.

 

---

 

directly and beneficially owned and held by Intermediate Parent and have been duly authorized and validly issued, are fully paid and nonassessable with no personal liability attaching to the ownership thereof, have been issued in full compliance with all federal and state securities laws and other Legal Requirements, were not issued in violation of or subject to any preemptive rights or other rights to subscribe for or purchase securities, and are free and clear of all Encumbrances.

 

---

Section 3.03.                                Business Operations.

 

---

 

actual, alleged, possible or potential violation of or failure to comply with any term or requirement of any Material Governmental Authorization or (B) any actual, proposed, possible or potential revocation, withdrawal, suspension, cancellation, termination of or modification to any Material Governmental Authorization.

 

---

 

status report was received with respect to such examination.  The most recent regulatory examination of Nevada Bank and its Subsidiaries was an FDIC visitation examination conducted by the FDIC, commenced on or about April 12, 2013 and ended on or about April 26, 2013  The most recent regulatory examination of New Mexico Bank and its Subsidiaries was an FDIC visitation examination conducted by the FDIC, commenced on or about June 24, 2013 and ended on or about July 12, 2013.

Section 3.04.                                Regulatory Reports.

 

---

Section 3.05.                                Deposits.  All of the deposits held by the Banks (including the records and documentation pertaining to such deposits) have been established and are held in compliance in all material respects with (i) all applicable policies, practices and procedures of the Banks, and (ii) all applicable Legal Requirements, including anti-money laundering, anti-terrorism, or embargoed persons requirements.  All of the deposit accounts of the Banks are insured to the maximum limit set by the FDIC and any premiums and assessments required to be paid in connection therewith have been fully paid, and no proceedings for the termination or revocation of such insurance are pending, or, to the Knowledge of the Company, threatened.

Section 3.06.                                Financial Matters.

 

---

 

respective dates set forth therein and their consolidated results of operations and stockholders' equity for the respective periods set forth therein, subject, in the case of the interim period financial statements, to normal year-end adjustments (none of which will be material).

 

---

 

or otherwise obtained knowledge of any material weakness regarding the accounting or auditing practices, procedures or methods of the Banks and their Subsidiaries or their respective internal accounting controls.

Section 3.07.                                Tax Matters.

 

---

  Section 3.08.                                Litigation And Claims.  There are no current, pending or, to the Knowledge of the Company, threatened Proceedings against or relating to the Banks or their Subsidiaries or the Business or any of the Contemplated Transactions, or that could otherwise materially interfere with or delay any of the Contemplated Transactions.  There is no material

 

---

 

Order or regulatory restriction imposed upon or relating to the Banks or their Subsidiaries or the Business or any of the Contemplated Transactions, or that could otherwise materially interfere with or delay any of the Contemplated Transactions.

Section 3.09.                                Employees.  Section 3.09 of the Disclosure Schedule sets forth, for each officer of the Banks and each employee of the Banks whose total compensation equals or exceeds $50,000, such employee's name, title, hire date, location, whether full- or part-time, whether active or on leave (and, if on leave, the nature of the leave and the expected return date), annual salary or wage rate, most recent annual bonus received and current annual bonus opportunity.  Five days prior to the Closing Date, the Company will provide Purchaser with a revised version of Section 3.09 of the Disclosure Schedule, updated as of such date.  Except as set forth on Section 3.09 of the Disclosure Schedule, no (i) officer of the Banks or (ii) other key employee of the Banks whose total compensation equals or exceeds $50,000, has indicated to the Company or the Banks or any of their Subsidiaries that he or she intends to resign or retire as a result of the transactions contemplated by this Agreement or otherwise within one year after the Closing Date.

Section 3.10.                                Employee Benefit Plans; Labor.

 

---

 

investigations by any Governmental Authority, termination proceedings or other claims (except routine claims for benefits payable under the Benefit Arrangements) or Proceedings against or involving any Benefit Arrangement.

 

---

  Section 3.11.                                Properties and Leases.  The Banks or their Subsidiaries (a) have good, valid and marketable title to all the properties and assets reflected in the June 30 Balance Sheets or acquired after the date thereof (except properties sold or otherwise disposed of since the date thereof in the Ordinary Course) (the "Owned Properties"), free and clear from any Encumbrances other than Encumbrances that, (A) individually or in the aggregate, (i) would not, and would not reasonably be expected to, affect the value thereof or interfere with the use made or to be made thereof by the Banks or their Subsidiaries in any material respect or otherwise be material, (ii) do not secure indebtedness for borrowed money and (iii) arose only in the Ordinary Course and (B) in the case of Owned Properties consisting of Real Estate, Permitted Liens, (b) is the lessee of all leasehold estates reflected in the June 30 Balance Sheets or acquired after the date thereof (except for leases that have expired by their terms since the date thereof) (the "Leased Properties" and, collectively with the Owned Properties, the "Properties"; and any Property consisting of real estate or buildings or improvements thereon ("Real Estate")), free and clear from Encumbrances other than Encumbrances that, (A) individually or in the aggregate, (i) would not, and would not reasonably be expected to, affect the value thereof or interfere with the use made or to be made thereof by the Banks or their Subsidiaries in any material respect or otherwise be material, (ii) do not secure indebtedness for borrowed money and (iii) arose only in the Ordinary Course and (B) in the case of Leased Properties consisting of Real Estate, Permitted Liens and is in possession of the properties purported to be leased thereunder, and each such lease is valid without default thereunder by the lessee or, to the

 

---

 

Knowledge of the Company, the lessor, and (c) owns or leases all properties and assets as are used by the Banks or their Subsidiaries in the Business or otherwise necessary to their respective operations as now conducted.  Section 3.11 of the Disclosure Schedule contains a true and complete list of all Real Estate as of the date of this Agreement and identifies which Real Estate is owned and which is leased.  The Real Estate is in material compliance with all applicable zoning laws and building codes, and the buildings and improvements located on the Real Estate are in good operating condition and in a state of good working order, ordinary wear and tear excepted.  There are no pending or, to the Knowledge of the Company, threatened material condemnation proceedings against any of the Real Estate.  The Banks and their Subsidiaries are in compliance with all applicable health and safety related requirements for the Real Estate, including those under the Americans with Disabilities Act of 1990 and the Occupational Safety and Health Act of 1970.

  Section 3.12.                                Absence of Certain Changes.  Since June 30, 2013, there has not been any action or omission by the Company, the Banks or their Subsidiaries that, if taken or omitted to be taken during the period from the date of this Agreement through the Closing Date, without Purchaser's consent, would constitute a breach of Section 5.01, except as disclosed in the Section 3.12 of the Disclosure Schedule.  Since June 30, 2013, (a) there has not been, and no fact, effect, event, change, occurrence or circumstance has occurred that would reasonably be expected to have, a Material Adverse Effect, and (b) no material default (or event which, with notice or lapse of time, or both, would constitute a material default) exists on the part of the Banks or their Subsidiaries or, to the Knowledge of the Company, on the part of any other party, in the due performance and observance of any term, covenant or condition of any Contract to which the Banks or their Subsidiaries is a party and which is, individually or in the aggregate, material to the financial condition of the Banks and their Subsidiaries.

Section 3.13.                                Commitments and Contracts.

 

---

 

---

 

other Person (other than letters of credit entered into in the Ordinary Course, including for the avoidance of doubt with customary terms);

  Section 3.14.                                Risk Management Instruments.  Section 3.14 of the Disclosure Schedule sets forth all derivative instruments of the Banks and their Subsidiaries, including swaps, caps, floors and option agreements, whether entered into for the Banks' or their Subsidiaries' own account or for the account of a customer of the Banks.  All such derivative instruments were entered into (a) only in the Ordinary Course of Business and consistent with past practice, (b) in accordance with all applicable laws, rules, regulations and regulatory policies and in accordance with prudent practices and (c) with counterparties believed to be financially responsible at the time; and each of them constitutes the valid and legally binding obligation of the Banks or their Subsidiaries and is enforceable against the Banks or their Subsidiaries, as applicable, and to the Knowledge of the Company, the other parties thereto (except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and similar laws of general applicability relating to or affecting creditors' rights or by general equity principles) in accordance with its terms.  Neither the Banks or their Subsidiaries nor any other party thereto, is in breach of any of its material obligations under any such agreement or arrangement.

 

---

Section 3.15.                                Environmental Matters.

  Section 3.16.                                Insurance.  The Banks and their Subsidiaries maintain insurance underwritten by insurers of recognized financial responsibility, of the types and in the amounts that the Banks and their Subsidiaries reasonably believe are adequate for their business, including, but not limited to, insurance covering all real and personal property owned by or

 

---

 

leased by the Banks or their Subsidiaries against theft, damage, destruction, acts of vandalism and all other risks customarily insured against, with such deductibles as are customary for companies in the same or similar business.  Section 3.16 of the Disclosure Schedule sets forth a true and complete list of, and the Company has furnished to Purchaser prior to the date hereof true and complete copies of, all insurance policies and fidelity bonds relating to the assets, business, operations, employees, officers or directors of the Banks and their Subsidiaries, whether or not the Banks or their Subsidiaries are party to such insurance policies or fidelity bonds.  Except as set forth in Section 3.16 of the Disclosure Schedule, there is no claim by the Banks or their Subsidiaries pending under any of such policies or bonds as to which coverage has been questioned, denied or disputed by the underwriters of such policies or bonds or in respect of which such underwriters have reserved their rights.  All premiums payable under all such policies and bonds have been timely paid and the Company, the Banks and their Subsidiaries have otherwise in all material respects complied fully with the terms and conditions of all such policies and bonds.  Such policies of insurance and bonds (or other policies and bonds providing substantially similar insurance coverage) have been in effect since at least January 1, 2006 and remain in full force and effect.  The Company has no Knowledge of any threatened termination of, premium increase with respect to, or material alteration of coverage under, any of such policies or bonds.  The Banks and their Subsidiaries shall after the Closing continue to have coverage under such policies and bonds with respect to events occurring prior to the Closing and such coverage will not be affected by any claims by the Company or any of its Subsidiaries other than the Banks and their Subsidiaries.

  Section 3.17.                                Intellectual Property.  The Banks and their Subsidiaries own, are licensed to use or otherwise possess legally enforceable rights to use all patents, patent rights, licenses, inventions, copyrights, know-how (including trade secrets, applications and other unpatented or unpatentable proprietary or confidential information, systems or procedures), trademarks, service marks, trade names, domain names and other intellectual property rights (collectively, "Proprietary Rights") that are material to the Business and used in or necessary for the conduct of the Business as currently conducted.  The Banks and their Subsidiaries have the right to use all material Proprietary Rights owned by the Banks or used in the conduct of the Business as currently conducted without infringing, misappropriating or otherwise violating the Proprietary Rights of any third party, and neither the Banks, their Subsidiaries nor the conduct of the Business has infringed, misappropriated or otherwise violated any such Proprietary Rights in any material respect.  To the Company's Knowledge, the Banks have the right to use all material Proprietary Rights licensed to the Banks and used in the conduct of the Business as currently conducted without infringing, misappropriating or otherwise violating the Proprietary Rights of any third party or violating the terms of any licensing or other agreement to which the Banks are a party.  To the Company's Knowledge, no Person is infringing, misappropriating or otherwise violating any of the Proprietary Rights of the Banks or their Subsidiaries, except where such infringement, misappropriation or other violation, or the lack of a right to use such Proprietary Rights, would not have any material impact on the Banks or their Subsidiaries.  No charges, claims or litigation have been asserted or, to the Company's Knowledge, threatened against the Banks or their Subsidiaries (i) contesting the right of the Banks or their Subsidiaries to use, or the validity of, any of the Proprietary Rights used in the conduct of Business as currently conducted, (ii) challenging or questioning the validity or effectiveness of any license or agreement pertaining thereto or asserting the misuse thereof or (iii) claiming that the Banks, their Subsidiaries or the conduct of the Business infringes, misappropriates or otherwise violates any

 

---

 

Proprietary Rights of any Person, and, to the Company's Knowledge, no valid basis exists for the assertion of any such charge, claim or litigation.  All licenses and other agreements to which the Banks or their Subsidiaries is a party relating to Proprietary Rights are in full force and effect and constitute valid, binding and enforceable obligations of the Banks and, to the Company's Knowledge, each other party thereto, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles, as the case may be, and there have not been and there currently are not any defaults (or any event which, with notice or lapse of time or both, would constitute a default) by the Banks or, to the Company's Knowledge, any other party thereto under any license or other agreement affecting Proprietary Rights used in the conduct of the Business as currently conducted, except for defaults, if any, which would not have any material impact on the Banks or their Subsidiaries.  Other than with respect to the items marked with *** on Section 3.17 of the Disclosure Schedule, the validity, continuation and effectiveness of all licenses and other agreements relating to the Proprietary Rights used in the conduct of Business as currently conducted and the current terms thereof will not be affected by the transactions contemplated by this Agreement.  Section 3.17 of the Disclosure Schedule sets forth a true and complete list of all registrations and applications for registration of Proprietary Rights owned by the Banks or their Subsidiaries.

Section 3.18.                                Related Party Transactions.

  Section 3.19.                                Community Reinvestment Act.  The Company has no Knowledge of, has not been advised of, and has no reason to believe that any facts or circumstances exist that would cause the Banks or their Subsidiaries to be deemed not to be in

 

---

 

satisfactory compliance in any material respect with the Community Reinvestment Act ("CRA") or to be assigned a rating for CRA purposes by federal or state bank regulators of lower than "satisfactory."

  Section 3.20.                                Anti-money Laundering.  The Company has no Knowledge of, has not been advised of, and has no reason to believe that any facts or circumstances exist that would cause the Banks or their Subsidiaries to be operating in violation in any material respect of the Bank Secrecy Act, the USA PATRIOT Act of 2001 (the "USA PATRIOT Act"), any order issued with respect to anti-money laundering by the U.S. Department of the Treasury's Office of Foreign Assets Control, or any other applicable anti-money laundering statute, rule or regulation or any license, order or regulation issued with respect to economic sanctions programs by the U.S. Department of the Treasury's Office of Foreign Assets Control, or that the Banks or their Subsidiaries is under investigation with respect to or has been threatened to be charged with or given notice of any violation of any of the foregoing.  The Banks' Boards of Directors have adopted and implemented an anti-money laundering program that contains adequate and appropriate customer identification verification procedures that comply with Section 326 of the USA PATRIOT Act and that meets the requirements in all material respects of Section 352 of the USA PATRIOT Act.

  Section 3.21.                                Customer Information Security.  Since January 1, 2011, there has been no unauthorized disclosure of, or access to any non-public personal information of a customer of the Banks or their Subsidiaries that could result in substantial harm or inconvenience to such customer.  The Company has no Knowledge of, has not been advised of, and has no reason to believe that any facts or circumstances exist that would cause the Banks or their Subsidiaries to be deemed not to be in satisfactory compliance in any material respect with the applicable privacy of customer information requirements contained in any federal and state privacy laws and regulations, including, without limitation, in Title V of the Gramm-Leach-Bliley Act of 1999 and regulations promulgated thereunder, as well as the provisions of any information security program adopted by the Banks pursuant to 12 C.F.R. Part 364.

  Section 3.22.                                Loan Portfolio.  i) Section 3.22(a)(i) of the Disclosure Schedule sets forth (i) the aggregate outstanding principal amount, as of September 30, 2013, of all loan agreements, notes or borrowing arrangements (including leases, credit enhancements and participations) payable to Banks or their Subsidiaries (collectively, the "Loans"), other than "non-accrual" Loans, and (ii) separately, the aggregate outstanding principal amount, as of the date hereof, of all "non-accrual" Loans.  Except as listed on Section 3.22(a)(ii) of the Disclosure Schedule, as of the date hereof, neither the Banks nor their Subsidiaries had any outstanding Loan or asset classified as "Other Real Estate Owned" or that was designated internally by the Banks or their Subsidiaries (or, to the Company's Knowledge, by a Governmental Authority in an examination report or directive) as "special mention," "substandard," "doubtful," "loss" or words of similar import (any of the foregoing Loans or assets, "Criticized Assets").  Section 3.22(a)(iii) of the Disclosure Schedule sets forth (x) a summary of Criticized Assets as of the date hereof, by category of Loan (e.g., commercial and consumer), together with the aggregate principal amount of such Loans by category and (y) each asset of the Banks or their Subsidiaries that, as of the date hereof, is so classified.  In addition, subject to the disclosures set forth on Section 3.22(a)(iv) of the Disclosure Schedule, to the Company's Knowledge, no borrower with respect to a Loan has (i) filed, or consented by answer or otherwise to the filing against it of, a

 

---

 

petition for relief or reorganization or arrangement or any other petition in bankruptcy, for liquidation or to take advantage of any bankruptcy or insolvency law of any jurisdiction, (ii) to the Knowledge of the Company, made an assignment for the benefit of its creditors, (iii) to the Knowledge of the Company consented to the appointment of a custodian, receiver, trustee, liquidator or other officer with similar power over itself or any substantial part of its property, (iv) been adjudicated insolvent, or (v) taken action for the purpose of authorizing any of the foregoing.  The Banks or their Subsidiaries, as applicable, have good, valid and marketable title to all properties and assets reflected in Section 3.22(a)(ii) of the Disclosure Schedule that are classified as "Other Real Estate Owned," free and clear from Encumbrances and any material obligations that would affect the value or transferability thereof.  The information (including electronic information and information contained on tapes and computer disks and the information set forth on Section 3.22(a) of the Disclosure Schedule referenced in this Section 3.22) with respect to the Loans and Criticized Assets made available to Purchaser by the Company is, as of the respective dates indicated therein, true and complete in all material respects.

 

---

 

3.22(c)(iii) of the Disclosure Schedule, neither the Banks nor their Subsidiaries has received a request to repurchase any loan or advance or participation therein, or any other asset, sold to a third party, nor has the Banks or their Subsidiaries been advised by any third-party purchaser of any loan or advance or participation therein, or any other asset, that such purchaser intends to request that the Banks or their Subsidiaries repurchase such loan or advance or participation therein, or other asset, and there is no basis for any of the foregoing.

  Section 3.23.                                Brokers or Finders.  Except as set forth in Section 3.23 of the Disclosure Schedule, neither the Banks nor their Subsidiaries, nor any of their representatives, have incurred any Liability for brokerage or finders' fees or agents' commissions or other similar payments (or any expenses in connection therewith) in connection with the Contemplated Transactions, and any such fees, commissions or other payments due in connection with the transactions contemplated hereby are solely Liabilities of the Company (not including the Banks or their Subsidiaries).

  Section 3.24.                                Disclaimer of Other Representations and Warranties.  EXCEPT AS EXPRESSLY SET FORTH IN THIS ARTICLE 3, THE COMPANY MAKES NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AT LAW OR IN EQUITY, IN RESPECT OF THE SHARES OR THE OTHER PURCHASED ASSETS AND ANY SUCH OTHER REPRESENTATIONS OR WARRANTIES ARE HEREBY EXPRESSLY DISCLAIMED.  PURCHASER HEREBY ACKNOWLEDGES AND AGREES THAT, EXCEPT TO THE EXTENT SPECIFICALLY SET FORTH IN THIS ARTICLE 3, PURCHASER IS PURCHASING THE SHARES AND THE OTHER PURCHASED ASSETS ON AN "AS-IS, WHERE-IS" BASIS.

ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PURCHASER

Purchaser hereby makes the following representations and warranties to Ultimate Parent and Intermediate Parent as of the date hereof and as of the Closing Date.

Section 4.01.                                Corporate Status And Authority; Non-contravention.

 

---

 

own its property and conduct its business in the manner in which such business is now being conducted and, subject to the receipt of the Purchaser Required Approvals, has full power and capacity to enter into this Agreement, carry out the Contemplated Transactions to which it is a party, and duly observe and perform all its obligations contained in this Agreement.

  Section 4.02.                                Governmental Authorizations.  Subject to entry of the Sale Order, and except for the filing of applications and notices with, and the receipt of consents, authorizations, approvals, exemptions or non-objections from, as applicable, the Federal Reserve Bank of Chicago and/or the Federal Reserve Board (the "Purchaser Required Approvals"), no consents or approvals of or filings or registrations with any Governmental Authority are necessary on the part of Purchaser or its Affiliates in connection with the execution and delivery by Purchaser of this Agreement and the consummation by Purchaser of the Contemplated Transactions.  As of the date of this Agreement, Purchaser knows of no reason relating specifically to Purchaser why any of Purchaser Required Approvals will not be obtained or that any of Purchaser Required Approvals will not be granted without imposition of a Burdensome Condition.

  Section 4.03.                                Investment Intent.  Purchaser is acquiring the Shares for its own account and not with the view toward distribution within the meaning of Section 2(a)(11) of the Securities Act of 1933, as amended, other than in compliance with all applicable Legal Requirements, including United States federal securities laws.

  Section 4.04.                                Non-Reliance.  Purchaser acknowledges and agrees that in entering into this Agreement it has not relied and is not relying on any representations, warranties or other statements whatsoever, whether written or oral (from or by the Banks, the Company or any Person acting on their behalf) other than those expressly set out in this Agreement (or other related documents referred to herein) and that it will not have any right or remedy rising out of any representation, warranty or other statement not expressly set out in this Agreement.

  Section 4.05.                                Sufficient Funds.  As of the Closing Date, Purchaser has and as of the Closing Date shall have sufficient funds to pay the Purchase Price and make the Equity Contribution.

---

  Section 4.06.                                Litigation And Claims.  There are no current, pending or threatened Proceedings against or relating to Purchaser that would reasonably be expected to materially interfere with or delay any of the Contemplated Transactions.  There is no material Order or regulatory restriction imposed upon or relating to Purchaser that could reasonably be expected to materially interfere with or delay any of the Contemplated Transactions.

ARTICLE 5
PRE-CLOSING MATTERS AND OTHER COVENANTS

  Section 5.01.                                Operations Until Closing.  Except as expressly otherwise provided in this Agreement or as may be otherwise required by any Governmental Authority having jurisdiction over the Banks or the Company, including the Bankruptcy Court, unless otherwise agreed or consented to in writing by Purchaser, which agreement or consent shall not be unreasonably withheld or delayed, from the date of this Agreement to the Closing:

 

---

 

---

 

Course of Business and consistent with past practice if, with respect to a pre-existing relationship with a borrower, there has been no material adverse change with respect to, or in the relationship with, such borrower and provided that the FICO score of such borrower or any guarantor or principals of such borrower equals or exceeds 620, which approval shall be given or denied by Purchaser no later than three (3) Business Days after Purchaser has received a written request therefor (which request shall be provided in accordance with Section 9.01 with emailed copies to jdunn@talmerbank.com and cchartier@talmerbank.com) together with all material information relating thereto (provided however if Purchaser does not object to the terms of such extension of credit within three (3) Business Days after Purchaser has so received a written request therefor together with all material information relating thereto, Purchaser's consent shall be deemed to have been given and the extension of such credit shall not be the basis for any Material Adverse Effect); provided further that, in the case of New Mexico Bank and Nevada Bank, each such Bank's gross loan portfolios shall not increase by more than $500,000 in the aggregate, and in the case of Michigan Bank and Indiana Bank, each such Banks' gross loan portfolio shall not increase by more than $1,000,000 in the aggregate, from the total of such Bank's Loans as of June 30, 2013 disregarding any reduction as a result of any write-offs or losses on Loans since June 30, 2013;

 

---

 

for the account of the Banks or for the account of a customer of the Bank, except in the Ordinary Course of Business and consistent with past practice;

 

---

 

reasonably likely to be adverse to the Banks, their Subsidiaries, the Business or, after the Closing, Purchaser or its Affiliates or (3) forgive any indebtedness or obligations of any guarantor;

 

---

 

wrap" or "click through" licenses), unless the Banks and/or their Subsidiaries, as applicable, obtains a substantially similar license or right to use such Proprietary Rights on terms as favorable as the terms under the existing agreement;

  Section 5.02.                                Confidentiality. Each party acknowledges that any information, materials and documentation of the other party it receives or observes pursuant to or as contemplated by the Contemplated Transactions, either before or after execution of this Agreement, is confidential; provided, however, that the foregoing shall not include information which (a) is or becomes available to the public other than as a result of a disclosure by the recipient party, (b) was known to the recipient party or in its possession prior to its disclosure to the recipient party, (c) becomes available to the recipient party from a source other than the disclosing party, provided that such source is not known by the recipient party to be bound by a confidentiality agreement with the disclosing party or to be otherwise prohibited from transmitting the information to the recipient party by a contractual, legal or fiduciary obligation to the disclosing party, or (d) is or was developed independently by the recipient party without reference to confidential information provided by the disclosing party.  Each party shall take, and shall cause its employees, representatives and agents to take, all reasonable steps and precautions to protect and maintain the confidentiality of such information, materials and documentation of the other party; provided that the foregoing will not prevent the Company or Purchaser from

 

---

 

disclosing or making available such information (i) to its and its Affiliates' respective directors, officers, employees, members, partners, shareholders, agents, representatives or advisors (including, without limitation, attorneys, accountants, insurers, rating agencies, consultants, bankers and financial advisors), any such information, materials and documentation on a confidential basis for the purpose of carrying out the Contemplated Transactions, (ii) to the extent required by a Legal Requirement or (iii) in connection with obtaining the Required Purchaser Approvals or discussions with supervising Governmental Authorities and provided further that (i) the obligations of Purchaser under this Section 5.02 shall terminate at Closing with respect to matters relating to the Banks, their Subsidiaries or the Business and (ii) from and after Closing, the Company will treat all information, materials and documentation of or relating to the Banks, their Subsidiaries or the Business as confidential in accordance herewith and notwithstanding clause (b), (c) or (d) of the proviso to the first sentence of this Section 5.02.  This provision shall supersede any conflicting provisions between the parties in any other agreement.

Section 5.03.                                Return of Information.  If the Closing is not completed and this Agreement is terminated, each party shall upon the written request of the other party, return to the other party or destroy (such destruction to be confirmed in writing to the other party upon written request) all materials, documentation, data, records and other papers and copies thereof (whether on paper or in electronic, magnetic, photographic, mechanical or optical storage) relating to Purchaser or its Affiliates or to the Company, the Banks, the Shares or the Business which is confidential and which is in the possession of such party and maintain the confidentiality of all information or knowledge obtained from the other party, and not use any such information or knowledge for any purpose whatsoever; provided that a party may maintain such information to the extent required by applicable Legal Requirements or such party's established document retention policies (including any requirement to retain e-mail on an automated e‑mail archival system) or relating to the safeguarding or backup storage of electronic data or in connection with a legal dispute with the other party.

 

---

 

themselves, their Subsidiaries, directors, officers and stockholders and such other matters as may be reasonably necessary or advisable in connection with any application, petition or any other statement or application made by or on behalf of Purchaser, the Company or their respective Subsidiaries to any Governmental Authority in connection with the Contemplated Transactions.  Purchaser and the Company shall have the right to review and discuss in advance all characterizations of the information relating to them and any of their respective Subsidiaries which appear in any filing made, or written materials submitted, in connection with the transactions contemplated by this Agreement with any Governmental Authority.  Notwithstanding anything herein to the contrary, Purchaser shall not be required to furnish the Company with any (i) personal biographical or financial information of any of the directors, officers, employees, managers or partners of Purchaser or any of its Affiliates, (ii) strategic plans or (iii) proprietary and non-public information related to the organizational terms of, or investors in Purchaser or any of its Affiliates.  In addition, nothing herein shall require the Purchaser or any of its Affiliates to take any action that would result in the imposition of a Burdensome Condition.

 

---

 

directors, officers, employees and agents and authorized representatives (including counsel and independent public accountants) available to confer with Purchaser and its representatives; provided, that such access shall be reasonably related to the procurement of Purchaser Required Approvals hereunder, the Conversion and general Closing planning and transition activities, and confirming the continuing accuracy of the representations and warranties of the Company and compliance by the Company with its agreements and obligations hereunder, and (ii) as promptly as reasonably available to the Company or the Banks (and in any event within 10 days of the end of the applicable month), copies of the most recent month-end reports covering each Banks' trial balance (i.e., account level general ledger), loan and deposit system data (including the data fields, and provided in the same medium, provided to Purchaser in connection with its due diligence efforts) and balance sheet reconciliations.

Section 5.05.                                Certain Company Contracts.

 

---

 

obligations for breaches or defaults occurring on or before Closing, other than Purchaser's obligation to pay the Cure Costs for Assumed Bank Related Contracts.

Section 5.06.                                Notices Of Certain Events.  The Company shall promptly notify Purchaser in writing of:

No information received by Purchaser pursuant to this Section 5.06 or otherwise shall operate as a waiver or otherwise affect any representation, warranty or agreement given or made by the Company in this Agreement, nor shall any such information be deemed to change, supplement or amend the Disclosure Schedule.

Section 5.07.                                Stalking-Horse Bidder Fee.

 

---

 

provided in the Bidding Procedures, with such fee due on the first Business Day following termination, provided that, if the Auction occurs and a Person other than Purchaser is the Successful Bidder, such fee shall be due on the earlier of consummation or termination of the transaction with such Successful Bidder.

  Section 5.08.                                Debtor-in-Possession.  During the pendency of the Bankruptcy Cases, the Company shall continue to operate its business as debtor-in-possession pursuant to the Bankruptcy Code.

  Section 5.09.                                The Sale Motion.  On or before October 11, 2013, the Company shall file a sale motion with the Bankruptcy Court (the "Sale Motion") in form and substance reasonably acceptable to Purchaser.  Thereafter, the Company shall use its reasonable efforts to cause the Bankruptcy Court to enter an order or orders corresponding to the Sale Motion, and in any event, seeking the following relief from the Bankruptcy Court:

 

---

If, on the Bid Deadline (as defined in the Bidding Procedures), there is more than one Qualified Bidder (as defined in the Bidding Procedures), then, on or before November 12, 2013, the Company shall conduct an auction of the Shares and the Other Purchased Assets (the "Auction") in which the Purchaser and all other Qualified Bidders may participate.

  Section 5.10.                                The Bidding Procedures.

  Section 5.11.                                Sale Order.  The Sale Order shall be in form and substance acceptable to Purchaser and shall include, without limitation, the following findings of fact, conclusions of law and ordering provisions:

 

---

 

---

 

assignment of such non-debtor party's Assumed Bank Related Contract (except to the extent any such objection was sustained by the Order of the Bankruptcy Court);

  Section 5.12.                                Non-Solicitation of Competing Bids.  Except in accordance with the Bidding Procedures Order, the Company shall not, and shall cause its Affiliates and its and their representatives not to, (a) solicit or negotiate with any Specified Person (and to cease immediately any such ongoing activity), or enter into any agreement or understanding with respect to, or approve or recommend, any direct or indirect sale of any equity interest in, or any material portion of the assets of, the Company or the Banks or any extraordinary corporate transaction directly or indirectly involving the Company or the Banks or (b) provide any Specified Person (other than Purchaser and its Affiliates, agents and representatives) with access to the books, records, operating data, contracts, documents or other information relating to the Banks.  The Company shall promptly notify Purchaser of any proposal or offer from a third party to acquire, directly or indirectly, all or any substantial portion of the assets, properties, rights and interests of the Company or the Banks received by the Company in writing after the date hereof until the Bankruptcy Court shall have entered the Bidding Procedures Order, and the Company shall communicate to Purchaser the material terms of any such bid.

  Section 5.13.                                Public Announcements.  Other than mutually agreed upon press releases and other materials to be issued upon the announcement of this Agreement or thereafter, with respect to which the parties shall cooperate in good faith to jointly prepare or communicate consistent with the joint communication policy of the parties, from and after the

 

---

 

date hereof, neither party shall make any public announcement or public comment regarding this Agreement or the Contemplated Transactions without the prior written consent of the other party (which consent shall not be unreasonably withheld, delayed or conditioned), unless and only to the extent that (a) the furnishing or use of information is required in making any filing or obtaining any Governmental Authorization required for the consummation of the Contemplated Transactions or (b) the furnishing or use of such information is required by Legal Requirements.

  Section 5.14.                                Tax Election.

  Section 5.15.                                Preparation and Filing of Tax Returns; Taxes.  The Company shall include the income, equity or other applicable tax bases of the Banks and their Subsidiaries on the Company's consolidated, unitary, affiliated or other combined federal and state income Tax Returns for all periods through the end of the Closing Date (such period, the "Pre-Closing Tax Period" and such Tax Returns, the "Company Tax Returns") and pay any federal and state Taxes attributable to such income, equity or other applicable tax base, subject to

 

---

 

an obligation of the Banks to reimburse the Company for the Banks' and their Subsidiaries' share of any such taxes paid by the Company, such share to be computed in accordance with federal consolidated return regulations, where applicable, and with the Interagency Policy Statement on Income Tax Allocation in a Holding Company Structure.  The Banks shall furnish Tax information to the Company for inclusion in such Tax Returns in accordance with the Banks' past custom and practice.  The income of the Banks and their Subsidiaries shall be apportioned to the period up to and including the Closing Date and the period after the Closing Date by closing the books of the Banks and their Subsidiaries as of the end of the Closing Date.  The Company shall timely prepare and file (or cause to be prepared and filed) the Company Tax Returns, and shall prepare all Company Tax Returns in a manner consistent with prior practice in respect of the Banks and their Subsidiaries unless otherwise required by applicable law or unless Purchaser consents to such different treatment, such consent not to be unreasonably withheld.  The Company shall provide (or cause to be provided) to Purchaser a copy of any Company Tax Return at least twenty (20) Business Days prior to the due date for filing such return, and Purchaser shall have ten (10) Business Days in which to review and comment on such return prior to the filing thereof.  Purchaser and the Company agree to report all transactions not in the ordinary course of business occurring on the Closing Date after the Closing on Purchaser's federal and state income Tax Returns to the extent permitted by Treasury Regulations Section 1.1502-76(b)(1)(ii)(B).  Notwithstanding anything in this Agreement to the contrary, upon written notice from Purchaser to the Company, (i) the Company shall submit appropriate documentation to the Internal Revenue Service designating one of the Banks selected by Purchaser as substitute agent in relation to all applicable Company Tax Returns which include the Banks and the Company, and (ii) upon and after Purchaser's issuance of such notice, the applicable Bank to be designated as such substitute agent, and not the Company, shall have all authority, discretion and rights connected with all Company Tax Returns, Pre-Closing Tax Matters, Post-Closing Tax Matters and other Tax matters, and the applicable provisions of this Agreement shall be applied and construed consistent with such authority and rights of such applicable Bank, in each case subject to the requirements of Treasury Regulations Section 1.1502-77.

              Section 5.16.                                Tax Cooperation.  In connection with the preparation of Tax Returns, audit examinations, and any administrative or judicial proceedings relating to the Tax liabilities imposed on or attributable to the Banks or their Subsidiaries, Purchaser on the one hand and the Company on the other hand shall reasonably cooperate fully with each other, including the furnishing or making available during normal business hours of records, personnel (as reasonably required), books of account, powers of attorney or other materials necessary or helpful for the preparation of such Tax Returns, the conduct of audit examinations or the defense of claims by taxing authorities as to the imposition of Taxes.  The Company shall provide to Purchaser copies of all information, returns, books, records and documents relating to any tax matters of or attributable to the Banks or their Subsidiaries.

 

---

any consolidated, affiliated, unitary or other combined Tax Return, whether such Tax is attributable to the Pre-Closing Tax Period (a "Pre-Closing Tax Matter") or whether such Tax is attributable to any period or portion of a period after the Closing Date (a "Post-Closing Tax Matter").  The Company shall have the right to contest, resolve, control and defend any Pre-Closing Tax Matter; provided, however, that if and to the extent any such Pre-Closing Tax Matter would adversely affect Taxes for any period for which Purchaser, the Banks or their Subsidiaries are liable (including a reduction of a Tax Refund, net operating loss or other Tax attribute), the Company shall permit Purchaser to participate in the proceeding and shall not settle or otherwise compromise such proceeding in respect of such Pre-Closing Tax Matter without the prior written consent of Purchaser, which consent shall not be unreasonably withheld, conditioned or delayed.  Any costs and expenses (including reasonable fees and expenses of counsel) incurred by Ultimate Parent, Intermediate Parent, Banks, or any of their Subsidiaries in connection with any Pre-Closing Tax Matter shall be borne by the Company, and reimbursed by the Banks for their pro rata share of the expense consistent with the past practice of the Banks and the Company, except to the extent Purchaser determines that such past practice is inappropriate as applied to the Banks, in which case the Purchaser and Company shall resolve the matter in a mutually agreeable and reasonable manner.  Purchaser shall have the right to contest, resolve, control and defend any Post-Closing Tax Matter.  Any costs and expenses (including reasonable fees and expenses of counsel) incurred by Purchaser, the Banks or their Subsidiaries in connection with any Post-Closing Tax Matter shall be borne by Purchaser.

  Section 5.18.                                Transfer Taxes.  Notwithstanding any other provision of this Agreement, Purchaser shall be responsible for any transfer, sales, use, stamp, conveyance, value added, recording, registration, documentary, filing and other similar non-income Taxes and administrative fees (including, without limitation, notary fees) ("Transfer Taxes") arising in connection with the consummation of the Contemplated Transactions, whether levied on the Company, Purchaser or its Affiliates.  Purchaser shall timely prepare (or cause to be prepared) any Tax Returns with respect to Transfer Taxes arising in connection with the consummation of the Contemplated Transactions (the "Transfer Tax Returns").  The Company shall timely file all Transfer Tax Returns and the Purchaser shall pay the amount shown as due on any such return on the due date of such return.  The Company and Purchaser shall cooperate to minimize Transfer Taxes.

  Section 5.19.                                Bankruptcy Filings.

 

---

 

this Agreement, the Sale, the Biding Procedures or Purchaser; provided, however, that the Company's failure to provide such notice shall not be a breach of this Agreement unless Purchaser has been actually and materially damaged due to such failure.

  Section 5.20.                                Transfer of Business-Related Assets and Contracts.  If at any time, whether before or after the Closing, the Company or any of its officers or employees discovers or is otherwise aware of the fact that the Company or one of its Subsidiaries (other than the Banks or their Subsidiaries) (i) owns any asset (whether real, personal, tangible, intangible or otherwise) that is used or held for use in connection with, or that relates to, the Business or (ii) is a party to any Contract relating to the Business, the Company will promptly give notice of that fact to Purchaser and, if Purchaser so requests, the Company will promptly cause such asset to be transferred to the Surviving Bank free and clear of all Encumbrances, or the rights and obligations (but not any obligations relating to a pre-transfer breach or default) under such Contract to be assigned to the Surviving Bank free and clear of all Encumbrances, as the case may be, for no additional consideration beyond that currently provided for herein.

  Section 5.21.                                Plan.  The Company covenants and agrees that if the Sale Order is entered, the terms of any plan of reorganization or liquidation submitted, supported or sponsored by the Company for confirmation shall not conflict with, supersede, abrogate, nullify, modify or restrict the terms of this Agreement and the rights of Purchaser hereunder, or in any way prevent or interfere with the consummation or performance of the transactions contemplated by this Agreement, including any transaction that is approved pursuant to the Sale Order.

  Section 5.22.                                Appeal.  If the Sale Order or the Bidding Procedures Order is appealed by any Person, or petition for certiorari or motion for rehearing, reconsideration or rehearing is filed with respect thereto, if requested by Purchaser, the Company will take all action as may be reasonably necessary to defend against such appeal, petition or motion and to obtain an expedited resolution of such appeal, petition or motion, and, in such case, Purchaser will take all actions as may be reasonably requested by the Company to assist the Company in such defense.

  Section 5.23.                                License Agreement. Effective upon Closing, the Company grants to Purchaser and the Surviving Bank a limited, non-exclusive license to use the Trademarks in connection with banking services offered by and through the Surviving Bank, during a phase-out period not to exceed five (5) years from the Effective Date (the "Trademark Term").  Purchaser and Surviving Bank shall cease all use of the Trademarks immediately upon expiration of the Trademark Term.  Purchaser and Surviving Bank agree to maintain the quality of the banking services offered under the Trademarks at a level that is equal or better than the quality of services offered by the Banks prior to the Closing Datee under the same Trademarks. Purchaser and Surviving Bank shall not use the Trademarks except in connection with the operations of the Surviving Bank.  Purchaser acknowledges and agrees that all right, title and interest in and to the Trademarks is and shall remain the sole and exclusive property of the Company.

  Section 5.24.                                Transition Services Agreement.  Ultimate Parent and Purchaser will negotiate in good faith a mutually acceptable transition services agreement (the "Transition Services Agreement").

 

56

---

 

                Section 5.25.                                Benefit Arrangements.  Upon not less than five (5) days' notice prior to the Closing Date from Purchaser to the Company, the Company shall cause the termination, amendment or other appropriate modification of each Benefit Arrangement such that the Banks shall not sponsor or otherwise have any further Liability or other obligation in connection with such Benefit Arrangements, effective as of the date which immediately precedes the Closing Date, and such that participants' account under each such Benefit Arrangement which is a Qualified Plan shall be 100% vested and nonforfeitable.

                Section 5.26.                                Certain Employee Matters.

 

---

 

---

ARTICLE 6
CONDITIONS OF CLOSING

  Section 6.01.                                Conditions to Purchaser's Obligations.  The obligation of Purchaser to complete the transactions contemplated by this Agreement is subject to the fulfillment of the following conditions:

 

---

 

---

The foregoing conditions are for the benefit of Purchaser only and accordingly Purchaser will be entitled to waive compliance with any such conditions if it sees fit to do so, without prejudice to its rights and remedies at law and in equity and also without prejudice to any of its rights of termination in the event of non-performance of any other conditions in whole or in part.

            Section 6.02.                                Conditions to the Company's Obligations.  The obligation of the Company to complete the transactions contemplated by this Agreement is subject to the fulfillment of each of the following conditions:

The foregoing conditions are for the benefit of the Company only and accordingly the Company will be entitled to waive compliance with any such conditions if it sees fit to do so, without prejudice to its rights and remedies at law and in equity and also without prejudice to any of its rights of termination in the event of non-performance of any other conditions in whole or in part.

              Section 6.03.                                Mutual Condition.  The obligations of the Company and Purchaser to complete the Contemplated Transactions are subject to the fulfillment of the condition that no injunction or restraining order or other decision, ruling or order of a court, board, Governmental Authority or administrative tribunal of competent jurisdiction, and no applicable Legal Requirement, being in effect which prohibits, restrains, limits or imposes conditions on the transactions contemplated by this Agreement and no action or proceeding having been instituted or remaining pending or having been threatened (and such threat not having been withdrawn) before any such court, board, Governmental Authority or administrative tribunal to restrain, prohibit, limit or impose conditions on the transactions contemplated by this Agreement.

.

---

 

---

ARTICLE 7
CLOSING TRANSACTIONS

Section 7.01.                                Time and Place.  The Closing shall take place in the offices of Honigman Miller Schwartz and Cohn LLP, 660 Woodward Ave., 2290 First National Building, Detroit, Michigan, on the Closing Date, or at such other time and date, or both, as the Company and Purchaser or their respective counsel may agree upon in writing.

Section 7.02.                                Company's Closing Deliverables.  At the Closing, the Company shall deliver the following to Purchaser:

 

---

 

Bank Related Contracts) and the execution and delivery of this Agreement and all documents, instruments and agreements required to be executed and delivered by the Company pursuant to this Agreement in such form and content as Purchaser may require, acting reasonably;

Section 7.03.                                Purchaser's Closing Deliverables.  At the Closing, Purchaser shall effect the Equity Contribution and deliver the following to the Company (or, in the case of the Cash Purchase Price, as set forth in Section 2.03):

 

---

 

unliquidated, known or unknown, and whether arising under any agreement or understanding or otherwise in law or in equity, against the Company and its Affiliates other than the Banks and their Subsidiaries (and their successors and its and their respective officers, directors, employees, managers, partners, shareholders, members, and principals), other than Liabilities under this Agreement and the Tax Sharing Agreements.

  Section 7.04.                                Concurrent Delivery.  It shall be a condition of the Closing that all matters of payment and the execution and delivery of documents, in each case, at Closing by any party to the other pursuant to the terms of this Agreement shall be concurrent requirements and that nothing will be complete at the Closing until everything required as a condition precedent to the Closing has been paid, executed and delivered, as the case may be.

  Section 7.05.                                Transfer of Shares and Other Purchased Assets.  Subject to the terms and conditions set forth in this Agreement, and subject to the entry of a Sale Order, the Sale of the Shares to Purchaser and the sale of the Other Purchased Assets (including the assignment of the Assumed Bank Related Contracts, if any) to the Surviving Bank or other designee of Purchaser shall be deemed to take effect on the Closing Date.

ARTICLE 8
SURVIVAL OF REPRESENTATIONS AND COVENANTS

  Section 8.01.                                Survival.  The Company and the Purchaser agree that all of the representations, warranties, agreements and covenants of the Company and the Purchaser contained in this Agreement, or any instrument delivered pursuant to this Agreement, shall terminate at the Closing Date, except that the representations, warranties, agreements and covenants that by their terms survive the Closing Date and this Article 8 and Article 9 shall survive the Closing Date.

ARTICLE 9
MISCELLANEOUS

  Section 9.01.                                Notices.  Any notice, request, demand or other communication required or permitted to be given under this Agreement shall be in writing and delivered by hand, facsimile transmission or prepaid registered mail (return receipt requested) to the party to which it is to be given as follows:

To Purchaser:

Talmer Bancorp, Inc.

2301 W. Big Beaver Road, 5^th Floor

Troy, Michigan 48084

Attention: David T. Provost

Facsimile No.: (248) 498-2914

with a copy to (which shall not constitute notice):

 

65

---

              Nelson Mullins Riley & Scarborough LLP

Atlantic Station

201 17th Street NW, Suite 1700

Atlanta, Georgia 30363

Attention: J. Brennan Ryan

Facsimile No.: (404) 322-6041

To the Company:


    Capitol Bancorp Ltd.
    200 N. Washington Square
    Lansing, Michigan 48933
    Attention:  Cristin Reid, Brian English
    email: benglish@capitolbancorp.com

with a copy to (which shall not constitute notice):

Honigman Miller Schwartz and Cohn LLP
2290 First National Building

660 Woodward Avenue
Detroit, Michigan 48226
Attention:  Phillip D. Torrence

Jeffrey H. Kuras
Facsimile No: (313) 465-7447

or to such other address or fax number as a party may specify by notice given in accordance with this Section 9.01.  Any such notice, request, demand or other communication given as aforesaid will be deemed to have been given, in the case of delivery by hand or registered mail, when delivered, or, in the case of delivery by facsimile transmission, when a legible facsimile is received by the recipient, in each case, if delivered or received before 5:00 p.m. local time on a Business Day, or on the next Business Day if delivered or received on a day which is not a Business Day or after 5:00 p.m. local time on a Business Day.

   Section 9.02.                                Further Assurances.  Each of the parties shall execute and deliver such further documents, instruments and agreements and do such further acts and things as may be reasonably required from time to time, either before, on or after the Closing Date, to carry out the full intent and meaning of this Agreement, give effect to the transactions contemplated by this Agreement and assure to Purchaser good and valid title to the Shares, free and clear of all Encumbrances, and assure to the Surviving Bank good and valid title to the Other Purchased Assets (including the assignment of the Assumed Bank Related Contracts, if any), free and clear of all Encumbrances.  The Company shall seek to enforce its rights under any third party nondisclosure or confidentiality agreements on behalf of and at the request and expense of Purchaser.

    Section 9.03.                                Time of the Essence.  Time shall be of the essence of this Agreement.

 

---

  Section 9.04.                                Entire Agreement.  This Agreement (and all related documents referred to herein, including the scheules and exhibits hereto) constitutes the entire agreement between the Company and Purchaser pertaining to the Contemplated Transactions and supersedes all prior agreements, undertakings, negotiations and discussions, whether oral or written, of the Company and Purchaser and there are no warranties, representations, covenants, obligations or agreements between the Company (or any Affiliate thereof) and Purchaser (or any Affiliate thereof) except as set forth in this Agreement (or any such related document).

  Section 9.05.                                Assignment.  Neither party to this Agreement may assign any of its respective benefits, obligations or liabilities under or in respect of this Agreement without the prior written consent of the other party, which may be withheld in its absolute discretion; provided, however, that Purchaser may, without the consent of the Company, assign its rights, benefits and obligations under or in respect of this Agreement, in whole or in part, to one or more directly or indirectly wholly owned Subsidiaries of Purchaser if and to the extent permitted by the Regulatory Approvals and the Bankruptcy Court, but no such assignment will relieve Purchaser of its obligations under this Agreement.  Any attempted assignment without the necessary consent shall be void.

  Section 9.06.                                Invalidity.  Each of the provisions contained in this Agreement is distinct and severable and a determination of illegality, invalidity or unenforceability of any such provision or part hereof by a court of competent jurisdiction shall not affect the validity or enforceability of any other provision hereof, unless as a result of such determination this Agreement would fail in its essential purposes.

  Section 9.07.                                Waiver and Amendment.  Except as expressly provided in this Agreement, no amendment or waiver of it will be binding unless made in writing by the party to be bound by such amendment or waiver.  No waiver of any provision, or any portion of any provision, of this Agreement will constitute a waiver of any other part of the provision or any other provision of this Agreement, nor a continuing waiver unless otherwise expressly provided.

  Section 9.08.                                Third-Party Beneficiaries.  This Agreement is for the sole benefit of the parties hereto and their permitted assigns and nothing herein express or implied shall give or be construed to give to any Person, other than the parties hereto and such permitted assigns, any legal or equitable rights hereunder.

  Section 9.09.                                Surviving Provisions on Termination.  Notwithstanding any other provisions of this Agreement, if this Agreement is terminated, the provisions of Sections 1.03, 5.02, 5.03, 5.07, 6.04(a) and 9.01 and, to the extent relating to any of the foregoing, this Article 9 shall survive such termination and remain in full force and effect, and each party shall remain liable for any willful and material breach of this Agreement prior to its termination.

  Section 9.10.                                Captions.  The captions in this Agreement are inserted for convenience of reference only and shall not be considered a part of or affect the construction or interpretation of any provision of this Agreement.

 

---

  Section 9.11.                                Counterparts.  This Agreement may be signed in counterparts and each such counterpart will constitute an original document and such counterparts, taken together, will constitute one and the same instrument.  Electronically transmitted or facsimile copies shall be deemed to be originals.

  Section 9.12.                                Specific Performance.  The parties hereto agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with the terms hereof and that the parties shall be entitled (without the requirement to post bond) to an injunction or injunctions to prevent breaches of this Agreement or to enforce specifically the performance of the terms and provisions hereof, in addition to any other remedy to which they are entitled at law or in equity.

   Section 9.13.                                Jurisdiction.  The parties hereto agree that any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby shall be brought in the United States Bankruptcy Court for the Eastern District of Michigan, so long as such court shall have subject matter jurisdiction over such suit, action or proceeding, and that any cause of action arising out of this Agreement shall be deemed to have arisen from a transaction of business in the State of Michigan, and each of the parties hereby irrevocably consents to the jurisdiction of such court (and of the appropriate appellate courts therefrom) in any such suit, action or proceeding and irrevocably waives, to the fullest extent permitted by law, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceeding in such court or that any such suit, action or proceeding brought in such court has been brought in an inconvenient forum.  Process in any such suit, action or proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction of such court.

   Section 9.14.                                Waiver Of Jury Trial.  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

  Section 9.15.                                Legal and Other Fees and Expenses.

 

---

 

Closing and allowed pursuant to a final, non-appealable order of the Bankruptcy Court, whether the Bankruptcy Court's order allowing such fees and expenses is entered and/or becomes final prior to or after the Closing (the "Allowed Administrative Claims");

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

---

 

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

CAPITOL BANCORP LTD.




By:      /s/ Cristin K. Reid
      Name: Cristin K. Reid
      Title: Corporate President

FINANCIAL COMMERCE CORPORATION

TALMER BANCORP, INC.




By:      /s/ David T. Provost
      Name: David T. Provost
      Title: Chief Executive Officer

[Signature Page to Stock Purchase Agreement]