Summary of MERCANTILE BANK CORP

Entry into a Material Definitive Agreement, Change in Directors or Principal

Item 1.01 Entry into a Material Definitive Agreement.
On May 15, 2009, Mercantile Bank Corporation (the "Company"), entered into a Letter Agreement, dated May 15, 2009, including the Securities Purchase Agreement - Standard Terms (collectively, the "Securities Purchase Agreement"), with the United States Department of the Treasury (the "Treasury") as part of the Treasury's Capital Purchase Program (the "CPP"). Pursuant to the Securities Purchase Agreement, the Company issued and sold to the Treasury (i) 21,000 shares of the Company's Fixed Rate Cumulative Perpetual Preferred Stock, Series A, without par value and having a liquidation preference of $1,000 per share (the "Series A Preferred Stock"), and (ii) a warrant (the "Warrant") to purchase 616,438 shares of the Company's common stock, at an exercise price of $5.11 per share (subject to certain anti-dilution and other adjustments), for an aggregate purchase price of $21,000,000 in cash.
The Series A Preferred Stock qualifies as Tier 1 capital for regulatory purposes, and pays cumulative dividends quarterly at a rate of 5% per annum for the first five years, and 9% per annum thereafter. The Series A Preferred Stock ranks senior to the Company's common stock and senior to or pari passu with all other series or classes of preferred stock with respect to dividends and distributions and amounts payable upon liquidation, dissolution and winding up of the Company. The Series A Preferred Stock is non-voting, other than class voting rights on certain matters that could adversely affect the Series A Preferred Stock. If dividends on the Series A Preferred Stock have not been paid for an aggregate of six quarterly dividend periods or more, whether or not consecutive, the Company's authorized number of directors will be automatically increased by two and the holders of the Series A Preferred Stock, voting together with holders of any then outstanding voting parity stock, will have the right to elect those directors at the Company's next annual meeting of shareholders or at a special meeting of shareholders called for that purpose. Any Series A Preferred Stock directors would be elected annually and serve until all accrued and unpaid dividends on the Series A Preferred Stock have been paid.
In connection with the CPP transaction, the Company entered into a side letter agreement, dated May 15, 2009, with the Treasury (the "Side Letter Agreement"), which amends the Securities Purchase Agreement in certain respects to make the terms of the Securities Purchase Agreement consistent with the provisions of the American Recovery and Reinvestment Act of 2009 ("ARRA"). Pursuant to the Side Letter Agreement, the Company has the right to redeem the Series A Preferred Stock at any time, subject to consultation with the Board of Governors of the Federal Reserve System (the "Federal Reserve Board"), the Company's primary regulator.
Until the earlier of (i) May 15, 2012, or (ii) such time as all Series A Preferred Stock has been redeemed by the Company or transferred by the Treasury to third parties that are not affiliated with the Treasury, the Company may not, without the Treasury's consent, increase its dividend rate per share of common stock or, with certain limited exceptions, repurchase its common stock.

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On May 12, 2009, the Company filed a Certificate of Designations of Fixed Rate Cumulative Perpetual Preferred Stock, Series A (the "Certificate of Designations") with the Michigan Department of Energy, Labor & Economic Growth, which constituted an amendment to the Company's Articles of Incorporation effective on that date. The Certificate of Designations established and designated the Series A Preferred Stock and specified the preferences and relative, participating, optional or other rights, and the qualifications, limitations and restrictions of that series, including the relevant provisions described above.
The Warrant is immediately exercisable and has a 10-year term. The exercise price and number of shares subject to the Warrant are both subject to anti-dilution adjustments. Pursuant to the Securities Purchase Agreement, the Treasury has agreed not to exercise voting power with respect to any shares of common stock issued upon exercise of the Warrant; however, the agreement not to vote the shares does not apply to any person who may subsequently acquire such shares. If the Company receives aggregate gross proceeds of at least $21,000,000 from one or more qualifying equity offerings of Tier 1-eligible perpetual preferred or common stock on or prior to December 31, 2009, the number of shares of common stock underlying the Warrant then held by the Treasury will be reduced by one-half of the original number of shares underlying the Warrant, after taking into account all adjustments.
The Series A Preferred Stock and the Warrant were issued in a private placement exempt from registration pursuant to Section 4(2) of the Securities Act of 1933. The Treasury and other future holders of the Series A Preferred Stock, the Warrant or the common stock issued pursuant to the Warrant have registration rights, including piggyback registration rights, with respect to these securities. The Series A Preferred Stock, the Warrant and the common stock issuable upon exercise of the Warrant are not subject to any contractual restrictions on transfer, except that the Treasury may only transfer or exercise an aggregate of one-half of the Warrant shares prior to the earlier of (i) the . . .

Item 9.01 Financial Statements and Exhibits
(d) Exhibits.

Exhibit No.                                  Description
    3.1       Certificate of Designations of Fixed Rate Cumulative Perpetual Preferred
              Stock, Series A, filed with the Michigan Department of Energy, Labor and
              Economic Growth on May 12, 2009, and constituting an amendment to the
              Articles of Incorporation of Mercantile Bank Corporation

    4.1       Form of the stock certificate for the Fixed Rate Cumulative Perpetual
              Preferred Stock, Series A

    4.2       Warrant to Purchase Common Stock of Mercantile Bank Corporation, dated
              May 15, 2009

   10.1       Letter Agreement, dated as of May 15, 2009, between Mercantile Bank
              Corporation and the United States Department of the Treasury, including
              the Securities Purchase Agreement - Standard Terms and Schedules

   10.2       Side Letter Agreement, dated as of May 15, 2009, between Mercantile Bank
              Corporation and the United States Department of the Treasury regarding the
              American Recovery and Reinvestment Act of 2009

   10.3       Amendment to Employment Agreements, dated May 15, 2009, by and among
              Mercantile Bank Corporation, Mercantile Bank of Michigan, Michael H.
              Price, Robert B. Kaminski, Jr. and Charles E. Christmas

   10.4       Form of Waiver executed by each of Michael H. Price, Robert B. Kaminski,
              Jr. and Charles E. Christmas

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