April 1,
2009
 
 
 David L.
Hatfield
 President
and CEO
 MainStreet
Financial Corporation
 629 W.
State Street
 Hastings,
Michigan 49508
 
 Re:
              Loan Facility from
      Independent Bank (successor to Independent Bank South Michigan) (the
      “Bank”)
 
 Dear Mr.
Hatfield:
 
 This letter (the “Letter Agreement”)
pertains to the credit facility outstanding from the Bank to MainStreet
Financial Corporation (the “Borrower”) pursuant to a certain Business Loan
Agreement, Promissory Note, Pledge Agreement, and Irrevocable Proxy, and other
related documents and agreements dated June 30, 2005 by and between the parties,
as the same may be amended, modified, supplemented, restated, or replaced from
time to time (collectively, the “Loan Documents”), which facility involves a
line of credit in the original principal amount of $2,000,000 (the
“Loan”).
 
 Conditional
Waiver of Failure to Meet Certain Covenants
 
 The
Bank and the Borrower acknowledge the Loan Documents require the Borrower to
achieve a consolidate return on assets (ROA) of greater than 0.00%, measured
quarterly in accordance with generally accepted accounting principles and
regulatory requirements. The Borrower has advised the Bank that the Borrower
failed to achieve a consolidated ROA greater than 0.00% during any quarter of
2008 and is not likely to achieve such required ROA for the first two quarters
in 2009.
 
 The Bank and the Borrower acknowledge
the Loan Documents require the Borrower’s thrift subsidiary to remain “well
capitalized”.  The Borrower has advised the Bank that the Borrower’s
thrift subsidiary failed to be “well capitalized” at 12/31/2008 and is not
likely to achieve a “well capitalized” regulatory designation for the first two
quarters in 2009.
 
 In addition, the Bank and the Borrower
acknowledge the Loan Documents require the Borrower to maintain consolidated
non-accrual loans and ORE of less than 20% of Tier 1 capital and less than 1.5%
of total loans, in each case measured quarterly in accordance with generally
accepted accounting principals and regulatory requirements. The Borrower has
advised the Bank that the Borrower failed to meet these covenants for one or
more quarters in 2008 and may not achieve these covenants for one or more
quarters in 2009. The defaults described in this paragraph and in the preceding
paragraphs are collectively referred to as the “Defaults”.
 
 The foregoing enumeration of Defaults
is without prejudice to the rights of the Bank to identify further defaults and
events of the default, whether now existing or hereafter arising, as and when
said defaults become known to the Bank.
   
    MainStreet
Financial Corporation
 April 1,
2009
 Page
2
 
 
 As a
result of the Defaults, the Loan is due and payable in full and the Bank is
entitled to exercise the remedies available to it under the Loan Documents and
applicable law.
 
 The Bank hereby agrees to refrain and
forbear from taking any action to enforce its remedies with respect to the
Defaults upon the following conditions:
 
 (a)           The
Borrower must remain, in all respects and at all times, in full compliance with
this letter Agreement;
 
 (b)           Except
for the Defaults, the Borrower must remain, in all respects and at all times, in
full compliance with each of the Loan Documents, including (without limitation)
the obligation to make all periodic payments on the Loan as and when due;
and
 
 (c)           The
MainStreet Financial Corporation Employee Stock Ownership Trust (the “ESOT”)
must remain, in all respects and at all times, in full compliance with each of
the Loan and Pledge Agreement, Promissory Note, and other related documents and
agreements dated December 22, 2006, by and between the Bank and the ESOT, as the
same may be amended, modified, supplemented, restated, or replaced from time to
time (collectively, the “ESOT Loan Documents”), except to the extent
specifically waived in that certain letter agreement between the ESOT and the
Bank dated on or about the same date as this Letter Agreement.
 
 If any of the above conditions are not
met at any time and for any reason, this Letter Agreement and the Bank’s
forbearance hereunder shall automatically terminate, without notice to Borrower
and without prejudice to any rights of the Bank. Without limiting the generality
of the foregoing, in such event, the Bank shall be entitled to claim and collect
damages from the Borrower with respect to all periods in which any default or
event of default existed pursuant to any of the Loan Documents, including at all
times from and after the date of this Letter Agreement and including with
respect to the Defaults.
 
 Notwithstanding the foregoing or
anything to the contrary in this Letter Agreement, this Letter Agreement and the
Bank’s forbearance hereunder shall expire automatically and without notice upon
the earlier of: (i)
June 30, 2009; (ii) the occurrence of any default or event of default under any
of the Loan Documents, other than the defaults listed above; or (iii) the
occurrence of any default of event of any default under any of the ESOT Loan
Documents, including (without limitation) and default by the Borrower under its
Guaranty of the Bank’s loan to the ESOT, except to the extent specifically
waived in that certain letter agreement between the ESOT and the Bank dated on
or about the same date as this Letter Agreement. Notwithstanding anything herein
to the contrary, nothing in this Agreement shall be construed so as to imply any
commitment by the Bank to forebear in any respect regarding any of the Loan
Documents at any time on or after June 30, 2009.
 
 The
Bank’s agreement to forbear hereunder shall be effective only upon the
acceptance and execution of this Letter Agreement on the part of the Borrower,
which must occur by 5:00 p.m. (EDT) on April
­­­­­­­­­­10, 2009 or this Letter
Agreement will be null and void and of no force or effect. The Borrower’s
execution of this Letter Agreement shall constitute the Borrower’s
acknowledgement of the Defaults and the Bank’s rights and remedies resulting
there from, and shall further constitute the Borrower’s acceptance of and
agreement to all of the terms and provisions of this Letter
Agreement.
 
 
 
 
 
 MainStreet
Financial Corporation
 April 1,
2009
 Page
3
 
 
 In consideration of the Bank’s
agreements set forth in this Letter Agreement, the Borrower hereby: (a)
releases, quits and forever discharges the Bank and its affiliates, officers,
directors, agents (including, without limitation, its legal representatives),
successors and assigns (collectively, the “Bank Affiliates”) of and from any and
all actions, causes of actions, claims, demands, damages and liabilities of
whatever kind and nature, known and unknown, which the Borrower now has, claims
or asserts, or might or could hereafter have, claim or assert, against the Bank
or any of the Bank Affiliates, arising or alleged to arise from any act,
omission or neglect of the Bank or any Bank Affiliate up to and including the
date of this Letter Agreement, with respect to the Loan, the Loan Documents, or
any transaction related thereto; and (b) waives any and all defenses, setoffs,
or counterclaims, of whatever kind and nature, known and unknown, under or with
respect to the Loan, the Loan Documents, or any transaction related thereto and
based upon any act, omission, or neglect of the Bank or any Bank affiliate up to
and including the date of this Letter Agreement. The Borrower acknowledges that
this paragraph, together will all other provisions of this Letter Agreement, is
freely and voluntarily made, without any duress or coercion and after careful
review, with the assistance of legal counsel, of all of the terms and provisions
hereof, and further acknowledges and agrees that the release and waiver stated
in this paragraph shall have been fully earned upon the Bank’s execution of this
Letter Agreement, shall not be subject to rescission or nullification at any
time hereafter due to the occurrence or nonoccurrence of any subsequent event,
and (notwithstanding anything in this Letter Agreement to the contrary) shall
survive the termination of this Letter Agreement and the termination of the
Bank’s forbearance hereunder.
 
 
 INDEPENDENT
BANK
   
 Robert N
Shuster
 Executive
Vice President
 
 
 
 
 AGREED AND
ACCEPTED:
 
 
 MAINSTREET
FINANCIAL CORPORATION
 
 
 
 /s/
David L.
Hatfield
 David L.
Hatfield
 President