Document:

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                                                                    EXHIBIT 10.3

                                                            Final Conformed Copy

                               PLACEMENT AGREEMENT

                                      among

                          MERCANTILE BANK CORPORATION,

                         MERCANTILE BANK CAPITAL TRUST I

                                       and

                         SUNTRUST CAPITAL MARKETS, INC.

                                ----------------

                         Dated as of September 16, 2004

                                ----------------

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                           Mercantile Bank Corporation

                    $16,000,000 Series A Preferred Securities
                    $16,000,000 Series B Preferred Securities

            Series A and Series B Floating Rate Preferred Securities
               (Liquidation Amount $1,000 per Preferred Security)

                               PLACEMENT AGREEMENT

                             ----------------------

                                                              September 16, 2004

SunTrust Capital Markets, Inc.
303 Peachtree Street, N.E.
24th Floor, Mail Code 3950
Atlanta, Georgia 30308

Ladies and Gentlemen:

      Mercantile Bank Corporation, a Michigan corporation (the "Company"), and
its financing subsidiary, Mercantile Bank Capital Trust I, a Delaware statutory
trust (the "Trust," and hereinafter together with the Company, the "Offerors"),
hereby confirm their agreement (this "Agreement") with you as placement agent
(the "Placement Agent"), as follows:

Section 1. Issuance and Sale of Securities.

      1.1 Introduction. The Offerors propose to issue and sell at the Initial
Closing (as defined in Section 2.3.1 hereof) SIXTEEN MILLION ($16,000,000)
DOLLARS of the Trust's Series A Floating Rate Preferred Securities, with a
liquidation amount of $1,000 per preferred security, bearing a variable rate of
interest per annum, reset quarterly, equal to LIBOR (as defined in the Indenture
(as defined below)) plus 2.18% (the "Series A Preferred Securities"), and at the
Subsequent Closing (as defined in Section 2.3.1 hereof) SIXTEEN MILLION
($16,000,000) DOLLARS of the Trust's Series B Floating Rate Preferred
Securities, with a liquidation amount of $1,000 per preferred security, bearing
a variable rate of interest per annum, reset quarterly, equal to LIBOR (as
defined in the Indenture (as defined below)) plus 2.18% (the "Series B Preferred
Securities" and together with the Series A Preferred Securities, the "Preferred
Securities"), to STI Investment Management, Inc., a Delaware corporation (the
"Purchaser"), pursuant to the terms of the Preferred Securities Subscription
Agreements entered into, or to be entered into on or prior to each Closing Date
(as defined in Section 2.3.1 hereof), between the Offerors and the Purchaser
(each a "Subscription Agreement" and collectively, the "Subscription
Agreements"), the form of which is attached hereto as Exhibit A and incorporated
herein by this reference.

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      1.2 Operative Agreements. The Preferred Securities shall be fully and
unconditionally guaranteed on a subordinated basis by the Company with respect
to distributions and amounts payable upon liquidation, redemption or repayment
(the "Guarantee") pursuant and subject to the Guarantee Agreement (the
"Guarantee Agreement"), to be dated as of the date hereof and executed and
delivered by the Company and Wilmington Trust Company, as guarantee trustee (the
"Guarantee Trustee"), for the benefit from time to time of the holders of the
Preferred Securities. The entire proceeds from the sale by the Trust to the
holders of the Preferred Securities shall be combined with the entire proceeds
from the sale by the Trust to the Company of its Series A and Series B common
securities (the "Common Securities"), and shall be used by the Trust to purchase
THIRTY TWO MILLION NINE HUNDRED NINETY THOUSAND ($32,990,000) DOLLARS in
principal amount of the Series A and Series B Floating Rate Junior Subordinated
Notes (the "Junior Subordinated Notes") of the Company. The Preferred Securities
and the Common Securities of the Trust shall be issued pursuant to an Amended
and Restated Trust Agreement among Wilmington Trust Company, as property trustee
(the "Property Trustee"), Wilmington Trust Company, as Delaware trustee (the
"Delaware Trustee"), the Administrative Trustees named therein and the Company,
to be dated as of the date hereof and in substantially the form heretofore
delivered to the Placement Agent (the "Trust Agreement"). The Junior
Subordinated Notes shall be issued pursuant to an Indenture (the "Indenture"),
to be dated as of the date hereof, between the Company and Wilmington Trust
Company, as indenture trustee (the "Indenture Trustee"). The documents
identified in this Section 1.2 and in Section 1.1 are referred to herein as the
"Operative Documents." The Preferred Securities, the Common Securities and the
Junior Subordinated Notes are collectively referred to as the "Securities." All
other capitalized terms used but not defined in this Agreement shall have the
meanings ascribed to them in the Indenture.

      1.3 Rights of Purchaser. The Preferred Securities shall be offered and
sold by the Trust directly to the Purchaser without registration of any of the
Preferred Securities, the Junior Subordinated Notes or the Guarantee under the
Securities Act of 1933, as amended (the "Securities Act"), or any other
applicable securities laws in reliance upon exemptions from the registration
requirements of the Securities Act and other applicable securities laws. The
Offerors agree that this Agreement shall be incorporated by reference into the
Subscription Agreements and the Purchaser shall be entitled to each of the
benefits of the Placement Agent and the Purchaser under this Agreement and shall
be entitled to enforce obligations of the Offerors under this Agreement as fully
as if the Purchaser were a party to this Agreement. The Offerors and the
Placement Agent have entered into this Agreement to set forth their
understanding as to their relationship and their respective rights, duties and
obligations.

      1.4 Legends. Upon original issuance thereof, and until such time as the
same is no longer required under the applicable requirements of the Securities
Act, the Preferred Securities and Junior Subordinated Notes certificates shall
each contain a legend as required pursuant to any of the Operative Documents.

Section 2. Purchase of Preferred Securities.

      2.1 Exclusive Rights; Purchase Price. From the date hereof until the
Subsequent Closing Date (which date may be extended by mutual agreement of the
Offerors and the Placement Agent), the Offerors hereby grant to the Placement
Agent the exclusive right to

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arrange for the sale to the Purchaser of each series of Preferred Securities at
a purchase price equal to $1,000 per Preferred Security. The aggregate purchase
price of each series of Preferred Securities shall be SIXTEEN MILLION
($16,000,000) DOLLARS (the "Purchase Price"), which Purchase Price is equal to
100% of the stated liquidation amount of a given series of Preferred Securities.

      2.2 Subscription. The Offerors hereby agree to evidence their acceptance
of the subscription by countersigning a copy of the Subscription Agreements and
returning the same to the Placement Agent.

      2.3 Closing and Delivery of Payment.

      2.3.1 Closing; Closing Date. The initial closing (the "Initial Closing")
for the sale and purchase of the Series A Preferred Securities by the Offerors
to the Purchaser shall occur at the offices of Powell, Goldstein, Frazer &
Murphy LLP, or such other place as the parties hereto shall agree at 11:00 a.m.
(eastern time) on September 16, 2004, or such other later date as the parties
may designate (the date and time of delivery and payment for the Series A
Preferred Securities being herein called the "Initial Closing Date"). The
subsequent closing (the "Subsequent Closing") for the sale and purchase of the
Series B Preferred Securities by the Offerors to the Purchaser shall occur at
the offices of Powell, Goldstein, Frazer & Murphy LLP, or such other place as
the parties hereto shall agree at 11:00 a.m. (eastern time) on or prior to
December 15, 2004, or such other later date as the parties may designate (the
date and time of delivery and payment for the Series B Preferred Securities
being herein called the "Subsequent Closing Date", the Initial Closing Date and
the Subsequent Closing Date each being, a "Closing Date"). Each series of
Preferred Securities shall be transferred and delivered to the Purchaser against
the payment of the Purchase Price (as defined in the applicable Subscription
Agreement) to the Offerors in immediately available funds on the applicable
Closing Date to a U.S. account designated in writing by the Company at least two
(2) business days prior to such Closing Date.

      2.3.2 Delivery. Delivery of each series of Preferred Securities shall be
made at such location, and in such names and denominations, as the Purchaser
shall designate at least two (2) business days in advance of the applicable
Closing Date. The Company and the Trust agree to have each series of Preferred
Securities available for inspection and checking by the Purchaser in Atlanta,
Georgia not later than 1:00 P.M., eastern time, on the business day prior to the
applicable Closing Date.

      2.4 Placement Agent's Fees and Expenses.

      2.4.1 Placement Agent's Compensation. The Company shall not be required to
pay a placement fee or commission to the Placement Agent in connection with the
transactions contemplated hereby.

      2.4.2 Costs and Expenses. The Company hereby covenants and agrees that it
shall pay or cause to be paid (directly or by reimbursement) (i) all costs and
expenses incident to the authorization, issuance, sale and delivery of the
Preferred Securities and any taxes payable in connection therewith; and (ii) the
fees and all reasonable expenses of the Guarantee Trustee, the Property Trustee,
the Delaware Trustee, the Indenture Trustee and any other trustee or paying

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agent appointed under the Operative Documents, including the fees and
disbursements of counsel for such trustees, which fees shall not exceed $3,000
in administrative fees annually with respect to all Preferred Securities issued
under the Trust and legal fees and disbursements of $1,500 for each of the
Initial and Subsequent Closings; provided, that the Company shall be entitled to
a reimbursement by the Placement Agent on each Closing Date for up to $1,500 in
legal fees incurred in connection with the closing of the transactions
contemplated hereby. The acceptance and administrative fees will be fixed for
the life of the trust so long as there is no event of default or other event in
which the trustee has the right to retain counsel. In such a case, those fees
and expenses will be billed at the trustee's cost.

      2.4.3 Reimbursement of Expenses. If the sale of any of the Preferred
Securities provided for in this Agreement is not consummated because any
condition set forth in Section 3 to be satisfied by either the Company or the
Trust is not satisfied, because this Agreement is terminated pursuant to Section
9 or because of any failure, refusal or inability on the part of the Company or
the Trust to perform all obligations and satisfy all conditions on its part to
be performed or satisfied hereunder other than by a reason of a default by this
Agreement, the Company will reimburse the Placement Agent upon demand for all
reasonable out-of-pocket expenses (including the fees and expenses of each of
the Placement Agent's or Purchaser's counsel) that shall have been incurred by
the Placement Agent or Purchaser in connection with the transaction contemplated
by this Agreement. The Company shall not in any event be liable to the Placement
Agent or Purchaser for the loss of anticipated profits from the transactions
contemplated by this Agreement.

Section 3. Closing Conditions. The obligations of the parties under this
Agreement on each Closing Date are subject to the following conditions:

      3.1 Accuracy of Representations and Warranties. The representations and
warranties contained in this Agreement, and the statements of the Offerors made
in any certificates pursuant to this Agreement, shall be accurate as of the date
of delivery of each series of Preferred Securities:

      3.2 Opinions of Counsel. On each Closing Date, the Placement Agent shall
have received the following favorable opinions, each dated as of the applicable
Closing Date: (a) from Dickinson Wright PLLC, counsel for the Offerors,
addressed to the Purchaser, the Placement Agent and the Indenture Trustee in
substantially the form set forth on Exhibit B-1 attached hereto and incorporated
herein by this reference, (b) from Powell, Goldstein, Frazer & Murphy LLP,
special tax counsel for the Placement Agent and Purchaser, addressed to the
Placement Agent and Purchaser in substantially the form set forth on Exhibit B-2
attached hereto and incorporated herein by this reference, (c) from Richards
Layton & Finger, P.A., special Delaware counsel to the Placement Agent and
Purchaser and addressed to the Purchaser, the Placement Agent and the Offerors,
in substantially the form set forth on Exhibit B-3 attached hereto and
incorporated herein by this reference, and (d) from Richards Layton & Finger,
P.A., special counsel to the Indenture Trustee, the Property Trustee and the
Guarantee Trustee and addressed to the Purchaser, the Placement Agent and the
Offerors, in substantially the form set forth on Exhibit B-4 attached hereto and
incorporated herein by this reference. Each opinion addressed to the Purchaser
shall state that the first entity, if any, to which the Purchaser transfers any
of the Preferred Securities (each, a "Subsequent Purchaser") shall be entitled
to rely on such opinion.

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      3.3 Officer's Certificate. The Company shall have furnished to the
Placement Agent and the Purchaser a certificate of the Company, signed by the
Chief Executive Officer, President or an Executive Vice President and by the
Chief Financial Officer, Treasurer or Assistant Treasurer of the Company, and
the Trust shall have furnished to the Placement Agent and the Purchaser a
certificate of the Trust, signed by an Administrative Trustee of the Trust, in
each case dated as of the applicable Closing Date, and, in the case of the
Company, as to 3.3.1 and 3.3.2 below and, in the case of the Trust, as to 3.3.1
below:

      3.3.1 the representations and warranties in this Agreement are true and
correct on and as of the applicable Closing Date with the same effect as if made
on such Closing Date, and the Company and the Trust have complied with all the
agreements and satisfied all the conditions on either of their part to be
performed or satisfied at or prior to such Closing Date; and

      3.3.2 since the date of the Interim Financial Statements (as defined
below), there has been no material adverse change in the condition (financial or
other), earnings, business or assets of the Company and its subsidiaries,
whether or not arising from transactions occurring in the ordinary course of
business.

      3.4 No Subsequent Change. Subsequent to the execution of this Agreement,
there shall not have been any change, or any development involving a prospective
change, in or affecting the condition (financial or other), earnings, business,
prospects or assets of the Company and its subsidiaries, whether or not
occurring in the ordinary course of business, the effect of which is, in the
Placement Agent's or Purchaser's judgment, so material and adverse as to make it
impractical or inadvisable to proceed with the purchase of the Preferred
Securities to be purchased on such Closing Date.

      3.5 Delivery of Operative Documents. Each of the Operative Documents shall
have been duly authorized, executed and delivered by each party thereto, and
copies thereof shall have been delivered to the Company, the Trust, the
Purchaser and the Placement Agent.

      3.6 Consents and Permits. The Company and the Trust shall have received
all consents, permits and other authorizations, and made all such filings and
declarations, as may be required from any person or entity pursuant to any law,
statute, regulation or rule (federal, state, local and foreign), or pursuant to
any agreement, order or decree to which the Company or the Trust is a party or
to which either is subject, in connection with the transactions contemplated by
this Agreement.

      3.7 Information. Prior to or on each Closing Date, the Offerors shall have
furnished to the Placement Agent, the Purchaser and their respective counsel
such further information, certificates, opinions and documents as the Placement
Agent, Purchaser or their respective counsel may reasonably request.

      If any of the conditions specified in this Section 3 shall not have been
fulfilled when and as required in this Agreement, or if any of the opinions,
certificates and documents mentioned above or elsewhere in this Agreement shall
not be reasonably satisfactory in form and substance to the Placement Agent, the
Purchaser or their respective counsel, this Agreement and all the Placement
Agent's obligations hereunder may be canceled at, or any time prior to, the

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Subsequent Closing Date by the Placement Agent. Notice of such cancellation
shall be given to the Offerors in writing or by telephone or facsimile confirmed
in writing.

      Each certificate signed by any trustee of the Trust or any officer of the
Company and delivered to the Placement Agent, Purchaser or their respective
counsel in connection with the Operative Documents and the transactions
contemplated hereby and thereby shall be deemed to be a representation and
warranty of the Trust and/or the Company, as the case may be, and not by such
trustee or officer in any individual capacity.

Section 4. Representations and Warranties of the Offerors. The Offerors jointly
and severally represent and warrant to the Placement Agent and the Purchaser as
of the date hereof and as of each Closing Date as follows with respect to the
Securities to be issued and sold and the transactions to be entered into on the
applicable Closing Date:

      4.1 Representations and Warranties of the Company and the Trust.

            (a)   Neither the Company nor the Trust, nor any of their
  "Affiliates" (as defined in Rule 501(b) of Regulation D under the Securities
  Act ("Regulation D")), nor any person acting on any of their behalf (except
  for the Placement Agent, as to which neither the Company nor the Trust make
  any representation) has, directly or indirectly, made offers or sales of any
  security, or solicited offers to buy any security, under circumstances that
  would require the registration under the Securities Act of any of the
  Securities.

            (b)   Neither the Company nor the Trust, nor any of their
  Affiliates, nor any person acting on its or their behalf (except for the
  Placement Agent, as to which neither the Company nor the Trust make any
  representation) has (i) offered for sale or solicited offers to purchase the
  Securities, (ii) engaged in any form of general solicitation or general
  advertising (within the meaning of Regulation D) in connection with any offer
  or sale of any of the Securities, or (iii) engaged in any "directed selling
  efforts" within the meaning of Regulation S under the Securities Act
  ("Regulation S") with respect to the Securities.

            (c)   The Securities (i) are not and have not been listed on a
  national securities exchange registered under section 6 of the Securities
  Exchange Act of 1934, as amended (the "Exchange Act"), or quoted on a U.S.
  automated interdealer quotation system and (ii) are not of an open-end
  investment company, unit investment trust or face-amount certificate company
  that are, or are required to be, registered under section 8 of the Investment
  Company Act of 1940, as amended (the "Investment Company Act"), and the
  Securities otherwise satisfy the eligibility requirements of Rule 144A(d)(3)
  promulgated pursuant to the Securities Act ("Rule 144A(d)(3)").

            (d)   Neither the Company nor the Trust is, and, immediately
  following consummation of the transactions contemplated hereby and the
  application of the net proceeds therefrom, neither the Company nor the Trust
  will be, an "investment company" or an entity "controlled" by an "investment
  company," in each case within the meaning of section 3(a) of the Investment
  Company Act.

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            (e)   Neither the Company nor the Trust has paid or agreed to pay to
  any person or entity, directly or indirectly, any fees or other compensation
  for soliciting another to purchase any of the Securities.

      4.2 Standing and Qualification of the Trust. The Trust has been duly
created and is validly existing in good standing as a statutory trust under the
Delaware Statutory Trust Act, 12 Del. C. Section 3801, et seq. (the "Statutory
Trust Act") with all requisite power and authority to own property and to
conduct the business it transacts and proposes to transact and to enter into and
perform its obligations under the Operative Documents to which it is a party.
The Trust is duly qualified to transact business as a foreign entity and is in
good standing in each jurisdiction in which such qualification is necessary,
except where the failure to so qualify or be in good standing would not have a
material adverse effect on the condition (financial or otherwise), earnings,
business, prospects or assets of the Trust, whether or not occurring in the
ordinary course of business. The Trust is not a party to, or otherwise bound by,
any agreement other than the Operative Documents. The Trust is, and under
current law will continue to be, classified for federal income tax purposes as a
grantor trust and not as an association or publicly traded partnership taxable
as a corporation.

      4.3 Trust Agreement. The Trust Agreement has been duly authorized by the
Company and, on each Closing Date specified in Section 2.3.1, will have been
duly executed and delivered by the Company and the Administrative Trustees of
the Trust, and, assuming due authorization, execution and delivery by the
Property Trustee and the Delaware Trustee, will be a legal, valid and binding
obligation of the Company and the Administrative Trustees, enforceable against
them in accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting creditors' rights
generally and to general principles of equity. Each of the Administrative
Trustees of the Trust is an employee of the Company or one of its subsidiary
banks and has been duly authorized by the Company to execute and deliver the
Trust Agreement. To the knowledge of the Administrative Trustees, the Trust is
not in violation of any provision of the Statutory Trust Act.

      4.4 Guarantee Agreement and the Indenture. Each of the Guarantee and the
Indenture has been duly authorized by the Company and, on each Closing Date,
will have been duly executed and delivered by the Company, and, assuming due
authorization, execution and delivery by the Guarantee Trustee, in the case of
the Guarantee, and by the Indenture Trustee, in the case of the Indenture, will
be a legal, valid and binding obligation of the Company enforceable against it
in accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting creditors' rights
generally and to general principles of equity.

      4.5 Preferred Securities and Common Securities. The Preferred Securities
and the Common Securities have been duly authorized by the Trust and, when
issued and delivered against payment therefor on each Closing Date to the
Purchaser in accordance with this Agreement and the Subscription Agreements, in
the case of the Preferred Securities, and to the Company in accordance with the
Common Securities Subscription Agreements between the Company and the Trust,
dated as of the applicable Closing Date, in the case of the Common Securities,
will be validly issued, fully paid and nonassessable and will represent
undivided beneficial interests in the assets of the Trust entitled to the
benefits of the Trust Agreement,

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enforceable against the Trust in accordance with their terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and other similar
laws affecting creditors' rights generally and to general principles of equity.
The issuance of the Securities is not subject to preemptive or other similar
rights. On each Closing Date, all of the issued and outstanding Common
Securities will be directly owned by the Company free and clear of any pledge,
security interest, claim, lien or other encumbrance (each, a "Lien").

      4.6 Junior Subordinated Notes. The Junior Subordinated Notes have been
duly authorized by the Company and, on each Closing Date, will have been duly
executed and delivered to the Indenture Trustee for authentication in accordance
with the Indenture and, when authenticated in the manner provided for in the
Indenture and delivered to the Trust against payment therefor in accordance with
the Junior Subordinated Note Subscription Agreements between the Company and the
Trust, each dated as of the applicable Closing Date, will constitute legal,
valid and binding obligations of the Company entitled to the benefits of the
Indenture enforceable against the Company in accordance with their terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium and
other similar laws affecting creditors' rights generally and to general
principles of equity.

      4.7 Placement Agreement. This Agreement has been duly authorized, executed
and delivered by the Company and the Trust and constitutes the legal, valid and
binding obligation of the Company and the Trust, enforceable against the Company
and the Trust in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium and other similar laws affecting
creditors' rights generally and to general principles of equity.

      4.8 Defaults. Neither the issue and sale of the Common Securities, the
Preferred Securities or the Junior Subordinated Notes, nor the purchase of the
Junior Subordinated Notes by the Trust, the execution and delivery of and
compliance with the Operative Documents by the Company or the Trust, the
consummation of the transactions contemplated herein or therein, or the use of
the proceeds therefrom, (i) will conflict with or constitute a breach of, or a
default under, the Trust Agreement or the charter or bylaws of the Company or
any subsidiary of the Company or any applicable law, statute, rule, regulation,
judgment, order, writ or decree of any government, governmental authority,
agency or instrumentality or court, domestic or foreign, having jurisdiction
over the Trust, or the Company or any of its subsidiaries, or their respective
properties or assets (collectively, "Governmental Entities"), (ii) will conflict
with or constitute a violation or breach of, or a default or Repayment Event (as
defined below) under, or result in the creation or imposition of any Lien upon
any property or assets of the Trust, the Company or any of the Company's
subsidiaries pursuant to any contract, indenture, mortgage, loan agreement,
note, lease or other agreement or instrument to which (A) the Trust, the Company
or any of its subsidiaries is a party or by which it or any of them may be
bound, or (B) any of the property or assets of any of them is subject, or any
judgment, order or decree of any court, governmental authority or arbitrator,
except, in the case of this clause (ii), for such conflicts, breaches,
violations, defaults, Repayment Events (as defined below) or Liens which (X)
would not, singly or in the aggregate, adversely affect the consummation of the
transactions contemplated by the Operative Documents and (Y) would not, singly
or in the aggregate, have a material adverse effect on the condition (financial
or otherwise), earnings, business, liabilities, prospects and assets (taken as a
whole) or business prospects of the Company and its subsidiaries taken as a
whole, whether or not occurring in the ordinary course of business (a "Material
Adverse Effect")

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or (iii) require the consent, approval, authorization or order of any court or
Governmental Entity, other than such as have been previously obtained. As used
herein, a "Repayment Event" means any event or condition which gives the holder
of any note, debenture or other evidence of indebtedness (or any person acting
on such holder's behalf) the right to require the repurchase, redemption or
repayment of all or a portion of such indebtedness by the Trust or the Company
or any of its subsidiaries prior to its scheduled maturity.

      4.9 Organization, Standing and Qualification of the Company. The Company
has been duly incorporated and is validly existing as a corporation in good
standing under the laws of Michigan, with all requisite corporate power and
authority to own, lease and operate its properties and conduct the business it
transacts and proposes to transact, and is duly qualified to transact business
and is in good standing as a foreign corporation in each jurisdiction where the
nature of its activities requires such qualification, except where the failure
of the Company to be so qualified would not, singly or in the aggregate, have a
Material Adverse Effect.

      4.10 Subsidiaries of the Company. Each of the Company's significant
subsidiaries listed in Schedule 1 (as defined in Section 1-02 of Regulation S-X
under the Securities Act) (the "Subsidiaries") has been duly organized and is
validly existing and in good standing under the laws of the jurisdiction in
which it is chartered or organized, with all requisite power and authority to
own its properties and conduct the business it transacts and proposes to
transact. Each Subsidiary is duly qualified to transact business and is in good
standing as a foreign entity in each jurisdiction where the nature of its
activities requires such qualification, except where the failure of any such
Subsidiary to be so qualified would not, singly or in the aggregate, have a
Material Adverse Effect.

      4.11 Government Licenses and Regulatory Compliance. Each of the Trust, the
Company and each of its Subsidiaries hold all necessary approvals,
authorizations, orders, licenses, certificates and permits (collectively,
"Government Licenses") of and from Governmental Entities necessary to conduct
its respective business as now being conducted, and neither the Trust, the
Company nor any of the Subsidiaries has received any notice of proceedings
relating to the revocation or modification of any such Government License,
except where the failure to be so licensed or approved or the receipt of an
unfavorable decision, ruling or finding, would not, singly or in the aggregate,
have a Material Adverse Effect; all of the Government Licenses are valid and in
full force and effect, except where the invalidity or the failure of such
Government Licenses to be in full force and effect, would not, singly or in the
aggregate, have a Material Adverse Effect; and the Company and the Subsidiaries
are in compliance with all applicable laws, rules, regulations, judgments,
orders, decrees and consents, except where the failure to be in compliance would
not, singly or in the aggregate, have a Material Adverse Effect.

      4.12 Property. Each of the Company and its subsidiaries owns or leases all
such properties as are necessary to the conduct of its operations as presently
conducted and has good and marketable title to all of its respective real and
personal properties, in each case free and clear of all Liens and defects,
except for those that would not, singly or in the aggregate, have a Material
Adverse Effect; and all of the leases and subleases under which the Trust, the
Company or any subsidiary of the Company holds properties are in full force and
effect, except where the failure of such leases and subleases to be in full
force and effect would not, singly or in the

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aggregate, have a Material Adverse Effect and none of the Trust, the Company or
any subsidiary of the Company has any notice of any claim of any sort that has
been asserted by anyone adverse to the rights of the Trust, the Company or any
subsidiary of the Company under any such leases or subleases, or affecting or
questioning the rights of such entity to the continued possession of the leased
or subleased premises under any such lease or sublease, except for such claims
that would not, singly or in the aggregate, have a Material Adverse Effect.

      4.13 Conflicts, Authorizations and Approvals. Neither the Company nor any
of its Subsidiaries is (i) in violation of its respective charter, bylaws or
similar organizational documents or (ii) in default in the performance or
observance of any obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, loan agreement, note, lease or other agreement or
instrument to which either the Company or any such Subsidiary is a party or by
which it or any of them may be bound or to which any of the property or assets
of any of them is subject, except, in the case of clause (ii), where such
default would not, singly or in the aggregate, have a Material Adverse Effect.
No filing with, or authorization, approval, consent, license, order,
registration, qualification or decree of, any Governmental Entity, other than
those that have been made or obtained, is necessary or required for the
performance by the Trust or the Company of their respective obligations under
the Operative Documents, as applicable, or the consummation by the Trust and the
Company of the transactions contemplated by the Operative Documents.

      4.14 Holding Company Registration and Deposit Insurance. The Company is
duly registered (i) as a bank holding company, and has filed an effective
election with the Federal Reserve Bank of Chicago to be a financial holding
company, under the Bank Holding Company Act of 1956, as amended (the "Bank
Holding Company Act"), and the regulations of the Board of Governors of the
Federal Reserve System (the "Federal Reserve"), and the deposit accounts of the
Company's subsidiary depository institutions are insured by the Federal Deposit
Insurance Corporation ("FDIC") to the fullest extent permitted by law and the
rules and regulations of the FDIC, and no proceeding for the termination of such
insurance are pending or, to the knowledge of the Company, threatened.

      4.15 Financial Statements.

            (a)   The audited consolidated financial statements (including the
  notes thereto) and schedules of the Company and its consolidated subsidiaries
  at and for the fiscal year ended December 31, 2003 (the "Financial
  Statements") and the interim unaudited consolidated financial statements of
  the Company and its consolidated subsidiaries at and for the quarter ended
  June 30, 2004 with respect to the Initial Closing and September 30, 2004 with
  respect to the Subsequent Closing (in each case, the "Interim Financial
  Statements") provided to the Placement Agent are the most recently available
  audited and unaudited consolidated financial statements of the Company and its
  consolidated subsidiaries, respectively, and, except as described in Schedule
  4.15(a), fairly present in all material respects, in accordance with U.S.
  generally accepted accounting principles ("GAAP"), the financial position of
  the Company and its consolidated subsidiaries, and the results of operations
  and changes in financial condition as of the dates and for the periods therein
  specified, subject, in the case of Interim Financial Statements, to year-end
  adjustments (which are expected to consist solely of normal recurring
  adjustments). Such consolidated financial statements and schedules have been
  prepared in

                                       11
<PAGE>

  accordance with GAAP consistently applied throughout the periods
  involved (except as otherwise noted therein).

            (b)   The Company's report on FRY-9C, dated June 30, 2004 (the
  "FRY-9C") with respect to the Initial Closing and September 30, 2004 with
  respect to the Subsequent Closing, provided to the Placement Agent is the most
  recently available such report, and the information therein fairly presents in
  all material respects the financial position of the Company and its
  subsidiaries.

            (c)   Since the respective dates of the Financial Statements,
  Interim Financial Statements and the FRY-9C, there has not been any material
  adverse change or development with respect to the condition (financial or
  otherwise), earnings, business, assets or business prospects of the Company
  and its subsidiaries, taken as a whole.

            (d)   The accountants of the Company who certified the Financial
  Statements are independent public accountants of the Company and its
  subsidiaries within the meaning of the Securities Act and the rules and
  regulations of the Securities and Exchange Commission ("SEC") thereunder.

      4.16 Regulatory Enforcement Matters. None of the Trust, the Company nor
any of its Subsidiaries, nor any of their respective officers, directors,
employees or representatives, is subject or is party to, or has received any
notice from any Regulatory Agency (as defined below) that any of them will
become subject or party to any investigation with respect to, any
cease-and-desist order, agreement, civil monetary penalty, consent agreement,
memorandum of understanding or other regulatory enforcement action, proceeding
or order with or by, or is a party to any commitment letter or similar
undertaking to, or is subject to any directive by, or has been a recipient of
any supervisory letter from, or has adopted any board resolutions at the request
or suggestion of, any Regulatory Agency that, in any such case, currently
restricts in any material respect the conduct of their business or that in any
material manner relates to their capital adequacy, their credit policies, their
management or their business (each, a "Regulatory Action"), nor has the Trust,
the Company or any of its Subsidiaries been advised by any Regulatory Agency
that it is considering issuing or requesting any such Regulatory Action; and
there is no unresolved violation, criticism or exception by any Regulatory
Agency with respect to any report or statement relating to any examinations of
the Trust, the Company or any of its Subsidiaries, except where such unresolved
violation, criticism or exception would not, singly or in the aggregate, have a
Material Adverse Effect. As used herein, the term "Regulatory Agency" means any
federal or state agency charged with the supervision or regulation of depositary
institutions or holding companies of depositary institutions, or engaged in the
insurance of depositary institution deposits, or any court, administrative
agency or commission or other governmental agency, authority or instrumentality
having supervisory or regulatory authority with respect to the Trust, the
Company or any of its Subsidiaries.

      4.17 No Undisclosed Liabilities. None of the Trust, the Company nor any of
its Subsidiaries has any material liability, whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become due,
including any liability for taxes (and there is no past or present fact,
situation, circumstance, condition or other basis for any present or future

                                       12
<PAGE>

action, suit, proceeding, hearing, charge, complaint, claim or demand against
the Company or its Subsidiaries that could give rise to any such liability),
except for (i) liabilities set forth in the Financial Statements or the Interim
Financial Statements and (ii) normal fluctuations in the amount of the
liabilities referred to in clause (i) above occurring in the ordinary course of
business of the Trust, the Company and all of its Subsidiaries since the date of
the most recent balance sheet included in such Financial Statements.

      4.18 Litigation. There is no action, suit or proceeding before or by any
Governmental Entity, arbitrator or court, domestic or foreign, now pending or,
to the knowledge of the Company or the Trust, threatened against or affecting
the Trust or the Company or any of the Subsidiaries, except for such actions,
suits or proceedings that, if adversely determined, could not, singly or in the
aggregate, reasonably be expected to materially adversely affect the
consummation of the transactions contemplated by the Operative Documents or to
have a Material Adverse Effect.

      4.19 Deferral of Interest Payments on Junior Subordinated Notes. The
Company has no present intention to exercise its option to defer payments of
interest on the Junior Subordinated Notes as provided in the Indenture. The
Company believes that the likelihood that it would exercise its rights to defer
payments of interest on the Junior Subordinated Notes as provided in the
Indenture at any time during which the Junior Subordinated Notes are outstanding
is remote because of the restrictions that would be imposed on the Company's
ability to declare or pay dividends or distributions on, or to redeem, purchase,
acquire or make a liquidation payment with respect to, any of the Company's
capital stock and on the Company's ability to make any payments of principal,
interest or premium on, or repay, repurchase or redeem, any of its debt
securities that rank pari passu in all respects with or junior in interest to
the Junior Subordinated Notes.

Section 5. Representations and Warranties of the Placement Agent. The Placement
Agent represents and warrants to, and agrees with, the Company and the Trust as
of the date hereof and as of each Closing Date as follows with respect to the
Securities to be issued and sold and transactions to be entered into on the
applicable Closing Date:

      5.1 Organization, Standing and Qualification. The Placement Agent is a
corporation, validly existing and in good standing under the laws of the state
of Tennessee, with full power and authority to own, lease and operate its
properties and conduct its business as currently being conducted. The Placement
Agent is duly qualified to transact business as a foreign corporation and is in
good standing in each jurisdiction in which it owns or leases property or
conducts its business so as to require such qualification and in which the
failure to so qualify would, individually or in the aggregate, have a material
adverse effect on the condition (financial or otherwise), earnings, business,
prospects or results of operations of the Placement Agent.

      5.2 Power and Authority. The Placement Agent has all requisite power and
authority to enter into this Agreement and to take all actions necessary on its
part to consummate the transactions contemplated hereby, and this Agreement has
been duly and validly authorized, executed and delivered by the Placement Agent
and constitutes the legal, valid and binding agreement of the Placement Agent,
enforceable against the Placement Agent in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and other

                                       13
<PAGE>

similar laws affecting creditors' rights generally and to general principles of
equity and except as any indemnification or contribution provisions thereof may
be limited under applicable securities laws.

      5.3 General Solicitation. Neither the Placement Agent, nor any
representative of the Placement Agent has engaged, or will engage, in any form
of "general solicitation or general advertising" (within the meaning of
Regulation D under the Securities Act) or in any "directed selling efforts"
(within the meaning of Regulation S under the Securities Act) in connection with
any offer or sale of the Preferred Securities.

      5.4 Purchaser. The Placement Agent has made such reasonable inquiry as is
necessary to determine that the Purchaser is acquiring the Preferred Securities
for its own account, the Purchaser does not intend to distribute the Preferred
Securities in contravention of the Securities Act or any other applicable
securities laws.

      5.5 Qualified Purchasers. The Placement Agent has not offered or sold, and
will not arrange for the offer or sale of, the Preferred Securities except (i)
to those the Placement Agent reasonably believes are "accredited investors"
(within the meaning of Rule 501 of Regulation D), (ii) in an offshore
transaction complying with Rule 903 of Regulation S or (iii) in any other manner
that does not require registration of the Preferred Securities under the
Securities Act. In connection with each such sale, the Placement Agent has taken
or will take reasonable steps to ensure that the Purchaser is aware that (a)
such sale is being made in reliance on an exemption under the Securities Act and
(b) future transfers of the Preferred Securities will not be made except in
compliance with applicable securities laws.

      5.6 Offering Circulars. Neither the Placement Agent nor its
representatives will include any nonpublic information about the Company, the
Trust or any of their affiliates in any registration statement, prospectus,
offering circular or private placement memorandum used in connection with any
purchase of Preferred Securities without the prior written consent of the
Company or the Trust, as applicable.

Section 6. Covenants of the Offerors. The Offerors covenant and agree with the
Placement Agent and the Purchaser as follows:

      6.1 Compliance with Representations and Warranties. During the period from
the date of this Agreement to the Subsequent Closing Date, the Offerors shall
use their best efforts to cause their representations and warranties contained
in Section 4 hereof to be true as of the applicable Closing Date, after giving
effect to the transactions contemplated by this Agreement, as if made on and as
of such Closing Date.

      6.2 Sale and Registration of Securities. Neither the Company nor the Trust
will, nor will either of them permit any of its Affiliates to, nor will either
of them permit any person acting on its or their behalf (other than the
Placement Agent and the Purchaser) to, directly or indirectly, (i) sell, offer
for sale or solicit offers to buy or otherwise negotiate in respect of any
security (as defined in the Securities Act) that would or could be integrated
with the sale of the Preferred Securities in any manner that would require the
registration of the Securities under the Securities Act or (ii) make offers or
sales of any such Security, or solicit offers to buy any such Security,

                                       14
<PAGE>

under any circumstances that would require the registration of any of such
Securities under the Securities Act.

      6.3 Use of Proceeds. The Trust shall use the proceeds from the sale of the
Preferred Securities and the Common Securities solely to purchase the Junior
Subordinated Notes from the Company.

      6.4 Investment Company. So long as any of the Securities are outstanding,
(i) the Securities shall not be listed on a national securities exchange
registered under section 6 of the Exchange Act or quoted in a U.S. automated
interdealer quotation system, (ii) neither the Company nor the Trust shall be an
open-end investment company, unit investment trust or face-amount certificate
company that is, or is required to be, registered under section 8 of the
Investment Company Act, and, the Securities shall otherwise satisfy the
eligibility requirements of Rule 144A(d)(3) and (iii) neither of the Offerors
shall engage, or permit any subsidiary to engage, in any activity which would
cause it or any subsidiary to be an "investment company" under the provisions of
the Investment Company Act.

      6.5 Solicitation and Advertising. Neither the Company nor the Trust will,
nor will either of them permit any of their Affiliates or any person acting on
their behalf to (other than the Placement Agent), (i) engage in any "directed
selling efforts" within the meaning of Regulation S under the Securities Act or
(ii) engage in any form of "general solicitation or general advertising" (within
the meaning of Regulation D) in connection with any offer or sale of any of the
Securities.

      6.6 Compliance with Rule 144A(d)(4) under the Securities Act. So long as
any of the Securities are outstanding and are "restricted securities" within the
meaning of Rule 144(a)(3) under the Securities Act, the Offerors will, during
any period in which they are not subject to and in compliance with Section 13 or
15(d) of the Exchange Act, or the Offerors are not exempt from such reporting
requirements pursuant to and in compliance with Rule 12g3-2(b) under the
Exchange Act, provide to each holder of such restricted securities and to each
prospective purchaser (as designated by such holder) of such restricted
securities, upon the request of such holder or prospective purchaser in
connection with any proposed transfer, any information required to be provided
by Rule 144A(d)(4) under the Securities Act, if applicable. The information
provided by the Offerors pursuant to this Section 6.6 will not, at the date
thereof, contain any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. If the Company and the
Trust are required to register under the Exchange Act, such reports filed in
compliance with Rule 12g3-2(b) shall be sufficient information as required
above. This covenant is intended to be for the benefit of the Purchaser, the
holders of the Securities, and the prospective purchasers designated by such
holders, from time to time, of the Securities.

      6.7 Reports. Each of the Company and the Trust shall furnish to (i) the
Placement Agent, (ii) the Purchaser and any subsequent holder of the Securities,
and (iii) any beneficial owner of the Securities reasonably identified to the
Company and the Trust (which identification may be made by either such
beneficial owner or by the Purchaser), a duly completed and executed certificate
in the form attached hereto as Annex F, including the financial statements

                                       15
<PAGE>

referenced in such Annex, which certificate and financial statements shall be so
furnished by the Company and the Trust not later than fifty (50) days after the
end of each of the first three fiscal quarters of each fiscal year of the
Company and not later than one hundred (100) days after the end of each fiscal
year of the Company during which the Junior Subordinated Notes are outstanding.

Section 7. Indemnification & Contribution.

      7.1 Indemnification.

      7.1.1 The Company and the Trust agree jointly and severally to indemnify
and hold harmless the Placement Agent, the Purchaser, the Placement Agent's
affiliates (collectively, the "Indemnified Parties") and the Indemnified
Parties' respective directors, officers, employees and agents and each person
who "controls" the Indemnified Parties within the meaning of either the
Securities Act or the Exchange Act against any and all losses, claims, damages
or liabilities, joint or several, to which they or any of them may become
subject under the Securities Act, the Exchange Act or other federal or state
statutory law or regulation, at common law or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon (i) any untrue statement or alleged untrue statement of a
material fact contained in any information (whether oral or written) or
documents furnished or made available to the Purchaser or the Placement Agent by
or on behalf of the Company, the Trust, or their respective representatives
pursuant to the due diligence request form provided by the Placement Agent in
connection with the transactions contemplated by the Operative Documents, or
(ii) the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading
in light of the circumstances under which they were made, and agrees to
reimburse each such Indemnified Party, as incurred, for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action. This indemnity
agreement will be in addition to any liability which the Company or the Trust
may otherwise have, without permitting any duplicate recovery.

      7.1.2 The Company agrees to indemnify the Trust against all loss,
liability, claim, damage and expense whatsoever, as due from the Trust under
Section 7.1.1 above.

      7.1.3 Promptly after receipt by an Indemnified Party under this Section 7
of notice of the commencement of any action, such Indemnified Party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 7, promptly notify the indemnifying party in writing of the commencement
thereof; but the failure so to notify the indemnifying party (i) will not
relieve the indemnifying party from liability under Section 7.1.1 above unless
and to the extent that such failure results in the forfeiture by the
indemnifying party of material rights and defenses and (ii) will not, in any
event, relieve the indemnifying party from any obligations to any Indemnified
Party other than the indemnification obligation provided in Section 7.1.1 above.
The indemnifying party shall be entitled to appoint counsel at the indemnifying
party's expense to represent the Indemnified Party in any action for which
indemnification is sought (in which case the indemnifying party shall not
thereafter be responsible for the fees and expenses of any separate counsel
retained by the Indemnified Party or parties except as set forth below);
provided, however, that such counsel shall be satisfactory to the Indemnified
Party.

                                       16
<PAGE>

Notwithstanding the indemnifying party's election to appoint counsel to
represent the Indemnified Party in an action, the Indemnified Party shall have
the right to employ separate counsel (including local counsel), and the
indemnifying party shall bear the reasonable fees, costs and expenses of such
separate counsel if (i) the use of counsel chosen by the indemnifying party to
represent the Indemnified Party would present such counsel with a conflict of
interest, (ii) the actual or potential defendants in, or targets of, any such
action include both the Indemnified Party and the indemnifying party and the
Indemnified Party shall have reasonably concluded that there may be legal
defenses available to it and/or other Indemnified Parties which are different
from or additional to those available to the indemnifying party, (iii) the
indemnifying party shall not have employed counsel satisfactory to the
Indemnified Party to represent the Indemnified Party within a reasonable time
after notice of the institution of such action, or (iv) the indemnifying party
shall authorize the Indemnified Party to employ separate counsel at the expense
of the indemnifying party. An indemnifying party will not, without the prior
written consent of the Indemnified Parties, which consent shall not be
unreasonably withheld or delayed, settle or compromise or consent to the entry
of any judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not the Indemnified Parties are actual or potential
parties to such claim or action) unless such settlement, compromise or consent
includes an unconditional release of each Indemnified Party from all liability
arising out of such claim, action, suit or proceeding. An Indemnified Party will
not, without the prior written consent of the indemnifying parties, settle or
compromise or consent to the entry of any judgment with respect to any pending
or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
Indemnified Parties are actual or potential parties to such claim or action).

      7.1.4 In the event that the indemnity provided in Sections 7.1.1, 7.1.2 or
7.1.3 is unavailable to or insufficient to hold harmless an Indemnified Party
for any reason, the Company, the Trust and the Placement Agent agree to
contribute to the aggregate losses, claims, damages and liabilities (including
legal or other expenses reasonably incurred in connection with investigating or
defending same) (collectively "Losses") to which the Company, the Trust and the
Placement Agent may be subject in such proportion as is appropriate to reflect
the relative benefits received by the Company and the Trust on the one hand and
by the Placement Agent on the other from the offering of the Securities;
provided, however, that in no case shall the Placement Agent be responsible for
any amount in excess of any purchase discount or commission applicable to the
Preferred Securities purchased hereunder. If the allocation provided by the
immediately preceding sentence is unavailable for any reason, the Company, the
Trust and the Placement Agent shall contribute in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Company and the Trust on the one hand and of the Placement Agent on
the other in connection with the statements or omissions which resulted in such
Losses, as well as any other relevant equitable considerations. Benefits
received by the Company and the Trust shall be deemed to be equal to the total
net proceeds from the offering (before deducting expenses) received by it, and
benefits received by the Placement Agent shall be deemed to be equal to the
total amount of any commission specified in Section 2.4.1. Relative fault shall
be determined by reference to, among other things, whether any untrue or any
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information provided by the Company and the
Trust on the one hand or the Placement Agent on the other, the intent of the
parties and their relative knowledge,

                                       17
<PAGE>

access to information and opportunity to correct or prevent such untrue
statement or omission. The Company, the Trust and the Placement Agent agree that
it would not be just and equitable if contribution were determined by pro rata
allocation or any other method of allocation which does not take account of the
equitable considerations referred to above. Notwithstanding the provisions of
this Section 7.1.4, no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 7, the Purchaser, each person
who controls the Placement Agent or the Purchaser within the meaning of either
the Securities Act or the Exchange Act and each director, officer, employee and
agent of the Placement Agent or the Purchaser shall have the same rights to
contribution as the Placement Agent, and each person who controls the Company
within the meaning of either the Securities Act or the Exchange Act, each
officer and director of the Company and each Administrator of the Trust shall
have the same rights to contribution as the Company, subject in each case to the
applicable terms and conditions of this Section 7.1.4.

Section 8. Rights and Responsibilities of Placement Agent.

      8.1 Reliance. In performing its duties under this Agreement, the Placement
Agent shall be entitled to rely upon any notice, signature or writing which it
shall in good faith believe to be genuine and to be signed or presented by a
proper party or parties. The Placement Agent may rely upon any opinions or
certificates or other documents delivered by the Offerors or their counsel or
designees to either the Placement Agent or the Purchaser.

      8.2 Rights of Placement Agent. In connection with the performance of its
duties under this Agreement, the Placement Agent shall not be liable for any
error of judgment or any action taken or omitted to be taken unless the
Placement Agent was grossly negligent or engaged in willful misconduct in
connection with such performance or non-performance. No provision of this
Agreement shall require the Placement Agent to expend or risk its own funds or
otherwise incur any financial liability on behalf of the Purchaser in connection
with the performance of any of its duties hereunder. The Placement Agent shall
be under no obligation to exercise any of the rights or powers vested in it by
this Agreement.

Section 9. Termination. This Agreement shall be subject to termination in the
absolute discretion of the Placement Agent, by notice given to the Company and
the Trust prior to delivery of and payment for either series of Preferred
Securities, if prior to such time (i) there has occurred any Material Adverse
Effect, or (ii) trading in any of the Company's securities shall have been
suspended by the SEC or the exchange upon which the Company's securities are
traded, if any, or trading in securities generally on the New York Stock
Exchange shall have been suspended or limited or minimum prices shall have been
established on such exchange, (ii) a banking moratorium shall have been declared
either by federal or Michigan authorities, or (iii) there shall have occurred
any outbreak or escalation of hostilities, declaration by the United States of a
national emergency or war or other calamity or crisis the effect of which on
financial markets is such as to make it, in the Placement Agent's judgment,
impracticable or inadvisable to proceed with the offering or delivery of the
Preferred Securities.

                                       18
<PAGE>

Section 10. Miscellaneous.

      10.1 Disclosure Schedule. The term "Disclosure Schedule," as used herein,
means the schedule, if any, attached to this Agreement that sets forth items the
disclosure of which is necessary or appropriate as an exception to one or more
representations or warranties contained in Section 4 hereof. The Disclosure
Schedule shall be arranged in paragraphs corresponding to the section numbers
contained in Section 4. Nothing in the Disclosure Schedule shall be deemed
adequate to disclose an exception to a representation or warranty made herein
unless the Disclosure Schedule identifies the exception with reasonable
particularity and describes the relevant facts in reasonable detail. Without
limiting the generality of the immediately preceding sentence, the mere listing
(or inclusion of a copy) of a document or other item in the Disclosure Schedule
shall not be deemed adequate to disclose an exception to a representation or
warranty made herein unless the representation or warranty has to do with the
existence of the document or other item itself. Information provided by the
Company in response to any due diligence questionnaire shall not be deemed part
of the Disclosure Schedule and shall not be deemed to be an exception to one or
more representations or warranties contained in Section 4 hereof unless such
information is specifically included on the Disclosure Schedule in accordance
with the provisions of this Section 10.1.

      10.2 Notices. All communications hereunder will be in writing and
effective only on receipt, and will be mailed, delivered by hand or courier or
sent by facsimile and confirmed:

If to the Placement Agent, to:

                           SunTrust Capital Markets, Inc.
                           303 Peachtree Street, N.E., 24th Floor
                           Mail Code 3950
                           Atlanta, Georgia 30308
                           Facsimile: (404) 813-5000
                           Attention: Trust Preferred

with a copy to:

                           Powell, Goldstein, Frazer & Murphy
                           Sixteenth Floor
                           191 Peachtree Street, N.E.
                           Atlanta, Georgia 30303
                           Facsimile: (404) 572-6807
                           Attention: Katherine Koops

                                       19
<PAGE>

if to the Offerors, to:

                           Mercantile Bank Corporation
                           5650 Byron Center Avenue SW
                           Wyoming, Michigan 49509
                           Facsimile: (616 ) 406-3701
                           Telephone: (616) 406-3700
                           Attention: Chief Financial Officer

      The Placement Agent, the Company, and their respective counsel, may change
their respective notice addresses, from time to time, by written notice to all
of the foregoing persons.

      10.3 Parties in Interest, Successors and Assigns. This Agreement will
inure to the benefit of and be binding upon the parties hereto and their
respective successors and permitted assigns. Nothing expressed or mentioned in
this Agreement is intended or shall be construed to give any person other than
the parties hereto and the affiliates, directors, officers, employees, agents
and controlling persons referred to in Section 7 hereof and their successors,
assigns, heirs and legal representatives, any right or obligation hereunder.
None of the rights or obligations of the Company or the Trust under this
Agreement may be assigned, whether by operation of law or otherwise, without the
Placement Agent's prior written consent. The rights and obligations of the
Placement Agent and Purchaser under this Agreement may be assigned by such party
without the Company's or the Trust's consent; provided that the assignee assumes
the obligations of such party under this Agreement.

      10.4 Amendments. This Agreement may not be modified, amended, altered or
supplemented, except upon the execution and delivery of a written agreement by
each of the parties hereto.

      10.5 Counterparts and Facsimile. This Agreement may be executed by any one
or more of the parties hereto in any number of counterparts, each of which shall
be deemed to be an original, but all such counterparts shall together constitute
one and the same instrument. This Agreement may be executed by any one or more
of the parties hereto by facsimile.

      10.6 Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.

      10.7 Governing Law. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE LAW OF THE STATE OF DELAWARE WITHOUT REFERENCE
TO PRINCIPLES OF CONFLICTS OF LAW.

      10.8 Entire Agreement. This Agreement, together with the Operative
Documents and the other documents delivered in connection with the transactions
contemplated by this Agreement, is intended by the parties as a final expression
of their agreement and intended to be a complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of the subject
matter contained herein and therein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein and
therein. This Agreement, together with the Operative Documents and the other
documents delivered in

                                       20
<PAGE>

connection with the transaction contemplated by this Agreement, supersedes all
prior agreements and understandings between the parties with respect to such
subject matter.

      10.9 Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions hereof shall not be in any way impaired or affected, it
being intended that all of the Placement Agent's and the Purchaser's rights and
privileges shall be enforceable to the fullest extent permitted by law.

      10.10 Survival. The respective agreements, representations, warranties,
indemnities and other statements of the Company and the Trust and their
respective officers or trustees and of the Placement Agent set forth in or made
pursuant to this Agreement will remain in full force and effect, regardless of
any investigation made by or on behalf of the Placement Agent, the Purchaser,
the Company or the Trust or any of their respective officers, directors,
trustees or controlling persons, and will survive delivery of and payment for
the Preferred Securities. The provisions of Sections 2.4 and 7 shall survive the
termination or cancellation of this Agreement.

                     Signatures appear on the following page

                                       21
<PAGE>

      If this Agreement is satisfactory to you, please so indicate by signing
the acceptance of this Agreement and deliver such counterpart to the Offerors
whereupon this Agreement will become binding between us in accordance with its
terms.

                             Very truly yours,

                                    MERCANTILE BANK CORPORATION

                                    By:  /s/ GERALD R. JOHNSON, JR.
                                        ---------------------------------------
                                        Gerald R. Johnson, Jr.
                                        Chairman and Chief Executive Officer

                                    MERCANTILE BANK CAPITAL TRUST I
                                    By: Mercantile Bank Corporation, as
                                    Depositor

                                       By:  /s/ GERALD R. JOHNSON, JR.
                                           ------------------------------------
                                           Gerald R. Johnson, Jr.
                                           Chairman and Chief Executive Officer

CONFIRMED AND ACCEPTED
as of the date first set forth above

SUNTRUST CAPITAL MARKETS, INC.,
as Placement Agent

By:  /s/ JAMES R. BENNISON
    ---------------------------------
     James R. Bennison
     Managing Director

                                       22
<PAGE>

                                                                      Schedule 1

                        List of Significant Subsidiaries

Mercantile Bank of West Michigan
Mercantile Bank Mortgage Company, LLC

                                       23
<PAGE>

                                                                       EXHIBIT A

                         FORM OF SUBSCRIPTION AGREEMENT

                   PREFERRED SECURITIES SUBSCRIPTION AGREEMENT

                                  [date], 2004

      THIS PREFERRED SECURITIES SUBSCRIPTION AGREEMENT (this "Agreement") made
among Mercantile Bank Capital Trust I (the "Trust"), a statutory trust created
under the Delaware Statutory Trust Act (12 Del. C. Section 3801, et seq.),
Mercantile Bank Corporation, a Michigan corporation, with its principal offices
located at 5650 Byron Center Avenue SW, Wyoming, Michigan 49509 (the "Company"
and, together with the Trust, the "Offerors"), STI Investment Management, Inc.
(the "Purchaser"), and SunTrust Capital Markets, Inc. (as to Sections 1.2, 1.3
and Article III).

                                    RECITALS:

      A. The Trust desires to issue SIXTEEN Million ($16,000,000) Dollars of its
Series [A][B] Floating Rate Preferred Securities (the "Series [A][B]Preferred
Securities"), liquidation amount $1,000 per Preferred Security, representing an
undivided beneficial interest in the assets of the Trust (the "Offering"), to be
issued pursuant to an Amended and Restated Trust Agreement (the "Trust
Agreement") by and among the Company, Wilmington Trust Company, as Property
trustee, Wilmington Trust Company, as Delaware trustee, the administrative
trustees named therein and the Holders (as defined therein), which Series [A][B]
Preferred Securities are to be guaranteed by the Company with respect to
distributions and payments upon liquidation, redemption and otherwise pursuant
to the terms of a Guarantee Agreement between the Company and Wilmington Trust
Company, as Guarantee Trustee (the "Guarantee"); and

      B. The proceeds from the sale of the Series [A][B] Preferred Securities
will be combined with the proceeds from the sale by the Trust to the Company of
its Series [A][B] Common Securities, and will be used by the Trust to purchase
an equivalent amount of Series [A][B] Floating Rate Junior Subordinated Notes of
the Company (the "Series [A][B] Notes") to be issued by the Company pursuant to
an indenture (the "Indenture") to be executed by the Company and Wilmington
Trust Company, as Indenture Trustee; and

      C. In consideration of the premises and the mutual representations and
covenants hereinafter set forth, the parties hereto agree as follows:

                                   Article I
                    PURCHASE AND SALE OF PREFERRED SECURITIES

      1.1 Upon the execution of this Agreement, the Purchaser hereby agrees to
purchase from the Trust Series [A][B] Preferred Securities at a price equal to
$1,000 per Preferred Security (the "Purchase Price"), which Purchase Price is
equal to sixteen Million ($16,000,000) Dollars, and the Trust agrees to sell
such Series [A][B] Preferred Securities to the Purchaser for said Purchase
Price. The rights and preferences of the Series [A][B] Preferred Securities are
set forth in the Trust Agreement. The closing of the sale and purchase of the
Series [A][B] Preferred Securities by the Offerors to the Purchaser shall occur
on [CLOSING DATE],

                                      A-1

<PAGE>

or such other later date as the parties may designate (the "Closing Date") The
Purchase Price is payable in immediately available funds on the Closing Date.
The Offerors shall provide the Purchaser payment instructions no later than two
(2) days prior to the Closing Date.

      1.2 The Placement Agreement, dated as of September 16, 2004 (the
"Placement Agreement"), among the Offerors and the Placement Agent identified
therein (the "Placement Agent") includes certain representations and warranties,
covenants and conditions to closing and certain other matters governing the
Offering. The Placement Agreement is hereby incorporated by reference into this
Agreement, and the Purchaser shall be entitled to each of the benefits of the
Placement Agent and the Purchaser under the Placement Agreement and shall be
entitled to enforce the obligations of the Offerors under such Placement
Agreement as fully as if the Purchaser were a party to such Placement Agreement.

      1.3 Subject to the provisions of Section 2 hereof, the Purchaser may
resell the Series [A][B] Preferred Securities to a subsequent purchaser (any
such purchaser from the Purchaser being referred to hereinafter as a "Subsequent
Purchaser"). Upon transfer of the Series [A][B] Preferred Securities to a
Subsequent Purchaser, the Subsequent Purchaser shall be entitled to each of the
benefits of the Placement Agent and the Purchaser under the Placement Agreement
and this Agreement, and shall be entitled to enforce the obligations of the
Offerors under the Placement Agreement and this Agreement, as fully as if the
Subsequent Purchaser were a party to the Placement Agreement and this Agreement.

                                   Article II
                   REPRESENTATIONS AND WARRANTIES OF PURCHASER

      2.1 The Purchaser understands and acknowledges that the Series [A][B]
Preferred Securities, the Series [A][B] Notes and the Guarantee (i) have not
been registered under the Securities Act of 1933, as amended (the "Securities
Act"), or any other applicable securities law, (ii) are being offered for sale
by the Trust in transactions not requiring registration under the Securities Act
and (iii) may not be offered, sold, pledged or otherwise transferred by the
Purchaser except in compliance with the registration requirements of the
Securities Act or any other applicable securities laws, pursuant to an exemption
therefrom or in a transaction not subject thereto.

      2.2 The Purchaser represents and warrants that it is purchasing the Series
[A][B] Preferred Securities for its own account and not with a view to, or for
offer or sale in connection with, any distribution thereof in violation of the
Securities Act or other applicable securities laws, subject to any requirement
of law that the disposition of its property be at all times within its control
and subject to its ability to resell such Series [A][B] Preferred Securities
pursuant to an effective registration statement under the Securities Act or
under Rule 144A or any other exemption from registration available under the
Securities Act or any other applicable securities law. The Purchaser understands
that no public market exists for any of the Series [A][B] Preferred Securities,
and that it is unlikely that a public market will ever exist for the Series
[A][B] Preferred Securities.

                                      A-2

<PAGE>

      2.3 The Purchaser represents and warrants that (a) it has consulted with
its own legal, regulatory, tax, business, investment, financial and accounting
advisers in connection herewith to the extent it has deemed necessary; (b) it
has had a reasonable opportunity to ask questions of and receive answers from
officers and representatives of the Offerors concerning their respective
financial condition and results of operations and the purchase of the Series
[A][B] Preferred Securities and any such questions have been answered to its
satisfaction; (c) it has had the opportunity to review all publicly available
records and filings concerning the Offerors and it has carefully reviewed such
records and filings that it considers relevant to making an investment decision;
and (d) it has made its own investment decisions based upon its own judgment,
due diligence and advice from such advisers as it has deemed necessary and not
upon any view expressed by the Offerors or the Placement Agent.

      2.4 The Purchaser represents and warrants that it is an institutional
"accredited investor" within the meaning of subparagraph (a)(1), (2), (3) or (7)
of Rule 501 of Regulation D under the Securities Act.

      2.5 The Purchaser represents and warrants that it was not formed solely
for the purpose of investing in the Series [A][B] Preferred Securities, and
additional capital or similar contributions were not specifically solicited from
any person owning a beneficial interest in it for the purpose of enabling it to
purchase any Series [A][B] Preferred Securities. The Purchaser is not a (i)
partnership, (ii) common trust fund or (iii) special trust, pension, profit
sharing or other retirement trust fund or plan in which the partners,
beneficiaries or participants, as applicable, may designate the particular
investments to be made or the allocation of any investment among such partners,
beneficiaries or participants, and it agrees that it shall not hold the Series
[A][B] Preferred Securities for the benefit of any other person and shall be the
sole beneficial owner thereof for all purposes and that it shall not sell
participation interests in the Series [A][B] Preferred Securities or enter into
any other arrangement pursuant to which any other person shall be entitled to a
beneficial interest in the distribution on the Series [A][B] Preferred
Securities. The Series [A][B] Preferred Securities purchased directly or
indirectly by the Purchaser constitute an investment of no more than 40% of its
assets.

      2.6 The Purchaser represents and warrants that it has full power and
authority to execute and deliver this Agreement, to make the representations and
warranties specified herein, and to consummate the transactions contemplated
hereby, and it has full right and power to subscribe for Series [A][B] Preferred
Securities and perform its obligations pursuant to this Agreement.

      2.7 The Purchaser represents and warrants that no filing with, or
authorization, approval, consent, license, order, registration, qualification or
decree of, any governmental body, agency or court having jurisdiction over the
Purchaser, other than those that have been made or obtained, is necessary or
required for the performance by the Purchaser of its obligations under this
Agreement or to consummate the transactions contemplated herein.

      2.8 The Purchaser represents and warrants that this Agreement has been
duly authorized, executed and delivered by the Purchaser.

                                      A-3

<PAGE>

                                  Article III
                                 MISCELLANEOUS

      3.1 Any notice or other communication given hereunder shall be deemed
sufficient if in writing and sent by registered or certified mail, return
receipt requested, international courier or delivered by hand against written
receipt therefor, or by facsimile transmission and confirmed by telephone, to
the following addresses, or such other address as may be furnished to the other
parties as herein provided:

          To the Offerors:          Mercantile Bank Corporation
                                    5650 Byron Center Avenue SW
                                    Wyoming, Michigan 49509
                                    Attention: Chief Financial Officer
                                    Fax: (616 ) 406-3701

          To the Purchaser:         SunTrust Capital Markets, Inc.
                                    303 Peachtree Street, N.E.
                                    24th Floor, Mail Code 3950
                                    Atlanta, Georgia 30308
                                    Fax: (404) 813-5000
                                    Attention: Trust Preferred

      Unless otherwise expressly provided herein, notices shall be deemed to
have been given on the date of mailing, except notice of change of address,
which shall be deemed to have been given when received.

      3.2 This Agreement shall not be changed, modified or amended except by a
writing signed by the parties to be charged, and this Agreement may not be
discharged except by performance in accordance with its terms or by a writing
signed by the party to be charged.

      3.3 Upon the execution and delivery of this Agreement by the Purchaser,
this Agreement shall become a binding obligation of the Purchaser with respect
to the purchase of Series [A][B] Preferred Securities as herein provided.

      3.4 NOTWITHSTANDING THE PLACE WHERE THIS AGREEMENT MAY BE EXECUTED BY ANY
OF THE PARTIES HERETO, THE PARTIES EXPRESSLY AGREE THAT ALL THE TERMS AND
PROVISIONS HEREOF SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS
OF THE STATE OF DELAWARE, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.

      3.5 The parties agree to execute and deliver all such further documents,
agreements and instruments and take such other and further action as may be
necessary or appropriate to carry out the purposes and intent of this Agreement.

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

                                      A-4

<PAGE>

      3.7 In the event that any one or more of the provisions contained herein,
or the application thereof in any circumstances, is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions hereof shall not be in any way impaired or affected, it being
intended that all of the Offerors' and the Purchaser's rights and privileges
shall be enforceable to the fullest extent permitted by law.

                     Signatures appear on the following page

                                      A-5

<PAGE>

      IN WITNESS WHEREOF, this Agreement is agreed to and accepted as of the day
and year first written above.

STI INVESTMENT MANAGEMENT, INC.

By: _______________________________
     Name:
     Title:

                                 MERCANTILE BANK CORPORATION

                                 By: ___________________________________________
                                     Name:
                                     Title:

                                 MERCANTILE BANK CAPITAL TRUST I
                                 By: Mercantile Bank Corporation, as
                                 Depositor

                                 By: ___________________________________________
                                     Name:
                                     Title:

                                 SUNTRUST CAPITAL MARKETS, INC.
                                 (for purposes of the rights and obligations in
                                 Sections 1.2, 1.3 and Article III only)

                                 By: ___________________________________________
                                     Name:
                                     Title:

                                      A-6

<PAGE>

                                                                     EXHIBIT B-1

                         FORM OF COMPANY COUNSEL OPINION

                                 [CLOSING DATE]

SunTrust Capital Markets, Inc.
303 Peachtree Street, NE
24th Floor, Mail Code 3947
Atlanta, Georgia  30308

STI Investment Management, Inc.
2202 Polly Drummond Office Park
Newark, Delaware 19711

Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-1600

Ladies and Gentlemen:

      We have acted as counsel to Mercantile Bank Corporation (the "Company"), a
Michigan corporation in connection with a certain Placement Agreement, dated
September 16, 2004, (the "Placement Agreement"), between the Company and
Mercantile Bank Corporation (the "Trust"), on one hand, and SunTrust Capital
Markets, Inc. (the "Placement Agent"), on the other hand. Pursuant to the
Placement Agreement, and subject to the terms and conditions stated therein, the
Trust will issue and sell to STI Investment Management, Inc. (the "Purchaser"),
$16,000,000 aggregate principal amount of Series [A][B] Floating Rate Preferred
Securities (liquidation amount $1,000.00 per capital security) (the "Preferred
Securities"), which Preferred Securities are guaranteed on a subordinated basis
by the Company to the extent set forth in the Guarantee Agreement dated
September 16, 2004, between the Company and the Guarantee Trustee named therein
(the "Guarantee Agreement"). The Trust is purchasing, with the proceeds of the
Preferred Securities and 495 Series [A][B] Common Securities (the "Common
Securities"), $16,495,000 aggregate principal amount of Series [A][B] Floating
Rate Junior Subordinated Notes due 2034 (the "Junior Subordinated Notes") of the
Company issued pursuant to an Indenture dated as of September 16, 2004 (the
"Indenture"), between the Company and Wilmington Trust Company, as indenture
trustee (the "Indenture Trustee").

      Capitalized terms used herein and not otherwise defined shall have the
same meaning ascribed to them in the Placement Agreement.

      The law covered by the opinions expressed herein is limited to the law of
the United States of America and of the State of Michigan.

                                     B-1-1

<PAGE>

      We have made such investigations of law as, in our judgment, were
necessary to render the following opinions. We have also reviewed (a) the
Company's Articles of Incorporation, as amended, and its Bylaws, as amended; and
(b) such corporate documents, records, information and certificates of the
Company and its subsidiaries, certificates of public officials or government
authorities and other documents as we have deemed necessary or appropriate as a
basis for the opinions hereinafter expressed. As to certain facts material to
our opinions, we have relied, with your permission, upon statements,
certificates or representations, including those delivered or made in connection
with the above-referenced transaction, of officers and other representatives of
the Company and its subsidiaries and the Trust after discussing the contents
thereof with such officers. We have not made any independent investigation as to
the existence of actions, suits, investigations or proceedings, if any, pending
or threatened against the Company or any of its subsidiaries, and we have not
conducted any independent search of any public records in connection with our
rendering our opinions set forth herein.

      In rendering the opinions expressed below, we have assumed, without
verification (i) the genuineness of the signatures on all documents that we have
examined, (ii) the authenticity of all documents submitted to us as originals,
(iii)the conformity with authentic original documents of all documents submitted
to us as copies, and (iv) the legal capacity of all natural persons. We have
assumed (except to the extent set forth in our opinions below as to the Company)
(a) that all parties to, or that have otherwise executed, the Operative
Documents have been duly organized or formed, as the case may be, and are in
good standing under the laws of their respective jurisdictions of organization
or formation, as the case may be, and have full power, corporate or other, to
enter into and perform all obligations thereunder and (b) the due authorization
by all requisite action, corporate or otherwise, and execution delivery by such
persons of such documents.

      Based upon and subject to the foregoing and the further qualifications set
forth below, we are of the opinion as of the date hereof that:

      1. The Company is validly existing and in good standing under the laws of
the State of Michigan and is duly registered as a bank holding company under the
Bank Holding Company Act of 1956, as amended. Each of the Subsidiaries is
validly existing and in good standing under the laws of its jurisdiction of
organization. Each of the Company and the Subsidiaries has full corporate power
and authority to own or lease its properties and to conduct its business as such
business is currently conducted in all material respects.

      2. The issuance, sale and delivery of the Preferred Securities and the
Junior Subordinated Notes in accordance with the terms and conditions of the
Placement Agreement and the other Operative Documents have been duly authorized
by all necessary actions of the Company. The issuance, sale and delivery of the
Junior Subordinated Notes by the Company and the issuance, sale and delivery of
the Preferred Securities and Common Securities by the Trust do not give rise to
any preemptive rights to subscribe for or to purchase any shares of capital
stock or equity securities of the Company under the Articles of Incorporation or
Bylaws of the Company or, to our knowledge, under any agreement or other
instrument to which the Company is a party or by which the Company may be bound.

                                      B-1-2

<PAGE>

      3. The Company has all requisite corporate power to enter into and perform
its obligations under the Placement Agreement and the Subscription Agreement of
even date herewith relating to the Preferred Securities (the "Subscription
Agreement"), and the Placement Agreement and the Subscription Agreement have
been duly and validly authorized, executed and delivered by the Company and
constitute the legal, valid and binding obligations of the Company enforceable
against the Company in accordance with their terms.

      4. Each of the Indenture, the Trust Agreement and the Guarantee Agreement
has been duly authorized, executed and delivered by the Company. Each of the
Indenture and the Guarantee Agreement constitutes a valid and legally binding
obligation of the Company enforceable against the Company in accordance with its
terms.

      5. The Junior Subordinated Notes have been duly authorized for issuance by
the Company, and the Junior Subordinated Note issued and delivered by the
Company to the Trust on this date has been duly executed and delivered by the
Company and, assuming due authentication by the Indenture Trustee under the
Indenture, is entitled to the benefits of the Indenture and constitutes the
legal, valid and binding obligation of the Company enforceable against the
Company in accordance with its terms.

      6. The execution, delivery and performance of the Placement Agreement and
the other Operative Documents and the consummation of the transactions
contemplated by the Placement Agreement and the other Operative Documents do not
and will not conflict with, result in the creation or imposition of any material
lien, claim, charge, encumbrance or restriction upon any property or assets of
the Company or the Subsidiaries pursuant to, or constitute a material breach or
violation of, or constitute a material default under, with or without notice or
lapse of time or both, any of the terms, provisions or conditions of (i) the
articles of incorporation or charter, bylaws or other governing documents of the
Company or the Subsidiaries, or (ii) to our knowledge, any material contract,
indenture, mortgage, deed of trust, loan or credit agreement, note, lease,
franchise, license or any other agreement or instrument known to us to which the
Company or any of the Subsidiaries is a party or by which any of them or any of
their respective properties may be bound or (iii) any order, decree, judgment,
franchise, license, permit, rule or regulation of any court, arbitrator,
government, or governmental agency or instrumentality, domestic or foreign,
known to us having jurisdiction over the Company or the Subsidiaries or any of
their respective properties which, in each case, is material to the Company and
the Subsidiaries on a consolidated basis.

      7. Except for filings, registrations or qualifications that may be
required by applicable securities laws, no authorization, approval, consent or
order of, or filing, registration or qualification with, any person (including
without limitation, any court, governmental body or authority) is required under
the laws of the State of Michigan in connection with the offer and sale of the
Preferred Securities as contemplated by the Placement Agreement and the other
Operative Documents.

                                      B-1-3

<PAGE>

      8. To our knowledge, (i) neither the Company nor any of the Subsidiaries
is in breach or violation of, or default under, with or without notice or lapse
of time or both, its Articles of Incorporation or Charter, Bylaws or other
governing documents, and (ii) no action, suit or proceeding is pending or
threatened against the Company or any of the Subsidiaries, before or by any
court or governmental official, commission, board or other administrative
agency, authority or body, or any arbitrator, wherein an unfavorable decision,
ruling or finding could reasonably be expected to have a material adverse effect
on the consummation of the transactions contemplated by the Placement Agreement
and the other Operative Documents or the issuance and sale of the Preferred
Securities as contemplated therein or the condition (financial or otherwise),
earnings, affairs, business, or results of operations of the Company and its
subsidiaries on a consolidated basis.

      9. Assuming the accuracy of the representations of the Company, the
Placement Agent and the Purchaser in the respective Operative Documents, it is
not necessary in connection with the offering, sale and delivery of the
Preferred Securities, the Junior Subordinated Notes and the Guarantee Agreement
(or the Guarantee) to the Purchaser pursuant to the Subscription Agreement to
register the same under the Securities Act of 1933, as amended, under the
circumstances contemplated in the Placement Agreement and the Subscription
Agreement.

      10. Neither the Company nor the Trust is or after giving effect to the
offering and sale of the Preferred Securities and the consummation of the
transactions described in the Placement Agreement will be, an "investment
company" or an entity "controlled" by an "investment company," in each case
within the meaning of the Investment Company Act of 1940, as amended.

      Our opinions set forth herein are limited by the following exceptions and
qualifications:

      (A) The opinions expressed in the first two sentences of numbered
paragraph 1 of this Opinion Letter are based solely upon certain certificates
and confirmations issued by the applicable governmental officer or authority
with respect to each of the Company and the Subsidiaries.

      (B) As used in paragraph 1 of this Opinion Letter, the term "in good
standing" shall mean (i) when used in connection with a corporation, that all
filings and registrations required to have been made by such corporation under
the [STATE BUSINESS CORPORATION CODE] have been made and that all filing fees
that are due and payable in connection therewith have been paid, and (ii) when
used in connection with a bank, that all filings and registrations required to
have been made by such bank under the [APPLICABLE FINANCIAL CODE] have been made
and that all filing fees that are due and payable in connection therewith have
been paid.

      (C) We have assumed for purposes of this Opinion Letter that all the
documents as to which we have opined with respect to enforceability constitute
the legal, valid and binding obligations of the parties thereto other than the
Company.

                                      B-1-4

<PAGE>

      (D) Our opinions regarding the legality, validity, binding effect or
enforceability of each of the Placement Agreement and Subscription Agreement are
subject to and limited by: (i) bankruptcy, insolvency, moratorium,
reorganization or other laws affecting the rights of creditors, generally; (ii)
the effect of general principles of equity, whether applied by a court of law or
equity, including the discretionary nature of equitable remedies; (iii) the
possible unenforceability, as contrary to public policy, of provisions regarding
indemnities for violations of securities laws; and (iv) the possible
unavailability of certain remedies in the case of a non-material breach.

      (E) Our opinions regarding the legality, validity, binding effect or
enforceability of each of the Indenture, the Trust Agreement, the Guarantee
Agreement and the Junior Subordinated Notes are subject to and limited by: (i)
bankruptcy, insolvency, moratorium, reorganization or other laws affecting the
rights of creditors, generally; and (ii) the effect of general principles of
equity, whether applied by a court of law or equity, including the discretionary
nature of equitable remedies.

      With respect to any matters indicated herein to be limited to our
knowledge (or words to like effect), the opinions set forth herein with respect
to such matters are specifically limited to the actual knowledge which attorneys
who are members of or are employed by this firm have obtained solely in
connection with the representation of the Company with respect to the offering
of the Preferred Securities and the other transactions contemplated by the
Placement Agreement.

      With respect to the foregoing opinions, we do not express any opinions as
to the laws of the state of New York and have assumed, with your approval and
without rendering any opinion to such effect, that to the extent applicable, the
laws of the State of New York are substantively identical to the laws of the
State of Michigan which would apply, without regard to conflict of law
provisions, were the matter in question governed by the laws of Michigan. We
express no opinion as to matters of choice of law (including the enforceability
of any choice of law provisions in any agreement).

      This opinion is rendered to you solely pursuant to Section 3.2(a) of the
Placement Agreement. As such, it may be relied upon by you or by a Subsequent
Purchaser as defined in Section 3.2 of the Placement Agreement only and may not
be used or relied upon by any other person for any purpose whatsoever without
our prior written consent.

                                                     Very truly yours,

                                                     DICKINSON WRIGHT  PLLC

                                      B-1-5

<PAGE>

                                                                     EXHIBIT B-2

                           FORM OF TAX COUNSEL OPINION

      Pursuant to Section 3.2(c) of the Placement Agreement, Powell Goldstein
LLP counsel for the Placement Agent and Purchaser, shall deliver an opinion to
the following effect:

Mercantile Bank Corporation
5650 Byron Center Avenue SW
Wyoming, Michigan 49509

SunTrust Capital Markets, Inc.
303 Peachtree Street, NE
24th Floor, Mail Code 3950
Atlanta, Georgia 30308

STI Investment Management, Inc.
2202 Polly Drummond Office Park
Newark, Delaware 19711

Ladies and Gentlemen:

      We have acted as counsel to SunTrust Capital Markets, Inc. (the "Placement
Agent"), a Tennessee corporation, and STI Investment Management, Inc. (the
"Purchaser"), a Delaware corporation, in connection with the Purchaser's
purchase of $16,000,000 Series [A][B] Floating Rate Preferred Securities
(liquidation amount $1,000 per capital security) (the "Preferred Securities") to
be issued by Mercantile Bank Capital Trust I (the "Trust"). The Preferred
Securities represent undivided beneficial ownership interests in $16,495,000 in
aggregate principal amount of Series [A][B] Floating Rate Junior Subordinated
Notes due 2034 (the "Junior Subordinated Notes") of Mercantile Bank Corporation
(the "Company"). This opinion letter is furnished pursuant to Section 3.2(b) of
the Placement Agreement dated September 16, 2004, between the Company, the Trust
and the Placement Agent.

      In arriving at the opinions expressed below we have examined executed
copies of (i) the Amended and Restated Trust Agreement of the Trust dated the
date hereof (the "Trust Agreement") and (ii) the Junior Subordinated Indenture
relating to the issuance of the Junior Subordinated Notes dated the date hereof
(the "Indenture") (together, the "Operative Documents"). In addition, we have
relied on the representations of the Company contained in its letter dated as of
the date hereof and delivered to us in connection with the issuance of our
opinions expressed below. We have assumed the legal capacity of all natural
persons, the genuineness of all signatures, the authenticity of all documents
and records submitted to us as originals, the conformity to original documents
and records of all documents and records submitted to us as copies, and the
truthfulness of all statements of facts contained therein. We have also made
such investigations of law and fact as we have deemed appropriate as a basis for
the opinion expressed below.

                                      B-2-1

<PAGE>

      Based upon and subject to the foregoing and such further qualifications as
set forth below, it is our opinion that, under current law and assuming the
performance of the Operative Documents in accordance with the terms described
therein:

      1.    the Trust will be classified for United States federal income tax
            purposes as a grantor trust and not as an association that is
            taxable as a corporation, and

      2.    the Junior Subordinated Notes will be treated for United States
            federal income tax purposes as indebtedness of the Company.

      Our opinion is based on the U.S. Internal Revenue Code of 1986, as
amended, Treasury regulations promulgated thereunder, and administrative and
judicial interpretations thereof, all as of the date hereof and all of which are
subject to change, possibly on a retroactive basis. In rendering this opinion,
we are expressing our views only as to the federal income tax laws of the United
States of America. In rendering this opinion, we make no undertaking to advise
you of the effect of changes in matters of law or fact occurring subsequent to
the date hereof.

      This opinion is rendered to you solely pursuant to Section 3.2(b) of the
Placement Agreement. As such, it may be relied upon by you and by any Subsequent
Purchaser as defined in Section 3.2 of the Placement Agreement only and may not
be used or relied upon by any other person for any purpose whatsoever without
our prior written consent.

                                          Very truly yours,

                                          POWELL, GOLDSTEIN, FRAZER & MURPHY LLP

                                      B-1-2

<PAGE>

                                                                     EXHIBIT B-3

                     FORM OF DELAWARE COUNSEL TRUST OPINION

      Pursuant to Section 3.2(c) of the Placement Agreement, and with respect to
each series of Preferred Securities, Common Securities, and Junior Subordinated
Notes to be issued in accordance therewith, Richards, Layton & Finger, P.A.,
special Delaware counsel for the Placement Agent and Purchaser, shall deliver an
opinion to the effect that:

(i)   the Trust has been duly created and is validly existing in good standing
      as a statutory trust under the Delaware Statutory Trust Act, and all
      filings required under the laws of the State of Delaware with respect to
      the creation and valid existence of the Trust as a statutory trust have
      been made;

(ii)  under the Delaware Statutory Trust Act and the Amended and Restated Trust
      Agreement, the Trust has the trust power and authority (A) to own property
      and conduct its business, all as described in the Amended and Restated
      Trust Agreement, (B) to execute and deliver, and to perform its
      obligations under, each of the Placement Agreement, the Subscription
      Agreement, the Common Securities Subscription Agreement, the Junior
      Subordinated Note Subscription Agreement and the Preferred Securities and
      the Common Securities and (C) to purchase and hold the Junior Subordinated
      Notes;

(iii) under the Delaware Statutory Trust Act, the certificate attached to the
      Amended and Restated Trust Agreement as Exhibit C is an appropriate form
      of certificate to evidence ownership of the Preferred Securities; the
      Preferred Securities have been duly authorized by the Trust Agreement and,
      when issued and delivered against payment of the consideration as set
      forth in the Subscription Agreement, the Preferred Securities will be
      validly issued and (subject to the qualifications set forth in this
      paragraph) fully paid and nonassessable and will represent undivided
      beneficial interests in the assets of the Trust; the holders of the
      Preferred Securities will be entitled to the benefits of the Amended and
      Restated Trust Agreement and, as beneficial owners of the Trust, will be
      entitled to the same limitation of personal liability extended to
      stockholders of private corporations for profit organized under the
      General Corporation Law of the State of Delaware; and such counsel may
      note that the holders of the Preferred Securities may be obligated,
      pursuant to the Amended and Restated Trust Agreement, to (A) provide
      indemnity and/or security in connection with and pay taxes or governmental
      charges arising from transfers or exchanges of Preferred Securities
      certificates and the issuance of replacement Preferred Securities
      certificates and (B) provide security or indemnity in connection with
      requests of or directions to the Property Trustee to exercise its rights
      and remedies under the Amended and Restated Trust Agreement;

(iv)  the Common Securities have been duly authorized by the Trust Agreement
      and, when issued and delivered by the Trust to the Company against payment
      therefor as described in the related Amended and Restated Trust Agreement
      and the related Common Securities Subscription Agreement, will be validly
      issued and fully paid and will represent undivided beneficial interests in
      the assets of the Trust entitled to the benefits of the Trust Agreement;

                                      B-3-1

<PAGE>

(v)   under the Delaware Statutory Trust Act and the Amended and Restated Trust
      Agreement, the issuance of the Preferred Securities and the Common
      Securities is not subject to preemptive or other similar rights;

(vi)  under the Delaware Statutory Trust Act and the Amended and Restated Trust
      Agreement, the execution and delivery by the Trust of the Placement
      Agreement, the Subscription Agreement, the Common Securities Subscription
      Agreement and the Junior Subordinated Note Subscription Agreement, and the
      performance by the Trust of its obligations thereunder, have been duly
      authorized by all necessary trust action on the part of the Trust;

(vii) the Amended and Restated Trust Agreement constitutes a legal, valid and
      binding obligation of the Company and the Trustees, and is enforceable
      against the Company and the Trustees, in accordance with its terms
      subject, as to enforcement, to the effect upon the Amended and Restated
      Trust Agreement of (a) bankruptcy, insolvency, moratorium, receivership,
      reorganization, liquidation, fraudulent conveyance or transfer and other
      similar laws relating to or affecting the rights and remedies of creditors
      generally, (b) principles of equity, including applicable law relating to
      fiduciary duties (regardless of whether considered and applied in a
      proceeding in equity or at law), and (c) the effect of applicable public
      policy on the enforceability of provisions relating to indemnification or
      contribution;

(viii) the issuance and sale by the Trust of the Preferred Securities and the
      Common Securities, the purchase by the Trust of the Junior Subordinated
      Notes, the execution, delivery and performance by the Trust of the
      Placement Agreement, the Subscription Agreement, the Common Securities
      Subscription Agreement and the Junior Subordinated Note Subscription
      Agreement, the consummation by the Trust of the transactions contemplated
      by the Placement Agreement and Subscription Agreement and compliance by
      the Trust with its obligations thereunder do not violate (a) any of the
      provisions of the Certificate of Trust or the Amended and Restated Trust
      Agreement or (b) any applicable Delaware law, rule or regulation;

(ix)  no filing with, or authorization, approval, consent, license, order,
      registration, qualification or decree of, any Delaware court or Delaware
      governmental authority or Delaware agency is necessary or required solely
      in connection with the issuance and sale by the Trust of the Common
      Securities or the Preferred Securities, the purchase by the Trust of the
      Junior Subordinated Notes, the execution, delivery and performance by the
      Trust of the Placement Agreement, the Subscription Agreement, the Common
      Securities Subscription Agreement and the Junior Subordinated Note
      Subscription Agreement, the consummation by the Trust of the transactions
      contemplated by the Placement Agreement and the Subscription Agreement and
      compliance by the Trust with its obligations thereunder; and

(x)   the holders of the Preferred Securities (other than those holders who
      reside or are domiciled in the State of Delaware) will have no liability
      for income taxes imposed by

                                      B-3-2

<PAGE>

      the State of Delaware solely as a result of their participation in the
      Trust and the Trust will not be liable for any income tax imposed by the
      State of Delaware.

In rendering such opinions, such counsel may (A) state that its opinion is
limited to the laws of the State of Delaware and (B) rely as to matters of fact,
to the extent deemed proper, on certificates of responsible officers of the
Company and public officials.

                                      B-3-3

<PAGE>

                                                                     EXHIBIT B-4

                         FORM OF TRUSTEE COUNSEL OPINION

      Pursuant to Section 3.2(d) of the Placement Agreement, and with respect to
each series of Preferred Securities, Common Securities, and Junior Subordinated
Notes to be issued in accordance therewith, Richards, Layton & Finger, P.A.,
special counsel for the Guarantee Trustee, the Property Trustee and the
Indenture Trustee, shall deliver an opinion to the effect that:

      (1) Wilmington Trust Company (the "Bank") has been duly incorporated and
is validly existing in good standing as a Delaware banking corporation under the
laws of the State of Delaware and has the power and authority to enter into, and
to take all action required of it under, the Transaction Documents.

      (2) The Transaction Documents have been duly authorized, executed and
delivered by the Trustee, the Property Trustee and the Guarantee Trustee and
each constitutes a legal, valid and binding obligation of the Trustee, the
Property Trustee and the Guarantee Trustee enforceable against them in
accordance with their respective terms, except as the enforceability thereof may
be limited by (i) bankruptcy, insolvency, reorganization, or other similar laws
affecting the enforcement of creditors' rights generally, as such laws would
apply in the event of a bankruptcy, insolvency or reorganization or similar
occurrence affecting the Trustee the Property Trustee and the Guarantee Trustee
and (ii) general principles of equity (regardless of whether such enforceability
is considered in a proceeding in equity or at law).

      (3) The Securities have been duly authenticated and delivered by the
Trustee.

      (4) The Preferred Securities have been duly authenticated and delivered by
the Property Trustee.

      (5) The execution and delivery of each of the Transaction Documents by the
Trustee, the Property Trustee and the Guarantee and the performance by them of
their respective terms do not conflict with or result in a violation of (A) any
law or regulation of the United States of America or the State of Delaware
governing the banking or trust powers of the Bank, or (B) the charter or By-laws
of the Bank.

      (6) No approval, authorization or other action by, or filing with, any
governmental authority of the United States of America or the State of Delaware
having jurisdiction over the banking or trust powers of the Bank is required in
connection with the execution and delivery by the Trustee, the Property Trustee
and the Guarantee Trustee of the Transaction Documents or the performance by the
Trustee, the Property Trustee and the Guarantee Trustee of the terms of the
Transaction Documents, other than the filing of the Certificate of Trust.

      In rendering such opinions, such counsel may (A) state that its opinion is
limited to the laws of the State of Delaware and the federal laws of the United
States governing the banking and trust powers of the Bank and (B) rely as to
matters of fact, to the extent deemed proper, on certificates of responsible
officers of the Company and public officials.

                                      B-4-1

<PAGE>

                                                                         Annex F

                                     Annex F

                              OFFICER'S CERTIFICATE

      The undersigned, the [Chief Financial Officer] [Treasurer] [Executive Vice
President] hereby certifies, pursuant to Section 6.9 of the Placement Agreement,
dated as of September 16, 2004, among Mercantile Bank Corporation (the
"Company"), Mercantile Bank Capital Trust I (the "Trust") and SunTrust Capital
Markets, Inc. that, as of [date], [20__], the Company had the following ratios
and balances:

[BANK HOLDING COMPANY/THRIFT HOLDING COMPANY]

As of [Quarterly Financial Dates], 2004

<TABLE>
<S>                                                             <C>
Tier 1 Risk Weighted Assets                                       _____________%

Ratio of Double Leverage                                          _____________%

Non-Performing Assets to Loans and OREO                           _____________%

Tangible Common Equity as a Percentage of Tangible Assets         _____________%

Ratio of Reserves to Non-Performing Loans                         _____________%

Ratio of Net Charge-Offs to Loans                                 _____________%

Return on Average Assets (annualized)                             _____________%

Net Interest Margin (annualized)                                  _____________%

Efficiency Ratio                                                  _____________%

Ratio of Loans to Assets                                          _____________%

Ratio of Loans to Deposits                                        _____________%

Total Assets                                                    $ _____________%

Year to Date Income                                             $ _____________%
</TABLE>

* A table describing the quarterly report calculation procedures is provided on
page __

[FOR FISCAL YEAR END: Attached hereto are the audited consolidated financial
statements (including the balance sheet, income statement and statement of cash
flows, and notes thereto, together with the report of the independent
accountants thereon) of the Company and its consolidated subsidiaries for the
three years ended [date], 20__.]

[FOR FISCAL QUARTER END: Attached hereto are the unaudited consolidated
financial statements (including the balance sheet and income statement) of the
Company and its consolidated subsidiaries for the fiscal quarter ended [date],
20__.]

                                      F-1
<PAGE>

                                                                         Annex F

The financial statements fairly present in all material respects, in accordance
with U.S. generally accepted accounting principles ("GAAP"), the financial
position of the Company and its consolidated subsidiaries, and the results of
operations and changes in financial condition as of the date, and for the [___
quarter interim] [annual] period ended [date], 20__, and such financial
statements have been prepared in accordance with GAAP consistently applied
throughout the period involved (expect as otherwise noted therein).

      IN WITNESS WHEREOF, the undersigned has executed this Officer's
Certificate as of this _____ day of _____________, 20__

                                                     ___________________________
                                                     Name:
                                                     Title:

                                                     Mercantile Bank Corporation
                                                     5650 Byron Center Avenue SW
                                                     Wyoming, Michigan 49509
                                                     (616) 406-3700

                                      F-2

<PAGE>

                              Financial Definitions

                              BANK HOLDING COMPANY

<TABLE>
<CAPTION>
                          CORRESPONDING FRY-9C OR LP LINE ITEMS WITH LINE ITEM
     REPORT ITEM                        CORRESPONDING SCHEDULES                             DESCRIPTION OF CALCULATION
----------------------- -------------------------------------------------------- --------------------------------------------------
<S>                     <C>                                                      <C>
Tier 1 Risk Weighted    BHCK7206                                                 Tier 1 Risk Ratio: Core Capital (Tier 1)/
Assets                  Schedule HC-R                                            Risk-Adjusted Assets
----------------------- -------------------------------------------------------- --------------------------------------------------
Ratio of Double         (BHCP0365)/(BCHCP3210)                                   Total equity investments in subsidiaries  divided
Leverage                Schedule PC in the LP                                    by the total equity capital. This field is
                                                                                 calculated at the parent company level.
                                                                                 "Subsidiaries" include bank, bank holding
                                                                                 company, and non-bank subsidiaries.
----------------------- -------------------------------------------------------- --------------------------------------------------
Non-Performing Assets   (BHCK5525-BHCK3506+BHCK5526-BHCK3507+BHCK2744)/          Total Nonperforming Assets (NPLs+Foreclosed Real
to Loans and OREO       (BHCK2122+ Schedules HC-C, HC-M & HC-N                   Estate+Other Nonaccrual & Repossessed
                                                                                 Assets)/Total Loans+Foreclosed Real Estate
----------------------- -------------------------------------------------------- --------------------------------------------------
                        (BHDM3210-BHCK3163)/(BHCK2170-BHCK3163)
Tangible Common                                                                  (Equity Capital - Goodwill)/(Total Assets -
Equity as a             Schedule HC                                              Goodwill)
Percentage of
Tangible Assets
----------------------- -------------------------------------------------------- --------------------------------------------------
                        (BHCK3123+BHCK3128)/(BHCK5525-
                        BHCK3506+BHCK5526-BHCK3507)
Ratio of Reserves to                                                             Total Loan Loss and Allocated Transfer  Risk
Non-Performing Loans    Schedules HC & HC-N & HC-R                               Reserves/ Total  Nonperforming Loans (Nonaccrual
                                                                                 + Restructured)
----------------------- -------------------------------------------------------- --------------------------------------------------
                        (BHCK4635-BHCK4605)/(BHCK3516)
Ratio of Net                                                                     Net charge  offs for the period as a percentage
Charge-Offs to Loans    Schedules HC-B & HC-K                                    of average loans.
----------------------- -------------------------------------------------------- --------------------------------------------------
                        (BHCK4340/BHCK3368)
Return on Average                                                                Net Income as a percentage of Assets.
Assets (annualized)     Schedules HI & HC-K
----------------------- -------------------------------------------------------- --------------------------------------------------
                        (BHCK4519)/(BHCK3515+BHCK3365+BHCK3516+
                        BHCK3401+BHCKB985)
Net Interest Margin                                                              (Net Interest Income Fully Taxable Equivalent,
(annualized)            Schedules HI Memorandum and HC-K                         if available/Average Earning Assets)
----------------------- -------------------------------------------------------- --------------------------------------------------
                        (BHCK4093)/(BHCK4519+BHCK4079)
Efficiency Ratio                                                                 (Non-interest Expense)/(Net Interest Income
                        Schedule HI                                              Fully Taxable Equivalent, if available, plus
                                                                                 Non-interest Income)
----------------------- -------------------------------------------------------- --------------------------------------------------
                        (BHCKB528+BHCK5369)/(BHCK2170)
Ratio of Loans to                                                                Total Loans & Leases (Net of Unearned Income &
Assets                  Schedule HC                                              Gross of Reserve)/Total Assets
----------------------- -------------------------------------------------------- --------------------------------------------------
                        (BHCKB528+BHCK5369)/(BHDM6631+BHDM6636
                        +BHFN6631+BHFN6636)
Ratio of Loans to                                                                Total Loans & Leases (Net of Unearned Income &
Deposits                Schedule HC                                              Gross of Reserve)/Total Deposits (Includes
                                                                                 Domestic and Foreign Deposits)
</TABLE>

                                       1
<PAGE>

<TABLE>
<S>                     <C>                                                      <C>
                        (BHCK2170)
Total Assets                                                                     The sum of total assets. Includes cash and
                        Schedule HC                                              balances due from depository institutions;
                                                                                 securities; federal funds sold and securities
                                                                                 purchased under agreements to resell; loans and
                                                                                 lease financing receivables; trading assets;
                                                                                 premises and fixed assets; other real estate owned;
                                                                                 investments in unconsolidated subsidiaries and
                                                                                 associated companies; customer's liability on
                                                                                 acceptances outstanding; intangible assets; and
                                                                                 other assets.
</TABLE>

                                       2

<PAGE>

                              DISCLOSURE SCHEDULES

                                SCHEDULE 4.15(a)

                              FINANCIAL STATEMENTS

      On August 16, 2004, the Company, gave notice of its intent to redeem in
full on September 17, 2004 the $16,000,000 Junior Subordinated Debentures Due
2029 of the Company.

                                       1<PAGE>

                                                                    EXHIBIT 10.4

                                                            Final Conformed Copy

--------------------------------------------------------------------------------

                               GUARANTEE AGREEMENT

                                     between

                          MERCANTILE BANK CORPORATION,
                                  As Guarantor,

                                       and

                            WILMINGTON TRUST COMPANY,
                              As Guarantee Trustee

                         Dated as of September 16, 2004

                         MERCANTILE BANK CAPITAL TRUST I

--------------------------------------------------------------------------------

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<S>                                                                            <C>
ARTICLE I     INTERPRETATION AND DEFINITIONS.................................   2
SECTION 1.1   Interpretation.................................................   2
SECTION 1.2   Definitions....................................................   2

ARTICLE II    REPORTS........................................................   6
SECTION 2.1   List of Holders................................................   6
SECTION 2.2   Periodic Reports to the Guarantee Trustee......................   6
SECTION 2.3   Event of Default; Waiver.......................................   6
SECTION 2.4   Event of Default; Notice.......................................   7

ARTICLE III   POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE.............   7
SECTION 3.1   Powers and Duties of the Guarantee Trustee.....................   7
SECTION 3.2   Certain Rights of the Guarantee Trustee........................   8
SECTION 3.3   Compensation...................................................  10
SECTION 3.4   Indemnity......................................................  10
SECTION 3.5   Securities.....................................................  11

ARTICLE IV    GUARANTEE TRUSTEE..............................................  11
SECTION 4.1   Guarantee Trustee; Eligibility.................................  11
SECTION 4.2   Appointment, Removal and Resignation of the Guarantee Trustee..  12

ARTICLE V     GUARANTEE......................................................  12
SECTION 5.1   Guarantee......................................................  12
SECTION 5.2   Waiver of Notice and Demand....................................  13
SECTION 5.3   Obligations Not Affected.......................................  13
SECTION 5.4   Rights of Holders..............................................  14
SECTION 5.5   Guarantee of Payment...........................................  14
SECTION 5.6   Subrogation....................................................  14
SECTION 5.7   Independent Obligations........................................  15
SECTION 5.8   Enforcement....................................................  15

ARTICLE VI    COVENANTS AND SUBORDINATION....................................  15
SECTION 6.1   Dividends, Distributions and Payments..........................  15
SECTION 6.2   Subordination..................................................  16
SECTION 6.3   Pari Passu Guarantees..........................................  16

ARTICLE VII   TERMINATION....................................................  16
SECTION 7.1   Termination....................................................  16

ARTICLE VIII  MISCELLANEOUS..................................................  17
SECTION 8.1   Successors and Assigns.........................................  17
SECTION 8.2   Amendments.....................................................  17
SECTION 8.3   Notices........................................................  17
SECTION 8.4   Benefit........................................................  18
</TABLE>

                                        i

<PAGE>

<TABLE>
<S>                                                                            <C>
SECTION 8.5   Governing Law..................................................  18
SECTION 8.6   Submission to Jurisdiction.....................................  18
SECTION 8.7   Counterparts...................................................  19
</TABLE>

                                       ii

<PAGE>

      GUARANTEE AGREEMENT, dated as of September 16, 2004, executed and
delivered by MERCANTILE BANK CORPORATION, a Michigan corporation (the
"Guarantor") having its principal office at 5650 Byron Center Avenue SW,
Wyoming, Michigan 49509, and WILMINGTON TRUST Company, a Delaware banking
corporation, as trustee (in such capacity, the "Guarantee Trustee"), for the
benefit of the Holders (as defined herein) from time to time of the Preferred
Securities (as defined herein) of Mercantile Bank Capital Trust I, a Delaware
statutory trust (the "Issuer").

                              W I T N E S S E T H :

      WHEREAS, pursuant to an Amended and Restated Trust Agreement, dated as of
the date hereof (the "Trust Agreement"), among the Guarantor, as Depositor, the
Property Trustee, the Delaware Trustee and the Administrative Trustees named
therein and the holders from time to time of the Preferred Securities (as
hereinafter defined), the Issuer is issuing $32,000,000 aggregate Liquidation
Amount (as defined in the Trust Agreement) of its Series A and Series B Floating
Rate Preferred Securities (Liquidation Amount $1,000 per preferred security)
(the "Preferred Securities") representing preferred undivided beneficial
interests in the assets of the Issuer and having the terms set forth in the
Trust Agreement;

      WHEREAS, the Preferred Securities will be issued by the Issuer and the
proceeds thereof, together with the proceeds from the issuance of the Issuer's
Common Securities (as defined below), will be used to purchase the Notes (as
defined in the Trust Agreement) of the Guarantor; and

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

      NOW, THEREFORE, in consideration of the purchase by each Holder of
Preferred Securities, which purchase the Guarantor hereby agrees shall benefit
the Guarantor, the Guarantor executes and delivers this Guarantee Agreement to
provide as follows for the benefit of the Holders from time to time of the
Preferred Securities:

                                       1
<PAGE>

                                    ARTICLE I

                         INTERPRETATION AND DEFINITIONS

      SECTION 1.1. Interpretation.

      In this Guarantee Agreement, unless the context otherwise requires:

            (a)   capitalized terms used in this Guarantee Agreement but not
      defined in the preamble hereto have the respective meanings assigned to
      them in Section 1.2;

            (b)   the words "include", "includes" and "including" shall be
      deemed to be followed by the phrase "without limitation";

            (c)   all references to "the Guarantee Agreement" or "this Guarantee
      Agreement" are to this Guarantee Agreement as modified, supplemented or
      amended from time to time;

            (d)   all references in this Guarantee Agreement to Articles and
      Sections are to Articles and Sections of this Guarantee Agreement unless
      otherwise specified;

            (e)   the words "hereby", "herein", "hereof" and "hereunder" and
      other words of similar import refer to this Guarantee Agreement as a whole
      and not to any particular Article, Section or other subdivision;

            (f)   a reference to the singular includes the plural and vice
      versa; and

            (g)   the masculine, feminine or neuter genders used herein shall
      include the masculine, feminine and neuter genders.

      SECTION 1.2 Definitions.

      As used in this Guarantee Agreement, the terms set forth below shall,
unless the context otherwise requires, have the following meanings:

            "Affiliate" of any specified Person means any other Person directly
      or indirectly controlling or controlled by or under direct or indirect
      common control with such specified Person; provided, that the Issuer shall
      not be deemed to be an Affiliate of the Guarantor. For the purposes of
      this definition, "control" when used with respect to any specified Person
      means the power to direct the management and policies of such Person,
      directly or indirectly, whether through the ownership of voting
      securities, by contract or otherwise; and the terms "controlling" and
      "controlled" have meanings correlative to the foregoing.

            "Beneficiaries" means any Person to whom the Issuer is or hereafter
      becomes indebted or liable.

                                       2
<PAGE>

            "Board of Directors" means either the board of directors of the
      Guarantor or any duly authorized committee of that board.

            "Common Securities" means the Series A and Series B Floating Rate
      Common Securities representing common undivided beneficial interests in
      the assets of the Issuer.

            "Debt" means with respect to any Person, whether recourse is to all
      or a portion of the assets of such Person, whether currently existing or
      hereafter incurred, and whether or not contingent and without duplication,
      (i) every obligation of such Person for money borrowed; (ii) every
      obligation of such Person evidenced by bonds, debentures, notes or other
      similar instruments, including obligations incurred in connection with the
      acquisition of property, assets or businesses; (iii) every reimbursement
      obligation of such Person with respect to letters of credit, bankers'
      acceptances or similar facilities issued for the account of such Person;
      (iv) every obligation of such Person issued or assumed as the deferred
      purchase price of property or services (but excluding trade accounts
      payable arising in the ordinary course of business); (v) every capital
      lease obligation of such Person; (vi) all indebtedness of such Person,
      whether incurred on or prior to the date of this Guarantee Agreement or
      thereafter incurred, for claims in respect of derivative products,
      including interest rate, foreign exchange rate and commodity forward
      contracts, options, swaps and similar arrangements; (vii) every obligation
      of the type referred to in clauses (i) through (vi) of another Person and
      all dividends of another Person the payment of which, in either case, such
      Person has guaranteed or is responsible or liable for, directly or
      indirectly, as obligor or otherwise; and (viii) any renewals, extensions,
      refundings, amendments or modifications of any obligation of the type
      referred to in clauses (i) through (vii).

            "Event of Default" means a default by the Guarantor on any of its
      payment or other obligations under this Guarantee Agreement; provided,
      that except with respect to a default in payment of any Guarantee
      Payments, the Guarantor shall have received notice of default from the
      Guarantee Trustee and shall not have cured such default within thirty (30)
      days after receipt of such notice.

            "Guarantee Payments" means the following payments or distributions,
      without duplication, with respect to each series of Preferred Securities,
      to the extent not paid or made by or on behalf of the Issuer: (i) any
      accumulated and unpaid Distributions (as defined in the Trust Agreement)
      required to be paid on a given series of Preferred Securities, to the
      extent the Issuer shall have funds on hand available therefor at such
      time, (ii) the Redemption Price (as defined in the Trust Agreement) with
      respect to a given series of Preferred Securities to the extent the Issuer
      shall have funds on hand available therefor at such time, and (iii) upon a
      voluntary or involuntary termination, winding up or liquidation of the
      Issuer, unless Notes are distributed to the Holders, the lesser of (a) the
      aggregate of the Liquidation Amount of $1,000 per Preferred Security plus
      accumulated and

                                       3
<PAGE>

      unpaid Distributions on each series of Preferred Securities to the date of
      payment, to the extent that the Issuer shall have funds available therefor
      at such time and (b) the amount of assets of the Issuer remaining
      available for distribution to Holders in liquidation of the Issuer after
      satisfaction of liabilities to creditors of the Issuer in accordance with
      applicable law (in either case, the "Liquidation Distribution").

            "Guarantee Trustee" means Wilmington Trust Company, until a
      Successor Guarantee Trustee, as defined below, has been appointed and has
      accepted such appointment pursuant to the terms of this Guarantee
      Agreement, and thereafter means each such Successor Guarantee Trustee.

            "Holder" means any holder, as registered on the books and records of
      the Issuer, of any Preferred Securities; provided, that, in determining
      whether the holders of the requisite percentage of Preferred Securities
      have given any request, notice, consent or waiver hereunder, "Holder"
      shall not include the Guarantor, the Guarantee Trustee or any Affiliate of
      the Guarantor or the Guarantee Trustee.

            "Indenture" means the Junior Subordinated Indenture, dated as of the
      date hereof, as supplemented and amended, between the Guarantor and
      Wilmington Trust Company, as trustee.

            "List of Holders" has the meaning specified in Section 2.1.

            "Majority in Liquidation Amount of the Preferred Securities" means a
      vote by the Holder(s) of a given series, voting separately as a class, of
      more than fifty percent (50%) of the aggregate Liquidation Amount of all
      then outstanding Preferred Securities in that series.

            "Obligations" means any costs, expenses or liabilities (but not
      including liabilities related to taxes) of the Issuer, other than
      obligations of the Issuer to pay to holders of a given series of Preferred
      Securities the amounts due such holders pursuant to the terms of such
      Preferred Securities.

            "Officers' Certificate" means, with respect to any Person, a
      certificate signed by the Chief Executive Officer, Chief Financial
      Officer, President or a Vice President of such Person, and by the
      Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary
      of such Person, and delivered to the Guarantee Trustee. Any Officers'
      Certificate delivered with respect to compliance with a condition or
      covenant provided for in this Guarantee Agreement (other than the
      certificate provided pursuant to Section 2.4) shall include:

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

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

                                       4
<PAGE>

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

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

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

            "Responsible Officer" means, with respect to the Guarantee Trustee,
      any Senior Vice President, any Vice President, any Assistant Vice
      President, the Secretary, any Assistant Secretary, the Treasurer, any
      Assistant Treasurer, any Financial Services Officer or Assistant Financial
      Services Officer or any other officer of the Corporate Trust Department of
      the Guarantee Trustee and also means, with respect to a particular
      corporate trust matter, any other officer to whom such matter is referred
      because of that officer's knowledge of and familiarity with the particular
      subject.

            "Senior Debt" means the principal of and any premium and interest on
      (including interest accruing on or after the filing of any petition in
      bankruptcy or for reorganization relating to the Guarantor whether or not
      such claim for post-petition interest is allowed in such proceeding) all
      Debt of the Guarantor, whether incurred on or prior to the date of the
      Indenture or thereafter incurred, unless it is provided in the instrument
      creating or evidencing the same or pursuant to which the same is
      outstanding, that such obligations are not superior in right of payment to
      the Preferred Securities; provided, however, that if the Guarantor is
      subject to the regulation and supervision of an "appropriate Federal
      banking agency" within the meaning of 12 U.S.C. 1813(q), the Guarantor
      shall have received the approval of such appropriate Federal banking
      agency prior to issuing any such obligation if not otherwise generally
      approved; provided further, that Senior Debt shall not include any other
      debt securities, and guarantees in respect of such debt securities, issued
      to any trust other than the Issuer (or a trustee of such trust),
      partnership or other entity affiliated with the Guarantor that is a
      financing vehicle of the Guarantor (a "financing entity"), in connection
      with the issuance by such financing entity of equity securities or other
      securities that are treated as equity capital for regulatory capital
      purposes guaranteed by the Guarantor pursuant to an instrument that ranks
      pari passu with or junior in right of payment to this Guarantee Agreement,
      including, without limitation, securities issued by MBWM Capital Trust I.

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

                                       5
<PAGE>

            "Trust Indenture Act" means the Trust Indenture Act of 1939, as
      amended and as in effect on the date of this Guarantee Agreement.

Capitalized or otherwise defined terms used but not otherwise defined herein
shall have the meanings assigned to such terms in the Trust Agreement as in
effect on the date hereof.

                                   ARTICLE II

                                     REPORTS

      SECTION 2.1 List of Holders.

      The Guarantor shall furnish or cause to be furnished to the Guarantee
Trustee at such times as the Guarantee Trustee may request in writing, within
thirty (30) days after the receipt by the Guarantor of any such request, a list,
in such form as the Guarantee Trustee may reasonably require, of the names and
addresses of the Holders (the "List of Holders") as of a date not more than
fifteen (15) days prior to the time such list is furnished, in each case to the
extent such information is in the possession or control of the Guarantor and is
not identical to a previously supplied list of Holders or has not otherwise been
received by the Guarantee Trustee in its capacity as such. The Guarantee Trustee
may destroy any List of Holders previously given to it on receipt of a new List
of Holders.

      SECTION 2.2 Periodic Reports to the Guarantee Trustee.

      The Guarantor shall deliver to the Guarantee Trustee, within one hundred
and twenty (120) days after the end of each fiscal year of the Guarantor ending
after the date of this Guarantee Agreement, an Officers' Certificate covering
the preceding fiscal year, stating whether or not to the knowledge of the
signers thereof the Guarantor is in default in the performance or observance of
any of the terms or provisions or any of the conditions of this Guarantee
Agreement (without regard to any period of grace or requirement of notice
provided hereunder) and, if the Guarantor shall be in default thereof,
specifying all such defaults and the nature and status thereof of which they
have knowledge.

      SECTION 2.3 Event of Default; Waiver.

      The Holders of a Majority in Liquidation Amount of the Preferred
Securities may, on behalf of the Holders of the applicable series of Preferred
Securities, waive any past Event of Default and its consequences. Upon such
waiver, any such Event of Default with respect to that series shall cease to
exist, and any Event of Default arising therefrom shall be deemed to have been
cured, for every purpose of this Guarantee Agreement, but no such waiver shall
extend to any subsequent or other default or Event of Default or impair any
right consequent therefrom.

                                       6
<PAGE>

      SECTION 2.4 Event of Default; Notice.

            (a)   The Guarantee Trustee shall, within ninety (90) days after the
      occurrence of a default, transmit to the Holders of any affected series of
      Preferred Securities notices of all defaults actually known to the
      Guarantee Trustee, unless such defaults have been cured or waived before
      the giving of such notice, provided, that, except in the case of a default
      in the payment of a Guarantee Payment, the Guarantee Trustee shall be
      protected in withholding such notice if and so long as the Board of
      Directors, the executive committee or a trust committee of directors
      and/or Responsible Officers of the Guarantee Trustee in good faith
      determine that the withholding of such notice is in the interests of the
      Holders. For the purpose of this Section 2.4, the term "default" means any
      event that is, or after notice or lapse of time or both would become, an
      Event of Default.

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

                                   ARTICLE III

               POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE

            SECTION 3.1 Powers and Duties of the Guarantee Trustee.

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

            (b)   The rights, immunities, duties and responsibilities of the
      Guarantee Trustee shall be as provided by this Guarantee Agreement and
      there shall be no other duties or obligations, express or implied, of the
      Guarantee Trustee. Notwithstanding the foregoing, no provisions of this
      Guarantee Agreement shall require the Guarantee Trustee to expend or risk
      its own funds or otherwise incur any financial liability in the
      performance of any of its duties hereunder, or in the exercise of any of
      its rights or powers, if it shall have reasonable grounds for believing
      that repayment of such funds or adequate indemnity against such risk or
      liability is not reasonably assured to it. Whether or not herein expressly
      so

                                       7
<PAGE>

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

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

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

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

      SECTION 3.2 Certain Rights of the Guarantee Trustee.

            (a)   Subject to the provisions of Section 3.1:

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

                  (ii)   any direction or act of the Guarantor contemplated by
            this Guarantee Agreement shall be sufficiently evidenced by an
            Officers' Certificate unless otherwise prescribed herein;

                  (iii)  the Guarantee Trustee may consult with counsel, and the
            advice of such counsel shall be full and complete authorization and

                                       8
<PAGE>

            protection in respect of any action taken, suffered or omitted to be
            taken by it hereunder in good faith and in reliance thereon and in
            accordance with such advice. Such counsel may be counsel to the
            Guarantee Trustee, the Guarantor or any of its Affiliates and may be
            one of its employees. The Guarantee Trustee shall have the right at
            any time to seek instructions concerning the administration of this
            Guarantee Agreement from any court of competent jurisdiction;

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

                  (v)    the Guarantee Trustee shall not be bound to make any
            investigation into the facts or matters stated in any resolution,
            certificate, statement, instrument, opinion, report, notice,
            request, direction, consent, order, bond, debenture, note, other
            evidence of indebtedness or other paper or document, but the
            Guarantee Trustee, in its discretion, may make such further inquiry
            or investigation into such facts or matters as it may see fit, and
            if the Guarantee Trustee shall determine to make such inquiry or
            investigation, it shall be entitled to examine the books, records
            and premises of the Guarantor, personally or by agent or attorney;

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

                  (vii)  whenever in the administration of this Guarantee
            Agreement the Guarantee Trustee shall deem it desirable to receive
            instructions with respect to enforcing any remedy or right
            hereunder, the Guarantee Trustee (A) may request instructions from
            the Holders of a Majority in Liquidation Amount of the Preferred
            Securities, (B) may refrain from enforcing such remedy or right or
            taking such other action until such instructions are received and
            (C) shall be protected in acting in accordance with such
            instructions;

                                       9
<PAGE>

                  (viii) except as otherwise expressly provided by this
            Guarantee Agreement, the Guarantee Trustee shall not be under any
            obligation to take any action that is discretionary under the
            provisions of this Guarantee Agreement; and

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

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

      SECTION 3.3 Compensation.

      The Guarantor agrees to pay to the Guarantee Trustee from time to time
reasonable compensation for all services rendered by it hereunder (which
compensation shall not be limited by any provisions of law in regard to the
compensation of a trustee of an express trust) and to reimburse the Guarantee
Trustee upon request for all reasonable expenses, disbursements and advances
(including the reasonable fees and expenses of its attorneys and agents)
incurred or made by the Guarantee Trustee in accordance with any provisions of
this Guarantee Agreement.

      SECTION 3.4 Indemnity.

      The Guarantor agrees to indemnify and hold harmless the Guarantee Trustee
and any of its Affiliates and any of their officers, directors, shareholders,
employees, representatives or agents from and against any loss, damage,
liability, tax (other than income, franchise or other taxes imposed on amounts
paid pursuant to Section 3.3), penalty, expense or other claim of any kind or
nature whatsoever incurred without negligence, bad faith or willful misconduct
on the part of the Guarantee Trustee, any of its Affiliates, or any of their
officers, directors, shareholders, employees, representatives or agents arising
out of or in connection with the acceptance or administration of this Guarantee
Agreement, including the costs and expenses of defending itself against any
claim or liability in connection with the exercise or performance of any of its
powers or duties hereunder. The Guarantee Trustee will not claim or exact any
lien or charge on any Guarantee Payments as a result of any amount due to it
under this Guarantee

                                       10
<PAGE>

Agreement. This indemnity shall survive the termination of this Agreement or the
resignation or removal of the Guarantee Trustee.

      In no event shall the Guarantee Trustee be liable for any indirect,
special, punitive or consequential loss or damage of any kind whatsoever,
including, but not limited to, lost profits, even if the Guarantee Trustee has
been advised of the likelihood of such loss or damage and regardless of the form
of action.

      In no event shall the Guarantee Trustee be liable for any failure or delay
in the performance of its obligations hereunder because of circumstances beyond
its control, including, but not limited to, acts of God, flood, war (declared or
undeclared), terrorism, fire, riot, embargo or government action, including any
laws, ordinances, regulations, governmental action or the like which delay,
restrict or prohibit the providing of the services contemplated by this
Guarantee Agreement.

      SECTION 3.5 Securities.

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

                                   ARTICLE IV

                                GUARANTEE TRUSTEE

      SECTION 4.1 Guarantee Trustee; Eligibility.

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

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

                  (ii)   be a corporation organized and doing business under the
            laws of the United States or of any State thereof, authorized to
            exercise corporate trust powers, having a combined capital and
            surplus of at least fifty million dollars ($50,000,000), subject to
            supervision or examination by Federal or State authority and having
            an office within the United States. If such corporation publishes
            reports of condition at least annually, pursuant to law or to the
            requirements of such supervising or examining authority, then, for
            the purposes of this Section 4.1, the combined capital and surplus
            of such corporation shall be deemed to be its combined capital and
            surplus as set forth in its most recent report of condition so
            published.

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

            (c)   If the Guarantee Trustee has or shall acquire any "conflicting
      interest" within the meaning of Section 310(b) of the Trust Indenture Act,
      the

                                       11
<PAGE>

      Guarantee Trustee shall either eliminate such interest or resign in the
      manner and with the effect set out in Section 4.2(c).

      SECTION 4.2 Appointment, Removal and Resignation of the Guarantee Trustee.

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

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

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

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

                                    ARTICLE V

                                    GUARANTEE

      SECTION 5.1 Guarantee.

            (a)   The Guarantor irrevocably and unconditionally agrees to pay in
      full to the Holders the Guarantee Payments (without duplication of amounts
      theretofore paid by or on behalf of the Issuer), as and when due,
      regardless of any defense (except for the defense of payment by the
      Issuer), right of set-off or counterclaim which the Issuer may have or
      assert. The Guarantor's obligation to make a Guarantee Payment may be
      satisfied by direct payment of the required amounts by the Guarantor to
      the Holders or by causing the Issuer to pay such amounts to the Holders.
      The Guarantor shall give prompt written notice to the

                                       12
<PAGE>

      Guarantee Trustee in the event it makes any direct payment to the Holders
      hereunder.

            (b)   The Guarantor hereby also agrees to assume any and all
      Obligations of the Issuer, and, in the event any such Obligation is not so
      assumed, subject to the terms and conditions hereof, the Guarantor hereby
      irrevocably and unconditionally guarantees to each Beneficiary the full
      payment, when and as due, of any and all Obligations to such
      Beneficiaries. This Guarantee is intended to be for the Beneficiaries who
      have received notice hereof.

      SECTION 5.2 Waiver of Notice and Demand.

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

      SECTION 5.3 Obligations Not Affected.

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

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

            (b)   the extension of time for the payment by the Issuer of all or
      any portion of the Distributions (other than an extension of time for
      payment of Distributions that results from the extension of any interest
      payment period on the Notes as provided in the Indenture), Redemption
      Price, Liquidation Distribution or any other sums payable under the terms
      of a given series of Preferred Securities or the extension of time for the
      performance of any other obligation under, arising out of, or in
      connection with, such Preferred Securities;

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

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

                                       13
<PAGE>

            (e)   any invalidity of, or defect or deficiency in, a given series
      of Preferred Securities;

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

            (g)   any other circumstance whatsoever that might otherwise
      constitute a legal or equitable discharge or defense of a guarantor, it
      being the intent of this Section 5.3 that the obligations of the Guarantor
      hereunder shall be absolute and unconditional under any and all
      circumstances.

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

      SECTION 5.4 Rights of Holders.

      The Guarantor expressly acknowledges that: (a) this Guarantee Agreement
will be deposited with the Guarantee Trustee to be held for the benefit of the
Holders; (b) the Guarantee Trustee has the right to enforce this Guarantee
Agreement on behalf of the Holders; (c) the Holders of a Majority in Liquidation
Amount of the Preferred Securities have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Guarantee
Trustee in respect of this Guarantee Agreement or exercising any trust or power
conferred upon the Guarantee Trustee under this Guarantee Agreement; and (d) any
Holder may institute a legal proceeding directly against the Guarantor to
enforce its rights under this Guarantee Agreement, without first instituting a
legal proceeding against the Guarantee Trustee, the Issuer or any other Person.

      SECTION 5.5 Guarantee of Payment.

      This Guarantee Agreement creates a guarantee of payment and not of
collection. This Guarantee Agreement will not be discharged except by payment of
the Guarantee Payments in full (without duplication of amounts theretofore paid
by the Issuer) or upon distribution of Notes to Holders as provided in the Trust
Agreement.

      SECTION 5.6 Subrogation.

      The Guarantor shall be subrogated to all (if any) rights of the Holders
against the Issuer in respect of any amounts paid to the Holders by the
Guarantor under this Guarantee Agreement and shall have the right to waive
payment by the Issuer pursuant to Section 5.1; provided, that, the Guarantor
shall not (except to the extent required by mandatory provisions of law) be
entitled to enforce or exercise any rights it may acquire by way of subrogation
or any indemnity, reimbursement or other agreement, in all cases as a result of
payment under this Guarantee Agreement, if, at the time of any such payment, any
amounts are due and unpaid under this Guarantee Agreement. If any amount shall
be paid to the Guarantor in violation of the preceding sentence, the Guarantor
agrees to hold such amount in trust for the Holders and to pay over such amount
to the Holders in accordance with the terms of this Guarantee Agreement.

                                       14
<PAGE>

      SECTION 5.7 Independent Obligations.

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

      SECTION 5.8 Enforcement.

      A Beneficiary may enforce the Obligations of the Guarantor contained in
Section 5.1(b) directly against the Guarantor, and the Guarantor waives any
right or remedy to require that any action be brought against the Issuer or any
other person or entity before proceeding against the Guarantor.

                                   ARTICLE VI

                           COVENANTS AND SUBORDINATION

      SECTION 6.1 Dividends, Distributions and Payments.

      So long as any Preferred Securities remain outstanding, if there shall
have occurred and be continuing an Event of Default or the Guarantor shall have
entered into an Extension Period as provided for in the Indenture and such
period, or any extension thereof, shall have commenced and be continuing, then
the Guarantor may not (a) declare or pay any dividends or distributions on, or
redeem, purchase, acquire or make liquidation payment with respect to, any of
the Guarantor's capital stock or (b) make any payment of principal of or any
interest or premium on or repay, repurchase or redeem any debt securities of the
Guarantor that rank pari passu in all respects with or junior in interest to the
Preferred Securities (other than (i) repurchases, redemptions or other
acquisitions of shares of capital stock of the Guarantor in connection with any
employment contract, benefit plan or other similar arrangement with or for the
benefit of any one or more employees, officers, directors or consultants, in
connection with a dividend reinvestment or stockholder stock purchase plan or in
connection with the issuance of capital stock of the Guarantor (or securities
convertible into or exercisable for such capital stock) as consideration in an
acquisition transaction entered into prior to the occurrence of such Event of
Default or the applicable Extension Period, (ii) as a result of an exchange or
conversion of any class or series of the Guarantor's capital stock (or any
capital stock of a subsidiary of the Guarantor) for any class or series of the
Guarantor's capital stock or any class of series of the Guarantor's indebtedness
for any class or series of the Guarantor's capital stock, (iii) the purchase of
fractional interests in shares of the Guarantor's capital stock pursuant to the
conversions or exchange provisions of such capital stock or the security being
converted or exchanged, (iv) any declaration of a

                                       15
<PAGE>

dividend in connection with any rights plan, the issuance of rights, stock or
other property under any rights plan or the redemption or repurchase of rights
pursuant thereto, or (v) any dividend in the form of stock, warrants, options or
other rights where the dividend stock or the stock issuable upon exercise of
such warrants, options or other rights is the same stock as that on which the
dividend is being paid or ranks pari passu with or junior to such stock).

      SECTION 6.2 Subordination.

      The obligations of the Guarantor under this Guarantee Agreement will
constitute unsecured obligations of the Guarantor and will rank subordinate and
junior in right of payment to all Senior Debt of the Guarantor.

      SECTION 6.3 Pari Passu Guarantees.

            (a)   The obligations of the Guarantor under this Guarantee
      Agreement shall rank pari passu with the obligations of the Guarantor
      under any similar guarantee agreements issued by the Guarantor with
      respect to preferred securities (if any) similar to the Preferred
      Securities, issued by trusts other than the Issuer established or to be
      established by the Guarantor (if any), in each case similar to the Issuer,
      including, without limitation, the Guarantee Agreement, dated September
      17, 1999, issued by the Guarantor with respect to the preferred securities
      issued by MBWM Capital Trust I.

            (b)   The right of the Guarantor to participate in any distribution
      of assets of any of its subsidiaries upon any such subsidiary's
      liquidation or reorganization or otherwise is subject to the prior claims
      of creditors of that subsidiary, except to the extent the Guarantor may
      itself be recognized as a creditor of that subsidiary. Accordingly, the
      Guarantor's obligations under this Guarantee will be effectively
      subordinated to all existing and future liabilities of the Guarantor's
      subsidiaries, and claimants should look only to the assets of the
      Guarantor for payments thereunder. This Guarantee does not limit the
      incurrence or issuance of other secured or unsecured debt of the
      Guarantor, including Senior Debt of the Guarantor, under any indenture or
      agreement that the Guarantor may enter into in the future or otherwise.

                                   ARTICLE VII

                                   TERMINATION

      SECTION 7.1 Termination.

      This Guarantee Agreement shall terminate and be of no further force and
effect upon (a) full payment of the Redemption Price of all Preferred
Securities, (b) the distribution of Notes to the Holders in exchange for all of
the Preferred Securities or (c) full payment of the amounts payable in
accordance with the Trust Agreement upon liquidation of the Issuer.
Notwithstanding the foregoing, this Guarantee Agreement will

                                       16
<PAGE>

continue to be effective or will be reinstated, as the case may be, if at any
time any Holder must restore payment of any sums paid with respect to Preferred
Securities or this Guarantee Agreement. The obligations of the Guarantor under
Sections 3.3 and 3.4 shall survive any such termination or the resignation and
removal of the Guarantee Trustee.

                                  ARTICLE VIII

                                  MISCELLANEOUS

      SECTION 8.1 Successors and Assigns.

      All guarantees and agreements contained in this Guarantee Agreement shall
bind the successors, assigns, receivers, trustees and representatives of the
Guarantor and shall inure to the benefit of the Holders of the Preferred
Securities then outstanding. Except in connection with a consolidation, merger
or sale involving the Guarantor that is permitted under Article VIII of the
Indenture and pursuant to which the successor or assignee agrees in writing to
perform the Guarantor's obligations hereunder, the Guarantor shall not assign
its rights or delegate its obligations hereunder without the prior approval of
the Holders of a Majority in Liquidation Amount of all of the Preferred
Securities, voting together as a single class.

      SECTION 8.2 Amendments.

      Except with respect to any changes that do not adversely affect the rights
of the Holders in any material respect (in which case no consent of the Holders
will be required), this Guarantee Agreement may only be amended with the prior
approval of the Guarantor, the Guarantee Trustee and the Holders of not less
than a Majority in Liquidation Amount of all of the Preferred Securities, voting
together as a single class. The provisions of Article VI of the Trust Agreement
concerning meetings or consents of the Holders shall apply to the giving of such
approval.

      SECTION 8.3 Notices.

      Any notice, request or other communication required or permitted to be
given hereunder shall be in writing, duly signed by the party giving such
notice, and delivered, telecopied or mailed by first class mail as follows:

            (a)   if given to the Guarantor, to the address or facsimile number
      set forth below or such other address, facsimile number or to the
      attention of such other Person as the Guarantor may give notice to the
      Guarantee Trustee and the Holders:

                  Mercantile Bank Corporation
                  5650 Byron Center Avenue SW
                  Wyoming, Michigan  49509
                  Facsimile No.: (616) 406-3701
                  Attention: Chief Executive Officer

                                       17
<PAGE>

            (b)   if given to the Issuer, at the Issuer's address or facsimile
      number set forth below or such other address, facsimile number or to the
      attention of such other Person as the Issuer may give notice to the
      Guarantee Trustee and the Holders:

                  Mercantile Bank Capital Trust I
                  c/o Mercantile Bank Corporation
                  5650 Byron Center Avenue SW
                  Wyoming, Michigan  49509
                  Facsimile No.: (616) 406-3701
                  Attention: Administrative Trustee

            (c)   if given to the Guarantee Trustee, at the address or facsimile
      number set forth below or such other address, facsimile number or to the
      attention of such other Person as the Guarantee Trustee may give notice to
      the Guarantor and the Holders:

                  Wilmington Trust Company
                  Rodney Square North
                  1100 North Market St.
                  Wilmington, Delaware 19890-1600
                  Facsimile No.: (302) 636-4140
                  Attention: Corporate Trust Administration

            (d)   if given to any Holder, at the address set forth on the books
      and records of the Issuer.

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

      SECTION 8.4 Benefit.

      This Guarantee Agreement is solely for the benefit of the Holders and is
not separately transferable from the Preferred Securities.

      SECTION 8.5 Governing Law.

      THIS GUARANTEE AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF EACH PARTY
HERETO, SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE
LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO ITS CONFLICT OF LAWS
PROVISIONS (OTHER THAN SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW).

      SECTION 8.6 Submission to Jurisdiction.

                                       18
<PAGE>

      ANY LEGAL ACTION OR PROCEEDING BY OR AGAINST ANY PARTY HERETO OR WITH
RESPECT TO OR ARISING OUT OF THIS GUARANTEE AGREEMENT MAY BE BROUGHT IN OR
REMOVED TO THE COURTS OF THE STATE OF NEW YORK, IN AND FOR THE COUNTY OF NEW
YORK, OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK
(IN EACH CASE SITTING IN THE BOROUGH OF MANHATTAN). BY EXECUTION AND DELIVERY OF
THIS GUARANTEE AGREEMENT, EACH PARTY ACCEPTS, FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID
COURTS (AND COURTS OF APPEALS THEREFROM) FOR LEGAL PROCEEDINGS ARISING OUT OF OR
IN CONNECTION WITH THIS GUARANTEE AGREEMENT.

      SECTION 8.7 Counterparts.

      This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.

                      [THE NEXT PAGE IS THE SIGNATURE PAGE]

                                       19
<PAGE>

      IN WITNESS WHEREOF, the undersigned have executed this Guarantee Agreement
as of the date first above written.

                                    MERCANTILE BANK CORPORATION

                                    By:   /S/ GERALD R. JOHNSON, JR
                                        ----------------------------------------
                                        Gerald R. Johnson, Jr.
                                        Chairman and Chief Executive Officer

                                    WILMINGTON TRUST COMPANY, not in its
                                    individual capacity, but solely as
                                    Guarantee Trustee

                                    By:   /S/ W. THOMAS MORRIS, II
                                        ----------------------------------------
                                        Name: W. Thomas Morris, II
                                        Title: Senior Financial Services Officer

                                        1

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