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EXHIBIT 4.7
PREFERRED SECURITIES GUARANTEE AGREEMENT
MERCANTILE BANK CORPORATION
AND
WILMINGTON TRUST COMPANY
DATED: AUGUST , 1999
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TABLE OF CONTENTS
PAGE
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ARTICLE I DEFINITIONS AND INTERPRETATION......................................................1
SECTION 1.1 Definitions and Interpretation .....................................................1
ARTICLE II TRUST INDENTURE ACT.................................................................5
SECTION 2.1 Trust Indenture Act; Application....................................................5
SECTION 2.2 Lists of Holders of Securities......................................................5
SECTION 2.3 Reports by the Preferred Guarantee Trustee..........................................5
SECTION 2.4 Periodic Reports to Preferred Guarantee Trustee.....................................6
SECTION 2.5 Evidence of Compliance with Conditions Precedent....................................6
SECTION 2.6 Events of Default; Waiver...........................................................6
SECTION 2.7 Event of Default; Notice............................................................6
SECTION 2.8 Conflicting Interests ..............................................................6
ARTICLE III POWERS, DUTIES AND RIGHTS OF PREFERRED GUARANTEE
TRUSTEE
SECTION 3.1 Powers and Duties of the Preferred Guarantee Trustee................................7
SECTION 3.2 Certain Rights of Preferred Guarantee Trustee.......................................8
SECTION 3.3 Not Responsible for Recitals or Issuance of Guarantee...............................10
ARTICLE IV PREFERRED GUARANTEE TRUSTEE.........................................................10
SECTION 4.1 Preferred Guarantee Trustee; Eligibility............................................10
SECTION 4.2 Appointment, Removal and Resignation of Preferred Guarantee
Trustees............................................................................11
ARTICLE V GUARANTEE...........................................................................12
SECTION 5.1 Guarantee...........................................................................12
SECTION 5.2 Waiver of Notice and Demand.........................................................12
SECTION 5.3 Obligations Not Affected............................................................12
SECTION 5.4 Rights of Holders...................................................................13
SECTION 5.5 Guarantee of Payment................................................................13
SECTION 5.6 Subrogation.........................................................................13
SECTION 5.7 Independent Obligations.............................................................14
ARTICLE VI LIMITATION OF TRANSACTIONS; SUBORDINATION...........................................14
SECTION 6.1 Limitation of Transactions..........................................................14
SECTION 6.2 Ranking.............................................................................14
ARTICLE VII TERMINATION.........................................................................14
SECTION 7.1 Termination.........................................................................14
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ARTICLE VIII INDEMNIFICATION; FEES...............................................................15
SECTION 8.1 Exculpation.........................................................................15
SECTION 8.2 Indemnification.....................................................................15
SECTION 8.3 Fees................................................................................15
ARTICLE IX MISCELLANEOUS.......................................................................16
SECTION 9.1 Successors and Assigns..............................................................16
SECTION 9.2 Amendments..........................................................................16
SECTION 9.3 Notices.............................................................................16
SECTION 9.4 Benefit.............................................................................17
SECTION 9.5 Governing Law.......................................................................17
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CROSS REFERENCE TABLE
Section of Trust Section of
Indenture Act of Guarantee
1939, as Amended Agreement
---------------- ---------
310(a) 4.1(a)
310(b) 4.1(c), 2.8
310(c) Inapplicable
311(a) 2.2(b)
311(b) 2.2(b)
311(c) Inapplicable
312(a) 2.2(a)
312(b) 2.2(b)
313 2.3
314(a) 2.4
314(b) Inapplicable
314(c) 2.5
314(d) Inapplicable
314(e) 1.1, 2.5, 3.2
314(f) 2.1, 3.2
315(a) 3.1(d)
315(b) 2.7
315(c) 3.1(c)
315(d) 3.1(d)
316(a) 1.1, 3.6, 5.4
316(b) 5.3
316(c) 8.2
317(a) Inapplicable
317(b) Inapplicable
318(a) 2.1(b)
318(b) 2.1
318(c) 2.1(a)
NOTE: This reconciliation and tie shall not, for any purpose, be deemed to be a
part of this Guarantee.
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PREFERRED SECURITIES GUARANTEE AGREEMENT
This PREFERRED SECURITIES GUARANTEE AGREEMENT (the "Preferred
Securities Guarantee"), dated as of July , 1999, is executed and delivered
by Mercantile Bank Corporation, a Michigan corporation (the "Guarantor"), and
Wilmington Trust Company, a Delaware banking corporation duly organized under
the laws of the State of Delaware, as trustee (acting not in its individual
capacity but solely as trustee, the "Preferred Guarantee Trustee"), for the
benefit of the Holders (as defined herein) from time to time of the Preferred
Securities (as defined herein) of MBWM Capital Trust I, a Delaware statutory
business trust (the "Trust").
WHEREAS, pursuant to an Amended and Restated Trust Agreement (the
"Trust Agreement") dated as of August , 1999 among the trustees of the
Trust named therein, the Guarantor, as sponsor, and the holders from time to
time of undivided beneficial interests in the assets of the Trust, the Trust is
issuing on the date hereof 1,400,000 preferred securities, and within 30 days
after the date of the prospectus relating to the public offering of the
preferred securities, a possible additional amount of up to 200,000 preferred
securities pursuant to an underwriters' over-allotment option, having an
aggregate liquidation amount of $14,000,000 to $16,000,000, designated the
% Cumulative Preferred Securities (the "Preferred Securities"); and
WHEREAS, as incentive for the Holders to purchase the Preferred
Securities, the Guarantor desires irrevocably and unconditionally to agree, to
the extent set forth in this Preferred Securities Guarantee, 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 Preferred Securities
Guarantee for the benefit of the Holders.
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 DEFINITIONS AND INTERPRETATION. In this Preferred
Securities Guarantee, unless the context otherwise requires:
(a) capitalized terms used in this Preferred Securities Guarantee but
not defined in the preamble above have the respective meanings assigned to them
in this Section 1.1;
(b) a term defined in the Trust Agreement has the same meaning when
used in this Preferred Securities Guarantee, unless otherwise defined in this
Preferred Securities Guarantee;
(c) a term defined anywhere in this Preferred Securities Guarantee has
the same meaning throughout;
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(d) all references to "the Preferred Securities Guarantee" or "this
Preferred Securities Guarantee" are to this Preferred Securities Guarantee as
modified, supplemented or amended from time to time;
(e) all references in this Preferred Securities Guarantee to Articles
and Sections are to Articles and Sections of this Preferred Securities
Guarantee, unless otherwise specified;
(f) a term defined in the Trust Indenture Act has the same meaning when
used in this Preferred Securities Guarantee, unless otherwise defined in this
Preferred Securities Guarantee or unless the context otherwise requires; and
(g) a reference to the singular includes the plural and vice versa.
"Affiliate" has the same meaning as given to that term in Rule 405 of
the Securities Act of 1933, as amended, or any successor rule thereunder.
"Business Day" means any day other than (a) a Saturday or Sunday, (b) a
day on which banking institutions in the State of Michigan are authorized or
required by law or executive order to remain closed, or (c) a day on which the
Preferred Guarantee Trustee's Corporate Trust Office is closed for business.
"Corporate Trust Office" means the office of the Preferred Guarantee
Trustee at which the corporate trust business of the Preferred Guarantee Trustee
shall, at any particular time, be principally administered, which office at the
date of execution of this Agreement is located at Rodney Square North, 1100
North Market Street, Wilmington, Delaware 19890-0001, Attn: Corporate Trust
Administration.
"Covered Person" means any Holder or beneficial owner of Preferred
Securities.
"Debt" means with respect to any person, whether recourse is to all or
a portion of the assets of such person and whether or not contingent: (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 or accrued liabilities arising in the ordinary course of
business); (v) every capital lease obligation of such person; and (vi) every
obligation of the type referred to in clauses (i) through (v) of another person
and all dividends of another person the payment of which, in either case, such
person has guaranteed or for which such person is responsible or liable,
directly or indirectly, as obligor or otherwise.
"Event of Default" means a default by the Guarantor on any of its
payment or other obligations under this Preferred Securities Guarantee.
"Guarantee Payments" means the following payments or distributions,
without duplication, with respect to the Preferred Securities, to the extent not
paid or made by the Trust: (i) any accrued and unpaid Distributions (as defined
in the Trust Agreement) that are required to
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be paid on such Preferred Securities to the extent the Trust shall have funds
available therefor, (ii) the redemption price, including all accrued and unpaid
Distributions to the date of redemption (the "Redemption Price") to the extent
the Trust has funds available therefor, with respect to any Preferred Securities
called for redemption by the Trust, and (iii) upon a voluntary or involuntary
dissolution, winding-up or termination of the Trust (other than in connection
with the distribution of Junior Subordinated Debentures to the Holders in
exchange for Preferred Securities as provided in the Trust Agreement), the
lesser of (a) the aggregate of the liquidation amount and all accrued and unpaid
Distributions on the Preferred Securities to the date of payment, to the extent
the Trust shall have funds available therefor, and (b) the amount of assets of
the Trust remaining available for distribution to Holders in liquidation of the
Trust (such lesser amount, the "Liquidation Distribution").
"Holder" shall mean any holder, as registered on the books and records
of the Trust of any Preferred Securities; provided, however, 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 Preferred Guarantee Trustee or any of their
respective Affiliates.
"Indemnified Person" means the Preferred Guarantee Trustee including in
its individual capacity, any Affiliate of the Preferred Guarantee Trustee, or
any officers, directors, shareholders, members, partners, employees,
representatives, nominees, custodians or agents of the Preferred Guarantee
Trustee.
"Indenture" means the Subordinated Indenture dated as of August ,
1999, among the Guarantor (the "Debenture Issuer") and Wilmington Trust Company,
as trustee, and any indenture supplemental thereto pursuant to which the Junior
Subordinated Debentures are to be issued to the Property Trustee of the Trust.
"Junior Subordinated Debentures" means the series of junior
subordinated deferrable interest debt securities of the Guarantor designated the
% Junior Subordinated Debentures due 2029 held by the Property Trustee of
the Trust.
"Liquidation Amount" means the stated valued of $10 per Trust Security.
"Liquidation Distribution" has the meaning in the definition of
Guarantee Payments.
"Majority in Liquidation Amount of the Preferred Securities" means,
except as provided by the Trust Indenture Act, a vote by Holders of Preferred
Securities, voting separately as a class, of more than 50% of the liquidation
amount (including the stated amount that would be paid on redemption,
liquidation or otherwise, plus accrued and unpaid Distributions to the date upon
which the voting percentages are determined) of all Preferred Securities.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by two Authorized Officers of such Person. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Preferred Securities Guarantee shall include:
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(a) a statement that each officer signing the Officers' Certificate has
read the covenant or condition and the definition 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;
(c) a statement that each such 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 such 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, or government or any
agency or political subdivision thereof, or any other entity of whatever nature.
"Preferred Guarantee Trustee" means Wilmington Trust Company not in its
individual capacity but solely as trustee, until a Successor Preferred Guarantee
Trustee has been appointed and has accepted such appointment pursuant to the
terms of this Preferred Securities Guarantee and thereafter means each such
Successor Preferred Guarantee Trustee.
"Redemption Price" has the meaning provided in the definition of
Guarantee Payments.
"Responsible Officer" means, with respect to the Preferred Guarantee
Trustee, any officer within the Corporate Trust Administration or Business
Development Office of the Preferred Guarantee Trustee, including any
vice-president, any assistant vice-president, any assistant secretary, the
treasurer, any assistant treasurer or other officer of the Corporate Trust
Office of the Preferred Guarantee Trustee customarily performing functions
similar to those performed by any of the above designated officers 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.
"Successor Preferred Guarantee Trustee" means a successor Preferred
Guarantee Trustee possessing the qualifications to act as Preferred Guarantee
Trustee under Section 4.1.
"Senior and Subordinated Debt" means the principal of (and premium, if
any) and interest, if any (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), on Debt of the Guarantor, whether incurred on or prior to the date
of the Indenture or thereafter incurred, unless, in the instrument creating or
evidencing the same or pursuant to which the same is outstanding, it is provided
that such obligations are not superior in right of payment to the Preferred
Securities Guarantee or to other Debt which is pari passu with, or subordinated
to, the Preferred Securities Guarantee; provided, however, that Senior and
Subordinated Debt shall not be deemed to include (i) any Debt of the Guarantor
which when incurred and without respect to any election under section 1111(b) of
the United States Bankruptcy Code of 1978, as amended, was without recourse to
the Guarantor, (ii) any Debt of
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the Guarantor to any of its subsidiaries, (iii) any Debt to any employee of the
Guarantor, (iv) any Debt which by its terms is subordinated to trade accounts
payable or accrued liabilities arising in the ordinary course of business to the
extent that payments made to the holders of such Debt by the holders of the
Junior Subordinated Debentures as a result of the subordination provisions of
the Indenture would be greater than they otherwise would have been as a result
of any obligation of such holders to pay amounts over to the obligees on such
trade accounts payable or accrued liabilities arising in the ordinary course of
business as a result of the subordination provisions to which such Debt is
subject, (v) the Junior Subordinated Debentures, and (vi) any other debt
securities issued pursuant to the Indenture.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 TRUST INDENTURE ACT; APPLICATION.
(a) This Preferred Securities Guarantee is subject to the provisions of
the Trust Indenture Act that are required to be part of this Preferred
Securities Guarantee and shall, to the extent applicable, be governed by such
provisions; and
(b) If and to the extent that any provision of this Preferred
Securities Guarantee limits, qualifies or conflicts with the duties imposed by
Sections 310 to 317, inclusive, of the Trust Indenture Act, such imposed duties
shall control.
SECTION 2.2 LISTS OF HOLDERS OF SECURITIES.
(a) In the event the Preferred Guarantee Trustee is not also acting in
the capacity of the Property Trustee under the Trust Agreement, the Guarantor
shall provide the Preferred Guarantee Trustee with a list, in such form as the
Preferred Guarantee Trustee may reasonably require, of the names and addresses
of the Holders of the Preferred Securities ("List of Holders") (i) on or before
[6 MONTHS AFTER ISSUANCE] 15 and [ISSUANCE ANNIVERSARY MONTH] 15 of each year,
and (ii) at any other time within 30 days of receipt by the Guarantor of a
written request for a List of Holders, as of a date no more than 15 days before
such List of Holders is given to the Preferred Guarantee Trustee provided, that
the Guarantor shall not be obligated to provide such List of Holders at any time
the List of Holders does not differ from the most recent List of Holders given
to the Preferred Guarantee Trustee by the Guarantor. The Preferred Guarantee
Trustee may destroy any List of Holders previously given to it on receipt of a
new List of Holders.
(b) The Preferred Guarantee Trustee shall comply with its obligations
under Sections 311(a), 311(b) and Section 312(b) of the Trust Indenture Act.
SECTION 2.3 REPORTS BY THE PREFERRED GUARANTEE TRUSTEE. On or before
[ISSUANCE ANNIVERSARY MONTH] 15 of each year, the Preferred Guarantee Trustee
shall provide to the Holders of the Preferred Securities such reports as are
required by Section 313 of the Trust Indenture Act, if any, in the form and in
the manner provided by Section 313 of the
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Trust Indenture Act. The Preferred Guarantee Trustee shall also comply with the
requirements of Section 313(d) of the Trust Indenture Act.
SECTION 2.4 PERIODIC REPORTS TO PREFERRED GUARANTEE TRUSTEE. The
Guarantor shall provide to the Preferred Guarantee Trustee such documents,
reports and information as required by Section 314 of the Trust Indenture Act,
if any, and the compliance certificate required by Section 314 of the Trust
Indenture Act in the form, in the manner and at the times required by Section
314 of the Trust Indenture Act.
SECTION 2.5 EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT. The
Guarantor shall provide to the Preferred Guarantee Trustee such evidence of
compliance with the conditions precedent, if any, provided for in this Preferred
Securities Guarantee that relate to any of the matters set forth in Section
314(c) of the Trust Indenture Act. Any certificate or opinion required to be
given by an officer pursuant to Section 314(c)(1) may be given in the form of an
Officers' Certificate.
SECTION 2.6 EVENTS OF DEFAULT; WAIVER. The Holders of a Majority in
liquidation amount of Preferred Securities may, by vote, on behalf of the
Holders of all of the Preferred Securities, waive any past Event of Default and
its consequences. Upon such waiver, any such Event of Default shall cease to
exist, and any Event of Default arising therefrom shall be deemed to have been
cured, for every purpose of this Preferred Securities Guarantee, but no such
waiver shall extend to any subsequent or other default or Event of Default or
impair any right consequent thereon.
SECTION 2.7 EVENT OF DEFAULT; NOTICE.
(a) The Preferred Guarantee Trustee shall, within 90 days after the
occurrence of an Event of Default, transmit by mail, first class postage
prepaid, to the Holders of the Preferred Securities, notices of all Events of
Default actually known to a Responsible Officer of the Preferred Guarantee
Trustee, unless such defaults have been cured before the giving of such notice.
(b) The Preferred Guarantee Trustee shall not be deemed to have
knowledge of any Event of Default unless the Preferred Guarantee Trustee shall
have received a properly addressed written notice, or of which a Responsible
Officer of the Preferred Guarantee Trustee charged with the administration of
the Trust Agreement shall have obtained actual knowledge.
SECTION 2.8 CONFLICTING INTERESTS. The Trust Agreement shall be deemed
to be specifically described in this Preferred Securities Guarantee for the
purposes of clause (i) of the first proviso contained in Section 310(b) of the
Trust Indenture Act.
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ARTICLE III
POWERS, DUTIES AND RIGHTS OF
PREFERRED GUARANTEE TRUSTEE
SECTION 3.1 POWERS AND DUTIES OF THE PREFERRED GUARANTEE TRUSTEE.
(a) This Preferred Securities Guarantee shall be held by the Preferred
Guarantee Trustee for the benefit of the Holders of the Preferred Securities,
and the Preferred Guarantee Trustee shall not transfer this Preferred Securities
Guarantee to any Person except a Holder of Preferred Securities exercising such
Holder's rights pursuant to Section 5.4(b) or to a Successor Preferred Guarantee
Trustee on acceptance by such Successor Preferred Guarantee Trustee of its
appointment to act as Successor Preferred Guarantee Trustee. The right, title
and interest of the Preferred Guarantee Trustee shall automatically vest in any
Successor Preferred Guarantee Trustee, 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 Preferred Guarantee
Trustee.
(b) If an Event of Default actually known to a Responsible Officer of
the Preferred Guarantee Trustee has occurred and is continuing, the Preferred
Guarantee Trustee shall enforce this Preferred Securities Guarantee for the
benefit of the Holders of the Preferred Securities.
(c) The Preferred Guarantee Trustee, before the occurrence of any Event
of Default and after the curing of all Events of Default that may have occurred,
shall undertake to perform only such duties as are specifically set forth in
this Preferred Securities Guarantee, and no implied covenants shall be read into
this Preferred Securities Guarantee against the Preferred Guarantee Trustee. In
case an Event of Default has occurred (that has not been cured or waived
pursuant to Section 2.6) and is actually known to a Responsible Officer of the
Preferred Guarantee Trustee, the Preferred Guarantee Trustee shall exercise such
of the rights and powers vested in it by this Preferred Securities Guarantee,
and use the same degree of care and skill in its exercise thereof, as a prudent
person would exercise or use under the circumstances in the conduct of such
person's own affairs.
(d) No provision of this Preferred Securities Guarantee shall be
construed to relieve the Preferred Guarantee Trustee from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) prior to the occurrence of any Event of Default and
after the curing or waiving of all such Events of
Default that may have occurred:
(A) the duties and obligations of the Preferred
Guarantee Trustee shall be determined solely by
the express provisions of this Preferred
Securities Guarantee, and the Preferred Guarantee
Trustee shall not be liable except for the
performance of such duties and obligations as are
specifically set forth in this Preferred
Securities Guarantee, and no implied covenants or
obligations shall be read into this Preferred
Securities Guarantee against the Preferred
Guarantee Trustee; and
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(B) in the absence of bad faith on the part of the
Preferred Guarantee Trustee, the Preferred
Guarantee Trustee may conclusively rely, as to
the truth of the statements and the correctness
of the opinions expressed therein, upon any
certificates or opinions furnished to the
Preferred Guarantee Trustee and conforming to the
requirements of this Preferred Securities
Guarantee; but in the case of any such
certificates or opinions that by any provision
hereof are specifically required to be furnished
to the Preferred Guarantee Trustee, the Preferred
Guarantee Trustee shall be under a duty to
examine the same to determine whether or not they
conform to the requirements of this Preferred
Securities Guarantee;
(ii) the Preferred Guarantee Trustee shall not be liable
for any error of judgment made in good faith by a
Responsible Officer of the Preferred Guarantee
Trustee;
(iii) the Preferred 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
Preferred Guarantee Trustee, or exercising any trust
or power conferred upon the Preferred Guarantee
Trustee under this Preferred Securities Guarantee;
and
(iv) no provision of this Preferred Securities Guarantee shall
require the Preferred Guarantee Trustee to expend or risk
its own funds or otherwise incur personal financial
liability in the performance of any of its duties or in
the exercise of any of its rights or powers if the
Preferred Guarantee Trustee shall have reasonable grounds
for believing that the repayment of such funds or
liability is not reasonably assured to it under the terms
of this Preferred Securities Guarantee or indemnity,
reasonably satisfactory to the Preferred Guarantee
Trustee, against such risk or liability is not reasonably
assured to it.
SECTION 3.2 CERTAIN RIGHTS OF PREFERRED GUARANTEE TRUSTEE.
(a) Subject to the provisions of Section 3.1:
(i) The Preferred Guarantee Trustee may conclusively rely
upon, and shall be fully protected in acting or
refraining from acting 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 believed by it to be genuine
and to have been signed, sent or presented by the
proper party or parties.
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(ii) Any direction or act of the Guarantor contemplated by
this Preferred Securities Guarantee shall be
sufficiently evidenced by an Officers' Certificate or
other written notice or instruction signed by the
Guarantor.
(iii) Whenever, in the administration of this Preferred
Securities Guarantee, the Preferred Guarantee Trustee
shall deem it desirable that a matter be proved or
established before taking, suffering or omitting any
action hereunder, the Preferred Guarantee Trustee
(unless other evidence is herein specifically
prescribed) may, in the absence of bad faith on its
part, request and conclusively rely upon an Officers'
Certificate which, upon receipt of such request,
shall be promptly delivered by the Guarantor.
(iv) The Preferred Guarantee Trustee shall have no duty to
see to any recording, filing or registration of any
instrument (or any rerecording, refiling or
registration thereof).
(v) The Preferred Guarantee Trustee may consult with
counsel, and the written advice or opinion of such
counsel with respect to legal matters shall be full
and complete authorization and protection in respect
of any action taken, suffered or omitted by it
hereunder in good faith and in accordance with such
advice or opinion. Such counsel may be counsel to the
Guarantor or any of its Affiliates and may include
any of its employees. The Preferred Guarantee Trustee
shall have the right at any time to seek instructions
concerning the administration of this Preferred
Securities Guarantee from any court of competent
jurisdiction.
(vi) The Preferred Guarantee Trustee shall be under no
obligation to exercise any of the rights or powers
vested in it by this Preferred Securities Guarantee
at the request or direction of any Holder, unless
such Holder shall have provided to the Preferred
Guarantee Trustee such security and indemnity,
reasonably satisfactory to the Preferred Guarantee
Trustee, against the costs, expenses (including
attorneys' fees and expenses and the expenses of the
Preferred Guarantee Trustee's agents, nominees or
custodians) 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 Preferred Guarantee Trustee;
provided that, nothing contained in this Section
3.2(a)(vi) shall be taken to relieve the Preferred
Guarantee Trustee, upon the occurrence of an Event of
Default, of its obligation to exercise the rights and
powers vested in it by this Preferred Securities
Guarantee.
(vii) The Preferred 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 Preferred Guarantee Trustee, in its
discretion, may make such further inquiry or
investigation into such facts or matters as it may
see fit.
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(viii) The Preferred Guarantee Trustee may execute any of
the trusts or powers hereunder or perform any duties
hereunder either directly or by or through agents,
nominees, custodians or attorneys, and the Preferred
Guarantee Trustee shall not be responsible for any
misconduct or negligence on the part of any agent or
attorney appointed in good faith by it hereunder.
(ix) Any action taken by the Preferred Guarantee
Trustee or its agents hereunder shall bind the
Holders of the Preferred Securities, and the
signature of the Preferred Guarantee Trustee or its
agents alone shall be sufficient and effective to
perform any such action. No third party shall be
required to inquire as to the authority of the
Preferred Guarantee Trustee to so act or as to its
compliance with any of the terms and provisions of
this Preferred Securities Guarantee, both of which
shall be conclusively evidenced by the Preferred
Guarantee Trustee's or its agent's taking such
action.
(x) Whenever in the administration of this Preferred
Securities Guarantee the Preferred Guarantee Trustee
shall deem it desirable to receive instructions with
respect to enforcing any remedy or right or taking
any other action hereunder, the Preferred Guarantee
Trustee (i) may request instructions from the Holders
of a Majority in liquidation amount of the Preferred
Securities, (ii) may refrain from enforcing such
remedy or right or taking such other action until
such instructions are received, and (iii) shall be
protected in conclusively relying on or acting in
accordance with such instructions.
(b) No provision of this Preferred Securities Guarantee shall be deemed
to impose any duty or obligation on the Preferred 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
Preferred 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 Preferred Guarantee Trustee shall be construed to be a duty.
SECTION 3.3 NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF GUARANTEE. The
recitals contained in this Preferred Securities Guarantee shall be taken as the
statements of the Guarantor, and the Preferred Guarantee Trustee does not assume
any responsibility for their correctness. The Preferred Guarantee Trustee makes
no representation as to the validity or sufficiency of this Preferred Securities
Guarantee.
ARTICLE IV
PREFERRED GUARANTEE TRUSTEE
SECTION 4.1 PREFERRED GUARANTEE TRUSTEE; ELIGIBILITY.
(a) There shall at all times be a Preferred Guarantee Trustee
which shall:
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(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing business under
the laws of the United States of America or any state
or territory thereof or of the District of Columbia,
or a corporation or Person permitted by the
Securities and Exchange Commission to act as an
institutional trustee under the Trust Indenture Act,
authorized under such laws to exercise corporate
trust powers, having a combined capital and surplus
of at least $50,000,000, and subject to supervision
or examination by federal, state, territorial or
District of Columbia authority. If such corporation
publishes reports of condition at least annually,
pursuant to law or to the requirements of the
supervising or examining authority referred to above,
then, for the purposes of this Section 4.1(a)(ii),
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 Preferred Guarantee Trustee shall cease to be
eligible to so act under Section 4.1(a), the Preferred Guarantee Trustee shall
immediately resign in the manner and with the effect set out in Section 4.2(c).
(c) If the Preferred Guarantee Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Preferred Guarantee Trustee and Guarantor shall in all
respects comply with the provisions of Section 310(b) of the Trust Indenture
Act.
SECTION 4.2 APPOINTMENT, REMOVAL AND RESIGNATION OF PREFERRED GUARANTEE
TRUSTEES.
(a) Subject to Section 4.2(b), the Preferred Guarantee Trustee may be
appointed or removed without cause at any time by the Guarantor.
(b) The Preferred Guarantee Trustee shall not be removed in accordance
with Section 4.2(a) until a Successor Preferred Guarantee Trustee has been
appointed and has accepted such appointment by written instrument executed by
such Successor Preferred Guarantee Trustee and delivered to the Guarantor.
(c) The Preferred Guarantee Trustee appointed to office shall hold
office until a Successor Preferred Guarantee Trustee shall have been appointed
or until its removal or resignation. The Preferred Guarantee Trustee may resign
from office (without need for prior or subsequent accounting) by an instrument
in writing executed by the Preferred Guarantee Trustee and delivered to the
Guarantor, which resignation shall not take effect until a Successor Preferred
Guarantee Trustee has been appointed and has accepted such appointment by
instrument in writing executed by such Successor Preferred Guarantee Trustee and
delivered to the Guarantor and the resigning Preferred Guarantee Trustee.
(d) If no Successor Preferred Guarantee Trustee shall have been
appointed and accepted appointment as provided in this Section 4.2 within 30
days after delivery to the Guarantor of an instrument of resignation, the
resigning Preferred Guarantee Trustee may
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petition any court of competent jurisdiction for appointment of a Successor
Preferred Guarantee Trustee. Such court may thereupon, after prescribing such
notice, if any, as it may deem proper, appoint a Successor Preferred Guarantee
Trustee.
(e) No Preferred Guarantee Trustee shall be liable for the acts or
omissions to act of any Successor Preferred Guarantee Trustee.
(f) Upon termination of this Preferred Securities Guarantee or removal
or resignation of the Preferred Guarantee Trustee pursuant to this Section 4.2,
the Guarantor shall pay to the Preferred Guarantee Trustee all amounts accrued
to the date of such termination, removal or resignation.
ARTICLE V
GUARANTEE
SECTION 5.1 GUARANTEE. The Guarantor irrevocably and unconditionally
agrees to pay in full to the Holders the Guarantee Payments (without duplication
of amounts theretofore paid by the Trust), as and when due, regardless of any
defense, right of set-off or counterclaim that the Trust 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 Trust to pay such amounts to the Holders.
SECTION 5.2 WAIVER OF NOTICE AND DEMAND. The Guarantor hereby waives
notice of acceptance of this Preferred Securities Guarantee and of any liability
to which it applies or may apply, presentment, demand for payment, any right to
require a proceeding first against the Trust 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 Preferred Securities Guarantee
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 Trust of any express or implied agreement,
covenant, term or condition relating to the Preferred Securities to be performed
or observed by the Trust;
(b) the extension of time for the payment by the Trust of all or any
portion of the Distributions, Redemption Price, Liquidation Distribution or any
other sums payable under the terms of the Preferred Securities or the extension
of time for the performance of any other obligation under, arising out of, or in
connection with, the Preferred Securities (other than an extension of time for
payment of Distributions, Redemption Price, Liquidation Distribution or other
sum payable that results from the extension of any interest payment period on
the Junior Subordinated Debentures or any extension of the maturity date of the
Junior Subordinated Debentures permitted by the Indenture);
(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
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pursuant to the terms of the Preferred Securities, or any action on the part of
the Trust 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 Trust or any of the assets of the
Trust;
(e) any invalidity of, or defect or deficiency in, the Preferred
Securities;
(f) any failure or omission to receive any regulatory approval or
consent required in connection with the Preferred Securities (or the Common
Securities issued by the Trust), including the failure to receive a approval of
the Board of Governors of the Federal Reserve System required for the redemption
of the Preferred Securities;
(g) the settlement or compromise of any obligation guarantied hereby or
hereby incurred; or
(h) 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 consent of, the Guarantor with respect to the happening of any of the
foregoing.
SECTION 5.4 RIGHTS OF HOLDERS.
(a) The Holders of a Majority in Liquidation Amount of the Preferred
Securities have the right to direct the time, method and place of conducting of
any proceeding for any remedy available to the Preferred Guarantee Trustee in
respect of this Preferred Securities Guarantee or exercising any trust or power
conferred upon the Preferred Guarantee Trustee under this Preferred Securities
Guarantee.
(b) Any Holder of Preferred Securities may institute a legal proceeding
directly against the Guarantor to enforce its rights under this Preferred
Securities Guarantee, without first instituting a legal proceeding against the
Trust, the Preferred Guarantee Trustee or any other Person.
SECTION 5.5 GUARANTEE OF PAYMENT. This Preferred Securities Guarantee
creates a guarantee of payment and not of collection.
SECTION 5.6 SUBROGATION. The Guarantor shall be subrogated to all (if
any) rights of the Holders of Preferred Securities against the Trust in respect
of any amounts paid to such Holders by the Guarantor under this Preferred
Securities Guarantee; provided, however, that the Guarantor shall not (except to
the extent required by mandatory provisions of law) be entitled to enforce or
exercise any right that it may acquire by way of subrogation or any indemnity,
reimbursement or other agreement, in all cases as a result of payment under this
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Preferred Securities Guarantee, if, at the time of any such payment, any amounts
are due and unpaid under this Preferred Securities Guarantee. 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.
SECTION 5.7 INDEPENDENT OBLIGATIONS. The Guarantor acknowledges that
its obligations hereunder are independent of the obligations of the Trust 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 Preferred Securities Guarantee notwithstanding the occurrence of
any event referred to in subsections (a) through (g), inclusive, of Section 5.3.
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 LIMITATION OF TRANSACTIONS. So long as any Preferred
Securities remain outstanding, if there shall have occurred and be continuing an
Event of Default or an event of default under the Trust Agreement, then (a) the
Guarantor shall not declare or pay any dividend or distributions on, or redeem,
purchase, acquire, or make a liquidation payment with respect to, any of its
capital stock, (b) the Guarantor shall not make any payment of interest,
principal or premium, if any, on or repay, repurchase or redeem any debt
securities issued by the Guarantor (including other Junior Subordinated
Debentures) which rank pari passu with or junior in interest to the Junior
Subordinated Debentures or (c) the Guarantor shall not make any guarantee
payments with respect to any guarantee by the guarantor of the debt securities
of any subsidiary of the Guarantor if such guarantee ranks pari passu or junior
in interest to the Junior Subordinated Debentures (other than (a) dividends or
distributions payable in common stock, (b) any declaration of a dividend in
connection with the implementation of a shareholders' rights plan, or the
issuance of stock under any such plan in the future or the redemption or
repurchase of any such rights pursuant thereto, (c) payments under this
Preferred Securities Guarantee and (d) purchases of common stock related to the
issuances of common stock or rights under any of the Guarantor's benefit plans
for its directors, officers or employees).
SECTION 6.2 RANKING. This Preferred Securities Guarantee will
constitute an unsecured obligation of the Guarantor and will rank subordinate
and junior in right of payment to all Senior and Subordinated Debt of the
Guarantor.
ARTICLE VII
TERMINATION
SECTION 7.1 TERMINATION. This Preferred Securities Guarantee shall
terminate upon (i) full payment of the Redemption Price of all Preferred
Securities, (ii) upon full payment of the amounts payable in accordance with the
Trust Agreement upon liquidation of the Trust or (iii) upon distribution of the
Junior Subordinated Debentures to the Holders of the Preferred Securities.
Notwithstanding the foregoing, this Preferred Securities Guarantee will continue
to be effective or will be reinstated, as the case may be, if at any time any
Holder of Preferred
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Securities must restore payment of any sums paid under the Preferred Securities
or under this Preferred Securities Guarantee.
ARTICLE VIII
INDEMNIFICATION; FEES
SECTION 8.1 EXCULPATION.
(a) No Indemnified Person shall be liable, responsible or accountable
in damages or otherwise to the Guarantor or any Covered Person for any loss,
damage or claim incurred by reason of any act or omission performed or omitted
by such Indemnified Person in good faith in accordance with this Preferred
Securities Guarantee and in a manner that such Indemnified Person reasonably
believed to be within the scope of the authority conferred on such Indemnified
Person by this Preferred Securities Guarantee or by law, except that an
Indemnified Person shall be liable for any such loss, damage or claim incurred
by reason of such Indemnified Person's negligence or willful misconduct with
respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in good
faith upon the records of the Guarantor and upon such information, opinions,
reports or statements presented to the Guarantor by any Person as to matters the
Indemnified Person reasonably believes are within such other Person's
professional or expert competence and who has been selected with reasonable care
by or on behalf of the Guarantor, including information, opinions, reports or
statements as to the value and amount of the assets, liabilities, profits,
losses, or any other facts pertinent to the existence and amount of assets from
which Distributions to Holders of Preferred Securities might properly be paid.
SECTION 8.2 INDEMNIFICATION. The Guarantor agrees to indemnify each
Indemnified Person for, and to hold each Indemnified Person harmless against,
any cost, loss, liability or expense incurred without negligence or bad faith on
its part, arising out of or in connection with the acceptance or administration
of the trust or trusts hereunder, including the costs and expenses (including
reasonable legal fees and expenses) of defending itself against, or
investigating, any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder. The obligation to
indemnify as set forth in this Section 8.2 shall survive the termination of this
Preferred Securities Guarantee.
SECTION 8.3 FEES. The Guarantor agrees except as otherwise expressly
provided herein, to reimburse the Preferred Trustee upon request for all
reasonable expenses, disbursements and advances incurred or made by the
Preferred Trustee in accordance with any provision of this Preferred Securities
Guarantee (including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such expense, disbursement
or advance as may be attributable to such Guarantee Trustee's negligence, bad
faith or willful misconduct.
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ARTICLE IX
MISCELLANEOUS
SECTION 9.1 SUCCESSORS AND ASSIGNS. All guaranties and agreements
contained in this Preferred Securities Guarantee 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.
SECTION 9.2 AMENDMENTS. Except with respect to any changes that do not
materially adversely affect the rights of Holders (in which case no consent of
Holders will be required), this Preferred Securities Guarantee may only be
amended with the prior approval of the Holders of at least a Majority in
liquidation amount of the Preferred Securities. The provisions of Article VI of
the Trust Agreement with respect to meetings of Holders of the Securities apply
to the giving of such approval.
SECTION 9.3 NOTICES. All notices provided for in this Preferred
Securities Guarantee shall be in writing, duly signed by the party giving such
notice, and shall be delivered, telecopied or mailed by registered or certified
mail, as follows:
(a) If given to the Preferred Guarantee Trustee, at the Preferred
Guarantee Trustee's mailing address set forth below (or such other address as
the Preferred Guarantee Trustee may give notice of to the Holders of the
Preferred Securities):
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Administration
(b) If given to the Guarantor, at the Guarantor's mailing address set
forth below (or such other address as the Guarantor may give notice of to the
Holders of the Preferred Securities):
Mercantile Bank Corporation
216 North Division Avenue
Grand Rapids, Michigan 49503
Attention: Jerry R. Johnson, Jr.
(c) If given to any Holder of Preferred Securities, at the address set
forth on the books and records of the Trust.
All such notices 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.
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SECTION 9.4 BENEFIT. This Preferred Securities Guarantee is solely for
the benefit of the Holders of the Preferred Securities and, subject to Section
3.1(a), is not separately transferable from the Preferred Securities.
SECTION 9.5. GOVERNING LAW. THIS PREFERRED SECURITIES GUARANTEE SHALL
BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF MICHIGAN; PROVIDED THAT THE RIGHTS, IMMUNITIES, DUTIES AND THE
STANDARD OF CARE OF THE PREFERRED GUARANTEE TRUSTEE SHALL BE GOVERNED BY
DELAWARE LAW.
THIS PREFERRED SECURITIES GUARANTEE is executed as of the day and year
first above written.
MERCANTILE BANK CORPORATION,
as Guarantor
By:____________________________________
Gerald R. Johnson, Jr.
WILMINGTON TRUST COMPANY,
As Preferred Guarantee Trustee
By:____________________________________
Name:__________________________________
Title:_________________________________
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