Exhibit 10.3
Amendment to Employment Agreements
     THIS AMENDMENT is made as of this 15th day of May, 2009 by and among
Mercantile Bank Corporation, a Michigan corporation (the “Company”), Mercantile
Bank of Michigan, a Michigan banking corporation (the “Bank”, and collectively
with the Company, the “Employers,” and each, an “Employer”) and each of the
Employees named on the signature lines below (each, an “Employee” and
collectively, the “Employees.”)
RECITALS
     A. The Company, the Bank and each Employee have previously entered into an
Employment Agreement, as such agreement has been previously amended, each as
listed on Exhibit A attached hereto (each, as amended, an “Employment
Agreement”, and collectively, the “Employment Agreements”).
     B. The Company anticipates entering into a Letter Agreement and Securities
Purchase Agreement (the “Investment Agreement”) with the United States
Department of Treasury (“Treasury”) that provides for the Company’s
participation in the Treasury’s TARP Capital Purchase Program (the “CPP”). For
the Company to participate in the CPP, and as a condition to the closing of the
investment contemplated by the Investment Agreement, the Company is required to
establish specified standards for incentive compensation to its senior executive
officers and to make changes to its compensation arrangements.
     C. The Company, the Bank and each Employee desire to amend the Employment
Agreements and other applicable compensation arrangements to comply with these
requirements.
TERMS OF AGREEMENT
     In consideration of the mutual covenants and obligations set forth herein,
and as consideration for the benefits that the Employees will receive as a
result of the Company’s participation in the CPP, the parties agree as follows:
     1. No Golden Parachute Payments. During the CPP Participation Period, the
Employers shall not make any golden parachute payment to an Employee that is
prohibited by EESA as a result of the Company’s participation in the CPP.
     2. Recovery of Bonus and Incentive Compensation. Any bonus, retention award
and incentive compensation paid to an Employee during the CPP Participation
Period is subject to recovery or “clawback” by the Employers if the payments
were based on statements of earnings, revenues, gains or other criteria that are
later found to be materially inaccurate.
     3. Compensation Program Amendments. Each of the Employers’ compensation,
bonus, incentive and other benefit plans, arrangements and agreements (including
the Employment Agreements) (collectively, the “Benefit Plans”) with respect to
each Employee is hereby amended to the extent necessary to give effect to
Paragraphs (1) and (2) above.

 

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     Further, the Company is required to review the Benefit Plans to ensure that
they do not encourage senior executive officers to take unnecessary and
excessive risks that threaten the value of the Company. To the extent any such
review requires further revisions to any of the Benefit Plans, each Employee and
the Employers agree to negotiate such changes promptly and in good faith.
     4. Definitions. Terms used in this Amendment as defined as follows:
          (a) “Senior executive officer” means an individual who is one of the
top five most highly paid executives of the Company whose compensation is
required to be disclosed pursuant to the Securities Exchange Act of 1934 and any
regulations issued thereunder, and as otherwise defined in or interpreted under
Section 111(a)(1) of EESA.
          (b) “Golden parachute payment” means any payment to a senior executive
officer for departure from an Employer for any reason, except for payments for
services performed or benefits accrued, and as otherwise defined in or
interpreted under Section 111(a)(2) of EESA.
          (c) “EESA” means the Emergency Economic Stabilization Act of 2008, as
amended by the American Recovery and Reinvestment Act of 2009, as both such acts
are implemented by guidance or regulation issued by the Department of Treasury.
          (d) “CPP Participation Period” means the period in which any
obligation arising from financial assistance provided under the TARP remains
outstanding, but shall not include any period during which the Federal
Government only holds warrants to purchase common stock of the Company.
     5. Application and Rules of Interpretation. If the Company does not
participate or ceases at any time to participate in the CPP, this Amendment
shall be of no further force and effect and shall automatically terminate. This
Amendment is intended to, and shall be interpreted, administered and construed
to comply with, Section 111 of EESA (and, to the maximum extent consistent with
the preceding, to permit operation of the Benefit Plans in accordance with their
terms before giving effect to this Amendment.) If an Employee terminates
employment during the CPP Participation Period and would otherwise be entitled
to payments under the Employment Agreement that may not be paid because of the
restrictions set forth in this Amendment, then, to the extent lawful to do so,
such payments will be made by the Bank (or if applicable, the Company) at the
earliest date at which it reasonably anticipates that the making of the payment
will not violate applicable law. In the event that the preceding sentence is
reasonably expected to result in the imposition of federal income tax and
penalty tax against an Employee before payments under this Paragraph (5) have
commenced to such Employee, and the amount of such tax and penalty is
substantial in relation to such payments, then the preceding sentence shall not
apply to the affected Employee or Employees and this Paragraph (5) shall be
deemed amended to remove the preceding sentence with respect to such affected
Employee(s).

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     6. Miscellaneous. To the extent not subject to federal law, this Amendment
will be governed by and construed in accordance with the laws of the State of
Michigan. This Amendment may be executed in two or more counterparts, each of
which will be deemed to be an original. Except as amended herein, the Employment
Agreements shall remain in full force and effect. This agreement may be amended
with respect to any Employee by an agreement in writing signed by the Employee
and each of the Employers.
     7. Additional Restriction. Michael H. Price and the Employers agree that
(a) the Employers shall not pay or accrue any bonus, retention award or
incentive compensation to or for him during the CPP Participation Period in
violation of Section 111(b)(3)(D) of EESA, (b) no provision of the Employment
Agreement among Mr. Price and the Employers, including the provisions of
Section 4 of the Employment Agreement, shall be construed to require any such
payment or accrual, and (c) if any agreement or plan exists or arises that
provides for any such payment or accrual, the agreement or plan shall be amended
as the Employers shall request, to the extent necessary so that the agreement or
plan will not violate such Section 111(b)(3)(D).
     The parties have executed this Amendment as of the day and year first above
written.

            MERCANTILE BANK CORPORATION
      By:   /s/ Michael H. Price         Michael H. Price        Chairman of the
Board, President and
Chief Executive Officer        MERCANTILE BANK OF MICHIGAN
      By:   /s/ Michael H. Price         Michael H. Price        Chairman of the
Board and
Chief Executive Officer        /s/ Michael H. Price       Michael H. Price     
      /s/ Robert B. Kaminski, Jr.       Robert B. Kaminski, Jr.            /s/
Charles E. Christmas       Charles E. Christmas         

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EXHIBIT A
Employment Agreements
A. Michael H. Price
     Employment Agreement dated as of October 18, 2001, as amended by a letter
amendment dated October 17, 2002 and by a Second Amendment dated as of
November 17, 2005.
B. Robert B. Kaminski, Jr.
     Employment Agreement dated as of October 18, 2001, as amended by a letter
amendment dated October 17, 2002, a letter amendment dated October 28, 2004 and
a Third Amendment dated as of November 17, 2005.
C. Charles E. Christmas
     Employment Agreement dated as of October 18, 2001, as amended by a letter
amendment dated October 17, 2002 and by a Second Amendment dated as of
November 17, 2005.

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