Document:

EX-10.2

UST 449

Exhibit 10.2

United States Department of the Treasury

1500 Pennsylvania Avenue, NW

Washington, D.C. 20220

May 15, 2009

Ladies and Gentlemen:

     Reference is made to that certain Letter Agreement incorporating the Securities Purchase
Agreement – Standard Terms dated of as of the date of this letter agreement (the “Securities
Purchase Agreement”) between United States Department of Treasury (“Investor”) and the company
named on the signature page hereto (the “Company”). Capitalized terms used but not defined herein
shall have the meanings assigned to them in the Securities Purchase Agreement.

     The American Recovery and Reinvestment Act of 2009, as it may be amended from time to time
(the “Act”), includes provisions relating to executive compensation and other matters that may be
inconsistent with the Securities Purchase Agreement, the Warrant and the Certificate of Designation
(the “Transaction Documents”). Accordingly, Investor and the Company desire to confirm their
understanding as follows:

     1. Notwithstanding anything in the Transaction Documents to the contrary, in the event that
the Act or any rules or regulations promulgated thereunder are inconsistent with any of the terms
of the Transaction Documents, the Act and such rules and regulations shall control.

     2. For the avoidance of doubt (and without limiting the generality of Paragraph 1):

     (a) the provisions of Section 111 of the Emergency Economic Stabilization Act of 2008,
as amended by the Act or otherwise from time to time (“EESA”), shall apply to the Company;

     (b) the waiver to be delivered by each of the Company’s Senior Executive Officers
pursuant to Section 1.2(d)(v) of the Securities Purchase Agreement shall, in addition, be
delivered by any additional highly compensated employees required by applicable rules or
regulations under EESA;

     (c) the Company’s chief executive officer and chief financial officer shall provide the
written certification of compliance by the Company with the requirements of Section 111 of
EESA in the manner specified by Section 111(b)(4) thereunder or in any rules or regulations
under EESA; and

     (d) the Company shall be permitted to repay preferred shares, and when such preferred
shares are repaid, the Investor shall liquidate warrants associated with such preferred
shares, all in accordance with the Act and any rules and regulations thereunder.

 

 

UST 449

     From and after the date hereof, each reference in the Securities Purchase Agreement to “this
Agreement” or “this Securities Purchase Agreement” or words of like import shall mean and be a
reference to the Agreement (as defined in the Securities Purchase Agreement) as amended by this
letter agreement.

     This letter agreement will be governed by and construed in accordance with the federal law of
the United States if and to the extent such law is applicable, and otherwise in accordance with the
laws of the State of New York applicable to contracts made and to be performed entirely within such
State.

     This letter agreement, the Securities Purchase Agreement, the Warrant, the Certificate of
Designation and any other documents executed by the parties at the Closing constitute the entire
agreement of the parties with respect to the subject matter hereof.

     Nothing in this letter agreement shall be deemed an admission by Investor as to the necessity
of obtaining the consent of the Company in order to effect the changes to the Transaction Documents
contemplated by this letter agreement, nor shall anything in this letter agreement be deemed to
require Investor to obtain the consent of any other TARP recipient (as defined in the Act)
participating in the Capital Purchase Program (the “CPP”) in order to effect changes to their
documentation under the CPP.

     This letter agreement may be executed in any number of separate counterparts, each such
counterpart being deemed to be an original instrument, and all such counterparts will together
constitute the same agreement. Executed signature pages to this letter agreement may be delivered
by facsimile and such facsimiles will be deemed sufficient as if actual signature pages had been
delivered.

[Remainder of this page intentionally left blank]

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UST 449

     In witness whereof, the parties have duly executed this letter agreement as of the date first
written above.

	 	 	 	 	 
	 	UNITED STATES DEPARTMENT OF THE TREASURY

 	 
	 	By:  	/s/ Duane Morse	 
	 	 	Name:  	Duane Morse	 
	 	 	Title:  	Chief Risk and Compliance Officer	 
	 
	 	COMPANY: MERCANTILE BANK CORPORATION

 	 
	 	By:  	/s/ Michael H. Price
 	 
	 	 	Name:  	Michael H. Price 	 
	 	 	Title:  	Chairman of the Board,
President and Chief

Executive Officer 	 

Signature Page to ARRA Letter AgreementEX-10.3

	 	 	 	 	 

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.

 

 

     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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