Document:

EX-10.39

EXHIBIT 10.39

AMENDED AND RESTATED

MERCANTILE BANK CORPORATION

STOCK INCENTIVE PLAN OF 2006

DATED NOVEMBER 18, 2008

SECTION 1

Establishment Of Plan; Purpose Of Plan

     1.1 Establishment of Plan. The Company hereby establishes the STOCK INCENTIVE PLAN OF 2006
for its Directors and certain of its Employees. The Plan permits the grant and award of Stock
Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Stock Awards and
other stock-based awards and stock-related awards.

     1.2 Purpose of Plan. The purpose of the Plan is to provide Directors and Employees with an
increased incentive to contribute to the long-term performance and growth of the Company and its
Subsidiaries, to join the interests of Directors and Employees with the interests of the Company’s
shareholders through the opportunity for increased stock ownership and to attract and retain
Participants. The Plan is further intended to provide flexibility to the Company in structuring
long-term incentive compensation to best promote the foregoing objectives.

     1.3 Approval of Plan and Incentive Awards. The Plan will be effective upon approval by the
Company’s shareholders. The Plan contemplates that Directors may be Participants and that the
Directors, as members of either the Board or of a committee of the Board, may approve grants of
Incentive Awards to Directors. Approval of the Plan by the Company’s shareholders shall constitute
authorization and approval of such grants.

SECTION 2

Definitions

     The following words have the following meanings unless a different meaning plainly is required
by the context:

     2.1 “Act” means the Securities Exchange Act of 1934, as amended.

     2.2 “Affiliate” means any organization controlling, controlled by or under common control with
the Company.

     2.3 “Board” means the Board of Directors of the Company.

     2.4 “Cause” means, with respect to termination of employment, (1) willful continued failure to
perform or willful poor performance of duties (other than due to Disability) after warning and
reasonable opportunity to meet reasonable required performance standards; (2) gross negligence
causing or putting the Company or any Affiliate at risk of significant damage or harm; (3)
misappropriation of or intentional damage to the property of the Company or any Affiliate; (4)
conviction of a felony (other than negligent vehicular homicide); (5) intentional act or omission
that the Participant knows or should know is significantly detrimental to the interests of the
Company or any Affiliate; (6) removal of an Employee by order of or at the direction of a
regulatory agency having jurisdiction over the Company or any of its Subsidiaries; or (7) material
violation of any employment agreement between the Company (or any Affiliate) and the Participant.
The existence of Cause for termination of employment shall in each case be determined by the
Committee in its sole discretion and consistent with the definition set forth in this Section 2.4.
The Committee may make such determination before or after the termination of employment.

     A Director will be removed for “Cause” for purposes of this Plan if and only if he or she has
been removed for cause in compliance with the Company’s Articles of Incorporation and applicable
law.

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     2.5 “Change in Control,” unless otherwise defined in an Incentive Award agreement, means (a)
the failure of the Continuing Directors at any time to constitute at least a majority of the
members of the Board; (b) the acquisition by any Person other than an Excluded Holder of beneficial
ownership (within the meaning of Rule 13d-3 issued under the Act) of 40% or more of the outstanding
Common Stock or the combined voting power of the Company’s outstanding securities entitled to vote
generally in the election of directors; (c) a reorganization, merger or consolidation other than
such a transaction (i) that is done for the purpose of reincorporation or (ii) after which the
Company’s shareholders immediately prior to the transaction continue to beneficially own more than
50% of the total fair market value and total voting power of the outstanding capital stock of the
entity surviving the transaction; (d) a complete liquidation or dissolution of the Company or the
sale or disposition of all or substantially all of the assets of the Company; (e) the occurrence of
a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A issued under the Act.

     2.6 “Code” means the Internal Revenue Code of 1986, as amended. Each reference herein to a
section or sections of the Code shall, unless otherwise noted, be deemed to include a reference to
the rules and regulations issued under such section or sections of the Code.

     2.7 “Committee” means the Compensation Committee of the Board or such other committee as the
Board may designate from time to time. The Committee shall consist of at least two Directors and
all of its members shall be “non-employee directors” as defined in Rule 16b-3 issued under the Act
and “outside directors” as defined in Section 162(m) of the Code.

     2.8 “Common Stock” means the Company’s common stock, no par value.

     2.9 “Company” means Mercantile Bank Corporation, a Michigan corporation, and its successors
and assigns.

     2.10 “Continuing Directors” means the individuals constituting the Board as of the date this
Plan was adopted and any subsequent directors whose election or nomination for election by the
Company’s shareholders was approved by a vote of a majority of the individuals who are then
Continuing Directors, but specifically excluding any individual whose initial assumption of office
occurs as a result of either an actual or threatened solicitation subject to Rule 14a-12(c) of
Regulation 14A issued under the Act or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board.

     2.11 “Covered Employee” means any Employee who is or may become a “Covered Employee,” as
defined in Section 162(m) of the Code, and who is designated, either as an individual Employee or
class of Employees, by the Committee within the shorter of (i) 90 days after the beginning of the
Performance Period, or (ii) the period of time after the beginning of the Performance Period and
before 25% of the Performance Period has elapsed, as a “Covered Employee” under this Plan for such
applicable Performance Period.

     2.12 “Director” means a member of the Board.

     2.13 “Disability” means a permanent disability as determined by the Committee in its
discretion.

     2.14 “Employee” means an employee of the Company or one of its Subsidiaries.

     2.15 “Employee Benefit Plan” means any plan or program established by the Company or a
Subsidiary for the compensation or benefit of Employees.

     2.16 “Excluded Holder” means the Company, a Subsidiary or any Employee Benefit Plan of the
Company or a Subsidiary or any trust holding Common Stock or other securities pursuant to the terms
of an Employee Benefit Plan.

     2.17 “Incentive Award” means the award or grant of a Stock Option, a Stock Appreciation Right,
Restricted Stock, a Restricted Stock Unit, a Stock Award, or another stock-based or stock-related
award, to a Participant pursuant to the Plan.

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     2.18 “Market Value” shall equal the closing price of Common Stock reported on Nasdaq on
the date of grant, exercise or vesting, as applicable, or if Nasdaq is closed on that date,
the last preceding date on which Nasdaq was open for trading and on which shares of Common Stock
were traded. If the Common Stock is not listed on Nasdaq, the Market Value shall be determined by
any means deemed fair and reasonable by the Committee in a manner consistent with the valuation
principles of Section 409A of the Code except when the Committee expressly determines not to use
Section 409A valuation principles, which determination shall be final and binding on all parties.

     2.19 “Mature Shares” means shares of Common Stock that a Participant has owned for at least
six months and that meet any other holding requirements established by the Committee for the shares
to be used for attestation.

     2.20 “Nasdaq” means the NASDAQ National Market, or if the Common Stock is not listed for
trading on the NASDAQ National Market on the date in question, then such other United States-based
quotation system or stock exchange on which the Common Stock may be traded on the date in question.

     2.21 “Participant” means a Director or Employee who is granted an Incentive Award under the
Plan.

     2.22 “Performance” means the level of achievement of the performance goals established by the
Committee pursuant to Section 10.1.

     2.23 “Performance Measures” means measures as described in Section 10 on which the performance
goals are based.

     2.24 “Performance Period” means the period of time during which the performance goals must be
met to determine the degree of payout, the vesting, or both, with respect to an Incentive Award
that is intended to qualify as Performance-Based Compensation.

     2.25 “Performance-Based Compensation” means compensation under an Incentive Award that
satisfies the requirements of Section 162(m) of the Code for certain “performance-based
compensation” paid to Covered Employees. Notwithstanding the foregoing, nothing in this Plan shall
be construed to mean that an Incentive Award which does not satisfy the requirements for
performance-based compensation under Section 162(m) of the Code does not constitute
performance-based compensation for other purposes, including Section 409A of the Code.

     2.26 “Person” has the same meaning as set forth in Sections 13(d) and 14(d)(2) of the Act.

     2.27 “Plan” means the Mercantile Bank Corporation Stock Incentive Plan of 2006 as set forth
herein, as it may be amended from time to time.

     2.28 “Restricted Period” means the period of time during which Restricted Stock, Restricted
Stock Units or other stock-based or stock-related awards that are awarded under the Plan are
subject to the risk of forfeiture, restrictions on transfer and other restrictions or conditions
pursuant to Sections 7 or 8. The Restricted Period may differ among Participants and may have
different expiration dates with respect to shares of Common Stock covered by the same Incentive
Award.

     2.29 “Restricted Stock” means Common Stock awarded to a Participant pursuant to Section 7 of
the Plan while such Common Stock remains subject to the risk of forfeiture, restrictions on
transfer and other restrictions or conditions pursuant to Section 7.

     2.30 “Restricted Stock Unit” means an award to a Participant pursuant to Section 7 of the Plan
and described as a “Restricted Stock Unit” in Section 7.

     2.31 “Retirement” means the voluntary termination of employment by a Participant after he or
she has attained the age of 65 or such other age as may be determined by the Committee in its sole
discretion or as otherwise may be set forth in the Incentive Award agreement or other grant
document with respect to a Participant and a particular Incentive Award.

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     2.32 “Stock Appreciation Right” or “SAR” means a right awarded to a Participant pursuant to
Section 6 of the Plan, which shall entitle the Participant to receive cash, Common Stock, other
property or a combination thereof, as determined by the Committee, in an amount equal to or
otherwise based on the
excess of (a) the Market Value of a share of Common Stock at the time of exercise over (b) the
exercise price of the right, as established by the Committee on the date the award is granted.

     2.33 “Stock Award” means an award of Common Stock awarded to a Participant pursuant to Section
8 of the Plan.

     2.34 “Stock Option” means the right to purchase Common Stock at a stated price for a specified
period of time. For purposes of the Plan, a Stock Option may be either an incentive stock option
within the meaning of Section 422(b) of the Code or a nonqualified stock option.

     2.35 “Subsidiary” means any corporation or other entity of which 50% or more of the
outstanding voting stock or voting ownership interest is directly or indirectly owned or controlled
by the Company or by one or more Subsidiaries of the Company. The term “Subsidiary” includes
present and future Subsidiaries of the Company.

     2.36 “Termination” or “Cessation” of employment shall be considered to occur on the date on
which the Employee is no longer obligated to perform services for the Company or any of its
Subsidiaries and the Employee’s right to re-employment is not guaranteed by statute, contract or
written policy of the Company, regardless of whether the Employee continues to receive compensation
from the Company or any of its Subsidiaries after such date. The following shall not be considered
such a termination or cessation: (i) a transfer of an employee among the Company and its
Subsidiaries; (ii) a leave of absence, duly authorized in writing by the Company, for military
service or for any other purpose approved by the Company if the period of such leave does not
exceed 90 days; (iii) a leave of absence in excess of 90 days, duly authorized in writing by the
Company, provided that the employee’s right to re-employment is guaranteed by statute, contract or
written policy of the Company; or (iv) a termination of employment as an officer with continued
service as an Employee or Director.

SECTION 3

Administration

     3.1 Power and Authority. The Committee shall administer the Plan, and subject to the express
provisions of the Plan, the Committee shall be authorized and empowered to do all things that it
determines to be necessary or appropriate in connection with the administration of this Plan. Any
power or authority of the Committee may also be exercised by the Board, except to the extent that
the grant or exercise of such power or authority would cause any Incentive Award or transaction to
become subject to (or lose an exemption under) the short-swing profit recovery provisions of
Section 16 of the Act or cause an Incentive Award intended to qualify for treatment as
performance-based compensation under Section 162(m) of the Code not to qualify for such treatment.
To the extent that any permitted action taken by the Board conflicts with action taken by the
Committee, the Board action shall control.

     The Committee may delegate any, some or all of its record keeping, calculation, payment and
other ministerial or administrative authority and responsibility from time to time to and among one
or more individuals, who are members of the Committee or Employees of the Company or its
Subsidiaries or Affiliates, but all actions taken pursuant to delegated authority and
responsibility shall be subject to such review, change and approval by the Committee as the
Committee considers appropriate. Except as limited in the Plan, the Committee shall have all of
the express and implied powers and duties set forth in the Bylaws of the Company and the Plan,
shall have full power and authority to interpret the provisions of the Plan and Incentive Awards
granted under the Plan and shall have full power and authority to supervise the administration of
the Plan and Incentive Awards granted under the Plan and to make all other determinations and do
all things considered necessary or advisable for the administration of the Plan. All
determinations, interpretations and selections made by the Committee regarding the Plan shall be
final and conclusive. The Committee shall hold its meetings at such times and places as it
considers advisable. Action may be taken by a written instrument signed by all of the members of
the Committee and any action so taken shall be fully as effective as if it had been taken at a
meeting duly called and held. The Committee shall prescribe, amend and rescind rules and
regulations for the conduct of its business and shall define

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terms not otherwise defined herein, in
each case as it considers advisable.

     3.2 Grants or Awards to Participants. In accordance with and subject to the provisions of the
Plan, the Committee shall have the authority to determine all provisions of Incentive Awards
including,
without limitation: (a) the persons who shall be selected as Participants; (b) the nature and,
subject to the limitations set forth in Sections 4.1 and 4.2 of the Plan, extent of the Incentive
Awards to be made to each Participant (including the number of shares of Common Stock to be subject
to each Incentive Award, any exercise or purchase price, the manner in which an Incentive Award
will vest or become exercisable and the form of payment for the Incentive Award); (c) the time or
times when Incentive Awards will be granted; (d) the duration of each Incentive Award; and (e) the
restrictions and other conditions to which payment or vesting of Incentive Awards may be subject.

     3.3 Amendments or Modifications of Incentive Awards. Subject to Section 12, the Committee
shall have the authority to amend or modify the terms of any outstanding Incentive Award in any
manner, provided that the amended or modified terms are not prohibited by the Plan as then in
effect and provided that such actions do not cause an Incentive Award not otherwise subject to
Section 409A of the Code to become subject to Section 409A of the Code. The Committee shall
without limitation, have the authority to: (a) modify the number of shares or other terms and
conditions of an Incentive Award; provided that any increase in the number of shares of an
Incentive Award other than pursuant to Section 4.3 will be considered to be a new grant with
respect to such additional shares for purposes of Section 409A of the Code and such new grant shall
be made at Market Value on the date of the new grant; (b) extend the term of an Incentive Award to
a date that is no later than the earlier of the latest date upon which the Incentive Award could
have expired by its terms under any circumstances or the 10th anniversary of the date of grant (for
purposes of clarity, as permitted under Section 409A of the Code, if the term of a Stock Option is
extended at a time when the Stock Option exercise price equals or exceeds the Market Value, it will
not be an extension of the term of the Stock Option, but instead will be treated as a modification
of the Stock Option and a new Stock Option will be treated as having been granted); (c) accelerate
the exercisability or vesting or otherwise terminate, waive or modify any restrictions relating to
an Incentive Award; (d) accept the surrender of any outstanding Incentive Award; and (e) to the
extent not previously exercised or vested, authorize the grant of new Incentive Awards in
substitution for surrendered Incentive Awards (such grant of new Incentive Awards will be
considered to be a new grant for purposes of Section 409A of the Code and such new grant shall be
made at Market Value on the date of the new grant); provided, that Incentive Awards issued under
the Plan may not be repriced, replaced, regranted through cancellation or modified without
shareholder approval if the effect of such repricing, replacement, regrant or modification would be
to reduce the exercise price or base price of such Incentive Awards to the same Participants.

     3.4 Indemnification of Committee Members. No member or former member of the Committee, or any
individual or group to whom authority or responsibility is or has been delegated, shall be
personally responsible or liable for any act or omission in connection with the performance of
powers or duties or the exercise of discretion or judgment in the administration and implementation
of the Plan. Each person who is or was a member of the Committee, and any other individual or
group exercising delegated authority or responsibility with respect to the Plan, shall be
indemnified and held harmless by the Company from and against any cost, liability or expense
imposed or incurred in connection with such person’s or the Committee’s taking or failing to take
any action under the Plan or the exercise of discretion or judgment in the administration and
implementation of the Plan. This Section 3.4 shall not be construed as limiting the Company’s or
any Subsidiary’s ability to terminate or otherwise alter the terms and conditions of the employment
of an individual or group exercising delegated authority or responsibility with respect to the
Plan, or to discipline any such person. Each such person shall be justified in relying on
information furnished in connection with the Plan’s administration by any appropriate person or
persons.

SECTION 4

Shares Subject to the Plan

     4.1 Number of Shares. Subject to adjustment as provided in Section 4.3 of the Plan, the
total number of shares available for Incentive Awards under the Plan shall be 350,000 shares of
Common Stock, plus all shares subject to Incentive Awards that are canceled, surrendered, modified,
exchanged for substitute Incentive Awards or that expire or terminate prior to the exercise or
vesting of the Incentive

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Awards in full, plus shares that are surrendered to the Company in
connection with the exercise or vesting of Incentive Awards, whether previously owned or otherwise
subject to such Incentive Awards, and plus any authorized shares that are or become available under
the Company’s Independent Director Stock Option Plan, 2004 Employee Stock Option Plan or the 2000
Employee Stock Option Plan and not then subject to outstanding stock options, stock awards, or
restricted stock awards under any such plan. Such
shares shall be authorized and may be unissued shares, shares issued and repurchased by the
Company (including shares purchased on the open market), shares issued and otherwise reacquired by
the Company and shares otherwise held by the Company.

     4.2 Limitation Upon Incentive Awards. No Participant shall be granted, during any calendar
year, Incentive Awards with respect to more than 25% of the total number of shares of Common Stock
available for Incentive Awards under the Plan set forth in Section 4.1 of the Plan, subject to
adjustment as provided in Section 4.3 of the Plan, but only to the extent that such adjustment will
not affect the status of any Incentive Award previously issued or that may thereafter be issued as
Performance-Based Compensation. The purpose of this Section 4.2 is to ensure that the Plan
provides Performance-Based Compensation, and this Section 4.2 shall be interpreted, administered
and amended if necessary to achieve that purpose.

     4.3 Adjustments.

     (a) Stock Dividends and Distributions. If the number of shares of Common Stock
outstanding changes by reason of a stock dividend, stock split, recapitalization or other
general distribution of Common Stock or other securities to holders of Common Stock, the
number and kind of securities subject to outstanding Incentive Awards and available for
issuance under the Plan, and the limitation provided in Section 4.2, together with
applicable exercise prices and base prices, shall be adjusted in such manner and at such
time as shall be equitable under the circumstances. No fractional shares shall be issued
pursuant to the Plan and any fractional shares resulting from such adjustments shall be
eliminated from the respective Incentive Awards.

     (b) Other Actions Affecting Common Stock. If there occurs, other than as described in
Section 4.3(a), any merger, business combination, recapitalization, reclassification,
subdivision or combination approved by the Board that would result in the persons who were
shareholders of the Company immediately prior to the effective time of any such transaction
owning or holding, in lieu of or in addition to shares of Common Stock, other securities,
money and/or property (or the right to receive other securities, money and/or property)
immediately after the effective time of such transaction, then the outstanding Incentive
Awards (including exercise prices and base prices) and reserves for Incentive Awards under
the Plan shall be adjusted in such manner and at such time as shall be equitable under the
circumstances. It is intended that in the event of any such transaction, Incentive Awards
under the Plan shall entitle the holder of each Incentive Award to receive (upon exercise
in the case of Stock Options and SARs), in lieu of or in addition to shares of Common
Stock, any other securities, money and/or property receivable upon consummation of any such
transaction by holders of Common Stock with respect to each share of Common Stock
outstanding immediately prior to the effective time of such transaction; upon any such
adjustment, holders of Incentive Awards under the Plan shall have only the right to receive
in lieu of or in addition to shares of Common Stock such other securities, money and/or
other property as provided by the adjustment.

SECTION 5

Stock Options

     5.1 Grant. A Participant may be granted one or more Stock Options under the Plan. No
Participant shall have any rights as a shareholder with respect to any shares of stock subject to
Stock Options granted hereunder until said shares have been issued. For purposes of determining
the number of shares available under the Plan, each Stock Option shall count as the number of
shares of Common Stock subject to the Stock Option. Stock Options shall be subject to such terms
and conditions, consistent with the other provisions of the Plan, as may be determined by the
Committee in its sole discretion. The Committee, in its sole discretion, may establish vesting
schedules (i) based upon Company performance, or (ii) that extend over a period of time selected by
the Committee. In addition, the Committee may vary,

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among Participants and among Stock Options
granted to the same Participant, any and all of the terms and conditions of the Stock Options
granted under the Plan. Subject to the limitation imposed by Section 4.2 of the Plan, the
Committee shall have complete discretion in determining the number of Stock Options granted to each
Participant. The Committee may designate whether or not a Stock Option is to be considered an
incentive stock option as defined in Section 422(b) of the Code; provided, that the number of
shares of Common Stock that may be designated as subject to incentive stock options for any given
Participant shall be limited to that number of shares that become exercisable for the first
time by the Participant during any calendar year (under all plans of the Company and its
Subsidiaries) and have an aggregate Market Value less than or equal to $100,000 (or such other
amount as may be set forth in relevant sections of the Code) and all shares subject to an Incentive
Award that have a Market Value in excess of such aggregate amount shall automatically be subject to
Stock Options that are not incentive stock options. No Stock Option granted to a Director who is
not an Employee shall be considered an incentive stock option under Section 422(b) of the Code.

     5.2 Stock Option Agreements. Stock Options shall be evidenced by stock option agreements,
certificates of award, or both, containing the terms and conditions applicable to such Stock
Options. To the extent not covered by a stock option agreement or certificate of award, the terms
and conditions of this Section 5 shall govern.

     5.3 Stock Option Exercise Price. The per share Stock Option exercise price shall be
determined by the Committee, but shall be a price that is equal to or greater than 100% of the
Market Value (or such higher amount as may be necessary under Section 5.5 below). The date of
grant of a Stock Option shall be the date the Stock Option is authorized by the Committee or a
future date specified by the Committee as the date for issuing the Stock Option.

     5.4 Medium and Time of Payment. The exercise price for each share purchased pursuant to a
Stock Option granted under the Plan shall be payable in cash or, if the Committee consents or
provides in the applicable stock option agreement or grant, in Mature Shares or other consideration
substantially equivalent to cash. The time and terms of payment may be amended with the consent of
a Participant before or after exercise of a Stock Option, provided that such amendment would not
cause a Stock Option to become subject to Section 409A of the Code. The Committee may implement a
program for the broker-assisted cashless exercise of Stock Options.

     5.5 Stock Options Granted to 10% Shareholders. No Stock Option granted to any Participant who
at the time of such grant owns, together with stock attributed to such Participant under Section
424(d) of the Code, more than 10% of the total combined voting power of all classes of stock of the
Company or any of its Subsidiaries may be designated as an incentive stock option, unless such
Stock Option provides an exercise price equal to at least 110% of the Market Value and the exercise
of the Stock Option after the expiration of five years from the date of grant of the Stock Option
is prohibited by its terms.

     5.6 Limits on Exercisability. Except as set forth in Section 5.5, Stock Options shall be
exercisable for such periods, not to exceed 10 years from the date of grant, as may be fixed by the
Committee. At the time of exercise of a Stock Option, the holder of the Stock Option, if requested
by the Committee, must represent to the Company that the shares are being acquired for investment
and not with a view to the distribution thereof. The Committee may in its discretion require a
Participant to continue the Participant’s service with the Company or its Subsidiaries for a
certain length of time prior to a Stock Option becoming exercisable and may eliminate such delayed
vesting provisions.

     5.7 Restrictions on Transferability.

     (a) General. Unless the Committee otherwise consents or permits (before or after the
stock option grant) or unless the stock option agreement or grant provides otherwise, Stock
Options granted under the Plan may not be sold, exchanged, transferred, pledged, assigned
or otherwise alienated or hypothecated except by will or the laws of descent and
distribution, and, as a condition to any transfer permitted by the Committee or the terms
of the stock option agreement or grant, the transferee must execute a written agreement
permitting the Company to withhold from the shares subject to the Stock Option a number of
shares having a Market Value at least equal to the amount of any federal, state or local
withholding or other taxes associated with or resulting from the exercise of a Stock
Option. All provisions of a Stock Option that are determined

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with reference to the
Participant, including without limitation those that refer to the Participant’s employment
with the Company or its Subsidiaries, shall continue to be determined with reference to the
Participant after any transfer of a Stock Option.

     (b) Other Restrictions. The Committee may impose other restrictions on any shares of
Common Stock acquired pursuant to the exercise of a Stock Option under the Plan as the
Committee deems advisable, including, without limitation, holding periods or further
transfer
restrictions, forfeiture or “claw-back” provisions, and restrictions under applicable
federal or state securities laws.

     5.8 Termination of Employment or Directorship Status. Unless the Committee otherwise consents
or permits (before or after the stock option grant) or unless the stock option agreement or grant
provides otherwise:

     (a) General. If a Participant ceases to be a Director or an Employee for any reason
other than the Participant’s death, Disability, Retirement (in the case of Employees only)
or termination for Cause, the Participant may exercise his or her Stock Options in
accordance with their terms for a period of three months after such termination of
employment or directorship status, but only to the extent the Participant was entitled to
exercise the Stock Options on the date of termination.

     (b) Death. If a Participant dies either while an Employee or Director or after the
termination of employment or directorship other than for Cause but during the time when the
Participant could have exercised a Stock Option, the Stock Option issued to such
Participant shall be exercisable in accordance with its terms by the personal
representative of such Participant or other successor to the interest of the Participant
for one year after the Participant’s death, but only to the extent that the Participant was
entitled to exercise the Stock Option on the date of death or termination of employment or
directorship, whichever first occurred, and not beyond the original terms of the Stock
Option.

     (c) Disability. If a Participant ceases to be an Employee or Director of the Company
or one of its Subsidiaries due to the Participant’s Disability, the Participant may
exercise his or her Stock Options in accordance with their terms for one year following
such termination of employment or directorship, but only to the extent that the Participant
was entitled to exercise the Stock Options on the date of such event and not beyond the
original terms of the Stock Options.

     (d) Participant Retirement. If a Participant Retires as an Employee, Stock Options
granted under the Plan to that Participant may be exercised in accordance with their terms
during the remaining terms of the Stock Options.

     (e) Termination for Cause. If a Participant’s employment is terminated for Cause or
the Participant is removed as a Director for Cause, the Participant shall have no further
right to exercise any Stock Options previously granted and all of the Participant’s
outstanding Stock Options shall automatically be forfeited and returned to the Company.
The Committee or officers designated by the Committee shall have absolute discretion to
determine whether a termination or removal is for Cause.

SECTION 6

Stock Appreciation Rights

     6.1 Grant. A Participant may be granted one or more Stock Appreciation Rights under the Plan
and such SARs shall be subject to such terms and conditions, consistent with the other provisions
of the Plan, as shall be determined by the Committee in its sole discretion. A SAR may relate to a
particular Stock Option and may be granted simultaneously with or subsequent to the Stock Option to
which it relates. Except to the extent otherwise modified in the grant, (i) SARs not related to a
Stock Option shall be granted subject to the same terms and conditions applicable to Stock Options
as set forth in Section 5, and (ii) all SARs related to Stock Options granted under the Plan shall
be granted subject to the same restrictions and conditions and shall have the same vesting,
exercisability, forfeiture and termination

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provisions as the Stock Options to which they relate.
SARs may be subject to additional restrictions and conditions. The per-share base price for
exercise or settlement of SARs shall be determined by the Committee, but shall be a price that is
equal to or greater than the Market Value of such shares. Other than as adjusted pursuant to
Section 4.3, the base price of SARs may not be reduced without shareholder approval (including
canceling previously awarded SARs and regranting them with a lower base price).

     6.2 Exercise; Payment. To the extent a SAR relates to a Stock Option, the SAR may be
exercised only when the related Stock Option could be exercised and only when the Market Value of
the
shares subject to the Stock Option exceed the exercise price of the Stock Option. When a
Participant exercises such SARs, the Stock Options related to such SARs shall automatically be
cancelled with respect to an equal number of underlying shares. Unless the Committee decides
otherwise (in its sole discretion), SARs shall only be paid in cash or in shares of Common Stock.
For purposes of determining the number of shares available under the Plan, each Stock Appreciation
Right shall count as one share of Common Stock, without regard to the number of shares, if any,
that are issued upon the exercise of the Stock Appreciation Right and upon such payment.

SECTION 7

Restricted Stock and Restricted Stock Units

     7.1 Grant. Subject to the limitations set forth in Sections 4.1 and 4.2 of the Plan,
Restricted Stock and Restricted Stock Units may be granted to Participants under the Plan. Shares
of Restricted Stock are shares of Common Stock the retention, vesting and/or transferability of
which is subject, during specified periods of time, to such conditions (including continued
employment and/or achievement of one or more performance goals established by the Committee
pursuant to Section 10) and terms as the Committee deems appropriate, but in no case shall the
Committee provide for any deferral of compensation after such conditions and terms are satisfied.
Restricted Stock Units are Incentive Awards denominated in units of Common Stock under which the
issuance of shares of Common Stock is subject to such conditions (including continued employment
and/or achievement of one or more performance goals established by the Committee pursuant to
Section 10) and terms as the Committee deems appropriate. For purposes of determining the number
of shares available under the Plan, each Restricted Stock Unit shall count as the number of shares
of Common Stock subject to the Restricted Stock Unit. Unless determined otherwise by the
Committee, each Restricted Stock Unit shall be equal to one share of Common Stock and shall entitle
a Participant to either shares of Common Stock or an amount of cash determined with reference to
the value of shares of Common Stock. To the extent determined by the Committee, Restricted Stock
and Restricted Stock Units may be satisfied or settled in cash, in shares of Common Stock or in a
combination thereof. Restricted Stock Units shall be settled no later than the 15th day of the
third month after the Restricted Stock Units vest. Restricted Stock and Restricted Stock Units
granted pursuant to the Plan need not be identical but shall be consistent with the terms of the
Plan. Subject to the requirements of applicable law, the Committee shall determine the price, if
any, at which awards of Restricted Stock or Restricted Stock Units, or shares of Common Stock
issuable pursuant to Restricted Stock Unit awards, shall be sold or awarded to a Participant, which
may vary from time to time and among Participants.

     7.2 Restricted Stock Agreements. Awards of Restricted Stock and Restricted Stock Units shall
be evidenced by restricted stock or restricted stock unit agreements or certificates of award
containing such terms and conditions, consistent with the provisions of the Plan, as the Committee
shall from time to time determine. Shares of Restricted Stock not evidenced by a certificate shall
be recorded in “book entry” form in the Company’s stock records. Unless the restricted stock or
restricted stock unit agreement or certificate of award provides otherwise, awards of Restricted
Stock and Restricted Stock Units shall be subject to the terms and conditions set forth in this
Section 7.

9

 

     7.3 Vesting. The grant, issuance, retention and vesting of shares of Restricted Stock and
Restricted Stock Units and the settlement of Restricted Stock Units shall occur at such time and in
such installments as determined by the Committee or under criteria established by the Committee.
The Committee shall have the right to make the timing of the grant and/or issuance of, the ability
to retain and the vesting and/or the settlement of Restricted Stock Units and shares of Restricted
Stock subject to continued employment, passage of time and/or Performance Measures as deemed
appropriate by the Committee. In no event shall the grant, issuance, retention, vesting or
settlement of shares of Restricted Stock or Restricted Stock Units that is based on Performance
Measures or a level of achievement measured against Performance Measures be subject to a
performance period of less than one year. No condition that is based upon continued employment or
the passage of time shall provide for vesting or settlement in full of Restricted Stock or
Restricted Stock Units over a period of less than three years from the date the Award is made,
other than as a result of or upon the death, Disability or Retirement of the Participant or a
Change in Control.

     7.4 Termination of Employment or Directorship Status. Unless the Committee otherwise consents
or permits (before or after the grant or Restricted Stock or Restricted Stock Units) or unless the
restricted stock or restricted stock unit agreement or grant provides otherwise:

     (a) General. Except as set forth in Section 7.4(b) below, if a Participant ceases to
be a Director or Employee during the Restricted Period, the Participant shall have no
further right to retain or receive any Restricted Stock or Restricted Stock Units and all
Restricted Stock and Restricted Stock Units still subject to restrictions at the date of
such termination shall automatically be forfeited and returned to the Company.

     (b) Death, Retirement or Disability. If (i) a Participant’s employment or
directorship with the Company is terminated because of death, Disability or (in the case of
Employees only) Retirement during the Restricted Period, or (ii) the Company terminates a
Participant’s employment other than for Cause, then all restrictions remaining on any or
all shares of Restricted Stock and Restricted Stock Units shall terminate automatically
with respect to that respective number of such shares or Restricted Stock Units (rounded to
the nearest whole number) equal to the respective total number of such shares or Restricted
Stock Units granted to such Participant multiplied by the number of full months that have
elapsed since the date of grant divided by the total number of full months in the
respective Restricted Period. All remaining shares of Restricted Stock and Restricted Stock
Units shall be forfeited and returned to the Company. The Committee may, in its sole
discretion, waive the restrictions remaining on and forfeiture of any or all such remaining
shares of Restricted Stock and Restricted Stock Units either before or after the death,
Disability or Retirement of the Participant. Any termination of a Participant because of
Disability shall be deemed a termination by the Participant.

     7.5 Restrictions on Transferability.

     (a) General. Unless the Committee otherwise consents or permits or unless the terms
of the restricted stock or restricted stock unit agreement or grant provide otherwise: (i)
neither shares of Restricted Stock nor Restricted Stock Units may be sold, exchanged,
transferred, pledged, assigned or otherwise alienated or hypothecated during the Restricted
Period except by will or the laws of descent and distribution; and (ii) all rights with
respect to Restricted Stock and Restricted Stock Units granted to a Participant under the
Plan shall be exercisable during the Participant’s lifetime only by such Participant or his
or her guardian or legal representative.

     (b) Other Restrictions. The Committee may impose other restrictions on any shares of
Common Stock acquired pursuant to an award of Restricted Stock or issuable pursuant to
Restricted Stock Unit awards under the Plan as the Committee considers advisable,
including, without limitation, holding periods or further transfer restrictions, forfeiture
or “claw-back” provisions, and restrictions under applicable federal or state securities
laws.

10

 

     7.6 Legending of Restricted Stock. In addition to any other legend that may be set forth on a
Participant’s share certificate, any certificates evidencing shares of Restricted Stock awarded
pursuant to the Plan shall bear the following legend:

The shares represented by this certificate were issued subject to certain
restrictions under the Mercantile Bank Corporation Stock Incentive Plan of 2006
(the “Plan”). This certificate is held subject to the terms and conditions
contained in a restricted stock agreement that includes a prohibition against the
sale or transfer of the stock represented by this certificate except in compliance
with that agreement and that provides for forfeiture upon certain events. Copies
of the Plan and the restricted stock agreement are on file in the office of the
Secretary of the Company.

The Committee may require that certificates representing shares of Restricted Stock be retained and
held in escrow by a designated employee or agent of the Company or any Subsidiary until any
restrictions applicable to shares of Restricted Stock so retained have been satisfied or lapsed.

     7.7 Rights as a Shareholder. A Participant shall have all dividend, liquidation and other
rights with respect to Restricted Stock held of record by such Participant as if the Participant
held unrestricted Common Stock; provided, that the unvested portion of any award of Restricted
Stock shall be subject to any restrictions on transferability or risks of forfeiture imposed
pursuant to this Section 7 and the terms and conditions set forth in the Participant’s restricted
stock agreement. Unless the Committee otherwise determines or unless the terms of the applicable
restricted stock unit agreement or grant provide otherwise, a Participant shall have all dividend
and liquidation rights with respect to shares of Common
Stock subject to awards of Restricted Stock Units held by such Participant as if the
Participant held unrestricted Common Stock. Unless the Committee determines otherwise or unless
the terms of the applicable restricted stock or restricted stock unit agreement or grant provide
otherwise, any noncash dividends or distributions paid with respect to shares of unvested
Restricted Stock and shares of Common Stock subject to unvested Restricted Stock Units shall be
subject to the same restrictions and vesting schedule as the shares to which such dividends or
distributions relate. Any dividend payment with respect to Restricted Stock or Common Stock
subject to awards of Restricted Stock Units shall be made no later than the end of the calendar
year in which the dividends are paid to shareholders, or, if later, the 15th day of the third month
following the date the dividends are paid to shareholders.

     7.8 Voting Rights. Unless otherwise determined by the Committee, Participants holding shares
of Restricted Stock granted hereunder may exercise full voting rights with respect to those shares
during the Restricted Period. Participants shall have no voting rights with respect to shares of
Common Stock underlying Restricted Stock Units unless and until such shares are issued and
outstanding shares on the Company’s stock ledger.

SECTION 8

Stock-Based Awards

     8.1 Grant. Subject to the limitations set forth in Sections 4.1 and 4.2 of the Plan, in
addition to any Stock Options, Stock Appreciation Rights, Restricted Stock, or Restricted Stock
Units that a Participant may be granted under the Plan, a Participant may be granted one or more
other types of awards based on or related to shares of Common Stock (including the grant of Stock
Awards). Such awards shall be subject to such terms and conditions, consistent with the other
provisions of the Plan, as may be determined by the Committee in its sole discretion, but in no
case shall the Committee provide for any deferral of compensation after such conditions and terms
are satisfied. Notwithstanding the previous sentence, Stock Awards shall be settled no later than
the 15th day of the third month after the awards vest. Such awards shall be expressed in terms of
shares of Common Stock or denominated in units of Common Stock. For purposes of determining the
number of shares available under the Plan, each such unit shall count as the number of shares of
Common Stock to which it relates.

11

 

     8.2 Rights as a Shareholder.

     (a) Stock Awards. A Participant shall have all voting, dividend, liquidation and
other rights with respect to shares of Common Stock issued to the Participant as a Stock
Award under this Section 8 upon the Participant becoming the holder of record of the Common
Stock granted pursuant to such Stock Award; provided, that the Committee may impose such
restrictions on the assignment or transfer of Common Stock awarded pursuant to a Stock
Award as it considers appropriate. Any dividend payment with respect to a Stock Award
shall be made no later than the end of the calendar year in which the dividends are paid to
shareholders, or, if later, the 15th day of the third month following the date the
dividends are paid to shareholders.

     (b) General. With respect to shares of Common Stock subject to awards granted under
the Plan other than Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted
Stock Units and Stock Awards, a Participant shall have such rights as determined by the
Committee and set forth in the respective award agreements; and the Committee may impose
such restrictions on the assignment or transfer of Common Stock awarded pursuant to such
awards as it considers appropriate.

SECTION 9

Change in Control

     9.1 Acceleration of Vesting. If a Change in Control of the Company occurs, then, unless the
Committee or the Board otherwise determines and expressly states in the agreements governing one or
more Incentive Awards, without action by the Committee or the Board: (a) all outstanding Stock
Options and Stock Appreciation Rights shall become vested and exercisable in full immediately prior
to the effective time of a Change in Control and shall remain exercisable during the remaining
terms thereof,
regardless of whether the Participants to whom such Stock Options and Stock Appreciation
Rights have been granted remain in the employ or service of the Company or any Subsidiary; and (b)
all other outstanding Incentive Awards shall become immediately fully vested and exercisable and
nonforfeitable.

     9.2 Cash Payment for Stock Options and Stock Appreciation Rights. If a Change in Control of
the Company occurs, then the Committee, in its sole discretion and without the consent of any
Participant affected thereby, may determine that some or all Participants holding outstanding Stock
Options and/or Stock Appreciation Rights shall receive, with respect to and in lieu of some or all
of the shares of Common Stock subject to such Stock Options and/or Stock Appreciation Rights, as of
the effective date of any such Change in Control of the Company, cash in an amount equal to the
excess of the greater of (a) the highest sales price of the shares on Nasdaq on the date
immediately prior to the effective date of such Change in Control of the Company or (b) the highest
price per share actually paid in connection with any Change in Control of the Company, over the
exercise price per share of such Stock Options and/or the base price per share of such Stock
Appreciation Rights. Upon a Participant’s receipt of such amount with respect to some or all of
his or her Stock Options and/or Stock Appreciation Rights, the respective Stock Options and/or
Stock Appreciation Rights shall be cancelled and may no longer be exercised by such Participant.

SECTION 10

Performance Measures

     10.1 Performance Measures. Unless and until the Committee proposes for shareholder vote and
the shareholders approve a change in the general Performance Measures set forth in this Section 10,
the performance goals upon which the payment or vesting of an Incentive Award to a Covered Employee
that is intended to qualify as Performance-Based Compensation may be based shall be limited to the
following Performance Measures:

	 	(a)	 	Net income (before or after taxes, interest, depreciation, and/or
amortization);
	 
	 	(b)	 	Net income per share;
	 
	 	(c)	 	Return on equity;

12

 

	 	(d)	 	Cash earnings;
	 
	 	(e)	 	Cash earnings per share (reflecting dilution of the Common Stock as the
Committee deems appropriate and, if the Committee so determines, net of or including
dividends);
	 
	 	(f)	 	Cash earnings return on equity;
	 
	 	(g)	 	Operating income;
	 
	 	(h)	 	Operating income per share;
	 
	 	(i)	 	Operating income return on equity;
	 
	 	(j)	 	Return on assets;
	 
	 	(k)	 	Cash flow;
	 
	 	(l)	 	Cash flow return on capital;
	 
	 	(m)	 	Return on capital;
	 
	 	(n)	 	Productivity ratios;
	 
	 	(o)	 	Share price (including without limitation growth measures, total shareholder
return or comparison to indices);
	 
	 	(p)	 	Expense or cost levels;
	 
	 	(q)	 	Margins;
	 
	 	(r)	 	Operating efficiency;
	 
	 	(s)	 	Efficiency ratio;
	 
	 	(t)	 	Customer satisfaction, satisfaction based on specified objective goals or a
Company-sponsored customer survey;
	 
	 	(u)	 	Employee satisfaction, satisfaction based on specified objective goals or a
Company-sponsored employee survey;
	 
	 	(v)	 	Economic value added measurements;
	 
	 	(w)	 	Market share or market penetration with respect to specific designated
products or services, product or service groups and/or specific geographic areas;
	 
	 	(x)	 	Reduction of losses, loss ratios, expense ratios or fixed costs;

	 
	 	(y)	 	Employee turnover; and
	 
	 	(z)	 	Specified objective social goals.

One or more Performance Measures may be used to measure the performance of one or more of the
Company, its Subsidiaries, its Affiliates or any combination of the foregoing, compared to
pre-determined levels, as the Committee may deem appropriate, or compared to the performance of a
pre-established peer group, or published or special index that the Committee, in its sole
discretion, deems appropriate. The Committee also has the authority to provide for accelerated
vesting of any Incentive Award based on the achievement of performance goals pursuant to the
Performance Measures specified in this Section 10.

     10.2 Evaluation of Performance. The Committee may provide in any such Incentive Award that any
evaluation of Performance may include or exclude any of the following events or their effects that
occurs during a Performance Period: (a) asset write-downs, (b) litigation or claim judgments or
settlements, (c) changes in tax laws, accounting principles, or other laws or provisions affecting
reported results, (d) any reorganization and restructuring programs, (e) extraordinary nonrecurring
items as described in Accounting Principles Board Opinion No. 30 and/or in management’s discussion
and analysis of financial condition and results of operations appearing in the Company’s annual
report to shareholders for the applicable fiscal year, (f) acquisitions, mergers, divestitures or
accounting changes, (g) amortization of goodwill or other intangible assets, (h) discontinued
operations, and (i) other special charges or extraordinary items. To the extent such inclusions or
exclusions affect Incentive Awards to Covered Employees, they shall be prescribed in a form that
meets the requirements of Section 162(m) of the Code for deductibility.

     10.3 Committee Discretion. In the event that applicable tax laws, securities laws, or both,
change to permit Committee discretion to alter the governing Performance Measures without obtaining
shareholder approval of such changes, the Committee shall have sole discretion to make such changes
without obtaining shareholder approval. In addition, in the event that the Committee determines
that it is advisable to grant Incentive Awards that shall not qualify as Performance-Based
Compensation, the Committee may make such grants without satisfying the requirements of Section
162(m) of the Code and may base vesting on Performance Measures other than those set forth in
Section 10.1.

     10.4 Adjustment of Performance-Based Compensation. Incentive Awards that are designed to
qualify as Performance-Based Compensation, and that are held by Covered Employees, may not be
increased or adjusted upward. The Committee shall retain the discretion to decrease or adjust such
Incentive Awards downward, and such Incentive Awards may be forfeited in whole or in part.

13

 

     10.5 Performance-Based Compensation Conditioned on Performance. Payment of Performance-Based
Compensation to a Participant for a Performance Period under this Plan shall be entirely contingent
upon achievement of the performance goals established by the Committee pursuant to this Section 10,
the satisfaction of which must be substantially uncertain when established by the Committee for the
Performance Period.

     10.6 Time of Determination of Performance Goals by Committee. All performance goals to be
made by the Committee for a Performance Period pursuant to this Section 10 shall be established in
writing by the Committee during the first 90 days of such Performance Period and before 25% of the
Performance Period has elapsed.

     10.7 Section 162(m) Purpose. It is intended that the Plan may provide performance-based
compensation under Section 162(m) of the Code, and the Plan shall be interpreted, administered and
amended if necessary to achieve that purpose.

     10.8 Objective Standards. Performance-Based Compensation shall be based solely upon objective
criteria, consistent with this Section 10, from which an independent third party with knowledge of
the facts could determine whether the performance goal or range of goals is met and from that
determination could calculate the Performance-Based Compensation to be paid. Although the
Committee has authority to exercise reasonable discretion to interpret this Plan and the criteria
it shall specify pursuant to this Section 10 of the Plan, it may not amend or waive such criteria
after the 90th day of the respective Performance Period. The Committee shall have no authority or
discretion to increase any Performance-Based Compensation or to construct, modify or apply the
measurement of a Participant’s Performance in a manner that will directly or indirectly increase
the Performance-Based Compensation for the Participant for any Performance Period above the amount
determined by the applicable objective standards established within the time period set forth in
Section 10.6.

Section 11

General Provisions

     11.1 No Rights to Incentive Awards. No Participant or other person shall have any claim to be
granted any Incentive Award under the Plan and there is no obligation of uniformity of treatment of
Participants or holders or beneficiaries of Incentive Awards under the Plan. The terms and
conditions of Incentive Awards of the same type and the determination of the Committee to grant a
waiver or modification of any Incentive Award and the terms and conditions thereof need not be the
same with respect to each Participant or the same Participant.

     11.2 Withholding. The Company or a Subsidiary shall be entitled to: (a) withhold and deduct
from future wages of a Participant (or from other amounts that may be due and owing to a
Participant from the Company or a Subsidiary), or make other arrangements for the collection of,
all legally required amounts necessary to satisfy any and all federal, state, local and other
withholding and employment-related tax requirements attributable to an Incentive Award, including,
without limitation, taxes on income deemed to be recognized as a result of grant, exercise or
vesting of, or payment of dividends with respect to, an Incentive Award or a disqualifying
disposition of Common Stock received upon exercise of an incentive stock option; or (b) require a
Participant promptly to remit the amount of such withholding to the Company before taking any
action with respect to an Incentive Award. Unless the Committee determines otherwise, withholding
may be satisfied by withholding Common Stock to be received upon exercise or vesting of an
Incentive Award or by delivery to the Company of previously owned Common Stock. The Company may
establish such rules and procedures concerning timing of any withholding election as it deems
appropriate. In addition, the Company may reasonably delay the issuance or delivery of shares of
Common Stock pursuant to an Incentive Award as it determines appropriate to address tax withholding
and other administrative matters.

     11.3 Compliance with Laws; Listing and Registration of Shares. All Incentive Awards granted
under the Plan (and all issuances of Common Stock or other securities under the Plan) shall be
subject to all applicable laws, rules and regulations, and to the requirement that if at any time
the Committee shall determine, in its discretion, that the listing, registration or qualification
of the shares

14

 

covered thereby upon any securities exchange or under any state or federal law, or
the consent or approval of any governmental regulatory body, is necessary or desirable as a
condition of, or in connection with, the grant of such Incentive Award or the issuance or purchase
of shares thereunder, such Incentive Award may not be exercised in whole or in part, or the
restrictions on such Incentive Award shall not lapse, unless and until such listing, registration,
qualification, consent or approval shall have been effected or obtained free of any conditions not
acceptable to the Committee.

     11.4 No Limit on Other Compensation Arrangements. Nothing contained in the Plan shall prevent
the Company or any Subsidiary from adopting, continuing in effect or discontinuing other or
additional compensation arrangements, including the grant of Stock Options and other stock-based
and stock-related awards, and such arrangements may be either generally applicable or applicable
only in specific cases.

     11.5 No Right to Employment. The grant of an Incentive Award shall not be construed as giving
a Participant the right to be retained as an Employee or Director of the Company or any Subsidiary.
The Company or any Subsidiary may at any time dismiss a Participant from employment, free from any
liability or any claim under the Plan, unless otherwise expressly provided in the Plan or in any
written agreement with the Participant.

     11.6 No Liability of Company. The Company and any Subsidiary or Affiliate which is in
existence or hereafter comes into existence shall not be liable to a Participant or any other
person as to: (a) the non-issuance or non-sale of Common Stock as to which the Company has been
unable to obtain from any regulatory body having jurisdiction the authority deemed by the Company’s
counsel to be necessary to the lawful issuance and sale of any shares hereunder; (b) any tax
consequence to any Participant or other person due to the receipt, exercise or settlement of any
Incentive Award granted hereunder; and (c) any provision of law or legal restriction that prohibits
or restricts the transfer of shares of Common Stock issued pursuant to any Incentive Award.

     11.7 Suspension of Rights under Incentive Awards. The Company, by written notice to a
Participant, may suspend a Participant’s and any transferee’s rights under any Incentive Award for
a period
not to exceed 60 days while the termination for Cause of that Participant’s employment with
the Company and its Subsidiaries is under consideration or while the removal for Cause of the
Participant as a Director is under consideration.

     11.8 Governing Law. The validity, construction and effect of the Plan and any rules and
regulations relating to the Plan shall be determined in accordance with the laws of the State of
Michigan and applicable federal law.

     11.9 Severability. In the event any provision of the Plan shall be held illegal or invalid
for any reason, the illegality or invalidity shall not affect the remaining provisions of the Plan
and the Plan shall be construed and enforced as if the illegal or invalid provision had not been
included, unless such construction would cause the Plan to fail in its essential purposes.

SECTION 12

Termination and Amendment

     12.1 Board and Committee Actions. The Board may terminate the Plan at any time or may from
time to time amend or alter the Plan or any aspect of it; provided, that no such amendment may be
made, without the approval of shareholders of the Company, that would (i) except as provided in
Section 4.3, reduce the exercise price at which Stock Options, or the base price at which Stock
Appreciation Rights, may be granted below the prices provided for in Sections 5.3 and 6.1,
respectively, (ii) except as provided in Section 4.3, reduce the exercise price of outstanding
Stock Options or the base price of outstanding Stock Appreciation Rights, (iii) increase the
individual maximum limits in Section 4.2, or (iv) otherwise amend the Plan in any manner requiring
shareholder approval by law or under Nasdaq listing requirements or other applicable Nasdaq rules.

     12.2 No Impairment. Notwithstanding anything to the contrary in Section 12.1, no such
amendment or alteration to the Plan or to any previously granted award agreement or Incentive Award
shall

15

 

be made which would impair the rights of the holder of the Incentive Award, without such
holder’s consent; provided, that no such consent shall be required if the Committee determines in
its sole discretion and prior to the date of any Change in Control that such amendment or
alteration either is required or advisable in order for the Company, the Plan or the Incentive
Award to satisfy any law or regulation or to meet the requirements of or avoid adverse tax or
financial accounting consequences under any tax or accounting standard, law or regulation.

SECTION 13

Effective Date and Duration of the Plan

     The Plan shall take effect January 19, 2006, subject to approval by the shareholders at the
2006 Annual Meeting of Shareholders or any adjournment thereof or at a Special Meeting of
Shareholders. Unless earlier terminated by the Board of Directors, no Incentive Award shall be
granted under the Plan after January 18, 2016.

16EX-10.47

EXHIBIT 10.47

MERCANTILE BANK CORPORATION

EMPLOYEE STOCK PURCHASE PLAN OF 2002

SECTION 1

PURPOSE OF PLAN

     The purpose of the Mercantile Bank Corporation Employee Stock Purchase Plan of 2002 is to
encourage Employees of the Company and the Company’s Subsidiaries to promote the best interests of
the Company and to align the interests of Employees with the Company’s shareholders by permitting
Eligible Employees to purchase shares of the Company’s Common Stock. The Plan is not intended to
qualify as an employee stock purchase plan under Section 423 of the Internal Revenue Code of 1986,
as amended.

SECTION 2

DEFINITIONS

     The following words have the following meanings unless a different meaning is plainly required
by the context:

     2.1 “Employee” means an employee of the Company or one of its Subsidiaries.

     2.2 “Board” means the Board of Directors of the Company.

     2.3 “Committee” means the Compensation Committee of the Board or such other committee as the
Board may from time to time designate to administer the Plan.

     2.4 “Common Stock” means the Company’s common stock.

     2.5 “Company” means Mercantile Bank Corporation, a Michigan corporation, and its successors
and assigns.

     2.6 “Election Form” means a notice (in a form approved by the Committee) that an Eligible
Employee must complete to participate in the Plan and authorize payroll deductions to be made on
the Eligible Employee’s behalf under the Plan.

     2.7 “Eligible Employees” means all present and future active full-time Employees and part-time
Employees who are regularly scheduled to work 20 hours or more per week.

     2.8 “Fair Market Value” as of any Stock Purchase Date means the average, rounded to the
nearest whole cent, of the highest and lowest sales prices of the Common Stock reported on The
Nasdaq Stock Market (or such other quotation system or stock exchange on which the Company’s Common
Stock may be traded on the date in question) on such Stock Purchase Date or, if such Stock Purchase
Date is not a trading day, the most recent date on which shares of Common Stock were traded on The
Nasdaq Stock Market (or such other quotation system or stock exchange). If the Company’s Common
Stock is not listed on Nasdaq or another quotation system or stock exchange on the Stock Purchase
Date in question, the Market Value shall be determined by any means deemed fair and reasonable by
the Committee, which determination shall be final and binding on all parties.

     2.9 “Investment Sharebuilder Account” means the account established on behalf of a Participant
pursuant to Section 8.2 below, in which shares of Common Stock purchased under the Plan shall be
held.

     2.10 “Option Period” means each calendar quarter, beginning on the first day of each such
calendar quarter and ending on the last day of such calendar quarter.

     2.11 “Participant” means an Eligible Employee who has elected to participate in the Plan in
accordance with Section 6.1 below.

1

 

     2.12 “Payroll Deduction Account” means the account established on behalf of a Participant
pursuant to Section 7.1 below, to which his or her payroll deductions shall be credited.

     2.13 “Permanent Disability” or “Disability” means an inability of a Participant to perform his
or her employment duties due to physical or mental disability sufficient for the Participant to
qualify for disability benefits under the general benefits policies of the Company and in effect
from time to time.

     2.14 “Plan” means the Mercantile Bank Corporation Employee Stock Purchase Plan of 2002 as set
forth herein, as it may be amended from time to time.

     2.15 “Purchase Price” means the purchase price for a share of Common Stock to be paid by a
Participant on a Stock Purchase Date, as determined under Section 8.1 below.

     2.16 “Retirement” means the voluntary termination of all employment by a Participant such that
the Participant would qualify for retirement benefits from the Company or a Subsidiary under
applicable retirement policies in effect from time to time.

     2.17 “Stock Purchase Date” means a date on which shares of Common Stock are purchased pursuant
to the Plan. Unless otherwise determined by the Committee, the Stock Purchase Date shall be the
last working day of each Option Period during the term of the Plan.

     2.18 “Subsidiary” means any corporation or other entity of which 50% or more of the
outstanding voting stock or voting ownership interest is directly or indirectly owned or controlled
by the Company or by one or more Subsidiaries of the Company. The term “Subsidiary” includes
present and future Subsidiaries of the Company.

SECTION 3

ADMINISTRATION

     3.1 General. The Committee shall administer the Plan. The Committee may request advice or
assistance or employ such other persons as are necessary for proper administration of the Plan,
including individuals who are employees of the Company or any Subsidiary. Subject to the express
provisions of the Plan, the Committee shall have authority to interpret the Plan, to prescribe,
amend and rescind rules, regulations and procedures relating to it, to waive any requirement of the
Plan in whole or in part and on a general or case-by-case basis, and to make all other
determinations necessary or advisable in administering the Plan, all of which determinations shall
be final and binding upon all persons unless otherwise determined by the Board. The Committee shall
hold its meetings at such times and places as it considers advisable. Action may be taken by a
written instrument signed by all of the members of the Committee and any action so taken shall be
as fully effective as if it had been taken at a meeting duly called and held. The Committee shall
make such rules and regulations, if any, for the conduct of its business as it considers advisable.

     3.2 Indemnification of Committee Members. Neither any member or former member of the
Committee, nor any individual or group to whom authority or responsibility is or has been
delegated, shall be personally responsible or liable for any act or omission in connection with the
performance of powers or duties or the exercise of discretion or judgment in the administration and
implementation of the Plan. Each person who is or shall have been a member of the Committee shall
be indemnified and held harmless by the Company from and against any cost, liability or expense
imposed or incurred in connection with such person’s or the Committee’s taking or failing to take
any action under the Plan or the exercise of discretion or judgment in the administration and
implementation of the Plan. Each such person shall be justified in relying on information
furnished in connection with the Plan’s administration by any appropriate person or persons.

SECTION 4

STOCK SUBJECT TO THE PLAN

     4.1 Number of Shares of Common Stock. There shall be reserved for issuance to and purchase by
Participants under the Plan an aggregate of 25,000 shares of Common Stock, subject to adjustment as
provided in Section 4.2. Shares of Common Stock available under the Plan shall be authorized and
unissued shares or shares purchased by the Company.

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     4.2 Adjustments. In the event of a stock dividend, stock split, recapitalization, merger,
reorganization, consolidation, combination or exchange of shares of Common Stock during the term of
the Plan, the number of shares reserved and authorized to be issued under the Plan shall be
adjusted proportionately, and such other adjustment shall be made as may be considered necessary or
equitable by the Committee or the Board. In the event of any other change affecting the Common
Stock, such adjustments shall be made as may be considered equitable by the Committee or the Board
to give proper effect to such change.

SECTION 5

ELIGIBILITY

     Participation in the Plan shall be open only to Eligible Employees. No option rights may be
granted under the Plan to any person who is not an Eligible Employee.

SECTION 6

PARTICIPATION AND WITHDRAWAL

     6.1 Election Form; Changes to Election Form.

     (a) Participation by any Eligible Employee in the Plan shall be entirely voluntary.
Any Eligible Employee may become a Participant by completing and delivering an Election
Form to the Company. Except with respect to the initial Option Period under this Plan,
such Eligible Employee shall become a Participant as of the first day of the next Option
Period following the delivery of his or her Election Form, provided that the Election Form
has been delivered at least ten working days prior to the beginning of the first day of
that Option Period. If the Election Form has not been delivered at least ten working days
prior to the beginning of the first day of that Option Period, then such Eligible Employee
shall become a Participant as of the first day of the second succeeding Option Period. With
respect to the initial Option Period under this Plan, such Eligible Employee shall become a
Participant as of the first pay date that is at least ten working days after the Company
receives the Election Form. The Election Form will authorize specified regular payroll
deductions (within the limits specified in Section 7.2 below) from the Participant’s
periodic compensation during the time he or she is a Participant.

     (b) Payroll deductions shall be made for each Participant in accordance with the
Election Form and shall continue until the Participant’s participation terminates, the
Election Form is modified or the Plan is terminated. A Participant may increase or
decrease his or her payroll deduction (within the limits specified in Section 7.2 below) by
delivering a new Election Form to the Company. The Company or the applicable Subsidiary
shall deduct the modified amount from the Participant’s payroll beginning with the first
pay date to occur on or after ten working days after the new Election Form is properly
delivered.

     6.2 Withdrawal. A Participant may elect at any time to terminate his or her participation in
the Plan by written notice delivered to the Company no later than ten working days before a pay
date, or by such other time as the Committee may from time to time determine. Upon any termination
by a Participant: (a) the Participant shall cease to be a Participant; (b) his or her Election Form
shall be revoked insofar as subsequent payroll deductions are concerned; (c) the amount in the
Participant’s Payroll Deduction Account, as well as any unauthorized payroll deductions made after
such revocation, shall be promptly refunded to the Participant; and (d) a certificate for the full
shares of Common Stock credited to the Participant’s Investment Sharebuilder Account shall be
promptly forwarded to the Participant. An Eligible Employee who has terminated participation in
the Plan shall not be eligible for reinstatement as a Participant for a period of six months after
such termination.

     Except as provided in Section 9 below, if a Participant ceases to be an Eligible Employee, (a)
no further payroll deductions shall be made on his or her behalf (b) the accumulated balance in his
or her Payroll Deduction Account shall promptly be returned to the Participant and (c) a
certificate for the full shares of Common Stock credited to the Participant’s Investment
Sharebuilder Account shall promptly be forwarded to the Participant.

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SECTION 7

PAYROLL DEDUCTIONS

     7.1 Payroll Deduction Account. The Company and/or its Subsidiaries will maintain a Payroll
Deduction Account for each Participant. Authorized payroll deductions shall begin with the first
pay date to occur on or after the first day of the first Option Period with respect to which a
Participant has elected (in accordance with Section 6.1) to participate in the Plan. Payments made
by Participants through payroll deductions shall be credited to each Participant’s Payroll
Deduction Account. No amounts other than payroll deductions authorized under the Plan may be
credited to a Participant’s Payroll Deduction Account, unless the Committee otherwise consents in
writing.

     7.2 Limits on Payroll Deductions. The amount of the payroll deduction specified by a
Participant in his or her Election Form shall not be less than $25 or more than $200 for each pay
period or such other amount as the Committee may determine in its sole discretion from time to
time. A Participant may only take payroll deductions from his or her base salary and not from a
Participant’s bonuses, incentive pay or commissions.

SECTION 8

PURCHASE AND SALE OF COMMON STOCK

     8.1 Purchase Price. The Purchase Price for each share of Common Stock purchased on a Stock
Purchase Date shall be the Fair Market Value of the Common Stock as of that Stock Purchase Date.

     8.2 Method of Purchase.

     (a) Except as otherwise provided herein, each Participant having funds in his or her
Payroll Deduction Account on a Stock Purchase Date shall be deemed, without any further
action, to have been granted and to have exercised his or her option to purchase the number
of whole shares of Common Stock which the funds in his or her Payroll Deduction Account
could purchase on the Stock Purchase Date. Options that are not exercised automatically
shall expire immediately. No fractional shares shall be issued or purchased under the
Plan. Funds not used to purchase whole shares shall remain in the Participant’s Payroll
Deduction Account for future purchases. If the number of available shares on a Stock
Purchase Date is not sufficient to exhaust all Payroll Deduction Accounts, the available
shares shall be allocated in proportion to the funds available in each Payroll Deduction
Account and the Plan shall thereafter terminate.

     (b) All whole shares purchased shall be maintained in separate Investment Sharebuilder
Accounts for Participants. Unless the Participant otherwise directs, any cash dividends
paid with respect to the whole shares in a Participant’s Investment Sharebuilder Account
shall be, in the discretion of the Committee, either distributed to the Participant or
applied to the Participant’s Payroll Deduction Account for the purchase of whole shares,
and shares so purchased shall be added to the shares held for a Participant in his or her
Investment Sharebuilder Account. Any non-cash dividends paid with respect to the whole
shares in a Participant’s Investment Sharebuilder Account shall be added to the shares held
for a Participant in his or her Investment Sharebuilder Account. Participants will be
notified not less than annually as to the amount and status of their Payroll Deduction
Accounts and Investment Sharebuilder Accounts.

     8.3 Title of Accounts. Each Investment Sharebuilder Account may be in the name of the
Participant or, if so indicated on the Election Form, in his or her name jointly or as tenants in
common with a member of the Participant’s family, with right of survivorship. With the Committee’s
consent, a Participant may be permitted to (a) designate a beneficiary to receive the Common Stock
held in the Participant’s Investment Sharebuilder Account upon death or (b) transfer the Common
Stock held in the Investment Sharebuilder Account to a revocable trust for the benefit of the
Participant.

     8.4 Rights as a Shareholder. After a Participant’s Payroll Deduction Account has been charged
with the amount of the Purchase Price, the Participant shall have all of the rights and privileges
of a shareholder of the Company with respect to whole shares purchased under the Plan and held in
the Investment Sharebuilder Account, whether or not certificates representing the shares shall have
been issued. In addition to the provisions specified in the Plan relating to termination of a
Participant’s participation in the Plan, a Participant may withdraw the shares in his or her
Investment Sharebuilder

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Account at regular intervals established by the Committee, which shall be
at least once per year. A Participant may withdraw shares held in his or her Investment
Sharebuilder Account by providing written notice to Mercantile’s Chief Financial Officer or his or
her designee. A Participant’s written notice must provide the number of shares a Participant intends to withdraw. Upon receiving a
Participant’s written notice, Mercantile will deliver the share certificates, titled as indicated
in the Election Form, to the Participant within ten days.

     8.5 Sale of Shares. Mercantile will not sell shares held in an Investment Sharebuilder
Account on behalf of a Participant. A Participant wishing to sell his or her shares must first
withdraw the shares as provided in Section 8.4 above.

SECTION 9

RIGHTS ON DEATH, RETIREMENT OR PERMANENT DISABILITY

     9.1 Death. If a Participant dies during an Option Period, no further contributions on behalf
of the deceased Participant shall be made. The executor or administrator of the deceased
Participant’s estate may elect to withdraw the balance in the Participant’s Payroll Deduction
Account by notifying the Company in writing at least ten working days before the Stock Purchase
Date in respect of such Option Period. If no election to withdraw has been made, the balance
accumulated in the deceased Participant’s Payroll Deduction Account shall be used to purchase
shares of Common Stock on the next Stock Purchase Date in accordance with Section 8 of the Plan.
The Company shall deliver a written statement of the number of whole shares that such deceased
Participant purchased under the Plan to his or her executor or administrator upon request. The
Company shall deliver any amounts remaining in the deceased Participant’s Payroll Deduction Account
after the last applicable Stock Purchase Date to his or her executor or administrator.

     9.2 Retirement or Permanent Disability. If, during an Option Period, a Participant (a)
Retires or (b) incurs a Permanent Disability, no further contributions on behalf of the Retired or
Disabled Participant shall be made. A Retired or Disabled Participant may elect to withdraw the
balance in his or her Payroll Deduction Account by notifying the Company in writing at least ten
working days before the Stock Purchase Date in respect of such Option Period. If no election to
withdraw has been made, the balance accumulated in the Retired or Disabled Participant’s Payroll
Deduction Account shall be used to purchase shares of Common Stock on the next Stock Purchase Date
in accordance with Section 8 of the Plan. The Company shall deliver a written statement of the
number of whole shares that such Retired or Disabled Participant purchased under the Plan to such
Retired or Disabled Participant’s upon request. The Company shall deliver any amounts remaining in
the Retired or Disabled Participant’s Payroll Deduction Account after the last applicable Stock
Purchase Date to such Retired or Disabled Participant.

     If a Retired or Disabled Participant dies during the Option Period of such Participant’s
Retirement or Permanent Disability and such Participant did not notify the Company of his or her
desire to withdraw the balance in his or her Payroll Deduction Account, the executor or
administrator of such Participant’s estate or other legal title holder shall have all the rights
provided pursuant to Section 9.1.

SECTION 10

GENERAL PROVISIONS

     10.1 Rights Not Transferable. Rights under the Plan are not transferable by a Participant
other than by will or the laws of descent and distribution, and are exercisable during his or her
lifetime only by the Participant.

     10.2 Amendment or Suspension of the Plan. The Committee or the Board may at any time, and
from time to time, amend the Plan in any respect or suspend the operation of the Plan.

     10.3 Termination of the Plan. The Plan and all rights of Employees hereunder shall terminate
at the earliest of: (a) when all shares of Common Stock reserved under the Plan have been
purchased; or (b) at any time, at the discretion of the Committee or the Board. Notice of
termination shall be given to all Participants, but any failure to give notice shall not impair the
termination. Upon termination of the Plan, all amounts in Payroll Deduction Accounts of
Participants and all Common Stock held in Investment Sharebuilder Accounts of Participants shall
promptly be returned to such Participants.

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     10.4 Governing Law; Compliance with Law. The Plan shall be construed in accordance the laws
of the state of Michigan. The Company’s obligation to sell and deliver shares of Common Stock
hereunder shall be subject to all applicable federal and state laws, rules and regulations and to
such approvals by any regulatory or governmental agency as may, in the opinion of counsel for the
Company, be required. The Company may make such provisions as it may deem appropriate for the withholding
of any taxes or payment of any taxes which it determines it may be required to withhold or pay in
connection with a Participant’s participation in the Plan.

     10.5 Not an Employment Contract. The Plan shall not be deemed to constitute a contract of
employment between the Company or any Subsidiary and any Eligible Employee or Participant or to be
consideration or inducement for the employment of any Eligible Employee or Participant. The Plan
shall not be deemed to give any Participant or Eligible Employee the right to be retained as an
Employee or in any other service of the Company or any Subsidiary, or to interfere with the right
of the Company or any Subsidiary to discharge any Participant or Eligible Employee at any time
regardless of the effect that such discharge shall have upon such person as a participant in the
Plan.

     10.6 Effective Dates. The first Option Period under the Plan shall commence on October 1,
2002.

     10.7 Investment Intent. The Committee may require a Participant to confirm that he or she is
purchasing with investment intent and not with a view to resale or other distribution.

     10.8 Severability. In the event any provision of the Plan shall be held illegal or invalid
for any reason, the illegality or invalidity shall not affect the remaining provisions of the Plan
and the Plan shall be construed and enforced as if the illegal or invalid provision had not been
included.

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