Document:

ex_131000.htm

Exhibit 10.7

 

AMENDED AND RESTATED

CHANGE IN CONTROL AGREEMENT

 

This Amended and Restated Change in Control Agreement (“Agreement”) is made as of the 29th day of November, 2018, effective as of December 31, 2018, 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 Charles E. Christmas (the "Employee").

 

RECITALS

 

A.       The Employers and the Employee have entered into a Change in Control Agreement dated as of November 19, 2015 (the "Change in Control Agreement") which provides for a lump sum payment if Employee's employment is terminated under certain circumstances within 24 months after a Change in Control (as defined therein).

 

B.       The Employers and Employee have entered into an Employment Agreement dated as of November 13, 2014, as amended by a First Amendment dated as of November 19, 2015 (the “Employment Agreement”).

 

C.       The Employers and Employee are, simultaneously herewith, amending and restating the Employment Agreement to adjust certain amounts payable to Employee thereunder.

 

D.       The Employers and Employee wish to amend and restate the Change in Control Agreement to adjust the lump sum payment payable to Employee on and after January 1, 2019.

 

E.       The Employers believe that entering into this Agreement is in the best interest of their respective shareholders.

 

F.       The Employee believes that entering into this Agreement is in his best interest.

 

TERMS OF AGREEMENT

 

In consideration of the mutual covenants and obligations set forth in this Agreement, to induce the Employee to remain in the employment of the Employers, and for other good and valuable consideration, the Employers and the Employee agree as follows:

 

1.        Obligation of Employers upon Termination without Cause or Employee's Termination with Good Reason Following a Change in Control. In the event that during the Employment Period, an Employer terminates the Employee's employment without Cause under Section 8.2 of the Employment Agreement, or the Employee terminates his employment for Good Reason under Section 8.3 of the Employment Agreement; or the Employee's employment is terminated for any other reason except (i) for Cause under Section 8.1 of the Employment Agreement, (ii) without Good Reason under Section 8.4 of the Employment Agreement, or (iii) for Disability or death pursuant to Section 7 of the Employment Agreement, in each case within 24 months after the occurrence of a Change in Control (as defined in Exhibit A); the Bank shall pay and provide to the Employee, in addition to the payments and benefits owing under the Employment Agreement, the sum of $350,000 payable in a lump sum within fifteen (15) days after the effective date of the termination of employment.

 

 

 

 

2.       Delay in Severance Payments. If the Employee is a Specified Employee (as hereinafter defined) on the date of termination of employment, then the payment described in Section 1 shall be paid in a lump sum on the first business day of the seventh month after the date on which termination of employment occurs.

 

The Employee is a "Specified Employee" if he is a "key employee" (as defined in Code Section 416(i) without regard to Code Section 416(i)(5)) and the stock of the Bank or the Company is publicly traded on an established securities market or otherwise on the date of termination of employment. The Employee is a "key employee" during the period described below if he is one of the following during the 12-month period ending on any December 31 (the "identification date"):

 

(a)      an officer of the Bank or the Company with annual compensation greater than $130,000 (as indexed pursuant to Code Section 416(i)(1) -- $175,000 for 2018), provided, that no more than 50 employees (or, if less, the greater of 3 employees or 10% of the employees) shall be treated as officers;

 

(b)       a five percent (5%) owner of the Bank or the Company; or

 

(c)       a one percent (1%) owner of the Bank or the Company with annual compensation of more than $150,000.

 

If the Employee is a "key employee" as of an identification date, he is treated as a Specified Employee for the 12-month period beginning on the first day of the fourth month following the identification date.

 

3.       Deduction of Taxes and Adjustments re Code Section 280G. Each Employer may deduct from any amounts required to be paid to the Employee under this Agreement any amounts required to be withheld by the Employer pursuant to federal, state, or local law relating to taxes or related payroll deductions. In the event that any payments, distributions or benefits to or for the benefit of the Employee from the Bank or the Company, whether paid or payable, distributed or distributable, would constitute a "parachute payment", as defined in Section 280G of the Internal Revenue Code of 1986, as amended, or any successors thereto (the "Code"), payments under this Agreement and/or the Employment Agreement shall be reduced to the largest amount that will eliminate both the imposition of the excise tax imposed by Section 4999 of the Code and the disallowance as deductions to the Employers under Section 280G of the Code of any such payments, distributions or benefits. The determination of any reduction in the payments under this Agreement and/or the Employment Agreement pursuant to this paragraph shall be made by a major national or regional accounting firm selected by the Bank and approved by the Employee, which approval shall not be unreasonably withheld.

 

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4.       Notices. Any notice required or permitted to be given under this Agreement shall be sufficient if in writing and if personally delivered or sent by registered or certified United States mail or by a nationally recognized overnight courier service, to his residence or the last address he has provided in writing to the Employers, in the case of the Employee, or to its principal office in the case of an Employer. For purposes of this Agreement, notices shall be deemed given when received at the address or office specified in the preceding sentence.

 

5.       Waiver of Breach. No waiver by either party of any breach or non-performance of any provision or obligation of this Agreement shall be deemed to be a waiver of any preceding or succeeding breach of the same or any other provision of this Agreement.

 

6.      Assignment. The rights and obligations of each Employer under this Agreement shall inure to the benefit of and shall be binding upon them and their respective successors and assigns. As used in this Agreement, the term "successor" shall include any person, firm, corporation, or other business entity which at any time whether by merger, purchase or otherwise acquires all or substantially all of the assets or business of an Employer.

 

7.      Entire Agreement and Regulatory Compliance. This instrument and the Employment Agreement contains the entire agreement of the parties hereto with respect to the subject matter hereof and supersedes all prior agreements or understandings between the parties hereto relating to the subject matter hereof. Capitalized terms used herein, but not defined herein, have the meanings assigned thereto in the Employment Agreement. This Agreement may not be changed orally but only by an agreement in writing signed by the Employee and the Employers. Employee acknowledges that each of the Employers is subject to supervision and regulation by bank regulatory agencies. If, at the time any payment would otherwise be made to Employee under this Agreement, such payment is prohibited or limited by any applicable statute or regulation, including, without limitation, the Federal Deposit Insurance Act and 12 C.F.R. Part 359 (Golden Parachute and Indemnification Payments), or by order of any such bank regulatory agency, the amount of such payment shall be reduced to the largest amount, if any, that may be paid at such time consistently with such statute, regulation, or order. Employee agrees that compliance with any such statute, regulation, or order, including any resulting reduction or elimination of any payment specified under this Agreement, shall not constitute a breach of this Agreement by the Employers.

 

8.       Severability. If a court of competent jurisdiction determines that any one or more of the provisions of this Agreement is invalid, illegal or unenforceable in any respect, such determination shall not affect the validity, legality or enforceability of any other provision of this Agreement.

 

9.       Governing Law. This Agreement and the legal relations between the parties shall be subject to and governed by the internal laws (and not the law of conflicts) of the State of Michigan.

 

10.     Section 409A. This Agreement is intended to be exempt from Section 409A of the Code to the greatest extent possible, to comply with Section 409A to the extent it is applicable and is to be interpreted and operated consistently with those intentions. To the extent that Section 409A applies to payments in the event of termination of employment under this Agreement, such payments shall be made only if the termination of employment is a "separation from service" within the meaning of Treas. Reg. Section 1.409A-1(h).

 

[Signatures on Following Page]

 

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The parties have executed this Agreement as of the day and year first above written.

 

	 	
			MERCANTILE BANK CORPORATION

				 
	 	 	 	 
	 	 	 	 
	 	
			By:

				
			/s/ Robert B. Kaminski, Jr.

				 
	 	 	 	 
	 	 	
			Its:   Chief Executive Officer

				 
	 	 	 	 
	 	 	 	 
	 	
			MERCANTILE BANK OF MICHIGAN

				 
	 	 	 	 
	 	 	 	 
	 	
			By:

				
			/s/ Robert B. Kaminski, Jr.

				 
	 	 	Robert B. Kaminski, Jr.	 
	 	 	
			Its:   Chief Executive Officer

				 
	 	 	 	 
	 	 	 	 
	 	
			EMPLOYEE

				 
	 	 	 	 
	 	 	
			/s/ Charles E. Christmas

				 
	 	Charles E. Christmas	 

 

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EXHIBIT A

 

DEFINITION OF CHANGE IN CONTROL

 

"Change in Control" means that one or more of the following events have occurred with respect to a Responsible Corporation (as hereinafter defined):

 

(i)      Change in ownership of a Responsible Corporation. A change in ownership of a Responsible Corporation occurs on the date that any one person, or more than one person acting as a group, acquires ownership of stock of a Responsible Corporation that, together with stock held by such person or group, constitutes more than 50 percent of the total fair market value or total voting power of the stock of the Responsible Corporation. However, if any one person or more than one person acting as a group, is considered to own more than 50 percent of the total fair market value or total voting power of the stock of a Responsible Corporation, the acquisition of additional stock by the same person or persons is not considered to cause a change in the ownership of the Responsible Corporation (or to cause a change in the effective control of the Responsible Corporation (as defined in paragraph (ii)).

 

(ii)      Change in the effective control of a Responsible Corporation. A change in the effective control of a Responsible Corporation occurs on the date that either:

 

(A)     any one person, or more than one person acting as a group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) ownership of stock of the Responsible Corporation possessing 30 percent or more of the total voting power of the stock of the Responsible Corporation; or

 

(B)     a majority of members of the Responsible Corporation’s board of directors is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Responsible Corporation’s board of directors prior to the date of the appointment or election, provided, that for purposes of this paragraph, the term “Responsible Corporation” refers solely to the relevant corporation for which no other corporation is a majority shareholder.

 

If any one person, or more than one person acting as a group, is considered to effectively control a Responsible Corporation, the acquisition of additional control of such Responsible Corporation by the same person or persons is not considered to cause a change in the effective control of such Responsible Corporation (or to cause a change in the ownership of such Responsible Corporation within the meaning of paragraph (i)).

 

(iii)      Change in the ownership of a substantial portion of a Responsible Corporation’s assets. A change in the ownership of a substantial portion of a Responsible Corporation’s assets occurs on the date that any one person, or more than one person acting as a group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) assets from the Responsible Corporation that have a total gross fair market value equal to or more than 40 percent of the total gross fair market value of all of the assets of the Responsible Corporation immediately prior to such acquisition or acquisitions. For this purpose, gross fair market value means the value of the assets of a Responsible Corporation, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets. No Change in Control shall be deemed to occur under this paragraph (iii) when there is a transfer to:

 

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(A)     a shareholder of the Responsible Corporation (immediately before the asset transfer) in exchange for or with respect to its stock;

 

(B)     any entity, 50 percent or more of the total value or voting power of which is owned, directly or indirectly, by the Responsible Corporation;

 

(C)     A person, or more than one person acting as a group, that owns, directly or indirectly, 50 percent or more of the total value or voting power of all the outstanding stock of the Responsible Corporation; or

 

(D)     An entity, at least 50 percent of the total value or voting power of which is owned, directly or directly, by a person described in subparagraph (C).

 

(iv)     For purposes of this Exhibit C, a “Responsible Corporation” shall mean:

 

(A)      the corporation for whom Employee is performing services at the time of the Change in Control event;

 

(B)     the corporation that is liable for the payment of benefits under this Agreement (or all corporations liable for payment if more than one corporation is liable) but only if either the benefits are attributable to the performance of service by Employee for such corporation or there is a bona fide business purpose for such corporation or corporations to be liable for such payment and, in either case, no significant purpose of making such corporation or corporations liable for such payment is the avoidance of Federal income tax; or

 

(C)      a corporation that is a majority shareholder of a corporation identified in (iv)(A) or (iv)(B) above, or any corporation in a chain of corporations in which each corporation is a majority shareholder of another corporation in the chain, ending in a corporation identified in (iv)(A) or (iv)(B) above.

 

(v)      The definition of "Change in Control" shall be construed and interpreted in accordance with Code Section 409A and regulations and other guidance of general applicability issued thereunder.

 

6ex_131001.htm

Exhibit 10.8

 

MERCANTILE BANK CORPORATION

STOCK INCENTIVE PLAN OF 2016

 

PERFORMANCE-BASED

RESTRICTED STOCK AWARD AGREEMENT

NOTIFICATION OF AWARD AND TERMS AND CONDITIONS OF AWARD

(2019)

 

 

 

	Name of Grantee: 	 
	 	 
	Grant Date:  	November __, 2018
	 	 
	Number of Shares: 	_______ (“Target Award”)
	 	 
	Performance Period:	January 1, 2019 - December 31, 2021

 

This Performance-Based Restricted Stock Award Agreement (the “Agreement”) contains the terms and conditions of the performance-based restricted stock award granted to you by Mercantile Bank Corporation, a Michigan corporation (the “Company”), under the Mercantile Bank Corporation Stock Incentive Plan of 2016, as amended from time to time (the "Plan").

 

1.     Grant of Performance-Based Restricted Stock. Pursuant to the Plan, the Company has granted to you, effective on the Grant Date (shown above), the right to receive the number of shares shown above of the Common Stock of the Company (“Shares”) at the end of the applicable Performance Period, subject to the restrictions set forth in this Agreement and the Plan. The number of Shares of Performance-Based Restricted Stock that the Grantee actually earns for the Performance Period will be determined based on the level of achievement of the Performance Goals in accordance with Exhibit A attached hereto, with [TARGET NUMBER] Shares to be earned if target performance levels are achieved (the "Target Award"). The Shares, or any installment of the Shares respectively, while subject to risk of forfeiture or any restrictions imposed by the Plan or this Agreement, are referred to in this Agreement as “Performance-Based Restricted Stock.”

 

2.     Stock Incentive Plan Governs. The award and this Agreement are subject to the terms and conditions of the Plan. The Plan is incorporated into this Agreement by reference and all capitalized terms used in this Agreement have the meaning set forth in the Plan, unless this Agreement specifies a different meaning. By signing this Agreement, you accept this award, acknowledge receipt of a copy of the Plan and the prospectus covering the Plan and acknowledge that the award is subject to all the terms and provisions of the Plan and this Agreement. You further agree to accept as binding, conclusive and final all decisions and interpretations by the Committee of the Plan and this Agreement.

 

 

 

 

3.     Payment. The Performance-Based Restricted Stock is granted without requirement of payment.

 

4.     Shareholder Rights. Your Performance-Based Restricted Stock shall be held for you by the Company, in book entry or certificated form, in your name, during the applicable Performance Period. You shall have all the rights of a shareholder for your vested Performance-Based Restricted Stock after the applicable Performance Period. With respect to your Performance-Based Restricted Stock during the applicable Performance Period,

 

A.     You will have the right to vote such shares at any meeting of shareholders of the Company;

 

B.     You will have, and the right to receive, free of restrictions (but subject to applicable withholding taxes) all cash dividends and any liquidation amounts paid with respect to such shares; and

 

C.     Any non-cash dividends and other non-cash proceeds of such shares, including stock dividends and any other securities issued or distributed in respect of such shares, other than liquidation payments, will be subject to the same restrictions and risk of forfeiture as the shares of Performance-Based Restricted Stock to which they relate, and the term “Performance-Based Restricted Stock” when used in this Agreement shall also include any related stock dividends and other securities issued or distributed in respect of such shares, other than liquidation payments.

 

5.       Performance Goals. 

 

A.     The number of Shares of Performance-Based Restricted Stock earned by the Grantee for the Performance Period will be determined at the end of the Performance Period based on the level of achievement of the Performance Goals in accordance with Exhibit A. All determinations of whether Performance Goals have been achieved, the number of Shares earned by the Grantee, and all other matters related to this Section 5 shall be made by the Committee in its sole discretion.

 

B.     Promptly following completion of the Performance Period (and no later than forty-five (45) days following the end of the Performance Period), the Committee will review and certify in writing (a) whether, and to what extent, the Performance Goals for the Performance Period have been achieved, and (b) the number of Shares that the Grantee shall earn, if any, subject to the requirements of Section 6. Such certification shall be final, conclusive, and binding on the Grantee, and on all other persons, to the maximum extent permitted by law.

 

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6.       Vesting of Performance-Based Restricted Stock.

 

A.     Vesting. Shares of Performance-Based Restricted Stock are subject to forfeiture until they vest. Except as otherwise provided herein, the Shares of Performance-Based Restricted Stock will vest and become nonforfeitable, if at all, on February 15, 2022 (the "Vesting Date"). The number of Shares that vest and become nonforfeitable under this Agreement shall be determined by the Committee based on the level of achievement of the Performance Goals set forth in Exhibit A and shall be rounded to the nearest whole Performance Share. Performance Shares that have not vested by the Vesting Date in accordance with this Paragraph 6A shall be forfeited.

 

All or part of your Performance-Based Restricted Stock may vest earlier than described above in this Paragraph 6A under the circumstances provided for in Paragraphs 6C, 6D, 6E or 6F below.

 

B.      Forfeiture Event. Subject to Paragraphs 6C, 6D, 6E and 6F below, the shares of your Performance-Based Restricted Stock that would otherwise vest on a Vesting Date will not vest and shall automatically be forfeited and returned to the Company, if after the Grant Date and prior to the Vesting Date for such Performance-Based Restricted Stock, you cease to be an Employee (a "Forfeiture Event").

 

C.      Accelerated Vesting Upon Death, Disability or Retirement. If you cease to be an Employee or Director because of death, Disability or (in the case of Employees Only) Retirement at or after age 65 during the Performance Period, all restrictions remaining on your Performance-Based Restricted Stock shall terminate automatically and your Performance-Based Restricted Stock shall become immediately fully vested and nonforfeitable at the Target Award level.

 

If you cease to be an Employee because of Retirement during the Performance Period on or after age 62, but before age 65, with 5 or more years of service with the Company, Mercantile Bank of Michigan, Firstbank Corporation or any affiliate of Firstbank Corporation, you will be vested in a pro rata portion of the shares of Performance-Based Restricted Stock granted to you, equal to the respective total number of such shares granted to you at the Target Award level multiplied by the number of full months that have elapsed since the Grant Date divided by the total number of full months in the respective Performance Period, calculated separately for Performance-Based Restricted Stock having different Performance Periods.

 

D.      Accelerated Vesting Upon Termination Other Than for Cause. If the Company terminates your employment as an Employee other than for Cause and you are no longer employed by the Company or any Subsidiary, then all restrictions remaining on your Performance-Based Restricted Stock shall terminate automatically with respect to the number of such shares (rounded to the nearest whole number) equal to the respective total number of such shares granted to you at the Target Award level multiplied by the number of full months that have elapsed since the Grant Date divided by the total number of full months in the respective Performance Period, calculated separately for Performance-Based Restricted Stock having different Performance Periods. All remaining shares of Performance-Based Restricted Stock 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 Performance-Based Restricted Stock either before or after your termination other than for Cause.

 

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E.     Accelerated Vesting at the Committee's Discretion. The Committee may, in its discretion, at any time accelerate the vesting of your Performance-Based Restricted Stock on such terms and conditions as it deems appropriate.

 

F.     Change in Control.  Unless the Committee, in its discretion, prescribes an economically equivalent alternative approach, if a Change in Control of the Company occurs, and if the parties do not agree that your Performance-Based Restricted Stock award will be assumed or substituted by the successor or acquiring company (or a parent company thereof), then your Performance-Based Restricted Stock that is outstanding and has not previously been forfeited, shall become immediately fully vested and nonforfeitable at the Target Award level as provided in Section 9 of the Plan.

 

7.     Forfeiture of Performance-Based Restricted Stock. If any of your Performance-Based Restricted Stock is forfeited as provided for in Paragraph 6, such forfeiture shall be immediate, and forfeited Performance-Based Restricted Stock (including any cash dividends or liquidation payments for which the record date occurs on or after the date of the forfeiture, and any noncash dividends or noncash distributions with respect to Performance-Based Restricted Stock that is forfeited), and all of your rights to and interest in the forfeited Performance-Based Restricted Stock shall terminate without payment of consideration. Forfeited Performance-Based Restricted Stock shall be reconveyed to the Company, and you agree to promptly take such action and sign such documents as the Company may request to facilitate such reconveyance to the Company.

 

8.      Performance-Based Restricted Stock Not Transferable. Unless the Committee otherwise consents or permits, neither the Performance-Based Restricted Stock, nor any interest in the Performance-Based Restricted Stock, may be sold, exchanged, transferred, pledged, assigned, or otherwise alienated or hypothecated during the Performance Period except by will or the laws of descent and distribution, and all of your rights with respect to the Performance-Based Restricted Stock shall be exercisable during your lifetime only by you, or your guardian or legal representative. Any attempted action in violation of this paragraph shall be null, void, and without effect.

 

9.      Taxes and Tax Withholding

 

A.     The vesting of your Performance-Based Restricted Stock, or making an Internal Revenue Code Section 83(b) election with respect to this award of Performance-Based Restricted Stock, will cause you to have income with respect to the Performance-Based Restricted Stock, and will subject you to income tax on that income.

 

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B.     You agree to consult with any tax consultants you think advisable in connection with your Performance-Based Restricted Stock and acknowledge that you are not relying, and will not rely, on the Company for any tax advice.

 

C.     Whenever any Performance-Based Restricted Stock becomes vested under the terms of this Agreement, or an Internal Revenue Code Section 83(b) election is made with respect to this award of Performance-Based Restricted Stock, you must remit, on or prior to the due date thereof, the minimum amount necessary to satisfy all of the federal, state and local withholding (including FICA) tax requirements imposed on the Company (or the Subsidiary that employs you) relating to your Shares. This withholding tax obligation may be satisfied by any (or a combination) of the following means: (i) cash, check, or wire transfer; (ii) authorizing the Company (or Subsidiary that employs you) to withhold from other cash compensation payable to you by the Company or a Subsidiary; or (iii) unless the Committee determines otherwise, authorizing the Company to withhold Shares otherwise deliverable to you as a result of the vesting of the Performance-Based Restricted Stock, or delivering other unencumbered shares of the Common Stock of the Company which have been held for at least six months, equal to the amount of the withholding obligation.

 

D.     You may within the thirty day period after the Grant Date, in your sole discretion, make an election with the Internal Revenue Service under, and to the extent permitted by, Section 83(b) of the Internal Revenue Code. If you make this election, you will promptly give the Company notice that you have made the election, and provide the Company a copy of the election with the notice.

 

10.     Value of Shares Not Included In Other Computations. The value of the Shares under this Agreement will not be taken into account in computing the amount of your salary or other compensation for purposes of determining any incentive compensation, pension, retirement, death or other benefit under any employee benefit plan of the Company or any Subsidiary, except to the extent, if any, that such plan or another agreement between you, and Company or a Subsidiary, specifically provides otherwise.

 

11.      Legending Performance-Based Restricted Stock. The Company may, without liability for its good faith actions, place legend restrictions upon the Performance-Based Restricted Stock or unrestricted Shares obtained upon vesting of the Performance-Based Restricted Stock and issue “stop transfer” instructions requiring compliance with applicable securities laws and the terms of the Performance-Based Restricted Stock.

 

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In addition to any other legend or notice that may be set forth on the certificate or book entry records relating to any Performance-Based Restricted Stock, any certificate or book entry records evidencing shares of Performance-Based Restricted Stock awarded pursuant to this Agreement may bear a legend or notice substantially as follows:

 

The shares represented by this certificate were issued subject to certain restrictions under the Mercantile Bank Corporation Stock Incentive Plan of 2016 (the “Plan”). This certificate is held subject to the terms and conditions contained in a performance-based 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 performance-based restricted stock agreement are on file in the office of the Secretary of the Company.

 

12.     Committee Determinations Are Conclusive. Determinations regarding this Agreement (including, but not limited to whether an event has occurred resulting in the forfeiture of or vesting of Performance-Based Restricted Stock) shall be made by the Committee in accordance with this Agreement and the Plan, and all determinations of the Committee shall be final and conclusive and binding on all persons.

 

13.     No Right of Continuing Employment. Neither this Agreement nor the Plan creates any contract of employment, and nothing in this Agreement or the Plan shall interfere with or limit in any way the right of the Company or any Subsidiary to terminate your employment or service at any time, nor confer upon you the right to continue in the employ of the Company or any Subsidiary. Nothing in this Agreement or the Plan creates any fiduciary or other duty to you owed by the Company, any Subsidiary, or any member of the Committee except as expressly stated in this Agreement or the Plan.

 

14.     Amendment of Plan and this Agreement. The Company reserves the right to amend the Plan and this Agreement as provided for or not prohibited by the Plan. Any amendment to this Agreement shall be in writing and signed by the Company, and to the extent required by the Plan, signed by you.

 

15.     Additional Information. By signing this Agreement, you agree to provide any information relating to this Agreement or the Performance-Based Restricted Stock that is reasonably requested from time to time by the Company.

 

16.     Notices. Any notice by you to the Company under this Agreement shall be in writing and shall be deemed duly given only upon receipt of the notice by the Company at its principal executive office addressed to its Secretary or Chief Financial Officer. Any notice by the Company to you shall be in writing or by electronic transmission, and shall be deemed duly given if mailed or sent by electronic transmission to you at the address specified below by you, or to your email address at the Company, or to such other address as you may later designate by notice given to the Company.

 

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17.     Governing Law. The validity, construction and effect of this Agreement shall be governed by the laws of the State of Michigan.

 

18.     Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original but all of which together will constitute one and the same instrument. Counterpart signature pages to this Agreement transmitted by facsimile transmission, by electronic mail in portable document format (.pdf), or by any other electronic means intended to preserve the original graphic and pictorial appearance of a document, will have the same effect as physical delivery of the paper document bearing an original signature.

 

 

[Signatures on following page]

 

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The Company has caused this Agreement to be executed by its duly authorized officer, and the Grantee has executed this Agreement, each as of the Grant Date set forth above.

 

	 	
			MERCANTILE BANK CORPORATION

				 	 
	 	 	 	 	 
	 	 	 	 	 
	 	
			By:

				
			 

				 	 
	 	 	Robert B. Kaminski, Jr.	 	 
	 	 	Its: President and Chief Executive Officer	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	
			GRANTEE

				 	 
	 	 	 	 
	 	I acknowledge having received, read and understood the Plan and this Agreement, and agree to all of the terms and provisions of this Agreement.	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 
	 	(Signature)	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	(Please print your residence address)	 	 

 

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EXHIBIT A

 

Performance Goals

 

The number of shares of Performance-Based Restricted Stock earned during the Performance Period shall be based upon the Company's achievement of certain performance levels for each of the measurement criteria as defined in the tables below. A linear interpolation would be used to determine the payout in the event a measurement criteria falls between the threshold and target, or target and maximum, performance levels.

 

The Performance Goals for the Performance Period are based on a comparison of the Company’s average performance over the Performance Period (i.e., the summation of performance for calendar years 2019, 2020 and 2021 divided by three) for:

 

(1)     Return on Average Assets (“ROAA”);

(2)     Diluted Earnings per Share Growth (“Diluted EPS Growth”); and

(3)     Return on Equity (“ROE”).

 

The Committee will determine whether the Performance Goals have been met by taking into consideration the Company’s performance as compared to budget. In addition, the Committee may take into consideration the 3-year average of the median performance for the Peer Group with respect to ROAA, Diluted EPS Growth and ROE, business unit and individual performance and such other factors as the Committee may determine and approve in its sole discretion. The “Peer Group” means a group of similarly sized financial institutions located in the Midwest, as determined by the Compensation Committee in its sole discretion; provided, however, that a financial institution will be deleted from the Peer Group for 2021 if it has not reported its year-end financial results by January 31, 2022 (the “Determination Date”).

 

On or about the Determination Date, the Committee shall make its determinations regarding the achievements of ROAA, Diluted EPS Growth and ROE for the Company based on Company financial statements, and comparing results to budget, to the Peer Group based on publicly available information, and to any other factors as determined in the Committee’s discretion. The Committee shall have complete flexibility in determining whether, and to what extent, the Performance Goals have been met, and the determination of the Committee shall be final and binding on all parties.

 

	
			 

				
			 

				
			THREE-YEAR RETURN ON AVERAGE ASSETS

			
	
			 

				 	
			Performance Period

				
			 

			
	
			Performance Level

				
			 

				
			2019-2021

				
			Vesting

			
	
			Maximum Performance

				
			 

				 	 	
			 

				
			 

				 	
			 

				
			37.5% of target award

			
	
			Target Performance

				
			 

				 	 	 	
			 

				 	
			 

				
			25% of target award

			
	
			Threshold Performance

				
			 

				 	 	 	
			 

				 	
			 

				
			12.5% of target award

			
	
			< Threshold Performance

				
			 

				 	 	 	
			 

				 	
			 

				
			0% of target award

			

 

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			THREE-YEAR DILUTED EARNINGS PER SHARE GROWTH

			
	
			 

				 	
			Performance Period

				
			 

			
	
			Performance Level

				
			 

				
			2019-2021

				
			Vesting

			
	
			Maximum Performance

				
			 

				 	 	
			 

				
			 

				 	
			 

				
			75% of target award

			
	
			Target Performance

				
			 

				 	 	 	
			 

				 	
			 

				
			50% of target award

			
	
			Threshold Performance

				
			 

				 	 	
			 

				
			 

				 	
			 

				
			25% of target award

			
	
			< Threshold Performance

				
			 

				 	 	 	
			 

				 	
			 

				
			0% of target award

			

 

	
			 

				
			 

				
			THREE-YEAR RETURN ON EQUITY

			
	
			 

				 	
			Performance Period

				
			 

			
	
			Performance Level

				
			 

				
			2019-2021

				
			Vesting

			
	
			Maximum Performance

				
			 

				 	 	
			 

				
			 

				 	
			 

				
			37.5% of target award

			
	
			Target Performance

				
			 

				 	 	 	
			 

				 	
			 

				
			25% of target award

			
	
			Threshold Performance

				
			 

				 	 	 	
			 

				 	
			 

				
			12.5% of target award

			
	
			< Threshold Performance

				
			 

				 	 	 	
			 

				 	
			 

				
			0% of target award

			

 

 

In its discretion, the Compensation Committee may adjust Performance Goals and performance measure results during the Performance Period for extraordinary events or accounting adjustments associated from significant asset purchases or dispositions or other events not contemplated or otherwise considered when the Performance Goals and targets were established.

 

Determining Number of Shares Earned

 

Except as otherwise provided in the Plan or the Agreement, the number of Shares earned with respect to the Performance Period shall be determined as follows:

 

	 	
			1.

				
			Compute the sum of the percentage of the actual performance achieved with respect to each Performance Goal above. The Performance Goals are weighted as follows: ROAA – 25%; Diluted EPS Growth – 50%; and ROE – 25%.

			

 

	 	
			2.

				
			Multiply the percentage determined in paragraph 1 by the Target Award number of Shares. The result is the number of Shares earned for the Performance Period.

			

 

Award Range

 

Depending on the Company's performance relative to the Performance Goals, the Grantee may earn between 0% and 150% of the Target Award.

 

10

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