AMENDED AND RESTATED
MERCANTILE BANK CORPORATION
STOCK INCENTIVE PLAN OF 2006
DATED NOVEMBER 18, 2008
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.
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.
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.
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.
(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.
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 applica
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