SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
MERCANTILE BANK CORPORATION
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(Name of Registrant as Specified in Its Charter)
MERCANTILE BANK CORPORATION
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
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[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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[MERCANTILE BANK CORPORATION LOGO]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 18, 2002
------------------------
To our Shareholders:
The 2002 annual meeting of shareholders of Mercantile Bank Corporation will
be held at Mercantile's office at 5610 Byron Center Avenue SW, Wyoming, Michigan
on Thursday, April 18, 2002, at 9:00 a.m. local time. The meeting is being held
for the purpose of considering and voting on the following matters:
1. Election of Directors. To elect five Class II directors, each for a
three year term, as detailed in the accompanying proxy statement.
2. Approval of the Independent Director Stock Option Plan. To approve the
Independent Director Stock Option Plan, as described in the accompanying proxy
statement.
3. Other Business. To transact such other business as may properly be
brought before the meeting or any adjournment or adjournments of the meeting.
All holders of record of shares of common stock of Mercantile at the close
of business on Friday, March 1, 2002, are entitled to notice of and to vote at
the meeting, and any postponements or adjournments of the meeting.
We urge you to sign and return the enclosed proxy as promptly as possible,
whether or not you plan to attend the meeting in person. If you plan to attend
the meeting, please let us know by checking the box provided for this purpose on
the enclosed proxy. We would appreciate receiving your proxy by Wednesday, April
10, 2002.
By Order of the Board of Directors,
/s/ Gerald R Johnson Jr
Gerald R. Johnson, Jr.
Chairman of the Board &
Chief Executive Officer
Dated: March 11, 2002
MERCANTILE BANK CORPORATION
5650 BYRON CENTER AVENUE SW
WYOMING, MICHIGAN 49509
MARCH 11, 2002
PROXY STATEMENT
GENERAL INFORMATION
This proxy statement is furnished to shareholders of Mercantile Bank
Corporation ("Mercantile") in connection with the solicitation of proxies by its
Board of Directors for use at the annual meeting of its shareholders to be held
on Thursday, April 18, 2002, at 9:00 a.m. local time, at Mercantile's office at
5610 Byron Center Avenue SW, Wyoming, Michigan, and at any and all adjournments
of the meeting. It is expected that the proxy materials will be mailed to
shareholders on or about March 11, 2002.
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its exercise. Unless the proxy is revoked, the
shares represented by the proxy will be voted at the annual meeting or any
adjournment of the meeting.
The entire cost of soliciting proxies will be borne by Mercantile. Proxies
may be solicited by mail or facsimile, or by directors, officers, or regular
employees of Mercantile or its subsidiary, Mercantile Bank of West Michigan (the
"Bank"), in person or by telephone. Mercantile will reimburse brokerage houses
and other custodians, nominees and fiduciaries for their out-of-pocket expenses
for forwarding soliciting material to the beneficial owners of Mercantile common
stock.
The Board of Directors, in accordance with the Bylaws, has fixed the close
of business on March 1, 2002 as the record date for determining shareholders
entitled to notice of and to vote at the annual meeting and at any and all
adjournments of the meeting.
At the close of business on the record date, the outstanding number of
voting securities of Mercantile was 5,148,342 shares of common stock, each of
which is entitled to one vote.
ELECTION OF DIRECTORS
Mercantile's Articles of Incorporation and Bylaws provide that the number
of directors, as determined from time to time by the Board of Directors, shall
be no less than six and no more than fifteen. The Board of Directors has
presently fixed the number of directors at fifteen. The Articles of
Incorporation and Bylaws further provide that the directors shall be divided
into three classes, Class I, Class II and Class III, with each class serving a
staggered three year term and with the number of directors in each class being
as nearly equal as possible.
The Board of Directors has nominated Betty S. Burton, David M. Cassard,
Peter A. Cordes, David M. Hecht, and Robert M. Wynalda as Class II directors for
three year terms expiring at the 2005 Annual Meeting and upon election and
qualification of their successors. Each of the nominees is presently a Class II
director whose term expires at the April 18, 2002 annual meeting of the
shareholders. The other members of the Board, who are Class I and Class III
directors, will continue in office in accordance with their previous elections
until the expiration of their terms at the 2003 or 2004 annual meetings.
It is the intention of the persons named in the enclosed proxy to vote the
proxy for the election of the five nominees. The proposed nominees for election
as directors are willing to be elected and serve; but in the event that any
nominee at the time of election is unable to serve or is otherwise unavailable
for election, the Board of Directors may select a substitute nominee, and in
that event the persons named in the enclosed proxy intend to vote the proxy for
the person selected. If a substitute nominee is not selected, the proxy will be
voted for the election of the remaining nominees. The affirmative vote of a
plurality of the votes cast at the meeting is required for the nominees to be
elected. Votes withheld and broker non-votes are not counted toward a nominee's
total.
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STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table presents information regarding the beneficial ownership
of Mercantile common stock as of February 1, 2002, by the nominees for election
as directors of Mercantile, the directors of Mercantile whose terms of office
will continue after the Annual Meeting, the executive officers named in the
Summary Compensation Table, and all directors and executive officers of
Mercantile as a group.
<Table>
<Caption>
AMOUNT PERCENT OF CLASS
BENEFICIALLY BENEFICIALLY
NAME OF BENEFICIAL OWNER OWNED(1) OWNED(12)
- ------------------------ ------------ ----------------
Betty S. Burton............................................. 1,119 *
David M. Cassard............................................ 3,727 *
Edward J. Clark............................................. 5,281(2) *
Peter A. Cordes............................................. 27,562 *
C. John Gill................................................ 45,753(3) *
Doyle A. Hayes.............................................. 525 *
David M. Hecht.............................................. 55,125 1.1%
Gerald R. Johnson, Jr....................................... 114,404(4) 2.2%
Susan K. Jones.............................................. 936 *
Lawrence W. Larsen.......................................... 18,191(5) *
Calvin D. Murdock........................................... 17,534(6) *
Michael H. Price............................................ 49,122(7) *
Dale J. Visser.............................................. 140,542(8) 2.7%
Donald Williams, Sr......................................... 804 *
Robert M. Wynalda........................................... 55,125 1.1%
Robert B. Kaminski.......................................... 16,807(9) *
Charles E. Christmas........................................ 11,729(10) *
All directors and executive officers of Mercantile as a
group (17 Persons)........................................ 564,286(11) 10.7%
</Table>
- -------------------------
* Less than one percent.
(1) Some or all of the common stock listed may be held jointly with, or for the
benefit of, spouses and children or grandchildren of, or various trusts
established by, the person indicated.
(2) Includes 315 shares that Mr. Clark has the power to vote and dispose of as
custodian of an account for a relative.
(3) Includes 15,435 shares held by Mr. Gill's spouse.
(4) Includes 54,022 shares that Mr. Johnson has the right to acquire within 60
days of February 1, 2002 pursuant to the Mercantile's 1997 Employee Stock
Option Plan or 2000 Employee Stock Option Plan and 5,257 shares that Mr.
Johnson owns under the Bank's 401(k) Plan. Mr. Johnson also holds options
under the stock option plans to purchase an additional 6,405 shares, which
have not yet vested.
(5) Includes 2,205 shares that Mr. Larsen has the power to vote and dispose of
as trustee of the Central Industrial Supply Profit Sharing Plan. He
disclaims beneficial ownership of these shares except to the extent of his
pecuniary interest in the shares.
(6) Includes 10 shares that Mr. Murdock has the power to vote and dispose of as
custodian of an account for a friend's child.
(7) Includes 35,279 shares that Mr. Price has the right to acquire within 60
days of February 1, 2002 pursuant to Mercantile's stock option plans and
5,223 shares that Mr. Price owns under the Bank's 401(k) Plan. Mr. Price
also holds options under the stock option plans to purchase an additional
3,150 shares, which have not yet vested.
(8) Includes 24,150 shares that Mr. Visser has the power to vote and dispose of
as trustee of a trust for family members.
(9) Includes 15,267 shares that Mr. Kaminski has the right to acquire within 60
days of February 1, 2002 pursuant to Mercantile's stock option plans and
1,540 shares that Mr. Kaminski owns under the Bank's
2
401(k) Plan. Mr. Kaminski also holds options under the stock option plans
to purchase an additional 3,150 shares, which have not yet vested.
(10) Includes 5,512 shares that Mr. Christmas has the right to acquire within 60
days of February 1, 2002 pursuant to Mercantile's stock option plans and
5,666 shares that Mr. Christmas owns under the Bank's 401(k) Plan. Mr.
Christmas also holds options under the stock option plans to purchase an
additional 3,150 shares, which have not yet vested.
(11) Includes 110,080 shares that such persons have the right to acquire within
60 days of February 1, 2002 pursuant to Mercantile's stock option plans and
17,686 shares that such persons own under the Bank's 401(k) Plan.
(12) The percentages shown are based on the 5,147,791 shares of Mercantile
common stock outstanding as of February 1, 2002, plus the number of shares
that the named person or group has the right to acquire within 60 days of
February 1, 2002. All share information is adjusted to take into account
the 5% stock dividend paid on February 1, 2002.
To the best of Mercantile's knowledge, no person owns more than 5% of
Mercantile's outstanding common stock.
INFORMATION ABOUT DIRECTORS, NOMINEES, AND EXECUTIVE OFFICERS
The following information is furnished with respect to each continuing
director, nominee as a director, and executive officer of Mercantile. Each of
the continuing directors and nominees is currently a director of Mercantile as
well as a director of the Bank.
<Table>
<Caption>
HAS SERVED
NAME, AGE, AND POSITION WITH AS YEAR WHEN TERM AS A
MERCANTILE AND THE BANK DIRECTOR SINCE DIRECTOR EXPIRES
- ---------------------------- -------------- -------------------
Betty S. Burton, 60, Director............................... 1998 2002
David M. Cassard, 48, Director.............................. 2001 2002
Edward J. Clark, 57, Director............................... 1998 2004
Peter A. Cordes, 61, Director............................... 1997 2002
C. John Gill, 68, Director.................................. 1997 2004
Doyle A. Hayes, 51, Director................................ 2001 2003
David M. Hecht, 64, Director................................ 1997 2002
Gerald R. Johnson, Jr., 55, Chairman of the Board and Chief
Executive Officer of Mercantile, Chairman of the Board of
the Bank; and Director.................................... 1997 2004
Susan K. Jones, 52, Director................................ 1998 2003
Lawrence W. Larsen, 62, Director............................ 1997 2003
Calvin D. Murdock, 62, Director............................. 1997 2004
Michael H. Price, 45, President and Chief Operating Officer
of Mercantile, President and Chief Executive Officer of
the Bank; and Director.................................... 1997 2003
Dale J. Visser, 65, Director................................ 1997 2003
Donald Williams, Sr., 65, Director.......................... 1998 2004
Robert M. Wynalda, 66, Director............................. 1997 2002
Robert B. Kaminski; 40, Senior Vice President and Secretary
of Mercantile, and Senior Vice President, Chief Operating
Officer and Secretary of the Bank.........................
Charles E. Christmas; 36, Senior Vice President, Chief
Financial Officer and Treasurer of Mercantile, and Senior
Vice President and Chief Financial Officer of the Bank....
</Table>
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The business experience of each of the directors, nominees and executive
officers of Mercantile for at least the past five years is summarized below:
BETTY S. BURTON (Director) Ms. Burton is a member of the Board of Directors
of, and a Consultant for, Wonderland Business Forms, Inc., which distributes
business forms and single source printing solutions. She has served in these
capacities since 1999. Ms. Burton was President and Chief Executive Officer of
Wonderland Business Forms from 1995 to 1999. Prior to taking over the family
business in 1990, Ms. Burton was a long time elementary teacher in the public
school system. She is a graduate of Western Michigan University, Grand Valley
State University and Dartmouth College Minority Business Executive Program. Ms.
Burton is a Trustee of both the Grand Valley State University Foundation and the
Western Michigan University Foundation. She has previously served as a member of
the Board of Directors of First Michigan Bank - Grand Rapids ("FMB-Grand
Rapids") and Butterworth Hospital. Ms. Burton is very involved in civic and
community activities in the Grand Rapids area.
DAVID M. CASSARD (Director) Mr. Cassard is President, Treasurer and a
member of the Board of Directors of Waters Corporation which owns and operates
commercial real estate properties in the Grand Rapids metropolitan area. He has
served in these capacities since January 1979. Prior to 1979 he worked for an
international firm of Certified Public Accountants. He is a graduate of the
University of Michigan (BBA) and Michigan State University (MBA), he is a
Certified Public Accountant and Certified Property Manager. He currently serves
as Chairperson of the City of Grand Rapids Downtown Development Authority and is
a member of the City of Grand Rapids Downtown Improvement District Board. He
also serves as Chairperson of the Grand Rapids Area Chamber of Commerce
Foundation, and is Vice Chair of the Family Owned Business Council of the Grand
Rapids Area Chamber of Commerce. He previously served as a member of the Board
of Directors of FMB-Grand Rapids and was a member of the Board of Directors of
First Michigan Bank Corporation ("FMB") and Butterworth Hospital. He is a member
of several professional organizations and societies including the American
Institute of CPA's, the Michigan Association of CPA's, the Grand Rapids
Association of Realtors, the National Association of Realtors and the Institute
of Real Estate Management. Mr. Cassard has been heavily involved in civic and
community activities with special focus on downtown development.
EDWARD J. CLARK (Director) Mr. Clark is the Chairman and Chief Executive of
The American Seating Company, and has held this position since 1986. American
Seating is headquartered in Grand Rapids, Michigan, and produces seating and
furniture for offices, as well as seating for buses, rail cars, auditoriums,
stadiums and performing arts centers. Mr. Clark is a member of the Boards of
Directors of the Metropolitan YMCA and the Grand Rapids Employers' Association.
He is Vice President of the Foundation Board of Trustees and Chairman of the
Development Committee of Grand Valley State University. From 1988 through 1997
he was a member of the Board of Directors and Executive Committee of FMB-Grand
Rapids. Mr. Clark has also previously served on the Boards of Directors of the
Grand Rapids Symphony Orchestra, Red Cross of Kent County, St. Mary's Hospital
and The Business and Institutional Furniture Manufacturer's Association.
PETER A. CORDES (Director) Mr. Cordes has served as President and Chief
Executive Officer of GWI Engineering Inc. ("GWI") of Grand Rapids, Michigan
since 1991. GWI is engaged in the manufacturing of industrial automation systems
for customers in a variety of industries in the Midwest. Mr. Cordes purchased
GWI in 1991 and is now its sole owner. Mr. Cordes graduated from St. Louis
University with a degree in aeronautics. He is a native of Traverse City,
Michigan and has spent the last twenty years in Western Michigan.
C. JOHN GILL (Director) Mr. Gill is the retired Chairman of the Board and
one of the owners of Gill Industries of Grand Rapids, Michigan. Mr. Gill served
as Chairman of Gill Industries from 1994 through 1997, and served as President
of Gill Industries from 1983 through 1993. Gill Industries is a manufacturing
company involved with sheet metal stampings and assemblies for the automotive
and appliance industries.
DOYLE A. HAYES (Director) Mr. Hayes has over 30 years experience in the
Automotive Industry and has held various positions within that industry.
Currently, he is President and CEO of Pyper Products Corporation, a plastic
injection molding company that supplies the auto and furniture industries. Mr.
Hayes has been the President and CEO of Pyper Products Corporation since 1994.
He has served on several non-profit boards in
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the Grand Rapids community and is currently Board Chair at Metropolitan Hospital
and a member of the Borgess Hospital of Kalamazoo Board of Directors. Mr. Hayes
is a member of the Davenport Educational System (DES), Grand Valley State
University Foundation, VanAndel Global Trade Center, Seidman Advisory Board,
Economic Club of Grand Rapids, Small Business Association of Michigan (SBAM),
Grand Valley Metro Council and the Governor's Workforce Commission Boards. Mr.
Hayes was formerly a Corporate Director of FMB.
DAVID M. HECHT (Director) Mr. Hecht is an attorney and has practiced law
for 41 years, including the past 29 years in Grand Rapids. From 1993 through
2001, he was the Chairman of the Grand Rapids law firm of Hecht & Lentz, and was
a founder of the firm. Mr. Hecht is a native of Grand Rapids and a graduate of
the University of Michigan and the University of Wisconsin. He is the President
of the Charles W. Loosemore Foundation, a Trustee of the Grand Valley University
Foundation, Vice Chair of the Board of Trustees of Hospice of Michigan, a
Trustee of the Hospice of Michigan Foundation, and a Director of Hospice
Foundation of Greater Grand Rapids.
GERALD R. JOHNSON, JR. (Chairman of the Board, Chief Executive Officer and
Director of Mercantile and Chairman of the Board and Director of the Bank) Mr.
Johnson has over 30 years experience in the financial service industry,
including 26 years of commercial banking experience. Mr. Johnson was appointed
President and Chief Executive Officer of FMB-Grand Rapids in 1986, and served as
Chairman, President and Chief Executive Officer from 1988 to May of 1997, when
he resigned to organize Mercantile. Mr. Johnson served as Chairman of the Board
and Chief Executive Officer of Mercantile and the Bank from their inception
through 1998, and since the beginning of 1999 has served as Chairman of the
Board and Chief Executive Officer of Mercantile and Chairman of the Board of the
Bank. In the Grand Rapids market, prior to joining FMB-Grand Rapids, Mr. Johnson
was employed in various lending capacities by Union Bank (now part of Bank One
Corporation), Pacesetter Bank-Grand Rapids (now part of Fifth Third Bancorp) and
Manufacturers Bank (now part of Comerica Bank). He currently serves as Chairman
of Horizons of Michigan, Chairman of Life Guidance Services and a member of the
Boards of Directors of the Girl Scouts of Michigan Trails and The Recuperation
Center (advisory board). Mr. Johnson has past board affiliations with the
Downtown YMCA (immediate past chair), American Heart Association of Kent County,
Project Rehab, Grand Rapids Area Chamber of Commerce and the Junior League of
Grand Rapids (advisory board). Mr. Johnson is also affiliated with Grand Rapids
Opportunity for Women, Grand Rapids Rotary Club and the Economic Development
Foundation.
SUSAN K. JONES (Director) Ms. Jones is both a partner of the Callahan
Group, LLC, a marketing consulting firm, and a tenured, full-time Professor of
Marketing at Ferris State University in Big Rapids, Michigan. She has been a
partner of the Callahan Group since 1998, and has worked at her own marketing
consulting firm, Susan K. Jones & Associates, since 1980. Ms. Jones has been a
Professor of Marketing at Ferris State since 1990. She enjoys an active
volunteer career, currently serving as Secretary and Treasurer of the Chicago
Association of Direct Marketing, a member of the Northwestern Alumni Association
Board, President of the Northwestern Club of West Michigan, and as the West
Michigan Alumni Admissions Council Chair for Northwestern University. She is a
past-president of the Junior League of Grand Rapids, a graduate of Leadership
Grand Rapids, and currently serves as a trustee of the Chicago Association of
Direct Marketing Educational Foundation.
LAWRENCE W. LARSEN (Director) Mr. Larsen is Chief Executive Officer,
President, and owner of Central Industrial Corporation of Grand Rapids,
Michigan. He began his employment with the company in 1967, and purchased it in
1975. Central Industrial Corporation is a wholesale distributor of industrial
supplies. Mr. Larsen is also an owner and director of Jet Products, Inc. of West
Carrollton, Ohio. Jet Products, Inc. designs, manufactures and sells hose reels
and related hydraulic products. Mr. Larsen is a native of Wisconsin. He has
spent the last 35 years in the Grand Rapids area. Mr. Larsen served as a
director of FMB-Grand Rapids from 1980 until June of 1997, and was a member of
the Executive Loan Committee and the Audit Committee.
CALVIN D. MURDOCK (Director) Mr. Murdock is President of SF Supply ("SF")
of Grand Rapids, Michigan. He has held this position since 1994. From 1992 to
1994, he served as the General Manager of SF,
5
and in 1991, served as SF's Controller. SF is a wholesale distributor of
commercial and industrial electronic, electrical and automation parts, supplies
and services. Mr. Murdock is a Michigan native and a graduate of Ferris State
University with a degree in accounting. Prior to joining SF, Mr. Murdock owned
and operated businesses in the manufacturing and supply of automobile wash
equipment.
MICHAEL H. PRICE (President, Chief Operating Officer and Director of
Mercantile and President, Chief Executive Officer and Director of the Bank) Mr.
Price has over 20 years of commercial banking experience, most of which was with
FMB and its subsidiary, FMB-Grand Rapids. Spending most of his banking career in
commercial lending, Mr. Price was the Senior Lending Officer from 1992 to 1997,
and President of FMB-Grand Rapids for several months in 1997 before joining the
Bank in late 1997. Mr. Price served as President and Chief Operating Officer of
Mercantile and the Bank from December of 1997 through 1998, and has served as
President and Chief Operating Officer of Mercantile and President and Chief
Executive Officer of the Bank since January of 1999. Mr. Price has been and
continues to be very active in the Grand Rapids community. He currently serves
on the Boards of Directors of Kent County Habitat for Humanity and The Grand
Rapids Urban League.
DALE J. VISSER (Director) Mr. Visser is Chairman and one of the owners of
Visser Brothers Inc. of Grand Rapids, Michigan. He has served this company in
various officer positions since 1960. Visser Brothers is a construction general
contractor specializing in commercial buildings. Mr. Visser also has an
ownership interest in several real estate projects in the Grand Rapids area
including Breton Village Shopping Center. Mr. Visser served as a director of
FMB-Grand Rapids from 1972 until June of 1997. He is a Grand Rapids native and a
graduate of the University of Michigan with a degree in civil engineering. Mr.
Visser is active in the community and serves on the Board of Directors of
Westminster Theological Seminary Foundation. He has previously served on the
Boards of the Grand Rapids YMCA, Christian Rest Home, and West Side Christian
School.
DONALD WILLIAMS, SR. (Director) Mr. Williams is currently the Coordinator
of the minority students teacher preparation program for the Grand Rapids Public
Schools (secondary schools). Mr. Williams has over 30 years experience in
administration of educational programs with special emphasis on political
sensitivity and equality. From 1989 to 2001, he was the Dean of Minority Affairs
and Director of the Multicultural Center of Grand Valley State University. Mr.
Williams also serves as President of the Concerned Citizens Council and 1st Vice
President of the Rotary Club of Grand Rapids. He previously served as President
of the Coalition for Representative Government (CRG), and as a member of the
Board of Directors of FMB-Grand Rapids and the Grand Rapids Advisory Board of
Michigan National Bank, as Treasurer and President of the Minority Affairs
Council of Michigan Universities (MACMU), and as a member of the Board of
Directors of the Grand Rapids Area Chamber of Commerce. Mr. Williams has been
the recipient of numerous awards in the Grand Rapids and Michigan area for
community service and job performance.
ROBERT M. WYNALDA (Director) Mr. Wynalda is the retired Chief Executive
Officer and former owner of Wynalda Litho Inc. of Rockford, Michigan. Mr.
Wynalda held the position of Chief Executive Officer from 1970 when he founded
the company until its sale in February of 1998. Wynalda Litho Inc. is a
commercial printing company serving customers from around the country. Mr.
Wynalda is a native of Grand Rapids and has spent 45 years in the printing
business. Mr. Wynalda serves on the Board of Trustees for Cornerstone College of
Grand Rapids, and formerly served as a director of a local financial
institution.
ROBERT B. KAMINSKI (Senior Vice President and Secretary of Mercantile and
Senior Vice President, Chief Operating Officer and Secretary of the Bank) Mr.
Kaminski joined the Bank in June 1997 and has over 17 years of commercial
banking experience. From 1984 to 1993, Mr. Kaminski worked for FMB-Grand Rapids
in various capacities in the areas of credit administration and bank compliance.
In 1993, Mr. Kaminski was appointed Vice President in charge of loan review and
served as Vice President and Manager of the commercial credit department for
three of FMB's subsidiaries. He has served as Senior Vice President and
Secretary of Mercantile and the Bank since their inception in 1997, and has also
served as Chief Operating Officer of the Bank since 2000. Mr. Kaminski serves on
the Leadership Committee for the National Kidney Foundation of Michigan in Grand
Rapids, and is a career mentor for Aquinas College of Grand Rapids.
CHARLES E. CHRISTMAS (Senior Vice President, Chief Financial Officer, and
Treasurer of Mercantile and Senior Vice President and Chief Financial Officer of
the Bank) Mr. Christmas joined the Bank in April 1998
6
and served as Vice President of Finance, Treasurer and Compliance Officer of
Mercantile and the Bank in 1998. In 1999, Mr. Christmas was elected Chief
Financial Officer, Treasurer and Compliance Officer of Mercantile and the Bank.
In 2000, Mr. Christmas was elected Senior Vice President, Chief Financial
Officer and Treasurer of Mercantile, and Senior Vice President and Chief
Financial Officer of the Bank. Prior to joining Mercantile, he examined various
financial institutions for over ten years while serving as a bank examiner with
the Federal Deposit Insurance Corporation ("FDIC"). He began his tenure with the
FDIC upon his graduation from Ferris State University. Mr. Christmas holds a
Bachelors of Science degree in Accountancy. Mr. Christmas serves as a
fundraising volunteer for the Make-A-Wish Foundation of Michigan.
BOARD OF DIRECTORS MEETINGS AND COMMITTEES
Mercantile has standing Audit, Compensation, and Nominating Committees of
the Board of Directors.
The functions of the Audit Committee and its activities during 2001 are
described below under the heading "Audit Committee Report".
The members of the Compensation Committee consist of David M. Cassard,
Peter A. Cordes, Lawrence W. Larson, and Calvin D. Murdock. The Compensation
Committee's responsibilities include considering and recommending to the Board
of Directors any changes in compensation and benefits for officers of
Mercantile. At present, all officers of Mercantile are also officers of the
Bank, and although they receive compensation from the Bank in their capacity as
officers of the Bank, they presently receive no separate cash compensation from
Mercantile.
The members of the Nominating Committee consist of Betty S. Burton, Doyle
A. Hayes, David M. Hecht, Dale J. Visser, and Robert M. Wynalda. The Nominating
Committee is responsible for reviewing and making recommendations to the Board
of Directors as to its size and composition, and recommending to the Board of
Directors candidates for election as directors at Mercantile's annual meetings.
The Nominating Committee will consider as potential nominees persons recommended
by shareholders. Recommendations should be submitted to the Nominating Committee
in care of Gerald R. Johnson, Jr., Chairman and Chief Executive Officer of
Mercantile. Each recommendation should include a personal biography of the
suggested nominee, an indication of the background or experience that qualifies
such person for consideration, and a statement that such person has agreed to
serve if nominated and elected. Shareholders who themselves wish to effectively
nominate a person for election to the Board of Directors, as contrasted with
recommending a potential nominee to the Nominating Committee for its
consideration, are required to comply with the advance notice and other
requirements set forth in Mercantile's Articles of Incorporation.
During 2001, there were a total of eleven meetings of the Board of
Directors of Mercantile. In addition, there were four meetings of the Audit
Committee, one meeting of the Compensation Committee and two meetings of the
Nominating Committee during 2001. Each director attended at least 75% of the
total number of meetings of the Board of Directors and committees of the Board
of which he or she was a member, held during 2001, except Robert M. Wynalda who
attended 71% of the meetings.
For 2001, non-employee directors of the Bank were paid an annual retainer
of $3,000 and a $300 fee for each meeting of the Board of Directors of the Bank
that they attended. For 2002, non-employee directors of the Bank were paid an
annual retainer of $7,200, and will be paid $300 for each meeting of the Board
that they attend. The Board of Directors of the Bank generally meets twice a
month. Under the Bank's deferred compensation plan for non-employee directors,
directors may elect to defer the receipt of the annual retainer and meeting fees
until they are no longer serving on the Board. On October 18, 2001, the Board of
Directors adopted an Independent Director Stock Option Plan, and a ten year
option for 525 shares (as adjusted for the February 1, 2002, 5% stock dividend)
was granted under the plan to each of Ms. Burton, Ms. Jones, and Messrs.
Cassard, Clark, Cordes, Gill, Hayes, Hecht, Larsen, Murdock, Visser, Williams,
and Wynalda. The options are first exercisable on October 18, 2006, subject to
accelerated vesting as provided in the plan. The exercise price under the
options is $19.86 per share, which is 125 percent of the fair market value per
share on the day the options were granted. The plan is being submitted to the
shareholders for approval at the annual meeting and is described later in this
proxy statement. The options will terminate if the plan is not approved by the
shareholders.
7
AUDIT COMMITTEE REPORT
The following Audit Committee Report does not constitute soliciting
material and should not be deemed filed or incorporated by reference into any
other Mercantile filing under the Securities Act of 1933 or the Securities
Exchange Act of 1934, except to the extent Mercantile specifically incorporates
this report by reference.
The members of the Audit Committee consist of Betty S. Burton, David M.
Cassard, Edward J. Clark, C. John Gill, David M. Hecht and Robert M. Wynalda.
Each of the members of the Audit Committee is an independent director as that
term is defined in Rule 4200(a) of The Nasdaq Stock Market Rules. The Audit
Committee's responsibilities include recommending to the Board of Directors the
independent auditors to be selected, reviewing the scope of proposed audits and
the procedures to be used, and the results of the audits, reviewing the adequacy
and effectiveness of accounting and financial controls, and reviewing the
internal auditing function and the financial statements of Mercantile.
The Audit Committee amended its charter during 2001, and the amended
charter has been approved by the Board of Directors. The complete text of the
charter, as amended, is included in Annex A to this proxy statement.
Management has the primary responsibility for the financial statements and
the reporting process, including Mercantile's systems of internal controls. In
fulfilling its oversight responsibilities, the Audit Committee reviewed the
audited financial statements for the year ended December 31, 2001 with
management, including a discussion of the quality and the acceptability of
Mercantile's financial reporting and controls.
The Audit Committee reviewed with the independent auditors, Crowe Chizek &
Company LLP, who are responsible for expressing an opinion on the conformity of
those audited financial statements with generally accepted accounting
principles, their judgments as to the quality and the acceptability of
Mercantile's financial reporting and such other matters as are required to be
discussed with the Audit Committee under generally accepted auditing standards,
including the matters required to be discussed pursuant to Statement on Auditing
Standards No. 61 (Communications with Audit Committees). In addition, the Audit
Committee has discussed with Crowe Chizek & Company LLP the auditors'
independence from management and Mercantile, including the matters in the
auditors' written disclosures required by the Independence Standards Board
Standard No. 1 (Independence Discussions with Audit Committees). The Audit
Committee has considered the compatibility of the provision of non-audit
services with maintaining the auditor's independence.
The Audit Committee also discussed with Mercantile's internal and
independent auditors the overall scope and plans for their respective audits.
The Audit Committee meets periodically with the internal and independent
auditors, with and without management present, to discuss the results of their
examinations, their evaluations of Mercantile's internal controls, and the
overall quality of Mercantile's financial reporting.
In reliance on the reviews and discussions referred to above, the Audit
Committee recommended to the Board of Directors that the audited financial
statements be included in the Annual Report on Form 10-K for the year ended
December 31, 2001 for filing with the Securities and Exchange Commission. The
Audit Committee also evaluated and recommended to the Board the reappointment of
Mercantile's independent auditors for fiscal 2002.
Audit Committee
Betty S. Burton
David M. Cassard
Edward J. Clark
C. John Gill
David M. Hecht
Robert M. Wynalda
8
AUDIT FEES
The aggregate fees billed to Mercantile for 2001 by Mercantile's accounting
firm, Crowe Chizek & Company LLP, are as follows:
<Table>
Audit Fees.................................................. $ 59,000
Financial Information Systems Design and Implementation
Fees...................................................... 0
All Other Fees.............................................. 91,550
--------
Total....................................................... $150,550
</Table>
COMPENSATION COMMITTEE REPORT
The following Compensation Committee Report and the shareholder return
performance graph included elsewhere in this proxy statement do not constitute
soliciting material and should not be deemed filed or incorporated by reference
into any other Mercantile filing under the Securities Act of 1933 or the
Securities Exchange Act of 1934, except to the extent Mercantile specifically
incorporates this report or the performance graph by reference.
The compensation of the executive officers of Mercantile is determined by
the Board of Directors based on recommendations of the Compensation Committee.
Mercantile seeks to establish compensation at a level that will attract,
motivate and retain experienced executive officers who can increase shareholder
value, deliver competitive products and services to customers, and provide
leadership for employees. Salaries are intended to be competitive, and reflect
factors such as individual performance, level of responsibility, and prior
experience. Incentive compensation and stock option awards are intended to align
the interests of executive officers with that of the shareholders and reward
performance that increases shareholder value.
Executive compensation is comprised of the following:
1. Salary.
2. Incentive compensation payable in the form of a cash bonus based on the
attainment by Mercantile of certain annual performance criteria
established by the Board of Directors.
3. Discretionary awards of stock options.
4. Participation in other benefit plans offered to all employees including
401(k), health insurance, disability insurance and life insurance.
Annual salaries for Mercantile's Chairman and Chief Executive Officer and
President and Chief Operating Officer increased in 2001. During the four-year
time period in which Mercantile has been operating, growth in earnings per share
and asset levels has been significant, and the salary increase granted these two
executive officers during the year recognizes the contribution these individuals
have made to the success of the organization. Executive salaries and incentive
compensation are also based in part on information derived from industry
compensation studies performed by Mercantile's auditors and by surveys conducted
by the Michigan Bankers Association and the Bank Administration Institute.
Compensation information is also taken from proxy materials filed with the
Securities and Exchange Commission by other comparable financial institutions.
This information is analyzed by Mercantile's Director of Human Resources and, in
conjunction with Mercantile's independent auditor, presented to the Compensation
Committee for the formulation of a salary recommendation to be approved by the
Board of Directors.
9
Executive bonuses are also determined by the Board of Directors as the
result of a recommendation by the Compensation Committee and are based on the
same criteria as is the incentive compensation for all non-lender employees.
Compensation Committee
David M. Cassard
Peter A. Cordes
Lawrence W. Larsen
Calvin D. Murdock
SUMMARY COMPENSATION TABLE
The following table details the compensation earned by the named executives
for the three years ended December 31, 2001:
<Table>
<Caption>
ANNUAL LONG TERM COMPENSATION
COMPENSATION --------------------------------------
---------------- ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS COMPENSATION(1)
- --------------------------- ---- ------ ----- ------- ---------------
Gerald R. Johnson, Jr...................... 2001 $275,000 $110,000 4,200 $11,275
Chairman of the Board and 2000 250,000 87,500 4,410 11,793
Chief Executive Officer of Mercantile, 1999 188,601 50,000 0 9,683
and Chairman of the Board of the Bank
Michael H. Price........................... 2001 245,000 98,000 3,150 10,350
President and Chief Operating Officer of 2000 220,000 77,000 4,410 10,610
Mercantile, and President and Chief 1999 158,997 42,500 0 8,099
Executive Officer of the Bank
Robert B. Kaminski......................... 2001 121,000 36,300 3,150 6,103
Senior Vice President and Secretary of 2000 108,309 28,000 4,243 5,485
Mercantile, and Senior Vice President, 1999 95,532 24,500 0 3,869
Chief Operating Officer and Secretary of
the Bank
Charles E. Christmas....................... 2001 105,000 31,500 3,150 5,011
Senior Vice President, Chief 2000 83,000 16,600 5,512 4,150
Financial Officer and Treasurer of
Mercantile, 1999 77,500 15,500 0 3,054
and Senior Vice President and Chief
Financial Officer of the Bank
</Table>
- -------------------------
(1) Includes for 2001, matching contributions by the bank to the 401(k) plan
accounts of Messrs. Johnson, Price, Kaminski and Christmas in the amounts of
$8,500, $8,500, $6,050 and $4,961. Also includes for 2001, life and
disability insurance premiums paid by the Bank on policies insuring Mr.
Johnson of $862 and $1913, and Mr. Price of $1,052 and $798; and life
insurance premiums on policies insuring Mr. Kaminski of $53, and Mr.
Christmas of $50. These policies are in addition to the Bank's group
insurance plans that are generally available to salaried employees.
10
OPTION GRANTS IN 2001
The Board of Directors of Mercantile is responsible for awarding stock
options and administering Mercantile's stock option plans. The following table
provides information on options granted to the named executives during the year
ended December 31, 2001:
<Table>
<Caption>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
STOCK PRICE
NO. OF SHARES % OF TOTAL APPRECIATION FOR
UNDERLYING OPTIONS GRANTED EXERCISE OPTION TERM
OPTIONS TO EMPLOYEES PRICE EXPIRATION --------------------
NAME GRANTED IN 2001 PER SHARE(3) DATE 5% 10%
- ---- ------------- --------------- ------------ ---------- -- ---
Gerald R Johnson, Jr. ...... 4,200(1) 11.3% $15.88 10/17/2011 $41,979 $106,351
Michael H. Price............ 3,150(2) 8.5% $15.88 10/17/2011 $31,484 $ 79,763
Robert B. Kaminski.......... 3,150(2) 8.5% $15.88 10/17/2011 $31,484 $ 79,763
Charles E. Christmas........ 3,150(2) 8.5% $15.88 10/17/2011 $31,484 $ 79,763
</Table>
- -------------------------
(1) Becomes exercisable for 3,150 of the shares on October 18, 2002, and for the
remaining 1,050 shares on January 1, 2003.
(2) Becomes exercisable on October 18, 2002.
(3) The exercise price for each of the options has been the market price of the
common stock at the time the option was granted. The exercise price may be
paid in cash, by the delivery of previously owned shares, or by a
combination of cash and shares.
AGGREGATED STOCK OPTION EXERCISES IN 2001 AND YEAR-END OPTION VALUES
The following table provides information on the exercise of stock options
during the year ended December 31, 2001 by the named executives and the value of
unexercised options at December 31, 2001:
<Table>
<Caption>
NUMBER OF VALUE OF
SHARES UNEXERCISED UNEXERCISED IN-THE-MONEY
ACQUIRED ON VALUE OPTIONS AT 12/31/01 OPTIONS AT 12/31/01
NAME EXERCISE REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE(1)
- ---- ----------- -------- ------------------------- ----------------------------
Gerald R. Johnson, Jr. ........ None N/A 51,817/8,610 $380,376/$30,691
Michael H. Price............... None N/A 35,279/3,150 232,227/ 3,213
Robert B. Kaminski............. None N/A 15,267/3,150 94,598/ 3,213
Charles E. Christmas........... None N/A 5,512/3,150 35,348/ 3,213
</Table>
- -------------------------
(1) In accordance with the SEC's rules, values are calculated by subtracting the
exercise price from the fair market value of the underlying common stock.
For purposes of this table, fair market value is deemed to be $16.90 per
share, the average of the highest and lowest sales prices reported on The
Nasdaq Stock Market on December 31, 2001.
EMPLOYMENT AGREEMENTS
GERALD R. JOHNSON, JR. AND MICHAEL H. PRICE. Effective December 1, 1998,
the Bank and Mercantile entered into Employment Agreements with Mr. Johnson and
Mr. Price providing for their employment from December 1, 1998 through December
31, 2001, and certain severance, confidentiality and non-compete arrangements
that would continue after the employment period. Effective December 31, 1999,
the Employment Agreements were amended and restated. The amendments extended the
employment period an additional year to December 31, 2002, and provide for the
employment period to extend an additional year, each December 31, starting
December 31, 2000, so that as of each December 31, there will be three years
remaining in the employment period. The annual extension of the employment
period can be avoided by the Bank, Mercantile, or the officer giving notice to
the others that the employment period is not to be extended.
11
Effective October 12, 2000, and October 18, 2001, the Employment Agreements were
further amended and restated, primarily to establish the base salaries for 2001
and 2002 for Mr. Johnson and Mr. Price.
The Employment Agreement with Mr. Johnson provided him with an annual base
salary of $275,000 for 2001, and provides him with an annual base salary of
$302,500 for 2002. The Employment Agreement with Mr. Price provided him with an
annual base salary of $242,000 for 2001, and provides him with an annual base
salary of $266,200 for 2002. For future years their annual base salaries will be
an amount set by the Board of Directors of the Bank that is not less than their
annual base salary for the immediately preceding year.
In addition to the annual base salary, the Employment Agreements provide
that Mr. Johnson and Mr. Price are entitled to participate in any employee
benefit and incentive compensation plans of Mercantile and the Bank, including
health insurance, life and disability insurance, stock option, profit sharing
and retirement plans. Under a profit sharing plan in effect for 2001, Messrs.
Johnson and Price each received a bonus for 2001 of 40% of their annual base
salary for that year. Under a profit sharing plan expected to be in effect for
2002, Messrs. Johnson and Price may each receive a bonus of up to 45% of their
annual base salary for 2002. The bonuses are payable, when aggregated with
bonuses to the other Bank employees, to the maximum extent of 33% of the excess
of actual net operating income over budgeted net operating income of Mercantile.
In the event that either of the officers becomes disabled or dies during
the employment period he is entitled to benefits under his Employment Agreement.
In the event of disability, the officer continues to receive his then current
annual base salary through the end of the employment period, and any disability
benefits payable under disability plans provided by the Bank or Mercantile. The
officer also continues to participate in life, disability, and health insurance
plans of the Bank or Mercantile, through age 65, to the extent permitted under
such plans. If the officer dies during the employment period, the Bank is
obligated to pay the officer's legal representative a death benefit of $250,000,
and if the Bank or Mercantile owns any life insurance insuring the life of the
officer, the proceeds of the policies are payable to the named beneficiaries.
The Employment Agreements provide severance benefits in the event that the
officer's employment is terminated by Mercantile and the Bank without "Cause" or
the officer elects to terminate his employment for "Good Reason" during the
employment period. In such event, the officer is entitled to receive the greater
of (i) his annual base salary through the end of the employment period or (ii)
$500,000; in either case payable over 18 months in equal monthly installments.
In addition, in the case of such a termination of employment, the officer is
entitled to continue his participation in life, disability and health insurance
plans provided by the Bank or Mercantile for 18 months, to the extent permitted
under such plans, to an assignment of any assignable life insurance policies
owned by the Bank or Mercantile insuring his life, and $10,000 for out-
placement, interim office and related expenses. The Employment Agreements also
provide severance benefits in the event that after the employment period and
prior to the officer reaching the age of 65, the officer's employment is
terminated by the Bank and Mercantile without "Cause" or the officer's annual
base salary is reduced without "Cause". In such event, the officer receives the
same benefits as are described above for a termination during the employment
period, except that when determining the cash severance payable to him over the
18 months following his termination, the alternative of receiving his annual
base salary through the end of the employment period does not apply, and instead
he receives the stated dollar amount of $500,000. In the event that an officer's
employment is terminated for "Cause" during the employment period, the officer
is not entitled to any accrued rights that he may then have under any stock
option plan of Mercantile.
Under the Employment Agreements, Mr. Johnson and Mr. Price agree not to
disclose, except as required by law, any confidential information relating to
the business or customers of the Bank or Mercantile, or use any confidential
information in any manner adverse to the Bank or Mercantile. In addition, each
has agreed that for 18 months following his employment with the Bank and
Mercantile, he will not be employed by, or act as a director or officer of, any
business engaged in banking within a 50 mile radius of Grand Rapids, Michigan
that solicits customers of the Bank.
ROBERT B. KAMINSKI. The Bank and Mercantile have entered into an Employment
Agreement with Mr. Kaminski for his services as Senior Vice President and
Secretary of Mercantile and Senior Vice President, Chief Operating Officer and
Chief Loan Review Officer of the Bank, beginning January 1, 2001, on
12
substantially the same terms as the Employment Agreements described for Mr.
Johnson and Mr. Price above, except that the compensation and severance amounts
are different. Effective October 18, 2001, the Employment Agreement was amended
and restated primarily to establish the base salary for Mr. Kaminski for 2002.
Mr. Kaminski's Employment Agreement established his base salary for 2001 at
$121,000, and establishes his base salary for 2002 at $133,000. Under a profit
sharing plan in effect for 2001, Mr. Kaminski received a bonus for 2001 of 30%
of his annual base salary for that year. Under a profit sharing plan expected to
be in effect for 2002, Mr. Kaminski may receive a bonus of up to 35% of his
annual base salary for 2002. The Employment Agreement also establishes a death
benefit of $100,000, a minimum severance benefit of $250,000 during his
employment period, and $125,000 after the employment period.
CHARLES E. CHRISTMAS. The Bank and Mercantile have entered into an
Employment Agreement with Mr. Christmas for his services as Senior Vice
President, Chief Financial Officer and Treasurer of Mercantile, and Senior Vice
President and Chief Financial Officer of the Bank, beginning January 1, 2001, on
substantially the same terms as the Employment Agreements described for Mr.
Johnson and Mr. Price above, except that the compensation and severance amounts
are different. Effective October 18, 2001, the Employment Agreement was amended
and restated primarily to establish the base salary for Mr. Christmas for 2002.
Mr. Christmas's Employment Agreement established his base salary for 2001 at
$95,000 (though it was adjusted to $105,000 during 2001), and establishes his
base salary for 2002 at $117,000. Under a profit sharing plan in effect for
2001, Mr. Christmas received a bonus for 2001 of 30% of his annual base salary
for that year. Under a profit sharing plan expected to be in effect for 2002,
Mr. Christmas may receive a bonus of up to 35% of his annual base salary for
2002. The Employment Agreement also establishes a death benefit of $100,000, a
minimum severance benefit of $250,000 during his employment period, and $125,000
after the employment period.
13
SHAREHOLDER RETURN PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly percentage change in
the cumulative total shareholder return on Mercantile common stock (based on the
last reported sales price of the respective year) with the cumulative total
return of the Nasdaq Stock Market Index (United States stocks only) and the
Nasdaq Bank Stocks Index from October 23, 1997 (the date Mercantile's Common
Stock began trading) through December 31, 2001. The following information is
based on an investment of $100 on October 23, 1997, in Mercantile common stock,
the Nasdaq Stock Market Index and the Nasdaq Bank Stocks Index, with dividends
reinvested where applicable.
MERCANTILE BANK CORPORATION
[LINE GRAPH]
<Table>
<Caption>
MERCANTILE BANK
CORPORATION NASDAQ - TOTAL US* NASDAQ BANK INDEX*
--------------- ------------------ ------------------
10/23/97 100.00 100.00 100.00
12/31/97 85.42 95.39 110.71
12/31/98 141.67 134.50 110.00
12/31/99 106.25 249.94 105.74
12/31/00 98.96 150.33 120.61
12/31/01 155.31 119.29 130.57
</Table>
<Table>
<Caption>
PERIOD ENDING
---------------------------------------------------------------------
INDEX 10/23/97 12/31/97 12/31/98 12/31/99 12/31/00 12/31/01
- ---------------------------------------------------------------------------------------------------------------
Mercantile Bank Corporation 100.00 85.42 141.67 106.25 98.96 155.31
NASDAQ -- Total US* 100.00 95.39 134.50 249.94 150.33 119.29
NASDAQ Bank Index* 100.00 110.71 110.00 105.74 120.61 130.57
</Table>
CERTAIN TRANSACTIONS
The Bank has had, and expects in the future to have, loan and other
financial transactions in the ordinary course of business with Mercantile's
directors, executive officers, and principal shareholders (and their associates)
on substantially the same terms as those prevailing for comparable transactions
with others. All such transactions (i) were made in the ordinary course of
business, (ii) were made on substantially the same terms, including interest
rates and collateral on loans, as those prevailing at the time for comparable
transactions with other persons, and (iii) in the opinion of management did not
involve more than the normal risk of collectibility or present other unfavorable
features.
As of December 31, 2001, the Bank had outstanding 66 loans to the directors
or executive officers of Mercantile, or their associates, totaling approximately
$3.3 million in aggregate amount, under commitments totaling approximately $7.9
million.
In 2001, the Bank Purchased from American Seating Company office furniture
for its new branch and operations center, and administrative building, in
Wyoming, Michigan; and paid approximately $292,000 for the furniture. In 1999,
the Bank purchased from American Seating Company office furniture for its Alpine
Township branch and retail facility and paid approximately $93,000 for the
office furniture. Edward J. Clark is
14
a member of the Board of Directors of Mercantile and the Bank, and the
President, Chief Executive Officer, and majority shareholder of American Seating
Company.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires Mercantile's
officers and directors, and persons who own more than 10% of Mercantile common
stock ("Reporting Persons") to file reports of ownership and changes in
ownership with the Securities and Exchange Commission. Mercantile's director,
Edward J. Clark, failed to file one report on Form 4 reporting the acquisition
of 2,000 shares and a gift of 300 shares, during 2001.
PROPOSAL TO APPROVE THE MERCANTILE BANK CORPORATION
INDEPENDENT DIRECTOR STOCK OPTION PLAN
On October 18, 2001, the Mercantile Board adopted the Mercantile Bank
Corporation Independent Director Stock Option Plan (the "Plan"), subject to
approval by Mercantile's shareholders. The following summary of the Plan is
subject to the specific provisions contained in the complete text of the Plan
attached to this proxy statement as Annex B.
PURPOSE. The Plan is intended to encourage stock ownership by certain
directors of Mercantile and its subsidiaries and to provide those individuals
with an additional incentive to manage Mercantile and/or its subsidiaries
effectively and to contribute to their success. The Plan is also intended to
provide a form of compensation that will attract and retain highly qualified
individuals as directors.
GRANT OF OPTIONS TO ACQUIRE COMMON STOCK. The Plan provides for the grant
of options to acquire shares of Mercantile's common stock to members of the
Board of Directors of Mercantile and the boards of directors of its subsidiaries
(collectively, the "Board" or the "Board of Directors") who qualify as
"Independent Directors." An individual is an "Independent Director" if he or she
is a member of the Board who (1) is not a contractual nor common law employee of
Mercantile or a subsidiary or any of their subsidiaries, and (2) does not
directly or indirectly own beneficially more than five percent (5%) of any of
Mercantile's or a subsidiary's outstanding securities, which includes being a
shareholder, owner, partner, director, or holder of more than ten percent (10%)
of the equity or capital of an entity which owns beneficially more than five
percent (5%) of any of Mercantile's or a subsidiary's outstanding securities.
There are currently thirteen (13) members of the Board who are Independent
Directors and therefore eligible to participate in the Plan.
The term of each option granted under the Plan may not exceed ten (10)
years from the date of grant. The exercise price for each option may not be less
than one hundred twenty-five percent (125%) of the fair market value of the
shares of common stock on the date of the grant of the option. In consideration
of the grant of an option, an optionee is required to agree to continue to serve
as a director of Mercantile or a subsidiary for the lesser of at least twelve
(12) months from the date the option is granted or for the remainder of the
optionee's term as a director ("Minimum Service Requirement"). In general, no
option may be exercised in whole or in part prior to the expiration of at least
sixty (60) months from the date of the grant of the option. However, all options
as to which the optionee has fulfilled the Minimum Service Requirement become
immediately exercisable in the event of the optionee's death, disability or
retirement after reaching age 70.
ADMINISTRATION. The Plan is to be administered by a Committee of at least
three (3) members of the Mercantile Board, none of whom may be an employee of
Mercantile or any of its subsidiaries and each of whom must qualify as a
Nonemployee Director, as defined in Rule 16b-3 (b)(3) promulgated by the SEC
pursuant to the Securities Exchange Act of 1934. The Committee is authorized to
select among the Independent Directors of Mercantile those who are to receive
options under the Plan and the terms and conditions of those options, subject to
the requirements of the Plan.
SHARES SUBJECT TO PLAN. The aggregate number of shares reserved for
purposes of the Plan (as adjusted for the February 1, 2002, 5% stock dividend)
is sixty-eight thousand two hundred and fifty (68,250)
15
authorized and unissued shares or issued shares reacquired by Mercantile. The
Plan provides for an equitable adjustment in the number, kind or price of shares
of common stock covered by options in the event the outstanding shares of common
stock are increased, decreased or changed into or exchanged for a different
number or kind of shares of Mercantile through stock dividends or certain
similar changes.
TERMINATION OR AMENDMENT OF THE PLAN. The Committee may amend or terminate
the Plan with respect to shares not subject to an option at the time of
amendment or termination; provided, however, that the Plan may not be amended
without the approval of the Board of Directors and Mercantile's shareholders if
the amendment would increase the maximum number of shares that may be issued
under the Plan, materially increase the benefits accruing to option holders
under the Plan, decrease the price at which options may be granted, remove the
administration of the Plan from the Committee, or permit the granting of options
under the Plan after the end of the Term of the Plan.
TRANSFERABILITY OF OPTIONS. During an optionee's life, options granted to
the optionee may not be transferred, except to certain family members or
entities for the benefit of such family members and only if the Committee
consents to the transfer and the transfer is made without consideration.
Following an optionee's death, an option may be exercised by a permitted
transferee or if the option was not transferred during the optionee's life, by
his or her estate or by a person who acquired the option by bequest or
inheritance.
FEDERAL TAX CONSEQUENCES. The following summarizes the consequences of the
grant and exercise of options under the Plan for federal income tax purposes,
based on management's understanding of existing federal income tax laws. This
summary is necessarily general in nature and does not purport to be complete.
Also, state and local income tax consequences are not discussed and may vary
from locality to locality.
Optionees will not recognize taxable income at the time an option is
granted under the Plan unless the option has a readily ascertainable market
value at the time of grant. Management understands that options to be granted
under the Plan will not have a readily ascertainable market value; therefore,
income will not be recognized by participants before the time of exercise of an
option. Because options will not qualify as incentive stock options under the
Internal Revenue Code of 1986, as amended, the difference between the fair
market value of the shares at the time an option is exercised and the option
exercise price generally will be treated as ordinary income to the optionee.
Mercantile is entitled to a corresponding deduction equal to the amount of an
optionee's ordinary income.
Tax consequences to an optionee will arise again at the time the shares of
common stock are sold. In general, if the shares have been held for more than
one (1) year, the gain or loss will be treated as long-term capital gain or
loss. Otherwise, the gain or loss will be treated as short-term capital gain or
loss. The amount of any gain or loss will be calculated under the general
principles for determining gain and loss, and will equal the difference between
the amount realized in the sale and the tax basis of the shares. The tax basis
will generally equal the cost of the shares (the option exercise price paid)
plus any income recognized upon exercise of the option.
REQUIRED VOTE FOR APPROVAL. The affirmative vote of a majority of
Mercantile's common stock voted at the annual meeting, by person or by proxy, is
required to approve the Plan. While broker nonvotes will not be treated as votes
cast on the approval of the Plan, shares voted as abstentions will be counted as
votes cast. Since a majority of the votes cast is required for approval, the sum
of any negative votes and abstentions will necessitate offsetting affirmative
votes to assure approval. Unless otherwise directed by marking the accompanying
proxy, the proxy holders named therein will vote for the approval of the Plan.
The Mercantile Board recommends a vote "FOR" the approval of the proposed
Plan.
SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected Crowe, Chizek & Company LLP as
Mercantile's principal independent auditors for the year ending December 31,
2002. Representatives of Crowe, Chizek & Company LLP plan to attend the annual
meeting of shareholders, will have the opportunity to make a statement if they
desire to do so, and will respond to appropriate questions by shareholders.
16
SHAREHOLDER PROPOSALS FOR 2003 ANNUAL MEETING
A proposal submitted by a shareholder for the 2003 annual meeting of
shareholders must be sent to the Secretary of Mercantile, 5650 Byron Center
Avenue SW, Wyoming, Michigan 49509 and received by November 11, 2002 in order to
be eligible to be included in Mercantile's proxy statement for that meeting.
OTHER MATTERS
The Board of Directors does not know of any other matters to be brought
before the annual meeting. If other matters are presented upon which a vote may
properly be taken it is the intention of the persons named in the proxy to vote
the proxies in accordance with their best judgment.
17
ANNEX A
MERCANTILE BANK CORPORATION
AUDIT COMMITTEE CHARTER
ORGANIZATION
There shall be a committee of the board of directors to be known as the
audit committee. The audit committee shall be composed of directors who are
independent of the management of the corporation and are free of any
relationship that, in the opinion of the board of directors, would interfere
with their exercise of independent judgment as a committee member.
STATEMENT OF POLICY
The audit committee shall provide assistance to the corporate directors in
fulfilling their responsibility to the shareholders, potential shareholders, and
investment community relating to corporate accounting, reporting practices of
the corporation, and the quality and integrity of the financial reports of the
corporation. In so doing, it is the responsibility of the audit committee to
maintain free and open means of communication between the directors, the
independent auditors, the internal auditors, and the financial management of the
corporation.
RESPONSIBILITIES
In carrying out its responsibilities, the audit committee believes its
policies and procedures should remain flexible, in order to best react to
changing conditions and to ensure to the directors and shareholders that the
corporate accounting and reporting practices of the corporation are in
accordance with all requirements and are of the highest quality.
In carrying out these responsibilities, the audit committee will:
- Review and recommend to the directors the independent auditors to be
selected to audit the financial statements of the corporation and its
divisions and subsidiaries, and where appropriate, recommend replacing
the independent auditors. The independent auditors are accountable to the
board of directors and the audit committee, as representatives of
shareholders.
- Ensure the receipt from the independent auditors of a formal written
statement delineating all relationships between the auditor and the
company, consistent with Independence Standards Board Standard 1,
communicate with the independent auditors regarding any relationships
that may impact the objectivity and independence of the auditor, and
recommend that the full board take appropriate action to oversee the
independence of the auditor.
- Meet with the independent auditors and financial management of the
corporation to review the scope of the proposed audit for the current
year and the audit procedures to be utilized, and at the conclusion
thereof review such audit, including any comments or recommendations of
the independent auditors.
- Review with the independent auditors, the company's internal auditor, and
financial and accounting personnel, the adequacy and effectiveness of the
accounting and financial controls of the corporation, and elicit any
recommendations for the improvement of such internal control procedures
or particular areas where new or more detailed controls or procedures are
desirable. Particular emphasis should be given to the adequacy of such
internal controls to expose any payments, transactions, or procedures
that might be deemed illegal or otherwise improper. Further, the
committee periodically should review company policy statements to
determine their adherence to the code of conduct.
- Review the internal audit function of the corporation including the
independence and authority of its reporting obligations, the proposed
audit plans for the coming year, and the coordination of such plans with
the independent auditors.
A-1
- Receive prior to each meeting, a summary of findings from completed
internal audits and a progress report on the proposed internal audit
plan, with explanations for any deviations from the original plan.
- Review the financial statements contained in the annual report to
shareholders with management and the independent auditors to determine
that the independent auditors are satisfied with the disclosure and
content of the financial statements to be presented to the shareholders.
Any changes in accounting principles should be reviewed.
- Provide sufficient opportunity for the internal and independent auditors
to meet with the members of the audit committee without members of
management present. Among the items to be discussed in these meetings are
the independent auditors' evaluation of the corporation's financial,
accounting, and auditing personnel, and the cooperation that the
independent auditors received during the course of the audit.
- Review accounting and financial human resources and succession planning
within the company.
- Submit the minutes of all meetings of the audit committee to, or discuss
the matters discussed at each committee meeting with, the board of
directors.
- Investigate any matter brought to its attention within the scope of its
duties, with the power to retain outside counsel for this purpose if, in
its judgment, that is appropriate.
A-2
ANNEX B
MERCANTILE BANK CORPORATION
INDEPENDENT DIRECTOR STOCK OPTION PLAN
1. Name and Purpose. This plan shall be called the Mercantile Bank
Corporation Independent Director Stock Option Plan (the "Plan"). The Plan is
intended to (a) encourage stock ownership by Independent Directors (as defined
below) of Mercantile Bank Corporation (the "Company") or any of the Company's
subsidiaries that adopts this Plan (individually, a "Subsidiary" and
collectively, the "Subsidiaries"), (b) to provide such directors with an
additional incentive to effectively manage the Company and/or the Subsidiaries
and to contribute to their success, and (c) to provide a form of compensation
which will attract and retain highly qualified individuals to serve as
directors.
2. Effective Date and Term of the Plan. The Plan shall become effective
with respect to the Company upon the date of its approval (the "Effective Date")
by the Company's Board of Directors (the "Company Board"), and shall become
effective with respect to a Subsidiary upon the date of its approval by the
Board of Directors of the Subsidiary. However, the Plan is subject to approval
by the Company's stockholders, and if such stockholder approval is not granted
within twelve (12) months of the Effective Date, the Plan shall terminate.
Grants of options may be made prior to such stockholder approval, but any
options granted shall not be exercisable prior to such stockholder approval, and
shall automatically terminate if stockholder approval is not given. Options may
not be granted under the Plan after the tenth anniversary of the Effective Date
(the "Term"); provided, however, that all options outstanding as of that date
shall remain or become exercisable pursuant to their terms and the terms of the
Plan. The Company Board and the Boards of Directors of all of the Subsidiaries
are collectively referred to in this Plan from time to time as the "Board of
Directors" or the "Board," and the stockholders of the Company and of the
Subsidiaries are collectively referred to in this Plan from time to time as the
"Stockholders."
3. Administration. The Plan shall be administered by a Committee of not
less than three (3) members of the Company Board (the "Committee"), none of whom
may be an employee of the Company or any subsidiary of the Company, and each of
whom must qualify as a Nonemployee Director, as defined in Rule 16b-3(b)(3)
promulgated by the Securities and Exchange Commission (the "SEC") pursuant to
the Securities Exchange Act of 1934, as amended (the "34 Act"). The members of
the Committee shall be appointed by the Company Board.
The Committee may, from time to time, establish such regulations,
provisions and procedures, within the terms of the Plan, as in the opinion of
its members may be advisable in the administration of the Plan. The Committee
shall keep minutes of its meetings. A majority of the Committee shall constitute
a quorum, and the acts of a majority of a quorum at any meeting, or acts reduced
to or approved in writing by a majority of the members of the Committee, shall
be the valid acts of the Committee.
The interpretation and construction by the Committee of any provisions of
the Plan or of any option granted pursuant to the Plan shall be final and
binding upon the Company, each Subsidiary, the Board of Directors, the
Stockholders, any optionee and any Permitted Transferee (as defined below). No
member of the Board of Directors or the Committee shall be liable for any action
or determination made in good faith with respect to the Plan or any option
granted pursuant thereto.
4. Participation. Subject to the limitations contained in this Section 4,
any Independent Director, may be granted options to purchase shares of the
Company's common stock ("Common Stock") in accordance and consistent with the
terms and conditions of the Plan. An optionee or a Permitted Transferee may hold
more than one option, but only on the terms and subject to the restrictions
hereafter set forth. The Committee shall from time to time determine (from those
who are eligible) the directors to be granted options, the amount of stock to be
optioned to each director, and the terms and conditions of the options to be
granted. The amount and other terms and conditions of options granted to a
director at any given time need not be the same as for any other grant of
options. An Independent Director is any director of the Company or a Subsidiary
who (a) is not a contractual nor common law employee of the Company or a
Subsidiary or any of their
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subsidiaries, (b) qualifies as a Nonemployee Director, as defined in Rule
16b-3(b)(3) promulgated by the SEC pursuant to the 34 Act, and (c) does not
directly or indirectly own beneficially more than five percent (5%) of any
outstanding security of the Company or a Subsidiary (including being a
stockholder, owner, partner, director or holder of more than ten percent (10%)
of the equity or capital of any entity which owns beneficially more than five
percent (5%) of any outstanding security of the Company or a Subsidiary).
5. Stock Available for Options. Subject to the adjustments as provided in
Section 6(h), the aggregate number of shares of Common Stock (the "Shares")
reserved for purposes of the Plan shall be sixty-five thousand (65,000)
authorized and unissued Shares or issued Shares reacquired by the Company.
Determinations as to the number of Shares that remain available for issuance
under the Plan shall be made in accordance with such rules and procedures as the
Committee shall determine from time to time, which shall be consistent with the
requirements of Rule 16b-3 promulgated by the SEC pursuant to the 34 Act, and
interpretations thereof. If any outstanding option under the Plan expires or is
terminated for any reason before the end of the Term of the Plan, the Shares
allocable to the unexercised portion of such option shall become available for
the grant of other options under the Plan. No Shares delivered to the Company in
full or partial payment upon exercise of an option pursuant to Section 6(d)
shall become available for the grant of other options under the Plan.
6. Terms and Conditions of Options. Each option granted under this Plan
shall be evidenced by an agreement ("Option Agreement" or "Agreement") in such
form as the Committee shall from time to time approve. No person shall have any
right with respect to the grant of an option unless and until he or she has
executed an Option Agreement. Option Agreements shall comply with and be subject
to the following conditions:
(a) Optionee's Agreement. Each optionee shall agree to continue to
serve as a director of the Company or a Subsidiary for the lesser of at
least twelve (12) months from the date of the grant of the option or for
the remainder of optionee's term as a director ("Minimum Service
Requirement"). Such agreement shall not impose upon the Company, a
Subsidiary, the Board of Directors or the Stockholders any obligation to
retain the optionee as a director for any period.
(b) Number of Shares and Term of Options. Each option shall state the
number of Shares of the Common Stock of the Company to which it pertains.
The term of each option shall be for a period of not greater than ten (10)
years from the date of grant of the option.
(c) Option Price. The exercise price of each option shall not be less
than one hundred twenty-five percent (125%) of the Fair Market Value of the
Shares of Common Stock on the date of the grant of the option. For the
purpose of this Section 6(c), the "Fair Market Value" per Share shall be
the closing price on the national market list as quoted in the National
Association of Securities Dealers Automated Quotation System ("NASDAQ") on
the day the option is granted or if no sale of Shares is reflected in
NASDAQ on that day, on the next preceding day on which there was a sale of
Shares reflected in NASDAQ. If the Shares are not traded in the
over-the-counter market but are listed upon an established stock exchange
or exchanges, "Fair Market Value" shall be deemed to be the closing price
of the Shares on such stock exchange or exchanges on the day the option is
granted or if no sale of the Shares shall have been made on any stock
exchange on that day, on the next preceding day on which there was a sale
of the Shares. If Shares are not actively traded in any recognized market,
"Fair Market Value" shall be the average price per Share at which
purchasers and sellers, none of whom are directors or officers of the
Company or any of its Subsidiaries, bought and sold Shares during the three
(3) preceding months in transactions known to management of the Company
involving one hundred (100) or more Shares, or if there have been no such
transactions, the "Fair Market Value" shall be determined in good faith by
the Committee.
(d) Medium of Payment. The option price shall be payable to the
Company either (i) in United States dollars in cash or by check, bank
draft, or money order payable to the order of the Company, (ii) through the
delivery of Shares of the Company's Common Stock with a Fair Market Value
on the date of the exercise equal to the option price, provided such Shares
are utilized as payment to acquire at least one hundred (100) Shares of
Common Stock, or (iii) by a combination of (i) and (ii) above. For
B-2
the purpose of this Section 6(d), "Fair Market Value" will be determined in
the manner specified in Section 6(c), except as to the date of
determination, which shall be the date of exercise.
(e) Exercise of Options. Except as otherwise provided in Section 6(h)
or as otherwise provided below, no option shall vest, either in whole or in
part, prior to the expiration of sixty (60) months from the date of the
grant of the option. Provided, however, that if an optionee has fulfilled
his or her Minimum Service Requirement under Section 6(a) and the optionee
(i) dies, (ii) resigns as a director because of a permanent and total
disability preventing his or her continued service (as determined by the
Committee in its sole discretion), or (iii) retires as a director upon or
after reaching a normal retirement age (as determined by the Committee in
its sole discretion), all options held by the optionee or his or her
Permitted Transferee(s) shall immediately vest and be exercisable.
Termination of service as a director for any of the reasons specified in
(i), (ii), or (iii) above constitutes an "Immediate Vesting Termination."
An option shall only be exercisable to the extent that it has vested.
Subject to the foregoing, the Committee shall have the authority to
determine, at the time of the grant of each option, the times at which an
option shall vest and be exercisable and any conditions precedent to the
exercise of an option. Once vested, an option shall be exercisable upon
written notice to the Chief Financial Officer of the Company, as to any or
all Shares covered by the option, until its termination or expiration in
accordance with the terms of the Agreement and the provisions of the Plan.
Notwithstanding the foregoing, an option shall not at any time be
exercisable with respect to less than one hundred (100) Shares unless the
remaining Shares covered by the option are less than one hundred (100)
Shares and the option is exercised with respect to all such remaining
Shares. The purchase price of the Shares purchased pursuant to an option
shall be paid in full upon delivery to the optionee or a Permitted
Transferee of certificates for such Shares. Exercise by an optionee's heir
or personal representative or any Permitted Transferee shall be accompanied
by evidence of his or her authority to act, in a form reasonably
satisfactory to the Company.
(f) Options Transferable. Except as otherwise specifically provided in
this Section 6(f), options may not be transferred, assigned, pledged or
hypothecated in any way and shall not be subject to execution, levy,
attachment or similar process; and any attempted transfer, assignment,
pledge, hypothecation, or other disposition of an option or any execution,
levy, attachment or similar process upon an option shall be null and void
and without effect. The Committee may, in its discretion, authorize all or
a portion of the options granted to an optionee to be on terms which permit
the transfer of such options by the optionee to (i) the spouse, children or
grandchildren of the optionee ("Immediate Family Members"), (ii) a trust or
trusts for the exclusive benefit of the optionee and/or one or more of such
Immediate Family Members, or (iii) a partnership or limited liability
company in which the optionee and/or one or more of such Immediate Family
Members are the only partners or members. (The persons or entities
described in (i) through (iii) above shall be referred to as "Permitted
Transferees"). However, (i) there may be no consideration for any such
transfer, (ii) the Option Agreement pursuant to which such options are
granted must be approved by the Committee, and must expressly provide for
transferability in a manner consistent with this Section 6(f), and (iii)
subsequent transfers of transferred options pursuant to this Section 6(f)
shall be prohibited. Following a permitted transfer, (i) any transferred
options shall continue to be subject to the same terms and conditions as
were applicable immediately prior to the transfer, and (ii) without
limiting the generality of the foregoing, the events of termination of
service of Section 6(g) and the vesting requirements of Section 6(e) shall
continue to be applied with reference to the original optionee. The Company
shall not be obligated to notify any Permitted Transferee of the expiration
or termination of any option. No option may be transferred except strictly
in accordance with the terms and conditions set forth above and any
additional terms and conditions set forth in the relevant Agreement.
(g) Termination of Service as Director. In the event an optionee shall
cease to serve the Company or a Subsidiary as a director for any reason
other than by reason of an Immediate Vesting Termination, each option held
by the optionee or his or her Permitted Transferee(s) shall terminate to
the extent not vested immediately prior to such termination of service. If
an optionee ceases to be a director of the Company or a Subsidiary by
reason of an Immediate Vesting Termination, each option held by the
B-3
optionee or his or her Permitted Transferee(s) shall be fully vested.
Following an optionee's termination of service as a director for any
reason, any options held by the optionee or his or her Permitted
Transferee(s) shall, to the extent vested, be exercisable, for the shorter
of the following periods: (i) a period of one (1) year from the date of the
optionee's termination of service as a director, or (ii) the remaining term
of the option, subject to limitations imposed by the Plan. In the event of
termination as a result of death, the option may be exercised by the
personal representative of the optionee's estate or by any person or
persons who have acquired the option directly from the optionee by bequest
or inheritance or by a Permitted Transferee(s). If an optionee dies during
the exercise period following cessation of service as a director, the
option, to the extent vested, may be exercised any time within one (1) year
after the optionee's death, subject to the prior expiration of the term of
the option and other limitations imposed by the Plan.
(h) Adjustment in Shares Covered by Option. The number of Shares
covered by each outstanding option, and the purchase price per Share
thereof, shall be proportionately adjusted for any increase or decrease in
the number of issued and outstanding Shares resulting from a split in or
combination of Shares or the payment of a stock dividend on the Shares or
any other increase or decrease in the number of Shares effected without
receipt of consideration by the Company.
If the Company is the surviving corporation in any merger or
consolidation or if the Company is merged into a wholly-owned subsidiary
solely for purposes of changing the Company's state of incorporation, each
outstanding option shall pertain to and apply to the securities to which a
holder of the number of Shares subject to the option would have been
entitled. A dissolution or liquidation of the Company or a merger or
consolidation in which the Company is not the surviving corporation, except
as provided above, shall cause each outstanding option to terminate,
provided, that each outstanding option shall become fully vested and be
exercisable immediately prior to such dissolution or liquidation, or such
merger or consolidation.
To the extent that the foregoing adjustments relate to stock or
securities of the Company, such adjustments shall be made by the Committee,
whose determination shall be final, binding and conclusive. Any such
adjustment may provide for the elimination of any fractional Shares which
might otherwise become subject to an option.
Except as expressly provided in this Section 6(h), an optionee or a
Permitted Transferee shall have no rights by reason of any split or
combination of shares of stock of any class or the payment of any stock
dividend or any other increase or decrease in the number of shares of stock
of any class or by reason of any dissolution, liquidation, merger, or
consolidation or spinoff of assets or stock of another corporation, and any
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall not affect, and no
adjustment by reason thereof shall be made with respect to, the number or
price of Shares of stock subject to the option.
The grant of an option pursuant to the Plan shall not affect in any
way the right or power of the Company to make adjustments,
reclassifications, reorganizations, or changes of its capital or business
structure, or to merge or to consolidate or to dissolve, liquidate or sell,
or transfer all or any part of its business or assets.
(i) Rights of a Stockholder. An optionee or a Permitted Transferee
shall have no rights as a Stockholder with respect to any Shares covered by
his or her option until the date on which he or she becomes the holder of
record of such Shares. No adjustment shall be made for dividends,
distributions, or other rights for which the record date is prior to the
date on which he or she shall have become the holder of record thereof,
except as provided in Section 6(h).
(j) Postponement of Delivery of Shares and Representations. The
Company, in its discretion, may postpone the issuance and/or delivery of
Shares upon any exercise of an option until completion of the registration
or other qualification of such Shares under any state and/or federal law,
rule or regulation as the Company may consider appropriate, and may require
any person exercising an option to make such representations, including,
without limitation, a representation that it is his or her intention to
acquire the
B-4
Shares for investment and not with a view to distribution thereof, and
furnish such information as it may consider appropriate in connection with
the issuance or delivery of the Shares in compliance with applicable laws,
rules, and regulations. In such event, no Shares shall be issued to such
holder unless and until the Company is satisfied with any such
representations.
(k) Other Provisions. The Option Agreements authorized under the Plan
shall contain such other provisions, including, without limitation,
restrictions upon the exercise of the option, as the Committee shall deem
advisable.
7. Adjustments in Shares Available for Options. The adjustments in number
and kind of shares and the substitution of shares, affecting outstanding options
in accordance with Section 6(h), shall also apply to the number and kind of
shares reserved for issuance pursuant to the Plan, but not yet covered by
options.
8. Amendment of the Plan. The Committee, insofar as permitted by law, shall
have the right from time to time, with respect to any Shares at the time not
subject to options, to suspend or discontinue the Plan or revise or amend it in
any respect whatsoever, except that, without approval of the Board of Directors
and the stockholders of the Company, no such revision or amendment shall:
(a) increase the maximum number of Shares which may be subject to the
Plan,
(b) materially increase the benefits accruing to option holders under
the Plan,
(c) decrease the exercise price of options granted under the Plan,
(d) remove the administration of the Plan from the Committee, or
(e) permit the granting of options under the Plan after the end of the
Term of the Plan.
9. Right to Terminate Director's Service. Nothing in this Plan or in the
grant of any option hereunder shall in any way limit or effect the right of the
Board of Directors or the Stockholders to remove any director or otherwise
terminate his or her service as a director, pursuant to law or the Articles of
Incorporation or Bylaws of the Company or a Subsidiary.
10. Application of Funds. The proceeds received by the Company from the
sale of Shares pursuant to options will be used for general corporate purposes.
11. No Obligation to Exercise Option. The granting of an option shall
impose no obligation upon the optionee or a Permitted Transferee to exercise
such option.
12. Construction. This Plan shall be construed under the laws of the State
of Michigan, United States of America.
B-5
MBCCM-PS-02
MERCANTILE BANK CORPORATION
C/O EQUISERVE
P.O. BOX 43068
PROVIDENCE, RI 02940
MERCANTILE BANK CORPORATION
Dear Shareholder,
Enclosed with this proxy is your Notice of Annual Meeting and Proxy Statement,
and 2001 Annual Report. We encourage you to carefully read these materials and
exercise your right to vote your shares.
Please mark the boxes on this proxy card to indicate how your shares will be
voted, then sign the proxy card, detach it, and return your proxy vote in the
enclosed postage paid envelope. If you plan to attend the meeting, please mark
the appropriate box on the proxy.
Your proxy card must be received prior to the Annual Meeting of Shareholders on
April 18, 2002.
Sincerely,
Mercantile Bank Corporation
DETACH HERE ZMBCC1
PLEASE MARK
[X] VOTES AS IN
THIS EXAMPLE.
- -------------------------------------------------------
MERCANTILE BANK CORPORATION
- -------------------------------------------------------
1. Election of Directors. Nominees as Directors:
(01) BETTY S. BURTON (03) PETER A. CORDES
(02) DAVID M. CASSARD (04) DAVID M. HECHT
(05) ROBERT M. WYNALDA
FOR WITHHELD
ALL FROM ALL
NOMINEES [ ] [ ] NOMINEES
[ ] ------------------------------------------------
For all nominees except as noted above
FOR AGAINST ABSTAIN
2. Proposal to approve the Independent Director [ ] [ ] [ ]
Stock Option Plan.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR ALL NOMINEES AND FOR THE
INDEPENDENT DIRECTOR STOCK OPTION PLAN.
In their discretion, the Proxies are authorized to vote upon such other matters
as may properly come before the meeting, or at any adjournment of the meeting.
Mark box at right if you plan to attend the meeting. [ ]
Mark box at right if an address change or comment has been
noted on the reverse side of this card. [ ]
Signature: Date: Signature: Date:
-------------- ------- -------------- --------
DETACH HERE ZMBCC2
MERCANTILE BANK CORPORATION
5650 BYRON CENTER AVENUE, SW, WYOMING, MICHIGAN 49509
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 18, 2002
The undersigned hereby appoints Doyle A. Hayes and Calvin D. Murdock, or either
of them, with power of substitution in each, proxies of the undersigned to vote
all common stock of the undersigned in Mercantile Bank Corporation, at the
Annual Meeting of Shareholders to be held on April 18, 2002, and at all
adjournments thereof.
IF THIS PROXY IS PROPERLY EXECUTED, THE SHARES REPRESENTED BY THIS PROXY WILL BE
VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE, THE SHARES WILL BE VOTED FOR
THE ELECTION OF ALL NOMINEES, AND FOR THE INDEPENDENT DIRECTOR STOCK OPTION
PLAN.
PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN
PROMPTLY IN THE ENCLOSED ENVELOPE.
Please sign exactly as your name(s) appear(s) hereon. Joint owners should
each sign personally. Trustees and other fiduciaries should indicate the
capacity in which they sign. If a corporation or partnership, the signature
should be that of an authorized person who should state his or her title.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
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