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EXHIBIT 10.1
MERCANTILE BANK CORPORATION
1997 EMPLOYEE STOCK OPTION PLAN
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As adopted by the Board of Directors
on July 22, 1997
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ARTICLE I - PURPOSE
The purpose of the 1997 Employee Stock Option Plan (the "Plan") of
Mercantile Bank Corporation (the "Company") is to enable key employees of the
Company or any Subsidiary to participate in the Company's future growth and
profitability by offering them long-term performance-based incentive
compensation. The Plan also provides a means through which the Company and its
Subsidiaries can attract and retain key employees.
ARTICLE II - DEFINITIONS
2.1 The following terms have the meaning described below when
used in the Plan:
(a) "Board of Directors" shall mean the board of directors of the
Company.
(b) "Code" shall mean the Internal Revenue Code of 1986, as amended, and
as it may be further amended from time to time.
(c) "Common Stock" shall mean the Common Stock of the Company.
(d) "Company" shall mean Mercantile Bank Corporation.
(e) "Fair Market Value" on a particular date shall mean (i) if the Common
Stock is quoted on the OTC Bulletin Board (the "Bulletin Board"), the mean
between the closing high bid and low asked quotations for such day (or, in the
event that the Common Stock was not quoted on such day, the most recent
preceding business day on which the Common Stock was quoted) of the Common
Stock on the Bulletin Board, (ii) if the Common Stock is quoted on The Nasdaq
Stock Market ("Nasdaq"), the mean between the closing high bid and low asked
quotations for such day of the Common Stock on Nasdaq, or (iii) if neither
clause (i) nor (ii) is applicable, a value determined by any fair and
reasonable means prescribed by the Board of Directors.
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(f) "Incentive Stock Option" shall mean a stock option granted under
Article VI that is intended to meet the requirements of Section 422 of the
Code.
(g) "Non-Qualified Stock Option" shall mean a stock option granted under
Article VI that is not intended to be an Incentive Stock Option.
(h) "Option" shall mean an Incentive Stock Option or
Non-Qualified Stock Option.
(i) "Participant" shall mean an eligible employee who has been
granted an Option.
(j) "Subsidiary" shall mean a corporation a majority of the outstanding
voting capital stock of which is owned by the Company.
ARTICLE III - ADMINISTRATION
3.1 Stock Option Plan Administration. The Board of Directors of the
Company shall administer the Plan. The Board of Directors shall have full
power and authority to grant to eligible employees (as determined by the Board
of Directors) Options under Article VI of the Plan, to interpret the provisions
of the Plan and any agreements relating to Options granted under the Plan, and
to administer the Plan. In making determinations of eligibility for the Plan,
the Board of Directors may consider the position and responsibilities of the
employee, the nature and value of his or her services and accomplishments, the
present and potential contribution of the employee to the success of the
Company, and such other factors as the Board of Directors may deem relevant.
(b) Decisions of Board of Directors. All decisions made by the Board of
Directors pursuant to the provisions of the Plan shall be final, conclusive and
binding on all persons, including the Company, its shareholders and employees,
and beneficiaries of employees.
ARTICLE IV - SHARES SUBJECT TO THE PLAN
4.1 (a) Number of Shares. Subject to adjustment as provided for in
Section 4.1(b), the maximum number of shares of Common Stock with respect to
which Options may be granted shall be 130,000 shares of Common Stock. Shares
of Common Stock shall be made available from the authorized but unissued shares
of the Company (including shares reacquired by the Company). If an Option
granted under the Plan shall expire or terminate for any reason, the shares
subject to, but not delivered, under such Option shall be available for other
Options to be issued under the Plan.
(b) Adjustments. All as may be deemed appropriate by the Board of
Directors, the aggregate number of shares of Common Stock which may be issued
under the Plan, the number of shares covered by each outstanding Option, and
the price per share in each Option, may be proportionately adjusted for any
increase or decrease in the number of issued
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shares of Common Stock of the Company resulting from a subdivision or
consolidation of shares or any other capital adjustment, a stock split, the
payment of a stock dividend, or other increase or decrease in such shares
effected without receipt of consideration by the Company.
ARTICLE V - ELIGIBILITY
5.1 The persons eligible to participate in the Plan and receive Options
under the Plan are officers and other key employees of the Company and its
Subsidiaries, including directors who are full time employees, as determined by
the Board of Directors.
ARTICLE VI - STOCK OPTIONS
6.1 Grant of Options. Subject to the limitations of the Plan, the
Board of Directors, after such consultation with and consideration of the
recommendations of management as the Board of Directors considers desirable,
shall select from eligible employees Participants to be granted Options and
determine the time when each Option shall be granted and the number of shares
subject to each Option. Options may be either Incentive Stock Options or
Non-Qualified Stock Options. More than one Option may be granted to the same
person. The Board of Directors may not grant a Participant Incentive Stock
Options which in the aggregate are first exercisable during any one calendar
year with respect to Common Stock the aggregate Fair Market Value of which
(determined as of the time of grant) exceeds $100,000.
6.2 Option Agreements. Each Option under the Plan shall be evidenced
by an option agreement that shall be signed by an officer of the Company and
the Participant and shall contain such provisions as may be approved by the
Board of Directors. Any such option agreement may be amended from time to time
as approved by the Board of Directors and the Participant, provided that the
terms of such option agreement after being amended conform to the terms of the
Plan.
6.3 Option Price. The price at which shares of Common Stock may be
purchased upon exercise of an Option shall be not less than one hundred percent
(100%) of the Fair Market Value of such shares on the date such Option is
granted.
6.4 Exercise of Options.
(a) The period during which each Option may be exercised shall be
fixed by the Board of Directors at the time such Option is granted, but such
period in no event shall expire later than ten (10) years from the date the
Option is granted.
(b) Subject to the terms and conditions of the option agreement and
unless canceled prior to exercise, each Option shall be exercisable in whole or
in part in installments at such time or times as the Board of Directors may
prescribe and specify in the applicable option agreement.
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(c) No shares shall be delivered pursuant to any exercise of an Option
until payment in full of the option price therefor is received by the Company.
Such payment shall be made in cash or through the delivery of shares of Common
Stock of the Company with a value equal to the total option price or a
combination of cash and shares. Any shares so delivered shall be valued at
their Fair Market Value on the exercise date. No Participant shall be deemed
to be a holder of any shares subject to any Option prior to the issuance of
such shares upon exercise of such Option.
6.5 Ten-Percent Shareholder Rule. If a Participant owns more than ten
percent (10%) of the total combined voting power of all classes of the Company
or of any Subsidiary's stock at the time an Incentive Stock Option is granted
to such Participant, the option price to such Participant shall not be less
than one hundred ten percent (110%) of the Fair Market Value per share of the
Common Stock on the date of grant, and such Incentive Stock Option by its terms
shall not be exercisable after the expiration of five (5) years from the date
of grant.
6.6 Non-Transferability of Options. No Option or any rights with
respect thereto shall be subject to any debts or liabilities of a Participant,
nor be assignable or transferable except by Will or the laws of descent and
distribution, nor be exercisable during the Participant's lifetime other than
by the Participant, nor shall Common Stock be issued to or in the name of one
other than the Participant; provided, however, that an Option may after the
death or disability of a Participant be exercised pursuant to Section 6.7; and
provided further that any Common Stock issued to a Participant hereunder may at
the request of the Participant, and with the consent of the Company, be issued
in the names of the Participant and one other person, as joint tenants with
right of survivorship and not as tenants in common, or in the name of a trust
for the benefit of the Participant or for the benefit of the Participant and
others.
6.7 Termination of Employment; Death and Disability. Subject to the
condition that no Option may be exercised in whole or in part after the
expiration of the option period specified in the applicable option agreement:
(a) Except as hereinafter provided, an Option may be exercised by the
Participant only while such Participant is in the employ of the Company or a
Subsidiary. In the event that the employment of a Participant to whom an
Option has been granted under the Plan shall terminate (except as set forth
below) such Option may be exercised, to the extent that the Option was
exercisable on the date of termination of employment, only until the earlier of
three (3) months after such termination or the original expiration date of the
Option; provided, however, that if termination of employment results from death
or total and permanent disability, such three (3) month period shall be
extended to twelve (12) months.
(b) In the event of the permanent disability of a Participant as
determined by the Board of Directors, an Option which is otherwise exercisable
may be exercised by the Participant's legal representative or guardian. In the
event of the death of the Participant, an Option which is otherwise exercisable
may be exercised by the person or persons whom the Participant shall have
designated in writing on forms prescribed by and filed with the Board of
Directors ("Beneficiaries"), or, if no such designation has been made, by the
person or persons to
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whom the Participant's rights shall have passed by Will or the laws of descent
and distribution ("Successors"). The Board of Directors may require an
indemnity and/or such evidence or other assurances as the Board of Directors in
its sole and absolute discretion may deem necessary in connection with an
exercise by a legal representative, guardian, Beneficiary or Successor.
ARTICLE VII - GENERAL PROVISIONS
7.1 Change in Control.
(a) In the case of a Change in Control (as defined below) of the
Company, unless the Board of Directors determines otherwise, each Option then
outstanding shall become exercisable in full immediately prior to such Change
in Control.
(b) Any determination by the Board of Directors made pursuant to
subsection (a) above may be made as to all outstanding Options or only as to
certain Options specified by the Board of Directors and any such determinations
shall be made in cases covered by subparagraphs 7.1(c)(i) and (ii) below prior
to or as soon as practicable after the occurrence of such event and in the
cases covered by subparagraphs 7. 1 (c) (iii) or (iv) prior to the occurrence
of such event.
(c) A Change in Control shall occur if:
(i) Any "person" or "group of persons" as such terms are
defined in Section 13(d) and 14(c) of the Securities Exchange Act of 1934 (the
"Exchange Act") directly or indirectly purchases or otherwise becomes the
"beneficial owner" (as defined in the Exchange Act) or has the right to acquire
such beneficial ownership (whether or not such right is exercised immediately,
with the passage of time or subject to any condition) of voting securities
representing forty percent (40%) or more of the combined voting power of all
outstanding voting securities of the Company,
(ii) During any period of two consecutive calendar years the
individuals who at the beginning of such period constitute the Board of
Directors cease for any reason to constitute at least the majority of the
members thereof unless (1) there are five or more directors then still in
office who were directors at the beginning of the period and (2) the election
or the nomination for election by the Company's shareholders of each new
director was approved by at least two-thirds (2/3) of the directors then still
in office who were directors at the beginning of the period,
(iii) The shareholders of the Company shall approve an agreement
to merge or consolidate the Company with or into another corporation as a
result of which less than fifty percent (50%) of the outstanding voting
securities of the surviving or resulting entity are or are to be owned by the
former shareholders of the Company (excluding from former shareholders a
shareholder who is or as a result of the transaction in question, becomes an
affiliate as defined in Rule 12b-2 under the Exchange Act of any party to such
consolidation or merger), or
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(iv) The shareholders of the Company shall approve the sale of
all or substantially all of the Company's business and/or assets to a person or
entity that is not a wholly-owned subsidiary of the Company.
7.2 No Right of Continued Employment. Neither the establishment of
the Plan, the granting of Options or any action of the Company or of the Board
of Directors shall be held or construed to confer upon any person any legal
right to be continued in the employ of the Company or its Subsidiaries, each of
which expressly reserves the right to discharge any employee whenever the
interest of any such company in its sole discretion may so require without
liability to such company or the Board of Directors, except as to any rights
that may be expressly conferred upon such employee under the Plan.
7.3 No Segregation of Cash or Shares. The Company shall not be
required to segregate any shares of Common Stock that may at any time be
represented by Options, and the Plan shall constitute an "unfunded" plan of the
Company. No employee shall have rights with respect to shares of Common Stock
prior to the delivery of such shares. The Company shall not, by any provisions
of the Plan, be deemed to be a trustee of any Common Stock or any other
property and the liabilities of the Company to any employee pursuant to the
Plan shall be those of a debtor pursuant to such contract obligations as are
created by or pursuant to the Plan, and the rights of any employee, former
employee or beneficiary under the Plan shall be limited to those of a general
creditor of the Company.
7.4 Delivery of Shares. No shares shall be delivered pursuant to any
exercise of an Option under the Plan unless the requirements of such laws and
regulations as may be deemed by the Board of Directors to be applicable thereto
are satisfied. All certificates for shares of Common Stock delivered under the
Plan shall be subject to such stock-transfer orders and other restrictions as
the Board of Directors may deem advisable under the rules, regulations, and
other requirements of the Securities and Exchange Commission, any stock
exchange upon which the Common Stock is then listed, and any applicable Federal
or state securities law, and the Board of Directors may cause a legend or
legends to be put on any such certificates to make appropriate reference to
such restrictions.
7.5 Governing Law. The Plan and all determinations made and action
taken pursuant thereto shall be governed by the laws of the State of Michigan
and construed in accordance therewith.
7.6 Payments and Tax Withholding. The delivery of any shares of
Common Stock under the Plan shall be for the account of the Company and any
such delivery or distribution shall not be made until the recipient shall have
made satisfactory arrangements for the payment of any applicable withholding
taxes.
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ARTICLE VIII - AMENDMENT AND TERMINATION
8.1 Amendment or Termination. The Board of Directors may amend or
terminate the Plan provided, however, that no such amendment or termination
shall adversely affect any Option then in effect unless the prior approval of
the Participant so affected is obtained and provided further that any amendment
to the Plan shall be subject to shareholder approval to the extent necessary to
satisfy the requirements of Section 16 under the Exchange Act. No Option may
be granted under the Plan after July 1, 2002.
ARTICLE IX - EFFECTIVENESS OF PLAN
9.1 The Plan was adopted by the Board of Directors on July 22, 1997
subject to the approval by the sole shareholder of the Company and was approved
by such shareholder on July 22, 1997.
ARTICLE X - SEVERABILITY
10.1 If any provision of the Plan, or any term or condition of any
Option granted thereunder, is invalid, such provision, term, condition
or application shall to that extent be void (or, in the discretion of the Board
of Directors, such provision, term or condition may be amended so as to avoid
such invalidity or failure), and shall not affect other provisions, terms or
conditions or applications thereof, and to this extent such provisions, terms
and conditions are severable.
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