EXHIBIT 10.21
EMPLOYMENT AGREEMENT
This Amended and Restated Employment Agreement ("Agreement") is made as
of the 18th day of October, 2001, by and among Mercantile Bank Corporation, a
Michigan corporation (the "Company"), Mercantile Bank of West Michigan, a
Michigan banking corporation (the "Bank", and collectively with the Company, the
"Employers", and each an "Employer"), and Xxxxxx X. Xxxxxxx, Xx. (the
"Employee").
RECITALS
A. The Company, the Bank and the Employee have previously entered into
an Employment Agreement dated December 1, 1998, which has been amended and
restated by an Amended and Restated Employment Agreement dated as of December
31, 1999 and an Amended and Restated Employment Agreement dated as of October
12, 2000 (the "Employment Agreement").
B. The Company, the Bank and the Employee wish to amend the Employment
Agreement to establish a base salary for the Employee of $302,500 for the year
2002.
C. This Agreement sets forth the terms of the Employee's employment as
Chairman and Chief Executive Officer of the Company and Chairman of the Bank.
D. The Employers believe that entering into this Agreement is in the
best interest of their respective shareholders.
E. The Employee believes that entering into this Agreement is in his
best interest.
TERMS OF AGREEMENT
In consideration of the mutual covenants and obligations set forth in
this Agreement, to induce the Employee to remain in the employment of the
Employers, and for other good and valuable consideration, the Employers and the
Employee amend and restate the Employment Agreement, and agree as follows:
1. Employment, Term, and Acceptance: The Company agrees to employ the
Employee as its Chairman of the Board of Directors and Chief Executive Officer,
and the Bank agrees to employ the Employee as its Chairman of the Board, for the
period from December 31, 1999 through the Termination Date (the "Employment
Period"), unless such employment is terminated earlier pursuant to Section 7 or
8 of this Agreement. The initial Termination Date is December 31, 2002.
Effective as of December 31, 2000, and as of each December 31 after December 31,
2000, the Termination Date will automatically extend to the next succeeding
December 31 after the then existing Termination Date unless prior to a December
31 automatic extension, the Employee, the Company, or the Bank gives notice to
each of the others that the Termination Date shall not be automatically extended
on such December 31; in which case the Termination Date will not be extended.
Accordingly, unless the Employee, the Company or the
Bank gives notice that the Termination Date will not be extended, there will, as
of each December 31, be an Employment Period of three years remaining. The
Employee hereby accepts such employment.
2. Duties and Authority:
2.1 Promotion of Employers' Interest. While employed as an
executive officer of the Company and the Bank, the Employee shall devote his
business time and attention to the business and affairs of the Employers, and
shall use his efforts and abilities to promote the interests of the Employers.
2.2 Performance of Duties. The Employee shall perform such
services and duties necessary or appropriate for the management of the Employers
as are normally expected of persons appointed to chairman of the board or chief
executive officer positions in the businesses in which the Employers are
engaged.
3. Cash Compensation. For all services to be performed by the Employee
under this Agreement (including services as an officer, employee, director, or
member of any board committee), the Bank shall pay the Employee an annual base
salary (prorated for any partial year) of (a) Two Hundred and Fifty Thousand
Dollars ($250,000) for the period from January 1, 2000 through December 31,
2000, (b) Two Hundred and Seventy-Five Thousand Dollars ($275,000) for the
period from January 1, 2001 through December 31, 2001, (c) Three Hundred Two
Thousand Five Hundred Dollars ($302,500) for the period from January 1, 2002
through December 31, 2002, and (d) for each January 1 through December 31 from
January 1, 2003 through the Termination Date, amounts not less than the annual
base salary for the immediately preceding year, as are determined by the Board
of Directors of the Bank, such determination to be made for each such 12 month
period prior to the beginning of such period ("Base Cash Compensation"); payable
in each case in accordance with the then prevailing payroll practices of the
Bank. To the extent that the date of any change in rate of compensation provided
for in clause (a), (b), (c) or (d) above does not coincide with the first day of
a payroll period of the Bank, such change in rate of compensation shall become
effective as of the first day of the payroll period that includes such date. In
addition to the Base Cash Compensation described above, the Employee will be
entitled to such bonuses and other discretionary compensation as may be awarded
to him from time to time by the Board of Directors of either of the Employers.
4. Participation in Employee Benefit Plans. In addition to the cash
compensation payable to the Employee under this Agreement, the Employee shall be
entitled to participate in such employee benefit plans, whether contributory or
non-contributory, such as group life and disability insurance plans, hospital,
surgical, vision and dental benefit plans or other bonus incentive, profit
sharing, stock option, retirement or other employee benefit plans of the
Employers as may now or hereafter exist to the extent that the Employee meets
the eligibility requirements of any such plans. All such group life and
disability insurance plans, and hospital, surgical, vision and dental benefit
plans are hereafter referred to as "Life, Disability and Medical Plans". It is
specifically agreed that the Employee shall be entitled to participate in the
incentive compensation plan described in Exhibit A to this Agreement for the
years 2001 and 2002.
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5. Out of Pocket Expenses. The Employee will be reimbursed by the Bank
or the Company, as the case may be, for all reasonable expenses incurred in
promoting their respective businesses; including expenses for entertainment,
travel and similar items upon the presentation by Employee, from time to time,
of an itemized account of such expenditures in a form and manner as determined
by the Board of Directors or the chief financial or accounting officer of the
Employer for whose account the expenditures are made.
6. Vacations. The Employee shall be entitled each year to five (5)
weeks paid vacation time. The Employee will not be entitled to additional
compensation for vacation time not utilized in any year nor will the Employee be
permitted to carry over unused vacation time to a succeeding year.
7. Termination of Employment Upon Disability or Death.
7.1 Disability. In the event the Employee shall become mentally or
physically disabled during the Employment Period and unable to perform the
material duties of his employment for ninety (90) days or more because of
illness, accident, or any other cause ("Disability"), the Bank or the Company
may terminate the Employee's employment under this Agreement by giving him
written notice of such termination ("Disability Termination Notice"). In the
event of any such termination during the Employment Period, the Bank shall
continue to pay the employee his Base Cash Compensation, at the rate in effect
immediately prior to the giving of the Disability Termination Notice, through
the end of the Employment Period (through the Termination Date then in effect).
In addition, the Employers shall cover the Employee under their disability
plans, if any, in effect from time to time under the terms and conditions that
such coverage is made available to other employees of the respective Employers,
and the Employee shall be entitled to any benefits payable to him under such
disability plans. While disabled, the Bank shall continue to provide the
Employee and his dependents with coverage under its Life, Disability and Medical
Plans until the Employee reaches the age of sixty-five (65) years old to the
extent that it may do so under the provisions of such plans, with the Employee's
contribution to the premiums under such plans being no more than the amounts he
paid for such premiums prior to his disability, adjusted from time to time for
normal periodic increases in such premiums applied in general to employees of
the Bank.
7.2 Death. In the event of the death of the Employee, his employment
with the Employers shall terminate as of the date of his death. Promptly
following his death, the Bank shall pay to his legal representative a death
benefit of $250,000. In addition, any life insurance policies owned by the Bank
or the Company, and insuring the life of the Employee shall be payable to the
beneficiaries of such policies in accordance with the terms of such policies.
7.3 Extent of Obligations. The provisions of Sections 7.1 and 7.2
apply only to Disability or death occurring during the Employment Period while
the Employee is employed by the Bank and the Company. Other than as set forth in
Section 7.1 or 7.2, neither of the Employers shall have any obligation or
liability to the Employee upon the employee's death or Disability except that
the Employee shall be entitled to all of his accrued rights under stock option,
retirement
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and other employee benefit plans of the Company and the Bank, and the Bank shall
promptly pay the Employee (or his personal representative) his Base Cash
Compensation due through the effective date of the termination of his
employment, the cash equivalent of any accrued vacation days not taken as of
such effective date (calculated based on the Employee's annual base salary
attributable to each vacation day), and any out-of -pocket expenses for which
the Employee is entitled to be reimbursed, and for which reimbursement has not
yet been made.
8. Termination of Employment for Cause, Without Cause, Good Reason, or
Without Good Reason.
8.1 Termination by an Employer for Cause. Each of the Employers
shall have the right, at any time, to terminate the Employee's employment for
Cause (as defined herein), within 90 days of the Employer's learning of such
Cause. For purposes of this Agreement, the term "Cause" means (a) an act or acts
of dishonesty committed by the Employee and intended by the Employee to result
in the Employee's substantial personal enrichment at the expense of the Company
or the Bank, (b) continuing intentional gross neglect by the Employee of his
duties under Section 2 of this Agreement which cause or are expected to cause
material harm to the Company or the Bank, and which is not remedied after
receipt of notice from the applicable Employer, (c) the Employee's conviction of
a felony, or (d) the Employee's intentional breach of his obligations under
Section 10 or 11 which causes or may be expected to cause material harm to the
Company or the Bank. Any termination for Cause shall be effective upon an
Employer giving the Employee written notice that the Employee's employment is
terminated, and setting forth in reasonable detail the basis for such
termination, and that such termination is for Cause. Any such notice shall
terminate the Employee's employment with both Employers.
8.2 Termination by an Employer Without Cause. Each of the Employers
shall have the right at any time to terminate the Employee's employment without
Cause by giving the Employee written notice that the Employee's employment is
terminated, and setting forth in reasonable detail the basis, if any, for such
termination. Any such termination shall be effective upon the giving of such
notice by the Employer.
8.3 Termination by Employee for Good Reason. The Employee shall have
the right at any time to terminate his employment under this Agreement for Good
Reason (as defined herein) within ninety (90) days of learning of such Good
Reason. For purposes of this Agreement, the term "Good Reason" means (a) any
assignment to the Employee of any title or duties that are materially
inconsistent with the Employee's present positions, titles, duties, or
responsibilities, other than an insubstantial or inadvertent action which is
remedied by the applicable Employer promptly after receipt of written notice
from the Employee, or which is approved of by the Employee in writing; (b) any
failure by an Employer to comply in a material respect with any provision of
Section 3, 4, 5, or 6, other than a insubstantial or inadvertent failure which
is remedied by the applicable Employer promptly after receipt of written notice
from the Employee. Any termination for Good Reason shall be effective upon the
Employee giving the Employers written notice that the Employee is terminating
his employment, and setting forth in reasonable detail the basis for such
termination, and that such termination is for Good Reason. Any such termination
shall be effective upon the giving of such notice by the Employee; and any such
notice shall terminate his
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employment with both Employers. Notwithstanding the above, (a) the failure of
the Employee to hold the position of Chairman of the Board of the Company
arising from any failure of the shareholders of the Company to re-elect the
Employee to the Board of Directors of the Company, provided that the Board of
Directors of the Company has included the Employee on its slate of nominees as a
director, or (b) the assignment to the Employee of any title or duties at the
Bank that he has previously held or performed at the Bank, shall not be
sufficient to constitute Good Reason for termination of employment by the
Employee.
8.4 Termination by Employee Without Good Reason. The Employee shall
have the right at any time to terminate the Employee's employment with both
Employers without Good Reason by giving the Employers written notice that the
Employee is terminating his employment. Any such termination shall apply to the
Employee's employment with both Employers and be effective ninety (90) days
after the giving of such notice by the Employee.
8.5 Obligation of Employers upon Termination without Cause or
Employee's Termination with Good Reason. In the event that during the Employment
Period, an Employer terminates the Employee's employment without Cause under
Section 8.2, or the Employee terminates his employment for Good Reason under
Section 8.3; or the Employee's employment is terminated for any other reason
except (i) for Cause under Section 8.1, (ii) without Good Reason under Section
8.4, or (iii) for Disability or death pursuant to Section 7; the Bank shall pay
and provide (and to the extent the insurance referred to in Section 8.5(d) is
owned by the Company, the Company shall provide) to the Employee the following:
(a) to the extent not previously paid, the Employee's Base Cash
Compensation due through the effective date of the termination of employment,
the cash equivalent of any accrued vacation days not taken as of such effective
date (calculated based on the Employee's annual base salary attributable to each
vacation day), and any out-of -pocket expenses for which the Employee is
entitled to be reimbursed, and for which reimbursement has not yet been made;
payable within ten (10) days of such effective date; plus
(b) an amount equal to the greater of (i) the Base Cash Compensation
payable to the Employee for the remainder of the Employment Period (i.e. through
the Termination Date then in effect), or (ii) $500,000; in either case, payable
in eighteen (18) substantially equal monthly installments commencing within
thirty (30) days after the effective date of the termination of employment; plus
(c) coverage for the Employee and his dependents under the Bank's
Life, Disability, and Medical Plans for the eighteen (18) month period
commencing on the effective date of the termination of employment to the extent
that the Bank may do so under the provisions of such plans, and to the extent
that it is not permitted to do so shall pay the Employee an amount that will
permit him to obtain and pay for substantially equivalent coverage; plus
(d) any life insurance policies owned by the Bank or the Company
insuring the life of the Employee, to the extent that they may be practically
assigned or transferred to the Employee; plus
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(e) $10,000 for out-placement, interim office, and related expenses.
In addition, the Employee shall be entitled to all of his accrued rights under
stock option, retirement, and other employee benefit plans of the Company and
the Bank.
8.6 Obligation of Employers upon Termination for Cause or by
Employee without Good Reason. In the event that during the Employment Period, an
Employer terminates the Employee's employment for Cause as provided for in
Section 8.1, or the Employee terminates his employment without Good Reason as
permitted in Section 8.4; the Bank shall pay and provide to the Employee, to the
extent not previously paid, the Employee's Base Cash Compensation due through
the effective date of the termination of employment, plus the cash equivalent of
any accrued vacation days not taken as of such effective date (calculated based
on the Employee's annual base salary attributable to each vacation day), within
ten (10) days of such effective date. In addition, the Employee shall be
entitled to all of his accrued rights under stock option (except with respect to
stock option plans, in the event of termination for Cause), retirement, and
other employee benefit plans of the Company and the Bank.
8.7 No Other Obligations of Employers upon Termination. Upon
termination of the Employee's employment, the Employers shall have no
obligations to the Employee except as set forth in this Agreement, or accrued
rights under stock option, retirement, or other employee benefit plans of either
Employer.
9. Severance Payments on Termination after the Employment Period. If at
any time after the Employment Period and prior to the Employee reaching the age
of 65, (a) the Employee's employment with the Bank is terminated by the Bank
without Cause, or (b) the Employee's annual base salary from the Bank is reduced
without his consent and without Cause, and the Employee, within ninety (90) days
thereafter, terminates his employment with the Bank; then unless the termination
of employment or reduction in annual base salary resulted from the death or
Disability of the Employee, the Bank shall pay and provide (and to the extent
the insurance referred to in Section 8.5(d) is owned by the Company, the Company
shall provide) to the Employee the following: (a) the amounts, coverage,
benefits and life insurance provided for in Section 8.5 (a), (c), (d) and (e),
plus (b) $500,000, payable in eighteen (18) substantially equal monthly
installments commencing within thirty (30) days after the effective date of the
termination of employment. In addition, the Employee shall be entitled to all of
his accrued rights under stock option (except with respect to stock option
plans, in the event of termination for Cause), retirement, and other employee
benefit plans of the Company and the Bank.
10. Confidential Information. Employee agrees that he will not at any
time (whether during his employment or at any time thereafter) disclose to any
person, corporation, firm, partnership or other entity, except as required by
law, any secret or confidential information concerning the business, clients or
affairs of the Company or the Bank, or any of their affiliates, for any reason
or purpose whatsoever other than in furtherance of the Employee's work for the
Company or the Bank, nor shall the Employee make use of any of such secret or
confidential information in any manner adverse to the Company or the Bank.
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11. Noncompetition Covenant. For a period of eighteen (18) months
following the termination of Employee's employment with the Employers, Employee
will not be employed by or act as a director or officer of any business
involving or engaged in the business of banking within a 50-mile radius of the
City of Grand Rapids, Michigan, where such business engages in soliciting,
directly or indirectly, customers of the Bank.
12. Remedies under Section 10 and 11. The Employee acknowledges and
agrees that his obligations under Sections 10 and 11 are of a special and unique
nature and that a failure to perform any such obligation or a violation of any
such obligation would cause irreparable harm to the Employers, the amount of
which cannot be accurately compensated for in damages by an action at law. In
the event of a breach by the Employee of any of the provisions of Section 10 or
11, the Company and the Bank shall be entitled to an injunction restraining the
Employee from such breach. Nothing in this Section shall be construed as
prohibiting the Company or the Bank from pursuing any other remedies available
for any breach of this Agreement.
13. Deduction of Taxes and Adjustments re IRC Section 280G. Each
Employer may deduct from any amounts required to be paid to the Employee under
this Agreement any amounts required to be withheld by the Employer pursuant to
federal, state, or local law relating to taxes or related payroll deductions. In
the event that any payments, distributions or benefits to or for the benefit of
the Employee from the Bank or the Company, whether paid or payable, distributed
or distributable, would constitute a "parachute payment", as defined in Section
280G of the Internal Revenue Code of 1986, as amended, or any successors thereto
(the "Code"), payments under this Agreement shall be reduced to the largest
amount that will eliminate both the imposition of the excise tax imposed by
Section 4999 of the Code and the disallowance as deductions to the Employers
under Section 280G of the Code of any such payments, distributions or benefits.
The determination of any reduction in the payments under this Agreement pursuant
to this paragraph shall be made by a major national or regional accounting firm
selected by the Bank and approved by the Employee, which approval shall not be
unreasonably withheld.
14. Objection to Termination and Legal Fees. The termination of the
Employee's employment pursuant to this Agreement shall not preclude any Employer
or the Employee from objecting to the basis asserted by the terminating party
for such termination. The Employers agree to pay all reasonable legal fees and
expenses incurred by the Employee in enforcing his rights under this Agreement,
except with respect to claims made by the Employee that are rejected by a court
(or any arbitrator sitting by agreement of the parties) to which such claims are
presented; provided that the Employers' obligation to pay legal fees and
expenses under this Section shall not exceed $10,000 in aggregate amount.
15. Adjustment between the Company and the Bank. The Company and the
Bank acknowledge that although the Employee is generally paid solely by the
Bank, he also performs some services for the Company, and the Company pays the
Bank periodically an amount necessary to reimburse the Bank for amounts paid to
the Employee by the Bank for services actually rendered to the Company.
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16. Notices. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing and if personally delivered or sent
by registered or certified United States mail or by a nationally recognized
overnight courier service, to his residence or the last address he has provided
in writing to the Employers, in the case of the Employee, or to its principal
office in the case of an Employer. For purposes of this Agreement, notices shall
be deemed given when received at the address or office specified in the
preceding sentence.
17. Waiver of Breach. No waiver by either party of any breach or
non-performance of any provision or obligation of this Agreement shall be deemed
to be a waiver of any preceding or succeeding breach of the same or any other
provision of this Agreement.
18. Assignment. The rights and obligations of each Employer under this
Agreement shall inure to the benefit of and shall be binding upon them and their
respective successors and assigns. As used in this Agreement, the term
"successor" shall include any person, firm, corporation, or other business
entity which at any time whether by merger, purchase or otherwise acquires all
or substantially all of the assets or business of an Employer.
19. Entire Agreement and Regulatory Compliance. This instrument
contains the entire Agreement of the parties hereto with respect to the subject
matter hereof and supersedes all prior agreements or understandings between the
parties hereto relating to the subject matter hereof. This Agreement may not be
changed orally but only by an agreement in writing signed by the Employee and
the Employers. To the extent that any payment provided for by this Agreement
would, in the circumstances prevailing at the time such payment is to be made,
otherwise violate any provision of the Federal Deposit Insurance Act (the
"FDIA") or any rule adopted under the FDIA, including 12 C.F.R. Part 359 (Golden
Parachute and Indemnification Payments), the amount of such payment shall be
reduced to the largest amount that could be paid on such date consistently with
such provision of the FDIA or rule adopted thereunder.
20. Severability. If a court of competent jurisdiction determines that
any one or more of the provisions of this Agreement is invalid, illegal or
unenforceable in any respect, such determination shall not affect the validity,
legality or enforceability of any other provision of this Agreement.
21. Governing Law. This Agreement and the legal relations between the
parties shall be subject to and governed by the internal laws (and not the law
of conflicts) of the State of Michigan.
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The parties have executed this Agreement as of the day and year first
above written.
MERCANTILE BANK CORPORATION
By: /s/ Xxxxxxx X. Xxxxx
-------------------------------
Xxxxxxx X. Xxxxx
President and Chief Operating Officer
MERCANTILE BANK OF WEST MICHIGAN
By: /s/ Xxxxxxx X. Xxxxx
-------------------------------
Xxxxxxx X. Xxxxx
President and Chief Executive Officer
EMPLOYEE
/s/ Xxxxxx X. Xxxxxxx, Xx.
--------------------------
Xxxxxx X. Xxxxxxx, Xx.
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EXHIBIT A
MERCANTILE BANK OF WEST MICHIGAN
EMPLOYEE BONUS 2001
- Employees receive $0.33 for every $1.00 over budgeted Net Operating Income
- Maximum Payouts are calculated as a percentage of salary as follows:
Chairman and President 40.0% of annual salary
Senior Vice Presidents 30.0% of annual salary
Vice Presidents 20.0% of annual salary
Assistant Vice Presidents 10.0% of annual salary
Officers 7.5% of annual salary
Non-Officer Employees 5.0% of annual salary
MERCANTILE BANK OF WEST MICHIGAN
EMPLOYEE BONUS 2002
- Non-lenders receive $0.33 for every $1.00 over budgeted Net Operating Income
- Maximum payouts are calculated as a percentage of salary as follows:
Chairman and President 45% of annual salary
Senior Vice Presidents 35% of annual salary
Vice Presidents 25% of annual salary
Assistant Vice Presidents 20% of annual salary
Officers 12.5% of annual salary
Non-Officer Employees 7.5% of annual salary
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