EMPLOYMENT AGREEMENT

Exhibit 10.2

EMPLOYMENT AGREEMENT

This EMPLOYMENT AGREEMENT (this “Agreement”) is made as of August 14, 2013, by and among MERCANTILE BANK CORPORATION, a Michigan corporation (“Mercantile Corp”), MERCANTILE BANK OF MICHIGAN (“Mercantile Bank”) (together referred to as “Mercantile”), FIRSTBANK CORPORATION, a Michigan Corporation (“Firstbank”), and THOMAS SULLIVAN (“Executive”).

Mercantile Corp and Firstbank, are parties to an Agreement and Plan of Merger, dated August 14, 2013, pursuant to which Firstbank will merge with and into Mercantile Corp (the “Merger”). This Agreement is intended to define the entire terms and conditions of the employment relationship between Mercantile and Executive after the Merger. This Agreement will become effective if and only if the Merger is consummated.

In consideration of Executive’s continued employment and the other provisions of this Agreement, the parties agree as follows:

1. Effective Date. This Agreement will become effective if and only if the Merger occurs and will automatically become effective at the effective time of the Merger (the “Effective Time”). At the Effective Time, this Agreement will supersede all previous agreements and understandings pertaining to Executive’s employment with and compensation by Firstbank or Mercantile or any of their affiliates or subsidiaries, including, but not limited to, the Change in Control Severance Agreement dated December 31, 1998, between Executive and Firstbank (the “CIC Agreement”). The CIC Agreement will terminate and will have no further force or effect at the Effective Time.

2. Employment. Executive will be employed in an executive capacity by Mercantile. During Executive’s employment, Executive will serve as Chairman of the Board of Directors of Mercantile Corp and will be appointed and serve as a director and Vice-Chairman of the Board of Directors of Mercantile Bank of Michigan when Firstbank and Keystone Community Bank have been consolidated with Mercantile Bank of Michigan. Executive’s entire business time and best efforts will be devoted to the performance of Executive’s duties for Mercantile during the term of employment. Executive shall perform his duties under this Agreement in accordance with reasonable standards and policies established from time to time by the Board of Directors of Mercantile Corp and Mercantile Bank. Executive’s employment with Mercantile shall automatically terminate one (1) year after the Effective Time (the “Term”). Mercantile Corp’s Board of Directors shall nominate Executive for re-election to Mercantile Corp’s Board of Directors at any annual meeting of Mercantile Corp’s shareholders which occurs within three (3) years of the Effective Time. At each Annual Meeting of the shareholder of Mercantile Bank which occurs within three (3) years of the Effective Time, Mercantile Corp shall vote to elect Executive as a director of Mercantile Bank. After the Term, Executive’s compensation for services as a director of Mercantile Corp and Mercantile Bank shall be on the same basis as other directors who are not employed by Mercantile Corp or Mercantile Bank.

3. Severance Payment and Benefits.

A. Change in Control Payment. In the first payroll period following the Effective Time of the Merger, Mercantile shall pay Executive a lump sum cash Change in Control Payment equal to the sum of:

(i) $525,000 [150% of salary], plus

(ii) $157,500 [150% of target incentive compensation], plus

(iii) $105,000 multiplied by the fraction D/365, where D is the number of days from and including, January 1, 2013 through the Effective Time (pro-rated bonus) [we understand the numerator could be more than 365]; minus

(iv) Amount of any bonus or incentive compensation previously paid for 2013.

B. Severance Payment. In the event that Mercantile terminates Executive’s employment prior to the end of the Term, Mercantile will continue Executive’s salary through the end of the Term.

C. Health Care Benefit. Executive’s coverage under Mercantile’s group health insurance plans will terminate at the end of Executive’s employment with Mercantile. Mercantile will reimburse Executive for the COBRA continuation coverage premiums incurred and paid by Executive to continue Executive’s then current employee and dependent health, dental, and prescription drug coverage for eighteen (18) months after Executive’s employment with Mercantile terminates, provided that (A) Executive elects and remains eligible for COBRA continuation coverage, and (B) Mercantile’s obligation to provide coverage will end if Executive becomes eligible for comparable coverage from a new employer. Reimbursement for each monthly premium paid by Executive will be made not later than thirty (30) days after Executive requests reimbursement, but in no event later than the end of the year after the year in which the expense was incurred. In addition, in the first payroll period following the conclusion of the eighteen (18) month COBRA continuation period, Mercantile will pay Executive a lump sum cash payment of $9,000, which Executive can use to offset the cost of obtaining individual health insurance or for any other purpose. Any payments under this Section 3C will be reported as part of Executive’s W-2 compensation and will be subject to Federal income tax withholding. In the event of Executive’s death while he remains employed by Mercantile or during the period he is receiving COBRA continuation coverage, Executive’s surviving spouse shall have the same right to reimbursement that Executive is entitled to receive hereunder for the same period and, if the $9,000 payment has not been made at the time of Executive’s death, Mercantile shall make such payment directly to Executive’s surviving spouse.

D. Life Insurance Benefit. Executive shall be entitled to life insurance coverage or reimbursement for the cost of life insurance coverage for a period of two (2) years after Executive’s employment with Mercantile terminates. The life insurance coverage will have a death benefit equal to the largest death benefit provided for Executive under Firstbank’s group

-2-

life insurance plan during the twelve (12) month period ending at the Effective Time. If Executive has a conversion right under the Firstbank plan, the coverage may be provided by exercising the conversion right under a split-dollar arrangement that allows Executive to designate a beneficiary for the two (2) year period. If a conversion right is not available, or if Mercantile and Executive cannot agree on a split-dollar arrangement, Mercantile will pay or reimburse Executive for the premium cost of other life insurance coverage. In either case, (i) Mercantile will have no obligation to provide or obtain coverage for Executive, (ii) Mercantile’s total payment or reimbursement obligation will be capped at $51,690 for the two (2) year period; and (iii) reimbursements, if payable, will be payable at the same time as the life insurance premium is due. Any payments under this Section 3D will be reported as part of Executive’s W-2 compensation and will be subject to Federal income tax withholding.

E. Conditions. In order to receive the payments and reimbursements listed in Sections 3B, 3C and 3D above, Executive must be and remain in compliance with the Non-Compete and Non-Solicitation Agreement referenced in Section 9 of this Agreement and must execute and not revoke a general release of all claims against Mercantile, Firstbank, their affiliates and subsidiaries and their owners, officers, directors, employees and agents, in the form attached to this Agreement as Exhibit B. The above-listed payments and benefits are in lieu of any and all payments and benefits to which Executive may otherwise have been entitled under the CIC Agreement or any other agreement or practice.

4. Compensation. During Executive’s employment, Mercantile agrees to pay Executive an annual salary of Three Hundred Sixty-Four Thousand Seven Hundred Fifty Dollars ($364,750) subject to normal withholdings and payable in accordance with the normal payroll practices of Mercantile. Executive will not receive any additional compensation for service on the Board of Directors of Mercantile Corp or Mercantile Bank during Executive’s employment.

5. Benefits. During Executive’s employment, Executive shall be eligible to receive fringe and welfare benefits consistent with those provided to the Chief Executive Officer of Mercantile subject to the terms and conditions of those plans. The benefits include, but are not limited to, health insurance, 401(k) participation, bonus plan(s) and stock based compensation (proportionately adjusted based on salary differences) and paid vacation. Executive will not be eligible for any Mercantile life insurance benefit except as provided for in Section 3D. Executive may purchase the company automobile he used while employed by Firstbank at its depreciated value on Firstbank’s accounting records as of 12/31/13.

6. At-Will Employment. Executive’s employment shall be “at will” and may be terminated by Mercantile at any time, with or without cause, at or before the end of the Term.

7. Death. In the event of the death of Executive during the Term, Executive’s estate shall be entitled to receive the Change In Control Payment under Section 3 (if not already paid), the salary through the end of the Term plus such other benefits as shall have accrued under this Agreement.

-3-

8. Non-Compete and Non-Solicitation Agreement. As a material condition of this Agreement, Executive must immediately execute and abide by Mercantile’s Non-Compete and Non-Solicitation Agreement which is attached to this Agreement as Exhibit A. Executive agrees that the Non-Compete and Non-Solicitation Agreement will be effective immediately at the Effective Time of the Merger. Executive further agrees that the termination of Executive’s employment after one (1) year as agreed to in Paragraph 2 of this Agreement will not constitute a Termination Without Cause under the Non-Compete and Non-Solicitation Agreement. Notwithstanding anything to the contrary contained herein, Executive shall be permitted to continue to serve on the Board of Directors of the Federal Home Loan Bank of Indianapolis and to continue to serve on the Community Depository Institutions Advisory Council and retain any fees paid to him in connection therewith.

9. Maximum Payments. Notwithstanding any provision in this Agreement to the contrary, if part or all of any amount to be paid to Executive by Mercantile under this Agreement or otherwise constitutes a “parachute payment” (or payments) under Section 280G or any other similar provision of the Internal Revenue Code of 1986, as amended (the “Code”), the following limitation shall apply:

If the aggregate present value of such parachute payments (the “Parachute Amount”) exceeds 2.99 times Executive’s “base amount” as defined in Section 280G of the Code, the amount otherwise payable to or for the benefit of the Executive subsequent to the termination of his employment, and taken into account in calculating the Parachute Amount (the “Termination Payment”), shall be reduced as further described below, to the extent necessary so that the Parachute Amount is equal to 2.99 times the Executive’s “base amount”.

Any determination or calculation described in this Paragraph shall be made by Mercantile’s independent accountants at Mercantile’s expense. Such determination, and any proposed reduction in termination payments shall be furnished in writing promptly by the accountants to the Executive. The Executive may then elect, in his sole discretion, which and how much of any particular termination payment shall be reduced and shall advise Mercantile in writing of his election, within thirty (30) days of the accountant’s determination, of the reduction in Termination Payments. If no such election is made by the Executive within such thirty (30) day period, Mercantile may elect which and how much of any termination payment shall be reduced and shall notify the Executive promptly of such election. As promptly as practicable following such determination and the elections hereunder, Mercantile shall pay to or distribute to or for the benefit of the Executive such amounts as are then due to the Executive.

Any disagreement regarding a reduction in termination payments will be subject to arbitration under this Agreement. Neither the Executive’s designation of specific payments to be reduced nor the Executive’s acceptance of reduced payments shall waive the Executive’s right to contest such reduction.

10. Other Contracts. As of the Effective Time of the Merger, all other prior agreements regarding conditions of Executive’s employment, whether written or oral, are hereby terminated and superseded by this Agreement. This Agreement contains the entire understanding of the parties concerning Executive’s employment and supersedes all previous oral and written agreements.

-4-

11. Assignments. This Agreement contemplates personal services by Executive. Executive may not transfer or assign Executive’s rights or delegate Executive’s duties and obligations under this Agreement. This Agreement may be assigned by Mercantile to any entity that succeeds to all or substantially all of the Company’s businesses.

12. Notices. Any notices under this Agreement shall be deemed given when in writing and delivered personally or sent by certified mail, postage prepaid, to the last known address of the party to whom notice is given. If sent by mail, notice shall be deemed given on the third day after mailing.

13. Amendments. No amendments or additions to this Agreement shall be binding unless in writing and signed by each of the parties.

14. Paragraph Headings. The paragraph headings used in this Agreement are included solely for convenience and shall not affect or be used in connection with the interpretation of this Agreement.

15. Severability. The provisions of this Agreement shall be deemed severable, and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof. If any provision contained in this Agreement shall be determined by a court of competent jurisdiction to be unenforceable as written because it is excessively broad as to duration, activity, subject, geographic coverage, or any other matter, it is the intent of the parties that such provision shall be construed by limiting and reducing it so as to be enforceable to the maximum extent allowed by applicable law.

16. Arbitration. Except as stated in the Non-Compete and Non-Solicitation Agreement, any dispute, controversy, or claim arising under or in connection with this Agreement shall be settled exclusively by arbitration, conducted in Grand Rapids, Michigan, before a panel of three arbitrators, in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrators’ award in any court having jurisdiction. Unless otherwise provided in the Rules of the American Arbitration Association, the arbitrators shall, in their award, allocate between the parties the arbitrators’ fees and expenses, in such proportions as the arbitrators deem just. Each party shall be responsible for their own attorney fees.

17. Governing Law. This Agreement shall be governed by the laws of the United States of America and the State of Michigan with venue and jurisdiction limited to the Circuit Court for Kent County, Michigan.

18. Section 409A. This Agreement is intended to be exempt from Section 409A of the Internal Revenue Code to the greatest extent possible, to comply with Section 409A to the extent it is applicable and is to be interpreted and operated consistently with those intentions.

-5-

IN WITNESS WHEREOF, the parties have executed this Employment Agreement on the day and year first above written.

-6-

EXHIBIT A

NON-COMPETE AND NON-SOLICITATION AGREEMENT

In consideration of my employment by Mercantile Bank Corporation (“Mercantile”), Mercantile Bank of Michigan (the “Bank”) or any of their subsidiaries or affiliates (each a “Company”, and together the “Companies”) and the benefits that I have received and will receive from the Companies, I agree as follows:

-2-

This Agreement is effective this              day of                     , 2        .

-3-

EXHIBIT B

RELEASE OF ALL LIABILITY

This Release of All Liability Agreement (“Agreement”) is entered into between                                               (“Employee”) and Mercantile Bank Corporation and Mercantile Bank of Michigan (together referred to as “Mercantile” or “Employer”).

1. In return for the payments and benefits described in the attached Employment Agreement, Employee unconditionally releases and forever discharges the Released Parties (as defined below) from any and all Covered Claims (as defined below).

(a) The Released Parties include Employer, Employer’s Affiliates, and all of their owners, officers, directors, employees, and agents. Employer’s Affiliates include Employer’s predecessors, successors, parents, subsidiaries and other affiliated organizations.

(b) The Covered Claims include any claim or cause of action arising out of or relating to any act, omission or occurrence up to and including the date Employee signs this Agreement. This includes any claim or cause of action arising out of or relating to Employee’s employment and termination of employment with Employer, including claims and causes of action under any statute, regulation, ordinance, or rule, including but not limited to: Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act of 1967, the Older Workers Benefit Protection Act, the Employee Retirement Income Security Act, the Americans with Disabilities Act, the Family and Medical Leave Act, the Michigan Civil Rights Act, the Michigan Whistleblowers’ Protection Act, and the Michigan Persons With Disabilities Civil Rights Act, all as amended. The Covered Claims also include any claim or cause of action for breach of any commitment or agreement (except the attached agreement), and any claim or cause of action under the common law, or arising out of public policy, including but not limited to claims or causes of action for intentional infliction of emotional distress, negligence, or defamation.

(c) Employee acknowledges that Employee is not seeking any short-term and/or long-term disability benefits and waives any and all claims to same.

(d) Covered Claims do not include Employee’s rights to vested benefits under the terms of Employer’s 401(k) qualified retirement plan. This Agreement does not prohibit Employee from filing a charge or participating in an investigation by the United States Equal Employment Opportunity Commission, but by executing this Agreement, Employee waives and releases any right Employee might otherwise have to any recovery of damages, attorney fees or any other monetary or equitable relief or benefit that might result from such charge or investigation.

2. Employee agrees that, to Employee’s knowledge, Employee has not sustained any disabling personal injury and/or occupational disease due to Employee’s employment at Employer and/or due to the termination of that employment.

3. Employee verifies that Employee has or will immediately deliver to Mercantile all Mercantile property in Employee’s possession, custody and/or control including, without limitation, all documents or recordings (including any and all copies) in hard copy, electronic form or otherwise, containing confidential information, as well as all supplies, equipment, computers, cellular and smart phones, credit cards, checks, petty cash, office keys, access cards and the like, and all materials and documents of any kind related to Employer or any of its Affiliates, whether prepared by Employee or anyone else that is in Employee’s possession, custody or control.

4. Employee agrees not to initiate or join in critical or derogatory statements in written, oral or electronic form about any of the Released Parties.

5. Employee agrees that neither Employer nor any of its Affiliates will have any obligation to employ Employee or consider Employee for employment in the future.

6. Employee agrees and understands as follows.

(a) Employee has 21 days after receiving this Agreement to consider this Agreement. Employee may elect in Employee’s sole discretion to sign this Agreement before expiration of the 21 day period and if Employee does so it is agreed that Employee will waive the balance of the 21 day period. Immediately upon signing this Agreement Employee will deliver the signed copy to Mercantile’s Senior Vice President of Human Resources. If Employee does not sign this Agreement within the 21 day period, the Agreement is withdrawn by Employer and is null and void.

(b) Employee has the right to revoke this Agreement within 7 days after signing it, by delivering written notice of revocation during that period to Mercantile’s Senior Vice President of Human Resources and this Agreement will not become effective or enforceable until the 7 day revocation period has expired without revocation as provided above. (“Effective Date”).

(c) Employer advises Employee to consult with an attorney of Employee’s choosing about this Agreement before signing it.

7. Except for Employee’s Employment Agreement and Non-Compete and Non-Solicitation Agreement, this Agreement contains the entire understanding of the parties with respect to the subject matter hereof and supersedes all prior agreements and understandings relating to the subject matter hereof. No change, modification, amendment, addition to or alleged waiver of this Agreement or any of its terms, provisions, or covenants shall be valid unless it is in writing and signed by the party against whom it is sought to be enforced.

-2-

8. Employee and Employer agree that this Agreement is not evidence of any wrongdoing whatsoever by Employer, but is entered into so that Employee and Employer can amicably end their relationship.

9. If any term, covenant and/or provision of this Agreement is deemed invalid or illegal by a court of competent jurisdiction, all other terms, covenants and provisions of this Agreement shall remain in full force and effect.

10. This Agreement and any matters relating hereto shall be construed in accordance with and shall be governed by the laws of the United States of America and the internal laws of the State of Michigan, as applicable, without application of choice of law principles. The parties agree that any action related to this Agreement shall be brought and heard in the Circuit Court for Kent County, Michigan or the United States District Court for the Western District of Michigan and the parties agree and consent to jurisdiction and venue in those courts.

11. This Agreement shall be binding on Employee and Employee’s spouse, heirs, administrators and assigns.

12. By signing below Employee freely, knowingly and voluntarily enters into this Release of All Liability without any duress or coercion. Employee has carefully and completely read this entire Agreement, and Employee understands and agrees with all of the provisions in this Agreement.

-3-