EXHIBIT 10.2

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (the “Agreement”) is made by CHOICEONE FINANCIAL
SERVICES, INC., a Michigan corporation (the “Corporation”), and KELLY J. POTES
(“Executive”). The parties agree as follows.

WHEREAS, the Board of Directors of the Corporation believes that the future
services of Executive as provided in this Agreement will be of significant value
to the Corporation; and

WHEREAS, the Corporation will own and operate two wholly owned subsidiaries,
ChoiceOne Bank and Lakestone Bank & Trust (“Banks”), which are engaged in the
general business of banking; and

WHEREAS, the Board of Directors of the Corporation has determined that it is in
the best interests of the Corporation, its shareholders and the Banks to secure
Executive’s continued services and to ensure Executive’s continued dedication
and objectivity in the event of any potential or occurrence of, or negotiation
or other action that could lead to, or create the possibility of, a Change in
Control (as hereafter defined) of the Corporation, without concern as to whether
Executive might be hindered or distracted by personal uncertainties and risks
created by any such possible Change in Control, and to encourage Executive’s
full attention and dedication to the Corporation and the Banks, the Board of
Directors has authorized the Corporation to enter into this Agreement; and

WHEREAS, Executive is willing to serve in the employ of the Corporation and the
Banks on a full-time basis as an at-will employee as provided in this Agreement.

NOW, THEREFORE, the parties agree as follows.

1.        Effective Date and Term. This Agreement will take effect as of the
Effective Time of the Corporation’s acquisition of County Bank Corp. (“County”),
as defined in the Agreement and Plan of Merger dated as of March 22, 2019,
between the Corporation and County (the “Merger Agreement”) (“Effective Date”).
If the merger of the Corporation and County does not close, this Agreement shall
be null and void. The initial term of this Agreement shall be three years, and,
beginning on the first anniversary of the Effective Date, the term shall
automatically be extended by another year on each anniversary of the Effective
Date unless either party gives the other notice (as provided in Section 15) of
intention to terminate this Agreement at least thirty (30) days before an
anniversary of the Effective Date, in which case this Agreement shall terminate
at the end of the then-current term without any further extension; provided,
however, that:

(a)        except for termination as provided above pursuant to notice from
Executive to the Corporation, this Agreement will not terminate during an
“Active Change in Control Proposal Period” (as defined in Section 10), even if
the Corporation has given Executive notice of intention to terminate this
Agreement;

(b)        except for termination as provided above pursuant to notice from
Executive to the Corporation, upon the occurrence of a “Change in Control” (as
defined in Section

  

 

9), the term of this Agreement shall automatically be extended until the third
anniversary of the effective date of the Change in Control, even if the
Corporation has given notice of intention to terminate this Agreement; and

(c)        termination of this Agreement shall not affect the obligations of
either party accrued before termination of this Agreement, including Executive’s
obligations under Sections 11, 12 and 13.

2.        Employment. Executive will serve as: (A) Chief Executive Officer of
the Corporation (the “principal position”); and (B) in such positions with
Affiliates (defined for purposes of this Agreement as any organizations
controlling, controlled by or under common control with the Corporation) as
reasonably requested by the Corporation, provided that the duties of such
positions are consistent with Executive’s responsibilities in Executive’s
principal position (together, the “Employment”). As used in this Agreement, the
term “Corporation” includes the Banks, unless the context clearly requires
otherwise.

Executive will serve the Corporation and the Banks well and faithfully during
the Employment and will devote Executive’s best reasonable full time business
efforts to the Employment, except that Executive may engage in civic and
professional activities, service on boards of directors, and similar activities
as long as such activities do not constitute a conflict of interest or impair
Executive’s performance of the duties of the Employment. The Employment may be
terminated during the term of this Agreement as provided in Sections 4 and 5.

3.        Compensation. Executive will be compensated during the Employment as
follows:

(a)       Salary. Executive’s annual salary (“Salary”) will be $360,000.00 for
2019 and 2020, prorated for any partial year, subject to required payroll
deductions and payable in weekly, bi-weekly or semi-monthly installments
pursuant to the Corporation’s normal payroll practices. Such Salary shall be
subject to review annually commencing in 2021 and will be subject to adjustment
pursuant to the Corporation’s normal procedures.

(b)       Bonus. Executive will participate in any bonus programs for senior
executives of the Corporation or the Banks, at a level commensurate with
Executive’s principal position, subject to the terms and conditions of the
applicable bonus program. Such bonus amount shall be subject to review annually
and will be subject to adjustment pursuant to the Corporation’s normal
procedures.

(c)       Equity Plans. Executive will participate in any equity based
compensation programs (“Equity Plans”) offered by the Corporation, at a level
commensurate with Executive’s principal position, subject to the terms and
conditions of the Equity Plans. Awards under the Equity Plans shall be
determined periodically pursuant to the Corporation’s normal procedures.

(d)        Fringe Benefits. Executive will participate in health and dental,
life insurance, short and long term disability insurance, retirement, and other
employee fringe benefit programs covering the Corporation’s salaried employees
as a group, and in any programs applicable to senior executives of the
Corporation or the Banks. The terms of

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applicable insurance policies and benefit plans in effect from time to time will
govern with regard to specific issues of coverage and benefit eligibility. All
benefit programs are subject to change from time to time in the Corporation’s
discretion, except that Executive will receive an annual car allowance of
$15,000, prorated for any partial year, paid in weekly, bi-weekly or
semi-monthly installments pursuant to the Corporation’s normal payroll
practices, or Executive can receive standard IRS mileage reimbursement for
business travel.

(e)        Paid Time Off. Executive will be entitled to the greater of (i) the
number of days of paid time off applicable to senior executives of the
Corporation per calendar year, or (ii) 30 days of paid time off per calendar
year.

(f)       Business Expenses. The Corporation will reimburse Executive for
reasonable ordinary and necessary business expenses incurred in the course of
the Employment, for fees and expenses of Executive’s attendance in the course of
the Employment at banking related conventions and similar events, for reasonable
professional association and seminar expenses, and for any additional expenses
authorized by the Corporation, subject to Executive’s submission of proper
documentation for tax and accounting purposes. Reimbursement under this section
will be paid within thirty (30) days after Executive submits documentation as
provided by this section, provided that payments may not be made after March 15
of the calendar year following the calendar year in which the expenses were
incurred.

4.       Termination of the Employment Without Severance Pay. Executive shall
not be entitled to any further compensation from the Corporation or any
Affiliate after termination of the Employment as permitted by this Section 4,
except (A) unpaid Salary installments through the Employment termination date,
(B) any vested benefits accrued as of the date of termination of the Employment
under the terms of any written Corporation or Bank employment, compensation or
benefit program; and (C) any rights of Executive to indemnification under the
provisions of the Articles of Incorporation or Bylaws of the Corporation or the
Banks or any indemnification agreement entered into between Executive and the
Corporation or any Affiliate (together, the “Vested Rights”).

(a)        Death. The Employment will terminate automatically upon Executive’s
death.

(b)        Disability. The Corporation may terminate the Employment due to
Executive’s “Disability”, defined as Executive being determined to be “disabled”
pursuant to the Corporation’s long-term disability insurance policy as in effect
from time to time and without regard to whether Executive is a participant in
such long-term disability policy. The Corporation may give Executive notice of
its intention to terminate the Employment due to Disability. It is understood
that the Corporation has the right to terminate the Employment due to
Executive’s Disability without meeting the standards in this Section 4(b), but
in that event the termination shall be deemed to be a termination of the
Employment pursuant to Section 5(a).

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(c)        Termination by Corporation for Cause. The Corporation may terminate
the Employment for “Cause”, defined as Executive’s: (i) breach of any material
term of this Agreement including, but not limited to, the terms in Sections 11,
12 and 13; (ii) continued failure to perform Executive’s duties; (iii) gross
negligence causing or placing the Corporation at risk of significant damage or
harm; (iv) misappropriation of or intentional damage to Corporation property;
(v) material fraud or dishonesty; (vi) conviction of or pleading guilty or no
contest to a felony; or (vii) intentional act or omission that Executive knows
or should know is significantly detrimental to the interests of the Corporation.
If the Corporation becomes aware after termination of the Employment other than
for Cause that Executive engaged before the termination of Employment in conduct
constituting Cause, the Corporation may recharacterize Executive’s termination
as having been for Cause.

The Corporation may not terminate the Employment for “Cause” under (i) or (ii)
above unless:

A.       the Chairman of the Board of Directors notifies the Executive in
writing, within sixty (60) days after the Board of Directors has concluded after
conducting any applicable investigation that an act or omission constitutes
Cause and explaining why the Board of Directors considers it to constitute
Cause;

B.       the Executive fails, within thirty (30) days after notice from the
Chairman under A. above, to revoke the action or correct the omission and make
the Corporation whole; and

C.       the Chairman gives notice of termination within thirty (30) days after
expiration of the thirty (30)-day period under B. above.

The Corporation may not terminate the Employment for “Cause” under (iii)-(vii)
above unless the Employment is terminated within sixty (60) days after the Board
of Directors concludes after conducting any applicable investigation that an act
or omission constitutes Cause and the Chairman gives Executive written notice of
the act or omission that the Board of Directors has concluded constitutes Cause
before or no later than thirty (30) days after termination.

(d)        Discretionary Termination by Executive. Executive may terminate the
Employment at will, with at least thirty (30) days' advance notice. If Executive
gives such notice of termination, the Corporation may (but need not) relieve
Executive of some or all of Executive’s offices and responsibilities for part or
all of such notice period, provided that Executive’s Salary and benefits are
continued for the lesser of thirty (30) days or the remaining period of the
Employment.

(e)        Termination of Employment after Termination of This Agreement. If
Executive continues to be employed by the Corporation or the Banks after
termination of this Agreement as provided in Section 1, Executive’s employment
shall be terminable by either party at will without any Severance Pay.

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5.        Termination With Severance Pay. Executive shall not be entitled to any
further compensation from the Corporation or any Affiliate after termination of
the Employment as permitted by this Section 5, except (A) Vested Rights; and (B)
Severance Pay under Section 6 or the Change in Control Severance under Section
7, whichever is applicable.

(a)        Discretionary Termination by Corporation. The Corporation may
terminate the Employment during the term of this Agreement at will, with at
least thirty (30) days advance notice to Executive. Any termination of
Executive’s Employment by the Corporation under Section 4 that is found not to
meet the standards of such Section will be considered to have been a termination
under this Section 5(a).

(b)       Termination by Executive for Good Reason. Executive may terminate the
Employment during the term of this Agreement for “Good Reason” if there is a
material negative change to the employment relationship between Executive and
the Corporation because: (i) Executive is demoted from any of Executive’s
principal positions; (ii) the status, authority or responsibility of Executive’s
principal positions is materially diminished; (iii) Executive’s Salary as then
in effect is materially reduced without a corresponding reduction in the
salaries of the Corporation and Banks’ other executives; (iv) the Corporation
requires Executive be based in a facility that is more than sixty (60) miles
from the facility where Executive is located immediately prior to the
relocation; or (v) any material breach by the Corporation or the Banks, or any
successor, of its obligations to Executive under this Agreement.

Executive may not terminate the employment for “Good Reason” unless:

A.       Executive notifies the Chairman of the Corporation’s Board of Directors
in writing, within sixty (60) days after Executive becomes aware of the act or
omission constituting Good Reason, that the act or omission in question
constitutes Good Reason and explaining why Executive considers it to constitute
Good Reason;

B.       the Corporation fails, within thirty (30) days after notice from
Executive under A. above, to revoke the action or correct the omission and make
Executive whole; and

C.       Executive gives notice of termination within thirty (30) days after
expiration of the thirty (30)-day period under B. above.

6.       Severance Pay. The Corporation will pay and provide Executive with the
payments and benefit continuation provided in this Section 6 (“Severance Pay”)
if Executive’s Employment is terminated during the term of this Agreement as
provided in Section 5 in a manner that constitutes a “separation from service”
as that term is defined by Section 409A of the Internal Revenue Code of 1986
(the “Code”) and Executive is not entitled to the Change in Control Severance
under Section 7. If Executive becomes entitled to Severance Pay under this
Section 6, and subsequently becomes entitled to the Change in Control Severance
under Section 7, the amount of the lump sum Cash Payment under Section 7(a)
shall be reduced by the amount of

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Severance Pay already received by Executive under this Section 6, and no further
Severance Pay will be payable under this Section 6.

(a)       Amount and Duration of Severance Pay. Subject to the other provisions
of this Section, Severance Pay will consist of (i) continued payment of
Executive’s then-current Salary (disregarding any reduction in Salary that
constitutes Good Reason) for one hundred and four (104) weeks following the week
in which the Employment terminates (the “Severance Pay Period”) pursuant to the
Corporation’s normal payroll process, subject to required payroll withholding;
and (ii) a monthly payment equal to the monthly cost of health care continuation
under the Corporation’s health plan based on the coverage (e.g., individual or
family) in place for Executive immediately prior to the termination of his
employment, until the earlier of (y) twelve (12) months after termination or (z)
the date Executive has commenced new employment and has thereby become eligible
for comparable benefits, subject to Executive's rights under COBRA.

Executive will receive the Severance Pay provided in Section 6(a)
notwithstanding any other earnings that Executive may have, and subject to
offset only as provided in Section 6(c). If Executive dies during the Severance
Pay Period, the Severance Pay under Section 6(a) will continue for the remainder
of the Severance Pay Period for the benefit of Executive’s designated
beneficiary (or Executive’s estate if Executive fails to designate a
beneficiary).

(b)        Conditions to Severance Pay. To be eligible for Severance Pay,
Executive must meet the following conditions: (i) Executive must comply with
Executive’s obligations under this Agreement that continue after termination of
the Employment; (ii) Executive must promptly sign and continue to honor a
release, in form acceptable to the Corporation, of any and all claims arising
out of or relating to Executive’s Employment or its termination and that
Executive might otherwise have against the Corporation, the Corporation’s
Affiliates, or any of their officers, directors, employees and agents, provided
that the release will not waive Executive’s right to claims or rights related to
(A) Severance Pay due under this Agreement; (B) unpaid salary through the
employment termination date; (C) unpaid expense reimbursements for authorized
business expenses incurred before the employment termination date; (D) any
Equity Plan benefits; (E) benefit plans (for example to convert life insurance);
(F) any rights under the terms of any qualified retirement plan covering
Executive; and (G) rights of indemnification under the Corporation’s Articles of
Incorporation or Bylaws or any indemnification agreement entered into between
Executive and the Corporation or any Affiliate (in addition, the release does
not affect Executive’s right to cooperate in an investigation by the Equal
Employment Opportunity Commission); and (iii) Executive must resign upon written
request by Corporation from all positions with or representing the Corporation
or any Affiliate, including but not limited to, membership on boards of
directors; and (iv) Executive must provide the Corporation for a period of six
(6) months after the Employment termination date with consulting services
regarding matters within the scope of Executive’s former duties upon request by
the Corporation’s Chief Executive Officer; provided, however, that Executive
will only be required to provide those services by telephone at Executive’s
reasonable convenience and without substantial interference with Executive’s
other activities or commitments and the amount

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of consulting services will be limited to ensure Executive’s termination of
employment qualifies as a separation from service under Section 409A of the
Code.

(c)        Reductions to Severance Pay. The Severance Pay due to Executive under
Section 6(a)(i) for any week will be reduced (but not below zero) by: (i) any
disability benefits to which Executive is entitled for that week under any
disability insurance policy or program of the Corporation or any Affiliate
(including but not limited to worker’s disability compensation); (ii) any
severance pay payable to Executive under any other agreement or Corporation
policy; (iii) any payment due to Executive under the Federal Worker Adjustment
and Retraining Notification Act or any comparable state statute or local
ordinance; and (iv) up to $5,000.00 of expenses owed by Executive to the
Corporation from debt incurred in the ordinary course of the service
relationship.

(d)       Delay in Payment to a Specified Employee. Notwithstanding any other
timing provision in this Section 6, if, at the time any payment that is not
exempt from Section 409A would commence due to a separation from service, and
Executive is a “specified employee” as that term is defined by Section 409A of
the Code, then no such payment under this Agreement may be paid before the date
that is six (6) months after Executive’s separation from service (or, if
earlier, the individual’s death). Payments that are not exempt from Section 409A
and that Executive would otherwise have been entitled during those six (6)
months will be accumulated and paid on the first payroll date after six (6)
months following Executive’s separation from service (or, if earlier, the
individual’s death). All payments that are exempt from Section 409A, or that
would otherwise be made more than six (6) months following Executive’s
separation from service, will be made in accordance with the general timing
provisions described above.

7.       Change in Control Severance. The Corporation will make the payments
provided for in this Section 7 if Executive’s Employment is terminated under
Section 5 during the term of this Agreement in a manner that constitutes a
“separation from service” as that term is defined by Section 409A of the Code,
and such termination of Employment occurs either (i) within three (3) years
after the date of a Change in Control or (ii) within six (6) months before the
date of a Change in Control.

(a)        Amount and Payment of Cash Payment. The Corporation will (i) make a
cash payment (the “Cash Payment”) to Executive in an amount equal to three times
the Executive’s then-current Salary (disregarding any reduction in Salary that
constitutes Good Reason) ; and (ii) a monthly payment equal to the monthly cost
of health care continuation under the Corporation’s health plan based on the
coverage (e.g., individual or family) in place for Executive immediately prior
to the termination of his employment, until the earlier of (y) twelve (12)
months after termination or (z) the date Executive has commenced new employment
and has thereby become eligible for comparable benefits, subject to Executive's
rights under COBRA. The Cash Payment in (i) above shall be paid to Executive in
a single lump sum in the first payroll occurring on or after the thirtieth
(30th) business day after the date Executive’s Employment terminates. If
Executive dies after becoming entitled to the Cash Payment but before it has
been paid in full, the Cash Payment will be made to Executive’s designated
beneficiary (or Executive’s estate if Executive fails to designate a
beneficiary).

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(b)       Reductions to Cash Payment. Executive will receive the Cash Payment
notwithstanding any other earnings that Executive may have and without offset of
any kind except required payroll deductions.

8.       Parachute Cap. The Corporation will act in good faith to mitigate the
impact of Section 280G of the Code on any Parachute Payment to Executive in
connection with a Change in Control. If, after the parties have cooperated in
good faith to mitigate the impact of Section 280G of the Code, and
notwithstanding anything in this Agreement to the contrary, any payment,
benefit, or amount payable or benefit to be provided to Executive, whether
pursuant to this Agreement or otherwise, that is a “Parachute Payment” as
defined in Section 280G(b)(2) of the Internal Revenue Code (the “Code”), will be
reduced to the extent necessary so that the benefits payable or to be provided
to Executive under this Agreement that are treated as Parachute Payments as well
as any payments or benefits provided outside of this Agreement that are so
treated will not cause the Corporation or any Affiliate to have paid an “Excess
Parachute Payment” as defined in Section 280G(b)(1) of the Code. If it is
established that an “Excess Parachute Payment” has occurred or will occur under
this Agreement or otherwise, any remaining Parachute Payments to be made will be
reduced to ensure that the total payments to Executive do not exceed 2.99 times
Executive’s “base amount” as defined in Section 280G(b)(3) of the Code. The lump
sum cash severance payment under Section 7(a) will be reduced to comply with
this Section 8 only to the extent necessary to ensure that the total payments to
Executive do not exceed 2.99 times Executive’s “base amount” as defined in
Section 280G(b)(3) of the Code. For the avoidance of doubt, in no circumstance
shall the Corporation or the Banks pay Executive a “gross up” or similar payment
to mitigate the impact of Section 280G of the Code.

9.       Definition of Change in Control. As used in this Agreement, the term
“Change in Control” means any of the occurrences listed in (a) below, subject to
(b) below.

(a)        A Change in Control means the occurrence of a change in the ownership
of effective control of the Corporation or a change in the ownership of a
substantial portion of the assets of the Corporation as provided by Treasury
Regulation § 1.409A-3(i)(5), which includes the occurrence of any of the
following events:

(i)       The acquisition, by a person or persons acting as a group, of stock of
the Corporation that together with stock held by such person or group
constitutes more than fifty percent (50%) of the total fair market value or
total voting power of the stock of the Corporation.

(ii)       The majority of members of the Board of Directors of the Corporation
are replaced during any twelve (12) month period by directors whose appointment
or election is not endorsed by a majority of the members of the Board of
Directors prior to the date of appointment or election.

(iii)       The acquisition, by a person or persons acting as a group, of the
Corporation’s assets that have a total gross fair market value equal to or
exceeding fifty percent (50%) of the total gross fair market value of the
Corporation’s assets in a single transaction or within a twelve (12) month
period ending with the most recent acquisition. For the purpose of this section,
gross fair market value means

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the value of the assets of the Corporation, or the value of the assets being
disposed of, determined without regard to any liabilities associated with such
assets.

The parties agree that the merger between the Corporation and County pursuant to
the Merger Agreement does not constitute a Change in Control under this
Agreement and does not trigger any payments that may otherwise be required by
this Section and Executive waives any right to any payment under this Agreement
as a result of that merger.

(b)        Notwithstanding the foregoing, no trust department or designated
fiduciary or other trustee of such trust department of the Corporation or a
subsidiary of the Corporation, or other similar fiduciary capacity of the
Corporation with direct voting control of the stock shall be treated as a person
or group within the meaning of subsection (a)(i) hereof. Further, no
profit-sharing, employee stock ownership, employee stock purchase and savings,
employee pension, or other employee benefit plan of the Corporation or any of
its subsidiaries, and no trustee of any such plan in its capacity as such
trustee, shall be treated as a person or group within the meaning of subsection
(a)(i) hereof.

10.        Definition of “Active Change in Control Proposal Period”. As used in
this Agreement the term “Active Change in Control Proposal Period” shall mean
any period:

(a)        during which the Board of Directors of the Corporation has authorized
solicitation by the Corporation of offers for a transaction which, if
consummated, would constitute a Change in Control; or

(b)        during which the Corporation has received a proposal for a
transaction which, if consummated, would constitute a Change in Control, and the
Board of Directors has not determined to reject such proposal without any
counter-offer or further discussions; or

(c)        during which any proxy solicitation or tender offer with regard to
the securities of the Corporation is ongoing, if the intent of such proxy
solicitation or tender offer is to cause the Corporation to solicit offers for
or enter into a transaction that would constitute a Change in Control.

11.       Confidentiality, Return of Property. Executive has obtained and may
obtain confidential information concerning the business, operations, financial
affairs, organizational and personnel matters, policies, procedures and other
non-public matters of Corporation and its Affiliates, and those of third-parties
that is not generally disclosed to persons not employed by Corporation or its
subsidiaries. Such information (referred to herein as the “Confidential
Information”) may have been or may be provided in written form or orally.
Executive shall not disclose to any other person the Confidential Information at
any time during or after termination of the Employment, except that during the
Employment Executive may use and disclose Confidential Information as reasonably
required by the Employment. Upon termination of the Employment, Executive will
deliver to the Corporation any and all property owned or leased by the
Corporation or any Affiliate and any and all Confidential Information (in
whatever form) including without limitation all customer lists and information,
financial information, business notes, business plans, documents, keys, credit
cards and other Corporation-provided equipment.

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Executive’s commitments in this Section will continue in effect after
termination of the Employment and after termination of this Agreement. The
parties agree that any breach of Executive’s covenants in this Section would
cause the Corporation irreparable harm, and that injunctive relief would be
appropriate.

12.       Inventions, Discoveries and Improvements. Executive hereby agrees to
assign and transfer to the Corporation, its successors and assigns, Executive’s
entire right, title and interest in and to any and all inventions, discoveries,
trade secrets and improvements thereto which he may discover to develop, either
solely or jointly with others, during Executive’s employment hereunder and for a
period of one (1) year after termination of such employment, which would relate
in any way to the business of the Corporation or any Affiliate of the
Corporation, together with all rights to letters patent, copyrights or
trademarks which may be granted with respect thereto. Immediately upon making or
developing any invention, discovery, trade secret or improvement thereto,
Executive shall notify the Corporation thereof and shall execute and deliver to
the Corporation, without further compensation, such documents as may be
necessary to assign and transfer to the Corporation Executive’s entire right,
title and interest in and to such invention, discovery, trade secret or
improvement thereto, and to prepare or prosecute applications for letters patent
with respect to the same in the name of the Corporation. Executive’s obligations
under this Section 12 shall continue in effect, as to inventions, discoveries
and improvements covered by this Section 12, notwithstanding any termination of
the employment or this Agreement. The parties agree that any breach of
Executive’s covenants in this Section would cause the Corporation irreparable
harm, and that injunctive relief would be appropriate.

13.        Noncompetition and Nonsolicitation.

(a)       In view of Executive’s importance to the success of the Corporation,
Executive and Corporation agree that the Corporation would likely suffer
significant harm from Executive’s competing with Corporation during the
Employment and for some period of time thereafter. Accordingly, Executive agrees
that Executive shall not engage in competitive activities either: (A) while
employed by Corporation; or (B) if Executive’s Employment is terminated during
the term of this Agreement, during the Restricted Period (as defined below).
Executive shall be deemed to engage in competitive activities if he shall,
without the prior written consent of the Corporation, (i) in any county in which
the Corporation or any of its Affiliates has a branch office or loan production
office and all contiguous counties (including the municipalities therein),
render services directly or indirectly, as an employee, officer, director,
consultant, advisor, partner or otherwise, for any organization or enterprise
which competes directly or indirectly with the business of Corporation or any of
its Affiliates in providing financial products or services (including, without
limitation, banking, insurance, or securities products or services) to consumers
and businesses, or (ii) directly or indirectly acquires any financial or
beneficial interest in (except as provided in the next sentence) any
organization which conducts or is otherwise engaged in a business or enterprise
in any county in which the Corporation or any of its Affiliates has a branch
office or loan production office and all contiguous counties (including all
municipalities therein) which competes directly or indirectly with the business
of Corporation or any of its Affiliates in providing financial products or
services (including, without limitation, banking, insurance or securities
products or services) to consumers and businesses. Notwithstanding the preceding
sentence, Executive shall not be

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prohibited from owning less than 1 percent of any class of publicly traded
securities of a competitor. For purposes of this Section 13 the term “Restricted
Period” shall equal twenty-four (24) months, commencing as of the date of
termination of Executive’s Employment during the term of this Agreement.

(b)        While employed by Corporation and during the Restricted Period,
Executive agrees that Executive shall not, in any manner directly (i) solicit by
mail, by telephone, by personal meeting, or by any other means, any customer or
prospective customer of Corporation to whom Executive provided services, or for
whom Executive transacted business, or whose identity become known to Executive
in connection with Executive’s services to Corporation (including employment
with or services to any predecessor or successor entities), to transact business
with a person or an entity other than the Corporation or its Affiliates or
reduce or refrain from doing any business with the Corporation or its Affiliates
or (ii) interfere with or damage (or attempt to interfere with or damage) any
relationship between Corporation or any of its Affiliates and any such customer
or prospective customer, or any shareholder of the Corporation. The term
“solicit” as used in this Section 13 means any communication of any kind
whatsoever, inviting, encouraging or requesting any person to take or refrain
from taking any action with respect to the business of Corporation or any of its
Affiliates.

(c)       While employed by Corporation and during the Restricted Period,
Executive agrees that Executive shall not, in any manner directly solicit any
person who is an employee of Corporation or any of its Affiliates to apply for
or accept employment or a business opportunity with any other person or entity.

(d)      The parties agree that nothing herein shall be construed to limit or
negate the common law of torts or trade secrets where it provides broader
protection than that provided herein.

(e)       Executive’s obligations under this Section shall survive termination
of this Agreement.

(f)       The parties agree that any breach of Executive’s covenants in this
Section would cause the Corporation irreparable harm, and that injunctive relief
would be appropriate.

14.        Successors; Binding Agreement.

(a)       This Agreement shall not be terminated by any merger or consolidation
of the Corporation whereby the Corporation is or is not the surviving or
resulting corporation or as a result of any transfer of all or substantially all
of the assets of the Corporation. In the event of any such merger,
consolidation, or transfer of assets, the provisions of this Agreement shall be
binding upon the surviving or resulting corporation or the person or entity to
which such assets are transferred.

(b)       The Corporation agrees that concurrently with any merger,
consolidation or transfer of assets constituting a Change in Control, it will
cause any successor or transferee unconditionally to assume, by written
instrument delivered to Executive (or Executive’s

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beneficiary or estate), all of the obligations of the Corporation hereunder.
Failure of the Corporation to obtain such assumption prior to the effective date
of any Change in Control shall be a material breach of the Corporation’s
obligations to Executive under this Agreement.

(c)       This Agreement shall inure to the benefit of and be enforceable by
Executive’s personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If Executive shall die
while any amounts would be payable to Executive hereunder had Executive
continued to live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to such person or persons
appointed in writing by Executive to receive such amounts or, if no person is so
appointed, to Executive’s estate.

15.       Notice. For purposes of this Agreement, all notices and other
communications required or permitted hereunder shall be in writing and shall be
deemed to have been duly given when delivered or received by facsimile
transmission or five (5) days after deposit in the United States mail, certified
and return receipt requested, postage prepaid, addressed as follows:

If to the Corporation: ChoiceOne Financial Services, Inc.
Attn: Chairman
109 E. Division
Sparta, MI 49345     If to Executive: Kelly J. Potes
____________________
____________________

 

Either party may change its address for notices by notice to the other party.

16.       Amendment and Waiver. No provisions of this Agreement may be amended,
modified, waived or discharged unless the waiver, modification, or discharge is
authorized by the Corporation’s Board of Directors, or a committee of the Board
of Directors, and is agreed to in a writing signed by Executive and by the
Chairman of the Board of Directors. No waiver by either party at any time of any
breach or non-performance of this Agreement by the other party shall be deemed a
waiver of any prior or subsequent breach or non-performance.

17.        Severability. The invalidity or unenforceability of any provision of
this Agreement will not affect the validity or enforceability of any other
provision of this Agreement, which will remain in full force and effect. If a
court of competent jurisdiction ever determines that any provision of this
Agreement (including, but not limited to, all or any part of the non-competition
covenant in this Agreement) is unenforceable as written, the parties intend that
the provision shall be deemed narrowed or revised in that jurisdiction (as to
geographic scope, duration, or any other matter) to the extent necessary to
allow enforcement of the provision. The revision shall thereafter govern in that
jurisdiction, subject only to any allowable appeals of that court decision.

18.       Entire Agreement. No agreements or representations, oral or otherwise,
express or implied, with respect to Executive’s Employment with the Corporation
or any of the subjects

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covered by this Agreement have been made by either party that are not set forth
expressly in this Agreement, and this Agreement supersedes any pre-existing
employment agreements and any other agreements on the subjects covered by this
Agreement, including the Change in Control Agreement between the parties dated
May 13, 2016, which Executive agrees terminates as of the Effective Time of the
Merger.

19.        Governing Law. The validity, interpretation, and construction of this
Agreement are to be governed by Michigan laws, without regard to choice of law
rules. The parties agree that any judicial action involving a dispute arising
under this Agreement will be filed, heard and decided in the Kent County Circuit
Court. The parties agree that they will subject themselves to the personal
jurisdiction and venue of either court, regardless of where Executive or the
Corporation may be located at the time any action may be commenced. The parties
agree that the locations specified above are mutually convenient forums and that
each of the parties conducts business in Kent County.

20.       Section 409A. Payments under this Agreement are intended to comply
with Section 409A of the Internal Revenue Code to the extent payments under this
Agreement are not otherwise exempt from Section 409A of the Internal Revenue
Code as an involuntary separation pay plan (as that term is understood under
Treasury Regulation § 1.409A-1(b)(9)) or as providing for short-term deferrals
(as that term is understood under Treasury Regulation § 1.409A-1(b)(4)) and
shall be interpreted and operated consistently with those intentions. To the
extent Section 409A is found to be applicable to this Agreement, this Agreement
is to be interpreted to comply with Section 409A and shall be interpreted and
operated consistently with those intentions, including but not limited to, any
applicable six-month delay in payment if Executive is a specified employee of
the Corporation. Each payment that the Executive may receive under this
Agreement shall be treated as a “separate payment” for purposes of Section 409A
of the Code, to the extent applicable.

21.        Counterparts. This Agreement may be signed in original or by fax in
counterparts, each of which shall be deemed an original, and together the
counterparts shall constitute one complete document.

Signature Page to Follow

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The parties made this Agreement effective as of the Effective Date in Section 1.

 

  CHOICEONE FINANCIAL SERVICES, INC.                 By /s/ Paul L. Johnson    
  Paul L. Johnson, Chairman  

 

 

  EXECUTIVE           /s/ Kelly J. Potes     Kelly J. Potes  

 

 

 

 

 

 

 

 

[signature page to Employment Agreement]