Document:

ChoiceOne Financial Services, Inc. 10-K

 

Exhibit
10.5

 

 

CHOICEONE
FINANCIAL SERVICES, INC.

DIRECTOR
EQUITY COMPENSATION PLAN OF 2019

 

SECTION
1

 

Establishment
Of Plan; Purpose Of Plan

 

1.1       Establishment
of Plan. The Company hereby establishes the DIRECTOR EQUITY COMPENSATION PLAN OF 2019 for its corporate and Subsidiary non-employee
directors. The Plan permits the grant and award of Stock Options, Restricted Stock, Restricted Stock Units, Stock Awards and other
stock-based and stock-related awards.

 

1.2       Purpose
of Plan. The purpose of the Plan is to provide Participants with an increased incentive to contribute to the long-term growth
of the Company and its Subsidiaries, to join the interests of Participants with the interests of the Company’s shareholders
through the opportunity for increased stock ownership and to attract and retain Participants. The Plan is further intended to
provide flexibility to the Company in structuring Director compensation to best promote the foregoing objectives.

 

 

SECTION
2

 

Definitions

 

The
following words have the following meanings unless a different meaning plainly is required by the context:

 

2.1       “Act”
means the Securities Exchange Act of 1934, as amended.

 

2.2       “Affiliate”
means any organization controlling, controlled by or under common control with the Company.

 

2.3       “Board”
means the Board of Directors of the Company.

 

2.4       “Change
in Control,” unless otherwise defined in an Equity Award agreement, means an occurrence of a nature that would be required
to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A issued under the Act. Without limiting the inclusiveness
of the definition in the preceding sentence, a Change in Control of the Company shall be deemed to have occurred as of the first
day that any one or more of the following conditions is satisfied: (a) any Person is or becomes the "beneficial owner"
(as defined in Rule 13d-3 under the Act), directly or indirectly, of securities of the Company representing 25% or more of
the combined voting power of the Company’s then outstanding securities; (b) the failure at any time of the Continuing Directors
to constitute at least a majority of the Board; or (c) any of the following occur: (i) any merger or consolidation of the Company,
other than a merger or consolidation in which the voting securities of the Company immediately prior to the merger or consolidation
continue to represent (either by remaining outstanding or being converted into securities of the surviving entity) 60% or more
of the combined voting power of the Company or surviving entity immediately after the merger or consolidation with another entity;
(ii) any sale, exchange, lease, mortgage, pledge, transfer or other disposition (in a single transaction or a series of related
transactions) of assets or earning power aggregating more than 50% of the assets or earning power of the Company on a consolidated
basis; (iii) any complete liquidation or dissolution of the Company; (iv) any reorganization, reverse stock split or recapitalization
of the Company which would result in a Change in Control as otherwise defined in this Plan; or (v) any transaction or series of
related transactions having, directly or indirectly, the same effect as any of the foregoing.

 

    	 	 	 

    	 

    

 

 

2.5       “Code”
means the Internal Revenue Code of 1986, as amended. Each reference in this Plan to a section or sections of the Code, unless
otherwise noted, shall be deemed to include a reference to the rules and regulations issued under such section or sections of
the Code.

 

2.6       “Committee”
means the Personnel and Benefits Committee of the Board or such other committee as the Board may designate from time to time.
The Committee shall consist of at least two members of the Board and all of its members shall be “non-employee directors”
as defined in Rule 16b-3 issued under the Act.

 

2.7       “Common
Stock” means the Company’s common stock, no par value per share.

 

2.8       “Company”
means ChoiceOne Financial Services, Inc., a Michigan corporation, and its successors and assigns.

 

2.9       “Continuing
Directors” means the individuals who were either (a) first elected or appointed as a director in connection with the
merger of the Company and County Bank Corp. pursuant to the terms of an Agreement and Plan of Merger dated as of March 22, 2019
and the First Amendment to Agreement and Plan of Merger dated as of April 25, 2019, between County Bank Corp. and the Company,
or (b) subsequently appointed as a director, if appointed or nominated by at least a majority of the Continuing Directors in office
at the time of the nomination or appointment, but specifically excluding any individual whose initial assumption of office occurs
as a result of either an actual or threatened solicitation subject to Rule 14a-12(c) of Regulation 14A issued under the Act or
other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board.

 

2.10       “Director”
means a member of the board of directors of the Company or one of its Subsidiaries who is not a common law employee of the Company
or one of its Subsidiaries.

 

2.11“Disability”
means an inability of a Participant to perform his or her duties as a Director due to physical or mental disability for a continuous
period of 180 days or longer.

 

2.12“Equity
Award” means the award or grant of a Stock Option, Restricted Stock, a Restricted Stock Unit, a Stock Award, or another
stock-based or stock-related award, to a Participant pursuant to the Plan.

 

2.13“Market
Value” on any given date means: (a) if the security is listed for trading on The Nasdaq Stock Market or one or more
national securities exchanges, the last reported sales price on the date in question, or if the security shall not have been traded
on the principal exchange on the applicable date, the last reported sales price on the first day before that date on which such
security was so traded; (b) if the security is not so listed for trading but is traded in the over-the-counter market, the fair
market value determined by the Committee in good faith, taking into account such factors as it considers advisable in a manner
consistent with the valuation principles of Section 409A of the Code, except when the Committee expressly determines not to use
Section 409A valuation principles, which determination shall be final and binding on all parties. Factors that the Committee may,
but need not, consider when determining Market Value include, without limitation, the prices at which recent sales of Common Stock
have been made, and the most recent reported bid and asked prices of the Common Stock as reported by the Company's market makers
on the applicable date.

 

    	 	2	 

    	 

    

 

 

2.14“Participant”
means a Director of the Company or one of its Subsidiaries who is granted an Equity Award under the Plan.

 

2.15“Person”
has the same meaning as set forth in Sections 13(d) and 14(d)(2) of the Act.

 

2.16       “Plan”
means the ChoiceOne Financial Services, Inc. Director Equity Compensation Plan of 2019 as set forth herein, as it may be amended
from time to time.

 

2.17       “Restricted
Period” means the period of time during which Restricted Stock, Restricted Stock Units or other stock-based or stock-related
awards that are awarded under the Plan are subject to the risk of forfeiture, restrictions on transfer and other restrictions
or conditions pursuant to Sections 6 or 7. The Restricted Period may differ among Participants and may have different expiration
dates with respect to shares of Common Stock covered by the same Equity Award.

 

2.18       “Restricted
Stock” means Common Stock awarded to a Participant pursuant to Section 6 of the Plan while such Common Stock remains
subject to the risk of forfeiture, restrictions on transfer and other restrictions or conditions pursuant to Section 6.

 

2.19       “Restricted
Stock Unit” means an award to a Participant pursuant to Section 6 of the Plan and described as a “Restricted
Stock Unit” in Section 6.

 

2.20“Retirement”
means the voluntary resignation of service as a Director by the Participant after the Participant has attained 55 years of age
and completed six years of service with the Company or any of its Subsidiaries or as otherwise may be set forth in the Equity
Award agreement or other grant document with respect to a Participant and a particular Equity Award.

 

2.21“Stock
Award” means an award of Common Stock awarded to a Participant pursuant to Section 7 of the Plan.

 

2.22“Stock
Option” means the right to purchase Common Stock at a stated price for a specified period of time. For purposes of the
Plan, a Stock Option may only be a nonqualified stock option.

 

    	 	3	 

    	 

    

 

 

2.23“Subsidiary”
means any corporation or other entity of which 50% or more of the outstanding voting stock or voting ownership interest is directly
or indirectly owned or controlled by the Company or by one or more Subsidiaries of the Company. The term “Subsidiary”
includes present and future Subsidiaries of the Company.

 

2.24“Termination”
or “Cessation” of service shall be considered to occur on the date on which the Director's term as a director
ends whether due to resignation, removal, or no longer being elected as a director for any reason.

 

 

SECTION
3

 

Administration

 

3.1       Power
and Authority. The Committee shall administer the Plan. The Committee may delegate any, some or all of its record keeping,
calculation, payment and other ministerial or administrative authority and responsibility from time to time to and among one or
more individuals, who may be members of the Committee or employees, but all actions taken pursuant to delegated authority and
responsibility shall be subject to such review, change and approval by the Committee as the Committee considers appropriate. Except
as limited in the Plan, the Committee shall have all of the express and implied powers and duties set forth in the Bylaws of the
Company and the Plan, shall have full power and authority to interpret the provisions of the Plan and Equity Awards granted under
the Plan and shall have full power and authority to supervise the administration of the Plan and Equity Awards granted under the
Plan and to make all other determinations and do all things considered necessary or advisable for the administration of the Plan.
All determinations, interpretations and selections made by the Committee regarding the Plan shall be final and conclusive. The
Committee shall hold its meetings at such times and places as it considers advisable. Action may be taken by a written instrument
signed by all of the members of the Committee and any action so taken shall be fully as effective as if it had been taken at a
meeting duly called and held. The Committee shall make such rules and regulations for the conduct of its business as it considers
advisable.

 

3.2       Grants
or Awards to Participants. In accordance with and subject to the provisions of the Plan, the Committee shall have the authority
to determine all provisions of Equity Awards as the Committee may consider necessary or desirable and as are consistent with the
terms of the Plan, including, without limitation, the following: (a) the persons who shall be selected as Participants; (b) the
nature and, subject to the limitations set forth in Section 4.1 of the Plan, extent of the Equity Awards to be made to each Participant
(including the number of shares of Common Stock to be subject to each Equity Award, any exercise or purchase price, the manner
in which an Equity Award will vest or become exercisable and the form of payment for the Equity Award); (c) the time or times
when Equity Awards will be granted; (d) the duration of each Equity Award; and (e) the restrictions and other conditions to which
payment or vesting of Equity Awards may be subject.

 

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3.3       Amendments
or Modifications of Equity Awards. Subject to Section 10, the Committee shall have the authority to amend or modify the terms
of any outstanding Equity Award in any manner, provided that the amended or modified terms are not prohibited by the Plan as then
in effect and provided such actions do not cause an Equity Award not already subject to Section 409A of the Code to become subject
to Section 409A of the Code, including, without limitation, the authority to: (a) modify the number of shares or other terms and
conditions of an Equity Award; provided that any increase in the number of shares of an Equity Award other than pursuant to Section
4.2 shall be considered to be a new grant with respect to such additional shares for purposes of Section 409A of the Code and
such new grant shall be made at Market Value on the date of grant; (b) extend the term of an Equity Award to a date that is no
later than the earlier of the latest date upon which the Equity Award could have expired by its terms under any circumstances
or the 10th anniversary of the date of grant (for purposes of clarity, as permitted under Section 409A of the Code,
if the term of a Stock Option is extended at a time when the Stock Option exercise price equals or exceeds the Market Value, it
will not be an extension of the term of the Stock Option, but instead will be treated as a modification of the Stock Option and
a new Stock Option will be treated as having been granted); (c) accelerate the exercisability or vesting or otherwise terminate,
waive or modify any restrictions relating to an Equity Award; (d) accept the surrender of any outstanding Equity Award; and (e)
to the extent not previously exercised or vested, authorize the grant of new Equity Awards in substitution for surrendered Equity
Awards; provided, however, that such grant of new Equity Awards shall be considered to be a new grant for purposes of Section
409A of the Code and shall be made at Market Value on the date of grant and, provided further, that Equity Awards issued
under the Plan may not be repriced, replaced, regranted through cancellation or modified without shareholder approval if the effect
of such repricing, replacement, regrant or modification would be to reduce the exercise price or base price of such Equity Awards
to the same Participants.

 

3.4       Indemnification
of Committee Members. Neither any member or former member of the Committee, nor any individual or group to whom authority
or responsibility is or has been delegated, shall be personally responsible or liable for any act or omission in connection with
the performance of powers or duties or the exercise of discretion or judgment in the administration and implementation of the
Plan. Each person who is or shall have been a member of the Committee, and any other individual or group exercising delegated
authority or responsibility with respect to the Plan, shall be indemnified and held harmless by the Company from and against any
cost, liability or expense imposed or incurred in connection with such person’s or the Committee’s taking or failing
to take any action under the Plan or the exercise of discretion or judgment in the administration and implementation of the Plan.
This Section 3.4 shall not be construed as limiting the Company’s or any Subsidiary’s ability to terminate or otherwise
alter the terms and conditions of the employment of an individual or group exercising delegated authority or responsibility with
respect to the Plan, or to discipline any such person. Each such person shall be justified in relying on information furnished
in connection with the Plan’s administration by any appropriate person or persons.

 

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SECTION
4

 

Shares
Subject to the Plan

 

4.1       Number
of Shares. Subject to adjustment as provided in Section 4.2 of the Plan, the total number of shares available for Equity Awards
under the Plan shall be 100,000 shares of Common Stock; plus shares subject to Equity Awards that are canceled, surrendered, modified,
exchanged for substitute Equity Awards or that expire or terminate prior to the exercise or vesting of the Equity Awards in full
and shares that are surrendered to the Company in connection with the exercise or vesting of Equity Awards, whether previously
owned or otherwise subject to such Equity Awards. Such shares shall be authorized and may be unissued shares, shares issued and
repurchased by the Company (including shares purchased on the open market), and shares issued and otherwise reacquired by the
Company.

 

		4.2	Adjustments.

 

(a)       Stock
Dividends and Distributions. If the number of shares of Common Stock outstanding changes by reason of a stock dividend, stock
split, recapitalization or other general distribution of Common Stock or other securities to holders of Common Stock, the number
and kind of securities subject to outstanding Equity Awards and available for issuance under the Plan, together with applicable
exercise prices and base prices, shall be adjusted in such manner and at such time as shall be equitable under the circumstances.
No fractional shares shall be issued pursuant to the Plan and any fractional shares resulting from such adjustments shall be eliminated
from the respective Equity Awards.

 

(b)       Other
Actions Affecting Common Stock. If there occurs, other than as described in Section 4.2(a), any merger, business combination,
recapitalization, reclassification, subdivision or combination approved by the Board that would result in the persons who were
shareholders of the Company immediately prior to the effective time of any such transaction owning or holding, in lieu of or in
addition to shares of Common Stock, other securities, money and/or property (or the right to receive other securities, money and/or
property) immediately after the effective time of such transaction, then the outstanding Equity Awards (including exercise prices)
and reserves for Equity Awards under the Plan shall be adjusted in such manner and at such time as shall be equitable under the
circumstances. It is intended that in the event of any such transaction, Equity Awards under the Plan shall entitle the holder
of each Equity Award to receive (upon exercise in the case of Stock Options), in lieu of or in addition to shares of Common Stock,
any other securities, money and/or property receivable upon consummation of any such transaction by holders of Common Stock with
respect to each share of Common Stock outstanding immediately prior to the effective time of such transaction; upon any such adjustment,
holders of Equity Awards under the Plan shall have only the right to receive in lieu of or in addition to shares of Common Stock
such other securities, money and/or other property as provided by the adjustment.

 

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SECTION
5

 

Stock
Options

 

5.1       Grant.
A Participant may be granted one or more Stock Options under the Plan. All Stock Options granted under this Plan will be non-qualified
Stock Options. No Participant shall have any rights as a shareholder with respect to any shares of stock subject to Stock Options
granted hereunder until such shares have been issued. For purposes of determining the number of shares available under the Plan,
each Stock Option shall count as the number of shares of Common Stock subject to the Stock Option. Stock Options shall be subject
to such terms and conditions, consistent with the other provisions of the Plan, as may be determined by the Committee in its sole
discretion. In addition, the Committee may vary, among Participants and among Stock Options granted to the same Participant, any
and all of the terms and conditions of the Stock Options granted under the Plan. The Committee shall have complete discretion
in determining the number of Stock Options granted to each Participant.

 

5.2       Stock
Option Agreements. Stock Options shall be evidenced by stock option agreements, certificates of award, or both, containing
the terms and conditions applicable to such Stock Options. To the extent not covered by a stock option agreement or certificate
of award, the terms and conditions of this Section 5 shall govern.

 

5.3       Stock
Option Exercise Price and Grant Date. The per share Stock Option exercise price shall be determined by the Committee, but
shall be a price that is equal to or greater than 100% of the Market Value on the date of grant. The date of grant of a Stock
Option shall be the date the Stock Option is authorized by the Committee or a future date specified by the Committee as the date
for issuing the Stock Option.

 

5.4       Medium
and Time of Payment. The exercise price for each share purchased pursuant to a Stock Option granted under the Plan shall be
payable in cash or, if the Committee consents or provides in the applicable stock option agreement or grant, in shares of Common
Stock or other consideration substantially equivalent to cash. The time and terms of payment may be amended with the consent of
a Participant before or after exercise of a Stock Option, provided that such amendment would not cause a Stock Option to become
subject to Section 409A of the Code. Except as limited by the Act, the Sarbanes-Oxley Act of 2002 or other laws, rules or regulations,
the Committee may from time to time authorize payment of all or a portion of the Stock Option exercise price in the form of a
promissory note or other deferred payment installments according to such terms as the Committee may approve; provided, however,
that such promissory note or other deferred payment installments shall be with full recourse and shall bear a market rate of interest.
The Board may restrict or suspend the power of the Committee to permit such loans and may require that adequate security be provided.
The Committee may implement a program for the broker-assisted cashless exercise of Stock Options.

 

5.5       Limits
on Exercisability. Stock Options shall be exercisable for such periods, not to exceed 10 years and one day from the date of
grant, as may be fixed by the Committee. At the time of exercise of a Stock Option, the holder of the Stock Option, if requested
by the Committee, must represent to the Company that the shares are being acquired for investment and not with a view to the distribution
thereof. The Committee may in its discretion require a Participant to continue the Participant’s service with the Company
or its Subsidiaries for a certain length of time prior to a Stock Option becoming exercisable and may eliminate such delayed vesting
provisions.

 

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5.6

Restrictions
on Transferability. 

 

(a)       General.
Unless the Committee otherwise consents or permits (before or after the stock option grant) or unless the stock option agreement
or grant provides otherwise, Stock Options granted under the Plan may not be sold, exchanged, transferred, pledged, assigned or
otherwise alienated or hypothecated except by will or the laws of descent and distribution. All provisions of a Stock Option that
are determined with reference to the Participant, including without limitation those that refer to the Participant’s service
with the Company or its Subsidiaries, shall continue to be determined with reference to the Participant after any transfer of
a Stock Option.

 

(b)       Other
Restrictions. The Committee may impose other restrictions on any shares of Common Stock acquired pursuant to the exercise
of a Stock Option under the Plan as the Committee considers advisable, including, without limitation, holding periods or further
transfer restrictions, forfeiture or “claw-back” provisions, and restrictions under applicable federal or state securities
laws.

 

5.7       Termination
of Service. Unless the Committee otherwise consents or permits (before or after the stock option grant) or unless the stock
option agreement or grant provides otherwise:

 

(a)       General.
If a Participant is no longer a Director for any reason other than the Participant’s Retirement, death, Disability or
removal for cause, the Participant may exercise his or her Stock Options in accordance with their terms for a period of 3 months
after such termination of service, but only to the extent the Participant was entitled to exercise the Stock Options on the date
of termination.

 

(b)       Death.
If a Participant dies either while a Director or otherwise during a time when the Participant could have exercised a Stock Option,
the Stock Options issued to such Participant shall be exercisable in accordance with their terms by the personal representative
of such Participant or other successor to the interest of the Participant for a period of one year after such Participant’s
death to the extent that the Participant was entitled to exercise the Stock Options on the date of death or termination, whichever
first occurred, but not beyond the original term of the Stock Options.

 

(c)       Disability.
If a Participant ceases to be a Director due to the Participant’s Disability, he or she may exercise his or her Stock
Options in accordance with their terms for one year after he or she ceases service unless such Stock Options earlier expire by
their terms, but only to the extent that the Participant was entitled to exercise the Stock Options on the date of such event
and not beyond the original terms of the Stock Options.

 

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(d)       Participant
Retirement. If a Participant ceases to a Director due to Retirement, the Participant may exercise his or her Stock Options
in accordance with their terms for three years after such termination of service unless such Stock Options earlier expire by their
terms, but only to the extent that the Participant was entitled to exercise the Stock Options on the date of such event and not
beyond the original terms of the Stock Options.

 

(e)       Termination
for Cause. If a Participant’s service as a Director is terminated for cause, the Participant shall have no further right
to exercise any Stock Options previously granted to him or her. The Committee or officers designated by the Committee shall have
absolute discretion to determine whether a termination is for cause.

 

 

SECTION
6

 

Restricted
Stock and Restricted Stock Units

6.1

Grant.
Subject to the limitations set forth in Section 4.1 of the Plan, Restricted Stock and Restricted Stock Units may be granted
to Participants under the Plan. Shares of Restricted Stock are shares of Common Stock the retention, vesting and/or transferability
of which is subject, during specified periods of time, to such conditions (including continued service as a Director) and terms
as the Committee deems appropriate. Restricted Stock Units are Equity Awards denominated in units of Common Stock under which
the issuance of shares of Common Stock is subject to such conditions (including continued service as a Director) and terms as
the Committee deems appropriate. For purposes of determining the number of shares available under the Plan, each Restricted Stock
Unit shall count as the number of shares of Common Stock subject to the Restricted Stock Unit. Unless determined otherwise by
the Committee, each Restricted Stock Unit shall be equal to one share of Common Stock and shall entitle a Participant to either
shares of Common Stock or an amount of cash determined with reference to the value of shares of Common Stock. To the extent determined
by the Committee, Restricted Stock and Restricted Stock Units may be satisfied or settled in cash, in shares of Common Stock or
in a combination thereof. Restricted Stock Units shall be settled no later than the 15th day of the third month after the Restricted
Stock Units vest. Restricted Stock and Restricted Stock Units granted pursuant to the Plan need not be identical but shall be
consistent with the terms of the Plan. Subject to the requirements of applicable law, the Committee shall determine the price,
if any, at which awards of Restricted Stock or Restricted Stock Units, or shares of Common Stock issuable pursuant to Restricted
Stock Unit awards, shall be sold or awarded to a Participant, which may vary from time to time and among Participants.

 

6.2

Restricted
Stock Agreements. Awards of Restricted Stock and Restricted Stock Units shall be evidenced by restricted stock or restricted
stock unit agreements or certificates of award containing such terms and conditions, consistent with the provisions of the Plan,
as the Committee shall from time to time determine. Unless the restricted stock or restricted stock unit agreement or certificate
of award provides otherwise, awards of Restricted Stock and Restricted Stock Units shall be subject to the terms and conditions
set forth in this Section 6.

 

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6.3

Vesting.
The grant, issuance, retention, vesting and settlement of shares of Restricted Stock and Restricted Stock Units shall occur
at such time and in such installments as determined by the Committee or under criteria established by the Committee. The Committee
shall have the right to make the timing of the grant and/or issuance of, the ability to retain and the vesting and/or the settlement
of Restricted Stock Units and shares of Restricted Stock subject to continued service and/or passage of time as deemed appropriate
by the Committee.

 

6.4

Termination
of Service. Unless the Committee otherwise consents or permits (before or after the grant of Restricted Stock or Restricted
Stock Units) or unless the restricted stock or restricted stock unit agreement or grant provides otherwise:

 

(a)       General.
If a Participant ceases to be a Director during the Restricted Period for any reason other than death, Disability, Retirement,
failure to be re-elected as a Director upon being nominated, or termination for cause, each share of Restricted Stock and Restricted
Stock Unit still subject in full or in part to restrictions at the date of such termination shall automatically be forfeited and
returned to the Company.

 

(b)       Death,
Retirement, Disability, or Failure to be Re-elected. In the event a Participant terminates service as a Director with the
Company because of death, Disability, Retirement, or failing to be re-elected as a Director by the Company’s shareholders
after being nominated to serve as a Director during the Restricted Period, the restrictions remaining on any or all shares of
Restricted Stock and Restricted Stock Units shall terminate automatically with respect to that respective number of such shares
or Restricted Stock Units (rounded to the nearest whole number) equal to the respective total number of such shares or Restricted
Stock Units granted to such Participant multiplied by the number of full months that have elapsed since the date of grant divided
by the total number of full months in the respective Restricted Period. All remaining shares of Restricted Stock and Restricted
Stock Units shall be forfeited and returned to the Company; provided, that the Committee may, in its sole discretion, waive the
restrictions remaining on any or all such remaining shares of Restricted Stock and Restricted Stock Units either before or after
the Participant’s death, Disability, Retirement or failure to be re-elected as a Director by the Company’s shareholders
after being nominated to serve as a Director.

 

(c)       Termination
for Cause. If a Participant’s service as a Director is terminated for cause, the Participant shall have no further right
to receive any Restricted Stock or Restricted Stock Units and all Restricted Stock and Restricted Stock Units still subject to
restrictions at the date of such termination shall automatically be forfeited and returned to the Company. For purposes of the
Plan, the Committee or officers designated by the Committee shall have absolute discretion to determine whether a termination
is for cause.

 

6.5

Restrictions
on Transferability.

 

(a)       General.
Unless the Committee otherwise consents or permits or unless the terms of the restricted stock or restricted stock unit agreement
or grant provide otherwise: (i) neither shares of Restricted Stock nor Restricted Stock Units may be sold, exchanged, transferred,
pledged, assigned or otherwise alienated or hypothecated during the Restricted Period except by will or the laws of descent and
distribution; and (ii) all rights with respect to Restricted Stock and Restricted Stock Units granted to a Participant under the
Plan shall be exercisable during the Participant’s lifetime only by such Participant or his or her guardian or legal representative.

 

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(b)       Other
Restrictions. The Committee may impose other restrictions on any shares of Common Stock acquired pursuant to an award of Restricted
Stock or issuable pursuant to Restricted Stock Unit awards under the Plan as the Committee considers advisable, including, without
limitation, holding periods or further transfer restrictions, forfeiture or “claw-back” provisions, and restrictions
under applicable federal or state securities laws.

 

6.6

Legending
of Restricted Stock. In addition to any other legend that may be set forth on a Participant’s share certificate, any
certificates evidencing shares of Restricted Stock awarded pursuant to the Plan shall bear the following legend:

 

The
shares represented by this certificate were issued subject to certain restrictions under the ChoiceOne Financial Services, Inc.
Director Equity Compensation Plan of 2019 (the “Plan”). This certificate is held subject to the terms and conditions
contained in a restricted stock agreement that includes a prohibition against the sale or transfer of the stock represented by
this certificate except in compliance with that agreement and that provides for forfeiture upon certain events. Copies of the
Plan and the restricted stock agreement are on file in the office of the Secretary of the Company.

 

The
Committee may require that certificates representing shares of Restricted Stock be retained and held in escrow by a designated
employee or agent of the Company or any Subsidiary until any restrictions applicable to shares of Restricted Stock so retained
have been satisfied or lapsed.

 

6.7

Rights
as a Shareholder. A Participant shall have all dividend, liquidation and other rights with respect to Restricted Stock held
of record by such Participant as if the Participant held unrestricted Common Stock; provided, that the unvested portion of any
award of Restricted Stock shall be subject to any restrictions on transferability or risks of forfeiture imposed pursuant to this
Section 6 and the terms and conditions set forth in the Participant’s restricted stock agreement. Unless the Committee otherwise
determines or unless the terms of the applicable restricted stock unit agreement or grant provide otherwise, a Participant shall
have all dividend and liquidation rights with respect to shares of Common Stock subject to awards of Restricted Stock Units held
by such Participant as if the Participant held unrestricted Common Stock. Unless the Committee determines otherwise or unless
the terms of the applicable restricted stock or restricted stock unit agreement or grant provide otherwise, any noncash dividends
or distributions paid with respect to shares of unvested Restricted Stock and shares of Common Stock subject to unvested Restricted
Stock Units shall be subject to the same restrictions and vesting schedule as the shares to which such dividends or distributions
relate. Any dividend payment with respect to Restricted Stock or Restricted Stock Units shall be made no later than the 15th day
of the third month following the date the dividends are paid to shareholders.

 

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6.8

Voting
Rights. Unless otherwise determined by the Committee, Participants holding shares of Restricted Stock granted hereunder may
exercise full voting rights with respect to those shares during the Restricted Period. Participants shall have no voting rights
with respect to shares of Common Stock underlying Restricted Stock Units unless and until such shares are reflected as issued
and outstanding shares on the Company’s stock ledger.

 

 

SECTION
7

 

Stock-Based
Awards

 

7.1

Grant.
Subject to the limitations set forth in Section 4.1 of the Plan, in addition to any Stock Options, Restricted Stock, or Restricted
Stock Units that a Participant may be granted under the Plan, a Participant may be granted one or more other types of awards based
on or related to shares of Common Stock (including the grant of Stock Awards). Such awards shall be subject to such terms and
conditions, consistent with the other provisions of the Plan, as may be determined by the Committee in its sole discretion. Notwithstanding
the previous sentence, the shares of stock subject to Stock Awards shall be issued no later than the 15th day of the
third month after the end of the calendar year in which the award is granted. Such awards shall be expressed in terms of shares
of Common Stock or denominated in units of Common Stock. For purposes of determining the number of shares available under the
Plan, each such unit shall count as the number of shares of Common Stock to which it relates.

 

7.2

Rights
as a Shareholder.

 

(a)       Stock
Awards. A Participant shall have all voting, dividend, liquidation and other rights with respect to shares of Common Stock
issued to the Participant as a Stock Award under this Section 7 upon the Participant becoming the holder of record of the Common
Stock granted pursuant to such Stock Award; provided, that the Committee may impose such restrictions on the assignment or transfer
of Common Stock awarded pursuant to a Stock Award as it considers appropriate. Any dividend payment with respect to a Stock Award
shall be made no later than the 15th day of the third month following the date the dividends are paid to shareholders.

 

(b)       General.
With respect to shares of Common Stock subject to awards granted under the Plan other than Stock Options, Restricted Stock,
Restricted Stock Units and Stock Awards, a Participant shall have such rights as determined by the Committee and set forth in
the respective award agreements; and the Committee may impose such restrictions on the assignment or transfer of Common Stock
awarded pursuant to such awards as it considers appropriate.

 

 

    	 	12	 

    	 

    

 

SECTION
8

 

Change
in Control

 

8.1

Acceleration
of Vesting. If a Change in Control of the Company occurs, then, unless the Committee or the Board otherwise determines and
expressly states in the agreements governing one or more Equity Awards, without action by the Committee or the Board: (a) all
outstanding Stock Options shall become vested and exercisable in full immediately prior to the effective time of a Change in Control
and shall remain exercisable during the remaining terms thereof, regardless of whether the Participants to whom such Stock Options
have been granted remain in the service of the Company or any Subsidiary; and (b) all other outstanding Equity Awards shall become
immediately fully vested and exercisable and nonforfeitable.

 

8.2

Cash
Payment for Stock Options. If a Change in Control of the Company occurs, then the Committee, in its sole discretion and without
the consent of any Participant affected thereby, may determine that some or all Participants holding outstanding Stock Options
shall receive, with respect to and in lieu of some or all of the shares of Common Stock subject to such Stock Options, as of the
effective date of any such Change in Control of the Company, cash in an amount equal to the highest price per share actually paid
in connection with any Change in Control of the Company over the exercise price per share of such Stock Options. Upon a Participant’s
receipt of such amount with respect to some or all of his or her Stock Options, the respective Stock Options shall be cancelled
and may no longer be exercised by such Participant.

 

 

SECTION
9

 

General
Provisions

 

9.1

No
Rights to Equity Awards. No Participant or other person shall have any claim to be granted any Equity Award under the Plan
and there is no obligation of uniformity of treatment of Participants or holders or beneficiaries of Equity Awards under the Plan.
The terms and conditions of Equity Awards of the same type and the determination of the Committee to grant a waiver or modification
of any Equity Award and the terms and conditions thereof need not be the same with respect to each Participant or the same Participant.

 

9.2

Self-Employment
Taxes. To the extent that amounts paid under the Plan are deemed to be net earnings from self-employment, each Director shall
be responsible for any taxes payable under federal, state or local law.

 

9.3

Compliance
With Laws; Listing and Registration of Shares. All Equity Awards granted under the Plan (and all issuances of Common Stock
or other securities under the Plan) shall be subject to all applicable laws, rules and regulations, and to the requirement that
if at any time the Committee shall determine, in its discretion, that the listing, registration or qualification of the shares
covered thereby upon any securities exchange or under any state or federal law, or the consent or approval of any governmental
regulatory body, is necessary or desirable as a condition of, or in connection with, the grant of such Equity Award or the issuance
or purchase of shares thereunder, such Equity Award may not be exercised in whole or in part, or the restrictions on such Equity
Award shall not lapse, unless and until such listing, registration, qualification, consent or approval shall have been effected
or obtained free of any conditions not acceptable to the Committee.

 

    	 	13	 

    	 

    

 

 

9.4

No
Limit on Other Compensation Arrangements. Nothing contained in the Plan shall prevent the Company or any Subsidiary from adopting
or continuing in effect other or additional compensation arrangements, including the grant of Stock Options and other stock-based
and stock-related awards, and such arrangements may be either generally applicable or applicable only in specific cases.

 

9.5

No
Right to Service. The grant of an Equity Award shall not be construed as giving a Participant the right to be retained in
the service of the Company or any Subsidiary as a Director. A Participant's service as a Director may be terminated at any time
pursuant to the Company's Bylaws, free from any liability or any claim under the Plan, unless otherwise expressly provided in
the Plan or in any written agreement with the Participant.

 

9.6

No
Liability of Company. The Company and any Subsidiary or Affiliate which is in existence or hereafter comes into existence
shall not be liable to a Participant or any other person as to: (a) the non-issuance or non-sale of Common Stock as to which
the Company has been unable to obtain from any regulatory body having jurisdiction the authority deemed by the Company’s
counsel to be necessary to the lawful issuance and sale of any shares hereunder; (b) any tax consequence to any Participant
or other person due to the receipt, exercise or settlement of any Equity Award granted hereunder; and (c) any provision of
law or legal restriction that prohibits or restricts the transfer of shares of Common Stock issued pursuant to any Equity Award.

 

9.7

Suspension
of Rights under Equity Awards. The Company, by written notice to a Participant, may suspend a Participant’s and any
transferee’s rights under any Equity Award for a period not to exceed 60 days while the termination for cause of that Participant’s
service as a Director with the Company and its Subsidiaries is under consideration.

 

9.8

Governing
Law. The validity, construction and effect of the Plan and any rules and regulations relating to the Plan shall be determined
in accordance with the laws of the State of Michigan and applicable federal law.

 

9.9

Severability.
In the event any provision of the Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall
not affect the remaining provisions of the Plan and the Plan shall be construed and enforced as if the illegal or invalid provision
had not been included, unless such construction would cause the Plan to fail in its essential purposes.

 

9.10

Compliance
with 409A. The Plan is intended to provide Equity Awards that are exempt from Section 409A of the Code as either exempt equity
awards under Treasury Regulation Section 1.409A-1(b)(5) or as exempt short-term deferrals under Treasury Regulation Section 1.409A-1(b)(4),
and is to be interpreted and operated consistently with those intentions.  To the extent that the Committee determines that
any Equity Award granted hereunder is subject to Section 409A of the Code, the agreement evidencing such Equity Award shall incorporate
the terms and conditions necessary to avoid the tax consequences specified in Section 409A(a)(1) of the Code. To the extent applicable,
the Plan and agreements shall be interpreted in accordance with Section 409A of the Code.

 

    	 	14	 

    	 

    

 

 

 

SECTION
10

 

Termination
and Amendment

 

10.1

Board
and Committee Actions. The Board may terminate the Plan at any time or may from time to time amend or alter the Plan or any
aspect of it as it considers proper and in the best interests of the Company; provided, that no such amendment may be made, without
the approval of shareholders of the Company, that would (i) reduce the exercise price at which Stock Options may be granted below
the price provided for in Section 5.3, (ii) reduce the exercise price of outstanding Stock Options, or (iii) otherwise amend the
Plan in any manner requiring shareholder approval by law or under the rules or listing requirements of any national securities
exchange on which the Company's Common Stock is traded, and provided further that the Plan may not be amended in any way that
causes the Plan to fail to comply with or be exempt from Section 409A of the Code.

 

10.2

No
Impairment. Notwithstanding anything to the contrary in Section 10.1, no such amendment or alteration to the Plan or to any
previously granted award agreement or Equity Award shall be made which would impair the rights of the holder of the Equity Award,
without such holder’s consent; provided, that no such consent shall be required if the Committee determines in its sole
discretion and prior to the date of any Change of Control that such amendment or alteration is required or advisable in order
for the Company, the Plan or the Equity Award to satisfy any law or regulation or to meet the requirements of or avoid adverse
financial accounting consequences under any tax or accounting standard, law or regulation.

 

SECTION
11

 

Effective
Date of the Plan

 

The
Plan shall take effect December  18, 2019.

 

 

 

    	 	15Exhibit 4.6

      

      

      DESCRIPTION OF CAPITAL STOCK

      

      

      The following description of the capital stock of VirnetX Holding Corporation (“us”, “our,” “we”, or the “Company”) is a summary.  We have adopted an amended and restated certificate of incorporation and amended and restated bylaws, and this description summarizes the provisions that are included in such documents. Because it is only a summary, it does not
          contain all the information that may be important to you. For a complete description of the matters set forth in this Exhibit, you should refer to our amended and restated certificate of incorporation and amended and restated bylaws, each
          previously filed with the Securities and Exchange Commission and incorporated by reference as exhibits to the Annual Report on Form 10-K of which this Exhibit is a part, and to the applicable provisions of Delaware law.

      

      

      General

      

      

      Our authorized capital stock consists of 100,000,000 shares of common stock with a $0.0001 par value per share, and 10,000,000 shares of preferred stock with a $0.0001 par value per share, all of
        which shares of preferred stock are undesignated.  Our board of directors may establish the rights and preferences of the preferred stock from time to time.  All outstanding shares of our common stock are fully paid and non-assessable. The rights,
        preferences and privileges of the holders of our common stock are subject to, and may be adversely affected by, the rights of the holders of shares of any series of preferred stock that we may designate and issue in the future.

      

      

      Common Stock

      

      

      We have one class of common stock.

      

      

      Dividend Rights

      

      

      Subject to any preferential rights of any outstanding preferred stock, holders of our common stock are entitled to receive ratably the dividends, if any, as may be declared from time to time by the
        board of directors out of funds legally available therefor.

      

      

      Voting Rights

      

      

      Each holder of our common stock is entitled to one vote for each share on all matters to be voted upon by the stockholders and there are no cumulative rights.

      

      

      Right to Receive Liquidation Distributions

      

      

      If there is a liquidation, dissolution or winding up of our company, holders of our common stock would be entitled to share in our assets remaining after the payment of liabilities and any
        preferential rights of any outstanding preferred stock.

      

      

      No Preemptive or Similar Rights

      

      

      Holders of our common stock have no preemptive or conversion rights or other subscription rights, and there are no redemption or sinking fund provisions applicable to the common stock.

      
        
          

      

      Preferred stock

      

      

      Our board of directors is authorized to issue shares of preferred stock in one or more series without stockholder approval.  Our board of directors has the discretion to determine the rights,
        preferences, privileges and restrictions, including voting rights, dividend rights, conversion rights, redemption privileges and liquidation preferences, of each series of preferred stock.  There are no restrictions presently on the repurchase or
        redemption of any shares of our preferred stock.  We have no present plans to issue any shares of preferred stock nor are any shares of our preferred stock presently outstanding.

      

      

      Anti-Takeover Effects

      

      

      Provisions of Delaware law and our amended and restated certificate of incorporation and Bylaws could make the acquisition of our company through tender offer, a proxy context or other means more
        difficult and could make the removal of incumbent officers and directors more difficult.  We expect these provisions to discourage coercive takeover practices and inadequate takeover bids and to encourage persons seeking to acquire control of our
        company to first negotiate with our board of directors.  We believe that the benefits provided by our ability to negotiate with the proponent of an unfriendly or unsolicited proposal outweigh the disadvantages of discouraging these proposals.  We
        believe the negotiation of an unfriendly or unsolicited proposal could result in an improvement of its terms.

      

      

      Amended and Restated Certificate of Incorporation and Bylaws

      

      

      Our amended and restated certificate of incorporation and bylaws provide for the following:

      

      

      
        	
                •

              	
                Undesignated Preferred Stock.  The ability to authorize undesignated preferred stock makes it
                    possible for our board of directors to issue one or more series of preferred stock with voting or other rights or preferences that could impede the success of any attempt to change control of our company.  These and other provisions may
                    have the effect of deferring hostile takeovers or delaying changes in control or management of our company.

              

      

      

      

      
        	
                •

              	
                Stockholder Meetings.  Our charter documents provide that a special meeting of stockholders may be
                    called only by resolution adopted by the board of directors.

              

      

      

      

      
        	
                •

              	
                Requirements for Advance Notification of Stockholder Nominations and Proposals.  Our bylaws
                    establish advance notice procedures with respect to stockholder proposals and the nomination of candidates for election as directors, other than nominations made by or at the direction of the board of directors or a committee of the
                    board of directors.

              

      

      

      

      
        	
                •

              	
                Board Classification.  Our board of directors is divided into three classes.  The directors in each
                    class will serve for a three-year term, one class being elected each year by our stockholders.  This system of electing and removing directors may tend to discourage a third party from making a tender offer or otherwise attempting to
                    obtain control of us, because it generally makes it more difficult for stockholders to replace a majority of the directors.

              

      

      
        
          

      

      
        	
                •

              	
                Stockholder Meetings; Limits on Ability of Stockholders to Act by Written Consent.  We have provided
                    in our certificate of incorporation that our stockholders may not act by written consent.  This limit on the ability of our stockholders to act by written consent may lengthen the amount of time required to take stockholder actions.  As
                    a result, a holder controlling a majority of our capital stock would not be able to amend our bylaws or remove directors without holding a meeting of our stockholders called in accordance with our bylaws.

              

      

      

      

      
        	
                •

              	
                Amendment of Bylaws.  Any amendment of our bylaws requires approval by holders of at least
                    two-thirds of our outstanding capital stock entitled to vote generally in the election of directors.

              

      

      

      

      Delaware Anti-Takeover Statute

      

      

      We are subject to Section 203 of the Delaware General Corporation Law, an anti-takeover law.  In general, Section 203 prohibits a publicly held Delaware corporation from engaging in a “business
        combination” with an “interested stockholder” for a period of three years following the date the person became an interested stockholder, unless:

      

      

      
        	
                •

              	
                prior to the date of the transaction, the board of directors of the corporation approved either the business combination or the transaction which resulted in the stockholder becoming an interested
                  stockholder;

              

      

      

      

      
        	
                •

              	
                the stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the number of shares outstanding (a) shares
                  owned by persons who are directors and also officers, and (b) shares owned by employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered
                  in a tender or exchange offer; or

              

      

      

      

      
        	
                •

              	
                on or subsequent to the date of the transaction, the business combination is approved by the board and authorized at an annual or special meeting of stockholders, and not by written consent, by the
                  affirmative vote of at least two-thirds of the outstanding voting stock that is not owned by the interested stockholder.

              

      

      

      

      Generally, a “business combination” includes a merger, asset or stock sale, or other transaction resulting in a financial benefit to the interested stockholder.  An “interested stockholder” is a
        person who, together with affiliates and associates, owns or, within three years prior to the determination of interested stockholder status, did own 15% or more of a corporation’s outstanding voting securities.  We expect the existence of this
        provision to have an anti-takeover effect with respect to transactions our board of directors does not approve in advance.  We also anticipate that Section 203 may also discourage attempts that might result in a premium over the market price for
        the shares of common stock held by stockholders.

      

      

      Transfer Agent and Registrar

      

      

      The transfer agent and registrar for the common stock is Corporate Stock Transfer, Inc.

      

      

      Listing

      

      

      Our common stock is listed on the NYSE American under the symbol “VHC.”

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