Document:

ChoiceOne Financial Services, Inc. 10-K

 

Exhibit
4.2

 

 

Description
of Rights of Shareholders

 General

The
authorized capital stock of ChoiceOne Financial Services, Inc. ("ChoiceOne") consists of 12,000,000 shares of common
stock, no par value, and 100,000 shares of preferred stock, no par value.

As
of February 28, 2020, there were 7,248,492 shares of ChoiceOne common stock issued and outstanding, and no shares of ChoiceOne
preferred stock were outstanding. ChoiceOne's common stock trades on the NASDAQ Capital Market under the trading symbol “COFS.”
ChoiceOne's transfer agent is Continental Stock Transfer & Trust Company.

Each
share of common stock has the same relative powers, preferences and rights as, and is identical in all respects with, all the
other shares of common stock. Holders of ChoiceOne common stock have no conversion rights and are not entitled to any preemptive
or subscription rights. ChoiceOne common stock is not subject to redemption or any further calls or assessments. ChoiceOne common
stock does not have cumulative voting rights in the election of directors.

Voting
rights

Each
holder of common stock is entitled to one vote for each share held by such shareholder. The ChoiceOne Bylaws provide that any
action required or permitted to be taken at a meeting of the ChoiceOne shareholders may be taken without a meeting, without prior
notice, and without a vote, if all the shareholders entitled to vote at the meeting consent in writing. Except as otherwise provided
in ChoiceOne's Articles of Incorporation (the "ChoiceOne Articles"), ChoiceOne's Bylaws, or applicable law, a majority
of the votes cast at a meeting is required to take any action. Directors are elected by a vote of the plurality of the votes cast
with respect to the director at any meeting for the election of directors.

 

Number
and Classification of Directors

The
ChoiceOne Articles provide that the board of directors is divided into three classes. Each class of directors is as equal as possible
in number and serves for a three-year term of office, except that directors may be elected for shorter terms so that approximately
one-third of the directors are elected each year. One class of ChoiceOne’s directors is elected each year, to hold office
for a three-year term (or until their respective successors are elected and qualified, or until their respective resignation or
removal). ChoiceOne’s board currently consists of 14 directors.

Dividend
policies

Holders
of ChoiceOne common stock are entitled to receive dividends, if any, as may be declared by ChocieOne's board of directors out
of assets legally available therefor after payment to holders of any outstanding shares of any class having preference over ChoiceOne
common stock as to the payment of dividends. The amount of and nature of any dividends declared on ChoiceOne common stock will
be determined by ChoiceOne's board of directors in their sole discretion.

Liquidation
rights

In
the event ChoiceOne liquidates, dissolves or winds up, each holder of ChoiceOne common stock will be entitled to receive a pro
rata portion of all assets available for distribution, after ChoiceOne pays or provides for payment of all of ChoiceOne's debts
and liabilities and of any amounts owing to holders of any outstanding shares of any class having preference over ChoiceOne common
stock in such event.

Issuance
of additional shares

In
the future, ChoiceOne's board of directors may authorize the issuance of additional shares of common stock and preferred
stock, in one or more series, up to the amounts authorized in the ChoiceOne Articles. Generally, no shareholder approval
would be required for the issuance of these additional shares, subject only to the restrictions of the Michigan Business
Corporation Act and the ChoiceOne Articles.

 

    	 

    	 

    

 

Modification
of Rights of Shareholders

The
ChoiceOne Articles may be amended by the affirmative vote of the holders of a majority of the outstanding ChoiceOne shares entitled
to vote, except that certain provisions of the ChoiceOne Articles related to directors, interested party transactions, business
combinations and tender or exchange offers, and amendment of the ChoiceOne Articles may be amended only by the affirmative vote
of at least 66 2/3% of the outstanding ChoiceOne shares entitled to vote. ChoiceOne's Bylaws may be amended by the affirmative
vote of a majority of the board of directors or by the affirmative vote of the holders of a majority of the outstanding ChoiceOne
shares entitled to vote.

 

Business
Combination Restrictions

The
ChoiceOne Articles include certain provisions related to business combinations with a person who owns 10% or more of the outstanding
ChoiceOne stock or who is an affiliate who in the past two years owned 10% or more of the outstanding ChoiceOne stock. Such business
combinations require approval by the affirmative vote of the holders of at least 66 2/3% of outstanding ChoiceOne stock (other
than stock held by certain related persons involved in such business combination). However, approval by the affirmative vote of
the holders of only a majority of outstanding ChoiceOne stock is required if the business combination has been approved by a vote
of a majority of disinterested directors or if payment to shareholders in connection with the business combination is solely in
cash and certain additional conditions are met.ChoiceOne Financial Services, Inc. 10-K

 

Exhibit
10.4

 

 

CHOICEONE
FINANCIAL SERVICES, INC.

DIRECTORS'
STOCK PURCHASE PLAN

 

 

SECTION
1

 

Establishment
and Purposes of Plan

 

1.1       Establishment
of Plan; Purposes of Plan. The Company hereby amends and restates the ChoiceOne Financial Services, Inc. Directors' Stock
Purchase Plan. The purposes of the Plan are to provide an opportunity and means by which directors can increase their financial
interest in the Company, and thereby increase their personal interest in the Company's continued success, through the payment
of directors' fees in Company Common Stock.

 

1.2       Effective
Date. The Plan was originally effective July 15, 1998, and the “Effective Date” of this amended and restated Plan
is December  18, 2019. Each Plan provision applies until the effective date of an amendment of that provision.

 

1.3       Number
of Shares of Stock. Subject to appropriate adjustment as required in connection with any change in the capital structure of
the Company, a maximum of 100,000 shares of Common Stock shall be available under the Plan after the Effective Date.

 

 

SECTION
2

 

Definitions

 

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

 

2.2       Committee.
“Committee” means the Personnel and Benefits Committee of the Board or such other committee as the Board shall designate
to administer the Plan. 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 under the Securities Exchange Act of 1934, as amended.

 

2.3       Common
Stock. “Common Stock” means the common stock, without par value, of ChoiceOne Financial Services, Inc.

 

2.4       Company.
“Company” means ChoiceOne Financial Services, Inc.

 

2.5       Director's
Fee. “Director's Fee” means the amount of income payable to a Participant for service as a director, including
payments for attendance at meetings of the Board or meetings of committees of the Board, and any retainer fee paid to members
of the Board.

 

2.6       Eligible
Director. “Eligible Director” means a member of the Board of Directors of the Company or any of its Subsidiaries.

 

    	 	 	 

    	 

    

 

 

2.7       Market
Value. “Market Value” of a share of Common Stock as of any Stock Purchase Date or other applicable date
means: (a) if the Common Stock is listed for trading on The Nasdaq Stock Market or one or more national securities exchanges,
the last reported sales price on the day before the applicable Stock Purchase Date, or if the Common Stock shall not have
been traded on the principal exchange on such date, the last reported sales price on the first day before such date on which
Common Stock 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.

 

2.8       Participant.
“Participant” means any individual who is participating in the Plan.

 

2.9       Plan.
“Plan” means the ChoiceOne Financial Services, Inc. Directors' Stock Purchase Plan, as such plan may be amended, administered
or interpreted from time to time.

 

2.10       Stock
Purchase Date. “Stock Purchase Date” means a date on which shares of Common Stock are purchased pursuant to the
Plan. Unless otherwise determined by the Committee, the Stock Purchase Date shall be the date on which Director's Fees are paid.

 

2.11       Subsidiary.
“Subsidiary” or “Subsidiaries” means any corporation or other entity of which 50% of 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, now or in the future.

 

 

SECTION
3

 

Administration

 

3.1       Power
and Authority. The Committee shall administer the Plan, shall have full power and authority to interpret the provisions of
the Plan, and shall have full power and authority to supervise 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 deems advisable. Action may be taken by a written instrument signed by a majority 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 deems advisable. The members of the
Committee shall not be paid any additional fees for their services.

 

3.2       Delegation
of Powers; Employment of Advisers. The Committee may delegate to any agent such duties and powers, both ministerial and discretionary,
as it deems appropriate except those that may not be delegated by law or regulation. In administering the Plan, the Committee
may employ attorneys, consultants, accountants or other persons, and the Company and the Committee shall be entitled to rely upon
the advice, opinions or valuation of any such persons. All usual and reasonable expenses of the Committee shall be paid by the
Company.

 

    	 	-2-	 

    	 

    

 

 

3.3       Indemnification
of Committee Members. Each person who is or shall have been a member of the Committee 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. Each such person shall be justified in relying on information furnished in
connection with the Plan's administration by any appropriate person or persons.

 

 

SECTION
4

 

Participation

 

4.1       Eligibility
to Participate. An Eligible Director may become a Participant in the Plan on the first day of the individual's term as a director.

 

 

SECTION
5

 

Elective
Payment of Director's Fees in Common Stock

 

5.1       Payment
of Director's Fees. A Participant may elect to receive payment of 25%, 50%, 75% or 100% of Director's Fees in the form of
Common Stock. On each Stock Purchase Date, the Participant shall receive a number of shares of Common Stock (rounded to the nearest
whole share) determined by dividing the dollar amount of fees payable that the director has elected to receive in Common Stock
by the Market Value of Common Stock on the day before the Stock Purchase Date.

 

5.2       Prior
Election. The election to receive Director's Fees in the form of Common Stock shall be made by the Participant on a form provided
for that purpose prior to a Stock Purchase Date. The election shall continue in effect until revoked or modified for a subsequent
Stock Purchase Date by the Participant.

 

5.3       Timing
of Payments. Payment of Director’s Fees in the form of Common Stock shall be made to the Participant on each date on
which the Director's Fees would have been payable to the Participant if the Participant had not made an election to receive Director's
Fees in the form of Common Stock.

 

5.4       Vesting.
The right to receive payment of Director's Fees in shares of Common Stock as provided by this Plan and any shares of Common Stock
acquired under this Plan shall not be subject to forfeiture for any reason.

 

    	 	-3-	 

    	 

    

 

 

5.5       Redemption
of Common Stock. The Company will have an option, exercisable within ninety (90) days after the termination of a Participant’s
directorship, to purchase, and the Participant will be required to sell upon notice of exercise of the Company’s option,
all of the shares that were acquired pursuant to this Plan at a price equal to the Market Value at the time of the sale. This
option will be binding on anyone who would be deemed a beneficial owner of a Participant's shares under Section 16 of the Securities
Exchange Act of 1934, as amended. The Company may exercise its option by providing written notice to the Participant or other
holders of the shares.

 

 

SECTION
6

 

General
Provisions

 

6.1       Amendment;
Termination. The Company reserves the right to amend the Plan prospectively or retroactively, in whole or in part, or to terminate
the Plan, provided that an amendment or termination may not reduce or revoke shares of Common Stock acquired under the Plan as
of the later of the date of adoption of the amendment or the effective date of the amendment or termination.

 

6.2       Rights
Not Assignable. Amounts promised under the Plan shall not be subject to assignment, conveyance, transfer, anticipation, pledge,
alienation, sale, encumbrance or charge, whether voluntary or involuntary, by the Participant, even if directed under a qualified
domestic relations order or other divorce order. An interest in any amount shall not provide collateral or security for a debt
of a Participant or be subject to garnishment, execution, assignment, levy or to another form of judicial or administrative process
or to the claim of a creditor of a Participant through legal process or otherwise. Any attempt to anticipate, alienate, sell,
transfer, assign, pledge, encumber, charge or to otherwise dispose of benefits payable, before actual receipt of the benefits,
or a right to receive benefits, shall be void and shall not be recognized.

 

6.3       Unsecured
Creditor Status. A Participant shall be an unsecured general creditor of the Company as to the payment of any benefit under
the Plan. The right of any Participant to be paid the amount promised in the Plan shall be no greater than the right of any other
general, unsecured creditor of the Company.

 

6.4       No
Trust or Fiduciary Relationship. Nothing contained in the Plan shall be deemed to create a trust or fiduciary relationship
of any kind for the benefit of any Participant.

 

6.5       Construction.
The singular includes the plural, and the plural includes the singular, unless the context clearly indicates the contrary. Capitalized
terms (except those at the beginning of a sentence or part of a heading) have the meaning specified in the Plan. If a capitalized
term is not defined in the Plan, the term shall have the general, accepted meaning of the term.

 

6.6       Disputes.
In the event that a dispute arises regarding the eligibility to participate in the Plan or any other matter relating to Plan participation,
such dispute shall be made to the Committee. The determination by the Committee with respect to such disputes shall be final and
binding on all parties. In the event that a dispute arises regarding the amount of any benefit payment under the Plan that is
not related to Participant eligibility disputes, the Committee may appoint a qualified independent certified public accountant
to determine the amount of payment and such determination shall be final and binding on all parties.

 

    	 	-4-	 

    	 

    

 

 

6.7       Unfunded
Plan. This shall be an unfunded plan within the meaning of the Internal Revenue Code of 1986, as amended. Benefits provided
in the Plan constitute only an unsecured contractual promise to pay in accordance with the terms of the Plan by the Company.

 

6.8       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.

 

6.9       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.

 

6.10       Right
of Company to Replace Directors. Neither the action of the Company in establishing the Plan, nor any provision of the Plan,
shall be construed as giving any director the right to be retained as a director, or any right to any payment whatsoever except
to the extent of the benefits provided for by the Plan. The Company expressly reserves the right at any time to replace or fail
to renominate any director without any liability for any claim against the Company for any payment whatsoever except to the extent
provided for in the Plan. The Company has no obligation to create any other or subsequent deferred compensation plan for directors.

 

6.11       Governing
Law; Severability. The Plan shall be construed, regulated and administered under the laws of the State of Michigan. If any
provisions of the Plan shall be held invalid or unenforceable for any reason, such invalidity or unenforceability shall not affect
the remaining provisions of the Plan, and the Plan shall be deemed to be modified to the least extent possible to make it valid
and enforceable in its entirety.

 

 

 

    	 	-5-

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