File No. 333-232157
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________
PRE-EFFECTIVE AMENDMENT NO. 2
TO
FORM S-4
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
CHOICEONE FINANCIAL SERVICES, INC.
(Exact Name of Registrant as Specified in its Charter)
Michigan
(State or Other Jurisdiction of Incorporation or Organization) |
6022
(Primary Standard Industrial Classification Code Number) |
38-2659066
(IRS Employer Identification Number) |
109 East Division
Sparta, Michigan 49345
(616) 887-7366
(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant's Principal Executive Offices)
Kelly J. Potes
Sparta, Michigan 49345
|
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service)
Copies to:
Jeffrey A. Ott Charlie Goode |
Peter Weinstock Jacque Kruppa |
Warner Norcross + Judd LLP | Hunton Andrews Kurth LLP |
111 Lyon Street, N.W., Suite 900 | 1445 Ross Avenue, Suite 3700 |
Grand Rapids, Michigan 49503-2487 | Dallas, Texas 75202-2799 |
(616) 752-2000 | (214) 468-3395 |
Approximate date of commencement of proposed sale of the securities to the public: As soon as practicable after this Registration Statement becomes effective.
If the securities being registered on this form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box: ¨
If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨
If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer ¨ Accelerated filer þ Non-accelerated filer ¨ Smaller reporting company þ Emerging Growth Company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ¨
If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:
Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer) ¨
Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer) ¨
The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.
EXPLANATORY NOTE
ChoiceOne Financial Services, Inc. is filing this Pre-Effective Amendment No. 2 ("Amendment") to its registration statement on Form S-4 (the "Registration Statement") as an exhibit-only filing to file Exhibit 10.7 and Exhibit 10.8 to the Registration Statement and to file an amended Exhibit 99.1. Accordingly, this Amendment consists of only the cover page, this explanatory note, Part II of the Registration Statement, the signature page to the Registration Statement, Exhibit 10.7, Exhibit 10.8 and Exhibit 99.1. The joint proxy statement and prospectus contained in the Registration Statement is unchanged and has been omitted.
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 20. Indemnification of Directors and Officers
ChoiceOne is required under its Articles of Incorporation to indemnify its directors and executive officers to the fullest extent permitted under the MBCA. ChoiceOne is also permitted under its Bylaws to indemnify other persons who serve or served as a director, officer, employee, or agent of ChoiceOne or who have served at the request of ChoiceOne as directors, officers, partners, trustees, employees, or agents of another foreign or domestic corporation, partnership, joint venture, trust or other enterprise.
Sections 561 through 571 of the MBCA contain provisions governing the indemnification of directors and officers by Michigan corporations. That statute provides that a corporation has the power to indemnify a person who was or is a party or is threatened to be made a party to a threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative and whether formal or informal (other than an action by or in the right of the corporation), by reason of the fact that he or she is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, partner, trustee, employee or agent of another foreign or domestic corporation, partnership, joint venture, trust or other enterprise, whether for profit or not, against expenses (including attorneys' fees), judgments, penalties, fines and amounts paid in settlement actually and reasonably incurred by him or her in connection with the action, suit or proceeding, if the person acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the corporation or its shareholders, and with respect to a criminal action or proceeding, if the person had no reasonable cause to believe his or her conduct was unlawful. The termination of an action, suit or proceeding by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, does not, of itself, create a presumption that the person did not act in good faith and in a manner that he or she reasonably believed to be in or not opposed to the best interests of the corporation or its shareholders, and, with respect to a criminal action or proceeding, had reasonable cause to believe that his or her conduct was unlawful.
Indemnification of expenses (including attorneys' fees) and amounts paid in settlement is permitted in derivative actions, except that indemnification is not allowed for any claim, issue or matter in which such person has been found liable to the corporation unless and to the extent that a court decides indemnification is proper. To the extent that a director or officer has been successful on the merits or otherwise in defense of an action, suit or proceeding, or in defense of a claim, issue or matter in the action, suit or proceeding, the corporation shall indemnify him or her against actual and reasonable expenses (including attorneys' fees) incurred by him or her in connection with the action, suit or proceeding, and any action, suit or proceeding brought to enforce the mandatory indemnification provided under the MBCA. The MBCA permits partial indemnification for a portion of expenses (including reasonable attorneys' fees), judgments, penalties, fines and amounts paid in settlement to the extent the person is entitled to indemnification for less than the total amount.
A determination that the person to be indemnified meets the applicable standard of conduct and an evaluation of the reasonableness of the expenses incurred and amounts paid in settlement shall be made: (i) by a majority vote of a quorum of the board of directors who were not parties or threatened to be made parties to the action, suit or proceeding; (ii) if a quorum cannot be so obtained, by a majority vote of a committee of not less than two directors who are not, at the time, parties or threatened to be made parties to the action, suit or proceeding; (iii) by independent legal counsel; (iv) by all independent directors not parties or threatened to be made parties to the action, suit or proceeding; or (v) by the shareholders (excluding shares held by directors, officers, employees or agents who are parties or are threatened to be made parties to the action, suit, or proceeding). An authorization for payment of indemnification may be made by: (a) the board of directors by (i) a majority vote of all directors who are not parties or threatened to be made parties to the action, suit or proceeding, provided that there are at least two such directors, (ii) a majority vote of a committee of two or more directors who are not parties or threatened to be made parties to the action, suit or proceeding, (iii) a majority vote of all "independent directors" who are not parties or threatened to be made parties to the action, suit or proceeding, provided that there is at least one such director, or (iv) if the corporation lacks the appropriate persons for alternatives (i) through (iii), by a majority vote of the entire board of directors; or (b) the shareholders (excluding shares held by directors, officers, employees or agents who are parties or threatened to be made parties to the action, suit, or proceeding). Under the MBCA, ChoiceOne may indemnify a director without a determination that the director has met the applicable standard of conduct unless the
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director received a financial benefit to which he or she was not entitled, intentionally inflicted harm on the corporation or its shareholders, violated Section 551 of the MBCA (which prohibits certain dividends, distributions and loans to insiders of the corporation), or intentionally committed a criminal act. A director may file for a court determination of the propriety of indemnification in any of the situations set forth in the preceding sentence.
In certain circumstances, the MBCA further permits advances to cover such expenses before a final disposition of the proceeding, upon receipt of an undertaking, which need not be secured and which may be accepted without reference to the financial ability of the person to make repayment, by or on behalf of the director, officer, employee or agent to repay such amounts if it shall ultimately be determined that he or she has not met the applicable standard of conduct. If a provision in the articles of incorporation or bylaws, a resolution of the board or shareholders, or an agreement makes indemnification mandatory, then the advancement of expenses is also mandatory, unless the provision, resolution or agreement specifically provides otherwise.
The indemnification provisions of the MBCA are not exclusive of the rights to indemnification under a corporation's articles of incorporation or bylaws or by agreement. However, the total amount of expenses advanced or indemnified from all sources combined may not exceed the amount of actual expenses incurred by the person seeking indemnification or advancement of expenses. The indemnification provided for under the MBCA continues as to a person who ceases to be a director, officer, employee or agent.
The MBCA and ChoiceOne's Articles of Incorporation permit ChoiceOne to purchase insurance on behalf of its directors, officers, employees and agents against liabilities arising out of their positions with ChoiceOne, whether or not such liabilities would be within the above indemnification provisions. Pursuant to this authority, ChoiceOne maintains such insurance on behalf of its directors, officers, employees and agents.
Item 21. Exhibits and Financial Statements
The exhibits listed below in the "Exhibit Index" are part of this Registration Statement and are numbered in accordance with Item 601 of Regulation S-K.
Item 22. Undertakings
The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to section 13(a) or section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
The undersigned registrant hereby undertakes as follows: that prior to any public reoffering of the securities registered hereunder through use of a prospectus which is a part of this registration statement, by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c) under the Securities Act of 1933, as amended, the issuer undertakes that such reoffering prospectus will contain the information called for by the applicable registration form with respect to reofferings by persons who may be deemed underwriters, in addition to the information called for by the other items of the applicable form.
The undersigned registrant undertakes that every prospectus: (i) that is filed pursuant to the immediately preceding paragraph, or (ii) that purports to meet the requirements of Section 10(a)(3) of the Securities Act of 1933, as amended, and is used in connection with an offering of securities subject to Rule 415, will be filed as a part of an amendment to the registration statement and will not be used until such amendment is effective, and that, for purposes of determining any liability under the Securities Act of 1933, as amended, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is
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against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes to respond to requests for information that is incorporated by reference into the prospectus pursuant to Items 4, 10(b), 11, or 13 of this Form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request.
The undersigned registrant hereby undertakes to supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective.
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SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the Village of Sparta, State of Michigan, on August 5, 2019.
ChoiceOne Financial Services, Inc. | |||
By: | /s/ Kelly J. Potes | August 5, 2019 | |
Kelly J. Potes
Chief Executive Officer |
Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the date indicated.
/s/ Kelly J. Potes |
Chief Executive Officer and
Director (Principal Executive Officer) |
August 5, 2019 | ||
Kelly J. Potes | ||||
/s/ Thomas L. Lampen |
Treasurer (Principal Financial and
Accounting Officer) |
August 5, 2019 | ||
Thomas L. Lampen | ||||
*/s/ Paul L. Johnson | Chairman of the Board and Director | August 5, 2019 | ||
Paul L. Johnson | ||||
*/s/ Greg L. Armock | Director | August 5, 2019 | ||
Greg L. Armock | ||||
*/s/ James A. Bosserd | Director | August 5, 2019 | ||
James A. Bosserd | ||||
*/s/ Keith D. Brophy | Director | August 5, 2019 | ||
Keith D. Brophy | ||||
*/s/ Jack G. Hendon | Director | August 5, 2019 | ||
Jack G. Hendon | ||||
*/s/ Bradley F. McGinnis | Director | August 5, 2019 | ||
Bradley F. McGinnis | ||||
*/s/ Nels W. Nyblad | Director | August 5, 2019 | ||
Nels W. Nyblad | ||||
*/s/ Roxanne M. Page | Director | August 5, 2019 | ||
Roxanne M. Page | ||||
*By /s/ Thomas L. Lampen | ||||
Attorney-in-Fact |
EXHIBIT INDEX
Exhibit | Document |
2 | Agreement and Plan of Merger between County Bank Corp. and ChoiceOne Financial Services, Inc., dated as of March 22, 2019 (attached as Annex A to the Prospectus and Proxy Statement that is part of this registration statement on Form S-4, and incorporated herein by reference). |
3.1 | Restated Articles of Incorporation of ChoiceOne Financial Services, Inc. Previously filed as an exhibit to ChoiceOne Financial Services, Inc.'s Form 10-K Annual Report for the year ended December 31, 2013. Here incorporated by reference. |
3.2 | Bylaws of ChoiceOne Financial Services, Inc., as currently in effect, and any amendments thereto. (2) |
4 | Advances, Pledge and Security Agreement between ChoiceOne Bank and the Federal Home Loan Bank of Indianapolis. Previously filed as an exhibit to ChoiceOne Financial Services, Inc.'s Form 10-K Annual Report for the year ended December 31, 2013. Here incorporated by reference. |
5 | Opinion of Warner Norcross + Judd LLP regarding the validity of the securities being registered. (2) |
8.1 | Opinion of Warner Norcross + Judd LLP regarding tax matters. (2) |
8.2 | Opinion of Hunton Andrews Kurth LLP regarding tax matters. (2) |
10.1 | Change in Control Agreement with Kelly J. Potes. (1) Previously filed as an exhibit to ChoiceOne Financial Services, Inc.'s Form 10-Q Quarterly Report for the period ended March 31, 2016. Here incorporated by reference. |
10.2 | Stock Incentive Plan of 2012. (1) Previously filed as Appendix A to ChoiceOne's definitive proxy statement for ChoiceOne's 2018 Annual Meeting of Shareholders, filed on April 19, 2018. Here incorporated by reference. |
10.3 | Directors' Stock Purchase Plan. (1) Previously filed as an exhibit to ChoiceOne Financial Services, Inc.'s Form 10-K Annual Report for the year ended December 31, 2016. Here incorporated by reference. |
10.4 | Former Valley Ridge Executive Employee Salary Continuation Agreements, as amended. (1) Previously filed as an exhibit to ChoiceOne Financial Services, Inc.'s Form 10-K Annual Report for the year ended December 31, 2013. Here incorporated by reference. |
10.5 | Former Valley Ridge Directors' Deferred Compensation Plan and Agreement. (1) Previously filed as an exhibit to the ChoiceOne Financial Services, Inc.'s Form 10-K Annual Report for the year ended December 31, 2013. Here incorporated by reference. |
10.6 | Amended and Restated Employee Stock Purchase Plan. (1) Previously filed as an exhibit to ChoiceOne Financial Services, Inc.'s Form 10-K Annual Report for the year ended December 31, 2016. Here incorporated by reference. |
10.7 | Employment Agreement between ChoiceOne Financial Services, Inc. and Michael J. Burke, Jr., dated as of March 22, 2019. (1)(3) |
10.8 | Transition Agreement between ChoiceOne Financial Services, Inc. and Bruce J. Cady, dated as of March 22, 2019. (1)(3) |
21 | Subsidiaries of ChoiceOne Financial Services, Inc. (2) |
23.1 | Consent of Warner Norcross + Judd LLP (included in Exhibits 5.1 and 8.1 and here incorporated by reference). |
23.2 | Consent of Hunton Andrews Kurth LLP (included in Exhibit 8.2 and here incorporated by reference). |
23.3 | Consent of Plante & Moran, PLLC. (2) |
23.4 | Consent of Crowe LLP. (2) |
24 | Powers of Attorney. (2) |
99.1 | Form of Proxy for ChoiceOne Financial Services, Inc. (3) |
99.2 | Form of Proxy for County Bank Corp. (2) |
99.3 | Voting Agreement between ChoiceOne Financial Services, Inc. and each of the directors of County Bank Corp., dated as of March 22, 2019. (2) |
99.4 | Voting Agreement between County Bank Corp. and each of the directors of ChoiceOne Financial services Inc., dated as of March 22, 2019. (2) |
99.5 | Consent of ProBank Austin (2) |
99.6 | Consent of Boenning & Scattergood, Inc. (2) |
99.7 | Rule 438 Consent of Director Nominee (2) |
(1) This agreement is a management contract or compensation plan or arrangement.
(2) Previously filed.
(3) Filed herewith.
EXHIBIT 10.7
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the “Agreement”) is made by CHOICEONE FINANCIAL SERVICES, INC., a Michigan corporation (the “Corporation”), and MICHAEL J. BURKE, JR. (“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) President 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 $310,000.00 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. Notwithstanding the Corporation’s normal procedures, Executive will receive an initial award of restricted stock units and stock options on the date in 2020 such awards are made to the Chief Executive Officer of the Corporation as if Executive had been employed by the Corporation since January 1, 2019, consistent with the awards based on 2019 performance that are made to the Corporation’s other officers; provided, however, that
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such award will immediately vest if Executive voluntarily terminates employment without Good Reason before December 31, 2020.
(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 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 continue to be provided the vehicle currently provided by County until such time as Executive requests a new vehicle. Until such time as Executive requests a new vehicle, the Corporation will reimburse all vehicle operation and maintenance expenses reasonably incurred by Executive in utilizing the vehicle currently provided by County 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. Upon request by Executive of a new vehicle, Executive shall deliver to the Corporation the vehicle currently provided by County and 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.
(g) Transition Bonus. The Corporation will pay Executive $250,000.00 in the first administratively feasible payroll following the Effective Date. If Executive voluntarily terminates the Employment without Good Reason on or before December 31, 2020, the Corporation will pay Executive $250,000.00 in the first administratively feasible payroll following Executive’s termination date. Executive acknowledges and agrees that upon execution of this Agreement he is not entitled to any payments under the Executive Employment Agreement between Executive and County dated February 18, 2016, as amended.
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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; (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, and (D) any right to a transition bonus under Section 3(g) (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).
(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 Chief Executive Officer 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, provided, however, that the Board of Directors begin any such investigation within sixty (60) days of first learning of the act or omission that could potentially lead to Cause;
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B. the Executive fails, within thirty (30) days after notice from the Chief Executive Officer under A. above, to revoke the action or correct the omission and make the Corporation whole; and
C. the Chief Executive Officer 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 Chief Executive Officer 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, provided, however, that the Board of Directors begin any such investigation within sixty (60) days of first learning of the act or omission that could potentially lead to Cause.
(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.
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
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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, except that a relocation to the Corporation’s headquarters will not be Good Reason if required due to Executive being named Chief Executive Officer or as part of an agreed upon transition plan for Executive to become Chief Executive Officer; 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 Chief Executive Officer 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 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
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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 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
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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 6 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).
(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
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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 be required to provide 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 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.
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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. 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
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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 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
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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 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:
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If to the Corporation: |
ChoiceOne Financial Services, Inc. Attn: CEO 109 E. Division Sparta, MI 49345 |
|
If to Executive: |
Michael J. Burke, Jr. 2704 Genny Ridge Lapeer, MI 48446 |
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 Chief Executive Officer. 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 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 Executive Employment Agreement between Executive and County dated February 18, 2016, as amended, 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
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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/ Kelly J. Potes | ||
Kelly J. Potes, Chief Executive Officer | ||
EXECUTIVE | ||
/s/ Michael J. Burke, Jr. | ||
Michael J. Burke, Jr. |
[signature page to Employment Agreement]
EXHIBIT 10.8
TRANSITION AGREEMENT
March 22, 2019
To: | Bruce J. Cady (“you” or “Executive”) |
From: | ChoiceOne Financial Services, Inc. and County Bank Corp. |
This confirms our agreement (this “Agreement”) regarding your terms of employment and non-competition agreement with ChoiceOne Financial Services, Inc. (“ChoiceOne”) and County Bank Corp. (“CBC”). This Agreement is offered in connection with ChoiceOne’s merger with CBC pursuant to the Agreement and Plan of Merger dated as of March 22, 2019, between ChoiceOne and CBC (the “Merger Agreement”).
1. If the merger of ChoiceOne and CBC closes as contemplated by the Merger Agreement, this Agreement will automatically become effective on the Effective Time of the Merger (as defined by the Merger Agreement). The term of this Agreement will begin on the Effective Time and end December 31, 2019 (the “Term”), after which this Agreement and your employment will terminate automatically, with no severance pay or benefits due upon your termination of employment except as otherwise provided in this Agreement.
2. You will be employed by ChoiceOne or one of ChoiceOne’s subsidiary banks. You will provide services as requested by ChoiceOne’s Board of Directors and ChoiceOne’s Chief Executive Officer to assist in the integration of CBC into ChoiceOne. You will be compensated for the Term at the rate of an annual salary of $304,321.00 prorated for the Term, which may not be adjusted downward during the Term. You agree to abide by the policies, practices and procedures of ChoiceOne as established from time-to-time. During the Term, you will continue to be provided an automobile to use consistent with CBC’s past practices. In this position, you will not be eligible for any bonus, incentive or equity plans. You will be eligible to participate in employee benefit plans, including a 401(k) plan and group health plan, as generally applicable to similarly situated employees and subject to the terms and conditions of the applicable benefit plans. You will be entitled to a prorated 2019 bonus, 401(k) matching contribution, and profit-sharing contribution for the portion of 2019 through the Effective Date as provided by the Merger Agreement for CBC employees.
3. In addition to your salary during the Term, ChoiceOne agrees that you will be paid the following amounts in a lump sum within 30 days after your termination of employment, less taxes and withholdings:
a. Severance of $608,642.00 plus $16,578.47, which is an amount equal to 12 times the monthly cost of health care continuation under CBC’s health plan.
b. The net present value of your benefit under the CBC Supplemental Executive Retirement Plan (“SERP”), calculated upon the termination of the SERP as of December 31, 2019.
Your account balance in the CBC Director Retirement Plan will be paid to you as provided in the Merger Agreement.
4. You agree that the restrictions contained in Sections 7 and 8 of your Executive Employment Agreement with CBC, as attached to this Agreement as Appendix A , are incorporated herein and will apply after termination of your employment and acknowledge and agree that the payments provided under this Agreement are adequate consideration for those restrictions.
5. All payments under this Agreement are conditioned on you executing and not revoking a separation and release agreement in the form attached to this Agreement as Appendix B .
6. This Agreement shall be governed by Michigan law, without regard to choice of law rules. This Agreement constitutes the entire understanding of the parties concerning the subjects addressed in this Agreement and supersedes any prior understanding or agreement between the parties, including your Executive Employment Agreement dated February 18, 2016, with CBC, which you agree terminates as of the Effective Time of the Merger. This Agreement may not be modified except in a writing signed by the parties.
7. This Agreement may be assigned by ChoiceOne; provided, that ChoiceOne shall remain liable for all payment obligations under this Agreement. Because your agreement is personal in nature, you may not assign the responsibilities nor the payments to be received pursuant to this Agreement.
8. No provisions of this Agreement may be amended, modified, waived or discharged unless the waiver, modification, or discharge is agreed to in a writing signed by you and ChoiceOne. No waiver by any party at any time of any breach or non-performance of this Agreement by another party shall be deemed a waiver of any prior or subsequent breach or non-performance.
9. 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 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. The parties agree that any breach of the provisions in Appendix A is likely to result in irreparable injury to ChoiceOne and that the remedy at law alone will be an inadequate remedy for such breach, and that in addition to any other remedy it may have, ChoiceOne will be entitled to enforce the specific performance of this Agreement by Executive in any court of competent jurisdiction and to seek both temporary and permanent injunctive relief (to the extent permitted by law) without bond and without liability should such relief be denied, modified or violated. Neither the right to obtain such relief nor the obtaining of such relief will be exclusive or preclude ChoiceOne from any other remedy.
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10. This Agreement may be signed in original, electronically 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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Please sign below to confirm our agreement. | |||
Sincerely, | |||
COUNTY BANK CORP. | |||
By | /s/ Michael J. Burke | ||
Michael J. Burke, President | |||
CHOICEONE FINANCIAL SERVICES, INC. | |||
By | /s/ Kelly J. Potes | ||
Kelly J. Potes, Chief Executive Officer | |||
AGREED: | ||
/s/ Bruce J. Cady | ||
Bruce J. Cady | ||
[signature page to Transition Agreement]
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APPENDIX A
Section 7. Proprietary Information; Inventions in the Field .
Section 7.01. Proprietary Information . In the course of service to the Bank, Executive will have access to (i) the identities of the Bank's existing and prospective customers or clients, including names, addresses, credit status, and pricing levels; (ii) the buying and selling habits and customs of the Bank's existing and prospective customers or clients; (iii) non-public financial information about the Company and the Bank; (iv) product and systems specifications, concepts for new or improved products and other product or systems data; (v) the identities of, and special skills possessed by, the Company's and/or the Bank's employees; (vi) the identities of and pricing information about the Company's and/or the Bank's vendors; (vii) training programs developed by the Company and/or the Bank; (viii) pricing studies, information and analyses; (ix) current and prospective products and inventories; (x) financial models, business projections and market studies; (xi) the Company's and the Bank's financial results and business conditions; (xii) business plans and strategies; (xiii) special processes, procedures, and services of the Company and the Bank and their vendors; and (xiv) computer programs and software developed by the Company and/or the Bank or their consultants, all of which are confidential and may be proprietary and are owned or used by the Bank, or any of its subsidiaries or affiliates. Such information will hereinafter be called " Proprietary Information " and will include any and all items enumerated in the preceding sentence and coming within the scope of the business of the Bank or any of its subsidiaries or affiliates as to which Executive may have access, whether conceived or developed by others or by Executive alone or with others during the period of service to the Bank, whether or not conceived or developed during regular working hours. Proprietary Information will not include any records, data or information which are in the public domain during or after the period of service by Executive provided the same are not in the public domain as a consequence of disclosure directly or indirectly by Executive in violation of this Agreement.
Section 7.02. Fiduciary Obligations . Executive agrees that Proprietary Information is of critical importance to the Bank and a violation of this Section 7 would seriously and irreparably impair and damage the Bank's business. Executive agrees that he will keep all Proprietary Information in a fiduciary capacity for the sole benefit of the Bank.
Section 7.03. Non-Use and Non-Disclosure . Executive will not during the Term or at any time thereafter (a) disclose, directly or indirectly, any Proprietary Information to any person other than the Bank or executives thereof at the time of such disclosure who, in the reasonable judgment of Executive, need to know such Proprietary Information or such other persons to whom Executive has been specifically instructed to make disclosure by the Board and in all such cases only to the extent required in the course of Executive's service to the Bank or (b) use any Proprietary Information, directly or indirectly, for his own benefit or for the benefit of any other person or entity. At the termination of his employment, Executive will deliver to the Bank all notes, letters, documents and records which may contain Proprietary Information which are then in his possession or control and will destroy any and all copies and summaries thereof.
Section 7.04. Return of Documents . All notes, letters, documents, records, tapes and other media of every kind and description relating to the business, present or otherwise, of the Bank or its affiliates and any copies, in whole or in part, thereof (collectively, the " Documents "), whether or not prepared by Executive, will be the sole and exclusive property of the Bank Executive will safeguard all Documents and will surrender to the Bank at the time his employment terminates, or at such earlier time or times as the Board or its designee may specify, all Documents then in Executive's possession or control.
Section 8. Restrictions on Activities of Executive . The Bank and Executive agree to the non-competition provisions set forth in this Section.
Section 8.01. Non-Competition . Executive agrees that during the term of his employment, which may exceed the Term of this Agreement, and for the Non-Competition Period set forth below, Executive will not, except as an employee of the Bank, in any capacity for Executive or for others, directly or indirectly:
(a) compete or engage anywhere in the geographic area comprised of any county in which the Bank currently does business, inclusive of the area which consists of the fifty (50) mile radius surrounding Executive's primary place of business in Lapeer, Michigan, plus any metropolitan statistical area, as that term is defined by the US Office of Management & Budget, in which a Bank customer is located and in which Executive has, on behalf of the Bank or the Company, conducted business, either in person, telephonically, electronically or otherwise, during the twelve (12) month period preceding the effective date of the termination (the " Market Area "), in any business that is the same or similar to the Bank, or offers competing financial products and services to those offered by the Bank;
(b) take any action to invest in, own, manage, operate, control, participate in, be employed or engaged by, or be connected in any manner with any partnership, corporation or other business or entity engaging in a business the same or similar, or which offers competing financial products and services as those offered by the Bank anywhere within the Market Area; notwithstanding the foregoing, Executive is permitted hereunder to own, directly or indirectly, up to one percent (1%) of the issued and outstanding securities of any publicly traded financial institution conducting business within the Market Area;
(c) call on, service, or solicit competing business from customers or prospective customers of the Bank if, within the twenty-four (24) months before the termination of Executive's employment, Executive had or made contact with the customer, or had access to Proprietary Information or information and files about the customer; or
(d) call on, solicit, or induce any employee of the Bank whom Executive had contact with, knowledge of, or association with in the course of employment with the Bank to terminate employment from the Bank, and will not assist any other person or entity in such activities.
Section 8.02. Non-Competition Period . The restrictions on Executive's activities identified in Section 8.01 hereof will apply for the longer of (a) twenty-four (24) months after the termination of Executive's employment with the Bank, or (b) the period during which Executive is receiving severance benefits pursuant to Section 6.02 (the ''Non-Competition Period"). The restrictions identified at Section 8.01 hereof will be applicable without regard to the reason for the termination of Executive's employment with the Bank.
Section 8.03. Tolling . In the event that the Company or the Bank will file a lawsuit in any court of competent jurisdiction alleging a breach of any of Executive's obligations under this Agreement, then any time period set forth in this Agreement, including the Non-Competition Period, will be deemed tolled as of the time such lawsuit is filed and will remain tolled until such dispute is resolved either by written settlement agreement resolving all claims raised by the lawsuit or by entry of a final judgment in such lawsuit and the final resolution of any post judgment appellate proceedings.
Section 8.04. THE EXECUTIVE REPRESENTS AND WARRANTS THAT THE KNOWLEDGE, SKILLS AND ABILITIES HE POSSESSES AT THE TIME OF COMMENCEMENT OF EMPLOYMENT HEREUNDER ARE SUFFICIENT TO PERMIT HIM, IN THE EVENT OF TERMINATION OF HIS EMPLOYMENT HEREUNDER, TO EARN A LIVELIHOOD SATISFACTORY TO HIMSELF WITHOUT VIOLATING ANY PROVISION OF SECTION 6 OR 7 HEREOF.
APPENDIX B
SEPARATION AND RELEASE AGREEMENT
I entered into a Transition Agreement with CHOICEONE FINANCIAL SERVICES, INC. (“ChoiceOne”) and COUNTY BANK CORP. (“CBC”) dated March 22, 2019. I hereby acknowledge and agree as follows:
1. A Separation and Release Agreement was attached as Appendix B to the Transition Agreement.
2. The benefits set forth in Paragraph 3 of the Transition Agreement become payable only if I sign this Separation and Release Agreement and do not revoke it within the seven (7) day revocation period after I sign it as provided below.
3. In consideration of benefits set forth in Paragraph 3 of the Transition Agreement, I release, waive, and forever discharge ChoiceOne and CBC, and all affiliated entities of ChoiceOne and CBC and the predecessors, successors, assigns, agents, officers, shareholders, employees and other representatives of ChoiceOne, CBC and each of their respective affiliates, from all claims, demands, charges, obligations, damages, and liabilities of every kind and nature and from all actions and causes of action which I may now have or later maintain against any of them, occurring prior to the effective date of this Separation and Release Agreement, whether in law or in equity, known or unknown, arising in any way out of my employment or the separation of my employment with ChoiceOne and/or CBC.
a. Included Statutes . This Release and Waiver includes, but is not limited to, any and all claims, including claims for attorneys’ fees, arising under the Civil Rights Acts of 1964 and 1991, the Age Discrimination in Employment Act of 1967, the Older Workers Benefit Protection Act, the Employee Retirement Income Security Act, the Americans with Disabilities Act, the Family and Medical Leave Act, the Michigan Elliott-Larsen Civil Rights Act, the Michigan Persons with Disabilities Civil Rights Act, and all other relevant state and federal statutes.
b. Included Claims . This Release and Waiver also includes, but is not limited to, all claims for past or future wages, severance pay, bonuses, commissions, vacation pay, paid time off, medical insurance, life or disability insurance, tuition reimbursement, and other benefits (except as provided in the Transition Agreement and Separation and Release Agreement, and except for vested retirement benefits) and all claims for violation of any expressed or implied agreement, written or verbal, that occurred before the execution of this Separation and Release Agreement, or for any violation of any common law duty or statute, including all claims for attorneys’ fees.
c. Excluded Claims . I do not waive rights or claims that may arise after the date I sign this Separation and Release Agreement, including any claims
relating to a breach of this Separation and Release Agreement by ChoiceOne and CBC. I do not waive any rights to vested employee benefits, group health benefit continuation rights provided by COBRA, any claim for workers’ compensation, or any rights to indemnification under any indemnification agreement with CBC, Articles of Incorporation, Bylaws, or any other organizational documents of CBC, insurance policy, or applicable state law with respect to any liability as an employee, officer, or director of CBC or Lakestone Bank & Trust.
4. I may consider this Separation and Release Agreement for up to twenty-one (21) days after my termination date. If this Separation and Release Agreement is signed before the end of the twenty-one (21) day period, I acknowledge that it is because I freely chose to do so after carefully considering the terms of the Separation and Release Agreement and after the opportunity to consult with an attorney. I also have the right to revoke the Separation and Release Agreement for a period of seven (7) days following the date of execution.
The parties have signed this Agreement as of the _____ day of _____________, 2019.
Dated: _____________, 2019 | ||||
Bruce J. Cady | ||||
Dated: _____________, 2019 | CHOICEONE FINANCIAL SERVICES, INC. | |||
By: | ||||
Its: | ||||
Employer |
EXHIBIT 99.1
CHOICEONE FINANCIAL SERVICES, INC. 109 E. DIVISION SPARTA, MI 49345-0186 VOTE BY INTERNET - www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information. Vote by 11:59 P.M. Eastern Time on September 17, 2019 for shares held directly and by 11:59 P.M. Eastern Time on September 16, 2019 for shares held in a Plan. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions. Vote by 11:59 P.M. Eastern Time on September 17, 2019 for shares held directly and by 11:59 P.M. Eastern Time on September 16, 2019 for shares held in a Plan. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: E82007-S86918 KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. CHOICEONE FINANCIAL SERVICES, INC The Board of Directors recommends you vote FOR proposals 1 through 5. For Against Abstain 1. Approval of the Agreement and Plan of Merger, dated as of March 22, 2019, by and between County Bank Corp. (County) and ChoiceOne Financial Services, Inc. (ChoiceOne), as it may be amended from time to time, under which County will merge with and into ChoiceOne. 2. Approval of an amendment to ChoiceOne's Articles of Incorporation to increase the number of authorized shares of common stock from 7,000,000 to 12,000,000. 3. Approval of an amendment to ChoiceOne's Articles of Incorporation to remove certain provisions related to the number of directors and vacancies on the board of directors. 4. Approval, on a non-binding, advisory basis, of the compensation that may be paid or become payable to ChoiceOne's named executive officers that is based on or otherwise related to the merger. 5. Approval of adjournment of the ChoiceOne special meeting, if necessary or appropriate, to solicit additional proxies in favor of proposals 1 through 3 listed above. Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
Important Notice Regarding the Availability of Proxy Materials for the Special Meeting: The Proxy Statement is available at CHOICEONE FINANCIAL SERVICES, INC. Special Meeting of Shareholders September 18, 2019 8:00 A.M. EDT This proxy is solicited by the Board of Directors The shareholder hereby appoints Mary J. Johnson, Paul L. Johnson and Roxanne M. Page, or any of them, as proxies, each with the power to appoint his/her substitute, and hereby authorizes them to represent and to vote, as designated on the reverse side of this ballot, all of the shares of Common Stock of CHOICEONE FINANCIAL SERVICES, INC. that the shareholder is entitled to vote at the Special Meeting of Shareholders to be held at 8:00 a.m. EDT on September 18, 2019, at 109 E. Division, Sparta MI 49345, and any adjournment or postponement thereof. When this proxy is properly executed, the shares represented by this proxy will be voted in the manner directed herein. If no such direction is made, the shares represented by this proxy will be voted FOR Proposals 1, 2, 3, 4 and 5. The named proxies are authorized to vote upon such other business as may properly come before the meeting in their discretion. Continued and to be signed on reverse side.