1.

Termination of Employment. The employment relationship between Fisher and Bank of Lenawee is hereby terminated by mutual agreement effective April 28, 2006 (the “Termination Date”). All employment and other agreements, contracts, commitments and understandings between Bank of Lenawee and Fisher whether written, oral or otherwise, are hereby terminated, ended and void as of the Termination Date.

2.

Consideration . In consideration of the release and other promises made by Fisher in paragraphs 3, 4, 5, 6, and 7 of this Supplemental Retirement Agreement and Release, and in full accord, satisfaction and discharge of any and all obligations, agreements, contracts, commitments, understandings, or otherwise, Bank of Lenawee agrees to provide the following:

A.

To pay Fisher a severance benefit consisting of salary continuation through June 30, 2006 at the rate of pay Fisher was earning as of April 28, 2006; and to pay Fisher an additional severance benefit equal to two hundred fifty-thousand dollars ($250,000) payable over five (5) years in annual installments of fifty thousand dollars ($50,000) each July 1 ^st beginning July 1,2006. Such payments shall be subject to withholding for applicable federal, state and local income taxes and F.I.C.A.

B.

To provide Fisher with medical and dental coverage until the first of the month in which Fisher turns age sixty-five (65), September 1, 2014, with premium payments to be made by the Employer. The coverage provided shall conform substantially to that provided by the Employer to its employees.

C.

To provide medical and dental coverage to her current spouse through June 30, 2006; and to provide the option to extend medical and dental coverage to her current spouse until September 1, 2014 as long as Fisher is also enrolled and pays the additional premium of the spousal coverage on a monthly basis.

It is understood that the foregoing payments and benefits provided by Bank of Lenawee are good and valuable consideration for this Supplemental Retirement Agreement and Release and do not constitute monies or benefits to which Fisher is otherwise entitled as part of her prior employment with Bank of Lenawee.

The payments referended in (A) and other obligations under this Supplemental Retirement Agreement and Release are unfunded and unsecured promises of the Employer to pay money or provide benefits in the future. Fisher shall not have the right to assign or pledge her interests in this Agreement to any other person except a named beneficiary to receive benefits in the event of her death. If Fisher dies before receiving the full amount under (A) above, payments hereunder shall continue to be made to the named beneficiary or her estate.

3.

Release by Fisher . In consideration of the payments and benefits specified in Section 2 above, Fisher, on behalf of herself and her heirs, legal representatives and assigns, hereby releases and forever discharges Bank of Lenawee, Pavilion Bancorp, Inc. and their Boards of Trustees, officers , divisions, units, successors, assigns, affiliates, agents, employees, former employees, and attorneys (hereafter “the Released Parties”) of and from all actions, causes of action, claims, demands, compensatory, exemplary, statutory and punitive damages, costs, suits, debts, dues, sums of money, fees, covenants, contracts, liens, controversies, agreements, promises, judgments, liability and any and all consequential damages whatsoever, in law or in equity, which against the Released Parties, Fisher, individually or in any representative capacity had, now has or may or shall have by reason of any matter, fact, representation, cause or thing of any conceivable kind and character whatsoever, and which have occurred up to and including the date this Supplemental Retirement Agreement and Release becomes effective pursuant to Section 9 of this Agreement. This Supplemental Retirement Agreement and Release includes specifically, but not by way of limitation, any and all claims of discrimination, wrongful discharge, breach of contract, fraud, promissory estoppel, misrepresentation, retaliation, all claims under or in connection with the Age Discrimination in Employment Act (ADEA), the Older Workers Benefit Protection Act, Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Employee Retirement Income Security Act of 1974, the Family Medical Leave Act, the Michigan Elliott-Larsen Civil Rights Act, the Michigan Persons With Disabilities Civil Rights Act, the Americans with Disabilities Act, the Whistleblowers’ Protection Act, and any other Michigan and Federal statutes and the common law of the State of Michigan and the United States, actions based on tort, public policy, defamation or injuries incurred on the job or incurred as a result of loss of employment, and any and all claims and demands of every conceivable kind based upon or in connection with or involving Fisher’s employment and the termination of such employment.

Nothing in this Supplemental Retirement Agreement and Release shall constitute a waiver of any claim or right of Fisher that may arise from events occurring after this Supplemental Retirement Agreement and Release becomes effective, of claims for workers’ compensation or unemployment compensation benefits, or of the right to file a charge with or participate in an investigation conducted by the Equal Employment Opportunity Commission. This release by Fisher becomes effective and enforceable as provided in Section 9 of this Agreement.

4.

Waiver of Rights To Sue or Proceed . In further consideration of the receipt of the consideration described in Section 2, I, Pamela Fisher, do hereby covenant with the Released Parties that I will not sue or proceed in any manner, whether at law or in equity, against any or all of them, for or on account of any claim of any nature whatsoever, including but not limited to any claim for injuries or compensatory, exemplary, statutory or punitive damages as a result of the events arising out of or relating in any way to the termination of my employment or any events arising out of or relating in any way to my former employment with Bank of Lenawee. I, Pamela Fisher, hereby covenant and agree that this Supplemental Retirement Agreement and Release may be pleaded as a full and complete defense to, and be used as a basis for, an injunction against any action, suit, or other proceeding which may be instituted, prosecuted or attempted by me or by my respective heirs, legal representatives or assigns in breach hereof.

5.

Waiver of Reinstatement and Reemployment . Fisher hereby expressly waives recall and/or reinstatement to any position with Bank of Lenawee, and Fisher represents and covenants and agrees that she will not in the future seek or apply for employment, recall, reemployment or reinstatement with Bank of Lenawee in any capacity.

6.

Purpose and Intent . The parties intend that this Agreement will irrevocably bar any action or claim whatso