EXHIBIT 10
SEPARATION
AGREEMENT
This Separation Agreement ("Agreement") is between SOUTHERN
MICHIGAN BANCORP, INC. ("Corporation") and RICHARD E. DYER
("Executive").
Executive has been employed by the Corporation and its
Affiliate FNB Financial ("Bank") pursuant to an Amended and
Restated Employment Agreement effective as of March 26, 2008
("Employment Agreement"). This Agreement sets forth the agreed
terms for Executive's separation from employment with the
Corporation, the Bank, and all other Affiliates (as defined in the
Employment Agreement). Therefore, the parties agree as follows.
1.
Termination of Employment . Executive hereby resigns
effective July 18, 2008 from all positions that he holds with or on
behalf the Corporation and all Affiliates, including but not
limited to his directorships on the Boards of Directors of the
Corporation and the Bank.
2.
Payments by the Corporation . The Corporation will
make the following payments to the Executive.
(a) Salary Continuation . The Corporation
will pay Executive $6,170.92 per bi-weekly pay period (prorated for
any partial payroll period) for the 52 week period beginning with
the week of July 20, 2008 and ending with the week of July 12, 2009
(the "Severance Pay Period"), subject to required payroll
withholding.
(b) Health Coverage Continuation . The
Corporation will reimburse the Executive for the COBRA continuation
premiums incurred by Executive to continue Executive's current
employee and dependent health, dental, and prescription drug
coverage in effect during the Severance Pay Period, provided (A)
that Executive elects and remains eligible for COBRA continuation
coverage, (B) that Executive continues to pay the normal employee
contribution for such coverage, (C) that the Corporation's
obligation to provide coverage will end if Executive becomes
eligible for comparable coverage from a new employer and (D) that
reimbursements under this Section will be made within thirty (30)
days after the Executive submits documentation of the reimbursable
expense.
(c) Outplacement Assistance . The
Corporation will reimburse up to $5,000.00 of outplacement
assistance from an outplacement assistance firm selected by
Executive and approved by the Corporation (whose approval shall not
be unreasonably withheld). Expenses must be incurred under this
Section not later than December 31, 2009 and will be reimbursed
within 30 days after Executive submits documentation of the
reimbursable expense.
(d) Unused Vacation . The Corporation will
pay Executive for any accrued unused current-year vacation pay to
which Executive is entitled under the Corporation's vacation pay
policy, to be paid with the pay check for the first pay period
after the effective date of this Agreement.
(e) Auto . The Corporation will promptly
transfer to Executive free and clear title to the 2006 Buick
Lucerne CSX that has been provided for Executive's use during his
employment. Executive accepts the auto "as is", with no warranties
from the Corporation or Affiliates, and understands that after
transfer of title all insurance, maintenance and other expenses
relating to the auto will be Executive's responsibility. The
parties agree that the fair market value of the auto is $18,760.
Required payroll withholding will be deducted from t
