Severance Compensation
Agreement
This Severance Compensation
Agreement (the “Agreement”), has been made
on July 24, 2008 by Fentura Financial, Inc. , a
Michigan corporation (the “Company”), West Michigan Community Bank
, (the “Bank”) and Ronald L. Justice , an
individual (the “Executive”).
The Executive is a
principal officer of the Bank and the Company and his continued
services are important to the Bank, its depositors and customers,
and the Company’s shareholders. The Bank and the Company
believe it is in their best interests that the Executive continue
to render services to the Bank and the Company if a Change in
Control is threatened or occurs, free from the distractions and
vexations which might result if his personal economic security is
made uncertain as a result of an impending Change in
Control.
1. Definitions. The following words and phrases have
the following meanings:
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a)
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“Cause”
means (i) the
willful and continuing failure by the Executive to substantially
perform his duties with the Bank or the Company (other than any
such failure resulting from the Executive’s death or
Disability) and which is not remedied in a reasonable period of
time after receipt by Executive of written notice from the Bank
specifying the duties the Executive has failed to perform, or
(ii) the willful and continued engaging by Executive in gross
misconduct that is materially injurious to the Bank or the Company
and which is not ceased within a reasonable period of time after
receipt by Executive of written notice from the Bank specifying the
misconduct and the injury, or (iii) an adjudication of the
Executive’s guilt of any crime involving a serious and
substantial breach of the Executive’s fiduciary duties to the
Bank. No act or failure to act on the Executive’s part shall
be considered “willful” unless done, or omitted to be
done, by him in bad faith and without reasonable belief that his
action or omission was in the best interest of the Bank or the
Company.
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b)
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“Change in
Control” means (i) the acquisition,
directly, indirectly and/or beneficially, by any person or group,
of more than fifty percent (50%) of the voting securities of the
Company or the Bank, (ii) the occurrence of
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any
event at any time during any two (2) year period which results
in a majority of the Board of Directors of the Company or the Bank
being comprised of individuals who were not members of such Board
at the commencement of that two (2) year period (the
“Incumbent Board”); provided, however, that any
individual becoming a director subsequent to the date hereof whose
election, or nomination for election by the Company’s or the
Bank’s shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall
be considered as though such individual were a member of the
Incumbent Board, but excluding for this purpose any such individual
whose initial assumption of the office occurs as a result of an
actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation
of proxies or consents by or on behalf of a person other than the
Incumbent Board, (iii) a sale of all or substantially all of
the assets of the Company or the Bank to another entity, or
(iv) a merger or reorganization of the Company or the Bank
with another entity.
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c)
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“Compensation”
means with respect to
the period under consideration, the aggregate of all amounts paid
by the Company and the Bank to and includable in the
Executive’s earnings as base salary, bonuses, commissions,
fees and any other compensation, but excluding contributions made
to any welfare and pension benefit plans by the Bank and/or Company
at its or their sole expense.
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d)
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“Disability”
means any physical or
mental impairment which meets the definition of disability found in
the long-term or short-term disability policy insuring the
Executive at the time disability is alleged or if no such policy is
in effect at that time, any physical or mental impairment that, on
the basis of qualified medical opinion of three (3) medical
doctors, has rendered Executive wholly and permanently unable to
engage in the regular and continuous occupation or employment for
remuneration or profit of a nature similar to his employment with
the Bank for a period of six (6) consecutive months or
more.
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e)
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“Good Reason”
means any of the
following, as determined by the Executive in his discretion:
(i) a material diminution of the Executive’s duties,
responsibilities, or authority with the Bank or the Company
immediately prior to a Change in Control, or a change adverse to
Executive in Executive’s reporting responsibilities, titles,
terms of employment (including bonus, compensation, fringe benefits
and vacation entitlement) or (ii) the Bank or the Company
requiring Executive to be based anywhere other than within fifty
(50) miles of his present office location, or (iii) a material
breach of this Agreement including the failure by the Company to
obtain the assumption of this Agreement as contemplated in
Section 6 hereof. Upon the occurrence of any event referenced
above, Executive shall, within ninety (90) of any
occurrence,
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provide the
Bank and the Company notice of the existence of the condition. Upon
receiving notice, the Bank and the Company shall have no more than
thirty (30) days to remedy the condition. Executive shall have
two years from the date of the initial existence of a violation of
one of t
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