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EXHIBIT 10.4
TRANSITION AGREEMENT
This TRANSITION AGREEMENT
(this "Agreement") is made and entered into this 17th day of April,
2007, by and among SOUTHERN MICHIGAN BANCORP, INC., a Michigan
corporation ("Southern"), FNB FINANCIAL CORPORATION, a Michigan
corporation (the "FNB"), and RICHARD E. DYER ("Executive").
WHEREAS, Southern and FNB,
the parent corporation of First National Bank of Three Rivers
("Bank"), are parties to an Agreement and Plan of Merger, dated
April 17, 2007, whereby FNB shall merge with and into Southern (the
"Merger"); and
WHEREAS, the parties desire
to enter into this Agreement, which is intended to set forth in its
entirety the terms and conditions of the employment relationship
between FNB and Executive; and
NOW, THEREFORE, the parties
agree as follows:
1.
Effective Date . This Agreement shall become
effective if and only if the Merger takes place and shall
automatically become effective at the Effective Time of the Merger,
provided that Southern and Executive have also entered into the
Employment Agreement attached as Appendix A to this Agreement (the
"Employment Agreement").
2.
Prior Agreements . This Agreement and the Employment
Agreement shall supersede all previous agreements and
understandings pertaining to Executive's employment with and
compensation (including any bonus or deferred compensation) by the
Bank, FNB, and/or Southern or any of their Affiliates, including,
but not limited to, the Management Continuity Agreement dated July
20, 2004, by and between Executive and FNB, and the Salary
Continuation Agreement dated July 20, 2004, by and between
Executive and Bank (collectively the "Prior Agreements"), all of
which shall be terminated without liability. Provided, however,
that this Agreement shall not terminate vested rights of Executive
under the terms of The First National Bank of Three Rivers 401(k)
Profit Sharing Plan, Executive's pending claims under the Bank's
health insurance program, any right of Executive to indemnification
under the Articles or Bylaws of the Bank or FNB, or the
Supplemental Life Insurance Agreement dated October 25, 2004, by
and between Executive and Bank (the "Life Insurance Agreement") as
amended by this Agreement to remove the policy expenses provision
of Section 3.3.2. Accordingly, Section 3.3.2 of the Life Insurance
Agreement is amended to read in its entirety as follows:
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3.3.2
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Net Death Proceeds Purchase . If the Company elects to
terminate the Agreement the Executive or his/her transferee shall
have the right to purchase the Executive's Interest in the Policy
as identified in Section 3.2 above. The Company shall withdraw the
Policy's cash surrender value and assign ownership of the Policy to
the Executive or his/her transferee. The Executive or his/her
transferee shall thereafter assume responsibility for any fees
and/or cost of insurance charges as necessary to
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