Back to GetFilings.com

U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

[x]     ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For fiscal year ended December 31, 2004

[ ]     TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from ___________ to _______

Commission file number 000-23550

FENTURA FINANCIAL, INC.
(Exact name of registrant as specified in its charter)

Registrant’s telephone number, including area code (810) 750-8725

Securities registered under Section 12(b) of the Exchange Act: None

Securities registered under Section 12(g) of the Exchange Act: Common Stock

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. _X_ Yes ___ No

Indicate by check mark if disclosure of delinquent filers in response to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ]

Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12-b-2). Yes    No  x .

State the aggregate market value of the voting and nonvoting common equity held by nonaffiliates of the registrant computed by reference to the price at which the common equity was sold, or the average bid and asked prices of such common equity, as of the last business day of the registrant’s most recently completed second quarter.

Aggregate Market Value as of June 30, 2004: $60,907,522.

State the number of shares outstanding of each of issuer’s classes of common equity, as of the latest practicable date. 1,894,269 shares of Common Stock as of March 1, 2005.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Fentura Financial, Inc. Proxy Statement for its annual meeting of shareholders to be held April 26, 2005 and its Rule 14a-3 annual report are incorporated by reference into Parts II and III.

1

Fentura Financial, Inc.

2004 Annual Report on Form 10-K

Table Of Contents

2

PART I

ITEM 1. DESCRIPTION OF BUSINESS

The Company

        Fentura Financial, Inc. (the “Company” or “Fentura”) is a bank holding company headquartered in Fenton, Michigan. As of December 31, 2004, Fentura owned three banks, see “The Banks” below. All information in this Item 1 is as of December 31, 2004. The Company’s subsidiary banks operate seventeen community banking offices offering a full range of banking services principally to individuals, small business, and government entities throughout mid-Michigan and western Michigan. At the close of business on December 31, 2004, the Company had assets of $585 million, deposits of $491 million, and shareholders’ equity of $43 million. Trust assets under management totaled $158 million.

        Fentura was incorporated in 1987 to serve as the holding company of its sole subsidiary bank, The State Bank (“TSB” or one of the “Banks”). TSB traces its origins to its predecessor, The Commercial Savings Bank of Fenton, which was incorporated in 1898. See “The Banks”. On March 13, 2000 a second bank subsidiary, Davison State Bank (“DSB” or one of the “Banks”) commenced operation. On March 15, 2004, Fentura acquired West Michigan Community Bank (“WMCB” or one of the “Banks”).

        In August of 2000 Fentura converted from a bank holding company to a financial holding company registered with the Board of Governors of the Federal Reserve System under the Bank Holding Company Act and the Gramm-Leach-Bliley Act (the “GLB Act”). On January 13, 2004, the Company relinquished its financial holding company status. This was necessary in order to complete the acquisition of West Michigan Community Bank, which at that time did not meet the capital and other requirements for a bank subsidiary of a financial holding company. Relinquishing the financial holding company status had no adverse effect of any kind on Fentura’s operations. As a bank holding company, the Company has corporate power to engage in such activities as are permitted to business corporations under the Michigan Business Corporation Act, subject to the limitations of the Bank Holding Company Act and GLB Act and regulations of the Board of Governors of the Federal Reserve System. In general, the Bank Holding Company Act and regulations restrict the Company with respect to its own activities that are closely related to the business of banking. See “Supervision and Regulation.”

        The Company’s principal executive offices are located at 175 North Leroy, Fenton, Michigan 48430-0725, and its telephone number is (810) 750-8725.

The Banks

        TSB’s original predecessor was incorporated as a state banking corporation under the laws of Michigan on September 16, 1898 under the name “The Commercial Savings Bank of Fenton.” In 1931, it changed its name to State Savings Bank of Fenton, and in 1988 became The State Bank. For over 100 years TSB has been engaged in the general banking business in the Fenton, Michigan area. Its deposits are insured by the Federal Deposit Insurance Corporation (the “FDIC”), but it is not a member of the Federal Reserve System. As a state bank, it is subject to federal and state laws applicable to banks and to regulation and supervision by the FDIC and the Michigan Office of Financial and Insurance Services, Division of Financial Institutions. See “Supervision and Regulation.”

3

        DSB commenced operations on March 13, 2000, and is engaged in the general banking business in the Davison, Michigan area. Its deposits are insured by the Federal Deposit Insurance Corporation (the “FDIC”), but it is not a member of the Federal Reserve System. As a state bank, it is subject to federal and state laws applicable to banks and to regulation and supervision by the FDIC and the Michigan Office of Financial and Insurance Services, Division of Financial Institutions. See “Supervision and Regulation.”

        Fentura acquired West Michigan Community Bank on March 15, 2004. WMCB is engaged in the general banking business in Hudsonville, Michigan, and other portions of Ottawa County and western Kent County, Michigan. Its deposits are insured by the Federal Deposit Insurance Corporation (the “FDIC”), but it is not a member of the Federal Reserve System. As a state bank, it is subject to federal and state laws applicable to banks and to regulation and supervision by the FDIC and the Michigan Office of Financial and Insurance Services, Division of Financial Institutions. See “Supervision and Regulation.”

        All Banks are community-oriented providers of financial services engaged in the business of general commercial banking. Their activities include investing in state and federal securities, accepting demand deposits, savings and other time deposits, extending retail, commercial, consumer and real estate loans to individuals and businesses, providing safe deposit boxes and credit card services, transmitting funds and providing other services generally associated with full service commercial banking. Lending is focused on individuals and small businesses in the local markets served by the Banks. In addition, TSB and WMCB operate trust departments offering a full range of fiduciary services.

        TSB is headquartered in the City of Fenton, Michigan, and considers its primary service area to be portions of Genesee, Oakland, and Livingston counties in Michigan. As of December 31, 2004, TSB operated four offices and a operations center in the City of Fenton, Michigan, one office in the City of Linden, Michigan, one office in the Village of Holly, Michigan, three offices in the Township of Grand Blanc, Michigan, and one office in Brighton, Michigan. Its main office is located downtown Fenton.

        DSB is headquartered in the City of Davison, Michigan, and considers its primary service area to be portions of Genesee and Lapeer Counties. As of December 31, 2004, DSB operated two offices in the City of Davison, Michigan and one office in Goodrich, Michigan.

        WMCB is headquartered in the City of Hudsonville, Michigan, and considers its primary service areas to be portions of Kent and Ottawa counties. As of December 31, 2004, WMCB operated two offices in the City of Hudsonville, Michigan, one office in the City of Jenison, Michigan, one office in the City of Holland, Michigan and one office in the City of Grandville, Michigan.

        As of December 31, 2004, TSB employed 129 full time personnel, including 44 officers, and an additional 33 part time employees; DSB employed 14 full time personnel, including 3 officers, and an additional 11 part time employees; WMCB employed 37 full time personnel, including 14 officers, and an additional 11 part time employees. All Banks consider their employee relations to be excellent.

Competition

        The financial services industry is highly competitive. The Banks compete with other commercial banks, many of which are subsidiaries of bank holding companies, for loans, deposits, trust accounts, and other business on the basis of interest rates, fees, convenience and quality of service. The Banks also compete with a variety of other financial services organizations including savings and loan associations, finance companies, mortgage banking companies, brokerage firms, credit unions and other financial organizations. Many of the Banks’ competitors have substantially greater resources than the Banks.

4

Supervision and Regulation

        The following is a summary of certain statutes and regulations affecting the Company and the Banks. This summary is qualified in its entirety by such statutes and regulations. A change in applicable laws or regulations may have a material effect on the Company, the Banks and the business of the Company and the Banks.

General

        Financial institutions and their holding companies are extensively regulated under federal and state law. Consequently, the growth and earnings performance of the Company and the Banks can be affected not only by management decisions and general economic conditions, but also by the statutes administered by, and the regulations and policies of, various governmental regulatory authorities. Those authorities include, but are not limited to, the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”), the FDIC, the Commissioner of the Michigan Office of Financial and Insurance Services (“Commissioner”), the Internal Revenue Service, and state taxing authorities. The effect of such statutes, regulations and policies can be significant, and cannot be predicted with a high degree of certainty.

        Federal and state laws and regulations generally applicable to financial institutions and their holding companies regulate, among other things, the scope of business, investments, reserves against deposits, capital levels relative to operations, lending activities and practices, the nature and amount of collateral for loans, the establishment of branches, mergers, consolidations and dividends. The system of supervision and regulation applicable to the Company and the Banks establishes a comprehensive framework for their respective operations and is intended primarily for the protection of the FDIC’s deposit insurance funds, the depositors of the Banks, and the public, rather than shareholders of the Banks or the Company.

        Federal law and regulations establish supervisory standards applicable to the lending activities of the Banks, including internal controls, credit underwriting, loan documentation and loan-to-value ratios for loans secured by real property.

        The Company’s common stock is registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). It is therefore subject to the information, proxy solicitation, insider trading and other restrictions and requirements of the SEC under the Exchange Act. On July 30, 2002, President Bush signed into law the Sarbanes-Oxley Act of 2002. The Sarbanes-Oxley Act provides for numerous changes to the reporting, accounting, corporate governance and business practices of companies as well as financial and other professionals who have involvement with the U.S. public markets. The SEC continues to issue new and proposed rules implementing various provisions of the Sarbanes-Oxley Act.

The Company

        General.        In August of 2000, the Company became a financial holding company, within the meaning of the Gramm-Leach-Bliley Act of 1999 (“GLB Act”). On January 13, 2004, the Company relinquished its financial holding company status. This was necessary in order to complete the acquisition of West Michigan Community Bank, which at that time did not meet the capital and other requirements for a bank subsidiary of a financial holding company. Relinquishing the financial holding company status had no adverse effect of any kind on Fentura’s operations. The Company is registered with, and subject to regulation by, the Federal Reserve Board under the Bank Holding Company Act, as amended (the “BHCA”). Under the BHCA, the Company is subject to periodic examination by the Federal Reserve Board, and is required to file with the Federal Reserve Board periodic reports of its operations and such additional information as the Federal Reserve Board may require.

        In accordance with Federal Reserve Board policy, the Company is expected to act as a source of financial strength to the Banks and to commit resources to support the Banks in circumstances where the Company might not do so absent such policy. In addition, if the Commissioner deems a Bank’s capital to be impaired, the Commissioner may require the Bank to restore its capital by a special assessment upon the Company as the Bank’s sole shareholder. If the Company were to fail to pay any such assessment, the directors of the Bank would be required, under Michigan law, to sell the shares of the Bank’s stock owned by the Company to the highest bidder at either a public or private auction and use the proceeds of the sale to restore the Bank’s capital.

5

        Investments and Activities. In general, any direct or indirect acquisition by the Company of any voting shares of any bank which would result in the Company’s direct or indirect ownership or control of more than 5% of any class of voting shares of such bank, and any merger or consolidation of the Company with another financial holding company or bank holding company, will require the prior written approval of the Federal Reserve Board under the BHCA.

        The merger or consolidation of an existing bank subsidiary of the Company with another bank, or the acquisition by such a subsidiary of assets of another bank, or the assumption of liability by such a subsidiary to pay any deposits in another bank, will require the prior written approval of the responsible Federal depository institution regulatory agency under the Bank Merger Act. In addition, in certain such cases an application to, and the prior approval of, the Federal Reserve Board under the BHCA and/or the Commissioner under the Michigan Banking Code, may be required.

        With certain limited exceptions, the BHCA prohibits any bank company from engaging, either directly or indirectly through a subsidiary, in any activity other than managing or controlling banks unless the proposed non-banking activity is one that the Federal Reserve Board has determined to be so closely related to banking or managing or controlling banks as to be a proper incident thereto. Under current Federal Reserve Board regulations, such permissible non-banking activities include such things as mortgage banking, equipment leasing, securities brokerage, and consumer and commercial finance company operations. Well-capitalized and well-managed bank holding companies may engage de novo in certain types of non-banking activities without prior notice to, or approval of, the Federal Reserve Board, provided that written notice of the new activity is given to the Federal Reserve Board within 10 business days after the activity is commenced. If a bank holding company wishes to engage in a non-banking activity by acquiring a going concern, prior notice and/or prior approval will be required, depending upon the activities in which the company to be acquired is engaged, the size of the company to be acquired and the financial and managerial condition of the acquiring bank holding company.

        Eligible bank holding companies that elect to operate as financial holding companies may engage in, or own shares in companies engaged in, a wider range of non-banking activities, including securities and insurance activities and any other activity that the Federal Reserve Board, in consultation with the Secretary of the Treasury, determines by regulation or order is financial in nature, incidental to any such financial activity or complementary to any such financial activity and does not pose a substantial risk to the safety or soundness of depository institutions or the financial system generally. The Bank Holding Company Act generally does not place territorial restrictions on the domestic activities of non-bank subsidiaries of bank or financial holding companies.

        Capital Requirements. The Federal Reserve Board uses capital adequacy guidelines in its examination and regulation of bank holding companies. If capital falls below minimum guidelines, a bank holding company may, among other things, be denied approval to acquire or establish additional banks or non-bank businesses. These capital guidelines are comparable to those established by the regulatory authorities for the Bank’s discussed below.

        Dividends.        The Company is a corporation separate and distinct from the Banks. Most of the Company’s revenues are received by it in the form of dividends paid by the Banks. Thus, the Company’s ability to pay dividends to its shareholders is indirectly limited by statutory restrictions on the Banks’ ability to pay dividends described below. Further, in a policy statement, the Federal Reserve Board has expressed its view that a bank holding company experiencing earnings weaknesses should not pay cash dividends exceeding its net income or which can only be funded in ways that weaken the bank holding company’s financial health, such as by borrowing. Additionally, the Federal Reserve Board possesses enforcement powers over bank holding companies and their non-bank subsidiaries to prevent or remedy actions that represent unsafe or unsound practices or violations of applicable statutes and regulations. Among these powers is the ability to proscribe the payment of dividends by banks and bank holding companies. Similar enforcement powers over the Banks are possessed by the FDIC. The “prompt corrective action” provisions of federal law and regulation authorizes the Federal Reserve Board to restrict the payment of dividends by the Company for an insured bank which fails to meet specified capital levels.

6

        In addition to the restrictions on dividends imposed by the Federal Reserve Board, the Michigan Business Corporation Act provides that dividends may be legally declared or paid only if after the distribution a corporation, such as the Company, can pay its debts as they come due in the usual course of business and its total assets equal or exceed the sum of its liabilities plus the amount that would be needed to satisfy the preferential rights upon dissolution of any holders of preferred stock whose preferential rights are superior to those receiving the distribution.

The Banks

        General.        The Banks are Michigan banking corporations, and their deposit accounts are insured by the Bank Insurance Fund (the “BIF”) of the FDIC. As a BIF insured Michigan chartered banks, the Banks are subject to the examination, supervision, reporting and enforcement requirements of the Commissioner, as the chartering authority for Michigan banks, and the FDIC, as administrator of BIF. These agencies and the federal and state laws applicable to the Banks and their operations, extensively regulate various aspects of the banking business including, among other things, permissible types and amounts of loans, investments and other activities, capital adequacy, branching, interest rates on loans and on deposits, the maintenance of non-interest bearing reserves on deposit accounts, and the safety and soundness of banking practices.

        Deposit Insurance. As FDIC-insured institutions, the Banks are required to pay deposit insurance premium assessments to the FDIC. The FDIC has adopted a risk-based assessment system under which all insured depository institutions are placed into one of nine categories and assessed insurance premiums, based upon their respective levels of capital and results of supervisory evaluation. Institutions classified as well-capitalized (as defined by the FDIC) and considered healthy pay the lowest premium while institutions that are less than adequately capitalized (as defined by the FDIC) and considered of substantial supervisory concern pay the highest premium. Risk classification of all insured institutions is made by the FDIC for each semi-annual assessment period.

        The Federal Deposit Insurance Act (“FDIA”) requires the FDIC to establish assessment rates at levels which will maintain the Deposit Insurance Fund at a mandated reserve ratio of not less than 1.25% of estimated insured deposits. For several years, the BIF reserve ratio has been at or above the mandated ratio and assessments have ranged from 0% of deposits for institutions in the lowest risk category to .27% of deposits in the highest risk category.

        FICO Assessments. The Banks, as members of the BIF, are subject to assessments to cover the payments on outstanding obligations of the Financing Corporation (“FICO”). FICO was created to finance the recapitalization of the Federal Savings and Loan Insurance Corporation, the predecessor to the FDIC’s Savings Association Insurance Fund (the “SAIF”) which insures the deposits of thrift institutions. From now until the maturity of the outstanding FICO obligations in 2019, BIF members and SAIF members will share the cost of the interest on the FICO bonds on a pro rata basis. It is estimated that FICO assessments during this period will be less than 0.025% of deposits.

        Commissioner Assessments. Michigan banks are required to pay supervisory fees to the Commissioner to fund the operations of the Commissioner. The amount of supervisory fees paid by a bank is based upon the bank’s total assets, as reported to the Commissioner.

        Capital Requirements. The FDIC has established the following minimum capital standards for state-chartered, FDIC insured non-member banks, such as the Banks: a leverage requirement consisting of a minimum ratio of Tier 1 capital to total average assets of 3% for the most highly-rated banks with minimum requirements of 4% to 5% for all others, and a risk-based capital requirement consisting of a minimum ratio of total capital to total risk-weighted assets of 8%, at least one-half of which must be Tier 1 capital. Tier 1 capital consists principally of shareholders’ equity. These capital requirements are minimum requirements. Higher capital levels will be required if warranted by the particular circumstances or risk profiles of individual institutions.

7

        Federal law provides the federal banking regulators with broad power to take prompt corrective action to resolve the problems of undercapitalized institutions. The extent of the regulators’ powers depends on whether the institution in question is “well capitalized,” “adequately capitalized,” “undercapitalized,” “significantly undercapitalized,” or “critically undercapitalized.” Federal regulations define these capital categories as follows:

        As of December 31, 2004 each of the Banks’ ratios exceeded minimum requirements for the well capitalized category.

        Depending upon the capital category to which an institution is assigned, the regulators’ corrective powers include: requiring the submission of a capital restoration plan; placing limits on asset growth and restrictions on activities; requiring the institution to issue additional capital stock (including additional voting stock) or to be acquired; restricting transactions with affiliates; restricting the interest rate the institution may pay on deposits; ordering a new election of directors of the institution; requiring that senior executive officers or directors be dismissed; prohibiting the institution from accepting deposits from correspondent banks; requiring the institution to divest certain subsidiaries; prohibiting the payment of principal or interest on subordinated debt; and ultimately, appointing a receiver for the institution.

        In general, a depository institution may be reclassified to a lower category than is indicated by its capital levels if the appropriate federal depository institution regulatory agency determines the institution to be otherwise in an unsafe or unsound condition or to be engaged in an unsafe or unsound practice. This could include a failure by the institution, following receipt of a less-than-satisfactory rating on its most recent examination report, to correct the deficiency.

        Dividends.        Under Michigan law, the Banks are restricted as to the maximum amount of dividends they may pay on their common stock. The Banks may not pay dividends except out of net income after deducting their losses and bad debts. A Michigan state bank may not declare or pay a dividend unless the bank will have surplus amounting to at least 20% of its capital after the payment of the dividend.

        Federal law generally prohibits a depository institution from making any capital distribution (including payment of a dividend) or paying any management fee to its holding company if the depository institution would thereafter be undercapitalized. The FDIC may prevent an insured bank from paying dividends if the bank is in default of payment of any assessment due to the FDIC. In addition, the FDIC may prohibit the payment of dividends by an insured bank, if such payment is determined, by reason of the financial condition of the bank, to be an unsafe and unsound banking practice.

8

        Insider Transactions. The Banks are subject to certain restrictions imposed by the Federal Reserve Act on any extensions of credit to the Company or its subsidiaries, on investments in the stock or other securities of the Company or its subsidiaries and the acceptance of the stock or other securities of the Company or its subsidiaries as collateral for loans. Certain limitations and reporting requirements are also placed on extensions of credit by the Banks to their directors and officers, to directors and officers of the Company and its subsidiaries, to principal shareholders of the Company, and to “related interests” of such directors, officers and principal shareholders. In addition, federal law and regulations may affect the terms upon which any person becoming a director or officer of the Company or one of its subsidiaries or a principal shareholder of the Company may obtain credit from banks with which the Banks maintain a correspondent relationship.

        Safety and Soundness Standards. The federal banking agencies have adopted guidelines to promote the safety and soundness of federally insured depository institutions. These guidelines establish standards for internal controls, information systems, internal audit systems, loan documentation, credit underwriting, interest rate exposure, asset growth, compensation, fees and benefits, asset quality and earnings.

        Investments and Other Activities. Under federal law and FDIC regulations, FDIC -insured state banks are prohibited, subject to certain exceptions, from making or retaining equity investments of a type, or in an amount, that are not permissible for a national bank. Federal law, as implemented by FDIC regulations, also prohibits FDIC insured state banks and their subsidiaries, subject to certain exceptions, from engaging as principal in any activity that is not permitted for a national bank or its subsidiary, respectively, unless the bank meets, and continues to meet, its minimum regulatory capital requirements and the FDIC determines the activity would not pose a significant risk to the deposit insurance fund of which the bank is a member. Impermissible investments and activities must be divested or discontinued within certain time frames set by the FDIC in accordance with federal law. These restrictions are not currently expected to have a material impact on the operations of the Banks.

        Consumer Protection Laws. The Banks’ businesses include making a variety of types of loans to individuals. In making these loans, the Banks are subject to State usury and regulatory laws and to various federal statutes, including the privacy of consumer financial information provisions of the Gramm-Leach-Bliley Act and regulations promulgated thereunder, the Equal Credit Opportunity Act, the Fair Credit Reporting Act, the Truth in Lending Act, the Real Estate Settlement Procedures Act, and the Home Mortgage Disclosure Act, and the regulations promulgated thereunder, which prohibit discrimination, specify disclosures to be made to borrowers regarding credit and settlement costs, and regulate the mortgage loan servicing activities of the Banks, including the maintenance and operation of escrow accounts and the transfer of mortgage loan servicing. In receiving deposits, the Banks are subject to extensive regulation under State and federal law and regulations, including the Truth in Savings Act, the Expedited Funds Availability Act, the Bank Secrecy Act, the Electronic Funds Transfer Act, and the Federal Deposit Insurance Act. Violation of these laws could result in the imposition of significant damages and fines upon the Bank and its directors and officers.

        Branching Authority. Michigan banks, such as the Banks, have the authority under Michigan law to establish branches anywhere in the State of Michigan, subject to receipt of all required regulatory approvals. Banks may establish interstate branch networks through acquisitions of other banks. The establishment of de novo interstate branches or the acquisition of individual branches of a bank in another state (rather than the acquisition of an out-of-state bank in its entirety) is allowed only if specifically authorized by state law.

        Michigan permits both U.S. and non-U.S. banks to establish branch offices in Michigan. The Michigan Banking Code permits, in appropriate circumstances and with the approval of the Michigan Office of Financial and Insurance Services, Division of Financial Institutions, (1) acquisition of Michigan banks by FDIC-insured banks, savings banks or savings and loan associations located in other states, (2) sale by a Michigan bank of branches to an FDIC-insured bank, savings bank or savings and loan association located in a state in which a Michigan bank could purchase branches of the purchasing entity, (3) consolidation of Michigan banks and FDIC-insured banks, savings banks or savings and loan associations located in other states having laws permitting such consolidation, (4) establishment of branches in Michigan by FDIC-insured banks located in other states, the District of Columbia or U.S. territories or protectorates having laws permitting a Michigan bank to establish a branch in such jurisdiction, and (5) establishment by foreign banks of branches located in Michigan.

9

ITEM 2. DESCRIPTION OF PROPERTY

        The Company’s executive offices are located at 175 North Leroy Street, Fenton, Michigan, which is also the main office of The State Bank. The State Bank also has the following branches in Fenton: a branch at 15095 Silver Parkway, a branch at 18005 Silver Parkway, and a loan office at 101 North Leroy Street. The State Bank’s other branches are located in Linden, Michigan, at 107 Main Street; Holly, Michigan, at 4043 Grange Hall Road; Grand Blanc, Michigan at 7606 S Saginaw, at 8185 Holly Road, 8245 Holly Road; and Brighton, Michigan at 315 E Grand River. The State Bank has an operations center at 3202 Owen Road in Fenton, Michigan. Davison State Bank is headquartered in Davison, Michigan, at 625 S. State with one branch location at 8503 Davison Road and another branch location is 7521 S State Street in Goodrich, Michigan. West Michigan Community Bank is headquartered in Hudsonville, Michigan at 5367 School Ave and a branch at 3467 Kelly Street in Hudsonville, Michigan. West Michigan Community Bank’s other branches are located in Jenison, Michigan at 437 Baldwin Street; Holland, Michigan at 81 E. 8^th Street and Grandville, Michigan at 4471 Wilson Avenue SW. The Company owns all of its properties with the exception of the Holly, the branch at 8503 Davison Road in Davison, the branch at 8185 Holly Road in Grand Blanc, the branch at 8245 Holly Road in Grand Blanc, the branch at 18005 Silver Parkway in Fenton, Brighton, Goodrich, Holland and Grandville facilities which are leased from third parties.

        All properties have maintenance contracts and are maintained in good condition.

ITEM 3. LEGAL PROCEEDINGS

        From time to time, the Company and its subsidiaries are parties to various legal proceedings incident to their business. At December 31, 2004, there were no legal proceedings which management anticipates would have a material adverse effect on the Company.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

        No matters were submitted during the fourth quarter of the year covered by this report to a vote of security holders through the solicitation of proxies or otherwise.

ADDITIONAL ITEM — EXECUTIVE OFFICERS OF REGISTRANT

        The following information concerning executive officers of the Company has been omitted from the Registrant’s proxy statement pursuant Instruction 3 to Regulation S-K, Item 401(b).

        Officers of the Company are appointed annually by the Board of Directors of the Company and serve at the pleasure of the Board of Directors. Certain of the officers named below are appointed annually by the Board of Directors of one or the other of the Banks and serve at the pleasure of the Board of the Bank that appointed them. The Bank officers are included in the listing of executive officers of the Company because of the nature of the office they hold. Information concerning these executive officers is given below:

10

Ronald L. Justice (age 40) is the Senior Vice President and Secretary of the Company since 1999 and prior to that served as Chief Financial Officer of the Company and the affiliates banks and Vice President since 1995. Prior to that Mr. Justice held other positions with The State Bank.

John A Emmendorfer (age 42) is President and CEO of Davison State Bank, and was appointed as a Senior Vice President of the Company on December 1, 2004. Prior to being named President and CEO of Davison State Bank in 2000, Mr. Emmendorfer held various lending capacities at The State Bank since 1988.

Dennis E. Leyder (age 51) was named Executive Vice President of The State Bank and was appointed Senior Vice President of the Company on December 1, 2004. In his new capacity at The State Bank, he is responsible for all retail banking, marketing, trust and investment management. Mr Leyder has over 23 years of banking experience, all in Genesee County.

Holly J Pingatore (age 47) was named Senior Vice President of the Company on December 1, 2004. Her responsibilities include data processing, bank operations, product support, and network services. Prior to such appointment, she was Senior Vice President of The State Bank. Prior to joining The State Bank in 1999, Ms. Pingatore served in various capacities at a large Michigan based regional bank.

Douglas J. Kelley (age 36)was appointed Chief Financial Officer of the Cocmpany in 2003 and was appointed Senior Vice President of the Company on December 1, 2004 Prior to being named Chief Financial Officer, he served as Controller and CFO of The State Bank and Davison State Bank since 2001. Prior to joining our banks, Mr. Kelley was an Assistant Vice President and Accounting Officer with Citizens Bank. Mr Kelley has over 15 years of banking experience .

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS
AND ISSUER PURCHASES OF EQUITY SECURITIES

        The market and dividend information required by this item appears under the caption “Fentura Financial, Inc. Common Stock” and Table 16 on page 54 under the title “MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS”, of the Company’s 2004 Rule 14a-3 annual report, and is incorporated herein by reference.

        The holders of record information required by this item appears under the caption “Stock Ownership Information” on page 56 of the Company’s 2004 Rule 14a-3 Annual Report, and is incorporated herein by reference.

ITEM 6. SELECTED FINANCIAL DATA

        The information required by this item appears under the title “MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS”, appearing in Table 1 on page 36 of the Company’s 2004 Rule 14a-3 annual report, and is incorporated herein by reference.

11

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

        The information required by this item appears under the title “MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS”, appearing on pages 36 through 55 of the Company’s 2004 Rule 14a-3 annual report, and is incorporated herein by reference.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

        The information required by this item appears under the headings “Liquidity and Interest Rate Risk Management” on pages 50 and 51 and “Quantitative and Qualitative Disclosure About Market Risk” on page 52 and 54 under the title “MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS” of the Company’s 2004 Rule 14a-3 annual report, and is incorporated herein by reference.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

        The consolidated financial statements of the Company and Report of Crowe Chizek and Company LLC, Independent Registered Public Accounting Firm appear on pages 1 through 35 of the Financial Statements portion of the Company’s 2004 Rule 14a-3 annual report, and are incorporated herein by reference.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

      None

ITEM 9A CONTROLS AND PROCEDURES

      (a) Evaluation of Disclosure Controls and Procedures.

        The Company’s Chief Executive Officer and the Chief Financial Officer, after evaluating the effectiveness of the Company’s disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15(d)-15(e)) as of the end of the period covered by this Form 10-K Annual Report have concluded that the Company’s disclosure controls and procedures were adequate and effective to ensure that material information relating to the Company would be made known to them by others within the Company, particularly during the period in which this Form 10-K Annual Report was being prepared.

      (b) Changes in Internal Controls.

        During the fourth quarter ended December 31, 2004, there have been no changes in the Company’s internal control over financial reporting that have materially affected or are reasonably likely to materially affect the Company’s internal control over financial reporting.

ITEM 9B OTHER INFORMATION

      None

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

        The Company’s Executive officers are identified in “Additional Item” in Part I of this Report on Form 10-K. The other information required by this item appears under the captions “2005 Election of Directors,” “The Corporation’s Board of Directors,” “Committees of the Corporation Board,” and “Compliance with Section 16 Reporting” on pages 3, 5, 6, 7, 8, and 15, respectively, of the Company’s 2005 Notice of Annual Shareholders Meeting and Proxy Statement, and is incorporated herein by reference.

12

        The Board of Directors of the Company has determined that Peggy L. Haw-Jury, a director and member of the Audit Committee, qualifies as an “Audit Committee financial expert” as defined in rules adopted by the Securities and Exchange Commission pursuant to the Sarbanes-Oxley Act of 2002.

        The Board of Directors of the Company has adopted a Code of Ethics, which details principles and responsibilities governing ethical conduct for all Company directors and executive officers. The Code of Ethics was filed as an Exhibit to the Company’s 2002 Annual Report on Form 10-K.

ITEM 11. EXECUTIVE COMPENSATION

        The information required by this item appears under the captions “Directors’ Compensation,” “Executive Compensation,” “Retirement and Change in Control Arrangements” and “Shareholder Return Performance Graph” on pages 6, 9, 11 and 12 and 14, respectively, of the Company’s 2005 Notice of Annual Shareholders Meeting and Proxy Statement, and is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

        The information required by this item appears under the caption “Stock Ownership of Directors, Executive Officers and Certain Major Shareholders” on page 3 of the Company’s 2005 Notice of Annual Shareholders Meeting and Proxy Statement, and is incorporated herein by reference.

        Securities Authorized for Issuance Under Equity Compensation Plans. The Company had the following equity compensation plans at December 31, 2004:

EQUITY COMPENSATION PLAN INFORMATION

        These equity compensation plans are more fully described in Note 11 to the Consolidated Financial Statements.

13

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

        The information required by this item appears under the caption “Other Information — Transactions with Certain Interested Persons” on page 15 of the Company’s 2005 Notice of Annual Shareholders Meeting and Proxy Statement, and is incorporated herein by reference.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

        The information required by this item appears under the caption “Relationship with Independent Public Accountants” on page 12 and 13 of the Company’s 2005 Notice of Annual Shareholders Meeting and Proxy Statement and is here incorporated by reference.

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

14

Signatures

        In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, dated March 28, 2005.

In accordance with the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Each director of the Registrant, whose signature appears below, hereby appoints Forrest A. Shook and Donald L. Grill, and each of them severally, as his or her attorney-in-fact, to sign his or her name and on his or her behalf, as a director of the Registrant, and to file with the Commission any and all amendments to this report on Form 10-K.

15

FENTURA FINANCIAL, INC.
2004 Annual Report on Form 10-K
EXHIBIT INDEX

16

10.10

Form of Severance Compensation Agreement between the Registrant and certain executives. The Registrant has entered into Severance Compensation Agreements with Mr. Ronald Justice and Mr. Robert Sewick.

10.11

Form of Incentive Supplemental Executive Retirement Agreement The Registrant has entered into Incentive Supplement Executive Retirement Agreements with Mr. Donald Grill and Mr. Robert Sewick

10.12

Nonqualified Deferred Compensation Plan.

10.13

Fentura Bancorp, Inc. Employee Deferred Compensation and Stock Ownership Plan.

13

Rule 14a-3 Annual Report to Security Holders (This report, except for those portions which are expressly incorporated by reference in this filing, is furnished for the information of the Securities and Exchange Commission and is not deemed filed as a part of this Report)

14

Code of Ethics for Directors and Executive Officers (Incorporated by reference to Exhibit 14 to the Form 10-K filed on March 27, 2003)

21.1

Subsidiaries of the Registrant (Filed herewith)

23.1

Consent of Independent Accountants (Filed herewith)

24

Powers of Attorney. Contained on the signature page of this report.

31.1

Certificate of President and Chief Executive Officer of Fentura Financial, Inc. pursuant to 15 U.S.C. Section 7241, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2

Certificate of Chief Financial Officer of Fentura Financial, Inc. pursuant to 15 U.S.C. Section 7241, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1

Certificate of Chief Executive Office and Chief Financial Officer of Fentura Financial, Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

17

EXHIBIT 10.10

SEVERANCE COMPENSATION AGREEMENT

        THIS SEVERANCE COMPENSATION AGREEMENT (the "Agreement"), has been made on ____________________ by FENTURA BANCORP, INC., a Michigan corporation (the "Company"), THE STATE BANK, (the "Bank") and ____________________, an individual (the "Executive").

BACKGROUND STATEMENT:

        The Executive is a principal officer of the Bank and the Company and has 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 of 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 of Control.

        1.       Definitions. The following words and phrases have the folbwing meanings:

c)

“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.

d)

“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.

e)

“Good Reason” means any of the following, as determined by the Executive in his discretion: (i) the assignment to the Executive by the Bank or the Company of any duties inconsistent with his position, duties, responsibilities and status 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 offices as in effect immediately prior to a Change in Control; or (ii) the Bank or the Company requiring Executive to be based anywhere other than within fifteen (15) miles of his present office location, or to travel on business of the Bank to an extent substantially greater than Executive’s present business travel obligations; or (iii) the failure by the Company to obtain the assumption of this Agreement as contemplated in Section 6 hereof. If any of the foregoing result from, or follow, a termination of employment for Cause, then Good Reason will not have occurred.

-2-

        2.       Income Protection Benefits. If the Executive is an employee of the Bank or the Company when a Change in Control occurs, and the Executive’s employment is thereafter terminated without Cause either by the Bank or the Company, or by the Executive for Good Reason, or by any party because of the Executive’s death or Disability, then:

-3-

d)

The Bank and/or the Company shall provide to the Executive, at its expense, hospital and medical insurance coverage of the same or equivalent scope as he was covered by immediately prior to termination of his employment for a period of 5 years after the Executive’s termination of employment.

        3.              Maximum Benefits Upon Change of Control. If the Bank’s usual certified public accountants determine that any payment by the Bank or the Company to or for the benefit of the Executive (whether paid or payable pursuant to the terms of this Agreement or otherwise) (the “Payment”) would be nondeductible by the Bank or the Company for Federal Income Tax purposes because of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code), then the aggregate present value of amounts payable to or for the benefit of the Executive pursuant to this Agreement (the “Agreement Payments”) shall be reduced (but not below zero) to the Reduced Amount. The “Reduced Amount” means an amount expressed in present value, determined in accordance with Section 280G(d)(4) of the Code, which maximizes the present value of all Agreement Payments without causing any Payment to be nondeductible by the Bank or the Company because of Section 280G of the Code.

        4.       Term. Unless earlier terminated by mutual agreement of the Company and the Executive, this Agreement shall terminate upon the earliest of (a) the termination of the Executive’s employment with the Bank and the Company for any reason prior to a Change in Control; or (b) five (5) years from the date of a Change in Control. Obligations under Section 2 of this Agreement created prior to termination shall survive termination.

        5.       Termination Prior To Change in Control. Notwithstanding anything in this agreement to the contrary, if a Change of Control occurs and (i) if the Executive’semployment with the Company or the Bank is terminated prior to the date on which Change of Control occurs, and if the termination of employment (a) was at the request or suggestion of a 3rd party who has taken steps reasonably caculated to effect the Change of Control or (b) otherwise arose in connection with or in anticipation of the Change of Control, or (ii) Executive has terminated his employment with Company and/or Bank for Good Cause prior to Change of Control, then Executive shall be entitled to the Income Protection Benefits and all other rights and privileges provided by this Agreement.

        6.       Successors, Binding Agreements.

-4-

b)

The Bank and the Company each hereby guarantee the timely payment and performance when due, of the other’s obligations under this Agreement.

c)

This Agreement shall inure to the benefit of and be enforceable by the Executive’s personal and legal representatives, executives, administrators, successors, heirs, distributes, devisees and legatees.

        7.       Notices. Notices under this Agreement shall be in writing and shall be deemed given when hand delivered or three (3) days after being mailed by United States registered or certified mail, return receipt requested, postage prepaid, as follows:

        or to such other address as either party may designate.

        8.       At Will Preserved. This Agreement is intended only to provide an economic benefit for Executive if his employment with the Bank or the Company is terminated under the circumstances described herein. Even though this economic benefit may be payable, Executive’s employment with the Bank and the Company shall continue to be “at will,” and the Bank, the Company or the Executive may terminate Executive’s employment with the Bank or the Company at any time, with or without cause. Further, the existence of this Agreement and the economic benefits herein provided shall not contradict, override, supersede or in any way detract ~m or affect the “at will” employment status of any other employee of the Bank or the Company. The employment terms set forth in the Bank’s employee handbook or employee manual, as they may be in effect from time to time, shall control.

        9.       Miscellaneous.

-5-

b)

Validity. The invalidity or unenforceability of any provision of this Agreement shall not affect the vahdity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.

c)

Governing Law. This Agreement shall be governed in all respects according to the laws of the State of Michigan.

COMPANY FENTURA BANCORP, INC., a Michigan corporation By __________________________________ BANK: THE STATE BANK By __________________________________ EXECUTIVE: ______________________________________

-6-

EXHIBIT 10.11

THE STATE BANK
INCENTIVE SUPPLEMENTAL EXECUTIVE
RETIREMENT AGREEMENT

        THIS AGREEMENT, effective __________________, is made this ____ day of __________________, by and between _____________________, ____________________________, located in ________________________ (the “Bank”), and __________________________ (the “Executive”).

INTRODUCTION

        To encourage the Executive to remain an employee of the Bank, the Bank is willing to provide supplemental retirement income to the Executive as set forth herein. The Bank will pay the benefits from its general assets.

AGREEMENT

        The Executive and the Bank agree as follows:

Article I
Definitions

1.1.2 "Code" means the Internal Revenue Code of 1986, as amended.

1.1.3 "Company" means Fentura Bancorp, Inc., a registered bank holding company under the Bank Holding Company Act of 1956, as amended.

1.1.4 “Disability”means, if the Executive is covered by a Bank sponsored disability policy, total disability as defined in such policy without regard to any waiting period. If the Executive is not covered by such a policy, Disability means the Executive suffering a sickness, accident or injury which, in the judgment of a physician satisfactory to the Bank, prevents the Executive from performing substantially all of the Executive’s normal duties for the Bank. As a condition to receiving any Disability benefits, the Bank may require the Executive to submit to such physical or mental evaluations and tests, as the Bank’s Board of Directors deems appropriate.

1.1.5 “Extraordinary Items”means those items recognized by Generally Accepted Accounting Principles as extraordinary that substantially affect shareholder equity and/or the Bank’s assets. Examples of such items are stock redemptions, mergers, acquisitions, stock splits and other items of that nature. The Bank’s Board of Directors, in its sole discretion, may designate other items of income or expense as extraordinary.

1.1.6 "Normal Retirement Age" means the Executive's 65th birthday.

1.1.7 “Normal Retirement Date”means the later of the Normal Retirement Age or Termination of Employment.

1.1.8 "Plan Year" means the calendar year.

1.1.9 “Projected Final Salary”means the gross annual base salary payable to the Executive at the Normal Retirement Date. The Projected Final Salary is calculated by taking the Executive’s current annual salary of $115,000 and increasing it annually by 3% until the Normal Retirement Date.

1.1.10 “Return On Equity”means the Bank’s after tax net income at the end of the most recent fiscal year, adjusted for Extraordinary Items, divided by the Bank’s average equity for the fiscal year, as determined by the Bank’s independent auditor based upon certified financial statements for the pertinent year.

1.1.11 “Targeted Benefit”means an annual benefit equal to 20% of Projected Final Salary payable monthly for fifteen (15) years.

1.1.12 “Termination of Employment”means the Executive ceasing to be employed by the Bank for any reason whatsoever, voluntary or involuntary, other than by reason of an approved leave of absence.

-2-

Article 2
Annual Incentive Award

Incentive Award Percentage    Prior Year ROE Performance

-3-

Article 3
Retirement Account

Article 4
Lifetime Benefits

-4-

4.2.1 Amount of Benefit. The benefit under this Section 4,2 is the Retirement Account balance at Termination of Employment multiplied by the applicable percentage from the following table based on the Executive’s age:

Executive's Age at Termination of Employment 55 56 57 58 59 60

Applicable Percentage 50% 60% 70% 80% 90% 100%

4.2.2 Payment of Benefit. The Bank shall pay the benefit to the Executive in one hundred and eighty (180) equal monthly installments commencing on the first day of the month following Termination of Employment or, if elected by the participant before the first payment is payable hereunder, any later date but in no event later than the Normal Retirement Date. On December 31 of each Plan Year, the Bank shall credit interest at the annual rate equal to the long-term corporate bond rate determined as of the Termination of Employment, compounded monthly, on the remaining Retirement Account balance during any applicable installment period.

4.3 Disability Benefit. If theExecutive terminates employment due to Disability prior to the Normal Retirement Age, the Bank shall pay to the Executive the benefit described in this Section 4.3 in lieu of any other benefit under this Agreement.

4.3.1 Amount of Benefit. The benefit under this Section 4.3 is the Retirement Account balance at Termination of Employment.

4.3.2 Payment of Benefit. The Bank shall pay the benefit to the Executive in one hundred and eighty (180) equal monthly installments commencing on the first day of the month following Termination of Employment or, if elected by the participant before the first payment is payable hereunder, any later date but in no event later than the Normal Retirement Date. On December 31 of each Plan Year, the Bank shall credit interest at an annual rate equal to the long-term corporate bond rate determined as of Termination of Employment, compounded monthly, on the remaining Retirement Account balance during any applicable installment period.

4.4 Change of Control Benefit. Upon a Change of Control, the Bank shall pay to the Executive the benefit described in this Section 4.4 in lieu of any other benefit under this Agreement.

-5-

4.4.1 Amount of Benefit. The benefit under this Section 4.4 is the benefit calculated under Section 4.1 as if the date of the Change of Control were the Normal Retirement Date.

4.4.2 Payment of Benefit. The Bank shall pay the benefit to the Executive in a lump sum within sixty (60) days after Termination of Employment. Such payment amount shall be grossed up to cover all personal income taxes.

Article 5
Death Benefits

Article 6
Beneficiaries

-6-

6.2Facility of Payment. If a benefit is payable to a minor, to a person declared incompetent, or to a person incapable of handling the disposition of his or her property, the Bank may pay such benefit to the guardian, legal representative or person having the care or custody of such minor, incompetent person or incapable person. The Bank may require proof of incompetence, minority or guardianship, as it may deem appropriate prior to distribution of the benefit. Such distribution shall completely discharge the Bank from all liability with respect to such benefit.

Article 7
General Limitations

-7-

Article 8
Claims and Review Procedures

Article 9
Amendments and Termination

        This Agreement may be amended or terminated only by a written agreement signed by the Bank and the Executive.

Article 10
Miscellaneous

-8-

10.3 Non-Transferability. Benefits under this Agreement cannot be sold, transferred, assigned, pledged, attached or encumbered in any manner.

10.4 Reorganization. The Bank shall not merge or consolidate into or with another company, or reorganize, or sell substantially all of its assets to another company, firm, or person unless such succeeding or continuing company, firm, or person agrees to assume and discharge the obligations of the Bank under this Agreement. Upon the occurrence of such event, the term “Bank” as used in this Agreement shall bedeemed to refer to the successor or survivor company.

10.5 Tax Withholding. The Bank shall withhold any taxes that are required to be withheld from the benefits provided under this Agreement.

10.6 Applicable Law. The Agreement and all rights hereunder shall be governed by the laws of the State of Michigan, except to the extent preempted by the laws of the United States of America.

10.7 Unfunded Arrangement. The Executive and beneficiary are general unsecured creditors of the Bank for the payment of benefits under this Agreement. The benefits represent the mere promise by the Bank to pay such benefits. The rights to benefits are not subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge. Encumbrance, attachment, or garnishment by creditors. Any insuranceon the Executive’s life purchased by the Bank under this Agreement is a general asset of the Bank towhich the Executive and beneficiary have no preferred or secured claim.

10.8 Entire Agreement. This Agreement constitutes the entire agreement between the Bank and the Executive as to the subject matter hereof. No rights are granted to the Executive by virtue of this Agreement other than those specifically set forth herein.

-9-

EXHIBIT 10.12

FENTURA FINANCIAL, INC.
NONQUALIFIED DEFERRED COMPENSATION PLAN

        Effective January 1, 2004, Fentura Financial, Inc., a Michigan corporation, (the “Company”) hereby adopts the Fentura Financial, Inc. Nonqualified Deferred Compensation Plan (the ‘Plan”) for the purpose of providing deferred compensation to certain officers of the Company and its affiliates.

1. Administration

        The Plan shall be authorized by the Company’s Board of Directors and administered by the Board’s Compensation Committee (hereinafter “Committee”). Subject to the provisions of the Plan, the Committee shall have exclusive power to determine the amount of deferred compensation to be granted hereunder, the officers eligible for grants and the time or times when deferred compensation will be granted.

        The Committee shall have authority to interpret the Plan, to adopt and revise rules and regulations relating to the Plan, to determine the conditions subject to which any deferred compensation may be made or payable, and to make any other determinations which it believes necessary or advisable for the administration of the Plan. Determinations by the Committee shall be made by majority vote and shall be final and binding on all parties with respect to all matters relating to the Plan

2. Grants

        Deferred compensation shall be granted in the Committee’s sole discretion to such officers of the Company and its affiliates who shall hereafter be referred to as the “Participant,” in accordance with the following method. The Committee will review the financial performance of the Company and its affiliates on an annual basis following the end of (he calendar year. Deferred compensation may then be granted under the Plan in an amount of up to 5% of a Participant’s annual compensation. The percentage may vary from Participant o Participant and from year to year in the sole discretion of the Committee.

3. Account

        Deferred compensation granted to the Participant under the Plan shall be credited to a deferred compensation account (the “Account”) established and maintained for such Participant. The Account shall be the record of deferred compensation granted to him under the Plan, is solely for accounting purposes and shall not require a segregation of any Company assets. The Account shall be valued by the Committee in the manner provided in Section 6.

4. Vesting and Forfeiture of Deferred Compensation

        (a)        The Participant Shall vest in his Account according to the following schedule:

        (b)        Solely for purposes of determining vesting under the Plan, the Participant shall receive one Year of Service Credit for each year of service credited under the Fentura Financial, Inc. Employee Deferred Compensation and Stock Ownership Plan, including service earned prior to the Plan’s effective data

        (c)        Notwithstanding the provisions of Paragraph (a) above, all deferred compensation credited to a Participant’s Account shall be forfeited and of no value and void, arid no payment whatsoever shall be owing to the Participant in the event the Participant: (i) is convicted of or pleads no contest to either a felony or a misdemeanor showing moral turpitude; (ii) violates the Company’s Code of Conduct; (iii) violates the Company’s Conflict of Interest Policy; (iv) violates the Company’s Confidentiality and Shareholder Protection Agreement; (v) continues to perform his duties in an unacceptable manner alter receiving a thirty day written notice of his deficiencies; or (vi) engages in conduct that materially injures the Company. In addition, in the event payments have begun under the Plan, all remaining unpaid amounts shall be forfeited upon the occurrence of any of the foregoing events.

        (d)        Death or disability of the Participant shall not trigger full vesting.

5. Payment for Deferred Compensation

        (a)        Upon the termination of employment of the Participant and if the Participant has not forfeited his Account under Paragraph 4(c) above, the Participant shall be entitled to receive the vested amount in his Account in accordance with 5(b) below.

        (b)        Payment to the Participant of the amount set forth in paragraph 5(a) above will be made in equal annual installments each calendar year over a period of 10 years.

        Upon the death of the Participant, payment will be made, according to Paragraph 7 below, at the end of the calendar year of the Participant’s death.

        For reasons other than death, including disability, payment will be made or commence within 120 days after the end of the calendar year following the later of the date the Participant: (i) attains age 65; or (ii) terminates employment.

-2-

        The Committee shall have the sole discretion to deviate from the foregoing payment terms on a case by case basis.

6. Valuation of Account

        The deferred compensation credited w an Account shall be credited with interest at the end of each calendar year based on the U.S. Treasury 5 year rate in effect as of the end of said year. An annual statement will be issued to the Participant within a reasonable rime after the end of each calendar year which discloses the value and remaining balance of the Account.

7. Transferability

        The deferred compensation credited to the Account and any rights and privileges pertaining thereto, may not be transferred, assigned, pledged or hypothecated in any manner, by operation of law or otherwise, other than by will or by the laws of descent and distribution, and shall not be subject to execution, attachment or similar process. If the Participant dies before the payment of all benefits under this Plan, the Company shall pay to his designated beneficiary the unpaid vested balance in the Account according to the same payment terms and payout period as were applicable to the Participant. If the designated beneficiary becomes entitled to payments hereunder and thereafter dies before all of the payments have been made by the Company, then the remaining payments shall be made to the estate of such designated beneficiary. The beneficiary referred to in this paragraph may be designated or changed by the Participant (without the consent of any prior beneficiary) on a form provided to the Company by the Participant before his death. If no such beneficiary shall have been designated, or if no designated beneficiary shall survive the Participant, the payment shall be made to the Participant’s estate.

8. Withholding

        The Company shall have the right to deduct from all amounts paid pursuant to the Plan any taxes required by law to be withheld with respect to such deferred compensation.

9. Miscellaneous Provisions

        (a)        No employee or other person shall have any claim or right to be granted deferred compensation under the Plan. Neither the Plan nor any action taken hereunder shall be construed as giving any employee any right to be retained in the employ of the Company or its affiliates or be construed as a contract of employment or a revision or amendment of any applicable personnel policies. In addition nothing contained in this Plan shall serve as a limitation of the right of the Company to discharge any of Its employees, with or without cause, subject to any separate written employment agreement.

-3-

        (b)        The Plan shall at all tines be entirely unfunded and no provision shall at any time be made with respect to segregating assets of the Company for payment of any benefits hereunder. No Participant or other person shall have any interest in any particular assets of the Company by reason of the right to receive a benefit under the Plan and any such Participant or other person shall have only the rights of a general unsecured creditor of the Company with respect to any rights under the Plan. Notwithstanding the foregoing, the Company may enter into a trust agreement (“Trust Agreement”), whereby the Company may agree to contribute to a trust (“Trust”) sums for the purpose of accumulating assets to fund benefit payments to the Participants hereunder. The Company may contribute amounts to the Trust from time to time hereafter as determined by the Board of Directors of the Company. Such Trust Agreement shall be substantially in the form of the model trust agreement set forth in Revenue Procedure 92-64, or any subsequent Internal Revenue Service Revenue Procedure, and shall include provisions required in such model trust agreement that all assets of the Trust shall be subject to the creditors of the Company in the event of insolvency. Any assets of the Trust remaining after all obligations hereunder with respect to the Participants have been satisfied shall be paid to the Company.

        (c)        Except when otherwise required by the context, any masculine terminology in this document shall include the feminine, and any singular terminology shall include the plural.

10. Amendment or Termination of the Plan

        The Board of Directors of the Company may alter or amend the Plan from time to time without obtaining approval of the shareholders of the Company. No amendment to the Plan may alter, impair or reduce the amount of deferred compensation already credited to an Account prior to the effective date of such amendment without the written consent of the Participant. Subject to the foregoing, the Company Board may terminate the plan at any time with or without notice.

11. Top-Hat Plan

        The benefits provided by the Plan may be considered a top-hat plan maintained primarily for the purpose of providing deferred compensation to executives of the Company and its affiliates, and that the notice required by Department of Labor regulations section 2520.104-23 will be filed by the Company as required by law.

12. Applicable Law.

-4-

EXHIBIT 10.13

FENTURA BANCORP, INC.

EMPLOYEE DEFERRED COMPENSATION AND STOCK OWNERSHIP PLAN

ARTICLE I - PURPOSE		1
ARTICLE II - DEFINITIONS		1
2.1 Definitions		1
ARTICLE III - PARTICIPATION AND SERVICE		13
3.1 Participation		13
3.2 Service		13
3.3 Participation and Service Upon Reemployment		14
ARTICLE IV - CONTRIBUTIONS AND FORFEITURES		15
4.1 Employer Contributions		15
4.2 Participant Elective Deferrals		18
4.3 After-Tax Contributions by Participants		24
4.4 Limitations on Employee and Matching Contributions		24
4.5 Final Disposition of Forfeitures		29
4.6 Rollover or Transfer Amount from Other Plans		29
ARTICLE V - ALLOCATIONS TO PARTICIPANTS' ACCOUNTS		31
5.1 Individual Accounts		31
5.2 Account Adjustments		33
5.3 Limitation on Allocations		35
ARTICLE VI - BENEFITS		40
6.1 Benefit Distributions		40
6.2 Normal Retirement, Early Retirement or Disability		41
6.3 Death		42
6.4 Termination for Other Reasons		42
6.5 Payment of Benefits		47
6.6 Distribution Restrictions		59
6.7 Waiver of Distribution Restrictions		62
6.8 Hardship Withdrawals of Elective Deferrals		64
6.9 Investment Direction		65
ARTICLE VII - PROVISIONS REGARDING EMPLOYER STOCK		66
7.1 Distribution of Cash Dividends		66
7.2 Voting Employer Stock		66
7.3 Diversification of Investments		66
7.4 Independent Appraisal of Employer Stock		67
7.5 Rights, Options and Restrictions on Employer Stock		67
7.6 Securities and Exchange Commission Approval		68
7.7 Special Rules for Pre-1987 Stock		69
ARTICLE VIII - TRUST FUND		69
8.1 Trust Contributions		69
8.2 Investment of Trust Assets		69
ARTICLE IX - ADMINISTRATION		71
9.1 Allocation of Responsibility Among Fiduciaries		71
9.2 Appointment of Committee		72
9.3 Claims Procedure		73
9.4 Records and Reports		73
9.5 Other Committee Powers and Duties		73
9.6 Rules and Decisions		74
9.7 Authorization of Benefit Payments		74
9.8 Application and Forms for Benefits		74
9.9 Indemnification		74
ARTICLE X - MISCELLANEOUS		75
10.1 Nonguarantee of Employment		75
10.2 Rights to Trust Assets		75
10.3 Nonalienation of Benefits		75
10.4 Discontinuance of Employer Contributions		76
10.5 Controlled Group of Corporations		76
10.6 Unclaimed Pension Checks		76
10.7 Correction of Errors		76
10.8 Construction		76
10.9 No Interest in Employer Affairs		76
ARTICLE XI - AMENDMENTS AND ACTION BY EMPLOYER		77
11.1 Amendments		77
11.2 Action by Employer		77
11.3 Amendment or Change of Vesting Schedule		77
ARTICLE XII - SUCCESSOR EMPLOYER, MERGER OR CONSOLIDATION		78
12.1 Successor Employer		78
12.2 Plan Assets		78
ARTICLE XIII - PLAN TERMINATION		78
13.1 Right to Terminate		78
13.2 Partial Termination		79
13.3 Liquidation of the Trust Fund		79
13.4 Manner of Distribution		79
ARTICLE XIV - TOP-HEAVY PLAN RESTRICTIONS		79
14.1 General Rule		79
14.2 Top-Heavy Test		79
14.3 Superseding Rules		81
14.4 Special Definitions		82
14.5 Effective Date		85

FENTURA BANCORP, INC.

EMPLOYEE DEFERRED COMPENSATION AND STOCK OWNERSHIP PLAN

ARTICLE I — PURPOSE

        Effective ___________________, Fentura Bancorp, Inc. established the Fentura Bancorp, Inc. Profit Sharing and Thrift Plan and effective ___________________, established the Fentura Bancorp, Inc. Employee Stock Ownership Plan and Trust Agreement to enable its eligible employees to acquire stock ownership interests in the Employer. Effective _____________________, the Plans have been merged. Therefore, the ESOP provisions of this Plan shall be effective on and after ___________________, and funds accumulated pursuant to this Plan and the Trust established hereunder will be invested primarily or totally in qualifying employer securities, as defined in Section 409(1) of the Internal Revenue Code and Section 407(d)(5) of ERISA, in the shares of common stock or preferred stock (meeting certain requirements of Fentura Bancorp, Inc. or an Affiliated Employer.

        The Plan is also designed to meet the general financing requirements of the Employer, including capital growth and transfers in the ownership of Fentura Bancorp, Inc. stock.

        The Plan has been amended and restated as the Fentura Bancorp, Inc. Employee Deferred Compensation and Stock Ownership Plan, and the Employer has adopted the amended and restated Plan effective as of _____________________.

        The Plan is a stock bonus plan and an employee stock ownership plan which is intended to meet the applicable requirements of Sections 401(a), 401(k), 501(a) and 4975(e)(7) of the Internal Revenue Code of 1986, as amended by the Small Business Job Protection Act, TRA ‘97, USERRA, GATT and RRA ‘98.

        The provisions of this Plan do not apply to Employees who terminate employment prior to the Effective Date. Unless otherwise indicated herein, the rights and benefits, if any, of an Employee who terminates employment prior to the Effective Date shall be determined in accordance with the prior provisions of the Plan in effect on the date of his employment termination.

ARTICLE II- DEFINITIONS

        2.1 Definitions: The following words and phrases shall, when used herein, have the following respective meanings unless their context clearly indicates otherwise:

(1)        For a specified group of Participants for a Plan Year, the average of the ratios (calculated separately for each Participant in such group) of:

[a]        the amount of Employer Contributions actually paid to the Trust on behalf of each such Eligible Participant for such Plan Year, to

[b]        the Eligible Participant’s Compensation for such Plan Year.

(2)        Employer contributions on behalf of any Participant shall include:

[a]        any Elective Deferrals made pursuant to the Participant’s deferral election, including Excess Elective Deferrals of Highly Compensated Employees, but excluding:

[i] Excess Elective Deferrals of Non-Highly Compensated Employees that arise solely from Elective Deferrals made under the Plan or Plans of this Employer; and

[ii]        Elective Deferrals that are taken into account in the Contribution Percentage test (provided the ADP test is satisfied both with and without exclusion of these Elective Deferrals); and

[b]        at the election of the Employer, Qualified Nonelective Contributionsand Qualified Matching Contributions.

For purposes of computing Actual Deferral Percentages, an Employee who would be a Participant but for the failure to make Elective Deferrals shall be treated as a Participant on whose behalf no Elective Deferrals are made.

(3)        The ADP for any Eligible Participant who is a Highly Compensated Employee for the Plan Year and who is eligible to have Elective Deferrals (and Qualified Nonelective Contributions or Qualified Matching Contributions, or both, if treated as Elective Deferrals for purposes of the ADP test) allocated to his or her accounts under two (2) or more plans or arrangements described in Code Section 40 1(k) that are maintained by the Employer shall be determined as if such Elective Deferrals (and, if applicable, such Qualified Nonelective Contributions or Qualified Matching Contributions, or both) were made under a single arrangement. If a Highly Compensated Employee participates in two (2) or more cash or deferred arrangements that have different Plan Years, all cash or deferred arrangements ending with or within the same calendar year shall be treated as a single arrangement. Notwithstanding the foregoing, certain plans shall be treated as separate if mandatorily disaggregated under regulations under Code Section 401(k).

(4)        In the event that this Plan satisfies the requirements of Code Sections 401(k), 401(a)(4), or 410(b) only if aggregated with one or more other plans, or if one or more other plans satisfy the requirements of such Code Sections only if aggregated with this Plan, then this section shall be applied by determining the ADP of employees as if all such plans were a single plan. For Plan Years beginning after December 31, 1989 plans may be aggregated in order to satisfy Code Section 40 1(k) only if they have the same Plan Year.

2

(c)        Adjustment Factor: The cost of living adjustment factor prescribed by the Secretary of the Treasury under Code Section 4 15(d) for years beginning after December 31, 1987, as applied to such items and in such manner as the Secretary shall provide.

(d)        Affiliated Employer: The Employer and any corporation which is a member of a controlled group of corporations (as defined in Code Section 4 14(b)) which includes the Employer; any trade or business (whether or not incorporated) which is under common control (as defined in Code Section 4 14(c)) with the Employer; any organization (whether or not incorporated) which is a member of an affiliated service group (as defined in Code Section 4 14(m)) which includes the Employer; and any other entity required to be aggregated with the Employer pursuant to regulations under Code Section 414(o).

(e)        Annual Additions: With respect to each Plan Year, the sum of the following amounts allocated to a Participant’s account during the Limitation Year:

(1)        Employer contributions,

(2)        Employee contributions,

(3)        Forfeitures, and

(4)        Amounts allocated after March 31, 1984 to an individual medical account, as defined in Code Section 415(l)(2), which is part of a pension or annuity plan maintained by the Employer are treated as Annual Additions to a defined contribution plan. Also, amounts derived from contributions paid or accrued after December 31, 1985, in taxable years ending after such date, which are attributable to post-retirement medical benefits, allocated to the separate account of a key employee, as defined in Code Section 419A(d)(3), under a welfare benefit fund, as defined in Code Section 4 19(e), maintained by the Employer and allocations under a SEP which is maintained by the Employer are treated as Annual Additions to a defined contribution plan.

For this purpose, any excess amount applied under Sections 5.3(a)(1)-(4)or Section 5.3(b) in the Limitation Year to reduce Employer contributions will be considered Annual Additions for such Limitation Year.

Employee contributions shall not include Rollover or Transfer Amounts for purposes of this definition of Annual Additions.

The Annual Addition for any Limitation Year beginning before January 1, 1987 shall not be recomputed to treat all Employee contributions as an Annual Addition.

3

(f)        Authorized Leave of Absence: Any absence authorized by the Employer under the Employer’s standard personnel practices provided that all persons under similar circumstances must be treated alike in the granting of such Authorized Leaves of Absence and provided further that the Participant returns within the period of authorized absence.

(g)        Beneficiary: A person or persons (natural or otherwise) designated by a Participant in accordance with the provisions of Section 6.5 to receive any death benefit which shall be payable under this Plan.

(h)        Break in Service: A twelve consecutive month period during which an Employee completes 500 or fewer Hours of Service shall constitute a Break in Service. A Break in Service will be measured on the same Eligibility Computation Period as is a Year of Service; provided however, for purposes of determining the Participant’s vested interest in the Plan, a Break in Service shall be measured on the same twelve consecutive month period as the Participant’s Vesting Computation Period.

(i)        Committee: The Fentura Bancorp, Inc. Compensation and Employee Deferred Compensation and Stock Ownership Committee appointed by the Board of Directors in accordance with Article IX.

(j)        Compensation: Compensation shall mean the total of all amounts paid to a Participant by the Employer for personal services determined on the same basis as reported on the Participant’s Federal Income Tax Withholding Statement (Form W-2).

The following rules shall apply for purposes of this definition:

(1)        Any Employee pre-tax salary reduction contributions to a tax deferred annuity under Code Section 403(b) or to a cafeteria plan under Code Section 125 or to a deferred compensation plan under either of Code Sections 401(k) or 402(h)(1)(B) shall be included in Compensation for purposes hereof. For Plan Years beginning on or after January 1, 2001, any elective amounts that are not includible in the gross income of the Employee by reason of Code Section 132(fl(4) shall be included in Compensation for purposes hereof.

(2)        Any benefits paid under this and any other deferred compensation plan and any qualified retirement plan shall be excluded from Compensation for purposes hereof.

(3)        For purposes of Employer contributions under Section 4.1, Compensation shall include Compensation paid to the Participant for the entire Plan Year, regardless of when his participation in the Plan commenced.

(4)        The annual Compensation of each Employee taken into account under the Plan shall not exceed the OBRA ‘93 annual compensation limit. The OBRA ‘93 annual compensation limit is $150,000, as adjusted by the Commissioner for increases in the cost of living in accordance with Code Section 401(a)(17)(B). The cost of living adjustment in effect for a calendar year applies to any period, not exceeding 12 months, over which Compensation is determined (determination period) beginning in such calendar year. If a determination period consists of fewer than 12 months, the OBRA ‘93 annual compensation limit will be multiplied by a fraction, the numerator of which is the number of months in the determination period, and the denominator of which is 12.

4

(5)        Compensation shall be determined without regard to any rules under Code Section 3401(a) that limit the remuneration included in wages based on the nature or location of employment or service performed (such as the exception for agricultural labor in Code Section 340 1(a)(2)).

(6)        The annual Compensation of each Participant taken into account in determining allocations for any Plan Year beginning after December 31, 2001, shall not exceed $200,000, as adjusted for cost-of-living increases in accordance with Code Section 401(a)(17)(B). Annual Compensation means Compensation during the Plan Year or such other consecutive 12-month period over which Compensation is otherwise determined under the Plan (the determination period). The cost-of-living adjustment in effect for a calendar year applies to annual Compensation for the determination period that begins with or within such calendar year.

(k)        Disability: Disability means a physical or mental disorder resulting from a bodily injury or disease which renders a Participant incapable of engaging in any occupation or employment whatsoever for remuneration. The Committee shall determine in a uniform and nondiscriminatory manner and in its sole discretion on the basis of a certification by at least one physician whether an individual is Disabled as that term is defined in this Section 2. 1(k).

(l)        Disqualified Person: Fiduciaries, a person providing services to the Plan, an Employer any of whose Employees are covered by the Plan, an employee organization any of whose members are covered by the Plan, an owner, direct or indirect, of 50% or more of the total combined voting power of all classes of voting stock or of the total value of all classes of the stock, or an officer, director, 10% or more shareholder, or a Highly Compensated Employee.

(m)        Effective Date: Except as otherwise noted in this Plan, the Effective Date of this restated Plan shall be the first day of the first Plan Year beginning on or after January 1, 1997.

(n)        Elective Deferral Account: The account maintained for the purpose of recording a Participant’s Elective Deferral Contributions and adjustments relating thereto.

(o)        Elective Deferral Contributions or Elective Deferrals: The contributions made to the Plan during the Plan Year by the Employer at the election of the Participant in lieu of cash compensation. These contributions shall be made pursuant to an elective deferral agreement.

(p)        Eligibility Computation Period: The 12 consecutive month period used to determine whether an Employee has completed a Year of Service or incurred a Break in Service for purposes of determining his or her eligibility to participate under Article III. The initial Eligibility Computation Period shall commence on the employment commencement date (the date on which the Employee first performs an Hour of Service). The Eligibility Computation Period thereafter shall be the same as a Plan Year, commencing with the Plan Year which includes the first anniversary of the Employee’s employment commencement date and succeeding Plan Years.

5

In the event that a reemployed Employee does not participate as of his reemployment date, said Employee’s Eligibility Computation Period shall commence on his reemployment commencement date (the date on which the reemployed Employee first performs an Hour of Service during his reemployment). The reemployment Eligibility Computation Period thereafter shall be the same as the Plan Year commencing with the Plan Year which includes the first anniversary of the Employee’s reemployment commencement date, and succeeding Plan Years.

(q)        Employee: Any person who, on or after the Effective Date, is receiving remuneration as a common law employee for personal services rendered to the Employer (or who would be receiving such remuneration except for an Authorized Leave of Absence) or for personal services rendered to any other employer required to be aggregated with such Employer under Code Sections 414(b), (c), (m) or (o).

(r)        Employee Contribution Account: The account maintained for a Participant to record his contributions and adjustments relating thereto.

(s)        Employer: Fentura Bancorp, Inc., or its successor or successors. For purposes of Section 5.3, Employer also includes all members of a controlled group of corporations (as defined in Code Section 414(b) as modified by Code Section 415(h)), all commonly controlled trades or businesses (as defined in Code Section 414(c) as modified by Code Section 415(h))or affiliated service groups (as defined in Code Section 414(m)) of which the Employer is a part, and any other entity required to be aggregated with the Employer pursuant to regulations under Code Section 414(o).

(t)        Employer Discretionary Contributions: Those discretionary Nonelective Contributions made pursuant to Section 4.1(b)(1).

(u)        Employer Discretionary Contribution Account: The account maintained for a Participant to record his share of the Employer Discretionary Contributions made pursuant to Section 4.1(b)(1) and adjustments relating thereto.

(v)        Employer Matching Contributions: Any contribution to the Plan made by the Employer for the Plan Year and allocated to a Participant’s account by reason of the Participant’s Employee Contributions or Elective Deferrals.

(w)        Employer Matching Contribution Account: The account maintained for a Participant to record his share of the Employer Matching Contributions made pursuant to Section 4.1(b)(2) and adjustments relating thereto.

6

(x)        Employer Stock: Shares of capital stock issued by the Employer or an Affiliated Employer, which must be voting common stock (or preferred stock convertible into voting common stock) and constitute “Employer Securities” under Code Section 409(1).

(y)        Employer Stock Account: The account maintained for a Participant to record his share of the contributions of Employer Stock and adjustments relating thereto.

(z)        ERISA: Public Law No. 93-406, the Employee Retirement Income Security Act of 1974, as amended from time to time.

(aa)        Fair Market Value: The Fair Market Value of the Employer Stock, as determined for all purposes under the Plan pursuant to Section 7.4 of this Plan.

(bb)        Fiduciaries: The Employer, the Committee, the Trustee, and any designated Investment Manager, but only with respect to the specific responsibilities of each for Plan and Trust administration, all as described in Section 9.1.

(cc)        Financed Shares: Shares of Employer Stock acquired by the Trustee with the proceeds of an Acquisition Loan.

(dd)        Forfeitures: The non-vested portion of a Participant’s Employer Discretionary Contribution Account and/or his Employer Matching Contribution Account (as the case may be) which is forfeited in accordance with Section 4.5.

(ee)        Governing Board: The governing body of the Employer according to law and the Employer’s governing documents.

(ff)        Highly Compensated Employee: Effective for years beginning after December 31, 1996, the term Highly Compensated Employee means any employee who:

(1)        was a 5-percent owner at any time during the year or the preceding year, or

(2)        for the preceding year had compensation from the Employer in excess of $80,000. The $80,000 amount is adjusted at the same time and in the same manner as under Code Section 415(d), except that the base period is the calendar quarter ending September 30, 1996. For purposes of this Section, compensation shall be compensation actually received within the meaning of Code Section 415(c)(3) without regard to Code Sections 125, 402(3)(3) and 402(h)(1)(B), and without regard to salary reduction contributions made under Code Section 403(b). For Plan Years beginning on or after January 1, 2001, any elective amounts that are not includible in the gross income of the employee by reason of Code Section 132(0(4) shall be included in compensation for purposes hereof. Thus compensation is not annualized for purposes of determining an Employee’s compensation during the determination year or the look-back year.

7

For this purpose the applicable year of the Plan for which a determination is being made is called a determination year and the preceding 12-month period is called a look-back year.

A former employee shall be treated as a highly compensated employee if such employee was a highly compensated employee when such employee separated from service or such employee was a highly compensated employee at any time after attaining age 55. For purposes of determining status as a highly compensated former employee, the rules applicable to determining highly compensated employee status as in effect for that determination year shall be applied.

In determining whether an employee is a Highly Compensated Employee for years beginning in 1997, the amendments to Code Section 414(q) stated above are treated as having been in effect for years beginning in 1996.

Special Rule: A Participant is a Highly Compensated Employee for a particular Plan Year if he or she meets the definition of a Highly Compensated Employee in effect for that Plan Year. Similarly, a Participant is a non-Highly Compensated Employee for a particular Plan Year if he or she does not meet the definition of a Highly Compensated Employee in effect for that Plan Year.

(gg)        Hour of Service:

(1)        Each hour for which an Employee is paid, or entitled to payment, for the performance of duties for the Employer. These hours shall be credited to the Employee for the computation period in which the duties are performed.

(2)        Each hour for which an Employee is paid, or entitled to payment, by the Employer on account of a period of time during which no duties are performed (irrespective of whether the employment relationship has terminated) due to vacation, holiday, illness, incapacity (including disability), layoff, jury duty, military duty or leave of absence. No more than 501 Hours of Service will be credited under this paragraph for any single continuous period (whether or not such period occurs in a single computation period). Hours under this paragraph will be calculated and credited pursuant to Section 2530.200b-2 of the Department of Labor Regulations which is incorporated herein by this reference.

(3)        Each hour for which back pay, irrespective of mitigation of damages, is either awarded or agreed to by the Employer. The same Hours of Service will not be credited both under paragraph (1) or paragraph (2), as the case may be, and under this paragraph (3). These hours shall be credited to the Employee for the computation period or periods to which the award or agreement pertains rather than the computation period in which the award, agreement or payment is made.

(4)        Hours of Service shall be determined on the basis of actual hours for which an Employee is paid or entitled to payment.

8

(5)        Where the Employer maintains the plan of a predecessor employer, service for such predecessor employer shall be treated as service for the Employer.

(6)        Hours of Service will be credited for employment with other members of an affiliated service group (under Code Section 414(m)), a controlled group of corporations (under Code Section 414(b)), or a group of trades or businesses under common control (under Code Section 414(c)), of which the Employer is a member and any other entity required to be aggregated with the Employer pursuant to Code Section 414(o) and the regulations thereunder.

(7)        Hours of Service will also be credited for any individual considered an Employee for purposes of this Plan under Code Section 414(n) or Code Section 414(o) and the regulations thereunder.

(8)        Solely for purposes of determining whether a Break in Service (as defined in Section 2.1) has occurred in a computation period under the Plan, an individual who is absent from work for maternity or paternity reasons shall receive credit for the Hours of Service which would otherwise have been credited to such individual but for such absence, or, in any case in which such hours cannot be determined, for 8 Hours of Service per day of such absence. For purposes of this paragraph, an absence from work for maternity or paternity reasons means an absence:

[a]        by reason of the pregnancy of the individual;

[b]        by reason of a birth of a child of the individual;

[c]        by reason of the placement of a child with the individual in connection with the adoption of such child by such individual; or

[d]        for purposes of caring for such child for a period beginning immediately following such birth or placement.

The Hours of Service credited under this paragraph (8) shall be credited in the computation period in which the absence begins if the crediting is necessary to prevent a Break in Service in that period. In all other cases, Hours of Service credited under this paragraph shall be credited in the next following computation period.

(9)        Hours of Service will be credited with respect to periods of qualified military service and family medical leave service as required by applicable law.

(hh)        Income: The net gain or loss of the Trust Fund from investments, as reflected by interest payments, dividends, realized and unrealized gains and losses on securities, other investment transactions and expenses paid from the Trust Fund. In determining the Income of the Trust Fund for any period, assets shall be valued on the basis of their Fair Market Value.

(ii)        Internal Revenue Code or Code: The Internal Revenue Code of 1986, as amended.

9

(jj)        Leased Employee: Any person (other than an employee of the recipient) who, pursuant to an agreement between the recipient and any other person (“leasing organization”) has performed services for the recipient (or for the recipient and related persons determined in accordance with Code Section 414(n)(6)) on a substantially full time basis for a period of at least one year, and such services are performed under the primary direction or control of the service recipient. Contributions or benefits provided to a Leased Employee by the leasing organization which are attributable to services performed for the recipient Employer will be treated as provided by the recipient Employer.

A Leased Employee will not be considered an Employee of the recipient if the requirements of (1) and (2) below are met:

(1)        Such employee is covered by a money purchase pension plan providing:

[a]        a nonintegrated employer contribution rate of at least ten percent (10%) of compensation (as defined in Code Section 415(c)(3),but including amounts contributed by the employer pursuant to a salary reduction agreement which are excludible from the employee’s gross income under any of Code Sections 125, 402(e)(3), 402(h)(1)(B), 403(b) or, effective January 1, 2001, 132(0(4));

[b]        immediate participation; and

[c]        full and immediate vesting.

(2)        Leased Employees do not constitute more than twenty percent (20%) of the recipient’s nonhighly compensated workforce.

(kk)        Loan Suspense Account: The account to which Financed Shares are initially allocated. Financed Shares shall be released from the Loan Suspense Account in accordance with Section 5.1.

(ll)        Nonhighly Compensated Employee: An Employee of the Employer who is not a Highly Compensated Employee.

(mm)        Normal Retirement Age: For all purposes under this Plan, the Normal Retirement Age shall be 65 (not to exceed the later of age 65 or the fifth anniversary of the participation commencement date).

(nn)        Other Investments Account: The account maintained for a Participant to record his share of contributions of Trust assets other than Employer Stock and adjustments relating thereto.

(oo)        Participant: An Employee participating in the Plan in accordance with the provisions of Section 3.1.

10

(pp)        Plan: The Fentura Bancorp, Inc. Employee Deferred Compensation and Stock Ownership Plan, the Plan set forth herein, as amended from time to time.

(qq)        Plan Administrator: Fentura Bancorp, Inc.

(rr)        Plan Year: The 12-month period commencing on January 1 and ending on December 31.

(ss)        Qualified Matching Contributions: Matching contributions made by the Employer and allocated to a Participant’s Employer Matching Contribution Account and/or Qualified Matching Contribution Account that the Participant may not elect to receive in cash until distributed from the Plan; that are 100% vested and nonforfeitable when made; and that are not distributable under the terms of the Plan to Participants or their Beneficiaries earlier than the earliest of:

(1)        retirement, death, disability, or separation from service of the Participant;

(2)        attainment of age 59 ½ by the Participant;

(3)        termination of the Plan without establishment of a successor plan;

(4)        the events specified in Section 12.3 hereof; or

(5)        for Plan Years beginning before January 1, 1989, upon hardship of the Participant.

In lieu of distributing Excess Contributions as provided in Section 4.2 or Excess Aggregate Contributions as provided in Section 4.4, the Employer may, as determined by the Governing Board, make Qualified Matching Contributions on behalf of Nonhighly Compensated Employees that are sufficient to satisfy either the ADP test or the ACP test, or both, pursuant to regulations under the Code.

In the event that the Employer Matching Contributions provided for in Section 4.1(b) meet all of the requirements of this Section, they shall be deemed to be Qualified Matching Contributions for purposes of the ADP and ACP tests.

(tt)        Qualified Nonelective Contributions: Contributions (other than Matching Employer Contributions) made by the Employer and allocated to a Participant’s Employer Discretionary Contribution Account and/or Qualified Non-elective Contribution Account that the Participant may not elect to receive in cash until distributed from the Plan; that are 100% vested and nonforfeitable when made; and that are not distributable under the terms of the Plan to Participants or their Beneficiaries earlier than the earliest of:

(1)        retirement, death, disability or separation from service of the Participant;

11

(2)        attainment of age 59 ½ by the Participant;

(3)        termination of the Plan without establishment of a successor plan;

(4)        the events specified in Section 12.3 hereof; or

(5)        for Plan Years beginning before January 1, 1989, upon hardship of the Participant.

In lieu of distributing Excess Contributions as provided in Section 4.2 or Excess Aggregate Contributions as provided in Section 4.4, the Employer may, as determined by the Governing Board, make Qualified Nonelective Contributions on behalf of Nonhighly Compensated Employees that are sufficient to satisfy either the ADP test or the ACP test, or both, pursuant to regulations under the Code.

In the event that the Employer Discretionary Contributions provided for in Section 4.1(a) meet all of the requirements of this Section, they shall be deemed to be Qualified Nonelective Contributions for purposes of the ADP and ACP tests.

In addition, a Participant may treat his or her Excess Contributions as an amount distributed to the Participant and then contributed by the Participant to the Plan. Recharacterized amounts will remain nonforfeitable. Amounts may not be recharacterized by a Highly Compensated Employee to the extent that such amount in combination with other Employee Contributions made by that employee would exceed any stated limit under the Plan on Employee Contributions.

Recharacterization must occur no later than 2 ½ months after the last day of the Plan Year in which such Excess Contributions arose and is deemed to occur no earlier than the date the last Highly Compensated Employee is informed in writing of the amount recharacterized and the consequences thereof. Recharacterized amounts will be taxable to the Participant for the Participant’s taxable year in which the Participant would have received them in cash.

(uu)        Service: A Participant’s period of employment with the Employer determined in accordance with Section 3.2. Notwithstanding any provision of this Plan to the contrary, effective December 12, 1994 contributions, benefits and service credit with respect to qualified military service will be provided in accordance with Code Section 414(u).

(vv)        Spouse or Surviving Spouse: The spouse or surviving spouse of the Participant, provided that a former spouse will be treated as the spouse or surviving spouse to the extent provided under a qualified domestic relations order as described in Code Section 4.14(p).

(ww)        Transfer Account: The account maintained for a Participant to record amounts transferred to the Trust Fund pursuant to Section 4.6 and adjustments relating thereto.

12

(xx)        Trust (or Trust Fund): The fund known as the Fentura Bancorp, Inc. Employee Deferred Compensation and Stock Ownership Trust, maintained in accordance with the terms of the trust agreement, as from time to time amended, which constitutes a part of this Plan and which is hereby incorporated by reference.

(yy)        Trustee: The corporation or individual(s) appointed by the Governing Board of the Employer to administer the Trust.

(zz)        Valuation Date: The last day of each Plan Year or such other date on which a valuation is made in the sole discretion of the Committee; provided, however, that valuations shall be performed at least annually.

(aaa)        Vesting Computation Period: The 12 consecutive month period used to determine whether an Employee has completed a Year of Service for purposes of vesting. The Vesting Computation Period shall be the same as the Plan Year.

(bbb)        Year of Service: A 12-consecutive month period during which an Employee has not less than 1,000 Hours of Service. Employment at either the beginning or the end of the applicable computation period shall not be determinative of whether a Year of Service has been completed, a Year of Service having been completed if the Employee has 1,000 or more Hours of Service at any time during the applicable computation period.

ARTICLE III — PARTICIPATION AND SERVICE

        3.1 Participation: All individuals who were Participants as of December 31, 2001 shall continue to participate in accordance with the terms of this amended and restated Plan. Any Employee whose participation in the Plan began in Plan Years beginning in 1997, 1998, 1999, 2000 or 2001 shall have participation determined in accordance with the terms of the Plan in effect on the date participation began. Any other Employee shall become a Participant as of the January 1, April 1, July 1 or October 1 thereafter (consistent with Code Section 410(a)(4)) coinciding with or next following the date on which the Employee has met the requirements set forth below. In no event will an Employee who has met the requirements et forth below be prevented from participating in the Plan after the earlier of the first day of the first Plan Year beginning after the date on which the requirements were satisfied or the date which is six months after the date on which the requirements were satisfied, unless the Employee separated from service and has not returned to employment prior to this date.

        3.2 Service: A Participant’s eligibility for benefits under the Plan shall be based on his period of Service, determined in accordance with this Section 3.2.

13

(a)        Service Prior to the Effective Date for Continuing Participants: For a Participant as of the Effective Date who had been covered under the prior provisions of the Plan, the Participant’s Service credit under the Plan prior to the Effective Date shall be counted as Service.

(b)        Service for Employees Participating From and After the Effective Date: Subject to the reemployment provisions of Section 3.3, an Employee shall accrue a Year of Service for each relevant Computation Period in which he has 1,000 or more Hours of Service.

        3.3 Participation and Service Upon Reemployment: If an Employee has a one-year Break in Service before satisfying the Plan’s requirement for eligibility, service before such Break will not be taken into account. Upon the reemployment of any person after the Effective Date who had previously been employed by the Employer prior to the Effective Date his rights upon reemployment shall be determined in accordance with the Plan in effect on the date of his employment termination. Upon the reemployment of any person after the Effective Date who had previously been employed by the Employer on or after the Effective Date, the following rules shall apply in determining his Participation in the Plan and his Service under Section 3.2:

        A former Employee who did not have a nonforfeitable right to any portion of his account balance derived from Employer contributions at the time of his termination shall be considered a new Employee, for eligibility purposes, if the number of consecutive one-year Breaks in Service equals or exceeds the greater of 5 or the aggregate number of Years of Service before such Break. If such former Employee’s Years of Service before his termination may not be disregarded under other provisions of this Plan in circumstances described in the preceding sentence, such Employee shall participate immediately upon his reemployment.

        In the event a Participant becomes ineligible to participate because he is no longer a member of an eligible class of Employees, but has not incurred a Break in Service, such Employee shall participate immediately upon his return to an eligible class of Employees. If such Participant incurs a Break in Service his eligibility to participate shall be determined pursuant to the two preceding paragraphs.

        In the event an Employee who is not a member of an eligible class of Employees becomes a member of the eligible class, such Employee shall participate immediately if such Employee has satisfied any minimum age and service requirements and would previously have become a Participant had he been in the eligible class.

14

(1)        Such Participant had a nonforfeitable interest in the account balance attributable to Employer contributions at the time of separation from service; or

(2)        Upon returning to service the number of consecutive one year Breaks in Service is less than the number of Years of Service.

Separate accounts will be maintained for the Participant’s pre-Break and post-Break Employer-derived account balance. Both accounts will share in the earnings and losses of the fund.

        In the case of a Participant who has fewer than 5 consecutive one year Breaks in Service, service shall be credited pursuant to Section 3.2 hereof.

        Notwithstanding the foregoing, for purposes of computing vested benefits under Section 6.4 in the case of any Employee who has any one-year Break in Service, Years of Service before such Break shall not be taken into account until the Employee has completed one Year of Service after his reemployment.

ARTICLE IV — CONTRIBUTIONS AND FORFEITURES

        4.1 Employer Contributions: All of the following types of Employer Contributions shall be made to the Plan without regard to current or accumulated earnings and profits for the taxable year or years in question. Notwithstanding the foregoing, the Plan shall continue to be designed to qualify as a profit sharing plan for purposes of Code Sections 401(a), 402, 412 and 417. In no event will the total of all contributions made by the Employer pursuant to this Section 4.1 exceed the maximum deductible amount permitted by the Internal Revenue Code of 1986, as amended, nor shall it exceed the maximum addition allowable for any Participant for such year as provided in Section 5.3. Notwithstanding any provision of this Plan to the contrary, contributions and benefits with respect to qualified military service will be provided in accordance with Code Section 414(u).

        Any contribution under Section 4.1(b) may be made in either cash or shares of Employer Stock. The Employer shall make contributions to the Trust Fund to the extent necessary to provide the Trustee with sufficient funds to pay any currently maturing obligations under any Acquisition Loan. Notwithstanding any provision of this Plan to the contrary, contributions and benefits with respect to qualified military service will be provided in accordance with Code Section 414(u).

        (a)        Elective Deferral Contributions: The Employer shall, for each Plan Year, contribute to the Trust Fund an amount equal to the total amount of contributions agreed to be made by it pursuant to elective deferral agreements under Plan Section 4.2 entered into between the Employer and Participants for said Plan Year. Contributions made by the Employer for a given Plan Year pursuant to elective deferral agreements under Section 4.2 shall be deposited in the Trust Fund no later than the earlier of (a) 30 days following the end of said Plan Year; or (b) the date the Employer files its federal income tax return for said Plan Year; or (c) such earlier date as is required by law or binding regulation. Any such contributions, once deposited in the Trust, shall remain in the Trust and will be administered according to the terms of this Plan.

15

(b)        Nonelective Contributions:

(1)        Employer Discretionary Contributions: The Employer may, for each Plan Year, contribute to the Trust Fund an amount as determined by resolution of the Governing Board adopted on or before the last day of each Plan Year, to be held and administered in Trust by the Trustee according to the terms of this Plan. This discretionary contribution will be made for any Participant who meets either of the following requirements:

[a]        the Participant was employed by the Employer on the last day of the Plan Year to which the discretionary contribution relates and completes 1,000 Hours of Service in that Plan Year; or

[b]        the Participant terminated employment with the Employer in the Plan Year to which the discretionary contribution relates, where such termination was:

[i]        on account of the Participant’s death; or

[ii]        on account of the Participant’s Disability; or

[iii]        on or after the date on which the Participant attained the Normal Retirement Age.

All such Employer discretionary contributions shall be paid to the Trustee, and payment shall be made not later than the date prescribed by law for filing the Employer’s federal income tax return, including extensions which have been granted for the filing of such tax return.

        The Employer Discretionary Contribution for the Plan Year will be allocated for eligible Participants (as described in Section 4.1(b)(1)[a] and [b]) in the same proportion as each such Participant’s Compensation for the Plan Year bears to the total Compensation of all Participants for such Plan Year.

16

(3)        Employer Safe Harbor Contributions: The provisions of this Section 4.l(b)(3) shall apply for Plan Years beginning on or after January 1, 2003, and any provisions relating to the ADP test described in Code Section 401(k)(3) or the ACP test described in Code Section 401 (m)(2) shall not apply for those Plan Years. To the extent that any other provision of the Plan is inconsistent with the provisions of this Section 4.l(b)(3), the provisions of this Section 4.1(b)(3) shall govern. Notwithstanding the foregoing, this Section may only apply to Plan Years beginning after December 31, 1998.

[a] Definitions:

[i]        “ADP Test Safe Harbor” is the method described in Section 4.1(b)(2)[b] for satisfying the ADP test of Code Section 401(k)(3).

[ii] "ADP Test Safe Harbor Contributions" are Matching Contributions and nonelective contributions described in Section 4.1 (b)(2) [b].

[iii]        “Compensation” is defined in Section 2.1 of the Plan, except, for purposes of this Section 4.1 (b)(3), no dollar limit, other than the limit imposed by Code Section 401(a)(17), applies to the Compensation of a Non-Highly Compensated Employee. However, for Plan Years in which the Plan is determined to be top-heavy in accordance with Article XIV hereof, Compensation shall include Compensation paid to the Participant for the entire Plan Year, regardless of when his participation in the Plan commenced. Solely for purposes of determining the Compensation subject to a Participant’s deferral election, the Employer may use an alternative definition to the one described in the preceding sentence, provided such alternative definition is a reasonable definition within the meaning of Regulation Section 1.4l4(s)-1(d)(2) and permits each Participant to elect sufficient Elective Deferrals to receive the maximum amount of Matching Contributions (determined using the definition of Compensation described in the preceding sentence) available to the Participant under the Plan.

[iv]        “Eligible Employee” means an Employee eligible to make Elective Deferrals under the Plan for any part of the Plan Year or who would be eligible to make Elective Deferrals but for a suspension due to a hardship distribution described in Article VI of the Plan or to statutory limitations, such as Code Sections 402(g) and 415.

[v]        “Matching Contributions” are contributions made by the Employer on account of an Eligible Employee’s Elective Deferrals.

[b]        ADP Test Safe Harbor Contributions:

[i]        The Employer will contribute for the Plan Year a Safe Harbor Matching Contribution to the Plan on behalf of each Eligible Employee equal to:

a.        100% of the amount of the Employee’s Elective Deferrals that do not exceed 3% of the Employee’s Compensation for the Plan Year, plus

17

b.        50%of the amount of the Employee’s Elective Deferrals that exceed 3% of the Employee’s Compensation but that do not exceed 5% of the Employee’s Compensation (“Basic Matching Contribution”).

[ii]        The Participant’s accrued benefit derived from ADP Test Safe Harbor Contributions is nonforfeitable and may not be distributed earlier than separation from service, death, disability, an event described in Code Section 401(k)(10), or, in the case of a profit sharing plan, the attainment of age 59 ½. ADP Test Safe Harbor Contributions may not be distributed on account of financial hardship. In addition, such contributions must satisfy the ADP Test Safe Harbor without regard to permitted disparity under Code Section 401(1).

[c]        Notice Requirement: At least 30 days, but not more than 90 days, before the beginning of the Plan Year, the Employer will provide each Eligible Employee a comprehensive notice of the Employee’s rights and obligations under the Plan, written in a manner calculated to be understood by the average Eligible Employee. If an Employee becomes eligible after the 90th day before the beginning of the Plan Year and does not receive the notice for that reason, the notice must be provided no more than 90 days before the Employee becomes eligible but not later than the date the Employee becomes eligible.

[d]        Election Periods: In addition to any other election periods provided under the Plan, each Eligible Employee may make or modify a deferral election during the 30 day period immediately following receipt of the notice described in Section [c] above.

        4.2 Participant Elective Deferrals: Elective Deferral payroll deductions may commence as soon as administratively feasible after an individual becomes eligible for such deductions in accordance with Plan Section 3.1. A Participant may begin payroll deductions by electing to enter into a written elective deferral agreement with the Employer. Any such agreement may be amended in accordance with this Section 4.2. The terms of any such elective deferral agreement shall provide that the Participant agrees to accept a reduction in Compensation from the Employer equal to any amount consistent with rules adopted and uniformly administered by the Committee not to exceed such percent of said Compensation as the Committee deems appropriate. No Employee shall be permitted to have Elective Deferrals made under this Plan or any other qualified plan maintained by the Employer during any calendar year in excess of the dollar limitation contained in Code Section 402(g) in effect at the beginning of such taxable year. In the event any Participant’s Elective Deferrals exceed this limit, the Excess Deferral Amount shall be distributed to said Participant in the manner set forth in Section 4.2(g) below. Said Elective Deferrals may be made from the Participant’s periodic payroll checks or from any bonus compensation checks issued to the Participant as elected by the Participant in the elective deferral agreement. All such Elective Deferrals are subject to the approval of the Committee pursuant to rules adopted by and uniformly administered by the Committee. In consideration of such agreement, the Employer will make an Elective Deferral contribution to the Participant’s Elective Deferral Account on behalf of the Participant for such year in an amount equal to the total amount by which the Participant’s Compensation from the Employer was reduced during the Plan Year pursuant to the elective deferral agreement.

        Amounts credited to a Participant’s Elective Deferral Account shall be 100% vested and nonforfeitable at all times. If a Participant enters into an elective deferral agreement with the Employer for a given Plan Year, his Compensation for such Plan Year for all other purposes of this Plan, unless otherwise noted, shall be equal to his Compensation before application of the elective deferral agreement.

18

        The following additional rules shall apply to the elective deferral agreement:

19

The Employer shall maintain records sufficient to demonstrate satisfaction of the ADP test and the amount of Qualified Nonelective Contributions or Qualified Matching Contributions, or both, used in such test.

The current year testing method contained in this Section 4.2(c) is effective for Plan Years beginning on or after January 1, 1999. The prior year testing method contained in the prior Plan shall apply for all Plan Years beginning before January 1, 1999.

The adjustments described above in this subsection (c) shall not apply for Plan Years beginning on or after January 1, 2003, because the formula described in Plan Section 4.1 meets the requirements of Code Section 401(k)(12).

(d)        Any adjustment to Elective Deferral amounts determined under paragraph (c) above shall be made by one or both of the following means:

(1)        First, the elective deferral agreement of such Participant shall be amended to reduce the contribution set forth therein so that the total amount of Elective Deferral Contributions for such Participant for the Plan Year does not exceed the maximum amount determined under paragraph (c) above.

(2)        Next, any Excess Contributions, plus any income and minus any loss allocable thereto, shall be distributed no later than the last day of each Plan Year to Participants to whose accounts such Excess Contributions were allocated for the preceding Plan Year. Excess Contributions are allocated to the Highly Compensated Employees with the largest amounts of Employer contributions taken into account in calculating the ADP test for the year in which the excess arose, beginning with the Highly Compensated Employee with the largest amount of such Employer contributions and continuing in descending order until all the Excess Contributions have been allocated. For purposes of the preceding sentence, the “largest amount” is determined after distribution of any Excess Contributions. If such excess amounts are distributed more than 2 ½ months after the last day of the Plan Year in which such excess amounts arose, a 10-percent excise tax will be imposed on the Employer maintaining the Plan with respect to such amounts.

Excess Contributions (including the amounts recharacterized) shall be treated as annual additions under the Plan.

Determination of Income or Loss: Excess Contributions shall be adjusted for any income or loss up to the date of distribution. The income or loss allocable to Excess Contributions allocated to each Participant is the sum of:

[a]        income or loss allocable to the Participant’s Elective Deferral account (and, if applicable, the Qualified Non-Elective Contribution account or the Qualified Matching Contributions account or both) for the Plan Year multiplied by a fraction, the numerator of which is such Participant’s Excess Contributions for the year and the denominator is the Participant’s account balance attributable to Elective Deferrals (and Qualified Non-Elective Contributions or Qualified Matching Contributions, or both, if any of such contributions are included in the ADP test) without regard to any income or loss occurring during such Plan Year; and

20

[b]        10 percent of the amount determined under (1) multiplied by the number of whole calendar months between the end of the Plan Year and the date of distribution, counting the month of distribution if distribution occurs after the 15thof such month.

Accounting for Excess Contributions: Excess Contributions shall be distributed from the Participant’s Elective Deferral Account and Qualified Matching Contribution account (if applicable) in proportion to the Participant’s Elective Deferrals and Qualified Matching Contributions (to the extend used in the ADP test) for the Plan Year. Excess Contributions shall be distributed from the Participant’s Qualified Non-Elective Contribution account only to the extent that such Excess Contributions exceed the balance in the Participant’s Elective Deferral Account and Qualified Matching Contribution account.

Definition:

"Excess Contributions" shall mean, with respect to any Plan Year, the excess of:

[a]        The aggregate amount of Employer contributions actually taken into account in computing the ADP of Highly Compensated Employees for such Plan Year, over

[b]        The maximum amount of such contributions permitted by the ADP test (determined by hypothetically reducing contributions made on behalf of Highly Compensated Employees in order of the ADPs, beginning with the highest of such percentages).

The amount of Excess Contributions to be distributed under this Section 4.2 with respect to an Employee for a Plan Year is reduced by any Excess Elective Deferrals previously distributed to the Employee for the Employee’s taxable year ending with or within the Plan Year in accordance with Code Section 402(g)(2).

(e)        For purposes of this Section 4.2 and for purposes of Section 2.1(b), the following definitions shall apply:

(1)        Actual Deferral Percentage shall be as defined in Section 2. 1.

(2)        Eligible Participant shall mean any Employee of the Employer who has met any age and service requirements of Section 3. 1.

(f)        The determination and treatment of the Elective Deferrals, Qualified Nonelective Contributions and Actual Deferral Percentage of any Participant shall satisfy such other requirements as may be prescribed by the Secretary of the Treasury.

21

(g)        If the amount of Elective Deferrals made by a Participant during any calendar year, when added to amounts deferred under other plans or arrangements described in Code Sections 401(k), 408(k), 403(b), 457 or 501(c)(18) exceed the limit imposed on the Participant by Code Section 402(g) for the year in which the deferral occurred, the Excess Deferral Amount and income allocable thereto shall be distributed not later than the April 15 following the calendar year in which the Excess Deferral Amount was contributed to the Plan, provided any such Participant files a claim for said Excess Deferral Amount in accordance with (2) below.

(1)        For purposes of this Section 4.2(g), Excess Deferral Amount shall mean those elective deferrals allocated to a Participant under this Plan which are includible in the Participant’s gross income under Code Section 402(g) to the extent such Participant’s Elective Deferrals for a taxable year exceed the dollar limitation under such Code Section. Excess Elective Deferrals shall be treated as Annual Additions under the Plan, unless such amounts are distributed no later than the first April 15 following the close of the Participant’s taxable year.

(2)        A Participant is deemed to notify the Committee of any Excess Elective Deferrals that arise by taking into account only those Elective Deferrals made to this Plan and any other plans of the Employer. Otherwise, any Participant’s claim for Excess Deferral Amounts shall:

[a]        be in writing;

[b]        be submitted to the Committee not later than March 1 following the calendar year in which the Excess Deferral Amount was contributed to the Plan;

[c]        specify the Participant’s Excess Deferral Amount for the preceding calendar year; and

[d]        be accompanied by the Participant’s written statement that if such amounts are not distributed, such Excess Deferral Amount will exceed the limit imposed on the Participant by Code Section 402(g) for the year in which the deferral occurred.

(3)        The Excess Deferral Amount distributed to a Participant with respect to a calendar year shall be adjusted for income or loss up to the date of distribution. The income or loss allocable to Excess Deferral Amounts is the sum of:

[a]        income or loss allocable to the Participant’s Elective Deferral Account for the taxable year multiplied by a fraction, the numerator of which is such Participant’s Excess Deferral Amount for the year and the denominator of which is the Participant’s account balance attributable to Elective Deferrals without regard to any income or loss occurring during such taxable year; and

[b]        ten percent (10%) of the amount determined under [a] multiplied by the number of whole calendar months between the end of the Participant’s taxable year and the date of distribution, counting the month of distribution if distribution occurs after the 15th of such month.

22

(h)        Elective Deferral amounts may be refunded to a Participant in accordance with Plan Section 5.3(a)(1).

(i)        Special Rules:

(1)        A Participant is a Highly Compensated Employee for a particular Plan Year if he or she meets the definition of a Highly Compensated Employee in effect for that Plan Year. Similarly, a Participant is a Non-Highly Compensated Employee for a particular Plan Year if he or she does not meet the definition of a Highly Compensated Employee in effect for that Plan Year.

(2)        The ADP for any Participant who is a Highly Compensated Employee for the Plan Year and who is eligible to have Elective Deferrals (and Qualified Non-Elective Contributions or Qualified Matching Contributions, or both, if treated as Elective Deferrals for purposes of the ADP test) allocated to his or her accounts under two or more arrangements described in Code Section 401(k), that are maintained by the Employer, shall be determined as if such Elective Deferrals (and, if applicable, such Qualified Non-Elective Contributions or Qualified Matching Contributions, or both) were made under a single arrangement. If a Highly Compensated Employee participates in two or more cash or deferred arrangements that have different Plan Years, all cash or deferred arrangements ending with or within the same calendar year shall be treated as a single arrangement. Notwithstanding the foregoing, certain plans shall be treated as separate if mandatorily disaggregated under regulations under Code Section 401(k).

(3)        In the event that this Plan satisfies the requirements of Code Sections 401(k), 401(a)(4), or 410(b) only if aggregated with one or more other plans, or if one or more other plans satisfy the requirements of such Code sections only if aggregated with this Plan, then this section shall be applied by determining the ADP of employees as if all such plans were a single plan. Any adjustments to the Non-highly Compensated Employee ADP for the prior year will be made in accordance with Notice 98-1 and any superseding guidance, unless the Employer has elected to use the Current Year Testing method. Plans may be aggregated in order to satisfy Code Section 40 1(k) only if they have the same Plan Year and use the same ADP testing method.

(j)        This section shall apply to contributions after December 31, 2001. All Employees who are eligible to make Elective Deferral Contributions under this Plan and who have attained age 50 before the close of the Plan Year shall be eligible to make catch-up contributions in accordance with, and subject to the limitations of Code Section 4 14(v). Such catch-up contributions shall not be taken into account for purposes of the provisions of the Plan implementing the required limitations of Code Sections 402(g) and 415. The Plan shall not be treated as failing to satisfy the provisions of the Plan implementing the requirements of Code Sections 401(k)(3), 401(k)(11), 401(k)(12), 410(b), or 416, as applicable, by reason of the making of such catch-up contributions. Elective Deferral Contributions made pursuant to this section shall not be eligible for Employer Matching Contributions described in Section Article 4. 1(b)(2) of the Plan.

23

        4.3 After-Tax Contributions by Participants: No after tax contributions to this Plan are permitted, except where a Participant elects to repay an Involuntary Cashout which occurs pursuant to Plan Section 6.4(c).

        4.4 Limitations on Employee and Matching Contributions:

24

(2)        Average Contribution Percentage means the average of the Contribution Percentages of the Eligible Participants in a group.

(3)        Contribution Percentage shall mean the ratio (expressed as a percentage) of a Participant’s Contribution Percentage Amounts to the Participant’s Compensation for the Plan Year (whether or not the Employee was a Participant for the entire Plan Year).

(4)        Contribution Percentage Amounts shall mean the sum of the Employee Contributions, Matching Contributions and Qualified Matching Contributions (to the extent not taken into account for purposes of the ADP test) made under the Plan on behalf of the Participant for the Plan Year. Such Contribution Percentage Amounts shall not include Matching Contributions that are forfeited either to correct Excess Aggregate Contributions or because the contributions to which they relate are Excess Deferrals, Excess Contributions or Excess Aggregate Contributions. The Employer may include Qualified Nonelective Contributions in the Contribution Percentage Amounts. The Employer may also elect to use Elective Deferrals in the Contribution Percentage Amounts so long as the ADP test is met before the Elective Deferrals are used in the ACP test and continues to be met following the exclusion of those Elective Deferrals that are used to meet the ACP test. In any Plan Year in which the Employer has elected to sue the prior year testing method, Qualified Nonelective Contributions may not be used to satisfy the ACP test.

(5)        Eligible Participant shall mean any Employee who was eligible to make an Employee Contribution, or an Elective Deferral (if the Employer takes such contributions into account in the calculation of the Contribution Percentage), or to receive a Matching Contribution or a Qualified Matching Contribution. If an Employee Contribution is required as a condition of participation in the Plan, any Employee who would be a Participant in the Plan if such Employee made such a contribution shall be treated as an eligible Participant on behalf of whom no Employee Contributions are made.

(6)        Employee Contribution shall mean any contribution made to the Plan by or on behalf of a Participant that is included in the Participant’s gross income in the year in which made and that is maintained under a separate account to which earnings and losses are allocated.

(7)        Matching Contribution shall mean an Employer contribution made to this or any other defined contribution Plan on behalf of a Participant on account of an Employee Contribution made by such Participant, or on account of a Participant’s Elective Deferral, under a plan maintained by the Employer.

(8)        Excess Aggregate Contributions shall mean, with respect to any Plan Year, the excess of:

[a]        the aggregate Contribution Percentage Amounts taken into account in computing the numerator of the Contribution Percentage actually made on behalf of Highly Compensated Employees for such Plan Year, over

25

[b]        the maximum Contribution Percentage Amounts permitted by the ACP test (determined by reducing contributions made on behalf of Highly Compensated Employees in order of their Contribution Percentages beginning with the highest of such percentages).

(c)        For purposes of this Section 4.4, the following special rules shall apply:

(1)        If one or more Highly Compensated Employees participate in both a CODA and a plan subject to the ACP test maintained by the Employer, and the sum of the ADP and ACP of those Highly Compensated Employees subject to either or both tests exceeds the Aggregate Limit, then the ACP of those Highly Compensated Employees who also participate in a CODA will be reduced (beginning with such Highly Compensated Employee whose ACP is the highest) so that the limit is not exceeded. The amount by which each Highly Compensated Employee’s Contribution Percentage Amounts is reduced shall be treated as an Excess Aggregate Contribution. The ADP and ACP of the Highly Compensated Employees are determined after any corrections required to meet the ADP and ACP tests and are deemed to be the maximum permitted under such tests for the Plan Year. Multiple use does not occur if both the ADP and ACP of the Highly Compensated Employees does not exceed 1.25 multiplied by the ADP and ACP of the Nonhighly Compensated Employees. “Aggregate Limit” shall mean the sum of (i) 125 percent of the greater of the ADP of the Nonhighly Compensated Employees for the Plan Year or the ACP of Nonhighly Compensated Employees under the Plan subject to Code 40 1(m) for the Plan Year beginning with or within the Plan Year of the CODA and (ii) the lesser of 200 percent or 2 plus the lesser of such ADP or ACP. “Lesser” is substituted for “greater” in “(i)', above, and “greater” is substituted for “lesser” after ” 2 plus the” in “(ii)” if it would result in a larger Aggregate Limit.

(2)        The Contribution Percentage for any Eligible Participant who was a Highly Compensated Employee for the Plan Year and who is eligible to have Contribution Percentage Amounts allocated to his or her account under two (2) or more plans described in Code Section 401(a) or arrangements described in Code Section 401(k) that are maintained by the Employer shall be determined as if the total of such Contribution Percentage Amounts was made under each plan. If a Highly Compensated Employee participated in two (2) or more cash or deferred arrangements that have different Plan Years, all cash or deferred arrangements ending with or within the same calendar year shall be treated as a single arrangement. Notwithstanding the foregoing, certain plans shall be treated as separate if mandatorily disaggregated under regulations under Code Section 401(m).

(3)        In the event that this Plan satisfies the requirements of Code Sections 401(m), 401(a)(4) or 4 10(b) only if aggregated with one or more other plans, or if one or more other plans satisfy the requirements of such Code Sections only if aggregated with this Plan, then this Section 4.4 shall be applied by determining the Contribution Percentage of Eligible Participants as if all such plans were a single plan. For Plan Years beginning after December 31, 1989, plans may be aggregated in order to satisfy Code Section 401(m) only if they have the same Plan Year.

26

(4)        For purposes of determining the Contribution Percentage test, Employee Contributions are considered to have been made in the Plan Year in which contributed to the Trust. Matching Contributions and Qualified Nonelective Contributions will be considered made for a Plan Year if made no later than the end of the twelve-month period beginning on the day after the close of the Plan Year.

(5)        The Employer shall maintain records sufficient to demonstrate satisfaction of the ACP test and the amount of Qualified Nonelective Contributions or Qualified Matching Contributions, or both, used in such test.

(6)        The determination and treatment of the Contribution Percentage of any Participant shall satisfy such other requirements as may be prescribed by the Secretary of the Treasury.

(7)        In the event that this Plan satisfies the requirements of Code Sections 401(m), 401(a)(4) or 410(b) only if aggregated with one or more other plans, or if one or more other plans satisfy the requirements of such Code sections only if aggregated with this Plan, then this section shall be applied by determining the Contribution Percentage of employees as if all such plans were a single plan. Any adjustments to the Nonhighly Compensated Employee ACP for the year will be made in accordance with Notice 98-1 and any superseding guidance, unless the Employer has elected to use the Current Year Testing method. Plans may be aggregated in order to satisfy Code Section 40 1(m) only if they have the same Plan Year and use the same ACP testing method.

(8)        The ACP for NHCEs for the prior year is determined taking into account only:

[a]        Employee contributions for those NHCEs for the prior year;

[b]        Employer Matching Contributions for NHCEs that were taken into account for purposes of the ACP test (and not the ADP test) under the current year method in the prior year; and

[c]        QNECs that were allocated to NHCEs’ accounts for the prior year, but that were not used to satisfy either the ADP test or the ACP test under the current year method for the prior year.

Thus, the following contributions made for the prior year are disregarded: QNECs used to satisfy either the ADP or ACP test under the current year testing method for the prior year, QMACs taken into account for purposes of the ADP test, and all Elective Deferrals. These limitation rules regarding double counting do not apply for testing years beginning before January 1, 1999.

27

(9)        The multiple use test described in Treasury Regulation Section 1.401(m)-2 and Article IV of the Plan shall not apply for Plan Years beginning after December 31, 2001.

(d)        Any Excess Aggregate Contributions, as determined pursuant to Section 4.4(a) above and Code Section 401(m)(6)(B), plus any income and minus any loss allocable thereto shall be forfeited, if forfeitable, or if not forfeitable, distributed not later than the last day of each Plan Year to Participants to whose accounts such Excess Aggregate Contributions were allocated for the preceding Plan Year. Excess Aggregate Contributions are allocated to the Highly Compensated Employees with the largest Contribution Percentage Amounts taken into account in calculating the ACP test for the year in which the excess arose, beginning with the Highly Compensated Employee with the largest amount of such Contribution Percentage Amounts and continuing in descending order until all the Excess Aggregate Contributions have been allocated. For purposes of the preceding sentence, the “largest amount” is determined after distribution of any Excess Aggregate Contributions. If such Excess Aggregate Contributions are distributed more than two and one-half (2 ½) months after the last day of the Plan Year in which such excess amounts arose, a ten percent (10%) excise tax will be imposed on the Employer maintaining the Plan with respect to those amounts. Excess Aggregate Contributions shall be treated as Annual Additions under the Plan.

Excess Aggregate Contributions shall be adjusted for any income or loss up to the date of distribution. The income or loss allocable to Excess Aggregate Contributions allocated to each Participant is the sum of:

(1)        income or loss allocable to the Participant’s Employee Contribution Account, Employer Matching Contribution amount (if any, and if all such amounts are not used in the ADP test) and, if applicable, Qualified Nonelective Contribution amounts and Elective Deferral Account for the Plan Year multiplied by a fraction, the numerator of which is such Participant’s Excess Aggregate Contributions for the year and the denominator is the Participant’s account balance(s) attributable to Contribution Percentage Amounts without regard to any income or loss occurring during such Plan Year; and

(2)        ten percent (10%) of the amount determined under (1) above multiplied by the number of whole calendar months between the end of the Plan Year and the date of distribution, counting the month of distribution if distribution occurs after the 15th of such month.

Notwithstanding the foregoing, the Committee may, pursuant to a uniform and nondiscriminatory written policy, adopt a different reasonable method of allocating income or loss to Excess Aggregate Contributions.

Excess Aggregate Contributions shall be forfeited, if forfeitable or distributed on a pro-rata basis from the Participant’s Employee Contribution Account, Matching Contribution Account, and Qualified Matching Contribution Account (and, if applicable, the Participant’s Qualified Non-Elective Contribution Account or Elective Deferral Account, or both). Amounts forfeited by Highly Compensated Employees under this Section 4.4 will be used to reduce future Employer contributions to the Plan.

28

        4.5 Final Disposition of Forfeitures: All nonvested amounts will be forfeited and used first to restore forfeited amounts required to be restored to reemployed Participants. Thereafter, forfeitures shall be allocated in the ratio that the Compensation of each Participant bears to that of all Participants as of the earlier of the last day of the Plan Year in which:

        4.6 Rollover or Transfer Amount from Other Plans:

29

(2)        the distribution from the Other Plan is eligible for rollover treatment or transfer pursuant to the requirements of the Code and applicable regulations, including the requirements of Code Section 402(c) applicable to eligible rollover distributions.

The Committee shall develop such procedures, and may require such information from an Employee on whose behalf such a rollover or transfer is to be made, as it deems necessary or desirable to determine that the proposed rollover or transfer will meet the requirements of this Section. Upon approval of the Committee, the amount rolled over or transferred shall be deposited in the Trust Fund and shall be credited to a Transfer Account. Such account shall be 100% vested in the Employee, shall share in income allocations in accordance with Section 5.2(a), but shall not share in Employer contribution allocations. Upon termination of employment, the total amount of the Employee’s Transfer Account shall be distributed in accordance with Article VI.

Upon such a rollover or transfer by an Employee who is otherwise eligible to participate in the Plan but who has not yet completed any age and/or service requirements of Section 3.1, his Transfer Account shall represent his sole interest in the Plan until he becomes a Participant.

(b)        The Trustee may accept a direct transfer of an account balance from any Other Plan on behalf of any Employee eligible to participate in the Plan (regardless of whether he has satisfied any age and/or service requirements of Section 3.1) according to such procedures and requirements as are imposed by the Committee in a nondiscriminatory manner in its sole discretion.

The Committee shall develop such procedures, and may require such information from an Employee on whose behalf such a transfer is to be made, as it deems necessary or desirable to determine that the proposed transfer will meet the requirements of this Section. Upon approval of the Committee, the amount transferred shall be deposited in the Trust Fund and shall be credited to a Transfer Account. Such account shall share in income allocations in accordance with Section 5.2(a),but shall not share in Employer contribution allocations. Upon termination of employment, the total amount of the Employee’s Transfer Account shall be distributed in accordance with Article VI.

Upon such a transfer by an Employee who is otherwise eligible to participate in the Plan but who has not yet completed any age and/or service requirements of Section 3.1, his Transfer Account shall represent his sole interest in the Plan until he becomes a Participant.

(c)        In the case of any rollover or transfer of assets to this Plan from a Keogh plan, the Committee shall maintain records which enable the Committee to identify which portion of the Transfer Account is comprised of the Keogh plan amounts (and earnings thereon).

30

ARTICLE V — ALLOCATIONS TO PARTICIPANTS’ ACCOUNTS

        5.1 Individual Accounts:

31

(b)        Loan Suspense Account: Any Financed Shares acquired by the Trust shall initially be credited to a Loan Suspense Account and will be allocated to the Employer Stock Accounts of Participants only as payments on the Acquisition Loan are made by the Trustee. The number of Financed Shares to be released from the Loan Suspense Account for allocations to Participants’ Employer Stock Accounts for each Plan Year shall be determined by the Committee (as of each Plan Year end) as described immediately below.

(1)        Principal and Interest Rule: The number of Financed Shares held in the Loan Suspense Account immediately before the release (rounded upward to the nearest whole number of shares) for the current Plan Year shall be multiplied by a fraction, the numerator of which shall be the amount of principal and/or interest paid on the Acquisition Loan for that Plan Year, and the denominator of which shall be the sum of the numerator plus the total payments of principal and interest on that Acquisition Loan projected to be paid for all future Plan Years. For this purpose, the interest to be paid in future years is to be computed using the interest rate in effect as of the current Valuation Date. Projections of payments in future years shall be made by the Committee. If the collateral or suspense account includes more than one class of Employer Stock, the number of shares of each class to be released for the Plan Year must be determined by applying the same fraction to each class.

(2)        Principal Only Rule: The Committee may elect (at the time an Acquisition Loan is incurred) or the provisions of the Acquisition Loan may provide for the release of Financed Shares from the Loan Suspense Account based solely on the ratio that the payments of principal for each Plan Year bear to the total principal amount of the Acquisition Loan. This method may be used only to the extent that: [a] the Acquisition Loan provides for annual payments of principal and interest at a cumulative rate that is not less rapid at any time than level annual payments of such combined amounts for ten years; [b] interest included in any payment on the Acquisition Loan is disregarded only to the extent that it would be determined to be interest under standard loan amortization tables; and [c] the entire duration of the Acquisition Loan repayment period does not exceed ten years, even in the event of a renewal, extension or refinancing of the Acquisition Loan.

If subsection 5.1(b)(1) is applicable and if no amount of principal and interest is paid for the Plan Year, or if subsection 5.1(b)(2) is applicable and no amount of principal is paid for the Plan Year, there shall be no release of shares of Employer Stock from the Loan Suspense Account for the Plan Year. Therefore, by establishing the terms of an Acquisition Loan or by extending, renewing or renegotiating the terms of a loan, the Employer may, in its sole and exclusive discretion, cause no shares of Employer Stock to be released from the Loan Suspense Account for a Plan Year or reduce or eliminate the number of said shares which would have been so released had the Employer not extended, renewed or renegotiated the terms of the Acquisition Loan.

32

In each Plan Year in which Trust Assets are applied to make payments on an Acquisition Loan, the Financed Shares released from the Loan Suspense Account in accordance with the provisions of this Section shall be allocated among the Employer Stock Accounts of Participants in the manner determined by the Committee based upon the source of funds (Employer Contributions, earnings attributable to Employer Contributions and cash dividends on Financed Shares allocated to Participants’ Employer Stock Accounts or cash dividends on Financed Shares credited to the Loan Suspense Account) used to make the payments on the Acquisition Loan. Cash dividends on Financed Shares used for payment of an Acquisition Loan shall be allocated pursuant to Section 5.2(a).

        5.2 Account Adjustments: The accounts of Participants, former Participants and Beneficiaries shall be adjusted in accordance with the following:

33

[a]        If the Employer is or becomes an S corporation under Code Section 1361, cash dividends on Financed Shares allocated to a Participant’s Employer Stock Account may not be used for payments on an Acquisition Loan under this Section 5.2(a)(2)unless permitted by applicable federal pension law.

[b]        If a Participant is disqualified under Section 5.2(d) because of a transaction involving Code Section 1042, the Trustee will invest the dividends as part of the Participant’s Other Investments Account and will not use the dividends to make payments on a loan incurred by the Trustee or purchase shares of Employer Stock from the pledged shares or suspense account.

(b)        Elective Deferral Contributions: The Employer Contribution for a Plan Year which is made pursuant to elective deferral agreements entered into with Participants pursuant to Section 4.2 for such Plan Year shall be allocated to the respective Participant’s Elective Deferral Accounts and to his or her Employer Stock Account and/or Other Investments Accounts as of such date as is specified in administrative procedures adopted and uniformly administered by the Committee.

(c)        Employer Discretionary Contributions:

(1)        As of the end of each Plan Year, any Employer Discretionary Contribution for a Plan Year which is made pursuant to Section 4. 1(b)(1) shall be allocated to the Employer Discretionary Contribution Accounts and to his or her Employer Stock Account and/or Other Investments Account of those Participants for whom contributions were made.

(2)        If this Plan is a Top-Heavy plan under Article XIV hereof, no allocations shall be made hereunder until the minimum contribution allocations set forth in Section 14.3 have been made.

(d)        Employer Matching Contributions: As of the end of each Plan Year, any Employer Matching Contributions for a Plan Year which are made pursuant to Section 4.1(b)(2) shall be allocated to the respective Employer Matching Contribution Accounts and to his or her Employer Stock Account and/or Other Investments Account of those Participants for whom the Employer Matching Contributions were made.

(e)        Forfeitures: As of the end of each Plan Year, any Forfeitures which have become available during such Year shall be allocated to the Employer Stock Accounts or Other Investments Accounts of Participants in the manner set forth in Section 4. 1.

(f)        Limitations on Allocations to Certain Participants:

(1)        No portion of the Trust Fund attributable to (or allocable in lieu of) Employer Stock acquired by the Plan after October 22, 1986 in a sale to which Code Section 1042 or Code Section 2057 applies may accrue or be allocated directly or indirectly under any plan maintained by the Employer meeting the requirements of Code Section 40 1(a):

34

[a]        during the “Nonallocation Period,” for the benefit of:

[i]        any taxpayer who makes an election under Code Section 1042(a) with respect to Employer Stock or any decedent if the executor of the estate of the decedent makes a qualified sale to which Code Section 2057 applies,

[ii]        any individual who is related to the taxpayer or the decedent (within the meaning of Code Section 267(b)) or,

[b]        for the benefit of any other person who owns (after application of Code Section 3 18(a) applied without regard to the employee trust exception in Code Section 31 8(a)(2)(B)(i)) more than 25% of:

[i]        any class of outstanding stock of the Employer or Affiliated Employer which issued such Employer Stock, or

[ii]        the total value of any class of outstanding stock of the Employer or Affiliated Employer.

(2)        Except, however, subparagraph (1)[a][ii] above shall not apply to lineal descendants of the taxpayer, provided that the aggregate amount allocated to the benefit of all such lineal descendants during the “Nonallocation Period” does not exceed more than 5 % of the Employer Stock (or amounts allocated in lieu thereof) held by the Plan which are attributable to a sale to the Plan by any person related to such descendants (within the meaning of Code Section 267(c)(4)) in a transaction to which Code Section 1042 or Code Section 2057 is applied.

(3)        A person shall be treated as failing to meet the stock ownership limitation under paragraph (1)[b] above if such person fails such limitation:

[a]        at any time during the one year period ending on the date of sale of Employer Stock to the Plan, or

[b]        on the date as of which Employer Stock is allocated to Participants in the Plan.

(4)        For purposes of this Section, “Nonallocation Period” means the period beginning on the date of the sale of Employer Stock and ending on the later of:

[a]        the date which is ten years after the date of sale, or

[b]        the date of the Plan allocation attributable to the final payment of the Acquisition Loan incurred in connection with such sale.

        5.3 Limitation on Allocations: This Section 5.3 applies notwithstanding any other provision in this Plan to the contrary.

35

(a)        If the Participant does not participate in, and has never participated in another qualified plan or a welfare benefit fund, as defined in Code Section 419(e), maintained by the Employer, an individual medical account, as defined in Code Section 415(l)(2),or a SEP defined in Code Section 408(k) maintained by the Employer, which provides an Annual Addition as defined in Section 2.1, the amount of Annual Additions which may be credited to the Participant’s account for any Limitation Year will not exceed the lesser of the maximum permissible amount or any other limitation contained in this Plan. If the Employer contribution that would otherwise be contributed or allocated to the Participant’s account would cause the Annual Additions for the Limitation Year to exceed the maximum permissible amount, the amount contributed or allocated will be reduced so that the Annual Additions for the Limitation Year will equal the maximum permissible amount.

Prior to determining the Participant’s actual compensation for the Limitation Year, the Employer may determine the maximum permissible amount for a Participant on the basis of a reasonable estimation of the Participant’s compensation for the Limitation Year, uniformly determined for all Participants similarly situated.

As soon as is administratively feasible after the end of the Limitation Year, the maximum permissible amount for the Limitation Year will be determined on the basis of the Participant’s actual compensation for the Limitation Year.

If pursuant to the preceding paragraph or as a result of the allocation of forfeitures, or as a result of a reasonable error in determining the amount of elective deferrals (within the meaning of Code Section 402(g)(3)) that may be made with respect to any individual under the limits of Code Section 415, there is an excess amount, the excess will be disposed of as follows:

(1)        Any nondeductible voluntary Employee Contributions, to the extent they would reduce the excess amount, will be returned to the Participant. Any gains attributable to such returned Employee Contributions will also be returned or will be treated as additional Employee Contributions for the Limitation Year in which the Employee Contributions were made.

(2)        If after the application of paragraph (1) an excess amount still exists, any elective deferrals (plus attributable earnings), to the extent they would reduce the excess amount, will be distributed to the Participant.

(3)        If after the application of paragraph (2) an excess amount still exists, and the Participant is covered by the Plan at the end of a Limitation Year, the excess amount in the Participant’s account will be used to reduce Employer contributions (including any allocation of forfeitures) for such Participant in the next Limitation Year, and each succeeding Limitation Year if necessary.

(4)        If after the application of paragraph (3) an excess amount still exists, and the Participant is not covered by the Plan at the end of a Limitation Year, the excess amount will be held unallocated in a suspense account. The suspense account will be applied to reduce future Employer contributions (including any allocation of forfeitures) for all remaining Participants in the next Limitation Year, and each succeeding Limitation Year if necessary.

36

(5)        If a suspense account is in existence at any time during the Limitation Year pursuant to this section, it will not participate in the allocation of the trust’s investment gains and losses. If a suspense account is in existence at any time during a particular Limitation Year, all amounts in the suspense account must be allocated and reallocated to Participants’ accounts before any Employer contributions may be made to the Plan for that Limitation Year. Excess amounts may not be distributed to Participants or former Participants.

(b)        This section applies if, in addition to this Plan, the Participant is covered under another qualified defined contribution plan or welfare benefit fund, as defined in Code Section 4 19(e), maintained by the Employer or an individual medical account, as defined in Code Section 415(l)(2), or a SEP defined in Code Section 408(k) maintained by the Employer which provides an Annual Addition as defined in Section 2.1, during any Limitation Year. The Annual Additions which may be credited to a Participant’s account under this Plan for any such Limitation Year when added to the Annual Additions credited to a Participant’s account under the other plans and welfare benefit funds for the same Limitation Year shall not exceed the maximum permissible amount. If the Annual Additions with respect to the Participant under other defined contribution plans and welfare benefit funds maintained by the Employer are less than the maximum permissible amount and the Employer contribution that would otherwise be contributed or allocated to the Participant’s account under this Plan would cause the Annual Additions for the Limitation Year to exceed this limitation, the amount contributed or allocated to the other defined contribution plan will be reduced so that the Annual Additions under all such plans and funds for the Limitation Year will equal the maximum permissible amount.

Prior to determining the Participant’s actual compensation for the Limitation Year, the Employer may determine the maximum permissible amount for a Participant in the manner described in Section 5.3(a).

As soon as is administratively feasible after the end of the Limitation Year, the maximum permissible amount for the Limitation Year will be determined on the basis of the Participant’s actual compensation for the Limitation Year.

If, pursuant to the preceding paragraph, or as a result of the allocation of forfeitures, or as a result of a reasonable error in determining the amount of elective deferrals (within the meaning of Code Section 402(g)(3)) that may be made with respect to any individual under the limits of Code Section 415, a Participant’s Annual Additions under this Plan and such other plans would result in an excess amount for a Limitation Year, the excess amount will be deemed to consist of the Annual Additions last allocated, except that Annual Additions attributable to a simplified employee pension will be deemed to have been allocated first, followed by annual additions to a welfare benefit fund or individual medical account regardless of the actual allocation date.

37

If an excess amount was allocated to a Participant on an allocation date of this Plan which coincides with an allocation date of another plan, the excess amount attributed to this Plan will be the product of,

(1)        the total excess amount allocated as of such date, times

(2)        the ratio of (i) the Annual Additions allocated to the Participant for the Limitation Year as of such date under this Plan to (ii) the total Annual Additions allocated to the Participant for the Limitation Year as of such date under this and all the other qualified defined contribution plans.

Any excess amount attributed to this Plan will be disposed in the manner described in Section 5.3(a).

(c)        For purposes of this Section 5.3 the following definitions shall apply:

(1)        Compensation: A Participant’s Earned Income, wages, salaries, and fees for professional services and other amounts received for personal services actually rendered in the course of employment with the Employer (including, but not limited to, commissions paid salesmen, compensation for services on the basis of a percentage of profits, commissions on insurance premiums, tips and bonuses), with the adjustments noted below.

[a]        Employer contributions to a plan of deferred compensation which are not includible in the Employee’s gross income for the taxable year in which contributed, or Employer contributions under a simplified employee pension plan to the extent such contributions are deductible by the Employee, or any distributions from a plan of deferred compensation shall be excluded from compensation; provided, that effective for Plan Years beginning after December 31, 1997, such Employer Contributions which are made pursuant to a compensation deferral agreement signed by an Employee pursuant to which the Employee elects to defer receipt of compensation shall be included in compensation for purposes of this Section.

[b]        Amounts realized from the exercise of a non-qualified stock option, or when restricted stock (or property) held by the Employee either becomes freely transferable or is no longer subject to a substantial risk of forfeiture shall be excluded from compensation.

[c]        Amounts realized from the sale, exchange or other disposition of stock acquired under a qualified stock option shall be excluded from compensation.

[d]        Amounts which an Employee elects not to receive as taxable compensation pursuant to Code Section 125 shall be included in compensation effective for Plan Years beginning after December 31, 1997.

[e]        For Limitation Years beginning on or after January 1, 2001, for purposes of applying the limitations described in this Section 5.3, compensation paid or made available during such Limitation Years shall include elective amounts that are not includible in the gross income of the Employee by reason of Code Section 132(f)(4).

38

(2)        Defined contribution dollar limitation: $30,000, as adjusted under Code Section 4 15(d).

(3)        Excess amount: The excess of the Participant’s Annual Additions for the Limitation Year over the maximum permissible amount.

(4)        Limitation Year: A calendar year, or the 12- consecutive month period elected by the Employer. All qualified plans maintained by the Employer must use the same Limitation Year. If the Limitation Year is amended to a different 12- consecutive month period, the new Limitation Year must begin on a date within the Limitation Year in which the amendment is made. The Limitation Year for purposes of this Plan shall be the same as the Plan Year.

(5)        Maximum Permissible Amount: The Maximum Annual Addition that may be contributed or allocated to a Participant’s account under the Plan for any Limitation Year shall not exceed the lesser of:

[a]        the defined contribution dollar limitation; or

[b]        25% of the Participant’s compensation for the Limitation Year.

The compensation limitation referred to in [b] shall not apply to any contribution for medical benefits (within the meaning of Code Section 401(h) or Code Section 419A(f)(2)) which is otherwise treated as an Annual Addition under Code Section 415(l)(l) or Code Section 419A(d)(2).

If a short Limitation Year is created because of an amendment changing the Limitation Year to a different 12-consecutive month period, the maximum permissible amount will not exceed the defined contribution dollar limitation multiplied by the following fraction:

Number of months in the short limitation year
12

39

Employer Stock that is released from the Loan Suspense Account by reason of payments on an Acquisition Loan for the Plan Year shall be deemed to be contributed to the Trust for that Plan Year for purposes of Section 5.3.

(e)        Adjustment to Annual Additions: In the case of shares of Employer Stock released from suspense and allocated to Participants’ accounts for a particular year as determined by the Committee, Annual Additions will be calculated on the basis of the Fair Market Value of shares of Employer Stock so released and allocated if the Annual Addition as so calculated is lower than the Annual Addition calculated on the basis of Employer Contributions. For this purpose, the Fair Market Value will be determined as of the Valuation Date chosen by the Committee.

(f)        Effective date. This Section 5.3(1) shall be effective for Limitation Years beginning after December 31, 2001.

(1)        Maximum annual addition. The annual addition that may be contributed or allocated to a Participant’s account under the Plan for any Limitation Year shall not exceed the lesser of:

[a]        $40,000, as adjusted for increases in the cost-of-living under Code Section 415(d), or

[b]        100% of the Participant’s compensation, within the meaning of Code Section 415(c)(3), for the Limitation Year.

The contribution limit referred to in [a] shall not apply to any catch-up contribution made pursuant to Code Section 414(v). The compensation limit referred to in [b] shall not apply to any contribution for medical benefits after separation from service (within the meaning of Code Section 401(h) or Code Section 419A(f)(2)) which is otherwise treated as an annual addition.

ARTICLE VI — BENEFITS

        6.1 Benefit Distributions:

40

(c)        If the Employer becomes substantially Employee owned or if the Employer is or becomes an S corporation, the Committee may eliminate, with respect to all Participants, optional forms of benefit by substituting cash distributions for distributions in the form of Employer Stock with respect to benefits subject to Code Section 409(h).

        6.2 Normal Retirement, Early Retirement or Disability: If a Participant’s employment with the Employer is terminated at or after he reaches his Normal Retirement Age or his Early Retirement Age, or if his employment is terminated at an earlier age because of Disability, he shall be entitled to receive the entire amount then in each of his accounts in accordance with Section 6.5within a reasonable time after the attainment of Normal or Early Retirement Age or Disability (as the case may be).

X = P(AB +(RXD))-(RXD)

41

        6.3 Death:

        6.4 Termination for Other Reasons:

42

No. of Years of Service Credit For Purposes of Vesting 0-2 3 4 5 6 7

Vested Percentage 0% 20% 40% 60% 80% 100%

Forfeited Percentage 100% 80% 60% 40% 20% 0%

For any Plan Year in which the Plan is a top-heavy plan pursuant to Article XIV, such vested percentage shall be determined in accordance with the following schedule (not slower than the 2 to 6 year graded vesting schedule provided by Code Section 416(b)(1)).

43

If a Participant terminates service with a vested account balance (at the time of distribution or any prior distribution) greater than $5,000 (or such other indexed amount as may be applicable) and elects, in accordance with the requirements of Section 6.5,to receive the value of the Participant’s vested account balance, the nonvested portion will be treated as a Forfeiture. If the Participant elects to have distributed less than the entire vested portion of the account balance derived from Employer Contributions, the part of the nonvested portion that will be treated as a Forfeiture is the total nonvested portion multiplied by a fraction, the numerator of which is the amount of the distribution attributable to Employer Contributions and the denominator of which is the total value of the vested Employer derived account balance. Any such distribution will be made in accordance with the following:

(1)        Distributions from the 401(k) portion of the Plan shall be made within a reasonable time following the date on which the Participant elects to receive a distribution.

(2)        Distributions from the ESOP portion of the Plan shall be made within a reasonable time following the end of the Plan Year during which the Participant elects to receive a distribution.

However, if the distribution would result in the payment of excise taxes under Code Section 4978(d)(l), such distribution will not occur until the Participant has incurred a one-year Break in Service.

44

Effective with respect to distributions made after December 31, 2001 and with respect to Participants who separated from employment regardless of when the severance from employment occurred. For purposes of this Section 6.4(c), the value of a Participant’s nonforfeitable account balance shall be determined without regard to that portion of the account balance that is attributable to rollover contributions (and earnings allocable thereto) within the meaning of Code Sections 402(c), 403(a)(4), 403(b)(8), 408(d)(3)(A)(ii), and 457(e)(16). If the value of the Participant’s nonforfeitable account balance as so determined is $5,000 or less, the Plan shall immediately distribute the Participant’s entire nonforfeitable account balance.

The consent of the Participant and the Participant's Spouse shall be obtained in writing within the 90-day period ending on the Annuity Starting Date. The Annuity Starting Date is the first day of the first period for which an amount is paid as an annuity or any other form. The Plan Administrator shall notify the Participant and the Participant’s Spouse of the right to defer any distribution until the Participant’s account balance is no longer immediately distributable. Such notification shall include a general description of the material features, and an explanation of the relative values of, the optional forms of benefit available under the Plan in a manner that would satisfy the notice requirements of Code Section 417(a)(3), and shall be provided no less than 30 days and no more than 90 days prior to the Annuity Starting Date. However, distribution may commence less than 30 days after the notice described in the preceding sentence is given, provided the distribution is one to which Code Sections 401(a)(11) and 417 do not apply, the Plan Administrator clearly informs the Participant that the Participant has a right to a period of at least 30 days after receiving the notice to consider the decision of whether or not to elect a distribution (and, if applicable, a particular distribution option), and the Participant, after receiving the notice affirmatively elects a distribution.

Notwithstanding the foregoing, only the Participant need consent to the commencement of a distribution in the form of a Qualified Joint and Survivor Annuity while the account balance is immediately distributable. (Furthermore, if payment in the form of a Qualified Joint and Survivor Annuity is not required with respect to the Participant pursuant to Plan Section 6.5(b)(6), only the Participant need consent to the distribution of an account balance that is immediately distributable.) Neither the consent of the Participant nor the Participant’s Spouse shall be required to the extent that a distribution is required to satisfy Code Section 401(a)(9) or Code Section 415. In addition, upon termination of the Plan if the Plan does not offer an annuity option (purchased from a commercial provider) and if the Employer or any entity within the same controlled group as the Employer does not maintain another defined contribution plan (other than an employee stock ownership plan as defined in Code Section 4975(e)(7)), the Participant’s account balance will, without the Participant’s consent, be distributed to the Participant. However, if any entity within the same controlled group as the Employer maintains another defined contribution plan (other than an employee stock ownership plan as defined in Code Section 4975(e)(7) then the Participant’s account balance will be transferred, without the Participant’s consent, to the other plan if the Participant does not consent to an immediate distribution.

45

An account balance is immediately distributable if any part of the account balance could be distributed to the Participant (or surviving spouse) before the Participant attains (or would have attained if not deceased) the later of Normal Retirement Age or age 62.

For purposes of determining the applicability of the foregoing consent requirements to distributions made before the first day of the first plan year beginning after December 31, 1988, the Participant’s vested account balance shall not include amounts attributable to accumulated deductible employee contributions with the meaning of Code Section 72(o)(5)(B).

(e)        Transitional Rules for Cash Out Limits. This section provides transitional rules with regard to the cash out limits for distributions made prior to October 17, 2000.

(1)        Distributions Subject to Code Section 417. If payment in the form of a qualified Joint and Survivor Annuity is required with regard to a Participant, the rule in this Section 6.4(e)(1) shall supersede the rules set forth in Section 6.4(d) above. If the value of a Participant’s vested account balance derived from Employer and Employee contributions exceeds (or at the time of any prior distribution:

[a]        in Plan Years beginning before August 6, 1997, exceeded $3,500 or

[b]        in Plan Years beginning after August 5, 1997, exceeded) $5,000,

and the account balance is immediately distributable, the Participant and the Participant’s Spouse (or where either the Participant or the Spouse has died, the survivor) must consent to any distribution of such account balance.

46

        6.5 Payment of Benefits: The benefit commencement date and form of benefit shall be determined in accordance with this Section 6.5. The Committee may charge a reasonable administrative fee in connection with the payment of benefits from the Plan. This fee may be established pursuant to administrative procedures. Any distribution to be made under this Plan shall be valued as of such date as the Committee deems appropriate.

47

[b]        Any Participant other than a 5 % owner attaining age 70½ in years prior to 1997 may elect to stop distributions and recommence by the April 1 of the calendar year following the year in which the Participant retires. There is no new annuity starting date upon recommencement.

(4) Elective Deferrals, Qualified Nonelective Contributions and Qualified Matching Contributions, if any, and income allocable to each, are not distributable to a Participant or his or her beneficiary, in accordance with such Participant’s or beneficiary’s election, earlier than the earliest to occur of the following events:

[a]        Separation from service, death or disability.

[b]        Termination of the Plan without the establishment of another defined contribution plan, other than an employee stock ownership plan (defined in Code Section 4975(e)(7), a simplified employee pension plan (defined in Code Section 408(k)) or a SIMPLE IRA Plan (defined in Code Section 408(p)).

[c]        The disposition by a corporation to an unrelated corporation of substantially all of the assets (within the meaning of Code Section 409(d)(2)) used in a trade or business of such corporation if such corporation continues to maintain this Plan after the disposition, but only with respect to Employees who continue employment with the corporation acquiring such assets.

[d]        The disposition by a corporation to an unrelated entity of such corporation’s interest in a subsidiary (within the meaning of Code Section 409(d)(3)) if such corporation continues to maintain this Plan, but only with respect to Employees who continue employment with such subsidiary.

[e]        The attainment of age 59-1/2.

[f]        The hardship of the Participant as described in Section 6.8.

[g]        This section shall apply for distributions occurring after December 31, 2001, regardless of when the severance from employment occurred. A Participant’s Elective Deferrals, Qualified Nonelective Contributions, Qualified Matching Contributions, and earnings attributable to these contributions shall be distributed on account of the Participant’s severance from employment. However, such a distribution shall be subject to the other provisions of the Plan regarding distributions, other than provisions that require a separation from service before such amounts may be distributed.

All distributions that may be made pursuant to one or more of the foregoing distributable events are subject to the spousal and Participant consent requirements (if applicable contained in Code Sections 401(a)(11) and 417. In addition, distributions that are triggered by any of [b], [c] or [d] above must be made in a lump sum.

48

(b)        Form of Benefit: Section 6.5(c) requires that benefits be paid in the form of certain kinds of annuities unless a qualified election has been filed with the Committee. If a qualified election has been filed, then the Participant or Beneficiary may select an optional form of benefit in accordance with this Section 6.5(b). The optional forms of benefit available under the Plan are listed below in this Section 6.5(b).

If he or she has elected an optional form of benefit pursuant to a Qualified Election within the Election Period, a Participant’s vested account balance will be paid in one of the following forms as elected by the Participant:

(1)        A lump sum payment equal to the vested portion of the amount standing to the Participant’s account as of his benefit commencement date.

(2)        A direct rollover of the Participant’s vested account balance to another plan that satisfies the requirements of Code Section 40 1(a). A distributee may elect, at the time and in the manner prescribed by the Committee, to have any portion of an eligible rollover distribution paid directly to an eligible retirement plan specified by the distributee in a direct rollover. For purposes of this Section 6.5(b)(2), the following definitions shall apply:

[a]        Eligible rollover distribution: An eligible rollover distribution is any distribution of all or any portion of the balance to the credit of the distributee, except that an eligible rollover distribution does not include: any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the distributee or the joint lives (or joint life expectancies) of the distributee and the distributee’s designated beneficiary, or for a specified period of ten years or more; any distribution to the extent such distribution is required under Code Section 401(a)(9); any hardship distribution described in Code Section 401(k)(2)(B)(i)(IV) received after December 31, 1998; the portion of any other distribution that is not includible in gross income (determined without regard to the exclusion for net unrealized appreciation with respect to Employer securities); and any other distribution that is reasonably expected to total less than $200 during a year.

[b]        Eligible retirement plan: An eligible retirement plan is an individual retirement account described in Code Section 408(a), an individual retirement annuity described in Code Section 408(b), an annuity plan described in Code Section 403(a), or a qualified trust described in Code Section 40 1(a), that accepts the distributee’s eligible rollover distribution. However, in the case of an eligible rollover distribution to the surviving spouse, an eligible retirement plan is an individual retirement account or individual retirement annuity.

[c]        Distributee: A distributee includes an Employee or former Employee.

In addition, the Employee’s or former Employee’s surviving spouse and the Employee’s or former Employee’s spouse or former spouse who is the alternate payee under a qualified domestic relations order, as defined in Code Section 414(p), are distributees with regard to the interest of the spouse or former spouse.

49

[d]        Direct rollover: A direct rollover is a payment by the Plan to the eligible retirement plan specified by the distributee.

(3)        Installment payments for a specified number of years in accordance with Section 6.6. Any unpaid balance at the end of each Plan Year shall receive an income allocation. Such periodic payments shall not be made less frequently than annually.

(4)        In the case of a restated Plan, if the Plan previously allowed optional forms of benefit distribution which are not permitted under this restated Plan, this restated Plan shall not be effective to eliminate or restrict an optional form of benefit except as set forth below. The preceding sentence shall not apply to an amendment (including this restatement) adopted and effective after September 5, 2000, that eliminates or restricts the ability of a Participant to receive payment of his or her account balance under a particular optional form of benefit if the amendment satisfies the conditions in [a] and [b] below:

[a]        The amendment provides a single-sum distribution form that is otherwise identical to the optional form of benefit eliminated or restricted. For purposes of this condition [a], a single-sum distribution form is otherwise identical only if it is identical in all respects to the eliminated or restricted optional form of benefit (or would be identical except that it provides greater rights to the Participant) except with respect to the timing of payments after commencement.

[b]        The amendment is not effective unless the amendment provides that the amendment shall not apply to any distribution with an annuity starting date that is earlier than the earlier of:

[i]        The 90th day after the date the Participant has been furnished a summary that reflects the elimination of such optional form and that meets the requirements of 29 CFR 2520. 104b-3; or

[ii]        The first day of the second Plan Year following the Plan Year in which this restated Plan is adopted.

Notwithstanding the foregoing, in no event will the Plan be permitted to eliminate any survivor annuity required by Code Sections 401(a)(l 1) and 417 or any direct rollover option required by Code Section 401(a)(31).

(5)        In the case of benefits payable pursuant to Section 6.3, the Participant may elect to allow his Surviving Spouse or Beneficiary to select the form in which any such benefits will be paid. When selecting such form, the Surviving Spouse or Beneficiary may choose among the optional forms listed in this Section 6.5(b).

(6)        If the Participant does not elect a form of benefit prior to the Participant’s death and does not elect according to Section 6.5(b)(5) above, then the Beneficiary will elect the form of payment (among the optional forms listed in this Section 6.5(b)) of any amount due to that Beneficiary.

50

(c)        Joint and Survivor Annuity Requirements.

(1)        The provisions of this article shall apply to any Participant who is credited with at least one hour of service with the Employer on or after August 23, 1984, and to such other Participants as provided in this Section 6.5(c).

(2)        Qualified Joint and Survivor Annuity. Unless an optional form of benefit is selected pursuant to a qualified election within the 90-day period ending on the annuity starting date, a married Participant’s vested account balance will be paid in the form of a qualified joint and survivor annuity and an unmarried Participant’s vested account balance will be paid in the form of a life annuity. The Participant may elect to have such annuity distributed upon attainment of the earliest retirement age under the Plan.

(3)        Qualified Preretirement Survivor Annuity. Unless an optional form of benefit has been selected within the election period pursuant to a qualified election, if a Participant dies before the annuity starting date then the Participant’s vested account balance shall be applied toward the purchase of an annuity for the life of the Surviving Spouse. The Surviving Spouse may elect to have such annuity distributed within a reasonable period after the Participant’s death.

(4) Definitions.

[a]        Election Period: The period which begins on the first day of the Plan Year in which the Participant attains age 35 and ends on the date of the Participant’s death. If a Participant separates from service prior to the first day of the Plan Year in which age 35 is attained, with respect to the account balance as of the date of separation, the election period shall begin on the date of separation.

[b]        Pre-Age 35 Waiver: A Qualified Election made by a Participant to waive the qualified preretirement survivor annuity prior to the first day of the Plan Year in which the Participant attains age 35. Such election shall not be valid unless the Participant receives a written explanation of the qualified preretirement survivor annuity in such terms as are comparable to the explanation required under Section 6.5(c)(5).Qualified preretirement survivor annuity coverage will be automatically reinstated as of the first day of the Plan Year in which the Participant attains age 35.Any new waiver on or after such date shall be subject to the full requirements of this Section 6.5.

[c]        Earliest Retirement Age: The earliest date on which, under the Plan, the Participant could elect to receive retirement benefits.

[d]        Qualified Election: A waiver of a qualified joint and survivor annuity or a qualified preretirement survivor annuity. Any waiver of a qualified joint and survivor annuity or a qualified preretirement survivor annuity shall not be effective unless:

51

[i]        the Participant’s Spouse consents in writing to the election;

[ii]        the election designates a specific Beneficiary, including any class of Beneficiaries or any contingent Beneficiaries, which may not be changed without spousal consent (or the spouse expressly permits designations by the Participant without any further spousal consent);

[iii]        the Spouse’s consent acknowledges the effect of the election; and

[iv]        the Spouse’s consent is witnessed by a Plan representative or notary public.

Additionally, a Participant’s waiver of the qualified joint and survivor annuity shall not be effective unless the election designates a form of benefit payment which may not be changed without spousal consent (or the Spouse expressly permits designations by the Participant without any further spousal consent). If it is established to the satisfaction of a plan representative that there is no Spouse or that the Spouse cannot be located, a waiver will be deemed a qualified election.

52

[g]        Annuity Starting Date: The first day of the first period for which an amount is paid as an annuity or any other form.

[h]        Vested Account Balance: The aggregate value of the Participant’s vested account balances derived from Employer and Employee Contributions (including rollovers), whether vested before or upon death, including the proceeds of insurance contracts, if any, on the Participant’s life. The provisions of this article shall apply to a Participant who is vested in amounts attributable to Employer Contributions, Employee Contributions (or both) at the time of death or distribution.

(5) Notice Requirements.

[a]        In the case of a qualified joint and survivor annuity, the Committee shall no less than 30 days and no more than 90 days prior to the annuity starting date provide each Participant a written explanation of:

[i]        the terms and conditions of a qualified joint and survivor annuity;

[ii]        the Participant’s right to make and the effect of an election to waive the qualified joint and survivor annuity form of benefit;

[iii]        the rights of a Participant’s Spouse; and

[iv]        the right to make, and the effect of, a revocation of a previous election to waive the qualified joint and survivor annuity.

[b]        In the case of a qualified preretirement survivor annuity as described in Section 6.5(c)(3), the Committee shall provide each Participant within the applicable period for such Participant a written explanation of the qualified preretirement survivor annuity in such terms and in such manner as would be comparable to the explanation provided for meeting the requirements of Section 6.5(c)(5) applicable to a qualified joint and survivor annuity.

The applicable period for a Participant is whichever of the following periods ends last:

[i]        the period beginning with the first day of the Plan Year in which the Participant attains age 32 and ending with the close of the Plan Year preceding the Plan Year in which the Participant attains age 35;

[ii]        a reasonable period ending after the individual becomes a Participant;

53

[iii]        a reasonable period ending after Section 6.5(c)(5) ceases to apply to the Participant;

[iv]        a reasonable period ending after this Article first applies to the Participant.

Notwithstanding the foregoing, notice must be provided within a reasonable period ending after separation from service in the case of a Participant who separates from service before attaining age 35.

For purposes of applying the preceding paragraph, a reasonable period ending after the enumerated events described in [ii], [iii] and [iv] is the end of the two-year period beginning one year prior to the date the applicable event occurs, and ending one year after that date. In the case of a Participant who separates from service before the Plan Year in which age 35 is attained, notice shall be provided within the two-year period beginning one year prior to separation and ending one year after separation. If such a Participant thereafter returns to employment with the Employer, the applicable period for such Participant shall be redetermined.

[c]        Notwithstanding the other requirements of this Section 6.5(c)(5), the respective notices prescribed by this Section need not be given to a Participant if:

[i]        the Plan “fully subsidizes” the costs of a qualified joint and survivor annuity or qualified preretirement survivor annuity, and

[ii]        the Plan does not allow the Participant to waive the qualified joint and survivor annuity or qualified preretirement survivor annuity and does not allow a married Participant to designate a nonspouse Beneficiary. For purposes of this Section 6.5(c)(5), a Plan fully subsidizes the costs of a benefit if no increase in cost, or decrease in benefits to the Participant may result from the Participant’s failure to elect another benefit.

[d]        The annuity starting date for a distribution in a form other than a qualified joint and survivor annuity may be less than 30 days after receipt of the written explanation described in the preceding paragraph provided: (a) the Participant has been provided with information that clearly indicates that the Participant has at least 30 days to consider whether to waive the qualified joint and survivor annuity and elect (with spousal consent) to a form of distribution other than a qualified joint and survivor annuity; (b) the Participant is permitted to revoke any affirmative distribution election at least until the annuity starting date or, if later, at any time prior to the expiration of the 7-day period that begins the day after the explanation of the qualified joint and survivor annuity is provided to the Participant; and (c) the annuity starting date is a date after the date that the written explanation was provided to the Participant.

(6)        Safe Harbor Rules.

54

[a]        This Section shall apply to a Participant in a profit sharing plan or an employee stock ownership plan, and to any distribution, made on or after the first day of the first Plan Year beginning after December 31, 1988, from or under a separate account attributable solely to accumulated deductible Employee Contributions, as defined in Code Section 72(o)(5)(B), and maintained on behalf of a Participant in a money purchase pension plan, (including a target benefit plan) if the following conditions are satisfied:

[i]        the Participant does not or cannot elect payments in the form of a life annuity; and

[ii]        on the death of a Participant, the Participant’s vested account balance will be paid to the Participant’s Surviving Spouse, but if there is no Surviving Spouse, or if the Surviving Spouse has consented in a manner conforming to a qualified election, then to the Participant’s designated Beneficiary.

The Surviving Spouse may elect to have distribution of the vested account balance commence within the 90-day period following the date of the Participant’s death. The account balance shall be adjusted for gains or losses occurring after the Participant’s death in accordance with the provisions of the Plan governing the adjustment of account balances for other types of distributions. This Section 6.5(c)(6) shall not be operative with respect to a Participant in a profit sharing plan if the plan is a direct or indirect transferee of a defined benefit plan, money purchase plan, a target benefit plan, stock bonus, or profit sharing plan which is subject to the survivor annuity requirements of Code Sections 401(a)(11) and 417. If this Section 6.5(c)(6) is operative, then the provisions of this Section 6.5(c), other than Sections 6.5(c)(6) and (c)(7), shall be inoperative.

[b]        The Participant may waive the spousal death benefit described in this Section at any time provided that no such waiver shall be effective unless it satisfies the conditions of Section 6.5(c)(4) (other than the notification requirement referred to therein) that would apply to the Participant’s waiver of the qualified preretirement survivor annuity.

[c]        For purposes of this Section 6.5(c)(6), vested account balance shall mean, in the case of a money purchase pension plan or a target benefit plan, the Participant’s separate account balance attributable solely to accumulated deductible Employee Contributions within the meaning of Code Section 72(o)(5)(B). In the case of a profit sharing plan, vested account balance shall have the same meaning as provided in Section 6.5(c)(4).

(7) Transitional Rules.

[a]        Any living Participant not receiving benefits on August 23, 1984, who would otherwise not receive the benefits prescribed by the previous sections of this Article must be given the opportunity to elect to have the prior elections of this article apply if such Participant is credited with at least one hour of service under this Plan or a predecessor Plan in a Plan Year beginning on or after January 1, 1976, and such Participant had at least 10 years of vesting service when he or she separated from service.

55

[b]        Any living Participant not receiving benefits on August 23, 1984, who was credited with at least one hour of service under this Plan or a predecessor Plan on or after September 2, 1974, and who is not otherwise credited with any service in a Plan Year beginning on or after January 1, 1976, must be given the opportunity to have his or her benefits paid in accordance with Section 6.5(c)(7)[d].

[c]        The respective opportunities to elect (as described in Section 6.5(c)(7) above) must be afforded to the appropriate Participants during the period commencing on August 23, 1984, and ending on the date benefits would otherwise commence to said Participants.

[d]        Any Participant who has elected pursuant to Section 6.5(c)(7) of this article and any Participant who does not elect under Section 6.5(c)(7)[a] or who meets the requirements of Section 6.5(c)(7)[a] except that such Participant does not have at least 10 years of vesting service when he or she separates from service, shall have his or her benefits distributed in accordance with all of the following requirements if benefits would have been payable in the form of a life annuity:

[i]        Automatic Joint and Survivor Annuity. If benefits in the form of a life annuity become payable to a married Participant who:

a.        begins to receive payments under the Plan on or after normal retirement age; or

b.        dies on or after normal retirement age while still working for the employer; or

c.        begins to receive payments on or after the qualified early retirement age; or

d.        separates from service on or after attaining normal retirement age (or the qualified early retirement age) and after satisfying the eligibility requirements for the payment of benefits under the Plan and thereafter dies before beginning to receive such benefits;

then such benefits will be received under this Plan in the form of a qualified joint and survivor annuity, unless the Participant has elected otherwise during the election period. The election period must begin at least 6 months before the participant attains qualified early retirement age and end not more than 90 days before the commencement of benefits. Any election hereunder will be in writing and may be changed by the Participant at any time.

56

[ii]        Election of Early Survivor Annuity. A Participant who is employed after attaining the qualified early retirement age will be given the opportunity to elect, during the election period, to have a survivor annuity payable on death. If the Participant elects the survivor annuity, payments under such annuity must not be less than the payments which would have been made to the Spouse under the qualified joint and survivor annuity if the Participant had retired on the day before his or her death. Any election under this provision will be in writing and may be changed by the Participant at any time. The election period begins on the later of:

a.        the 90th day before the Participant attains the qualified early retirement age, or

b.        the date on which participation begins, and ends on the date the Participant terminates employment.

[iii]        For purposes of this Section 6.5(c)(7)[d]:

a.        Qualified early retirement age is the latest of:

1.        the earliest date, under the Plan, on which the Participant may elect to receive retirement benefits,

2.        the first day of the 120th month beginning before the Participant reaches normal retirement age, or

3.        the date the Participant begins participation.

b.        Qualified joint and survivor annuity is an annuity for the life of the Participant with a survivor annuity for the life of the Spouse as described in Section 6.5(c)(4) of this Article.

(d)        Committee Discretion with Regard to Distributions:

(1)        Timing of Distribution: At the Participant’s election in writing and subject to Section 6.5(a) and this Section 6.5(d),payment of a Participant’s Account balance will generally begin at the time set forth in Section 6.2, 6.3 or 6.4, as applicable; provided, however, that notwithstanding any provision in this Plan to the contrary except the joint and survivor annuity rules of Section 6.5(c), the Committee shall have discretion to:

[a]        postpone payment to a date not later than the Valuation Date of the Plan Year following the Plan Year in which a Participant’s Normal Retirement, disability or death occurs; or

[b]        postpone payment to a date not later than the Valuation Date of the sixth year following the Plan Year during which the Participant separates from service for any other reason. If a Participant’s account balance includes Financed Shares, such shares shall not be deemed to be a part of his account balance until the Valuation Date of the Plan Year in which the Acquisition Loan has been fully repaid and all indebtedness incurred in connection with a single acquisition of Employer Stock shall be treated as one Acquisition Loan.

57

If the amount of a Participant's Employer Stock Account balance cannot be determined by the Committee by the date on which a distribution is to commence, or if the Participant cannot be located, distribution of his benefit shall commence within 60 days after the date on which his Employer Stock Account balance can be determined or after the date on which the Committee locates the Participant, whichever applies.

(2)        Form of Distribution: In general, distributions under this Article VI shall occur in one of the optional forms set forth in Section 6.5(b), as elected by the Participant. The Committee may, in its discretion and based on the liquidity of the Trust Fund and the Employer and other relevant considerations, decide to pay any benefit in substantially equal periodic payments over a period not to exceed five years; provided that this period over which installments may be made may be extended an additional year (up to five additional years) for each $100,000 or fraction thereof by which the value of the distribution exceeds $500,000. Further, the Committee may, in its discretion, use a combination of equal and unequal installment payments.

(3)        The Committee may, in its discretion, segregate the vested interest in the Trust of a Participant and invest such amounts in assets other than Employer Stock in circumstances including, but not limited to, the following:

[a]        A Participant’s vested interest in the Trust exceeds $5,000 and the Participant does not consent to his or her commencement of benefits in accordance with Section 6.5(c);

[b]        A Participant who is entitled to a distribution cannot be located;

[c]        A Participant (whether terminated or employed) is receiving installment payments from the Trust;

[d]        A Participant has terminated employment, but is not yet entitled to receive a distribution from the Plan;

[e]        A portion of a Participant’s account has been or is eligible to be segregated for the benefit of an alternate payee pursuant to a Qualified Domestic Relations Order;

[f]        Any other time that the Committee deems appropriate when such segregation would be in the best interests of the remaining Participants in the Plan.

58

        6.6 Distribution Restrictions: The restrictions contained in this section will apply to all of the optional forms of benefit listed in Section 6.5. Nothing contained in this Section 6.6 will have the effect of offering optional forms of benefit not contained in Section 6.5. All distributions required under this Section will be determined and made in accordance with the Proposed Income Tax Regulations under Code Section 401 (a)(9), including the minimum distribution incidental benefit requirement of Proposed Regulation Section 1.401(a)(9)-2.

        With respect to distributions under the Plan made for calendar years beginning on or after January 1, 2001, the Plan will apply the minimum distribution requirements of Code Section 401(a)(9) in accordance with the regulations under Code Section 401(a)(9) that were proposed in January 2001, notwithstanding any provision of the Plan to the contrary. This paragraph shall continue in effect until the end of the last calendar year beginning before the effective date of final regulations under Code Section 401(a)(9) or such other date specified in guidance published by the Internal Revenue Service.

the amount required to be distributed for each calendar year, beginning with distributions for the first distribution calendar year, must at least equal the quotient obtained by dividing the Participant’s benefit by the applicable life expectancy.

59

(2)        For calendar years beginning before January 1, 1989, if the Participant’s spouse is not the designated Beneficiary, the method of distribution selected must assure that at least 50% of the present value of the amount available for distribution is paid within the life expectancy of the Participant.

(3)        For calendar years beginning after December 31, 1988, the amount to be distributed each year, beginning with distributions for the first distribution calendar year shall not be less than the quotient obtained by dividing the Participant’s benefit by the lesser of:

[a]        the applicable life expectancy, or

[b]        if the Participant’s spouse is not the designated Beneficiary, the applicable divisor determined from the table set forth in Q&A-4 of Section 1.401(a)(9)-2 of the Proposed Income Tax Regulations.

Distributions after the death of the Participant shall be distributed using the applicable life expectancy in Section 6.6(b)(1) above as the relevant divisor without regard to Proposed Regulations Section 1 ..401(a)(9)-2.

60

[b]        December 31 of the calendar year in which the Participant would have attained age 70 ½.

(e)        If the Participant has not made an election pursuant to Section 6.6(d) by the time of his or her death, the Participant’s designated Beneficiary must elect the method of distribution not later than the earlier of:

(1)        December 31 of the calendar year in which distributions would be required to begin under this section, or

(2)        December 31 of the calendar year which contains the fifth anniversary of the date of death of the Participant.

If the Participant has no designated beneficiary, or if the designated beneficiary does not elect a method of distribution, distribution of the Participant’s entire interest must be completed by December 31 of the calendar year containing the fifth anniversary of the Participant’s death.

61

(3)        Distribution calendar year. A calendar year for which a minimum distribution is required. For distributions beginning before the Participant’s death, the first distribution calendar year is the calendar year immediately preceding the calendar year which contains the Participant’s required beginning date. For distributions beginning after the Participant’s death, the first distribution calendar year is the calendar year in which distributions are required to begin pursuant to Sections 6.6(d)-(h) above.

(4)        Life expectancy. Life expectancy and joint and last survivor expectancy are computed by use of the expected return multiplies in Tables V and VI of Section 1.72-9 of the Income Tax Regulations.

Unless otherwise elected by the Participant (or spouse, in the case of distributions described in Section 6.6(d)(2) above) by the time distributions are required to begin, life expectancies shall be recalculated annually. Such election shall be irrevocable as to the Participant (or spouse) and shall apply to all subsequent years. The life expectancy of a nonspouse Beneficiary may not be recalculated.

(5)        Participant’s benefit.

[a]        The account balance as of the last valuation date in the calendar year immediately preceding the distribution calendar year (valuation calendar year) increased by the amount of any contributions or forfeitures allocated to the account balance as of dates in the valuation calendar year after the valuation date and decreased by distributions made in the valuation calendar year after the valuation date.

[b]        For purposes of paragraph [a] above, if any portion of the minimum distribution for the first distribution calendar year is made in the second distribution calendar year on or before the required beginning date, the amount of the minimum distribution made in the second distribution calendar year shall be treated as if it had been made in the immediately preceding distribution calendar year.

        6.7 Waiver of Distribution Restrictions: The Committee may segregate to separate accounts within the Trust those amounts which are the subject of a qualified domestic relations order in accordance with Code Section 4.14(p). Distributions pursuant to this Section 6.7 will be made in accordance with the following procedures.

62

(b)        Within sixty days after receiving the DRO, or as soon as reasonably possible, the Committee (or legal counsel) will determine the qualified status of the DRO. The Participant and each Alternate Payee, or his designated representative, shall then be furnished written notice of the determination. If it has been determined that the DRO is a QDRO, the terms and directions as to payment and entitlement contained in the DRO will be promptly communicated to each Alternate Payee or designated representative at the address specified in the QDRO.

(c)        When reviewing the DRO, the Committee must determine that the order is a QDRO if such order:

(1)        is a judgment, decree or order;

(2)        creates or recognizes the existence of an Alternate Payee’s right to receive all or a portion of the benefits payable with respect to a Participant under the Plan;

(3)        relates to the provision of child support, alimony payments, or marital property rights to a spouse, child or other dependent of a Participant;

(4)        is made pursuant to a state domestic relations law; and

(5)        clearly specifies the following:

[a]        the name and last known mailing address (if any) of the Participant and the name and mailing address of each Alternate Payee covered by the order (the Alternate Payee must notify the Committee of any change of address. The order may permit the Alternate Payee to designate a representative to receive copies of notices that are sent to the Alternate Payee with respect to the domestic relations order);

[b]        the amount or percentage of the Participant’s benefits to be paid by the Plan to each such Alternate Payee, or the manner in which such amount or percentage is to be determined;

[c]        the number of payments or periods to which such order applies; and

[d]        each Plan to which such order applies.

(d)        A DRO will not be deemed a QDRO if it:

(1)        requires the Plan to provide any type or form of benefit or any option not otherwise provided under the Plan;

(2)        requires the Plan to provide increased benefits (determined on the basis of actuarial value); or