EXHIBIT 10.7

SECOND AMENDMENT TO
SOUTHERN MICHIGAN BANK & TRUST
DEFERRED COMPENSATION AGREEMENT
For

          THIS AMENDMENT executed on March 28, 2008, by SOUTHERN MICHIGAN BANK &
TRUST, a state commercial bank located in Coldwater, Michigan (the "Company")
and _____________ (the "Executive").

          The Company and the Executive executed the Southern Michigan Bank &
Trust Deferred Compensation Agreement dated ________________ (the "Agreement").
Pursuant to the power of amendment reserved by Article 9 of the Agreement, the
undersigned hereby amend, in part, said Agreement for the purpose of complying
with the final deferred compensation regulations under Section 409A of the
Internal Revenue Code. Therefore:

          Article 1, Section 1.6 is amended to read as follows:

          1.6          "Disability" means the Executive is, by reason of any
medically determinable physical or mental impairment that can be expected to
result in death or can be expected to last for a continuous period of not less
than 12 months, either (i) unable to engage in any substantial gainful activity,
or (ii) receiving income replacement benefits for a period of not less than
three months under the Company's accident and health plan.

          Article 1, Section 1.13 is amended to read as follows:

          1.13          "Termination of Employment" means that the Executive
ceases to be employed by the Company for any reason whatsoever in a manner that
constitutes a "separation from service" as that term in defined by Section 409A
of the Code, other than by reason of a leave of absence, which is approved by
the Company. For purposes of this Agreement, if there is a dispute over the
employment status of the Executive or the date of the Executive's Termination of
Employment, the Company shall have the sole and absolute right to decide the
dispute.

          Article 2, Section 2.2.2 is amended to read as follows:

          2.2.2          Hardship. If an unforeseeable financial emergency
occurs, the Executive, by written instructions to the Company, may reduce future
deferrals under this Agreement. For purposes of this Agreement, an unforeseeable
financial hardship shall mean an emergency need for funds resulting from
extraordinary and unforeseeable circumstances arising as a result of events
beyond the control of the Executive.

          Article 4, Section 4.3 is amended to read as follows:

          4.3          Disability Benefit. If the Executive suffers a
Disability, the Company shall pay to the Executive the benefit described in this
Section 4.3 in lieu of any other benefit under this Agreement.

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          Article 4, Section 4.5 is amended to read as follows:

          4.5          Hardship Distribution. Upon the Board of Director's
determination (following petition by the Executive) that the Executive has
suffered an unforeseeable financial emergency as described in Section 2.2.2, the
Company shall distribute to the Executive all or a portion of the Deferral
Account balance as determined by the Company, but in no event shall the
distribution be greater than is necessary to relieve the financial hardship
(including amounts necessary to pay taxes or penalties resulting from the
distribution) and distribution shall not be made to the extent the unforeseeable
financial hardship may be relieved through alternative means, such as insurance,
liquidation of the Executive's assets to the extent it would not cause a severe
financial hardship, or by ceasing deferrals under this Agreement.

          A new Article 4, Section 4.6 is added to read as follows:

          4.6          Benefit Elections. The form of payment of Executive's
Normal Retirement Benefit, Disability Benefit and Change of Control Benefit in
effect on December 31, 2007, on the Form of Benefit Election attached as Exhibit
II to the Agreement is irrevocable as of December 31, 2007, and may not be
subsequently changed except in accordance with the following restrictions:

          4.6.1          Effective Date. An election of a new form of payment
will not take effect until 12 months after the date on which the election is
made.

          4.6.2          Mandatory Deferral. Except for changes in the form of
payment of Executive's Disability Benefit, any new election of the form of
payment will result in the payment being deferred for five years from the date
the payment otherwise would have been made. The five year deferral will be
calculated from the date the lump sum or first installment was otherwise
scheduled to be paid.

          A new Article 4, Section 4.7 is added to read as follows:

          4.7          Delay in Payment. Notwithstanding any other timing
provision in this Article 4, if, at the time Executive would begin receiving
payment of the Normal Retirement Benefit, Early Termination Benefit, or Change
in Control Benefit, Executive is a "specified employee" as defined by Section
409A of the Internal Revenue Code, then no payments will be made before the date
that is six months after Executive's Termination of Employment. Payments to
which Executive would otherwise have been entitled during that six months will
be accumulated and paid on the first day after six months following the date of
Executive's Termination of Employment. All payments that would otherwise be made
more than six months following the date of Executive's Termination of Employment
will be made in accordance with the general timing provisions described above.

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          Article 7, Section 7.3 is amended to read as follows:

          7.3          Excess Parachute Payment Gross-up. If any benefit payable
under this Agreement would create an excise tax under the excess parachute rules
of Section 280G of the Code, the Company shall pay to the Executive an
additional amount (the "Gross-up") equal to the Executive's excise penalty tax
amount divided by the sum of (one minus the sum of the penalty tax rate plus the
Executive's marginal income tax rate). The Gross-up shall be paid to Executive
in a lump sum by the end of the calendar year following the calendar year in
which Executive remits the related taxes.

          Article 7, Section 7.4 is amended to read as follows:

          7.4          Deferral Unwind Provision. If, for any reason, all or any
portion of the Executive's benefits becomes taxable under Section 409A of the
Code prior to receipt, the Executive may petition the Company for a distribution
of that portion of the Executive's benefit that has become taxable. Upon the
grant of such a petition, the Company shall distribute to the Executive
immediately available funds in an amount equal to the portion of the benefit
taxable under Section 409A of the Code. If the petition is granted, the tax
liability distribution shall be made within 90 days of the date when the
Executive's petition is granted.

          IN WITNESS OF THE ABOVE, the Executive and the Company have agreed to
this Amendment.

Executive:

 

Company:

             

Southern Michigan Bank & Trust

             

By

 

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Title

 

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