Exhibit 10.4

EMPLOYMENT AGREEMENT

This Agreement is made this 1stday of July, 2003, by and between Pavilion Bancorp, Inc., a Michigan
Corporation (herein referred to as the Holding Company) and the Bank of
Lenawee, a Michigan banking corporation (herein referred to as the Company),
and Richard J. DeVries (herein referred to as Executive).

WHEREAS, the Company desires to
employ Executive and Executive desires to continue to be employed by the Company, upon the
terms and subject to the conditions hereinafter set forth.

NOW, THEREFORE, in consideration of
the premises and the mutual covenants and agreements set forth below, the parties agree as
follows:

|1. | Employment
of Executive and Duties.
|-- | -----------------------------------

The Company agrees to appoint and to
continue the employment of Executive as President and Chief Executive Officer of the Bank
of Lenawee and Executive accepts such employment and agrees to serve as President in
accordance with the terms of this Agreement. Executive shall perform on a fill-time basis
such duties and responsibilities as are assigned to him from time to time by the Board of
Directors or by the Chair of the Board of Directors.

Executive shall faithfully devote all
of his time, attention and energy to the management, supervision, promotion and
improvement of the business and affairs of the Company and shall carry out all of his
working duties in strict observance of the interests of the Company.

|2. | Term.
|-- | -----

The term of employment under this
Agreement shall commence on July 1, 2003, and shall continue to and include July
1, 2006, unless earlier terminated in accordance with Section 3 of this Agreement.
This Agreement supersedes and cancels all prior agreements, oral, written or otherwise.
This Agreement may be extended only by mutual written agreement signed by both the
Executive and the Chair of the Board of Directors of the Company, and Executive shall have
no expectancy that his employment or this Agreement will be extended or renewed without
such mutual written extension. In the event the Company elects not to extend this
Employment Agreement beyond, its term, the Company agrees to provide Executive with
written notice of such, intent no later than April 1, 2006. In the event either
party desires to enter into negotiations for a new, successor agreement, written notice of
such a request must be provided to the other party no later than January 1, 2006.

|3. | Duration
of Contract and Termination.
|-- | -------------------------------------

| | 3.1 | Termination
without Cause.
| | --- | --------------------------

| | This
Agreement may be terminated at any time by either party for any or no cause, or for any or
no reason, and the employment relationship between Executive and the Company shall be
regarded as an employment at will. The Company shall not be required to
provide Executive with any prior notice of termination, written or otherwise, and may
effect termination of this Agreement and of Executives employment immediately upon
giving oral or written notice. Executive may terminate this Agreement upon providing the
Company with thirty (30) days written notice. Written notice shall be served by
registered letter or telegram, and the notice period shall commence and run from the date
of postmark of such letter or telegram.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---



| | In
the event the Company terminates Executives employment and this Agreement for any
reason other than those provided in Paragraph 3.2 and 3.3 below, the Company shall pay
Executive a lump sum amount equal to Executives monthly salary at the time of
termination multiplied by 12, less applicable state, federal and, local income tax and
PICA withholdings.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 3.2 | Termination
for Cause.
| | --- | ----------------------

| | The
Company shall have the right to terminate the employment and services of Executive,
effective immediately upon giving oral or written notice, if Executive:
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 3.2.1 | Dies
during the term of this Agreement (in which case no notice of termination need be given);
| | ----- | ----------------------------------------------------------------------------------------------

| | 3.2.2 | Ceases
to render services to the Company as provided in this Agreement (other than by reason of
disability) or otherwise breaches any of the terms or provisions of this Agreement on his
part to be observed, performed or fulfilled;
| | ----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 3.2.3 | Is
repeatedly absent from' work without cause acceptable to Company;
| | ----- | --------------------------------------------------------------------

| | 3.2.4 | Is
intoxicated or under the influence of alcohol or controlled  substances while on the
Company's  business or the                   Company's premises;
| | ----- | --------------------------------------------------------------------------------------------------------------------------------------------------------

| | 3.2.5 | Is
convicted of a felony or of any violation of law involving moral turpitude;
| | ----- | ------------------------------------------------------------------------------

| | 3.2.6 | Embezzles
any property  belonging to the Company or willfully  injures the Company or any property
of the Company; or
| | ----- | ---------------------------------------------------------------------------------------------------------------------

| | 3.2.7 | Engages
in gross negligence, fraud, dishonesty or behavior inimical to the business or welfare of
the Company.
| | ----- | --------------------------------------------------------------------------------------------------------------

| | Termination
of this Agreement by its Company for any of the acts or activities of Executive specified
in this paragraph 3.2 shall be deemed, for all purposes of this Agreement, to be a
Termination for Cause. In the event Company terminates Executives
employment for Cause, Executive shall be entitled to receive only Executives salary
as accrued pro rata through the effective date of his termination of employment and any
earned but unpaid time off, all in a single lump sum, less applicable tax and PICA
withholdings. Executive shall have no rights to be paid salary or any other payment by the
Company upon or after Executives Termination for Cause.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

2

---



| | 3.3 | Termination
Due To Incapacity Or Inability To Perform Duties.
| | --- | -------------------------------------------------------------

| | In
the event that Executive is unable to perform the functions of the President, whether
totally or partially, by reason of illness, accident or incapacity for a period of more
than three (3) months, the Company shall have the right at any time subsequent to such
period to terminate Executives employment and this Employment Agreement by written
notice to the Executive, and all obligations of the Company shall thereupon cease, except
as otherwise required by any disability insurance policy provided by the Company to the
Executive and other executives. During the three-month period during which Executive is
unable to perform the functions of the President position due to incapacity, Executive
shall receive short-term disability benefits available to other executive personnel and a
supplemental monthly payment which, when added to Executives monthly disability
benefits, provides Executive with a sum equal to his regular monthly salary. During this
three-month period, Executive shall not be paid the salary provided in Section 3 of this
Agreement. All job functions and performance responsibilities required for the position of
President shall be determined by the Board of Directors of the Bank of Lenawee. The Board
of Directors of the Bank of Lenawee shall also make the ultimate determination as to
whether Executive is performing those functions and responsibilities. In the event that
Executives employment is terminated pursuant to this Paragraph 3.3 by reason of
illness, accident or incapacity, the Company shall pay Executive for a period not to
exceed twelve (12) months a supplement which, when added to all other disability and paid
leave benefits already provided by or through Company sponsored insurance or benefit
programs, will equal two-thirds (2/3) of Executives annual base salary be was
receiving as of the date of termination,
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 3.4 | Termination
By Executive.
| | --- | -------------------------

| | Executive
shall have the right to terminate this Agreement and his employment provided he gives
thirty (30) calendar days advance notice in writing to the Chair of the Board of
Directors. The employment relationship and this Agreement shall terminate thirty (30) days
after receipt of such notice, and the Company shall be relieved of making any further
salary payments to Executive, In the event Executive terminates this Agreement or retires,
he shall receive salary which has been earned and accrued pro-rata through die effective
date of the termination and earned but unpaid leave but shall not be eligible for any
pro-rated bonus under the Companys senior officers bonus plan. Notwithstanding
the foregoing, Executive will be paid a lump sum amount equal to Executives monthly
salary at the time of termination multiplied by 12, less applicable state, federal and
local income tax and PICA withholdings, if mid only if (a) Executives duties and
responsibilities are modified as a result of a Change in Control as defined
below; or (b) there is an assignment of responsibilities by the Company to Executive which
is a substantial diminution of Executives then present functions and
responsibilities.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

3

---



| | For
purposes of this Agreement, Change in Control shall mean the purchase or other
acquisition, after July 1, 2003, by any person, entity or group of persons, within the
meaning of section 13(d) or 14(d) of the Securities Exchange Act of 1934
(Act), or any comparable successor provisions, of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Act) of 30 percent or more of either the
outstanding shares of common stock or the combined voting power of the Companys or
the Holding Companys then outstanding voting securities entitled to vote generally,
or the approval by the stockholders of the Company or of the Holding Company of a
reorganization, merger, or consolidation, in each case, with respect to which persons who
were stockholders of the Company or of the Holding Company immediately prior to such
reorganization, merger or consolidation do not immediately thereafter own more than 50
percent of the combined voting power entitled to vote generally in the election of
directors of the reorganized, merged or consolidated Companys or the Holding
Companys then outstanding securities, or a liquidation or dissolution of the Company
or the Holding Company, or of the sale of all or substantially all of the Companys
or the Holding Companys assets.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | It
is also understood and agreed that payment of any amounts under :subparagraphs 3.1, 3.3 or
3.4 above is further conditioned upon Executive signing a settlement agreement and general
release attached hereto in the form of Appendix A or as may be modified from time to time
by Company with the consent of Executive.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4. | Compensation.
|-- | -------------

Effective July 1, 2003, the Company
shall pay Executive a base salary at an annual rate of $160,000 payable in
accordance with the Companys normal payroll practices. The Company reserves the
right to review and adjust the Executives salary at any time during the term of this
agreement. Such salary shall be paid in periodic installments in accordance with the
Companys normal mode of executive salary payment. All compensation referred to in
this Section is stated in. terms of gross amount. The Company will withhold from such
gross amount required deductions, such as federal, state and local income taxes and
unemployment taxes.

|5. | Benefits.
|-- | ---------

| | 5.1
During the term of this Agreement, Executive shall be eligible to receive or participate
in those benefits made available to the Companys other Executives, including, but
not limited to group term life and disability insurance programs, medical plan, 40 1(k)
savings plan with up to a 2% match in Pavilion Bancorp Inc. stock, defined benefit
retirement plan, dental plan, paid time off benefits, Bank observed paid holidays, free
Bank services, educational assistance and other reasonable and customary fringe benefits
which may from time-to-time be made available by the Company; provided, however, that the
availability of such benefits is subject to any applicable eligibility requirement of each
such program and to the terms of the plan documents which govern the availability,
eligibility and level of such benefits. Executive shall also be eligible to participate in
the Pavilion Bancorp, inc. Stock Option Plan, the bonus plan for senior officers and the
Section 125 plan. It is further understood and agreed that compensation arrangements among
the Executives of the Company vary and, accordingly, a particular benefit may not be made
available to Executive even though it is made available to another Executive. Nothing
herein shall obligate the Company to continue any such fringe benefits for Executive if
discontinued for other Executives of the Company.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

4

---



| | 5.2
The Company will provide Executive with a four-door, full size automobile or comparable
vehicle for Executives business and personal use. The purchase price of the vehicle
shall not exceed $45,000, and the Company shall retain title to the vehicle. The Company
will maintain collision and liability insurance coverage on such vehicle so long as the
vehicle is driven by Executive and will reimburse Executive for reasonable and customary
expenses incurred in the routine maintenance of the vehicle. Upon Executives
termination from employment or retirement, Executive has the option of either returning
the vehicle to the Company or purchasing the vehicle at used car book value.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 5.3
On termination of this Agreement and Executives employment for whatever reason or
upon Executives retirement (either early retirement or upon normal retirement age),
the Company will purchase Executives primary residence located in the Companys
market area based upon two qualified estimates of the fair market value of said home and
property, The estimates must be submitted in writing by certified appraisers, one of whom
is selected by the Executive and one of whom is selected by the Company. The average of
these two estimates will be deemed the purchase price. The Company shall pay all normal
closing costs and fees.In no event will the Company be obligated to pay a purchase
price for Executives residence and property which exceeds $400,000. The Company
agrees to effect said purchase no later than six (6) months following Executives
termination or retirement.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|6. | Resignation
From Board Or Agency Appointments.
|-- | ----------------------------------------------

To
the extent that Executive serves, solely by virtue of and in connection with his
employment by the Company, as a member of any board of directors, board of trustees, or
advisory board, or In a capacity representing Company, the Holding Company, or any
Affiliate, effective with Executives termination of employment from Company,
Executive shall resign from any and all positions Executive may have on die Board of
Directors of the Bank of Lenawee or its Holding Company or any other representative
relationships, Company is hereby appointed as Executives attorney-in-fact to tender
any such resignation from the Board of Directors of the Bank of Lenawee or its
Holding Company or any other Affiliate Board. Executive agrees to cooperate with Company
by signing a resignation letter or submitting a written resignation as may be required by
any such board or organization to formally effectuate Executives resignation from
such service or capacity.

|7. | Expenses.
|-- | ---------

Traveling and living expenses on
business trips and expenses for entertaining customers will be reimbursed by the Company
in accordance with the Companys prevailing rules and policies provided such expenses
do not exceed reasonable limits and are supported by complete documentation and receipts
detailing the amounts and description of each expenditure.

5

---



|8. | Special
Obligations of the Executive.
|-- | -------------------------------------

| | The
Executive shall:
| | --------------------

| | 8.1 | Refrain from gainful employment on behalf of a third party and shall not engage in
business on his/her own account unless he/she has been specifically authorized in writing
by the Company to do so in each and every case.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 8.2 | Refrain from divulging any confidential information concerning the Company, the Holding
Company, and any affiliates (herein the Companies) during and after the
termination of employment for whatever reason, including retirement. For purposes of this
Agreement, confidential information means any details of the business or
affairs of the Companies (including, without limitation, financial information,
organizational structure, strategic planning, sales, marketing strategies, compensation
and incentive plans, data processing and other systems, personnel policies and related
compensation programs of the Companies); any customer or client account information or
customer lists owned or used by the Companies; and information, knowledge or data of a
technical nature (including, without limitation, methods, know-how, formulae,
compositions, processes, discoveries, inventions or research methods) of or used by the
Companies; any information, knowledge or data relating to future developments and
marketing strategies (including, without limitation, research and development) of or used
by the Companies; and any and all trade secrets of the Companies or used by the Companies
which may be imparted to Executive, and any other information pertaining to the Companies
which has not been made public, whether in Companies reports, at shareholders
meetings, in handouts or statements to the press and lectures or publications by
authorized Executives or by the Companies, or any of them, In the event there is any
dispute or uncertainty as to whether certain information constitutes confidential
information, the Chair of the Board of Directors of the Company shall determine
whether a given item of information is or is not confidential.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Executive
shall not impart confidential information to fellow Executives except where necessary for
the performance of his/her duties.
| | --------------------------------------------------------------------------------------------------------------------------------------

| | Executive
may disclose Confidential Information if required by any judicial or governmental request,
requirement or order; provided that Executive will take reasonable steps to give the
Companies sufficient prior notice in order to contest such request, requirement or order.
Executive may also disclose Confidential Information if the information has become known
to the general public by means other than Executives breach of this Agreement.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 8.3 |  | Of his own accord surrender all business documents and records to the Company or its
nominated representative upon termination of employment. The Executive may also be
required to surrender such documents and records at any time during the term of this
Agreement.
| | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

6

---



|9. | Non-Competition.
|-- | ----------------

| | 9.1 | Non-Competition and Solicitation. Executive acknowledges and recognizes the highly
competitive nature of the business of the Company. In consideration of the compensation
described in this Agreement, Executive agrees that for a period of time coextensive with
the Term and for one year following Executives termination of employment with the
Company, for whatever reason and whether or not pursuant to the terms of this Agreement
(the Non-Compete Period), Executive shall not, either directly or indirectly
(and whether or not for compensation), work for, be employed by, own, manage, operate,
control, finance, participate or engage in, or have any interest in, any person, firm,
entity, financial institution, partnership, limited partnership, limited liability
company, corporation or business (whether as an employee, owner, sole proprietor, partner,
venturer, member, shareholder; officer, director, agent, creditor, consultant or in any
capacity which calls for the rendering of personal services, advice, acts of management,
operation or control) which engages in any activity substantially the same as or
competitive with the business of the Company as it is then conducted or planned to be
conducted (the Business), in Lenawee, Washtenaw, Jackson, and Monroe Counties
of the State of Michigan (the Restricted Territory). The foregoing shall not,
however, be deemed to prevent Executive from owning, for investment purposes only, up to
1% of the securities of any corporation the shares of which are traded on a securities
exchange or in the over-the-counter market.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Executive
further agrees that Executive shall not, directly or indirectly, at any time during the
Non-Compete Period: (a) divert or attempt to divert from the Companies any work within the
definition of the Business, whether or not in the Restricted Territory; (b) solicit,
contact, call upon or attempt to solicit, or provide services to, any of the
Companies Business Customers, suppliers or actively sought potential customers or
suppliers for the purpose of doing anything within the definition of the Business, or any
work reasonably related to the Business, whether or not in the Restricted Territory; or
(c) induce or attempt ~to induce any person who is an Executive or employee of the
Companies to leave the employ of the Companies or of any affiliate of the Companies
whether or not in the Restricted Territory. For the purposes of this Agreement,
Business Customer means any person or entity to, with or from whom the Company
has within a three (3) year period preceding the Executives termination:
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 9.1.1 | Provided
banking, leading, credit, mortgage or other financial services;
| | ----- | ------------------------------------------------------------------------

| | 9.1.2 | Submitted
a bid for, or  otherwise  negotiated  for,  the  providing  of products or the
 performance  of                            services;
| | ----- | ----------------------------------------------------------------------------------------------------------------------------------------------

| | 9.1.3 | Provided
products or performed services;
| | ----- | ----------------------------------------

| | 9.1.4 | Entered
into an agreement for the providing of products or performance of services; or
| | ----- | --------------------------------------------------------------------------------------

7

---



| | 9.1.5 | Entered
into any strategic research and development alliance, strategic marketing alliance, or
strategic promotional alliance.
| | ----- | ------------------------------------------------------------------------------------------------------------------------------

| | 9.2 | Remedies. Executive has had knowledge of the affairs, trade secrets, customers,
potential customers and other proprietary information with respect to the Business, and
Executive acknowledges and agrees that compliance with the covenants set forth in
Paragraphs 8.2 and 9 is necessary for the protection of the Business, and the goodwill and
other proprietary interests of the Companies and that any violation of this Agreement will
cause severe and irreparable injury to the Business, and the goodwill and proprietary
interests of the Companies, which injury is not adequately compensable by money damages.
Accordingly, in the event of a breach (or threatened or attempted breach) of Paragraph 8.2
and/or 9, any of the Companies, in addition to any other rights and remedies, including
disgorgement of all profits wrongfully derived by Executive from such breach, shall be
entitled to immediate appropriate injunctive relief or a decree of specific performance,
without the necessity of showing any irreparable injury or special damages.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Executive
agrees that the remedy at law for breach of the obligations set forth in Paragraphs. 8.
and 9 of this Agreement is. inadequate and in the event of a breach or threatened breach
thereof Executive agrees that the Companies, without posting any bond, shall be entitled
to seek equitable relief in the form of specific performance temporary restraining order,
temporary, preliminary or permanent injunction, or Other appropriate equitable remedy.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | If,
in any judicial proceeding, a court shall refuse to enforce any of the covenants included
herein, then said unenforceable covenant(s) shall be deemed modified so as to become
enforceable to the maximum extent permitted, and if such modification is not permitted,
then such unenforceable covenants shall be deemed eliminated from these provisions for the
purpose of the proceeding to the extent necessary to permit the remaining separate
covenants to be enforced. It is the intent and agreement of the Company and Executive that
these covenants be given the maximum force, effect and application permissible under law.
The provisions of Paragraphs 8.2 and 9 shall survive the termination of this Agreement.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10. | Assignment
and Pledging of Salary.
|--- | ----------------------------------

The Executive shall neither assign
nor pledge to third parties his/her salary or any other indemnity which might be due to
him from the Company. The duties and obligations of Executive under this Agreement are
personal unto the Executive and may not be assigned, delegated or otherwise transferred.

|11. | Acceptance
of Presents.
|--- | -----------------------

The Executive may not, in connection
with his work for the Company, accept or pledge himself to accept either directly or
indirectly any presents, commission or other favor of any kind whatsoever without the
prior knowledge of the Company.

8

---



|12. | Retirement.
|--- | -----------

Upon retirement or termination of
employment for whatever reason, the confidentiality and non-competition obligations of
this Agreement shall continue in full force and effect and remain binding on the
Executive.

|13. | Premature
Discharge of Executive with Notice.
|--- | ---------------------------------------------

Without prejudice to the compensation
set forth in paragraph 4 of this Agreement, the Company may wholly or partially forego the
services of the Executive between the date when notice of termination was first given and
the date of contract expiration. In the event the Company decides to wholly or partially
forego the services of Executive, Company has the right to pay in cash any remaining
salary which the Executive has not yet been paid for the balance of the one-month notice
period set forth in paragraph 3.4 of this Agreement,

|14. | Entire
Agreement.
|--- | -----------------

This Agreement, together with the
Executive Confidentiality Agreement, contains the entire agreement of the parties hereto
with respect to the subject matter hereby referenced and may not be changed, altered or
extended (including by additions or deletions), orally or otherwise, except by an
agreement or consent in writing signed by both the Executive and the Chair of the Board of
Directors of the Company. Such writing may only be signed on behalf of the Company by the
Chair of the Board of Directors of the Company. This Agreement supersedes all other
agreements, written or otherwise and shall in no event be modified by any oral statement,
agreement, commitment, representation or understanding.

|15. | Severability.
|--- | -------------

If any term or provision of this
Agreement or the application thereof to any circumstance shall, to any extent and for any
reason, be held invalid or unenforceable, the remainder of this Agreement, or the
application of such term or provision to circumstances other than those as to which it is
held to be invalid or unenforceable, shall not be affected thereby and shall be construed
as if such invalid or unenforceable term or provision bad never been contained herein, and
each term and provision of this Agreement shall be valid and enforceable to the fullest
extent permitted by law. If any portion of this Agreement is held to be excessively broad
as to time, duration, geographical scope, activity or subject, it shall be construed by
limiting or reducing the provision as required so that the provision as limited or reduced
is enforceable under applicable law.

|16. | Successors.
|--- | -----------

The obligations of the Company under
this Agreement, shall be binding upon, and the rights of the Company hereunder shall inure
to the benefit of, the Company and its successors and assigns.

9

---



|17. | Governing
Law.
|--- | --------------

This Agreement shall be governed by
and construed in accordance with the laws and judicial decisions of the State of Michigan.

|18. | Agreement
To Arbitrate Employment Claims.
|--- | -----------------------------------------

In the event Executive fails for
whatever reason to execute the settlement agreement and general release attached hereto as
Appendix A, the Company, the Holding Company and Executive agree to submit to final and
binding arbitration in accordance with the National Rules for the Resolution of Employment
Disputes issued by the American Arbitration Association, effective July 1, 2003, any
existing or future employment disputes, controversies or claims arising out of
Executives employment with the Company or the termination of that employment,
including but not limited to claims for breach of contract, common law tort claims, claims
for nonpayment of wages, commissions, or overtime pay, claims of unlawful termination or
retaliation, and claims of employment discrimination based on race, se; age, national,
origin, pregnancy, disability or other status protected by state or federal law or any
other bias prohibited by state or federal law. Binding arbitration under the Federal
Arbitration Act, 9 U. S.C. Section 1, shall be the sole and exclusive means of
resolving any dispute arising out of Executives employment or the termination from
employment by the Company or by Executive, and no other suit or action can be brought by
Executive In any, court or in any other forum. In addition, any disputes arising
during Executives employment involving claims of unlawful discrimination or unlawful
harassment under federal or state statutes shall be submitted exclusively to binding
arbitration under the above provisions.

Executive understands and agrees that
arbitration of such disputes and claims shall be the sole and exclusive means for
resolving any and all existing and future disputes or controversies arising out of
Executives employment with the Company or the termination thereof; with the
exception of claims for benefits under the Michigan Workers Disability Compensation
Act and the Michigan Employment Security Act. Notwithstanding anything contained herein to
the contrary, this Agreement to arbitrate shall not be deemed to be a waiver of the
Companys right to secure equitable relief including an injunction if and when
otherwise appropriate to enforce Sections 8 and 9 of this Agreement.

Executive understands that by
signing this Agreement Executive is waiving any right that he/she may have to a jury trial
or a court trial of any employment-related dispute. Executive further understands and
agrees that by accepting or continuing employment with the Company, Executive
automatically agrees that arbitration is the exclusive forum for all disputes arising out
of or related to Executives employment with the Company, and Executive agrees to
waive all rights to a civil court action regarding his/her employment and the termination
of that employment and Executive agrees that only an arbitrator, and neither a Judge nor a
jury, will decide the dispute.

If Executive decides to dispute
his/her termination or any other alleged incident during his/her employment, including but
not limited to unlawful discrimination or harassment, Executive must deliver a written
request for arbitration to the Company within one (1) year from the date of termination,
or one (1) year from the date on which the alleged incident(s) or conduct occurred, and
respond within fourteen (14) calendar days to each communication regarding the selection
of an arbitrator and the scheduling of a hearing. Executive expressly waives any longer
statute or other period of limitations to the contrary.

10

---



If the Company does not receive a
written request for arbitration from Executive within one (1) year, or if Executive does
not respond to any communication from the Company about the arbitration proceedings within
fourteen (14) calendar days, Executive will have waived any right to raise any claims
arising out of the termination of Executives employment with the Company, or
involving claims of unlawful discrimination or harassment, in arbitration and in any court
or other forum. Failure to initiate arbitration as provided herein will forever bar any
claim involving that dispute.

If Executive makes a timely request
for arbitration, the Company agrees to pay the case management administrative fee charged
by the American Arbitration Association. Executive shall have the right to be represented
by counsel of his/her own choosing. Executive and the Company shall each bear respective
costs for legal representation at any such arbitration. The Executive and the Company
shall be given clear notice of all hearing dates. The selected arbitrator shall authorize
and supervise pre-hearing discovery and shall be empowered to set a hearing, bear
testimony and examine whatever acceptable evidence the Company and Executive may present.
Executives liability for the costs and fees of arbitration, other than attorney
fees, however, shall be limited to $1000. The arbitrator may grant any remedy or relief
that a court having jurisdiction of the matter could grant, including reinstatement of the
Executive with or without back pay or with partial back pay. If the arbitrator orders
reinstatement, the arbitrator shall also designate an alternative monetary award which the
Company may, at its option, elect to pay Executive in lieu of reinstatement. The
arbitrator is authorized to award a reasonable attorneys fee in accordance with
applicable law. In the absence of an award, each party is responsible for its own attorney
fees.

Executive understands and agrees that
the decision and award of the arbitrator is final and binding on both the Executive, the
Company, and the Holding Company shall provide the exclusive remedy(ies) for resolving any
and all disputes between the Company, the Holding Company and Executive arising from the
employment relationship, and shall be enforceable in any court of competent jurisdiction,
In accordance with 9 U.S.C. § 1 et seq., MCL 600.5001-600.6035; MSA
27A.5000-27A5035 andMCR 3.602, Executive agrees that upon issuance of the
arbitrators decision and award, judgment in any court of competent jurisdiction
shall be rendered on the award and entered so as to enforce its provisions.

EXECUTIVE VOLUNTARILY AND
KNOWINGLY AGREES THAT HIS/HER EMPLOYMENT BY THE COMPANY AS OF THIS DATE IS GOOD AND
VALUABLE CONSIDERATION FOR THIS AGREEMENT.

EXECUTIVE HAS READ AND UNDERSTANDS
THE FOREGOING AND VOLUNTARILY AND KNOWINGLY AGREES TO TUE TERMS AND CONDITIONS OF THIS
AGREEMENT.

11

---



EXECUTIVE ACKNOWLEDGES THAT
EXECUTIVE HAS READ THIS AGREEMENT, THAT EXECUTIVE UNDERSTANDS ITS TERMS AND THAT BY
SIGNING if, EXECUTIVE IS WAIVING ALL RIGHTS TO A TRIAL BEFORE A COURT OR JURY OF ANY AND
ALL DISPUTES AND CLAIMS REGARDING EXECUTIVES EMPLOYMENT WITH COMPANY OR TUE
TERMINATION THEREOF, EXCEPT AS OTHERWISE NOTED HEREIN, THAT. NOW EXIST OR MAY IN THE
FUTURE EXIST OR BE KNOWN OR SUSPECTED BY EXECUTIVE.

IN WITNESS WHEREOF, the
parties date set forth in the first paragraph of this

|Richard J. DeVries
EXECUTIVE'S PRINTED NAME
/s/ Richard J. DeVries
EXECUTIVE'S SIGNATURE
FOR PAVILION BANCORP BY:
/s/ Douglas L. Kapnick
Douglas L. Kapnick, Chairman |  | President and CEO
        POSITION
        July 14, 2003
        DATE
        June 26, 2003
        DATE
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------

12

---



# APPENDIX A

# SETTLEMENT AGREEMENT
AND GENERAL RELEASE

This
 Settlement  Agreement and General Release  ("Agreement")  is made and entered into this
_____ day of ,__, 20_, by and between ___________________ (the "Executive"),
and_________________________ (the "Employer").

WHEREAS,
Executive and Employer desire to settle and resolve all issues arising out of
Executives employment with and termination from employment with Employer without any
disputes, proceedings or litigation, on the following terms and conditions.

NOW,
THEREFORE, in consideration of the promises and of the mutual covenants and agreements
contained herein, it is agreed by and between the parties hereto that:

1.       
          This Agreement does not constitute any admission by Employer that any action it,
          its agents or employees took with respect to Executive was wrongful, unlawful or
          In violation of any local, state or Federal act, statute, or constitution, or
          susceptible of inflicting any damages or injury whatsoever on Executive, and
          Employer specifically denies any such wrongdoing or violation. It is further
          agreed that this Agreement is entered into solely in an effort to resolve fully
          all matters related to or arising out of Executives employment with
          Employer and his termination therefrom.

2.       
          Employer shall pay Executive the sum of One Thousand Dollars ($1,000.00) fifteen
          (15) days after Executive and Employer execute this Agreement. The
          aforementioned payment is understood by the parties to be paid in consideration
          of Executive waiving and otherwise releasing Employer, its directors,
          officers, members, agents, employees, representatives, attorneys, successors and
          assigns, of and from any and all claims, demands, rights, liabilities, and
          causes of action of any kind or nature arising out of or in connection with her
          employment with Employer or her termination from Employer, It is also agreed and
          understood that this payment is for any alleged damages, costs and
          attorneys fees incurred by Executive and will be subject to payroll taxes
          or deductions, income or withholding taxes, social security taxes, unemployment
          taxes, disability taxes or any other taxes which customarily are deducted and/or
          paid with respect to wages.

3.       
          In return for the payment made to Executive pursuant to paragraph 2 herein,
          Executive hereby generally releases and forever discharges Employer, its Holding
          Company, subsidiaries, directors, officers, members, agents, employees,
          representatives, attorneys, successors, and assigns of and from any and all
          causes of action, claims or demands of any type, including, without limiting the
          generality of the foregoing general release, claims or causes arising or which
          could have arisen out of Executives employment relationship with. Employer
          and the termination of his employment relationship with Employer, any and all
          claims under the Fair Labor Standards Act, 29 U.S.C. § 201 et
          seq.; the Age Discrimination in Employment Act, 29 U.S.C. § 621
          et seq. (1976); Title VII of the Civil Rights Act of 1964, 42
          U.S.C. §2000e et seq.; the Civil Rights Act of 1866,
          42 U.S.C. § 1981; the Civil Rights Act of 1991, Pub. L. No. 102-166; the
          National Labor Relations Act, 29 U.S.C. § 151 et seq. (1976);
          the Americans With Disabilities Act, 42 U.S.C. § 12101 et
          seq.; Federal Executive Order 11246; the Family and Medical Leave Act,
          Pub. L. No. 103-3; the Employee Retirement Income Security Act of 1974 (ERISA),
          the Older Workers Benefit Protection Act, the Elliot-Larsen Civil Rights
          Act, M.C.L. 37.2101 et seq.; the Michigan Persons With
          Disabilities Civil Rights Act, M.C.L. 37.1101 et seq.; the Michigan
          Minimum Wage Law of 1964; the Michigan Act Regulating Payment of Wages and
          Fringe Benefits, M.C.L. 408.471; the Whistleblowers Protection Act and/or
          any other similar federal, state or local statute, law, ordinance, regulation or
          order, claims for breach of contract, defamation, promissory estoppel or any
          tortious conduct. The foregoing provision shall not apply to claims for benefits
          under any employee benefit plan as defined in Section 3(3) of ERISA (exclusive
          of Executives SERA), irrespective of whether the particular benefit plan
          is a church plan not subject to ERISA.

1

---



4.       
          Except as provided herein, the parties also release and forever discharge each
          other, theft directors, officers, members, agents, employees, representatives,
          attorneys, successors, assigns, heirs, executors and administrators, of and from
          any and all other demands, claims, causes of action, obligations,
          agreements, promises, representations, damages, suits and liabilities regarding
          Executives employment with or termination from Employer, both known and
          unknown, in law or in equity, of a class or individual nature, including but not
          limited to, attorneys fees and costs. Executive further covenants and
          agrees never to institute (directly or indirectly) any action or proceeding of
          any kind against Employer, its agents, employees, representatives, attorneys,
          successors, assigns, heirs, executors and administrators, regarding
          Executives employment with or termination of employment from Employer.

5.       
          As a part of this Agreement, Executive agrees to waive reinstatement and to not
          seek future employment in any position with Employer, or in any company in which
          Employer has a substantial (more than twenty-five percent 25%) ownership
          interest

6.       
          Executive agrees that this document and any and all matters concerning this
          settlement will be regarded as confidential communications between the parties
          hereto and will not be disseminated by publication of any sort or be released in
          any manner or means to any newspaper, magazine, radio station, television
          station, to any future, current or former employee, vendor or customer of
          Employer or to anyone else except as provided for in this Agreement.
          Except as provided for in this Agreement, if asked about such matters by any
          ~individual whatsoever, Executive is to reply that the matter has been
          resolved or words of similar effect. It is understood that Executive may,
          on a limited basis, advise his attorney, accountant and tax preparers of this
          Agreement, all of whom shall agree to follow the confidentiality provisions of
          this paragraph.

7.       
          It is further agreed that Executive will not encourage or assist any present or
          past employee of Employer who litigates against or who files administrative
          charges against Employer, its agents, officers, directors, shareholders or
          employees, unless required to provide testimony or documents pursuant to a
          lawful subpoena or as otherwise required by law.

2

---



8.       
          This instrument constitutes and contains the entire agreement and understanding
          between the parties concerning the subject matter of this Agreement, and
          supersedes all prior negotiations, proposed agreements and understandings, if
          any, between the parties.

9.       
          Executive specifically acknowledges that, at least twenty-one (21) days prior to
          the required date for executing this document, Executive was given a complete
          copy of this Agreement and by this Agreement was advised in writing to consult
          with an attorney concerning its meaning and effect. Executive understands that
          he may revoke this document in writing, addressed to
          the.________________________, within seven (7) days after execution hereof, in
          which event this Agreement will be of no effect and Executive will be entitled
          to none of the benefits provided hereunder and Paragraph 18 of Executives
          Employment Agreement shall then apply and be controlling.

10.       
          Executive states that he has read and understands that this Agreement is meant
          as a complete and final settlement and release, releasing Employer, its
          directors, agents, employees, representatives, attorneys, successors, assignees,
          heirs, executors and administrators, of and from any and all claims he may
          have against them, that he voluntarily agrees to the terms set forth herein,
          that he knowingly and willingly intends to be legally bound by the same, that he
          was given adequate opportunity to consider the Agreement, that he discussed it
          with his legal counsel, that lie has had ample time to study the terms of this
          Agreement with his attorney and with members of his family, that the terms and
          conditions hereof were determined by negotiation, and that be executes this
          Agreement knowingly and of his own free will.

|[EXECUTIVE]
Subscribed and Sworn to before me
this ____ day of ______________, 2006.
        Notary Public[EMPLOYER]By: ________________________Its: ________________________
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

3

---



EMPLOYMENT AGREEMENT
EXTENSION AGREEMENT

This EMPLOYMENT AGREEMENT Extension
Agreement is made this 22nd day of February, 2007, by and between Pavilion Bancorp, Inc.,
a Michigan Corporation (herein referred to as the Holding Company) and the
Bank of Lenawee, a Michigan banking corporation (herein referred to as the
Company), and Richard J. DeVries (herein referred to as Executive).

WHEREAS, the Company desires to
extend the EMPLOYMENT AGREEMENT between the Company and Executive, dated July 1, 2003, for
a period of three years beyond the stated EMPLOYMENT AGREEMENT conclusion date of July 1,
2006

NOW, THEREFORE, the Holding Company,
Company and Executive hereby agree to extend the EMPLOYMENT AGREEMENT TO July 1, 2009 with
the following amendments:

| | - | The base salary referred to in the paragraph found in section 4, page 4,
titled Compensation, shall be amended to read $205,000, effective January 1,
2007.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------

| | - | Section 5.2, found on page 5 of the EMPLOYMENT AGREEMENT, which addresses providing an
automobile for Executive, will be amended to include the purchase of a new car for the use
of Executive every four years, or at the attainment of 90,000 miles, whichever event
arrives first. The purchase price of the new car will be approved by the executive
committee of the Company.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

IN WITNESS WHEREOF, the parties have
caused this EMPLOYMENT AGREEMENT Extension Agreement to be executed as of the date set
forth in the first paragraph of this Extension Agreement.

|Richard J. DeVries
EXECUTIVE'S PRINTED NAME
/s/ Richard J. DeVries
EXECUTIVE'S SIGNATURE
FOR PAVILION BANCORP. INC., BY:
/s/ Douglas L. Kapnick
Douglas L. Kapnick, Chairman |  | President & CEO
        POSITION
        2/22/07
        DATE
        2/22/07
        DATE
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------

---