# 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)

|Michigan(State or other jurisdiction ofincorporation or organization | 38-2806518(IRS Employer Identification No.)
|-------------------------------------------------------------------- | -------------------------------------------

|175 North Leroy, Fenton, Michigan(Address of Principal
Executive Offices) | 48430-0725(Zip Code)
|------------------------------------------------------------------------- | --------------------

# 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

|                                                                           | 
|-------------------------------------------------------------------------- | 
|PART I                                                                     | 
|Item 1. Description of Business                                            | 
|Item 2. Description of Property                                            | 
|Item 3. Legal Proceedings                                                  | 
|Item 4. Submission of Matters to a Vote of Security Holders                | 
|Additional Item - Executive Officers of Registrant                         | 
|                                                                          
|PART II                                                                    | 
|Item 5. Market for Registrant's Common Equity, Related Stockholder Matters | 
|and Issuer Purchases of Equity Securities                                  | 
|Item 6. Selected Financial Data                                            | 
|Item 7. Management's Discussion and Analysis of Financial Condition and    | 
|Results of Operations                                                      | 
|Item 7A. Quantitative and Qualitative Disclosures About Market Risk        | 
|Item 8. Financial Statements and Supplementary Data                        | 
|Item 9. Changes in and Disagreements with Accountants on Accounting        | 
|and Financial Disclosure                                                   | 
|Item 9A. Controls and Procedures                                           | 
|Item 9B. Other Information                                                 | 
|                                                                          
|PART III                                                                   | 
|Item 10. Directors and Executive Officers of the Registrant                | 
|Item 11. Executive Compensation                                            | 
|Item 12. Security Ownership of Certain Beneficial Owners and Management    | 
|and Related Stockholder Matters                                            | 
|Item 13. Certain Relationships and Related Transactions                    | 
|Item 14. Principal Accountant Fees and Services                            | 
|Item 15. Exhibits and Financial Statement Schedules                        | 
|                                                                          
|SIGNATURES                                                                 | 
|                                                                          
|EXHIBIT INDEX                                                              | 

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:

|                               | TotalRisk-BasedCapital Ratio | Tier 1Risk-BasedCapital Ratio | Leverage Ratio
|------------------------------ | ---------------------------- | ----------------------------- | --------------
|Well capitalized               |                              | 10% or above                  |               
|Adequately capitalized         |                              | 8% or above                   |               
|Undercapitalized               |                              | Less than 8%                  |               
|Significantly undercapitalized |                              | Less than 6%                  |               
|Critically undercapitalized    |                              | --                            |               

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.
8th 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:

| | Donald
L. Grill(age 57) was appointed as President and Chief Executive Officer of the
Company and of The State Bbank in late 1996. From 1983 to 1996, Mr. Grill was employed by
First of America Bank Corporation and served as President and Chief Executive Officer of
First of America Bank  Frankenmuth.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Robert
E. Sewick (age 55) was appoint President and CEO of West Michigan Community Bank on
March 15, 2004, and was appointed Senior Vice President of the Company on December 1,
2004. Prior to the appointment, Mr. Sewick was Senior Vice President and Senior Lender of
The State Bank. Prior to joining The State Bank in June of 1999, he was Senior Vice
President and Regional Credit officer for Huntington National Bank for Western Michigan.
Mr, Sewick has over 30 years of banking experience.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

|Plan Category         | Number of securities to
be issued upon exerciseof outstanding options
          (1) | Weighted-average
  exercise price ofoutstanding options
         (2) | Number of securities
remaining available for
future issuance under
equity compensation
plans (excluding
securities reflected in
column (1))
(3)
|--------------------- | ----------------------------------------------------------------------------------- | -------------------------------------------------------------------- | -----------------------------------------------------------------------------------------------------------------------------------------------
|Equity compensation   |                                                                                     |                                                                      |                                                                                                                                                
|plans approved by     |                                                                                    
|security holders      |                                                                                     | 42,212                                                               |                                                                                                                                                
|                      |                                                                                    
|Equity compensation   |                                                                                    
|plans not approved by |                                                                                    
|security holders      |                                                                                     | 0                                                                    |                                                                                                                                                
|                      |                                                                                    
|Total                 |                                                                                     | 42,212                                                               |                                                                                                                                                
|                      |                                                                                    

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

|(a) | 1. | Financial Statements:
|--- | -- | ---------------------

| | The
following consolidated financial statements of the Company and Report of Crowe Chizek and
Company LLC, Independent Registered Public Accounting Firm are incorporated by reference
under Item 8 Financial Statements and Supplementary Data of this document:      Consolidated Balance Sheets
      Consolidated Statements of Income
      Consolidated Statements of Comprehensive Income
      Consolidated Statements of Changes in Stockholders' Equity
      Consolidated Statements of Cash Flows
      Notes to the Consolidated Financial statements
      Report of Crowe Chizek and Company LLC, Independent Registered Public Accounting Firm
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 2. | Financial
Statement Schedules All schedules are omitted  see Item 14(d) below.
| | -- | -------------------------------------------------------------------------------

| | 3. | Exhibits: 
The
exhibits listed on the Exhibit Index following the signature page of this
report are filed herewith and are incorporated herein by reference.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------

|(b) | Exhibits:
The
Exhibit Index follows the signature page of this report and is incorporated
herein by reference.
|--- | ----------------------------------------------------------------------------------------------------------------

|(c) | Financial
Statement Schedules:  
All
financial statement schedules normally required by Article 9 of Regulation S-X are omitted
since they are either not applicable or the required information is shown in the
consolidated financial statements or notes thereto.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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.

| | Fentura Financial, Inc.
        (Registrant)
 By /s/ Donald L. Grill                                       
      
      Donald L. Grill
      On behalf of the registrant
       and as President & CEO
 By   /s/ Douglas J. Kelley                                     
      
      Douglas J. Kelley
       Chief Financial Officer
       (Principal Accounting Officer)
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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.

|Signautre
/s/ Forrest A. Shook    

Forrest A. Shook        
/s/ Donald L. Grill     

Donald L. Grill
/s/ Peggy L. Haw Jury   

Peggy L. Haw Jury
/s/ J. David Karr       

J. David Karr
/s/ Thomas P. McKenney  

Thomas P. McKenney
/s/ Thomas L. Miller

Thomas L. Miller
/s/ Brian P. Petty

Brian P. Petty
/s/ Ian W. Schonsheck

Ian W. Schonsheck
/s/ Douglas J. Kelly    

Douglas J. Kelley | CapacityChairman of the Board          
Director
Director                       
Director                       
Director                       
Director                       
Director                       
Director                       
Director                       
Chief Financial Officer        
(Principal Accounting Officer) | DateMarch 28, 2005
March 28, 2005
March 28, 2005
March 28, 2005
March 28, 2005
March 28, 2005
March 28, 2005
March 28, 2005
March 28, 2005
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------

15

---



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

| | ExhibitNo. | Exhibit
| | ---------- | -------

---

| | 2 | Agreement
 and  Plan of  Merger  By and  Among  Fentura  Financial,  Inc.,  West  Michigan
 Financial                 Corporation  and West  Michigan  Community  Bank dated as of
October 14, 2003,  and joined in by WMFC                 Acquisition  Subsidiary,  Inc.
and Amendment No. 1 thereto (Incorporated by reference to Exhibits 2.1
                and 2.2 to the Registrant's Current Report on Form 8-K dated March 15,
2004).
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 3(i) | Articles of Incorporation of Fentura Financial, Inc. (Incorporated by reference
                    to Form 10-SB Registration Number 0-23550)
| | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------

| | 3(ii) | Bylaws of Fentura Financial, Inc. (Incorporated by reference to Form 10-SB
                    Registration Number 0-23550)
| | ----- | ---------------------------------------------------------------------------------------------------------------------------

| | 3(iii) | Amendment to the Articles of Incorporation of Fentura Financial, Inc.
                    (Incorporated by reference to Exhibit 3(iii) to the Form 10-K Filed March 20,
                    2001)
| | ------ | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 3(iv) | Amendment to the Articles of Incorporation of Fentura Financial, Inc.
                    (Incorporated by reference to Exhibit 3 filed with Form 10-Q for the quarter
                    ended March 31, 2002)
| | ----- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 4.1 | Amended
and Restated Automatic Dividend Reinvestment Plan (Incorporated by reference to
Registration Statement on Form S-3  Registration No. 333-75194)
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.1 | Directors
Stock Purchase Plan (Incorporated by reference to Form 10K-SB filed on March 17, 1996)
| | ---- | ------------------------------------------------------------------------------------------------

| | 10. | 2
Non-Employee Director Stock Option Plan (Incorporated by reference to Form
                    10K-SB filed on March 17, 1996)
| | --- | --------------------------------------------------------------------------------------------------------------------------------

| | 10.3 | Form
of Non-Employee Director Stock Option Agreement  (Incorporated by reference to Form
10Q-SB filed                 on May 2, 1996)
| | ---- | -------------------------------------------------------------------------------------------------------------------------------------

| | 10.4 | Retainer
Stock Plan for Directors (Incorporated by reference to Form 10K-SB filed on March 17,
1996)
| | ---- | ----------------------------------------------------------------------------------------------------

| | 10.5 | Employee
Stock Option Plan(Incorporated by reference to Form 10K-SB filed on March 17, 1996)
| | ---- | --------------------------------------------------------------------------------------------

| | 10.6 | Form
of Employee  Stock  Option Plan  Agreement  (Incorporated  by  reference to Form 10K-SB
filed on                 March 17, 1996)
| | ---- | -------------------------------------------------------------------------------------------------------------------------------------

| | 10.7 | Executive
Stock Bonus Plan (Incorporated by reference to Form 10K-SB filed on March 17, 1996)
| | ---- | ---------------------------------------------------------------------------------------------

| | 10.8 | Stock
 Purchase  Plan between The State Bank and Donald E. Johnson,  Jr.,  Mary Alice J.
Heaton,  and                 Linda J. LeMieux  dated  November 17, 1996  (Incorporated
 by reference to Exhibit  10.19 to the Form         10K-SB
filed March 20, 1997)
| | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.9 | Severance
 Compensation  Agreement  between the  Registrant  and Donald L. Grill dated March 20,
1997                 (Incorporated by reference to Exhibit 10.20 to the Form 10Q-SB filed
May 12, 1997)
| | ---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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:

| | a) | Cause means (i) the willful and continuing failure by the
                    Executive to substantially perform his duties with the Bank or the Company
                    (other than any such failure resulting from the Executives death or
                    Disability) and which is not remedied in a reasonable period of time after
                    receipt by Executive of written notice from the Bank specifying the duties the
                    Executive has failed to perform, or (ii) the willful and continued engaging by
                    Executive in gross misconduct that is materially injurious to the Bank or the
                    Company and which is not ceased within a reasonable period of time after receipt
                    by Executive of written notice from the Bank specifying the misconduct and the
                    injury, or (iii) an adjudication of the Executives guilt of any crime
                    involving a serious and substantial breach of the Executives fiduciary
                    duties to the Bank. No act or failure to act on the Executives part shall
                    be considered willful unless done, or omitted to be done, by him in
                    bad faith and without reasonable belief that his action or omission was in the
                    best interest of the Bank or the Company.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | b) | Change in Control means (I) the acquisition, directly,
                    indirectly and/or beneficially, by any person or group, of more than fifty
                    percent (50%) of the voting securities of the Company or the Bank, (ii) the
                    occurrence of any event at any time during any two (2) year period which results
                    in a majority of the Board of Directors of the Company or the Bank being
                    comprised of individuals who were not members of such Board at the commencement
                    of that two (2) year period (the Incumbent Board); provided,
                    however, that any individual becoming a director subsequent to the date hereof
                    whose election, or nomination for election by the Companys or the
                    Banks shareholders, was approved by a vote of at least a majority of the
                    directors then comprising the Incumbent Board shall be considered as though such
                    individual were a member of the Incumbent Board, but excluding for this purpose
                    any such individual whose initial assumption of the office occurs as a result of
                    an actual or threatened election contest with respect to the election or removal
                    of directors or other actual or threatened solicitation of proxies or consents
                    by or on behalf of a person other than the Incumbent Board, (iii) a sale of all
                    or substantially all of the assets of the Company or the Bank to another entity,
                    or (iv) a merger or reorganization of the Company or the Bank with another
                    entity.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---



| | 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:

| | a) | The Company and the Bank shall pay to the Executive, in a lump sum in cash
                    within 30 days after the date of termination of employment the aggregate of the
                    following amounts:
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | i) | that portion of the Executives annual base salary and directors fees
          through the date of termination not theretofore paid, and
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------

| | ii) | the product of (x) the sum of all commissions and bonuses of any kind paid or
          payable to Executive in the calendar year immediately preceding the year in
          which termination of employment occurs multiplied by (y) a fraction, the
          numerator of which is the number of days in the current calendar year through
          the date of termination, and the denominator of which is 365, and
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | iii) | any compensation previously deferred by the Executive (together with any accrued
          interest o earnings thereon), and
| | ---- | ----------------------------------------------------------------------------------------------------------------------------

| | iv) | any accrued vacation pay.
| | --- | -------------------------

| | b) | The Executive shall have the right within 90 days following termination of
          employment to exercise any stock options awarded him prior to the termination of
          his employment.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | c) | The
Bank and/or the Company shall thereafter pay to the Executive an annual           amount
equal to 50% of the highest amount of the Executives annual           Compensation
in the five calendar years immediately preceding Executives           termination
for a period of 5 years from and after the Executives           termination of
employment, payable in equal monthly installments commencing the           first day of
the month coinciding with or immediately following the           Executives
termination of employment. If the Executive dies after the           Banks and the
Companys obligation to make these payments is           triggered, the Bank and the
Company shall thereafter pay to the Executives           Beneficiary a lump sum
amount equal to the present value of the unpaid monthly           installments,
discounted using a ten percent (10%) per annum interest rate. In           lieu of the
foregoing installments, the Executive may elect by written notice to           the Bank
within ninety (90) days of the Executives termination of           employment to
receive a lump sum amount equal to the present value of the           monthly
installments, discounted by using a ten percent (10%) per annum interest           rate.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

-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.

| | a) | Any purchaser, successor or assign (whether direct or indirect), to or of all,
                    substantially all, or any material part of the business, properties and assets
                    of the Bank and/or the Company shall be bound by the terms of this Agreement,
                    and the Bank and the Company shall require any such purchaser, successor or
                    assign, by agreement in form and substance satisfactory to Executive, expressly,
                    absolutely and unconditionally to assume and agree to perform this Agreement in
                    the same manner and to the same extent that the Bank and the Company would be
                    required to perform if no such succession or assignment had taken place.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

-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:

|If to the Companyor the Bank:If to the Executive: | Fentura Bancorp, Inc.One Fenton SquarePO Box 725Fenton, MI 48430-0725____________________________________________________________
|------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------

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.

| | a) | Modification; Waiver. This Agreement may be modified, waived or
                    discharged only in, and limited to the extent specifically set forth in, a
                    written document signed by the Executive and the Company.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

-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
     Definitions.  Whenever used in this  Agreement,  the  following  words and phrases
shall have the meanings specified:
| | ------------------------------------------------------------------------------------------------------------------------------

| | 1.1.1
Change of Controlmeans one or more of the following events that is
followed within twelve (12) mouths by the Executives Termination of Employment for
reasons other than death, Disability or attainment of the Normal Retirement Date:
(i) the acquisition, directly, indirectly and/or beneficially, by any person or
group, of more than fifty percent (50%) of the voting securities of the Company or the
Bank, (ii) the occurrence of any event at any time during any two (2) year period
which results in a majority of the Board of Directors of the Company or the Bank being
comprised of individuals who were not members of such Board at the commencement of that
two (2) year period (the Incumbent Board); provided, however, that any
individual becoming a director subsequent to the date hereof whose election, or nomination
for election by the Companys or the Banks shareholders, was approved by a vote
of at least a majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board, but excluding
for this purpose any such individual whose initial assumption of the office occurs as a
result of an actual or threatened election contest with respect to the election or removal
of directors or other actual or threatened solicitation of proxies or consents by or on
behalf of a person other than the Incumbent Board, (iii) a sale of all or substantially
all of the assets of the Company or the Bank to another entity, or (iv) a merger or
reorganization of the Company or the Bank with another entity.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---



| | 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

| | 2.1
Annual Incentive Award.The Return On Equity (the ROE) determined as
of December 31 of each Plan Year shall determine the Executives Annual Incentive
Award Percentage, in accordance with the following chart:
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Incentive Award
Percentage   Prior Year ROE Performance

|    |  
|--- | -
|70  | %
|80  | %
|90  | %
|100 | %
|110 | %
|120 | %
|130 | %

| | The
above chart may be reviewed and adjusted annually by the Banks Board of Directors ii
its sole discretion. The Annual Incentive Award is calculated (as indicated in Section
2.2) by determining the appropriate annual accrual for the Targeted Benefit multiplied by
the applicable Incentive Award Percentage as set forth above.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 2.2
Annual IncentiveAward.On December 31 of each Plan Year, the Bank shall
determine the Executives Annual Incentive Award for the just completed Plan Year
and shall credit such amount to the Executives Retirement Account (the Retirement
Account) as follows:
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Annual
Incentive Award = Base Salary for the just completed year X Incentive Award Percentage
(from Section 2.1) based upon ROE Performance (see Section 1.1.10) verses Target (see
Section 2.1).
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 2.3
Annual Incentive Award Illustration.The attached EXHIBIT A  INDIVIDUAL PLAN
ACCOUNTING illustrates the supplemental retirement benefit projections based upon the
account variables and assumptions.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

-3-

---



# Article 3 Retirement Account

| | 3.1
Establishing and Crediting.TheBank shall establish a Retirement Account as
of November 1, 1999 on its books for the Executive, and shall credit annually to the
Retirement Account the following amounts:
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 3.1.1
  Annual Incentive Award.  The Incentive Award as determined under Article 2.
| | -----------------------------------------------------------------------------------

| | 3.1.2
Interest.On December 31 of each Plan Year and immediately prior to the payment of
any benefits, interest is tobe credited on the Retirement Account balance since
the preceding credit under this Section 3.1.2, if any, at an annual rate equal to the
rolling three-year average of the Banks ROE compounded monthly.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 3.2
Statement of Accounts.The Bank shall provide to the Executive, within sixty (60)
days after the end of each Plan Year this Agreement is in effect, a statement setting
forth the current Retirement Account balance.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 3.3
Accounting Device Only.The Retirement Account is solely a device for measuring
amounts to be paid under this Agreement. The Retirement Account is not a trust fund of
any kind. The Executive is a general unsecured creditor of the Bank for the payment of
benefits. The benefits represent the mere Bank promise to pay such benefits. The Executives
rights to the Retirement Account are not subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or garnishment
by the Executives creditors.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# Article 4 Lifetime Benefits

| | 4.1
     Normal  Retirement  Benefit.  Upon  the  Normal  Retirement  Date,  the  Bank  shall
 pay  to the Executive the benefit described in this Section 4.1 in lieu of any other
benefit under this Agreement.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 4.1.1
Amount of BenefitThe benefit under this Section 4.1 is the Retirement Account
balance at the Normal Retirement Date.
| | --------------------------------------------------------------------------------------------------------------------------

| | 4.1.2
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 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 Normal Retirement Date, compounded monthly, on the remaining Retirement Account
balance during any applicable installment period.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 4.2
Early Termination Benefit.Upon Termination of Employment prior to the Normal
Retirement Age for reasons other than death, Change of Control or Disability, the Bank
shall pay to the Executive the benefit described in this Section 4.2 in lieu of any other
benefit under this Agreement.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

-4-

---



| | 4.2.1
Amount of Benefit.The benefit under this Section 4,2 is the Retirement
Account balance at Termination of Employmentmultiplied 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 4.3is the
Retirement Account balance at Termination of Employment.
| | -------------------------------------------------------------------------------------------------------------------------

| | 4.3.2
Payment of Benefit.TheBank 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.TheBank 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

| | 5.1
Death During Active Service.If the Executive dies prior to Termination of
Employment, the Bank shall pay to the Executives beneficiary the benefit describedinthis
Section 5.1 in Lieu of the Lifetime Benefits of Article 4.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 5.1.1
Amount of Benefit.The benefit under Section 5.1 shall be the greater of the
Retirement Account balance (100% vested upon death) or $335,356.
| | --------------------------------------------------------------------------------------------------------------------------------------------------

| | 5.1.2
Payment of Benefit.The Bank shall pay thebenefit to the beneficiary in one
hundred and eighty (130) equal monthly installments commencing on the first day of the
month following the Executives death. 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 the Executives death, compounded monthly, on the remaining
Retirement Account balance during any applicable installment period.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 5.2
Death During Benefit Period.Ifthe Executive dies after benefit payments
have commenced under this Agreement but before receiving all such payments, the Bank
shall pay the remaining benefits to the Executives beneficiary at the same time and
in the same amounts they would have been paid to the Executive had the Executive
survived.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 5.3
Death After Termination of Employment Rut Before Benefit Payments Commence.If the
Executive is entitled to benefit payments under this Agreement, butdies prior to
the commencement of said benefit payments, the Bank shall pay the benefit payments that
the Executive was entitled to prior to death to the Executives beneficiary except
that the benefit payments shall commence on the first day of the month following the date
of the Executives death.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# Article 6 Beneficiaries

| | 6.1
Beneficiary Designations.The Executiveshall designate a beneficiary by
filing a written designation with the Bank. The Executive may revoke or modify the
designation at any rime by filing a new designation. However, designations will only be
effective if signed by the Executive and accepted by the Bank during the Executives
lifetime. The Executives beneficiary designation shall be deemed automatically
revoked if the beneficiary predeceases the Executive, or if the Executive names a spouse
as beneficiary and the marriage is subsequently dissolved. If the Executive dies without
a valid beneficiary designation, all payments shall be madeto the Executives
estate.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

-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

| | 7.1
Excess Parachute Payment.Notwithstanding any provision of this Agreement to the
contrary, the Bank shall not pay any benefit under this Agreement to the extent the
benefit would create an excise tax under the excess parachute rules of Section 280G of
the Code.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 7.2
Termination for Cause.Notwithstanding any provision of this Agreement to the
contrary, the Bank shall not pay any benefit under this Agreement if theBank
terminates the Executives employment based on:
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (a)       
               Willfuland continuing failure by the Executive to substantially perform
               his duties with the Bank or the Company (other than any such failure resulting
               from the Executives death or Disability) and which is not remedied in a
               reasonable period of time after receipt by Executive of written notice from the
               Bank specifying the duties the Executive has failed to perform;
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b)       
               Willful and continued engaging by Executive in gross misconduct that is
               materially injurious to the Bank or the Company and which is not ceased within a
               reasonable period of time after receipt by Executive of written notice from the
               Bank specifying the misconductand the injury; or
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (c)       
               An adjudication of the Executives guilt of any crime involving a serious
               and substantial breach of the Executives fiduciary duties to the Bank. No
               act or failure to act on the Executives part shall be considered
               willful unless done, or omitted to be done, by him in bad faith and
               without reasonable belief that his action or omission was in the best interest
               of the Bank or the Company.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 7.3
Suicide.Notwithstanding any provision of this Agreement to the contrary, the Bank
shall not pay any benefit under this Agreement if the Executive commits suicide within
two yearsafter the date of this Agreement, or if the Executive has made any
material misstatement of fact on any application for life insurance purchased by the Bank
under this Agreement.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

-7-

---



# Article 8Claims and Review
Procedures

| | 8.1
Claims Procedure.TheBank shall notify any person or entity that makes a
claim against the Agreement (the Claimant) in writing, within ninety (90)
days of Claimantswrittenapplication for benefits, of his or her
eligibility or noneligibility for benefits under the Agreement. If the Bank determines
that the Claimant is not eligible for benefits or full benefits, the notice shall set
forth (1) the specific reasons for such denial, (2) a specific reference to the
provisions of the Agreement on which the denial is based, (3) a description of any
additional information or material necessary for the Claimant to perfect his or her claim
and a description of why it is needed, and (4) an explanation of the Agreements
claims review procedure and other appropriate information as to the steps to be taken if
the Claimant wishes tohave the claim reviewed. If the Bank determines that there
are special circumstances requiring additional time to make a decision, the Bank shall
notify the Claimant of the special circumstances and the date by which a decision is
expected to be made, and may extend the time for up to an additional ninety (90) days.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 8.2
Review Procedure.If the Claimant is determined by the Bank not to be eligible for
benefits, or if the Claimant believes that he or she is entitled to greater or different
benefits, the Claimant shall have the opportunity to have such claim reviewed by the Bank
by filing a written petition for review with the Bank within sixty (60) days after
receipt of the notice issued by the Bank. Said petition shall state the specific reasons,
which the Claimant believes, entitle him or her to benefits or to greater or different
benefits. Within sixty (60) days after receipt by the Bank of the petition, the Bank
shall afford the Claimant (and counsel, if any) an opportunity to present his or her
position to the Bank verbally or in writing, and the Claimant (or counsel) shall have the
right to review the pertinent documents. The Bank shall notify the Claimant of its
decision in writing within the sixty (60) day period, stating specifically the basis of
its decision, written in a manner calculated to be understood by the Claimant and the
specific provisions of the Agreement ox which the decision is based. If, because of
the need for a hearing, the sixty (60) day period is notsufficient, the decision
may be deferred for up to another sixty (60)days at the election of the Bank, but
notice of this deferral shall be given to the Claimant.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# 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

| | 10.1
    Binding Effect.  This Agreement  shall bind the Executive and the Bank. and their
 beneficiaries, survivors, executors, successors, administrators and transferees.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.2
No Guarantee of Employment.This Agreement is not an employment policy orcontract.
It does not give the Executive the right to remain an employee of the Bank, nor does it
interfere with the Banks right to discharge the Executive. It also does not require
the Executive to remain an employee nor interfere with the Executives right to
terminate employment at any time.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

-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
EntireAgreement. 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:

|No. of Years of Service Credit34567 | Vested Percentage20%40%60%80%100% | Forfeited Percentage80%60%40%20%0%
|----------------------------------- | --------------------------------- | ----------------------------------

(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 withinterest 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.

| | This
Plan shall be governed by the laws of the State of Michigan, including any conflicts of
laws rules.
| | --------------------------------------------------------------------------------------------------------

| | FENTURA FINANCIAL, INC.By: /s/ Donald GrillIts: President and CEO
| | -----------------------------------------------------------------

-4-

---



# EXHIBIT 10.13

# FENTURA BANCORP, INC.

# EMPLOYEE DEFERRED
COMPENSATION AND STOCK OWNERSHIP PLAN

---



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

---



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:

| | (a)                 Acquisition
Loan: A loan or other extension of credit used by the Trustee to           finance the
acquisition of Employer Stock.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------

| | (b)                 Actual
Deferral Percentage or ADP:
| | ------------------------------------------------------

---



| | (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 1⁄2 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 1⁄2 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 1⁄2 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.

| | (a)                 The
Employee has completed one Year of Service within any Eligibility           Computation
Period; and
| | ---------------------------------------------------------------------------------------------------------------------------

| | (b)                 The
Employee has attained 21 years of age (not to exceed age 21); and
| | -----------------------------------------------------------------------------------------

| | (c)                 The
Employee is employed by the Employer on said January 1 or July 1.
| | -----------------------------------------------------------------------------------------

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)                 Participation:
A former Participant shall become a Participant immediately upon           his return to
the employ of the Employer if such former Participant had a           nonforfeitable
right to all or a portion of his account balance derived from           Employer
contributions at the time of his termination.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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.

| | (b)                 Service:
In the case of a Participant who has 5or more consecutive one           year
Breaks in Service, all service after such Breaks in Service will be           disregarded
for the purpose of vesting the Employer-derived account balance that           accrued
before such Breaks in Service. Such Participants pre-Break Service           will
count in vesting the post-Break Employer-derived account balance only if
          either:
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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.

| | (2)                 Employer
Matching Contributions: Subject to the limitations of Section 4.4, the           Employer
may, for each Plan Year, contribute to the Trust Fund a matching           contribution
based on the Elective Deferrals which are contributed by           Participants. The
amount of this matching contribution will be an amount equal           to such amount for
every dollar which the Participant contributes in the form of           Elective
Deferrals as is determined by resolution of the Governing Board adopted           on or
before the last day of each Plan Year. All such Employer Matching           Contributions
shall be deposited in the Trust Fund 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 return. This           matching
contribution will be made for any Participant who made Elective           Deferral
Contributions during the 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
          1⁄2. 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:

| | (a)                 Elective
deferral agreements and amendments to elective deferral agreements           shall not be
made retroactively and shall be effective in accordance with           administrative
procedures adopted by the Committee.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b)                 The
Employer may amend or revoke its elective deferral agreement with any
          Participant at any time if the Employer determines that such revocation or
          amendment is necessary to ensure that a Participants Annual Additions for
          any Plan Year will not exceed the limitations of Plan Section 5.3for
          such Plan Year.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (c)                 If
the Actual Deferral Percentage in a Plan Year for Eligible Participants who           are
Highly Compensated Employees for the Plan Year is larger than the greater           of:
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (1)                 the
ADP for Eligible Participants who are Nonhighly Compensated Employees for           the
Plan Year multiplied by 1.25,or
| | -----------------------------------------------------------------------------------------------------------------------------------------------

| | (2)                 the
ADP for Eligible Participants who are Nonhighly Compensated Employees for           the
Plan Year multiplied by 2, provided that the ADP for Eligible Participants           who
are Highly Compensated Employees does not exceed the ADP for Eligible
          Participants who are Nonhighly Compensated Employees by more than two (2)
          percentage points, then the deferral amount specified in the elective deferral
          agreements of the Highly Compensated Employees shall be reduced to the extent
          necessary so that the ADP for the group of Highly Compensated Employees is not
          more than the greater of (1) or (2) above. Such reduction shall be accomplished
          as set forth in Section 4.2(d) below.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | For
purposes of determining the ADP test, Elective Deferrals, Qualified Nonelective
Contributions and Qualified Matching Contributions must be made before the last day of
the twelve (12) month period immediately following the Plan Year to which contributions
relate. In addition, the ADP for NHCEs for the prior year is determined taking into
account only Elective Deferrals for NHCEs that were taken into account for purposes of
the ADP test (and not the ACP test) under the current year method in the prior year and
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:
QNEC5 used to satisfy either the ADP or ACP test under the current year testing method
for the prior year, Elective Deferrals taken into account for purposes of the ACP test,
and all QMACS. These limitation rules regarding double counting do not apply for testing
years beginning before January 1, 1999.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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
1⁄2          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:

| | (a)                 If
required by applicable law, if the Average Contribution Percentage (the           ACP)
in a Plan Year for Eligible Participants who are Highly           Compensated Employees
is larger than the greater of:
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (1)                 the
ACP for Eligible Participants who are Nonhighly Compensated Employees for           the
Plan Year multiplied by 1.25, or,
| | -------------------------------------------------------------------------------------------------------------------------------------------------

| | (2)                 the
ACP for Eligible Participants who are Nonhighly Compensated Employees for           the
Plan Year multiplied by 2, provided that the ACP for Eligible Participants           who
are Highly Compensated Employees does not exceed the ACP for Eligible
          Participants who are Nonhighly Compensated Employees by more than two (2)
          percentage points, the amount of Employee Contributions and Matching Employer
          Contributions of the Highly Compensated Employees shall be reduced to the
extent           necessary so that the ACP for the group of Highly Compensated Employees
is not           more than the greater of (1) or (2). Such reduction shall be
accomplished as set           forth in Section 4.4(d) below.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
current year testing method contained in this Section 4.4(a) 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 (a) 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(m)(11).
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b)                 For
purposes of this Section 4.4, the following definitions shall apply:
| | --------------------------------------------------------------------------------------------

| | (1)                 Aggregate
Limit shall mean the sum of:
| | ----------------------------------------------------------

| | [a]                 One
hundred twenty-five percent (125%) 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 Section 401(m) for the Plan           Year
beginning with or within the Plan Year of the CODA; and
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | [b]                 The
lesser of two hundred percent (200%) or two (2) plus the lesser of such ADP           or
ACP.
| | ---------------------------------------------------------------------------------------------------------------------

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 1⁄2) 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:

| | (a)                 distributions
commence to the terminated Participant, or
| | ----------------------------------------------------------------------------

| | (b)                 such
Participant incurs his fifth consecutive one year Break in Service.
| | --------------------------------------------------------------------------------------------

| | If
a Participant receives a distribution pursuant to Section 6.4, and the Participant
resumes employment covered under the Plan, the Participants Employer-derived
account balance will be restored to the amount reflected therein on the date of
distribution if the Participant repays to the Plan the full amount of the distribution
attributable to Employer contributions before the earlier of five years after the first
date on which the Participant is subsequently reemployed by the Employer, or the date the
Participant incurs five consecutive one year Breaks in Service following the date of the
distribution. If a Participant is deemed to receive a distribution pursuant to Section
6.4, and the Participant resumes employment covered under this Plan before the date the
Participant incurs fiveconsecutive one year Breaks in Service, then the
Employer-derived account balance of the Participant will be restored to the amount on the
date of such deemed distribution as of the Participants reemployment date.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Notwithstanding
the foregoing provisions of Section 4.5,forfeitures shall first be charged
against a Participants Other Investments Account, with any remaining amount charged
against his Employer Stock Account (at the current Fair Market Value of Employer Stock on
the last day of the Plan Year in which the stock is forfeited). Financed Shares shall be
forfeited only after other shares of Employer Stock have been forfeited.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

4.6
     Rollover or Transfer Amount from Other Plans:

| | (a)                 If
an Employee who is eligible to participate in the Plan (regardless of whether
          he has satisfied any age and/or service requirements of Section 3.1), has
          received or is entitled to receive a distribution from a plan which meets the
          requirements of Code Section 401(a) (the Other Plan), such
          Participant may, in accordance with procedures approved by the Committee,
          rollover or transfer the distribution from the Other Plan to the Trustee
          provided the following conditions are met:
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (1)                 the
rollover or transfer occurs on or before the 60th day following his receipt           of
the distribution from the Other Plan, or if such distribution had previously
          been deposited in an Individual Retirement Account (as defined in Code Section
          408), the rollover or transfer occurs on or before the 60th day following his
          receipt of such distribution plus earnings thereon from the Individual
          Retirement Account;
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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:

| | (a)                 The
Committee shall create and maintain adequate records to disclose the           interest
in the Trust of each Participant, former Participant and Beneficiary.           Such
records shall be in the form of individual accounts and credits and charges
          shall be made to such accounts in the manner herein described. When
appropriate,           a Participant shall have an Employee Contribution Account and an
Employer           Contribution Account. The Employee Contribution Account shall include
an           Elective Deferral Account, a Transfer Account, and an Employee After Tax
          Contribution Account. The Employer Contribution Account shall include an
          Employer Discretionary Contribution Account and an Employer Matching
          Contribution Account, a Qualified Non-elective Contribution Account, and a
          Qualified Matching Contribution Account. The above accounts may also include
          sub-accounts therein; an Employer Stock Account and an Other Investments
          Account. The maintenance of individual accounts is only for accounting
purposes,           and a segregation of the assets of the Trust Fund to each account
shall not be           required, except where a Participant directs the investment of
accounts in           accordance with Article VI below. Distributions and withdrawals
made from any           account shall be charged to the account as of the date paid. In
no event will           the amount allocated to any Participants accounts hereunder
exceed the           maximum addition allowable for such year as provided in Section 5.3.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (1)                 The
Employer Stock Account maintained for each Participant will he credited
          annually with the Participants allocable share of Employer Stock
          (including fractional shares) purchased and paid for or contributed in kind,
          together with any Forfeitures of Employer Stock and with any stock dividends on
          Employer Stock allocated to his Employer Stock Account.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2)                 The
Other Investments Account maintained for each Participant will be credited
          annually with the Participants allocable share of [a] Employer
          contributions in cash, [b] any Forfeitures from a Participants Other
          Investments Account, and [c] net income (or loss) of the Trust attributable to
          Trust Assets, together with any cash dividends on Employer Stock allocated to
          the Participants Employer Stock Account (other than dividends distributed
          pursuant to Section 7.1. Such Other Investments Account will be debited for the
          Participants share of any cash payments made by the Trustee for the
          acquisition of Employer Stock or for the payment of any principal and/or
          interest on an Acquisition Loan, subject to Section 5.2(a).
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (3)                 The
Transfer Account maintained for a Participant will be credited with amounts
          rolled over or transferred to the Plan from another qualified plan or
individual           retirement account pursuant to Section 4.6.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
 maintenance  of  individual  accounts  is  only  for  accounting  purposes,  and  a
segregation of the assets of the Trust Fund to each account shall not be required.
Distributions and withdrawals made from any account shall be charged to the account as of
the date paid. In addition, the Committee shall maintain adequate records of the
aggregate cost basis of each class of Employer Stock allocated to each Participants
Accounts. The Committee shall also keep separate records of Financed Shares and of
Employer Contributions (and any earnings thereon) made for the purpose of enabling the
Trustee to repay any Acquisition Loan. From time to time, the Committee, in its
discretion, may modify the accounting procedures for the purpose of achieving equitable
and nondiscriminatory allocations among the Accounts of Participants in accordance with
the general concepts of the Plan and applicable law.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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:

| | (a)                 Income:
| | ---------------------------

| | (1)                 Other
Investments Accounts and Transfer Accounts: All contributions held in           Other
Investments Accounts and Transfer Accounts will be credited with the           actual
investment earnings and gains and losses from the actual date of deposit           of
each such contribution with the relevant investment fund until the end of the
          valuation period. Such Participant accounts will be credited with actual
          investment earnings as of the next crediting date following the date of deposit
          (but in no event later than the last day of the Plan Year to which the deposit
          relates). Participants will share in the earnings of the investment fund(s) in
          which their accounts are invested as of the date on which such earnings are
          either credited or accrued.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2)                 Dividends
on Employer Stock: Any cash dividend received on shares of Employer           Stock
allocated to Participants Employer Stock Accounts as of the record           date
relating to the cash dividend will be first allocated to the respective           Other
Investments Accounts of such Participants. If such dividends create a
          subsequent release of Financed Shares, the Participants Other Investments
          Accounts will be debited upon crediting their Employer Stock Accounts with a
          respective allocation of those Financed Shares. Any cash dividend received on
          unallocated shares of Employer Stock, including any Financed Shares credited to
          the Loan Suspense Account, shall be allocated in accordance with Section
          5.2(a)(1).Any stock dividend received on Employer Stock will be credited
          to the Accounts (including the Loan Suspense Account) to which such Employer
          Stock was allocated as of the record date relating to the stock dividend.
          Notwithstanding the foregoing, any cash dividends which are currently
          distributed to Participants pursuant to Section 7. 1 shall not be credited to
          their respective Other Investments Accounts.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | If
cash dividends on Financed Shares allocated to a Participants Employer Stock
Account are used for payments on an Acquisition Loan, Financed Shares (representing that
portion of such payments and whose Fair Market Value is at least equal to the amount of
such dividends) released from the Loan Suspense Account shall be allocated to that
Participants Employer Stock Account.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Notwithstanding
the foregoing:
| | ------------------------------

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 year12

| | (d)                 Special
Acquisition Loan Rules: Any Employer Contributions which are used by the           Trust
(not later than the due date, including extensions, for filing the           Employers
Federal income tax return for the Plan Year) to pay interest on           an Acquisition
Loan, and any Financed Shares which are allocated as Forfeitures,           shall not be
included as Annual Additions under Section 5.3(a);provided,           however,
that the provisions of this Section 5.3(d) shall be applicable only for           a Plan
Year in which not more than one-third of the contributions applied to pay
          principal and/or interest on an Acquisition Loan are allocated to Participants
          who are Highly Compensated Employees (within the meaning of Code Section
          414(q)). The Committee may reallocate such contributions to the extent
necessary           to satisfy this special rule.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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:

| | (a)                 The
Trustee will make distributions from the Trust only as directed by the
          Committee. Distribution of a Participants benefit will be made in whole
          shares of Employer Stock, cash or a combination of both, as determined by the
          Committee; provided, however, that the Committee shall notify the Participant
of           his right (subject to Section 6.1(b)) to demand distribution of his benefit
          entirely in whole shares of Employer Stock (with only the value of any
          fractional share paid in cash).
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b)                 Notwithstanding
anything to the contrary, if the Employers charter or           by-laws restrict
the ownership of substantially all outstanding shares of           Employer Stock to
current Employees and the Trust or any other trust qualified           under Code
Sections 401(a) and 501(a), the distribution of a Participants           benefit
shall be made entirely in cash without granting him the right to demand
          distribution in shares of Employer Stock. Alternatively, Employer Stock may be
          distributed subject to the requirement that it be immediately resold to the
          Employer under payment terms that comply with Section 7.5(a).
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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).

| | A
Participants Early Retirement Age shall be the date upon which he attains age 55and
completes 10 Years of Service. If a Participant separates from service before satisfying
the age requirement for Early Retirement, but has satisfied any service requirement, the
Participant will be entitled to elect an Early Retirement benefit upon satisfaction of
such age requirement.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
addition, any Participant who has attained age 59 1⁄2 and continues to be employed
by the Employer shall be entitled to receive all or any portion of the vested amount then
in each of his accounts in accordance with Section 6.5 within a reasonable time after the
request is made.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | If
a distribution is made at a time when a Participant has a nonforfeitable right to less
than 100% of the account balance derived from Employer contributions and the Participant
may increase the nonforfeitable percentage in the account:
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (a)                 A
separate account will be established for the Participants interest in           the
Plan as of the time of the distribution, and
| | -------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b)                 At
any relevant time the Participants nonforfeitable portion of the           separate
account will be equal to an amount (X) determined by the           formula:
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

| | For
purposes of applying the formula: P is the nonforfeitable percentage at the relevant
time, AB is the account balance at the relevant time, D is the amount of the
distribution, and R is the ratio of the account balance at the relevant time to the
account balance after distribution.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Notwithstanding
the foregoing, benefits attributable to assets (including the post-transfer earnings
thereon) and liabilities that are transferred, within the meaning of Code Section 414(1)
to this Plan from a money purchase pension plan qualified under Code Section 401(a)
(other than any portion of those assets and liabilities attributable to voluntary
Employee contributions) are not permitted to be distributed prior to the Participants
attainment of Normal Retirement Age, death, Disability, severance from employment or Plan
termination.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

41

---



6.3
     Death:

| | (a)                 If
a Participant dies before distribution of his or her entire amount has
          commenced, such entire amount will be distributed in accordance with this
          Section. Within a reasonable time after receipt by the Committee of acceptable
          proof of death, the entire amount then in all of his accounts shall be paid to
          his Spouse or Beneficiary as determined in accordance with Section 6.5.The
form of payment shall be determined pursuant to the rules contained in           Section
6.5 hereof.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
entire amount in a Participants account at termination of employment
shall include all amounts credited to all of the Participants Plan Accounts,
including any Elective Deferral Contributions, Employer Matching Contributions and
Employee after-tax Contributions made pursuant to any of Plan Sections 4.1, 4.2 or 4.3,
respectively, for the Plan Year in which employment termination occurs where such
contributions are not yet allocated to an account.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b)                 If
a Participant dies after distribution of his or her interest has commenced,           the
remaining portion of such interest will continue to be distributed at least           as
rapidly as under the method of distribution being used prior to the           Participants
death.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

6.4
Termination for Other Reasons:

| | (a)                 At
any given time, a Participants vesting in his accounts will be           determined
in accordance with paragraphs (1) and (2) below. If a           Participants
employment with the Employer is terminated before the Normal           Retirement Age for
any reason other than Early Retirement, Disability or death,           the Participant
shall be entitled to the sum of:
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (1)                 The
entire amount credited to his Employee Contribution Account, if any, his
          Employer Matching Contribution Account and his Elective Deferral Contribution
          Account, if any (including any contributions made or to be made to such
accounts           for the Plan Year in which employment termination occurs but not yet
allocated           on the employment termination date), and his Transfer Account, if
any, and any           amounts attributable to Qualified Nonelective or Qualified
Matching           Contributions, plus
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2)                 An
amount equal to the vested percentage of his Employer           Discretionary
Contribution Account. For any Plan Year in which the Plan is not a           top-heavy
plan pursuant to Article XIV, such vested percentage shall be           determined in
accordance with the following schedule (not slower than the 3 to 7           year graded
vesting schedule provided by Code Section 411(a)(2)).
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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)).

|No. of Years of Service Credit 
    For Purposes of Vesting    
              0-1              
               2               
               3               
               4               
               5               
               6 | Vested   
  Percentage 
      0%     
      20%    
      40%    
      60%    
      80%    
     100% | Forfeited
          Percentage
             100%
             80%
             60%
             40%
             20%0%
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------

| | (b)                 Notwithstanding
the foregoing, the vested interest, if any, of a Participant who           had been
covered under the prior provisions of the Plan shall not be less than           the
vested interest the Participant would have had if the provisions of the Plan           as
in effect immediately prior to the Effective Date had continued without           change.
Furthermore, the interest of a Participant shall be 100% vested and
          nonforfeitable upon the first to occur of attainment of age 65 or the Normal
          Retirement Age or the Early Retirement Age, irrespective of the foregoing
          vesting schedule.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (c)                 If
a Participant terminates service, and the value of the Participants
          vested account balance derived from Employer and Employee Contributions (at the
          time of distribution or any prior distribution) is not greater than $5,000 (or
          such other indexed amount as may be applicable), the Participant will receive a
          distribution of the value of the entire vested portion of such account balance
          and the nonvested portion will be treated as a Forfeiture. If a Participant
          would have received a distribution under the preceding sentence but for the
fact           that the Participants vested account balance exceeded $5,000 when
the           Participant terminated service and if at a later time such account balance
is           reduced such that it is not greater than $5,000, the Participant will
receive a           distribution of such account balance and the nonvested portion will
be treated           as a Forfeiture. Such distribution will be made within one year
after           termination of employment. For purposes of this section, if the value of
a           Participants vested account balance is zero, the Participant shall be
          deemed to have received a distribution of such vested account balance. A
          Participants vested account balance shall not include accumulated
          deductible employee contributions within the meaning of Code Section
72(o)(5)(B)           for Plan Years beginning prior to January 1, 1989.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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.

| | The
$5,000 limitation contained in this Section 6.3(c) is effective for Plan Years beginning
on or after January 1, 1999. In addition, it is effective for the Plan Year(s) beginning
in 1997 and 1998. In no event will the $5,000 limitation be effective prior to the first
day of the first Plan Year beginning after August 5,1997. For Plan Years
beginning prior to the effective date of this $5,000 limit, $3,500 shall be substituted
for $5,000 in this Section 6.3(c).
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (d)                 Payment
of benefits due under this Section, except those involuntarily cashed           out,
shall be made in accordance with Section 6.5.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------

| | If
payment in the form of a Qualified Joint and Survivor Annuity is required with respect to
a Participant and either the value of a Participants vested account balance derived
from Employer and Employee contributions exceeds $5,000 or there are remaining payments
to be made with respect to a particular distribution option that previously commenced,
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.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | If
payment in the form of a Qualified Joint and Survivor Annuity is not required with
respect to a Participant and the value of a Participants vested account balance
derived from Employer and Employee contributions exceeds $5,000, and the account balance
is immediately distributable, the Participant must consent to any distribution of such
account balance.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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.

| | (2)                 Distributions
Not Subject to Code Section 417. If payment in the form of a           Qualified Joint
and Survivor Annuity is not required with respect to a           Participant, the rule in
this Section 6.4(e)(2) 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:
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | [a]                 for
Plan Years beginning before August 6, 1997, exceeds $3,500 (or exceeded           $3,500
at the time of any prior distribution),
| | --------------------------------------------------------------------------------------------------------------------------------------------------------

| | [b]                 for
Plan Years beginning after August 5,1997, and for a distribution           made
prior to March 22, 1999, exceeds $5,000 (or exceeded $5,000 at the time of           any
prior distribution),
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | [c]                 and
for Plan Years beginning after August 5,1997 and for a distribution           made
after March 21, 1999, that either exceeds $5,000 or is a remaining payment
          under a selected optional form of payment that exceeded $5,000 at the time the
          selected payment began, and the account balance is immediately distributable,
          the Participant 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.

| | (a)                 Time
of Payment:
| | ------------------------------------

| | (1)                 In
general, the time of payment will be as determined in Section 6.4. In any
          event, payment of the retired, disabled, deceased or terminated
          Participants vested benefits must, unless the Participant elects
otherwise           in writing, commence not later than the 60th day after the close of
the Plan           Year in which the latest of the following events occurs:
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | [a]                 the
Participant attains the earlier of the Plans Normal Retirement  Age or 65;
| | ---------------------------------------------------------------------------------------------------

| | [b]                 the
10th anniversary of the Plan Year in which the Participant commenced
          participation in the Plan; or
| | ------------------------------------------------------------------------------------------------------------------------------------

| | [c]                 the
Participant terminates his service with the Employer.
| | -----------------------------------------------------------------------------

| | (2)                 Notwithstanding
the foregoing, the failure of a Participant and spouse to           consent to a
distribution while a benefit is immediately distributable, within           the meaning
of Section 6.4(d), shall be deemed to be an election to defer           commencement of
payment of any benefit sufficient to satisfy this Section.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (3)                 No
written election may defer distribution of a Participants account           balance
to a date later than the required beginning date. The required beginning           date
of a Participant shall be determined in accordance with this section. The
          required beginning date of a Participant is the later of the April 1 of the
          calendar year following the calendar year in which the Participant attains age
          701⁄2 or retires except that benefit distributions to a 5-percent owner
          must commence by the April 1 of the calendar year following the calendar year
in           which the Participant attains age 701⁄2.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | [a]                 Any
Participant other than a 5% owner attaining age 70 1/2 in years after 1995           may
elect by April 1 of the calendar year following the year in which the
          Participant attained age 701⁄2, (or by December 31, 1997 in the case of a
          Participant attaining age 701⁄2 in 1996) to defer distributions until the
          calendar year following the calendar year in which the Participant retires. If
          no such election is made, the Participant will begin receiving distributions by
          the April 1 of the calendar year following the year in which the Participant
          attained age 701⁄2 (or by December 31, 1997 in the case of a Participant
          attaining age 701⁄2 in 1996).
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

47

---



| | [b]                 Any
Participant other than a 5% owner attaining age 701⁄2 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.

| | Any
 consent  by  a  Spouse   obtained   under  this   provision   (or establishment that the
consent of a Spouse may not be obtained) shall be effective only with respect to such
Spouse. A consent that permits designations by the Participant without any requirement of
further consent by such Spouse must acknowledge that the Spouse has the right to limit
consent to a specific Beneficiary, and a specific form of benefit where applicable, and
that the Spouse voluntarily elects to relinquish either or both of such rights. A
revocation of a prior waiver may be made by a Participant without the consent of the
Spouse at any time before the commencement of benefits. The number of revocations shall
not be limited. No consent obtained under this provision shall be valid unless the
Participant has received notice as provided in Section 6.5(c)(5) below.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | [e]                 Qualified
Joint and Survivor Annuity: An immediate annuity for the life of the
          Participant with a survivor annuity for the life of the Spouse which is not
less           than 50%and not more than 100% of the amount of the annuity which
is           payable during the joint lives of the Participant and the Spouse and which
is           the amount of benefit which can be purchased with the Participants
vested           account balance. The percentage of the survivor annuity under the Plan
shall be           50%.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | [f]                 Spouse
(Surviving Spouse): The Spouse or Surviving Spouse of the Participant,           provided
that a former Spouse will be treated as the Spouse or Surviving Spouse           and a
current Spouse will not be treated as the Spouse or Surviving Spouse to           the
extent provided under a qualified domestic relations order as described in           Code
Section 4l4.(p).
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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.

| | (a)                 As
of the first distribution calendar year, distributions, if not made in a           single
sum, may only be made over one of the following periods (or a combination
          thereof):
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (1)                 the
life of the Participant,
| | ------------------------------------------------

| | (2)                 the
life of the Participant and a designated beneficiary,
| | -----------------------------------------------------------------------------

| | (3)                 a
period certain not extending beyond the life expectancy of the Participant,  or
| | -----------------------------------------------------------------------------------------------------

| | (4)                 a
period certain not extending beyond the joint and last survivor expectancy of
          the Participant and a designated Beneficiary.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b)                 If
a Participants interest is to be distributed in other than a single           sum,
the following minimum distribution rules shall apply on or after the           required
beginning date (as defined in Section 6.5(a)):
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (1)                 If
a Participants benefit is to be distributed over:
| | -------------------------------------------------------------------------

| | [a]                 a
period not extending beyond the life expectancy of the Participant or the           joint
life and last survivor expectancy of the Participant and the           Participants
designated Beneficiary, or
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | [b]                 a
period not extending beyond the life expectancy of the designated   beneficiary,
| | ------------------------------------------------------------------------------------------------------

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.

| | (4)                 The
minimum distribution required for the Participants first distribution
          calendar year must be made on or before the Participants required
          beginning date. The minimum distribution for other calendar years, including
the           minimum distribution for the distribution calendar year in which the
          Participants required beginning date occurs, must be made on or before
          December 31 of that distribution calendar year.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (c)                 If
the Participants benefit is distributed in the form of an annuity
          purchased from an insurance company, distributions thereunder shall be made in
          accordance with the requirements of Code Section 401(a)(9) and the proposed
          regulations thereunder.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (d)                 If
the Participant dies before distribution of his or her interest begins,
          distribution of the Participants entire interest shall be completed by
          December 31 of the calendar year containing the fifth anniversary of the
          Participants death except to the extent that an election is made to
          receive distributions in accordance with (1) or (2) below:
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (1)                 If
any portion of the Participants interest is payable to a designated
          beneficiary, distributions may be made over the life or over a period certain
          not greater than the life expectancy of the designated beneficiary commencing
on           or before December 31 of the calendar year immediately following the
calendar           year in which the Participant died.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2)                 If
the designated Beneficiary is the Participants surviving spouse, the           date
distributions are required to begin in accordance with (1) above shall not           be
earlier than the later of:
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | [a]                 December
31 of the calendar year immediately following the calendar year in           which the
Participant died; or
| | ----------------------------------------------------------------------------------------------------------------------------------------

60

---



| | [b]                 December
31 of the calendar year in which the Participant would have attained           age 70
1⁄2.
| | ---------------------------------------------------------------------------------------------------------------------

| | (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.

| | (1)                 For
purposes of Section 6.6(d) above, if the surviving spouse dies after the
          Participant, but before payments to such spouse begin, the provisions of
Section           6.6(d), with the exception of Section 6.6(d)(2), shall be applied as if
the           surviving spouse were the Participant.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (g)                 For
purposes of this Section 6.6, any amount paid to a child of the Participant
          will be treated as if it had been paid to the surviving spouse if the amount
          becomes payable to the surviving spouse when the child reaches the age of
          majority.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (h)                 If
distribution in the form of an annuity irrevocably commences to the           Participant
before the required beginning date, the date distribution is           considered to
begin is the date distribution actually commences.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (i)                 For
purposes of this Section 6.6, the following definitions shall apply:
| | --------------------------------------------------------------------------------------------

| | (1)                 Applicable
life expectancy. The life expectancy (or joint and last survivor           expectancy)
calculated using the attained age of the Participant (or designated
          Beneficiary) as of the Participants (or designated Beneficiarys)
          birthday in the applicable calendar year reduced by one for each calendar year
          which has elapsed since the date life expectancy was first calculated. If life
          expectancy is being recalculated, the applicable life expectancy shall be the
          life expectancy as so recalculated. The applicable calendar year shall be the
          first distribution calendar year, and if life expectancy is being recalculated
          such succeeding calendar year.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2)                 Designated
Beneficiary. The individual who is designated as the Beneficiary           under the Plan
in accordance with Code Section 401(a)(9) and the regulations           thereunder.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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.

| | (a)                 Within
a reasonable time after receiving a domestic relations order (a           DRO)
from a State Court requiring the distribution of all, or a part           of, the
Participants benefits under the Plan to an Alternate Payee (i.e.,           any
spouse, former spouse, child or other dependent of the Participant who is
          designated by the DRO as having a right to receive all or a portion of the
          benefits payable under the Plan with respect to the Participant), the Committee
          will notify the Participant and the Alternate Payee of the receipt of the DRO
          and the Plans procedures for reviewing the DRO and rendering an opinion
as           to whether the DRO is a qualified domestic relations order (a QDRO)
          as defined by ERISA Section 206(d)(3)(B).
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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
| | ------------------------------------------------------------------------------------------------------------------------------

63

---



| | (3)                 requires
payments of benefits to an Alternate Payee that are required to be paid           to
another Alternate Payee under a previously existing QDRO.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (e)                 The
Committee shall, as soon as practical, ascertain the dollar amount payable           to
each Alternate Payee pursuant to the DRO and as soon thereafter as the
          Participant reaches the Earliest Retirement Age, disperse the amounts payable
to           each Alternate Payee as provided in the DRO, subject to any distribution
          limitations contained in the Plan. If there is to be a delay for any reason in
          making payments of the amounts due to an Alternate Payee, the Committee must
          suspend the payment of any benefits which are in dispute, and direct that the
          amount payable be segregated into a separate account within the Plan. If the
          segregation is deemed to be inconvenient or undesirable, the amount payable
will           be transferred to an escrow account wherein the monies will continue to
          appreciate. If, within eighteen (18) months after the suspension of benefits
the           order is determined to be a QDRO, the Committee must pay the segregated
amounts,           plus interest, to the person(s) entitled to receive them. If, after
the eighteen           month period, the Committee has not determined whether the order
is (or is not)           qualified, or has determined that the order is not a QDRO, the
segregated           amounts, plus interest, must be paid to the person(s) who would have
received           the amounts if the DRO had not been issued. Thereafter, any subsequent
          determination that an order is a QDRO will be applied prospectively, and the
          Plan will not be liable to the Alternate Payee for payments made to the
          Participant for the period prior to the time the order was determined to be
          qualified.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

6.8
Hardship Withdrawals of Elective Deferrals:

| | (a)                 At
any time, but not more frequently than once in each Plan Year, a Participant
          may elect, with the written consent of his or her Spouse, to withdraw up to an
          amount equal to the balance then credited to his or her Elective Deferral
          Account, not including earnings credited to the Account after December 31,
1988.           Such withdrawals may be made only if the purpose of the withdrawal is to
meet           immediate and heavy financial needs of the Participant where the amount of
the           withdrawal is not reasonably available from the resources of the
Participant.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b)                 The
only financial needs considered to be immediate and heavy are:
| | --------------------------------------------------------------------------------------

| | (1)                 Deductible
medical expenses incurred or necessary (within the meaning of Code           Section 2
13(d)) of the Participant, the Participants spouse, children or
          dependents.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2)                 The
purchase (excluding mortgage payments) of a principal residence for the Participant.
| | ------------------------------------------------------------------------------------------------------------

| | (3)                 Payment
of tuition for the next twelve (12) months of post-secondary education           for the
Participant, the Participants spouse, children and dependents.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (4)                 The
need to prevent the eviction of the Participant from, or a foreclosure on           the
mortgage of, the Participants principal residence.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------

64

---



| | (c)                 A
distribution will be considered as necessary to satisfy an immediate and heavy
          financial need of the Participant only if:
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------

| | (1)                 The
Participant has obtained all distributions, other than hardship           distributions,
and all nontaxable loans under all plans maintained by the           Employer.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2)                 All
plans maintained by the Employer provide that the Participants           Elective
Deferrals (and Employee Contributions) will be suspended for six months           after
the receipt of the hardship distribution.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (3)                 The
distribution is not in excess of the amount of an immediate and significant
          financial need (including amounts necessary to pay any federal, state or local
          income taxes or penalties reasonably anticipated to result from the
          distribution).
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (4)                 All
plans maintained by the Employer provide that the Participant may not make
          Elective Deferrals for the Participants taxable year immediately
following           the taxable year of the hardship distribution in excess of the
applicable limit           under Code Section 402(g) for such taxable year less the
amount of such           Participants Elective Deferrals for the taxable year of
the hardship           distribution.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (d)                 All
withdrawal elections shall be made by a Participant on written forms           supplied
by the Committee for that purpose. Upon employment termination, a           Participants
remaining Elective Deferral Account shall be distributed in a           manner consistent
with Article VI hereof.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

6.9
Investment Direction:

| | (a)                 Each
Participant may elect to direct the investment of his or her Elective           Deferral
Account in accordance with written, uniform and nondiscriminatory
          administrative procedures adopted by the Committee. In that event, the
          Participants Elective Deferral Account in the Trust shall be placed in a
          segregated account within the Trust. This segregated account shall then be
          invested in any security or other property or other form that the Trustee has
          the power to invest in hereunder, including Employer Stock, as directed by the
          Participant and as consistent with administrative procedures adopted by the
          Committee pursuant to this Section 6.9. Such administrative procedures shall
          describe the number of investment choices available under this Section 6.9, the
          permitted frequency of participant investment elections and any other aspect of
          this Participant investment direction feature which the Committee chooses to
          specify in said administrative procedures, all in accordance with applicable
          law. Each Participant may subsequently notify the Trustee that any investment
          which was previously made at the Participants direction be sold,
converted           to any other permissible investment or otherwise disposed of in
accordance with           this Section. The Trustee shall then purchase such investment
or dispose of such           investment as stated in the notice received from the
Participant. Investments           thus acquired shall be held by the Trustee for the
Participant and all income           and/or losses thereon shall be credited to the
Participants account from           which the investment was made. Investments so
acquired shall be held by the           Trustee until distributed in accordance with this
Plan. This directed investment           provision shall be administered in a manner
consistent with ERISA Section 404(c)           or any successor thereto. The Committee
shall develop procedures regarding the           status of a Participant and the
investment of his or her account balance if no           valid investment election has
been filed by the Participant.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

65

---



ARTICLE
VII- PROVISIONS REGARDING EMPLOYER STOCK

7.1
Distribution of Cash Dividends: If so determined by the Board of Directors, and subject
to Section 5.2, any cash dividends payable on Employer Stock allocated to the Employer
Stock Accounts of Participants may be paid currently (or within 90 days after the end of
the Plan Year in which the dividends are paid to the Trust) in cash by the Trustee to
such Participants (or their Beneficiaries) on a nondiscriminatory basis, or the Employer
may pay such dividends directly to the Participants (or Beneficiaries). Such distribution
(if any) of cash dividends may be limited to Participants who are still Employees, may be
limited to dividends on shares of Employer Stock which are then vested or may be
applicable to cash dividends on all shares allocated to Participants Employer Stock
Accounts.

Notwithstanding
the foregoing, if the Employer is or becomes an S corporation under Code Section 1361,
distributions of cash dividends under this Section 7.1 may only be made, if at all, to
the extent such distributions are permitted by applicable federal pension law.

7.2
     Voting Employer  Stock:  Shares of Employer Stock held by the Trust shall be voted
by the Trustee in accordance with Section 3.04 of the Trust Agreement.

7.3
Diversification of Investments:

| | (a)                 Election
by Qualified Participant. Each Qualified Participant (as defined in           Section
7.3(e) below) shall be permitted to direct the Plan pursuant to Section           7.3(c)
below as to the investment of 25% of the value of the Participants
          Account(s) less any prior portion diversified within 90 days after the last day
          of each Plan Year during the Participants Qualified Election Period as
          defined in Section 7.3(d). Within 90 days after the close of the last Plan Year
          in the Participants Qualified Election Period, a Qualified Participant
may           direct the Plan pursuant to Section 7.3(c) below as to the investment of
50% of           the value of such account balance less any prior portion diversified.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b)                 Method
of Directing Investment. The Participants direction shall be           provided to
the Committee in writing, and shall be effective as soon as           administratively
feasible, but in no event later than 180 days after the close           of the Plan Year
to which the direction applies.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (c)                 Distribution
for Investment or Direct Transfer to Another Plan. At the election           of the
Qualified Participant, the Plan shall distribute (notwithstanding Code           Section
409(d)) the portion of the Participants account that is covered by           the
election described in Section 7.3(a) above within 90 days after the last day           of
the period during which the election can be made. Such distribution shall be
          subject to such requirements of the Plan concerning put options as would
          otherwise apply to a distribution of Employer Securities from the Plan.
          Alternatively, if the Employer maintains a separate qualified plan which
          satisfies the investment option requirements applicable to the portion of the
          Participants account that is covered by the election described in Section
          7.3(a) above (the other plan), the Participant may, with approval
of           the Committee, transfer the portion of the Participants account that
is           covered by the election described in Section 7.3(a) above to the other plan
          within 90 days after the last day of the period during which the election can
be           made. This Section 7.3(c) shall apply notwithstanding any other provision of
the           Plan other than such provisions as require the consent of the Participant
and           the Participants spouse to a distribution with a present value in
excess           of $5,000.If the Participant and the Participants spouse do
not           consent, such amount shall be retained in this Plan. No withdrawal election
          shall be permitted if the balance in a Participants Employer Stock
Account           as of the Valuation Date of the first Plan Year in the Election Period
has a           Fair Market Value of $500or less, unless and until the balance in
his           Employer Stock Account as of a subsequent Valuation Date in the Election
Period           exceeds $500.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

66

---



| | (d)                 For
purposes of this Section 7.3, Qualified Election Period means the six Plan           Year
period beginning with the later of (1) the first Plan Year in which the
          Participant first becomes a Qualified Participant; or (2) the first Plan Year
          beginning after December 31, 1986; provided, however, that the Committee may
          elect to treat an Employee first becoming a Qualified Participant in the Plan
          Year beginning in 1987 as having become a Qualified Participant in the Plan
Year           beginning in 1988.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (e)                 For
purposes of this Section 7.3, Qualified Participant means a Participant who           has
attained age 55and who has completed at least 10 years of           participation
in the Plan. Years of participation include only those Plan Years           in which a
Participant is entitled to share in the allocation of Employer           Contributions
and Forfeitures.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

7.4
Independent Appraisal of Employer Stock: All valuations of shares of Employer Stock that
are not readily tradeable on an established securities market will be made by an
independent appraiser as defined in Code Section 401(a)(28). These valuations will be
used for purposes of determining Employer contributions, account adjustments under
Section 5.2, and all other purposes for which valuations of Employer Stock are required
under the Plan.

7.5
     Rights, Options and Restrictions on Employer Stock:

| | (a)                 The
Employer shall provide a put option to any Participant (or the
          Participants donees, or a person (including an estate or distributee) to
          whom the security passes by reason of the Participants death) or
          Beneficiary who receives a distribution of Employer Stock which is or becomes
          not readily tradeable on an established securities market. The put option shall
          permit such person to sell such Employer Stock to the Employer at any time
          during two option periods, at the most recently completed valuation determined
          pursuant to Plan Section 7.4 for transactions not involving disqualified
          persons, or at the Fair Market Value determined as of the date of the
          transaction for transactions involving disqualified persons. The first put
          option period shall be for at least 60 days beginning on the date of
          distribution. The second put option period shall be for at least 60 days
          beginning after the new determination of the most recently completed valuation
          pursuant to Plan Section 7.4 (and notice to the Participant thereof) in the
          following Plan Year. The Employer may allow the Committee to direct the Trustee
          to purchase shares of Employer Stock tendered to the Employer under a put
          option. The payment for any Employer Stock sold under a put option shall be
made           within 20 days if the shares were distributed as part of an installment
          obligation. If the shares are distributed in a lump sum distribution, payment
          shall commence within 30 days and may be made in a lump sum or in substantially
          equal, annual installments over a period not exceeding five years, with
adequate           security provided and interest payable at a reasonable rate on any
unpaid           installment balance (as determined by the Employer or the Committee).
This           put option shall be non-terminable within the meaning of
Section 7.5(d).In no event shall the put option expire prior to the end of the
          15-month period which begins on the date the security subject to the put option
          is distributed by the ESOP. In the case of a security that is publicly traded
          without restriction when distributed but ceases to be so traded within 15
months           after distribution, the Employer must notify each security holder in
writing on           or before the 10th day after the date the security ceases to be so
traded that           for the remainder of the 15-month period the security is subject to
a put           option. The number of days between such 10th day and the date on which
notice is           actually given, if later than the 10th day, must be added to the
duration of the           put option. The notice must inform distributees of the terms of
the put options           that they are to hold.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

67

---



| | (b)                 To
the extent applicable under relevant law, shares of Employer Stock           distributed
by the Trust shall be subject to a right of first           refusal. The
right of first refusal shall provide that, prior to any           subsequent transfer,
the shares must first be offered for purchase in writing to           the Employer, and
then to the Trust. The selling price and other terms under the           right must not
be less favorable to the Seller than the greater of the Fair           Market Value of
the security or the purchase price and other terms offered by a           buyer other
than the Employer or the Plan making a good faith offer to purchase           the
security. The Employer and the Committee (on behalf of the Trust) shall have           a
total of 14 days to exercise the right of first refusal on the same terms
          offered by a prospective buyer. The Employer may require that a Participant
          entitled to a distribution of Employer Stock execute an appropriate stock
          transfer agreement (evidencing right of first refusal) prior to receiving a
          certificate of Employer Stock.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (c)                 Shares
of Employer Stock held or distributed by the Trustee may include such           legend
restrictions on transferability as the Employer may reasonably require in           order
to assure compliance with applicable federal and state securities laws.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (d)                 Non-Terminable
Protections and Rights. No Employer Stock, except as provided in           Section 7.5,
acquired with the proceeds of an Acquisition Loan may be subject to           a put,
call, or other option, or buy-sell or similar arrangement when held by           and when
distributed from the Trust Fund, whether or not the Plan is then an           ESOP. The
protections and rights granted in this Section are non-terminable, and           such
protections and rights shall continue to exist under the terms of this Plan           so
long as any Stock acquired with the proceeds of an Acquisition Loan is held           by
the Trust Fund or by any Participant or other person for whose benefit such
          protections and rights have been created, and neither the repayment of such
loan           nor the failure of the Plan to be an ESOP, or an amendment of the Plan
shall           cause a termination of said protections and rights.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

7.6
Securities and Exchange Commission Approval: The Employer may request an interpretive
letter from the Securities and Exchange Commission stating that the transfers of Employer
Stock contemplated hereunder do not involve transactions requiring a registration of such
Employer Stock under the Securities Act of 1933. In the event that a favorable
interpretive letter is not obtained, the Employer reserves the right to amend the Plan
and Trust retroactively to their Effective Dates in order to obtain a favorable
interpretive letter or to terminate the Plan.

68

---



7.7
Special Rules for Pre-1987 Stock: Unless the Employer by resolution of its Board of
Directors elects to apply the special rules regarding stock acquired by the Plan after
December 31, 1986 (including, but not limited to rules regarding voting and
diversification) to stock acquired by the Plan on or before December 31, 1986 (the Pre-1987
Stock) which is held by the Plan, the Pre-1987 stock shall be subject to the rules
regarding stock acquired by the Plan on or before December 31, 1986.

ARTICLE VIII- TRUST
FUND

8.1
Trust Contributions: All contributions under this Plan shall be paid to the Trustee and
deposited in the Trust Fund. All assets of the Trust Fund, including investment income,
shall be retained for the exclusive benefit of Participants, former Participants, and
Beneficiaries and shall be used to pay benefits to such persons or to pay administrative
expenses of the Plan and Trust Fund to the extent not paid by the Employer and shall not
revert to or inure to the benefit of the Employer.

In
the event the deduction of a contribution made by the Employer is disallowed under Code
Section 404, such contribution (to the extent disallowed) must be returned to the
Employer within one year of the disallowance of the deduction.

8.2
Investment of Trust Assets:

| | (a)                 Purchase
of Employer Stock. Trust Assets (including any assets relating to           Elective
Deferrals) will be invested by the Trustee primarily in Employer Stock           in
accordance with directions from the Committee. Contributions (and other Trust
          Assets) may be used to acquire shares of Employer Stock from any shareholder of
          the Employer or an Affiliated Employer, from the Employer or an Affiliated
          Employer, from an estate, or from any other person or entity deemed appropriate
          by the Committee. The Trustee may also invest Trust Assets in such other
prudent           investments as the Committee deems to be desirable for the Trust, or
Trust           Assets may be held in cash. The Committee may direct the Trustee to
invest and           hold up to 100% of the Trust Assets in Employer Stock. All purchases
or sales of           Employer Stock by the Trustee shall be made only as directed by the
Committee           and only at prices which do not exceed the Fair Market Value of
Employer Stock           as of the date of the transaction (to the extent required under
applicable law)           and as determined in good faith by the Committee. The Plan or
Trust may not           obligate itself to acquire Employer Stock from a particular
holder thereof at an           indefinite time determined upon the happening of an event
such as the death of           the holder.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b)                 Borrowing
to Acquire Employer Stock. The Committee may direct the Trustee to           enter into
Acquisition Loans (including an Acquisition Loan with a Disqualified           Person)
from time to time to finance the acquisition of Employer Stock (Financed
          Shares) or to repay a prior Acquisition Loan. An installment obligation
incurred           in connection with the purchase of Employer Stock shall be treated as
an           Acquisition Loan. An Acquisition Loan shall meet the requirements of Code
          Section 4975(d)(3) and ERISA Section 408(b)(3) and regulations thereunder.
Those           requirements include (among others) the requirements described below.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

69

---



| | (1)                 The
loan shall be for a specific term and not payable upon demand except in the
          event of default.
| | -------------------------------------------------------------------------------------------------------------------------------

| | (2)                 The
loan is primarily for the benefit of Participants and Beneficiaries, at a
          reasonable rate of interest, and under terms at the time the loan is made which
          are at least as favorable to the Plan as the terms of a comparable loan
          resulting from arms-length negotiations between independent parties.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (3)                 The
proceeds of the loan must be used within a reasonable time after their           receipt
to acquire Employer Stock or for making repayment of an outstanding           Acquisition
Loan.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (4)                 The
loan shall be without recourse against the Plan and collateral for the loan
          shall be limited to Employer Stock acquired with the proceeds of the loan or
          used as collateral on an outstanding Acquisition Loan which is being repaid.
The           lender shall have no right to any assets of the Plan other than the
collateral,           Employer Contributions (excluding contributions of Employer Stock)
and earnings           on such collateral and contributions (including but not limited to
dividends           paid on unallocated Employer Stock).
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (5)                 In
the event of a loan default, the value of the Plan assets transferred in
          satisfaction of the loan shall not exceed the amount of the default and, if the
          lender is a party in interest or Disqualified Person, shall not exceed an
amount           of Plan assets equal to the amount of the payment schedule with respect
to which           there is a failure to pay.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (6)                 The
loan terms may provide that there shall be no required payments of principal
          and/or interest for one or more years. The Employer may from time to time
direct           the Trustee to renegotiate any such loan to change the payment terms
with           respect to payments not then due and payable, to extend the period of
payment,           or to reduce or eliminate the amount of any payment or payments of
principal           and/or interest not then due and payable.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (7)                 Any
pledge of Financed Shares must provide for the release of shares so pledged           as
payments on the Acquisition Loan are made by the Trustee and such Financed
          Shares are allocated to Participants Employer Stock Accounts under
Article           V.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | These
rules shall be changed by amendment to the Plan to the extent changes in applicable law
require or permit.
| | ----------------------------------------------------------------------------------------------------------------

| | (c)                 Acquisition
Loan Payments. Payments of principal and/or interest on any           Acquisition Loan
shall be made by the Trustee (as directed by the Committee)           only from Employer
Contributions paid in cash to enable the Trust to repay such           Acquisition Loan,
from earnings attributable to such Employer Contributions and,           subject to
Section 5.2(a)(2), from any cash dividends received by the Trust on           shares of
Employer Stock (whether allocated or unallocated) acquired with the           proceeds of
the Acquisition Loan. The payments made with respect to an           Acquisition Loan for
a Plan Year must not exceed the sum of such Employer           Contributions, earnings
and dividends for that Plan Year (and prior Plan Years),           less the amount of
such payments for prior Plan Years. If the Employer is the           lender with respect
to an Acquisition Loan, Employer Contributions may be paid           in the form of
cancellation of indebtedness under the Acquisition Loan (with           written notice to
the Trustee). If the Employer is not the lender with respect           to an Acquisition
Loan, the Employer may elect to make payments on the           Acquisition Loan directly
to the lender and to treat such payments as Employer           Contributions.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

70

---



| | (d)                 Sales
of Employer Stock. Subject to the approval of the Board of Directors and           at the
direction of the Committee, the Trustee may sell shares of Employer Stock           to
any person (including the Employer), provided that any such sale must be made
          at a price not less than the Fair Market Value as of the date of the
transaction           (to the extent required under applicable law) and as determined in
good faith by           the Committee. Notwithstanding the provisions of Section 8.2(d),
the Trustee may           apply the proceeds from the sale of unallocated Financed Shares
to repay the           Acquisition Loan (incurred to finance the purchase of such
Financed Shares) in           the event of the sale of the Employer or the termination of
the ESOP or if the           ESOP ceases to be an employee stock ownership plan under
Code Section 4975(e)(7).Any proceeds or unallocated Employer Stock remaining
after           repaying the Acquisition Loan shall be allocated to the Other Investments
          Accounts of Employees who are Participants as of the date of the sale in the
          manner described in Section 5.2(a)( 1). If the Trustee is unable to
make           payments of principal and/or interest on an Acquisition Loan when due, the
          Trustee (with the approval of the Board of Directors and at the direction of
the           Committee) may either sell any Financed Shares that have not yet been
allocated           to Participants Employer Stock Accounts or obtain an
Acquisition Loan in           an amount sufficient to make such payments. Any sale of
Employer Stock under           this Section 8.2(d) must comply with the fiduciary duties
applicable to the           Trustee under ERISA Section 404(a)(1).
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
sale of Employer Stock and the use of proceeds to repay an Acquisition Loan contemplated
by this Section 8.2(d) will not cause the Annual Addition limitations of Code
Section 415 to be exceeded. If the Internal Revenue Service concludes otherwise, however,
the Trustee will establish a special suspense account to hold such excess Section 415
Annual Additions until they may be allocated to the affected Participants.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

ARTICLE IX 
ADMINISTRATION

9.1
Allocation of Responsibility Among Fiduciaries: Except as otherwise provided herein, the
Fiduciaries shall have only those specific powers, duties, responsibilities and
obligations as are specifically given them under this Plan or the Trust. In general, the
Employer shall have the sole responsibility for making the contributions provided for
under Section 4.1, and shall have the sole authority to appoint and remove the Trustee,
Committee, any Committee Member and any Investment Manager which may be provided for
under the Trust, and to amend or terminate, in whole or in part, this Plan or the Trust.
The Employer shall have the sole responsibility for the administration of this Plan,
which responsibility is specifically described in this Plan, the Trust and Administrative
Procedures, if any, and such administrative responsibility may be delegated hereunder.
The Trustee shall have the sole responsibility for the administration of the Trust and
the management of the assets held under the Trust, all as specifically provided in the
Trust except in those situations where the Trustee is acting on the express directions of
the Committee or Plan Participants, as the case may be. Each Fiduciary warrants that any
directions given, information furnished, or action taken by it shall be in accordance
with the provisions of the Plan or the Trust, as the case may be, authorizing or
providing for such direction, information or action.

71

---



Furthermore,
each Fiduciary may rely upon any such direction, information or action of another
Fiduciary as being proper under this Plan or the Trust, and is not required under this
Plan or the Trust to inquire into the propriety of any such direction, information or
action. It is intended under this Plan and the Trust that each Fiduciary shall be
responsible for the proper exercise of its own powers, duties, responsibilities and
obligations under this Plan and the Trust and shall not be responsible for any act or
failure to act of another Fiduciary. No Fiduciary guarantees the Trust Fund in any manner
against investment loss or depreciation in asset value.

9.2
Appointment of Committee: The Plan shall be administered by the ESOP Committee which is
composed of individuals appointed by the Board of Directors of the Employer to serve at
its pleasure and without compensation. The Committee shall be the named fiduciary with
authority to control and manage the operation and administration of the Plan. The Trustee
shall be notified in writing by the Employer of the names of the Committee members. The
Trustee may conclusively assume that the members of the Committee will continue to act in
that capacity until the Trustee has been notified by the Employer to the contrary in
writing.

Action
by the Committee will be by (a) the majority vote of its members at a meeting duly
noticed in writing at least five business days in advance of such meeting and attended by
a majority of the members of the Committee, or (b) by the unanimous written action of the
Committee without a meeting. Minutes of each meeting of the Committee shall be kept. The
Committee will direct the Trustee on all matters which require instructions or
directions, as provided in this Plan and the Trust Agreement. The Committee may allocate
its fiduciary responsibilities among its members and may designate other persons
(including the Trustee) to carry out its fiduciary responsibilities (other than
investment responsibilities) under the Plan. The Committee may designate any one or more
of its members to have authority to sign any documents on its behalf. The Trustee shall
be fully protected in complying with any instructions received from the Committee
member(s) so designated.

The
Committee shall be responsible for directing the Trustee as to the investment of the
Trust Assets. The Committee may delegate to the Trustee the responsibility for investing
Trust Assets other than Employer Stock. The Committee shall establish a funding policy
and method for directing the Trustee to acquire Employer Stock (and for otherwise
investing the Trust Assets) in a manner that is consistent with the objectives of the
Plan and the requirements of ERISA.

The
Committee is empowered, on behalf of the Plan, to employ investment advisers,
accountants, legal counsel and other agents to assist it in the performance of its duties
under the Plan. All usual and reasonable expenses of the Committee may be paid in whole
or in part by the Employer and any expenses not paid by the Employer shall, upon the
written consent of the Committee, be paid by the Trustee out of the principal or income
of the Trust Fund. The Employer shall secure fidelity bonding for the fiduciaries of the
Plan, as required by ERISA Section 412.

72

---



The
Employer or the Trustee (as directed by the Committee) may purchase insurance for the
Committee (and other fiduciaries of the Plan) to cover liability or loss occurring by
reason of the act or omission of a fiduciary. If such insurance is purchased with Trust
Assets, the insurance must permit recourse by the insurer against the fiduciary in the
case of breach of a fiduciary obligation by such fiduciary. The Employer shall indemnify
each member of the Committee (to the extent permitted by law) against any personal
liability or expense, except such liability or expense as may result from his own willful
misconduct.

The
Employer shall be the Plan Administrator under Code Section 4 14(g) and under ERISA
Section 3(16)(A). The Committee shall be the designated agent of the Plan for the service
of legal process.

9.3
Claims Procedure: The Committee shall have discretionary authority and shall make all
determinations as to the right of any person to a benefit. Any denial by the Committee of
the claim for benefits under the Plan by a Participant or Beneficiary shall be stated in
writing by the Committee and delivered or mailed to the Participant or Beneficiary; and
such notice shall set forth the specific reasons for the denial, written to the best of
the Committees ability in a manner that may be understood without legal or
actuarial counsel. Approval or denial of a claim is to be delivered or mailed to the
claimant within 90 days of the time such claim is made, unless special circumstances
require an extension of time in accordance with relevant law. In addition, the Committee
shall afford a reasonable opportunity to any Participant or Beneficiary whose claim for
benefits has been denied in whole or in part for a review of the decision denying the
claim. Review must be applied for by written request to the Committee within 60 days
after denial of the claim. The Committee will advise the claimant of its decision within
60 days after such request is made. The times set forth above for submission of claims
and appeals and for response by the Plan Administrator may be modified to comply with any
applicable law or regulation issued.

9.4
Records and Reports: The Committee shall exercise such authority and responsibility as it
deems appropriate in order to comply with ERISA and governmental regulations issued
thereunder relating to records of Participants Service, account balances and the
percentage of such account balances which are nonforfeitable under the Plan; notification
to Participants; annual registration with the Internal Revenue Service; and annual
reports to the Department of Labor.

9.5
Other Committee Powers and Duties: The Committee shall have such duties and powers as may
be necessary to discharge its duties hereunder, including, but not by way of limitation,
the following:

| | (a)                 discretionary
authority to construe and interpret the Plan, decide all questions           of
eligibility and determine the amount, manner and time of payment of any
          benefits hereunder;
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

73

---



| | (b)                 to
prescribe procedures to be followed by Participants or Beneficiaries filing
          applications for benefits;
| | ---------------------------------------------------------------------------------------------------------------------------------------

| | (c)                 to
prepare and distribute, in such manner as the Committee determines to be
          appropriate, information explaining the Plan;
| | -------------------------------------------------------------------------------------------------------------------------------------------------------

| | (d)                 to
receive from the Employer and from Participants such information as shall be
          necessary for the proper administration of the Plan;
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (e)                 to
furnish the Employer, upon request such annual reports with respect to the
          administration of the Plan as are reasonable and appropriate;
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (f)                 to
receive, review and keep on file (as it deems convenient and proper) reports           of
the financial condition and of the receipts and disbursements of the Trust           Fund
from the Trustee;
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (g)                 to
appoint or employ individuals to assist in the administration of the Plan
          (including a committee of individuals) and any other agents it deems advisable,
          including legal and actuarial counsel.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The
Committee shall have no power to add to, subtract from or modify any of the terms of the
Plan, or to change or add to any benefits provided by the Plan, or to waive or fail to
apply any requirements of eligibility for a benefit under the Plan.

9.6
Rules and Decisions: The Committee may adopt such rules as it deems necessary, desirable,
or appropriate. All rules and decisions of the Committee shall be uniformly and
consistently applied to all Participants in similar circumstances. When making a
determination or calculation, the Committee shall be entitled to rely upon information
furnished by a Participant or Beneficiary, the Employer, the legal counsel of the
Employer, or the Trustee.

9.7
Authorization of Benefit Payments: The Committee shall issue directions to the Trustee
concerning all benefits which are to be paid from the Trust Fund pursuant to the
provisions of the Plan, and warrants that all such directions are in accordance with this
Plan.

9.8
Application and Forms for Benefits: Claims for benefits under the Plan are to be made on
forms supplied by the Committee. The Committee may rely upon all such information so
furnished it, including the claimants current mailing address.

9.9
Indemnification: The Employer will indemnify the Trustees, the members of the Committee
and any other employees of the Employer who are deemed fiduciaries under ERISA, and hold
them harmless, against any and all liabilities, including legal fees and expenses arising
out of any act or omission made or suffered in good faith pursuant to the provisions of
the Plan, or arising out of any failure to discharge any fiduciary obligation imposed by
ERISA other than a willful failure to discharge an obligation of which the person was
aware.

74

---



ARTICLE X 
MISCELLANEOUS

10.1
Nonguarantee of Employment: Nothing contained in this Plan shall be construed as a
contract of employment between the Employer and any Employee, or as a right of any
Employee to be continued in the employment of the Employer, or as a limitation of the
right of the Employer to discharge any of its Employees, with or without cause.

10.2
Rights to Trust Assets: No Employee or Beneficiary shall have any right to, or interest
in, any assets of the Trust Fund, upon termination of his employment or otherwise, except
as provided from time to time under this Plan, and then only to the extent of the
benefits payable under the Plan to such Employee or Beneficiary out of the assets of the
Trust Fund. All payments of benefits as provided for in this Plan shall be made solely
out of the assets of the Trust Fund and none of the Fiduciaries shall be liable therefore
in any manner.

10.3
Nonalienation of Benefits: Except as provided in Article VI, no benefit, right or
interest payable under this Plan shall be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, charge, garnishment,
execution, seizure, attachment or levy of any kind, either voluntary or involuntary, or
any other legal, equitable or other process. The preceding sentence shall also apply to
the creation, assignment or recognition of a right to any benefit payable with respect to
a Participant pursuant to a domestic relations order, unless such order is determined to
be a qualified domestic relations order, as defined in Code Section 4.14(p), or any
domestic relations order entered before January 1, 1985. The Trust Fund shall not in any
manner be liable for, or subject to, the debts, contracts, liabilities, engagements, or
torts of any person entitled to benefits hereunder.

Notwithstanding
the foregoing, effective August 5,1997, in the event a Participant is obligated
to pay an amount to the Plan pursuant to a judgment, order or decree issued or settlement
agreement entered into on or after that date, payment may be satisfied by an offset
against a Participants Account balance if:

| | (a)                 The
order or requirement to pay arises under a judgment, order, decree or
          settlement stemming from the following crimes or violations of ERISA:
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (1)                 A
judgment or conviction for a crime involving the Plan,
| | ----------------------------------------------------------------------------

| | (2)                 A
civil judgment (including a consent order or decree) entered by a court in an
          action brought in connection with a violation (or an alleged violation) of
          ERISAs fiduciary responsibility provisions, or
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (3)                 A
settlement agreement between the IRS and the Participant, in connection with a
          violation (or alleged violation) of ERISAs fiduciary responsibility
          provisions by a fiduciary or any other person;
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b)                 The
judgment, order, decree, or settlement agreement expressly provides for the
          offset of all or part of the amount ordered or required to be paid to the Plan
          against the Participants Plan benefits; and
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

75

---



| | (c)                 Where
the survivor annuity requirements of Section 6.5(c)apply to Plan
          distributions to the Participant (under Code Section 401(a)(11)), the rights of
          the Participants spouse to survivor benefits are preserved.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

10.4
Discontinuance of Employer Contributions: In the event of a permanent discontinuance of
contributions to the Plan by the Employer, the accounts of each affected Participant
shall, as of the date of such discontinuance, become nonforfeitable.

10.5
Controlled Group of Corporations: Except as provided in Regulations issued under Code
Section 4 14(a), all employees of all Affiliated Employers shall be treated as employed
by a single Employer.

Further,
all Years of Service with other Affiliated Employers shall be credited for purposes of
determining an Employees eligibility to participate or his nonforfeitable
percentage of his Accrued Benefit under the Plan.

10.6
Unclaimed Pension Checks: If a check in payment of a benefit payable under this Plan has
been mailed by regular United States mail to the last address of the payee furnished to
the Trustee and the check is returned unclaimed, payments to such payee shall be
discontinued and shall be held in his respective Accounts until his correct address shall
become known to the Trustee. Any such amounts will be credited with fund earnings in
accordance with Section 5.2.If the Trustee does not receive written notice from
the payee of a new address within the time provided by Michigan law for escheat of
unclaimed property of this kind, all right to receive such benefits shall cease and the
property shall escheat to the State of Michigan.

10.7
Correction of Errors: Notwithstanding any other provision of this Plan to the contrary,
the Employer and the Committee reserve the right to correct (retroactively, if necessary)
any error in the Plan language or in the administration of the Plan which was
inadvertently made in the good faith creation and/or administration of this employee
stock ownership program.

10.8
Construction: The masculine gender, where appearing in the Plan, shall be deemed to
include the feminine gender, unless the context clearly indicates to the contrary. The
words hereof, herein, hereunder and other similar
compounds of the word here shall mean and refer to the entire Plan and not to
any particular provision or section, unless otherwise stated.

10.9
No Interest in Employer Affairs: Nothing contained in the Plan or this document will be
construed as giving any Participant, Employee or Beneficiary an equity or other interest
in the assets, business or affairs of the Employer or the right to examine any of the
books and records of the Employer.

76

---



ARTICLE XI-
AMENDMENTS AND ACTION BY EMPLOYER

11.1
Amendments: The Employer reserves the right to make from time to time any amendment or
amendments to this Plan which do not cause any part of the Trust Fund to be used for, or
diverted to, any purpose other than the exclusive benefit of Participants, former
Participants or their Beneficiaries. Any corrective amendment(s) for the purpose of
satisfying Code Section 410(b) and certain provisions of Code Section 401(a)(4) shall be
adopted and implemented by the Employer on or before the later of the 15th day of the
10th month after the close of the Plan Year to which the amendment is to apply or such
times as may be required by the Internal Revenue Service.

No
amendment to the Plan shall retroactively reduce the vested rights of Participants.
Notwithstanding the preceding sentence, a Participants account balance may be
reduced to the extent permitted under Code Section 412(c)(8). If the vesting schedule of
the Plan is amended, in the case of an Employee who is a Participant as of the later of
the date such amendment is adopted or the date it becomes effective, the nonforfeitable
percentage (determined as of such date) of such Employees Employer-derived account
balance will not be less than the percentage computed under the Plan without regard to
such amendment. In the event that an amendment is determined to be a cutback prohibited
by Code Section 411(d)(6) and the regulations thereunder, benefits shall be provided to
the affected Participant(s) pursuant to the terms of the Plan without regard to the
amendment.

The
Employer may amend the Plan by adding overriding plan language where such language is
necessary to satisfy Code Sections 415 or 416 because of the required aggregation of
multiple plans under these Sections.

11.2
Action by Employer: Any action by the Employer under this Plan may be by resolution of
its Governing Board, or by any person or persons duly authorized by resolution of said
Board to take such action.

11.3
Amendment or Change of Vesting Schedule: No amendment to the vesting schedule set forth
at Section 6.4 above, nor any change thereof due to change in the top-heavy status of the
Plan, shall deprive a Participant of his nonforfeitable rights to benefits accrued to the
date of the amendment. Further, if the then operative vesting schedule of this Plan is
amended or deemed amended due to a change in the top-heavy status of the Plan, each
Participant with at least three Years of Service with the Employer at the date of
amendment may elect, within a reasonable period after the adoption of the amendment or
the change, to have his nonforfeitable percentage computed under this Plan without regard
to such amendment or change. For Participants who do not have at least one Hour of
Service in any Plan Year beginning after December 31, 1988, the preceding sentence shall
be applied by substituting five Years of Service for three Years of Service where such
language appears. The period within which the election may be made shall commence with
the date the amendment is adopted or deemed to be made and shall end on the later of:

| | (a)                 60
days after the amendment is adopted; or
| | --------------------------------------------------------------

77

---



| | (b)                 60
days after the amendment becomes effective; or
| | ---------------------------------------------------------------------

| | (c)                 60
days after the Participant is issued written notice of the amendment by the
          Employer or Committee.
| | -----------------------------------------------------------------------------------------------------------------------------------

ARTICLE XII  SUCCESSOR
EMPLOYER, MERGER OR CONSOLIDATION

12.1
Successor Employer: In the event of the dissolution, merger, consolidation or
reorganization of the Employer, provision may be made by which the Plan and Trust will be
continued by the successor; and, in that event, such successor shall be substituted for
said Employer under the Plan. The substitution of the successor shall constitute an
assumption of Plan liabilities by the successor and the successor shall have all of the
powers, duties and responsibilities of said Employer under the Plan.

12.2
Plan Assets: In the event of any merger or consolidation of the Plan with, or transfer in
whole or in part of the assets and liabilities of the Trust Fund to another trust fund
held under, any other plan of deferred compensation maintained or to be established for
the benefit of all or some of the Participants of this Plan, the assets of the Trust Fund
applicable to such Participants shall be merged or consolidated with, or transferred to,
the other trust fund only if:

| | (a)                 each
Participant would (if either this Plan or the other plan then terminated)
          receive a benefit immediately after the merger, consolidation or transfer which
          is equal to or greater than the benefit he would have been entitled to receive
          immediately before the merger, consolidation or transfer (if this Plan had then
          terminated);
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b)                 resolutions
of the Boards of Directors of the Employer under this Plan, or of           any new or
successor employer of the affected Participants, shall authorize such           transfer
of assets; and, in the case of the new or successor employer of the           affected
Participants, its resolutions shall include an assumption of           liabilities with
respect to such Participants inclusion in the new           employers plan;
and
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (c)                 such
other plan and trust are qualified under Code Sections 401(a) and 501(a).
| | --------------------------------------------------------------------------------------------------

ARTICLE XIII 
PLAN TERMINATION

13.1
Right to Terminate: In accordance with the procedures set forth in this Article, the
Employer may terminate the Plan at any time. In the event of the dissolution, merger,
consolidation or reorganization of the Employer, the Plan shall terminate and the Trust
Fund shall be liquidated unless the Plan is continued by a successor to the Employer in
accordance with Section 12.1.

In
the event of the termination or partial termination of the Plan, or in the event of a
discontinuance of contributions thereunder, the accrued benefit of each affected
Participant shall become fully vested as of the date of such termination or
discontinuance, and no forfeiture shall then or thereafter occur.

78

---



13.2
Partial Termination: Upon termination of the Plan with respect to a group of Participants
which constitutes a partial termination of the Plan, the Trustee shall, in accordance
with the directions of the Committee, allocate and segregate for the benefit of the
Employees then or theretofore employed by the Employer with respect to which the Plan is
being terminated the proportionate interest of such Participants in the Trust Fund. The
funds so allocated and segregated shall be used by the Trustee to pay benefits to or on
behalf of Participants in accordance with Section 13.3.

13.3
Liquidation of the Trust Fund: Upon complete or partial termination of the Plan, or upon
complete discontinuance of contributions to the Plan, the accounts of all Participants
affected thereby shall become fully vested and nonforfeitable, and the Committee shall
direct the Trustee to distribute the assets remaining in the Trust Fund, after payment of
any expenses properly chargeable thereto, to Participants, former Participants and
Beneficiaries in proportion to their respective account balances; provided, however, that
neither the Employer nor an Affiliated Employer maintains a successor plan. All
distributions on plan termination will be made in accordance with Section 6.5.

13.4
Manner of Distribution: To the extent that no discrimination in value results, any
distribution after termination of the Plan may be made, in whole or in part, in cash, in
securities or other assets in kind, or in nontransferable annuity contracts, as the
Committee (in its discretion) may determine. All non-cash distributions shall be valued
at Fair Market Value at date of distribution. In the event that the Employer is sold in
connection with the termination of the Plan or the amendment of the Plan to become a
qualified employee benefit plan that is not a stock bonus plan, all Participant Accounts
will be distributed in cash.

ARTICLE XIV 
TOP-HEAVY PLAN RESTRICTIONS

14.1
General Rule. If the Plan is a top-heavy plan as determined under Section 14.2, then the
requirements in Section 14.3 shall apply to the extent indicated by that paragraph;
provided, however, that the Employer-derived account balances which are subject to a
vesting schedule pursuant to Section 6.4 of any employee who does not complete an Hour of
Service after the Plan becomes top-heavy is not subject to any top-heavy vesting schedule
set forth in Section 6.4.

14.2
Top-Heavy Test. The Plans status as a top-heavy plan for any Plan Year shall be
determined in accordance with the following five step procedure. The Plan could be top
heavy even if the required Plan aggregation described below is not applied.

| | (a)                 Required
Plan Aggregation. First, there shall be aggregated with this Plan (1)           each
qualified plan, whether or not terminated, of the Employer in which a key
          employee is or was a Participant at any time during the determination period
and           (2) each other plan of the Employer which enables a plan described in
Section           14.2(a)(1) to meet the requirements of Code Section 401(a)(4) or 410.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

79

---



| | (b)                 Key
Employee Sum. Second, there shall be computed, as of the determination date,
          the sum of the account balances of all key employees under all defined
          contribution plans, including this Plan, required to be aggregated under
Section           14.2(a) hereof. For purposes of this computation:
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (1)                 there
shall be included in the said sum any distributions made to an employee           from
this Plan, or from another plan required to be aggregated under Section
          14.2(a), within the five year period ending on the determination date;
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2)                 in
calculating any employees accrued benefit for purposes of Section 14.2,
          rollovers shall be treated in the following manner:
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------

| | [a]                 Unrelated
rollovers:
| | ----------------------------------------

| | [i]                 the
plan providing the distribution always counts the distribution as a
          distribution under Code Section 416(g)(3)(B); and
| | -------------------------------------------------------------------------------------------------------------------------------------------------------

| | [ii]                 the
plan accepting the rollover does not consider the rollover part of the           accrued
benefit if said rollover was accepted after December 31, 1983. If the           rollover
was accepted before December 31, 1983, it is considered part of the           accrued
benefit.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | [b]                 Related
rollovers (whether or not occurring before December 31, 1983):
| | ------------------------------------------------------------------------------------------

| | [i]                 the
plan providing the rollover does not count the rollover as a distribution           under
Code Section 416(g)(3)(B); and
| | ------------------------------------------------------------------------------------------------------------------------------------------------

| | [ii]                 the
plan accepting the rollover counts the rollover as part of the accrued           benefit.
| | ------------------------------------------------------------------------------------------------------------------

| | (3)                 there
shall be excluded from said sum the account balance and present value of           the
accrued benefit of any employee who:
| | -----------------------------------------------------------------------------------------------------------------------------------------------------

| | [a]                 formerly
was a key employee but who is not a key employee for the year ending on           the
determination date; or
| | -----------------------------------------------------------------------------------------------------------------------------------------

| | [b]                 has
not performed any service for any Employer maintaining the Plan at any time
          during the 5year period ending on the determination date.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (c)                 All
Employee Sum. Third, under the same procedures as set forth in Section           14.2(b)
above (including the special rules in Section 14.2(b)(1), (2), and (3))           the sum
of account balances for all employees shall be computed.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (d)                 Top-Heavy
Test Fraction. Fourth, the sum computed in Section 14.2(b) shall be           divided by
the sum computed in Section 14.2(c). If the resulting fraction is           0.60 or less,
the Plan is not a top-heavy plan for the Plan Year with regard to           which the
determination was made. If the fraction is greater than 0.60, the Plan           is a
top-heavy plan for the Plan Year in question, unless after the permissive           plan
aggregation described in Section 14.2(e) below, the recomputed fraction is           0.60
or less.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

80

---



| | (e)                 Permissive
Plan Aggregation. At the election of the Committee, plans of the           Employer other
than those required to be aggregated under Section 14.2(a) may be           aggregated
with the required aggregation group (for purposes of the topheaviness
          determination) so long as such permissively aggregated group would meet the
          requirements of Code Sections 401(a)(4) and 410. This permissively aggregated
          group may be referred to as a permissive aggregation group. Those steps
          described in Section 14.2(b), (c), and (d) may then be repeated, based on this
          permissively aggregated group. If the top-heavy test fraction computed in
          Section 14.2(d) is 0.60 or less for this permissive group, then the Plan is not
          a top-heavy plan for the Plan Year in question. However, if the top-heavy test
          fraction computed in 14.2(d) is greater than 0.60 for this permissive group,
          only this Plan (and any plans of the Employer that are required to be
aggregated           under Section 14.2(a)) is top-heavy for the Plan Year in question.
Any plans           which may be aggregated with this Plan under this Section 14.2(e) are
not, as           the result of permissive aggregation with this Plan, top-heavy.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

14.3
Superseding Rules. For each Plan Year with regard to which the Plan is a top-heavy plan,
the requirements in this Section 14.3 shall supersede any other provisions of the Plan
which otherwise would apply for that Plan Year.

| | (a)                 Minimum
Contributions for Non-Key Employee Participants.
| | ----------------------------------------------------------------------------

| | (1)                 Except
as otherwise provided in (3) and (4) below, the Employer contributions           and
forfeitures allocated on behalf of any Participant who is not a key employee
          shall not be less than the lesser of 3 % of such Participants
compensation           or in the case where the Employer has no defined benefit plan
which designates           this Plan to satisfy Code Section 401, the largest percentage
of Employer           contributions and forfeitures, as a percentage of key employees
          compensation, as limited by Code Section 401(a)(17), allocated on behalf of any
          key employee for that year. The minimum allocation is determined without regard
          to any Social Security contribution. This minimum allocation shall he made even
          though, under other Plan provisions, the Participant would not otherwise be
          entitled to receive an allocation, or would have received a lesser allocation
          for the year because of (i) the Participants failure to complete 1,000
          flours of Service (or any equivalent provided in the Plan), or (ii) the
          Participants failure to make mandatory Employee contributions to the
Plan,           or (iii) compensation less than a stated amount.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2)                 For
purposes of computing the minimum allocation, compensation shall mean
          compensation as defined in Section 14.4(h) as limited by Code Section
          401(a)(17).
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (3)                 The
provision in (1) above shall not apply to any Participant who was not           employed
by the Employer on the last day of the Plan Year.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------

82

---



| | (4)                 The
provision in (1) above shall not apply to any Participant to the extent the
          Participant is covered under any other plan or plans of the Employer and the
          Employer has provided herein that the minimum allocation or benefit requirement
          applicable to top-heavy plans will be met in the other plan or plans.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b)                 Vesting.
The minimum allocation required (to the extent required to be           nonforfeitable
under Code Section 416(b)) may not be forfeited under Code           Sections
411(a)(3)(B) or 411(a)(3)(D).
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

14.4
    Special  Definitions.  For  purposes of this  Article  XIV,  the  following  terms
shall have the meanings indicated:

| | (a)                 determination
date means, with respect to any Plan Year, the last           day of the preceding
Plan Year, except that in the case of the first Plan Year,           the determination
date shall be the last day of that Plan Year.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b)                 employee means
a common-law employee of the Employer who is or once           was a Participant,
including any Beneficiary, but excluding any employee who is           a member of a unit
of employees covered by a collective bargaining agreement           under which
retirement benefits were the subject of good faith bargaining with           the
Employer.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (c)                 key
employee means each employee (or former employee) who, at any           time during
the Plan Year or any of the four preceding Plan Years:
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (1)                 is
an officer of the Employer whose annual compensation for the Plan Year           exceeds
50%of the dollar limitation under Code Section 415(b)(1)(A);
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2)                 is
one of the ten employees owning or considered owning (under Code Section 318)
          the largest interests in the Employer (except that an employee will not be
          considered a top ten owner for a Plan Year if the employee earns not more than
          100% of the dollar limitation under Code Section 415(c)(1)(A) as in effect for
          the calendar year in which the determination date falls);
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (3)                 owns
more than 5% of the outstanding stock or voting power of all stock of an
          incorporated Employer or more than 5% of the capital or profit interest of an
          unincorporated Employer;
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (4)                 owns
more than 1 % of the outstanding stock or voting power of all stock of an
          incorporated Employer or more than 1 % of the capital or profit interest of an
          unincorporated Employer and has annual compensation from the Employer of more
          than $150,000; or
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (5)                 a
beneficiary of any person included in (c)(1)-(c)(4) above.
| | --------------------------------------------------------------------------------

| | The
determination of who is a key employee will be made in accordance with Code Section
416(i)(l) and the regulations thereunder.
| | ---------------------------------------------------------------------------------------------------------------------------------

82

---



| | For
purposes of Section  14.4(c)(2),  (3), and (4), the constructive  ownership rules of Code
Section 318 shall apply with the modification that 5 percent shall be substituted for 50
percent in Code Section 318(a)(2).
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (d)                 related
rollover means a rollover either (1) not initiated by the           employee or (2)
made to a qualified retirement plan maintained by another           employer required to
be aggregated under any of Code Sections 414(b), (c) or (m)           with the employer
sponsor of the Plan from which the rollover distribution was           made.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (e)                 unrelated
rollover means a rollover initiated by the employee and           made from a plan
maintained by one employer to a plan maintained by another           employer not
required to be aggregated with the first employer under any of Code           Sections
414(b), (c), or (m).
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (f)                 super
top-heavy means a top-heavy plan in which the fraction           computed under
Section 14.2(d) hereof exceeds 0.90.
| | ------------------------------------------------------------------------------------------------------------------------------------------------

| | (g)                 Valuation
Date. The date as of which account balances or accrued           benefits are
valued for purposes of calculating the top-heavy ratio shall be the           last day of
each Plan Year.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (h)                 compensation or
annual compensation means, for purposes           of Article XIV,
compensation as defined in Code Section 415(c)(3) but including           amounts
contributed by the Employer pursuant to an elective deferral agreement           which
are excludible from the employees gross income under Code Sections           125,
402(e)(3), 402(h) or 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(f)(4) shall be included in compensation
          for purposes hereof.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (i)                 non-key
employee is any employee who is not a key employee as           defined in Section
14.4(c).
| | -------------------------------------------------------------------------------------------------------------------------

| | (j)                 Top-Heavy
Plan: For any Plan Year beginning after December 31, 1983, this Plan           is
top-heavy if any of the following conditions exists:
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (1)                 If
the top-heavy ratio for this Plan exceeds 60% and this Plan is not part of           any
required aggregation group or permissive aggregation group of plans.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2)                 If
this Plan is a part of a required aggregation group of plans but not part of           a
permissive aggregation group and the top-heavy ratio for the group of plans
          exceeds 60%.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (3)                 If
this Plan is a part of a required aggregation group and part of a permissive
          aggregation group of plans and the top-heavy ratio for the permissive
          aggregation group exceeds 60%.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (k)                 Top-Heavy
Ratio:
| | ------------------------------------

83

---



| | (1)                 If
the Employer maintains one or more defined contribution plans (including any
          Simplified Employee Pension Plan) and the Employer has not maintained any
          defined benefit plan which during the 5-year period ending on the determination
          date(s) has or has had accrued benefits, the top-heavy ratio for this Plan
alone           or for the required or permissive aggregation group as appropriate is a
          fraction, the numerator of which is the sum of the account balances of all key
          employees as of the determination date(s) (including any part of any account
          balance distributed in the 5-year period ending on the determination date(s)),
          and the denominator of which is the sum of all account balances (including any
          part of any account balance distributed in the 5-year period ending on the
          determination date(s)), both computed in accordance with Code Section 416 and
          the regulations thereunder. Both the numerator and denominator of the top-heavy
          ratio are increased to reflect any contribution not actually made as of the
          determination date, but which is required to be taken into account on that date
          under Code Section 416 and the regulations thereunder.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2)                 If
the Employer maintains one or more defined contribution plans (including any
          Simplified Employee Pension Plan) and the Employer maintains or has maintained
          one or more defined benefit plans which during the 5-year period ending on the
          determination date(s) has or has had any accrued benefits, the top-heavy ratio
          for any required or permissive aggregation group as appropriate is a fraction,
          the numerator of which is the sum of account balances under the aggregated
          defined contribution plan or plans for all key employees, determined in
          accordance with (a) above, and the present value of accrued benefits under the
          aggregated defined benefit plan or plans for all key employees as of the
          determination date(s), and the denominator of which is the sum of the account
          balances under the aggregated defined contribution plan or plans for all
          Participants, determined in accordance with (a) above, and the present value of
          accrued benefits under the defined benefit plan or plans for all Participants
as           of the determination date(s), all determined in accordance with Code Section
416           and the regulations thereunder. The accrued benefits under a defined
benefit           plan in both the numerator and denominator of the top-heavy ratio are
increased           for any distribution of an accrued benefit made in the five-year
period ending           on the determination date.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (3)                 For
purposes of (1) and (2) above the value of account balances and the present
          value of accrued benefits will be determined as of the most recent valuation
          date that falls within or ends with the 12-month period ending on the
          determination date, except as provided in Code Section 416 and the regulations
          thereunder for the first and second plan years of a defined benefit plan. The
          account balances and accrued benefits of a Participant (i) who is not a key
          employee but who was a key employee in a prior year, or (ii) who has not been
          credited with at least one Hour of Service with any employer maintaining the
          Plan at any time during the 5-year period ending on the determination date will
          be disregarded. The calculation of the top-heavy ratio, and the extent to which
          distributions, rollovers, and transfers are taken into account will be made in
          accordance with Code Section 416 and the regulations thereunder. Deductible
          employee contributions will not be taken into account for purposes of computing
          the top-heavy ratio. When aggregating plans the value of account balances and
          accrued benefits will be calculated with reference to the determination dates
          that fall within the same calendar year.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

84

---



| | The
 accrued  benefit  of a  Participant  other  than a key  employee  shall be determined
under (a) the method, if any, that uniformly applies for accrual purposes under all
defined benefit plans maintained by the Employer, or (b) if there is no such method, as
if such benefit accrued not more rapidly than the slowest accrual rate permitted under
the fractional rule of Code Section 411(b)(1)(C).
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (1)                 Present
Value: Present value shall be based only on the interest and mortality           rates
specified in the defined benefit plan.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------

14.5
Effective Date. This section shall apply for purposes of determining whether the Plan is
a top-heavy plan under Code Section 416(g) for Plan Years beginning after December 31,
2001, and whether the Plan satisfies the minimum benefits requirements of Code Section
416(c) for such years. This section amends other provisions of this Article IV.

| | (a)                 Determination
of top-heavy status.
| | ------------------------------------------------------

| | (1)                 Key
employee. Key employee means any employee or former employee (including any
          deceased employee) who at any time during the Plan Year that includes the
          determination date was an officer of the Employer having annual compensation
          greater than $130,000 (as adjusted under Code Section 416(i)(1) for Plan Years
          beginning after December 31, 2002), a 5%owner of the Employer, or a 1 %
          owner of the Employer having annual compensation of more than $150,000. For
this           purpose, annual compensation means compensation within the meaning of Code
          Section 4l5(c)(3). The determination of who is a key employee will be made in
          accordance with Code Section 416(i)(1) and the applicable regulations and other
          guidance of general applicability issued thereunder.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2)                 Determination
of present values and amounts. This Section 14.5(a)(2) shall apply           for purposes
of determining the present values of accrued benefits and the           amounts of
account balances of employees as of the determination date.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | [a]                 Distributions
during year ending on the determination date. The present values           of accrued
benefits and the amounts of account balances of an employee as of the
          determination date shall be increased by the distributions made with respect to
          the employee under the Plan and any plan aggregated with the Plan under Code
          Section 416(g)(2) during the 1-year period ending on the determination date.
The           preceding sentence shall also apply to distributions under a terminated
plan           which, had it not been terminated, would have been aggregated with the
Plan           under Code Section 416(g)(2)(A)(i). In the case of a distribution made for
a           reason other than separation from service, death, or disability, this
provision           shall be applied by substituting 5-year period for 1-year
          period.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | [b]                 Employees
not performing services during year ending on the determination date.           The
accrued benefits and accounts of any individual who has not performed           services
for the Employer during the 1-year period ending on the determination           date
shall not be taken into account.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b)                 Minimum
benefits.
| | -------------------------------------

85

---



| | (1)                 Matching
contributions. Employer Matching Contributions shall be taken into           account for
purposes of satisfying the minimum contribution requirements of Code           Section
416(c)(2) and the Plan. The preceding sentence shall apply with respect           to
Matching Contributions under the Plan or, if the Plan provides that the           minimum
contribution requirement shall be met in another plan, such other plan.
          Employer Matching Contributions that are used to satisfy the minimum
          contribution requirements shall be treated as Matching Contributions for
          purposes of the actual contribution percentage test and other requirements of
          Code Section 401(m).
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2)                 Contributions
under other plans. The minimum contribution requirement shall not           apply to any
Participant to the extent the Participant is covered under any           other plan or
plans of the Employer (including another plan that consists solely           of a cash or
deferred arrangement which meets the requirements of Code Section           401(k)(12)
and matching contributions with respect to which the requirements of           Code
Section 401(m)(l 1) are met) and the Employer has provided that the minimum
          allocation or benefit requirement applicable to top-heavy plans will be met in
          the other plan or plans.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

DATED this _____ day of
____________________.

| |  | FENTURA BANCORP, INC.By:       
      Donald L. Grill, President and CEO
| |  | --------------------------------------------------------------------------------------

86

---



# Exhibit 13

# Rule 14a-3 annual
report

# FENTURA FINANCIAL, INC. FINANCIAL STATEMENTS
AND REPORT OF INDEPENDENT CERTIFIED
PUBLIC ACCOUNTANTS December 31, 2004 and
2003

# and

# MANAGEMENTS
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

---



FENTURA FINANCIAL, INC. Fenton, Michigan

CONSOLIDATED FINANCIAL
STATEMENTS December 31, 2004 and
2003

CONTENTS

|                                                                                         | 
|---------------------------------------------------------------------------------------- | 
|REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM                                  | 
|                                                                                        
|                                                                                        
|CONSOLIDATED FINANCIAL STATEMENTS                                                        | 
|                                                                                        
|CONSOLIDATED BALANCE SHEETS                                                              | 
|                                                                                        
|CONSOLIDATED STATEMENTS OF INCOME                                                        | 
|                                                                                        
|CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME                                          | 
|                                                                                        
|CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY                               | 
|                                                                                        
|CONSOLIDATED STATEMENTS OF CASH FLOWS                                                    | 
|                                                                                        
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                               | 
|                                                                                        
|MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL    CONDITION AND RESULTS OF OPERATIONS | 

---



REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM

Board of Directors and
StockholdersFentura Financial, Inc.Fenton, Michigan

We have audited the accompanying consolidated
balance sheets of Fentura Financial, Inc. as of December 31, 2004 and 2003, and the
related consolidated statements of income, comprehensive income, changes in
stockholders equity and cash flows for each of the three years in the period ended
December 31, 2004. These financial statements are the responsibility of the
Corporations management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance
with the standards of the Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the consolidated
financial statements referred to above present fairly, in all material respects, the
financial position of Fentura Financial, Inc. as of December 31, 2004 and 2003, and
the results of its operations and its cash flows for each of the three years in the period
ended December 31, 2004 in conformity with U.S. generally accepted accounting principles.

| | /s/ Crowe Chizek and Company LLCCrowe Chizek and Company LLC
| | ------------------------------------------------------------

Grand Rapids,
MichiganFebruary 3, 2005

---



FENTURA FINANCIAL, INC. CONSOLIDATED BALANCE
SHEETS December 31, 2004 and
2003 (000s omitted
except share and per share data)

|                                                       | 2004 | 2003      
|------------------------------------------------------ | ---- | ----------
|ASSETS                                                 |      |           
|Cash and due from banks                                |      | $   22,705
|Federal funds sold                                     |      | 4,550     
|                                                       |      |           
|Total cash and cash equivalents                        |      | 27,255    
|Securities available for sale, at fair value           |      | 110,391   
|Securities held to maturity (fair value 2004 - $18,788 |     
|2003 - $12,519)                                        |      | 18,786    
|Loans held for sale                                    |      | 1,587     
|Loans, net of allowance of 2004 - $5,501,              |     
|2003 - $3,414                                          |      | 387,929   
|Bank premises and equipment                            |      | 13,812    
|Accrued interest receivable                            |      | 2,335     
|Bank owned life insurance                              |      | 6,861     
|Goodwill                                               |      | 7,955     
|Acquisition intangibles                                |      | 1,433     
|Federal Home Loan Bank stock                           |      | 2,252     
|Other assets                                           |      | 4,294     
|                                                       |      |           
|                                                       |      | $ 584,890 
|                                                       |      |           
|LIABILITIES AND STOCKHOLDERS' EQUITY                   |     
|Deposits:                                              |     
|Noninterest-bearing deposits                           |      | $   80,631
|Interest-bearing deposits                              |      | 410,434   
|                                                       |      |           
|Total deposits                                         |      | 491,065   
|Short-term borrowings                                  |      | 5,200     
|Federal Home Loan Bank Advances                        |      | 19,402    
|Repurchase Agreements                                  |      | 10,000    
|Subordinated debentures                                |      | 12,000    
|Accrued taxes, interest and other liabilities          |      | 4,254     
|                                                       |      |           
|Total liabilities                                      |      | 541,921   
|Stockholders' equity                                   |     
|Common stock - $0 par value, shares issued             |     
|1,889,463 - 2004; 1,880,485 - 2003                     |      | 33,110    
|Retained earnings                                      |      | 10,514    
|Accumulated other comprehensive income(loss)           |      | (655      
|                                                       |      |           
|                                                       |      | 42,969    
|                                                       |      |           
|                                                       |      | $ 584,890 
|                                                       |      |           

See accompanying notes to consolidated
financial statements.

2.

---



FENTURA FINANCIAL, INC. CONSOLIDATED STATEMENTS
OF INCOME Years ended December
31, 2004, 2003 and 2002 (000s omitted
except share and per share data)

|                                                    | 2004 | 2003      | 2002
|--------------------------------------------------- | ---- | --------- | ----
|Interest income                                     |      |           |     
|Loans, including fees                               |      | $22,161   |     
|Securities:                                         |     
|Taxable                                             |      | 3,053     |     
|Tax-exempt                                          |      | 746       |     
|Short-term investments                              |      | 134       |     
|                                                    |      |           |     
|Total interest income                               |      | 26,094    |     
|Interest expense                                    |     
|Deposits                                            |      | 7,004     |     
|Short-term borrowings                               |      | 0         |     
|Other Borrowings                                    |      | 1,259     |     
|                                                    |      |           |     
|Total interest expense                              |      | 8,263     |     
|                                                    |      |           |     
|Net interest income                                 |      | 17,831    |     
|Provision for loan losses                           |      | 1,389     |     
|                                                    |      |           |     
|Net interest income after provision for loan losses |      | 16,442    |     
|Noninterest income                                  |     
|Service charges on deposit accounts                 |      | 3,738     |     
|Gain on sale of mortgage loans                      |      | 510       |     
|Trust income                                        |      | 677       |     
|Gain on sale of securities                          |      | 0         |     
|Gain on sale of fixed assets                        |      | 0         |     
|Gain on sale of credit card and SBA loans           |      | 464       |     
|Other income and fees                               |      | 1,903     |     
|                                                    |      |           |     
|Total noninterest income                            |      | 7,292     |     
|Noninterest expense                                 |     
|Salaries and employee benefits                      |      | 9,956     |     
|Occupancy                                           |      | 1,633     |     
|Furniture and equipment                             |      | 2,153     |     
|Office supplies                                     |      | 349       |     
|Loan and collection                                 |      | 289       |     
|Advertising and promotional                         |      | 499       |     
|Other professional services                         |      | 1,031     |     
|Other general and administrative                    |      | 2,266     |     
|                                                    |      |           |     
|Total noninterest expense                           |      | 18,176    |     
|                                                    |      |           |     
|Net income before taxes                             |      | 5,558     |     
|Federal income taxes                                |      | 1,524     |     
|                                                    |      |           |     
|Net income                                          |      | $  4,034  |     
|                                                    |      |           |     
|Per share:                                          |     
|Earnings - basic                                    |      | $    2.14 |     
|Earnings - diluted                                  |      | 2.13      |     

See accompanying notes to consolidated
financial statements.

3.

---



FENTURA FINANCIAL, INC. CONSOLIDATED STATEMENTS
OF COMPREHENSIVE INCOME Years ended December
31, 2004, 2003 and 2002 (000s omitted
except share and per share data)

|                                                | 2004 | 2003    | 2002
|----------------------------------------------- | ---- | ------- | ----
|Net income                                      |      | $ 4,034 |     
|Other comprehensive income:                     |     
|Unrealized holding gains (losses) on available  |     
|for sale securities                             |      | (803    | )   
|Less: reclassification adjustment for gains and |     
|losses later recognized in income               |      | 0       |     
|                                                |      |         |     
|Net unrealized gains (losses)                   |      | (803    | )   
|Tax effect                                      |      | 273     |     
|                                                |      |         |     
|Other comprehensive income (loss), net of tax   |      | (530    | )   
|                                                |      |         |     
|Comprehensive income                            |      | $ 3,504 |     
|                                                |      |         |     

See accompanying notes to consolidated
financial statements.

4.

---



FENTURA FINANCIAL, INC.CONSOLIDATED
STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY Years ended December
31, 2004, 2003 and 2002 (000s omitted
except share and per share data)

|                                              | CommonStock | RetainedEarnings | AccumulatedOtherComprehensiveIncome (Loss) | TotalStockholders'Equity
|--------------------------------------------- | ----------- | ---------------- | ------------------------------------------ | ------------------------
|Balance, January 1, 2002                      |             | $ 30,664         |                                            | $   7,677               
|Net Income                                    |             |                  |                                            | 3,466                   
|Cash Dividends ($0.92 per share)              |             | 0                |                                            | (1,748                  
|Stock repurchase (23,259 shares)              |             | (719             | )                                          | 0                       
|Issuance of shares under stock purchase plans |             | 291              |                                            | 0                       
|Other comprehensive income (net of tax)       |             | 0                |                                            | 0                       
|                                              |             |                  |                                            |                         
|Balance, December 31, 2002                    |             | 30,236           |                                            | 9,395                   
|Net Income                                    |             | 0                |                                            | 3,788                   
|Cash Dividends ($0.92 per share)              |             | 0                |                                            | (1,966                  
|Stock Dividend (170,953 shares)               |             | 2,979            |                                            | (2,979                  
|Stock repurchase (26,478 shares)              |             | (894             | )                                          | 0                       
|Issuance of shares under stock purchase plans |             | 448              |                                            | 0                       
|Other comprehensive income (net of tax)       |             | 0                |                                            | 0                       
|                                              |             |                  |                                            |                         
|Balance, December 31, 2003                    |             | 32,769           |                                            | 8,238                   
|Net Income                                    |             | 0                |                                            | 4,034                   
|Cash Dividends ($0.92 per share)              |             | 0                |                                            | (1,758                  
|Stock repurchase (3,621 shares)               |             | (122             | )                                          | 0                       
|Issuance of shares under stock purchase plans |             | 463              |                                            | 0                       
|Other comprehensive loss (net of tax)         |             | 0                |                                            | 0                       
|                                              |             |                  |                                            |                         
|Balance, December 31, 2004                    |             | $ 33,110         |                                            | $ 10,514                
|                                              |             |                  |                                            |                         

See accompanying notes to consolidated
financial statements.

5.

---



FENTURA FINANCIAL, INC. CONSOLIDATED STATEMENTS
OF CASH FLOWS Years ended December
31, 2004, 2003 and 2002 (000s omitted
except share and per share data)

|                                                   | 2004 | 2003      | 2002
|-------------------------------------------------- | ---- | --------- | ----
|Cash flows from operating activities               |      |           |     
|Net income                                         |      | $   4,034 |     
|Adjustments to reconcile net income to             |     
|net cash from operating activities                 |     
|Depreciation and amortization                      |      | 2,359     |     
|Deferred income taxes (benefit)                    |      | (23       | )   
|Provision for loan losses                          |      | 1,389     |     
|Gain on sales of loans                             |      | (974      | )   
|Loans originated for sale                          |      | (33,822   | )   
|Proceeds from the sale of loans                    |      | 34,540    |     
|Gain on sales of securities                        |      | 0         |     
|Gain on sale of fixed assets                       |      | 0         |     
|Net change in accrued interest receivable          |     
|and other assets                                   |      | (53       | )   
|Earnings from bank owned life insurance            |      | (219      | )   
|Net change in accrued interest payable and         |     
|other liabilities                                  |      | 1,853     |     
|                                                   |      |           |     
|Net cash from operating activities                 |      | 9,084     |     
|Cash flows from investing activities               |     
|Proceeds from maturities of securities - HTM       |      | 3,858     |     
|Proceeds from maturities of securities - AFS       |      | 2,625     |     
|Proceeds from calls of securities - HTM            |      | 7         |     
|Proceeds from calls of securities - AFS            |      | 48,813    |     
|Proceeds from sales of securities - AFS            |      | 0         |     
|Purchases of securities - HTM                      |      | (10,472   | )   
|Purchases of securities - AFS                      |      | (23,865   | )   
|Originations of loans, net of principal repayments |      | (47,357   | )   
|Proceeds from sales of loans                       |      | 4,911     |     
|Purchase of bank owned life insurance              |      | 0         |     
|Net cash from acquisition of WMFC                  |      | (1,112    | )   
|Acquisition of premises and equipment, net         |      | (867      | )   
|                                                   |      |           |     
|Net cash from investing activities                 |      | (23,459   | )   
|Cash flows from financing activities               |     
|Net change in deposits                             |      | 32,712    |     
|Net change in short-term borrowings                |      | 382       |     
|Repayments on advances from FHLB                   |      | (7,706    | )   
|Redemption of repurchase agreements                |      | (2,500    | )   
|Issuance of subordinated debt                      |      | 0         |     
|Cash dividends paid                                |      | (1,758    | )   
|Net proceeds from stock issuance and purchases     |      | 341       |     
|                                                   |      |           |     
|Net cash from financing activities                 |      | 21,471    |     
|                                                   |      |           |     
|Net change in cash and cash equivalents            |      | 7,096     |     
|Cash and cash equivalents at beginning of year     |      | 20,159    |     
|                                                   |      |           |     
|Cash and cash equivalents at end of year           |      | $ 27,255  |     
|                                                   |      |           |     
|Supplemental disclosure of cash flow information   |     
|Cash paid during the year for                      |     
|Interest                                           |      | $   8,160 |     
|Income taxes                                       |      | 730       |     

See accompanying notes to consolidated
financial statements.

6.

---



FENTURA FINANCIAL, INC.NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS December 31, 2004 and 2003

# CONSOLIDATED STATEMENTS
OF CASH FLOWS (Continued)

|                                            | 
|------------------------------------------- | 
|Noncash investing and financing activities: | 
|WMFC acquisition:                           | 
|Securities acquired (including FHLB stock)  | 
|Loans acquired                              | 
|Bank premises and equipment                 | 
|Bank owned life insurance                   | 
|Acquisition intangibles recorded            | 
|Other assets acquired                       | 
|Deposits assumed                            | 
|Borrowings assumed                          | 
|Other liabilities assumed                   | 

# NOTE 1  SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations and
Principles of Consolidation: The consolidated financial statements include Fentura
Financial, Inc. (the Corporation) and its wholly owned subsidiaries, The State Bank in
Fenton, Michigan; Fentura Mortgage Company, Davison State Bank in Davison, Michigan; West
Michigan Community Bank in Hudsonville, Michigan; and West Michigan Mortgage Company (the
Banks). Intercompany transactions and balances are eliminated in consolidation.

The Corporation provides banking and
trust services principally to individuals, small businesses and governmental entities
through its eleven community banking offices in Genesee, Livingston, Oakland Counties in
southeastern Michigan and four community banking offices in Ottawa and Kent counties in
west Michigan. Its primary deposit products are checking, savings, and term certificate
accounts, and its primary lending products are residential mortgage, commercial, and
installment loans. Substantially all loans are secured by specific items of collateral
including business assets, consumer assets and real estate. Commercial loans are expected
to be repaid from cash flow from operations of businesses. Real estate loans are secured
by both residential and commercial real estate. Other financial instruments which
potentially represent concentrations of credit risk include deposit accounts in other
financial institutions and federal funds sold.

Use of Estimates: To prepare
financial statements in conformity with accounting principles generally accepted in the
United States of America, management makes estimates and assumptions based on available
information. These estimates and assumptions affect the amounts reported in the financial
statements and the disclosures provided, and future results could differ. The allowance
for loan losses, fair values of securities, fair values of financial instruments and
carrying value of intangibles are particularly subject to change.

(Continued)

7.

---



FENTURA FINANCIAL, INC.NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS December 31, 2004 and 2003

# NOTE 1 - SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (Continued)

Cash Flows: Cash and cash
equivalents includes cash, deposits with other financial institutions under 90 days, and
federal funds sold. Net cash flows are reported for customer loan and deposit transactions
and short-term borrowings.

Securities: Securities are
classified as held to maturity and carried at amortized cost when management has the
positive intent and ability to hold them to maturity. Securities are classified as
available for sale when they might be sold before maturity. Securities available for sale
are carried at fair value, with unrealized holding gains and losses reported in other
comprehensive income. Other securities such as Federal Home Loan Bank stock are carried at
cost.

Interest income includes amortization
of purchase premium or discount. Premiums and discounts on securities are amortized on the
level-yield method without anticipating prepayments. Gains and losses on sales are based
on the amortized cost of the security sold. Securities are written down to fair value when
a decline in fair value is not temporary.

Declines in the fair value of
securities below their cost that are other than temporary are reflected as realized
losses. In estimating other-than-temporary losses, management considers: (1) the length of
time and extent the fair value has been less than cost, (2) the financial condition and
near term prospects of the issuer, and (3) the Corporations ability and intent to
hold the security for a period sufficient to allow for any anticipated recovery in fair
value.

Loans: Loans that management
has the intent and ability to hold for the foreseeable future or until maturity or payoffs
are reported at the principal balance outstanding, net of unearned interest, deferred loan
fees and costs, and an allowance for loan losses. Loans held for sale are reported at the
lower of cost or market, on an aggregate basis and are sold with servicing rights
released.

Interest income is reported on the
interest method and includes amortization of net deferred loan fees and costs over the
loan term. Loan origination fees, net of certain direct origination costs, are deferred
and recognized in interest income using the level-yield method without anticipating
prepayments. Interest income is not reported when full loan repayment is in doubt,
typically when the loan is impaired or payments are past due over 90 days (180 days for
residential mortgages).

All interest accrued but not received
for loans placed on nonaccrual is reversed against interest income. Interest received on
such loans is accounted for on the cash-basis or cost-recovery method, until qualifying
for return to accrual. Loans are returned to accrual status when all the principal and
interest amounts contractually due are brought current and future payments are reasonably
assured.

(Continued)

8.

---



FENTURA FINANCIAL, INC.NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS December 31, 2004 and 2003

# NOTE 1 - SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (Continued)

Allowance for Loan Losses: The
allowance for loan losses is a valuation allowance for probable incurred credit losses,
increased by the provision for loan losses and decreased by charge-offs less recoveries.
Management estimates the allowance balance required using past loan loss experience, the
nature and volume of the portfolio, information about specific borrower situations and
estimated collateral values, economic conditions, and other factors. Allocations of the
allowance may be made for specific loans, but the entire allowance is available for any
loan that, in managements judgment, should be charged-off. Loan losses are charged
against the allowance when management believes the uncollectibility of a loan balance is
confirmed. Consumer loans are typically charged off no later than 120 days past due.

The allowance consists of specific
and general components. The specific component relates to loans that are individually
classified as impaired or loans otherwise classified as substandard or doubtful. The
general component covers non-classified loans and is based on historical loss experience
adjusted for current factors.

A loan is impaired when full payment
under the loan terms is not expected. Commercial and commercial real estate loans are
individually evaluated for impairment. If a loan is impaired, a portion of the allowance
is allocated so that the loan is reported, net, at the present value of estimated future
cash flows using the loans existing rate or at the fair value of collateral if
repayment is expected solely from the collateral. Large groups of smaller balance
homogeneous loans, such as consumer and residential real estate loans, are collectively
evaluated for impairment, and accordingly, they are not separately identified for
impairment disclosures.

Foreclosed Assets: Assets
acquired through or instead of loan foreclosure are initially recorded at fair value when
acquired, establishing a new cost basis. If fair value declines, a valuation allowance is
recorded through expense. Costs after acquisition are expensed.

Premises and Equipment: Land
is carried at cost. Premises and equipment are stated at cost less accumulated
depreciation. Buildings and related components are depreciated using the straight-line
method with useful lives ranging from 15 to 40 years. Furniture, fixtures and equipment
are depreciated using the straight-line method with useful lives ranging from 3 to 7
years.

Long-term Assets: Premises and
equipment and other long-term assets are reviewed for impairment when events indicate
their carrying amount may not be recoverable from future undiscounted cash flows. If
impaired, the assets are recorded at fair value.

(Continued)

9.

---



FENTURA FINANCIAL, INC.NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS December 31, 2004 and 2003

# NOTE 1 - SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (Continued)

Bank owned life insurance: The
Corporation has purchased life insurance policies on certain key executives. Bank owned
life insurance is recorded at its cash surrender value, or the amount that can be
realized.

Goodwill: Goodwill results
from prior business acquisitions and represents the excess of the purchase price over the
fair value of acquired tangible assets and liabilities and identifiable intangible assets.
Goodwill is assessed at least annually for impairment and any such impairment will be
recognized in the period identified.

Acquisition Intangibles:
Acquisition intangibles consist of core deposit and acquired customer and trust
relationship intangible assets arising from acquisitions. They are initially measured at
fair value and then are amortized on an accelerated method over their estimated useful
lives.

Stock Compensation: Employee
compensation expense under stock option plans is reported if options are granted below
market price at grant date. Pro forma disclosures of net income and earnings per share are
shown using the fair value method of SFAS No. 123 to measure expense for options
granted after 1994, using an option pricing model to estimate fair value.

The stock option plans are accounted
for in accordance with Accounting Principles Board Opinion No. 25, Accounting for Stock
Issued to Employees(APB 25) as permitted under Financial Accounting Standards No.
123, Accounting for Stock Based Compensation (SFAS 123). In accordance with APB 25,
no compensation expense is required nor has been recognized for the options issued under
existing plans. Had the Corporation chosen not to elect APB 25, SFAS 123 would apply and
compensation expense would have been recognized, and the Corporations earnings would
have been as follows (in thousands, except per share data):

|                                      | 2004 | 2003            | 2002
|------------------------------------- | ---- | --------------- | ----
|Net income                            |      |                 |     
|As reported                           |      | $      4,034    |     
|Deduct:  Stock-based compensation     |     
|expense determined under a fair value |     
|based system                          |      | (93             | )   
|                                      |      |                 |     
|Proforma                              |      | $      3,941    |     
|                                      |      |                 |     
|Basic net income per share            |     
|As reported                           |      | $             2 | .14 
|Proforma                              |      | 2               | .09 
|Diluted net income per share          |     
|As reported                           |      | $             2 | .13 
|Proforma                              |      | 2               | .08 

(Continued)

10.

---



FENTURA FINANCIAL, INC.NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS December 31, 2004 and 2003

# NOTE 1 - SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (Continued)

The fair value of option granted and
pro forma effects are computed using option-pricing models, using the following
weighted-average assumptions as of grant date.

|                                       | 2004 | 2003         | 2002
|-------------------------------------- | ---- | ------------ | ----
|Risk-free interest rate                |      | 3.78%        |     
|Expected option life                   |      | 6 years      |     
|Expected stock price volatility        |      | 23%          |     
|Dividend yield                         |      | 2.70%        |     
|Weighted average fair value of options |     
|granted during the year                |      | $       6.92 |     
|                                       |      |              |     

Income Taxes: Income tax
expense is the total of the current year income tax due or refundable and the change in
deferred tax assets and liabilities. Deferred tax assets and liabilities are the expected
future tax amounts for the temporary differences between carrying amounts and tax bases of
assets and liabilities, computed using enacted tax rates. A valuation allowance, if
needed, reduces deferred tax assets to the amount expected to be realized.

Financial Instruments:
Financial instruments include off-balance sheet credit instruments, such as commitments to
make loans and standby letters of credit, issued to meet customer financing needs. The
face amount for these items represents the exposure to loss, before considering customer
collateral or ability to repay. Such financial instruments are recorded when they are
funded.

Earnings Per Common Share:
Basic earnings per common share is net income divided by the weighted average number of
common shares outstanding during the period. ESOP shares are considered outstanding for
this calculation unless unearned. Diluted earnings per common share includes the dilutive
effect of additional potential common shares issuable under stock options. Earnings and
dividends per share are restated for all stock splits and dividends through the date of
issue of the financial statements.

Comprehensive Income:
Comprehensive income consists of net income and other comprehensive income. Other
comprehensive income includes unrealized gains and losses on securities available for
sale, which are also recognized as separate components of equity.

(Continued)

11.

---



FENTURA FINANCIAL, INC.NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS December 31, 2004 and 2003

# NOTE 1 - SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (Continued)

Recently Issued Accounting
Standards: FAS 123, Revised requires all public companies to record compensation cost
for stock options provided to employees in return for employee service. The cost is
measured at the fair value of the options when granted, and this cost is expensed over the
employee service period, which is normally the vesting period of the options. This will
apply to awards granted or modified after the first quarter or year beginning after June
15, 2005. Compensation cost will also be recorded for prior option grants that vest after
the date of adoption. The effect on results of operations will depend on the level of
future option grants and the calculation of the fair value of the options granted at such
future date, as well as the vesting periods provided, and so cannot be predicted. Existing
options that will vest after adoption date are expected to result in additional
compensation expense of $3,000 during the balance of 2005. There will be no significant
effect on financial position as total equity will not change.

SOP 03-3 requires that a valuation
allowance for loans acquired in a transfer, including in a business combination, reflect
only losses incurred after acquisition and should not be recorded at acquisition. It
applies to any loan acquired in a transfer that showed evidence of credit quality
deterioration since it was made. The effect of this new standard on the Corporations
financial position and results of operations is not expected to be material upon and after
adoption.

Loss Contingencies: Loss
contingencies, including claims and legal actions arising in the ordinary course of
business, are recorded as liabilities when the likelihood of loss is probable and an
amount or range of loss can be reasonably estimated. Management does not believe there now
are such matters that will have a material effect on the financial statements.

Restrictions on Cash: Cash on
hand or on deposit with the Federal Reserve Bank of $6,358,000 and $6,716,000 was required
to meet regulatory reserve and clearing requirements at year-end 2004 and 2003
respectively. These balances do not earn interest.

Dividend Restriction: Banking
regulations require maintaining certain capital levels and may limit the dividends paid by
the banks to the holding company or by the holding company to shareholders.

Fair Value of Financial
Instruments: Fair values of financial instruments are estimated using relevant market
information and other assumptions, as more fully disclosed in a separate note. Fair value
estimates involve uncertainties and matters of significant judgment regarding interest
rates, credit risk, prepayments, and other factors, especially in the absence of broad
markets for particular items. Changes in assumptions or in market conditions could
significantly affect the estimates.

(Continued)

12.

---



FENTURA FINANCIAL, INC.NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS December 31, 2004 and 2003

# NOTE 1 - SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (Continued)

Operating Segments: While the
Corporations chief decision-makers monitor the revenue streams of the various
Corporation products and services, operations are managed and financial performance is
evaluated on a Corporate-wide basis. Accordingly, all of the Corporations financial
service operations are considered by management to be aggregated in one reportable
operating segment.

Reclassifications: Some items
in the prior year financial statements were reclassified to conform to the current
presentation.

# NOTE 2  EARNINGS
PER SHARE

The factors in the earnings per share
computation follow.

|                                               | 2004 | 2003           | 2002
|---------------------------------------------- | ---- | -------------- | ----
|Basic                                          |      |                |     
|Net income                                     |      | $4,034,000     |     
|                                               |      |                |     
|Weighted average common shares                 |     
|outstanding                                    |      | 1,884,310      |     
|                                               |      |                |     
|Basic earnings per common share                |      | $         2.14 |     
|                                               |      |                |     
|Diluted                                        |     
|Net income                                     |      | $4,034,000     |     
|                                               |      |                |     
|Weighted average common shares outstanding     |     
|for basic earnings per common share            |      | 1,884,310      |     
|Add:  Dilutive effects of assumed exercises of |     
|stock options                                  |      | 8,361          |     
|                                               |      |                |     
|Average shares and dilutive potential          |     
|common shares                                  |      | 1,892,671      |     
|                                               |      |                |     
|Diluted earnings per common share              |      | $         2.13 |     
|                                               |      |                |     

Stock options for 12,404, 5,096 and
6,311 shares of common stock were not considered in computing diluted earnings per common
share for 2004, 2003 and 2002 respectively, because they were antidilutive.

(Continued)

13.

---



FENTURA FINANCIAL, INC.NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS December 31, 2004 and 2003

# NOTE 3  SECURITIES

Year-end securities are as follows
(in thousands):

# Available for Sale

|                                   | FairValue | GrossUnrealizedGains | GrossUnrealizedLosses
|---------------------------------- | --------- | -------------------- | ---------------------
|2004                               |           |                      |                      
|U.S. Government and federal agency |           | $  47,835            |                      
|State and municipal                |           | 7,124                |                      
|Mortgage-backed                    |           | 54,386               |                      
|Equity securities                  |           | 1,045                |                      
|                                   |           |                      |                      
|                                   |           | $110,390             |                      
|                                   |           |                      |                      
|2003                               |          
|U.S. Government and federal agency |           | $  62,882            |                      
|State and municipal                |           | 6,791                |                      
|Mortgage-backed                    |           | 42,744               |                      
|Corporate                          |           | 1,021                |                      
|Equity securities                  |           | 395                  |                      
|                                   |           |                      |                      
|                                   |           | $113,833             |                      
|                                   |           |                      |                      

# Held to Maturity

|                    | AmortizedCost | GrossUnrecognizedGains | GrossUnrecognizedLosses | FairValue
|------------------- | ------------- | ---------------------- | ----------------------- | ---------
|2004                |               |                        |                         |          
|Mortgage-backed     |               | $       23             |                         | $     2  
|State and municipal |               | 18,763                 |                         | 181      
|                    |               |                        |                         |          
|                    |               | $18,786                |                         | $ 183    
|                    |               |                        |                         |          
|2003                |              
|State and municipal |               | $12,169                |                         | $ 364    
|                    |               |                        |                         |          

Sales
of available for sale securities were as follows (in thousands):

|             | 2004 | 2003 | 2002
|------------ | ---- | ---- | ----
|Proceeds     |      | $0   |     
|Gross gains  |      | 0    |     
|Gross losses |      | 0    |     

(Continued)

14.

---



FENTURA FINANCIAL, INC.NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS December 31, 2004 and 2003

# NOTE 3  SECURITIES
(Continued)

Contractual maturities of
debt securities at year-end 2004 were as follows. Securities not due at a single maturity
date, primarily mortgage-backed securities, and equity securities are shown separately
(in thousands).

|                           | Held to Maturity | Available for Sale
|-------------------------- | ---------------- | ------------------
|
|Due in one year or less    |                  | $  8,506          
|Due from one to five years |                  | 4,028             
|Due from five to ten years |                  | 3,951             
|Due after ten years        |                  | 2,278             
|Mortgage-backed securities |                  | 23                
|Equity securities          |                  | 0                 
|                           |                  |                   
|                           |                  | $18,786           
|                           |                  |                   

Securities pledged at
year-end 2004 and 2003 had a carrying amount of $47,209,000 and $30,161,000 and were
pledged to secure public deposits and repurchase agreements.

At year-end 2004 and
2003, there were no holdings of securities of any one issuer, other than the U.S.
Government and its agencies, in an amount greater than 10% of shareholdersequity.

Securities with
unrealized losses at year-end 2004 and 2003, aggregated by investment category and length
of time that individual securities have been in a continuous unrealized loss position are
as follows:

|2004                           | Less than 12 Months | 12 Months or More | Total
|------------------------------ | ------------------- | ----------------- | -----
|
|US Government & federal agency |                     | $  47,834         |      
|State & municipal              |                     | 8,307             |      
|Mortgage-backed                |                     | 52,856            |      
|Corporate                      |                     | 0                 |      
|Equity securities              |                     | 0                 |      
|                               |                     |                   |      
|Total temporarily impaired     |                     | $108,997          |      
|                               |                     |                   |      

(Continued)

15.

---



FENTURA FINANCIAL, INC.NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS December 31, 2004 and 2003

# NOTE 3  SECURITIES
(Continued)

|2003                           | Less than 12 Months | 12 Months or More | Total
|------------------------------ | ------------------- | ----------------- | -----
|
|
|US Government & federal agency |                     | $18,459           |      
|State & municipal              |                     | 4,803             |      
|Mortgage-backed                |                     | 40,282            |      
|Corporate                      |                     | 0                 |      
|Equity securities              |                     | 0                 |      
|                               |                     |                   |      
|Total temporarily impaired     |                     | $64,544           |      
|                               |                     |                   |      

The Corporation evaluates
securities for other-than-temporary impairment-at least on a quarterly basis, and more
frequently when economic or market concerns warrant such evaluation. Consideration is
given to the length of time and the extent to which fair value has been less than cost,
the financial condition and near-term prospects of the issuer, and the intent and the
ability of the Corporation to retain its investment in the issuer for a period of time
sufficient to allow for any anticipated recovery in fair value. In analyzing an issuers
financial condition, the Corporation may consider whether the securities are issued by
the federal government or its agencies, whether downgrades by bond rating agencies have
occurred, and the results of the reviews of the issuers financial condition.

Unrealized losses have
not been recognized into income because the issuers are of high credit  quality,
management has the intent and ability to hold for the foreseeable future, and the decline
in fair value is largely due to increased market interest rates. The fair value is
expected to recover as the bonds approach their maturity date or if market rates decline
prior to maturity.

# NOTE 4  LOANS

Major
categories of loans at December 31, are as follows (in thousands):

|                               | 2004 | 2003    
|------------------------------ | ---- | --------
|Commercial                     |      | $229,012
|Real estate - construction     |      | 61,278  
|Real estate - mortgage         |      | 32,705  
|Consumer                       |      | 70,435  
|                               |      |         
|                               |      | 393,430 
|Less allowance for loan losses |      | 5,501   
|                               |      |         
|                               |      | $387,929
|                               |      |         

(Continued)

16.

---



FENTURA FINANCIAL, INC.NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS December 31, 2004 and 2003

NOTE
4  LOANS (Continued)

The Corporation originates primarily
residential and commercial real estate loans, commercial, construction and installment
loans. The Corporation estimates that the majority of their loan portfolio is based in
Genesee and Livingston counties within southeast Michigan and Kent and Ottawa counties in
west Michigan with the remainder of the portfolio distributed throughout Michigan. The
ability of the Corporations debtors to honor their contracts is dependent upon the
real estate and general economic conditions in these areas.

Certain directors and executive
officers of the Corporation, including their affiliates are loan customers of the Banks.
Such loans were made in ordinary course of business at the Banks normal credit terms
and interest rates, and do not represent more than a normal risk of collection. Total
loans to these persons at December 31, 2004 and 2003 amounted to $14,191,000 and
$5,001,000 respectively. During 2004, $11,835,000 of new loans were made to these persons,
repayments totaled $2,645,000.

Activity in the allowance for loan
losses for the years are as follows (in thousands)

|                               | 2004 | 2003    | 2002
|------------------------------ | ---- | ------- | ----
|Balance, beginning of year     |      | $ 3,414 |     
|Provision for loan losses      |      | 1,389   |     
|Addition from WMCB Acquisition |      | 1,159   |     
|Loans charged off              |      | (671    | )   
|Loan recoveries                |      | 210     |     
|                               |      |         |     
|Balance, end of year           |      | $ 5,501 |     
|                               |      |         |     

Loan impairment is measured by
estimating the expected future cash flows and discounting them at the respective effective
interest rate or by valuing the underlying collateral. The recorded investment in these
loans is as follows at December 31, (in thousands):

|                                        | 2004 | 2003   
|--------------------------------------- | ---- | -------
|Year end loans not requiring allocation |      | $   139
|Year end loans requiring allocation     |      | 3,365  
|                                        |      |        
|                                        |      | $3,504 
|                                        |      |        
|Amount of the allowance for loan losses |     
|allocated                               |      | $   765

Loans for which the accrual of
interest has been discontinued at December 31, 2004 and 2003 amounted to $1,102,000 and
$229,000, respectively, and are included in the impaired loans above. Loans past due
greater than 90 days and still accruing interest amounted to $91,000 and $47,000 at
December 31, 2004 and 2003.

(Continued)

17.

---



FENTURA FINANCIAL, INC.NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS December 31, 2004 and 2003

NOTE
4  LOANS (Continued)

Interest income recognized on
impaired loans based on cash collected in total is approximately $192,000, $160,000 and
$72,000 for the years ended December 31, 2004, 2003 and 2002, respectively. The average
recorded investment in impaired loans was $4,303,000, $3,752,000 and $2,642,000 during the
years ended December 31, 2004, 2003 and 2002 respectively.

# NOTE 5  PREMISES
AND EQUIPMENT, NET

Bank premises and equipment is
comprised of the following at December 31 (in thousands):

|                                   | 2004 | 2003    
|---------------------------------- | ---- | --------
|Land and land improvements         |      | $  3,565
|Building and building improvements |      | 11,756  
|Furniture and equipment            |      | 10,421  
|Construction in progress           |      | 12      
|                                   |      |         
|                                   |      | 25,754  
|Less accumulated depreciation      |      | 11,942  
|                                   |      |         
|                                   |      | $13,812 
|                                   |      |         

Depreciation expense was $1,445,000,
$1,031,000 and $1,035,000 for 2004, 2003 and 2002, respectively.

The Corporation leases property for
certain branches and ATM locations. Rent expense for 2004 was $292,000, for 2003 was
$149,000 and for 2002 was $133,000. Rent commitments under noncancelable operating leases
were as follows, before considering renewal options that generally are present (in
thousands).

|     | 
|---- | 
|2005 | 
|2006 | 
|2007 | 
|2008 | 
|     | 
|     | 
|     | 

(Continued)

18.

---



FENTURA FINANCIAL, INC.NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS December 31, 2004 and 2003

# NOTE 6  GOODWILL
AND INTANGIBLE ASSETS

# Goodwill

# Acquired Intangible
Assets

Acquired intangible assets related to
the 2004 acquisition of West Michigan Financial Corporation were as follows as of
year-end:

|                                  | 2004
|--------------------------------- | ----
|
|Amortized intangible assets:      |     
|Core deposit assets               |     
|Customer relationship intangibles |     
|                                  |     
|Total                             |     
|                                  |     

Aggregate amortization expense was
$292,000 for 2004.

Estimated amortization expense for each
of the next five years:

|     | 
|---- | 
|2005 | 
|2006 | 
|2007 | 
|2008 | 
|2009 | 

The weighted average amortization
period for the intangible assets is 3.12 years.

# NOTE 7  DEPOSITS

The following is a summary of
deposits at December 31 (in thousands):

|                         | 2004 | 2003     
|------------------------ | ---- | ---------
|Noninterest-bearing:     |      |          
|Demand                   |      | $  80,631
|Interest-bearing:        |     
|Savings                  |      | 148,631  
|Money market demand      |      | 118,388  
|Time, $100,000 and over  |      | 50,934   
|Time, $100,000 and under |      | 92,481   
|                         |      |          
|                         |      | $491,065 
|                         |      |          

(Continued)

19.

---



FENTURA FINANCIAL, INC.NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS December 31, 2004 and 2003

# NOTE 7  DEPOSITS
(Continued)

Scheduled maturities of time deposits
at December 31, were as follows (in thousands):

|               | 2004 | 2003     
|-------------- | ---- | ---------
|In one year    |      | $  78,877
|In two years   |      | 16,314   
|In three years |      | 25,077   
|In four years  |      | 10,911   
|In five years  |      | 11,646   
|Thereafter     |      | 590      
|               |      |          
|               |      | $143,415 
|               |      |          

Deposits from principal officers,
directors, and their affiliates at year-end December 31, 2004 and 2003 were $21,013,000
and $3,488,000.

# NOTE 8  BORROWINGS

Short-Term Borrowings Short-term borrowings consist of term
federal funds purchased and treasury tax and loan deposits and generally are repaid within
one to 120 days from the transaction date.

Federal Home Loan Bank
Advances At year-end, advance from the Federal
Home Loan Bank were as follows (dollars in thousands):

|                                                        | 2004 | 2003   
|------------------------------------------------------- | ---- | -------
|Maturities from January 2005 through January 2011,      |      |        
|fixed rates from 2.23% to 3.77% and one variable        |     
|rate at 1.82%, all averaging 3.16% at December 31, 2004 |      | $18,311
|One advance outstanding at December 31, 2004 and        |     
|2003 matures in 2016 and bears interest at 7.34%        |      | 1,091  
|                                                        |      |        
|                                                        |      | $19,402
|                                                        |      |        

Each advance is payable at its
maturity date, a prepayment penalty is assessed with early payoffs of advances. The
advances were collateralized by securities totaling $20,574,000 and $4,000,000 and first
mortgage loans totaling $8,842,000 and $0 under a blanket lien arrangement at December 31,
2004 and 2003.

Maturities over the next five years
are (dollars in thousands):

|           | 
|---------- | 
|2005       | 
|2006       | 
|2007       | 
|2008       | 
|2009       | 
|Thereafter | 
|           | 
|           | 
|           | 

(Continued)

20.

---



FENTURA FINANCIAL, INC.NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS December 31, 2004 and 2003

# NOTE 8  BORROWINGS
(Continued)

Repurchase Agreements Repurchase agreements are secured by
mortgage-backed securities held by a third party trustee with carrying amounts of $18.9
million and $23.9 million at year-end 2004 and 2003.

These agreements are fixed rate
financing arrangements that, at year-end 2004, mature in 2005 ($5,000,000) and 2008
($5,000,000). At maturity, the securities underlying the agreements are returned to the
Corporation. Information concerning repurchase agreements is summarized as follows (in
thousands):

|                                           | 2004 | 2003        
|------------------------------------------ | ---- | ------------
|Average daily balance during the year      |      | $     11,815
|Average interest rate during the year      |      | 1.90%       
|Maximum month-end balance during the year  |      | $     10,000
|Weighted average interest rate at year-end |      | 2.02%       

Subordinated Debenture
and Trust Preferred Securities A trust formed by the Corporation
issued $12,000,000 trust preferred securities in 2003 as part of a pooled offering of such
securities. The interest rate is a floating rate (LIBOR plus 3.00%) and the current rate
is 5.49%. The Corporation issued subordinated debentures to the trust in exchange for the
proceeds of the offering; the debentures and related debt issuance costs represent the
sole assets of the trust. The Corporation may redeem the subordinated debentures, in whole
but not in part, any time after 2008 at a price of 100% of face value. The subordinated
debentures must be redeemed no later than 2033.

# NOTE 9  INCOME
TAXES

The provision for income taxes
reflected in the consolidated statements of income for the years ended December 31,
consists of the following (in thousands):

|                           | 2004 | 2003   | 2002
|-------------------------- | ---- | ------ | ----
|Current expense            |      | $1,524 |     
|Deferred (benefit) expense |      | 0      |     
|                           |      |        |     
|                           |      | $1,524 |     
|                           |      |        |     

Income tax expense was less than the
amount computed by applying the statutory federal income tax rate to income before income
taxes. The reasons for the difference are as follows (in thousands):

|                                 | 2004 | 2003    | 2002
|-------------------------------- | ---- | ------- | ----
|Income tax at statutory rate     |      | $ 1,890 |     
|Tax exempt interest              |      | (291    | )   
|Reduction of federal tax accrual |      | (107    | )   
|Other                            |      | 32      |     
|                                 |      |         |     
|                                 |      | $ 1,524 |     
|                                 |      |         |     

(Continued)

21.

---



FENTURA FINANCIAL, INC.NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS December 31, 2004 and 2003

NOTE 9  INCOME TAXES(Continued)

The net deferred tax asset recorded
includes the following amounts of deferred tax assets and liabilities (in thousands):

|                                                 | 2004 | 2003   
|------------------------------------------------ | ---- | -------
|Deferred tax assets                              |      |        
|Allowance for loan losses                        |      | $ 1,531
|Unrealized loss on securities available for sale |      | 338    
|Compensation                                     |      | 253    
|Other                                            |      | 173    
|                                                 |      |        
|                                                 |      | 2,295  
|Deferred tax liabilities                         |     
|Accretion                                        |      | (29    
|Depreciation                                     |      | (242   
|Purchase accounting adjustments                  |      | (575   
|Other                                            |      | (123   
|                                                 |      |        
|                                                 |      | (969   
|                                                 |      |        
|                                                 |      | $ 1,326
|                                                 |      |        

A valuation allowance related to
deferred tax assets is required when it is considered more likely than not that all or
part of the benefit related to such assets will not be realized. Management has determined
that no valuation allowance is required at December 31, 2004 or 2003.

# NOTE 10  BENEFIT
PLANS

The Corporation has a noncontributory
discretionary employee stock ownership plan (Plan) covering substantially all of its
employees. It is a requirement of the plan to invest principally in the Corporations
common stock. The contribution to the Plan in 2004, 2003 and 2002 was $40,000, $60,000 and
$88,000, respectively.

The Corporation has also established
a 401(k) Plan in which 50% of the employees contribution can be matched with a
discretionary contribution by the Corporation up to a maximum of 6% of gross wages. The
contribution to the 401(k) Plan for 2004, 2003 and 2002 was $180,000, $141,000 and
$100,000, respectively.

(Continued)

22.

---



FENTURA FINANCIAL, INC.NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS December 31, 2004 and 2003

# NOTE 11  STOCK
PURCHASE AND OPTION PLANS

Director and Employee
Plans On December 26, 2001, the Corporation
approved a plan to repurchase up to 50,000 shares of its common stock. The timing of the
purchases and the actual number of shares purchased are based on market conditions. Shares
have been repurchased from time to time in the open market or in privately negotiated
transactions. Shares repurchased will be available for future issuance in the discretion
of the Corporations Board of Directors. The Corporation repurchased 3,621 shares and
26,478 shares in 2004 and 2003, respectively. No further purchases are contemplated under
this Plan.

The Directors Stock Purchase Plan
permits directors of the Corporation to purchase shares of common stock made available for
purchase under the plan at the fair market value on the fifteenth day prior to the annual
issuance date. The total number of shares issuable under this plan is limited to 9,600
shares in any calendar year.

The Retainer Stock Plan allows
directors to elect to receive shares of common stock in full or partial payment of the
directors retainer fees and fees for attending meetings. The number of shares is
determined by dividing the dollar amount of fees to be paid in shares by the market value
of the stock on the first business day prior to the payment date.

The Executive Stock Bonus Plan
permits the administrator of the plan to grant shares of the Corporations common
stock to eligible employees. Any executive or managerial level employee is eligible to
receive grants under the plan. The Board of Directors administers the plan.

Dividend Investment PlanThe Automatic Dividend Reinvestment
Plan (DRIP) permits enrolled shareholders to automatically use dividends paid
on common stock to purchase additional shares of the Corporations common stock at
the fair market value on the investment date. Any shareholder who is the beneficial or
record owner of not more than 9.9% of the issued and outstanding shares of the
Corporations common stock is eligible to participate in the plan.

(Continued)

23.

---



FENTURA FINANCIAL, INC.NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS December 31, 2004 and 2003

# NOTE 11 - STOCK PURCHASE
AND OPTION PLANS (Continued)

Pursuant to a separate agreement with
a family who collectively holds more than 9.9% of the Corporations stock on or prior
to January 31 of each year beginning January 31, 1997, the Corporation is to advise the
family, in a written notice, of the number of shares sold under the DRIP. Each family
member will have the option, until February 28 of the same year, to purchase from the
Corporation one-third of the total number of shares that would be sufficient to prevent
the dilution to all family members as a group that result solely as a result of the DRIP
shares. The purchase price under this agreement is the fair market value on December 31 of
the year immediately preceding the year in which the written notice is given. Similarly, a
reverse agreement exists which allows the Corporation to redeem family shares to maintain
the family ownership percentage in the event that stock repurchase activity more than
offsets the shares available because of the DRIP.

The following summarizes shares
issued under the various plans:

|                                         | 2004 | 2003   | 2002
|---------------------------------------- | ---- | ------ | ----
|Automatic dividend reinvestment plan     |      | 9,502  |     
|Director stock purchase & retainer stock |      | 3,208  |     
|Other issuance of stock &                |      | 0      |     
|                                         |      |        |     
|                                         |      | 12,710 |     
|                                         |      |        |     

Stock Option Plans The Nonemployee Director Stock Option
Plan grants options to nonemployee directors to purchase the Corporations common
stock on April 1 each year. The purchase price of the shares is the fair market value at
the date of the grant, and there is a three-year vesting period before options may be
exercised. Options to acquire no more than 6,720 shares of stock may be granted under the
Plan in any calendar year and options to acquire not more than 67,200 shares in the
aggregate may be outstanding at any one time.

The Employee Stock Option Plan grants
options to eligible employees to purchase the Corporations common stock at or above,
the fair market value of the stock at the date of the grant. Awards granted under this
plan are limited to an aggregate of 72,000 shares. The administrator of the plan is a
committee of directors. The administrator has the power to determine the number of options
to be granted, the exercise price of the options and other terms of the options, subject
to consistency with the terms of the plan.

(Continued)

24.

---



FENTURA FINANCIAL, INC.NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS December 31, 2004 and 2003

NOTE 11  STOCK PURCHASE AND
OPTION PLANS(Continued) The following table summarizes stock option activity:

|                                         | Number ofOptions | WeightedAverage Price
|---------------------------------------- | ---------------- | ---------------------
|Options outstanding at January 1, 2002   |                  | 24,839               
|Options granted 2002                     |                  | 3,242                
|Options forfeited 2002                   |                  | (3,037               
|                                         |                  |                      
|Options outstanding at December 31, 2002 |                  | 25,044               
|Options granted 2003                     |                  | 14,575               
|Options exercise 2003                    |                  | (1,822               
|Options forfeited 2003                   |                  | (3,036               
|                                         |                  |                      
|Options outstanding at December 31, 2003 |                  | 34,761               
|Options granted 2004                     |                  | 12,250               
|Options forfeited 2004                   |                  | (4,799               
|                                         |                  |                      
|Options outstanding at December 31, 2004 |                  | 42,212               
|                                         |                  |                      

Information pertaining to options
outstanding at December 31, is as follows:

|Range of Exercise Price                    | NumberOutstanding | WeightedAverageRemainingLife | WeightedAveragePrice | NumberExercisable
|------------------------------------------ | ----------------- | ---------------------------- | -------------------- | -----------------
|2004     $15.00 - $20.00                   |                   | 3,642                        |                      | 1                
|$20.00 - $30.00                            |                   | 8,413                        |                      | 5                
|$30.00 - $40.00                            |                   | 29,892                       |                      | 8                
|$40.00 - $50.00                            |                   | 264                          |                      | 4                
|                                           |                   |                              |                      |                  
|Outstanding at end of year                 |                   | 42,212                       |                      |                  
|                                           |                   |                              |                      |                  
|Weighted average exercise price of options |                  
|exercisable at the end of the year         |                   |                              |                      |                  
|                                           |                   |                              |                      |                  

(Continued)

25.

---



FENTURA FINANCIAL, INC.NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS December 31, 2004 and 2003

# NOTE 12 
REGULATORY MATTERS

The Corporation (on a consolidated
basis) and its Bank subsidiaries are subject to various regulatory capital requirements
administered by the federal banking agencies. Failure to meet minimum capital requirements
can initiate certain mandatory  and possibly additional discretionary  actions
by regulators that, if undertaken, could have a direct material effect on the Banks
financial statements. Under capital adequacy guidelines and the regulatory framework for
prompt corrective action, the Corporation and the Banks must meet specific capital
guidelines that involve quantitative measures of assets, liabilities, and certain
off-balance-sheet items are calculated under regulatory accounting practices. The capital
amounts and classifications are also subject to qualitative judgments by the regulators
about components, risk weightings, and other factors. Prompt corrective action provisions
are not applicable to bank holding companies.

Quantitative measures established by
regulation to ensure capital adequacy require the Corporation and the Banks to maintain
minimum amounts and ratios (set forth in the table below in thousands) of total and Tier 1
capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier
1 capital (as defined) to average assets (as defined). Management believes, as of December
31, 2004, that the Corporation and the Banks meet all capital adequacy requirements to
which they are subject. As of December 31, 2004 and 2003, the most recent notifications
from Federal Deposit Insurance Corporation categorized the Corporation and the Banks as
well capitalized under the regulatory framework for prompt corrective action. To be
categorized as well capitalized the Corporation and the Banks must maintain minimum total
risk-based, Tier 1 risk-based, and Tier 1 leverage ratios as set forth in the table. There
are no conditions or events since the notifications that management believes have changed
the Banks category.

(Continued)

26.

---



FENTURA FINANCIAL, INC.NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS December 31, 2004 and 2003

NOTE 12  REGULATORY MATTERS(Continued)

|                                   | Actual | For CapitalAdequacyPurposes | To Be WellCapitalized UnderPrompt CorrectiveAction Provisions
|---------------------------------- | ------ | --------------------------- | -------------------------------------------------------------
|
|Total Capital                      |        |                             |                                                              
|(to Risk Weighted Assets)          |       
|Consolidated                       |        | $52,257                     |                                                              
|The State Bank                     |        | 34,268                      |                                                              
|Davison State Bank                 |        | 5,126                       |                                                              
|West Michigan Community Bank       |        | 11,845                      |                                                              
|Tier 1 Capital                     |       
|(to Risk Weighted Assets)          |       
|Consolidated                       |        | 46,756                      |                                                              
|The State Bank                     |        | 30,622                      |                                                              
|Davison State Bank                 |        | 4,665                       |                                                              
|West Michigan Community Bank       |        | 10,451                      |                                                              
|Tier 1 Capital (to Average Assets) |       
|Consolidated                       |        | 46,756                      |                                                              
|The State Bank                     |        | 30,622                      |                                                              
|Davison State Bank                 |        | 4,665                       |                                                              
|West Michigan Community Bank       |        | 10,451                      |                                                              

|                                   |  |         |  |    |     |        
|---------------------------------- |  | ------- |  | -- | --- | -------
|
|
|Total Capital                      |  |         |  |    |     |        
|(to Risk Weighted Assets)          | 
|Consolidated                       |  | $56,421 |  | 18 | .0% | $25,119
|The State Bank                     |  | 31,307  |  | 11 | .6  | 21,638 
|Davison State Bank                 |  | 4,844   |  | 11 | .6  | 3,353  
|Tier 1 Capital                     | 
|(to Risk Weighted Assets)          | 
|Consolidated                       |  | 53,007  |  | 16 | .9  | 12,559 
|The State Bank                     |  | 28,358  |  | 10 | .5  | 10,819 
|Davison State Bank                 |  | 4,380   |  | 10 | .5  | 1,677  
|Tier 1 Capital (to Average Assets) | 
|Consolidated                       |  | 53,007  |  | 14 | .0  | 15,125 
|The State Bank                     |  | 28,358  |  | 7  | .8  | 14,496 
|Davison State Bank                 |  | 4,380   |  | 9  | .4  | 1,861  

(Continued)

27.

---



FENTURA FINANCIAL, INC.NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS December 31, 2004 and 2003

# NOTE 13  FINANCIAL
INSTRUMENTS

The estimated fair values of the
Corporations financial instruments at December 31, are as follows (in thousands):

|                                | 2 0 0 4 | 2 0 0 3  
|------------------------------- | ------- | ---------
|
|Assets:                         |         |          
|Cash and cash equivalents       |         | $  27,255
|Securities - available for sale |         | 110,390  
|Securities - held to maturity   |         | 18,786   
|FHLB stock                      |         | 2,252    
|Loans held for sale             |         | 1,587    
|Loans                           |         | 387,929  
|Bank owned life insurance       |         | 6,861    
|Accrued interest receivable     |         | 2,335    
|Liabilities:                    |        
|Deposits                        |         | 491,065  
|Short-term borrowings           |         | 5,200    
|FHLB advances                   |         | 19,402   
|Repurchase agreements           |         | 10,000   
|Subordinated debentures         |         | 12,000   
|Accrued interest payable        |         | 676      

The following methods and assumptions
were used by the Corporation in estimating its fair value disclosures for financial
instruments:

Cash and cash equivalents The carrying amounts reported in the
balance sheet for cash and short-term instruments approximate their fair values.

Securities (including
mortgage-backed securities) Fair values for securities are based
on quoted market prices, where available. If quoted market prices are not available, fair
values are based on quoted market prices of comparable instruments.

Loans held for saleThe market value of these loans
represents estimated fair value. The market value is determined in the aggregate on the
basis of existing forward commitments or fair values attributable to similar loans.

(Continued)

28.

---



FENTURA FINANCIAL, INC.NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS December 31, 2004 and 2003

NOTE 13  FINANCIAL
INSTRUMENTS(Continued)

LoansFor variable rate loans that reprice
frequently and with no significant change in credit risk, fair values are based on
carrying values. The fair value for other loans are estimated using discounted cash flow
analysis, using interest rates currently being offered for loans with similar terms to
borrowers of similar credit quality. The carrying amount of accrued interest receivable
approximates its fair value.

Bank owned life insurance The carrying amounts reported in the
balance sheet for bank owned life insurance approximates their fair values.

Off-balance-sheet
instruments The Corporations
off-balance-sheet instruments approximate their fair values.

Deposit liabilitiesThe fair values disclosed for demand
deposits are, by definition equal to the amount payable on demand at the reporting date.
The carrying amounts for variable rate, fixed term money market accounts and certificates
of deposit approximate their fair values at the reporting date. Fair values for fixed
certificates of deposit are estimated using discounted cash flow calculation that applies
interest rates currently being offered on similar certificates. The carrying amount of
accrued interest payable approximates its fair value.

Short-term borrowings The carrying amounts of federal funds
purchased and other short-term borrowings approximate their fair values.

FHLB advances Rates currently available for FHLB
debt with similar terms and remaining maturities are used to estimate the fair value of
the existing debt.

Repurchase agreementsRates currently available for
repurchase agreements with similar terms and remaining maturities are used to estimate the
fair value of the existing repurchase agreements.

Subordinated DebenturesRates currently available for
subordinated debentures with similar terms and remaining maturities are used to estimate
the fair value of the existing subordinated debentures.

(Continued)

29.

---



FENTURA FINANCIAL, INC.NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS December 31, 2004 and 2003

NOTE 13  FINANCIAL
INSTRUMENTS(Continued)

LimitationsFair value estimates are made at a
specific point in time, based on relevant market information and information about the
financial instrument. These estimates do not reflect any premium or discount that could
result from offering for sale at one time the Corporations entire holdings of a
particular financial instrument. Because no market exists for a significant portion of the
Corporations financial instruments, fair value estimates are based on
managements judgments regarding future expected loss experience, current economic
conditions, risk characteristics and other factors. These estimates are subjective in
nature and involve uncertainties and matters of significant judgment and therefore cannot
be determined with precision. Changes in assumptions could significantly affect the
estimates.

Off-balance-sheet risk Some financial instruments, such as
loan commitments, credit lines, letters of credit, and overdraft protection, are issued to
meet customer financing needs. These are agreements to provide credit or to support the
credit of others, as long as conditions established in the contract are met, and usually
have expiration dates. Commitments may expire without being used. Off-balance-sheet risk
to credit loss exists up to the face amount of these instruments, although material losses
are not anticipated. The same credit policies are used to make such commitments as are
used for loans, including obtaining collateral at exercise of the commitment.

The contractual amount of financial
instruments with off-balance-sheet risk was as follows at year- end (in thousands):

|                                             | 2004 | 2003   
|-------------------------------------------- | ---- | -------
|Commitments to make loans (at market rates)  |      | $47,687
|Unused lines of credit and letters of credit |      | 69,555 

Commitments to make loans are
generally made for periods of 90 days or less. At December 31, 2004, $3,758,000 of
the outstanding loan commitments had fixed interest rates ranging from 6.0% to 7.4% and
maturities ranging from three years to seven years.

(Continued)

30.

---



FENTURA FINANCIAL, INC.NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS December 31, 2004 and 2003

# NOTE 14  PARENT
ONLY CONDENSED FINANCIAL INFORMATION

The condensed financial information
that follows presents the financial condition of Fentura Financial, Inc. (parent company
only), along with the results of its operations and its cash flows.

CONDENSED BALANCE SHEETS December 31 (in
thousands)

|                                              | 2004 | 2003      
|--------------------------------------------- | ---- | ----------
|ASSETS                                        |      |           
|Cash and cash equivalents                     |      | $      524
|Securities available for sale, at market      |      | 1,045     
|Other assets                                  |      | 674       
|Investment in subsidiaries                    |      | 53,949    
|                                              |      |           
|                                              |      | $ 56,192  
|                                              |      |           
|STOCKHOLDERS' EQUITY                          |     
|Other liabilities                             |      | $      473
|Other borrowings                              |      | 750       
|Subordinated debt                             |      | 12,000    
|Common stock                                  |      | 33,110    
|Retained earnings                             |      | 10,514    
|Accumulated other comprehensive income (loss) |      | (655      
|                                              |      |           
|                                              |      | $ 56,192  
|                                              |      |           

CONDENSED STATEMENTS OF
INCOME Years ended December 31 (in
thousands)

|                                               | 2004 | 2003       | 2002
|---------------------------------------------- | ---- | ---------- | ----
|Interest on securities                         |      | $        1 |     
|Other income                                   |      | 2          |     
|Dividends from subsidiaries                    |      | 621        |     
|Interest expense                               |      | (569       | )   
|Operating expenses                             |      | (349       | )   
|Equity in undistributed income of subsidiaries |      | 4,638      |     
|                                               |      |            |     
|Income before income taxes                     |      | 4,344      |     
|Federal income tax expense (benefit)           |      | (310       | )   
|                                               |      |            |     
|Net income                                     |      | $ 4,034    |     
|                                               |      |            |     

(Continued)

31.

---



FENTURA FINANCIAL, INC.NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS December 31, 2004 and 2003

# NOTE 14 - PARENT ONLY
CONDENSED FINANCIAL INFORMATION (Continued)

CONDENSED STATEMENTS OF
CASH FLOWS Years ended December 31 (in
thousands)

|                                               | 2004 | 2003       | 2002
|---------------------------------------------- | ---- | ---------- | ----
|Cash flows from operating activities           |      |            |     
|Net income                                     |      | $   4,034  |     
|Amortization                                   |      | 1          |     
|Change in other assets                         |      | (2,028     | )   
|Change in other liabilities                    |      | 56         |     
|Equity in undistributed income of subsidiary   |      | (4,638     | )   
|                                               |      |            |     
|Net cash from operating activities             |      | (7,705     | )   
|Cash flows provided by investing activities    |     
|Purchase of equity securities                  |      | (650       | )   
|Sales and maturities of securities - AFS       |      | 300        |     
|Purchases of securities - AFS                  |      | 0          |     
|Purchase of West Michigan Financial Corp       |      | (12,900    | )   
|Investment in subsidiary                       |      | (1,700     | )   
|                                               |      |            |     
|Net cash from investing activities             |      | (14,950    | )   
|Cash flows used in financing activities        |     
|Issuance of subordinated debt                  |      | 0          |     
|Net short-term borrowings                      |      | 750        |     
|Dividends paid                                 |      | (1,758     | )   
|Stock repurchase                               |      | (122       | )   
|Proceeds from stock issuance                   |      | 463        |     
|                                               |      |            |     
|Net cash from financing activities             |      | (667       | )   
|                                               |      |            |     
|Increase in cash and cash equivalents          |      | (18,192    | )   
|Cash and cash equivalents at beginning of year |      | 18,716     |     
|                                               |      |            |     
|Cash and cash equivalents at end of year       |      | $      524 |     
|                                               |      |            |     

(Continued)

32.

---



FENTURA FINANCIAL, INC.NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS December 31, 2004 and 2003

# NOTE 15 
ACQUISITION

On October 15, 2003, the Corporation announced
the signing of a definitive agreement to acquire West Michigan Financial Corporation
(WMFC), a commercial bank headquartered in Hudsonville, Michigan. The purpose
of the acquisition was to establish a presence in the West Michigan market resulting in a
foundation to grow the Corporations asset base, primarily loans, in the West Michigan
market. Under the terms of the transaction, the Corporation acquired all of the
outstanding stock of WMFC in exchange for cash. The total cost of the transaction was
$12.9 million. The Corporation closed the transaction on March 15, 2004.

The acquisition has been accounted
for using the purchase method of accounting, and accordingly, the purchase price has been
allocated to the tangible and identified intangible assets purchased and the liabilities
assumed based upon the estimated fair values at the date of acquisition. Identified
intangible assets and purchase accounting fair value adjustments are being amortized under
various methods over the expected lives of the corresponding assets and liabilities.
Goodwill will not be amortized, but will be reviewed for impairment on an annual basis.
Goodwill is tax deductible over 15 years. Identified intangible assets aggregate to $1.7
million and include a core deposit intangible and customer relationship value related to
West Michigan Financial Corporations loan, deposit and wealth management customers.
Goodwill aggregates to $7.9 million. Intangible assets recorded for the acquisition that
are subject to amortization are estimated as follows in thousands of dollars:

|                                  | Amount
|--------------------------------- | ------
|Core deposits intangible          |       
|Customer relationships intangible |       

In conjunction with the acquisition,
the fair values of significant assets and liabilities assumed are as follows, stated in
thousands of dollars:

|                          | 
|------------------------- | 
|Cash and cash equivalents | 
|Securities                | 
|Loans                     | 
|Acquisition intangibles   | 
|Deposits                  | 
|Other borrowings          | 

The following table presents pro
forma information stated in thousands of dollars for the years ended December 31, 2004 and
2003 as if the acquisition of WMFC had occurred at the beginning of 2004 and 2003. The pro
forma information includes adjustments for the amortization of intangibles arising from
the transaction, the elimination of acquisition related expenses, and the related income
tax effects. WMFC has been included in results since March 15, 2004. The pro forma
financial information is not necessarily indicative of the results of operations as they
would have been had the transactions been effected on the assumed dates.

(Continued)

33.

---



FENTURA FINANCIAL, INC.NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS December 31, 2004 and 2003

# NOTE 15 
ACQUISITION (Continued)

|                                    | 2004 | 2003     
|----------------------------------- | ---- | ---------
|Interest income                     |      | $27,485  
|Interest expense                    |      | 8,691    
|                                    |      |          
|Net interest income                 |      | 18,794   
|Provision for loan losses           |      | 1,426    
|                                    |      |          
|Net interest income after provision |      | 17,368   
|Noninterest income                  |      | 7,555    
|Noninterest expense                 |      | 19,167   
|                                    |      |          
|Income before federal income tax    |      | 5,756    
|Federal income tax expense          |      | 1,586    
|                                    |      |          
|Net income                          |      | $  4,170 
|                                    |      |          
|Basic earnings per share            |      | $    2.21
|Diluted earnings per share          |      | 2.20     

# NOTE 16  SUMMARY
OF QUARTERLY FINANCIAL DATA  UNAUDITED

The unaudited quarterly results of
operations for 2004 and 2003 are as follows (in thousands except per share data):

|                      | FirstQuarter | SecondQuarter | ThirdQuarter | FourthQuarter
|--------------------- | ------------ | ------------- | ------------ | -------------
|2004                  |              |               |              |              
|Interest income       |              | $5,257        |              | $6,512       
|Interest expense      |              | 1,694         |              | 2,082        
|Provision for loan lo |              | 273           |              | 363          
|Noninterest income    |              | 1,611         |              | 1,831        
|Noninterest expenses  |              | 3,795         |              | 4,791        
|Income before income  |              | 1,106         |              | 1,107        
|Provision for income  |              | 284           |              | 286          
|Net income            |              | 822           |              | 821          
|Earnings per share    |             
|Basic                 |              | .44           |              | .44          
|Diluted               |              | .44           |              | .43          

The Corporation sold SBA and credit
card loans of $4 million in the fourth quarter, which produced a gain of $464,000. The
loans were sold to reduce future credit risk.

(Continued)

34.

---



FENTURA FINANCIAL, INC.NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS December 31, 2004 and 2003

# NOTE 16 - SUMMARY OF
QUARTERLY FINANCIAL DATA - UNAUDITED (Continued)

|                      |  |        |  |       
|--------------------- |  | ------ |  | ------
|2003                  |  |        |  |       
|Interest income       |  | $4,446 |  | $4,516
|Interest expense      |  | 1,318  |  | 1,320 
|Provision for loan lo |  | 296    |  | 668   
|Noninterest income    |  | 1,575  |  | 2,053 
|Noninterest expenses  |  | 3,303  |  | 3,365 
|Income before income  |  | 1,104  |  | 1,216 
|Provision for income  |  | 283    |  | 306   
|Net income            |  | 821    |  | 910   
|Earnings per share    | 
|Basic                 |  | .44    |  | .48   
|Diluted               |  | .44    |  | .48   

(Continued)

35.

---



FENTURA FINANCIAL, INC.NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS December 31, 2004 and 2003

# Managements
Discussion and Analysis of Financial Condition and Results of Operations

This section provides a narrative
discussion and analysis of the consolidated financial condition and results of operations
of Fentura Financial, Inc. (the Corporation), together with its subsidiaries, The State
Bank, Davison State Bank, and West Michigan Community Bank (the Banks), for the years
ended December 31, 2004, 2003, and 2002. The supplemental financial data included
throughout this discussion should be read in conjunction with the primary financial
statements presented on pages 5 through 35 of this report. It provides a more detailed and
comprehensive review of operating results and financial position than could be obtained
from a reading of the financial statements alone. The financial data and results of
operations for West Michigan Community Bank are included only from the date of acquisition
on March 15, 2004.

# TABLE 1           Selected
Financial Data

|$ in thousands except per share data
     And ratios | 2004 | 2003        | 2002 | 2001        | 2000
|---------------------------------------------------- | ---- | ----------- | ---- | ----------- | ----
|                                                     |     
|Summary of Consolidated Statements of Income:        |      |             |      |             |     
|Interest Income                                      |      | $  26,094   |      | $  18,438   |     
|Interest Expense                                     |      | 8,263       |      | 5,601       |     
|                                                     |      |            
|Net Interest Income                                  |      | 17,831      |      | 12,837      |     
|Provision for Loan Losses                            |      | 1,389       |      | 1,319       |     
|                                                     |      |            
|Net Interest Income after Provision                  |      | 16,442      |      | 11,518      |     
|Total Other Operating Income                         |      | 7,292       |      | 6,866       |     
|Total Other Operating Expense                        |      | 18,176      |      | 13,276      |     
|                                                     |      |            
|Income Before Income Taxes                           |      | 5,558       |      | 5,108       |     
|Provision for Income Taxes                           |      | 1,524       |      | 1,320       |     
|                                                     |      |            
|Net Income                                           |      | $    4,034  |      | $    3,788  |     
|                                                     |      |            
|Net Income Per Share - Basic                         |      | $      2.14 |      | $      2.01 |     
|Net Income Per Share - Diluted                       |      | $      2.13 |      | $      2.01 |     
|                                                    
|Summary of Consolidated Balance Sheets:              |     
|Assets                                               |      | $584,890    |      | $419,966    |     
|Securities, including FHLB stock                     |      | 131,428     |      | 126,856     |     
|Loans, including loans held for sale                 |      | 395,017     |      | 254,340     |     
|Deposits                                             |      | 491,065     |      | 348,525     |     
|Stockholders' Equity                                 |      | 42,969      |      | 40,882      |     
|                                                    
|Other Financial and Statistical Data:                |     
|Tier 1 Capital to Risk Weighted Assets               |      | 10.20       | %    | 16.90       | %   
|Total Capital to Risk Weighted Assets                |      | 11.40       | %    | 18.00       | %   
|Tier 1 Capital to Average Assets                     |      | 8.70        | %    | 14.00       | %   
|Total Cash Dividends                                 |      | $    1,758  |      | $    1,966  |     
|Book Value Per Share                                 |      | $    22.74  |      | $    21.74  |     
|Cash Dividends Paid Per Share                        |      | $      0.92 |      | $      0.92 |     
|Period End Market Price Per Share                    |      | $    36.75  |      | $    31.45  |     
|Dividend Pay-out Ratio                               |      | 43.58       | %    | 51.90       | %   
|Return on Average Stockholders' Equity               |      | 9.72        | %    | 9.32        | %   
|Return on Average Assets                             |      | 0.74        | %    | 1.00        | %   
|Net Interest Margin                                  |      | 3.70        | %    | 3.88        | %   
|Total Equity to Assets at Period End                 |      | 7.34        | %    | 9.73        | %   

36.

---



# RESULTS OF OPERATIONS

The Corporation achieved net income
of $4,034,000 for the year of 2004, an increase of $246,000 or 6.5%. Net income increased
primarily due to the acquisition of West Michigan Financial Corporation and the increased
net interest income during 2004. Contributing to the 2004 results was the increase in
total noninterest income of $426,000, a 6.2% increase over the noninterest income in the
prior year. Non-interest expense increased by $4,900,000 or 36.9%. We expect that interest
rates will remain steady or possibly increase in 2005, which should have a positive impact
on our operations.

Standard performance indicators used
in the banking industry help management evaluate the Corporations performance. Two
of these performance indicators are return on average assets and return on average equity.
For 2004, 2003, and 2002 respectively, the Corporation posted a return on average assets
of 0.74%, 1.00%, and 1.10%. Return on average equity was 9.72% in 2004, 9.32% in 2003, and
8.78% in 2002. While the Corporation has a very strong capital position, the 5.1% increase
in our equity in 2004,and the $12 million of trust preferred securities, greatly enhance
our ability to grow. Total assets increased $165 million in 2004, $79 million in 2003, and
$31 million in 2002. Diluted earnings per share were $2.13 in 2004, $2.01 in 2003, and
$1.81 in 2002.

# NET INTEREST INCOME

Net interest income, the principal
source of income, is the amount of interest income generated by earning assets
(principally securities and loans) less interest expense paid on interest bearing
liabilities (largely deposits and other borrowings).

A critical task of management is to
price assets and liabilities so that the spread between the interest earned on assets and
the interest paid on liabilities is maximized without unacceptable risk. While interest
rates on interest earning assets and interest bearing liabilities are subject to market
forces, in general, the Corporation can exert more control over deposit costs than earning
asset rates. Loan products carry either fixed rates of interest or rates tied to market
indices determined independently. The Corporation sets its own rates on deposits,
providing management with some flexibility in determining the timing and proportion of
rate changes for the cost of its deposits.

Table 2 summarizes the changes in net
interest income resulting from changes in volume and rates for the years ended December
31, 2004 and 2003. Net interest income (displayed with consideration of full tax
equivalency), average balance sheet amounts, and the corresponding yields for the last
three years are shown in Table 3. Tax equivalent net interest income increased by
$5,021,000 in 2004, or 37.8% and decreased by $638,000 or 5.0% in 2003. The primary factor
contributing to the increase in net interest income was the acquisition of West Michigan
Community Bank in March of 2004. Also, contributing to the increase in net interest income
was the increase in loan and security volume and a slight decrease in interest expense.
The increase in volume increased net interest income to offset the decrease in net
interest margin.

As indicated in Table 3, for the year
ended December 31, 2004, the Corporations net interest margin was 3.70% compared
with 3.88% and 4.46% for the same period in 2003 and 2002, respectively. The decrease in
2004 was due to lower earning asset yields due to the historically low rate environment
and the addition of West Michigan Community Bank which had a significantly lower net
interest margin than the other two banks in the Corporation. The decrease in margin in
2003 and 2002 was attributable to a decrease in the Corporations earning asset
yields due to the cuts in the prime rate. Cost of funding decreased in response to
decreases in treasury rates and local competitors rates.

Average earning assets increased
44.6% in 2004. Average earning assets increased due to the Corporation purchasing West
Michigan Financial Corporation on March 15, 2004. Average earning assets increased 20.7%
in 2003, and decreased 0.3% in 2002. Loans, the highest yielding component of earning
assets, represented 72.9% of earning assets in 2004, compared to 69.3% in 2003 and 77.2%
in 2002. Average interest bearing liabilities increased 52.1% in 2004, 22.7% in 2003, and
0.9% in 2002. Non-interest bearing deposits amounted to 14.8% of average earning assets in
2004 compared with 15.4% in 2003 and 15.5% in 2002.

37.

---



# TABLE 2

# Changes in Net
Interest IncomeDue to Changes in
Average Volume and Interest Rates Years Ended December
31,

|                                   | INCREASE (DECREASE)2004 DUE TO: | INCREASE (DECREASE)2003 DUE TO:
|---------------------------------- | ------------------------------- | -------------------------------
|                                   |                                 |                                
|
|                                   |                                
|TAXABLE SECURITIES                 |                                 | $ 1,096                        
|TAX-EXEMPT SECURITIES              |                                 | (209                           
|FEDERAL FUNDS SOLD                 |                                 | (66                            
|TOTAL LOANS                        |                                 | 8,375                          
|LOANS HELD FOR SALE                |                                 | (88                            
|                                   |                                 |                                
|TOTAL EARNING ASSETS               |                                 | 9,108                          
|INTEREST BEARING DEMAND DEPOSITS   |                                 | 515                            
|SAVINGS DEPOSITS                   |                                 | 375                            
|TIME CDs $100,000 AND OVER         |                                 | 572                            
|OTHER TIME DEPOSITS                |                                 | 352                            
|OTHER BORROWINGS                   |                                 | 1,071                          
|                                   |                                 |                                
|TOTAL INTEREST BEARING LIABILITIES |                                 | 2,885                          
|                                   |                                 |                                
|NET INTEREST INCOME                |                                 | $ 6,223                        
|                                   |                                 |                                

38.

---



# TABLE 3 (000's omitted)

Summary of Net
Interest Income
                                                                        Years Ended
December 31,

|ASSETS                           | AVGBAL | 2004INC/EXP | YIELD | AVGBAL      | 2003INC/EXP | YIELD | AVGBAL | 2002INC/EXP | YIELD
|-------------------------------- | ------ | ----------- | ----- | ----------- | ----------- | ----- | ------ | ----------- | -----
|                                 |        |            
|Securities:                      |        |             |       |             |             |       |        |             |      
|U.S. Treasury and                |        | 106,512     |       | 2,916       |             | 2     | .74%   | 68,109      |      
|Government Agencies              |       
|State and Political (1)          |        | 15,354      |       | 1,130       |             | 7     | .36%   | 19,384      |      
|Other                            |        | 3,053       |       | 137         |             | 4     | .49%   | 1,950       |      
|                                 |        |             |       |            
|Total Securities                 |        | 124,919     |       | 4,183       |             | 3     | .35%   | 89,443      |      
|Fed Funds Sold                   |        | 9,308       |       | 134         |             | 1     | .44%   | 15,911      |      
|Loans:                           |       
|Commercial                       |        | 259,016     |       | 15,632      |             | 6     | .04%   | 159,752     |      
|Tax Free (1)                     |        | 4,708       |       | 297         |             | 6     | .31%   | 5,204       |      
|Real Estate-Mortgage             |        | 26,198      |       | 1,801       |             | 6     | .87%   | 15,276      |      
|Consumer                         |        | 70,408      |       | 4,482       |             | 6     | .37%   | 54,476      |      
|                                 |        |             |       |            
|Total loans                      |        | 360,330     |       | 22,212      |             | 6     | .16%   | 234,708     |      
|Allowance for Loan Loss          |        | (4,779      | )     |             |             |       |        | (3,247      | )    
|Net Loans                        |        | 355,551     |       | 22,212      |             | 6     | .16%   | 231,461     |      
|                                 |        |             |       |            
|Loans Held for Sale              |        | 884         |       | 50          |             | 5     | .66%   | 2,508       |      
|                                 |        |             |       |            
|TOTAL EARNING ASSETS             |        | $495,441    |       | $26,579     |             | 5     | .36%   | $342,570    |      
|                                 |        |            
|Cash Due from Banks              |        | 24,249      |       |             |             |       |        | 18,167      |      
|All Other Assets                 |        | 31,990      |       |             |             |       |        | 20,634      |      
|                                 |        |             |       |             |            
|TOTAL ASSETS                     |        | $ 546,901   |       |             |             |       |        | $ 378,124   |      
|                                 |        |             |       |             |            
|LIABILITIES & SHAREHOLDERS'      |       
|EQUITY:                          |       
|Deposits:                        |       
|Interest bearing - DDA           |        | 108,704     |       | 1,194       |             | 1     | .10%   | 53,897      |      
|Savings Deposits                 |        | 149,099     |       | 2,287       |             | 1     | .53%   | 117,138     |      
|Time CD's $100,000 and Over      |        | 39,260      |       | 1,228       |             | 3     | .13%   | 28,804      |      
|Other Time CD's                  |        | 90,202      |       | 2,295       |             | 2     | .53%   | 73,759      |      
|                                 |        |             |       |            
|Total Interest Bearing           |        | 387,918     |       | 7,004       |             | 1     | .81%   | 273,598     |      
|Deposits                         |       
|Other Borrowings                 |        | 41,082      |       | 1,259       |             | 3     | .06%   | 8,502       |      
|                                 |        |             |       |            
|INTEREST BEARING LIABILITIES     |        | $ 429,000   |       | $     8,263 |             | 1     | .93%   | $282,100    |      
|                                 |        |            
|Non-interest bearing - DDA       |        | 73,553      |       |             |             |       |        | 52,853      |      
|All Other Liabilities            |        | 2,618       |       |             |             |       |        | 2,522       |      
|Shareholders Equity              |        | 41,730      |       |             |             |       |        | 40,649      |      
|                                 |        |             |       |             |            
|TOTAL LIABILITIES and S/H EQUITY |        | $ 546,901   |       |             |             |       |        | $ 378,124   |      
|                                 |        |             |       |             |            
|Net Interest Rate Spread         |        |             |       |             |             | 3     | .44%   |             |      
|Net Interest Income/Margin       |        |             |       | $   18,316  |             | 3     | .70%   |             |      
|                                 |        |             |       |             |             |       |        |             |      

(1)    
           Presented on a fully taxable equivalent basis using a federal income tax
          rate of 34%.

39.

---



# ALLOWANCE AND PROVISION
FOR LOAN LOSSES

The allowance for loan losses
reflects managements judgment as to the level considered appropriate to absorb
probable incurred losses in the loan portfolio. The Corporations methodology in
determining the adequacy of the allowance is based on ongoing quarterly assessments and
relies on several key elements, which include specific allowances for identified problem
loans and a formula based risk allocated allowance for the remainder of the portfolio.
This includes a review of individual loans, size and composition of the loan portfolio,
historical loss experience, current economic conditions, financial condition of borrowers,
the level and composition of non-performing loans, portfolio trends, estimated net
charge-offs, and other pertinent factors. Although reserves have been allocated to various
portfolio segments, the allowance is general in nature and is available for the portfolio
in its entirety. At December 31, 2004, the allowance for loan losses was $5,501,000 or
1.40% of total loans. This compares with $3,414,000 or 1.34% at December 31, 2003 and
$3,184,000, or 1.42%, at December 31, 2002. Management believes that the allowance for
loan losses is appropriate given identified risk in the loan portfolio based on asset
quality.

The provision for loan losses was
$1,389,000 in 2004 and $1,319,000 and $426,000 in 2003 and 2002, respectively, with
$457,000 of the 2004 provision attributable to West Michigan Community Bank. The increase
was due to the addition of West Michigan Community Bank; if the acquisition had not been
made the provision would have been $932,000 for 2004. The 2004 provision level reflects
continued loan growth in the subsidiary banks coupled with a slight decline in
nonperforming assets and lower net charge-offs. The increase in the provision in 2003
reflects managements effort to maintain adequate reserves due to an unanticipated
charge-off of one large commercial relationship in the first half of the year. In 2002,
loans charged-off had a modest increase due to certain non-performing commercial loans.

Table 4 summarizes loan losses and
recoveries from 2000 through 2004. During 2004 the Corporation experienced net charge-offs
of $461,000, compared with net charge-offs of $1,089,000 and $367,000 in 2003 and 2002,
respectively. The net charge-off ratio is the net of charge-off loans minus the recoveries
from loans divided by gross loans. Accordingly, the net charge-off ratio for 2003 was .12%
compared to .43% and .16% at the end of 2003 and 2002, respectively. The net charge-off
ratio decreased in 2004 due to fewer charge offs in the commercial and consumer
portfolios. In 2003, one large commercial relationshipaccounted for $836,000 of the net
charge-offs for the year. In 2002, the net charge-off ratio decreased due to an increase
in commercial recoveries.

The Corporation maintains formal
policies and procedures to control and monitor credit risk. Management believes the
allowance for loan losses is adequate to meet normal credit risks in the loan portfolio.
The Corporations loan portfolio has no significant concentrations in any one
industry or any exposure in foreign loans. The Corporation has not extended credit to
finance highly leveraged transactions nor does it intend to do so in the future.
Employment levels and other economic conditions in the Corporations local markets
may have a significant impact on the level of credit losses. Management continues to
identify and devote attention to credits that may not be performing as agreed. Management
does not expect the level of the allowance for loan losses as a percentage of gross loans
to change significantly in 2005. Non-performing loans are discussed further in the section
titled Non-Performing Assets.

40.

---



# TABLE 4

|Analysis of the Allowance for Loan Losses  | Years Ended December 31,
|------------------------------------------ | ------------------------
|
|                                           |                         
|Balance Beginning of Period                |                         
|                                           |                         
|Charge-offs:                               |                         
|Commercial, Financial and Agricultural     |                         
|Real Estate-Construction                   |                         
|Real Estate-Mortgage                       |                         
|Installment Loans to Individuals           |                         
|                                           |                         
|Total Charge-offs                          |                         
|                                           |                         
|Recoveries:                                |                         
|Commercial, Financial and Agricultural     |                         
|Real Estate-Construction                   |                         
|Real Estate-Mortgage                       |                         
|Installment Loans to Individuals           |                         
|                                           |                         
|Total Recoveries                           |                         
|                                           |                         
|Net Charge-offs                            |                         
|                                           |                         
|Provision                                  |                         
|                                           |                         
|Addition from WMCB acquisition             |                         
|                                           |                         
|Balance at End of Period                   |                         
|                                           |                         
|Ratio of Net Charge-Offs During the Period |                         

# NON-INTEREST INCOME

Non-interest income was $7,292,000 in
2004, $6,866,000 and $5,394,000 in 2003 and 2002, respectively. These amounts represent an
increase of 6.2% in 2004 compared to 2003 and an increase of 27.3% comparing 2003 to 2002.

The most significant category of
non-interest income is service charges on deposit accounts. These fees were $3,738,000 in
2004, compared to $3,609,000 and $2,594,000 in 2003 and 2002, respectively. This was an
increase of $129,000 or 3.6% in 2004 and an increase of $1,015,000 or 39.1% in 2003. The
increase in 2004 was due to the addition of West Michigan Community Bank, which provided
$277,000 of service charges on deposit accounts. The increase in 2003 was due to the
overdraft privilege product being in place all year and a slight increase in business
deposit account service charges.

Gains on the sale of mortgage loans
originated by the Banks and sold in the secondary market were $510,000 in 2004, $1,258,000
in 2003, and $1,009,000 in 2002. The decrease of $748,000 in 2004 was due to higher
interest rates than in 2003 and 2002 and a continued slowdown of the refinance activity.
The 24.7% increase in 2003 was due to the increase in mortgage loan production caused by
an increase in new home purchases and refinancing activity due to low mortgage interest
rates. The Corporation sells the majority of the mortgage loans originated in the
secondary market on a servicing released basis; thus the Corporation did not receive
mortgage-servicing fees in 2004, 2003 or 2002.

Trust income increased $170,000 or
33.5% in 2004 to $677,000 compared with $507,000 in 2003 and $540,000 in 2002. The 33.5%
increase in 2004 was due primarily to the acquisition of West Michigan Community Bank that
provided $119,000 of additional trust income. The 6.1% decrease in 2003 was due to decline
in market value of trust assets.

In 2004, the Corporation did not
recognize any securities gains compared to 2003 when the Corporation did recognize a gain
on security transactions of $31,000 and the Corporation did not recognize any gains in
2002. In 2003, these gains were due to the Corporation selling some low yielding
securities and purchasing higher yielding securities.

41.

---



In 2003, the Corporation recognized a
gain on the sale of fixed assets of $201,000, due to the sale of a branch of one of the
Bank subsidiaries.

Other income and fees includes income
from the sale of checks, safe deposit box rent, merchant account income, ATM income, and
other miscellaneous income items. Other income and fees were $2,367,000 in 2004 compared
to $1,260,000 and $1,251,000 in 2003 and 2002, respectively. The increase in 2004 was due
to the gain on the sale of the credit card portfolio and the sale of some SBA loans, which
totaled $464,000. The corporation sold the credit card portfolio due to potential fraud
risk in the future and sold the SBA loans due to processing issues with the loans. Also,
the addition of West Michigan Community Bank did help increase other income in 2004. The
increase in 2003 was due to an increase debit card and ATM income.

# NON-INTEREST EXPENSE

Total non-interest expense was
$18,176,000 in 2004 compared to $13,276,000 in 2003 and $12,253,000 in 2002. This was an
increase of 36.9% in 2004 and 8.4% in 2003.

Salaries and employee benefits, the
Corporations largest operating expense category, were $9,956,000 in 2004, compared
with $6,981,000 in 2003, and $6,454,000 in 2002. Increased costs are primarily a result of
the West Michigan Community Bank acquisition that increased this category by $2,081,000.
The other portion of the increase is due to annual salary increases, increases in health
care expenses and staff additions in connection with new branch offices in Brighton,
Goodrich and Grandville, which all opened in 2004.

In 2004, equipment expenses were
$2,153,000 compared to $1,533,000 in 2003 and $1,563,000 in 2002, an increase of 40.4% in
2004 and a decrease of 1.9% in 2003. The increase in 2004 was primarily attributable to
the acquisition of West Michigan Community Bank, which totaled $388,000 in 2004. Also, the
increase in 2004 was due in part to equipment maintenance cost increasing due to more
equipment to cover and an increase in equipment depreciation. The slight decrease in 2003
was due to lower rental costs and depreciation expense.

Occupancy expenses associated with
the Corporations facilities were $1,633,000 in 2004 compared to $1,116,000 in 2003
and $1,061,000 in 2002. In 2004, this was an increase of 46.3% and in 2003 an increase of
5.2%. The increase of $517,000 in 2004 was due to the opening of three branch offices
(Goodrich, Brighton & Grandville) and the acquisition of West Michigan Community Bank,
which had occupancy expenses of $303,000 in 2004. The increase in 2003 was due to higher
property taxes, and expenses associated with opening the new Grand Blanc extension office.

Office supplies were $349,000 in 2004
compared to $300,000 in 2003 and $ 305,000 in 2002. In 2004, this was an increase of 16.3%
and in 2003 a decrease of 1.6 %. The increase of $49,000 in 2004 was due to West Michigan
Community Bank acquisition, which had office supplies in 2004 that totaled $56,000. The
slight decrease in 2003 was due to reduction in various normal office supplies.

Loan and collection expenses were
$289,000 in 2004 compared to $280,000 in 2003, and $183,000 in 2002. The slight increase
in 2004 of 3.2% was due to the acquisition of West Michigan Community Bank that had loan
and collection expenses of $60,000 in 2004. The increase of 53.0% in 2003 was due to the
other real estate and collection efforts pertaining to a large charge off during the year.

Advertising expenses were $499,000 in
2004 compared to $373,000 in 2003, and $315,000 in 2002. The increase of 33.8% was due to
the acquisition of West Michigan Community Bank, which had advertising expenses of
$132,000 in 2004. The 18.4% increase in advertising expense in 2003 was due to broader
advertising efforts in the Grand Blanc market.

42.

---



Other professional service fees
include audit fees, consulting fees, legal fees, and various other professional services.
Other professional services were $1,031,000 in 2004 compared to $1,171,000 in 2003, and
$1,100,000 in 2002. The decrease of 12.0% in 2004 was due to having lower consulting fees
pertaining to the overdraft privilege product. The increase of 6.5% in 2003 was due to
higher consulting fees pertaining to the implementation of the overdraft privilege
product.

Other general and administrative
expenses were $2,266,000 in 2004 compared to $1,522,000 in 2003, and $1,272,000 in 2002.
The increase of $744,000 in 2004 was primarily due to the acquisition of West Michigan
Community Bank that had other expenses of $480,000 in 2004. Also, other losses and
business development expenses increased in 2004. The increase of $250,000 or 19.7% in 2003
was due to higher other losses from charged off deposit accounts and higher business
development expenses. The decreases in these expenses were due to lower other losses from
charged off accounts and lower correspondent bank charges in 2002.

# FINANCIAL CONDITION

Proper management of the volume and
composition of the Corporations earning assets and funding sources is essential for
ensuring strong and consistent earnings performance, maintaining adequate liquidity and
limiting exposure to risks caused by changing market conditions. The Corporations
securities portfolio is structured to provide a source of liquidity through maturities and
to generate an income stream with relatively low levels of principal risk. The Corporation
does not engage in securities trading. Loans comprise the largest component of earning
assets and are the Corporations highest yielding assets. Client deposits are the
primary source of funding for earning assets while short-term debt and other sources of
funds could be utilized if market conditions and liquidity needs change.

The Corporations total assets
averaged $547 million for 2004 exceeding 2003s average of $378 million by $169
million or 44.6%. The Corporation acquired West Michigan Financial Corporation on March
15, 2004, which has assets of $137 million. The Corporation entered into a security
leverage strategy in 2003, which entailed borrowing $12.5 million of repurchase agreements
and using $12.5 million of excess liquidity to purchase $25 million of mortgage-backed
securities that returned a positive spread and increased net interest income for the
Corporation. Average loans comprised 65.9% of total average assets during 2004 compared to
62.1% in 2003. Loans grew $125.6 million on average, with commercial loans leading the
advance by $99.3 million or 62.1%. The ratio of average non-interest bearing deposits to
total deposits was 15.9% in 2004 compared to 16.2% during 2003. Interest bearing deposits
comprised 90.4% of total average interest bearing liabilities during 2004, down from 97.0%
during 2003. The Corporations year-end total assets were $585 million for 2004 up
from $420 million in 2003. The increase was due to the higher loan demand and the
acquisition of West Michigan Community Bank in 2004.

# SECURITIES PORTFOLIO

Securities totaled $129,177,000 at
December 31, 2004 compared to $126,002,000 at December 31, 2003. This was an increase of
$3,175,000 or 2.5%. The increase in 2004 resulted principally from the West Michigan
Ccommunity Band acquisition and the Corporations other security portfolios decreased
to fund higher loan demand. At December 31, 2004 these securities comprised 24.4% of
earning assets, up from 32.8% at December 31, 2003. The Corporation considers all of its
securities as available for sale except for Michigan tax-exempt securities and a few
mortgage backed securities, which are classified as held to maturity. Increases in loan
balances from new loan growth in 2004 did not exceed the amount of deposit growth, which
coupled with the slight increase in securities in 2004 accounts for the slight increase in
federal funds sold. Fed funds sold were $4,550,000 at December 31, 2004 compared with
$3,650,000 at December 31, 2003.

The Corporations present
policies with respect to the classification of securities are discussed in Note 1 to the
Consolidated Financial Statements. As of December 31, 2004, the estimated aggregate fair
value of the Corporations securities portfolio was $991,000 below amortized cost. At
December 31, 2004 gross unrealized gains were $317,000 and gross unrealized losses were
$1,308,000. A summary of estimated fair values and unrealized gains and losses for the
major components of the securities portfolio is provided in Note 3 to the Consolidated
Financial Statements. Yields on municipal securities presented in Table 5 below have not
been tax effected.

43.

---



# TABLE 5 Analysis and Maturities
of Securities

|(000's omitted)             | AmortizedCost | FairValue     | Yield
|--------------------------- | ------------- | ------------- | -----
|AVAILABLE FOR SALE          |               |               |      
|U.S. Agencies               |              
|One year or less            |               | $           0 |      
|Over one through five years |               | 27,676        |      
|Over five through ten years |               | 18,557        |      
|Over ten years              |               | 2,000         |      
|                            |               |              
|Total                       |               | 48,233        |      
|Mortgage-Backed             |              
|One year or less            |               | $           0 |      
|Over one through five years |               | 9             |      
|Over five through ten years |               | 16,623        |      
|Over ten years              |               | 38,407        |      
|                            |               |              
|Total                       |               | 55,039        |      
|State and Political         |              
|One year or less            |               | $       150   |      
|Over one through five years |               | 1,774         |      
|Over five through ten years |               | 2,464         |      
|Over ten years              |               | 2,678         |      
|                            |               |              
|Total                       |               | 7,066         |      
|Equity Securities           |               | $    1,045    |      
|HELD TO MATURITY            |              
|Mortgage-Backed             |              
|One year or less            |               | $           8 |      
|Over one through five years |               | 15            |      
|Over five through ten years |               | 0             |      
|Over ten years              |               | 0             |      
|                            |               |              
|Total                       |               | 23            |      
|State and Political         |              
|One year or less            |               | $    8,507    |      
|Over one through five years |               | 4,028         |      
|Over five through ten years |               | 3,756         |      
|Over ten years              |               | 2,472         |      
|                            |               |              
|Total                       |               | 18,763        |      
|Total Securities            |               | $130,169      |      

# LOAN PORTFOLIO

The Corporation extends credit
primarily within in its local markets in Genesee, Oakland, and Livingston counties and in
its new local markets in Kent and Ottawa counties of the west side of Michigan. The
Corporations commercial loan portfolio is widely diversified with no concentration
within a single industry that exceeds 10% of total loans. The Corporations loan
portfolio balances are summarized in Table 6.

44.

---



Total loans increased $140,677,000
for the year ended December 31, 2004, with total loans comprising 74.4% of earning assets
as compared to 75.6% of December 31, 2003 earning assets. The increase was primarily
due to the acquisition of West Michigan Community Bank in 2004 and the growth of the
commercial loan portfolio in The State Bank.Economic conditions remained reasonably
steady throughout 2004 in southeastern Michigan and in west Michigan. The steadiness of
the economy supported continued commercial business growth including commercial
development. Accordingly, the Corporation experienced strong demand for commercial loans.
In 2004, commercial loans increased $82,562,000 to $229,012,000 or 56.4%. Also, real
estate construction and mortgage loans increased $28,364,000 or 86.2% in 2004. Consumer
loans increased $14,888,000 or 26.8% in 2004. In 2003, commercial loans increased
approximately $16,888,000 to $146,450,000 or 13.0%. Additionally, real estate construction
and development loans increased $5,881,000 or 21.8% to $32,913,000 at December 31, 2003.
Consumer loans stayed steady for 2003.

Management expects the economy to
support continued growth and development in 2005 and will aggressively seek out new loan
opportunities while continuing its efforts to maintain sound credit quality.

# TABLE 6 Loan Portfolio

|December 31,(000's omitted) | 2004 | 2003     | 2002 | 2001     | 2000
|--------------------------- | ---- | -------- | ---- | -------- | ----
|                            |     
|Commercial                  |      | $229,012 |      | $146,450 |     
|Real estate - construction  |      | 61,278   |      | 32,913   |     
|Real estate - mortgage      |      | 32,705   |      | 18,335   |     
|Consumer                    |      | 70,435   |      | 55,547   |     
|                            |      |         
|Total                       |      | $393,430 |      | $253,245 |     
|                            |      |         

The Corporation originates primarily
residential and commercial real estate loans, commercial, construction, and consumer
loans. The Corporation estimates that 80% of the loan portfolio is based in Genesee and
Livingston counties within southeast Michigan and Kent and Ottawa counties in west
Michigan. The ability of the Corporations debtors to honor their contracts is
dependent upon the real estate and general economic conditions in the areas.

# TABLE 7 Maturities of the Loan
Portfolio by Loan Type

|December 31, 2004(000's omitted) | WithinOneYear | One-FiveYears | AfterFiveYears | Total   
|-------------------------------- | ------------- | ------------- | -------------- | --------
|Commercial                       |               | $  53,641     |                | $125,637
|Real estate - construction       |               | 55,821        |                | 4,077   
|                                 |               | 14,989        |                | 6,046   
|Consumer                         |               | 9,079         |                | 21,016  
|                                 |               |               |                |         
|                                 |               | $133,530      |                | $156,776
|                                 |               |               |                |         

# TABLE 8 Maturities of the Loan Portfolio
by Rate Categories

|December 31, 2004(000's omitted) | WithinOneYear | One-FiveYears | AfterFiveYears | Total    
|-------------------------------- | ------------- | ------------- | -------------- | ---------
|
|Loans:                           |               |               |                |          
|Fixed Rate                       |               | $  41,649     |                | $  81,522
|Variable Rate                    |               | 91,881        |                | 75,254   
|                                 |               |               |                |          
|                                 |               | $133,530      |                | $156,776 
|                                 |               |               |                |          

45.

---



Credit risk is managed via specific
credit approvals and monitoring procedures. The Corporations outside loan review
function examines the loan portfolio on a periodic basis for compliance with credit
policies and to assess the overall credit quality of the loan portfolio. These procedures
provide management with information on an ongoing basis for setting appropriate direction
and taking corrective action as needed.

The Corporation closely monitors its
construction and commercial mortgage loan portfolios. Construction loans at December 31,
2004, which comprised 15.6% of total loans, totaled $61,278,000 as compared to $32,913,000
and $27,032,000 at the end of 2003 and 2002, respectively.

The construction and commercial real
estate loan properties are located principally in the Corporations local markets.
Included are loans to various industrial and professional organizations. The Corporation
believes that these portfolios are well diversified and do not present a significant risk
to the Banks.

NON-PERFORMING ASSETS

Non-performing assets include loans
on which interest accruals have ceased, real estate acquired through foreclosure, loans
past due 90 days or more and still accruing and renegotiated loans. Table 9 represents the
levels of these assets at December 31, 2000 through 2004. Non-performing assets decreased
slightly at December 31, 2004 as compared to 2003. Other Real Estate Owned decreased
$873,000 in 2004, however, Other Real Estate In Redemption increased by $672,000, which
had one residential property that comprised $727,000 of the $856,000 balance at the end of
the year. The majority of the properties are commercial and marketability is dependent on
the real estate market. One single-family residential property comprises $856,000 of the
outstanding balance at the end of 2004. Non-performing loans decreased slightly as
compared to December 31, 2003. Renegotiated loans were reduced significantly due to
reclassification of a residential real estate secured loan to Other Real Estate In
Redemption. Non-accrual loans and loans past due over 90 days and still accruing interest
increased during this period. This increase was due to two commercial credits being
nonaccrual in one of the subsidiary banks.

The level and composition of
non-performing assets are affected by economic conditions in the Corporations local
markets. Non-performing assets, charge-offs, and provisions for loan losses tend to
decline in a strong economy and increase in a weak economy, potentially impacting the
Corporations operating results. In addition to non-performing loans, management
carefully monitors other credits that are current in terms of principal and interest
payments but, in managements opinion, may deteriorate in quality if economic
conditions change.

# TABLE 9Non-Performing Assets
and Past Due Loans (000s omitted)

|                                       | December 31,
|-------------------------------------- | ------------
|
|                                       |             
|Non-Performing Loans:                  |             
|Loans Past Due 90 Days or More & Still |             
|Accruing                               |             
|Non-Accrual Loans                      |             
|Renegotiated Loans                     |             
|                                       |             
|Total Non-Performing Loans             |             
|                                       |             
|Other Non-Performing Assets:           |             
|Other Real Estate                      |             
|Other Real Estate Owned in Redemption  |             
|Other Non-Performing  Assets           |             
|                                       |             
|Total Other Non-Performing Assets      |             
|                                       |             
|Total Non-Performing Assets            |             
|                                       |             
|Non-Performing Loans as a % of         |             
|Total Loans                            |             
|Non-Performing Assets as a % of        |             
|Total Loans and Other Real Estate      |             
|Allowance for Loan Losses as a % of    |             
|Non-Performing Loans                   |             
|Accruing Loans Past Due 90 Days or     |             
|More to Total Loans                    |             
|Non-performing Assets as a % of        |             
|Total Assets                           |             

46.

---



Table 10 reflects the allocation of
the allowance for loan losses and is based upon ranges of estimates and is not intended to
imply either limitations on the usage of the allowance or precision of the specific
amounts. The Corporation does not view the allowance for loan losses as being divisible
among the various categories of loans. The entire allowance is available to absorb any
future losses without regard to the category or categories in which the charged-off loans
are classified. Table 10 also reflects the percentage ratio of outstanding loans by
category to total loans at the end of each of the respective years.

# TABLE 10Allocation of the
Allowance for Loan Losses

|December 31,(000's omitted) | 2004 | 2003   | 2002 | 2001 | 2000
|--------------------------- | ---- | ------ | ---- | ---- | ----
|
|                           
|Commercial and              |      | $4,600 |      | 73   | .79%
|construction                |     
|Real estate mortgage        |      | 312    |      | 8    | .31%
|Consumer                    |      | 508    |      | 17   | .90%
|Unallocated                 |      | 81     |      |      |     
|                           
|Total                       |      | $5,501 |      | 100  | .00%
|                            |     

The following describes the
Corporations policy and related disclosures for impaired loans. The Corporation
maintains an allowance for impaired loans. A loan is considered impaired when management
determines it is probable that the principal and interest due under the contractual terms
of the loan will not be collected. In most instances, impairment is measured based on the
fair value of the underlying collateral. Impairment may also be measured based on the
present value of expected future cash flows discounted at the loans effective
interest rate. Interest income on impaired non-accrual loans is recognized on a cash
basis. Interest income on all other impaired loans is recorded on an accrual basis.

Certain of the Corporations
non-performing loans included in Table 9 are considered impaired. The Corporation measures
impairment on all large balance non-accrual commercial loans. Certain large balance
accruing loans rated watch or lower are also measured for impairment. Impairment losses
are believed to be adequately covered by the provision for loan losses. Large groups of
smaller balance homogeneous loans are collectively evaluated for impairment and include
certain smaller balance commercial loans, consumer loans, residential real estate loans,
and credit card loans, and are not included in the impaired loan data in the following
paragraphs.

At December 31, 2004, loans
considered to be impaired totaled $3,504,000. A specific allowance is required for all
except for a $139,000 loan. The average recorded investment in impaired loans was
$4,303,000 in 2004. The interest income recognized on impaired loans based on cash
collections totaled $192,000 during 2004.

At December 31, 2003, loans
considered to be impaired totaled $5,102,000. A specific allowance is required for all
except for a $66,000 loan. The average recorded investment in impaired loans was
$3,752,000 in 2003. The interest income recognized on impaired loans based on cash
collections totaled $160,000 during 2003.

The Corporation maintains policies
and procedures to identify and monitor non-accrual loans. A loan is placed on non-accrual
status when there is doubt regarding collection of principal or interest, or when
principal or interest is past due 90 days or more. Interest accrued but not collected is
reversed against income for the current quarter and charged to the allowance for loan
losses for prior quarters when the loan is placed on non-accrual status.

47.

---



# DEPOSITSTABLE 11

# Average Deposits Years Ended December 31,

|                        | 2004 | 2003      | 2002 | 2001 | 2000
|----------------------- | ---- | --------- | ---- | ---- | ----
|
|                        |     
|Non-int. bearing demand |      | $  73,553 |      |      |     
|Interest-bearing demand |      | 108,704   |      | 0    | .98%
|Savings                 |      | 149,099   |      | 1    | .09%
|Time                    |      | 129,462   |      | 3    | .05%
|                        |      |          
|Total                   |      | $460,818  |      | 1    | .44%
|                        |      |          

The Corporations average
deposit balances and rates for the past five years are summarized in Table 11. Total
average deposits were 41.2% higher in 2004 as compared to 2003. Deposit growth was derived
primarily from increases in all deposit categories and the acquisition of West Michigan
Community Bank. Interest-bearing demand deposits comprised 23.5% of total deposits,
savings deposits comprised 32.3% of total deposits, and time deposits comprised 28.1% of
total deposits.

As of December 31, 2004 certificates
of deposit of $100,000 or more accounted for approximately 10.4% of total deposits
compared to 7.1% at December 31, 2003. The maturities of these deposits are summarized in
Table 12.

# TABLE 12 Maturity of Time
Certificates of Deposit of $100,000 or More

|(000's omitted)                | December 31,2004 | December 31,2003
|------------------------------ | ---------------- | ----------------
|                               |                 
|Three months or less           |                  | $24,417         
|Over three through six months  |                  | 3,647           
|Over six through twelve months |                  | 3,678           
|Over twelve months             |                  | 19,192          
|                               |                  |                 
|Total                          |                  | $50,934         
|                               |                  |                 

Repurchase agreements are secured by
mortgage-backed securities held by a third party trustee with a carrying amount of $18.9
million at year-end 2004. These agreements are fixed rate financing arrangements that
mature in 2005 ($5,000,000) and 2008 ($5,000,000). At maturity, the securities underlying
the agreements are returned to the Corporation. These repurchase agreements were used as
part of the securities leverage strategy to help enhance net interest income for the
Corporation.

# FEDERAL INCOME TAXES

The Corporations effective tax
rate was 27.4% for 2004, 25.8% for 2003 and 29.9% for 2002. The principal difference
between the effective tax rates and the statutory tax rate of 34% is the
Corporations investment in securities and loans, which provide income exempt from
federal income tax. Additional information relating to federal income taxes is included in
Note 8 to the Consolidated Financial Statements.

# LIQUIDITY AND INTEREST
RATE RISK MANAGEMENT

Asset/Liability management is
designed to assure liquidity and reduce interest rate risks. The goal in managing interest
rate risk is to maintain a strong and relatively stable net interest margin. It is the
responsibility of the Asset/Liability Management Committee (ALCO) to set policy guidelines
and to establish short-term and long-term strategies with respect to interest rate
exposure and liquidity. The ALCO, which is comprised of key members of senior management,
meets regularly to review financial performance and soundness, including interest rate
risk and liquidity exposure in relation to present and prospective markets, business
conditions, and product lines. Accordingly, the committee adopts funding and balance sheet
management strategies that are intended to maintain earnings, liquidity, and growth rates
consistent with policy and prudent business standards. Liquidity maintenance, together
with a solid capital base and strong earnings performance are key objectives of the
Corporation. The Corporations liquidity is derived from a strong deposit base
comprised of individual and business deposits. Deposit accounts of customers in the mature
market represent a substantial portion of deposits of individuals. The Corporations
deposit base plus other funding sources (federal funds purchased, other liabilities and
shareholders equity) provided primarily all funding needs in 2004, 2003, and 2002.
While these sources of funds are expected to continue to be available to provide funds in
the future, the mix and availability of funds will depend upon future economic and market
conditions. The Corporation does not foresee any difficulty in meeting its funding
requirements.

48.

---



Primary liquidity is provided through
short-term investments or borrowings (including federal funds sold and purchased), while
the security portfolio provides secondary liquidity along with FHLB advances. As of
December 31, 2004 federal funds sold represented 0.8% of total assets, compared to 0.9% at
the end of 2003. The Corporation regularly monitors liquidity to ensure adequate cash
flows to cover unanticipated reductions in the availability of funding sources.

Interest rate risk is managed by
controlling and limiting the level of earnings volatility arising from rate movements. The
Corporation regularly performs reviews and analyses of those factors impacting interest
rate risk. Factors include maturity and re-pricing frequency of balance sheet components,
impact of rate changes on interest margin and prepayment speeds, market value impacts of
rate changes, and other issues. Both actual and projected performance, are reviewed,
analyzed, and compared to policy and objectives to assure present and future financial
viability.

The Corporation had cash flows from
financing activities resulting primarily from the inflow of demand and savings deposits
and decrease of borrowings. In 2004, these deposits increased $32,712,000 and these
borrowings decreased $9,824,000. Cash used by investing activities was $23,459,000 in 2004
compared to cash used of $95,541,000 in 2003. The change in investing activities was due
to the increase in the origination of loans in 2004 compared to 2003 and not as many
securities purchases in 2004 compared with 2003.

The following table discloses
information on the maturity of the Corporations contractual long-term obligations:

|Table 13              | Total | Less than 1year | 1-3 years | 3-5 years   | More than5 years
|--------------------- | ----- | --------------- | --------- | ----------- | ----------------
|Short-term borrowings |       | $  5,200        |           | $     5,200 |                 
|FHLB advances         |       | 19,402          |           | 10,311      |                 
|Repurchase agreements |       | 10,000          |           | 5,000       |                 
|Subordinated debt     |       | 12,000          |           | -           |                 
|Operating leases      |       | 630             |           | 281         |                 
|                      |       |                 |           |             |                 
|                      |       | $47,232         |           | $20,792     |                 
|                      |       |                 |           |             |                 

# CAPITAL RESOURCES

Management closely monitors capital
levels to provide for current and future business needs and to comply with regulatory
requirements. Regulations prescribed under the Federal Deposit Insurance Corporation
Improvement Act of 1991 have defined well capitalized institutions as those
having total risk-based ratios, tier 1 risk-based capital ratios and tier 1 leverage
ratios of at least 10%, 6%, and 5% respectively. At December 31, 2004, the Corporation was
well in excess of the minimum capital and leverage requirements necessary to be considered
a well capitalized banking company as defined by federal law.

Total shareholders equity rose
5.1% to $42,969,000 at December 31, 2004, compared with $40,882,000 at December 31, 2003.
The Corporations equity to asset ratio was 7.3% at December 31, 2004, compared to
9.7% at December 31, 2003. The decrease in this retio was primarily due to the acquisition
of West Michigan Community Bank. The increase in equity in 2004 resulted from retained
earnings (net income in excess of dividends). In 2004, the Corporation paid $0.92 per
share for a dividend, same level paid in 2003.

At December 31, 2004, the
Corporations tier 1 and total risk-based capital ratios were 10.2% and 11.4%,
respectively, compared with 16.9% and 18.0% in 2003. The decrease in the risk-based
capital ratios was largely due to the purchase of West Michigan Financial Corporation in
March of 2004. The Corporations tier 1 leverage ratio was 8.7% at December 31, 2004
compared with 14.0% at December 31, 2003. This decrease in the leverage ratio was due to
the purchase of West Michigan Financial Corporation.

49.

---



# CRITICAL ACCOUNTING
POLICIES AND ESTIMATES

The Managements Discussion and
Analysis of financial condition and results of operations are based on Fentura Financial,
Inc.s consolidated financial statements, which have been prepared in accordance with
accounting principles generally accepted in the United States of America. The preparation
of these financial statements requires us to make estimates and judgments that affect the
reported amounts of assets, liabilities, income and expenses. Material estimates that are
particularly susceptible to significant change in the near term relate to the
determination of the allowance for loan losses, and actual results could differ from those
estimates.

The allowance for loan losses is
maintained at a level we believe is adequate to absorb probable losses identified and
inherent in the loan and lease portfolio. Our evaluation of the adequacy of the allowance
for loan and lease losses is an estimate based on reviews of individual loans, assessments
of the impact of current and anticipated economic conditions on the portfolio, and
historical loss experience. The allowance for loan and leases losses represents
managements best estimate, but significant downturns in circumstances relating to
loan and lease quality or economic conditions could result in a requirement for an
increased allowance for loan and lease losses in the near future. Likewise, an upturn in
loan and lease quality or improved economic conditions may result in a decline in the
required allowance for loan and lease losses. In either instance unanticipated changes
could have a significant impact on operating earnings.

The allowance for loan and lease
losses is increased through a provision charged to operating expense. Uncollectible loans
and leases are charged-off through the allowance for loan and lease losses. Recoveries of
loans and leases previously charged-off are added to the allowance for loan and lease
losses. A loan is considered impaired when it is probable that contractual interest and
principal payments will not be collected either for the amounts or by the dates as
scheduled in the loan agreement. Our policy for recognizing income on impaired loans is to
accrue interest unless a loan is placed on nonaccrual status.

# OFF-BALANCE-SHEET ITEMS

Some financial instruments, such as
loan commitments, credit lines, letters of credit, and overdraft protection, are issued to
meet customer financing needs. These are agreements to provide credit or to support the
credit of others, as long as conditions established in the contract are met, and usually
have expiration dates. Commitments may expire without being used. Off-balance-sheet risk
to credit loss exists up to the face amount of these instruments, although material losses
are not anticipated. The same credit policies are used to make such commitments as are
used for loans, including obtaining collateral at exercise of the commitment. Amount of
commitments are included in Note 13 to the consolidated financial statements.

# QUANTITATIVE AND
QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Fentura Financial, Inc. faces market
risk to the extent that both earnings and the fair value of its financial instruments are
affected by changes in interest rates. The Corporation manages this risk with static GAP
analysis and has begun simulation modeling. Throughout 2004, the results of these
measurement techniques were within the Corporations policy guidelines. The
Corporation does not believe that there has been a material change in the nature of the
Corporations substantially influenced market risk exposures, including the
categories of market risk to which the Corporation is exposed and the particular markets
that present the primary risk of loss to the Corporation, or in how those exposures were
managed in 2004 compared to 2003.

The Corporations market risk
exposure is mainly comprised of its vulnerability to interest rate risk. Prevailing
interest rates and interest rate relationships in the future will be primarily determined
by market factors, which are outside of the Corporations control. All information
provided in this section consists of forward-looking statements. Reference is made to the
section captioned Forward Looking Statements in this annual report for a
discussion of the limitations on the Corporations responsibility for such
statements.

50.

---



The following table provides
information about the Corporations financial instruments that are sensitive to
changes in interest rates as of December 31, 2004. The table shows expected cash flows
from market sensitive instruments for each of the next five years and thereafter. The
expected maturity date values for loans and securities (at amortized cost) were calculated
without adjusting the instruments contractual maturity dates for expected
prepayments. Maturity date values for interest bearing core deposits were not based on
estimates of the period over which the deposits would be outstanding, but rather the
opportunity for re-pricing. The Corporation believes that re-pricing dates, as opposed to
expected maturity dates, may be more relevant in analyzing the value of such instruments
and are reported as such in the following table.

# TABLE 14 Rate
Sensitivity of Financial Instruments

|(000's omitted)              | 2005 | 2006            | 2007 | 2008    | 2009 | Thereafter | Total | FairValue      
|---------------------------- | ---- | --------------- | ---- | ------- | ---- | ---------- | ----- | ---------------
|                            
|Rate Sensitive Assets:       |      |                 |      |         |      |            |       |                
|Fixed interest rate loans    |      | $       41,637  |      | $30,913 |      | $27,223    |       | $     21,926   
|Average interest rate        |      | 6.42%           |      | 6.90%   |      | 6.94%      |       | 6.50%          
|Variable interest rate loans |      | $       91,890  |      | $25,770 |      | $17,919    |       | $     30,827   
|Average interest rate        |      | 5.95%           |      | 5.79%   |      | 5.85%      |       | 5.61%          
|Fixed interest rate          |      | $       50,214  |      | $ 7,134 |      | $ 3,907    |       | $       9,205  
|securities                   |     
|Average interest rate        |      | 4,44%           |      | 4.87%   |      | 4.08%      |       | 5.37%          
|Variable Interest rate       |      |                 |      |         |      |            |       |                
|securities                   |     
|Average interest rate        |      |                 |      |         |      |            |       |                
|FHLB Stock                   |      | $         2,252 |      |         |      |            |       |                
|Average interest rate        |      | 3.90%           |     
|Other interest bearing       |      | $         4,550 |      |         |      |            |       |                
|assets                       |     
|Average interest rate        |      | 2.00%           |     
|Rate Sensitive Liabilities:  |     
|Interest-bearing checking    |      | $      118,388  |      |         |      |            |       |                
|Average interest rate        |      | 1.01%           |     
|Savings                      |      | $      148,631  |      |         |      |            |       |                
|Average interest rate        |      | 0.52%           |     
|Time                         |      | $       78,781  |      | $21,086 |      | $22,666    |       | $       8,508  
|Average interest rate        |      | 2.67%           |      | 2.81%   |      | 4.25%      |       | 3.53%          
|Short term borrowings        |      | $         5,200 |      |         |      |            |       |                
|Average interest rate        |      | 2.50%           |     
|FHLB advances                |      | $       10,015  |      | $ 3,015 |      | $ 3,015    |       | $            15
|Average interest rate        |      | 2.42%           |      | 4.42%   |      | 3.62%      |       | 7.34%          
|Repurchase agreements        |      | $         5,000 |      |         |      |            |       | $       5,000  
|Average interest rate        |      | 1.40%           |      |         |      |            |       | 2.60%          
|Subordinated debt            |      |                 |      |         |      |            |       | $     12,000   
|Average interest rate        |      |                 |      |         |      |            |       | 4.15%          

# INTEREST RATE
SENSITIVITY MANAGEMENT

Interest rate sensitivity management
seeks to maximize net interest income as a result of changing interest rates, within
prudent ranges of risk. The Corporation attempts to accomplish this objective by
structuring the balance sheet so that re-pricing opportunities exist for both assets and
liabilities in roughly equivalent amounts at approximately the same time intervals.
Imbalances in these re-pricing opportunities at any point in time constitute a banks
interest rate sensitivity. The Corporation currently does not utilize derivatives in
managing interest rate risk.

An indicator of the interest rate
sensitivity structure of a financial institutions balance sheet is the difference
between its interest rate sensitive assets and interest rate sensitive liabilities, and is
referred to as GAP.

51.

---



Table 15 sets forth the distribution
of re-pricing of the Corporations earning assets and interest bearing liabilities as
of December 31, 2004, the interest rate sensitivity GAP, as defined above, the cumulative
interest rate sensitivity GAP, the interest rate sensitivity GAP ratio (i.e. interest rate
sensitive assets divided by interest rate sensitive liabilities) and the cumulative
sensitivity GAP ratio. The table also sets forth the time periods in which earning assets
and liabilities will mature or may re-price in accordance with their contractual terms.

# TABLE 15

|Gap AnalysisDecember 31, 2004      
|-----------------------------------
|
|                                   
|Interest Bearing Bank Deposits     
|Federal Funds Sold                 
|Securities                         
|Loans                              
|Loans Held for Sale                
|FHLB Stock                         
|                                   
|Total Earning Assets               
|                                   
|Interest Bearing Liabilities:      
|Interest Bearing Demand Deposits   
|Savings Deposits                   
|Time Deposits Less than $100,000   
|Time Deposits Greater than $100,000
|Short-term Borrowings              
|FHLB Advances                      
|Repurchase Agreements              
|Subordinated Debt                  
|                                   
|Total Interest Bearing Liabilities 
|                                   
|Interest Rate Sensitivity GAP      
|Cumulative Interest Rate           
|Sensitivity GAP                    
|Interest Rate Sensitivity GAP      
|Cumulative Interest Rate           
|Sensitivity GAP Ratio              

As indicated in Table 15, the
short-term (one year and less) cumulative interest rate sensitivity gap is negative.
Accordingly, if market interest rates increase, this negative gap position could have a
short- term negative impact on interest margin. Conversely, if market interest rates
decrease, this negative gap position could have a short-term positive impact on interest
margin. However, gap analysis is limited and may not provide an accurate indication of the
impact of general interest rate movements on the net interest margin since the re-pricing
of various categories of assets and liabilities is subject to the Corporations
needs, competitive pressures, and the needs of the Corporations customers. In
addition, various assets and liabilities indicated as re-pricing within the same period
may in fact re-price at different times within such period and at different rate indices.
The limitations of gap described above impacted financial performance in 2004. The
Corporations gap position was negative and there was an increase in market interest
rates; yet net interest income increased and the net interest margin ratio increased. In
2004, with the Corporation being in a negative gap position, net interest income should in
theory decrease if rates rose. What occurred, however, was rates increased on the asset
side and the Corporation lagged the market, generating more net interest income and
increasing the net interest margin ratio in 2004. The liabilities, largely deposits,
either lagged market re-pricing due to the maturity dates on time deposits or were not
re-priced by the same amount as assets due to competitive pressures. Interest bearing
checking and savings deposits are generally lower cost of funds products compared to time
deposits. For example certain asset products re-priced upward 1.25% with the upward
movement of national prime rates in the last part of 2004 while most of interest bearing
checking and savings were at rates lower than 0.50% at the start of the year and
accordingly, had a much lesser level of re-pricing opportunity. The Corporation expects to
continue to make strides in managing interest rate sensitivity.

52.

---



# ACCOUNTING AND REPORTING
DEVELOPMENTS

FAS 123, Revised requires all public
companies to record compensation cost for stock options provided to employees in return
for employee service. The cost is measured at the fair value of the options when granted,
and this cost is expensed over the employee service period, which is normally the vesting
period of the options. This will apply to awards granted or modified after the first
quarter or year beginning after June 15, 2005. Compensation cost will also be recorded for
prior option grants that vest after the date of adoption. The effect on results of
operations will depend on the level of future option grants and the calculation of the
fair value of the options granted at such future date, as well as the vesting periods
provided, and so cannot be predicted. Existing options that will vest after adoption date
are expected to result in additional compensation expense of $3,000 during the balance of
2005. There will be no significant effect on financial position, as total equity will not
change.

SOP 03-3 requires that a valuation
allowance for loans acquired in a transfer, including in a business combination, reflect
only losses incurred after acquisition and should not be recorded at acquisition. It
applies to any loan acquired in a transfer that showed evidence of credit quality
deterioration since it was made.

The effect of these other new
standards on the Corporations financial position and results of operations is not
expected to be material upon and after adoption.

# FORWARD LOOKING
STATEMENTS

This discussion and analysis of
financial condition and results of operations, and other sections of the Consolidated
Financial Statements, contain forward looking statements that are based on
managements beliefs, assumptions, current expectations, estimates and projections
about the financial services industry, the economy, and about the Corporation itself.
Words such as anticipates, believes, estimates,
expects, forecasts, intends, is likely,
plans, projects, variations of such words and similar expressions
are intended to identify such forward looking statements. These statements are not
guarantees of future performance and involve certain risks, uncertainties and assumptions
(Future Factors), which are difficult to predict with regard to timing,
extent, likelihood and degree of occurrence. Therefore, actual results and outcomes may
materially differ from what may be expressed or forecast in such forward-looking
statements. The Corporation undertakes no obligation to update, amend or clarify forward
looking statements as a result of new information, future events, or otherwise.

Future Factors that could cause a
difference between an ultimate actual outcome and a preceding forward looking statement
include, but are not limited to, changes in interest rate and interest rate relationships,
demands for products and services, the degree of competition by traditional and
non-traditional competitors, changes in banking laws or regulations, changes in tax laws,
change in prices, the impact of technological advances, government and regulatory policy
changes, the outcome of pending and future litigation and contingencies, trends in
customer behavior as well as their ability to repay loans, and the local economy.

# FENTURA FINANCIAL, INC.
COMMON STOCK

Table 16 sets forth the high and low
market information for each quarter of 2002 through 2004. These quotations reflect
inter-dealer prices, without retail mark-up, markdown, or commission and may not represent
actual transactions. As of March 1, 2005, there were 808 shareholders of record, not
including participants in the Corporations employee stock option program.

53.

---



# TABLE 16 Common Stock Data

|     |  | MarketInformation | DividendsPaid
|---- |  | ----------------- | -------------
|
|    
|     |  | First Quarter     |              
|2002 |  | Second Quarter    |              
|     |  | Third Quarter     |              
|     |  | Fourth Quarter    |              
|     |  |                   |              
|    
|     |  | First Quarter     |              
|2003 |  | Second Quarter    |              
|     |  | Third Quarter     |              
|     |  | Fourth Quarter    |              
|     |  |                   |              
|    
|     |  | First Quarter     |              
|2004 |  | Second Quarter    |              
|     |  | Third Quarter     |              
|     |  | Fourth Quarter    |              
|     |  |                   |              

|Note: | Market
and dividend per share figures have been adjusted to reflect a 10% stock dividend payable
onFebruary 13, 2004.
|----- | ---------------------------------------------------------------------------------------------------------------------

54.

---



# Exhibit 21.1 Subsidiaries of the
Registrant

|Company                           
The State Bank                    
Davison State Bank                
Community Bank Services, Inc.     
Fentura Mortgage Company, Inc.    
West Michigan Community Bank      
Michigan (as of March 15, 2004) 
West Michigan Mortgage, LLC       
Community Insurance Services | Ownership            
              100%              
              100%              
     100% by The State Bank     
     100% by The State Bank     
              100%
    99.5% by West Michigan 
       Community Bank           
    0.5% by Community Insurance 
            Services 
  100% by West Michigan         
       Community Bank | State of Incorporation
              Michigan
              Michigan
              Michigan
              Michigan
              Michigan
              MichiganMichigan
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---



# EXHIBIT 23.1 CONSENT OF INDEPENDENT
REGISTERED ACCOUNTING FIRM

We
consent to the incorporation by reference in the Registration Statements of Fentura
Financial, Inc. on Form S-3D (File No.333-120182) and on Form S-8 (File No. 118085) of our
report dated February 3, 2005 on the 2004 Consolidated Financial Statements of Fentura
Financial, Inc., which report is included in the 2004 Annual Report on Form 10-K of
Fentura Financial, Inc.

/s/ CROWE CHIZEK AND
COMPANYLLC

Grand Rapids, MichiganMarch
____, 2005

---



# Exhibit 31.1

# CERTIFICATIONS

I, Donald L. Grill, certify that:

| | 1. | I have reviewed this Annual Report on Form 10-K of Fentura Financial, Inc. ;
| | -- | ----------------------------------------------------------------------------

| | 2. | Based on my knowledge, this report does not contain any untrue statement of a
               material fact or omit to state a material fact necessary to make the statements
               made, in light of the circumstances under which such statements were made, not
               misleading with respect to the period covered by this report;
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 3. | Based on my knowledge, the financial statements, and other financial information
               included in this report, fairly present in all material respects the financial
               condition, results of operations and cash flows of the registrant as of, and
               for, the periods presented in this report;
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 4. | The registrants other certifying officers and I are responsible for
               establishing and maintaining disclosure controls and procedures (as defined in
               Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (a) | designed such disclosure controls and procedures, or caused such disclosure
                    controls and procedures to be designed under our supervision, to ensure that
                    material information relating to the registrant, including its consolidated
                    subsidiaries, is made known to us by others within those entities, particularly
                    during the period in which this report is being prepared;
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b) | evaluated the effectiveness of the registrants disclosure controls and
                    procedures and presented in this report our conclusions about the effectiveness
                    of the disclosure controls and procedures, as of the end of the period covered
                    by this report based on such evaluation; and
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (c) | disclosed in this report any change in the registrants internal control
                    over financial reporting that occurred during the registrants most recent
                    fiscal quarter (the registrants fourth fiscal quarter in the case of an
                    annual report) that has materially affected, or is reasonably likely to
                    materially affect, the registrants internal control over financial
                    reporting; and
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 5. | The registrants other certifying officers and I have disclosed, based on
               our most recent evaluation of internal control over financial reporting, to the
               registrants auditors and the audit committee of the registrants
               board of directors (or persons performing the equivalent functions):
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (a) | all significant deficiencies and material weaknesses in the design or operation
                    of internal control over financial reporting which are reasonably likely to
                    adversely affect the registrants ability to record, process, summarize and
                    report financial information; and
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b) | any fraud, whether or not material, that involves management or other employees
                    who have a significant role in the registrants internal control over
                    financial reporting.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Date: March 28, 2005

| | /s/ Donald L. GrillDonald
L. GrillChief Executive Officer and     President
| | ---------------------------------------------------------------------------

---



# Exhibit 31.2

# CERTIFICATIONS

I, Douglas J. Kelley, certify that:

| | 1. | I have reviewed this Annual Report on Form 10-K of Fentura Financial, Inc. ;
| | -- | ----------------------------------------------------------------------------

| | 2. | Based on my knowledge, this report does not contain any untrue statement of a
               material fact or omit to state a material fact necessary to make the statements
               made, in light of the circumstances under which such statements were made, not
               misleading with respect to the period covered by this report;
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 3. | Based on my knowledge, the financial statements, and other financial information
               included in this report, fairly present in all material respects the financial
               condition, results of operations and cash flows of the registrant as of, and
               for, the periods presented in this report;
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 4. | The registrants other certifying officers and I are responsible for
               establishing and maintaining disclosure controls and procedures (as defined in
               Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (a) | designed such disclosure controls and procedures, or caused such disclosure
                    controls and procedures to be designed under our supervision, to ensure that
                    material information relating to the registrant, including its consolidated
                    subsidiaries, is made known to us by others within those entities, particularly
                    during the period in which this report is being prepared;
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b) | evaluated the effectiveness of the registrants disclosure controls and
                    procedures and presented in this report our conclusions about the effectiveness
                    of the disclosure controls and procedures, as of the end of the period covered
                    by this report based on such evaluation; and
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (c) | disclosed in this report any change in the registrants internal control
                    over financial reporting that occurred during the registrants most recent
                    fiscal quarter (the registrants fourth fiscal quarter in the case of an
                    annual report) that has materially affected, or is reasonably likely to
                    materially affect, the registrants internal control over financial
                    reporting; and
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 5. | The registrants other certifying officers and I have disclosed, based on
               our most recent evaluation of internal control over financial reporting, to the
               registrants auditors and the audit committee of the registrants
               board of directors (or persons performing the equivalent functions):
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (a) | all significant deficiencies and material weaknesses in the design or operation
                    of internal control over financial reporting which are reasonably likely to
                    adversely affect the registrants ability to record, process, summarize and
                    report financial information; and
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b) | any fraud, whether or not material, that involves management or other employees
                    who have a significant role in the registrants internal control over
                    financial reporting.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Date: March 28, 2005

| | /s/ Douglas J. KelleyDouglas
J. KelleyChief Financial Officer
| | -------------------------------------------------------------

---



# Exhibit 32.1

Each
of Donald L. Grill, Chief Executive Officer and President, and Douglas J. Kelley, Chief
Financial Officer, of Fentura Financial, Inc., certify, pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

| | (1) | the Annual Report on Form 10-K for the fiscal year ended December 31, 2004 which
               this statement accompanies fully complies with the requirements of Section 13(a)
               or 15(d) of the Securities Exchange Act of 1934, and
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | the information contained in the Annual Report on Form 10-K for the fiscal year
               ended December 31, 2004 fairly presents, in all material respects, the
               financial condition and results of operations of Fentura Financial, Inc.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Dated: March 28, 2005

| | /s/ Donald L. Grill
Donald L. GrillChief Executive Officer and President/s/ Douglas J. KelleyDouglas
J. KelleyChief Financial Officer
| | -------------------------------------------------------------------------------------------------------------------------------------

A signed original of this
certification has been provided to Fentura Financial, Inc. and will be retained by Fentura
Financial, Inc. and furnished to the Securities and Exchange Commission upon request.