Document:

EX-10.10

AMENDMENT #1 TO THE

LANCE N. KRAJACIC, JR.

EXECUTIVE EMPLOYMENT AGREEMENT

          THIS AMENDMENT (this “Amendment”), is made and entered into as of December 29, 2008 by and
between BANK OF BIRMINGHAM., a Michigan state bank (the “Bank”) and LANCE N. KRAJACIC, JR., (the
“Executive”).

          WHEREAS, the Executive serves as Executive Vice President and Chief Lending Officer of the
Bank, a subsidiary of Birmingham Bloomfield Bancshares, Inc., (the “Company”); and

          WHEREAS, the Bank and the Executive have previously entered into an Executive Employment
Agreement dated June 28, 2007 (the “Agreement”) and wish to amend the Agreement to satisfy the
requirements of Section 409A of the Internal Revenue Code; and

          WHEREAS, except as otherwise provided in this Amendment, the Agreement shall continue in full
force and effect.

          NOW, THEREFORE, in consideration of the premises and of the covenants herein and for other
good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the
Bank and the Executive agree to amend the Agreement as follows:

	1.	 	The following sentence is added to the end of Paragraph 4 of the Agreement:
	 
	 	 	Reimbursement under this Paragraph 4 shall be made in accordance with the Bank’s expense
reimbursement policies, but in no event later than the last day of the calendar year following
the calendar year in which the expenses are incurred. Reimbursement under this Paragraph 4
shall not affect the expenses eligible for reimbursement in any other calendar year and cannot
be liquidated or exchanged for any other benefit.
	 
	2.	 	The second paragraph of Paragraph 31 is amended as follows:

     In the event that Executive is terminated by the Bank within sixty (60) days following
such Change of Control for any reason other than for Good Cause, Executive shall be entitled to
receive as severance the lump sum amount determined pursuant to Paragraph 32 upon written
notice to the Bank, in which case the severance provisions of Paragraph 34 shall not apply.

	3.	 	Paragraph 32 is amended as follows:

     32. In the event that termination of this Agreement is based upon the Change in Control,
the Bank shall pay to the Executive a cash lump sum payment equal to 199% of his Base Amount as
defined in section 280G(b)(3) of the Internal Revenue Code of 1986, as amended (“Code”) within
thirty (30) days of such notice.

 

 

	4.	 	The a third paragraph of Paragraph 32 is amended as follows:

     For purposes of determining the Gross Up, the Executive shall be deemed to pay federal,
state, and local income taxes at the highest marginal rate of taxation in his filing status for
the calendar year in which the payment is to be made based upon the Executive’s domicile on the
date of the event that triggers the Excise Tax. The determination of whether such Excise Tax
is payable and the amount of such Excise Tax shall be based upon the opinion of tax counsel
selected by the Bank, subject to the reasonable approval of the Executive. If such opinion is
not finally accepted by the Internal Revenue Service, then appropriate adjustments shall be
calculated (with additional Gross Up determined based on the principals outlined in the
previous Paragraph, if applicable) by such tax counsel based upon the final amount of Excise
Tax so determined together with any applicable penalties and interest. The final amount shall
be paid, if applicable, within thirty (30) days after such calculations are completed, but in
no event later than March 15 of the year following the event that triggers the Excise Tax.
Such compensation shall be payable in equal disbursements in accordance with the Bank’s
ordinary payroll policies and procedures. The Executive will also continue to receive his
automobile allowance provided by the Bank for a period of twelve (12) months following the date
of termination.

	5.	 	A new subsection (g) is added to Paragraph 33 as follows:

     (g) Notwithstanding the definition of Change of Control set forth above, a Change of
Control shall not have occurred unless the event constitutes a “change in control event” as
such term is defined by Section 409A of the Internal Revenue Code of 1986 ( “Section 409A”) and
the regulations promulgated thereunder.

	6.	 	The following is added to the end Paragraph 34 of the Agreement:
	 
	 	 	In no event shall payments be made under this Paragraph 34, unless the Executive has incurred a
Separation from Service as defined Section 409A and the Final Regulations promulgated
thereunder. In addition, notwithstanding anything contained herein to the contrary, if at the
time of a termination of this Agreement, (i) Executive is a “specified employee” as defined in
Section 409A, and the regulations and guidance thereunder in effect at the time of such
termination, and, (ii) any of the payments or benefits provided hereunder may constitute
“deferred compensation” under Section 409A, then, and only to the extent required by such
provisions, the date of payment of such payments or benefits otherwise provided shall be
delayed until the earlier of six (6) months following the date of termination or Executive’s
death. Any such payment or series of payments to be made due to a Separation from Service shall
commence no earlier than the first day of the seventh month following the Separation from
Service, provided that to the extent permitted by Section 409A of the Code, only payments
scheduled to be paid during the first 6 months after the date of such Separation from Service
shall be delayed and such delayed payments shall be paid in a single sum on the first day of
the seventh month following the date of such Separation from Service.

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	7.	 	A new Paragraph 54 is added to the Agreement as follows:

     54. This Agreement shall at all times be administered, and the provisions of this
Agreement shall be interpreted, consistent with the requirements of Section 409A and the final
regulations thereunder.

          IN WITNESS WHEREOF, the parties have executed this Amendment as of the date first above
written.

	 	 	 	 	 	 	 	 	 
	BANK OF BIRMINGHAM	 	 	 	LANCE N. KRAJACIC, JR.	 	 
	 
	 	 	 	 	 	 	 	 
	By:
	 	/s/ Robert E. Farr	 	 	 	/s/ Lance N. Krajacic, Jr. 	 	 
	 

	 	Robert E. Farr, President & CEO

	 	 
	 	 

	 	 

3EX-10.5

Exhibit 10.5

PEOPLES STATE BANK

AMENDED AND RESTATED

DEFERRED COMPENSATION PLAN

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	ARTICLE I. DEFINITIONS
	 	 	1	 
	 
	 	 	 	 
	ARTICLE II. ADMINISTRATION
	 	 	3	 
	 
	 	 	 	 
	2.01. Administration of the Plan
	 	 	3	 
	 
	 	 	 	 
	2.02. Claims Procedure
	 	 	3	 
	 
	 	 	 	 
	ARTICLE III. PARTICIPATION
	 	 	4	 
	 
	 	 	 	 
	3.01. Eligibility to Participate
	 	 	4	 
	 
	 	 	 	 
	3.02. Modification of Participation
	 	 	4	 
	 
	 	 	 	 
	3.03. Termination of Participation
	 	 	4	 
	 
	 	 	 	 
	ARTICLE IV. DEFERRED COMPENSATION
	 	 	4	 
	 
	 	 	 	 
	4.01. Deferral of Bonuses by Officers
	 	 	4	 
	 
	 	 	 	 
	4.02. Deferral of Fees by Directors
	 	 	5	 
	 
	 	 	 	 
	ARTICLE V. ACCOUNTS AND INVESTMENTS
	 	 	5	 
	 
	 	 	 	 
	5.01. Establishment of Accounts
	 	 	5	 
	 
	 	 	 	 
	5.02. Allocation of Interest to Accounts
	 	 	5	 
	 
	 	 	 	 
	5.03. Vesting of Accounts
	 	 	5	 
	 
	 	 	 	 
	5.04. Statement of Accounts
	 	 	5	 
	 
	 	 	 	 
	ARTICLE VI. BENEFITS
	 	 	5	 
	 
	 	 	 	 
	6.01. Benefit upon Officer’s Normal Retirement, Disability and Termination of
Employment or Director’s Cessation of Service as a Director
	 	 	5	 
	 
	 	 	 	 
	6.02. Method of Payment of Benefits
	 	 	6	 
	 
	 	 	 	 
	6.03. Death
	 	 	6	 
	 
	 	 	 	 
	6.04. Commencement of Payments
	 	 	6	 
	 
	 	 	 	 
	7.01. Amendment by Board
	 	 	7	 
	 
	 	 	 	 
	7.02. Board’s Right to Terminate
	 	 	7	 

 

 

	 	 	 	 	 
	7.03. Change in Control
	 	 	7	 
	 
	 	 	 	 
	7.04. ERISA Compliance
	 	 	8	 
	 
	 	 	 	 
	ARTICLE VIII. MISCELLANEOUS 
	 	 	8	 
	 
	 	 	 	 
	8.01. Unfunded Plan
	 	 	8	 

 

 

PEOPLES STATE BANK

AMENDED AND RESTATED

DEFERRED COMPENSATION PLAN

     WHEREAS, Peoples State Bank, a Michigan corporation (hereinafter referred to as the “Bank”),
established the Peoples State Bank Deferred Compensation Plan (hereinafter referred to as the
“Plan”) for certain Officers and Directors of the Bank, effective as of July 1, 1995.

     WHEREAS, the Bank amended and restated the Plan, effective as of January 1, 1997 (“Prior
Amendment”).

     WHEREAS, the Bank hereby amends and restates the Plan in order to comply with the applicable
provisions of the American Jobs Creation Act of 2004, Internal Revenue Code Section 409A (“Section
409A”).

     NOW, THEREFORE, the Bank hereby amends and restates the Plan and Prior Amendment in its
entirety, effective as of January 1, 2005.

PURPOSE

     The purpose of this Plan is to provide a means by which certain Officers and Directors of the
Bank may elect to defer the receipt of certain compensation.

ARTICLE I. DEFINITIONS

     1.01. “Beneficiary” means the individual, trust or estate designated by the Participant to
receive the Participant’s benefits after his death on a Designation of Beneficiary form prescribed
by the Committee and filed with the Bank before the Participant’s death. A Participant may revoke,
amend or alter such Beneficiary designation at any time. In the absence of an effective
designation of Beneficiary, or if the Beneficiary does not survive the Participant, the
Participant’s benefits shall be paid to the individual in (or paid in equal shares by right of
representation to the individuals in) the first of the following classes of successive preference
Beneficiaries in which there shall be an individual surviving such Participant: (a) his spouse,(b)
his issue; (c) his parents; or (d) his brothers and sisters and issue thereof. If no such
Beneficiary survives the Participant, the Participant’s benefits shall be paid to the Participant’s
estate.

     1.02. “Bank” means Peoples State Bank, a Michigan corporation, and any successor, and any
organization into which or with which the Bank may merge or consolidate or to which all or
substantially all of the Bank’s assets may be transferred.

     1.03. “Board of Directors” or “Board” means the board of directors of Peoples State Bank. For
purposes of determining which Directors are eligible to participate in the Plan and effective with
respect to all director fees payable on or after September 1, 2003, “Board of Directors” or “Board”
shall include the members of the board of directors of PSB Group, Inc. (the “Holding Company”).

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     1.04. “Change in Control” means the time any person or entity acquires 50% or more the Holding
Company’s outstanding voting stock. Notwithstanding the aforementioned, no event shall be
considered a Change in Control, unless the event also constitutes a change in the ownership or
effective control pursuant to Section 409A(a)(2)(A)(v) and the final regulations promulgated
thereunder.

     1.05. “Committee” means the Compensation and Benefits Committee appointed by the Board of
Directors to administer the Plan, or any successor thereto.

     1.06. “Deferred Benefit” means the benefit payable to, or on behalf of, a Participant upon his
retirement, death, disability, or termination of employment from the Bank or upon the cessation of
service as a Director of the Bank, as calculated under Article VII hereof.

     1.07. “Deferred Benefit Account” means the account or accounts maintained on the books of the
Bank for each Participant pursuant to Article VI. A Participant’s Deferred Benefit Account shall
be utilized solely as a device for the measurement and determination of the amounts to be paid to
the Participant shall not constitute or be treated as a trust fund of any kind.

     1.08. “Director” means a director on the Board of Directors of the Bank or the Holding
Company.

     1.09. “Disability” or “Disabled Participant” means an inability to engage in any substantial
gainful activity by reason of any medically determinable physical or mental impairment which can be
expected to result in death or can be expected to last for a continuous period of not less than 12
months or is by reason of any medically determinable physical or mental impairment which can be
expected to last for a continuous period of not less than 12 months, receiving income replacement
benefits for a period of not less than 3 months under an accident and health plan covering
employees of the Bank.

     1.10. “Effective Date” means January 1, 2005.

     1.11. “Normal Retirement Age” means the time at which a Participant attains age 65.

     1.12. “Officer” means a person employed as an officer of the Bank.

     1.13. “Participant” means each individual who is a Director or any individual who is an
Officer designated by the Committee as eligible to participate in this Plan and who elects to
participate by filing a Participation Agreement, as provided in ARTICLE IV.

     1.14. “Participation Agreement” means the agreement filed by a Participant prior to the
beginning of the first period for which the Participant’s compensation is to be deferred pursuant
to the Plan.

     1.15. “Plan” means the Peoples State Bank Deferred Compensation Plan as set forth herein and
as may be amended from time to time.

2

 

     1.16. “Plan Year” means the calendar year, except that the first Plan Year shall be a short
Plan Year and shall begin on July 1, 1995, the date this Plan is executed by the Bank, and shall
end on December 31, 1995.

     1.17. “Separation from Service” means the Participant’s termination of employment or cessation
from service as a Director for any reason other than death provided the termination of employment
or cessation from service as a Director is a Separation from Service as defined in Section 409A and
the regulations promulgated thereunder.

     1.18. “Specified Employee” means a key employee (as defined in Section 416(i) of the Code
without regard to paragraph 5 thereof) of the Bank if any stock of the Bank is publicly traded on
an established securities market or otherwise.

ARTICLE II. ADMINISTRATION

     2.01. Administration of the Plan. The Plan shall be administered by the Committee which shall
have full and exclusive power to interpret the Plan, to determine the amount and manner of any
deferrals and payments and to adopt such rules and regulations as are necessary for its
administration. A member of the Committee who is a Participant shall not vote on any question
relating specifically to himself; and, in the event the remaining members of the Committee are
unable to come to a determination of any question, the same shall be determined by the Board of
Directors. The decisions of the Committee shall be final and conclusive on all persons and the
Committee shall not be subject to liability thereon. The Committee may delegate specific
responsibilities it assumes under this Plan which are administrative or ministerial in nature by
notifying a delegate as to the duties and responsibilities delegated.

     2.02. Claims Procedure. Claims for benefits under the Plan shall be made in writing to the
Committee. If a claim for benefits is wholly or partially denied, the Committee shall, within a
reasonable period of time, but not later than 90 days after receipt of the claim, provide the
claimant notice written in a manner calculated to be understood by the claimant of:

          (a) The specific reason or reasons for denial;

          (b) Specific reference to the pertinent Plan provisions on which the denial is based;

          (c) A description of any additional material or information necessary for the claimant to
perfect the claim and an explanation of why such material or information is necessary; and

          (d) Any explanation of the Plan’s claim review procedure.

A Participant whose claim for benefits under the Plan has been denied, or his duly authorized
representative, may request a review upon written application to the Committee, may review
pertinent documents, and may submit issues and comments in writing. The claimant’s written
request for review must be submitted to the Committee within 60 days after receipt by the claimant
of written notification of the denial of a claim. A decision by the Committee shall be made
promptly, and not later than 60 days after the Committee’s receipt of a request for review,

3

 

unless
special circumstances require an extension of time for proceeding, in which case a decision shall
be rendered as soon as possible, but not later than 120 days after receipt of the request for
review. The decision on review shall be in writing and shall include specific reasons for the
decision, specific reference to the pertinent Plan provision on which the decision is based, and be
written in a manner calculated to be understood by the claimant.

ARTICLE III. PARTICIPATION

     3.01. Eligibility to Participate. Each Director and any Officer who is designated by the
Committee to be eligible to participate shall be eligible to participate in this Plan. Each such
Director or Officer shall become a Participant in the Plan upon execution of a Participation
Agreement in a form prescribed by the Committee.

     Except as provided below, a Participation Agreement must be filed with the Committee prior to
the December 31 immediately preceding the Plan Year in which the Participant’s participation in the
Plan will commence. Newly eligible Participants must file a Participation Agreement within 30 days
of eligibility for deferrals effective at the end of such 30-day period. For the first short Plan
Year, Participants shall execute and file Participation Agreements within 30 days of the date the
Bank executes the Plan. For the 2003 Plan Year, the Participation Agreement in effect for
Directors of the Bank with respect to fees payable by the Bank shall apply equally to any fees
payable to those Directors who also serve on the Holding Company Board.

     3.02. Modification of Participation. A Participant may not modify his Participation Agreement
to change the amount deferred or the manner of payment, except with respect to amounts to be earned
in subsequent calendar years by executing a new Participation Agreement prior to the beginning of
the calendar year in which such modification is to become effective. Any such modification shall
have no effect upon amounts deferred or to be deferred through the effective date of such
modification, which shall be payable only in accordance with the terms of the Participation
Agreement and this Plan.

     3.03. Termination of Participation. A Participant may revoke his Participation Agreement by
filing a Notice of Termination of Election on a form prescribed by the Committee, which shall
become effective as of the beginning of the calendar year following the date such revocation is
filed with the Committee. Thereafter the Participant may again make new deferrals, if he is then
eligible, by executing a new Participation Agreement to defer amounts to be earned in subsequent
years, provided that such Participation Agreement is filed with the Committee prior to the
beginning of the calendar year in which it is to become effective.

ARTICLE IV. DEFERRED COMPENSATION

     4.01. Deferral of Bonuses by Officers. An Officer eligible to participate may elect to defer
all or any portion of the bonus (a “Bonus Deferral Amount”) which he is awarded with respect to any
calendar year if (a) for the short Plan Year, he files his Participation Agreement within 30 days
of the date the Bank executes the Plan and (b) for all subsequent Plan Years, he files his
Participation Agreement on or before December 31 of the Plan Year preceding the Plan

4

 

Year with
respect to which such Bonus is declared. The amount of such Bonus to be deferred shall be
specified by the Officer in his Participation Agreement.

     4.02. Deferral of Fees by Directors. A Director eligible to participate may elect to defer
all or any portion of the Director’s fee (a “Director’s Fee Deferral Amount”) he is eligible to
receive for a Plan Year if (a) for the short Plan Year, he files his Participation Agreement within
30 days of the date the Bank executes the Plan and (b) for all subsequent Plan Years, he files his
Participation Agreement on or before December 31 of the Plan Year preceding the Plan Year with
respect to which such Fee is earned and payable. The amount of such Fee to be deferred shall be
specified by the Director in his Participation Agreement.

ARTICLE V. ACCOUNTS AND INVESTMENTS

     5.01. Establishment of Accounts. The Bank shall establish on its books a Deferred Benefit
Account for each Participant which shall consist of a Bonus Deferral Subaccount and/or a Director’s
Fee Deferral Subaccount, as applicable. Upon deferral of any Bonus Deferral Amount, the Bank shall
make a memorandum credit to the Bonus Deferral Subaccount under the Participant’s Deferred Benefit
Account to indicate the amount of such deferral and upon deferral of any Director’s Fee Deferral
Amount, the Bank shall make a memorandum credit to the Director’s Fee Deferral Subaccount under the
Participant’s Deferred Benefit Account to indicate the amount of such deferral.

     5.02. Allocation of Interest to Accounts. Interest will be credited to the Deferred Benefit
Account of each Participant as of the first day of each month, based on the average rate received
for the prior month on the Bank’s investment securities, as defined by the Regulatory Call Reports
and as reported to the Board of Directors. Interest will be credited separately to the
Participant’s Bonus Deferral Subaccount and/or Director’s Fee Deferral Subaccount, as applicable.

     5.03. Vesting of Accounts. A Participant shall at all times be 100% vested in his Deferred
Benefit Account.

     5.04. Statement of Accounts. The Bank shall submit to each Participant, within 120 days after
the close of each Plan Year, a statement in such form as the Bank deems desirable, setting forth
the balance to the credit of the Participant in the applicable Subaccount or Subaccounts of his
Deferred Benefit Account as of the last day of the preceding Plan Year.

ARTICLE VI. BENEFITS

     6.01. Benefit upon Officer’s Normal Retirement, Disability and Termination of Employment or
Director’s Cessation of Service as a Director. Upon an Officer’s (a) retirement from the Bank
after reaching Normal Retirement Age, (b) Disability, or (c) termination of employment from the
Bank, he shall be entitled to a Deferred Benefit equal to the amount of the Bonus Deferral
Subaccount under his Deferred Benefit Account, determined in accordance with Sections 6.01 and 6.02
as of the first day of the month following the date the Participant is eligible to receive benefits
under this Plan. Upon the cessation of a Director’s service as a

5

 

Director of the Bank and the
Holding Company, he shall be entitled to a Deferred Benefit equal to the amount of the Director’s
Fee Deferral Subaccount under his Deferred Benefit Account, determined in accordance with Sections
6.01 and 6.02 as of the first day of the month following the date the Participant is eligible to
receive benefits under this Plan.

     6.02. Method of Payment of Benefits. Deferred Benefits shall be paid to a Participant in 1
lump sum or in substantially equal annual installments over such period of time (not to exceed 15
years), as elected by the Participant. The form of payment for any amounts deferred, shall be as
set forth in a 1-time, irrevocable election made by the Participant on a form to be provided by the
Committee. Such election shall be made prior to the beginning of the first period for which the
Director’s Fee Deferral Amount or Bonus Deferral Amount, as applicable, is to be deferred
hereunder. Prior to December 31, 2008, Participant may change his or her election with respect to
the form of payment provided that both of the following conditions are met: (1) the change does
not result in the acceleration into 2008 a payment that would otherwise have been made in 2009 or
later; and (2) the change does not result in the delay of a payment that would have been made in
2008 until 2009 or later. After December 31, 2008, the Participant may change his or her election
with respect to the form of payment only if (i) such election cannot take effect for at least 12
months after it is made; (ii) except for distributions upon the Participant’s death the election
must defer the first scheduled payment for at least 5 years; and (iii) with respect to payments to
be made at a specified time or pursuant to a specified schedule, the election must be made at least
12 months before the first scheduled payment.

     6.03. Death. If a Participant dies after the commencement of payment of any portion of his
Deferred Benefit, his Beneficiary shall receive 1 lump sum payment equal to the sum of the
remaining installments of the Participant’s Deferred Benefit within 30 days after the date of
Participant’s death. If a Participant dies while employed and prior to receipt of any portion of
any of his Deferred Benefit, the Participant’s Beneficiary shall receive the balance of the
Participant’s Deferred Benefit Account in 1 lump sum within 30 days after the date of Participant’s
death.

     6.04. Commencement of Payments.

          (a) Bonus Deferral Amounts. The first payment to a Participant from his Bonus Deferral
Subaccount (whether in the form of an installment payment or as a lump sum payment) shall be made
no later than January 31 of the calendar year following the year of an Officer’s (i) retirement
from the Bank after reaching Normal Retirement age, (ii) Disability or (iii) termination of
employment. Payment of subsequent installments, if applicable, shall be made no later than January
31 of the year in which such payment is due. The amount of each installment shall be equal to the
quotient obtained by dividing (i) the amount in the Bonus Deferral Subaccount under the
Participant’s Deferred Benefit Account as of January 1 of the Plan Year by (ii) the number of
installment payments elected by the Participant minus the number of installment payments previously
made on behalf of the Participant from his Bonus Deferral Subaccount. The balance shall be
appropriately reduced to reflect the installment payments made hereunder. In the event of death,
payment of remaining installments shall be made in accordance with Section 6.03, in a lump sum.
Anything to the contrary herein notwithstanding, the Committee may require minimum annual
installment payments of $1,000.00.

6

 

          (b) Director’s Fee Deferral Amounts. The first payment to a Participant from his Director’s
Fee Deferral Subaccount (whether in the form of an installment payment or as a lump sum payment)
shall be made no later than January 31 of the calendar year following the year of his cessation of
service as a Director of both the Holding Company and the Bank. Payment of subsequent
installments, if applicable, shall be made no later than January 31 of the year in which such
payment is due. The amount of each installment shall be equal to the quotient obtained by dividing
(i) the amount in the Director’s Fee Deferral Subaccount under the Participant’s Deferred Benefit
Account as of January 1 of the Plan Year by (ii) the number of installment payments elected by the
Participant minus the number of installment payments previously made on behalf of the Participant
from his Director’s Fee Deferral Subaccount. The balance shall be appropriately reduced to reflect
the installment payments made hereunder. In the event of death, payment of remaining installments
shall be made as elected by the Participant. Anything to the contrary herein notwithstanding, the
Committee may require minimum annual installment payments of $1,000.00.

          (c) Restriction on Timing of Distribution. Notwithstanding any provision of this Agreement to
the contrary, if the Participant is considered a Specified Employee at Separation from Service
under such procedures as established by the Bank in accordance with Section 409A of the Code,
benefit distributions that are made upon Separation from Service may not, to the extent required by
Section 409A of the Code, commence earlier than six (6) months after the date of such Separation
from Service. Therefore, in the event this Article VI, Section (c) is applicable to the
Participant, any distribution or series of distributions to be made due to a Separation from
Service shall commence no earlier than the first day of the seventh month following the Separation
from Service, provided that to the extent permitted by Section 409A of the Code, only payments
scheduled to be paid during the first six (6) months after the date of such Separation from Service
shall be delayed and such delayed payments shall be paid in a single sum on the first day of the
seventh month following the date of such Separation from Service.

ARTICLE VII. AMENDMENT AND TERMINATION OF THE PLAN

     7.01. Amendment by Board. The Board may at any time amend the Plan in whole or in part;
provided, however, that, except as provided in Section 8.02, no amendment shall decrease or
restrict any Deferred Benefit Account at the time of such amendment.

     7.02. Board’s Right to Terminate. The Board may at any time terminate the Plan with respect
to new elections to defer if, in its judgment, the continuance of the Plan, the tax, accounting, or
other effects thereof, or potential payments thereunder would not be in the best interests of the
Bank. The Board may also terminate the Plan in its entirety at any time, and upon any such
termination, each Participant (and Beneficiary) who is then receiving a Deferred Benefit shall be
paid the then remaining balance in his Deferred Benefit Account, as elected by the Participant;
and, each Participant who has not received a payment of his Deferred Benefit shall be paid as
elected by the Participant in accordance with this Plan.

     7.03. Change in Control. In the event of a Change in Control, the Plan may be terminated in
the sole discretion of the Board of Directors. If the Plan is not terminated upon a

7

 

Change in
Control, all Participation Agreements filed with Committee prior to such Change in Control shall
remain in effect without modification.

     7.04. ERISA Compliance. Notwithstanding any provisions of this Article VII to the contrary,
the Bank may amend or modify the Plan in any respect which shall be necessary or advisable in order
that the benefits provided by the Plan shall constitute unfunded deferred compensation for a select
group of management or highly compensated employees as described in Sections 201(2), 301(a)(3) and
401(a)(1) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”).

     7.05. Distributions Upon Termination. Notwithstanding anything to the contrary of this
Article VII, distributions following termination of the Plan shall be made in the same time and
manner specified in the Plan except to the extent provided by Code Section 409A and the final
regulations thereunder, including, not by way of limitation, Treas. Reg.
§1.409A-3(j)(4)(ix)(A)-(D).

ARTICLE VIII. MISCELLANEOUS

     8.01. Unfunded Plan. The undertakings of the Bank herein to each Participant constitute
merely the unsecured promise to make the payments as provided for herein and it is the Bank’s
intention that the Plan be unfunded for tax purposes and for purposes of Title I of ERISA. Neither
a Participant nor any Beneficiary nor any other person shall have, by reason of this Plan, any
rights, title or interest of any kind in or to any property of the Bank, nor any beneficial
interest in any trust which may be established by the Bank in connection with this Plan. If the
Bank transfers any property to a trust in connection with this Plan such trust shall not be held
for the exclusive benefit of Participants, and any assets
held in such trust shall be subject to the claims of the Bank’s general creditors in the event
of the Bank’s insolvency or bankruptcy.

     8.02. Compliance with Section 409A. This Plan shall at all times be administered and
the provisions of this Plan shall be interpreted consistent with the requirements of Section 409A
of the Internal Revenue Code and any and all regulations thereunder, including such regulations as
may be promulgated after the Effective Date of this Plan.

     IN WITNESS WHEREOF, the Bank, by its officers duly authorized, has executed this document this
31st day of  December, 2008.

	 	 	 	 	 
	Attest:	 	PEOPLES STATE BANK
	 
	 	 	 	 
	 

	 	By:	 	/s/ David A. Wilson
	 

	 	 	 	 
	 

	 	Its:	 	Senior Vice President and Chief
Financial Officer

8

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