Document:

Exhibit 10.2

 

INDEMNIFICATION AGREEMENT

 

This INDEMNIFICATION AGREEMENT
(the "Agreement"), dated as of ___________, 2014, is entered into by and between First National Bank in Howell,
a national bank association (the "Bank"), and ____________________ (the "Director").

 

Background

 

A.           The
Board of Directors of the Bank (the "Board") recognizes that qualified individuals have become more reluctant to serve
financial institutions as directors or in other capacities unless they are provided with adequate protection against risks of claims
and actions against them arising out of their service to and activities on behalf of the institution. In addition, in light of
increased regulation and the difficulties that continue to challenge the financial services industry, the risk of serving as a
director of a financial institution, such as the Bank, has increased.

 

B.           The
Board has discussed the fact that the shareholders of the Bank's holding company, FNBH Bancorp, Inc. (the "Company"),
have already approved certain limitations on the liability of directors to the Company and its shareholders and certain indemnification
to be provided by the Company to its directors, as set forth in the Company's Articles of Incorporation. These limitations on liability
and indemnification at the holding company level are also intended to protect directors of the Bank for expenses, damages, and
liabilities they may incur as a result of their service to the Bank. However, there may be situations in which such protections
at the holding company level are not deemed applicable or adequate to protect directors of the Bank. Federal law applicable to
the Bank permits the Bank to enter into contractual arrangements with its directors with respect to indemnification.

 

C.           The
Board has determined that the increased difficulty in attracting and retaining qualified individuals to serve on the Board is detrimental
to the best interests of the Bank, the Company, and the shareholders of the Company and that the Bank should act to assure such
persons that there will be increased certainty of such protection in the future. The Board has determined that it is reasonable
and prudent for the Bank to contractually obligate itself to indemnify, and to advance expenses on behalf of, such persons to the
fullest extent permitted by applicable law so they will serve or continue to serve the Bank free from undue concern that they will
not be so indemnified.

 

D.           This
Agreement is a supplement to and in furtherance of the Articles of Incorporation and Bylaws of the Company and the Articles of
Association and Bylaws of the Bank and shall not be deemed a substitute for any such provisions, nor to diminish or abrogate any
rights of Director pursuant to any such provisions.

 

Agreement

 

THEREFORE, in order
to induce Director to serve or continue to serve the Bank as a director, and in consideration of the mutual covenants set forth
in this Agreement, the parties agree as follows:

 

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1.            Definitions.
Certain terms used in this Agreement are defined as follows:

 

(a)          "Corporate
Status" describes the status of a person serving (or having served) as a director, officer, employee, or agent of the
Bank or as a director, officer, partner, trustee, employee, or agent of any other corporation, partnership, joint venture, trust,
or other enterprise at the request of the Bank, including (without limitation) such person's service as a director of the Company.

 

(b)          "Enterprise"
shall mean the Bank and any other corporation, partnership, joint venture, trust, employee benefit plan, or other enterprise that
Director is or was serving at the request of the Bank as a director, officer, partner, trustee, employee, or agent.

 

(c)          "Expenses"
shall include all reasonable attorneys' fees, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses,
duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, and all other disbursements or
expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating,
participating, or being or preparing to be a witness in a Proceeding, or responding to, or objecting to, a request to provide discovery
in any Proceeding; provided, however, that Expenses shall not include amounts paid in settlement by Director or the amount of judgments,
fines, or penalties against Director.

 

(d)          "Independent
Counsel" means a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither presently
is, nor in the past five years has been, retained to represent (i) the Bank or Director in any matter material to either such party,
or (ii) any other party to the Proceeding giving rise to a claim for indemnification pursuant to this Agreement; provided, however,
that Independent Counsel shall not include any person who, under the applicable standards of professional conduct then prevailing,
would have a conflict of interest in representing either the Bank or Director in an action to determine Director's rights under
this Agreement. For the purposes of applying the preceding sentence, a law firm's or a lawyer's service as Independent Counsel
pursuant to this Agreement or a similar indemnification agreement to which the Company or the Bank is a party during the preceding
five years shall not disqualify such firm or lawyer as an Independent Counsel.

 

(e)          "Proceeding"
includes any threatened, pending, or completed action, suit, arbitration, alternate dispute resolution mechanism, investigation,
inquiry, administrative hearing, or any other actual, threatened, or completed proceeding, whether brought by or in the right of
the Bank or otherwise and whether civil, criminal, administrative, or investigative, and whether formal or informal, in which Director
was, is, or will be involved as a party or otherwise, by reason of his or her Corporate Status or by reason of any action taken
by him or her (or any inaction on his or her part) while acting in his or her Corporate Status; in each case whether or not he
or she is acting or serving in any such capacity at the time any liability or expense is incurred for which indemnification can
be provided under this Agreement, but excluding any such proceeding initiated by Director to enforce his or her rights under this
Agreement.

 

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2.            Agreement
to Serve. Director agrees to serve as a director of the Bank to the best of his or her ability so long as he or she is duly
elected and qualified in accordance with the Articles of Association and Bylaws of the Bank or until his or her earlier resignation
or removal. The Bank expressly confirms and agrees that it has entered into this Agreement and assumes the obligations imposed
on it pursuant to this Agreement in order to induce Director to serve or continue to serve as a director of the Bank, and the Bank
acknowledges that Director is relying upon this Agreement in serving as a director of the Bank.

 

3.            Indemnification
of Director. The Bank agrees to hold harmless and indemnify Director to the fullest extent permitted by law, as such may be
amended from time to time. In furtherance of the foregoing indemnification, and without limiting the generality of the foregoing
indemnification:

 

(a)          Proceedings
Other Than Proceedings by or in the Right of the Bank. Director shall be entitled to the rights of indemnification provided
in this Section 3(a) if, by reason of his or her Corporate Status, Director is, or is threatened to be made, a party to or participant
in any Proceeding other than a Proceeding by or in the right of the Bank. Pursuant to this Section 3(a), Director shall be indemnified
against all Expenses, judgments, penalties, fines, and amounts paid in settlement actually and reasonably incurred by him or her,
or on his or her behalf, in connection with such Proceeding or any claim, issue, or matter in such Proceeding.

 

(b)          Proceedings
by or in the Right of the Bank. Director shall be entitled to the rights of indemnification provided in this Section 3(b) if,
by reason of his or her Corporate Status, Director is, or is threatened to be made, a party to or participant in any Proceeding
brought by or in the right of the Bank. Pursuant to this Section 3(b), Director shall be indemnified against (i) all Expenses,
judgments, penalties, and fines actually and reasonably incurred by him or her, or on his or her behalf, in connection with such
Proceeding or any claim, issue, or matter in such Proceeding; and (ii) all amounts paid in settlement actually and reasonably incurred
by him or her, or on his or her behalf, in connection with such Proceeding or any claim, issue, or matter in such Proceeding if
Director acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the
Bank or its shareholder. Notwithstanding the foregoing, if applicable law so provides, no indemnification pursuant to the preceding
sentence (including, without limitation, against Expenses) shall be made in respect of any claim, issue, or matter in such Proceeding
as to which Director shall have been adjudged to be liable to the Bank unless and to the extent that a court of competent jurisdiction
shall determine that such indemnification may be made.

 

(c)          Indemnification
for Expenses of a Party Who is Wholly or Partly Successful. Notwithstanding any other provision of this Agreement, to the extent
that Director is, by reason of his or her Corporate Status, a party to and is successful, on the merits or otherwise, in any Proceeding,
he or she shall be indemnified to the maximum extent permitted by law, as such may be amended from time to time, against all Expenses
actually and reasonably incurred by him or her or on his or her behalf in connection with such Proceeding. If Director is not wholly
successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues,
or matters in such Proceeding, the Bank shall indemnify Director against all Expenses actually and reasonably incurred by him or
her or on his or her behalf in connection with each successfully resolved claim, issue, or matter. For purposes of this Section
3(c) and without limitation, the termination of any claim, issue, or matter in such a Proceeding by dismissal, with or without
prejudice, shall be deemed to be a successful result as to such claim, issue, or matter.

 

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4.            Contribution.

 

(a)          Joint
Liability. Whether or not the indemnification provided in Section 3 above is available, in respect of any Proceeding in which
the Bank is jointly liable with Director (or would be if joined in such Proceeding), the Bank shall pay, in the first instance,
the entire amount of any judgment or settlement of such Proceeding without requiring Director to contribute to such payment, and
the Bank waives and relinquishes any right of contribution it may have against Director. The Bank shall not enter into any settlement
of any Proceeding in which the Bank is jointly liable with Director (or would be if joined in such Proceeding) unless such settlement
provides for a full and final release of all claims asserted against Director.

 

(b)          Contribution
to Amounts Paid by Director. Without diminishing or impairing the obligations of the Bank set forth in Section 4(a) above,
if, for any reason, Director shall elect or be required to pay all or any portion of any judgment or settlement in any Proceeding
in which the Bank is jointly liable with Director (or would be if joined in such Proceeding), the Bank shall contribute to the
amount of Expenses, judgments, fines, and amounts paid in settlement actually and reasonably incurred and paid or payable by Director
in proportion to the relative benefits received by the Bank and all officers, directors, or employees of the Bank, other than Director,
who are jointly liable with Director (or would be if joined in such Proceeding), on the one hand, and Director, on the other hand,
from the transaction or events from which such Proceeding arose; provided, however, that the proportion determined on the basis
of relative benefit may, to the extent necessary to conform to law, be further adjusted by reference to the relative fault of the
Bank and all officers, directors, or employees of the Bank other than Director who are jointly liable with Director (or would be
if joined in such Proceeding), on the one hand, and Director, on the other hand, in connection with the transaction or events that
resulted in such Expenses, judgments, fines, or settlement amounts, as well as any other equitable considerations that applicable
law may require to be considered. The relative fault of the Bank and all officers, directors, or employees of the Bank, other than
Director, who are jointly liable with Director (or would be if joined in such Proceeding), on the one hand, and Director, on the
other hand, shall be determined by reference to, among other things, the degree to which their actions were motivated by intent
to gain personal profit or advantage, the degree to which their liability is primary or secondary, and the degree to which their
conduct is active or passive.

 

(c)          Additional
Contribution. To the fullest extent permissible under applicable law, if the indemnification provided for in this Agreement
is unavailable to Director for any reason, the Bank, in lieu of indemnifying Director, shall contribute to the amount incurred
by Director, whether for judgments, fines, penalties, excise taxes, amounts paid or to be paid in settlement, and/or for Expenses,
in connection with any claim relating to an indemnifiable event under this Agreement, in such proportion as is deemed fair and
reasonable in light of all of the circumstances of such Proceeding in order to reflect (i) the relative benefits received by the
Bank and Director as a result of the transaction or events giving cause to such Proceeding and/or (ii) the relative fault of the
Bank (and its directors, officers, employees, and agents) and Director in connection with such transaction or events.

 

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5.            Indemnification
for Expenses of a Witness. Notwithstanding any other provision of this Agreement, to the extent that Director is, by reason
of his or her Corporate Status, a witness, or is made (or asked) to respond to discovery requests, in any Proceeding to which Director
is not a party, he or she shall be indemnified against all Expenses actually and reasonably incurred by him or her on his or her
behalf in connection with acting as such witness or responding to such discovery requests.

 

6.            Advancement
of Expenses. Notwithstanding any other provision of this Agreement, the Bank shall, from time to time, advance all Expenses
incurred by or on behalf of Director in connection with any Proceeding in which Director is involved by reason of his or her Corporate
Status within 30 days after the receipt by the Bank of a statement from Director requesting such advance, whether prior to or after
final disposition of such Proceeding. Such statement shall reasonably evidence the Expenses incurred by Director and shall include
or be preceded or accompanied by a written undertaking by or on behalf of Director to repay any Expenses advanced if it shall ultimately
be determined that Director is not entitled to be indemnified against such Expenses. Any advances and undertakings to repay pursuant
to this Section 6 shall be unsecured and interest-free.

 

7.            Procedures
for Determination of Entitlement to Indemnification. It is the intent of this Agreement to secure for Director rights of indemnity
that are as favorable as may be permitted under federal law and Michigan Business Corporation Act (and any successor statute) and
public policy of the United States and the State of Michigan. Accordingly, the parties agree that the following procedures and
presumptions shall apply, to the maximum extent permissible by law, in the event of any question as to whether Director is entitled
to indemnification under this Agreement:

 

(a)          Request
for Indemnification. To obtain indemnification under this Agreement, Director shall submit to the Bank a written request, together
with such documentation and information as is reasonably available to Director and is reasonably necessary to determine whether
and to what extent Director is entitled to indemnification. The Secretary of the Bank shall, promptly upon receipt of such a request
for indemnification, advise the Board in writing that Director has requested indemnification. Notwithstanding the foregoing, any
failure of Director to provide such a request to the Bank, or to provide such a request in a timely fashion, shall not relieve
the Bank of any liability that it may have to Director unless, and to the extent that, such failure actually and materially prejudices
the interests of the Bank.

 

(b)          Person
to Determine Entitlement to Indemnification. Upon written request by Director for indemnification pursuant to Section 7(a)
above, a determination with respect to Director's entitlement to such indemnification shall be made in the specific case by one
of the following four methods, which shall be at the election of the Board: (i) by a majority vote of the disinterested directors,
even though less than a quorum, (ii) by a committee of disinterested directors designated by a majority vote of the disinterested
directors, even though less than a quorum, (iii) if there are no disinterested directors or if the disinterested directors so direct,
by Independent Counsel, selected by the Board, in a written opinion to the Board, a copy of which shall be delivered to the Director,
or (iv) if so directed by the Board, by the shareholder of the Bank. For purposes of this Agreement, disinterested directors are
those members of the Board who are not parties to the Proceeding in respect of which indemnification is sought by Director.

 

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(c)          Timing
for Determination. If the person, persons, or entity empowered or selected under Section 7(b) to determine whether Director
is entitled to indemnification shall not have made a determination within 60 days after receipt by the Bank of the request for
indemnification, the requisite determination of entitlement to indemnification shall be deemed to have been made and Director shall
be entitled to such indemnification absent (i) a misstatement by Director of a material fact, or an omission of a material fact
necessary to make Director’s statement not materially misleading, in connection with the request for indemnification, or
(ii) a prohibition of such indemnification under applicable law; provided, however, that such 60-day period may be extended for
a reasonable time, not to exceed an additional 30 days, if the person, persons, or entity making such determination with respect
to entitlement to indemnification in good faith requires such additional time to obtain or evaluate documentation and/or information
relating to such entitlement.

 

(d)          Cooperation
by Director. Director shall cooperate with the person, persons, or entity making such determination with respect to Director's
entitlement to indemnification, including providing to such person, persons, or entity upon reasonable advance request any documentation
or information that is not privileged or otherwise protected from disclosure and that is reasonably available to Director. Any
Independent Counsel, member of the Board, or shareholder of the Bank shall act reasonably and in good faith in making a determination
regarding Director's entitlement to indemnification under this Agreement. Any costs or expenses (including attorneys' fees and
disbursements) incurred by Director in so cooperating with the person, persons, or entity making such determination shall be borne
by the Bank (irrespective of the determination as to Director's entitlement to indemnification) and the Bank agrees to indemnify
and hold Director harmless from such costs and expenses.

 

(e)          Certain
Resolutions of Proceedings. The Bank acknowledges that a settlement or other disposition short of final judgment may be successful
if it permits a party to avoid expense, delay, distraction, disruption, and uncertainty. If any Proceeding to which Director is
a party is resolved in any manner other than by adverse judgment against Director (including, without limitation, settlement of
such Proceeding with or without payment of money or other consideration), it shall be presumed that Director has been successful
on the merits or otherwise in such Proceeding. Anyone seeking to overcome this presumption shall have the burden of proof and the
burden of persuasion by clear and convincing evidence. The termination of any Proceeding or of any claim, issue, or matter of any
Proceeding, by judgment, order, settlement, or conviction, or upon a plea of nolo contendere or its equivalent, shall not
(except as otherwise expressly provided in this Agreement) of itself adversely affect the right of Director to indemnification
or create a presumption that Director did not act in good faith and in a manner which he or she reasonably believed to be in or
not opposed to the best interests of the Bank or its shareholder.

 

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8.            Non-Exclusivity;
Insurance; Subrogation; No Duplication.

 

(a)          Non-Exclusivity.
The rights of indemnification provided by this Agreement shall not be deemed exclusive of any other rights to which Director
may at any time be entitled under applicable law, the Articles of Incorporation or the Bylaws of the Company, the Articles of Association
or the Bylaws of the Bank, any agreement, a vote of shareholders of the Company or of the shareholder of the Bank, a resolution
of directors of the Company or the Bank, or otherwise. No amendment, alteration, or repeal of this Agreement or of any provision
of this Agreement shall limit or restrict any right of Director under this Agreement in respect of any action taken or omitted
by such Director in his or her Corporate Status prior to such amendment, alteration, or repeal. To the extent a change in federal
law or the Michigan Business Corporation Act (or any successor statute), whether by statute or judicial decision, permits greater
indemnification than would be afforded currently under the Articles of Incorporation and Bylaws of the Company, the Articles of
Association and Bylaws of the Bank, and this Agreement, it is the intent of the parties that Director shall enjoy by this Agreement
the greater benefits so afforded by such change. No right or remedy conferred by this Agreement is intended to be exclusive of
any other right or remedy, and every other right and remedy shall be cumulative and in addition to every other right and remedy
given pursuant to this Agreement or now or hereafter existing at law or in equity or otherwise. The assertion of any right or remedy
pursuant to this Agreement, or otherwise, shall not prevent the concurrent assertion or employment of any other right or remedy.

 

(b)          Insurance.
To the extent the Bank maintains an insurance policy or policies providing liability insurance for directors, officers, partners,
trustees, employees, or agents of the Bank or of any other corporation, partnership, joint venture, trust, or other enterprise
that such person serves at the request of the Bank, Director shall be covered by such policy or policies in accordance with its
or their terms to the maximum extent of the coverage available for any director, officer, partner, trustee, employee, or agent
under such policy or policies. If, at the time of the receipt of a notice of a claim pursuant to the terms of this Agreement, the
Bank has directors' and officers' liability insurance in effect, the Bank shall give prompt notice of the commencement of such
claim to the insurers in accordance with the procedures set forth in the respective policies. The Bank shall thereafter take all
necessary or desirable action to cause such insurers to pay, on behalf of Director, all amounts payable as a result of such Proceeding
in accordance with the terms of such policies.

 

(c)          Subrogation.
In the event of any payment under this Agreement, the Bank shall be subrogated to the extent of such payment to all of the
rights of recovery of Director, who shall execute all documents required and take all actions necessary for Bank to secure and
enforce such rights.

 

(d)          No
Duplication. The Bank shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable pursuant
to this Agreement if and to the extent that Director has otherwise actually received such payment under any insurance policy, contract,
agreement, or otherwise. The Bank's obligation to indemnify or advance Expenses pursuant to this Agreement to Director who is or
was serving at the request of the Bank as a director, officer, partner, trustee, employee, or agent of any other corporation, partnership,
joint venture, trust, or other enterprise shall be reduced by any amount Director has actually received as indemnification or advancement
of expenses from such other corporation, partnership, joint venture, trust, or other enterprise.

 

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9.            Exceptions
to Right of Indemnification. Notwithstanding any provision in this Agreement, the Bank shall not be obligated under this Agreement
to make any indemnity in connection with any claim made against Director: (i) for which payment has actually been made to or on
behalf of Director under any insurance policy or other indemnity provision, except with respect to any excess beyond the amount
paid under any insurance policy or other indemnity provision; or (ii)

 

for an accounting of profits made from the
purchase and sale (or sale and purchase) by Director of securities of the Company within the meaning of Section 16(b) of
the Securities Exchange Act of 1934, as amended, or similar provisions of state statutory law or common law; or (iii) in connection
with any Proceeding (or any part of any Proceeding) initiated by Director, including any Proceeding (or any part of any Proceeding)
initiated by Director against the Bank or its directors, officers, or employees, unless the Board authorized the Proceeding (or
any part of any Proceeding) prior to its initiation or the Bank provides the indemnification, in its sole discretion, pursuant
to the powers vested in the Bank under applicable law; or (iv) to the extent such indemnity is deemed to violate any applicable
law, rule, or regulation.

 

10.           Duration
of Agreement; Binding Effect. All agreements and obligations of the Bank contained in this Agreement shall continue during
the period Director is a director of the Bank (or is or was serving at the request of the Bank as a director, officer, partner,
trustee, employee, or agent of another corporation, partnership, joint venture, trust, or other enterprise) and for a period of
two years thereafter and shall continue thereafter so long as Director shall be subject to any Proceeding by reason of his or her
Corporate Status, whether or not he or she is acting or serving in any such capacity at the time any liability or Expense is incurred
for which indemnification can be provided under this Agreement. This Agreement shall be binding upon and inure to the benefit of
and be enforceable by the parties and their respective successors (including any direct or indirect successor by purchase, merger,
consolidation, or otherwise to all or substantially all of the business or assets of the Bank), assigns, spouses, heirs, executors,
and personal and legal representatives.

 

11.           Entire
Agreement. This Agreement constitutes the entire agreement between the parties with respect to its subject matter and supersedes
all prior agreements and understandings, oral, written, and implied, between the parties with respect to such subject matter.

 

12.           Severability.
Notwithstanding any provision of this Agreement to the contrary, the invalidity or unenforceability of any provision of this Agreement
shall in no way affect the validity or enforceability of any other provision. Without limiting the generality of the foregoing,
this Agreement is intended to confer upon Director indemnification rights to the fullest extent permitted by applicable laws, including
federal and state laws. In the event any provision of this Agreement conflicts with any applicable law, such provision shall be
deemed modified, consistent with the aforementioned intent, to the extent necessary to resolve such conflict.

 

13.           Modification
and Waiver. No supplement, modification, termination, or amendment of this Agreement shall be binding unless executed in writing
by both of the parties. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any
other provisions of this Agreement (whether or not similar) nor shall such waiver constitute a continuing waiver.

 

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14.           Notice
By Director. Director agrees to promptly notify the Bank in writing upon being served with or otherwise receiving any summons,
citation, subpoena, complaint, indictment, information, or other document relating to any Proceeding or matter that may be subject
to indemnification covered by this Agreement. The failure to so notify the Bank shall not relieve the Bank of any obligation which
it may have to Director under this Agreement or otherwise unless and only to the extent that such failure or delay materially prejudices
the Bank.

 

15.           Notices.
All notices and other communications given or made pursuant to this Agreement shall be in writing and shall be deemed effectively
given (a) upon personal delivery to the party to be notified, (b) when sent by confirmed electronic mail or facsimile if sent during
normal business hours of the recipient, and if not so confirmed, then on the next business day, (c) five days after having been
sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one day after deposit with a nationally
recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications to Director
shall be sent to the primary address for the Director on file with the Bank or to such other address as may have been furnished
to the Bank by Director. All communications to the Bank shall be sent to the attention of its President at its principal executive
office or to such other address as may have been furnished to Director by the Bank.

 

16.           Counterparts.
This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together
shall constitute one and the same the same instrument.

 

17.           Headings.
The headings of the sections of this Agreement are inserted for convenience only and shall not be deemed to constitute part of
this Agreement or to affect the construction of this Agreement.

 

18.           Governing
Law and Consent to Jurisdiction. This Agreement and the legal relations between the parties shall be governed by, and
construed and enforced in accordance with, the laws of the State of Michigan, without regard to its conflict of laws rules. The
Bank and Director irrevocably and unconditionally that any dispute arising under this Agreement shall be subject to the exclusive
jurisdiction and venue of courts located in either Livingston or Kent County, Michigan. To the maximum extent permitted by applicable
law, each party to this Agreement expressly and irrevocably consents to the personal jurisdiction and venue of such courts and
waives any objections it may have based on improper venue or forum non conveniens to the conduct of any such proceeding
in any such court.

 

[Signatures appear on following page.]

 

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INTENDING TO BE LEGALLY
BOUND, the parties have executed this Indemnification Agreement as of the date first above written.

 

	BANK:	 	DIRECTOR:
	First National Bank in Howell	 	 
	 	 	 
	 	 	 
	By:  Ronald L. Long	 	Print name: 	 
	Its:  President & CEO	 	 	 

 

    	10EXHIBIT 10.1

 

EXECUTION COPY

 

November 8, 2014

 

Mr. Brian MacDonald

c/o Hertz Global Holdings, Inc.

999 Vanderbilt Beach Road

Naples, FL 34108

 

Dear Brian:

 

In connection with your recent appointment, effective September 7, 2014 (the “Appointment Date”), as interim Chief Executive Officer (“Interim CEO”) of Hertz Global Holdings, Inc. (“Holdings”) and The Hertz Corporation (“Hertz” and, together with Holdings, the  “Companies”), I am pleased to confirm the following additional compensation that will be provided to you during your tenure as Interim CEO, in recognition of the additional duties and responsibilities that you have assumed as Interim CEO:

 

1.                                    Term; Current Employment Agreement.

 

(a)       Term. The terms of this letter became effective as of the Appointment Date, and shall expire on the date that you cease to be Interim CEO, if you are replaced by a new Chief Executive Officer of the Companies, unless otherwise agreed by you and the Board of Directors of the Companies (the “Boards”) or your employment with the Companies is otherwise terminated. The period during which you are employed by Holdings pursuant to this letter agreement as provided in the preceding sentence is referred to herein as the “Interim Term”.

 

(b)      Current Employment Agreement.  You and the Companies acknowledge that Holdings and you have previously entered into an Employment Agreement, dated June 2, 2014 (the “HERC Agreement”), covering the terms of your employment with Holdings in your capacity as Chief Executive Officer of Hertz Equipment Rental Corporation (“HERC”).  Any capitalized terms used in this letter agreement but not defined in this letter agreement will have the meaning proscribed in the HERC Agreement.  You and Holdings agree that, during the Interim Term, to the extent not expressly incorporated into this letter agreement, the provisions contained in the HERC Agreement will be tolled.  Subject to the provisions of Section 8 of this letter agreement, upon the expiration of the Interim Term, you will be reappointed as Chief Executive Officer of HERC and continue to be employed with Holdings pursuant to the terms of the HERC Agreement, with any modifications to such agreement to be made to reflect the passage of time or other facts as may be applicable (but which for the avoidance of doubt shall not result in such terms being less favorable to you than in effect on the date you commenced employment thereunder).

 

2.                                    Position.  During the Interim Term, you will serve as Interim CEO of the Companies.  In that capacity, you will report directly to the Board of Directors of Holdings (the “Holdings Board”) and have the customary authority, duties and responsibilities that accompany this position.   During the Interim Term, the Holdings Board can remove you as Interim CEO at any time, with or without prior notice.

 

 

3.                                    Location.  During the Interim Term, you will perform your duties at Holdings’ headquarters in Naples, Florida (and travel to other locations as business requires).

 

4.                                    Annual Base Salary; Special Cash Incentive.  You and Holdings acknowledge that your current annual base salary under the HERC Agreement is, and will remain so long as you are Interim CEO, $1,100,000 (your “Annual Base Salary”), payable at the times consistent with the Companies’ general policies regarding compensation of senior executives.  During the Interim Term, you will also be paid, on an annualized basis retroactive to your Appointment Date, $500,000 (your “Special Cash Incentive”).  On the payroll date following as soon as practicable following the execution of this letter agreement, you will receive a lump sum payment equal to the amount you would have received if the Special Cash Incentive had commenced being paid to you immediately following the Appointment Date, and thereafter the balance of the Special Cash Incentive will be paid to you in substantially equal installments on at least a monthly basis at the times consistent with the Companies’ general policies regarding compensation of senior executives.

 

5.                                    Annual Bonus Opportunity.  You and Holdings acknowledge that, during the Interim Term, you will continue to be eligible to participate in Holdings’ Executive Incentive Plan, with a target annual incentive bonus of 130% of your Annual Base Salary (your “Target Annual Bonus”), with the actual annual bonus amount to be awarded to you based on such performance results as determined by the Compensation Committee of the Holdings Board (the “Committee”) and the terms of the Holdings’ Executive Incentive Plan as in effect from time to time; provided that your actual bonus for the calendar year 2014 under the Holdings Executive Incentive Plan will be no less than the Target Annual Bonus, prorated for the portion of the calendar year during which you were employed by the Companies.

 

6.                                    Annual Equity Opportunity.  If, at the time that grants of equity-based awards are made under the Holdings 2008 Omnibus Incentive Plan (the “Omnibus Plan”) to senior executives of the Companies in respect of the 2015 fiscal year (the “2015 Equity Grants”), you remain Interim CEO, you will also receive equity-based awards under the Omnibus Plan in the same form as such senior executives receive such grants; however, the level of such grants will be commensurate with the level you would have received if you had been employed as Chief Executive Officer of HERC pursuant to the HERC Agreement.  In addition, if, at the time the 2015 Equity Grants are made, you have been reappointed as Chief Executive Officer of HERC due to expiration of the Interim Term, and the Spin-off has not yet been consummated, you will receive equity-based awards under the Omnibus Plan in the same form as the senior executives of the Companies receive such grants, at a level commensurate with your position as Chief Executive Officer of HERC.

 

7.                                    Determination of Initial Equity Grant; Special Equity Incentive Award.

 

(a)       Determination of Initial Equity Grant. Notwithstanding the provisions of Section 3(c)(i) of the HERC Agreement, Holdings and you agree that the number of shares of Holdings common stock that will be subject to the Initial Equity Grant, at such time as such award may be granted pursuant to the terms of the HERC Agreement, will be equal to 114,000.

 

 

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(b)      As a special inducement to perform your services as Interim CEO, within 5 days after the Companies have filed all required reports under Section 13 or Section 15(d) of the Securities Exchange Act of 1934 (including, for the avoidance of doubt, amendment #2 to Holdings’ annual report on Form 10-K for the year ended December 31, 2013) (all such filing requirements, the “periodic reporting requirements”), Holdings will grant you 23,000 restricted stock units under the Omnibus Plan (the “Special Equity Award”). The Special Equity Award will vest, subject to achievement of a performance goal based on EBITDA of the Companies and their consolidated subsidiaries exceeding $20,000,000 during the one-year period beginning on the first day of the quarter containing the grant date of the Special Equity Award (with EBITDA of the Companies and their consolidated subsidiaries generally referring to Corporate EBITDA as disclosed by the Companies, subject to equitable adjustment in the event of material acquisitions or dispositions by the Companies during the performance period), in full in one installment on September 8, 2015, assuming your continued employment with the Companies (whether as Interim CEO or otherwise) and subject to such other customary terms and conditions as may be set forth in the applicable performance stock unit award agreement to be used to make such award, which will be in substantially the form used to make grants to other senior executive officers of Holdings as previously filed by Holdings with the Securities and Exchange Commission.  In addition, upon expiration of the Interim Term and your continued employment under the HERC Agreement, the Special Equity Award will, to the extent you are employed with the Companies on the date of the consummation of the Spin-off, be converted into a replacement grant in the same manner as the Initial Equity Award is converted into a Replacement Grant under Section 3(c)(i) of the HERC Agreement.

 

8.                                    Severance Provisions.

 

(a)       Application of Section 8 of HERC Agreement.  During the Interim Term, Section 8 of the HERC Agreement will continue to apply, except that, solely during the Interim Term, all references to your position as “Chief Executive Officer of HERC” contained in Section 8(d) of the HERC Agreement will instead refer to your position as “interim Chief Executive Officer of Holdings”.

 

(b)      Treatment of Certain Equity Awards.  Notwithstanding anything contained in the HERC Agreement, the Omnibus Plan or any award agreement granted thereunder, if, during the Interim Term, Holdings terminates your employment without Cause under Section 8(c) of the HERC Agreement or you terminate your employment for Good Reason (as modified by Section 8(a) above) under Section 8(d) of the HERC Agreement, then, upon your satisfaction of the same terms and conditions of Section 8(c) of the HERC Agreement, and in addition to the severance payments and benefits to which you are entitled under Section 8(c) of the HERC Agreement: (i) if, on or prior to your Date of Termination, you have received the Special Equity Award and the Initial Equity Award, you will become vested in any unvested portion of each such award; but if (ii) the Companies have not yet satisfied their periodic reporting requirements such that you have not yet received the Special Equity Award and the Initial Equity Award, you will instead receive a lump sum cash payment equal to $3,000,000, payable on the same date you would otherwise receive the amount set forth in Section 8(e)(iii)(A) of the HERC Agreement.

 

 

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(c)       Notwithstanding the foregoing and for the avoidance of doubt, you agree that upon the expiration of the Interim Term, if you are removed as Interim CEO by the Holdings Board but simultaneously reappointed as Chief Executive Officer of HERC, such removal as Interim CEO and simultaneous reappointment as Chief Executive Officer of HERC (the date of such events, the “Transition Date”) will not be deemed a termination without Cause by the Companies, nor an event of Good Reason under Section 8(d) of the HERC Agreement, either under this letter agreement or the HERC Agreement, and thereafter you will continue to be covered by the provisions of Section 8 of the HERC Agreement as if Section 8(a) of this letter agreement had never been effective; provided, however, that on and after the Transition  Date, the provisions of Section 8(b) of this letter agreement shall be incorporated and made a part of Section 8 of the HERC Agreement and will continue to apply, to the extent any portion of the Special Equity Award and/or the Initial Equity Award remain outstanding and unvested as of the Date of Termination thereunder.

 

9.                                    Employee Benefits.  During the Interim Term, you will continue to be entitled to employee benefit, welfare and other plans, policies and programs generally applicable to similarly situated senior executives of Holdings.

 

10.                            Company Policies; Regulatory and Licensing Requirement.  You will continue to be subject to all policies of Holdings, including, without limitation, any stock ownership guidelines and incentive compensation clawback policy applicable to senior executives of Holdings, as each policy is adopted or amended from time to time.  By signing this letter you agree that your continued employment is contingent upon compliance with applicable regulatory, registration and licensing requirements, if any, now or in the future required of your position, including passing the appropriate exams or transferring existing license(s), if any, or completing any registration requirements, within any reasonable time limits imposed by Holdings, and your compliance with applicable regulatory, registration and licensing.

 

11.                            Restrictive Covenants.   For the avoidance of doubt, you will continue to be subject to the restrictive covenants contained in Sections 11, 12, 13 14 and 15 of your HERC Employment Agreement, during employment with the Companies under this letter agreement or otherwise, and after, in accordance with the provisions thereof.

 

12.                            Miscellaneous.

 

·                 Entire Agreement; Amendment.  Except as otherwise provided in this letter agreement, this letter agreement shall supersede and toll any other agreement or understanding, written or oral, with respect to the matters covered herein, including the HERC Agreement.  This letter may not be amended or modified otherwise than in writing signed by the parties hereto; provided, however, that, notwithstanding the foregoing, Holdings may amend or modify this letter if it determines it is necessary to do so in order to comply with applicable legal and/or regulatory requirements or guidance or any changes in applicable law, rules or regulations or in the formal and conclusive interpretation thereof by any regulator or agency of competent jurisdiction.  In the event such modification has a material adverse impact upon the employment benefits you received under this letter agreement, Holdings and you will cooperate diligently and in good faith to amend the terms of this letter to preserve your employment benefits under this letter.

 

 

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·                 Reimbursement of Fees.  The Company will pay your reasonable costs of legal counsel incurred in connection with the negotiation and preparation of this letter in an amount not to exceed $10,000.

 

·                 Severability.  The invalidity or unenforceability of any provision of this letter will not affect the validity or enforceability of any other provision of this letter, and this letter will be construed as if such invalid or unenforceable provision was omitted (but only to the extent that such provision cannot be appropriately reformed or modified).

 

·                 Tax Matters.  The Company may withhold from any amounts payable to you such Federal, state, local or foreign taxes as shall be required to be withheld pursuant to any applicable law or regulation.  It is intended that the payments and benefits provided under this letter shall comply with the provisions of Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”) and the regulations relating thereto, or an exemption to Section 409A, and this letter shall be interpreted accordingly.  Any payments or benefits that qualify for the “short-term deferral” exception or another exception under Section 409A shall be paid under the applicable exception.  Each payment under this letter will be treated as a separate payment for purposes of Section 409A.  If you become entitled to a payment of nonqualified deferred compensation as a result of your termination of employment and at such time you are a “specified employee” (within the meaning of Section 409A and as determined in accordance with the methodology established by Holdings as in effect on your date of termination), such payment will be postponed to the extent necessary to satisfy Section 409A, and any amounts so postponed will be paid in a lump sum on the first business day that is six months and one day after your separation from service (or any earlier date of your death).  If the compensation and benefits provided under this letter would subject you to taxes or penalties under Section 409A, Holdings and you will cooperate diligently to amend the terms of this letter to avoid such taxes and penalties, to the extent possible under applicable law; provided that, in no event shall Holdings be responsible for any Section 409A taxes or penalties that arise in connection with any amounts payable or benefits provided under this letter or otherwise.

 

·                 Governing Law, Dispute Resolution.   The governing law, consent to waiver of jury trial and all other dispute resolution provisions contained in Section 20 of the HERC Agreement are incorporated by referenced and made a part of this letter agreement.

 

·                 Successors.  This letter is personal to you and without the prior written consent of Holdings will not be assignable by you.  This letter and any rights and benefits hereunder will inure to the benefit of and be enforceable by your legal representatives, heirs or legatees.  This letter and any rights and benefits hereunder will inure to the benefit of and be binding upon Holdings and its successors and assigns.

 

·                 Headings.  The headings in this letter are for convenience of reference only and do not affect the interpretation of this letter.

 

·                 Counterparts.  This letter may be executed in separate counterparts, each of which is deemed to be an original and all of which taken together constitute one and the same.

 

 

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If this letter correctly sets forth our agreement, please return a signed copy of this letter to Holdings.

 

Brian, we thank you for your leadership.

 

 

	
 
    	
Sincerely,
    
	
 
    	
 
    
	
 
    	
Hertz   Global Holdings, Inc.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By: 
    	
/s/   Linda Fayne Levinson
    
	
 
    	
 
    	
Name:   Linda Fayne Levinson
    
	
 
    	
 
    	
Title:   Independent Non-Executive Chair of
    
	
 
    	
 
    	
the   Board of Directors
    

 

 

 

Accepted and agreed to this 10th day of November, 2014.

 

 

 

	
/s/ Brian MacDonald
    	
 
    
	
Brian MacDonald
    	
 
    

 

 

[Signature page to Brian MacDonald letter agreement]

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