Document:

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Exhibit 10.28
                                LICENSE AGREEMENT

      This License Agreement ("Agreement"), effective as of the 1st day of
January, 2003 ("Effective Date"), is entered into by and between Seiko Epson
Corporation, a corporation organized and existing under the laws of Japan, with
its principal place of business at 3-5 Owa, 3-chome, Suwa-shi, Nagano-ken,
392-8502 Japan and TransAct Technologies Incorporated, a Delaware corporation
with its principal place of business at 7 Laser Lane, Wallingford, Connecticut
(the "Parties");

      WHEREAS, TransAct (as defined herein) and EPSON (as defined herein) each
desire to enter into a mutually beneficial cross-license relating to Licensed
Products (as defined herein);

      WHEREAS, TransAct wishes to obtain a license under the EPSON Licensed
Patents (as defined herein), and EPSON is willing to grant such a license to
TransAct, subject to the terms, conditions, representations and warranties set
forth herein;

      WHEREAS, EPSON wishes to obtain a license under the TransAct Licensed
Patents (as defined herein), and TransAct is willing to grant such a license to
EPSON, subject to the terms, conditions, representations and warranties set
forth herein;

      NOW, THEREFORE, in accordance with the foregoing recitals, and in
consideration of the mutual agreements set forth in this Agreement, and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the Parties hereto agree as follows:

I.          DEFINITIONS

      1.01 Definitions. As used in this Agreement, the following defined terms
shall have the meanings set forth below:

      "EPSON" shall mean Seiko Epson Corporation and any parent, Subsidiary,
Affiliate, predecessor or successor thereto.

      "EPSON Licensed Patents" shall mean the U.S. Patents listed on Exhibit A
hereto and all continuations, continuations-in-part, divisions, reissues and
re-examinations based thereon and all corresponding foreign patents and patent
applications that are counterpart to, claim priority from, or are the basis of
priority of any of the foregoing.

      "TransAct Licensed Products" shall mean **

          ** Confidential treatment requested.
<PAGE>

      "Epson Licensed Products" shall mean **

      "TransAct" shall mean TransAct Technologies Incorporated and any parent,
Subsidiary, Affiliate, predecessor or successor thereto.

      "TransAct Licensed Patents" shall mean the U.S. Patents listed on Exhibit
B hereto and all continuations, continuations-in-part, divisions, reissues and
re-examinations based thereon and all corresponding foreign patents and patent
applications that are counterpart to, claim priority from, or are the basis of a
claim of priority in any of the foregoing.

      "Subsidiary(ies)" and "Affiliate(s)" shall mean any corporation, company
or other business entity which directly or indirectly through one or more
intermediaries, is controlled by, is under common control with, or which
controls EPSON or TransAct, respectively. For purposes of this definition,
control means the direct or indirect beneficial ownership of more than fifty
percent (50%) of the outstanding shares or stock or other ownership interest
representing the right to vote in general meetings of shareholders or owners or
for the election of directors or their equivalents regardless of the form
thereof, on the date this Agreement is executed or thereafter. Such corporation,
company or other business entity shall be deemed to be a Subsidiary or Affiliate
for the purposes of this Agreement only so long as such ownership or control
exists.

      1.02 Use of Defined Terms. The definitions in this Paragraph shall apply
equally to both the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed by the phrase "without limitation".

II. GRANT OF LICENSE

      2.01 License Grant From TransAct to EPSON. TransAct grants to EPSON a
paid-up world-wide, non-exclusive license under the TransAct Licensed Patents
for the term of this Agreement to make, have made, import, use, offer to sell
and sell Epson Licensed Products. **.

      2.02 License Grant From EPSON to TransAct. EPSON grants to TransAct a
world-wide, non-exclusive license under the EPSON Licensed Patents for the term
of this Agreement to make, have made, import, use, offer to sell and sell
Transact Licensed Products. This license shall be royalty-bearing as set forth
in Paragraph V below.

      ** Confidential treatment requested
<PAGE>
III.  RELEASES

      3.01 Release From TransAct. Based on the consideration provided in this
Agreement, TransAct hereby releases and forever discharges EPSON, its
Subsidiaries and Affiliates, and their respective directors, shareholders,
officers, attorneys, agents, employees, distributors, customers and other
downstream users of EPSON Licensed Products, with regard to TransAct Licensed
Patents, from every claim and cause of action of any kind whatsoever, whether or
not now known, that TransAct ever had or on the Effective Date has against EPSON
as to EPSON Licensed Products and TransAct Licensed Patents. After consultation
with counsel, TransAct expressly waives the provisions of California Civil Code
Section 1542, which reads as follows: "A GENERAL RELEASE DOES NOT EXTEND TO
CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE
TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY
AFFECTED HIS SETTLEMENT WITH THE DEBTOR." TransAct, being aware of the above
code section, also waives any right or benefit to which it may be entitled under
any other similar statute or common law principle to the extent permitted by
law.

      3.02 Release From EPSON. Based on the consideration provided in this
Agreement, EPSON hereby releases and forever discharges TransAct, its
Subsidiaries and Affiliates, and their respective directors, shareholders,
officers, attorneys, agents, employees, distributors, customers and other
downstream users of Transact Licensed Products, with regard to EPSON Licensed
Patents, from every claim and cause of action of any kind whatsoever, whether or
not now known, that EPSON ever had or on the Effective Date has against TransAct
as to TransAct Licensed Products and EPSON Licensed Patents. After consultation
with counsel, EPSON expressly waives the provisions of California Civil Code
Section 1542, which reads as follows: "A GENERAL RELEASE DOES NOT EXTEND TO
CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE
TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY
AFFECTED HIS SETTLEMENT WITH THE DEBTOR." EPSON, being aware of the above code
section, also waives any right or benefit to which it may be entitled under any
other similar statute or common law principle to the extent permitted by law.

IV.   OBLIGATION OF CONFIDENTIALITY

      4.01 TransAct and EPSON each agree that, without the prior written consent
of the other Party hereto or unless required by law, statute, rule, regulation
(including the disclosure requirements of the SEC) or order of a Court or other
tribunal or administrative agency of competent jurisdiction, regulation of a
securities market (e.g., NASDAQ), it shall not disclose to any third party the
terms of this Agreement or any confidential information regarding the other
Party hereto or the business of such other Party which has been made available
to it, except that the terms of this Agreement may be disclosed to outside
auditors and outside legal counsel, provided that such outside auditors and
legal counsel agree to maintain the contents of this Agreement in confidence to
the extent required by this Paragraph. Any confidentiality
<PAGE>
obligations imposed on the Parties under this Agreement shall survive the
termination of this Agreement.

      4.02 Notwithstanding any other provision of this Agreement, TransAct shall
have the right to disclose to any third party the existence of this Agreement
and EPSON's status as a licensee of TransAct's patents for consideration, as
appropriate, in connection with enforcing any of TransAct's patents or to
prospective licensees of TransAct's patents. TransAct may also publicly disclose
that it has entered into a cross-license agreement with EPSON, but may not
publicly disclose the specific terms thereof.

      4.03 Notwithstanding any other provision of this Agreement, EPSON shall
have the right to disclose to any third party, the existence of this Agreement
and TransAct's status as a licensee of EPSON's patents for a running royalty, as
appropriate, in connection with enforcing any of EPSON's patents or to
prospective licensees of EPSON's patents. EPSON may also publicly disclose that
it has entered into a cross-license agreement with TransAct wherein TransAct
pays a running royalty to EPSON, but may not publicly disclose the specific
terms thereof.

V.    PAYMENTS

      5.01 Payments. In consideration for past sales, TransAct shall pay ** The
obligations of TransAct to make the foregoing payments shall be absolute and
unconditional. All payments shall be made by wire transfer to the following
EPSON account:

      **

      5.02 Royalties. TransAct shall also pay EPSON royalties in the amount of
** for each TransAct Licensed Product, covered by any claim of any of the EPSON
Licensed Patents, made, had made, imported, used or sold by any TransAct entity
in the United States, or any other country where such EPSON Licensed Patent
exists, beginning on the Effective Date and continuing for the life of the last
to survive of the EPSON Licensed Patents. Without affecting the interpretation
of the definition of TransAct Licensed Products in Paragraph 1.01 and the use of
that definition in this Paragraph 5.02, the phrase "covered by

      ** Confidential treatment requested
<PAGE>
any claim of any of the EPSON Licensed Patents" as used in the previous sentence
shall be interpreted to include, but not be limited to: (1) "TransAct Licensed
Products" wherein the product offered to a customer includes the option to
utilize EPSON Licensed Patents ESC/POS Function and/or Command, if such
utilization would result in infringement; (2) TransAct Licensed Products wherein
software is supplied to the customer including EPSON Licensed Patents ESC/POS
Function and/or Command, if such software would result in infringement; or (3)
TransAct Licensed Products wherein the customer may select EPSON Licensed
Patents ESC/POS Function and/or Command from a series of offered commands, if
such selection would result in infringement. Such payments shall be due and
payable upon the first invoicing or shipment by any TransAct entity. Each
TransAct Licensed Product shall be considered "sold" under this Agreement when
billed to the purchaser, or if not billed, then when shipped; or when paid for,
if paid for by the purchaser before shipment. TransAct shall pay such royalties
to EPSON on a quarterly basis, i.e. on each period ending March 31st, June 30th,
September 30th and December 31st. Each payment shall be made within thirty (30)
days of the end of each quarter. For calendar year 2003, all royalties shall be
paid no later than thirty (30) days after the last Party executes this
Agreement, and shall cover the period from January 1, 2003 to December 31, 2003.
No royalties shall be due for TransAct's sale of printers to any third party
that is already obligated to pay EPSON royalties relating to the sale or use of
TransAct Licensed Products. In the event of a return of a sold product for which
a royalty has been paid or is due, and a substitute or replacement product is
provided in exchange for the sold product (e.g., warranty return and exchange),
no additional royalty shall be due for the substitute or replacement product
provided in exchange. In addition, TransAct shall be entitled, with respect to
any product sold for which royalties have been paid or are due, to a credit for
such royalties in the event the product is returned to TransAct and no
royalty-bearing product is provided in exchange for such returned product.

      5.03 Non-refundability. All payments made under this Agreement are
non-refundable, except to the extent of any adjustments for payment calculation
errors or product returns.

VI.   WARRANTIES AND REPRESENTATIONS

      6.01 EPSON represents and warrants that it is the sole and exclusive owner
of all right, title and interest (including all right of recovery for any and
all past infringement thereof) in and to the EPSON Licensed Patents and has the
right to grant the license and release granted herein. EPSON further represents
and warrants that it is currently not aware of infringement of any EPSON patents
(other than the EPSON Licensed Patents) by any of the TransAct Licensed
Products, and that as a result it currently has no plans to sue TransAct for
patent infringement with respect to the TransAct Licensed Products.

      6.02 TransAct represents and warrants that it is the sole and exclusive
owner of all right, title and interest (including all right of recovery for any
and all past infringement thereof) in and to the TransAct Licensed Patents and
has the right to grant the license and release granted herein.

      6.03 Each Party acknowledges that it has been represented by counsel in
connection with the negotiation, drafting and execution of this Agreement.
<PAGE>
VII.  LIMITATIONS

      7.01 The license granted by EPSON to TransAct in Paragraph 2.02 is
non-assignable and non-sublicenseable to any person or entity, unless prior
written consent is provided by EPSON, with the exception that the rights shall
be transferable in connection with a merger, consolidation or purchase of all or
substantially all of the assets of the business to which this Agreement
pertains. In such cases, however, the license shall not extend to other products
or product lines of the merger or consolidation partner or the purchaser.

      The license granted by TransAct to EPSON in Paragraph 2.01 is
non-assignable and non-sublicenseable to any person or entity, unless prior
written consent is provided by TransAct, with the exception that the rights
shall be transferable in connection with a merger, consolidation or purchase of
all or substantially all of the assets of the business to which this Agreement
pertains. In such cases, however, the license shall not extend to other products
or product lines of the merger or consolidation partner or the purchaser.

      7.02 The releases and licenses granted to the receiving Party, as set
forth above, are applicable only to products, equipment, devices, systems,
processes and services manufactured, sold, offered for sale, exported, imported,
received, purchased, produced, constructed, installed, used, developed or
provided by or for the receiving Party, and are not intended as and are not the
grant of a general release or license or any other rights under the Licensed
Patents to any third party not expressly licensed or released under this
Agreement. The Party granting the releases and licenses set forth above
specifically retains all its rights under its Licensed Patents (including the
right to bring suit for patent infringement) against any such third parties not
expressly released or licensed under this Agreement.

      7.03 In no event shall either Party or its Subsidiaries or Affiliates be
liable to the other Party or its Subsidiaries or Affiliates or to any third
party, for any indirect, special, incidental, or consequential losses or damages
arising in any manner from this Agreement, including the performance or
non-performance of obligations hereunder, whether a claim is brought in
contract, tort or other legal theory.

      7.04 Nothing contained in this Agreement shall be construed as:

      (a) an agreement to prosecute actions or suits against third parties for
infringement or conferring any rights to bring or prosecute actions or suits
against third parties; or

      (b) conferring the right to use in advertising or publicity any trademark,
trade name, or any contraction, abbreviation thereof or adaptation thereof, of
either Party;

      (c) conferring by implication estoppel or otherwise any license or rights
other than as specifically set forth herein;

      (d) an admission by EPSON that any claims of the TransAct Licensed Patents
are valid, enforceable or infringed by EPSON;

      (e) an admission by TransAct that any claims of the EPSON Licensed Patents
are valid, enforceable or infringed by TransAct; or
<PAGE>
      (f) an obligation on the part of either Party to furnish any technical
information or know-how to the other Party.

      7.05 Each Party represents and warrants that it is a corporation in good
standing under the laws where it is incorporated; that it has the right and
authority to enter into this Agreement on behalf of itself and its Subsidiaries
and Affiliates; that it has obtained all corporate approvals necessary to enter
into this Agreement on behalf of itself and its Subsidiaries and Affiliates; and
that this Agreement is valid and binding and enforceable in accordance with its
terms.

      7.06 In case that a Party assigns or sells a part of or all of its
Licensed Patents to a third party or a third person after execution of this
Agreement, the licenses granted under Paragraphs 2.01 or 2.02 will continue to
be effective and enforced during the term defined in Paragraph 8.01, provided
that the obligations under this Agreement continue to be fulfilled.

VIII. TERM

      8.01 Except as provided in Paragraph 8.03, this Agreement and the license
granted from EPSON to TransAct of Paragraph 2.02 shall continue for the
remainder of the life of the last to expire of the EPSON Licensed Patents.
Except as provided in Paragraph 8.03, the license granted from TransAct to EPSON
of Paragraph 2.01 shall continue for the life of the last to expire of the
TransAct Licensed Patents.

      8.02 Effect of Expiration, Invalidation, etc. In the event that (i) all of
the EPSON Licensed Patents expire, (ii) all of the claims of the EPSON Licensed
Patents are canceled, invalidated or rendered unenforceable by any agency,
tribunal or court of competent jurisdiction, or (iii) any agency, tribunal or
court of competent jurisdiction determines that EPSON is not the owner of all
right, title or interest in all of the EPSON Licensed Patents, TransAct may
cease paying, and shall have no obligation to pay, royalties with respect to
TransAct Licensed Products.

      8.03 Termination. If a Party ("defaulting party") materially breaches this
Agreement, the other Party ("non-defaulting party") may give defaulting party
written notice of such material breach, and if, within sixty (60) days after
such notice, defaulting party fails to remedy such material breach, then in
addition to its other legal remedies, non-defaulting party shall have the right
to terminate this Agreement, effective upon written notice to that effect.
Termination by either Party under this Paragraph shall terminate the entire
Agreement, including all licenses granted herein to each Party, except that the
following provisions shall survive: (i) the release granted by TransAct under
Paragraph 3.01, (ii) the release granted by EPSON under Paragraph 3.02, if
payments are made within the time limits set forth in Paragraph 5.01, and (iii)
any other provision for which survival of termination is expressly stated in
this Agreement.

IX.   REPORTS AND AUDIT

      9.01 Royalty Report. TransAct shall provide royalty reports, concurrent
with its royalty payments, to EPSON. Such royalty reports shall account for all
TransAct Licensed Products, made or sold worldwide by all TransAct entities
during the preceding quarter (or
<PAGE>
quarters as to the initial report), and include information stating the number
of units sold for each model number or other product designation, the total
number of units sold and the amount of royalties paid to EPSON for the relevant
quarter.

      9.02 Audit. EPSON shall be entitled to an audit of TransAct's applicable
financial records, at EPSON's expense, by an independent auditor designated by
EPSON, not engaged on a contingency basis, and approved by TransAct (whose
approval shall not be unreasonably withheld), once every twelve months in order
to verify the accuracy of the quarterly royalty reports provided by TransAct. In
the event that royalties due for any time period are determined by the
independent auditor to be at least 5% greater than the royalties paid for that
time period, TransAct shall pay the difference plus prime-rate interest and
shall reimburse EPSON for the costs of the audit within 15 days of receiving the
report from the auditor.

      9.03 Audit Procedures. Any such audit pursuant to Paragraph 9.02 shall be
conducted after 30 days prior notice, during normal business hours and at the
location(s) where TransAct's books and records are normally kept. Such audits
and the results thereof shall be confidential (except for use, subject to
reasonable protective orders to which the Parties shall stipulate, in connection
with proceedings to compel a correcting payment as set forth in Paragraph 9.02).
The auditor shall report to EPSON the amount, if any, of royalties that TransAct
has underpaid and shall not disclose to EPSON underlying information beyond what
is required by Paragraph 9.02. The auditor shall provide a copy of its report to
TransAct concurrently with reporting to EPSON.

X.    PATENT MARKING

      10.01 TransAct shall mark as soon as practical but within ninety (90) days
after the date on which this Agreement is executed by the last Party to sign the
Agreement each TransAct Licensed Product manufactured or sold by TransAct after
such date in accordance with the relevant law pertaining to patent marking.

      10.02 EPSON shall mark as soon as practical but within ninety (90) days
after the date on which this Agreement is executed by the last Party to sign the
Agreement each EPSON Licensed Product manufactured or sold by EPSON after such
date in accordance with the relevant law pertaining to patent marking.

XI.   MISCELLANEOUS

      11.01 Limitation of Liability. Notwithstanding anything else in this
Agreement or otherwise, no Party will be liable to any other Party or any other
person or entity with respect to any subject matter of this Agreement under any
contract, negligence, strict liability or other legal or equitable theory for
any (A) indirect, incidental, special or consequential damages or (B) lost
profits or lost business, even if the remedies provided for in this Agreement
fail of their essential purpose and even if any Party has been advised of the
possibility of probability of such damages.

      11.02 Force Majeure. If for some reasons of Force Majeure, as hereinafter
defined, any Party fails to comply with its obligations hereunder, such failure
shall not constitute breach of contract. For the purpose of this Article, Force
Majeure shall mean acts of God; acts, regulations or laws of any government;
war; civil commotion; destruction of production
<PAGE>
facilities or materials; fire, earthquake or storm; labor disturbances; failure
of public utilities or common carriers and any other causes beyond the
reasonable control of any Party.

      11.03 Assignment. This Agreement may not be assigned by TransAct or EPSON
without the prior written consent of the other Party which consent shall not be
unreasonably withheld; provided, however, that TransAct or EPSON may assign or
transfer this Agreement in whole to any third party without prior consent,
together with the sale of all or substantially all of the business of TransAct
or EPSON to which its Licensed Products relate, and together with its Licensed
Patents, respectively, to such third party, provided that all obligations as
well as rights are transferred to and assumed by such third party. The sale
includes mergers, consolidation partners or purchasers of all or substantially
all of the business. This Agreement shall be binding upon and inure to the
benefit of the Parties, their respective mergers, consolidation partners,
purchasers, successors and assigns. Further, in such cases, however, the license
of Paragraph 2.01 or 2.02 shall not extend to other products or product lines of
the mergered company, the acquirer, the consolidation partners, the purchasers,
the successors or the assigns.

      11.04 Notices. All notices, requests and other communications hereunder
must be in writing in the English language and will be deemed to have been duly
given only if delivered personally or by confirmed facsimile transmission or by
confirmed mail (first class or air mail in the case of international
correspondence, postage prepaid with return or delivery receipt) or by an
internationally recognized common carrier's overnight courier (providing a
return or delivery receipt) to the Parties at the following addresses or
facsimile:

         If to EPSON:

         Seiko Epson Corporation
         Director, Intellectual Property Division
         3-5, Owa 3-chome, Suwa-shi
         Nagano-ken, 392-8502 Japan
         Facsimile: 81-266-58-3243

         If to TransAct:

         TransAct Technologies Incorporated
         7 Laser Lane
         Wallingford, CT 06492
         USA
         Facsimile: (203) 949-9048

All such notices, requests and other communications shall (i) if delivered
personally to the address as provided in this Paragraph 11.04, be deemed given
upon delivery, (ii) if delivered by confirmed facsimile transmission to the
facsimile number provided in this Paragraph 11.04, be deemed given upon receipt,
and (iii) if delivered by mail or overnight courier in the manner described
above to the address provided in this Paragraph 11.04, be deemed given upon
receipt. Any Party from time to time may change its address or facsimile number
upon written notice to the other Party.

<PAGE>
      11.05 Governing Law. This Agreement shall be governed by and construed in
accordance with the substantive and procedural law of the State of California.

      11.06 Entire Agreement. This Agreement constitutes the entire agreement
between the Parties with respect to the subject matter hereof and supersedes any
and all previous communications, representations, agreements or understandings,
oral or written, between the Parties. This Agreement may be amended,
supplemented or modified only by a written instrument duly executed by or on
behalf of each Party hereto which specifically refers to this Agreement.

      11.07 Waiver. No express or implied waiver by any of the Parties to this
Agreement of any breach of any term, condition or obligation of this Agreement
by any other Party shall be construed as a waiver of any subsequent or
continuing breach of that term, condition or obligation or of any other term
condition or obligation of this Agreement of the same or of a different nature.
A waiver of any term, condition or obligation of this Agreement shall be
effectively only if set forth in a writing duly executed by or on behalf of each
Party hereto.

      11.08 Severability: If any provision of this Agreement is held to be
illegal, invalid or unenforceable under any applicable present or future law,
and if the rights or obligations of any Party hereto under this Agreement will
not be materially and adversely affected thereby, (a) such provision will be
fully severable, (b) this Agreement will be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part hereof,
(c) the remaining provisions of this Agreement will remain in full force and
effect and will not be affected by the illegal, invalid or unenforceable
provision or by its severance herefrom and (d) in lieu of such illegal, invalid
or unenforceable provision, there will be added automatically as a part of this
Agreement, a legal, valid and enforceable provision as similar in terms to such
illegal, invalid or unenforceable provision as may be possible and consistent
with the intent of the Parties when entering into this Agreement.

      11.09 Agency. No Party shall be deemed to be the agent or joint venturer
of the other, and no Party is authorized to take any action binding upon any
other Party.

      11.10 Counterparts and Headings. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but both together
will constitute one and the same instrument. All headings in this Agreement are
inserted for convenience of reference only and shall not affect the
interpretation of this Agreement.

      IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be
executed in duplicate originals by the duly authorized representative of each
Party hereto on the respective dates entered below:

TransAct Technologies Incorporated                  Seiko Epson Corporation

By:       /s/ Bart C. Shuldman                      By:      /s/ Minoru Usui
Title:    Chairman, President and CEO               Title:   Director
Date:    April 28, 2004                             Date:    May 17, 2004

                                    EXHIBIT A

                            SEIKO EPSON U.S. PATENTS

                            **

      ** Confidential treatment requested.
<PAGE>
                                   EXHIBIT B

                             TRANSACT U.S. PATENTS

                                 **

      ** Confidential treatment requested.exv10w3

 

EXHIBIT 10.3

EMPLOYMENT AGREEMENT

     This Agreement, made this 1st day of May, 2004, by and between STURGIS
BANK & TRUST COMPANY, a Michigan savings bank (“STURGIS”), and ERIC L. EISHEN
of Bronson, Michigan (“Employee”).

     W I T N E S S E T H:

     WHEREAS, STURGIS desires to employ Employee and Employee desires to be
employed by STURGIS upon the terms and conditions set forth herein.

     1. Employment. STURGIS hereby employs Employee as Chief Executive Officer
and President, and Employee hereby accepts employment by STURGIS upon the terms
and conditions herein set forth. The primary place of employment shall be at
STURGIS’ principal offices, Sturgis, Michigan, or at such other location as
STURGIS may designate.

     2. Term. The term of this Agreement shall commence as of May 1, 2004 for
a term of three (3) years, unless sooner terminated as hereinafter set forth.

     3. Duties. Employee will, during the term hereof:

     (A) As Chief Executive Officer and President to faithfully and diligently
do and perform all such acts and duties and furnish such services as the Board
of Directors of STURGIS shall direct, and do and perform all acts in the
ordinary course of STURGIS’ business, with such limits as the Board of STURGIS
may prescribe, necessary and conducive to STURGIS’ best interests; and,

     (B) Devote his full time, energy, and skill to the business of STURGIS and
to the promotion of STURGIS’ best interests, except for vacations and absences
made necessary because of illness.

     4. Compensation.

     (A) Subject to the provisions of Paragraphs 6 and 7 hereof, STURGIS shall
pay to Employee for all services to be performed by Employee during the term of
this Agreement:

 (i) a salary at the rate of One Hundred Eighty Thousand Two Hundred
Fifty ($180,250.00) Dollars per annum, payable in periodic payments in
accordance with STURGIS’ practices for other executive, managerial, and
supervisory employees, as such practices may be determined from time to
time. The Board of Directors of STURGIS (“Board of Directors”) will
review such fixed salary annually and, in its discretion, may grant
increases or decreases thereof based upon Employee’s performance; and

-46-

 

 (ii) any additional or special compensation, such as incentive pay or
bonuses, based upon Employee’s performance, as the Board of Directors in its
discretion, may from time to time determine.

All such payments will be subject to such deductions as may be required to be
made pursuant to law, government regulation or order, or by agreement with, or
consent of, Employee.

     (B) In addition to the salary payments set forth above, STURGIS agrees
that during the term of this Agreement:

 (i) Employee shall be entitled to reimbursement by STURGIS for all
reasonable expenses actually and necessarily incurred by him on its
behalf in the course of his employment hereunder, for which he shall
submit vouchers in a form satisfactory to STURGIS and which are approved
by STURGIS in its sole discretion;

 (ii) STURGIS shall provide Employee with the use of an automobile and
shall reimburse Employee for the expenses thereof related to the course
of his employment hereunder, upon a mutually agreeable basis.

     5. Benefits. Employee shall be entitled to participate in such life
insurance, medical, pension, retirement, and stock option plans and other
programs, including sick leave, as may be approved from time to time by STURGIS
for the benefit of its employees. Employee also shall be entitled to no less
than four (4) weeks of vacation under STURGIS’ current policy, as amended. The
said vacation shall not be carried over from year to year.

     6. Termination. Employee’s employment with STURGIS shall terminate by
reason of Employee’s death, or total and/or permanent disability (as defined
for social security purposes) or for cause. STURGIS shall have the sole
discretion to determine whether the conditions constituting a termination for
cause have occurred. In the event of a termination of employment pursuant to
this paragraph 6, all obligations of STURGIS hereunder shall terminate.

     (A) In addition to the foregoing, STURGIS’ Board of Directors may
terminate the Employee’s employment at any time, but any termination by
STURGIS’ Board of Directors other than termination for cause, shall not
prejudice the Employee’s right to compensation or other benefits under the
contract. The Employee shall have no right to receive compensation or other
benefits for any period after termination for cause. Termination for cause
shall include termination because of the Employee’s personal dishonesty,
incompetence, willful misconduct, breach of fiduciary duty involving personal
profit, intentional failure to perform stated duties, willful violation of any
law, rule, or regulation, (other than traffic violations or similar offenses)
or final cease-and-

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desist order, or material breach of any provision of this
contract.

     (B) If the Employee is suspended and/or temporarily prohibited from
participating in the conduct of STURGIS’ affairs by a notice served under
section 8(e)(3) or (g)(1) of (the) Federal Deposit Insurance Act (12 U.S.C.
1818(e)(3) and (g)(1) STURGIS’ obligations under the contract shall be suspended as of the date
of service unless stayed by appropriate proceedings. If the charges in the
notice are dismissed, STURGIS may in its discretion (i) pay the Employee all or
part of the compensation withheld while its contract obligations were suspended
and (ii) reinstate (in whole or in part) any of its obligations which were
suspended.

     (C) If the Employee is removed and/or permanently prohibited from
participating in the conduct of STURGIS’ affairs by an order issued under
section 8(e)(4) or (g)(1) of the Federal Deposit Insurance Act (12 U.S.C.
1818(e)(4) or (g)(1)), all obligations of STURGIS under the contract shall
terminate as of the effective date of the order, but vested rights of the
contracting parties shall not be affected.

     (D) If STURGIS is in default (as defined in section 3(x)(1) of the Federal
Deposit Insurance Act), all obligations under the contract shall terminate as
of the date of default, but this paragraph D. shall not affect any vested
rights of the contracting parties.

     (E) All obligations under the contract shall be terminated, except to the
extent determined that continuation of the contract is necessary (for the
continued operation of STURGIS):

 (i) by the Director or his or her designee, at the time the Federal
Deposit Insurance Corporation or the Michigan Office of Financial and
Insurance Services enters into an agreement to provide assistance to or
on behalf of STURGIS under the authority contained in section 13(c) of
the Federal Deposit Insurance Act; or

 (ii) by the Director or his or her designee, at the time the Director or
his or her designee approves a supervisory merger to resolve problems
related to operation of STURGIS or when STURGIS is determined by the
Director to be in an unsafe or unsound condition.

     Any rights of the parties that have already vested, however, shall not be
affected by such action.

     (F) Upon thirty (30) days written notice by Employee to STURGIS, the
Employee may terminate this Agreement forfeiting all of his rights including
vested rights unless Employee terminates such employment with good reason (as
defined in the Agreement).

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     7. Change In Control. If within five (5) years after a change in control
(as defined in this Agreement) STURGIS shall terminate Employee without cause
(as defined in this Agreement) or Employee shall voluntarily terminate such
employment with good reason (as defined in this Agreement) STURGIS shall,
within ninety (90) days of the termination make a lump sum cash payment to him
equal to three (3) year’s salary in accordance with Internal Revenue Code
section 280(G), as amended. If it is mutually in the best interest of STURGIS
and Employee, the Employee shall have the right to elect by written request to
the Board of Directors to receive a cash payment equal to one year’s salary and
the remaining two (2) years’ salary on an installment basis in accordance with
Internal Revenue Code section 280(G). Employee shall not be paid any
compensation under this agreement other than that specified in this paragraph.

     8. Definitions. For purposes of this Agreement:

     (A) “Cause” shall include in its meaning:

 (i) Employee’s conviction of any criminal violation involving
dishonesty, fraud, or breach of trust;

 (ii) Employee’s willful engagement in any misconduct in the performance
of his duty that materially injures STURGIS;

 (iii) Employee’s performance of any act which, if known to the
customers, clients or stockholders of STURGIS would materially and
adversely impact on the business of STURGIS;

 (iv) Employee’s willful and substantial nonperformance of his duties and
such nonperformance continues more than ten (10) days after STURGIS has
given written notice of such nonperformance and of its intention to
terminate Employee’s employment because of such nonperformance; or,

 (v) Employee’s willful violation of paragraphs 9 or 10 herein.

     (B) “Good Reason” shall exist if, without Employee’s express written
consent:

 (i) STURGIS shall assign to Employee duties of a nonexecutive nature or
for which Employee is not reasonably equipped by his skills and
experience;

 (ii) STURGIS shall reduce the salary of Employee, or materially reduce
the amount of paid vacations to which he is entitled, or his fringe
benefits and perquisites;

 (iii) STURGIS shall require Employee to relocate his principal business
office or his principal place of residence outside the Sturgis, Michigan
Marketing Area

-49-

 

(the “Area”), or assign to Employee duties that would
reasonably require such relocation;

 (iv) STURGIS shall require Employee, or assign duties to Employee which
would reasonably require him to spend more than ninety (90) normal
working days away from the Area during any consecutive twelve (12) month
period;

 (v) STURGIS shall fail to provide office facilities, secretarial
services, and other administrative services to Employee which are
substantially equivalent to the facilities and services provided to
Employee on the date hereof; or,

 (vi) STURGIS shall terminate incentive and benefit plans or
arrangements, or
reduce or limit Employee’s participation therein relative to the level of
participation of other executives of similar rank, to such an extent as
to materially reduce the aggregate value of Employee’s incentive
compensation and benefits below their aggregate value of the date hereof.

     (C) “Change in Control”, (except as provided in subparagraph (v)), shall
be deemed to occur on the earliest of:

 (i) The Acquisition by any entity, person, or group of beneficial
ownership, as that term is defined in Rule 13d-3 under the Securities
Exchange Act of 1934, of more than fifty percent (50%) of the outstanding
capital stock of STURGIS entitled to vote for the election of directors
(“Voting Stock”);

 (ii) The commencement by any entity, person, or group (other than
STURGIS or a subsidiary of STURGIS) of a tender offer or an exchange
offer for more than twenty-five percent (25%) of the outstanding Voting
Stock of STURGIS;

 (iii) The effective time of (1) a merger or consolidation of STURGIS
with one or more other corporations as a result of which the holders of
the outstanding Voting Stock of STURGIS immediately prior to such merger
hold less than fifty percent (50%) of the Voting Stock of the surviving
or resulting corporation, or (2) a transfer of substantially all of the
property of STURGIS other than to an entity of which STURGIS owns at
least eighty percent (80%) of the Voting Stock.

 (iv) The election to the Board of Directors of STURGIS without the
recommendation or approval of the incumbent Board of Directors of
STURGIS, of the lesser of three directors or directors constituting a
majority of the number of Directors of STURGIS then in office.

     9. Restrictive Covenant. During the term of this Agreement, and for a
period of one (1) year following the termination of Employee’s employment with
STURGIS pursuant to this Agreement including termination occasioned by the
expiration

-50-

 

of this Agreement, and in consideration for payments made on an
installment basis to Employee pursuant to Internal Revenue Code Section 280(G)
as amended, Employee shall not:

     (A) Within a geographic radius of seventy-five (75) miles from Sturgis,
Michigan, engage in, or work for, manage, operate, control or participate in
the ownership, management, operation or control of, or be connected with, or
have any financial interest in, any individual, partnership, firm, corporation
or institution engaged in the same or similar activities to those now or
hereafter carried on by STURGIS;

     (B) Interfere with the relationship of STURGIS and any of its employees,
agents or representatives; and,

     (C) Directly or indirectly divert or attempt to divert from STURGIS any
business in which STURGIS has been actively engaged during the term hereof, nor
interfere with the relationships of STURGIS with its dealers, distributors,
sources of supply or customers.

Any breach of the covenant not to compete by Employee will result in the
forfeiture by Employee and all other persons of any and all rights to unpaid
benefits and payments at the time of breach and in such event STURGIS shall
have no further obligation to pay any amounts related thereto.

     10. Nondisclosure of Confidential Information. Employee acknowledges that
STURGIS may disclose certain confidential information to Employee during the
term of this Agreement to enable him to perform his duties hereunder. Employee
hereby covenants and agrees that he will not, without the prior written consent
of STURGIS, during the term of this Agreement or at any time thereafter,
disclose or permit to be disclosed to any third party by any method whatsoever
any of the confidential information of STURGIS. For purposes of this
Agreement, “confidential information” shall include, but not be limited to, any
and all records, notes, memoranda, data, ideas, techniques, programs, computer
software, writings, research, personnel information, customer information,
STURGIS’ financial information, plans, or any other information of whatever
nature in the possession or control of STURGIS which has not been published or
disclosed to the general public, or which gives to STURGIS an opportunity to
obtain an advantage over competitors who do not know of or use it. Employee
further agrees that if his employment hereunder is terminated for any reason,
he will leave with STURGIS and will not take originals or copies of any and all
records, papers, programs, computer software and documents and all matter of
whatever nature which bears secret or confidential information of STURGIS.

     The foregoing paragraph shall not be applicable if and to the extent
Employee is required to testify in a judicial or regulatory proceeding pursuant
to an order of a judge or administrative law judge issued after Employee and
his legal counsel urge that the aforementioned confidentiality be preserved.

-51-

 

     Employee agrees, without charge to STURGIS or at STURGIS’ expense, to
execute, acknowledge and deliver to STURGIS all such papers, including
trademark registrations, and assignments thereof, as may be necessary, and at
all times to assist STURGIS, its successors, assigns and nominees in every
proper way to patent or register said programs, ideas, discoveries,
improvements, copyrightable material or trademarks in any and all countries and
to vest title thereto in STURGIS, its parent, subsidiaries, successors, assigns
or nominees.

     Employee will promptly report to STURGIS all discoveries, inventions, or
improvements of whatever nature conceived or made by him at any time he was
employed by STURGIS, its parent, subsidiaries or successors. All such
discoveries, inventions and improvements which are applicable in any way to
STURGIS’ business shall be the sole and exclusive property of STURGIS.

     The covenants set forth in this paragraph which are made by Employee are
in consideration of the employment, or continuing employment of, and the
compensation paid to, Employee during his employment by STURGIS. The foregoing
covenants will not prohibit Employee from disclosing confidential or other information to
other employees of STURGIS or to third parties to the extent that such
disclosure is necessary to the performance of his duties under this Agreement.

     11. Additional Remedies. It is expressly understood and agreed that
although Employee and STURGIS consider the restrictions contained in this
Agreement to be reasonable for the purpose of preserving the going business
value and goodwill of STURGIS, if a final judicial determination is made by a
court having jurisdiction that the time or territory or any other restriction
contained in this Agreement is an unenforceable restriction against the
Employee, provisions of such restrictions shall not be rendered void but shall
be deemed amended to apply as to such maximum time and territory and to such
other extent as such court may judicially determine or indicate to be
reasonable. Alternatively, if the court referred to above finds that any
restriction contained in this Agreement is unenforceable, and such restriction
cannot be amended so as to make it enforceable, such findings shall not effect
the enforceability of any of the other restrictions contained herein.

     The Employee acknowledges and agrees that STURGIS’ remedy at law for a
breach or threatened breach of any of the provisions of this Agreement would be
inadequate and, in recognition of this fact, in the event of a breach or a
threatened breach by the Employee of any of the provisions, it is agreed that,
in addition to its remedy at law, STURGIS shall be entitled, without posting
any bond, to obtain equitable relief, and the Employee agrees not to oppose
STURGIS’ request for equitable relief in the form of specific performance,
temporary restraining order, temporary or permanent injunction, or any other
equitable remedy which may then be available. The Employee acknowledges that
the granting of a temporary injunction, temporary restraining order or
permanent injunction merely prohibiting a breach or threatened breach would not
be an

-52-

 

adequate remedy, and consequently agrees upon any such breach or
threatened breach to the granting of injunctive relief. Nothing herein
contained shall be construed as prohibiting STURGIS from pursuing any other
remedies available to it for such breach or threatened breach.

     12. Nonassignment. This Agreement is personal to Employee and shall not
be assigned by him. Employee shall not delegate, encumber, alienate, transfer
or otherwise dispose of his rights and duties hereunder. STURGIS may assign
this Agreement without Employee’s consent to any other entity who, in
connection with such assignment, acquires all or substantially all of STURGIS’
assets or into or with which STURGIS is merged or consolidated.

     13. Waiver. The waiver by STURGIS of a breach by Employee of any
provision of this Agreement shall not be construed as a waiver of any
subsequent breach by Employee.

     14. Severability. If any clause, phrase, provision or portion of this
Agreement or the application thereof to any person or circumstance shall be
invalid or unenforceable under any applicable law, such event shall not affect
or render invalid or unenforceable the remainder of this Agreement and shall
not affect the application of any clause, provision,
or portion hereof to other persons or circumstances.

     15. Benefit. The provisions of this Agreement shall inure to the benefit
of STURGIS, its successors and assigns, and shall be binding upon STURGIS and
Employee, its and his heirs, personal representatives and successors, including
without limitation Employee’s estate and the executors, administrators, or
trustees of such estate.

     16. Relevant Law. This Agreement shall be construed and enforced in
accordance with the laws of the United States and State of Michigan.

     17. Notices. All notices, requests, demands and other communications in
connection with this Agreement shall be made in writing and shall be deemed to
have been given when delivered by hand or 48 hours after mailing at any general
or branch United States Post Office, by registered or certified mail, postage
prepaid, addressed as follows, or to such other address as shall have been
designated in writing by the addressee:

     (A) If to STURGIS:

 Attn: Chairman of the Board

119-125 East Chicago Road

Sturgis, Michigan 49091

     (B) If to Employee:

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 Eric L. Eishen

964 Weaver Road

Bronson, Michigan 49028

     18. Entire Agreement. This Agreement sets forth the entire understanding
of the parties and supersedes all prior agreements including the Agreement
effective September 20, 1988, arrangements, and communications, whether oral or
written, pertaining to the subject matter hereof; and this Agreement shall not
be modified or amended except by written agreement of STURGIS and Employee.

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
date first set forth above.

	 	 	 	 	 	 	 
	 	 	STURGIS BANK & TRUST COMPANY
	 
	 	 	    /s/ James A. Goethals
	 	 	
 	 
	

	 	By:
	 	James A. Goethals	 	 
	

	 	Its:
	 	Chairman of the Board	 	 
	ATTEST:
	 	 	 	 	 	 
	    /s/   Brian P. Hoggatt	 	 	 	 	 
	

	 	 	 	 	 	 
	Brian P. Hoggatt, Secretary
	 	 	 	 	 	 
	

	 	EMPLOYEE:	 	 	 	 
	
 
	 	    /s/
Eric L. Eishen	 	 
	 	 	
 	 	 
	 	 	Eric L. Eishen	 	 

-54-

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