EMPLOYMENT SEVERANCE COMPENSATION AGREEMENT

 

                                                            WEAVER/EXHIBIT 10(g)

                  EMPLOYMENT SEVERANCE COMPENSATION AGREEMENT

I.  INTRODUCTION

    Both Pinnacle Financial Services, Inc. ("Pinnacle") and Pinnacle Bank, a 
Michigan banking corporation, formerly The Peoples State Bank of St. Joseph 
("the Bank") consider the maintenance of a vital management group to be 
essential to protecting and enhancing the best interests of those Companies 
and their shareholders.  Pinnacle and the Bank recognize that, as is the case 
with many publicly-held corporations, there is always the possibility of a 
change in control, and further, that the uncertainty and questions which 
arise as a result of that possibility may result in the departure of key 
management personnel, to the detriment of the Companies and their 
shareholders.

    Accordingly, the Board of Directors for Pinnacle and the Bank have 
determined that appropriate steps should be taken to protect its President 
and Chief Operating Officer, Mr. Arnold L. Weaver ("Executive"), in the event 
his employment is terminated due to a change in control of either Pinnacle or 
the Bank.

    Pinnacle, the Bank and Mr. Weaver previously entered into this Employment 
Severance Compensation Agreement on October 16, 1992. The Employment 
Severance Compensation Agreement is amended and restated by the parties as 
hereafter provided.

II. OPERATION OF AGREEMENT

    A.   EFFECTIVE DATE.  This Agreement will be effective and binding
         immediately upon its execution by the parties hereto, but will
         operate as an employment contract only during the "Term of
         Employment" as described below.

    B.   TERM OF EMPLOYMENT.  The "Term of Employment" is the period
         beginning on the date of a "Change of Control" and ending on the
         earliest of:

         1.   Retirement at age 65, or any earlier age of retirement
              elected by Executive under any of the Company's retirement
              plans.

         2.   Executive's death.

         3.   Executive's termination of employment as a result of
              disability as defined in a disability plan or policy of
              disability insurance maintained by the Company and under
              which Executive is eligible for payments as a result of his
              disability.

         4.   The date on which all rights and obligations of the parties
              hereto have been satisfied in accordance with the terms of
              this Agreement.

         5.   Executive's termination of employment for cause, as defined
              in paragraph C of Article V.

         The expiration of the Term of Employment will not relieve the
    Company of the obligation to provide Executive, in accordance with the
    terms hereof, the payments, benefits and coverage to which he has
    become entitled under this Agreement.

    C.   COMPANY.  "The Company" means both Pinnacle Financial Services,
         Inc., and Pinnacle Bank, a Michigan banking corporation, formerly
         named The Peoples State Bank of St. Joseph, collectively and
         individually.

    D.   CHANGE OF CONTROL.  "Change of Control" means any of the
         following:

         1.   The Company sells substantially all of its assets to a
              single purchaser or to a group of associated purchasers;

         2.   At least one-half of the outstanding corporate shares of the
              Company are sold, exchanged, or otherwise disposed of, in
              one transaction;

         3.   The Company elects to terminate its business or liquidate
              its assets; or

         4.   There is a merger or consolidation of the Company in a
              transaction in which the Company's shareholders receive less
              than 50% of the outstanding voting shares of the new or
              continuing corporation.

III.     EMPLOYMENT

    A.   EMPLOYMENT OF EXECUTIVE.  The Company agrees to employ Executive
         throughout the Term of Employment as President and Chief
         Operating Officer of the Company without reducing Executive's
         authority or status and without imposing on Executive travel
         requirements not customary to the industry or other duties
         substantially more onerous than those to which he was subject
         immediately prior to the Change of Control.  The Company agrees
         to provide Executive with an office and executive secretarial
         support similar to those provided immediately before the Change
         of Control and further agrees that Executive's situs of
         employment will be in St. Joseph, Michigan, or any other location
         mutually agreed upon by Executive and the Company.

    B.   DUTIES.  Executive agrees, subject to paragraph C of Article V
         below, to remain in the Company's employ during the Term of
         Employment, as described in paragraph A of this Article III.

              Excluding periods of vacation and sick leave, Executive
         agrees to devote reasonable attention and time during normal
         business hours to the business and affairs of the Company to the
         extent necessary to discharge responsibilities assigned to
         Executive hereunder and to use reasonable efforts to perform such
         responsibilities faithfully and efficiently.  No greater time,
         attention or effort to discharge responsibilities shall be
         required of Executive than is reasonable and customary to the
         industry.  Executive may:

         1.   Serve on corporate, civic and charitable boards or
              committees, and

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         2.   Deliver lectures, fulfill speaking engagements and teach at
              educational institutions, 

         so long as such activities do not significantly interfere with
         the performance of Executive's responsibilities.  To the extent
         that any such activities have been conducted by Executive prior
         to the Change of Control, such prior conduct, and any subsequent
         conduct similar in nature and scope, shall not be deemed to
         interfere with the performance of Executive's responsibilities.

    C.   SUBSIDIARIES.  For purposes of this Agreement, employment by a
         subsidiary of the Company will be deemed to be employment by the
         Company, and the Company may cause its obligations hereunder to
         be discharged through such a subsidiary, provided that the
         Company will remain liable for the discharge of all such
         obligations and that the rights, benefits, authority and status
         of the Executive are in no way diminished thereby.  A subsidiary
         is any corporation more than 50% of the voting stock of which is
         owned by the Company or another subsidiary of the Company.

IV. COMPENSATION

    A.   EXECUTIVE'S COMPENSATION.  The Company will pay as annual salary
         to Executive for his services as an employee during the Term of
         Employment a base annual salary at a rate equal to or greater
         than the rate of base salary in effect for Executive immediately
         prior to the Change of Control.

    B.   BENEFITS.  In addition, for his service as an employee during the
         Term of Employment, Executive will:

         1.   Participate fully in the Company's stock option plan (and/or
              any successor plan);

         2.   Participate fully in all pension, profit sharing and similar
              benefit plans of the Company;

         3.   Participate fully, together with his dependents and
              beneficiaries, in all life insurance plans, accident and
              health plans and other welfare plans, maintained or
              sponsored by the Company immediately prior to the Change of
              Control, or receive substantially equivalent coverage (or
              the full value thereof in cash) from the Company; and

         4.   Participate fully in any additional benefit plans offered by
              the Company to executives before or after the Change of
              Control.

    C.   REASONABLE COMPENSATION.  Amounts payable under this Article IV
         for services rendered by Executive during his employment
         constitute reasonable compensation for such services as provided
         for under section 280G(b)(4) of the Code.  This paragraph C of
         Article IV does not apply to amounts payable under Article V.

                                     -3-

V.  TERMINATION OF EMPLOYMENT

    A.   SEVERANCE COMPENSATION.  In the event Executive's employment is
         terminated  by the Company during the Term of Employment for any
         reason other than "Cause" (as defined in paragraph E below) the
         Company will pay Executive:

         1.   An amount equal to two times the sum of his annual base
              salary at the rate in effect at his date of termination,
              plus an amount equal to two times the highest bonus paid to
              him in any one year during the most recent five year period.

         2.   Maintain in full force and effect all life, health (medical
              and dental), accidental death, and dismemberment and
              disability insurance in effect on the date of termination,
              for a period of two years after the date of termination or
              until Executive receives equivalent benefits from any new
              employer.  In Executive's sole discretion, at the end of
              that extended coverage period, the Company shall assign to
              him any assignable insurance policy owned by the Company
              which related to Executive, at no cost to him and with no
              appointment of any prepaid premiums.

         3.   In the event Executive becomes self-employed after his
              termination, the  Company will pay his reasonable business
              travel expenses incurred in that endeavor for a period of
              two years after the date of termination, up to the amount
              budgeted by the Company for his travel expenses in the year
              in which the date of termination occurs.

         4.   Continue to provide Executive with the executive car
              benefits available to him as of the date of termination, for
              a period of two years after the date of termination.

         5.   Continue to provide Executive with benefits of any financial
              counseling program available to him through the Company as
              of the date of his termination, for a period of two years
              after his date of termination.

         6.   Pay all the reasonable costs of any outplacement service
              utilized by Executive until he becomes employed on a full-time 
              basis.

    B.   COMPANY BREACH.

         1.   Upon the occurrence of any breach by the Company of this
              Agreement within the meaning of subparagraph 2, below,
              Executive may give the Company written notice of his
              intention to resign effective the 30th day following the
              date of such notice.  If the Company does not fully remedy
              such breach within 15 days of the date of such notice,
              Executive's resignation will become effective on such 30th
              day.  If the Executive resigns in accordance with this
              paragraph during the Term of Employment, his employment will
              be deemed to have been terminated by the Company for reasons
              other than Cause (and he will be deemed to have offered to

                                     -4-

              continue to provide services to the Company), and he will be
              entitled to all the payments and rights and benefits
              described in paragraph A of this Article V; provided that
              such payments and rights and benefits will in no event be
              less than they would have been had such termination taken
              place on the date that the Company first breached this
              Agreement.

         2.   The following events are breaches by the Company of this
              Agreement within the meaning of this paragraph B of Article
              V:

              (a)  any reduction of, or failure to pay, Executive's
                   salary as described in paragraph A of Article IV;

              (b)  any failure to provide the benefits required by
                   paragraph B of Article IV or to make any payment
                   which might be due in accordance with paragraph C
                   of Article IV;

              (c)  assignment to Executive of any duties inconsistent
                   in any respect with his position (including
                   status, offices and titles), authority, duties or
                   responsibilities as contemplated by paragraph A of
                   Article III, and as is further inconsistent with
                   those customary to the industry, or any other
                   action by the Company which results in a
                   diminution of such position, authority, duties or
                   responsibilities as not customary in the industry;

              (d)  failure after a Change of Control to comply with
                   and satisfy Article IX;

              (e)  relocation of the Company's principal executive
                   offices, or any event that causes Executive to
                   have his principal place of work changed, to any
                   location outside the St. Joseph, Michigan area,
                   unless such relocation is mutually agreed upon by
                   Executive and the Company;

              (f)  any requirement by the Company that Executive
                   travel away from his office in the course of his
                   duties significantly more than what is customary
                   to the industry; and

              (g)  without limiting the generality or effect of the
                   foregoing, any other material breach of this
                   Agreement by the Company or any successor thereto
                   or transferee of substantially all the assets
                   thereof.

    C.   CAUSE.  If Executive is dismissed by the Company for Cause, he
         will not be entitled to payments or benefits provided under
         paragraph A of Article V above.  "Cause" means only the willful
         commission by Executive of theft, embezzlement or other serious
         and substantial crimes against the Company.  For purposes of this

                                     -5-

         definition, no act or omission shall be considered to have been
         "willful" unless it was not in good faith and Executive had
         knowledge at the time that the act or omission was not in the
         best interest of the Company.

    D.   DISPUTE.  If Executive's employment is alleged to be terminated
         for Cause or if Executive's right to resign under paragraph B of
         Article V is disputed, Executive may initiate binding arbitration
         in St. Joseph, Michigan, before the American Arbitration
         Association by serving a notice to arbitrate upon the Company or,
         at Executive's election, institute judicial proceedings, in
         either case within 90 days of the effective date of his
         termination or, if later, his receipt of notice of termination,
         or such longer period as may be reasonably necessary for
         Executive to take such action if illness or incapacity should
         impair his taking such action within the 90-day period.  The
         Company agrees to pay the costs and expenses (including fees of
         counsel to Executive of any such arbitration and/or judicial
         proceedings, including Executive's counsel fees).

    E.   DEATH OR DISABILITY.  Termination of employment due to death or
         disability of Executive will not be considered a termination for
         purposes of this Article V.

    F.   BENEFICIARY.  If Executive dies following a termination of
         employment which entitled him to benefits under this Article V
         but prior to receipt of all such benefits, his beneficiary (as
         designated to the Company in writing) or, if none, his estate,
         will be entitled to receive all unpaid amounts due hereunder.

VI. NO OBLIGATION TO MITIGATE

    There shall be no requirement on the Executive's part to seek other
    employment or otherwise mitigate in order to be entitled to the full
    amount of any payments or benefits hereunder.

VII. LIMITATION ON SEVERANCE COMPENSATION

    A.   REDUCTION.  Notwithstanding any other provision of this
         Agreement, the payments or benefits to which Executive will be
         entitled under Article V of this Agreement, plus any payments
         payable to Executive outside this Agreement which are determined
         to be in the nature of compensation for purposes of whether
         payment of a "parachute payment" has occurred under Section
         280G(b)(2) of the Code, or the applicable regulations will be
         reduced to the extent necessary so that Executive will not be
         liable for the federal excise tax levied on certain "excess
         parachute payments" under section 4999 of the Code.

    B.   EXECUTIVE DETERMINATION.  If a reduction is made pursuant to
         paragraph A of this Article VII, Executive will have the right to
         determine which payments and benefits will be reduced.

                                     -6-

VIII. EXPENSES

    It is the intent of the Company that the Executive not be required to
    incur any expenses associated with the enforcement of his rights under
    this Agreement by legal action or arbitration proceeding because the
    cost and expenses thereof would substantially detract from the
    benefits intended to be extended to the Executive hereunder. 
    Accordingly, if Executive determines in good faith that the Company
    has failed to comply with any of its obligations under this Agreement,
    or if the Company or any other person takes any action to declare this
    Agreement void or unenforceable, or institutes any legal action or
    arbitration proceedings designed to deny Executive, or to recover from
    him, the benefits intended to be provided hereunder, or in the event
    of action instituted as contemplated by paragraph D of Article V
    above, the Company irrevocably authorizes Executive from time to time
    to retain counsel of his choice, at the expense of the Company as
    hereafter provided, to represent Executive in connection with any and
    all actions and proceedings, whether by or against the Company which
    may adversely affect Executive's rights under this Agreement.  In
    addition, notwithstanding any existing or prior attorney-client
    relationship between the Company and such counsel, the  Company
    irrevocably consents to Executive's entering into an attorney-client
    relationship with such counsel and agrees that a confidential
    relationship shall exist between Executive and such counsel.  Without
    limiting the effect of paragraph D of Article V above or of the
    foregoing provisions of this Article VIII, the Company shall pay or
    cause to be paid and shall be solely responsible for any and all
    attorneys' and related fees and expenses incurred by Executive as a
    result of the Company failure to perform under this Agreement.

IX. MERGER OR ACQUISITION

    A.   ASSUMPTION.  If the Company is at any time before or after a
         Change of Control merged with or consolidated into or with any
         other corporation or other entity (whether or not the Company is
         the surviving entity), or if substantially all of the assets of
         the Company are transferred to another corporation or other
         entity, the corporation or other entity resulting from such
         merger or consolidation, or the acquirer of such assets, shall
         (by agreement in form and substance satisfactory to Executive)
         expressly assume the obligations of the  Company under this
         Agreement.  In any event, however,  the provisions of this
         Agreement shall be binding upon and inure to the benefit of the
         corporation or other entity resulting from such merger or
         consolidation or the acquirer of such assets, and this Article IX
         will apply in the event of any subsequent merger or consolidation
         or transfer of assets.

    B.   BENEFITS AFTER MERGER.  In the event of any merger, consolidation
         or sale of assets described above, nothing contained in this
         Agreement will detract from or otherwise limit Executive's right
         to or privilege of participation in any stock option or purchase
         plan or any bonus, profit sharing, pension, group insurance,
         hospitalization or other incentive or benefit plan or arrangement
         which may be or become applicable to executives of the
         corporation resulting from such merger or consolidation or the
         corporation acquiring such assets of the Company.

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    C.   SUCCESSOR ENTITY.  In the event of any merger, consolidation or
         sale of assets described above, references to the Company in this
         Agreement shall unless the context suggest otherwise be deemed to
         include the entity resulting from such merger or consolidation or
         the acquirer of such assets of the Company.

X.  WITHHOLDING

    All payments required to be made by the Company hereunder to Executive
    or his dependents, beneficiaries or estate will be subject to the
    withholding of such amounts relating to tax and/or other payroll
    deductions as may be required by law.

XI. AMENDMENT

    A.   No amendment, change or modification of this Agreement may be
         made except in writing, signed by all parties.

XII. GENERAL

    A.   ENTIRE AGREEMENT.  This Agreement supersedes all other agreements
         previously made between the parties relating to its subject
         matter.  There are no other understandings or agreements.

    B.   NOTICE.  Any notice to be delivered in the furtherance of this
         Agreement shall be given in writing and delivered, personally or
         by certified mail, postage prepaid, addressed to the Company or
         to Executive at their last known address.

    C.   NON-WAIVER.  No delay or failure by either party to exercise any
         right under this Agreement, and no partial or single exercise of
         that right, shall constitute a waiver of that or any other right.

    D.   HEADINGS.  Headings in this Agreement are for convenience only,
         and shall not be used to interpret or construe its provisions.

    E.   GOVERNING LAW.  This Agreement shall be construed in accordance
         with and governed by the law of the State of Michigan.  In the
         event any of the provisions of this Agreement are determined by a
         court of law to be void or unenforceable, then the remaining
         provisions shall be interpreted to give the fullest effect
         possible to the stated intentions of this Agreement.

    F.   MODIFICATION.  This Agreement may be terminated or modified only
         upon the  written agreement of the Company and Executive.

XII. ACKNOWLEDGEMENTS

    The parties to this Agreement acknowledge and certify that full and
    fair consideration has been given for the promises made, that they
    have had an opportunity to review this Agreement with the advisors of
    their choice, and that, when signing on behalf of Pinnacle

                                     -8-

    or the Bank, they have full authority to enter into this Agreement and so
    bind those organizations.

    The effective date of this amended Agreement shall be April 30, 1996.

                              /s/ A. L. Weaver
                             --------------------------------------------------
                             A. L. Weaver

                             PINNACLE FINANCIAL SERVICES, INC.

                             By:  /s/ Richard L. Schanze
                                -----------------------------------------------
                                  Richard L. Schanze

                             By:  /s/ Terrence A. Friedman
                                -----------------------------------------------
                                  Terrence A. Friedman
                                  Its:  Chairman and Director, respectively 

                             PINNACLE BANK, a Michigan Banking Corporation,
                             Formerly THE PEOPLES STATE BANK OF ST. JOSEPH

                             By:  /s/ Richard L. Schanze
                                -----------------------------------------------
                                  Richard L. Schanze

                             By:  /s/ Terrence A. Friedman
                                -----------------------------------------------
                                  Terrence A. Friedman
                                  Its:  Chairman and Director, respectively

                                     -9- 

Basic Info X:

Name: EMPLOYMENT SEVERANCE COMPENSATION AGREEMENT
Type: Employment Severance Compensation Agreement
Date: Jan. 14, 1997
Company: PINNACLE FINANCIAL SERVICES INC
State: Michigan

Other info:

Date:

  • October 16 , 1992
  • April 30 , 1996

Organization:

  • The Peoples State Bank of St. Joseph
  • Board of Directors for Pinnacle
  • Employment Severance Compensation Agreement
  • Pinnacle Financial Services , Inc.
  • Term of Employment
  • the Change of Control
  • American Arbitration Association
  • Michigan Banking Corporation

Location:

  • St. Joseph
  • Michigan

Person:

  • Arnold L. Weaver
  • VIII
  • A. L. Weaver
  • Richard L. Schanze
  • Terrence A. Friedman

Percent:

  • 50 %