MONARCH COMMUNITY BANCORP INC
SETTLEMENT AGREEMENT AND MUTUAL RELEASE DATED DECEMBER 9, 2004
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>2
<FILENAME>k90446exv10w1.htm
<DESCRIPTION>SETTLEMENT AGREEMENT AND MUTUAL RELEASE DATED DECEMBER 9, 2004
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<P align="right" style="font-size: 10pt"><B>EXHIBIT 10.1</B>



<P align="center" style="font-size: 10pt"><B>SETTLEMENT AGREEMENT AND MUTUAL RELEASE</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This Settlement Agreement and Mutual Release (&#147;Agreement&#148;) is made and
entered into this 9th day of December, 2004, by and among John R. Schroll, an
individual with an address at 209 North Clay Street, Coldwater, Michigan 49036
(&#147;Schroll&#148; or &#147;Party&#148;), Monarch Community Bancorp, Inc., a Maryland corporation
with its chief executive office located at 375 North Willowbrook Road,
Coldwater, Michigan 49036 (&#147;Bancorp&#148; or &#147;Party&#148;) and Monarch Community Bank, a
federally-chartered banking corporation with its chief executive office located
at 375 North Willowbroook Road, Coldwater, Michigan 49036 (&#147;Bank&#148; or &#147;Party&#148;).


<P align="center" style="font-size: 10pt"><B>FACTUAL RECITALS</B>



<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="right">A.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Schroll and Bank entered into an Employment
Agreement dated November&nbsp;12, 2002, as amended (the &#147;Employment
Agreement&#148;) pursuant to which Schroll was employed as Bank&#146;s
President and Chief Executive Officer.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="right">B.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Bancorp appointed Schroll to Bank&#146;s Board of
Directors.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="right">C.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Schroll was employed by Bancorp as its President
and Chief Executive Officer.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="right">D.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Schroll currently serves as a duly-elected
Director of Bancorp whose term expires in April, 2007.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="right">E.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Schroll&#146;s position as President and CEO of
Bancorp and Bank was involuntarily terminated by Bancorp and
Bank without cause on or about August&nbsp;19, 2004.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="right">F.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Schroll&#146;s employment with Bancorp and Bank was
involuntarily terminated by Bancorp&#146;s Board of Directors and
Bank&#146;s Board of Directors, respectively, without cause on or
about September&nbsp;30, 2004.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="right">G.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>A dispute between the Parties (the &#147;Dispute&#148;)
arose in respect of certain monies owed to Schroll by Bancorp
and/or Bank, as the case may be, pursuant to both: (i)&nbsp;the
Employment Agreement, in Schroll&#146;s capacity as a director,
officer and/or employee of Bank and (ii)&nbsp;in Schroll&#146;s capacity
as a director, officer and/or employee of Bancorp.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="right">H.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Schroll commenced an action in the State of
Michigan Circuit Court in Branch County, File No.
04-09-617-CK, in which Schroll alleged various</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt">Page 9 of 21
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<P><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="right">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>claims arising out of the Employment Agreement and his
employment with Bancorp and Bank (&#147;Lawsuit&#148;).</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="right">I.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Schroll, Bancorp, and Bank shall be collectively
referred in this Agreement as the &#147;Parties&#148;.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="right">J.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Parties believe that it is in their best
respective interests and to their best respective advantage in
order to forever settle, adjust and compromise the Dispute and
all other controversies and disputes that now or in the future
may exist between them pursuant to the terms and upon the
conditions more fully detailed in this Agreement.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are both acknowledged and mutually agreed to by the
respective Parties, it is agreed as follows:


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Agreements of Schroll. </B>In consideration of the agreements of
both Bank and Bancorp, as the case may be, contained herein Schroll
agrees as follows:</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="right">A.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>To accept the Payments, Personal Property and
Benefits (as each are hereinafter defined) from both Bank and
Bancorp, as the case may be, as a full and final satisfaction
of the Dispute.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="right">B.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Simultaneously with the execution hereof, to sign
Exhibit&nbsp;A hereto whereby he will immediately resign from the
Board of Directors of Bancorp and all of its affiliates.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="right">C.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>To execute all documents necessary in order to
effectuate the terms of this Agreement.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="right">D.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>To dismiss, with prejudice and without cost or
attorney fees to any Party, the Lawsuit.</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Agreements of Bank and/or Bancorp. </B>In consideration of the
agreements of Schroll contained herein, Bank and/or Bancorp, as the
case may be, agree as follows:</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="right">A.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>To transmit and/or provide to Schroll the
following: (i)&nbsp;payment(s) (individually, a &#147;Payment&#148; and
collectively, the &#147;Payments&#148;), (ii)&nbsp;personal property
(&#147;Personal Property&#148;) and (iii)&nbsp;benefits (individually a
&#147;Benefit&#148; and collectively the &#147;Benefits&#148;) in the following
amounts and manner:</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="9%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Continue to make consecutive weekly salary payments in the amount of $2,865.39
commencing on August&nbsp;22, 2004 with a final weekly
payment to be made on January&nbsp;7, 2005.<SUP><B>*</B></SUP></TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt">Page 10 of 21
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<P><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="9%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>A lump-sum salary payment of
$177,654.18 on or about January&nbsp;14, 2005.* For the
purposes of the provisions of the Michigan Employment
Security Act, MCL 408.31, <I>et seq.</I>, as amended, and
any related regulations, this payment shall be
considered a severance payment which is allocated
equally to each week from January&nbsp;14, 2005 to March
18, 2006, inclusive.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="9%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Transfer of Bank&#146;s Chevrolet
Suburban automobile (&#147;Vehicle&#148;) and a one-time
payment in the amount of $1,312.72 for both the
transfer of title and registration of the Vehicle.<SUP><B>&#043;</B></SUP></TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="9%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>A one-time lump-sum
discretionary bonus payment in the amount of
$35,774.00.<SUP><B>&#043;</B></SUP></TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="9%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Ongoing health insurance
coverage for both Schroll and his family until March
18, 2006 under Bank&#146;s health care plan pursuant to the
Consolidated Omnibus Budget Reconciliation Act of
1985 (COBRA), at Bancorp&#146;s or Bank&#146;s expense, except
that Schroll will pay that portion of the premium
which other senior management employees of Bank are
required to pay. If through no fault of Schroll,
COBRA coverage becomes unavailable, Bancorp or Bank
will provide substitute coverage identical or
substantially identical to the health insurance
coverage that both Schroll and his family received
prior to Schroll&#146;s without-cause termination from
both Bank and Bancorp.<SUP><B>*</B></SUP></TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="9%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>A one-time OnStar&#174;
reimbursement in the amount of $199.00.<SUP><B>&#043;</B></SUP></TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="9%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In lieu of ongoing long-term
disability insurance coverage, a one-time $2,500.00
payment.<SUP>*</SUP></TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="9%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Conveyance of both the (i)
Computer and (ii)&nbsp;Palm Pilot that were furnished to
Schroll by the Bank during his employment.<SUP>&#043;</SUP></TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="9%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>A one-time life insurance
coverage payment in the amount of $1,606.83.<SUP><B>*</B></SUP></TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="9%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>A one-time payment in the
amount of $10,000.00 to be applied by Schroll to his
outstanding legal fees. <SUP>&#043;</SUP></TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="9%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>A one-time allocation payment
in the amount of $25,458.00 related to Schroll&#146;s
Employee Stock Ownership Plan participation.<SUP><B>&#043;</B></SUP></TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="9%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>A one-time future and accrued
medical reimbursement payment of $1,500.00.<SUP><B>&#043;</B></SUP></TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt">Page 11 of 21
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<P><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="9%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>A one-time payment in the
amount of $6,304.00 representing eighty-eight (88)
aggregate hours of paid leave time.<SUP><B>&#043;</B></SUP></TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="9%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>A one-time payment in the
amount of $7,048.00 representing Section 401(k)
aggregate payment allocations.<SUP><B>&#043;</B></SUP></TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="9%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>All amounts submitted by
Schroll pursuant to his monthly expense reimbursement
requests.<SUP>&#043;</SUP></TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="9%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>A one-time payment in the
amount of $75,000.00 to be applied by Schroll (at his
discretion) to amounts owed to him for both
outstanding attorneys fees and one (1)&nbsp;vesting period
pursuant to Bancorp&#146;s 2003 Recognition and Retention
Plan (&#147;RRP&#148;). <SUP><B>*</B></SUP></TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="9%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>A one-time payment in the
amount of $8,890.00 to be applied by Schroll for one
(1)&nbsp;vesting period pursuant to Bancorp&#146;s 2003 Stock
Option and Incentive Plan (&#147;SOP&#148;).<SUP><B>&#043;</B></SUP></TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="9%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>A one-time payment in the
amount of $64,941.67 for one (1)&nbsp;RRP vesting period.
&#091;Assumes $14.27/share redemption price&#093;<SUP><B>*</B></SUP></TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="right">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Except as otherwise indicated, Bancorp and/or Bank will make
the payments referenced above within 10&nbsp;days of the date
hereof.</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="right">B.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>To execute all documents necessary in order to
effectuate the terms of this Agreement.</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Release. </B>The Parties agree to a mutual release as follows:</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="right">A.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In consideration of the execution of this
Agreement and the full, final and complete resolution of the
Dispute, Schroll, on behalf of himself and any other persons
or entities claiming under or through him, hereby releases,
discharges and acquits Bancorp and/or Bank and its respective
current and former agents, servants, officers, directors,
shareholders, employees, owners, officials, subsidiaries,
affiliates, attorneys, successors, predecessors, heirs,
personal representatives and assigns from all causes of
action, suits, claims, debts, judgments, executions, damages,
demands, and rights whatsoever, in law, in equity or
otherwise, accrued or unaccrued, known or unknown, matured or
unmatured, liquidated or unliquidated, certain or contingent,
which Schroll ever had or claimed to have or now</TD>
</TR>

</TABLE>



<P>
<HR size="1" width="18%" align="left" noshade>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top">
    <TD width="96%">*Ongoing Obligation(s) To Be Performed by either Bank and/or Bancorp, as the
case may be.</TD>
</TR>

<TR><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD width="96%"><SUP>&#043;</SUP>Bank and/or Bancorp, as the case may be, has completed Obligation(s).</TD>
</TR>

</TABLE>


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<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="right">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>has or claims to have against Bancorp and/or Bank, including,
but not limited to any cause of action related or relating to
a breach of any express and/or implied contract or tort,
arising under the common law, any federal, state or local
statute of ordinance, including, but not limited to, Title
VII of the Civil Rights Act of 1964, as amended (42 U.S.C.
&#167;2000 et seq.), the Age Discrimination in Employment Act, as
amended (29 U.S.C. &#167;621 et seq.), the Elliott-Larson Civil
Rights Act (MCL 37.2101 et seq.), the Americans with
Disabilities Act (42 U.S.C. &#167;12101 et seq.), the Equal Pay
Act (29 U.S.C. &#167;206 et seq.), the Family and Medical Leave
Act (29 U.S.C. &#167;2601 et seq.), the Fair Labor Standards Act
of 1938 (29 U.S.C. &#167;201 et seq.) and any other federal, state
or local law dealing with payment of wages, minimum wage,
overtime or equal pay, the COBRA, the Employee Retirement
Income Security Act of 1974, as amended (29 U.S.C &#167;1001 et
seq.), and any and all actions, charges, complaints or
allegations which have been or could in the future be filed
with the Michigan Department of Civil Rights, the Michigan
Department of Labor, the United States Equal Employment
Opportunity Commission, the National Labor Relations Board,
and any other local, state or federal administrative agency,
which arise out of, or are connected with, in any way, the
Employment Agreement, any unvested rights under the Monarch
Community Bancorp, Inc. Amended and Restated 2003 Stock
Option Plan, and any related agreements, and any unvested
rights under the Monarch Community Bancorp, Inc. 2003
Recognition and Retention Plan, and any related agreements or
which otherwise arise out of, or are connected with, in any
way, the employment or the termination of employment of
Schroll by Bank or Bancorp, or any relationship between
Schroll and Bank and/or Bancorp based upon any events
occurring up to and including the date of execution of this
Agreement. Provided however this release shall not affect
any future or ongoing duties, responsibilities and/or
payments either due and/or owing to Schroll by either Bank or
Bancorp pursuant to the specifically enumerated sections of
the Employment Agreement referenced herein, this Agreement or
otherwise, all of which shall survive the execution and
delivery of this Agreement.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="right">B.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In consideration of the execution of this
Agreement and the full, final and complete resolution of the
Dispute, Bancorp and/or Bank, on behalf of itself and any
other persons or entities claiming under or through it, hereby
releases, discharges and acquits Schroll, his attorneys,
successors, predecessors, heirs, personal representatives and
assigns from all causes of action, suits, claims, debts,
judgments, executions, damages, demands, and rights
whatsoever, in law, in equity or otherwise, accrued or
unaccrued, known or unknown, matured or unmatured, liquidated
or unliquidated, certain or contingent, which Bancorp and/or
Bank ever had or claimed to have or now has or claims to have
against Schroll, including, but not</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt">Page 13 of 21
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<P><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="right">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>limited to any cause of action related or relating to a
breach of any express and/or implied contract.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="right">C.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Parties agree that the mutual releases set
forth in this Agreement shall not affect either Bank&#146;s or
Schroll&#146;s obligations, duties and responsibilities (as the
case may be) in respect of the following retirement
interests/plans that Bank maintains/administers either for or
on behalf of Schroll:</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="9%" nowrap align="right">(i)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Schroll&#146;s Employee Stock Ownership Plan (&#147;ESOP&#148;);</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="9%" nowrap align="right">(ii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Schroll&#146;s 401(k) Retirement Plan;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="9%" nowrap align="right">(iii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Schroll&#146;s Deferred Compensation Plan; and</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="9%" nowrap align="right">(iv)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Schroll&#146;s Pension Plan.</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">4.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Representations and Warranties. </B>In making and executing this
Agreement, the Parties hereby represent, warrant and agree as
follows:</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="right">A.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Parties have received independent legal
advice from their attorneys with respect to their rights and
asserted rights arising out of the matters in controversy and
with respect to the advisability of executing this Agreement.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="right">B.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Parties have made such investigation of all
matters pertaining to this Agreement as they deem necessary
and do not rely on any statement, promise or representation by
the Parties hereto with respect to such matters.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="right">C.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Schroll acknowledges that, in accordance with the
ADEA, as amended by the Older Workers Benefit Protection Act
of 1990, he has been given a period of twenty-one (21)&nbsp;days to
review and consider this Agreement before signing it. If he
elects to sign this Agreement without availing himself of the
opportunity to consider its provisions for at least twenty-one
(21)&nbsp;days, Schroll hereby acknowledges that his decision to
shorten the time for considering this Agreement prior to
signing is knowing and voluntary, and such decision is not
induced by Bank or Bancorp through fraud, misrepresentation,
or a threat to withdraw or alter the provisions set forth in
this Agreement prior to the expiration of the twenty-one (21)
day time period, or by providing different terms should he
agree to execute the Agreement prior to the expiration of the
twenty-one (21)&nbsp;day time period. Bank and Bancorp advises and
encourages Schroll to consult with his attorneys concerning
this Agreement prior to executing this Agreement. By signing
this Agreement, Schroll acknowledges that he has read this
Agreement thoroughly, that he has been advised and encouraged
by Bank and Bancorp, and has had the opportunity, to consult
with his attorneys prior</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt">Page 14 of 21
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<P><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #textcolor#; background: #bgcolor#">
    <TD width="6%" nowrap align="right">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>to signing the Agreement and that his agreement to the terms
of this Agreement is knowing, willing, and voluntary.
Schroll understands that he may revoke this Agreement within
seven (7)&nbsp;days after the date on which he signs this
Agreement, and that this Agreement does not become effective
until the expiration of the seven (7)&nbsp;day period. In the
event that Schroll wishes to revoke this Agreement within the
seven (7)&nbsp;day period, he must provide such revocation in
writing to BRAD A. RAYLE, 39400 Woodward Avenue, Suite&nbsp;101,
Bloomfield Hills, Michigan 48304.</TD>
</TR>
<TR>
<TD>&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="right">D.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Both Bancorp and Bank represent and agree that
neither of them have received any indication from their
respective federal and/or State governmental regulators that
either of them may be prohibited from fulfilling their
respective duties and/or obligations pursuant to this
Agreement for any reason. Neither Bank nor Bancorp has been
informed by their respective federal and/or State governmental
regulators that a potential order may be entered against
either of them concerning their financial condition, safety or
soundness which could impinge on their respective ability to
fully perform hereunder.</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">5.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Remedies</B>.</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="right">A.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Upon or after the occurrence of any default in
the obligations under this Agreement by any Party hereto, the
other Party may without any further notice or demand/exercise
all other rights and/or remedies accorded pursuant to
applicable Michigan law.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="right">B.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Bank, Bancorp and Schroll each covenant and agree
that Sections&nbsp;8 (Non-Competition, Confidentiality and
Non-Solicitation), 16 (Indemnification) and 19 (Arbitration)
of the Employment Agreement shall survive the execution and
delivery of this Agreement in their entirety and may be
enforced as provided therein; provided, however, the Parties
expressly agree that the one-year time periods referenced in
Section 8(a) and Section 8(d) of the Employment Agreement
expire on August&nbsp;18, 2005.</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">6.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Rights and Remedies Cumulative; No Waiver</B>. All rights and
remedies of any Party hereto provided herein: (a)&nbsp;are cumulative and
concurrent, (b)&nbsp;may be exercised independently, successively or
together against the other Parties or their respective properties at
the sole discretion of the enforcing Party, (c)&nbsp;shall not be
exhausted by any exercise thereof, but may be exercised as often as
occasion therefore may arise, and (d)&nbsp;shall not be construed to be
waived or released by any Party&#146;s delay in exercising or failure to
exercise them or any of them at any time it may be entitled to do
so. Time is of the essence of this Agreement.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">7.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Expenses</B>. Legal counsel fees and expenses incurred to
enforce or protect a Party&#146;s interests under this Agreement shall be
paid in the manner more-fully</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt">Page 15 of 21
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<P><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #textcolor#; background: #bgcolor#">
    <TD width="3%" nowrap align="right">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>described in Section&nbsp;19 (Arbitration) of the Employment Agreement;
provided, however, notwithstanding anything to the contrary
contained herein or in the Employment Agreement, if an action is
brought by the Bank pursuant to Section 8(e) of the Employment
Agreement, legal counsel fees and expenses incurred in connection
therewith shall be awarded to the prevailing party.</TD>
</TR>
<TR>
<TD>&nbsp;

</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">8.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Assigns</B>. Each of the Parties hereto warrants, represents and
agrees that it has not heretofore assigned or transferred or
purported to assign or transfer to any person, firm, partnership,
corporation or other entity whatsoever, any of the action or
actions, cause or causes of action, at law or in equity, suits,
debts, demands, claims, contracts, covenants, liens, liabilities,
losses, costs, expenses (including, without limitation, attorney
fees) or damages released herein. Each Party hereto agrees to
indemnify, defend or hold harmless the other Party from any claims,
expenses or liabilities (including attorney fees) arising from any
prior assignment or transfer subject to this paragraph. Further,
this Agreement may not be assigned by any of the Parties
voluntarily, involuntarily or by operation of law without having
first received the prior written consent of all the Parties, which
such consent may be withheld at the sole discretion of any such
Party.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">9.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Regulatory Actions</B>. To the extent practicable, Bank and
Bancorp, as the case may be, covenant and agree that they will
provide Schroll with prior written notice of: (i)&nbsp;any contemplated
or proposed regulatory action by the Office of Thrift Supervision,
the Security and Exchange Commission and/or any other federal, state
or local regulatory agency which might in any manner impinge on the
ability of either Bank or Bancorp to meet its obligations pursuant
to this Agreement and (ii)&nbsp;any proposed or contemplated voluntary
action by either Bank&#146;s or Bancorp&#146;s Board of Directors which might
in any manner impinge on the ability of either Bank or Bancorp to
meet its obligations pursuant to this Agreement.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">10.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>No Admission. </B>Neither the negotiations nor the execution of
this Agreement, or any of its provisions, are to be construed as an
admission by either of the Parties hereto, or by their respective
attorneys, officers, directors, employees or agents, regarding the
truth of any matter alleged in connection with the Dispute.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">11.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Confidentiality</B>. Each of the Parties acknowledges and agrees
that Bancorp and/or Bank are required by Securities and Exchange
Commission (&#147;SEC&#148;) requirements applicable to public companies, to
publicly disclose the terms and conditions of this Agreement. The
Parties further acknowledge that banking regulatory authorities
which have jurisdiction over Bancorp and Bank (&#147;Banking Regulators&#148;)
have full and continuing access to all information about Bancorp&#146;s
and Bank&#146;s operations, including information relating to the terms
and conditions of this Agreement and the basis for any claims and
negotiations leading to it Except as necessary to satisfy SEC
requirements, and requirements of Banking Regulators, and except as
may otherwise be required by law, the Parties and their</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt">Page 16 of 21
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<P><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #textcolor#; background: #bgcolor#">
    <TD width="3%" nowrap align="right">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>attorneys agree not to publicize or disclose or cause or knowingly
permit or authorize the publicizing or disclosure of the contents
of this Agreement, the terms of this Agreement, the underlying
claims in the Dispute, the resolution of the Dispute, the payment
terms or the other terms of the settlement. Each of the Parties
also agrees that, at all times following the execution of this
Agreement, they shall not make derogatory or negative statements
about any other Party. Notwithstanding the foregoing, the Parties
may make confidential communications to their attorneys and
accountants provided those persons are instructed to maintain the
strict confidential of the terms of this Agreement and to otherwise
comply with the provisions of this Agreement. In the event of a
breach or threatened breach of this paragraph, the Parties will be
entitled to pursue any and all legal or equitable remedies pursuant
to the provisions of this Agreement.</TD>
</TR>
<TR>
<TD>&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">12.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Joint Participation. </B>The Parties hereto participated jointly
in the preparation of this Agreement, and each of the Parties has
had the opportunity to obtain the advice of legal counsel and to
review, comment upon, and redraft this Agreement. Accordingly, it is
agreed that no rule of construction shall apply against either of
the Parties or in favor of any of the Parties. This Agreement shall
be construed as if the Parties jointly prepared this Agreement, and
any uncertainty or ambiguity shall not be interpreted against any
one of the Parties and in favor of the other.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">13.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Employment Inquiries</B>. Other than as may be necessary to
satisfy SEC requirements, Banking Regulators or as otherwise may be
required by law, Bancorp and Bank will only provide information to
third parties regarding Schroll&#146;s employment with either Bank or
Bancorp as follows:</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Schroll&#146;s salary on August&nbsp;19, 2004.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Schroll&#146;s position on August&nbsp;19, 2004.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Schroll&#146;s dates of employment with Bank, Bancorp
and their respective predecessors.</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">14.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Voluntariness of Agreement. </B>The Parties agree that they have
sufficient information to evaluate this Agreement and no further
information is necessary. The Parties further believe that no
further information, financial or otherwise, would affect their
decision to execute this Agreement and assume that their claims
against each other may be infinitely more or less valuable than
reflected by any information which they have today. The Parties
hereby affirm and acknowledge that they have read the foregoing
Agreement, that they have had the opportunity to review or discuss
it with counsel of their choice and that they fully understand and
appreciate the meaning of each of its terms, and that it is
voluntary, a full and final compromise, release and settlement to
the fullest extent permitted by law of all claims, demands,
injuries, relating to or arising out of any facts, claims, matters,
or events occurring prior to the execution of this Agreement.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt">Page 17 of 21
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<P><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">15.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Integration. </B>With the exception of the ongoing duties,
responsibilities and payments due by the Parties pursuant to this
Agreement, including but not limited to, the obligations referenced
in Section&nbsp;5.B. of this Agreement, or otherwise, each of which shall
survive the execution and delivery of this Agreement, this Agreement
constitutes a single integrated written contract expressing the
entire Agreement between the Parties hereto. There are no other
agreements, written or oral, expressed or implied, between the
Parties hereto except as set forth in this Agreement.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">16.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Counterparts</B>. This Agreement may be executed in counterparts,
each of which shall be deemed equally authentic.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">17.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Binding Effect. </B>This Agreement shall be binding upon and
inure to the benefit of the Parties hereto and each of their
respective successors, heirs, personal representatives and permitted
assigns.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">18.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Governing Law. </B>This Agreement shall be construed,
interpreted, governed, and enforced pursuant to the domestic
internal laws, without regard to the conflicts of laws, of the State
of Michigan.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">19.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Exclusive Venue and Jurisdiction</B>. Each of the Parties
irrevocably covenant and agree that exclusive jurisdiction and venue
for all matters either related or relating to this Agreement shall
take place and be arbitrated in Branch County, Michigan pursuant to
Section&nbsp;19 of the Employment Agreement; provided, however,
notwithstanding anything contained herein to the contrary, an action
brought by the Bank pursuant to Section 8(e) of the Employment
Agreement shall be brought in the Circuit Court in Branch County,
Michigan. The Parties further covenant and agree that no future
objection shall be made regarding the convenience of Branch County,
Michigan in order to arbitrate (or litigate in the case of an action
brought by the Bank pursuant to Section 8(e) of the Employment
Agreement) any disputes related or relating to this Agreement.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">20.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Joint and Several Liability</B>. All agreements, conditions,
performance, covenants, representations, authorizations and
undertakings of both Bank and Bancorp under this Agreement and
otherwise shall be joint and several and shall equally legally bind
both Bank and Bancorp. In the event of any default by Bancorp or
Bank pursuant to this Agreement, Schroll may pursue his remedies
against either Bank or Bancorp or both Bank and Bancorp at any time
and both Bank and Bancorp waive any defense based upon Schroll&#146;s
election of remedies.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">21.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Severability. </B>Should any of the provisions of this Agreement
be rendered invalid by a court or government agency of competent
jurisdiction, it is agreed that this shall not in any way or manner
affect the enforceability of the other provisions of this Agreement
which shall remain in full force and effect.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt">Page 18 of 21
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<P><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">22.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Notices</B>. Notices to the Parties shall be transmitted to the
addresses set forth on page one of this Agreement with copies to:</TD>
</TR>

</TABLE>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="90%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="37%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="58%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">For Schroll:
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Kevin C. O&#146;Malley, Esquire</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Perrin Rynders, Esquire</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Varnum, Riddering, Schmidt &#038; Howlett LLP</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">201 North Washington Square, Suite&nbsp;810</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Lansing, MI 48933</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">For Bancorp and/or Bank:
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Joseph B. Hemker, Esquire</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Brad A. Rayle, Esquire</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Howard &#038; Howard Attorneys, P.C.</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Comerica Building</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">151 South Rose Street, Suite&nbsp;800</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Kalamazoo, MI 49007</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>IN WITNESS WHEREOF, </B>the Parties have executed this Agreement on the day
and year stated above.

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="55%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="18%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="77%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>JOHN R. SCHROLL</B></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ John R. Schroll</TD>
</TR>

<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><HR size="1" noshade>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>MONARCH COMMUNITY BANCORP, INC.</B></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ Donald L. Denney</TD>
</TR>

<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><HR size="1" noshade>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>By:</B>  Donald L. Denney</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>Its:</B>   President and Chief
Executive Officer</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>MONARCH COMMUNITY BANK</B></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ Donald L. Denney</TD>
</TR>

<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><HR size="1" noshade>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>By:</B>  Donald L. Denney</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>Its:</B>   President and Chief
Executive Officer</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<P align="center" style="font-size: 10pt"><B>EXHIBIT A</B>



<P align="left" style="font-size: 10pt">The undersigned, John R. Schroll, does hereby resign from all positions he has
as a director of Monarch Community Bancorp, Inc., Monarch Community Bank and
Community Services Group, Inc.


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="59%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="36%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">

<TD align="left" valign="top"><DIV style="margin-left:0px; text-indent:-0px">Dated: December&nbsp;9, 2004
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">/s/ John R. Schroll</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><HR size="1" noshade></TD>
</TR>


<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">John R. Schroll</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>




<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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</TEXT>
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