Exhibit 10.1

AMENDED AND RESTATED

EMPLOYMENT AGREEMENT

THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT, is entered into as of June 17,
2008, by and between Peoples State Bank, Wausau, Wisconsin, a Wisconsin banking
corporation, (“the Bank”), and Peter W. Knitt (“Mr. Knitt”).

WITNESSETH:

WHEREAS, the Bank and Mr. Knitt initially entered into an employment agreement
dated June 30, 2006.

WHEREAS, the Company and Mr. Knitt now desire to amend and restate the
employment agreement in its entirety by setting forth the terms and conditions
of their agreements and understandings in this Amended and Restated Employment
Agreement (“Agreement”), which shall replace and supercede the initial
employment agreement effective as of the date first written above.

NOW, THEREFORE, in consideration of the premises, covenants, and mutual
agreements contained herein, the Bank and Mr. Knitt agree as follows:

1.

Employment.  Subject to the earlier termination of this agreement pursuant to
the terms hereof, Mr. Knitt is hereby employed on the Commencement Date (as
defined below) as the President and CEO of the Bank; provided, however, that,
prior to a Change of Control, Mr. Knitt may be employed in such other capacity
as the Board of Directors of the Bank shall deem appropriate and in the best
interests of the Bank.  Mr. Knitt agrees to serve in such capacity or capacities
on the terms and conditions hereinafter set forth.

2.

Term.  The term of this agreement commenced on July 1, 2006 (the “Commencement
Date”) and shall end at midnight on the Expiration Date, except as otherwise
provided in paragraph 8(a) hereof.  The term “Expiration Date” shall mean the
first to occur of (a) the date of Mr. Knitt’s death, or (b) the later of (i) the
third anniversary of the Commencement Date and (ii) the date to which the term
of this agreement has most recently been extended pursuant to the following
sentence.  On the third and each subsequent anniversary of the Commencement Date
the term of this agreement shall automatically be extended for one calendar
year; provided, however, that automatic extensions of the term of this agreement
(and, consequently, the Expiration Date) pursuant to this sentence shall cease
on the first to occur of (x) either the Bank or Mr. Knitt giving to the other,
at any time on or after the Commencement Date, a written notice that no, or no
further, as the case may be, automatic extensions of the term of this agreement
shall thereafter occur, but the giving of such a notice shall not affect any
previous extensions, or (y) Mr. Knitt’s 64th birthday.  For all purposes of this
Agreement other than as provided in paragraph 8(a) hereof, the term “Term of
Employment” shall mean the period beginning on the Commencement Date and ending
on the earlier of the Expiration Date or the date on which Mr. Knitt’s
employment is terminated hereunder.

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3.

Extent of Services.  Mr. Knitt agrees to devote his full-time attention and
efforts (except during vacation periods, periods of illness, and other approved
absences as provided for in paragraph 4(g)) to the duties of any office held by
him during the Term of Employment; provided, however, that Mr. Knitt’s devotion
of a reasonable and de minimis portion of his attention or efforts to the
management of his personal affairs during normal business hours shall not
constitute a breach of the foregoing requirement.

4.

Compensation and Reimbursement.

(a)

Salary.  The Bank shall pay to Mr. Knitt a salary based on an annual amount of
$218,400.  The Bank may increase Mr. Knitt’s salary from the amount specified
herein during the Term of Employment, but may not decrease Mr. Knitt’s salary
from any previously established amount.  Mr. Knitt’s salary shall be payable at
such times and in such installments as are consistent with the manner in which
the salaries of other executive officers of the Bank are paid.

(b)

Incentive Compensation.  During the Term of Employment, Mr. Knitt shall be
entitled to receive such additional compensation from the Bank as may be
provided for officers under the terms of any incentive program from time to time
maintained and in effect at the Bank for the President and CEO.

(c)

Automobile.  The Bank shall furnish an automobile for Mr. Knitt’s business use
during the Term of Employment.  The Bank shall have sole discretion of the model
and year of such automobile, but such automobile shall be at least commensurate
with other automobiles provided to other executive officers of the Bank and, for
the initial term of this agreement, shall be comparable to a vehicle provided
for his immediate predecessor in office as President and CEO of the Bank

(d)

Club Memberships.  During the Term of Employment, the Bank shall provide Mr.
Knitt with a social membership at the Wausau Country Club.

(e)

[INTENTIONALLY LEFT BLANK].

(f)

Deferred Compensation.  The Bank will not terminate, with respect to future
deferrals or Bank contributions, that certain Amended and Restated Executive
Deferred Compensation Agreement dated as of December 31, 2007 and entered into
by the Bank and Mr. Knitt, prior to January 1, 2009.

(g)

Other Benefits.  During the Term of Employment, Mr. Knitt shall be
entitled to receive all benefits and perquisites ordinarily provided to
executive officers of
the Bank including coverage under an officer’s and director’s liability
insurance policy,
and Mr. Knitt shall participate in all employee benefit plans or fringe benefit
programs
now or hereafter established or maintained by the Bank including, but not
limited to,
group insurance plans, pension benefit plans, welfare benefit plans, pay
practices, and
vacation and sick leave benefits, except to the extent Mr. Knitt is then
participating in a separately negotiated plan or program.  Mr. Knitt shall be
entitled to participate in all
plans or programs maintained by the Bank on terms no less favorable than those

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generally available to officers of the Bank and at a level of participation
commensurate with his office.

(h)

Expenses.  The Bank shall pay or reimburse Mr. Knitt, upon submission of
receipts by him, for all entertainment, travel, meal, hotel accommodation, and
miscellaneous expenses reasonably incurred by him in the interest of the Bank’s
business during the Term of Employment.

5.

Termination of Employment.

(a)

Termination by the Bank for Good Cause.  The Bank may terminate Mr. Knitt’s
employment prior to the Expiration Date for good cause only upon compliance with
the requirements of this paragraph 5(a).  “Good cause” for termination of Mr.
Knitt’s employment by the Bank shall consist only of one or more of (i) the
commission of an act or acts by Mr. Knitt which results in a payment to the Bank
or to PSB Holdings, Inc., the parent company of the Bank (“PSB”) of a claim
filed by the Bank or PSB under a fidelity bond policy as from time to time and
at any time maintained; (ii) the willful and continuing failure to perform his
duties in accordance with standards or policies established, from time to time,
or at any time, by the Bank, after a written demand for substantial performance
is delivered to Mr. Knitt by the Board which specifically identifies the manner
in which the Board believes that Mr. Knitt has not substantially performed his
duties; (iii) the commission by Mr. Knitt of any crime of moral turpitude, of
dishonesty, of breach of trust, of theft, of embezzlement, of misapplication of
funds, of unauthorized issuance of obligations or of false entries; (iv) any
intentional, reckless, or negligent act or omission to act by Mr. Knitt which
results in the violation by Mr. Knitt of any policy established by the Bank
which is designed to insure compliance with applicable banking, securities,
employment discrimination, or other laws or which causes or results in the
Bank’s violation of such laws, or any violation of an employment policy
maintained by the Bank and applicable to all other employees (for example,
employment policies relating to the use of drugs or alcohol) and which, by the
terms of such policy, is grounds for termination of employment, except any act
done by Mr. Knitt in good faith, as determined in the reasonable discretion of
the Board of Directors of the Bank, or which results in a violation of such
policies or law which is, in the reasonable sole discretion of such Board,
immaterial; or (v) Mr. Knitt’s physical or mental disability, if such disability
either results in Mr. Knitt receiving permanent disability payments pursuant to
any group disability insurance policy or prevents Mr. Knitt from the normal
performance of his duties for a continuous period of at least six months.  Upon
the occurrence of any event constituting good cause for which the Bank elects to
terminate Mr. Knitt’s employment prior to the Expiration Date, the Bank shall
provide written notice to Mr. Knitt, which shall state the good cause for
termination, and Mr. Knitt’s termination of employment shall be effective as of
the date specified in such notice.  In the event of termination of Mr. Knitt’s
employment in accordance with the conditions of this paragraph (a), on the
effective date of Mr. Knitt’s termination of employment, the Term of Employment
shall end, all of Mr. Knitt’s obligations pursuant to this agreement (except for
those provided in paragraphs 6 and 7) shall end, and the Bank’s obligations to
pay compensation or provide benefits to Mr. Knitt pursuant to paragraph 4 shall
end.

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(b)

Termination by the Bank Other Than for Good Cause.  The Bank may terminate Mr.
Knitt’s employment prior to the Expiration Date for any reason other than good
cause (as defined in paragraph 5(a)) upon providing written notice to Mr. Knitt
specifying the effective date of Mr. Knitt’s termination of employment.  If the
Bank terminates Mr. Knitt’s employment other than for good cause under paragraph
5(a), the Term of Employment and all of Mr. Knitt’s obligations pursuant to this
agreement (except for those provided in paragraphs 6 and 7) shall end on the
effective date of Mr. Knitt’s termination of employment and the Bank shall
provide, for a period beginning on the effective date of Mr. Knitt’s termination
of employment, as a severance benefit to Mr. Knitt and as liquidated damages for
breach by the Bank of its otherwise applicable obligations hereunder, (i) for a
period of 12 months beginning on the first day of the first month following Mr.
Knitt’s termination of employment a monthly cash payment equal to 110% of the
amount which would, except for Mr. Knitt’s termination of employment, have been
paid to Mr. Knitt, if then living, as salary under paragraph 4(a) and (ii) until
Mr. Knitt becomes eligible for coverage under the health insurance plan of
another employer of Mr. Knitt, coverage for Mr. Knitt, under the same terms then
available to executive officers of the Bank, under any group health insurance
program in which Mr. Knitt was a participant on the effective date of Mr.
Knitt’s termination of employment, or under such successor plan or program as
maintained after such date for the benefit of the Bank’s employees, but in no
event longer than the period for which payments are made pursuant to clause (i).
 Mr. Knitt shall not, by virtue of his severance benefit and liquidated damages
rights, acquire any right, title, or interest in particular assets of the Bank,
and such rights shall be no greater than the right of any unsecured general
creditor of the Bank.  Despite any other provision of this agreement, Mr. Knitt
shall not be entitled to any severance benefit or liquidated damages, and the
Bank shall not be obligated to pay any such benefit or damages, if Mr. Knitt
violates the provisions of paragraph 6 or 7.

(c)

Termination by Mr. Knitt.  Mr. Knitt may terminate his employment at any time
upon providing 30 days prior written notice to the Bank stating the effective
date of his termination.  In any such event, all obligations of the Bank to Mr.
Knitt under this agreement and all obligations of Mr. Knitt to the Bank (except
those provided for in paragraphs 6 and 7) shall cease and the Term of Employment
shall end on the effective date of Mr. Knitt’s termination of employment.

(d)

Section 409A Considerations.  This paragraph 5(d) shall apply in the event the
Bank determines, in good faith, that payment of severance benefits pursuant to
this paragraph or paragraph 8(d) are subject to the provisions of Section 409A
of the Internal Revenue Code of 1986, as amended (the “Code”).  For purposes of
Mr. Knitt’s
entitlement to any severance benefit pursuant to paragraph 5(b) or 8(b), Mr.
Knitt shall be deemed to have incurred a termination of employment with the Bank
only on such date on which his employment has been terminated by the Bank, each
other member of the
controlled group of corporations of which the Bank is a member, and each other
entity
under common control with the Bank, and has thereby incurred a separation from
service
(a “Separation from Service”) within the meaning of Code Section 409A(a)(2)(A)
and the applicable regulations promulgated thereunder.  Notwithstanding any
other provision of
this agreement to the contrary, in no event shall the severance benefit to which
Mr. Knitt

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may become entitled under the terms of paragraph 5(b) or 8(d) be paid to Mr.
Knitt until the date on which he has incurred a Separation from Service;
provided, however, that in the event Mr. Knitt was a Key Employee as of the date
of his Separation from Service, no severance benefit shall be paid to him
earlier than the first day of the seventh month after the date of such
Separation from Service to the extent required by Code Section 409A and the
applicable regulations.  For purposes of this agreement, the term “Key Employee”
means each person who is a “key employee” within the meaning of Code Section
416(i) and the applicable authority under such Code section and Code Section
409A.  Any such delayed payments shall bear interest at the short-term
applicable federal rate compounded semi-annually as in effect for the month in
which Mr. Knitt’s employment terminates.  

6.

Restrictive Covenant.  Mr. Knitt agrees, subject to the provisions of paragraph
8, that during the Term of Employment and during the one-year period which ends
on the first anniversary of the effective date of Mr. Knitt’s termination of
employment:

(a)

he will not, within a radius of 25 miles of the principal office of the Bank in
Wausau, Wisconsin, or any branch or subsidiary office or operation of the Bank
at which, or on behalf of, Mr. Knitt provided services during the 12 months
preceding the effective date of Mr. Knitt’s termination of employment, directly
or indirectly, perform services similar to those that Mr. Knitt provided to the
Bank during the one year preceding the effective date of Mr. Knitt’s termination
of employment, for any depository institution, doing business as a bank, savings
and loan association, or otherwise or as a mortgage broker, or on behalf of any
other entity, which competes for the Bank’s retail or commercial loan business
(each a “Financial Institution”); and

(b)

he will not, directly or indirectly, solicit loans, deposits, or other business
on behalf of any Financial Institution from any person, corporation, limited
liability company, partnership, or other entity or organization who was a
customer with whom/which Mr. Knitt had direct contact during the one year period
preceding the effective date of his termination of employment (“Restricted
Customer”);

(c)

he will not, directly or indirectly, for himself or for any other person, induce
or attempt to induce any Restricted Customer of the Bank to cease doing business
with the Bank, or in any way interfere with the relationship between any
Restricted Customer of the Bank and the Bank.

For purposes of this paragraph 6, the term “directly or indirectly” includes (a)
any solicitation or
sale through any medium and (b) the direct or indirect ownership, management,
operation,
control, service as a director for, or association or employment with, any
Financial Institution if
such Financial Institution is engaged in the activities prohibited to Mr. Knitt
by the provisions of
this paragraph 6 and Mr. Knitt’s activities or services for such Financial
Institution involve the
activities and services which are the same or substantially similar to those
services performed by
him for the Bank; provided, however, that an aggregate beneficial ownership
interest of
Mr. Knitt of less than 5% of the equity interests in any Financial Institution
(or affiliate thereof)
whose stock is registered pursuant to the provision of the Securities Exchange
Act of 1934 shall
be deemed not to constitute a violation of this provision.  Mr. Knitt further
agrees that the

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restrictions set forth in this agreement are reasonably necessary to protect the
reasonable interests of the Bank.

7.

Confidential Information.  Mr. Knitt agrees that during the Term of Employment
and for a two year period following the termination of his employment he will
not reveal to any individual who is not then either employed by, retained by, or
on the Board of Directors of PSB or any of its subsidiaries, without the consent
of PSB or the Bank, any confidential or proprietary information of PSB or the
Bank, the revealing of which would adversely affect the business of PSB or the
Bank, unless Mr. Knitt discloses such matters in response to a subpoena or to
discovery proceedings concerning a matter in litigation or based on advice of
counsel acceptable to the Bank that such disclosure is appropriate or necessary
under applicable law or regulation.

8.

Change of Control.  In the event of a Change of Control, the following
provisions of this agreement shall apply notwithstanding any other terms or
conditions of this agreement:

(a)

Notwithstanding anything contained in this Agreement to the contrary, upon a
Change of Control, the “Term of Employment” for purposes of this Agreement shall
in all cases be 24 months starting on the date of the Change of Control, and the
“Expiration Date” shall mean the first to occur of (i) Mr. Knitt’s death, (ii)
his termination pursuant to paragraph 5, (iii) his termination pursuant to
paragraph 8(b), or (iv) the expiration of the 24-month Term of Employment.
 Notwithstanding any other provision of this Agreement or any incentive
compensation plan then in effect, Mr. Knitt shall be awarded, for each fiscal
year ending during the Term of Employment following the Change of Control, an
annual bonus (the “Annual Bonus”) in cash at least equal to his average annual
bonus under any bonus plan with respect to performance during each of the three
full calendar years prior to the effective date of the Change of Control (or
such shorter period that Mr. Knitt was employed by the Bank), regardless of when
such bonus was actually paid (the “Recent Annual Bonus”) and each such Annual
Bonus shall be paid in the period beginning on January 1st and ending on March
15th of the calendar year next following the fiscal year for which the Annual
Bonus is awarded.  Such bonus amount shall be reduced by any amount paid to Mr.
Knitt under any other annual incentive compensation plan maintained after the
Change of Control.

(b)

Termination of Employment by Mr. Knitt for Good Reason.  Mr. Knitt’s employment
may be terminated by Mr. Knitt during the Term of Employment for Good Reason if,
(i) within 60 days of the date of occurrence of a triggering event, Mr. Knitt
notifies the Bank in writing of his intention to treat such event as Good
Reason, (ii) within 30 days following receipt of such notice provided for in
(i), the Bank fails to cure the triggering event, and (iii) within 30 days
following the expiration of the 30-day period described in (ii), Mr. Knitt
voluntarily terminates his employment by giving written notice to the Bank.

(c)

Good Reason.  For purposes of this agreement, “Good Reason” shall mean the
occurrence of one or more of the following events subsequent to a Change of
Control, or prior to a Change of Control at the request of a person acquiring,
directly or indirectly, an interest in the Bank in a Change of Control
transaction (each of which shall be a “triggering event”):

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(i)

the assignment to Mr. Knitt of any duties inconsistent in any respect with the
duties or responsibilities then held by Mr. Knitt (except if his status, title,
or authority has been increased), or any other action by the Bank which results
in a diminution in such duties or responsibilities, excluding for this purpose
an isolated, insubstantial, and inadvertent action not taken in bad faith and
which is remedied by the Bank promptly after receipt of notice thereto given by
Mr. Knitt;

(ii)

any failure by the Bank to comply with any of the provisions of paragraph 4 of
this agreement, other than an isolated, insubstantial, and inadvertent failure
not occurring in bad faith and which is remedied by the Bank promptly after
receipt of notice thereof given by Mr. Knitt, unless the Bank agrees to fully
compensate Mr. Knitt for any such reduction;

(iii)

Mr. Knitt is required to locate his office more than 25 miles from the current
location of the Bank’s principal office, excluding business travel reasonably
consistent with the amount of travel required of him prior to such relocation;

(iv)

any purported termination by the Bank of Mr. Knitt’s employment otherwise than
as expressly permitted by this agreement;

(v)

any failure of any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to assume and agree to perform this Agreement
(either expressly or by operation of law) in the same manner and to the same
extent that the Bank would be required to perform it if no such succession had
taken place; or

(vi)

the Bank‘s or PSB’s request that Mr. Knitt perform an illegal, or wrongful act
in violation of the Bank’s code of conduct policies.

(d)

Severance Benefit on Termination by Mr. Knitt for Good Reason or by the Bank
Without Good Cause.  Upon termination of Mr. Knitt’s employment by Mr. Knitt
pursuant to paragraph 8(b) or by the Bank for a reason other than good cause or
Mr. Knitt’s death, after a Change of Control or prior to a Change of Control at
the request of a person acquiring, directly or indirectly, an interest in the
Bank in a Change of Control transaction, all obligations of Mr. Knitt to the
Bank (except those provided for in paragraph 7) shall cease and the Term of
Employment shall end (the “Date of Termination”) and:

(i)

subject to paragraphs 5(d) and 8(f), the Bank shall pay to Mr. Knitt in a lump
sum in cash within 30 days after the Date of Termination the aggregate of the
following amounts:

(A)

the sum of (1) Mr. Knitt’s base salary under paragraph 4(a) through the Date of
Termination and any accrued incentive compensation to the extent not theretofore
paid, and (2) the product of (a) an amount equal to any incentive compensation
earned by Mr. Knitt for the most

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recently completed fiscal year during the Term of Employment, if any, and (b) a
fraction, the numerator of which is the number of days in the current fiscal
year through the Date of Termination, and the denominator of which is 365; and

(B)

the amount equal to 300% of the sum of (1) Mr. Knitt’s annual salary as most
recently in effect pursuant to paragraph 4(a) and   (2) the average incentive
compensation earned by Mr. Knitt in the three most recently completed fiscal
years during the Term of Employment;

(ii)

until Mr. Knitt becomes eligible for coverage under the health insurance plan of
another employer of Mr. Knitt, coverage for Mr. Knitt for a maximum period of 36
months beginning on the Date of Termination, under the same terms then available
to executive officers of the Bank, under any group health insurance program in
which Mr. Knitt was a participant on the effective date of Mr. Knitt’s
termination of employment or under such successor plan or program as maintained
after such date for the benefit of the Bank’s employees; and

(iii)

to the extent not theretofore paid or provided, the Bank shall timely pay or
provide to Mr. Knitt any other amounts or benefits required to be paid or
provided or which he is eligible to receive under any plan, program, policy or
practice, or contract or agreement of the Bank and its affiliated companies.

(e)

Definition of Change of Control.  For the purpose of this agreement, a “Change
of Control” shall be deemed to have occurred:

(i)

when any “person” as defined in Section 3(a)(9) of the Securities Exchange Act
of 1934, as amended (the “Exchange Act”) and as used in Sections 13(d) and 14(d)
thereof, including a “group” as defined in Section 13(d) of the Exchange Act,
excluding any employee benefit plan sponsored or maintained by PSB or any
subsidiary of PSB (including any trustee of such plan acting as trustee),
directly or indirectly, becomes the “beneficial owner” (as defined in Rule 13d-3
under the Exchange Act, as amended from time to time), of securities of PSB or
the Bank representing 30% or more of the combined voting power of the Bank’s or
PSB’s then outstanding securities with respect to the election of the directors
of the Bank or PSB; or

(ii)

when, during any period of 24 consecutive months, the individuals
who, at the beginning of such period, constitute the Board of Directors of PSB
(the “Incumbent Directors”) cease for any reason other than death to constitute
at
least a majority thereof, provided, however, that a director who was not a
director
at the beginning of such 24-month period shall be deemed to have satisfied such
24-month requirement (and be an Incumbent Director) if such director was
elected by, or on the recommendation of or with the approval of, at least a
majority of the directors who then qualified as Incumbent Directors either
actually

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(because they were directors at the beginning of such 24-month period) or by
prior operation of this provision; or

(iii)

the occurrence of a transaction requiring stockholder approval of the
acquisition of the Bank by an entity other than PSB or a 50% or more owned
subsidiary of PSB or shareholder approval of the acquisition of PSB through
purchase of assets, or by merger, consolidation or otherwise, except in the case
of a transaction pursuant to which, immediately after the transaction, PSB’s
shareholders immediately prior to the transaction own at least 60% of the
combined voting power of the surviving entity’s then outstanding securities with
respect to the election of the directors of such entity solely by reason of such
transaction; or

(iv)

the liquidation or dissolution of the Bank or PSB.

(f)

Limitation on Benefits.

(i)

Notwithstanding any other provision of this agreement, the present value of all
amounts payable pursuant to this paragraph 8 which would constitute “parachute
payments” (as such term is defined in Code Section 280G, and any regulations
promulgated thereunder), together with the present value of all other benefits
payable by the Bank or PSB to Mr. Knitt under any other plans which would also
constitute “parachute payments,” shall in no event equal or exceed an amount
(the “Testing Amount”) equal to three times Mr. Knitt’s “base amount” (as such
term is defined in Code Section 280G and any regulations promulgated
thereunder); provided, however, that notwithstanding anything contained to the
contrary in Code Section 280G and any regulations promulgated thereunder, such
“base amount” shall, for all purposes of this Agreement, also include the
average of amounts which Mr. Knitt has deferred into the Executive Deferred
Compensation Agreement for the prior five (5) taxable years or such shorter
period as Mr. Knitt was employed by the Bank, annualized consistently with any
base salary for the first year of employment.  In the event that the present
value of the payments provided for in this paragraph 8 together with the present
value of such other amounts, equals or exceeds the Testing Amount, then the
amount of the payments provided for in this paragraph 8 and under such plans
shall be reduced, beginning with the payments which are last in time, until the
present value of all such payments is one-dollar less than the Testing Amount.
 For purposes of this paragraph 8, present value shall be determined in the
manner provided in Code Section 280G and the regulations promulgated thereunder.

(ii)

If any payment, as calculated under paragraph (8)(f)(i) above, constitutes an
“excess parachute payment” (as such term is defined in Code
Section 280G, and any regulations promulgated thereunder) and is thereby subject
to an excise tax under Code Section 4999, then Mr. Knitt shall receive a
Gross-up Payment (as hereinafter defined).  The Gross-up Payment shall be a
payment
equal to the product of (A) the excise tax on any “excess parachute payment” (as
calculated under Code Section 4999 and defined in Code Section 280G, and any

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regulations promulgated thereunder) multiplied by (B) the 280G Gross-up Multiple
(as hereinafter defined).  The “280G Gross-up Multiple” shall equal a fraction,
the numerator of which is one and the denominator of which is one minus the sum,
expressed as a decimal fraction, of the rates of all excise taxes and federal
and state income and employment taxes applicable to the Gross-up Payment after
taking into account the deductibility of state, local, and other taxes.  For
purposes of determining the amount of the Gross-up Payment, it shall be assumed
that (x) Mr. Knitt is subject to federal and state income tax at the highest
marginal statutory rates in effect for the relevant period after taking into
account any deduction and any limitations on the use thereof available in
respect of any such tax and (y) the deduction available for state and local
income taxes in computing federal income taxes is subject to the maximum
adjusted gross income limitations.

(iii)

In the event the provisions of this paragraph 8 require any reduction in the
amount to be paid to Mr. Knitt under this paragraph 8, the Bank shall deliver to
Mr. Knitt concurrently with such payment a statement setting forth the basis for
and computation of such reduction.

9.

Payment Obligations Absolute.  Upon a Change of Control the obligations of the
Bank to pay the benefits provided for under this Agreement shall be absolute and
unconditional and shall not be affected by any circumstances, including, without
limitation, any set-off, counterclaim, recoupment, defense, or other right which
the Bank or any of its subsidiaries may have against Mr. Knitt; provided,
however, that this paragraph 9 shall not limit the rights of the Bank under any
noncompetition agreement to which Mr. Knitt is a party.  In no event shall Mr.
Knitt be obligated to seek other employment or take any other action by way of
mitigation of the amounts payable to Mr. Knitt under any of the provisions of
this Agreement, nor shall the amount of any payment hereunder be reduced by any
compensation earned by Mr. Knitt as a result of employment by another employer.

10.

Miscellaneous.

(a)

Notices.  Any notice required or permitted to be given under this agreement
shall not be deemed to have been given unless delivered in person or mailed,
postage prepaid by certified mail addressed, in the case of Mr. Knitt, to his
last known residence as specified by him in a notice to the Bank, or, in the
case of the Bank to its principal office.

(b)

Benefits and Obligations.  This agreement shall be binding upon, shall inure to
the benefit of the Bank and its successors or assigns, and, as provided for
herein, PSB, and shall be enforceable by the Bank and its respective successors
and assigns, and Mr. Knitt, his heirs, assigns, or legal representatives;
provided, however, that the obligations of Mr. Knitt contained herein may not be
delegated or assigned.

(c)

Entire Agreement; Amendment.  This agreement supersedes all prior agreements
between the parties relating to Mr. Knitt’s employment by the Bank and
constitutes the entire agreement between the parties with respect to the subject
matter

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hereof and may only be amended by an agreement in writing signed by all of the
parties hereto.

(d)

Waiver.  The failure of any party hereto to insist, in any one or more
instances, upon performance of any of the terms and conditions of this
agreement, shall not be construed as a waiver or relinquishment of any right
granted hereunder or of the future performance of any such term, covenant, or
condition.

(e)

Severability.  In the event that any portion of this agreement may be held to be
invalid or unenforceable for any reason, the parties hereto agree that said
invalidity or unenforceability shall not effect the other portions of this
agreement and that the remaining covenants, terms, and conditions or portions
thereof shall remain in full force and effect and any court of competent
jurisdiction may so modify the objectionable provision as to make it valid and
enforceable.

(f)

Governing Laws.  This agreement shall be governed by and construed in accordance
with the internal laws of the State of Wisconsin without reference to conflicts
of law principles.

(g)

Captions.  The captions contained in this agreement are for the convenience of
the Bank and Mr. Knitt and shall not be deemed or construed as in any way
limiting or extending the language of the provisions to which such captions
refer.

IN WITNESS WHEREOF, the Bank and Mr. Knitt have caused this instrument to be
executed as of the date first written above.

PEOPLES STATE BANK

By:

/s/ Patrick L. Crooks_______________

   Patrick L. Crooks

   As its Chairman of the Board

/s/ Peter W.
Knitt                                                                   

   Peter W. Knitt

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