BANK MUTUAL CORPORATION
 OUTSIDE DIRECTORS RETIREMENT PLAN
 Preamble
  1.
    
    Purpose. The Bank Mutual Corporation Outside Directors Retirement Plan (the Plan)
is maintained by Bank Mutual Corporation (the Company) for the purpose of providing
retirement benefits to its outside directors. The objective of the Plan is to provide an
incentive for individuals to become and remain directors of the Company by providing them with
a retirement benefit in addition to their annual cash retainer fees.
 2.
    
    Participation. The term Participant as used herein refers to any member of the
Companys Board of Directors (the Board) who has been designated by the Board as a
Participant, but it shall not include any director who (i) is a current or former officer or
employee of the Company or any of its affiliates or (ii) is or was covered under any other
similar retirement plan for directors of the Company or any of its affiliates. A schedule of
the current Participants is attached to this Plan as Exhibit A.
 3.
    
    Benefits Upon Retirement. Upon the Participants retirement or other termination from
the Board of Directors, the Participant shall be entitled to receive a monthly retirement
benefit provided that (i) the Participant had completed at least 5 years of service as a
Director or (ii) the Participants retirement or termination of service as a Director follows
a Change in Control. The monthly retirement benefit shall be payable commencing with the
first of the month following the Participants retirement from the Board or, if later, the
first day of the month following the Participants 65th birthday. The monthly retirement
benefit shall be payable for a period of 120 months or for such lesser number of months which
is equal to the number of whole months of the Participants service as a Director. The amount
of the monthly retirement benefit shall be 1/12th of the annual cash retainer in effect for
the Participant at the time of his termination of service as a Director.
 A Change in Control shall be deemed to have occurred if: (a) any person (as such term is
used in Section 13(d) and 14(d)(2) of the Securities Exchange Act of 1934) becomes the
beneficial owner, directly or indirectly, of more than 25% of the capital stock of the Company
in a transaction or transactions subject to the notice provisions of the Change in Bank Control
Act of 1978, (12 USC § 1817(j)) as amended from time to time, or approval under the Savings and
Loan Holding Company Act (12 USC § 1467a), as amended from time to time; (ii) during any period
of two (2) consecutive years, the individuals, who at the beginning of any such period
constituted the directors of the Company, cease for any reason to constitute at least a
majority thereof; or (iii) the Company files a report or proxy statement with the Securities
and Exchange Commission and/or the Office of Thrift Supervision disclosing in response to the
appropriate item of




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Form 8-K or Form 10-Q, each promulgated pursuant to the Securities Exchange
Act of 1934, as amended (Exchange Act) or Item 6(e) of Schedule 14A promulgated thereunder,
or successor Items, that a change in control of the Company has or may have occurred pursuant
to any contract or transaction.
 4.
    
    Death Benefits. In the event of a Participants death before the completion of all
payments due him/her under Section 3 above, the remaining balance of such payments shall be
made to the beneficiary or beneficiaries designated by the Participant in a written document
filed with the Board prior to the Participants death. If the Participant has made no such
designation or no beneficiary survives, such payments shall be made to the Participants
estate. In either case, such payments shall be made in the same manner as provided with
respect to payments to the Participant.
 5.
    
    General Creditor Status. Nothing contained in this Plan, and no action taken
pursuant to the provisions of this Plan, shall create or be construed to create a funded
obligation of any kind, or fiduciary relationship between the Company and Participant, his/her
designated beneficiary or any other person. Any funds which may be invested or assets which
may be acquired by the Company relating to this Plan shall continue for all purposes to be a
part of the general funds of the Company and no person other than the Company shall by virtue
of the provisions of this Plan have any interest in such funds or assets. To the extent that
any person acquires a right to receive payment from the Company under this Plan, such right
shall be no greater than the right of any unsecured general creditor of the Company.
 6.
    
    Nonassignment. No benefit(s) under the Plan, nor any other interest hereunder of any
Participant or beneficiary shall be assignable, transferable, or subject to sale, mortgage,
pledge, hypothecation, anticipation, garnishment, attachment, execution, or levy of any kind.
 7.
    
    Government Regulations. It is intended that the Plan will comply with all applicable
laws and governmental regulations, and the Company shall not be obligated to perform an
obligation hereunder in any case where, in the opinion of the Companys legal counsel, such
performance would result in violation of any law or regulation.
 8.
    
    Taxes. To the extent required by law, the Company shall withhold any taxes required
to be withheld by the federal or any state or local government from accruals or payments
hereunder.
 9.
    
    No Right to Continued Service. Participation in this Plan shall not be construed as
giving to the Participant any right to be retained in the service of the Company as a
Director, limiting in any way the right of the Company to terminate the Participants service
as a Director at any time or evidencing any agreement or understanding, express or implied,
that the Company will provide Participant a particular rate of compensation for his service as
a Director.
 10.
    
    Termination or Modification of Plan. The Board shall have the right to terminate or
modify the Plan or the payments made to any persons under the Plan at any time and from time
to time; provided, however, that such termination shall not affect the accrued
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benefit(s) of any Participant. Notwithstanding the foregoing, in the event that the Board should terminate
the Plan and if the termination is of the type permitting immediate lump sum distribution
under Section 409A of the Internal Revenue Code, the Board also has the right at any time
thereafter to accelerate the remaining payments due any individual hereunder by paying the
lump sum present value of those payments to that individual. Lump present value shall be
calculated using an interest discount factor equal to the same interest rate which would be
used under the Companys Pension Plan as then in effect in determining the amount of a lump
sum distribution to be made under that plan payable on the same date as the lump sum present
value payment in question is payable hereunder.
 11.
    
    Claims Procedure. If the Participant or the Participants beneficiary believes there
has been an error of interpretation of the Plan provisions as applicable to such person, he or
she may file a claim with the Board. The decision of the Board with respect to such claim
shall be final and binding on all parties hereunder and it is not intended that such decision
shall be subject to de novo review in any legal proceeding.
 12.
    
    Legal Fees and Expenses. It is the intent of the Company that Participants not be
required to incur the expenses associated with the enforcement of rights under this Plan
because the cost and expense thereof would substantially detract from the benefits intended to
be extended to Participants hereunder. Accordingly, if the Company has failed to comply with
any of its obligations under this Plan or in the event that the Company or any other person
takes any action of declare this Plan void or unenforceable, or institutes any legal action
designed to deny, or to recover, the benefits intended to be provided to Participant
hereunder, the Company irrevocably authorizes the Participant to retain counsel of his choice,
at the expense of the Company as hereafter provided, to represent Participant in connection
with the initiation or defense of any legal action, whether by or against the Company or any
Director, officer, shareholder or other person affiliated with the Company, in any
jurisdiction. The Company shall pay and be solely responsible for any and all attorneys and
related fees and expenses incurred by Participant as a result of the Companys failure to
perform its obligations under this Plan or any provision thereof or as a result of the Company
or any person contesting the validity or enforceability of this Plan or any provision thereof as aforesaid. All such fees and expenses shall be
paid, or reimbursed to Participant if paid by Participant, on a regular, periodic basis
upon presentation by Participant to the Company of a statement or statements prepared by
such counsel in accordance with its customary practices.
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SCHEDULE OF CURRENT PARTICIPANTS
 
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