Thomas L. Herlacher Executive Employee Salary Continuation Agreement



 Exhibit 10.9 
 EXECUTIVE EMPLOYEE SALARY CONTINUATION AGREEMENT 
 FOR 
 THOMAS L. HERLACHE 
 THIS AGREEMENT is made this 1st
day of October 1999, between Baylake Bank, a Wisconsin corporation (the “Company”) and Thomas L. Herlache (the “Participant”). 
 WHEREAS, the Participant is an executive employee of the Company and as such has materially contributed to the Company’s position, and 
 WHEREAS the Company wishes to establish this Agreement for purposes of promoting in the Participant the strongest interest in the successful operation of the Company and increased efficiency in his work and to provide the Participant
benefits upon retirement, death, disability or other termination of employment, in consideration of services to be performed after the date of this agreement but prior to his retirement; and 
 WHEREAS, the Company also wishes to establish this Agreement to enhance its abilities to attract and retain highly qualified executives and to enable those executives to
perform their duties in the best interests of the Company and its shareholders in the event of possible or threatened Change in Control of the Company with undue concern regarding the personal, financial interests of such executives. 
 NOW THEREFORE, in consideration of the premises, the parties hereto agree as follows: 
 SECTION 1 
 DEFINITIONS 
  

	1.1	Salary and Compensation Committee – “Salary and Compensation Committee” shall mean the committee appointed pursuant to Section 5 of this Agreement.


  

	1.2	Age – “Age” shall mean the age of the person as of the date of his last birthday. 









	1.3	Change in Control – For purposes of this Agreement, a Change in Control of the Company shall have occurred (i) on the fifth day preceding the scheduled
expiration date of a tender offer by, or exchange offer by any corporation, person, other entity or group (other than the Company or any of its wholly owned subsidiaries), to acquire Voting Stock of the Company if (a) after giving effect to
such offer such corporation, person, other entity or group would own twenty five percent (25%) or more of the Voting Stock of the Company, (b) there shall have been filed documents with the Securities and Exchange Commission
(“SEC”) in connection therewith (or, if no such filing is required, public evidence that the offer has already commenced), and © such corporation, person, other entity or group has secured all regulatory approvals to own or control twenty five (25%) or more of the Voting
Stock of the Company, (ii) if the shareholders of the Company approve a definitive agreement to merge or consolidate the Company with or into another corporation in a transaction in which neither the Company nor any of its wholly owned
subsidiaries will be the surviving corporation, or to sell or otherwise dispose of all or substantially all of the Company’s assets to any corporation, person, other entity or group (other than the Company or any of its wholly owned
subsidiaries), and such definitive agreement is consummated; (iii) if any corporation, person, other entity or group (other than the Company or any of its wholly owned subsidiaries) becomes the Beneficial Owner of stock representing twenty five
percent (25%) of the Voting Stock of the Company, or (iv) if during any period of two (2) consecutive years Continuing Directors cease to comprise a majority of the Company’s Board of Directors. The term “Continuing
Director” means (i) any member of the Board of Directors of the Company who was a member of the Board of Directors of the Company at the beginning of any period of two (2) consecutive years, and (ii) any person who subsequently
becomes a member of the Board of Directors of the Company, if (a) such person’s nomination for election or election to the Board of Directors of the Company is recommended or approved by resolution of a majority of the Continuing
Directors, or (b) such person is included as a nominee in a proxy statement of the Company distributed when a majority of the Board of Directors of the Company consists of Continuing Directors, For purposes of this Agreement, “Voting
Stock” shall mean those shares of the Company entitled to vote generally in the election of directors. 

  

	1.4	Crediting Rate – “Crediting Rate” shall mean an annual rate of interest equal to 6.00%. 

  

	1.5	Disability – “Disability” shall mean, If the Participant is insured under the Company long-term disability policy, the definition of total disability
contained in the long-term disability insurance policy. If the Participant is not insured under such a policy, the board shall, in Its complete and sole discretion, determine whether the Participant is disabled for the purposes of this Agreement.









 [1.6 Discharge for Cause – “Discharge for Cause” shall mean the termination of the
Participant’s employment with the Company because of (a) the Participant’s willful and continued failure to substantially perform his duties (other than any such failure resulting from his incapacity due to physical or mental
illness), after a demand for substantial performance is delivered to him by the Company which specifically identifies the manner in which the Company believes he has not substantially performed his duties; (b) any willful act of misconduct by
the Participant which is materially injurious to the Company, monetarily or otherwise; © a criminal conviction of the Participant for any act involving the business and affairs of the Company; (d) a criminal conviction of the Participant for commission of a felony; or (e) the removal of
the Participant by a regulatory agency. For purposes of this definition, no act or failure to act on the Participant’s part will be considered “willful” unless done or omitted by him not in good faith and without reasonable belief
that his act or omission was in the best interest of the Company.] OR 
  

	1.6	Discharge for Cause – The Company may terminate the Participant’s employment under this Agreement for “Cause.” A termination for Cause is a
termination by reason of the Board’s good faith determination that the Participant (I) is incompetent or acted dishonestly or engaged in willful misconduct in the performance of his duties, (ii) breached a fiduciary duty to the
Company for personal profit to himself, (III) intentionally failed to perform reasonably assigned duties, (iv) willfully violated any law, rule or regulation (other than traffic violations or similar offenses) or any final cease and desist order, or
(v) materially breached this Agreement. No act, or failure to act, on the Participant’s part shall be considered “willful” unless he has acted, or failed to act, with an absence of good faith and without a reasonable belief that
his action or failure to act was in the best interest of the Company. Notwithstanding the foregoing, (I) the Participant shall not be deemed to have been terminated for Cause unless there shall have been delivered to the Participant a copy of a
resolution duly adopted by the affirmative vote of not less than a majority of the entire membership of the Board at a meeting of the Board called and held for the purpose (after reasonable notice to the Participant and an opportunity for the
Participant, together with his counsel, to be heard before the Board), finding that in the good faith opinion of the Board the Participant was guilty of conduct set forth above in the second sentence of this Section and specifying the particulars
thereof in detail, and (ii) in no event will the Participant be subject to termination for Cause pursuant to clause (v) above unless the Participant shall have failed to cure, correct or prevent the alleged breach within thirty days after
such resolution has been delivered to the Participant. 

  








	1.7	Early Retirement Date – “Early Retirement Date” shall mean the first day of the month following the month in which a Participant reaches age 60.


  

	1.8	Normal Retirement Date – “Normal Retirement Date” shall mean the first day of the month following the month in which a Participant reaches age 65.


  

	1.9	Termination of Employment – “Termination of Employment” shall mean the Participant’s ceasing to be employed by the Company for any reason
whatsoever, voluntary or involuntary, including by reason of death or disability. 

  

	 1.10
	 Vesting – For purposes of this Agreement and the vesting schedule attached as Schedule A, vesting
shall accrue to the Participant on a pro rata monthly basis beginning annually on each anniversary date of this Agreement. The Participant shall earn 1/12th of the annual vesting increased for each month of completed service during each year of this Agreement. Regardless of the number of years of service completed by the Participant, upon a Change in
Control, the Participant shall become 100% vested in all benefits under this Agreement. 


 SECTION 2 
 ELIGIBILITY 
 The Participant is eligible for
the benefits provided herein in accordance with the terms of this Agreement upon the execution hereof. 
 A Participant shall cease to be a Participant at
Termination of Employment However, the employment of a Participant shall not be deemed to be so terminated by reason of an approved leave of absence granted in accordance with uniform rules applied in a non-discriminatory manner. 
 SECTION 3 
 PAYMENT OF
BENEFITS 
  

	3.1	Benefits Upon Normal Retirement. 

 Upon a Participant’s
Termination of Employment on or after the Normal Retirement Date, the Company shall pay to the Participant the sum of $67.500 per year, payable in monthly installments of $5,625.00 each, commencing on the first day of the month
coincident with or next following date of Termination of Employment and continuing on the first day of each month thereafter for the life of the Participant but in any event until a minimum of 180 total monthly payments are made to the
Participant or the Participant’s beneficiary per Section 3.6(b). 








	3.2	Benefits Upon Early Retirement. 

 Upon a
Participant’s Termination of Employment on or after reaching the Early Retirement Date but prior to the Normal Retirement Date, the Company shall pay to the Participant, monthly payments equal to the benefit described in Schedule A, attached.
Such payments shall commence on the first day of the month coincident with or next following the date of Termination of Employment and shall continue on the first day of each month thereafter for a period of not less than fifteen years. 

The Participant may elect, on or before December 31 of the year prior to Termination of Employment, to defer commencement of payment of the early retirement
benefit to a date not later than the Normal Retirement Date. Such election shall be in writing and submitted to the Company. If a Participant elects to defer payment until his Normal Retirement Date, the Company shall pay to the Participant the
normal retirement benefit described in Section 3.1 above. If a Participant elects to defer payment of the benefit to a date prior to the Normal Retirement Date, the Company shall pay to the Participant a benefit calculated in accordance with
the first sentence of this Section 3.2, but using the date selected by the Participant for the commencement of this benefit as his “Termination of Employment” date instead of his actual termination date. 
  

	3.3	Benefits Upon Late Retirement. 

 Upon a
Participant’s Termination of Employment after the Normal Retirement Date, the Company shall pay to the Participant the normal retirement benefit described in Section 3.1 above, increased by 5% per year or .00416 for each month that
the Participant’s Termination of Employment is deferred beyond the Normal Retirement Date, in equal monthly installments commencing on the first day of the month coincident with or next following the date of Termination of Employment and
continuing on the first day of each month thereafter for the periods specified in Section 3.1 
  

	3.4	Benefits Upon Disability. 

 Upon a Participant’s
Termination of Employment prior to the Normal Retirement Date due to Disability, no separate provision is made for a disability benefit under this Agreement. However, any such Participant shall be considered, notwithstanding such Termination of
Employment, to continue to be a Participant while disabled and for so long as the disability continues prior to reaching the Early Retirement Date, such Participant’s beneficiary shall receive the survivor’s benefits described in
Section 3.6(a). In the event the Participant lives to the Early Retirement Date, the Participant shall be entitled to receive the early retirement benefit described in Section 3.2. 








	3.5	Other Terminations of Employment. 

  

	(a)	Voluntary Termination of Employment Prior to the Early Retirement Date or Discharge for Cause at any Time. Upon a Participant’s voluntary Termination of Employment prior
to reaching the Early Retirement Date, for reasons other than death or Disability, or upon the Participant’s Discharge for Cause at any time, the Company shall pay the vested benefit to the Participant pursuant to Schedule A attached to this
Agreement, and the Participant shall have no further right to receive any additional benefit hereunder. 

  

	(b)	Involuntary Termination of Employment Prior to the Early Retirement Date Other Than Because of Death, Disability or Discharge for Cause. Upon a Participant’s involuntary
Termination of Employment prior to reaching the Early Retirement, for reasons other than death, disability or discharge for cause, the Company shall pay to the Participant as compensation for services rendered prior to such Termination of
Employment, the vested “Immediate Annual Benefit” or the vested “Annual Benefit at Age 65” as defined in Schedule A, payable in monthly installments, commencing on the first day of the month coincident with or next following the
date of Termination of Employment, or Age 65 and continuing on the first day of each month thereafter for a period of fifteen years. For purposes of this subsection 3.5 (b), the Participant shall be deemed to have incurred an Involuntary Termination
of Employment covered by this subsection if he quits employment as a result of the Company’s significantly lessening either his title, duties, responsibilities, compensation or altering his status of employment, without his consent. His
compensation shall be deemed to be significantly lessened if any cutback is imposed except as a part of an overall cutback applied proportionately to all of the Company’s management employees or if the Participant fails to receive periodic
increases substantially proportionate to and coincident with the increase granted to management employees. 

  

	(c)	 Termination of Employment At or After a Change in Ownership of Control. If a Participant incurs a voluntary or involuntary Termination of Employment prior to
reaching the Early Retirement Date, for reasons other than death, disability, or discharge for cause, but on or after the occurrence of a Change in Control, and in connection with such change, the Participant’s title, duties, responsibilities,
or compensation is significantly lessened or his status of employment is changed, without his consent, the Company shall pay to the Participant as compensation for services rendered prior to such Termination of Employment, an amount equal to three
(3) years of the Participant’s then current annual salary, payable in monthly installments, commencing 










 
on the first day of the month coincident with or next following the date of Termination of Employment and continuing on the first day of each month
thereafter for a period of three (3) years, but in any event until a minimum of thirty-six (36) total monthly payments are made to the Participant or the Participant’s Beneficiary per Section 3.6(b), and the Immediate Annual
Benefit determined on Schedule A corresponding to the Participant’s age at the Date of Termination. Such Immediate Annual Benefit shall be paid in monthly installments in the manner provided in Section 3.1. 
  

	3.6	Survivorship Benefits. 

  

	(a)	Prior to Commencement of Normal or Early Retirement Benefits. If a Participant dies while in the service of the Company or after a Termination of Employment due to Disability
and while Disabled or after a Termination of Employment on or after the Early Retirement Date, but prior to commencement of any benefit payments under this Agreement, the Company shall pay to the Participant’s beneficiary a survivor’s
benefit of 180 equal monthly installments of $5,625 commencing on the first day of the month after the Participant’s death and continuing on the first day of each month thereafter until all such payments are completed. In the event a
beneficiary dies before receiving all the survivor’s benefit payments, the remaining payments shall be paid to the legal representatives of the beneficiary’s estate. Payment of the survivor’s benefit shall relieve the Company of the
obligation to pay any other benefit which the Participant would have otherwise received, under the terms of this Agreement. 

  

	(b)	After Commencement of Benefits. If a Participant dies after any benefit payments have commenced, but prior to receiving all of the scheduled minimum number of monthly
payments, the Company shall pay the remaining monthly payment to the Participant’s beneficiary. In the event a beneficiary dies before receiving all of the remaining payments, the remaining payments shall be paid to the legal representatives of
the beneficiary’s estate. 

  

	3.7	Recipients of Payments: Designation of Beneficiary. 

 All payments to be made by the Company shall be made to the Participant, if living. In the event of a Participant’s death prior to the receipt of all benefit payments, all subsequent payments to be made under this Agreement shall be to
the beneficiary or beneficiaries of the Participant. The Participant shall designate a beneficiary by filing a written notice of such designation with the Company in such form as the Company may prescribe. The Participant may revoke or modify said
designation at any time by a further written 
 designation. The Participant’s beneficiary designation shall be deemed automatically revoked in the event
of death of the beneficiary, 







 or if the beneficiary is the Participant’s spouse, in the event of dissolution of marriage. If no designation shall
be in effect at the time of any benefits payable under this Agreement shall become due, the beneficiary shall be the spouse of the Participant, or if no spouse is then living, the legal representatives of the Participant’s estate. 

 

	3.	Acceleration of Benefits. 

 At any time after the Participant
or the Participant’s beneficiary becomes entitled to a payment of benefits under this Agreement, the Participant, or the Participant’s beneficiary, may elect to accelerate the payment of benefits to the payment of a lump-sum payment. Such
payment shall equal ninety percent (90%) of the present value of the remaining payments payable assuming a discount rate equal to the Crediting Rate, and in the case of payments that are payable over the life of the Participant or the
Participant’s beneficiary, assuming the Mortality Assumptions. 
 SECTION 4 
 ADDITIONAL CHANGE IN CONTROL PROVISIONS 
  

	4.1	Application of Section. 

 If the Participant receives
payments under this Agreement that are contingent upon a Change in Control, as determined under Section 280G of the Internal Revenue Code of 1986 (the “Code”) and the regulations thereunder, then the provisions of this Section 4
shall apply. 
  

	4.2	Reduction of Payments. 

 If payments of benefits under this
Agreement, after taking into account all other payments or benefits to which the Participant is entitled from the Company, are expected to result in an excise tax on the Officer or the loss of certain tax deductions by the Company by reason of
Sections 280G and 4999 of the Internal Revenue Code of 1986 or any successor provisions to those Sections, payments under this Agreement shall be reduced by the least amount required to avoid such excise tax and loss of deductions unless the failure
to reduce such salary payments would be financially beneficial to the Participant. The failure to reduce such salary payments will be financially beneficial to the Participant if it results in an after-tax value to the Participant of all payments
and benefits referenced in the preceding sentence, despite the application of the excise tax and income tax, which value is greater than the after-tax value the Participant would realize if salary payments were reduced to avoid the application of
the excise tax.) OR 
  








	Limit	on Payments. 

 If payments or benefits under this Agreement,
after taking into account all other payments or benefits to which the Participant is entitled from the Company, are expected to result in an excise tax on the Participant or the loss of certain tax deductions by the Company by reason of Code
Section 280G and 4999, then payments under this Agreement shall be reduced to an amount such that all payments to the Participant from the Company, which are considered contingent upon the Change in Control, shall not exceed 2.99 times the
Participant’s Base Amount as defined in Code Section 280G.) 
  

	4.3	Determination by Experts. 

 If the Participant and the
Company shall disagree as to whether a payment under this Agreement could result in the loss of a deduction, the matter shall be resolved by an opinion of (the Company’s Law Firm), or if (Company’s Law Firm) is unable to provide such
opinion, counsel selected by the Company, and agreed to by the Officer. Counsel’s opinion need not be unqualified. Counsel’s opinion shall be based on determinations of the Base Amount and Excess Parachute Payments (if applicable), as such
terms are defined by Section 280G of the Code or its successor, by (Consulting Firm), or if (Consulting Firm) is unable to make such determinations, a consulting firm chosen by the Company and agreed to by the Officer. The Company shall pay the
fees and expenses of such counsel and consulting firm, and shall make available such information as may be reasonably requested by such counsel and consulting firm to prepare the opinion. If the maximum amount payable to the Officer pursuant to this
Section cannot be determined prior to the due date for such payment, the Company shall pay on the due date the minimum amount which it in good faith determines to be payable, and shall pay the remaining amount as soon as practicable after such
remaining amount is determined. 
 SECTION 5  
 ADMINISTRATION AND INTERPRETATION OF THIS AGREEMENT 
 The Board of Directors shall appoint a Personnel and
Compensation Committee consisting of three (3) or more persons to administer and interpret this Agreement. Interpretation by the Personnel and Compensation Committee shall be final and binding upon a Participant. The Personnel and Compensation
Committee may adopt rules and regulations relating to this Agreement as it may deem necessary or advisable for the administration thereof. 







 SECTION 6 
 CLAIMS PROCEDURE 
 If the Participant or the Participant’s beneficiary (hereinafter referred to as a
“Claimant”) is denied all or a portion of an expected benefit under this Plan for any reason, he or she may file a claim with the Personnel and Compensation Committee. The Personnel and Compensation Committee shall notify the Claimant
within sixty (60) days of allowance or denial of the claim, unless the Claimant receives written notice from the Personnel and Compensation Committee prior to the end of the sixty (60) day period stating that special circumstances requires
an extension of the time for decision. The notice of the Personnel and Compensation Committee’s decision shall be in writing, sent by mail to Claimant’s last known address, and If a denial of the claim, must contain the following
information: 
  

	 	(a)	the specific reasons for the denial: 

  

	 	(b)	specific reference to pertinent provisions of the Plan on which the denial is based; and 

  

	 	(c)	if applicable, a description of any additional information or material necessary to perfect the claim, an explanation of why such information or material is necessary, and an
explanation of the claims review procedure. 

 SECTION 7  
 REVIEW PROCEDURE 
  

	7.1	A Claimant is entitled to request a review of any denial of his claim by the Personnel and Compensation Committee. The request for review must be submitted in writing within a sixty
(60) day period, the claim will be deemed to be conclusively denied. The Claimant or his representative shall be entitled to review all pertinent documents, and to submit issues and comments orally and in writing. 

  

	7.2	If the request for review by a Claimant concerns the interpretation and application of the provisions of the Agreement and the Company’s obligations, then the review shall be
conducted by a separate committee consisting of three persons designated or appointed by the Personnel and Compensation Committee. The separate committee shall afford the Claimant a hearing and the opportunity to review all pertinent documents and
submit issues and comments orally and in writing and shall render a review decision in writing, all within sixty (60) days after receipt of a request for a review, provided that, in special circumstances (such as the necessity of holding a
hearing) the committee may extend the time for decision by not more than sixty (60) days upon written notice to the Claimant. The Claimant shall receive written notice of the separate committee’s review decision, together with specific
reasons for the decision and reference to the pertinent provisions of this Agreement. 








 SECTION 8  
 LIFE INSURANCE AND FUNDING 
 The Company in its discretion may apply for and procure as owner and for its own
benefit, insurance on the life of the Participant, in such amounts and in such forms as the Company may choose. The Participant shall have no interest whatsoever in any policy or policies, but at the request of the Company he shall submit to medical
examinations and supply such information and execute such documents as may be required by the insurance company or companies to whom the Company has applied for insurance. 
 The rights of the Participant, or his beneficiary, or estate, to benefits under the Plan shall be solely those of an unsecured creditor of the Company. Any insurance policy or other assets acquired by or held by the
Company in connection with the liabilities assumed by it pursuant to the Plan shall not be deemed to be held under any trust for the benefit of the Participant, his beneficiary, or his estate, or be security for the performance of the obligations
for the Company but shall be, in remain, a general, unpledged, and unrestricted asset of the Company. 
 If this Agreement is funded through insurance on the
life of the Participant, then in the event of such Participant’s death during the first two (2) years after the effective date of this Agreement, and if such Participant’s death was a result of suicide or if such Participant made any
material misstatement or failed to make a material disclosure of information in any documentation which the Participant is requested to complete in connection with this Agreement, then no death benefits under the terms of this Agreement will be
payable, unless and to the extent that the Board of Directors of Company, in their absolute discretion, may otherwise determine. 
 SECTION
9  
 ASSIGNMENT OF BENEFITS 
 Neither the Participant nor any other beneficiary under the Plan shall have any right to assign the right to receive any benefits hereunder, and in the event of any attempted assignment or transfer, the Company shall no further liability
hereunder. 
  







 SECTION 10  
 EMPLOYMENT NOT GUARANTEED BY AGREEMENT 
 Neither this Agreement nor any action taken hereunder shall be
construed as giving the Participant the right to be retained as an Executive Employee or as an employee of the Company for any period. 
 SECTION 11  
 TAXES 
 The Company shall deduct from all payments made hereunder all applicable federal or state taxes required by law to be withheld from such payments. 
 SECTION 12  
 AMENDMENT AND TERMINATION 
 The Board of Directors may, at any time, amend or terminate this Agreement, provided that the Board may not reduce or modify any benefit in pay status to the Participant
or beneficiary hereunder or any benefit that would become payable hereunder if the Participant were to have died or were to have been involuntarily terminated under Section 3.5(b) hereof on the day prior to such action by the Board, without
prior written consent of the Participant. 
 The Company is entering into this Agreement upon the assumption that certain existing tax laws will continue in
effect in substantially their current form. In the event of any changes in Federal law relating to and allowing the tax-free accumulation of earnings within a life insurance policy, the income tax-free payment of proceeds from life insurance
policies or any other law which would result in a material adverse impact upon the Company’s ability to perform its obligations under this Agreement, the Company shall have an option to terminate or modify this Agreement subject to the
protection afforded Participant’s in the preceding paragraph above. 
 SECTION 13  
 CONSTRUCTION 
 This Agreement shall be
construed according to the laws of the State of Wisconsin. 
  







 SECTION 14  
 FORM AND COMMUNICATION 
 Any election, application, claim, notice or other communication required or permitted
to be made by the Participant to the Company shall be made in writing and in such form as the Company shall prescribe. Such communication shall be effective upon mailing, if sent by first-class mail, postage prepaid, and addressed to the
Company’s office at 217 North Fourth Avenue; Sturgeon Bay, Wl 54235-0009. 
 SECTION 15  
 CAPTIONS 
 The captions at the head of a
section or a paragraph of this Agreement are designed for convenience of reference only and are not to be resorted to for the purpose of interpreting any provision of this Agreement. 
 SECTION 16  
 SEVERABILITY 
 The invalidity of any portion of this Agreement shall not invalidate the remainder thereof, and said remainder shall continue in full force and effect. 
 SECTION 17  
 BINDING
EFFECT 
 This Agreement shall be binding upon and shall inure to the benefit of the Company and the Participant, and each of their successors,
heirs, personal representatives and permitted assigns. No sale of substantially all. of the Company’s assets shall be made without the buyer expressly assuming the obligation of this Agreement. The Company further agrees that it will not be a
party to any merger, consolidation or reorganization unless and until its obligations hereunder are expressly assumed by the successor or successors. 
 IN
WITNESS WHEREOF, this Agreement has been executed by the parties as of the date first set forth above. 
  

			
	 By:
	 	 /s/ Kevin LaLuzerne

	 Its:
	 	Controller
	 /s/ T.L. Herlache

	 Participant