Exhibit 10.1




 





BANK MUTUAL


EMPLOYMENT
AGREEMENT 


 


 


THIS EMPLOYMENT AGREEMENT
(“Agreement”) is made and entered into as of this 31st day of May, 2017, by and between Bank Mutual, a federal savings
bank (hereinafter referred to as “Employer”), and David A. Baumgarten (hereinafter referred to as “Executive”).


 


WHEREAS, Employer is
a wholly owned subsidiary of Bank Mutual Corporation, a registered savings and loan holding company (hereinafter referred to as
“Company”);


 


WHEREAS, Employer and
Executive are currently parties to an employment agreement and they mutually wish to enter into a revised and updated agreement
in lieu of a termination or continuation of the existing agreement; and


 


WHEREAS, Executive
and Employer have agreed that it is in their mutual best interest to enter into this Agreement pursuant to the terms and conditions
described herein.


 


NOW, THEREFORE, for
good and valuable consideration which is hereby acknowledged by Executive and Employer, including, without limitation, the promises
and covenants described herein, the parties hereto hereby agree as follows:


 


ARTICLE I


 


EMPLOYMENT


 


1.1       Term
of Employment.


 


Employer shall employ
Executive for an initial term commencing on the date set forth above and ending on December 31, 2018. Not less than thirty (30)
days prior to and effective as of the end of the initial term and each December 31 thereafter, the employment term may be extended
by adding one additional year to the remaining term of the Agreement so that said term is annually restored to a full two year
term upon agreement of Executive and by affirmative action taken by Employer’s Board of Directors. Executive’s employment
under this Agreement may otherwise be terminated only as contemplated by Sections 2.1, 2.2, 2.3, 2.4, 2.5, 2.6 and 2.7 of this
Agreement.


 


1.2       Duties
of Executive.


 


Executive is hereby
employed full-time to hold the office of President and CEO and to perform such executive duties as are normally performed by persons
serving in similar capacities at similar institutions together with such other duties and responsibilities as may be appropriate
to Executive’s position and as may be from time to time determined by Employer’s Board of Directors to be necessary
to its operations and in accordance with its bylaws. Employer agrees that it will not reduce Executive’s current job title,
status and responsibilities without Executive’s consent. Executive hereby accepts such employment and undertakes to use
his or her best efforts to discharge his or her duties and responsibilities. Unless Executive’s employment is earlier terminated
pursuant to the terms of this Agreement, during the term of this Agreement, Executive shall devote substantially his or her full
business time to the discharge of his or her duties and responsibilities under this Agreement, except for vacations in accordance
with this Agreement and with Employer’s vacation policy applicable to executive personnel. This provision shall not prevent
Executive from devoting a reasonable amount of time during normal business hours to serving as a director, trustee or member of
any charitable, community, trade or financial industry board, committee or organization.


 



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1.3       Base
and Incentive Compensation.


 


(a)       During
the term of this Agreement, Executive shall be entitled to an annual base salary equal to not less than current year base salary
per year. Executive’s annual salary will be reviewed annually by the Board of Directors of Employer on the basis of his or
her performance to such date and the progress of Employer and shall be increased as of such date if so determined by the Board
in its absolute discretion. The Board of Directors may also increase Executive’s compensation at any other time, in its absolute
discretion.


 


(b)       Executive
shall also be entitled to receive incentive compensation which compensation shall be calculated in accordance with the provisions
of Employer’s incentive compensation plan, as in effect from time to time. Executive’s base salary shall be payable
periodically according to the normal practice of Employer and Executive’s incentive compensation shall be payable as earned
in accordance with the provisions of Employer’s incentive compensation plan.


 


1.4       Expense
Reimbursement.


 


Executive shall be
entitled to reimbursement of business expenses reasonably incurred in connection with his or her employment upon presentation of
adequate documentation and to the extent then permitted by Employer’s general practices and policies for reimbursement of
such expenses.


 


1.5       Benefits.


 


(a)       In
accordance with Employer’s policies, in effect from time to time, Executive shall be entitled to be reimbursed by Employer
for the annual membership dues in the Milwaukee Country Club and the Milwaukee Athletic Club. In accordance with Employer’s
policies, in effect from time to time, Executive shall also be provided with such educational assistance as is reasonably related
to the performance of his or her duties hereunder. Employer shall provide Executive with a gasoline credit card and a $400 a month
car allowance in accordance with Employer's established automobile policy as in effect from time to time.


 



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(b)       Executive
shall be entitled to four weeks vacation each calendar year, sick leave and other time off in accordance with Employer’s
established Personnel Policy as in effect from time to time.


 


(c)       Employer
shall maintain for Executive term life insurance coverage in such amount as is provided in accordance with Employer’s established
policy in effect from time to time. Such life insurance shall be maintained for the benefit of the Executive, who shall be entitled
to designate all beneficiaries of such life insurance.


 


(d)       Employer
shall maintain medical and dental insurance on such terms and in such amounts as are generally offered to or provided for any other
executives of Employer.


 


(e)       Executive
shall be entitled to participate in all of Employer’s retirement or pension plans, stock option, employee stock ownership
plans or other similar plans as in effect from time to time in accordance with and to the extent qualified under the provisions
of such plans.


 


(f)       Executive
shall be entitled to participate in any short-term and long-term disability plans which cover other executives of the Employer.


 


(g)       In
addition to the foregoing benefits, Executive shall also be entitled to participate, as determined by Employer’s Board of
Directors, in such other employee benefit plans or programs as are offered to or provided for other executives of Employer from
time to time.


 


(h)       Notwithstanding
the foregoing, Executive shall not be entitled to participate in any employee benefit plans or programs offered by an affiliate
of the Employer.


 


(i)       Notwithstanding
any other provision hereof, incentive payment and awards under any plans shall be subject to clawback related to any restatement
of the earnings of the Company to the extent required by law, regulation or any Company clawback policy as may be in effective
from time to time.


 


1.6       Officers
Insurance.


 


For so long as Executive
shall be an officer of Employer, Employer shall use its best efforts to provide Executive with insurance coverage against business
liability to the extent that such coverage is reasonably available for officers of financial institutions of comparable size.


 


1.7       Indemnity
by Employer.


 


For valuable consideration,
and as a material inducement to Executive to enter into this Agreement, Employer shall take whatever actions are necessary to provide
indemnification of Executive by Employer for business liability, including without limitation, liability as an officer to all interested
parties, to the fullest extent it can be made available under applicable law.


 




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ARTICLE II


 


TERMINATION
OF EMPLOYMENT


 


2.1       Termination
at Expiration of the Term of this Agreement.


 


(a)       If
Executive elects to terminate Executive’s employment with Employer at or prior to the end of the initial term under Section
1.1, Executive shall be entitled to receive (i) Executive’s theretofore unpaid base salary and incentive compensation for
the period of employment, and (ii) compensation for accrued but unused vacation time. Executive and his or her spouse and dependents
will be entitled to further medical coverage, at his or her and/or their expense, to the extent required by the Consolidated Omnibus
Reconciliation Act of 1985 (“COBRA”).


 


(b)       If
the Employer elects to terminate Executive’s employment with Employer at the end of the initial term under Section 1.1, Executive
shall be entitled to receive (i) an amount equal to one hundred percent (100%) of his or her annual base salary at the date of
termination, (ii) Executive’s theretofore unpaid base salary and incentive compensation for the period of employment, and
(iii) compensation for accrued but unused vacation time. Executive shall be owed and Employer shall be obligated to pay to Executive
the aggregate amount provided in clauses (i), (ii) and (iii) above (other than incentive compensation which shall be payable when
earned as provided in Section 1.3 hereof), within thirty (30) days after the termination of Executive pursuant to this Section
2.1(b), and until such amounts are paid in full to Executive, interest shall accrue on said amount as of the date first due at
the rate of eighteen percent (18%) per annum, compounded daily. Furthermore, at Employer’s cost, Employer shall continue
to provide Executive with the following benefits, consistent with the terms and conditions set forth in Section 1.5 hereof: (i)
life insurance and medical, dental and optical insurance, to the extent the same can be provided under the arrangements in effect
at the time of termination, and (ii) any other benefits to which Executive is entitled by law or the specific terms of Employer’s
policies in effect at the time of his or her termination of employment. Benefits will be continued pursuant to this Section 2.1(b)
for a period of three (3) months from the date of termination of employment, unless Executive becomes employed by another company
and becomes eligible for employment benefits substantially similar to those which would otherwise be provided under this Section.
Notwithstanding the foregoing, Executive and his or her spouse and dependent children will be entitled, at Executive’s expense,
to further medical coverage to the extent required by COBRA which shall, in this case, be deemed to commence upon expiration of
the three (3) month period set forth in the preceding sentence. Notwithstanding anything contained herein to the contrary, if Executive
becomes unable to perform each of the material duties of his or her employment under this Agreement prior to his or her termination
of employment pursuant to this paragraph (b), and Executive thereafter, as a result of the same condition, becomes Totally and
Permanently Disabled as defined in Section 2.3, Executive will be entitled to the Full Disability Benefits (as defined in Section
2.3) provided for in Section 2.3 upon his or her termination of employment.


 




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2.2       Termination
for Death or Retirement.


 


If Executive’s
employment is terminated by reason of Executive’s retirement or death then Executive, or Executive’s personal representative,
as the case may be, shall be entitled to receive (a) Executive’s theretofore unpaid base salary and incentive compensation
for the period of employment, prorated to the end of the calendar month in which such termination occurs, and (b) compensation
for accrued but unused vacation time. Employer shall pay the amounts due under this Section 2.2 to Executive or Executive’s
personal representative within thirty (30) days of Executive’s retirement or death, as the case may be. The term “retirement”
for purposes of this Agreement shall mean the point in time after the Executive reaches 65 years of age and at which Executive
gives notice to Employer that he or she is retiring.


 


2.3       Termination
for Disability.


 


If Executive becomes
totally and permanently disabled during the term of this Agreement, Executive’s employment may be terminated by the Employer
at any time during the continuance of such disability. The Executive is Totally and Permanently Disabled if he or she is unable
to perform each of the material duties of his or her employment under this Agreement, by reason of any disability, illness, accident
or condition, for a period of more than six consecutive months during any twelve-month period, which is expected to continue for
more than one year as certified by a medical doctor of Executive’s own choosing and concurred in by a doctor of Employer’s
choosing.


 


Upon termination as
described in this Section 2.3, Executive shall be entitled to receive (a) an amount equal to one hundred percent (100%) of Executive’s
annual base salary at the date of termination, (b) Executive’s theretofore unpaid base salary and incentive compensation
for the period of employment, prorated to the end of the calendar month in which such termination occurs, and (c) compensation
for accrued but unused vacation time within thirty (30) days after the termination of Executive pursuant to this Section 2.3, and
until such amounts are paid in full to Executive, interest shall accrue on said amount as of the date first due at the rate of
eighteen percent (18%) per annum, compounded daily. In addition, at Employer’s cost, Employer shall continue to provide Executive
with the following benefits, consistent with the terms and conditions set forth in Section 1.5 hereof: (i) life insurance and medical,
dental and optical insurance, to the extent the same can be provided under the arrangements in effect at the time of termination,
and (ii) any other benefits to which the Executive is entitled by law or the specific terms of Employer’s policies in effect
at the time of his or her termination of employment. Benefits will be continued pursuant to this Section 2.3 for a period of twelve
(12) months from the date of termination of employment, unless Executive becomes employed by another company and becomes eligible
for employment benefits substantially similar to those which would otherwise be provided under this Section.


 


2.4       Voluntary
Termination by Executive or Termination by Employer for Cause.


 


Employer may terminate
Executive’s employment hereunder for cause (as such term is defined below). If Executive’s employment is voluntarily
terminated by Executive or is terminated by Employer for cause, Executive shall be entitled to receive (a) Executive’s theretofore
unpaid base salary and incentive compensation for the period of employment, prorated to the date of termination, and (b) compensation
for accrued but unused vacation time, but shall not be entitled to any compensation or employment benefits pursuant to this Agreement
for any period after the date of termination, or the continuation of any benefits except as may be required by law, including,
at his or her own expense, COBRA.


 



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Termination by Employer
for cause shall mean termination because of the Executive’s Personal Dishonesty (as hereinafter defined), Incompetence (as
hereinafter defined), Willful Misconduct (as hereinafter defined), breach of fiduciary duty involving personal profit, intentional
failure to perform stated duties, willful violation of any law, rule, or regulation (other than traffic violations or similar offenses)
or final cease-and-desist order, the occurrence of an event described in Section 2.7(b) or (c) hereof, or material breach of any
provision of this Agreement; provided, however, in the event Employer determines that Executive has intentionally failed to perform
his or her stated duties or materially breached this Agreement, Employer may not terminate Executive for cause unless Employer
has notified Executive of such failure or breach, Executive has been given a reasonable period of time to cure such failure or
breach, and in the opinion of Employer, Executive has not cured such failure or breach. For the purpose of this Agreement: (i)
“Incompetence” means Executive’s demonstrated lack of ability to perform the duties assigned to him or her which
lack of ability directly causes (or the Board of Directors determines is reasonably likely to cause) material injury to Employer;
(ii) “Personal Dishonesty” means conduct on the part of Executive which evinces a want of integrity or an intentional
breach of trust and which directly causes (or the Board of Directors determines is reasonably likely to cause) material injury
to Employer; and (iii) “Willful Misconduct” means conduct on the part of Executive which evinces a deliberate disregard
of the interest of Employer and which causes (or the Board of Directors determines is reasonably likely to cause) direct material
injury to Employer.


 


2.5       Termination
by Employer Without Cause or Termination by Executive for Cause.


 


(a)       In
the event Employer reduces Executive’s base compensation, responsibilities or duties without Executive’s consent or
otherwise breaches this Agreement, Executive may elect to terminate this Agreement for cause. In the event Employer terminates
Executive other than under Section 2.1 (expiration of the term), Section 2.2 (death/retirement), Section 2.3 (disability) or Section
2.4 (voluntary termination by Executive or termination by Employer for cause) or Executive elects to terminate his or her employment
hereunder for cause, then in either such event Executive shall receive (i) one hundred percent (100%) of his or her annual base
salary at the time of termination for the Severance Period (as hereinafter defined) (ii) Executive’s theretofore unpaid base
salary and incentive compensation, prorated to the end of the calendar month in which such termination occurs, and (iii) compensation
for accrued but unused vacation time. Executive shall be owed, and Employer shall be obligated to pay to Executive, the entire
amount provided in clauses (i), (ii) and (iii) above (other than incentive compensation which shall be payable within the period
of time provided in Section 1.3) within thirty (30) days after the termination of Executive pursuant to this Section 2.5, and until
such amount is paid in full to Executive, interest shall accrue on said amount as of the date first due at the rate of eighteen
percent (18%) per annum, compounded daily. For purposes of this Agreement, the “Severance Period” shall be two years.


 



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(b)       Furthermore,
if Employer terminates Executive pursuant to this Section 2.5, at Employer’s cost, Employer shall continue to provide Executive
with the following benefits, consistent with the terms and conditions set forth in Section 1.5 hereof: (i) life insurance and medical,
dental and optical insurance, to the extent the same can be provided under the arrangements in effect at the time of termination,
and (ii) any other benefits to which Executive is entitled by law or the specific terms of Employer’s policies in effect
at the time of his or her termination of employment. Benefits will be continued pursuant to this Section 2.5 through the end of
the Severance Period, unless Executive becomes employed by another company and is eligible for employment benefits substantially
similar to those which would otherwise be provided under this Section.


 


(c)       If
Employer terminates Executive pursuant to this Section 2.5, the Executive shall also be entitled to receive an additional benefit.
Such benefit shall be a single sum cash payment within thirty (30) days after termination of Executive pursuant to this Section
2.5 in an amount equal to the product of the Employer’s annual aggregate contribution, for the benefit of the Executive in
the year preceding termination, to all qualified retirement plans in which the Executive participated multiplied by the number
of years in the Severance Period. Such benefit shall be in addition to any benefit payable from any qualified or nonqualified plans
or programs maintained by the Employer at the time of termination.


 


2.6       Termination
by Executive Due to Change in Control or Nonrenewal by Employer Following Change in Control.


 


(a)       During
the period beginning with the date of a Change in Control (as hereinafter defined) and ending on December 31st of the
year following, Executive may, by giving notice to Employer, immediately terminate his or her employment under this Agreement upon
the occurrence of any of the following:


 


(i)       any
reduction in Executive’s base or incentive compensation, or employee benefits described in Section 1.4, 1.5, 1.6 and 1.7
and provided to Executive immediately preceding a Change in Control (other than changes in benefits required by law and applicable
to all employees generally), or any assignment to any position, responsibilities or duties that are less significant than his position,
duties and responsibilities as of the time immediately preceding a Change in Control;


 


(ii)       a
transfer of Executive by Employer requiring Executive to have his or her principal location of work more than fifty (50) miles
from Executive’s principal location of work immediately prior to the Change in Control; or


 


(iii)       a
requirement by Employer that Executive travel materially more than that amount of time which has historically been required by
Employer such that Executive is required to be away from his or her place of residence for more than three weekends in a calendar
year or for four or more week nights per week during any three weeks in a calendar year.


 



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(b)       If
Executive terminates this Agreement pursuant to this Section 2.6, or if Employer fails to renew this Agreement at the first renewal
date under Section 1.1 occurring following the date of the Change in Control or a renewal date occurring while a proposed Change
in Control is pending, Executive shall have the right to receive payments and benefits under, and to the extent provided by, Section
2.5 as if a termination by Employer without cause had occurred except that the Severance Period would be two (2) years.


 


(c)       For
purposes of this Agreement, a “Change in Control” shall be deemed to have occurred if: (1) any “person”
(as such term is used in Section 13(d) and 14(d)(2) of the Securities Exchange Act of 1934) or the Company becomes the owner of
securities of the Employer, or any person becomes the beneficial owner, directly or indirectly, of a majority 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
U.S.C. § 1817(j)) as amended from time to time, or approval under the Savings and Loan Holding Company Act (12 U.S.C. §
1467a), as amended from time to time; (2) any person (as defined above) other than the Company becomes owner of more than 25% of
the voting securities of the Employer; (3) during any period of two (2) consecutive years, the individuals, who at the beginning
of any such period constituted the directors of the Employer or the Company, cease for any reason to constitute at least a majority
thereof; or (4) the filing by the Company of a report or proxy statement with the Securities and Exchange Commission or the Office
of Thrift Supervision disclosing in response to Item 1 of Form 8-K or Item 5 of Part II of 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.


 


However, notwithstanding
the foregoing provisions, the following events or occurrences shall not constitute a “Change in Control” hereunder:


 


(i)       The
merger, consolidation or other combination of the Employer with, or sale of the Employer to, or assumption of the Employer by any
company controlled by, controlling or under control with the Company if the entity with which the Employer is combined assumes
this Agreement, in which event such successor shall be deemed to be the “Employer” hereunder.


 


2.7       Termination
or Suspension as Required by Law.


 


(a)       If
the Executive is suspended and/or temporarily prohibited from participating in the conduct of the Employer’s affairs by a
notice serviced under section 8 (e)(3) or (g)(1) of the FDIA (12 U.S.C. § 1818(e)(3) and (g)(1)) the Employer’s obligations
under this Agreement shall be suspended as of the date of service unless stayed by appropriate proceedings. If the charges in the
notice are dismissed, the Employer may in its discretion (i) pay the Executive all or part of the severance benefit withheld while
its contract obligations were suspended, and (ii) reinstate (in whole or in part) any of its obligations which were suspended.


 


(b)       If
the Executive is removed and/or permanently prohibited from participating in the conduct of the Employer’s affairs by an
order issued under section 8 (e)(4) or (g)(1) of the FDIA (12 U.S.C. § 1818 (e)(4) or (g)(1)), all obligations of the Employer
under this Agreement shall terminate as of the effective date of the order, but vested rights of the Executive and the Employer
shall not be affected.


 



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(c)       If
the Employer is in default (as defined in section 3(x)(1) of the FDIA, all obligations under this Agreement shall terminate as
of the date of default, but this Section 2.7 shall not affect any vested rights of the Executive or the Employer.


 


(d)       All
obligations under this Agreement shall be terminated except to the extent determined that continuation of the contract is necessary
for the continued operation of the Employer.


 


(i)        By
the Comptroller of the Currency (the “Comptroller”) or his or her designee, at the time the Federal Deposit Insurance
Corporation or Resolution Trust Corporation enters into an agreement to provide assistance to or on behalf of the Employer under
the authority contained in 13(c) of the FDIA; or


 


(ii)       By
the Comptroller or his or her designee, at the time the Comptroller or his or her designee approves a supervisory merger to resolve
problems related to operation of the Employer or when the Employer is determined by the Comptroller to be in an unsafe or unsound
condition.


 


Any rights of the Executive which
have vested, including those which vest pursuant to this Agreement, shall not be affected by such action.


 


2.8       Successors
and Binding Agreements.


 


(a)       This
Agreement shall be binding upon and inure to the benefit of Employer and any Successor of or to Employer, but shall not otherwise
be assignable or delegatable by Employer. “Successor” shall mean any successor in interest, including, without limitation,
any entity, individual or group of persons acquiring directly or indirectly all or substantially all of the business or assets
of Employer whether by sale, merger, consolidation, reorganization or otherwise.


 


(b)       This
Agreement shall inure to the benefit of and be enforceable by Executive’s personal or legal representatives, executors, administrators,
successors, heirs, distributees and legatee.


 


(c)       Employer
shall require any Successor to agree (in such form as is reasonably requested by Executive) to perform this Agreement to the same
extent as the original parties would be required if no succession had occurred.


 


(d)       This
Agreement is personal in nature and neither of the parties shall, without the consent of the other, assign, transfer or delegate
this Agreement or any rights or obligations hereunder except as expressly provided in this Section 2.8.


 






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(e)       (e)
Executive's receipt of termination payments and/or benefits provided under Sections 2.1(b), 2.2, 2.3, 2.5 and 2.6 are conditioned
on Executive executing (and not revoking) a severance agreement upon terms, including a waiver and release in favor of the Employer
(including its directors, employees, agents and related parties), then typically required by the Employer in connection with the
provision of severance payments and/or benefits to terminated employees.


 


2.9       Limitations
on Termination Compensation.


 


(a)       In
the event that the severance benefits payable to the Executive under Sections 2.5, or 2.6 (“Severance Benefits”), or
any other payments or benefits received or to be received by the Executive from the Employer (whether payable pursuant to the terms
of this Agreement or any other plan, agreement or arrangement with the Employer) or any corporation (“Affiliate”) affiliated
with the Employer within the meaning of Section 1504 of the Internal Revenue Code of 1986, as amended (the “Code”),
in the opinion of tax counsel selected by the Employer’s independent auditors and acceptable to the Executive, constitute
“parachute payments” within the meaning of Section 280G(b)(2) of the Code, and the present value of such “parachute
payments” equals or exceeds three (3) times the average of the annual compensation payable to the Executive by the Employer
(or an Affiliate) and includible in the Executive’s gross income for federal income tax purposes for the five (5) calendar
years preceding the year in which a change in ownership or control of the Employer occurred (“Base Amount”), such Severance
Benefits shall be reduced to an amount the present value of which (when combined with the present value of any other payments or
benefits otherwise received or to be received by the Executive from the Employer (or an Affiliate) that are deemed “parachute
payments”) is equal to 2.99 times the Base Amount, notwithstanding any other provision to the contrary in this Agreement.
The Severance Benefits shall not be reduced if (A) the Executive shall have effectively waived his or her receipt or enjoyment
of any such payment or benefit which triggered the applicability of this Section 2.9, or (B) in the opinion of tax counsel, the
Severance Benefits (in its full amount or as partially reduced, as the case may be) plus all other payments or benefits which constitute
“parachute payments” within the meaning of Section 280G(b)(2) of the Code are reasonable compensation for services
actually rendered, within the meaning of Section 280G(b)(4) of the Code, and such payments are deductible by the Employer. The
Base Amount shall include every type and form of compensation includible in the Executive’s gross income in respect of his
or her employment by the Employer (or an Affiliate), except to the extent otherwise provided in temporary or final regulations
promulgated under Section 280G(b) of the Code. For purposes of this Section 2.9, a “change in ownership or control”
shall have the meaning set forth in Section 280G(b) of the Code and any temporary or final regulations promulgated thereunder.
The present value of any non-cash benefit or any deferred cash payment shall be determined by the Employer’s independent
auditors in accordance with the principles of Sections 280G(b)(3) and (4) of the Code.


 


(b)       The
Executive shall have the right to request that the Employer obtain a ruling from the Internal Revenue Service (“Service”)
as to whether any or all payments or benefits determined by such tax counsel are, in the view of the Service, “parachute
payments” under Section 280G. If a ruling is sought pursuant to the Executive’s request, no Severance Benefits payable
under this Agreement shall be made to the Executive until after fifteen (15) days from the date of such ruling. For purposes of
this Section 2.9(b), the Executive and the Employer agree to be bound by the Service’s ruling as to whether payments constitute
“parachute payments” under Section 280G. If the Service declines, for any reason, to provide the ruling requested,
the tax counsel’s opinion provided in Subsection 2.9(a) with respect to what payments or benefits constitute “parachute
payments” shall control, and the period during which the Severance Benefits may be deferred shall be extended to a date fifteen
(15) days from the date of the Service’s notice indicating that no ruling would be forthcoming.


 



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(c)       In
the event that Section 280G, or any successor statute, is repealed, this Section 2.9 shall cease to be effective on the effective
date of such repeal. The parties to this Agreement recognize that final regulations under Section 280G of the Code may affect the
amounts that may be paid under this Agreement and agree that, upon issuance of such final regulations, this Agreement may be modified
as in good faith deemed necessary in light of the provisions of such regulations to achieve the purposes of this Agreement, and
that consent to such modifications shall not be unreasonably withheld.


 


(d)       Any
payments made to the Executive pursuant to this Agreement, or otherwise, are subject to and conditioned upon their compliance with
section 18(k) of the Federal Deposit Insurance Act (12 U.S.C. § 1828(k)) and any regulations promulgated thereunder.


 


(e)       Executive’s
receipt of termination payments and/or benefits provided under Sections 2.1(b), 2.2, 2.3, 2.5 and 2.6 are conditioned on Executive
executing (and not revoking) a severance agreement upon terms, including a waiver and release in favor of the Employer (including
its directors, employees, agents and related parties), then typically required by the Employer in connection with the provision
of severance payments and/or benefits to terminated employees.


 


ARTICLE III


 


confidentiality
and non-solicitation


 


3.1       Confidentiality.


 


(a)       "Confidential
Information" means oral or written information disclosed to Executive or known to Executive as a consequence of or through
the performance of his or her duties to the Employer (including information conceived, originated, discovered or developed by him
or her), which derives value from not being generally known to the public, and includes information regarding Employer's business
affairs, including such matters as lending programs, various financial services and products, computer programs, research, customer
lists and preferences, customer development, planning, purchasing, finance, marketing, customer relations, personnel information
including employee compensation and confidential or similar proprietary information. Confidential information shall be defined
to exclude information which is or becomes public knowledge through no fault of Executive, or which was known to Executive before
the start of his or her earliest relationship with the Employer.


 


(b)       As
to any Confidential Information constituting a trade secret under applicable law, Executive agrees that Executive will not, for
so long as the item qualifies as a trade secret, use or disclose (or cause to be used or disclosed) such Confidential Information,
except to the extent necessary in executing Executive’s duties for The Employer. As to all other Confidential Information
(i.e., Confidential Information that does not constitute a trade secret), Executive agrees that Executive will not, either during
the course of Executive’s employment with the Employer or for two years following the termination of Executive's employment,
use or disclose (or cause to be used or disclosed) such Confidential Information except to the extent necessary in executing Executive’s
duties for the Employer. Executive further agrees that when using Confidential Information to further the Employer’s business,
Executive will use his or her best efforts to limit the disclosure of Confidential Information to those within the Employer who
have a legitimate need to know the information.


 



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Nothing in this Agreement
shall be construed to prevent Executive from communicating or cooperating with any government agency regarding matters that are
within the agency's jurisdiction. Further, Executive may not be held criminally or civilly liable under any Federal or State trade
secret law for the disclosure of a trade secret that is made: (a) in confidence to a Federal, State, or local government official,
either directly or indirectly, or to an attorney, and provided that such disclosure is solely for the purpose of reporting or investigating
a suspected violation of the law, or (b) in a complaint or other document filed in a lawsuit or other proceeding, provided that
such filing is made under seal. Additionally, in the event Executive files a lawsuit against the Employer for retaliation by the
Employer against Executive for reporting a suspected violation of law, Executive has the right to provide trade secret information
to Executive's attorney and use the trade secret information in the court proceeding, although Executive must file any document
containing the trade secret under seal and Executive may not disclose the trade secret, except pursuant to court order.


 


(c)       Executive
shall not acquire any rights to any Confidential Information as a result of his or her performance of his or her duties to the
Employer.


 


(d)       The
restrictions in this Section 3.1 are in addition to and not in lieu of any other obligations Executive may have relating to the
Employer's Confidential Information, including any obligations under Wis. Stat. § 134.90 or similar laws governing trade secrets
which may extend beyond the two (2) year period of restriction on use or disclosure of Confidential Information.


 


3.2       Non-Solicitation
of Customers.


 


Executive agrees that
for two (2) years following the termination of Executive's employment, regardless of the reason for such termination, Executive
shall not solicit or assist with the solicitation of any customer of the Employer to terminate or diminish such customer's business
with the Employer. For purposes of this provision, a "customer" shall mean an entity or individual (1) in connection
with whom Executive provided services on behalf of the Employer within the eighteen (18) months prior to Executive's termination
or (2) about whom Executive obtained Confidential Information within the eighteen (18) months prior to Executive's termination.


 


3.3       Non-Solicitation
of Employees


 


Executive agrees that
for two (2) years following the termination of Executive's employment, regardless of the reason for such termination, Executive
shall not directly or indirectly solicit, assist, cause or seek to cause any employee of the Employer about whom Executive learned
Confidential Information through employment with the Employer to provide services to, or work for any competitor of the Employer
(or for any person or entity who intends to compete with the Employer). This provision is not intended and shall not be construed
to foreclose or burden the employment of any such employee who pursues or accepts such employment without any solicitation prohibited
by this provision.


 



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3.4       Reasonableness
and Remedies.


 


Executive acknowledges
and agrees that the restrictions set forth in Article III are founded on valuable consideration and are fair and reasonable and
that such restrictions are necessary to protect the legitimate interests of the Employer. In addition to other remedies provided
by law or equity, upon a breach by Executive of any of the covenants contained herein, the Employer shall be entitled to have a
court of competent jurisdiction enter an injunction against Executive prohibiting any further breach of the covenants contained
herein.


 


ARTICLE IV


 


LEGAL FEES
AND EXPENSES


 


It is the intent of
Employer that Executive not be required to incur the expenses associated with the enforcement of his or her rights under this Agreement
by litigation, arbitration or other legal action because the cost and expense thereof would substantially detract from the benefits
intended to be extended to Executive hereunder. Accordingly, if it should appear to Executive that Employer has failed to comply
with any of its obligations under this Agreement or in the event that Employer or any other person takes any action to declare
this Agreement void or unenforceable, or institutes any litigation, arbitration or other legal action designed to deny, or to recover
from Executive, the benefits intended to be provided to Executive hereunder, Employer irrevocably authorizes Executive from time
to time to retain counsel of his or her choice, at the expense of Employer as hereafter provided, to represent Executive in connection
with the initiation or defense of any litigation, arbitration or other legal action, whether by or against Employer or any director,
officer, shareholder or other person affiliated with Employer, in any jurisdiction. Notwithstanding any existing or prior attorney-client
relationship between Employer and such counsel, Employer irrevocably consents to Executive’s entering into an attorney-client
relationship with such counsel, and in that connection Employer and Executive agree that a confidential relationship shall exist
between Executive and such counsel. Employer shall pay and be solely responsible for reasonable and necessary attorneys’
and related fees and expenses incurred by Executive as a result of Employer’s failure to perform this Agreement or any provision
thereof or as a result of Employer or any person contesting the validity or enforceability of this Agreement or any provision thereof
as aforesaid, but only if Executive obtains a final legal judgment or settlement in his or her favor. All fees and expenses due
hereunder shall be paid upon presentation by Executive to Employer of a statement or statements prepared by such counsel and containing
such information and detail as may be requested by Employer.


 



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ARTICLE V


 


GENERAL PROVISIONS


 


5.1       Entire
Agreement.


 


This Agreement supersedes
any other agreements, oral or written, between the parties with respect to the employment of Executive by Employer and contains
all of the agreements and understandings between the parties with respect to such employment, provided however, that this Agreement
shall not supersede or affect the terms of any employee benefit arrangement in existence on the date of this Agreement and in which
the Executive is participating on that date, including, but not limited to all pension, retirement, deferred compensation, 401(k),
excess benefit or other similar plans. Any waiver or modification of any term of this Agreement shall be effective only if it is
signed in writing by both parties.


 


5.2       Withholding
of Taxes.


 


Employer may withhold
from any amounts payable under this Agreement all federal, state, city or other taxes as shall be required pursuant to any law
or government regulation or ruling.


 


5.3       Notices.


 


Any notice to be given
hereunder by either party to the other may be made by personal delivery in writing or by mail, registered or certified, postage
prepaid with return receipt requested. Mailed notices shall be addressed to the parties at the addresses appearing below, but each
party may change his or her or its address by written notice in accordance with this paragraph. Notices delivered personally shall
be deemed communicated as of actual receipt; mailed notices shall be deemed communicated five (5) days after the date of mailing.


 


If to Employer, addressed
to:


 


Bank Mutual


Attention: Michael T. Crowley, Jr.


Chairman of the Board


4949 West Brown Deer Road


P. O. Box 23988


Milwaukee, WI 53223-0988


Fax No: (414) 362-6915


 


with a copy to:


 


Quarles & Brady, LLP


Attention: James D. Friedman


411 East Wisconsin Avenue


Milwaukee, WI 53202


Fax No: (414) 978-8735


 


If to Executive, addressed
to:


 


David A. Baumgarten


923 Kilbourn, Unit 1801


Milwaukee, WI 53202


Or the Executive's last known address as
reflected in the Employer's personnel records.



 



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5.4       Governing
Law.


 


This Agreement shall
be construed in accordance with and governed by the laws of the State of Wisconsin and, to the extent applicable, of the United
States.


 


5.5       Incapacity.


 


If Employer shall reasonably
and in good faith find that any person to whom any payment is payable under this Agreement is unable to care for his or her affairs
because of illness or accident, or is a minor, any payment due (unless a prior claim therefore shall have been made by a duly appointed
guardian, committee, or other legal representative) may be paid to the spouse, a child, a parent, or a brother or sister, or to
any person reasonably and in good faith deemed by Employer to have incurred expense for such person otherwise entitled to payment
in such manner and proportions as Employer may determine in its sole discretion. Any such payment shall be a complete discharge
of the liabilities of Employer to make such payment to Executive.


 


5.6       Waivers.


 


The waiver by any party
of any breach, default, misrepresentation or breach of warranty or covenant in this Agreement, whether intentional or not, shall
be in writing and shall not be deemed to extend to any prior or subsequent breach, default, misrepresentation or breach of warranty
or covenant herein and shall not affect in any way any rights arising by virtue of any such prior or subsequent occurrence.


 


5.7       Section
409A.


 


Notwithstanding anything
in the Employment Agreement to the contrary, in the event that the Executive is deemed by the Bank to be a "specified employee"
within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended ("Section 409A'"), no payment that
is "deferred compensation" subject to Section 409A shall be made to the Executive prior to the date that is six (6) months
after the date of the Executive's separation from service (as defined in Section 409A) (or, if earlier, the Executive's date of
death). In such event, the payments subject to the six (6) month delay will be paid in a lump sum on the earliest permissible payment
date with interest on the delayed payments credited at the rate that Employer is paying on the date of the Executive's separation
from service on a six month certificate of deposit for such a lump sum amount.


 


5.8       Severability.


 


The provisions of this
Agreement are severable and in case any one or more of the provisions contained in this Agreement should be invalid, illegal, or
unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained in this Agreement
shall not in any way be affected or impaired thereby.


 




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5.9       Remedies
Cumulative.


 


Remedies under this
Agreement of any party hereto are in addition to any remedy or remedies to which such party is entitled or may become entitled
at law or in equity.


 


5.10       Counterparts.


 


This Agreement may
be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute
one and the same agreement.


 


5.11       Headings.


 


The headings in this
Agreement are for convenience of reference only, and under no circumstances should they be construed as being a substantive part
of this Agreement nor shall they limit or otherwise affect the meaning thereof.


 


5.12       Additional
Documents


 


Each of the parties
hereto, without further consideration, agrees to execute and deliver such additional documents and to take such other actions reasonably
necessary to more effectively consummate the purposes of this Agreement.


 


IN WITNESS WHEREOF,
the parties have executed this Employment Agreement as of the day and year first above written.


 


Bank Mutual


 


By: /s/ Michael T. Crowley, Jr.           

Michael T. Crowley, Jr.



Its: Chairman of the Board






 


EXECUTIVE


 


/s/ David A. Baumgarten                   

David A. Baumgarten


President and CEO


 






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