exv10w1






Exhibit 10.1




BANK MUTUAL

EMPLOYMENT AGREEMENT




     THIS
EMPLOYMENT AGREEMENT (“Agreement”) is made and entered into
as of this 5th day of April, 2010, 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, Executive has substantial experience in the banking industry and Employer is seeking
an experienced Executive; 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 a period of two (2) years commencing on April 12, 2010
(the “Effective Date”). Not less than thirty (30) days prior to and effective as of the end of
the one year anniversary and each annual anniversary 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 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



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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 best
efforts to discharge his 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 full business time to the discharge of his 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.



1.3 Base and Incentive Compensation.




     During the term of this Agreement, Executive shall be entitled to an annual base salary equal
to not less than $375,000 per year. Executive’s annual salary will be reviewed annually by the
Board of Directors of Employer on the basis of his 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. 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 his 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 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. Executive shall have access to mortgage and consumer financing
from Employer with terms consistent with the normal practice of Employer. 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 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.



     (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.



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     (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) Not later than May 3, 2010, Executive shall be awarded options to purchase 50,000 shares
of the Company’s common stock upon and subject to the terms and conditions of the Company’s 2004
Stock Incentive Plan.



     (i) Not later than May 3, 2010, Executive shall be awarded 15,000 shares of the Company’s
restricted common stock upon and subject to the terms and conditions of the Company’s 2004 Stock
Incentive Plan.



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


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 first two years of employment 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 spouse
and dependents will be entitled to further medical coverage, at his 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
first two years of employment under Section 1.1, Executive shall be entitled to receive (i) an
amount equal to one hundred percent (100%) of his 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 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 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 employment under this Agreement prior
to his 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 termination of employment.


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



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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 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 is unable to perform each of
the material duties of his 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 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 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, or material breach of any
provision of this Agreement; provided, however, in the event Employer determines that Executive has
intentionally failed to perform his 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 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 employment hereunder for cause, then in either such event Executive shall receive (i)
one hundred percent (100%) of his annual base salary at the time of termination through the end of
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 as follows: if the termination shall occur
within the initial two years of employment, the Severance Period shall be through the end of the
initial two year term of employment, but not less than one year; and if the termination shall occur
after the expiration of the initial two years employment, the Severance Period shall be twelve (12)
months.



     (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



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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 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.




     (a) Following a Change in Control (as hereinafter defined), Executive may, by giving notice to
Employer, immediately terminate his 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 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 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.



     If Executive terminates this Agreement pursuant to this Section 2.6, 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.



     (b) 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



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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) someone 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 there under, 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.



     (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 Director of the Office of Thrift Supervision (the “Director”) or his or her
designee, at the time the Federal Deposit Insurance Corporation or Resolution



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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 Director or his or her designee, at the time the Director 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 Director 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.


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



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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 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 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 there under. 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.



     (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 there under.







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ARTICLE III




CONFIDENTIALITY AND NON-SOLICITATION



3.1 Confidentiality.




     (a) During the period of Executive’s employment with Employer and for two (2) years following
the termination of Executive’s employment, regardless of the reason for termination, Executive
shall not, at any time, directly or indirectly, use any Confidential Information (as defined below)
except as required to perform his duties for Employer, or disclose to any individual, corporation,
partnership or any other entity any Confidential Information or trade secrets of or relating to
Employer.



     (b) “Confidential Information” means oral or written information disclosed to Executive or
known to Executive as a consequence of or through the performance of his duties to the Employer
(including information conceived, originated, discovered or developed by him), 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, 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 earliest relationship with the Employer.



     (c) Executive shall not acquire any rights to any Confidential Information as a result of his
performance of his 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,
cause or seek to cause any employee of the Employer to terminate, curtail or



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otherwise modify his or her employment relationship 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.



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 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 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 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.



ARTICLE V




GENERAL PROVISIONS


5.1 Entire Agreement.







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     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 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.

Chief Executive Officer

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.


5.9 Remedies Cumulative.







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     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 and CEO




EXECUTIVE

 	 
	 	  	/s/
David A. Baumgarten	 
	 	 	David A. Baumgarten 	 
	 	 	 	 



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