Document:

exv10w33

 

Exhibit 10.33

EXECUTION COPY

KNOWLES ELECTRONICS HOLDINGS, INC.

AMENDMENT NO. 1 TO CREDIT AGREEMENT

     AMENDMENT NO. 1 TO CREDIT AGREEMENT (this “Amendment”), dated as of March 29, 2005, among
KNOWLES ELECTRONICS HOLDINGS, INC., a Delaware corporation (the “Borrower”), the SUBSIDIARY LOAN
PARTIES listed on the signature pages hereof (for purposes of Sections 6, 7(c) and 7(d) hereof
only), XERION PARTNERS II MASTER FUND LIMITED, a Bermuda limited liability company (“Xerion”) and
JEFFERIES & COMPANY, INC., a Delaware corporation (“Jefferies”, and together with Xerion, the
“Lenders”).

RECITALS

     WHEREAS, the Borrower and Xerion have entered into a Credit Agreement, dated as of December
20, 2004, among the Borrower, Xerion and the other lenders party thereto from time to time (the
“Credit Agreement”);

     WHEREAS, pursuant to Section 8.02(c) of the Credit Agreement, the Credit Agreement was deemed
amended by Amendment No. 8 and Waiver dated as of March 10, 2005, to the Credit Agreement dated as
of June 28, 1999, as amended and restated as of July 21, 1999, as amended, among the Borrower, the
lenders party thereto, JPMorgan Chase Bank, N.A., as successor to The Chase Manhattan Bank, as
administrative agent and Morgan Stanley Senior Funding, Inc., as syndication agent to permit the
incurrence of certain additional indebtedness;

     WHEREAS, Jefferies intends to provide the Borrower with an additional $10,000,000 Loan
Commitment; and

     WHEREAS, the Borrower and Xerion have agreed to amend the Credit Agreement to provide for such
additional indebtedness and certain other amendments.

     NOW, THEREFORE, in consideration of the premises and the mutual covenants hereinafter set
forth, and for other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:

     Section 1. Definitions. Capitalized terms used but not otherwise defined in this
Amendment shall have the meanings set forth in the Credit Agreement and shall be interpreted in
accordance with the principles set forth in Section 1.02 of the Credit Agreement.

     Section 2. Amendments.

     (a) Recitals. The first recital of the Credit Agreement is amended in
its entirety to read as follows:

     WHEREAS, Borrower wishes to establish a $19,000,000 credit facility for general
corporate purposes;

 

 

     (b) Definitions.

        (i) The definition of “Commitment Termination Date” provided in
Section 1.01 of the Credit Agreement is amended in its entirety to read as
follows:

        “Commitment Termination Date” means, in the case of the Loan
Commitment of Xerion, January 31, 2005 and, in the case of the Loan
Commitment of Jefferies & Company, Inc., March 31, 2005.

        (ii) The last sentence of the definition of “Loan Commitment” provided
in Section 1.01 of the Credit Agreement is amended in its entirety to read
as follows:

        The aggregate amount of the Lenders’ Loan Commitments after giving
effect to Amendment No. 1 is $10,000,000.

        (iii) The definition of “Effective Date” provided in Section 1.01 of
the Credit Agreement is amended in its entirety to read as follows:

        “Effective Date” means the date on which the conditions
specified in Section 4.01 are first satisfied (or waived in accordance with
Section 8.02).

        (iv) Section 1.01 of the Credit Agreement is amended to include the
definition of “Amendment No. 1” in alphabetical order as follows:

        “Amendment No. 1” means Amendment No. 1 to Credit Agreement,
dated as of March 29, 2005, among the Borrower, the Subsidiary Loan Parties
listed on the signature pages thereto, Xerion and Jefferies & Company, Inc.

     (c) Prepayments. The last sentence of Section 2.08(e) of the Credit
Agreement is amended in its entirety to read as follows:

     Any prepayment pursuant to (i) Section 2.08(a) or (ii) Section 2.08(b) as a result of a
Prepayment Event occurring upon any of the events described in clause (c) of the definition
of “Prepayment Event” or the occurrence of a Change of Control or the issuance of Equity
Interests, each as described in clause (d) of the definition of “Prepayment Event”, in each
case, shall be accompanied by a fee equal to two percent of the principal so prepaid.

     (d) Material Non-Public Information.

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        (i) Section 3.17 of the Credit Agreement is amended in its entirety to
read as follows:

        SECTION 3.17. Material Non-Public Information. As of the date
hereof and of the initial funding of the Loans, neither the Borrower nor any
of its Subsidiaries have furnished or otherwise disclosed any information to
Xerion that the Borrower reasonably believes may contain material non-public
information.

        (ii) Section 5.12 of the Credit Agreement is amended in its entirety
to read as follows:

        SECTION 5.12. Material Non-Public Information. Prior to
furnishing any information that the Borrower reasonably believes may contain
material, non-public information to an Electing Lender pursuant to the Loan
Documents, the Borrower shall provide written notice to each Electing Lender
and the Borrower shall not provide any such information that may constitute
material, non-public information without the express written consent of such
Lenders; provided that the time periods set forth in this Article V
applicable to the provision of information shall be deemed extended for a
reasonable period of time required for the Borrower to (a) make such
determination as to its reasonable belief, (b) provide any such written
notice and (c) receive any such express written consent. For purposes
hereof, an “Electing Lender” shall mean Xerion and any Lender that
provides written notice to the Borrower that such Lender elects to be an
Electing Lender for purposes of this Section 5.12.

     (e) Assignments. Section 8.04(b) is amended in its entirety to read as follows:

     (b) Any Lender may assign to one or more assignees all or a portion of its
rights and obligations under this Agreement (including all or a portion of its Loan
Commitments and the Loans at the time owing to it), provided that (i) except
(A) in the case of an assignment to a Lender or an Affiliate or Approved Fund of a
Lender, (B) in the case of an assignment by Jefferies & Company, Inc. of a Loan made
by Jefferies & Company, Inc., and (C) during the continuance of an Event of Default,
the Borrower must give its prior written consent to such assignment (which consent
shall not be unreasonably withheld or delayed), (ii) except in the case of (A) an
assignment to a Lender or an Affiliate or Approved Fund of a Lender, (B) an
assignment of the entire remaining amount of the assigning Lender’s Loan Commitments
or Loans and (C) an assignment by Jefferies & Company, Inc. of a Loan made by
Jefferies & Company, Inc., the amount of the Loan Commitments or Loans of the
assigning Lender subject to each such assignment (determined as of the date the
Assignment and Acceptance with respect to such assignment is delivered to the
Borrower and the Required Lenders) shall not be less than $500,000 unless each of
the Borrower and the Required Lenders otherwise consent, (iii) each partial
assignment shall be made

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as an assignment of a proportionate part of all the
assigning Lender’s rights and obligations under this Agreement, (iv) the parties to
each assignment (other than any assignment by Jefferies & Company, Inc.) shall
execute and deliver to Xerion an Assignment and Acceptance, together with a
processing and recordation fee of $3,500, and (v) the assignee, if it shall not be a
Lender, shall deliver to the Required Lenders such information reasonably requested
in connection with the administration of an Assignment and Acceptance. Promptly
after any assignment by Jefferies & Company, Inc., Jefferies & Company, Inc. shall
give written notice to the Borrower and Xerion of any such assignment;
provided that the failure to provide such notice shall not affect the
validity of any such assignment. Subject to acceptance and recording thereof
pursuant to paragraph (d) of this Section, from and after the effective date
specified in each Assignment and Acceptance the assignee thereunder shall be a party
hereto and, to the extent of the interest assigned by such Assignment and
Acceptance, have the rights and obligations of a Lender under this Agreement, and
the assigning Lender thereunder shall, to the extent of the interest assigned by
such Assignment and acceptance, be released from its obligations under this
Agreement (and, in the case of an Assignment and Acceptance covering all of the
assigning Lender’s rights and obligations under this Agreement, such Lender shall
cease to be a party hereto but shall continue to be entitled to the benefits of
Sections 2.11, 2.12, 2.13 and 8.03). Any assignment or transfer by a Lender of
rights or obligations under this Agreement that does not comply with this paragraph
shall be null and void.

     (f) Schedule 2.01. Schedule 2.01 to the Credit Agreement is hereby amended in its
entirety by substituting Annex A to this Amendment as a new Schedule 2.01 to the Credit Agreement.

     Section 3. Conditions To Effectiveness. Section 2 of this Amendment shall become
effective only upon the prior or concurrent satisfaction of all of the following conditions:

     (a) The Lenders (or their respective counsel) shall have received from each
party hereto either (i) a counterpart of this Amendment signed on behalf of such
party or (ii) written evidence satisfactory to the Lenders (which may include
telecopy transmission of a signed signature page of this Amendment) that such party
has signed a counterpart of this Amendment.

     (b) The Lenders shall have received a favorable written opinion (addressed to
the Lenders and dated the date hereof) of each of (i) Richards Spears Kibbe & Orbe
LLP, special counsel for the Borrower and (ii) Dykema Gosset Rooks Pitts PLLC,
counsel for the Borrower, in each case, in form and substance reasonably
satisfactory to the Lenders and their respective counsel.

     (c) The Lenders shall have received such documents and certificates as the
Lenders or their respective counsel may reasonably request relating to the
organization, existence and good standing of each Loan Party, the authorization of
this Amendment and any other legal matters relating to the Loan Parties, the Loan

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Documents, the Transactions or this Amendment, all in form and substance
satisfactory to the Lenders and their respective counsel.

     (d) The Lenders shall have received a certificate, dated the date hereof and
signed by the President, a Vice President or a Financial Officer of the Borrower and
each Subsidiary Loan Party, confirming compliance with the conditions set forth in
paragraphs (a) and (b) of Section 4.02 as of the date hereof.

     (e) The Lenders shall have received on or prior to the date hereof all fees
and other amounts due and payable on or prior to the date hereof, including, to the
extent invoiced, reimbursement or payment of all reasonable out-of-pocket expenses
(including fees, charges and disbursements of their respective counsel) required to
be reimbursed or paid by any Loan Party.

     (f) All consents and approvals required to be obtained from any Governmental
Authority or other Person in connection with this Amendment shall have been
obtained.

     Section 4. Loan. Upon the satisfaction of the conditions set forth in Section 3
above, Jefferies shall (subject to satisfaction of the conditions specified in Section 4.02 of the
Credit Agreement) provide $10,000,000 to the Borrower on the date hereof by wire transfer of
immediately available funds by 5:00 p.m., New York City time, to the account designated by the
Borrower pursuant to a Borrowing Request. In connection with the foregoing and so long as notice
is provided by no later than 4:00 p.m. New York time on the date of the proposed Borrowing, the
Lenders hereby (a) waive compliance by the Borrower with the three Business Day notice requirement
of Section 2.03 of the Credit Agreement for any Borrowing and (b) confirm that Section 2.10(a) of
the Credit Agreement shall not apply to the initial Interest Period for such Loan.

     Section 5. Representations and Warranties. The Borrower represents and warrants to
each Lender that:

     (a) Powers. Each Loan Party has all requisite power and authority to
enter into this Amendment and to carry out the transactions contemplated by, and
perform its obligations under, this Amendment and the Credit Agreement as amended by
this Amendment (the “Amended Agreement”).

     (b) Authorization; Enforceability. The transactions contemplated by,
and the performance of each Loan Party’s obligations under, this Amendment and the
Amended Agreement are within such Loan Party’s corporate powers and have been duly
authorized by all necessary corporate and, if required, stockholder action. This
Amendment has been duly executed and delivered by each Loan Party and constitutes a
legal, valid and binding obligation of each Loan Party, enforceable in accordance
with its terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium or other laws affecting creditors’ rights

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generally and subject to
general principles of equity, regardless of whether considered in a proceeding in
equity or at law.

     (c) Governmental Approvals; No Conflicts. The execution and delivery
by each Loan Party of this Amendment, the performance by each Loan Party of the
obligations under this Amendment and the Amended Agreement and the consummation of
the transactions contemplated by this Amendment and the Amended Agreement (i) do not
require any consent or approval of, registration or filing with (other than a filing
on Securities and Exchange Commission Form 8-K), or any other action by or before,
any Governmental Authority, except such as have been obtained or made and are in
full force and effect, (ii) will not violate any applicable law or regulation or the
charter, by-laws or other organizational documents of the Borrower or any of the
Subsidiaries or any order of any Governmental Authority, (iii) will not violate or
result in a default under any material indenture, agreement or other instrument
binding upon the Borrower or any of the Subsidiaries or any of their assets, or give
rise to a right thereunder to require any material payment to be made by the
Borrower or any of the Subsidiaries, and (iv) will not result in the creation or
imposition of any Lien on any asset of the Borrower or any of the Subsidiaries.

     (d) Solvency. Immediately after the consummation of the transactions
to occur on the date hereof and immediately following the making of the Loan made on
the date hereof and after giving effect to application of the proceeds of such Loan,
(i) the fair value of the assets of each Loan Party, at a fair valuation, will
exceed its debts and liabilities, subordinated, contingent or otherwise; (ii) the
present fair saleable value of the property of each Loan Party will be greater than
the amount that will be required to pay the probable liability of its debts and
other liabilities, subordinated, contingent or otherwise, as such debts and other
liabilities become absolute and matured; (iii) each Loan Party will be able to pay
its debts and liabilities, subordinated, contingent or otherwise, as such debts and
liabilities become absolute and matured; and (iv) no Loan Party will have
unreasonably small capital with which to conduct the business in which it is engaged
as such business is now conducted and is proposed to be conducted following the date
hereof.

     (e) Senior Indebtedness. The Loan to be made hereunder constitutes
“Senior Indebtedness” under and as defined in the Subordinated Debt Documents.

     (f) Incorporation of Representations and Warranties. The
representations and warranties contained in Article III of the Credit Agreement
(considered as if already amended by this Amendment) are true, correct and complete
in all material respects on the date hereof, except to the extent such
representations and warranties specifically relate to an earlier date, in which case
they were true, correct and complete in all material respects on and as of such
earlier date.

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     (g) Absence of Default. As of the date hereof and immediately after
giving effect to the transactions to occur on the date hereof, no Default shall have
occurred and be continuing.

     Section 6. Acknowledgement And Consent.

     (a) Each Subsidiary Loan Party is a party to the Subsidiary Guarantee
Agreement pursuant to which each such Subsidiary Loan Party has, among other things,
guaranteed the Obligations (as defined in the Subsidiary Guarantee Agreement). Each
Loan Party is a party to the Indemnity, Subrogation and Contribution Agreement
pursuant to which each such Loan Party has, among other things, subordinated certain
claims to the indefeasible payment in full in cash of all Obligations (as defined in
the Subsidiary Guarantee Agreement).

     (b) Each Loan Party hereby acknowledges that it has reviewed the terms and
provisions of the Credit Agreement and this Amendment and consents to the amendments
of the Credit Agreement effected pursuant to this Amendment. Each Subsidiary Loan
Party hereby confirms that the Subsidiary Guarantee Agreement will continue to
guarantee to the fullest extent provided in the Subsidiary Guarantee Agreement the
payment and performance of all Obligations (as defined in the Subsidiary Guarantee
Agreement) including the payment and performance of all such Obligations (as defined
in the Subsidiary Guarantee Agreement) now or hereafter existing under or in respect
of the Amended Agreement. Each Loan Party hereby confirms that the Indemnity,
Subrogation and Contribution Agreement will continue to subordinate to the fullest
extent provided in the Indemnity, Subrogation and Contribution Agreement the claims
specified therein to the indefeasible payment in full in cash of all Obligations (as
defined in the Subsidiary Guarantee Agreement) including the payment and performance
of all such Obligations (as defined in the Subsidiary Guarantee Agreement) now or
hereafter existing under or in respect of the Amended Agreement.

     (c) Each Loan Party acknowledges and agrees that each of the Subsidiary
Guarantee Agreement and the Indemnity, Subrogation and Contribution Agreement to
which it is a party or otherwise bound shall continue in full force and effect and
that all of its obligations thereunder shall be valid and enforceable and shall not
be impaired or limited by the execution or effectiveness of this Amendment. Each
Subsidiary Loan Party represents and warrants that all representations and
warranties contained in the Subsidiary Guarantee Agreement (after giving effect to
the transactions to occur on the date hereof) to which it is a party or otherwise
bound are true, correct and complete in all material respects on and as of the date
hereof to the same extent as though made on and as of such date, except to the
extent such representations and warranties specifically relate to an earlier date,
in which case they were true, correct and complete in all material respects on and
as of such earlier date.

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     (d) Each Loan Party acknowledges and agrees that (i) notwithstanding the
conditions to effectiveness set forth in this Amendment, such Loan Party (excluding
the Borrower) is not required by the terms of the Credit Agreement or any other Loan
Document to consent to the amendments to the Credit Agreement effected pursuant to
Section 2 of this Amendment and (ii) nothing in the Credit Agreement, this Amendment
or any other Loan Document shall be deemed to require the consent of such Loan Party
(excluding the Borrower) to any future amendments to the Credit Agreement, as
amended by this Amendment.

     Section 7. Miscellaneous

     (a) Effect on the Credit Agreement and the Other Loan Documents.

        (i) Except as specifically amended by this Amendment, the Credit
Agreement and the other Loan Documents shall remain in full force and effect
and are hereby ratified and confirmed.

        (ii) The execution, delivery and performance of this Amendment shall
not, except as expressly provided herein, constitute a waiver of any
provision of, or operate as a waiver of any right, power or remedy of any
Lender under, the Credit Agreement or any of the other Loan Documents.

     (b) Fees and Expenses. The Borrower acknowledges that all costs, fees and
expenses as described in Section 8.03 of the Credit Agreement incurred by the Lenders and
their respective counsel with respect to this Amendment and the documents and transactions
contemplated hereby shall be for the account of the Borrower.

     (c) GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAW OF THE STATE OF NEW YORK.

     (d) Other Provisions. The provisions of Sections 8.06, 8.07, 8.09(b) and (c),
8.10 and 8.11 of the Credit Agreement shall apply to this Amendment mutatis mutandis.

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     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the date first appearing above.

	 	 	 	 	 
	 	KNOWLES ELECTRONICS HOLDINGS, INC.,

 	 
	 	By  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	 	KNOWLES INTERMEDIATE HOLDING, INC.,

(for purposes of Sections 6, 7(c) and 7(d) only)

 	 
	 	By  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	 	KNOWLES ELECTRONICS SALES CORP.,

(for purposes of Sections 6, 7(c) and 7(d) only)

 	 
	 	By  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	 	KNOWLES MANUFACTURING LTD.,

(for purposes of Sections 6, 7(c) and 7(d) only)

 	 
	 	By  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	 	KNOWLES ELECTRONICS, LLC,

(for purposes of Sections 6, 7(c) and 7(d) only)

 	 
	 	By  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

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	 	XERION PARTNERS II MASTER FUND LIMITED

 	 
	 	By  	 	 
	 	 	Name:  	 	 
	 	 	 	 
	 

	 	 	 	 	 
	 	JEFFERIES & COMPANY, INC.

 	 
	 	By  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

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Annex A

Schedule 2.01

Initial Loan Commitments

	 	 	 	 	 
	LENDER	 	INITIAL COMMITMENT	 
	 
	XERION PARTNERS II MASTER FUND LIMITED
	 	$	10,000,000.00	 
	 
	JEFFERIES & COMPANY, INC.	 	 	10,000,000.00	 
	520 Madison Avenue

New York, NY 10022	 	 	 	 
	 
	Attention: Josh Targoff
	 	 	 	 
	 
	 	 	 
	 
	TOTAL
	 	$	20,000,000.00	 

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Exhibit 10.8

BAYLAKE BANK

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

PLAN DOCUMENT

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	ARTICLE
	 	DESCRIPTION	 	 	 	 
	ARTICLE 1
	 	NAME AND PURPOSE	 	 	1-1	 
	ARTICLE 2
	 	DEFINITIONS	 	 	2-1	 
	ARTICLE 3
	 	ELIGIBILITY AND PARTICIPATION	 	 	3-1	 
	ARTICLE 4
	 	SERP CONTRIBUTION AND ACCOUNT	 	 	4-1	 
	ARTICLE 5
	 	DEFERRAL ACCOUNT	 	 	5-1	 
	ARTICLE 6
	 	VESTING	 	 	6-1	 
	ARTICLE 7
	 	FORMS OF BENEFIT PAYMENTS	 	 	7-1	 
	ARTICLE 8
	 	BENEFIT PAYMENT EVENTS	 	 	8-1	 
	ARTICLE 9
	 	BENEFICIARIES	 	 	9-1	 
	ARTICLE 10
	 	RIGHTS OF PARTICIPANTS AND BENEFICIARIES	 	 	10-1	 
	ARTICLE 11
	 	TRUST	 	 	11-1	 
	ARTICLE 12
	 	CLAIMS PROCEDURE	 	 	12-1	 
	ARTICLE 13
	 	ADMINISTRATION	 	 	13-1	 
	ARTICLE 14
	 	AMENDMENT AND TERMINATION	 	 	14-1	 
	ARTICLE 15
	 	MISCELLANEOUS	 	 	15-1	 

 

 

BAYLAKE BANK

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

          The Baylake Bank Supplemental Executive Retirement Plan (“the Plan”) is hereby adopted by
Baylake Bank, a corporation organized and existing under and by virtue of the laws of the State of
Wisconsin (the “Bank”);

W I T N E S S E T H:

          WHEREAS, the Bank, in order to reward a select group of management and/or highly compensated
employees (hereinafter referred to as “Executive(s)”), desires to provide Executives with
additional retirement benefits through a Supplemental Executive Retirement Plan (the “SERP”).

          NOW, THEREFORE, the Bank hereby adopts the Plan, effective March 1, 2005, as follows:

 

 

ARTICLE 1

NAME AND
PURPOSE

	1.1.  	Name. The name of the Plan shall be the Baylake Bank Supplemental Executive Retirement Plan.
	 
	1.2.  	Purpose. The purpose of the Plan is to reward certain management and highly compensated
employees of the Bank who have contributed to the Bank’s success and are expected to continue
to contribute to such success in the future.
	 
	1.3.  	Plan for a Select Group. The Plan shall only cover Executives of the Bank (chosen at the
Bank’s discretion), who are members of a “select group of management or highly compensated
employees” within the meaning of ERISA Sections 201(2), 301(a)(3) and 401(a)(1). The Bank
shall have the authority to take any and all actions necessary or desirable in order for the
Plan to satisfy the requirements set forth in ERISA and the regulations thereunder applicable
to plans maintained for Executives who are members of a select group of management or highly
compensated employees.
	 
	1.4.  	Not a Funded Plan. It is the intention and purpose of the Bank that the Plan shall be deemed
to be “unfunded” for tax purposes and deemed a plan as would properly be described as
“unfunded” for purposes of Title I of ERISA. The Plan shall be administered in such a manner,
notwithstanding any contrary provision of the Plan, in order that it will be so deemed and
would be so described.

1-1

 

ARTICLE 2

DEFINITIONS

          Unless the context otherwise indicates, the following words used herein shall have the
following meanings wherever used in this instrument:

	2.1.  	Administrator. The word “Administrator” shall mean such person or entity as determined by
the Bank, and in absence of such determination, the Bank.
	 
	2.2.  	Appeals Committee. The words “Appeals Committee” shall mean the Executive Committee of the
Board established pursuant to Article 12 herein.
	 
	2.3.  	Bank. The word “Bank” shall mean Baylake Bank and any successor corporation or business
organization which shall assume the duties and obligations of Baylake Bank, under the Plan.
	 
	2.4.  	Beneficiary. The word “Beneficiary” shall mean any person who receives, or is designated to
receive, payment of any benefit under the terms of the Plan because of the participation of a
Participant in the Plan.
	 
	2.5.  	Benefit Commencement Date. The words “Benefit Commencement Date” shall mean the first date
as of which benefits are to be paid pursuant to the terms of the Plan.
	 
	2.6.  	Benefit Payment. The words “Benefit Payment” shall mean payment of the benefit as set forth
in Article 7 and Article 8, as applicable.
	 
	2.7.  	Board. The word “Board” shall mean the board of directors of the Bank.
	 
	2.8.  	Bonus. The word “Bonus” shall mean compensation for services performed for the Bank over a
period of at least 12 months where the payment or amount of the compensation is contingent on
the satisfaction of organizational or individual performance criteria that are not
substantially certain to be met when the deferral election with respect to the Bonus is
submitted.
	 
	2.9.  	Change in Control. The “Change in Control” shall mean either a “Change in Ownership,”
“Change in Effective Control” or a “Change of Ownership of a Substantial Portion of Assets,”
as defined below:

Change in Ownership

	   	A change in the ownership of the Bank occurs on the date that any one person, or more than
one Person Acting as a Group (as defined below), acquires ownership of stock of the Bank
that, together with stock held by such person or Group, constitutes more than 50% of the
total fair market value or total voting power of the stock of the Bank . However, if any
one person or more than one Person Acting as a Group, is considered to own more than 50% of
the total fair market value or total voting power of the stock of the Bank, the acquisition
of additional stock by the same person or persons is not considered to cause a change in the
ownership of the Bank (or to cause a change in the effective control of the

2-1

 

Bank). An increase in the percentage of stock owned by any one person, or Persons Acting as
a Group, as a result of a transaction in which the Bank acquires its stock in exchange for
property will be treated as an acquisition of stock. This applies only when there is a
transfer of stock of the Bank (or issuance of stock of the Bank) and stock in the Bank
remains outstanding after the transaction.

Persons Acting as a Group: Persons will not be considered to be acting as a group solely
because they purchase or own stock of the same corporation at the same time, or as a result
of the same public offering. However, persons will be considered to be acting as a group if
they are owners of a corporation that enters into a merger, consolidation, purchase or
acquisition of stock, or similar business transaction with the Bank. If a person, including
an entity, owns stock in both corporations that enter into a merger, consolidation, purchase
or acquisition of stock, or similar transaction, such shareholder is considered to be acting
as a group with other shareholders in a corporation prior to the transaction giving rise to
the change and not with respect to the ownership interest in the other corporation.

Change in Effective Control

A change in the effective control of a corporation occurs on the date that either -

(i) Any one person, or more than one Person Acting as a Group, acquires (or has acquired
during the 12-month period ending on the date of the most recent acquisition by such person
or persons) ownership of stock of the Bank possessing 35% or more of the total voting power
of the stock of the Bank; or

(ii) a majority of members of the Board is replaced during any 12-month period by directors
whose appointment or election is not endorsed by a majority of the members of the Board
prior to the date of the appointment or election,

In the absence of an event described in paragraph (i) or (ii), a change in the effective
control of a corporation will not have occurred.

Acquisition of additional control: If any one person, or more than one Person Acting as a
Group, is considered to effectively control the Bank, the acquisition of additional control
of the Bank by the same person or persons is not considered to cause a change in the
effective control of the Bank (or to cause a change in the ownership of the Bank.

Change of Ownership of a Substantial Portion of Assets

A change in the ownership of a substantial portion of the Bank’s assets occurs on the date
that any one person, or more than one Person Acting as a Group, acquires (or has acquired
during the 12-month period ending on the date of the most recent acquisition by such person
or persons) assets from the Bank that have a total gross fair market value equal to or more
than 40% of the total gross fair market value of all of the assets of the Bank immediately
prior to such acquisition or acquisitions. For this purpose, gross fair market value means
the value of the assets of the Bank, or the value of the assets being

2-2

 

disposed of, determined without regard to any liabilities associated with such assets.

Transfers to a related person: There is no Change in Control when there is a transfer to an
entity that is controlled by the shareholders of the Bank immediately after the transfer. A
transfer of assets by the Bank is not treated as a change in the ownership of such assets if
the assets are transferred to -

(i) A shareholder of the Bank (immediately before the asset transfer) in exchange for or
with respect to its stock;

(ii) An entity, 50% or more of the total value or voting power of which is owned, directly
or indirectly, by the Bank;

(iii) A person, or more than one Person Acting as a Group, that owns, directly or
indirectly, 50% or more of the total value or voting power of all the outstanding stock of
the Bank; or

(iv) An entity, at least 50% of the total value or voting power of which is owned, directly
or indirectly, by a person described in paragraph (iii).

A person’s status is determined immediately after the transfer of the assets. For example, a
transfer to a corporation in which the Bank has no ownership interest before the
transaction, but which is a majority-owned subsidiary of the Bank after the transaction is
not treated as a change in the ownership of the assets of the Bank.

	2.10.  	Code. The word “Code” shall mean the Internal Revenue Code of 1986 and any regulations or
other pronouncements promulgated thereunder. Whenever a reference is made herein to a
specific Code section, such reference shall be deemed to include any successor Code section
having the same or a similar purpose.
	 
	2.11.  	Deferral Account. The words “Deferral Account” shall mean a bookkeeping account maintained
by the Administrator on behalf of each Participant.
	 
	2.12.  	Disability The word “Disability” shall have the following meaning: A Participant shall be
considered disabled if the Participant:

	 	(a)  	Is unable to engage in any substantial gainful activity by reason of any
medically determinable physical of mental impairment which can be expected to result in
death or can be expected to last for a continuous period of not less than 12 months, or
	 
	 	(b)  	Is, by reason of any medically determinable physical or mental impairment which
can be expected to result in death or can be expected to last for a continuous period
of not less than 12 months, receiving income replacement benefits for a period of not
less than three months under a long-term disability plan covering employees of the Bank
or under the disability insurance provisions of the Social Security Act.

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	2.13.  	Effective Date. The words “Effective Date” shall mean the date the Plan becomes effective,
which is March 1, 2005.
	 
	2.14.  	ERISA. The acronym “ERISA” shall mean the Employee Retirement Income Security Act of 1974,
as amended, and any regulations or other pronouncements promulgated thereunder. Whenever a
reference is made herein to a specific ERISA section, such reference shall be deemed to
include any successor ERISA section having the same or a similar purpose.
	 
	2.15.  	Executive. The word “Executive” shall mean any common-law employee of the Bank, whether or
not a Board member, but excluding any person serving only in the capacity of Board member.
	 
	2.16.  	Executive Committee. The words “Executive Committee” shall mean the Executive Committee of
the Board or any successor thereto.
	 
	2.17.  	Measurement Funds. The words “Measurement Funds” shall mean hypothetical investments the
Participant may elect to value his or her SERP Account or Deferral Account balances.
	 
	2.18.  	Participant. The word “Participant” shall mean any eligible Executive who is designated by
the Executive Committee as eligible to participate in the SERP.
	 
	2.19.  	Participant Access System. The words “Participant Access System” shall mean the online
administration system that provides Participants with continual access to Account balances and
important Plan information, as well as the ability to reallocate Measurement Funds.
	 
	2.20.  	Plan. The word “Plan” shall mean the Baylake Bank Supplemental Executive Retirement Plan as
set forth herein, effective as of the Effective Date, and as it may be later amended.
	 
	2.21.  	Plan Year. The words “Plan Year” shall mean the 12-month period ending on December 31 in
each calendar year.
	 
	2.22.  	SERP Account. The words “SERP Account” shall mean a bookkeeping account maintained by the
Administrator on behalf of each Participant.
	 
	2.23.  	SERP Contribution. The words “SERP Contribution” shall mean for each Participant an amount
determined by the Bank and credited to the Participant’s SERP Account.
	 
	2.24.  	Termination of Employment. The words “Termination of Employment” shall mean for any
Participant the occurrence of any one of the following events:

	 	(a)  	The Participant is discharged by the Bank unless the Participant is
subsequently reemployed and given pay back to date of discharge, or
	 
	 	(b)  	The Participant voluntarily terminates employment with the Bank.

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	2.25.  	Unforeseeable Emergency. The term “Unforeseeable Emergency” means a severe financial
hardship to the Participant resulting from an illness or accident of the Participant, the
Participant’s spouse, or a dependent of the Participant, loss of the Participant’s property
due to casualty, or other similar extraordinary and unforeseeable circumstances arising as a
result of events beyond the control of the Participant. An unforeseeable emergency is met
only if the amounts paid with respect to an emergency do not exceed the amounts necessary to
satisfy such emergency plus amounts necessary to pay taxes reasonably anticipated as a result
of the payment, after taking into account the extent to which such hardship is or may be
relieved through reimbursement or compensation by insurance or otherwise or by liquidation of
the Participant’s assets (to the extent the liquidation of such assets would not itself cause
severe financial hardship).
	 
	2.26.  	Year of Service. The words “Year of Service” shall mean each fiscal year commencing from
the date of hire of the Executive by the Bank.

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ARTICLE 3

ELIGIBILITY AND PARTICIPATION

	3.1.  	Eligibility. The Executive Committee may, from time to time, in its discretion, designate
one or more Executives as eligible to participate in the Plan. An Executive shall only be
considered eligible for participation (or to continue to participate) if he or she is part of
a “select group of management and highly compensated employees” within the meaning of ERISA
Sections 201(2), 301(a)(3) and 401(a)(1).
	 
	3.2.  	Participation. Each Executive who has been designated as eligible to participate in the Plan
shall become a Participant on or as of the date of designation as an Executive eligible to
participate in the Plan. The Executive shall remain a Participant until the earlier of (a)
the date of his or her Termination of Employment, or (b) the cessation of eligible status
pursuant to Article 3.3.
	 
	3.3.  	Cessation of Participation Initiated by the Executive Committee. In the event that the
Executive Committee determines, in its sole discretion, that a Participant is not, or may not
be, a member of a “select group of management or highly compensated employees” as defined
above, then the Executive Committee may, in its sole discretion, terminate such Participant’s
participation in the Plan. In the event of such termination of participation:

	 	(a)  	Such Participant shall no longer have additional amounts credited to his or her
SERP and Deferral Accounts;
	 
	 	(b)  	The Executive Committee shall direct that such actions be taken which most
closely adhere to the terms of the Plan while not putting at risk its status as a plan
maintained for a “select group of management or highly compensated employees;” and
	 
	 	(c)  	With respect to a Participant whose Plan participation is terminated on or
after January 1, 2006, no payments shall be made to the Participant other than pursuant
to Article 7 and Article 8.

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ARTICLE 4

SERP CONTRIBUTION AND ACCOUNT

	4.1.  	SERP Contribution. The Bank in its discretion shall make an annual SERP Contribution to each
Participant’s SERP Account.
	 
	4.2.  	Establishment of SERP Account. The Administrator or designated representative shall
establish a SERP Account in the name of each Participant on its books and records. All
amounts credited to the SERP Account of any Participant, or Beneficiary shall constitute a
general, unsecured liability of the Bank, as applicable, to such person.
	 
	4.3.  	Crediting of SERP Contributions. SERP Contributions shall be credited to the Participant’s
SERP Account as of March 1 of the Plan Year.
	 
	4.4.  	Adjustment of SERP Account. The SERP Account shall be adjusted for earnings, gains and
losses as if such SERP Account held actual assets and such assets were invested in Measurement
Funds in accordance with Article 4.5. The value of each Participant’s SERP Account shall be
determinable on a daily basis as follows, using the terms and methods in the order defined
below:

	 	(a)  	Beginning Balance. The balance at the beginning of the day. This equals the
Ending Balance (as described below) as of the end of the most recent business day,
which for purposes of this Plan shall mean those days on which the New York Stock
Exchange was open for trading.
	 
	 	(b)  	Sub-Ending Balance. The Beginning Balance, plus SERP Contribution credits,
less any Benefit Payments and forfeitures (as provided in Article 8.6), which are made
on or occur as of such date.
	 
	 	(c)  	Investment Earnings. Investment earnings, gains and losses determined pursuant
to this Article will be credited to each Participant’s SERP Account as of each business
day.
	 
	 	(d)  	Ending Balance. The Sub-Ending Balance plus Investment Earnings.

	4.5.  	Measurement Funds. The Bank shall designate Measurement Funds for the valuation of each
Participant’s SERP Account as if such SERP Account held actual assets. The Measurement Funds
may include but shall not be limited to the following types of funds as determined by the
Bank:

	 	(a)  	mutual funds, including without limitation, equity funds, money market funds,
fixed income funds and balanced funds,
	 
	 	(b)  	any insurance company’s general account, or
	 
	 	(c)  	any special account established and maintained by any insurance company.

4-1

 

	   	The Bank shall have the sole discretion to determine the number of Measurement Funds to be
designated hereunder and the nature of the funds and may change or eliminate the Measurement
Funds designated hereunder from time to time.

	   	Participants shall direct the allocation of his or her SERP Account among the Measurement
Funds designated by the Bank as though such SERP Account held actual assets. Any such
directions of investment shall be subject to such rules as the Bank and Administrator may
prescribe, including, but not limited to, rules concerning the manner of providing
investment directions and the frequency of changing such investment directions. In the
event a Participant does not direct the investment of any portion of a Participant’s SERP
Account, such undirected portion shall be deemed to be invested in the money market fund.

4-2

 

ARTICLE 5

DEFERRAL ACCOUNT

	5.1.  	Deferral Elections. A Participant in the Plan has the right to make certain elections with
respect to the deferral of salary and/or Bonus. If a Participant makes a deferral election
under the Plan for a Plan Year, then a portion of the salary and/or Bonus which would normally
be paid to the Participant by the Bank shall be retained by the Bank, as applicable, and, in
lieu thereof, an amount equal thereto, shall constitute a deferral amount hereunder and shall
be credited to the Participant’s Deferral Account pursuant to Article 5.7.
	 
	5.2.  	Salary Deferral. With respect to each Plan Year, a Participant may elect to defer all or a
portion of salary by making a deferral election via the Participant Access System or in
writing, as required by the Administrator. A Participant’s deferral election shall specify a
stated percentage or dollar amount of the Participant’s salary, which specified percentage or
dollar amount shall not exceed 100% of the Participant’s salary, less amounts necessary to
satisfy employee tax obligations or elections made as part of the Bank’s other benefit plans.
The amount so elected under the deferral election shall be credited to the Participant’s
Deferral Account under the Plan. Except as provided in Article 5.4, no salary deferral
election shall be effective with respect to salary earned before the first day of the Plan
Year commencing after the applicable deferral election is provided to the Administrator in a
form acceptable to the Administrator.
	 
	5.3.  	Bonus Deferral. A Participant may elect to defer all or a portion of his or her potential
Bonus award for any 12-month award period by making a deferral election via the Participant
Access System or in writing, as required by the Administrator, at least six months prior to
the end of such period. A Participant’s deferral election shall specify a stated percentage
or dollar amount of the Participant’s Bonus, which specified percentage or dollar amount shall
not exceed 100% of the Participant’s Bonus, less amounts necessary to satisfy employee tax
obligations or elections made as part of the Bank’s other benefit plans. The amount so
elected under the deferral election shall be credited to the Participant’s Deferral Account
under the Plan.
	 
	5.4.  	General Deferral Election Rules. A Participant’s deferral election shall be irrevocable for
the entire Plan Year for which it is made. All deferral elections under the Plan, and all
resulting deferrals, shall be subject to the rules as set forth in Code Section 409A. In the
Plan Year in which the Participant is first eligible to make a deferral election or in which
the Plan first becomes effective, a deferral election may be made within 30 days after the
Participant is first eligible or the Plan’s effective date, as applicable, which election
shall apply to salary or Bonus for services rendered after the date of election.
Notwithstanding the foregoing, a Participant may elect to defer all or a portion of his or her
potential Bonus award for any award period by submitting a deferral election at least six
months prior to the end of such period. Subsequent deferral elections shall be made as
provided in Articles 5.2 and 5.3. The Administrator may establish other procedures, limits
and restrictions from time to time. The minimum annual deferral amount shall be $5,000.

5-1

 

	5.5.  	Establishment of Deferral Accounts. The Administrator or designated representative shall
establish one or more Deferral Accounts in the name of each Participant on its books and
records. All amounts credited to the Deferral Account of any Participant, or Beneficiary
shall constitute a general, unsecured liability of the Bank, as applicable, to such person.
	 
	5.6.  	Crediting of Deferral Amounts. Amounts shall be credited to the Participant’s Deferral
Account as of the date the salary or Bonus would have otherwise been paid to the Participant,
absent the deferral election.
	 
	5.7.  	Adjustment of Deferral Account. The Deferral Account shall be adjusted for earnings, gains
and losses as if such Deferral Account held actual assets and such assets were invested in
Measurement Funds in accordance with Article 5.8. The value of each Participant’s Deferral
Account shall be determinable on a daily basis as follows, using the terms and methods in the
order defined below:

	 	(a)  	Beginning Balance. The balance at the beginning of the day. This equals the
Ending Balance (as described below) as of the end of the most recent business day.
	 
	 	(b)  	Sub-Ending Balance. The Beginning Balance, plus deferral amounts, less any
Benefit Payments and forfeitures (as provided in Article 8.6), which are made on or
occur as of such date.
	 
	 	(c)  	Investment Earnings. Investment earnings, gains and losses determined pursuant
to this Article will be credited to each Participant’s Deferral Account as of each
business day.
	 
	 	(d)  	Ending Balance. The Sub-Ending Balance plus Investment Earnings.

	5.8.  	Measurement Funds. The Bank shall designate Measurement Funds for the valuation of each
Participant’s Deferral Account as if such Deferral Account held actual assets. The Measurement
Funds may include but shall not be limited to the following types of funds as determined by
the Bank:

	 	(a)  	mutual funds, including without limitation, equity funds, money market funds,
fixed income funds and balanced funds,
	 
	 	(b)  	any insurance company’s general account, or
	 
	 	(c)  	any special account established and maintained by any insurance company.

	   	The Bank shall have the sole discretion to determine the number of Measurement Funds to be
designated hereunder and the nature of the funds and may change or eliminate the Measurement
Funds designated hereunder from time to time.

	5.9.  	Participants shall direct the allocation of their Deferral Account among the Measurement
Funds designated by the Bank as though such Deferral Account held
actual assets. Any such directions of investment shall be subject to such rules as the Bank and Administrator
may prescribe, including, but not limited to, rules concerning the manner of providing
investment directions and the frequency of changing such investment directions. In the
event a Participant does not direct the investment of any portion of a Participant’s
Deferral Account, such undirected portion shall be deemed to be invested in the money market
Measurement Fund.

5-2

 

5-3

 

ARTICLE 6

VESTING

	6.1.  	Vesting of SERP Account. A Participant becomes 100% vested in his or her SERP Account upon
the completion of 10 Years of Service and attaining age 55.
	 
	6.2.  	Vesting of Deferral Account. A Participant will always be 100% vested in his or her Deferral
Account.
	 
	6.3.  	Vesting Upon Certain Events for SERP Account. A Participant shall be considered vested in
his or her SERP Account upon the occurrence of certain events including, but not limited to,
the following:

	 	(a)  	the Participant’s death;
	 
	 	(b)  	the Participant’s Termination of Employment due to Disability; or
	 
	 	(c)  	the date of a Change in Control.

6-1

 

ARTICLE 7

FORMS OF BENEFIT PAYMENTS

	7.1.  	Normal Form. Unless elected to the contrary, a Participant’s Deferral and SERP Accounts, to
the extent vested under Article 6, shall be paid pursuant to Form 1 as described in Article
7.3.
	 
	7.2.  	Election of Benefit Payment Forms. Subject to certain restrictions described herein, in lieu
of receiving Benefit Payments in accordance with Form 1, a Participant may elect in his or her
initial deferral election to receive Benefit Payments pursuant to Form 2 as described in
Article 7.3. Such election shall be in a form provided by the Administrator, shall indicate
the number of annual installments (not to exceed 30), and shall be signed by the Participant.
	 
	7.3.  	Forms. The forms of Benefit Payments are as follows:

	 	(a)  	Form 1. Lump Sum Payment. The Participant shall receive a single sum payment
on the Benefit Commencement Date.
	 
	 	(b)  	Form 2. Installments. The Participant shall receive payments commencing on
the Benefit Commencement Date of up to 30 annual installments, as elected by the
Participant pursuant to Article 7.2.

	7.4.  	Terms and Conditions of Forms. The forms of Benefit Payments described in Article 7.3 shall
be subject to the following conditions:

	 	(a)  	Benefit Payments under Form 2 shall be paid annually during the first month of
the Plan Year;
	 
	 	(b)  	If Benefit Payments under Form 2 have commenced and the Participant dies before
his or her SERP Account (if vested) and Deferral Account have been paid in full, and
the Participant’s surviving spouse is the named Beneficiary, then any remaining Benefit
Payments shall be paid to the surviving spouse as a continuation under Form 2 as
elected by the Participant; if Benefit Payments have not commenced, or if Benefit
Payments under Form 2 have commenced but the Participant’s surviving spouse is not the
named Beneficiary, the SERP Account (if vested) and Deferral Account balances shall be
paid to the named Beneficiary under Form 1 within 60 days following the date of the
Participant’s death;
	 
	 	(c)  	If any Participant is receiving Benefit Payments under Form 2 and the
Participant’s Beneficiary dies after the Benefit Commencement Date, but prior to the
death of the Participant, such Participant shall be entitled to designate a new
Beneficiary;
	 
	 	(d)  	For purposes of Benefit Payments under Form 2, such Benefit Payments shall be
calculated on the basis of the values of the Participant’s SERP Account (if vested) and
Deferral Account determined as of the December 31st preceding the payment
date, except that the final Benefit Payment shall use the current value; and

7-1

 

	 	(e)  	If at any time the remaining SERP Account (if vested) or Deferral Account
balance is less than $10,000, then such remaining balance shall be paid in one lump sum
as soon as administratively feasible.

	7.5.  	Modification of Elected Forms. A Participant may change from Form 1 to Form 2, or may change
the period of installment payments elected under Form 2, by written notice filed with the
Administrator. Any such modified election must adhere to the following requirements:

	 	(a)  	Such election may not shorten or otherwise accelerate the period of installment
payments initially elected under Form 2;
	 
	 	(b)  	Such election may not take effect until at least 12 months after the date on
which the election is made;
	 
	 	(c)  	The first Benefit Payment with respect to such election must be deferred for a
period of not less than five years from the date such Benefit Payment would otherwise
have been made; and
	 
	 	(d)  	Such election is not made less than 12 months prior to the date of the first
scheduled or actual Benefit Payment.

	7.6.  	Correction of Amounts Payable. Anything contained in this Article 7 to the contrary
notwithstanding, if, after a Participant’s Termination of Employment, the SERP or Deferral
Account balance which would have been payable under the Plan is subject to any deduction,
change, offset or correction, then the amount payable to such Participant or Beneficiary shall
be adjusted to reflect any such deduction, change, offset or correction.
	 
	7.7.  	Timing of Payments. Payments under the Plan shall be made as of the time specified elsewhere
in the Plan. Notwithstanding the foregoing provisions of this Article 7 and such other
provisions to the contrary, the requirement that a Benefit Payment commence on or before a
particular date shall not apply if the Administrator is unable to locate the Participant or
the Beneficiary after making reasonable efforts to do so, provided that, within 60 days after
the Participant or the Beneficiary is located, a Benefit Payment is made retroactive to such
date.

7-2

 

ARTICLE 8

BENEFIT PAYMENT EVENTS

	8.1.  	Termination of Employment. A Participant who has a Termination of Employment shall be paid
his or her SERP (if vested) and Deferral Accounts, in such form as provided under Article 7.
The Benefit Commencement Date for a Participant whose Termination of Employment occurs after
attaining age 65 shall be the date elected by the Participant in his or her initial deferral
election, not to exceed the January 1st immediately following the Participant’s
75th birthday. If such an election has not be made or the Participant’s
Termination of Employment occurs before attaining age 65, then the Benefit Commencement Date
shall be as soon as administratively feasible but not later than 60 days following the date of
such Termination of Employment.
	 
	8.2.  	Key Employees. Except for any payments pursuant to Articles 8.3, 8.4, 8.5, 8.7 or 8.8, the
Benefit Commencement Date of a Participant who is a “key employee” of the Bank as defined in
Code Section 416(i) (generally, an officer having annual compensation of more than $135,000,
as adjusted; a 5% owner; or a 1% owner having annual compensation of more than $150,000) shall
not be earlier than the date that is six months after the Participant’s Termination of
Employment.
	 
	8.3.  	Death. A Participant who dies prior to receipt of any unpaid SERP Account or Deferral
Account balance shall have the remaining balance paid to his or her Beneficiaries in
accordance with Article 7.4(b).
	 
	8.4.  	Disability. A Participant who suffers a Disability shall receive his or her Deferral and
SERP Accounts pursuant to Article 7.2, or if applicable, Article 7.3, which Benefit Payments
shall commence as of the first day of the month following Termination due to Disability.
	 
	8.5.  	Fixed Date. A Participant may elect in his or her initial deferred election to receive a
specified percentage of, or dollar amount from, his or her Deferral Account as of a specific
Benefit Commencement Date, which may be any date prior to Termination of Employment.
	 
	8.6.  	Forfeiture. Notwithstanding anything to the contrary in this Plan, a current or former
vested and unvested Participant’s SERP Account and/or Benefit Payments from his or her SERP
Account shall be forfeited if the Bank determines at any time that the current or former
Participant has (i) been convicted of, or entered a plea of nolo contendre to, a felony or
other crime involving moral turpitude; (ii) embezzled or misappropriated the Bank’s funds or
property; or (iii) breached any fiduciary duty owed to the Bank or engaged in any act of
self-dealing that is detrimental to the Bank.
	 
	8.7.  	Change in Control. Upon a Change in Control, the Bank shall make a payment to the
Participants in lieu of his or her other rights with respect to the SERP Account. The amount
of the Change in Control SERP Benefit Payment shall be the greater of:

	 	(a)  	The Participant’s SERP Account balance, or

8-1

 

	 	(b)  	The lump sum present value, at the time of Change in Control, of 20 annual
payments, beginning at age 65, of the Change in Control SERP benefit amount, discounted
at 6%. This Change in Control SERP benefit amount is equal to:

	 	(i)  	60% of the Participant’s base salary at the time of the Change
in Control, projected to age 65 at a 4.5% annual growth rate, less
	 
	 	(ii)  	the Bank’s portion of the projected age 65 annual Social
Security benefit, less
	 
	 	(iii)  	the annual payment provided by the Bank’s portion of the
Participant’s 401(k) plan value at the time of the Change in Control,
accumulated at 8% to age 65, and paid over 20 annual installments using a 6%
annual interest rate.

	 	The Change in Control Deferral Account benefit to be paid immediately will be the value of
the Deferral Account at the time of the payment.
	 
	 	Notwithstanding the foregoing, if the payment required to be made under this Article 8.7(b),
when considered alone and not aggregated with other payments to the Participant from the
Bank that would be deemed “excess parachute payments” under Code Section 280G(b)(1), is
deemed by the Bank to be a “parachute payment” under Code Section 280G(b)(2), then the
Change in Control SERP benefit amount shall be automatically reduced to an amount equal to
$1.00 less than three times the “base amount” (as defined in Code Section 280G(b)(3)) (the
“Reduced Amount”). Provided, however, the preceding sentence shall not
apply if the sum of (A) the amount of the Change in Control SERP benefit amount less (B) the
amount of excise tax payable by the Participant under Code Section 4999 with respect to such
Change in Control SERP benefit amount (not aggregated with any other payments to the
Participant from the Bank), is greater than the Reduced Amount. The decision of the Bank
(based upon the recommendations of its tax counsel and accountants) as to the
characterization of payments as parachute payments, the value of parachute payments, the
amount of excess parachute payments, and the payment of the Reduced Amount shall be final.

	8.8.  	Hardship Withdrawal. In the event that the Administrator, upon application of a Participant,
determines that the Participant has suffered an Unforeseeable Emergency, the Bank shall pay to
the Participant an amount, not in excess of the sum of the Participant’s vested Account
balances, necessary to satisfy the emergency. Such payment shall be made in Form 1 pursuant
to Article 7.3. To the extent of such withdrawal, the Participant’s Account balances shall be
canceled.
	 
	8.9.  	Change of Benefit Commencement Date. A Participant shall elect the Benefit Commencement Date
at the time the initial deferral election is submitted. A Participant may subsequently change
such election as long as:

	 	(a)  	Such election does not accelerate the time or schedule of any Benefit Payment;

8-2

 

	 	(b)  	Such election does not take effect until at least 12 months after the date on
which the election is made;
	 
	 	(c)  	The first Benefit Payment with respect to such election must be deferred for a
period of not less than five years from the date such Benefit Payment would otherwise
have been made; and
	 
	 	(d)  	Such election is not made less than 12 months prior to the date of the first
scheduled or actual Benefit Payment.

	   	Such election shall be in a form prescribed for this purpose by the Administrator and signed
by the Participant. Such election shall be deemed to be made when it shall have been
received by the Administrator or designated representative.

8-3

 

ARTICLE 9

BENEFICIARIES

	9.1.  	Automatic Beneficiary. Unless a Participant has designated a Beneficiary in accordance with
the provisions of Article 9.2, the Beneficiary shall be deemed to be the person or persons in
the first of the following classes in which there are any survivors of such Participant:

	 	(a)  	spouse at the time of Participant’s death,
	 
	 	(b)  	issue, per stirpes,
	 
	 	(c)  	parents, or
	 
	 	(d)  	executor or administrator of Participant’s estate.

	9.2.  	Designated Beneficiary or Beneficiaries. A Participant may designate the Beneficiary or
Beneficiaries to receive any benefit payable under Article 8.3, using a form provided by the
Administrator. In the event a Participant dies at a time when a designation is on file which
does not dispose of the total benefit payable under Article 8.3, then the portion of such
benefit payable on behalf of said Participant, the disposition of which was not determined by
the deceased’s designation, shall be paid to a Beneficiary determined under Article 9.1. Any
ambiguity in a Beneficiary designation shall be resolved by the Administrator.

9-1

 

ARTICLE 10

RIGHTS OF PARTICIPANTS AND BENEFICIARIES

	10.1.  	Creditor Status of Participant and Beneficiary. The Plan constitutes the unfunded, unsecured
promise of the Bank to make Benefit Payments to each Participant and Beneficiary in the future
and shall be a liability solely against the general assets of the Bank. The Bank shall not be
required to segregate, set aside or escrow any amounts for the benefit of any Participant or
Beneficiary. Each Participant and Beneficiary shall have the status of a general unsecured
creditor of the Bank and may look only to the Bank and their general assets for Benefit
Payments under the Plan.
	 
	10.2.  	Rights with Respect to a Trust. Any trust and any assets held thereby to assist the Bank in
meeting their obligations under the Plan shall in no way be deemed to controvert the
provisions of Article 10.1.
	 
	10.3.  	Investments. In its sole discretion, the Bank may acquire insurance policies, annuities or
other financial vehicles for the purpose of providing future assets of the Bank to meet their
anticipated liabilities under the Plan. Such policies, annuities or other investments shall
at all times be and remain unrestricted general property and assets of the Bank or property of
a trust. Participants and Beneficiaries shall have no rights, other than as general
creditors, with respect to such policies, annuities or other acquired assets.

10-1

 

ARTICLE 11

TRUST

	11.1.  	Establishment of Trust. Notwithstanding any other provision or interpretation of the Plan,
the Bank may establish a trust in which to hold cash, insurance policies or other assets to be
used to make, or reimburse the Bank, as applicable, for Benefit Payments to the Participants
or Beneficiaries. Any trust assets shall at all times remain subject to the claims of general
creditors of the Bank in the event of their insolvency as more fully described in the trust.
	 
	11.2.  	Obligations of the Bank. Notwithstanding the fact that a trust may be established under
Article 11.1, the Bank shall remain liable for paying the benefits under the Plan. However,
any payment of benefits to a Participant or a Beneficiary made by such a trust shall satisfy
the Bank’s obligation to make such payment to such person.
	 
	11.3.  	Trust Terms. A trust established under Article 11.1 may be revocable by the Bank provided;
however, that such a trust may become irrevocable in accordance with its terms in the event of
a Change in Control. Such a trust may contain such other terms and conditions as the Bank may
determine to be necessary or desirable. The Bank may terminate or amend a trust established
under Article 11.1 at any time, and in any manner it deems necessary or desirable, subject to
the preceding sentence and the terms of any agreement under which any such trust is
established or maintained.

11-1

 

ARTICLE 12

CLAIMS PROCEDURE

	12.1.  	Claim for Benefits. Any claim for benefits under the Plan shall be made in writing to the
Administrator in such a manner as the Administrator shall reasonably prescribe. The
Administrator shall process each such claim and determine entitlement to benefits within 30
days following the receipt of a completed application for benefits unless special
circumstances require an extension of time for processing the claim. If such an extension of
time for processing is required, written notice of the extension shall be furnished to the
claimant prior to the termination of the initial 30-day period. In no event shall such
extension exceed a period of 30 days from the end of such initial period. The extension
notice shall indicate the special circumstances requiring an extension of time and the date as
of which the Administrator expects to render the final decision.
	 
	12.2.  	Denial of a Claim. If such a claim is wholly or partially denied by the Administrator, the
Administrator shall notify the claimant of the denial of the claim in writing, delivered in
person or mailed by first class mail to the claimant’s last known address. Such notice of
denial shall contain:

	 	(a)  	the specific reason or reasons for denial of the claim,
	 
	 	(b)  	a reference to the relevant Plan provisions upon which the denial is based,
	 
	 	(c)  	a description of any additional material or information necessary for the
claimant to perfect the claim, together with an explanation of why such material or
information is necessary and
	 
	 	(d)  	an explanation of the Plan’s claim review procedure.

	 	If no such notice is provided, and if the claim has not been granted within the time
specified above for approval of the claim, the claim shall be deemed denied and subject to
review as described below. The interpretations, determinations and decisions of the
Administrator shall be final and binding upon all persons with respect to any right, benefit
and privilege hereunder, subject to the review procedures set forth in this Article 12.
	 
	12.3.  	Request for Review of a Denial of a Claim for Benefits. Any claimant or authorized
representative of the claimant whose claim for benefits under the Plan has been denied or
deemed denied, in whole or in part, by the Administrator may upon written notice delivered to
the Appeals Committee request a review by the Appeals Committee of such denial of
Participant’s claim for benefits. Such claimant shall have 60 days from the date the claim is
deemed denied, or 180 days from receipt of the notice denying the claim, as the case may be,
in which to request such a review. The claimant’s notice must specify the relief requested
and the reason such claimant believes the denial should be reversed.
	 
	12.4.  	Appeals Procedure. The Appeals Committee is hereby authorized to review the facts and
relevant documents, including the Plan document, to interpret the Plan and other relevant
documents and to render a decision on the appeal of the claimant. Such review

12-1

 

	   	may be made by
written briefs submitted by the claimant and the Administrator or at a hearing, or by both, as
shall be deemed necessary by the Appeals Committee. Upon receipt of a request for review, the
Appeals Committee shall schedule a hearing to be held (subject to reasonable scheduling
conflicts) not less than 30 nor more than 45 days from the receipt of such request. The date
and time of such hearing shall be designated by the Appeals Committee upon not less than 15
days notice to the claimant and the Administrator unless both accept shorter notice. The
notice shall specify that such claimant must indicate, in writing, at least five days in
advance of the time established for such hearing, claimant’s intention to appear at the
appointed time and place, or the hearing will automatically be canceled. The reply shall
specify any other persons who will accompany claimant to the hearing, or such other persons
will not be admitted to the hearing. The Appeals Committee shall make every effort to
schedule the hearing on a day and at a time which is convenient to both the claimant and the
Administrator. The hearing will be scheduled at the Bank’s headquarters unless the Appeals
Committee determines that another location would be more appropriate. The Bank shall provide
the claimant, upon request and free of charge, reasonable access to and copies of all
documents, records and other information relevant (as defined in applicable ERISA regulations)
to the claimant’s claim for benefits and claimant may submit issues and comments in writing
prior to or during the hearing.

	12.5.  	Decision upon Review of Denial of Claim for Benefits. After the review has been completed,
the Appeals Committee shall render a decision, in writing, a copy of which shall be sent to
both the claimant and the Administrator. In making its decision, the Appeals Committee shall
have full power, authority, and discretion to determine any and all questions of fact, resolve
all questions of interpretation of this instrument or related documents which may arise under
any of the provisions of the Plan or such documents as to which no other provision for
determination is made hereunder, and exercise all other powers and discretions necessary to be
exercised under the terms of the Plan which it is herein given or for which no contrary
provision is made and to determine the right to benefits of, and the amount of benefits, if
any, payable to, any person in accordance with the provisions of the Plan. The Appeals
Committee shall render a decision on the claim review promptly, but not more than 45 days
after the receipt of the claimant’s request for review, unless a hearing is held, in which
case the 45-day period shall be extended to 30 days after the date of the hearing. Such
decision shall include specific reasons for the decision, written in a manner calculated to be
understood by the claimant, shall contain specific references to the pertinent provisions of
the Plan and related documents upon which the decision is based, and shall state that the
claimant is entitled to receive, upon request and free of charge, reasonable access to and
copies of all documents, records and other information relevant (as defined in applicable
ERISA regulations) to the claimant’s claim for benefits. The decision on review shall be
furnished to the claimant within the appropriate time described above. If the decision on
review is not furnished within such time, the claim shall be deemed denied on review at the
end of such period. There shall be no further appeal from a decision rendered by the Appeals
Committee. The decision of the Appeals Committee shall be final and binding in all respects
on the Administrator, the Bank and the claimant. Except as otherwise provided by law, the
review procedures of this Article 12 shall be the claimant’s sole and exclusive remedy and
shall be in lieu of all actions at law, in equity, pursuant to arbitration or otherwise.

12-2

 

	12.6.  	Establishment of Appeals Committee. The Board shall appoint the members of an Appeals
Committee which shall consist of three or more members. The members of the Appeals Committee
shall remain in office at the will of the Board, and the Board, from time to time, may remove
any of said members of the Appeals Committee with or without cause. A member of the Appeals
Committee may resign upon written notice to the remaining member or members of the Appeals
Committee and to the Board, respectively. The fact that a person is a Participant shall not
disqualify them from acting as a member of the Appeals Committee, nor shall any member of the
Appeals Committee be disqualified from acting on any question because of Participant’s
interest therein, except that no member of the Appeals Committee may act on any claim which
such member has brought as a Participant or Beneficiary under the Plan. In the case of death,
resignation or removal of any member of the Appeals Committee, the remaining members shall act
until a successor-member shall be appointed by the Board. At the Administrator’s request, the
Senior Vice President of Human Resources of the Bank shall notify the Administrator in writing
of the names of the original members of the Appeals Committee, of any and all changes in the
membership of the Appeals Committee, of the member designated as Chairman, and the member
designated as Secretary, and of any changes in either office. Until notified of a change, the
Administrator shall be protected in assuming that there has been no change in the membership
of the Appeals Committee or the designation of Chairman or of Secretary since the last
notification was filed with it. The Administrator shall be under no obligation at any time to
inquire into the membership of the Appeals Committee or its officers. All communications to
the Appeals Committee shall be addressed to its Secretary at the address of the Bank. Unless
the Board shall appoint others as the Appeals Committee, the three Board members with the
longest period of active service on the Board shall constitute such Appeals Committee.
	 
	12.7.  	Operations of Appeals Committee. On all matters and questions, a decision of a majority of
the members of the Appeals Committee shall govern and control. Meetings may be held in person
or by electronic means. In lieu of a meeting, decisions may be made by unanimous written
consent. The Appeals Committee shall appoint one of its members to act as its Chairman and
another member to act as Secretary. The terms of office of these members shall be determined
by the Appeals Committee, and either or both the Secretary and Chairman may be removed by the
other members of the Appeals Committee for any reason which such other members may deem just
and proper. The Secretary shall do all things directed by the Appeals Committee. Although
the Appeals Committee shall act by decision of a majority of its members as above provided,
nevertheless in the absence of written notice to the contrary, every person may deal with the
Secretary and consider the Secretary’s acts as having been authorized by the Appeals
Committee. Any notice served or demand made on the Secretary shall be deemed to have been
served or made upon the Appeals Committee.

12-3

 

ARTICLE 13

ADMINISTRATION

	13.1.  	Appointment of Administrator. The Board shall appoint the Administrator which shall be any
person(s), corporation or partnership (including the Bank itself) as the Board shall deem
desirable in its sole discretion. The Administrator may be removed or resign upon 30 days
written notice or such lesser period of notice as is mutually agreeable. Unless the Board
appoints another Administrator, the Executive Committee shall be the Administrator.
	 
	13.2.  	Powers and Duties of the Administrator. Except as expressly otherwise set forth herein, the
Administrator shall have the authority and responsibility granted or imposed on an
“administrator” by ERISA. The Administrator shall determine any and all questions of fact,
resolve all questions of interpretation of the Plan which may arise under any of the
provisions of the Plan as to which no other provision for determination is made hereunder, and
exercise all other powers and discretions necessary to be exercised under the terms of the
Plan which it is herein given or for which no contrary provision is made. The Administrator
shall have full power and discretion to interpret the Plan and related documents, to resolve
ambiguities, inconsistencies and omissions, to determine any question of fact, and to
determine the rights and benefits, if any, of any Participant, or other applicant, in
accordance with the provisions of the Plan. Subject to the provisions of any claims procedure
hereunder, the Administrator’s decision with respect to any matter shall be final and binding
on all parties concerned, and neither the Administrator nor any of its directors, officers,
employees or delegates nor, where applicable, the directors, officers or employees of any
delegate, shall be liable in that regard except for gross abuse of the discretion given it and
them under the terms of the Plan. All determinations of the Administrator shall be made in a
uniform, consistent and nondiscriminatory manner with respect to all Participants and
Beneficiaries in similar circumstances. The Administrator, from time to time, may designate
one or more persons or agents to carry out any or all of its duties hereunder.
	 
	13.3.  	Engagement of Advisors. The Administrator may employ actuaries, attorneys, accountants,
brokers, employee benefit consultants, and other specialists to render advice concerning any
responsibility the Administrator, Appeals Committee or Executive Committee has under the Plan.
Such persons may also be advisors to the Bank.
	 
	13.4.  	Payment of Costs and Expenses. The costs and expenses incurred in the administration of the
Plan shall be paid in either of the following manners as determined by the Bank in its sole
discretion:

	 	(a)  	The expenses may be paid directly by the Bank; or
	 
	 	(b)  	The expenses may be paid out of the trust, if any (subject to any restriction
contained in such trust or required by law).

	 	Such costs and expenses include those incident to the performance of the responsibilities of
the Administrator, Appeals Committee or Executive Committee, including but not limited to,
claims, administration fees and costs, fees of accountants, legal counsel and other
specialists, bonding expenses, and other costs of administering the Plan. Notwithstanding
the foregoing, in no event will any person serving in the capacity of Administrator, Appeals
Committee member or Executive Committee member who is a full-time employee of the Bank be
entitled to any compensation for such services.

13-1

 

13-2

 

ARTICLE 14

AMENDMENT AND TERMINATION

	14.1.  	Power to Amend or Terminate. Except as otherwise provided herein following a Change in
Control, the Plan may be amended by the Bank at any time, and may be terminated by the Bank at
any time, but no such amendment, modification or termination shall reduce the amounts credited
to the SERP and Deferral Accounts of any Participant, determined as of the date of such
amendment, modification or termination. Such amendment or termination shall be in writing,
executed by two or more Board members whose actions are authorized or ratified by the Board.
The Plan may not be amended (but may be terminated) during the two-year period following a
Change in Control except that amendments may be made as required by law. Notwithstanding the
foregoing, the Bank may amend this Plan in any manner that it deems necessary to comply with
Code Section 409A or Department of the Treasury guidance published with respect thereto.
	 
	14.2.  	Effects of Plan Termination. If the Plan is terminated, then, on and after the effective
date of such termination, all deferrals and allocations hereunder shall cease.
Notwithstanding the Plan’s termination, each Participant’s SERP Account (if vested) and
Deferral Account balances shall be paid solely in accordance with Articles 7.1 through 7.4 and
Articles 8.1 through 8.7 and with the then current Benefit Payment election of each
Participant, as if the Plan had continued in effect.
	 
	14.3.  	No Liability for Plan Amendment or Termination. Neither the Bank, nor any officer, nor any
Board member thereof shall have any liability as a result of the amendment or termination of
the Plan. Without limiting the generality of the foregoing, the Bank shall have no liability
for terminating the Plan notwithstanding the fact that a Participant may have expected to have
future allocations made on Participant’s behalf hereunder had the Plan remained in effect.

14-1

 

ARTICLE 15

MISCELLANEOUS

	15.1.  	Non-Alienation. No benefits or amounts credited to any SERP or Deferral Account under the
Plan shall be subject in any manner to be anticipated, alienated, sold, transferred, assigned,
pledged, encumbered, attached, garnished or charged in any manner (either at law or in
equity), and any attempt to so anticipate, alienate, sell, transfer, assign, pledge, encumber,
attach, garnish or charge the same shall be void; nor shall any such benefits or amounts in
any manner be liable for or subject to the debts, contracts, liabilities, engagements or torts
of the person entitled to such benefits or amounts as are herein provided to Participant.
	 
	15.2.  	Tax Withholding. The Bank may withhold from a Participant’s compensation or any payment
made by it under the Plan such amount or amounts as may be required for purposes of complying
with the tax withholding or other provisions of the Code or the Social Security Act or any
state or local income or employment tax act or for purposes of paying any estate, inheritance
or other tax attributable to any amounts payable hereunder.
	 
	15.3.  	Incapacity. If the Administrator determines that any Participant or other person entitled
to payments under the Plan is incompetent by reason of physical or mental disability and is
consequently unable to give a valid receipt for payments made hereunder, or is a minor, the
Administrator may order the payments becoming due to such person to be made to another person
for the Participant’s benefit, without responsibility on the part of the Administrator to
follow the application of amounts so paid. Payments made pursuant to this Article shall
completely discharge the Administrator, the Bank and the Appeals Committee with respect to
such payments.
	 
	15.4.  	Administrative Forms. All applications, elections and designations in connection with the
Plan made by a Participant or other person shall become effective only when duly executed on
forms or via the Plan’s Participant Access System as provided by the Administrator and filed
with the Administrator.
	 
	15.5.  	Independence of Plan. Except as otherwise expressly provided herein, the Plan shall be
independent of, and in addition to, any other benefit agreement or plan of the Bank or any
rights that may exist from time to time thereunder.
	 
	15.6.  	No Employment Rights Created. The Plan shall not be deemed to constitute a contract
conferring upon any Participant the right to remain employed by the Bank for any period of
time.
	 
	15.7.  	Responsibility for Legal Effect. Neither the Bank, the Administrator, the Executive
Committee, Appeals Committee, nor any officer, member, delegate or agent of any of them, makes
any representations or warranties, express or implied, or assumes any responsibility
concerning the legal, tax, or other implications or effects of the Plan. Without limiting the
generality of the foregoing, the Bank shall not have any liability for the tax liability which
a Participant may incur resulting from participation in the Plan or the payment of benefits
hereunder.

15-1

 

	15.8.  	Limitation of Duties. The Bank, the Executive Committee, the Administrator, the Appeals
Committee, and their respective officers, members, employees and agents shall have no duty or
responsibility under the Plan other than the duties and responsibilities expressly assigned to
them herein or delegated to them pursuant hereto. None of them shall have any duty or
responsibility with respect to the duties or responsibilities assigned or delegated to another
of them.
	 
	15.9.  	Limitation of Sponsor Liability. Any right or authority exercisable by the Bank, pursuant
to any provision of the Plan, shall be exercised in the Bank’s capacity as sponsor of the
Plan, or on behalf of the Bank in such capacity, and not in a fiduciary capacity, and may be
exercised without the approval or consent of any person in a fiduciary capacity. Neither the
Bank, nor any of its respective officers, members, employees, agents and delegates, shall have
any liability to any party for its exercise of any such right or authority.
	 
	15.10.  	Successors. The terms and conditions of the Plan shall inure to the benefit of and bind the
Bank and their successors, the Participants, their Beneficiaries and the personal
representatives of the Participants and their Beneficiaries.
	 
	15.11.  	Controlling Law. The Plan shall be construed in accordance with the laws of the State of
Wisconsin to the extent not preempted by laws of the United States.
	 
	15.12.  	Notice. Any notice or filing required or permitted to be given to the Committee under the
Plan shall be sufficient if in writing and hand-delivered, or sent by registered or certified
mail, to the address below:

	 	 	 	 	 
	 	 	Baylake Bank
	 	 	217 North 4th Avenue
	 	 	P. O. Box 9
	 	 	Sturgeon Bay, Wisconsin 54235
	

	 	Attn:
	 	Administrator, Baylake Bank
	

	 	 	 	Supplemental Executive Retirement Plan

	15.13.  	Headings and Titles. The Article headings and titles of Articles used in the Plan are for
convenience of reference only and shall not be considered in construing the Plan.
	 
	15.14.  	General Rules of Construction. The masculine gender shall include the feminine and neuter,
and vice versa, as the context shall require. The singular number shall include the plural,
and vice versa, as the context shall require. The present tense of a verb shall include the
past and future tenses, and vice versa, as the context may require.
	 
	15.15.  	Severability. In the event that any provision or term of the Plan, or any agreement or
instrument required by the Administrator, is determined by a judicial, quasi-judicial or
administrative body to be void or not enforceable for any reason, all other provisions or
terms of the Plan or such agreement or instrument shall remain in full force and effect and
shall be enforceable as if such void or nonenforceable provision or term had never been a part
of the Plan, or such agreement or instrument except as to the extent the

15-2

 

	   	Administrator
determines such result would have been contrary to the intent of the Bank in establishing and
maintaining the Plan.

	15.16.  	Indemnification. The Bank shall indemnify, defend, and hold harmless any Executive, officer
or Board member of the Bank for all acts taken or omitted in carrying out the responsibilities
of the Bank, Executive Committee, Administrator or Appeals Committee under the terms of the
Plan. This indemnification for all such acts taken or omitted is intentionally broad, but
shall not provide indemnification for any civil penalty that may be imposed by law, nor shall
it provide indemnification for embezzlement or diversion of Plan funds for the benefit of any
such individual. The Bank shall indemnify any such individual for expenses of defending an
action by a Participant, Beneficiary, service provider, government entity or other person,
including all legal fees and other costs of such defense. The Bank shall also reimburse any
such individual for any monetary recovery in a successful action against such individual in
any federal or state court or arbitration. In addition, if a claim is settled out of court
with the concurrence of the Bank, the Bank shall indemnify any such individual for any
monetary liability under any such settlement, and the expenses thereof. Such indemnification
will not be provided to any person who is not a present or former Executive, officer or Board
member of the Bank nor shall it be provided for any claim by a participating Bank against any
such individual.

IN WITNESS WHEREOF, Baylake Bank, by its appropriate officers duly authorized, has caused the Plan
to be executed and adopted as of March 1, 2005.

Baylake Bank

	 	 	 	 	 	 	 
	By

	 	 	 	Date:	 	 
	

	 	

	 	 	 	

	

	 	Chief Executive Officer	 	 	 	 

15-3

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