Document:

Exhibit

Exhibit 10.5

EMPLOYMENT AGREEMENT
 
THIS EMPLOYMENT AGREEMENT (together with its Exhibits, this “Agreement”) by and between Chimera Investment Corporation (together with its successors and assigns, the “Company”) and Phillip J. Kardis, II (“Executive”, and together with the Company, a “Party”) dated December 17, 2018 and effective as of January 1, 2019 (the “Effective Date”).
WITNESSETH:
 
WHEREAS, Executive wishes to continue to be employed by the Company, and the Company wishes to secure the continued employment of Executive, under the terms and conditions described below.
WHEREAS, the Parties are currently parties to an Employment Agreement that became effective as of August 5, 2015 (the “Prior Employment Agreement”) and that is being superseded by this Agreement, except as otherwise provided in this Agreement.
NOW THEREFORE, in consideration of the foregoing premises and the mutual agreements herein contained, the Parties agree as follows:
1.Term of Employment.
(a)    The Company hereby employs Executive, and Executive hereby accepts employment with the Company, in the positions and with the duties and responsibilities as set forth in Section 2 below, subject to the terms and conditions of this Agreement.  
(b)    The term of employment under this Agreement will commence on the Effective Date and will: (i) continue until December 31, 2021 (the “Initial Term”); (ii) be extended until the first December 31st that coincides with, or follows, the second anniversary of any Change in Control that occurs after December 31, 2019 during the Term of Employment; (ii) will be extended for an additional one year period (a “Renewal Term”) on the last day of the Initial Term or of any extension of the Term of Employment pursuant to clause (ii), and on each subsequent anniversary thereof, unless either Party provides written notice of nonrenewal to the other Party not less than 90 days prior to the latest of the last day: of the Initial Term, of any extension of the Term of Employment pursuant to clause (ii), or of any Renewal Term (the Initial Term, together with each extension of the Term of Employment pursuant to clause (ii) and each Renewal Term, the “Term of Employment”); provided that, if the last day of the Term of Employment otherwise would occur during a Garden Leave period, the Term of Employment will continue through the end of such Garden Leave.  The Term of Employment may also be terminated in accordance with Section 5 below.
2.    Position; Duties and Responsibilities.
(a)    During the Term of Employment, Executive will be employed as the Chief Legal Officer of the Company, reporting directly to the Chief Executive Officer of the Company (“CEO”). Executive will (i) be responsible for, and, along with the CEO, have authority over, the 

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Company’s legal functions, and (ii) have such other duties and responsibilities as are reasonably assigned to him by the CEO or the Board of Directors of the Company (the “Board of Directors”) (not inconsistent in any significant respect with the duties and responsibilities typically assigned to the chief legal officer of a publicly-traded REIT).
(b)    During the Term of Employment, Executive will, without additional compensation, also serve on the board of directors of, serve as an officer of, and/or perform such executive and consulting services for, or on behalf of, such subsidiaries or affiliates of the Company as the Board of Directors may, from time to time, reasonably request.  For purposes of this Agreement, the term “affiliate” will have the meaning ascribed thereto as of the Effective Date in Rule 12b-2 under the Securities Exchange Act of 1934, as amended.
(c)    During the Term of Employment, Executive will serve the Company faithfully, diligently and to the best of his ability and will devote substantially all of his time and efforts to his employment and the performance of his duties under this Agreement. Nothing herein will preclude Executive from engaging in charitable and community affairs and managing his personal, financial and legal affairs, so long as such activities do not materially interfere with his carrying out his duties and responsibilities under this Agreement.  Notwithstanding the foregoing, any service on civic, educational, philanthropic or charitable boards or committees shall be subject to prior approval by the CEO.  During the Term of Employment, Executive shall perform his duties and responsibilities principally in New York City.
3.    Compensation.
(a)    Base Salary. During his employment with the Company, Executive will be entitled to receive an annualized base salary (the “Base Salary”) of not less than $750,000.  The Compensation Committee of the Board of Directors (the “Compensation Committee”) may review Executive’s Base Salary annually to determine whether increases are appropriate.  Any such increased amount will thereafter be the “Base Salary” for all purposes.  During Executive’s employment with the Company, the Base Salary will not be decreased at any time, or for any purpose (including, without limitation for the purpose of determining payments and benefits under Section 5), without Executive’s prior written consent.
(b)    Incentive Compensation.  
(i)    For each calendar year that begins during the Term of Employment, Executive will be entitled to receive an annual cash bonus, payable in cash (“Annual Cash Bonus”), to the extent provided under this Agreement and Exhibit A.  The Compensation Committee will make all determinations with respect to any Annual Cash Bonus, in good faith, in consultation with the CEO, and consistent with the text of this Agreement and the terms of Exhibit A. 
(ii)    During each calendar year that begins during the Term of Employment, Executive shall be entitled to receive long-term incentive compensation consisting of grants in the form of restricted stock units (“RSUs”) and performance stock units (“PSUs”) granted under the Company’s current Equity Compensation Plan (or its successor), in each case consistent with the text of this Agreement and Exhibit A (such compensation, “LTI”).  The 

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Compensation Committee will make all determinations with respect to LTI, in good faith, in consultation with the CEO, and in compliance with the text of this Agreement and Exhibit A.  
(c)    Stock Ownership Requirements.  All shares of the Company’s stock distributed to Executive by the Company will be subject to the stock ownership guidelines in effect for executives from time to time, as determined by the Board of Directors.   Unless the stock ownership guidelines provide otherwise: vested shares under equity grants may not be transferred during Executive’s employment with the Company unless the value of Executive’s stock holdings in the Company (including shares of restricted stock, restricted stock units and deferred stock units) after the transfer exceeds three times Executive’s Base Salary; and following the termination of Executive’s employment with the Company, vested shares of equity awards may not be transferred unless the value of Executive’s stock holdings in the Company (including shares of restricted stock, restricted stock units and deferred stock units) after the transfer exceeds three times Executive’s Base Salary as of the date that the Executive’s employment with the Company terminates in accordance with the terms of this Agreement (the “Termination Date”), provided, however, that this sentence will no longer apply following the six-month anniversary of the Termination Date.  Notwithstanding the foregoing, the restrictions of this subsection (c) will not prevent Executive from selling or directing the withholding of shares of the Company stock in accordance with, and subject to, Section 21 to satisfy income tax and employment tax obligations relating to the vesting, exercise, or settlement of equity grants to which the shares relate.
4.    Employee Benefit Programs and Fringe Benefits. During the Term of Employment, Executive will be entitled to five weeks of vacation per fiscal year and will be eligible to participate in all executive incentive and employee benefit programs of the Company now or hereafter made available to the Company’s senior executives or salaried employees generally, as such programs may be in effect from time to time.  The Company will reimburse Executive for any and all business expenses reasonably incurred by Executive in connection with his employment in accordance with applicable the Company policies.
5.    Termination of Employment.
(a)    Termination Due to Death or Disability.  If Executive’s employment with the Company is terminated by reason of Executive’s death or Disability, the Term of Employment will (if it has not yet already expired) terminate automatically and the Company will have no further obligations to Executive under this Agreement except for (x) any payments and benefits described in Section 5(f) below and (y) subject to the requirements of Section 5(i) below, amounts and benefits due pursuant to clauses (i) through (iv) of this Section 5(a).  
(i)    In the event Executive’s employment with the Company is terminated during the Term of Employment by reason of Executive’s Disability, the Company will reimburse Executive for 100% of the COBRA premiums incurred by Executive for Executive and his eligible dependents under the Company’s health care plan during the 18-month period immediately following the Termination Date.  Such reimbursement will be provided on the payroll date immediately following the date on which Executive remits the applicable premium payment and will commence within 60 days after the Termination Date; provided that the first payment will include any reimbursements that would have otherwise been payable during the period beginning 

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Exhibit 10.5

on the Termination Date and ending on the date of the first reimbursement payment.  Reimbursement payments will be treated as taxable compensation to Executive.
(ii)    Whether or not such termination of employment due to death or Disability occurs during the Term of Employment, any outstanding equity-based or other compensation that has been granted to Executive, and that vests solely on the basis of continued employment, will vest in full as of the Termination Date and, with respect to RSUs, will be paid on the dates specified in the documents governing the awards.
(iii)    For any termination due to death or Disability, whether or not such termination of employment occurs during the Term of Employment, the “2015 Equity Award” (as defined in the Prior Employment Agreement) will (if not already fully vested as of the Termination Date) fully vest as of the Termination Date and will be settled within 60 days following the Termination Date.
(iv)    Whether or not such termination of employment due to death or Disability occurs during the Term of Employment, all of Executive’s outstanding PSUs and other performance-vesting awards will continue to vest, subject only to the achievement by the Company of the applicable performance goals, in each case as though such termination of employment had not occurred, and will be paid on the date specified in the documents governing the awards. 
(v)    Whether or not such termination due to death or Disability occurs during the Term of Employment, Executive will receive a Pro-Rata Annual Cash Bonus (as defined in Section 5(b)(vi) below), determined and paid as provided such subsection.
(b)    Termination By the Company Without Cause or By Executive with Good Reason (Other Than in Connection with a Change in Control).  In the event Executive’s employment with the Company is terminated (other than for death or Disability) (x) by the Company without Cause (other than within six months before, or 24 months after, a Change in Control), or (y) by Executive with Good Reason (other than within 24 months after a Change in Control), the Term of Employment will (if it has not already expired) terminate automatically and the Company will have no further obligations to Executive under this Agreement except for (x) any payments and benefits described in Section 5(f) below and (y) subject to the provisions of Section 5(i) below, the following payments and benefits:
(i)    If such termination of employment occurs during the Term of Employment, Executive will be entitled to a cash severance amount equal to:
A.      1.5 times his Base Salary as of the Termination Date, plus
B.    1.5 times the greater of (x) his Target Cash Bonus (as defined in Exhibit A) or (y) the average of the Annual Cash Bonus awarded (or due to be awarded) to Executive (including, for avoidance of doubt, annual cash bonuses awarded under the Prior Employment Agreement for years ending prior to the Effective Date) by the Company for the three most recent 

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calendar years that ended on or before the Termination Date (the “Average Cash Bonus”).  
The severance amount will be paid in 18 equal monthly installments commencing within 60 days following the Termination Date; provided, however, that the first installment will include any unpaid installments for the period prior to commencement, and the final installment will be paid on or before the date that is 18 months after the Termination Date.  
(ii)    Whether or not such termination of employment by the Company without Cause or by Executive with Good Reason occurs during the Term of Employment, any outstanding equity-based or other compensation that has been granted to Executive, and that vests solely on the basis of continued employment, will vest (and become exercisable) in full as of the Termination Date and, with respect to RSUs, will be paid on the date(s) specified in the documents governing the awards.     
(iii)    Whether or not such termination of employment by the Company without Cause or by Executive with Good Reason occurs during the Term of Employment, all of Executive’s outstanding PSUs and other performance-vesting awards will continue to vest, subject only to the achievement by the Company of the applicable performance goals, as though such termination of employment had not occurred, and will be paid on the date(s) specified in the documents governing the awards.
(iv)    Whether or not such termination of employment by the Company without Cause or by Executive with Good Reason occurs during the Term of Employment, the 2015 Equity Award will (to the extent not already fully vested) fully vest as of the Termination Date and will be settled within 60 days following such date.   
(v)    If such termination of employment occurs during the Term of Employment, the Company will reimburse Executive for 100% of the COBRA premiums incurred by Executive for Executive and his eligible dependents under the Company’s health care plan during the 12-month period following the Termination Date. Such reimbursement will be provided on the payroll date immediately following the date on which Executive remits the applicable premium payment and will commence within 60 days after the Termination Date; provided that the first payment will include any reimbursements that would have otherwise been payable during the period beginning on the Termination Date and ending on the date of the first reimbursement payment.  Reimbursement payments will be treated as taxable compensation to Executive.
(vi)    Whether or not such termination of employment by the Company without Cause or by Executive with Good Reason occurs during the Term of Employment, Executive will receive a portion of the Annual Cash Bonus that Executive would have earned for the calendar year in which his employment terminated, based on the degree to which the Company has attained any applicable Company-wide performance metrics for such year, with any discretionary or personal performance goals treated as having been attained at target.  The portion of such Annual Cash Bonus to be received by Executive (a “Pro-Rata Annual Cash Bonus”) shall be determined by multiplying the Annual Cash Bonus amount determined under the first sentence of this clause (vi) by a fraction whose numerator is the number of days during the calendar year of termination that he was employed 

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with the Company and whose denominator is 365.  Any Pro-Rata Annual Cash Bonus will be paid in cash when the corresponding Annual Cash Bonus would have been paid to Executive for such year absent such termination but no later than March 15 of the immediately following year.
No termination of Executive’s employment that is governed by this Section 5(b), or by Section 5(c), 5(d) or 5(m) below, will be deemed a breach of this Agreement, nor will it relieve either Party of its/his other obligations under this Agreement.
(c)    Termination by the Company for Cause or Voluntary Termination by Executive. In the event that at any time Executive’s employment with the Company is terminated (x) by the Company for Cause or (y) by Executive other than with Good Reason, due to Disability, or in a termination governed by Section 5(m) below, then (z) the Term of Employment will (if it has not already expired) terminate automatically and the Company will have no further obligations to Executive under this Agreement except for any payments and benefits described in Section 5(f).
(d)    Garden Leave. Executive will provide a Notice of Termination to the Company no less than 90 days prior to any termination by him of his employment with the Company effective during the Term of Employment, and the Company will provide a Notice of Termination to Executive no less than 90 days prior to terminating Executive’s employment effective during the Term of Employment (other than a termination for Cause); provided that the Company may elect to terminate the Garden Leave (as defined below) early as described below.  During this 90-day notice period (the “Garden Leave”), Executive will (i) continue to make himself available to provide such services as the Company may reasonably request (provided only that such services are reasonably consistent with Executive’s status as a senior executive of the Company) and (ii) continue to receive all payments and benefits to which he would otherwise be entitled, except that (notwithstanding anything in this Agreement or elsewhere to the contrary) in the event of a termination (x) by Executive other than with Good Reason, for Disability, or in a termination to which Section 5(m) applies, or (y) by the Company for Cause, Executive will not be eligible to earn any Annual Cash Bonus with respect to any calendar year that ends after the commencement of the Garden Leave.  During the Garden Leave, the Company may require Executive to resign from any position with the Company and/or remove any or all of Executive’s duties or responsibilities, which will not constitute Good Reason or otherwise be deemed a violation of this Agreement.  Executive agrees that he will not commence employment with any entity during the Term of Employment (including the Garden Leave).  During the Garden Leave, Executive will take all steps reasonably requested by the Company to effect a successful transition of client and customer relationships to the person or persons designated by the Company.  Notwithstanding the foregoing, the Company in its sole discretion may waive all or any portion of the Garden Leave by providing written notice to Executive accelerating the last day of the Garden Leave period and the Termination Date (provided that, if the termination of Executive’s employment is on account of termination by the Company without Cause or due to Disability, pay in lieu of notice shall be paid for any remaining portion of the 90-day notice period).   For the avoidance of doubt, no such shortening of the Garden Leave will be treated as a termination of Executive’s employment by the Company without Cause or as giving Executive any basis for terminating his employment with Good Reason.    

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(e)    Termination Related to Change in Control.  In the event Executive’s employment with the Company is terminated (x) by the Company other than for Cause or Disability, and within six months before, or 24 months after, a Change in Control, or (y) by Executive with Good Reason and within 24 months after a Change in Control, then (z) the Term of Employment (if it has not already expired) will terminate automatically and the Company will have no further obligations to Executive under this Agreement except for (x) any payments and benefits described in Section 5(f) below, and (y) subject to the requirements of Section 5(i) below, the following payments and benefits:
(i)    If such termination occurs during the Term of Employment, the Company will promptly pay to Executive a cash severance amount equal to:
A.    2.0 times his Base Salary as of the Termination Date, plus
B.    2.0 times the greater of (x) his Target Cash Bonus (as defined in Exhibit A) or (y) the Average Cash Bonus.  
Except as provided below, the severance amount shall be paid in a cash lump sum payment within 60 days following the Termination Date.   If Executive’s employment is terminated by the Company other than for Cause or Disability within six months before a Change in Control, as described above, the severance amount shall be calculated pursuant to Section 5(b)(i) and paid in the form of payment described in Section 5(b)(i) upon Executive’s termination of employment before the Change in Control, and upon the Change in Control, Executive shall receive a lump sum cash payment equal to the excess of the severance amount payable under this Section 5(e)(i) over the severance amount previously paid to Executive pursuant to Section 5(b)(i), consistent with Section 409A (as defined below).  
(ii)    Whether or not such termination of employment by the Company without Cause or by Executive with Good Reason occurs during the Term of Employment, all of Executive’s outstanding equity-based and other awards that vest or become exercisable based solely on Executive’s continued employment will vest (and become exercisable) in full as of the Termination Date.  In addition, if such termination of employment occurs on or within 24 months after the Change in Control, (A) any such awards (e.g., RSUs) that settle following vesting will be settled within 60 days after the Termination Date, and (B) any such awards that are in the form of stock options or SARs will remain exercisable until at least the earlier of (a) the 90th day following the Termination Date and (b) the date on which such option or SAR would have expired had Executive’s employment not terminated.
(iii)    Whether or not such termination of employment by the Company without Cause or by Executive with Good Reason occurs during the Term of Employment, any of Executive’s outstanding PSUs or other performance-vesting equity-based grants whose continued vesting after such Change in Control is based solely on continued employment (without regard to performance after such Change in Control) will vest in full as of the Termination Date (or as of the Change in Control, if later) and will be settled within 60 days after the Termination Date (or the Change in Control, if later).  In addition, and except as otherwise provided in Section 9 of Exhibit 

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A, any outstanding performance-vesting awards whose vesting remains contingent on performance will continue to vest, subject only to attainment by the Company of the applicable performance goals.
(iv)    The Company will reimburse Executive for 100% of the COBRA premiums incurred by Executive for Executive and his eligible dependents under the Company’s health care plan during the 18-month period following the Termination Date. Such reimbursement will be provided on the payroll date immediately following the date on which Executive remits the applicable premium payment and will commence within 60 days after the Termination Date; provided that, the first payment will include any reimbursements that would have otherwise been payable during the period beginning on the Termination Date and ending on the date of the first reimbursement payment.  Reimbursement payments will be treated as taxable compensation to Executive.  
(v)    Executive will receive a Pro-Rata Annual Cash Bonus, determined and paid as described in Section 5(b)(vi) above.
(f)    Other Payments and Benefits. Upon any termination of Executive’s employment with the Company, in addition to the amounts and benefits (if any) under other sub-sections of this Section 5, Executive will be entitled to the following:
(i)    prompt payment of any earned but unpaid portion of his Base Salary through the Termination Date and a prompt cash payment (determined based on Executive’s per-business-day rate of Base Salary) in respect of vacation that is accrued but unused as of the Termination Date;
(ii)    any vested deferred compensation (including any interest accrued on or appreciation in value of such deferred amounts) in accordance with the documents governing such compensation;
(iii)    prompt reimbursement for business expenses reasonably incurred but not yet reimbursed by the Company in accordance with the Company’s expense reimbursement policy as in effect from time to time; 
(iv)    unless Executive’s employment with the Company has been terminated by the Company for Cause, the Executive will receive any earned but unpaid Annual Cash Bonus for any calendar year that ended prior to the Termination Date (including, without limitation, any annual cash bonus for calendar year 2018); and 
(v)    any other payment or benefit to which Executive is, or becomes, entitled under the then-applicable terms of any then-applicable written plan, program, agreement, corporate governance document, or other arrangement of the Company or any of its affiliates (collectively, “Company Arrangements”), including (without limitation) Sections 8 and 19 of this Agreement).  
(g)    Payments Subject to Section 409A and Other Applicable Law.

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Exhibit 10.5

(i)    The Company and Executive intend that this Agreement will be interpreted and administered so that any amount or benefit payable hereunder will be paid or provided in a manner that is either exempt from or compliant with Section 409A of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations and Internal Revenue Service guidance promulgated thereunder (“Section 409A”), and thus does not incur any income inclusion, “additional tax”, or interest under Section 409A.
(ii)    Notwithstanding anything in this Agreement or elsewhere to the contrary, Executive will not be entitled to any payment or benefit pursuant to this Section 5 prior to the earliest date he is permitted to receive such payment or benefit without incurring income inclusion, “additional tax”, or interest under Section 409A. To the extent any payment or benefit is required to be delayed six months pursuant to the special rules of Section 409A related to “specified employees,” each affected payment and benefit will be delayed until the first day of the seventh month following the Termination Date or, if earlier, within ten days following the date of Executive’s death.
(iii)    Any installment payments or benefits under this Agreement or any other arrangement will be treated as a series of separate payments and benefits for purposes of Section 409A.  Executive shall have no duties following the Termination Date that are inconsistent with his having had a “separation from service” under Section 409A on or before the Termination Date.  Notwithstanding any other provision contained herein, if a Change in Control is not a change in ownership or control as defined for purposes of Section 409A and payment of the severance amount in a lump sum would trigger “additional tax” under Section 409A, then the severance amount under Section 5(e)(i) shall be paid in the form described in Section 5(b)(i). 
(iv)    If Executive is entitled to any reimbursement of expenses or in-kind benefits that are includable in Executive’s federal gross taxable income, the amount of such expenses reimbursable or in-kind benefits provided in any one calendar year will not affect the expenses eligible for reimbursement or the in-kind benefits to be provided in any other calendar year.  Executive’s right to reimbursement of expenses or in-kind benefits under this Agreement will (x) not be subject to liquidation or exchange for another benefit and (y) be made on or before the last day of Executive’s taxable year following the year in which the expense was incurred.  
(v)    None of the Company, its affiliates or their respective directors, officers, employees or advisors will be held liable for any taxes, interest or other amounts owed by Executive as a result of the application of Section 409A or otherwise, provided (in the case of the Company only) that the Company has complied with the provisions of this Agreement, and of any other applicable Company Arrangement, concerning the timing of payments and benefits.
(h)    No Mitigation; No Offset. In the event of any termination of Executive’s employment with the Company, he will be under no obligation to seek other employment or otherwise in any way to mitigate the amount of any payment or benefit provided for in this Section 5, and there will be no offset against amounts due him under this Agreement on account of any remuneration attributable to any subsequent employment that he may obtain.

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Exhibit 10.5

(i)    Release; Compliance with Covenants.  The Company’s obligation to make any payment or provide any benefit (other than the payments and benefits described in Section 5(f)) under Section 5(a), Section 5(b), Section 5(e), or Section 5(m) will be contingent upon, and is the consideration for, (A) Executive executing and delivering to the Company, within 45 days after the Termination Date, a general release (the “Release”), substantially in the form annexed hereto as Exhibit B, (B) such release becoming irrevocable in accordance with its terms and (C) Executive not having committed, prior to the date that such payment or benefit is due to be provided, a material breach of his obligations under Section 7, which breach has remained uncured for 10 days after the Company has given him written notice describing the breach in reasonable detail and requesting cure (provided that the Company shall not be required to provide an opportunity to cure if the Board of Directors determines in good faith that the breach is not curable within the 10-day cure period that would otherwise apply).   In the event of a material breach of Executive’s obligations under Section 7 without timely cure as described above, the Company may immediately cease all payments under Section 5(a), Section 5(b), Section 5(e), or Section 5(m), as applicable (other than the payments and benefits described in Section 5(f)), and the Company may immediately forfeit all outstanding equity awards held by Executive to the extent that such equity awards vested or would have vested pursuant to Section 5(a), Section 5(b), Section 5(e), or Section 5(m), as applicable (other than as described in Section 5(f)).  In the event that either the 45-day period, or the 10-day period, referred to in the immediately preceding sentence span two calendar years, any payments or benefits that, but for clauses (A), (B) or (C), as applicable, of such sentence, would have been due to be provided during the first such calendar year will be delayed and paid to Executive on the first regular payroll date of the Company in such second calendar year (but in no event later than January 31 of such second calendar year but with respect to delays pursuant to clause (C) of the immediately preceding sentence only if then cured), with any subsequent payments and benefits to be provided as if no such delay had occurred.
(j)    Parachute Payments.  
(i)    Notwithstanding anything in this Agreement or elsewhere to the contrary, in the event that any payment or distribution in the nature of compensation (within the meaning of Section 280G(b)(2) of the Code) to or for the benefit of Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (each, a “Payment”), would constitute an “excess parachute payment” within the meaning of Section 280G of the Code, the Company will reduce (but not below zero) the aggregate present value of the Payments under this Agreement to the Reduced Amount (as defined below), if reducing the Payments under this Agreement will provide Executive a Net After-Tax Benefit that exceeds his Net After-Tax Benefit if such reduction is not made.  To the extent such Payments are required to be so reduced, they will be reduced in the following order and, to the extent applicable, in accordance with Section 409A of the Code, such that any such reduction does not result in Executive incurring any income inclusion, “additional tax”, or interest under Section 409A of the Code: (i) Payments that are payable in cash, with amounts that are payable last reduced first; (ii) Payments due in respect of any equity or equity derivatives included in such calculation at their full value under Section 280G (rather than their accelerated value), with amounts that are payable last reduced first; and (iii) Payments due in respect of any equity or equity derivatives included in such calculation at their accelerated value under Section 280G, with the highest per share values reduced first (as such values are determined 

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Exhibit 10.5

under Treasury Regulation Section 1.280G-1, Q&A 24).  If the same payment or benefit date applies to more than one payment or benefit within any of the foregoing categories, the reduction will apply to each such payment or benefit on a pro rata basis.
(ii)    The “Reduced Amount” will be an amount expressed in present value that maximizes the expected net after-tax present value of the Payments without causing any Payment under this Agreement to be subject to the Excise Tax.  The term “Excise Tax” means the excise tax imposed under Section 4999 of the Code, together with any interest or penalties imposed with respect to such excise tax.  The term “Net After-Tax Benefit” means the present value (as determined in accordance with Section 280G(d)(4) of the Code) of the Payments net of all taxes imposed on Executive with respect thereto under Sections 1 and 4999 of the Code and under applicable state and local laws, determined by applying the highest marginal rate under Section 1 of the Code and under the state and local laws that applied to Executive’s taxable income for the immediately preceding taxable year, or such other rate(s) as Executive certifies are likely to apply to him in the relevant tax year(s).
(iii)    All determinations to be made under this Section 5(j) will be made in the first instance by a nationally-recognized public accounting or consulting firm, selected by the Company prior to the events that trigger the potential application of Section 280G, which firm (the “Auditor”) will provide its determinations and any supporting calculations to both the Company and Executive within ten days after the events that trigger the potential application of Section 280G.  All fees and expenses of the Auditor in performing the determinations referred to in this Section 5(j) will be borne solely by the Company.  
(iv)    It is possible that after the Auditor makes its determinations under clause (iii) above, Executive will receive Payments that are, in the aggregate, either more or less than the Reduced Amount (hereafter referred to as an “Excess Payment” or “Underpayment”, respectively). If it is determined by the Auditor upon request by Executive or the Company, by a final determination of a court, or by an Internal Revenue Service proceeding that has been finally and conclusively resolved, that an Excess Payment has been made, then Executive will refund the Excess Payment to the Company promptly on demand, together with an additional payment in an amount equal to the product obtained by multiplying the Excess Payment times the rate that is 120% of the applicable annual federal rate (as determined in and under Section 1274(d) of the Code), times a fraction whose numerator is the number of days elapsed from the date of Executive’s receipt of such Excess Payment through the date of such refund and whose denominator is 365. If it is determined by the Auditor upon request by Executive or the Company, by arbitration under Section 19 below, or by a court of competent jurisdiction, that an Underpayment has occurred, the Company will pay an amount equal to the Underpayment to Executive within 10 days of such determination together with an additional payment in an amount equal to the product obtained by multiplying the Underpayment times the rate that is 120% of the applicable annual federal rate (as determined in and under Section 1274(d) of the Code) times a fraction whose numerator is the number of days elapsed from the date of the Underpayment through the date of such payment and whose denominator is 365

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Exhibit 10.5

(k)    Resignation from Positions.  Upon any termination of Executive’s employment with the Company, Executive will be deemed to have resigned with immediate effect from any position he then holds as an officer, director or fiduciary of the Company or any Company-related entity.  The Executive will promptly execute and deliver to the Company any letters, documents and other instruments that the Company delivers to him and reasonably requests him to sign, and that are necessary or appropriate to effect such resignations.
(l)    No Duplication.   For the avoidance of doubt, Executive will in no event be entitled to duplicate payments or benefits under both Section 5(e) and Section 5(b).
(m)    Terminations After Expiration of the Term of Employment Following Delivery of Notice of Nonrenewal of the Term of Employment By the Company.  
(i)    If the Company provides Executive written notice of nonrenewal of the Term of Employment in accordance with Section 1(b) and the Company terminates Executive’s employment without Cause after the last day of the Term of Employment, then, subject to the provisions of Section 5(i), the Company will, in addition to providing the benefits set forth in Sections 5(b)(ii), (iii), (iv) and (vi), continue to pay Executive the Base Salary for a period of one year following the Termination Date in accordance with the Company’s regular payroll practices as if his employment had not ended.  Such Base Salary continuation payments will commence within 60 days following the Termination Date, and the first payment will include any unpaid installments for the period prior to commencement.  Notwithstanding the foregoing, if Executive’s employment is terminated as described in this Section 5(m)(i) within 24 months following a Change in Control, such Base Salary amount will be payable to Executive in a cash lump sum instead of installments.  Such lump sum shall be paid within 60 days following the Termination Date.  If Executive’s employment is terminated as described in this Section 5(m)(i) within six months before a Change in Control, when the Change in Control occurs, the excess of the severance amount payable under this Section 5(m)(i) over the severance amount previously paid to Executive pursuant to this Section 5(m)(i) shall be paid in a lump sum upon the Change in Control, consistent with Section 409A.  
(ii)    The provisions of this subsection (ii) shall apply if (A) the Company provides Executive written notice of nonrenewal of the Term of Employment in accordance with Section 1(b) (other than for Cause), (B) the Company does not offer Executive a successor employment agreement that is substantially equivalent to this Agreement (viewed in the aggregate) at least 10 days before the last day of the Term of Employment and (C) Executive provides written notice of termination no later than the seventh day after the last day of the Term of Employment.  In that event, the Company will provide (x) any payments and benefits described in Section 5(f) above and (y) subject to the provisions of Section 5(i) above, the payments and benefits described in Sections 5(b)(ii), (iii), (iv) and (vi). The Company shall have no further obligations to Executive. 
(iii)    Notwithstanding anything in this Agreement or elsewhere to the contrary, if  Executive terminates his employment with the Company (with or without Good Reason) at any time and the sum of his age plus his years of service with the Company and its predecessors (including, without limitation, Fixed Income Discount Advisory Company (“FIDAC”) during the time that FIDAC was the external manager of the Company) (including, in each case, fractional 

12

Exhibit 10.5

years) equals or exceeds 65 as of the Termination Date, and he has at least five years of service with the Company and its predecessors as of the Termination Date, then the Company will provide (without duplication) (x) any payments and benefits described in Section 5(f) above and (y) subject to the provisions of Section 5(i) above, the payments and benefits described in Sections 5(b)(ii), (iii), (iv) and (vi). The Company shall have no further obligations to Executive. 
6.    Definitions. For purposes of this Agreement, the following terms will be defined as set forth below:
(a)    “Cause” means Executive’s (i) conviction, or entry of a guilty plea or a plea of nolo contendere with respect to, a felony, a crime of moral turpitude or any crime committed against the Company, other than traffic violations; (ii) engagement in willful misconduct, gross negligence, or fraud, embezzlement, or misappropriation relating to significant amounts occurs in connection with the performance of his duties under this Agreement; (iii) willful failure to use his best reasonable efforts to comply with lawful and reasonable directions of the Board of Directors; (iv) material breach of Section 7 of this Agreement; (v) chronic or persistent substance abuse that materially and adversely affects his performance of his duties under this Agreement or (vi) material breach of this Agreement (other than Section 7) resulting in material and demonstrable economic injury to the Company.  No act or omission to act by Executive will be deemed “willful” if conducted in good faith or with a reasonable belief that such act or omission was in, or not opposed to, the best interests of the Company.  No termination of Executive’s employment for Cause shall be effective as a termination for Cause unless the following provisions of this Section 6(a) have first been complied with.  The Board of Directors shall give Executive written notice of its intention to terminate his employment for Cause, such notice (the “Cause Notice”) (x) to state in reasonable detail the circumstances that constitute the grounds on which the proposed termination for Cause is based and (y) to be given no later than the later of (i) the 90th day after the Board of Directors first becomes aware of such circumstances or (ii) the 10th day after the Board of Directors completes (with reasonable diligence) its investigation as to whether Cause exists. If the Board of Directors determines that the grounds on which the proposed termination for Cause is based are subject to cure, Executive shall have 10 days after receiving such Cause Notice in which to fully cure such grounds.  If he fails to timely and fully cure such grounds, Executive shall then be entitled to a hearing before the Board of Directors.  Such hearing shall be held and completed within 25 days after he received such Cause Notice, provided that he requests such hearing within 10 days after receiving such Cause Notice.  If, within 10 days following such hearing (if timely requested), and otherwise within 20 days after he received such Cause Notice, the Board of Directors gives written notice to Executive confirming that, in the judgment of at least a majority of the members of the Board of Directors, Cause for terminating his employment on the basis set forth in the original Cause Notice still exists, his employment shall thereupon be terminated for Cause.  During the period between the delivery of a Cause Notice and expiration of the time within which the Board is required to confirm that “Cause” as set forth in such notice exists, the Board may suspend some or all of Executive’s duties and responsibilities, and such suspension will not constitute Good Reason or otherwise be deemed a violation of this Agreement.  

13

Exhibit 10.5

(b)    “Change in Control” means the occurrence of any one of the following events to the extent such event also constitutes a “change in control event” for purposes of Section 409A of the Code:
(i)    any “person,” as such term is used in Sections 13(d) and 14(d) of the Act (other than the Company, any of its subsidiaries, or any trustee, fiduciary or other person or entity holding securities under any employee benefit plan or trust of the Company or any of its subsidiaries) together with all affiliates and “associates” (as such term is currently defined in Rule 12b-2 under the Act) of such person, becomes the “beneficial owner” (as such term is currently defined in Rule 13d-3 under the Act), directly or indirectly, of securities of the Company representing 40% or more of the combined voting power of the Company’s then outstanding securities having the right to vote in an election of the Board of Directors (“voting securities”); or
(ii)    persons who, as of the Effective Date, are members of the Board of Directors (the “Incumbent Directors”) cease for any reason, including, without limitation, as a result of a tender offer, proxy contest, merger or similar transaction, to constitute at least a majority of the Board of Directors, provided that any person becoming a member of the Board of Directors subsequent to the Effective Date whose election or nomination for election was approved by a vote of at least a majority of the Incumbent Directors will, for purposes of this Agreement, be considered an Incumbent Director; or
(iii)    there occurs (A) any consolidation or merger of the Company or any subsidiary where the stockholders of the Company, immediately prior to the consolidation or merger, would not, immediately after the consolidation or merger, beneficially own (as such term is defined in Rule 13d-3 under the Act), directly or indirectly, and in substantially the same proportions that they beneficially owned shares of the Company immediately prior to the consolidation or merger, securities representing in the aggregate 60% or more of the combined voting power of the then outstanding securities of the entity issuing cash or securities in the consolidation or merger (or of its ultimate parent entity, if any), (B) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all or substantially all of the business or assets of the Company (other than to an entity 60% or more of whose voting power is represented by securities beneficially owned, in substantially the same proportions that they beneficially owned shares of the Company immediately before such transfer, by the persons or entities that beneficially owned shares of the Company immediately before such transfer) or (C) any liquidation or dissolution of the Company.
Notwithstanding the foregoing, a “Change in Control” will not be deemed to have occurred for purposes of the foregoing clause solely as the result of an acquisition of its own voting securities by the Company which, by reducing the number of voting securities outstanding, increases the proportionate voting power represented by the voting securities beneficially owned by any person or entity to 40% or more of the combined voting power of all then outstanding voting securities, provided that any subsequent acquisition of additional voting securities by such person or entity, when such person or entity beneficially owns voting securities representing 40% or more of the combined voting power of all then outstanding voting securities, shall by itself constitute a Change in Control.

14

Exhibit 10.5

(c)    “Code” means the Internal Revenue Code of 1986, as amended.
(d)    “Disability” means Executive’s inability, for a period of six consecutive months, to render substantially the services provided for in this Agreement by reason of mental or physical disability, whether resulting from illness, accident or otherwise, other than by reason of chronic or persistent abuse of any substance (such as narcotics or alcohol), provided that such inability also constitutes “disability” for purposes of Section 409A. 
(e)    “Good Reason” means the occurrence of any of the following events without Executive’s prior written consent:
(i)    any material diminution in Executive’s title, duties or responsibilities;
(ii)    any relocation of Executive’s principal place of employment to a place other than New York City (or, following a Change in Control, the Borough of Manhattan);
(iii)    any failure of the Company to pay or provide to Executive, when due, any material payment or benefit owed to him; or
(iv)    any material failure by the Company to honor any of its material obligations to Executive.
For Good Reason to exist on the basis of an event, Executive must have provided written notice of such event to the Company within 90 days after he first learned of its occurrence; the Company must have failed to fully cure such event within 30 days after it received such notice; and Executive must have provided to the Company, within 30 days following the expiration of such cure period, written notice of his decision to terminate his employment, which termination shall (notwithstanding anything in Section 5(d) to the contrary) be effective 90 days after the date of Executive’s initial written notice of the Good Reason event, unless the Company agrees to an earlier termination date.  The Company may require that Executive be on Garden Leave as described in Section 5(d) during the 90-day period following the date of Executive’s initial written notice of the Good Reason event.
(f)    “Notice of Termination” means any written notice, delivered by either Party to the other, that Executive’s employment with the Company will terminate.
7.    Covenants.
(a)    Confidentiality Restrictions.  Executive agrees at all times during his employment with the Company and thereafter, to hold in strictest confidence, and not to use, or disclose to any person, firm or corporation, any confidential or proprietary information of the Company (“Confidential Information”), except as otherwise provided in this Section 7.  Confidential Information includes, without limitation: client or customer lists, identities, contacts, business and financial information; investment strategies; pricing information or policies, fees or commission arrangements of the Company; marketing plans, projections, presentations or strategies of the Company; financial and budget information of the Company; personnel information, personnel lists, resumes, personnel data, organizational structure, compensation and performance evaluations; 

15

Exhibit 10.5

information regarding the existence or terms of any agreement or relationship between the Company and any other party; information developed by Executive during his employment with the Company; and any other information of whatever nature that gives to the Company an opportunity to obtain an advantage over its competitors who or which do not have access to such information, in each case to the extent that such information is confidential or proprietary.  Confidential Information developed by Executive during his employment with the Company will be subject to the terms and conditions of this Agreement as if the Company had furnished such Confidential Information to Executive in the first instance.  Confidential Information does not include any of the foregoing items that have become publicly known and through no wrongful act of Executive or a third party.  
(b)    Exceptions.  
(i)    Nothing in this Agreement or elsewhere shall prevent Executive from: (i) using and disclosing documents and information in connection with the good faith performance of his duties for the Company or any of its affiliates; (ii) cooperating with, or participating in, any investigation conducted by any governmental agency; (iii) making truthful statements, or disclosing documents and information, (x) to the extent reasonably necessary in connection with any litigation, arbitration or mediation involving Executive’s rights or obligations under this Agreement or otherwise in connection with his employment with the Company (or the termination of such employment) or (y) when required by law, by legal process or by any court, arbitrator, mediator or legislative body (including any committee thereof) with actual or apparent jurisdiction to order Executive to make such statements or to disclose such documents and information, provided that Executive both gives the Company advance notice of any such disclosure to the extent legally allowable and cooperates (at the Company’s sole expense) in good faith with any effort the Company may make to seek a protective order concerning the confidentiality of any such disclosure; (iv) retaining, and using appropriately (e.g., not in connection with violating any non-competition or non-solicitation restriction),  documents and information relating to his personal rights and obligations and his rolodex (and electronic equivalents); (v) disclosing his post-employment restrictions in confidence in connection with any potential new employment or business venture; (vi) disclosing documents and information in confidence to any attorney, financial advisor, tax preparer, or other professional for the purpose of securing professional advice; or (vii) using and disclosing documents and information at the request of the Company or its attorneys or agents. 
(ii)    Nothing in this Agreement or elsewhere shall prohibit or restrict Executive from initiating communications directly with, responding to any inquiry from, providing testimony before, providing confidential information to, reporting possible violations of law or regulation to, or filing a claim or assisting with an investigation directly with a self-regulatory authority or a government agency or entity, including the Equal Employment Opportunity Commission, the Department of Labor, the National Labor Relations Board, the Department of Justice, the Securities and Exchange Commission, Congress, any agency Inspector General or any other federal, state or local regulatory authority (collectively, the “Regulators”), or from making other disclosures that are protected under the whistleblower provisions of state or federal law or regulation.  Executive does not need the prior authorization of the Company to engage in conduct protected by this subsection, and Executive does not need to notify the Company that Executive has engaged in such conduct.  Please take notice that federal law provides criminal and civil immunity 

16

Exhibit 10.5

to federal and state claims for trade secret misappropriation to individuals who disclose trade secrets to their attorneys, courts, or government officials in certain, confidential circumstances that are set forth at 18 U.S.C. §§ 1833(b)(1) and 1833(b)(2), related to the reporting or investigation of a suspected violation of the law, or in connection with a lawsuit for retaliation for reporting a suspected violation of the law 
(c)    Former Employer Information.  Subject to Section 7(b), Executive agrees that he will not, during and in connection with his employment with the Company, use or disclose any proprietary information or trade secrets of any former or concurrent employer or other person or entity and that he will not bring into the premises of the Company any unpublished document or proprietary information belonging to any such employer, person or entity unless consented to in writing by such employer, person or entity.  
(d)    Third Party Information.  Subject to Section 7(b), Executive recognizes that the Company has received, and in the future will receive, from third parties their confidential or proprietary information subject to a duty on the Company’s part to maintain the confidentiality of such information and to use it only for certain limited purposes.  Executive agrees to treat all such information as Confidential Information.
(e)    Mutual Non-Disparagement.  Executive acknowledges that any disparaging comments by him against the Company are likely to substantially depreciate the business reputation of the Company.  Subject to Section 7(b), Executive therefore agrees that he will not directly or indirectly defame, disparage, or publicly criticize the services, business, integrity, veracity or reputation of the Company or its officers, directors, or employees in any forum or through any medium of communication.  The Company agrees that it will not, directly or indirectly, through its executive officers or directors, defame, disparage, or publicly criticize the integrity, veracity, or reputation of Executive.   
(f)    Restrictive Covenants.
(i)    Conflicting Employment.  Executive agrees that, during his employment with the Company, he will not engage in any other employment, occupation, consulting or other business activity related to the business in which the Company is now involved or becomes involved during such employment, nor will he engage in any other activities that conflict with his obligations or responsibilities to the Company.
(ii)    Returning Company Documents and Property.  Subject to Section 7(b), Executive agrees that, at the time he leaves the employ of the Company, or at any other time at the Company’s reasonable request, he will deliver to the Company (and will not keep in his possession, recreate or deliver to anyone else) any and all software, devices, records, data, notes, reports, proposals, lists, correspondence, specifications, drawings, blueprints, sketches, materials, equipment, Confidential Information, other documents or property, or reproductions of any aforementioned items developed by him pursuant to his employment with the Company or otherwise belonging to the Company.  Subject to Section 7(b), to the extent Executive has retained any Company property or Confidential Information on any electronic or computer equipment belonging to him or under his control, Executive agrees to so advise the Company and to permanently delete 

17

Exhibit 10.5

all such property or Confidential Information and all copies, and to allow the Company reasonable access to such equipment for purposes of permanently deleting all such property or Confidential Information.  In the event of any termination of Executive’s employment with the Company, Executive agrees to provide such written assurances of his compliance with this Section 7(f)(ii) as the Company may reasonable request.
(iii)    Notification to New Employer.  During Executive’s employment with the Company and for 12 months thereafter, Executive will advise the Company of any new employer of his, or any other person or entity for whom he may perform services, either before or within three (3) days after accepting an offer to work for such employer or other person or entity.  Executive hereby agrees to notify, and grants consent to notification by the Company to, any new employer, or other person or entity for whom he may perform services, of his obligations under this Section 7 and under Section 5(d) above (relating to “Garden Leave”).
(iv)    Solicitation of Employees.  During his employment with the Company and for 12 months thereafter, Executive will not, either directly or indirectly, for himself or for any other person or entity: 
A.    solicit, induce, recruit or encourage any of the Company’s employees, consultants, independent contractors or any person who provides services to the Company to terminate or reduce their employment or other relationship with the Company, 
B.    hire any individual who is (or was within the six (6) months immediately preceding such hiring) an employee, exclusive consultant, or exclusive independent contractor of the Company, or 
C.    attempt to do any of the foregoing.
(v)    Solicitation of Customers.  During his employment with the Company and for 12 months thereafter, Executive will not, either directly or indirectly, (i) solicit, entice, or induce any Customer for the purpose of providing, or provide, products or services that are competitive with the products or services provided by the Company, or (ii) solicit, entice, or induce any Customer to terminate or reduce its business with (or refrain from increasing its business with) the Company.  As used in this subsection (f)(v) of Section 7, “Customer” means any person or entity to which the Company provided products or services (or was invested in products offered by the Company), and with which Executive had contact on behalf of the Company or about whom the Executive possesses Confidential Information, within the last twelve (12) months of his employment with the Company. 
(vi)    Noncompetition.  During his employment with the Company and for 12 months thereafter, Executive will not, either directly or indirectly: 
A.    have any ownership interest in, or participate in the financing, operation, management or control of, any Competitor; or 

18

Exhibit 10.5

B.    engage in or perform services (whether as an employee, consultant, proprietor, partner, director or otherwise) for any Competitor, if such services either (i) are the same as or similar to (individually or in the aggregate) the services Executive performed for the Company during his employment with the Company, or (ii) are performed with respect to products or services of the Competitor that are competitive with the products or services provided by the Company with which Executive was involved during his employment with the Company or about which Executive received or possessed Confidential Information during his employment with the Company. 
(vii)    As used in subsection (f)(vi) of Section 7, “Competitor” means any person or entity that competes with the Company and that is (i) a mortgage REIT, (ii) an entity or person engaged in any element of acquiring mortgage backed securities, including any private or public investment firm or broker dealer whose business strategy is based on or who engages in the trading, sales, investment or management of mortgage backed securities, or (iii) an entity or person that manages or advises (including as an external advisor) either a mortgage REIT or an entity or person engaged in any element of acquiring mortgage backed securities, including any private or public investment firm or broker dealer whose business strategy is based on or who engages in the trading, sales, investment or management of mortgage backed securities. The restrictions set forth in subsection (f)(vi) of this Section 7 will apply within or with respect to the United States and any other country in which the Company is then engaged in business. Executive acknowledges that the Company’s technology and products have worldwide application, including without limitation over the Internet and that such geographic scope is therefore reasonable. It is agreed that ownership of no more than 2% of the outstanding voting stock of a publicly traded entity will not constitute a violation of subsection (f)(vi) of this Section 7.  It will not be a breach of subsection (f)(vi) of this Section 7 for Executive to engage in the private practice of law at a private law firm following a termination of his employment for any reason, whether or not such practice relates to or includes services performed for a client of such law firm that is a Competitor, provided that Executive is only providing legal services to any such Competitor.
(viii)    Corporate Opportunities.  Executive agrees that, during his employment with the Company and for 12 months thereafter, Executive will not use, for his own personal gain or benefit, opportunities discovered in the course of his employment.  In addition, if during his employment with the Company Executive is approached about or otherwise become aware of a potential investment or other business transaction that may be appropriate for the Company, Executive will not take that opportunity for himself, will (if warranted) bring it to the Board’s attention, and will not share or disclose it to any third party, without either (x) the Board’s permission or (y) a good faith belief that sharing or disclosing it is in, or not opposed to, the Company’s best interests. 
(g)    Cooperation with Respect to Litigation. During the Term of Employment and at all times thereafter, Executive agrees to give written notice to the Company of any third-party claim against the Company promptly after becoming aware of such claim, and cooperate with the Company, in good faith and upon reasonable request by the Company, in connection with any 

19

Exhibit 10.5

pending, potential or future claim, investigation or action that directly or indirectly relates to any action, event or activity about which Executive may have knowledge in connection with or as a result of his employment by the Company. Such cooperation will include all assistance that the Company, its counsel or representatives may reasonably request, including reviewing documents, meeting with counsel, providing factual information and material, and appearing or testifying as a witness, in each case consistent with Executive’s other obligations under this Agreement and with his other personal and professional commitments after the Termination Date; provided, however, that the Company will promptly pay, or reimburse Executive for, any reasonable expense that he incurs in connection with any cooperation under this Section 7(g).  
(h)    Remedies. 
(i)    Executive acknowledges and agrees that the restrictions set forth in this Section 7 are critical and necessary to protect the Company’s legitimate business interests; are reasonably drawn to this end with respect to duration, scope, and otherwise; are not unduly burdensome; are not injurious to the public interest; and are supported by adequate consideration.  Executive agrees that it would be impossible or inadequate to measure and calculate the Company’s damages from any breach of the restrictions set forth in this Section 7.  Accordingly, Executive agrees that if he breaches or threatens to breach any such restriction, the Company will have available, in addition to any other right or remedy available, the right to seek an injunction from a court of competent jurisdiction restraining such breach or threatened breach and to specific performance of such restriction.  Executive further agrees that no bond or other security will be required in obtaining such equitable relief.  Executive further acknowledges and agrees that (x) any claim he may have against the Company, whether under this Agreement or otherwise, will not (except as otherwise expressly provided in Section 7(h)(iii) below) be a defense to enforcement of the restrictions set forth in this Section 7, (y) the circumstances of the termination of his employment with the Company will have no impact on his obligations under this Section 7, and (z) this Section 7 is enforceable by the Company, and its subsidiaries, its affiliates, and its permitted successors and assigns.    
(ii)    Executive, and the Company, agree and intend that Executive’s obligations under any subsection of this Section 7 (to the extent not perpetual) be tolled during any period that Executive is in material breach of any of the obligations in such subsection, so that the Company is provided with the full benefit of the restrictive period set forth in such subsection; provided that the extension by tolling for any subsection shall not exceed 12 months in the aggregate.
(iii)    Executive also agrees that, in addition to any other remedies available to the Company, in the event Executive breaches, in any material respect and without timely cure, any of his obligations under this Section 7, the Company shall also be entitled to the remedy described in Section 5(i) above. 
(iv)    Executive and the Company further agree that, in the event that any provision of this Section 7 is determined by any court of competent jurisdiction to be unenforceable by reason of its being extended over too great a time, too large a geographic area or too great a range of activities, that provision will be deemed to be modified to permit its enforcement to the maximum extent permitted by law.  The prevailing party in any action or proceeding under Section 7(h)(i) will be entitled to prompt reimbursement of all expenses (including, without limitation, 

20

Exhibit 10.5

attorney fees) that such party reasonably incurred in connection with such action or proceeding.  It is also agreed that each of the Company’s affiliates will have the right to enforce all of Executive’s obligations to that affiliate under this Agreement, including without limitation pursuant to this Section 7.
(v)    In the event that (A) the Company or any of its affiliates is, on or after the Termination Date, in material breach of any of its material obligations to Executive under this Agreement,  (B) Executive provides  written notice to the Company describing such breach in reasonable detail and requesting cure, within 30 days after he learns of the occurrence of such breach, (C) the Company does not cure such breach within 30 days after receipt of such notice, then (z) the restrictions (relating to competition and solicitation of customers) that are set forth in Sections 7(f)(v) and 7(f)(vi) will immediately become null and void.  For the avoidance of doubt, the Company and its affiliates will not be considered in breach of their obligations under this Agreement for purposes of this Section 7(h)(v) by reason of the Company or an affiliate exercising its rights under this Agreement in the event of a breach of this Agreement by Executive.
8.    Indemnification. The Company will indemnify Executive, to the fullest extent permitted by Maryland law as amended from time to time, against any and all costs, expenses, liabilities and losses (including, without limitation, attorneys’ fees, judgments, fines, penalties, ERISA excise taxes and amounts paid in settlement) actually and reasonably incurred by Executive in connection with any action, suit or proceeding, whether civil, criminal, administration, investigative, formal, informal or other (each, a “Proceeding”), provided that Executive’s involvement in such Proceeding relates to his positions with, or services for, the Company or any of its affiliates. Expenses incurred by Executive in connection with any such Proceeding will be paid, or reimbursed by the Company, promptly upon receipt by the Company of (i) a written affirmation of Executive’s good faith belief that Executive is entitled to indemnification by the Company pursuant to this Section 8 with respect to such expenses and proceeding, (ii) a written undertaking by Executive, or on Executive’s behalf, to and in favor of the Company, wherein Executive agrees to repay the amount if Executive is determined not to have been entitled to indemnification under this Section 8 and (iii) reasonable supporting documentation demonstrating that the expenses have been incurred.  While Executive is an officer of the Company, and for six years thereafter, the Company (or any successor thereto) will provide comprehensive coverage under its officers and directors insurance policy (or policies) on substantially the same terms and levels that it then provides coverage to its senior executive officers and/or to members of the Board of Directors, at the Company’s sole cost.  Nothing in this Agreement shall limit any right that Executive may have in respect of indemnification, advancement, or liability insurance coverage under any other Company Arrangement.  Notwithstanding the foregoing, in no event shall the foregoing indemnification apply to any costs, expenses, liabilities or losses resulting from Executive’s engaging in conduct that constitutes Cause.
9.    Clawback Policy.  Executive agrees that all bonuses, equity compensation and other incentive compensation provided by the Company will be subject to any clawback policy applying to senior executives of the Company generally that is implemented by the Board of Directors from time to time.

21

Exhibit 10.5

10.    Inventions
(a)    Assignment of Inventions.  Executive acknowledges that, during his employment by the Company, Executive may be expected to undertake creative work, either alone or jointly with others, which may lead to inventions, ideas, original works of authorship, developments, concepts, improvements, trade secrets or other intellectual property rights, in each case, whether or not patentable or registrable under patent, copyright or similar laws and including, in each case, tangible embodiment of any of the foregoing (“Inventions”).  Executive hereby agrees that any Invention that is created by him during his employment by the Company and that is related to the actual or prospective business of the Company or that results from work performed by Executive for the Company (whether or not on the Company’s premises or using the Company’s equipment and materials or during regular business hours) (“Company Inventions”) will be a work-for-hire and will be the sole and exclusive property of the Company and, to the extent such Company Inventions are not a work-for-hire, Executive hereby assigns to the Company Investment Corporation all of his right, title and interest in and to any and all such Company Inventions.  In addition, any Inventions created within three years after the termination of Executive’s employment by the Company which are based upon or derived from Confidential Information or Company Inventions will be the sole and exclusive property of the Company and Executive hereby assigns to the Company all of his right, title and interest in and to any and all such Company Inventions.  Nothing in the preceding sentence will be construed to limit Executive’s obligations under Section 10 of this Agreement.
(b)    Further Assistance.  Executive agrees to assist the Company, or its designee, upon reasonable request and at the sole expense of the Company or its designee, whether during his employment with the Company or thereafter, in every proper way to secure the Company’s, or designee’s, rights in the Company Inventions and any copyrights, patents, mask work rights or other intellectual property rights relating thereto in any and all countries, including disclosing to the Company or designee all pertinent information and data with respect thereto, executing, or causing to be executed, all applications, specifications, oaths, assignments and other instruments which the Company or designee reasonably deems necessary in order to apply for and obtain such rights and in order to assign and convey to the Company or designee the sole and exclusive rights, title and interest in and to such Company Inventions and any copyrights, patents, mask work rights or other intellectual property rights relating thereto.  If the Company, or its designee, is unable because of Executive’s mental or physical incapacity or for any other reason to secure Executive’s signature to apply for or to pursue any application for any United States or foreign patents, copyright registrations or other registrations covering Company Inventions, then Executive hereby irrevocably designates and appoints the Company, or its designee, and its duly authorized officers and agents as his agent and attorney in fact, to act for and in his behalf and stead to execute and file any such applications and to do all other lawfully permitted acts to further the prosecution and issuance of letters patent or copyright registrations thereon with the same legal force and effect as if executed by him, in each case at no expense to Executive.  Executive understands and acknowledges that this appointment is coupled with an interest and survives his death or incompetence.
(c)    Moral Rights.  To the extent not assignable, Executive hereby waives, to the extent permitted by applicable law, any and all claims he may now or hereafter have in any 

22

Exhibit 10.5

jurisdiction to all rights of paternity, integrity, disclosure and withdrawal and any other rights that may be known as “moral rights” with respect to all Company Inventions.
(d)    No License.  Executive understands and acknowledges that this Agreement does not grant him, and will not be construed to grant him, any license or right of any nature with respect to any Company Inventions or Confidential Information, other than as expressly set forth in this Agreement.
11.    Assignability; Binding Nature. This Agreement will inure to the benefit of the Company and Executive and their respective successors, heirs (in the case of Executive) and assigns. No rights or obligations of the Company under this Agreement may be assigned or transferred by the Company except that any such rights or obligations may be assigned or transferred pursuant to a merger or consolidation in which the Company is not the continuing entity, or the sale or liquidation of all or substantially all of the assets of the Company, provided that in each case the assignee or transferee is the successor to all or substantially all of the business and assets of the Company and such assignee or transferee assumes the liabilities, obligations and duties of the Company, as contained in this Agreement, either contractually or as a matter of law. This Agreement will not be assignable by Executive; provided however that, in the event of Executive’s death or a judicial determination of his incapacity, references to Executive in this Agreement will be deemed, where appropriate, to be references to his heir(s), estate, beneficiar(ies), executor(s) or other legal representative(s).
12.    Representation. The Company and Executive each represent and warrant that it or he is fully authorized and empowered to enter into this Agreement and that its or his entering into this Agreement, and the performance of its or his obligations under this Agreement, will not violate any document to which it or he is a party or by which it or he is bound.
13.    Entire Agreement; Inconsistency. This Agreement contains the entire agreement between the Company and Executive concerning the subject matter hereof and supersedes all prior agreements, understandings, discussions, negotiations and undertakings, whether written or oral, between them with respect thereto (including, without limitation, the Prior Employment Agreement); provided that nothing in this Agreement shall affect any obligations the Company may have to provide a 2018 annual bonus to Executive, honor outstanding equity awards granted to Executive, or provide unpaid salary, vacation or other benefits accrued prior to January 1, 2019 under the terms of the Prior Employment Agreement or of any other Company Arrangement.  In the event of any inconsistency between this Agreement and any other Company Arrangement, whether applicable on the date of this Agreement or at any time thereafter, this Agreement will, to the extent more favorable to Executive, control unless Executive otherwise agrees in a signed writing that specifically identifies the provisions of this Agreement whose control he is waiving.
14.    Amendment or Waiver. This Agreement can only be changed, modified or amended in a writing that is signed by both Executive and the Company and that specifically identifies the provision(s) of this Agreement that are being changed, modified or amended. No waiver by either the Company or Executive at any time of any breach by the other Party of any condition or provision of this Agreement will be deemed a waiver of a similar or dissimilar condition or provision at the 

23

Exhibit 10.5

same or at any prior or subsequent time. Any waiver must be in writing and signed by Executive or a specifically-authorized officer of the Company, as the case may be.
15.    Severability. In the event that any provision or portion of this Agreement is determined to be invalid or unenforceable for any reason, in whole or in part, the remaining provisions of this Agreement will be unaffected thereby and will remain in full force and effect to the fullest extent permitted by law.
16.    Reasonableness. To the extent that any provision or portion of this Agreement is determined to be unenforceable by a court of law or equity, or by any arbitration panel, that provision or portion of this Agreement will nevertheless be enforceable to the extent that such court or panel determines is reasonable.
17.    Survivorship. The respective rights and obligations of the Parties will survive any termination of the Term of Employment, or of Executive’s employment with the Company, to the extent necessary to the intended preservation of such rights and obligations.  For the avoidance of doubt, the covenants in Section 7 and the indemnification and insurance provisions of Section 8 of this Agreement will survive any termination of the Term of Employment or of Executive’s employment with the Company.
18.    Governing Law. This Agreement, the rights and obligations of the Parties under it, and any claims or disputes relating thereto will be governed by and construed in accordance with the laws of the State of New York (without regard to its choice of law provisions), other than rights and obligations (and related claims and disputes) under Section 8 (Indemnification), which will be governed by Maryland law.  
19.    Resolution of Disputes.  Any claim arising out of or relating to this Agreement, any other agreement between the Parties, Executive’s employment with the Company, or any termination thereof (each, a “Covered Claim”) will (except to the extent otherwise provided in Section 7(h)(i) with respect to certain requests for injunctive relief) be resolved by binding confidential arbitration, to be held in the Borough of Manhattan in New York City, before a panel of three arbitrators, in accordance with the Commercial Arbitration Rules (and not the National Rules for Resolution of Employment Disputes) of the American Arbitration Association and this Section 19.  Any award rendered by the panel will be accompanied by a written opinion setting forth in reasonable detail the basis for the award, and any such award may be entered in an court having jurisdiction thereof.   
20.    Notices.  Any notice, consent, demand, request, or other communication given to any person or entity in connection with this Agreement shall be in writing and will be deemed to have been given to such person or entity (i) when delivered personally to such person or entity,  (ii)  five days after being sent by prepaid certified or registered mail, or two days after being sent by a nationally recognized overnight courier, to the address specified below for such person or entity (or to such other address as such person or entity shall have specified by 10 days advance notice given in accordance with this Section 20), or (ii) in the case of the Company only, on the first business day after it is sent by facsimile to the facsimile number set forth below (or to such other facsimile number as has been specified on 10 days' advance notice given in accordance with this 

24

Exhibit 10.5

Section 20), with a confirmatory copy sent by certified or registered mail or by overnight courier in accordance with this Section 20.
		
	If to the Company:
	Chimera Investment Corporation

520 Madison Avenue, 32nd Floor
New York, NY  10022
Attn:  Chief Executive Officer
Fax #:  

		
	If to Executive:
	The address of his principal residence as it appears in the Company records, with a copy to him (during his employment with the Company) at his principal office at the Company and with a copy (which shall not constitute notice) to:

Morrison Cohen LLP
909 Third Avenue, 27th Floor
New York, NY  10022
Attn: Robert M. Sedgwick, Esq.
Fax: 212-735-8708

If to a beneficiary of Executive:  The address most recently specified by Executive or his beneficiary.

21.    Withholding.  The Company will be entitled to withhold from any amounts payable under this Agreement any federal, state, local or foreign withholding or other taxes or charges which the Company reasonably determines to be required to be withheld pursuant to applicable law.  The Company will use commercially reasonable efforts to establish a relationship with a broker-dealer to facilitate the sale of shares acquired on the vesting or exercise of any equity or equity-based compensation granted to Executive by the Company to enable Executive to satisfy all applicable withholding taxes due in connection with such vesting or exercise; provided that if the Company does not establish any such relationship, Executive may satisfy such withholding obligations by instructing the Company to retain shares otherwise deliverable to Executive upon the vesting or exercise of any such equity or equity-based award with a fair market value not exceeding the minimum amount required to be withheld by applicable law.
22.    Headings. The headings of the Sections and sub-sections contained in this Agreement are for convenience only and will not be deemed to control or affect the meaning or construction of any provision of this Agreement.
23.    Counterparts. This Agreement may be executed in two or more counterparts.  Signatures delivered by facsimile (including, without limitation, by “pdf”) will be deemed effective for all purposes.

25

Exhibit 10.5

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first written above.
 
     Chimera Investment Corporation
      
     By:____/s/ Gerard Creagh______________     
          Name: Gerard Creagh
Title: Chairman of the Compensation Committee of the Board of Directors

      
         
_/s/ Phillip Kardis, II_____________     
          Name: Phillip J. Kardis, II
                              Title: Chief Legal Officer       

26

Exhibit 10.5

Exhibit A

Incentive Compensation

I.    Annual Cash Bonus.

The following summarizes the material terms of the Annual Cash Bonus set forth in Section 3(b)(i) of the Agreement to which this Exhibit A is attached (the “Agreement”).  Unless otherwise specified in this Exhibit A, all defined terms have the meanings set forth in the Agreement.
1.    Performance Period.  The Annual Cash Bonus will be payable for each calendar year during the Term of Employment (each, an “Annual Cash Bonus Performance Period”).  The metrics described below will apply to the following Annual Cash Bonus Performance Periods:
		
	•
	January 1, 2019 through December 31, 2019

		
	•
	January 1, 2020 through December 31, 2020

		
	•
	January 1, 2021 through December 31, 2021

The metrics for subsequent Annual Cash Bonus Performance Periods will be determined by the Compensation Committee, in good faith, in consultation with, and subject to agreement of, the CEO. 
Except as otherwise provided in the Agreement, Executive will be eligible to receive the Annual Cash Bonus only if Executive remains employed by the Company through the last day of the applicable Annual Cash Bonus Performance Period.  In no event will Executive receive any unpaid Annual Cash Bonus in the event Executive’s employment is terminated by the Company for Cause.  For the avoidance of doubt, Executive will not be entitled to an Annual Cash Bonus for any Annual Cash Bonus Performance Period beginning on or after termination of Executive’s employment for any reason.  
Except as otherwise provided in the Agreement, any Annual Cash Bonus will be subject to achievement of the performance goals described in this Exhibit.  
2.    Target Cash Bonus.  For each Annual Cash Bonus Performance Period, Executive’s target Annual Cash Bonus (the “Target Cash Bonus”) will be equal to $1,485,000, which Target Cash Bonus may be increased by the Compensation Committee to account for the consummation of strategic initiatives, such as capital raises and M&A transactions, and any such increased amount will thereafter be the Target Cash Bonus for all purposes under the Agreement.  Executive is entitled to receive an Annual Cash Bonus from 0% to 250% of the Target Cash Bonus for each Annual Cash Bonus Performance Period, based on performance as described below.  
3.    Performance Component.  The Annual Cash Bonus will be payable based on the Company’s relative return on average equity (“Relative ROAE”).
4.    Definitions.  For purposes of this Exhibit A:  
“Company ROAE” means (i) Company Return for the Annual Cash Bonus Measurement Period, divided by (ii) Company Average Equity for the Annual Cash Bonus Measurement Period.  
“Relative ROAE” means Company ROAE as such amount stands in relation to the return on average equity (determined in the same way that the Company ROAE is determined) for the 

Exhibit 10.5

Annual Cash Bonus Measurement Period of the entities (other than the Company) included in the Peer Group described below.  Relative ROAE will be measured from the end of the third fiscal quarter of the calendar year immediately preceding the beginning of the Annual Cash Bonus Performance Period through the end of the third fiscal quarter of the Annual Cash Bonus Performance Period (i.e. Q3 to Q3 measurement period) (the “Annual Cash Bonus Measurement Period”).   
“Peer Group” means the entities (other than the Company) included in the iShares Mortgage Real Estate ETF as of the beginning of the applicable Annual Cash Bonus Measurement Period or LTI Measurement Period, as applicable.  Any entity (other than the Company) that ceases to be included in the iShares Mortgage Real Estate ETF during the Annual Cash Bonus Measurement Period or LTI Measurement Period, as applicable, shall be treated as performing at the lowest level in the Peer Group for such Annual Cash Bonus Measurement Period or LTI Measurement Period, as applicable.
“Company Return” means the Company’s net income as determined in accordance with GAAP and shown on the Company’s quarterly and annual financial statements as filed with the Securities and Exchange Commission, but excluding non-cash, non-operating expense items such as depreciation expense, amortization of goodwill and other non-cash, non-operating expense items as determined by the Compensation Committee in its sole discretion for the applicable Annual Cash Bonus Measurement Period.  If, for any portion of any Annual Cash Bonus Measurement Period, (i) the Company does not use hedge accounting or (ii) its derivative hedging instruments or any portion thereof are otherwise deemed ineffective, which in either case, results in changes in the value of such hedging instruments being recorded in the Company’s GAAP income statement, then any gains or losses from such hedging instruments will be excluded from the calculation of Company Return.
“Company Average Equity” means the stockholders’ equity of the Company as determined in accordance with GAAP and shown on the Company’s quarterly and annual financial statements as filed with the Securities and Exchange Commission, but excluding accumulated other comprehensive income or loss (which, among other things, reflects unrealized gains or losses in the Company’s portfolio), stockholders’ equity attributable to preferred stock and other items as determined by the Compensation Committee in its sole discretion for the applicable Annual Cash Bonus Measurement Period. For purposes of calculating Relative ROAE, Company Average Equity will be determined based on the average of the Company’s stockholders’ equity calculated as described in the preceding sentence as of the last day of each fiscal quarter during the applicable Annual Cash Bonus Measurement Period. Notwithstanding the foregoing, stockholder’s equity attributable to an issuance of common stock of the Company during the applicable Annual Cash Bonus Measurement Period shall be excluded from the calculation of “Company Average Equity” for a period of six months from such issuance.
5.    Annual Cash Bonus Earned.  
For each Annual Cash Bonus Performance Period, Executive will be entitled to receive, as Executive’s Annual Cash Bonus, from 0% to 250% of Executive’s Target Cash Bonus, based on the Company ROAE compared to that of the Peer Group (measured as a percentile) or, if the Threshold is determined under clause (x) of its definition, the Company ROAE compared to the Threshold, as follows:

Exhibit 10.5

	
		
	Relative ROAE*
	Percentage of Target Cash 
Bonus Payable

	Less than the Threshold
	0%

	50th Percentile
	100%

	75th Percentile
	175%

	100% Percentile
	250%

* Company ROAE is used to determine whether clause (x) of the Threshold is met.
 “Threshold” means the lesser of (x) the average of the weekly 2-year Treasury note rates published in the U.S. Reserve H.15 Report for the 52 weeks in the applicable Annual Cash Bonus Measurement Period plus 100 basis points or (y) the 25th percentile of Relative ROAE.  The percentage of Target Cash Bonus payable for Relative ROAE achieved between the Threshold and the 100th percentile that is not set forth in the above table, will be determined by linear interpolation.  
6.    Payment of Annual Cash Bonus.  Any Annual Cash Bonus will be paid in cash between December 1 of the applicable Annual Cash Bonus Performance Period and January 30 of the year following the last day of such Annual Cash Bonus Performance Period, subject (except as otherwise provided in the Agreement or this Exhibit A) to continued employment through the end of such Annual Cash Bonus Performance Period.
II.    Long-Term Incentive Compensation.

The following summarizes the material terms of the long term incentive compensation (“LTI”) in the form of RSUs and PSUs that is to be awarded under Section 3(b)(ii) of the Agreement to which this Exhibit A is attached.  Unless otherwise specified in this Exhibit A, all capitalized terms used in this Exhibit A have the meanings set forth in the Agreement.
7.    Performance Period.  The metrics described below will apply to the following performance periods (each an “LTI Performance Period”):
		
	•
	January 1, 2019 through December 31, 2019

		
	•
	January 1, 2020 through December 31, 2020

		
	•
	January 1, 2021 through December 31, 2021

The metrics for subsequent LTI Performance Periods will be determined by the Compensation Committee, in good faith, in consultation with, and subject to agreement of, the CEO.  
Except as otherwise provided in the Agreement or this Exhibit A, Executive will be eligible to receive payout on LTI only if Executive remains employed by the Company through the applicable vesting date (in the case of RSUs) and through the last day of the applicable PSU Performance Period (in the case of PSUs).   In no event will Executive receive any unpaid LTI in the event Executive’s employment is terminated by the Company for Cause.  For the avoidance of doubt, Executive will not be entitled to LTI for any LTI Performance Period beginning on or after termination of Executive’s employment for any reason.
Except as otherwise provided in the Agreement or this Exhibit A, any LTI will be subject to the vesting conditions and achievement of the performance goals described below  

Exhibit 10.5

8.    Target LTI.  For each LTI Performance Period, Executive’s target LTI will be equal to $990,000 (the “Target LTI”), which Target LTI may be increased by the Compensation Committee to account for the consummation of strategic initiatives, such as capital raises and M&A transactions, and any such increased amount will thereafter be the LTI for all purposes under the Agreement and this Exhibit A.  
9.    Performance Components.  For each LTI Performance Period, the LTI will consist of two components:
		
	•
	RSUs.  For each LTI Performance Period, Executive will be granted, as of the first day in the LTI Performance Period, a number of RSUs having an aggregate value on such first day equal to 50% of the Target LTI.  Subject (except as otherwise provided in this Exhibit A or in the Agreement) to Executive remaining employed by the Company through the applicable vesting date (the “Time-Based Vesting Date”) and meeting all applicable requirements set forth in the Agreement and this Exhibit A, the RSUs will vest in three equal installments on each of the first three anniversaries of the date of grant.  Unless otherwise provided in the Agreement or this Exhibit A, the vested portion of the RSUs will be paid in common stock of the Company within 60 days after the vesting date, or such other date as may be specified in the documents governing the awards.  

		
	•
	PSUs.  For each LTI Performance Period, Executive will be granted, as of the first day of the LTI Performance Period a target number of PSUs having an aggregate value on such first day equal to 50% of the Target LTI (the “Target PSUs”).  The PSU Performance Periods shall be as follows (each corresponding to the LTI Performance Period beginning on the same date, as applicable):

		
	•
	January 1, 2019 through December 31, 2021

		
	•
	January 1, 2020 through December 31, 2022

		
	•
	January 1, 2021 through December 31, 2023

Subject (except as otherwise provided in the Agreement or this Exhibit A) to Executive’s continuing employment through the last day of the applicable PSU Performance Period, between 0% and 200% of the Target PSUs will vest as of the last day of such PSU Performance Period and be paid in common stock of the Company between December 1 of such PSU Performance Period and January 30 of the year following the last day of such PSU Performance Period, based on the Company Economic Return compared to that of the Peer Group (measured as a percentile) or, if the Threshold is determined under clause (x) of its definition, the Company Economic Return compared to  the Threshold, as follows:
	
		
	Relative Economic Return*
	Percentage of Target PSUs Vesting and Payable

	Less than the Threshold
	0%

	50th Percentile
	100%

	75th Percentile
	200%

* Company Economic Return is used to determine whether clause (x) of the Threshold is met.

Exhibit 10.5

 “Threshold” means the lesser of (x) the average weekly interest rate on the 2-year U.S. Treasury note during the applicable LTI Measurement Period plus 100 basis points or (y) the 25th percentile of Relative Economic Return.  For any Relative Economic Return achieved between the Threshold and 75th percentiles and not specified in the above table, the percentage of the Target PSUs that will vest for the applicable PSU Performance Period will be determined by linear interpolation.
Notwithstanding anything in the Agreement or this Exhibit A to the contrary, upon the consummation of a Change in Control, (i) the percentage of the Target PSUs that would have vested in accordance with the preceding table based on the Company’s actual Relative Economic Return from the first day of the applicable LTI Measurement Period through the end of the most recent fiscal quarter prior to such Change in Control for which data is available (or the last day of the applicable LTI Measurement Period, if earlier)  will be eligible to vest on the last day of the applicable PSU Performance Period, subject only to Executive’s continuing employment with the Company (except as otherwise provided in Sections 5(a), 5(b) or 5(e) of the Agreement), and (ii) any portion of the Target PSUs that would not have vested in accordance with the preceding table based on the Company’s actual Relative Economic Return from the grant date through the date of such Change in Control will be forfeited as of such Change in Control with no compensation due therefor.  
The RSUs and PSUs will be granted to Executive under the Company’s current Equity Compensation Plan (or its successor).  
10.    Definition of Relative Economic Return. For purposes of the PSUs: 
“Company Economic Return” means (x) the Company’s change in book value per share (“BVPS”), plus (y) common stock dividends, for the LTI Measurement Period.
“Relative Economic Return” means (i) the Company Economic Return for the LTI Measurement Period, divided by (ii) BVPS at the beginning of the LTI Measurement Period, as such amount stands in relation to the economic return (measured in the same way that the Company Economic Return is measured) during the LTI Measurement Period of the entities in the Peer Group.  Relative Economic Return will be measured from the end of the third fiscal quarter of the calendar year immediately preceding the beginning of the PSU Performance Period through the end of the third fiscal quarter of the last calendar year in the PSU Performance Period (i.e. Q3 to Q3 measurement period) (the “LTI Measurement Period”).
III.    Dividend Equivalents

Dividend equivalents will accrue on RSUs and PSUs granted hereunder as and when dividends are paid to the Company’s shareholders and, to the extent that the RSUs and PSUs become vested, will be paid to Executive in cash, shares or a combination thereof, as determined by the Committee in its sole discretion, at the time such RSUs or PSUs are settled.
IV.    Committee Determinations

All determinations with respect to the Annual Cash Bonus and the LTI, including, without limitation, the amount, if any, that is payable to Executive for each performance period, will be made by the Compensation Committee, in good faith, and in compliance with the Agreement and this Exhibit A.  All such determinations will be final and binding on Executive and the Company.

Exhibit 10.5

Exhibit B

General Release

IN CONSIDERATION OF good and valuable consideration, the receipt of which is hereby acknowledged, and in consideration of the terms and conditions contained in the Employment Agreement, effective as of January 1, 2019, (the “Agreement”) by and between Phillip J. Kardis, II (the “Executive”) and Chimera Investment Corporation (the “Company”), the Executive on behalf of himself and any person or entity claiming by, through, or under him (including without limitation his heirs, executors, administrators, spouse, personal representatives and assigns), releases and discharges the Company and its past, present and future subsidiaries, divisions, affiliates and parents, and their respective current and former officers, directors, employees, attorneys, agents, benefit plans, and/or owners, and their respective successors and assigns, and any other person or entity claimed to be jointly or severally liable with the Company or any of the aforementioned persons or entities (collectively, the “Released Parties”) from any and all manner of actions and causes of action, suits, debts, dues, accounts, bonds, covenants, contracts, agreements, judgments, charges, claims, attorneys’ fees and costs, and demands whatsoever (“Claims”) which the Executive (or any person or entity claiming by, through, or under him) have, had, or may have, against the Released Parties or any of them arising at any time from the beginning of the world to the date Executive executes this General Release, whether known or unknown, accrued or unaccrued, contingent or noncontingent.  The Claims described in this paragraph include without limitation, (i) any and all Claims relating to the Executive’s employment with the Company and the cessation thereof, (ii) any and all Claims for discrimination based on age, sex, race, color, disability status, national origin, religion, or any other protected characteristic, including but not limited to, Claims under Title VII of the Civil Rights Act of 1964, 42 U.S.C. §§ 2000 et seq., the Age Discrimination in Employment Act of 1967, 29 U.S.C. §§ 621 et seq. (the “ADEA”), the Americans with Disabilities Act of 1990, 42 U.S.C. §§ 12101 et seq., the New York State and New York City Human Rights Laws, and all state and local analogues of such statutes, each as amended, (iii) any and all Claims under all federal, state, and local statutes, rules, regulations, or ordinances, each as amended, including but not limited to, the Family and Medical Leave Act of 1993, 29 U.S.C. §§ 2601 et seq., the Worker Adjustment and Retraining Notification Act of 1988, 29 U.S.C. §§2101 et seq., the Employee Retirement Income Security Act of 1974, 29 U.S.C. §§ 1001 et seq., the New York Labor Laws, the New York Whistleblower Protection Law (to the fullest extent they may be released under applicable law), the New York Civil Rights Law (N.Y. Civ. Rts. § 1, et seq.), the New York AIDS/HIV confidentiality law (N.Y. Public Health Law §2780), the New York Equal Pay Law, New York State Labor Relations Act, Article 23-A of the New York State Corrections Law, New York Family Leave Law, New York Minimum Wage Act, New York Wage and Hour Law, New York Wage Payment Law, New York State Worker Adjustment and Retraining Notification Act, and retaliation provisions of New York Workers' Compensation Law, and (iv) any and all Claims under the common law of any jurisdiction, including but not limited to, breach of contract, defamation, interference with contractual/prospective contractual relations, invasion of privacy, promissory estoppel, negligence, breach of the covenant of good faith and fair dealing, fraud, infliction of emotional distress, and wrongful discharge; provided, however, that the Executive does not release or discharge the Released Parties from: any of the obligations that arise under, or are preserved by, Section 5 of the Agreement; any Claim for unemployment or workers’ compensation benefits; any Claim that arises after the date 

Exhibit 10.5

on which the Executive signs this General Release; or any Claim that is not waivable under applicable law.  It is the intention of the Executive that the language relating to the description of Claims in this paragraph will be given the broadest possible interpretation permitted by law.  It is understood that nothing in this General Release is to be construed as an admission on behalf of the Released Parties of any wrongdoing with respect to the Executive, any such wrongdoing being expressly denied. The Executive represents and warrants that he fully understands the terms of this General Release, that he has been encouraged to seek, and has sought, the benefit of advice of legal counsel, and that he knowingly and voluntarily, of his own free will, without any duress, being fully informed, and after due deliberation, accepts its terms and signs below as his own free act. Except as otherwise provided in this Release, the Executive understands that as a result of executing this General Release, he will not have the right to assert any Claims that the Company or any other of the Released Parties unlawfully terminated his employment or violated any of his rights in connection with his employment or otherwise.
The Executive agrees and covenants not to file, initiate, or join any lawsuit (either individually, with others, or as part of a class), in any forum, pleading, raising, or asserting any Claim(s) barred or released by this General Release.  If he does so, and the action is found to be barred in whole or in part by this General Release, the Executive agrees to pay the attorneys’ fees and costs, or the proportions thereof, incurred by the applicable Released Party in defending against those Claims that are found to be barred by this General Release.  Nothing in this General Release precludes the Executive from challenging the validity of this General Release under the requirements of the Age Discrimination in Employment Act, and the Executive will not be responsible for reimbursing the attorneys’ fees and costs of the Released Parties in connection with such a challenge to the validity of the release.  The Executive, however, acknowledges that this General Release applies to all Claims that he has under the Age Discrimination in Employment Act, and that, unless the release is held to be invalid, all of the Executive’s Claims under that Act will be extinguished by execution of this General Release.  The Executive further agrees that nothing in this General Release will preclude or prevent the Executive from filing a charge with, providing information to, or cooperating with the U.S. Equal Employment Opportunity Commission, the U.S. Securities and Exchange Commission, or other government agency, and the Executive understands that he does not need the prior authorization of any of the Released Parties prior to taking any such action.  The Executive will not seek or accept any relief obtained on his behalf by any government agency, private party, class, or otherwise with respect to any Claims released in this General Release, and, in the event the Executive receives such monetary relief, the Company will be entitled to an offset for the payments made pursuant to the Agreement and this General Release.  This General Release does not limit the Executive’s right to receive an award from any government agency that provides awards for providing information relating to a potential violation of law.
Please take notice that federal law provides criminal and civil immunity to federal and state claims for trade secret misappropriation to individuals who disclose a trade secret to their attorney, a court, or a government official in certain, confidential circumstances that are set forth at 18 U.S.C. §§ 1833(b)(1) and 1833(b)(2), related to the reporting or investigation of a suspected violation of the law, or in connection with a lawsuit for retaliation for reporting a suspected violation of the law.

Exhibit 10.5

The Company hereby advises the Executive to consult with counsel before executing this General Release.  The Executive may take twenty-one (21) days to consider whether to execute this General Release and discuss it with counsel of his own choosing.  The Executive agrees that changes made to this General Release, whether material or immaterial, do not restart the aforementioned twenty-one (21) day period.  Upon the Executive’s execution of this General Release, the Executive will have seven (7) days after such execution in which he may revoke such execution.  In the event of revocation, the Executive must present written notice of such revocation to the office of the Company’s Corporate Secretary.  If seven (7) days pass without receipt of such notice of revocation, this General Release will become binding and effective on the eighth (8th) day after the execution hereof.  Signatures delivered by facsimile (including, without limitation, by “pdf”) will be effective for all purposes.
INTENDING TO BE LEGALLY BOUND, I hereby set my hand below:

______________________    
  
Dated:________________

 

Exhibit 10.5

Exhibit C

[Prior Inventions]Exhibit 4.4

 

BANK FIRST NATIONAL

 

RETIREMENT PLAN

 

Amended and Restated effective January 1, 2017

 

    			

     

    

 

BANK FIRST NATIONAL

RETIREMENT PLAN

 

TABLE OF CONTENTS

 

	Article I	Definitions and Construction	1-1
	1.1	Definitions	1-1
	1.2	Construction	1-8
	 	 	 
	Article II	Eligibility and Participation	2-1
	2.1	Eligible Employees	2-1
	2.2	Commencement of Participation	2-2
	2.3	Termination of Participation	2-2
	2.4	Reemployment	2-2
	 	 	 
	Article III	Contributions and Allocations	3-1
	3.1	Employer Contributions.	3-1
	3.2	Participant Contributions	3-2
	3.3	Matching Contributions	3-4
	3.4	Timing of Contributions	3-5
	3.5	Allocation of Forfeitures	3-5
	3.6	Rollovers from Other Employee Benefit Plans	3-5
	3.7	Return of Contributions	3-6
	3.8	Contribution and Allocation Restrictions	3-6
	3.9	Dividend Reallocations	3-6
	3.10	Money Purchase Plan Accounts	3-6
	 	 	 
	Article IV	Valuation and Accounting	4-1
	4.1	Valuation and Accounting	4-1
	4.2	Acquisition Loan Accounts	4-1
	4.3	Valuation of Qualifying Employer Securities	4-2
	4.4	Acquisition of Qualifying Employer Securities	4-3
	 	 	 
	Article V	Contribution and Allocation Restrictions	5-1
	5.1	Annual Addition Limitation.	5-1
	5.2	Top-Heavy Restrictions	5-2
	5.3	Actual Deferral Percentage Test	5-2
	5.4	Actual Contribution Percentage Test.	5-7
	5.5	Separate Testing	5-10
	5.6	Limitation if Shareholder Elect(s) Gain Deferral	5-10
	 	 	 
	Article VI	Vesting	6-1
	6.1	Vesting	6-1
	6.2	Forfeitures	6-2
	6.3	Reinstatement.	6-2

 

    	 	i	 

     

    

 

	Article VII	Distributions	7-1
	7.1	Payment of Retirement Benefits	7-1
	7.2	Form and Method of Payment.	7-2
	7.3	Death Benefits	7-3
	7.4	Required Lifetime Distributions	7-5
	7.5	In-Service Withdrawals.	7-6
	7.6	Hardship Distributions	7-6
	7.7	Right of First Refusal	7-8
	7.8	Put Option	7-10
	7.9	Qualified Domestic Relations Orders	7-11
	7.10	Elective Deferrals and Safe Harbor Contributions	7-11
	7.11	Distribution Rules for Money Purchase Plan Assets	7-11
	 	 	 
	Article VIII	Administration of the Plan	8-1
	8.1	Designation of Administrator	8-1
	8.2	Administration and Interpretation	8-1
	8.3	Administrator’s Duties	8-1
	8.4	Authority	8-1
	8.5	Maintenance of Accounts and Reports	8-1
	8.6	Examination of Financial Statements and Audits	8-2
	8.7	Agent for Service of Process	8-2
	8.8	Bond	8-2
	8.9	Compensation and Expenses	8-2
	8.10	Limitation of Authority	8-2
	8.11	Limitations on Liability	8-2
	8.12	404(c) Compliance	8-2
	8.13	Diversification Requirements for Employer Securities	8.3
	 	 	 
	Article IX	Administration of the Trust	9-1
	9.1	Appointment of Trustee	9-1
	9.2	Authorization for Trust Agreement	9-1
	9.3	Participant Direction of Investment of Account	9-1
	9.4	Funding Policy	9-1
	9.5	Diversification of Investments	9-1
	9.6	Voting Rights	9-2
	 	 	 
	Article X	Claims Procedure	10-1
	10.1	Application for Benefits	10-1
	10.2	Review of Denied Claim	10-1
	 	 	 
	Article XI	Amendment and Termination	11-1
	11.1	Amendment or Restatement	11-1
	11.2	Termination and Discontinuance of Contributions	11-1
	11.3	Merger, Consolidation or Transfer of Assets and Liabilities	11-2
	11.4	Successor Employer	11-2

 

    	 	ii	 

     

    

 

	Article XII	General Provisions	12-1
	12.1	Limitation on Liability	12-1
	12.2	Indemnification	12-1
	12.3	Compliance with ERISA	12-1
	12.4	Nonalienation of Benefits	12-1
	12.5	Employment Not Guaranteed by Plan	12-1
	12.6	Facility of Payment	12-1
	12.7	Location of Participant or Beneficiary Unknown	12-2
	12.8	Offset	12-2
	12.9	Military Leave	12-2

 

    	 	iii	 

     

    

 

INTRODUCTION

 

This amended and restated
document is effective as of this 1st day of January, 2017.

 

Effective March 16, 1987,
First Manitowoc Bancorp (the “Company”), the holding company of First National Bank in Manitowoc (the “Bank”)
adopted the First National Bank in Manitowoc 401(k) Profit Sharing Plan (this “Plan”) to allow employees of the Company
and the Bank (and employees of certain related organizations) to make additional pre-tax contributions toward their own retirement
savings. As established, the Plan was intended to be a 401(k)-profit sharing plan and the Company received a favorable determination
letter from the Internal Revenue Service (“IRS”) to confirm this status in December 1997.

 

In 2002, the frozen First
National Bank in Manitowoc Money Purchase Plan (the “Money Purchase Plan”) was merged into this Plan. Frozen individual
accounts from the Money Purchase Plan have been carried forward into the “Money Purchase Plan Accounts” referenced
in Section 1.1(a) below.

 

Effective January 1, 2003,
the Company amended the Plan into a “stock bonus plan” consisting of: (1) an employee stock ownership plan (or “ESOP”),
within the meaning of Section 4975(e)(7)(A) of the Internal Revenue Code of 1986, as amended (the “Code”); and (2)
a qualified cash or deferred arrangement (or “CODA”) within the meaning of Code Section 401(k)(2). Such combined plans
are often referred to as “KSOPs.”

 

On February 12, 2008, the
Company renamed the Plan to reflect the change in the name of the Bank from “First National Bank in Manitowoc” to “Bank
First National.” As renamed, the Plan became known as the Bank First National Retirement Plan (with the Company as the primary
sponsor of the Plan).

 

The Company timely amended
and restated the Plan, effective as of January 1, 2010, as the EGTRRA Cycle D restatement, which incorporated prior Plan amendments
and applicable legislative and regulatory amendments. The Cycle D restatement received a favorable determination letter from the
IRS dated September 20, 2013.

 

Effective January 1, 2014,
the Company amended and restated the Plan in its entirety, in order to timely submit the Plan to the IRS for a favorable determination
letter under Cycle D-2 of the remedial amendment period filing procedures set forth in IRS Notice 2013-84 (i.e., the 2013 Cumulative
List). The Company’s EIN is 39-1435359. Effective July 1, 2014, the Company changed its name to Bank First National Corporation,
in order to better align the name of the holding company parent with the name of its wholly-owned subsidiary, Bank First National.

 

Both the Company and the
Bank are C-corporations. Neither the Company nor the Bank have ever been an S-corporation. The Company’s stock is traded
on the Over-The-Counter Bulletin Board (“OTC:BB”) which is not considered “publicly traded” for purposes
of the diversification requirements set forth in Code Section 401(a)(35).

 

    		iv	 

     

    

 

article
I

 

Definitions and Construction

 

1.1       Definitions.
Unless a different meaning is clearly required by the context, the following words, when used in this Plan, shall have the meaning(s)
set forth below.

 

(a)          Account.
One or more individual account(s) maintained to record each Participant’s benefits under the Plan and his or her interest
in the Trust. Consistent with the terms of this document, a Participant may have one or more of the following sub-accounts in his
or her name under this Plan:

 

●      an Elective
Contribution Account;

 

●      a Matching
Contribution Account;

 

●      an Employer
Contribution Account;

 

●      a Money
Purchase Plan Account;

 

●      a Prior
Plan Account; and

 

●      a Rollover
Account

 

(b)          Administrator.
The Administrator (sometimes referred to herein as the “Plan Administrator”) shall be the named fiduciary who shall
control and manage the operation and administration of the Plan. The Administrator shall be the Bank, acting by its board of directors
or any delegate(s) duly authorized by the Bank’s board of directors.

 

(c)          Acquisition
Loan. A loan (or other extension of credit) used by the Trust to finance the acquisition of Qualifying Employer Securities,
which loan may constitute an extension of credit to the Trust from a party in interest (as defined in ERISA). An Acquisition Loan
must satisfy all of the requirements of the Code and ERISA, including Code Section 4975 (including Treasury Regulation Section
54.4975-7) and ERISA Section 408(b)(3). Additionally, an Acquisition Loan must be approved, in writing, by the Bank’s Compensation,
Pension and Retirement Committee or by the Bank’s Board of Directors. No Acquisition Loans have been made to the Plan.

 

(d)          Break
in Service. A Plan Year during which a Participant is not credited with more than 1 Hour of Service with an Employer. With
respect to any Plan Year that is less than 12 consecutive months, the determination period shall be the 12 consecutive month period
beginning on the first day of such Plan Year.

 

(e)          Code.
The Internal Revenue Code of 1986, as amended from time to time, and as interpreted by applicable regulations and rulings.

 

(f)          Company.
Bank First National Corporation (f/k/a First Manitowoc Bancorp) and any successor. The Company’s name change from First Manitowoc
Bancorp to Bank First National Corporation became effective July 1, 2014. The Company’s board of directors, or its delegate(s),
shall act on behalf of the Company for purposes of this Plan.

 

    	 	1-1	 

     

    

 

(g)          Compensation.
An Employee’s wages for federal income tax withholding purposes, as defined under Code Section 3401(a), plus all other payments
to an Employee in the course of the Employer’s trade or business, for which the Employer must furnish the Employee a written
statement under Code Sections 6041, 6051 and 6052, but determined without regard to any rules that limit the remuneration included
in wages based on the nature or location of the employment or services performed (such as the exception for agricultural labor
in Code Section 3401(a)(2)).

 

Notwithstanding
the preceding or any other Plan provision(s) to the contrary, Compensation shall include “elective contributions.”
For purposes of this provision, “elective contributions” are amounts excludible from the Employee’s gross income
under Code Sections 125, 132(f)(4), 402(e)(3), 402(h)(2), 403(b), 408(p) or 457. Effective January 1, 2009, differential wage payments
from the Company to Participants who are performing Qualified Military Service will be included as Compensation.

 

Compensation shall
exclude the following amounts for all Plan purposes: severance pay and Compensation paid after an Employee’s last
day of employment with any Employer.

 

Compensation shall
exclude the following amounts for purposes of Plan allocations: group term life insurance benefits (even if taxable to the
Participant), annual cash holiday bonus payments, supplemental life insurance provided to the individuals who serve on the Company’s
Board of Directors, any automobile allowance (whether or not such amount is taxable to the individual), clothing allowances and
any other taxable or non-taxable fringe benefits or other benefits made available by the Employer to the Employee from time to
time that is not part of the Employee’s base salary.

 

The annual Compensation
of each Employee taken into account for determining all benefits provided under the Plan for any Plan Year shall not exceed the
adjusted annual compensation limit provided in Code Section 401(a)(17), which adjustments shall be made annually by the Secretary.
The annual Compensation limit for the Plan Year beginning January 1, 2016 is $265,000. If Compensation is determined for a period
of time that contains fewer than 12 consecutive months, the annual compensation limit shall be applied on a pro rata basis.

 

(h)          Disability.
A Participant will be considered to have a Disability if the Participant terminates employment with each Employer under circumstances
that entitle the Participant to receive long term disability benefits under the disability provisions of the Company’s or
the Bank’s long term disability plan (the “LTD Plan”) or, for a Participant who does not also participate in
the LTD Plan, under circumstances that would entitle the Participant to LTD Plan benefits if the individual did participate in
the LTD Plan. The Administrator shall determine whether an individual who does not participate in the LTD Plan satisfies the requirements
of the LTD Plan. The Administrator shall determine the date that a disability is deemed to have occurred. The Administrator may
require a Participant to submit to a physical examination in order to confirm a Disability. The Administrator shall apply the terms
of this provision in a nondiscriminatory manner.

 

    	 	1-2	 

     

    

 

(i)           Disqualified
Person. An Employer, an owner (either direct or indirect) of 50% or more of the voting power or total value of all classes
of stock entitled to vote, an officer or director of an Employer, a holder of 10% or more of an Employer’s shares and any
other person defined as a “disqualified person” in Code Section 4975(e)(2).

 

(j)           Effective
Date. The Effective Date of the original Plan is March 16, 1987. Except as otherwise noted in this document, the Effective
Date of this restatement is January 1, 2017.

 

(k)          Employee.
A person who is employed by an Employer or who is a Leased Employee who is deemed to be an employee of the Employer under applicable
Code provisions.

 

(l)          Employer.
The Company and any “participating employer” that adopts this Plan and whose participation in this Plan is approved,
in writing, by the Company shall be considered an Employer under this Plan. As of the Effective Date of this restatement Bank First
National (f/k/a First National Bank in Manitowoc) is a participating employer. (Prior to January 1, 2010, the George V. Reis Investment
Group and, the Vincent Group were participating employers in this Plan.) Each of the preceding “participating employers”
is also a member of the same controlled group that includes the Company, such that this Plan is a single employer plan, not a multiple
employer plan.

 

(m)          ERISA.
The Employee Retirement Income Security Act of 1974, as amended from time to time, and as interpreted by applicable regulations
and rulings.

 

(n)          Forfeiture.
The non-vested portion of a Participant’s Account that is forfeited upon distribution of a Participant’s Account following
his or her termination of employment or upon the Participant incurring five (5) consecutive one-year breaks in Service.

 

(o)          Highly
Compensated Employee (or “HCE”). An Employee who performs services for an Employer or any other employer (a “related
company”) required to be aggregated with an Employer under Code Sections 414(b), (c), (m), or (o) and who: [i] was a 5% owner
of an Employer or any related company at any time during the current or immediately preceding Plan Year; or [ii] received Compensation
from an Employer or a related company in excess of $80,000 (as adjusted pursuant to Code Section 414(q)(1)) Effective January 1,
2016, the HCE limit is $120,000. A Highly Compensated Employee shall also include any individual who was a highly compensated active
employee for either the year in which he or she separated from service or any year ending on or after the individual’s 55th
birthday.

 

(p)          Hour
of Service. For Employees whose actual hours of employment are tracked by an Employer, an Hour of Service shall equal:

 

    	 	1-3	 

     

    

 

(i)       Each
hour for which an Employee is paid, or entitled to payment for the performance of service for an Employer.

 

(ii)       Each
hour for which an Employee is paid, or entitled to payment by an Employer on account of a period of time during which no duties
are performed (irrespective of whether the employment relationship has terminated) due to vacation, holiday, illness, incapacity
(including disability), layoff, jury duty, military duty, or leave of absence. No more than one Hour of Service will be credited
under this Section (ii) for any single continuous period (whether or not such period occurs in a single Plan Year or other computation
period). Hours under this Section (ii) will be calculated and credited pursuant to Section 2530.200b-2 of the Department of
Labor Regulations, which is incorporated herein by this reference, and shall govern the determination of an individual’s
Hours of Service.

 

(iii)       Each
hour for which back pay, regardless of any mitigation of damages, is either awarded or agreed to by an Employer, provided that
the same Hours of Service will not be credited under Section (i) or Section (ii), as the case may be, and under this Section (iii).

 

(iv)       Hours
of Service will be credited to each Employee for the computation period in which the duties are performed or would have been performed
or, in the case of Section (iii) above, for the computation period or periods to which the award or agreement pertains rather than
the computation period in which the award, agreement or payment is made.

 

(v)       Solely
for purposes of determining whether a Break in Service has occurred for participation and vesting purposes, an individual who is
absent from work for maternity or paternity reasons shall receive credit for the Hours of Service which would otherwise have been
credited to such Employee but for such absence or, in any case in which such Hours of Service cannot be determined, eight Hours
of Service per day of such absence. For purposes of this paragraph, an absence from work for maternity or paternity reasons means
an absence: [a] by reason of the pregnancy of the Employee; [b] by reason of a birth of a child of the Employee; [c] by reason
of the placement of a child with the Employee in connection with the adoption of such child by the Employee; or [d] for purposes
of caring for such child for a period immediately following such birth or placement. The Plan shall credit Hours of Service pursuant
to this paragraph first to the Plan Year in which the absence begins to the extent necessary to prevent a Break in Service in that
Plan Year, then to the Plan Year following the Plan Year in which the absence begins. No more than 1 hour will be credited under
this Section. The Plan shall not award Hours of Service pursuant to this Section unless the Employee involved provides the Administrator
such information as the Administrator reasonably requires to establish the purpose of the absence as consistent with this paragraph
and to establish the number of days in the absence.

 

    	 	1-4	 

     

    

 

(vi)       Hours
of Service shall be credited for employment with other members of an affiliated service group (under Code Section 414(m)), a controlled
group of corporations (under Code Section 414(b)), a group of trades or businesses under common control (under Code Section 414(c))
of which an Employer is a member, any other entity required to be aggregated with the Company pursuant to Code Section 414(o) and
for services performed as a Leased Employee.

 

(vii)       To
the extent consistent with guidelines adopted by the Company and applicable Code and ERISA provisions, Hours of Service shall be
granted or credited based upon the preceding principles, applied the periods before a particular Employer adopted (or agreed to
be a “participating employer”) under this Plan.

 

Employees whose actual
hours of employment are not tracked by an Employer (i.e., exempt employees) shall receive: 10 Hours of Service for a daily
equivalency; 45 Hours of Service for a weekly equivalency; 95 Hours of Service for a semimonthly equivalency; or 190 Hours of Service
for a monthly equivalency. An Employee’s equivalency period shall equal the unit or period for which the employee receives
a paycheck.

 

Notwithstanding the preceding
and to the extent consistent with the Code and ERISA, the Company may, in its sole discretion, uniformly grant Hours of Service
for prior service with any company or entity that an Employer acquires (whether through an acquisition of a direct ownership interest,
a statutory merger, an acquisition of assets or any other similar transaction).

 

(q)          Income.
The income or loss allocable to an Account.

 

(r)           Investment
Committee. The Employees responsible for selecting, evaluating and monitoring the Plan’s investment options in accordance
with the Plan’s Investment Policy Statement. The members of the Investment Committee shall be selected by the Vice President
of Human Resources and their appointment approved by the Compensation, Pension and Retirement Committee. Leased Employees, senior
management Employees, and members of any Employer board of directors may not serve as members of the Investment Committee.

 

(s)          Key
Employee. Any Employee or former Employee and the beneficiaries of such Employee who, pursuant to Code Section 416(i), during
the Plan Year, is or was: [a] an officer of an Employer who received compensation (as defined in Code Section 414(q)(7)) in excess
of 50% of the dollar limitation under Code Section 415(b)(1)(A); [b] a 5% owner of an Employer; or [c] a 1% owner of an Employer
who received compensation (as defined in Code Section 414(q)(7)) of more than $150,000, as adjusted by the Internal Revenue Service.

 

    	 	1-5	 

     

    

 

(t)           Leased
Employee. Any person (other than an Employee of an Employer who, pursuant to an agreement between that Employer and any other
person (the “leasing organization”), has performed services for an Employer (or for that Employer and related persons
determined in accordance with Code Section 414(n)(6)) on a substantially full-time basis for a period of at least one year, and
such services are performed under the Employer’s direction or control. Notwithstanding this general rule, a Leased Employee
shall not be considered an Employee of an Employer if: (i) the Leased Employee is covered by a money purchase pension plan
providing: [a] a non-integrated employer contribution rate of at least 10% of Compensation; [b] immediate participation;
and [c] full and immediate vesting; and (ii) all Leased Employees do not constitute more than 20% of the Employer’s non-Highly
Compensated Employees.

 

(u)          Normal
Retirement Date. A Participant’s 65th birthday.

 

(v)          Participant.
Any individual who has satisfied the eligibility and participation requirements of the Plan as provided in Article 2 below. Where
appropriate, the term “Participant” also includes some or all of the following individuals for whom an Account exists
which has not been distributed or forfeited in total: (i) former Participants who are no longer eligible to participate in the
Plan; (ii) beneficiaries of a Participant; and (iii) alternate payees, as defined in Code Section 414(p)(8), of a Participant or
former Participant.

 

(w)         Plan.
The Bank First National Retirement Plan (f/k/a the First National Bank in Manitowoc 401(k) Profit Sharing Plan), as set forth herein
and as amended from time to time.

 

(x)          Plan
Year. The period beginning on each January 1 and ending on the following December 31.

 

(y)          Qualifying
Employer Securities. Common stock of an Employer with a combination of voting power and dividend rights equal to the class
of common stock with the highest dividend rights and that class of common stock with the greatest voting power or non-callable
preferred stock of an Employer if convertible at any time into common stock as previously described at a reasonable conversion
price. Unless specifically approved by the Company’s Board of Directors, the Plan shall not hold more than twenty percent
(20%) of the outstanding stock of the Company or any other Employer. For purposes of Code Sections 401(a)(22), 401(a)(28), 409(h)(1)(B)
and 409(l), “readily tradable on an established securities market” means Employer securities that are readily tradable
on an established market within the meaning of Treasury Regulations Section 1.401(a)(35)-1(f)(5).

 

(z)          Top-Heavy.
The Plan will be Top-Heavy if the “top-heavy ratio” for this Plan exceeds 60% and this Plan is not part of any “top-heavy
group.” Generally, the Plan will be Top-Heavy for any Plan Year, if, as of the determination date, the accumulations in the
Accounts of Key Employees exceed 60% of its accumulations in the Accounts of all Participants. To determine if the Plan is Top-Heavy,
the Administrator shall: (i) include in each Participant’s Account distributions made with respect to the Participant during
the Plan Year containing the “determination date” and the one-year period ending on the determination date; and (ii)
exclude from the calculation: [a] the Account of any Participant who has not been a Key Employee at any time during the Plan Year
containing the determination date and the preceding Plan Year; and [b] the Account of any individual who did not complete at least
one Hour of Service during the immediately preceding year. For purposes of this Section, the following words shall be defined as
set forth herein. Determination Date: For the first Plan Year, the determination date is the last day of that Plan Year.
For any other Plan Year, the determination date is the last day of the immediately preceding Plan Year.

 

    	 	1-6	 

     

    

 

(i)       Top-Heavy
Group. The Plan is part of a Top-Heavy Group if by aggregating plans of an Employer which cover a Key Employee and any other
plan which enables a plan covering that Key Employee to meet the qualification requirements under the coverage or anti-discrimination
rules contained in the Code it is determined that the sum of: [a] the present value of the accumulated accrued benefits for Key
Employees under all defined benefit plans included in the group; and [b] the sum of the account balances of Key Employees under
all defined contribution plans included in the group, exceeds 60% of the same amount determined for all Participants under all
plans included in the group.

 

(A)       Required
Aggregation Group. In determining a Top-Heavy Group hereunder, each plan of an Employer in which a Key Employee is a participant
in the Plan Year containing the determination date or the preceding year, and each other plan of an Employer which enables any
plan in which a Key Employee participates to meet the requirements of Code Sections 401(a)(4) or 410, will be required to be aggregated.
Such group shall be known as a Required Aggregation Group. In the case of a Required Aggregation Group, each plan in the group
will be considered a Top-Heavy Plan if the Required Aggregation Group is a Top-Heavy Group. No plan in the Required Aggregation
Group will be considered a Top-Heavy Plan if the required Aggregation Group is not a Top-Heavy Group.

 

(B)       Permissive
Aggregation Group. The Company may also include any other plan not required to be included in the Required Aggregation Group,
provided the resulting group, taken as a whole, would continue to satisfy the provisions of Code Section 401(a)(4) and 410. Such
group shall be known as a Permissive Aggregation Group. In the case of a Permissive Aggregation Group, only a plan that is part
of the Required Aggregation Group will be considered a Top-Heavy Plan if the Permissive Aggregation Group is a Top-Heavy Group.
No plan in the Permissive Aggregation Group will be considered a Top-Heavy Plan if the Permissive Aggregation Group is not a Top-Heavy
Group.

 

(ii)       Top-Heavy
Ratio. The Administrator shall determine the Top-Heavy Ratio in accordance with Code Section 416(g).

 

(aa)        Trust.
The assets of the Plan held in trust by the Trustee.

 

(bb)       Trustee.
The person, persons or entity holding the assets of the Plan in trust.

 

    	 	1-7	 

     

    

 

(cc)        Valuation
Date. The day or days of each Plan Year when the Administrator values the assets of the Trust pursuant to Article 4. Notwithstanding
any language in the Plan to the contrary, the last day each Plan Year shall be a Valuation Date.

 

(dd)       Year
of Service. Any Plan Year during which the Employee completes at least 1 Hour of Service after the Employee attains age eighteen
(18). With respect to any Plan Year that is less than 12 consecutive calendar months, an Employee shall be credited with a Year
of Service if he or she completes 1 Hour of Service during the 12 consecutive month period ending on the last day of such short
Plan Year. If an Employer maintains the plan of a predecessor employer, service of an Employee with the predecessor employer is
credited as service with the Employer under this Plan.

 

1.2       Construction.
Except to the extent preempted by the ERISA, the laws of the State of Wisconsin shall govern the construction and application of
the Plan. Words used in the masculine gender shall include the feminine and words in the singular shall include the plural, as
appropriate. If any provision of the Code or ERISA render any provisions of this Plan unenforceable, such provision shall be of
no force and effect only to the extent required by such law.

 

    	 	1-8	 

     

    

 

article
II

 

Eligibility and Participation

 

2.1       Eligible
Employees. An Employee will be eligible to participate in the Plan only after he or she has satisfied the age and service requirements
provided in Section (a) below and only while he or she is not a member of an “excluded group,” as described in Section
(b) below.

 

(a)          Age
and Service Requirements. An Employee shall be eligible to participate in the Plan after the Employee has attained age 18 and
completed at least one Hour of Service with one or more Employer(s) as of any date that is at least six (6) months after the date
that the individual first completes one Hour of Service with any Employer. Notwithstanding the preceding, the Company may, in its
sole discretion, grant credit for prior service that an individual may have provided to a different organization which is purchased
or acquired by an Employer. Notwithstanding the preceding provisions of this Section 2.1(a), effective June 1, 2011, an Employee
shall be eligible to participate in the Plan after the Employee has attained age 18 and completed at least one Hour of Service
with one or more Employer(s) as of any date that is at least three (3) months after the date that the individual first completes
one Hour of Service with any Employer.

 

(b)          Excluded
or Reclassified Employees. Notwithstanding any other provision in the Plan to the contrary, an individual who is providing
services for an Employer in one (or more) of the following categories shall not be entitled to participate in this Plan or to receive
benefits hereunder wholly or partially as a result of such services:

 

(i)       Independent
Contractor. A person who is classified by the Employer as an independent contractor, as evidenced by the Employer’s failure
to withhold taxes from the person’s compensation, even if the individual is otherwise determined to be the Employer’s
common law employee.

 

(ii)       Contractor’s
Employee. A person working for a business that provides goods or services (including temporary employee services) to the Employer
whom the Employer does not regard as its own common law employee, as evidenced by the Employer’s failure to withhold taxes
from the person’s compensation, even if the individual is otherwise determined to be the Employer’s common law employee.

 

(iii)       Waived
Participation. A person to whom the Employer did not extend the opportunity of participating in this Plan and/or an individual
who agreed orally or in writing that he or she would not be eligible to receive benefits hereunder whether or not this Plan was
expressly identified in that agreement. Notwithstanding anything in the Plan to the contrary, any waiver of participation in the
Plan shall be irrevocable with respect to Employer contributions.

 

    	 	2-1	 

     

    

 

2.2       Commencement
of Participation. An Employee who meets the eligibility requirements provided in Section 2.1 above shall become a Participant
in the Plan on the same date that the Employee satisfies such eligibility requirements.

 

2.3       Termination
of Participation. An individual shall cease to be a Participant in the Plan on the date that his or her employment with each
Employer terminates or, if earlier, the date that he or she is a member of an excluded group, as defined in Section 2.1 above.
If an individual terminates his or her participation in the Plan because he or she becomes a member of an excluded group, as defined
in Section 2.1 above, the individual shall resume participation in the Plan: 

 

(a)          immediately
upon again becoming a member of an eligible class of Employees if he or she again becomes a member of such class before incurring
five consecutive Breaks in Service; or

 

(b)          in
accordance with the rules provided in Sections 2.1 and 2.2 above if he or she again becomes a member of an eligible class of Employees
after he or she incurs five consecutive Breaks in Service.

 

2.4       Reemployment.
If a Participant terminates his or her employment with each Employer (and his or her participation in the Plan) and he or she subsequently
resumes employment with an Employer, he or she shall participate in the Plan in accordance with the following rules.

 

(a)          No
Break in Service. If the former Participant resumes employment with an Employer before he or she incurs a Break in Service,
the rehired Employee shall participate in the Plan immediately upon reemployment with such Employer.

 

(b)          After
a Break in Service-Vested Benefits. If the former Participant had vested rights in his or her Account and he or she subsequently
resumes employment with an Employer after incurring a Break in Service, the rehired Employee shall participate in the Plan immediately
upon reemployment with such Employer.

 

(c)          After
a Break in Service-No Vested Benefits. The rehired Employee shall participate in the Plan immediately upon reemployment with
an Employer if the former Participant had no vested rights in his or her Account and he or she subsequently resumes employment
with an Employer before incurring a period of Breaks in Service equaling or exceeding the greater of: (i) five consecutive years;
or (ii) the number of Years of Service the former Participant completed prior to the Break in Service. The rehired Employee shall
be treated as a new Employee who must again satisfy the eligibility and participation requirements provided in Sections 2.1 and
2.2 above if the former Participant had no vested rights in his or her Account and he or she subsequently resumes employment with
an Employer after incurring a period of Breaks in Service equaling or exceeding the greater of: (i) five consecutive years; or
(ii) the number of Years of Service the former Participant completed prior to the Break in Service. A Participant shall not be
credited with any Years of Service that are disregarded under this Section because those Years of Service were completed before
a Break in Service.

 

    	 	2-2	 

     

    

 

 

article
III

 

Contributions and Allocations

 

3.1       Employer
Contributions.

 

(a)          Amount.
For each Plan Year, each Employer shall make a contribution of cash or other property to the Trust in such amount, if any, as determined
by the Company. The Company shall have the authority to establish, in its sole discretion, the specific contribution amount for
each Employer and for each subsidiary of the Company and the contribution amount or percentage for each Employer or subsidiary
of the Company need not be uniform and the Company, in its sole discretion, may determine that some or all Employers or subsidiaries
of the Company will not make any contribution to the Plan for a particular Plan Year. The Company’s determination of the
amount of its contribution and the contribution from each Employer or subsidiary of the Company, if any, for each Plan Year shall
be binding and conclusive upon all Employers, subsidiaries of the Company, Participants, the Trustee and the Administrator.

 

(b)          The
amount of the contribution or the allocation of such contribution, if any, shall not be subject to change as a result of a subsequent
audit by the Internal Revenue Service (“IRS”) or as a result of any subsequent adjustment of the Company’s records.
The Trustee shall have no right or duty to inquire into the amount of the Company’s contribution or the method used in determining
the amount of such contribution or the allocation thereof. The Trustee shall be accountable only for funds it actually receives.

 

(c)          Roth
Elective Deferrals. Participants shall be eligible to irrevocably designate some or all of their elective contributions as
either pre-tax elective contribution or Roth elective contributions. All elections shall be subject to the same election procedures,
limits on modifications and other terms and conditions on elections as specified in the Plan.

 

(d)          Allocation.

 

(i)       No
Acquisition Loan. As of the last day of each Plan Year when there is no Acquisition Loan and following the allocation of income
pursuant to Article 4, the Administrator shall allocate the Employer contribution, if any, to each Participant who is employed
by an Employer on the last day of that Plan Year in the same proportion that the Participant’s total Compensation for the
Plan Year bears to the total Compensation of all Participants who are employed by an Employer on the last day of that Plan Year.
As of the last day of each Plan Year when there is no Acquisition Loan and following the allocation of income pursuant to Article
4, the Administrator shall allocate the contributions from the Company and each Employer or subsidiary of the Company, if any,
to each Participant who is employed respectively by the Company, by such Employer or by such subsidiary of the Company on the last
day of that Plan Year in the same proportion that the Participant’s total Compensation for the Plan Year bears to the total
Compensation of all Participants who are similarly employed by the Company, by the Employer or by the subsidiary of the Company
which employs the Participant of the last day of that Plan Year. An individual will, however, be deemed to be employed on the last
day of the Plan Year if he or she terminates his or her employment with all Employers prior to the last day of the Plan Year because
of his or her death, Disability or attainment of his or her Normal Retirement Date. Additionally, and solely for purposes of determining
allocations for the Plan Year beginning on January 1, 2009, an individual who was employed by the Vincent Group on December 30,
2009, shall be deemed to be employed by the Vincent Group on December 31, 2009.

 

    	 	3-1	 

     

    

 

(ii)       Acquisition
Loan. Notwithstanding Section (i) or any other Plan provision(s) to the contrary, Employer contributions used to repay an Acquisition
Loan shall be allocated pursuant to the rules provided in Section 4.2 below.

 

(e)          Suspension
or Reduction of Contributions. Notwithstanding any other provision(s) of the Plan to the contrary, the Company may suspend,
reduce or eliminate Employer contributions at any time.

 

(f)          Top-Heavy
Contributions. Notwithstanding any other provision(s) to the contrary, if the Plan is Top-Heavy for a particular Plan Year,
the Employer contributions for a Plan Year allocated on behalf of any Participant who is not a Key Employee, and who is employed
by an Employer on the last day of such Plan Year (without regard to the number of Hours of Service he or she accumulated during
such Plan Year), shall not be less than the top-heavy contribution. The “top-heavy contribution” is a contribution
equaling (when combined with contributions on behalf of such Participant to this and other defined contribution plans maintained
by the Employer and qualified pursuant to Code Section 401(a)) the lesser of: (i) 3% of the Participant’s Compensation for
such Plan Year; or (ii) the same percentage of the Participant’s Compensation for such year as the highest percentage of
a Key Employee’s Compensation that the allocation of contributions to that Key Employee’s Account totals for such Plan
Year. The provisions in this Section shall not, however, apply to any Participant who is covered under any other qualified plan(s)
of the Employer if the minimum allocation or benefit requirement applicable to top-heavy plans is met in the other plan(s).

 

3.2       Participant
Contributions. Participants may make elective contributions to this Plan, as set forth.

 

(a)          Automatic
Enrollment and Increases. Participants may enroll to make elective contributions, discontinue making all elective deferrals
or change the level of his or her elective deferrals as of the first day of any calendar quarter. Upon the initial satisfaction
of the eligibility requirements to make elective deferrals under this Plan, an eligible Employee who has not made an affirmative
elective contribution election shall be deemed to have made an elective contribution election in the amount of 4% of Compensation
(or such other amount as determined, from time to time by the Plan Administrator). In addition to the automatic enrollment provisions
noted above, a Participant who is automatically enrolled in the Plan or who has enrolled by making an affirmative enrollment or
deferral election in an amount other than 0%, shall be deemed to have elected to increase his or her deferral contributions by
1% as of the first day of each Plan Year, provided that such automatic increases shall not exceed 10% of the Participant’s
Compensation.

 

    	 	3-2	 

     

    

 

Effective January
1, 2012, the deferral contributions of a Participant will not be automatically increased by 1% as of the first day of each Plan
Year.

 

Notwithstanding
the preceding, effective January 1, 2015, a Participant who does not make an affirmative elective contribution election upon initial
satisfaction of the eligibility requirements and is automatically enrolled in the Plan shall be deemed to have elected to increase
his or her deferral contributions by 1% as of the first day of each Plan Year, provided that such automatic increases shall not
exceed 10% of the Participant’s Compensation. Automatic enrollment and automatic escalation will continue unless and until
the Participant affirmatively elects to make deferral contributions (including making an affirmative election to defer zero dollars
($0)).

 

(b)          Affirmative
Elections. For each Plan Year, a Participant may affirmatively direct his or her Employer to make “elective contributions”
on his or her behalf directly to the Trust in an amount different than the automatic enrollment and increases contemplated under
Section 3.2(a) above. A Participant may revoke his or her election to make elective contributions pursuant to rules prescribed
by the Administrator. A Participant may increase or decrease the amount of his or her elective contributions as of the first day
of any calendar quarter or as otherwise allowed by the Administrator.

 

(c)          Employer
Deposits. The Employer shall make elective contributions on behalf of a Participant in lieu of the Employer’s payment
of an equal amount to the Participant as direct remuneration for the Plan Year; provided the Participant elects to defer such amounts
prior to the date such amounts become currently available to the Participant. Such amounts may be contributed to the Plan only
if such amounts would have been received by the Participant, but for the Participant’s election, on or before 2-1/2 months
following the end of the Plan Year. A Participant may so elect only as to amounts becoming currently available after the cash or
deferred arrangement of this Plan is adopted and effective.

 

(d)          Minimum,
Maximum and Catch-Up Amounts. A Participant’s elective contributions must equal at least 2% of the Participant’s
Compensation for each payroll period when the election is in plan. Further, except to the extent permitted under Code Section 414(v),
a Participant’s elective contributions for each calendar year may not exceed the limit of Code Section 402(g) as adjusted
annually for increases in the cost of living by the Secretary of the Treasury or his or her delegate and as in effect for such
calendar year. All Participants who are eligible to make elective deferrals under this Plan and who have attained age 50 before
the close of the Plan Year shall be eligible to make catch-up contributions in accordance with, and subject to the limitations
of, section 414(v) of the Code. Such catch-up contributions shall not be taken into account for purposes of the provisions of the
Plan implementing the required limitations of sections 402(g) and 415 of the Code. The Plan shall not be treated as failing to
satisfy the provisions of the Plan implementing the requirements of section 401(k)(3), 401(k)(11), 401(k)(12), 410(b), or 416 of
the Code, as applicable, by reason of the making of such catch-up contributions.

 

    	 	3-3	 

     

    

 

(e)          Allocation.
As of each Valuation Date (but no later than the last day of each calendar month and following the allocation of income pursuant
to Article 4), the Administrator shall allocate the elective contributions for the year to the Elective Contribution Accounts of
the Participants for whom such contributions were made.

 

(f)           Return
of Excess Elective Contributions. If a Participant notifies the Administrator in writing by the March 1 following the close
of a calendar year, or by the April 15 following such March 1 the Company designates on behalf of the Participant with respect
to elective contributions under the Plan and any other Plans of an Employer, that the Participant has made excess elective contributions
for that year, the Administrator shall distribute to the Participant the amount of the excess elective contributions allocable
to the Plan (plus or minus any Income or loss allocable thereto up to the close of the calendar year). Such distribution shall
occur by the April 15 immediately following the close of the calendar year in which the excess elective contributions were contributed
to the Plan. The amount of “excess elective contributions” for any calendar year shall equal (1) the sum of amounts
contributed to the Plan as elective contributions on behalf of the Participant plus amounts deferred by the Participant pursuant
to other arrangements described in Code sections 401(k), 408(k) and 403(b) (the “total elective contributions”) minus
(2) the greater of the limit of Code section 402(g), as adjusted: [a] for Code section 414(v); and [b] such annual increases in
the cost of living by the Secretary of the Treasury or his or her delegate from time to time. The Participant’s written notification
must contain a statement to the effect that, if such excess elective contributions were not distributed, the Participant’s
total elective contributions would exceed the limit specified in Code section 402(g) for the calendar year in which such elective
contributions were made. Income allocable to excess elective contributions shall be determined (1) under any reasonable method
used for allocating Income to all Participants’ Accounts as applied consistently to all Participants for the Plan Year or
(2) by multiplying Income allocable to the Participant’s Elective Contribution Account for the calendar year by a fraction,
the numerator of which is such Participant’s excess elective contributions for the year and the denominator is the Participant’s
Account balance attributable to elective contributions as of the beginning of the calendar year plus the Participant’s elective
contributions for the calendar year.

 

3.3       Matching
Contributions. For each Plan Year (or such shorter period as established by the Company), each Employer may make a matching
contribution of cash or other property to the Trust in such amount or according to such formula, if any, as determined by the Company.

 

    	 	3-4	 

     

    

 

(a)          Amount.
The amount of the matching contribution, if any, shall equal the amount or percentage of Compensation determined by the Company
to match all or part of the elective contributions made to the Plan by such Employer’s Participants during the Plan Year
(or other period) in question. The Company’s determination of the amount of its contribution, if any, for each Plan Year
shall be binding and conclusive upon all Employers, Participants, the Trustee and the Administrator. The amount of the contribution
or the allocation of such contribution, if any, shall not be subject to change as a result of a subsequent audit by the Internal
Revenue Service (“IRS”) or as a result of any subsequent adjustment of the Company’s records. The Trustee shall
have no right or duty to inquire into the amount of the Company’s contribution or the method used in determining the amount
of such contribution or the allocation thereof. The Trustee shall be accountable only for funds it actually receives.

 

(b)          Suspension
or Reduction of Contributions. Notwithstanding any other provision(s) of the Plan to the contrary, the Company may suspend,
reduce or eliminate matching contributions at any time.

 

3.4       Timing
of Contributions. Each Employer shall pay its contributions, including Participant Contributions within Section 3.2 above,
to the Trust within the time required by law. Participant Contributions shall be deposited into the Trust as soon as administratively
feasible, but in no event later than the 15th day of the calendar month after the Participant would have otherwise received
such compensation. Employer Contributions under Section 3.1, if any, shall be paid to the Trust within the time prescribed by law,
including extensions, for the filing of the Employer’s federal income tax return for such year or within such other period
as provided in Code Section 404.

 

3.5       Allocation
of Forfeitures. As of the last day of each Plan Year and following the allocation of Income pursuant to Article 4, the Administrator
shall allocate Forfeitures, if any, to the Employer Contribution Accounts of qualifying Participants as if such Forfeitures were
additional employer contributions pursuant to Section 3.1(a) above.

 

3.6       Rollovers
from Other Employee Benefit Plans. Any employee of an Employer who is a member of an eligible class of employees pursuant to
Section 2.1 above and who participated in another retirement plan and trust qualified pursuant to Code Sections 401(a) and 501(a)
(“qualified plan”) may deposit in the Plan any portion of an eligible rollover distribution paid from another qualified
plan in a direct rollover or which he or she received personally (either directly from such plan or as a rollover from an individual
retirement account or annuity) provided that amounts not paid in a direct rollover must be deposited in the Plan within 60 days
following receipt of such amounts. Before accepting such a rollover, the Administrator shall require such Participant’s consent
(and spousal consent, if necessary) and may require such documentation and information as it deems necessary. An Employee who rolled
over amounts pursuant to this Section, or on whose behalf such a rollover occurred, shall always remain 100% vested in such rolled
over amounts and the income thereon. Immediately upon receipt the Administrator shall allocate amounts rolled over by, or on behalf
of, a Participant to his or her Rollover Account. If an individual who rolled over amounts to the Trust pursuant to this Section,
or on whose behalf such a rollover occurred, does not otherwise qualify to become a Participant, he or she shall, nonetheless,
constitute a Participant only in relation to such rolled over amounts and the income thereon. The Plan may accept a rollover contribution
to a Roth Elective Deferral Account only if it is a direct rollover from another Roth elective deferral account under an applicable
retirement plan described in Code section 402A(e)(1) and only to the extent the rollover is permitted under the rules of Code section
402(c).

 

    	 	3-5	 

     

    

 

3.7       Return
of Contributions. The Trustee shall return contributions made to the Plan in the following circumstances:

 

(a)          Each
Employer and the Plan hereby condition all Employer contributions to the Plan upon their deductibility by the Employer under Code
Section 404. Any portion of any such contribution for which a deduction is disallowed shall be returned by the Trustee to the Employer
within one year after the disallowance (or as permitted or required by the Code or ERISA). Earnings attributable to the nondeductible
contribution may not be returned; any losses attributable thereto shall, however, reduce the amount returned to the Employer.

 

(b)          In
the event that all or part of any Employer contribution is paid to the Trust due to a mistake of fact, the Trustee shall, upon
request by the Employer, return the mistaken portion of such contribution to the Employer within one year after the contribution
was originally paid to the Trust. Earnings attributable to the nondeductible contribution may not be returned; any losses attributable
thereto shall, however, reduce the amount returned to the Employer.

 

(c)          The
Employer and the Plan condition all Employer contributions to this Plan upon the initial qualification of the restated Plan pursuant
to Code Section 401(a). If the IRS determines that the Plan fails to satisfy the requirements of Code Section 401(a), the Trustee
shall return all Plan and Trust assets to the Employer within one year after the date of such determination, provided that the
Employer previously requested a favorable determination letter from the IRS and that such request was made within the time prescribed
by law.

 

3.8       Contribution
and Allocation Restrictions. All contributions and allocations provided for in this Article 3 are subject to the limitations
and restrictions set forth in Article 5 below.

 

3.9       Dividend
Reallocations. Consistent with Code section 404(k)(2)(A)(iii) and IRS Notice 2002-2, Participants in this Plan shall be allowed
a reasonable opportunity to reinvest any dividends paid on stock allocated to their account in Qualifying Employer Securities or
to receive the dividend as a cash distribution of the dividend. Once a Participant makes an election with respect to such dividend
amount, that election will carry forward to all future dividends unless subsequently changed, in writing, by the Participant (which
each Participant shall be allowed to do at least once per year effective on the first day of that Plan Year). Any stock acquired
with such dividends shall be fully and immediately vested, notwithstanding any provision in Article VI to the contrary.

 

3.10     Money
Purchase Plan Accounts. Amounts transferred from the frozen First National Bank in Manitowoc Money Purchase Pension Plan into
the Plan shall be held in individual Money Purchase Pension Plan Accounts on behalf of Participants.

 

    	 	3-6	 

     

    

 

article
IV

 

Valuation and Accounting

 

4.1       Valuation
and Accounting. As of each Valuation Date, the Administrator shall determine the value of each Participant’s Account
in accordance with the income accounting method(s) applicable to each investment vehicle in which the assets of the Account are
invested.

 

4.2       Acquisition
Loan Accounts. Notwithstanding any provision(s) in this Plan to the contrary, the Trustee shall maintain a separate suspense
account to hold all Qualifying Employer Securities acquired with the proceeds of an Acquisition Loan.

 

(a)          Release
From Encumbrance. At the time of the Acquisition Loan, the Administrator shall inform the Trustee how to release Qualifying
Employer Securities from this suspense account. The method used to release Qualifying Employer Securities from the suspense account
must be permissible under Treasury regulation Section 54.4975-7(b)(8)(i) (i.e. the general rule) or 54.4975-7(b)(8)(ii) (i.e. the
special rule).

 

Specifically,
under the general rule, the Acquisition Loan must provide for the release from encumbrance of Plan assets used as collateral for
the Acquisition Loan. For each Plan Year during the duration of the Acquisition Loan, the number of Qualifying Employer Securities
released must equal the number of encumbered securities held immediately before release for the current Plan Year multiplied by
a fraction. The numerator of the fraction is the amount of principal and interest paid for the year. The denominator of the fraction
is the sum of the numerator plus the principal and interest to be paid for all future years. The number of future years under the
Acquisition Loan must be definitely ascertainable and must be determined without taking into account any possible extensions or
renewal periods. If the interest rate under the Acquisition Loan is variable, the interest to be paid in future years must be computed
by using the interest rate applicable as of the end of the Plan Year. If collateral includes more than one class of securities,
the number of securities of each class to be released for a Plan Year must be determined by applying the same fraction to each
class.

 

Under the special
rule, the Acquisition Loan will not fail to be an exempt loan merely because the number of Qualifying Employer Securities to be
released from encumbrance is determined solely with reference to principal payments. However, if release is determined with reference
to principal payments only, the following three additional rules apply. The first rule is that the Acquisition Loan must provide
for annual payments of principal and interest at a cumulative rate that is not less rapid at any time than level annual payments
of such amounts for ten (10) years. The second rule is that interest included in any payment is disregarded only to the extent
that it would be determined to be interest under standard loan amortization tables. The third rule is this special rule is not
applicable from the time that, by reason of a renewal, extension or refinancing, the sum of the expired duration of the Acquisition
Loan, the renewal period, the extension period and the duration of a new Acquisition Loan exceeds ten (10) years.

 

    	 	4-1	 

     

    

 

The Trustee shall
release and withdraw Qualifying Employer Securities from the suspense account in accordance with these instructions as of the last
day of each Plan Year. The Trustee shall then allocate the released Qualifying Employer Securities (in whole shares) to the Participants’
Accounts (subject to the limitations set forth in Article 5 of this Plan) in the same proportion that each Participant would have
shared in the Employer’s contribution for such year had the contribution been allocated in accordance with Article 3.

 

(b)          Income.
The Trustee shall allocate the income, if any, received with respect to Qualifying Employer Securities in the suspense account
as income of the Plan except to the extent that such income is used to repay the Acquisition Loan, or is collateral for the Acquisition
Loan. If the Plan receives dividends with respect to Qualifying Employer Securities while Qualifying Employer Securities are still
held in the suspense account and while the Plan remains obligated to make payments on an Acquisition Loan, the Trustee shall allocate
such dividends according to the following rules.

 

(i)       Suspense
Account. Dividends attributable to Qualifying Employer Securities that are held in the suspense account shall be used to make
payments on the Acquisition Loan at such time or in such Plan Year as determined by the Administrator, in accordance with applicable
requirements. The Trustee shall release and withdraw Qualifying Employer Securities from the suspense account with a fair market
value equal to such dividends. The Trustee shall then allocate the released Qualifying Employer Securities (in whole shares) to
the Participants’ Accounts in the same manner as an Employer contribution under Section 3.1 above.

 

(ii)       Allocated
Shares. Dividends attributable to Qualifying Employer Securities that have been allocated to Participants’ Accounts shall
be allocated to such Participant’s Accounts based upon the number of shares then held in such Account(s).

 

4.3       Valuation
of Qualifying Employer Securities. All Qualifying Employer Securities shall be valued using the fair market value of the shares,
as determined in good faith and based on all relevant factors for determining the fair market value of securities on the date of
valuation. In the case of a transaction between the Plan and a Disqualified Person, the date of valuation shall be the date of
the transaction. For purposes of Articles 6 and 7, the value of a Participant’s Account shall be determined as of the Valuation
Date coincident with or immediately preceding the date the distribution occurs or commences. If the Administrator determines that
valuing the Participant’s Account as of the immediately preceding Valuation Date would significantly jeopardize the interests
of the Plan and its Participants because, due to subsequent market fluctuations or other developments, that valuation would inaccurately
reflect the value of the Participant’s Account as of the date distribution occurs or commences, the Administrator may, in
its discretion, value the Participant’s Account as of a date closer to the date the distribution occurs or commences. To
the extent that Qualifying Employer Securities are not readily tradable on an established securities market, the fair market value
of such shares for purposes of this Section 4.3 shall be determined by an independent appraiser who satisfies the requirements
of Treasury Regulation Section 401(a)(28)(C).

 

    	 	4-2	 

     

    

 

4.4       Acquisition of
Qualifying Employer Securities. From time to time the Compensation and Retirement Committee (the “Committee”) may,
in its sole discretion, direct the Trustee to acquire Qualifying Employer Securities from the Company or from shareholders, including
shareholders who are or have been Employees, Participants, or fiduciaries with respect to the Plan. The Trustee shall pay for such
Qualifying Employer Securities no more than the fair market value, which shall be determined conclusively by the Committee. The
Committee may direct the Trustee to finance the acquisition of Qualifying Employer Securities by incurring or assuming indebtedness
to the seller or another party which indebtedness shall be called an “Acquisition Loan.” The term “Acquisition
Loan” shall refer to a loan made to the Plan by a disqualified person within the meaning of Section 4975(e)(2) of the Code,
or a loan to the Plan which is guaranteed by a disqualified person. An Acquisition Loan includes a direct loan of cash, a purchase-money
transaction, and an assumption of an obligation of a tax-qualified employee stock ownership plan under Section 4975(e)(7) of the
Code (“ESOP”). For these purposes, the term “guarantee” shall include an unsecured guarantee and the use
of assets of a disqualified person as collateral for a loan, even though the use of assets may not be a guarantee under applicable
state law. An amendment of an Acquisition Loan in order to qualify as an “exempt loan” is not a refinancing of the
Acquisition Loan or the making of another Acquisition Loan. The term “exempt loan” refers to a loan that satisfies
the provisions of this paragraph. A “non-exempt loan” fails to satisfy this paragraph. Any Acquisition Loan shall be
subject to the following conditions and limitations:

 

(a)          All
Acquisition Loans incurred by the Plan must be primarily for the benefit of Plan Participants and Beneficiaries, and an Acquisition
Loan shall be for a specific term, shall not be payable on demand except in the event of default, and shall bear a reasonable rate
of interest, such that the interest rate and the price of the securities to be acquired with the Acquisition Loan may only be used
to acquire Qualifying Employer Securities or to repay the Acquisition Loan (or a prior Acquisition Loan). The Qualifying Employer
Securities purchased with the proceeds of the Acquisition Loan may not be subject to any put, call or other option or buy/sell
arrangement.

 

(b)          An
Acquisition Loan may, but need not, be secured by a collateral pledge of either the Qualifying Employer Securities acquired in
exchange for the Acquisition Loan, or the Qualifying Employer Securities previously pledged in connection with a prior Acquisition
Loan which is being repaid with the proceeds of the current Acquisition Loan. No other assets of the Plan and Trust may be used
as collateral for an Acquisition Loan, and no creditor under an Acquisition Loan shall have any right or recourse to any Plan and
Trust assets other than Qualifying Employer Securities remaining subject to a collateral pledge.

 

(c)          Any
pledge of Qualifying Employer Securities to secure an Acquisition Loan must provide for the release of pledged Qualifying Employer
Securities in connection with payments on the Acquisition Loan as set forth in Section 4.2.

 

(d)          Repayments
of principal and interest on any Acquisition Loan during any Plan Year must not exceed an amount equal to the sum of contributions
and earnings received during or prior to such Plan Year, less such payments in prior Plan Years and from cash dividends received
on Qualifying Employer Securities. All contributions and earnings shall be separately accounted for in the Plan’s records
until the Acquisition Loan is repaid.

 

(e)          In
the event of a default of an Acquisition Loan, the value of Plan assets transferred in satisfaction of the Acquisition Loan must
not exceed the amount of the default. If the lender is a disqualified person within the meaning of Section 4975 of the Code, an
Acquisition Loan must provide for a transfer of Plan assets upon default only upon and to the extent of the failure of the Plan
to meet the payment schedule of the Acquisition Loan. For purposes of this paragraph, the making of a guarantee does not make a
person a lender.

 

    	 	4-3	 

     

    

 

article
V

 

Contribution and Allocation
Restrictions

 

5.1       Annual
Addition Limitation.

 

(a)          General
Limitations. Except to the extent permitted under Code section 414(v), the annual addition that may be contributed or allocated
to a Participant’s Account under the Plan for any limitation year (which shall be the Plan Year) shall not exceed the lesser
of [i] $40,000, as adjusted for increases in the cost-of-living under Code section 415(d),
or [ii] 100 percent of the Participant’s compensation, within the meaning of section 415(c)(3) of the Code, for the limitation
year. Effective January 1, 2016, the Code Section 415(d) limit on annual additions is $53,000.

 

(b)          Annual
Additions. For purposes of this Section 5.1, “annual additions” include all contributions and Forfeitures, if any,
allocated to a Participant’s Account for any year (except as excluded below) and allocated to his or her benefit pursuant
to all other defined contribution plans maintained by an Employer for the Plan Year, including employee contributions. Annual Additions,
however, shall include only the lesser of the amount of the Employer contribution, if any, used to repay an Acquisition Loan or
the fair market value of the shares of stock that are allocated to a Participant’s Account as a result of the repayment of
such loan. Contributions allocated to any individual accounts which are part of a pension or annuity plan under Code Sections 415(l)
and 419A (d)(2) shall be treated as annual additions to a defined contribution plan.

 

(c)          Acquisition
Loans. Annual additions do not include the proceeds of an Acquisition Loan that are used to purchase Qualifying Employer Securities
held in a suspense account.

 

(d)         Reallocation.
For limitation years beginning on or after July 1, 2007, excess annual additions may only be corrected using correction methods
which are permissible under the IRS’ Employee Plans Compliance Resolution System (i.e. Rv. Porc. 2008-50, Rev. Proc. 2013-12
and any successor).

 

For limitation
years beginning on or before July 1, 2007, the following provisions applied. If, due to a reasonable error in the estimation of
compensation or salary deferrals or the allocation of Forfeitures, this Plan exceeds the limitations provided in this Section 5.1,
then the Administrator shall reallocate all annual additions that exceed the limitations provided in this Section 5.1 as follows,
provided that all of the Participant’s contributions under any other Qualified Plan(s) maintained by the Employer shall be
adjusted before any adjustment is made under this Plan:

 

(i)       Other
Participants. The Administrator shall first reallocate the excess annual additions to the Accounts of Participants who have
not exceeded the limits provided in this Section 5.1. If the reallocation causes the limits stated above to be exceeded with respect
to each Participant for the limitation year, then these amounts shall be held unallocated in a suspense account and reallocated
to Participants’ Accounts in the next (or succeeding, if necessary) limitation year before the allocation of Employer contributions.

 

    	 	5-1	 

     

    

 

(ii)       Reduce
Employer Contribution. If the excess annual additions have not been corrected through the reallocation contemplated under clause
(i) above, then the excess annual additions may be used to reduce the Employer contribution, if any, for the next (or succeeding,
if necessary) Plan Year for the Participant who incurred the excess amounts, provided the Participant is covered by the Plan at
the end of such limitation year. If the Participant is no longer covered by the Plan as of the end of the limitation year, the
excess amounts shall be held unallocated in a suspense account and reallocated in the next limitation year to all remaining Participants
in the Plan as a reduction of such Participants’ Employer contributions.

 

(iii)       All
Participants. If the excess annual additions have not been corrected through the processes contemplated in clauses (i) and/or
(ii) above, then the excess annual additions may be held unallocated in a suspense account for the limitation year and reallocated
in the next (or succeeding, if necessary) limitation year to all Participants in the Plan. The excess amount must be used to reduce
Employer contributions for the next (and succeeding, if necessary) limitation years. Excess amounts may not be distributed to Participants
or former Participants. Any excess amount held in a suspense account shall not share in Income. If the Plan terminates before the
allocation of such excess, the excess shall revert to the Employer, to the extent that it may not be allocated to any Participant’s
Account.

 

(iv)       Return
of Contributions. If the excess annual additions have not been corrected under the processes contemplated in the preceding
clauses, then the excess annual additions shall be returned to the Employer, to the extent permitted under Section 3.7 above.

 

5.2       Top-Heavy
Restrictions. Annually, as of each determination date, the Administrator shall apply the tests recited in Code Section 416
to determine if the Plan is Top-Heavy. If the Plan is or becomes Top-Heavy in any Plan Year, the Top-Heavy contribution and allocation
provisions in Article 3 above will supersede any conflicting provisions in the Plan; the Plan already utilizes a vesting schedule
that complies with the Top-Heavy Requirements.

 

5.3       Actual
Deferral Percentage Test. Effective for any Plan Year in which participants may make elective contributions to this Plan, the
Plan shall satisfy either the requirements of this Section 5.3(a) or (b).

 

    	 	5-2	 

     

    

 

(a)          Safe
Harbor Contributions. This Plan may, at the Company’s discretion, elect to be a 401(k) safe harbor plan for any particular
Plan Year(s). During such years, the Plan will meet the safe harbor requirements by making contributions to all eligible employees
regardless of hours of service or employment on the last day of the Plan Year. Notwithstanding anything in this Plan document to
the contrary during such Plan Years, each Employer shall make a safe harbor non-elective contribution in an amount equal to at
least 3% of each Participant’s Compensation, without regard to whether the Participant makes any elective deferrals to this
Plan. The safe harbor non-elective contributions shall be credited to the Participant’s Account for the Plan Year with respect
to which the contributions made and, for purposes of Article 4, shall be credited as of the Valuation Date coincident with or immediately
following the date such contribution is received by the Trustee or as soon as administratively practicable after such contribution
is received by the Trustee. If, pursuant to this Section 5.3(a) an Employer makes a safe harbor non-elective contribution, it shall
be fully vested at all times and non-forfeitable. Such contributions shall not be distributable to Participants or beneficiaries
earlier than: (i) the Participant’s separation from service, death or disability; (ii) termination of the Plan without establishment
or maintenance of another defined contribution plan; (iii) disposition by the Employer of substantially all the assets used by
the Employer; or (iv) the date on which the Participant attains age 59-1/2. At least 30 days, but not more than 90 days, before
the beginning of the Plan Year, the Employer will provide each eligible Employee a comprehensive notice of the Employee’s
rights and obligations under the Plan, written in a manner calculated to be understood by the average Employee. If an Employee
becomes eligible after the 90th day, before the beginning of the Plan Year and does not receive the notice for that
reason, the notice must be provided no more than 90 days before the Employee does become eligible to participate in the Plan, but
not later than the date that the Employee actually becomes eligible to participate in the Plan.

 

(b)         The
ADP Test. For any Plan Year in which the Company elects to not utilize the safe harbor provisions of Section 5.3(a) above,
the Plan shall satisfy the Actual Deferral Percentage (the “ADP”) test as set forth herein. As such, the ADP for the
participants who are Highly Compensated Employees may not exceed the greater of: (i) 1.25 times the ADP for all Participants who
are not HCEs, determined as of the prior Plan Year; or (ii) the lesser of [a] 2 times the ADP of Participants who are not HCEs
or [b] the ADP of Participants who are not HCEs plus 2 percentage points. For purposes of applying the preceding standards, this
Plan shall utilize the “prior year” method of comparing the HCE’s ADP for a particular Plan Year to the ADP of
non-HCEs, determined as of the preceding Plan Year. The Administrator shall determine the Participants’ deferral percentages
consistent with Code Section 401(k)(3) and applicable Treasury Regulations, which the Plan incorporates by reference. The Company
and each Employer shall maintain records sufficient to demonstrate satisfaction of the ADP test and the amount of qualified non-elective
contributions or qualified matching contributions, if any, used in such test.

 

(c)          ADP
Defined. For each Plan Year, the Administrator shall determine the “ADP” for the Participants who are HCEs and
all other Participants as follows: [a] The ADP for a group of Participants shall equal the average of the ratios, calculated
separately for each Participant in the group, of [I] the allocations of elective contributions and qualified non-elective contributions
or qualified matching contributions (to the extent not taken into account for purposes of the actual contribution percentage test),
not including income, which the Administrator determines for a Plan Year to [II] the Participant’s Compensation for that
Plan Year. The ADP of a Participant who makes no elective contributions is zero. Excess elective contributions of non-HCEs, determined
pursuant to Section 3.2, are not taken into account or purposes of ADP testing. [b] The “ADP” for any Participant who
is an HCE and eligible to have elective contributions allocated to his or her account pursuant to two or more plans or arrangements
described in Code Section 401(k) and maintained by an Employer shall be determined as if all such contributions were made pursuant
to a single arrangement.

 

    	 	5-3	 

     

    

 

Qualified Nonelective Contributions
(as defined in Regulation Section 1.401(k)-6) cannot be taken into account in determining the Actual Deferral Ratio (ADR) for a
Plan Year for a Non-Highly Compensated Employee (NHCE) to the extent such contributions exceed the product of that NHCE’s
Code Section 414(s) compensation and the greater of five percent (5%) or two (2) times the Plan’s “representative contribution
rate.” Any Qualified Nonelective Contribution taken into account under an Actual Contribution Percentage (ACP) test under
Regulation Section 1.401(m)-2(a)(6) (including the determination of the representative contribution rate for purposes of Regulation
Section 1.401(m)-2(a)(6)(v)(B)), is not permitted to be taken into account for purposes of this Section (including the determination
of the “representative contribution rate” under this Section). For purposes of this Section

 

(i)       The
Plan’s “representative contribution rate” is the lowest “applicable contribution rate” of any eligible
NHCE among a group of eligible NHCEs that consists of half of all eligible NHCEs for the Plan Year (or, if greater, the lowest
“applicable contribution rate” of any eligible NHCE who is in the group of all eligible NHCEs for the Plan Year and
who is employed by the Employer on the last day of the Plan Year). The “applicable contribution rate” for an eligible
NHCE is the sum of the Qualified Matching Contributions (as defined in Regulation Section 1.401(k)-6) taken into account in determining
the ADR for the eligible NHCE for the Plan Year and the Qualified Nonelective Contributions made for the eligible NHCE for the
Plan Year, divided by the eligible NHCE’s Code Section 414(s) compensation for the same period.

 

(ii)       Qualified
Matching Contributions may only be used to calculate an ADR to the extent that such Qualified Matching Contributions are matching
contributions that are not precluded from being taken into account under the ACP test for the Plan Year under the rules of Regulation
Section 1.401(m)-2(a)(5)(ii) and as set forth in Section 7.1.

 

(d)       Limitation
on QNECS and QMACs. Qualified Nonelective Contributions and Qualified Matching Contributions cannot be taken into account to
determine an ADR to the extent such contributions are taken into account for purposes of satisfying any other ADP test, any ACP
test, or the requirements of Regulation Section 1.401(k)-3, 1.401(m)-3, or 1.401(k)-4. Thus, for example, matching contributions
that are made pursuant to Regulation Section 1.401(k)-3(c) cannot be taken into account under the ADP test. Similarly, if a plan
switches from the current year testing method to the prior year testing method pursuant to Regulation Section 1.401(k)-2(c), Qualified
Nonelective Contributions that are taken into account under the current year testing method for a year may not be taken into account
under the prior year testing method for the next year.

 

    	 	5-4	 

     

    

 

(e)          ADR
of HCE If Multiple Plans. The Actual Deferral Ratio (ADR) of any Participant who is a Highly Compensated Employee (HCE) for
the Plan Year and who is eligible to have Elective Contributions (as defined in Regulation Section 1.401(k)-6) (and Qualified Nonelective
Contributions and/or Qualified Matching Contributions, if treated as Elective Contributions for purposes of the ADP test) allocated
to such Participant’s accounts under two (2) or more cash or deferred arrangements described in Code Section 401(k),
that are maintained by the same Employer, shall be determined as if such Elective Contributions (and, if applicable, such Qualified
Nonelective Contributions and/or Qualified Matching Contributions) were made under a single arrangement. If an HCE participates
in two or more cash or deferred arrangements of the Employer that have different Plan Years, then all Elective Contributions made
during the Plan Year being tested under all such cash or deferred arrangements shall be aggregated, without regard to the plan
years of the other plans. Notwithstanding the foregoing, certain plans shall be treated as separate if mandatorily disaggregated
under the Regulations of Code Section 401(k).

 

(f)           Plans
Using Different Testing Methods for the ADP and ACP test. Except as otherwise provided in this Section, the Plan may use the
current year testing method or prior year testing method for the ADP test for a Plan Year without regard to whether the current
year testing method or prior year testing method is used for the ACP test for that Plan Year. However, if different testing methods
are used, then the Plan cannot use:

 

(i)       The
recharacterization method of Regulation Section 1.401(k)-2(b)(3) to correct excess contributions for a Plan Year;

 

(ii)       The
rules of Regulation Section 1.401(m)-2(a)(6)(ii) to take Elective Contributions into account under the ACP test (rather than the
ADP test); or

 

(iii)       The
rules of Regulation Section 1.401(k)-2(a)(6)(v) to take Qualified Matching Contributions into account under the ADP test (rather
than the ACP test).

 

5.4       Distribution
of Income Attributable to Excess Contributions. Distributions of Excess Contributions must be adjusted for income (gain or
loss), including an adjustment for income for the period between the end of the Plan Year and the date of the distribution (the
“gap period”). The Administrator has the discretion to determine and allocate income using any of the methods set forth
below:

 

(a)          Reasonable
method of allocating income. The Administrator may use any reasonable method for computing the income allocable to Excess Contributions,
provided that the method does not violate Code Section 401(a)(4), is used consistently for all Participants and for all corrective
distributions under the Plan for the Plan Year, and is used by the Plan for allocating income to Participant’s accounts.
A Plan will not fail to use a reasonable method for computing the income allocable to Excess Contributions merely because the income
allocable to Excess Contributions is determined on a date that is no more than seven (7) days before the distribution. The Plan
Administrator shall determine the ordering rule for refunds of excess elective contributions. Such ordering rule may provide that
the Participant may elect to have refunds made either from his pre-tax elective contributions or Roth elective contributions or
any combination thereof.

 

    	 	5-5	 

     

    

 

(b)          Alternative
method of allocating income. The Administrator may allocate income to Excess Contributions for the Plan Year by multiplying
the income for the Plan Year allocable to the Elective Contributions and other amounts taken into account under the ADP test (including
contributions made for the Plan Year), by a fraction, the numerator of which is the Excess Contributions for the Employee for the
Plan Year, and the denominator of which is the sum of the:

 

(i)       Account
balance attributable to Elective Contributions and other amounts taken into account under the ADP test as of the beginning of the
Plan Year, and

 

(ii)       Any
additional amount of such contributions made for the Plan Year.

 

(c)          Safe
harbor method of allocating gap period income. The Administrator may use the safe harbor method in this paragraph to determine
income on Excess Contributions for the gap period. Under this safe harbor method, income on Excess Contributions for the gap period
is equal to ten percent (10%) of the income allocable to Excess Contributions for the Plan Year that would be determined under
paragraph (b) above, multiplied by the number of calendar months that have elapsed since the end of the Plan Year. For purposes
of calculating the number of calendar months that have elapsed under the safe harbor method, a corrective distribution that is
made on or before the fifteenth (15th) day of a month is treated as made on the last day of the preceding month and a distribution
made after the fifteenth day of a month is treated as made on the last day of the month.

 

(d)          Alternative
method for allocating Plan Year and gap period income. The Administrator may determine the income for the aggregate of the
Plan Year and the gap period, by applying the alternative method provided by paragraph (b) above to this aggregate period. This
is accomplished by (1) substituting the income for the Plan Year and the gap period, for the income for the Plan Year, and (2)
substituting the amounts taken into account under the ADP test for the Plan Year and the gap period, for the amounts taken into
account under the ADP test for the Plan Year in determining the fraction that is multiplied by that income.

 

(e)          Distribution
of Gap Period Income. Effective January 1, 2008, pursuant to Treasury Regulations Section 1.402(g)-1(e), the Plan shall calculate
and distribute income earned on elective deferrals after the close of any Plan Year in which such elective deferrals have exceeded
the applicable annual limitations set forth in Code Section 402(g); provided, however, that such “gap period income”
is not required to be calculated and distributed with respect to any ADP or ACP test failure, in accordance with Section 902(e)
of the Pension Protection Act of 2006. However, gap period income will be distributed on refunds of excess pre-tax or after-tax
Roth deferrals or Employer contributions that are not refunds due to ADP or ACP test failures.

 

    	 	5-6	 

     

    

 

(f)           “Gap
period income” generally means earnings on excess pre-tax deferrals or after-tax Roth deferrals or excess matching contributions
under Code Section 401(m) that accumulate after the close of the Plan Year for amounts that were contributed to the Plan through
the date that such amounts are distributed. For Plan Years before January 1, 2008, gap period income will be distributed as part
of any refund that is made to correct a violation of any Code or Plan limit which is made in order to avoid disqualifying the Plan.

 

(g)          Corrective
contributions. If a failed ADP test is to be corrected by making an Employer contribution, then the provisions of the Plan
for the corrective contributions shall be applied by limiting the contribution made on behalf of any NHCE pursuant to such provisions
to an amount that does not exceed the targeted contribution limits of this Plan, or in the case of a corrective contribution that
is a Qualified Matching Contribution, the targeted contribution limit of this Plan.

 

5.5       Actual
Contribution Percentage Test.

 

Applying the Test.
Effective for Plan Years beginning on or after January 1, 1987, the actual contribution percentage (the “ACP”) for
Participants who are highly compensated employees (“HCEs”) may not exceed the greater of: (i) 1.25 times the ACP for
all Participants who are not HCEs; or (ii) the lesser of [a] 2 times the ACP of Participants who are not HCEs or [b] the ACP of
Participants who are not HCEs plus 2 percentage points. For purposes of applying the preceding standards, this Plan shall utilize
the “prior year” method of comparing the HCE’s ACP for a particular Plan Year to the ACP of non-HCEs, determined
as of the preceding Plan Year. The Administrator shall determine the Participants’ contribution percentages consistent with
Code Section 401(m)(3) and applicable Treasury regulations, which the Plan incorporates by reference. The Company and each Employer
shall maintain records sufficient to demonstrate satisfaction of the ACP test and the amount of qualified nonelective contributions
and qualified matching contributions, if any, used in such test.

 

(a)          ACP
Defined. For each Plan Year, The “ACP” for a group of HCEs shall equal the average of the ratios, calculated separately
for each Participant in the group, of [a] the allocations of matching contributions (to the extent not taken into account for purposes
of the ADP test) (not including income) for a Plan Year (“Year 1”) to [b] the Participant’s compensation for
Year 1. The “ACP” for a group of non-HCEs shall equal the average of the ratios, calculated separately for each Participant
in the group, of [a] the allocations of matching contributions (to the extent not taken into account for purposes of the ADP test)
(not including Income) for the Plan Year immediately preceding Year 1 to [b] the Participant’s compensation for the same
Plan Year. Qualified nonelective contributions or qualified matching contributions, if any, (to the extent not taken into account
for purposes of the ADP test) may be taken into account for purposes of calculating the ACP for Participants.

 

(b)          Targeted
matching contribution limit. A matching contribution with respect to an Elective Contribution for a Plan Year is not taken
into account under the Actual Contribution Percentage (ACP) test for an NHCE to the extent it exceeds the greatest of:

 

(i)       five
percent (5%) of the NHCE’s Code Section 414(s) compensation for the Plan Year;

 

    	 	5-7	 

     

    

 

(ii)       the
NHCE’s Elective Contributions for the Plan Year; and

 

(iii)       the
product of two (2) times the Plan’s “representative matching rate” and the NHCE’s Elective Contributions
for the Plan Year.

 

For purposes
of this Section, the Plan’s “representative matching rate” is the lowest “matching rate” for any
eligible NHCE among a group of NHCEs that consists of half of all eligible NHCEs in the Plan for the Plan Year who make Elective
Contributions for the Plan Year (or, if greater, the lowest “matching rate” for all eligible NHCEs in the Plan who
are employed by the Employer on the last day of the Plan Year and who make Elective Contributions for the Plan Year).

 

For purposes
of this Section, the “matching rate” for an Employee generally is the matching contributions made for such Employee
divided by the Employee’s Elective Contributions for the Plan Year. If the matching rate is not the same for all levels of
Elective Contributions for an Employee, then the Employee’s “matching rate” is determined assuming that an Employee’s
Elective Contributions are equal to six percent (6%) of Code Section 414(s) compensation.

 

If the Plan
provides a match with respect to the sum of the Employee’s after-tax Employee contributions and Elective Contributions, then
for purposes of this Section, that sum is substituted for the amount of the Employee’s Elective Contributions in subsections
(b) and (c) above and in determining the “matching rate,” and Employees who make either after-tax Employee contributions
or Elective Contributions are taken into account in determining the Plan’s “representative matching rate.” Similarly,
if the Plan provides a match with respect to the Employee’s after-tax Employee contributions, but not Elective Contributions,
then for purposes of this subsection, the Employee’s after-tax Employee contributions are substituted for the amount of the
Employee’s Elective Contributions in subsections (i) and (ii) above and in determining the “matching rate,” and
Employees who make after-tax Employee contributions are taken into account in determining the Plan’s “representative
matching rate.”

 

(c)          Targeted
QNEC limit. Qualified Nonelective Contributions (as defined in Regulation Section 1.401(k)-6) cannot be taken into account
under the Actual Contribution Percentage (ACP) test for a Plan Year for an NHCE to the extent such contributions exceed the product
of that NHCE’s Code Section 414(s) compensation and the greater of five percent (5%) or two (2) times the Plan’s “representative
contribution rate.” Any Qualified Nonelective Contribution taken into account under an Actual Deferral Percentage (ADP) test
under Regulation Section 1.401(k)-2(a)(6) (including the determination of the “representative contribution rate” for
purposes of Regulation Section 1.401(k)-2(a)(6)(iv)(B)) is not permitted to be taken into account for purposes of this Section
(including the determination of the “representative contribution rate” for purposes of the standards set forth below).
For purposes of this Section:

 

    	 	5-8	 

     

    

 

(i)       The
Plan’s “representative contribution rate” is the lowest “applicable contribution rate” of any eligible
NHCE among a group of eligible NHCEs that consists of half of all eligible NHCEs for the Plan Year (or, if greater, the lowest
“applicable contribution rate” of any eligible NHCE who is in the group of all eligible NHCEs for the Plan Year and
who is employed by the Employer on the last day of the Plan Year).

 

(ii)       The
“applicable contribution rate” for an eligible NHCE is the sum of the matching contributions (as defined in Regulation
Section 1.401(m)-1(a)(2)) taken into account in determining the ACR for the eligible NHCE for the Plan Year and the Qualified Nonelective
Contributions made for that NHCE for the Plan Year, divided by that NHCE’s Code Section 414(s) compensation for the Plan
Year.

 

(d)         ACR
of HCE if Multiple Plans. The Actual Contribution Ratio (ACR) for any Participant who is a Highly Compensated Employee (HCE)
and who is eligible to have matching contributions or after-tax Employee contributions allocated to his or her account under two
(2) or more plans described in Code Section 401(a), or arrangements described in Code Section 401(k) that are maintained by the
same Employer, shall be determined as if the total of such contributions was made under each plan and arrangement. If an HCE participates
in two (2) or more such plans or arrangements that have different plan years, then all matching contributions and after-tax Employee
contributions made during the Plan Year being tested under all such plans and arrangements shall be aggregated, without regard
to the plan years of the other plans.

 

(e)          Plans
Using Different Testing Methods for the ACP and ADP Test. Except as otherwise provided in this Section, the Plan may use the
current year testing method or prior year testing method for the ACP test for a Plan Year without regard to whether the current
year testing method or prior year testing method is used for the ADP test for that Plan Year. However, if different testing methods
are used, then the Plan cannot use:

 

(i)       The
recharacterization method of Regulation Section 1.401(k)-2(b)(3) to correct excess contributions for a Plan Year;

 

(ii)       The
rules of Regulation Section 1.401(m)-2(a)(6)(ii) to take Elective Contributions into account under the ACP test (rather than the
ADP test); or

 

(iii)       The
rules of Regulation Section 1.401(k)-2(a)(6) to take Qualified Matching Contributions into account under the ADP test (rather than
the ACP test).

 

(f)           Excess
Aggregate Contributions. If, for any Plan Year, the aggregate amount of contributions to the Matching Contributions Accounts,
if any, of Participants who are HCEs exceeds the maximum amount permitted in Section (a) above (“excess aggregate contributions”),
the Administrator shall distribute such excess amount plus or minus any income or loss allocable to such excess amount to some
or all of the Participants who are HCEs. Such corrective distributions shall be made by reducing contributions made on behalf of
Participants who are HCEs in order of the Participants who received the largest contributions. The Administrator shall distribute
the vested portion of such excess amount to each affected Participant plus or minus any Income or loss allocable to the vested
portion of such excess amount during the period beginning on the first day following the close of the Plan Year in which the excess
contributions arose and ending on the date that is 2-1/2 months from the close of the Plan Year and, in no event, later than the
close of the following Plan Year. The nonvested portion of such excess amount, plus or minus any Income or loss allocable to such
nonvested portion, shall be forfeited from each affected Participant’s Matching Contribution Account as of the last day of
the Plan Year in which the vested portion of such excess amount is distributed. The Administrator shall calculate any excess pursuant
to this Section (c) after determining the amount of excess elective deferrals pursuant to Article 3 and the amount of contributions
in excess of the ADP test pursuant to Section 5.3.

 

    	 	5-9	 

     

    

 

Income allocable
to excess aggregate contributions shall be determined (i) under any reasonable method used for allocating income to all Participants’
Accounts as applied consistently to all Participants for the Plan Year or (ii) by multiplying income allocated to the Participant’s
matching contributions for the Plan Year by a fraction, the numerator of which equals the Participant’s excess aggregate
contributions for the year and the denominator of which equals the Participant’s Account balance attributable to matching
contributions (and qualified matching contributions, if any) as of the beginning of the Plan Year and qualified matching contributions,
if any, for the Plan Year. For the purpose of this Section, “income” shall be determined and allocated in accordance
with the provisions of this Plan, except that such Section shall be applied by substituting “Excess Contributions”
with “Excess Aggregate Contributions” and by substituting amounts taken into account under the ACP test for amounts
taken into account under the ADP test. If a failed ACP test is to be corrected by making an Employer contribution, then the provisions
of the Plan for the corrective contributions shall be applied by limiting the contribution made on behalf of any NHCE pursuant
to such provisions to an amount that does not exceed the targeted contribution limits of this Plan. The Plan may distribute excess
aggregate contributions (and income) without regard to consent otherwise required for Plan distributions.

 

5.6       Separate
Testing. The requirements of Sections 5.3 and 5.4 may be applied separately to the following groups of employees: (a) all employees
who have not attained age 21 and accrued a “Year of eligibility service”; and (b) all other employees. The application
of this Section shall be in accordance with all Code requirements.

 

5.7       Limitation
if Shareholder Elect(s) Gain Deferral. If an Employer shareholder or former shareholder sells Qualifying Employer Securities
to the Trust and that shareholder elects (with the consent of the Employer) nonrecognition of any gain associated with that sale,
in accordance with Code Section 1042, no portion of that Qualifying Employer Securities may be allocated during the nonallocation
period to the Account of (or be allocated directly or indirectly under any plan of the Employer for the benefit of): (a) any individual
who makes an election under Code Section 1042 with respect to any Qualifying Employer Securities sold to the Plan; or (b) such
individual’s spouse, brothers or sisters (whether by whole or half-blood), ancestors or lineal descendants (except as to
certain lineal descendants, to the extent permitted under Code Section 409(n)(3)(A)) or any other person who bears a relationship
to him that is described in Code Section 267(b). The “nonallocation period” is the period beginning on the date of
the sale and ending on the later of the date that is 10 years from the date of that sale or the date of the Plan allocation attributable
to the final payment of any loan obligation incurred by the Plan in connection with that sale.

 

No portion of the Qualifying
Employer Securities purchased in any transaction to which Code Section 1042 applies (or any dividends or other income attributable
thereto) may thereafter be allocated to the Account of any Participant owning (as determined under Code Section 318(a) (without
regard to Code Section 318(a)(2)(B)(i)), during the entire one-year period preceding the date of purchase or as of the date such
Qualifying Employer Securities is allocated, more than 25% of any class of outstanding stock of the Employer or of the total value
of any class of outstanding stock of the Employer.

 

    	 	5-10	 

     

    

 

article
VI

 

Vesting

 

6.1       Vesting.
A Participant’s interest in his or her Elective Contribution, Matching Contribution, Money Purchase Pension, Prior Plan and
Rollover Account(s), if any, shall be fully vested and nonforfeitable at all times. A Participant’s interest in his or her
Employer Contribution Account, if any, shall vest in accordance with the following rules.

 

(a)          Retirement,
Death or Disability. A Participant’s interest in his or her Account shall be fully vested and nonforfeitable if his or
her Employment terminates on or after his or her Normal Retirement Date or due to his or her death or Disability. Effective with
respect to deaths occurring on or after January 1, 2007, the Plan shall pay the following benefits to the Beneficiaries of Participants
who die while performing qualified military service. Such Beneficiaries shall be entitled to receive any additional benefits the
Plan would have provided if the Participant had resumed employment with the Company and then terminated employment on account of
death (i.e., full vesting due to death while performing qualified military service, but not any additional benefit accruals related
to the period of qualified military service).

 

(b)         Other
Termination of Employment. If a Participant terminates Employment in a manner that is not described in Section 6.1(a) above,
his or her interest in his or her Employer Contribution Account, if any, shall vest, and be nonforfeitable, in relation to his
or her Years of Service as follows:

 

	Years of Service	 	Vested Percentage	 
	 	 	 	 
	Fewer than 2	 	 	0	%
	 	 	 	 	 
	2	 	 	20	%
	 	 	 	 	 
	3	 	 	40	%
	 	 	 	 	 
	4	 	 	60	%
	 	 	 	 	 
	5	 	 	80	%
	 	 	 	 	 
	6 or more	 	 	100	%

 

(c)          Change
in Vesting Schedule. In no event shall a change in the Plan’s vesting schedule reduce a Participant’s vested and
nonforfeitable interest in his or her Account. Upon a change in the Plan’s vesting schedule, a Participant who has accumulated
at least three Years of Service may elect to determine the vested interest in his or her Account pursuant to either the revised
vesting schedule or the vesting schedule without regard to such change. Such election shall be made during an election period which
shall commence with the date the amendment is adopted or deemed to be made and shall end 60 days after the latest of the date the
amendment is adopted, become effective, or the date the Participant is issued written notice of the amendment by the Company or
the Administrator.

 

(d)         Business
Acquisitions. Notwithstanding the preceding rules, and to the extent consistent with Code and ERISA, the Company may, in its
sole discretion, uniformly grant Hours of Service for prior service with any company or entity, consistent with Section 1.1(o)(vii)
above. To the extent that the Company does grant such credit, that service shall be applicable for purposes of determining a Participant’s
vested rights under this Article VI.

 

    	 	6-1	 

     

    

 

6.2       Forfeitures.
The nonvested portion of a Participant’s Account shall constitute a Forfeiture (be “forfeited”) as of the earlier
of the date the Participant receives a distribution from his or her Account following the termination of his or her Employment
or the date the Participant incurs 5 consecutive one-year Breaks in Service. The Administrator shall reallocate a Forfeiture pursuant
to Article 3 as of the end of the Plan Year in which the Forfeiture occurs. Notwithstanding anything in the Plan to the contrary,
Qualifying Employer Securities held in a Participant’s Account shall be forfeited only after all other assets in the Participant’s
Account have been forfeited.

 

6.3       Reinstatement.

 

(a)          Five
or More Consecutive One-Year Breaks in Service. If a former Participant resumes participation in the Plan after experiencing
at least five consecutive one-year Breaks in Service, such Participant shall retain no right to any previously forfeited portion
of his or her Account. Such employee’s Years of Service prior to his or her Breaks in Service shall affect the vesting of
his or her Account balance accruing after reinstatement only if his or her Account was at least partially vested at the time he
or she incurred a Break in Service or, upon his or her reinstatement, the number of his or her Years of Service prior to the Break
equals or exceeds the number of his or her consecutive one-year Breaks in Service. Such Participant’s Years of Service after
his or her Breaks in Service shall be disregarded for the purpose of vesting his or her Account balance that accrued prior to such
Breaks in Service. Separate Accounts shall be maintained for the Participant’s pre-break Account balance and post-break Account
balance.

 

(b)         Before
Five Consecutive One-Year Breaks in Service. If a former Participant resumes participation in the Plan before experiencing
five consecutive one-year Breaks in Service, the Administrator shall aggregate the Participant’s Years of Service completed
prior to his or her Break in Service with his or her Years of Service completed following his or her reinstatement to determine
his or her vested interest in both allocations made to his or her Account after reinstatement and any portion of his or her Account
originating prior to such Break in Service. The Administrator shall restore any previously forfeited portion of such a reinstated
Participant’s Account only if the Participant repays to the Plan the full amount of the distribution. The Participant must
repay the full amount of the distribution prior to the end of the five-year period commencing on the Participant’s date of
reinstatement. Any amount so restored shall not constitute an annual addition pursuant to Section 5.1.

 

(c)          Disregarded
Years of Service. For purpose of this Section, the Years of Service the Participant completed prior to his or her Break in
Service shall not include any Years of Service disregarded pursuant to this Section by reason of prior Breaks in Service.

 

    	 	6-2	 

     

    

 

article
VII

 

Distributions

 

7.1       Payment
of Retirement Benefits. A Participant’s retirement benefits shall not be distributed before the Participant terminates
his or her employment with each Employer, unless specifically authorized elsewhere in the Plan. A distribution of death benefits
shall be made in accordance with Section 7.3 below.

 

(a)          Small
Accounts. A Participant’s account shall be automatically distributed in a single lump sum distribution without the Participant’s
consent if the Participant’s vested Account has a value of $1,000 or less at the time of any distributable event. A Participant
will be deemed to have received an immediate distribution of his or her Account if the vested Account has a value of $0. Accounts
subject to this Section shall be distributed as soon as administratively feasible following the date on which the Participant’s
employment with each Employer terminates. In the event the Participant’s vested Account under this Plan is greater than $1,000
but less than $5,000, if the Participant does not affirmatively elect to have such distribution paid directly to an eligible retirement
plan specified by the Participant in a direct rollover or to receive the distribution directly, then the Administrator will pay
the distribution in a direct rollover to an individual retirement plan designated by the Plan Administrator. If the Participant’s
vested Account under this Plan is $5,000 or more, in general, no distribution shall be made without the Participant’s consent.

 

(b)          Large
Accounts. A Participant’s vested Account that is equal to $5,000 or more shall be distributed in accordance with the
rules in this Section (b) if that Account is not subject to mandatory distribution rules provided in Section (a) above.

 

(i)       Retirement
before Age 65. Unless a Participant consents, in writing, to an earlier or later distribution, his or her vested Account shall
be distributed between the 1st and the 60th day of the Plan Year immediately after the Plan Year in which the Participant attains
his Normal Retirement Date.

 

(A)       Early
Distributions. If a person terminates for any reason other than death, Disability, or the attainment of his or her Normal Retirement
Date, the distribution will commence, subject to the Participant’s consent, no later than the end of the sixth year following
the Plan Year in which such termination occurred.

 

(B)       Deferred
Distributions. Alternatively, a Participant may elect to defer the distribution of his or her vested Account to his or her
“required beginning date,” as defined in Section 7.4 below.

 

    	 	7-1	 

     

    

 

(ii)       Retirement
after Age 65. If a Participant terminates his or her employment with each Employer on or after his or her Normal Retirement
Date, death or Disability and the Participant does not elect to further defer the receipt of his or her vested Account, that Account
shall be distributed as soon as administratively feasible following the date on which the Participant terminated his or her employment
with each Employer. Notwithstanding the above, a Participant may elect to defer the distribution of his or her vested Account to
his or her “required beginning date,” as defined in Section 7.4 below.

 

(c)       Qualifying
Employer Securities Acquired with an Acquisition Loan. Notwithstanding the other provisions of this Sections 7.1(a) and/or
(b)(i) to the contrary, the Trustee may determine that a Participant’s Account, for purposes of making any distribution hereunder,
should not be considered to include Qualifying Employer Securities that were purchased with the proceeds of an Acquisition Loan
until the close of the Plan Year in which such loan is repaid in full.

 

7.2       Form
and Method of Payment.

 

(a)          Form
of Payment. Subject to other contrary provisions in this Plan, a Participant may elect, in writing, to receive a distribution
of his Account in the form of whole shares of Qualifying Employer Securities (fractional shares shall be paid in cash), unless
the Employer’s by-laws restrict ownership of substantially all such stock to active employees of the Employer and the Plan.
In the absence of an election to receive Qualifying Employer Securities, a Participant’s vested Account shall be distributed
to him or her in cash or Qualifying Employer Securities, as determined by the Administrator.

 

(b)          Method
of Payment.

 

(i)       Normal
Method of Payment. Distribution of a Participant’s vested Account which is not subject to Section 7.1(a) above and which
is attributable to Qualifying Employer Securities acquired after January 1, 2003 may, notwithstanding any election available under
the Plan, be made in substantially equal payments (not less frequently than annually) over the greater of not more than: (i) five
(5) years; or (ii) in the case of a Participant whose vested Account contains Qualifying Employer Securities worth more than $1,070,000
(as adjusted by the Secretary of the Treasury), five (5) years plus one (1) additional year for each $210,000 (as adjusted by the
Secretary of the Treasury) or fraction thereof by which the value of the Qualifying Employer Securities exceed $1,070,000 (as adjusted
by the Secretary of the Treasury). Any distribution made under the Plan that is not paid in installments as provided in the last
sentence or made as a direct rollover distribution as provided in subsection (c) below, shall be paid as a single lump-sum distribution.

 

(ii)       Payment
of Money Purchase Plan Accounts. Notwithstanding the form of payment set forth in Section 7.2(a), the distribution of Money
Purchase Plan Accounts shall be made in the form of joint and survivor annuities whereby the survivor annuity portion of the joint
and survivor annuity shall be 50% of the amount paid to the Participant prior to his or her death.

 

    	 	7-2	 

     

    

 

(c)          Eligible
Rollover Distributions.

 

(i)       Direct
Rollover Election. Notwithstanding any provision of the Plan to the contrary that would otherwise limit a distributee’s
election under this Section, a distributee may elect, at the time and in the manner prescribed by the Administrator, to have any
portion of an eligible rollover distribution paid directly to an eligible retirement plan specified by the distributee in a direct
rollover; provided, however, that if a Participant elects a direct rollover as to only a portion of his distributable Account,
the amount to be paid in a direct rollover must equal at least $500.

 

(ii)       Definitions.

 

(A)       Eligible
Rollover Distribution. An eligible rollover distribution is any distribution of all or any portion of the balance to the credit
of the distributee, except that an eligible rollover distribution does not include: any distribution that is one of a series of
substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the distributee
or the joint lives (or joint life expectancies) of the distributee and the distributee’s designated beneficiary, or for a
specified period of ten years or more; any distribution to the extent such distribution is required under Section 401(a)(9) of
the Code; and the portion of any distribution that is not includable in gross income (determined without regard to the exclusion
for net unrealized appreciation with respect to company securities). An eligible rollover distribution shall not include
any hardship distribution.

 

(B)       Eligible
Retirement Plan. An eligible retirement plan is an individual retirement account described in Section 408(a) of the Code, an
individual retirement annuity described in Section 408(b) of the Code, an individual retirement annuity described in Section 403(a)
of the Code, or a qualified trust described in Section 401(a) of the Code, that accepts the distributee’s eligible rollover
distribution. However, in the case of an eligible rollover distribution to the surviving spouse, an eligible retirement plan is
an individual retirement account or individual retirement annuity.

 

(C)       Distributee.
A distributee includes an Employee or former Employee. In addition, the Employee’s or former Employee’s surviving spouse
and the Employee’s or former Employee’s spouse or former spouse who is the alternate payee under a qualified domestic
relations order, as defined in Section 414(p) of the Code, are distributees with regard to the interest of the spouse or former
spouse. Effective January 1, 2010, a “distributee” shall also include any non-spouse beneficiary of the Participant.

 

(D)       Direct
Rollover. A direct rollover is a payment by the Plan to the eligible retirement plan specified by the distributee.

 

7.3       Death
Benefits. If a Participant dies before he or she has received a distribution of his or her entire vested Account, the remainder
of such Account shall be distributed to the beneficiary designation, if any, in effect on the date of the Participant’s death.
If no such designation exists, the Account shall be distributed directly to the Participant’s surviving spouse or, if none,
to his or her issue per stirpes or, if none, to his or her next of kin determined pursuant to the laws of the State of Wisconsin
that would apply if the Participant had died unmarried and intestate. All distributions under this Section shall be made available
to the beneficiary within a reasonable time after the end of the Plan Year in which occurred the Participant’s death and
in no event later than the earliest date benefits would be payable to the Participant if his or her employment terminated on the
date of his or her death for a reason other than death.

 

    	 	7-3	 

     

    

 

(a)          Beneficiary
Designation. Each Participant may designate, in writing, on forms approved by and filed with the Administrator, one or more
beneficiaries (and, if desired, contingent beneficiaries) to receive his or her death benefits, if any, under this Plan. The beneficiary
of 100% of the Account of a Participant who is married at the time of his death shall be his surviving spouse, unless his spouse
consents to the designation of an alternative beneficiary or the spouse cannot be located. Such a spousal consent shall be made
in writing, acknowledging the effect of such election and witnessed by a Plan representative or notary public. Any change in, or
revocation of, a Participant’s designated beneficiary shall again require spousal consent unless the earlier consent of the
spouse expressly permitted subsequent designations by the Participant without further spousal consent.

 

(b)         Death
On or Before Required Beginning Date. The Plan shall distribute the Account of a Participant who dies on or before his “required
beginning date,” as defined in Section 7.4 below, in accordance with this Section (b).

 

(i)       General.
Distributions shall extend no longer than the end of the calendar year that contains the fifth anniversary of the Participant’s
death, except to the extent that paragraph (ii) or (iii) below applies. For either paragraph (ii) or (iii) to apply, the Participant
must have so elected before his or her death or his or her designated beneficiary must have so elected no later than the earlier
of December 31 of the calendar year in which distributions otherwise must commence or December 31 of the calendar year containing
the fifth anniversary of the Participant’s death.

 

(ii)       Non-spouse
Beneficiary. If any portion of the Participant’s Account is payable to a designated beneficiary who is not the Participant’s
surviving spouse, distribution shall commence no later than December 31 of the calendar year following the date of the Participant’s
death and shall extend over a period no longer than the life of such beneficiary or over a period certain not extending beyond
the life expectancy of such beneficiary determined using the attained age (or ages) in the calendar year distributions must commence
and as reduced by one during each subsequent year.

 

(iii)       Spouse
as Beneficiary. If any portion of a Participant’s Account is payable to the Participant’s surviving spouse, distributions
to such spouse shall commence no later than December 31 of the calendar year in which the Participant would have attained age 70-1/2
and shall extend over a period no longer than the life of such spouse or over a period certain not extending beyond the life expectancy
of such spouse as determined using the spouse’s attained age in the first distribution calendar year and reduced by one in
each year thereafter. The Participant’s surviving spouse may elect instead to recalculate life expectancy, provided the election
is irrevocable and made prior to the initial distribution date. If the Participant’s spouse dies before the commencement
of distributions, the Administrator shall apply this Section as if the spouse were the Participant.

 

    	 	7-4	 

     

    

 

(c)          Death
after Required Beginning Date. If a Participant dies on or after his or her “required beginning date,” as defined
in Section 7.4 below, any remaining portion of his or her vested Account shall be distributed at least as rapidly as required by
the method of distribution in effect on the date of his or her death.

 

7.4       Required
Lifetime Distributions. Notwithstanding any other provisions of this Plan to the contrary, each Participant’s entire
Account shall be distributed in accordance with the requirements of Code Section 401(a)(9), which the Plan hereby incorporates
by reference. The following provisions of this Section 7.4 summarize those rules. Required minimum distributions were not suspended
for the 2009 Plan Year under Code Section 401(a)(9)(H).

 

(a)          Required
Beginning Date. Distribution of a Participant’s Account shall commence no later than his or her “required beginning
date.” A Participant’s required beginning date shall be April 1 of the calendar year immediately following the
calendar year when the Participant attains (or would have attained) age 70-1/2, unless the participant is not a 5% owner of an
Employer, in which case the required beginning date will be the later of this date or April 1 of the calendar year after the participant
terminates his or her employment with all Employers. For purposes of this Section, a Participant is a 5% owner if he or she is
a 5% owner within the meaning of Code Section 416(i) at any time during the Plan Year ending with or within the calendar year in
which the Participant attains age 66-1/2 or any subsequent Plan Year. Once distributions for the Plan have begun to a 5-percent
owner, such distributions shall continue, even if the Participant ceases to be a 5-percent owner in a subsequent year.

 

(b)          Limits
on Distribution Periods. Installment payments of a Participant’s Account shall occur over a period of time calculated
as of the calendar year immediately preceding the calendar year which contains the Participant’s required beginning date
(the “first distribution calendar year”). The time period for payment of installments shall be no longer than:

 

(i)       The
Participant’s life or life expectancy determined using the Participant’s attained age as of the first distribution
calendar year, if the Participant has not designated a beneficiary; or

 

(ii)       If
the Participant has designated a beneficiary, the life or joint and last survivor expectancy of the Participant and the designated
beneficiary determined using the attained ages of the Participant and the designated beneficiary as of the first distribution calendar
year.

 

    	 	7-5	 

     

    

 

(c)          Amount
required to be distributed. The required distribution paid each calendar year beginning with the first distribution calendar
year shall not equal less than the quotient obtained upon dividing the Participant’s Account by the lesser of (i) the applicable
life expectancy or (ii), if the beneficiary is not the Participant’s spouse, the applicable minimum distribution incidental
benefit divisor determined from the table recited in Q&A-4 of proposed regulation Section 1.401(a)(9)-2. The “applicable
life expectancy” is the life expectancy (or joint and last survivor expectancy) calculated using the attained age of the
Participant (or designated beneficiary) as of the Participant’s (or designated beneficiary’s) birthday in the first
distribution calendar year reduced by one in each year thereafter. If the Participant’s benefit is distributed in the form
of an annuity purchased from an insurance company, distributions thereunder shall be made in accordance with the requirements of
Code Section 401(a)(9). The Participant may elect to recalculate his life expectancy and/or that of his spouse, provided such election
is irrevocable and is made prior to the Participant’s required distribution date.

 

A Participant’s Account
is determined as of the last Valuation Date in the calendar year immediately preceding the calendar year for which a distribution
is required, adjusted as follows: increased by the amount of any contributions or Forfeitures, if any, allocated to the Account
as of dates in such calendar year after the Valuation Date and decreased by distributions made in such calendar year after the
Valuation Date.

 

7.5       In-Service
Withdrawals.

 

(a)          Age
59-1/2. On or after attaining age 59-1/2, a Participant may withdraw all or any portion of his or her Elective Contribution
Account by submitting a written request for such a withdrawal to the Administrator.

 

(b)          Age
65. On or after attaining age 65, a Participant may withdraw all or any portion of his or her Employer Contribution Account
by submitting a written request for such a withdrawal to the administrator.

 

(c)          2
Year Rule. A Participant may withdraw all or any portion of his or her vested Employer Contribution Account that was contributed
and allocated for Plan Years ending before January 1, 2005, provided that the amount to be withdrawn has been allocated to the
Participant’s Employer Contribution Account for at least two (2) complete Plan years. In order to request such a withdrawal,
a Participant must submit a written request to the Administrator.

 

(d)          5
Year Rule. A Participant may withdraw all or any portion of his or her vested Employer Contribution Account that was contributed
and allocated for Plan Years ending before January 1, 2005, provided that the Participant has participated in the Plan for at least
five (5) complete Plan Years. In order to request such a withdrawal, a Participant must submit a written request to the Administrator.

 

(e)          Rollover
and After-Tax Accounts. A Participant may withdraw all or any portion of his or her Rollover Account and/or After-Tax Account
at any time by submitting a written request for such a withdrawal to the Administrator.

 

7.6       Hardship
Distributions. A Participant may withdraw any portion of his Elective Contributions Account upon appropriate notice to the
Administrator if the withdrawal results from a “hardship.”

 

    	 	7-6	 

     

    

 

(a)          A
distribution under the Plan is hereby deemed to be on account of an immediate and heavy financial need of an Employee if the distribution
is for one of the following or any other item permitted under Regulation Section 1.401(k)-1(d)(3)(iii)(B):

 

(i)       Expenses
for (or necessary to obtain) medical care that would be deductible under Code Section 213(d) (determined without regard to whether
the expenses exceed 10% of adjusted gross income);

 

(ii)       Costs
directly related to the purchase of a principal residence for the Employee (excluding mortgage payments);

 

(iii)       Payment
of tuition, related educational fees, and room and board expenses, for up to the next twelve (12) months of post-secondary education
for the Employee, the Employee’s spouse, children, or dependents (as defined in Code Section 152, without regard to Code
Section 152(b)(1), (b)(2), and (d)(1)(B));

 

(iv)       Payments
necessary to prevent the eviction of the Employee from the Employee’s principal residence or foreclosure on the mortgage
on that residence:

 

(v)       Payments
for burial or funeral expenses for the Employee’s deceased parent, spouse, children or dependents (as defined in Code Section
152, without regard to Code Section 152(d)(1)(B)); or

 

(vi)       Expenses
for the repair of damage to the Employee’s principal residence that would qualify for the casualty deduction under Code Section
165 (determined without regard to whether the loss exceeds 10% of adjusted gross income).

 

(b)       Satisfies
all of the following:

 

(i)       The
distribution does not exceed the amount of the financial need, including any amount necessary to pay taxes or penalties reasonably
anticipated to result from the distribution;

 

(ii)       The
Participant has obtained all distributions (other than hardship withdrawals) and all nontaxable loans currently available pursuant
to this Plan or any other plan maintained by the Employer;

 

(iii)       The
Participant cannot make elective contributions and employee after-tax contributions pursuant to this Plan or any other qualified
or nonqualified plan of deferred compensation (excluding health or welfare plans) maintained by the Employer for at least 6 months
after receipt of the withdrawn amount; and

 

    	 	7-7	 

     

    

 

(iv)       The
Participant’s elective contributions made in the calendar year immediately following the calendar year in which the withdrawal
is received do not exceed the limit of Code section 402(g) (as adjusted) in effect for such calendar year, less the Participant’s
elective contributions made in the calendar year in which the withdrawal was received.

 

If the Plan provides for
hardship distributions upon satisfaction of the safe harbor standards set forth in Regulation Sections 1.401(k)-1(d)(3)(iii)(B)
(deemed immediate and heavy financial need) and 1.401(k)-1(d)(3)(iv)(E) (deemed necessary to satisfy immediate need), then there
shall be no reduction in the maximum amount of elective deferrals that a Participant may make pursuant to Code Section 402(g) solely
because of a hardship distribution made by this Plan or any other plan of the Employer.

 

7.7       Right
of First Refusal. All Qualifying Employer Securities that are distributed to Participants, former Participants, or beneficiaries
of Participants or former Participants, shall be subject to the transfer restrictions set forth in this Section. Notwithstanding
anything in this Plan to the contrary, effective February 15, 2011, the Right of First Refusal described in this Section 7.7 shall
no longer apply.

 

(a)          General
Restriction. No such Qualifying Employer Securities may be offered, sold, pledged, bequeathed, given, hypothecated or otherwise
disposed of by the Participant, or beneficiary of the Participant whether for value or not, unless the shares have first been offered
for sale to the Company under the provisions of Sections (b) and (c) below. Any attempt to dispose of such securities without regard
to this restriction shall be deemed to be an offer to the Company under the terms set forth in Sections (b) and (c), and in such
a case the date of the offer shall be deemed to be the date on which the Company receives actual notice of the attempted disposition.

 

(b)          Price
of Securities Offered. The Qualifying Employer Securities offered to the Company pursuant to this Section shall be offered
at their fair market value. The Company shall advise the offeror of the fair market value of the Qualifying Employer Securities
as determined by the Company in good faith and based on all relevant factors for determining the fair market value of the Qualifying
Employer Securities on the date of valuation. The date of valuation shall be the Valuation Date immediately preceding the date
of acceptance of the offer, including any interim Valuation Date determined by the Administrator; provided, however, that the date
of valuation with respect to a transaction between the Plan and a Participant who is a Disqualified Person on the date of such
transaction shall be the date of the transaction. The Company’s determination shall be deemed, for purposes of this Section,
to be fair market value unless the offeror presents to the Company written evidence of a bona fide current offer from any person
to purchase such Qualifying Employer Securities at a higher price or on more favorable terms than those otherwise offered by the
Company under this Section. If such written evidence is submitted, the price designated therein shall be deemed the fair market
value of the securities for purposes of this Section, and the Company may elect, but shall not be required, to purchase at such
higher price or upon such terms.

 

(c)          Method
of Sale to Company. The offer shall be in writing and shall provide that if accepted, in whole or in part, the purchaser shall
have the right to pay the purchase price, plus interest on the unpaid balance at the rate current in Milwaukee, Wisconsin on the
date of sale for prime commercial loans, in equal installments over a period not to exceed five years from the date of sale.

 

    	 	7-8	 

     

    

 

(d)          Expiration
of Offer. The Company shall have 14 days following receipt of an offer under this Section to accept or reject the offer as
to all or any part of the Qualifying Employer Securities offered. Mailing of notice of acceptance to the address listed on the
stock transfer books of the Company for the Qualifying Employer Securities offered or for any shares of the Company owned by the
offeror shall constitute acceptance as of the date of postmark of such notice. Qualifying Employer Securities not accepted by the
end of the 14-day period may be sold or otherwise disposed of by the offeror. Notwithstanding the preceding sentence, if, pursuant
to Section (b), the offeror has submitted written evidence of a bona fide offer to purchase the Qualifying Employer Securities
at a higher price or on more favorable terms than otherwise offered by the Company under this Section, and the Company has not
elected, within 14 days of the offer and submission of such evidence, to purchase the Qualifying Employer Securities at such higher
price or on such terms, then the offeror may sell such securities only at a price not less than, and terms no less favorable to
the seller than, the price and terms specified in the written evidence submitted; if the offeror attempts to sell the Qualifying
Employer Securities at a lower price or on less favorable terms, then the provisions of this Section again apply as if no offer
under this Section was ever made, and any such attempted sale shall be void.

 

(e)          Restriction
to Continue. These restrictions shall be perpetual to the extent allowed by law; provided, however, that these restrictions
will not apply for any period during which the Qualifying Employer Securities subject thereto are publicly traded. All owners of
Qualifying Employer Securities distributed from the Trust Fund pursuant to the Plan shall take such Qualifying Employer Securities
subject to the restrictions contained in this Section.

 

(f)          Certificates
to Contain Legend. Certificates for shares distributed pursuant to the Plan shall contain a statement showing the existence
of these restrictions.

 

(g)         Closing.
Closing shall occur on a date specified by the Company, but not more than 30 days after the offer is accepted. The first annual
installment is due on closing.

 

(h)          Company
Authority. For purposes of this Section, the Company’s President and/or its Compensation, Pension and Retirement Committee
may act on behalf of the Company.

 

    	 	7-9	 

     

    

 

7.8       Put
Option.

 

(a)         
Any Participant who has received Qualifying Employer Securities from the Plan and any other person who has received Qualifying
Employer Securities from the Plan (including by reason of the Participant’s death or incompetence, by reason of divorce or
separation from the Participant, or by reason of a rollover distribution), shall have the right to require the Company to purchase
the Qualifying Employer Securities for their current fair market value (hereinafter referred to as the “put right”).
The put right shall be exercisable by written notice to the Compensation and Retirement Committee during the first 60 days after
the Qualifying Employer Securities are distributed by the Plan, and, if not exercised in that period, during the first 60 days
in the following Plan Year after the Compensation and Retirement Committee has communicated to the Participant its determination
as to the current fair market value of the Qualifying Employer Securities. However, the put right shall not apply to the extent
that the Qualifying Employer Securities, at the time the put right would otherwise be exercisable, may be sold on an established
market in accordance with federal and state securities laws and regulations. Similarly, the put right shall not apply with respect
to the portion of the Participant’s Account which the individual elected to have reinvested under Code Section 401(a)(28)(B).
If the put right is exercised, the Trustee may, if so directed by the Compensation and Retirement Committee, in its sole discretion,
assume the Employer’s rights and obligations with respect to purchasing the Qualifying Employer Securities. Notwithstanding
anything herein to the contrary, in the case of a plan established by a bank (as defined in Code Section 581), the put right shall
not apply if prohibited by federal or state law and Participants are entitled to elect their benefits as distributed in cash.

 

(b)        
The Employer or the Trustee, as the case may be, may elect to pay for the Qualifying Employer Securities in equal periodic installments,
no less frequently than annually, over a period beginning not later than thirty (30) days after the exercise of the put right and
not exceeding five (5) years, with adequate security and interest at a reasonable rate on the unpaid balance, all such terms to
be set forth in a promissory note delivered to the seller with normal terms as to acceleration upon any uncured default.

 

(c)         
Nothing contained herein shall be deemed to obligate any Employer to register any Qualifying Employer Securities under any federal
or state securities law or to create or maintain a public market to facilitate the transfer or disposition of any Qualifying Employer
Securities. The put right described herein may only be exercised by a person described in the second preceding paragraph, and may
not be transferred with any Qualifying Employer Securities to any other person. As to all Qualifying Employer Securities purchased
by the Plan in exchange for any Acquisition Loan, the put right shall be non-terminable. The put right for Qualifying Employer
Securities acquired through an Acquisition Loan shall continue with respect to such Qualifying Employer Securities after the Acquisition
Loan is repaid or the Plan ceases to be an employee stock ownership plan.

 

(d)          Notwithstanding
anything in the Plan to the contrary, if securities acquired with the proceeds of an Acquisition Loan available for distribution
consist of more than one class, a distribute must receive substantially the same proportion of each such class, in accordance with
Treasury Regulations Section 54.4975-11(f)(2).

 

    	 	7-10	 

     

    

 

7.9       Qualified
Domestic Relations Orders. Upon receipt of a domestic relations order issued by a court of competent jurisdiction with respect
to a Participant’s interest in the Plan, the Administrator shall determine whether such domestic relations order constitutes
a qualified domestic relations order (as defined in Code Section 414(p)(1), a “QDRO”). The Administrator shall establish
reasonable procedures to determine the qualified status of a domestic relations order and to administer distributions mandated
by a QDRO. If the Administrator determines that the domestic relations order is a QDRO, an alternate payee as defined in Code Section
414(p)(8) may receive distributions in a single lump sum commencing as if the Participant’s had terminated as described in
Section 7.1. Distributions made pursuant to this Section may occur without regard to the age or the employment status of
the Participant. Except as provided by this Section, a distribution pursuant to a QDRO shall not include any type of benefit or
payment option not otherwise payable by the Plan. If the Administrator has notice that a QDRO is being or may be sought but has
not received the QDRO, the Administrator shall not, unless requested in writing by the Participant or beneficiary, as appropriate,
delay payment of a benefit to a Participant or beneficiary which would otherwise be due. If the Administrator has determined that
an order is not a QDRO and all comment and appeal periods have expired, the Administrator shall not, unless requested in writing
by the Participant or beneficiary, as appropriate, delay payment to a Participant or beneficiary which otherwise would be due even
if the Administrator has notice that the party claiming to be an alternate payee or the Participant is attempting to correct any
deficiencies in the order.

 

7.10     Elective
Deferrals and Safe Harbor Contributions. Notwithstanding any other provision in this Plan to the contrary, elective contributions
made by a Participant pursuant to Section 3.2 of this Plan and safe harbor elections made to this Plan under Section under 5.3(a),
may not be distributed to a Participant or beneficiary earlier than: (a) the Participant’s separation from service, death
or disability; (b) the termination of the Plan without the establishment or maintenance of another defined contribution plan; (c)
the disposition by the Employer of substantially all the assets used by the Employer; or (d) the date on which the Participant
attained age 59-1/2.

 

7.11     Distribution
Rules for Money Purchase Pension Plan Assets. The provisions of this Section only apply to amounts transferred to the Plan
form the frozen First National Bank in Manitowoc Money Purchase Pension Plan (‘MPP”). The MPP was frozen in 2002 and
MPP plan assets were transferred to this Plan in 2002. All such transferred amounts are held in individual Money Purchase Pension
Plan Accounts (“MPP Accounts”) on behalf of Participants.

 

(a)       Definitions.
The following terms shall have the meanings specified below, but only with respect to amounts held in a Participant’s MPP
Account:

 

(1)       Annuity
Starting Date. The first day of the first period for which an amount is payable as an annuity or any other form.

 

(2)       Earliest
Retirement Age. The earliest age at which a Participant could separate from service and receive a distribution from the MPP
Account.

 

(3)       Election
Period.

 

    	 	7-11	 

     

    

 

(i)       The
90 day period ending on the Annuity Starting Date but effective January 1, 2007, the 180 day period ending on the Annuity Starting
Date; or

 

(ii)       for
an election to waive the Qualified Preretirement Survivor Annuity, the period commencing on the first day of the Plan Year in which
the Participant attains age thirty-five (35) (or, if earlier, the date of the Participant’s severance from employment) and
ending on the date of the Participant’s death.

 

(4)       Qualified
Joint and Survivor Annuity. An annuity for the life of the Participant with a survivor annuity after the Participant’s
death for the life of the Participant’s spouse which is equal to fifty percent (50%) of the amount of the annuity payable
during the joint lives of the Participant and his or her spouse. Notwithstanding the preceding sentence, Participants may elect
either a sixty-six and two-thirds percent (66 2/3%) joint and survivor annuity, or a seventy-five percent (75%) joint and survivor
annuity, or a one hundred percent (100%) joint and survivor annuity in lieu of the fifty-percent (50%) survivor annuity. Participants
may elect either an immediate starting date annuity or a deferred starting date annuity.

 

(5)       Qualified
Preretirement Survivor Annuity. An immediate annuity for the life of the surviving spouse, the actuarial equivalent of which
is equal to the value of the Participant’s Account.

 

(6)       Normal
Retirement Age. Age sixty-five (65).

 

(7)       Early
Retirement Age. Age fifty-five (55) with six (6) Years of Service.

 

(8)       Vesting.
All MPP Accounts are fully vested.

 

(9)       Distribution
Triggering Events. Participants with MPP Accounts may request a distribution of their MPP Account upon (i) severance form employment
before Normal Retirement Age; (ii) attaining Normal Retirement Age without a severance from employment; or (iii) Disability. Rollovers
into the MPP Account may be withdrawn at any time.

 

(d)       Payments
to Participants.

 

(1)       If
a Participant is married on his or her Annuity Starting Date, the distributions payable from his or her MPP Account shall be made
in the form of a Qualified Joint and Survivor Annuity.

 

(2)       If
a Participant is not married on his or her Annuity Starting Date, the distributions payable from his or her MPP Account shall be
made in the form of a monthly annuity payment until the Participant’s death.

 

    	 	7-12	 

     

    

 

(3)       If
elected in accordance with Section 7.11(e) below, in lieu of payment under Section 7.11(d)(1) or (2), distributions from a Participant’s
MPP Account may be payable as a single, lump-sum payment.

 

(e)       Election
of Optional Payment Form. 

 

(1)       An
election to receive a lump sum as an optional form of payment, or a revocation of such election, shall be made on a form prescribed
by the Plan Administrator. Such election shall be executed by a Participant, shall comply with subsection 7.11(e)(2), shall specifically
designate a lump sum form of payment and specify any non-spousal Beneficiary (including contingent Beneficiaries) named. The completed
form may be executed and delivered to the Plan Administrator at any time during the Election Period. Any election made under this
section may be revoked at any time during the Election Period without prejudice to the Participant’s right to again make
the election permitted in this section. Such revocation shall only be valid if executed by both the Participant and his or her
spouse, and if such spousal consent complies with Section 7.11(e)(2). A Participant’s spouse may not revoke his or her consent
previously given (i.e., to select a lump sum payment) under this section without such Participant’s written agreement.

 

(2)       An
election under Section 7.11(e)(1) by a married Participant shall only be valid if the Participant’s spouse consents in writing
to the election (acknowledging the effect of the election) and such consent is witnessed by either the Plan Administrator (or its
delegate) or a notary public. Such consent shall not be required if the Participant does not have a spouse or the spouse cannot
be located. Such consent shall also not be required if the Participant is legally separated from his or her spouse or the Participant
has been abandoned (under applicable local law) and the Participant has a court order to such effect, unless a Qualified Domestic
Relations Order provides otherwise. If the Participant’s spouse is legally incompetent to give consent, the spouse’s
legal guardian (even if the guardian is the Participant) may give consent. An election under Section 7.11 (e)(1) by a married Participant
shall be deemed a waiver by such Participant’s spouse of the Qualified Preretirement Survivor Annuity.

 

(3)      (A)      Pursuant
to Treasury Regulations Section 1.417(a)(3)-1, the Plan Administrator shall furnish each Participant a written statement sent by
first class mail, hand delivery, or email describing in a manner calculated to be understood by the average participant:

 

(i)       the
terms and conditions of the Qualified Joint and Survivor Annuity and each other optional form of benefit available to the Participant;
a description of the eligibility conditions for each form of benefit; a description of the financial effect of electing the optional
form of benefit (i.e. the amounts and timing of payments to the Participant under the form of benefit during the Participant’s
lifetime and after the Participant’s death using reasonable estimates but affording the Participant the right to request
a more precise calculation which shall be disclosed to the Participant); a description of any other material features of the option
forms of benefit; and a statement as to whether any annuity form of benefit will be provided by purchasing an annuity contract
from an insurance company with the Participant’s account balance (and if the financial effect of the annuity form of benefit
was provided using estimates rather than by assuring that an insurer is able to provide the amount disclosed to the Participant,
the statement must also disclose that fact).

 

    	 	7-13	 

     

    

 

(ii)       the
terms and conditions of the Participant’s right to elect, under Section 7.11(e)(1), to waive the Qualified Joint and Survivor
Annuity and the effect thereof:

 

(iii)       the
right to revoke an election under Section 7.11(e)(1) and the effect thereof.

 

(B)   The
written statement required by this subsection shall be provided to each Participant no less than thirty (30) and no more than ninety
(90) days before such Participant’s Annuity Starting Date, except to the extent otherwise permitted in accordance with regulations.
Effective January 1, 2007, notice to the Participant with regard to having the right to elect the manner in which his vested MPP
Account balance will be distributed to him may be given up to 180 days before the first day of the first period for which an amount
is payable.

 

(4)    Each
Participant shall be obligated to notify the Plan Administrator in writing of his or her marital status and to promptly notify
the Plan Administrator of any change thereof, providing such information as the Plan Administrator may require in order to implement
the provisions of the Plan. The Administrator may reasonably rely on the information furnished by such Participant unless it has
actual knowledge to the contrary.

 

    	 	7-14	 

     

    

 

article
VIII

 

Administration of the Plan

 

8.1       Designation
of Administrator. The Company, acting through its President or its other delegate(s), shall be the Plan Administrator. Any
person or entity serving as the Administrator may resign at any time by filing a written notice of resignation with the Company
and may be removed at any time by the Company. In the event of a vacancy in the office of the Administrator, the Company shall
appoint a successor or successors.

 

8.2       Administration
and Interpretation. The Administrator shall administer the Plan in accordance with its terms and shall have all powers necessary
to effectuate the provisions of the Plan. The Administrator shall have the exclusive right to interpret the Plan, shall determine
all questions arising in the administration, interpretation and application of the Plan documents, to resolve ambiguities, inconsistencies
and omissions related thereto, and shall, from time to time, formulate and issue such rules and regulations as may be necessary
for the purpose of administering the Plan. Any interpretation, determination, rule or regulation issued by the Administrator shall
be conclusive and binding on all persons. In any review of such an interpretation, determination, rule or regulation, the Administrator’s
decision shall be given deference and shall be set aside by a reviewing tribunal only in the event the Administrator acted in an
arbitrary and capricious manner.

 

8.3       Administrator’s
Duties. The Administrator and all fiduciaries of this Plan or the Trust shall discharge their duties with respect to the Plan
and Trust solely in the interest of the Participants and beneficiaries, for the exclusive purpose of providing benefits to Participants
and their beneficiaries and deferring reasonable expenses of administering the Plan and Trust with care, skill, prudence and diligence
under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use and
in accordance with the Plan and Trust documents and instruments, insofar as such documents and instruments are consistent with
the provisions of ERISA and any acts amendatory thereto. In addition, the Trustee shall discharge its fiduciary duties by diversifying
the investments of the Plan so as to minimize the risk of large losses, unless under the circumstances it is clearly prudent not
to do so.

 

8.4       Authority.
The Administrator shall have the authority to give to the Trustee, in writing, any other notice or direction permitted by the terms
of the Plan, and the Trustee shall be entitled to rely upon such writing until such time as the Administrator shall file a written
revocation of the notice or direction with the Trustee.

 

8.5       Maintenance
of Accounts and Reports. The Administrator shall maintain accounts showing the fiscal transactions of the Plan and such books
and records as may be necessary to comply with ERISA, governmental regulations issued thereunder and other applicable law. The
Administrator shall timely file or cause to be timely filed, all annual reports, financial and other statements as may be required
of the Administrator by any federal or state statute, agency or authority. The Administrator shall timely furnish or cause to be
furnished, all such reports, statements and other documents as may be required by any federal or state statute, agency or authority
to be furnished by the Administrator to any Participant, beneficiary or interested party.

 

    	 	8-1	 

     

    

 

8.6       Examination
of Financial Statements and Audits. The Administrator shall, if required by law or deemed necessary by the Administrator, engage
an independent and qualified public accountant to conduct an examination of any financial statements of the Plan and the Trust
and any other books and records of the Plan and shall, if required by law, engage such accountant to form an opinion as to whether
the financial statement and schedules required to be included in the annual report required by Section 103 of ERISA are presented
fairly in conformity with generally accepted accounting principles applied on a basis consistent with that of the preceding year.
The opinion of the accountant need not be expressed with respect to the most recent annual statement of assets and liabilities
of a common or collective trust maintained by a bank or similar institution, or of a separate trust maintained by a bank or a similar
institution as a Trustee, so long as such annual statement is certified by the bank or similar institution as accurate and is made
a part of the annual report submitted under Section 103 of ERISA.

 

8.7       Agent
for Service of Process. The Administrator shall have the authority to accept service of process on behalf of the Plan.

 

8.8       Bond.
The Administrator shall give such bond as may be required by ERISA.

 

8.9       Compensation
and Expenses. The expenses incurred by the Administrator in the proper administration of the Plan shall be paid from the Trust
Fund, unless one or more Employer(s) elects to pay such expenses directly. An Administrator who is an Employee of an Employer,
however, shall not receive any fee or compensation for services as Administrator.

 

8.10     Limitation
of Authority. The Administrator shall not add to, subtract from or modify any of the terms of the Plan, change or add to any
benefits prescribed by the Plan, or waive or fail to apply any Plan requirement for benefit eligibility.

 

8.11     Limitations
on Liability. To the extent that a fiduciary may be relieved of liability under Section 410(a) of ERISA for a breach of any
responsibility, obligation or duty imposed by Title 1, Part 4 of ERISA, and no fiduciary shall be liable for any action or failure
to act hereunder, except for bad faith, willful misconduct or gross negligence. To the extent that a fiduciary may be relieved
of liability under Section 410(a) of ERISA for a breach of another fiduciary of any responsibility, obligation or duty imposed
by Title 1, Part 4 of ERISA, no fiduciary shall be personally liable for a breach committed by any other fiduciary, unless the
fiduciary: (a) knowingly participated in or knowingly concealed a breach by such other fiduciary; (b) by his failure to comply
with the fiduciary duties set out in Section 9.01, has enabled such other fiduciary to commit a breach; or (c) has failed to make
reasonable efforts under the circumstances to remedy the breach of another fiduciary of which he has knowledge. To the same extent,
no fiduciary shall be personally liable for the acts or omissions of any attorney or agent employed by a fiduciary hereunder, if
such attorney or agent shall have been selected with reasonable care.

 

8.12     404(c)
Compliance. No Plan fiduciary (including the Administrator and Trustee) is liable for any loss or for any breach resulting
from a Participant’s direction of the investment of any part of his/her directed Account to the extent that the Participant’s
exercise of his or her right to direct the investment of his or her Account satisfies the requirements of ERISA Section 404(c).

 

    	 	8-2	 

     

    

 

8.13     Diversification
Requirements for Employer Securities. The diversification requirements below apply for Plan Years beginning on or after January
1, 2007, to the extent the Plan holds any “publicly traded employer securities” as defined in Code Section 401(a)(35)(G)(v)
and Treasury Regulations Section 1.401(a)(35)-1(f)(5)(ii)(A). From January 1, 2007 through December 31, 2014, the Plan has not
held any “publicly traded employer securities” because the Company’s stock was only traded on the Over-The-Counter
Bulletin Board (OTC:BB), which is not considered “publicly traded” within the meaning of Code Section 401(a)(35). However,
if the Plan should ever hold any “publicly traded employer securities” then the following provisions will apply:

 

(a)       An
applicable individual, as defined in Treasury Regulations Section 1.401(a)(35)-1(b), is permitted to elect to direct any publicly
traded Qualifying Employer Securities (as defined in Code Section 401(a)(35)(G)(v)) held in his Account under the Plan to be reinvested
in other investment options offered under the Plan with respect to the portion of his Account that is subject to Code Section 401(a)(35)(B)
or (C). The Bank may permit diversification of accounts invested in Qualifying Employer Securities earlier than is required as
long as the earlier time period is applied consistently to all applicable individuals.

 

(b)       The
Plan shall offer at least three (3) investment options, other than Qualifying Employer Securities, to which the applicable individual
may direct all or any portion of his Account invested in Qualifying Employer Securities, and each investment option must be diversified
and have materially different risk and return characteristics that satisfy the requirements of Department of Labor Regulations
Section 2550.404c-1(b)(3). The Plan may limit the time for divestment and reinvestment to periodic, reasonable opportunities occurring
no less frequently than quarterly. The Plan may not impose any restrictions or conditions with respect to the investment of Qualifying
Employer Securities that are not imposed on the investment options offered under the Plan, except as provided in Treasury Regulations
Section 1.401(a)(35)-1(e).

 

(c)       A
notice must be provided to each applicable individual that describes the divestiture rights and the importance of diversifying
the investment of retirement plan assets. The Bank shall provide the notice to all applicable individuals no later than 30 days
before the date on which the applicable individuals are eligible to exercise their right to diversify.

 

    	 	8-3	 

     

    

 

article
IX

 

Administration of the Trust

 

9.1       Appointment
of Trustee. The Company shall appoint one or more Trustees to receive and hold in trust all contributions, and income, paid
into the Trust. The Company may remove the Trustee or the Trustee may resign and a successor trustee shall be appointed all pursuant
to the requirements and procedure recited in the Trust agreement.

 

9.2       Authorization
for Trust Agreement. The Company hereby authorizes and directs each of its officers to enter into an agreement with the Trustee
to provide for the administration of the Trust. Said officers shall also have the right at any time, and from time to time, to
amend the Trust Agreement on the Company’s behalf.

 

9.3       Participant
Direction of Investment of Account. The Company may, upon written request of a Participant and in accordance with its uniform
and nondiscriminatory rules, authorize Participants to direct the investment of all or part of their Account in such funds as the
Investment Committee may select. Participants may choose to invest their Accounts among the available investment vehicles in any
whole percentage of at least 1%. Elections shall be made and verified in a manner prescribed by the Administrator. Once filed,
a Participant’s verified election will remain in effect until amended or discontinued pursuant to this paragraph. A Participant
may change his or her investment election as of any Valuation Date (except that transfers of Qualifying Employer Securities will
only be processed as of a date determined by the Administrator based upon the availability of Qualifying Employer Securities and
the practical implications of implementing that election); provided that the Administrator receives the Participant’s verified
written election at least 15 days prior to such effective date. If a Participant fails to direct the investment of all or any portion
of his or her Account, such amount shall be invested in the fund(s) uniformly designated by the Investment Committee. A Participant’s
directions hereunder shall bind the Trustee unless and until the Company amends or revokes the authorization for investment direction
by Participants. If the Trustee acts at the direction of a Participant, the Company, its board of directors, officers and employees,
the Administrator and the Trustee shall not be liable or responsible for any loss resulting to the Trust or to any Account for
any breach of fiduciary responsibility by reason of any act done pursuant to the direction of the Participants.

 

9.4       Funding
Policy. The Trustee shall invest the Trust for the exclusive benefit of Participants and their beneficiaries in any combination
of corporate stocks, including bonds, instruments of indebtedness, insurance contracts (if otherwise allowed), government securities,
bank deposits and the Trustee’s common trust funds or pooled investment funds, if any, as the Trustee deems appropriate for
the Plan and consistent with applicable law.

 

9.5       Diversification
of Investments after Age 55. Pursuant to Code Section 401(a)(28), a Participant who has attained age 55 and completed at least
10 years of participation in the Plan may elect in each of the Plan Years during his qualified election period to withdraw the
value of a specified number of shares of Company Stock allocated to his Account pursuant to the following:

 

    	 	9-1	 

     

    

 

(a)          Amount
Eligible for Withdrawal. In each of the first five Plan Years of the Participant’s qualified election period, the Participant
may withdraw the value of (i) up to 25 percent of the total number of shares of Company Stock that has been allocated to his Account
as of the prior Valuation Date, less (ii) the number of shares of Company Stock that the Participant previously elected to withdraw,
if any. In the last Plan Year of the Participant’s qualified election period, “50 percent” shall be substituted
for “25 percent” in the preceding sentence in determining the amount the Participant may withdraw.

 

(b)         Qualified
Election Period. A Participant’s “qualified election period” is the six consecutive Plan Years commencing
on the first day of the Plan Year in which the Participant attains age 55 and has completed at least 10 years of participation
in the Plan.

 

(c)          Withdrawal
Procedure. A Participant must make an election to withdraw in accordance with this section, in writing, within the 90-day period
following the close of each Plan Year during his qualified election period. The Administrator shall distribute the amount designated
by the Participant’s election within 90 days after the date the Participant’s election is filed with the Administrator.
Such distribution shall be made in accordance with the methods of distribution available under Article 7 as if the Participant
had terminated his Employment.

 

9.6       Voting
Rights. Each Participant and, in the case of a deceased Participant, the deceased Participant’s beneficiary shall direct
the Trustee how to vote any Company Stock allocated to his Account. The Administrator shall direct the Trustee how to vote any
Company Stock not allocated to a Participant’s Account, any stock allocated to the Account of a Participant but to which
voting instructions are not received from the Participant and all shares on matters not voted pursuant to the preceding sentence.

 

9.7       Special One-Time
Diversification Right.       Notwithstanding any other provision of the Plan to the contrary, effective July 19, 2012, all Participants
who have not terminated employment, other than (i) senior management team employees and (ii) members of the Company’s Board
of Directors, shall have a special, one-time right to elect to diversify the portion of their Plan Account that is invested in
Company Stock into any other investment alternative permitted under the Plan, but such election right shall not apply to any Company
stock that was contributed to the Plan by the Company in the form of discretionary profit sharing contributions. This election
right shall be implemented under the terms and conditions set forth in this Section 9.7, and any other administrative rules that
the Plan Administrator may determine from time to time.

 

Starting on July 19, 2012
and ending on July 24, 2012, each eligible Participant may submit to the Plan Administrator a signed and dated diversification
election form (as provided by the Plan Administrator) to sell all or a portion of the Company Stock that is held in the Participant’s
Plan Account to the Company for cash, but such election shall not apply to any Company stock that was contributed to the Plan by
the Company in the form of discretionary profit sharing contributions. The amount that the Company will pay for each share of Company
Stock shall be the dollar value determined by an independent appraisal which the Plan will obtain on July 19, 2012. Elections are
irrevocable once filed with the Plan Administrator.

 

    	 	9-2	 

     

    

 

The Plan shall remit the
Company Stock from each electing Participant’s Account to the Company as soon as practicable on or after July 24, 2012 and
the Company shall immediately remit cash to the Plan equal to the aggregate dollar value of the shares of Company Stock that are
to be sold to the Company, pursuant to the Participant’s proper election. Such cash shall be allocated to the Accounts of
each Participant who elected to sell his or her shares of Company Stock pursuant to this special one-time diversification right,
such that each Participant shall receive the appropriate dollar value per share for each share of Company Stock sold to the Company
pursuant to the Participant’s special, one-time diversification election. The cash will be deposited into the investment
options selected by the Participant on the Participant’s diversification election form. Once the cash has been allocated
to the Participant’s Account, the Participant may invest the cash into any other investment alternative available under the
Plan, in accordance with the Plan’s regular investment policies and procedures.

 

This special one-time diversification
election is intended to qualify for the statutory prohibited transaction exemption set forth in ERISA Section 408(e), such that
(i) the sale of Company Stock shall be for adequate consideration (i.e., based on the July 19, 2012 independent appraisal obtained
by the Plan); (ii) no commission is charged with respect to such sale; and (iii) the Plan is an eligible individual account plan.
Furthermore, the Plan is not subject to the diversification requirements of Code Section 401(a)(35) because the Company Stock is
traded on Over The Counter Bulletin Board (OTC BB) which is not a “national securities exchange” under Section 6 of
the Securities Exchange Act of 1934, as amended. Other than this special one-time diversification right, Participants who have
not terminated employment are only permitted to diversify out of Company Stock after age 55 in accordance with Section 9.5. Participants
who have terminated employment may elect to receive a distribution of their Plan Account and may exercise the put right set forth
in Section 7.8.

 

9.8       Special
Diversification Right. Notwithstanding any other provision of the Plan to the contrary, effective October 24, 2015, all Participants
who have not terminated employment, other than members of the Company’s Board of Directors, shall have a special right to
elect to diversify the portion of their Plan Account that is invested in Company Stock into any other investment alternative permitted
under the Plan. This election right shall be implemented under the terms and conditions set forth in this Section 9.8, and any
other administrative rules that the Plan Administrator may determine from time to time.

 

Starting on October 24,
2015, and ending on October 29, 2015, each eligible Participant may submit to the Plan Administrator a signed and dated diversification
election form (as provided by the Plan Administrator) to sell all or a portion of the Company Stock that is held in the Participant’s
Plan Account to the Company for cash. The amount that the Company will pay for each share of Company Stock shall be the dollar
value determined by an independent appraisal which the Plan will obtain on October 24, 2015. Elections are irrevocable once filed
with the Plan Administrator.

 

    	 	9-3	 

     

    

 

The Plan shall remit the
Company Stock from each electing Participant’s Account to the Company as soon as practicable on or after October 29, 2015,
and the Company shall immediately remit cash to the Plan equal to the aggregate dollar value of the shares of Company Stock that
are to be sold to the Company, pursuant to the Participant’s proper election. Such cash shall be allocated to the Accounts
of each Participant who elected to sell his or her shares of Company Stock pursuant to this special diversification right, such
that each Participant shall receive the appropriate dollar value per share for each share of Company Stock sold to the Company
pursuant to the Participant’s special diversification election. The cash will be deposited into the investment options selected
by the Participant on the Participant’s diversification election form. Once the cash has been allocated to the Participant’s
Account, the Participant may invest the cash into any other investment alternative available under the Plan, in accordance with
the Plan’s regular investment policies and procedures.

 

This diversification election
is intended to qualify for the statutory prohibited transaction exemption set forth in ERISA Section 408(e), such that (i) the
sale of Company Stock shall be for adequate consideration (i.e., based on the October 24, 2015, independent appraisal obtained
by the Plan); (ii) no commission is charged with respect to such sale; and (iii) the Plan is an eligible individual account plan.
Furthermore, the Plan is not subject to the diversification requirements of Code Section 401(a)(35) because the Company Stock is
traded on Over The Counter Bulletin Board (OTC BB) which is not a “national securities exchange” under Section 6 of
the Securities Exchange Act of 1934, as amended. Other than this special one-time diversification right, Participants who have
not terminated employment are only permitted to diversify out of Company Stock after age 55 in accordance with Section 9.5. Participants
who have terminated employment may elect to receive a distribution of their Plan Account and may exercise the put right set forth
in Section 7.8.

 

    	 	9-4	 

     

    

 

article
X

 

Claims Procedure

 

10.1     Application
for Benefits. If an Employee, Participant, beneficiary or other person shall make a claim for benefits under the Plan, the
claim shall be referred to the Administrator for resolution. Within 30 days after receipt of a claim, the Administrator shall render
a written decision concerning the merits of the request. If the claim is denied, the written decision shall set forth: (a) the
specific reason or reasons for the denial; (b) specific reference to pertinent Plan provisions on which the denial is based; (c)
a description of any additional material or information; and (d) an explanation of the Plan’s claim review procedure. If
a claimant is not furnished a written decision containing such information within 30 days, the claim shall be deemed denied and
automatically proceed to the review stage.

 

10.2     Review
of Denied Claim. The claimant may file a written request with the Administrator for review of the decision rendered under Section
10.1 above within 60 days after receiving the written decision denying the claim or, if no written decision is rendered, within
90 days after filing the claim. The claimant may review pertinent Plan documents prior to such request and submit written issues
and comments. The Administrator shall render a written decision within 30 days after receipt of the request for review, setting
forth the specific reasons for the decision in language calculated to be understood by the claimant, with specific reference to
the pertinent Plan provisions on which the decision is based.

 

    	 	10-1	 

     

    

 

article
XI

 

Amendment and Termination

 

11.1     Amendment
or Restatement. The Company reserves the right to amend the Plan in every respect at any time, either before or after termination
hereof, or from time to time (and retroactively if deemed necessary or appropriate to conform with governmental regulations or
other policies), provided, however, that no such amendment shall be effective: (a) which shall attempt to divert the assets held
by the Trustee to purposes other than for the exclusive benefit of the Participants or their beneficiaries (prior to satisfaction
of all liabilities of the Plan with respect to such Participants and beneficiaries); (b) which shall increase or decrease the duties
of the Trustee without the Trustee’s consent; or (c) to the extent that the amendment has the effect of decreasing a Participant’s
accrued benefit. Notwithstanding the preceding sentence, a Participant’s Account balance may be reduced to the extent permitted
under Section 412(c)(8) of the Code. For purposes of this paragraph, a Plan amendment which has the effect of decreasing a Participant’s
Account balance or eliminating an optional form of benefit, with respect to benefits attributable to service before the amendment,
shall be treated as reducing an accrued benefit. If the Plan’s vesting schedule is amended, or the Plan is otherwise amended
in any way that directly or indirectly affects the computation of the Participant’s nonforfeitable interest in his or her
Account, each Participant with at least three Years of Service may elect, within a reasonable period after the adoption of the
amendment or change, to have his or her nonforfeitable percentage calculated under the Plan without regard to such change or amendment.
The period during which the election may be made shall commence with the date such amendment is adopted or deemed to be made and
shall end on the latest of: (a) 60 days after the amendment is adopted; (b) 60 days after the amendment becomes effective; or (c)
60 days after the Participant is issued a written notice of the amendment by the Company or the Administrator. If the Plan’s
vesting schedule is amended, or the Plan is otherwise amended in any way that directly or indirectly affects the vesting schedule,
then such amendment shall not be effective to the extent that it would otherwise cause the nonforfeitable percentage of the accrued
benefit derived from employer contributions (determined as of the later of the date such amendment is adopted or the date such
amendment becomes effective) of any Employee who is a Participant in the Plan to be less than such nonforfeitable percentage computed
under the Plan without regard to such amendment.

 

11.2     Termination
and Discontinuance of Contributions. The Company reserves the right to terminate this Plan or to discontinue or suspend contributions
thereto at any time; the Company shall provide the Trustee with written notice of such action. Upon such termination, discontinuance
or suspension, further contributions to the Trust shall cease until further action by the Company. Upon termination of the Plan,
the Accounts of each Participant or beneficiary shall be fully vested and non-forfeitable and those Accounts shall be distributed
in a manner which is consistent with and satisfies the requirements provided in Article 7 above. The termination of the Plan shall
not result if the reduction of any benefit protected by Code Section 411(d)(6) except as permitted pursuant to applicable Treasury
regulations.

 

Upon termination of the Plan
with respect to a group of Participants which constitutes a partial termination of the Plan, the Trustee shall allocate and segregate
for the benefit of the Participants then or theretofore employed by an Employer with respect to which the Plan is being terminated,
a proportionate interest of the Trust assets for such Participants. Distribution of the Accounts of each such Participant or his
or her beneficiary shall be made in the same manner as provided above.

 

    	 	11-1	 

     

    

 

In the event of a full or
partial termination of the Plan, an Employer’s liability to pay Plan benefits be strictly limited to the assets of the Trust.
No one shall have any claim against an Employer to provide any or all Plan benefits regardless of the sufficiency of the Trust’s
assets, except as otherwise required by law.

 

11.3     Merger,
Consolidation or Transfer of Assets and Liabilities. In the event of a merger or consolidation with or transfer of assets or
liabilities to any other plan, each Participant shall, if such plan then terminates, receive a benefit immediately after the merger,
consolidation or transfer which is equal to or greater than the benefit the Participant would have been entitled to receive immediately
before the merger, consolidation or transfer, assuming that this Plan had then terminated.

 

11.4     Successor
Employer. Any successor to the business of an Employer may, with the written consent of the Company, continue the Plan and
Trust. Such successor shall succeed to all the rights, powers and duties of such Employer. The employment of any Employee of the
Employer who continues in the employ of the successor shall not be deemed to have been terminated or severed for any purpose of
the Plan.

 

    	 	11-2	 

     

    

 

article
XII

 

General Provisions

 

12.1     Limitation
on Liability. In no event shall an Employer, Administrator or any employee, officer or director of an Employer or Administrator
incur any liability for any act or failure to act unless such act or failure to act constitutes a lack of good faith, willful misconduct
or gross negligence with respect to the Plan or Trust.

 

12.2     Indemnification.
The Trust shall indemnify the Administrator and any employee, officer or director of an Employer against all liabilities arising
by reason of any act or failure to act unless such act or failure to act is due to such person’s own gross negligence or
willful misconduct or lack of good faith in the performance of his duties to the Plan or Trust. Such indemnification shall include,
but not be limited to, expenses reasonably incurred in the defense of any claim, including attorney and legal fees, and amounts
paid in any settlement or compromise; provided, however, that indemnification shall not occur to the extent that it is not permitted
by applicable law. If Trust assets are insufficient or indemnification is not permitted by applicable law, the Employer shall indemnify
such person. Indemnification shall not be deemed the exclusive remedy of any person entitled to indemnification pursuant to this
Section. The indemnification provided hereunder shall continue as to a person who has ceased acting as a director, officer, member,
agent or employee of the Administrator or as an officer, director or employee of the Employer, and such person’s rights shall
inure to the benefit of his heirs and representatives.

 

12.3     Compliance
with ERISA. Notwithstanding any other provisions of this Plan, a fiduciary or other person shall not be relieved of any responsibility
or liability for any responsibility, obligation or duty imposed upon such person pursuant to ERISA.

 

12.4     Non-alienation
of Benefits. Except with respect to any in any indebtedness owing to the Trust or payments required pursuant to a qualified
domestic relations order as defined by the Code, or as otherwise permitted by law, benefits payable by the Plan shall not be subject
to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, charge, garnishment, execution or levy, either voluntary
or involuntary. Any attempt to anticipate, alienate, sell, transfer, assign, pledge, encumber, charge or otherwise dispose of any
right to Plan benefits shall be void.

 

12.5     Employment
Not Guaranteed by Plan. The establishment of this Plan, its amendments and the granting of a benefit pursuant to the Plan shall
not give any Participant the right to continued employment with an Employer, or limit the right of the Employer to dismiss or impose
penalties upon the Participant or modify the terms of employment of any Participant.

 

12.6     Facility
of Payment. If a Participant’s duly qualified guardian or legal representative makes claim for any amount owing to the
Participant, the Trustee shall pay the amount to which the Participant is entitled to such guardian or legal representative. In
the event a distribution is to be made to a minor, the Administrator may direct that such distribution be paid to the legal guardian,
or if none, to a parent of such minor or an adult with whom the beneficiary maintains his residence, or to the custodian for such
beneficiary under the Uniform Gift to Minors Act if permitted by the laws of the state in which the beneficiary resides. Any payment
made pursuant to this Section in good faith shall be a payment for the Account of the Participant and shall be a complete discharge
from any liability of the Trust or the Trustee.

 

    	 	12-1	 

     

    

 

12.7     Location
of Participant or Beneficiary Unknown. If the Administrator is unable to pay benefits from the Plan to any Participant or beneficiary
due to the Administrator’s inability to locate such Participant or beneficiary, after forwarding a registered letter, return
receipt requested, to the last known address of such Participant or beneficiary and after further diligent effort, the amount to
be distributed shall be treated as a Forfeiture which shall be allocated to Participants as an additional Employer contribution
on the last day of such Plan Year. If the Participant or beneficiary is located subsequent to the allocation of the Forfeiture,
the forfeited amount should be restored, first from Forfeitures, if any, then income and last, as an additional Employer contribution.
In the event a Participant or beneficiary cannot be located upon termination of the Plan, any amount payable to such Participant
or beneficiary shall be transferred at the earliest possible date to the state of the Participant’s or beneficiaries last
known address pursuant to the terms of that State’s abandoned property law. Upon such transfer, the Employer, Administrator
and Trustee shall have no further liability for the amount so transferred.

 

12.8     Offset.
In the event any payment is made by the Trustee to any individual who is not entitled to such payment, the Trustee shall have the
right to reduce future payments due to such individual by the amount of any such erroneous payment. This right of offset however,
shall not limit the rights of the Trustee to recover such overpayments in any other manner.

 

12.9     Special
Rules for Military Service. In the event that any obligation of an Employer under this Plan conflicts with the requirements
of Code Section 414(u), ERISA or any other applicable law regarding military leave and veterans’ rights, such Employee
shall be entitled to any additional rights provided under such laws. Pursuant to Code Section 401(a)(37) and notwithstanding any
provisions of the Plan to the contrary, in the case of a Participant who dies while performing qualified military service (as defined
in Code Section 414(u)), the survivors of the Participant are entitled to any additional benefits (other than benefit accruals
relating to the period of qualified military service) provided under the Plan had the Participant resumed and then terminated employment
on account of death. The Plan does not provide any such additional benefits, but if the Plan were to provide such additional benefits,
then such survivors would be entitled to receive such benefits.

 

12.10   Spouse.
Wherever the term “spouse” is used in this Plan, pursuant to Revenue Ruling 2013-17, for federal tax purposes, the
term “spouse” includes an individual married to a person of the same sex if the individuals are lawfully married under
state law, and the term “marriage” includes such a marriage between individuals of the same sex. The Plan shall recognize
a marriage of same-sex individuals that was validly entered into in a state whose laws authorize the marriage of two individuals
of the same sex even if the married couple is domiciled in a state that does not recognized the validity of same-sex marriages.

 

    	 	12-2	 

     

    

 

IN WITNESS that the foregoing
Plan has been duly adopted and is in effect on the terms stated herein, this Plan has been executed on the date set forth below.

 

	 	BANK FIRST NATIONAL CORPORATION
	 	 	 	 
	 	 	 	 
	12-22-16	 	By: 	/s/ Sherry Jonet
	Date	Sherry Jonet, Vice President, Human Resources

    	 	12-3	 

     

    

 

BANK FIRST NATIONAL
RETIREMENT PLAN

Amended and Restated Effective January 1, 2017

 

 

 

Amendment Number One

 

 

  

WHEREAS,
Bank First National Corporation (the “Company”), which owns 100% of Bank First National (the “Bank”),
maintains the Bank First National Retirement Plan (the "Plan"); and

 

WHEREAS,
Section 11.1 of the Plan allows the Company to amend the Plan from time to time; and

 

WHEREAS,
the Company desires to amend the Plan to allow for Automatic Enrollment and Automatic Increases.

 

NOW,
THEREFORE, effective June 1, 2017, the Plan is amended as follows:

 

		1.	The following provision shall replace and supersede
Section 3.2(a) as set forth in the Plan:

 

3.2
Participant Contributions. Participants may make elective contributions to this Plan, as set forth below.

           

      (a)
Automatic Enrollment and Increases. Participants may enroll to make elective contributions, discontinue making all elective
deferrals, or change the level of their elective deferrals as of the first day of any calendar quarter. Upon the initial satisfaction
of the eligibility requirements to make elective deferrals under the Plan, a Participant who has not made an affirmative elective
contribution election shall be deemed to have made an automatic elective contribution election in the amount of 4% of compensation
(or such other amount as determined from time to time by the Plan Administrator) (“Automatic Enrollment”). A Participant
who has not made an affirmative election contribution and is thereby automatically enrolled also shall be deemed to have elected
to automatically increase his or her deferral contributions by 1% as of the first day of each Plan Year, provided that such automatic
increases shall not exceed 10% of the Participant's compensation (“Automatic Increases”). A Participant who has made
an affirmative elective contribution of more than 0% may also elect Automatic Increases, provided that such Automatic Increase
shall not exceed 10% of the Participant's compensation.

 

IN WITNESS WHEREOF, this Amendment
has been executed by a duly authorized officer on the date set forth below.

 

	 	 	BANK FIRST NATIONAL CORPORATION

	 	 	 
	May 16, 2017	 	By: 	/s/ Sherry Jonet
	Date	 	 	 

 

     

     

    

 

BANK FIRST NATIONAL RETIREMENT PLAN

Amended and Restated Effective January
1, 2017

 

 

 

Amendment Number Two

 

 

 

WHEREAS, Bank
First National Corporation (the “Company”), which owns 100% of Bank First National (the “Bank”), maintains
the Bank First National Retirement Plan (the “Plan”); and

 

WHEREAS, Section
11.1 of the Plan allows the Company to amend the Plan from time to time; and

 

WHEREAS, the
Company desires to amend the Plan to allow participants to change Participant Elective contributions from quarterly to monthly.

 

NOW, THEREFORE,
effective October 1, 2017, the Plan is amended as follows:

 

1.          The
following provision shall replace and supersede Section 3.2(b) as set forth in the Plan:

 

3.2 Participant
Contributions.   Participants may make elective contributions to this Plan, as set forth below.

 

(b) Affirmative
Elections. For each Plan Year, a Participant may affirmatively direct his or her Employer to make “elective contributions”
on his or her behalf directly to the Trust in an amount different than the automatic enrollment and increases contemplated under
Section 3.2(a) above. A Participant may revoke his or her election to make elective contributions pursuant to rules prescribed
by the Administrator. A Participant may increase or decrease the amount of his or her elective contributions as of the first day
of any calendar month or as otherwise allowed by the Administrator.

 

IN WITNESS WHEREOF,
this Amendment has been executed by a duly authorized officer on the date set forth below.

 

	 	 	BANK FIRST NATIONAL CORPORATION
	 	 	 	 
	August 15, 2017	 	By: 	/s/ Sherry Jonet               
	Date

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