EXECUTIVE DEFERRED COMPENSATION AGREEMENT

Exhibit 10.1

PEOPLES STATE BANK

EXECUTIVE DEFERRED COMPENSATION AGREEMENT

THIS AGREEMENT is made by and between Peoples State Bank (the “Bank”), a Wisconsin state bank with its principal office in Wausau, Wisconsin, and _________________ (the “Executive”), a key officer employed by the Bank.  This Agreement amends and restates that certain Executive Deferred Compensation Agreement, dated __________, by and between the Bank and the Executive.

INTRODUCTION

To encourage the Executive to remain an employee of the Bank, the Bank is willing to provide to the Executive a deferred compensation opportunity and a deferred bonus opportunity.  The Bank will pay the Executive’s benefits from the Bank’s general assets.  

AGREEMENT

The Executive and the Bank agree as follows:

Article 1

Definitions

1.1

Definitions.  Whenever used in this Agreement, the following words and phrases shall have the meanings specified:

1.1.1

“ Base Salary ” means the Executive’s base compensation, excluding any and all other compensation such as commissions, allowances or other non-annual payments or non-annual incentive bonuses, whether paid in cash, deferred cash payments or payments into or for any deferred compensation arrangement, including a Code section 401(k) plan, and premium payment for life insurance under the terms of any other deferred compensation or benefit arrangement.

1.1.2

“ Beneficiary ” means each person designated pursuant to Article 6, or the estate of the deceased Executive, entitled to benefits, if any, upon the death of the Executive.

1.1.3

“ Beneficiary Designation Form ” means the form established from time to time by the Plan Administrator that the Executive completes, signs, and returns to the Plan Administrator to designate one or more Beneficiaries.

1.1.4

“ Benefit Election Form ” means the form attached hereto as Exhibit B .

1.1.5

“ Change of Control ” means (other than Permitted Transfers):

(a)

a change in the ownership of the Bank or the Holding Company whereby a person or group (a “Person”) (within the meaning of Code section 409A) acquires, directly or indirectly, ownership of a number of shares of capital stock of the Bank or the Holding Company which, together with capital stock already held by such Person, constitutes more than fifty percent (50%) of the total fair market value or of the combined voting power of the Bank’s or Holding Company’s outstanding capital stock; provided, however , that if a Person already owns more than fifty percent (50%) of the total fair market value or of the combined voting power of the Bank’s or Holding Company’s outstanding capital stock, the acquisition of additional capital stock by such Person is not considered a Change of Control; or

(b)

a change in the effective control of the Holding Company whereby

(i)

a Person acquires (or has acquired during the preceding twelve (12) month period ending on the date of the most recent acquisition by such person), directly or indirectly, ownership of a number of shares of capital stock of the Holding Company which constitutes thirty-five percent (35%)or more of the combined voting power of the Holding Company’s outstanding capital stock; provided, however , that if a Person already owns thirty-five percent (35%) or more of the combined voting power of the Holding Company’s outstanding capital stock, the acquisition of additional capital stock by such Person is not considered a Change of Control; or

(ii)

a majority of the persons who were members of the Board of Directors of the Bank or Holding Company as of the Effective Date are, within a twelve (12) month period, replaced by individuals whose appointment or election to the Bank’s or Holding Company’s Board of Directors is not endorsed by a majority of the Bank’s or Holding Company’s Board of Directors prior to such appointment or election; or

(c)

a change in the ownership of the assets of the Bank or the Holding Company whereby a Person acquires (or has acquired during a twelve (12) month period ending on the date of the most recent acquisition by such person) assets of the Bank or the Holding Company that have a  total gross fair market value equal to or more than forty percent (40%) of the total gross fair market value of all of the assets of the Bank or the Holding Company immediately prior to such acquisition or acquisitions; provided, however, that there is no Change of Control if assets are transferred to an entity that is controlled by the shareholders of the Bank or the Holding Company immediately after the transfer, nor is it a Change of Control if the Bank or the Holding Company transfers assets to:

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(i)

a shareholder of the Bank or the Holding Company (immediately before the asset transfer) in exchange for or with respect to the shareholder’s capital stock in the Bank or the Holding Company;

(ii)

an entity, fifty percent (50%) or more of the total value or voting power of which is owned, directly or indirectly, by the Bank or the Holding Company;

(iii)

a Person that owns, directly or indirectly, fifty percent (50%) or more of the total value or voting power of all the outstanding capital stock of the Bank or the Holding Company; or

(iv)

an entity, at least fifty percent (50%) of the total value or voting power of which is owned, directly or indirectly, by a Person described in paragraph (iii) of this Section 1.1.5(c).

1.1.6

“ Change in Control Benefit ” means the benefit described in Section 4.4.

1.1.7

“ Code ” means the Internal Revenue Code of 1986, as amended.

1.1.8

“ Death Benefit ” means the benefit described in Article 5.

1.1.9

“ Death Benefit Election Form ” means the form attached hereto as Exhibit C .

1.1.10

“ Deferral ” means the amount of Base Salary or bonus compensation (if any) that the Executive elects to contribute to the Deferral Account, as set forth on the Deferral Election Form.

1.1.11

“ Deferral Account ” means the bookkeeping account established by the Bank pursuant to Article 3.

1.1.12

“ Deferral Election Form ” means the form by which the Executive elects to make Deferrals of Base Salary or bonus compensation (if any), which is attached to this Agreement as Exhibit A .

1.1.13

“ Disability ” means (i) the inability of the Executive to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of more than twelve (12) months, or (ii) the receipt of income replacement benefits for a period of more than three (3) months under a Bank-sponsored or Holding Company-sponsored accident and health plan covering the Executive due to medically determinable physical or mental impairment which is expected to result in death or is expected to last for a continuous period of more than twelve (12) months.

1.1.14

“ Disability Benefit ” means the benefit described in Section 4.3.

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1.1.15

“ Effective Date ” means ___________.  The effective date of this amended and restated Agreement is _________, 2007.

1.1.16

“ Early Termination of Employment ” means the Executive’s Termination of Employment prior to attainment of Normal Retirement Age for any reason other than death, Disability or Termination of Employment for Cause.

1.1.17

“ Holding Company ” means PSB Holdings, Inc., a Wisconsin corporation and registered bank holding company.

1.1.18

“ Interest ” has the meaning set forth in Section 3.1.3.

1.1.19

“ Matching Grant ” means the amount, if any, contributed or credited to the Deferral Account by the Bank which does not represent Deferrals of Base Salary or bonus compensation (if any) or Interest  credited pursuant to Section 3.1.3 of this Agreement.

1.1.20

“ Normal Retirement Age ” means age sixty-five (65).

1.1.21

“ Normal Retirement Benefit ” means the benefit described in Section 4.1.

1.1.22

“ Normal Retirement Date ” means the Executive's Termination of Employment after the attainment of Normal Retirement Age.

1.1.23

“ Permitted Transfers ” means that a Shareholder may make the following transfers and such transfers shall be deemed not to be a Change of Control under Section 1.1.5:

(a)

to any trust, company, or partnership created solely for the benefit of any Shareholder or any spouse of or any lineal descendent of any Shareholder;

(b)

to any individual or entity by bona fide gift;

(c)

to any spouse or former spouse of any Shareholder pursuant to the terms of a decree of divorce;

(d)

to any officer or employee of the Agency pursuant to any incentive stock option plan established by the Bank or Holding Company;

(e)

to any family member of any Shareholder;

(f)

after receipt of any necessary regulatory approvals, to any company or partnership, including but not limited to, a family limited partnership, a majority of the stock or interests of which company or partnership are owned by any of the Shareholder; or

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(g)

to any trust established by the Bank or Holding Company and intended to qualify under section 401(a) of the Code.

1.1.24

“ Plan Year ” means each twelve (12) consecutive month period beginning on January 1st and ending on December 31st of each year.  

1.1.25

“ Return On Equity ” or “ RO E” means a fraction, the numerator of which is the net earnings of the Bank after state and federal corporate tax, but excluding (i) after-tax annual interest expense payable on the trust preferred securities issued by the Holding Company (if any), (ii) after-tax income resulting from death proceeds payable from any life insurance policies acquired by the Bank, (iii) extraordinary items (determined pursuant to GAAP), and the denominator of which is the shareholder’s equity of the Bank as of the end of the preceding Plan Year.

1.1.26

“ Shareholder ” means an existing owner of issued and outstanding stock of the Holding Company as of the Effective Date of this Agreement.

1.1.27

“ Specified Employee ” means a “key employee,” as defined in Code section 416(i) and the regulations issued there under.

1.1.28

“ Termination of Employment ,” “ Terminates Employment ,” “ Terminates ” and similar mean that the Executive has incurred a separation of service (within the meaning of Code section 409A and the guidance and regulations issued thereunder) and ceases to be employed by the Bank and/or the Holding Company for any reason.

1.1.29

“ Termination of Employment for Cause ” has the meaning set forth in Article 7.

1.1.30

“ Unforeseeable Emergency ” means a severe financial hardship of the Executive or the Executive’s Beneficiary resulting from (a) illness or accident of the Executive, the Executive’s Beneficiary, or the spouse or dependent (as defined in section 152(a) of the Internal Revenue Code) of either; (b) loss of the Executive’s or Executive’s Beneficiary’s property due to casualty; or (c) other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Executive or the Executive’s Beneficiary.  The determination of the occurrence of an Unforeseeable Emergency is based upon all relevant facts and circumstances and shall be determined in accordance with and shall otherwise comply with the requirements of Code section 409A and the regulations issued thereunder.

Article 2

Deferral Election

2.1

Initial Deferral Election .  The Executive shall make an initial Deferral election under this Agreement by filing with the Bank a signed Deferral Election Form within thirty (30) days after the Effective Date of this Agreement.  The Deferral Election Form shall set forth the

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amount of Base Salary and bonus compensation (if any) to be deferred, and shall be effective to defer only Base Salary and bonus compensation (if any) earned after the date the Deferral Election Form is received by the Bank.  A Deferral Election Form shall remain in effect until modified by the Executive in accordance with Section 2.2.  

2.2

Election Changes .

2.2.1

Generally .  Once filed, a Deferral Election Form is irrevocable for the Plan Year to which the Deferral Election Form applies (subject to Section 2.2.2).  Upon the Bank’s approval, the Executive may modify the amount of Base Salary or bonus compensation (if any) to be deferred in a subsequent Plan Year by filing a new Deferral Election Form with the Bank prior to the beginning of such Plan Year for which Base Salary and bonus compensation (if any) is to be deferred.  The new Deferral Election Form shall not be effective until the first day of the Plan Year following the Plan Year in which the new Deferral Election Form is received and approved by the Bank.

2.2.2

Cancellation of Deferrals Upon Unforeseeable Emergency .  Notwithstanding the requirements of Section 2.2.1, if the Executive incurs an Unforeseeable Emergency or a hardship distribution under section 1.401(k)-1(d)(3) of the Code and the regulations thereunder, the Executive may cancel Deferrals under this Agreement.  Any Deferral Election Form submitted by the Executive to the Bank subsequent to cancellation of Deferrals under this Section 2.2.2 shall be considered an initial Deferral Election Form by the Executive for purposes of Code section 409A and the guidance and regulations issued thereunder.

2.2.3

Void Elections .  Any elections provided for in this Agreement which would be deemed by operation of law to be taxable to the Executive prior to the anticipated payment of the benefits to the Executive or by operation of law would cause a loss of deductibility by the Bank when the payments commence or greater taxation than anticipated by the Bank for this Agreement will be deemed not to have been made by the Executive.

Article 3

Deferral Account

3.1

Establishing and Crediting .  The Bank shall establish a Deferral Account on its books for the Executive and shall credit to the Deferral Account the following amounts:

3.1.1

Deferrals .  The amount of Base Salary or bonus compensation (if any) deferred by the Executive as set forth in the signed Deferral Election Form completed by the Executive and submitted to the Bank in accordance with Article 2.  The Bank shall credit the Deferrals as of the time such amounts would have otherwise been paid to the Executive as Base Salary or bonus compensation (if any) in accordance with the Bank’s or Holding Company’s regular payroll schedule and policy.  Notwithstanding the above, in any given Plan Year the amount of Base Salary deferred by the Executive shall not exceed twenty percent (20%) of Base Salary and the amount of bonus compensation (if

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any) deferred by the Executive shall not exceed seventy percent (70%) of bonus compensation.

3.1.2

Matching Grant .  The Bank shall make a contribution to the Executive’s Deferral Account in the form of a Matching Grant equal to twenty (20%) of the Executive’s Deferrals up to a maximum of three percent (3%) of the Executive’s Base Salary.  The Bank shall credit the Matching Grant to the Deferral Account at the same time the Executive’s Deferrals are credited to the Deferral Account in accordance with Section 3.1.1.

3.1.3

Interest .  Until any benefit payment commences under this Agreement, as of the last day of each Plan Year, the Bank shall calculate Interest on the Deferral Account balance at a rate equal to the annual ROE of the Bank determined as of the last day of the Plan Year, with such Interest to be compounded annually and credited on the last day of the Plan Year.  The minimum rate of Interest credited under the first sentence of this Section 3.1.3 shall be five percent (5%), and the maximum rate of Interest shall be fifteen percent (15%).  In the year that the Executive obtains Normal Retirement Age, the Bank shall calculate Interest on the Deferral Account balance at a rate equal to the annual ROE of the Bank determined as of the last day of the Plan Year, with such Interest to be credited on a pro-rata basis.  After the commencement of any benefit payment under this Agreement, the Bank shall calculate Interest on the Deferral Account balance at a rate equal to seven percent (7%), with such Interest to be compounded bi-weekly until the full benefit is paid from this Agreement.  Interest will continue to be credited until the Deferral Account balance is fully paid.  Notwithstanding the preceding, the rate of Interest credited under this Section 3.1.3 is subject to adjustment from time to time in the sole discretion of the Bank approved by the board of directors.

3.1.4

Vesting Schedule .  The Executive shall be one hundred percent (100%) vested in any Deferrals made under this Agreement.  The Executive shall vest in any Matching Grant credited under Section 3.1.2 and any Interest credited under Section 3.1.3 in accordance with the following schedule:

At the end of the sixth (6th) Plan Year from such Matching Grant or Interest, the Executive shall be one hundred percent (100%) vested in that or any future Matching Grant or Interest credited under Sections 3.1.2 and 3.1.3.  For purposes of determining an Executive’s vested percentage under this Section 3.1.4, all Plan Years completed since the Effective Date shall be considered.

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3.2

Statement of Accounts .  The Bank shall provide to the Executive, within 120 days after the end of each Plan Year, a statement setting forth the Deferral Account balance.

3.3

Accounting Device Only .  The Deferral Account is solely a device for measuring amounts to be paid under this Agreement.  The Deferral Account is not a funded trust of any kind. The Executive is a general unsecured creditor of the Bank for the payment of benefits and does not retain any ownership of the mutual funds used to determine Return on Investment.  The benefits represent the mere Bank promise to pay such benefits.  The Executive’s rights are not subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or garnishment by the Executive’s creditors.

Article 4

Lifetime Benefits

4.1

Normal Retirement Benefit .  Upon the Normal Retirement Date, the Bank shall pay to the Executive the benefit described in this Section 4.1 in lieu of any other benefit under this Agreement.

4.1.1

Amount of Benefit .  The benefit under this Section 4.1 is one hundred percent (100%) of the Deferral Account balance determined as of the Executive’s Normal Retirement Date.

4.1.2

Payment of Benefit .  The Bank shall pay the benefit described in Section 4.1.1 to the Executive in the form elected by the Executive on the Benefit Election Form.  The benefit shall commence on the last day of the month following the Executive’s Normal Retirement Date; provided, however , that, subject to Section 5.3, if the Executive is a Specified Employee, the benefit under this Section 4.1 shall not commence until the last day of the sixth (6th) month following the Executive’s Normal Retirement Date.  

4.2

Early Termination Benefit .  Upon Termination of Employment prior to Normal Retirement Age for reasons other than death, a Change of Control or Disability, the Bank shall pay to the Executive the benefit described in this Section 4.2 in lieu of any other benefit under this Agreement.

4.2.1

Amount of Benefit .  The benefit under this Section 4.2 is the vested portion of the Deferral Account, determined pursuant to Section 3.1.4, as of the date of the Executive’s Termination of Employment.

4.2.2

Payment of Benefit .  The Bank shall pay the benefit described in Section 4.2.1 to the Executive in a single lump-sum payment within sixty (60) days following the Executive’s Termination of Employment, provided, however , that, Subject to Section 5.3, if the Executive is a Specified Employee, the benefit under this Section 4.1 shall not commence until the last day of the sixth (6th) month following the Executive’s Termination of Employment.

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4.3

Disability Benefit .  If the Executive incurs a Termination of Employment due to Disability prior to Normal Retirement Age, the Bank shall pay to the Executive the benefit described in this Section 4.3 in lieu of any other benefi