Amendment to Fritz Contract

Employment Agreement Giancola

First Amendment Giancola

Second Amendment Giancola

 

EXHIBIT 10.1

EMPLOYMENT AGREEMENT
(As Amended and Restated February 8, 2006)

     This Employment Agreement (“Agreement”), which was entered into as of June 15, 2004, by and between Royal American Bank (“Bank”) and Royal American Corporation (collectively, the “Employer”) and Jay Fritz (the “Employee”), is hereby amended and restated in its entirety.

Introduction

     WHEREAS, the Employer desires to continue to employ the Employee, and the Employee desires to continue to be employed by the Employer; and

     WHEREAS, the Employer recognizes and desires to reward the unique contributions the Employee has made to the Employer’s business, including the career risks and sacrifices undertaken to create the enterprise and the outstanding leadership over more than ten (10) years resulting in steady growth and profitability, and increased value to the shareholders; and

     WHEREAS, the Employer has entered into that certain Agreement and Plan of Merger between Midwest Banc Holdings, Inc. (“Company”) and Employer, dated February 8, 2006 (the “Merger Agreement”); and

     WHEREAS, immediately following the Closing (as defined in the Merger Agreement), the “Employer” shall become the Company; and

     WHEREAS, this amendment and restatement of the Agreement shall become effective immediately prior to, and all changes contained herein shall be strictly contingent upon, the Closing (the “Effective Time”).

     NOW, THEREFORE, the Employer and Employee enter into this Agreement for the Employee’s continued employment upon the terms and subject to the conditions of employment set forth herein.

Terms and Conditions

     1. Employment Term. The term of the Employee’s employment under this Agreement shall commence on the date of this Agreement and end on November 1, 2010 (the “Term”). The Agreement is subject to earlier termination by either party, provided such party provides three (3) years notice of such party’s intent to terminate the Agreement. Such notice shall be in writing and otherwise comply with the terms of Section 9 of the Agreement. In the event such notice is given by either party, Employee shall continue to receive compensation and benefits as provided in Sections 3 and 4 of the Agreement for three (3) years, provided the Employee continues to work and perform his duties to the satisfaction of the Employer. The Employee shall have a one-time option at the end of the Term to either (i) terminate his employment and receive a lump sum payment equal to his Base Salary as determined by the Employer’s Organization Committee and approved by the Board of Directors for the last

 


 

calendar year in which he worked full-time, and Employer-paid health insurance coverage, to be no less comprehensive than the health insurance coverage provided to all other employees, for the Employee and his spouse (if the Employee is married at the end of the Term) until such time as the Employee and his spouse reach age sixty-five (65) or such later date as necessary for Medicare eligibility; or (ii) continue his employment on an at-will basis unless and until the parties desire to negotiate a new employment agreement.

     2. Duties and Responsibilities. The Employer agrees to continue to employ the Employee as Chairman of the Board and Chief Executive Officer; provided, however, that as of Closing, the Employee shall serve as the President and Chief Operating Officer of the Company’s subsidiary, Royal American Bank and as Executive Vice President of Company, and the Employee agrees to serve in such roles and to perform the services and functions relating to such positions or otherwise reasonably incident to such positions. The Employee shall be subject to the direction and supervision of the Board of Directors of the Employer, and following the Closing, the Chief Executive of the Employer. The Employee shall devote his best efforts and his full time and attention to the performance of his duties, subject to absences due to vacations or temporary illness in accordance with the Employer’s general policies, and except that the Employee may participate in governmental, educational or charitable activities or serve as a director of one or more other companies so long as the Board of Directors of the Employer determines that such activities do not interfere with the business of the Employer or the performance of Employee’s duties under this Agreement. The employment relationship between the parties shall be governed by the general employment policies, practices and rules of the Employer, including without limitation the Employer’s handbook, except that when the express terms of this Agreement differ from or are in conflict with the Employer’s general employment policies, practices or rules, this Agreement shall control. Notwithstanding the foregoing, the Employee may at any time request to work a reduced number of hours subject to the approval of the Board of Directors.

     3. Compensation. As compensation for his services under the terms of this Agreement, the Employee shall receive from the Employer an annual base salary of no less than $275,000 per year (which shall be adjusted to $300,000 per year as of the Effective Time) to be determined and subject to periodic review by the Organization Committee and approved by the Board of Directors payable in equal semi-monthly installments (hereinafter, “Base Salary”). The Employee may also receive a bonus based on a bonus structure and performance measures determined by the Organization Committee and Board of Directors; provided, however, that as of the Effective Time, Employee shall be eligible for a maximum bonus equal of to 70% of Base Salary, subject to performance measures the same as applicable to the Chief Executive Officer of the Company. In the event the Board of Directors approves a request by the Employee to reduce his hours as contemplated above, the Employee’s annual salary may be reduced on a pro rata basis or as mutually agreed by the parties.

     4. Fringe Benefits. The Employer shall furnish to the Employee such perquisites and benefit programs which are currently furnished to executives of the Employer, for his business use, as set forth in Schedule A, including life insurance, health and medical insurance and retirement and savings plans and other perquisites and programs, as such plans, perquisites

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and programs may be amended from time to time. The Employer will pay for or reimburse the Employee for reasonable dues and membership expenses in the Fiddlesticks Country Club (except for equity) and Inverness Country Club, and all reasonable business expenses incurred at said Clubs. In addition, the Employer will provide the Employee with an Infinity Q45 or comparable model automobile. All expenses to be paid or reimbursed by the Employer will be subject to the appropriate justification by the Employee and approval by the Employer.

     5. Termination of Employment.

     A. Termination Employer. In the event that the Employee’s employment is terminated by the Employer prior to November 1, 2010, unless such termination by the Employer is for Due Cause (as defined herein), the Employee shall continue receive the compensation and benefits as provided in Sections 3 and 4 of the Agreement for three (3) years, provided the Employee continues to work and perform his duties to the satisfaction of the Employer. All other rights and benefits that the Employee may have under any benefit plans or programs of the Employer shall be determined in accordance with the terms and conditions of such plans or programs based upon the date of the Employee’s actual termination of employment with the Employer.

     B. For Due Cause. Nothing herein shall prevent the Employer from terminating, without prior notice, the Employee for “Due Cause” (as hereinafter defined), in which event the Employer shall have no obligation to make any payment to the Employee under this Agreement other than an amount equal to his Base Salary on a prorated basis to the date of termination. All other rights and benefits that the Employee may have under any benefit plans or programs of the Employer shall be determined in accordance with the terms and conditions of such plans or programs based upon the date of the Employee’s actual termination of employment with the Employer. For purposes of this Agreement, “Due Cause” means, based upon the good faith determination of the Employer’s Board of Directors, (i) an act of dishonesty by the Employee which is injurious to the Employer, (ii) a breach of the Employee’s fiduciary duties as an officer or director of the Employer or (iii) a violation of law or a breach of Sections 7 or 8 of this Agreement which is injurious to the Employer.

     C. Disability. In the event the Employee suffers from a “Disability” (as hereinafter defined), the Employee’s employment with Employer shall terminate on the date on which the Disability occurs, but the Employee shall continue to receive the Base Salary for a period of ninety (90) days from the date of termination and Employer- paid health insurance coverage as described in Section 1 above for the Employee and his spouse (if the Employee is married on the date of termination) until the Employee and his spouse reach age sixty-five (65) or such later age as necessary for Medicare eligibility. All other rights and benefits that the Employee may have under any benefit plans or programs of the Employer shall be determined in accordance with the terms and conditions of such plans or programs based upon the date of the Employee’s actual termination of employment with the Employer. For purposes of this Agreement, “Disability” shall mean the inability or incapacity (by reason of a medically

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determinable physical or mental impairment) of the Employee to perform the duties and responsibilities related to the job or position with the Employer described in Section 2 of this Agreement for a period that lasts, or that can reasonably be expected to last, more than 180 days. Such inability or incapacity shall be documented to the reasonable satisfaction of the Employer by appropriate correspondence from registered physicians reasonably satisfactory to the Employer, and the Employee agrees to submit to an examination by the Employer’s physicians for the purpose of making such determination.

     D. Death. In the event of the death of the Employee, the Employee’s employment with the Employer shall terminate on the date of death. The estate or named beneficiary of the Employee shall continue to receive the Base Salary for a period of ninety (90) from the date of termination. If the Employee is married at the date of termination, the Employee’s spouse shall receive Employer-paid health insurance coverage to be determined by the Employer until the spouse remarries or reaches age sixty-five (65) or such later age as necessary for Medicare eligibility. All other rights and benefits that the Employee (or his estate or named beneficiary) may have under any benefit plans or programs of the Employer shall be determined in accordance with the terms and conditions of such plans or programs based upon the date of the Employee’s actual termination of employment with the Employer on the date of death.

     E. Termination by Employee. In the event that the Employee resigns from or otherwise terminates his employment hereunder prior to November 1, 2010 without giving the notice required in Section 1, the Employer shall have no obligation to make any payment to the Employee under this Agreement other than an amount equal to his Base Salary on a prorated basis to the date of termination of employment. All other rights and benefits that the Employee may have under any benefit plans or programs of the Employer shall be determined in accordance with the terms and conditions of such plans or programs based upon the date of the Employee’s actual termination of employment with the Employer.

     6. Change in Control. For purposes of this Agreement, “Change in Control” shall mean (i) the acquisition by any person or entity of a beneficial interest, direct or indirect, in securities representing 25% or more of the Employer’s common stock in an eighteen-month period; (ii) the reorganization, merger or consolidation of the Employer with another entity as a result of which the current stockholders of the Employer after such merger or consolidation own less than 51% of the voting power in the surviving entity or of the Employer, or (iii) the liquidation or dissolution of Employer or the sale of all or substantially all of the Employer’s assets; provided, however, that the parties acknowledge and agree that the consummation of the transactions contemplated by the Merger Agreement will not be deemed a “Change in Control” under this Agreement. For purposes of this Agreement, “Good Reason” shall mean, without the Employee’s express written consent, the occurrence of any of the following: (v) a significant adverse change in the nature or scope of Employee’s position, duties or responsibilities as in effect immediately after the Effective Time; (w) a relocation of

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Employee’s principal office to an office that is more than thirty-five (35) highway miles from Employee’s principal office immediately prior to the Effective Time, unless such relocation does not increase the actual distance required for Employee to commute from his home to the new place of business by more than ten (10) miles; or (x) a reduction of the Employee’s annual salary to a rate which is less than the Employee’s annual salary rate as of the Effective Time; (y) a breach of this Agreement by the Employer; or (z) providing Employee incentive compensation opportunities which are materially less favorable to Employee than the opportunities provided to Employee as of immediately after the Effective Time (it being understood that incentive compensation is based upon performance and that there are no minimum guaranteed amounts of actual incentive compensation). If following a Change in Control of the Employer, the Employee is terminated by the Employer, or a related employer, for reasons other than Cause, death or Disability, or the Employee voluntarily terminates employment for “Good Reason” (as defined above), the Employer shall, without regard to the notice period described in Section 1 above, receive the following:

     A. A monthly payment equal to one twelfth (1/12) of the Employee’s average total annual compensation for the last three (3) years of full-time employment. The Employee shall receive such monthly payments for a period of thirty-five (35) months commencing the month his employment is terminated.

     B. Employer-paid health insurance coverage as described in Section 1 above for the Employee and his spouse (if the employee is married on the date of termination) until the Employee and his spouse reach age sixty-five (65) or such later age as necessary for Medicare eligibility.

In the event the Employee’s employment is terminated due to a Change in Control, receipt of the payments and benefits in this Section is conditioned upon the Employee’s compliance with the restrictive covenants contained in the following Sections 7 or 8.

     7. Non-Competition; Non-Solicitation.

     A. Termination by Employee. In the event the Employee terminates his employment prior to November 1, 2010 without notice, or opts to take a lump sum payment at the end of the Term as provided in Section 1, the Employee covenants that during his employment and for a period of three (3) years thereafter, he shall not (i) directly or indirectly participate or engage in management or operational aspects of, or acquire a financial interest in, any bank or financial institution within fifty (50) miles of any then-existing facility of the Employer; (ii) directly or indirectly, on behalf of any business other than the Employer, engage or assist in offering employment to or encourage the departure of an employee of the Employer; or (iii) disparage the Employer publicly or to any person or entity with which the Employer has a present or prospective business relationship. The time period for the covenants contained herein shall not begin or continue to run for any period during which the Employee is in breach of any of the covenants set forth herein.

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     B. Termination for Due Cause. In the event the Employer terminates the Employee’s employment for Due Cause, the Employee covenants that during his employment and for a period of one (1) year thereafter, he shall not (i) directly or indirectly participate or engage in management or operational aspects of, or acquire a financial interest in, any bank or financial institution; (ii) directly or indirectly, on behalf of any business other than the Employer, engage or assist in offering employment to or encourage the departure of an employee of the Employer; (iii) directly or indirectly solicit or assist in the solicitation of any customer of the Employer for the purpose of providing banking or financial services from any business other than Employer or (iv) disparage the Employer publicly or to any person or entity with which the Employer has a present or prospective business relationship. The time period for the covenants contained herein shall not begin or continue to run for any period during which the Employee is in breach of any of the covenants set forth herein.

     C. Change in Control. In the event the Employee’s employment terminates due to a Change in Control, the Employee covenants that during his employment and for a period of thirty-five (35) months thereafter, he shall not (i) directly or indirectly participate or engage in management or operational aspects of, or acquire a financial interest in, any bank or financial institution; (ii) directly or indirectly, on behalf of any business other than the Employer, engage or assist in offering employment to or encourage the departure of an employee of the Employer; (iii) directly or indirectly solicit or assist in the solicitation of any customer of the Employer for the purpose of providing banking or financial services from any business other than Employer or (iv) disparage the Employer publicly or to any person or entity with which the Employer has a present or prospective business relationship. The time period for the Covenants contained herein shall not begin or continue to run for any period during which the Employee is an breach of any of the covenants set forth herein.

     8. Confidential information. The Employee further covenants that during his employment and thereafter, the Employee shall not use or disclose (except in the performance of his duties hereunder) any trade secrets or other confidential information of the Employer, except to the extent required by order of a court or governmental agency to the extent that such disclosure is made under seal or with sufficient notice to the Employer so as to allow the Employer to seek a protective order. Notwithstanding anything in this Agreement to the contrary, if the Employee violates any of the provisions of this Section 8 or the preceding Section 7, in addition to all appropriate legal and equitable remedies, the Employer shall have no further payment obligations under this Agreement.

     9. Notices. All notices, requests, demands and other communications given under or by reason of this Agreement shall be in writing and shall be deemed given when delivered in person or mailed by certified mail (return receipt requested), postage prepaid, addressed as follows (or to such other address as a party may specify by notice pursuant to this provision):

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A.

 

If to the Employer, addressed to it at:

 

 

 

 

 

 

 

 

 

Royal American Corporation

 

 

 

 

Board of Directors

 

 

 

 

1604 West Colonial Parkway

 

 

 

 

Inverness, Illinois 60067-4725

 

 

 

 

 

 

 

 

 

and

 

 

 

 

 

 

 

 

 

Royal American Bank

 

 

 

 

Board of Directors

 

 

 

 

1604 West Colonial Parkway

 

 

 

 

Inverness, Illinois 60067-4725

 

 

 

 

 

 

 

B.

 

If to the Employee, addressed to him at:

 

 

 

 

 

 

 

 

 

J. J. Fritz

 

 

 

 

659 Aberdeen Rd.

 

 

 

 

Inverness, IL 60067

 

 

 

 

 

 

 

 

 

JJ. Fritz

 

 

 

 

c/o Mr. Randall L. Mitche

 

 

 

 

Adducci, Dorf, Lehner, Mitchell & Blankenship, P.C.

 

 

 

 

150 N. Michigan Ave., Suite 21

 

 

 

 

Chicago, IL 60601

     10. Survival of Provisions. The provisions of Sections 7 or 8 of this Agreement shall survive the termination of the Employee’s employment with the Employer and the expiration or termination of this Agreement.

     11. Controlling Law. The execution, validity, interpretation and performance of this Agreement shall be governed by and construed in accordance with the laws of the State of Illinois.

     12. Entire Agreement; Amendments; Waivers. This Agreement contains the entire agreement between the Employee and the Employer relating to the matters contained herein and supercedes all prior agreements and understandings, oral or written, between the Employee and the Employer with respect to the subject matter hereof unless otherwise expressly provided herein. This Agreement may be amended, modified or supplemented, but only in writing signed by each of the parties hereto. Any terms of this Agreement may be waived only with the written consent of the party sought to be bound, and the waiver by either party to this Agreement of a breach of any provision of the Agreement by the other party shall not operate or be construed as a waiver by such party of any subsequent breach by such other party.

     13. Reformation and Severability. In case any provision of this Agreement shall be invalid, illegal or unenforceable, it shall, to the extent possible, be modified in such a manner as to be valid, legal and enforceable but so as to most nearly retain the intent of the parties. If such modification is not possible, such provision shall be severed from this Agreement, and in

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either case the validity, legality and enforceability of the remaining provisions of this Agreement shall not in any way be affected or impaired thereby.

     14. Assignments. The Employer may assign this Agreement to any affiliate of the Employer or any person or entity succeeding to all or substantially all of the business interests of the Employer by merger or otherwise and the Employee understands and agrees that this Agreement will be assigned or transferred to the Company in connection with the consummation of the transactions contemplated by the Merger Agreement. The rights and obligations of the Employee under this Agreement are personal to him, and no such rights, benefits or obligations shall be subject to voluntary or involuntary alienation, assignment or transfer, except as otherwise expressly contemplated in this Agreement.

     15. Effect of Agreement. Subject to the provisions of Section 14 of the Agreement with respect to assignments, this Agreement shall be binding upon the Employee and his heirs, executors, administrators, legal representatives and assigns and upon the Employer and its respective successors and assigns, except as otherwise expressly contemplated in this Agreement.

     16. Injunctive Relief; Attorneys’ Fees. The Employee understands and agrees that monetary damages may not be an adequate remedy for the breach of this Agreement, including but not limited to the covenants in Sections 7 or 8, and that the Employer has the right to seek equitable relief including injunction and specific performance and any other appropriate equitable or legal relief for the enforcement of his obligations hereunder.

     17. Exercise of Rights and Remedies. The rights and remedies in this Agreement shall not be exclusive, but are intended to be cumulative with all other rights and remedies of the Employer, whether under this Agreement, any other agreement, law or otherwise. No delay of or omission in the exercise of any right, power or remedy accruing to any party as a result of any breach or default by any other party under this Agreement shall impair any such right, power or remedy, nor shall it be construed as a waiver of or acquiescence in any such breach or default, or of any similar breach or default occurring later.

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

     19. Failure to Close. The parties agree that this amendment and restatement of the Agreement shall become effective as of the Effective Time (as defined in the recitals hereto); provided, however, that if the Merger Agreement is terminated, this amendment and restatement of the Agreement shall also automatically and simultaneously terminate and the Agreement shall remain in full force and effect absent such amendment and restatement.

     20. Internal Revenue Code Section 409A. Notwithstanding anything contained herein to the contrary, if at the time of a termination of employment, (i) Employee is a “specified employee” as defined in Internal Revenue Code Section 409A, and the regulations and guidance thereunder in effect at the time of such termination (“409A”), and, (ii) any of the

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payments or benefits provided hereunder may constitute “deferred compensation” under 409A, then, and only to the extent required by such provisions, the date of payment of such payments or benefits otherwise provided shall be delayed for a period of up to six (6) months following the date of termination.

     IN WITNESS WHEREOF, the Employee and the Employer have executed this Agreement effective as of the date first above written.

 

 

 

 

 

Employer:

 

Employee:

 

 

 

 

 

ROYAL AMERICAN CORPORATION

 

 

 

 

 

 

 

By:

 

/s/ Mary King Wilson

 

/s/ J.J. Fritz

 

 

 

 

 

 

 

 

 

Jay Fritz

Its:

 

Executive Vice President

 

 

 

 

 

 

 

 

 

 

 

 

 

ROYAL AMERICAN BANK

 

 

 

 

 

 

 

By:

 

/s/ Mary King Wilson

 

 

 

 

 

 

 

 

 

 

 

 

Its:

 

Executive Vice President

 

 

 

 

 

 

 

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SCHEDULE A

Inverness Golf Club

 

-

 

Annual dues, assessments and business-related expenses

Fiddlesticks Country Club

 

-

 

Annual dues, assessments and business-related expenses

Private Health Club Membership

Company Car

 

-

 

Infinity G45, or comparable model

Inside Director” Compensation authorized by the board

 

-

 

currently 100 shares of stock (pursuant to the applicable director compensation program as may be in effect from time to time)

Stock Appreciation Rights (SARs) Awards under the Royal American Corporation Long Term Stock Appreciation Rights Executive Compensation Plan (as may be in existence from time to time)

Annual Contribution to the “Choice Plan” (Successor Plan to the Split Dollar Life Insurance Benefit) (as may be in existence from time to time)

Group Term Life Insurance

Health Insurance

Long Term Disability Insurance

401k/Profit Sharing

 


EX-10.52 3 c26634exv10w52.htm SECOND AMENDMENT TO THE AMENDED AND RESTATED EMPLOYMENT AGREEMENT

Exhibit 10.52

AMENDMENT NO. 1 TO
EMPLOYMENT AGREEMENT DATED FEBRUARY 8, 2006
WITH JAY FRITZ

     This Amendment No. 1 by and between Midwest Banc Holdings, Inc. (the “Employer”) and Jay Fritz (the “Employee”), dated effective as of March 12, 2008.

R E C I T A L S

     A. The Employer (who acquired Royal American Corporation on July 1, 2006) and the Employee are parties to an Employment Agreement entered into as of June 15, 2004 and amended and restated effective February 8, 2006 (the “Agreement”) governing the terms and conditions of Employee’s employment with the Employer.

     B. The Employer and the Employee desire to amend certain provisions to the Agreement to comply with Section 409A of the Internal Revenue Code and the Treasury regulations thereunder.

          NOW THEREFORE, the parties agree as follows:

     1. Paragraph A of Section 5 of the Agreement is amended in its entirety to read as follows, effective January 1, 2008:

     A. Termination By Employer. In the event that the Employee’s employment is terminated by the Employer prior to November 1, 2010, unless such termination by the Employer is for Due Cause (as defined in paragraph B), the Employee shall continue to receive the compensation and benefits as provided in Section 3 and 4 of the Agreement for three (3) years, without regard to Employee’s continued service. The schedule for the time of the salary payments will be the same schedule as the time for receiving salary payments during the period of the Employee’s employment. Similarly, the form of the payment shall be the same form as the Employee was receiving during the period of the Employee’s employment. The schedule for the time and form of payment are fixed as provided herein and may not be modified by the Employee or the Employer without compliance with Section 409A of the Internal Revenue Code (the “Code”). All other rights and benefits that the Employee may have under any benefit plans or programs of the Employer shall be determined in accordance with the terms and conditions of such plans or programs based upon the date of the Employee’s actual termination of employment with the Employer.

     2. Paragraph C of Section 5 of the Agreement is amended in its entirety to read as follows, effective January 1, 2008:

     C. Disability. In the event the Employee suffers from a “Disability” (as hereinafter defined), the Employee’s employment with Employer shall terminate on the date on which the Disability occurs, but the Employee shall

 


 

continue to receive the Base Salary for a period of ninety (90) days from the date of termination and Employer-paid health insurance coverage as described in Section 1 above for the Employee and his spouse (if the Employee is married on the date of termination) until the Employee and his spouse reach age sixty-five (65) or such later age as necessary for Medicare eligibility. The schedule for the time of the salary payments and the in-kind health insurance coverage will be the same schedule as the time for receiving salary payments and the in-kind health insurance coverage during the period of the Employee’s employment. Similarly, the form of the payment shall be the same form as the Employee was receiving during the period of the Employee’s employment. The schedule for the time and form of payment are fixed as provided herein and may not be modified by the Employee or the Employer without compliance with Section 409A of the Code. In no event may the Employer substitute cash or cash equivalents for the Employer-paid health insurance coverage. All other rights and benefits that the Employee may have under any benefit plans or programs of the Employer shall be determined in accordance with the terms and conditions of such plans or programs based upon the date of the Employee’s actual termination of employment with the Employer. For purposes of this Agreement, “Disability” shall mean the inability or incapacity (by reason of a medically determinable physical or mental impairment) of the Employee to perform the duties and responsibilities related to the job or position with the Employer described in Section 2 of this Agreement for a period that lasts, or can reasonably be expected to last, more than 180 days. Such inability or incapacity shall be documented to the reasonable satisfaction of the Employer by the appropriate correspondence from registered physicians reasonably satisfactory to the Employer, and the Employee agrees to submit to an examination by the Employer’s physicians for the purpose of making such determination.

     3. Paragraph D of Section 5 of the Agreement is amended in its entirety to read as follows, effective January 1, 2008:

     D. Death. In the event of the death of the Employee, the Employee’s employment with Employer shall terminate on the date on the date of death. The estate or named beneficiary of the Employee shall continue to receive the Base Salary for a period of ninety (90) days from the date of termination. If the Employee is married at the date of termination, the Employee’s spouse shall receive Employer-paid health insurance coverage to be determined by the Employer until the spouse remarries or reaches age sixty-five (65) or such later age as necessary for Medicare eligibility. The schedule for the time of the salary payments and the in-kind health insurance coverage will be the same schedule as the time for receiving salary payments and the in-kind health insurance coverage during the period of the Employee’s employment. Similarly, the form of the payment shall be the same form as the Employee was receiving during the period of the Employee’s employment. The schedule for the time and form of payment are fixed as provided herein and may not be modified by the Employee or the Employer without compliance with Section 409A of the Internal Revenue Code (the “Code”). In no event may the Employer substitute cash or cash equivalents for the Employer-paid health insurance coverage. All other rights and benefits

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that the Employee (or his estate or named beneficiary) may have under any benefit plans or programs of the Employer shall be determined in accordance with the terms and conditions of such plans or programs based upon the date of the Employee’s actual termination of employment with the Employer on the date of death.

     4. Section 6 of the Agreement is amended in its entirety to read as follows, effective January 1, 2008:

     6. Change in Control. For purposes of this Agreement, “Change in Control” shall mean a change in the ownership or effective control of the Employer, or in the ownership of a substantial portion of the assets of the Employer as provided in Section 409A(a)(2)(A)(v) of the Code and the final Treasury regulations thereunder. In accordance with the final Treasury regulations, “Change in Control” means any one of the events described below

     A. Change in Ownership. A change in the ownership of the Employer occurs on the date that any person or persons acting as a group acquires ownership of stock of the Employer that, together with stock held by such person or group, constitutes more than fifty (50) percent of the total fair market value or total voting power of the stock of such Employer. If a person or group is considered to own more than fifty (50) percent of the total fair market value or total combined voting power of the stock of the Employer, the acquisition of additional stock by the same person or persons is not considered to cause a change in the ownership of the Employer (or to cause a change in the “effective control of the Employer” within the meaning of Section 6.C).

     B. Change in Effective Control. A change in the effective control of the Employer occurs on the date that a majority of the Employer’s board of directors is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Employer’s board of directors prior to the date of the appointment or election.

     C. Change in Ownership of a Substantial Portion of the Employer’s Assets. A change in the ownership of a substantial portion of the Employer’s assets occurs on the date that any person or group acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) assets from the Employer that have a total gross fair market value equal to or more than fifty (50) percent of the total gross fair market value of all of the assets of the Employer immediately prior to such acquisition or acquisitions. For purposes of this Agreement, “Good Reason” shall mean, without the Employee’s express written consent, the occurrence of any of the following: (v) a significant adverse change in the nature or scope of Employee’s position, duties or responsibilities as in effect immediately after the Effective Time; (w) a relocation of Employee’s principal office

3


 

to an office that is more than thirty-five (35) highway miles from Employee’s principal office immediately prior to the Effective Time, unless such relocation does not increase the actual distance required for Employee to commute from his home to the new place of business by more than ten (10) miles; (x) a reduction of the Employee’s annual salary to a rate which is less than the Employee’s annual salary rate as of the Effective Time; (y) a breach of this Agreement by the Employer; or (z) providing Employee incentive compensation opportunities which are materially less favorable to Employee than the opportunities provided to Employee as of immediately after the Effective Time (it being understood that incentive compensation is based upon performance and that there are no minimum guaranteed amounts of actual incentive compensation). If following a Change in Control of the Employer, the Employee is terminated by the Employer or a related employer for reasons other than Cause, death or Disability, or the Employee voluntarily terminates employment for “Good Reason” (as defined below), the Employer shall, without regard to the notice period described in Section 1 above, receive the following:

     Y. A monthly payment equal to one twelfth (1/12) of the Employee’s average total annual compensation for the last three (3) years of full-time employment. For purposes of this subsection, the term “total annual compensation” shall mean the dollar value of the benefits provided in Section 3 of this Agreement. The Employee shall receive such monthly payments for a period of thirty-five (35) months commencing the month his employment is terminated. The schedule for the time of the monthly payments will be the same schedule as the time for receiving salary payments during the period of the Employee’s employment. Similarly, the form of the payment shall be the same form as the Employee was receiving during the period of the Employee’s employment. The schedule for the time and form of payment are fixed as provided herein and may not be modified by the Employee or the Employer without compliance with Section 409A of the Code.

     Z. Employer-paid health insurance coverage as described in Section 1 above for the Employee and his spouse (if the employee is married on the date of termination) until the Employee and his spouse reach age sixty-five (65) or such later age as necessary for Medicare eligibility. The schedule for the time of the in-kind health insurance coverage will be the same schedule as the time for receiving the in-kind health insurance coverage during the period of the Employee’s employment. In no event may the Employer substitute cash or cash equivalents for the Employer-paid health insurance coverage.

4


 

     Notwithstanding the foregoing, payments to the Employee may not exceed 299% of his Base Amount as defined in Section 280G(b)(3) of the Code (“Change in Control Payment”); provided, however, if the Change in Control Payment to Employee would cause the Employer to contravene any law, regulation or policy applicable to the Employer, the Employer and Employee agree that such Change in Control Payment shall be made to the extent permitted by law, regulation and policy, and the remainder of such Change in Control Payment shall be made from time to time at the earliest time permitted by law, regulation and policy.

     In the event the Employee’s employment is terminated due to a Change in Control, receipt of the payments and benefits in this Section is conditioned upon the Employee’s compliance with the restrictive covenants contained in the following Sections 7 or 8.

     5. Sections 9A and 9B of the Agreement are amended in their entirety to read as follows, effective January 1, 2008:

 

 

 

 

 

 

 

A.

 

If to the Employer, addressed to it at:

 

 

 

 

 

Midwest Banc Holdings, Inc.

 

 

 

 

Chairman of the Compensation Committee

 

 

 

 

501 W. North Ave.

 

 

 

 

Melrose Park, IL 60160

 

 

 

 

 

 

 

 

 

with a copy to

 

 

 

 

 

 

 

 

 

Midwest Banc Holdings, Inc.

 

 

 

 

Chief Executive Officer

 

 

 

 

501 W. North Ave.

 

 

 

 

Melrose Park, IL 60160

 

 

 

 

 

 

 

B.

 

If to the Employee, addressed to his attorney at:

 

 

 

 

 

 

 

 

 

Donald L. Norman, Esq.

 

 

 

 

Barack Ferrazzano Kirschbaum & Nagelberg, LLC

 

 

 

 

200 W. Madison St.

 

 

 

 

Chicago, IL 60606

     6. Section 20 of the Agreement is amended in its entirety to read as follows, effective January 1, 2008:

     20. Restriction on Timing of Distributions. Notwithstanding any provision of this Agreement to the contrary, if the Employee is considered a Specified Employee (as defined herein), the provisions of this Section 20 shall govern all distributions hereunder. If benefit distributions which would otherwise be made to the Employee due to Termination of Employment are limited because the Employee is a Specified Employee, then such distributions

5


 

shall not be made during the first six (6) months following Termination of Employment. Rather, any distribution which would otherwise be paid to the Employee during such period shall be accumulated (without the adjustment for the time value of money) and paid to the Employee in a lump sum on the first day of the seventh month following Termination of Employment. All subsequent distributions shall be paid in the manner specified. The term “Specified Employee” means an employee who, as of the date of the employee’s Termination of Employment, is a key employee of the Employer. Notwithstanding the foregoing, an employee is a Specified Employee only if the stock of the Employer or any entity with whom the Employer would be considered a single employer under Section 414(b) or Section 414(c) of the Code is publicly traded on an established securities market or otherwise. For purposes of this Agreement, an employee is a key employee if the employee meets the requirements of Section 416(i)(l)(A)(i), (ii), or (iii) of the Code (applied in accordance with the regulations thereunder and disregarding Section 416(i)(5)) at any time during the twelve (12) month period ending on December 31 (the “identification period”). For purposes of identifying a Specified Employee, the definition of compensation under Treasury Regulation Section 1.415(c)-2(a) is used, applied as if the Employer were not using any safe harbor provided in Treasury Regulation Section 1.415(c)-2(d), were not using any of the special timing rules provided in Treasury Regulation Section 1.415(c)-2(e), and were not using any of the special rules provided in Treasury Regulation Section 1.415(c)-2(g). If the Employee is a key employee during an identification period, the Employee is treated as a key employee for purposes of this Agreement during the twelve (12) month period that begins on the first day of April following the close of the identification period.

*    *    *

     IN WITNESS WHEREOF, the Employee and a duly authorized officer of the Employer have executed this Amendment No. 1 as of the date set forth above.

 

 

 

 

 

 

 

Employer:

Employee:

 

MIDWEST BANC HOLDINGS, INC. for itself and its Subsidiaries

 

 

 

 

 

/s/  Jay Fritz

 

By:

 

/s/  James J. Giancola

 

 

 

 

 

Jay Fritz

 

Title:

 

President & CEO

6




EMPLOYMENT AGREEMENT with James J. Giancola

Amendment to the Employment Agreement

 

Exhibit 10.25

EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT (the “Agreement”) is made and entered into as of the 28th day of September 2004 (the “Effective Date”), by and among Midwest Banc Holdings, Inc. (the “Company”), Midwest Bank and Trust Co. (the “Bank,” and together with the Company, the “Employer”) and James J. Giancola (“Executive”) (the signatories to this Agreement will be referred to jointly as the “Parties”).

WITNESSETH:

     WHEREAS, Employer wishes to assure itself of the services of Executive for the term of this Agreement; and

     WHEREAS, Executive has agreed to provide his services to Employer on the terms and conditions set forth in this Agreement; and

     WHEREAS, both Employer and Executive have read and understood the terms and provisions set forth in this Agreement and have been afforded a reasonable opportunity to review this Agreement with their respective legal counsel.

     NOW, THEREFORE, in consideration of the mutual promises and covenants set forth in this Agreement, and for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Executive and Employer agree as follows:

     1. Term of Employment. This Agreement is effective as of the Effective Date and shall continue in effect through December 31, 2009 (the “Initial Period”), unless terminated pursuant to Section 4. At the end of the Initial Term of this Agreement, the Agreement shall automatically renew for successive one-year terms, unless Employer provides written notice to Executive within ninety (90) days prior to the expiration of the then current term. Such Initial Term and all subsequent terms shall be referred to herein as the “Term of Employment.”

     2. Duties and Authority.

          (a) During the Term of Employment, Executive shall serve as Chief Executive Officer and President of both Company and Bank. Executive shall perform in a professional manner the authorized and customary duties for the position and such other reasonable duties and responsibilities as the Board of Directors of Bank and/or Company (the term “Board of Directors” as used in this Agreement shall mean the Board of Directors of Company, unless specifically stated otherwise) may assign to Executive from time to time, which duties shall include, but not be limited to the following:

               (i) Executive shall provide administrative and management_services to Company as are customarily performed by persons in similar executive positions;

               (ii) Executive shall oversee the daily operation of Bank and all subsidiary activities related to and controlled by Employer;

               (iii) Executive shall carry out and implement all proper directions and instructions of the Board of Directors that conform with reasonable and sound banking practices;

               (iv) Executive shall use his best efforts to operate Employer so as to meet the growth and financial projections and budgets established and approved by the Board of Directors, assuming such projections and budgets shall be reasonable and realistically attainable under the conditions which then exist both in Employer and local and national financial markets; and

               (v) Executive shall use his best efforts to avoid any action that might materially damage, harm or discredit the reputation of Employer, its shareholders, or its Boards of Directors.

          (b) Notwithstanding the provisions of Section 2(a), the duties and responsibilities of Executive may be changed and modified from time to time by Company at its discretion. Upon changes and modifications to Executive’s duties and responsibilities, Executive’s employment with Employer shall continue to be governed by the terms of this Agreement.

               (i) From the Effective Date through December 31, 2004, Executive shall devote a substantial portion of each month (exclusive of holidays) to the attention of the business operations of Employer in such manner as the Board of Directors and Executive agree.

               (ii) Beginning January 1, 2005 and continuing during the Term of Employment, Executive shall devote Executive’s best efforts and entire productive time, ability and attention to the business operations of Employer, and shall not, without the written consent of Employer, directly or indirectly, alone or as a partner, officer, director, stockholder, employee, or consultant of any other person, entity, association, agency, organization, or institution, engage in any other business or profession which would necessitate Executive’s giving any portion of his time and effort to such activity. Executive shall at all times faithfully, with diligence and to the best of Executive’s ability, experience, and talent, perform all the duties that may be required of and from Executive pursuant to the express and implicit terms hereof to the reasonable satisfaction of Employer.

               (iii) Executive shall become informed to the best of his ability of current developments in the banking industry applicable to Employer and shall attend such banking seminars and schools as he or the Board of Directors deems appropriate to keep apprised of laws, regulations, policies and procedures that affect Employer and its operations. These activities will be at the Employer’s cost and on its time. Executive shall serve on such committees of Employer as the Board of Directors may determine from time to time. Executive shall at all times be subject to the direction and control of the Board of Directors, and all acts of Executive in the performance of his duties hereunder shall be carried out in conformity with the policies, directions and limitations as from time to time established by the Board of Directors. Promptly after the Effective Date, Executive shall change his primary domicile from Incline Village, Nevada to the Chicago, Illinois metropolitan area in connection with the performance of his duties hereunder. Executive shall not be required to engage in any activities or exercise any powers or authority that has the effect of violating any federal, state or local laws or regulations.

     3. Compensation and Benefits. All payments of compensation to Executive shall be payable in accordance with Employer’s ordinary payroll and other policies and procedures.

          (a) Base Salary.

               (i) From the Effective Date through December 31, 2004, Employer shall pay Executive a base monthly salary of $1,000, prorated for the actual period of service. Employer shall also reimburse Executive for his reasonable costs of travel to and from his domicile in Tucson, Az. And reasonable temporary living expenses consistent with the fulfillment of his duties to Employer pursuant to this Agreement.

               (ii) Beginning January 1, 2005 and continuing during the Term of Employment, Employer shall pay Executive a base salary of $535,000 per full calendar year (“Base Salary”), appropriately prorated for partial months at the commencement and end of the term of this Agreement. Employer shall review the amount of such Base Salary no less often than annually. Any salary adjustment (whether increased or decreased) shall be based on: (i) Executive’s performance since Executive’s last review; (ii) the performance and profitability of the Employer; and (iii) the Employer’s salary policy effective at the time of any such salary review and adjustment. Employer shall have the right to deduct from payment of all compensation to Executive hereunder any federal, state or local taxes required by law to be withheld with respect to such payments and any other amounts specifically authorized to be withheld or deducted by Executive.

          (b) Annual Cash Incentive Compensation. Executive, if employed on the last day of the calendar year for which any bonus as determined by the Board of Directors is being awarded, shall be eligible for performance-based annual cash incentive compensation (no greater than 70% of Executive’s Base Salary) and/or stock awards as determined by the Board of Directors in accordance with mutually agreed upon goals and objectives established by the Board of Directors in January of each calendar year this Agreement is in force and effect.

          (c) Participation in Employee Benefit Programs. Executive shall be entitled to participate in any benefit programs, including health insurance benefits, applicable to all employees of Employer or to executive employees of Employer in accordance with Employer policy and the provisions of said benefit plans. This Agreement, which provides certain additional benefits, does not preclude Executive’s participation in such other plans of Employer.

          (d) Executive Vacation Allocation. Beginning January 1, 2005, Executive shall be allocated a minimum of four (4) weeks paid vacation annually. If vacation time is unused, unused vacation time may accumulate and be used at a future date as deemed appropriate by Executive and Employer. If the Executive has accumulated vacation at time of termination, accumulated vacation time will be paid to Executive as regular pay using his Base Salary in effect at the time of termination, prorated on a weekly basis.

          (e) Restricted Stock. As of January 1, 2005, the Company shall grant to Executive 150,000 restricted shares of common stock of the Company subject to such restrictions and limitations as are commonly applied to such stock and as agreed by the Board of Directors. The stock certificate issued pursuant to this Section may contain additional terms and restrictions not inconsistent with this Agreement or any restricted stock plan of the Company then in existence and under which the restricted stock pursuant to this Section is issued. Thirty thousand (30,000) shares granted under this Section shall be fully vested as of January 1, 2005, and the remaining shares granted under this Section shall vest 30,000 on each of January 1, 2006, 2007, 2008 and 2009 so long as Executive is employed pursuant to this Agreement on the last day of the calendar year preceding each such date.

          (f) Stock Options. As of January 1, 2006, the Company shall grant to Executive options to purchase up to 100,000 shares of common stock of the Company based on performance standards to be determined by the Board of Directors for the year 2005. All stock options granted under this Section shall expire ten years following the date of grant, have an exercise price equal to the fair market value of the common stock of the Company at the time of issuance, and be evidenced by a stock option agreement which may contain additional terms and restrictions not inconsistent with this Agreement or any stock option plan of the Company then in existence and under which options pursuant to this Section are issued.

          (g) Vehicle Allowance. At Employer’s election, (i) Employer shall provide Executive with the use of a company-owned automobile or (ii) Employer shall reimburse Executive, for Executive’s transportation to and from the offices of Employer and for use in engaging in activities in the name of or for the benefit of Employer. Additionally, Employer shall pay or reimburse Executive for reasonable gas, road tolls and automobile property insurance costs associated with the vehicle designated for use by the Executive.

          (h) Reimbursement of Expenses. During the Term of Employment, Employer shall promptly pay all reasonable expenses incurred by Executive for all reasonable travel and other business related expenses incurred by him in performing his obligations under this Agreement in accordance with Employer’s travel and business expense policy, such expenses to be reviewed by the Board of Directors on a periodic basis. In addition, Employer shall pay for Executive’s reasonable moving expenses ( including real estate commissions, attorneys’ fees and real estate settlement costs) from his personal residence in Tucson, Arizona to the Chicago, Illinois metropolitan area, upon Executive’s presentation of such records and information as Employer may reasonably request.

               (i) Compensation After Termination.

               (i) If the Term of Employment is terminated (i) by Employer for cause or due to the death or disability of Executive, (ii) by Executive or (iii) through expiration of the Term of Employment, Employer shall have no further obligations hereunder or otherwise with respect to Executive’s employment from and after the termination or expiration date (except payment of Executive’s Base Salary accrued through the date of termination or expiration) and Employer shall continue to have all other rights available hereunder.

               (ii) If the Term of Employment is terminated by the Employer without cause, Executive shall be entitled to receive as severance pay (in addition to the payment of the Base Salary through the date of termination) an amount using the following schedule:

 

 

 

 

 

Years of Service


 

 

% of Base Salary


 

1

 

 

0

%

2

 

 

60

%

3

 

 

70

%

4

 

 

80

%

5

 

 

100

%

Employer will pay such severance payment to Executive within thirty (30) days of the end of the Term of Employment; provided, however, if the severance payment to Executive would cause Employer to contravene any law, regulation or policy applicable to Employer, Employer and Executive agree that such severance payment shall be made to the extent permitted by law, regulation and policy, and the remainder of such severance payment shall be made from time to time at the earliest time permitted by law, regulation and policy. After the 30th day following the end of the Term of Employment, the outstanding severance payment shall, until paid, bear interest per annum at the prime lending rate as published in The Wall Street Journal on the 31st day following the end of the Term of Employment. In addition, until Executive reaches age 65 or his earlier death, the Employer shall at Executive’s expense continue on behalf of the Executive and his spouse and dependents medical, dental, and hospitalization benefits provided (x) to the Executive at any time during the 90-day period prior to the termination hereunder or (y) to other similarly situated executives who continue in the employ of the Employer. The Employer’s obligation hereunder with respect to the foregoing benefits shall be limited to the extent that the Executive obtains any such benefits pursuant to a subsequent employer’s benefit plans, in which case the Employer may reduce the coverage of any benefits it is required to provide the Executive hereunder as long as the aggregate coverages and benefits of the combined benefit plans is no less favorable to the Executive than the coverages and benefits required to be provided hereunder. This provision shall not be interpreted so as to limit any benefits to which the Executive or his dependents or beneficiaries may be entitled under any of the Employer’s employee benefit plans, programs, or practices following the Executive’s termination of employment, including, without limitation, retiree medical and life insurance benefits. Except as otherwise specifically provided herein, Employer shall have no other obligations hereunder or otherwise with respect to Executive’s employment from and after the termination or expiration date, and Employer shall continue to have all other rights available hereunder.

               (iii) No termination under Section 4 shall terminate or adversely affect any rights of Executive then vested under any disability, stock option, restricted stock or other benefit program of Employer.

          (j) Club Fees. During the period of the Executive’s employment, Employer shall pay up to $60,000 for the Executive to join the club of his choice and will reimburse the Executive for dues to such club not to exceed $500 per month. The Executive agrees to use the club as entertainment for selected Employer clients.

          (k) Fair and Adequate Compensation. Employer and Executive acknowledge that such compensation and the other covenants and agreements of Employer contained herein are fair and adequate compensation for Executive’s services and for the covenants described below.

     4. Termination.

          (a) Death. If Executive dies during the Term of Employment and while in the employ of Employer, this Agreement shall automatically terminate and Employer or Company shall have no further obligation to Executive or his estate under this Agreement (other than death benefits payable under the benefit plans referenced in Section 3(c) or 3(d)), except that Employer shall pay Executive’s estate that portion of Executive’s Base Salary under Section 3(a) accrued through the date on which Executive’s death occurred. Such payment of Base Salary to Executive’s estate shall be made in the same manner as other payroll obligations of the Employer.

          (b) Disability.

               (i) Employer may terminate this Agreement if, during the Term of Employment, Executive shall be prevented from performing his duties hereunder by reason of becoming disabled. For purposes of this Agreement, the term “disabled” shall have the meaning set forth in Employer’s long term disability plan or, if Employer has no long term disability plan in effect at the time of the Executive’s disability, shall mean that Executive has become physically or mentally incapable (excluding infrequent and temporary absences due to ordinary illness) of performing the essential functions of his duties under this Agreement for a continuous period of six (6) months, as determined by Employer upon the advice of a qualified physician. In the event a dispute arises between Executive and the Employer concerning Executive’s physical or mental ability to continue or return to the performance of his duties, Executive shall submit to examination by a competent physician mutually agreeable to both parties. The physician’s opinion as to the Executive’s capability to perform his duties will be final and binding. During any period prior to termination during which the Executive fails to perform his duties as a result of incapacity due to physical or mental illness, Executive shall continue to receive his full salary at the rate then in effect for such period until his employment terminates pursuant to this Section 4(b), provided that payments so made to Executive during such period shall be reduced by the sum of the amounts, if any, payable to Executive under any disability benefit plans of Employer that were not previously applied to reduce such payment.

               (ii) In the event of a termination pursuant to this Section 4(b), Employer shall be relieved of all its obligations under this Agreement, except that Employer shall pay to Executive, or his estate in the event of his subsequent death, Executive’s Base Salary under Section 3(a) through the date on which such termination shall have occurred, reduced during such period by the amount of any benefits received by Executive under any disability policy maintained by Employer and any death benefits payable under the benefit plans referenced in Section 3(c) or 3(d). All such payments to Executive or his estate shall be made in the same manner as other payroll obligations of Employer.

          (c) Discharge for Cause. At any time during the Term of Employment, Employer may discharge Executive for cause and terminate this Agreement by delivering to Executive a written notice of discharge. The notice of discharge shall set forth the reasons for Executive’s termination for cause. For purposes of this Agreement, “cause” shall be defined as the occurrence of any of the following events:

               (i) The determination by the Board of Directors in the exercise of its reasonable judgment, after consultation with its legal counsel, that Executive has committed an act or acts constituting (A) a felony or other crime, whether a felony or a misdemeanor, involving moral turpitude, dishonesty or theft, (B) dishonesty or disloyalty with respect to Bank or Company, or (C) fraud;

               (ii) The determination by the Board of Directors in the exercise of its reasonable judgment, that (i) the Executive has failed to follow the policies adopted by the Board of Directors; (ii) that Executive has failed to meet the performance goals established in writing by the Board of Directors in January of each calendar year this Agreement is in effect; or (iii) that Executive has engaged in such actions or omissions that would constitute unsafe or unsound banking practices;

               (iii) The determination by the Board of Directors in the exercise of its reasonable judgment, after consultation with its legal counsel, that Executive has committed a breach or violation of this Agreement, and fails to cure such breach or violation within thirty (30) days after written notice to Executive by Employer specifying in reasonable detail the alleged breach or violation;

               (iv) The determination by the Board of Directors, after consultation with its legal counsel, that Executive (A) has engaged in gross misconduct in the course and scope of his employment with Employer including indecency, immorality, gross insubordination, dishonesty, unlawful harassment or discrimination, use of illegal drugs, or fighting or (B) committed a willful act or any grossly negligent act, or the willful or grossly negligent omission to act, which is intended to cause, has caused or is reasonably likely to cause, material harm to Employer (including harm to its business reputation); or

               (v) In the event Executive is prohibited from engaging in the business of banking by any governmental regulatory agency having jurisdiction over Bank or Company. For purposes of this Agreement, Executive shall not be deemed to be in breach of this Agreement for his failure to substantially perform his duties under this Agreement where such failure results because Executive has becomes disabled within the meaning of Section 4(b). In such cases, termination of Executive shall be governed by the provisions of Section 4(b).

          (d) Discharge without Cause. At any time during the Term of Employment, Employer shall be entitled to terminate Executive’s employment and this Agreement “without cause,” by providing him with a written notice of termination at least sixty (60) days in advance of the effective termination date. Any termination of this Agreement which is not for cause, as defined above in Section 4(c), or which does not result from the death or disability of Executive, as set forth in Sections 4(a) or 4(b) respectively, or a constructive discharge as set forth in Section 4(e), respectively, shall be deemed to be a termination without cause.

          (e) Resignation. Executive shall be entitled to terminate this Agreement by providing Employer with a written notice of resignation at least ninety (90) days prior to the intended resignation date. Upon Executive’s resignation, he shall be entitled to receive any Base Salary which has been earned by him through the effective date of such resignation. In lieu of having Executive work for Employer through the effective date of the resignation, Employer may terminate this Agreement immediately; however, Employer shall still pay Executive amounts to which he would otherwise be entitled through the effective date of such resignation. Upon the effective date of Executive’s resignation, Executive shall not be entitled to receive any other compensation or benefits as provided in the individual benefit plans or agreements. Executive has the right to purchase health insurance at his own expense through age 65.

     5. Non-Disclosure and Confidentiality.

          (a) Executive acknowledges that, by the nature of his duties, he will or may have access to and become informed of confidential, proprietary, and highly sensitive information relating to Employer and which is a competitive asset of Employer, including, without limitation, information pertaining to: (i) the identities of Employer’s existing and prospective customers or clients, including names, addresses, credit status, and pricing levels; (ii) the buying and selling habits and customs of Employer’s existing and prospective customers or clients; (iii) financial information about Employer; (iv) product and systems specifications, concepts for new or improved products and other product or systems data; (v) the identities of, and special skills possessed by, Employer’s employees; (vi) the identities of and pricing information about Employer’s suppliers and vendors; (vii) training programs developed by Employer; (viii) pricing studies, information and analyses; (ix) current and prospective products and inventories; (x) financial models, business projections and market studies; (xi) Employer’s financial results and business conditions; (xii) business plans and strategies; (xiii) special processes, procedures, and services of Employer and its suppliers and vendors; and (xiv) computer programs and software developed by Employer or its consultants.

          (b) The term Proprietary Information does not include information or know-how which: (i) is in Executive’s possession prior to its disclosure to him by Employer (as shown by competent written evidence in Executive’s files and records immediately prior to the time of disclosure); (ii) is available to the general public other than through any inaction or action (whether or not wrongful) on Executive’s part; or (iii) is approved for release by written authorization of the Employer.

          (c) Executive agrees not to: (i) use, at any time, any Proprietary Information for his own benefit and for the benefit of another; or (ii) disclose, directly or indirectly, any Proprietary Information to any person who is not a current employee of Employer, except in the performance of the duties assigned to Executive in this Agreement, at any time prior or subsequent to the termination of his employment with Employer, except as such disclosure may be required by law. Executive further agrees not to make copies of any Proprietary Information, except in the performance of the duties assigned to him in this Agreement.

     6. Return of Employer Property. Executive acknowledges that all memoranda, notes, records, reports, manuals, books, papers, letters, client and customer lists, contracts, software programs, information and records, drafts of instructions, guides and manuals, and other documentation (whether in draft or final form), and other sales or financial information and aids relating to Employer’s business, and any and all other documents containing Proprietary Information furnished to Executive by any representative of Employer or otherwise acquired or developed by Executive in connection with his association with Employer (collectively, “Recipient Materials”) shall at all times be the property of Employer. Within twenty-four (24) hours of the termination of his employment with Employer, Executive shall return to Employer any Recipient Materials which are in his possession, custody or control.

     7. Non-Solicitation of Customers/Clients.

          (a) Executive acknowledges that the special relationship of trust and confidence between him, Employer, and its clients and customers creates a high risk and opportunity for Executive to misappropriate the relationship and goodwill existing between Employer and its clients and customers. Executive further acknowledges and agrees that it is fair and reasonable for Employer to take steps to protect itself from the risk of such misappropriation. Executive further acknowledges that, at the outset of his employment with Employer and/or throughout his employment with Employer, Executive will be provided with access to and informed of Employer’s Proprietary Information, which will enable him to benefit from Employer’s goodwill and know-how.

          (b) Executive acknowledges that it would be inevitable in the performance of his duties as a director, officer, employee, investor, agent or consultant of any person, association, entity, or company which competes with Employer, or which intends to or may compete with Employer, to disclose and/or use Employer’s Proprietary Information, as well as to misappropriate Employer’s goodwill and know-how, to or for the benefit of such other person, association, entity, or company. Executive also acknowledges that, in exchange for the execution of the non-solicitation restriction set forth in this Section 7, he has received substantial, valuable consideration. Executive further acknowledges and agrees that this consideration constitutes fair and adequate consideration for the execution of the non-solicitation restriction set forth in this Section.

          (c) Ancillary to the enforceable promises set forth in this Agreement, as well as to protect the vital interests described in those Sections, Executive agrees that, while he is employed by Employer and for a period of two (2) years following the termination of his employment with the Employer, regardless of the reason for such termination, Executive will not, without the prior written consent of Employer, directly or indirectly, alone or for his own account, or as owner, partner, investor, member, trustee, officer, director, shareholder, employee, consultant, distributor, advisor, representative or agent of any partnership, joint venture, corporation, trust, or other business organization or entity:

               (i) solicit the banking business of any current customers of the Employer;

               (ii) acquire, charter, operate or enter into any franchise or other management agreement with any financial institution;

               (iii) serve as an officer, director, employee, agent or consultant to any financial institution, or

               (iv) establish or operate a branch or other office of a financial institution within the city limits of or having its main office or a branch within fifty (50) miles of the main office of Bank or any of its branches.

Executive agrees that the restriction set forth above is ancillary to an otherwise enforceable agreement, is supported by independent valuable consideration, and that the limitations as to time, geographical area, and scope of activity to be restrained by this Section are reasonable and acceptable, and do not impose any greater restraint than is reasonably necessary to protect the goodwill and other business interests of Employer. Executive agrees that if, at some later date, a court of competent jurisdiction determines that the non-solicitation agreement set forth in this Section does not meet the criteria set forth by applicable law, this Section may be reformed by the court and enforced to the maximum extent permitted under applicable law. Executive understands that his obligations under this Section shall not be assignable by him.

     8. Non-Solicitation of Employees. Executive agrees that, as part of his employment with Employer, he will become familiar with the salary, pay scale, capabilities, experiences, skill and desires of the Employer’s employees. Executive agrees to maintain the confidentiality of such information. He further covenants and agrees that, for a period of two (2) years subsequent to the termination of his employment with Employer, whether such termination occurs at the insistence of himself or Employer, he shall not recruit, hire, or attempt to recruit or hire, directly or by assisting others, any other employees of Employer, nor shall he contact or communicate with any other employees of Employer for the purpose of inducing other employees to terminate their employment with Employer. For purposes of this covenant, “other employees” shall refer to employees who were employed by, or doing business with, Employer within twelve (12) months of the time of the attempted recruiting or hiring.

     9. Independent Covenants. Executive acknowledges that the covenants set forth in Sections 5, 7 and 8 are material conditions to Employer’s willingness to execute and deliver this Agreement and to provide Executive the compensation and benefits and other consideration provided hereunder. The parties agree that the existence of any claim or cause of action of Executive against Employer, whether predicated on this Agreement or otherwise, will not constitute a defense to the enforcement by Employer of such covenants. It is specifically acknowledged that the period of one year following the termination of employment stated in Sections 7 and 8, during which the agreements and covenants of Executive made in such sections are effective, is to be computed by excluding from such computation any time during which Executive is in violation of any provision of Sections 7 and 8. The covenants contained in Sections 5, 7 and 8 will not be affected by any breach of any other provision hereof by any party hereto. In addition, Executive’s obligations under Sections 5, 7 and 8 shall survive the termination of this Agreement and Executive’s employment with Employer. Executive’s obligations under Sections 5, 7 and 8 are in addition to, and not in limitation or preemption of, all other obligations of confidentiality which he may have to Employer under general legal or equitable principles, or other Employer policies.

     10. Remedies. In the event that Executive violates any of the provisions set forth in Sections 5, 7 and 8 of this Agreement, Executive acknowledges that Employer will suffer immediate and irreparable harm which cannot be accurately calculated in monetary damages. Consequently, Executive acknowledges and agrees that Employer shall be entitled to immediate injunctive relief, either by temporary or permanent injunction, to prevent such a violation. Executive further acknowledges and agrees that this injunctive relief shall be in addition to any other legal or equitable relief to which Employer would be entitled.

     11. Early Resolution Conference. This Agreement is understood to be clear and enforceable as written and is executed by both parties on that basis. However, if at any time Executive seeks to challenge any provision of this Agreement as unclear, unenforceable or inapplicable to any competitive activity in which Executive intends to engage, Executive shall first notify the Employer in writing and meet with a representative of the Employer and a neutral mediator (if the Employer elects to retain one, at its expense) to discuss the resolution of any disputes between the parties. Executive shall provide this notification at least fourteen (14) days before Executive engages in any activity that could foreseeably fall within the scope of any of the provisions set forth in Section 5, 7 or 8 of this Agreement. The failure to comply with this requirement shall operate as a waiver by the Executive to challenge the reasonable scope, clarity, applicability or enforceability of Sections 5, 7 or 8 of this Agreement. All rights of Executive and the Employer will be preserved if the early resolution conference requirement is complied with, even in the event that no agreement is reached as a result of the conference.

 

     12. Arbitration.

          (a) Executive recognizes that differences may arise between him, the Employer, and the Company during or following his employment with Employer, and that those differences may or may not be related to his employment. Executive acknowledges that by entering into this Agreement, he anticipates gaining the benefits of a speedy, impartial dispute-resolution procedure for resolving any and all disputes between himself and Employer. Notwithstanding Section 18 hereof, this Section 12 shall be governed by the Federal Arbitration Act and to the extent that it is inconsistent with Illinois law, it will supersede Illinois law relating to the arbitrability of any disputes.

          (b) Executive and Employer consent to the resolution by final and binding arbitration of any claim, controversy, or dispute (“claim(s)”) between Executive and Employer, whether or not such claims arise out of or relate to his employment by Employer, in accordance with the Employment Arbitration Rules of the American Arbitration Association in effect on the date the claim or controversy arises. The claims covered by this Section include, but are not limited to, claims for wages or other compensation due; claims for breach of any contract or covenant (express or implied); tort claims (including, but not limited to, invasion of privacy, intentional infliction of emotional distress, assault, battery, fraud, negligence, gross negligence, negligent hiring or retention); claims of discrimination (including, but not limited to, race, gender, sexual harassment, religion, national origin, age, marital status, or medical condition, handicap or disability); claims for benefits (except where an employee benefit or pension plan specifies that its claims procedure shall culminate in an arbitration procedure different from this one); and claims for violation of any federal, state, or other governmental law, statute, regulation, or ordinance, except claims excluded in the following paragraph.

          (c) Executive and Employer understand that claims for workers’ compensation or unemployment compensation benefits are not covered by this Agreement. Moreover, although Executive is prohibited from filing a lawsuit concerning claims covered by this Agreement, Executive understands that this Section shall not prohibit him from filing a charge or complaint with any governmental agency. Finally, Executive understands that this Section 12 does not apply with respect to disputes relating to the operation of and the enforcement of Sections 5, 7 and 8 hereof.

          (d) Either party may initiate an arbitration proceeding by delivery of written notice to the other party hereto. Resolution of such dispute shall be resolved by a majority vote of a panel of three arbitrators. Within 30 days after giving or receiving a demand for arbitration, Employer and Executive shall each select one arbitrator. Such arbitrators shall be freely selected and the parties shall not be limited in their selection to any prescribed list. The arbitrators chosen by Employer and Executive shall, by mutual consent, select the third arbitrator. Except as otherwise agreed upon by the Parties, the arbitration shall convene in Chicago, Illinois.

          (e) The decision of the arbitrators shall be in writing and presented in separate findings of fact and law. The award of the arbitrators shall be final and binding on the parties from which no appeal maybe taken and an order confirming the award or judgment upon the award may be entered into in any court having jurisdiction there over.

          (f) Prior to the appointment of the arbitrator, Employer or Executive may seek provisional remedies, including, without limitation, temporary restraining orders and preliminary injunctions. After the appointment of the arbitrators, the arbitrators shall have sole authority to grant such provisional remedies as the arbitrators, in their sole discretion, deem necessary or appropriate.

          (g) The arbitrators shall have the authority to award any relief permitted by relevant federal or state statute, including, without limitation, back wages, front wages, actual damages, compensatory damages, punitive damages, attorneys’ fees, and costs associated with the arbitration proceeding. The arbitrators, in the award, may assess the fees and expenses of the arbitrators and of the

 arbitration proceeding and the witness and attorney’s fees of the parties or any part thereof, against either Employer or Executive or both of them, taking into account the circumstances of the case. Except as assessed by the arbitrators in the award, Employer and Executive shall each bear their own costs in connection with the arbitration proceeding. Notwithstanding the foregoing, Employer shall bear 100% of the aggregate fees and expenses of the arbitrators.

          (h) Executive and Employer acknowledge and agree that a party making a claim pursuant to or arising under this Section must give written notice of such claim within one (1) year of the occurrence of the event or conduct giving rise to the claim. Failure to give notice of any claim within one (1) year shall constitute a waiver of the claim, even if there is a federal or state statute of limitations which would have given more time to pursue the claim.

          (i) Except with respect to claims described in Section 12(c), Executive and Employer acknowledge and agree that the arbitrators, and not any federal, state, or local court or agency, shall have exclusive authority to resolve any dispute relating to the interpretation, applicability, enforceability or formation of this Agreement, including, but not limited to, any claim that all or any part of this Agreement is void or voidable. Such arbitrators shall have jurisdiction to hear and rule on pre-hearing disputes, and are authorized to hold pre-hearing conferences by telephone or in person as the arbitrator deems necessary. The arbitrators shall have the authority to entertain a motion to dismiss and/or a motion for summary judgment by any party and shall apply the standards governing such motions under the Federal Rules of Civil Procedure. The arbitrators shall apply the substantive law (and the law of remedies, if applicable) of the state in which the claim arose, or federal law, or both, as applicable to the claim(s) asserted. The Federal Rules of Evidence shall apply to the arbitration proceeding.

     13. Goodwill. Executive acknowledges that Employer has developed, and will, over a period of time, continue to develop, significant relationships and goodwill between itself and its clients and customers by providing superior products and services. Executive further acknowledges that these relationships and this goodwill are a valuable asset belonging solely to Employer. Executive understands that Employer agrees to compensate him, as well as to reimburse him for reasonable and necessary business expenses incurred, while he builds and/or maintains business relationships and goodwill with Employer’s current and prospective clients and customers on a personal level. Executive acknowledges that the responsibility to build and maintain business relationships and goodwill with current and prospective clients and customers creates a special relationship of trust and confidence between him, Employer, and its clients and customers.

     14. Change in Control. Upon a Change in Control, whether or not Executive continues his employment, all of Executive’s outstanding stock options and other incentive awards from the Company in the nature of rights that may be exercised shall become fully exercisable, all restrictions on Executive’s outstanding awards of restricted stock shall lapse and the Employer shall pay to Executive a cash lump sum payment equal to 299% of his Base Amount as defined in section 280G(b)(3) of the Internal Revenue Code of 1986, as amended (“Change in Control Payment”); provided, however, if the Change in Control Payment to Executive would cause the Employer to contravene any law, regulation or policy applicable to the Employer, the Employer and Executive agree that such Change in Control Payment shall be made to the extent permitted by law, regulation and policy, and the remainder of such Change in Control Payment shall be made from time to time at the earliest time permitted by law, regulation and policy. For purposes of this Agreement, “Change in Control” means:

          (a) a change in the ownership of the capital stock of the Bank or the Company, whereby a corporation, person, or group acting in concert (other than the current members of the boards of directors of the Company or the Bank or any of their descendants, the Company, the Bank, or any savings, pension or other benefit plan for the benefit of the employees of the Company or the Bank or

subsidiaries thereof) (a “Person”) as described in Section 14(d)(2) of the Securities Exchange Act of 1934, as amended (“Exchange Act”), holds or acquires, directly or indirectly, beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of a number of shares of capital stock of the Company or the Bank which constitutes fifty percent (50%) or more of the combined voting power of the Company’s or the Bank’s then outstanding capital stock entitled to vote generally in the election of directors;

          (b) the persons who were members of the board of directors of the Company or the Bank immediately prior to a tender offer, exchange offer, contested election or any combination of the foregoing, cease to constitute a majority of the board of directors of the Company or the Bank, as applicable;

          (c) the consummation by the board of directors of the Company or the Bank of a merger, consolidation or reorganization plan involving the Company or the Bank in which the Company or the Bank, as applicable, is not the surviving entity, or a sale of all or substantially all of the assets of the Company or the Bank. For purposes of this Agreement, a sale of all or substantially all of the assets of the Company or the Bank shall be deemed to occur if any Person acquires (or during the 12-month period ending on the date of the most recent acquisition by such Person, has acquired) gross assets of the Company or the Bank, as applicable, that have an aggregate fair market value equal to fifty percent (50%) or more of the fair market value of all of the respective gross assets of the Company or the Bank immediately prior to such acquisition or acquisitions;

          (d) a tender offer or exchange offer is made by any Person which is successfully completed and results in such Person beneficially owning (within the meaning of Rule 13d-3 promulgated under the Exchange Act) either fifty percent (50%) or more of the Company’s or Bank’s outstanding shares of common stock or shares of capital stock having fifty percent (50%) or more of the combined voting power of the Company’s or Bank’s then outstanding capital stock (other than an offer made by the Company or the Bank), and sufficient shares are acquired under the offer to cause such person to own fifty percent (50%) or more of the voting power;

          (e) a dissolution or liquidation of the Company or the Bank; or

          (f) any other transactions or series of related transactions occurring which have substantially the same effect as the transactions specified in clauses (a)-(f); provided however that, a shareholder or shareholders may make the following transfers and such transfers shall be deemed not to be a Change in Control: (i) to any trust described in section 1361(c)(2) of the Code and that is created solely for the benefit of any shareholder or any spouse or lineal descendant of any shareholder; (ii) to any individual by bona fide gift; (iii) to any spouse or former spouse pursuant to the terms of a decree of divorce; or (iv) to any officer or employee of the Company or the Bank pursuant to any stock option or restricted stock plan established by the shareholders of the Company or the Bank.

     15. Notices. All notices, requests, consents and other communications to be given or delivered hereunder or by reason of the provisions of this Agreement shall be in writing and shall be deemed to have been properly served if (a) delivered personally, (b) delivered by a recognized overnight courier service, (c) sent by certified or registered mail, return receipt requested and first class postage prepaid, or (d) sent by facsimile transmission followed by a confirmation copy delivered by recognized overnight courier service the next day. Such notices, requests, consents and other communications shall be sent to the respective parties as follows: (i) if to Executive: James J. Giancola,    (ii) if to Bank: Midwest Bank and Trust Co.; and (iii) if to Company: Midwest Banc Holdings, Inc. Any Party hereto may designate a different address by providing written notice of such new address to the other Parties. Date of service of such notice shall be (i) the date such notice is personally delivered or sent by facsimile transmission (with issuance by the transmitting machine of a confirmation of a successful transmission), (ii) three business days after the date of mailing if sent by certified or registered mail or (iii) one business day after the date of delivery to the overnight courier if sent by overnight courier.

     16. Severability. The Parties acknowledge that each covenant and/or provision of this Agreement shall be enforceable independently of every other covenant and/or provision. Furthermore, Executive and Employer acknowledge that, in the event any covenant and/or provision of this Agreement is determined to be unenforceable for any reason, the remaining covenants and/or provisions will remain effective, binding and enforceable.

     17. Complete Agreement; Modification. The Parties acknowledge and agree that this Agreement constitutes the complete and entire agreement between the parties; that each executed this Agreement based upon the express terms and provisions set forth herein; that, in accepting employment with Employer, Executive has not relied on any representations, oral or written, which are not set forth in this Agreement; that no previous agreement, either oral or written, shall have any effect on the terms or provisions of this Agreement; and that all previous agreements, either oral or written, are expressly superseded and revoked by this Agreement. The provisions hereof may not be altered, amended, modified, waived, or discharged in any way whatsoever, except by written agreement executed by Executive and Employer. No waiver shall be deemed a continuing waiver or a waiver of any subsequent breach or default, either of a similar or different nature, unless expressly so stated in writing.

     18. Governing Law. This Agreement shall be construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation and performance of this Agreement shall be governed by, the laws of the State of Illinois, without giving effect to provision thereof regarding conflict of laws.

     19. Counterparts. This Agreement may be executed in multiple original counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

     20. Prior Agreements. Executive represents that his service as an employee of Employer will not violate any agreement: (i) he has made that prohibits him from disclosing any information he acquired prior to his becoming employed by Employer; or (ii) he had made that prohibits him from accepting employment with Employer or that will interfere with his compliance with the terms of this Agreement. Executive further represents that he has not previously, and will not in the future, disclose to Employer any proprietary information or trade secrets belonging to any previous employer. Executive acknowledges that Employer has instructed him not to disclose to it any proprietary information or trade secrets belonging to any previous employer.

     21. Voluntary Agreement. The Parties acknowledge that each has carefully read this agreement, that each has had an opportunity to consult with his or its attorney concerning the meaning, import and legal significance of this Agreement, that each understands its terms, that all understandings and agreements between Executive and Employer relating to the subjects covered in this Agreement are contained in it, and that each has entered into the Agreement voluntarily and not in reliance on any promises or representations by the other than those contained in this Agreement.

     22. Restrictions Upon Funding. The Employer shall have no obligation to set aside, earmark or entrust any fund or money with which to pay its obligations under this Agreement. The Executive or any successor-in-interest to Executive shall be and remain simply a general creditor of the Employer in the same manner as any other creditor having a general unsecured claim. For purposes of the Code, the Employer intends this Agreement to be an unfunded, unsecured promise to pay on the part of the Employer. For purposes of Employee Retirement Income Security Act of 1974, as amended (“ERISA”), the Employer intends that this Agreement not be subject to ERISA. If it is deemed subject to ERISA, it is intended to be an unfunded arrangement for the benefit of a select member of management, who is a highly compensated employee of the Employer for the purpose of qualifying this Agreement for the “top hat” plan exception under sections 201(2), 301(a)(3) and 401(a)(1) of ERISA. At no time shall the Executive have or be deemed to have any lien nor right, title or interest in or to any specific investment or to any assets of the Employer. If the Employer elects to invest in a life insurance, disability or annuity policy upon the life of Executive, the Executive shall assist the Employer by freely submitting to a physical examination and supplying such additional information necessary to obtain such insurance or annuities.

     23. Interpretation. When a reference is made in this Agreement to a Section, such reference shall be to a Section of this Agreement unless otherwise indicated. The headings contained in this Agreement are for convenience of reference only and shall not affect in any way the meaning or interpretation of this Agreement. Whenever the words “include”, “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.” The words “hereof”, “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision in this Agreement. Each use herein of the masculine, neuter or feminine gender shall be deemed to include the other genders. Each use herein of the plural shall include the singular and vice versa, in each case as the context requires or as is otherwise appropriate. The word “or” is used in the inclusive sense. Any agreement or instrument defined or referred to herein or in any agreement or instrument that is referred to herein means such agreement or instrument as from time to time amended, modified or supplemented, including by waiver or consent. References to a person are also to its permitted successors or assigns.

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above, to be effective as of the Effective Date.

EXECUTIVE:

 

     /s/ James J. Giancola


 

James J. Giancola

 

EMPLOYER:

 

 

 

 

Midwest Banc Holdings, Inc.

 

 

 

By:

 

     /s/ E. V. Silveri

 

 


 

 

 

E. V. Silveri, Chairman of the Board

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#Top of the Document

 

AMENDMENT TO EMPLOYMENT AGREEMENT

 

Exhibit 10.2

AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT

     This Amendment No. 1 to Employment Agreement is made and entered into as of the 1st day of January, 2006, by and among Midwest Banc Holdings, Inc. (the “Company”), Midwest Bank and Trust Company (the “Amendment”) (the “Bank” and together with the Company “Employer”) and James J. Giancola (“Executive”).

     WHEREAS, the Employer and the Executive entered into an Employment Agreement on September 28, 2004 (the “Agreement”); and

     WHEREAS, the Executive and the Employer desire to amend Section 3(f) of the Agreement.

     NOW, THEREFORE, in consideration of the mutual promises and covenants set forth in this Amendment and for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Executive and Employer agree as follows:

1.

 

Amendment to Section 3.3(f). Section 3(f) of the Agreement is hereby amended to read as follows:

 

 

 

 

 

Restricted Stock Award; Cancellation of Stock Option. As of January 1, 2006, in exchange for Executive’s surrender to the Company of an option to acquire 100,000 shares of common stock of the Company, the Company grants to Executive 29,316 restricted shares of common stock of the Company, subject to the restrictions and limitations established when the Compensation Committee of the Board of Directors of the Company approved restricted stock awards on June 28, 2005 for officers of the Company. The restricted stock granted under this Section shall be evidenced by a stock certificate and a restricted stock award agreement which will contain terms and restrictions not inconsistent with this Agreement and which will be subject to the terms and conditions of the Company’s Stock and Incentive Plan.”

 

 

 

2.

 

Effect of Amendment. Except as expressly set forth herein, this Amendment shall not be deemed or construed to amend any other term or condition of this Agreement and all of the other terms and conditions of the Agreement shall remain in full force and effect.

     IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the date first written above.

 

 

 

 

 

EXECUTIVE

 

EMPLOYER

 

 

 

 

 

/s/ James J. Giancola

 

Midwest Banc Holdings, Inc.

 

 

 

 

 

James J. Giancola

 

 

 

 

 

 

By:

 

/s/ Daniel R. Kadolph

 

 

 

 

 

 

 

 

 

Daniel R. Kadolph

 

 

 

 

 

 

 

Its:

 

Senior Vice President and

 

 

 

 

Chief Financial Officer

 





EX-10.51 2 c26634exv10w51.htm SECOND AMENDMENT TO EMPLOYMENT AGREEMENT

Exhibit 10.51

AMENDMENT NO. 2 TO
EMPLOYMENT AGREEMENT DATED SEPTEMBER 28, 2004
WITH JAMES J. GIANCOLA

     This Amendment No. 2 by and among Midwest Banc Holdings, Inc. (the “Company”), Midwest Bank and Trust Company (the “Bank,” and together with the Company, the “Employer”) and James J. Giancola (the “Executive”), dated effective as of March 12, 2008.

R E C I T A L S

     A. The Employer and the Executive are parties to an Employment Agreement entered into as of September 28, 2004, as amended as of January 1, 2006 (the “Agreement”) governing the terms and conditions of Executive’s employment with the Employer.

     B. The Employer desires to continue to employ the Executive and to make certain changes to extend the Term of Employment of the Agreement.

     C. The Employer and the Executive desire to amend certain provisions to the Agreement to comply with Section 409A of the Internal Revenue Code and the Treasury regulations thereunder.

     D. The Employer and the Executive desire to clarify the limitation on the benefits in the event there is a change in control.

     NOW THEREFORE, the parties agree as follows:

     1. Section 1 of the Agreement is deleted in its entirety and replaced with the following, effective January 1, 2008:

     1. Term of Employment. The term of this Agreement and Executive’s employment shall be the period commencing on September 28, 2004 and ending on the second anniversary of the date on which notice of termination of this Agreement is provided by either party to the other party as provided in this Agreement, unless terminated earlier pursuant to Section 4. The employment period shall be referred to herein as the “Term of Employment.”

     2. The first paragraph of Section 14 of the Agreement is deleted in its entirety and replaced with the following, effective January 1, 2008:

     14. Change in Control. Upon a Change in Control, whether or not Executive continues his employment, all of Executive’s outstanding stock options and other incentive awards from the Company in the nature of rights that may be exercised shall become fully exercisable and all restrictions on Executive’s outstanding awards of restricted stock shall lapse. In addition, upon a Change in Control, whether or not Executive continues his employment, the Employer shall pay to Executive a cash lump sum payment equal to 299% of his “Base Amount” (“Change in Control Payment”) as defined in Section 280G(b)(3) of the Internal Revenue Code of 1986, as amended (the “Code”), within seventy-four (74) days of the Change in Control event; provided, however, that if Executive experiences an Involuntary Termination (as defined in Section 24(d) below) within the one year period following the Change in Control

 


 

and, as a result of that Involuntary Termination, Executive is entitled to receive, and receives, full payment of the Liquidated Damages (as defined in Section 24(a) below), then the “Change in Control Payment” payable hereunder shall be automatically reduced to a cash lump sum payment equal to 199% of Executive’s compensation as defined in Section 14(g) of this Agreement and any amount paid to Executive in excess of such reduced amount will be treated as a loan to the Executive by the Employer and shall be repayable on the ninetieth day following demand by the Company, together with interest at the lowest “applicable federal rate” provided in Section 1274(d) of the Code, from the date on which the excess amount was paid to Executive through the first day of the month in which the excess amount is repaid. Notwithstanding the foregoing, if the Change in Control Payment to Executive would cause the Employer to contravene any law, regulation or policy applicable to the Employer, the Employer and Executive agree that such Change in Control Payment shall be made to the extent permitted by law, regulation and policy, and the remainder of such Change in Control Payment shall be made from time to time at the earliest time permitted by law, regulation and policy. For purposes of this Agreement, “Change in Control” means:

     3. The Agreement is amended by adding the following Section 24 at the end thereof, effective January 1, 2008:

          24. Damages.

     (a) If the Executive experiences an “Involuntary Termination” (as defined in Section 24(e) below) within the one year period following a Change in Control (as defined in Section 14), such termination of employment shall be subject to the Company’s obligations under this Section 24. In the event of such an Involuntary Termination of the Executive, if the Executive has offered to continue to provide the services contemplated by and on the terms provided in this Agreement and such offer has been declined, then, subject to Section 24(b) of this Agreement, the Company shall pay, as damages for breach of contract (“Liquidated Damages), the Executive a cash lump sum payment equal to (i) the present value (using the Short-Term Applicable Federal Rate on the date the Executive’s employment is terminated) of the Executive’s Base Salary (as defined in Section 3(a) below) that he would have received under this Agreement if the Executive had continued to perform services for the Employer for the two year period remaining in the Term of Employment (such two year period is referred to hereafter as the “Liquidated Damage Period”), and (ii) one half of the Executive’s annual cash incentive compensation (set forth under Section 3(b) hereof) which shall be an amount equal to the average of the amount of the Executive’s annual cash incentive compensation for the last three completed fiscal years immediately preceding the Executive’s termination of employment for the Liquidated Damage Period. The Company shall pay such Liquidated Damages to the Executive within seventy-four (74) days of his Involuntary Termination. In the event Executive is paid Liquidated Damages pursuant to this Section 24(a), Executive shall not be entitled to the severance payment contemplated in Section 3(i)(ii) of this Agreement, but Executive shall be entitled to participate in the Company’s medical, dental and hospitalization benefits as contemplated in Section 3(i)(ii) of this Agreement.

2


 

     (b) In the event that the Executive becomes entitled to Liquidated Damages pursuant to Section 24(a), the Company’s obligation thereunder with respect to cash damages shall be reduced by the amount of the Executive’s earned income (within the meaning of Section 911(d)(2)(A) of the Code), if any, from providing personal services during the Liquidated Damage Period. To the extent the provisions of this Section 24(b) are applicable and an overpayment has been made to the Executive as of the expiration of Liquidated Damage Period, the Executive shall reimburse the Company an amount equal to such overpayment.

     (c) The Employer and Executive acknowledge that this Agreement and all amendments effective on or prior to January 1, 2008 were not entered into, amended, or renewed in contemplation of a Change in Control, and that the compensation that Executive would have received during the Liquidated Damage Period would have qualified as reasonable compensation under Section 162 of the Code.

     (d) For purposes of this Section 24, the term “Involuntary Termination” means the termination of the employment of the Executive (i) by either the Company or the Bank or both without his express written consent; or (ii) by the Executive by reason of (1) a material diminution in the Executive’s Base Salary; (2) a material diminution in the Executive’s authority, duties, or responsibilities as Chief Executive Officer and President of both Company and Bank; (3) a material change in the geographic location at which the Executive must perform the services; or (4) any other action or inaction that constitutes a material breach by the Company of this Agreement. The term “Involuntary Termination” does not include discharge for cause within the meaning of Section 4(c)(i)-(v) or termination of employment due to retirement, death, or disability.

     4. The Agreement is amended by adding the following Section 25 immediately after the newly added Section 24, effective January 1, 2008:

          25. Adjustment Due to Excise Tax.

     (a) If it is determined (in the reasonable opinion of independent public accountants then regularly retained by the Company), that any amount payable to Executive by the Company under this Agreement (excluding the Liquidated Damages set forth in Section 24 above) or any other plan, program or agreement under which Executive participates or is a party (collectively, the “Potential Payments”) would constitute an “Excess Parachute Payment” within the meaning of Section 280G (or any similar provision) of the Code, subject to the excise tax imposed by Section 4999 of the Code, as amended from time to time (the “Excise Tax”), then the Potential Payments payable to the Executive shall be reduced to the extent necessary so that no portion of the Potential Payments payable to the Executive is subject to the Excise Tax. Executive shall be responsible for any and all Excise Tax (or similar taxes imposed upon such payments).

     (b) The determination of the amount of reduction, if any, in the amounts payable to the Executive shall be made in good faith and in the

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reasonable opinion of the independent public accountants then regularly retained by the Company, and a written statement setting forth the calculation thereof shall be provided to the Executive. If amounts payable to the Executive are to be reduced pursuant to this Section 25, the Executive, in consultation with the chief financial officer, shall determine the compensation and benefits to be so reduced.

     (c) The Company and the Executive hereby recognize that the restrictive covenants in Sections 5, 7 and 8 of this Agreement (“Restrictive Covenants”) have value and that value shall be recognized in the Section 280G calculations by an allocation of the Potential Payments between the Restrictive Covenants and such payments based on the value of the fair market value of the Restrictive Covenants. The Employer shall make the determination of the fair value to be assigned.

     5. The Agreement is amended by adding the following Section 26 immediately after the newly added Section 25, effective January 1, 2008:

     26. Restriction on Timing of Distribution Pursuant to Section 409A. Notwithstanding anything contained herein to the contrary, if at the time of a termination of employment, (i) Executive is a “specified employee” as defined in Section 409A of the Code, and the regulations and guidance thereunder in effect at the time of such termination (“409A”), and, (ii) any of the payments or benefits provided hereunder may constitute “deferred compensation” under 409A, then, and only to the extent required by such provisions to avoid the imposition of a penalty, the date of payment of such payments or benefits otherwise provided shall be delayed for a period of up to six (6) months following the date of termination.

     IN WITNESS WHEREOF, the Executive and a duly authorized officer of the Employer have executed this Amendment No. 2 as of the date set forth above.

 

 

 

 

 

Executive:

 

Employer:

 

 

 

 

 

 

 

MIDWEST BANC HOLDINGS, INC. for itself and its Subsidiaries

 

 

 

 

 

/s/  James J. Giancola

 

By:

 

/s/  Daniel R. Kadolph

 

 

 

 

 

James J. Giancola

 

As its:

 

Executive Vice President and Chief Administrative Officer 

 

 

 

 

 

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