MIDWEST BANC HOLDINGS, INC. SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT

Exhibit 10.41

MIDWEST BANC HOLDINGS, INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT

THIS AGREEMENT made as of the day of (the “Effective Date”), by and between Midwest Banc Holdings, Inc., a Delaware corporation (the “Company”), and the undersigned executive (the “Executive”).

INTRODUCTION

The Company has agreed to provide supplemental retirement benefits to certain executives and to enter into individual agreements with the executives to set forth the terms thereof. Such agreements are intended to encourage the executive to remain an employee of the Company or one or more of its Subsidiaries. Except for the death benefit payable to the Executive in the event such Executive dies while in the active service of the Company, the Company and the Subsidiaries will pay the benefits from their general assets. These agreements are intended to constitute an unfunded plan maintained primarily to provide deferred compensation to a select group of management or highly compensated employees within the meaning of Sections 201(2), 301(3) and 401(a)(1) of ERISA and regulations issued thereunder.

In furtherance of the foregoing, the Company and Executive agree as follows:

AGREEMENT

ARTICLE 1

DEFINITIONS

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

1.1 “Accrual Rate” means an interest rate equal to ___percent per annum.

1.2 “Agreement” means this Midwest Banc Holdings, Inc. Supplemental Executive Retirement Agreement entered into between the Company and the Executive.

1.3 “Benefit Percentage” means ___percent.

1.4 “Change of Control Event” means a change in the ownership or effective control of the Company, or in the ownership of a substantial portion of the assets of the Company as provided in section 409A(a)(2)(A)(v) of the Code. Pending issuance of Treasury regulations, a “Change in Control Event” will be as defined in IRS Notice 2005-1 and subsequent guidance. In accordance with IRS Notice 2005-1, a “Change in Control Event” means:

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

change in the ownership of the Company (or to cause a change in the “effective control of the Company” within the meaning of paragraph (b)).

(b) Change in Effective Control. A change in the effective control of the Company occurs on the date that a majority of the Company’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 Company’s board of directors prior to the date of the appointment or election.

(c) Change in Ownership of a Substantial Portion of the Company’s Assets. A change in the ownership of a substantial portion of the Company’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 Company that have a total gross fair market value equal to or more than 50 percent of the total gross fair market value of all of the assets of the Company immediately prior to such acquisition or acquisitions.

1.5 “Code” means the Internal Revenue Code of 1986, as amended from time to time, or any successor legislation thereto.

1.6 “Company” means Midwest Banc Holdings, Inc., a Delaware corporation, as well as any successor to such entity as provided in Section 11.3 hereof.

1.7 “Compensation Committee” means the Compensation Committee of the Company’s board of directors.

1.8 “Disability” means, if the Executive is covered by a Company-sponsored disability policy, total disability as defined in such policy without regard to any waiting period. If the Executive is not covered by such a policy, Disability means the Executive suffering a sickness, accident or injury which, in the judgment of a physician satisfactory to the Company, prevents the Executive from performing substantially all of the Executive’s normal duties for the Employer. As a condition to receiving any Disability benefits, the Company may require the Executive to submit to such physical or mental evaluations and tests as the Company’s board of directors deems appropriate.

1.9 “Early Retirement Age” means the Executive’s 60th birthday.

1.10 “Employer” means the entity from among the Company and the Subsidiaries that is, or was, the primary employer of the Executive.

1.11 “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

1.12 “Executive” means the individual named on this Agreement and on whose behalf the Agreement is entered.

1.13 “Final Salary” means the highest annual base salary rate paid by the Company and any Subsidiary to the Executive during the three (3) years ending on the date of Termination of Employment, or if earlier, the date the Executive attains Normal Retirement Age.

1.14 “Involuntary Termination of Employment” means, for the purposes of the Agreement, Termination of Employment by the Employer without Cause (as defined in Section 1.20 of this Agreement) or by the Executive because of Constructive Discharge (as defined in Section 1.20 of this Agreement).

1.15 “Normal Retirement Age” means the Executive’s 65th birthday.

1.16 “Normal Retirement Date” means the later of the Normal Retirement Age or Termination of Employment.

1.17 “Plan Year” means a twelve-month period commencing on January 1 and ending on December 31 of each year. The initial Plan Year shall be a short Plan Year which shall commence on the Effective Date.

1.18 “Specified Employee” means a key employee (as defined in section 416(i) of the Code without regard to paragraph (5) thereof) of a corporation any stock in which is publicly traded on an established securities market or otherwise.

1.19 “Subsidiary” means any direct or indirect subsidiary of the Company.

1.20 “Termination of Employment”

(a) For purposes of this Agreement, the term “Termination of Employment” shall mean (i) termination by the Company and all Subsidiaries of the employment of the Executive with the Company and all Subsidiaries for any reason including death, disability or “Cause” (as defined below), or (ii) resignation from employment with the Company and all Subsidiaries by the Executive for any reason, including “Constructive Discharge” (as defined below).

(b) “Cause” shall mean, with respect to termination of an Executive’s employment or directorship, the occurrence of any one or more of the following, as determined by the Committee, in the exercise of good faith and reasonable judgment:

(i) In the case where there is no employment, change in control or similar agreement in effect between the Executive and the Employer at the time of Termination of Employment, or where there is such an agreement but the agreement does not define “cause” (or similar words) or a “cause” termination would not be permitted under such agreement at that time because other conditions were not satisfied, the termination of an employment or consulting arrangement due to the willful and continued failure or refusal by the Executive to substantially perform assigned duties (other than any such failure resulting from the Executive Disability), the Executive’s dishonesty or theft, the Executive’s violation of any obligations or duties under any employee agreement, or the Executive’s gross negligence or willful misconduct; or

(ii) In the case where there is an employment, change in control or similar agreement in effect between the Executive and the Employer at the time of Termination of Employment that defines “cause” (or similar words)

and the occurrence of an event for which resignation for “cause” would be permitted under such agreement at that time.

No act or failure to act on an Executive’s part shall be considered willful unless done, or omitted to be done, by the Executive not in good faith and without reasonable belief that his action or omission was in the best interest of the Company.

(c) The term “Constructive Discharge” shall mean the Executive’s resignation from employment with the Company and all Subsidiaries upon any one of the following:

(i) In the case where there is an employment, change in control or similar agreement in effect between the Executive and the Employer at the time of Termination of Employment that defines “constructive discharge” (or similar words), the occurrence of an event for which resignation for “constructive discharge” would be permitted under such agreement at that time; or

(ii) In the case where there is no employment, change in control or similar agreement in effect between the Executive and the Employer, or where there is such an agreement but the agreement does not define “constructive discharge” (or similar words), or a resignation for “constructive discharge” would not be permitted at that time because other conditions were not satisfied, there shall have occurred:

(A) a reduction in the Executive’s base salary or annual bonus opportunity from that in effect immediately prior to the date of a Change in Control Event.

(B) a material diminution in the Executive’s title, duties or responsibilities from those in effect immediately prior to the date of a Change in Control Event;

(C) a change by the Employer of the Executive’s primary employment location to a place that is more than 35 miles from Executive’s primary employment location immediately prior to date of a Change in Control Event.

1.21 “Year of Service” means a twelve-month period commencing on the Executive’s most recent date of hire by the Company or a Subsidiary and on each anniversary thereof.

ARTICLE 2

LIFETIME BENEFITS

2.1 Normal Retirement Benefit. Subject to Article 6, upon Termination of Employment on or after the Normal Retirement Age for reasons other than death, the Employer shall pay to the Executive the benefit described in this Section 2.1 in lieu of any other benefit under this Agreement.

2.1.1 Amount of Benefit. The annual benefit under this Section 2.1 is an amount equal to the Executive’s Final Salary multiplied by the Benefit Percentage.

2.1.2 Payment of Benefit. The Employer shall pay the annual benefit to the Executive in twelve (12) equal monthly installments payable on the first day of each month commencing with the month following the Executive’s Termination of Employment. Notwithstanding the foregoing, for any Specified Employee distributions may not be made before the date which is six (6) months after the date of Termination of Employment (or, if earlier, the date of death of the Executive). The annual benefit shall be paid to the Executive for fifteen (15) years.

2.1.3 Benefit Increases. Commencing on the first anniversary of the first benefit payment, and continuing on each subsequent anniversary, the Company’s board of directors, in its sole discretion, may increase the benefit.

2.2 Early Retirement Benefit. Subject to Article 6, upon Termination of Employment (a) on or after the Early Retirement Age but before the Normal Retirement Age for reasons other than death or Disability and (b) after completing five continuous years of employment with the Employer or any Subsidiary after the Effective Date, the Employer shall pay to the Executive the benefit described in this Section 2.2 in lieu of any other benefit under this Agreement.

2.2.1 Amount of Benefit. The annual benefit under this Section 2.2 is an amount equal to a percentage of the annual benefit that would be payable as described in Section 2.1.1 above, computed as follows:


Age at Termination		Percentage of
of Employment		Section 2.1.1 Benefit
60 years 61 years 62 years 63 years 64 years 65 years		50% 60% 70% 80% 90% 100%

2.2.2 Payment of Benefit. The Employer shall pay the annual benefit to the Executive in twelve (12) equal monthly installments payable on the first day of each month commencing with the month following the Executive’s Termination of Employment. Notwithstanding the foregoing, for any Specified Employee distributions may not be made before the date which is six (6) months after the date of Termination of Employment (or, if earlier, the date of death of the Executive). The annual benefit shall be paid to the Executive for fifteen (15) years.

2.3 Early Termination Benefit. Subject to Article 6, upon Termination of Employment before the Early Retirement Age, for reasons other than death or Disability, the Employer shall pay to the Executive the benefit described in this Section 2.3 in lieu of any other benefit under this Agreement.

2.3.1 Amount of Benefit. If the Executive has completed 10 or more Years of Service and five (5) continuous years of employment with the Employer or any Subsidiary after the Effective Date, the benefit under this Section 2.3 is the total liability then accrued on the Employer’s records at the time of the Executive’s Termination of Employment. The Early Termination annual benefit amount is determined by calculating a 15-year fixed annuity from the accrual balance, crediting interest on the unpaid balance at an annual rate equal to the Accrual Rate, compounded monthly. If the Executive has completed less than ten (10) Years of Service or less than five (5) years continuous service after the Effective Date, the Employer shall pay no benefit under this Section 2.3.

2.3.2 Payment of Benefit. The Employer shall pay the annual benefit to the Executive in twelve (12) equal monthly installments payable on the first day of each month commencing with the month following the Executive’s Normal Retirement Date. Notwithstanding the foregoing, for any Specified Employee distributions may not be made before the date which is six (6) months after the date of Termination of Employment (or, if earlier, the date of death of the Executive). The annual benefit shall be paid to the Executive for fifteen (15) years.

2.4 Disability Benefit. Subject to Article 6, if the Executive terminates employment due to Disability prior to Normal Retirement Age, the Employer shall pay to the Executive the benefit described in this Section 2.4 in lieu of any other benefit under this Agreement.

2.4.1 Amount of Benefit. The benefit under this Section 2.4 is an amount equal to the Executive’s Normal Retirement Benefit, calculated under Section 2.1 above, as if the Executive remained employed, with no increase in annual base salary through his Normal Retirement Age.

2.4.2 Payment of Benefit. The Employer shall pay the annual benefit amount to the Executive in twelve (12) equal monthly installments payable on the first day of each month commencing with the month following the Executive’s Normal Retirement Date. Notwithstanding the foregoing, for any Specified Employee distributions may not be made before the date which is six (6) months after the date of Termination of Employment (or, if earlier, the date of death of the Executive). The annual benefit shall be paid to the Executive for fifteen (15) years.

2.5 Change of Control Benefit. Subject to Article 6, in the event of the Executive’s Involuntary Termination of Employment for reasons other than death or Disability following a Change of Control, but prior to Normal Retirement Age, the Employer shall pay to the Executive the benefit described in this Section 2.5 in lieu of any other benefit under this Agreement.

2.5.1 Amount of Benefit. The benefit under this Section 2.5 is percent of the benefit projected to be earned had the Executive remained employed through Normal Retirement Age with an annual positive 4% salary adjustment effective on each anniversary of the Involuntary Termination of Employment until the Executive reached his Normal Retirement Age. In the event the Executive has attained the Early Retirement Age, and is entitled to the Early Retirement Benefit under section 2.2, the benefit hereunder shall be the greater of the foregoing or that amount provided in section 2.2.1.

2.5.2 Payment of Benefit. The Employer shall pay the annual benefit amount to the Executive in twelve (12) equal monthly installments payable on the first day of each month commencing with the month following the Executive’s Normal Retirement Date. Notwithstanding the foregoing, for any Specified Employee distributions may not be made before the date which is six (6) months after the date of Termination of Employment (or, if earlier, the date of death of the Executive). The annual benefit shall be paid to the Executive for fifteen (15) years.

2.5.3 Lump Sum Benefit. Notwithstanding Sections 2.1.2, 2.2.2, 2.3.2 or 2.5.2 above, upon a Termination of Employment after a Change in Control Event, the Executive may elect to receive a lump sum payment equal to the lump sum present value of the payments described in Sections 2.1.2, 2.2.2, 2.3.2 or 2.5.2 above, whichever is applicable, where such present value is to be determined using a discount rate equal to the applicable federal rate in effect on the date of the Change in Control Event for purposes of determining present value of payments subject to the non-deductibility and excise tax provisions of Section 280G and Section 4999 of the Code, respectively, and regulations thereunder.

ARTICLE 3

DEATH BENEFITS

3.1 Death During Active Service. No death benefits will be paid by the Company under this Agreement in the event the Executive dies while in the active service of the Company. Death benefits will be provided by way of a compensatory split-dollar life insurance arrangement pursuant to Article 7.

3.2 Death During Payment of a Lifetime Benefit. If the Executive dies after any payments have commenced under Article 2 of this Agreement but before receiving all such payments, the Employer shall pay the remaining benefits to the Executive’s beneficiary at the same time and in the same amounts they would have been paid to the Executive had the Executive survived.

3.3 Death After Termination of Employment But Before Payment of a Lifetime Benefit Commences. If the Executive is entitled to a benefit under Article 2 of this Agreement, but dies after Termination of Employment and prior to the commencement of said benefit payments, the Employer shall pay the same benefit payments to the Executive’s beneficiary that the Executive was entitled to prior to death except that the benefit payments shall commence on the first day of the month following the date of the Executive’s death.

ARTICLE 4

LIABILITY FOR BENEFITS

4.1 Primary Obligor. The Employer shall be the primary obligor with respect to the obligation to pay benefits owing to a Executive under this Agreement.

4.2 Company Guaranty. The Company hereby guarantees the obligations of each Employer to pay benefits owing to an Executive under this Agreement.

ARTICLE 5

BENEFICIARIES

5.1 Beneficiary Designations. The Executive shall designate a beneficiary by filing a written designation with the Employer. The Executive may revoke or modify the designation at any time by filing a new designation. However, designations will only be effective if signed by the Executive and accepted by the Employer during the Executive’s lifetime. The Executive’s beneficiary designation shall be deemed automatically revoked if the beneficiary predeceases the Executive, or if the Executive names a spouse as beneficiary and the marriage is subsequently dissolved. If the Executive dies without a valid beneficiary designation, all payments shall be made to the Executive’s estate.

5.2 Facility of Payment. If a benefit is payable to a minor, to a person declared incapacitated, or to a person incapable of handling the disposition of his or her property, the Employer may pay such benefit to the guardian, legal representative or person having the care or custody of such minor, incapacitated person or incapable person. The Employer may require proof of incapacity, minority or guardianship as it may deem appropriate prior to distribution of the benefit. Such distribution shall completely discharge the Employer from all liability with respect to such benefit.

ARTICLE 6

GENERAL LIMITATIONS

6.1 Termination for Cause. Notwithstanding any provision of this Agreement to the contrary, neither the Company nor any Subsidiary shall pay any benefit under this Agreement if the Company or any Subsidiary terminates the Executive’s employment for Cause.

6.2 Suicide Misstatement. The Company shall not pay any benefit under the Agreement if the Executive commits suicide within two years after the Effective Date.

6.3 Restrictive Covenants.

6.3.1 The Company has agreed to provide benefits under this Agreement in return for the Executive’s acceptance of restrictive covenants set forth in this Section 6.3. The Executive hereby acknowledges that the benefits provided hereunder constitute adequate consideration for Executive’s obligations under this Section 6.3.

6.3.2 Neither the Company nor any Subsidiary shall pay any benefit under this Agreement, and the Executive shall be obligated to repay any lump sum payment received under this Agreement if, without the prior written consent of the Company and the affected Subsidiary or Subsidiaries, Executive:

(a) At any time prior to the anniversary of the Termination of Employment of the Executive, engages in, becomes interested in, directly or indirectly, as a sole proprietor, as a partner in a partnership, or as a substantial equity owner in a corporation or other entity, or becomes associated with, in the capacity of employee, director, officer, principal, agent, trustee or in any other capacity whatsoever,

any enterprise conducted in the business area (a 35 mile radius) of the Company or any Subsidiary, which enterprise is, or may deemed to be, competitive with any business carried on by the Company or any Subsidiary as of the date of termination of employment; or

(b) at any time prior to the anniversary of the Termination of Employment of the Executive, either as an individual, on his or her own account, or as an agent, employee, director, shareholder or otherwise, directly or indirectly, solicit, induce or encourage, or attempt to solicit, induce or encourage any customer of the Company or any of its affiliates not to do business with the Company or any of its affiliates. For purposes of this paragraph, such customers and such affiliates shall be limited to those persons or entities which are customers or affiliates as of the date immediately preceding the date of the Executive’s termination of employment; or

(c) at any time prior to the anniversary of the Termination of Employment of the Executive, directly or indirectly solicits, induces or encourages any person who, as of the date immediately preceding the date of the termination of employment, is an employee of the Company or any of its affiliates to terminate his or her relationship with the Company or any of its affiliates.

6.3.3 Executive represents and warrants that:

(a) Executive has read and understands this Agreement;

(b) Executive has had an opportunity to consult with legal counsel in connection herewith;

(d) enforcement of the provisions of Section 6.3 will not cause him or her undue hardship; and

(e) that the above restrictions are reasonable in scope and duration and are the least restrictive means to protect the Company’s and its affiliates’ legitimate and proprietary business interests and property from irreparable harm.

6.3.4 The Employer and the Employee hereby recognize that the restrictive non compete provisions of Section 6.3.2 have value and that value shall be recognized in the Section 280G calculations by an allocation of the termination benefits between the non compete provision and the other Termination Benefits based on the value of the fair market value of the non compete provisions. The Employer shall make the determination of the fair value to be assigned.

ARTICLE 7

LIFE INSURANCE

7.1 General. The Company will provide the Executive with current life insurance protection by way of a compensatory split-dollar life insurance arrangement in the event the Executive dies while in the active service of the Company. The Company is and will be the owner of the life insurance policy or policies contemplated by this Agreement (individually the “Policy,” and collectively, the “Policies”) and, as such, possess all of the incidents of ownership in and to each Policy, subject to the limitations contained herein. The Company will endorse to the Executive the right to designate the beneficiary of a portion of the death benefits payable under the Policies as provided and limited herein.

7.2 Purchase of the Policies. The parties undertake all necessary actions to cause each Policy to be issued to the Company and to cause each Policy to conform to the terms of this Agreement. Each Policy will be subject to the terms and conditions of this Agreement and of the endorsement filed with the insurance company issuing each Policy (the “Insurer”). The Policies that are subject to this Agreement as of the date hereof are listed on Schedule A hereto.

7.3 Ownership of the Policies.

7.3.1 Company Will Own Each Policy. The Company will own each Policy at all times and may exercise all ownership rights and incidents of ownership granted to the particular Policy’s owner by the Insurer, except the Executive’s right to direct the distribution of the Policies’ death benefits up to the Current Life Insurance Protection Amount defined in section 7.4.1.

7.3.2 Company’s Right to Borrow, Withdraw, Pledge or Assign. The Company alone may, to the extent of its interest, exercise the right to borrow or withdraw on each Policy’s cash surrender values. The Company may pledge or assign the policy, subject to the terms and conditions of this Agreement, in order to secure a loan or loans from the Insurer or from a third party. Interest charges on such loans shall be the responsibility of and shall be paid by the Company.

7.3.3 Company’s Right to Surrender or Cancel Policy. The Company shall have the sole right to surrender or cancel any Policy or Policies and to receive from the Insurer the amount due the owner under each Policy.

7.3.4 Company Retains Rights Granted Under Each Policy. The Company shall retain all rights which each Policy grants to the owner thereof.

7.3.5 No Action By Executive. The Executive shall take no action with respect to any Policy that would in any way compromise or jeopardize the Company’s rights without the Company’s express written consent.

7.4 Economic Benefit Limited to Current Life Insurance Protection Amount.

7.4.1 Economic Benefit Provided to Executive. For each calendar year for which this Agreement is in force, the economic benefit provided to the Executive under this

Agreement is limited to current life insurance protection in an amount equal to the total age 65 liability accrued on the Company’s records as of the end of the preceding calendar year (the “Current Life Insurance Protection Amount”).

7.4.2 Executive Has No Right to Cash Surrender Value. The Executive does not have any current or future right to access any cash surrender value of any Policy.

7.4.3 Executive Has No Economic Benefits. The Executive does not have any economic benefits in any Policy other than as provided in Section 7.4.1.

7.4.4 Determination of the Current Life Insurance Protection Amount. The Current Life Insurance Protection Amount shall be determined by the Company following the close of each calendar year and communicated to the Executive by March 15 of the calendar year for which it is effective. Each time the Current Life Insurance Protection Amount changes (which may not be annually), the Company shall effect an endorsement to each Policy with each Insurer to ensure that each Insurer is obligated to pay the proper portion of the Current Life Insurance Protection Amount to the Executive’s beneficiaries or estate upon the death of the Executive while in the active service of the Company (with all remaining Policy proceeds being payable to the Company).

7.5 Beneficiary Designation Rights. The Company shall endorse to the Executive the right and power to designate a beneficiary or beneficiaries to receive an aggregate sum payable upon the death of the Executive equal to the Current Life Insurance Protection Amount. This endorsement shall be effected using a form provided by the Insurer or Insurer. A Policy’s endorsement shall not be terminated, altered, or amended without the express written consent of the Executive. To change a beneficiary, the Executive must execute a new endorsement and comply with the requirements of the particular Policy. Failure to comply with the terms of the individual Policy will result in the change not becoming effective. The parties shall take all actions necessary to cause such an endorsement to conform to the provisions of this Agreement.

7.6 Premium Payments. Subject to the Company’s absolute right to surrender or terminate any Policy at any time and for any reason, the Company shall pay the entire premiums owed under the Policies to the Insurers. Upon request, the Company shall promptly furnish to the Executive evidence of timely payment of such premiums.

7.7 Income Taxation of Current Life Insurance Protection Amount. Consistent with the federal income tax regulations governing the taxation of compensatory split-dollar life insurance arrangements, the parties agree that the value of the economic benefits provided to the Executive hereunder for a taxable year is equal to the cost of the Current Life Insurance Protection Amount in effect for that year. Such cost equals the Current Life Insurance Protection Amount multiplied by the life insurance premium factor designated or permitted in guidance published by the Internal Revenue Service. The Company shall annually furnish to the Executive a statement of the amount of income reportable by the Executive for federal and state income tax purposes consistent therewith. The Executive agrees to report the amount reflected in the statement on his or her personal income tax return.

7.8 Death of the Executive.

7.8.1 Determination of the Death Benefit Payable to the Executive and the Company. Upon the death of the Executive while in the active service of the Company, the Company and the Executive’s beneficiaries designated under the Policies (or if no beneficiary is designated, the estate of the Executive) shall promptly take all action necessary to obtain the death benefits provided under each Policy. The Company shall have the unqualified right to receive that portion of such death benefits that exceeds the Current Life Insurance Protection Amount for the calendar year in which the Executive’s death occurs. The balance of the Policy death benefits (i.e., the Current Life Insurance Protection Amount) shall be paid to the Executive’s beneficiaries designated under the Policies (or if no beneficiary is designated, the estate of the Executive) in the manner and in the amount provided in the Policy’s provisions. In no event shall the aggregate amounts payable under the Policies (and this Agreement) to the Executive’s beneficiaries (or estate) exceed the Current Life Insurance Protection Amount for the calendar year in which the Executive’s death occurs.

7.8.2 Payment to Executive’s Beneficiaries. To the extent an amount is paid to the Executive’s beneficiaries (or the estate of the Executive) hereunder, then such amount will satisfy, replace, and render void all obligations of the Company to pay such amount under Article 3 of this Agreement.

7.8.3 No Rights to Death Benefits if Executive Dies While Not in the Active Service of the Company. If the Executive dies while not in the active service of the Company, neither the Executive’s estate nor any of the Executive’s beneficiaries shall have any rights to any portion of any death benefits payable under any Policy.

7.9 Exchange of Policies. The Company may unilaterally and without the consent of the Executive exchange any Policies that are the subject matter of this Agreement, with or without replacing said Policies.

7.10 No Rights to Assign Interest in Policy. The Executive may not, without the written consent of the Company, assign to any individual, trust or other organization, any right, title or interest in any Policy, nor any rights, options, privileges or duties created under this Agreement.

7.11 Insurer Not a Party to This Agreement. No Insurer shall be deemed a party to this Agreement, but is expected to respect the rights of the parties as herein developed upon receiving an executed copy of this Agreement. The Insurer shall be fully discharged from its obligations under the applicable Policy by payment of the Policy’s death benefit to the beneficiaries named in the Policy, subject to the Policy’s terms and conditions and endorsements. No provision in this Agreement shall in any way be construed as enlarging, changing, varying, or in any other way affecting the Insurer’s obligations as expressly provided in the Policy, except insofar as the provisions of this Agreement are made a part of the Policy by the endorsement document executed by the Company and filed with the Insurer in connection with this Agreement.

ARTICLE 8

CLAIMS AND REVIEW PROCEDURES

8.1 Claims Procedure. The Company shall notify any person or entity that makes a claim under this Agreement (the “Claimant”) in writing, within 90 days of Claimant’s written

application for benefits, of his or her eligibility or noneligibility for benefits under the Agreement. If the Company determines that the Claimant is not eligible for benefits or full benefits, the notice shall set forth (1) the specific reasons for such denial, (2) a specific reference to the provisions of the Agreement on which the denial is based, (3) a description of any additional information or material necessary for the Claimant to perfect his or her claim, and a description of why it is needed, and (4) an explanation of this Agreement’s claims review procedure and other appropriate information as to the steps to be taken if the Claimant wishes to have the claim reviewed. If the Company determines that there are special circumstances requiring additional time to make a decision, the Company shall notify the Claimant of the special circumstances and the date by which a decision is expected to be made, and may extend the time for up to an additional 90 days.

8.2 Review Procedure. If the Claimant is determined by the Company not to be eligible for benefits, or if the Claimant believes that he or she is entitled to greater or different benefits, the Claimant shall have the opportunity to have such claim reviewed by the Company by filing a petition for review with the Company within 60 days after receipt of the notice issued by the Company. Said petition shall state the specific reasons which the Claimant believes entitle him or her to benefits or to greater or different benefits. Within 60 days after receipt by the Company of the petition, the Company shall afford the Claimant (and counsel, if any) an opportunity to present his or her position to the Company verbally or in writing, and the Claimant (or counsel) shall have the right to review the pertinent documents. The Company shall notify the Claimant of its decision in writing within the 60-day period, stating specifically the basis of its decision, written in a manner calculated to be understood by the Claimant and the specific provisions of the Agreement on which the decision is based. If, because of the need for a hearing, the 60-day period is not sufficient, the decision may be deferred for up to another 60 days at the election of the Company, but notice of this deferral shall be given to the Claimant.

ARTICLE 9

AMENDMENT AND TERMINATION

9.1 Amendment. This Agreement may be amended or terminated only by a written agreement signed by the Company and the Executive.

Notwithstanding the previous paragraph in this Article 9, the Company may amend or terminate this Agreement at any time if, pursuant to legislative, judicial or regulatory action, continuation of the Agreement would (i) cause benefits to be taxable to the Executive prior to actual receipt, or (ii) result in significant financial penalties or other significantly detrimental ramifications to the Company (other than the financial impact of paying the benefits).

9.2 Effect of Change in Control Event.

9.2.1 Notwithstanding any other provision of this Agreement, following a Change in Control Event, the provisions or the interpretation or administration of this Agreement may not be amended or terminated in any manner which would adversely affect in any way the computation or amount of or entitlement to benefits under the Agreement as in effect immediately prior to the Change in Control Event, including, but not by way of limitation, any adverse change in or to:

(i) the formula pursuant to which benefits are earned or the date on which benefits become vested;

(ii) Final Salary recognized under the Agreement for purposes of determining benefits; or

(iii) the time or manner of payment of benefits available to any Executive or beneficiary, including the commencement of the benefit payments or any present value or other factors, including any methods of accounting, used in determining the amount thereof.

9.2.2 The Employer shall deposit assets equal in value to the aggregate of all accrued benefits then payable or reasonably expected to be payable in the future under the Agreement as of the date of such Change in Control Event with a bank or corporate trustee pursuant to one or more grantor trusts in a form satisfactory to the Company and Executive.

ARTICLE 10

ADJUSTMENT DUE TO EXCISE TAX

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

10.2 The determination of the amount of reduction, if any, in the amounts payable to the Executive shall be made in good faith by the Employer’s chief financial officer after consultation with the advisors then regularly retained by the Employer, 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 Article 10, the Executive, in consultation with the chief financial officer, shall determine the compensation and benefits to be so reduced.

ARTICLE 11

MISCELLANEOUS

11.1 No Guarantee of Employment. This Agreement is not an employment policy or contract. It does not give any Executive the right to remain an employee of the Company or any Subsidiary, nor does it interfere with the Employer’s right to discharge the Executive. It also does not require the Executive to remain an employee nor interfere with the Executive’s right to terminate employment at any time.

11.2 Non-Transferability. Benefits under this Agreement may not be sold, transferred, assigned, pledged, attached or encumbered in any manner.

11.3 Reorganization. The Company shall not merge or consolidate into or with another company, or reorganize, or sell substantially all of its assets to another company, firm, or person unless such succeeding or continuing company, firm, or person agrees to assume and discharge the obligations of the Company under this Agreement. Upon the occurrence of such event, the term “Company” as used in this Agreement shall be deemed to refer to the successor or survivor company.

11.4 Tax Withholding. The Employer shall withhold any taxes that are required to be withheld from the benefits provided under this Agreement.

11.5 Applicable Law. The Agreement and all rights hereunder shall be governed by the laws of Illinois, except to the extent preempted by Federal laws.

11.6 Unfunded Arrangement. The Executives and beneficiaries are general unsecured creditors of the Company and their respective Employers for the payment of benefits under this Agreement. The benefits represent the mere promise by the Company and the respective Employers to pay such benefits. The rights to benefits are not subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or garnishment by creditors. Any insurance on the Executive’s life is a general asset of the Company or the Employer to which the Executive and beneficiary have no preferred or secured claim.

11.7 Administration. The Company shall have powers which are necessary to administer this Agreement, including but not limited to:

11.7.1 Construing and interpreting the provisions of the Agreement;

11.7.2 Establishing and revising the method of accounting for the Agreement;

11.7.3 Maintaining a record of benefit payments; and

11.7.4 Establishing rules and prescribing any forms necessary or desirable to administer the Agreement.

11.8 Named Fiduciary. The Company shall be the named fiduciary and plan administrator under this Agreement. It may delegate to others certain aspects of the management and operational responsibilities including the employment of advisors and the delegation of ministerial duties to qualified individuals.

11.9 Gender and Number. In the Agreement, wherever the context permits, words in the masculine gender include the feminine and neuter genders, words in the singular include the plural and words in the plural include the singular.

11.10 Entire Agreement. This Agreement constitutes the entire agreement between the Company and the Executive as to the subject matter hereof. No rights are granted to the Executive by virtue of this Agreement other than those specifically set forth herein.

11.11 Binding Effect. This Agreement shall bind the Executive and the Company, and their beneficiaries, survivors, executors, successors, administrators and transferees. The Company shall require any successor to the Company and any successor to any Employer by merger, consolidation or combination to expressly assume in writing the obligations of the Company and/or such Employer hereunder.

* * *

IN WITNESS WHEREOF, the Executive and a duly authorized company Officer have signed this Agreement on this day of , 2006.


Executive:	Company:
	MIDWEST BANC HOLDINGS, INC., for itself and its Subsidiaries


	By:

		Xxxxx X. Xxxxxxxx

	As its:	President and CEO

SCHEDULE A
[INSERT NAME OF EXECUTIVE]


Name	Policy	Policy Date	Policy	% of	Amount of
of	Number		Face Amount	Executive’s	Executive’s
Insurer				Current Life	Current Life
				Insurance	Insurance
				Protection	Protection Amount
				Amount Payable	(as of the end of
				to Beneficiary	2006) Payable to
					Beneficiary

The Company shall have the unqualified right to receive that portion of the Policy death benefits in excess of the Current Life Insurance Protection Amount for the calendar year in which the Executive dies.

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MIDWEST BANC HOLDINGS, INC. SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT

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