EMPLOYMENT AGREEMENT
Exhibit 10.01
This Employment Agreement (this “Agreement”), is made and entered into as of May 15,
2009 (the “Effective Date”) by and between Midwest Banc Holdings, Inc. (the “Company”),
and Xxx Xxxxx (the “Employee,” and together with the Company, the “Parties”).
WHEREAS, the Employee currently is serving as the President and Chief Executive Officer of the
Company, pursuant to that certain employment agreement, amended and restated as of February 8,
2006, and amended as of March 12, 2008 (the “Prior Agreement”);
WHEREAS, the Company desires to continue to employ the Employee, and the Employee desires to
continue to be employed by the Company; and
WHEREAS, the Parties desire to enter into a new employment agreement which shall fully
supersede in its entirety the Prior Agreement.
NOW, THEREFORE, in consideration of the premises and of the covenants and agreements
hereinafter contained, it is covenanted and agreed by and between the Parties hereto as follows:
Terms and Conditions
1. Employment Term. The term of this Agreement shall commence on the Effective Date
and end on the third anniversary of the Effective Date (the “Term”). This Agreement is subject to
earlier termination as provided herein.
2. Duties and Responsibilities. The Company agrees to continue to employ the Employee
as Senior Executive Vice President of the Company focusing on executive management transition, new
business development and client retention, and the Employee agrees to serve in such role and to
perform the services and functions relating to such position or otherwise reasonably incident to
such position. The Parties agree and acknowledge that this position shall be a non-officer and
non-policy making function for the Company. The Employee shall be subject to the direction and
supervision of the Chief Executive Officer of the Company. Unless otherwise agreed to by the
Parties, the Employee shall provide the foregoing services from the Company’s location in
Inverness, Illinois. Notwithstanding the foregoing, during the Term, the Employee may devote
reasonable time to activities other than those required under this Agreement, including activities
of a charitable, educational, religious or similar nature (including professional associations) to
the extent such activities do not, in the reasonable judgment of the Chief Executive Officer of the
Company, inhibit, prohibit, interfere with or conflict with the Employee’s duties under this
Agreement. The Employee shall resign from any and all officer or fiduciary positions and titles
with the Company and any of its affiliates as of the Effective Date and shall resign as a member of
the board of directors of the Company (the “Board”) and the board of directors of any of its
affiliates, effective May 15, 2009.
3. Compensation. As compensation for his services under the terms of this Agreement,
the Employee shall receive from the Company an annual base salary of $331,500 per year, payable in
equal semi-monthly installments (the “Base Salary”), subject to the Company’s normanl payroll
practices. The Employee may also receive an annual incentive bonus and shall be eligible to
participate in the Company’s equity incentive plan, both in the sole and absolute discretion of the
Board.
4. Fringe Benefits. The Company shall furnish to the Employee such benefit programs
which are currently furnished to executives of the Company, including life insurance, health and
medical insurance and retirement and savings plans and other perquisites and programs, as such
plans, perquisites and programs may be amended from time to time. The Company shall provide
Company-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 until such time as the
Employee and his spouse reach age sixty-five (65) or such later date as necessary for Medicare
eligibility. The Company will pay for or reimburse the Employee for reasonable dues and
membership expenses in the Inverness Country Club. The Company will provide the Employee with an
automobile and related expenses pursuant to the Company’s automobile policy applicable to senior
management.
5. Supplemental Retirement Plan. As of the Effective Date, by execution of this
Agreement, the term “Benefit Percentage” as defined and used under the Supplemental Executive
Retirement Agreement (the “SERP”) shall be increased from thirty percent (30%) to thirty-five
percent (35%), without the need for a separate amendment of the SERP. The Executive agrees that,
for purposes of this Agreement and the SERP, that a sale by the Company of equity or instruments
convertible into equity during the twelve (12) month period following the Effective Date shall not
constitute a Change-in-Control.
6. Business Expenses. The Employee shall be reimbursed by the Company, on terms and
conditions that are substantially similar to those that apply to other employees of the Company,
for reasonable out-of-pocket expenses which are consistent with the Company’s expense reimbursement
policy and actually incurred by the Employee in the promotion of the Company’s business. Such
reimbursement payments will be made in accordance with the Company’s expense reimbursement policy,
but in no event later than two and one-half (21/2) months following the end of the year in which the
corresponding expenses are incurred.
7. Termination of Employment.
(a) Termination by Company other than for Cause. In the event that the Employee’s
employment is terminated by the Company during the Term, unless such termination by the Company is
for Cause (as defined herein), the Employee shall continue receive the compensation and benefits as
provided in Sections 3 and 4 of the Agreement for the balance of the Term, 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 Company without compliance with
Section 409A of the
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Internal Revenue Code (the “Code”). All other rights and benefits that the Employee may have
under any benefit plans or programs of the Company 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 Company.
(b) For Cause. Nothing herein shall prevent the Company from terminating the Employee
for Cause, in which event the Company 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 Company 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
Company. For purposes of this Agreement, “Cause” means, based upon the good faith determination of
the Board, one of the following to occur: (i) the Employee’s conviction of, or the pleading of nolo
contendre to, a crime of embezzlement, fraud or a felony under the laws of the United States or any
state thereof; (ii) the Employee’s breach of a fiduciary responsibility to the Company; (iii) a
material violation by the Employee of any applicable material law or regulation respecting the
business of the Company; (iv) an act of dishonesty by the Employee which is materially and
demonstrably injurious to the Company, or (v) a violation or breach of Sections 8 or 8(a) of this
Agreement which is injurious to the Company. The Employee shall be entitled to at least thirty
(30) days’ prior written notice of the Company’s intention to terminate the Employee’s employment
for Cause specifying the grounds for such termination, a reasonable opportunity to cure any conduct
or act, if curable, alleged as grounds for such termination, and a reasonable opportunity to
present to the Board his position regarding any dispute relating to such termination.
(c) Disability. In the event the Employee suffers from a “Disability” (as hereinafter
defined), the Employee’s employment with Company 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 Company-paid health insurance coverage as
described in Section 4 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 Company without compliance with
Section 409A of the Code. In no event may the Company substitute cash or cash equivalents for the
Company-paid health insurance coverage. All other rights and benefits that the Employee may have
under any benefit plans or programs of the Company 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 Company. 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
Company 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
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reasonable satisfaction of the Company by the appropriate correspondence from registered
physicians reasonably satisfactory to the Company, and the Employee agrees to submit to an
examination by the Company’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
Company 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) days from the date of
termination. If the Employee is married at the date of termination, the Employee’s spouse shall
receive Company-paid health insurance coverage to be determined by the Company 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 Company without compliance with Section 409A of the Code. In no event may the
Company substitute cash or cash equivalents for the Company-paid health insurance coverage. All
other rights and benefits that the Employee (or his estate or named beneficiary) may have under any
benefit plans or programs of the Company 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 Company on the date of death.
(e) Termination by Employee. In the event that the Employee resigns from or otherwise
terminates his employment prior to the end of the Term, the Company 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 Company 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 Company.
8. Non-Competition; Non-Solicitation.
(a) General. The Employee covenants that during the period commencing on the
Effective Date and ending on the one-year anniversary of the last day on which the Employee
receives a timely payment of Base Salary (as provided in Section 3 or Section 7) (the “Restriction
Period”), regardless of employment status, or the termination thereof for any reason, 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 Company; (ii) directly or indirectly, on behalf of any business other
than the Company, engage or assist in offering employment to or encourage the departure of an
employee of the Company; or (iii) directly or indirectly solicit or assist in the solicitation of
any customer of the Company for the purpose of providing banking or financial services from any
business other than Company or (iv) disparage the Company publicly or to any person or entity with
which the Company has a present or prospective business relationship. The foregoing restrictions
set forth in subsections (i) and (iii) above shall be limited to “commercial
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banking” and shall not preclude Employee’s activities or investments in, among other things,
the commercial insurance industry. 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.
(b) Effectiveness of Restrictions. Notwithstanding the foregoing provisions of this
Section 8, in the event that the Company does not provide the benefits or payments as set forth by
this Agreement or the SERP, as and when required herein and therein, whether due to the limitations
of Section 21 or otherwise (but not due to the limitations of Section 24), the foregoing
non-competition and non-solicitation restrictions shall have no force or effect for any period
following Employees’ termination of employment, for any reason. If such payments are suspended
solely due to the application of Section 21, the period of inapplicability shall correspond to the
period during which payments are not being made; provided, however, that in no event will this
provision cause the restrictive covenants to apply to any period beyond the original Restriction
Period.
9. 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 Company, 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 Company so as to allow the Company 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(a) or the preceding Section 8, in addition to all
appropriate legal and equitable remedies, the Company shall have no further payment obligations
under this Agreement.
10. 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):
(a) If to the Company, addressed to it at:
Midwest Banc Holdings, Inc.
Chairman of the Compensation Committee
000 X. Xxxxx Xxxxxx
Xxxxxxx Xxxx, XX 00000
Chairman of the Compensation Committee
000 X. Xxxxx Xxxxxx
Xxxxxxx Xxxx, XX 00000
with a copy to
Midwest Banc Holdings, Inc.
Chief Executive Officer
000 X. Xxxxx Xxxxxx
Xxxxxxx Xxxx, XX 00000
Chief Executive Officer
000 X. Xxxxx Xxxxxx
Xxxxxxx Xxxx, XX 00000
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(b) If to the Employee, addressed to his attorney at:
Xxxxxx X. Xxxxxx, Esq.
Barack Xxxxxxxxxx Xxxxxxxxxx & Xxxxxxxxx, LLC
000 X. Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Barack Xxxxxxxxxx Xxxxxxxxxx & Xxxxxxxxx, LLC
000 X. Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
11. Controlling Provisions. The Parties agree and acknowledge that the restrictive
covenants contained in Section 8 shall control in the event of similar or conflicting
non-competition or non-solicitations provisions contained in any other agreement, plan, program or
arrangement (including the SERP), otherwise applicable to Employee.
12. Survival of Provisions. The provisions of Sections 8 or 9 of this Agreement shall
survive the termination of the Employee’s employment with the Company and the expiration or
termination of this Agreement.
13. 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.
14. Entire Agreement; Amendments; Waivers. This Agreement contains the entire
agreement between the Employee and the Company relating to the matters contained herein and
supercedes all prior agreements and understandings, oral or written, between the Employee and the
Company with respect to the subject matter hereof unless otherwise expressly provided herein;
provided, however, that this Agreement does not supersede or terminate the SERP, except as
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.
15. 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
either case the validity, legality and enforceability of the remaining provisions of this Agreement
shall not in any way be affected or impaired thereby.
16. Assignments. The Company may assign this Agreement to any affiliate of the
Company or any person or entity succeeding to all or substantially all of the business interests of
the Company by merger or otherwise. 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.
17. Effect of Agreement. Subject to the provisions of Section 16 of the Agreement
with respect to assignments, this Agreement shall be binding upon the Employee and his heirs,
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executors, administrators, legal representatives and assigns and upon the Company and its
respective successors and assigns, except as otherwise expressly contemplated in this Agreement.
18. Injunctive Relief. 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 8 or 9, and that the Company 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.
19. 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
Company, 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.
20. 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.
21. Regulatory Restrictions.
(a) Section 111(b) of the Emergency Economic Stabilization Act of 2008 (the “EESA”) and the
rules and regulations promulgated thereunder and as amended by Section 7001 of the American
Recovery and Reinvestment Act of 2009 and the rules and regulations to be promulgated thereunder
(the “ARRA”) impose certain prohibitions on payment of executive compensation by a financial
institution during periods in which it participates in the Troubled Asset Relief Program or the
Capital Purchase Program, each as promulgated under the EESA as revised under ARRA (collectively,
the “EESA Programs”). Because of the Company participation in the EESA Programs, the Parties agree
to amend this Agreement if, and as may be, required by the regulatory guidance issued pursuant to
the EESA and the ARRA. In this regard, the Agreement, as amended, shall impose the minimum level
of limitations on payments under this Agreement as are required to permit the Company to comply
with the limitations on executive compensation under the EESA Programs.
(b) If any amounts or benefits due or payable pursuant to this Agreement are not payable
during the period the Company participates in the EESA Programs, as provided in subsection (a), the
Company’s obligations hereunder, absent such restrictions, shall continue, and all payments and
benefits which would otherwise have been paid or provided shall be immediately paid and provided as
soon as legally permissible; provided, however, the Company shall not be obligated to make such
payments or provide such benefits if it is prohibited from doing so by EESA or ARRA or the rules
and regulations issued, or to be issued, thereunder.
(c) Notwithstanding anything herein to the contrary, the Parties acknowledge and agree that
the foregoing provisions of this Section 21 are not intended to, and shall not,
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constitute an expansion of the waiver executed by the Employee with respect to the Company’s
original participation in the EESA Programs. Accordingly, if the limitations set forth herein are
in excess of those which have been previously waived by Employee, the Employee shall not be deemed
to have waived a claim of right to such payment or obligations, if the Company is otherwise limited
under the EESA Programs from paying or providing such benefits.
22. Indemnification. In the event that legal action is instituted against the
Employee during or after the Term by a third party (or parties) based on the performance or
nonperformance by Employee of his duties as an employee, officer or director of the Company or any
of its affiliates or a fiduciary of any benefit plan maintained by the Company or any of its
affiliates during his employment with the Company, the Company, its successors and predecessors or
their affiliates (collectively, the “Indemnifying Party”), the Indemnifying Party will assume the
defense of such action by its attorney or attorneys selected by the Indemnifying Party and will
advance the costs and expenses thereof (including reasonable attorneys’ fees) and will indemnify
the Employee against any judgment or amounts paid in settlement of said actions in accordance with
its charter, by-laws, insurance and applicable law, without prejudice to or waiver by the
Indemnifying Party of its rights and remedies against Employee. In the event that there is a
settlement or final judgment entered against Employee in any such litigation, and the Indemnifying
Party’s board of directors determines that Employee should, in accordance with the Indemnifying
Party’s charter, by-laws, insurance and applicable law, reimburse the Indemnifying Party, Employee
shall be liable to the Indemnifying Party for all such costs, expenses, damages and other amounts
paid or incurred by the Indemnifying Party in the defense, settlement or other resolution of any
such litigation (the “Reimbursement Amount”). The Reimbursement Amount shall be paid by Employee
within thirty (30) days after rendition of the final judgment. The Indemnifying Party shall be
entitled to set off the reimbursement amount against all sums which may be owed or payable by the
Indemnifying Party to Employee hereunder or otherwise. The parties shall cooperate in the defense
of any asserted claim, demand or liability against Employee or the Indemnifying Party or its
subsidiaries or affiliates. The term “final judgment” as used herein shall be defined to mean the
decision of a court of competent jurisdiction, and in the event of an appeal, then the decision of
the appellate court, after petition for rehearing has been denied, or the time for filing the same
(or the filing of further appeal) has expired. The rights to indemnification under this Section 22
shall be in addition to any rights which Employee may now or hereafter have under the charter or
By-Laws of the Indemnifying Party or any of its affiliates, under any insurance contract maintained
by the Indemnifying Party or any of its affiliates or any agreement between Employee and the
Indemnifying Party or any of its affiliates.
23. Legal Fees. The Company shall pay reasonable legal fees for the drafting and
negotiating of this Agreement directly to the law firm of Barack Xxxxxxxxxx Xxxxxxxxxx & Xxxxxxxxx,
LLP (the “Firm”), with such payment to be made within fifteen (15) calendar days following the
Effective Date. The payment of such fees shall be reflected on an IRS Form 1099 designating the
Firm as the payee and the Company as the payor.
24. 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 24 shall govern all distributions hereunder. If benefit
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distributions which would otherwise be made to the Employee due to a termination of employment
are limited because the Employee is a Specified Employee, then such distributions 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 Company. Notwithstanding the
foregoing, an employee is a Specified Employee only if the stock of the Company or any entity with
whom the Company would be considered a single Company 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)(1)(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 Company 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.
(Signature page to follow)
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IN WITNESS WHEREOF, the Employee and the Company have executed this Agreement effective as of
the Effective Date.
| Midwest Banc Holdings, Inc. | |||||
By:
|
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| Xxx Xxxxx | |||||
| Its: | |||||
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