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 Jay Fritz (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:
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 (2 1 / 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
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