Nonqualified Stock Option Gain Deferral Plan Master Plan Document

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FIRST MIDWEST BANCORP INC | First Midwest Bancorp, Inc

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Title: Nonqualified Stock Option Gain Deferral Plan Master Plan Document
Date: 2/28/2008
Industry: Regional Banks Sector: Financial

Exhibit 10.12

First Midwest Bancorp, Inc.

Nonqualified Stock Option Gain Deferral Plan

Master Plan Document

Amended and Restated
Effective January 1, 2008

TABLE OF CONTENTS




ARTICLE I       GENERAL                                          1





    1.1         Effective Date                                  1





    1.2         Purpose                                          1





    1.3         Intent                                           1





ARTICLE II      DEFINITIONS AND USAGE                          2





    2.1         Definitions                                     2





    2.2         Usage                                            3





ARTICLE III     ELIGIBILITY AND PARTICIPATION                 3





    3.1         Eligibility                                     3





    3.2         Participation                                   4





    3.3         Deferral Election Procedure                   4





    3.4         Stock-for-Stock Payment Method for Options        4





    3.5         Delivery of Stock                                       4





ARTICLE IV      PARTICIPANT ACCOUNTS                           5





    4.1         Accounts                                                 5





    4.2         Participant Deferrals                          5





    4.3         Investment Procedure                           5





    4.4         Valuation of Accounts                          5





ARTICLE V       PAYMENT OF BENEFITS                            6





    5.1         Entitlement to Benefit Payments               6





    5.2         Commencement of Benefit Payments                      6





    5.3         Short-Term Payout                                       7





    5.4         Unforeseeable Financial Emergencies                   7





    5.5         Withdrawal Election                            7





    5.6         Payments in Stock                                       8





ARTICLE VI      PAYMENT OF BENEFIT ON OR AFTER DEATH          8





    6.1         Commencement of Payments After Death          8





    6.2         Designation of Beneficiary                             
8





ARTICLE VII     ADMINISTRATION                                   8





    7.1         General                                          8





    7.2         Administrative Rules                             8





    7.3         Duties                                             8





    7.4         Fees                                             9





ARTICLE VIII    CLAIMS PROCEDURE                                       9





    8.1         General                                          9





    8.2         Denials                                          9





    8.3         Notice                                           9





    8.4         Appeals Procedure                                       9




    8.5         Review                                          10





ARTICLE IX      MISCELLANEOUS PROVISIONS                              10





    9.1         Amendment                                      10





    9.2         Termination                                    10





    9.3         No Assignment                                   10





    9.4         Incapacity                                      10





    9.5         Successors and Assigns                          11





    9.6         Governing Law                                   11





    9.7         No Guarantee of Employment                             11





    9.8         Severability                                    11





    9.9         Notification of Addresses                              11





ARTICLE X       ADOPTING EMPLOYERS                              11





    10.1        Adoption of Plan                                        11





    10.2        Administration                                  11





    10.3        Company as Agent                                        11





    10.4        Termination                                     12





ARTICLE XI      TRUST                                           12





    11.1        Trust                                           12





    11.2        Contributions and Expense                              12





    11.3        Trustee Duties                                  12





    11.4        Voting Rights                                   12





    11.5        Reversion to the Company                               12

iii

FIRST MIDWEST BANCORP, INC.
NONQUALIFIED STOCK OPTION - GAIN DEFERRAL PLAN
(As Amended and Restated as of January 1, 2008)

WHEREAS , First Midwest Bancorp, Inc. ("the Company') has established the First Midwest Bancorp, Inc. Omnibus Stock and Incentive Plan, as Amended and Restated as of January 1, 2008, (the "Stock Plan") for its Employees; and

WHEREAS , the Company recognizes the unique qualifications of key employees and the valuable services that they have provided; and

WHEREAS , the Company desires to increase Company stock ownership by facilitating the deferral of gains resulting from the exercise of Company nonqualified stock Options;

NOW, THEREFORE , the Company hereby amends and restates the First Midwest Bancorp, Inc. Nonqualified Stock Option - Gain Deferral Plan (the "Plan") as hereinafter provided:

ARTICLE I

GENERAL

1.1 Effective Date . The provisions of the Plan shall be effective as of January 1, 2008 (the "Effective Date"). The rights, if any, of any person whose status as an Employee of the Company and its subsidiaries and affiliates, if any, has terminated shall be determined pursuant to the Plan as in effect on the date such Employee terminated, unless a subsequently adopted provision of the Plan is made specifically applicable to such person.

Effective January 1, 2005, except for deferrals relating to a limited number of Options, no further deferrals shall be permitted under the Plan. The only Options for which deferrals are permitted after December 31, 2004 are those Options that vested before January 1, 2005, were subject to a deferral election as of December 31, 2004 and then only with respect to options exercised on or after March 1, 2006. Distribution of gain deferred on such options shall be governed by the terms of Appendix A. Gain deferrals before January 1, 2005 shall remain subject to the terms of the Plan.

1.2 Purpose . The purpose of the Plan is to increase Company stock ownership by facilitating the deferral of gains resulting from the exercise of Company nonqualified stock Options.

1.3 Intent . With respect to the participation of Employees hereunder, the Plan is intended to be (and shall be construed and administered as) an "employee pension benefit plan" under the provisions of the Employee Retirement Income Security Act of 1974 ("ERISA") which is unfunded and maintained by the Company or an Employer solely to provide retirement income to a select group of management or highly compensated Employees as such group is described under section 201(2), 301(a)(3), and 401(a)(1) of ERISA as interpreted by the U.S. Department of Labor. The Plan is not intended to be a plan described in section 401(a) of the Code, or section 3(2)(A) of ERISA. With respect to the participation in the Plan by nonemployee directors of the Company, the Plan is intended to be a plan of deferred compensation. The

obligation of the Company and an Employer to make payments under this Plan constitutes nothing more than an unsecured promise to make such payments and any property of the Company or an Employer that may be set aside for the payment of benefits under the Plan shall in the event of the Company's or Employer's bankruptcy or insolvency, remain subject to the claims of the Company's general creditors and the Employer's general creditors, respectively, until such benefits are distributed in accordance with Article V herein.

ARTICLE II
DEFINITIONS AND USAGE

2.1 Definitions . Wherever used in the Plan, the following words and phrases shall have the meaning set forth below unless the context plainly requires a different meaning:

(a) "Account" means the account established on behalf of the Participant as described in Section 4.1.

(b) "Administrator" means the person or persons described in Article VII.

(d) "Code" means the Internal Revenue Code of 1986, as amended from time to time.

(e) "Committee" means the Compensation Committee of the Board of Directors or such other committee appointed from time to time by the Board of Directors to administer this Plan. The Committee shall consist of two or more members, each of whom shall qualify as a "non-employee director," as the term (or similar successor term) is defined by Rule 16b-3, and as an "outside director" within the meaning of Code Section 162(m) and regulations thereunder.

(f) "Company" means First Midwest Bancorp, Inc. and any successor thereto.

(g) "Effective Date" means January 1, 2008, the original effective date of the Plan.

(h) "Employee" means a regular salaried employee (including officers and directors who are also employees) of the Company or an Employer, or any branch or division thereof.

(i) "Employer" means the Company and any subsidiary or affiliate of the Company that adopts the Plan for the benefit of its key Employees with the approval of the Company and in accordance with Article X.

(j) "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time.

(k) "Fair Market Value" means the average of the highest and lowest prices of the Stock as reported by the consolidated tape of the NASDAQ National Market System on a particular date. In the event that there are no Stock transactions on such date, the Fair Market Value shall be determined as of the immediately preceding date on which there were Stock transactions.

(l) "Option" means the right to purchase Stock at a stated price for a specified period of time granted by the Company to an Employee under the Stock Plan. For purposes of the Plan, an Option shall be a "Nonstatutory (Nonqualified) Stock Option," or "NSO," as provided for under the Stock Plan.

(m) "Participant" means an eligible Employee and any nonemployee director of the Company who is participating in the Plan in accordance with Section 3.1.

(n) "Plan" means the First Midwest Bancorp, Inc. Nonqualified Stock Option - Gain Deferral Plan.

(o) "Plan Year" means the calendar year. Notwithstanding the foregoing, the initial Plan Year shall be the period beginning on the Effective Date and ending December 31, 1997.

(p) "Profit Shares" means, (A) with respect to any exercise of an Option, the number of shares equal in value to the excess of (i) the Fair Market Value of the shares of Stock purchased on Option exercise over (ii) the exercise price of the shares of Stock purchased, divided by the Fair Market Value of one share of Stock, and (B) with respect to any Stock Award, the number of shares payable upon the vesting of such Award For purposes of this definition, Fair Market Value shall be determined as of the date of Option exercise.

(q) "Stock" means the common stock, $0.01 par value per share, of the Company.

(r) "Stock Award" means any award under the Stock Plan, other than an Option, which is payable in Stock, including, but not limited to, restricted stock or performance share awards.

(s) "Stock Plan" means the First Midwest Bancorp, Inc. Omnibus Stock and Incentive Plan, as amended from time to time, and any other similar or successor plan established by the Company and under which Employees have been granted nonqualified stock options.

(t) "Valuation Date" means the last business day of each Plan Year and such other dates as determined from time to time by the Administrator.

2.2 Usage . Except where otherwise indicated by the context, any masculine terminology used herein shall also include the feminine and vice versa, and the definition of any term herein in the singular shall also include the plural and vice versa.

ARTICLE III
ELIGIBILITY AND PARTICIPATION

3.1 Eligibility . The Committee shall designate from time to time those Employees who shall participate in the Plan; provided, however , that such Employees are members of a select group of management or highly compensated Employees as such group is described under sections 201(2), 301(a)(3), and 401(a)(1) of ERISA as interpreted by the Department of Labor. In addition, each nonemployee director of the Company shall also be entitled to participate in the Plan.

3.2 Participation . An Employee shall commence participation in the Plan as of the date designated by the Committee. A nonemployee director shall commence participation in the Plan as of the later of the Effective Date or the date service as a nonemployee director commences. The participation of any Participant may be suspended or terminated by the Committee at any time, but no such suspension or termination shall operate to reduce the balance of the Account of the Participant as of the Valuation Date that precedes or coincides with the date of such suspension or termination without such Participant's consent. An Employee or nonemployee director shall cease to be a Participant when he terminates employment and service as a director with the Company and all Employers and the balance in his Account is distributed to him or on his behalf. Effective January 1, 2005, participation in the Plan shall be frozen.

3.3 Deferral Election Procedure .

(a) Each Participant may execute one or more Deferral Election Forms in the form prescribed by the Administrator. Each Deferral Election Form shall be treated in accordance with Section 4.2. In order to be effective with respect to the exercise of any Option or payment of any Stock Award, a Deferral Election Form must be executed by the Participant: (i) in a calendar year preceding the exercise of such Options or vesting of the Stock Award; and (ii) at least six months (or such shorter period as the Committee may approve) prior to the exercise of such Options or vesting of the Stock Award; provided, however, that a Deferral Election Form executed by a Participant during the first 30 days following the later of the Effective Date of the Plan or the participation commencement date designated by the Committee pursuant to Section 3.2 for such Participant, shall be effective with respect to the exercise of Options or vesting of the Stock Award after the date of such Deferral Election Form without regard to clauses (i) and (ii). Effective January 1, 2005, Deferral Election Forms shall not be accepted by the Administrator.

(b) An Agreement shall be effective no earlier than the date on which it is delivered to the Administrator and shall continue in effect for all succeeding Plan Years unless otherwise superseded by a subsequent Deferral Election Form (or Deferral Revocation Form).

3.4 Stock-for-Stock Payment Method for Options . If a Participant has executed a Deferral Election Form, and such Deferral Election Form is effective under the terms of the Plan with respect to the Option being exercised, then the Option price shall be payable to the Company in full solely by tendering shares of Stock, which have been held for at least six months prior to the date of the exercise of the Option, having an aggregate Fair Market Value at the time of exercise equal to the total Option price (including, for this purpose, Stock deemed

tendered by affirmation of ownership). Shares of Stock tendered or deemed tendered shall, for purposes of the six month holding rule, be deemed to be newly-held following use to exercise the Option and thus cannot be used for a subsequent exercise until six months have elapsed.

3.5 Delivery of Stock . As soon as practicable after (a) receipt of the tendered Stock or the affirmation of ownership of Stock pursuant to Section 3.4 above, or (b) vesting of the Stock Award, the Company shall deliver to the Trustee, as named pursuant to Article XI of the Plan, a certificate or certificates representing the Profit Shares generated with respect to the exercise of any such Option or vesting of the Stock Award.

ARTICLE IV
PARTICIPANT ACCOUNTS

4.1 Accounts . The Administrator shall establish and maintain, pursuant to the terms of the Plan, one or more Accounts for each Participant consisting of amounts credited to such Account pursuant to Section 4.2 below. All amounts which are credited to a Participant's Account shall be credited solely for purposes of accounting and computation, and shall remain assets of the Company subject to the claims of the Company's general creditors. A Participant shall not have any interest or right in or to such Account at any time.

4.2 Participant Deferrals . The Administrator shall credit to a Participant's Account for a Plan Year the amount of Profit Shares resulting from the exercise of an Option or Options or vesting of Stock Awards for which a valid Deferral Election Form is in effect. In order for a Deferral Election Form to be valid with respect to the exercise of an Option: (a) the Deferral Election Form must have been timely executed in accordance with Section 3.5; and (b) with respect to an Option, (i) the exercise complies with all of the applicable terms of the Option and of the Stock Plan; and (ii) the Option price is satisfied by a tender of Stock as described in Section 3.4.

4.3 Investment Procedure . A Participant's Account shall be deemed invested in Stock of the Company. Any dividends deemed paid on Stock shall be deemed to be reinvested in Stock. In the event of a change in the Stock of the type that results in an adjustment to the Stock pursuant to adjustment provisions set forth in the Stock Plan, then the Participant's Account shall be deemed invested in Stock as so adjusted; provided, however, to the extent that the adjustment results in a deemed investment in cash and stock, such cash shall be deemed reinvested in Stock (as adjusted); provided, further, that if such adjustment results in the deemed investment of the Account entirely in cash, then such cash shall be deemed invested in an interest-bearing account and credited with interest quarterly at an annual rate equal to the prime rate as published in The Wall Street Journal at the beginning of such quarterly period plus 2%, or such other investments as the Committee may permit the Participants to recommend to the trustee of the Trust established pursuant to Article XI below.

4.4 Valuation of Accounts . The value of a Participant's Account shall be determined from time to time by the Administrator in the following manner:

(a) The income and expense, gains, and losses, both realized and unrealized, from such deemed investments as are required under Section 4.3 shall be determined by the

Administrator. The amount so determined shall be allocated to the Account of a Participant proportionately in accordance with the procedures established by the Administrator.

(b) Each Participant's Account shall be valued as of the Valuation Date of each Plan Year or more frequently as determined in the sole discretion of the Administrator, and shall again be valued as of the date that a Participant receives a payment under the Plan, in accordance with the procedures established by the Administrator.

(c) A Participant's Account shall be reduced by the amount of any benefits distributed to or on behalf of the Participant pursuant to Article V.

(d) All allocations to and deductions from a Participant's Account under this Section 4.4 shall be deemed to have been made on the applicable Valuation Date in the order of priority set forth in this Section 4.4, even though actually determined at a later date.

ARTICLE V
PAYMENT OF BENEFITS

5.1 Entitlement to Benefit Payments . Upon a Participant's separation from service as an Employee or nonemployee director, as applicable, from the Company and all Employers, the Participant shall be entitled to his Account Balance payable by the Company or by hi

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