Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered into as of
March 7, 2018 (the “Effective Date”) by and between Midland States
Bancorp, Inc., an Illinois Corporation (the “Company”), Midland States Bank, an
Illinois banking corporation (the “Bank, and collectively with the Company, the
“Employer”), and Stephen  A. Erickson (the “Executive”).

 

RECITALS

 

A.            The Bank is a wholly-owned subsidiary of the Company.

 

B.            The Employer has determined that it is in its best interest that
the Executive serve as Chief Financial Officer of the Company and the Bank
pursuant to this written employment agreement, and that this Agreement
supersedes and replaces any prior written agreement regarding employment of the
Executive, including that certain Executive Employment Agreement dated April 4,
2012.

 

C.            The parties have agreed that this Agreement shall set forth the
terms and conditions of the Executive’s employment by the Employer.

 

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:

 

AGREEMENTS

 

1.             Employment Period.  Subject to the terms and conditions of this
Agreement, the Employer hereby agrees to employ Executive during the Employment
Period and Executive hereby agrees to continue to remain in the employ of the
Employer and to provide services during the Employment Period in accordance with
this Agreement.  The “Employment Period” shall be the period commencing on the
Effective Date and ending December 31, 2018, unless sooner terminated as
provided herein.  This agreement shall automatically renew for additional one
year terms from January 1st to December 31st of each year unless either the
Employer or the Executive notifies the other party, by written notice delivered
no later than 90 days prior to December 31st of each year that the “Employment
Period” shall not be extended for an additional year.  Notwithstanding anything
contained herein to the contrary, if a Change of Control occurs during the
Employment Period, this Agreement shall remain in effect for one (1) year period
following the Change of Control and shall then terminate.

 

2.             Duties.  Executive agrees that during the Employment Period,
Executive will devote his full business time, energies and talents to serving as
the Chief Financial Officer of the Company and the Bank at the direction of the
Company’s Chief Executive Officer (“CEO”).  Executive shall have such duties and
responsibilities as may be assigned to Executive from time to time by the CEO,
which duties and responsibilities shall be commensurate with Executive’s
position, shall perform all duties assigned to Executive faithfully and
efficiently, subject to the direction of the CEO, and shall have such
authorities and powers as are inherent to the undertakings applicable to
Executive’s position and necessary to carry out the responsibilities

 

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and duties required of Executive hereunder.  Executive will perform the duties
required by this Agreement at the Company’s principal place of business unless
the nature of such duties requires otherwise.  Notwithstanding the foregoing,
during the Employment Period, Executive 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 CEO, inhibit, prohibit, interfere with or conflict with Executive’s
duties under this Agreement or conflict in any material way with the business of
the Employer and its Affiliates; provided, however, that Executive shall not
serve on the board of directors of any business (other than the Employer or its
Affiliates) or hold any other position with any business without receiving the
prior written consent of the CEO.

 

3.             Compensation and Benefits.  Subject to the terms and conditions
of this Agreement, during the Employment Period, while Executive is employed by
the Employer, the Employer shall compensate Executive for Executive’s services
as follows for periods following the Effective Date:

 

(a)           Executive shall be compensated at an annual rate of $325,000 (the
“Annual Base Salary”), which shall be payable and adjusted in accordance with
the Employer’s normal payroll practices as are in effect from time to time. 
Executive shall be entitled to receive performance based annual incentive
bonuses (each, the “Incentive Bonus”) from the Employer for each fiscal year
ending during the Employment Period.  Any such Incentive Bonus shall be paid to
Executive within thirty (30) days of the completion of the annual audit by the
Employer’s auditor, but in no event later than two and one-half months after the
close of each such fiscal year.  Executive’s target Incentive Bonus shall be not
less than forty percent (40%) of the Annual Base Salary, which Incentive Bonus
shall be determined by specific performance criteria established from time to
time by the Company’s Compensation Committee or by the CEO.  The long-term
incentive bonus percentage for the Executive shall be forty percent (40%).

 

(b)           Executive shall be eligible to participate, subject to the terms
and conditions thereof, in all other incentive plans and programs, including
such cash and deferred bonus programs and equity incentive plans as may be in
effect from time to time with respect to senior executives employed by the
Employer. Executive and Executive’s dependents, as the case may be, shall be
eligible to participate in all pension and similar benefit plans (qualified,
non-qualified and supplemental), profit sharing, 401(k), as well as all medical
and dental, disability, group and executive life, accidental death and travel
accident insurance, and other similar welfare benefit plans and programs of the
Employer, subject to the terms and conditions thereof, as in effect from time to
time with respect to senior executives employed by the Employer. With respect to
group life insurance, Executive’s coverage amount shall be equal to one times
salary with a minimum of $50,000 and a maximum of $300,000.

 

(c)           Executive shall be entitled to accrue vacation at a rate of no
less than four (4) weeks paid vacation for each calendar year, subject to the
Employer’s vacation programs and policies as may be in effect during the
Employment Period.

 

(d)           Executive shall be reimbursed by the Employer, on terms and
conditions that are substantially similar to those that apply to other similarly
situated executives of the

 

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Employer, for reasonable out-of-pocket expenses for entertainment, travel,
meals, lodging and similar items which are consistent with the Employer’s
expense reimbursement policy and actually incurred by Executive in the promotion
of the Employer’s business.

 

4.             Definitions.  As used throughout this Agreement, all of the terms
defined in this Section 4 shall have the meanings given below.

 

(a)           “Affiliate” shall mean each company, corporation, partnership,
bank, savings bank, savings and loan association, credit union or other
financial institution, directly or indirectly, which is controlled by, controls,
or is under common control with, the Company, where “control” means (x) the
ownership of 51% or more of the voting securities or other voting interest or
other equity interest of any corporation, partnership, joint venture or other
business entity, or (y) the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such
corporation, partnership, joint venture or other business entity.

 

(b)           “Base Compensation” shall mean the amount of equal to the sum of
(i) the greater of Executive’s then-current Annual Base Salary or Executive’s
Annual Base Salary as of the date one (1) day prior to the Change of Control;
and (ii) the average of the Incentive Bonus paid (or payable) for the three
(3) most recently completed fiscal years of the Company.

 

(c)           “Change of Control” shall mean the first to occur of the
following:

 

(i)            Any Person, other than a trustee or other fiduciary holding
securities under an employee benefit plan of the Company or a corporation owned
directly or indirectly by the stockholders of the Company in substantially the
same proportions as their ownership of stock of the Company, is or becomes the
beneficial owner (within the meaning of Rule 13d-3 of the Exchange Act),
directly or indirectly, of securities representing fifty percent (50%) or more
of the total voting power represented by the Company’s then outstanding Voting
Securities; or

 

(ii)           During any period of twelve (12) consecutive months, individuals
who at the beginning of such period constitute the Board of Directors of the
Company and any new Director whose election by the Board of Directors or
nomination for election by the Company’s stockholders was approved by a vote of
at least two-thirds (2/3) of the Directors then still in office who either were
Directors at the beginning of the period or whose election or nomination for
election was previously so approved, cease for any reason to constitute a
majority thereof; or

 

(iii)          Consummation of:  (i) a merger or consolidation of the Company
with any other corporation, other than a merger or consolidation which would
result in the voting securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into Voting Securities of the surviving entity) at least fifty percent
(50%) of the total voting power represented by the Voting Securities of the
Company or such surviving entity outstanding immediately after such merger or
consolidation; or (ii) a complete liquidation of the Company or an agreement for
the sale or disposition by the Company of all or substantially all the Company’s
assets.

 

However, in no event shall a Change in Control be deemed to have occurred, with
respect to the Executive if the Executive is part of a purchasing group which
consummates the Change-in-

 

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Control transaction.  The Executive shall be deemed “part of a purchasing group”
for purposes of the preceding sentence if the Executive is an equity participant
in the purchase company or group (except for (i) passive ownership of less than
two percent (2%) of the stock of the purchasing company; or (ii) ownership of
equity participation in the purchasing company or group which is otherwise not
significant, as determined prior to the Change in Control by a majority of the
non-employee continuing Directors).

 

In the event that any benefit under this Agreement constitutes deferred
compensation, and the settlement of, or distribution of such benefits is to be
triggered by a Change in Control, then such settlement or distribution shall be
subject to the event constituting the Change in Control also constituting a
“change in the ownership” or “change in the effective control” of the Company,
as permitted under Code Section 409A.

 

(d)           “Covered Period” shall mean the period beginning six (6) months
prior to a Change of Control and ending twelve (12) months after the Change of
Control.

 

(e)           “Disability” shall mean that Executive is (i) unable to engage in
any substantial gainful activity by reason of any medically determinable
physical or mental impairment that can be expected to result in death or can be
expected to last for a continuous period of not less than twelve (12) months, or
(ii) by reason of any medically determinable physical or mental impairment that
can be expected to result in death or can be expected to last for a continuous
period of not less than twelve (12) months, receiving income replacement
benefits for a period of not less than three months under an accident and health
plan covering employees of the Employer.

 

(f)            “Good Reason” shall mean Executive’s voluntary Termination of
employment for one or more of the following reasons:

 

(i)          a materially adverse change in the nature, scope or status of
Executive’s position, authorities or duties from those in effect in accordance
with Section 2 immediately following the Effective Date, or if applicable and
greater, immediately prior to the Covered Period;

 

(ii)         a material reduction in Executive’s Annual Base Salary, Target
Incentive Bonus opportunity, or material reduction in Executive’s aggregate
compensation and benefits from that in effect immediately following the
Effective Date, or if applicable and greater, immediately prior to the Covered
Period (in each case excluding a reduction principally resulting from
Executive’s actual Incentive Bonus);

 

(iii)        relocation of Executive’s primary place of employment of more than
ninety (90) miles from Executive’s primary place of employment immediately
following the Effective Date, or if applicable, prior to the Covered Period, or
a requirement that Executive engage in travel that is materially greater than
was required prior to the Covered Period;

 

(iv)        failure by an acquirer to assume this Agreement at the time of a
Change of Control; or

 

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(v)         a material breach by the Employer, or its successor, of this
Agreement.

 

Notwithstanding the foregoing, prior to Executive’s Termination for Good Reason,
Executive must give the Employer written notice of the existence of any
condition set forth in clause (i) — (v) above within thirty (30) days of such
initial existence and the Employer shall have thirty (30) days from the date of
receipt of such notice in which to cure the condition giving rise to Good
Reason, if curable.  If, during such thirty (30) day period, the Employer cures
the condition giving rise to Good Reason, no payments or benefits shall be due
under Section 5 of this Agreement with respect to such occurrence.  If, during
such thirty (30) day period, the Employer fails or refuses to cure the condition
giving rise to Good Reason, Executive shall be entitled to payments or benefits
under Section 5 of this Agreement upon such Termination; provided such
Termination occurs within 30 days after the end of such cure period.

 

(g)           “Minimum Payments” shall mean, as applicable, the following
amounts:

 

(i)          Executive’s earned but unpaid Annual Base Salary for the period
ending on the Termination Date;

 

(ii)         Executive’s earned but unpaid Incentive Bonus for the previously
completed fiscal year;

 

(iii)        Executive’s accrued but unpaid vacation pay for the period ending
on the Termination Date;

 

(iv)        Executive’s unreimbursed business expenses and all other items
earned and owed to Executive through the Termination Date; and

 

(v)         benefits, incentives and awards described in Section 5(f).

 

(h)           “Pro Rata Bonus” means a payment equal to the Incentive Bonus that
Executive would have earned for the year of termination, based upon actual
results of the Employer and pro-rated on a per diem basis (by dividing the
number of days employed during the applicable performance period by the total
number of days in the applicable performance period).

 

(i)            “Release” shall mean a general release and waiver substantially
in the form attached hereto as Exhibit A.

 

(j)            “Severance Amount” shall mean:

 

(i)          for any Termination occurring during the Employment Period and not
during a Covered Period, the benefit available under the Company’s Severance
Plan or Policy as is effect from time to time; or

 

(ii)         for any Termination occurring during a Covered Period, an amount
equal to one hundred percent (100%) of Executive’s Base Compensation.

 

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(k)           “Termination” shall mean termination of Executive’s employment
either:

 

(i)          by the Employer or its successor, as the case may be, other than
(1) a Termination for Cause or (2) any termination as a result of death or
Disability; or

 

(ii)         by Executive for Good Reason.

 

(l)            “Termination Date” shall mean the date of employment termination,
for any reason or no reason, indicated in the written notice provided by the
Employer or Executive to the other.

 

(m)          “Termination for Cause” shall mean only a termination by the
Employer as a result of:

 

(i)          Executive’s willful failure, that is not remedied within twenty
(20) days after receipt of written notice of such failure from the Company, to
perform his obligations hereunder;

 

(ii)         Executive’s willful act or acts of misconduct that are, alone or in
the aggregate, demonstrably injurious, monetarily or otherwise, to the Employer
or an Affiliate, and/or a violation of Company policy /Regulatory Requirements
as determined in the discretion of the Company; or

 

(iii)        Executive’s breach of fiduciary responsibility or any obligation of
Executive pursuant to Section 7.

 

(n)           “Voting Securities” shall mean any securities which ordinarily
possess the power to vote in the election of directors without the happening of
any pre-condition or contingency.

 

5.             Rights and Payments Upon Termination.  Either party may terminate
Executive’s employment under this Agreement pursuant to the terms and conditions
of this Section 5.  Subject to Section 6 below, Executive’s right to benefits
and payments, if any, for periods after the Termination Date shall be determined
in accordance with this Section 5:

 

(a)           Minimum Payments.  If the Termination Date occurs during the
Employment Period for any reason, Executive shall be entitled to the Minimum
Payments, in addition to any payments or benefits to which Executive may be
entitled under the following provisions of this Section 5 (other than this
Section 5(a)) or the express terms of any employee benefit plan or as required
by law.  Any payments to be made to Executive pursuant to this
Section 5(a) shall be made within thirty (30) days after the Termination Date;
provided that any benefits, incentives or awards payable as described in
Section 5(f) shall be made in accordance with the provisions of the applicable
plan, program or arrangement.  Except as may be otherwise expressly provided to
the contrary in this Agreement or as otherwise provided by law, nothing in this
Agreement shall be construed as requiring Executive to be treated as employed by
the Employer following the Termination Date for purposes of any employee benefit
plan or arrangement in which Executive may participate at such time.

 

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(b)           Termination for Cause, Death, Disability, Voluntary Resignation
and Non-Renewal.

 

(i)          Upon a determination of a Termination for Cause by the Employer,
Executive’s death or Disability, or Executive’s voluntary resignation other than
for Good Reason, Executive’s employment shall immediately terminate.

 

(ii)         If the Termination Date occurs during the Employment Period and is
a result of a Termination for Cause, death, Disability, voluntary resignation
other than for Good Reason or if this Agreement expires due to notice of
non-renewal by either party as provided under Section 1 or at the end of a
Covered Period, then, other than the Minimum Payments, Executive shall have no
right to payments or benefits under this Agreement (and the Employer shall have
no obligation to make any such payments or provide any such benefits) for
periods after the Termination Date.

 

(c)           Termination by the Company Other than for Cause; or Resignation 
by Executive for Good Reason.  If Executive’s employment by the Employer, or any
Affiliate or successor of the Employer, shall be subject to a Termination other
than during a Covered Period, then, in addition to the Minimum Payments, the
Employer shall provide Executive the following benefits:

 

(i)          Commencing on the Termination Date, Executive shall receive the
applicable Severance Amount (less any amount described in the next sentence)
paid in accordance with the Company’s regular payroll schedule.  To the extent
any portion of the applicable Severance Amount exceeds the “safe harbor” amount
described in Treasury Regulation Section 1.409A-1(b)(9)(iii)(A), Executive shall
receive such portion of the applicable Severance Amount that exceeds the “safe
harbor” amount in a single lump sum payment payable within five (5) days after
Executive’s Termination Date.

 

(d)           Termination Upon a Change of Control.  If Executive’s employment
by the Employer, or any Affiliate or successor of the Employer, shall be subject
to a Termination within a Covered Period, then, in addition to Minimum Payments,
the Employer shall provide Executive the following benefits:

 

(i)          Within five (5) days after Executive’s Termination Date, the
Employer shall pay Executive a lump sum payment in an amount equal to the
Severance Amount.

 

(ii)         Executive (and his dependents, as may be applicable) shall be
entitled to the medical benefits provided in Section 5(e) below.

 

(iii)        Executive shall be entitled to receive a Pro Rata Bonus, when
Incentive Bonuses are paid to other senior management of Employer, consistent
with Section 3(a) of this Agreement.

 

(e)           Medical and Dental Benefits.  If Executive’s employment by the
Employer or any Affiliate or successor of the Employer shall be subject to a
Termination as provided in subsections (c) or (d) above within the Employment
Period, then to the extent that

 

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Executive or any of Executive’s dependents may be covered under the terms of any
medical and dental plans of the Employer (or any Affiliate) for active employees
immediately prior to the termination, then, for as long as Executive is eligible
for and elects coverage under the health care continuation rules of the
Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”), the Employer
will provide Executive and those dependents with equivalent coverage, with
Executive required to pay the same amount as Executive would pay if Executive
continued in employment with the Employer or an Affiliate during such period,
but in no event more than twelve (12) months following termination,  The
coverage may be procured directly by the Employer (or any Affiliate, if
appropriate) apart from, and outside of the terms of the plans themselves;
provided that Executive and Executive’s dependents comply with all of the
conditions of the medical or dental plans, with the cost to the Employer not to
exceed the cost for continued COBRA coverage.  In the event Executive or any of
Executive’s dependents become eligible for coverage under the terms of any other
medical and/or dental plan of a subsequent employer which plan benefits are
comparable to Employer (or any Affiliate) plan benefits, coverage under Employer
(or any Affiliate) plans will cease for the eligible Executive and/or
dependent.  Executive and Executive’s dependents must notify the Employer (or
any Affiliate) of any subsequent employment and provide information regarding
medical and/or dental coverage available.  In the event the Employer (or any
Affiliate) discovers that Executive and/or dependent has become employed and not
provided the above notification, all payments and benefits under this subsection
(e) will cease.

 

(f)            Other Benefits.  Executive’s rights following a Termination with
respect to any benefits, incentives or awards provided to Executive pursuant to
the terms and conditions of any plan, program or arrangement sponsored or
maintained by the Employer, whether tax-qualified or not, which are not
specifically addressed herein, shall be subject to the terms and conditions of
such plan, program or arrangement and this Agreement shall have no effect upon
such terms and conditions except as specifically provided herein.

 

6.             Release.  Notwithstanding anything contained in this Agreement to
the contrary, no payments or benefits (including without limitation, vesting of
any and all stock options, shares of restricted stock, restricted stock units
and other unvested incentive awards) payable to Executive under Section 5(c),
5(d) or 5(e) (except for payments and benefits described in Section 5(a)) shall
be paid or provided to Executive unless he/she first executes (without
subsequent revocation) and delivers to the Employer a Release.  To the extent
any of the payments and/or benefits due under Section 5(c), 5(d) or 5(e) are
determined to be subject to Section 409A of the Internal Revenue Code of 1986,
as amended (the “Code”), the Release must be executed and become irrevocable on
or before the 60th day following the Termination Date.  Provided that an
executed, irrevocable Release has been delivered on or before the 60th day
following the Termination Date, any payments and benefits that are determined to
be subject to Section 409A of the Code shall become payable, or shall otherwise
commence, as of the 60th day following the Termination Date.  If an executed,
irrevocable Release is not delivered on or before the 60th day following the
Termination Date, Executive shall forever forfeit any and all rights to any
payment or benefit (to the extent such payment or benefit is determined to be
subject to Section 409A of the Code) under Section 5(c), 5(d) or 5(e) or any
payment or benefit in lieu thereof.

 

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7.                                      Restrictive Covenants.

 

(a)                                 Confidential Information.  Executive
acknowledges that, during the course of his employment with the Employer,
Executive may produce and have access to confidential and/or proprietary
non-public information concerning the Employer and its Affiliates, including
marketing materials, financial and other information concerning customers and
prospective customers, customer lists, records, data, trade secrets, proprietary
business information, pricing and profitability information and policies,
strategic planning, commitments, plans, procedures, litigation, pending
litigation and other information not generally available to the public
(collectively, “Confidential Information”).  Executive agrees not to directly or
indirectly use, disclose, copy or make lists of Confidential Information for the
benefit of anyone other than the Employer, either during or after his employment
with the Employer, except to the extent that such information is or thereafter
becomes lawfully available from public sources, or such disclosure is authorized
in writing by the Employer, required by law or any competent administrative
agency or judicial authority, or otherwise as reasonably necessary or
appropriate in connection with performance by Executive of his duties
hereunder.  Executive agrees that, if she receives a subpoena or other court
order or is otherwise required by law to provide information to a governmental
authority or other person concerning the activities of the Employer or any of
its Affiliates, or his activities in connection with the business of the
Employer or any of its Affiliates, Executive will immediately notify the
Employer of such subpoena, court order or other requirement and deliver
forthwith to the Employer a copy thereof and any attachments and non-privileged
correspondence related thereto.  Executive shall take reasonable precautions to
protect against the inadvertent disclosure of Confidential Information. 
Executive agrees to abide by the Employer’s reasonable policies, as in effect
from time to time, respecting avoidance of interests conflicting with those of
the Employer and its Affiliates.  In this regard, Executive shall not directly
or indirectly render services to any person or entity where Executive’s service
would involve the use or disclosure of Confidential Information.  Executive
agrees not to use any Confidential Information to guide his in searching
publications or other publicly available information, selecting a series of
items of knowledge from unconnected sources and fitting them together to claim
that he did not violate any agreements set forth in this Agreement.

 

(b)                                 Documents and Property.  All records, files,
documents and other materials or copies thereof relating to the business of the
Employer and its Affiliates, which Executive shall prepare, receive, or use,
shall be and remain the sole property of the Employer and, other than in
connection with performance by Executive of his duties hereunder, shall not be
removed from the premises of the Employer or any of its Affiliates without the
Employer’s prior written consent, and shall be promptly returned to the Employer
upon Executive’s termination of employment together with all copies (including
copies or recordings in electronic form), abstracts, notes or reproductions of
any kind made from or about the records, files, documents or other materials.

 

(c)                                  Non-Solicitation and Non-Competition.  The
Employer and Executive have agreed that the primary service area of the
Employer’s lending and deposit taking functions in which Executive will actively
participate extends separately to an area that encompasses a twenty-five (25)
mile radius from the Company’s Effingham, Illinois headquarters (the “Restricted
Area”).  Therefore, as an essential ingredient of and in consideration of this

 

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Agreement and his employment by the Employer, Executive agrees that, during his
employment with the Employer and for a period of twelve (12) months immediately
following the termination of his employment (the “Restricted Period”), for
whatever reason, where such termination occurs during the Employment Period or
thereafter, he will not, except with the express prior written consent of the
Employer, directly or indirectly, do any of the following (all of which are
collectively referred to in this agreement as the “Restrictive Covenant”):

 

(i)                               Executive will not, directly or indirectly,
either for himself/herself, or any Financial Institution: (1) induce or attempt
to induce any employee of the Employer or any of its Affiliates to leave the
employ of the Employer or any of its Affiliates; (2) in any way interfere with
the relationship between the Employer or any of its Affiliates and any employee
of the Employer or any of its Affiliates; or (3) induce or attempt to induce any
customer, supplier, licensee, or business relation of the Employer or any of its
Affiliates to cease doing business with the Employer or any of its Affiliates or
in any way interfere with the relationship between the Employer or any of its
Affiliates and their respective customers, suppliers, licensees or business
relations.

 

(ii)                            Executive will not, directly or indirectly,
either for himself/herself, or any Financial Institution, solicit the business
of any person or entity known to Executive to be a customer of the Employer or
any of its Affiliates, where Executive, or any person reporting to Executive,
had personal contact with such person or entity, with respect to products,
activities or services which compete in whole or in part with the products,
activities or services of the Employer or any of its Affiliates.

 

(iii)                         Engage or invest in, own, manage, operate,
finance, control, or participate in the ownership, management, operation or
control of, be employed by, associated with, or in any manner connected with,
serve as a director, officer or consultant to, lend his name or any similar name
to, lend his credit to, or render services or advice to, any person, firm,
partnership, corporation or trust which owns, operates or is in the process of
forming, a bank, savings and loan association, credit union or similar financial
institution (a “Financial Institution”) with an office located, or to be located
at an address identified in a filing with any regulatory authority, within the
Restricted Area; provided however, that the ownership by Executive of shares of
the capital stock of any Financial Institution which shares are listed on a
securities exchange or quoted on the National Association of Securities Dealers
Automated Quotation System and which do not represent more than five percent
(5%) of the institution’s outstanding capital stock, shall not violate any terms
of this Agreement.

 

(iv)                        Executive will not, directly or indirectly, serve as
the agent, broker or representative of, or otherwise assist, any person or
entity in obtaining services or products from any Financial Institution within
the Restricted Area, with respect to the products, activities or services which
compete in whole or in part with the products, activities or services of the
Employer or any of its Affiliates.

 

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Notwithstanding the foregoing, in the event of a Termination or resignation for
Good Reason paragraphs 7(c)(iii) and 7(c)(iv) shall not apply.

 

(d)                                 Work for Hire Provisions.

 

(i)                               Exclusive Rights of the Employer in Work
Product.  The parties acknowledge and agree that all work performed by Executive
for the Employer or any of its Affiliates shall be deemed “work for hire.”  The
Employer shall at all times own and have exclusive right, title and interest in
and to all Confidential Information and Inventions (as defined below), and the
Employer shall retain the exclusive right to license, sell, transfer and
otherwise use and dispose of the same.  Any and all enhancements of the
technology of the Employer or any of its Affiliates that are developed by
Executive shall be the exclusive property of the Employer.  Executive hereby
assigns to the Employer any right, title and interest in and to all Inventions
that he/she may have, by law or equity, without additional consideration of any
kind whatsoever from the Employer or any of its Affiliates.  Executive agrees to
execute and deliver any instruments or documents and to do all other things
(including the giving of testimony) requested by the Employer (both during and
after the termination of his employment with the Employer) in order to vest more
fully in the Employer or any of its Affiliates all ownership rights in the
Inventions (including obtaining patent, copyright or trademark protection
therefore in the United States and/or foreign countries).

 

(ii)                            Definitions and Exclusions.  For purposes of
this Agreement, “Inventions” means all systems, procedures, techniques, manuals,
data bases, plans, lists, inventions, trade secrets, copyrights, patents,
trademarks, discoveries, innovations, concepts, ideas and software conceived,
compiled or developed by Executive in the course of his employment with the
Employer or any of its Affiliates and/or comprised, in whole or part, of
Confidential Information.  Notwithstanding the foregoing, Inventions shall not
include: (i) any inventions independently developed by Executive and not
derived, in whole or part, from any Confidential Information or (ii) any
invention made by Executive prior to his exposure to any Confidential
Information.

 

(e)                                  Remedies for Breach of Restrictive
Covenants.  Executive has reviewed the provisions of this Agreement with legal
counsel, or has been given adequate opportunity to seek such counsel, and
Executive acknowledges and expressly agrees that the covenants contained in this
Section 7 are reasonable with respect to their duration, geographical area and
scope.  Executive further acknowledges that the restrictions contained in this
Section 7 are reasonable and necessary for the protection of the legitimate
business interests of the Employer, that they create no undue hardships, that
any violation of these restrictions would cause substantial injury to the
Employer and such interests, and that such restrictions were a material
inducement to the Employer to enter into this Agreement.  In the event of any
violation or threatened violation of these restrictions, the Employer, in
addition to and not in limitation of, any other rights, remedies or damages
available to the Employer under this Agreement or otherwise at law or in equity,
shall be entitled to preliminary and permanent injunctive relief to prevent or
restrain any such violation by Executive and any and all persons directly or
indirectly acting for or with her, as the case may be.

 

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(f)                                   In the event of the existence of any other
agreement between the parties which (i) is in effect during the Restricted
Period, and (ii) which contains restrictive covenants that conflict with any of
the provisions of this Section7, then the more restrictive of such provisions
from the agreements shall control for the period during which the agreements
would otherwise be in effect.

 

(g)                                 Nothing contained herein shall impede
Executive’s ability to communicate with the staff of the Securities and Exchange
Commission or other governmental agencies regarding possible federal securities
law violations (i) without the Company’s prior approval, and (ii) without having
to forfeit or forgo any resulting whistleblower awards.

 

8.                                      No Set-Off; No Mitigation.  Except as
provided herein, the Employer’s obligation to make the payments provided for in
this Agreement and otherwise to perform its obligations hereunder shall not be
affected by any circumstances, including any set-off, counterclaim, recoupment,
defense or other right which the Employer may have against Executive or others. 
In no event shall Executive be obligated to seek other employment or take any
other action by way of mitigation of the amounts payable to Executive under any
of the provisions of this Agreement, and such amounts shall not be reduced
whether or not Executive obtains other employment.

 

9.                                      Notices.  Notices and all other
communications under this Agreement shall be in writing and shall be deemed
given when mailed by United States registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:

 

If to the Employer (with a copy to the Company):

 

Midland States Bancorp, Inc.
Attention: Chief Executive Officer and Corporate Counsel
1201 Network Centre Drive
Effingham, Illinois 62401

 

If to Executive, to such home address or other address as Executive has most
recently provided to the Employer.

 

or to such other address as either party may furnish to the other in writing,
except that notices of changes of address shall be effective only upon receipt.

 

10.                               Applicable Law.  All questions concerning the
construction, validity and interpretation of this Agreement and the performance
of the obligations imposed by this Agreement shall be governed by the internal
laws of the State of Illinois applicable to agreements made and wholly to be
performed in such state without regard to conflicts of law provisions of any
jurisdiction, and any court action commenced to enforce this Agreement shall
have as its sole and exclusive venue the County of Effingham, Illinois.

 

11.                               Entire Agreement; Survival.

 

(a)                                 This Agreement constitutes the entire
agreement between Executive and the Employer concerning the subject matter
hereof, and supersedes all prior negotiations,

 

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undertakings, agreements and arrangements with respect thereto, whether written
or oral, specifically including the Prior Agreement.  If a court of competent
jurisdiction determines that any provision of this Agreement is invalid or
unenforceable, then the invalidity or unenforceability of that provision shall
not affect the validity or enforceability of any other provision of this
Agreement and all other provisions shall remain in full force and effect.  The
various covenants and provisions of this Agreement are intended to be severable
and to constitute independent and distinct binding obligations.  Without
limiting the generality of the foregoing, if the scope of any covenant contained
in this Agreement is too broad to permit enforcement to its full extent, such
covenant shall be enforced to the maximum extent permitted by law, and Executive
hereby agrees that such scope may be judicially modified accordingly.

 

(b)                                 The provisions of Section 7 shall survive
the termination of this Agreement.

 

12.                               Withholding of Taxes.  The Employer may
withhold from any benefits payable under this Agreement all federal, state, city
or other taxes as may be required pursuant to any law, governmental regulation
or ruling.

 

13.                               No Assignment.  Executive’s rights to receive
payments or benefits under this Agreement shall not be assignable or
transferable whether by pledge, creation of a security interest or otherwise,
other than a transfer by will or by the laws of descent or distribution.  In the
event of any attempted assignment or transfer contrary to this Section, the
Employer shall have no liability to pay any amount so attempted to be assigned
or transferred.  This Agreement shall inure to the benefit of and be enforceable
by Executive’s personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees.

 

14.                               Successors.  This Agreement shall be binding
upon and inure to the benefit of the Employer, its successors and assigns
(including, without limitation, any company into or with which the Employer may
merge or consolidate).  The Employer agrees that it will not affect the sale or
other disposition of all or substantially all of its assets (where such
transaction would constitute a Change in Control) unless either (a) the person
or entity acquiring the assets, or a substantial portion of the assets, shall
expressly assume by an instrument in writing all duties and obligations of the
Employer under this Agreement, or (b) the Employer shall provide, through the
establishment of a separate reserve, for the payment in full of all amounts
which are or may reasonably be expected to become payable to Executive under
this Agreement.

 

15.                               Legal Fees.  In the event that either party
commences arbitration or litigation to enforce or protect his and/or its rights
under this Agreement, the prevailing party in any such action shall be entitled
to recover reasonable attorneys’ fees and costs (including the costs of experts,
evidence and counsel) relating to such action, in addition to all other entitled
relief, including but not limited to damages and injunctive relief.

 

16.                               Amendment.  This Agreement may not be amended
or modified except by written agreement signed by Executive and the Employer.

 

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17.                               Internal Revenue Code Section 409A.

 

(a)                                 It is intended that this Agreement comply
with the provisions of Section 409A of the Code so as not to subject Executive
to the payment of additional taxes and interest under Section 409A of the Code. 
In furtherance of this intent, this Agreement shall be interpreted, operated and
administered in a manner consistent with these intentions, and to the extent
that any regulations or other guidance issued under Section 409A of the Code
would result in Executive being subject to payment of additional income taxes or
interest under Section 409A of the Code, the parties agree to amend this
Agreement to maintain to the maximum extent practicable the original intent of
the Agreement while avoiding the application of such taxes or interest under
Section 409A of the Code.

 

(b)                                 Notwithstanding any provision in this
Agreement to the contrary, if Executive is determined to be a Specified Employee
as of the Termination Date, then, to the extent required pursuant to
Section 409A(a)(2)(B)(i) of the Code, payments due under this Agreement which
are deemed to be deferred compensation shall be subject to a six (6) month delay
following the Termination Date.  For purposes of Section 409A of the Code, all
installment payments of deferred compensation made hereunder, or pursuant to
another plan or arrangement, shall be deemed to be separate payments and,
accordingly, the aforementioned deferral shall only apply to separate payments
which would occur during the six (6) month deferral period and all other
payments shall be unaffected.  All delayed payments shall be accumulated and
paid in a lump-sum catch-up payment as of the first day of the seventh-month
following the Termination Date (or, if earlier, the date of death of Executive)
with all such delayed payments being credited with interest (compounded monthly)
for this period of delay equal to the prime rate in effect on the first day of
such six-month period.  Any portion of the benefits hereunder that were not
otherwise due to be paid during the six-month period following the Termination
Date shall be paid to Executive in accordance with the payment schedule
established herein.

 

(c)                                  The term “Specified Employee” shall mean
any person who is a “key employee” (as defined in Code Section 416(i) of the
Code without regard to paragraph (5) thereof), as determined by the Employer
based upon the 12-month period ending on each December 31st (such 12-month
period is referred to below as the “identification period”).  If Executive is
determined to be a key employee under Section 416(i) of the Code (without regard
to paragraph (5) thereof), he/she shall be treated as a Specified Employee for
purposes of this Agreement during the 12-month period that begins on the April 1
following the close of such identification period.  For purposes of determining
whether Executive is a key employee under Section 416(i) of the Code,
“compensation” shall mean Executive’s W-2 compensation as reported by the
Employer for a particular calendar year.

 

(remainder of page intentionally left blank)

 

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the Effective
Date.

 

MIDLAND STATES BANCORP, INC.

 

STEPHEN A. ERICKSON

 

 

 

 

 

 

 

By:

/s/ Jeffrey G. Ludwig

 

/s/ Stephen A. Erickson

Name: Jeffrey G. Ludwig

 

 

Its: President

 

 

 

 

 

MIDLAND STATES BANK

 

 

 

 

 

 

 

 

 

By:

/s/ Jeffrey G. Ludwig

 

 

Name: Jeffrey G. Ludwig

 

 

Its: Chief Executive Officer

 

 

 

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EXHIBIT A

 

GENERAL RELEASE AND WAIVER

 

THIS GENERAL RELEASE AND WAIVER (the “Release”) is made and entered into as of
this     day of           , 20  , by and between Midland States Bank, an
Illinois banking corporation (the “Employer”), and            (“Executive”).

 

FOR VALUABLE CONSIDERATION, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:

 

1.                                      Termination of Employment.  Executive
and the Employer agree that Executive’s employment with the Employer terminated
effective                .  Executive further agrees that without prior written
consent of the Employer he/she will not hereafter seek reinstatement, recall or
reemployment with the Employer.

 

2.                                      Severance Payment.

 

(a)                                 A description of the payments to which
Executive may be entitled upon termination of employment are contained in
Section 5 of that certain Employment Agreement entered into by and between the
Employer and Executive dated                                     , which is
incorporated by reference herein (the “Employment Agreement”).

 

(b)                                 The payments described in this Section 2 are
over and above that to which Executive would be otherwise entitled to upon the
termination of his/her employment with the Employer, absent executing this
Release, notwithstanding the terms of the Employment Agreement.  Executive
affirms that he/she has agreed in the Employment Agreement, and again herein,
that he/she is only entitled to such payments if he/she executes this Release.

 

3.                                      General Release.  In consideration of
the payments and benefits to be made by the Employer to Executive in Section 2
above, Executive, with full understanding of the contents and legal effect of
this Release and having the right and opportunity to consult with his/her
counsel, releases and discharges the Employer, its shareholders, officers,
directors, supervisors, managers, employees, agents, representatives, attorneys,
parent companies, divisions, subsidiaries and affiliates, and all related
entities of any kind or nature, and its and their predecessors, successors,
heirs, executors, administrators, and assigns (collectively, the “Released
Parties”) from any and all claims, actions, causes of action, grievances, suits,
charges, or complaints of any kind or nature whatsoever, that he/she ever had or
now has, whether fixed or contingent, liquidated or unliquidated, known or
unknown, suspected or unsuspected, and whether arising in tort, contract,
statute, or equity, before any federal, state, local, or private court, agency,
arbitrator, mediator, or other entity, regardless of the relief or remedy,
arising prior to the execution of this Release.  Without limiting the generality
of the foregoing, it being the intention of the parties to make this Release as
broad and as general as the law permits, this Release specifically includes any
and all subject matters and claims arising from any alleged violation by the
Released Parties under the Age Discrimination in Employment Act of 1967, as
amended; Title VII of the Civil Rights Act of 1964, as amended; the Civil Rights
Act of 1866, as amended by the Civil Rights Act of 1991 (42 U.S.C. § 1981); the
Rehabilitation

 

A-1

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Act of 1973, as amended; the Employee Retirement Income Security Act of 1974, as
amended; the Illinois Human Rights Act, and other similar state or local laws;
the Americans with Disabilities Act; the Worker Adjustment and Retraining
Notification Act; the Equal Pay Act; Executive Order 11246; Executive Order
11141; and any other statutory claim, employment or other contract or implied
contract claim, claim for equity in the Employer, or common law claim for
wrongful discharge, breach of an implied covenant of good faith and fair
dealing, defamation, or invasion of privacy arising out of or involving his
employment with the Employer, the termination of his employment with the
Employer, or involving any continuing effects of his employment with the
Employer or termination of employment with the Employer; provided, however, that
nothing herein waives or releases Executive’s rights to any payments or benefits
the Employer is required to pay or provide pursuant to the terms of the
Employment Agreement or this Release or to indemnification which Executive may
have under the Employer’s governing documents, by any agreement, under any
applicable law or otherwise.  Executive further acknowledges that he/she is
aware that statutes exist that render null and void releases and discharges of
any claims, rights, demands, liabilities, action and causes of action which are
unknown to the releasing or discharging part at the time of execution of the
release and discharge.  Executive hereby expressly waives, surrenders and agrees
to forego any protection to which he/she would otherwise be entitled by virtue
of the existence of any such statute in any jurisdiction including, but not
limited to, the State of Illinois.

 

4.                                      Covenant Not to Sue.  Executive agrees
not to bring, file, charge, claim, sue or cause, assist, or permit to be
brought, filed, charged or claimed any action, cause of action, or proceeding
regarding or in any way related to any of the claims described in Section 3
hereof, and further agrees that his Release is, will constitute and may be
pleaded as, a bar to any such claim, action, cause of action or proceeding.  If
any government agency or court assumes jurisdiction of any charge, complaint, or
cause of action covered by this Release, Executive will not seek and will not
accept any personal equitable or monetary relief in connection with such
investigation, civil action, suit or legal proceeding.

 

5.                                      No Disparaging, Untrue Or Misleading
Statements.  Executive represents that he/she has not made, and agrees that
he/she will not make, to any third party any disparaging, untrue, or misleading
written or oral statements about or relating to, respectively, the Employer, its
products or services (or about or relating to any officer, director, agent,
employee, or other person acting on the Employer’s behalf), or Executive.

 

6.                                      Severability.  If any provision of this
Release shall be found by a court to be invalid or unenforceable, in whole or in
part, then such provision shall be construed and/or modified or restricted to
the extent and in the manner necessary to render the same valid and enforceable,
or shall be deemed excised from this Release, as the case may require, and this
Release shall be construed and enforced to the maximum extent permitted by law,
as if such provision had been originally incorporated herein as so modified or
restricted, or as if such provision had not been originally incorporated herein,
as the case may be.  The parties further agree to seek a lawful substitute for
any provision found to be unlawful; provided, that, if the parties are unable to
agree upon a lawful substitute, the parties desire and request that a court or
other authority called upon to decide the enforceability of this Release modify
the Release so that, once modified, the Release will be enforceable to the
maximum extent permitted by the law in existence at the time of the requested
enforcement.

 

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7.                                      Waiver.  A waiver by the Employer of a
breach of any provision of this Release by Executive shall not operate or be
construed as a waiver or estoppel of any subsequent breach by Executive.  No
waiver shall be valid unless in writing and signed by an authorized officer of
the Employer.

 

8.                                      Non-Disclosure.  Executive agrees that
he/she will keep the terms and amounts set forth in this Release completely
confidential and will not disclose any information concerning this Release’s
terms and amounts to any person other than his/her attorney, accountant, tax
advisor, or immediate family, until such time as the information in this Release
is disclosed by the Employer as may be required by law.

 

9.                                      Restrictive Covenants.  Executive agrees
that he/she will abide by the terms set forth in Section 7 of the Employment
Agreement.

 

10.                               Return of Employer Materials. Executive
represents that he/she has returned all Employer property and all originals and
all copies, including electronic and hard copy, of all documents, within his
possession at the time of the execution of this Release, including but not
limited to the laptop computer, printer, Blackberry device, telephone, and
credit card, as may be applicable.

 

11.                               Representation.  Executive hereby agrees that
this Release is given knowingly and voluntarily and acknowledges that:

 

(a)                                 this Release is written in a manner
understood by Executive;

 

(b)                                 this Release refers to and waives any and
all rights or claims that he/she may have arising under the Age Discrimination
in Employment Act, as amended;

 

(c)                                  Executive has not waived any rights arising
after the date of this Release;

 

(d)                                 Executive has received valuable
consideration in exchange for the Release in addition to amounts Executive is
already entitled to receive; and

 

(e)                                  Executive has been advised to consult with
an attorney prior to executing this Release.

 

12.                               Consideration and Revocation.  Executive is
receiving this Release on           , 20      , and Executive shall be given
twenty-one (21) days from receipt of this Release to consider whether to sign
the Release.  Executive agrees that changes or modifications to this Release do
not restart or otherwise extend the above twenty-one (21) day period, unless
specifically agreed to in writing by the Employer.  Moreover, Executive shall
have seven (7) days following execution to revoke this Release in writing to the
Secretary of the Employer and the Release shall not take effect until those
seven (7) days have ended.

 

13.                               Future Cooperation.  In connection with any
and all claims, disputes, negotiations, investigations, lawsuits or
administrative proceedings involving the Employer which relate to periods of
time during the Employment Period (as defined in the Employment Agreement),
Executive agrees to make himself/herself reasonably available, upon reasonable

 

A-3

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notice from the Employer and without the necessity of subpoena, to provide
information or documents, provide declarations or statements to the Employer,
meet with attorneys or other representatives of the Employer, prepare for and
give depositions or testimony, and/or otherwise cooperate in the investigation,
defense or prosecution of any or all such matters.  Executive shall be
reimbursed for reasonable costs and expenses incurred by him as a result of
actions taken pursuant to this Section 13.  It is expressly agreed and
understood that Executive will provide only truthful testimony if required to do
so, and that any payment to him is solely to reimburse his expenses and costs
for cooperation with the Employer.  Nothing in this Section 13 is intended to
require Executive to expend an unreasonable period of time in activities
required by this Section.

 

14.                               Amendment.  This Release may not be altered,
amended, or modified except in writing signed by both Executive and the
Employer.

 

15.                               Joint Participation.  The parties hereto
participated jointly in the negotiation and preparation of this Release, and
each party has had the opportunity to obtain the advice of legal counsel and to
review and comment upon the Release.  Accordingly, it is agreed that no rule of
construction shall apply against any party or in favor of any party.  This
Release shall be construed as if the parties jointly prepared this Release, and
any uncertainty or ambiguity shall not be interpreted against one party and in
favor of the other.

 

16.                               Binding Effect; Assignment.  This Release and
the various rights and obligations arising hereunder shall inure to the benefit
of and be binding upon the parties and their respective successors, heirs,
representatives and permitted assigns.  Neither party may assign its respective
interests hereunder without the express written consent of the other party.

 

17.                               Applicable Law.  All questions concerning the
construction, validity and interpretation of this Release and the performance of
the obligations imposed by this Release shall be governed by the internal laws
of the State of Illinois applicable to agreements made and wholly to be
performed in such state without regard to conflicts of law provisions of any
jurisdiction and any court action commenced to enforce this Release shall have
as its sole and exclusive venue the County of Effingham, Illinois.

 

18.                               Execution of Release.  This Release may be
executed in several counterparts, each of which shall be considered an original,
but which when taken together, shall constitute one Release.

 

PLEASE READ THIS RELEASE AND CAREFULLY CONSIDER ALL OF ITS PROVISIONS BEFORE
SIGNING IT.  THIS RELEASE CONTAINS A RELEASE OF ALL KNOWN AND UNKNOWN
CLAIMS, INCLUDING THOSE UNDER THE FEDERAL AGE DISCRIMINATION IN EMPLOYMENT ACT,
AND OTHER FEDERAL, STATE AND LOCAL LAWS PROHIBITING DISCRIMINATION IN
EMPLOYMENT.

 

If Executive signs this Release less than 21 days after he/she receives it from
the Employer, he/she confirms that he/she does so voluntarily and without any
pressure or coercion from anyone at the Employer.

 

A-4

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IN WITNESS WHEREOF, the parties have executed this Release as of the date first
stated above.

 

MIDLAND STATES BANK

 

 

MIDLAND STATES BANCORP, INC.

 

EXECUTIVE’S NAME

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

[Signature]

Its:

 

 

 

 

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