Exhibit 10.41
MIDWEST BANC HOLDINGS, INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT
     THIS AGREEMENT made as of the       day of                      (the
“Effective Date”), by and between Midwest Banc Holdings, Inc., a Delaware
corporation (the “Company”), and the undersigned executive (the “Executive”).
INTRODUCTION
     The Company has agreed to provide supplemental retirement benefits to
certain executives and to enter into individual agreements with the executives
to set forth the terms thereof. Such agreements are intended to encourage the
executive to remain an employee of the Company or one or more of its
Subsidiaries. Except for the death benefit payable to the Executive in the event
such Executive dies while in the active service of the Company, the Company and
the Subsidiaries will pay the benefits from their general assets. These
agreements are intended to constitute an unfunded plan maintained primarily to
provide deferred compensation to a select group of management or highly
compensated employees within the meaning of Sections 201(2), 301(3) and
401(a)(1) of ERISA and regulations issued thereunder.
     In furtherance of the foregoing, the Company and Executive agree as
follows:
AGREEMENT
ARTICLE 1
DEFINITIONS
     Whenever used in this Agreement, the following words and phrases shall have
the meanings specified:
     1.1 “Accrual Rate” means an interest rate equal to ___percent per annum.
     1.2 “Agreement” means this Midwest Banc Holdings, Inc. Supplemental
Executive Retirement Agreement entered into between the Company and the
Executive.
     1.3 “Benefit Percentage” means ___percent.
     1.4 “Change of Control Event” means a change in the ownership or effective
control of the Company, or in the ownership of a substantial portion of the
assets of the Company as provided in section 409A(a)(2)(A)(v) of the Code.
Pending issuance of Treasury regulations, a “Change in Control Event” will be as
defined in IRS Notice 2005-1 and subsequent guidance. In accordance with IRS
Notice 2005-1, a “Change in Control Event” means:
          (a) Change in Ownership. A change in the ownership of the Company
occurs on the date that any person or persons acting as a group acquires
ownership of stock of the Company that, together with stock held by such person
or group, constitutes more than 50 percent of the total fair market value or
total voting power of the stock of such Company. If a person or group is
considered to own more than 50 percent of the total fair market value or total
combined voting power of the stock of the Company, the acquisition of additional
stock by the same person or persons is not considered to cause a

 

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change in the ownership of the Company (or to cause a change in the “effective
control of the Company” within the meaning of paragraph (b)).
          (b) Change in Effective Control. A change in the effective control of
the Company occurs on the date that a majority of the Company’s board of
directors is replaced during any 12-month period by directors whose appointment
or election is not endorsed by a majority of the members of the Company’s board
of directors prior to the date of the appointment or election.
          (c) Change in Ownership of a Substantial Portion of the Company’s
Assets. A change in the ownership of a substantial portion of the Company’s
assets occurs on the date that any person or group acquires (or has acquired
during the 12-month period ending on the date of the most recent acquisition by
such person or persons) assets from the Company that have a total gross fair
market value equal to or more than 50 percent of the total gross fair market
value of all of the assets of the Company immediately prior to such acquisition
or acquisitions.
     1.5 “Code” means the Internal Revenue Code of 1986, as amended from time to
time, or any successor legislation thereto.
     1.6 “Company” means Midwest Banc Holdings, Inc., a Delaware corporation, as
well as any successor to such entity as provided in Section 11.3 hereof.
     1.7 “Compensation Committee” means the Compensation Committee of the
Company’s board of directors.
     1.8 “Disability” means, if the Executive is covered by a Company-sponsored
disability policy, total disability as defined in such policy without regard to
any waiting period. If the Executive is not covered by such a policy, Disability
means the Executive suffering a sickness, accident or injury which, in the
judgment of a physician satisfactory to the Company, prevents the Executive from
performing substantially all of the Executive’s normal duties for the Employer.
As a condition to receiving any Disability benefits, the Company may require the
Executive to submit to such physical or mental evaluations and tests as the
Company’s board of directors deems appropriate.
     1.9 “Early Retirement Age” means the Executive’s 60th birthday.
     1.10 “Employer” means the entity from among the Company and the
Subsidiaries that is, or was, the primary employer of the Executive.
     1.11 “ERISA” means the Employee Retirement Income Security Act of 1974, as
amended.
     1.12 “Executive” means the individual named on this Agreement and on whose
behalf the Agreement is entered.
     1.13 “Final Salary” means the highest annual base salary rate paid by the
Company and any Subsidiary to the Executive during the three (3) years ending on
the date of Termination of Employment, or if earlier, the date the Executive
attains Normal Retirement Age.

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     1.14 “Involuntary Termination of Employment” means, for the purposes of the
Agreement, Termination of Employment by the Employer without Cause (as defined
in Section 1.20 of this Agreement) or by the Executive because of Constructive
Discharge (as defined in Section 1.20 of this Agreement).
     1.15 “Normal Retirement Age” means the Executive’s 65th birthday.
     1.16 “Normal Retirement Date” means the later of the Normal Retirement Age
or Termination of Employment.
     1.17 “Plan Year” means a twelve-month period commencing on January 1 and
ending on December 31 of each year. The initial Plan Year shall be a short Plan
Year which shall commence on the Effective Date.
     1.18 “Specified Employee” means a key employee (as defined in section
416(i) of the Code without regard to paragraph (5) thereof) of a corporation any
stock in which is publicly traded on an established securities market or
otherwise.
     1.19 “Subsidiary” means any direct or indirect subsidiary of the Company.
     1.20 “Termination of Employment”
          (a) For purposes of this Agreement, the term “Termination of
Employment” shall mean (i) termination by the Company and all Subsidiaries of
the employment of the Executive with the Company and all Subsidiaries for any
reason including death, disability or “Cause” (as defined below), or
(ii) resignation from employment with the Company and all Subsidiaries by the
Executive for any reason, including “Constructive Discharge” (as defined below).
          (b) “Cause” shall mean, with respect to termination of an Executive’s
employment or directorship, the occurrence of any one or more of the following,
as determined by the Committee, in the exercise of good faith and reasonable
judgment:
          (i) In the case where there is no employment, change in control or
similar agreement in effect between the Executive and the Employer at the time
of Termination of Employment, or where there is such an agreement but the
agreement does not define “cause” (or similar words) or a “cause” termination
would not be permitted under such agreement at that time because other
conditions were not satisfied, the termination of an employment or consulting
arrangement due to the willful and continued failure or refusal by the Executive
to substantially perform assigned duties (other than any such failure resulting
from the Executive Disability), the Executive’s dishonesty or theft, the
Executive’s violation of any obligations or duties under any employee agreement,
or the Executive’s gross negligence or willful misconduct; or
          (ii) In the case where there is an employment, change in control or
similar agreement in effect between the Executive and the Employer at the time
of Termination of Employment that defines “cause” (or similar words)

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and the occurrence of an event for which resignation for “cause” would be
permitted under such agreement at that time.
No act or failure to act on an Executive’s part shall be considered willful
unless done, or omitted to be done, by the Executive not in good faith and
without reasonable belief that his action or omission was in the best interest
of the Company.
          (c) The term “Constructive Discharge” shall mean the Executive’s
resignation from employment with the Company and all Subsidiaries upon any one
of the following:
          (i) In the case where there is an employment, change in control or
similar agreement in effect between the Executive and the Employer at the time
of Termination of Employment that defines “constructive discharge” (or similar
words), the occurrence of an event for which resignation for “constructive
discharge” would be permitted under such agreement at that time; or
          (ii) In the case where there is no employment, change in control or
similar agreement in effect between the Executive and the Employer, or where
there is such an agreement but the agreement does not define “constructive
discharge” (or similar words), or a resignation for “constructive discharge”
would not be permitted at that time because other conditions were not satisfied,
there shall have occurred:
          (A) a reduction in the Executive’s base salary or annual bonus
opportunity from that in effect immediately prior to the date of a Change in
Control Event.
          (B) a material diminution in the Executive’s title, duties or
responsibilities from those in effect immediately prior to the date of a Change
in Control Event;
          (C) a change by the Employer of the Executive’s primary employment
location to a place that is more than 35 miles from Executive’s primary
employment location immediately prior to date of a Change in Control Event.
     1.21 “Year of Service” means a twelve-month period commencing on the
Executive’s most recent date of hire by the Company or a Subsidiary and on each
anniversary thereof.
ARTICLE 2
LIFETIME BENEFITS
     2.1 Normal Retirement Benefit. Subject to Article 6, upon Termination of
Employment on or after the Normal Retirement Age for reasons other than death,
the Employer shall pay to the Executive the benefit described in this
Section 2.1 in lieu of any other benefit under this Agreement.

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          2.1.1 Amount of Benefit. The annual benefit under this Section 2.1 is
an amount equal to the Executive’s Final Salary multiplied by the Benefit
Percentage.
          2.1.2 Payment of Benefit. The Employer shall pay the annual benefit to
the Executive in twelve (12) equal monthly installments payable on the first day
of each month commencing with the month following the Executive’s Termination of
Employment. Notwithstanding the foregoing, for any Specified Employee
distributions may not be made before the date which is six (6) months after the
date of Termination of Employment (or, if earlier, the date of death of the
Executive). The annual benefit shall be paid to the Executive for fifteen
(15) years.
          2.1.3 Benefit Increases. Commencing on the first anniversary of the
first benefit payment, and continuing on each subsequent anniversary, the
Company’s board of directors, in its sole discretion, may increase the benefit.
     2.2 Early Retirement Benefit. Subject to Article 6, upon Termination of
Employment (a) on or after the Early Retirement Age but before the Normal
Retirement Age for reasons other than death or Disability and (b) after
completing five continuous years of employment with the Employer or any
Subsidiary after the Effective Date, the Employer shall pay to the Executive the
benefit described in this Section 2.2 in lieu of any other benefit under this
Agreement.
          2.2.1 Amount of Benefit. The annual benefit under this Section 2.2 is
an amount equal to a percentage of the annual benefit that would be payable as
described in Section 2.1.1 above, computed as follows:

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

          2.2.2 Payment of Benefit. The Employer shall pay the annual benefit to
the Executive in twelve (12) equal monthly installments payable on the first day
of each month commencing with the month following the Executive’s Termination of
Employment. Notwithstanding the foregoing, for any Specified Employee
distributions may not be made before the date which is six (6) months after the
date of Termination of Employment (or, if earlier, the date of death of the
Executive). The annual benefit shall be paid to the Executive for fifteen
(15) years.
     2.3 Early Termination Benefit. Subject to Article 6, upon Termination of
Employment before the Early Retirement Age, for reasons other than death or
Disability, the Employer shall pay to the Executive the benefit described in
this Section 2.3 in lieu of any other benefit under this Agreement.

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          2.3.1 Amount of Benefit. If the Executive has completed 10 or more
Years of Service and five (5) continuous years of employment with the Employer
or any Subsidiary after the Effective Date, the benefit under this Section 2.3
is the total liability then accrued on the Employer’s records at the time of the
Executive’s Termination of Employment. The Early Termination annual benefit
amount is determined by calculating a 15-year fixed annuity from the accrual
balance, crediting interest on the unpaid balance at an annual rate equal to the
Accrual Rate, compounded monthly. If the Executive has completed less than ten
(10) Years of Service or less than five (5) years continuous service after the
Effective Date, the Employer shall pay no benefit under this Section 2.3.
          2.3.2 Payment of Benefit. The Employer shall pay the annual benefit to
the Executive in twelve (12) equal monthly installments payable on the first day
of each month commencing with the month following the Executive’s Normal
Retirement Date. Notwithstanding the foregoing, for any Specified Employee
distributions may not be made before the date which is six (6) months after the
date of Termination of Employment (or, if earlier, the date of death of the
Executive). The annual benefit shall be paid to the Executive for fifteen
(15) years.
     2.4 Disability Benefit. Subject to Article 6, if the Executive terminates
employment due to Disability prior to Normal Retirement Age, the Employer shall
pay to the Executive the benefit described in this Section 2.4 in lieu of any
other benefit under this Agreement.
          2.4.1 Amount of Benefit. The benefit under this Section 2.4 is an
amount equal to the Executive’s Normal Retirement Benefit, calculated under
Section 2.1 above, as if the Executive remained employed, with no increase in
annual base salary through his Normal Retirement Age.
          2.4.2 Payment of Benefit. The Employer shall pay the annual benefit
amount to the Executive in twelve (12) equal monthly installments payable on the
first day of each month commencing with the month following the Executive’s
Normal Retirement Date. Notwithstanding the foregoing, for any Specified
Employee distributions may not be made before the date which is six (6) months
after the date of Termination of Employment (or, if earlier, the date of death
of the Executive). The annual benefit shall be paid to the Executive for fifteen
(15) years.
     2.5 Change of Control Benefit. Subject to Article 6, in the event of the
Executive’s Involuntary Termination of Employment for reasons other than death
or Disability following a Change of Control, but prior to Normal Retirement Age,
the Employer shall pay to the Executive the benefit described in this
Section 2.5 in lieu of any other benefit under this Agreement.
          2.5.1 Amount of Benefit. The benefit under this Section 2.5 is
                     percent of the benefit projected to be earned had the
Executive remained employed through Normal Retirement Age with an annual
positive 4% salary adjustment effective on each anniversary of the Involuntary
Termination of Employment until the Executive reached his Normal Retirement Age.
In the event the Executive has attained the Early Retirement Age, and is
entitled to the Early Retirement Benefit under section 2.2, the benefit
hereunder shall be the greater of the foregoing or that amount provided in
section 2.2.1.

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          2.5.2 Payment of Benefit. The Employer shall pay the annual benefit
amount to the Executive in twelve (12) equal monthly installments payable on the
first day of each month commencing with the month following the Executive’s
Normal Retirement Date. Notwithstanding the foregoing, for any Specified
Employee distributions may not be made before the date which is six (6) months
after the date of Termination of Employment (or, if earlier, the date of death
of the Executive). The annual benefit shall be paid to the Executive for fifteen
(15) years.
          2.5.3 Lump Sum Benefit. Notwithstanding Sections 2.1.2, 2.2.2, 2.3.2
or 2.5.2 above, upon a Termination of Employment after a Change in Control
Event, the Executive may elect to receive a lump sum payment equal to the lump
sum present value of the payments described in Sections 2.1.2, 2.2.2, 2.3.2 or
2.5.2 above, whichever is applicable, where such present value is to be
determined using a discount rate equal to the applicable federal rate in effect
on the date of the Change in Control Event for purposes of determining present
value of payments subject to the non-deductibility and excise tax provisions of
Section 280G and Section 4999 of the Code, respectively, and regulations
thereunder.
ARTICLE 3
DEATH BENEFITS
     3.1 Death During Active Service. No death benefits will be paid by the
Company under this Agreement in the event the Executive dies while in the active
service of the Company. Death benefits will be provided by way of a compensatory
split-dollar life insurance arrangement pursuant to Article 7.
     3.2 Death During Payment of a Lifetime Benefit. If the Executive dies after
any payments have commenced under Article 2 of this Agreement but before
receiving all such payments, the Employer shall pay the remaining benefits to
the Executive’s beneficiary at the same time and in the same amounts they would
have been paid to the Executive had the Executive survived.
     3.3 Death After Termination of Employment But Before Payment of a Lifetime
Benefit Commences. If the Executive is entitled to a benefit under Article 2 of
this Agreement, but dies after Termination of Employment and prior to the
commencement of said benefit payments, the Employer shall pay the same benefit
payments to the Executive’s beneficiary that the Executive was entitled to prior
to death except that the benefit payments shall commence on the first day of the
month following the date of the Executive’s death.
ARTICLE 4
LIABILITY FOR BENEFITS
     4.1 Primary Obligor. The Employer shall be the primary obligor with respect
to the obligation to pay benefits owing to a Executive under this Agreement.
     4.2 Company Guaranty. The Company hereby guarantees the obligations of each
Employer to pay benefits owing to an Executive under this Agreement.

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ARTICLE 5
BENEFICIARIES
     5.1 Beneficiary Designations. The Executive shall designate a beneficiary
by filing a written designation with the Employer. The Executive may revoke or
modify the designation at any time by filing a new designation. However,
designations will only be effective if signed by the Executive and accepted by
the Employer during the Executive’s lifetime. The Executive’s beneficiary
designation shall be deemed automatically revoked if the beneficiary predeceases
the Executive, or if the Executive names a spouse as beneficiary and the
marriage is subsequently dissolved. If the Executive dies without a valid
beneficiary designation, all payments shall be made to the Executive’s estate.
     5.2 Facility of Payment. If a benefit is payable to a minor, to a person
declared incapacitated, or to a person incapable of handling the disposition of
his or her property, the Employer may pay such benefit to the guardian, legal
representative or person having the care or custody of such minor, incapacitated
person or incapable person. The Employer may require proof of incapacity,
minority or guardianship as it may deem appropriate prior to distribution of the
benefit. Such distribution shall completely discharge the Employer from all
liability with respect to such benefit.
ARTICLE 6
GENERAL LIMITATIONS
     6.1 Termination for Cause. Notwithstanding any provision of this Agreement
to the contrary, neither the Company nor any Subsidiary shall pay any benefit
under this Agreement if the Company or any Subsidiary terminates the Executive’s
employment for Cause.
     6.2 Suicide Misstatement. The Company shall not pay any benefit under the
Agreement if the Executive commits suicide within two years after the Effective
Date.
     6.3 Restrictive Covenants.
          6.3.1 The Company has agreed to provide benefits under this Agreement
in return for the Executive’s acceptance of restrictive covenants set forth in
this Section 6.3. The Executive hereby acknowledges that the benefits provided
hereunder constitute adequate consideration for Executive’s obligations under
this Section 6.3.
          6.3.2 Neither the Company nor any Subsidiary shall pay any benefit
under this Agreement, and the Executive shall be obligated to repay any lump sum
payment received under this Agreement if, without the prior written consent of
the Company and the affected Subsidiary or Subsidiaries, Executive:
          (a) At any time prior to the                      anniversary of the
Termination of Employment of the Executive, engages in, becomes interested in,
directly or indirectly, as a sole proprietor, as a partner in a partnership, or
as a substantial equity owner in a corporation or other entity, or becomes
associated with, in the capacity of employee, director, officer, principal,
agent, trustee or in any other capacity whatsoever,

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any enterprise conducted in the business area (a 35 mile radius) of the Company
or any Subsidiary, which enterprise is, or may deemed to be, competitive with
any business carried on by the Company or any Subsidiary as of the date of
termination of employment; or
          (b) at any time prior to the                      anniversary of the
Termination of Employment of the Executive, either as an individual, on his or
her own account, or as an agent, employee, director, shareholder or otherwise,
directly or indirectly, solicit, induce or encourage, or attempt to solicit,
induce or encourage any customer of the Company or any of its affiliates not to
do business with the Company or any of its affiliates. For purposes of this
paragraph, such customers and such affiliates shall be limited to those persons
or entities which are customers or affiliates as of the date immediately
preceding the date of the Executive’s termination of employment; or
          (c) at any time prior to the                      anniversary of the
Termination of Employment of the Executive, directly or indirectly solicits,
induces or encourages any person who, as of the date immediately preceding the
date of the termination of employment, is an employee of the Company or any of
its affiliates to terminate his or her relationship with the Company or any of
its affiliates.
          6.3.3 Executive represents and warrants that:
          (a) Executive has read and understands this Agreement;
          (b) Executive has had an opportunity to consult with legal counsel in
connection herewith;
          (c) the restraints and agreements herein provided are fair and
reasonable;
          (d) enforcement of the provisions of Section 6.3 will not cause him or
her undue hardship; and
          (e) that the above restrictions are reasonable in scope and duration
and are the least restrictive means to protect the Company’s and its affiliates’
legitimate and proprietary business interests and property from irreparable
harm.
          6.3.4 The Employer and the Employee hereby recognize that the
restrictive non compete provisions of Section 6.3.2 have value and that value
shall be recognized in the Section 280G calculations by an allocation of the
termination benefits between the non compete provision and the other Termination
Benefits based on the value of the fair market value of the non compete
provisions. The Employer shall make the determination of the fair value to be
assigned.

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ARTICLE 7
LIFE INSURANCE
     7.1 General. The Company will provide the Executive with current life
insurance protection by way of a compensatory split-dollar life insurance
arrangement in the event the Executive dies while in the active service of the
Company. The Company is and will be the owner of the life insurance policy or
policies contemplated by this Agreement (individually the “Policy,” and
collectively, the “Policies”) and, as such, possess all of the incidents of
ownership in and to each Policy, subject to the limitations contained herein.
The Company will endorse to the Executive the right to designate the beneficiary
of a portion of the death benefits payable under the Policies as provided and
limited herein.
     7.2 Purchase of the Policies. The parties undertake all necessary actions
to cause each Policy to be issued to the Company and to cause each Policy to
conform to the terms of this Agreement. Each Policy will be subject to the terms
and conditions of this Agreement and of the endorsement filed with the insurance
company issuing each Policy (the “Insurer”). The Policies that are subject to
this Agreement as of the date hereof are listed on Schedule A hereto.
     7.3 Ownership of the Policies.
          7.3.1 Company Will Own Each Policy. The Company will own each Policy
at all times and may exercise all ownership rights and incidents of ownership
granted to the particular Policy’s owner by the Insurer, except the Executive’s
right to direct the distribution of the Policies’ death benefits up to the
Current Life Insurance Protection Amount defined in section 7.4.1.
          7.3.2 Company’s Right to Borrow, Withdraw, Pledge or Assign. The
Company alone may, to the extent of its interest, exercise the right to borrow
or withdraw on each Policy’s cash surrender values. The Company may pledge or
assign the policy, subject to the terms and conditions of this Agreement, in
order to secure a loan or loans from the Insurer or from a third party. Interest
charges on such loans shall be the responsibility of and shall be paid by the
Company.
          7.3.3 Company’s Right to Surrender or Cancel Policy. The Company shall
have the sole right to surrender or cancel any Policy or Policies and to receive
from the Insurer the amount due the owner under each Policy.
          7.3.4 Company Retains Rights Granted Under Each Policy. The Company
shall retain all rights which each Policy grants to the owner thereof.
          7.3.5 No Action By Executive. The Executive shall take no action with
respect to any Policy that would in any way compromise or jeopardize the
Company’s rights without the Company’s express written consent.
     7.4 Economic Benefit Limited to Current Life Insurance Protection Amount.
          7.4.1 Economic Benefit Provided to Executive. For each calendar year
for which this Agreement is in force, the economic benefit provided to the
Executive under this

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Agreement is limited to current life insurance protection in an amount equal to
the total age 65 liability accrued on the Company’s records as of the end of the
preceding calendar year (the “Current Life Insurance Protection Amount”).
          7.4.2 Executive Has No Right to Cash Surrender Value. The Executive
does not have any current or future right to access any cash surrender value of
any Policy.
          7.4.3 Executive Has No Economic Benefits. The Executive does not have
any economic benefits in any Policy other than as provided in Section 7.4.1.
          7.4.4 Determination of the Current Life Insurance Protection Amount.
The Current Life Insurance Protection Amount shall be determined by the Company
following the close of each calendar year and communicated to the Executive by
March 15 of the calendar year for which it is effective. Each time the Current
Life Insurance Protection Amount changes (which may not be annually), the
Company shall effect an endorsement to each Policy with each Insurer to ensure
that each Insurer is obligated to pay the proper portion of the Current Life
Insurance Protection Amount to the Executive’s beneficiaries or estate upon the
death of the Executive while in the active service of the Company (with all
remaining Policy proceeds being payable to the Company).
     7.5 Beneficiary Designation Rights. The Company shall endorse to the
Executive the right and power to designate a beneficiary or beneficiaries to
receive an aggregate sum payable upon the death of the Executive equal to the
Current Life Insurance Protection Amount. This endorsement shall be effected
using a form provided by the Insurer or Insurer. A Policy’s endorsement shall
not be terminated, altered, or amended without the express written consent of
the Executive. To change a beneficiary, the Executive must execute a new
endorsement and comply with the requirements of the particular Policy. Failure
to comply with the terms of the individual Policy will result in the change not
becoming effective. The parties shall take all actions necessary to cause such
an endorsement to conform to the provisions of this Agreement.
     7.6 Premium Payments. Subject to the Company’s absolute right to surrender
or terminate any Policy at any time and for any reason, the Company shall pay
the entire premiums owed under the Policies to the Insurers. Upon request, the
Company shall promptly furnish to the Executive evidence of timely payment of
such premiums.
     7.7 Income Taxation of Current Life Insurance Protection Amount. Consistent
with the federal income tax regulations governing the taxation of compensatory
split-dollar life insurance arrangements, the parties agree that the value of
the economic benefits provided to the Executive hereunder for a taxable year is
equal to the cost of the Current Life Insurance Protection Amount in effect for
that year. Such cost equals the Current Life Insurance Protection Amount
multiplied by the life insurance premium factor designated or permitted in
guidance published by the Internal Revenue Service. The Company shall annually
furnish to the Executive a statement of the amount of income reportable by the
Executive for federal and state income tax purposes consistent therewith. The
Executive agrees to report the amount reflected in the statement on his or her
personal income tax return.
     7.8 Death of the Executive.

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          7.8.1 Determination of the Death Benefit Payable to the Executive and
the Company. Upon the death of the Executive while in the active service of the
Company, the Company and the Executive’s beneficiaries designated under the
Policies (or if no beneficiary is designated, the estate of the Executive) shall
promptly take all action necessary to obtain the death benefits provided under
each Policy. The Company shall have the unqualified right to receive that
portion of such death benefits that exceeds the Current Life Insurance
Protection Amount for the calendar year in which the Executive’s death occurs.
The balance of the Policy death benefits (i.e., the Current Life Insurance
Protection Amount) shall be paid to the Executive’s beneficiaries designated
under the Policies (or if no beneficiary is designated, the estate of the
Executive) in the manner and in the amount provided in the Policy’s provisions.
In no event shall the aggregate amounts payable under the Policies (and this
Agreement) to the Executive’s beneficiaries (or estate) exceed the Current Life
Insurance Protection Amount for the calendar year in which the Executive’s death
occurs.
          7.8.2 Payment to Executive’s Beneficiaries. To the extent an amount is
paid to the Executive’s beneficiaries (or the estate of the Executive)
hereunder, then such amount will satisfy, replace, and render void all
obligations of the Company to pay such amount under Article 3 of this Agreement.
          7.8.3 No Rights to Death Benefits if Executive Dies While Not in the
Active Service of the Company. If the Executive dies while not in the active
service of the Company, neither the Executive’s estate nor any of the
Executive’s beneficiaries shall have any rights to any portion of any death
benefits payable under any Policy.
     7.9 Exchange of Policies. The Company may unilaterally and without the
consent of the Executive exchange any Policies that are the subject matter of
this Agreement, with or without replacing said Policies.
     7.10 No Rights to Assign Interest in Policy. The Executive may not, without
the written consent of the Company, assign to any individual, trust or other
organization, any right, title or interest in any Policy, nor any rights,
options, privileges or duties created under this Agreement.
     7.11 Insurer Not a Party to This Agreement. No Insurer shall be deemed a
party to this Agreement, but is expected to respect the rights of the parties as
herein developed upon receiving an executed copy of this Agreement. The Insurer
shall be fully discharged from its obligations under the applicable Policy by
payment of the Policy’s death benefit to the beneficiaries named in the Policy,
subject to the Policy’s terms and conditions and endorsements. No provision in
this Agreement shall in any way be construed as enlarging, changing, varying, or
in any other way affecting the Insurer’s obligations as expressly provided in
the Policy, except insofar as the provisions of this Agreement are made a part
of the Policy by the endorsement document executed by the Company and filed with
the Insurer in connection with this Agreement.
ARTICLE 8
CLAIMS AND REVIEW PROCEDURES
     8.1 Claims Procedure. The Company shall notify any person or entity that
makes a claim under this Agreement (the “Claimant”) in writing, within 90 days
of Claimant’s written

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application for benefits, of his or her eligibility or noneligibility for
benefits under the Agreement. If the Company determines that the Claimant is not
eligible for benefits or full benefits, the notice shall set forth (1) the
specific reasons for such denial, (2) a specific reference to the provisions of
the Agreement on which the denial is based, (3) a description of any additional
information or material necessary for the Claimant to perfect his or her claim,
and a description of why it is needed, and (4) an explanation of this
Agreement’s claims review procedure and other appropriate information as to the
steps to be taken if the Claimant wishes to have the claim reviewed. If the
Company determines that there are special circumstances requiring additional
time to make a decision, the Company shall notify the Claimant of the special
circumstances and the date by which a decision is expected to be made, and may
extend the time for up to an additional 90 days.
     8.2 Review Procedure. If the Claimant is determined by the Company not to
be eligible for benefits, or if the Claimant believes that he or she is entitled
to greater or different benefits, the Claimant shall have the opportunity to
have such claim reviewed by the Company by filing a petition for review with the
Company within 60 days after receipt of the notice issued by the Company. Said
petition shall state the specific reasons which the Claimant believes entitle
him or her to benefits or to greater or different benefits. Within 60 days after
receipt by the Company of the petition, the Company shall afford the Claimant
(and counsel, if any) an opportunity to present his or her position to the
Company verbally or in writing, and the Claimant (or counsel) shall have the
right to review the pertinent documents. The Company shall notify the Claimant
of its decision in writing within the 60-day period, stating specifically the
basis of its decision, written in a manner calculated to be understood by the
Claimant and the specific provisions of the Agreement on which the decision is
based. If, because of the need for a hearing, the 60-day period is not
sufficient, the decision may be deferred for up to another 60 days at the
election of the Company, but notice of this deferral shall be given to the
Claimant.
ARTICLE 9
AMENDMENT AND TERMINATION
     9.1 Amendment. This Agreement may be amended or terminated only by a
written agreement signed by the Company and the Executive.
     Notwithstanding the previous paragraph in this Article 9, the Company may
amend or terminate this Agreement at any time if, pursuant to legislative,
judicial or regulatory action, continuation of the Agreement would (i) cause
benefits to be taxable to the Executive prior to actual receipt, or (ii) result
in significant financial penalties or other significantly detrimental
ramifications to the Company (other than the financial impact of paying the
benefits).
     9.2 Effect of Change in Control Event.
          9.2.1 Notwithstanding any other provision of this Agreement, following
a Change in Control Event, the provisions or the interpretation or
administration of this Agreement may not be amended or terminated in any manner
which would adversely affect in any way the computation or amount of or
entitlement to benefits under the Agreement as in effect immediately prior to
the Change in Control Event, including, but not by way of limitation, any
adverse change in or to:

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          (i) the formula pursuant to which benefits are earned or the date on
which benefits become vested;
          (ii) Final Salary recognized under the Agreement for purposes of
determining benefits; or
          (iii) the time or manner of payment of benefits available to any
Executive or beneficiary, including the commencement of the benefit payments or
any present value or other factors, including any methods of accounting, used in
determining the amount thereof.
          9.2.2 The Employer shall deposit assets equal in value to the
aggregate of all accrued benefits then payable or reasonably expected to be
payable in the future under the Agreement as of the date of such Change in
Control Event with a bank or corporate trustee pursuant to one or more grantor
trusts in a form satisfactory to the Company and Executive.
ARTICLE 10
ADJUSTMENT DUE TO EXCISE TAX
     10.1 If it is determined (in the reasonable opinion of independent public
accountants then regularly retained by the Employer), that any amount payable to
Executive by Employer under this Agreement or any other plan, program or
agreement under which Executive participates or is a party would constitute an
“Excess Parachute Payment” within the meaning of Code Section 280G (or any
similar provision), subject to the excise tax imposed by Section 4999 of the
Code, as amended from time to time (the “Excise Tax”), then the amount of
benefits payable to the Executive under any provision of this Agreement shall be
reduced to the extent necessary so that no portion of the amounts payable to the
Executive is subject to the Excise Tax. Executive shall be responsible for any
and all Excise Taxes (or similar taxes imposed upon such payments).
     10.2 The determination of the amount of reduction, if any, in the amounts
payable to the Executive shall be made in good faith by the Employer’s chief
financial officer after consultation with the advisors then regularly retained
by the Employer, and a written statement setting forth the calculation thereof
shall be provided to the Executive. If amounts payable to the Executive are to
be reduced pursuant to this Article 10, the Executive, in consultation with the
chief financial officer, shall determine the compensation and benefits to be so
reduced.
ARTICLE 11
MISCELLANEOUS
     11.1 No Guarantee of Employment. This Agreement is not an employment policy
or contract. It does not give any Executive the right to remain an employee of
the Company or any Subsidiary, nor does it interfere with the Employer’s right
to discharge the Executive. It also does not require the Executive to remain an
employee nor interfere with the Executive’s right to terminate employment at any
time.

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     11.2 Non-Transferability. Benefits under this Agreement may not be sold,
transferred, assigned, pledged, attached or encumbered in any manner.
     11.3 Reorganization. The Company shall not merge or consolidate into or
with another company, or reorganize, or sell substantially all of its assets to
another company, firm, or person unless such succeeding or continuing company,
firm, or person agrees to assume and discharge the obligations of the Company
under this Agreement. Upon the occurrence of such event, the term “Company” as
used in this Agreement shall be deemed to refer to the successor or survivor
company.
     11.4 Tax Withholding. The Employer shall withhold any taxes that are
required to be withheld from the benefits provided under this Agreement.
     11.5 Applicable Law. The Agreement and all rights hereunder shall be
governed by the laws of Illinois, except to the extent preempted by Federal
laws.
     11.6 Unfunded Arrangement. The Executives and beneficiaries are general
unsecured creditors of the Company and their respective Employers for the
payment of benefits under this Agreement. The benefits represent the mere
promise by the Company and the respective Employers to pay such benefits. The
rights to benefits are not subject in any manner to anticipation, alienation,
sale, transfer, assignment, pledge, encumbrance, attachment, or garnishment by
creditors. Any insurance on the Executive’s life is a general asset of the
Company or the Employer to which the Executive and beneficiary have no preferred
or secured claim.
     11.7 Administration. The Company shall have powers which are necessary to
administer this Agreement, including but not limited to:
          11.7.1 Construing and interpreting the provisions of the Agreement;
          11.7.2 Establishing and revising the method of accounting for the
Agreement;
          11.7.3 Maintaining a record of benefit payments; and
          11.7.4 Establishing rules and prescribing any forms necessary or
desirable to administer the Agreement.
     11.8 Named Fiduciary. The Company shall be the named fiduciary and plan
administrator under this Agreement. It may delegate to others certain aspects of
the management and operational responsibilities including the employment of
advisors and the delegation of ministerial duties to qualified individuals.
     11.9 Gender and Number. In the Agreement, wherever the context permits,
words in the masculine gender include the feminine and neuter genders, words in
the singular include the plural and words in the plural include the singular.
     11.10 Entire Agreement. This Agreement constitutes the entire agreement
between the Company and the Executive as to the subject matter hereof. No rights
are granted to the Executive by virtue of this Agreement other than those
specifically set forth herein.

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     11.11 Binding Effect. This Agreement shall bind the Executive and the
Company, and their beneficiaries, survivors, executors, successors,
administrators and transferees. The Company shall require any successor to the
Company and any successor to any Employer by merger, consolidation or
combination to expressly assume in writing the obligations of the Company and/or
such Employer hereunder.
*           *           *
     IN WITNESS WHEREOF, the Executive and a duly authorized company Officer
have signed this Agreement on this       day of                     , 2006.

          Executive:   Company:     MIDWEST BANC HOLDINGS, INC., for
itself and its Subsidiaries
 
       
 
       
 
  By:    
 
       
 
      James J. Giancola
 
       
 
  As its:   President and CEO
 
       

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SCHEDULE A
[INSERT NAME OF EXECUTIVE]

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

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