Exhibit 10.28

Employment Agreement

 

This Employment Agreement (this “Agreement”) is made and entered into as of
December 20, 2012 (the “Effective Date”) by and between Midland States Bank, an
Illinois banking corporation (the “Employer”) and Jeffrey Mefford (the
“Executive”).

Recitals

A. The Employer is a wholly-owned subsidiary of Midland States Bancorp, Inc.,
(the “Company”).

B. Executive is currently employed as Senior Vice President Community Banking of
the Employer pursuant to the terms and conditions of that certain employment
agreement by and between the parties dated December 1, 2010 (the “Prior
Agreement”).

C. The Company is considering various strategic initiatives, one of which may be
an initial public offering (an “IPO”) of its common stock pursuant to which the
Company would become a publicly-traded corporation.

D. In anticipation of the possibility of an IP, or other strategic initiatives,
the parties desire to reconsider, amend and restate the terms and conditions of
employment applicable to Executive’s employment with 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. Prior Agreement. As of the Effective Date, the Agreement shall supersede and
replace any and all prior agreements respecting Executive’s employment by, or
service to, the Employer or the Company as may from time to time have been made
by and between the parties, whether or not in writing, including but not limited
to the Prior Agreement; provided, however, that any vested benefits due to
Executive pursuant to any pension plan, welfare benefit plan or any other
employee benefit plan shall continue to be available to Executive subject to the
terms and conditions of the applicable plan as may be in effect from time to
time.

 

2. Employment Period.  Subject to the terms and conditions of this Agreement,
the Employer hereby agrees to continue 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 two (2) years thereafter, unless sooner terminated as
provided herein. As of the first anniversary of the Effective Date, and each
anniversary thereafter (each an “Extension Date”), the Employment Period shall
automatically be extended for one (1) additional year, unless either the
Employer or the Executive notifies the other party, by written notice delivered
no later than 90 days prior to such Extension Date, 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

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the Employment Period, this Agreement shall remain in effect for the two (2)
year period following the Change of Control and shall then terminate.

3. Duties.  Executive agrees that during the Employment Period, Executive will
devote his/her full business time, energies and talents to serving as the Senior
Vice President Community Banking of the Employer, at the direction of the Chief
Executive Officer of the Employwer  (the “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 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.

4. 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 $220,000 (the “Annual
Base Salary”), which shall be payable in accordance with the Employer’s normal
payroll practices as are in effect from time to time.  Beginning on January 1,
2012 and on each anniversary of such date, Executive’s rate of Annual Base
Salary shall be reviewed by the CEO, and following such review, the Annual Base
Salary may be adjusted upward but in no event will it be decreased.

(b)  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 thirty-five percent (35%) of the Annual Base Salary, which Incentive
Bonus shall be determined by specific performance criteria established from time
to time by the CEO.

(c) 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 on
as favorable  a basis as provided to other similarly situated senior
executives. Executive and Executive’s dependents, as the case may be, shall be

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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 on as favorable
a basis as provided to other similarly situated senior executives.

(d) 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.

(e) 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 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.

5. Definitions.  As used throughout this Agreement, all of the terms defined in
this Section 5 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

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(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-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 twenty-four  (24) 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) an adverse change in the nature, scope or status of Executive’s position,
authorities or duties from those in effect in accordance with Section 3
immediately following the Effective Date, or if applicable and greater,
immediately prior to the Covered Period;

(ii) a reduction in Executive’s Annual Base Salary, 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;  

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(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

(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 ninety (90) 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 6 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 6 of this Agreement upon such Termination; provided such
Termination occurs within 24 months after such initial existence of the
applicable condition.  

(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 Section6(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.

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(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 Midland States Severance Plan;
or

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

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

(i) by the Employer or its successor, as the case may be, other than a
Termination for Cause or 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 and continuing failure, that is not remedied within
twenty (20) days after receipt of written notice of such failure from the CEO,
to perform her obligations hereunder;

(ii) Executive’s willful act or acts of misconduct that are, alone or in the
aggregate, materially and demonstrably injurious, monetarily or otherwise, to
the Employer or an Affiliate, as determined in the sole discretion of the CEO;
or

(iii) Executive’s breach of fiduciary responsibility or any obligation of
Executive pursuant to Section 8.

(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.

6. Rights and Payments Upon Termination.    Either party may terminate
Executive’s employment under this Agreement pursuant to the terms and conditions
of this Section 6.  Subject to Section 7 below, Executive’s right to benefits
and payments, if any, for periods after the Termination Date shall be determined
in accordance with this Section 6:

(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 6 (other than this Section 6‎(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 6‎(a) shall be made
within thirty (30) days after the Termination Date; provided that any benefits,

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incentives or awards payable as described in Section 6‎(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.

(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 2 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 Other than for Cause or Termination 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 subparagraph (ii) below) paid in
12 substantially equal monthly installments, with each successive payment being
due on the monthly anniversary of the Termination Date.

(ii) 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.

(iii) Executive (and dependents, as may be applicable) shall be entitled to the
medical benefits provided in Section 6(e) below.

(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.

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(ii) Executive (and her dependents, as may be applicable) shall be entitled to
the medical benefits provided in Section 6‎(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 ‎4(b) of this Agreement.

(e) Medical,  Dental and Life Insurance 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 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.

7. 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 6(c),
 ‎6(d) or ‎6(e) (except for payments and benefits described in Section ‎6(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 6(c),  6(d) or 6(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

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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 6(c),  6(d) or 6(e) or any payment or benefit in lieu
thereof.

8. Restrictive Covenants.    

(a) Confidential Information.  Executive acknowledges that, during the course of
her 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 her 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 her 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 her 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 her 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/she 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,

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notes or reproductions of any kind made from or about the records, files,
documents or other materials.

(c) Non-Competition and Non-Solicitation.  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 each banking or
other office location of the Employer and its Affiliates (collectively, the
“Restricted Area”).  Therefore, as an essential ingredient of and in
consideration of this Agreement and her employment by the Employer,  Executive
agrees that, during her 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/she 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) 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 her name or any similar name to, lend her 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.

(ii) 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.

(iii) 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.

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(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.

(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 her
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 her 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 her 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 8 are reasonable with
respect to their duration, geographical area and scope.  Executive further
acknowledges that the restrictions contained in this Section 8 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 Section
8, then the more restrictive of such provisions from the agreements shall
control for the period during which the agreements would otherwise be in effect.

9. 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.

10. 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 Bank
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.

11. 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.

12. 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, 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

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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 8 shall survive the termination of this Agreement.

13. 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.

14. 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.

15. 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.

16. Legal Fees.  In the event that either party commences arbitration or
litigation to enforce or protect her 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.

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

18. 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

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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.

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

 

MIDLAND STATES BANKJEFFREY MEFFORD

 

 

 

By:  /s/ Leon J. Holschbach/s/ Jeffrey Mefford

Name:  Leon J. Holschbach[Signature]

Its: President & Chief Executive Officer

 

 

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