Employment Agreement-Taylor


    Exhibit
      10.4

    


    EMPLOYMENT
      AGREEMENT 

     

    This
      Employment Agreement (the "Agreement") is made and entered into this 1st day
      of
      May, 2004, by and between First Mid-Illinois Bancshares, Inc. ("the Company"),
      a
      corporation with its principal place of business located in Mattoon, Illinois,
      and Michael L. Taylor (“Manager”).

    


    In
      consideration of the promises and mutual covenants and agreements contained
      herein, the parties hereto acknowledge and agree as follows:

    


    ARTICLE
      ONE

    TERM
      AND NATURE OF AGREEMENT

    


    1.01 Term
      of Agreement.
      The
      term of this Agreement shall commence as of May 1, 2004 and shall continue
      for
      three years, until April 30, 2007. Thereafter, unless Manager’s employment with
      the Company has been previously terminated, Manager shall continue his
      employment with the Company on an at will basis and, except as provided in
      Articles Five, Six and Seven, this Agreement shall terminate unless extended
      by
      mutual written agreement.

    


    1.02  Employment.
      The
      Company agrees to employ Manager as Executive Vice President and Manager accept
      such employment by the Company on the terms and conditions herein set forth.
      The
      duties of Manager shall be determined by the Company’s Chief Executive Officer
      and shall adhere to the policies and procedures of the Company and shall follow
      the supervision and direction of the Chief Executive Officer or his designee
      in
      the performance of such duties. During the term of his employment, Manager
      agrees to devote his full working time, attention and energies to the diligent
      and satisfactory performance of his duties hereunder. Manager shall not, while
      he is employed by the Company, engage in any activity which would (a) interfere
      with, or have an adverse effect on, the reputation, goodwill or any business
      relationship of the Company or any of its subsidiaries; (b) result in economic
      harm to the Company or any of its subsidiaries; or (c) result in a breach of
      Section Six of the Agreement.

    


    ARTICLE
      TWO

    COMPENSATION
      AND BENEFITS

    


    While
      Manager is employed with the Company during the term of this Agreement, the
      Company shall provide Manager with the following compensation and
      benefits:

    


    2.01 Base
      Salary.
      The
      Company shall pay Manager an annual base salary of $110,000.00 per fiscal year,
      payable in accordance with the Company’s customary payroll practices for
      management employees. The Chief Executive Officer or his designee may review
      and
      adjust Manager's base salary from year to year; provided, however, that during
      the term of Manager's employment, the Company shall not decrease Manager's
      base
      salary.

    


    2.02 Incentive
      Compensation Plan.
      Manager
      shall continue to participate in the First Mid-Illinois Bancshares, Inc.
      Incentive Compensation Plan in accordance with the terms and conditions of
      such
      Plan. Pursuant to the Plan, Manager shall have an opportunity to receive
      incentive compensation of up to a maximum of 25% of Manager's annual base
      salary. The incentive compensation payable for a particular fiscal year will
      be
      based upon the attainment of the performance goals in effect under the Plan
      for
      such year and will be paid in accordance with the terms of the Plan and at
      the
      sole discretion of the Board.

    


    2.03 Deferred
      Compensation Plan.
      Manager
      shall be eligible to participate in the First Mid-Illinois Bancshares, Inc.
      Deferred Compensation Plan in accordance with the terms and conditions of such
      Plan.

    


    2.04 Vacation.
      Manager
      shall be entitled to three (3) weeks of paid vacation each year during the
      term
      of this Agreement.

    


    2.05 Other
      Benefits.
      Manager
      shall be eligible (to the extent he qualifies) to participate in any other
      retirement, health, accident and disability insurance, or similar employee
      benefit plans as may be maintained from time to time by the Company for its
      other management employees subject to and on a consistent basis with the terms,
      conditions and overall administration of such plans.

    


    2.06 Business
      Expenses.
      Manager
      shall be entitled to reimbursement by the Company for all reasonable expenses
      actually and necessarily incurred by him on its behalf in the course of his
      employment hereunder and in accordance with expense reimbursement plans and
      policies of the Company from time to time in effect for management
      employees.

    


    2.07 Withholding.
      All
      salary, incentive compensation and other benefits provided to Manager pursuant
      to this Agreement shall be subject to withholding for federal, state or local
      taxes, amounts withheld under applicable employee benefit plans, policies or
      programs, and any other amounts that may be required to be withheld by law,
      judicial order or otherwise or by agreement with, or consent of,
      Manager.

    


    ARTICLE
      THREE

    DEATH
      OF MANAGER

    


    This
      Agreement shall terminate prior to the end of the term described in Section
      1.01
      upon Manager’s termination of employment with the Company due to his death. Upon
      Manager’s termination due to death, the Company shall pay Manager’s estate the
      amount of Manager’s base salary plus his accrued but unused vacation time earned
      through the date of such death and any incentive compensation earned for the
      preceding fiscal year that is not yet paid as of the date of such
      death.

    


    ARTICLE
      FOUR

    TERMINATION
      OF EMPLOYMENT

    


    Manager’s
      employment with the Company may be terminated by Manager or by the Company
      at
      any time for any reason. Upon Manager’s termination of employment prior to the
      end of the term of the Agreement, the Company shall pay Manager as
      follows:

    


    4.01 Termination
      by the Company for Other Than Cause.
      If the
      Company terminates Manager’s employment for any reason other than Cause, the
      Company shall pay Manager the following:

    


    (a) An
      amount
      equal to Manager’s monthly base salary in effect at the time of such termination
      of employment for a period of six (6) months thereafter. Such amount shall
      be
      paid to Manager periodically in accordance with the Company’s customary payroll
      practices for management employees.

    


    (b) The
      base
      salary and accrued but unused paid vacation time earned through the date of
      termination and any incentive compensation earned for the preceding fiscal
      year
      that is not yet paid.

    


    (c) Continued
      coverage for Manager and/or Manager’s family under the Company’s health plan
      pursuant to Title I, Part 6 of the Employee Retirement Income Security Act
      of
      1974 (“COBRA”) and for such purpose the date of Manager’s termination of
      employment shall be considered the date of the “qualifying event” as such term
      is defined by COBRA. During the period beginning on the date of such termination
      and ending at the end of the period described in Section 4.01(a), Manager shall
      be charged for such coverage in the amount that he would have paid for such
      coverage had he remained employed by the Company, and for the duration of the
      COBRA period, Manager shall be charged for such coverage in accordance with
      the
      provisions of COBRA.

    


    For
      purposes of this Agreement, “Cause” shall mean Manager’s (i) conviction in a
      court of law of (or entering a plea of guilty or no contest to) any crime or
      offense involving fraud, dishonesty or breach of trust or involving a felony;
      (ii) performance of any act which, if known to the customers, clients,
      stockholders or regulators of the Company, would materially and adversely impact
      the business of the Company; (iii) act or omission that causes a regulatory
      body
      with jurisdiction over the Company to demand, request, or recommend that Manager
      be suspended or removed from any position in which Manager serves with the
      Company; (iv) substantial nonperformance of any of his obligations under this
      Agreement; (v) misappropriation of or intentional material damage to the
      property or business of the Company or any affiliate; or (vi) breach of Article
      Five or Six of this Agreement.

    


    4.02 Termination
      Following a Change in Control.
      Notwithstanding Section 4.01, if, following a Change in Control, and prior
      to
      the end of the term of this Agreement, Manager’s employment is terminated by the
      Company (or any successor thereto) for any reason other than Cause, or if
      Manager terminates his employment because of a decrease in his then current
      base
      salary or a substantial diminution in his position and responsibilities, the
      Company (or any successor thereto) shall pay Manager the following:

    


    (a) An
      amount
      equal to Manager’s monthly base salary in effect at the time of such termination
      for a period of twelve (12) months thereafter. Such amount shall be paid, at
      Manager’s election, in either a lump sum payment as soon as practicable
      following the date of such termination or periodically in accordance with the
      Company’s or successor’s customary payroll practices for Manager
      employees.

    


    (b) An
      amount
      equal to the incentive compensation earned by or paid to Manager for the fiscal
      year immediately preceding the year in which Manager’s termination of employment
      occurs. Such amount shall be paid to Manager in a lump sum as soon as
      practicable after the date of his termination.

    


    (c) The
      base
      salary and accrued but unused paid vacation time earned through the date of
      termination and any incentive compensation earned for the preceding fiscal
      year
      that is not yet paid.

    


    (d) Continued
      coverage for Manager and/or Manager’s family under the Company’s health plan
      pursuant to Title I, Part 6 of the Employee Retirement Income Security Act
      of
      1974 (“COBRA”) and for such purpose the date of Manager’s termination of
      employment shall be considered the date of the “qualifying event” as such term
      is defined by COBRA. During the period beginning on the date of such termination
      and ending at the end of the period described in Section 4.02(a), Manager shall
      be charged for such coverage in the amount that he would have paid for such
      coverage had he remained employed by the Company, and for the duration of the
      COBRA period, Manager shall be charged for such coverage in accordance with
      the
      provisions of COBRA.

    


    For
      purposes of this Agreement, “Change in Control” shall have the meaning as set
      forth in the First Mid-Illinois Bancshares, Inc. 1997 Stock Incentive
      Plan.

    


    4.03 Other
      Termination of Employment.
      If,
      prior to the end of the term of this Agreement, the Company terminates Manager’s
      employment for Cause, or if Manager terminates his employment for any reason
      other than as described in Section 4.02 above, the Company shall pay Manager
      the
      base salary and accrued but unused paid vacation time earned through the date
      of
      such termination and any incentive compensation earned for the preceding fiscal
      year that is not yet paid.

    


    ARTICLE
      FIVE

    CONFIDENTIAL
      INFORMATION

    


    5.01 Non-Disclosure
      of Confidential Information.
      During
      his employment with the Company, and after his termination of such employment
      with the Company, Manager shall not, in any form or manner, directly or
      indirectly, use, divulge, disclose or communicate to any person, entity, firm,
      corporation or any other third party, any Confidential Information, except
      as
      required in the performance of Manager’s duties hereunder, as required by law or
      as necessary in conjunction with legal proceedings.

    


    5.02 Definition
      of Confidential Information.
      For the
      purposes of this Agreement, the term "Confidential Information" shall mean
      any
      and all information either developed by Manager during his employment with
      the
      Company and used by the Company or its affiliates or developed by or for the
      Company or its affiliates of which Manager gained knowledge by reason of his
      employment with the Company that is not readily available in or known to the
      general public or the industry in which the Company or any affiliate is or
      becomes engaged. Such Confidential Information shall include, but shall not
      be
      limited to, any technical or non-technical data, formulae, compilations,
      programs, devices, methods, techniques, procedures, manuals, financial data,
      business plans, lists of actual or potential customers, lists of employees
      and
      any information regarding the Company's or any affiliate’s products, marketing
      or database. The Company and Manager acknowledge and agree that such
      Confidential Information is extremely valuable to the Company and may constitute
      trade secret information under applicable law. In the event that any part of
      the
      Confidential Information becomes generally known to the public through
      legitimate origins (other than by the breach of this Agreement by Manager or
      by
      other misappropriation of the Confidential Information), that part of the
      Confidential Information shall no longer be deemed Confidential Information
      for
      the purposes of this Agreement, but Manager shall continue to be bound by the
      terms of this Agreement as to all other Confidential Information.

    


    5.03 Delivery
      upon Termination.
      Upon
      termination of Manager's employment with the Company for any reason, Manager
      shall promptly deliver to the Company all correspondence, files, manuals,
      letters, notes, notebooks, reports, programs, plans, proposals, financial
      documents, and any other documents or data concerning the Company's or any
      affiliate’s customers, database, business plan, marketing strategies, processes
      or other materials which contain Confidential Information, together with all
      other property of the Company or any affiliate in Manager's possession, custody
      or control.

    


    ARTICLE
      SIX

    NON-COMPETE
      AND NON-SOLICITATION COVENANTS

    


    6.01 Covenant
      Not to Compete.
      During
      the term of this Agreement and for a period of one year following the later
      of
      (i) the termination of Manager's employment for any reason or (ii) the last
      day
      of the term of the Agreement, Manager shall not, on behalf of himself or on
      behalf of another person, corporation, partnership, trust or other entity,
      within the counties of Coles, Moultrie, Douglas, Cumberland, Effingham,
      Champaign, Christian, Madison, Macon, Bond or Piatt, Illinois, or any other
      county in which the Company or any affiliate conducts business:

    


    (a) Directly
      or indirectly own, manage, operate, control, participate in the ownership,
      management, operation or control of, be connected with or have any financial
      interest in, or serve as an officer, employee, advisor, consultant, agent or
      otherwise to any person, firm, partnership, corporation, trust or other entity
      which owns or operates a business similar to that of the Company or its
      affiliates.

    


    (b) Solicit
      for sale, represent, and/or sell Competing Products to any person or entity
      who
      or which was the Company’s customer or client during the last year of Manager's
      employment. "Competing Products," for purposes of this Agreement, means products
      or services which are similar to, compete with, or can be used for the same
      purposes as products or services sold or offered for sale by the Company or
      any
      affiliate or which were in development by the Company or any affiliate within
      the last year of Manager's employment.

    


    6.02 Covenant
      Not to Solicit.
      For a
      period of one year following the later of (i) the termination of Manager’s
      employment for any reason or (ii) the last day of the term of this Agreement,
      Manager shall not:

    


    (a) Attempt
      in any manner to solicit from any client or customer business of the type
      performed by the Company or any affiliate or persuade any client or customer
      of
      the Company or any affiliate to cease to do such business or to reduce the
      amount of such business which any such client or customer has customarily done
      or contemplates doing with the Company or any affiliate, whether or not the
      relationship between the Company or affiliate and such client or customer was
      originally established in whole or in part through Manager’s efforts.


    


    (b) Render
      any services of the type rendered by the Company or any affiliate for any client
      or customer of the Company. 

    


    (c) Solicit
      or encourage, or assist any other person to solicit or encourage, any employees,
      agents or representatives of the Company or an affiliate to terminate or alter
      their relationship with the Company or any affiliate.

    


    (d) Do
      or
      cause to be done, directly or indirectly, any acts which may impair the
      relationship between the Company or any affiliate with their respective clients,
      customers or employees.

    


    ARTICLE
      SEVEN

    REMEDIES

    


    Manager
      acknowledges that compliance with the provisions of Articles Five and Six herein
      is necessary to protect the business, goodwill and proprietary information
      of
      the Company and that a breach of these covenants will irreparably and
      continually damage the Company for which money damages may be inadequate.
      Consequently, Manager agrees that, in the event that he breaches or threatens
      to
      breach any of these provisions, the Company shall be entitled to both (a) a
      temporary, preliminary or permanent injunction in order to prevent the
      continuation of such harm; and (b) money damages insofar as they can be
      determined. In addition, the Company will cease payment of all compensation
      and
      benefits under Articles Three and Four hereof. In the event that any of the
      provisions, covenants, warranties or agreements in this Agreement are held
      to be
      in any respect an unreasonable restriction upon Manager or are otherwise
      invalid, for whatsoever cause, then the court so holding shall reduce, and
      is so
      authorized to reduce, the territory to which it pertains and/or the period
      of
      time in which it operates, or the scope of activity to which it pertains or
      effect any other change to the extent necessary to render any of the
      restrictions of this Agreement enforceable.

    


    ARTICLE
      EIGHT

    MISCELLANEOUS

    


    8.01 Successors
      and Assignability.

    


    (a) No
      rights
      or obligations of the Company under this Agreement may be assigned or
      transferred except that the Company will require any successor (whether direct
      or indirect, by purchase, merger, consolidation or otherwise) to all or
      substantially all of the business and/or assets of the Company to expressly
      assume and agree to perform this Agreement in the same manner and to the same
      extent that the Company would be required to perform it if no such succession
      had taken place.

    


    (b) No
      rights
      or obligations of Manager under this Agreement may be assigned or transferred
      by
      Manager other than his rights to payments or benefits hereunder which may be
      transferred only by will or the laws of descent and distribution. 

    


    8.02 Entire
      Agreement.
      This
      Agreement contains the entire agreement between the parties with respect to
      the
      subject matter hereof and may not be modified except in writing by the parties
      hereto. Furthermore, the parties hereto specifically agree that all prior
      agreements, whether written or oral, relating to Manager's employment by the
      Company shall be of no further force or effect from and after the date
      hereof.

    


    8.03 Severability.
      If any
      phrase, clause or provision of this Agreement is deemed invalid or
      unenforceable, such phrase, clause or provision shall be deemed severed from
      this Agreement, but will not affect any other provisions of this Agreement,
      which shall otherwise remain in full force and effect. If any restriction or
      limitation in this Agreement is deemed to be unreasonable, onerous or unduly
      restrictive, it shall not be stricken in its entirety and held totally void
      and
      unenforceable, but shall be deemed rewritten and shall remain effective to
      the
      maximum extent permissible within reasonable bounds.

    


    8.04 Controlling
      Law and Jurisdiction.
      This
      Agreement shall be governed by and interpreted and construed according to the
      laws of the State of Illinois. The parties hereby consent to the jurisdiction
      of
      the state and federal courts in the State of Illinois in the event that any
      disputes arise under this Agreement.

    


    8.05 Notices.
      All
      notices, requests, demands and other communications under this Agreement shall
      be in writing and shall be deemed to have been duly given (a) on the date of
      service if served personally on the party to whom notice is to be given; (b)
      on
      the day after delivery to an overnight courier service; (c) on the day of
      transmission if sent via facsimile to the facsimile number given below; or
      (d)
      on the third day after mailing, if mailed to the party to whom notice is to
      be
      given, by first class mail, registered or certified, postage prepaid and
      properly addressed, to the party as follows:


    
      
         

      

      
         

        
          

        

      

      
         

      

    


    If
      to
      Manager:  Michael
      L. Taylor

    19
      Cambridge Drive

    Mattoon,
      IL 61983

    


    


    If
      to the
      Company: First
      Mid-Illinois Bancshares, Inc.

    1515
      Charleston Avenue

    Mattoon,
      Illinois 61938

    


    Facsimile:
      217-258-0485

    


    Attention:
      Chairman and Chief Executive Officer

    Any
      party
      may change its address for the purpose of this Section by giving the other
      party
      written notice of its new address in the manner set forth above.

    IN
      WITNESS WHEREOF,
      the
      parties hereto have executed this Agreement as of the date first written
      above.

    


    
      	 	 	 	 	
              FIRST
                MID-ILLINOIS BANCSHARES,
                INC.

            


    

    


    


    
      	 	 	 	 	
              By:
                /s/ William S. Rowland

            


    

     

    
      	 	 	 	 	
              Title:
                Chairman and Chief Executive
                Officer

            


    

    


    


    


    
      	 	 	 	 	
              MANAGER:

            


    

    


    
      	 	 	 	 	
              /s/
                Michael L. Taylor