**Exhibit 10iii.1**

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**MANAGEMENTCONTIINUITYAGREEMENT**

 

 

ThisManagement Continuity Agreement (“Agreement”) is made and entered into as ofthis sixteenth day of December, 1999. by and between Illini Corporation, anIllinois corporation with an office at 3200 West Ties Avenue, Springfield,Illinois 62707 (the “Company”), and Burnard K. McHone, whose address is 3800North West Territory Drive, Springfield, Illinois, 62707 (the “Officer”).

 

**WITNESSETH**

 

**WHEREAS,**the Officer is employed by the Company and the Company’ssubsidiary, Illini Bank, an Illinois banking corporation (the “Bank”), as anofficer of the Company and the Bank, respectively, with the title and salarycurrent at the date of this Agreement as set forth in this Agreement; and

 

**WHEREAS,**the Company wishes to attract and retain highly qualifiedexecutives and to achieve this goal it is in the best interests of the Companyand the Bank to secure the continued services of the Officer regardless of achange in control of the Company; and

 

**WHEREAS,**the Company is willing, in order to provide the Officer a measure of securitywith respect to his employment with the Company and the Bank in the event of achange in control of the Company so that the Officer will be in a position toact with respect to a possible change in control of the Company in the bestinterests of the Company and its shareholders, without concern as to theOfficer’s own financial security, and in order to induce the Officer to remainin employment with the Company and the Bank, to agree that employment of theOfficer shall be terminable only for cause for a limited period after a changein control of the Company.

 

**NOW,THEREFORE,** the Company and the Officer agree as follows:

 

**Section 1Employment**

 

**1.1    Term.**The Company shallemploy the Officer and the Officer shall remain in employment with the Companyand the Bank for a period of three years from the Commencement Date (hereincalled the Term). Annually, effective on the anniversary of the 

 

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Commencement Date, the Term of this Agreement shall be extended for oneadditional year, unless the Board of Directors of the Company takes action tonot extend the Term prior to such anniversary of the Commencement Date of thisAgreement. The Term may be otherwise extended by written amendment to this Agreement,which amendment specifically refers to this Agreement, signed by the Companyand the Officer.

 

**1.2   Compensation.**As compensation for services provided to the Company and the Bank by theOfficer pursuant to this Agreement, the Company shall cause the Bank to pay theOfficer an annual base salary of $111,500.00, which salary may be increasedfrom time to time by the Company or the Bank. The Officer shall also beeligible to actively participate in any other compensation and benefit plansgenerally available to executive employees of the Company or the Bank of likegrade and salary including, but not limited to, retirement plans, group life,disability, accidental death and dismemberment, travel and accident, and healthand dental insurance plans, incentive compensation plans, stock compensationplans, stock option plans, deferred compensation plans, supplemental retirementplans and excess benefit plans. Such other compensation and benefit plans arehereinafter referred to collectively as the “Compensation and Benefits Plans”.

 

**1.3    Duties.**TheOfficer shall perform such duties and functions as are described in Schedule Ato this Agreement. Such duties shall be updated annually by the Boards ofDirectors of the Company and the Bank, or by a duly authorized committee of theBoards of Directors of the Company and the Bank. In the event of an actual orpotential Change in Control (as defined in Section 2.9), the Officer shallperform his duties and functions in a manner that is consistent with the best interestof the Company and its shareholders, without regard to the effect that thepotential or actual Change in Control may have on the Officer personally.

 

**1.4    Duty of Loyalty.**TheOfficer shall work full-time for the Company and the Bank only, provided that:

 

(a)     he may also engage in charitable, civic andother similar activities;

 

(b)             with the consent ofthe Board of Directors of the Company, he may serve as a director of a businessorganization not competing with the Company; and

 

(c)              he may make such investmentsand reinvestment in business activities as shall not require a substantialportion of his time.

 

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**1.5   Duty Not toDisclose Confidential Information.**The Officer acknowledgesthat his relationship with the Company and the Bank is one of high trust andconfidence, and that he has access to Confidential Information (as hereinafterdefined) of the Company and the Bank. The Officer shall not, directly orindirectly, communicate, deliver, exhibit or provide any ConfidentialInformation to any person, firm, partnership, corporation, organization orentity, except as required in the normal course of the Officer’s duties. Theduties contained in this paragraph shall be binding upon the Officer during thetime that he is employed by the Company and following the termination of suchemployment. Such duties will not apply to any such Confidential Informationwhich is or becomes in the public domain through no action on the part of theOfficer, is generally disclosed to third parities by the Company withoutrestriction on such third parties, or is approved for release by writtenauthorization of the Board of Directors of the Company. The term “ConfidentialInformation” shall mean any and all confidential, proprietary, or secretinformation relating to the Company’s or the Bank’s business, services,customers, business operations, or activities and any and all trade secrets,products, methods of conducting business, information, skills, knowledge,ideas, know-how or devices used in, developed by, or pertaining to theCompany’s or the Bank’s business and not generally known, in whole or in part,in any trade or industry in which the Company or the Bank is engaged.

 

**Section 2Termination**

 

**2.1 Termination of Agreement.**Unless soonerterminated in accordance with the terms of this Section 2, this Agreement shallterminate at the expiration of the Term, and all obligations hereunder shallterminate except as specifically set forth in Section 2.5. The Officer may,with the consent of the Company, continue in the employ of the Company and theBank after the expiration of the Term on such terms and conditions as may beagreed upon by the Company and the Officer.

 

**2.2 Termination by****the Officer.**The officer mayvoluntarily terminate this Agreement by providing thirty days notice to theCompany, in which event the Company shall have no further obligation to theOfficer hereunder from the date of such termination and the Officer shall haveno further obligation to the Company hereunder except the duty to not discloseConfidential Information in accordance with Section 1.5. In the event theOfficer’s employment with the Company and the Bank is terminated due to theOfficer’s death, the Company shall have no further obligation to the Officer,his heirs or legatees hereunder from the date of such termination, except topay any benefits due under the Compensation and

 

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Benefit Plans. In theevent the Officer’s employment with the Company and the Bank is terminated dueto the Officer’s Permanent Disability, the Company shall have no furtherobligation to the Officer hereunder from the date of such termination, except,to pay benefits due under the Compensation and Benefit Plans. For purposes ofthis Agreement, the term “Permanent Disability” means a physical or mentalcondition of the Officer which:

 

(a)                         hascontinued uninterrupted for six months;

 

(b)                        isexpected to continue indefinitely; and

 

(c)                         isdetermined by the Company to render the Officer incapable of adequatelyperforming his duties under Section 1.3 of this Agreement.

 

**2.3****Termination by****the Company Without Cause.**Thecompany may terminate this Agreement without cause prior to the Firm Term (ashereinafter defined), by providing thirty days notice to the Officer. In suchevent, the Officer shall have no further obligation to the Company hereunder,except the duty to not disclose Confidential Information in accordance withSection 1.5, and the Company shall have no further obligation to the Officerhereunder from the date of such termination except (i) to pay to the Officerthe salary payments described in Section 1.2, in the amount in effect on thedate of termination, for a period of twelve months from the date of termination,(ii) to pay to the Officer any other benefits due under the Compensation andBenefit Plans for a period of twelve months from the date of termination, and(iii) to pay to the Officer reasonable expenses of out placement within thefinancial institutions industry during the twelve month period following thedate of termination; provided, however, out placement expenses shall be paidonly upon actually incurring such expenses and Officer’s furnishing of evidencethereof to the Company and shall not include moving or relocation expenses; andprovided, however, that any benefit to be provided by a Compensation andBenefit Plan may be provided by the Company through cash of equivalent value orthrough a nonqualified arrangement or arrangements if, in the judgment of theCompany, permitting the Officer to participate in such plan after the date oftermination would adversely affect the tax status of such plan.

 

**2.4   Termination by theCompany With Cause.**Prior to or during the Firm Term, theCompany may terminate this Agreement for Cause. For purposes of this Agreement,Cause shall mean;

 

(a)             theOfficer’s willful and material breach of the provisions of this Agreement afterthe Board of Directors delivers a written demand to cure such breach, whichspecifically identifies the

 

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manner in which the Boardof Directors believes that the Officer has not substantially performed hisduties, or

 

(b)            theOfficer willfully engages in illegal conduct or gross misconduct whichmaterially and demonstrably injures the Company or the Bank.

 

For purposes ofdetermining whether “Cause” exists, no act or failure to act, on the Officer’spart shall be considered “willful,” unless it is done, or omitted to be done,by the Officer in bad faith or without reasonable belief by the Officer thathis action or omission was in the best interests of the Company. In the eventof the Officer’s termination for Cause, the Company will have no furtherobligation to the Officer under the Agreement from the date of suchtermination.

 

 

**2.5 Termination following Change in Control.**Inthe event there is a Change in Control of the Company, as defined in Section2.6, during the Term, and:

 

(a)            within the periodcommencing three months prior to the date of a Change in Control and ending sixmonths following the date of the Change in Control (the “Firm Term”), theOfficer’s employment hereunder is terminated by the Company other than forCause, as defined in Section 2.4; or

 

(b)           within the Firm Term,the Officer resigns from his employment hereunder upon thirty days writtennotice given to the Company within thirty days following a material change inthe Officer’s title, authorities or duties, in effect immediately prior to theChange in Control, a reduction in the compensation or a reduction in benefitsprovided pursuant to this Agreement or the Compensation and Benefit Plans belowthe amount of compensation and benefits in effect immediately prior to theChange in Control, or a change of the Officer’s principal place of employmentwithout his consent to a city more than 25 miles from Springfield, Illinois,

 

then the Officer shallhave no further obligation to the Company hereunder, except the duty not todisclose Confidential Information in accordance with Section 1.5, and theCompany shall have no further obligation to the Officer hereunder from the dateof termination except (i) to pay to the Officer the salary payments describedin Section 1.2, in the amount in effect on the date of termination, for a periodof twelve months from the date of termination, (ii) to pay to the Officer anyother benefits due under the Compensation and Benefit Plans for a period oftwelve months from the date of termination and (iii) to pay to the Officerreasonable expenses of out placement within the financial institutions industryduring the twelve month period following the date of termination; provided,however, out placement expenses shall be paid only upon actually incurring suchexpenses and Officer’s furnishing of evidence thereof to the Company and

 

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shall not include movingor relocation expenses and provided, however, that any benefit to be providedby a Compensation****and Benefits Plan may be provided by the Company through cashof equivalent value or through a nonqualified arrangement or arrangements if.in the judgment of the Company, permitting the Officer to participate in suchplan after the date of termination would adversely affect the tax status ofsuch plan.

 

**2.6****       Changein Control Defined.**A Change in Control of the Company shall have occurred:

(a)            on the fifth daypreceding the scheduled expiration date of a tender offer by, or exchange offerby any corporation, person, other entity or group (other than the Company orany of its wholly owned subsidiaries), to acquire Voting Stock of the Companyif:

 

(i)            after giving effect tosuch offer such corporation, person, other entity or group would own 50% ormore of the Voting Stock of the Company~

 

(ii)         there shall have beenfiled documents with the Securities and Exchange Commission in connectiontherewith (or, if no such filing is required, public evidence that the offerhas already commenced); and

 

(iii)      such corporation, personother entity or group has secured all required regulatory approvals to own orcontrol 50% or more of the Voting Stock of the Company;

 

(b)             if the shareholdersof the Company approve a definitive agreement to merger or consolidate theCompany with or into another corporation in a transaction in which neither theCompany nor any of its wholly owned subsidiaries will be the survivingcorporation, or to sell or otherwise dispose of all or substantially all of theCompany’s assets to any corporation, person, other entity or group (other thanthe Company or any of its wholly owned subsidiaries), and such definitiveagreement is consummated;

 

(c)              if any corporation,person, other entity or group (other than the Company or any of its whollyowned subsidiaries) becomes the Beneficial Owner (as that term is defined inthe Securities and Exchange Commission’s Rule 13d-3 under the SecuritiesExchange Act of 1934) of stock representing 50% or more of the Voting Stock ofthe Company; or

 

(d)             if during any periodof two consecutive years Continuing Directors cease to comprise a majority ofthe Company’s Board of Directors.

 

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The term “ContinuingDirector’ means:

 

(a)              any member of theBoard of Directors of the Company at the beginning of any period of twoconsecutive years; and

 

 (b)          any person who subsequently becomes a memberof the Board of Directors of the Company, if:

 

(i)                   such person’snomination for election or election to the Board of Directors of the Company isrecommended or approved by resolution of a majority of the ContinuingDirectors; or

 

(ii)                such person isincluded a nominee in a proxy statement of the Company distributed when amajority of the Board of Directors of the Company consists of ContinuingDirectors.

 

“VotingStock” shall mean those shares of the Company entitled to vote generally in theelection of directors.

 

**2.7Termination of Related Officers.**The parties agree that inthe event Officer’s employment by the Company is terminated for any reason,Officer will immediately resign from all other positions or offices held withthe Company, including any directorships with the Company or the Bank.

 

**2.8   Officer’s Costs of Enforcement.**The Company shall pay all expenses of the Officer, including but not limited toattorney’s fees, incurred in enforcing payments by the Company pursuant to thisAgreement.

 

**Section 3Miscellaneous**

 

**3.1    Assignment of Officer’s Rights.**TheOfficer may not assign, pledge or otherwise transfer any of the benefits ofthis Agreement either before or after termination of employment, and anypurported assignment, pledge or transfer of any payment to be made by theCompany hereunder shall be void and of no effect. No payment to be made to theOfficer hereunder shall be subject to the claims of creditors of the Officer.

 

**3.2      Agreements Binding on Successor.**This Agreement shall be binding and inure to the benefit of the parties heretoand their respective successors, assigns, personal representatives, heirs,legatees and beneficiaries.

 

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**3.3   Notices.** Any noticerequired or desired to be given under this Agreement shall be deemed given ifin writing and sent by first class mail to the Officer or the Company at his orits address as set forth above, or to such other address of which either theOfficer or the Company shall notify the other in writing.

 

**3.4   Waiver of Breach.**Thewaiver by either party of a breach of any provision of this Agreement shall notoperate or be construed as a waiver of any subsequent breach by either the Officeror the Company.

 

**3.5  Entire****Agreement.**ThisAgreement contains the entire understanding of the parties and supersedes thePersonal Service Contract between the Officer, the Company and the Bank, whichwas effective October 30, 1996. It may be modified or amended only by anagreement in writing signed by the party against whom enforcement of any changeor amendment is sought.

 

**3.6  Severability of Provisions.**If for any reason any paragraph, term or provision of this Agreement is held tobe invalid or unenforceable, all other valid provisions herein shall remain infull force and effect and all paragraphs, terms and provisions of thisAgreement shall be deemed to be severable in nature.

 

**3.7**   **Governing Law.**This Agreement is made in,and shall be governed by, the laws of the State of Illinois.

 

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**INWITNESS WHEREOF,**the parties have executed this Agreement asof the day and year first set forth above.

 

 
|   | /s/ Burnard McHone     |            |   |
|--------|------------------------|-----------------|--------|
|   | Officer                |            |
|   |                   |            |
|   | **ILLINI CORPORATION** |            |
|   |                   |            |
|   | **By: **          | /s/Thomas Black |   |   |
|   | **Its:**               | Chairman        |   |   |

 

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