3. Midwest agrees to pay to Giancola in 2008 the sum of $415,799, reduced for payrollwithholding as required by law. The amount of such payment shall be reported by Midwest as wagespaid to Giancola in the 2008 tax year.     4. In exchange for the receipt of the payment identified in paragraph 3, Giancola, on his ownbehalf and on behalf of the persons identified in paragraph 10 hereunder to the fullest extentallowed by law, hereby releases and forever discharges each and every one of the Released Partiesfrom any and all past, present or future claims, debts, demands, actions, causes of action, suits,costs, damages, expenses, obligations, attorneys’ fees, and other liabilities whatsoever thatGiancola has, may have had, or may have in the future relating to the Restricted Shares and whicharose prior to the execution of this Settlement Agreement or which will or may arise after theexecution of this Settlement Agreement, including but not limited to: (i) any claim forprofessional fees incurred by Giancola in preparing and filing amended tax returns; and (ii) theunderlying State or Federal taxes assessed on the value of the Restricted Shares (including butnot limited to income, FICA, Medicare, and unemployment taxes), and the penalties, interest, andother additions to tax asserted by the Internal Revenue Service, the Illinois Department ofRevenue, or any other State or Federal agency with respect to the underpayment thereof.     5. The parties further expressly agree and covenant that this Settlement Agreement operatesas a bar and may be pleaded as a defense in any subsequent action or proceedings that may bebrought, instituted, or taken by Giancola against any of the Released Parties in the future withrespect to the claims released and discharged in paragraph 4 hereof by Giancola or any thirdparty.     6. Giancola expressly covenants not to sue any of the Released Parties in the future forpayment or reimbursement of any amount related to income tax obligations arising from theRestricted Shares.     7. Giancola acknowledges that the payment of the sums hereunder do not constitute anadmission on the part of Midwest or any Released Party of any amount owed or alleged wrongfulconduct on their part. Midwest and the other Released Parties do not admit, and expressly deny,liability of any kind to Giancola with respect to the Restricted Shares. Midwest and the ReleasedParties state that they are entering into this Settlement Agreement to avoid the future cost andexpense of litigation.     8. This Settlement Agreement shall be governed and enforced in accordance with the laws ofthe State of Illinois. Venue shall lie exclusively in the federal and state court in the Illinoiscounty in which Midwest is headquartered. In the event an action is instituted for breach of thisSettlement Agreement, each party shall bear its own attorney’s fees and costs, includingattorney’s fees and costs on appeal.     9. This Settlement Agreement has been negotiated at arms’ length between persons knowledgeablein the matters dealt with herein. Accordingly, any rule of law, or any legal decision that wouldrequire interpretation of any ambiguities in this Settlement Agreement against the party that hasdrafter it, is of no application and is hereby expressly waived.
 

 
     10. All of the terms, covenants, warranties and representations contained herein shallbe binding upon the parties, and their respective spouses, executors, administrators, heirs,dependents, guardians, personal representatives for estate or probate matters, assigns,officers, shareholders, directors, principals, successors, employees, agents, beneficiaries,subrogees, and predecessors in interest, to the fullest extent permitted by law.     11. Giancola acknowledges that he, and only he, is obligated to satisfy any and allliabilities to the Internal Revenue Service, Illinois Department of Revenue, and any otherState or Federal agency with respect to unpaid or underpaid tax obligations related to theRestricted Shares. Giancola further agrees to defend, indemnify, and hold-harmless theReleased Parties against any and all causes of action, claims, demands, subrogationinterests and/or liens, whether known or unknown, whether currently existing or arising inthe future, arising out of or in connection with the Restricted Shares.     12. This Settlement Agreement constitutes the entire agreement between the parties andsupersedes all prior agreements, oral or otherwise, with respect to the subject matterhereof. Neither this Settlement Agreement nor any term hereof may be changed, waived,discharged or terminated orally, except by an instrument in writing signed by the partyagainst which enforcement of the change, waiver, discharge or termination is sought.* * * * *     IN WITNESS WHEREOF, the parties hereto have executed this Settlement Agreement as ofthe latest date below.   /s/ James J. Giancola MIDWEST BANC HOLDINGS, INC. JAMES J. GIANCOLA       By: /s/ JoAnn Sannasardo Lilik   Date: 11/6/08 Printed Name: JoAnn Sannasardo Lilik EVP  Title: Chief Financial Officer  Date: November 6, 2008