exv10w1



 






Exhibit 10.1




MANAGEMENT CONTINUITY AGREEMENT





	 	 	This Management Continuity Agreement (“Agreement”) is made and entered into as
of November 1, 2004, by and between Illini Corporation, an Illinois bank
holding company organized under the laws of the Illinois (“Illini”), Illini
Bank, a bank organized under the Illinois Banking Act (“Bank”), and Gaylon E.
Martin, 407 Dover Drive, Chatham, Illinois (“Officer”).





WITNESSETH





	 	 	WHEREAS, the Officer is seeking employment with Illini Corporation as
President, and is now employed with the Bank as President;
	 
	 	 	WHEREAS, Illini and Bank wish to attract and retain highly qualified executives
and to achieve this goal it is in the best interest of Illini and Bank to
secure the continued services of the Officer regardless of a change in control
of Illini, and to reward the Officer in accordance with his contributions to
Illini’s success;
	 
	 	 	WHEREAS, Illini and Officer are willing, in order to induce the Officer to
remain an employee of Illini and Bank, and to provide the Officer a measure of
security with respect to his employment with Illini in the event of a change in
control of Illini so that the Officer will be in a position to act with respect
to a possible change in control of Illini in the best interests of Illini and
its shareholders without concern as to the Officer’s own financial security,
and therefore agree that employment of the Officer shall be terminable only in
accordance with Section II herein;
	 
	 	 	WHEREAS; Illini is willing, in order to compensate the Officer fairly for the
Officer’s contribution to the prosperity of Illini, and in order to induce the
Officer to remain in employment with Illini, to agree that Officer shall be
compensated in accordance with the terms and conditions herein.
NOW, THEREFORE, Illini, Bank, and Officer agree as follows:





SECTION I. EMPLOYMENT





	 	A.	 	Term. Illini shall continue to employ Officer as its President, and Bank
shall continue to employ Officer as its President until November 1, 2008,
(the “Term”), unless terminated prior to the expiration of the Term
pursuant to Section II herein.
	 
	 	B.	 	Compensation. As compensation for services provided to Illini and Bank
by Officer pursuant to this Agreement, Illini shall pay the Officer an
annual base salary of $135,000.00. On July 1, 2005, and annually
thereafter, Officers base salary will be adjusted to equal the
75th
percentile of banks of similar asset size according to the Illinois
Community Bank salary surveys.




 









 






	 	 	 	Adjustments to Officers base salary are subject to the approval of the Board
of Directors. It is expressly understood that the annual base salary of
Officer shall be allocated between Illini and Bank in accordance to time
devoted to each position. Officer will not participate in any incentive
program except as may be awarded by the Board of Directors on an arbitrary
basis. Such other compensation and benefit plans are hereinafter referred
to collectively as the “Compensation and Benefits Plans”, and exclude any
participation or rights that Officer may have been granted or offered to
Illini stock options, which rights, to the extent that they exist, are
waived by Officer. Officer shall be paid a $600.00 monthly automobile
allowance as reimbursement for the use of his personally owned automobile
and in addition, Officer shall be reimbursed for gasoline expense incurred
in official travel.
	 
	 	C.	 	Duties. Officer shall perform such duties and functions as are assigned
to him by the bylaws of Illini or Bank, as amended or restated by the
Board of Directors of Illini or by the Board of Directors of Bank. Illini
shall provide the Officers with a description of his duties at the
inception of his employment which shall remain unchanged until such time
as changes in duties or function are approved by Illini’s or Bank’s Board
of Directors. In the event of an actual or potential Change in Control
(as defined in Section II, H) of Illini, Officer shall perform his duties
and function in a manner that is consistent with the best interest of
Illini and its shareholders, without regard to the effect that the
potential or actual Change in Control may have on the officer personally.
	 
	 	D.	 	Duty of Loyalty. The Officer shall work full-time for Illini and Bank
only, or for a subsidiary thereof, provided that:






	 	1.	 	He may also engage in charitable, civic and other similar
activities;
	 
	 	2.	 	With the consent of the Board of Directors of Illini or Bank,
he may serve as a director of a business organization not competing
with the Illini or Bank; and
	 
	 	3.	 	He may make such investment and reinvestment in business
activities as shall not require a substantial portion of his time.






	 	E.	 	Duty Not To Disclose Confidential Information. The Officer acknowledges
that his relationship with Illini is one of high trust and confidence, and
that he has access to Confidential Information, as hereinafter defined, of
Illini and Bank. The Officer shall not directly or indirectly,
communicate, deliver, exhibit or provide Confidential Information to any
person, firm, partnership, corporation, organization or entity, except as
required in the normal course of




2









 






	 	 	 	the Officer’s duties. The duties contained in this paragraph shall be
binding upon the Officer during the time that he is employed under this
Agreement and following the termination of such employment. Such duties
will not apply to any such Confidential Information that is or becomes in
the public domain through no action on the part of the Officer, is generally
disclosed to third parties by Illini without restriction on such third
parties, or is approved for release by written authorization of the Board of
Directors of Illini or Bank. The term “Confidential Information” shall mean
any and all confidential, proprietary, or secret information relating to the
Illini’s or 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 Illini’s’ or Bank’s business and not
generally known, in whole or in part, in any trade or industry in which
Illini is engaged.





Section II. TERMINATION





	 	A.	 	Term of Agreement. This Agreement shall run for an initial term of
four years from its inception. Subject to the approval of the Board of
Directors of Illini, or unless Illini terminates for cause, or Officer
terminates in accordance with Section II, the term of this agreement
shall be from November 1, 2004 through October 31, 2008. In the event
of a termination by Illini for cause, or by the Officer under Section
II, all obligations hereunder shall terminate except as specifically set
forth in the Agreement.
	 
	 	B.	 	Voluntary Termination by Officer. The Officer may voluntarily
terminate this Agreement by providing thirty days notice to Illini, in
which event Illini shall have no further obligation to the Officer
hereunder from the date of such termination except to pay Officer earned
but unpaid salary and benefits without imposing further condition or
reduction thereof, and the Officer shall have no further obligation to
Illini hereunder except the duty to not disclose Confidential
Information in accordance with Section E.
	 
	 	C.	 	Termination by Death of Officer. In the event the Officer’s
employment with Illini is terminated due to the Officer’s death, Illini
shall have no further obligation to the Officer, his hears or legatees
hereunder from the date of such termination, except to notify Officers
heirs or legatees of earned but unpaid salary and benefits due under the
Compensation and Benefit Plans and the value, terms and condition of
vested option rights and to pay Officer’s heirs or legatees amounts due
officer hereunder without imposing further condition or reduction
thereof and the heirs and legatees of the Officer shall have no further
obligation.




3









 






	 	D.	 	Termination by Disability of Officer. In the event of the Officer’s
employment with the Illini is terminated due the Officer’s Permanent
Disability, Illini shall have no further obligation to the Officer
hereunder from the date of such termination except to notify the
employee of and pay at the direction of Officer or persons empowered by
Officer to direct payment earned but unpaid salary and benefits due
under the Compensation and Benefit Plans without imposing further
condition or reduction thereof, and Illini shall have no further
obligation to Officer or person empowered by Officer to direct payments
due under the Agreement. For purposes of this Agreement, the term
“Permanent Disability” means a physical or mental condition of the
Officer which:






	 	1.	 	Has continued uninterrupted for six months;
	 
	 	2.	 	Is expected to continue indefinitely; and
	 
	 	3.	 	Is determined by Illini to render the Officer incapable
of adequately performing his duties.






	 	 	 	In case of dispute in applying “Permanent Disability” to a physical or
mental condition of Officer, the test of disability used by the United
States Social Security Administration for the same or similar purposes
shall be the final standard for determining the “Permanent Disability” of
the Officer.
	 
	 	E.	 	Termination by Illini Without Cause. Illini may terminate this
Agreement without cause prior to the Firm Term as hereinafter defined by
providing thirty days notice to the Officer. In such event, the Officer
shall have no further obligation to Illini hereunder, except the duty to
not disclose Confidential Information in accordance with Section I, E,
and Illini shall have no further obligation to the Officer hereunder
from the date of such termination except (i) to pay to the Officer the
salary payments described in Section I, B, in the amount in effect on
the date of termination for a period of twelve months from the date of
termination, (ii) to pay to the Officer any other benefits under the
Compensation and Benefit Plans without imposing further condition or
reduction; and provided, however, that any benefit to be provided by a
Compensation and Benefit Plan may be provided by Illini through cash or
equivalent value or through a nonqualified arrangement or arrangements
if, in the judgment of Illini, permitting the Officer to participate in
such plan after the date of termination would adversely affect the tax
status of such plan, and if, in the judgment of the Officer, any
proposed cash or




4









 






	 	 	 	equivalent value through a nonqualified arrangement or arrangement would
not materially increase the tax liabilities of Officer under federal or
state income tax or estate tax laws.
	 
	 	F.	 	Termination by Illini With Cause. Prior to or during the Firm Term,
Illini may terminate this Agreement for Cause. For purposes of this
Agreement, Cause shall mean;






	 	1.	 	The Officer’s willful and material breach of a provision
of this Agreement; or
	 
	 	2.	 	The Officer willfully engages in illegal conduct or gross
misconduct, which materially and demonstrably injures Illini;






	 	 	 	For purposes of determining whether “Cause” exists, no act or failure to
act, on the Officer’s part 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 that his action or omission was in the
best interest of Illini. In the event of the Officer’s termination for
Cause, Illini will have no further obligation to the Officer under the
Agreement from the date of such termination.





     G. Termination Following Change in Control. In the event there is a
Change in Control of Illini, as defined in Section H below, during the Term,
and (1) within the period commencing twelve months prior to the date of a
Change in Control and ending twelve months following the date of the Change in
Control (the “Firm Term”), the Officer’s employment hereunder is terminated by
the Illini other than for Cause, a defined in Section II, F; or (2) within the
Firm Term, the Officer resigns from his employment hereunder upon thirty days
written notice given to Illini within thirty days following a change of
control, then the Officer shall have no further obligation to Illini hereunder,
except the duty not to disclose Confidential Information in accordance with
Section I, E, and Illini shall have no further obligation to the Officer
hereunder from the date of termination except (i) to pay to the Officer the
salary payments described in Section I, B, in the amount in effect on the date
of termination, for the balance of the term of the contract, (ii) to pay to the
Officer any other benefits due under the Compensation and Benefit Plans without
imposing further condition or reduction thereof.



H. Change in Control Defined. A Change in Control of the Illini shall have
occurred:




	 	1.	 	On the fifth day preceding the scheduled expiration date of a
tender offer by,
or exchange offer by any corporation, person, other entity or group
(other than
Illini or any of its wholly owned subsidiaries), to acquire Voting
Stock of Illini
if:






	 	i.	 	After giving effect to such offer such corporation,
person, other




5









 






	 	 	 	Entity or group would own 50% or more of the Voting Stock of the
Illini;
	 
	 	ii.	 	There shall have been filed documents with the Securities and
Exchange Commission in connection therewith (or, if no such
Filing is required, public evidence that the offer has already
commenced); and such corporation, person, other entity or
group
has secured all required regulatory approvals to own or
control
50% or more of the Voting Stock of Illini;






	 	2.	 	If the shareholders of Illini approve a definitive agreement to
merger or
consolidate Illini with or into another corporation in a transaction
in which neither
Illini nor any of its wholly owned subsidiaries will be the
surviving corporation,
or to sell or otherwise dispose of all or substantially all of the
Illini’s assets to any
corporation, person, other entity or group (other than Illini or any
of its wholly
owned subsidiaries), and such definitive agreement is consummated;






	 	i.	 	(c) If any corporation, person, other entity or
group (other than Illini or
any of its wholly owned subsidiaries) becomes the Beneficial Owner (as
that term is defined in the Securities and Exchange Commission’s Rule
13d-3 under the Securities Exchange Act of 1934) of stock representing
50% or more of the Voting Stock of Illini; or
	 
	 	ii.	 	(d) If during any period of two consecutive years Continuing Directors
cease to comprise a majority of Illini’s Board of Directors.






	 	3.	 	The term “Continuing Director’ means:






	 	i.	 	Any member of the Board of
Directors of Illini at the
Beginning of any period of two consecutive years; and
	 
	 	ii.	 	Any person who subsequently becomes a member of the Board
of Directors of the Illini, if:





(i) Such person’s nomination for election or election
to the
Board of Directors of Illini or Illini is recommended
or approved
by resolution of a majority of the Continuing
Directors; or



(ii) Such a person is included a nominee in a proxy
statement
of the Illini distributed when a majority of the Board
of Directors




6









 








of Illini or Illini consists of Continuing Directors.




	 	4.	 	“Voting Stock” means those shares of Illini entitled to vote
generally in the
election of directors.





I. Termination of Related Offices. The parties agree that in the event
Officer’s employment
by Illini is terminated for any reason, Officer will immediately resign from
all other positions
or offices held with Illini, including any directorships with Illini, or any
subsidiaries thereof.



Section III. MISCELLANEOUS




A. Assignment of Officer’s Rights. The Officer may not assign, pledge or
otherwise transfer
any of the benefits of this Agreement either before or after termination of
employment, and any
purported assignment, pledge or transfer of any payment to be made by “Illini”
hereunder
shall be subject to the claims of creditors of the Officer.



B. Agreements Binding on Successor. This Agreement shall be binding and inure
to the
benefit of the parties hereto and their respective successors, assign, personal
representatives,
heirs, legatees and beneficiaries.



C. Notices. Any notice required or desired to be given under this Agreement
shall be deemed
given if in writing and sent by first class mail to the Officer or Illini, at
his or its address as
set forth above, or to such other address of which either the Officer or Illini
shall notify the
other in writing.



D. Waiver of Breach. The waiver by either party of a breach of any provision
of this
Agreement shall not operate or be construed as a waiver of any subsequent
breach by either the Officer or Illini.



E. Intellectual Property Rights. Officer shall have sole and exclusive rights
over any
intellectual property created by him while employed under this Agreement, and
shall not
be subject to claims by Illini of rights they may have under equity or statute
arising from
Officer’s employment with Illini.



F. Entire Agreement. This Agreement contains the entire understanding of the
parties
and supersedes prior agreements between Office and Illini. It may be modified
or
amended only by an agreement in writing signed by the party against whom
enforcement
of any change or amendment is sought.



G. Severability of Provisions. If for any reason any paragraph, term or
provision of this
Agreement is held to be invalid or unenforceable, all other valid provisions
herein shall




7









 








remain in full force and effect and all paragraphs, terms and provisions of
this Agreement
shall be deemed to be several in nature. An Offer of Employment containing
various
special terms and conditions of the Officer’s employment was made between
Illini and
Officer and is attached to this Agreement and incorporated hereinto by this
reference.



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



IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first set forth above.



	 	 	 	 	 
	ILLINI CORPORATION	 	          (OFFICER)
	ILLINI BANK	 	 
	By:

	 	/s/ Thomas A. Black
	 	/s/ Gaylon E. Martin
	

	 	

	 	

	Its: Chairman	 	Date: November 9, 2004
	Date: November 1, 2004	 	 








8