ex10-1_121207b.htm


    

      Exhibit
        10.1

      


      EMPLOYMENT
        AGREEMENT

      


      This
        Employment Agreement (the “Agreement”) is made and entered into this 11th day of
        December,
        2007, by and between First Mid-Illinois Bancshares, Inc. (“the Company”), a
        corporation with its principal place of business located in Mattoon, Illinois,
        and William S. Rowland (“Executive”).

       

      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
        December 11, 2007 and shall continue until December 31,
        2010.  Thereafter, unless Executive’s employment with the Company has
        been previously terminated, Executive 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
        as President and CEO.  The Company agrees to continue to employ
        Executive as its President and Chief Executive Officer commencing December
        11,
        2007 and Executive accepts such employment by the Company on the terms and
        conditions herein set forth.  The duties of Executive shall be
        determined by the Company’s Board of Directors and Executive shall adhere to the
        policies and procedures of the Company and shall follow the supervision and
        direction of the Board in the performance of such duties.  During the
        term of his employment, Executive agrees to devote his full working time,
        attention and energies to the diligent and satisfactory performance of his
        duties hereunder.  Executive 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.

       

      1.03           Service
        as Chairman.  The Company shall use its best efforts to continue
        Executive’s position as Chairman of the Board of Directors of the Company during
        the term of his employment, to which position he was elected effective as
        of
        June 1, 1999.


      ARTICLE
        TWO

      COMPENSATION
        AND BENEFITS

       

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

       

      2.01           Base
        Salary.  The Company shall pay Executive an annual base salary of
        $275,000 per fiscal year, payable in accordance with the Company’s customary
        payroll practices for executive employees.  The Board may review and
        adjust Executive’s base salary from year to year; provided, however, that during
        the term of Executive’s employment, the Company shall not decrease Executive’s
        base salary.

       

      2.02           Incentive
        Compensation Plan.  Executive 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,
        Executive shall have an opportunity to receive incentive compensation of
        up to a
        maximum of 50% of Executive’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.  Executive may continue to participate in the
        First Mid-Illinois Bancshares, Inc. Deferred Compensation Plan in accordance
        with the terms and conditions of such Plan.

       

      2.04           Supplemental
        Executive Retirement Plan.  Executive shall continue to
        participate in the First Mid-Illinois Bancshares, Inc. Supplemental Executive
        Retirement Plan, including the Participation Agreement as amended and restated
        effective as of January 1, 2005, in accordance with the terms and conditions
        of
        such Plan and Participation Agreement as in effect from time to time; provided,
        however, that the retirement benefit payable under the Plan upon Executive’s
        retirement shall be $50,000 per year with unreduced benefits commencing at
        age
        63.

       

      2.05           Stock
        Option Plan.  Executive may participate in the First Mid-Illinois
        Bancshares, Inc. 2007 Stock Incentive Plan.

       

      2.06           Vacation.  Executive
        shall be entitled to four (4) weeks of paid vacation each year during the
        term
        of this Agreement.

       

      2.07           Fringe
        Benefits.  The Company shall provide the following additional
        fringe benefits to Executive:


      
        	
                (a)  

              	
                Use
                  of a Company-owned or leased vehicle for professional and personal
                  use.

                 

              


      

      
        	
                (b)  

              	
                An
                  amount equal to the annual dues for a Class “H” membership at the Mattoon
                  Golf and Country Club.

                 

              


      

      
        	
                (c)  

              	
                Use
                  of a cellular phone for work-related calls.

                 

              


      

       

      2.08           Other
        Benefits.  Executive 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 executives or employees subject
        to and on a consistent basis with the terms, conditions and overall
        administration of such plans.

       

      2.09           Business
        Expenses.  Executive 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 executive employees.

       

      2.10           Withholding.  All
        salary, incentive compensation and other benefits provided to Executive 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,
        Executive.

       

      ARTICLE
        THREE

      DEATH
        OF EXECUTIVE

       

      This
        Agreement shall terminate prior to
        the end of the term described in Section 1.01 upon Executive’s termination of
        employment with the Company due to his death.  Upon Executive’s
        termination due to death, the Company shall pay Executive’s estate the amount of
        Executive’s base salary and 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

       

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


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

       

      (a)  An
        amount equal to
        Executive’s monthly base salary in effect at the time of such termination of
        employment for a period of twelve (12) months thereafter.  Such amount
        shall be paid to Executive periodically in accordance with the Company’s
        customary payroll practices for executive 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 proceeding fiscal year that is
        not yet
        paid.

       

      (c)  Continued
        coverage for
        executive and/or Executive’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 Executive’s termination of employment shall be
        considered the date of the “qualifying event” as such term is defined by
        COBRA.  During the twelve month period beginning on the date of such
        termination, the Executive 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, the Executive shall be charged
        for
        such coverage in accordance with the provisions of COBRA.

       

      For
        purposes of this Agreement, “Cause”
shall mean Executive’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 Executive be suspended or removed from
        any
        position in which Executive 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, Executive’s employment is terminated by the
        Company (or any successor thereto) for any reason other than Cause, or if
        Executive 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 Executive the
        following:


                      
        (a) Two times Executive’s annual base salary in effect at the time of such
        termination.  Such amount shall be paid periodically in accordance
        with the Company’s or successor’s customary payroll practices for executive
        employees.

       

      (b)
        An amount equal to the incentive
        compensation earned by or paid to Executive for the fiscal year immediately
        preceding the year in which Executive’s termination of employment
        occurs.  Such amount shall be paid to Executive 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 Executive
        and/or Executive’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 Executive’s termination of employment shall be
        considered the date of the “qualifying event” as such term is defined by
        COBRA.  During the twelve month period beginning on the date of such
        termination, the Executive 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, the Executive shall be charged
        for
        such coverage in accordance with the provisions of COBRA.

       

      For
        the purposes of this Agreement,
“Change of Control” shall have the meaning as set forth in the First
        Mid-Illinois Bancshares, Inc. 2007 Stock Incentive Plan (or successor stock
        incentive plan maintained by the Company).

       

      4.03           Other
        Termination of Employment.  If, prior to the end of the term of
        this Agreement, the Company terminates Executive’s employment for Cause, or if
        Executive terminates his employment for any reason other than as described
        in
        Section 4.02 above, the Company shall pay Executive 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.

       

      4.04           Key
        Employee Status.  If as the time of such termination of employment
        Executive is a “Key Employee” as defined in Section 416(i) of the Internal
        Revenue Code (without reference to paragraph thereof), and the amounts payable
        to Executive pursuant to Article Four are subject to Section 409A of the
        Internal Revenue Code, payment of such amounts shall not commence until six
        months following Manager’s termination of employment, with the first payment to
        include the payments that otherwise would have been made during such six-month
        period.


      ARTICLE
        FIVE

      CONFIDENTIAL
        INFORMATION

       

      5.01           Non-Disclosure
        of Confidential Information.    During his employment
        with Company, and after his termination of such employment with the Company,
        Executive 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 Executive’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 Executive 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 Executive 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 Executive 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
        Executive 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 Executive 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 Executive’s employment with
        the Company for any reason, Executive 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
        Executive’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 two years following the later of the termination of Executive’s
        employment for any reason or the last day of the term of the Agreement,
        Executive shall not, on behalf of himself or on behalf of another person,
        corporation, partnership, trust or other entity, within any 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 two years of Executive’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 two years of Executive’s employment.

       

      6.02           Covenant
        Not to Solicit.  For a period of two years following the later of
        the termination of Executive’s employment for any reason or the last day of the
        term of this Agreement, Executive 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 Executive’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
        not 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

       

      Executive
        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, Executive 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 the Executive 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 Executive under this Agreement may be
        assigned or transferred by Executive 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 Executive’s employment by the Company shall be or no
        further force or effect from and after the date of 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
        Executive:                      William
        S. Rowland

      1
        Prairie Sun Lane

      Mattoon,
        IL  61938

      


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

      1515
        Charleston Avenue

      Mattoon
        IL 61938

      Facsimile:
        217-258-0485

      Attention:
        Chairman of Compensation
        Committee

      


      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/
        Kenneth R.
        Diepholz                                        
                                          


       

      Title:
        Director                                                               


      
      

      
 

      EXECUTIVE:

       

                                                     
        /s/ William S.
        Rowland                                                  


      William
        S. Rowland