ex10-2_121207b.htm


    Exhibit
      10.2

     

    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 Kelly A. Downs (“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
      December 11, 2007 and shall continue for until December 31,
      2010.  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 and Manager accepts 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
      $67,500 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,
      beginning in 2008, Manager shall have an opportunity to receive incentive
      compensation of up to a maximum of 20% of Manager's annual base
      salary.  The Chief Executive Office or his designee may review and
      adjust the maximum percentage from year to year, provided, however, that during
      the term of manager’s employment, the Company shall not decrease this
      percentage.  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.   Beginning in 2008, 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 four (4) 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 twelve (12) 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 periodically in accordance with the Company’s or successor’s customary
      payroll practices for management 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. 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 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.

     

    4.04  Key
      Employee Status.  If at the time of such termination of employment
      Manager is a “Key Employee” as defined in Section 416(i) of the Internal Revenue
      Code (without reference to paragraph 5 thereof), and the amounts payable to
      Manager 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 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 (1) year following the later of the termination of Manager's
      employment for any reason or 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
      the termination of Manager’s employment for any reason or 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:                       Kelly
      A. Downs

    2000
      Meadowlake Drive

    Charleston,
      IL  61920

    


    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/
      Kelly A.
      Downs                                                 


                        Kelly
      A.
      Downs