Document:

exv10w2

Exhibit 10.2

FIRST POTOMAC REALTY TRUST

2009 EMPLOYEE SHARE PURCHASE PLAN

1. ESTABLISHMENT OF PLAN.

     First Potomac Realty Trust, a Maryland real estate investment trust (the “Trust”), proposes to
grant options (“Options”) for the purchase of the Trust’s common shares, $0.001 par value (“Common
Share”), to eligible employees of the Trust and its Designated Affiliates (as hereinafter defined)
pursuant to this 2009 Employee Share Purchase Plan (this “Plan”). For purposes of this Plan, the
term “Affiliate” means a trade or business, whether or not incorporated, which together with the
Trust is treated as a single employer under Section 414 of the Internal Revenue Code of 1986, as
amended (the “Code”).

2. STOCK SUBJECT TO PLAN.

     The total number of Common Shares available for issuance under this Plan shall be 200,000
shares. Such number shall be subject to adjustments effected in accordance with Section 16 of this
Plan. Any Common Shares that have been made subject to an Option that cease to be subject to the
Option (other than by means of exercise of the Option), including, without limitation, in
connection with the cancellation or termination of an Option, shall again be available for issuance
in connection with future grants of Options under this Plan.

3. PURPOSE.

     The purpose of this Plan is to provide employees of the Trust and its Designated Affiliates,
with a convenient means of acquiring an equity interest in the Trust through payroll deductions and
lump sum contributions, to enhance such employees’ sense of participation in the affairs of the
Trust and its Affiliates, and to provide an incentive for continued employment.

4. ADMINISTRATION.

     This Plan shall be administered by the Compensation Committee (the “Committee”) of the Trust’s
Board of Trustees (the “Board”). Subject to the provisions of this Plan, the Committee shall have
exclusive authority, in its discretion, to determine all matters relating to Options granted under
this Plan, including all terms, conditions, restrictions, and limitations of Options. The
Committee shall also have exclusive authority to interpret this Plan and may from time to time
adopt rules and regulations of general application for this Plan’s administration. The Committee’s
exercise of discretion and interpretation of this Plan, its rules and regulations, and all actions
taken and determinations made by the Committee pursuant to this Plan shall be conclusive and
binding on all parties involved or affected. The Committee may delegate administrative duties to
employees of the Company or to independent contractors, as it deems advisable. All expenses
incurred in connection with the administration of this Plan shall be paid by the Trust and the
Designated Affiliates; provided, however, that the Committee may require a participant to pay any
costs or fees in connection with the sale by the participant of Common

 

 

Shares acquired under this Plan or in connection with the participant’s request for the
issuance of a certificate for Common Shares held in the participant’s Share Account (as hereinafter
defined).

5. ELIGIBILITY.

     Any employee of the Trust or a Designated Affiliate is eligible to participate in the Plan for
any Offering Period (as hereinafter defined) under this Plan except the following:

     (a) employees who are customarily employed for less than 20 hours per week;

     (b) employees who are customarily employed for not more than five months in a calendar year;

     (c) employees who have been employed by the Trust or a Designated Affiliate for less than 90
days;

     (d) employees who, together with any other person whose stock would be attributed to such
employee pursuant to Section 424(d) of the Code, own shares or hold options to purchase shares
possessing five percent or more of the total combined voting power or value of all classes of
shares of the Trust or any of its Affiliates or who, as a result of being granted Options under
this Plan would own shares or hold options to purchase shares possessing five percent or more of
the total combined voting power or value of all classes of shares of the Trust or any of its
Affiliates; and

     (e) employees whose employment terms are covered by a collective bargaining agreement in
situations where the applicable union or other collective bargaining unit has either refused to
bargain with respect to this Plan as an employee benefit or has considered this Plan as a potential
employee benefit and has rejected this Plan or has otherwise determined that employees which such
union or other bargaining unit represents may not participate in this Plan.

     For all purposes of this Plan, the term “Designated Affiliate” shall mean an Affiliate listed
on Annex A to this Plan or any Affiliate which may hereafter be determined by the Board to be a
Designated Affiliate. A Designated Affiliate will cease to be a Designated Affiliate on the
earlier of (i) the date the Board determines that such Affiliate is no longer a Designated
Affiliate or (ii) the date such Designated Affiliate ceases for any reason to be an “Affiliate.”

6. OFFERING PERIODS.

     The offering periods of this Plan (individually, an “Offering Period”) shall be of periods not
to exceed five (5) years. Until determined otherwise by the Committee, (a) Offering Periods shall
commence on the first day of each calendar quarter; provided, however, that the first Offering
Period may begin on any date as shall be determined by the Committee, and (b) each Offering Period
shall end on the last business day of the calendar quarter in which the Offering Period commenced;
provided, however, that the last day of the first Offering Period shall be determined by the
Committee. The first day of each Offering Period is referred to as the “Offering Date.” The last
day of each Offering Period is referred to as the “Purchase Date.” Subject to the requirements of
this Plan, the Committee shall have the power to change the

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duration of Offering Periods if such change is announced at least fifteen (15) days prior to
the Offering Date of the first Offering Period to be affected by such change.

7. PARTICIPATION IN THIS PLAN.

     Eligible employees may become participants in an Offering Period under this Plan on any
Offering Date by delivering an enrollment form provided by the Trust to the administrator for this
Plan (“Plan Administrator”) not later than the fifteenth (15th) day of the month (or if
such day is not a business day for the Company or the applicable Affiliate, on the immediately
preceding business day) before such Offering Date unless a later time for filing the enrollment
form authorizing payroll deductions is set by the Committee for all eligible employees with respect
to a given Offering Period. Once an employee becomes a participant in the Plan with respect to an
Offering Period, such employee will automatically participate in the Offering Period commencing
immediately following the last day of the prior Offering Period unless the employee withdraws from
this Plan or terminates further participation in the Offering Period as set forth in Sections 13
and 14 below. Such participant is not required to file any additional enrollment form in order to
continue participation in this Plan, except that the Committee may require the filing of new
enrollment forms by participants who transfer to another division of the Trust or a Designated
Affiliate.

8. GRANT OF OPTION ON ENROLLMENT.

     Enrollment by an eligible employee in this Plan with respect to an Offering Period will
constitute the grant by the Trust to such employee of an Option to purchase on the Purchase Date up
to that number of whole Common Shares determined by dividing (a) the dollar amount accumulated in
such employee’s Employee Account (as hereinafter defined) during the Offering Period ending on such
Purchase Date, by (b) the Purchase Price (as defined in Section 9); provided, however, that the
number of shares which may be purchased pursuant to an Option may in no event exceed the number of
shares determined in the manner set forth in Section 11(b) of the Plan or such other maximum number
of shares as may be specified in the future by the Committee in lieu of the limitation set forth in
Section 11(b).

9. PURCHASE PRICE.

     The Purchase Price at which a Common Share will be sold in any Offering Period shall be the
lower of (a) 85 percent of the fair market value of such share on the Offering Date or (b) 85
percent of the fair market value of such share on the Purchase Date; provided, however, that in no
event may the purchase price per share of Common Stock be below the par value per share of Common
Stock.

     For purposes of this Plan, the “fair market value” of a Common Share on a particular date
shall be the reported closing price of a Common Share in the principal trading market for the
Common Shares as reported by the source selected by the Committee or, if no closing price was
reported on such day, then on the next preceding day on which such a closing price was reported.

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10. PURCHASE OF SHARES; CHANGES IN PAYROLL DEDUCTIONS; ISSUANCE OF SHARES.

     (a) Funds contributed by each participant for the purchase of shares under this Plan shall be
accumulated by regular payroll deductions made during each Offering Period or lump sum
contributions by the first day of the Offering Period. Subject to Section 11 and any procedures
established or approved by the Committee, the deductions shall be made as a whole dollar amount
that the participant elects to have deducted from the participant’s Compensation. As used herein,
“Compensation” shall mean all base salary, cash bonuses, wages, commissions, and overtime.
“Compensation” does not include severance pay, hiring and relocation allowances, pay in lieu of
vacation, automobile allowances, imputed income arising under any Trust group insurance or benefit
program, income received in connection with stock options, or any other special items of
remuneration. Payroll deductions shall commence on the first payday following the Offering Date
and shall continue through the last payday that occurs in the Offering Period unless sooner altered
or terminated as provided in this Plan.

     (b) A participant may increase or decrease the rate of payroll deductions during an Offering
Period by filing with the Plan Administrator a new authorization for payroll deductions on a form
provided by the Trust, in which case the new whole dollar deduction shall become effective for the
next payroll period commencing more than fifteen (15) days after the Plan Administrator’s receipt
of the authorization and shall continue for the remainder of the Offering Period unless changed
pursuant to this Section 10(b). Such change in the payroll deduction may be made at any time
during an Offering Period, but not more than two increases and two decreases may be made effective
during any Offering Period. Notwithstanding the foregoing, a participant may lower the payroll
deduction to zero for the remainder of the Offering Period. A participant may increase or decrease
the payroll deduction for any subsequent Offering Period by filing with the Plan Administrator a
new authorization for payroll deductions not later than the fifteenth (15th) day of the
month (or if such date is not a business day, the immediately preceding business day) before the
beginning of such Offering Period. A participant who has decreased the payroll deduction to zero
will be deemed to continue as a participant in the Plan until the participant withdraws from the
Plan in accordance with the provisions of Section 13 or his or her participation is terminated in
accordance with the provisions of Section 14. A participant shall have the right to withdraw from
this Plan in the manner set forth in Section 13 regardless of whether the participant has exercised
his or her right to lower the payroll deduction during the applicable Offering Period.

     (c) All payroll deductions and lump sum contributions made for a participant will be credited
to an unfunded and unsecured bookkeeping account maintained on behalf of the participant (the
“Employee Account”) and deposited with the general funds of the Trust. No interest will accrue on
payroll deductions and lump sum contributions. All payroll deductions and lump sum contributions
received or held by the Trust may be used by the Trust for any corporate purpose, and the Trust
shall not be obligated to segregate such payroll deductions and contributions. Contributions to an
Employee Account other than by payroll deduction and lump sum contributions are not permitted.

     (d) On each Purchase Date, provided that the participant has not withdrawn from the Plan
pursuant to Section 13 or terminated employment pursuant to Section 14, in either case on

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or before the fifteenth (15th) day (or if such date is not a business day, on the
immediately preceding business day) of the last month of the Offering Period in accordance with
Section 13 or 14 of this Plan, or the Plan has not been terminated prior to the date referred to in
the foregoing clause, the Trust shall apply the funds then in the participant’s Employee Account to
the purchase of whole Common Shares at the Purchase Price for the Offering Period. Shares may be
purchased in the public equity markets, directly from the Trust or in privately negotiated
transactions.

     (e) During a participant’s lifetime, such participant’s Option to purchase shares hereunder is
exercisable only by him or her or, in the event of the participant’s disability, the participant’s
legal representatives. The participant will have no interest or voting right in shares covered by
his or her Option until such Option has been exercised.

     (f) No fractional Common Shares shall be purchased by or issued to a participant. Any portion
of the payroll deductions credited to an Employee Account which is not utilized to purchase Common
Shares because it is insufficient to purchase an additional whole Common Share shall be retained in
the participant’s Employee Account and applied to the purchase of Common Shares in the succeeding
Offering Period. No interest will accrue on any amounts retained in an Employee Account.

11. LIMITATIONS ON RIGHTS TO PURCHASE.

     (a) No employee shall be granted an Option to purchase Common Shares under this Plan at a rate
which, when aggregated with his or her rights to purchase stock under all employee stock purchase
plans of an Affiliate (an “Affiliate Plan”), exceeds $25,000 in fair market value, determined as of
the applicable date of the grant of the Option, for each calendar year in which the employee
participates in this Plan (or any other employee stock purchase plan described in this Section
11(a)).

     (b) The number of Common Shares which may be purchased by any employee on the first Purchase
Date to occur in any calendar year may not exceed the number of Common Shares determined by
dividing $25,000 by the fair market value (as defined in Section 9) of a Common Share on the
Offering Date of the Offering Period in which such Purchase Date occurs. The number of Common
Shares which may be purchased by any employee on any subsequent Purchase Date which occurs in the
same calendar year (as that referred to in the preceding sentence) shall not exceed the number of
Common Shares determined by performing the calculation described below.

Step One: The number of Common Shares purchased by the employee during each previous
Offering Period which occurred in the same calendar year shall be multiplied by the fair
market value (as defined in Section 9) of a Common Share on the first day of each such
previous Offering Period in which such shares were purchased and the number of shares
purchased by the employee under an Affiliate Plan during any previous offering period under
such plan which occurred in the same calendar year shall be multiplied by the fair market
value of such shares on the first day of such previous offering period. The resulting
products then will be totaled.

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Step Two: The amount determined in Step One shall be subtracted from $25,000.

Step Three: The amount determined in Step Two shall be divided by the fair market value (as
defined in Section 9) of a Common Share on the next Offering Date in the same calendar year
and any fraction shall be disregarded. The quotient so obtained shall be the maximum number
of Common Shares that may be purchased by any employee on the subsequent Purchase Date in
the same calendar year.

     (c) The Committee may from time to time prescribe a maximum number of Common Shares that may
be purchased on any given Purchase Date that is less than the maximum amount described in Section
11(b), in which case the number of shares which may be purchased by any employee on such Purchase
Date may not exceed such limitation.

     (d) If the number of Common Shares to be purchased on a Purchase Date by all employees
participating in this Plan exceeds the number of Common Shares then available for issuance under
this Plan, then the Trust will make a pro rata allocation of the remaining Common Shares in as
uniform a manner as shall be reasonably practicable and as the Committee shall determine to be
equitable. In such event, the Trust shall give written notice of such reduction of the number of
Common Shares to be purchased under a participant’s Option to each participant affected thereby.

     (e) Any payroll deductions accumulated in an Employee Account which are not used to purchase
stock due to the limitations in this Section 11 shall be returned to the participant as soon as
practicable after the end of the applicable Offering Period without interest.

12. TRANSFER RESTRICTION; EVIDENCE OF STOCK OWNERSHIP.

     (a) Common Shares purchased under the Plan may not be sold, transferred, assigned, pledged or
otherwise disposed of in any way until six months after the applicable Purchase Date. The transfer
restriction set forth in the preceding sentence shall not apply (i) on or after a “Control Change
Date” (as defined in the Trust’s 2009 Equity Compensation Plan), (ii) after a Participant’s
termination of employment by the Trust or (iii) to the transfer of shares to a Participant’s
beneficiary under Section 22 or transfers by such beneficiary.

     (b) As soon as administratively practicable following the Purchase Date, the Common Shares
purchased on behalf of a participant pursuant to the exercise of his or her Option will be credited
to an account at the Trust’s transfer agent or with a securities brokerage firm, as determined by
the Trust (the “Plan Financial Agent”), in the name of the participant. By electing to participate
in the Plan, a participant will be deemed to authorize the establishment of an account (the “Share
Account”) in his or her name with the Plan Financial Agent selected by the Trust. A participant
may request that the Plan Financial Agent arrange, subject to any applicable fee, for the delivery
to the participant or an account designated by the participant of some or all of the Common Shares
held in the participant’s Share Account. Subject to the restriction set forth in Section 12(a), if
the participant desires to sell some or all of the Common Shares held in his or her Share Account,
he or she may do so either (i) by disposing of the Common Shares through the Plan Financial Agent
subject to any applicable fee, or (ii) through such other means as the Trust may permit.

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     (c) Following termination of a participant’s employment with the Trust and its Affiliates for
any reason, and subject to the restriction set forth in Section 12(a), the participant shall have a
period of 30 days to notify the Plan Financial Agent whether such participant desires (i) to
receive a certificate representing all Common Shares then in the participant’s Share Account with
the Plan Financial Agent, (ii) to transfer the Common Shares in the participant’s Share Account to
a securities account designated by the participant, or (iii) to sell the Common Shares in the
participant’s Share Account through the Plan Financial Agent. If the terminated participant fails
to file such notice with the Plan Financial Agent within 30 days after termination, he or she shall
be deemed to have elected the alternative set forth in clause (i) above.

     (d) Dividends credited to a participant’s Share Account shall be paid periodically to a
participant at such times as the Board or the Committee shall designate. Copies of annual reports,
proxy statements and any other materials issued to shareholders of the Trust generally will be
distributed to a participant provided the balance in his or her Share Account is one Common Share
or more. In the absence of timely instructions from a participant with respect to tenders or
exchanges of Common Shares, the Trust and the Plan Financial Agent will be deemed authorized to
tender or exchange the participant’s Common Shares held in his or her Share Account whenever the
Trust deems it to be in the best interest of the participant to do so.

13. WITHDRAWAL.

     Each participant may withdraw from participation in the Plan by signing and delivering to the
Plan Administrator a written notice to that effect on a form provided by the Trust for such
purpose. Upon withdrawal from this Plan, the participant’s participation in this Plan shall
terminate, subject to Section 15. In the event a participant elects to withdraw from the Plan
pursuant to this Section 13, he or she may not resume his or her participation in this Plan during
the same Offering Period, but he or she may participate in any subsequent Offering Period by filing
a new enrollment form in the same manner as set forth above for initial participation in this Plan.

14. TERMINATION OF EMPLOYMENT; LEAVE OF ABSENCE.

     Termination of a participant’s employment with the Trust and its Affiliates for any reason,
including resignation, retirement, termination or death, or the failure of a participant to remain
an eligible employee, immediately terminates his or her participation in this Plan, subject to
Section 15. For purposes of this Section 14, an employee will not be deemed to have terminated
employment or failed to remain in the continuous employ of the Trust during any leave of absence
approved by the Committee.

15. RETURN OF PAYROLL DEDUCTIONS AND OTHER CONTRIBUTIONS.

     In the event a participant’s participation in this Plan is terminated by withdrawal pursuant
to Section 13 or termination of employment pursuant to Section 14, or in the event this Plan is
terminated by the Board, the Trust shall promptly deliver to the participant, or in the case of the
participant’s death to such person pursuant to Section 22, all payroll deductions and lump sum
contributions of the participant which have not yet been applied to the purchase of Common

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Shares; provided, however, that if such withdrawal or termination of employment occurs later
than the fifteenth (15th) day of the last month of an Offering Period (or if such date
is not a business day, on the preceding business day), then such payroll deductions and lump sum
contributions will be utilized to purchase Common Shares for the participant on the Purchase Date
at the end of such Offering Period; provided, further, that upon termination of the Plan the Board
may accelerate the Purchase Date. No interest shall accrue on the payroll deductions or lump sum
contributions of a participant in this Plan.

16. CAPITAL CHANGES.

     In the event of any change in the capitalization of the Trust, such as a share split or a
corporate transaction, such as any merger, consolidation, separation, including a spin-off, or
other distribution of shares or property of the Trust, any reorganization (whether or not such
reorganization comes within the definition of such term in Section 368 of the Code) or any partial
or complete liquidation of the Trust or sale of all or substantially all of the Trust’s assets or
shares then the Committee, in its sole discretion, shall make such equitable adjustments as it
shall deem appropriate in the circumstances in the maximum number and kind of shares subject to
this Plan as set forth in Sections 1 and 2, the number and kind of shares subject to outstanding
Options, and/or the Purchase Price. The determination by the Committee as to the terms of any of
the foregoing adjustments shall be conclusive and binding.

17. NONASSIGNABILITY.

     Neither payroll deductions credited to an Employee Account nor any rights with regard to the
exercise of an Option or to receive Common Shares under this Plan may be assigned, transferred,
pledged, or otherwise disposed of in any way (other than by will, the laws of descent and
distribution, or as provided in Section 22 hereof by the participant. Any such attempt at
assignment, transfer, pledge, or other disposition shall be void and without effect.

18. REPORTS AND STATUS OF ACCOUNTS.

     Individual account records will be maintained for each participant’s Employee Account and
Share Account. The Plan Financial Agent shall send to each participant promptly after the end of
each Offering Period a report of his or her account setting forth with respect to such Offering
Period the number of shares purchased and the price per share thereof, and also setting forth the
total number of Common Shares then held in his or her Share Account. Neither the Company nor any
Designated Affiliate shall have any liability for any error or discrepancy in any such report.

19. NO RIGHTS TO CONTINUED EMPLOYMENT; NO IMPLIED RIGHTS.

     Neither this Plan nor the grant of any Option hereunder shall confer any right on any employee
to remain in the employ of the Trust or any Affiliate or restrict the right of the Trust or any
Affiliate to terminate such employee’s employment. The grant of any Option hereunder during any
Offering Period shall not give a participant any right to similar grants thereafter.

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20. AMENDMENT OF PLAN.

     The Board may amend this Plan in such respects as it shall deem advisable; provided, however,
that shareholder approval will be required for any amendment that must be submitted to shareholders
for approval under the rules of an exchange on which the Common Shares are listed for trading.

21. TERMINATION OF THE PLAN.

     The Board may suspend or terminate this Plan at any time (and upon termination may accelerate
the Purchase Date of the current Offering Period in accordance with Section 15). Unless this Plan
shall have been terminated by the Board, this Plan shall terminate on, and no Options shall be
granted after, the day before the tenth anniversary of the date that this Plan is adopted by the
Board or, if earlier, the date that this Plan is approved by shareholders. No Options shall be
granted during any period of suspension of this Plan.

22. DESIGNATION OF BENEFICIARY.

     (a) A participant may file a written designation on a form provided by the Trust of a
beneficiary who is to receive cash and Common Shares, if any, from the participant’s Employee
Account and Share Account under this Plan in the event of such participant’s death.

     (b) Such designation of beneficiary may be changed by the participant at any time on a form
provided by the Trust for such purpose. In the event of the death of a participant and in the
absence of a beneficiary validly designated under this Plan who is living at the time of such
participant’s death, the Trust shall deliver such cash or Common Shares to the executor or
administrator of the estate of the participant, or if no such executor or administrator has been
appointed (to the knowledge of the Trust), the Trust, in its discretion, may deliver such cash or
Common Shares to the spouse or to any one or more dependents or relatives of the participant or, if
no spouse, dependent, or relative is known to the Company, to such other person as the Company may
in good faith determine to be an appropriate designee.

23. CONDITIONS UPON ISSUANCE OF SHARES; LIMITATION ON SALE OF SHARES.

     Shares shall not be issued with respect to an Option unless the exercise of such Option and
the issuance and delivery of Common Shares pursuant thereto shall comply with all applicable
provisions of law, domestic or foreign, including, without limitation, the Securities Act of 1933,
as amended, the Securities Exchange Act of 1934, as amended, the rules and regulations promulgated
thereunder, and the requirements of any stock exchange or automated quotation system upon which the
Common Shares may then be listed, and shall be further subject to the approval of counsel for the
Trust with respect to such compliance.

     Shares shall not be issued with respect to an Option unless the participant satisfies the
applicable income and employment tax withholding requirements arising from the exercise of the
Option in a manner acceptable to the Committee.

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24. PLAN EFFECTIVE DATE.

     The effective date of the Plan is the date that this Plan is approved by a majority of the
votes entitled to be cast by the Trust’s shareholders, voting either in person or by proxy, at a
duly held shareholders’ meeting at which a quorum is present and within twelve months of the
Board’s adoption of the Plan.

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ANNEX A

 2009 EMPLOYEE SHARE PURCHASE PLAN

DESIGNATED AFFILIATES

As of February 24, 2009

     The “Affiliates” of First Potomac Realty Trust that are “Designated Affiliates” for purposes
of Section 5 of the 2009 Employee Share Purchase Plan are as follows:

First Potomac Realty Investment Limited Partnership

First Potomac Management LLC

11exv10w1

Exhibit 10.1

FORBEARANCE AGREEMENT

     THIS FORBEARANCE AGREEMENT (“Agreement”) is entered into as of October 22, 2009 but
effective as of July 3, 2009, by and between M&I MARSHALL & ILSLEY BANK (the “Bank”), and
MIDWEST BANC HOLDINGS, INC., a Delaware corporation and bank holding company (“Borrower”).

RECITALS:

     A. The Bank previously agreed to provide to the Borrower: (1) a revolving line of credit
pursuant to which the Borrower could borrow up to $15,000,000.00 from the Bank, and Borrower
previously executed and delivered to the Bank a Promissory Note (which promissory note amended and
restated a promissory note dated March 24, 2006, the “Revolving Note”) in the face amount
of $15,000,000.00 and dated June 3, 2009 evidencing such revolving loans; and (2) a term loan
pursuant to which the Borrower borrowed $75,000,000.00 from the Bank, and Borrower previously
executed and delivered to the Bank a Promissory Note (the “Term Note”) dated September 28,
2007, in the face amount of $75,000,000.00 (which amount was reduced to $55,000,000 pursuant to a
First Amendment to Note dated March 31, 2008 between the Bank and the Borrower) (the Revolving Note
and the Term Note, each a “Note” and collectively, the “Notes”).

     B. Each Note is also governed by a Letter Agreement dated as of April 3, 2009 by and between
the Borrower and the Bank (which Letter Agreement amended and restated a Letter Agreement dated as
of March 31, 2008, and as further amended, the “Letter Agreement”).

     C. Payment and performance of each Note, the Letter Agreement and the liabilities,
indebtedness, and obligations evidenced thereby (collectively, the “Indebtedness”) are
secured, and continue to be secured, by a Commercial Pledge Agreement dated as of March 24, 2006
(as amended, the “Pledge Agreement”), and the pledge and delivery to the Bank of stock
certificates evidencing Borrower’s ownership of 1,076,640 issued and outstanding shares of Midwest
Bank and Trust Company (“Midwest Bank”) (collectively, along with all other Collateral (as
that term is defined in the Pledge Agreement), the “Pledged Collateral”). The stock
certificates evidencing Borrower’s ownership of 1,076,640 issued and outstanding shares of Midwest
Bank constitute 100% of the issued and outstanding shares of Midwest Bank.

     D. Borrower did not comply with: (1) Section 3(i) of the Letter Agreement with respect to the
requirement that Midwest Bank maintain a ratio of non-performing loans to total loans of not
greater than 3.00% for the periods ending March 31, 2009 and June 30, 2009; and (2) Section 3(ii)
of the Letter Agreement with respect to the requirement that Borrower report a quarterly profit for
the periods ending September 30, 2008, March 31, 2009 and June 30, 2009 (the “Financial
Covenant Defaults”). In addition, the Revolving Note matured on July 3, 2009 and the Borrower
was obligated to pay to the Bank all of the aggregate outstanding principal and accrued but unpaid
interest on the Revolving Note on such date. As of October 22, 2009 the Borrower has not repaid
the Revolving Note in full, and such failure constitutes an additional event of default (the
“Payment Default”) under the Loan Documents (as hereinafter defined).

     E. The Borrower has previously received from the Bank contingent waiver letters (the
“Contingent Waiver Letters”) dated September 12, 2008, September 23, 2008 and March 4,
2009. Pursuant to the Contingent Waiver Letters, the Bank contingently waived compliance by the
Borrower with Section 3(ii) of the Letter Agreement caused by the Borrower’s failure to report a
quarterly profit for the period ending September 30, 2008. This contingent waiver was contingent
on the Borrower prepaying the principal amount of the Indebtedness owed to the Bank by at least
$5,000,000 on or before July 1, 2009. The Borrower failed to make that payment, and has previously
informed the Bank that it

 

 

will not make this payment. Such non-compliance constitutes a continuing event of default
under the Letter Agreement and the Security Documents (as that term is defined in the Letter
Agreement) (the “Contingent Waiver Default”). The Financial Covenant Defaults, the
Contingent Waiver Default and the Payment Default are severally and collectively referred to as the
“Existing Defaults.”

     F. The Borrower has previously received from the Bank a default letter dated July 8, 2009,
informing the Borrower of the Existing Defaults (the “Default Letter”).

     G. Because of the Existing Defaults, the Bank is now entitled to exercise all rights and
remedies provided to it under the Notes, the Letter Agreement and the Pledge Agreement.

     H. Borrower has requested that the Bank forbear from exercising such rights and remedies for
the time period provided in this Agreement.

     I. The Bank is willing to forbear from exercising such rights and remedies in reliance upon
the representations, warranties and agreements set forth below, and pursuant to the Loan Documents
(as hereinafter defined).

     J. This Agreement is a continuation of, and not a repayment or novation of, the obligations
and liabilities of Borrower contained in the Notes and the Letter Agreement. As used herein, the
Notes, Letter Agreement, Pledge Agreement, the Deposit Control Agreement (as hereinafter defined),
the Tax Security Agreement (as hereinafter defined) and this Agreement, along with all now or
hereafter existing documents, certificates and agreements related thereto, are severally and
collectively referred to herein as the “Loan Documents.”

     K. Borrower further acknowledges and agrees that forbearance by the Bank from the current
exercise of its rights and remedies shall result in a direct and substantial benefit to Borrower.

AGREEMENT:

     NOW THEREFORE, in consideration of the agreements and undertakings contained herein, and for
other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:

1. Recitals. The foregoing recitals are true and correct in all respects as of the date
hereof, and are incorporated into this Agreement by this reference.

2. Acknowledgments by Borrower. Borrower acknowledges and agrees that, as of October 22,
2009 and thereafter: (a) the Existing Defaults constitute Events of Default under the Loan
Documents; (b) timely, adequate and proper notice of such Events of Defaults were received by
Borrower from the Bank; (c) all grace periods, if any, applicable to cure such Existing Defaults
have expired or are hereby waived by Borrower; (d) the Bank is entitled to immediate payment of the
Notes and all other sums due under the Loan Documents; (e) the Bank has not waived the Existing
Defaults; (f) the Loan Documents are free from any offset, defense, recoupment, or counterclaim, in
law or in equity, of any kind or nature; (g) the Indebtedness is fully secured by valid, perfected
and enforceable first priority security interests in the Pledged Collateral and the Accounts (as
defined in the Deposit Control Agreement); (h) the Bank has fully performed all of its respective
obligations and duties under all previously existing agreements between Borrower and the Bank; (i)
all actions taken by the Bank prior to the date of this Agreement have been reasonable and
appropriate under the circumstances and have been within the Bank’s rights; (j) the Bank’s
commitment to enter into this Agreement represents new value given by the Bank for the benefit of
Borrower, the value of which is substantially greater than the value to the Bank of all agreements,

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covenants, representations, warranties and acknowledgements contained herein for the benefit of the
Bank; and (k) it is the express intention of Borrower that the agreements, covenants,
representations, warranties and acknowledgements contained in this Agreement constitute a
contemporaneous exchange for new value given to Borrower by the Bank.

3. Reaffirmation of Warranties and Representations. Borrower hereby reaffirms the accuracy
of the representations and warranties contained in the Loan Documents, and affirms the accuracy of
the recitals contained in this Agreement. Borrower hereby confirms that there is no other default
or event of default under the Loan Documents, except for the Existing Defaults identified in
Recitals.

4. Acknowledgment of Indebtedness; Reduction in Commitment. Borrower acknowledges and
agrees that: (a) as of October 22, 2009, Indebtedness in the amount of $63,600,000.00 of principal,
plus accrued interest thereon and all costs incurred by the Bank (including reasonable
attorneys’ fees) is due and payable to the Bank, without offset, deduction, defense, recoupment or
counterclaim, and (b) effective as of July 3, 2009, the aggregate commitment of the Bank to
Borrower under the Revolving Note was reduced to $8,600,000.00 from $15,000,000.00, notwithstanding
the $15,000,000.00 face amount of the Revolving Note.

5. Forbearance. The Bank agrees to forbear from exercising the rights and remedies
available to it under the Loan Documents and under applicable law as a consequence of the Existing
Defaults for a period (the “Forbearance Period”) commencing on the effective date hereof
and ending on the first to occur of: (a) March 31, 2010; (b) the date on which Borrower
breaches or defaults in any of its representations, warranties or obligations to the Bank under
this Agreement; (c) the date on which Borrower defaults in complying with any of its continuing
obligations under the Loan Documents (except that, as provided in Section 7(b) hereof, the Borrower
shall not be obligated to comply with the covenants contained in Section 3 and Section 5 of the
Letter Agreement, and, as provided in Section 7(d) hereof, the Borrower shall be obligated to make
payments to the Bank only from the amounts maintained in the Account (as hereinafter defined)); and
(d) the date on which Midwest Bank becomes subject to a receivership by the Federal Deposit
Insurance Corporation, or the date on which the Borrower becomes subject to a bankruptcy or
insolvency type proceeding.

6. Interest Rate. As provided in the Default Letter, interest will continue to accrue on
the Revolving Note and the Term Note at the default rate of interest specified in each such
promissory note.

7. Covenants and Agreements of Borrower During Forbearance Period. As a condition to the
Bank’s agreements set forth herein and to the continuation of the Forbearance Period pursuant to
Section 5, above, Borrower covenants and agrees as follows:

     (a) Borrower shall not request, and the Bank shall not be obligated to make, any additional
loans or advances on the Revolving Note.

     (b) Borrower shall continue to comply with all covenants, terms and conditions of the Loan
Documents; provided, however, that the Borrower shall not be obligated to comply
with the financial covenants contained in Section 3 of the Letter Agreement or the requirements of
Section 5 of the Letter Agreement, each during the Forbearance Period, and the Borrower shall be
obligated to make payments to the Bank only from the amounts maintained in the Account.

     (c) On October 22, 2009, Borrower shall enter into that certain Deposit Account Security and
Control Agreement in favor of the Bank (the “Deposit Control Agreement”), and shall
initially deposit $325,000.00 into the DDA account described therein (the “Account”).

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     (d) Borrower shall pay all accrued interest, accrued late fees, principal payments and
interest due under the Notes during the Forbearance Period, and make all other payments or
reimbursements required by the Loan Documents; provided, however, that (1) all such
payments shall be made by the Bank debiting the amounts maintained in the Account, and (2) if there
is no money in the Account, the Borrower shall not be obligated to make any such payments to the
Bank prior to the termination of the Forbearance Period.

     (e) Except as prohibited by law, Borrower and Midwest Bank shall continue to provide the Bank
with copies of all documents and information that Borrower or Midwest Bank is required to provide
to the Federal Deposit Insurance Corporation and/or any other regulatory authority responsible for
the examination or oversight of the Borrower or Midwest Bank.

     (f) Beginning October 31, 2009, the Borrower shall provide to the Bank, within fifteen days of
the end of each month, a Borrower prepared balance sheet and income statement for Midwest Bank,
along with a detailed list of all Pass-Watch, OAEM, substandard, nonaccrual and OREO assets of
Midwest Bank, all in form and substance satisfactory to the Bank.

     (g) On October 22, 2009, the Borrower shall enter into that certain Tax Refund Security
Agreement in favor of the Bank (the “Tax Security Agreement”). Upon receipt by the
Borrower of the Royal American Corporation 2004 federal income tax refund resulting from the 2006
NOL carryback on the amended tax return filed with the IRS on February 2, 2009, the Borrower shall
promptly deliver all of the proceeds received by the Borrower to the Bank, which proceeds will be
maintained in the Account and shall be subject to the Deposit Control Agreement.

8. Termination of Forbearance Period and Preservation of Rights. Immediately upon the
termination of the Forbearance Period for any reason: (a) the forbearance provided by this
Agreement shall terminate; (b) the Notes and Indebtedness shall be immediately due and payable
without further notice; (c) the Loan Documents shall be enforceable against Borrower in accordance
with their terms; and (d) the Bank shall be entitled to exercise all its rights and remedies under
the Loan Documents and at law (without any further notice or demand). During the Forbearance
Period, the Bank shall be entitled to take any actions deemed necessary by it to preserve its
rights and its interests under the Loan Documents, exclusive of the actions permitted or
contemplated by subsections (a) through (d) of this Section 8.

9. Costs and Expenses. Borrower agrees to pay all costs and expenses (including reasonable
attorneys’ fees) incurred by the Bank in connection with the preparation and negotiation of this
Agreement and enforcement of the Bank’s rights hereunder.

10. No Further Accommodations. Nothing contained in this Agreement shall be construed to
implicitly or explicitly promise, agree or commit to extend the terms of the forbearance beyond the
end of the Forbearance Period, or to require or commit the Bank to extend any other financial
accommodation to Borrower. Borrower acknowledges that Borrower is required to pay the Notes and
Indebtedness in full upon the termination of the Forbearance Period, without setoff, recoupment or
reduction of any kind.

11. No Waiver or Amendment. The effectiveness of this Agreement shall not constitute a
waiver by the Bank of the Existing Defaults or any other default under the Loan Documents, all of
which shall be deemed to remain in existence. This Agreement shall not in any way impair the right
of the Bank to exercise any or all of its rights and remedies under the Loan Documents or under law
with respect to such defaults at any time after the expiration of the Forbearance Period, all of
which rights and remedies are hereby expressly reserved. Borrower represents, warrants and agrees
there are no oral or written statements or agreements which add to, modify or amend in any manner
the terms of this Agreement or
the Loan Documents, and that neither this Agreement nor any of the Loan Documents shall be modified
or amended except by a writing signed by all parties hereto.

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12. Governing Law. This Agreement shall be construed, interpreted and governed by the
internal laws of the State of Wisconsin.

13. Conflicts. In the event of any conflict or inconsistency between the terms of this
Agreement and any of the other Loan Documents, the applicable terms of this Agreement shall
control.

14. Recommendation of Counsel. Borrower acknowledges and understands that the Bank has
recommended that it consult with their legal counsel prior to the execution of this Agreement.
Borrower acknowledges the recommendation and represent that Borrower has either consulted with
counsel prior to executing this Agreement and any agreements referenced herein, or has knowingly
waived the right to do so notwithstanding the express recommendation of the Bank.

15. WAIVER OF RIGHT TO JURY TRIAL. BORROWER AND THE BANK EACH KNOWINGLY AND VOLUNTARILY
WAIVE TRIAL BY JURY WITH RESPECT TO ALL MATTERS ARISING OUT OF THEIR RELATIONSHIPS AND CONSENT TO
THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY A JUDGE OF A COURT OF
COMPETENT JURISDICTION, AND ACKNOWLEDGE HAVING SOUGHT THE ADVICE OF LEGAL COUNSEL IN CONNECTION
WITH THIS WAIVER.

16. SUBMISSION TO JURISDICTION. THE BANK MAY ENFORCE ANY CLAIM ARISING OUT OF THIS
AGREEMENT OR THE LOAN DOCUMENTS IN ANY STATE OR FEDERAL COURT HAVING SUBJECT MATTER JURISDICTION
AND LOCATED IN MILWAUKEE, WISCONSIN. FOR THE PURPOSE OF ANY ACTION OR PROCEEDING INSTITUTED WITH
RESPECT TO ANY SUCH CLAIM, BORROWER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF SUCH COURTS.

17. NO CLAIMS. BORROWER, FOR ITSELF AND ITS DIRECTORS, OFFICERS, SHAREHOLDERS, EMPLOYEES,
AGENTS, PERSONAL REPRESENTATIVES, SUCCESSORS, ASSIGNS AND SUBSIDIARIES, DOES HEREBY FULLY
UNCONDITIONALLY AND IRREVOCABLY RELEASE THE BANK AND ANY PARTICIPANT FROM, AND WAIVES AGAINST THE
BANK AND ANY PARTICIPANT, THEIR DIRECTORS, OFFICERS, SHAREHOLDERS, EMPLOYEES, AGENTS, SUBSIDIARIES,
AFFILIATES, ATTORNEYS, SUCCESSORS AND ASSIGNS, ANY AND ALL CLAIMS, LIABILITIES, CAUSES OF ACTION,
DEFENSES, COUNTERCLAIMS AND SETOFFS OF ANY KIND, WHETHER KNOWN OR UNKNOWN (WHETHER IN CONTRACT,
TORT, STATUTE OR UNDER ANY OTHER LAW OR PRINCIPLE OF EQUITY) ARISING OUT OF, RELATED TO OR IN
CONNECTION WITH ANY ACT OR OMISSION BY THE BANK OR ANY PARTICIPANT ON OR BEFORE THE DATE OF THIS
AGREEMENT, OR WITH RESPECT TO THIS AGREEMENT AND THE LOAN DOCUMENTS; PROVIDED,
HOWEVER, NOTHING CONTAINED IN THIS SECTION SHALL BE DEEMED TO BE A WAIVER OR DISCHARGE OF
THE TERMS AND CONDITIONS OF THIS AGREEMENT OR THE LOAN DOCUMENTS.

18. Successors and Assigns. The provisions of this Agreement shall inure to the benefit
of, and be binding upon, the permitted successors and assigns of the parties hereto. The
Borrower’s rights and liabilities under this Agreement and the Loan Documents are not assignable in
whole or in part without the prior written consent of the Bank.

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19. Equity Swap. The Bank may, in its sole discretion, consider any proposal from the
Borrower concerning a debt for equity swap with respect to the Notes and any equity interest in the
Borrower and/or Midwest Bank. The parties hereto acknowledge and agree that the foregoing shall
not obligate the Bank to consummate any such potential transaction, and any such potential
transaction shall be subject to the Bank’s standard underwriting procedures and to the Bank’s sole
discretion.

[signature page to follow]

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This Agreement is effective as of the date and year first written above.

	 	 	 	 	 	 	 	 	 	 	 
	MIDWEST BANC HOLDINGS, INC.	 	 	 	M&I MARSHALL & ILSLEY BANK	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	By:	 	 	 	 
	Name/Title:

	 	 

	 	 
	 	Name/Title:
	 	 

	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Name/Title:	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 

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