Document:

EX 10.1 Mission Agreement

EXHIBIT 10.1
AGREEMENT
THIS AGREEMENT (this “Agreement”) is made and entered into as of this 22nd day of August, 2013, by and among Covanta Holding Corporation, a Delaware corporation, f/k/a Danielson Holding Corporation, f/k/a Mission Insurance Group, Inc. (“Covanta”), and John M. Huff, as Director of the Missouri Department of Insurance, Financial Institutions and Professional Registration (the “Trustee”), solely in his capacity as trustee and statutory receiver of the Mission Reinsurance Corporation Trust (“MRC Trust”) and the Holland-America Insurance Company Trust (“HAIC Trust” and, together with the MRC Trust, the “Trusts”).
WHEREAS, Covanta indirectly owns a majority of the outstanding equity securities of Danielson Indemnity Corporation, a Missouri corporation, f/k/a Holland-America Insurance Company (“DIND”), and Danielson Reinsurance Corporation, a Missouri corporation, f/k/a Mission Reinsurance Company (“DRC”);
WHEREAS, this Agreement is being entered into with reference to that certain Agreement of Reorganization, Rehabilitation and Restructuring dated as of December 13, 1989 by and among Mission Insurance Group, Inc., a debtor-in-possession under Chapter 11 of the United States Bankruptcy Code, Roxani M. Gillespie, as Insurance Commissioner of the State of California, solely in her capacities as conservator of Mission American Insurance Company and Compac Insurance Company, as liquidator of Mission Insurance Company, Enterprise Insurance Company and Mission National Insurance Company, and as ancillary liquidator of DIND and DRC, and Lewis E. Melahn, as Director of the Division of Insurance of the State of Missouri, solely in his capacities as statutory receiver of DIND and DRC;
WHEREAS, Covanta entered into that certain Amendment to Agreement Regarding Closing dated as of December 1, 2005 by and among John Garamendi, Insurance Commissioner of the State of California (the “Commissioner”), in his capacity as Trustee of the Mission Insurance Company Trust, the Mission National Insurance Company Trust and the Enterprise Insurance Company Trust, on the one hand, and Covanta, on the other hand, which provided certain indemnification rights to the Commissioner pursuant to Section 6 thereof, and the Trustee desires to obtain similar rights; and
WHEREAS, in consideration for the Trustee’s agreements with respect to the commutation of certain intercompany claims and the accelerated payment of $3,750,000 on the terms and conditions set forth herein, Covanta is willing to provide similar rights to the Trustee.
NOW, THEREFORE, in consideration of the promises and the representations and warranties, covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
1.Definitions.  The following capitalized terms shall have the following meanings when used in this Agreement:
(a)“Affiliated Group” shall mean the affiliated group of corporations of which Covanta or its successor is the common parent in respect of any tax period, as defined in section 1504 of the Code.
(b)“Code” shall mean the Internal Revenue Code of 1986, as amended.
(c)“Consolidated Return” shall mean the Income Tax returns, statements, schedules, forms and reports filed with the IRS by, on behalf of or with respect to the Affiliated Group.
(d)“Income Taxes” shall mean state, local and U.S. federal income taxes, interest and penalties thereon.
(e)“IRS” shall mean the Internal Revenue Service.
2.Payments.  Upon the Effective Date, the MRC Trust shall make a payment to Covanta in an amount equal to $3,750,000.
3.Indemnity.  From and after the Effective Date, Covanta shall indemnify and hold harmless the Trusts and the Trustee from any claims, demands, losses, liabilities, attorneys’ fees, costs, incidental damages, actual damages or consequential damages (collectively, “Losses”) imposed on the Trusts or the Trustee for Income Taxes the Trusts may be required to pay that are attributable to income reportable in the Consolidated Return for taxable years beginning with the taxable year ending on December 31, 2004.  This indemnification specifically includes the amount, if any, assessed against the Trustee on the basis of personal liability under 31 U.S.C. section 3713.  The Trustee shall keep Covanta reasonably informed as to any developments 

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concerning any potential demand for Income Taxes, including all penalties, additional taxes, and interest thereon, reimbursable pursuant to this Section, including, but not limited to, the receipt of any notices of audit, information document requests, revenue agent’s reports, notices of deficiency or other correspondence or communication with the IRS or comparable state or local tax authority.
4.The Trustee is a party to this Agreement only in his representative capacity as Trustee and as statutory receiver of the HAIC Trust and the MRC Trust and not individually.  The State of Missouri is not a party to this Agreement.  Neither the Trustee and statutory receiver nor his agents, employees, attorneys, deputies or representatives, shall have personal liability in connection with this transaction.
5.Confidentiality.  The Trustee agrees that at all times it shall keep confidential and shall not, without the prior written consent of Covanta, use or disclose to any third party any Confidential Information (as hereinafter defined).  The Trustee shall take such steps as lie within its power to assure that all employees of the Missouri Department of Insurance, Financial Institutions and Professional Registration, to whom Confidential Information is disclosed take all proper precautions to prevent the unauthorized disclosure and use of such Confidential Information.  For purposes of this Agreement, “Confidential Information” shall mean any information of a confidential nature concerning Covanta or any other member of the Affiliated Group or the Trusts, whether disclosed before or after the date hereof, including any information regarding Income Taxes, Income Tax returns, financial information, business plans, marketing plans, concepts, ideas, processes, methods, techniques, pricing, technical information, data, customer information, information relating to contracts, confidential information of third parties and other information of commercial value.  Notwithstanding the foregoing, nothing in this Section 4 shall restrict disclosure by the Trustee of any Confidential Information where such disclosure is required by applicable law or by order of any court of proper jurisdiction, provided, however, that, prior to any such disclosure, the Trustee shall (a) give notice of the contemplated disclosure to Covanta as promptly as possible, (b) cooperate with Covanta in resisting such disclosure and (c) only provide such information as may be required by applicable law or court order.
6.Effective Date; Termination.  
(a)Notwithstanding anything herein to the contrary, the effectiveness of this Agreement shall be conditioned upon the approval of the Agreement by the Circuit Court of Jackson County, Missouri at Kansas City (the date of such approval, the “Effective Date”).
(b)This Agreement shall terminate on the first day on which the Trusts are no longer in existence for Income Tax purposes or no longer qualify as grantor trusts under the Code.  Notwithstanding anything herein to the contrary, the obligations of Trustee pursuant to Section 5 shall remain in effect indefinitely.
7.General Cooperation.  The parties hereto agree to cooperate in the implementation of this Agreement and to provide such assistance as may reasonably be requested by one another in connection with the preparation of any Consolidated Return, audit or judicial or administrative proceeding or determination relating to a liability for taxes, including reasonable access to and assistance in identifying and interpreting the books and records, financial statements and work papers, as well as the execution of documents and the performance of other acts reasonably necessary to accomplish the purposes of this Agreement. 
8.Amendments; Waiver.  This Agreement may be amended in whole or in part only by a written instrument signed by each of the parties hereto.  No delay or omission by any party to this Agreement to exercise its rights under this Agreement shall impair any such right or power or shall be construed as a waiver or acquiescence of any default.  No waiver of any default shall be construed, taken or held to be a waiver of any other default.
9.Entire Agreement.  This Agreement sets forth the entire understanding of the parties hereto with respect to the subject matter hereof and supersedes and cancels any prior agreements, arrangements, representations, warranties or communications (whether oral or written) between the parties hereto relating to the subject matter hereof.
10.Applicable Law.  This Agreement shall be subject to and governed by the laws of the State of Missouri, without regard to its conflict of laws principles.  
11.Interpretation.  The headings in this Agreement are included solely for convenience and shall not affect the interpretation of this Agreement.  Unless the context requires otherwise, any pronouns used in this Agreement shall include the corresponding singular, plural, masculine, feminine or neuter pronouns, as the case may be.  Underscored references to Sections shall refer to those Sections of this Agreement.  The use of the terms “including” or “include” shall in all cases herein mean “including, without limitation” or “include, without limitation,” respectively.  
12.Notices.  Any notice required or permitted under the terms of this Agreement shall be in writing and shall be delivered by personal delivery, via overnight carrier, via facsimile or via registered or certified mail, return receipt requested, first class postage prepaid.  If notice is delivered by personal delivery or via overnight carrier, notice shall be deemed given on the date that actual delivery is made.  If notice is delivered via facsimile, notice shall be deemed given on the date that the notice is transmitted and written confirmation of such transmission is obtained.  If notice is delivered via registered or certified mail, notice 

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shall be deemed given on the earlier of (a) the actual day of delivery or (b) the fifth day after the date of mailing.  All notices shall be addressed to the intended recipient as set forth below:
If to the Trustee or any of the Trusts:
Tamara Kopp
Receivership Counsel
Missouri Department of Insurance
Financial Institutions and Professional Registration
301 West High Street, Room 530
Jefferson City, Missouri 65101
Fax No.:  573-751-1165

With a copy to:
Lathrop & Gage LLP
2345 Grand Blvd., Suite 2200
Kansas City, MO 64108
Attention:  John C. Craft, Esq.
Fax No.:  (816) 292-2001

If to Covanta, to:
Covanta Holding Corporation
445 South Street
Morristown, New Jersey 07960
Attention:  Timothy J. Simpson, Executive 
Vice President and General Counsel
Fax No.:  (862) 345-5140

With a copy to:
Neal, Gerber & Eisenberg LLP
2 North LaSalle Street, Suite 1700
Chicago, Illinois  60602
Attention:  David S. Stone, Esq.
Fax No.:  (312) 578-1796

or to such other address or to the attention of the person or persons as the recipient party has specified by proper prior written notice to the sending party.  If more than one method for sending notice as set forth above is used, the earliest notice date established as set forth above shall control.
13.No Third Party Beneficiaries.  This Agreement is solely for the benefit of the parties hereto and no provision of this Agreement shall be deemed to confer upon other third parties any remedy, claim, liability, reimbursement, cause of action or other right.  Notwithstanding the foregoing, DIND and DRC shall be intended third-party beneficiaries of this Agreement and shall be able to enforce the provisions hereof.
14.Counterparts.  This Agreement may be executed in multiple counterparts (including by facsimile or pdf transmission), each of which shall be deemed an original, and all of which taken together shall be considered one and the same instrument.
15.Severability.  If any term or provision of this Agreement shall, to any extent, be held by a court of competent jurisdiction to be invalid or unenforceable, the remainder of this Agreement or the application of such term or provision to persons or circumstances other than those as to which it has been held invalid or unenforceable, shall not be affected thereby and this Agreement shall be deemed severable and shall be enforced otherwise to the full extent permitted by applicable law.
[Remainder of Page Intentionally Left Blank; Signature Page Follows]

    

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.
COVANTA HOLDING CORPORATION

By:  /s/ Timothy J. Simpson    
Name:   Timothy J. Simpson
		
	Title:
	Executive Vice President, General Counsel

MISSION REINSURANCE 
CORPORATION TRUST

By:  /s/ John M. Huff    
John M. Huff, as Director of the Missouri Department of Insurance, Financial Institutions and Professional Registration, solely in his capacity as trustee and statutory receiver

HOLLAND-AMERICA INSURANCE 
COMPANY TRUST

By:  /s/ John M. Huff    
John M. Huff, as Director of the Missouri Department of Insurance, Financial Institutions and Professional Registration, solely in his capacity as trustee and statutory receiver

4exhibit10-1_102313_8k

Exhibit 10.1

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

This Amended and Restated Employment Agreement (the “Agreement”) is made and entered into this 22nd day of October, 2013, by and between First Mid-Illinois Bancshares, Inc. (“the Company”), a corporation with its principal place of business located in Mattoon, Illinois, and Joseph R. Dively (“Executive”).

WHEREAS, the Company and Executive are party to that certain Employment Agreement, dated as of April 27, 2011 and effective as of May 9, 2011 (the “Original Employment Agreement”), pursuant to which the Company agrees to employ Executive as Senior Vice President of the Company and President of First Mid-Illinois Bank and Trust, N.A. (the “Bank”); and

WHEREAS, the Company and Executive are hereby agreeing to amend and restate the Original Agreement in its entirety on the terms and subject to the conditions set forth herein.

NOW, THEREFORE, 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 on January 1, 2014 (the “Effective Date”) and shall continue until December 31, 2016. 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.  The Original Agreement shall continue to be effective and in full force and effect at all times from the date hereof up until the Effective Date, at which time this Agreement shall amend and replace the Original Agreement in its entirety.

1.02     Employment.  The Company agrees to employ Executive as President and Chief Executive Officer of the Company, and to continue to employ Executive as President of the Bank, commencing on the Effective Date. 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.

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 $320,000 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 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 participate in the First Mid-Illinois Bancshares, Inc. Deferred Compensation Plan in accordance with the terms and conditions of such Plan.

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

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

2.06    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, or an $800 per month vehicle allowance for such uses, as may be agreed to by the Company and Executive.

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

2.07     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.

2.08     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.

2.09     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 annual base salary and any 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 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 at 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, for any reason, 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, Executive shall not, on behalf of himself or on behalf of another person, corporation, partnership, trust or other entity, within a one hundred mile radius of any location where 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:        Joseph R. Dively
13179 E CR 720N
Charleston, IL 61920

If to the Company:    First Mid-Illinois Bancshares, Inc.
1515 Charleston Avenue
Mattoon IL 61938
Facsimile: 217-258-0485

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.

[Signature Page Follows]

    

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.

FIRST MID-ILLINOIS BANCSHARES, INC.

By:            
Title:    Chairman, Compensation Committee                     

EXECUTIVE

Joseph R. Dively

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