Document:

exv10w1

 

Exhibit 10.1

MIDWEST BANC HOLDINGS, INC.

STOCK AND INCENTIVE PLAN

ADOPTED BY THE BOARD OF DIRECTORS MARCH 23, 2005

APPROVED BY STOCKHOLDERS MAY 18, 2005

AMENDED BY STOCKHOLDERS AS OF MAY 3, 2006

ARTICLE I

ESTABLISHMENT, PURPOSE, DURATION AND EFFECTIVE DATE

     1.1 Establishment of the Plan. Midwest Banc Holdings, Inc., a Delaware corporation
(hereinafter referred to as the “Company”), adopted the Midwest Banc Holdings, Inc. Stock and
Incentive Option Plan, f/k/a Midwest Banc Holdings, Inc. 1996 Stock Option Plan (the “Plan”),
effective November 19, 1996. The Company now wishes to amend and restate the Plan to make such
changes in the Plan necessary to: increase the number of shares of Common Stock that may be issued
pursuant to Awards under the Plan to 3,900,000 (Article IV), add Stock Appreciation Rights (Article
VII), Restricted Stock (Article VIII), and Restricted Stock Units (Article IX), to extend the
duration of the Plan to March 23, 2015 (Section 1.3), and to allow Non-Employee Directors to
participate in the Plan (Article V). Inasmuch as the 10-year duration of the Incentive Stock Option
plan will expire on November 18, 2006 and no Incentive Stock Options have been granted under the
Plan, the Incentive Stock Option plan is terminated and a new Incentive Stock Option plan is hereby
established in this amended and restated Plan.

     1.2 Purpose of the Plan. The purpose of this Plan is to benefit the Company and its
Subsidiaries by enabling the Company to offer to certain present and future executives, key
employees, and Non-Employee Directors stock based incentives in the Company, thereby giving them a
stake in the growth and prosperity of the Company and encouraging the continuance of their services
with the Company or its Subsidiaries.

     1.3 Duration of the Plan. The Plan shall remain in effect, subject to the right of the Board
of Directors to amend or terminate the Plan at any time pursuant to Article XIII hereof, until all
Shares subject to it shall have been purchased or acquired according to the Plan’s provisions.
Unless sooner terminated, the Plan shall terminate on the date before the tenth anniversary of the
date the Plan is adopted by the Board or approved by the stockholders of the Company, whichever is
earlier. No Awards may be granted under the Plan after the Plan is terminated.

     1.4 Effective Date. The Plan as amended and restated shall become effective on March 23, 2005,
but no Awards shall be granted unless and until the Plan has been approved by the stockholders of
the Company, which approval shall be within twelve months before or after the date the Plan is
adopted by the Board.

ARTICLE II

DEFINITIONS

     2.1 Definitions. Whenever used in the Plan, the following terms shall have the meanings set
forth below, and when the meaning is intended, the initial letter of the word shall be capitalized:

     “Award” means, individually or collectively, a grant under this Plan of Nonqualified Stock
Options, Incentive Stock Options, Stock Appreciation Rights, Restricted Stock or Restricted Stock
Units.

     “Award Agreement” means a written agreement between the Company and a Participant setting
forth the terms, conditions, limitations and provisions applicable to Awards granted under this
Plan, as shall be determined by the Committee.

 

 

     “Beneficial Owner” or “Beneficial Ownership” shall have the meaning ascribed to such term in
Rule 13d-3 of the General Rules and Regulations under the Exchange Act, or any successor rule or
regulation promulgated under the Exchange Act.

     “Board” means the Board of Directors of the Company.

     “Cause” means, with respect to termination of a Participant’s employment (or status as a
Non-Employee Director), the occurrence of any one or more of the following, as determined by the
Committee, in the exercise of good faith and reasonable judgment:

     (i) In the case where there is no employment, change in control or similar agreement in
effect between the Participant and the Company or a Subsidiary at the time of the grant of
the Award, or where there is such an agreement but the agreement does not define “cause” (or
similar words) or where a “cause” termination would not be permitted under such agreement at
that time because other conditions were not satisfied, the termination of an employment due
to the (a) willful and continued failure or refusal by the Participant to substantially
perform assigned duties (other than any such failure resulting from the Participant’s
Disability), (b) the Participant’s dishonesty or theft, (c) the Participant’s violation of
any obligations or duties under any employment agreement, (d) the Participant’s gross
negligence or willful misconduct, or (e) the Participant’s suspension or termination due to
the direction of any authorized bank regulatory agency that the Participant be relieved of
his duties and responsibilities to the Company or a Subsidiary.

     (ii) In the case where there is an employment, change in control or similar agreement
in effect between the Participant and the Company or a Subsidiary at the time of the grant
of the Award that defines “cause” (or similar words) and a “cause” termination would be
permitted under such agreement at that time, the termination of an employment arrangement
that is or would be deemed to be for “cause” (or similar words) as defined in such
agreement.

     (iii) In the case of a Non-Employee Director, the removal of the Non-Employee Director
pursuant to a vote of the stockholders of the Company or the removal of a Non-Employee
Director pursuant to a direction received from any authorized bank regulatory agency.

     No act or failure to act on a Participant’s part shall be considered willful unless done, or
omitted to be done, by the Participant not in good faith and without reasonable belief that his
action or omission was in the best interest of the Company.

“Change Of Control” means the occurrence of any one or more of the following events:

     (i) The Company is merged or consolidated or reorganized into or with another
corporation or other legal person (an “Acquiror”) and as a result of such merger,
consolidation or reorganization less than 50% of the outstanding voting securities or other
capital interests of the surviving, resulting or acquiring corporation or other legal person
are owned in the aggregate by persons who were stockholders of the Company, directly or
indirectly, immediately prior to such merger, consolidation or reorganization, other than by
the Acquiror or any corporation or other legal person controlling, controlled by or under
common control with the Acquiror;

     (ii) The Company sells all or substantially all of its business and/ or assets to an
Acquiror, of which less than 50% of the outstanding voting securities or other capital
interests are owned in the aggregate by persons who were stockholders of the Company,
directly or indirectly, immediately prior to such sale, other than by any corporation or
other legal person controlling, controlled by or under common control with the Acquiror;

     (iii) Any person or group (as the terms “person” and “group” are used in Section
13(d)(3) or Section 14(d)(2) of the Exchange Act and the rules and regulations promulgated
thereunder) has become the Beneficial Owner of more than 50% of the issued and outstanding
shares of voting securities of Company, other than (a) a trustee or other fiduciary holding
securities under any employee benefit plan of

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the Company or any Subsidiary or (b) a
corporation owned directly or indirectly by the stockholders of the Company in substantially
the same proportion as their ownership of stock in the Company;

     (iv) Individuals who are members of the Incumbent Board cease to constitute a majority
of the Board. For this purpose, “Incumbent Board” means (a) the members of the Board of
Directors of the Company on the Effective Date and (b) any individual who becomes a member
of the Board after the Effective Date, if such individual’s election or nomination for
election as a Director was approved by the affirmative vote of the then Incumbent Board; or

     (v) The stockholders of the Company approve a plan of complete liquidation or
dissolution of the Company.

The Board has final authority to determine the exact date on which a Change in Control has been
deemed to have occurred under paragraphs (i), (ii), (iii), (iv) and (v) above.

     “Code” means the Internal Revenue Code of 1986, as amended from time to time, or any successor
legislation thereto, and the rules and regulations thereunder.

     “Committee” means the Committee as specified in Article III herein appointed by the Board to
administer the Plan with respect to grants of Awards.

     “Common Stock” or “Shares” means the common stock, $0.01 par value per share, of the Company.

     “Company” means Midwest Banc Holdings, Inc., a Delaware corporation, as well as any successor
to the Company which shall maintain this Plan as provided in Article XVI herein.

     “Director” means any individual who is a member of the Board. Notwithstanding the foregoing, a
Non-Employee Director who, with the approval of the Board or the Committee, enters into a
continuing participant agreement with the Company or a Subsidiary effective upon such person
ceasing to be a Non-Employee Director, shall continue to be a Non-Employee Director for purposes of
this Plan and shall not be deemed to incur a termination of directorship during the term of such
continuing participant agreement.

     “Disability” means the permanent and total disability of a person as defined in Section
22(e)(3) of the Code and shall be determined by the Committee upon receipt of competent medical
advice from one or more individuals selected by the Committee who are qualified to give
professional medical advice.

     “Early Retirement” means the Participant’s termination of employment with the Company and its
Subsidiaries (for reasons other than Cause) on or after attaining age 55 having completed five or
more years of employment with the Company or its Subsidiaries.

     “Effective Date” means March 23, 2005, except as otherwise provided herein.

     “Employee” means any full-time salaried employee (including officers and directors) of the
Company and its Subsidiaries, including Subsidiaries which become such after adoption of the Plan.
Mere service as a Director or payment of a Director’s fee by the Company or a Subsidiary, however,
shall not be sufficient to qualify such Director as an “Employee” of the Company or a Subsidiary.
Notwithstanding the foregoing, a full-time salaried employee who, with the approval of the Board or
the Committee, enters into a continuing participant agreement with the Company or a Subsidiary
effective upon such person ceasing to be a full-time salaried employee, shall continue to be an
Employee for purposes of this Plan and shall not be deemed to incur a termination of employment
during the term of such continuing participant agreement; provided, however, that for purposes of
Incentive Stock Options, the term “Employee” does not include any person who is not an “employee”
within the meaning of Section 422 of the Code.

     “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, or any
successor act thereto, and the rules and regulations thereunder.

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     “Fair Market Value” means, as of any date, the value of the Common Stock determined as
follows:

     (i) If the Common Stock is at the time traded on the NASDAQ National Market System (or
any similar system or exchange), then the Fair Market Value shall be the average of the
highest and lowest prices of the Common Stock as reported by the consolidated tape of the
NASDAQ National Market System (or any similar system or exchange) on the date of
determination. In the event that there are no Common Stock transactions on such date, the
Fair Market Value shall be determined as of the immediately preceding date on which there
were Common Stock transactions.

     (ii) If the Common Stock is regularly quoted on an automated quotation system
(including OTB Bulletin Board) or by a recognized securities dealer, then the Fair Market
Value shall be the closing sales price for the shares as quoted on such system on the date
of determination. If selling prices are not reported, the Fair Market Value of a Share shall
be the mean between the high bid and low asked prices for the Common Stock on the date of
determination (or, if no such prices were reported on that date, on the last date such
prices were reported), as reported in The Wall Street Journal or such other source as the
Committee deems reliable.

     (iii) In the absence of an established market for the Common Stock of the type
described in paragraphs (i) and (ii) above, the Fair Market Value thereof shall be
determined by the Committee after taking into account such factors as the Committee shall
deem appropriate.

     “Incentive Stock Option” or “ISO” means an option to purchase Shares granted under Article VI
hereof and which is designated as an Incentive Stock Option and which qualifies as an ISO under
Section 422 of the Code and the regulations promulgated thereunder.

     “Non-Employee Director” means a Director who is not also a current Employee.

     “Nonqualified Stock Option” or “NQSO” means an option to purchase Common Stock of the Company
other than an Incentive Stock Option described in Section 422 of the Code that satisfies the
following requirements: (1) the amount required to purchase the Common Stock under the Nonqualified
Stock Option (the exercise price) may never be less than the Fair Market Value of the underlying
Common Stock on the date the Nonqualified Stock Option is granted; (2) the receipt, transfer or
exercise of the Nonqualified Stock Option is subject to taxation under Section 83 of the Code; and
(3) the Nonqualified Stock Option does not include any feature for the deferral of compensation
other than the deferral of recognition of income until the later of exercise or disposition of the
option under Section 1.83-7 of the Treasury regulations.

     “Option” means an ISO or a NQSO granted pursuant to the Plan.

     “Participant” means a holder of an outstanding Award granted under the Plan.

     “Period of Restriction” means the period during which the transfer of Restricted Stock or
Restricted Stock Units is limited in some way (based on the passage of time, the achievement of
performance goals, or upon the occurrence of other events as determined by the Committee, at its
discretion).

     “Person” shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act
and used in Sections 13(d) and 14(d) thereof, including a group as defined in Section 13(d)
thereof.

     “Related” means (i) in the case of an SAR or other right, an SAR or other right which is
granted in conjunction with, and to the extent exercisable, in whole or in part, in lieu of, an
Option or another right and (ii) in the case of an Option, an Option with respect to which and to
the extent an SAR or other right is exercisable, in whole or in part, in lieu thereof.

     “Restricted Stock” means Shares granted under Article VIII herein.

     “Restricted Stock Unit” means a unit granted under Article IX evidencing the right to receive
either Common Stock or a cash payment equal to the Fair Market Value of a Share (or a combination
thereof) at some future date.

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     “Retirement” means the Participant’s termination of employment with the Company or its
Subsidiaries (for reasons other than Cause) on or after the date the Participant attains age 65 or,
in the case of a Non-Employee Director, it means the cessation of the Non-Employee Director’s
duties as a Director due to his decision to resign or not stand for re-election or due to the Board
of Directors decision not to reslate him for election as a Director (other than for Cause).

     “Rule 16b-3” means Rule 16b-3 or any successor or comparable rule or rules applicable to
Awards granted under the Plan promulgated by the Securities and Exchange Commission under Section
16(b) of the Exchange Act.

     “Stock Appreciation Right” or “SAR” means a right to receive upon exercise an amount payable
in Shares. An SAR issued under the Plan must meeting the following requirements: (1) the value of
the Common Stock the excess over which the right provides for payment upon exercise (the SAR
exercise price) may never be less than the fair market value of the underlying Common Stock on the
date the right is granted; (2) the Common Stock subject to the right is traded on an established
securities market; (3) only such traded Common Stock may be delivered in settlement of the right
upon exercise; and (4) the right does not include any feature for the deferral of compensation
other than the deferral of recognition of income until the exercise of the right.

     “Subsidiary” means any corporation, partnership, joint venture, affiliate, or other entity in
which the Company is the direct or indirect beneficial owner of not less than 50% of all issued and
outstanding equity interests.

     2.2 Gender And Number. Except when otherwise indicated by the context, words in the masculine
gender when used in the Plan shall include the feminine gender, the singular shall include the
plural, and the plural shall include the singular.

     2.3 Severability. In the event any provision of the Plan shall be held illegal or invalid for
any reason, the illegality or invalidity shall not affect the remaining parts of the Plan, and the
Plan shall be construed and enforced as if the illegal or invalid provision had not been included.

ARTICLE III

ADMINISTRATION

     3.1 The Committee. The Plan shall be administered by the Board of Directors acting as a
committee or by the Compensation Committee of the Board of Directors, or by any other Committee
appointed by the Board of Directors. The Committee administering the Plan shall consist of two or
more Directors who are (i) “non-employee directors” as the term (or any similar successor) is
defined in Rule 16b-3, and (ii) “outside directors” within the meaning of Section 162(m) of the
Code.

     3.2 Authority of the Committee. Except as limited by law or by the amended and restated
Certificate of Incorporation (the “Certificate”) or the amended and restated By-laws (the
“By-laws”) of the Company, and subject to the provisions herein, the Committee (acting by majority
action (whether taken during a meeting or by written consent)) shall have full and complete
discretionary power to:

	 	•	 	select Employees and Non-Employee Directors to whom Awards will be provided;
	 
	 	•	 	determine the number, sizes and types of Awards, the date the Awards may be
exercised and the date on which the risk of forfeiture shall lapse, the acceleration of
any such dates and the expiration date of an Award;
	 
	 	•	 	determine the terms and conditions of Awards in a manner consistent with the Plan;
	 
	 	•	 	determine whether, to what extent and under what circumstances an Award may be
settled, or the exercise price of an Award may be paid, in cash, Shares, other means or
a combination thereof;
	 
	 	•	 	construe and interpret the Plan and any agreement or instrument entered into under the Plan;

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	 	•	 	establish, amend, or waive rules and regulations for the Plan’s administration;
	 
	 	•	 	(subject to the provisions of Article XIII herein) amend the terms and conditions of
any outstanding Award to the extent such terms and conditions are within the discretion
of the Committee as provided in the Plan; and
	 
	 	•	 	make all other determinations which may be necessary or advisable for the
administration of the Plan.

     3.3 Manner of Exercise of Committee Authority; Subcommittees. The express grant of any
specific power to the Committee, and the taking of any action by the Committee, shall not be
construed as limiting any power or authority of the Committee. The Committee may act through
subcommittees, including for purposes of perfecting exemptions under Rule 16b-3 or qualifying
Awards under Section 162(m) of the Code as performance-based compensation, in which case the
subcommittee shall be subject to and have authority granted hereunder to the Committee, and the
acts of the subcommittee shall be deemed to be acts of the Committee hereunder.

     3.4 Decisions Binding. All determinations and decisions made by the Committee pursuant to the
provisions of the Plan and all related orders and resolutions of the Board shall be final,
conclusive and binding on all persons, including the Company, its stockholders, Employees,
Participants, and their estates and beneficiaries.

ARTICLE IV

SHARES SUBJECT TO THE PLAN AND MAXIMUM AWARDS

     4.1 Shares Available For Awards. (a) Subject to adjustment as provided in Section 4.4, the
aggregate number of Shares which may be issued or used for reference purposes over the term of the
Plan shall not exceed 3,900,000 Shares (inclusive of shares issued prior to March 23, 2005), which
may be either authorized and unissued Shares or Shares held in or reacquired for the treasury of
the Company.

          (b) All of the Shares may be issued under Awards which are Restricted Stock or Restricted
Stock Units. Such number of shares shall be subject to adjustment upon occurrence of any of the
events indicated in Section 4.4.

          (c) Of the aggregate number of Shares available for Awards set forth in paragraph (a), the
total number of Shares of Company Stock with respect to which Incentive Stock Option Awards may be
granted shall not exceed 1,037,846 Shares.

     4.2 Reuse. If, and to the extent:

     (i) an Option shall expire, terminate, lapse or be cancelled for any reason without
having been exercised in full (including, without limitation, cancellation and re-grant), or
in the event that an Option is exercised or settled in a manner such that some or all of the
Shares related to the Option are not issued to the Participant (or beneficiary) (including
as the result of a Share-for-Share exercise or the use of Shares for withholding taxes), the
Shares subject thereto which have not become outstanding shall (unless the Plan shall have
terminated) remain available for issuance under the Plan; or

     (ii) any Awards under the Plan are forfeited for any reason, or settled in cash in lieu
of Shares or in a manner such that some or all of the Shares related to the Award are not
issued to the Participant (or beneficiary) (including as a result of the use of Shares for
tax withholding), such Shares shall (unless the Plan shall have terminated) remain available
for issuance under the Plan, except as provided in Section 7.2 which relates to the exercise
of SARs in conjunction with Options.

     4.3 Individual Participant Limitations. (a) Subject to adjustment as provided in Section
4.4 herein, the maximum aggregate number of Shares that may be granted with respect to Options or
SARs in any one fiscal year to a Participant shall be 150,000. To the extent required by Section
162(m) of the Code or the Treasury regulations thereunder, in applying the foregoing limitations
with respect to a Participant, if any Option or SAR is

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canceled, the canceled Option or SAR shall
continue to count against the maximum number of Shares with respect to which Options and SARs may
be granted to the Participant. For this purpose, the repricing of an Option shall be treated as the
cancellation of the existing Option and the grant of a new Option.

          (b) No Participant may be granted, during any fiscal year, Awards consisting of Shares or
units denominated in such shares (other than any Awards consisting of Options or SARs) covering or
relating to more than 150,000 Shares, subject to adjustment pursuant to the provisions of Section
4.4 hereof.

     4.4 Adjustments in Authorized Shares. In the event of any change in corporate capitalization,
such as a stock split, stock dividend, recapitalization, or a corporate transaction, such as any
merger, consolidation, combination, separation, including a spin-off, or other distribution of
stock or property of the Company, 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 Company, an adjustment shall be made in the number and class of Shares available
for Awards, the number and class of and/ or price of Shares subject to outstanding Awards granted
under the Plan and the number of Shares set forth in Sections 4.1, 4.2 and 4.3, as may be
determined to be appropriate and equitable by the Committee, in its sole discretion, to prevent
dilution or enlargement of rights; provided, however, that the number of Shares subject to any
Award shall always be a whole number.

ARTICLE V

ELIGIBILITY AND PARTICIPATION

     5.1 Eligibility. The persons eligible to participate in this Plan are as follows:

          (i) Employees; and

          (ii) Non-Employee Directors.

     Notwithstanding the foregoing, only Employees are eligible to receive Incentive Stock Options.

     5.2 Actual Participation. Subject to the provisions of the Plan, the Committee shall have
full authority to determine which eligible persons are to receive Awards and the nature and amount
of each Award.

ARTICLE VI

STOCK OPTIONS

     6.1 Grant of Options. Subject to the terms and provisions of the Plan, Options may be granted
to Employees and Non-Employee Directors at any time and from time to time as determined by the
Committee in its sole discretion; provided, however, that Non-Employee Directors shall not be
eligible to receive Incentive Stock Options. The Committee, in its sole discretion, shall determine
the number of Shares subject to each Option. The
Committee may grant Incentive Stock Options, Nonqualified Stock Options, or a combination
thereof. The Committee may grant any type of Option to purchase Stock that is permitted by law at
the time of grant.

     6.2 Award Agreement. Each Option shall be evidenced by an Award Agreement that shall specify
the exercise price, the expiration date of the Option, the number of Shares to which the Option
pertains, any conditions to exercise of the Option, and such other terms and conditions as the
Committee, in its discretion, shall determine. In the event the Award Agreement does not set forth
when each Option expires and becomes unexercisable, then the Option evidenced thereby shall expire
and become unexercisable in accordance with

the provisions of Section 6.4. The Award Agreement shall also specify whether the Option is
intended to be an Incentive Stock Option or a Nonqualified Stock Option.

     6.3 Exercise Price. Subject to the provisions of this Section 6.3, the exercise price for
each Option shall be determined by the Committee in its sole discretion.

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          (a) Nonqualified Stock Options. In the case of a Nonqualified Stock Option, the exercise price
shall be not less than the Fair Market Value of a Share on the date of the grant.

          (b) Incentive Stock Options. In the case of an Incentive Stock Option, the exercise price
shall be not less than one hundred percent (100%) of the Fair Market Value of a Share on the date
of the grant; provided, however, that if on the date of the grant, the Employee (together with
persons whose stock ownership is attributed to the Employee pursuant to Section 424(d) of the Code)
owns stock representing more than ten percent (10%) of the total combined voting power of all
classes of stock of the Company or any of its Subsidiaries, the exercise price shall be not less
than one hundred and ten percent (110%) of the Fair Market Value of a Share on the date of the
grant.

          (c) Substitute Options. Notwithstanding the provisions of paragraphs (a) and (b), in the event
that the Company or a Subsidiary consummates a transaction described in Section 424(a) of the Code
(e.g., the acquisition of property or stock from an unrelated corporation), persons who become
Employees on account of such transaction may be granted Options in substitution for options granted
by their former employer. If such substitute Options are granted, the Committee, in its sole
discretion and consistent with Section 424(a) of the Code, shall determine the exercise price of
such substitute Options.

     6.4 Expiration of Options. Subject to the provisions of Section 6.8 and Section 6.11, Options
granted pursuant to this Article VI shall expire in accordance with this Section 6.4.

          (a) Expiration Dates in General. Each Option granted pursuant to this Article VI shall
terminate no later than the first to occur of the following events:

     (i) The date for termination of the Option set forth in the written Award Agreement; or

     (ii) The expiration of ten (10) years measured from the date of the grant; or

     (iii) The expiration of three (3) months from the date of the Participant’s termination
of employment (or termination as a Non-Employee Director) for a reason other than the
Participant’s death, Disability, Retirement, or for Cause; or

     (iv) The expiration of one (1) year from the date of the Participant’s termination of
employment (or termination as a Non-Employee Director) by reason of death, Disability or
Retirement; or

     (v) The date of termination of employment (or termination as a Non-Employee Director)
in the event of a termination for Cause.

          (b) Effect of Termination of Service. Notwithstanding Section 6.4(a) or 6.5:

     (i) Upon the death, Disability or Retirement of the Participant, each Option held by
the Participant shall become exercisable in full (without regard to any installment or other
vesting provisions thereof) and shall be exercisable thereafter until the first to occur of
the dates set forth in Section 6.4(a)(i), (ii) or (iv).

     (ii) Upon Early Retirement, each Option held by a Participant who from such Early
Retirement retires and agrees to remain retired from the industry (a “sunset arrangement”)
shall become exercisable in full (without regard to any installment or other vesting
provisions thereof) and shall be exercisable by the Participant until the earlier of the
dates set forth in Section 6.4(a)(i), (ii) or (iii).

     (iii) In the event of the death of the Participant after his termination of employment
(or his termination as a Non-Employee Director), but prior to the expiration of his Options,
then his then exercisable Options shall be exercisable in full by his beneficiaries until
the earlier of the date such

Options would have expired had the Participant survived until such date or the expiration of one
(1) year from the date of the Participant’s termination.

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     (iv) If the employment of the Participant (or his status as a Non-Employee Director)
shall terminate for any reason other then death, Disability, Retirement, Early Retirement,
or for Cause, the rights under any then outstanding Option granted pursuant to the Plan
shall terminate upon the expiration date of the Option or three (3) months after such date
of termination, whichever first occurs; provided, however, that in the event such
termination occurs after a Change in Control, the rights under any then outstanding Option
granted pursuant to the Plan shall terminate upon the expiration date of the Option or one
(1) year after such date of termination of service, whichever first occurs.

     (v) Where termination of employment (or termination as a Non-Employee Director) is for
Cause, rights under all Options shall terminate immediately upon such termination.

     6.5 Terms of Exercise. Options granted under the Plan shall be exercisable at such times and
be subject to such restrictions and conditions as the Committee shall determine in its sole
discretion and prescribe in the Award Agreement; provided that, to the extent required to comply
with Rule 16b-3, no Option shall be exercisable within the first six months of its term, unless
death or Disability of the Participant occurs during such period. Each Option which is intended to
qualify as an Incentive Stock Option under Section 422 of the Code shall comply with the applicable
provisions of the Code pertaining to such Options. In the event that the Award Agreement does not
set forth times with respect to the exercisability of Options, then each such Option granted to an
Employee or Non-Employee Director shall become exercisable on the first anniversary of the date of
the grant at the rate of one-fourth (25%) of the Shares which may be purchased under the Option
(rounded down to the nearest whole number), and on each of the second, third and fourth anniversary
of the date of the grant to the extent of an additional one-fourth (25%) of such Shares. After an
Option is granted, the Committee, in its sole discretion, may accelerate the exercisability of the
Option. Notwithstanding the foregoing, upon a Change in Control or an event described in Section
6.4(b)(i) or (ii), any and all Options granted under this Article VI shall become immediately
exercisable in full.

     6.6 Method of Exercise; Cancellation of Related SAR.

          (a) Options shall be exercised by the Participant’s delivery of a written notice of exercise
to the President of the Company (or his designee), setting forth the number of Shares with respect
to which the Option is to be exercised, accompanied by full payment for the Shares.

          (b) The exercise of an Option shall cancel any Related SAR to the extent of the number of
Shares as to which the Option is exercised. As soon as practicable after receipt of a written
notification of exercise and full payment for the Shares purchased, the Company shall deliver to
the Participant (or the Participant’s designated broker), Share certificates (which may be in book
entry form) representing such Shares.

     6.7 Payment Upon Exercise. Upon the exercise of any Option, the Exercise Price shall be
payable to the Company in full as follows:

     (i) in cash or its equivalent (including, for this purpose, the proceeds from a
cashless exercise program as permitted under Federal Reserve Board’s regulations);

     (ii) by tendering previously acquired Shares (which, if such shares have been acquired
under this Plan, have been held at least six (6) months) having an aggregate Fair Market
Value at the time of exercise equal to the total Exercise Price;

     (iii) by any other means which the Committee, in its sole discretion, determines to
both provide legal consideration for the Shares, and to be consistent with the purposes of
the Plan; or

     (iv) by a combination of (i), (ii) and (iii), as the Committee, in its sole discretion,
may permit.

     6.8 Limited Transferability of Options. (a) An Incentive Stock Option shall be exercisable
only by the Participant during his lifetime and shall not be assignable or transferable other than
by will or by the laws of descent and distribution following the Participant’s death.
Notwithstanding the foregoing, the Participant may, by delivering written notice to the Company, in
a form satisfactory to the Company, designate a third party who, in the event of the death of the
Participant, shall thereafter be entitled to exercise the Option.

9

 

          (b) The Committee may, in its discretion, authorize all or a portion of the Nonqualified Stock
Options granted to a Participant to be on terms which permit transfer by such Participant to:

     (i) the spouse, children or grandchildren of the Participant (“Immediate Family
Members”),

     (ii) a trust or trusts for the exclusive benefit of such Immediate Family Members, or

     (iii) a partnership in which such Immediate Family Members are the only partners,
provided that (A) there may be no consideration for any such transfer, (B) the Award
Agreement pursuant to which such Options are granted expressly provides for transferability
in a manner consistent with this Section 6.8, and (C) subsequent transfers of transferred
Options shall be prohibited except those in accordance with Article X.

          (c) Following transfer, any such Options shall continue to be subject to the same terms and
conditions as were applicable immediately prior to transfer; provided that for purposes of Article
X hereof the term “Participant” shall be deemed to refer to the transferee. The provisions of
Article VI and Article XII relating to the period of exercisability and expiration of the Option
shall continue to be applied with respect to the original Participant, and the Options shall be
exercisable by the transferee only to the extent, and for the periods, set forth in Article VI and
Article XII.

     6.9 Restrictions on Share Transferability. The Committee may impose such restrictions on any
Shares acquired pursuant to the exercise of an Option as it may deem advisable, including, but not
limited to, restrictions related to applicable Federal securities laws, the requirements of any
national securities exchange or system upon which Shares are then listed or traded, or any blue sky
or state securities laws.

     6.10 Stockholder Rights. The holder of an Option shall have no stockholder rights with
respect to the Shares subject to the Option until such person shall have exercised the Option, paid
the exercise price and become the recordholder of the purchased Shares.

     6.11 Additional Provisions Applicable to Incentive Stock Options. Notwithstanding anything in
the Plan to the contrary, to the extent required from time to time by the Code, the following
additional provisions shall apply to the grant of Options which are intended to qualify as
Incentive Stock Options:

          (a) Annual Dollar Limitation. The aggregate Fair Market Value (determined on the date the
Option is granted) of the Common Stock with respect to which Incentive Stock Options are
exercisable for the first time by any Employee during any calendar year (under all plans of the
Company and its Subsidiaries) shall not exceed $100,000 or such other amount as may subsequently be
specified by the Code; provided, however, that in the event the Employee holds two or more
Incentive Stock Options which become exercisable for the first time in the same calendar year, then
those Incentive Stock Options up to such $100,000 limitation (determined in the order such
Options were granted) shall continue to be Incentive Stock Options and the remainder shall be
Nonqualified Stock Options.

          (b) Termination of Continuous Service; Exercise. Notwithstanding anything in this Plan to the
contrary, no Incentive Stock Option may be exercised more than three (3) months after the
Participant’s termination of employment with the Company and all Subsidiaries for any reason other
than Disability or death (in which case the Incentive Stock Option may be exercised until the
expiration of one (1) year from the date of death or Disability). In the event the Participant dies
during the three-month period after termination of employment, the Incentive Stock Option may be
exercised by such Participant’s beneficiaries for the period ending one (1) year after the date of
the Participant’s death. In the event the Award Agreement or the Committee permits later exercise
and the Incentive Stock Option is not exercised within such three (3) month or one (1) year period,
whichever is applicable, then such Incentive Stock Option shall become a Nonqualified Stock Option.

          (c) Option Term. The term of each Incentive Stock Option shall be fixed by the Committee.
Notwithstanding the foregoing, no Incentive Stock Option may be exercised after the expiration of
ten (10) years from the date such Option is granted; provided, however, that if the Incentive
Stock Option is granted to an Employee who, together with persons whose stock ownership is
attributed to the Employee pursuant to Section 424(d) of the Code, owns stock possessing more than
10% of the total combined voting power of all classes

10

 

of the stock of the Company or any of its
Subsidiaries, the Option may not be exercised after the expiration of five (5) years from the date
such Option is granted.

ARTICLE VII

STOCK APPRECIATION RIGHTS

     7.1 Grant of Stock Appreciation Rights. Subject to the provisions of Section 1.3 and Article
IV, Stock Appreciation Rights may be granted to Employees at any time and from time to time as
shall be determined by the Committee. An SAR may be granted at the discretion of the Committee in
any of the following forms:

	 	•	 	In conjunction with Options;
	 
	 	•	 	In addition to Options;
	 
	 	•	 	Upon lapse of Options;
	 
	 	•	 	Independent of Options; or
	 
	 	•	 	Each of the above in connection with previously awarded Options.

     7.2 Exercise of SARs In Conjunction With Options. SARs granted in conjunction with Options
may be exercised for all or part of the Shares subject to the Related Option upon the surrender of
the right to exercise an equivalent number of Options. The SAR may be exercised only with respect
to the Shares for which its Related Option is then exercisable. Option Shares with respect to which
the SAR shall have been exercised may not be subject again to an Award under this Plan. SARs
granted pursuant to this Section 7.2 with respect to which the Option Shares have been exercised
will immediately lapse upon such exercise.

     7.3 Exercise of SARs in Addition to Options. SARS granted in addition to Options shall be
deemed to be exercised upon the exercise of the Related Options.

     7.4 Exercise of SARs Upon Lapse of Options. SARs granted upon lapse of Options shall be
deemed to have been exercised upon the lapse of the Related Options as to the number of Shares
subject to the Options. Notwithstanding Section 4.2, cancelled Options in an amount equal to the
related SARs shall not be available again for Awards under the Plan.

     7.5 Exercise of SARs Independent of Options. SARs granted independent of Options may be
exercised upon whatever terms and conditions the Committee, in its sole discretion, imposes upon
the SARs.

     7.6 Payment of SAR Amount. Upon exercise of the SAR, the holder shall be entitled to receive
payment of an amount (subject to Section 7.7 below) determined by multiplying:

          (a) The difference between the Fair Market Value of a Share at the date of exercise over the
Fair Market Value of a Share on the date the right is granted, by

          (b) The number of Shares with respect to which the Stock Appreciation Right is exercised.

     7.7 Form and Timing of Payment. At the discretion of the Committee, payment for SARs may be
made in cash or Shares, or in a combination thereof.

     7.8 Limit of Appreciation. At the time of grant, the Committee may establish in its sole
discretion, a maximum amount per Share which will be payable upon exercise of an SAR.

     7.9 Term of SAR. The term of an SAR granted under the Plan shall not exceed ten (10) years.

11

 

     7.10 Termination of Service. In the event the termination of a Participant’s service for any
reason, any SARs outstanding shall terminate in the same manner as specified for Options under
Section 6.4(b) hereof.

     7.11 Nontransferability of SARs. No SAR granted under the Plan may be sold, transferred,
pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of
descent and distribution. Further, all SARs granted to a Participant under the Plan shall be
exercisable only by the Participant during his lifetime.

ARTICLE
VIII

RESTRICTED STOCK

     8.1 Grant of Restricted Stock. Subject to the provisions of Section 1.3 and Article IV, the
Committee, at any time and from time to time, may grant an Award entitling the recipient to
acquire, at no cost or for a purchase price determined by the Committee, shares of Stock subject to
such restrictions and conditions as the Committee may determine at the time of the grant. Each
Restricted Stock Award shall be evidenced by an Award Agreement.

     8.2 Transferability of Restricted Stock. The Restricted Stock granted hereunder may not be
sold, transferred, pledged, assigned, or otherwise alienated or hypothecated until the termination
of any Period of Restriction specified in the Award Agreement, or until the earlier satisfaction of
any other conditions specified in the Award Agreement (which may include the attainment of
pre-established performance goals as defined in Section 8.8 hereof). Limitations on the
transferability of Restricted Stock shall be set forth in the Award Agreement.

     8.3 Other Restrictions. The Committee shall impose such other restrictions on any shares of
Restricted Stock granted under the Plan as it may deem advisable including, without limitation,
restrictions under applicable Federal or state securities laws, and shall legend the Share
certificates representing the Restricted Stock to give appropriate notice of such restrictions.

     8.4 Voting Rights. Participants holding Shares of Restricted Stock granted hereunder may
exercise full voting rights with respect to such Shares of Restricted Stock.

     8.5 Dividends and Other Distributions. Participants holding Shares of Restricted Stock shall
be entitled to receive all dividends and other distributions paid with respect to such Shares of
Restricted Stock. If any
such dividends or distributions are paid in Shares, the Shares shall be subject to the same
restrictions on transferability as the Shares of Restricted Stock with respect to which they were
paid.

     8.6 Termination of Service Due to Retirement, Death or Disability. In the event a
Participant’s employment (or his status as a Non-Employee Director) terminates due to his or her
Retirement, death or Disability, the remaining restrictions with respect to the Restricted Stock,
except as otherwise provided by the Committee in the Award Agreement pursuant to Sections 8.2 or
8.3 hereof, shall automatically terminate so that all Shares of Restricted Stock shall be free of
all restrictions and freely transferable.

     8.7 Termination of Service For Reasons Other than Retirement, Death, or Disability. In the
event a Participant’s employment (or his status as a Non-Employee Director) terminates for reasons
other than Retirement, death, or Disability, all Restricted Stock subject to restrictions shall be
forfeited and reacquired by the Company at the price paid by the Participant. Notwithstanding the
foregoing, the Committee, in its sole discretion, may waive the restrictions remaining with respect
to Shares of Restricted Stock.

     8.8 Performance Goals. One or more of the following business criteria for the Company, on a
consolidated basis, and/ or for specified subsidiaries or affiliates or other business units of the
Company shall be used by the Committee in establishing performance goals: (1) revenue measures; (2)
operating income, earnings form operations, earnings before or after taxes, or earnings before or
after extraordinary or special items, (3) net income per common share (basic or diluted) or
earnings per share (basis or diluted); (4) return on assets, return on investment, return on
capital, or return on equity; (5) cash flow, free cash flow, cash flow return on investment, or net
cash provided by operations; (6) efficiency ratio; (7) economic profit or value created; (8) net
interest margin; (9) stock price or total stockholder return; and (10) strategic business criteria,
consisting of one or more objectives

12

 

based on meeting specified market penetration, geographic
business expansion goals, costs targets, customer satisfaction and goals relating to acquisitions
or divestitures of subsidiaries, affiliates or joint ventures. The targeted level or levels of
performance with respect to such business criteria may be established at such levels and in such
terms as the Committee may determine, in its discretion, including in absolute terms, as a goal
relative to performance in prior periods, or as a goal compared to the performance of one or more
comparable companies or an index covering multiple companies.

     8.9 Automatic Grant of Restricted Stock to Non-Employee Directors. Each Non-Employee Director
elected or appointed to serve as a Director for the first time starting with the 2004 annual
meeting of stockholders of the Company shall automatically be granted 3,000 Shares of Restricted
Stock with the first grants being made to qualified Non-Employee Directors on the fifth business
day after the stockholders of the Company approve the Plan. The Restricted Stock shall vest as
follows: 1,000 Shares shall vest on the fifth business day after the date on which the Non-Employee
Director is first elected or appointed; and an additional 1,000 shares shall vest on each of the
two succeeding anniversaries of such Non-Employee Director’s election or, if appointed, on each of
the next two succeeding annual meetings of stockholders, provided that such Non-Employee Director
is still serving as a Director of the Company on each such anniversary date; provided, further,
that with respect to any Non-Employee Director elected for the first time at the 2004 annual
meeting of stockholders, the first 1,000 shares shall vest on the fifth business day after the 2005
annual meeting of stockholders. The foregoing award shall not be made to any Non-Employee Director who is elected or appointed to the Board pursuant to an agreement between the Company and an entity being acquired by the Company.

ARTICLE IX

RESTRICTED STOCK UNITS

     9.1 Grant of Restricted Stock Units. Subject to the provisions of Section 1.3 and Article IV,
the Committee, at any time and from time to time, may grant Restricted Stock Units under the Plan
to such Employees or Non-Employee Directors as it shall determine. Each Restricted Stock Unit Award
shall be evidenced by an Award Agreement and may provide for payment to the Participant in cash or
Shares or a combination thereof upon expiration of the Period of Restriction. The Committee, in its
discretion, may permit a Participant to defer receipt of Common Stock or a cash payment beyond the
expiration of any applicable Period of Restriction or the satisfaction of other restrictions
imposed by the Committee.

     9.2 Transferability of Restricted Stock Units. Restricted Stock Units granted hereunder may
not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated until the
termination of any Period of Restriction specified in the Award Agreement, or until the earlier
satisfaction of any other conditions specified in the Award Agreement (which may include the
attainment of pre-established performance goals as defined in Section 8.8 hereof).

     9.3 Other Restrictions. The Committee shall impose such other restrictions on Restricted
Stock Units granted pursuant to the Plan as it may deem advisable including, without limitation,
restrictions under applicable Federal or state securities laws.

     9.4 Rights as a Stockholder. No voting or dividend rights as a stockholder shall exist with
respect to Restricted Stock Units prior to the issuance of Shares in the name of the Participant.
An Award Agreement may provide for dividend equivalent units.

     9.5 Termination of Service Due to Retirement, Death, or Disability. In the event a
Participant’s employment (or his status as a Non-Employee Director) terminates due to his
Retirement, death or Disability, the remaining restrictions with respect to the Restricted Stock
Units, except as otherwise provided by the Committee in the Award Agreement pursuant to Sections
9.2 or 9.3 hereof, shall automatically terminate and the Participant shall be entitled to receive
Shares or a cash payment, or a combination thereof, provided in the Award Agreement.

     9.6 Termination of Service For Reasons Other Than Retirement, Death, or Disability. In the
event that a Participant’s his employment (or his status as a Non-Employee Director) terminates
with the Company for reasons other than Retirement, death, or Disability, all Restricted Stock
Units subject to restrictions shall be forfeited and returned to the Company; provided, however,
that, the Committee in its sole discretion may waive restrictions remaining on any or all
Restricted Stock Units and distribute Shares or make a cash payment, or a combination thereof, as
set out in the Award Agreement.

13

 

     9.7 Application of Section 409A of the Code. Section 409A of the Code will apply to
Restricted Stock Unit Awards until otherwise provided by Treasury regulations or other guidance
issued by the U.S. Department of Treasury.

ARTICLE X

BENEFICIARY DESIGNATION

     Each Participant under the Plan may, from time to time, name any beneficiary or beneficiaries
(who may be named contingently or successively) to whom any benefit under the Plan is to be paid in
case of his death before he receives any or all of such benefit. Each such designation shall revoke
all prior designations by the same Participant, shall be in a form prescribed by the Committee, and
will be effective only when filed by the Participant in writing with the Committee during the
Participant’s lifetime. In the absence of any such designation, benefits remaining unpaid at the
Participant’s death shall be paid to the Participant’s estate.

ARTICLE XI

RIGHTS OF PARTICIPANTS

     11.1 Service. Nothing in the Plan shall interfere with or limit in any way the right of the
Company or a Subsidiary to terminate any Participant’s employment (or status as a Director) at any
time, nor confer upon any Participant any right to continue in the employ (or as a Director) of the
Company or a Subsidiary.

     11.2 Participation. No Employee (or Non-Employee Director) shall have a right to be selected
as a Participant, or, having been so selected, to be selected again as a Participant.

ARTICLE XII

CHANGE IN CONTROL

     Except as expressly provided otherwise in an Award Agreement, in the event of a Change in
Control as defined in Section 2.1 above, all Awards under the Plan shall vest 100% and shall be
fully exercisable, whereupon all Options and SARs shall become exercisable in full and the
restrictions applicable to Restricted Stock and Restricted Stock Units (including any Period of
Restriction) shall terminate.

ARTICLE
XIII

AMENDMENT, MODIFICATION, AND TERMINATION

     13.1 Amendment, Modification, and Termination. The Board may at any time and from time to
time, alter, amend, suspend or terminate the Plan in whole or in part for the purpose of meeting or
addressing any changes in legal requirements or for any other purpose permitted by law.

     13.2 Stockholder Approval. The Board shall obtain stockholder approval of any Plan amendment
to the extent the Board deems necessary or desirable or to comply with applicable laws or the rules
of the NASDAQ National Market System or any other system or exchange on which the Shares are then
listed or quoted. Notwithstanding the foregoing, the Board shall obtain stockholder approval to
amend the Plan to (i) materially increase the maximum number of Shares issuable under the Plan
(except for permissible adjustments under Section 4.4); (ii) materially increase the benefits
accruing to Participants in the Plan; or (iii) materially modify the eligibility requirements for
participation in the Plan.

     13.3 Effect of Amendment or Termination. No amendment, termination, or modification of the
Plan shall adversely affect in any material way any Award previously granted under the Plan or the
rights of any Participant without the written consent of the Participant holding such Award.

14

 

ARTICLE XIV

WITHHOLDING

     14.1 Tax Withholding. The Company shall have the power and the right to deduct or withhold, or
require a Participant to remit to the Company, an amount sufficient to satisfy Federal, state, and
local taxes, domestic or foreign, required by law or regulation to be withheld with respect to any
taxable event arising as a result of the Plan.

     14.2 Share Withholding. With respect to withholding required upon the exercise of Options or
SARs, upon the lapse of restrictions on Restricted Stock, or upon any other taxable event arising
as a result of Awards granted hereunder, Participants may elect to satisfy the withholding
requirement, in whole or in part, by having the Company withhold Shares having a Fair Market Value
on the date the tax is to be determined equal to the minimum statutory total tax which would be
imposed on the transaction; provided, however, that in the event a deferral election is in effect
with respect to the Shares deliverable upon exercise of an Option, then the Participant may only
elect to have such withholding made from the Shares tendered to exercise such Option. All such
elections shall be irrevocable, made in writing, signed by the Participant, and shall be subject to
any restrictions or limitations that the Committee, in its sole discretion, deems appropriate.

ARTICLE XV

INDEMNIFICATION

     Each Person who is or shall have been a member of the Committee or of the Board shall be
indemnified and held harmless by the Company against and from any loss, cost, liability, or expense
that may be imposed upon or reasonably incurred by him in connection with or resulting from any
claim, action, suit, or proceeding to which he may be a party or in which he may be involved by
reason of any action taken or failure to act under the Plan and against and from any and all
amounts paid by him in settlement thereof, with the Company’s approval, or paid by him in
satisfaction of any judgment in any such action, suit, or proceeding against him, provided he shall
give the Company an opportunity, at its own expense, to handle and defend the same before he
undertakes to handle and defend it on his own behalf. The foregoing right of indemnification shall
not be exclusive of any other rights of indemnification to which such persons may be entitled under
the Certificate or By-laws of the Company, as a matter of law, or otherwise, or any power that the
Company may have to indemnify them or hold them harmless.

ARTICLE XVI

SUCCESSORS

     All obligations of the Company under the Plan with respect to Awards granted hereunder shall
be binding on any successor to the Company, whether the existence of such successor is the result
of a direct or indirect merger, consolidation, purchase of all or substantially all of the business
and/ or assets of the Company or otherwise.

ARTICLE XVII

LEGAL CONSTRUCTION

     17.1 Requirements of Law. The granting of Awards and the issuance of Shares under the Plan
shall be subject to all applicable laws, rules, and regulations, and to such approvals by any
governmental agencies or national securities exchanges as may be required.

     17.2 Governing Law. To the extent not preempted by Federal law, the Plan and all Award
Agreements hereunder, shall be construed in accordance with and governed by the laws of the State
of Delaware.

* * *

15

 

     IN WITNESS WHEREOF, Midwest Banc Holdings, Inc. by its appropriate officers duly authorized,
has executed this instrument this 3rd day of May, 2006.

	 	 	 	 	 
	 	 	MIDWEST BANC HOLDINGS, INC.
	 
	 	 	 	 
	 

	 	By:
	 	     /s/James J. Giancola
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	As its:
	 	   President and Chief Executive Officer
	 

	 	 	 	 

16EX-10.19 Change of Control Employment Agreement

 

Exhibit 10.19

CHANGE OF CONTROL EMPLOYMENT AGREEMENT

     AGREEMENT by and between Seacoast Banking Corporation of Florida (the “Company”) and Richard
A. Yanke (“Executive”), dated as of the 18th day of July, 2006.

     The Board of Directors of the Company (the “Board”), has determined that it is in the best
interests of the Company and its stockholders to assure that the Company will have the continued
dedication of Executive, notwithstanding the possibility, threat or occurrence of a Change of
Control (as defined below) of the Company. The Board believes it is imperative to diminish the
inevitable distraction of Executive by virtue of the personal uncertainties and risks created by a
pending or threatened Change of Control and to encourage Executive’s full attention and dedication
to the Company currently and in the event of any threatened or pending Change of Control, and to
provide Executive with compensation and benefits arrangements upon a Change of Control which ensure
that the compensation and benefits expectations of Executive will be satisfied and which are
competitive with those of other corporations. Therefore, in order to accomplish these objectives,
the Board has caused the Company to enter into this Agreement.

     NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

     1. Certain Definitions.

          (a) The “Effective Date” shall mean the first date during the Change of Control Period (as
defined in Section l(b)) on which a Change of Control (as defined in Section 2) occurs. Anything
in this Agreement to the contrary notwithstanding, if a Change of Control occurs during the Change
of Control Period and if Executive’s employment with the Company has been terminated either by the
Company without Cause or by Executive for Good Reason (as such terms are defined in Section 5)
within six months prior to the date on which the Change of Control occurs, and unless it is
reasonably demonstrated by the Company that such termination of employment (i) was not at the
request of a third party who has taken steps reasonably calculated to effect the Change of Control
and (ii) did not otherwise arise in connection with or anticipation of the Change of Control, then
for all purposes of this Agreement the “Effective Date” shall mean the date immediately prior to
the date of such termination of employment.

          (b) The “Change of Control Period” shall mean the period commencing on the date hereof and
ending on the first anniversary of the date hereof; provided, however, that commencing on the date
one year after the date hereof, and on each annual anniversary of such date (such date and each
annual anniversary thereof shall be hereinafter referred to as the “Renewal Date”), unless
previously terminated, the Change of Control Period shall be automatically extended so as to
terminate one year from such Renewal Date, unless at least 60 days prior to the Renewal Date the
Company shall give notice to Executive that the Change of Control Period shall not be so extended.

 

 

Change of Control Employment Agreement

Richard A. Yanke

Page 2

 

     2. Change of Control. For the purposes of this Agreement, a “Change of Control” shall
mean the occurrence of any of the following events:

          (a) individuals who, at the Effective Date, constitute the Board (the “Incumbent Directors”)
cease for any reason to constitute at least a majority of the Board, provided that any person
becoming a director after the Effective Date and whose election or nomination for election was
approved by a vote of at least a majority of the Incumbent Directors then on the Board (either by a
specific vote or by approval of the proxy statement of the Company in which such person is named as
a nominee for director, without written objection to such nomination) shall be an Incumbent
Director; provided, however, that no individual initially elected or nominated as a
director of the Company as a result of an actual or threatened election contest (as described in
Rule 14a-11 under the 1934 Act (“Election Contest”) or other actual or threatened solicitation of
proxies or consents by or on behalf of any “person” (as such term is defined in Section 3(a)(9) of
the 1934 Act and as used in Section 13(d)(3) and 14(d)(2) of the 1934 Act) other than the Board
(“Proxy Contest”), including by reason of any agreement intended to avoid or settle any Election
Contest or Proxy Contest, shall be deemed an Incumbent Director;

          (b) any person is or becomes a “beneficial owner” (as defined in Rule 13d-3 under the 1934
Act), directly or indirectly, of securities of the Company representing 25% or more of the combined
voting power of the Company’s then outstanding securities eligible to vote for the election of the
Board (the “Company Voting Securities”); provided, however, that the event
described in this paragraph (b) shall not be deemed to be a Change in Control of the Company by
virtue of any of the following acquisitions: (A) any acquisition by a person who is on the
Effective Date the beneficial owner of 25% or more of the outstanding Company Voting Securities,
(B) an acquisition by the Company which reduces the number of Company Voting Securities outstanding
and thereby results in any person acquiring beneficial ownership of more than 25% of the
outstanding Company Voting Securities; provided, that if after such acquisition by
the Company such person becomes the beneficial owner of additional Company Voting Securities that
increases the percentage of outstanding Company Voting Securities beneficially owned by such
person, a Change in Control of the Company shall then occur, (C) an acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the Company or any Parent or Subsidiary,
(D) an acquisition by an underwriter temporarily holding securities pursuant to an offering of such
securities, (E) an acquisition pursuant to a Non-Qualifying Transaction (as defined in paragraph
(c) below), or (F) a transaction (other than the one described in paragraph (c) below) in which
Company Voting Securities are acquired from the Company, if a majority of the Incumbent Directors
approve a resolution providing expressly that the acquisition pursuant to this clause (F) does not
constitute a Change in Control of the Company under this paragraph (b);

 

 

Change of Control Employment Agreement

Richard A. Yanke

Page 3

 

          (c) the consummation of a reorganization, merger, consolidation, statutory share exchange or
similar form of corporate transaction involving the Company that requires the approval of the
Company’s stockholders, whether for such transaction or the issuance of securities in the
transaction (a “Reorganization”), or the sale or other disposition of all or substantially all of
the Company’s assets to an entity that is not an affiliate of the Company (a “Sale”), unless
immediately following such Reorganization or Sale: (A) more than 50% of the total voting power of
(x) the corporation resulting from such Reorganization or the corporation which has acquired all or
substantially all of the assets of the Company (in either case, the “Surviving Corporation”), or
(y) if applicable, the ultimate parent corporation that directly or indirectly has beneficial
ownership of 100% of the voting securities eligible to elect directors of the Surviving Corporation
(the “Parent Corporation”), is represented by the Company Voting Securities that were outstanding
immediately prior to such Reorganization or Sale (or, if applicable, is represented by shares into
which such Company Voting Securities were converted pursuant to such Reorganization or Sale), and
such voting power among the holders thereof is in substantially the same proportion as the voting
power of such Company Voting Securities among the holders thereof immediately prior to the
Reorganization or Sale, and (B) no person (other than (x) the Company, (y) any employee benefit
plan (or related trust) sponsored or maintained by the Surviving Corporation or the Parent
Corporation, or (z) a person who immediately prior to the Reorganization or Sale was the beneficial
owner of 25% or more of the outstanding Company Voting Securities) is the beneficial owner,
directly or indirectly, of 25% or more of the total voting power of the outstanding voting
securities eligible to elect directors of the Parent Corporation (or, if there is no Parent
Corporation, the Surviving Corporation), and (C) at least a majority of the members of the board of
directors of the Parent Corporation (or, if there is no Parent Corporation, the Surviving
Corporation) following the consummation of the Reorganization or Sale were Incumbent Directors at
the time of the Board’s approval of the execution of the initial agreement providing for such
Reorganization or Sale (any Reorganization or Sale which satisfies all of the criteria specified in
(A), (B) and (C) above shall be deemed to be a “Non-Qualifying Transaction”); or

          (d) approval by the stockholders of the Company of a complete liquidation or dissolution of
the Company.

     3. Employment Period. The Company hereby agrees to continue Executive in its employ
of the Company, and Executive hereby agrees to remain in the employ of the Company subject to the
terms and conditions of this Agreement, for the period commencing on the Effective Date and ending
on the first anniversary of such date (the “Employment Period”).

 

 

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     4. Terms of Employment.

          (a) Position and Duties.

               (i) During the Employment Period, (A) Executive’s position (including status, offices, titles
and reporting requirements), authority, duties and responsibilities shall be at least commensurate
in all material respects with the most significant of those held, exercised and assigned at any
time during the 120-day period immediately preceding the Effective Date, and (B) Executive’s
services shall be performed at the location where Executive was employed immediately preceding the
Effective Date or any office or location less than 35 miles from such location.

               (ii) During the Employment Period, and excluding any periods of vacation and sick leave to
which Executive is entitled, Executive agrees to devote reasonable attention and time during normal
business hours to the business and affairs of the Company and, to the extent necessary to discharge
the responsibilities assigned to Executive hereunder, to use Executive’s reasonable best efforts to
perform faithfully and efficiently such responsibilities. During the Employment Period it shall
not be a violation of this Agreement for Executive to (A) serve on corporate, civic or charitable
boards or committees, (B) engage in other business activities that do not represent a conflict of
interest with the full execution of his duties to the Company, and (C) manage personal investments,
so long as such activities do not significantly interfere with the performance of Executive’s
responsibilities as an employee of the Company in accordance with this Agreement. It is expressly
understood and agreed that to the extent that any such activities have been conducted by Executive
prior to the Effective Date, the continued conduct of such activities (or the conduct of activities
similar in nature and scope thereto) subsequent to the Effective Date shall not thereafter be
deemed to interfere with the performance of Executive’s responsibilities to the Company.

          (b) Compensation.

               (i) Base Salary. During the Employment Period, Executive shall receive an annual
base salary (“Annual Base Salary”), which shall be paid at a monthly rate, at least equal to 12
times the highest monthly base salary paid or payable, including any base salary which has been
earned but deferred, to Executive by the Company and its affiliated companies in respect of the
12-month period immediately preceding the month in which the Effective Date occurs. Any increase
in Annual Base Salary shall not serve to limit or reduce any other obligation to Executive under
this Agreement. Annual Base Salary shall not be reduced after any such increase and the term
Annual Base Salary as utilized in this Agreement shall refer to Annual Base Salary as so increased.
As used in this Agreement, the term “affiliated companies” shall include any company controlled
by, controlling or under common control with the Company.

 

 

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               (ii) Annual Bonus. In addition to Annual Base Salary, Executive shall be awarded,
for each fiscal year ending during the Employment Period, an annual bonus (the “Annual Bonus”) in
cash at least equal to Executive’s highest annual bonus for the last three full fiscal years prior
to the Effective Date (annualized in the event that Executive was not employed by the Company for
the whole of such fiscal year). Each such Annual Bonus shall be paid no later than the end of the
third month of the fiscal year next following the fiscal year for which the Annual Bonus is
awarded, unless Executive shall elect to defer the receipt of such Annual Bonus.

               (iii) Incentive, Savings and Retirement Plans. During the Employment Period,
Executive shall be entitled to participate in all incentive, savings and retirement plans,
practices, policies and programs applicable generally to senior executive officers of the Company
and its affiliated companies (“Peer Executives”), but in no event shall such plans, practices,
policies and programs provide Executive with incentive opportunities, savings opportunities and
retirement benefit opportunities, in each case, less favorable, in the aggregate, than the most
favorable of those provided by the Company and its affiliated companies for Executive under such
plans, practices, policies and programs as in effect at any time during the 120-day period
immediately preceding the Effective Date or if more favorable to Executive, those provided
generally at any time after the Effective Date to Peer Executives.

               (iv) Welfare Benefit Plans. During the Employment Period, Executive and/or
Executive’s family, as the case may be, shall be eligible for participation in and shall receive
all benefits under welfare benefit plans, practices, policies and programs provided by the Company
and its affiliated companies (including, without limitation, medical, prescription, dental,
disability, employee life, group life, accidental death and travel accident insurance plans and
programs) to the extent applicable generally to Peer Executives.

               (v) Expenses. During the Employment Period, Executive shall be entitled to receive
prompt reimbursement for all reasonable expenses incurred by Executive in accordance with the
policies, practices and procedures of the Company applicable to Peer Executives.

               (vi) Fringe Benefits. During the Employment Period, Executive shall be entitled to
fringe benefits in accordance with the plans, practices, programs and policies of the Company
applicable to Peer Executives.

     5. Termination of Employment.

          (a) Death, Disability or Retirement. Executive’s employment shall terminate
automatically upon Executive’s death or Retirement during the Employment Period. For purposes of
this Agreement, “Retirement” shall mean normal retirement as defined in the Company’s then-current
retirement plan, or if there is no such retirement

 

 

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plan, “Retirement” shall mean voluntary termination after age 65 with ten years of service. If
the Company determines in good faith that the Disability of Executive has occurred during the
Employment Period (pursuant to the definition of Disability set forth below), it may give to
Executive written notice in accordance with Section 13(b) of this Agreement of its intention to
terminate Executive’s employment. In such event, Executive’s employment with the Company shall
terminate effective on the 30th day after receipt of such notice by Executive (the “Disability
Effective Date”), provided that, within the 30 days after such receipt, Executive shall not have
returned to full-time performance of Executive’s duties. For purposes of this Agreement,
“Disability” shall mean the inability of Executive, as determined by the Board, to perform the
essential functions of his regular duties and responsibilities, with or without reasonable
accommodation, due to a medically determinable physical or mental illness which has lasted (or can
reasonably be expected to last) for a continuous period of six (6) months during any continuous
twelve (12) month period.

          (b) Cause. The Company may terminate Executive’s employment during the Employment
Period with or without Cause. For purposes of this Agreement, “Cause” shall mean:

               (i) the willful and continued failure of Executive to perform substantially Executive’s
duties with the Company (other than any such failure resulting from incapacity due to physical or
mental illness, and specifically excluding any failure by Executive, after reasonable efforts, to
meet performance expectations), after a written demand for substantial performance is delivered to
Executive by the Board of Directors of the Company which specifically identifies the manner in
which such Board believes that Executive has not substantially performed Executive’s duties, or

               (ii) the willful engaging by Executive in illegal conduct or gross misconduct which is
materially and demonstrably injurious to the Company.

     For purposes of this provision, no act or failure to act, on the part of Executive, shall be
considered “willful” unless it is done, or omitted to be done, by Executive in bad faith or without
reasonable belief that Executive’s action or omission was in the best interests of the Company.
Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the
Board or based upon the advice of counsel for the Company shall be conclusively presumed to be
done, or omitted to be done, by Executive in good faith and in the best interests of the Company.
The cessation of employment of Executive shall not be deemed to be for Cause unless and until there
shall have been delivered to Executive a copy of a resolution duly adopted by the affirmative vote
of not less than three-fourths of the entire membership of the Board of the Company at a meeting of
such Board called and held for such purpose (after reasonable notice is provided to Executive and
Executive is given an opportunity, together with counsel, to be heard before such Board), finding
that, in the good faith opinion of such Board,

 

 

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Executive is guilty of the conduct described in subparagraph (i) or (ii) above, and specifying the
particulars thereof in detail.

          (c) Good Reason. Executive’s employment may be terminated by Executive for Good
Reason or for no reason. For purposes of this Agreement, “Good Reason” shall mean:

               (i) without the written consent of Executive, the assignment to Executive of any duties
inconsistent in any material respect with Executive’s position (including status, offices, titles
and reporting requirements), authority, duties or responsibilities as in effect on the Effective
Date, or any other action by the Company which results in a diminution in such position, authority,
duties or responsibilities, excluding for this purpose an isolated, insubstantial and inadvertent
action not taken in bad faith and which is remedied by the Company promptly after receipt of notice
thereof given by Executive;

               (ii) the Company’s requiring Executive, without his consent, to be based at any office or
location that is more than 35 miles from the location where Executive was employed immediately
prior to the Effective Date;

               (iii) a reduction in Executive’s Base Salary and benefits as in effect on the Effective Date
or as the same may be increased from time to time;

               (iv) the failure by the Company (a) to continue in effect any compensation plan in which
Executive participates as of the Effective Date that is material to Executive’s total compensation,
unless an equitable arrangement (embodied in an ongoing substitute or alternative plan) has been
made with respect to such plan, or (b) to continue Executive’s participation therein (or in such
substitute or alternative plan) on a basis not materially less favorable, both in terms of the
amount of benefits provided and the level of Executive’s participation relative to other
participants; or

               (v) any failure by the Company to comply with and satisfy Section 12(c) of this Agreement; or

               (vi) the material breach of this Agreement by the Company.

     For purposes of this Section 5(c), any good faith determination of “Good Reason” made by
Executive shall be conclusive. Anything in this Agreement to the contrary notwithstanding, a
termination by Executive for any reason during the 30-day period immediately following the six (6)
month anniversary of the Effective Date shall be deemed to be a termination for Good Reason for all
purposes of this Agreement.

          (d) Notice of Termination. Any termination by the Company for Cause, or by Executive
for Good Reason, shall be communicated by Notice of

 

 

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Termination to the other party hereto given in accordance with this Agreement. For purposes of
this Agreement, a “Notice of Termination” means a written notice which (i) indicates the specific
termination provision in this Agreement relied upon, (ii) to the extent applicable, sets forth in
reasonable detail the facts and circumstances claimed to provide a basis for termination of
Executive’s employment under the provision so indicated and (iii) specifies the termination date
(which date shall be not less than 60 days after the giving of such notice). If a dispute exists
concerning the provisions of this Agreement that apply to Executive’s termination of employment,
the parties shall pursue the resolution of such dispute with reasonable diligence. Within five (5)
days of such a resolution, any party owing any payments pursuant to the provisions of this
Agreement shall make all such payments together with interest accrued thereon at the rate provided
in Section 1274(b)(2)(B) of the Internal Revenue Code of 1986, as amended (the “Code”). The
failure by either party to set forth in the Notice of Termination any fact or circumstance which
contributes to a showing of Good Reason or Cause shall not waive any right of such party hereunder
or preclude such party from asserting such fact or circumstance in enforcing such party’s rights
hereunder.

          (e) Date of Termination. “Date of Termination” means (i) if Executive’s employment is
terminated other than by reason of death or Disability, the date of receipt of the Notice of
Termination, or any later date specified therein, or (ii) if Executive’s employment is terminated
by reason of death or Disability, the Date of Termination will be the date of death or the
Disability Effective Date, as the case may be.

     6. Obligations of the Company upon Termination.

          (a) Good Reason; Other Than for Cause, Death or Disability. If, during the
Employment Period, the Company shall terminate Executive’s employment other than for Cause or
Disability, or Executive shall terminate employment for Good Reason, then in consideration of
Executive’s services rendered prior to such termination:

               (i) the Company shall pay to Executive in a lump sum in cash within thirty (30) days after
the Date of Termination the aggregate of the following amounts:

                    A. the sum of (1) Executive’s Base Salary through the Date of Termination to the extent not
theretofore paid, (2) the product of (x) Executive’s highest annual bonus from the Company,
including any bonus or portion thereof which has been earned but deferred, for any of the last
three full fiscal years prior to the Date of Termination (such amount being referred to as the
“Highest Annual Bonus”) and (y) a fraction, the numerator of which is the number of days in the
current fiscal year through the Date of Termination, and the denominator of which is 365, (3) any
accrued vacation pay to the extent not theretofore paid, and (4) unless Executive has elected a
different payout date in a prior deferral election, any compensation previously deferred by
Executive (together with any accrued interest or earnings thereon) to the extent not

 

 

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theretofore paid (the sum of the amounts described in clauses (1), (2), (3) and (4) shall be
hereinafter referred to as the “Accrued Obligations”); and

                    B. the amount equal to one (1) times the sum of (x) Executive’s Annual Base Salary at the rate
in effect on the Date of Termination, and (y) Executive’s Highest Annual Bonus;

               (ii) for a period of one (1) year from the Date of Termination, the Company will allow
Executive and/or Executive’s eligible dependents to continue to participate in any medical and
other welfare plans described in Section 4(b)(iv) of this Agreement to the same extent and upon the
same terms as the Executive and/or Executive’s eligible dependents participated immediately prior
to the Date of Termination; provided that, in the event the Board determines that Executive’s
and/or Executive’s eligible dependents’ continued participation is not permissible under the terms
and provisions of such plans, the Company shall take such actions as may be necessary to provide
Executive and/or Executive’s eligible dependents (without additional cost to the Executive and/or
Executive’s eligible dependents) with benefits outside such plans having terms not less favorable
than those provided under the Company’s medical and other welfare plans as of the Date of
Termination. If Executive becomes re-employed with another employer and is eligible to receive
medical or other welfare benefits under another employer provided plan, the medical and other
welfare benefits described herein shall be secondary to those provided under such other plan during
such applicable period of eligibility; and

               (iii) all unvested stock options to acquire stock of the Company and all awards of restricted
stock of the Company held by Executive as of the Date of Termination shall be immediately and fully
vested as of the Date of Termination and, in the case of stock options, shall be fully exercisable
as of the Date of Termination; and

               (iv) to the extent not theretofore paid or provided, the Company shall timely pay or provide
to Executive any other amounts or benefits required to be paid or provided or which Executive is
eligible to receive under any plan, program, policy or practice or contract or agreement of the
Company and its affiliated companies (such other amounts and benefits shall be hereinafter referred
to as the “Other Benefits”).

          (b) Death, or Disability or Retirement. If Executive’s employment is terminated by
reason of Executive’s death, or Disability or Retirement during the Employment Period, this
Agreement shall terminate without further obligations to Executive or Executive’s legal
representatives under this Agreement, other than for payment of Accrued Obligations and the timely
payment or provision of Other Benefits. Accrued Obligations shall be paid to Executive’s estate or
beneficiary, as applicable, in a lump sum in cash within 30 days of the Date of Termination. With
respect to the provision of Other Benefits, the term Other Benefits as used in this Section 6(b)
shall include, without limitation, and Executive or Executive’s estate and/or beneficiaries shall

 

 

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be entitled to receive, benefits under such plans, programs, practices and policies relating to
death or disability or retirement, if any, as are applicable to Executive on the Date of
Termination.

          (c) Cause or Voluntary Termination without Good Reason. If Executive’s employment
shall be terminated for Cause during the Employment Period, or if Executive voluntarily terminates
employment during the Employment Period without Good Reason, this Agreement shall terminate without
further obligations to Executive, other than for payment of Accrued Obligations (excluding the
pro-rata bonus described in clause 2 of Section 6(a)(i)) and the timely payment or provision of
Other Benefits.

          (d) Expiration of Employment Period. If Executive’s employment shall be terminated
due to the normal expiration of the Employment Period, this Agreement shall terminate without
further obligations to Executive, other than for payment of Accrued Obligations and the timely
payment or provision of Other Benefits.

     7. Non-exclusivity of Rights. Nothing in this Agreement shall prevent or limit
Executive’s continuing or future participation in any plan, program, policy or practice provided by
the Company or any of its affiliated companies and for which Executive may qualify, nor, subject to
Section 13(f), shall anything herein limit or otherwise affect such rights as Executive may have
under any contract or agreement with the Company or any of its affiliated companies. Amounts which
are vested benefits or which Executive is otherwise entitled to receive under any plan, policy,
practice or program of or any contract or agreement with the Company or any of its affiliated
companies at or subsequent to the Date of Termination shall be payable in accordance with such
plan, policy, practice or program or contract or agreement except as explicitly modified by this
Agreement.

     8. Full Settlement. The Company’s obligation to make the payments provided for in
this Agreement and otherwise to perform its obligations hereunder shall not be affected by any
set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may
have against Executive or others. In no event shall Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable to Executive under
any of the provisions of this Agreement and, except as explicitly provided herein, such amounts
shall not be reduced whether or not Executive obtains other employment.

     9. Costs of Enforcement. In any action taken in good faith relating to the
enforcement of this Agreement or any provision herein, Executive shall be entitled to be paid any
and all costs and expenses incurred by him in enforcing or establishing his rights thereunder,
including, without limitation, reasonable attorneys’ fees, whether suit be brought or not, and
whether or not incurred in trial, bankruptcy or appellate proceedings. Executive shall also be
entitled to be paid all reasonable legal fees and expenses, if any, incurred in connection with any
tax audit or proceeding to the extent attributable to the

 

 

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application of Section 4999 of the Internal Revenue Code to any payment or benefit hereunder. Such
payments shall be made within five (5) business days after delivery of Executive’s respective
written requests for payment accompanied with such evidence of fees and expenses incurred as the
Company reasonably may require.

     10. Confidential Information. Executive shall hold in a fiduciary capacity for the
benefit of the Company all secret or confidential information, knowledge or data relating to the
Company or any of its affiliated companies, and their respective businesses, which shall have been
obtained by Executive during Executive’s employment by the Company or any of its affiliated
companies and which shall not be or become public knowledge (other than by acts by Executive or
representatives of Executive in violation of this Agreement). After termination of Executive’s
employment with the Company or such affiliated companies, Executive shall not, without the prior
written consent of the Company or as may otherwise be required by law or legal process, communicate
or divulge any such information, knowledge or data to anyone other than the Company and those
designated by it.

     11. Certain Additional Payments by the Company.

          (a) Anything in this Agreement to the contrary notwithstanding and except as set forth below,
in the event it shall be determined that any payment or distribution by the Company to or for the
benefit of Executive (whether paid or payable or distributed or distributable pursuant to the terms
of this Agreement or otherwise, but determined without regard to any additional payments required
under this Section 11) (a “Payment”) would be subject to the excise tax imposed by Section 4999 of
the Code or any interest or penalties are incurred by Executive with respect to such excise tax
(such excise tax, together with any such interest and penalties, are hereinafter collectively
referred to as the “Excise Tax”), then Executive shall be entitled to receive an additional payment
(a “Gross-Up Payment”) in an amount such that after payment by Executive of all taxes (including
any interest or penalties imposed with respect to such taxes), including, without limitation, any
income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed
upon the Gross-Up Payment, Executive retains an amount of the Gross-Up Payment equal to the Excise
Tax imposed upon the Payments.

          (b) Subject to the provisions of Section 11(c), all determinations required to be made under
this Section 11, including whether and when a Gross-Up Payment is required and the amount of such
Gross-Up Payment and the assumptions to be used in arriving at such determination, shall be made by
Ernst & Young LLP or such other certified public accounting firm as may be designated by Executive
(the “Accounting Firm”) which shall provide detailed supporting calculations both to the Company
and Executive within 15 business days of the receipt of notice from Executive that there has been a
Payment, or such earlier time as is requested by the Company. In the event that the Accounting
Firm is serving as accountant or auditor for the individual,

 

 

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entity or group effecting the Change of Control, Executive shall appoint another nationally
recognized accounting firm to make the determinations required hereunder (which accounting firm
shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the
Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant
to this Section 11, shall-be paid by the Company to Executive within five days of the receipt of
the Accounting Firm’s determination. Any determination by the Accounting Firm shall be binding
upon the Company and Executive. As a result of the uncertainty in the application of Section 4999
of the Code at the time of the initial determination by the Accounting Firm hereunder, it is
possible that Gross-Up Payments which will not have been made by the Company should have been made
(“Underpayment”), consistent with the calculations required to be made hereunder. In the event
that the Company exhausts its remedies pursuant to Section 11(c) and Executive thereafter is
required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the
Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to
or for the benefit of Executive.

          (c) Executive shall notify the Company in writing of any claim by the Internal Revenue Service
that, if successful, would require the payment by the Company of the Gross-Up Payment. Such
notification shall be given as soon as practicable but no later than ten business days after
Executive is informed in writing of such claim and shall apprise the Company of the nature of such
claim and the date on which such claim is requested to be paid. Executive shall not pay such claim
prior to the expiration of the 30-day period following the date on which it gives such notice to
the Company (or such shorter period ending on the date that any payment of taxes with respect to
such claim is due). If the Company notifies Executive in writing prior to the expiration of such
period that it desires to contest such claim, Executive shall:

               (i) give the Company any information reasonably requested by the Company relating to such
claim,

               (ii) take
such action in connection with contesting such claim as the Company
shall reasonably request in writing from time to time, including, without
limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company,

               (iii) cooperate with the Company in good faith in order effectively to contest such claim,
and

               (iv) permit the Company to participate in any proceedings relating to such claim;

provided, however, that the Company shall bear and pay directly all costs and expenses (including
additional interest and penalties) incurred in connection with such contest and

 

 

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shall indemnify and hold Executive harmless, on an after-tax basis, for any Excise Tax or income
tax (including interest and penalties with respect thereto) imposed as a result of such
representation and payment of costs and expenses. Without limitation of the foregoing provisions
of this Section 11(c), the Company shall control all proceedings taken in connection with such
contest and, at its sole option, may pursue or forgo any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in respect of such claim and may,
at its sole option, either direct Executive to pay the tax claimed and sue for a refund or contest
the claim in any permissible manner, and Executive agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of initial jurisdiction and in one or
more appellate courts, as the Company shall determine; provided, however, that if the Company
directs Executive to pay such claim and sue for a refund, the Company shall advance the amount of
such payment to Executive, on an interest-free basis and shall indemnify and hold Executive
harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties
with respect thereto) imposed with respect to such advance or with respect to any imputed income
with respect to such advance; and further provided that any extension of the statute of limitations
relating to payment of taxes for the taxable year of Executive with respect to which such contested
amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company’s
control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be
payable hereunder and Executive shall be entitled to settle or contest, as the case may be, any
other issue raised by the Internal Revenue Service or any other taxing authority.

          (d) If, after the receipt by Executive of an amount advanced by the Company pursuant to
Section 11(c), Executive becomes entitled to receive any refund with respect to such claim,
Executive shall (subject to the Company’s complying with the requirements of Section 11(c))
promptly pay to the Company the amount of such refund (together with any interest paid or credited
thereon after taxes applicable thereto). If, after the receipt by Executive of an amount advanced
by the Company pursuant to Section 11(c), a determination is made that Executive shall not be
entitled to any refund with respect to such claim and the Company does not notify Executive in
writing of its intent to contest such denial of refund prior to the expiration of 30 days after
such determination, then such advance shall be forgiven and shall not be required to be repaid and
the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment
required to be paid.

     12. Successors.

          (a) This Agreement is personal to Executive and without the prior written consent of the
Company shall not be assignable by Executive otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be enforceable by Executive’s legal
representatives.

 

 

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          (b) This Agreement shall inure to the benefit of and be binding upon the Company and its
successors and assigns.

          (c) 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 assume expressly 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. As
used in this Agreement, “Company” shall mean the Company as hereinbefore defined and any successor
to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by
operation of law, or otherwise.

     13. Miscellaneous.

          (a) Waiver. Failure of either party to insist, in one or more instances, on
performance by the other in strict accordance with the terms and conditions of this Agreement shall
not be deemed a waiver or relinquishment of any right granted in this Agreement or of the future
performance of any such term or condition or of any other term or condition of this Agreement,
unless such waiver is contained in a writing signed by the party making the waiver.

          (b) Severability. If any provision or covenant, or any part thereof, of this
Agreement should be held by any court to be invalid, illegal or unenforceable, either in whole or
in part, such invalidity, illegality or unenforceability shall not affect the validity, legality or
enforceability of the remaining provisions or covenants, or any part thereof, of this Agreement,
all of which shall remain in full force and effect.

          (c) Status Prior to Effective Date. Executive and the Company acknowledge that,
except as may otherwise be provided under any other written agreement between Executive and the
Company, the employment of Executive by the Company is “at will” and, subject to Section 1(a)
hereof, prior to the Effective Date, Executive’s employment may be terminated by either Executive
or the Company at any time prior to the Effective Date, in which case Executive shall have no
further rights under this Agreement. However, absent termination of employment of Executive, this
Agreement may not be terminated by the Company during the Change of Control Period and before the
Effective Date. From and after the Effective Date, this Agreement shall supersede any other
agreement between the parties with respect to the subject matter hereof, including without
limitation any then-current employment agreement between the Company or any of its subsidiaries and
Executive.

          (d) Governing Law. Except to the extent preempted by federal law, and without regard
to conflict of laws principles, the laws of the State of Florida shall govern this Agreement in all
respects, whether as to its validity, construction, capacity, performance or otherwise.

 

 

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          (e) Notices. All notices, requests, demands and other communications required or
permitted hereunder shall be in writing and shall be deemed to have been duly given if delivered or
three days after mailing if mailed, first class, certified mail, postage prepaid:

	 	 	 
	To the Company:

	 	Seacoast Banking Corporation of Florida
	 

	 	815 Colorado Avenue
	 

	 	Stuart, Florida 34994
	 

	 	Attention: Chief Executive Officer
	 
	 	 
	To Executive:

	 	Richard A. Yanke
	 

	 	P. O. Box 414
	 

	 	Stuart, FL 34995

Any party may change the address to which notices, requests, demands and other communications shall
be delivered or mailed by giving notice thereof to the other party in the same manner provided
herein.

          (f) Amendments and Modifications. This Agreement may be amended or modified only by a
writing signed by both parties hereto, which makes specific reference to this Agreement.

     IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this Change in Control
Employment Agreement as of the date first above written.

	 	 	 	 	 
	 	SEACOAST BANKING CORPORATION OF FLORIDA

 	 
	 	By:  	/s/ Dennis S. Hudson, III
 	 
	 	 	Dennis S. Hudson, III 	 
	 	 	Title:  	Chairman 	 
	 
	 	EXECUTIVE:

 	 
	 	/s/ Richard A. Yanke
 	 
	 	Richard A. Yanke

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