UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported):
OCTOBER 1, 2005
FIRST MID-ILLINOIS BANCSHARES, INC.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE
(State of Other Jurisdiction of Incorporation)
0-13368 37-1103704
(Commission File Number) (IRS Employer Identification No.)
1515 CHARLESTON AVENUE, MATTOON, IL 61938
(Address Including Zip Code of Principal Executive Offices)
(217) 234-7454
(Registrant's Telephone Number, including Area Code)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17CFR 240.13e-4(c))
Item 1.01 Entry into a Material Definitive Agreement.
On October 1, 2005, First Mid-Illinois Bancshares, Inc. ("the Company") entered
into an Executive Employment Agreement, effective October 1, 2005 and continuing
for three years, until September 30, 2008, with John W. Hedges under which Mr.
Hedges agrees to continue to serve as President of First Mid Bank (the "Hedges
Agreement"). Under the Hedges Agreement, Mr. Hedges will receive an annual base
salary of $154,500 and will continue to participate in the Company's Incentive
Compensation Plan, Deferred Compensation Plan, Supplemental Executive Retirement
Plan, and 1997 Stock Incentive Plan. The Hedges Agreement also provides Mr.
Hedges with severance benefits in the event of the termination of his employment
under certain circumstances and contains certain confidentiality and
non-competition and non-solicitation provisions.
The Hedges Agreement is filed as Exhibit 10.1 and is incorporated by reference
herein.
Item 9.01. Financial Statements and Exhibits.
(a) None required
(b) None required
(c) None required
(d) Exhibits
Exhibit 10.1 - Employment Agreement between First Mid-Illinois Bancshares, Inc.
and John W. Hedges effective October 1, 2005.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
FIRST MID-ILLINOIS BANCSHARES, INC.
Date: November 3, 2005 /s/ William S. Rowland
William S. Rowland
President and Chief Executive Officer
INDEX TO EXHIBITS
Exhibit
Number Description
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10.1 Employment Agreement between First Mid-Illinois Bancshares, Inc.
and John W. Hedges
Exhibit 10.1
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is made and entered into this 1st
day of October 1, 2005, by and between First Mid-Illinois Bancshares, Inc. ("the
Company"), a corporation with its principal place of business located in
Mattoon, Illinois, and John W. Hedges ("Executive").
In consideration of the promises and mutual covenants and agreements
contained herein, the parties hereto acknowledge and agree as follows:
ARTICLE ONE
TERM AND NATURE OF AGREEMENT
1.01 Term of Agreement. The term of this Agreement shall commence as of October
1, 2005 and shall continue until September 30, 2008. Thereafter, unless
Executive's employment with the Company has been previously terminated,
Executive shall continue his employment with the Company on an at will basis
and, except as provided in Articles Five, Six and Seven, this Agreement shall
terminate unless extended by mutual written agreement.
1.02 Employment. The Company agrees to employ Executive and Executive accepts
such employment by the Company on the terms and conditions herein set forth. The
duties of Executive shall be determined by the Company's Chief Executive Officer
and Executive shall adhere to the policies and procedures of the Company and
shall follow the supervision and direction of the Chief Executive Officer or his
designee in the performance of such duties. During the term of his employment,
Executive agrees to devote his full working time, attention and energies to the
diligent and satisfactory performance of his duties hereunder. Executive shall
not, while he is employed by the Company, engage in any activity which would (a)
interfere with, or have an adverse effect on, the reputation, goodwill or any
business relationship of the Company or any of its subsidiaries; (b) result in
economic harm to the Company of any of its subsidiaries; or (c) result in a
breach of Section Six of the Agreement.
ARTICLE TWO
COMPENSATION AND BENEFITS
While Executive is employed with the Company during the term of this Agreement,
the Company shall provide Executive with the following compensation and
benefits:
2.01 Base Salary. The Company shall pay Executive an annual base salary of
$154,500 per fiscal year, payable in accordance with the Company's customary
payroll practices for executive employees. The Chief Executive Officer or his
designee may review and adjust Executive's base salary from year to year;
provided, however, that during the term of Executive's employment, the Company
shall not decrease Executive's base salary.
2.02 Incentive Compensation Plan. Executive shall continue to participate in the
First Mid-Illinois Bancshares, Inc. Incentive Compensation Plan in accordance
with the terms and conditions of such Plan. Pursuant to the Plan, Executive
shall have an opportunity to receive incentive compensation of up to a maximum
of 35% of Executive's annual base salary. The incentive compensation payable for
a particular fiscal year will be based upon the attainment of the performance
goals in effect under the Plan for such year and will be paid in accordance with
the terms of the Plan and at the sole discretion of the Board.
2.03 Deferred Compensation Plan. Executive shall be eligible to participate in
the First Mid-Illinois Bancshares, Inc. Deferred Compensation Plan in accordance
with the terms and conditions of such Plan as in effect from time to time.
2.04 Vacation. Executive shall be entitled to three (3) weeks of paid vacation
each year during the term of this Agreement.
2.05 Fringe Benefits. The Company shall provide the following additional fringe
benefits to Executive:
(a) Use of a Company-owned or leased vehicle for professional and personal
use.
(b) An amount equal to the annual dues for a Class "H" membership at the
Mattoon Golf and Country Club
(c) Use of a cellular phone for work-related calls.
(d) An Internet connection for Executive's home.
2.06 Other Benefits. Executive shall be eligible (to the extent he qualifies) to
participate in any other retirement, health, accident and disability insurance,
or similar employee benefit plans as may be maintained from time to time by the
Company for its other executives or management employees subject to and on a
consistent basis with the terms, conditions and overall administration of such
plans.
2.07 Business Expenses. Executive shall be entitled to reimbursement by the
Company for all reasonable expenses actually and necessarily incurred by him on
its behalf in the course of his employment hereunder and in accordance with
expense reimbursement plans and policies of the Company from time to time in
effect for executive employees.
2.08 Withholding. All salary, incentive compensation and other benefits provided
to Executive pursuant to this Agreement shall be subject to withholding for
federal, state or local taxes, amounts withheld under applicable employee
benefit plans, policies or programs, and any other amounts that may be required
to be withheld by law, judicial order or otherwise or by agreement with, or
consent of, Executive.
ARTICLE THREE
DEATH OF EXECUTIVE
This Agreement shall terminate prior to the end of the term described in Section
1.01 upon Executive's termination of employment with the Company due to his
death. Upon Executive's termination due to death, the Company shall pay
Executive's estate the amount of Executive's base salary plus his accrued but
unused vacation time earned through the date of such death and any incentive
compensation earned for the preceding fiscal year that is not yet paid as of the
date of such death.
ARTICLE FOUR
TERMINATION OF EMPLOYMENT
Executive's employment with the Company may be terminated by Executive or by the
Company at any time for any reason. Upon Executive's termination of employment
prior to the end of the term of the Agreement, the Company shall pay Executive
as follows:
4.01 Termination by the Company for Other than Cause. If the Company terminates
Executive's employment for any reason other than Cause, the Company shall pay
Executive the following:
(a) An amount equal to Executive's monthly base salary in effect at the
time of such termination of employment for a period of twelve (12) months
thereafter. Such amount shall be paid to Executive periodically in accordance
with the Company's customary payroll practices for executive employees; however,
that Company may delay payment of such amount to the extent required by law.
(b) The base salary and accrued by unused paid vacation time earned through
the date of termination and any incentive compensation earned for the preceding
fiscal year that is not yet paid.
(c) Continued coverage for Executive and/or Executive's family under the
Company's health plan pursuant to Title I, Part 6 of the Employee Retirement
Security Act of 1974 ("COBRA") and for such purpose the date of Executive's
termination of employment shall be considered the date of the "qualifying event"
as such term is defined by COBRA. During the twelve month period beginning on
the date of such termination, the Executive shall be charged for such coverage
in the amount that he would have paid for such coverage had he remained employed
by the Company, and for the duration of the COBRA period, the Executive shall be
charged for such coverage in accordance with the provisions of COBRA.
For purposes of this Agreement, "Cause" shall mean Executive's (i) conviction in
a court of law of (or entering a plea of guilty or no contest to) any crime or
offense involving fraud, dishonesty or breach of trust or involving a felony;
(ii) performance of any act which, if known to the customers, clients,
stockholders or regulators of the Company, would materially and adversely impact
the business of the Company; (iii) act or omission that causes a regulatory body
with jurisdiction over the Company to demand, request, or recommend that
Executive be suspended or removed from any position in which Executive serves
with the Company; (iv) substantial nonperformance of any of his obligations
under this Agreement; (v) misappropriation of or intentional material damage to
the property or business of the Company or any affiliate; or (vi) breach of
Article Five or Six of this Agreement.
4.02 Termination Following a Change in Control. Notwithstanding Section 4.01,
if, following a Change in Control and prior to the end of the term of this
Agreement, Executive's employment is terminated by the Company (or any successor
thereto) for any reason other than Cause, or if Executive terminates his
employment because of a decrease in his then current base salary or a
substantial diminution in his position and responsibilities, the Company (or any
successor thereto) shall pay Executive the following:
(a) Two times Executive's annual base salary in effect at the time of such
termination. Such amount shall be paid, at Executive's election, in either a
lump sum payment as soon as practicable following the date of such termination
or periodically in accordance with the Company's or successor's customary
payroll practices for executive employees.
(b) An amount equal to the incentive compensation earned by or paid to
Executive for the fiscal year immediately preceding the year in which
Executive's termination of employment occurs. Such amount shall be paid to
Executive in a lump sum as soon as practicable after the date of his
termination.
(c) The base salary and accrued but unused paid vacation time earned
through the date of termination and any incentive compensation earned for the
preceding fiscal year that is not yet paid.
(d) Continued coverage for Executive and/or Executive's family under the
Company's health plan pursuant to Title I, Part 6 of the Employee Retirement
Income Security Act of 1974 ("COBRA") and for such purpose the date of
Executive's termination of employment shall be considered the date of the
"qualifying event" as such term is defined by COBRA. During the twelve month
period beginning on the date of such termination, the Executive shall be charged
for such coverage in the amount that he would have paid for such coverage had he
remained employed by the Company, and for the duration of the COBRA period, the
Executive shall be charged for such coverage in accordance with the provisions
of COBRA.
For purposes of this Agreement, "Change in Control" shall have the meaning as
set forth in the First Mid-Illinois Bancshares, Inc. 1997 Stock Incentive Plan.
4.03 Other Termination of Employment. If, prior to the end of the term of this
Agreement, the Company terminates Executive's employment for Cause, or if
Executive terminates his employment for any reason other than as described in
Section 4.02 above, the Company shall pay Executive the base salary and accrued
but unused paid vacation time earned through the date of such termination and
any incentive compensation earned for the preceding fiscal year that is not yet
paid.
ARTICLE FIVE
CONFIDENTIAL INFORMATION
5.01 Non-Disclosure of Confidential Information. During his employment with
Company, and after his termination of such employment with the Company,
Executive shall not, in any form or manner, directly or indirectly, use,
divulge, disclose or communicate to any person, entity, firm, corporation or any
other third party, any Confidential Information, except as required in the
performance of Executive's duties hereunder, as required by law or as necessary
in conjunction with legal proceedings.
5.02 Definition of Confidential Information. For the purposes of this Agreement,
the term "Confidential Information" shall mean any and all information either
developed by Executive during his employment with the Company and used by the
Company or its affiliates or developed by or for the Company or its affiliates
of which Executive gained knowledge by reason of his employment with the Company
that is not readily available in or known to the general public or the industry
in which the Company or any affiliate is or becomes engaged. Such Confidential
Information shall include, but shall not be limited to, any technical or
non-technical data, formulae, compilations, programs, devices, methods,
techniques, procedures, manuals, financial data, business plans, lists of actual
or potential customers. Lists of employees and any information regarding the
Company's or any affiliate's products, marketing or database. The Company and
Executive acknowledge and agree that such Confidential Information is extremely
valuable to the Company and may constitute trade secret information under
applicable law. In the event that any part of the Confidential Information
becomes generally known to the public through legitimate origins (other than by
the breach of this Agreement by Executive or by other misappropriation of the
Confidential Information), that part of the Confidential Information shall no
longer be deemed Confidential Information for the purposes of this Agreement,
but Executive shall continue to be bound by the terms of this Agreement as to
all other Confidential Information.
5.03 Delivery upon Termination. Upon termination of Executive's employment with
the Company for any reason, Executive shall promptly deliver to the Company all
correspondence, files, manuals, letters, notes, notebooks, reports, programs,
plans, proposals, financial documents, and any other documents or data
concerning the Company's or any affiliate's customers, database, business plan,
marketing strategies, processes or other materials which contain Confidential
Information, together with all other property of the Company or any affiliate in
Executive's possession, custody or control.
ARTICLE SIX
NON-COMPETE AND NON-SOLICITATION COVENANTS
6.01 Covenant Not to Compete. During the term of this Agreement and for a period
of two years following the later of (i) the termination of Executive's
employment for any reason or (ii) the last day of the term of the Agreement,
Executive shall not, on behalf of himself or on behalf of another person,
corporation, partnership, trust or other entity, within any county in which the
Company or any affiliate conducts business.
(a) Directly or indirectly own, manage, operate, control, participate in
the ownership, management, operation or control of, be connected with or have
any financial interest in, or serve as an officer, employee, advisor,
consultant, agent or otherwise to any person, firm, partnership, corporation,
trust or other entity which owns or operates a business similar to that of the
Company or its affiliates.
(b) Solicit for sale, represent, and/or sell Competing Products to any
person or entity who or which was the Company's customer or client during the
last two years of Executive's employment. "Competing Products," for purposes of
this Agreement, means products or services which are similar to, compete with,
or can be used for the same purposes as products or services sold or offered for
sale by the Company or any affiliate or which were in development by the Company
or any affiliate within the last two years of Executive's employment.
6.02 Covenant Not to Solicit. For a period of two years following the later of
(i) the termination of Executive's employment for any reason or (ii) the last
day of the term of this Agreement, Executive shall not:
(a) Attempt in any manner to solicit from any client or customer business
of the type performed by the Company or any affiliate or persuade any client or
customer of the Company or any affiliate to cease to do such business or to
reduce the amount of such business which any such client or customer has
customarily done or contemplates doing with the Company or any affiliate,
whether or not the relationship between the Company or affiliate and such client
or customer was originally established in whole or in part through Executive's
efforts.
(b) Render any services of the type rendered by the Company or any
affiliate for any client or customer of the Company.
(c) Solicit or encourage, or assist any other person to solicit or
encourage, any employees, agents or representatives of the Company or an
affiliate to terminate or alter their relationship with the Company or any
affiliate.
(d) Do not cause to be done, directly or indirectly, any acts which may
impair the relationship between the Company or any affiliate with their
respective clients, customers or employees.
ARTICLE SEVEN
REMEDIES
Executive acknowledges that compliance with the provisions of Articles Five and
Six herein is necessary to protect the business, goodwill and proprietary
information of the Company and that a breach of these covenants will irreparably
and continually damage the Company for which money damages may be inadequate.
Consequently, Executive agrees that, in the event that he breaches or threatens
to breach any of these provisions, the Company shall be entitled to both (a) a
temporary, preliminary or permanent injunction in order to prevent the
continuation of such harm; and (b) money damages insofar as they can be
determined. In addition, the Company will cease payment of all compensation and
benefits under Articles Three and Four hereof. In the event that any of the
provisions, covenants, warranties or agreements in this Agreement are held to be
in any respect an unreasonable restriction upon the Executive or are otherwise
invalid, for whatsoever cause, then the court so holding shall reduce, and is so
authorized to reduce, the territory to which it pertains and/or the period of
time in which it operates, or the scope of activity to which it pertains or
effect any other change to the extent necessary to render any of the
restrictions of this Agreement enforceable.
ARTICLE EIGHT
MISCELLANEOUS
8.01 Successors and Assignability.
(a) No rights or obligations of the Company under this Agreement may be
transferred except that the Company will require any successor (whether direct
or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place.
(b) No rights or obligations of Executive under this Agreement may be
assigned transferred by Manager other than his rights to payment or benefits
hereunder which may by transferred only by will or the laws of descent and
distribution.
8.02 Entire Agreement. This Agreement contains the entire agreement between the
parties with respect to the subject matter hereof and may not be modified except
in writing by the parties hereto; provided, however, that any amendment or
modification that the Company in its sole discretion deems necessary to comply
with the American Jobs Creation act, and regulations promulgated thereunder,
shall not require the consent of Executive as long as such amendment or
modification does not reduce the absolute dollar amount of benefits payable
hereunder. Furthermore, the parties hereto specifically agree that all prior
agreements, whether written or oral, relating to Executive's employment by the
Company shall be of no further force or effect from and after the date hereof.
8.03 Severability. If any phrase, clause or provision of this Agreement is
deemed invalid or unenforceable, such phrase, clause or provision shall be
deemed severed from this Agreement, but will not affect any other provisions of
this Agreement, which shall otherwise remain in full force and effect. If any
restriction or limitation in this Agreement is deemed to be unreasonable,
onerous or unduly restrictive, it shall not be stricken in its entirety and held
totally void and unenforceable, but shall be deemed rewritten and shall remain
effective to the maximum extent permissible within reasonable bounds.
8.04 Controlling Law and Jurisdiction. This Agreement shall be governed by and
interpreted and construed according to the laws of the State of Illinois. The
parties hereby consent to the jurisdiction of the state and federal courts in
the State of Illinois in the event that any disputes arise under this Agreement.
8.05 Notices. All notices, requests, demands and other communications under this
Agreement shall be in writing and shall be deemed to have been duly given (a) on
the date of service if served personally on the party to whom notice is to be
given; (b) on the day after delivery to an overnight courier service; (c) on the
day of transmission if sent via facsimile to the facsimile number given below;
or (d) on the third day after mailing, if mailed to the party to whom notice is
to be given, by first class mail, registered or certified, postage prepaid and
properly addressed, to the party as follows:
If to Executive: John W. Hedges
#4 Pinehurst
Mattoon, IL 61938
If to the Company: First Mid-Illinois Bancshares, Inc.
1515 Charleston Avenue
Mattoon IL 61938
Facsimile: 217-258-0485
Attention: Chairman
Any party may change its address for the purpose of this Section by giving the
other party written notice of its new address in the manner set forth above.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first written above. FIRST MID-ILLINOIS BANCSHARES, INC.
By: /s/ William S. Rowland
William S. Rowland
Title: Chairman of the Board
EXECUTIVE:
/s/ John W. Hedges