MIDWEST BANC HOLDINGS INC
RETIREMENT AGREEMENT
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<TYPE>EX-10.26
<SEQUENCE>4
<FILENAME>c89512exv10w26.htm
<DESCRIPTION>RETIREMENT AGREEMENT
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<P align="right" style="font-size: 10pt"><B>EXHIBIT 10.26</B>



<P align="center" style="font-size: 10pt"><B>RETIREMENT AGREEMENT AND GENERAL RELEASE</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;THIS RETIREMENT AGREEMENT AND GENERAL RELEASE (&#147;this Agreement&#148;) is made
and entered into as of the 28th day of September&nbsp;2004, by and among Midwest
Banc Holdings, Inc. (the &#147;Company&#148;), Midwest Bank and Trust Co. (the &#147;Bank,&#148;
and together with the Company, the &#147;Employer&#148;) and Brad A. Luecke (&#147;Executive&#148;)
(the signatories to this Agreement will be referred to jointly as the
&#147;Parties&#148;).


<P align="center" style="font-size: 10pt"><B>STATEMENT OF FACTS</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Executive is retiring from his employment. Executive desires to accept
the following agreements in return for Executive&#146;s general release and
non-disclosure agreements set forth below. Executive and the Employer desire
to settle fully and finally any differences and disputes that might arise out
of Executive&#146;s employment with the Employer and the termination of his
employment with the Employer by reason of his retirement.


<P align="center" style="font-size: 10pt"><B>STATEMENT OF TERMS</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In consideration of the mutual promises herein, it is agreed as follows:


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>1.&nbsp;Non-Admission of Liability. </B>Neither this Agreement nor the Employer&#146;s
offer to enter into this Agreement shall in any way be construed as an
admission by the Employer that it has acted wrongfully with respect to
Executive or any other person, or that Executive has any rights whatsoever
against the Employer other than as set forth in this Agreement. The Employer
specifically disclaims any liability for wrongful acts against Executive or any
other person, on the part of itself, its officers, directors, employees, agents
or representatives. The Employer&#146;s willingness to enter into this Agreement is
based upon its desire to ease Executive&#146;s transition into retirement and
possibly future alternative employment.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.&nbsp;Retirement and Termination of Employment; Resignation. </B>Executive is
retiring from his employment with Employer. Executive acknowledges,
understands and agrees that his employment with the Employer will terminate
effective at the close of business on October _, 2004 (the &#147;Separation Date&#148;).
As of the date of this Agreement, Executive hereby resigns his positions as
President, Chief Executive Officer and director of the Company and vice
chairman, Chief Executive Officer and director of the Bank.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>3.&nbsp;Effective Date. </B>Except for Executive&#146;s resignation as set out in
Section&nbsp;2, which is effective upon signing of this Agreement, the effective
date of this Agreement shall be the eighth day after Executive signs this
Agreement (the &#147;Effective Date&#148;). As of the Effective Date, if Executive has
not revoked this Agreement pursuant to Section&nbsp;16(e), this Agreement shall be
fully effective and enforceable.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>4.&nbsp;Consideration. </B>In full consideration and as material inducement for
Executive&#146;s signing of this Retirement Agreement and General Release, the
sufficiency of which is hereby acknowledged, the Employer agrees to pay
Executive the benefits provided in the Personal Statement of Termination
Benefits attached as Exhibit&nbsp;A. All amounts that the Employer pays to


<P align="center" style="font-size: 10pt">&nbsp;
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<DIV style="font-family: 'Times New Roman',Times,serif">
<P align="left" style="font-size: 10pt">Executive whether paid pursuant to this Agreement or otherwise shall be
subject to any and all required withholding taxes.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>5.&nbsp;Cessation of Authority. </B>Executive understands and agrees that he is
not authorized to make any commitments or incur any obligations or liability on
behalf of the Employer after the Separation Date. Executive agrees that he has
submitted to the Employer any and all expenses incurred by Executive through
the Separation Date. Employer agrees to reimburse Executive for those expenses
on or before the Effective Date.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>6.&nbsp;Return of Employer Materials and Property. </B>Executive understands and
agrees that he has turned over, or will turn over promptly after his execution
of this Agreement, to the Employer all files, memoranda, records, manuals and
any other equipment or documents, and all other physical or personal property
that are the property of the Employer or its clients and customers.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Executive agrees, represents and acknowledges that as a result of his
employment with the Employer, Executive had in his custody, possession and
control proprietary documents, data, materials, files and other similar items
concerning proprietary information of the Employer. Executive acknowledges,
warrants and agrees that he has returned all such items and any copies or
extras thereof and that Executive has complied with the Employer&#146;s policies
regarding proprietary and confidential information and will comply with all of
the provisions of this Agreement, including particularly those relating to
trade secrets and confidential information.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>7.&nbsp;No Obligation. </B>Executive agrees and understands that the consideration
described above in Section&nbsp;4 of this Agreement is not required by the
Employer&#146;s policies and procedures or by any other contracts between Executive
and the Employer. Executive further agrees and understands that Executive&#146;s
entitlement to receive the consideration set forth above is conditioned upon
Executive&#146;s execution of this Agreement and compliance with the terms of this
Agreement.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>8.&nbsp;Severability. </B>The provisions of this Agreement are severable, and if
any part of it is found to be unenforceable, the other paragraphs shall remain
fully valid and enforceable. This Agreement shall survive the termination of
any arrangements contained herein.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>9.&nbsp;Confidentiality and Professionalism. </B>Executive and the Employer
represent and agree that they will keep the terms, amount, value, and nature of
consideration paid to Executive, and the fact of this Agreement completely
confidential. Executive further represents and agrees that Executive will not
hereafter disclose any information concerning this Agreement and related
settlement negotiations to anyone other than Executive&#146;s immediate family and
professional representatives who will be informed of and bound by this
confidentiality clause, unless required to do so by law, rule or regulation.
The Employer further represents that the Employer will not hereafter disclose
any information concerning this Agreement and related settlement negotiations
to anyone other than the Employer officers, employees, directors, accountants
and legal counsel who will be informed of and bound by this confidentiality
clause, unless required to do so by law, rule or regulation.


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<DIV style="font-family: 'Times New Roman',Times,serif">


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Executive agrees that Executive will not make or issue, or procure any
person, company or entity to make or issue, any statement in any form
concerning the Employer, Executive&#146;s employment relationship or the termination
of Executive&#146;s employment relationship with the Employer to any person or
entity if such statement is harmful to or disparaging of the Employer or any of
its employees, officers, directors, agents or representatives.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Employer agrees that the Employer will not make or issue, or procure
any person, company or entity to make or issue, any statement in any form
concerning Executive, Executive&#146;s employment relationship or the termination of
Executive&#146;s employment relationship with the Employer to any person or entity
if such statement is harmful to or disparaging of Executive. Subject to the
provisions of Section&nbsp;11, the Employer further agrees that it will not make or
issue, or procure any person, company or entity to make or issue, any statement
in any form raising objections of any kind to Executive working for any person,
company or entity even if such person, company or entity is considered to be a
competitor of the Employer.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>10.&nbsp;Agreement Not to Disclose Trade Secrets and Confidential Information.</B>
Executive understands and agrees that in the course of employment with the
Employer, Executive has acquired Employer Information, as defined below,
including confidential information and trade secrets concerning the Employer&#146;s
operations, its future plans and its methods of doing business, some of which
information Executive understands and agrees would be extremely damaging to the
Employer if disclosed to a competitor or made available to any other person or
entity. Executive understands and agrees that such information has been
divulged to Executive in confidence. Executive agrees that he will not, at any
time, directly or indirectly, publish, disseminate or otherwise disclose any
Employer Information to any third party without the Employer&#146;s prior written
consent.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The restrictions on Executive&#146;s disclosure of all Employer Information, as
set forth above, shall survive for a period of one (1)&nbsp;year; provided however,
that the restrictions on the disclosure of Trade Secrets shall survive beyond
such one year period for so long as such information qualifies as a Trade
Secret under applicable law.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In view of the nature of Executive&#146;s employment and Employer Information
which Executive has received during the course of his employment, Executive
likewise agrees that the Employer would be irreparably harmed by certain
violations, or threatened violations of this Agreement and that, therefore, the
Employer shall be entitled to seek an injunction prohibiting Executive from any
violation or threatened violation of this Agreement, and shall further be
entitled to recover any damages flowing from such violation(s). The
undertakings set forth in this section shall survive the termination of other
arrangements contained in this Agreement.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Employer Information&#148; means Confidential Information and Trade Secrets.
However, &#147;Employer Information&#148; does not include any information which: (i)&nbsp;at
the time of disclosure to Executive, was in the public domain; (ii)&nbsp;after
disclosure to Executive, is published or otherwise becomes part of the public
domain through no fault of his own; (iii)&nbsp;was in his lawful possession at the
time of disclosure to Executive; (iv)&nbsp;was received by Executive from a third
party who did not, through such disclosure, breach any duty owed to the
Employer; or (v)&nbsp;that Executive can show was


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<DIV style="font-family: 'Times New Roman',Times,serif">
<P align="left" style="font-size: 10pt">independently developed by Executive without reference to Employer Information.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Confidential Information&#148; means any and all information of the Employer
other than Trade Secrets that has value to the Employer and is not generally
known to the Employer&#146;s competitors obtained by Executive during the time he
was employed by the Employer. For example, Confidential Information includes
any information about the Employer&#146;s accounting practices or financial
practices, the Employer&#146;s operations, its future plans, its methods of doing
business and the computer or electronic passwords of all employees of the
Employer.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Trade Secret&#148; means information related to the business or services of
the Employer which (1)&nbsp;derives independent actual or potential commercial value
from not being generally known or readily ascertainable through independent
development or reverse engineering by persons who can obtain economic value
from its disclosure or use; and (2)&nbsp;is the subject of efforts by the Employer
and such third parties that are reasonable under the circumstances to maintain
its secrecy. Assuming the foregoing criteria in clauses (1)&nbsp;and (2)&nbsp;are met,
Trade Secret includes business and technical information including, without
limitation, designs, formulas, patterns, compilations, programs, devices,
inventions, methods, techniques, drawings, processes, finances, actual or
potential clients and suppliers, existing and future products and services,
members of the Employer, membership lists of the Employer and employees of the
Employer.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>11.&nbsp;Non-Solicitation of Customers/Clients</B>.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;Executive acknowledges that the special relationship of trust and
confidence between him, Employer, and its clients and customers has created a
high risk and opportunity for Executive to misappropriate the relationship and
goodwill existing between Employer and its clients and customers. Executive
further acknowledges and agrees that it is fair and reasonable for Employer to
take steps to protect itself from the risk of such misappropriation. Executive
further acknowledges that, from the outset of his employment with Employer
and/or throughout his employment with Employer, Executive has been provided
with access to and informed of Employer&#146;s Proprietary Information, which have
enabled him to benefit from Employer&#146;s goodwill and know-how.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;Executive acknowledges that it would be inevitable in the
performance of his duties as a director, officer, employee, investor, agent or
consultant of any person, association, entity, or company which competes with
Employer, or which intends to or may compete with Employer, to disclose and/or
use Employer&#146;s Proprietary Information, as well as to misappropriate Employer&#146;s
goodwill and know-how, to or for the benefit of such other person, association,
entity, or company. Executive also acknowledges that, in exchange for the
execution of the non-solicitation restriction set forth in this Section&nbsp;11, he
has received substantial, valuable consideration. Executive further
acknowledges and agrees that this consideration constitutes fair and adequate
consideration for the execution of the non-solicitation restriction set forth
in this Section.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;Ancillary to the enforceable promises set forth in this Agreement,
as well as to protect the vital interests described in those Sections,
Executive agrees that, for a period of one (1)&nbsp;year following the termination
of his employment with the Employer, regardless of the


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<DIV style="font-family: 'Times New Roman',Times,serif">
<P align="left" style="font-size: 10pt">reason for such termination, Executive will not, without the prior written
consent of Employer, directly or indirectly, alone or for his own account, or
as owner, partner, investor, member, trustee, officer, director, shareholder,
employee, consultant, distributor, advisor, representative or agent of any
partnership, joint venture, corporation, trust, or other business organization
or entity:



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;solicit the banking business of any current customers of the
Employer;


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;acquire, charter, operate or enter into any franchise or other
management agreement with any financial institution;


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;serve as an officer, director, employee, agent or consultant to any
financial institution, or


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)&nbsp;establish or operate a branch or other office of a financial
institution within the city limits of or having its main office or a branch
within fifty (50)&nbsp;miles of the main office of Bank or any of its branches.

<P align="left" style="font-size: 10pt">Executive agrees that the restriction set forth above is ancillary to an
otherwise enforceable agreement, is supported by independent valuable
consideration, and that the limitations as to time, geographical area, and
scope of activity to be restrained by this Section are reasonable and
acceptable, and do not impose any greater restraint than is reasonably
necessary to protect the goodwill and other business interests of Employer.
Executive agrees that if, at some later date, a court of competent jurisdiction
determines that the non-solicitation agreement set forth in this Section does
not meet the criteria set forth by applicable law, this Section may be reformed
by the court and enforced to the maximum extent permitted under applicable law.
Executive understands that his obligations under this Section shall not be
assignable by him.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12.&nbsp;<B>Non-Solicitation of Employees</B>. Executive agrees that, as part of
his employment with Employer, he has become familiar with the salary, pay
scale, capabilities, experiences, skill and desires of the Employer&#146;s
employees. Executive agrees to maintain the confidentiality of such
information. He further covenants and agrees that, for a period of one (1)&nbsp;year
subsequent to the termination of his employment with Employer, he shall not
recruit, hire, or attempt to recruit or hire, directly or by assisting others,
any other employees of Employer, nor shall he contact or communicate with any
other employees of Employer for the purpose of inducing other employees to
terminate their employment with Employer. For purposes of this covenant, &#147;other
employees&#148; shall refer to employees who were employed by, or doing business
with, Employer within twelve (12)&nbsp;months of the time of the attempted
recruiting or hiring.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13.&nbsp;<B>Independent Covenants</B>. Executive acknowledges that the covenants
set forth in Sections&nbsp;10, 11 and 12 are material conditions to Employer&#146;s
willingness to execute and deliver this Agreement and to provide Executive the
compensation and benefits and other consideration provided hereunder. The
parties agree that the existence of any claim or cause of action of Executive
against Employer, whether predicated on this Agreement or otherwise, will not
constitute a defense to the enforcement by Employer of such covenants. It is
specifically


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<DIV style="font-family: 'Times New Roman',Times,serif">
<P align="left" style="font-size: 10pt">acknowledged that the period of one year following the termination of
employment stated in Sections&nbsp;11 and 12, during which the agreements and
covenants of Executive made in such sections are effective, is to be computed
by excluding from such computation any time during which Executive is in
violation of any provision of Sections&nbsp;11 and 12. The covenants contained in
Sections&nbsp;10, 11 and 12 will not be affected by any breach of any other
provision hereof by any party hereto. In addition, Executive&#146;s obligations
under Sections&nbsp;10, 11 and 12 shall survive the termination of this Agreement
and Executive&#146;s employment with Employer. Executive&#146;s obligations under
Sections&nbsp;10, 11 and 12 are in addition to, and not in limitation or preemption
of, all other obligations of confidentiality which he may have to Employer
under general legal or equitable principles, or other Employer policies.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14.&nbsp;<B>Remedies</B>. In the event that Executive violates any of the
provisions set forth in Sections&nbsp;10, 11 and 12 of this Agreement, Executive
acknowledges that Employer will suffer immediate and irreparable harm which
cannot be accurately calculated in monetary damages. Consequently, Executive
acknowledges and agrees that Employer shall be entitled to immediate injunctive
relief, either by temporary or permanent injunction, to prevent such a
violation. Executive further acknowledges and agrees that this injunctive
relief shall be in addition to any other legal or equitable relief to which
Employer would be entitled.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15.&nbsp;<B>Complete Release. </B>As a material inducement to the parties to enter
into this Retirement Agreement and General Release, Executive hereby
irrevocably and unconditionally releases, acquits and forever discharges the
Employer and each of the Employer&#146;s owners, stockholders, partners,
predecessors, successors, assigns, agents, directors, officers, employees,
representatives, attorneys, parent companies, divisions, subsidiaries,
affiliates (and agents, directors, officers, employees, representatives and
attorneys of such parent companies, divisions, subsidiaries and affiliates),
and all persons acting by, through, under or in concert with any of them
(collectively &#147;Releasees&#148;), from any and all charges, complaints, claims,
liabilities, obligations, promises, agreements, controversies, damages,
actions, causes of action, suits, rights, demands, costs, losses, debts, and
expenses of any nature whatsoever, known or unknown, suspected or unsuspected,
including, but not limited to, rights arising out of alleged violations or
breaches of any contracts, express or implied, or any tort, or any legal
restrictions on the Employer&#146;s right to terminate employees, or any federal,
state or other governmental statute, regulation, or ordinance, including,
without limitation: (1)&nbsp;Title VII of the Civil Rights Act of 1964, as amended
by the Civil Rights Act of 1991, (race, color, religion, sex, and national
origin discrimination); (2)&nbsp;the Americans with Disabilities Act (disability
discrimination); (3)&nbsp;42 U.S.C. &#167; 1981 (discrimination); (4)&nbsp;the Age
Discrimination in Employment Act (age discrimination); (5)&nbsp;the Older Workers
Benefit Protection Act (age discrimination); (6)&nbsp;the Equal Pay Act (wage
discrimination); (7)&nbsp;the Executive Retirement Income Security Act (&#147;ERISA&#148;);
(8)&nbsp;Section&nbsp;503 of the Rehabilitation Act of 1973; (9)&nbsp;the False Claims Act
(including the qui tam provision thereof); (10)&nbsp;the Occupational Safety and
Health Act; (11)&nbsp;the Consolidated Omnibus Budget Reconciliation Act of 1986;
(12)&nbsp;intentional or negligent infliction of emotional distress or &#147;outrage&#148;;
(13)&nbsp;defamation; (14)&nbsp;interference with employment and/or contractual
relations; (15)&nbsp;wrongful discharge; (16)&nbsp;invasion of privacy; and (17)&nbsp;breach
of contract, express or implied (including breach of employment contract),
(&#147;Claim&#148; or &#147;Claims&#148;), which Executive now has, owns or holds, or claims to
have, own or hold, or which Executive at any time heretofore had, owned or
held, or claimed to have, owned or held, against each or any of the


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<DIV style="font-family: 'Times New Roman',Times,serif">
<P align="left" style="font-size: 10pt">Releasees at any time up to and including the Effective Date of this Agreement. The
Employer affirms that Executive&#146;s release granted under this Section&nbsp;15 does
not apply to any demand or claims for breach of the Employer&#146;s or any
Releasee&#146;s obligations under this Agreement. after the Effective Date.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>16.&nbsp;Age Discrimination In Employment Act. </B>Executive hereby acknowledges
and agrees that this Agreement and all actions taken in connection therewith
are in compliance with the Age Discrimination in Employment Act and the Older
Workers Benefit Protection Act and that the releases set forth in Section&nbsp;15
hereof shall be applicable, without limitation, to any claims brought under
these Acts. Executive further acknowledges and agrees that:


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="10%" nowrap align="right">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the release given by Executive in this Agreement
is given solely in exchange for the consideration set forth in
Section&nbsp;4 of this Agreement;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="10%" nowrap align="right">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>by entering into this Agreement, Executive does
not waive rights or claims that may arise after the date this
Agreement is executed;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="10%" nowrap align="right">(c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Executive has been advised to consult an attorney
prior to entering into this Agreement, and this provision of
this Agreement satisfies the requirement of the Older Workers
Benefit Protection Act that Executive be so advised in
writing;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="10%" nowrap align="right">(d)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Executive has been offered twenty-one (21)&nbsp;days
from receipt of this Retirement Agreement and General Release
within which to consider this Agreement; and</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="10%" nowrap align="right">(e)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>for a period of seven (7)&nbsp;days following
Executive&#146;s execution of this Agreement, whichever is later,
Executive may revoke this Agreement and this Agreement shall
not become effective or enforceable until such seven (7)&nbsp;day
or greater period has expired.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>17.&nbsp;Indemnification. </B>As a further material inducement to the parties to
enter into this Agreement, Executive hereby agrees to indemnify and hold each
and all of the Releasees harmless from and against any and all loss, costs,
damages, or expenses, including, without limitation, attorneys&#146; fees incurred
by Releasees, or any of them, arising out of any breach of this Agreement by
Executive or the fact that any representation made herein by Executive was
false when made; and the Employer hereby agrees to indemnify and hold Executive
harmless from and against and all loss, costs, damages, or expenses, including,
without limitation, attorneys&#146; fees incurred by Executive arising out of any
breach of this Agreement by the Employer or any Releasee or the fact that any
representation made herein by the Employer was false when made.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>18.&nbsp;No Other Representations. </B>Executive represents and acknowledges that
in executing this Agreement Executive does not rely, and has not relied, upon
any representation or statement not set forth herein made by any of the
Releasees or by any of the Releasees&#146; agents, representatives, or attorneys
with regard to the subject matter, basis or effect of this Agreement or
otherwise.


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<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>19.&nbsp;Sole and Entire Agreement. </B>This Agreement sets forth the entire
agreement between the parties hereto, and supersedes any and all prior
agreements or understandings between the parties pertaining to the subject
matter hereof.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>20.&nbsp;Binding Effect; Assignment. </B>This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective heirs,
representatives, successors, transferees and permitted assigns. This Agreement
shall not be assignable by Executive but shall be freely assignable by the
Employer.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>21.&nbsp;Knowledgeable Decision By Executive. </B>Executive represents and
warrants that Executive has read all the terms of this Agreement. Executive
understands the terms of this Agreement and understands that this Agreement
releases forever the Employer from any legal action arising from Executive&#146;s
relationship with the Employer as an employee, and the termination of that
relationship between Executive and the Employer. Executive is signing and
delivering this Agreement of his own free will in exchange for the
consideration to be given to Executive, which Executive acknowledges and agrees
is adequate and satisfactory.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>22.&nbsp;Consultation with an Attorney. </B>The Employer advises Executive to
consult with an attorney prior to executing this Agreement. Executive agrees
that he has had the opportunity to consult counsel if Executive chose to do so.
Executive acknowledges that he is responsible for any costs and fees resulting
from Executive&#146;s attorney reviewing this Agreement.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>23.&nbsp;Full and Careful Consideration. </B>Please take this Agreement home and
carefully consider all of its provisions before signing it. You may take up to
twenty-one (21)&nbsp;days to decide whether you want to accept and sign this
Agreement. Also, if you sign this Agreement, you will then have an additional
seven (7)&nbsp;days after you sign this Agreement or until Executive&#146;s Separation
Date, whichever is later, in which to revoke this Agreement. This Agreement
will not be effective or enforceable, nor will any consideration be paid, until
after the revocation period has expired. Again, you are free, and encouraged,
to discuss the contents and advisability of signing this Agreement with an
attorney of your choosing.


<P align="center" style="font-size: 10pt"><B>PLEASE READ CAREFULLY. THIS RETIREMENT AGREEMENT AND GENERAL<BR>
RELEASE INCLUDES A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS.</B>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
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<TR valign="bottom">
    <TD width="48%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="46%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="46%">&nbsp;</TD>
</TR>

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<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top">September&nbsp;28, 2004</TD>
    <TD>&nbsp;</TD>
    <TD colspan="5" valign="top" align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;/s/ Brad A. Luecke</TD>
</TR>


<TR style="font-size: 1px">
    <TD valign="top"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="5" valign="top" align="left"><HR size="1" noshade>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">DATE</TD>
    <TD>&nbsp;</TD>
    <TD colspan="5" valign="top" align="left">BRAD A. LUECKE</TD>
</TR>
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</TABLE>
</DIV>



<P align="center" style="font-size: 10pt">-8-
</DIV>

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<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="48%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="46%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="46%">&nbsp;</TD>
</TR>

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<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top">September&nbsp;28, 2004<HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD colspan="5" valign="top" align="left">MIDWEST BANC HOLDINGS, INC.</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">DATE</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="5" valign="top" align="left">By: &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;/s/ E. V. Silveri</TD>
</TR>

<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="5" valign="top" align="left">Name: E. V. Silveri,</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="5" valign="top" align="left">Title: Chairman of the Board</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD>&nbsp;</TD>
</TR>


<TR valign="bottom">
    <TD valign="top">September&nbsp;28,2004<HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD colspan="5" valign="top" align="left">MIDWEST BANK AND TRUST
COMPANY</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">DATE</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="5" valign="top" align="left">By: &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;/s/ E. V. Silveri</TD>
</TR>

<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="5" valign="top" align="left">Name: E. V. Silveri</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="5" valign="top" align="left">Title: Chairman of the Board</TD>
</TR>

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</TABLE>
</DIV>



<P align="left" style="font-size: 10pt">Effective Date of Agreement October&nbsp;6, 2004.



<P align="center" style="font-size: 10pt">-9-
</DIV>

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<P align="center" style="font-size: 10pt"><B>EXHIBIT A</B>



<P align="center" style="font-size: 10pt"><B>PERSONAL STATEMENT OF TERMINATION BENEFITS<BR>
ATTACHMENT TO RETIREMENT AGREEMENT AND GENERAL RELEASE</B><BR>
(September&nbsp;28, 2004)



<P align="left" style="font-size: 10pt">Executive Name: Brad A. Luecke



<P align="left" style="font-size: 10pt">Last Day of Work: September&nbsp;28, 2004



<P align="left" style="font-size: 10pt">Separation Date: October&nbsp;6, 2004


<P align="left" style="font-size: 10pt">Provided you have signed the attached Separation Agreement and General Release,
and have not otherwise revoked it, and provided your remain employed in good
standing through the Separation Date, the benefits below shall be payable to
you as follows (subject to applicable withholding taxes):


<P align="left" style="font-size: 10pt">GROSS SEVERANCE AMOUNT: $500,000. This Severance Payment shall be paid to you
in the form of twelve (12)&nbsp;equal monthly payments beginning with the first
payroll period ending following the later of the Effective Date of the
Agreement or your Separation Date.


<P align="left" style="font-size: 10pt">SERP AGREEMENT: Benefits
schedule under the existing SERP Agreement is suspended and replaced
by the benefits payable under this Exhibit&nbsp;A. All other terms of
the SERP shall remain in force. Employer shall pay to Executive the
amount of $9,226.25 each month for 180&nbsp;months beginning on the
first day of the month following the signing of the Retirement
Agreement and General Release.


<P align="left" style="font-size: 10pt">WELFARE BENEFITS: The Employer will continue on behalf of your spouse and
dependents and you medical, dental, and hospitalization benefits provided to
similarly situated former employees for a period of up to 18&nbsp;months following
your Separation Date. The Employer&#146;s obligation hereunder with respect to the
foregoing benefits shall be limited to the extent that you obtain any such
benefits pursuant to a subsequent employer&#146;s benefit plans, in which case the
Employer may reduce the coverage of any benefits it is required to provide you
hereunder as long as the aggregate coverages and benefits of the combined
benefit plans is no less favorable to you than the coverages and benefits
required to be provided hereunder.

<P align="left" style="font-size: 10pt">The Company agrees to pay
costs of medical, dental and hospitalization insurance commencing on
October&nbsp;6, 2004 and continuing for eighteen months.

<P align="left" style="font-size: 10pt">Ownership of the Company Car shall be transferred to Brad Luecke on the
effective date of this agreement.




<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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