UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                      placeCityWashington, StateD.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):
                                 AUGUST 1, 2006


                       FIRST MID-ILLINOIS BANCSHARES, INC.
             (Exact Name of Registrant as Specified in its Charter)

                               placeStateDELAWARE
                 (State of Other Jurisdiction of Incorporation)

                       0-13368                       37-1103704
              (Commission File Number)   (IRS Employer Identification No.)


        1515 CHARLESTON AVENUE
             MATTOON, IL                            61938
(Address of Principal Executive Offices)          (Zip Code)

                                 (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 August 1, 2006, First Mid-Illinois Bancshares, Inc. ("the Company") entered
into an Executive Employment Agreement, effective August 1, 2006 and continuing
for three years, until July 31, 2009, with Robert J. Swift. Jr. under which Mr.
Swift agrees to continue to serve as Executive Vice President of First Mid Bank
(the "Swift Agreement"). Under the Swift Agreement, Mr. Swift will receive an
annual base salary of $133,800 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 Swift Agreement also
provides Mr. Swift 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 Swift 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 Robert J. Swift, Jr. effective August 1, 2006.





                                    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:  August  3, 2006             /s/ William S. Rowland

                                   William S. Rowland
                                   President and Chief Executive Officer










                                INDEX TO EXHIBITS



Exhibit
Number            Description
--------------------------------------------------------------------------------
10.1 Employment Agreement between First Mid-Illinois  Bancshares,  Inc. and
     Robert J. Swift, Jr.






                                                                    Exhibit 10.1

                              EMPLOYMENT AGREEMENT

     This Employment  Agreement (the  "Agreement") is made and entered into this
1st day of August,  2006, by and between  First  Mid-Illinois  Bancshares,  Inc.
("the  Company"),  a corporation with its principal place of business located in
CityplaceMattoon, StateIllinois, and Robert J. Swift, Jr. ("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 Terms of Agreement. The term of this Agreement shall commence on
August 1, 2006 and shall continue until July 31, 2009. 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 as Executive
Vice President commencing August 1, 2006 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 (CEO) and
Executive shall adhere to the policies and procedures of the Company and shall
follow the supervision and direction of the CEO 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 $133,800 per fiscal year, payable in accordance with the Company's customary
payroll practices for executive employees. The CEO 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 25% 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 and  calls  associated  with  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 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,  the Company  may delay  payment of such amount to the
     extent required by law.
          (b) The base salary and accrued but unused paid  vacation  time earned
     through the date of termination and any incentive  compensation  earned for
     the preceding year that is not yet paid.
          (c) Continued  coverage for Executive and/or  Executive's family under
     the  Company's  health  plan  pursuant  to Title I, Part 6 of the  Employee
     Retirement  Income Security Act of 1974 ("COBRA") and for such purposes 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 of 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) The  Executive's  annual base salary in effect at the time of such
     termination.  Such  amount  shall be paid in a lump sum  payment as soon as
     practicable following the date of such termination.
          (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 of
     the date of Executive's  termination of employment  shall be considered the
     date of the "qualifying event" as such term if defined by COBRA. During the
     twelve  month  period  beginning  on the  date  of  such  termination,  the
     Executive  shall be charged  for such  overage 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.

         If at the time of such termination of employment Executive is a "Key
Employee" as defined in Section 416(i) of the Internal Revenue Code (without
reference to paragraph 5 thereof), and the amounts payable to Executive pursuant
to Section 4.02(a) and (b) are subject to Section 409A of the Internal Revenue
Code, payment of such amounts shall not commence until six month following
Executive's termination of employment, with the first payment to include the
payments that otherwise would have been made during such six-month period.

         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 the 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 reasons 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  assigned  or  transferred  except  that the  Company  will  require any
     successor (whether direct or indirect, by purchase,  merger,  consolidation
     or otherwise) to all or substantially  all of the business and/or assets of
     the Company to expressly  assume and agree to perform this Agreement in the
     same manner and to the same  extent  that the Company  would be required to
     perform it if no such succession had taken place.
          (b) No right or obligations  of Executive  under this Agreement may be
     assigned or transferred  by Executive  other than his rights to payments or
     benefits  hereunder  which may be  transferred  only by will or the laws of
     descent and distribution.

         8.02 Entire Agreement. This Agreement contains the entire agreement
between the parties with respect to the subject matter hereof and may not be
modified except in writing by the parties hereto; 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 Manager 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 phase, 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
StateplaceIllinois. The parties hereby consent to the jurisdiction of the state
and federal courts in the State of StateplaceIllinois 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 given, by first class mail, registered or certified,
postage prepaid and properly addressed, to the party as follows:






         If to Executive:  Robert J. Swift, Jr.
                           addressStreet56 Country Club Rd.
                           CityplaceMattoon, StateIL  PostalCode61938


         If to the Company: First Mid-Illinois Bancshares, Inc.
                            1515 Charleston Ave.
                            Mattoon, Illinois  619338
                            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:   Chief Executive Officer

                                    EXECUTIVE:
                                        /s/ Robert J. Swift

                                            Robert J. Swift, Jr.