Exhibit 10.1

 

COMPENSATION AND BENEFITS

 

ASSURANCE AGREEMENT FOR

 

Old Second Bancorp, Inc.

 

(Amended 3/1/2000)

 

 

James Eccher

 

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COMPENSATION AND BENEFITS ASSURANCE AGREEMENT

 

This COMPENSATION AND BENEFITS ASSURANCE AGREEMENT (this “Agreement”) is made,
entered into, and is effective as of this 1st day of January 1, 2005 (the
“Effective Date”) by and between Old Second Bancorp, Inc. (hereinafter referred
to as the “Company”) and James Eccher, (hereinafter referred to as the
“Executive”).

 

WHEREAS, the Executive is presently employed by The Old Second National Bank,
Aurora, Illinois (the “Bank”), in a key management capacity; and

 

WHEREAS, the Company is the holder, directly and indirectly, of all of the
issued and outstanding stock of the Bank; and

 

WHEREAS, the Executive possesses considerable experience and knowledge of the
business and affairs of the Bank and the Company concerning its and their
policies, methods, personnel, and operations; and

 

WHEREAS, the Company is desirous of assuring the continued employment of the
Executive in a key management capacity of the Bank, and the Executive is
desirous of having such assurances.

 

NOW THEREFORE, in consideration of the foregoing and of the mutual covenants and
agreements of the parties set forth in this Agreement, and of other good and
valuable consideration including, but not limited to, the Executive’s continuing
employment with the Bank, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound, agree as
follows:

 

SECTION 1.                                          TERM OF AGREEMENT

 

This Agreement will commence on the Effective Date and shall continue in effect
for one (1) full calendar year (through December 31, 2005) (the “Initial Term”).

 

The term of this Agreement automatically shall be extended for one additional
year at the end of the Initial Term, and then again after each successive
one-year period thereafter (each such one-year period following the Initial Term
a “Successive Period”).  However, either party may terminate this Agreement at
the end of the Initial Term, or at the end of any Successive Period thereafter,
by giving the other party written notice of intent not to renew delivered at
least ninety (90) calendar days prior to the end of such Initial Term or
Successive Period.  Except as otherwise provided, if such notice is properly
delivered by either party, this Agreement, along with all corresponding rights,
duties, and covenants, shall automatically expire at the end of the Initial Term
or Successive Period then in progress.

 

In the event that a “Change in Control” of the Company occurs (as such term is
hereinafter defined) during the Initial Term or any Successive Period, upon the
effective date of such Change in Control, the term of this Agreement shall
automatically and irrevocably be renewed for a period of twenty-four (24) full
calendar months from the effective date of such Change in Control (such 24-month
period being hereinafter referred to as the “Extended Period”).  This Agreement
shall thereafter automatically terminate following the twenty-four

 

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(24) month Change in Control renewal period.  Further, this Agreement shall be
assigned to, and shall be assumed by, the purchaser in such Change in Control,
as further provided in Section 4 herein.

 

SECTION 2.                                          SEVERANCE BENEFITS

 

2.1.                            RIGHT TO SEVERANCE BENEFITS.  THE EXECUTIVE
SHALL BE ENTITLED TO RECEIVE FROM THE COMPANY SEVERANCE BENEFITS AS DESCRIBED IN
PARAGRAPH 2.3 AND SECTION 3 HEREIN, IF DURING THE TERM OF THIS AGREEMENT THERE
HAS BEEN A CHANGE IN CONTROL OF THE COMPANY OR THE BANK (AS DEFINED IN PARAGRAPH
2.4 HEREIN) AND IF, WITHIN THE EXTENDED PERIOD, THE EXECUTIVE’S EMPLOYMENT WITH
THE BANK SHALL END FOR ANY REASON SPECIFIED IN PARAGRAPH 2.2 HEREIN AS BEING A
QUALIFYING TERMINATION.  THE SEVERANCE BENEFITS DESCRIBED IN PARAGRAPHS 2.3(A)
AND 2.3(B) HEREIN SHALL BE PAID IN CASH TO THE EXECUTIVE IN A SINGLE LUMP SUM AS
SOON AS PRACTICABLE FOLLOWING THE QUALIFYING TERMINATION, BUT IN NO EVENT LATER
THAN THIRTY (30) CALENDAR DAYS FROM SUCH DATE.  NOTWITHSTANDING THE FOREGOING,
SEVERANCE BENEFITS WHICH BECOME DUE PURSUANT TO THE CIRCUMSTANCES DESCRIBED IN
PARAGRAPHS 2.2(C) AND 4.1 SHALL BE PAID IMMEDIATELY.

 

2.2.                            QUALIFYING TERMINATION.  THE OCCURRENCE OF ANY
ONE OR MORE OF THE FOLLOWING EVENTS (I.E., A “QUALIFYING TERMINATION”) WITHIN
THE EXTENDED PERIOD SHALL TRIGGER THE PAYMENT OF SEVERANCE BENEFITS TO THE
EXECUTIVE, AS SUCH BENEFITS ARE DESCRIBED UNDER PARAGRAPH 2.3 HEREIN:

 

(A)                                  THE BANK’S INVOLUNTARY TERMINATION OF THE
EXECUTIVE’S EMPLOYMENT WITHOUT CAUSE (AS SUCH TERM IS DEFINED IN PARAGRAPH 2.6
HEREIN);

 

(B)                                 THE EXECUTIVE’S VOLUNTARY TERMINATION OF
EMPLOYMENT FOR GOOD REASON (AS SUCH TERM IS DEFINED IN PARAGRAPH 2.5 HEREIN);
AND

 

(C)                                  THE COMPANY OR THE BANK, OR ANY SUCCESSOR
COMPANY, COMMITS A MATERIAL BREACH OF ANY OF THE PROVISIONS OF THIS AGREEMENT
INCLUDING, BUT NOT LIMITED TO THE COMPANY FAILING TO OBTAIN THE ASSUMPTION OF,
OR THE SUCCESSOR COMPANY REFUSING TO ASSUME THE OBLIGATIONS OF THIS AGREEMENT
PURSUANT TO PARAGRAPH 4.1 HEREIN.

 

A Qualifying Termination shall not include a termination of the Executive’s
employment within twenty-four (24) calendar months after a Change in Control by
reason of death, disability, the Executive’s voluntary termination without Good
Reason, or the Bank’s involuntary termination of the Executive’s employment for
Cause.

 

2.3.                            DESCRIPTION OF SEVERANCE BENEFITS.  IN THE EVENT
THAT THE EXECUTIVE BECOMES ENTITLED TO RECEIVE SEVERANCE BENEFITS, AS PROVIDED
IN PARAGRAPHS 2.1 AND 2.2 HEREIN, THE COMPANY (OR THE BANK AT THE DIRECTION OF
THE COMPANY) SHALL, WITHIN THE TIME LIMITS STATED IN PARAGRAPH 2.1, PAY TO THE
EXECUTIVE AND PROVIDE THE EXECUTIVE WITH THE FOLLOWING:

 

(A)                                  A LUMP-SUM CASH AMOUNT EQUAL TO THE
EXECUTIVE’S UNPAID BASE SALARY (AS SUCH TERM IS DEFINED IN PARAGRAPH 2.7
HEREIN), ACCRUED VACATION PAY, UNREIMBURSED BUSINESS EXPENSES, AND ALL OTHER
ITEMS EARNED BY AND OWED TO THE EXECUTIVE THROUGH AND INCLUDING THE DATE OF THE
QUALIFYING TERMINATION.  SUCH PAYMENT SHALL CONSTITUTE FULL SATISFACTION FOR
THESE AMOUNTS OWED TO THE EXECUTIVE.

 

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(B)                                 A LUMP-SUM CASH AMOUNT EQUAL TO TWO (2)
MULTIPLIED BY THE GREATER OF THE EXECUTIVE’S ANNUAL RATE OF BASE SALARY IN
EFFECT UPON THE DATE OF THE QUALIFYING TERMINATION, OR THE EXECUTIVE’S ANNUAL
RATE OF BASE SALARY IN EFFECT IMMEDIATELY PRIOR TO THE OCCURRENCE OF THE CHANGE
IN CONTROL.

 

(C)                                  IMMEDIATE 100% VESTING OF ALL STOCK
OPTIONS, AND ANY OTHER AWARDS WHICH HAD BEEN PROVIDED TO THE EXECUTIVE BY THE
COMPANY OR THE BANK UNDER ANY INCENTIVE COMPENSATION PLAN.

 

(D)                                 AT THE EXACT SAME COST TO THE EXECUTIVE, AND
AT THE SAME COVERAGE LEVEL AS IN EFFECT AS OF THE EXECUTIVE’S DATE OF QUALIFYING
TERMINATION (SUBJECT TO CHANGES IN COVERAGE LEVELS APPLICABLE TO ALL EMPLOYEES
GENERALLY), A CONTINUATION OF THE EXECUTIVE’S (AND THE EXECUTIVE’S ELIGIBLE
DEPENDENTS’) HEALTH INSURANCE COVERAGE FOR TWENTY-FOUR (24) MONTHS FROM THE DATE
OF THE QUALIFYING TERMINATION.  THE APPLICABLE COBRA HEALTH INSURANCE BENEFIT
CONTINUATION PERIOD SHALL BEGIN AT THE END OF THIS TWENTY-FOUR (24) MONTH
BENEFIT CONTINUATION PERIOD.  THE PROVIDING OF HEALTH INSURANCE BENEFITS BY THE
COMPANY SHALL BE DISCONTINUED PRIOR TO THE END OF THE TWENTY-FOUR (24) MONTH
CONTINUATION PERIOD IN THE EVENT THAT THE EXECUTIVE SUBSEQUENTLY BECOMES COVERED
UNDER THE HEALTH INSURANCE COVERAGE OF A SUBSEQUENT EMPLOYER WHICH DOES NOT
CONTAIN ANY EXCLUSION OR LIMITATION WITH RESPECT TO ANY PREEXISTING CONDITION OF
THE EXECUTIVE OR THE EXECUTIVE’S ELIGIBLE DEPENDENTS.  FOR PURPOSES OF ENFORCING
THIS OFFSET PROVISION, THE EXECUTIVE SHALL HAVE DUTY TO INFORM THE COMPANY AS TO
THE TERMS AND CONDITIONS OF ANY SUBSEQUENT EMPLOYMENT AND THE CORRESPONDING
BENEFITS EARNED FROM SUCH EMPLOYMENT.  THE EXECUTIVE SHALL PROVIDE, OR CAUSE TO
PROVIDE, TO THE COMPANY IN WRITING CORRECT, COMPLETE, AND TIMELY INFORMATION
CONCERNING THE SAME.

 

(E)                                  THE EXECUTIVE SHALL BE ENTITLED TO RECEIVE
STANDARD OUTPLACEMENT SERVICES FROM A NATIONALLY RECOGNIZED OUTPLACEMENT FIRM OF
THE EXECUTIVE’S SELECTION, FOR A PERIOD OF UP TO ONE (1) YEAR FROM THE
EXECUTIVE’S DATE OF QUALIFYING TERMINATION.  HOWEVER, SUCH SERVICE SHALL BE AT
THE COMPANY’S EXPENSE TO A MAXIMUM AMOUNT NOT TO EXCEED TWENTY THOUSAND DOLLARS
($20,000).

 

2.4.                            DEFINITION OF “CHANGE IN CONTROL.”  “CHANGE IN
CONTROL” OF THE COMPANY OR THE BANK MEANS, AND SHALL BE DEEMED TO HAVE OCCURRED
UPON, THE FIRST TO OCCUR OF ANY OF THE FOLLOWING EVENTS:

 

(A)                                  ANY PERSON OTHER THAN A TRUSTEE OR OTHER
FIDUCIARY HOLDING SECURITIES UNDER AN EMPLOYEE BENEFIT PLAN OF THE COMPANY OR A
CORPORATION OWNED DIRECTLY OR INDIRECTLY BY THE STOCKHOLDERS OF THE COMPANY IN
SUBSTANTIALLY THE SAME PROPORTIONS AS THEIR OWNERSHIP OF STOCK OF THE COMPANY,
IS OR BECOMES THE BENEFICIAL OWNER (WITHIN THE MEANING OF RULE 13D-3 OF THE
EXCHANGE ACT), DIRECTLY OR INDIRECTLY, OF SECURITIES OF THE COMPANY OR THE BANK
REPRESENTING TWENTY PERCENT (20%) OR MORE OF THE TOTAL VOTING POWER REPRESENTED
BY THE COMPANY’S OR THE BANK’S THEN OUTSTANDING VOTING SECURITIES; OR

 

(B)                                 DURING ANY PERIOD OF TWO (2) CONSECUTIVE
YEARS, INDIVIDUALS WHO AT THE BEGINNING OF SUCH PERIOD CONSTITUTE THE BOARD OF
DIRECTORS OF THE COMPANY AND ANY NEW DIRECTOR WHOSE ELECTION BY THE BOARD OF
DIRECTORS OR NOMINATION FOR ELECTION BY THE COMPANY’S STOCKHOLDERS WAS APPROVED
BY A VOTE OF AT LEAST TWO-THIRDS (2/3) OF THE DIRECTORS THEN STILL IN

 

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office who either were Directors at the beginning of the period or whose
election or nomination for election was previously so approved, cease for any
reason to constitute a majority thereof; or

 

(C)                                  THE STOCKHOLDERS OF THE COMPANY APPROVE A
MERGER OR CONSOLIDATION OF THE COMPANY WITH ANY OTHER CORPORATION, OTHER THAN A
MERGER OR CONSOLIDATION WHICH WOULD RESULT IN THE VOTING SECURITIES OF THE
COMPANY OUTSTANDING IMMEDIATELY PRIOR THERETO CONTINUING TO REPRESENT (EITHER BY
REMAINING OUTSTANDING OR BY BEING CONVERTED INTO VOTING SECURITIES OF THE
SURVIVING ENTITY) AT LEAST EIGHTY PERCENT (80%) OF THE TOTAL VOTING POWER
REPRESENTED BY THE VOTING SECURITIES OF THE COMPANY OR SUCH SURVIVING ENTITY
OUTSTANDING IMMEDIATELY AFTER SUCH MERGER OR CONSOLIDATION, OR THE STOCKHOLDERS
OF THE COMPANY APPROVE A PLAN OF COMPLETE LIQUIDATION OF THE COMPANY OR THE BANK
OR AN AGREEMENT FOR THE SALE OR DISPOSITION BY THE COMPANY OF ALL OR
SUBSTANTIALLY ALL THE COMPANY’S OR THE BANK’S ASSETS.

 

HOWEVER, IN NO EVENT SHALL A CHANGE IN CONTROL BE DEEMED TO HAVE OCCURRED, WITH
RESPECT TO THE EXECUTIVE IF THE EXECUTIVE IS PART OF A PURCHASING GROUP WHICH
CONSUMMATES THE CHANGE-IN-CONTROL TRANSACTION.  THE EXECUTIVE SHALL BE DEEMED
“PART OF A PURCHASING GROUP” FOR PURPOSES OF THE PRECEDING SENTENCE IF THE
EXECUTIVE IS A EQUITY PARTICIPANT IN THE PURCHASE COMPANY OR GROUP (EXCEPT FOR
(I) PASSIVE OWNERSHIP OF LESS THAN TWO PERCENT (2%) OF THE STOCK OF THE
PURCHASING COMPANY; OR (II) OWNERSHIP OF EQUITY PARTICIPATION IN THE PURCHASING
COMPANY OR GROUP WHICH IS OTHERWISE NOT SIGNIFICANT, AS DETERMINED PRIOR TO THE
CHANGE IN CONTROL BY A MAJORITY OF THE NONEMPLOYEE CONTINUING DIRECTORS).

 

2.5.                            DEFINITION OF “GOOD REASON.”  “GOOD REASON”
SHALL MEAN, WITHOUT THE EXECUTIVE’S EXPRESS WRITTEN CONSENT, THE OCCURRENCE BY
ANY ONE OR MORE OF THE FOLLOWING WITHIN THE EXTENDED PERIOD:

 

(A)                                  THE ASSIGNMENT OF THE EXECUTIVE TO DUTIES
INCONSISTENT WITH THE EXECUTIVE’S POSITION, DUTIES, RESPONSIBILITIES, AND STATUS
AS AN OFFICER OF THE BANK, OR A REDUCTION OR ALTERATION IN THE NATURE OR STATUS
OF THE EXECUTIVE’S AUTHORITIES, DUTIES, OR RESPONSIBILITIES FROM THOSE IN EFFECT
AS OF NINETY (90) CALENDAR DAYS PRIOR TO THE CHANGE IN CONTROL, OTHER THAN AN
INSUBSTANTIAL AND INADVERTENT ACT THAT IS REMEDIED BY THE BANK PROMPTLY AFTER
RECEIPT OF NOTICE THEREOF GIVEN BY THE EXECUTIVE.

 

(B)                                 THE BANK’S REQUIRING THE EXECUTIVE TO BE
BASED AT A LOCATION IN EXCESS OF TWENTY-FIVE (25) MILES FROM THE LOCATION OF THE
EXECUTIVE’S PRINCIPAL JOB LOCATION OR OFFICE IMMEDIATELY PRIOR TO THE CHANGE IN
CONTROL; EXCEPT FOR REQUIRED TRAVEL ON THE BANK’S BUSINESS TO AN EXTENT
CONSISTENT WITH THE EXECUTIVE’S THEN PRESENT BUSINESS TRAVEL OBLIGATIONS.

 

(C)                                  A REDUCTION BY THE BANK OF THE EXECUTIVE’S
BASE SALARY IN EFFECT ON THE EFFECTIVE DATE, OR AS THE SAME SHALL BE INCREASED
FROM TIME TO TIME.

 

(D)                                 THE FAILURE OF THE BANK TO KEEP IN EFFECT
ANY OF THE BANK’S COMPENSATION, HEALTH AND WELFARE BENEFITS, OR PERQUISITE
PROGRAMS UNDER WHICH THE EXECUTIVE RECEIVES VALUE, AS SUCH PROGRAMS EXIST
IMMEDIATELY PRIOR TO THE CHANGE IN CONTROL, OR THE FAILURE OF THE BANK TO MEET
THE FUNDING REQUIREMENTS, IF ANY, OF EACH OF THE PROGRAMS.  HOWEVER, THE
REPLACEMENT OF AN EXISTING PROGRAM WITH A NEW PROGRAM WILL BE PERMISSIBLE (AND
NOT GROUNDS FOR A GOOD REASON TERMINATION) IF DONE FOR ALL EMPLOYEES GENERALLY.

 

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(E)                                  ANY BREACH BY THE COMPANY OF ITS OBLIGATION
UNDER SECTION 4 OF THIS AGREEMENT OR ANY FAILURE OF A SUCCESSOR COMPANY TO
ASSUME AND AGREE TO PERFORM THE COMPANY’S ENTIRE OBLIGATIONS UNDER THIS
AGREEMENT, AS REQUIRED BY SECTION 4 HEREIN.

 

The Executive’s right to terminate employment for Good Reason shall not be
affected by the Executive’s incapacity due to physical or mental illness.  The
Executive’s continued employment shall not constitute consent to, or a waiver of
rights with respect to, any circumstance constituting Good Reason herein.

 

2.6.                            DEFINITION OF “CAUSE.”  “CAUSE” SHALL MEAN THE
OCCURRENCE OF ANY ONE OR MORE OF THE FOLLOWING:

 

(A)                                  A DEMONSTRABLY WILLFUL AND DELIBERATE ACT
OR FAILURE TO ACT BY THE EXECUTIVE (OTHER THAN AS A RESULT OF INCAPACITY DUE TO
PHYSICAL OR MENTAL ILLNESS) WHICH IS COMMITTED IN BAD FAITH, WITHOUT REASONABLE
BELIEF THAT SUCH ACTION OR INACTION IS IN THE BEST INTERESTS OF THE COMPANY,
WHICH CAUSES ACTUAL MATERIAL FINANCIAL INJURY TO THE BANK AND WHICH ACT OR
INACTION IS NOT REMEDIED WITHIN FIFTEEN (15) BUSINESS DAYS OF WRITTEN NOTICE
FROM THE BANK; OR

 

(B)                                 THE EXECUTIVE’S CONVICTION FOR COMMITTING AN
ACT OF FRAUD, EMBEZZLEMENT, THEFT, OR ANY OTHER ACT CONSTITUTING A FELONY
INVOLVING MORAL TURPITUDE WHICH CAUSES MATERIAL HARM, FINANCIAL OR OTHERWISE, TO
THE BANK.

 

2.7.                            OTHER DEFINED TERMS.  THE FOLLOWING TERMS SHALL
HAVE THE MEANINGS SET FORTH BELOW:

 

(A)                                  “BASE SALARY” MEANS, AT ANY TIME, THE
THEN-REGULAR ANNUAL RATE OF PAY WHICH THE EXECUTIVE IS RECEIVING AS SALARY,
EXCLUDING AMOUNTS: (I) DESIGNATED BY THE COMPANY AS PAYMENT TOWARD REIMBURSEMENT
OF EXPENSES; OF (II) RECEIVED UNDER INCENTIVE OR OTHER BONUS PLANS, REGARDLESS
OF WHETHER OR NOT THE AMOUNTS ARE DEFERRED.

 

(B)                                 “BENEFICIAL OWNER” SHALL HAVE THE MEANING
ASCRIBED TO SUCH TERM IN RULE 13D-3 OF THE GENERAL RULES AND REGULATIONS UNDER
THE EXCHANGE ACT (AS SUCH TERM IS DEFINED BELOW).

 

(C)                                  “EXCHANGE ACT” MEANS THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED FROM TIME TO TIME, OR ANY SUCCESSOR ACT
THERETO.

 

(D)                                 “PERSON” SHALL HAVE THE MEANING ASCRIBED TO
SUCH TERM IN SECTION 3(A)(9) OF THE EXCHANGE ACT AND USED IN SECTIONS 13(D) AND
14(D) THEREOF, INCLUDING A “GROUP” AS DEFINED IN SECTION 13(D) THEREOF.

 

SECTION 3.                                          EXCISE TAX

 

3.1.                            EXCISE TAX PAYMENT.  IF ANY PORTION OF THE
SEVERANCE BENEFITS OR ANY OTHER PAYMENT UNDER THIS AGREEMENT, OR UNDER ANY OTHER
AGREEMENT WITH, OR PLAN OF THE COMPANY OR BANK, INCLUDING BUT NOT LIMITED TO
STOCK OPTIONS AND OTHER LONG-TERM INCENTIVES (IN THE AGGREGATE “TOTAL PAYMENTS”)
WOULD CONSTITUTE AN “EXCESS PARACHUTE PAYMENT,” SUCH THAT A GOLDEN PARACHUTE
EXCISE TAX IS DUE, THE COMPANY (OR THE BANK AT THE COMPANY’S DIRECTION) SHALL
PROVIDE

 

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to the Executive, in cash, an additional payment in an amount to cover the full
cost of any excise tax and the Executive’s state and federal income and
employment taxes on this additional payment (cumulatively, the “Gross-Up
Payment”).  This Gross-Up Payment shall be made as soon as possible following
the date of the Executive’s Qualifying Termination, but in no event later than
thirty (30) calendar days of such date.

 

For purposes of this Agreement, the term “excess parachute payment” shall have
the meaning assigned to such term in Section 280G of the Internal Revenue Code,
as amended (the “Code”), and the term “excise tax” shall mean the tax imposed on
such excess parachute payment pursuant to Sections 280G and 4999 of the Code.

 

3.2.                            SUBSEQUENT RECALCULATION.  IN THE EVENT THE
INTERNAL REVENUE SERVICE SUBSEQUENTLY ADJUSTS THE EXCISE TAX COMPUTATION HEREIN
DESCRIBED, THE COMPANY (OR THE BANK AT THE COMPANY’S DIRECTION) SHALL REIMBURSE
THE EXECUTIVE FOR THE FULL AMOUNT NECESSARY TO MAKE THE EXECUTIVE WHOLE ON AN
AFTER-TAX BASIS (LESS ANY AMOUNTS RECEIVED BY THE EXECUTIVE THAT THE EXECUTIVE
WOULD NOT HAVE RECEIVED HAD THE COMPUTATIONS INITIALLY BEEN COMPUTED AS
SUBSEQUENTLY ADJUSTED), INCLUDING THE VALUE OF ANY UNDERPAID EXCISE TAX, AND ANY
RELATED INTEREST AND/OR PENALTIES DUE TO THE INTERNAL REVENUE SERVICE.

 

SECTION 4.                                          SUCCESSORS AND ASSIGNMENTS

 

4.1.                            SUCCESSORS.  THE COMPANY WILL REQUIRE ANY
SUCCESSOR (WHETHER VIA A CHANGE IN CONTROL, DIRECT OR INDIRECT, BY PURCHASE,
MERGER, CONSOLIDATION, OR OTHERWISE) OF THE COMPANY OR THE BANK TO EXPRESSLY
ASSUME AND AGREE TO PERFORM THE OBLIGATIONS UNDER 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.

 

Failure of the Company to obtain such assumption and agreement prior to the
effectiveness of any such succession shall, as of the date immediately preceding
the date of a Change in Control, automatically give the Executive Good Reason to
collect, immediately, full benefits hereunder as a Qualifying Termination.

 

4.2.                            ASSIGNMENT BY EXECUTIVE.  THIS AGREEMENT SHALL
INURE TO THE BENEFIT OF AND BE ENFORCEABLE BY THE EXECUTIVE’S PERSONAL OR LEGAL
REPRESENTATIVES, EXECUTORS, ADMINISTRATORS, SUCCESSORS, HEIRS, DISTRIBUTEES,
DEVISEES, AND LEGATEES.  IF AN EXECUTIVE SHOULD DIE WHILE ANY AMOUNT IS STILL
PAYABLE TO THE EXECUTIVE HEREUNDER, HAD THE EXECUTIVE CONTINUED TO LIVE, ALL
SUCH AMOUNTS, UNLESS OTHERWISE PROVIDED HEREIN, SHALL BE PAID IN ACCORDANCE WITH
THE TERMS OF THIS AGREEMENT TO THE EXECUTIVE’S DEVISEE, LEGATEE, OR OTHER
DESIGNEE, OR IF THERE IS NO SUCH DESIGNEE, TO THE EXECUTIVE’S ESTATE.

 

An Executive’s rights hereunder shall not otherwise be assignable.

 

SECTION 5.                                          RESTRICTIVE COVENANTS

 

5.1.                            COVENANTS.  WITHOUT THE PRIOR WRITTEN CONSENT OF
THE COMPANY, AND WHERE THE EXECUTIVE IS ENTITLED TO RECEIVE THE SEVERANCE
BENEFITS PURSUANT TO THE TERMS OF THIS AGREEMENT, DURING THE 24-MONTH PERIOD
NEXT FOLLOWING THE EXECUTIVE’S TERMINATION OF EMPLOYMENT WITH THE BANK, THE
EXECUTIVE SHALL NOT, DIRECTLY OR INDIRECTLY:

 

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(A)                                  DISCLOSURE OF INFORMATION.  USE, ATTEMPT TO
USE, DISCLOSE, OR OTHERWISE MAKE KNOWN TO ANY PERSON OR ENTITY (OTHER THAN THE
BOARD OF DIRECTORS OF THE COMPANY OR THE BANK):

 

(I)                                     ANY CONFIDENTIAL OR PROPRIETARY
KNOWLEDGE OR INFORMATION, INCLUDING WITHOUT LIMITATION, LISTS OF CUSTOMERS,
PROCESSES, AND SYSTEMS, AS WELL AS ANY DATA AND RECORDS PERTAINING THERETO,
WHICH THE EXECUTIVE MAY ACQUIRE IN THE COURSE OF HIS EMPLOYMENT.

 

(II)                                  ANY CONFIDENTIAL OR PROPRIETARY KNOWLEDGE
OR INFORMATION OF A CONFIDENTIAL NATURE (INCLUDING BUT NOT LIMITED TO ALL
UNPUBLISHED MATTERS) RELATING TO, WITHIN LIMITATION, THE BUSINESS, PROPERTIES,
ACCOUNTING, BOOKS AND RECORDS, COMPUTER SYSTEMS AND PROGRAMS, OR MEMORANDA OF
THE COMPANY OR THE BANK.

 

5.2.                            ACKNOWLEDGMENT OF COVENANTS.  THE PARTIES HERETO
ACKNOWLEDGE THAT THE EXECUTIVE’S SERVICES ARE OF A SPECIAL, EXTRAORDINARY, AND
INTELLECTUAL CHARACTER WHICH GIVES HIM UNIQUE VALUE, AND THAT THE BUSINESS OF
THE COMPANY AND ITS SUBSIDIARIES IS HIGHLY COMPETITIVE, AND THAT VIOLATION OF
ANY OF THE COVENANTS PROVIDED IN THIS SECTION 5 WOULD CAUSE IMMEDIATE,
IMMEASURABLE, AND IRREPARABLE HARM, LOSS AND DAMAGE TO THE COMPANY NOT
ADEQUATELY COMPENSABLE BY A MONETARY AWARD.  THE EXECUTIVE ACKNOWLEDGES THAT THE
TIME AND SCOPE OF ACTIVITY RESTRAINED BY THE PROVISIONS OF THIS SECTION 5 ARE
REASONABLE AND DO NOT IMPOSE A GREATER RESTRAINT THAN IS NECESSARY TO PROTECT
THE GOODWILL OF THE COMPANY’S BUSINESS.  THE EXECUTIVE FURTHER ACKNOWLEDGES THAT
HE AND THE COMPANY HAVE NEGOTIATED AND BARGAINED FOR THE TERMS OF THIS AGREEMENT
AND THAT THE EXECUTIVE HAS RECEIVED ADEQUATE CONSIDERATION FOR ENTERING INTO THE
AGREEMENT.  IN THE EVENT OF ANY SUCH BREACH OR THREATENED BREACH BY THE
EXECUTIVE OF ANY ONE OR MORE OF SUCH COVENANTS, THE COMPANY SHALL BE ENTITLED TO
SUCH EQUITABLE AND INJUNCTIVE RELIEF AS MAY BE AVAILABLE TO RESTRAIN THE
EXECUTIVE FROM VIOLATING THE PROVISIONS HEREOF.  NOTHING HEREIN SHALL BE
CONSTRUED AS PROHIBITING THE COMPANY FROM PURSUING ANY OTHER REMEDIES AVAILABLE
AT LAW OR IN EQUITY FOR SUCH BREACH OR THREATENED BREACH, INCLUDING THE RECOVERY
OF DAMAGES AND THE IMMEDIATE TERMINATION OF THE EMPLOYMENT OF THE EXECUTIVE
HEREUNDER.

 

SECTION 6.                                          MISCELLANEOUS

 

6.1.                            ADMINISTRATION.

 

(A)                                  ADMINISTRATION.  THIS AGREEMENT SHALL BE
ADMINISTERED BY THE BOARD OF DIRECTORS OF THE COMPANY, OR BY A COMMITTEE OF THE
BOARD CONSISTING OF BOARD MEMBERS DESIGNATED BY THE BOARD (THE “COMPENSATION
COMMITTEE”).  THE COMPENSATION COMMITTEE (WITH THE APPROVAL OF THE BOARD, IF THE
BOARD IS NOT THE COMPENSATION COMMITTEE) IS AUTHORIZED TO INTERPRET THIS
AGREEMENT, TO PRESCRIBE AND RESCIND RULES AND REGULATIONS, AND TO MAKE ALL OTHER
DETERMINATIONS NECESSARY OR ADVISABLE FOR THE ADMINISTRATION OF THIS AGREEMENT. 
IN FULFILLING ITS ADMINISTRATIVE DUTIES HEREUNDER, THE COMPENSATION COMMITTEE
MAY RELY ON OUTSIDE COUNSEL, INDEPENDENT ACCOUNTANTS, OR OTHER CONSULTANTS TO
RENDER ADVICE OR ASSISTANCE.

 

(B)                                 CLAIMS PROCEDURE.  IF THE EXECUTIVE BELIEVES
THAT HE IS BEING DENIED A BENEFIT TO WHICH HE IS ENTITLED UNDER THE AGREEMENT,
HE MAY FILE A WRITTEN REQUEST FOR SUCH BENEFIT

 

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with the Company, setting forth his claim.  Upon receipt of the claim, the
Company shall advise the Executive that a reply will be forthcoming within 15
days and shall, in fact, deliver such reply with such period.  The Company may,
however, extend the reply period for an additional fifteen (15) days for
reasonable cause.  If the claim is denied in whole or in part, the Company shall
adopt a written opinion, using language calculated to be understood by the
Executive, setting forth:

 

(I)                                     THE SPECIFIC REASON OR REASONS FOR SUCH
DENIED;

 

(II)                                  THE SPECIFIC REFERENCE TO PERTINENT
PROVISIONS OF THIS AGREEMENT ON WHICH SUCH DENIAL IS BASED;

 

(III)                               A DESCRIPTION OF ANY ADDITIONAL MATERIAL OR
INFORMATION NECESSARY FOR THE EXECUTIVE TO PERFECT HIS CLAIM AND AN EXPLANATION
WHY SUCH MATERIAL OR SUCH INFORMATION IS NECESSARY;

 

(IV)                              APPROPRIATE INFORMATION AS TO THE STEPS TO BE
TAKEN IF THE EXECUTIVE WISHES TO SUBMIT THE CLAIM FOR REVIEW; AND

 

(V)                                 THE TIME LIMITS FOR REQUESTING THE REVIEW
UNDER (C) BELOW.

 

(C)                                  REQUEST FOR CLAIM DECISION REVIEW.  WITHIN
THIRTY (30) DAYS AFTER RECEIPT BY THE EXECUTIVE OF THE WRITTEN OPINION DESCRIBED
ABOVE, THE EXECUTIVE MAY REQUEST IN WRITING THAT THE PRESIDENT OF THE COMPANY
REVIEW THE DESCRIPTION OF THE COMPANY.  SUCH REQUEST MUST BE ADDRESSED TO THE
PRESIDENT OF THE COMPANY, AT ITS THEN PRINCIPAL PLACE OF BUSINESS.  THE
EXECUTIVE OF HIS DULY AUTHORIZED REPRESENTATIVE MAY, BUT NEED NOT, REVIEW THE
PERTINENT DOCUMENTS AND SUBMIT ISSUES AND COMMENTS IN WRITING FOR CONSIDERATION
BY THE COMPANY.  IF THE EXECUTIVE DOES NOT REQUEST A REVIEW OF THE COMPANY’S
DETERMINATION BY THE PRESIDENT OF THE COMPANY WITHIN SUCH 30-DAY PERIOD, HE
SHALL BE BARRED AND ESTOPPED FROM CHALLENGING THE COMPANY’S DETERMINATION. 
WITHIN THIRTY (30) DAYS AFTER THE PRESIDENT’S RECEIPT OF A REQUEST FOR REVIEW,
HE WILL REVIEW THE COMPANY’S DETERMINATION.  AFTER CONSIDERING ALL MATERIALS
PRESENTED BY THE EXECUTIVE, THE PRESIDENT WILL RENDER A WRITTEN OPINION, WRITTEN
IN A MANNER CALCULATED TO BE UNDERSTOOD BY THE EXECUTIVE, SETTING FORTH SPECIFIC
REASONS FOR THE DECISION AND CONTAINING SPECIFIC REFERENCES TO THE PERTINENT
PROVISIONS OF THIS AGREEMENT ON WHICH THE DECISION IS BASED.

 

6.2.                            NOTICES.  ANY NOTICE REQUIRED TO BE DELIVERED TO
THE COMPANY, THE COMPENSATION COMMITTEE OR THE PRESIDENT OF THE COMPANY BY THE
EXECUTIVE HEREUNDER SHALL BE PROPERLY DELIVERED TO THE COMPANY WHEN PERSONALLY
DELIVERED TO (INCLUDING BY A REPUTABLE OVERNIGHT COURIER), OR ACTUALLY RECEIVED
THROUGH THE U.S. MAIL, POSTAGE PREPAID, BY:

 

Old Second Bancorp, Inc.

37 South River Street

Aurora, IL 60506

 

Any notice required to be delivered to the Executive by the Company, the
Compensation Committee or the President of the Company hereunder shall be
properly delivered to the Executive when personally delivered to (including by a
reputable overnight courier), or actually

 

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received through the U.S. mail, postage prepaid, by the Executive at his last
known address as reflected on the books and records of the Bank.

 

SECTION 7.                                          CONTRACTUAL RIGHTS AND LEGAL
REMEDIES

 

7.1.                            CONTRACTUAL RIGHTS TO BENEFITS.   THIS AGREEMENT
ESTABLISHES IN THE EXECUTIVE A RIGHT TO THE BENEFITS TO WHICH THE EXECUTIVE IS
ENTITLED HEREUNDER.  HOWEVER, EXCEPT AS EXPRESSLY STATED HEREIN, NOTHING HEREIN
CONTAINED SHALL REQUIRE OR BE DEEMED TO REQUIRE, OR PROHIBIT OR BE DEEMED TO
PROHIBIT, THE COMPANY TO SEGREGATE, EARMARK, OR OTHERWISE SET ASIDE ANY FUNDS OR
OTHER ASSETS, IN TRUST OR OTHERWISE, TO PROVIDE FOR ANY PAYMENTS TO BE MADE OR
REQUIRED HEREUNDER.

 

7.2.                            LEGAL FEES AND EXPENSES.  THE COMPANY SHALL PAY
ALL LEGAL FEES, COSTS OF LITIGATION, PREJUDGMENT INTEREST, AND OTHER EXPENSES
WHICH ARE INCURRED IN GOOD FAITH BY THE EXECUTIVE AS A RESULT OF THE COMPANY’S
REFUSAL TO PROVIDE THE SEVERANCE BENEFITS TO WHICH THE EXECUTIVE BECOMES
ENTITLED UNDER THIS AGREEMENT.   IN ADDITION, IF THE EXECUTIVE SHALL RESORT TO
EITHER LITIGATION OR ARBITRATION IN ORDER TO SECURE THE PAYMENT BY THE COMPANY
OF THE SEVERANCE BENEFITS, AND THE EXECUTIVE IS SUCCESSFUL IN SUCH LITIGATION OR
ARBITRATION, THEN THE COMPANY SHALL ALSO PAY TO THE EXECUTIVE AN ADDITIONAL
AMOUNT EQUAL TO 25% OF THE SEVERANCE BENEFITS. WHETHER OR NOT THE EXECUTIVE HAS
BEEN SUCCESSFUL IN SUCH LITIGATION OR ARBITRATION SHALL ALSO BE DETERMINED IN
THE SAME PROCEEDING.

 

7.3.                            ARBITRATION.  THE EXECUTIVE SHALL HAVE THE RIGHT
AND OPTION TO ELECT (IN LIEU OF LITIGATION) TO HAVE ANY DISPUTE OR CONTROVERSY
ARISING UNDER OR IN CONNECTION WITH THIS AGREEMENT SETTLED BY ARBITRATION,
CONDUCTED BEFORE A PANEL OF THREE (3) ARBITRATORS SITTING IN A LOCATION SELECTED
BY THE EXECUTIVE WITHIN FIFTY (50) MILES FROM THE LOCATION OF HIS OR HER JOB
WITH THE COMPANY, IN ACCORDANCE WITH THE RULES OF THE AMERICAN ARBITRATION
ASSOCIATION THEN IN EFFECT.  THE EXECUTIVE’S ELECTION TO ARBITRATE, AS HEREIN
PROVIDED, AND THE DECISION OF THE ARBITRATORS IN THAT PROCEEDING, SHALL BE
BINDING ON THE COMPANY AND EXECUTIVE.

 

Judgment may be entered on the award of the arbitrator in any court having
jurisdiction.  All expenses of such arbitration, including the fees and expenses
of the counsel for the Executive, shall be borne by the Company.

 

7.4.                            UNFUNDED AGREEMENT.  THIS AGREEMENT IS INTENDED
TO BE AN UNFUNDED GENERAL ASSET PROMISE FOR A SELECT, HIGHLY COMPENSATED MEMBER
OF THE COMPANY’S MANAGEMENT AND, THEREFORE, IS INTENDED TO BE EXEMPT FROM THE
SUBSTANTIVE PROVISIONS OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974 AS
AMENDED.

 

7.5.                            EXCLUSIVITY OF BENEFITS.  UNLESS SPECIFICALLY
PROVIDED HEREIN, NEITHER THE PROVISIONS OF THIS AGREEMENT NOR THE BENEFITS
PROVIDED HEREUNDER SHALL REDUCE ANY AMOUNTS OTHERWISE PAYABLE, OR IN ANY WAY
DIMINISH THE EXECUTIVE’S RIGHTS AS AN EMPLOYEE OF THE COMPANY, WHETHER EXISTING
NOW OR HEREAFTER, UNDER ANY COMPENSATION AND/OR BENEFIT PLANS (QUALIFIED OR
NONQUALIFIED), PROGRAMS, POLICIES, OR PRACTICES PROVIDED BY THE COMPANY, FOR
WHICH THE EXECUTIVE MAY QUALIFY.

 

Vested benefits or other amounts which the Executive is otherwise entitled to
receive under any plan, policy, practice, or program of the Company, at or
subsequent to the Executive’s

 

10

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date of Qualifying Termination, shall be payable in accordance with such plan,
policy, practice, or program except as expressly modified by this Agreement.

 

7.6.                            INCLUDABLE COMPENSATION.  SEVERANCE BENEFITS
PROVIDED HEREUNDER SHALL NOT BE CONSIDERED “INCLUDABLE COMPENSATION” FOR
PURPOSES OF DETERMINING THE EXECUTIVE’S BENEFITS UNDER ANY OTHER PLAN OR PROGRAM
OF THE COMPANY.

 

7.7.                            EMPLOYMENT STATUS.  NOTHING HEREIN CONTAINED
SHALL BE DEEMED TO CREATE AN EMPLOYMENT AGREEMENT BETWEEN THE COMPANY OR THE
BANK AND THE EXECUTIVE PROVIDING FOR THE EMPLOYMENT OF THE EXECUTIVE BY EITHER
THE COMPANY OR THE BANK FOR ANY FIXED PERIOD OF TIME.  THE EXECUTIVE’S
EMPLOYMENT WITH THE BANK IS TERMINABLE AT WILL BY THE BANK OR THE EXECUTIVE AND
EACH SHALL HAVE THE RIGHT TO TERMINATE THE EXECUTIVE’S EMPLOYMENT WITH THE BANK
AT ANY TIME, WITH OR WITHOUT CAUSE, SUBJECT TO THE COMPANY’S OBLIGATION TO
PROVIDE SEVERANCE BENEFITS AS REQUIRED HEREUNDER.

 

In no event shall the Executive be obligated to seek other employment or take
any other action by way of mitigation of the amounts payable to the Executive
under any of the provisions of this Agreement, nor shall the amount of any
payment hereunder be reduced by any compensation earned by the Executive as a
result of employment by another employer, other than as provided in Paragraph
2.3(d) herein.

 

7.8.                            ENTIRE AGREEMENT.  THIS AGREEMENT REPRESENTS THE
ENTIRE AGREEMENT BETWEEN THE PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF,
AND SUPERSEDES ALL PRIOR DISCUSSION, NEGOTIATIONS, AND AGREEMENTS CONCERNING THE
SUBJECT MATTER HEREOF, INCLUDING, BUT NOT LIMITED TO, ANY PRIOR SEVERANCE
AGREEMENT MADE BETWEEN THE EXECUTIVE AND THE COMPANY.

 

7.9.                            TAX WITHHOLDING.  THE COMPANY SHALL WITHHOLD
FROM ANY AMOUNTS PAYABLE UNDER THIS AGREEMENT ALL FEDERAL, STATE, CITY, OR OTHER
TAXES AS LEGALLY REQUIRED TO BE WITHHELD.

 

7.10.                     WAIVER OF RIGHTS.  EXCEPT AS OTHERWISE PROVIDED
HEREIN, THE EXECUTIVE’S ACCEPTANCE OF SEVERANCE BENEFITS, THE GROSS-UP PAYMENT
(IF APPLICABLE), AND ANY OTHER PAYMENTS REQUIRED HEREUNDER SHALL BE DEEMED TO BE
A WAIVER OF ALL RIGHTS AND CLAIMS OF THE EXECUTIVE AGAINST THE COMPANY
PERTAINING TO ANY MATTERS ARISING UNDER THIS AGREEMENT.

 

7.11.                     SEVERABILITY.  IN THE EVENT ANY PROVISION OF THE
AGREEMENT SHALL BE HELD ILLEGAL OR INVALID FOR ANY REASON, THE ILLEGALITY OR
INVALIDITY SHALL NOT AFFECT THE REMAINING PARTS OF THE AGREEMENT, AND THE
AGREEMENT SHALL BE CONSTRUED AND ENFORCED AS IF THE ILLEGAL OR INVALID PROVISION
HAD NOT BEEN INCLUDED.

 

7.12.                     APPLICABLE LAW.  TO THE EXTENT NOT PREEMPTED BY THE
LAWS OF THE UNITED STATES, THE LAWS OF THE STATE OF ILLINOIS SHALL BE THE
CONTROLLING LAW IN ALL MATTERS RELATING TO THE AGREEMENT.

 

[Remainder of Page Intentionally Left Blank]

 

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IN WITNESS WHEREOF, the Company has executed this Agreement, to be effective as
of the day and year first written above.

 

ATTEST:

OLD SECOND BANCORP, INC.

 

 

By:

Robin Hodgson

 

By:

  William B. Skoglund

 

 

 

 

 

 

Title:

  Chairman & CEO

 

 

 

 

 

 

/s/ William B. Skoglund

 

 

Name

 

S-1

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