Exhibit 10.3


 


[OLD SECOND BANCORP LETTERHEAD]


 


January   , 2009


 


VIA
CERTIFIED MAIL, RETURN RECEIPT REQUESTED


 


[Name of Executive]


[Street Address]


[City, State  Zip]


 


Dear [Insert Name]:


 


Old Second Bancorp, Inc. (the “Company”)
anticipates entering into a Letter Agreement and Securities Purchase Agreement
(collectively, the “Participation Agreement”)
with the United States Department of Treasury (“Treasury”)
that provides for the Company’s participation in the Treasury’s TARP Capital
Purchase Program (the “CPP”).  If the Company does not participate or ceases
at any time to participate in the CPP, this letter shall be of no further force
and effect.


 


For the Company to participate in the CPP and as a condition to the
closing of the investment contemplated by the Participation Agreement, the
Company is required to establish specified standards for incentive compensation
to its senior executive officers and to make changes to its compensation
arrangements.  To comply with these
requirements, and in consideration of the benefits that you will receive as a
result of the Company’s participation in the CPP, you agree as follows:


 


(1)                                  No Golden Parachute Payments. 
The Company is prohibiting any golden parachute payment to you during
any “CPP Covered Period.”  A “CPP Covered Period” is any period during which (A) you
are a senior executive officer and (B) Treasury holds an equity or debt
position acquired from the Company in the CPP.


 


(2)                                  Recovery of Bonus and Incentive
Compensation.  Any bonus and incentive compensation paid to
you during a CPP Covered Period is subject to recovery or “clawback” by the
Company if the payments were based on materially inaccurate financial
statements or any other materially inaccurate performance metric criteria.


 


(3)                                  Compensation Program Amendments. 
Each of the Company’s compensation, bonus, incentive and other benefit
plans, arrangements and agreements (including golden parachute, severance and
employment agreements) (collectively, “Benefit Plans”)
with respect to you is hereby amended to the extent necessary to give effect to
provisions (1) and (2).


 


In addition, the Company is required to review its Benefit Plans to
ensure that they do not encourage senior executive officers to take unnecessary
and excessive risks that threaten the value of the Company.  To the extent any such review requires
revisions to any Benefit Plan with respect to you, you and the Company agree to
negotiate such changes promptly and in good faith.


 


(4)                                  Definitions and Interpretation. 
This letter shall be interpreted as follows:


 


·                                                “Senior
executive officer” means the Company’s “senior executive officers” as defined
in subsection 111(b)(3) of EESA.


 

















 


·                                                “Golden
parachute payment” is used with same meaning as in Section 111(b)(2)(C) of
EESA.


 


·                                                “EESA”
means the Emergency Economic Stabilization Act of 2008 as implemented by
guidance or regulation issued by the Department of Treasury and as published in
the Federal Register on October 20, 2008.


 


·                                                The
term “Company” includes any entities treated as a single employer with the
Company under 31 C.F.R. § 30.1(b) (as in effect on the Closing Date).  You are also delivering a waiver pursuant to
the Participation Agreement, and, as between the Company and you, the term “employer”
in that waiver will be deemed to mean the Company as used in this letter.


 


·                                                The
term “CPP Covered Period” shall be limited by, and interpreted in a manner
consistent with, 31 C.F.R. § 30.11 (as in effect on the Closing Date).


 


·                                                Provisions
(1) and (2) of this letter are intended to, and will be interpreted,
administered and construed to, comply with Section 111 of EESA (and, to
the maximum extent consistent with the preceding, to permit operation of the
Benefit Plans in accordance with their terms before giving effect to this
letter).


 


(5)                                  Miscellaneous. 
To the extent not subject to federal law, this letter will be governed
by and construed in accordance with the laws of the State of Illinois.  This letter may be executed in two or more
counterparts, each of which will be deemed to be an original.  A signature transmitted by facsimile will be
deemed an original signature.


 


The Board appreciates the
concessions you are making and looks forward to your continued leadership
during these financially turbulent times.


 


	
   

  	
  Yours sincerely,

  
	
   

  	
   

  	
   

  
	
   

  	
  OLD SECOND BANCORP, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
					



 


Intending to be legally bound, I agree with an


accept the foregoing terms on the date set


forth below


 


 


	
   

  	
   

  
	
  [Insert Executive’s Name]

  	
   

  
	
   

  
	
  Date: January    , 2009

  
	
   

  
	
  cc: [Insert Name], via Hand Delivery