CENTRAL JERSEY BANCORP LETTERHEAD] December 19, 2008
EXHIBIT
10.5
[CENTRAL
JERSEY BANCORP LETTERHEAD]
December
19, 2008
Xxxxx X.
Xxxxxxx
1903
Highway 35
Oakhurst,
New Jersey 07755
Dear Xx.
Xxxxxxx:
As you know, Central Jersey Bancorp
(the “Company”) anticipates entering into a Securities Purchase Agreement (the
“Participation Agreement”) with the United States Department of Treasury
(“Treasury”) that provides, among other things, for the Company’s participation
in the Treasury’s TARP Capital Purchase Program (“CPP”). In the event
that the Company does not participate or ceases at any time to participate in
the CPP, this letter agreement shall be of no further force or
effect.
In order 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 hereby agree as
follows:
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1.
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No Golden Parachute
Payments. No golden parachute payments will be made by
the Company to you during any “CPP Covered Period.” A “CPP
Covered Period” is any period during which (A) you are a senior executive
officer of the Company, and (B) the Treasury holds an equity or debt
position acquired from the Company in the
CPP.
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2.
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Recovery of Bonus and
Incentive Compensation. Any bonus and/or 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.
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3.
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Compensation Program
Amendments. Each of the Company’s compensation, bonus,
incentive and other benefit plans, arrangements and agreements (including,
but not limited to, golden parachute, severance and employment agreements)
(collectively, “Benefit Plans”) with respect to you is hereby amended
(notwithstanding any contrary language within such Benefit Plans) to the
extent necessary to give effect to provisions (1) and (2)
above.
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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
that 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.
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4.
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Definitions and
Interpretation. This letter agreement shall be
interpreted as follows:
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“Senior
executive officer” means the Company’s “senior executive officers” as defined in
Section 111(b)(3) of EESA.
“Golden
parachute payment” has the 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 that has been issued by the Department of Treasury and is
in effect as of the “Closing Date,” as defined in the Participation
Agreement.
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 agreement.
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 agreement 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
agreement.
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5.
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Miscellaneous. To
the extent not subject to federal law, this letter agreement will be
governed by the laws of the State of New Jersey, without giving effect to
the conflicts of laws provisions thereof. This letter agreement
may be executed in two or more counterparts, each of which shall be deemed
to be an original. A signature transmitted by facsimile will be
deemed to be an original signature.
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Please indicate your acceptance and
agreement to the terms and conditions set forth in this letter agreement by
countersigning same and returning a copy to the Company. The Board of
Directors of the Company appreciates the concessions you are making and looks
forward to your continued leadership.
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Very
truly yours,
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By:
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/s/ Xxxxxx X. Xxxxx
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Name:
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Xxxxxx
X. Xxxxx
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Title:
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Senior
Executive Vice President,
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Chief
Operating Officer and
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Secretary
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Intending
to be legally bound by the terms of this letter agreement, I hereby agree with,
acknowledge the sufficiency of the consideration for, and accept the foregoing
terms as of the date set forth below.
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/s/ Xxxxx X. Xxxxxxx
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Xxxxx
X. Xxxxxxx
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Dated: December
19, 2008
