COMPANY LETTERHEAD]
Exhibit
10.3
[COMPANY
LETTERHEAD]
| December ___, 2008 |
[Officer
Name]
0000
Xxxxx 000 Xxxxx
Cranbury,
NJ 08512
| RE: | Letter Agreement Required to Effect Terms of | |
| Treasury’s TARP Capital Purchase Program |
Dear
[Officer],
As you
know, 1st
Constitution Bancorp (the “Company,” as further defined below) has entered into
a Securities Purchase Agreement, dated December 23, 2008 (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 (“CPP”).
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, to make changes to its compensation arrangements,
and to obtain your agreement to those changes that apply to you and that
restrict certain related rights. 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, by your signature in the space provided at the end of
this letter agreement, you agree to the following:
(1) No Golden Parachute
Payments. The Company will not make, and you shall not be
entitled to, any golden parachute payments 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) Treasury holds an equity
or debt position acquired from the Company in the CPP.
(2) 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, and you agree to such recovery or clawback, 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, 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, and you agree to each
such amendment.
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 hereby agree that the Benefit Plan shall be amended as required,
which amendment may have retroactive effect, and to execute any such additional
documents as the Company deems necessary or useful to reflect or acknowledge
such amendment.
(4) Waiver of Rights and
Release. You agree to deliver to a written waiver in the form
attached to the Participation Agreement releasing the investor from any claims
that you may otherwise have as a result of the issuance of the regulations that
require the modifications covered by this letter agreement.
(5) Definitions and
Interpretation. This letter agreement 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” has the same meaning as in Subsection 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 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.
2
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.
This
letter agreement will be governed by the laws of the State of New Jersey, except
to the extent that federal law controls.
The
Company’s Board of Directors appreciates the concessions you are making and
looks forward to your continued leadership.
| Very truly yours, | |||
| 1st Constitution Bancorp | |||
|
|
By:
|
||
| Name: | |||
| Title: | |||
Intending
to be legally bound, I hereby
agree
with, acknowledge the sufficiency
of
consideration for, and accept, the
foregoing
terms.
______________________________
[Officer
Name]
Dated:
December ___, 2008
3
