EXHIBIT 10.3

December 12, 2008

[Insert Name and Address]

[Insert Name]:

HopFed Bancorp, Inc. (the “Company”) anticipates entering into a Securities
Purchase Agreement (the “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
(“Letter Agreement”) 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 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). For reference, certain affected Benefit Plans are set
forth in Appendix A to this letter. 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 the 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 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 Louisiana.
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 Company’s Board of Directors appreciates the concessions you are making and
looks forward to your continued leadership during these financially turbulent
times.

 

Yours sincerely, HOPFED BANCORP, INC. By:  

 

Name:   Gilbert E. Lee Title:   Chairman of the Board

Intending to be legally bound, I agree with and accept the foregoing terms on
the date set forth below.

 

 

[Insert Name] Date: