Exhibit 10.3

 

December 11, 2008

 

William C. Gilson
Senior Vice President and Senior Lending Officer
c/o Monadnock Bancorp, Inc.
One Jaffrey Road
Peterborough, New Hampshire 03458

 

Dear Mr. Gilson:

 

      Monadnock Bancorp, Inc. (the "Company") anticipates entering into a
Securities Purchase Agreement (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) either currently or hereinafter in effect and including
all amendments thereto (collectively, "Benefit Plans") with respect to you is
hereby amended to the extent necessary to give effect to provisions (1) and (2).

<PAGE>

William C. Gilson
December 11, 2008
Page 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 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 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 New York. 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.

<PAGE>

William C. Gilson
December 11, 2008
Page 3

 

      

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

Yours sincerely,

     

MONADNOCK BANCORP, INC.

     

By:

/s/ William M. Pierce, Jr.

   

--------------------------------------------------------------------------------

 

Name: William M. Pierce, Jr.

 

Title: President and Chief Executive Officer

   

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

     

/s/ William C. Gilson

 

--------------------------------------------------------------------------------

 

William C. Gilson

 

Date: December 11, 2008

 

<PAGE>

December 11, 2008

 

Donald R. Blanchette
Senior Vice President
c/o Monadnock Bancorp, Inc.
One Jaffrey Road
Peterborough, New Hampshire 03458

 

Dear Mr. Blanchette:

 

      Monadnock Bancorp, Inc. (the "Company") anticipates entering into a
Securities Purchase Agreement (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) either currently or hereinafter in effect and including
all amendments thereto (collectively, "Benefit Plans") with respect to you is
hereby amended to the extent necessary to give effect to provisions (1) and (2).

<PAGE>

Donald R. Blanchette
December 11, 2008
Page 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 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 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 New York. 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.

<PAGE>

Donald R. Blanchette
December 11, 2008
Page 3

 

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

   

Yours sincerely,

     

MONADNOCK BANCORP, INC.

     

By:

/s/ William M. Pierce, Jr.

   

--------------------------------------------------------------------------------

 

Name: William M. Pierce, Jr.

 

Title: President and Chief Executive Officer

   

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

     

/s/ Donald R. Blanchette

 

--------------------------------------------------------------------------------

 

Donald R. Blanchette

 

Date: December 11, 2008

 

<PAGE>

December 11, 2008

 

Karl F. Betz
Senior Vice President, Chief Financial Officer
and Treasurer
c/o Monadnock Bancorp, Inc.
One Jaffrey Road
Peterborough, New Hampshire 03458

 

Dear Mr. Betz:

 

      Monadnock Bancorp, Inc. (the "Company") anticipates entering into a
Securities Purchase Agreement (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) either currently or hereinafter in effect and including
all amendments thereto (collectively, "Benefit Plans") with respect to you is
hereby amended to the extent necessary to give effect to provisions (1) and (2).

<PAGE>

Karl F. Betz
December 11, 2008
Page 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 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 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 New York. 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.

<PAGE>

Karl F. Betz
December 11, 2008
Page 3

 

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

   

Yours sincerely,

     

MONADNOCK BANCORP, INC.

     

By:

/s/ William M. Pierce, Jr.

   

--------------------------------------------------------------------------------

 

Name: William M. Pierce, Jr.

 

Title: President and Chief Executive Officer

   

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

     

/s/ Karl F. Betz

 

--------------------------------------------------------------------------------

 

Karl F. Betz

 

Date: December 11, 2008

 

<PAGE>

December 11, 2008

 

William M. Pierce, Jr.
President and Chief Executive Officer
c/o Monadnock Bancorp, Inc.
One Jaffrey Road
Peterborough, New Hampshire 03458

 

Dear Mr. Pierce:

 

      Monadnock Bancorp, Inc. (the "Company") anticipates entering into a
Securities Purchase Agreement (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) either currently or hereinafter in effect and including
all amendments thereto (collectively, "Benefit Plans") with respect to you is
hereby amended to the extent necessary to give effect to provisions (1) and (2).

<PAGE>

William M. Pierce, Jr.
December 11, 2008
Page 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 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 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 New York. 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.

<PAGE>

William M. Pierce, Jr.
December 11, 2008
Page 3

 

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

   

Yours sincerely,

     

MONADNOCK BANCORP, INC.

     

By:

/s/ Karl F. Betz

   

--------------------------------------------------------------------------------

 

Name: Karl F. Betz

 

Title: Senior Vice President, Chief Financial Officer and Treasurer

   

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

     

/s/ William M. Pierce, Jr.

 

--------------------------------------------------------------------------------

 

William M. Pierce, Jr.

 

Date: December 11, 2008

 

<PAGE>