Exhibit 10.4
EMPLOYMENT AGREEMENT
This Agreement. made as of this 31st day of December, 2003, between
Eagle Bancorp, Inc., a Maryland corporation (the "Company") having its principal
executive offices at 0000 Xxxxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxx 00000, and Xxxxxx
X. Xxxx ("Xxxx"), an individual maintaining an office at 0000 Xxxx Xxxx Xxxxxxx,
Xxxxxxxx, Xxxxxxxx 00000.
WHEREAS, Xxxx has extensive business and organizational knowledge,
judgment, skills, acumen, experience and expertise, particularly in connection
with the conduct of the business of managing and operating banking institutions,
which knowledge, judgment, experience, acumen and expertise would be of
significant benefit to the Company and its wholly owned subsidiary, EagleBank
(the "Bank"); and
WHEREAS, the Company desires to obtain the benefit of Paul's knowledge,
judgment, experience, acumen and expertise; and
WHEREAS, the Company desires to continue to receive the benefit of
Paul's services in the future, and to induce Xxxx to continue to provide such
services, and to retain Xxxx as an employee in accordance with the terms and
conditions of this Agreement; and
WHEREAS, Xxxx desires to be employed by and to continue to provide such
services to the Company. In accordance with such terms and conditions;
NOW, THEREFORE, in consideration of the premises and the mutual
promises and covenants contained herein, and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, and
intending to be legally bound hereby, the parties hereto agree as follows:
1. Employment. The Company hereby employs Xxxx, and Xxxx hereby accepts
employment, as President of the Company, subject to the supervision and
direction of the Board of Directors of the Company. As President of the Company,
Xxxx shall provide such services and perform such duties, functions and
assignments as are normally incident to such office, and such additional
functions and services as the Board of Directors may from time to time direct
(including temporary service as interim President of the Bank). Subject to his
continued nomination and election as such, Xxxx shall serve as Chairman of the
Board of the Bank and Board member of the Company. Notwithstanding anything to
the contrary contained herein, Paul's service as a director of the Company and
the Bank shall be subject to his election as such by the shareholders of the
Company and the Bank, as the case may be, and Paul's service as Chairman of the
Board of Directors of the Bank be subject to his election as such by the Board
of Directors of the Company, and nothing contained herein shall constitute any
agreement, understanding or commitment of the Company to nominate, appoint or
elect Xxxx, or cause Xxxx to be nominated appointed or elected to the Board of
Directors of the Company or the Bank.
2. Term. (a) The initial term of Paul's employment hereunder shall
commence as of December 31, 2003 (the "Effective Date") and shall continue until
December 31, 2006 (the "Initial Term") Upon, each anniversary of the
commencement of the Initial Term, unless (i) the employment contemplated hereby
is earlier terminated in accordance with the provisions of Section 6 hereof, or
(ii) Xxxx shall have provided written notice to the other party, not less than
60 days prior to the anniversary date, of Paul's desire to terminate this
Agreement upon expiration of the Initial Term or such Renewed Term, as
appropriate, this Agreement shall automatically be extended for an additional
period of one year (each a "Renewed Term"). For example and for illustrative
purposes only, on December 31, 2004, absent termination or notice of termination
as provided above, the term of this Agreement shall automatically be extended
for one year, and the Renewed Term of this Agreement shall continue until
December 31, 2007, and on December 31, 2005, absent termination or notice of
termination as provided above, the term of this Agreement shall automatically be
extended for one year, and the Renewed term of this Agreement shall continue
until December 31, 2008.
3. Compensation. (i) As compensation for Paul's employment hereunder,
Xxxx shall be entitled to base cash compensation ("Base Compensation") from the
Company at a rate of $90,000 per calendar year, payable in monthly installments,
or such other installments as the Company and Xxxx xxx agree upon, and shall be
subject to deduction
and withholding of all necessary social security, medicare, income and
withholding taxes, and any other sums required by law or authorized by Xxxx.
Notwithstanding the foregoing, the Base Compensation payable by the Company
hereunder in any year shall be reduced by the amount paid to Xxxx by the Bank
(or any successor thereto) as compensation for services rendered to the Bank.
(ii) On the Effective Date of this Agreement, Xxxx shall be entitled to
receive options to purchase 24,000 shares of the Company's Common Stock (the
"Option Compensation"). Such options shall have an exercise price equal to the
fair market value of the common stock as of such date, and a term of ten years
Such options shall vest as follows:
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Date Number of Options
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December 31, 2003 The number of options to purchase whole shares having an
aggregate exercise price equal to, as close as possible and not
in excess of, $40,000
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January 15, 2004 The number of options to purchase whole shares having an
aggregate exercise price equal to, as close as possible and not
in excess of, $100,000
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January 15, 2005 The number of options to purchase whole shares having an
aggregate exercise price equal to, as close as possible and not
in excess of, $100,000
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January 15, 2006 The number of options to purchase whole shares having an
aggregate exercise price equal to, as close as possible and not
in excess of, $100,000
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January 15, 2007 All remaining options
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Notwithstanding the foregoing, in the event that Paul's employment hereunder
shall be terminated for any reason, including death or disability, all options
shall vest immediately upon such termination. To the extent permitted by
applicable law and available for issuance under the Company's 1998 Stock Option
Plan, or successor plan, such options shall be incentive stock options. If Xxxx
shall not be eligible to receive incentive stock options upon such terms with
respect to all or any portion of the options to which he shall be entitled, or
if sufficient incentive options are not available for issuance, such options
shall be nonincentive options.
(iii) During the period of the Agreement, periodic increases (but not
decreases) in the rate of Base Compensation and/or Option Compensation hereunder
may be made by the independent members of the Board of Directors of the Company
(as determined in accordance with applicable law, regulation and rules of the
Nasdaq Stock Market or other market or exchange on which the Company's
securities trade) or a committee of the Board of Directors of the Company
consisting solely of independent members.
(iv) Xxxx shall be entitled to receive such incentive or bonus
compensation as the Board of Directors of the Company may in its sole discretion
determine.
(v) During the term of this Agreement, and following the termination of
this Agreement during any period where payments hereunder are being made to Xxxx
(or with respect to which a lump sum payment has been made to Xxxx), Xxxx shall
not be entitled to receive any fees, payments or other compensation, whether in
cash or otherwise, for service as a member (including as Chairman or Vice
Chairman) of the Board of Directors of the Company, the Bank or other subsidiary
of the Company or Bank, if any, or for service on any committee of the Board of
Directors of the Company, the Bank or other subsidiary of the Company or Bank,
if any.
4. Benefits and Expenses.
(a) Xxxx shall be entitled to participate in and receive all fringe
benefit programs and plans, if any as are generally available to directors of
the Company and the Bank.
(b) Xxxx is authorized to incur reasonable expenses for conducting and
promoting the business and activities
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of the Company and the Bank, including expenses for travel, business
entertainment and similar expenses in accordance with the policies of the
Company and the Bank regarding the reimbursement of expenses applicable to
directors of the Company and the Bank generally, as such policies may from time
to time exist.
(c) Xxxx shall be entitled to the use of his current office located in
the building in which the principal executive offices of the Company are
located, together with such secretarial and other office support services as he
may reasonably require.
5. Outside Activities. Xxxx shall devote his best efforts to the
performance of his duties hereunder and shall commit and make available
sufficient time to provide the services reasonably requested by the Company and
the Bank in a timely manner. However, nothing contained herein shall be
construed to prohibit Xxxx from engaging in any other full or part-time
employment, or any consulting or independent contractor arrangement or any other
occupation, whether or not for remuneration, provided, however, that no such
outside activity shall be in competition with the activities of the Company or
the Bank, or be otherwise detrimental or adverse to the business.
competitiveness, operations, or image of the Company or the Bank.
6. Termination.
(a) This Agreement may be terminated prior to the end of the Initial
Term or any Renewed Term, as applicable, by the Company under any of the
following circumstances:
(i) Upon the death of Xxxx;
(ii) Upon the inability of Xxxx to perform all of his duties
hereunder by reason of illness, physical, mental or emotional
disability or other incapacity, which inability shall continue
for more than three (3) successive months or six (6) months in
the aggregate during any period of twelve (12) consecutive
months;
(iii) For cause, defined as: the failure of Xxxx (other than
for reasons described in Section 6(a)(ii)) to perform or
observe and comply with any material term or provision of this
Agreement; any significant misconduct on the part of Xxxx that
is materially damaging or detrimental to the Company and the
Bank, as determined by the Board of Directors of the Company,
Xxxx not participating, in the exercise of its good faith
judgment; conviction after final appeal of a crime involving a
felony, fraud, embezzlement or the like; or any breach of
fiduciary duty involving personal profit or misappropriation
of the funds or property of the Company or the Bank; or
(iv) Upon the failure of Xxxx to be reelected as a director
of either the Company or the Bank by the respective
stockholders of the Company and the Bank, except following a
"Change in Control" (as defined in Section 6(b)) of the
Company or the Bank.
(b) This Agreement may be terminated prior to the end of the Initial
Term or any Renewal Term, as applicable, by Xxxx under any of the following
circumstances:
(i) Upon the failure of the Company and the Bank to comply
with any material term or provision of this Agreement;
(ii) Upon the failure of Xxxx to be reelected or nominated for
reelection as a director of the Company or the Bank, or any
successor to the Bank, following a Change in Control of the
Company or the Bank, and/or the voluntary resignation of Xxxx
as a director of the Company and the Bank following a Change
in Control of the Company or the Bank. For purposes hereof, a
"Change in Control" shall be deemed to occur in the following
circumstances: (1) upon consummation of a merger or
consolidation of the Company or the Bank, or a sale of all or
substantially all of the assets of the Company or the Bank
following which the stockholders of the Company immediately
preceding such consummation, in the aggregate, own less than
50% of the aggregate number of votes entitled to be cast in
the election of directors of the surviving entity
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resulting from such transaction; (ii) upon any "person" (as
that term is used for purposes of Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934 (the "Exchange Act")) or
persons acting as a "group" (as that term is used for purposes
of Section 13(d) of the Exchange Act) or otherwise "acting in
concert" (as that term is used for purposes of the federal
Change in Bank Control Act) becoming the direct or indirect
"beneficial owner" (as that term is used for purposes of
Section 13(d) of the Exchange Act) of 51% or more of the
outstanding shares of capital stock of the Company; or (iii)
if individuals who are members of the Board of Directors of
the Company as of the date hereof (the "Incumbent Board")
cease, for any reason, to constitute at least a majority of
the Board of Directors, provided that any person who becomes a
member of the Board of Directors of the Company and whose
nomination, election or appointment as a director was approved
by at least two thirds of the directors comprising the
Incumbent Board, or by a nominating committee of the Board of
Directors, the membership of which was approved by at least
two thirds of the directors comprising the Incumbent Board,
shall, for purposes of this subclause (iii) be considered as a
member of the Incumbent Board.
(c) (i) Upon any termination of this agreement pursuant to Section
6(a)(i), 6(a)(ii). 6(a)(iv), 6(b)(i) or 6(b)(ii), Xxxx, or his
estate, shall be entitled to receive, in addition to the Base
Compensation and Option Compensation and any other amounts due
hereunder to the date of such termination, in a lump sum or in
periodic payments in accordance with the provisions hereof, at
the election of Xxxx or his estate, an amount, in cash, equal
to 2.99 times the rate of Base Compensation and Option
Compensation in effect at the date of termination.
(ii) Upon any termination of this agreement pursuant to
Section 6(a)(iii), Xxxx shall be entitled to receive only the
Compensation and any other amounts due hereunder to the date
of such termination.
(d) Notwithstanding anything in this Agreement to the contrary, if any
of the payments provided for under this Agreement (the "Agreement Payments"),
together with any other payments that Xxxx has the right to receive (such other
payments together with the Agreement Payments are referred to as the "Total
Payments"), would constitute a "parachute payment" as defined in Section
280G(b)(2) of the Internal Revenue Code of 1986, as amended (the "Code") (a
"Parachute Payment"), the Agreement Payments shall be reduced by the smallest
amount necessary so that no portion of such Total Payments would be Parachute
Payments. In the event the Company shall make an Agreement Payment to Xxxx or
his estate that would constitute a Parachute Payment, Xxxx or his estate, as
applicable, shall return such payment to the Company (together with interest at
the rate set forth in Section 1274(b)(2)(B) of the Code). For purposes of
determining whether and the extent to which the Total Payments constitute
Parachute Payments, no portion of the Total Payments the receipt of which Xxxx
has effectively waived in writing shall be taken into account.
7. Notice. Each notice, demand, request, consent, report, approval or
communication ("Notice") which is or may be required to be given under this
Agreement by any party to any other party shall be in writing and given by
telex, telecopy, personal delivery, receipted delivery service, or by certified
mail, return receipt requested, prepaid and properly addressed to the party to
be served at the addresses first set forth above. A copy of each Notice to Xx.
Xxxx shall be sent to Xxxx Xxxxxx, Esq., Xxxxxxxx Xxxxxx, 00000 Xxxxxxxxx Xxxx,
Xxxxxxxxx, Xxxxxxxx 00000. Notices shall be effective on the date sent via telex
or telecopy, the date delivered personally or by receipted delivery service, or
three (3) days after the date mailed. Each party may designate, by Notice in
writing to the other party, a new address to which any Notice may thereafter be
given, delivered or sent.
8. Action of the Company. Every decision, determination, agreement or
other action required to be taken by the Company, and every Notice which may or
is required to be given to the Company, shall be taken by or given to, the Board
of Directors of the Company, or such individual member or committee of members
as the Board of Directors may designate in writing.
9. Waiver of Breach. The waiver by either party of a breach of any
provision of this Agreement by the other shall not operate or be construed as a
waiver of any subsequent breach.
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10. Assignment. The rights and obligations of the Company under this
Agreement shall inure to the benefit of and shall be binding upon the successors
and assigns of the Company, but the rights and obligations of Xxxx are personal
and may not be assigned or delegated without the Company's prior written
consent.
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11. Entire Agreement. This Agreement contains the entire agreement of
the parties with respect to tile subject matter hereof. It may not be changed
orally, but only by an agreement in writing executed by the party against whom
enforcement of any waiver, change, modification, extension or discharge is
sought. Not in limitation of the foregoing, this Agreement supersedes and
replaces that Employment Agreement between the Company and Xxxx dated as of
January 1, 2001, which is hereby terminated, except that Xxxx shall be entitled
to receive the December 2003 grant of Option Compensation thereunder.
12. Applicable Law. This Agreement and all covenants contained herein,
shall be governed in all respects, whether as to validity, construction,
capacity, performance or otherwise, by the laws of the State of Maryland. In the
event any provision of this Agreement shall be held invalid by a court with
jurisdiction over the parties to this Agreement, such provision shall be deleted
from the Agreement, which shall then be construed to give effect to the
remaining provisions thereof.
13. Paragraph Headings. The paragraph headings contained in this
Agreement are for convenience only and in no manner shall be construed as part
of this Agreement.
14. Counterparts. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
Eagle Bancorp, Inc.
By:
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Xxxxxxx X. Xxxx, Chairman
Xxxxxx X. Xxxx
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