Exhibit 10.5
CHAIRMAN'S FEE AGREEMENT
This Chairman's Fee 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 Xxxxxxx X. Xxxx ("Xxxx"), an individual maintaining an office address
at 0000 Xxxxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxx 00000.
WHEREAS, Xxxx'x service as Chairman of the Board of Directors of the
Company and member of the Board of Directors of the Company's wholly owned
subsidiary, EagleBank (the "Bank") involves a more substantial commitment of
time and effort, than would ordinarily be required as a member of the Board of
Directors, and such service is valuable to the Company as a result of Xxxx'x
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; and
WHEREAS, the Company desires to continue to receive the benefit of
Xxxx'x service in the future, and to induce Xxxx to continue to serve as
Chairman of the Board of Directors of the Company and a member of the Board of
Directors of the Bank, in accordance with the terms and conditions of this
Agreement; and
WHEREAS, Xxxx desires to continue to serve in such capacities, 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. Xxxx hereby agrees to serve as Chairman of the Board of Directors of
the Company and Board member of the Bank. Notwithstanding anything to the
contrary contained herein, Xxxx'x 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 Xxxx'x service as Chairman of the Board of
Directors of the Company shall 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. The termination of Xxxx'x service as
Chairman of the Board of Directors, whether through his failure to be reelected,
declination to stand for reelection or otherwise, shall not constitute a breach
by Xxxx of his obligations under this agreement, or give rise to a right of
termination by Company, so long as Xxxx is a member of the Board of Directors of
the Company and/or the Bank.
2. Term. The initial term of Xxxx'x service 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) this agreement 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 Xxxx'x 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 Xxxx'x services hereunder, the
Company shall pay Xxxx a fee of $48,000 per year (the "Compensation"). 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.
(ii) On the Effective Date of this Agreement, Xxxx shall be entitled to
receive options to purchase six thousand (6,000) shares of the Company's Common
Stock. Such options shall be immediately vested in full, shall have an exercise
price equal to the fair market value of the common stock as of such date (as
determined in accordance with Company's 1998 Stock Option Plan), and a term of
ten years.
(iii) During the period of the Agreement periodic increases (but not
decreases) may be made by the Board of Directors of the Company on the
recommendation of the Benefits Committee of the Company or comparable Bank
committee serving such purpose for the Company (or if required by applicable
law, regulation or rules or listing requirements of The Nasdaq Stock Market or
other market or exchange on which the Company's securities trade, a committee of
independent member of the Board of Directors of the Company, or the independent
members of the Board of Directors of the Company). The Compensation shall be
paid in equal monthly installments, or such other installments as the Company
and Xxxx shall agree upon. Notwithstanding the foregoing, the 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).
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 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 required by such positions 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
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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 resulting
from such transaction; (2) 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 (3) 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 (3) 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
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 equal to 2.99 times the rate of
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
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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 tile party to
be served at the addresses first set forth above. 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.
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.
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 Consulting Agreement dated as of January 1, 2001 between the
Company and Xxxx, which is hereby terminated.
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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Xxxxxx X. Xxxx, President
Xxxxxxx X. Xxxx
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