EXHIBIT 10.4
EMPLOYMENT AGREEMENT
This Agreement. made as of this 1st day of January, 2001, 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 Xxxxxxxxx Xxxx,
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.
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 and/or the Company 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 January 1, 2001and shall continue until December 31, 2003 (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
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 January 1, 2002,
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, 2004, and on January 1, 2003,
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, 2005.
3. Compensation. (i) As compensation for Paul's employment hereunder,
Xxxx shall be entitled to base cash
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compensation ("Base Compensation") from the Company at a rate of $50,000 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. The parties hereto
acknowledge and agree that it is anticipated that during the Initial Term, the
Bank will pay Xxxx $25,000 per year, but the failure of the Bank to pay Xxxx any
or all of such amount shall not relieve the Company of the obligation to make
any payment hereunder.
(ii) During the term of this Agreement, Xxxx shall be entitled to
receive on the last business day of each March, June, September and December
(each an "Option Compensation Date"), options to purchase the number of shares
of the Company's Common Stock determined by dividing $6,250 by the fair market
value of the common stock as of the close of business on such day (the "Option
Compensation"). 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, and a term of ten years. 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 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 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.
(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 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
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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 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
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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 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.
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
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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: _________________________
Xxxxxxx X. Xxxx, Chairman
Xxxxxx X. Xxxx
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