AMENDED AND RESTATED EMPLOYMENT AGREEMENT
Exhibit 10.3
AMENDED AND RESTATED
This Amended and Restated Agreement (“Agreement”) is made as of the 1st day of January, 2014, 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.
RECITALS
WHEREAS, the Company and Xxxx are parties to an Employment Agreement dated as of December 31, 2003 and as of December , 2008 [sic] (collectively, the “Existing Agreement”), pursuant to which Xxxx serves as the Chairman of the Company; and
WHEREAS, the parties believe that amendment of the Existing Agreement is appropriate
WHEREAS, to accomplish the foregoing, the parties desire to hereby enter into this Agreement to supersede and replace the Existing Agreement.
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 Chairman and Chief Executive Officer of the Company, subject to the supervision and direction of the Board of Directors of the Company. In such capacity, 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 Company’s subsidiary, EagleBank (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 under this Agreement shall commence as of January 1, 2014 (the “Effective Date”) and shall continue until December 31, 2017 (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 Company, 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, 2014, 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, 2018, and on December 31, 2015, 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, 2019.
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 eight hundred-seven thousand and seventy dollars ($807,070) 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) Prior to the Effective Date, the Company has granted Xxxx certain options to purchase shares of the Company’s Common Stock and certain restricted stock awards of the Company’s Common Stock (collectively, “Options”). In the event that Paul’s employment hereunder shall be terminated for any reason, all Options shall vest immediately upon such termination.
(iii) During the period of the Agreement, periodic increases (but not decreases) in the rate of Base Compensation and/or Options 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.
(vi) The Company will pay Xxxx a monthly car allowance of One Thousand Five Hundred Dollars ($1,500.00).
(vii) Xxxx xxx obtain a term life insurance policy (the “Policy”) on Xxxx in the amount of One Million Dollars ($1,000,000.00), the particular product and carrier to be chosen by Xxxx in his discretion. Xxxx shall have the right to designate the beneficiary of the Policy. If the Policy is obtained, Xxxx shall provide the Bank with a copy of the Policy, and the Bank will pay, during the Term of this Agreement, the premiums for the Policy upon submission by Xxxx to the Bank of the invoices therefor. In the event Xxxx is rated and the premium exceeds the standard rate for a One Million Dollar ($1,000,000.00) policy, the Policy amount shall be lowered to the maximum amount that can be purchased at the standard rate for a One Million Dollar ($1,000,000.00) policy. For example, if Xxxx is rated and the standard rate for a One Million Dollar ($1,000,000.00) policy would acquire a Five Hundred Thousand Dollar ($500,000.00) policy, the Bank would only be required to pay the premium for a Five Hundred Thousand Dollar ($500,000.00) policy. If a Policy is obtained and it is cancelled or terminated, Xxxx shall immediately notify the Bank of such cancellation or termination.
The Company may, at its cost, obtain and maintain “key-man” life insurance and/or Company-owned life insurance on Xxxx in such amount as determined by the Board of Directors of the Company from time to time. Xxxx agrees to cooperate fully and to take all actions reasonably required by the Company in connection with such insurance.
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 employees and/or 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 employees and/or 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 Renewed Term, as applicable, by Xxxx under any of the following circumstances:
(i) Upon the failure of the Company or 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 have occurred if:
(A) there shall be consummated any consolidation, merger, share exchange or other transaction relating to the Company, or pursuant to which shares of the Company’s capital stock are converted into cash, securities of another entity and/or other property, other than a transaction in which the holders of the Company’s voting stock immediately before such transaction shall, upon consummation of such transaction, own at least fifty percent (50%) of the voting power of the surviving entity, or (2) any sale of all or substantially all of the assets of the Company, other than a transfer of assets to a related Person which is not treated as a change in control event under §1.409A-3(i)(5)(vii)(B) of the U.S. Treasury Regulations;
(B) any person, entity or group (each within the meaning of Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) shall become the beneficial owner (within the meaning of Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of securities of the Company representing more than fifty percent (50%) of the voting power of all outstanding securities of the Company entitled to vote generally in the election of directors of the Company (including, without limitation, any securities of the Company that any such Person has the right to acquire pursuant to any agreement, or upon exercise of conversion rights, warrants or options, or otherwise, which shall be deemed beneficially owned by such Person); or
(C) over a twelve (12) month period, a majority of the members of the Board of Directors of the Company are replaced by directors whose appointment or election was not endorsed by a majority of the members of the Board of Directors of the Company in office prior to such appointment or election.
Notwithstanding the foregoing, if the event purportedly constituting a Change in Control under Section 6(b)(ii)(A), (B) or C) does not also constitute a “change in ownership” of the Company, a “change in effective control” of the Company, or a “change in the ownership of a substantial portion of the assets” of the Company within the meaning of Section 409A, then such event shall not constitute a “Change in Control” hereunder.
(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, any Options that were awarded to him and any other amounts due hereunder to the date of such termination, a lump-sum cash payment (the “Change Payment”) equal to 1.99 times the rate of Base Compensation and Option Compensation (as defined below) that was payable to Xxxx for the twelve full calendar months immediately preceding the date of termination. For purposes of this provision, the amount of “Option Consideration” for any twelve (12)-month period shall be the value of (A) all Options that the Company granted to Xxxx during that period, with value to be determined by the Company’s’ regularly retained accounting firm, applying the Black-Scholes formula consistent with past practice, together with (B) all cash bonuses (incentive and discretionary).
(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.
Notwithstanding anything to the contrary in this Section 6(c), any payment pursuant to this Section shall be subject to (i) any delay in payment required by Section 7(b((ii) hereof and (ii) any reduction required pursuant to Section 7(c)(ii) hereof, as applicable.
7. Compliance with Certain Restrictions.
(a) Certain Defined Terms. For purposes of this Agreement, the following terms are defined as follows:
(i) “Additional 280G Payments” means any distributions in the nature of compensation by the Company or any Affiliate to or for the benefit of Xxxx (including, but not limited to, the value of acceleration in vesting in restricted stock, options or any other stock-based compensation), whether or not paid or payable or distributed or distributable pursuant to this Agreement, which is required to be taken into consideration in applying Section 280G(b)(2)(A) of the Code;
(ii) “Applicable Severance” means Paul’s severance from employment by reason of involuntary termination by the Company or in connection with any bankruptcy, liquidation or receivership of the Company or any other entity that is treated as the same employer under EESA, in each case as determined under the regulations implementing Section 111(b) of EESA;
(iii) Authorities Period” means the period under which the authorities of Section 101 of EESA are in effect, as determined pursuant to Section 120 thereof;
(iv) “Determining Firm” means a reputable law or accounting firm selected by the Bank to make a determination pursuant to this Article 7;
(v) “EESA” means the Emergency Economic Stabilization Act of 2008, Public Law 110-343, as implemented by any guidance or regulations thereunder;
(vi) “Incentive Compensation” means all bonus and other incentive-based compensation, as those terms are applied under EESA including but not limited to Option Consideration;
(vii) “Parachute Payment” is defined as set forth in Section 280G(b)(2) of the Code, with amounts payable during the Authorities Period upon Applicable Severance being specifically included in applying such provision;
(viii) “Total Change in Control Payments” means the total amount of the Change Payment together with all Additional 280G Payments that are required to be paid because of a Change in Control; and
(ix) “Total Severance Payments” means the total amount of payments, including Additional 280G Payments, that are required to be paid to Xxxx but that would not have been payable to him if no Applicable Severance had occurred.
(b) Compliance with Section 280G.
(i) Notwithstanding anything in this Agreement to the contrary, if any amount becomes payable to Xxxx because of an Applicable Severance and (ii) the Determining Firm determines that any portion of the Total Severance Payments would otherwise constitute a Parachute Payment, the amount payable to Xxxx shall automatically be reduced by the smallest amount necessary so that no portion of the Total Severance Payments will be a Parachute Payment. . If Total Severance Payments are to be paid in other than a lump sum, such reduction shall be applied in such order as Xxxx designates, subject to the approval of Bank, not to be unreasonably withheld, conditioned or delayed. If, despite the foregoing sentence, a payment shall be made to Xxxx that would constitute a Parachute Payment, Xxxx shall have no right to retain such payment, and, immediately upon being informed of the impropriety of such payment, Xxxx shall return such payment to the Company, the Bank or any other affiliate that was the payer thereof, together with interest at the applicable federal rate determined pursuant to Section 1274(d) of the Code.
(ii) Notwithstanding anything in this Agreement to the contrary, other than Section 10.2(a) above, if the Determining Firm determines that any portion of the Total Change in Control Payments would otherwise constitute a Parachute Payment, the amount payable to Xxxx shall automatically be reduced by the smallest amount necessary so that no portion of the Total Change in Control Payments will be a Parachute Payment. If Total Change in Control Payments are to be paid in other than a lump sum, such reduction shall be applied in such order as Xxxx designates, subject to the approval of Bank, not to be unreasonably withheld, conditioned or delayed. If, despite the foregoing sentence, a payment shall be made to Xxxx that would constitute a Parachute Payment, Xxxx shall have no right to retain such payment and, immediately upon being informed of the impropriety of such payment, Xxxx shall return such payment to the Company, the Bank or any other affiliate that was the payer thereof,, together with interest at the applicable federal rate determined pursuant to Section 1274(d) of the Code.
(c) Compliance with Section 409A.
(i) It is the intention of the parties hereto that this Agreement and the payments provided for hereunder shall not be subject to, or shall be in accordance with, Section 409A, and thus avoid the imposition of any tax and interest on Xxxx pursuant to Section 409A(a)(1)(B) of the Code, and this Agreement shall be interpreted and construed consistent with this intent. Xxxx acknowledges and agrees that he shall be solely responsible for the payment of any tax or penalty which may be imposed or to which he may become subject as a result of the payment of any amounts under this Agreement.
(ii) Notwithstanding any provision of this Agreement to the contrary, if Xxxx is a “specified employee” at the time of his “separation from service”, any payment of “nonqualified deferred compensation” (in each case as determined pursuant to Section 409A) that is otherwise to be paid to Xxxx within six (6) months following his separation from service, then to the extent that such payment would otherwise be subject to interest and additional tax under Section 409A(a)(1)(B) of the Code, such payment shall be delayed and shall be paid on the first business day of the seventh calendar month following Paul’s separation from service, or, if earlier, upon Paul’s death. Any deferral of payments pursuant to the foregoing sentence shall have no effect on any payments that are scheduled to be paid more than six (6) months after the date of separation from service.
(iii) The parties hereto agree that they shall take such actions as may be necessary and permissible under applicable law, regulation and guidance to amend or revise this Agreement in order to ensure that Section 409A(a)(1)(B) does not impose any additional tax and interest on payments made pursuant to this Agreement.
(d) Clawback if Material Inaccuracy. If any Incentive Compensation that is paid to Xxxx by the Company, the Bank or any other Affiliate while the U.S. Treasury holds any equity securities in the Company is based on any materially inaccurate financial statement or other materially inaccurate performance metric criteria, as those terms are applied under EESA, Xxxx shall be required to disgorge and pay over to the Company, the Bank or the other Affiliate that was the payer thereof, all such Incentive Compensation, together with interest at the applicable federal rate determined pursuant to Section 1274(d) of the Code.
8. 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. 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.
9. 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.
10. 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.
11. 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.
12. 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 the Existing Agreement, except that Xxxx shall remain entitled to receive any compensation earned but not yet paid thereunder.
13. 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.
14. 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.
15. 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.
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Eagle Bancorp, Inc. | |
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Xxxxxx X. Xxxx | |
