Exhibit 10.3

 

AMENDED AND RESTATED

EMPLOYMENT AGREEMENT

 

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 7815 Woodmont Avenue,
Bethesda, Maryland 20814, and Ronald D. Paul (“Paul”), an individual maintaining
an office at 4416 East West Highway, Bethesda, Maryland 20814.

 

RECITALS

 

WHEREAS, the Company and Paul  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 Paul 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 Paul, and Paul 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, Paul 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, Paul 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 Paul,
or cause Paul 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) Paul 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, Paul 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 Paul may 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 Paul.

 

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Notwithstanding the foregoing, the Base Compensation payable by the Company
hereunder in any year shall be reduced by the amount paid to Paul 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 Paul 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)                              Paul 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 Paul (or with respect to which a lump sum payment
has been made to Paul), Paul 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 Paul a monthly car
allowance of One Thousand Five Hundred Dollars ($1,500.00).

 

(vii)                           Paul may obtain a term life insurance policy
(the “Policy”) on Paul in the amount of One Million Dollars ($1,000,000.00), the
particular product and carrier to be chosen by Paul in his discretion.  Paul
shall have the right to designate the beneficiary of the Policy.  If the Policy
is obtained, Paul 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 Paul to the Bank of the invoices therefor.  In the event Paul 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 Paul 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, Paul 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 Paul in such amount as determined by the
Board of Directors of the Company from time to time. Paul agrees to cooperate
fully and to take all actions reasonably required by the Company in connection
with such insurance.

 

4. Benefits and Expenses.

 

(a) Paul 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) Paul 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) Paul shall be entitled to the use of his current office located in the
building in which the principal

 

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executive offices of the Company are located, together with such secretarial and
other office support services as he may reasonably require.

 

5. Outside Activities.  Paul 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
Paul 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 Paul;

 

(ii)                                Upon the inability of Paul 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 Paul
(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 Paul that is materially damaging or detrimental to the
Company and the Bank, as determined by the Board of Directors of the Company,
Paul 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 Paul 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 Paul 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 Paul 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 Paul 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;

 

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(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), Paul, 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
Paul 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 Paul 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), Paul 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 Paul (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;

 

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(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 Paul 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 Paul 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 Paul 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 Paul 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 Paul
that would constitute a Parachute Payment, Paul shall have no right to retain
such payment, and, immediately upon being informed of the impropriety of such
payment, Paul 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 Paul 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 Paul 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 Paul that would
constitute a Parachute Payment, Paul shall have no right to retain such payment
and, immediately upon being informed of the impropriety of such payment, Paul
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.

 

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(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 Paul pursuant to Section 409A(a)(1)(B) of
the Code, and this Agreement shall be interpreted and construed consistent with
this intent.  Paul 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 Paul 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 Paul 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 Paul 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, Paul 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 Paul are personal and
may not be assigned or delegated without the Company’s prior written consent.

 

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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 Paul 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.

 

 

Eagle Bancorp, Inc.

 

 

 

 

 

By:

 

 

 

 

 

 

 

 

 

Ronald D. Paul

 

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