Exhibit 10.2

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (“Agreement”) is made and entered into as of the 1st
day of September, 2011, by and between EagleBank, a Maryland chartered
commercial bank (the “Bank”), and Thomas D. Murphy (“Murphy”).

 

RECITALS:

 

WHEREAS, the Bank and Murphy are parties to an Amended and Restated Employment
Agreement dated December 2, 2008 (the “Prior Agreement”), pursuant to which
Murphy has served as the Bank’s President of Community Banking (formerly
President — Montgomery County Region); and

 

WHEREAS, the Prior Agreement, by its terms, terminated on August 31, 2011; and

 

WHEREAS, the Bank continues to employ Murphy; and

 

WHEREAS, the parties desire to hereby enter into this Agreement with respect to
Murphy’s continued employment by the Bank.

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants and
agreements set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and intending to be
legally bound hereby, the parties hereto agree as follows:

 

1.                                       Employment.  The Bank agrees to employ
Murphy, and Murphy agrees to be employed as the Bank’s President of Community
Banking, subject to the terms and provisions of this Agreement.

 

2.                                       Certain Definitions.  As used in this
Agreement, the following terms have the meanings set forth below:

 

2.1                                 “Affiliate” means, with respect to any
Person, (i) any Person directly or indirectly controlling, controlled by or
under common control with such Person, (ii) any Person owning or controlling
fifty percent (50%) or more of the outstanding voting interests of such Person,
(iii) any officer, director, general partner, managing member, or trustee of, or
Person serving in a similar capacity with respect to, such Person, or (iv) any
Person who is an officer, director, general partner, member, trustee, or holder
of fifty percent (50%) or more of the voting interests of any Person described
in clauses (i), (ii), or (iii) of this sentence. For purposes of this
definition, the terms “controlling,” “controlled by,” or “under common control
with” shall mean the possession, direct or indirect, of the power to direct or
cause the direction of the management and policies of a Person, whether through
the ownership of voting securities, by contract or otherwise.

 

2.2                                 “Bancorp” means Eagle Bancorp, Inc., a
Maryland corporation.

 

2.3                                 “Bank” is defined in the Recitals.  If the
Bank is merged into any other Entity, or transfers substantially all of its
business operations or assets to another Entity, the term “Bank” shall be deemed
to include such successor Entity for purposes of applying Article 8 of this
Agreement.

 

2.4                                 “Bank Entities” means and includes any of
the Bank, Bancorp and their Affiliates.

 

2.5                                 “Bank Regulatory Agency” means any
governmental authority, regulatory agency, ministry, department, statutory
corporation, central bank or other body of the United States or of any other
country or of any state or other political subdivision of any of them having
jurisdiction over the Bank or any transaction contemplated, undertaken or
proposed to be undertaken by the Bank, including, but not necessarily be limited
to:

 

(a)                                  the Federal Deposit Insurance Corporation
or any other federal or state depository insurance organization or fund;

 

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(b)                                 the Federal Reserve System, the Maryland
Division of Financial Institutions, or any other federal or state bank
regulatory or commissioner’s office;

 

(c)                                  any Person established, organized, owned
(in whole or in part) or controlled by any of the foregoing; and

 

(d)                                 any predecessor, successor or assignee of
any of the foregoing.

 

2.6                                 “Board” means the Board of Directors of the
Bank.

 

2.7                                 “Code” means the Internal Revenue Code of
1986, as amended.

 

2.8                                 “Competitive Business” means the banking and
financial services business, which includes, without limitation, consumer
savings, commercial banking, the insurance and trust business, the savings and
loan business and mortgage lending, or any other business in which any of the
Bank Entities is engaged or has invested significant resources within the prior
six (6) month period in preparation for becoming actively engaged.

 

2.9                                 “Competitive Products or Services” means, as
of any time, those products or services of the type that any of the Bank
Entities is providing, or is actively preparing to provide, to its customers.

 

2.10                           “Disability” means a mental or physical condition
which, in the good faith opinion of the Board, renders Murphy, with reasonable
accommodation, unable or incompetent to carry out the material job
responsibilities which Murphy held or the material duties to which Murphy was
assigned at the time the disability was incurred, which has existed for at least
three (3) months and which in the opinion of a physician mutually agreed upon by
the Bank and Murphy (provided that neither party shall unreasonably withhold
such agreement) is expected to be permanent or to last for an indefinite
duration or a duration in excess of nine (9) months.

 

2.11                           “Expiration Date” means August 31, 2014.

 

2.12                           “Person” means any individual or Entity.

 

2.13                           “Section 409A” means Section 409A of the Code and
the regulations and administrative guidance promulgated thereunder.

 

2.14                           “Termination Date” means the Expiration Date or
such earlier date on which the Term expires pursuant to Section 3.1 or is
terminated pursuant to Section 7.2, 7.3, 7.4, 7.5, 9.2 or 9.3, as applicable.

 

Other terms are defined throughout this Agreement and have the meanings so given
them.

 

3.                                       Term; Position.

 

3.1                                 Term.  Murphy’s employment hereunder shall
continue until the Expiration Date, unless extended in writing by both the Bank
and Murphy or sooner terminated in accordance with the provisions of this
Agreement (the “Term”).

 

3.2                                 Position.  The Bank shall employ Murphy to
serve as the Bank’s President of Community Banking.

 

3.3                                 No Restrictions.  Murphy represents and
warrants to the Bank that Murphy is not subject to any legal obligations or
restrictions that would prevent or limit his entering into this Agreement and
performing his responsibilities hereunder.

 

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4.                                       Duties of Murphy.

 

4.1                                 Nature and Substance.  Murphy shall report
directly to and shall be under the direction of Chairman of the Board or the
Chairman’s designee. The specific powers and duties of Murphy shall be
established, determined and modified by and within the discretion of the Board.

 

4.2                                 Performance of Services.  Murphy agrees to
devote his full business time and attention to the performance of his duties and
responsibilities under this Agreement, and shall use his best efforts and
discharge his duties to the best of his ability for and on behalf of the Bank
and toward its successful operation.  Murphy agrees that, without the prior
written consent of the Board, he will not during the Term, directly or
indirectly, perform services for or obtain a financial or ownership interest in
any other Entity (an “Outside Arrangement”) if such Outside Arrangement would
interfere with the satisfactory performance of his duties to the Bank, present a
conflict of interest with the Bank and/or Bancorp, breach his duty of loyalty or
fiduciary duties to the Bank and/or Bancorp, or otherwise conflict with the
provisions of this Agreement.  Murphy shall promptly notify the Board of any
Outside Arrangement, provide the Bank with any written agreement in connection
therewith and respond fully and promptly to any questions that the Board may ask
with respect to any Outside Arrangement.  If the Board determines that Murphy’s
participation in an Outside Arrangement would interfere with his satisfactory
performance of his duties to the Bank, present a conflict of interest with the
Bank and/or Bancorp, breach his duty of loyalty or fiduciary duties to the Bank
and/or Bancorp, or otherwise conflict with the provisions of this Agreement,
Murphy shall not undertake, or shall cease, such Outside Arrangement as soon as
feasible after the Board notifies him of such determination.  Notwithstanding
any provision hereof to the contrary, this Section 4.2 does not restrict
Murphy’s right to own securities of any Entity that files periodic reports with
the Securities and Exchange Commission under Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended; provided that his total ownership
constitutes less than two percent (2%) of the outstanding securities of such
company.

 

4.3                                 Compliance with Law.  Murphy shall comply
with all laws, statutes, ordinances, rules and regulations relating to his
employment and duties.

 

5.                                       Compensation; Benefits. As full
compensation for all services rendered pursuant to this Agreement and the
covenants contained herein, the Bank shall pay to Murphy the following:

 

5.1                                 Salary.  Through the end of the Term, Murphy
shall be paid a salary (“Salary”) of Two Hundred Seventy-five Thousand Four
Hundred Dollars ($275,400.00) on an annualized basis.  The Bank shall pay
Murphy’s Salary in equal installments in accordance with the Bank’s regular
payroll periods as may be set by the Bank from time to time.  Murphy’s Salary
may be further increased from time to time, at the discretion of the Board.
Murphy may also be entitled to certain incentive bonus payments as determined by
Board approved incentive plans.

 

5.2                                 Withholding.  Payments of Salary shall be
subject to the customary withholding of income and other employment taxes as is
required with respect to compensation paid by an employer to an employee.

 

5.3                                 Vacation and Leave.  Murphy shall be
entitled to such vacation and leave as may be provided for under the current and
future leave and vacation policies of the Bank for executive officers.

 

5.4                                 Office Space.  The Bank will provide
customary office space and office support to Murphy.

 

5.5                                 Parking.  Paid parking at Murphy’s regular
worksite will be provided by the Bank at its expense.

 

5.6                                 Car Allowance.  The Bank will pay Murphy a
monthly car allowance of Seven Hundred Fifty Dollars ($750.00).

 

5.7                                 Non-Life Insurance.  The Bank will provide
Murphy with group health, disability and other insurance as the Bank may
determine appropriate for all employees of the Bank.

 

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5.8                                 Life Insurance.

 

5.8.1                        Murphy may obtain a term life insurance policy (the
“Policy”) on Murphy in the amount of Seven Hundred Fifty Thousand Dollars
($750,000.00), the particular product and carrier to be chosen by Murphy in his
discretion.  Murphy shall have the right to designate the beneficiary of the
Policy.  If the Policy is obtained, Murphy 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 Murphy to the Bank of the invoices
therefor.  In the event Murphy is rated and the premium exceeds the standard
rate for a Seven Hundred Fifty Thousand Dollar ($750,000.00) policy, the Policy
amount shall be lowered to the maximum amount that can be purchased at the
standard rate for a Seven Hundred Fifty Thousand Dollar ($750,000.00) policy. 
For example, if Murphy is rated and the standard rate for a Seven Hundred Fifty
Thousand Dollar ($750,000.00) 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, Murphy shall immediately notify the
Bank of such cancellation or termination.

 

5.8.2                        The Bank may, at its cost, obtain and maintain
“key-man” life insurance and/or Bank-owned life insurance on Murphy in such
amount as determined by the Board from time to time. Murphy agrees to cooperate
fully and to take all actions reasonably required by the Bank in connection with
such insurance.

 

5.9                                 Expenses.  The Bank shall, promptly upon
presentation of proper expense reports therefor, pay or reimburse Murphy, in
accordance with the policies and procedures established from time to time by the
Bank for its officers, for all reasonable and customary travel (other than local
use of an automobile for which Murphy is being provided the car allowance) and
other out-of-pocket expenses incurred by Murphy in the performance of his duties
and responsibilities under this Agreement and promoting the business of the
Bank, including approved membership fees, dues and the cost of attending
business related seminars, meetings and conventions.

 

5.10                           Retirement Plans.  Murphy shall be entitled to
participate in any and all qualified pension or other retirement plans of the
Bank which may be applicable to personnel of the Bank.

 

5.11                           Other Benefits.  While this Agreement is in
effect, Murphy shall be entitled to all other benefits that the Bank provides
from time to time to its officers and such other benefits as the Board may from
time to time approve for Murphy.

 

5.12                           Eligibility.  Participation in any health, life,
accident, disability, medical expense or similar insurance plan or any qualified
pension or other retirement plan shall be subject to the terms and conditions
contained in such plan. All matters of eligibility for benefits under any
insurance plans shall be determined in accordance with the provisions of the
applicable insurance policy issued by the applicable insurance company.

 

5.13                           Equity Compensation.  Murphy shall be eligible to
receive awards of options, SARs and /or Restricted Stock under the 2006 Stock
Plan of Bancorp, from time to time, at the discretion of the 2006 Plan Committee
or Compensation Committee of the Board of Directors of Bancorp.

 

6.                                       Conditions Subsequent to Continued
Operation and Effect of Agreement.

 

6.1                                 Continued Approval by Bank Regulatory
Agencies.  This Agreement and all of its terms and conditions, and the continued
operation and effect of this Agreement and the Bank’s continuing obligations
hereunder, shall at all times be subject to the continuing approval of any and
all Bank Regulatory Agencies whose approval is a necessary prerequisite to the
continued operation of the Bank. Should any term or condition of this Agreement,
upon review by any Bank Regulatory Agency, be found to violate or not be in
compliance with any then-applicable statute or any rule, regulation, order or
understanding promulgated by any Bank Regulatory Agency, or should any term or
condition required to be included herein by any such Bank Regulatory Agency be
absent, this Agreement may be rescinded and terminated by the Bank if the
parties hereto cannot in good faith agree upon such additions, deletions or
modifications as may be deemed necessary or appropriate to bring this Agreement
into compliance.

 

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7.                                       Termination of Agreement.  Prior to the
Expiration Date, the Term of this Agreement may be terminated as provided below
in this Article 7.

 

7.1                                 Definition of Cause.  For purposes of this
Agreement, “Cause” means:

 

(a)                                  any act of theft, fraud, intentional
misrepresentation, personal dishonesty or breach of fiduciary duty involving
personal gain or similar conduct by Murphy with respect to the Bank Entities or
the services to be rendered by him under this Agreement;

 

(b)                                 any failure of this Agreement to comply with
any Bank Regulatory Agency requirement which is not cured in accordance with
Section 6.1 within a reasonable period of time after written notice thereof;

 

(c)                                  any Bank Regulatory Agency action or
proceeding against Murphy as a result of his negligence, fraud, malfeasance or
misconduct;

 

(d)                                 indictment of Murphy, or Murphy’s conviction
or plea of nolo contendere at the trial court level, of a felony, or any crime
of moral turpitude, or involving dishonesty, deception or breach of trust;

 

(e)                                  any of the following conduct on the part of
Murphy that Murphy has not been corrected or cured within thirty (30) days after
having received written notice from the Bank detailing and describing such
conduct (provided, however, that the Bank shall not be required to provide
Murphy with notice and opportunity to cure more than two (2) times in any twelve
(12) month period):

 

(i)                                     habitual absenteeism, or the failure by
or the inability of Murphy to devote full time attention and energy to the
performance of Murphy’s duties pursuant to this Agreement (other than by reason
of his death or Disability);

 

(ii)                                  intentional material failure by Murphy to
carry out the explicit lawful and reasonable directions, instructions, policies,
rules, regulations or decisions of the Board which are consistent with his
position;

 

(iii)                               willful or intentional misconduct on the
part of Murphy that results, or that the Board in good faith determines may
result, in substantial injury to the Bank or any of its Affiliates; or

 

(iv)                              any action (including any failure to act) or
conduct by Murphy in violation of a material provision of this Agreement
(including but not limited to the provisions of Article 8 hereof, which shall be
deemed to be material); or

 

(f)                                    the use of drugs, alcohol or other
substances by Murphy to an extent which materially interferes with or prevents
Murphy from performing his duties under this Agreement;

 

(g)                                 the determination by the Board, in the
exercise of its reasonable judgment and in good faith, that Murphy’s job
performance is substantially unsatisfactory and that he has failed to cure such
performance within a reasonable period (but in no event more than thirty (30)
days) after written notice specifying in reasonable detail the nature of the
unsatisfactory performance; or

 

(h)                                 Murphy’s commission of unethical business
practices, acts of moral turpitude, financial impropriety, fraud or dishonesty
in any material matter which the Board in good faith determines could adversely
affect the reputation, standing or financial prospects of the Bank or its
Affiliates.

 

7.2                                 Termination by the Bank for Cause.  After
the occurrence of any of the conditions specified in Section 7.1, the Bank shall
have the right to terminate the Term for Cause immediately on written notice to
Murphy.

 

7.3                                 Termination by the Bank without Cause.  The
Bank shall have the right to terminate the Term at any time on written notice
without Cause, for any or no reason, such termination to be effective on the
date on which the Bank gives such notice to Murphy or such later date as may be
specified in such notice.

 

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7.4                                 Termination for Death or Disability.  The
Term shall automatically terminate upon the death of Murphy or upon the Board’s
determination that Murphy is suffering from a Disability.

 

7.5                                 Termination by Murphy.  Murphy shall have
the right to terminate the Term at any time, such termination to be effective on
the date ninety (90) days after the date on which Murphy gives such notice to
the Bank unless Murphy and the Bank agree in writing to a later date on which
such termination is to be effective.  After receiving notice of termination, the
Bank may require Murphy to devote his good faith energies to transitioning his
duties to his successor and to otherwise helping to minimize the adverse impact
of his resignation upon the operations of the Bank.  If Murphy fails or refuses
to fully cooperate with such transition, the Bank may immediately terminate
Murphy, in which case it shall no longer have any obligation to pay any Salary
or provide any benefits to him, but solely for purposes of Sections 8.5 and 8.6
below, the Termination Date shall be the date ninety (90) days after the date on
which Murphy gives notice of termination to the Bank pursuant to the first
sentence of this Section 7.5, or the later date referred to therein, whichever
is later.

 

7.6                                 Pre-Termination Salary and Expenses. 
Without regard to the reason for, or the timing of, the termination or
expiration of the Term:  (a) the Bank shall pay Murphy any unpaid Salary due for
the period prior to the Termination Date; and (b) following submission of proper
expense reports by Murphy, the Bank shall reimburse Murphy for all expenses
incurred prior to the Termination Date and subject to reimbursement pursuant to
Section 5.9 hereof.  These payments shall be made promptly upon termination and
within the period of time mandated by law.

 

7.7                                 Severance if Termination by the Bank without
Cause.  Provided that Murphy signs and delivers to the Bank no later than
twenty-one (21) days after the Termination Date a General Release and Waiver in
the form attached to this Agreement as Exhibit A, and except as set forth below,
if the Term is terminated by the Bank during the Term without Cause, the Bank
shall, for a period of one (1) year following the Termination Date, (i) continue
to pay Murphy, in the manner set forth below, Murphy’s Salary at the rate being
paid as of the Termination Date, and (ii) if Murphy timely elects to continue
his health insurance benefits under COBRA, pay to the insurer Murphy’s premiums
for health insurance benefits continuation (for so long as Murphy remains
qualified for such continuation under COBRA); provided, however, that Murphy
shall not be entitled to any such payments if he is otherwise entitled to
payments pursuant to Section 9.4 in relation to a Change in Control.   Any
payments due Murphy pursuant to this Section 7.7 shall be paid to Murphy in
installments on the same schedule as Murphy was paid immediately prior to the
Termination Date, each installment to be the same amount Murphy would have been
paid under this Agreement if he had not been terminated. In the event Murphy
breaches any provision of Article 8 of this Agreement, Murphy’s entitlement to
any payments payable pursuant to this Section 7.7, if and to the extent not yet
paid, shall thereupon immediately cease and terminate as of the date of such
breach, with Murphy having the obligation to repay to the Bank any payments that
were paid to him and any payments for health insurance benefits continuation
pursuant to this Section 7.7 with respect to the period after such breach
occurred and before such breach became known to the Bank.  Furthermore, if
termination was initially not for Cause but the Bank thereafter determines in
good faith that, during the Term, Murphy had engaged in conduct that would have
constituted Cause, Murphy’s entitlement to any payments pursuant to this
Section 7.7 shall terminate retroactively to the Termination Date, with Murphy
having the obligation to repay to the Bank all payments that were paid to him
and any payments for health insurance benefits continuation pursuant to this
Section 7.7, and, upon the return of all such payments, said General Release and
Waiver shall be deemed rescinded and of no force or effect.   Notwithstanding
anything to the contrary in this Section 7.7, any payment pursuant to this
Section shall be subject to (i) any delay in payment required by Section 10.2
hereof and (ii) any reduction required pursuant to Section 10.1.2 hereof.

 

7.8                                 Termination After Change in Control. 
Sections 9.2 and 9.3 set out provisions applicable to certain circumstances in
which the Term may be terminated after Change in Control.

 

8.                                       Confidentiality; Non-Competition;
Non-Interference.

 

8.1                                 Confidential Information.  Murphy, during
employment, will have, and has had, access to and become familiar with various
confidential and proprietary information of the Bank Entities and/or relating to
the business of the Bank Entities (“Confidential Information”), including, but
not limited to: business plans; operating

 

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results; financial statements and financial information; contracts; mailing
lists; purchasing information; customer data (including lists, names and
requirements); feasibility studies; personnel related information (including
compensation, compensation plans, and staffing plans); internal working
documents and communications; and other materials related to the businesses or
activities of the Bank Entities which is made available only to employees with a
need to know or which is not generally made available to the public.  Failure to
mark any Confidential Information as confidential, proprietary or protected
information shall not affect its status as part of the Confidential Information
subject to the terms of this Agreement.

 

8.2                                 Nondisclosure.  Murphy hereby covenants and
agrees that he shall not, directly or indirectly, disclose or use, or authorize
any Person to disclose or use, any Confidential Information (whether or not any
of the Confidential Information is novel or known by any other Person); provided
however, that this restriction shall not apply to the use or disclosure of
Confidential Information (i) to any governmental entity to the extent required
by law, (ii) which is or becomes publicly known and available through no
wrongful act of Murphy or any Affiliate of Murphy or (iii) in connection with
the performance of Murphy’s duties under this Agreement.

 

8.3                                 Nondisclosure of this Agreement.  The terms,
conditions and fact of this Agreement are strictly confidential.  From and after
the date of execution of this Agreement, Murphy agrees not to disclose, directly
or indirectly, the existence of this Agreement or any of the terms and
conditions herein to any Person except that Murphy may disclose the existence of
this Agreement or the terms and conditions herein to Murphy’s immediate family,
tax, financial or legal advisers, prospective employers (with whom Murphy’s
employment is not prohibited by Section 8.5), any taxing authority, or as
required by law.  If Murphy is asked about the existence and/or terms and
conditions of this Agreement, Murphy is permitted to state only that “the terms
of my employment are a confidential matter that I am not able to disclose.” 
Murphy acknowledges that the terms of this Section 8.3 are a material inducement
for the Bank to enter into this Agreement.  Notwithstanding the foregoing,
Murphy may disclose such information regarding this Agreement as may be
disclosed by the Bank Entities in any document filed with the Securities and
Exchange Commission.

 

8.4                                 Documents.  All files, papers, records,
documents, compilations, summaries, lists, reports, notes, databases, tapes,
sketches, drawings, memoranda, and similar items (collectively, “Documents”),
whether prepared by Murphy, or otherwise provided to or coming into the
possession of Murphy, that contain any proprietary information about or
pertaining or relating to the Bank Entities (the “Bank Information”) shall at
all times remain the exclusive property of the Bank Entities. Promptly after a
request by the Bank or the Termination Date, Murphy shall take reasonable
efforts to (i) return to the Bank all Documents in any tangible form (whether
originals, copies or reproductions) and all computer disks or other media
containing or embodying any Document or Bank Information and (ii) purge and
destroy all Documents and Bank Information in any intangible form (including
computerized, digital or other electronic format) as may be requested in writing
by the Chief Executive Officer of the Bank or Chairman of the Board of the Bank,
and Murphy shall not retain in any form any such Document or any summary,
compilation, synopsis or abstract of any Document or Bank Information.

 

8.5                                 Non-Competition.  Murphy hereby acknowledges
and agrees that, during the course of employment, Murphy has become, and will
become, familiar with and involved in all aspects of the business and operations
of the Bank Entities. Murphy hereby covenants and agrees that during the Term
until the later to occur of (a) the date one (1) year after the Termination
Date, or (b) the Expiration Date (the “Restricted Period”), Murphy will not at
any time (except for the Bank Entities), directly or indirectly, in any capacity
(whether as a proprietor, owner, agent, officer, director, shareholder,
organizer, partner, principal, manager, member, employee, contractor, consultant
or otherwise) provide any advice, assistance or services to any Competitive
Business or to any Person that is attempting to form or acquire a Competitive
Business if such Competitive Business operates, or is planning to operate, any
office, branch or other facility (in any case, a “Branch”) that is (or is
proposed to be) located within a thirty-five (35) mile radius of the Bank’s
headquarters or any Branch of the Bank Entities.  Notwithstanding any provision
hereof to the contrary, this Section 8.5 does not restrict Murphy’s right to
(i) own securities of any Entity that files periodic reports with the Securities
and Exchange Commission under Section 13 or 15(d) of the Securities Exchange Act
of 1934, as amended; provided that his total ownership constitutes less than two
percent (2%) of the outstanding securities of such company.

 

8.6                                 Non-Interference. Murphy hereby covenants
and agrees that during the Restricted Period, he will not, directly or
indirectly, for himself or any other Person (whether as a proprietor, owner,
agent, officer, director,

 

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shareholder, organizer, partner, principal, member, manager, employee,
contractor, consultant or any other capacity):

 

(a)                                  induce or attempt to induce any customer,
supplier, officer, director, employee, contractor, consultant, agent or
representative of, or any other Person that has a business relationship with any
Bank Entity, to discontinue, terminate or reduce the extent of its, his or her
relationship with any Bank Entity or to take any action that would disrupt or
otherwise be disadvantageous to any such relationship;

 

(b)                                 solicit any customer of any of the Bank
Entities for the purpose of providing any Competitive Products or Services to
such customer (other than any solicitation to the general public that is not
disproportionately directed at customers of any Bank Entity); or

 

(c)                                  solicit any employee of any of the Bank
Entities to commence employment with, become a consultant or independent
contractor to or otherwise provide services for the benefit of any other
Competitive Business

 

In applying this Section 8.6:

 

(i)                                     the term “customer” shall be deemed to
include, at any time, any Person to which any of the Bank Entities had, during
the six (6) month period immediately prior to such time, (A) sold any products
or provided any services or (B) submitted, or been in the process of submitting
or negotiating, a proposal for the sale of any product or the provision of any
services;

 

(ii)                                  the term “supplier” shall be deemed to
include, at any time, any Person which, during the six (6) month period
immediately prior to such time, (A) had sold any products or services to any of
the Bank Entities or (B) had submitted to any of the Bank Entities a proposal
for the sale of any products or services;

 

(iii)                               for purposes of clause (c), the term
“employee” shall be deemed to include, at any time, any Person who was employed
by any of the Bank Entities within the prior six (6) month period (thereby
prohibiting Murphy from soliciting any Person who had been employed by any of
the Bank Entities until six (6) months after the date on which such Person
ceased to be so employed); and

 

(iv)                              If during the Restricted Period any employee
of any of the Bank Entities accepts employment with or is otherwise retained by
any Competitive Business of which Murphy is an owner, director, officer,
manager, member, employee, partner or employee, or to which Murphy provides
material services, it shall be presumed that such employee was hired in
violation of the restriction set forth in clause (c) of this Section 8.6, with
such presumption to be overcome only upon Murphy’s showing by a preponderance of
the evidence that he was not directly or indirectly involved in the hiring,
soliciting or encouraging such employee to leave employment with the Bank
Entities.

 

8.7                                 Injunction. In the event of any breach or
threatened or attempted breach of any provision of this Article 8 by Murphy, the
Bank shall, in addition to and not to the exclusion of any other rights and
remedies at law or in equity, be entitled to seek and receive from any court of
competent jurisdiction (i) full temporary and permanent injunctive relief
enjoining and restraining Murphy and each and every other Person concerned
therein from the continuation of such violative acts and (ii) a decree for
specific performance of the applicable provisions of this Agreement, without
being required to furnish any bond or other security.

 

8.8                                 Reasonableness.

 

8.8.1                        Murphy has carefully read and considered the
provisions of this Article 8 and, having done so, agrees that the restrictions
and agreements set forth in this Article 8 are fair and reasonable and are
reasonably required for the protection of the interests of the Bank Entities and
their respective businesses, shareholders, directors, officers and employees.
Murphy further agrees that the restrictions set forth in this Agreement will not
impair or unreasonably restrain his ability to earn a livelihood.

 

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8.8.2                        If any court of competent jurisdiction should
determine that the duration, geographical area or scope of any provision or
restriction set forth in this Article 8 exceeds the maximum duration, geographic
area or scope that is reasonable and enforceable under applicable law, the
parties agree that said provision shall automatically be modified and shall be
deemed to extend only over the maximum duration, geographical area and/or scope
as to which such provision or restriction said court determines to be valid and
enforceable under applicable law, which determination the parties direct the
court to make, and the parties agree to be bound by such modified provision or
restriction.

 

9.                                       Change in Control.

 

9.1                                 Definition.  “Change in Control” means and
shall be deemed to have occurred if:

 

(a)                                  there shall be consummated (i) any
consolidation, merger, share exchange, or similar transaction relating to
Bancorp, or pursuant to which shares of Bancorp’s capital stock are converted
into cash, securities of another Entity and/or other property, other than a
transaction in which the holders of Bancorp’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 (ii) any
sale of all or substantially all of the assets of Bancorp, 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 Bancorp representing more than fifty percent (50%)
of the voting power of all outstanding securities of Bancorp entitled to vote
generally in the election of directors of Bancorp (including, without
limitation, any securities of Bancorp 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 Bancorp are replaced by directors
whose appointment or election was not endorsed by a majority of the members of
the Board of Directors of Bancorp in office prior to such appointment or
election.

 

Notwithstanding the foregoing, if the event purportedly constituting a Change in
Control under Section 9.1(a), Section 9.1(b), or Section 9.1(c) does not also
constitute a “change in ownership” of Bancorp, a “change in effective control”
of Bancorp or a “change in the ownership of a substantial portion of the assets”
of Bancorp within the meaning of Section 409A, then such event shall not
constitute a “Change in Control” hereunder.

 

9.2                                 Change in Control Termination.  For purposes
of this Agreement, a “Change in Control Termination” means that while this
Agreement is in effect:

 

(a)                                  Murphy’s employment with the Bank is
terminated without Cause (i) within one hundred twenty (120) days immediately
prior to and in conjunction with a Change in Control or (ii) within twelve (12)
months following consummation of a Change in Control; or

 

(b)                                 Within twelve (12) months following
consummation of a Change in Control, Murphy’s title, duties and or position have
been materially reduced such that Murphy is not in a comparable position (with
materially comparable compensation, benefits and responsibilities and is located
within twenty-five (25) miles of Murphy’s primary worksite) to the position he
held immediately prior to the Change in Control, and within thirty (30) days
after notification of such reduction he notifies the Bank that he is terminating
his employment due to such change in his employment unless such change is cured
within thirty (30) days of such notice by providing him with a comparable
position (including materially comparable compensation and benefits and is
located within twenty-five (25) miles of Murphy’s primary worksite).  If
Murphy’s employment is terminated under this Section, his last day of employment
shall be mutually agreed to by Murphy and the Bank, but shall be not more than
sixty (60) days after such notice is given by Murphy.

 

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9.3                                 Window Period Resignation After Change in
Control.  If at the expiration of the twelve (12) month period following
consummation of a Change in Control (the “Action Period”), Murphy’s employment
by the Bank has not been terminated, Murphy may, by giving written notice to the
Bank within the thirty (30) day period immediately following the last day of the
Action Period, elect to terminate the Term, in which event his last day of
employment will be as mutually agreed to by the Bank and Murphy but which shall
be not more than sixty (60) days after such notice is given by Murphy.

 

9.4                                 Change in Control Payment.  If there is a
Change in Control Termination pursuant to Section 9.2 or Murphy resigns after
the Action Period pursuant to Section 9.3, Murphy shall be paid a lump-sum cash
payment (the “Change Payment”) equal to 2.99 times Murphy’s Salary at the
highest rate in effect during the twelve (12) month period immediately preceding
his Termination Date, such Change Payment to be made to Murphy within forty-five
(45) days after the later of (i) his Termination Date or (ii) the date of the
Change in Control, the exact date of payment to be determined in the sole
discretion of the Bank; provided, however, that the Bank shall be relieved of
its obligation to pay the Change Payment if Murphy fails to sign and deliver to
the Bank no later than twenty-one (21) days after the Termination Date a General
Release and Waiver in the form attached to this Agreement as Exhibit A. 
Notwithstanding anything to the contrary in this Section 9.4, any payment
pursuant to this Section shall be subject to (i) any delay in payment required
by Section 10.2  hereof and (ii) any reduction required pursuant to
Section 10.1.2 hereof, as applicable.

 

10.                                 Compliance with Certain Restrictions.

 

10.1                           Section 280G.

 

10.1.1                  For purposes of this Agreement, the following terms are
defined as follows:

 

(a)                                  “Additional 280G Payments” means any
distributions in the nature of compensation by any Bank Entity to or for the
benefit of Murphy (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;

 

(b)                                 “Parachute Payment” is defined as set forth
in Section 280G(b)(2) of the Code; and

 

(c)                                  “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.

 

10.1.2                  Notwithstanding anything in this Agreement to the
contrary, 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 Murphy 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 inverse order to the time at
which the payments are scheduled to be made (e.g., the last scheduled payment
will be the first such payment to be reduced).  If, despite the foregoing
sentence, a payment shall be made to Murphy that would constitute a Parachute
Payment, Murphy shall have no right to retain such payment and, immediately upon
being informed of the impropriety of such payment, Murphy shall return such
payment to the Bank or other Bank Entity that was the payer thereof, together
with interest at the applicable federal rate determined pursuant to
Section 1274(d) of the Code.

 

10.2                           Section 409A.

 

10.2.1                  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 Murphy pursuant to Section 409A(a)(1)(B) of the Code, and
this Agreement shall be interpreted and construed consistent with this intent. 
Murphy 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.

 

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10.2.2                  Notwithstanding any provision of this Agreement to the
contrary, if Murphy 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 Murphy
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
Murphy’s separation from service, or, if earlier, upon Murphy’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.

 

10.2.3                  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 additional tax and interest on payments
made pursuant to this Agreement.

 

11.                                 Assignability.  Murphy shall have no right
to assign this Agreement or any of his rights or obligations hereunder to
another party or parties.  The Bank may assign this Agreement to any of its
Affiliates or to any Person that acquires a substantial portion of the operating
assets of the Bank.  Upon any such assignment by the Bank, references in this
Agreement to the Bank shall automatically be deemed to refer to such assignee
instead of, or in addition to, the Bank, as appropriate in the context.

 

12.                                 Governing Law; Venue.  This Agreement shall
be governed by and construed in accordance with the laws of the State of
Maryland applicable to contracts executed and to be performed therein, without
giving effect to the choice of law rules thereof. Any action to enforce any
provision of this Agreement may be brought only in a court of the State of
Maryland or in the United States District Court for the District of Maryland. 
Accordingly, each party (a) agrees to submit to the jurisdiction of such courts
and to accept service of process at its address for notices and in the manner
provided in Section 13 for the giving of notices in any such action or
proceeding brought in any such court and (b) irrevocably waives any objection to
the laying of venue of any such proceeding brought in such a court and any claim
that any such proceeding brought in such a court has been brought in an
inconvenient or inappropriate forum.

 

13.                                 Notices.  All notices, requests, demands and
other communications required to be given or permitted to be given under this
Agreement shall be in writing and shall be conclusively deemed to have been
given as follows: (a) when hand delivered to the other party; (b) when received
by facsimile at the facsimile number set forth below, provided, however, that
any notice given by facsimile shall not be effective unless either (i) a
duplicate copy of such facsimile notice is promptly given by depositing the same
in a United States post office first-class postage prepaid and addressed to the
applicable party as set forth below or (ii) the receiving party delivers a
written confirmation of receipt for such notice either by facsimile or by any
other method permitted under this Section; or (c) when deposited in a United
States post office with first-class certified mail, return receipt requested,
postage prepaid and addressed to the applicable party as set forth below; or
(d) when deposited with a national overnight delivery service reasonably
approved by the parties (Federal Express and DHL WorldWide Express being deemed
approved by the parties), postage prepaid, addressed to the applicable party as
set forth below with next-business-day delivery guaranteed; provided that the
sending party receives a confirmation of delivery from the delivery service
provider. Any notice given by facsimile shall be deemed received on the date on
which notice is received except that if such notice is received after 5:00 p.m.
(recipient’s time) or on a non-business day, notice shall be deemed given the
next business day).  Any notice sent by Untied States mail shall be deemed given
three (3) business days after the same has been deposited in the United States
mail.  Any notice given by national overnight delivery service shall be deemed
given on the first business day following deposit with such delivery service. 
For purposes of this Agreement, the term “business day” shall mean any day other
than a Saturday, Sunday or day that is a legal holiday in Montgomery County,
Maryland.  The address of a party set forth below may be changed by that party
by written notice to the other from time to time pursuant to this Article.

 

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To:                              Thomas D. Murphy

 

 

Fax No.

 

To:                              EagleBank

c/o Ronald D. Paul

7815 Woodmont Ave.

Bethesda, MD 20814

Fax No.: 301-986-8529

 

cc:                                 Fred Sommer, Esquire

Shulman, Rogers, Gandal, Pordy & Ecker, P.A.

12505 Park Potomac Avenue, Sixth Floor

Potomac, MD 20854

Fax No.: 301-230-2891

 

14.                                 Entire Agreement.  This Agreement contains
all of the agreements and understandings between the parties hereto with respect
to the employment of Murphy by the Bank, and supersedes all prior agreements,
arrangements and understandings related to the subject matter hereof.  No oral
agreements or written correspondence shall be held to affect the provisions
hereof. No representation, promise, inducement or statement of intention has
been made by either party that is not set forth in this Agreement, and neither
party shall be bound by or liable for any alleged representation, promise,
inducement or statement of intention not so set forth. Not in limitation of the
foregoing, this Agreement supersedes and replaces the Prior Agreement, except
that Murphy shall remain entitled to receive any compensation earned but not yet
paid thereunder.

 

15.                                 Headings.  The Article and Section headings
contained in this Agreement are for reference purposes only and shall not in any
way affect the meaning or interpretation of this Agreement.

 

16.                                 Severability.  Should any part of this
Agreement for any reason be declared or held illegal, invalid or unenforceable,
such determination shall not affect the legality, validity or enforceability of
any remaining portion or provision of this Agreement, which remaining portions
and provisions shall remain in force and effect as if this Agreement has been
executed with the illegal, invalid or unenforceable portion thereof eliminated.

 

17.                                 Amendment; Waiver.  Neither this Agreement
nor any provision hereof may be amended, modified, changed, waived, discharged
or terminated except by an instrument in writing signed by the party against
which enforcement of the amendment, modification, change, waiver, discharge or
termination is sought. The failure of either party at any time or times to
require performance of any provision hereof shall not in any manner affect the
right at a later time to enforce the same. No waiver by either party of the
breach of any term, provision or covenant contained in this Agreement, whether
by conduct or otherwise, in any one or more instances, shall be deemed to be, or
construed as, a further or continuing waiver of any such breach, or a waiver of
the breach of any other term, provision or covenant contained in this Agreement.

 

18.                                 Gender and Number.  As used in this
Agreement, the masculine, feminine and neuter gender, and the singular or plural
number, shall each be deemed to include the other or others whenever the context
so indicates.

 

19.                                 Binding Effect.  This Agreement is and shall
be binding upon, and inures to the benefit of, the Bank, its successors and
assigns, and Murphy and his heirs, executors, administrators, and personal and
legal representatives.

 

[signatures on following page]

 

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IN WITNESS WHEREOF, the parties have executed this Employment Agreement as of
the date first written above.

 

 

EAGLEBANK

 

 

 

 

 

By:

/s/ Ronald D. Paul

 

Name: Ronald D. Paul

 

Title: Chief Executive Officer

 

 

 

 

 

THOMAS D. MURPHY

 

 

 

 

 

/s/ Thomas D. Murphy

 

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Attachment A

 

Form of

General Release and Waiver of All Claims

 

Thomas D. Murphy (“you”) executes this General Release And Waiver of All Claims
(the “Release”) as a condition of receiving certain payments and other benefits
in accordance with the terms of Section 7.7 of your Employment Agreement dated
September 1, 2011.  All capitalized terms used but not otherwise defined herein
shall have the same meaning as in your Employment Agreement.

 

1.  RELEASE.

 

You hereby release and forever discharge EagleBank and Eagle Bancorp, Inc.
[modify to specifically include any additional Affiliates] and each and every
one of their former or current subsidiaries, parents, affiliates, directors,
officers, employees, agents, parents, affiliates, successors, predecessors,
subsidiaries, assigns and attorneys (the “Released Parties”) from any and all
charges, claims, damages, injury and actions, in law or equity, which you or
your heirs, successors, executors, or other representatives ever had, now have,
or may in the future have by reason of any act, omission, matter, cause or thing
through the date of your execution of this Release. You understand that this
Release is a general release of all claims you may have against the Released
Parties based on any act, omission, matter, case or thing through the date of
your execution of this Release.

 

2.  WAIVER.

 

You realize there are many laws and regulations governing the employment
relationship. These include, but are not limited to, Title VII of the Civil
Rights Acts of 1964 and 1991; the Age Discrimination in Employment Act of 1967;
the Americans with Disabilities Act; the National Labor Relations Act; 42 U.S.C.
§ 1981; the Family and Medical Leave Act; the Employee Retirement Income
Security Act of 1974 (other than any accrued benefit(s) to which you have a
non-forfeitable right under any pension benefit plan); the Maryland Civil Rights
Act, the Maryland Wage Payment and Collection Law, Maryland Occupational Safety
and Health Act, the Maryland Collective Bargaining Law, and any other state,
local and federal employment laws; and any amendments to any of the foregoing.
You also understand there may be other statutes and laws of contract and tort
that also relate to your employment. By signing this Release, you waive and
release any rights you may have against the Released Parties under these and any
other laws based on any act, omission, matter, cause or thing through the date
of your execution of this Release. You also agree not to initiate, join, or
voluntarily participate in any action or suit in any court or to accept any
damages or other relief from any such proceeding brought by anyone else based on
any act, omission, matter, cause or thing through the date of your execution of
this Release.

 

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3.              NOTICE PERIOD.

 

This document is important. We advise you to review it carefully and consult an
attorney before signing it, as well as any other professional whose advice you
value, such as an accountant or financial advisor. If you agree to the terms of
this Release, sign in the space indicated below for your signature. You will
have twenty-one (21) calendar days from the date you receive this document to
consider whether to sign this Release. If you choose to sign the Release before
the end of that twenty-one day period, you certify that you did so voluntarily
for your own benefit and not because of any coercion.

 

4.  RETURN OF PROPERTY.

 

You certify that you have fully complied with Section 8.4 of your Employment
Agreement.

 

5.              REVOCATION.

 

You should also understand that even after you have signed this Release, you
still have seven (7) days to revoke it. To revoke your acceptance of this
Release, the Chairman of the Bank’s Board of Directors must receive written
notice before the end of the seven (7)-day period. In the event you revoke or do
not accept this Release, you will not be entitled to any of the payments or
benefits that you would have been entitled to under your Employment Agreement by
virtue of executing this Release. If you do not revoke this Release within seven
(7) days after you sign it, it will be final, binding, and irrevocable.

 

IN WITNESS WHEREOF, the Parties have knowingly and voluntarily executed this
Release, as of the day and year first set forth below.

 

 

 

 

 

Thomas D. Murphy

 

Date

 

 

 

 

 

 

 

 

 

EagleBank

 

Date

 

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