Exhibit 10.40


 


 


Separation Agreement and
General Release


 


THIS SEPARATION AND GENERAL RELEASE
AGREEMENT (hereinafter, “this Agreement”) is entered into this 13th day of November 2018, by and between
Howard Bank, a Maryland chartered trust company (the “Company”) and James D. Witty (the “Executive” or
the “Employee”). Collectively, the Company and the Executive shall be referred to as the “Parties”.


 


RECITALS


 


WHEREAS, the Executive has been employed
by the Company in the capacity of Executive Vice President and Chief Lending Officer;


 


WHEREAS, the terms of the Executive’s
employment by the Company are governed by an Executive Employment Agreement dated April 29, 2016, as amended on May 24, 2017, by
and between the Parties (collectively the “Employment Agreement);


 


WHEREAS, the current Term of the
Employment Agreement (as defined therein) expires on March 31, 2019;


 


WHEREAS, the Executive has elected
to terminate the Executive’s employment, for Good Reason, pursuant to Section 3.2.2(a) of the Employment Agreement and the
Parties have agreed that such termination shall be effective as of November 16, 2018 (the “Termination Date”).


 


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


 


1.                 
Recitals Incorporated; Certain Defined Terms. The recitals set forth above are incorporated herein by this
reference and shall be deemed terms and provisions hereof with the same force and effect as if fully set forth in this Section
1. Capitalized terms that are not otherwise defined herein shall be deemed to have the same meanings herein as are ascribed to
such terms in the Employment Agreement.





 


2.                 
 Termination. The Executive’s election to resign for Good Reason shall be effective as of the Termination
date, at which time (i) the Executive’s Role as an employee of the Company shall cease, and (ii) the Executive shall return
to the Company all Company property, materials and Confidential Information in the Executive’s possession.


 






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3.                 
Severance Payments; Equity:


 


		(a)	Commencing December 7, 2018, and continuing on each of the Company’s regular payroll dates
thereafter through and including the (25th) regular payroll date thereafter (which the Parties estimate to be November
22, 2019) the Company shall pay to the Executive the sum of Thirteen Thousand Nine Hundred Twenty Two and 89/100 dollars ($13,922.89)
(each, a “Subsequent Payment” and collectively, the “Subsequent Payments”). The schedule of Subsequent
Payments is attached hereto as Exhibit A.



 


		(b)	The Parties intend for the total payments to be made by the Company to the Executive pursuant to
Section 3.7 (a) of the Employment Agreement, as confirmed by Section 3(a) of this Agreement, to be Three Hundred Sixty One Thousand
Nine Hundred Ninety Five and 12/100 dollars ($361,995.14).



 


		(c)	The Executive’s right to receive any installment payments as set forth in this Agreement
shall be treated as a right to receive a series of separate payments and, accordingly, each such installment payment shall at all
times be considered a separate and distinct payment as permitted under Section 409A of the Code (as defined in the Employment Agreement).



 


		(d)	The Parties acknowledge and agree that the effect of Section 3.7(a) of the Employment Agreement
shall be to cause all issued stock awards, including restricted stock units of Howard Bancorp, Inc. to vest in favor of the Executive
immediately upon the Termination Date. The Executive shall be paid in accordance with the terms of any grant agreement issuing
restricted stock units to the Executive under the time-based vesting component (as opposed to the performance vesting component)
of the Howard Bancorp, Inc. 2013 Equity Incentive Plan.



 


		(e)	Except as provided in Section 3 of this Agreement, the Parties agree that the Executive shall not
be entitled to receive from the Company any other payment as a result of the termination of his employment by the Company, whether
pursuant to Section 3.7(a) of the Employment Agreement or otherwise.



 






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		(b)	Release of Claims: 



 


		(a)	In exchange for the consideration extended to the Executive by the Company
in this Agreement, Executive, on behalf of Executive, Executive’s spouse, heirs, administrators, children, representatives,
executors, successors, assigns, and all other persons claiming through Executive, if any (collectively, “Releasers”),
does hereby release, waive, and forever discharge the Company, and each of its parent, subsidiary or affiliated entities, and each
of their respective current, former or future directors, officers, agents, employees, trustees, stockholders, investors, joint
ventures, and representatives, each of their predecessors, successors and assigns, and any of their directors, officers, partners,
members, agents and employees, both individually and in their official capacities (collectively, the “Releasees”) from,
and does fully waive any obligations of Releasees to Releasers for, any and all liability, actions, charges, causes of action,
demands, damages, or claims for relief, remuneration, sums of money, accounts or expenses (including attorneys’ fees and
costs) of any kind whatsoever, whether known or unknown or contingent or absolute, which heretofore has been or which hereafter
may be suffered or sustained, directly or indirectly, by Releasers in consequence of, arising out of, or in any way relating to:
Executive’s employment with the Company or any of its subsidiaries or affiliates, including the termination of Executive’s
employment, or any other events occurring on or prior to the date of this Release. The release and discharge, waiver and covenant
not to sue in this Agreement includes, but is not limited to, (i) all claims for wages, salary, bonuses, incentive compensation,
stock, restricted stock, stock options, other equity incentive, severance pay, vacation pay or any other fees, compensation or
benefits (except for vested rights and benefits as of the date of termination under any Company compensation or benefit plan, including
without limitation accrued salary through the date of this Agreement and the right to reimbursement of business expenses incurred
through the date of this Agreement in accordance with the Company’s policy), (ii) all claims and any obligations or causes
of action arising from such claims under common law including wrongful or retaliatory discharge or breach of contract (including
but not limited to any claims under the Employment Agreement and any claims under any equity incentive arrangements between Executive
and the Company but excluding those claims set forth below as not covered by this release), (iii) any action arising in tort including
libel, slander, defamation or intentional infliction of emotional distress, and (iv) all claims or actions arising under any federal,
state or local statute including the Age Discrimination in Employment Act (including the Older Workers Benefit Protection Act)
(“ADEA”), Title VII of the Civil Rights Act of 1964, the Civil Rights Acts of 1866 and 1871 (42 U.S.C. § 1981),
the Civil Rights Act of 1991, the National Labor Relations Act, the Employee Retirement Income Security Act of 1974, the Americans
with Disabilities Act of 1990, the Rehabilitation Act of 1973, the Equal Pay Act of 1963, the Genetic Information Nondiscrimination
Act of 2008, Maryland Equal Pay Act, Title 20 of the State Government Article of the Maryland Annotated Code, the non-discrimination
ordinances of Baltimore City and Howard, Anne Arundel, Prince George’s, and Montgomery Counties, or the discrimination or
employment laws of any state or municipality, and/or any claims under any express or implied contract which Releasers may claim
existed with Releasees. This also includes a release of any claims for alleged physical or personal injury, emotional distress
relating to or arising out of Executive’s employment with the Company or any of its subsidiaries or affiliates. Notwithstanding
anything herein to the contrary, Releasers do not release, and this release and waiver does not apply to and shall not be construed
as to apply to: (A) any claim or right to receive the severance benefits set forth in Section 3.7 (Termination Payments) of the
Employment Agreement; (B) any claim or right to indemnification under the Employment Agreement or any other agreement or arrangement;
(C) any claim or right with respect to any vested interest under any equity or equity-based award plan of the Company; (E) any
claim or right to continuation of health plan coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985 (or
similar law); and (F) any claim or right arising after the date hereof.



 






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		(b)	Excluded from this Agreement are any claims which cannot be waived by law,
such as the right to make a claim for unemployment or worker’s compensation benefits. Nothing in this Agreement prevents,
or is intended to prevent, Executive from filing a charge of discrimination with the EEOC or with any other federal, state or local
civil rights agency, or from reporting possible violations of law to a governmental agency or entity or requires Executive to seek
authorization from the Company or to notify the Company if Executive makes such reports. Nor shall anything in this Agreement interfere
with Executive’s right to participate or cooperate in a proceeding with the EEOC or any other federal, state, or local government
agency investigating or enforcing discrimination, or any other violation of state or federal law. However, in the event that a
complaint is filed against the Company or its successors or assigns on Executive’s behalf or by Executive with an administrative
agency relating to any act or omission occurring prior to the date of this Agreement, Executive waives and relinquishes any claim
for damages or monetary recovery, except for any monetary award from a government-administered whistleblower program. Executive
represents and warrants that Executive has not filed any complaint, charge, or lawsuit against the Releasees with any government
agency or any court.



 


		(c)	Executive agrees never to seek personal recovery from Releasees in any forum
for any claim covered by the above waiver and release language, except that Executive may bring a claim under the ADEA to challenge
this Agreement. Nothing in this Agreement is intended to reflect any party’s belief that Executive’s waiver of claims
under ADEA is invalid or unenforceable, it being the intent of the parties that such claims are waived.



 


		(d)	Executive agrees that neither this Agreement, nor the furnishing of the
consideration for this Agreement, shall be deemed or construed at any time to be an admission by the Company, any Releasees or
Executive of any improper or unlawful conduct.



 


		(e)	The Parties acknowledge and agree that Executive’s obligations under
Section 5 (Company Information and Company Materials), Section 6 (Non-Competition), Section 7 (Non- Solicitation of Customers),
and Section 8 (Non-Solicitation of Employees) of the Employment Agreement survive the termination of employment and are incorporated
herein by reference. Executive affirms that the restrictive covenants in the Employment Agreement are reasonable and necessary
to protect the legitimate interests of the Company and its affiliates, and that Executive received adequate consideration in exchange
for agreeing to those restrictions and will abide by those restrictions. The Parties acknowledge and agree that Section 2 (Duties)
of the Employment Agreement expired as of the Termination Date and Section 5 Confidential Information shall survive for as long
as the information remains confidential. The Parties also acknowledge and agree that Section 6, Section 7 and Section 8 of the
Employment Agreement survive for a period of one (1) year following the Termination Date and shall therefore expire on November
16, 2019.



 






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		(f)	Executive represents and warrants that he has been paid all wages due and
owing as of the date of this Agreement, to which he would be entitled under the Fair Labor Standards Act, the Maryland Wage and
Hour Law, the Maryland Wage Payment and Collection Act, all other applicable federal, state or municipal laws or ordinances, and
the terms and conditions of any agreement or arrangement between Executive and the Company.



 


		(g)	Executive acknowledges and recites that:



 


		a.	Executive has executed this Agreement knowingly and voluntarily;



 


		b.	Executive has read and understands this Agreement in its entirety;



 


		c.	Executive has been advised and directed orally and in writing (and this
subparagraph (c) constitutes such written direction) to seek legal counsel and any other advice Executive wishes with respect to
the terms of this Agreement before executing it;



 


		d.	Executive’s execution of this Agreement has not been forced by any employee
or agent of the Company, is without coercion, duress, fraud, or undue influence of any kind and Executive has had an opportunity
to negotiate about the terms of this Agreement; and



 


		e.	Executive has been offered 45 calendar days after receipt of this Agreement to consider its terms
before executing it.



 


(c)               
Confidentiality: The Parties shall strictly maintain the confidentiality of the circumstances, negotiations,
terms, and conditions of this Agreement, sharing such information only with their counsel and accountant and as may be required
by judicial or other compulsory process and, in the Company’s case, with senior management and regulatory agencies with jurisdiction
over the Company only and, in Executive’s case, with Executive’s spouse and/or immediate family members (provided that
Executive will cause such family members to maintain the confidentiality of the circumstances, negotiations, terms, and conditions
of this Agreement). The Parties agree that either party will give written notice to the other party when compelled by judicial
or other compulsory process to disclose the terms and conditions of this Agreement. Notwithstanding anything contained herein to
the contrary, the Parties shall be entitled to disclose the terms and conditions of this Agreement in any judicial proceeding or
arbitration to enforce the provisions of this Agreement, and the Executive shall be entitled to disclose the terms and conditions
of this Agreement to any bank or other institution which extends credit to the Executive or to which the Executive applies for
an extension of credit. A breach of the confidentiality of the circumstances, negotiations, terms, and conditions of this Agreement
shall be deemed material.


 






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(d)              
Non-Disparagement: Neither of the Parties shall state nor infer that theirs was anything other than a separation
of mutual convenience from their employment relationship. Neither of the Parties shall disparage the other with respect to any
of the circumstances of employment. The Company shall respond to requests for information from Company Employees and third parties
regarding the circumstances of the Executive’s decision to “pursue other opportunities.”


 


(e)               
Governing Law and Venue:  This Agreement is intended to be effective and operate pursuant to the laws of the
State of Maryland. In the event litigation is filed to enforce rights under this Agreement, such suit will be filed in a state
or federal court located in Maryland or when the parties hereto consent to such venue.


 


(f)               
Severability: The separate provisions of this Agreement are severable. Should any provision or portion of
a provision of this Agreement be declared or determined by any Court of competent jurisdiction to be illegal, invalid or unenforceable,
the legality, validity and enforceability of the remaining parts, terms and provisions shall not be affected thereby, and said
illegal, unenforceable or invalid part, term or provision will be deemed not to be part of this Agreement.


 


(g)              
Modifications: No modification or waiver of any of the terms of this Agreement shall be valid unless made
in writing and signed by the Parties.


 


(h)              
Contractual Terms: The terms of this Agreement, including the Preamble and the Introductory Statement, are
contractual and not mere recital.


 


(i)                
Full and Complete Settlement: This Agreement and the Employment Agreement, as clarified and amended hereby,
set forth the entire agreement between the Parties and, together, fully supersede any and all prior negotiations, agreements, or
understandings, whether written or oral, between the Parties pertaining to the subject matter of this Agreement and the Employment
Agreement.


 


(j)                
No Admission of Liability: It is expressly understood and agreed to that the making of this Agreement by the
Company, its affiliates or parent companies, is not an admission that any action taken or not taken with respect to the Executive
was improper or unjust, or that the Company, its affiliates, or any of its employees, officers, directors or agents acted in any
manner that violated any law or duty owed to the Executive arising out of the Executive’s employment with the Company, and
liability is expressly denied by the Company.


 






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(k)              
Construction: This Agreement shall be binding and inure to the benefit of the Parties hereto, their respective
successors, assigns, heirs, partners, agents, and representatives, as well as their officers, directors, shareholders, related
or affiliated companies or entities, subsidiaries, successors, predecessors, agents, and attorneys. Whenever used, the singular
shall include the plural, the plural the singular, and the use of any gender shall be applicable to all genders.


 


		(l)	Older Workers Benefit Protection Act: 



 


		(a)	The Executive represents, warrants, and acknowledges that he has carefully read this Agreement
and has had sufficient opportunity to review and deliberate the foregoing with counsel of his own choosing. By executing this Agreement,
the Executive is representing that he understands its contents, that he knowingly and voluntarily waives and releases, without
coercion, the claims described in this Agreement, specifically including claims under the ADEA, and signs this Agreement as his
free and independent act. The Executive further acknowledges that the waivers and releases he provides in this Agreement are made
with full appreciation that he is forever foreclosed from pursuing any of the rights so waived or released which arise on or before
the date of execution of this Agreement. In addition, the Executive also acknowledges that the consideration given for the waivers
and releases contained in this Agreement are in addition to anything of value to which the Executive was already entitled.



 


		(b)	The Executive further acknowledges that he has been advised by this writing that (i) he should
consult with an attorney prior to executing this Agreement and that he has, in fact, done so; (ii) he has up to forty five (45)
days from receipt of this Agreement to consider and accept it; and (iii) he has seven (7) days following his execution of this
Agreement to revoke any acceptance of this Agreement (“Revocation Period”). Should the Executive wish to revoke his
acceptance within the 7-day period, he must deliver a written notice of his intent to revoke acceptance by that date to:






 


Howard Bank


Attn: Chief Executive Officer


3301 Boston Street


Baltimore, MD 21224


 





Any written notice from the Executive intending
to rescind his release of claims must be received no later than the final day of the Revocation Period.


 






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		(c)	Notwithstanding the fact that the Executive has been given forty five (45) days to consider this
Agreement, he may, in his sole discretion, elect to execute this Agreement prior to the end of such forty five (45) day period,
then, by his signature below, the Executive represents and warrants that his decision to shorten this time was done knowingly and
voluntarily and was not induced by fraud, misrepresentation, or any threat to withdraw or alter the benefits provided by the Executive
herein, prior to end of such forty five (45) day consideration period. The parties agree changes, whether material or immaterial,
to this Agreement shall not restart the running of the forty five(45) day time period.



 


		(d)	The Executive acknowledges and agrees that no inducements, representations, or agreements have
been made or relied upon to make this Agreement except as expressly stated herein, and that he is waiving certain important rights
that he might otherwise have had.



 


		(m)	Execution:  The executed, signed copy of this Agreement shall be mailed or hand-delivered
by the Employee to:



 


Howard Bank


Attn: Chief Executive Officer


3301 Boston Street


Baltimore, MD 21224


 


 


		(n)	Binding Effect: This Agreement shall be binding upon and shall inure to the benefit
of the Company, the Employee, and their respective heirs, personal representatives, successors, and assigns, as the case may be.



 





 


PLEASE READ THIS AGREEMENT CAREFULLY. IT CONTAINS
A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS.


 





 


 


 


[Signature Page
Follows]


 


 









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IN WITNESS WHEREOF,
the Parties hereto, intending that this Agreement be under seal, have signed and sealed their Agreement.


 








	Attest:		HOWARD BANK	 
	 	 	 	 	 
	 	 	 	 	 
			By:	 	(Seal)  
	 		 	Mary Ann Scully	 
	 		 	CEO	 
	 	 	 	 	 
	Date Provided To Executive: 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	Witness:		Terms Accepted:	 
	 	 	 	 	 
	 	 	 	 	 
			 	 	(Seal)
	 		 	Executive: James D. Witty	 







 



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