Exhibit 10.2


 


AMENDED
AND RESTATED


EMPLOYMENT
AGREEMENT


 


This Amended and Restated
Agreement (“Agreement”) is made as of the 2nd day of December, 2008,
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 (the “2003 Agreement”), pursuant
to which Paul serves as the Chairman of the Company; and


 


WHEREAS, the parties
believe that amendment of the 2003 Agreement is appropriate in order to ensure
that Section 409A(a)(1)(B) of the Internal Revenue Code does not
impose additional tax and interest on payments to Paul; and


 


WHEREAS, the parties believe that amendment of the
2003 Agreement is appropriate in order to ensure that the provisions thereof do
not impede the ability of the Company to receive funds from the U.S. Department
of Treasury pursuant to the Troubled Assets Relief Plan Capital Purchase
Program; and


 


WHEREAS, to accomplish
the foregoing, the parties desire to hereby enter into this Agreement to
supersede and replace the 2003 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 December 2, 2008 (the “Effective Date”)
and shall continue until December 1, 2011 (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 2, 2009, 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 1, 2012, and on December 2, 2010, 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 1, 2013.


 


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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 $350,000 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.  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 (“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 


 


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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 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 


 


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assets
of the Company, other than a transfer of assets to a related Person which is
not treated as a change in control event under §1.409A-3(i)(5)(vii)(B) of
the U.S. Treasury Regulations;


 


(B)           any person, entity or group (each
within the meaning of Sections 13(d) and 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”)) shall become the
beneficial owner (within the meaning of Rules 13d-3 and 13d-5 under the
Exchange Act), directly or indirectly, of securities of the Company
representing more than fifty percent (50%) of the voting power of all
outstanding securities of the Company entitled to vote generally in the
election of directors of the Company (including, without limitation, any
securities of the Company that any such Person has the right to acquire
pursuant to any agreement, or upon exercise of conversion rights, warrants or
options, or otherwise, which shall be deemed beneficially owned by such
Person); or


 


(C)           over a twelve (12) month period, a
majority of the members of the Board of Directors of the Company are replaced
by directors whose appointment or election was not endorsed by a majority of
the members of the Board of Directors of the Company in office prior to such
appointment or election.


 


Notwithstanding the
foregoing, if the event purportedly constituting a Change in Control under Section 6(b)(ii)(A),
(B) or C) does not also constitute a “change in ownership” of the Company,
a “change in effective control” of the Company, or a “change in the ownership
of a substantial portion of the assets” of the Company within the meaning of Section 409A,
then such event shall not constitute a “Change in Control” hereunder.


 


(c)                                  (i)            Upon any termination of this
Agreement pursuant to Section 6(a)(i), 6(a)(ii). 6(a)(iv), 6(b)(i) or
6(b)(ii), 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 2.99 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
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.


 


(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



 


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receivership of the Company or any other entity that
is treated as the same employer under EESA, in each case as determined under
the regulations implementing Section 111(b) of EESA;


 


(iii)          Authorities
Period” means the period under which the authorities of Section 101 of
EESA are in effect, as determined pursuant to Section 120 thereof;


 


(iv)          “Determining
Firm” means a reputable law or accounting firm selected by the Bank to make a
determination pursuant to this Article 7;


 


(v)           “EESA”
means the Emergency Economic Stabilization Act of 2008, Public Law 110-343, as
implemented by any guidance or regulations thereunder;


 


(vi)          “Incentive
Compensation” means all bonus and other incentive-based compensation, as those
terms are applied under EESA;


 


(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 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 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 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 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 


 


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thereof,, together with interest at the applicable
federal rate determined pursuant to Section 1274(d) of the Code.


 


(c) Compliance
with Section 409A.


 


(i)            It
is the intention of the parties hereto that this Agreement and the payments
provided for hereunder shall not be subject to, or shall be in accordance with,
Section 409A, and thus avoid the imposition of any tax and interest on
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 


 


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personal and may not be
assigned or delegated without the Company’s prior written consent.


 


12.
Entire Agreement. This Agreement contains the entire agreement
of the parties with respect to tile subject matter hereof. It may not be
changed orally, but only by an agreement in writing executed by the party
against whom enforcement of any waiver, change, modification, extension or
discharge is sought. Not in limitation of the foregoing, this Agreement
supersedes and replaces the 2003Agreement, 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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