Document:

EXHIBIT 10.3

                              EMPLOYMENT AGREEMENT
                              --------------------

         THIS EMPLOYMENT AGREEMENT  ("Agreement") is made and entered into as of
the 31st day of December, 2000, by and between EagleBank, a Maryland corporation
("Eagle"), and Thomas D. Murphy ("Murphy").

                                     RECITAL
                                     -------

         Eagle  desires to retain  Murphy as the  Executive  Vice  President and
Chief Operating  Officer of Eagle and Murphy desires to accept such  employment,
all upon the terms and conditions hereinafter set forth.

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

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

                  1.1      "Commencement Date" means December 31, 2000.

                  1.2      "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 Eagle or
                  any  transaction  contemplated,  undertaken  or proposed to be
                  undertaken by Eagle,  including,  but not necessarily  limited
                  to:

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

                  (b)  the  Federal  Reserve  System,  the  Comptroller  of  the
                  Currency, 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.

                  1.3      "Board" means the Board of Directors of Eagle.

                  1.4      "Bylaws"  means the Bylaws of Eagle as in effect from
                  time to time.

                  1.5      "EBI"  means   Eagle   Bancorp,   Inc.,   a  Maryland
                           corporation

                  1.6      "Person"  means any  individual,  firm,  association,
                           partnership,  corporation, limited liability company,
                           group,  governmental  agency or other  authority,  or
                           other organization or entity.

                  1.7      "President"  means the President and Chief  Executive
                           Officer of Eagle.

         2.       Employment; Term.
                  -----------------

                  2.1  Position.  Eagle  hereby  employs  Murphy to serve as the
                  Executive Vice President and Chief Operating Officer of Eagle.
                  Murphy  shall  also  be a  member  of the  Board,  subject  to
                  election by the  shareholders  of Eagle in accordance with the
                  Bylaws.

                  2.2 Term. The term of this  Agreement and Murphy's  employment
                  hereunder  shall  commence  with  the  Commencement  Date  and
                  continue until  December 31, 2003 (the "Term"),  unless sooner
                  terminated   in  accordance   with  the   provisions  of  this
                  Agreement.
                                       1
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         3.       Duties of Murphy.
                  -----------------

                  3.1 Nature and Substance.  Murphy shall report directly to the
                  President and shall be under the  direction of the  President.
                  The specific powers and duties of Murphy shall be established,
                  determined  and modified by and within the  discretion  of the
                  Board, including (but not necessarily be limited to):

                  (a) the preparation  and  presentation to the Board of budgets
                  and adherence of Eagle to those approved by the Board;

                  (b) the provision of such reports,  updates and other data and
                  information  as may be  reasonably  required by Eagle and Bank
                  Regulatory Agencies;

                  (c)  subject to  guidelines  and/or  criteria  established  by
                  Eagle,  the  hiring,  promotion,  supervision,  retention  and
                  discharge of all employees,  except for executive  officers of
                  Eagle at or above the level of Executive Vice President;

                  (d) the formulation and  implementation of employee  personnel
                  policies and benefits, subject to approval by the Board;

                  (e) the  promotion  of the  reputation  and  business of Eagle
                  within the community;

                  (f)  the  advancement  of  the  business  purposes  of  Eagle,
                  including,  but  not  limited  to,  business  development  and
                  customer, depositor and public relations;

                  (g)  participation  in and service  upon such  committees  and
                  subcommittees  as  may  be  directed  by  the  Board,  without
                  additional compensation to that set forth herein below;

                  (h) such other  duties of the  Executive  Vice  President  and
                  Chief  Operating  Officer as may be  enumerated in the Bylaws;
                  and

                  (i) such other  duties and  responsibilities  as are  normally
                  incident to the position of Executive Vice President and Chief
                  Operating  Officer,  including  assisting,   directing  and/or
                  supervising  the operations and other  employees of Eagle upon
                  such terms, conditions, rules, policies and regulations as may
                  be established by the Board from time to time.

                  3.2 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 Eagle and toward its  successful
                  operation.  Murphy  shall  comply  with  all  laws,  statutes,
                  ordinances,  rules and regulations  relating to his employment
                  and duties.  During the Term of this  Agreement,  Murphy shall
                  not at any time or place  directly  or  indirectly  engage  or
                  agree to engage in any  business  or  practice  related to the
                  banking  business  with or for any other  Person to any extent
                  whatsoever, other than to the extent required by the terms and
                  conditions  of  this  Agreement.   Murphy  agrees  that  while
                  employed  by Eagle he will  not,  without  the  prior  written
                  consent  of the  Board,  engage,  or  obtain  a  financial  or
                  ownership  interest,   in  any  other  business,   employment,
                  consulting or similar  arrangement,  or other  undertaking (an
                  "Outside  Arrangement")  if  such  Outside  Arrangement  would
                  interfere with the satisfactory performance of Murphy's duties
                  to Eagle,  present a conflict of interest  with Eagle,  breach
                  Murphy's  duty of loyalty  or  fiduciary  duties to Eagle,  or
                  otherwise  conflict  with the  provisions  of this  Agreement;
                  provided,  however,  that Murphy shall not be  prevented  from
                  investing  Murphy's assets in such form or manner as would not
                  require any services on the part of Murphy in the operation or
                  the affairs of the entities in which such investments are made
                  and  provided  such  investments  do not present a conflict of
                  interest with Eagle. Murphy shall promptly notify the Board of
                  any Outside  Arrangement  and  provide  Eagle with any written
                  agreement in connection therewith.

                                       2
<PAGE>

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

                  4.1 Salary.  Beginning on the Commencement  Date, Murphy shall
                  be paid a salary  ("Salary")  of One  Hundred  Sixty  Thousand
                  Dollars  ($160,000.00) on an annualized basis. Eagle shall pay
                  Murphy's  Salary  in equal  installments  in  accordance  with
                  Eagle's  regular  payroll  periods as may be set by Eagle from
                  time to time.  Murphy's Salary shall be further increased from
                  time to time at the discretion of the Board.

                  4.2 Bonus. During the Term, Murphy shall be paid a bonus ("COO
                  Bonus") as approved by the Benefits Committee and the Board.

                  4.3  Withholding.  Payments  of Salary and COO Bonus  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.

                  4.4  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 Eagle for executive
                  officers.

                  4.5 Office Space.  Eagle will provide  customary  office space
                  and office  support to Murphy  beginning  on the  Commencement
                  Date.

                  4.6 Car  Allowance.  Eagle  will  pay  Murphy  a  monthly  car
                  allowance of Six Hundred Fifty Dollars ($650.00).

                  4.7 Non-Life  Insurance.  Eagle will provide Murphy with group
                  health,  disability and other insurance as Eagle may determine
                  appropriate and arrange for all employees of Eagle.

                  4.8 Life Insurance.
                      ----------------
                  4.8.1 Eagle will obtain,  and maintain at all times while this
                  Agreement  is in effect,  a term life  insurance  policy  (the
                  "Policy")  on Murphy in the  amount  of Six  Hundred  Thousand
                  ($600,000.00), the particular product and carrier to be chosen
                  by Eagle in its  discretion.  Murphy  shall  have the right to
                  designate the  beneficiary  of the Policy.  Eagle will pay the
                  premium for the Policy.  In the event  Murphy is rated and the
                  premium  exceeds the standard rate, the Policy amount shall be
                  lowered to the  maximum  amount that can be  purchased  at the
                  standard rate for a Six Hundred Thousand ($600,000.00) policy.
                  For example,  if Murphy is rated and the  standard  rate for a
                  Six Hundred Thousand ($600,000.00) policy would acquire a Five
                  Hundred  Thousand  ($500,000.00)  policy,  Eagle would only be
                  required to purchase the Five Hundred  Thousand  ($500,000.00)
                  policy.

                  4.8.2 Eagle may, at its cost,  obtain and  maintain  "key-man"
                  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 Eagle in connection
                  with such insurance.

                  4.9 Expenses. Eagle shall promptly upon presentation of proper
                  expense reports therefor  reimburse Murphy, in accordance with
                  the policies and procedures  established  from time to time by
                  Eagle for its senior  executive  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 Eagle,  including
                  appropriate  membership  fees,  dues and the cost of attending
                  meetings and conventions.

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

                  4.11 Warrants.  Murphy shall be issued  warrants or options to
                  acquire  shares  of  EBI  stock  from  time  to  time  at  the
                  discretion  of the  Board  of  Directors  of EBI  following  a
                  recommendation by the Board.

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<PAGE>

                  4.12 Other Benefits. While this Agreement is in effect, Murphy
                  shall be entitled to all other  benefits  that Eagle  provides
                  from time to time to its senior executive officers, including,
                  but not limited to, any stock option plan and other  incentive
                  plans.

                  4.13 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.       Conditions  Subsequent  to Continued  Operation  and Effect of
                  Agreement.
                  --------------------------------------------------------------

                  5.1  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 Eagle'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  Eagle.  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 Eagle 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.

         6.       Termination  of  Agreement.  This  Agreement may be terminated
                  prior to expiration of the Term as provided below.

                  6.1      Definition of Cause.  For purposes of this Agreement,
                  "Cause" means:

                           (a)   any   act   of   theft,   fraud,    intentional
                           misrepresentation  or  similar  conduct  by Murphy in
                           connection  with  or  associated  with  the  services
                           rendered by Murphy to Eagle 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 5.1 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)  material  failure  of  Eagle to  achieve  budget
                           requirements,   performance   standards   or  targets
                           established annually by the Board, where such failure
                           is not the result of economic  conditions  or lack of
                           appropriate effort and/or due diligence by Murphy; or

                           (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  Eagle  detailing  and  describing  such
                           conduct:

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

                                    (ii)     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);

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<PAGE>

                                    (iii)    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    as    Executive    Vice
                                             President   and   Chief   Operating
                                             Officer; or

                                    (iv)     willful or  intentional  misconduct
                                             on the part of Murphy that  results
                                             in  substantial  injury to Eagle or
                                             any of its parent,  subsidiaries or
                                             affiliates.

                  6.2      Termination by Eagle.
                           ---------------------

                           6.2.1 For Cause. Eagle shall have the right to cancel
                           and terminate this Agreement and Murphy's  employment
                           for  Cause   immediately  on  written  notice,   with
                           Murphy's  compensation  and  benefits  ceasing  as of
                           Murphy's last day of employment,  provided,  however,
                           that Murphy shall be entitled to benefits through the
                           last day of employment  and accrued  compensation  to
                           that date.

                           6.2.2  Without  Cause.  Eagle shall have the right to
                           cancel and  terminate  this  Agreement  and  Murphy's
                           employment  at any  time on  written  notice  without
                           Cause   for   any  or  no   reason,   with   Murphy's
                           compensation and benefits ceasing as of Murphy's last
                           day  of  employment,  subject  to the  provisions  of
                           Section 6.4. and Article 8.

                  6.3  Termination  by  Murphy.  Murphy  shall have the right to
                  cancel and terminate  this Agreement and his employment at any
                  time on sixty  (60) days  prior  written  notice to the Board,
                  with Murphy's compensation and benefits ceasing as of Murphy's
                  last day of employment,  provided,  however, that Murphy shall
                  be entitled to benefits through the last day of employment and
                  accrued compensation to that date.

                  6.4  Severance.   Except  as  set  forth  below,  if  Murphy's
                  employment with Eagle is terminated by Eagle or its successors
                  during the Term without Cause, Eagle shall, for the balance of
                  the Term,  continue  to pay  Murphy,  in the  manner set forth
                  below,  Murphy's  Salary at the rate being paid as of the date
                  of  termination  plus  the  unpaid  portion  of any COO  Bonus
                  previously  approved  as provided  in Section  4.2;  provided,
                  however,  that Murphy not be entitled to any such  payments of
                  Salary if (i) his employment is terminated due to his death or
                  long-term disability,  or (ii) this Agreement is rendered null
                  and void  pursuant to Section  5.1, or (iii) there is a Change
                  in Control Termination (as defined in Section 8.2). Any Salary
                  and COO Bonus due Murphy pursuant to this Section 6.4 shall be
                  paid to Murphy in  installments on the same schedule as Murphy
                  was paid  immediately  prior to the date of termination,  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 7 of this
                  Agreement,  Murphy's  entitlement  to any  Salary or COO Bonus
                  payable pursuant to this Section 6.4, if and to the extent not
                  yet paid, shall thereupon immediately cease and terminate.

         7.       Confidentiality; Non-Competition; Non-Interference.
                  ---------------------------------------------------

                  7.1 Confidential  Information.  Murphy,  during  employment by
                  Eagle,  will have access to and become  familiar  with various
                  confidential and proprietary information of Eagle, its parent,
                  subsidiaries and/or affiliates and/or relating to the business
                  of  Eagle,   its  parent,   subsidiaries   and/or   affiliates
                  ("Confidential  Information"),  including, but not limited to:
                  business plans;  operating 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  Eagle,  its  parent,  subsidiaries  and/or
                  affiliates  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.

                  7.2  Nondisclosure.  Murphy  hereby  covenants and agrees that
                  Murphy  shall  not  at  any  time,   directly  or  indirectly,
                  disclose,  divulge,  reveal, report,  publish, or transfer any
                  Confidential  Information to any Person,  or

                                       5
<PAGE>

                  use  Confidential  Information  in any way or for any purpose,
                  except as  required in the course of  Murphy's  employment  by
                  Eagle.  The  covenant  set forth in this Section 7.2 shall not
                  apply to information  now known by the public or which becomes
                  known  generally  to the public  (other  than as a result of a
                  breach of this  Article 7 by  Murphy) or  information  that is
                  customarily shown or disclosed.

                  7.3  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  Eagle,  its  parent,   subsidiaries   and/or
                  affiliates and/or their businesses ("Eagle Information") shall
                  at all times remain their exclusive property. Promptly after a
                  request by Eagle or the  termination  of Murphy's  employment,
                  Murphy  shall take  reasonable  efforts to (i) return to Eagle
                  all Documents in any tangible form (whether originals,  copies
                  or  reproductions)   and  all  computer  disks  containing  or
                  embodying any Document or Eagle Information and (ii) purge and
                  destroy all Documents and Eagle  Information in any intangible
                  form  (including  computerized,  digital  or other  electronic
                  format) as may be  requested in writing by the Chairman of the
                  Board of Eagle,  and Murphy  shall not retain in any  tangible
                  form any such Document or any summary,  compilation,  synopsis
                  or abstract of any Document or Eagle Information.

                  7.4      Non-Competition.
                           ----------------

                           7.4.1  Murphy  hereby  acknowledges  and agrees that,
                           during the course of employment by Eagle, Murphy will
                           become  familiar  with and involved in all aspects of
                           the business and  operations of Eagle.  Murphy hereby
                           covenants and agrees that from the Commencement  Date
                           until  the  earlier  to  occur  of (a) the  date  one
                           hundred  eighty (180) days after Murphy's last day of
                           employment  with  Eagle  or (b)  December  31,  2003,
                           Murphy  will  not at any  time  (except  for  Eagle),
                           directly or indirectly, in any capacity (whether as a
                           proprietor,    owner,   agent,   officer,   director,
                           shareholder,  partner,  principal,  member, employee,
                           contractor,   consultant  or  otherwise)  render  any
                           services  to a bank or savings  and loan or a holding
                           company of a bank or savings and loan (in any case, a
                           "Bank") with  respect to any Bank  office,  branch or
                           other  facility  (in any case,  a  "Branch")  that is
                           located within a thirty-five  (35) mile radius of the
                           location of Eagle's  headquarters  on the date hereof
                           (including, without limitation, being involved in any
                           manner   in  the   operations   of  or   having   any
                           responsibilities with respect to any Branch).

                           7.4.2  This  Section  7.4 shall not apply if prior to
                           December  31,   2003,   there  is  a  (i)  merger  or
                           consolidation  of Eagle  with a third  party in which
                           Eagle is not the survivor, (ii) sale of a controlling
                           interest in Eagle to a third party or (iii) a sale of
                           all or substantially all of the business or assets of
                           Eagle to a third  party,  and this  Agreement  is not
                           assigned to such third  party or Murphy's  employment
                           hereunder is otherwise terminated by such third party
                           in  connection  with such  merger,  consolidation  or
                           sale.  Further,  mere  ownership  of  less  than  two
                           percent (2%) of the  securities  of any publicly held
                           corporation  shall not constitute a violation of this
                           Section.

                  7.5 Non-Interference.  Murphy hereby covenants and agrees that
                  from the  Commencement  Date until the earlier to occur of (a)
                  the date one hundred eighty (180) days after Murphy's last day
                  of employment with Eagle or (b) December 31, 2003, Murphy will
                  not,  directly or indirectly,  for himself or any other Person
                  (whether as a proprietor,  owner,  agent,  officer,  director,
                  shareholder, partner, principal, member, employee, contractor,
                  consultant or any other capacity), induce or attempt to induce
                  any customers,  suppliers,  officers, employees,  contractors,
                  consultants, agents or representatives of, or any other person
                  that has a  business  relationship  with,  Eagle or any of its
                  parent, subsidiaries and affiliates to discontinue,  terminate
                  or reduce the extent of their  relationship  with Eagle and/or
                  any such parent, subsidiary or affiliate or to take any action
                  that would disrupt or otherwise be disadvantageous to any such
                  relationship.

                  7.6  Injunction.  In the event of any breach or  threatened or
                  attempted breach of any such provision by Murphy, Eagle 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

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<PAGE>

                  injunctive  relief  enjoining and restraining  Murphy and each
                  and every other Person concerned therein from the continuation
                  of  such   volatile  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.

                  7.7      Reasonableness.
                           ---------------

                           7.7.1 Murphy has carefully  read and  considered  the
                           provisions  of this  Article 7 and,  having  done so,
                           agrees that the restrictions and agreements set forth
                           in this  Article  7 are fair and  reasonable  and are
                           reasonably   required  for  the   protection  of  the
                           interests  of Eagle and its  business,  shareholders,
                           directors,  officers and  employees.  Murphy  further
                           agrees  that  the  restrictions  set  forth  in  this
                           Agreement  will not impair or  unreasonably  restrain
                           Murphy's ability to earn a livelihood.

                           7.7.2 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  7  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.

         8.       Change in Control.
                  ------------------

                  8.1      Definition.  "Change in  Control"  means and shall be
                  deemed to have occurred if:

                  (a) there shall be consummated any  consolidation or merger of
                  EBI  in  which  EBI  is  not  the   continuing   or  surviving
                  corporation or pursuant to which shares of EBI's capital stock
                  are converted  into cash,  securities or other  property other
                  than a consolidation  or merger of EBI in which the holders of
                  EBI's voting stock  immediately  before the  consolidation  or
                  merger  shall,  upon  consummation  of  the  consolidation  or
                  merger,  own at least 50% of the voting stock of the surviving
                  corporation,  or any sale of all or  substantially  all of the
                  assets of EBI;

                  (b) any  person  (within  the  meaning of  Sections  13(d) and
                  14(d)(2) of the  Securities  Exchange Act of 1934,  as amended
                  (the "Exchange Act")) shall after the Commencement Date become
                  the  beneficial  owner  (within the meaning of Rules 13d-3 and
                  13d-5 under the  Exchange  Act),  directly or  indirectly,  of
                  securities of EBI representing fifty-one percent (51%) or more
                  of the voting power of then all outstanding  securities of EBI
                  entitled to vote generally in the election of directors of EBI
                  (including, without limitation, any securities of EBI 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)  individuals who at the  Commencement  Date constitute the
                  entire Board of Directors of EBI and any new  directors  whose
                  election by the Board of Directors of EBI, or whose nomination
                  for election by EBI's  stockholders,  shall have been approved
                  by a vote of at  least a  majority  of the  directors  then in
                  office who either were directors at the  Commencement  Date or
                  whose  election or nomination  for election shall have been so
                  approved,  shall cease for any reason to constitute at least a
                  majority of the Board of Directors of EBI.

                  8.2      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 Eagle is terminated without Cause
                  within one hundred twenty (120) days  immediately (i) prior to
                  and in conjunction  with a Change in Control or (ii) following
                  consummation of a Change in Control; or

                  (b) Murphy is notified  within one hundred  twenty  (120) days
                  immediately prior to or immediately following  consummation of
                  a Change  in  Control  that,  as a  result  of the  Change  in
                  Control, he will not be continued in a

                                       7
<PAGE>

                  comparable   position  (with   comparable   compensation   and
                  benefits) with Eagle to the position  Murphy holds at the time
                  such  notice  is given  if the  notice  is given  prior to the
                  Change in Control or, if the notice is given after a Change in
                  Control,  to the position Murphy held immediately prior to the
                  Change  in  Control,   and  within  fifteen  (15)  days  after
                  receiving such  notification  Murphy notifies Eagle that he is
                  terminating   his   employment  due  to  such  change  in  his
                  employment,  with his last day of  employment  to be  mutually
                  agreed to by Eagle and Murphy but which shall be not more than
                  sixty (60) days after such notice is given by Murphy; or

                  (c) If at the  expiration of the one hundred  twenty (120) day
                  period  immediately  following  consummation  of a  Change  in
                  Control (the "Action  Period") none of the events described in
                  Sections 8.2(a) and 8.2(b) above have occurred, Murphy, within
                  the thirty (30) day period immediately  following the last day
                  of the Action  Period,  notifies  Eagle that he is terminating
                  his employment due to the Change in Control, with his last day
                  of employment to be mutually agreed to by Eagle and Murphy but
                  which shall be not more than sixty (60) days after such notice
                  is given by Murphy.

                  8.3 Change in Control Payment. If there is a Change in Control
                  Termination, 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 last day of employment,  such Change
                  Payment to be made to Murphy within forty-five (45) days after
                  his last day of employment.

                  8.4      Adjustment.
                           -----------

                  (a)   Notwithstanding   anything  in  this  Agreement  to  the
                  contrary,  if the  Determining  Firm (as  defined  in  Section
                  8.4(b))  determines  that any  portion of the  Change  Payment
                  and/or  the   portions,   if  any,   of  other   payments   or
                  distributions in the nature of compensation by Eagle to or for
                  the  benefit of Murphy  (including,  but not  limited  to, the
                  value of the  acceleration  in  vesting of  restricted  stock,
                  options or any other stock-based  compensation) whether or not
                  paid or payable or  distributed or  distributable  pursuant to
                  the  terms of this  Agreement  (collectively  with the  Change
                  Payment, the "Aggregate Payment"),  would cause any portion of
                  the Aggregate  Payment to be subject to the excise tax imposed
                  by Code  Section  4999 or  would  be  nondeductible  by  Eagle
                  pursuant to Code  Section  280G (such  portion  subject to the
                  excise tax or being nondeductible,  the "Parachute  Payment"),
                  the  Aggregate  Payment  will be reduced,  beginning  with the
                  Change Payment,  to an amount which will not cause any portion
                  of the Aggregate Payment to constitute a Parachute Payment.

                  (b) All determinations  required to be made under this Section
                  8.4, will be made by a reputable  law or accounting  firm (the
                  "Determining  Firm") selected by Eagle.  All fees and expenses
                  of the Determining  Firm will be obligations  solely of Eagle.
                  The determination of the Determining Firm will be binding upon
                  Eagle and Murphy.

         9.  Assignability.  Murphy shall have no right to assign this Agreement
         or any of Murphy's rights or obligations  hereunder to another party or
         parties.,

         10. Governing Law. 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 to the
         choice of law rules thereof.

         11. 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
         (1) when hand  delivered to the other party,  or (2) when received when
         by facsimile at the address a number set forth below provided  however,
         that notices given by facsimile  shall no be effective  unless either a
         duplicate copy of such facsimile notice is promptly given by depositing
         same in a States post office first-class  postage prepaid and addressed
         to the parties as set forth below,  or the receiving  party  delivers a
         written  confirmation of receipt for such notice either by facsimile or
         any other  method  permitted  under this sub  additionally,  any notice
         given by facsimile shall be deemed received on the next business day if
         such  notice is  received  after 5:00 p.m.  (recipient's  time) or on a
         non-business  day);  or (3) three (3) business days after the same have
         been  deposited  in  a  United  States  post  office  with  first-class
         certified mail,  return  receipt,  postage prepaid and addressed to the
         parties as set forth  below;  or (4) the next  business  day after same
         have

                                       8
<PAGE>

         been 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  parties  as  set  forth  below  with  next-business-day   delivery
         guaranteed,  provided that the sending party received a confirmation of
         delivery from the delivery service provider. 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.

                  To:      Thomas D. Murphy
                           13205 Betty Lane
                           Silver Spring, MD 20904

                  To:      EagleBank
                           C/O Ronald D. Paul
                           7815 Woodmont Ave.
                           Bethesda, MD 20814

                  cc:      Kennedy, Baris & Lundy
                           David Baris
                           4701 Sangamore Road
                           Suite P-15
                           Bethesda, MD 20816

         12. Entire Agreement. This Agreement contains all of the agreements and
         understandings   between  the  parties   hereto  with  respect  to  the
         employment of Murphy by Eagle,  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.

         13.  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.

         14.  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.

         15. 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.

         16.  Gender  and  Tense.  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.

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

                                       9
<PAGE>

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

         EAGLEBANK

         By:   ______________________

         Title: ______________________

         THOMAS D. MURPHY

         ----------------------------
         Thomas D. Murphy

         ----------------------------
         Date

                                       10EXHIBIT 10.4

                              EMPLOYMENT AGREEMENT

         This Agreement. made as of this 1st day of January, 2001, 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 8101 Glenbrook  Road,
Bethesda, Maryland 20814.

         WHEREAS,  Paul has  extensive  business and  organizational  knowledge,
judgment,  skills, acumen, experience and expertise,  particularly in connection
with the conduct of the business of managing and operating banking institutions,
which  knowledge,  judgment,  experience,  acumen  and  expertise  would  be  of
significant  benefit to the Company and its wholly owned  subsidiary,  EagleBank
(the "Bank"); and

         WHEREAS, the Company desires to obtain the benefit of Paul's knowledge,
judgment, experience, acumen and expertise; and

         WHEREAS,  the  Company  desires to  continue  to receive the benefit of
Paul's  services in the future,  and to induce Paul to continue to provide  such
services,  and to retain Paul as an employee  in  accordance  with the terms and
conditions of this Agreement; and

         WHEREAS, Paul desires to be employed by and to continue to provide such
services to the Company. In accordance with such terms and conditions;

         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  President  of  the  Company,  subject  to the  supervision  and
direction of the Board of Directors of the Company. As President of the Company,
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  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 and/or the Company 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  hereunder  shall
commence as of January 1, 2001and shall  continue  until  December 31, 2003 (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  other  party,  not less than 60 days  prior to
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 January 1, 2002,
absent  termination or notice of termination as provided above, the term of this
Agreement shall  automatically be extended for one year, and the Renewed Term of
this  Agreement  shall continue until December 31, 2004, and on January 1, 2003,
absent  termination or notice of termination as provided above, the term of this
Agreement shall  automatically be extended for one year, and the Renewed term of
this Agreement shall continue until December 31, 2005.

         3. Compensation.  (i) As compensation for Paul's employment  hereunder,
Paul shall be entitled to base cash

                                       1
<PAGE>

compensation  ("Base  Compensation")  from the  Company at a rate of $50,000 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. The parties hereto
acknowledge  and agree that it is anticipated  that during the Initial Term, the
Bank will pay Paul $25,000 per year, but the failure of the Bank to pay Paul any
or all of such amount  shall not relieve the Company of the  obligation  to make
any payment hereunder.

         (ii)     During the term of this  Agreement,  Paul shall be entitled to
receive on the last  business day of each March,  June,  September  and December
(each an "Option Compensation  Date"),  options to purchase the number of shares
of the Company's  Common Stock  determined by dividing $6,250 by the fair market
value of the common  stock as of the close of business on such day (the  "Option
Compensation").  Such options shall be immediately vested in full, shall have an
exercise  price  equal to the fair market  value of the common  stock as of such
date,  and a term of ten years.  To the extent  permitted by applicable  law and
available for issuance  under the Company's 1998 Stock Option Plan, or successor
plan,  such  options  shall be  incentive  stock  options.  If Paul shall not be
eligible to receive  incentive  stock options with respect to all or any portion
of the options to which he shall be entitled, or if sufficient incentive options
are not available for issuance, such options shall be nonincentive options.

         (iii)    During the period of the  Agreement,  periodic  increases (but
not  decreases)  in the rate of Base  Compensation  and/or  Option  Compensation
hereunder  may  be  made  by the  Board  of  Directors  of  the  Company  on the
recommendation  of the  Benefits  Committee  of the Company or  comparable  Bank
committee serving such purpose for the Company.

         (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.

         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 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 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

                                       2
<PAGE>

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 Renewal  Term,  as  applicable,  by Paul under any of the  following
circumstances:

                  (i) Upon the  failure  of the  Company  and 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 occur in the following
                  circumstances:   (1)  upon   consummation   of  a  merger   or
                  consolidation  of the Company or the Bank, or a sale of all or
                  substantially  all of the  assets of the  Company  or the Bank
                  following which the  stockholders  of the Company  immediately
                  preceding such consummation,  in the aggregate,  own less than
                  50% of the  aggregate  number of votes  entitled to be cast in
                  the election of directors of the  surviving  entity  resulting
                  from such transaction; (ii) upon any "person" (as that term is
                  used  for  purposes  of  Sections   13(d)  and  14(d)  of  the
                  Securities  Exchange  Act of 1934  (the  "Exchange  Act"))  or
                  persons acting as a "group" (as that term is used for purposes
                  of Section 13(d) of the Exchange Act) or otherwise  "acting in
                  concert"  (as that term is used for  purposes  of the  federal
                  Change in Bank  Control  Act)  becoming the direct or indirect
                  "beneficial  owner"  (as  that  term is used for  purposes  of
                  Section  13(d)  of the  Exchange  Act)  of 51% or  more of the
                  outstanding  shares of capital stock of the Company;  or (iii)
                  if  individuals  who are members of the Board of  Directors of
                  the  Company as of the date  hereof  (the  "Incumbent  Board")
                  cease,  for any reason,  to  constitute at least a majority of
                  the Board of Directors, provided that any person who becomes a
                  member  of the Board of  Directors  of the  Company  and whose
                  nomination, election or appointment as a director was approved
                  by at  least  two  thirds  of  the  directors  comprising  the
                  Incumbent Board, or by a nominating  committee of the Board of
                  Directors,  the  membership  of which was approved by at

                                       3
<PAGE>

                  least two thirds of the  directors  comprising  the  Incumbent
                  Board,   shall,  for  purposes  of  this  subclause  (iii)  be
                  considered as a member of the Incumbent Board.

         (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 and Option Compensation and any other amounts due
                  hereunder to the date of such termination, in a lump sum or in
                  periodic payments in accordance with the provisions hereof, at
                  the election of Paul or his estate,  an amount, in cash, equal
                  to  2.99  times  the  rate  of Base  Compensation  and  Option
                  Compensation in effect at the date of termination.

                  (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.

         (d) Notwithstanding  anything in this Agreement to the contrary, if any
of the payments  provided for under this Agreement (the  "Agreement  Payments"),
together with any other  payments that Paul has the right to receive (such other
payments  together  with the  Agreement  Payments  are referred to as the "Total
Payments"),  would  constitute  a  "parachute  payment"  as  defined  in Section
280G(b)(2)  of the  Internal  Revenue  Code of 1986,  as amended (the "Code") (a
"Parachute  Payment"),  the Agreement  Payments shall be reduced by the smallest
amount  necessary so that no portion of such Total  Payments  would be Parachute
Payments.  In the event the Company  shall make an Agreement  Payment to Paul or
his estate that would  constitute a Parachute  Payment,  Paul or his estate,  as
applicable,  shall return such payment to the Company (together with interest at
the rate set forth in  Section  1274(b)(2)(B)  of the  Code).  For  purposes  of
determining  whether  and the  extent  to which the  Total  Payments  constitute
Parachute  Payments,  no portion of the Total Payments the receipt of which Paul
has effectively waived in writing shall be taken into account.

         7. 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 tile 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.

         8. 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.

         9.  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.

         10.  Assignment.  The rights and  obligations of the Company under this
Agreement shall inure to the benefit of and shall be binding upon the successors
and assigns of the Company,  but the rights and obligations of Paul are personal
and may not be  assigned  or  delegated  without  the  Company's  prior  written
consent.

         11. 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.

         12. 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

                                       4
<PAGE>

remaining provisions thereof.

         13.  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.

         14. 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: _________________________
                                                       Leonard L. Abel, Chairman

                                                   Ronald D. Paul

                                                   ---------------------

                                       5

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