Document:

Exhibit 10.2

 

STOCK
SECURITY AGREEMENT

 

THIS STOCK SECURITY AGREEMENT
(this “Security Agreement”) is made as of August 11, 2008, by and between (i) UNITED
BANK, a Virginia banking corporation, having offices at 2071 Chain Bridge Road,
Vienna, Virginia  22182 (the “Lender”),
and (ii) EAGLE BANCORP, INC., a Maryland corporation, having a mailing
address of 7815 Woodmont Avenue, Bethesda, Maryland  20814 (the “Pledgor” or the “Borrower”).

 

WITNESSETH:

 

(b)         DEFINITIONS. All capitalized
terms used but not otherwise defined herein shall have the meanings attributed
to such terms in that certain Loan Agreement dated the date hereof (as the same
may be modified or amended from time to time, the “Loan Agreement”), by and
between the Lender and the Borrower.

 

(c)          GRANT OF SECURITY.   To secure (i) the Obligations (as
defined in the Loan Agreement), and the payment and performance of the other
obligations of the Borrower with respect to a certain loan and other financial
accommodations (collectively, the “Loan”) made to the Borrower by the Lender
pursuant to the Loan Agreement in the original maximum principal amount of
Twenty Million and No/100 Dollar ($20,000,000.00), including all interest, fees
and other charges payable in connection with the Loan, which Loan is evidenced
by the Note in the maximum principal amount of Twenty Million and No/100
Dollars ($20,000,000.00); and (ii) any other indebtedness or liability of
the Borrower to the Lender whether direct or indirect, joint, several or joint
and several, absolute or contingent, due or to become due or now existing or
hereafter created or arising, including without limitation all future advances
or loans which may be made by any Lender in connection with the Loan or
otherwise (all of the foregoing being herein collectively referred to as the “Obligations”),
Pledgor hereby grants and conveys to the Lender a security interest in the
property described in Schedule A
hereto, together with all proceeds thereof (the “Collateral”).

 

(d)         LIEN PRIORITY.  As a result of the foregoing grant by Pledgor
to the Lender of a security interest in the Collateral, the Lender shall have a
first lien security interest in the Collateral, free and clear of any and all
liens, security interests, claims, charges and other encumbrances whatsoever.

 

(e)          REPRESENTATIONS AND WARRANTIES.  Pledgor hereby represents and warrants as
follows:

 

(i)    That Pledgor is the owner and holder of the
number of shares listed on Schedule A
hereto of the issued and outstanding common stock of each of the companies listed
on Schedule A hereto (collectively,
the “Companies”), and such shares represent the percentage of issued and
outstanding capital stock of such Companies shown on Schedule
A hereto;

 

(ii)   That the Collateral is legally and equitably
owned by Pledgor free and clear of any and all liens, security interests,
claims, charges and other encumbrances whatsoever;

 

(iii)  That all of the Collateral has been duly
authorized and validly issued and is fully paid and nonassessable;

 

(iv)  That this Security Agreement constitutes a
valid security interest in the Collateral, securing the Obligations for the
benefit of the Lender, that all of the Collateral (to the extent certificated)
has been delivered to the Lender, together with appropriate stock powers, and
that the Lender’s possession of the Collateral (to the extent certificated)
establishes a perfected first priority lien on and security interest in the
Collateral;

 

(v)   That Pledgor has the right to vote, pledge
and grant a security interest in the Collateral, as provided by this Security
Agreement; and

 

1

 

(vi)  That each of the foregoing representations and
warranties shall be deemed remade and redated as of the date of each advance
made pursuant to the Loan Agreement.

 

(f)          COVENANTS.  So long as any of the Obligations remain
unpaid or any Lender has any obligation to make advances under the Loan,
Pledgor covenants and agrees that it will:

 

(i)    Pay and perform all of the Obligations
according to their terms;

 

(ii)   Defend all right and title to the Collateral
against any and all claims and demands whatsoever;

 

(iii)  Upon the reasonable request of the Lender do
the following: furnish further assurance of title, execute any written
agreement and do all other acts necessary to effectuate the intent, purposes
and provisions of this Security Agreement, execute any instrument or statement
required by law or otherwise in order to perfect, continue or terminate the
security interest of the Lender in the Collateral and pay all filing or other
costs incurred in connection therewith;

 

(iv)  Unless otherwise required by the Lender,
retain legal and beneficial ownership of the Collateral and not sell, exchange,
assign, loan, deliver, mortgage or otherwise encumber or dispose of the Collateral
or any portion thereof without the Lender’s prior written consent;

 

(v)   Keep the Collateral free and clear of all
liens, charges, encumbrances, restrictions on transfer, taxes and assessments
and pay when due all taxes, payments and/or assessments in any way relating to
the Collateral or any part thereof, except to the extent the validity or amount
thereof is being contested in good faith by appropriate proceedings and the
non-payment thereof during the pendency of such proceeding(s) will not
adversely affect the Lender’s security interest in the Collateral or the
priority thereof;

 

(vi)  Keep and maintain satisfactory, complete and
current records of the Collateral.  Upon
request of the Lender, Pledgor will provide the Lender with written reports of
the status of the Collateral, or any part thereof, as of the period specified,
in form and substance reasonably satisfactory to the Lender; and

 

(vii) Comply with all federal, state and local laws
and regulations applicable to the Collateral, whether now in effect or
hereafter enacted, and upon request of the Lender, furnish to the Lender
evidence of such compliance therewith.

 

(g)         EVENTS OF DEFAULT.  For purposes of this Security Agreement, each
of the following shall constitute an “Event of Default” hereunder:

 

(i)    An Event of Default under the Loan
Agreement; or

 

(ii)   If any representation or warranty made or
given by Pledgor in connection with this Security Agreement shall prove to have
been incorrect or misleading or breached in any material respect on or as of
the date when made or remade; or

 

(iii)  If Pledgor fails to observe or perform any of
the covenants and agreements set forth in this Security Agreement (other than
those covenants specifically addressed in the Loan Agreement), and such failure
continues unremedied for a period of thirty (30) days after written notice to
the Pledgor; or

 

(iv)  If all or any part of the Collateral is
subject to levy of execution or other judicial process.

 

(h)         REMEDIES UPON DEFAULT.  Upon the occurrence and during the
continuation of an Event of Default and at the option of the Lender:

 

2

 

(i)    The Lender shall have all of the rights,
remedies and privileges with respect to repossession, retention and sale of the
Collateral and disposition of the proceeds thereof as are accorded to the
Lender by the applicable sections of the UCC and other applicable law.

 

(ii)   Without limiting the scope of the foregoing
clause (a), it is expressly understood and agreed that:

 

a.     The Lender shall have the right to sell,
resell, assign, and deliver all or any of the Collateral at any exchange or
broker’s board or at public or private sale. 
The Lender agrees that unless the Collateral is perishable or threatens
to decline speedily in value or is of a type customarily sold on a recognized
market, the Lender will give Pledgor at least 
ten (10) days’ prior written notice by registered or certified mail
(at the address of Pledgor set forth above) of the time and place of any public
sale of the Collateral or the time after which any private sale or any other
intended disposition of the Collateral is to be made.  Any such notice shall be deemed to meet any
requirement hereunder or under any applicable law (including the UCC) that
reasonable notification be given of the time and place of such sale or other
disposition.  Such notice may be given
without any demand for performance or other demand, all such demands being
hereby expressly waived by Pledgor.  All
sales of the Collateral shall be at such price or prices as the Lender shall
deem best and either for cash, on credit or for future delivery (without
assuming any responsibility for credit risk);

 

b.     At any such sale or sales, the Lender or
any affiliate, designee or agent of the Lender may purchase any or all of the
Collateral upon such terms as such purchaser may deem best, and the Collateral
so purchased shall be held by the purchaser absolutely free from any and all
claims or rights of Pledgor of every kind and nature whatsoever, including, without
limitation, any equity of redemption or similar rights, all such equity of
redemption and similar rights being hereby expressly waived and released by
Pledgor.  The proceeds of the sale of any
Collateral, together with any other additional collateral security at the time
received and held hereunder, shall be received and applied: first, to the
payment of all costs and expenses of sale, including reasonable attorneys’
fees; second, to the payment of the Obligations, in such order of priority as
the Lender shall determine; and third, any remaining proceeds shall be paid to
Pledgor, unless otherwise provided by law or directed by a court of competent
jurisdiction;

 

c.     Pledgor recognizes that the Lender may be
unable to effect a public sale of all or any part of the Collateral by reason
of certain prohibitions contained in the Securities Act of 1933, as amended
(the “Securities Act”), or other applicable laws, rules or regulations,
but may be compelled to resort to one or more private sales to a restricted group
of purchasers who will, among other things, be obliged to agree to acquire the
Collateral or any part thereof for their own account, for investment and not
with a view to the distribution or resale thereof.  Pledgor agrees that private sales so made may
be at prices and on terms less favorable than if the Collateral were sold at
public sales, and that the Lender has no obligation to delay the sale of any
Collateral for the period of time necessary to permit the Collateral to be
registered for public sale under the Securities Act or any other applicable
law, rule or regulation.  Pledgor
agrees that private sales made under the foregoing circumstances shall be
deemed to have been made in a commercially reasonable manner; and

 

d.     Pledgor shall remain liable for any
deficiency resulting from any sale of the Collateral, or any part thereof, and
shall pay any such deficiency forthwith on demand.

 

(iii)  Without limiting any of the rights granted to
the Lender elsewhere in this Security Agreement, upon the occurrence and during
the continuation of an Event of Default, the Lender shall be entitled to (i) exercise
the voting power appurtenant to the Collateral, (ii) receive and retain as
collateral security for the Obligations any and all dividends or other distributions
at any time or from time to time declared or made upon any of the Collateral
(all cash dividends or other distributions payable in respect of the Collateral
which are received by Pledgor after the occurrence of an Event of Default shall
be paid directly to the Lender and, if received by Pledgor, shall be received
in trust for the benefit of the Lender, shall be segregated from other funds of
Pledgor and shall be immediately paid over to the Lender as Collateral in the
same form as received, with any necessary endorsements), and (iii) exercise
any and all rights of payment, conversion, exchange, subscription or other
rights, privileges or options appurtenant to the Collateral, as if the Lender
were the absolute owner thereof, including without limitation the right to
exchange, at its discretion, any and all of the Collateral upon the merger,
consolidation, reorganization, 

 

3

 

recapitalization
or other readjustment of Pledgor.  Upon
the exercise of any such right, privilege or option pertaining to the
Collateral, and in connection therewith, the Lender may deliver and deposit any
or all of the Collateral with any committee, depositary, transfer agent,
registrar or other designated agency upon such terms and conditions as the
Lender may determine, all without liability, except to account for property
actually received, but the Lender shall not have any duty to exercise any of
the aforesaid rights, privileges or options and shall not be responsible for
any failure to do so or delay in so doing.

 

(iv)  The Lender may cause all or any of the
Collateral to be transferred into its name or into the name of its nominee or
nominees; provided, however, that so long as no Event of Default has occurred
and is continuing, Pledgor shall be entitled to exercise as it shall think fit,
but in a manner not inconsistent with the terms of this Security Agreement, the
Loan Agreement, any other Loan Document or the Obligations, the voting power
appurtenant to the Collateral, and to receive cash dividends paid to Pledgor
(subject to any applicable prohibitions in the Loan Documents).

 

(i)    OTHER RIGHTS OF THE LENDER.

 

(i)    Notwithstanding anything contained herein to
the contrary, if upon any dissolution, winding up, liquidation or reorganization
of Pledgor, whether in bankruptcy, insolvency or receivership proceedings or
upon an assignment for the benefit of creditors or any other marshaling of the
assets and liabilities of Pledgor, any sum shall be paid or any property shall
be distributed upon or with respect to any of the Collateral, such sum shall be
paid or property distributed over to the Lender, to be held by the Lender or
applied against the Obligations, as the Lender determines in its sole
discretion.  Subject to Section 7
above, in case any stock dividend shall be declared on any of the Collateral,
or any share of stock or fraction thereof shall be issued pursuant to any stock
split involving any of the Collateral, or any distribution of capital shall be
made on any of the Collateral, or any property shall be distributed upon or
with respect to the Collateral pursuant to recapitalization or reclassification
of the capital of Pledgor, or otherwise, the shares or other property so
distributed shall constitute Collateral and be delivered immediately to the
Lender to be held as collateral security for the Obligations.

 

(ii)   Upon the occurrence and during the
continuation of an Event of Default , the Lender shall have the right, for and
in the name, place and stead of Pledgor, to execute endorsements, assignments
and other instruments of conveyance or transfer with respect to all or any of
the Collateral.

 

(j)    SECURITY INTEREST ABSOLUTE.  Except as otherwise provided herein, all
rights of the Lender and security interests hereunder, and all obligations of
Pledgor hereunder, shall be absolute and unconditional irrespective of, and
unaffected by:

 

(i)    Any lack of validity or enforceability of
the Loan Agreement or any other Loan Document; or

 

(ii)   Any change in the time, manner or place of
payment of, or in any other term of, all or any of the Obligations, or any
other amendment or waiver of or any consent to any departure from the Loan
Agreement and/or any other Loan Document; or

 

(iii)  Any exchange, surrender, release or
non-perfection of any Collateral for all or any of the Obligations; or

 

(iv)  Any other circumstance which might otherwise
constitute a defense available to, or a discharge of, Pledgor in respect of the
Obligations or this Security Agreement.

 

(k)   GENERAL PROVISIONS.

 

(i)    Except as otherwise provided herein, the
Lender may exercise its rights with respect to the Collateral held hereunder
without first or simultaneously resorting to any other collateral or sources of
repayment or reimbursement, and without being obligated to consider or take
notice of any right of contribution, reimbursement, subrogation or marshaling
of assets which Pledgor may have or claim to have against any person or 

 

4

 

persons
or with respect to any other collateral. 
The Lender may release any and all other collateral it may now or
hereafter have to secure repayment of the Obligations, all without affecting or
impairing its rights with respect to the Collateral.  No delay or omission on the part of the Lender
in exercising any right hereunder shall operate as a waiver of such right or
any other right under this Security Agreement. 
A waiver on any one occasion shall not be construed as a bar to or
waiver of any right and/or remedy on any future occasion.

 

(ii)        If Pledgor shall default in the
performance of any provision of this Security Agreement on Pledgor’s part to be
performed, the Lender may perform the same for Pledgor’s account and any monies
expended in so doing shall be chargeable with interest at the Default Rate set
forth in the Note and added to the indebtedness secured hereby.

 

(iii)       If in connection with the exercise by the
Lender of any power, right, provision or remedy granted pursuant to this
Security Agreement, or in order to effectuate the purposes and intent of this
Security Agreement, any consent, approval, registration, filing, qualification
or authorization of any governmental authority is required, Pledgor will
execute and deliver all applications, certificates, instruments and other documents
and papers that the Lender may be required to obtain for such governmental
consent, approval, registration, filing, qualification or authorization.

 

(iv)  The rights and powers granted to the Lender
hereunder are being granted in order to preserve and protect the Lender’s
security interest in and to the Collateral granted hereby and shall not be
interpreted to, and shall not, impose any duties on the Lender in connection
therewith.

 

(v)        The Lender shall not have any duty as to
the collection or protection of the Collateral held hereunder nor of any income
thereon, nor as to the preservation of any rights pertaining thereto, beyond
the safe custody of the Collateral.  The
Lender shall be deemed to have exercised reasonable care in the custody and
preservation of the Collateral if it complies with Pledgor’s requests in such
regard made to the Lender in writing, but failure to comply with any such
request shall not in and of itself be deemed a failure to exercise reasonable
care in such custody and preservation of the Collateral.

 

(vi)       Without limiting the applicable
provisions of the Loan Agreement with respect to the obligation of Pledgor to
reimburse the Lender for its fees and expenses, upon enforcement of the Lender’s
rights hereunder, the Lender’s reasonable attorneys’ fees and the reasonable
legal and other expenses of pursuing, searching for, receiving, taking,
keeping, storing, advertising and selling the Collateral shall be chargeable to
Pledgor.

 

(vii)      The Lender may assign its interests in
this Security Agreement in connection with any assignment of such party’s
interest under the Loan Agreement and, if assigned and upon notice of such
assignment to Pledgor, the assignee shall be entitled (to the same extent as
the Lender) to performance of all of Pledgor’s obligations and agreements
hereunder, and the assignee shall also be entitled (to the same extent as the
Lender) to all of the rights and remedies of the Lender hereunder.  Pledgor will not assert a claim or defense
against the assignee which Pledgor may have against the Lender.

 

(viii)     WAIVER OF JURY TRIAL.  Each party hereby (a)  covenants and
agrees not to elect a trial by jury of any issue triable by a jury, and (b) waives
any right to trial by jury fully to the extent that any such right shall now or
hereafter exist.   This waiver of right
to trial by jury is separately given by each party, knowingly and voluntarily,
and this waiver is intended to encompass individually each instance and each
issue as to which the right to a jury trial would otherwise accrue.  Each party is hereby authorized and requested
to submit this Security Agreement to any court having jurisdiction over the
subject matter and the parties hereto, so as to serve as conclusive evidence of
each of the parties’ herein contained waiver of the right to jury trial.  Further, each party hereby certifies that no
representative or agent of the other parties 
(including their legal counsel) has represented, expressly or otherwise,
to such party that the other parties will not seek to enforce this provision
waiving the right to a trial by jury.

 

(ix)        VENUE; SERVICE OF PROCESS.  Any judicial proceeding brought against
Pledgor with respect to this Security Agreement or any other Loan Document may
be brought in any court of competent jurisdiction in Fairfax County, Virginia,
and by execution and delivery of this Security Agreement, Pledgor accepts for
itself and in connection with its properties, generally and unconditionally,
the non-exclusive jurisdiction of the aforesaid court, and irrevocably agrees
to be bound by any judgment rendered by such court in connection with this
Agreement.  A copy of any process served
shall be mailed by registered or certified mail to Pledgor at the address to
which notices are to be addressed in accordance with this Security Agreement,
such service 

 

5

 

being
hereby acknowledged by Pledgor to be effective and binding on it in every
respect.  Pledgor hereby agrees that
service upon it by mail shall constitute sufficient notice.  Nothing herein shall affect the right to
serve process in any other manner permitted by law or shall limit the right of
the Lender to bring proceedings against Pledgor in the courts of any other jurisdiction.

 

(x)         The terms, warranties and agreements
contained in this Security Agreement shall bind and inure to the benefit of the
parties hereto, and their respective successors and permitted assigns.

 

(xi)        This Security Agreement may not be
changed orally, but may be changed only by an agreement in writing signed by
the parties against whom enforcement of any waiver, change, modification or
discharge is sought.

 

(xii)       Captions are inserted only as a matter of
convenience and for reference and in no way define, limit or describe the scope
of this Security Agreement or the intent of any provision hereof.  The gender and number used in this Security
Agreement are used as reference terms only and shall apply with the same effect
whether the parties are of the masculine or feminine gender, corporate or other
form, and the singular shall likewise include the plural.  If there shall be more than one Pledgor,
their liability shall be joint and several.

 

(xiii)      Any provision in this Security Agreement
declared invalid under any law shall not invalidate any other provision of this
Security Agreement.  This Security
Agreement shall be governed by and construed in accordance with the laws of the
Commonwealth of Virginia, without regard to conflicts of laws provisions.

 

(xiv)     This Security Agreement may be executed in
any number of counterparts, each of which shall be deemed an original and all
of which taken together shall be deemed one and the same instrument.

 

(xv)      Notices to either party shall be in
writing and shall be delivered personally or by mail addressed to the party at
the address and in the manner set forth in the Loan Agreement or as otherwise
designated in writing.

 

IN WITNESS WHEREOF,
the parties have respectively signed and sealed these presents on the day and
year first above written.

 

	
  ATTEST:

  	
   

  	
  Pledgor/Borrower:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  EAGLE BANCORP, INC., a
  Maryland corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: 

  	
   

  	
  (SEAL)

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  LENDER:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  UNITED BANK, a Virginia
  banking corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
						

 

6

 

SCHEDULE
A TO STOCK SECURITY AGREEMENT

 

All
of the right, title and interest of Pledgor in and to all of the capital stock
of the companies listed below (collectively, the “Companies”), whether common
and/or preferred, and whether now or hereafter issued or outstanding, and
whether now or hereafter acquired by Pledgor, together with all voting or other
rights appurtenant thereto, including, but not limited to, the right to receive
all dividends and/or other distributions payable to Pledgor by virtue of
Pledgor’s ownership of such capital stock, and all proceeds thereof, additions
thereto and substitutions thereof.

 

	
  Company

  	
   

  	
  Number of Shares

  	
   

  	
  Percentage

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  EagleBank, a
  Maryland banking corporation

  	
   

  	
  46,250

  	
   

  	
  100

  	
  %

  

 

7Exhibit 10.3

 

VIRGINIA
STATUTORY NOTICE UNDER SECTION 8.01-433.1

 

IMPORTANT NOTICE – THIS
INSTRUMENT CONTAINS A CONFESSION OF JUDGMENT PROVISION WHICH CONSTITUTES A
WAIVER OF IMPORTANT RIGHTS YOU MAY HAVE AS A DEBTOR AND ALLOWS THE
CREDITOR TO OBTAIN A JUDGMENT AGAINST YOU WITHOUT ANY FURTHER NOTICE.

 

	
  $20,000,000.00

  	
   

  	
  Vienna, Virginia

  
	
   

  	
   

  	
  August 11,
  2008

  

 

PROMISSORY
NOTE

 

FOR
VALUE RECEIVED, the undersigned, EAGLE BANCORP, INC.,
a Maryland corporation (together with its successors and assigns, collectively,
the “Borrower”), promises to pay to the
order of UNITED BANK, a Virginia banking
corporation, with offices located at 2071 Chain Bridge Road, Vienna,
Virginia  22182, its successors and
assigns (the “Lender”) at such offices, or at
such other place or places as the Lender may from time to time designate in
writing, the principal sum of TWENTY MILLION AND NO/100
DOLLARS ($20,000,000.00), or so much thereof as shall have been
advanced or readvanced and shall remain unpaid under this Promissory Note (this
“Note”), as hereinafter provided,
together with interest at the rate or rates hereinafter provided until
paid.  Capitalized terms used but not
defined in this Note shall have the meaning attributed to such terms in the hereinafter
referenced Loan Agreement.

 

Amounts
outstanding under this Note shall bear interest at a rate (the “Applicable
Interest Rate”) equal to the Prime Rate of Interest (as hereafter defined)
minus twenty-five (25) basis points, subject, however, to the Lender’s right to
charge the Default Rate (as hereinafter defined).  This Note shall be payable as follows:

 

(i) 
Accrued and unpaid interest shall be paid in monthly installments, commencing
on August 31, 2008, and continuing on the last day of each and every
calendar month thereafter until the Maturity Date (hereinafter defined); and

 

 (ii) Except as otherwise provided herein
below, on August 31, 2010 (the “Maturity Date”),
the entire unpaid principal balance of this Note as of such date, plus all
accrued and unpaid interest and other amounts due hereunder, shall be due and
payable in full, unless sooner accelerated.

 

For
purposes of computing interest on the indebtedness evidenced hereby, interest
shall be calculated on the basis of a three hundred sixty (360) day calendar
year applied to the actual number of days funds are outstanding.  Payments made on account hereof shall be
applied first to the payment of late charges or other fees and costs owed to
the Lender, next to the payment of accrued and unpaid interest, and then to
principal.

 

As
used in this Note, the expression “Prime Rate of Interest”
shall be defined as a floating rate of interest equal to the prime lending rate
of interest (the “Prime Rate”), as published from time to time in the “Money
Rates” section of The Wall Street Journal; it being understood that such
rate is not intended to be the lowest rate of interest charged on any extension
of credit to any of Lender’s customers; provided, however, that at no time
shall the Applicable Interest Rate or Default Rate (as the case may be) exceed
the highest rate permissible under applicable laws.  If at any time The Wall Street Journal
ceases to be published or ceases to publish the Prime Rate, the Lender shall
designate by written notice to the Borrower another publication to be substituted
for The Wall Street Journal for the purposes of computing the Applicable
Interest Rate. The Applicable Interest Rate shall be adjusted as and when any
change in the “Prime Rate of Interest” shall occur.

 

Notwithstanding
the foregoing repayment terms, the Borrower may, without penalty or premium,
term out the entire outstanding principal balance of this Note at any time
prior to the stated Maturity Date (or any extension thereof agreed to in
writing by the Lender) for a five (5) year repayment period, albeit
amortized  pursuant to a ten (10) year
straight-line amortization schedule such that the outstanding principal balance
of this Note will be 

 

1

 

payable
in sixty (60) equal and consecutive monthly payments, amortized over one
hundred twenty (120) months, plus accrued and unpaid interest at the Applicable
Interest Rate; provided that (i) no Event of Default shall have occurred
or exist under the Loan Agreement or any other Loan Document, and no act, event
or condition shall have occurred or exist which with notice or the passage of
time, or both, would constitute an Event of Default under the Loan Agreement or
any other Loan Document, (ii) the Borrower shall have provided not less
than thirty (30) days, but not more than sixty (60) days, prior written notice
to the Lender of its desire to term out the entire outstanding principal
balance of this Note, and (iii) the Borrower shall have executed and
delivered to the Lender such documents, instruments and agreements as the
Lender may deem necessary or appropriate to evidence the change in repayment
terms of this Note, and the Borrower shall have paid all of the Lender’s
reasonable fees and expenses (including, without limitation, the reasonable
legal fees and expenses of the Lender’s outside counsel) incurred in connection
therewith.  The effective date of terming
out the entire outstanding principal balance of this Note pursuant the
foregoing requirements, as determined by the Lender in its sole discretion,
shall be known as the “Conversion Date”.

 

If
the Borrower desires to extend, from time to time, the stated Maturity Date or
any later stated Maturity Date (but not term out the indebtedness evidenced
hereby, as provided above) for a successive two (2) year term, the
Borrower shall make written request to the Lender therefor at any time during
the calendar month that is thirteen (13) months prior to the then current
stated Maturity Date of this Note.  By
way of example and not of limitation, the Borrower’s initial request to extend
the stated Maturity Date of this Note shall be made at any time during the
month of July, 2009.  The Lender will
exercise commercially reasonable efforts to underwrite any such requested extension,
but shall have no obligation to extend the stated Maturity Date or liability
for its failure to do so.  Any such
extension shall only be binding upon the Lender and the Borrower upon their
execution and delivery of an allonge to this Note, in form and substance
mutually acceptable to the Lender and the Borrower, evidencing such extension.

 

This
Note is issued pursuant to that certain Loan Agreement dated the date hereof
(as the same may be modified or amended from time to time, the “Loan Agreement”), by and between the Lender and the Borrower,
and shall be subject to all of the terms and provisions thereof.  If an Event of Default shall occur under the
Loan Agreement or any other Loan Document, or if default be made in the payment
of any installment of principal or interest due under this Note, the entire
principal sum outstanding, together with accrued interest thereof, fees and
costs, if any, shall at once become due and payable at the option of the Lender
without further notice.  If default be
made in the performance of any covenant set forth in this Note or any of the
other Loan Documents, and if such default shall continue past the expiration of
any applicable grace period therein contained, the entire principal sum
outstanding hereunder, together with all accrued and unpaid interest thereon,
shall at once become due and payable at the option of the Lender without
further notice.  The occurrence of any of
the defaults described in the two immediately preceding sentences shall
constitute an Event of Default under this Note and the Loan Agreement.  The Lender’s failure to exercise the
aforementioned options shall not constitute a waiver of the right to exercise
the same in the event of any subsequent default.  Acceleration of maturity, once claimed by the
Lender, may at its option be rescinded by an instrument in writing to that
effect delivered to the Borrower in accordance with Section 11(a) of
the Loan Agreement; however, the tender and acceptance of a partial payment or
partial performance shall not, by itself, affect or rescind such acceleration
of maturity.

 

In
the event any installment of principal or interest due under this Note is not
paid within ten (10) days after the date when the same is due, then the
Borrower shall pay to the Lender a “late charge” in an amount equal to five percent
(5%) of such installment.  In the event
of an Event of Default under the Loan Agreement, this Note or any other Loan
Document, the Lender may, in the Lender’s sole discretion and without notice or
demand, in addition to any other remedy the Lender may exercise, raise the rate
of interest accruing on the unpaid principal balance of this Note by two
percent (2.00%) per annum above the Applicable Interest Rate (the “Default Rate”) until such default is cured, regardless of
whether the holder elects to accelerate the unpaid balance as a result of such
default.  If judgment is entered against
the Borrower on this Note, the amount of such judgment entered (which may
include principal, interest, fees and costs) shall bear interest at such
Default Rate as of the date of entry of judgment.

 

Without
limiting the Borrower’s obligation to reimburse the Lender for all fees and
expenses incurred by the Lender in connection with the indebtedness evidenced
hereby (including, without limitation, reasonable attorneys fees), in the event
it shall become necessary to employ counsel to collect this obligation or to
protect the security for this Note, the Borrower agrees to pay reasonable
attorney’s fees, whether suit be brought or not, and all 

 

2

 

other
costs and expenses reasonably connected with collection, the protection of the
security, the defense of any counterclaim, the enforcement (including without
limitation, as a party of any proceeding brought under the Bankruptcy Reform
Act of 1978, as amended) of any remedies herein provided for, or provided for
in any of the Loan Documents given to secure the repayment of any of the
indebtedness evidenced by this Note.

 

The
privilege is reserved to prepay the principal indebtedness evidenced hereby, in
whole or in part, at any time, without premium or penalty.

 

The
Borrower and any endorsers, guarantors and sureties jointly and severally waive
presentment, protest and demand, notice of protest, notice of dishonor, demand
and dishonor, and any and all lack of diligence or delays in the collection or
enforcement hereby and expressly agree that this Note, or any payment
hereunder, may be extended from time to time without in any way affecting the
liability of the Borrower or any endorser, guarantor or surety hereof.

 

THIS
NOTE AND ITS VALIDITY, ENFORCEMENT AND INTERPRETATION, SHALL BE GOVERNED BY THE
LAWS OF THE COMMONWEALTH OF VIRGINIA (WITHOUT REGARD TO ANY CONFLICT OF LAWS
PRINCIPLES) AND APPLICABLE UNITED STATES FEDERAL LAW.  The Borrower agrees that any controversy
arising under or in relation to this Note of any Security Document shall be
litigated exclusively in Fairfax County, Virginia.  The state and federal courts and authorities
with jurisdiction in the Commonwealth of Virginia shall have exclusive
jurisdiction over all controversies which shall arise under or in relation to
this Note or any Security Document.  The
Borrower irrevocably consents to service, jurisdiction, and venue of such courts
for any such litigation and waives any other venue to which it might be
entitled by virtue of domicile, habitual residence or otherwise.

 

In
the event any provision of this Note (or any part of any provision) is held by
a court of competent jurisdiction to be invalid, illegal or unenforceable in
any respect, such invalidity, illegality or unenforceability shall not affect
any other provision (or remaining part of the affected provision) of this Note;
but this Note shall be as if such invalid, illegal or unenforceable provision
(or part thereof) had not been contained in this Note, but only to the extent
it is invalid, illegal or unenforceable.

 

All
notices, demands, requests and other communications required pursuant to the
provisions of this Note shall be issued and delivered in the manner prescribed
for “Notices” in the Loan Agreement.

 

It
is the intention of the Borrower and the Lender to conform strictly to
applicable usury laws.  Accordingly, if
the transactions contemplated hereby would be usurious under applicable law
(including the laws of the Commonwealth of Virginia and the laws of the United
States of America) then, in that event, notwithstanding anything to the
contrary in any agreement entered into in connection with or as security for
this Note, it is agreed that the aggregate of all consideration which
constitutes interest under applicable law that is contracted for, charged or
received under this Note or under any of the aforesaid agreements or otherwise
in connection with or as security for this Note, it is agreed that the aggregate
of all consideration which constitutes interest under applicable law that is
contracted for, charged or received under this Note or any of the other
aforesaid agreements or otherwise in connection with this Note shall under no
circumstances exceed the maximum amount of interest allowed by applicable law,
and any, excess shall be credited, first, on the principal balance due on this
Note by the Lender, secondly, to accrued interest due hereunder, and thirdly,
on fees and costs, if any, due on this Note (or, if this Note shall have been
paid in full, refunded to the Borrower).

 

As
used in this Note, the singular shall include the plural and the plural shall
include the singular, where the context shall so require.

 

This
Note shall be the joint and several obligation of each of the makers hereof (if
more than one) and shall apply to and bind them and each of them and their
respective heirs, successors, personal representatives and assigns.

 

So
long as the loan indebtedness evidenced by this Note remains unpaid, the
Borrower agrees to provide the Lender with such reasonable information with
respect to the financial condition of the Borrower as the Lender may from time
to time require.

 

From
time to time, the Maturity Date of this Note may be extended, or this Note may
be renewed in whole or in part, or a new note of different form may be
substituted for this Note, or the rate of interest may be 

 

3

 

modified,
or changes may be made in consideration of loan extension, and the holder
hereof, from time to time, may waive or surrender, either in whole or in part
any right, guaranties, secured interest or liens, given for the benefit of the
holder in connection with the payment and the security of payment of this Note;
but no such occurrence shall in any manner affect, limit, modify, or otherwise
impair rights, guaranties, or security of the holder not specifically waived,
released or surrendered in writing, nor shall the undersigned makers, or any of
them, or any guarantor or endorser, or any person who is or might be liable
hereon, either temporarily or contingently, be released by such event.  The holder hereof, from time to time, shall
have the unlimited right to release any person who might be liable hereon, and
such release shall not affect or discharge the liability of any person who is
or might be liable hereon.  No waivers or
modifications shall be valid unless in writing and signed by the Lender.

 

THE
BORROWER HEREBY (I) COVENANTS AND AGREES NOT TO ELECT A TRIAL BY JURY OF
ANY ISSUE TRIABLE OR RIGHT BY A JURY, AND (II) WAIVES ANY RIGHT TO TRIAL
BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER
EXIST.  THIS WAIVER OF RIGHT TO TRIAL BY
JURY IS SEPARATELY GIVEN, KNOWINGLY AND VOLUNTARILY, BY THE BORROWER, AND THIS
WAIVER IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO
WHICH THE RIGHT TO A JURY TRIAL WOULD OTHERWISE ACCRUE.  THE LENDER IS HEREBY AUTHORIZED AND REQUESTED
TO SUBMIT THIS NOTE TO ANY COURT HAVING JURISDICTION OVER THE SUBJECT MATTER
AND THE PARTIES HERETO, SO AS TO SERVE AS CONCLUSIVE EVIDENCE OF THE BORROWER’S
WAIVER OF THE RIGHT TO JURY TRIAL. 
FURTHER, THE BORROWER HEREBY CERTIFIES THAT NO REPRESENTATIVE OR AGENT
OF THE LENDER (INCLUDING THE LENDER’S COUNSEL) HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, TO THE BORROWER THAT THE LENDER WILL NOT SEEK TO ENFORCE THIS WAIVER
OR RIGHT TO JURY TRIAL PROVISION.  THE
BORROWER FURTHER ACKNOWLEDGES THAT IT HAS READ AND UNDERSTANDS THE MEANING AND
RAMIFICATIONS OF THIS WAIVER AND HAS HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER
WITH INDEPENDENT LEGAL COUNSEL.

 

CONFESSION
OF JUDGMENT. 
UPON THE OCCURRENCE OF AN EVENT OF DEFAULT UNDER THIS NOTE OR ANY OTHER
LOAN DOCUMENT, AND FOLLOWING THE EXPIRATION OF ANY APPLICABLE NOTICE AND CURE
PERIOD, THE  BORROWER
HEREBY AUTHORIZES GEORGE PITTS, ESQ., CHARLES V. MEHLER, III, OR ANY OTHER
ATTORNEY WITH THE LAW FIRM OF DICKSTEIN SHAPIRO LLP ADMITTED TO PRACTICE IN THE
COMMONWEALTH OF VIRGINIA TO APPEAR ON BEHALF OF THE BORROWER IN THE CLERKS
OFFICE OF FAIRFAX COUNTY, VIRGINIA OR IN ANY OTHER COURT IN ONE OR MORE
PROCEEDINGS, OR BEFORE ANY OTHER CLERK THEREOF OR PROTHONOTARY OR OTHER COURT
OFFICIAL, AND TO CONFESS JUDGMENT AGAINST THE BORROWER IN FAVOR OF LENDER IN
THE FULL AMOUNT DUE UNDER THIS NOTE AND THE OTHER LOAN DOCUMENTS (INCLUDING
PRINCIPAL, ACCRUED INTEREST AND ANY AND ALL CHARGES, FEES AND COSTS) PLUS
ATTORNEYS’ FEES EQUAL TO FIFTEEN PERCENT (15%) OF THE AMOUNT DUE, PLUS COURT
COSTS, ALL WITHOUT PRIOR NOTICE OR OPPORTUNITY OF THE BORROWER FOR PRIOR
HEARING.  ADDITIONALLY, THE BORROWER
HEREBY AGREES AND CONSENTS THAT VENUE AND JURISDICTION SHALL BE PROPER IN ANY
STATE OR FEDERAL COURT LOCATED IN FAIRFAX COUNTY, VIRGINIA.  THE BORROWER WAIVES THE BENEFIT OF ANY AND
EVERY STATUTE, ORDINANCE, OR RULE OF COURT WHICH MAY BE LAWFULLY WAIVED
CONFERRING UPON THE BORROWER ANY RIGHT OR PRIVILEGE OF EXEMPTION, HOMESTEAD
RIGHTS, STAY OF EXECUTION, OR SUPPLEMENTARY PROCEEDINGS, OR OTHER RELIEF FROM
THE ENFORCEMENT OR IMMEDIATE ENFORCEMENT OF A JUDGMENT OR RELATED PROCEEDINGS
ON A JUDGMENT.  THE AUTHORITY AND POWER
TO APPEAR FOR AND ENTER JUDGMENT AGAINST THE BORROWER SHALL NOT BE EXHAUSTED BY
ONE OR MORE EXERCISES THEREOF, OR BY ANY IMPERFECT EXERCISE THEREOF, AND SHALL
NOT BE EXTINGUISHED BY ANY JUDGMENT ENTERED PURSUANT THERETO; SUCH AUTHORITY
AND POWER MAY BE EXERCISED ON ONE OR MORE OCCASIONS FROM TIME TO TIME, IN
THE SAME OR DIFFERENT JURISDICTIONS, AS OFTEN AS LENDER SHALL DEEM NECESSARY,
CONVENIENT, OR PROPER.  NOTWITHSTANDING
THE FOREGOING, THE LENDER ACKNOWLEDGES THAT ATTORNEYS’ FEES ARE STATED TO BE
FIFTEEN PERCENT (15%) 

 

4

 

SOLELY FOR THE PURPOSE OF FIXING A SUM CERTAIN FOR
WHICH JUDGMENT CAN BE ENTERED BY CONFESSION, AND THE LENDER AGREES THAT IN
ENFORCING ANY SUCH JUDGMENT BY CONFESSION, THE LENDER SHALL NOT COLLECT, SOLELY
WITH RESPECT TO ATTORNEYS’ FEES INCURRED BY THE LENDER IN CONNECTION WITH SUCH
INDEBTEDNESS, ANY AMOUNTS IN EXCESS OF THE ACTUAL AMOUNT OF ATTORNEYS’ FEES AND
EXPENSES REASONABLY CHARGED OR BILLED TO THE LENDER.

 

It
is understood and agreed that in the event a default exists under any other
loan held by the Lender in which the Borrower or any guarantor therefor is a
borrower or a guarantor thereunder, then the Lender may, at its option, declare
the entire indebtedness evidenced hereby immediately due and payable.

 

The
Borrower represents and warrants that the loan evidenced by this Note was made
and transacted for the conduct of a business or investment within the meaning ascribed
to those terms under Section 6.1-330.75 of the Code of Virginia,
and the Borrower further warrants that all loan proceeds will be used solely
for the purpose of carrying on or acquiring a business or commercial
enterprise.  Time is of the essence of
all provisions of this Note.

 

IN
WITNESS WHEREOF, this Note has been duly executed and delivered as of the date
set forth on the face of this Note.

 

	
  WITNESS:

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
  EAGLE BANCORP, INC., a
  Maryland corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By: 

  	
      SPECIMEN

  	
  SEAL)

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
					

 

5

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