UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
______________
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d)
of
the Securities Exchange Act of 1934
______________
Date
of
Report (Date of earliest event reported): June
1, 2006
Bay
National Corporation
(Exact
name of registrant as specified in its charter)
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Maryland
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000-51765
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52-2176710
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(State
or other
jurisdiction
of
incorporation)
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(Commission
File
Number)
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(IRS
Employer
Identification
No.)
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2328
West Joppa Road, Lutherville, Maryland
21093
(Address
of principal executive offices) (Zip
Code)
(410)
494-2580
(Registrant’s
telephone number, including area code)
N/A
(Former
name or former address, if changed since last report)
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see
General
Instruction A.2. below):
[
] Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[
]
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[
] Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
[
]
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act
(17 CFR 240.13e-4(c))
Section
1 - Registrant’s Business and Operations
Item
1.01 Entry into a Material Definitive Agreement.
On
June
1, 2006, Bay National Bank (the “Bank”), the operating subsidiary of Bay
National Corporation (the “Company”), and Hugh W. Mohler entered into an Amended
and Restated Employment Agreement (the “Restated Agreement”), pursuant to which
Mr. Mohler will continue to serve as President and Chief Executive Officer
of
the Bank and the Company.
The
Restated Agreement provides for an initial annual base salary of $225,000.
In
addition, Mr. Mohler is eligible for annual incentive compensation bonuses
as
determined by the Bank’s board of directors (the “Board”) and is entitled to
participate in any bonus, incentive and other executive compensation program
available to senior management.
The
Restated Agreement has an initial three-year term that, unless written notice
that the Restated Agreement will not be renewed is provided to Mr. Mohler,
is
renewed for an additional year on the anniversary of its effective date, such
that the remaining term at each such anniversary date will be three years.
The
Restated Agreement provides for earlier termination in certain circumstances.
If
Mr.
Mohler’s employment is terminated by the Bank without Cause or upon Mr. Mohler’s
Permanent Disability, by Mr. Mohler for Good Reason or upon his Permanent
Disability (all as defined in the Restated Agreement), or upon Mr. Mohler’s
death, Mr. Mohler (or his personal representative) will be entitled to receive
an amount equal to his current base salary plus all benefits he is then
receiving for a period equal to the remaining term of the Restated Agreement
plus any incentive compensation already accrued for that year.
If
the
Bank does not renew the Restated Agreement by providing the notice of
nonrenewal, then, assuming a Change of Control (as defined in the Restated
Agreement) has not occurred, Mr. Mohler will be entitled to receive at the
end
of the then-current term of employment an amount equal to 50% of his base salary
for the preceding 12-month period either in a lump sum or in six equal monthly
installments, at his option, as well as continuation of employee benefits
substantially similar to those he is then receiving for a period of six
months.
If,
within 12 months following a Change in Control, the Restated Agreement is
terminated by Mr. Mohler for any reason or by the Bank without Cause, then,
instead of the payments provided for above, Mr. Mohler will be entitled to
(i) a
lump sum payment equal to the sum of (a) 2.99 times his average annual taxable
compensation during the last five years minus the aggregate present value of
any
other payments he receives that are treated as contingent upon the Change in
Control and (b) a pro-rated bonus; (ii) immediate vesting of all stock awards;
(iii) immediate exercisability of any unexercised stock options; and (iv)
continued medical coverage for two years as available to the Bank’s other
employees.
If
any
severance payment or distribution made to Mr. Mohler is determined to be subject
to the limitations of Section 280G of the Internal Revenue Code of 1986, as
amended (a “Parachute Payment”), Mr. Mohler will be entitled to a full tax
“gross-up” to cover any excise taxes on such amount, unless the total value of
all such payments and benefits (as measured for purposes of Section 280G)
exceeds the taxable threshold by ten percent or less, in which event the
payments and benefits will instead be reduced so as to fall below the taxable
threshold.
Under
the
Restated Agreement, Mr. Mohler is bound by confidentiality and proprietary
information covenants during his employment and for three years thereafter.
He
is also prohibited, during the period that any payments in connection with
the
termination or non-renewal of the Restated Agreement are being made, from
competing with the Bank, soliciting its customers, and soliciting, recruiting
or
hiring its employees (other than his administrative assistant).
The
foregoing description of the Restated Agreement does not purport to be complete
and is qualified in its entirety by reference to the Restated Agreement, which
is filed as Exhibit 10.1 hereto and incorporated herein by
reference.
Also,
on
June 1, 2006, the Bank entered into an employment agreement with Richard C.
Springer to serve as Executive Vice President of the Bank. A brief description
of the terms and conditions of this employment agreement is contained in
Item 5.02 of this Form 8-K and incorporated into this Item 1.01 by
reference.
Section
5 - Corporate Governance and Management
Item
5.02 Departure of Directors or Principal Officers; Election of Directors;
Appointment of Principal Officers.
(c)
On
June
1, 2006, the Bank entered into an employment agreement (the “Agreement”) with
Richard C. Springer to serve as Executive Vice President of the
Bank.
Since
December 1997, Mr. Springer has been employed as Senior Vice President and
Area
Executive, Baltimore, with Branch Banking & Trust Company (BB&T). At
BB&T, Mr. Springer was responsible for all commercial banking functions
including administration of the commercial loan portfolio, commercial deposit
acquisition, the development of additional business clients and the delivery
of
non-credit services to the market. He was also responsible for the coordination
and promotion of BB&T’s image within the Baltimore area.
The
Agreement provides for (i) an initial annual base salary of $200,000; (ii)
a
potential maximum annual bonus of 60% of base salary as determined by the Board;
(iii) subject to certain vesting requirements and continued employment, a grant
of 12,000 shares of the Company’s common stock; (iv) $30,000 paid to Mr.
Springer on June 1, 2006; and (v) $30,000 payable to Mr. Springer on December
1,
2006 if he is then employed with the Bank pursuant to the Agreement and is
not
then suspended without pay as provided for in the Agreement. Mr. Springer also
is entitled to participate in any bonus, incentive and other executive
compensation program available to senior management.
The
Agreement has an initial three-year term that, unless written notice that the
Agreement will not be renewed is provided to Mr. Springer, is renewed for an
additional year on the anniversary of its effective date, such that the
remaining term at each such anniversary date will be three years. The Agreement
provides for earlier termination in certain circumstances.
If
Mr.
Springer’s employment is terminated by the Bank without Cause or upon Mr.
Springer’s Permanent Disability or by Mr. Springer for Good Reason (all as
defined in the Agreement), Mr. Springer will be entitled to receive an amount
equal to his current base salary plus all benefits he is then receiving
for
a
period equal to the remaining term of the Agreement plus any incentive
compensation already accrued for that year. In addition, all of Mr. Springer’s
stock awards and stock options will immediately vest.
If
the
Bank does not renew the Agreement by providing the notice of nonrenewal, then,
assuming a Change in Control has not occurred, Mr. Springer will be entitled
to
receive at the end of the then- current term of employment an amount equal
to
50% of his base salary for the preceding 12-month period either in a lump sum
or
in six equal monthly installments, at his option, as well as continuation of
employee benefits substantially similar to those he is then receiving for a
period of six months.
If
the
Agreement is terminated by the Bank without Cause within 12 months following
a
Change in Control, then, instead of the payments and benefits provided for
above, Mr. Springer will be entitled to (i) a lump sum payment equal to the
sum
of (a) 2.99 times his average annual taxable compensation during the last five
years minus the aggregate present value of any other payments he receives that
are treated as payments contingent on the Change in Control and (b) a pro-rated
bonus; (ii) immediate vesting of all stock awards; (iii) immediate
exercisability of any unexercised stock options; and (iv) continued medical
coverage for two years as available to the Bank’s other employees.
If
any
severance payment or distribution made to Mr. Springer is determined to be
subject to the limitations of Section 280G of the Internal Revenue Code of
1986,
as amended (a “Parachute Payment”), Mr. Springer will be entitled to a full
tax “gross-up” to cover any excise taxes on such amount, unless the total value
of all such payments and benefits (as measured for purposes of Section 280G)
exceeds the taxable threshold by ten percent or less, in which event the
payments and benefits will instead be reduced so as to fall below the taxable
threshold.
Under
the
Agreement, Mr. Springer is bound by confidentiality and proprietary
information covenants during his employment and for three years thereafter.
In
addition, while any payments in connection with the termination or non-renewal
of the Agreement are being made (the payment of which may be waived by Mr.
Springer), Mr. Springer is prohibited from competing with the Bank. He is also
prohibited from soliciting the Bank’s customers and soliciting, recruiting or
hiring its employees (other than his administrative assistant) for one year
after termination of his employment.
The
foregoing description of the Agreement does not purport to be complete and
is
qualified in its entirety by reference to the Agreement, which is filed as
Exhibit 10.2 hereto and incorporated herein by reference.
Section
9 - Financial Statements and Exhibits
Item
9.01 Financial Statements and Exhibits.
(d)
Exhibits.
The
following exhibits are filed herewith:
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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BAY
NATIONAL CORPORATION
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Date:
June 1, 2006
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By:
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/s/
Hugh W. Mohler
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Hugh
W. Mohler, President
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