EXHIBIT 10.1
FORM OF
BAYLAKE BANK
CHANGE OF CONTROL AGREEMENT
This Change of Control Agreement
(this “Agreement”) is entered into this ___ day of
_________, 2008, by and between Baylake Bank (the
“Bank”) and ________________ (the
“Executive”). All terms not otherwise defined herein
are defined on Exhibit A of this Agreement.
RECITALS
The Executive is employed by the
Bank in an executive capacity. The Bank is entering into this
Agreement to provide severance to the Executive in the event that
the Executive’s employment with the Bank is terminated
without Cause, or by the Executive for Good Reason, after the
occurrence of a Change of Control of Baylake Corp. (the
“Parent”) so that if such a Change of Control is
anticipated, the Executive will be able to focus on the
Bank’s business without distraction.
1.
Severance Benefit . If the Executive’s employment with
the Bank is terminated without Cause, or if the Executive
terminates his employment for Good Reason, within 12 months after
the occurrence of a Change of Control, he will be entitled to the
following:
(a)
Accrued Obligations . Within 20 days after the termination
of employment occurs, payment of the Executive’s then current
base salary through the termination date, any benefits accrued
under the applicable Bank plans through the termination date and
any annual incentive payment for the year prior to the year in
which the Executive’s employment terminates which has been
accrued but not paid (hereafter, jointly, the “Accrued
Obligations”), except if the terms of the applicable plans
provide otherwise;
(b)
Cash Lump-Sum Payment . A cash lump-sum payment equal to ___
times the sum of (i) the greater of the Executive’s annual
base salary when the Change of Control occurs or when his/her
employment terminates, (ii) the greater of (A) the target
bonus to which the Executive would be entitled for the year in
which the Change of Control occurs under the Bank’s or the
Parent’s annual incentive plan, (B) the target bonus to
which the Executive would be entitled for the year in which the
termination of employment occurs under the Bank’s or the
Parent’s annual incentive plan, or (C) the annual
incentive bonus which the Executive received which was attributable
to services rendered during the year prior to the year in which the
termination of employment occurs, and (iii) an amount equal to the
contribution by the Bank or the Parent to any ERISA qualified
retirement plan(s) on behalf of the Executive for the year prior to
the year in which the termination of employment occurs. Such cash
lump sum payment shall be paid to the Executive within 20 days
after the termination of employment occurs, except as provided in
the following sentence. If The Bank determines that the Executive
is a “specified employee” within the meaning of Section
409A(2)(B)(i) of the Internal Revenue Code of 1986, as amended (the
“Code”) at the time of termination of employment, and
payments to the Executive do not fit under the “short term
deferral” or “separation pay plan” exceptions to
Section 409A coverage contained in Treas. Reg. §1.409A 1(b)(4)
and §1.409A 1(b)(9), respectively, then the Bank will delay
such payments to the minimum extent necessary to avoid the 20%
penalty tax under Code Section 409A. Any such delayed payments
shall be paid to Executive on the first day of the seventh month
after Executive’s termination of employment, and will bear
interest from the date such payments were due under this Agreement
to the date of payment at the applicable Federal short term rate
under Section 1234(d) of the Code, as established by the IRS for
the month in which the Executive’s employment
terminated.
(c)
Health Insurance Continuation . If the Executive properly
elects continued medical and dental coverage under COBRA, payment
by the Bank of a dollar amount of the monthly premiums for the
initial 12 months of the COBRA period such that the
Executive’s share of the monthly premiums is the same as it
would be if he were an active employee, provided ,
however , if the Executive become eligible for medical
and/or dental coverage from another employer, this benefit shall
cease.
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2.
Cut-Back to Avoid Parachute Tax Exposure .
Notwithstanding any other provision of this Agreement, if any
portion of the payments owing under Section 1 of this Agreement, or
under any other agreement with or plan of the Parent or the Bank
(in the aggregate “Total Payments”), would constitute
an “excess parachute payment,” then the Total Payments
to be made to the Executive shall be reduced such that the value of
the aggregate Total Payments that the Executive is entitled to
receive shall be One Dollar ($1) less than the maximum amount which
the Executive may receive without becoming subject to the parachute
tax imposed by Section 4999 of the Code (or any successor
provision) or which the Bank may pay without loss of deduction
under Section 280G(a) of the Code (or any successor provision). For
purposes of this Agreement, the terms “excess parachute
payment” and “parachute payments” shall have the
meanings assigned to them in Section 280G of the Code (or any
successor provision), and such “parachute payments”
shall be valued as provided therein or in other applicable
guidance. If necessary to avoid the imposition of the parachute
tax, Total Payments shall be reduced or eliminated as specified by
the Executive in writing delivered to the Bank within ten business
days of the Executive’s receipt of notice that such reduction
will be necessary or, if the Executive fails to so notify the Bank,
then as the Bank shall reasonably determine, so that there will be
no excess parachute payment.
(a)
General Non-Competition Provisions . During the one-year
period after the termination of the Executive’s employment
(such one-year period referred to hereafter as the
“Restricted Period”), the Executive agrees not to
provide Restricted Services that directly or indirectly benefit any
Competitor’s business activities within a 30-mile radius of
any of the Bank’s business locations where the Executive has
an office. “Restricted Services” means services
substantially similar to the type performed by the Executive for
the Bank during the 24-month period preceding the end of the
Executive’s employment with the Bank. A
“Competitor” means an entity in the financial services
business which is engaged in providing commercial banking or wealth
management products or services. For all purposes of this Section
3, the “Company” means the Bank, Baylake Corp. and any
subsidiaries of either the Bank or Baylake Corp.
(b)
Nonsolicitation of Customers . During the Restricted Period,
the Executive may not, directly or indirectly, attempt to sell to
any Restricted Customer, any goods, products or services of the
type or substantially similar to the type sold by the Company. The
term Restricted Customer means any individual or entity (i) for
whom/which the Company provides goods, products or services and
(ii) with whom/which the Executive had direct contact on behalf of
the Company, or about whom/which the Executive acquired non-public
information in connection with his/her employment by the Company,
during the 24 month period preceding the end of the
Executive’s employment with the Company. The term
“direct contact” as used in this paragraph means
focused intentional contact by the Executive to either maintain or
enhance the Company’s business relationship with such
individual or entity, whether such contact was in person, by phone
or in writing.
(c)
Nonsolicitation of Employees . During the Restricted Period,
the Executive may not directly or indirectly encourage any employee
of the Company to terminate his/her employment with the Company or
solicit such an individual for employment in a manner which would
end or diminish that employee’s services to the
Company.
(d)
Confidential Information . During the Executive’s
employment with the Bank and the Restricted Period, the Executive
may not directly or indirectly use, possess or disclose any
Confidential Information except in the interest and for the benefit
of the Company. For purposes of this paragraph, the term
“Confidential Information” means all information of,
about or related to the Company or provided to the Company by its
customers that is not known generally to the public or the
Company’s competitors. Confidential Information includes but
is not limited to: (i) product specifications, information
about products under development, business plans, financial
information, customer lists, information about transactions with
customers, sales and marketing strategies and plans, acquisition
strategies and plans, pricing strategies and plans, information
relating to sources and costs of services, personnel information
and business records; and (ii) information which is marked or
otherwise designated as confidential or proprietary by the Company;
provided , however , that Confidential Information
shall not include any information which (w) can be
demonstrated by the Executive to have been known by him/her prior
to his/her employment by the Bank; (x) is or becomes generally
available to the public through no act or omission of the
Executive; (y) is obtained by the Executive in good faith from
a third party who discloses such information to the Executive on a
non-confidential basis without violating any obligation of
confidentiality or secrecy relating to the information disclosed;
or (z) is independently developed by the Executive outside the
scope of his/her employment without use of Confidential Information
or Trade Secrets of the Company. If the Executive is requested or
becomes legally required or compelled (by oral questions,
interrogatories, requests for information or documents, subpoena,
civil or criminal investigative demand, or similar process) or is
required by a governmental body to make any disclosure that is
prohibited or otherwise constrained by this Agreement, the
Executive will provide the Bank with prompt written notice of such
request so that it may seek an appropriate protective order or
other appropriate remedy. Subject to the foregoing, the Executive
may furnish that portion (and only that portion) of the
Confidential Information that the Executive is legally compelled or
is otherwise required to disclose.
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(e)
Trade Secrets . Executive hereby covenants and agrees that
Executive shall not, directly or indirectly, use, possess or
disclose any Trade Secret. “Trade Secret” has that
meaning set forth under applicable law. The term includes, but is
not limited to, all computer source code, provided ,
however , that Trade Secrets shall not include any
information which (w) can be demonstrated by the Executive to
have been known by him/her prior to his/her employment by the Bank;
(x) is or becomes generally available to the public through no
act or omission of the Executive; (y) is obtained by the
Executive in good faith from a third party who discloses such
information to the Executive on a non-confidential basis without
violating any obligation of confidentiality or secrecy relating to
the information disclosed; or (z) is independently developed
by the Executive outside the scope of his/her employment without
use of Confidential Information or Trade Secrets of the Company. If
the Executive is requested or becomes legally required or compelled
(by oral questions, interrogatories, requests for information or
documents, subpoena, civil or criminal investigative demand, or
similar process) or is required by a governmental body to make any
disclosure that is prohibited or otherwise constrained by this
Agreement, the Executive will provide the Company with prompt
written notice of such request so that it may seek an appropriate
protective order or other appropriate remedy. Subject to the
foregoing, the Executi
