EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is made as of the 31st
day of December, 1996, by and between Ridgestone Bank, Brookfield,
Wisconsin, a state chartered bank ("Bank") and Xxxxxxxxx X. Lake
("Executive").
WHEREAS, Bank is a wholly-owned subsidiary of Ridgestone
Financial Services, Inc., a Wisconsin corporation ("Corporation"); and
WHEREAS, Executive possesses intimate knowledge of the business
and affairs of Bank and its policies, markets and financial and human
resources; and
WHEREAS, Executive is currently the Executive Vice President and
a Director of Bank and is the Vice President and Director of Corporation
("Positions"); and
WHEREAS, the Board of Directors of Bank desires to assure the
continued services and employment of Executive, to recognize Executive's
contribution to the growth and success of Bank, and to compensate
Executive for such contribution and service; and
WHEREAS, Bank desires and believes it would be in its best
interests to ensure that the current and continued competent management
services it is receiving from Executive continues; and
WHEREAS, Executive is willing to continue in the employment of
Bank on a full-time basis, upon the terms and conditions hereinafter set
forth.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained in this Agreement, Bank and Executive
agree as follows:
1. Employment. Bank shall continue to employ Executive and
Executive shall continue to serve Bank for the period of time stated in
paragraph 2 of this Agreement. Bank and Executive agree that Executive
shall not be required to perform Executive's duties under this Agreement
other than in Brookfield, Wisconsin.
2. Employment Term. Unless employment has sooner terminated
in accordance with paragraph 5 of this Agreement, the term of Executive's
employment under this Agreement shall be deemed to commence as of December
31, 1996, and shall continue until December 31, 1998; provided, however,
that on each December 31st during the term of this Agreement (except the
first day of the Employment Term) the Employment Term shall automatically
be extended for one additional year so that the Employment Term shall be
annually restored to a full two (2) year term, unless on or before 60 days
immediately preceding any such renewal date, Bank, in connection with an
annual performance review of Executive conducted by the Board of
Directors, or for any other reason, or Executive gives notice to the other
that the term shall not be extended beyond the then current expiration
date of the term. The period of employment is the "Employment Term."
3. Position and Duties. Executive agrees to devote
Executive's full-time knowledge, skill and efforts to the performance of
Executive's duties as an executive of Bank.
4. Compensation/Benefits. During the Employment Term,
Executive shall receive a base salary and such bonuses as may from time to
time be decided by the Board of Directors of Bank, in accordance with the
regular payroll practices of Bank from time to time in effect.
Executive's base salary (exclusive of bonuses) shall not be less than his
salary (exclusive of bonuses) in effect on the date of this Agreement, and
shall not be reduced at any time after any increase is approved by the
Board of Directors of Bank. During the Employment Term, Executive shall
be entitled to participate in such other benefits and perquisites of
employment generally made available to Bank's executive or key management
personnel, in accordance with Bank's practices from time to time in
effect, such as group health, dental, disability and life insurance plans,
retirement and pension plans, deferred compensation plans, stock purchase
plans, stock option plans, paid vacations, club memberships, and
automobile usage, and any other similar plans or arrangements presently or
hereafter made available by Bank to its executive officers.
5. Termination.
a. Death or Disability; Cause; Voluntary Termination.
The Employment Term will cease prior to its expiration under paragraph 2:
(i) automatically and immediately, upon Executive's death or Disability;
(ii) upon the effective date of a notice of termination for Cause given by
Bank to Executive; or (iii) upon the effective date of a notice of
voluntary termination given by Executive to bank. If the Employment Term
ceases for any of these reasons, Executive or Executive's estate, heirs
and beneficiaries, as applicable, shall be entitled to all compensation
and other benefits and expense reimbursement to which Executive is
entitled through the termination date. In addition, Executive shall be
entitled to all benefits otherwise payable to Executive relating to
retirement benefits or any other deferred compensation benefits for
Executive, if any, according to the terms of such plans.
b. Change in Control; Other. The Employment Term will
cease prior to its expiration under paragraph 2: (i) upon the effective
date of a notice of termination under subparagraph 5.c.(3) resulting from
a Change in Control, given by Executive to Bank; or (ii) upon the
effective date of a notice of termination for any reason other than for
Cause (and other than confirmation of death or Disability), given by Bank
to Executive. In the event of termination under this subparagraph 5.b.,
compensation shall be paid to Executive as provided in subparagraph 5.d.
c. Definitions.
(1) Disability. The term "Disability" shall have the
same definition contained in Executive's disability insurance plan in
effect as of the date of this Agreement. In the event there is no such
disability insurance plan, Disability shall mean Executive's inability, as
a result of physical or mental incapacity, to substantially perform
Executive's duties with bank for a period of six (6) consecutive months.
Any question as to the existence of Executive's Disability upon which
Executive and Bank cannot agree shall be determined by a qualified
independent physician mutually agreeable to Executive and Bank or, if the
parties are unable to agree upon a physician within 10 days after notice
from bank or Executive to the other suggesting a physician, by a physician
designated by the then president of the medical society for the county in
which Executive maintains his principal residence, upon the request of
either party. Costs of any such medical examination shall be paid by
Bank.
(2) Cause. Cause shall mean (i) the willful and
continued failure by Executive to substantially perform Executive's duties
with Bank (other than a failure resulting from Executive's incapacity due
to Disability or physical or mental illness) after a written demand for
substantial performance is delivered to Executive by Bank, which demand
specifically identifies the manner in which Bank believes that Executive
has not substantially performed Executive's duties; (ii) any willful act
of misconduct by Executive which is injurious to bank, monetarily or
otherwise; (iii) criminal conviction of Executive for any act involving
dishonesty, breach of trust or a violation of the banking laws of the
State of Wisconsin or the United States; (iv) criminal conviction of
Executive for the commission of any felony; or (v) final action by a bank
regulatory agency prohibiting Executive from participating in the affairs
of Bank. For purposes of this definition, no act, or failure to act on
Executive's part shall be deemed "willful" unless done or admitted to be
done by Executive not in good faith and without reasonable belief that the
action or omission was in the best interest of Bank.
(3) Change in Control. A "Change in Control" of Bank
shall occur if and when, as a result of one transaction or a series of
transactions: (i) any person (other than a member of Executive's
immediate family) or group of persons (not including a member of
Executive's immediate family) acting in concert becomes the beneficial
owner, directly or indirectly, of securities of Bank or Corporation
representing 25% or more of the combined voting power of the then
outstanding securities of Bank or Corporation; (ii) Bank or Corporation is
combined (by merger, share exchange, consolidation, or otherwise) with
another entity and as a result of such combination less than 75% of the
outstanding securities of the surviving or resulting corporation are owned
in the aggregate by the former shareholders of Bank or Corporation; or
(iii) Bank or Corporation sells, leases, or otherwise transfers all or
substantially all of the properties or assets of Bank or Corporation not
in the ordinary course of business to another person or entity.
Executive's immediate family is Executive's children and spouse. These
"Change in Control" provisions shall apply to successive changes in
control or an individual transaction basis.
Except for terminations under paragraph 5.1., a
termination by Bank "in contemplation of" a "Change in Control" or a
termination by Bank (or other surviving entity) during the twelve month
period after a "Change in Control" shall be deemed to be a Change in
Control termination pursuant to paragraph 5.b. A termination by Bank
other than under paragraph 5.a. during the three month period prior to the
announcement of a Change in Control and up to the closing of such Change
in Control shall be deemed to be a termination in contemplation of a
Change in Control and compensation shall be paid as for a Change in
Control termination pursuant to paragraph 5.b.
Executive may terminate his employment under this
Agreement by giving at least ninety (90) days prior written notice to Bank
at any time after the occurrence, subsequent to any "Change in Control" or
in contemplation of a Change in Control of any of the following events,
without Executive's express written consent:
(A) Executive is assigned to positions, duties
or responsibilities that are less significant than his positions, duties
and responsibilities at the commencement of the Employment Term;
(B) Executive is removed from or Bank fails to
re-elect Executive to any of his Positions, except (1) in connection with
termination of Executive's employment for Cause, Disability or Retirement,
or (2) in connection with any Change in Control of Corporation, the result
of which Corporation is not the continuing or surviving Corporation,
provided, however, the successor organization executes an agreement in
substantially the form of this Agreement and the removal or failure to re-
elect is limited to Positions with the Corporation;
(C) Executive's base salary is reduced or
Executive experiences in any year a reduction of the ratio of his bonus
payments to his base salary which is greater than the average reduction in
the ratio of bonus payments to base salaries in such year experienced by
all other executive officers of Bank, or any other failure by Bank to
comply with paragraph 4;
(D) Executive is transferred to a location not
within a thirty-five (35) mile radius of Brookfield, Wisconsin; or
(E) Bank fails to obtain an agreement from a
successor organization as required under subsection (B) above.
(4) Termination Date. The "Termination Date" is the
effective date of termination of Executive's employment under this
Agreement.
d. Compensation for Termination Under Paragraph 5.b. If
the Employment Term is terminated for any of the reasons in paragraph
5.b., Executive shall at Executive's option receive either a lump sum
severance payment, or a series of installment severance payments for a
period of two years commencing on the termination date. The lump sum
payment of cash shall be in a total cash amount (without making a present
value adjustment) equal to two times the sum of (a) Executive's then
current annual base salary, plus (b) the average of Executive's annual
cash bonuses, if any, for the two year ends immediately preceding the
termination date. If Executive elects to receive installment payments,
Executive shall receive the same amount as would be provided by a lump sum
payment, but payment shall be made in equal installments for a period of
two years commencing on the termination date, on the same dates as Bank's
regular payroll payments are made.
Executive shall continue to receive for two (2) years
following the termination date, and not via a lump sum, all other benefits
that Executive was receiving or was entitled to receive immediately prior
to the termination date; provided, however, if it is impractical to
continue a particular benefit (for example, a benefit plan limits benefits
to active employees) Bank shall provide a reasonably equivalent substitute
benefit to Executive or shall pay in cash to Executive the reasonable
equivalent value of the benefit.
In addition, Executive shall be entitled to all benefits
otherwise payable to Executive relating to retirement benefits or any
other deferred compensation benefits for Executive, if any, according to
the terms of such plans, computed as though Executive had continued in
Bank's employ for the then unexpired portion of the Employment Term
remaining as of the termination date (as though the Employment Term had
not been terminated under paragraph 5.b.) at Executive's compensation
level as of the termination date; provided, however, if it is impractical
to continue a particular benefit (for example, a benefit plan limits
benefits to active employees) Bank shall provide a reasonably equivalent
substitute benefit to Executive or shall pay in cash to Executive the
reasonable equivalent value of the benefit.
Executive's death after a termination under paragraph 5.b.
shall not affect Bank's payment obligations under this subparagraph.
e. Mitigation. Notwithstanding anything to the contrary
in this Agreement, if Executive's employment is terminated for any reason
other than under paragraph 5.a., and if Executive is under sixty (60)
years old on the termination date, Executive shall take reasonable steps
to obtain employment which is substantially similar in job duties to those
performed by Executive with Bank at this time, and thereby mitigate the
amount of compensation and benefits due under paragraph 5.d.; provided,
however, that Executive shall not be required to accept a position other
than one within a 35 mile radius of Brookfield, Wisconsin. If Executive
is sixty (60) years old or older on the termination date or Executive
determines upon the advice of a qualified independent physician that
Executive is physically or mentally unable to substantially perform duties
with another employer comparable to those performed by Executive with
Bank, Executive shall have no obligation to seek other employment.
However, regardless of age or capacity, during any period for which
Executive is receiving benefits under this Agreement, if Executive becomes
employed on a full-time basis by another employer, then to the extent
Executive shall receive compensation, benefits or service credit from such
other employer, the aggregate amount of all compensation to be paid and
benefits to be provided under this Agreement shall be correspondingly
reduced.
f. Prohibited Compensation. Regardless of any provision
in this Agreement, Bank is not required to compensate Executive according
to the terms of this Agreement to the extent such compensation is
prohibited or limited by applicable federal or state law, including but
not limited to 12 U.S.C Section 182(k) and 12 C.F.R. Part 359, or by a
federal or state bank regulatory agency acting under applicable federal or
state law or regulation, but shall compensate Executive according to the
terms of this Agreement to the extent compensation is not so prohibited or
limited.
g. Limitations on Termination Compensation.
(1) In the event that the severance benefits payable
to Executive under paragraph 5.d., or any other payments or benefits
received or to be received by Executive from bank (whether payable
pursuant to the terms of this Agreement, any other plan, agreement or
arrangement with Bank or any corporation ("Affiliate") affiliated with
Bank within the meaning of Section 1504 of the Internal Revenue Code of
1954, as amended (the "Code"), in the opinion of tax counsel selected by
Bank and acceptable to Executive, constitute "parachute payments" within
the meaning of Section 280G(b)(2) of the Code, and the present value of
such "parachute payments" equals or exceeds three (3) times the average of
the annual compensation payable to Executive by Bank (or an Affiliate) and
includable in the Executive's gross income for federal income tax purposes
for the five (5) calendar years preceding the year in which a change in
ownership or control of Bank occurred ("Base Amount"), such benefits shall
be reduced to an amount the present value of which (when combined with the
present value of any other payments or benefits otherwise received or to
be received by Executive from Bank (or an Affiliate) that are deemed
"parachute payments") is equal to 2.99 times the Base Amount,
notwithstanding any other provision to the contrary in this Agreement.
The severance benefits shall not be reduced if (A) Executive shall have
effectively waived his receipt or enjoyment of any such payment or benefit
which triggered the applicability of this paragraph g., or (B) in the
opinion of such tax counsel, the severance benefits (in its full amount or
as partially reduced, as the case may be) plus all other payments or
benefits which constitute "parachute payments" within the meaning of
Section 280G(b)(2) of the Code are reasonable compensation for services
actually rendered, within the meaning of Section 280G(b)(4) of the Code,
and such payments are deductible by Bank. The Base Amount shall include
every type and form of compensation includable in Executive's gross income
in respect to his employment by Bank (or an Affiliate), except to the
extent otherwise provided in regulations promulgated under Section 280G(b)
of the Code. For purposes of this paragraph g.(1), a "change in ownership
or control" shall have the meaning set forth in Section 280G(b) of the
Code and any regulations promulgated thereunder. The present value of any
non-cash benefit or any deferred cash payment shall be determined by
Bank's independent auditors in accordance with the principles of Sections
280G(b)(3) and (4) of the Code.
(2) In the event that Section 280G, or any successor
statute, is repealed, this section g. shall cease to be effective on the
effective date of such repeal.
6. Confidential Information. Executive acknowledges that
during the course of Executive's employment, Executive has produced and
has access to material records, files, documents, data, trade secrets and
information not generally available to the public ("Confidential
Information") regarding Bank and its affiliates. Therefore, during and
subsequent to Executive's employment by Bank, Executive shall hold in
confidence and not directly or indirectly disclose or use or copy or make
lists of any such Confidential Information, except to the extent required
by any court or administrative agency, other than to an employee of Bank
or a person to whom disclosure is reasonably necessary or appropriate in
connection with the performance by Executive of Executive's duties as an
officer of Bank. All records, files, documents, and other materials or
copies of these items, relating to Bank's business and the business of any
affiliate thereof, which Executive shall prepare, or use or come into
contact with, shall be and remain the sole property of Bank, and should
not be removed from Bank's premises without its written consent, and shall
be promptly returned to Bank upon the termination date.
7. Competition. Subject to Executive's obligations under
section 5.e., Executive agrees that at any time while Executive is
employed by Bank pursuant to this Agreement, or during any period after
termination of Executive's employment under paragraph 5.b., during which
time Executive is receiving or has received severance pay under this
Agreement, Executive shall not either directly or indirectly as agent,
stockholder, employee, officer, director, trustee, partner, proprietor, or
otherwise (except as the holder of not more than 1% equity in another
entity) engage in, render advice or assistance to (other than on behalf of
Bank), or be employed on a compensation basis, without the prior written
consent of Bank, by any person, firm or entity which competes in Wisconsin
with the commercial banking, such other entity competes in any banking
market in Wisconsin where, in the immediately preceding fiscal year, Bank
derived not less than two percent (2%) of its total consolidated banking
deposits; in the case of any other business, Executive's principal duties
with Bank where in the same type of business and such other entity
competes anywhere in wisconsin with any material segment of said business
of bank. For purposes hereof, a segment of business of bank shall be
deemed "material" where, in the immediately preceding fiscal year, not
less than two percent (2%) of Bank's consolidated total assets were
devoted to such business in wisconsin, or not less than two percent (2%)
of Bank's consolidated gross revenues were derived from such business in
Wisconsin. Notwithstanding anything to the contrary in this paragraph,
Executive may engage in employment which competes with Bank at any time
during which or for which Executive is no longer receiving severance
benefits under the terms of this Agreement.
8. General Provisions.
a. Successors; Assignment. Executive's rights and
obligations under this Agreement shall not be transferable by assignment
or otherwise. This Agreement and all rights of Executive hereunder shall
inure to the benefit of and be enforceable by Executive's personal or
legal representatives, estate, executors, administrators, heirs, and
beneficiaries. Nothing in this Agreement shall prevent the consolidation
of Bank with, its merger into, or a share exchange with, any other
corporation, or the sale by Bank of all or substantially all of its
properties or assets; and this Agreement shall inure to the benefit of, be
binding upon and be enforceable by, any successor, surviving or resulting
corporation, or other entity to which such assets are transferred. This
Agreement shall not be terminated by the voluntary or involuntary
dissolution of Bank. As used herein, the term "Bank" shall, where the
context requires, mean and include, in addition to Ridgestone Bank, any
successor of Bank following a "Change in Control" and any successor(s) of
any such successor.
b. Arbitration. Any controversy or claim arising out of
or relating to this Agreement shall be submitted and settled by binding
arbitration in Brookfield, Wisconsin, or at such other place as the
parties may agree, under the rules of the American Arbitration
Association. Any award, order or judgment pursuant to such arbitration
shall be deemed final and may be entered and enforced in any state or
federal court of competent jurisdiction. Each party agrees to submit to
the jurisdiction of any such court for purposes of the enforcement of any
such award, order or judgment. The arbitrator(s) shall interpret this
Agreement in accordance with the laws of the State of Wisconsin. In any
arbitration proceeding hereunder, the arbitrator(s) are authorized to
award reasonable attorneys' fees and other arbitration-related costs to
the prevailing party.
c. Expenses. If any legal proceeding is necessary to
enforce or interpret the terms of this Agreement or to recover damage for
breach of this Agreement, the prevailing party shall be entitled to
recover from the other party reasonable attorneys' fees and necessary
costs and disbursements incurred in such legal proceeding, in addition to
any other relief to which such prevailing party may be entitled.
d. Enforcement. The provisions of this Agreement shall
be regarded as divisible and if any provisions or any part of them are
declared invalid or unenforceable by a court of competent jurisdiction,
the validity and enforceability of the remainder of the provision or parts
of the provisions and the applicability of the provisions shall not be
affected by such declaration.
e. Withholding. Bank shall be entitled to withhold from
amounts to be paid to Executive under this Agreement any federal, state or
local withholding or other taxes or charges which it is from time to time
required to withhold. Bank shall be entitled to rely on an opinion of
legal counsel if any question as to the amount or requirement of any such
withholding arises.
f. Governing Law. This Agreement and the rights and
obligations under this Agreement shall be governed by and construed in
accordance with the laws of the State of Wisconsin.
g. Notice. Notices given pursuant to this Agreement
shall be in writing and shall be deemed given when received if delivered
by hand, or forty-eight (48) hours after mailing, if properly mailed as
described below. Notices by mail shall be mailed by United States
registered or certified mail, return receipt requested, addressee only,
postage prepaid, if to Bank to 00000 X. Xxxxx Xxxxxx, Xxxxxxxxxx,
Xxxxxxxxx, 00000, or if to Executive at the address set forth below
Executive's signature line on this Agreement, or to such other address as
the party to be notified shall have given to the other party by proper
notice.
h. No Waiver. No waiver by either party at any time of
any breach by the other party of, or compliance with, any condition or
provisions of this Agreement to be performed by the other party shall be
deemed a waiver of similar or dissimilar provisions or conditions at the
same time or any prior or subsequent time.
i. Headings. The headings in this Agreement are for
reference only and shall not affect the meaning or interpretation of any
provision of this Agreement.
j. Miscellaneous. This Agreement constitutes the entire
agreement between the parties pertaining to its subject matter, and
supersedes all prior and contemporaneous agreements, employment
agreements, understandings, and discussions, whether oral or written, in
connection with the subject matter. This Agreement may be executed 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. This
Agreement may not be amended or modified except by written instrument
executed by Bank and Executive.
RIDGESTONE BANK (SEAL)
By:
/s/ Xxxx X. Xxxxxx
Title: President
/s/ Xxxxxxxxx X. Lake (SEAL)
Xxxxxxxxx X. Lake
Address: 00000 Xxxxxx Xx.
Xxxxxxxxxx, XX 00000
