SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. ____)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14
Ridgestone Financial Services, Inc.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-
11.
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2) Aggregate number of securities to which transaction applies:
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pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date
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<PAGE>
RIDGESTONE FINANCIAL SERVICES, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held April 28, 1998
To the Shareholders of
Ridgestone Financial Services, Inc.:
NOTICE IS HEREBY GIVEN that the annual meeting of shareholders
of Ridgestone Financial Services, Inc. (the "Company") will be held on
Tuesday, April 28, 1998, at 10:00 A.M., local time, at the Westmoor
Country Club, 400 South Moorland Road, Brookfield, Wisconsin 53005, for
the following purposes:
1. To elect twelve directors by class for staggered terms of
one, two and three years and until their successors are duly elected and
qualified (or if the Classified Board Amendments as defined and described
in the accompanying Proxy Statement are not approved and adopted, then to
hold office until the 1999 annual meeting of shareholders and until their
successors are duly elected and qualified).
2. To consider and vote upon (as separate proposals) the
approval and adoption of amendments (the "Classified Board Amendments") to
the Company's Articles of Incorporation (the "Articles") as more fully
described in the accompanying Proxy Statement, which, in connection with
certain amendments to the Company's By-Laws (the "By-Laws") that have been
approved by the Board of Directors contingent upon shareholder approval of
all of the Classified Board Amendments, (i) classify the Board of
Directors into three classes; (ii) provide that a director may only be
removed from office upon the affirmative vote of shareholders possessing a
majority of the voting power of all classes of the Company's stock
generally possessing voting rights and then only for cause (as defined),
unless the Board of Directors adopts a resolution for such removal without
cause by the "Requisite Vote" (as defined); (iii) provide that vacancies
on the Board of Directors, including those resulting from the removal of a
director, shall be filled for the unexpired portion of the director's term
by a majority of the directors then in office; (iv) provide that, whenever
the holders of one or more series of capital stock (other than common
stock) have the right to elect directors, the features of such
directorships shall be governed by the terms of such capital stock
applicable thereto; and (v) establish supermajority and other special
voting requirements to amend those provisions of the Articles and By-laws
governing the Board of Directors and creating a classified Board of
Directors.
3. To consider and vote upon the approval and adoption of an
amendment to the Articles to increase the number of shares of common
stock, no par value ("Common Stock"), authorized for issuance from
1,000,000 to 10,000,000 (the "Common Stock Amendment"). As described in
greater detail in the accompanying Proxy Statement, the Board of Directors
has authorized a 5% stock dividend on the Common Stock contingent upon
shareholder approval of the Common Stock Amendment.
4. To consider and vote upon the approval and adoption of an
amendment to the Articles to create a class of preferred stock, no par
value, with 2,000,000 shares authorized for issuance.
5. To consider and vote upon the approval and adoption of the
Ridgestone Financial Services, Inc. 1996 Stock Option Plan, as amended.
6. To consider and act upon such other business as may
properly come before the meeting or any adjournment or postponement
thereof.
The close of business on March 2, 1998 has been fixed as the
record date for the determination of shareholders entitled to notice of,
and to vote at, the meeting and any adjournment or postponement thereof.
A proxy for the meeting and a proxy statement are enclosed
herewith.
By Order of the Board of Directors
RIDGESTONE FINANCIAL SERVICES, INC.
/s/ Christine V. Lake
Christine V. Lake
Vice President and Secretary
Brookfield, Wisconsin
March 18, 1998
YOUR VOTE IS IMPORTANT NO MATTER HOW LARGE OR SMALL YOUR HOLDINGS MAY BE.
TO ASSURE YOUR REPRESENTATION AT THE MEETING, PLEASE SIGN AND DATE THE
ENCLOSED PROXY, WHICH IS SOLICITED BY THE BOARD OF DIRECTORS, SIGN EXACTLY
AS YOUR NAME APPEARS THEREON AND RETURN IMMEDIATELY.
<PAGE>
RIDGESTONE FINANCIAL SERVICES, INC.
13925 West North Avenue
Brookfield, Wisconsin 53005
PROXY STATEMENT
For
ANNUAL MEETING OF SHAREHOLDERS
To Be Held April 28, 1998
This proxy statement is being furnished to shareholders by the
Board of Directors (the "Board") of Ridgestone Financial Services, Inc.
(the "Company") beginning on or about March 18, 1998 in connection with a
solicitation of proxies by the Board for use at the Company's annual
meeting of shareholders to be held on Tuesday, April 28, 1998, at
10:00 A.M., local time, at the Westmoor Country Club, 400 South Moorland
Road, Brookfield, Wisconsin 53005, and all adjournments or postponements
thereof (the "Annual Meeting"), for the purposes set forth in the attached
Notice of Annual Meeting of Shareholders.
Execution of a proxy given in response to this solicitation will
not affect a shareholder's right to attend the Annual Meeting and to vote
in person. Presence at the Annual Meeting of a shareholder who has signed
a proxy does not in itself revoke a proxy. Any shareholder giving a proxy
may revoke it at any time before it is exercised by giving notice thereof
to the Company in writing or in open meeting.
A proxy, in the enclosed form, which is properly executed,
returned to the Company and not revoked will be voted in accordance with
the instructions contained therein. The shares represented by executed
but unmarked proxies will be voted FOR the twelve persons nominated for
election as directors referred to herein, FOR the approval of all of the
Classified Board Amendments, the Common Stock Amendment and the Preferred
Stock Amendment (as such terms are defined herein) (together, the
"Amendments"), FOR the approval of the Ridgestone Financial Services, Inc.
1996 Stock Option Plan, as amended (the "1996 Plan"), and on such other
business or matters that may properly come before the Annual Meeting in
accordance with the best judgment of the persons named as proxies in the
enclosed form of proxy. Other than the election of directors, the
approval of the Amendments and the approval of the 1996 Plan, as amended,
the Board has no knowledge of any matters to be presented for action by
the shareholders at the Annual Meeting.
Only holders of record of the Company's common stock, no par
value (the "Common Stock"), at the close of business on March 2, 1998 are
entitled to vote at the Annual Meeting. On that date, the Company had
outstanding and entitled to vote 834,340 shares of Common Stock, each of
which is entitled to one vote per share.
The Company, which commenced operations in 1995, is the holding
company for Ridgestone Bank (the "Bank").
ELECTION OF DIRECTORS
At the Annual Meeting, the shareholders will elect twelve
directors. If all of the Classified Board Amendments are approved by the
shareholders at the Annual Meeting, Messrs. Charles N. Ackley, William R.
Hayes, John E. Horning and Frederick I. Olson will be elected for terms to
expire at the 1999 annual meeting of shareholders and until their
successors are duly elected and qualified; Ms. Christine V. Lake and
Messrs. Gregory J. Hoesly, Richard A. Streff and William J. Tetzlaff will
be elected for terms to expire at the 2000 annual meeting of shareholders
and until their successors are duly elected and qualified; and Messrs.
William F. Krause, Jr., Paul E. Menzel, Charles G. Niebler and James E.
Renner will be elected for terms to expire at the 2001 annual meeting of
shareholders and until their successors are duly elected and qualified.
If all of the Classified Board Amendments are not approved by the
shareholders at the Annual Meeting, then all of the nominees will be
elected for terms expiring at the 1999 annual meeting of shareholders and
until their successors are duly elected and qualified. Unless
shareholders otherwise specify, the shares represented by the proxies
received will be voted in favor of the election as directors of the twelve
persons named as nominees herein. The Board has no reason to believe that
any of the listed nominees will be unable or unwilling to serve as a
director if elected. However, in the event that any nominee should be
unable to serve or for good cause will not serve, the shares represented
by proxies received will be voted for another nominee selected by the
Board.
Directors will be elected by a plurality of the votes cast at
the Annual Meeting (assuming a quorum is present). An abstention from
voting will be tabulated as a vote withheld on the election and will be
included in computing the number of shares present for purposes of
determining the presence of a quorum, but will not be considered in
determining whether each of the director nominees has received a plurality
of the votes cast at the Annual Meeting. A broker or nominee holding
shares registered in its name, or the name of its nominee, which are
beneficially owned by another person and for which it has not received
instructions as to voting from the beneficial owner, has the discretion to
vote the beneficial owner's shares with respect to the election of
directors.
The following sets forth certain information, as of March 2,
1998, about all of the Board's nominees for election at the Annual
Meeting. All directors of the Company also serve as directors of the
Bank. The directors are grouped according to the year of the annual
meeting in which their respective terms will expire assuming approval of
the Classified Board Amendments. If the Classified Board Amendments are
not approved by the shareholders at the Annual Meeting, then all of the
nominees will be elected for terms expiring at the 1999 annual meeting of
shareholders and until their successors are duly elected and qualified.
Nominees Whose Terms Will Expire at the 1999 Annual Meeting of
Shareholders
Charles N. Ackley, 67, has been owner of C.N.A. Associates,
Inc., a company engaged in sales representation of manufacturers, since
1992. He was President of Ackley-Dornbach, Inc. from 1962 to 1992 and
President of A.D.G. Erectors, Inc. from 1972 to 1987. Mr. Ackley has been
a director of the Company since 1995.
William R. Hayes, 53, has been a Vice President and Treasurer of
the Company and Vice President, Cashier/Controller of the Bank since 1995.
From 1988 to 1994, Mr. Hayes was employed as Vice President, Cashier and
Controller of M&I Wauwatosa State Bank, with responsibility for bank
operations, financial reporting, human resources and regulatory
compliance. Mr. Hayes has been a director of the Company since 1995.
John E. Horning, 60, is Chairman of the Board and Chief
Executive Officer of Shorewest Realtors, Inc., Wisconsin Mortgage
Corporation and Heritage Title Service, all located in Brookfield,
Wisconsin. He has been employed by Shorewest Realtors since 1950. He is
a member of the national, state and Metropolitan Milwaukee Boards of
Realtors. Mr. Horning has been a director of the Company since 1995.
Frederick I. Olson, 82, was a Professor of History at the
University of Wisconsin-Milwaukee until his retirement in 1985. He also
served as Associate Dean of the University's College of Letters and
Science and held other administrative positions. Professor Olson has been
a director of the Company since 1995.
Nominees Whose Terms Will Expire at the 2000 Annual Meeting of
Shareholders
Gregory J. Hoesly, 41, has been President of L.L. Richards
Machinery Co., Inc., a Butler, Wisconsin machine tool dealer, since 1992
and has been employed by such company since 1984. He is a member of the
American Machine Tool Distributors Association, the Machinery Dealers
National Association, the Association of Machinery and Equipment
Appraisers and the Butler Area Chamber of Commerce. Mr. Hoesly has been a
director of the Company since 1996.
Christine V. Lake, 45, has been a Vice President of the Company
since 1995, Secretary of the Company since January 1996 and Executive Vice
President of the Bank since February 1996. Ms. Lake served as Vice
President of M&I Wauwatosa State Bank from 1991 to 1994 with
responsibilities for management of the Consumer Banking Division. From
1994 to 1995, Ms. Lake was a Vice President of M&I Marshall & Ilsley Bank
in Retail Administration. Ms. Lake has been a director of the Company
since 1996.
Richard A. Streff, 66, has been Chairman of the Board of Streff
Advertising, Inc. of Wauwatosa, Wisconsin since 1960. He is a member of
the Promotional Products Association of America. Mr. Streff has been a
director of the Company since 1995.
William J. Tetzlaff, 66, has been President of Tetzlaff
Associates, Inc., a consulting services company in Wauwatosa, Wisconsin,
since 1991, President of Advanced Plastics Technology, Inc., a
distribution company located in Wauwatosa, Wisconsin, since 1992, and Vice
President of Executive Travel Services, Ltd., a travel agency located in
Wauwatosa, Wisconsin, since 1995. Mr. Tetzlaff has been a director of the
Company since 1995.
Nominees Whose Terms Will Expire at the 2001 Annual Meeting of
Shareholders
William F. Krause, Jr., 60, has been President since 1994 and
was Vice President from 1962 to 1994 of Krause Funeral Home, Inc., a
multi-location funeral service provider based in Milwaukee, Wisconsin. He
is a member of the International Cemetery and Funeral Association and the
Funeral Service Alliance of Wisconsin. Mr. Krause has been a director of
the Company since 1996.
Paul E. Menzel, 60, has been President and Chief Executive
Officer of the Company and the Bank since 1995. For ten years prior
thereto, Mr. Menzel was President and a director of M&I Wauwatosa State
Bank. Mr. Menzel has been a director of the Company since 1995.
Charles G. Niebler, 53, has been President of Eye Care Vision
Centers, a multi-location optometry practice based in Brookfield,
Wisconsin, since 1970. He is a member of the Milwaukee Optometric Society
and the American and Wisconsin Optometric Associations. Dr. Niebler has
been a director of the Company since 1996.
James E. Renner, 59, owns Renner Oldsmobile and Renner
Mitsubishi in Wauwatosa, Wisconsin. He became associated with the
Oldsmobile dealership in 1958, and acquired the Mitsubishi dealership in
1993. Mr. Renner is a member of the Automobile Dealers of Mega Milwaukee,
Inc. and the National Automobile Dealers Association. Mr. Renner has been
a director of the Company since 1995.
THE BOARD RECOMMENDS THE FOREGOING NOMINEES FOR ELECTION AS
DIRECTORS AND URGES EACH SHAREHOLDER TO VOTE "FOR" EACH NOMINEE. UNLESS
MARKED TO THE CONTRARY, THE SHARES REPRESENTED BY PROPERLY EXECUTED
PROXIES RECEIVED PRIOR TO OR AT THE ANNUAL MEETING AND NOT REVOKED WILL BE
VOTED "FOR" EACH NOMINEE.
BOARD OF DIRECTORS
General
The Board has standing Audit and Personnel Committees. The
functions of the Audit Committee are to recommend to the Board the
appointment of independent auditors, review the independence of the
auditors, approve the scope of the annual audit, approve the audit fee
payable to the auditors and review the audit results. Messrs. Horning,
Olson and Renner are members of the Audit Committee. The Audit Committee
met once during 1997. The Audit Committee of the Board of Directors of
the Bank, which consists of Messrs. Horning, Olson and Renner, met five
times in 1997.
The Personnel Committee of the Board is responsible for
administering the 1996 Plan. The members of the Personnel Committee,
which met once in 1997, are Messrs. Krause, Renner and Streff. Beyond
administering the 1996 Plan, the Personnel Committee of the Board does not
consider any other matters regarding compensation since such compensation
is currently paid only at the Bank level and not at the Company level.
The Personnel Committee of the Board of Directors of the Bank reviews and
recommends to the Bank's Board of Directors the compensation structure for
the directors, officers and other managerial personnel of the Bank,
including salary rates, fringe benefits, non-cash perquisites and other
forms of compensation. The Personnel Committee of the Board of Directors
of the Bank, which met four times in 1997, consists of Messrs. Krause,
Renner and Streff.
The Board does not have a standing nominating committee. The
Board will consider nominations for directors made by shareholders
provided such nominations are made in writing, contain certain information
specified in the Company's By-Laws (the "By-Laws") and are delivered to
the President of the Company no less than 14 days or more than 50 days
prior to any meeting of shareholders called for the election of directors.
The Board held four meetings during 1997. During 1997, each
director of the Company attended at least 75% of the aggregate of (a) the
total number of meetings of the Board and (b) the total number of meetings
held by all committees of the Board on which such director served during
the year, except Mr. Horning.
Director Compensation
The Company currently does not pay any compensation to its
directors. Directors of the Bank receive a fee of $250 per meeting
attended as well as a fee of $50 per committee meeting attended. Employee
directors of the Bank are not entitled to receive the committee meeting
fee.
EXECUTIVE OFFICERS
Paul E. Menzel, the Company's President and Chief Executive
Officer, William R. Hayes, the Company's Vice President and Treasurer, and
Christine V. Lake, the Company's Vice President and Secretary, are the
only executive officers of the Company. Certain information regarding the
executive officers is set forth under the caption "Election of Directors."
The executive officers of the Company serve at the pleasure of the Board.
PRINCIPAL SHAREHOLDERS
The following table sets forth information, as of March 2, 1998,
regarding beneficial ownership of Common Stock by each director and
nominee, the Company's Chief Executive Officer, and all of the directors,
nominees and executive officers of the Company as a group. As of the date
of this Proxy Statement, the Company was not aware of any shareholder who
beneficially owned in excess of 5% of the outstanding shares of Common
Stock.
Number of
Shares Percent
Beneficially of
Name of Beneficial Owner(1) Owned Class
Charles N. Ackley 10,000 1.2%
William R. Hayes 9,167(2) 1.1%
Gregory J. Hoesly 7,000(3) *
John E. Horning 2,500 *
William F. Krause, Jr. 12,500(4) 1.5%
Christine V. Lake 11,833(5) 1.4%
Paul E. Menzel 38,933(6) 4.6%
Charles G. Niebler 9,000(7) 1.1%
Frederick I. Olson 3,000 *
James E. Renner 7,000(8) *
Richard A. Streff 5,000(9) *
William J. Tetzlaff 3,200(10) *
Directors, nominees and executive
officers of the Company as a group
(12 persons) 119,133 14.1%
_______________
* Less than one percent (1%).
(1) The address of each of the persons named in the table is 13925
West North Avenue, Brookfield, Wisconsin 53005.
(2) Includes 1,667 shares which Mr. Hayes has the right to acquire
upon the exercise of vested stock options.
(3) Includes 5,000 shares held by River Parkway Partnership, of
which Mr. Hoesly is a Partner.
(4) Includes 10,000 shares held by the Krause Funeral Home, Inc.
Employees Profit Sharing Plan, of which Mr. Krause is a trustee.
(5) Includes 3,000 shares held by Ms. Lake's spouse and 3,333 shares
which Ms. Lake has the right to acquire upon the exercise of
vested stock options.
(6) Includes 2,623 shares held by Mr. Menzel's spouse, 2,700 shares
held by Mr. Menzel's children and 8,333 shares which Mr. Menzel
has the right to acquire upon the exercise of vested stock
options.
(7) Includes 1,380 shares held by Dr. Niebler's spouse.
(8) Includes 2,000 shares held by Mr. Renner's children.
(9) Includes 1,000 shares held by Mr. Streff's spouse and 1,000
shares held by Streff Advertising, Inc.
(10) Includes 500 shares held by the William Tetzlaff Family Trust,
of which Mr. Tetzlaff is a trustee.
EXECUTIVE COMPENSATION
Summary Compensation Information
The following table sets forth certain information concerning
compensation paid in 1996 and 1997 to Mr. Menzel, the Company's Chief
Executive Officer. No executive officer of the Company or the Bank
received in excess of $100,000 in cash compensation during fiscal 1997.
<TABLE>
<CAPTION>
Summary Compensation Table
Annual Long Term
Compensation Compensation
----------------------------------------------- --------------
Securities
Underlying All
Name and Principal Salary(2) Bonus Other Annual Stock other
Position Year ($) ($) Compensation Options(#) compensation
<S> <C> <C> <C> <C> <C> <C>
Paul E. Menzel(1) 1997 $82,516 0 $13,147(3) 25,000 $351(5)
President 1996 $28,100 0 $ 3,123(4) 25,000 $56
______________ 1995 0 0 0 0 0
(1) Mr. Menzel received no cash compensation during fiscal 1995 and did not receive any cash compensation for service as
an executive officer in fiscal 1996 until September 1, 1996.
(2) Includes $3,000 in directors fees in fiscal 1997 and 1996.
(3) Consists of $5,790 for a car allowance and $7,357 for a country club membership.
(4) Consists of a car allowance.
(5) For fiscal 1997, consists of life insurance premiums paid by the Bank.
</TABLE>
Stock Options
The Company has in effect a stock option plan pursuant to which
options to purchase Common Stock may be granted to employees (including
officers) of the Company and its subsidiaries. The following table
presents certain information about grants of stock options made during
fiscal 1997 to Mr. Menzel.
<TABLE>
<CAPTION>
Option Grants in 1997 Fiscal Year
Individual Grants
Number of Percent of Total
Securities Options Granted Exercise or
Underlying Options to Employees in Base Price Expiration
Name Granted (#)(1) Fiscal Year ($/Share) Date
<S> <C> <C> <C> <C>
Paul E. Menzel 25,000 51.0% $14.625 5/8/07
________________
(1) The options reflected in the table (which are nonstatutory options for purposes
of the Internal Revenue Code of 1986, as amended (the "Code")) were granted on
May 8, 1997. One-third of the options will vest and become exercisable on the
first anniversary of grant, an additional one-third of the options will vest and
become exercisable on the second anniversary of grant and the final one-third of
the options will vest and become exercisable on the third anniversary of grant.
</TABLE>
The following table sets forth information regarding the fiscal
year-end value of unexercised options held by Mr. Menzel. No options were
exercised by Mr. Menzel in 1997.
<TABLE>
<CAPTION>
Fiscal Year-End Option Values
Number of Securities
Underlying Unexercised Value of Unexercised
Options at Fiscal In-the-Money Options
Year-End (#) at Fiscal Year End ($)(1)
Name Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C>
Paul E. Menzel 8,333 41,667 $49,998 $178,127
___________________
(1) The dollar value is calculated by determining the difference between the fair market
value of the underlying Common Stock and the exercise price of the option at fiscal
year-end.
</TABLE>
Employment Agreement
The Bank has entered into an employment agreement with Mr.
Menzel for a three-year term beginning December 31, 1997. The agreement
provides that the term will be automatically extended on December 31 of
each year for an additional year, unless at least 60 days before such
renewal date the Bank or Mr. Menzel gives notice that the term will not be
extended beyond the then current expiration date. The agreement further
provides that Mr. Menzel will be paid a base salary and such bonuses as
may from time to time be determined by the Board of Directors of the Bank.
The agreement provides that Mr. Menzel's base salary (exclusive of bonus)
will not be less than his salary (exclusive of bonus) in effect on the
date of the agreement and may not be reduced at any time after any
increase is approved by the Board of Directors of the Bank. The agreement
will terminate upon Mr. Menzel's death or disability, for cause, or upon
voluntary termination by Mr. Menzel.
If Mr. Menzel resigns or is terminated following a "change in
control" (as defined below), Mr. Menzel will be entitled to a lump sum
severance payment equal to three times the sum of (i) his then current
salary and (ii) his average bonus over the three years preceding
termination. Alternatively, Mr. Menzel may elect to receive his severence
payment in installments over a period of three years commencing on the
termination date. The termination payment and amount of benefits may
be reduced to the extent necessary to avoid an "excess parachute payment"
under the Code. The agreement defines a "change in control" as any of
the following, whether in a single transaction or in a series of
transactions: (i) the acquisition by any person or group of 25% or more
of the voting power of the Company or the Bank; (ii) the combination of
the Company or Bank with any entity after which less than 75% of the
outstanding securities of the surviving entity are owned by former
shareholders of the Company; or (iii) the sale, lease or other transfer by
either the Company or the Bank of all or substantially all of its
respective properties or assets other than in the ordinary course of
business. In addition, if Mr. Menzel is terminated by the Bank "in
contemplation of" a change of control, or is terminated by the Bank (or
other surviving entity) during the twelve-month period after a change of
control, such termination will be deemed to be a change of control for
purposes of the agreement. The agreement also provides that if Mr. Menzel
is terminated by the Bank during the three-month period prior to the
announcement of a change of control, such termination will be deemed to be
a termination "in contemplation of" a change of control.
If any of the following events occur after a change in control
without Mr. Menzel's written consent, then Mr. Menzel may terminate his
employment by giving at least 90 days' prior written notice: Mr. Menzel
is assigned to positions, duties or responsibilities that are less
significant than his positions, duties and responsibilities at the
commencement of the employment term; Mr. Menzel is removed from or is not
re-elected to any of his positions (subject to certain exceptions); Mr.
Menzel's base salary or relative bonus is reduced; Mr. Menzel is
transferred to a location more than 35 miles from Brookfield, Wisconsin;
or in the event of a change of control of the Company in which the Company
is not the surviving entity, the surviving entity fails to execute an
employment agreement in substantially the same form as Mr. Menzel's
current employment agreement. If Mr. Menzel terminates his employment in
such a situation, then he will be entitled to the same severance payment
as if he had been terminated following a change in control.
For the three years following termination, Mr. Menzel will also
be entitled to receive all other benefits, including retirement benefits
and deferred compensation, to which he would have been entitled had he
remained employed by the Bank.
PROPOSED AMENDMENTS TO THE ARTICLES OF INCORPORATION
Classified Board Amendments
The Board has unanimously approved and recommends that the
shareholders approve (as separate proposals) amendments to Article
5 of the Articles of Incorporation of the Company (the "Articles")
to allow for the adoption of a classified Board and additional
provisions related thereto (together, the "Classified Board
Amendments"). Article 5 of the Articles, as proposed to be
amended by the Classified Board Amendments, is as set forth in
Appendix A to this Proxy Statement, and the following description
is qualified in its entirety by reference to the full text of
the Classified Board Amendments. Shareholders are entitled to
vote on each Classified Board Amendment individually. However,
the Board believes that all of the Classified Board Amendments are
integral to the establishment and maintenance of an effective
classified Board. As a result, unless all the Classified Board
Amendments are approved by shareholders, none will be implemented.
For a discussion of potential advantages and disadvantages of the
Classified Board Amendments, see page 11.
The Classified Board Amendments are discussed in more detail in the
following paragraphs.
Classification of Directors. Directors of the Company are currently
elected annually by the shareholders to serve until the next annual
meeting of shareholders and until their successors are duly elected
and qualified. The Classified Board Amendments, in combination with
the amendment to the By-Laws (which is as set forth on Appendix B to
this Proxy Statement and which has previously been approved by the
Board, to take effect if and at such time as the shareholders approve
all of the Classified Board Amendments), would stagger the Board by
dividing it into three classes, as nearly equal in number as
possible. The initial term of the first class of directors will
expire at the 1999 annual meeting of shareholders; the initial term
of office of the second class of directors will expire at the 2000
annual meeting of shareholders; and the initial term of office of the
third class of directors will expire at the 2001 annual meeting of
shareholders. Directors elected to succeed those directors whose
terms have expired will be elected for a term of office to expire at
the third succeeding annual meeting of shareholders after their
election. Vacancies which occur during the year may be filled by the
Board for the remainder of the full term to which the director
previously serving in such vacant position was first elected, or, if
such vacancy was created by an increase in the number of directors,
then for the remainder of the full term of the class of directors to
which the director appointed to fill such vacancy was appointed. If
the Classified Board Amendments are adopted, they would apply to
every election of directors as opposed to only those elections
occurring in connection with a particular event, such as a hostile
takeover attempt.
Vote to Amend Classified Board Provisions. The Classified Board
Amendments also provide generally that the affirmative vote of
shareholders possessing at least 75% of the voting power of the then
outstanding shares of all classes of stock of the Company generally
possessing voting rights in elections of directors will be required
to amend or adopt any provision inconsistent with Article 5 of the
Articles or Sections 1, 2 and 3 of Article III of the By-Laws (which
Sections relate to the classified Board). However, with respect to
the By-laws only, the Board may amend or adopt such a provision
without the vote of the shareholders by a resolution adopted by the
Requisite Vote (defined as the affirmative vote of at least two-
thirds of the directors then in office plus one director). As a
result, it would be more difficult for the shareholders or an entity
proposing a takeover offer to modify the structure of the Board,
since currently the provisions of the Articles and By-Laws relating
to the structure of the Board could be amended or repealed by a
majority vote of the shares present at a duly constituted meeting of
shareholders or by a majority of directors present at a duly
constituted meeting of the Board.
Removal of Directors. The Classified Board Amendments also provide
that a director may be removed from office by the affirmative vote of
shareholders possessing at least a majority of the voting power of
the then outstanding shares of all classes of stock of the Company
generally possessing voting rights in elections of directors,
considered for such purpose as one class, but can be so removed only
for "cause" (as defined). However, the shareholders may remove a
director from office by the foregoing vote without "cause" if the
Board recommends such removal by a resolution adopted by the
Requisite Vote. For purposes of the Classified Board Amendments, the
term "cause" as it applies to any director is defined generally as
including acts of fraud constituting a felony and resulting in
personal enrichment for the director at the Company's expense for
which the director was duly and properly indicted, and such
indictment is not dismissed within ninety days of issuance.
Shareholders should note that if the Classified Board Amendments are
adopted, unless "cause" is established or removal is recommended by
the Requisite Vote of the directors, a director may not be removed
from office even if shareholders possessing a majority of the voting
power favor such action.
Filling of Vacancies. The Classified Board Amendments also provide
that any vacancy occurring on the Board, including a vacancy created
by an increase in the number of directors, will be filled by the
affirmative vote of a majority of the directors then in office. Any
director so elected will serve until the next election of the class
for which such director shall have been chosen.
Rights of Holders of Other Capital Stock. The Classified Board
Amendments further provide that whenever the holders of any one or
more series of the Company's captial stock (other than the Common
Stock) have the right to elect directors at an annual or special
meeting of shareholders, the election, term of office, filling of
vacancies and other features of such directorships will be governed
by the terms of the series of such capital stock applicable thereto,
and such directors so elected will not be divided into classes unless
expressly provided by the terms of the applicable series. Currently,
the Articles do not authorize the issuance of any series of capital
stock other than the Common Stock. However, if the shareholders
approve the Preferred Stock Amendment (as defined herein), the
Company will be authorized to issue Preferred Stock (as defined
herein) as provided therein. The holders of such Preferred Stock,
voting as a group, could be authorized to elect a certain number of
directors to the Board without the approval of the holders of Common
Stock.
Certain Advantages of the Classified Board Amendments. The
Board believes that adoption of a classified Board is advisable because
such a structure would tend to promote management continuity since only
one-third of the directors would stand for election each year. Staggered
terms would guarantee that approximately two-thirds of the directors at
any one time would have at least one year's experience as directors of the
Company. The Board believes that such continuity and stability enhance
both the Board's ability to focus on the Company's long-term strategic
direction and the Company's ability to attract the competent and qualified
officers and employees necessary for continued success. In addition, the
classified Board would make it more difficult for a group of shareholders,
which may not be acting in the best interests of all shareholders, to
force an immediate and complete change in the composition of the Board as
means to effect, for example, a transaction that is contrary to the
interests of the Company and its shareholders as a whole.
Certain Disadvantages of the Classified Board Amendments.
Although the Board believes the adoption of the Classified Board
Amendments is in the best interests of shareholders for the reasons
outlined above, shareholders should be aware of potential disadvantages
associated with the proposals. For example, by staggering the terms of
the directors, the classified Board would not permit the shareholders to
elect at one meeting an entirely new slate of directors, even if a
majority of the shareholders wanted to do so, since only one-third of the
directors would stand for election in any given year. This limitation on
influencing the Board could conceivably discourage potential takeover
offers which, although viewed by some or most of the shareholders as being
in their best interests, were opposed by the incumbent Board.
Additionally, by requiring the affirmative vote of shareholders possessing
at least 75% (as opposed to a simple majority) of the outstanding voting
power of the Company to amend the provisions of the Aritlces and By-Laws
relating to the classified Board, the proposals would make it difficult to
unwind the classified Board structure once it was enacted. Adoption of
the Classified Board Amendments would also make it more difficult for
shareholders to remove a director from office, since such removal could
only be for "cause" unless otherwise provided by a supermajority vote of
the directors.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE "FOR" APPROVAL AND
ADOPTION OF ALL OF THE CLASSIFIED BOARD AMENDMENTS.
Common Stock Amendment
The Board has unanimously approved and recommends that the
shareholders approve an amendment to Article 2 of the Articles to increase
the number of authorized shares of Common Stock from 1,000,000 to
10,000,000 (the "Common Stock Amendment"). Article 2 of the Articles, as
proposed to be amended by the Common Stock Amendment, is as set forth in
Appendix C to this Proxy Statement, and the following description is
qualified in its entirety by reference to the full text of the Common
Stock Amendment.
Of the 1,000,000 presently authorized shares of Common Stock, at
March 2, 1998, 834,340 shares were issued and outstanding, 100,000 shares
were reserved for issuance pursuant to the 1996 Plan and 65,660 shares
were unissued and unreserved. Accordingly, the Company is seeking to
increase the number of shares authorized for issuance, so that in the
future it will be able to issue Common Stock for any proper corporate
purpose, including those listed below. If the Common Stock Amendment is
approved by the shareholders and effective, the Company will then have
available for issuance 9,065,660 unissued and unreserved shares of Common
Stock (prior to the Stock Dividend, described below). If the shareholders
approve the 1996 Plan, as amended, the Company will reserve an additional
400,000 shares for issuance pursuant to the terms of the 1996 Plan.
The Board has approved, contingent upon shareholder approval of
the Common Stock Amendment, a 5% stock dividend on the Common Stock
("Stock Dividend"), payable on May 21, 1998 to holders of record on
May 11, 1998. The proposed increase in authorized shares of Common Stock
will allow the Company to issue shares pursuant to the Stock Dividend
while ensuring sufficient authorized Common Stock in the future for, among
other purposes, possible additional future stock dividends, stock splits,
issuance from time to time in connection with acquisitions of other
financial institutions, possible future employee benefit plans, a Common
Stock shareholder rights plan, financing requirements or other general
corporate purposes. As of the date of this Proxy Statement and except for
the operation of the 1996 Plan and the issuance of shares of Common Stock
in the Stock Dividend, the Board is not considering any transaction which
would require the issuance of additional shares of Common Stock, nor are
there presently any understandings, agreements, plans or commitments
relating to the issuance of additional shares of Common Stock.
If the Common Stock Amendment is approved, such additional
shares could be issued at such time or times and for such consideration as
the Board in its discretion determines without further shareholder action
(unless otherwise required in connection with certain statutory mergers or
as may be required by the policies of any exchange on which the Common
Stock is then traded) should it determine to do so. Because the Articles
do not provide preemptive rights, shareholders will not have a
preferential right to subscribe for their proportionate share of any new
issue of Common Stock unless so provided by the Board. Issuance of any of
the proposed shares of Common Stock, other than as a pro rata distribution
to existing shareholders, will dilute the proportionate voting power of
existing shareholders.
The Company does not view the Common Stock Amendment as part of
an "anti-takeover" strategy. The Common Stock Amendment is also not being
advanced as a result of any known effort by any party to accumulate Common
Stock or to obtain control of the Company. Issuing additional shares of
Common Stock could, nonetheless, impede or defeat a non-negotiated
acquisition of the Company by diluting the ownership interests of a
substantial shareholder and thereby increase the total amount of
consideration necessary for a person to obtain control of the Company or
increasing the voting power of friendly third parties.
Neither the Articles nor the Wisconsin Business Corporation Law
provide for cumulative voting by shareholders of the Company in the
election of directors.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE "FOR" APPROVAL AND
ADOPTION OF THE COMMON STOCK AMENDMENT.
Preferred Stock Amendment
The Board has unanimously approved and recommends that the
shareholders approve an amendment to Article 2 of the Articles to
establish a class of preferred stock, no par value ("Preferred Stock"),
with 2,000,000 shares authorized for issuance (the "Preferred Stock
Amendment"). Article 2 of the Articles, as proposed to be amended by the
Preferred Stock Amendment, is as set forth in Appendix D to this Proxy
Statement, and the following description is qualified in its entirety by
reference to the full text of the Preferred Stock Amendment.
Pursuant to the Preferred Stock Amendment, the Board would be
authorized to issue Preferred Stock from time to time and in one or more
series, and would be authorized to determine, by resolution providing for
the issuance of shares of each particular series, (i) the consideration
for which the shares of such series are to be issued; (ii) the number of
shares constituting such series; (iii) the rate of dividends upon which
and the times at which dividends on shares of such series shall be payable
and the preference, if any, which such dividends shall have relative to
dividends on shares of any other class or classes or any other series of
stock of the Company; (iv) whether such dividends shall be cumulative or
noncumulative; (v) the voting rights, if any, to be provided for shares of
such series; (vi) the rights, if any, which the holders of shares of such
series shall have in the event of liquidation, dissolution or winding up
of the affairs of the Company; (vii) the rights, if any, which the holders
of shares of such series shall have to convert such shares into or
exchange such shares for shares of any other class or classes or any other
series of stock of the Company and the terms and conditions of such
conversion or exchange; (viii) the redemption price and other terms of
redemption, if any, for shares of such series; and (ix) any and all other
preferences, rights, qualifications, limitations or restrictions
pertaining to shares of such series. If the Preferred Stock Amendment is
approved, no further action on the part of the shareholders would be
required prior to issuing any shares of Preferred Stock, except as may be
required by applicable law. The Board believes the ability to issue
Preferred Stock on flexible terms would enhance its opportunities to
procure additional financing or enter into acquisition agreements.
At the date of mailing of this Proxy Statement, the Corporation
did not have any plans to issue shares of Preferred Stock. The issuance
of Preferred Stock could decrease the amount of earnings and assets
available for distribution to the holders of Common Stock and adversely
affect the rights and powers, including voting rights, of the Common
Stock. Shares of Preferred Stock could also be used to discourage a non-
negotiated attempt to obtain control of the Company, even if such a
transaction may be favorable to shareholders of Common Stock. This could
occur through issuance of shares that would dilute the interest in the
equity and voting power of a party seeking to gain control. The Company
is not currently aware of any effort by any party to obtain control of the
Company.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE "FOR" APPROVAL AND
ADOPTION OF THE PREFERRED STOCK AMENDMENT.
Potential Anti-Takeover Effects
The Company does not currently have in effect provisions in its
Articles or By-laws which may be generally regarded as "anti-takeover"
provisions. The adoption of the Classified Board Amendments and the
Preferred Stock Amendment could, however, enhance the ability of existing
management and the Board to retain their positions by discouraging or
making more difficult both the acquisition of the Company on a
non-negotiated basis and the removal of existing management and the Board.
These consequences could occur even if an acquisition of the Company were
favored by a majority of shareholders and an offer were made at a premium
to the market price of the Common Stock. The Board is not currently aware
of any threatened or existing effort to accumulate shares of Common Stock
or acquire control of the Company. The Company has no current intention
to submit to its shareholders any other proposals which might be viewed as
anti-takeover measures. Reference is made to the discussions of each
individual Amendment above for further information on their potential
anti-takeover effects.
Vote Required
The affirmative vote of the holders of a majority of the shares
of Common Stock represented and voted at the Annual Meeting (assuming a
quorum is present) is required to approve each of the Classified Board
Amendments, the Common Stock Amendment and the Preferred Stock Amendment.
Any shares of Common Stock not voted at the Annual Meeting with respect to
the Classified Board Amendments, the Common Stock Amendment and the
Preferred Stock Amendment (whether as a result of broker non-votes,
abstentions or otherwise) will have no impact on the vote.
THE BOARD RECOMMENDS A VOTE "FOR" ALL OF THE CLASSIFIED BOARD
AMENDMENTS, THE COMMON STOCK AMENDMENT AND THE PREFERRED STOCK AMENDMENT
AND URGES EACH SHAREHOLDER TO VOTE "FOR" ALL OF THE CLASSIFIED BOARD
AMENDMENTS, THE COMMON STOCK AMENDMENT AND THE PREFERRED STOCK AMENDMENT.
UNLESS MARKED TO THE CONTRARY, THE SHARES REPRESENTED BY PROPERLY EXECUTED
PROXIES RECEIVED PRIOR TO OR AT THE ANNUAL MEETING AND NOT REVOKED WILL BE
VOTED "FOR" ALL OF THE CLASSIFIED BOARD AMENDMENTS, THE COMMON STOCK
AMENDMENT AND THE PREFERRED STOCK AMENDMENT.
APPROVAL OF THE 1996 PLAN, AS AMENDED
General
The Board has unanimously approved an amendment to the 1996
Plan, contingent upon shareholder approval of the 1996 Plan, as so
amended, at the Annual Meeting, increasing the aggregate number of shares
authorized for issuance under the 1996 Plan from 100,000 to 500,000
(subject to adjustment in order to prevent dilution in certain cases
described below). The following summary description of the 1996 Plan is
qualified in its entirety by reference to the full text of the 1996 Plan,
as proposed to be amended, which is attached to this Proxy Statement as
Appendix E. As of the date of this Proxy Statement, options covering an
aggregate of 96,875 shares were outstanding under the 1996 Plan. The
Board approved the 1996 Plan, as amended, to allow for additional options
to be awarded under the 1996 Plan so that key employees may be (i) induced
to remain in the employ of the Company or its subsidiaries, (ii) provided
with additional incentive to increase their efforts to improve operating
results, and (iii) encouraged to secure or increase on reasonable terms
their stock ownership in the Company.
The purpose of the 1996 Plan is to promote the best interests of
the Company and its shareholders by providing key employees of the Company
and its affiliates with an opportunity to acquire a proprietary interest
in the Company. The 1996 Plan is intended to promote continuity of
management and to provide increased incentive and personal interest in the
welfare of the Company by those key employees who are primarily
responsible for shaping and carrying out the long-range plans of the
Company and securing the Company's continued growth and financial success.
The 1996 Plan was adopted by the Board on July 16, 1996 and
approved by shareholders on April 22, 1997. The 1996 Plan, as amended,
was adopted by the Board on January 27, 1998.
The closing price of the Common Stock as reported on the OTC
Bulletin Board on March 11, 1998 was $18.00.
Administration and Eligibility
The 1996 Plan is required to be administered by a committee of
the Board (the "Committee") consisting of no less than two directors who
are "nonemployee directors" within the meaning of Rule 16b-3 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and who
are "outside directors" within the meaning of Section 162(m) of the Code.
In the event that the Committee is not appointed, the functions of the
Committee will be exercised by those members of the Board who qualify as
"nonemployee directors" under Rule 16b-3 and as "outside directors" within
the meaning of Section 162(m). The Personnel Committee of the Board has
been designated as the current administrator of the 1996 Plan. Among
other functions, the Committee has the authority to establish rules for
the administration of the 1996 Plan; to select the key employees of the
Company and its affiliates to whom stock options will be granted; to
determine the number of shares of Common Stock subject to the options to
be granted to key employees; and to set the terms and conditions of such
stock options. Subject to the express terms of the 1996 Plan,
determinations and interpretations with respect thereto will be in the
sole discretion of the Committee, whose determinations and interpretations
will be binding on all parties.
Any key employee of the Company or any affiliate, including any
executive officer or employee-director of the Company who is not a member
of the Committee, is eligible to be granted awards by the Committee under
the 1996 Plan. Currently, approximately 23 employees are eligible to
participate in the 1996 Plan. The number of eligible employees may
increase over time based upon future growth of the Company.
Awards Under the 1996 Plan; Available Shares
The 1996 Plan authorizes the granting to key employees of stock
options, which may be either incentive stock options meeting the
requirements of Section 422 of the Code ("ISOs") or non-qualified stock
options. The 1996 Plan currently provides that up to a total of 100,000
shares of Common Stock (subject to adjustment as described below) will be
available for the granting of options thereunder. If the shareholders
approve the 1996 Plan, as amended, a total of 500,000 shares of Common
Stock will be available for the granting of options.
If any shares subject to options granted under the 1996 Plan, or
to which any option relates, are forfeited, or if an option otherwise
terminates, expires or is canceled prior to the delivery of all of the
shares or other consideration issuable or payable pursuant to the option,
such shares will be available for the granting of new options under the
1996 Plan. Any shares delivered pursuant to exercise of an option granted
under the 1996 Plan may be either authorized and unissued shares of Common
Stock or treasury shares held by the Company.
Stock Option Awards
Options granted under the 1996 Plan to key employees may be
either ISOs or non-qualified stock options. During any one calendar year,
no individual key employee may be granted options to purchase in excess of
25,000 shares of Common Stock under the 1996 Plan (subject to adjustment
as described below).
The exercise price per share of Common Stock subject to options
granted to key employees under the 1996 Plan will be determined by the
Committee, provided that the exercise price may not be less than 100% of
the fair market value of a share of Common Stock on the date of grant.
The term of any option granted to a key employee under the 1996 Plan will
be as determined by the Committee, provided that no stock option may have
a term which exceeds ten years from the date of its grant. Options
granted to key employees under the 1996 Plan become exercisable in such
manner and within such period or periods and in such installments or
otherwise as determined by the Committee. Options may be exercised by
payment in full of the exercise price, either (at the discretion of the
Committee) in cash or (in whole or in part) by tendering shares of Common
Stock or other consideration having a fair market value on the date of
exercise equal to the option exercise price. Pursuant to the terms of the
1996 Plan, no ISO may be granted thereunder after July 16, 2006. All ISOs
granted under the 1996 Plan will also be required to comply with all other
terms of Section 422 of the Code.
Adjustments
If any dividend or other distribution, recapitalization, stock
split, reverse stock split, reorganization, merger, consolidation, split-
up, spin-off, combination, repurchase, or exchange of shares of Common
Stock or other securities of the Company, issuance of warrants or other
rights to purchase shares of Common Stock or other securities of the
Company, or other similar corporate transaction or event affects the
shares of Common Stock so that an adjustment is appropriate in order to
prevent dilution or enlargement of the benefits or potential benefits
intended to be made available under the 1996 Plan, then the Committee will
generally have the authority to, in such manner as it deems equitable,
adjust (a) the number and type of shares subject to the 1996 Plan and
which thereafter may be made the subject of options, (b) the number and
type of shares subject to outstanding options, and (c) the exercise price
with respect to any option, or may make provision for a cash payment to
the holder of an outstanding option.
Limits on Transferability
Except as otherwise provided by the Committee, no option granted
under the 1996 Plan may be assigned, sold, transferred or encumbered by
any participant, otherwise than by will, by designation of a beneficiary,
or by the laws of descent and distribution. Except as otherwise provided
by the Committee, each option will be exercisable during the participant's
lifetime only by such participant or, if permissible under applicable law,
by the participant's guardian or legal representative.
Amendment and Termination
The Board may amend, suspend or terminate the 1996 Plan at any
time, except that no such action may adversely affect any option granted
and then outstanding thereunder without the approval of the respective
participant. The 1996 Plan further provides that shareholder approval of
any amendment thereto must also be obtained if required by (a) the Code or
any rules promulgated thereunder (to allow for ISOs to be granted
thereunder), (b) any other applicable law or (c) the quotation or listing
requirements of the exchange or market on which the Common Stock is then
traded (in order to maintain the trading of the Common Stock on such
exchange or market).
Withholding
Not later than the date as of which an amount first becomes
includible in the gross income of a key employee for federal income tax
purposes with respect to any option granted under the 1996 Plan, the key
employee will be required to pay to the Company, or make arrangements
satisfactory to the Company regarding the payment of, any federal, state,
local or foreign taxes of any kind required by law to be withheld with
respect to such amount. Unless otherwise determined by the Committee,
withholding obligations arising with respect to options granted under the
1996 Plan may be settled with shares of Common Stock, including shares of
Common Stock that are received upon exercise of the option that gives rise
to the withholding requirement. The obligations of the Company under the
1996 Plan are conditional on such payment or arrangements, and the Company
and any affiliate will, to the extent permitted by law, have the right to
deduct any such taxes from any payment otherwise due to the key employee.
The Committee may establish such procedures as it deems appropriate for
the settling of withholding obligations with shares of Common Stock.
Certain Federal Income Tax Consequences
The grant of an option under the 1996 Plan will create no income
tax consequences to the key employee. A key employee who is granted a
non-qualified stock option will generally recognize ordinary income at the
time of exercise in an amount equal to the excess of the fair market value
of the Common Stock acquired at such time over the exercise price. The
Company will be entitled to a deduction in the same amount and at the same
time as ordinary income is recognized by the key employee. A subsequent
disposition of the Common Stock will give rise to capital gain or loss to
the extent the amount realized from the sale differs from the tax basis,
i.e, the fair market value of the Common Stock on the date of exercise.
This capital gain or loss will be a long-term capital gain or loss if the
Common Stock has been held for more than one year from the date of
exercise. Long-term capital gain is subject to tax at a maximum stated
rate of either 20% if the employee has held the Common Stock for more than
18 months prior to the disposition or 28% if the employee has held the
Common Stock for not more than 18 months prior to the disposition.
In general, a key employee will recognize no income or gain as a
result of exercise of an ISO (except that the alternative minimum tax may
apply). Except as described below, any gain or loss realized by the key
employee on the disposition of the Common Stock acquired pursuant to the
exercise of an ISO will be treated as a long-term capital gain or loss and
no deduction will be allowed to the Company. If the key employee fails to
hold the shares of Common Stock acquired pursuant to the exercise of an
ISO for a least two years from the date of grant of the ISO and one year
from the date of exercise, the key employee will recognize ordinary income
at the time of the disposition equal to the smaller of (a) the gain
realized on the disposition, or (b) the excess of the fair market value of
the shares of Common Stock acquired on the date of exercise over the
exercise price. The Company will be entitled to a deduction in the same
amount and at the same time as ordinary income is recognized by the key
employee. Any additional gain realized by the key employee over the fair
market value at the time of exercise will be treated as a capital gain.
This capital gain will be a long-term capital gain if the Common Stock has
been held for more than one year from the date of exercise. Long-term
capital gain is subject to tax at a maximum stated rate of either 20% if
the employee has held the Common Stock for more than 18 months prior to
the disposition or 28% if the employee has held the Common Stock for not
more than 18 months prior to the disposition.
New Plan Benefits
The Company cannot determine the awards that may be granted in
the future to key employees under the 1996 Plan, as amended. Such
determinations will be made from time to time by the Committee.
Vote Required
The affirmative vote of the holders of a majority of the shares
of Common Stock represented and voted at the Annual Meeting (assuming a
quorum is present) is required to approve the 1996 Plan, as amended. Any
shares of Common Stock not voted at the Annual Meeting with respect to the
1996, as amended (whether as a result of broker non-votes, abstentions or
otherwise) will have no impact on the vote.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE "FOR" APPROVAL AND
ADOPTION OF THE 1996 PLAN, AS AMENDED.
CERTAIN TRANSACTIONS
Organizational Matters
During 1995, the organizers of the Bank (Messrs. Ackley,
Thomas C. Birdsall, Hayes, Horning, Curtis Lang, Menzel, Niebler, Olson,
Peterman, Renner, Streff and Tetzlaff) loaned an aggregate of $36,000 to
the Company to cover organizational expenses of the Bank and the Company.
Interest was payable on these loans at an annual interest rate of 10%.
Mr. Menzel also made loans to the Company under two separate lines of
credit of $150,000 and $100,000, respectively, to fund salaries and other
administrative expenses of the Company and the Bank during their
organization. Each line of credit bore interest at a variable rate (8.75%
initially) and matured on December 6, 1995. The loans Mr. Menzel entered
into to fund his loans to the Company were subject to certain limited
guarantees provided by the organizers. All of the foregoing loans were
repaid out of the net proceeds of the Company's November 1995 initial
public offering.
Mr. Thomas C. Birdsall, an organizer of the Bank engaged in the
business of commercial and industrial real estate brokerage, was paid a
broker's commission of approximately $10,400, which was equal to one-half
of the 6% commission paid on the five-year lease covering the Bank
premises, and is entitled to additional commissions if the Company
exercises its options for further five-year lease terms and if the Company
later purchases the shopping mall in which the Bank premises are located.
The other half of this commission was paid to Birdsall-Horning &
Associates, Inc., a wholly-owned subsidiary of Shorewest Realtors, Inc.,
of which Mr. Horning, a director of the Company and the Bank, is both
Chairman of the Board and a principal shareholder. Mr. Birdsall is Vice
President of Birdsall-Horning & Associates, Inc. The broker's commission
was determined by a majority of the independent outside directors of the
Company to be on terms no less favorable to the Company than those that
are generally available from unaffiliated third parties. The payment of
the commission was ratified by a majority of the independent outside
directors who do not have an interest in the transaction other than in
their capacity as directors of the Company.
Other Transactions
The Bank from time to time makes loans or extends credit to
certain directors, executive officers, their affiliates and their family
members. All such loans and extensions of credit made to date were made
in the ordinary course of business and on substantially the same terms,
including interest rates and collateral, as those prevailing at the time
of such transactions for comparable transactions with other persons, and
did not involve more than the normal risk of collectibility or present
other unfavorable features.
INDEPENDENT AUDITORS
Conley McDonald LLP served as the Company's independent auditors
for the fiscal year ended December 31, 1997. The Board has similarly
appointed Conley McDonald LLP to serve as independent auditors for the
Company for the fiscal year ending December 31, 1998. Representatives of
Conley McDonald LLP are expected to be present at the Annual Meeting with
the opportunity to make a statement if they so desire. Such
representatives are also expected to be available to respond to
appropriate questions.
MISCELLANEOUS
Shareholder Proposals
Proposals which shareholders of the Company intend to present at
and have included in the Company's proxy statement for the 1999 annual
meeting must be received by the Company by the close of business on
November 18, 1998.
Solicitation Expenses
The cost of soliciting proxies will be borne by the Company. In
addition to soliciting proxies by mail, proxies may be solicited
personally and by telephone by certain officers and regular employees of
the Company. The Company will also reimburse brokers and other nominees
for their reasonable expenses in communicating with the persons for whom
they hold Common Stock.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires the Company's
executive officers and directors to file reports of ownership and changes
of ownership with the Securities and Exchange Commission. The regulations
of the Securities and Exchange Commission require such persons to furnish
the Company with copies of all Section 16(a) reports they file. Based on
such reports, the Company believes that all of its officers and directors
have complied with the Section 16(a) filing requirements.
The Company will provide without charge a copy of its Annual
Report on Form 10-KSB (including financial statements and financial
schedules, but not including exhibits thereto), as filed with the
Securities and Exchange Commission, to each person who is a record or
beneficial owner of Common Stock as of the record date for the Annual
Meeting. A written request for a Form 10-KSB should be directed to
William R. Hayes, Vice President and Treasurer, Ridgestone Financial
Services, Inc., 13925 West North Avenue, Brookfield, Wisconsin 53005.
By Order of the Board of Directors
RIDGESTONE FINANCIAL SERVICES, INC.
/s/ Christine V. Lake
Christine V. Lake
Vice President and Secretary
March 18, 1998
<PAGE>
APPENDIX A
Proposed amendments to Article 5 of the Articles of Incorporation
(the "Classified Board Amendments")
Article 5. BOARD OF DIRECTORS
A. POWERS, NUMBER, CLASSIFICATION AND NOMINATION.
The general powers, number, classification, and requirements for
nomination of directors shall be as set forth in Sections 1, 2 and 3 of
Article III of the By-Laws of the Corporation (and as such sections shall
exist from time to time). Notwithstanding any other provisions of these
Articles of Incorporation or the By-Laws of the Corporation (and
notwithstanding the fact that a lesser affirmative vote may be specified
by law), the affirmative vote of shareholders possessing at least seventy-
five percent (75%) of the voting power of the then outstanding shares of
all classes of stock of the Corporation generally possessing voting rights
in elections of directors, considered for this purpose as one class, shall
be required to amend, alter, change or repeal, or to adopt any provision
inconsistent with, such Sections 1, 2 and 3 of Article III of the By-Laws,
or any provision thereof; provided, however, that the Board of Directors,
by a resolution adopted by the Requisite Vote (as defined herein), may
amend, alter, change or repeal, or adopt any provision inconsistent with,
Sections 1, 2 and 3 of Article III of the By-Laws, or any provision
thereof, without the vote of the shareholders. As used herein, the term
"Requisite Vote" shall mean the affirmative vote of at least two-thirds of
the directors then in office plus one director.
B. REMOVAL OF DIRECTORS.
Any director may be removed from office, but only for "cause"
(as defined herein) by the affirmative vote of shareholders possessing at
least a majority of the voting power of the then outstanding shares of all
classes of stock of the Corporation generally possessing voting rights in
elections of directors, considered for this purpose as one class;
provided, however, that if the Board of Directors by a resolution adopted
by the Requisite Vote shall have recommended removal of a director, then
the shareholders may remove such director from office by the foregoing
vote without cause. As used herein, "cause" shall be deemed to exist only
if the director whose removal is proposed has committed acts of fraud
constituting a felony and resulting in personal enrichment for the
director at the Corporation's expense for which the director was duly and
properly indicted and such indictment is not dismissed within ninety (90)
days of issuance.
C. VACANCIES.
Any vacancy occurring in the Board of Directors, including a
vacancy created by an increase in the number of directors, shall be filled
by the affirmative vote of a majority of the directors then in office,
though less than a quorum of the Board of Directors, or by a sole
remaining director. Any director so elected shall serve until the next
election of the class for which such director shall have been chosen and
until his or her successor shall be duly elected and qualified.
D. OTHER CAPITAL STOCK
Notwithstanding the foregoing and any provisions in the By-Laws
of the Corporation, whenever the holders of any one or more series of
captial stock (other than the Common Stock) issued by the Corporation
pursuant to Article 2 hereof shall have the right, voting separately as a
class or by series, to elect directors at an annual or special meeting of
shareholders, the election, term of office, filling of vacancies and other
features of such directorships shall be governed by the terms of the
series of such capital stock applicable thereto, and such directors so
elected shall not be divided into classes unless expressly provided by the
terms of the applicable series.
E. AMENDMENTS.
Notwithstanding any other provisions of these Articles of
Incorporation (and notwithstanding the fact that a lesser affirmative vote
may be specified by law), the affirmative vote of shareholders possessing
at least seventy-five percent (75%) of the voting power of the then
outstanding shares of all classes of stock of the Corporation generally
possessing voting rights in elections of directors, considered for this
purpose as one class, shall be required to amend, alter, change or repeal,
or adopt any provision inconsistent with, the provisions of this Article
5.
<PAGE>
APPENDIX B
Amendment to the By-Laws of the Company
(approved by the Board of Directors contingent upon shareholder approval
of the Classified Board Amendments)
SECTION 3. Classified Board. The Board of Directors shall
be divided into three classes, with respect to the time that they
severally hold office, as nearly equal in number as possible, with the
initial term of the first class of directors to expire at the 1999 annual
meeting of shareholders, the initial term of office of the second class of
directors to expire at the 2000 annual meeting of shareholders and the
initial term of office of the third class of directors to expire at the
2001 annual meeting of shareholders. Directors elected to succeed those
directors whose terms have thereupon expired shall be elected for a term
of office to expire at the third succeeding annual meeting of shareholders
after their election, and upon the election and qualification of their
successors. A person elected as a director shall be deemed a director as
of the time of such election. If the number of directors is changed, then
any increase or decrease shall be apportioned among the classes so as to
maintain or attain, if possible, an equal number of directors in each
class, but in no case will a decrease in the number of directors shorten
the term of any incumbent director. If such equality is not possible,
then the increase or decrease shall be apportioned among the classes in
such a way that the difference in the number of directors in any two
classes shall not exceed one.
<PAGE>
APPENDIX C
Proposed amendment to Article 2 of the Articles of Incorporation
(the "Common Stock Amendment")
Article 2. CAPITAL STOCK
A. COMMON STOCK.
The Corporation shall have the authority to issue ten million
(10,000,000) shares of common stock, no par value (the "Common Stock").
The holders of the Common Stock shall be entitled to such dividends
(payable in cash, stock or otherwise) upon the Common Stock as may be
declared from time to time by the Board of Directors and paid out of funds
legally available therefor. In the event of any liquidation, dissolution
or winding up of the affairs of the Corporation and subject to the prior
rights of other holders of shares of capital stock of the Corporation, the
holders of the Common Stock shall be entitled to share ratably in all
assets available for distribution to the shareholders. Subject to
applicable law, the holders of Common Stock shall be entitled to one vote
for each of the shares held by them of record at the time for determining
holders thereof entitled to vote.
<PAGE>
APPENDIX D
Proposed amendment to Article 2 of the Articles of Incorporation
(the "Preferred Stock Amendment")
B. PREFERRED STOCK.
The Corporation shall have the authority to issue two million
(2,000,000) shares of preferred stock, no par value (the "Preferred
Stock"). The Preferred Stock may be issued from time to time in one or
more series, with such distinctive serial designations as may be stated or
expressed in the resolution or resolutions providing for the issue of such
stock adopted from time to time by the Board of Directors; and in such
resolution or resolutions providing for the issue of shares of each
particular series, the Board of Directors is also expressly authorized, to
the full extent permitted under the Wisconsin Business Corporation Law, to
fix: the consideration for which the shares of such series are to be
issued; the number of shares constituting such series; the rate of
dividends (which may be fixed or variable) upon which and the times at
which dividends on shares of such series shall be payable and the
preference, if any, which such dividends shall have relative to dividends
on shares of any other class or classes or any other series of stock of
the Corporation; whether such dividends shall be cumulative or
noncumulative, and if cumulative, the date or dates from which dividends
on shares of such series shall be cumulative; the voting rights, if any,
to be provided for shares of such series; the rights, if any, which the
holders of shares of such series shall have in the event of any voluntary
or involuntary liquidation, dissolution or winding up of the affairs of
the Corporation; the rights, if any, which the holders of shares of such
series shall have to convert such shares into or exchange such shares for
shares of any other class or classes or any other series of stock of the
Corporation and the terms and conditions, including price and rate of
exchange, of such conversion or exchange; the redemption price or prices
and other terms of redemption, if any, for shares of such series; and any
and all other preferences and relative, participating, optional or other
special rights and qualifications, limitations or restrictions thereof
pertaining to shares of such series.
<PAGE>
APPENDIX E
Ridgestone Financial Services, Inc. 1996 Stock Option Plan, as amended
RIDGESTONE FINANCIAL SERVICES, INC.
Amended 1996 Stock Option Plan
Section 1. Purpose
The purpose of the Ridgestone Financial Services, Inc. 1996 Stock
Option Plan (the "Plan") is to promote the best interests of Ridgestone
Financial Services, Inc. (together with any successor thereto, the
"Company") and its shareholders by providing key employees of the Company
and its Affiliates (as defined below) with an opportunity to acquire a
proprietary interest in the Company. It is intended that the Plan will
promote continuity of management and increased incentive and personal
interest in the welfare of the Company by those key employees who are
primarily responsible for shaping and carrying out the long-range plans of
the Company and securing the Company's continued growth and financial
success.
Section 2. Definitions
As used in the Plan, the following terms shall have the respective
meanings set forth below:
(a) "Affiliate" shall mean any entity that, directly or through one
or more intermediaries, is controlled by, controls, or is under common
control with, the Company, including, without limitation, Ridgestone Bank.
(b) "Stock Option Agreement" shall mean any written agreement,
contract, or other instrument or document evidencing any Option granted
under the Plan.
(c) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time.
(d) "Commission" shall mean the United States Securities and
Exchange Commission or any successor agency.
(e) "Committee" shall mean a committee of the Board of Directors of
the Company designated by such Board to administer the Plan and comprised
of not less than two directors, each of whom is eligible and qualified to
serve thereon as provided by Rule 16b-3 and each of whom is an "outside
director" within the meaning of Section 162(m)(4)(C) of the Code (or any
successor provision thereto).
(f) "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended from time to time.
(g) "Fair Market Value" shall mean, with respect to any property
(including, without limitation, any Shares or other securities), the fair
market value of such property determined by such methods or procedures as
shall be established from time to time by the Committee.
(h) "Incentive Stock Option" shall mean an Option granted under
Section 6(a) of the Plan that is intended to meet the requirements of
Section 422 of the Code (or any successor provision thereto).
(i) "Key Employee" shall mean any officer or other key employee of
the Company or of any Affiliate who is responsible for or contributes to
the management, growth or profitability of the business of the Company or
any Affiliate as determined by the Committee.
(j) "Non-Qualified Stock Option" shall mean an Option granted under
Section 6(a) of the Plan that is not intended to be an Incentive Stock
Option.
(k) "Option" shall mean an Incentive Stock Option or a Non-Qualified
Stock Option.
(l) "Participating Key Employee" shall mean a Key Employee
designated to be granted an Option under the Plan.
(m) "Person" shall mean any individual, corporation, partnership,
association, joint-stock company, trust, unincorporated organization, or
government or political subdivision thereof.
(n) "Rule 16b-3" shall mean Rule 16b-3 as promulgated by the
Commission under the Exchange Act, or any successor rule or regulation
thereto.
(o) "Shares" shall mean shares of common stock of the Company, no
par value, and such other securities or property as may become subject to
Options pursuant to an adjustment made under Section 4(b) of the Plan.
Section 3. Administration
The Plan shall be administered by the Committee; provided, however,
that if at any time the Committee shall not be in existence, the functions
of the Committee as specified in the Plan shall be exercised by a
committee consisting of those members of the Board of Directors of the
Company who qualify as persons eligible to serve thereon pursuant to Rule
16b-3 and as "outside directors" under Section 162(m)(4)(C) of the Code
(or any successor provision thereto). Subject to the terms of the Plan
and without limitation by reason of enumeration, the Committee shall have
full power and authority to: (i) designate Participating Key Employees;
(ii) determine the type or types of Options to be granted to each
Participating Key Employee under the Plan; (iii) determine the number of
Shares to be covered by Options granted to Participating Key Employees;
(iv) determine the terms and conditions of any Option granted to a
Participating Key Employee; (v) interpret and administer the Plan and any
instrument or agreement relating to, or Option granted under, the Plan
(including, without limitation, any Stock Option Agreement); (vi)
establish, amend, suspend, or waive such rules and regulations and appoint
such agents as it shall deem appropriate for the proper administration of
the Plan; and (vii) make any other determination and take any other action
that the Committee deems necessary or desirable for the administration of
the Plan. Unless otherwise expressly provided in the Plan, all
designations, determinations, interpretations, and other decisions under
or with respect to the Plan or any Option shall be within the sole
discretion of the Committee, may be made at any time, and shall be final,
conclusive, and binding upon all Persons, including the Company, any
Affiliate, any Participating Key Employee, any holder or beneficiary of
any Option, any shareholder, and any employee of the Company or of any
Affiliate.
Section 4. Shares Available for Award
(a) Shares Available. Subject to adjustment as provided in Section
4(b):
(i) Number of Shares Available. The number of Shares with
respect to which Options may be granted under the Plan shall be 500,000.
If, after the effective date of the Plan, an Option is forfeited or if an
Option otherwise terminates, expires or is cancelled prior to the delivery
of all of the Shares or of other consideration issuable or payable
pursuant to such Option, then the number of Shares counted against the
number of Shares available under the Plan in connection with the grant of
such Option, to the extent of any such forfeiture, termination, expiration
or cancellation, shall again be available for granting of additional
Options under the Plan.
(ii) Limitations on Option Grants to Individual Participants.
During any one calendar year, no Participating Key Employee shall be
granted Options under the Plan for more than 25,000 Shares. Such number
of Shares as specified in the preceding sentence shall be subject to
adjustment in accordance with the terms of Section 4(b) hereof. In all
cases, determinations under this Section 4(a)(ii) shall be made in a
manner that is consistent with the exemption for performance-based
compensation provided by Section 162(m) of the Code (or any successor
provision thereto) and any regulations promulgated thereunder.
(iii) Accounting for Options. The number of Shares covered by
an Option under the Plan shall be counted on the date of grant of such
Option against the number of Shares available for granting of Options
under the Plan.
(iv) Sources of Shares Deliverable Under Options. Any Shares
delivered pursuant to an Option may consist, in whole or in part, of
authorized and unissued Shares or of treasury Shares.
(b) Adjustments. In the event that the Committee shall determine
that any dividend or other distribution (whether in the form of cash,
Shares, other securities, or other property), recapitalization, stock
split, reverse stock split, reorganization, merger, consolidation, split-
up, spin-off, combination, repurchase, or exchange of Shares or other
securities of the Company, issuance of warrants or other rights to
purchase Shares or other securities of the Company, or other similar
corporate transaction or event affects the Shares such that an adjustment
is determined by the Committee to be appropriate in order to prevent
dilution or enlargement of the benefits or potential benefits intended to
be made available under the Plan, then the Committee may, in such manner
as it may deem equitable, adjust any or all of (i) the number and type of
Shares subject to the Plan and which thereafter may be made the subject of
Options under the Plan, (ii) the number and type of Shares subject to
outstanding Options, and (iii) the exercise price with respect to any
Options, or, if deemed appropriate, make provision for a cash payment to
the holder of an outstanding Option; provided, however, in each case, that
with respect to Incentive Stock Options no such adjustment shall be
authorized to the extent that such authority would cause the Plan to
violate Section 422(b) of the Code (or any successor provision thereto);
and provided further that the number of Shares subject to an Option shall
always be a whole number.
Section 5. Eligibility
Any Key Employee, including any executive officer or employee-
director of the Company or of any Affiliate, who is not a member of the
Committee shall be eligible to be designated a Participating Key Employee.
Section 6. Awards
(a) Option Awards to Key Employees. The Committee is hereby
authorized to grant Options to Key Employees with the terms and conditions
as set forth below and with such additional terms and conditions, in
either case not inconsistent with the provisions of the Plan, as the
Committee shall determine.
(i) Exercise Price. The exercise price per Share of an
Option granted pursuant to this Section 6(a) shall be determined by the
Committee; provided, however, that such exercise price shall not be less
than 100% of the Fair Market Value of a Share on the date of grant of such
Option.
(ii) Option Term. The term of each Option shall be fixed by
the Committee; provided, however, that in no event shall the term of any
Option exceed a period of ten years from the date of its grant.
(iii) Exercisability and Method of Exercise. An Option shall
become exercisable in such manner and within such period or periods and in
such installments or otherwise as shall be determined by the Committee.
The Committee also shall determine the method or methods by which, and the
form or forms, including, without limitation, cash, Shares, other
securities, other Options, or other property, or any combination thereof,
having a Fair Market Value on the exercise date equal to the relevant
exercise price, in which payment of the exercise price with respect to any
Option may be made or deemed to have been made.
(iv) Incentive Stock Options. The terms of any Incentive
Stock Option granted under the Plan shall comply in all respects with the
provisions of Section 422 of the Code (or any successor provision thereto)
and any regulations promulgated thereunder. Notwithstanding any provision
in the Plan to the contrary, no Incentive Stock Option may be granted
hereunder after the tenth anniversary of the adoption of the Plan by the
Board of Directors of the Company.
(b) General.
(i) No Consideration for Options. Options shall be granted
to Participating Key Employees without the requirement of cash
consideration unless otherwise determined by the Committee.
(ii) Stock Option Agreements. Each Option granted under the
Plan shall be evidenced by a Stock Option Agreement in such form
(consistent with the terms of the Plan) as shall have been approved by the
Committee.
(iii) Options May Be Granted Separately or Together. Options
granted to Participating Key Employees under the Plan may be granted
either alone or in addition to, in tandem with, or in substitution for any
other Option or any award granted under any other plan of the Company or
any Affiliate. Options granted in addition to or in tandem with other
Options, or in addition to or in tandem with awards granted under any
other plan of the Company or any Affiliate, may be granted either at the
same time as or at a different time from the grant of such other Options
or awards.
(iv) Limits on Transfer of Options. No Option shall be
assignable, alienable, salable or transferable by a Participating Key
Employee otherwise than by will or by the laws of descent and
distribution; provided, however, that a Participating Key Employee at the
discretion of the Committee may be entitled, in the manner established by
the Committee, to designate a beneficiary or beneficiaries to exercise his
or her rights, and to receive any property distributable, with respect to
any Option upon the death of the Participating Key Employee; and provided
further that a participating Key Employee at the discretion (as reflected
in the applicable Stock Option Agreement) of the Committee and subject to
the limitations of the Code in the case of an Incentive Stock Option may
be entitled to assign, alienate, sell or transfer an Option to the extent
permitted by Rule 16b-3. Unless otherwise provided by the Committee in
its sole discretion (as reflected in the applicable Stock Option
Agreement) and subject to the limitations of the Code in the case of an
Incentive Stock Option, (i) each Option shall be exercisable, during the
lifetime of the Participating Key Employee, only by such individual or, if
permissible under applicable law, by such individual's guardian or legal
representative and (ii) no Option may be pledged, attached, or otherwise
encumbered, and any purported pledge, attachment, or encumbrance thereof
shall be void and unenforceable against the Company or any Affiliate.
(v) Term of Options. The term of each Option shall be for
such period as may be determined by the Committee but the expiration date
of an Option shall be not later than ten years after the date such Option
is granted.
(vi) Share Certificates; Representation. All certificates for
Shares delivered under the Plan pursuant to the exercise of any Option
shall be subject to such stop transfer orders and other restrictions as
the Committee may deem advisable under the Plan or the rules, regulations,
and other requirements of the Commission, any stock exchange or other
market upon which such Shares are then listed or traded, and any
applicable federal or state securities laws, and the Committee may cause a
legend or legends to be put on any such certificates to make appropriate
reference to such restrictions. The Committee may require each
Participating Key Employee or other Person who acquires Shares under the
Plan by means of an Option originally made to a Participating Key Employee
to represent to the Company in writing that such Participating Key
Employee or other Person is acquiring the Shares without a view to the
distribution thereof.
Section 7. Amendment and Termination of the Plan; Correction of Defects
and Omissions
(a) Amendments to and Termination of the Plan. The Board of
Directors of the Company may at any time amend, alter, suspend,
discontinue, or terminate the Plan; provided, however, that shareholder
approval of any amendment of the Plan shall also be obtained if otherwise
required by: (i) the Code or any rules promulgated thereunder (in order
to allow for Incentive Stock Options to be granted under the Plan), (ii)
any other applicable law, or (iii) the quotation or listing requirements
of any principal securities exchange or market on which the Shares are
then traded (in order to maintain the quotation or listing of the Shares
thereon). Amendment, alteration, suspension, discontinuance or
termination of the Plan shall not affect the rights of Participating Key
Employees without their consent with respect to Options previously granted
to them, and all unexpired Options shall continue in force and effect
after termination of the Plan except as they may lapse or be terminated by
their own terms and conditions.
(b) Correction of Defects, Omissions and Inconsistencies. The
Committee may correct any defect, supply any omission, or reconcile any
inconsistency in any Option or Stock Option Agreement in the manner and to
the extent it shall deem desirable to carry the Plan into effect.
Section 8. General Provisions
(a) No Rights to Options. No Key Employee, Participating Key
Employee or other Person shall have any claim to be granted an Option
under the Plan, and there is no obligation for uniformity of treatment of
Key Employees, Participating Key Employees, or holders or beneficiaries of
Options under the Plan. The terms and conditions of Options need not be
the same with respect to each Participating Key Employee.
(b) Withholding. No later than the date as to which an amount first
becomes includable in the gross income of a Participating Key Employee for
federal income tax purposes with respect to any Option granted under the
Plan, the Participating Key Employee shall pay to the Company, or make
arrangements satisfactory to the Company regarding the payment of, any
federal, state, local or foreign taxes of any kind required or permitted
by law to be withheld with respect to such amount. Unless otherwise
determined by the Committee, withholding obligations arising with respect
to Options granted to Participating Key Employees under the Plan may be
settled with Shares, including Shares that are part of, or are received
upon exercise of, the Option that gives rise to the withholding
requirement. The obligations of the Company under the Plan shall be
conditional on such payment or arrangements, and the Company and any
Affiliate shall, to the extent permitted by law, have the right to deduct
any such taxes from any payment otherwise due to the Participating Key
Employee. The Committee may establish such procedures as it deems
appropriate for the settling of withholding obligations with Shares,
including, without limitation, the establishment of such procedures as may
be necessary to satisfy the requirements of Rule 16b-3.
(c) No Limit on Other Compensation Arrangements. Nothing contained
in the Plan shall prevent the Company or any Affiliate from adopting or
continuing in effect other or additional compensation arrangements, and
such arrangements may be either generally applicable or applicable only in
specific cases.
(d) Rights and Status of Recipients of Options. The grant of an
Option shall not be construed as giving a Participating Key Employee the
right to be retained in the employ of the Company or any Affiliate.
Further, the Company or any Affiliate may at any time dismiss a
Participating Key Employee from employment, free from any liability, or
any claim under the Plan, unless otherwise expressly provided in the Plan
or in any Stock Option Agreement. Participating Key Employees shall have
no rights as holders of Shares as a result of the granting of Options
hereunder.
(e) Governing Law. The validity, construction and effect of the
Plan and any rules and regulations relating to the Plan shall be
determined in accordance with the laws of the State of Wisconsin and
applicable federal law.
(f) Severability. If any provision of the Plan or any Stock Option
Agreement or any Option is or becomes or is deemed to be invalid, illegal,
or unenforceable in any jurisdiction, or as to any Person or Option, or
would disqualify the Plan, any Stock Option Agreement or any Option under
any law deemed applicable by the Committee, such provision shall be
construed or deemed amended to conform to applicable laws, or if it cannot
be so construed or deemed amended without, in the determination of the
Committee, materially altering the intent of the Plan, any Stock Option
Agreement or the Option, such provision shall be stricken as to such
jurisdiction, Person, or Option, and the remainder of the Plan, any such
Stock Option Agreement and any such Option shall remain in full force and
effect.
(g) No Fractional Shares. No fractional Shares or other securities
shall be issued or delivered pursuant to the Plan, any Stock Option
Agreement or any Option, and the Committee shall determine (except as
otherwise provided in the Plan) whether cash, other securities, or other
property shall be paid or transferred in lieu of any fractional Shares or
other securities, or whether such fractional Shares or other securities or
any rights thereto shall be canceled, terminated, or otherwise eliminated.
(h) Headings. Headings are given to the Sections and subsections of
the Plan solely as a convenience to facilitate reference. Such headings
shall not be deemed in any way material or relevant to the construction or
interpretation of the Plan or any provision thereof.
Section 9. Effective Date of the Plan
The Plan shall be effective on the date of adoption of the Plan by
the Board of Directors of the Company provided that the Plan is approved
by the shareholders of the Company within twelve months following the date
of adoption of the Plan by the Board of Directors. All Options granted
prior to shareholder approval of the Plan shall be contingent upon
shareholder approval and shall not be exercisable until after such
approval.
<PAGE>
RIDGESTONE FINANCIAL SERVICES, INC.
THIS PROXY STATEMENT IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints PAUL E. MENZEL and WILLIAM R.
HAYES, or either of them (with full power of substitution in each of
them), as Proxies, and hereby authorizes them to represent and to vote as
designated below all of the shares of Common Stock of Ridgestone Financial
Services, Inc. held of record by the undersigned on March 2, 1998 at the
annual meeting of shareholders to be held on April 28, 1998, or any
adjournment or postponement thereof.
This proxy when properly executed will be voted in the manner
directed herein by the undersigned shareholder. If no direction is made,
this proxy will be voted "FOR" the election of the Board's nominees, "FOR"
the proposals to approve the Classified Board Amendments, "FOR" the
proposal to approve the Common Stock Amendment, "FOR" the proposal to
approve the Preferred Stock Amendment and "FOR" the proposal to approve
the 1996 Plan, as amended.
DETACH BELOW AND RETURN USING THE ENVELOPE PROVIDED
<PAGE>
RIDGESTONE FINANCIAL SERVICES, INC. 1998 ANNUAL MEETING
1. ELECTION OF DIRECTORS (for terms expiring (i) at the respective
annual meeting dates set forth for each nominee in the Proxy
Statement in the event that the Classified Board Amendments are
approved by the shareholders or (ii) at the 1999 annual meeting in
the event that the Classified Board Amendments are not approved by
shareholders)
[_] FOR all nominees listed below [_] WITHHOLD AUTHORITY
(except as marked to the to vote for all nominees
contrary below) listed below
P. Menzel, W. Hayes, C. Lake, C. Ackley, G. Hoesly, J. Horning,
W. Krause, Jr., C. Niebler, F. Olson, J. Renner, R. Streff, W. Tetzlaff
Instructions: To withhold authority to vote for any individual nominee,
write that nominee's name on the space provided below.
____________________________________________
2. Proposals to approve the Classified Board Amendments:
(i) To provide for a classified Board of Directors.
[_] FOR [_] AGAINST [_] ABSTAIN
(ii) To provide for removal of directors only for cause,
unless otherwise provided by the Requisite Vote of the
Board of Directors.
[_] FOR [_] AGAINST [_] ABSTAIN
(iii) To provide that vacancies on the Board of
Directors shall be filled by a majority vote of
the directors.
[_] FOR [_] AGAINST [_] ABSTAIN
(iv) To provide that whenever holders of capital stock
(other than common stock) have the right to elect
directors, the features of such directorships shall be
governed by the terms of such capital stock.
[_] FOR [_] AGAINST [_] ABSTAIN
(v) To provide for supermajority voting requirements to
amend provisions of the Articles or By-Laws relating
to the classified Board.
[_] FOR [_] AGAINST [_] ABSTAIN
3. Proposal to approve the Common Stock Amendment:
[_] FOR [_] AGAINST [_] ABSTAIN
4. Proposal to approve the Preferred Stock Amendment:
[_] FOR [_] AGAINST [_] ABSTAIN
5. Proposal to approve the 1996 Plan, as amended
[_] FOR [_] AGAINST [_] ABSTAIN
IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH
OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
Address
Change? [_] Name Change? [_]
Mark Box
Indicate changes below: Please sign exactly as your name appears
hereon. When shares are held by joint
tenants, both should sign. When signing as
attorney, executor, administrator, trustee or
guardian, please give your full title as such.
If a corporation, please sign in full
corporate name by President or other
authorized officer. If a partnership, please
sign in partnership name by authorized person.
DATED:__________________________, 1998
____________________________________________
Signature
____________________________________________
Signature (if held jointly)
