EXECUTIVE EMPLOYMENT AND CONSULTING AGREEMENT
THIS AGREEMENT is made as of the 31st day of December, 1999, by and
between State Financial Services Corporation, a Wisconsin corporation ("SFSC"),
and XXXXXX X. XXXX ("Executive").
WHEREAS, Executive currently serves as Chairman of the Board and Vice
President of SFSC, and in such capacities, Executive consults on a regular basis
with management of SFSC concerning matters of strategic planning, business
development and company policies;
WHEREAS, Executive has been a director of SFSC since its inception in
1984, a director of the State Financial Bank (Wisconsin), a wholly-owned
subsidiary of SFSC (the "Bank"), since 1960, a director of State Financial
Bank-Waterford, a wholly-owned subsidiary of SFSC, since 1995, a director of
State Financial Bank (Illinois), a wholly-owned subsidiary of SFSC, since 1998,
and a director of Home Federal Savings of Elgin, a wholly-owned subsidiary of
SFSC, since 1998, and in each such position Executive has materially contributed
to SFSC's success;
WHEREAS, the nature of the services provided by Executive to SFSC have
in recent years become more consultative and such services increasingly have
been requested by SFSC and provided by Executive more on an as needed basis
rather than on a day-to-day basis; and
WHEREAS, SFSC wishes to establish this Agreement for purposes of
promoting in Executive the strongest interest in the successful operation of
SFSC, to facilitate an orderly transition upon the cessation or reduction of
certain duties by Executive, and to provide to Executive benefits upon
retirement or disability in consideration of: (a) past services provided by
Executive to SFSC and its affiliates; (b) Executive's commitment to remain
employed by SFSC and the services to be performed for SFSC until December 31,
1999 (the "Retirement Date"); (c) consulting and other services to be performed
for SFSC subsequent to the Retirement Date; and (d) other commitments and
agreements made by Executive herein;
NOW, THEREFORE, in consideration of the premises, terms and conditions
hereinafter set forth, the parties hereto agree as follows:
1. Duties During Employment Period.
Executive shall continue to serve SFSC, for the remainder of
calendar year 1999 and ending on the Retirement Date (the "Employment Period"),
as an executive officer with the title of Vice President of SFSC. After the
Retirement Date, Executive shall cease to be an executive officer or employee of
SFSC.
During the Employment Period, Executive shall have the following
duties, together with such other duties, subject to Executive's availability, as
the SFSC's President or Board of Directors may reasonably assign from time to
time:
(a) Executive shall perform duties respecting customer service
and account retention for the Bank's high net worth clientele (the "Clientele").
(b) Executive shall assist customer service staff with difficult
Clientele and with Clientele inquiries or problems.
(c) Executive shall be available for consultation on all new
products, regulations and policies applicable to SFSC, the Bank or the
Clientele, and shall participate as requested in regular staff meetings to
evaluate and discuss methods, changes and problems in the acquisition and
retention of Clientele.
(d) Executive shall be available for consultation on strategic
business alliances, acquisitions, divestitures, joint ventures and similar
business combinations and transactions as such are from time to time considered,
negotiated and consummated by the officers or Board of Directors of SFSC.
(e) Executive shall assist SFSC management in the establishment
and implementation of goals for the acquisition and retention of Clientele.
(f) Executive shall maintain his memberships in community
organizations and participate generally in the activities and affairs of such
organizations with a view toward furthering the interests of SFSC, and Executive
shall seek opportunities to join other similar organizations consistent with his
interests and availability; and
(d) At the request of the President or Board of Directors,
Executive shall participate in ceremonial activities of SFSC, including the
annual Christmas party, periodic employee social gatherings, branch openings,
award presentations, recognition functions, and the like.
During the Employment Period, Executive shall devote his best
efforts and attention to SFSC's business or the business of any of its
affiliates, except during usual vacation periods.
2. Duties as Chairman of the Board. Executive shall continue to serve
SFSC as Chairman of the Board until the earlier of his resignation, removal or
death or such time that his successor is duly elected and qualified; provided,
however, that Executive shall not serve as Chairman of the Board of SFSC after
December 31, 2004. During such time as Executive serves as Chairman of the Board
of SFSC, Executive agrees to accept and serve in the capacity of a reasonable
number of other director and/or chairman positions at SFSC affiliates as the
President or Board of Directors of SFSC may request from time to time.
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3. Duties After Retirement Date.
Beginning January 1, 2000 and continuing until the end of
Executive's life (the "Consulting Period"), Executive shall be available to SFSC
and its Board of Directors and the executive officers of SFSC for consulting
services respecting SFSC's business and the Clientele, at such times and places
as may be mutually convenient to and agreed by Executive and SFSC. During the
Consulting Period, Executive shall serve as a "good will ambassador" in the
general community, and shall use his best efforts to preserve the business
relationships between SFSC, the Bank and the Bank's customers and to refer
potential customers to the Bank. Executive shall continue to perform the duties
described in subsection 1(c) through 1(g), except that Executive shall no longer
be responsible to assist in the administrative and organizational aspects of
SFSC, and it is understood that Executive's general level of activities on
behalf of SFSC will be substantially reduced. SFSC shall not request Executive
to perform any services which are inconsistent with his previous duties and
experience as an executive of SFSC or which would unreasonably interfere with
his normal activities in retirement. Consulting services may be provided by
telephone, and nothing herein shall be construed to require the Executive's
residence or continued location in the Milwaukee area.
4. Compensation.
4.1. Compensation for Executive.
(a) During the Employment Period, SFSC shall continue to
pay to Executive, and Executive shall continue to accept from SFSC, a total
annual compensation in accordance with such rates, terms and conditions as in
effect between SFSC and Executive as of the date hereof.
(b) SFSC shall pay to Executive, and Executive shall accept
from SFSC, a total annual compensation in the amount of One Hundred Thousand
Dollars ($100,000) (or proration thereof) for each year (or portion thereof)
after the Retirement Date for which Executive serves as Chairman of the Board of
SFSC. While Executive serves as Chairman of the Board of SFSC, he shall not
receive additional director or committee fees for his service as a Director or
committee member for SFSC or any affiliate of SFSC. After Executive ceases to be
Chairman of the Board of SFSC, he shall be compensated for any continued service
as a Director or committee member of SFSC or any affiliate of SFSC in the same
manner as any outside Director.
(c) Throughout the Consulting Period, subject to Section
4.1(d) below, SFSC shall pay to Executive, and Executive shall accept from SFSC,
an annual consulting compensation of Two Hundred and Twenty Five Thousand
Dollars ($225,000), a portion of which shall constitute deferred compensation
for services rendered prior to the Retirement Date and the balance shall be paid
in respect of Executive's continuing duties and obligations set forth in
paragraph 2 of this Agreement.
(d) If, during the Consulting Period, as a result of the
Executive's disability due to physical or mental illness or injury, the
Executive shall have been absent from
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the Executive's duties hereunder on a full-time basis for a period of 182 days
and, within thirty days after the Company notifies the Executive in writing that
it intends to reduce the Executive's compensation, the Executive shall not have
returned to the performance of the Executive's consulting duties hereunder, then
the Company may reduce the Executive's compensation for purposes of this
Agreement to an annual amount of $100,000, effective upon the first day of the
calendar month following the expiration of the 30-day period following notice to
the Executive.
All compensation payable to Executive under this Section
4.1:(i) shall be payable in regular periodic installments under and in
accordance with SFSC's payroll plan in effect from time to time, and (ii) shall
cease upon Executive's death, except for any unpaid amounts attributable to
periods prior to the first day of the month of Executive's death, which unpaid
amounts shall be promptly paid by SFSC to Executive's estate.
Executive shall receive no other monetary compensation from
SFSC after the Employment Period, except (i) as the Board of Directors may
approve in its sole discretion for services or performance beyond Executive's
obligations under this Agreement and (ii) under SFSC's Deferred Compensation
Agreement, dated December 9, 1980, and SFSC's Stock Incentive Plan, to the
extent each is applicable to directors, for such time as Executive serves as a
director of SFSC or any of its affiliates. Except as otherwise provided in this
Agreement, Executive hereby waives his right to participate in SFSC's deferred
compensation programs at any time in the future (except to the extent of
benefits accrued as of the date hereof). Executive also understands that after
the end of the Employment Period he shall have no rights to continue in active
participation in the SFSC retirement plans (except to the extent of benefits
accrued to the end of the Employment Period), and in the event he may be
determined to be an employee of SFSC following the Employment Period, Executive
waives his right to participate in such plans following the Employment Period
and further waives his right to receive any further payments in lieu of his
participation in the SFSC retirement plans including payments attributable to
periods prior to the date hereof (except to the extent of benefits accrued to
the end of the Employment Period).
4.2. Fringe Benefits.
Throughout the Consulting Period, SFSC shall provide, at no
cost to Executive, for his lifetime, supplemental Medicare insurance coverage
and prescription medication coverage that is reasonably acceptable to Executive
and comparable to the coverage in effect for Executive on the date hereof. To
that end, SFSC shall reimburse Executive for premium payments Executive makes
under such supplemental Medicare insurance coverage arrangement and/or for
prescription medication coverage. However, SFSC reserves the right at any time
and at SFSC's sole discretion to provide, at no cost to Executive, in lieu of
such reimbursement for premium payments, supplemental Medicare insurance
coverage comparable to the coverage in effect for Executive on the date hereof.
Except as otherwise provided in this Agreement, Executive shall continue to
participate in all fringe benefit programs of the SFSC during the Employment
Period and shall cease to participate in such programs during the Consulting
Period. Executive's failure or inability to perform services to SFSC as
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contemplated in this Agreement shall not affect SFSC's obligation to provide
supplemental Medicare insurance coverage and prescription medication coverage as
provided in this Section 4.2.
4.3. Expenses.
During the Employment Period and the Consulting Period, SFSC
shall reimburse Executive for all reasonable documented expenses incurred by
Executive in performance of his duties under this Agreement, except that SFSC
shall not be required to reimburse Executive after the Retirement Date for club
dues and club expenses (other than documented club expenses which are incurred
by Executive in the performance of his duties and approved by SFSC).
4.4. Disability.
No separate provision is made for a disability benefit under
this Agreement. However, for purposes of this Agreement, Executive shall be
considered, notwithstanding any such disability, to continue to be employed
until the Retirement Date and Executive shall continue to receive compensation
payments pursuant to Section 4.1 for the duration of the Employment Period and
the Consulting Period.
4.5. Release.
Except as specifically provided in this Agreement or
hereafter specifically approved by the Board of Directors of SFSC, Executive
agrees to release and forever discharge SFSC and all of its present and former
directors, officers, shareholders, and its and their successors, assigns and
representatives from any and all claims to compensation, monetary or otherwise,
which Executive may have now or in the future.
5. Change in Control of SFSC.
In the event there is a Change in Control (as hereinafter defined)
of SFSC during the Consulting Period, the Executive shall, at his sole
discretion, be entitled to receive, and SFSC shall promptly pay, all remaining
consulting compensation as provided in Section 4.1(c) (or 4.1(d), if applicable)
above in one lump sum payment computed on the basis of the present value of the
remaining consulting compensation for the remainder of the consultant's then
actuarial life expectancy. The life expectancy computations under this Section 5
shall be made pursuant to applicable Internal Revenue Service rules and
regulations (Table 90CM) and the present value computations shall use a discount
rate of 8%.
A "Change in Control" shall be deemed to have occurred if the
event set forth in any one of the following paragraphs shall have occurred:
(a) Any person (other than (A) SFSC or any of its subsidiaries,
(B) a trustee or other fiduciary holding securities under any employee benefit
plan of SFSC or any of its subsidiaries, (C) an underwriter temporarily holding
securities pursuant to an offering of
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such securities or (D) a corporation owned, directly or indirectly, by the
stockholders of SFSC in substantially the same proportions as their ownership of
stock in the SFSC ("Excluded Persons")) is or becomes the "Beneficial Owner" (as
such term is defined in Rule 13d-3 under the Securities Exchange Act of 1934, as
amended (the "Act")), directly or indirectly, of securities of SFSC (not
including in the securities beneficially owned by such person any securities
acquired directly from SFSC or its affiliates after June 1, 1999 pursuant to
express authorization by the Board that refers to this exception) representing
25% or more of either the then outstanding shares of common stock of SFSC or the
combined voting power of SFSC's then outstanding voting securities; or
(b) The following individuals cease for any reason to constitute
a majority of the number of directors then serving: individuals who, on December
1, 1999, constituted the Board and any new director (other than a director whose
initial assumption of office is in connection with an actual or threatened
election contest, including but not limited to a consent solicitation, relating
to the election of directors of SFSC, as such terms are used in Rule 14a-11 of
Regulation 14A under the Act) whose appointment or election by the Board or
nomination for election by SFSC's stockholders was approved by a vote of at
least two-thirds (2/3) of the directors then still in office who either were
directors on December 1, 1999 or whose appointment, election or nomination for
election was previously so approved; or
(c) The stockholders of SFSC approve a merger, consolidation or
share exchange of SFSC with any other corporation or approve the issuance of
voting securities of SFSC in connection with a merger, consolidation or share
exchange of SFSC (or any direct or indirect subsidiary of SFSC) pursuant to
applicable stock exchange requirements, other than (A) a merger, consolidation
or share exchange which would result in the voting securities of SFSC
outstanding immediately prior to such merger, consolidation or share exchange
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity or any parent thereof) at least
50% of the combined voting power of the voting securities of SFSC or such
surviving entity or any parent thereof outstanding immediately after such
merger, consolidation or share exchange, or (B) a merger, consolidation or share
exchange which would result in the voting securities of SFSC outstanding
immediately prior to such merger, consolidation or share exchange continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity or any parent thereof) at least 25% of the
combined voting power of the voting securities of SFSC or such surviving entity
or any parent thereof outstanding immediately after such merger, consolidation
or share exchange, but only if the individuals described in subsection (ii)
above cease for any reason to constitute a majority of the number of directors
of SFSC or such surviving entity or any parent thereof (for purposes of this
determination SFSC shall be deemed to include such surviving entity or any
parent thereof); or
(d) The stockholders of SFSC approve a plan of complete
liquidation or dissolution of SFSC or an agreement for the sale or disposition
by SFSC of all or substantially all of SFSC's assets (in one transaction or a
series of related transactions within any period of 24 consecutive months),
other than a sale or disposition by SFSC of all or substantially all of SFSC's
assets to an entity at least 75% of the combined voting power of the
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voting securities of which are owned by persons in substantially the same
proportions as their ownership of SFSC immediately prior to such sale.
Notwithstanding the foregoing, no "Change in Control" shall be
deemed to have occurred if there is consummated any transaction or series of
integrated transactions immediately following which the record holders of the
common stock of SFSC immediately prior to such transaction or series of
transactions continue to have substantially the same proportionate ownership in
an entity that owns all or substantially all of the assets or voting securities
of SFSC immediately following such transaction or series of transactions.
6. Further Obligations of the Executive.
(a) Competition. The Executive agrees that during the Consulting
Period, the Executive shall not, without the written consent of SFSC, directly
or indirectly, as an employee, owner, partner, agent or otherwise, participate
in any manner (or assist or advise any other person) in the business of a
commercial bank (or of a business in direct competition with commercial banks,
such as a savings and loan association, mortgage bank or consumer finance
company, leasing company, credit union or commercial or consumer lender) at a
place of business within the State of Wisconsin or Illinois or within 50 miles
of any business operation of SFSC or any affiliate of SFSC; provided, however,
that Executive may be employed by any affiliate of SFSC. The restrictions herein
do not bar the Executive from ownership of securities bought and sold on a
public market.
(b) Confidential Information. During and following the
Executive's employment by SFSC, including the Consulting Period, the Executive
shall hold in confidence and not directly or indirectly disclose or use or copy
or make lists of any confidential information or proprietary data of SFSC or the
Bank, except to the extent authorized in writing by the Board of Directors of
SFSC or required by any court or administrative agency, other than to an
employee of SFSC or the Bank or a person to whom disclosure is reasonably
necessary or appropriate in connection with the performance by the Executive of
duties as an executive of SFSC. Confidential information shall not include any
information known generally to the pubic or any information of a type not
otherwise considered confidential by persons engaged in the same business or a
business similar to that of SFSC. All records, files, documents and materials or
copies thereof, relating to SFSC's business which the Executive shall prepare,
or use, or come into contact with, shall be and remain the sole property of
SFSC.
7. Assignment of Benefits.
Unless ordered by a court of competent jurisdiction, Executive
shall not have any right to assign the right to receive any benefits hereunder,
and in the event of any assignment or transfer, whether voluntary or
involuntary, except pursuant to an order of a court of competent jurisdiction.
In the event Executive attempts such a transfer or assignment, SFSC shall not
have any further liability hereunder.
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8. Taxes.
SFSC shall deduct from all payments made hereunder all applicable
federal or state taxes required by law to be withheld from such payments.
9. Amendment.
The parties may amend, modify and supplement this Agreement in
such manner as they may agree upon in writing.
10. Construction.
This Agreement shall be governed by and construed in accordance
with the laws of the State of Wisconsin.
11. Notice.
Any notice required or permitted to be made under this Agreement
shall be sufficient if sent by certified mail, postage prepaid, addressed to
SFSC at 00000 Xxxx Xxxxxxxxxx Xxxx, Xxxxx Xxxxxxx, Xxxxxxxxx 00000, and to the
Executive at 0000 X. Xxxxxx Xx., Xxxxxxxxxx Xxxx, Xxxxxxxxx 00000.
12. Captions.
The captions at the head of a section or a paragraph of this
Agreement are designed for convenience of reference only and are not to be
resorted to for the purpose of interpreting any provision of this Agreement.
13. Severability.
The invalidity of any portion of this Agreement shall not
invalidate the remainder thereof, and said remainder shall continue in full
force and effect.
14. Binding Effect.
This Agreement shall be binding upon and shall inure to the
benefit of the Executive and SFSC and its successors. The term "successor" as
used herein shall include any person, firm, corporation, or other business
entity which at any time, by merger, consolidation, purchase or otherwise,
acquires all or substantially all of SFSC's stock, assets or business. No sale
of substantially all of SFSC's assets shall be made without the buyer expressly
assuming the obligation of this Agreement. SFSC further agrees that it will not
be a party to any merger, consolidation or reorganization unless and until its
obligations hereunder are expressly assumed by the successor or successors.
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15. Entire Agreement.
This Agreement contains the entire understanding of the parties
respecting the subject matter hereof and supersedes all other oral and written
agreements.
IN WITNESS WHEREOF, this Agreement has been executed by the
parties as of the date first set forth above.
STATE FINANCIAL SERVICES CORPORATION
By:_____________________________________
Xxxxxxx X. Xxxxx
President and Chief Executive Officer
Attest:_________________________________
Title:__________________________________
EXECUTIVE
________________________________________
Xxxxxx X. Xxxx
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