Registration No. 333-_______
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------------
FORM S-8
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
------------------
STATE FINANCIAL SERVICES CORPORATION
(Exact name of registrant as specified in its charter)
Wisconsin 39-1489983
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10708 W. Janesville Road 53130
Hales Corners, Wisconsin (Zip Code)
(Address of principal executive offices)
State Financial Services Corporation 1998 Stock Incentive Plan
(Full title of the plan)
Michael J. Falbo Copy to:
President and Chief Executive Officer
State Financial Services Corporation Ulice Payne, Jr.
10708 W. Janesville Road Foley & Lardner
Hales Corners, Wisconsin 53130 777 East Wisconsin Avenue
(414) 425-1600 Milwaukee, Wisconsin 53202
(Name, address and telephone number, (414) 271-2400
including area code, of agent for service)
--------------------------
CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------
Proposed
Proposed Maximum
Title of Amount Maximum Aggregate Amount of
Securities to be to be Offering Price Offering Registration
Registered Registered Per Share Price Fee
- --------------------------------------------------------------------------------
Common Stock, 425,000 shares $14.75(1) $6,268,750(1) $1,742.71
$.10 par value
- --------------------------------------------------------------------------------
(1) Estimated pursuant to Rule 457(h) under the Securities Act of 1933
solely for the purpose of calculating the registration fee based on the
average of the high and low sale prices of the Common Stock as reported
on The Nasdaq Stock Market on December 16, 1998.
---------------------------------
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
The document or documents containing the information specified in
Part I are not required to be filed with the Securities and Exchange Commission
("Commission") as part of this Form S-8 Registration Statement.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents filed by State Financial Services
Corporation (the "Company") with the Commission are incorporated herein by
reference:
(a) The Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1997, which includes audited financial statements as of and
for the year ended December 31, 1997.
(b) All other reports filed by the Company pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), since December 31, 1997.
(c) The description of the Company's Common Stock contained in
Item 1 of the Company's Registration Statement on Form 8-A, dated June 4, 1990,
filed with the Commission pursuant to Section 12 of the Exchange Act, and any
amendments or reports filed for the purpose of updating such description.
All documents subsequently filed by the Company pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act after the date of filing
of this Registration Statement and prior to such time as the Company files a
post-effective amendment to this Registration Statement which indicates that all
securities offered hereby have been sold or which deregisters all securities
then remaining unsold shall be deemed to be incorporated by reference in this
Registration Statement and to be a part hereof from the date of filing of such
documents.
Item 4. Description of Securities.
Not applicable.
-2-
<PAGE>
Item 5. Interests of Named Experts and Counsel.
Not applicable.
Item 6. Indemnification of Directors and Officers.
Pursuant to the provisions of the Wisconsin Business Corporation
Law ("WBCL"), directors and officers of the Company are entitled to mandatory
indemnification from the Company against certain liabilities (which may include
liabilities under the Securities Act of 1933) and expenses (i) to the extent
that such officers or directors are successful in the defense of a proceeding;
and (ii) in proceedings in which the director or officer is not successful in
the defense thereof, unless it is determined that the director or officer
breached or failed to perform his or her duties to the Company and such breach
or failure to perform constituted: (a) a wilful failure to deal fairly with the
Company or its shareholders in connection with a matter in which the director or
officer had a material conflict of interest; (b) a violation of criminal law,
unless the director or officer had reasonable cause to believe his or her
conduct was lawful or had no reasonable cause to believe his or her conduct was
unlawful; (c) a transaction from which the director or officer derived an
improper personal profit; or (d) wilful misconduct.
Additionally, under the WBCL, directors of the Company are not subject to
personal liability to the Company, its shareholders or any person asserting
rights on behalf thereof, for certain breaches or failures to perform any duty
resulting solely from their status as directors, except in circumstances
paralleling those outlined in (a) through (d) above.
The Company's By-Laws contain similar indemnification provisions
as to its officers and directors.
The indemnification provided by the WBCL and the Company's
By-Laws is not exclusive of any other rights to which a director or officer of
the Company may be entitled. The Company also carries directors' and officers'
liability insurance.
Item 7. Exemption from Registration Claimed.
Not Applicable.
Item 8. Exhibits.
The following exhibits have been filed (except where otherwise
indicated) as part of this Registration Statement:
Exhibit No. Exhibit
(4) State Financial Services Corporation 1998 Stock Incentive Plan
(5) Opinion of Foley & Lardner
-3-
<PAGE>
(23) Consent of Ernst & Young LLP
(24) Power of Attorney relating to subsequent amendments (included
on the signature page to this Registration Statement)
Item 9. Undertakings.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement to include any
material information with respect to the plan of distribution not previously
disclosed in the Registration Statement or any material change to such
information in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of 1933, each
filing of the Registrant's annual report pursuant to Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing
of an employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in this
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered herein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
-4-
<PAGE>
SIGNATURES
The Registrant. Pursuant to the requirements of the Securities
Act of 1933, the Registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-8 and has duly caused
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Hales Corners, and State of Wisconsin,
on this 4th day of December, 1998.
STATE FINANCIAL SERVICES
CORPORATION
By: /s/ Michael J. Falbo
Michael J. Falbo,
President and Chief Executive Officer
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated. Each person whose signature appears below
constitutes and appoints Michael J. Falbo and Michael A. Reindl, and each of
them individually, his or her true and lawful attorney-in-fact and agent, with
full power of substitution and revocation, for him or her and in his or her
name, place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement and to file
the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
connection therewith, as fully to all intents and purposes as he or she might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or either of them, may lawfully do or cause to be
done by virtue hereof.
S-1
<PAGE>
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ Michael J. Falbo President, Chief Executive December 4, 1998
Michael J. Falbo Officer (Principal Executive
Officer) and Director
/s/ Michael A. Reindl Senior Vice President, December 4, 1998
Michael A. Reindl Controller and Chief Financial
Officer (Principal Financial and
Accounting Officer)
/s/ Jerome J. Holz Chairman of the Board, Vice December 4, 1998
Jerome J. Holz President and Director
/s/ Richard A. Horn Director December 4, 1998
Richard A. Horn
/s/ Barbara E. Holz-Weis Director December 4, 1998
Barbara E. Holz-Weis
/s/ David M. Stamm Director December 4, 1998
David M. Stamm
/s/ Ulice Payne, Jr. Director December 4, 1998
Ulice Payne, Jr.
</TABLE>
S-2
<PAGE>
EXHIBIT INDEX
STATE FINANCIAL SERVICES
CORPORATION 1998 STOCK INCENTIVE PLAN
Sequentially
Exhibit No. Exhibit Numbered Page
(4) State Financial Services Corporation 1998
Stock Incentive Plan
(5) Opinion of Foley & Lardner
(23) Consent of Ernst & Young LLP
(24) Power of Attorney relating to subsequent
amendments (included on the signature page
to this Registration Statement) -
Exhibit 4
STATE FINANCIAL SERVICES CORPORATION
1998 STOCK INCENTIVE PLAN
Article I. Establishment and Purpose
1.1 Establishment. State Financial Services Corporation, a Wisconsin
corporation (the "Company"), hereby establishes a stock option plan for
Participants and others providing services to the Company, as described herein,
which shall be known as the State Financial Services Corporation 1998 Stock
Incentive Plan (the "Plan"). It is intended that certain of the options issued
pursuant to the Plan to Participants of the Company may constitute incentive
stock options within the meaning of section 422 of the Internal Revenue Code,
and that other options issued pursuant to the Plan shall constitute nonstatutory
options.
1.2 Purpose. The purpose of the Plan is to provide a means for the
Company to attract and retain competent personnel and to provide to
participating directors, officers and other key Participants long term
incentives for high levels of performance by providing them with a means to
acquire a proprietary interest in the Company's success.
Article II. Definitions
2.1 Definitions. For purposes of this Plan, the following terms shall
be defined as follows:
(a) "Board" means the Board of Directors of the Company.
(b) "Cause" means the definition of Cause in Optionee's employment
agreement, if any, with the Company. If no such employment agreement or
definition in such agreement exists, Cause means (i) breach by Optionee of any
covenant not to compete or confidentiality agreement with the Company, (ii)
failure by Optionee to substantially perform his duties to the reasonable
satisfaction of the Board, (iii) serious misconduct by Optionee which is
demonstrably and substantially injurious to the Company, (iv) fraud or
dishonesty by Optionee with respect to the Company, (v) material
misrepresentation by Optionee to a stockholder or director of the Company or
(vi) acts of negligence by Optionee in performance of Optionee's duties that are
substantially injurious to the Company. The Board, by majority vote, shall make
the determination of whether Cause exists.
(c) "Code" means the internal Revenue Code of 1986, as amended from
time to time, and any successor thereto.
(d) "Commission" means the Securities and Exchange Commission or any
successor agency.
(e) "Committee" means the Committee provided for by Article IV hereof,
which may be created at the discretion of the Board.
<PAGE>
(f) "Company" means State Financial Services Corporation, a Wisconsin
corporation. When applicable in the context, "the Company" also means each
direct and indirect subsidiary of State Financial Services Corporation.
(g) "Consultant" means any person or entity, including an officer or
director of the Company who provides services (other than as an Employee) to the
Company and includes a Qualified Director, as defined below.
(h) "Date of Exercise" means the date the Company receives notice, by
an Optionee, of the exercise of an Option pursuant to section 8.1 of this Plan.
Such notice shall indicate the number of shares of Stock the Optionee intends to
purchase upon exercise of an Option.
(i) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, and any successor thereto.
(j) "Fair Market Value" means the fair market value of Stock upon which
an Option is granted under this Plan, as determined by the Board. If the Stock
is traded on an over-the-counter securities market or national securities
exchange, "Fair Market Value" shall mean an amount equal to the average of the
highest and lowest reported sales prices of the Stock reported on such
over-the-counter market or such national securities exchange on the applicable
date or, if no sales of Stock have been reported for that date, on the next
preceding date for which sales were reported.
(k) "Incentive Stock Option" means an Option granted under this Plan
which is intended to qualify as an `incentive stock option" within the meaning
of section 422 of the Code.
(l) "IRS" means the Internal Revenue Service, or any successor agency.
(m) "Nonstatutory Option" means an Option granted under this Plan which
is not intended to qualify as an incentive stock option within the meaning of
section 422 of the Code. Nonstatutory Options may be granted at such times and
subject to such restrictions as the Board shall determine without conforming to
the statutory rules of section 422 of the Code applicable to incentive stock
options.
(n) "Option" means the right, granted under this Plan, to purchase
Stock of the Company at the option price for a specified period of time. For
purposes of this Plan, an Option may be an Incentive Stock Option or a
Nonstatutory Option.
(o) "Optionee" means a Participant or Consultant holding an Option or
Restricted Stock under the Plan.
(p) "Parent Corporation" shall have the meaning set forth in section
424(e) of the Code with the Company being treated as the employer corporation
for purposes of this definition.
-2-
<PAGE>
(q) "Participant" means any officer or director of the Company or any
direct or indirect subsidiary of the Company.
(r) "Qualified Director" means a director who is both (a) a
"Non-Employee Director" within the meaning of Rule 16b-3 under the Exchange Act,
or any successor definition adopted by the Commission, and (b) an "Outside
Director" under section 162(m) of the Code and the regulations promulgated
thereunder, or any successor definition adopted by the IRS.
(s) "Restricted Stock" means an award under Article XI.
(t) "Rule 16b-3" means Rule 16b-3, as promulgated by the Commission
under Section 16(b) of the Exchange Act, as amended from time to time.
(u) "Significant Stockholder" means an individual who, within the
meaning of section 422(b)(6) of the Code, owns stock possessing more than ten
percent of the total combined voting power of all classes of stock of the
Company. In determining whether an individual is a Significant Stockholder, an
individual shall be treated as owning stock owned by certain relatives of the
individual and certain stock owned by corporations in which the individual is a
partner, and estates or trusts of which the individual is a beneficiary, all as
provided in section 424(d) of the Code.
(v) "Stock" means the Common Stock, par value $.10 per share, of the
Company.
2.2 Gender and Number. Except when otherwise indicated by the context,
any masculine terminology when used in this Plan also shall include the feminine
gender and the definition of any term herein in the singular shall also include
the plural.
Article III. Eligibility and Participation
3.1 Eligibility and Participation. All Participants are eligible to
participate in this Plan and receive Incentive Stock Options, Nonstatutory
Options and/or Restricted Stock. All Consultants are eligible to participate in
this Plan and receive Nonstatutory Options hereunder. Optionees in the Plan
shall be selected by the Board from among those Participants and Consultants
who, in the opinion of the Board, are in a position to contribute materially to
the Company's continued growth and development and to its long-term financial
success.
Article IV. Administration
4.1 Administration. The Plan shall be administered by a committee (the
"Committee") selected by the Board, consisting of two or more members of the
Board. The members of the Committee may be directors who are eligible to receive
Options under the Plan, but Options may be granted to such persons only be
action of the full Board and not by action of the Committee. In the event that
the full Board grants Options to a director, the Plan shall be administered by
the Board with respect to such Options. If at any time the Committee shall not
be in existence, the Board shall administer the Plan. To the extent that the
Board administers the Plan, all references to the Committee herein shall include
the Board. To the extent permitted by applicable law, the Board may delegate to
another committee of the Board or to one or more senior officers of the Company
any or all of the authority and responsibility of the Committee with respect to
the Plan, other than with respect to Optionees who are subject to Section 16 of
the Exchange Act. To the
-3-
<PAGE>
extent that the board has delegated to such other committee or one or more
officers the authority and responsibility of the Committee, all references to
the Committee herein shall include such other committee or one or more officers.
Subject to the express provisions of the Plan, the Committee shall
have complete authority to interpret the Plan, to prescribe, amend and rescind
rules and regulations relating to the Plan, to provide for conditions and
assurances deemed necessary or advisable to protect the interests of the
Company, and to make all other determinations necessary or advisable for the
administration of the Plan. Subject to the express provisions of the Plan, the
Committee shall also have complete authority to determine the types of awards
and the number of shares covered by the awards and the terms, conditions,
restrictions and other provisions of such awards. Determinations,
interpretations or other actions made or taken by the Committee pursuant to the
provisions of the Plan shall be final, binding and conclusive for all purposes
and upon all persons.
To the extent that the Board administers the Plan, the Board shall
have all of the enumerated powers of the Committee. No member of the Board or
the Committee shall be liable for any action or determination made in good faith
with respect to the Plan or any Option or Restricted Stock granted under it.
The Board may from time to time remove members from, or add
members to, the Committee. The Board may terminate the Committee at any time.
Vacancies on the Committee, howsoever caused, shall be filled by the Board. The
Committee shall select one of its members as Chairman and shall hold meetings at
such times and places as the Chairman may determine. A majority of the Committee
at which a quorum is present, or acts reduced to or approved in writing by all
of the members of the Committee, shall be the valid acts of the Committee. A
quorum shall consist of two-thirds (2/3) of the members of the Committee.
4.2 Special Provisions for Grants to Officers or Directors. Rule 16b-3
provides that the grant of a stock option or share of stock to a director or
officer of a company subject to the Exchange Act will be exempt from the
provisions of Section 16(b) of the Exchange Act if the conditions set forth in
Rule 16b-3 are satisfied. Unless otherwise specified by the Board, grants of
Options or Restricted Stock hereunder to individuals who are officers or
directors of the Company for purposes of Section 16(b) of the Exchange Act shall
be made in a manner that satisfies the conditions of Rule 16b-3.
Article V. Stock Subject to the Plan
5.1 Number. The total number of shares of Stock hereby made available
and reserved for issuance under the Plan shall be 425,000, of which not more
than 425,000 shares of Stock may be issued as Options intended to be Incentive
Stock Options. The maximum number of shares of Stock that may be covered by
Options granted to any one Participant
-4-
<PAGE>
under the Plan shall be 42,500 during any single fiscal year. The aggregate
number of shares of Stock available under this Plan shall be subject to
adjustment as provided in section 5.3. The total number of shares of Stock may
be authorized but unissued shares of Stock or shares acquired by purchase as
directed by the Board from time to time in its discretion, to be used for
issuance as Restricted Stock or upon exercise of Options granted hereunder.
5.2 Unused Stock; Payment with Stock. If an Option shall expire or
terminate for any reason without having been exercised in full, the unpurchased
shares of Stock subject thereto shall (unless the Plan shall have terminated)
become available for other Options under the Plan and if any shares of Stock
that are subject to any Restricted Stock award are forfeited, such shares again
shall be available for distribution in connection with awards under this Plan.
In addition, upon the full or partial payment of any option price by the
transfer to the Company of shares of Stock pursuant to section 7.7, upon
satisfaction of tax withholding obligations with shares of Stock pursuant to
section 15.1 or any other payment made or benefit realized under this Plan by
the transfer or relinquishment of shares of Stock, only the net number of shares
of Stock actually issued or transferred by the Company, after subtracting the
number of shares of Stock so transferred or relinquished, will be charged
against the maximum share limitation set forth in section 5.1 above.
5.3 Adjustment in Capitalization. In the event of any change in the
outstanding shares of Stock by reason of a stock dividend or split,
recapitalization, reclassification or other similar corporate change, the
aggregate number of shares of Stock set forth in section 5.1 shall be
appropriately adjusted by the Board whose determination shall be conclusive;
provided, however, that fractional shares shall be rounded to the nearest whole
share. In any such case, the number and kind of shares that are subject to any
Option (including any Option outstanding after termination of employment) and
the Option price per share shall be proportionately and appropriately adjusted
without any change in the aggregate Option price to be paid therefor upon
exercise of the Option.
Article VI. Duration of the Plan
6.1 Duration of the Plan. The Plan shall be in effect for ten years
from the date of its approval by the Company's stockholders. Any Options or
Restricted Stock outstanding at the end of such period shall remain in effect in
accordance with their terms. The Plan shall terminate before the end of such
period if all Stock subject to the Plan has been purchased pursuant to the
exercise of Options granted under the Plan or issued as shares of Restricted
Stock no longer subject to risk of forfeiture.
Article VII. Terms of Stock Options
7.1 Grant of Options. Subject to section 5.1, Options may be granted to
Participants or Consultants at any time and from time to time as determined by
the Board; provided, however, that Consultants may receive only Nonstatutory
Options and may not receive Incentive Stock Options. The Board shall have
complete discretion in determining the number of Options granted to each
Optionee. In making such determinations, the Board may take into account the
nature of services rendered by such employee or Consultant, their present
-5-
<PAGE>
and potential contributions to the Company, and such other factors as the Board
in its discretion shall deem relevant. The Board shall also determine whether an
Option is to be an Incentive Stock Option or a Nonstatutory Option.
In the cases of Incentive Stock Options, the total Fair Market
Value (determined at the date of grant) of shares of Stock with respect to which
Incentive Stock Options are exercisable for the first time by the Optionee
during any calendar year under all plans of the Company under which incentive
stock options may be granted (and all such plans of any Parent Corporation and
any subsidiary corporations of the Company) shall not exceed $100,000.
(Hereinafter, this requirement is sometimes referred to as the "$100,000
Limitation.").
Nothing in this Article VII of the Plan shall be deemed to prevent
the grant of Options permitting exercise in excess of the maximums established
by the preceding paragraph where such excess amount is treated as a Nonstatutory
Option.
7.2 No Tandem Options. Where an Option granted under this Plan is
intended to be an Incentive Stock Option, the Option shall not contain terms
pursuant to which the exercise of the Option would affect the Optionee's right
to exercise another Option, or vice versa, such that the Option intended to be
an Incentive Stock Option would be deemed a tandem stock option within the
meaning of the regulations under section 422 of the Code. If an Incentive Stock
Option at any time would be deemed a tandem stock option with the meaning of the
regulations under section 422 of the Code, the Incentive Stock Option shall be
treated as a Nonstatutory Option.
7.3 Option Agreement; Terms and Conditions to Apply Unless Otherwise
Specified. As determined by the Board on the date of grant, each Option shall be
evidenced by an Option agreement (the "Option Agreement") that includes the
nontransferability provisions required by section 11.2 hereof and specifies:
whether the Option is an Incentive Stock Option or a Nonstatutory Option; the
Option price; the duration of the Option; the number of shares of Stock to which
the Option applies; any vesting or exercisability restrictions which the Board
may impose; in the case of an Incentive Stock Option, a provision implementing
the $100,000 Limitation; and any other terms and conditions as shall be
determined by the Board at the time of grant of the Option.
All Option Agreements shall incorporate the provisions of this
Plan by reference, with certain provisions to apply depending upon whether the
Option Agreement applies to an Incentive Stock Option or to a Nonstatutory
Option.
7.4 Option Price. No Incentive Stock Option granted pursuant to this
Plan shall have an Option price that is less than the Fair Market Value of Stock
on the date the Option is granted. Incentive Stock Options granted to
Significant Stockholders shall have an Option price of not less than 110 percent
of the Fair Market Value of Stock on the date of grant. The Option price for
Nonstatutory Options shall be established by the Board.
7.5 Term of Options. Each Option shall expire at such time as the Board
shall determine when it is granted, provided, however, that no Option shall be
exercisable later than
-6-
<PAGE>
the tenth anniversary date of its grant. Incentive Stock Options granted to
significant stockholders will be exercisable over not more than five years after
the date of grant, unless otherwise provided by the Code.
7.6 Exercise of Options. Options granted under this Plan shall be
exercisable at such times and be subject to such restrictions and conditions as
the Board shall in each instance approve, which need not be the same for all
Optionees.
7.7 Payment.
(a) Payment for all shares of Stock shall be made at the time that an
Option, or any part thereof, is exercised, and no shares shall be issued until
full payment therefor has been made (except that, in the case of an exercise
described in Section 7.7 (b), payment may be made as soon as practicable after
the exercise). Such payment may be made in cash, outstanding shares of Stock, in
combinations thereof, or any other method of payment approved by the Board;
provided, however, that (I) the deposit of any withholding tax shall be made in
accordance with applicable law and (ii) that such shares of Stock used to pay
the exercise price have been held by the Participant for at least six months
prior to the exercise date. If shares of Stock are being used in part or full
payment for the shares to be acquired upon exercise of the Option, such shares
shall be valued for the purpose of such exchange as of the date of exercise of
the Option at the Fair Market Value of the shares. Any certificates evidencing
shares of Stock used to pay the purchase price shall be accompanied by stock
powers duly endorsed in blank by the registered holder of the certificate (with
signatures thereon guaranteed). In the event the certificates tendered by the
holder in such payment cover more shares than are required for such payment, the
certificate shall also be accompanied by instructions from the holder to the
Company's transfer agent with regard to the disposition of the balance of the
shares covered thereby.
(b) The Board may permit an Optionee to pay the exercise price of an
Option by authorizing a third party to sell shares of Stock (or a sufficient
portion of the shares) acquired upon exercise of the Option and remit to the
Company a sufficient portion of the sales proceeds to pay the entire exercise
price and any tax withholding resulting from such exercise.
Article VIII. Written Notice, Issuance of Stock Certificates, Stockholder
Privilege
8.1 Written Notice. An Optionee wishing to exercise an Option shall
give written notice to the Company, in the form and manner prescribed by the
Board. Full payment for the Options exercised, except as provided in section 7.7
above, must accompany the written notice.
8.2 Issuance of Stock Certificate. As soon as practicable after the
receipt of written notice and payment, the Company shall deliver to the Optionee
or to a nominee of the Optionee a certificate or certificates for the requisite
number of shares of Stock.
8.3 Privileges of a Stockholder. An Optionee or any other person
entitled to exercise an Option under this Plan shall not have stockholder
privileges with respect to any Stock covered by the Option until the date of
issuance of a stock certificate for such Stock.
-7-
<PAGE>
Article IX. Termination of Employment or Services
Except as otherwise expressly specified by the Board, all Options
granted under this Plan shall be subject to the following termination
provisions.
9.1 Death. If an Optionee's employment in the case of an Employee, or
provision of services as a Consultant in the case of a Consultant, terminates by
reason of death, the Option may thereafter be exercised at any time prior to the
expiration date of the Option or within 12 months after the date of such death,
whichever period is the shorter, by the person or persons entitled to do so
under the Optionee's will or, if the Optionee shall fail to make a testamentary
disposition of an Option or shall die intestate, the Optionee's legal
representative or representatives. The Option shall be exercisable only to the
extent that such Option was exercisable as of the date of death.
9.2 Termination Other Than for Cause or Due to Death. In the event of
an Optionee's termination of employment in the case of an Employee, or
termination of the provision of services as a Consultant in the case of a
Consultant, other than for Cause or by reason of death, the Optionee may
exercise such portion of his Option as was exercisable by him at the date of
such termination (the "Termination Date") at any time within three months of the
Termination Date; provided, however, that where the Optionee is an Employee, and
is terminated due to disability within the meaning of Code section 22(e)(3) or
any successor provision, he may exercise such portion of his Option as was
exercisable by him on his Termination Date within one year of his Termination
Date. In any event, the Option cannot be exercised after the expiration of the
original term of the Option. Options not exercised within the applicable period
specified above shall terminate.
In the case of an Employee, a change of duties or position within
the Company, if any, shall not be considered a termination of employment for
purposes of this Plan. The Option Agreements may contain such provisions as the
Board shall approve with respect to the effect of approved leaves of absence
upon termination of employment.
9.3 Termination for Cause. In the event of an Optionee's termination of
employment in the case of an Employee, or termination of the provision of
services as a Consultant in the case of a Consultant, which termination is by
the Company for Cause, any Option or Options held by him under the Plan, to the
extent not exercised before such termination, shall forthwith terminate.
Article X. Rights of Optionees
10.1 Service. Nothing in this Plan shall interfere with or limit in any
way the right of the Company to terminate any Employee's employment, or any
Consultant's services, at any time, nor confer upon any Employee any right to
continue in the employ of the Company, or upon any Consultant any right to
continue to provide services to the Company.
10.2 Nontransferability. Options granted under this Plan shall be
nontransferable by the Optionee, other than by will or the laws of descent and
distribution, and shall be exercisable during the Optionee's lifetime only by
the Optionee.
-8-
<PAGE>
Article XI. Restricted Stock
11.1 Administration. Shares of Restricted Stock may be issued either
alone or in addition to other awards granted under the Plan. The Committee shall
determine the Participants to whom and the time or times at which grants of
Restricted Stock will be made, the number of shares to be awarded, the time or
times within which such awards may be subject to forfeiture and any other terms
and conditions of the awards, in addition to those contained in Section 11.3.
The Committee may condition the grant of Restricted Stock upon the
attainment of specified performance goals or such other factors or criteria as
the Committee shall determine. The provisions of Restricted Stock awards need
not be the same with respect to each recipient.
11.2 Awards and Certificates. Each Participant receiving a Restricted
Stock award shall be issued a certificate in respect of such shares of
Restricted Stock. Such certificate shall be registered in the name of such
Participant and shall bear an appropriate legend referring to the terms,
conditions, and restrictions applicable to such award, substantially in the
following form:
"The transferability of this certificate and the shares of stock
represented hereby are subject to the terms and conditions (including
forfeiture) of the State Financial Services Corporation 1998 Stock Incentive
Plan. Copies of such Plan and Agreement are on file at the offices of State
Financial Services Corporation, 10708 West Janesville Road, Hales Corners,
Wisconsin 53130."
The Committee may require that the certificates evidencing such
shares be held in custody by the Company until the restrictions thereon shall
have lapsed and that, as a condition of any Restricted Stock award, the
Participant shall have delivered a stock power, endorsed in blank, relating to
the Stock covered by such award.
11.3 Terms and Conditions. Shares of Restricted Stock shall be subject
to the following terms and, conditions:
(a) Subject to the provisions of the Plan and the Restricted Stock
Agreement referred to in Section 11.3(f), during a period set by the Committee,
commencing with the date of such award (the "Restriction Period"), the
Participant shall not be permitted to sell, assign, transfer, pledge or
otherwise encumber shares of Restricted Stock. Within these limits, the
Committee may provide for the lapse of such restrictions in installments and may
accelerate or waive such restrictions, in whole or in part, based on service,
performance and such other factors or criteria as the Committee may determine.
(b) Except as provided in this paragraph (b), and Section 11.3(a), the
Participant shall have, with respect to the shares of Restricted Stock, all of
the rights of a stockholder of the Company, including the right to vote the
shares and the right to receive any dividends, unless otherwise determined by
the Committee and other distributions made with respect to those shares while
they are so held. If any such dividends or distributions are paid in shares of
-9-
<PAGE>
Stock, the shares will be subject to the same restrictions on transferability as
the shares of Restricted Stock with respect to which they were paid.
(c) Except to the extent otherwise provided in the applicable
Restricted Stock Agreement and Sections 11.3(a) and (d), upon termination of a
Participant's employment for any reason during the Restriction Period, all
shares still subject to restriction shall be forfeited by the Participant.
(d) In the event of hardship or other special circumstances of a
Participant whose employment is involuntarily terminated (other than for cause),
the Committee may waive in whole or in part any or all remaining restrictions
with respect to such Participant's shares of Restricted Stock.
(e) If and when the Restriction Period expires without a prior
forfeiture of the Restricted Stock subject to such Restriction Period,
unlegended certificates for such shares shall be delivered to the Participant.
(f) Each award shall be confirmed by, and be subject to the terms of, a
Restricted Stock Agreement.
Article XII. Amendment, Modification and Termination of the Plan
12.1 Amendment, Modification, and Termination of the Plan. The Board
may at any time amend, alter, suspend, discontinue or terminate the Plan;
provided, however, that stockholder approval of any amendment of the Plan shall
be obtained if otherwise required by (a) the Code or any rules promulgated
thereunder (in order to allow incentive stock options to be granted under the
Plan or the enable the Company to comply with the provisions of ss. 162(m) of
the Code so that the Company can deduct compensation in excess of limitations
set forth therein), or (b) the listing requirements of the principal securities
exchange or market on which the Stock is then traded (in order to maintain the
listing or quotation of the Stock thereon). To the extent permitted by
applicable law, the Committee may also amend the Plan, provided that any such
amendments shall be reported to the Board.
No amendment, modification or termination of the Plan shall in any
manner adversely affect any outstanding Option or share of Restricted Stock
under the Plan without the consent of the Optionee holding the Option or share
of Restricted Stock.
12.2 Waiver of Conditions. The Committee may, in whole or in part,
waive any conditions or other restrictions with respect to any award granted
under the Plan.
Article XIII. Acquisition, Merger and Liquidation
13.1 Acquisition. Notwithstanding anything herein to contrary, in the
event that an Acquisition (as defined below) occurs with respect to the Company,
the Company shall have the option, but not the obligation, to cancel Options
outstanding as of the effective date of Acquisition, whether or not such Options
are then exercisable, in return for payment to the Optionees for each Option of
an amount equal to a reasonable, good faith estimate of an
-10-
<PAGE>
amount (hereinafter the "Spread") equal to the difference between the net amount
per share payable in the Acquisition, or as a result of the Acquisition, less
the exercise price per share of the Option. In estimating the Spread,
appropriate adjustments to give effect to the existence of the Options shall be
made, such as deeming the Options to have been exercised, with the Company
receiving the exercise price payable thereunder, and treating the shares
receivable upon exercise of the Options as being outstanding in determining the
net amount per share. For purposes of this section, an "Acquisition" shall mean
any transaction in which substantially all of the Company's assets are acquired
or in which a controlling amount of the Company's outstanding shares are
acquired, in each case by a single person or entity or an affiliated group of
persons and/or entities. For purposes of this section a controlling amount shall
mean more than 50% of the issued and outstanding shares of stock of the Company.
The Company shall have such an option regardless of how the Acquisition is
effectuated, whether by direct purchase, through a merger or similar corporate
transaction, or otherwise. In cases where the acquisition consists of the
acquisition of assets of the Company, the net amount per share shall be
calculated on the basis of the net amount receivable with respect to shares upon
a distribution and liquidation by the Company after giving effect to expenses
and charges, including but not limited to taxes, payable by the Company before
the liquidation can be completed.
Where the Company does not exercise its option under this section
13.1, the remaining provisions of this Article XIII shall apply, to the extent
applicable.
13.2 Merger or Consolidation. Subject to section 13.1 and to any
required action by the stockholders, if the Company shall be the surviving
corporation in any merger or consolidation, any Option granted hereunder shall
pertain to and apply to the securities to which a holder of the number of shares
of Stock subject to the Option would have been entitled in such merger or
consolidation.
13.3 Other Transactions. Subject to section 13.1, dissolution or a
liquidation of the Company or a merger and consolidation in which the Company is
not the surviving corporation shall cause every Option outstanding hereunder to
terminate as of the effective date of the dissolution, liquidation, merger or
consolidation. However, the Optionee either (I) shall be offered a firm
commitment whereby the resulting or surviving corporation in a merger or
consolidation will tender to the Optionee an option (the "Substitute Option") to
purchase its shares on terms and conditions both as to number of shares and
otherwise, which will substantially preserve to the Optionee the rights and
benefits of the Option outstanding hereunder granted by the Company, or (ii)
shall have the right immediately prior to such dissolution, liquidation, merger,
or consolidation to exercise any unexercised Options whether or not then
exercisable, subject to the provisions of this Plan. The Board shall have
absolute and uncontrolled discretion to determine whether the Optionee has been
offered a firm commitment and whether the tendered Substitute Option will
substantially preserve to the Optionee the rights and benefits of the Option
outstanding hereunder. In any event, any Substitute Option for an Incentive
Stock Option shall comply with the requirements of the Code.
-11-
<PAGE>
Article XIV. Securities Registration
14.1 Securities Registration. In the event that the Company shall deem
it necessary or desirable to register under the Securities Act of 1933, as
amended, or any other applicable statute, any Options or any Stock with respect
to which an Option may be or shall have been granted or exercised, or to qualify
any such Options or Stock under the Securities Act of 1933, as amended, or any
other statute, then the Optionee shall cooperate with the Company and take such
action as is necessary to permit registration or qualification of such Options
or Stock.
Unless the Company has determined that the following
representation is unnecessary, each person exercising an Option under the Plan
or receiving shares of Restricted Stock may be required by the Company, as a
condition to the issuance of the shares of Restricted Stock or shares pursuant
to exercise of the Option, to make a representation in writing that he will
comply with all securities laws applicable to the sale of such shares and such
other restrictions as the Company may deem appropriate. The Company may also
require that the certificates representing such shares contain legends
reflecting the foregoing.
Article XV. Tax Withholding
15.1 Tax Withholding. Whenever shares of Stock are to be issued in
satisfaction of Options exercised under this Plan, the Company shall have the
power to require the recipient of the Stock to remit to the Company an amount
sufficient to satisfy federal, state and local withholding tax requirements.
Unless otherwise determined by the Board, withholding obligations may be settled
with Stock, including Stock that is part of the award 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, its subsidiaries
and affiliates shall, to the extent permitted by law, have the right to deduct
any such taxes from any payment otherwise due to the participant.
Article XVI. Indemnification
16.1 Indemnification. To the extent permitted by law, each person who
is or shall have been a member of the Board shall be indemnified and held
harmless by the Company against and from any loss, cost, liability, or expense
that may be imposed upon or reasonably incurred by him in connection with or
resulting from any claim, action, suit, or proceeding to which he may be a party
or in which he may be involved by reason of any action taken or failure to act
under the Plan and against and from any and all amounts paid by him in
settlement thereof, with the Company's approval, or paid by him in satisfaction
of judgment in any such action, suit or proceeding against him, provided he
shall give the Company an opportunity, at its own expense, to handle and defend
it on his own behalf. The foregoing right of indemnification shall not be
exclusive of any other rights of indemnification to which such persons may be
entitled under the Company's articles of incorporation or bylaws, as a matter of
law, or otherwise, or any power that the Company may have to indemnify them or
hold them harmless.
-12-
<PAGE>
Article XVII. Requirements of Law
17.1 Requirements of Law. The granting of Restricted Stock and Options
and the issuance of shares of Stock upon the exercise of an Option shall be
subject to all applicable laws, rules, and regulations, and to such approvals by
any governmental agencies or national securities exchanges as may be required.
17.2 Governing Law. The Plan and all agreements hereunder shall be
construed in accordance with and governed by the laws of the state of Wisconsin.
Article XVIII. Compliance with Code
18.1 Compliance with Code. Incentive Stock Options granted hereunder
are intended to qualify as "incentive stock options" under Code section 422. If
any provision of this Plan is susceptible to more than one interpretation, such
interpretation shall be given thereto as is consistent with Incentive Stock
Options granted under this Plan being treated as incentive stock options under
the Code. Options granted hereunder to any person who is a "covered employee"
under Code section 162(m) at any time when the Company is subject to Code
section 162(m) are intended to qualify as performance-based compensation within
the meaning of Code section 162(m)(4)(C). If any provision of this Plan is
susceptible to more than one interpretation, such interpretation shall be given
thereto as is consistent with Options granted under this Plan to such "covered
Participants" being treated as performance-based compensation under Code section
162(m).
-13-
CHICAGO FIRSTAR CENTER SACRAMENTO
DENVER 777 EAST WISCONSIN AVENUE SAN DIEGO
JACKSONVILLE MILWAUKEE, WISCONSIN 53202-5367 SAN FRANCISCO
LOS ANGELES TELEPHONE (414) 271-2400 TALLAHASSEE
MADISON FACSIMILE (414) 297-4900 TAMPA
MILWAUKEE WASHINGTON, D.C.
ORLANDO WEST PALM BEACH
CLIENT/MATTER NUMBER
042326.0101
December 14, 1998
State Financial Services Corporation
10708 West Janesville Road
Hales Corners, Wisconsin 53130
Ladies and Gentlemen:
We have acted as counsel for State Financial Services Corporation, a
Wisconsin corporation (the "Company"), in connection with the preparation of a
Form S-8 Registration Statement (the "Registration Statement") to be filed by
the Company with the Securities and Exchange Commission under the Securities Act
of 1933, as amended (the "Securities Act"), relating to 425,000 shares of the
Company's Common Stock, $.10 par value per share (the "Common Stock"), which may
be issued or acquired pursuant to the State Financial Services Corporation 1998
Stock Incentive Plan (the "Plan").
In this regard, we have examined: (a) the Plan; (b) a signed copy of
the Registration Statement; (c) the Company's Articles of Incorporation and
Bylaws, as amended to date; (d) resolutions of the Company's Board of Directors
relating to the Plan; and (e) such other documents and records as we have deemed
necessary to enable us to render this opinion.
Based upon the foregoing, we are of the opinion that:
1. The Company is a corporation validly existing under the laws of the
State of Wisconsin.
2. The shares of Common Stock, when issued by the Company in the manner
contemplated in the Plan, will be validly issued, fully paid and nonassessable,
except with respect to wage claims of, or other debts owing to, employees of the
Company for services performed, but not exceeding six months' service in any one
case, as provided by Section 180.0622(2)(b) of the Wisconsin Business
Corporation Law and judicial interpretations thereof.
<PAGE>
FOLEY & LARDNER
State Financial Services Corporation
December 14, 1998
Page 2
We consent to the use of this opinion as an exhibit to the Registration
Statement. In giving this consent, we do not admit that we are "experts" within
the meaning of Section 11 of the Securities Act or within the category of
persons whose consent is required by Section 7 of the Securities Act.
Yours truly,
FOLEY & LARDNER
Exhibit 23
Consent of Independent Auditors
We consent to the incorporation by reference in Registration Statement (Form
S-8) pertaining to the State Financial Services Corporation 1998 Stock Incentive
Plan of our report dated January 16, 1998, with respect to the consolidated
financial statements of State Financial Services Corporation incorporated by
reference in its Annual Report (Form 10-K) for the year ended December 31, 1997,
filed with the Securities and Exchange Commission.
December 21, 1998
/s/ Ernst & Young LLP
