RESTATED AGREEMENT

        THIS RESTATED AGREEMENT is made and entered into as of this 14th day of
December, 2005, by and between First Business Financial Services, Inc. (formerly
known as First Business Bancshares, Inc.), a Wisconsin corporation (the
“Corporation”), and its wholly owned subsidiary, First Business Bank (the
“Bank”) (sometimes collectively referred to as the “Companies”) and Jerome J.
Smith, Chief Executive Officer (“CEO”) of the Corporation (the “Executive” or
“CEO”).

W I T N E S S E T H

        WHEREAS, the Executive has discharged the duties as CEO of the
Corporation in a very capable and skillful manner, resulting in substantial
benefits to the Companies; and

        WHEREAS, the Companies and the Executive previously entered into a
deferred compensation agreement, originally effective as of June 23, 1995, which
has been periodically amended thereafter; and

        WHEREAS, the Corporation desires the Executive to remain in its service
and to continue to use his knowledge and experience on behalf of the Companies;
and

        WHEREAS, the Boards of the Companies have approved the Companies’
entering into this Restated Agreement with the Executive in order to reflect the
ongoing relationship of the parties; and

        NOW, THEREFORE, in consideration of the prior valuable services provided
by the Executive and in order to induce the Executive to continue to provide
such services to the Companies, the Companies and the Executive enter into the
Restated Agreement, to provide as follows:

ARTICLE 1
DEFINITIONS

        1.1 Definitions. Whenever used in this Agreement, the following terms
shall have the meanings set forth below, and, when the meaning is intended, the
initial letter of the word is capitalized:

          (a) “Agreement” or “Restated Agreement” means this document.

          (b) “Beneficiary” means the persons or entities designated or deemed
designated by the Executive pursuant to Section 8.2 herein.

          (c) “Benefit Amount” means the amount of deferred compensation
benefits under Section 2.1.

          (d) “Boards” mean the Boards of Directors of the Companies or any
committee formed by or appointed by the Boards to administer this Agreement.

          (e) “Cause” shall be determined by the Board of Directors of the
Corporation or the Bank, in the exercise of good faith and reasonable judgment,
and shall mean the occurrence of the Executive’s conviction for committing an
act of fraud, embezzlement, theft, or other act constituting a felony, which is
substantially related to the circumstances of the Executive’s duties; or
material breach by the Executive of the banking laws of Wisconsin or the United
States or any regulation issued by a state or federal regulatory authority
having jurisdiction over the banking affairs of the Company, or any of its
subsidiary, parent, or affiliated organizations; or an act which disqualifies
the Executive from serving as an officer or director of a bank under Wisconsin
or Federal banking laws. Notwithstanding the foregoing, “Cause” shall not
include the occurrence of any such conviction, breach or act that does not
involve intentional or willful misconduct on the part of the Executive.

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          (f) “Code” means the United States Internal Revenue Code of 1986, as
amended.

          (g) “Companies” refers collectively to the Corporation and the Bank,
or any successor thereto as provided in Article 7 herein, and “Company” refers
generically to either the Corporation or the Bank.

          (h) “Date of Termination” means the date on which the Executive incurs
a Termination of Employment.

          (i) “Effective Date” means June 23, 1995, the date of the original
agreement.

          (j) “Executive” means Jerome J. Smith, CEO of the Corporation.

          (k) “Salary” means: The average annual monetary compensation including
bonuses but not including employee benefits paid to the Executive for three of
the five calendar years immediately preceding the year of termination. The three
calendar years used to determine the average shall be the last calendar year
preceding the year of termination, and the Executive’s choice of two of the
remaining four calendar years immediately preceding the year of termination.

          For purposes of determining “Salary” under this Section 1.1(k),
bonuses paid in a calendar year which are attributable to performance in a prior
calendar year are included in compensation for such prior calendar year.

          (l) “Termination of Employment” means the Executive’s separation from
service (within the meaning of Code Section 409A(a)(2)(A)(i) and regulations
thereunder) with both of the Companies (and all entities related to the
Companies under Code Sections 414(b), (c) and (m)) for any reason, which shall
include separation as a result of death, disability, retirement, voluntary or
involuntary termination, or any other reason.

ARTICLE 2
PAYMENT OF DEFERRED COMPENSATION

        2.1 Benefit Amount. The Companies agree to pay to the Executive, upon
the Executive’s Termination of Employment (or to his designated beneficiary in
the event of his death, or, if none, his estate), deferred compensation in the
amount of five (5) times the Executive’s Salary, less two hundred-thousand and
00/100 ($200,000.00) dollars. Such compensation will be paid out over a period
of five (5) years beginning with the first day of the first month following the
Executive’s Date of Termination. Such compensation will be paid monthly at a
rate of one-sixtieth (1/60) of the total amount, payable as of the first day of
each month pursuant to the Companies’ normal payroll practices.

        Notwithstanding the foregoing, unless the Executive ceases to be a
“specified employee” (within the meaning of Code Section 409A(a)(2)(B)(i) and
regulations thereunder) before his Date of Termination, then the first actual
payment under this Section 2.1 shall be delayed six (6) months, so that the
monthly payments to which the Executive would be otherwise entitled during the
first six (6) months following Termination of Employment will be accumulated and
paid on the first day of the seventh (7th) month following the Executive’s Date
of Termination. Thereafter, monthly payments shall be made as specified above.

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        2.2 Termination of Employment for Cause. In the event of a Termination
of Employment for Cause, all obligations of the Companies to pay benefits under
this Agreement shall immediately become null and void.

        2.3 Health Insurance Continuation. Subject to the Companies’ ability to
provide coverage, the Executive shall be entitled to continue eligibility for
all benefits pursuant to any and all health benefit plans under which the
Executive and/or the Executive’s family is eligible to receive benefits and/or
coverage immediately prior to the Executive’s Termination of Employment. These
benefits shall be made available by the Companies to the Executive immediately
upon the Executive’s Termination of Employment and shall continue to be made
available for a period of five (5) years from the Date of Termination. Such
benefits shall be made available to the Executive at the same coverage level as
in effect as of the Executive’s Date of Termination. The Executive shall
reimburse the Companies for such benefits at a rate equal to what current
employees of the Companies pay at that time for the same benefits.

        2.4 Withholding of Taxes. Either of the Companies, as applicable, shall
withhold from amounts payable under this Article or other amounts payable to the
Executive, all federal, state, city, local, or other taxes as may be required.

ARTICLE 3
RESTRICTIVE COVENANT

        3.1 Restrictive Covenant. For a period of two (2) years after the
Executive’s Date of Termination, the Executive shall not, directly or
indirectly, enter into, or in any manner, including as an employee, agent,
independent contractor, officer, director, owner or otherwise, provide services
to or on behalf of any bank or banking-related business, profession, or endeavor
within a twenty (20) mile radius of 406 Science Drive, Madison, Wisconsin. The
Executive and the Companies acknowledge that each considers the restrictions set
forth in this Article 3 to be reasonable and that the duration, geographic
scope, extent and application of each of such restrictions are no greater than
is necessary for the protection of the legitimate interests of the Companies. In
the event of a breach of the covenants under this Article 3, the Companies may
obtain injunctive or any other equitable relief to prevent the breach from
continuing.

        3.2 Consideration for Restrictive Covenant. As and for consideration for
this restrictive covenant, the Companies shall pay the Executive the sum of
three thousand three hundred thirty-three and 33/100 dollars ($3,333.33)
beginning with the first day of the first month following the Executive’s Date
of Termination, payable monthly (as of the first day of each month) for a total
of sixty (60) months pursuant to the Companies’ normal payroll practices.

        Notwithstanding the foregoing, unless the Executive ceases to be a
“specified employee” (within the meaning of Code Section 409A(a)(2)(B)(i) and
regulations thereunder) before his Date of Termination, then the first actual
payment under this Section 3.2 shall be delayed six (6) months, so that the
monthly payments to which the Executive would be otherwise entitled during the
first six (6) months following Termination of Employment will be accumulated and
paid on the first day of the seventh (7th) month following the Executive’s Date
of Termination.

        3.3 Withholding of Taxes. The Companies shall withhold from any amounts
payable under this Article, or from other amounts payable to the Executive, all
federal, state, city, local and other taxes as may be required.

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ARTICLE 4
DEATH BENEFIT

        4.1 Death Benefit. In the event of the Executive’s death while in the
employ of either of the Companies, or in the event of the Executive’s death
after his Termination of Employment, the Companies shall pay to the Executive’s
designated Beneficiary, or if none, to his estate, the sum of two hundred
thousand and 00/100 dollars ($200,000.00). Such sum shall be paid out over a
period of five (5) years beginning with the first day of the first month
following the date of the Executive’s death and on the first day of each month
thereafter, at a rate of one-sixtieth (1/60) of the total amount due under this
Section 4.1; provided, however, the sum payable under this Section 4.1 shall, be
reduced for all sums paid to the Executive under Article 3.

        4.2 Withholding of Taxes. The Companies shall withhold from any amounts
payable under this Article, or from other amounts payable to the Executive, all
federal, state, city, local and other taxes as may be required.

ARTICLE 5
THE COMPANIES’ PAYMENT OBLIGATIONS

        5.1 Payment Obligations Absolute. The Companies’ obligations to make the
payments and the arrangements provided for under this Restated Agreement shall
be absolute and unconditional, and shall not be affected by any circumstances,
including,without limitation, any offset, counterclaim, recoupment, defense, or
other right which the Companies may have against the Executive or anyone else.
All amounts payable by the Companies thereunder shall be paid without notice or
demand, except as provided herein. Each and every payment made thereunder by the
Companies shall be final, and the Companies shall not seek to recover all or any
part of such payment from the Executive or from whomsoever may be entitled
thereto, for any reasons whatsoever.

        The Executive shall not be obligated to seek other employment in
mitigation of the amounts payable or arrangements made under this Restated
Agreement, and the obtaining of any such other employment shall in no event
effect any reduction of the Companies’ obligations to make the payments and
arrangements required to be made under this Restated Agreement.

        5.2 Contractual Rights to Benefits. This Restated Agreement establishes
and vests in the Executive a contractual right to the benefits to which he is
entitled hereunder. However, nothing herein contained shall require or be deemed
to require, or prohibit or be deemed to prohibit, the Companies to segregate,
earmark, or otherwise set aside any funds or other assets, in trust or
otherwise, to provide for any payments to be made or required hereunder.

ARTICLE 6
PAYMENT OF LEGAL FEES AND TAXES

        6.1 Payment of Legal Fees. To the extent permitted by law, the Companies
shall pay all legal fees, costs of litigation, prejudgment interest, and other
expenses incurred in good faith by the Executive as a result of contesting the
validity, enforceability, or interpretation of this Restated Agreement, or as a
result of any conflict between the parties pertaining to this Restated
Agreement.

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        6.2 Payment of Additional Taxes. Anything in this Restated Agreement to
the contrary notwithstanding, in the event it shall be determined that any
payment or distribution by the Companies to or for the benefit of the Executive
(whether paid or payable or distributed or distributable pursuant to the terms
of this Restated Agreement or otherwise, but determined without regard to any
additional payments required under this Section 6.2) (a “Payment”) would be
subject to the excise tax imposed by Code Section 409A or any interest or
penalties are incurred by the Executive with respect to such excise tax (such
excise tax, together with any such interest and penalties, are hereinafter
collectively referred to as the “Excise Tax”), then the Executive shall be
entitled to receive an additional payment (a “Gross-Up Payment”) in an amount
such that after payment by the Executive of all taxes (including any interest or
penalties imposed with respect to such taxes), including, without limitation,
any income taxes (and any interest and penalties imposed with respect thereto)
and Excise Tax imposed upon the Gross-Up Payment, the Executive retains an
amount of the Gross-Up Payment equal to the Excise Tax imposed upon the
Payments.

ARTICLE 7
SUCCESSORS

        7.1 Successors. The Corporation or the Bank, as applicable, will require
any successor to the Corporation or the Bank (whether direct or indirect, by
purchase, merger, consolidation, or otherwise) of all or substantially all of
its business and/or assets to expressly assume and agree to perform its
obligations under this Restated Agreement in the same manner and to the same
extent that it would be required to perform them if no such succession had taken
place. Failure of the Corporation or the Bank to obtain such assumption and
agreement prior to the effective date of any such succession shall be a breach
of this Restated Agreement and shall entitle the Executive to compensation from
the Companies in the same amount and on the same terms as he would be entitled
to hereunder upon Executive’s Termination of Employment.

        7.2 Enforcement. This Restated Agreement shall inure to the benefit of
and be enforceable by the Executive’s personal or legal representatives,
executors, administrators, successors, beneficiaries, heirs, distributees,
devises, and legatees.

ARTICLE 8
MISCELLANEOUS

        8.1 Employment Status. The Executive and the Companies acknowledge that,
except as provided under any other agreement between the Executive and either of
the Companies, the employment of the Executive by each of the Companies is “at
will,” and, may be terminated by either the Executive or each of the Companies
at any time, subject to applicable law.

        8.2 Beneficiaries. If the Executive should die while any amount would
still be payable to him hereunder had he continued to live, all such amounts,
unless otherwise provided herein, shall be paid in accordance with the terms of
this Restated Agreement, to the Executive’s Beneficiary. If the Executive has
not named a Beneficiary, then such amounts shall be paid to the Executive’
devisee, legatee, beneficiary, or other designee, or if there is no such
designee, to the Executive’s estate. The Executive may designate one or more
persons or entities as the primary and/or contingent Beneficiaries of any
benefit owing to the Executive under this Restated Agreement. Such designation
must be in the form of a signed writing acceptable to the Board of each of the
Companies. The Executive may make or change such designation at any time.

        8.3 Entire Agreement. This Restated Agreement contains the entire
understanding of the Companies and the Executive and supersedes any prior
agreements or writings with respect to the subject matter hereof.

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        8.4 Gender and Number. Except where otherwise indicated by the context,
any masculine term used herein also shall include the feminine; the plural shall
include the singular, and the singular shall include the plural.

        8.5 Severability. In the event any provision of this Restated Agreement
shall be held illegal or invalid for any reason, the illegality or invalidity
shall not affect the remaining parts of the Restated Agreement, and the Restated
Agreement shall be construed and enforced as if the illegal or invalid provision
had not been included. Further, the captions of this Restated Agreement are not
part of the provisions hereof and shall have no force and effect.

        8.6 Modification. No provision of this Restated Agreement may be
modified, waived, or discharged unless such modification, waiver, or discharge
is agreed to in writing and signed by the Executive and by an authorized member
of each Board, or by the respective parties’ legal representatives and
successors.

        8.7 Applicable Law. To the extent not preempted by the laws of the
United States, the laws of the State of Wisconsin shall be the controlling law
in all matters relating to this Agreement.

        IN WITNESS WHEREOF, the parties have executed this Restated Agreement as
of the day and year first above written.

FIRST BUSINESS FINANCIAL SERVICES, INC.

By: /s/ Charles H. Thompson Charles H. Thompson, Chairman of the Board

FIRST BUSINESS BANK

By: /s/ Jan A. Eddy Jan A. Eddy, Chairman of the Board

s/s Jerome J. Smith Jerome J. Smith, Executive

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